UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F
(Mark One)
[ ] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) or (g)
OF THE SECURITIES EXCHANGE ACT OF 1934
OR
[ ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended ......................................................
OR
[X] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from .......April 1, 1999 to December 31, 1999........
Commission file number 1-12874
TEEKAY SHIPPING CORPORATION
(Exact name of Registrant as specified in its charter)
Not Applicable
(Translation of Registrant's name into English)
Republic of The Marshall Islands
(Jurisdiction of incorporation or organization)
4th Floor, Euro Canadian Centre, Marlborough Street & Navy Lyon Road, P.O. Box
SS-6293, Nassau,
Commonwealth of the Bahamas
(Address of principal executive offices)
Securities registered or to be registered pursuant to Section 12(b) of the Act.
Title of each class Name of each exchange on
which registered
Common Stock, par value of $0.001 per share New York Stock Exchange
8.32% First Preferred Ship Mortgage Notes due 2008 New York Stock Exchange
Securities registered or to be registered pursuant to Section 12(g) of the Act.
None
Securities for which there is a reporting obligation pursuant to Section 15(d)
of the Act.
None
Indicate the number of outstanding shares of each of the issuer's classes
of capital or common stock as of the close of the period covered by the annual
report.
38,064,264 shares of Common Stock, par value of $0.001 per share.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark which financial statement item the registrant has elected
to follow:
Item 17 [ ] Item 18 [X]
<PAGE>
TEEKAY SHIPPING CORPORATION
INDEX TO REPORT ON FORM 20-F
PART I. Page
Item 1. Description of Business.................................... 3
Item 2. Description of Property.................................... 10
Item 3. Legal Proceedings.......................................... 13
Item 4. Control of Registrant...................................... 13
Item 5. Nature of Trading Market................................... 13
Item 6. Exchange Controls and Other Limitations Affecting
Security Holders........................................ 14
Item 7. Taxation................................................... 14
Item 8. Selected Financial Data.................................... 15
Item 9. Management's Discussion and Analysis of Financial
Condition and Results of Operations..................... 17
Item 10. Directors and Officers of the Registrant................... 24
Item 11. Compensation of Directors and Officers..................... 26
Item 12. Options to Purchase Securities From Registrant
or Subsidiaries......................................... 26
Item 13. Interest of Management in Certain Transactions............. 26
PART II.
Item 14. Description of Securities to be Registered.......Not applicable
PART III.
Item 15. Defaults Upon Senior Securities..................Not applicable
Item 16. Changes in Securities, Changes in Security for
Registered Securities and Use of Proceeds.....Not applicable
PART IV.
Item 17. Financial Statements.............................Not applicable
Item 18. Financial Statements....................................... 27
Item 19. Financial Statements and Exhibits.......................... 27
Signature ........................................................... 30
<PAGE>
PART I
Item 1. Description of Business
Teekay has changed its fiscal year end from March 31 to December 31,
effective December 31, 1999, in order to facilitate comparison of its operating
results to those of other companies in the transportation industry.
The Company
Teekay Shipping Corporation ("Teekay"), together with its subsidiaries (the
"Company"), is a leading provider of international crude oil and petroleum
product transportation services through the world's largest fleet of medium size
oil tankers. The Company's modern fleet of tankers provides transportation
services to major oil companies, oil traders and government agencies world wide.
The Company's fleet consists of 74 vessels: 69 Aframax oil tankers and
oil/bulk/ore carriers ("O/B/Os") (including five vessels time-chartered-in and
three vessels owned by a joint venture), two smaller oil tankers, two Suezmax
tankers, and one Very Large Crude Carrier ("VLCC"). The Company's vessels are of
Bahamian, Norwegian, Australian, Liberian, Panamanian or Marshall Islands
registry. The Company's fleet has a total cargo capacity of approximately 7.4
million tonnes and its Aframax vessels represent approximately 10.4% of the
total tonnage of the world Aframax fleet.
The Company's Aframax tanker fleet is one of the most modern fleets in the
world, with an average age of approximately 7.4 years, compared to an average
age for the world oil tanker fleet, including Aframax tankers, of approximately
13.9 years and for the world Aframax tanker fleet of approximately 12.1 years.
The Company has been recognized by customers and rating services for safety,
quality and service. Given the age profile of the world tanker fleet, increasing
emphasis by customers on quality as a result of stringent environmental
regulations, and heightened concerns about liability for oil pollution, the
Company believes that its modern fleet and its emphasis on quality and safety
provide it with a favorable competitive profile.
Through wholly owned subsidiaries located worldwide, the Company provides
substantially all of the operations, ship maintenance, crewing, technical
support, shipyard supervision, insurance and financial management services
necessary to support its fleet.
The Company has a worldwide chartering staff located in Vancouver, Tokyo,
London, Oslo, Houston and Singapore. Each office serves the Company's clients
headquartered in such office's region. Fleet operations, vessel positions and
charter market rates are monitored around the clock. Management believes that
monitoring such information is critical to making informed bids on competitive
brokered business. During the nine month period ended December 31, 1999,
approximately 74% of the Company's net voyage revenues were derived from spot
voyages or time charters and contracts of affreightment priced on a spot market
basis.
The Teekay organization was founded in 1973 to manage and operate oil
tankers. Prior to 1985, the Company chartered-in most of the tonnage that it
subsequently provided to its transportation customers. As the availability of
acceptable chartered-in tonnage declined, management began an expansion of its
owned fleet. Since 1985, the Company has significantly expanded and modernized
its owned fleet by taking delivery of 42 new vessels and acquiring 32 vessels in
the second-hand market, as well as disposing of 29 older tankers over the past
eight years. In addition, the Company acquired control of an additional 26
vessels in its acquisition of Bona Shipholding Ltd. described below.
The Company pursues an intensively customer and operations-oriented business
strategy, emphasizing market concentration and service quality to achieve
superior operating results. The Company believes that it has five key
competitive strengths: (i) market concentration in the Indo-Pacific and Atlantic
Basin, which facilitates comprehensive coverage of charterer requirements and
provides a base for efficient operation and a high degree of capacity
utilization, (ii) full-service marine operations capabilities and experienced
management in all functions critical to its operations, which affords a focused
marketing effort, tight quality and cost controls, improved capacity utilization
and effective operations and safety monitoring, (iii) a modern, high-quality
fleet that operates with high fuel efficiency and low maintenance and operating
costs and affords greater acceptance among charterers in an environment of
increasingly stringent operating and safety standards, (iv) a large,
uniform-size fleet of Aframax (75,000-115,000 dwt) tankers, many of which are in
sister vessel series (substantially identical vessels), which facilitates
scheduling flexibility due to vessel substitution opportunities, permitting
greater responsiveness to customer demands and enhanced capacity utilization,
and which results in lower operating costs than those experienced by smaller
operators and (v) a strong network of customer relationships and a reputation
for transportation excellence among quality-sensitive customers. As a result of
its business strategy, the Company has achieved consistently higher operating
cash flow per vessel as compared to an average of certain other publicly traded
shipping companies. The Company's growth strategy is to leverage its existing
competitive strengths to continue to expand its business. The Company
anticipates that the continued upgrade and expansion of its Aframax tanker
business will continue to be a key component of its strategy. In addition, the
Company believes that its full-service marine operations capabilities,
reputation for safety and quality and strong customer orientation provide it
with the opportunity to expand its business by providing additional value-added
and innovative services, in many cases to existing customers. Finally, the
Company intends to identify expansion opportunities in new tanker market
segments, geographic areas and services to which the Company's competitive
strengths are well suited. The Company may choose to pursue such opportunities
through internal growth, joint ventures or business acquisitions.
Teekay is incorporated under the laws of the Republic of The Marshall
Islands and maintains its principal executive headquarters at the 4th Floor,
Euro Canadian Centre, Marlborough Street & Navy Lyon Road, P.O. Box SS 6293,
Nassau, Commonwealth of the Bahamas. Its telephone number at such address is
(242) 322-8020. The Company's principal operating office is located at Suite
1400, One Bentall Centre, 505 Burrard Street, Vancouver, British Columbia,
Canada, V7X 1M5. Its telephone number at such address is (604) 683-3529.
Acquisition of Bona Shipholding Ltd.
On June 11, 1999, the Company acquired Bona Shipholding Ltd. ("Bona") for
aggregate consideration (including estimated transaction expenses of $19.0
million) of $450.3 million, consisting of $39.9 million in cash, $294.0 million
of assumed debt (net of cash acquired of $91.7 million) and the balance of $97.4
million in shares of the Company's common stock. Bona was the third largest
operator of medium-size tankers, controlling a fleet of vessels consisting of 15
Aframax tankers, eight oil/bulk/ore carriers and, through a joint venture, 50%
interests in one additional Aframax tanker and two Suezmax tankers. Bona engaged
in the transportation of oil, oil products, and dry bulk commodities, primarily
in the Atlantic region. Through this acquisition, the Company has combined
Bona's market strength in the Atlantic region with the Company's franchise in
the Indo-Pacific Basin. For the year ended December 31, 1998, Bona earned net
voyage revenues of $148.9 million resulting in income from vessel operations of
$29.5 million and net income of $16.6 million. Bona's operating results are
reflected in the Company's financial statements commencing the effective date of
the acquisition.
As a result of this acquisition, the Company anticipates annual cost savings of
approximately $10 million, commencing after an estimated 12-month integration
period, through a reduction in combined overhead costs, increased purchasing
power, and other operational efficiencies. The Company also believes that the
acquisition will create revenue enhancement opportunities as a result of owning
a larger fleet with a greater selection of vessels to match customer demands and
enable the Company to further extend the breadth of services provided to its
customers.
Competition
International seaborne oil and other petroleum products transportation
services are provided by two main types of operators: captive fleets of major
oil companies (both private and state-owned) and independent ship owner fleets.
Many major oil companies and other oil trading companies, the primary charterers
of the vessels owned or controlled by the Company, also operate their own
vessels and transport their own oil as well as oil for third party charterers in
direct competition with independent owners and operators. Competition for
charters is intense and is based upon price, location, the size, age, condition
and acceptability of the vessel, and the vessel's manager. Competition in the
Aframax segment is also affected by the availability of other size vessels that
compete in the Company's markets. Suezmax (115,000 to 200,000 dwt) size vessels
and Panamax (50,000 to 75,000 dwt) size vessels can compete for many of the same
charters for which the Company competes. Because of their large size, Ultra
Large Crude Carriers (320,000+ dwt) ("ULCCs") and VLCCs (200,000 to 320,000 dwt)
rarely compete directly with Aframax tankers for specific charters; however,
because ULCCs and VLCCs comprise a substantial portion of the total capacity of
the market, movements by such vessels into Suezmax trades and of Suezmax vessels
into Aframax trades would heighten the already intense competition.
The Company competes principally with other Aframax owners through the
global tanker charter market, comprised of tanker broker companies which
represent both charterers and ship owners in chartering transactions. Within
this market, some transactions, referred to as "market cargoes," are offered by
charterers through two or more brokers simultaneously and shown to the widest
possible range of owners; other transactions, referred to as "private cargoes,"
are given by the charterer to only one broker and shown selectively to a limited
number of owners whose tankers are most likely to be acceptable to the charterer
and are in position to undertake the voyage. Management estimates that the
Company transacts approximately one-third of its spot voyages from market
cargoes, the remainder being either private cargoes or direct cargoes transacted
directly with charterers outside this market.
Other large operators of Aframax tonnage include Neptune Orient Lines Ltd.
(owned partially by the Singapore government), with approximately 22 Aframax
vessels, Shell International Marine, a subsidiary of Royal Dutch/Shell Petroleum
Corporation, with approximately 16 Aframax vessels, trading globally (9 of which
are on charter), Ermis Maritime Corp., with approximately 15 Aframax vessels,
and Tanker Pacific Management, which controls approximately 11 Aframax vessels.
Management believes that it has significant competitive advantages in the
Aframax tanker market as a result of the age, quality, type and dimensions of
its vessels and its market share in the Indo-Pacific and Atlantic Basins. Some
competitors of the Company, however, may have greater financial strength and
capital resources than the Company.
As part of its growth strategy, the Company will continue to consider
strategic opportunities, including business acquisitions, such as the
acquisition of Bona. To the extent the Company enters new geographic areas or
tanker market segments, there can be no assurance that the Company will be able
to compete successfully therein. New markets may involve competitive factors
which differ from those of the Aframax market segment in the Indo-Pacific and
Atlantic Basins and may include participants which have greater financial
strength and capital resources than the Company.
Regulation
The business of the Company and the operation of its vessels are materially
affected by government regulation in the form of international conventions,
national, state and local laws and regulations in force in the jurisdictions in
which the vessels operate, as well as in the country or countries of their
registration. Because such conventions, laws, and regulations are often revised,
the Company cannot predict the ultimate cost of complying with such conventions,
laws and regulations or the impact thereof on the resale price or useful life of
its vessels. Additional conventions, laws and regulations may be adopted which
could limit the ability of the Company to do business or increase the cost of
its doing business and which may have a material adverse effect on the Company's
operations. The Company is required by various governmental and
quasi-governmental agencies to obtain certain permits, licenses and certificates
with respect to its operations. Subject to the discussion below and to the fact
that the kinds of permits, licenses and certificates required for the operations
of the vessels owned by the Company will depend upon a number of factors, the
Company believes that it has been and will be able to obtain all permits,
licenses and certificates material to the conduct of its operations.
The Company believes that the heightened environmental and quality concerns
of insurance underwriters, regulators and charterers will impose greater
inspection and safety requirements on all vessels in the tanker market and will
accelerate the scrapping of older vessels throughout the industry.
Environmental Regulation--International Maritime Organization ("IMO"). On
March 6, 1992, the IMO adopted regulations which set forth new and upgraded
requirements for pollution prevention for tankers. These regulations, which went
into effect on July 6, 1995, in many jurisdictions in which the Company's tanker
fleet operates, provide that (i) tankers between 25 and 30 years old must be of
double-hull construction or of a mid-deck design with double side construction,
unless they have wing tanks or double-bottom spaces, not used for the carriage
of oil, which cover at least 30% of the length of the cargo tank section of the
hull, or are capable of hydrostatically balanced loading which ensures at least
the same level of protection against oil spills in the event of collision or
stranding, (ii) tankers 30 years old or older must be of double-hull
construction or mid-deck design with double-side construction, and (iii) all
tankers will be subject to enhanced inspections. Also, under IMO regulations, a
tanker must be of double-hull construction or a mid-deck design with double side
construction or be of another approved design ensuring the same level of
protection against oil pollution in the event that such tanker (i) is the
subject of a contract for a major conversion or original construction on or
after July 6, 1993, (ii) commences a major conversion or has its keel laid on or
after January 6, 1994, or (iii) completes a major conversion or is a newbuilding
delivered on or after July 6, 1996.
Under the current regulations, the single-hulled vessels of the Company's
existing fleet will be able to operate for substantially all of their respective
economic lives before being required to have double-hulls. None of the Company's
vessels are older than 20 years, therefore, the IMO requirements currently in
effect regarding 25 and 30 year-old tankers will not affect the Company's fleet
in the near future. However, compliance with the new regulations regarding
inspections of all vessels may adversely affect the Company's operations. The
Company cannot at the present time evaluate the likelihood or magnitude of any
such adverse effect on the Company's operations due to uncertainty of
interpretation of the IMO regulations.
The operation of the Company's vessels is also affected by the requirements
set forth in the IMO's International Management Code for the Safe Operation of
Ships and Pollution Prevention (the "ISM Code"). The ISM Code requires
shipowners and bareboat charterers to develop and maintain an extensive "Safety
Management System" that includes the adoption of a safety and environmental
protection policy setting forth instructions and procedures for safe operation
and describing procedures for dealing with emergencies. The failure of a
shipowner or bareboat charterer to comply with the ISM Code may subject such
party to increased liability, may decrease available insurance coverage for the
affected vessels, and may result in a denial of access to, or detention in,
certain ports. Currently, each of the Company's applicable vessels is ISM
code-certified. However, there can be no assurance that such certification will
be maintained indefinitely.
Environmental Regulations--The United States Oil Pollution Act of 1990 ("OPA
90"). OPA 90 established an extensive regulatory and liability regime for the
protection and cleanup of the environment from oil spills. OPA 90 affects all
owners and operators whose vessels trade to the United States or its territories
or possessions or whose vessels operate in United States waters, which include
the United States' territorial sea and its two hundred nautical mile exclusive
economic zone.
Under OPA 90, vessel owners, operators and bareboat (or "demise") charterers
are "responsible parties" and are jointly, severally and strictly liable (unless
the spill results solely from the act or omission of a third party, an act of
God or an act of war) for all containment and clean-up costs and other damages
arising from discharges or threatened discharges of oil from their vessels.
These other damages are defined broadly to include (i) natural resources damages
and the costs of assessment thereof, (ii) real and personal property damages,
(iii) net loss of taxes, royalties, rents, fees and other lost revenues, (iv)
lost profits or impairment of earning capacity due to property or natural
resources damage, (v) net cost of public services necessitated by a spill
response, such as protection from fire, safety or health hazards, and (vi) loss
of subsistence use of natural resources. OPA 90 limits the liability of
responsible parties to the greater of $1,200 per gross ton or $10 million per
tanker that is over 3,000 gross tons (subject to possible adjustment for
inflation). These limits of liability would not apply if the incident was
proximately caused by violation of applicable United States federal safety,
construction or operating regulations or by the responsible party's gross
negligence or willful misconduct, or if the responsible party fails or refuses
to report the incident or to cooperate and assist in connection with the oil
removal activities. The Company currently plans to continue to maintain for each
of its vessels pollution liability coverage in the amount of $1 billion per
incident. A catastrophic spill could exceed the insurance coverage available, in
which event there could be a material adverse effect on the Company.
Under OPA 90, with certain limited exceptions, all newly built or converted
tankers operating in United States waters must be built with double-hulls, and
existing vessels which do not comply with the double-hull requirement must be
phased out over a 25-year period (1990-2015) based on size, age and hull
construction. Nine of the Company's non-double-hulled vessels are over 15 years
old, and the oldest of these vessels, the Teekay Foam and Teekay Favour, would
not be phased-out under the double-hull regulations until April 2009 and
November 2009, respectively. Notwithstanding the phase-out period, OPA 90
currently permits existing single-hull tankers to operate until the year 2015 if
their operations within United States waters are limited to discharging at the
Louisiana Off-Shore Oil Platform, or off-loading by means of lightering
activities within authorized lightering zones more than 60 miles off-shore.
OPA 90 requires owners and operators of vessels to establish and maintain
with the United States Coast Guard (the "Coast Guard") evidence of financial
responsibility sufficient to meet their potential liabilities under OPA 90. In
December 1994, the Coast Guard implemented regulations requiring evidence of
financial responsibility in the amount of $1,500 per gross ton for tankers,
coupling the OPA limitation on liability of $1,200 per gross ton with the
Comprehensive Environmental Response, Compensation, and Liability Act liability
limit of $300 per gross ton. Under the regulations, such evidence of financial
responsibility may be demonstrated by insurance, surety bond, self-insurance, or
guaranty. Under OPA 90, an owner or operator of a fleet of tankers is required
only to demonstrate evidence of financial responsibility in an amount sufficient
to cover the tanker in the fleet having the greatest maximum liability under OPA
90.
The Coast Guard's regulations concerning certificates of financial
responsibility provide, in accordance with OPA 90, that claimants may bring suit
directly against an insurer or guarantor that furnishes certificates of
financial responsibility; and, in the event that such insurer or guarantor is
sued directly, it is prohibited from asserting any contractual defense that it
may have had against the responsible party and is limited to asserting those
defenses available to the responsible party and the defense that the incident
was caused by the willful misconduct of the responsible party. Certain
organizations, which had typically provided certificates of financial
responsibility under pre-OPA 90 laws, including the major protection and
indemnity organizations, declined to furnish evidence of insurance for vessel
owners and operators if they are subject to direct actions or required to waive
insurance policy defenses.
The Coast Guard's financial responsibility regulations may also be satisfied
by evidence of surety bond, guaranty or by self-insurance. Under the
self-insurance provisions, the ship owner or operator must have a net worth and
working capital, measured in assets located in the United States against
liabilities located anywhere in the world, that exceeds the applicable amount of
financial responsibility. The Company has complied with the Coast Guard
regulations by providing a financial guaranty from a related company evidencing
sufficient self-insurance.
OPA 90 specifically permits individual states to impose their own liability
regimes with regard to oil pollution incidents occurring within their
boundaries, and some states have enacted legislation providing for unlimited
liability for oil spills. In some cases, states which have enacted such
legislation have not yet issued implementing regulations defining tanker owners'
responsibilities under these laws. The Company intends to comply with all
applicable state regulations in the ports where the Company's vessels call.
Owners or operators of tankers operating in United States waters are
required to file vessel response plans with the Coast Guard, and their tankers
are required to operate in compliance with their Coast Guard approved plans.
Such response plans must, among other things, (i) address a "worst case"
scenario and identify and ensure, through contract or other approved means, the
availability of necessary private response resources to respond to a "worst case
discharge," (ii) describe crew training and drills, and (iii) identify a
qualified individual with full authority to implement removal actions. The
Company has filed vessel response plans with the Coast Guard for the tankers
owned by the Company and has received approval of such plans for all vessels in
its fleet to operate in United States waters.
Environmental Regulation--Other Environmental Initiatives. The European
Union is considering legislation that will affect the operation of tankers and
the liability of owners for oil pollution. It is difficult to predict what
legislation, if any, may be promulgated by the European Union or any other
country or authority.
Although the United States is not a party thereto, many countries have
ratified and follow the liability scheme adopted by the IMO and set out in the
International Convention on Civil Liability for Oil Pollution Damage, 1969, as
amended (the "CLC"), and the Convention for the Establishment of an
International Fund for Oil Pollution of 1971, as amended. Under these
conventions, a vessel's registered owner is strictly liable for pollution damage
caused on the territorial waters of a contracting state by discharge of
persistent oil, subject to certain complete defenses. Many of the countries that
have ratified the CLC have increased the liability limits through a 1992
Protocol to the CLC. The liability limits in the countries that have ratified
this Protocol are currently approximately $4.0 million plus approximately $566.0
per gross registered tonne above 5,000 gross tonnes with an approximate maximum
of $80.5 million, with the exact amount tied to a unit of account which varies
according to a basket of currencies. The right to limit liability is forfeited
under the CLC where the spill is caused by the owner's actual fault or privity
and, under the 1992 Protocol, where the spill is caused by the owner's
intentional or reckless conduct. Vessels trading to contracting states must
provide evidence of insurance covering the limited liability of the owner. In
jurisdictions where the CLC has not been adopted, various legislative schemes or
common law govern, and liability is imposed either on the basis of fault or in a
manner similar to the CLC.
Risk of Loss and Insurance
The operation of any ocean-going vessel carries an inherent risk of
catastrophic marine disasters and property losses caused by adverse weather
conditions, mechanical failures, human error, war, terrorism, piracy and other
circumstances or events. In addition, the transportation of crude oil is subject
to the risk of crude oil spills, and business interruptions due to political
circumstances in foreign countries, hostilities, labor strikes, and boycotts.
Any such event may result in loss of revenues or increased costs.
The Company carries insurance to protect against most of the
accident-related risks involved in the conduct of its business and it maintains
environmental damage and pollution insurance coverage. The Company does not
carry insurance covering the loss of revenue resulting from vessel off-hire
time. There can be no assurance that all covered risks are adequately insured
against, that any particular claim will be paid or that the Company will be able
to procure adequate insurance coverage at commercially reasonable rates in the
future. More stringent environmental regulations at times in the past have
resulted in increased costs for, and may result in the lack of availability of,
insurance against the risks of environmental damage or pollution.
Operations Outside the United States
The operations of the Company are primarily conducted outside of the United
States and, therefore, may be affected by currency fluctuations and by changing
economic, political and governmental conditions in the countries where the
Company is engaged in business or where its vessels are registered. During the
nine month period ended December 31, 1999, the Company derived approximately 57%
of its total revenues from its operations in the Indo-Pacific Basin. In the
past, political conflicts in such regions, particularly in the Arabian Gulf,
have included attacks on tankers, mining of waterways and other efforts to
disrupt shipping in the area. Vessels trading in such regions have also been
subject to, in limited instances, acts of terrorism and piracy. Future
hostilities or other political instability in the region could affect the
Company's trade patterns and adversely affect the Company's operations and
performance.
Crewing and Staff
The Company employs approximately 2,700 seagoing staff around the world and
approximately 300 personnel ashore.
The Company places great emphasis on attracting, through its recruiting
offices in Manila, Glasgow, Sydney, Mumbai and Latvia, qualified crew members
for employment on the Company's tankers. Recruiting has become an increasingly
difficult task for operators in the tanker industry. The Company pays
competitive salaries and provides competitive benefits to its personnel and
tries to promote, when possible, from within their ranks. Management believes
that the well maintained quarters and equipment on the Company's vessels help to
attract and retain motivated and qualified seamen and officers. During fiscal
1996, the Company entered into a Collective Bargaining Agreement with the
Philippine Seafarers' Union (PSU), an affiliate of the International Transport
Workers' Federation (ITF), and a Special Agreement with ITF London, which covers
substantially all of the Company's junior officers and seamen. The Collective
Bargaining Agreement and the Special Agreement did not result in any significant
increase in the levels of wages paid or benefits provided to members of the
vessel crews. The Company is also a party to Enterprise Bargaining Agreements
with three Australian maritime unions, covering officers and seamen. The time
charters covering the Australian vessels provide that increases in wages or
benefits for the Company's Australian-crewed vessels will be passed on to the
customer. Bona's officers and seamen are also covered under Special Agreements
with ITF London.
The Company has a cadet training program, the purpose of which is to develop
a cadre of future senior officers for the Company, with one specially equipped
vessel staffed with an instructor and trainees. In addition to the basic
training that all seamen are required to undergo to achieve certification, the
Company provides additional training of as much as one month for all newly hired
seamen and junior officers at training facilities in the Philippines. Safety
procedures are a critical element of this training and continue to be emphasized
through the Company's onboard training program. Management believes that high
quality manning and training policies will play an increasingly important role
in distinguishing larger independent tanker companies which have in-house (or
affiliate) capabilities, from smaller companies that must rely on outside ship
managers and crewing agents.
Customers
Customers of the Company include major oil companies, major oil traders,
large oil consumers and petroleum product producers, government agencies, and
various other entities dependent upon the tanker transportation trade. One
customer, an international oil company, accounted for 13% ($48,140,000) of the
company's consolidated voyage revenues during the nine month period ended
December 31, 1999. No other customer accounted for more than 10% of the
Company's consolidated voyage revenues. Three customers, all international oil
companies, individually accounted for 12% ($51,411,000), 12% ($50,727,000) and
10% ($42,797,000), respectively, of the Company's consolidated voyage revenues
during the year ended March 31, 1999. A single customer, also an international
oil company, accounted for 14% ($56,357,000) of the Company's consolidated
voyages revenues during the year ended March 31, 1998.
Taxation of the Company
The legal jurisdictions of the countries in which Teekay and the majority
of its subsidiaries are incorporated do not impose income taxes upon
shipping-related activities. The Company's Australian ship-owning subsidiaries
are subject to income taxes. In addition, some subsidiaries pay taxes in the
jurisdictions in which they operate in connection with the revenue generated
from the services provided by them in that jurisdiction. Such tases are not
considered material to the Company.
<PAGE>
Item 2. Description of Property
The Company's Fleet
The following list provides information with respect to the Company's vessels as
at February 29, 2000.
<TABLE>
<CAPTION>
Year
Series/Yard Built Type Dwt-MT Flag
<S> <C> <C> <C> <C> <C>
Aframax Tankers (60)
HAMANE SPIRIT.............. Onomichi 1997 DH 105,300 Bahamian
POUL SPIRIT................ Onomichi 1995 DH 105,300 Bahamian
TORBEN SPIRIT.............. Onomichi 1994 DH 98,600 Bahamian
SAMAR SPIRIT............... Onomichi 1992 DH 98,600 Bahamian
LEYTE SPIRIT............... Onomichi 1992 DH 98,600 Bahamian
LUZON SPIRIT............... Onomichi 1992 DH 98,600 Bahamian
MAYON SPIRIT............... Onomichi 1992 DH 98,600 Bahamian
TEEKAY SPIRIT.............. Onomichi 1991 SH 100,200 Bahamian
PALMSTAR LOTUS............. Onomichi 1991 SH 100,200 Bahamian
PALMSTAR THISTLE........... Onomichi 1991 SH 100,200 Bahamian
PALMSTAR ROSE.............. Onomichi 1990 SH 100,200 Bahamian
PALMSTAR POPPY............. Onomichi 1990 SH 100,200 Bahamian
ONOZO SPIRIT............... Onomichi 1990 SH 100,200 Bahamian
PALMSTAR CHERRY............ Onomichi 1990 SH 100,200 Bahamian
PALMSTAR ORCHID............ Onomichi 1989 SH 100,200 Bahamian
GOTLAND SPIRIT............. Hyundai 1995 DH 95,400 Bahamian
FALSTER SPIRIT............. Hyundai 1995 DH 95,400 Bahamian
SOTRA SPIRIT............... Hyundai 1995 DH 95,400 Bahamian
SHILLA SPIRIT.............. Hyundai 1990 SH 106,700 Bahamian
ULSAN SPIRIT............... Hyundai 1990 SH 106,700 Bahamian
NAMSAN SPIRIT.............. Hyundai 1988 SH 106,700 Bahamian
PACIFIC SPIRIT............. Hyundai 1988 SH 106,700 Bahamian
PIONEER SPIRIT............. Hyundai 1988 SH 106,700 Bahamian
DAMPIER SPIRIT (FSO)....... Hyundai 1988 SH 106,700 Bahamian
MERSEY SPIRIT.............. Hyundai 1986 DS 94,700 Bahamian
CLYDE SPIRIT............... Hyundai 1985 DS 94,700 Bahamian
NASSAU SPIRIT.............. Imabari 1998 DH 107,000 Bahamian
SENANG SPIRIT.............. Imabari 1994 DH 95,700 Bahamian
SEBAROK SPIRIT............. Imabari 1993 DH 95,700 Bahamian
SEAFALCON*................. Imabari 1990 DS 97,300 Marshall Islands
SELETAR SPIRIT............. Imabari 1988 DS 95,000 Bahamian
SERAYA SPIRIT.............. Imabari 1992 DS 97,300 Bahamian
SENTOSA SPIRIT............. Imabari 1989 DS 97,300 Bahamian
ALLIANCE SPIRIT............ Imabari 1989 DS 97,300 Bahamian
SEMAKAU SPIRIT............. Imabari 1988 DS 97,300 Bahamian
SINGAPORE SPIRIT........... Imabari 1987 DS 97,300 Bahamian
SUDONG SPIRIT.............. Imabari 1987 DS 97,300 Bahamian
KANATA SPIRIT.............. Samsung 1999 DH 113,000 Bahamian
KAREELA SPIRIT............. Samsung 1999 DH 113,000 Bahamian
KIOWA SPIRIT............... Samsung 1999 DH 113,000 Bahamian
KOA SPIRIT................. Samsung 1999 DH 113,000 Bahamian
KYEEMA SPIRIT.............. Samsung 1999 DH 113,000 Bahamian
AEGEAN PRIDE*.............. Samsung 1999 DH 105,300 Liberian
SILVER PARADISE*........... Samsung 1998 DH 105,200 Panamanian
KYUSHU SPIRIT.............. Mitsubishi 1991 DS 95,600 Bahamian
KOYAGI SPIRIT.............. Mitsubishi 1989 SH 96,000 Bahamian
SABINE SPIRIT.............. Mitsubishi 1989 DS 84,800 Bahamian
HUDSON SPIRIT.............. Mitsubishi 1988 DS 84,800 Bahamian
COLUMBIA SPIRIT............ Mitsubishi 1988 DS 84,800 Bahamian
SHETLAND SPIRIT............ Mitsui 1994 DH 106,200 Bahamian
ORKNEY SPIRIT.............. Mitsui 1993 DH 106,200 Bahamian
SEABRIDGE*................. Namura 1996 DH 105,200 Liberian
SEAMASTER*................. Namura 1990 SH 101,000 Liberian
TORRES SPIRIT.............. Namura 1990 SH 96,000 Bahamian
MENDANA SPIRIT (1)......... Namura 1980 SH 81,700 Bahamian
SHANNON SPIRIT............. Gdynia 1987 SH 99,300 Bahamian
CLARE SPIRIT............... Gdynia 1986 SH 95,200 Bahamian
BORNES **.................. Solisnor 1990 DS 88,900 Liberian
MAGELLAN SPIRIT............ Hitachi 1985 DS 95,000 Bahamian
COOK SPIRIT................ Hashima 1987 DS 91,500 Bahamian
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Year
Series/Yard Built Type Dwt-MT Flag
<S> <C> <C> <C> <C> <C>
Oil/Bulk/Ore Carriers (10)
VICTORIA SPIRIT ........... Hyundai 1993 DH 103,200 Bahamian
VANCOUVER SPIRIT .......... Hyundai 1992 DH 103,200 Bahamian
TEEKAY FORUM .............. Hyundai 1983 DB 78,500 Bahamian
TEEKAY FULMAR.............. Hyundai 1983 DB 78,500 Bahamian
TEEKAY FOUNTAIN............ Hyundai 1982 DB 78,500 Norwegian Int'l Registry
TEEKAY FORTUNA ***......... Hyundai 1982 DB 78,500 Norwegian Int'l Registry
TEEKAY FREIGHTER ****...... Bremer 1982 DB 75,400 Norwegian Int'l Registry
TEEKAY FOAM................ Hyundai 1981 DB 78,500 Bahamian
TEEKAY FAVOUR.............. Howaldtswerke 1981 DB 82,500 Bahamian
TEEKAY FAIR................ Bremer 1981 DH 75,500 Norwegian Int'l Registry
Other Tankers (6)
MUSASHI SPIRIT (VLCC)...... Sasebo 1993 SH 280,700 Bahamian
INAGO **................... Solisnor 1993 DS 159,800 Liberian
ERATI **................... Solisnor 1992 DS 159,700 Liberian
BARRINGTON................. Samsung 1989 DH 33,300 Australian
PALMERSTON................. Halla 1990 DB 36,700 Australian
SCOTLAND (2)............... Mitsubishi 1982 DS 40,800 Bahamian
------------
7,526,500
============
- ------------------------------------------------------------------------------------------------------------------------------------
DH Double-hull tanker FSO Floating storage and off-loading vessel *Time-chartered-in
DS Double-sided tanker SH Single-hull tanker ** 50% owned
DB Double-bottom tanker VLCC Very Large Crude Carrier *** 67% owned
**** 52% owned
(1) Sold March 23, 2000
(2) Sold March 21, 2000
</TABLE>
<PAGE>
Many of the Company's vessels have been designed and constructed as
substantially identical sister ships. Such vessels can, in many situations, be
interchanged, providing scheduling flexibility and greater capacity utilization.
In addition, spare parts and technical knowledge can be applied to all the
vessels in the particular series, thereby generating operating efficiencies and
economies of scale.
See Note 6 of the Consolidated Financial Statements for information with
respect to major encumbrances against vessels of the Company.
Classification and Inspection
All of the Company's vessels have been certified as being "in class" by
their respective classification societies: Nippon Kaiji Kyokai, Lloyds Register,
Det Norske Veritas or American Bureau of Shipping. Every commercial vessel's
hull and machinery is "classed" by a classification society authorized by its
country of registry. The classification society certifies that the vessel has
been built and maintained in accordance with the rules of such classification
society and complies with applicable rules and regulations of the country of
registry of the vessel and the international conventions of which that country
is a member. Each vessel is inspected by a surveyor of the classification
society every year ("Annual Survey"), every two to three years ("Intermediate
Survey") and every four to five years ("Special Survey"). Vessels also may be
required, as part of the Intermediate Survey process, to be drydocked every 24
to 30 months for inspection of the underwater parts of the vessel and for
necessary repair related to such inspection. Many of the Company's vessels have
qualified with their respective classification societies for drydocking every
five years in connection with the Special Survey and are no longer subject to
the Intermediate Survey drydocking process. To so qualify, the Company was
required to enhance the resiliency of the underwater coatings of each such
vessel as well as to install apparatus on each vessel to accommodate thorough
underwater inspection by divers.
In addition to the classification inspections, many of the Company's
customers, including the major oil companies, regularly inspect the Company's
vessels as a precondition to chartering voyages on such vessels. Management
believes that the Company's well-maintained, high quality tonnage should provide
it with a competitive advantage in the current environment of increasing
regulation and customer emphasis on quality of service.
Company employees perform much of the necessary ordinary course maintenance
and regularly inspect all of the Company's vessels, both at sea and while the
vessels are in port. The Company inspects its vessels two to four times per year
using predetermined and rigorous criteria. Each vessel is examined and specific
notations are made, and recommendations are given for improvements to the
overall condition of the vessel, maintenance, safety, and crew welfare.
The Company has obtained through Det Norske Veritas, the Norwegian
classification society, accreditation with the ISO 9000 standards of total
quality management. ISO 9000 is a series of international standards for quality
systems which includes ISO 9002, the standard most commonly used in the shipping
industry. The Company has also completed the implementation of the International
Safety Management (ISM) code. The Company has obtained Documents of Compliance
(DOC) for its offices and Safety Management Certificates (SMC) for its
applicable vessels.
<PAGE>
Item 3. Legal Proceedings
From time to time the Company has been, and expects to continue to be,
subject to legal proceedings and claims in the ordinary course of its business,
principally personal injury and property casualty claims. Such claims, even if
lacking merit, could result in the expenditure of significant financial and
managerial resources. The Company is not aware of any legal proceedings or
claims that it believes will have, individually or in the aggregate, a material
adverse effect on the Company or on its financial condition or results of
operations.
Item 4. Control of Registrant
Principal Shareholders
(a) The Company is not directly or indirectly owned or controlled by another
corporation or by any foreign government.
(b) The following table sets forth certain information regarding ownership,
as of March 14, 2000, of Teekay's common stock, par value of $0.001 per share
(the "Common Stock") by (i) each person known by the Company to own more than
10% of the Common Stock and (ii) the Directors and officers as a group:
<TABLE>
<CAPTION>
Identity of Person or Group Shares Owned Percent of Class
- --------------------------- ------------ ----------------
<S> <C> <C>
Cirrus Trust (1)........................................................... 14,427,397 37.90%
Alliance Capital Management................................................ 4,958,301 13.03%
All Directors and officers as a group (13 persons) (2)..................... * *
- ----------
</TABLE>
(1) JTK Trust, which is under common supervision with Cirrus Trust, owns an
additional 2,888,293 shares (or 7.59%) of Common Stock.
(2) Excludes (a) outstanding options to purchase up to 1,445,000 shares of
Common Stock and (b) 3,082,908 shares of Common Stock held by Leif O. Hoegh
& Co. ASA, an entity controlled by Leif O. Hoegh, a Director of the
Company, and an additional 524,512 shares beneficially owned by Mr. Hoegh.
* Less than one percent of outstanding shares.
(c) The Company is not aware of any arrangements, the operation of which may
at a subsequent date result in a change in control of the Company.
Item 5. Nature of Trading Market
The Company's Common Stock is traded on The New York Stock Exchange under
the symbol "TK". The following table sets forth the high and low closing sales
prices for the Common Stock on The New York Stock Exchange for each of the
fiscal quarters indicated.
<TABLE>
<CAPTION>
High Low
<S> <C> <C>
Year ended March 31, 1999
First quarter................................................. $ 30 7/8 $ 22 9/16
Second quarter................................................ 25 1/8 18 7/16
Third quarter................................................. 18 7/16 15 15/16
Fourth quarter................................................ 18 7/8 14 1/4
Nine Months ended December 31, 1999
First quarter................................................. $ 18 5/8 $ 15 1/8
Second quarter................................................ 18 15/16 15 3/16
Third quarter................................................. 16 1/8 13 3/4
</TABLE>
Teekay's 8.32% First Preferred Ship Mortgage Notes due 2008 are listed for
trading on The New York Stock Exchange. These Notes were first offered on the
market January 19, 1996. As no active trading market exists for these Notes, no
historical pricing information is included here.
<PAGE>
Item 6. Exchange Controls and Other Limitations Affecting Security Holders
(a) The Company is not aware of any governmental laws, decrees or regulations in
the Company's country of organization that restrict the export or import of
capital, including, but not limited to, foreign exchange controls, or that
affect the remittance of dividends, interest or other payments to
non-resident holders of the Company's securities.
(b) The Company is not aware of any limitations on the right of non-resident or
foreign owners to hold or vote securities of the Company imposed by foreign
law or by the charter or other constituent document of the Company.
Item 7. Taxation
Teekay Shipping Corporation was incorporated in the Republic of Liberia on
February 9, 1979 and was domesticated in the Republic of The Marshall Islands on
December 20, 1999.
(a) Republic of Liberia. Since, (i) prior to its domestication in the Republic
of The Marshall Islands, Teekay Shipping Corporation was a "non-resident
Liberian entity" under the Liberian Internal Revenue Code, and is now a
"non-resident foreign person" under the Liberian Internal Revenue Code,
(ii) the Company is not now carrying on, and in the future does not expect
to carry on, any operations within the Republic of Liberia, and (iii)
Teekay's 8.32% First Preferred Ship Mortgage Notes and all documentation
relating to the Notes and to the public offering of Teekay's common stock
were executed outside of the Republic of Liberia, and assuming the holders
of the Notes and the Common Stock neither reside in, maintain an office in,
nor engage in business in, the Republic of Liberia, under current Liberian
law, no taxes or withholdings are imposed by the Republic of Liberia on
payments to be made in respect to the Notes or on distributions made in
respect of the Common Stock. Furthermore, no stamp, capital gains or other
taxes will be imposed by the Republic of Liberia on the ownership or
disposition of the Common Stock by holders thereof.
(b) Republic of The Marshall Islands. Since, (i) Teekay Shipping Corporation is
not now carrying on or conducting, and in the future does not expect to
carry on or conduct, any business or transactions within the Republic of
The Marshall Islands and therefore is now, and in the future intends to
remain, a "non-resident domestic corporation" under The Marshall Islands
Business Corporations Act, and (ii) Teekay's 8.32% First Preferred Ship
Mortgage Notes and all documentation relating to the Notes and to the
public offering of Teekay's common stock were executed outside of the
Republic of The Marshall Islands, and assuming the holders of the Notes and
the Common Stock neither reside in, maintain an office in, engage in
business in, nor conduct transactions in, the Republic of The Marshall
Islands, under current Marshall Islands law, no taxes or withholdings are
imposed by the Republic of The Marshall Islands on payments to be made in
respect to the Notes or on distributions made in respect of the Common
Stock. Furthermore, no stamp, capital gains or other taxes will be imposed
by the Republic of The Marshall Islands on the ownership or disposition of
the Common Stock by holders thereof.
<PAGE>
Item 8. Selected Financial Data
Set forth below are selected consolidated financial and other data of the
Company for the nine month period ended December 31, 1999 and the four years
ended March 31, 1999, which have been derived from the Company's Consolidated
Financial Statements. The data below should be read in conjunction with the
Consolidated Financial Statements and the notes thereto and the report of Ernst
& Young, independent Chartered Accountants, with respect to the financial
statements for the nine month period ended December 31, 1999 and the years ended
March 31, 1999, and 1998, and "Management's Discussion and Analysis of Financial
Condition and Results of Operations." The Company changed its fiscal year end
from March 31 to December 31, commencing December 31, 1999, in order to
facilitate comparison of its operating results to those of other companies in
the transportation industry.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
Nine Months Ended Year Ended Year Ended Year Ended Year Ended
December 31, March 31, March 31, March 31, March 31,
1999 1999 1998 1997 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
(U.S. dollars in thousands, except per share and per day data and ratios)
Income Statement Data:
Voyage revenues........................ $ 377,882 $ 411,922 $ 406,036 $ 382,249 $ 336,320
Voyage expenses........................ 129,532 93,511 100,776 102,037 90,575
Net voyage revenues.................... 248,350 318,411 305,260 280,212 245,745
Income from vessel operations.......... 23,572 85,634 107,640 94,258 76,279
Interest expense....................... (44,996) (44,797) (56,269) (60,810) (62,910)
Interest income........................ 5,842 6,369 7,897 6,358 6,471
Other income (loss).................... (4,013) 5,506 11,236 2,824 9,230
Net income before extraordinary items.. (19,595) 52,712 70,504 42,630 29,070
Extraordinary loss on bond redemption.. -- (7,306) -- -- --
Net income (loss)...................... (19,595) 45,406 70,504 42,630 29,070
Per Share Data:
Net income (loss) before extraordinary
items.................................. $ (0.54) $ 1.70 $ 2.46 $ 1.52 $ 1.17
Extraordinary loss on bond redemption.. -- (0.24) -- -- --
Net income (loss)
--basic.............................. (0.54) 1.46 2.46 1.52 1.17
--diluted............................ (0.54) 1.46 2.44 1.50 1.17
Cash earnings-- basic(1)............... 1.19 4.72 5.78 4.75 4.51
Cash dividends declared................ 0.65 0.86 0.86 0.86 0.48
Balance Sheet Data (at end of period):
Cash and marketable securities......... $ 226,381 $ 132,256 $ 115,254 $ 117,523 $ 101,780
Total assets........................... 1,982,684 1,452,220 1,460,183 1,372,838 1,355,301
Total debt............................. 1,085,167 641,719 725,369 699,726 725,842
Total stockholders' equity............. 832,067 777,390 689,455 629,815 599,395
Other Financial Data:
EBITDA(2).............................. $ 89,839 $ 186,069 $ 209,582 $ 191,632 $ 166,233
EBITDA to interest expense(2)(3)....... 1.96x 3.98x 3.80x 3.22x 2.69x
Total debt to EBITDA(2)................ 12.08 3.45 3.46 3.65 4.37
Total debt to total capitalization..... 56.6% 45.2% 51.3% 52.6% 54.8%
Net debt to capitalization(4).......... 50.8 39.6 46.9 48.0 51.0
Cash earnings(1)....................... 43,343 146,489 165,575 133,554 112,107
Capital expenditures:
Vessel purchases, gross.............. 452,584 85,445 197,199 65,104 123,843
Drydocking (accrual basis)........... 4,971 7,213 12,409 23,124 11,641
Fleet Data:
Average number of ships(5) ............ 65 47 43 41 39
Average age of Company's Aframax fleet
(in years)(6) ....................... 7.4 8.0 7.6 7.9 6.8
TCE per ship per day(5)(7)(8).......... $ 13,410 $ 19,576 $ 21,373 $ 20,356 $ 18,438
Vessel operating expenses per ship per
day(8)(9)............................ 5,719 4,969 4,554 4,922 4,787
Operating cash flow per ship per
day(8)(10)........................... 4,569 10,903 12,664 11,819 10,613
</TABLE>
(Footnotes on following page)
<PAGE>
(Footnotes for previous page)
(1) Cash earnings represents net income (loss) before extraordinary items,
foreign exchange gains (losses), and before depreciation and amortization
expense. Cash earnings is included because it is used by certain
investors to measure a company's financial performance as compared to
other companies in the shipping industry. Cash earnings is not required
by generally accepted accounting principles and should not be considered
as an alternative to net income or any other indicator of the Company's
performance required by generally accepted accounting principles.
(2) EBITDA represents net income (loss) before extraordinary items, interest
expense, income tax expense, depreciation and amortization expense,
minority interest, and gains or losses arising from prepayment of debt,
foreign exchange translation and disposal of assets. EBITDA is included
because such data is used by certain investors to measure a company's
financial performance. EBITDA is not required by generally accepted
accounting principles and should not be considered as an alternative to
net income or any other indicator of the Company's performance required
by generally accepted accounting principles.
(3) For purposes of computing EBITDA to interest expense, interest expense
includes capitalized interest but excludes amortization of loan costs.
(4) Net debt represents total debt less cash, cash equivalents and marketable
securities.
(5) Includes vessels time-chartered-in, but excludes vessels of joint
ventures.
(6) Average age of Company's Aframax fleet is the average age, at the end of
the relevant period, of all the vessels owned, leased or
time-chartered-in by the Company, excluding vessels of joint ventures.
(7) TCE (or "time charter equivalent") is a measure of the revenue
performance of a vessel, which, on a per voyage basis, is generally
determined by Clarkson Research Studies Inc. ("Clarkson") and other
industry data sources by subtracting voyage expenses (except commissions)
which are incurred in transporting cargo from gross revenue per voyage
and dividing the remaining revenue by the total number of days required
for the round-trip voyage. Voyage expenses comprise all expenses relating
to particular voyages, including bunker fuel expense, port fees and canal
tolls. For purposes of calculating the Company's average TCE for the
year, TCE has been calculated consistent with Clarkson's method, by
deducting total voyage expenses (except commissions) from total voyage
revenues and dividing the remaining sum by the Company's total voyage
days in the year.
(8) To facilitate comparison to prior years' results, excludes the results
from the Company's Australian-crewed vessels, which comprised four of the
Company's vessels during the nine month period ended December 31, 1999,
the year ended March 31, 1999 and the fourth quarter of the year ended
March 31, 1998. Vessel operating expenses for the Australian-crewed
vessels are substantially higher than those for the rest of the Company's
fleet on a per ship basis, primarily as a result of higher crew costs,
with correspondingly higher charter rates associated with the charter
arrangements for those vessels. See "Item 9. Management's Discussion and
Analysis of Results of Operations and Financial Condition--General."
(9) Vessel operating expenses consist of all expenses relating to the
operation of vessels (other than voyage expenses), including crewing,
repairs and maintenance, insurance, stores and lubes, and miscellaneous
expenses including communications. Ship days are calculated on the basis
of a 365-day year multiplied by the average number of vessels in the
Company's fleet for the respective year. Vessel operating expenses
exclude vessels time-chartered-in.
(10) Operating cash flow represents income from vessel operations plus
depreciation and amortization expense (other than drydock amortization
expense). Ship days are calculated on the basis of a 365-day fiscal year
multiplied by the average number of vessels in the Company's fleet for the
respective year. Operating cash flow is not required by generally accepted
accounting principles and should not be considered as an alternative to net
income or any other indicator of the Company's performance required by
generally accepted accounting principles.
<PAGE>
Item 9. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Teekay has changed its fiscal year end from March 31 to December 31,
effective December 31, 1999, in order to facilitate comparison of its operating
results to those of other companies in the transportation industry.
General
Teekay is a leading provider of international crude oil and petroleum
product transportation services to major oil companies, major oil traders and
government agencies worldwide. The Company's fleet consists of 74 vessels
(including five vessels time-chartered-in and three vessels owned by a joint
venture), for a total cargo-carrying capacity of approximately 7.4 million
tonnes.
During the nine months ended December 31, 1999, approximately 61% of the
Company's net voyage revenues were derived from spot voyages. The balance of the
Company's revenue is generated by two other modes of employment: time charters,
whereby vessels are chartered to customers for a fixed period; and contracts of
affreightment ("COAs"), whereby the Company carries an agreed quantity of cargo
for a customer over a specified trade route within a given period of time. In
the nine months ended December 31, 1999, approximately 13% of net voyage
revenues were generated by time charters and COAs priced on a spot market basis.
In the aggregate, approximately 74% of the Company's net voyage revenues during
the nine months ended December 31, 1999 were derived from spot voyages or time
charters and COAs priced on a spot market basis, with the remaining 26% being
derived from fixed-rate time-charters and COAs. This dependence on the spot
market, which is within industry norms, contributes to the volatility of the
Company's revenues, cash flow from operations, and net income.
Historically, the tanker industry has been cyclical, experiencing volatility
in profitability and asset values resulting from changes in the supply of, and
demand for, vessel capacity. In addition, tanker markets have historically
exhibited seasonal variations in charter rates. Tanker markets are typically
stronger in the winter months as a result of increased oil consumption in the
northern hemisphere and unpredictable weather patterns that tend to disrupt
vessel scheduling.
In December 1997, the Company acquired two vessels and related shore support
services from an Australian affiliate of Caltex Petroleum. These two tankers,
together with one of the Company's existing Aframax tankers, have been time
chartered to the Caltex affiliate in connection with the Company's provision of
Caltex's oil transportation requirements formerly provided by that affiliate. In
addition, the Company has converted one of its existing vessels to a floating
storage and off-loading vessel, which is sharing crews with the vessels employed
in the Caltex arrangement (together with the other three vessels involved in
this arrangement, the "Australian Vessels"). Vessel operating expenses for the
Australian Vessels are substantially higher than those for the rest of the
Company's fleet, primarily as a result of higher costs associated with employing
an Australian crew. The time-charter rates for the Australian Vessels are
correspondingly higher to compensate for these increased costs. During the nine
months ended December 31, 1999, the Australian Vessels earned net voyage
revenues and an average TCE rate (as defined below) of $27.2 million and
$25,218, respectively, and incurred vessel operating expenses of $9.3 million,
or $8,485 on a per ship per day basis. In comparison, during the year ended
March 31, 1999, the Australian Vessels earned net voyage revenues and an average
TCE rate of $38.2 million and $26,329, respectively, and incurred vessel
operating expenses of $14.9 million, or $10,173 on a per ship per day basis. The
results of the Australian Vessels are included in the Company's Consolidated
Financial Statements included herein.
Acquisition of Bona Shipholding Ltd.
On June 11, 1999, the Company acquired Bona Shipholding Ltd. ("Bona") for
aggregate consideration (including estimated transaction expenses of $19.0
million) of $450.3 million, consisting of $39.9 million in cash, $294.0 million
of assumed debt (net of cash acquired of $91.7 million) and the balance of $97.4
million in shares of the Company's common stock. Bona was the third largest
operator of medium-size tankers, controlling a fleet of vessels consisting of
fifteen Aframax tankers, eight oil/bulk/ore carriers and, through a joint
venture, 50% interests in one additional Aframax tanker and two Suezmax tankers.
Bona engaged in the transportation of oil, oil products, and dry bulk
commodities, primarily in the Atlantic region. Through this acquisition, the
Company has combined Bona's market strength in the Atlantic region with the
Company's franchise in the Indo-Pacific Basin. For the year ended December 31,
1998, Bona earned net voyage revenues of $148.9 million resulting in income from
vessel operations of $29.5 million and net income of $16.6 million.
The acquisition of Bona has been accounted for using the purchase method of
accounting. Bona's operating results are reflected in the Company's financial
statements commencing June 11, 1999.
As a result of this acquisition, the Company anticipates annual cost savings
of approximately $10 million, commencing after an estimated 12-month integration
period, through a reduction in combined overhead costs, increased purchasing
power, and other operational efficiencies. The Company also believes that the
acquisition will create revenue enhancement opportunities as a result of owning
a larger fleet with a greater selection of vessels to match customer demands and
enable the Company to further extend the breadth of services provided to its
customers.
Historically, the Company has depreciated its vessels for accounting
purposes over an economic life of 20 years down to estimated residual values.
Bona depreciated its vessels over an economic life of 25 years down to estimated
scrap values, the method used by the majority of companies in the shipping
industry. Effective April 1, 1999, the Company revised the estimated useful life
of its vessels to 25 years and also replaced the estimated residual values with
estimated scrap values. Since such changes, the Company's average depreciation
expense per vessel has decreased from historical levels.
As a result of the Bona acquisition, the Company expects that its general
and administrative expenses, while remaining relatively stable on a per vessel
basis during the first few fiscal quarters of combined operations, will begin to
decline on a per vessel basis as efficiencies are obtained from the integration
of the two companies' operations. The Company's interest expense has increased
as a result of debt that was assumed as part of the acquisition.
All oil/bulk/ore carriers ("O/B/O") owned by Bona have been operated through
an O/B/O pool managed by a subsidiary of Bona. Net voyage revenues from the
O/B/O pool are currently included on a 100% basis in the Company's consolidated
financial statements. Where the Company owns less than 50% of a vessel, the
minority participants' share of the O/B/O pool is reflected as a time charter
hire expense. The Company anticipates that these O/B/Os will earn lower average
TCE rates than the rest of the Teekay fleet as these vessels command lower rates
than modern Aframax tankers under typical market conditions, which reflects the
lower capital cost of these vessels.
Results of Operations
Bulk shipping industry freight rates are commonly measured at the net voyage
revenue level in terms of "time charter equivalent" (or "TCE") rates, defined as
voyage revenues less voyage expenses (excluding commissions), divided by voyage
ship-days for the round-trip voyage. Voyage revenues and voyage expenses are a
function of the type of charter, either spot charter or time charter, and port,
canal and fuel costs depending on the trade route upon which a vessel is
sailing, in addition to being a function of the level of shipping freight rates.
For this reason, shipowners base economic decisions regarding the deployment of
their vessels upon anticipated TCE rates, and industry analysts typically
measure bulk shipping freight rates in terms of TCE rates. Therefore, the
discussion of revenue below focuses on net voyage revenue and TCE rates.
Nine Months Ended December 31, 1999 versus Year Ended March 31, 1999
As a result of the Company's change in fiscal year end from March 31 to
December 31, the current fiscal period's results are for the nine month period
ended December 31, 1999, while the comparative results are for the twelve month
period ended March 31, 1999. Where indicated in the following discussions,
percentage change figures reflect the annualized results for the nine month
period ended December 31, 1999. The annualized results for the nine month period
ended December 31, 1999 are not necessarily indicative of those for a full
fiscal year.
The results for the nine month period ended December 31, 1999 include the
results of Bona commencing June 11, 1999. On an annualized basis, the Company's
average fleet size increased 39.5% in the nine month period ended December 31,
1999 compared to the year ended March 31, 1999.
Aframax TCE rates declined during the second half of 1998 and 1999 due to a
reduction in tanker demand, oil production cutbacks and a large number of
newbuilding deliveries. TCE rates will depend upon oil production levels, oil
consumption growth, the number of vessels scrapped and charterers' preference
for modern tankers. As a result of the Company's dependence on the tanker spot
market, any fluctuations in Aframax TCE rates will impact the Company's revenues
and earnings.
Net voyage revenues were $248.4 million in the nine month period ended
December 31, 1999, as compared to $318.4 million in the year ended March 31,
1999, representing a 4.0% increase on an annualized basis from the year ended
March 31, 1999. This is mainly the result of an increase in fleet size, offset
by a 31.5% decrease in the Company's average TCE rate, excluding the Australian
Vessels, of $13,410 for the nine month period ended December 31, 1999, from
$19,576 for the year ended March 31, 1999. As of December 31, 1999, the Company
changed its process of estimating net voyage revenues from a load port-to-load
port basis to a discharge port-to-discharge port basis, which is consistent with
most other shipping companies. This change in voyage estimate resulted in a
one-time increase in net voyage revenues of $5.7 million for the nine month
period ended December 31, 1999.
<PAGE>
Vessel operating expenses, which include crewing, repairs and maintenance,
insurance, stores, lubes, and communication expenses, increased to $98.8 million
in the nine month period ended December 31, 1999 from $84.4 million in the year
ended March 31, 1999, representing a 56.1% increase on an annualized basis. This
increase was mainly the result of the addition of the Bona vessels, which
currently have higher operating expenses than the remainder of Teekay's fleet.
Time charter hire expense was $30.7 million in the nine month period ended
December 31, 1999, up from $29.7 million in the year ended March 31, 1999,
primarily due to the Bona acquisition. The minority pool participants' net
voyage revenues in the O/B/O pool managed by a Bona subsidiary is reflected as
time charter hire expense. The average number of vessels time-chartered-in by
the Company was four in the nine month period ended December 31, 1999, the same
as in the year ended March 31, 1999.
Depreciation and amortization expense decreased to $68.3 million in the nine
month period ended December 31, 1999, from $93.7 million in the year ended March
31, 1999, representing a 2.8% decrease on an annualized basis. This reflects the
change in estimated useful life of the vessels from 20 to 25 years, partially
offset by the increase in fleet size arising from the acquisition of Bona.
Depreciation and amortization expense included amortization of drydocking costs
of $6.3 million and $8.6 million in the nine month period ended December 31,
1999 and in the year ended March 31, 1999, respectively. Had Teekay retained its
previous depreciation policy and applied this policy to the Bona fleet,
depreciation expense would have been $22.5 million higher in the current period.
General and administrative expenses were $27.0 million in the nine month
period ended December 31, 1999, as compared to $25.0 million in the year ended
March 31, 1999, representing a 44.1% increase on an annualized basis primarily
as a result of the acquisition of Bona.
Interest expense increased to $45.0 million in the nine month period ended
December 31, 1999 from $44.8 million in the year ended March 31, 1999,
representing a 33.9% increase on an annualized basis. This increase reflects the
$386 million in additional debt assumed as part of the Bona acquisition and an
increase in interest rates.
Interest income decreased to $5.8 million in the nine month period ended
December 31, 1999 from $6.4 million in the year ended March 31, 1999. On an
annualized basis, interest income increased by 20.8% as a result of increased
interest rates and higher cash and marketable securities balances.
Other loss of $4.0 million in the nine month period ended December 31, 1999
consisted primarily of future income taxes related to the Australian Vessels and
one-time employee and severance-related costs, partially offset by equity income
from a 50%-owned joint venture. Other income of $5.5 million in the year ended
March 31, 1999 consisted primarily of gains on the sale of vessels.
As a result of the foregoing factors, net loss was $19.6 million in the nine
month period ended December 31, 1999, compared to net income of $45.4 million in
the year ended March 31, 1999. The results for the year ended March 31, 1999
included an extraordinary loss of $7.3 million on the redemption of the
Company's 9 5/8% First Preferred Ship Mortgage Notes (the "9 5/8% Notes"), and
gains on asset sales of $7.1 million. There were no extraordinary items and no
asset sales in the nine month period ended December 31, 1999.
<PAGE>
Year Ended March 31, 1999 ("Fiscal 1999") versus Year Ended March 31, 1998
("Fiscal 1998")
Operating results for these two fiscal years generally reflect a cyclical
peak in average TCE rates in fiscal 1998 followed by a decline in TCE rates
experienced by the Company's fleet during the second half of fiscal 1999 and
growth in the size of the Company's fleet. In addition, the fiscal 1999 results
include a full year of results from the four Australian Vessels whereas the
fiscal 1998 results only include approximately three months of results from
three of the Australian Vessels, which have higher operating expenses and earn
correspondingly higher TCE rates. The Company sold two of its older Aframax
tankers during the fiscal year ended March 31, 1999 and added four newer Aframax
tankers (including three time-chartered-in vessels) to its fleet during the same
period. As a result, the Company's average fleet size increased by two vessels,
or 8.9%, in fiscal 1999 compared to fiscal 1998, following an earlier increase
of two vessels, or 4.9% in fiscal 1998.
Net voyage revenues increased 4.3% to $318.4 million in fiscal 1999 from
$305.3 million in fiscal 1998, reflecting the increase in the Company's fleet
size and higher TCE rates earned on the Australian Vessels, partially offset by
lower spot TCE rates. The Company's average overall TCE rate in fiscal 1999,
excluding the Australian Vessels, was down 8.4% to $19,576 from $21,373 in
fiscal 1998.
Vessel operating expenses increased 19.7% to $84.4 million in fiscal 1999
from $70.5 million in fiscal 1998, mainly as a result of higher crewing costs
associated with the Australian Vessels and an adjustment to crew wage rates and
salaries effective April 1, 1998.
Time-charter hire expense was $29.7 million in fiscal 1999, up from $10.6
million in fiscal 1998, as the average number of vessels time-chartered-in by
the Company increased to four in fiscal 1999 from two in fiscal 1998.
Depreciation and amortization expense decreased by 1.3% to $93.7 million in
fiscal 1999 from $94.9 million in fiscal 1998, primarily as a result of lower
amortization of drydocking costs during the current year due to fewer scheduled
drydockings compared to the previous fiscal year. Depreciation and amortization
expense included amortization of drydocking costs of $8.6 million and $11.7
million in fiscal years 1999 and 1998, respectively.
General and administrative expenses rose 16.1% to $25.0 million in fiscal
1999 from $21.5 million in fiscal 1998, primarily as a result of the hiring of
additional personnel in connection with the expansion of the Company's
operations, particularly in Australia. The fiscal 1999 results include the
Australian Vessels for the full year in comparison to three months in fiscal
1998 for three of the Australian Vessels.
Interest expense decreased by 20.4% to $44.8 million in fiscal 1999 from
$56.3 million in fiscal 1998, reflecting the reduction in the Company's total
debt and lower average interest rates on debt borrowings. In June 1998, the
Company completed a public offering of its Common Stock resulting in net
proceeds to the Company of approximately $69.0 million. These net proceeds,
together with other funds, were applied in August 1998 to redeem the Company's
outstanding 9 5/8% Notes.
Other income of $5.5 million in fiscal 1999 consisted primarily of $7.1
million in gains on the sale of two vessels, offset partially by $1.9 million in
income taxes related to the Australian Vessels. Other income of $11.2 million in
fiscal 1998 consisted primarily of gains on the sale of vessels.
As a result of the foregoing factors, net income was $45.4 million in fiscal
1999, compared to net income of $70.5 million in fiscal 1998. Net income for
fiscal 1999 included an extraordinary loss of $7.3 million arising from the
redemption of the 9 5/8% Notes and gains on asset sales of $7.1 million. Net
income for fiscal 1998 included $14.4 million in gains on asset sales.
<PAGE>
The following table illustrates the relationship between fleet size
(measured in ship-days), TCE performance, and operating results per calendar
ship-day. To facilitate comparison to the prior years' results, unless otherwise
indicated, the figures in the table below exclude the results from the Company's
Australian Vessels.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Nine Months Ended Year Ended Year Ended
December 31, March 31, March 31,
1999 1999 1998
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
International Fleet:
Average number of ships 61 43 42
Total calendar ship-days 16,797 15,612 15,341
Revenue generating ship-days (A) 15,807 14,647 14,229
Net voyage revenue before commissions (1) (B) (000s) $ 211,971 $ 286,735 $ 304,115
- ----------------------------------------------------------------------------------------------------------------------
TCE (B/A) $ 13,410 $ 19,576 $ 21,373
- ----------------------------------------------------------------------------------------------------------------------
Operating results per calendar ship-day:
Net voyage revenue $ 12,190 $ 17,950 $ 19,358
Vessel operating expense 5,719 4,969 4,554
General and administrative expense 1,510 1,465 1,375
Drydocking expense 392 613 765
- ----------------------------------------------------------------------------------------------------------------------
Operating cash flow per calendar ship-day $ 4,569 $ 10,903 $ 12,664
- ----------------------------------------------------------------------------------------------------------------------
Australian Vessels:
Operating cash flow per calendar ship-day $ 14,643 $ 14,509 $ 13,482
- ----------------------------------------------------------------------------------------------------------------------
Total Fleet:
Operating cash flow per calendar ship-day $ 5,177 $ 11,171 $ 12,682
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Nine months ended December 31, 1999 figure excludes the $5.7 million
adjustment arising from the change in voyage estimate from a load
port-to-load port basis to a discharge port-to-discharge port basis.
Liquidity and Capital Resources
The Company's total liquidity, including cash, restricted cash, marketable
securities and undrawn long-term lines of credit, was $237.4 million as at
December 31, 1999, up from $143.3 million as at March 31, 1999, and $186.3
million as at March 31, 1998. The increase in liquidity during the nine month
period ended December 31, 1999 was primarily the result of drawing an additional
$100 million under one of the Company's revolving credit facilities.
Net cash flow from operating activities decreased to $51.5 million in the
nine month period ended December 31, 1999, compared to $137.7 million in the
year ended March 31, 1999, and $161.1 million in the year ended March 31, 1998.
This primarily reflects the change in TCE rates during these periods.
Scheduled debt repayments were $32.3 million during the nine month period
ended December 31, 1999, compared to $50.6 million in the year ended March 31,
1999 and $33.9 million in the year ended March 31, 1998.
Dividends declared during the nine month period ended December 31, 1999 were
$23.17 million, or $0.645 per share, of which $23.15 million was paid in cash
and the remainder was paid in the form of shares of Common Stock issued under
the Company's dividend reinvestment plan.
During the nine month period ended December 31, 1999, the Company incurred
capital expenditures for vessels and equipment of $23.3 million, consisting
mainly of payments made towards the two newbuilding double-hull Aframax tankers
delivered in July and September of 1999. Cash expenditures for drydocking were
$6.6 million in the nine month period ended December 31, 1999 compared to $11.7
million in the year ended March 31, 1999 and $18.4 million in the year ended
March 31, 1998. There were fewer scheduled drydockings than usual during the
nine month period ended December 31, 1999.
As part of its growth strategy, the Company will continue to consider
strategic opportunities, including the acquisition of additional vessels and
expansion into new markets. The Company may choose to pursue such opportunities
through internal growth, joint ventures, or business acquisitions. The Company
intends to finance any future acquisitions through various sources of capital,
including internally generated cash flow, existing credit lines, additional debt
borrowings, and the issuance of additional shares of capital stock.
Market Rate Risks
The Company is exposed to market risk from foreign currency and changes in
interest rate fluctuations. The Company uses interest rate swaps and forward
foreign currency contracts to manage these risks, but does not use financial
instruments for trading or speculative purposes.
Interest Rate Risk
The Company invests its cash and marketable securities in financial
instruments with maturities of less than three months within the parameters of
its investment policy and guidelines.
The Company uses interest rate swaps to manage the impact of interest rate
changes on earnings and cash flows. The differential to be paid or received
under these swap agreements is accrued as interest rates change and is
recognized as an adjustment to interest expense. Premiums and receipts, if any,
are recognized as adjustments to interest expense over the lives of the
individual contracts.
Foreign Exchange Rate Risk
The international tanker industry's functional currency is the U.S. dollar.
Virtually all of the Company's revenues and most of its operating costs are in
U.S. dollars. The Company incurs certain operating expenses, drydocking, and
overhead costs in foreign currencies, the most significant of which are Japanese
yen, Singapore dollars, Canadian dollars, Australian dollars and Norwegian
kroner. During the nine months ended December 31, 1999, approximately 20.4% of
vessel and voyage costs, overhead and drydock expenditures were denominated in
these currencies. However, the Company has the ability to shift its purchase of
goods and services from one country to another and, thus, from one currency to
another, on relatively short notice.
The Company enters into forward contracts as a hedge against changes in
certain foreign exchange rates. Market value gains and losses are deferred and
recognized during the period in which the hedged transaction is recorded in the
accounts.
<TABLE>
<CAPTION>
Contract Carrying Amount Fair
(in USD 000's) Amount Asset Liability Value
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
December 31, 1999
FX Forward Contracts $ 4,448 $ - $ - $ (20)
Interest Rate Swap Agreements 200,000 - - 4,488
Debt 1,085,167 - 1,085,167 1,060,417
March 31, 1999
FX Forward Contracts $ 2,905 $ - $ - $ (22)
Debt 641,719 - 641,719 637,219
- ----------------------------------------- -------------------------------------------------------------------------
</TABLE>
Year 2000 Compliance
The Company relies on computer systems, software, databases, third party
electronic data interchange interfaces and embedded processors to operate its
business. The Company successfully implemented a program to systematically
address the Year 2000 problem. The Company was Year 2000 compliant prior to the
rollover to the Year 2000. The Company will continue to monitor electronic date
recognition issues.
<PAGE>
FORWARD-LOOKING STATEMENTS
The Company's Annual Report to Shareholders for 1999 and this Annual Report
on Form 20-F for the nine months ended December 31, 1999 contain certain
forward-looking statements (as such term is defined in Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended) concerning future events and the Company's operations,
performance and financial condition, including, in particular, statements
regarding: Aframax TCE rates in the near-term; tanker supply and demand; supply
and demand for oil; the Company's market share; future capital expenditures; the
Company's growth strategy and measures to implement such strategy; the Company's
competitive strengths; future success of the Company; cost savings and other
benefits that may be realized in connection with the Bona acquisition; and Year
2000 compliance. Words such as "expects," "intends," "plans," "believes,"
"anticipates," "estimates" and variations of such words and similar expressions
are intended to identify forward-looking statements. These statements involve
known and unknown risks and are based upon a number of assumptions and estimates
which are inherently subject to significant uncertainties and contingencies,
many of which are beyond the control of the Company. Actual results may differ
materially from those expressed or implied by such forward-looking statements.
Factors that could cause actual results to differ materially include, but are
not limited to: changes in production of or demand for oil and petroleum
products, either generally or in particular regions; the cyclical nature of the
tanker industry and its dependence on oil markets; the supply of tankers
available to meet the demand for transportation of petroleum products;
charterers' preference for modern tankers; greater than anticipated levels of
tanker newbuilding orders or less than anticipated rates of tanker scrapping;
changes in trading patterns significantly impacting overall tanker tonnage
requirements; changes in typical seasonal variations in tanker charter rates;
the Company's dependence on spot oil voyages; competitive factors in the markets
in which the Company operates; environmental and other regulation; the Company's
potential inability to achieve and manage growth; risks associated with
operations outside the United States; the potential inability of the Company to
generate internal cash flow and obtain additional debt or equity financing to
fund capital expenditures; the Company's ability to successfully integrate Bona
into the Company's operations; and other factors detailed from time to time in
the Company's periodic reports filed with the U.S. Securities and Exchange
Commission. The Company expressly disclaims any obligation or undertaking to
release publicly any updates or revisions to any forward-looking statements
contained herein to reflect any change in the Company's expectations with
respect thereto or any change in events, conditions or circumstances on which
any such statement is based.
<PAGE>
Item 10. Directors and Officers of the Registrant
Management
The directors, executive officers and senior management personnel of the
Company are listed below:
<TABLE>
<CAPTION>
Name Age Position
<S> <C> <C>
Day, C. Sean 50 Director and Chairman of the Board
Moller, Bjorn 42 Director, President and Chief Executive Officer
Karlshoej, Axel 59 Director and Chairman Emeritus
Coady, Arthur F. 66 Director, EVP and Secretary
Dingman, Michael D. 68 Director
Feder, Morris L. 83 Director
Hsu, Steve G. K. 66 Director
Hsu, Thomas Kuo-Yuen 53 Director
Hoegh, Leif O. 36 Director
Antturi, Peter S. 41 VP, Treasurer and Chief Financial Officer
Glendinning, David 46 SVP, Customer Service & Marine Project Development
Meldgaard, Mads T. 35 VP, Chartering
Westgarth, Graham 45 SVP, Marine Operations
</TABLE>
Certain biographical information about each of these individuals is set
forth below:
Peter S. Antturi joined the Company in September 1991 as Manager, Accounting
and was promoted to the position of Controller in March 1992, and to his current
position of Vice President, Treasurer and Chief Financial Officer in October
1997. Prior to joining the Company, Mr. Antturi held various accounting and
finance roles in the shipping industry since 1985.
Arthur F. Coady is the Executive Vice President and Secretary of the
Company. He has served as a Director of the Company since 1989. He joined the
Company after 30 years in private law practice in Canada, having specialized in
corporate and commercial law. In July 1995, Mr. Coady was appointed a Director
of the Bahamas Maritime Authority.
C. Sean Day has been a Director of the Company since September 1998 and has
served as the Company's Chairman of the Board since September 1999. He has also
been Chairman of the Board of Seagin International LLC since April 1999 and was
President and Chief Executive Officer of Navios Corporation from 1989 to 1999.
Navios Corporation is a large bulk shipping company based in Stamford,
Connecticut. Prior to this, Mr. Day held a number of senior management positions
in the shipping and finance industry. He is also on the boards of various other
companies. Mr. Day is now engaged on a full-time basis as a consultant to the
trust group that currently exercises effective control over the Company.
Michael D. Dingman is a private investor, industrial company executive and
corporate director. He has served as a Director of the Company since May 1995.
He is Chairman and Chief Executive Officer of The Shipston Group Limited, a
diversified international holding company, and a Director of Fisher Scientific
International Inc. and of Ford Motor Company. Mr. Dingman also serves as
Director/Executive to a number of other industrial concerns.
Morris L. Feder has served as a Director of the Company since June 1993. He
is President of Worldwide Cargo Inc., a New York-based chartering firm. Mr.
Feder has been employed in the shipping industry in excess of 50 years, of which
43 were spent with Maritime Overseas Corporation, from which he retired as
Executive Vice President and Director in December 1991. He has also served as
Senior Vice President and Director of Overseas Shipholding Group Inc. and was a
member of the Finance and Development Committee of its Board of Directors. Mr.
Feder is a member of the American Bureau of Shipping, the Connecticut Maritime
Association and the Association of Shipbrokers and Agents USA Inc., as well as
being a member of the Board of Directors of American Marine Advisors, Inc.
Captain David Glendinning joined the Chartering Department of the Company's
London office in January 1987. Since then, he has worked in a number of senior
positions within the organization, including Vice President, Commercial
Operations, Vice President, Marine and Commercial Operations and currently,
Senior Vice President, Customer Service and Marine Project Development since
February 1999. Captain Glendinning has 18 years sea service on oil tankers of
various types and sizes and is a Master Mariner with British Class 1 Foreign
Going Certificate of Competency.
Leif O. Hoegh was appointed as a Director in June 1999 concurrently with
the Company's acquisition of Bona Shipholding Ltd. He served as a Director of
Bona from November 1993 to June 1999 and served as its Chairman from June 1998
to June 1999. Mr. Hoegh is Managing Director of Leif Hoegh (U.K.) Limited. He
serves as a Director of Dannebrog Rederi AS and Hual AS and serves as the
Chairman of Hoegh Capital Partners, Inc. and Unicool Ltd.
Steve G. K. Hsu has served as a Director of the Company since June 1993. He
is Chairman of Oak Maritime (H.K.) Inc., Limited, a ship management company
based in Hong Kong and a Director of Sincere Navigation Corporation, based in
Taiwan. Mr. Hsu is a Standing Supervisor of the National Association of Chinese
Shipowners, Taiwan, a member of the American Bureau of Shipping, and a council
member of the International General Committee of Bureau Veritas.
Thomas Kuo-Yuen Hsu has served as a Director of the Company since June 1993.
He has served 28 years with, and is presently Executive Director of, Expedo &
Company (London) Ltd., which is part of the Expedo Group of Companies that
manages a fleet of eight vessels, ranging in size from 20,000 dwt to 280,000
dwt. He has been a Committee Director of the Britannia Steam Ship Insurance
Association Limited since 1988.
Axel Karlshoej is President of Nordic Industries, a California general
construction firm with which he has served for the past 27 years. He is the
older brother of the late J. Torben Karlshoej, the founder of the Company. He
has served as a Director and Chairman of the Board of Teekay since June 1993 and
Chairman Emeritus since stepping down as Chairman in September 1999.
Mads T. Meldgaard joined the Company's Chartering Department in January 1986
and served in the European and Singapore offices until December 1991, when he
was appointed Chartering Manager in the Vancouver office. In January 1994, he
was promoted to the position of General Manager, Chartering, and then to
Managing Director (Singapore) in September 1995. In July 1998, Mr. Meldgaard
became Vice President, Chartering based in Vancouver.
Bjorn Moller has served as Director, President and Chief Executive Officer
of the Company in April 1998. Mr. Moller has over 21 years experience in
shipping and has served in senior management positions with the Company for more
than 12 years. He has headed the Company's overall operations since January
1997, following his promotion to the position of Chief Operating Officer. Prior
to this, Mr. Moller headed the Company's global chartering operations and
business development activities.
Captain Graham Westgarth joined the Company in February 1999 as Vice
President, Marine Operations and was promoted to the position of Senior Vice
President, Marine Operations in December 1999. Captain Westgarth has 28 years of
shipping industry experience. Eighteen of those years were spent at sea,
including 5 years in a command position. He joined the Company from Maersk
Company (U.K.), where he joined as Master in 1987 before being promoted to
General Manager in 1994.
<PAGE>
Item 11. Compensation of Directors and Officers
The aggregate compensation paid to the six executive officers and senior
managers listed above was $964,766 for the nine months ended December 31, 1999,
a portion of which was attributable to payments made pursuant to bonus plans of
the Company, which consider both Company and individual performance for a given
period. For the nine months ended December 31, 1999, the Company contributed an
aggregate of $81,313 to provide pension and similar benefits for the six
executive officers and senior managers listed above. During the nine months
ended December 31, 1999, the Company granted an aggregate of 203,000 options
with an exercise price of $16.875 per share and 200,000 options with an exercise
price of $16.9375 per share, to the six executive officers and senior managers
listed above under the Company's 1995 Stock Option Plan. The options expire June
1, 2009 and September 2, 2009, respectively, ten years after the date of each
grant.
Currently, the non-employee Directors of the Company receive, in the
aggregate, approximately $120,000 for their services plus reimbursement of their
out-of-pocket expenses in each fiscal year during which they are directors of
the Company. During the nine months ended December 31, 1999, the Company granted
an aggregate of 60,000 options with an exercise price of $16.875 per share and
200,000 options with an exercise price of $16.9375 per share, to the
non-employee Directors under the Company's 1995 Stock Option Plan. The options
expire June 1, 2009 and September 2, 2009 respectively, ten years after the date
of each grant.
Item 12. Options to Purchase Securities From Registrant or Subsidiaries
Teekay's 1995 Stock Option Plan (the "Plan") entitles certain eligible
officers, employees (including senior sea staff) and directors of the Company to
receive options to acquire Common Stock of Teekay. As of March 14, 2000, a total
of 5,991,750 shares of Common Stock are reserved for issuance under the Plan. As
of such date, options to purchase a total of 4,000,967 shares of Common Stock
were outstanding, with options to purchase a total of 1,202,889 shares then
exercisable and with the directors and the six executive officers and senior
managers listed above holding options to purchase a total of 1,445,000 shares,
of which 389,750 were exercisable. The outstanding options are exercisable at
prices ranging from $16.875 to $33.50 per share, with a weighted average
exercise price of $22.46 per share, and expire between July 19, 2005 and March
6, 2010, ten years after the date of each grant.
Item 13. Interest of Management in Certain Transactions
As of December 31, 1999, Cirrus Trust and JTK Trust owned, in the aggregate,
approximately 45.5% of the Company's outstanding Common Stock. The activities of
Cirrus Trust and JTK Trust are under the common supervision of Messrs. Coady,
Karlshoej and Thomas Hsu, directors of Teekay, and Mr. Shigeru Matsui, President
of Matsui & Company, a Tokyo based ship brokerage firm. The beneficiaries of
such trusts include charitable institutions and affiliated trusts.
In April 1993, Teekay acquired all of the issued and outstanding shares of
common stock of Palm Shipping Inc. (now known as Teekay Chartering Ltd.) from an
affiliate of Teekay for a nominal purchase price, plus an amount to be paid at a
later date (up to a maximum of $5.0 million plus accrued interest), contingent
upon certain future events.
<PAGE>
PART II
Item 14. Description of Securities to be Registered
Not applicable.
PART III
Item 15. Defaults Upon Senior Securities
Not applicable.
Item 16. Changes in Securities, Changes in Security for Registered Securities
and Use of Proceeds
Not applicable.
PART IV
Item 17. Financial Statements
Not applicable.
Item 18. Financial Statements
See item 19(a) below.
Item 19. Financial Statements and Exhibits
(a) The following financial statements and schedule, together with the report of
Ernst & Young thereon, are filed as part of this Annual Report:
Page
Report of Independent Public Accountants.....................................F-1
Consolidated Financial Statements
Consolidated Statements of Income and Retained Earnings......................F-2
Consolidated Balance Sheets..................................................F-3
Consolidated Statements of Cash Flows........................................F-4
Notes to the Consolidated Financial Statements...............................F-5
Schedule A to the Consolidated Financial Statements.........................F-15
All other schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required, are
inapplicable or have been disclosed in the Notes to the Consolidated Financial
Statements and therefore have been omitted.
(b) The following exhibits are filed as part of this Annual Report:
2.1 Amended and Restated Articles of Incorporation of Teekay
Shipping Corporation.
2.2 Articles of Amendment of Articles of Incorporation of Teekay
Shipping Corporation.
2.3 Amended and Restated Bylaws of Teekay Shipping Corporation.
**2.4 Registration Rights Agreement among Teekay, Tradewinds
Trust Co. Ltd., as Trustee for the Cirrus Trust, and
Worldwide Trust Services Ltd., as Trustee for the JTK Trust.
**2.5 Specimen of Teekay Common Stock Certificate.
##2.6 Indenture dated January 29, 1996 among Teekay, VSSI Oceans
Inc., VSSI Atlantic Inc., VSSI Appian Inc., Senang Spirit
Inc., Exuma Spirit Inc., Nassau Spirit Inc., Andros Spirit
Inc. and United States Trust Company of New York, as
Trustee.
##2.7 Specimen of Teekay's 8.32% First Preferred Ship Mortgage
Notes Due 2008.
##++2.8 Bahamian Statutory Ship Mortgage dated January 29, 1996
by Nassau Spirit Inc. to United States Trust Company of New
York.
##++2.9 Deed of Covenants dated January 29, 1996 by Nassau Spirit
Inc. to United States Trust Company of New York.
#2.10 First Preferred Ship Mortgage dated January 29, 1996 by
VSSI Oceans Inc. to United States Trust Company of New York,
as Trustee.
##++2.11 Assignment of Time Charter dated January 29, 1996 by
Nassau Spirit Inc. to United States Trust Company of New
York, as Trustee.
##++2.12 Assignment of Insurance dated January 29, 1996 by
Nassau Spirit Inc. to United States Trust Company of New
York, as Trustee.
##2.13 Pledge Agreement and Irrevocable Proxy dated January 29,
1996 by Teekay in favor of United States Trust Company of
New York, as Trustee.
##++2.14 Guarantee dated January 29, 1996 by Nassau Spirit Inc.
in favor of United States Trust Company of New York, as
Trustee.
##++2.15 Assignment of Freights and Hires dated January 29, 1996
by Nassau Spirit Inc. to United States Trust Company of New
York, as Trustee.
##++2.16 Cash Collateral Account Agreement dated January 29, 1996
between Nassau Spirit Inc. and United States Trust Company
of New York, as Trustee.
##2.17 Investment Account Agreement dated January 29, 1996 between
Teekay and United States Trust Company of New York, as
Trustee.
**2.18 1995 Stock Option Plan.
**2.19 Form of Indemnification Agreement between Teekay and each
of its officers and directors.
**2.20 Reducing Revolving Credit Facility Agreement dated June 6,
1995 between Chiba Spirit Inc., VSSI Sun Inc., VSSI Gemini
Inc., VSSI Carriers Inc., Mendana Spirit Inc., Musashi
Spirit Inc., VSSI Condor Inc., Palm Monarch Inc., VSSI Drake
Inc., VSSI Tokyo Inc., VSSI Marine Inc., Tasman Spirit Inc.,
Vancouver Spirit Inc. and Elcano Spirit Inc. and Den norske
Bank AS, Christiania Bank og Kreditkasse, acting through its
New York Branch, and Nederlandse Scheepshypotheskbank N.V.
+2.21 Charter Party, as amended, dated September 21, 1989 between
Palm Shipping Inc. and BP Shipping Limited.
#2.22 Time Charter, as amended, dated July 3, 1995 between VSSI
Oceans Inc. and Palm Shipping Inc.
#2.23 Time Charter, as amended, dated January 4, 1994 between
VSSI Atlantic Inc. and Palm Shipping Inc.
#2.24 Time Charter, as amended, dated February 1, 1992 between
VSSI Appian Inc. and Palm Shipping Inc.
#2.25 Time Charter, as amended, dated December 1, 1993 between
Senang Spirit Inc. and Palm Shipping Inc.
#2.26 Time Charter, as amended, dated August 1, 1992 between
Exuma Spirit Inc. and Palm Shipping Inc.
#2.27 Time Charter, as amended, dated May 1, 1992 between Nassau
Spirit Inc. and Palm Shipping Inc.
#2.28 Time Charter, as amended, dated November 1, 1992 between
Andros Spirit Inc. and Palm Shipping Inc.
#++2.29 Management Agreement, as amended, dated June 1, 1992
between Teekay Shipping Limited and Nassau Spirit Inc.
@2.30 Agreement, dated October 3, 1996, for a U.S. $90,000,000
Term Loan Facility to be made available to certain
subsidiaries of Teekay Shipping Corporation by Christiania
Bank og Kreditkasse, acting through its New York Branch, The
Bank of Nova Scotia, and Banque Indosuez.
@2.31 Agreement, dated October 18, 1996, for a U.S. $120,000,000
Term Loan Facility to be made available to certain
subsidiaries of Teekay Shipping Corporation by Den Norske
Bank ASA, Nederlandse Scheepshypothesbank N.V., The Bank of
New York, and Midland Bank PLC.
@@2.32 Agreement, dated January 26, 1998, for a U.S. $200,000,000
Reducing Revolving Credit Facility to be made available to
certain wholly-owned subsidiaries of Teekay Shipping
Corporation by Den Norske Bank ASA, Christiania Bank Og
Kreditkasse ASA, New York Branch, and the Bank of Nova
Scotia.
@@@2.33 Agreement, dated March 26, 1999, for the amalgamation of
Northwest Maritime Inc., a 100% owned subsidiary of Teekay
Shipping Corporation, and Bona Shipholding Ltd.
2.34 Agreement, dated April 1997, for a U.S. $30,000,000 Term
Loan Facility to be made available to VSSI Australia Limited
by Rabo Australia Limited.
2.35 Agreement, dated December 18, 1997, for a U.S. $44,000,000
Term Loan Facility to be made available to Barrington
(Australia) Pty Limited and Palmerston (Australia) Pty
Limited by Rabo Australia Limited.
2.36 Amended and Restated Reimbursement Agreement, dated April
16, 1998, among Barrington (Australia) Pty Limited,
Palmerston (Australia) Pty Limited, VSSI Australia Limited,
VSSI Transport Inc. and Alliance Chartering Pty Limited and
Nedship Bank (America) N.V., The Bank of New York and
Landesbank Schleswig-Holstein.
2.37 Amendment No. 1, dated May 1999, to Amended and Restated
Reimbursement Agreement dated April 16, 1998 among
Barrington (Australia) Pty Limited, Palmerston (Australia)
Pty Limited, VSSI Australia Limited, VSSI Transport Inc. and
Alliance Chartering Pty Limited and Nedship Bank (America)
N.V., The Bank of New York and Landesbank
Schleswig-Holstein.
2.38 Amended and Restated Agreement, date June 11, 1999, for a
$500,000,000 Revolving Loan between Bona Shipholding Ltd.,
Chase Manhattan plc, Citibank International plc and various
other banks.
<PAGE>
2.39 Amendment and Restatement Agreement, dated June 11,1999,
relating to a U.S. $500,000,000 Revolving Loan Agreement
between Bona Shipholding Ltd., Chase Manhattan plc, Citibank
International plc and various other banks.
27.1 Financial Data Schedule
- ----------
** Previously filed as an exhibit to the Company's Registration Statement on
Form F-1 (Registration No. 33-7573-4), filed with the SEC on July 14, 1995,
and hereby incorporated by reference to such Registration Statement.
+ Previously filed as an exhibit to the Company's Registration Statement on
Form F-1 (Registration No. 33-68680), as declared effective by the SEC on
November 29, 1993, and hereby incorporated by reference to such
Registration Statement.
++ A schedule attached to this exhibit identifies all other documents not
required to be filed as exhibits because such other documents are
substantially identical to this exhibit. The schedule also sets forth
material details by which the omitted documents differ from this exhibit.
# Previously filed as an exhibit to the Company's Registration Statement on
Form F-3 (Registration No. 33-65139), filed with the SEC on January 19,
1996, and hereby incorporated by reference to such Registration Statement.
## Previously filed as an exhibit to the Company's Annual Report on Form 20-F
(File No. 1-12874), filed with the SEC on June 4, 1996, and hereby
incorporated by reference to such Annual Report.
@ Previously filed as an exhibit to the Company's Annual Report on Form 20-F
(File No. 1-12874), filed with the SEC on June 11, 1997, and hereby
incorporated by reference to such Annual Report.
@@ Previously filed as an exhibit to the Company's Annual Report on Form 20-F
(File No. 1-12874), filed with the SEC on May 20, 1998, and hereby
incorporated by reference to such Annual Report.
@@@ Previously filed as an exhibit to the Company's Annual Report on Form 20-F
(File No.1-12874), filed with the SEC on June 11, 1999, and hereby
incorporated by reference to such Annual Report.
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the Registrant certifies that it meets all of the requirements for filing
on Form 20-F and has duly caused this Annual Report to be signed on its behalf
by the undersigned, thereunto duly authorized.
TEEKAY SHIPPING CORPORATION
By: /s/ Peter Antturi
--------------------------------------------
Peter Antturi
Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
Dated: March 30, 2000
<PAGE>
F-1
AUDITORS' REPORT
To the Shareholders of
TEEKAY SHIPPING CORPORATION
We have audited the accompanying consolidated balance sheets of Teekay
Shipping Corporation and subsidiaries as of December 31, 1999 and March 31,
1999, and the related consolidated statements of income and retained earnings
and cash flows for the nine month period ended December 31, 1999 and for the
years ended March 31, 1999 and 1998. Our audits also included the financial
schedule listed in the Index: Item 19(a). These financial statements and
schedule are the responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Teekay Shipping
Corporation and subsidiaries as at December 31, 1999 and March 31, 1999, and the
consolidated results of their operations and their cash flows for the nine month
period ended December 31, 1999 and for the years ended March 31, 1999 and 1998,
in conformity with accounting principles generally accepted in the United
States. Also, in our opinion, the related schedule, when considered in relation
to the basic financial statements taken as a whole, presents fairly in all
material aspects the information set forth therein.
Nassau, Bahamas, /s/ ERNST & YOUNG
February 11, 2000 Chartered Accountants
<PAGE>
F-2
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
(in thousands of U.S. dollars, except per share amounts)
<TABLE>
<CAPTION>
Nine Months Ended Year Ended Year Ended
December 31, March 31, March 31,
1999 1999 1998
$ $ $
-----------------------------------------------
<S> <C> <C> <C>
NET VOYAGE REVENUES
Voyage revenues 377,882 411,922 406,036
Voyage expenses 129,532 93,511 100,776
- ----------------------------------------------------------------------------------------------------------------------------
Net voyage revenues 248,350 318,411 305,260
- ----------------------------------------------------------------------------------------------------------------------------
OPERATING EXPENSES
Vessel operating expenses 98,780 84,397 70,510
Time charter hire expense 30,681 29,666 10,627
Depreciation and amortization 68,299 93,712 94,941
General and administrative 27,018 25,002 21,542
- ----------------------------------------------------------------------------------------------------------------------------
224,778 232,777 197,620
- ----------------------------------------------------------------------------------------------------------------------------
INCOME FROM VESSEL OPERATIONS 23,572 85,634 107,640
- ----------------------------------------------------------------------------------------------------------------------------
OTHER ITEMS
Interest expense (44,996) (44,797) (56,269)
Interest income 5,842 6,369 7,897
Other income (loss) (note 11) (4,013) 5,506 11,236
- ----------------------------------------------------------------------------------------------------------------------------
(43,167) (32,922) (37,136)
- ----------------------------------------------------------------------------------------------------------------------------
Net income (loss) before extraordinary loss (19,595) 52,712 70,504
Extraordinary loss on bond redemption (note 6) - (7,306) -
- ----------------------------------------------------------------------------------------------------------------------------
Net income (loss) (19,595) 45,406 70,504
Retained earnings, beginning of the period 446,897 428,102 382,178
- ----------------------------------------------------------------------------------------------------------------------------
427,302 473,508 452,682
Dividends declared (23,172) (26,611) (24,580)
- ----------------------------------------------------------------------------------------------------------------------------
Retained earnings, end of the period 404,130 446,897 428,102
- ----------------------------------------------------------------------------------------------------------------------------
Basic Earnings per Common Share (note 9)
o Net income (loss) before extraordinary loss (0.54) 1.70 2.46
o Net income (loss) (0.54) 1.46 2.46
Diluted Earnings per Common Share (note 9)
o Net income (loss) before extraordinary loss (0.54) 1.70 2.44
o Net income (loss) (0.54) 1.46 2.44
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
F-3
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands of U.S. dollars)
<TABLE>
<CAPTION>
As at As at
December 31, March 31,
1999 1999
$ $
----------------------------------
<S> <C> <C>
ASSETS
Current
Cash and cash equivalents 220,327 118,435
Marketable securities (note 4) - 8,771
Accounts receivable 30,753 22,995
Prepaid expenses and other assets 29,579 16,195
- ---------------------------------------------------------------------------------------------------------------------------
Total current assets 280,659 166,396
- ---------------------------------------------------------------------------------------------------------------------------
Marketable securities (note 4) 6,054 5,050
Vessels and equipment (notes 1 and 6)
At cost, less accumulated depreciation of $624,727
(March 31, 1999 - $557,946) 1,666,755 1,218,916
Advances on newbuilding contracts - 55,623
- ---------------------------------------------------------------------------------------------------------------------------
Total vessels and equipment 1,666,755 1,274,539
- ---------------------------------------------------------------------------------------------------------------------------
Investment in joint venture 19,402 -
Other assets 9,814 6,235
- ---------------------------------------------------------------------------------------------------------------------------
1,982,684 1,452,220
- ---------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current
Accounts payable 20,431 11,926
Accrued liabilities (note 5) 39,515 19,285
Current portion of long-term debt (note 6) 66,557 39,058
- ---------------------------------------------------------------------------------------------------------------------------
Total current liabilities 126,503 70,269
- ---------------------------------------------------------------------------------------------------------------------------
Long-term debt (note 6) 1,018,610 602,661
Other long-term liabilities 3,400 1,900
- ---------------------------------------------------------------------------------------------------------------------------
Total liabilities 1,148,513 674,830
- ---------------------------------------------------------------------------------------------------------------------------
Minority interest 2,104 -
Stockholders' equity
Capital stock (note 9) 427,937 330,493
Retained earnings 404,130 446,897
- ---------------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 832,067 777,390
- ---------------------------------------------------------------------------------------------------------------------------
1,982,684 1,452,220
- ---------------------------------------------------------------------------------------------------------------------------
Commitments and contingencies (notes 7 and 10)
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
F-4
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of U.S. dollars)
<TABLE>
<CAPTION>
Nine Months Ended Year Ended Year Ended
December 31, March 31, March 31,
1999 1999 1998
$ $ $
----------------------------------------------------
<S> <C> <C> <C>
Cash and cash equivalents provided by (used for)
OPERATING ACTIVITIES
Net income (loss) (19,595) 45,406 70,504
Add (deduct) charges to operations not requiring a
payment of cash and cash equivalents:
Depreciation and amortization 68,299 93,712 94,941
Gain on disposition of assets - (7,117) (14,392)
Loss on bond redemption - 7,306 2,175
Equity income (721) - (45)
Future income taxes 1,500 1,900 -
Other 1,134 1,218 2,735
Change in non-cash working capital items related to
operating activities (note 12) 896 (4,717) 5,201
- ------------------------------------------------------------------------------------------------------------------------------
Net cash flow from operating activities 51,513 137,708 161,119
- ------------------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Proceeds from long-term debt 100,000 230,000 208,600
Scheduled repayments of long-term debt (32,252) (50,577) (33,876)
Prepayments of long-term debt (10,000) (268,034) (150,655)
Net proceeds from issuance of Common Stock - 68,751 5,126
Cash dividends paid (23,150) (26,222) (15,990)
Capitalized loan costs - (690) (994)
- ------------------------------------------------------------------------------------------------------------------------------
Net cash flow from financing activities 34,598 (46,772) 12,211
- ------------------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Expenditures for vessels and equipment (23,313) (85,445) (197,199)
Expenditures for drydocking (6,598) (11,749) (18,376)
Proceeds from disposition of assets - 23,435 33,863
Net cash acquired through purchase of
Bona Shipholding Ltd. (note 3) 51,774 - -
Acquisition costs related to purchase of
Bona Shipholding Ltd. (note 3) (13,806) - -
Net cash flow from investment - - 6,380
Proceeds on sale of available-for-sale securities 13,724 13,305 14,854
Purchases of available-for-sale securities (6,000) - (42,154)
Other - - (268)
- ------------------------------------------------------------------------------------------------------------------------------
Net cash flow from investing activities 15,781 (60,454) (202,900)
- ------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents 101,892 30,482 (29,570)
Cash and cash equivalents, beginning of the period 118,435 87,953 117,523
- ------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of the period 220,327 118,435 87,953
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
F-5
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, other than share
or per share data)
1. Summary of Significant Accounting Policies
Basis of presentation
The consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States. They include the
accounts of Teekay Shipping Corporation ("Teekay"), which is incorporated under
the laws of the Republic of the Marshall Islands, and its wholly owned or
controlled subsidiaries (the "Company"). Significant intercompany items and
transactions have been eliminated upon consolidation.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Certain of the comparative figures have been reclassified to conform with
the presentation adopted in the current period.
Reporting currency
The consolidated financial statements are stated in U.S. dollars because
the Company operates in international shipping markets which utilize the U.S.
dollar as the functional currency.
Change in fiscal year end
The Company changed its fiscal year end from March 31 to December 31,
effective December 31, 1999. The following is a summary of selected financial
information for the comparative twelve and nine month periods ended December 31,
1999 and 1998:
<TABLE>
<CAPTION>
Twelve Months Ended Twelve Months Ended Nine Months Ended
December 31, December 31, December 31,
1999 1998 1998
(unaudited) (unaudited) (unaudited)
$ $ $
----------------------------------------------------------------------
<S> <C> <C> <C>
RESULTS OF OPERATIONS
Net voyage revenues 318,348 327,016 248,413
Income from vessel operations 34,189 103,660 75,017
Net income (loss) before extraordinary loss (17,723) 66,451 50,840
Net income (loss) (17,723) 59,145 43,534
Net income (loss) before extraordinary loss
per common share
- - basic and diluted (0.50) 2.19 1.65
Net income (loss) per common share
- - basic and diluted (0.50) 1.95 1.41
CASH FLOWS
Net cash flow from operating activities 71,633 151,779 117,588
Net cash flow from financing activities 76,948 (74,407) (89,122)
Net cash flow from investing activities 5,613 (127,372) (50,286)
</TABLE>
<PAGE>
F-6
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, other than share or
per share data)
Operating revenues and expenses
Voyage revenues and expenses are recognized on the percentage of completion
method of accounting. The Company has refined its estimation process from a
load-to-load basis to a discharge-to-discharge basis under the percentage of
completion method to more precisely reflect net voyage revenues. This refinement
in accounting estimate resulted in an increase in net voyage revenues of $5.7
million, or 16 cents per share, for the nine month period ended December 31,
1999.
Estimated losses on voyages are provided for in full at the time such losses
become evident. The consolidated balance sheets reflect the deferred portion of
revenues and expenses applicable to subsequent periods.
Voyage expenses comprise all expenses relating to particular voyages,
including bunker fuel expenses, port fees, canal tolls, and brokerage
commissions. Vessel operating expenses comprise all expenses relating to the
operation of vessels, including crewing, repairs and maintenance, insurance,
stores, lubes, communications, and miscellaneous expenses.
Marketable securities
The Company's investments in marketable securities are classified as
available-for-sale securities and are carried at fair value. Net unrealized
gains or losses on available-for-sale securities, if material, are reported as a
separate component of stockholders' equity.
Vessels and equipment
All pre-delivery costs incurred during the construction of newbuildings,
including interest costs, and supervision and technical costs are capitalized.
The acquisition cost and all costs incurred to restore used vessel purchases to
the standard required to properly service the Company's customers are
capitalized. Depreciation is calculated on a straight-line basis over a vessel's
useful life from the date a vessel is initially placed in service.
Effective April 1, 1999, the Company revised the estimated useful life of
its vessels from 20 years to 25 years, consistent with most other public tanker
companies. This change in accounting estimate resulted in a reduction of
depreciation expense of $22.5 million, or 62 cents per share, for the nine month
period ended December 31, 1999.
Interest costs capitalized to vessels and equipment for the nine month
period ended December 31, 1999 and the years ended March 31, 1999 and 1998
aggregated $1,710,000, $3,018,000, and $283,000, respectively.
Expenditures incurred during drydocking are capitalized and amortized on a
straight-line basis over the period until the next anticipated drydocking. When
significant drydocking expenditures recur prior to the expiry of this period,
the remaining balance of the original drydocking is expensed in the month of the
subsequent drydocking. Drydocking expenses amortized for the nine month period
ended December 31, 1999 and the years ended March 31, 1999 and 1998 aggregated
$6,275,000, $8,583,000, and $11,737,000, respectively.
Investment in joint ventures
The Company has a 50% participating interest in the joint venture
(Soponata-Teekay Limited). The joint venture is accounted for using the equity
method whereby the investment is carried at the Company's original cost plus its
proportionate share of undistributed earnings.
Investment in the Panamax OBO Pool
All oil/bulk/ore carriers ("OBO") owned by the Company are operated through
a Panamax OBO Pool. The participants in the Pool are the companies contributing
vessel capacity to the Pool. The voyage revenues and expenses of these vessels
have been included on a 100% basis in the consolidated financial statements. The
minority pool participants' share of the result has been deducted as time
charter hire expense.
<PAGE>
F-7
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Cont'd)
(all tabular amounts stated in thousands of U.S. dollars, other than share or
per share data)
Other assets
Loan costs, including fees, commissions and legal expenses, are capitalized
and amortized on a straight line basis over the term of the relevant loan.
Amortization of loan costs is included in interest expense.
Interest rate swap agreements
The differential to be paid or received, pursuant to interest rate swap
agreements, is accrued as interest rates change and is recognized as an
adjustment to interest expense. Premiums and receipts, if any, are recognized as
adjustments to interest expense over the lives of the individual contracts.
Forward contracts
The Company enters into forward contracts as a hedge against changes in
certain foreign exchange rates. Market value gains and losses are deferred and
recognized during the period in which the hedged transaction is recorded in the
accounts.
Cash and cash equivalents
The Company classifies all highly liquid investments with a maturity date of
three months or less when purchased as cash and cash equivalents.
Cash interest paid during the nine month period ended December 31, 1999 and
the years ended March 31, 1999 and 1998 totaled $63,086,000, $48,527,000, and
$55,141,000, respectively.
Income taxes
The legal jurisdictions of the countries in which Teekay and the majority of
its subsidiaries are incorporated do not impose income taxes upon
shipping-related activities. The Company's Australian ship-owning subsidiaries
are subject to income taxes (see Note 11). The Company accounts for such taxes
using the liability method pursuant to Statement of Financial Accounting
Standards No.
109, " Accounting for Income Taxes".
Accounting for Stock-Based Compensation
Under Statement of Financial Accounting Standards No. 123 ("SFAS 123"),
"Accounting for Stock-Based Compensation", disclosures of stock-based
compensation arrangements with employees are required and companies are
encouraged (but not required) to record compensation costs associated with
employee stock option awards, based on estimated fair values at the grant dates.
The Company has chosen to continue to account for stock-based compensation using
the intrinsic value method prescribed in APB Opinion No. 25 ("APB 25")
"Accounting for Stock Issued to Employees" and has disclosed the required pro
forma effect on net income and earning per share as if the fair value method of
accounting as prescribed in SFAS 123 had been applied (see Note 9--Capital
Stock).
Comprehensive income
The Company follows Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income", which establishes standards for reporting and
displaying comprehensive income and its components in the consolidated financial
statements. For the nine month period ended December 31, 1999, and the years
ended March 31, 1999 and 1998, the Company did not have any components of
comprehensive income.
<PAGE>
F-8
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Cont'd)
(all tabular amounts stated in thousands of U.S. dollars, other than share or
per share data)
Recent accounting pronouncements
In June 1998, the FASB issued Statement of Financial Accounting Standards
No. 133, "Accounting for Derivative Instruments and Hedging Activities", which
establishes new standards for recording derivatives in interim and annual
financial statements. This statement requires recording all derivative
instruments as assets or liabilities, measured at fair value. Statement No. 133,
as amended by FASB Statement No. 137, is effective for fiscal years beginning
after June 15, 2000. Management has not determined the impact, if any, that the
adoption of the new statement will have on the consolidated results of
operations or financial position of the Company.
2. Business Operations
The Company is engaged in the ocean transportation of petroleum cargoes
worldwide through the ownership and operation of a fleet of tankers. All of the
Company's revenues are earned in international markets.
One customer, an international oil company, accounted for 13% ($48,140,000)
of the Company's consolidated voyage revenues during the nine month period ended
December 31, 1999. No other customer accounted for more than 10% of the
Company's consolidated voyage revenues. During the year ended March 31, 1999,
three customers, all international oil companies, individually accounted for 12%
($51,411,000), 12% ($50,727,000) and 10% ($42,797,000), respectively, of the
Company's consolidated voyage revenues. During the year ended March 31, 1998, a
single customer, also an international oil company, accounted for 14%
($56,357,000) of the Company's consolidated voyage revenues.
3. Acquisition of Bona Shipholding Ltd.
On June 11, 1999, Teekay purchased Bona Shipholding Ltd. ("Bona") for
aggregate consideration (including estimated transaction expenses of $19.0
million) of $450.3 million, consisting of $39.9 million in cash, $294.0 million
of assumed debt (net of cash acquired of $91.7 million) and the balance of $97.4
million in shares of Teekay's Common Stock. Bona's operating results are
reflected in these financial statements commencing the effective date of the
acquisition.
The following table shows comparative summarized condensed pro forma
financial information for the nine month period ended December 31, 1999, and for
the year ended March 31, 1999 and gives effect to the acquisition as if it had
taken place April 1, 1998.
<TABLE>
<CAPTION>
Pro Forma
Nine Months Ended Year Ended
December 31, March 31,
1999 1999
(unaudited) (unaudited)
$ $
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net voyage revenues 272,469 463,696
Income from vessel operations 26,127 132,122
Net income (loss) before extraordinary loss (22,482) 86,505
Net income (loss) (22,482) 79,199
Net income (loss) before extraordinary loss per common share
- - basic and diluted (0.59) 2.31
Net income (loss) per common share
- - basic and diluted (0.59) 2.11
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
F-9
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Cont'd)
(all tabular amounts stated in thousands of U.S. dollars, other than share
or per share data)
4. Investments in Marketable Securities
<TABLE>
<CAPTION>
Gross Gross Approximate
Unrealized Unrealized Market and
Cost Gains Losses Carrying Value
$ $ $ $
-----------------------------------------------------------------
<S> <C> <C> <C> <C>
December 31, 1999
Available-for-sale securities...................... 6,051 6 (3) 6,054
March 31, 1999
Available-for-sale securities...................... 13,865 (44) 13,821
</TABLE>
The cost and approximate market value of available-for-sale securities by
contractual maturity, as at December 31, 1999 and March 31, 1999, are shown as
follows:
<TABLE>
<CAPTION>
Approximate
Market and
Cost Carrying Value
$ $
--------------------------------
<S> <C> <C>
December 31, 1999
Less than one year ............................................................. - -
Due after one year through five years .......................................... 6,051 6,054
----------- -----------
6,051 6,054
=========== ===========
March 31, 1999
Less than one year ............................................................. 8,771 8,771
Due after one year through five years........................................... 5,094 5,050
----------- -----------
13,865 13,821
=========== ===========
</TABLE>
5. Accrued Liabilities
<TABLE>
<CAPTION>
December 31, March 31,
1999 1999
$ $
---------------------------------
<S> <C> <C>
Voyage and vessel............................................................... 12,469 6,868
Interest........................................................................ 12,619 7,552
Payroll and benefits............................................................ 14,427 4,865
----------- --------------------
39,515 19,285
</TABLE>
6. Long-Term Debt
<TABLE>
<CAPTION>
December 31, March 31,
1999 1999
$ $
-----------------------------------
<S> <C> <C>
Revolving Credit Facilities..................................................... 634,000 169,000
First Preferred Ship Mortgage Notes (8.32%)
U.S. dollar debt due through 2008............................................. 225,000 225,000
Term Loans U.S. dollar debt due through 2009 ................................... 226,167 247,719
----------- ------------
1,085,167 641,719
Less current portion............................................................ 66,557 39,058
----------- ------------
1,018,610 602,661
</TABLE>
<PAGE>
F-10
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Cont'd)
(all tabular amounts stated in thousands of U.S. dollars, other than share
or per share data)
The Company has two long-term Revolving Credit Facilities (the "Revolvers")
available, which, as at December 31, 1999, provided for borrowings of up to
$645.0 million. Interest payments are based on LIBOR (December 31, 1999: 6.0%;
March 31, 1999: 5.0%) plus a margin depending on the financial leverage of the
Company; at December 31, 1999, the margins ranged between 0.6% and 0.9% (March
31,1999: 0.5%). The amount available under the Revolvers reduces semi-annually
with final balloon reductions in 2006 and 2008. The Revolvers are collateralized
by first priority mortgages granted on forty of the Company's Aframax tankers
and oil/bulk/ore carriers, together with certain other related collateral, and a
guarantee from the Company for all amounts outstanding under the Revolvers.
The 8.32% First Preferred Ship Mortgage Notes due February 1, 2008 (the
"8.32% Notes") are collateralized by first preferred mortgages on seven of the
Company's Aframax tankers, together with certain other related collateral, and
are guaranteed by seven subsidiaries of Teekay that own the mortgaged vessels
(the "8.32% Notes Guarantor Subsidiaries") to a maximum of 95% of the fair value
of their net assets. As at December 31, 1999, the fair value of these net assets
approximated $182.0 million. The 8.32% Notes are also subject to a sinking fund,
which will retire $45.0 million principal amount of the 8.32% Notes on each
February 1, commencing 2004.
Upon the 8.32% Notes achieving Investment Grade Status and subject to
certain other conditions, the guarantees of the 8.32% Notes Guarantor
Subsidiaries will terminate, all of the collateral securing the obligations of
the Company and the 8.32% Notes Guarantor Subsidiaries under the Indenture and
the Security Documents will be released (whereupon the Notes will become general
unsecured obligations of the Company) and certain covenants under the Indenture
will no longer be applicable to the Company.
In August 1998, the Company redeemed the remaining $98.7 million of the 9
5/8% First Preferred Ship Mortgage Notes (the "9 5/8% Notes") which resulted in
an extraordinary loss of $7.3 million, or 24 cents per share, for the year ended
March 31, 1999.
The Company has several term loans outstanding, which, as at December 31,1999,
totalled $226.2 million. Interest payments are based on LIBOR plus a margin. At
December 31,1999, the margins ranged between 0.65% and 1.25%. The term loans
reduce in quarterly or semi-annual payments with varying maturities through
2009. All term loans of the Company are collateralized by first preferred
mortgages on the vessels to which the loans relate, together with certain other
collateral, and guarantees from Teekay.
As at December 31, 1999, the Company was committed to a series of interest
rate swap agreements whereby $200.0 million of the Company's floating rate debt
was swapped with fixed rate obligations having an average remaining term of 3.8
years, expiring between December 2001 and February 2005. These arrangements
effectively change the Company's interest rate exposure on $200.0 million of
debt from a floating LIBOR rate to an average fixed rate of 6.28%. The Company
is exposed to credit loss in the event of non-performance by the counter parties
to the interest rate swap agreements; however, the Company does not anticipate
non-performance by any of the counter parties.
Among other matters, the long-term debt agreements generally provide for such
items as maintenance of certain vessel market value to loan ratios and minimum
consolidated financial covenants, prepayment privileges (in some cases with
penalties), and restrictions against the incurrence of additional debt and new
investments by the individual subsidiaries without prior lender consent. The
amount of Restricted Payments, as defined, that the Company can make, including
dividends and purchases of its own capital stock, is limited as of December 31,
1999, to $188.0 million. Certain of the loan agreements require a minimum level
of free cash be maintained. As at December 31, 1999, this amount was $26.0
million.
The aggregate annual long-term debt principal repayments required to be
made for the five fiscal years subsequent to December 31, 1999 are $66,557,000
(fiscal 2000), $92,196,000 (fiscal 2001), $90,043,000 (fiscal 2002),
$132,157,000 (fiscal 2003), and $114,078,000 (fiscal 2004).
<PAGE>
F-11
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Cont'd)
(all tabular amounts stated in thousands of U.S. dollars, other than share
or per share data)
7. Leases
Charters-out
Time charters to third parties of the Company's vessels are accounted for as
operating leases. The minimum future revenues to be received on time charters
currently in place are $82,204,000 (fiscal 2000), $72,158,000 (fiscal 2001),
$57,830,000 (fiscal 2002), $39,035,000 (fiscal 2003), $39,140,000 (fiscal 2004),
and $132,063,000 thereafter.
The minimum future revenues should not be construed to reflect total charter
hire revenues for any of the years.
Charters-in
Minimum commitments under vessel operating leases are $22,795,000 (fiscal
2000) and $2,981,000 (fiscal 2001).
8. Fair Value of Financial Instruments
Carrying amounts of all financial instruments approximate fair market value
except for the following:
Long-term debt -- The fair values of the Company's fixed rate long-term debt
are based on either quoted market prices or estimated using discounted cash flow
analyses, based on rates currently available for debt with similar terms and
remaining maturities.
Interest rate swap agreements and foreign exchange contracts -- The fair
value of interest rate swaps and foreign exchange contracts, used for hedging
purposes, is the estimated amount that the Company would receive or pay to
terminate the agreements at the reporting date, taking into account current
interest rates, the current credit worthiness of the swap counter parties and
foreign exchange rates.
The estimated fair value of the Company's financial instruments is as
follows:
<TABLE>
<CAPTION>
December 31, 1999 March 31, 1999
-----------------------------------------------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
$ $ $ $
-----------------------------------------------------------------
<S> <C> <C> <C> <C>
Cash, cash equivalents and marketable
securities
.................................................... 226,381 226,381 132,256 132,256
Long-term debt ..................................... 1,085,167 1,060,417 641,719 637,219
Interest rate swap agreements (note 6) ............. - 4,488 - -
Foreign currency contracts (note 10) ............... - (20) - (22)
</TABLE>
The Company transacts interest rate swap and foreign currency contracts
with investment grade rated financial institutions and requires no collateral
from these institutions.
<PAGE>
F-12
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Cont'd)
(all tabular amounts stated in thousands of U.S. dollars, other than share
or per share data)
9. Capital Stock
<TABLE>
<CAPTION>
Common Thousands
Stock of shares
$ #
---------------------------------
<S> <C> <C>
Authorized
25,000,000 Preferred Stock with a par value of $1 per share 725,000,000 Common
Stock with a par value of $0.001 per share
Issued and outstanding
Balance March 31, 1997 ......................................................... 247,637 28,328
Reinvested Dividends............................................................ 8,590 273
Exercise of Stock Options....................................................... 5,126 232
------------- ----------
Balance March 31, 1998.......................................................... 261,353 28,833
June 15, 1998 Share Offering
2,800,000 shares at $24.7275 per share of Common Stock
(net of share issue costs) ................................................... 68,700 2,800
Reinvested Dividends............................................................ 389 13
Exercise of Stock Options....................................................... 51 2
------------- ----------
Balance March 31, 1999.......................................................... 330,493 31,648
June 11, 1999 Common Stock
issued on acquisition of Bona ................................................ 97,422 6,415
Reinvested Dividends ........................................................... 22 1
------------- ----------
Balance December 31, 1999 ...................................................... 427,937 38,064
============= ==========
</TABLE>
In June 1998, the Company sold 2,800,000 shares in a public offering. The
Company used the net proceeds from the offering of approximately $69.0 million,
together with other funds, to redeem the outstanding 9 5/8% Notes.
In September 1998, the Company's shareholders approved an amendment to the
Company's 1995 Stock Option Plan (the "Plan") to increase the number of shares
of Common Stock reserved and available for future grants of options under the
Plan by an additional 1,800,000 shares. As of December 31, 1999, the Company had
reserved 3,642,000 shares of Common Stock for issuance upon exercise of options
granted pursuant to the Plan. During the nine month period ended December 31,
1999 and the years ended March 31, 1999 and 1998, the Company granted options
under the Plan to acquire up to 1,463,500, 573,000 and 359,750 shares of Common
Stock (the "Grants"), respectively, to certain eligible officers, employees
(including senior sea staff), and directors of the Company. The options have a
10-year term and vest equally over four years from the date of grant.
<PAGE>
F-13
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Cont'd)
(all tabular amounts stated in thousands of U.S. dollars, other than share
or per share data)
A summary of the Company's stock option activity, and related information
for the nine month period ended December 31, 1999 and the years ended March 31,
1999 and 1998 are as follows:
<TABLE>
<CAPTION>
December 31, 1999 March 31, 1999 March 31, 1998
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Options Weighted-Average Options Weighted-Average Options Weighted-Average
(000's) Exercise Price (000s) Exercise Price (000s) Exercise Price
# $ # $ # $
----------------------------------------------------------------------------------
Outstanding-beginning of period 1,729 26.46 1,161 26.66 1,056 23.40
Grant.................................. 1,464 17.11 573 26.05 360 33.50
Exercised.............................. - - (2) 21.50 (232) 22.02
Forfeited.............................. (94) 21.12 (3) 30.44 (23) 30.39
------ -------------- ------- --------------- -------- -----------
Outstanding-end of period.............. 3,099 22.14 1,729 26.46 1,161 26.66
====== ============== ======= =============== ======== ===========
Exercisable at end of period .......... 1,019 25.35 731 24.08 565 22.14
====== ============== ======= =============== ======== ===========
Weighted-average fair value
of options granted during
the period (per option) ............. 3.88 5.93 8.13
============== =============== ===========
</TABLE>
Exercise prices for the options outstanding as of December 31, 1999 ranged
from $16.88 to $33.50. These options have a weighted-average remaining
contractual life of 8.18 years.
As the exercise price of the Company's employee stock options equals the
market price of underlying stock on the date of grant, no compensation expense
is recognized under APB 25.
Had the Company recognized compensation costs for the Grants consistent with
the methods recommended by SFAS 123 (see Note 1--Accounting for Stock-Based
Compensation), the Company's net income and earnings per share for the nine
month period ended December 31, 1999 and the years ended March 31, 1999 and 1998
would have been stated at the pro forma amounts as follows:
<TABLE>
<CAPTION>
Nine Months Ended Year Ended Year Ended
December 31, March 31, March 31,
1999 1999 1998
$ $ $
---------------------------------------------------------------
<S> <C> <C> <C>
Net income (loss):
As reported.......................................... (19,595) 45,406 70,504
Pro forma............................................ (21,828) 43,715 69,090
Basic earnings per common share:
As reported.......................................... (0.54) 1.46 2.46
Pro forma............................................ (0.60) 1.41 2.41
Diluted earnings per common share:
As reported.......................................... (0.54) 1.46 2.44
Pro forma............................................ (0.60) 1.41 2.39
</TABLE>
Basic earnings per share is based upon the following weighted average number
of common shares outstanding: 36,384,000 shares for the nine month period ended
December 31, 1999; 31,063,000 shares for the year ended March 31, 1999; and
28,655,000 shares for the year ended March 31, 1998. Diluted earnings per share,
which gives effect to the aforementioned stock options, is based upon the
following weighted average number of common shares outstanding: 36,405,000
shares for the nine month period ended December 31, 1999; 31,063,000 shares for
the year ended March 31, 1999; and 28,870,000 shares for the year ended March
31, 1998.
<PAGE>
F-14
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Cont'd)
(all tabular amounts stated in thousands of U.S. dollars, other than share
or per share data)
The fair values of the Grants were estimated on the dates of grant using the
Black-Scholes option-pricing model with the following assumptions: risk-free
average interest rates of 5.8% for the nine month period ended December 31,
1999; and 5.40%, and 6.29%, for the years ended March 31, 1999 and 1998,
respectively; dividend yield of 3.0%; expected volatility of 25%; and expected
lives of 5 years.
10. Commitments and Contingencies
The Company has guaranteed 50% of the outstanding mortgage debt in the joint
venture company, Soponata-Teekay Limited, totalling $28.8 million as at December
31, 1999.
The Company has guaranteed its share of committed, uncalled capital in
certain limited partnerships totalling $3.1 million as at December 31, 1999.
As at December 31, 1999, the Company was committed to foreign exchange
contracts for the forward purchase of approximately Japanese Yen 100 million,
Singapore dollars 2.4 million and Norwegian Kroner 16.0 million for U.S.
dollars, at an average rate of Japanese Yen 102.06 per U.S. dollar, Singapore
dollar 1.65 per U.S. dollar and Norwegian Kroner 7.99 per U.S. dollar,
respectively, for the purpose of hedging accounts payable and accrued
liabilities.
11. Other Income (Loss)
<TABLE>
<CAPTION>
Nine Months Ended Year Ended Year Ended
December 31, March 31, March 31,
1999 1999 1998
$ $ $
---------------------------------------------------------
<S> <C> <C> <C>
Gain on disposition of assets................................. - 7,117 14,392
Equity in joint venture ...................................... 721 - 45
Write off of loan costs due to refinancing.................... - - (1,308)
Loss on extinguishment of debt................................ - - (2,175)
Future income taxes .......................................... (1,500) (1,900) -
Miscellaneous................................................. (3,234) 289 282
------------ -------- ---------
(4,013) 5,506 11,236
============ ======== ==========
</TABLE>
12. Change in Non-Cash Working Capital Items Related to Operating Activities
<TABLE>
<CAPTION>
Nine Months Ended Year Ended Year Ended
December 31, March 31, March 31,
1999 1999 1998
$ $ $
---------------------------------------------------------
<S> <C> <C> <C>
Accounts receivable............................................ (5,462) 1,332 2,484
Prepaid expenses and other assets.............................. 307 (2,409) 880
Accounts payable............................................... (6,571) (4,238) 5,814
Accrued liabilities............................................ 12,622 598 (3,977)
----------- --------- ---------
896 (4,717) 5,201
=========== ========= =========
</TABLE>
<PAGE>
F-15
SCHEDULE A
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS
(in thousands of U.S. dollars)
<TABLE>
<CAPTION>
Nine Months Ended December 31, 1999
----------------------------------------------------------------------------------
8.32% Notes Teekay
Teekay Guarantor Non-Guarantor Shipping Corp.
Shipping Corp. Subsidiaries Subsidiaries Eliminations & Subsidiaries
$ $ $ $ $
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net voyage revenues - 28,589 349,222 (129,461) 248,350
Operating expenses 493 24,056 310,304 (110,075) 224,778
----------------------------------------------------------------------------------
Income (loss) from vessel operations (493) 4,533 38,918 (19,386) 23,572
Net interest income (expense) (14,420) 87 (24,821) - (39,154)
Equity in net income (loss) of subsidiaries (4,682) - - 4,682 -
Other income (loss) - - (4,013) - (4,013)
----------------------------------------------------------------------------------
Net (loss) income (19,595) 4,620 10,084 (14,704) (19,595)
Retained earnings (deficit), beginning
of the period 446,897 (33,570) 359,286 (325,716) 446,897
Dividends declared (23,172) - - - (23,172)
==================================================================================
Retained earnings (deficit), end of
the period 404,130 (28,950) 369,370 (340,420) 404,130
==================================================================================
Year Ended March 31, 1999
---------------------------------------------------------------------------------
8.32% Notes Teekay
Teekay Guarantor Non-Guarantor Shipping Corp.
Shipping Corp. Subsidiaries Subsidiaries Eliminations & Subsidiaries
$ $ $ $ $
---------------------------------------------------------------------------------
Net voyage revenues - 37,820 461,394 (180,803) 318,411
Operating expenses 356 37,214 376,010 (180,803) 232,777
---------------------------------------------------------------------------------
Income (loss) from vessel operations (356) 606 85,384 - 85,634
Net interest income (expense) (22,857) 148 (15,719) - (38,428)
Equity in net income of subsidiaries 75,698 - - (75,698) -
Other income 227 - 30,710 (25,431) 5,506
---------------------------------------------------------------------------------
Net income before extraordinary loss 52,712 754 100,375 (101,129) 52,712
Extraordinary loss on bond redemption (7,306) - - - (7,306)
---------------------------------------------------------------------------------
Net income 45,406 754 100,375 (101,129) 45,406
Retained earnings (deficit), beginning
of the year 428,102 (34,324) 258,911 (224,587) 428,102
Dividends declared (26,611) - - - (26,611)
=================================================================================
Retained earnings (deficit), end of the
year 446,897 (33,570) 359,286 (325,716) 446,897
=================================================================================
</TABLE>
<PAGE>
F-15A
SCHEDULE A
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS
(in thousands of U.S. dollars)
<TABLE>
<CAPTION>
Year Ended March 31, 1998
----------------------------------------------------------------------------------
8.32% Notes Teekay
Teekay Guarantor Non-Guarantor Shipping Corp.
Shipping Corp. Subsidiaries Subsidiaries Eliminations & Subsidiaries
$ $ $ $ $
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net voyage revenues - 36,443 495,650 (226,833) 305,260
Operating expenses 362 34,344 389,747 (226,833) 197,620
----------------------------------------------------------------------------------
Income (loss) from vessel operations (362) 2,099 105,903 - 107,640
Net interest income (expense) (33,011) 391 (15,752) - (48,372)
Equity in net income of subsidiaries 105,936 - - (105,891) 45
Other income (loss) (2,059) - 29,179 (15,929) 11,191
----------------------------------------------------------------------------------
Net income 70,504 2,490 119,330 (121,820) 70,504
Retained earnings (deficit), beginning
of the year 382,178 (18,124) 155,181 (137,057) 382,178
Dividends declared (24,580) (18,690) (15,600) 34,290 (24,580)
==================================================================================
Retained earnings (deficit), end of the
year 428,102 (34,324) 258,911 (224,587) 428,102
==================================================================================
</TABLE>
--------------
(See Note 6)
<PAGE>
F-16
SCHEDULE A
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
CONDENSED BALANCE SHEETS
(in thousands of U.S. dollars)
<TABLE>
<CAPTION>
As at December 31, 1999
----------------------------------------------------------------------------------
8.32% Notes Teekay
Teekay Guarantor Non-Guarantor Shipping Corp.
Shipping Corp. Subsidiaries Subsidiaries Eliminations & Subsidiaries
$ $ $ $ $
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents 210 39,652 180,465 - 220,327
Other current assets 42 582 162,084 (102,376) 60,332
----------------------------------------------------------------------------------
Total current assets 252 40,234 342,549 (102,376) 280,659
Vessels and equipment (net) 294,800 1,371,955 - 1,666,755
Advances due from subsidiaries 121,415 - - (121,415) -
Other assets (principally marketable securities
and investments in subsidiaries) 943,389 - 15,873 (943,394) 15,868
Investment in joint venture - - 19,402 - 19,402
==================================================================================
1,065,056 335,034 1,749,779 (1,167,185) 1,982,684
==================================================================================
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities 7,989 991 227,331 (109,808) 126,503
Long-term debt 225,000 - 797,010 - 1,022,010
Due to (from) affiliates - (6,337) 211,255 (204,918) -
----------------------------------------------------------------------------------
Total liabilities 232,989 (5,346) 1,235,596 (314,726) 1,148,513
----------------------------------------------------------------------------------
Minority Interest - - 2,104 - 2,104
Stockholders' Equity
Capital stock 427,937 23 5,943 (5,966) 427,937
Contributed capital - 369,307 136,766 (506,073) -
Retained earnings (deficit) 404,130 (28,950) 369,370 (340,420) 404,130
----------------------------------------------------------------------------------
Total stockholders' equity 832,067 340,380 512,079 (852,459) 832,067
==================================================================================
1,065,056 335,034 1,749,779 (1,167,185) 1,982,684
==================================================================================
As at March 31, 1999
----------------------------------------------------------------------------------
8.32% Notes Teekay
Teekay Guarantor Non-Guarantor Shipping Corp.
Shipping Corp. Subsidiaries Subsidiaries Eliminations & Subsidiaries
$ $ $ $ $
----------------------------------------------------------------------------------
ASSETS
Cash and cash equivalents 5 33,313 85,117 - 118,435
Other current assets 28 768 142,414 (95,249) 47,961
----------------------------------------------------------------------------------
Total current assets 33 34,081 227,531 (95,249) 166,396
Vessels and equipment (net) - 306,764 967,775 - 1,274,539
Advances due from subsidiaries 213,498 - - (213,498) -
Other assets (principally marketable securities
and investments in subsidiaries) 792,084 - 11,290 (792,089) 11,285
==================================================================================
1,005,615 340,845 1,206,596 (1,100,836) 1,452,220
==================================================================================
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities 3,225 1,095 161,944 (95,995) 70,269
Long-term debt 225,000 - 379,561 - 604,561
Due to (from) affiliates - 3,990 163,096 (167,086) -
----------------------------------------------------------------------------------
Total liabilities 228,225 5,085 704,601 (263,081) 674,830
----------------------------------------------------------------------------------
Stockholders' Equity
Capital stock 330,493 23 5,943 (5,966) 330,493
Contributed capital - 369,307 136,766 (506,073) -
Retained earnings (deficit) 446,897 (33,570) 359,286 (325,716) 446,897
----------------------------------------------------------------------------------
Total stockholders' equity 777,390 335,760 501,995 (837,755) 777,390
==================================================================================
1,005,615 340,845 1,206,596 (1,100,836) 1,452,220
==================================================================================
</TABLE>
--------------
(See Note 6)
<PAGE>
F-17
SCHEDULE A
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
CONDENSED STATEMENTS OF CASH FLOWS
(in thousands of U.S. dollars)
<TABLE>
<CAPTION>
Nine Months Ended December 31, 1999
--------------------------------------------------------------------------------
8.32% Notes Teekay
Teekay Guarantor Non-Guarantor Shipping Corp.
Shipping Corp. Subsidiaries Subsidiaries Eliminations & Subsidiaries
$ $ $ $ $
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cash and cash equivalents provided by (used for)
OPERATING ACTIVITIES
--------------------------------------------------------------------------------
Net cash flow from operating activities (9,844) 16,674 44,683 51,513
--------------------------------------------------------------------------------
FINANCING ACTIVITIES
Proceeds from long-term debt - - 100,000 100,000
Prepayments of long-term debt - - (10,000) (10,000)
Repayments of long-term debt - - (32,252) (32,252)
Other 49,933 (10,327) (62,756) (23,150)
--------------------------------------------------------------------------------
Net cash flow from financing activities 49,933 (10,327) (5,008) 34,598
--------------------------------------------------------------------------------
INVESTING ACTIVITIES
Expenditures for vessels and equipment - (8) (29,903) (29,911)
Net cash flow from purchase of Bona Shipholding Ltd.
(net of cash acquired of $91,658) (39,884) - - (39,884)
Other 85,576 85,576
--------------------------------------------------------------------------------
Net cash flow from investing activities (39,884) (8) 55,673 15,781
--------------------------------------------------------------------------------
Increase in cash and cash equivalents 205 6,339 95,348 101,892
Cash and cash equivalents, beginning of the period 5 33,313 85,117 118,435
================================================================================
Cash and cash equivalents, end of the period 210 39,652 180,465 220,327
================================================================================
Year Ended March 31, 1999
--------------------------------------------------------------------------------
8.32% Notes Teekay
Teekay Guarantor Non-Guarantor Shipping Corp.
Shipping Corp. Subsidiaries Subsidiaries Eliminations & Subsidiaries
$ $ $ $ $
--------------------------------------------------------------------------------
Cash and cash equivalents provided by (used for)
OPERATING ACTIVITIES
--------------------------------------------------------------------------------
Net cash flow from operating activities (24,829) 21,261 141,276 137,708
--------------------------------------------------------------------------------
FINANCING ACTIVITIES
Proceeds from long-term debt - - 230,000 230,000
Prepayments of long-term debt (108,034) - (160,000) (268,034)
Repayments of long-term debt (20,645) - (29,932) (50,577)
Net proceeds from issuance of Common Stock 68,751 - - 68,751
Other 84,740 3,252 (114,904) (26,912)
--------------------------------------------------------------------------------
Net cash flow from financing activities 24,812 3,252 (74,836) (46,772)
--------------------------------------------------------------------------------
INVESTING ACTIVITIES
Expenditures for vessels and equipment - (1,887) (95,307) (97,194)
Other - - 36,740 36,740
--------------------------------------------------------------------------------
Net cash flow from investing activities - (1,887) (58,567) (60,454)
--------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents (17) 22,626 7,873 30,482
Cash and cash equivalents, beginning of the year 22 10,687 77,244 87,953
================================================================================
Cash and cash equivalents, end of the year 5 33,313 85,117 118,435
================================================================================
</TABLE>
<PAGE>
F-17A
SCHEDULE A
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
CONDENSED STATEMENTS OF CASH FLOWS
(in thousands of U.S. dollars)
<TABLE>
<CAPTION>
Year Ended March 31, 1998
---------------------------------------------------------------------------------
8.32% Notes Teekay
Teekay Guarantor Non-Guarantor Shipping Corp.
Shipping Corp. Subsidiaries Subsidiaries Eliminations & Subsidiaries
$ $ $ $ $
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cash and cash equivalents provided by (used for)
OPERATING ACTIVITIES
---------------------------------------------------------------------------------
Net cash flow from operating activities (32,624) 23,489 170,254 161,119
---------------------------------------------------------------------------------
FINANCING ACTIVITIES
Proceeds from long-term debt - - 208,600 208,600
Prepayments of long-term debt (29,056) - (121,599) (150,655)
Repayments of long-term debt - - (33,876) (33,876)
Net proceeds from issuance of Common Stock 5,126 - - 5,126
Other 22,254 (17,968) (21,270) (16,984)
---------------------------------------------------------------------------------
Net cash flow from financing activities (1,676) (17,968) 31,855 12,211
---------------------------------------------------------------------------------
INVESTING ACTIVITIES
Expenditures for vessels and equipment - (3,566) (212,009) (215,575)
Other 34,290 - (21,615) 12,675
---------------------------------------------------------------------------------
Net cash flow from investing activities 34,290 (3,566) (233,624) (202,900)
---------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents (10) 1,955 (31,515) (29,570)
Cash and cash equivalents, beginning of the year 32 8,732 108,759 117,523
=================================================================================
Cash and cash equivalents, end of the year 22 10,687 77,244 87,953
=================================================================================
</TABLE>
--------------
(See Note 6)
EXHIBIT 2.1
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
TEEKAY SHIPPING CORPORATION
UNDER SECTIONS 9.5 AND 9.8 OF THE LIBERIAN BUSINESS CORPORATION ACT
I, the undersigned, the Executive Vice-President and Secretary of TEEKAY
SHIPPING CORPORATION, a corporation incorporated under the laws of the Republic
of Liberia, (the "Corporation") for the purpose of amending and restating the
Articles of Incorporation of said Corporation hereby certify:
A. The name of the Corporation is TEEKAY SHIPPING CORPORATION. The Corporation
was originally formed effective as of February 9, 1979 under the name
VIKING STAR SHIPPING INC.
B. The purpose of the Corporation is to engage in any lawful act or activity
for which corporations may now or hereafter be organized under the Business
Corporation Act of the jurisdiction of incorporation of the Corporation
(the "Business Corporation Act"). In furtherance and not in limitation of
the foregoing, the more specific powers and purposes of the Corporation are
as follows:
(1) To purchase or otherwise acquire, own, use, operate, pledge,
hypothecate, mortgage, lease, charter, sub-charter, sell, build, and
repair steamships, motorships, tankers, whaling vessels, sailing
vessels, tugs, lighters, barges, and all other vessels and craft of
any and all motive power whatsoever, including aircraft, landcraft,
and any and all means of conveyance and transportation by land, water
or air, together with engines, boilers, machinery, equipment and
appurtenances of all kinds, including masts, sails, boats, anchors,
cables, tackle, furniture and all other necessities thereunto
appertaining and belonging, together with all materials, articles,
tools, equipment and appliances necessary, suitable or convenient for
the construction, equipment, use and operation thereof; and to equip,
furnish and outfit such vessels and ships.
(2) To engage in ocean, coastwise and inland commerce, and generally in
the carriage of freight, goods, cargo in bulk, passengers, mail and
personal effects by water between the various ports of the world and
to engage generally in waterborne commerce throughout the world.
(3) To purchase or otherwise acquire, own, use, operate, lease, build,
repair, sell or in any manner dispose of docks, piers, quays, wharves,
dry docks, warehouses and storage facilities of all kinds, and any
property, real, personal and mixed, in connection therewith.
(4) To act as ship's husband, ship brokers, customs house brokers, ship's
agents, manager of shipping property, freight contractors, forwarding
agents, warehousemen, wharfingers, ship chandlers, and general
traders.
(5) To enter into, make and perform contracts of every kind and
description with any person, firm, association, corporation,
municipality, country, state, body politic, or government or colony or
any dependency thereof.
(6) To appoint or act as an agent, broker, or representative, general or
special, in respect of any or all of the powers expressed herein or
implied hereby; to appoint agents, brokers or representatives.
(7) To carry on its business, to have one or more offices, and to exercise
its powers in foreign countries, subject to the laws of the particular
country.
(8) To borrow or raise money and contract debts, when necessary for the
transaction of its business or for the exercise of its corporate
rights, privileges or franchise or for any other lawful purpose of its
incorporation; to draw, make, accept, endorse, execute and issue
promissory notes, bills of exchange, bonds, debentures, and other
instruments and evidences of indebtedness either secured by mortgage,
pledge, deed of trust, or otherwise, or unsecured.
<PAGE>
(9) To purchase or otherwise acquire, hold, own, mortgage, sell, convey,
or otherwise dispose of real and personal property of every class and
description.
(10) To apply for, secure by purchase or otherwise hold, use, sell, assign,
lease, grant licenses in respect of, mortgage or otherwise dispose of
letters patent of any country, patent rights, licenses, privileges,
inventions, improvements and processes, copyrights, trademarks, and
trade names, relative to or useful in connection with any business of
the corporation.
(11) To buy, sell, pledge, negotiate and deal generally in shares of
stocks, bonds and other securities of other corporations irrespective
of the business that such corporations may be engaged in and
irrespective of the nationality or domicile of such corporations, and
to deal generally in corporate securities listed on security exchanges
of various countries and engage generally in the business of finance
in all its phases as permitted by the laws of the jurisdiction of
incorporation of the Corporation.
(12) To give guarantees of other persons, firms or corporations and to
secure its obligations under such guarantees by mortgage or pledge of,
or creation of a security interest in, all or any part of its property
or any interest therein, wherever situated and, to give such
guarantees even if not in furtherance of the corporate purposes of a
corporation, when such guarantees and, if applicable, such mortgage,
pledge or security interest, is authorized at a meeting of the
shareholders by a vote of the holders of a majority of the shares
entitled to vote thereon.
(13) To engage generally in any lawful commercial enterprise in any country
and to do all and everything lawfully necessary and proper for the
accomplishment of the objects enumerated in its Articles of
Incorporation or any amendment thereof or necessary to the protection
and benefit of the Corporation and in general to carry on any lawful
business necessary to the attainment of the objects of the
Corporation.
The foregoing clauses shall be construed as both purposes and powers and the
matters expressed in each clause shall, except as otherwise expressly provided,
be in no wise limited by reference or inference from the terms of any other
clause, but shall be regarded as independent purposes and powers; and the
enumeration of specific purposes and powers shall not be construed to limit or
restrict in any manner the meaning of general terms or the general powers of the
Corporation; nor shall the expression of one thing be deemed to exclude another,
although it be of like nature, not expressed. All of the foregoing purposes and
powers are subject, however, to the limitation and restriction that the
Corporation, so long as it is subject to the Liberian Business Corporation Act,
shall at all times be a "non-resident domestic corporation" within the meaning
of the Liberian Business Corporation Act and in particular the Corporation shall
not in the Republic of Liberia engage in the banking business or the insurance
business or exercise banking powers or insurance powers, and nothing in these
Articles of Incorporation shall be deemed to authorize it to do so.
C. The registered address of the Corporation in Liberia shall be 80 Broad
Street, Monrovia, Liberia. The name of the Corporation's Registered Agent
at such address shall be The International Trust Company of Liberia.
D. The aggregate number of shares of stock that the Corporation is authorized
to issue is Seven Hundred Fifty Million (750,000,000) shares, all of which
shall be registered shares, comprised of:
(1) Seven Hundred Twenty Five Million (725,000,000) registered shares of
Common Stock, par value one tenth of one cent ($0.001) each.
(2) Twenty Five Million (25,000,000) shares of Preferred Stock, par value
One Dollar ($1) each. The shares of Preferred Stock may be issued from
time to time in one or more series in any manner permitted by law
except as may otherwise be expressly prohibited by the provisions of
these Articles of Incorporation of the Corporation, as determined from
time to time by the Board of Directors and stated in the resolution or
resolutions provided for the issuance thereof, prior to the issuance
of any shares thereof. The Board of Directors shall have the authority
to fix and determine, subject to the provisions hereof, the rights and
preferences of the shares of any series so established.
All of the issued and unissued shares of Common Stock, without par value, of the
Corporation are deemed to have been converted effective as of the date of the
effectiveness hereof into shares of Common Stock, par value one tenth of one
cent ($0.001), of the Corporation.
<PAGE>
E. Subject to the provisions of the Business Corporation Act, the number of
Directors constituting the entire Board shall be not less than 3 and shall
be not more than 11. Subject to such limitations and the Directors' acting
under a specific provision of the bylaws so authorizing them, such number
shall be fixed by resolution of the Board and such number shall be
increased or decreased by the vote of a majority of the entire Board. No
decrease in the number of Directors shall have the effect of shortening the
term of any incumbent Director.
F. To the full extent that the Business Corporation Act, as it existed on
March 4, 1994 or may thereafter be amended, permits the limitation or
elimination of the liability of Directors, a Director of the Corporation
shall not be liable to the Corporation or its shareholders for monetary
damages for breach of fiduciary duty as a Director. Any amendment to or
repeal of this Section F shall not adversely affect any right or protection
of a Director of the Corporation for or with respect to any acts or
omissions of such Director occurring prior to such amendment or repeal.
G.1. except as otherwise expressly provided by law or by paragraphs 2 and 3
below, a majority of shares entitled to vote, represented in person or by
proxy, shall constitute a quorum at a meeting of shareholders.
2. For the purposes of consideration of and voting on any business that:
(a) is submitted to the shareholders at any meeting; and
(b) has been recommended by a majority of Continuing Directors (as defined
below) for approval by the shareholders;
one-third of the shares entitled to vote, represented in person or by
proxy, shall constitute a quorum at a meeting of shareholders for the
purpose of such consideration and voting.
"Continuing Directors" shall mean the incumbent members of the Board of
Directors of the Corporation that were members of recommended by a majority
of the Continuing Directors.
3. For the purposes of considering and voting on the election of Directors at
any meeting, the quorum requirement stipulated in paragraph 1 shall apply
unless all nominees for election as Directors are persons recommended by a
majority of Continuing Directors. If such nominees are so recommended, the
quorum requirement stipulated in paragraph 2 shall apply.
H. No holder of any shares of the Corporation shall have any pre-emptive right
to subscribe for, purchase or receive any shares of the Corporation,
whether now or hereafter authorized, or any securities convertible into or
carrying options to purchase any such shares of the Corporation, or any
options or rights to purchase any such shares or securities, issued or sold
by the Corporation for cash or any other form of consideration or without
consideration, and no notice of any such right need be given to any
shareholder of the Corporation, but any such shares, securities, options or
rights may be issued or disposed of by the Board of Directors to such
persons and on such terms as the Board of Directors in its discretion shall
deem advisable.
These Amended and Restated Articles of Incorporation were authorized by
resolution of the shareholders of the Corporation entitled to vote thereon.
IN WITNESS WHEREOF the undersigned has executed these Amended and Restated
Articles of Incorporation this 6th day of September, 1999.
A.F. Coady, Executive Vice-President and Secretary
On this 7th day of September, 1999 before me personally came Mr. A.F. Coady
known to be the individual described in and who executed the foregoing
instrument and he duly acknowledged to me that the execution thereof was his act
and deed.
Charles Mackey
Attorney-at-Law
Notary Public
Nassau, Bahamas
Date: September 7, 1999
EXHIBIT 2.2
ARTICLES OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
TEEKAY SHIPPING CORPORATION
UNDER SECTION 9.5 OF THE BUSINESS CORPORATION ACT
I, the undersigned, the Executive Vice-President and the Secretary of Teekay
Shipping Corporation, a corporation incorporated under the laws of the Republic
of Liberia, (the "Corporation"), for the purpose of amending the Articles of
Incorporation of said corporation hereby certify:
1. The name of the Corporation is TEEKAY SHIPPING CORPORATION. The Corporation
was formed under the name VIKING STAR SHIPPING INC.
2. The Articles of Incorporation were filed with the Minister of Foreign
Affairs as of February 9, 1979.
3. Articles of Amendment of Section E of the Articles of Incorporation were
filed with the Minister of Foreign Affairs as of December 29, 1986.
4. Articles of Amendment of Section E of the Articles of Incorporation were
filed with the Minister of Foreign Affairs as of November 23, 1988.
5. Articles of Amendment of Section E of the Articles of Incorporation were
filed with the Minister of Foreign Affairs as of May 12, 1990.
6. Articles of Amendment of Section E of the Articles of Incorporation were
filed with the Minister of Foreign Affairs as of July 23, 1991.
7. Articles of Amendment of Section E of the Articles of Incorporation were
filed with the Minister of Foreign Affairs as of July 8, 1992.
8. Articles of Amendment of Section E and H and the addition of Section J to
the Articles of Incorporation were filed with the Minister of Foreign
Affairs as of March 11,1994.
9. Articles of Amendment of Section B of the Articles of Incorporation were
filed with the Minister of Foreign Affairs as of April 7, 1995.
10. Amended and Restated Articles of Incorporation were filed with the Minister
of Foreign Affairs as of September 29,1999.
11. Section C of the Articles of Incorporation is hereby amended and restated
in its entirety as follows:
The corporation shall change its place of business to the Republic of
The Marshall Islands, redomesticating therein. The registered address
of the Corporation in the Marshall Islands shall be Trust Company
Complex, Ajeltake Islands, P.O. Box 1405, Majuro, Marshall Islands MH
96960. The name of the Corporation's Registered Agent at such address
shall be The Trust Company of the Marshall Islands, Inc.
<PAGE>
The amendment to the Articles of Incorporation was authorized by written consent
of the directors of the Corporation.
IN WITNESS WHEREOF the undersigned have executed these Articles of Amendment
this 6th day of December, 1999.
___________________________
Name: Arthur F. Coady
Title: Executive Vice-President and Secretary
NOTARY
CITY OF NASSAU )
COUNTRY OF ) SS:
THE BAHAMAS )
On this 6th day of December, 1999, before me personally came Arthur F. Coady
known to me to be the individual described in and who executed the foregoing
instrument and he duly acknowledged to me that the execution thereof was the act
and deed of the Corporation.
___________________________
Notary Public
EXHIBIT 2.3
TEEKAY SHIPPING CORPORATION
AMENDED AND RESTATED BYLAWS
DATED AS OF JUNE 15, 1999
1.00 OFFICES
The registered office of the Corporation shall be at 80 Broad Street,
Monrovia, Liberia. The Corporation may also have an office or offices at such
other places within or outside Liberia as the Board of Directors may from time
to time designate or the business of the Corporation may require.
2.00 SHAREHOLDERS
2.01 Annual Meeting. The annual meeting of shareholders shall be held on
such day, and at such time and place within or outside Liberia as the Directors
may from time to time determine, for the purpose of electing Directors and
transacting such other business as may properly be brought before the meeting.
Only such business shall be conducted at an annual meeting of shareholders as
shall have been properly brought before the meeting. To be properly brought
before an annual meeting, business must be (a) specified in the notice of
meeting (or any supplement thereto) given by or at the direction of the Board of
Directors, (b) otherwise properly brought before the meeting by or at the
direction of the Board of Directors, or (c) otherwise properly brought before
the meeting by a shareholder or shareholders of the Corporation holding in the
aggregate not less than 15% of the shares having the right to vote at the
meeting. For business to be properly brought before an annual meeting by such
shareholder or shareholders, the shareholder or shareholders must have given
timely notice thereof in writing to the Secretary. To be timely, a shareholder's
or shareholders' notice must be delivered to or mailed and received at the
principal office of the Corporation not less than 60 days nor more than 90 days
prior to the meeting; provided, that in the event that less than 70 days' notice
of the date of the meeting is given to the shareholders, notice by the
shareholder or shareholders to be timely must be so received not later than the
close of business on the seventh day following the day on which such notice of
the date of the meeting was mailed. A shareholder's or shareholders' notice to
the Secretary shall set forth (a) as to each matter the shareholder or
shareholders propose to bring before the annual meeting, a brief description of
the business proposed to be brought before the annual meeting, the language of
the proposal, if appropriate, and the reasons for conducting such business at
the annual meeting, (b) the name and address, as they appear on the
Corporation's books, of the shareholder or shareholders proposing such business,
(c) a representation that the shareholder or shareholders hold in the aggregate
not less than 15% of the shares having the right to vote at the meeting and a
statement of the class and number of shares of the Corporation which are
beneficially owned by the shareholder or shareholders, (d) any material interest
of the shareholder or shareholders in such business, and (e) a representation
that the shareholder or shareholders intend to appear in person or by proxy at
the meeting to present the business specified in the notice. Notwithstanding
anything in these Bylaws to the contrary, no business shall be conducted at any
annual meeting except in accordance with the procedures set forth in this
Section 2.01. The Board of Directors or the Chairman of the meeting shall, if
the facts warrant, determine (i) that a proposal does not constitute proper
business to be transacted at the meeting, or (ii) that business was not properly
brought before the meeting in accordance with the provisions of this Section
2.01, and, if it is so determined, in either case, any such business shall not
be transacted. The procedures set forth in this Section 2.01 for business to be
properly brought before an annual meeting by a shareholder or shareholders are
in addition to, and not in lieu of, provisions of applicable law, rules and
regulations.
2.02 Special Meetings. Special meetings of shareholders, unless otherwise
prescribed by law, may be called for any purpose at any time by order of the
Board of Directors. Such meetings shall be held at such place, date and time as
may be designated in the notice thereof.
2.03 Notice of Meetings. Notice of every meeting of shareholders (other
than any meeting the giving of notice of which is otherwise prescribed by law)
stating the date, time, place and purpose thereof, and in the case of special
meetings, the name of the person or persons at whose direction the notice is
being issued, shall be given personally or sent by courier service, mail, telex,
cable or facsimile at least fifteen but not more than sixty days before such
meeting, to each shareholder of record entitled to vote thereat and to each
shareholder of record who, by reason of any action proposed at such meeting
would be entitled to have his or her shares appraised if such action were taken,
and the notice shall include a statement of that purpose and to that effect.
Notice of a special meeting shall state the purpose of the proposed special
meeting and the business transacted at any special meeting shall be limited
accordingly. If mailed, notice shall be deemed to have been given when deposited
in the mail, directed to the shareholder at his or her address as the same
appears on the record of shareholders of the Corporation. Notice of a meeting
need not be given to any shareholder who submits a signed waiver of notice,
whether before or after the meeting, or who attends the meeting without
protesting, prior to the conduct of any voting thereat, the lack of notice to
him or her. Accidental omission to give notice of a meeting to, or the
non-receipt of notice of a meeting by, any shareholder shall not invalidate the
proceedings of that meeting.
When a meeting is adjourned to another time or place, it shall not be
necessary, unless the meeting was adjourned for lack of a quorum or unless the
Board fixes a new record date for the adjourned meeting, to give any notice of
the adjourned meeting if the time and place to which the meeting is adjourned
are announced at the meeting at which the adjournment is taken. At such
adjourned meeting, any business may be transacted that might have been
transacted on the original date of the meeting.
2.04 Quorum and Voting. Except as otherwise expressly provided by law or by
the Articles of Incorporation, a majority of shares entitled to vote,
represented in person or by proxy, shall constitute a quorum at a meeting of
shareholders.
If a quorum is present, and except as otherwise expressly provided by law,
by the Articles of Incorporation or by the Bylaws, the affirmative vote of a
majority of the shares of stock represented at the meeting shall be the act of
the shareholders. At any meeting of shareholders, each shareholder entitled to
vote thereat shall be entitled to one vote for each such share, and may so vote
either in person or by proxy appointed by instrument in writing (including
facsimile), signed by the shareholder or the shareholder's attorney-in-fact.
Except as otherwise expressly provided by law, every proxy is revocable at the
pleasure of the shareholder executing it. Voting shall be by show of hands,
unless a poll or written ballot is directed by the Chairman. Any action required
or permitted to be taken at a meeting may be taken without a meeting if a
written consent, setting forth the action so taken, is signed by all of the
shareholders entitled to vote with respect to the subject matter thereof.
2.05 Right to Vote and Fixing of Record Date. The Board of Directors may
fix a time not more than sixty days nor less than fifteen days prior to the date
of any meeting of shareholders, or more than sixty days prior to the last day on
which the consent or dissent of shareholders may be expressed for any purpose
without a meeting, as the time as of which shareholders entitled to notice of
and to vote at such meeting or whose consent or dissent is required or may be
expressed for any purpose, as the case may be, shall be determined, and all
persons who were holders of record of voting shares at such time, and no others,
shall be entitled to notice of and to vote at such meeting or to express their
consent or dissent, as the case may be.
The Board of Directors may fix a time not exceeding sixty days preceding
the date fixed for the payment of any dividend, the making of any distribution,
the allotment of any rights or the taking of any other action, as a record time
for the determination of the shareholders entitled to receive any such dividend,
distribution or allotment or for the purpose of such other action.
With respect to holders of shares entitled to vote at the meeting, such
shareholders shall present thereat proof of identity satisfactory to the
secretary of the meeting.
If a holder of shares desires to vote by proxy, such proxy nominee shall
present proof of identity satisfactory to the secretary of the meeting. No proxy
shall be valid after the expiration of eleven months from the date of its
execution unless the shareholder executing it shall have specified therein a
longer time during which it is to continue in force.
2.06 Attendance by Directors, etc. The Directors, the officers, the
auditors and the solicitors of the Corporation shall be entitled to attend at
any meeting of shareholders but no such person shall be counted in the quorum or
be entitled to vote at any meeting of shareholders unless such person shall be a
member or proxyholder entitled to vote thereat.
3.00 BOARD OF DIRECTORS
3.01 Numbers. Subject to and in accordance with the provisions of Section
6.3 of the Liberian Business Corporation Act ("LBCA"), the number of Directors
constituting the entire Board shall be not less than 3 and shall be not more
than 11. Subject to such limitations, such number shall be fixed by resolution
of the Board and such number shall be increased or decreased from time to time
by vote of a majority of the entire Board. No decrease in the number of
Directors shall have the effect of shortening the term of any incumbent
Director.
3.02 How Elected; Classification. Prior to such time as the Corporation has
a classified Board of Directors in accordance with the following provisions
hereof, the Directors of the Corporation shall be elected at the annual meeting
of shareholders. At the first annual meeting of shareholders (the "First
Election Meeting") at which the shareholders of the Corporation approve thereof,
the Board shall be divided into three classes. Each class shall be as nearly
equal in number as possible and no class shall include fewer than three
Directors. Subject to the foregoing and to the LBCA, the Board of Directors may
assign the Directors to the classes in any manner. At the First Election
Meeting, the number of Directors constituting the entire Board shall be elected
in such three classes: the first class to be composed of three (or more, if
applicable) Directors who shall be elected to hold office for a term expiring at
the close of the first annual meeting of shareholders following the First
Election Meeting; the second class to be composed of three (or more, if
applicable) Directors who shall be elected to hold office for a term expiring at
the close of the second annual meeting of shareholders following the First
Election Meeting; and the third class to be composed of three (or more, if
applicable) Directors who shall be elected to hold office for a term expiring at
the close of the third annual meeting of shareholders following the First
Election Meeting.
At each annual meeting of shareholders of the Corporation following the
First Election Meeting (each a "Subsequent Election Meeting"), three (or more,
if applicable) Directors to replace those whose terms expire shall be elected to
hold office for a term expiring at the close of the third annual meeting of
shareholders following the particular Subsequent Election Meeting.
Notwithstanding the foregoing, each Director shall be elected to serve until his
or her successor shall have been duly elected and qualified, except in the event
of his or her death, resignation, removal or the earlier termination of his or
her term of office. A Director whose term of office expires shall be eligible
for re-election.
3.03 Procedure for Nomination. Only persons who are nominated in accordance
with the procedures set forth in this Section 3.03 shall be eligible for
election as Directors by the shareholders. Nominations of persons for election
to the Board of Directors may be made at an annual meeting of shareholders by or
at the direction of the Board of Directors or by a shareholder or shareholders
of the Corporation holding in the aggregate not less than 15% of the shares
having the right to vote for the election of Directors at the meeting who
complies or comply with the notice procedure set forth in this Section 3.03.
Such nominations, other than those made by or at the direction of the Board of
Directors, shall be made pursuant to timely notice in writing to the Secretary.
To be timely, a shareholder's or shareholders' notice shall be delivered to or
mailed and received at the principal office of the Corporation not less than 60
days nor more than 90 days prior to the meeting; provided that in the event less
than 70 days' notice of the date of the meeting is given to shareholders, notice
by the shareholder or shareholders to be timely must be so received not later
than the close of business on the seventh day following the day on which such
notice of the date of the meeting was mailed. Such shareholder's or
shareholders' notice shall set forth (a) as to each person whom the shareholder
or shareholders propose to nominate for election as a Director, (i) the name,
age, business and residence address of such person, (ii) the principal
occupation or employment of such person, (iii) the class and number of shares of
the Corporation that are beneficially owned by such person, and (iv) any other
information relating to such person that is required to be disclosed in
solicitations of proxies for election of Directors, or is otherwise required, in
each case pursuant to Regulation 14A under the Securities Exchange Act of 1934,
as amended (including without limitation such person's written consent to being
named in the proxy statement as a nominee and to serving as a Director if
elected); and (b) as to the shareholder or shareholders giving the notice (i)
the name and address, as they appear on the Corporation's books, of such
shareholder or shareholders, (ii) a representation that the shareholder or
shareholders hold in the aggregate not less than 15% of the shares having the
right to vote for the election of Directors at the meeting and statement of the
class and number of shares of the Corporation that are beneficially owned by
such shareholder or shareholders, and (iii) a representation that the
shareholder or shareholders intend to appear in person or by proxy at the
meeting to make the nomination specified in the notice. At the request of the
Board of Directors, any person nominated by the Board of Directors for election
as a Director shall furnish to the Secretary that information required to be set
forth in a shareholder's or shareholders' notice of nomination. The Board of
Directors or the Chairman of the meeting shall, if the facts warrant, determine
that a nomination was not made in accordance with the procedures prescribed by
these Bylaws, and, if it is so determined, the defective nomination shall be
disregarded. The procedures set forth in this Section 3.03 for nomination for
the election of Directors by shareholders are in addition to, and not in
limitation of, any procedures now in effect or hereafter adopted by or at the
direction of the Board of Directors or any committee thereof.
3.04 Newly Created Directorships and Vacancies. Newly created Directorships
resulting from an increase in the number of Directors and vacancies occurring in
the Board for any reason, including the failure of the shareholders to elect the
entire Board at any election of Directors, may be filled by a vote of a majority
of the Directors then in office, although less than a quorum exists. A Director
elected to fill a vacancy (other than a vacancy resulting from an increase in
the number of Directors) becomes a member of the same class as his or her
predecessor.
3.05 Removal of Directors and resignations.
1. Any or all of the Directors may be removed for cause by vote of a majority
of Directors constituting the entire Board of Directors, or by vote of the
shareholders.
2. Any Director may resign at any time by giving written notice to the
President or the Secretary of the Corporation. Such resignation shall take
effect at the time specified therein; and unless otherwise specified
therein the acceptance of such resignation shall not be necessary to make
it effective.
3. Except as otherwise provided by the LBCA, no act or proceeding of the
Directors is invalid by reason only of there being less than the designated
number of Directors in office.
3.06 Organization. At each meeting of the Board of Directors, the President
or, in the absence of the President, a chairman chosen by a majority of the
Directors present shall preside, and the Secretary of the Corporation or, in the
absence of the Secretary, a person appointed by the chairman of the meeting
shall act as secretary. The Board of Directors may adopt such rules as they
shall deem proper, not inconsistent with law or with these Bylaws, for the
conduct of their meetings and the management of the affairs of the Corporation.
At all meetings of the Board of Directors, business shall be transacted in such
order as the Board may determine.
3.07 Regular Meetings. Regular meetings of the Board of Directors may be
held at such time and place as may be determined by resolution of the Board of
Directors and no notice shall be required for any regular meeting. Except as
otherwise provided by law, any business may be transacted at any regular
meeting.
3.08 Special Meetings. Special meetings of the Board of Directors may,
unless otherwise prescribed by law, be called from time to time by the
President, or any officer of the Corporation who is also a Director. The
President or the Secretary shall call a special meeting of the Board upon
written request directed to either of them by any two Directors stating the
time, place and purpose of such special meeting. Special meetings of the Board
shall be held on such date, and at such time and place, as may be designated in
the notice thereof by the officer calling the meeting.
3.09 Notice of Special Meetings. Notice of the date, time and place of each
special meeting of the Board of Directors shall be given to each Director at
least forty-eight hours prior to such meeting, unless the notice is given orally
or delivered in person, in which case it shall be given at least twenty-four
hours prior to such meeting. For the purpose of this section, notice shall be
deemed to be duly given to a Director if given to him or her personally
(including by telephone) or if such notice be delivered to such Director by
courier service, mail, telegraph, cable, telex, or facsimile, to his or her last
known address. Notice of a meeting need not be given to any Director who submits
a signed waiver of notice, whether before or after the meeting, or who attends
the meeting without protesting, prior to the conduct of any voting thereat, the
lack of notice to him or her.
3.10 Annual Meetings. An annual meeting of the Board of Directors shall be
held in each year after the adjournment of the annual shareholders meeting and
on the same day. If a quorum of the Directors is not present on the day
appointed for the annual meeting, the meeting shall be adjourned to some
convenient day.
3.11 Participation by Conference Telephone. The Board of Directors or any
committee thereof may participate in a meeting of such Board or committee by
means of conference telephone or similar communication equipment by means of
which all persons participating in the meeting can hear each other, and
participation in a meeting pursuant to this section shall constitute presence in
person at such meeting.
3.12 Quorum. Except as otherwise provided by the LBCA, a majority of the
Directors at the time in office, present in person or by proxy given to another
Director or conference telephone, shall constitute a quorum for the transaction
of business.
3.13 Voting. The vote of the majority of the Directors, present in person
or by proxy given to another Director or conference telephone, at a meeting of
the Board or a committee thereof at which a quorum is present shall be the act
of the Board or the committee, as the case may be. Any action required or
permitted to be taken at a meeting may be taken without a meeting if all members
of the Board or the committee consent thereto in writing.
3.14 Compensation. The Board may from time to time, in its discretion, fix
the amounts which shall be payable to members of the Board of Directors for
attendance at the meetings of the Board or of any committee and for services
rendered to the Corporation.
4.00 COMMITTEES
4.01 Executive Committee. The Board of Directors may, by resolution adopted
by a majority vote of the entire Board, designate two or more of the members of
the Board to constitute an Executive Committee. The Executive Committee shall
have and may exercise, so far as may be permitted by law, and to the extent
provided in said resolution and these Bylaws, all of the powers of the Board in
the management of the affairs and property of the Corporation and the exercise
of its corporate powers, and shall have power to authorize the seal of the
Corporation to be affixed to all papers which may require it; but the Executive
Committee shall not have power to fill vacancies in the Board, or to change the
membership of, or to fill vacancies in, the Executive Committee, or any other
committee or to amend or repeal Bylaws or adopt new Bylaws, or to submit to
shareholders any action requiring their authorization, or to fix Directors'
compensation for serving on the Board or on the Executive Committee or any other
committee, or to amend or repeal any resolutions of the Board which by their
terms shall not be so amendable or repealable. The Board shall have the power at
any time to fill vacancies in, to change the membership of, or to dissolve, the
Executive Committee with or without cause. The Executive Committee may hold
meetings and make rules for the conduct of its business as it shall from time to
time deem necessary. A majority of the members of the Executive Committee shall
constitute a quorum. All action of the Executive Committee shall be reported to
the Board at its meeting next succeeding such action.
4.02 Other Committees. The Board of Directors may, in its discretion, by
resolution adopted by a majority vote of the entire Board, appoint other
committees composed of two or more Directors which shall have and may exercise
such powers as shall be conferred or authorized by the resolution appointing
them. A majority of any such committee may determine its action and fix the time
and place of its meetings, unless the Board of Directors shall otherwise
provide. The Board shall have power at any time to change the membership of any
such committee, to fill vacancies, and to discharge any such committee with or
without cause. Each committee shall keep a record of its proceedings and report
the same to the Board when required. No committee shall have the power to fill
vacancies in the Board, or to change the membership of or to fill vacancies in,
the Executive Committee or any other committee, or to amend or repeal Bylaws or
adopt new Bylaws, or to submit to shareholders any action requiring their
authorization, or to fix Directors' compensation for sitting on the Board or the
Executive Committee or any other committee, or to amend or repeal any resolution
of the Board which by its terms shall not be amendable or repealable.
5.00 OFFICERS
5.01 Number and Designations. The Board of Directors shall elect a
President, Secretary and Treasurer and such other officers as it may deem
necessary. Officers may be of any nationality and need not be residents of
Liberia. The officers shall be elected annually by the Board of Directors at its
first meeting following the annual election of Directors, but in the event of
the failure of the Board to so elect any officer, such officer may be elected at
any subsequent meeting of the Board of Directors. The salaries of officers and
any other compensation paid to them shall be fixed from time to time by the
Board of Directors. The Board of Directors may elect additional officers at any
meeting.
Each officer shall hold office until the first meeting of the Board of
Directors following the next annual election of Directors and until his or her
successor shall have been duly elected and qualified, except in the event of the
earlier termination of his or her term of office, through death, resignation,
removal or otherwise.
Any officer may be removed by the Board at any time with or without cause.
Any vacancy in an office may be filled for the unexpired portion of the term of
such office by the Board of Directors at any regular or special meeting.
5.02 President. The President shall be the chief executive officer of the
Corporation and shall have the general management of the affairs of the
Corporation together with the powers and duties usually incident to the office
of President, except as specifically limited by appropriate resolution of the
Board of Directors, and shall have such other powers and perform such other
duties as may be assigned to him or her by the Board of Directors. The President
shall preside at all meeting of shareholders at which he or she is present.
5.03 Secretary. The Secretary shall act as Secretary of all meetings of the
shareholders and of the Board of Directors at which he or she is present, shall
have supervision over the giving and serving of notices of the Corporation,
shall be the custodian of the corporate records and the corporate seal of the
Corporation, shall be empowered (together with the other officers of the
Corporation) to affix the corporate seal to those documents, the execution of
which, on behalf of the Corporation under its seal, is duly authorized and when
so affixed may attest the same, and shall exercise the powers and perform such
other duties as may be assigned to him or her by the Board of Directors or the
President.
5.04 Treasurer. The Treasurer shall have general supervision over the care
and custody of the funds, securities, and other valuable effects of the
Corporation and shall deposit the same or cause the same to be deposited in the
name of the Corporation in such depositories as the Board of Directors may
designate, shall disburse the funds of the Corporation as may be ordered by the
Board of Directors, shall have supervision over the accounts of all receipts and
disbursements of the Corporation, shall, whenever required by the Board, render
or cause to be rendered financial statements of the Corporation, shall have the
power and perform the duties usually incident to the office of Treasurer, and
shall have such powers and perform such other duties as may be assigned to him
or her by the Board of Directors or President.
5.05 Other Officers. Officers other than those treated in Sections 5.02
through 5.04 of these Bylaws shall exercise such powers and perform such duties
as may be assigned to them by the Board of Directors or the President.
5.06 Attorneys-in-Fact. The Board of Directors shall have the power to
appoint attorneys-in-fact for the Corporation with such powers (including the
power of substitution) as the Board of Directors shall deem appropriate.
5.07 Bond. The Board of Directors shall have power to the extent permitted
by law, to require any officer, agent or employee of the Corporation to give
bond for the faithful discharge of his or her duties in such form and with such
surety or sureties as the Board of Directors may deem advisable.
6.00 CERTIFICATES FOR SHARES
6.01 Form and Issuance. The shares of the Corporation shall be represented
by certificates in form meeting the requirements of law and approved by the
Board of Directors. Certificates shall be signed by (a) the President or any
Vice-President, and (b) by the Secretary or an Assistant Secretary or the
Treasurer. The signatures of the officers upon a certificate may be facsimiles
if the certificate is countersigned by a transfer agent or registered by a
registrar other than the Corporation itself or its employees. In case of any
officer who has signed or whose facsimile signature had been placed upon a
certificate shall have ceased to be such officer before such certificate is
issued, it may be issued by the Corporation with the same effect as if he or she
were such officer at the date of issue.
6.02 Transfers. The Board of Directors shall have power and authority to
make such rules and regulations as they may deem expedient concerning the
issuance, registration and transfer of certificates representing shares of the
Corporation's stock. The transfer of shares issued to bearer shall be by
delivery of the certificate or certificates representing such shares.
6.03 Share Register. The Corporation shall maintain a share register to be
kept on file in any office of the Corporation or any office of a registrar or
transfer agent.
6.04 Lost or Destroyed Certificates. No certificates for shares of stock of
the Corporation shall be issued in place of any certificate alleged to have been
lost, stolen or destroyed, except upon production of such evidence of the loss,
theft or destruction and upon indemnification of the Corporation and its agents
to such extent and in such manner as the Board of Directors may require.
7.00 DIVIDENDS
Dividends may be declared in conformity with law by, and at the discretion
of, the Board of Directors at any regular or special meeting. Dividends may be
declared and paid in cash, stock or other property of the Corporation.
8.00 MISCELLANEOUS PROVISIONS
8.01 Fiscal Year. The fiscal year of the Corporation shall begin on January
1st of each year and shall end on the last day of December following.
8.02 Checks and Notes. All checks and drafts on the Corporation's bank
accounts and all bills of exchange and promissory notes and all acceptances,
obligations and other instruments for the payment of money, shall be signed by
such officer or officers or agent or agents as shall be thereunto authorized
from time to time by the Board of Directors.
8.03 Corporate Seal. The corporate seal shall have inscribed therein the
name of the Corporation and such other information as the Board of Directors may
from time to time determine. In lieu of such corporate seal, when so authorized
by the Board of Directors or a duly empowered committee thereof, a facsimile
thereof may be impressed or affixed or reproduced.
9.00 AMENDMENTS
9.01 By The Shareholders. These Bylaws may be amended, added to, altered or
repealed, or new Bylaws may be adopted, at any meeting of shareholders of the
Corporation by the affirmative vote of the holders of a majority of the stock
present and voting at such meeting, provided notice that an amendment is to be
considered and acted upon is inserted in the notice or waiver of notice of said
meeting.
9.02 By The Directors. These Bylaws may be amended, added to, altered, or
repealed, or new Bylaws may be adopted, at any regular or special meeting of the
Board of Directors by the affirmative vote of a majority of the entire Board,
subject, however, to the power of the shareholders to alter, amend or repeal any
Bylaw so adopted.
10.00 INDEMNIFICATION
10.01 Right To Indemnification. Each person who was or is made a party to
or is otherwise involved (including, without limitation, as a witness) in any
actual or threatened action, suit or proceeding, whether civil, criminal,
administrative or investigative (hereinafter a "proceeding"), by reason of the
fact that he or she is or was a Director or officer of the Corporation or that,
being or having been such a Director or officer or an employee of the
Corporation, he or she is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to an
employee benefit plan (hereinafter an "indemnitee"), whether the basis of such
proceeding is alleged action in an official capacity as such a Director,
director, officer, employee or agent or in any other capacity while serving as
such a Director, director, officer, employee or agent, shall be indemnified and
held harmless by the Corporation to the full extent permitted by the LBCA, as
the same exists or may hereafter be amended (but, in the case of any such
amendment, only to the extent that such amendment permits the Corporation to
provide broader indemnification rights than permitted prior thereto), or by
other applicable law as then in effect, against all expense, liability and loss
(including attorneys' fees, judgments, fines and ERISA excise taxes or penalties
and amounts paid in settlement) actually and reasonably incurred or suffered by
such indemnitee in connection therewith and such indemnification shall continue
as to an indemnitee who has ceased to be a Director, director, officer, employee
or agent and shall inure to the benefit of the indemnitee's heirs, executors and
administrators; provided however, that except as provided in subsection 10.02
hereof with respect to proceedings seeking to enforce rights to indemnification,
the Corporation shall indemnify any such indemnitee in connection with a
proceeding (or part thereof) initiated by such indemnitee only if such
proceeding (or part thereof) was authorized or ratified by the Board of
Directors. The right to indemnification conferred in this subsection 10.01 shall
be a contract right and shall include the right to be paid by the Corporation
the expenses incurred in defending any such proceeding in advance of its final
disposition (hereinafter an "advancement of expenses"); provided however that if
the LBCA requires, an advancement of expenses incurred by an indemnitee in his
or her capacity as a Director or officer (and not in any other capacity in which
service was or is rendered by such indemnitee, including, without limitation,
service to an employee benefit plan) shall be made only upon delivery to the
Corporation of an undertaking (hereinafter an "undertaking"), by or on behalf of
such indemnitee, to repay all amounts so advanced if it shall ultimately be
determined by final judicial decision from which there is no further right to
appeal that such indemnitee is not entitled to be indemnified for such expenses
under this subsection 10.1 or otherwise.
10.02 Right Of Indemnitee To Bring Suit. If a claim under subsection 10.01
hereof is not paid in full by the Corporation within sixty days after a written
claim has been received by the Corporation, except in the case of a claim for an
advancement of expenses, in which case the applicable period shall be twenty
days, the indemnitee may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim. If successful in whole or
in part in any such suit, or in a suit brought by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the indemnitee
shall be entitled to be paid also the expense of prosecuting or defending such
suit. The indemnitee shall be presumed to be entitled to indemnification under
this Section upon submission of a written claim (and, in an action brought to
enforce a claim for an advancement of expenses, where the required undertaking,
if any is required, has been tendered to the Corporation), and thereafter the
Corporation shall have the burden of proof to overcome the presumption that the
indemnitee is not so entitled. Neither the failure of the Corporation (including
its Board of Directors, independent legal counsel or its stockholders) to have
made a determination prior to the commencement of such suit that indemnification
of the indemnitee is proper in the circumstances nor an actual determination by
the Corporation (including its Board of Directors, independent legal counsel or
its stockholders) that the indemnitee is not entitled to indemnification shall
be a defense to the suit or create a presumption that the indemnitee is not so
entitled.
10.03 Non-exclusivity Of Rights. The rights to indemnification and to the
advancement of expenses conferred in this Section shall not be exclusive of any
other right which any person may have or hereafter acquire under any statute,
agreement, vote of stockholders or disinterested Directors, provisions of the
Certificate of Incorporation or Bylaws of the Corporation, or otherwise.
10.04 Insurance, Contracts and Funding. The Corporation may maintain
insurance, at its expense, to protect itself and any Director, director,
officer, employee or agent of the Corporation or another corporation,
partnership, joint venture, trust or other enterprise against any expense,
liability or loss, whether or not the Corporation would have the power to
indemnify such person against such expense, liability or loss under the LBCA.
The Corporation without further stockholder approval, may enter into contracts
with any Director, director, officer, employee or agent in furtherance of the
provisions of this Section and may create a trust fund, grant a security
interest or use other means (including, without limitation, a letter of credit)
to ensure the payment of such amounts as may be necessary to effect
indemnification as provided in this Section.
10.05 Indemnification of Employee and Agents of the Corporation. The
Corporation may, by action of the Board of Directors, grant rights to
indemnification and advancement of expenses to employees or agents or groups of
employees or agents of the Corporation with the same scope and effect as the
provisions of this Section with respect to the indemnification and advancement
of expenses of Directors and officers of the Corporation; provided however, that
an undertaking shall be made by an employee or agent only if required by the
Board.
10.06 Persons Serving Other Entities. Any person who is or was a Director,
officer or employee of the Corporation who is or was serving as a director or
officer of another corporation of which a majority of the shares entitled to
vote in the election of its directors is held by the Corporation shall be deemed
to be so serving at the request of the Corporation and entitled to
indemnification and advancement of expenses under subsection 10.01 hereof.
EXHIBIT 2.34
AGREEMENT FOR
A
U.S. $30,000,000 TERM LOAN
FACILITY
TO BE MADE AVAILABLE TO
VSSI AUSTRALIA LIMITED
BY
RABO AUSTRALIA LIMITED
(ACN 060 452 217)
April __, 1997
INDEX
PAGE
CLAUSE 1 DEFINITIONS .................................................. 1
1.1 Defined Terms..................................... 1
1.2 Construction...................................... 5
1.3 Accounting Terms.................................. 5
CLAUSE 2 REPRESENTATIONS AND WARRANTIES................................. 5
2.1(a) Due Organization and Power........................ 6
2.1(b) Authorization and Consents........................ 6
2.1(c) Binding Obligations............................... 6
2.1(d) No Violation...................................... 6
2.1(e) Litigation........................................ 6
2.1(f) No Default........................................ 7
2.1(g) Financial Statements.............................. 7
2.1(h) Tax Returns and Payments.......................... 7
2.1(i) Insurance......................................... 7
2.1(j) Offices........................................... 7
2.1(k) Equity Ownership.................................. 7
2.1(l) Limited Purpose................................... 7
2.1(m) Confirmation...................................... 8
2.1(n) Survival.......................................... 8
CLAUSE 3 THE LOAN .................................................. 8
3.1(a) Purposes.......................................... 8
3.1(b) Loan ............................................. 8
3.2 Drawdown Notice................................... 8
3.3 Effect of Drawdown Notice......................... 8
CLAUSE 4 CONDITIONS PRECEDENT........................................... 8
4.1 Conditions Precedent to Drawdown of the
Loan ........................................... 8
4.2 Further Conditions Precedent...................... 10
CLAUSE 5 REPAYMENT AND PREPAYMENT ...................................... 11
5.1 Repayment......................................... 11
5.2 Voluntary Prepayment.............................. 11
5.3 Application of Prepayments........................ 11
CLAUSE 6 INTEREST AND RATE.............................................. 11
6.1 Interest Rate; Default Rate....................... 11
6.2 Interest Periods.................................. 12
6.3 Interest Payments................................. 12
6.4 Calculation of Interest........................... 12
CLAUSE 7 PAYMENTS .................................................. 12
7.1 Place of Payments, No Set Off..................... 12
7.2 Tax Credits....................................... 14
CLAUSE 8 EVENTS OF DEFAULT............................................... 14
8.1(a) Repayment......................................... 14
8.1(b) Other Payments.................................... 14
8.1(c) Representations, etc.............................. 14
8.1(d) Impossibility, Illegality......................... 14
8.1(e) Covenants......................................... 14
8.1(f) Indebtedness...................................... 15
8.1(g) Stock Ownership................................... 15
8.1(h) Default under the Reimbursement
Agreement and First Loan Agreement.............. 15
8.1(i) Bankruptcy........................................ 15
8.1(j) Sale of Assets.................................... 15
8.1(k) Judgments......................................... 16
8.1(l) Inability to Pay Debts............................ 16
8.1(m) Financial Position................................ 16
8.2 Indemnification................................... 16
8.3 Application of Moneys............................. 17
CLAUSE 9 COVENANTS .................................................. 17
9.1 Covenants......................................... 17
CLAUSE 10 ASSIGNMENT 19
CLAUSE 11 ILLEGALITY, INCREASED COST,
NON-AVAILABILITY, ETC............................ 19
11.1 Illegality ..................................... 19
11.2 Increased Cost.................................... 19
11.3 Determination of Losses........................... 20
11.4 Compensation for Losses........................... 21
CLAUSE 12 CURRENCY INDEMNITY ..................................... 21
12.1 Currency Conversion............................... 21
12.2 Change in Exchange Rate........................... 21
12.3 Additional Debt Due............................... 21
12.4 Rate of Exchange.................................. 21
CLAUSE 13 FEES AND EXPENSES ..................................... 21
13.1 Expenses ..................................... 21
CLAUSE 14 APPLICABLE LAW, JURISDICTION AND WAIVER....................... 22
14.1 Applicable Law.................................... 22
14.2 Jurisdiction ..................................... 22
CLAUSE 15 NOTICES AND DEMANDS ..................................... 23
15.1 Notices ..................................... 23
CLAUSE 16 MISCELLANEOUS ..................................... 23
16.1 Time of Essence................................... 23
16.2 Unenforceable, etc., Provisions -
Effect ..................................... 24
16.3 References ..................................... 24
16.4 Further Assurances................................ 24
16.5 Entire Agreement, Amendments...................... 24
16.6 Headings ..................................... 24
EXHIBITS
A Form of Letter of Guarantee
B Form of Drawdown Notice
01029.004 #160636
TERM LOAN FACILITY AGREEMENT
THIS TERM LOAN FACILITY AGREEMENT is made as of the __th day
of April __, 1998, and is by and among:
(1) VSSI AUSTRALIA LIMITED, a corporation incorporated and
existing under the laws of the Republic of Liberia (the
"Borrower"); and
(2) RABO AUSTRALIA LIMITED (ACN 060 452 217), a corporation
incorporated and existing under the laws of New South Wales,
Australia (the "Lender").
WITNESSETH THAT:
1. DEFINITIONS
1.1 Defined Terms. In this Agreement the words and expressions specified below
shall, except where the context otherwise requires, have the meanings attributed
to them in Clause 1.1 of the Reimbursement Agreement (as defined below) or as
follows:
"Agent" shall have the meaning ascribed thereto in the Reimbursement
Agreement;
"Agreement" means this Agreement as the same shall be amended, modified or
supplemented from time to time;
"Applicable Rate" means any rate of interest on the Loan from time to time
applicable pursuant to Clause 6.1 hereof;
"Banking Day(s) shall have the meaning ascribed thereto in the
Reimbursement Agreement;
"Banks" means the "Banks" party to the Reimbursement Agreement;
"Barrington" shall have the meaning ascribed thereto in the Reimbursement
Agreement;
"Default Rate" means the rate per annum equal to the sum of the Applicable
Rate and three percent (3%);
"Dollars" shall have the meaning ascribed thereto in the Reimbursement
Agreement;
"Drawdown Date" means, the date, being a Banking Day falling not later than
May 31, 1998, upon which the Borrower shall have requested that the Loan be
made available as provided in Clause 3 hereof and;
"Drawdown Notice" shall have the meaning ascribed thereto in Clause 3.2
hereof;
"Event(s) of Default" means any of the events set out in Clause 8 hereof;
"Facility Period" means the period from the Drawdown Date to the date upon
which all amounts owing under the Loan and all other amounts due to the
Lender pursuant to this Agreement, and the Security Document become
repayable and are repaid in full or are prepaid in full;
"First Loan Agreement" shall have the meaning ascribed thereto in the
Reimbursement Agreement;
"Guarantor" Nedship Bank (America) N.V., a banking corporation incorporated
and existing under the laws of the Netherlands Antilles;
"Indebtedness" shall have the meaning ascribed thereto in the Reimbursement
Agreement;
"Interest Payment Date" means the last day of each Interest Period and, for
Interest Periods longer than three months that day falling every three
months after the commencement thereof until the end of such Interest
Periods; should any such day not be a Banking Day the relevant Interest
Payment Date shall be the next following Banking Day, unless such next
following Banking Day falls in the following calendar month, in which case
the relevant Interest Payment Date shall be the immediately preceding
Banking Day;
"Interest Period(s)" with respect to the Loan, means any period by
reference to which an interest rate is determined pursuant to Clause 6.2
hereof;
"Letter of Guarantee" means the amended and restated letter of guarantee in
respect of the obligations of (i) the Borrower under this Agreement and
(ii) the Original Borrowers under the First Loan Agreement, to be executed
by the Guarantor in favor of the Lender pursuant to Clause 4.1(d) hereof
substantially in the form of Exhibit B hereto;
"LIBOR" means, in relation to Interest Periods of three (3) or six (6)
months, the rate (rounded upward to the nearest 1/16th of one percent) for
offer rates for deposits of Dollars for a period equivalent to such period
at or about 11:00 a.m. (London time) on the second London Banking Day
before the first day of such period as displayed on Telerate page 3750
(British Bankers' Association Interest Settlement Rates) (or such other
page as may replace such page 3750 on such system or on any other system of
the information vendor for the time being designated by the British
Bankers' Association to calculate the BBA Interest Settlement Rate (as
defined in the British Bankers' Association's Recommended Terms and
Conditions ("BBAIRS" terms) dated August 1985)), provided that if on such
date no such rate is so displayed or if the Interest Period is other than
three (3) or six (6) months, LIBOR for such period shall be the arithmetic
mean (rounded upward if necessary to four decimal places) of the rates
respectively quoted to the Agent by each of the Reference Banks at the
request of the Agent as the offered rate for deposits of Dollars in an
amount approximately equal to the amount in relation to which LIBOR is to
be determined for a period equivalent to such period to prime banks in the
London Interbank Market at or about 11:00 a.m. (London time) on the second
Banking Day before the first day of such period;
"Loan" means the term loan to be made available to the Borrower by the
Lender pursuant to Clause 3.1 in the maximum principal amount of Thirty
Million Dollars (US$30,000,000) or the balance thereof from time to time
outstanding;
"Manager" means Teekay Shipping Limited, a Bahamian company and a Wholly
Owned Subsidiary of Teekay;
"Margin" is .10% per annum;
"Maturity Date" means December 17, 2005; if such day is not a Banking Day,
the next following Banking Day, unless such next following Banking Day
falls in the following calendar month, in which case the Maturity Date
shall be the immediately preceding Banking Day;
"Original Borrowers" shall have the meaning ascribed thereto in the
Reimbursement Agreement;
"Palmerston" shall have the meaning ascribed thereto in the Reimbursement
Agreement;
"Reimbursement Agreement" means the Amended and Restated Reimbursement
Agreement dated the date hereof entered into between the Borrower,
Palmerston, Barrington, VSSI Transport, Alliance, the Banks, the Agent and
the Security Trustee;
"Repayment Date" means June 17, 1998 and each of the dates falling at
intervals of six months thereafter; if such day is not a Banking Day, the
next following Banking Day, unless such next following Banking Day falls in
the following calendar month, in which case the relevant Repayment Date
shall be the immediately preceding Banking Day;
"Security Document" means the Letter of Guarantee;
"Security Trustee" means Nedship Bank (America) N.V., appointed as such
pursuant to Clause 13 of the Reimbursement Agreement;
"Teekay" means Teekay Shipping Corporation, a corporation organized and
existing under the laws of the Republic of Liberia;
"Transaction Documents" means this Agreement and the Security Documen;t
"Vessel" means the Bahamian registered vessel, DAMPIER SPIRIT, Official No.
730939;
"VSSI Transport" shall have the meaning ascribed thereto in the
Reimbursement Agreement; and
"Wholly Owned Subsidiary" shall have the meaning ascribed thereto in the
Reimbursement Agreement.
1.2 Construction. Words importing the singular number only shall include the
plural and vice versa. Words importing persons shall include companies, firms,
corporations, partnerships, unincorporated associations and their respective
successors and assigns.
1.3 Accounting Terms. All accounting terms not specifically defined herein shall
be construed in accordance with generally accepted accounting principles as in
effect from time to time in the United States of America consistently applied
("GAAP") and all financial statements submitted pursuant to this Agreement shall
be prepared in accordance with, and all financial data submitted pursuant hereto
shall be derived from financial statements prepared in accordance with, GAAP.
2 REPRESENTATIONS AND WARRANTIES
2.1 In order to induce the Lender to enter into this Agreement and to make the
Loan available, the Borrower hereby represents and warrants (which
representations and warranties shall survive the execution and delivery of this
Agreement and the drawdown of the Loan hereunder) that:
(a) Due Organization and Power. The Borrower is duly formed
and validly existing in good standing under the laws of its respective
jurisdiction of incorporation, has duly qualified and, insofar as the Borrower
is aware, has been registered as a foreign corporation in Australia and is
authorized to do business as a foreign corporation in each jurisdiction wherein
the nature of the business transacted thereby makes such qualification
necessary, has full power to carry on its business as now being conducted and to
enter into and perform its obligations under the Transaction Documents to which
it is or is to be a party, and has complied with all statutory, regulatory and
other requirements relative to such business and such agreements the
noncompliance with which could reasonably be expected to have a material adverse
effect on its business, assets or operations, financial or otherwise.
(b) Authorization and Consents. All necessary corporate action
has been taken to authorize, and all necessary consents and authorities have
been obtained and remain in full force and effect to permit, the Borrower to
enter into and perform its obligations under the Transaction Documents and to
borrow, service and repay the Loan and, as of the date of this Agreement, no
further consents or authorities are necessary for the service and repayment of
the Loan or any part of any thereof.
(c) Binding Obligations. The Transaction Documents constitute
or, when executed and delivered, will constitute, legal, valid and binding
obligations of the Borrower enforceable thereagainst in accordance with their
terms, except to the extent that such enforcement may be limited by equitable
principles, principles of public policy or applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting generally the enforcement of
creditors' rights.
(d) No Violation. The execution and delivery of, and the
performance of the provisions of, the Transaction Documents by the Borrower does
not, and will not during the term of this Agreement, contravene any applicable
law or regulation existing at the date hereof or any contractual restriction
binding on any thereof or the articles of incorporation or by-laws (or
equivalent documents) of any thereof.
(e) Litigation. Except as otherwise disclosed in writing to
the Lender on or before the date hereof, no action, suit or proceeding is
pending or threatened against the Borrower before or by any court, board of
arbitration or administrative agency which has a reasonable likelihood of
resulting in any material adverse change in the business or condition (financial
or otherwise) of the Borrower.
(f) No Default. The Borrower is not in default under any
agreement by which it is bound, nor is any thereof in default in respect of any
financial commitment or obligation.
(g) Financial Statements. Except as otherwise disclosed in
writing to the Lender on or prior to the date hereof, all information and other
data furnished by the Borrower to the Lender are complete and correct, and all
financial statements furnished by the Borrower have been prepared in accordance
with GAAP and accurately and fairly present the financial condition of the
parties covered thereby as of the respective dates thereof and the results of
the operations thereof for the period or respective periods covered by such
financial statements. Since such date or dates there has been no material
adverse change in the financial condition or results of the operations of any of
such parties and none thereof has any contingent obligations, liabilities for
taxes or other outstanding financial obligations which are material in the
aggregate except as disclosed in such statements, information and data.
(h) Tax Returns and Payments. The Borrower has filed all tax
returns required to be filed thereby and has paid all taxes payable thereby
which have become due, other than those not yet delinquent or the nonpayment of
which would not have a material adverse effect on any such party, as the case
may be, and except for those taxes being contested in good faith and by
appropriate proceedings or other acts and for which adequate reserves have been
set aside on its books.
(i) Insurance. The Borrower has insured its properties and
assets against such risks and in such amounts as are customary for companies
engaged in similar businesses.
(j) Offices. The chief executive office and chief place of
business of the Borrower and the office in which the financial records relating
the Vessel are kept, is, and will continue to be, located at Ernst & Young at
Ernst & Young Building, 321 Kent Street, Sydney NSW Australia; the Borrower does
not maintains a place of business in Canada, the United States or the United
Kingdom.
(k) Equity Ownership. The Borrower is a Wholly Owned
Subsidiary of Teekay. On the Drawdown Date, the Borrower will not own any shares
of capital stock, partnership interest or any other direct or indirect equity
interest in any corporation, partnership or other entity.
(l) Limited Purpose. The Borrower is a special purpose company
whose sole capital asset is the Vessel; the Borrower does not engage in any
business other than the owning of the Vessel.
(m) Confirmation. All representations, covenants and
undertakings made pursuant to Clause 3 of the Reimbursement Agreement are hereby
incorporated, repeated and warranted to be true and correct as if they were
fully set forth herein.
(n) Survival. All representations, covenants and warranties
made herein and in any certificate or other document delivered pursuant hereto
or in connection herewith shall survive the making of the Loan.
3 THE LOAN
3.1 (a) Purposes. The Lender shall make the Loan available to the Borrower for
the purpose of financing the acquisition cost of the Vessel.
(b) Loan. The Lender, relying upon each of the representations
and warranties set out in Clause 2, hereby agrees with the Borrower that,
subject to and upon the terms of this Agreement, it will on the Drawdown Date
advance the Loan to the Borrower. The proceeds of the Loan shall be utilized to
partially finance the acquisition cost of the Vessel.
3.2 Drawdown Notice. The Borrower, shall, at least three (3) Banking Days before
a Drawdown Date, serve a notice, such notice to be substantially in the form of
Exhibit C hereto (a "Drawdown Notice"), on the Lender which notice shall (a) be
in writing addressed to the Lender, (b) be effective on receipt by the Lender,
(c) specify the amount of the Loan to be drawn, (d) specify the Banking Day on
which the Loan is to be drawn, (e) identify the purpose(s) of the Loan and the
Borrower(s) on whose behalf the Loan is requested, (f) specify the initial
Interest Period for the Loan, (g) specify the disbursement instructions and (h)
be irrevocable.
3.3 Effect of Drawdown Notice. The Drawdown Notice shall be deemed to constitute
a warranty by the Borrower (a) that the representations and warranties stated in
Clause 2 (updated mutatis mutandis) are true and correct on the date of such
Drawdown Notice and will be true and correct on the Drawdown Date as if made on
such date, and (b) that no Event of Default nor any event which with the giving
of notice or lapse of time or both would constitute an Event of Default has
occurred and is continuing.
4 CONDITIONS PRECEDENT
4.1 Conditions Precedent to Drawdown of the Loan . The obligation of the Lender
to make the Loan available to the Borrower under this Agreement shall be
expressly subject to the following conditions precedent:
(a) the Lender shall have received the following documents in
form and substance satisfactory to the Lender and counsel to the Lender:
(i) copies, certified as true and complete by an officer of
the Borrower, of the resolutions of its board of
directors (and, if any necessary under appropriate law,
shareholders) evidencing approval of the Transaction
Documents to which such company is to be a party and
authorizing an appropriate officer or officers or
attorney-in-fact or attorneys-in-fact to execute the
same on its behalf;
(ii) copies, certified as true and complete by an officer of
the Borrower or other applicable party, of all
documents evidencing any other necessary action
(including actions by such parties thereto other than
the Borrower, as may be required by the Lender),
approvals or consents with respect to this Agreement
and the transactions contemplated hereby and thereby;
(iii)copies, certified as true and complete by an officer
of the Borrower of the articles or certificate of
incorporation and by-laws (or the equivalent thereof)
thereof;
(iv) good standing certificate or the equivalent thereof
with respect to the Borrower issued by the appropriate
authorities of the jurisdiction of incorporation
thereof; and
(v) evidence that the Borrower is registered as a foreign
corporation in Australia; and
(b) the Lender shall have received evidence satisfactory to
the Lender and counsel to the Lender that all conditions precedent required
pursuant to Clause 4 of the Reimbursement Agreement have been satisfied;
(c) the Borrower shall have duly executed and delivered this
Agreement;
(d) the Guarantor shall have duly executed and delivered the
Letter of Guarantee;
(e) the Lender shall have received payment in full of all fees
and expenses due to the Lender on the date thereof including, without
limitation, all fees and expenses due under Clause 13 hereof;
(f) the Borrower shall have provided such evidence as the
Lender may require documenting the current legal and beneficial ownership of the
shares of the Borrower;
(g) Watson, Farley & Williams, counsel to the Borrower on
matters of Liberian law, shall have provided a legal opinion with respect to the
laws of the United States, New York and Liberia acceptable to the Lender; and
(h) Norton Smith & Co., special counsel to the Lender on
matters of Australian corporate law, shall have provided a legal opinion with
respect in Australian law acceptable to the Lender.
4.2 Further Conditions Precedent. The obligation of the Lender to make the Loan
available to the Borrower shall be expressly and separately from the foregoing
conditional upon, on the relevant Drawdown Date:
(a) the Lender having received a Drawdown Notice in accordance
with the terms of Clause 3.2;
(b) the representations stated in Clause 2 (updated mutatis
mutandis to such date) being true and correct as if made on that date;
(c) no Event of Default having occurred and being continuing
and no event having occurred and being continuing which, with the giving of
notice or lapse of time, or both, would constitute an Event of Default; and
(d) the Lender being satisfied that no Event of Default will
arise following the drawdown of the Loan in question by reason of the drawdown
of the Loan and that no event or state of affairs exists which constitutes, in
the reasonable opinion of the Lender, a material risk that it will be unlawful
or impossible for the Borrower, or any other of the parties thereto to make any
payment or perform any material obligation as required under the terms of this
Agreement and the Security Document to which it is a party or any of them.
5 REPAYMENT AND PREPAYMENT
5.1 Repayment. The Borrower shall repay the principal amount of the Loan with
interest thereon in sixteen (16) consecutive semiannual installments on the
Repayment Dates, the first eight of which shall be in the principal amount of
One Million Dollars ($1,000,000) the next following seven of which shall be in
the principal amount of Two Million Dollars ($2,000,000) and the sixteenth and
last installment shall be in the principal amount of Eight Million Dollars
($8,000,000).
5.2 Voluntary Prepayment. The Borrower may prepay, upon five (5) Banking Days
written notice (which notice shall be irrevocable), on the last day of any
Interest Period applicable to the Loan or the portion thereof to be prepaid, the
Loan or any portion thereof, without penalty. Each prepayment shall be in a
minimum amount of Five Million Dollars ($5,000,000) in increments of One Million
Dollars ($1,000,000) or the full amount of the Loan.
5.3 Application of Prepayments. Any prepayments of the Loan made hereunder
(including, without limitation, those made pursuant to Clauses 5.2 and 9.1)
shall be subject to the condition that:
(a) any partial prepayment made shall be applied pro rata
in or towards satisfaction of the remaining
installments of the Loan;
(b) any amounts prepaid shall not be available for
re-borrowing; and
(c) on the date of any prepayment all accrued interest to
the date of such prepayment shall be paid in full with
respect to the portion of the principal being prepaid,
together with any and all actual costs or expenses
incurred by the Lender in connection with any breaking
of funding (as certified by the Lender, which
certification shall, absent any manifest error, be
conclusive and binding on the Borrower).
6 INTEREST AND RATE
6.1 Interest Rate; Default Rate. The Loan shall bear interest at the Applicable
Rate, which shall be the rate per annum equal to the aggregate of (a) LIBOR for
the applicable Interest Period and (b) the Margin. Any amounts due under this
Agreement, not paid when due, whether on a Repayment Date, by acceleration or
otherwise, shall bear interest thereafter at the Default Rate.
6.2 Interest Periods. The Borrower may select Interest Periods of three or six
months, or such other period as selected by the Borrower which is available to,
and accepted by the Lender for purposes of funding the Loan, provided, however,
that at all times the Borrower must select an Interest Period which corresponds
to the Interest Period (as such term is defined in the First Loan Agreement)
under the First Loan Agreement. The Borrower, shall provide the Lender with
written notice specifying the Interest Period selected by the Borrower at least
three (3) Banking Days prior to the Drawdown Date and the end of any then
existing Interest Period. If at the end of any then existing Interest Period the
Borrower fails to give notice as aforesaid, the relevant Interest Period shall
be three (3) months.
6.3 Interest Payments. The Borrower agrees to pay interest accrued on the Loan,
in arrears, on the Interest Payment Dates.
6.4 Calculation of Interest. All interest shall accrue from day to day and be
calculated on the actual number of days elapsed over a three hundred sixty (360)
day year.
7 PAYMENTS
7.1 Place of Payments, No Set Off. (a) All payments to be made hereunder by the
Borrower shall be made on the due dates of such payments to the Lender at its
office located at Level 10, Challis House, 4 Martin Place, Sydney, NSW Australia
or to such other place as the Lender may direct without set-off or counterclaim
and free from, clear of and without deduction for, any Taxes, provided, however,
that if the Borrower shall at any time be compelled by law to withhold or deduct
any Taxes from any amounts payable to the Lender hereunder, then, subject to
Clause 7.2, the Borrower shall pay such additional amounts in Dollars as may be
necessary in order that the net amounts received after withholding or deduction
shall equal the amounts which would have been received if such withholding or
deduction were not required and, in the event any withholding or deduction is
made, whether for Taxes or otherwise, the Borrower shall promptly send to the
Lender such documentary evidence with respect to such withholding or deduction
as may be required from time to time by the Lender. Notwithstanding the
preceding sentence, the Borrower shall not be required to pay additional amounts
or otherwise indemnify the Lender for or on account of:
(i) Taxes based on or measured by the overall net income of
the Lender or Taxes in the nature of franchise taxes or taxes for the privilege
of doing business imposed by any jurisdiction or any political subdivision or
taxing authority therein unless such are imposed as a result of the activities
of the Borrower within the relevant taxing jurisdiction;
(ii) Taxes imposed by any jurisdiction or any political
subdivision or taxing authority therein on the Lender that would not have been
imposed but for the Lender being organized in or conducting business in or
maintaining a place of business in the relevant taxing jurisdiction, or engaging
in activities or transactions in the relevant taxing jurisdiction that are
unrelated to the transactions contemplated by the Transaction Documents, but
only to the extent such Taxes are not imposed as a result of the activities of
any of the Borrower within the relevant taxing jurisdiction or the jurisdiction
of the Borrower under the laws of the taxing jurisdiction;
(iii) Taxes imposed on or with respect to the Lender as a
result of a transfer, sale, assignment, or other disposition by the Lender of
any interest in any Transaction Document or the Vessel (other than a transfer
pursuant to an exercise of remedies upon an Event of Default);
(iv) Taxes imposed on, or with respect to, a transferee (or a
subsequent transferee) of the Lender (and including as such a transferee the
Lender whose shares of stock have been transferred or the purchaser of a
participation in the Loan) to the extent of the excess of such Tax over the
amount of such Tax that would have been imposed on, or with respect to, the
Lender had there not been a transfer, sale, assignment or other disposition of
the shares of the Lender or a transfer, sale, assignment or other disposition by
the Lender of any interest in the Vessel or any Transaction Document (in each
case, other than any transfer pursuant to the exercise of remedies as a result
of an Event of Default that shall have occurred and be continuing); or
(v) Taxes imposed on the Lender that would not have been
imposed but for any failure of the Lender to comply with any return filing
requirement or any certification, information, documentation, reporting or other
similar requirement known to the Lender, if such compliance is required to
obtain or establish relief or exemption from or reduction in such Taxes.
(b) In the event that the Borrower has actual knowledge that
the Borrower is required to, or there arises in the Borrower's reasonable
opinion a substantial likelihood that the Borrower will be required to, pay an
additional amount or otherwise indemnify the Lender for or on account of any Tax
pursuant to Clause 7.1(a), the Borrower will promptly notify the Lender of the
nature of such Tax, and shall furnish such information to the Lender with
respect to such Tax, as the Lender may reasonably request. In the event of any
knowledge or opinion of the Borrower described in the preceding sentence, the
Borrower and the Lender shall consult in good faith to determine what may be
required to fund the Loan in Australian Dollars and/or to eliminate or reduce
such Tax, and shall each use reasonable efforts to fund the Loan in Australian
Dollars and/or to eliminate or reduce such Tax (so long as such efforts do not,
in the reasonable opinion of the relevant Lender, result in any cost to the
Lender or any modification of the terms or repayment of the Loan or result in
the Lender being subjected to any additional risk or exposure).
7.2 Tax Credits. If the Lender at its discretion utilises the benefit of a
credit against its liability for Taxes imposed by any taxing authority for all
or part of the Taxes as to which the Borrower has paid additional amounts as
aforesaid then the Lender shall reimburse the Borrower for the amount of the
credit so obtained. The Lender shall use reasonable efforts in filing such tax
return as are necessary to obtain any such credit. In connection therewith, the
Lender may consult with its legal advisers, all fees and expenses of which shall
be for the account of the Borrower. Where the credit is not utilized, the Lender
shall use reasonable endeavors to pass credit on to the Borrower.
8 EVENTS OF DEFAULT
8.1 In the event that any of the following events shall occur and be continuing:
(a) Repayments. Any principal or interest payment due hereunder
is not paid on the due date; or
(b) Other Payments. Any fees or other amount becoming payable
to the Lender under this Agreement is not paid on the due date or within three
(3) Banking Days after the date of demand (as the case may be); or
(c) Representations, etc. Any representation, warranty or
other statement made by the Borrower in this Agreement or in any other
instrument, document or other agreement delivered in connection herewith or
therewith proves to have been untrue or misleading in any material respect as at
the date as of which made; or
(d) Impossibility, Illegality. It becomes impossible or
unlawful for the Borrower, to fulfill any of the covenants and obligations
contained herein or, exercise any of the rights vested in any of them hereunder
and such impossibility or illegality, in the reasonable opinion of the Lender,
will have a material adverse effect on its rights hereunder, or under the
Security Document or on its rights to enforce any thereof; or
(e) Covenants. The Borrower defaults in the performance of any
term, covenant or agreement contained in this Agreement or in any other
instrument, document or other agreement delivered in connection herewith or
therewith, or there occurs any other event which constitutes a default under
this Agreement in each case other than an Event of Default referred to elsewhere
in this Clause 8.1, and such default, in the reasonable opinion of the Lender,
could have a material adverse effect on their rights hereunder or under any of
the Security Document or on their right to enforce any thereof and continues
unremedied for a period of thirty (30) days; or
(f) Indebtedness. The Borrower shall default in the payment
when due (subject to any applicable grace period), whether by acceleration or
otherwise, of any Indebtedness having an outstanding principal amount of Five
Hundred Thousand Dollars ($500,000) or more or any party becomes entitled to
enforce the security for any such Indebtedness and such party shall take steps
to enforce the same, unless such default or enforcement is being contested in
good faith and by appropriate proceedings or other acts and the Borrower shall
set aside on its books adequate reserves with respect thereto, and so long as
such default or enforcement shall not subject the Vessel to material risk of
forfeiture or loss; or
(g) Stock Ownership. There is, without the prior written
consent of the Lender (i) any change in the legal or beneficial stock ownership
or the voting control of the Borrower or (ii) any pledge of the shares of the
Borrower in favor of a party other than the Security Trustee or (iii) less than
fifty-one percent (51%) of the issued and outstanding shares of Teekay is held
beneficially and of record by the Cirrus Trust and the JTK Trust; or
(h) Default under the Reimbursement Agreement and First Loan
Agreement. There is an event of default under either of the Reimbursement
Agreement or the First Loan Agreement which shall have occurred and be
continuing; or
(i) Bankruptcy. The Borrower commences any proceeding relating
to any substantial portion of its property under any reorganization, arrangement
or readjustment of debt, dissolution, winding up, adjustment, composition,
bankruptcy or liquidation law or statute of any jurisdiction, whether now or
hereafter in effect ("Proceeding"), or there is commenced against the Borrower
any Proceeding and such Proceeding remains undismissed or unstayed for a period
of thirty (30) days; or any receiver, trustee, liquidator or sequestrator of, or
for, the Borrower or any substantial portion of the property thereof is
appointed and is not discharged within a period of thirty (30) days; or the
Borrower by any act indicates consent to or approval of or acquiescence in any
Proceeding or to the appointment of any receiver, trustee, liquidator or
sequestrator of, or for, itself or any substantial portion of its property; or
(j) Sale of Assets. The Borrower ceases, or threatens to
cease, its operations or sells or otherwise disposes of, or threatens to sell or
otherwise dispose of, all or substantially all of its assets or all or
substantially all of its assets are seized or otherwise appropriated; or
(k) Judgments. Any judgment or order is made the effect
whereof would be to render ineffective or invalid this Agreement the Security
Document or any of them; or
(l) Inability to Pay Debts. The Borrower is unable to pay or
admits its inability to pay its debts as they fall due or if a moratorium shall
be declared in respect of any Indebtedness thereof; or
(m) Financial Position. Any change in the financial position
of the Borrower which, in the reasonable opinion of the Lender, is likely to
have a material adverse effect on the ability of the Borrower to perform its
material obligations under this Agreement;
then the Lender's obligation to make the Loan available shall cease and
the Lender, by notice to the Borrower, may declare the then outstanding amount
of the Loan, accrued interest and any other sums payable by the Borrower
hereunder, to be immediately due and payable whereupon the same shall forthwith
be due and payable without presentment, demand, protest or notice of any kind,
all of which are hereby expressly waived; provided that upon the happening of an
event specified in subclauses (i) or (l) of this Clause 8.1, the Loan, accrued
interest and any other sums payable hereunder shall be immediately due and
payable without declaration or other notice to the Borrower. In such event, the
Lender, may (i) proceed to protect and enforce its rights by action at law, suit
in equity or in admiralty or other appropriate proceeding, whether for specific
performance of any covenant contained in this Agreement or in the Security
Document or to enforce the payment of the Security Document or to enforce any
other legal or equitable right of the Lender, or (ii) proceed to take any action
authorized or permitted under the terms of any of the Security Document or by
applicable laws for the collection of all sums due, or so declared due
including, without limitation, the right to appropriate and hold or apply
(directly, by way of set-off or otherwise) to the payment of the obligations of
the Borrower to the Lender hereunder, all moneys and other amounts of the
Borrower, then or thereafter in possession of the Lender, inclusive of the
balance of any deposit account (demand or time, matured or unmatured) of the
Borrower, then or thereafter with the Lender.
8.2 Indemnification. The Borrower agrees to, and shall, indemnify and hold the
Lender harmless against any loss or costs or expenses (including legal fees and
expenses) which the Lender may sustain or incur as a consequence of any default
in repayment of the principal amount of the Loan or interest accrued thereon or
any other amount payable hereunder (other than costs and expenses caused by the
gross negligence or willful misconduct of the Lender) including, but not limited
to, all actual losses incurred in liquidating or re-employing fixed deposits
made by third parties or funds acquired to effect or maintain the Loan or any
part thereof. The Lender's certification of such costs and expenses shall,
absent any manifest error, be conclusive and binding on the Borrower.
8.3 Application of Moneys. All moneys received by the Lender under or pursuant
to this Agreement after the happening of any Event of Default (unless cured to
the satisfaction of the Lender) shall be applied by the Lender in the following
manner:
(i) first, in or towards the payment or reimbursement of
any expenses or liabilities incurred by the Lender in
connection with the ascertainment, protection or
enforcement of its rights and remedies hereunder and
under the Security Document,
(ii) secondly, in or towards payment of any interest owing
in respect of the Loan,
(iii)thirdly, in or towards repayment of principal owing in
respect of the Loan,
(iv) fourthly, in or towards payment of all other sums which
may be owing to the Lender under this Agreement or the
First Loan Agreement, and
(v) fifthly, the surplus (if any) shall be paid to the
Borrower or to whomsoever else may be entitled thereto.
9 COVENANTS
9.1 The Borrower hereby covenants and undertakes with the Lender that, from the
date hereof and so long as any principal, interest or other monies are owing in
respect of this Agreement:
The Borrower will:
(i) Performance of Agreements. Duly perform and observe, and
procure the observance and performance by all other parties thereto (other than
the Lender) of, the terms of this Agreement and the Reimbursement Agreement;
(ii) Notice of Default. Promptly inform the Lender of the
occurrence of (a) any Event of Default or of any event which with the giving of
notice or lapse of time, or both, would constitute an Event of Default, (b) any
litigation or governmental proceeding pending or threatened against the Borrower
or Teekay which could reasonably be expected to have a material adverse effect
on the business, assets, operations, property or financial condition of any such
party and (c) any other event or condition of which it becomes aware which is
reasonably likely to have a material adverse effect on its ability, or the
ability of any other party thereto, to perform its obligations under this
Agreement;
(iii) Obtain Consents. Obtain every consent and do all other
acts and things which may from time to time be necessary or advisable for the
continued due performance of all its and any other party's (other than the
Lender's') obligations under this Agreement;
(iv) Corporate Existence. Do or cause to be done, and procure
that Teekay and Alliance shall do or cause to be done, all things necessary to
preserve and keep in full force and effect their respective corporate existence,
and all licenses, franchises, permits and assets necessary to the conduct of the
business of each such corporation;
(v) Taxes. Pay and discharge, and cause Teekay and Alliance
to pay and discharge, all taxes, assessments and governmental charges or levies
imposed upon each such corporation or upon such corporation's income or property
prior to the date upon which penalties attach thereto; provided, however, that
such corporations shall not be required to pay and discharge, or cause to be
paid and discharged, any such tax, assessment, charge or levy so long as the
legality or amount thereof shall be contested in good faith and by appropriate
proceedings or other acts and it shall set aside on its books adequate reserves
with respect thereto, and so long as such deferment in payment shall not subject
the Vessel to material risk of forfeiture or loss;
(vi) Compliance with Statutes, etc. Do or cause to be done,
and procure that Teekay and Alliance shall do or cause to be done, all things
necessary to comply with all material laws, and the rules and regulations
thereunder, applicable to the Borrower, Teekay and Alliance and including,
without limitation, those laws, rules and regulations relating to employee
benefit plans and environmental matters; and
(vii) Maintenance of Properties. Maintain, or cause to be
maintained, and keep, or cause to be kept, and procure that Teekay and Alliance
shall maintain, or cause to be maintained, and keep, or cause to be kept, all
properties used or useful in the conduct of its business in good condition,
repair and working order and supplied with all necessary equipment and will
cause to be made necessary repairs, renewals and replacements thereof so that
the business carried on and in connection therewith and every portion thereof
may be properly and advantageously conducted at all times. In addition, the
Borrower shall cause the Vessel to be drydocked as often as required by the
Vessel's classification society and as a prudent shipowner would require.
9.2 The Borrower covenants and undertakes with the Lender that the Borrower will
be duly registered as a foreign company under the Corporations Law of Australia
within 60 days from the date of this Agreement or such further period which the
Lender shall in writing permit.
10 ASSIGNMENT
This Agreement shall be binding upon, and inure to the benefit
of, the Borrower, the Lender and their respective successors and assigns, except
that the Borrower may not assign any of its rights or obligations hereunder
except as specifically provided herein. The Lender may, with the prior written
consent of the Borrower (such consent not to be unreasonably withheld) assign a
portion of its rights and obligations under this Agreement to any one or more
commercial lenders (the expenses of the Lender in connection with any such
assignment shall be for its own account). The Borrower will take all reasonable
actions requested by the Lender to effect such assignment, including, without
limitation, the execution of a written consent to such assignment and any
agreement executed in connection therewith.
11 ILLEGALITY, INCREASED COST, NON-AVAILABILITY, ETC.
11.1. Illegality. In the event that by reason of any change in any applicable
law, regulation or regulatory requirement or in the interpretation thereof the
Lender reasonably concludes that it has become unlawful for the Lender to
maintain or give effect to its obligations as contemplated by this Agreement,
the Lender shall inform the Borrower to that effect, whereafter the liability of
the Lender to make the Loan available shall forthwith cease and the Borrower
shall be required to prepay the then outstanding portion of the Loan immediately
in accordance with and subject to the provisions of Clause 11.4. In any such
event, but without prejudice to the aforesaid obligations of the Borrower to
prepay the Loan, the Borrower and the Lender shall negotiate in good faith with
a view to agreeing on terms for making the Loan available in Australian Dollars
or or otherwise restructuring the Loan on a basis which is not unlawful with
respect to the Lender and the Lender shall use reasonable efforts to replace
itself with a lender for which the making and performance of the Agreement would
not be illegal.
11.2 Increased Cost. If any change in applicable law, regulation or regulatory
requirement or in the interpretation or application thereof by any governmental
or other authority, shall:
(i) change the basis of taxation (excluding any change in the rate of any
Tax) to the Lender of payments of principal or interest or any other
payment due or to become due pursuant to this Agreement (other than a
change in taxation of the overall net income of the Lender effected by
the jurisdiction of organization or the jurisdiction of the principal
place of business of the Lender, the Commonwealth of Australia, the
State of New South Wales or any governmental subdivision or other
taxing authority having jurisdiction over the Lender (unless such
jurisdiction is asserted solely by reason of the activities of the
Borrower) or such other jurisdiction where the Loan may be repayable),
or
(ii) impose, modify or deem applicable any reserve requirements or require
the making of any special deposits against or in respect of any assets
or liabilities of, deposits with or for the account of, or loans by,
the Lender, or
(iii)impose on the Lender any other condition affecting the Loan or any
part thereof, and the result of the foregoing is either to increase
the cost to the Lender of making available or maintaining the Loan or
any part thereof or to reduce the amount of any payment received by
the Lender, then and in any such case if such increase or reduction in
the opinion of the Lender materially affects the interests of the
Lender under or in connection with this Agreement, then:
(a) the Lender shall notify the Borrower of the happening of such
event,
(b) the Borrower agrees forthwith upon demand to pay to the Lender
such amount as the Lender certifies to be necessary to compensate
the Lender for such additional cost or such reduction, and
(c) any such demand as is referred to in sub-clause (b) of this
Clause 11.2 may be made by the Lender at any time before or after
any repayment of the Loan.
11.3 Determination of Losses. A certificate or determination notice of the
Lender, as to any of the matters referred to in this Clause 11 shall, absent
manifest error, be conclusive and binding on the Borrower.
11.4 Compensation for Losses. Where the Loan or a portion thereof are to be
prepaid by the Borrower pursuant to Clause 11.1 the Borrower agrees
simultaneously with such prepayment to pay to the Lender all accrued interest to
the date of actual payment and all other sums payable by the Borrower to the
Lender pursuant to this Agreement, without penalty or premium.
12 CURRENCY INDEMNITY
12.1 Currency Conversion. If for the purpose of obtaining or enforcing a
judgment in any court in any country it becomes necessary to convert into any
other currency (the "judgment currency") an amount due in Dollars under this
Agreement then the conversion shall be made, in the discretion of the Lender, at
the rate of exchange prevailing either on the date of default or on the day
before the day on which the judgment is given or the order for enforcement is
made, as the case may be (the "conversion date"), provided that the Lender shall
not be entitled to recover under this clause any amount in the judgment currency
which exceeds at the conversion date the amount in Dollars due under this
Agreement.
12.2 Change in Exchange Rate. If there is a change in the rate of exchange
prevailing between the conversion date and the date of actual payment of the
amount due, the Borrower shall pay such additional amounts (if any, but in any
event not a lesser amount) as may be necessary to ensure that the amount paid in
the judgment currency when converted at the rate of exchange prevailing on the
date of payment will produce the amount then due under this Agreement in
Dollars; any excess over the amount due received or collected by the Lender
shall be remitted to the Borrower.
12.3 Additional Debt Due. Any amount due from the Borrower under Clause 12.2
shall be due as a separate debt and shall not be affected by judgment being
obtained for any other sums due under or in respect of this Agreement.
12.4. Rate of Exchange. The term "rate of exchange" in this Clause 12 means the
rate at which the Lender in accordance with their normal practices are able on
the relevant date to purchase Dollars with the judgment currency and includes
any premium and costs of exchange payable in connection with such purchase.
13 FEES AND EXPENSES
13.1 Expenses. The Borrower agrees, whether or not the transactions hereby
contemplated are consummated, on demand to pay, or reimburse the Lender for its
payment of, the reasonable expenses of the Lender incident to said transactions
(and in connection with any supplements, amendments, waivers or consents
relating thereto or incurred in connection with the enforcement or defense of
the Lender's rights or remedies with respect thereto or in the preservation of
the Lender's priorities under the documentation executed and delivered in
connection therewith) including, without limitation, all reasonable costs and
expenses of preparation, negotiation, execution and administration of this
Agreement and the documents referred to herein, the fees and disbursements of
the Lender's counsel in connection therewith, including Seward & Kissel and
Norton Smith & Co., as well as the reasonable fees and expenses of any
independent appraisers, surveyors, engineers and other consultants retained by
the Lender in connection with this transaction, all reasonable costs and
expenses, if any, in connection with the enforcement of this Agreement and the
Security Document and stamp and other similar taxes, if any, incident to the
execution and delivery of the documents herein contemplated and to hold the
Lender free and harmless in connection with any liability arising from the
nonpayment of any such stamp or other similar taxes. Such taxes and, if any,
interest and penalties related thereto as may become payable after the date
hereof shall be paid immediately by the Borrower to the Lender, as the case may
be, when liability therefor is no longer contested by such party or parties or
reimbursed immediately by the Borrower to such party or parties after payment
thereof (if the Lender, at its sole discretion, chooses to make such payment).
14 APPLICABLE LAW, JURISDICTION AND WAIVER
14.1 Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New South Wales.
14.2 Jurisdiction. The Borrower hereby irrevocably submits to the jurisdiction
of the Supreme Court of New South Wales and of the Federal Court of Australia in
any action or proceeding brought against it by the Lender under this Agreement
or under any document delivered hereunder and hereby irrevocably agrees that
service of summons or other legal process on it may be served by registered mail
addressed thereto, c/o Clayton Utz, Levels 27-35, No. 1 O'Connell Street, Sydney
NSW Australia. The service, as herein provided, of such summons or other legal
process in any such action or proceeding shall be deemed personal service and
accepted by the Borrower as such, and shall be legal and binding upon the
Borrower for all the purposes of any such action or proceeding. Final judgment
(a certified or exemplified copy of which shall be conclusive evidence of the
fact and of the amount of any indebtedness of the Borrower to the Lender)
against the Borrower in any such legal action or proceeding shall be conclusive
and may be enforced in other jurisdictions by suit on the judgment. The Borrower
will advise the Lender promptly of any change of address for the purpose of
service of process. Notwithstanding anything herein to the contrary, the Lender
may bring any legal action or proceeding in any other appropriate jurisdiction.
15 NOTICES AND DEMANDS
15.1 Notices. All notices, requests, demands and other communications to any
party hereunder shall be in writing (including prepaid overnight courier,
facsimile transmission or similar writing) and shall be given to the Borrower
and Lender at the address or telecopy number set out below or at such other
address or telecopy number as such party may hereafter specify for the purpose
by notice to each other party hereto. Each such notice, request or other
communication shall be effective (i) if given by telecopy, when such telecopy is
transmitted to the telecopy number specified in this Clause and telephonic
confirmation of receipt thereof is obtained or (ii) if given by mail, prepaid
overnight courier or any other means, when received at the address specified in
this Clause or when delivery at such address is refused.
If to the Borrower:
c/o Teekay Shipping Limited
4th Floor
Euro-Canadian Centre
Marlborough Street and Navy Lion Road
P.O. Box SS 7293
Nassau, Bahamas
Telecopy No.: 242-328-7330
Attention: The President
If to the Lender:
Rabo Australia Limited
Level 10, Challis House
4 Martin Place
Sydney, NSW AUSTRALIA
Telecopy No.: 612-9231-0007
Attention: Manager -
Corporate Banking and Structured Finance
16 MISCELLANEOUS
16.1 Time of Essence. Time is of the essence of this Agreement but no failure or
delay on the part of the Lender to exercise any power or right under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise by the Lender of any power or right hereunder preclude any other or
further exercise thereof or the exercise of any other power or right. The
remedies provided herein are cumulative and are not exclusive of any remedies
provided by law.
16.2 Unenforceable, etc., Provisions - Effect. In case any one or more of the
provisions contained in this Agreement would, if given effect, be invalid,
illegal or unenforceable in any respect under any law applicable in any relevant
jurisdiction, said provision shall not be enforceable against the Borrower, but
the validity, legality and enforceability of the remaining provisions herein or
therein contained shall not in any way be affected or impaired thereby.
16.3 References. References herein to Clauses and Schedules are to be construed
as references to clauses of, and schedules to, this Agreement.
16.4 Further Assurances. The Borrower agrees that if this Agreement in the
reasonable opinion of the Lender, at any time be deemed by the Lender for any
reason insufficient in whole or in part to carry out the true intent and spirit
hereof or thereof, it will execute or cause to be executed such other and
further assurances and documents as in the opinion of the Lender may be required
in order more effectively to accomplish the purposes of this Agreement.
16.5 Entire Agreement; Amendments. This Agreement constitutes the entire
agreement of the parties hereto This Agreement may be executed in any number of
counterparts, each of will shall be deemed an original, but all such
counterparts together shall constitute one and the same instrument. Any
provision of this Agreement may be amended or waived if, but only if, such
amendment or waiver is in writing and is signed by the Borrower and the Lender
(and, if the rights or duties of the Lender are affected thereby, by the Lender,
as applicable).
16.6 Headings. In this Agreement, Clause headings are inserted for convenience
of reference only and shall not be taken into account in the interpretation of
this Agreement.
<PAGE>
Executed as an Agreement
Signed for and on behalf of )
VSSI Australia Limited )
in the presence of: )
- -------------------------
Signed for and on behalf of )
Rabo Australia Limited )
ACN 060 452 217 )
in the presence of : )
- -------------------------
01029.004 #160636
April , 1998
To: Rabo Australia Limited
Level 10, Challis House
74 Martin Place
Sydney NSW Australia
At the request of Barrington (Australia) Pty. Limited (ACN 080 850 559)
("Barrington"), Palmerston (Australia) Pty. Limited (ACN 080 850 586)
("Palmerston"; Palmerston and Barrington shall sometimes hereinafter be referred
to together as the "Original Borrowers") and VSSI Australia Limited ("VSSI
Australia") (collectively, the "Borrowers" and each separately, a "Borrower"),
we the undersigned Nedship Bank (America) N.V., hereby issue the following
guarantee to you (the "Guarantee"), which amends and restates the Original
Guarantee (as hereinafter defined).
We have previously issued a guarantee to you dated December 17, 1997 (the
"Original Guarantee"), in connection with a term loan facility agreement dated
December 17, 1997 (the "First Loan Facility Agreement"), between the Original
Borrowers, as borrowers, and you, as lender, regarding a loan in the amount of
US$44,000,000 (the "First Loan") provided by you in order to assist in the
financing of the Australian flag vessels BARRINGTON and PALMERSTON.
You have agreed to make a loan in the amount of US$30,000,000 (the "Second
Loan"; the First Loan and the Second Loan shall sometimes hereinafter be
referred to together as the "Loans" and each separately, a "Loan") to VSSI
Australia, an affiliate of the Original Borrowers, as borrower, pursuant to a
term loan facility agreement to be dated on or about April 17, 1998 (the "Second
Loan Facility Agreement"; the First Loan Facility Agreement and the Second Loan
Facility Agreement shall sometimes hereinafter be referred to together as the
"Loan Facility Agreements" and each separately, a "Loan Facility Agreement"), in
order to assist in the financing of the Bahamian flag vessel DAMPIER SPIRIT.
We have received a copy of and have duly noted the contents of the Loan Facility
Agreements.
1. In consideration of you having entering into the Loan Facility
Agreements we hereby irrevocably guarantee to pay to you as primary
obligor any and all amounts due and payable to you from (i) the
Original Borrowers under the First Loan Facility Agreement and (ii)
VSSI Australia under the Second Loan Facility Agreement (together, the
"Guaranteed Amounts") as herein provided.
2. We shall immediately, and no later than five (5) Banking Days after
receipt of your written demand, pay to you all amounts due and which
the Borrower(s) are obliged to pay to you under the Loan Facility
Agreements to which they are a party, provided only that your demand
recites that there has been an Event of Default under the relevant
Loan Facility Agreement and that you have accelerated the relevant
Loan and specifies the amount that the relevant Borrowers are obliged
to pay to you. No further documentation or action shall be necessary
in order to oblige us to make payment under this Guarantee.
Upon our payment of the Guaranteed Amounts, you shall execute a
release of this Guarantee. Any costs incurred by you in connection
with such release shall be for our account.
3. As a separate obligation we unconditionally and irrevocably agree to
indemnify you against all liability or loss arising from, and any
costs, charges, expenses or interest incurred directly or indirectly,
as a result of or arising out of the Guaranteed Amounts not being or
ever having been recoverable from any of the Borrowers because of any
circumstance.
4. Our obligations hereunder shall be irrevocable and absolute without
regard to:
(1) you, as lender under either of the Loan Facility Agreements (the
"Lender") or another person granting time or other indulgence
(with or without the imposition of an additional burden) to,
compounding or compromising with or wholly or partially releasing
the Borrowers, any other guarantor or another person in any way;
(2) laches, acquiescence, delay, acts, omissions or mistakes on the
part of the Lender or another person or any one or more of them;
(3) any variation or novation of a right of the Lender or another
person or material alteration of a document, in respect of the
Borrowers, the Guarantor or another person including, without
limitation, an increase in the limit of or other variation in
connection with advances or accommodation;
(4) the transaction of business, expressly or impliedly, with, for,
or at the request of, the Borrowers, the Guarantor or another
person;
(5) changes which from time to time may take place in the membership,
name or business of a firm, partnership, committee or association
whether by death, retirement, admission or otherwise whether or
not the Guarantor or another person was a member;
(6) the loss or impairment of any security given with respect to
either of the Loan Facility Agreements (a "Security Interest");
(7) a Security Interest being void, voidable or unenforceable;
(8) a person dealing in any way with a guarantee, judgment or
negotiable instrument (including, without limitation, taking,
abandoning or releasing (wholly or partially), realizing,
exchanging, varying, abstaining from perfecting or taking
advantage of it);
(9) the death of any person or any insolvency, bankruptcy,
reorganization or other similar proceeding (an "Insolvency
Event");
(10) a change in the legal capacity, rights or obligations of a
person;
(11) the fact that a person is a trustee, nominee, joint owner, joint
venturer or a member of a partnership, firm or association;
(12) a judgment against any Borrower or another person;
(13) the receipt of a dividend after an Insolvency Event or the
payment of a sum or sums into the account of any Borrower or
another person at any time (whether received or paid jointly,
jointly and severally or otherwise);
(14) any part of the Guaranteed Amounts being irrecoverable;
(15) an assignment of rights in connection with either of the
Guaranteed Amounts;
(16) the acceptance of repudiation or other termination in connection
with either of the Guaranteed Amounts;
(17) the invalidity or unenforceability of an obligation or liability
of a person other than the Guarantor;
(18) invalidity or irregularity in the execution of this guarantee by
the Guarantor or any deficiency in or irregularity in the
exercise of the powers of the Guarantor to enter into or observe
its obligations under this guarantee and indemnity;
(19) the opening of a new account by any Borrower with the Lender or
another person or the operation of a new account;
(20) any obligation of any Borrower being discharged by operation of
law;
(21) property secured under a Security Interest being forfeited,
extinguished, surrendered, resumed or determined.
The liability of the Guarantor under this Guarantee is not affected;
(a) because any other person who was intended to enter into this
Guarantee, or otherwise become a co-surety or co-indemnifier
for payment of any of the Guaranteed Amounts or other money
payable under this guarantee and indemnity has not done so or
has not done so effectively; or
(b) because a person who is a co-surety or co-indemnifier for
payment of any of the Guaranteed Amounts or other money
payable under this Guarantee is discharged under an agreement
or under statute or a principle of law or equity.
1. This Guarantee shall remain in full force and effect up to the
date which is six months after the Maturity Date (as the term
is defined in the First Loan Facility Agreement).
2. If at any time any amount payable by any Borrower under the
Loan Facility Agreement to which it is a party is rescinded or
must be otherwise restored or returned upon the insolvency,
bankruptcy or reorganization of any Borrower or otherwise, our
obligations hereunder with respect to such payment shall be
reinstated at such time as though such payment had not been
made.
3. We waive any right we may have of requiring you to proceed against or
enforce your rights against any Borrower under the Loan Facility
Agreement to which it is a party or any other person before making a
demand under the Guarantee.
We confirm that our rights of subrogation and our rights to proceed
against any of the Borrowers (including without limitation the right
to initiate legal proceedings against any of the Borrowers and the
right to claim dividend from any Borrower's estate) are subordinated
to your rights against the Borrowers. We shall not exercise any such
right unless either the Guaranteed Amounts have been paid in full or
with your prior written consent.
4. Any and all payments under this Guarantee shall be made in freely
available funds without set-off or counterclaims and without any
restrictions or condition and free and clear of all and any taxes,
duties, charges or other deductions or withholdings of any nature.
5. This Guarantee is governed by the law in force in New South Wales,
Australia.
The undersigned hereby irrevocably and unconditionally submits to the
non-exclusive jurisdiction of the courts of New South Wales and
courts of appeal from them. The undersigned waives any right it has
to object to an action being brought in those courts, including,
without limitation, by claiming that the action has been brought in
an inconvenient forum or that those courts do not have jurisdiction.
Without preventing any other mode of service, any document in an
action (including, without limitation, any writ of summons or other
originating process or any third or other party notice) may be served
on the undersigned by being delivered to or left for that party at
Scharlooweg 55 Curacao, Netherlands Antilles, Attention: Richard van
Heel.
6. This Guarantee becomes effective on the date hereof.
Executed as an Agreement
Signed for and on behalf of )
Nedship Bank (America) N.V. )
in the presence of: )
............................................
01029.004 #160636
EXHIBIT C
DRAWDOWN NOTICE
April , 1998
Rabo Australia Limited
Level 10, Challis House
4 Martin Place
SYDNEY 2000
NSW AUSTRALIA
Attention:
Dear Sirs:
Please be advised that, in accordance with the terms of the
Term Loan Facility Agreement among (i) you, as lender (the "Lender") and (ii)
VSSI Australia Limited (the "Borrower"), to be dated on or about April 17, 1998
(the "Loan Agreement"), we hereby irrevocably request that the loan be advanced
to the Borrower as follows:
(1) Amount: US$30,000,000 (the "Loan")
(2) Date Loan requested to be made available:
(3) Purpose: To assist the financing of the acquisition of the vessel
DAMPIER SPIRIT
(4) Initial Interest Period:
(5) Disbursement Instructions: Transfer for value today US$ to your
account at Account No. for further credit to .
In the event that the Lender shall not be obliged under the
terms of the Loan Agreement or as a result of any other cause or circumstance to
make the Loan, the Borrower together with the undersigned shall indemnify and
hold the Lender fully harmless against any losses which the Lender may sustain
as a result of borrowing or agreeing to borrow funds to meet the drawdown
requirement in respect thereof and the certificate of such Lender shall, absent
manifest error, be conclusive and binding on the Borrower and the undersigned as
to the extent of any such losses.
The undersigned hereby represents and warrants that all corporate action has
been taken to authorize, and all necessary consents and authorities have been
obtained to permit, the undersigned to enter into and perform its obligations
under this Drawdown Notice.
This Drawdown Notice is governed by the law of New South Wales.
TEEKAY SHIPPING CORPORATION
on behalf of itself and
VSSI AUSTRALIA LIMITED
By_______________________
Name:
Title:
01029.004 #160636
EXHIBIT 2.35
AGREEMENT FOR
A
U.S. $44,000,000 TERM LOAN
FACILITY
TO BE MADE AVAILABLE TO
BARRINGTON (AUSTRALIA) PTY LIMITED
(ACN 080 850 559)
PALMERSTON (AUSTRALIA) PTY LIMITED
(ACN 080 850 586)
BY
RABO AUSTRALIA LIMITED
(ACN 060 452 217)
December 18, 1997
<PAGE>
INDEX
PAGE
CLAUSE 1 DEFINITIONS ..................................................... 1
1.1 Defined Terms........................................ 1
1.2 Construction......................................... 5
1.3 Accounting Terms..................................... 5
CLAUSE 2 REPRESENTATIONS AND WARRANTIES.................................... 5
2.1(a) Due Organization and Power........................... 5
2.1(b) Authorization and Consents........................... 5
2.1(c) Binding Obligations.................................. 6
2.1(d) No Violation......................................... 6
2.1(e) Litigation........................................... 6
2.1(f) No Default........................................... 6
2.1(g) Financial Statements................................. 6
2.1(h) Tax Returns and Payments............................. 6
2.1(i) Insurance............................................ 7
2.1(j) Offices.............................................. 7
2.1(k) Equity Ownership..................................... 7
2.1(l) Limited Purpose...................................... 7
2.1(m) Confirmation......................................... 7
2.1(n) Survival............................................. 7
CLAUSE 3 THE LOAN ..................................................... 7
3.1(a) Purposes............................................. 7
3.1(b) Loan ................................................ 7
3.2 Drawdown Notice...................................... 7
3.3 Effect of Drawdown Notice............................ 8
CLAUSE 4 CONDITIONS PRECEDENT.............................................. 8
4.1 Conditions Precedent to Drawdown of
Loan .............................................. 8
4.2 Further Conditions Precedent......................... 9
CLAUSE 5 REPAYMENT AND PREPAYMENT ......................................... 10
5.1 Repayment............................................ 10
5.2 Voluntary Prepayment................................. 10
5.3 Application of Prepayments........................... 10
CLAUSE 6 INTEREST AND RATE................................................. 11
6.1 Interest Rate; Default Rate.......................... 11
6.2 Interest Periods..................................... 11
6.3 Interest Payments.................................... 11
6.4 Calculation of Interest.............................. 11
CLAUSE 7 PAYMENTS ..................................................... 11
7.1 Place of Payments, No Set Off........................ 11
7.2 Tax Credits.......................................... 13
CLAUSE 8 EVENTS OF DEFAULT.................................................. 13
8.1(a) Repayment............................................ 13
8.1(b) Other Payments....................................... 13
8.1(c) Representations, etc................................. 13
8.1(d) Impossibility, Illegality............................ 13
8.1(e) Covenants............................................ 14
8.1(f) Indebtedness......................................... 14
8.1(g) Stock Ownership...................................... 14
8.1(h) Default under the Reimbursement
Agreement.......................................... 14
8.1(i) Bankruptcy........................................... 14
8.1(j) Sale of Assets....................................... 15
8.1(k) Judgments............................................ 15
8.1(l) Inability to Pay Debts............................... 15
8.1(m) Financial Position................................... 15
8.2 Indemnification...................................... 16
8.3 Application of Moneys................................ 16
CLAUSE 9 COVENANTS ..................................................... 16
9.1 Covenants............................................ 16
CLAUSE 10 ASSIGNMENT ..................................................... 18
CLAUSE 11 ILLEGALITY, INCREASED COST,
NON-AVAILABILITY, ETC............................... 18
11.1 Illegality ........................................ 18
11.2 Increased Cost....................................... 19
11.3 Determination of Losses.............................. 20
11.4 Compensation for Losses.............................. 20
CLAUSE 12 CURRENCY INDEMNITY ........................................ 20
12.1 Currency Conversion.................................. 20
12.2 Change in Exchange Rate.............................. 20
12.3 Additional Debt Due.................................. 20
12.4 Rate of Exchange..................................... 20
CLAUSE 13 FEES AND EXPENSES ........................................ 21
13.1 Expenses ........................................ 21
CLAUSE 14 APPLICABLE LAW, JURISDICTION AND WAIVER.......................... 21
14.1 Applicable Law....................................... 21
14.2 Jurisdiction ........................................ 21
CLAUSE 15 NOTICES AND DEMANDS ........................................ 22
15.1 Notices ........................................ 22
CLAUSE 16 MISCELLANEOUS ........................................ 23
16.1 Time of Essence...................................... 23
16.2 Unenforceable, etc., Provisions -
Effect ........................................ 23
16.3 References ........................................ 23
16.4 Further Assurances................................... 23
16.5 Joint and Several Obligations........................ 23
16.6 Entire Agreement, Amendments......................... 23
16.7 Headings ........................................ 24
EXHIBITS
A Form of Letter of Guarantee
B Form of Drawdown Notice
99182.020 #160632
TERM LOAN FACILITY AGREEMENT
THIS TERM LOAN FACILITY AGREEMENT is made as of the 17th day
of December, 1997, and is by and among:
(1) BARRINGTON (AUSTRALIA) PTY LIMITED (ACN 080 850 559), and
PALMERSTON (AUSTRALIA) PTY LIMITED (ACN 080 850 586), both
corporations incorporated and existing under the laws of New
South Wales, Australia (together, the "Borrowers", each a
"Borrower"); and
(2) RABO AUSTRALIA LIMITED (ACN 060 452 217), a corporation
incorporated and existing under the laws of New South Wales,
Australia (the "Lender").
WITNESSETH THAT:
1. DEFINITIONS
1.1 Defined Terms. In this Agreement the words and expressions specified below
shall, except where the context otherwise requires, have the meanings attributed
to them in Clause 1.1 of the Reimbursement Agreement (as defined below) or as
follows:
"Agreement" means this Agreement as the same shall be amended, modified or
supplemented from time to time;
"Applicable Rate" means any rate of interest on the Loan from time to time
applicable pursuant to Clause 6.1 hereof;
"Assignment and Assumption Agreement(s)" means the Assignment and
Assumption Agreement(s) executed pursuant to Clause 10 hereof substantially
in the form of Exhibit I hereto;
"Banks" means the "Banks" party to the Reimbursement Agreement.
"Default Rate" means the rate per annum equal to the sum of the Applicable
Rate and three percent (3%);
"Drawdown Date" means, the date, being a Banking Day falling not later than
January 31, 1998, upon which the Borrowers shall have requested that the
Loan be made available as provided in Clause 3 hereof and;
"Drawdown Notice" shall have the meaning ascribed thereto in Clause 3.2
hereof;
"Event(s) of Default" means any of the events set out in Clause 8 hereof;
"Facility Period" means the period from the Drawdown Date to the date upon
which all amounts owing under the Loan and all other amounts due to the
Lender pursuant to this Agreement, and the Security Document become
repayable and are repaid in full or are prepaid in full;
"Guarantor" Nedship Bank (America) N.V., a banking corporation incorporated
and existing under the laws of the Netherlands Antilles;
"Interest Payment Date" means the last day of each Interest Period and, for
Interest Periods longer than three months that day falling every three
months after the commencement thereof until the end of such Interest
Periods; should any such day not be a Banking Day the relevant Interest
Payment Date shall be the next following Banking Day, unless such next
following Banking Day falls in the following calendar month, in which case
the relevant Interest Payment Date shall be the immediately preceding
Banking Day;
"Interest Period(s)" with respect to the Loan, means any period by
reference to which an interest rate is determined pursuant to Clause 6.2
hereof;
"Letter of Guarantee" means the letter of guarantee in respect of the joint
and several obligations of the Borrowers under this Agreement to be
executed by the Guarantor in favor of the Lender pursuant to Clause 4.1(d)
hereof substantially in the form of Exhibit B hereto;
"LIBOR" means, in relation to Interest Periods of three (3) or six (6)
months, the rate (rounded upward to the nearest 1/16th of one percent) for
offer rates for deposits of Dollars for a period equivalent to such period
at or about 11:00 a.m. (London time) on the second London Banking Day
before the first day of such period as displayed on Telerate page 3750
(British Bankers' Association Interest Settlement Rates) (or such other
page as may replace such page 3750 on such system or on any other system of
the information vendor for the time being designated by the British
Bankers' Association to calculate the BBA Interest Settlement Rate (as
defined in the British Bankers' Association's Recommended Terms and
Conditions ("BBAIRS" terms) dated August 1985)), provided that if on such
date no such rate is so displayed or if the Interest Period is other than
three (3) or six (6) months, LIBOR for such period shall be the arithmetic
mean (rounded upward if necessary to four decimal places) of the rates
respectively quoted to the Agent by each of the Reference Banks at the
request of the Agent as the offered rate for deposits of Dollars in an
amount approximately equal to the amount in relation to which LIBOR is to
be determined for a period equivalent to such period to prime banks in the
London Interbank Market at or about 11:00 a.m. (London time) on the second
Banking Day before the first day of such period;
"Loan" means the term loan to be made available to the Borrowers by the
Lender pursuant to Clause 3.1 in the maximum principal amount of Forty Four
Million U.S. Dollars (US$44,000,000) or the balance thereof from time to
time outstanding;
"Manager" means Australian Tankships Pty Limited a New South Wales
corporation and a Wholly Owned Subsidiary of Teekay;
"Margin" is .10% per annum;
"Maturity Date" means the day which falls eight years from the Drawdown
Date; if such day is not a Banking Day, the next following Banking Day,
unless such next following Banking Day falls in the following calendar
month, in which case the Maturity Date shall be the immediately preceding
Banking Day;
"Reimbursement Agreement" means the Reimbursement Agreement dated the date
hereof entered into between the Borrowers, Palmstar Thistle, Inc., Alliance
Chartering, the Banks (as defined therein), the Agent and the Security
Trustee (as defined therein);
"Repayment Date" means each of the dates falling at intervals of six months
after the Drawdown Date; if such day is not a Banking Day, the next
following Banking Day, unless such next following Banking Day falls in the
following calendar month, in which case the relevant Repayment Date shall
be the immediately preceding Banking Day;
"Security Document" means the Letter of Guarantee;
"Security Trustee" means Nedship Bank (America) N.V., appointed as such
pursuant to Clause 13 of the Reimbursement Agreement;
"Teekay" means Teekay Shipping Corporation, a corporation organized and
existing under the laws of the Republic of Liberia;
"Transaction Documents" means this Agreement and the Security Document and
any Assignment and Assumption Agreement;
"Vessels" means the Australian registered vessels, BARRINGTON Official No.
853229, and PALMERSTON Official No. 853755;
1.2 Construction. Words importing the singular number only shall include the
plural and vice versa. Words importing persons shall include companies, firms,
corporations, partnerships, unincorporated associations and their respective
successors and assigns.
1.3 Accounting Terms. All accounting terms not specifically defined herein shall
be construed in accordance with generally accepted accounting principles as in
effect from time to time in the United States of America consistently applied
("GAAP") and all financial statements submitted pursuant to this Agreement shall
be prepared in accordance with, and all financial data submitted pursuant hereto
shall be derived from financial statements prepared in accordance with, GAAP.
2 REPRESENTATIONS AND WARRANTIES
2.1 In order to induce the Lender to enter into this Agreement and to make the
Loan available, each of the Borrowers hereby represents and warrants (which
representations and warranties shall survive the execution and delivery of this
Agreement and the drawdown of the Loan hereunder) that:
(a) Due Organization and Power. Each of the Borrowers is duly
formed and validly existing in good standing under the laws of its respective
jurisdiction of incorporation, has duly qualified and, insofar as the Borrowers
are aware, is authorized to do business as a foreign corporation in each
jurisdiction wherein the nature of the business transacted thereby makes such
qualification necessary, has full power to carry on its business as now being
conducted and to enter into and perform its respective obligations under the
Transaction Documents to which it is or is to be a party, and has complied with
all statutory, regulatory and other requirements relative to such business and
such agreements the noncompliance with which could reasonably be expected to
have a material adverse effect on its business, assets or operations, financial
or otherwise.
(b) Authorization and Consents. All necessary corporate action
has been taken to authorize, and all necessary consents and authorities have
been obtained and remain in full force and effect to permit, each of the
Borrowers to enter into and perform its obligations under the Transaction
Documents and to borrow, service and repay the Loan and, as of the date of this
Agreement, no further consents or authorities are necessary for the service and
repayment of the Loan or any part of any thereof.
(c) Binding Obligations. The Transaction Documents constitute
or, when executed and delivered, will constitute, legal, valid and binding
obligations of each of the Borrowers enforceable against each in accordance with
their terms, except to the extent that such enforcement may be limited by
equitable principles, principles of public policy or applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting generally the
enforcement of creditors' rights.
(d) No Violation. The execution and delivery of, and the
performance of the provisions of, the Transaction Documents by each of the
Borrowers do not, and will not during the term of this Agreement, contravene any
applicable law or regulation existing at the date hereof or any contractual
restriction binding on any thereof or the articles of incorporation or by-laws
(or equivalent documents) of any thereof.
(e) Litigation. Except as otherwise disclosed in writing to
the Lender on or before the date hereof, no action, suit or proceeding is
pending or threatened against any of the Borrowers before or by any court, board
of arbitration or administrative agency which has a reasonable likelihood of
resulting in any material adverse change in the business or condition (financial
or otherwise) of either of the Borrowers.
(f) No Default. Neither of the Borrowers is in default under
any agreement by which it is bound, nor is any thereof in default in respect of
any financial commitment or obligation.
(g) Financial Statements. Except as otherwise disclosed in
writing to the Lender on or prior to the date hereof, all information and other
data furnished by the Borrowers to the Lender are complete and correct, and all
financial statements furnished by the Borrowers have been prepared in accordance
with GAAP and accurately and fairly present the financial condition of the
parties covered thereby as of the respective dates thereof and the results of
the operations thereof for the period or respective periods covered by such
financial statements. Since such date or dates there has been no material
adverse change in the financial condition or results of the operations of any of
such parties and none thereof has any contingent obligations, liabilities for
taxes or other outstanding financial obligations which are material in the
aggregate except as disclosed in such statements, information and data.
(h) Tax Returns and Payments. Each of the Borrowers has filed
all tax returns required to be filed thereby and has paid all taxes payable
thereby which have become due, other than those not yet delinquent or the
nonpayment of which would not have a material adverse effect on any such party,
as the case may be, and except for those taxes being contested in good faith and
by appropriate proceedings or other acts and for which adequate reserves have
been set aside on its books.
(i) Insurance. Each of the Borrowers has insured its
properties and assets against such risks and in such amounts as are customary
for companies engaged in similar businesses.
(j) Offices. Each of the chief executive office and chief
place of business of each of the Borrowers and the office in which the financial
records relating the Vessels are kept, is, and will continue to be, located at
Ernst & Young at Ernst & Young Building, 321 Kent Street, Sydney NSW Australia;
none of the Borrowers maintains a place ofbusiness in Canada, the United States
or the United Kingdom.
(k) Equity Ownership. Each of the Borrowers is a Wholly Owned
Subsidiary of Teekay. On the Drawdown Date, none of the Borrowers will own any
shares of capital stock, partnership interest or any other direct or indirect
equity interest in any corporation, partnership or other entity.
(l) Limited Purpose. Each Borrower is a special purpose
company whose sole capital asset is its Vessel; no Borrower engages in any
business other than the owning of its Vessel.
(m) Confirmation. All representations, covenants and
undertakings made pursuant to Clause 3 of the Reimbursement Agreement are hereby
incorporated, repeated and warranted to be true and correct as if they were
fully set forth herein;
(n) Survival. All representations, covenants and warranties
made herein and in any certificate or other document delivered pursuant hereto
or in connection herewith shall survive the making of the Loan.
3 THE LOAN
3.1 (a) Purposes. The Lender shall make the Loan available to the Borrowers for
the purpose of financing the acquisition cost of the Vessels.
(b) Loan. The Lender, relying upon each of the representations
and warranties set out in Clause 2, hereby severally and not jointly agrees with
the Borrowers that, subject to and upon the terms of this Agreement, it will on
the Drawdown Date advance the Loan to the Borrowers. The proceeds of the Loan
shall be utilized to partially finance the acquisition cost of the Vessels.
3.2 Drawdown Notice. The Borrowers, shall, at least five (5) Banking Days before
a Drawdown Date, serve a notice, such notice to be substantially in the form of
Exhibit C hereto (a "Drawdown Notice"), on the Lender which notice shall (a) be
in writing addressed to the Lender, (b) be effective on receipt by the Lender,
(c) specify the amount of the Loan to be drawn, (d) specify the Banking Day on
which the Loan is to be drawn, (e) identify the purpose(s) of the Loan and the
Borrower(s) on whose behalf the Loan is requested, (f) specify the initial
Interest Period for the Loan, (g) specify the disbursement instructions and (h)
be irrevocable.
3.3 Effect of Drawdown Notice. The Drawdown Notice shall be deemed to constitute
a warranty by the Borrowers (a) that the representations and warranties stated
in Clause 2 (updated mutatis mutandis) are true and correct on the date of such
Drawdown Notice and will be true and correct on the Drawdown Date as if made on
such date, and (b) that no Event of Default nor any event which with the giving
of notice or lapse of time or both would constitute an Event of Default has
occurred and is continuing.
4 CONDITIONS PRECEDENT
4.1 Conditions Precedent to Drawdown of the Loan . The obligation of the Lender
to make the Loan available to the Borrowers under this Agreement shall be
expressly subject to the following conditions precedent:
(a) the Lender shall have received the following documents in form and
substance satisfactory to the Lender and counsel to the Lender:
(i) copies, certified as true and complete by an officer of each of
the Borrowers, of the resolutions of each such company's board of
directors (and, if any necessary under appropriate law,
shareholders) evidencing approval of the Transaction Documents to
which such company is to be a party and authorizing an
appropriate officer or officers or attorney-in-fact or
attorneys-in-fact to execute the same on its behalf;
(ii) copies, certified as true and complete by an officer of each of
the Borrowers or other applicable party, of all documents
evidencing any other necessary action (including actions by such
parties thereto other than the Borrowers, as may be required by
the Lender), approvals or consents with respect to this Agreement
and the transactions contemplated hereby and thereby;
(iii)copies, certified as true and complete by an officer of each of
the Borrowers of the articles or certificate of incorporation and
by-laws (or the equivalent thereof) of each thereof;
(iv) good standing certificates or the equivalent thereof with respect
to each of the Borrowers issued by the appropriate authorities of
the respective jurisdiction of incorporation of such parties; and
(b) the Lender shall have received evidence satisfactory to the Lender and
counsel to the Lender that all conditions precedent required pursuant to
Clause 4 of the Reimbursement Agreement have been satisfied;
(c) each Borrower shall have duly executed and delivered this Agreement;
(d) the Guarantor shall have duly executed and delivered the Letter of
Guarantee;
(e) the Lender shall have received payment in full of all fees and expenses
due to the Lender on the date thereof including, without limitation, all
fees and expenses due under Clause 13 hereof;
(f) the Borrowers shall have provided such evidence as the Lender may
require documenting the current legal and beneficial ownership of the
shares of the Borrowers; and
(g) Norton Smith & Co., special counsel to the Lender on matters of
Australian law, shall have advised the Lender that the Borrower has
complied with, or made satisfactory arrangement for compliance with, the
requirements of clauses 4.1(a) through (f).
4.2 Further Conditions Precedent. The obligation of the Lender to make the Loan
available to the Borrowers shall be expressly and separately from the foregoing
conditional upon, on the relevant Drawdown Date:
(a) the Lender having received a Drawdown Notice in accordance with the
terms of Clause 3.2;
(b) the representations stated in Clause 2 (updated mutatis mutandis to
such date) being true and correct as if made on that date;
(c) no Event of Default having occurred and being continuing and no event
having occurred and being continuing which, with the giving of notice or
lapse of time, or both, would constitute an Event of Default;
(d) the Lender being satisfied that no Event of Default will arise
following the drawdown of the Loan in question by reason of the drawdown of
the Loan and that no event or state of affairs exists which constitutes, in
the reasonable opinion of the Lender, a material risk that it will be
unlawful or impossible for the Borrowers, or any other of the parties
thereto to make any payment or perform any material obligation as required
under the terms of this Agreement and the Security Document to which it is
a party or any of them; and
5 REPAYMENT AND PREPAYMENT
5.1 Repayment. The Borrowers shall repay the principal amount of the Loan with
interest thereon in sixteen (16) consecutive semiannual installments on the
Repayment Dates, the first fifteen of which shall be in the principal amount of
Two Million Two Hundred Thousand Dollars ($2,200,000) and the sixteenth and last
installment shall be in the principal amount of Eleven Million Dollars
($11,000,000).
5.2 Voluntary Prepayment. The Borrowers may prepay, upon five (5) Banking Days
written notice (which notice shall be irrevocable), on the last day of any
Interest Period applicable to the Loan or the portion thereof to be prepaid, the
Loan or any portion thereof, without penalty. Each prepayment shall be in a
minimum amount of Five Million Dollars ($5,000,000) in increments of $1,000,000
or the full amount of the Loan.
5.3 Application of Prepayments. Any prepayments of the Loan made hereunder
(including, without limitation, those made pursuant to Clauses 5.2 and 9.1)
shall be subject to the condition that:
(a) any partial prepayment made shall be applied pro rata in or towards
satisfaction of the remaining installments of the Loan;
(b) any amounts prepaid shall not be available for re-borrowing; and
(c) on the date of any prepayment all accrued interest to the date of such
prepayment shall be paid in full with respect to the portion of the
principal being prepaid, together with any and all actual costs or
expenses incurred by any Lender in connection with any breaking of
funding (as certified by such Lender, which certification shall,
absent any manifest error, be conclusive and binding on the Borrower).
6 INTEREST AND RATE
6.1 Interest Rate; Default Rate. The Loan shall bear interest at the Applicable
Rate, which shall be the rate per annum equal to the aggregate of (a) LIBOR for
the applicable Interest Period and (b) the Margin. Any amounts due under this
Agreement, not paid when due, whether on a Repayment Date, by acceleration or
otherwise, shall bear interest thereafter at the Default Rate.
6.2 Interest Periods. The Borrowers may select Interest Periods of three or six
months, or such other period as selected by the Borrowers which is available to,
and accepted by the Lender for purposes of funding the Loan, provided, however,
that at all times the Borrower must select an Interest Period for a portion of
the Loan to allow the installments to be met on each Repayment Date. The
Borrowers, shall provide the Lender with written notice specifying the Interest
Period selected by the Borrowers at least three (3) Banking Days prior to the
Drawdown Date and the end of any then existing Interest Period. If at the end of
any then existing Interest Period the Borrowers fail to give notice as
aforesaid, the relevant Interest Period shall be three (3) months.
6.3 Interest Payments. The Borrowers agree to pay interest accrued on the Loan,
in arrears, on the Interest Payment Dates.
6.4 Calculation of Interest. All interest shall accrue from day to day and be
calculated on the actual number of days elapsed over a three hundred sixty (360)
day year.
7 PAYMENTS
7.1 Place of Payments, No Set Off. (a) All payments to be made hereunder by the
Borrowers shall be made on the due dates of such payments to the Lender at its
office located at Level 10, Challis House, 4 Martin Place, Sydney, NSW Australia
or to such other place as the Lender may direct without set-off or counterclaim
and free from, clear of and without deduction for, any Taxes, provided, however,
that if the Borrowers shall at any time be compelled by law to withhold or
deduct any Taxes from any amounts payable to the Lender hereunder, then, subject
to Clause 7.2, the Borrowers shall pay such additional amounts in Dollars as may
be necessary in order that the net amounts received after withholding or
deduction shall equal the amounts which would have been received if such
withholding or deduction were not required and, in the event any withholding or
deduction is made, whether for Taxes or otherwise, the Borrowers shall promptly
send to the Lender such documentary evidence with respect to such withholding or
deduction as may be required from time to time by the Lender. Notwithstanding
the preceding sentence, the Borrowers shall not be required to pay additional
amounts or otherwise indemnify the Lender for or on account of:
(i) Taxes based on or measured by the overall net income of
the Lender or Taxes in the nature of franchise taxes or taxes for the privilege
of doing business imposed by any jurisdiction or any political subdivision or
taxing authority therein unless such are imposed as a result of the activities
of the Borrowers within the relevant taxing jurisdiction;
(ii) Taxes imposed by any jurisdiction or any political
subdivision or taxing authority therein on the Lender that would not have been
imposed but for the Lender being organized in or conducting business in or
maintaining a place of business in the relevant taxing jurisdiction, or engaging
in activities or transactions in the relevant taxing jurisdiction that are
unrelated to the transactions contemplated by the Transaction Documents, but
only to the extent such Taxes are not imposed as a result of the activities of
any of the Borrowers within the relevant taxing jurisdiction or the jurisdiction
of any of the Borrowers under the laws of the taxing jurisdiction;
(iii) Taxes imposed on or with respect to the Lender as a
result of a transfer, sale, assignment, or other disposition by the Lender of
any interest in any Transaction Document or any Vessel (other than a transfer
pursuant to an exercise of remedies upon an Event of Default);
(iv) Taxes imposed on, or with respect to, a transferee (or a
subsequent transferee) of the Lender (and including as such a transferee the
Lender whose shares of stock have been transferred or the purchaser of a
participation in the Loan) to the extent of the excess of such Tax over the
amount of such Tax that would have been imposed on, or with respect to, the
Lender had there not been a transfer, sale, assignment or other disposition of
the shares of the Lender or a transfer, sale, assignment or other disposition by
the Lender of any interest in any Vessel or any Transaction Document (in each
case, other than any transfer pursuant to the exercise of remedies as a result
of an Event of Default that shall have occurred and be continuing); or
(v) Taxes imposed on the Lender that would not have been
imposed but for any failure of the Lender to comply with any return filing
requirement or any certification, information, documentation, reporting or other
similar requirement known to the Lender, if such compliance is required to
obtain or establish relief or exemption from or reduction in such Taxes.
(b) In the event that any Borrower has actual knowledge that
the Borrowers are required to, or there arises in any Borrower's reasonable
opinion a substantial likelihood that the Borrowers will be required to, pay an
additional amount or otherwise indemnify the Lender for or on account of any Tax
pursuant to Clause 7.1(a), the Borrower will promptly notify the Lender of the
nature of such Tax, and shall furnish such information to the Lender with
respect to such Tax, as the Lender may reasonably request. In the event of any
knowledge or opinion of a Borrower described in the preceding sentence, the
Borrowers and the Lender shall consult in good faith to determine what may be
required to fund the Loan in Australian Dollars and/or to eliminate or reduce
such Tax, and shall each use reasonable efforts to fund the Loan in Australian
Dollars and/or to eliminate or reduce such Tax (so long as such efforts do not,
in the reasonable opinion of the relevant Lender, result in any cost to the
Lender or any modification of the terms or repayment of the Loan or result in
the Lender being subjected to any additional risk or exposure).
7.2 Tax Credits. If the Lender at its discretion utilises the benefit of a
credit against its liability for Taxes imposed by any taxing authority for all
or part of the Taxes as to which the Borrowers have paid additional amounts as
aforesaid then the Lender shall reimburse the Borrowers for the amount of the
credit so obtained. The Lender shall use reasonable efforts in filing such tax
return as are necessary to obtain any such credit. In connection therewith, the
Lender may consult with its legal advisers, all fees and expenses of which shall
be for the account of the Borrowers. Where the Credit is not utilized, the
Lender shall use reasonable endeavors to pass credit on to the Borrowers.
8 EVENTS OF DEFAULT
8.1 In the event that any of the following events shall occur and be
continuing:
(a) Repayments. Any principal or interest payment due hereunder is not paid
on the due date; or
(b) Other Payments. Any fees or other amount becoming payable
to the Lender under this Agreement is not paid on the due date or within three
(3) Banking Days after the date of demand (as the case may be); or
(c) Representations, etc. Any representation, warranty or
other statement made by the Borrowers in this Agreement or in any other
instrument, document or other agreement delivered in connection herewith or
therewith proves to have been untrue or misleading in any material respect as at
the date as of which made; or
(d) Impossibility, Illegality. It becomes impossible or
unlawful for the Borrowers, to fulfill any of the covenants and obligations
contained herein or, exercise any of the rights vested in any of them hereunder
and such impossibility or illegality, in the reasonable opinion of the Lender,
will have a material adverse effect on its rights hereunder, or under the
Security Document or on its rights to enforce any thereof; or
(e) Covenants. Either of the Borrowers defaults in the
performance of any term, covenant or agreement contained in this Agreement or in
any other instrument, document or other agreement delivered in connection
herewith or therewith, or there occurs any other event which constitutes a
default under this Agreement in each case other than an Event of Default
referred to elsewhere in this Clause 8.1, and such default, in the reasonable
opinion of the Lender, could have a material adverse effect on their rights
hereunder or under any of the Security Document or on their right to enforce any
thereof and continues unremedied for a period of thirty (30) days; or
(f) Indebtedness. The Borrowers shall default in the payment
when due (subject to any applicable grace period), whether by acceleration or
otherwise, of any Indebtedness having an outstanding principal amount of
$500,000 or more or any party becomes entitled to enforce the security for any
such Indebtedness and such party shall take steps to enforce the same, unless
such default or enforcement is being contested in good faith and by appropriate
proceedings or other acts and the relevant Borrowers shall set aside on its
books adequate reserves with respect thereto, and so long as such default or
enforcement shall not subject any Vessel to material risk of forfeiture or loss;
or
(g) Stock Ownership. There is, without the prior written
consent of the Lender (i) any change in the legal or beneficial stock ownership
or the voting control of the Borrowers or (ii) any pledge of the shares of the
Borrowers in favor of a party other than the Security Trustee or (iii) less than
fifty-one percent (51%) of the issued and outstanding shares of Teekay is held
beneficially and of record by the Cirrus Trust and the JTK Trust; or
(h) Default under the Reimbursement Agreement. There is an
event of default under the Reimbursement Agreement which shall have occurred and
be continuing; or
(i) Bankruptcy. Either of the Borrowers commences any
proceeding relating to any substantial portion of its property under any
reorganization, arrangement or readjustment of debt, dissolution, winding up,
adjustment, composition, bankruptcy or liquidation law or statute of any
jurisdiction, whether now or hereafter in effect ("Proceeding"), or there is
commenced against the Borrowers any Proceeding and such Proceeding remains
undismissed or unstayed for a period of thirty (30) days; or any receiver,
trustee, liquidator or sequestrator of, or for, the Borrowers or any substantial
portion of the property of any thereof is appointed and is not discharged within
a period of thirty (30) days; or the Borrowers by any act indicates consent to
or approval of or acquiescence in any Proceeding or to the appointment of any
receiver, trustee, liquidator or sequestrator of, or for, itself or any
substantial portion of its property; or
(j) Sale of Assets. The Borrowers ceases, or threatens to
cease, its operations or sells or otherwise disposes of, or threatens to sell or
otherwise dispose of, all or substantially all of its assets or all or
substantially all of its assets are seized or otherwise appropriated; or
(k) Judgments. Any judgment or order is made the effect
whereof would be to render ineffective or invalid this Agreement the Security
Document or any of them; or
(l) Inability to Pay Debts. Any of the Borrowers is unable to
pay or admits its inability to pay its debts as they fall due or if a moratorium
shall be declared in respect of any Indebtedness thereof; or
(m) Financial Position. Any change in the financial position
of the Borrower which, in the reasonable opinion of the Lender, is likely to
have a material adverse effect on the ability of the Borrowers to perform its
material obligations under this Agreement;
then the Lender's obligation to make the Loan thereof available shall
cease and the Lender, by notice to the Borrowers, may declare the then
outstanding amount of the Loan, accrued interest and any other sums payable by
the Borrowers hereunder, to be immediately due and payable whereupon the same
shall forthwith be due and payable without presentment, demand, protest or
notice of any kind, all of which are hereby expressly waived; provided that upon
the happening of an event specified in subclauses (i) or (l) of this Clause 8.1,
the Loan, accrued interest and any other sums payable hereunder shall be
immediately due and payable without declaration or other notice to the
Borrowers. In such event, the Lender, may (i) proceed to protect and enforce its
rights by action at law, suit in equity or in admiralty or other appropriate
proceeding, whether for specific performance of any covenant contained in this
Agreement or in the Security Document or to enforce the payment of the Security
Document or to enforce any other legal or equitable right of the Lender, or (ii)
proceed to take any action authorized or permitted under the terms of any of the
Security Document or by applicable laws for the collection of all sums due, or
so declared due including, without limitation, the right to appropriate and hold
or apply (directly, by way of set-off or otherwise) to the payment of the
obligations of the Borrowers to the Lender hereunder, all moneys and other
amounts of the Borrowers, then or thereafter in possession of the Lender,
inclusive of the balance of any deposit account (demand or time, matured or
unmatured) of the Borrowers, then or thereafter with the Lender.
8.2 Indemnification. The Borrowers agree to, and shall, indemnify and hold the
Lender harmless against any loss or costs or expenses (including legal fees and
expenses) which the Lender sustain or incur as a consequence of any default in
repayment of the principal amount of the Loan or interest accrued thereon or any
other amount payable hereunder (other than costs and expenses caused by the
gross negligence or willful misconduct of the Lender) including, but not limited
to, all actual losses incurred in liquidating or re-employing fixed deposits
made by third parties or funds acquired to effect or maintain the Loan or any
part thereof. The Lender's certification of such costs and expenses shall,
absent any manifest error, be conclusive and binding on the Borrowers.
8.3 Application of Moneys. All moneys received by the Lender under or pursuant
to this Agreement after the happening of any Event of Default (unless cured to
the satisfaction of the Lender) shall be applied by the Lender in the following
manner:
(i) first, in or towards the payment or reimbursement of any
expenses or liabilities incurred by the Lender in connection
with the ascertainment, protection or enforcement of its
rights and remedies hereunder and under the Security
Document,
(ii) secondly, in or towards payment of any interest owing in
respect of the Loan,
(iii)thirdly, in or towards repayment of principal owing in
respect of the Loan,
(iv) fourthly, in or towards payment of all other sums which may
be owing to the Lender under this Agreement, and
(v) fifthly, the surplus (if any) shall be paid to the Borrowers
or to whomsoever else may be entitled thereto.
9 COVENANTS
9.1 Each Borrower hereby covenants and undertakes with the Lender that, from the
date hereof and so long as any principal, interest or other monies are owing in
respect of this Agreement:
The Borrowers will each:
(i) Performance of Agreements. Duly perform and observe, and
procure the observance and performance by all other parties thereto (other than
the Lender) of, the terms of this Agreement and the Reimbursement Agreement;
(ii) Notice of Default. Promptly inform the Lender of the
occurrence of (a) any Event of Default or of any event which with the giving of
notice or lapse of time, or both, would constitute an Event of Default, (b) any
litigation or governmental proceeding pending or threatened against the
Borrowers or Teekay which could reasonably be expected to have a material
adverse effect on the business, assets, operations, property or financial
condition of any such party and (c) any other event or condition of which it
becomes aware which is reasonably likely to have a material adverse effect on
its ability, or the ability of any other party thereto, to perform its
obligations under this Agreement;
(iii) Obtain Consents. Obtain every consent and do all other
acts and things which may from time to time be necessary or advisable for the
continued due performance of all its and any other party's (other than the
Lender's') obligations under this Agreement;
(iv) Corporate Existence. Do or cause to be done, and procure
that Teekay and Alliance Chartering shall do or cause to be done, all things
necessary to preserve and keep in full force and effect their respective
corporate existence, and all licenses, franchises, permits and assets necessary
to the conduct of the business of each such corporation;
(v) Taxes. Pay and discharge, and cause Teekay and Alliance
Chartering to pay and discharge, all taxes, assessments and governmental charges
or levies imposed upon each such corporation or upon such corporation's income
or property prior to the date upon which penalties attach thereto; provided,
however, that such corporations shall not be required to pay and discharge, or
cause to be paid and discharged, any such tax, assessment, charge or levy so
long as the legality or amount thereof shall be contested in good faith and by
appropriate proceedings or other acts and it shall set aside on its books
adequate reserves with respect thereto, and so long as such deferment in payment
shall not subject any Vessel to material risk of forfeiture or loss;
(vi) Compliance with Statutes, etc. Do or cause to be done,
and procure that Teekay and Alliance Chartering shall do or cause to be done,
all things necessary to comply with all material laws, and the rules and
regulations thereunder, applicable to the Borrowers, Teekay and Alliance
Chartering and including, without limitation, those laws, rules and regulations
relating to employee benefit plans and environmental matters;
(vii) Maintenance of Properties. Maintain, or cause to be
maintained, and keep, or cause to be kept, and procure that Teekay and Alliance
Chartering shall maintain, or cause to be maintained, and keep, or cause to be
kept, all properties used or useful in the conduct of its business in good
condition, repair and working order and supplied with all necessary equipment
and will cause to be made necessary repairs, renewals and replacements thereof
so that the business carried on and in connection therewith and every portion
thereof may be properly and advantageously conducted at all times. In addition,
each Borrower shall cause its Vessel to be drydocked as often as required by the
Vessel's classification society and as a prudent shipowner would require;
10 ASSIGNMENT
This Agreement shall be binding upon, and inure to the benefit
of, the Borrowers, the Lender and their respective successors and assigns,
except that the Borrowers may not assign any of its rights or obligations
hereunder except as specifically provided herein. The Lender may, with the prior
written consent of the Borrowers (such consent not to be unreasonably withheld)
assign a portion of their rights and obligations under this Agreement to any one
or more commercial lenders (the expenses of the Lender in connection with any
such assignment shall be for its own account). The Borrowers will take all
reasonable actions requested by the Lender to effect such assignment, including,
without limitation, the execution of a written consent to such Assignment and
Assumption Agreement.
11 ILLEGALITY, INCREASED COST, NON-AVAILABILITY, ETC.
11.1. Illegality. In the event that by reason of any change in any applicable
law, regulation or regulatory requirement or in the interpretation thereof the
Lender reasonably concludes that it has become unlawful for the Lender to
maintain or give effect to its obligations as contemplated by this Agreement,
the Lender shall inform the Borrowers to that effect, whereafter the liability
of the Lender to make the Loan available shall forthwith cease and the Borrowers
shall be required to prepay the then outstanding portion of the Loan immediately
in accordance with and subject to the provisions of Clause 11.4. In any such
event, but without prejudice to the aforesaid obligations of the Borrowers to
prepay the Loan, the Borrowers and the Lender shall negotiate in good faith with
a view to agreeing on terms for making the Loan available in Australian Dollars
or or otherwise restructuring the Loan on a basis which is not unlawful with
respect to the Lender and the Lender shall use reasonable efforts to replace
itself with a lender for which the making and performance of the Agreement would
not be illegal.
11.2 Increased Cost. If any change in applicable law, regulation or regulatory
requirement or in the interpretation or application thereof by any governmental
or other authority, shall:
(i) change the basis of taxation (excluding any change in the rate of any
Tax) to the Lender of payments of principal or interest or any other
payment due or to become due pursuant to this Agreement (other than a
change in taxation of the overall net income of the Lender effected by
the jurisdiction of organization or the jurisdiction of the principal
place of business of the Lender, the Commonwealth of Australia, the
State of New South Wales or any governmental subdivision or other
taxing authority having jurisdiction over the Lender (unless such
jurisdiction is asserted solely by reason of the activities of any of
the Borrowers) or such other jurisdiction where the Loan may be
repayable), or
(ii) impose, modify or deem applicable any reserve requirements or require
the making of any special deposits against or in respect of any assets
or liabilities of, deposits with or for the account of, or loans by,
the Lender, or
(iii)impose on the Lender any other condition affecting the Loan or any
part thereof, and the result of the foregoing is either to increase
the cost to the Lender of making available or maintaining the Loan or
any part thereof or to reduce the amount of any payment received by
the Lender, then and in any such case if such increase or reduction in
the opinion of the Lender materially affects the interests of the
Lender under or in connection with this Agreement, then:
(a) the Lender shall notify the Borrowers of the happening of such
event,
(b) the Borrowers agree forthwith upon demand to pay to the Lender
such amount as the Lender certifies to be necessary to compensate
the Lender for such additional cost or such reduction, and
(c) any such demand as is referred to in sub-clause (b) of this
Clause 11.2 may be made by the Lender at any time before or after
any repayment of the Loan.
11.3 Determination of Losses. A certificate or determination notice of the
Lender, as to any of the matters referred to in this Clause 11 shall, absent
manifest error, be conclusive and binding on the Borrowers.
11.4 Compensation for Losses. Where the Loan or a portion thereof are to be
prepaid by the Borrowers pursuant to Clause 11.1 the Borrowers agree
simultaneously with such prepayment to pay to the Lender all accrued interest to
the date of actual payment and all other sums payable by the Borrowers to the
the Lender pursuant to this Agreement without penalty or premium.
12 CURRENCY INDEMNITY
12.1 Currency Conversion. If for the purpose of obtaining or enforcing a
judgment in any court in any country it becomes necessary to convert into any
other currency (the "judgment currency") an amount due in Dollars under this
Agreement then the conversion shall be made, in the discretion of the Lender, at
the rate of exchange prevailing either on the date of default or on the day
before the day on which the judgment is given or the order for enforcement is
made, as the case may be (the "conversion date"), provided that the Lender shall
not be entitled to recover under this clause any amount in the judgment currency
which exceeds at the conversion date the amount in Dollars due under this
Agreement.
12.2 Change in Exchange Rate. If there is a change in the rate of exchange
prevailing between the conversion date and the date of actual payment of the
amount due, the Borrowers shall pay such additional amounts (if any, but in any
event not a lesser amount) as may be necessary to ensure that the amount paid in
the judgment currency when converted at the rate of exchange prevailing on the
date of payment will produce the amount then due under this Agreement in
Dollars; any excess over the amount due received or collected by the Lender
shall be remitted to the Borrowers.
12.3 Additional Debt Due. Any amount due from the Borrowers under Clause 12.2
shall be due as a separate debt and shall not be affected by judgment being
obtained for any other sums due under or in respect of this Agreement.
12.4. Rate of Exchange. The term "rate of exchange" in this Clause 12 means the
rate at which the Lender in accordance with their normal practices are able on
the relevant date to purchase Dollars with the judgment currency and includes
any premium and costs of exchange payable in connection with such purchase.
13 FEES AND EXPENSES
13.1 Expenses. The Borrowers jointly and severally agree, whether or not the
transactions hereby contemplated are consummated, on demand to pay, or reimburse
the Lender for its payment of, the reasonable expenses of the Lender incident to
said transactions (and in connection with any supplements, amendments, waivers
or consents relating thereto or incurred in connection with the enforcement or
defense of the Lender's rights or remedies with respect thereto or in the
preservation of the Lender's priorities under the documentation executed and
delivered in connection therewith) including, without limitation, all reasonable
costs and expenses of preparation, negotiation, execution and administration of
this Agreement and the documents referred to herein, the fees and disbursements
of the Lender's counsel in connection therewith, including Seward & Kissel and
Norton Smith & Co., as well as the reasonable fees and expenses of any
independent appraisers, surveyors, engineers and other consultants retained by
the Lender in connection with this transaction, all reasonable costs and
expenses, if any, in connection with the enforcement of this Agreement and the
Security Document and stamp and other similar taxes, if any, incident to the
execution and delivery of the documents herein contemplated and to hold the
Lender free and harmless in connection with any liability arising from the
nonpayment of any such stamp or other similar taxes. Such taxes and, if any,
interest and penalties related thereto as may become payable after the date
hereof shall be paid immediately by the Borrowers to the Lender, as the case may
be, when liability therefor is no longer contested by such party or parties or
reimbursed immediately by the Borrowers to such party or parties after payment
thereof (if the the Lender, at its sole discretion, chooses to make such
payment).
14 APPLICABLE LAW, JURISDICTION AND WAIVER
14.1 Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New South Wales.
14.2 Jurisdiction. Each of the Borrowers hereby irrevocably submits to the
jurisdiction of the Supreme Court of New South Wales and of the Federal Court of
Australia in any action or proceeding brought against it by the Lender under
this Agreement or under any document delivered hereunder and hereby irrevocably
agrees that service of summons or other legal process on it may be served by
registered mail addressed thereto, c/o Clayton Utz, Levels 27-35, No. 1
O'Connell Street, Sydney NSW Australia. The service, as herein provided, of such
summons or other legal process in any such action or proceeding shall be deemed
personal service and accepted by the Borrowers as such, and shall be legal and
binding upon the Borrowers for all the purposes of any such action or
proceeding. Final judgment (a certified or exemplified copy of which shall be
conclusive evidence of the fact and of the amount of any indebtedness of the
Borrowers to the Lender) against the Borrowers in any such legal action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment. The Borrowers will advise the Lender promptly of any
change of address for the purpose of service of process. Notwithstanding
anything herein to the contrary, the Lender may bring any legal action or
proceeding in any other appropriate jurisdiction.
15 NOTICES AND DEMANDS
15.1 Notices. All notices, requests, demands and other communications to any
party hereunder shall be in writing (including prepaid overnight courier,
facsimile transmission or similar writing) and shall be given to the Borrowers
and Lender at the address or telecopy number set out below or at such other
address or telecopy number as such party may hereafter specify for the purpose
by notice to each other party hereto. Each such notice, request or other
communication shall be effective (i) if given by telecopy, when such telecopy is
transmitted to the telecopy number specified in this Clause and telephonic
confirmation of receipt thereof is obtained or (ii) if given by mail, prepaid
overnight courier or any other means, when received at the address specified in
this Clause or when delivery at such address is refused.
If to the Borrowers:
c/o Teekay Shipping Limited
4th Floor
Euro-Canadian Centre
Marlborough Street and Navy Lion Road
P.O. Box SS 7293
Nassau, Bahamas
Telecopy No.: 242-328-7330
Attention: The President
If to the Lender:
Rabo Australia Limited
Level 10, Challis House
4 Martin Place
Sydney, NSW AUSTRALIA
Telecopy No.: 612-9231-0007
Attention: Veronica White
16 MISCELLANEOUS
16.1 Time of Essence. Time is of the essence of this Agreement but no failure or
delay on the part of the Lender to exercise any power or right under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise by the Lender of any power or right hereunder preclude any other or
further exercise thereof or the exercise of any other power or right. The
remedies provided herein are cumulative and are not exclusive of any remedies
provided by law.
16.2 Unenforceable, etc., Provisions - Effect. In case any one or more of the
provisions contained in this Agreement would, if given effect, be invalid,
illegal or unenforceable in any respect under any law applicable in any relevant
jurisdiction, said provision shall not be enforceable against the Borrowers, but
the validity, legality and enforceability of the remaining provisions herein or
therein contained shall not in any way be affected or impaired thereby.
16.3 References. References herein to Clauses and Schedules are to be construed
as references to clauses of, and schedules to, this Agreement.
16.4 Further Assurances. Each of the Borrowers agree that if this Agreement in
the reasonable opinion of the Lender, at any time be deemed by the Lender for
any reason insufficient in whole or in part to carry out the true intent and
spirit hereof or thereof, it will execute or cause to be executed such other and
further assurances and documents as in the opinion of the Lender may be required
in order more effectively to accomplish the purposes of this Agreement.
16.5 Joint and Several Obligations. The obligations of the Borrowers under this
Agreement and under each provision hereof are joint and several whether or not
so specified in any provision hereof. Each Borrower shall be entitled to rights
of contribution as against the other Borrower, provided, however, that such
rights of contribution shall (a) not in any way condition or lessen the
liability of any Borrower as a joint and several borrower for the whole of the
obligations owed to the Lender hereunder and (b) be fully subject and
subordinate to the rights of the Lender hereunder.
16.6 Entire Agreement; Amendments. This Agreement constitutes the entire
agreement of the parties hereto including all parties added hereto pursuant to
an Assignment and Assumption Agreement. This Agreement may be executed in any
number of counterparts, each of will shall be deemed an original, but all such
counterparts together shall constitute one and the same instrument. Any
provision of this Agreement may be amended or waived if, but only if, such
amendment or waiver is in writing and is signed by the Borrowers and the Lender
(and, if the rights or duties of the Lender are affected thereby, by the Lender,
as applicable).
16.7 Headings. In this Agreement, Clause headings are inserted for convenience
of reference only and shall not be taken into account in the interpretation of
this Agreement.
<PAGE>
Executed as an Agreement
Signed for and on behalf of )
Barrington (Australia) Pty. Limited )
ACN 080 850 559 )
in the presence of: )
- -------------------------
Signed for and on behalf of )
Palmerston (Australia) Pty Limited )
ACN 080 850 586 )
in the presence of: )
- -------------------------
Signed for and on behalf of )
Rabo Australia Limited )
ACN 060 452 217 )
in the presence of : )
- -------------------------
99182.020 #160632
<PAGE>
December 17, 1997
To: Rabo Australia Limited
Level 10, Challis House
74 Martin Place
Sydney NSW Australia
At the request of Barrington (Australia) Pty. Limited (ACN 080 850 559) and
Palmerston (Australia) Pty. Limited (ACN 080 850 586) (the "Borrowers"), we the
undersigned Nedship Bank (America) N.V., hereby issue the following guarantee to
you (the "Guarantee").
We have received a copy of and have duly noted the contents of a term loan
facility agreement dated on or about December 18, 1997, between the Borrowers,
as borrowers, and you, as lender (the "Term Loan Facility Agreement"), regarding
a Loan (as defined in the Term Loan Facility Agreement) in the amount of
US$44,000,000 provided by you in order to assist in the financing of the
Australian flag vessels BARRINGTON and PALMERSTON. Terms not specifically
defined herein shall have the meaning ascribed to them in the Term Loan Facility
Agreement.
1. In consideration of you having entering into the Term Loan
Facility Agreement we hereby irrevocably guarantee to pay to
you as primary obligor any and all amounts due and payable to
you from the Borrowers under the Term Loan Facility Agreement
(the "Guaranteed Amount") as herein provided.
2. We shall immediately, and no later than five (5) Banking Days
after receipt of your written demand, pay to you all amounts
due and which the Borrowers are obliged to pay to you under
the Term Loan Facility Agreement, provided only that your
demand recites that there has been an Event of Default under
the Term Loan Facility Agreement and that you have accelerated
the Loan and specifies the amount that the Borrowers are
obliged to pay to you. No further documentation or action
shall be necessary in order to oblige us to make payment under
this Guarantee.
Upon our payment of the Guaranteed Amount, you shall execute a
release of this Guarantee. Any costs incurred by you in connection
with such release shall be for our account.
3. As a separate obligation we unconditionally and irrevocably agree to
indemnify you against all liability or loss arising from, and any
costs, charges or expenses incurred directly or indirectly, as a
result of or arising out of the Guaranteed
Amount not being or ever having been recoverable from the Borrowers because of
any circumstance.
4. Our obligations hereunder shall be irrevocable and absolute without
regard to:
(1) the Lender or another person granting time or other indulgence
(with or without the imposition of an additional burden) to,
compounding or compromising with or wholly or partially
releasing the Borrowers, any other guarantor or another person
in any way;
(2) laches, acquiescence, delay, acts, omissions or mistakes on
the part of the Lender or another person or any one or more of
them;
(3) any variation or novation of a right of the Lender or another
person or material alteration of a document, in respect of the
Borrowers, the Guarantor or another person including, without
limitation, an increase in the limit of or other variation in
connection with advances or accommodation;
(4) the transaction of business, expressly or impliedly, with,
for, or at the request of, the Borrowers, the the Guarantor or
another person;
(5) changes which from time to time may take place in the
membership, name or business of a firm, partnership, committee
or association whether by death, retirement, admission or
otherwise whether or not the Guarantor or another person was a
member;
(6) the loss or impairment of any security given with respect to
the Term Loan Facility Agreement (a "Security Interest");
(7) a Security Interest being void, voidable or unenforceable;
(8) a person dealing in any way with a guarantee, judgment or
negotiable instrument (including, without limitation, taking,
abandoning or releasing (wholly or partially), realizing,
exchanging, varying, abstaining from perfecting or taking
advantage of it);
(9) the death of any person or any insolvency, bankruptcy,
reorganization or other similar proceeding (an "Insolvency Event");
(10)a change in the legal capacity, rights or obligations of a person;
(11) the fact that a person is a trustee, nominee, joint owner,
joint venturer or a member of a partnership, firm or
association;
(12) a judgment against either Borrower or another person;
(13) the receipt of a dividend after an Insolvency Event or the
payment of a sum or sums into the account of either Borrower
or another person at any time (whether received or paid
jointly, jointly and severally or otherwise);
(14) any part of the Guaranteed Amount being irrecoverable;
(15) an assignment of rights in connection with the Guaranteed
Amount;
(16) the acceptance of repudiation or other termination in connection
with the Guaranteed Amount;
(17) the invalidity or unenforceability of an obligation or
liability of a person other than the Guarantor;
(18) invalidity or irregularity in the execution of this guarantee
by the Guarantor or any deficiency in or irregularity in the
exercise of the powers of the Guarantor to enter into or
observe its obligations under this guarantee and indemnity;
(19) the opening of a new account by either Borrower with the
Lender or another person or the operation of a new account;
(20) any obligation of either Borrower being discharged by operation
of law;
(21) property secured under a Security Interest being forfeited,
extinguished, surrendered, resumed or determined.
The liability of the Guarantor under this Guarantee is not affected;
(a) because any other person who was intended to enter into this
Guarantee, or otherwise become a co-surety or co-indemnifier
for payment of the Guaranteed Amount or other money payable
under this guarantee and indemnity has not done so or has not
done so effectively; or
<PAGE>
5
(b) because a person who is a co-surety or co-indemnifier for
payment of the Guaranteed Amount or other money payable under
this Guarantee is discharged under an agreement or under
statute or a principle of law or equity.
1. This Guarantee shall remain in full force and effect up to the
date which is six months after the Maturity Date.
2. If at any time any amount payable by the Borrowers under the
Term Loan Facility Agreement is rescinded or must be otherwise
restored or returned upon the insolvency, bankruptcy or
reorganization of either Borrower or otherwise, our
obligations hereunder with respect to such payment shall be
reinstated at such time as though such payment had not been
made.
3. We waive any right we may have of requiring you to proceed
against or enforce your rights against the Borrowers under the
Term Loan Facility Agreement or any other person before making
a demand under the Guarantee.
We confirm that our rights of subrogation and our rights to proceed
against the Borrowers (including without limitation the right to
initiate legal proceedings against the Borrowers and the right to
claim dividend from the Borrower's estate) are subordinated to your
rights against the Borrowers. We shall not exercise any such right
unless either the Guaranteed Amount has been paid in full or with
your prior written consent.
4. Any and all payments under this Guarantee shall be made in freely
available funds without set-off or counterclaims and without any
restrictions or condition and free and clear of all and any taxes,
duties, charges or other deductions or withholdings of any nature.
5. This Guarantee is governed by the law in force in New South Wales,
Australia.
The undersigned hereby irrevocably and unconditionally submits to the
non-exclusive jurisdiction of the courts of New South Wales and
courts of appeal from them. The undersigned waives any right it has
to object to an action being brought in those courts, including,
without limitation, by claiming that the action has been brought in
an inconvenient forum or that those courts do not have jurisdiction.
Without preventing any other mode of service, any document in an
action (including, without limitation, any writ of summons or other
originating process or any third or other party notice) may be served
on the undersigned by being delivered to or left for that party at
Scharlooweg 55 Curacao, Netherlands Antilles, Attention: Richard van
Heel.
6. This Guarantee becomes effective on the date hereof.
Executed as an Agreement
Signed for and on behalf of )
Nedship Bank (America) N.V. )
in the presence of: )
............................................
99182.020 #160632
<PAGE>
DRAWDOWN NOTICE
December 11, 1997
Rabo Australia Limited
Level 10, Challis House
4 Martin Place
SYDNEY 2000
NSW AUSTRALIA
Attention: Veronica White
Dear Sirs:
Please be advised that, in accordance with the terms of the
Term Loan Facility Agreement among (i) you, as lender (the "Lender"), (ii)
Barrington Pty. Ltd. and Palmerston Pty. Ltd., as borrowers (the "Borrowers"),
to be dated on or about December 11, 1997 (the "Loan Agreement"), we hereby
irrevocably request that the loan be advanced to the Borrowers as follows:
(1) Amount: US$44,000,000 (the "Loan")
(2) Date Loan requested to be made available: December 18, 1997
(3) Purpose: To assist the financing of the acquisition of the
vessels BARRINGTON and PALMERSTON
(2) Initial Interest Period:
(3) Disbursement Instructions: Transfer for value today
US$ to your account at
Account No. for further credit to
In the event that the Lenders shall not be obliged under the
terms of the Loan Agreement or as a result of any other cause or circumstance to
make the Loan, the Borrowers together with the undersigned shall indemnify and
hold the Lenders, or any of them, fully harmless against any losses which the
Lenders, or any of them, may sustain as a result of borrowing or agreeing to
borrow funds to meet the drawdown requirement in respect thereof and the
certificate of such Lender or Lenders shall, absent manifest error, be
conclusive and binding on the Borrowers and the undersigned as to the extent of
any such losses.
The undersigned hereby represents and warrants that all corporate action has
been taken to authorize, and all necessary consents and authorities have been
obtained to permit, the undersigned to enter into and perform its obligations
under this Drawdown Notice.
This Drawdown Notice is governed by the law of New South Wales.
TEEKAY SHIPPING CORPORATION
on behalf of itself and
PALMERSTON (AUSTRALIA), PTY.
LTD. (ACN 080 850 586)
BARRINGTON (AUSTRALIA), PTY.
LTD. (ACN 080 850 559)
By_______________________
Name:
Title:
99182.020 #160632
EXHIBIT 2.36
AMENDED AND RESTATED
REIMBURSEMENT AGREEMENT
AMONG
BARRINGTON (AUSTRALIA) PTY LIMITED
PALMERSTON (AUSTRALIA) PTY LIMITED
VSSI AUSTRALIA LIMITED
VSSI TRANSPORT INC.
ALLIANCE CHARTERING PTY LIMITED,
as Account Parties,
NEDSHIP BANK (AMERICA) N.V.,
as Agent, Security Trustee and Issuer
AND
THE BANKS
as provided herein.
===============================================================================
April 16, 1998
01029.004 #79655
5
INDEX
PAGE
CLAUSE 1 DEFINITIONS......................................................... 3
1.1 Defined Terms........................................................... 3
1.2 Construction............................................................ 18
1.3 Accounting Terms........................................................ 18
CLAUSE 2 LETTER OF CREDIT.................................................... 19
2.1 Issuance of the Amended Letter of Credit................................ 19
2.2 Several Obligations; Drawings........................................... 19
2.3 Reimbursement Obligation; Interest...................................... 20
2.4 Commission and Fees..................................................... 21
2.5 Increased Cost ......................................................... 22
2.6 Illegality.............................................................. 24
2.7 Substitution of Banks................................................... 24
2.8 General Provisions as to Payment........................................ 25
2.9 Obligations Absolute.................................................... 26
2.10 Determination of Losses................................................. 27
CLAUSE 3 REPRESENTATIONS AND WARRANTIES...................................... 27
3.1(a) Due Organization and Power............................................ 27
3.1(b) Authorization and Consents........................................... 27
3.1(c) Filings, etc......................................................... 28
3.1(d) Binding Obligations.................................................. 28
3.1(e) No Violation......................................................... 28
3.1(f) No Immunity.......................................................... 28
3.1(g) Litigation............................................................ 29
3.1(h) No Default............................................................ 29
3.1(i) Charters.............................................................. 29
3.1(j) Vessel Ownership, Classification, Seaworthiness and Insurance......... 29
3.1(k) Financial Statements.................................................. 30
3.1(l) Tax Returns and Payments.............................................. 30
3.1(m) Insurance............................................................. 30
3.1(n) Offices............................................................... 31
3.1(o) Not an Investment Company............................................. 31
3.1(p) Equity Ownership...................................................... 31
3.1(q) Environmental Matters................................................. 31
3.1(r) Pending or Threatened Environmental Claims............................ 32
3.1(s) Limited Purpose....................................................... 32
3.1(t) Permitted Indebtedness................................................ 32
3.1(u) Survival.............................................................. 32
CLAUSE 4 CONDITIONS PRECEDENT................................................ 32
4.1 Conditions Precedent to Issuance of Amended Letter of Credit............. 32
CLAUSE 5 PAYMENTS............................................................ 36
5.1 Place of Payments, No Set Off........................................... 36
5.2 Tax Credits............................................................. 38
5.3 Sharing of Setoffs...................................................... 38
CLAUSE 6 EVENTS OF DEFAULT................................................... 39
6.1(a) Repayments............................................................ 39
6.1(b) Other Payments........................................................ 39
6.1(c) Loan Agreements....................................................... 39
6.1(d) Representations, etc.................................................. 39
6.1(e) Impossibility, Illegality............................................. 39
6.1(f) Covenants............................................................. 39
6.1(g) Indebtedness.......................................................... 40
6.1(h) Stock Ownership....................................................... 40
6.1(i) Default under the Security Documents.................................. 40
6.1(j) Bankruptcy............................................................ 40
6.1(k) Sale of Assets........................................................ 40
6.1(l) Judgments............................................................. 41
6.1(m) Inability to Pay Debts................................................ 41
6.1(n) Financial Position.................................................... 41
6.1(o) Amendment or Assignment of Charters................................... 41
6.1(p) Termination or Default Under Charters................................. 41
6.2 Indemnification......................................................... 42
6.3 Application of Moneys................................................... 42
CLAUSE 7 COVENANTS........................................................... 43
7.1 Covenants............................................................... 43
7.1(A)(i) Performance of Agreements........................................ 43
7.1(A)(ii) Notice of Default; Change in Classification of Vessel............ 44
7.1(A)(iii) Obtain Consents.................................................. 44
7.1(A)(iv) Financial Statements............................................. 44
7.1(A)(v) Corporate Existence.............................................. 45
7.1(A)(vi) Books, Records, etc.............................................. 45
7.1(A)(vii) Inspection....................................................... 45
7.1(A)(viii)Taxes .................................................... 45
7.1(A)(ix) Compliance with Statutes, etc.................................... 46
7.1(A)(x) Environmental Matters............................................ 46
7.1(A)(xi) Accountants...................................................... 47
7.1(A)(xii) Continue Charters................................................ 47
7.1(A)(xiii)Class Certificate................................................ 47
7.1(A)(xiv) Maintenance of Properties........................................ 47
7.1(A)(xv) Vessel Management................................................ 48
7.1(A)(xvi) ISM Compliance................................................... 48
7.1(A)(xvii)Limitation on Restricted Payments................................ 48
7.1(B)(i) Liens............................................................ 50
7.1(B)(ii) Loans and Advances............................................... 51
7.1(B)(iii) Limitation on Indebtedness....................................... 51
7.1(B)(iv) Guarantees, etc.................................................. 53
7.1(B)(v) Changes in Business.............................................. 53
7.1(B)(vi) Use of Corporate Funds........................................... 53
7.1(B)(vii) Issuance of Shares............................................... 53
7.1(B)(viii)Consolidation, Merger............................................ 54
7.1(B)(ix) Changes in Offices or Names...................................... 54
7.1(B)(x) Limitation on Transactions with Shareholders and Affiliates...... 54
7.1(B)(xi) Change of Flag................................................... 55
7.1(B)(xii) Sale of Vessel................................................... 55
7.1(b)(xiii)Modification of Agreements....................................... 55
7.2 Valuation of the Vessels................................................ 55
7.3 Collateral Maintenance.................................................. 55
7.4 Substitution of Collateral.............................................. 56
CLAUSE 8 ASSIGNMENT/PARTICIPATIONS........................................... 56
8.1 Assignment............................................................... 56
8.2 Participations........................................................... 57
CLAUSE 9 CURRENCY INDEMNITY.................................................. 57
9.1 Currency Conversion..................................................... 57
9.2 Change in Exchange Rate................................................. 58
9.3 Additional Debt Due..................................................... 58
9.4 Rate of Exchange........................................................ 58
CLAUSE 10 EXPENSES........................................................... 58
10.1 Expenses................................................................ 58
CLAUSE 11 APPLICABLE LAW, JURISDICTION AND WAIVER............................ 59
11.1 Applicable Law.......................................................... 59
11.2 Jurisdiction ........................................................... 59
11.3 WAIVER OF JURY TRIAL.................................................... 59
CLAUSE 12 THE AGENT.......................................................... 60
12.1 Appointment of Agent.................................................... 60
12.2 Distribution of Payments................................................ 60
12.3 No Duty to Examine, Etc................................................. 60
12.4 Agent as Banks.......................................................... 60
12.5(a) Obligations of Agent................................................. 60
12.5(b) No Duty to Investigate............................................... 60
12.6(a) Discretion of Agent.................................................. 61
12.6(b) Instructions of Majority Banks....................................... 61
12.7 Assumption re Event of Default.......................................... 61
12.8 No Liability of Agent or Banks.......................................... 61
12.9 Indemnification of Agent................................................ 62
12.10Consultation with Counsel............................................... 62
12.11Resignation ............................................................ 62
12.12Representations of Banks................................................ 63
12.13Notification of Event of Default........................................ 63
12.14Distributing Financial Statements, etc.................................. 63
CLAUSE 13 APPOINTMENT OF SECURITY TRUSTEE.................................... 63
CLAUSE 14 NOTICES AND DEMANDS................................................ 64
14.1 Notices................................................................. 64
CLAUSE 15 MISCELLANEOUS...................................................... 64
15.1 Time of Essence......................................................... 64
15.2 Unenforceable, etc., Provisions - Effect................................ 64
15.3 References ............................................................. 65
15.4 Further Assurances...................................................... 65
15.5 Prior Agreements, Merger................................................ 65
15.6 Joint and Several Obligations........................................... 65
15.7 Limitation of Liability................................................. 65
15.8 Release of Palmstar Thistle............................................. 67
15.9 Entire Agreement; Amendments............................................ 67
15.10Headings ........................................................... 67
EXHIBITS
A Amended Letter of Credit
B Guaranty
C1 Form of Bahamian Deed of Covenants
C2 Form of Australian Mortgage
C3 Form of Mortgage Amendment
D1 Form of Bahamian Vessels Earnings Assignment
D2Form of Australian Vessels Earnings Assignment
E Form of Insurances Assignment
F Form of Sub-Charter Assignment
G1Form of Consent and Agreement to the Earnings Assignment
G2Form of Consent and Agreement to the Sub- Charter Assignment
H Form of Share Pledge
I Form of Assignment and Assumption Agreement
J Form of Compliance Certificate
K Accession Agreement
01029.004 #79655
AMENDED AND RESTATED
REIMBURSEMENT AGREEMENT
THIS AMENDED AND RESTATED REIMBURSEMENT AGREEMENT dated April __, 1998
(this "Agreement") is made among BARRINGTON (AUSTRALIA) PTY LIMITED (ACN 080 850
559) ("Barrington") and PALMERSTON (AUSTRALIA) PTY LIMITED (ACN 080 850 586)
("Palmerston" and with Barrington collectively referred to as the "Original
Borrowers"), each a company organized and existing under the laws of New South
Wales, Commonwealth of Australia, and VSSI AUSTRALIA LIMITED, a company
organized and existing under the laws of the Republic of Liberia ("VSSI
Australia" and with the Original Borrowers collectively referred to as the
"Borrowers"), VSSI TRANSPORT INC., a company organized and existing under the
laws of the Republic of Liberia ("VSSI Transport" and with the Borrowers
collectively referred to as the "Owners"), and ALLIANCE CHARTERING PTY LIMITED
(ACN 080 850 540) ("Alliance"), a company organized and existing under the laws
of New South Wales, Commonwealth of Australia, as account parties ("Alliance"
and with the Owners individually referred to as an "Obligor" and collectively as
the "Obligors"), the BANKS listed on the signature pages hereof and any
additional banks as may become a party hereto pursuant to Clause 8 (the "Banks")
and NEDSHIP BANK (AMERICA) N.V. ("Nedship"), as agent (the "Agent") and security
trustee (the "Security Trustee"), which Agreement amends and restates that
certain reimbursement agreement dated December 17, 1997 (the "Original
Reimbursement Agreement") made among, inter alia, the Original Borrowers,
Palmstar Thistle Inc., a company organized and existing under the laws of the
Republic of Liberia ("Palmstar Thistle"), Alliance, certain of the Banks, the
Agent and the Security Trustee.
WHEREAS the Original Borrowers and Rabo Bank Australia Ltd. (the "Lender")
are parties to a loan agreement dated December 17, 1997 (the "First Loan
Agreement") providing for (among other things) the making of a loan of
US$44,000,000 (the "First Loan") by the Lender to the Original Borrowers to
enable the Original Borrowers to acquire the Australian flag vessels BARRINGTON
and PALMERSTON;
WHEREAS, a condition precedent to the making of the First Loan was that
Nedship (the "Loan Guarantor") deliver to the Lender a letter of guarantee (the
"Letter of Guarantee") which secured the obligations of the Original Borrowers
under the First Loan Agreement;
WHEREAS, a condition precedent to the issuance of the Letter of Guarantee
by the Loan Guarantor was that the Loan Guarantor, as beneficiary (the
"Beneficiary") receive a standby letter of credit in the maximum stated amount
of US$46,000,000 (of which US$44,000,000 secured the amount guaranteed by the
Loan Guarantor of the First Loan and $2,000,000 secured interest and expenses)
(the "Letter of Credit") from the Agent on behalf of certain banks (the
"Original Banks") as security for the obligations of the Original Borrowers to
the Loan Guarantor in respect of the Letter of Guarantee;
WHEREAS, the the Agent on behalf of the Original Banks issued the Letter of
Credit on the terms and conditions of the Original Reimbursement Agreement;
WHEREAS, VSSI Australia and the Lender are parties to a loan agreement
dated as of the date hereof (the "Second Loan Agreement" and with the First Loan
Agreement collectively referred to as the "Loan Agreements") providing for
(among other things) the making of a loan of up to US$30,000,000 (the "Second
Loan" and with the First Loan collectively referred to as the "Loans") by the
Lender to VSSI Australia to enable VSSI Australia to finance the Bahamian flag
vessel DAMPIER SPIRIT;
WHEREAS, it is a condition precedent to the making of the Second Loan that
the Loan Guarantor deliver to the Lender an amended and restated letter of
guarantee (the "Amended Letter of Guarantee"), which Amended Letter of Guarantee
amends and restates the Letter of Guarantee to provide for the guarantee of the
obligations of the Original Borrowers under the First Loan Agreement and the
obligations of VSSI Australia under the Second Loan Agreement;
WHEREAS, it is a condition precedent to the issuance of the Amended Letter
of Guarantee by the Loan Guarantor that the Loan Guarantor receive an amended
and restated standby letter of credit in the maximum stated amount of
US$78,000,000, (of which $74,000,000 secures the amount guaranteed by the Loan
Guarantor of the Loans and $4,000,000 secures interest and expenses) (the
"Amended Letter of Credit") from the Agent on behalf of the Banks as security
for the obligations of the Borrowers to the Loan Guarantor in respect of the
Amended Letter of Guarantee;
WHEREAS, the Obligors have requested the Agent on behalf of the Banks to
issue the Amended Letter of Credit; and
WHEREAS, the Banks are willing to to have the Agent issue the Amended
Letter of Credit on their behalf on the terms and conditions of this Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
WITNESSETH THAT:
1. DEFINITIONS
1.1 Defined Terms. In this Agreement the words and expressions specified below
shall, except where the context otherwise requires, have the meanings
attributed to them below:
"Acceptable Accounting Firm"
means Ernst & Young, or such other recognized international accounting firm
as shall be approved by the Majority Banks, such approval not to be
unreasonably withheld;
"Accession Agreement"
an agreement substantially in the form of Exhibit K hereto pursuant to
which a wholly-owned subsidiary of the Guarantor is made an Obligor in
accordance with the terms hereof; "Adjusted Consolidated Net Income" means
the aggregate net income (or loss) of the Guarantor and its consolidated
Subsidiaries determined in accordance with GAAP; provided that the
following items shall be excluded in computing Adjusted Consolidated Net
Income (without duplication): (i) the effects of foreign currency exchange
adjustments under GAAP, (ii) any gains or losses (on an after-tax basis)
attributable to vessel sales or to prepayment of Indebtedness and (iii) any
extraordinary gains (or losses).
"Adjusted Stated Amount"
means the Stated Amount less the aggregate of (i) $4,000,000 and (ii) any
principal amount of the Loans theretofore prepaid;
"Affiliate"
means, with respect to any Person, any other Person directly or indirectly
controlling, controlled by or under common control with such Person. For
the purposes of this definition, "control" (including, with correlative
meanings, the terms "controlled by" and "under common control with") as
applied to any Person means the possession directly or indirectly of the
power to direct or cause the direction of the management and policies of
that Person whether through ownership of voting securities or by contract
or otherwise;
"Agent"
has the meaning ascribed thereto in the Preamble to this Agreement;
"Agreement"
means this Agreement as such term is used in the Preamble hereto as the
same shall be amended, modified or supplemented from time to time;
"Alliance"
has the meaning ascribed thereto in the Recitals to this Agreement;
"Amended Letter of Credit"
means the amended and restated irrevocable letter of credit in the maximum
stated amount of $78,000,000 referred to in the Recitals of this Agreement,
to be issued by the Agent on behalf of the Banks to the Beneficiary
pursuant to this Agreement, substantially in the form of Exhibit A, as
amended and in effect from time to time and any letter of credit
substituted therefor pursuant to Clause 2.7;
"Amended Letter of Guarantee"
has the meaning ascribed thereto in the Recitals to this Agreement;
"Ampol"
means Australian Petroleum Pty Ltd. (ACN 000 032 128), a corporation
incorporated and existing under the laws of New South Wales, Australia;
"Apache"
means Apache Energy Limited (ACN 009 301 964), a corporation incorporated
and existing under the laws of Western Australia;
"Apache Charter"
the charterparty agreement dated December 10, 1997 entered into by VSSI
Australia with Apache relating to the DAMPIER SPIRIT, as the same may be
modified or amended in accordance with this Agreement;
"Applicable Office"
means, as to each Bank, its office located at its address set forth on the
signature pages hereof or such other office as such Bank may hereafter
designate as its Applicable Office by notice to the Obligors and the Agent;
"Assignment and Assumption Agreement(s)"
means the Assignment and Assumption Agreement(s) executed pursuant to
Clause 8 substantially in the form of Exhibit I;
"Assignment Notices"
means:
a) the notices with respect to the Earnings Assignments executed by the
Owners pursuant to Clause 4.1(c) substantially in the form set out in
Exhibit 1 thereto or in such other form as the Agent may agree;
b) the notices with respect to the Subcharter Assignments executed by
Alliance pursuant to Clause 4.1(d) substantially in the form set out
in Exhibit 1 thereto or in such other form as the Agent may agree; and
c) the notices with respect to the Insurances Assignments executed by the
Owners pursuant to Clause 4.1(c) substantially in the form set out in
Exhibit 1 thereto or in such other form as the Agent may agree;
"Assignments"
means the Earnings Assignments, the Subcharter Assignments and the
Insurances Assignments;
"Australian Vessels"
means the BARRINGTON and PALMERSTON;
"Bahamian Vessels"
means the DAMPIER SPIRIT and NASSAU SPIRIT;
"Banking Day(s)"
means day(s) on which banks are open for the transaction of business of the
nature required by this Agreement in Vancouver, Canada, Rotterdam, the
Netherlands, Curacao, Netherlands Antilles, Sydney, Australia and New York,
New York;
"Banks"
has the meaning ascribed thereto in the Preamble to this Agreement;
"BARRINGTON"
means the Australian registered tanker vessel BARRINGTON, Official No.
853229;
"Beneficiary"
has the meaning ascribed thereto in the Preamble to this Agreement;
"Bond Offering"
means that certain issue by the Guarantor of US$225,000,000 of 8.32%
First Preferred Mortgage Notes due February 1, 2008 made pursuant to
the Prospectus dated January 19, 1996;
"Borrowers"
has the meaning ascribed thereto in the Preamble to this Agreement;
"Charter(s)"
means
(a) the time charterparty agreements dated December 17, 1997 entered into
by each of the Original Borrowers with Alliance relating to such
Original Borrower's Vessel, or any substitute charter acceptable to
the Majority Banks in their sole discretion,
(b) the charterparty agreement dated January 10, 1998 entered into by VSSI
Transport with Palm Shipping relating to the NASSAU SPIRIT or any
substitute charter acceptable to the Majority Banks in their sole
discretion, and (c) the Apache Charter or any substitute charter
acceptable to the Majority Banks in their sole discretion;
"Charterers"
means Alliance and/or Palm Shipping and/or Apache;
"Code"
means the Internal Revenue Code of 1986, as amended, and any successor
statute and regulations promulgated thereunder;
"Commitment"
in relation to a Bank, means the portion of the Letter of Credit
Amount set out opposite its name on the signature pages hereto or, as
the case may be, in any relevant Assignment and Assumption Agreement;
"Compliance Certificate"
has the meaning ascribed thereto in Clause 7.1A(iv)(a);
"Consents"
means
(i) the Consent and Agreement to each of the Earnings Assignments
executed by the relevant Charterer substantially in the form set out
in Exhibit G1 and (ii) the Consent and Agreements to the Subcharter
Assignments executed or to be executed by Ampol to the Subcharter
Assignments substantially in the form of Exhibit G2 together with any
amendments thereto;
"Consolidated EBITDA"
means, with respect to any Person for any period, the sum of
(i) income from vessel operations, (ii) depreciation expense and
(iii) amortization expense, as presented in the financial statements
of such Person;
"Consolidated Interest Expense"
means, with respect to any Person for any period, the aggregate amount of
(i) interest expense and (ii) losses on marketable securities less
(iii) interest income and (iv) gains on marketable securities as disclosed
on the financial statements of such Person;
"Currency Agreement"
means any foreign exchange contract, currency swap agreement or other
similar agreement or arrangement designed to protect the Guarantor or any
of its Subsidiaries against fluctuations in currency values to or under
which the Guarantor or any of its Subsidiaries is a party or a beneficiary
on the date of this Agreement or becomes a party or a beneficiary
thereafter;
"DAMPIER SPIRIT"
means the Bahamian registered vessel DAMPIER SPIRIT, Official No. 730939;
"Date of Issuance"
means the date on which the Amended Letter of Credit is issued pursuant to
Clause 2.1;
"DOC"
means a document of compliance issued to an Operator in accordance with
rule 13 of the ISM Code;
"Dollars" and the sign "$"
means the legal currency, at any relevant time hereunder, of the United
States of America and, in relation to all payments hereunder, in same day
funds settled through the New York Clearing House Interbank Payments System
(or such other Dollar funds as may be determined by the Banks to be
customary for the settlement in New York City of banking transactions of
the type herein involved);
"Earnings Assignments"
means the assignments in respect of the earnings of each Vessel from any
and all sources, including, but not limited to, the respective Charter
relating to such Vessel, executed or to be executed by the relevant Owner
in favor of the Security Trustee for the benefit of the Banks pursuant to
Clause 4.1(c)(iii), substantially in the form of Exhibits D1 and D2;
"Environmental Approvals"
shall have the meaning ascribed thereto in Clause 3.1(r);
"Environmental Claim"
shall have the meaning ascribed thereto in Clause 3.1(r);
"Environmental Laws"
shall have the meaning ascribed thereto in Clause 3.1(r);
"Equity"
means, for any Person, such Person's shareholders' equity (inclusive of
retained earnings) as reflected on such Person's most recent quarterly
unaudited or annual audited financial statements, as the case may be, as
prepared in accordance with GAAP;
"Event(s) of Default"
means any of the events set out in Clause 6;
"Expiration Date"
has the meaning set forth in Clause 2.1(b);
"First Loan Agreement"
has the meaning ascribed thereto in the Recitals to this Agreement;
"GAAP"
has the meaning ascribed thereto in Clause 1.3;
"Guarantor"
means Teekay Shipping Corporation, a corporation organized and existing
under the laws of the Republic of Liberia;
"Guaranty"
means the amended and restated guaranty in respect of the joint and several
obligations of the Obligors under this Agreement to be executed by the
Guarantor in favor of the Security Trustee for the benefit of the Banks
pursuant to Clause 4.1(e) substantially in the form of Exhibit B;
"Indebtedness"
means, with respect to any Person at any date of determination (without
duplication), (i) all indebtedness of such Person for borrowed money,
(ii) all obligations of such Person evidenced by bonds, debentures, notes
or other similar instruments, (iii) all obligations of such Person in
respect of letters of credit or other similar instruments (including
reimbursement obligations with respect thereto), (iv) all obligations of
such Person to pay the deferred and unpaid purchase price of property or
services, which purchase price is due more than six months after the date
of placing such property in service or taking delivery thereof or the
completion of such services, except trade payables, (v) all obligations on
account of principal of such Person as lessee under capitalized leases,
(vi) all indebtedness of other Persons secured by a lien on any asset of
such Person, whether or not such indebtedness is assumed by such Person;
provided that the amount of such indebtedness shall be the lesser of
(a) the fair market value of such asset at such date of determination and
(b) the amount of such indebtedness, (vii) all indebtedness of other
Persons guaranteed by such Person to the extent such indebtedness is
guaranteed by such Person, and (viii) to the extent not otherwise included
in this definition, the net obligations under Currency Agreements and
Interest Rate Agreements. The amount of Indebtedness of any Person at any
date shall be the outstanding balance at such date of all unconditional
obligations as described above and, with respect to contingent obligations,
the maximum liability upon the occurrence of the contingency giving rise to
the obligation, provided that the amount outstanding at any time of any
indebtedness issued with original issue discount shall be the face amount
of such indebtedness less the remaining unamortized portion of the original
issue discount of such indebtedness at such time as determined in
conformity with GAAP; and provided further that Indebtedness shall not
include any liability for federal, state, local or other taxes;
"Indenture"
means that certain Indenture dated as of January 29, 1996 by and among,
inter alia, the Guarantor and United States Trust Company of New York
executed pursuant to the Bond Offering;
"Insurances Assignments"
means the assignments in respect of the insurances of each Vessel, executed
or to be executed by the relevant Borrower in favor of the Security Trustee
for the benefit of the Banks pursuant to Clause 4.1(c)(ii), substantially
in the form of Exhibit E;
"Interest Coverage Ratio"
means, with respect to any Person on any date, the ratio of (i) the
aggregate amount of Consolidated EBITDA of such Person for the four fiscal
quarters for which financial information in respect thereof is available
immediately prior to such date to (ii) the aggregate Consolidated Interest
Expense of such Person during such four fiscal quarters. In making the
foregoing calculation, (A) pro forma effect shall be given to (1) any
Indebtedness incurred subsequent to the end of the four-fiscal-quarter
period referred to in clause (i) and prior to such date (other than
Indebtedness incurred under a revolving credit or similar arrangement to
the extent of the commitment thereunder (or under any predecessor revolving
credit or similar arrangement) in effect on the last day of such period),
(2) any Indebtedness incurred during such period to the extent such
Indebtedness is outstanding at such date and (3) any Indebtedness to be
incurred on such date, in each case as if such Indebtedness had been
incurred on the first day of such four-fiscal-quarter period and after
giving pro forma effect to the application of the proceeds thereof as if
such application had occurred on such first day; (B) Consolidated Interest
Expense attributable to interest on any Indebtedness (whether existing or
being incurred) computed on a pro forma basis and if bearing a floating
interest rate shall be computed as if the rate in effect on such date
(taking into account any Interest Rate Agreement applicable to such
Indebtedness if such Interest Rate Agreement has a remaining term in excess
of 12 months) had been the applicable rate of the entire period; (C) there
shall be excluded from Consolidated Interest Expense any Consolidated
Interest Expense related to any amount of Indebtedness that was outstanding
during such four-fiscal-quarter period or thereafter but that is not
outstanding or is to be repaid on such date, except for Consolidated
Interest Expense accrued (as adjusted pursuant to clause (B)) during such
four-fiscal-quarter period under a revolving credit or similar arrangement
to the extent of the commitment thereunder (or under any successor
revolving credit or similar arrangement) in effect on such date; and
(D) pro forma effect shall be given to asset dispositions and asset
acquisitions (including giving pro forma effect to the application of
proceeds of any asset disposition) that occur during such
four-fiscal-quarter period or thereafter and prior to such date as if they
had occurred and such proceeds had been applied on the first day of such
four-fiscal-quarter period; provided that to the extent that clause (D) of
this sentence requires that pro forma effect be given to an asset
acquisition or asset disposition, such pro forma calculation shall be based
upon the four full fiscal quarters immediately preceding such date of the
Person, or division or line of business of the Person, that is acquired or
disposed for which financial information is available; and provided further
that for purposes of determining the Interest Coverage Ratio with respect
to the acquisition of a Vessel or the financing thereof, the Guarantor may
apply Consolidated EBITDA for such Vessel based upon historical earnings of
such Vessel or, if none, of its most comparable Vessel during the
applicable four-fiscal-quarter period, or if, in the good faith
determination of the board of directors of the Guarantor, the Guarantor
does not have a comparable Vessel, based upon industry average earnings for
comparable vessels;
"Interest Rate Agreements"
means any interest rate protection agreement, interest rate future
agreement, interest rate option agreement, interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement, interest rate
hedge agreement or other similar agreement or arrangement designed to
protect the Guarantor or any of its Subsidiaries against fluctuations in
interest rates to or under which the Guarantor or any of its Subsidiaries
is a party or a beneficiary on the date of this Agreement or becomes a
party or a beneficiary hereafter;
"ISM Code"
means the International Safety Management Code for the Safe Operating of
Ships and for Pollution Prevention constituted pursuant to Resolution A.
741(18) of the International Maritime Organization and incorporated into
the Safety of Life at Sea Convention and includes any amendments or
extensions thereto and any regulation issued pursuant thereto;
"L/C Fee"
shall have the meaning ascribed thereto in Clause 2.4;
"Lender"
has the meaning ascribed thereto in the Preamble to this Agreement;
"Letter of Credit Amount"
means, with respect to any Bank at any time, (i) prior to the Date of
Issuance, the amount set forth opposite the name of such Bank on the
signature pages hereof and (ii) on or after the Date of Issuance, such
Bank's Percentage Share of the Stated Amount at such time;
"Letter of Credit Liabilities"
means, as of any date, the sum of (i) the Stated Amount as of such date
plus (ii) the aggregate unpaid amount of all Reimbursement Obligations
(together with accrued interest thereon) as of such date payable to all
Banks in respect of drawings or other payments made under or pursuant to
the Amended Letter of Credit on or prior to such date;
"Loan Agreements"
has the meaning ascribed thereto in the Recitals to this Agreement;
"Loans"
has the meaning ascribed thereto in the Recitals to this Agreement;
"Majority Banks"
means Banks whose Commitments exceed fifty percent (50%) of total
Commitments;
"Management Agreement(s)"
means the agreement(s) entered into between the respective Manager and each
Borrower in respect of the commercial and technical management of the
Vessels;
"Manager"
means Australian Tankships Pty. Ltd. (ACN 079 641 580), an Australian
corporation and a Wholly Owned Subsidiary of the Guarantor, in respect of
the Australian Vessels and Teekay Shipping Limited, a Bahamian company and
also a Wholly Owned Subsidiary of the Guarantor, in respect of the Bahamian
Vessels;
"Materials of Environmental Concern"
has the meaning ascribed thereto in Clause 3.1(r);
"Mortgage Amendments"
means the amendment no. 1 to the first priority Australian ship mortgages
dated December 18, 1997 with respect to each Australian Vessel, in each
case executed or to be executed by the relevant Owner in favor of the
Security Trustee for the benefit of the Banks, pursuant to
Clause 4.1(c)(i), and to be substantially in the form of Exhibit C3 ;
"Mortgages" means (i) the first priority statutory Bahamian mortgage and
deed of covenants collateral thereto with respect to each Bahamian Vessel
and (ii) the first priority Australian ship mortgages with respect to each
Australian Vessel, in each case executed or to be executed by the relevant
Owner in favor of the Security Trustee for the benefit of the Banks,
pursuant to Clause 4.1(c)(i), and to be substantially in the form of
Exhibits C1 and C2, respectively;
"NASSAU SPIRIT"
means the Bahamian registered vessel NASSAU SPIRIT, Official No. 730910;
"Net Debt"
means (x) the sum of long term debt and capital leases (including the
current portions) less (y) to the extent positive, the sum of cash
(including cash held in retention accounts for the payment of debt and cash
pledged as collateral against balance sheet obligations) and marketable
securities less the sum of the current portion of long term debt and
capital leases (excluding the current portion of advances outstanding under
any revolving credit facilities);
"Net Debt to Equity Ratio"
means, the ratio of the Guarantor's consolidated Net Debt to its
consolidated Equity as reflected on the most recent quarterly unaudited or
annual audited financial statements, as the case may be, as calculated by
the Guarantor, which calculation shall be set forth in the Compliance
Certificate accompanying such financial statements, and agreed by the
Agent;
"Obligor(s)"
has the meaning ascribed thereto in the Recitals to this Agreement;
"Operator"
means any Person who is from time to time concerned in the operation of a
Vessel and falls within the definition of "Company" set out in rule 1.1.2
of the ISM Code;
"Original Banks"
has the meaning ascribed thereto in the Recitals to this Agreement;
"Original Borrowers"
has the meaning ascribed thereto in the Recitals to this Agreement;
"Original Reimbursement Agreement"
has the meaning ascribed thereto in the Recitals to this Agreement;
"Owner"
means the relevant registered owner of a Vessel;
"Palm Shipping"
means Palm Shipping Inc., a corporation organized and existing under the
laws of the Republic of Liberia and an affiliate of the Obligors and a
Wholly Owned Subsidiary of the Guarantor;
"PALMERSTON"
means the Australian registered tanker vessel PALMERSTON, Official No.
853755;
"Palmstar Thistle"
has the meaning ascribed thereto in the Preamble to this Agreement;
"Parent"
means, with respect to any Bank, any Person controlling such Bank;
"Percentage Share"
means, with respect to any Bank, the percentage specified as such Bank's
Percentage Share on the signature pages hereof or in any Assignment and
Assumption Agreement executed in connection herewith;
"Person"
means any individual, sole proprietorship, corporation, partnership
(general or limited), limited liability company, business trust, bank,
trust company, 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;
"Pledge"
means the pledge of shares of VSSI Australia and VSSI Transport to be
executed by the Guarantor pursuant to Clause 4.1(e)(ii) substantially in
the form of Exhibit H;
"Prime Rate"
means the rate of interest announced by the Reference Bank in New York City
from time to time as its base, prime or reference rate;
"Reference Bank"
means Rabobank International, New York branch;
"Reimbursement Obligations"
means, with respect to any Bank as of any date, the obligations of the
Obligors then outstanding and unpaid to reimburse such Bank pursuant to
Clause 2.3 for the amounts paid by such Bank in respect of all drawings or
other payments made under or pursuant to the Amended Letter of Credit;
"Reimbursement Period"
means the period from the Date of Issuance until the Expiration Date;
"Security Documents"
means the Guaranty, the Pledge, the Mortgages, the Mortgage Amendments, the
Assignments, the Assignment Notices, the Consents, and any other documents
that may be executed as security for the Obligors' obligations hereunder;
"Security Trustee"
has the meaning ascribed thereto in the Preamble to this Agreement;
"SMC"
means a safety management certificate issued in respect of a Vessel in
accordance with rule 13 of the ISM Code;
"Stated Amount"
means the amount reflected in Column 1 of Schedule A to the Amended Letter
of Credit in the initial amount of $78,000,000, such amount being reduced
six months after each installment date under the Loan Agreements by the
aggregate of the scheduled amount of principal due under the Loan
Agreements on such date;
"Subcharter Assignments"
means the assignments in respect of the Sub-Charters executed or to be
executed by Alliance in favor of the Security Trustee for the benefit of
the Banks pursuant to Clause 4.1(d) substantially in the form of Exhibit F
;
"Sub-Charters"
means the sub-charter agreements relating to each of the Australian
Vessels, entered into between Alliance and Ampol;
"Subsidiary"
is defined to mean, with respect to any Person, any business entity of
which more than 50% of the outstanding voting stock is owned directly or
indirectly by such Person and one or more other Subsidiaries of such
Person;
"Taxes"
means any present or future income or other taxes, levies, duties, charges,
fees, deductions or withholdings of any nature now or hereafter imposed,
levied, collected, withheld or assessed by any taxing authority whatsoever;
"Transaction Documents"
means this Agreement, the Amended Letter of Guarantee, the Amended Letter
of Credit, the Security Documents and any Assignment and Assumption
Agreement;
"VSSI Australia"
has the meaning ascribed thereto in the Preamble to this Agreement;
"VSSI Transport"
has the meaning ascribed thereto in the Preamble to this Agreement;
"Vessels"
means the Australian Vessels and the Bahamian Vessels; and
"Wholly Owned"
means, with respect to any Subsidiary of any Person, such Subsidiary of
such Person if all of the outstanding common stock or other similar equity
ownership interests (but not including preferred stock) in such Subsidiary
(other than any director's qualifying share or investments by foreign
nationals mandated by applicable law) is owned directly or indirectly by
such Person.
1.2 Construction. Words importing the singular number only shall include the
plural and vice versa. Words importing persons shall include companies,
firms, corporations, partnerships, unincorporated associations and their
respective successors and assigns.
1.3 Accounting Terms. All accounting terms not specifically defined herein
shall be construed in accordance with generally accepted accounting
principles as in effect from time to time in the United States of America
consistently applied ("GAAP") and all financial statements submitted
pursuant to this Agreement shall be prepared in accordance with, and all
financial data submitted pursuant hereto shall be derived from financial
statements prepared in accordance with, GAAP.
2. LETTER OF CREDIT
2.1 Issuance of the Amended Letter of Credit.
(a) Subject to the terms and conditions of this Agreement and in reliance
on the representations, warranties and covenants herein contained, the
Banks hereby agree, upon satisfaction of the conditions precedent
contained in Clause 4 to procure that the Agent shall issue on behalf
of the Banks the Amended Letter of Credit in favor of the Beneficiary.
(b) The Agent, on behalf of the Banks,shall issue the Amended Letter of
Credit upon three Business Days' prior written notice from the
Obligors to the Agent requesting the issuance of the Amended Letter of
Credit and setting forth the Date of Issuance, which date shall be no
later than May 31, 1998, with respect thereto and the date on which
such Amended Letter of Credit is to expire which date shall be no
later than June 17, 2006 (the "Expiration Date"). Each Bank severally
and not jointly agrees, on the terms and conditions set forth herein,
to cause the Agent to issue on behalf of the Banks on such date the
Amended Letter of Credit to the Beneficiary in the amount of
$78,000,000, effective on the Date of Issuance and expiring on the
Expiration Date. The commitment of each Bank to cause the Agent to
issue on behalf of the Banks the Amended Letter of Credit and its
obligations hereunder and under the Amended Letter of Credit shall be
limited to its Letter of Credit Amount as in effect from time to time.
(c) Upon receipt of the Notice of Issuance, the Agent shall promptly
notify each Bank of the contents thereof and of its Percentage Share
of the amount of the Amended Letter of Credit.
(d) In the event that the Borrowers prepay part of the Loans pursuant to
the terms of the relevant Loan Agreement and the Beneficiary consents
to a corresponding reduction of the Stated Amount of the Amended
Letter of Credit, the Banks agree that they shall cause the Agent to
issue on their behalf an amended letter of credit with a reduced
Stated Amount.
2.2. Several Obligations; Drawings.
(a) The obligations of the Banks hereunder and under or in respect of the
Amended Letter of Credit are several and not joint, and no Bank shall
be liable for the failure of any other Bank to perform its obligations
hereunder or thereunder. The failure of any Bank to honor its
obligations hereunder or in respect of the Amended Letter of Credit
shall not excuse the several obligations of the other Banks hereunder
or thereunder.
(b) Upon receipt from the Beneficiary of any demand for payment under the
Amended Letter of Credit made in accordance with the terms thereof,
the Agent shall promptly notify the Obligors and each Bank as to the
amount to be paid by such Bank as a result of such demand and the date
for such payment (which shall be a Business Day). Upon receipt of such
notice from the Agent, each Bank shall promptly transfer the amount to
be paid by it as a result of such demand in immediately available
funds to the account specified in or pursuant to Clause 5.1 or such
other account as the Agent shall have specified in such notice. Unless
the Agent shall have received notice from a Bank prior to the date for
such payment that such Bank will not make available to the Agent such
Bank's Percentage Share of such payment, the Agent may assume that
such Bank has made an amount equal to such Percentage Share available
to the Agent on the date for such payment in accordance with this
subclause (b) and the Agent may, in reliance upon such assumption,
make available to the Beneficiary on such date a corresponding amount.
If and to the extent that the Agent in reliance upon such assumption
shall have made available to the Beneficiary, on behalf of any Bank,
an amount equal to such Bank's Percentage Share of any payment
pursuant to this Clause and such Bank shall not have made an amount
equal to such Percentage Share available to the Agent and the Agent
shall not have been reimbursed by the Obligors for such amount, such
Bank agrees to pay to the Agent forthwith on demand such amount,
together with interest thereon, for each day from the date such amount
is made available to the Beneficiary until the date such amount is
repaid to the Agent at a rate per annum equal to the Prime Rate for
each such day.
2.3. Reimbursement Obligation; Interest.
(a) The Obligors agree to pay to the Agent, for the account of the Banks,
immediately after (and on the same Business Day as) (i) any amount is
drawn under, or otherwise paid pursuant to, the Amended Letter of
Credit, a sum equal to the amount so drawn or paid and interest on
such amount as provided in subclauses (b) and (c) below and (ii) any
Event of Default shall have occurred and be continuing, an amount
equal to the aggregate amount (if any) paid or prepaid by the Agent
pursuant to Clause 6.1, and interest on such amount as provided in
subclauses (b) and (c) below; provided that if the Agent shall receive
such payment from the Obligors later than 3:00 P.M. (New York City
time) on such Business Day, such payment shall be deemed to have been
received by the Agent on the next succeeding Business Day and interest
shall accrue thereon pursuant to subclauses (b) and (c) below from the
date such payment was due. The Obligors agree that all payments
required hereunder shall be free and clear of all set-offs,
withholdings, taxes, claims or other deductions of any kind
whatsoever.
(b) Any amount owing by the Obligors pursuant to subclause (a) and not
paid when due shall bear interest, payable upon demand, for each day
from and including the date payment thereof was due to but excluding
the date of actual payment thereof in full at a rate per annum equal
to the sum of 2% plus the Prime Rate for such day.
(c) Until payment of any amount due hereunder is made, the Obligors'
obligations to the Agent and the Banks under Clause 2.3(a) shall be
evidenced by a loan account ledger maintained by the Agent in the name
of the Obligors. The Agent shall determine any amounts payable by the
Obligors under this Clause 2.3 and any such determination shall be
conclusive absent manifest error.
2.4 Commission and Fees. (a) L/C Fee. The Obligors agree to pay the Agent, for
distribution to the Banks, a letter of credit fee (the "L/C Fee"), on the
Adjusted Stated Amount quarterly in arrears for the period from the Date of
Issuance of the Amended Letter of Credit until the earlier of (i) the
Expiration Date or (ii) termination of the Amended Letter of Credit in
accordance with the terms hereof or thereof, at the rate as determined in
accordance with this Clause 2.4; provided, however, that the Obligors shall
not be obligated to pay the L/C Fee for the period from the maturity date
or prepayment of the Loans until the Expiration Date if the Loans have been
repaid in full. The L/C Fee will vary based upon the Net Debt to Equity
Ratio in accordance with the following schedule:
Net Debt to Equity Ratio: L/C Fee
If greater than or equal to 1.5 to 1.0 0.85% p.a.
If greater than or equal to 1.0 to 1.0 but less than 1.5 to 1.0 0.70% p.a.
If less than 1.0 to 1.0 0.60% p.a.
The L/C Fee shall be determined based on the most recent financial
information delivered to the Agent in accordance with Clause 7.1A(iv)(a)
and shall change, effective as of the beginning of any fiscal quarter
following the quarter during which a change in such ratio occurred.
(b) Commitment Commission. The Obligors agree to pay on the Date of
Issuance a commitment commission on the available but unissued amount
of the Adjusted Stated Amount for the period commencing on the date of
execution of this Agreement by the Obligors and ending on the Date of
Issuance. The Commitment Commission shall accrue from day to day and
be calculated on the actual number of days elapsed and a three hundred
sixty (360) day year. The Commitment Commission will vary based upon
the Net Debt to Equity Ratio in accordance with the following
schedule:
Net Debt to Equity Ratio: Commitment Commission
If greater than or equal to 1.5 to 1.0 0.34% p.a.
If greater than or equal to 1.0 to 1.0 but less than 1.5 to 1.0 0.28% p.a.
If less than 1.0 to 1.0 0.24% p.a.
The Commitment Commission shall be determined based on the most recent
financial information delivered to the Agent and shall change, effective as
of the beginning of any fiscal quarter following the quarter during which a
change in such ratio occurred.
(c) Front-End Fee. The Obligors agree to pay a non-refundable front-end
fee equal to .25% of the Adjusted Stated Amount (the "Front-End Fee")
as of the Date of Issuance, payable to the Banks on the Date of
Issuance, to be allocated (including the Original Front End Fee (as
hereinafter defined) by the Agent based upon their Commitments. The
front-end fee (the "Original Front-End Fee") paid by the Original
Borrowers, Palmstar Thistle and Alliance in connection with the First
Loan Agreement pursuant to a fee letter dated December 17, 1997
executed by the Guarantor on their behalf shall be credited against
the Front-End Fee due hereunder.
2.5 Increased Cost. If any change in applicable law, regulation or regulatory
requirement or in the interpretation or application thereof by any
governmental or other authority, shall:
(i) change the basis of taxation (excluding any change in the rate of any
Tax) to any of the Banks with respect to the Amended Letter of Credit
or any drawing or payment thereunder or pursuant thereto or its
obligations to make payments under or in respect of the Amended Letter
of Credit or to issue the Amended Letter of Credit pursuant to this
Agreement or with respect to payments of principal or interest or any
other payment due or to become due pursuant to this Agreement (other
than a change in taxation of the overall net income of such Bank
effected by the jurisdiction of organization or the jurisdiction of
the principal place of business of such Bank, the United States of
America, the State or City of New York or any governmental subdivision
or other taxing authority having jurisdiction over the Bank (unless
such jurisdiction is asserted solely by reason of the activities of
any of the Obligors) or such other jurisdiction where the obligations
under this Agreement may be payable), or
(ii) impose, modify or deem applicable any reserve requirements (including,
without limitation, any such requirement imposed by the Board of
Governors of the Federal Reserve System or other comparable
governmental authority against letters of credit or letters of
commitment issued by, or assets of, or deposits with or for the
account of, or credit extended by, any Bank) or require the making of
any special deposits against or in respect of any assets or
liabilities of, deposits with or for the account of, or loans by, any
of the Banks, or
(iii)impose on any of the Banks any other condition affecting its
obligations under or in respect of this Agreement, or the Amended
Letter of Credit or any part thereof, and the result of the foregoing
is either to increase the cost to such Bank of making available or
maintaining the Amended Letter of Credit or any part thereof or to
reduce the amount of any payment received by such Bank, then and in
any such case if such increase or reduction in the opinion of such
Bank materially affects the interests of such Bank under or in
connection with this Agreement, then:
(a) such Bank shall notify the Agent and Obligors of the happening of
such event,
(b) the Obligors agree forthwith upon demand to pay to the Agent or
such Bank such amount as such Bank certifies to be necessary to
compensate such Bank, for such additional cost or such reduction,
and
(c) any such demand as is referred to in sub-clause (b) of this
Clause 2.5 may be made by such Bank at any time before or after
any repayment of the Letter of Credit Liabilities.
2.6 Illegality. In the event that by reason of any change in any applicable
law, regulation or regulatory requirement or in the interpretation thereof
any of the Banks reasonably concludes that it has become unlawful for such
Bank to maintain or give effect to its obligations as contemplated by this
Agreement, such Bank shall inform the Agent, the Agent shall forthwith give
notice thereof to the other Banks and the Obligors to that effect,
whereafter the liability of such Bank to make payments under or in respect
of the Amended Letter of Credit or to issue the Amended Letter of Credit
pursuant to this Agreement shall forthwith cease and the Obligors shall be
required to (x) replace such Bank with one or more banks pursuant to the
provisions of Clause 2.7(a),(y) pay to the Agent an amount in Dollars equal
to such Bank's Letter of Credit Amount as of such date which amount shall
be retained by the Agent until such time as this Agreement is terminated
pursuant to Clause 2.7 and applied by the Agent from time to time to pay
such Bank's Percentage Share of any drawings or other payments under or
pursuant to the Amended Letter of Credit or (z) obtain the Beneficiary's
consent to the discharge of such Bank from its obligations under the
Amended Letter of Credit; provided that, upon any such discharge (except if
such Bank is replaced pursuant to (x) above), the Stated Amount shall be
reduced by the amount of such Bank's Letter of Credit Amount. In any such
event, but without prejudice to the aforesaid obligations of the Obligors
to prepay such Bank's Letter of Credit Amount, the Obligors and such Bank
shall negotiate in good faith with a view to agreeing on terms for making
its Letter of Credit Amount available from another jurisdiction or
otherwise restructuring the obligations under this Agreement on a basis
which is not unlawful with respect to such Bank and Agent shall use
reasonable efforts to replace such Bank with a bank for which the making
and performance of this Agreement would not be illegal.
2.7 Substitution of Banks. If (i) any Bank has demanded compensation under
Clause 2.5 or (ii) the Obligors are obligated to replace a Bank pursuant to
clause (x) of Clause 2.6(a) the Obligors shall have the right, upon twenty
(20) Business Days' prior notice to such Bank (or five Business Days' prior
notice in the case of any substitution pursuant to the foregoing clause
(ii)), to cause one or more banks (which may be one or more of the Banks),
each such bank to be acceptable to the Beneficiary and, if there shall at
such time be more than one Bank hereunder, reasonably satisfactory to the
Majority Banks (determined for this purpose as if such Bank had no Letter
of Credit Amount and no Reimbursement Obligation was payable to such Bank
hereunder), in each case with the written acknowledgment of the Agent, to
assume the obligations of the Bank to be replaced (the "Old Bank(s)") under
this Agreement and, if required by the Beneficiary, to issue (together with
the other Banks hereto) a letter of credit in the form of the Amended
Letter of Credit then outstanding but in an amount equal to the Stated
Amount then in effect. If one or more such banks in each case acceptable to
the Beneficiary are identified by the Obligors and, if required pursuant to
this Clause, approved as being reasonably satisfactory to the Majority
Banks (determined as provided above), the Banks shall consent to such
assumption and issuance pursuant to a written instrument. Upon (i) the
execution and delivery of such instrument by the Obligors, the Banks, and
the Agent, (ii) the return by the Beneficiary of the Amended Letter of
Credit, (iii) the execution and delivery to the Beneficiary of a new letter
of credit by the Banks (including the new banks but excluding the Old
Banks) and (iv) payment by the new banks (the "Substitution Banks") to the
Old Banks of all accrued fees to but excluding the date of such assumption
and issuance, each of such Substitution Banks shall become a bank party to
this Agreement (if it is not already a party hereto) and shall from the
date of such substitution have all the rights and obligations of a Bank
with a Letter of Credit Amount and Percentage Share (which, if such
Substitution Bank is already a party hereto, shall take into account such
Substitution Bank's existing Letter of Credit Amount and Percentage Share)
and the Old Bank shall from date of such substitution be released from its
obligations under this Agreement and the Amended Letter of Credit, and no
further consent or action by any other Person shall be required; provided
that on the date of such assumption and issuance (x) all amounts payable
under Clause 2.3 shall have been paid in full and (y) no Event of Default
shall have occurred and be continuing on such date. In the event that there
is more than one Bank party hereto and the entity which is the Agent, in
its capacity as a Bank, is required to transfer all of its rights and
obligations hereunder pursuant to this Clause 2.7, the Agent shall,
promptly upon the consummation of any assumption pursuant to this Clause
2.7, resign as Agent hereunder and the Majority Banks (determined as if the
Bank resigning as Agent had no Letter of Credit Amount and no Reimbursement
Obligation was payable to such Bank hereunder) shall (subject to the
consent of the Obligors), have the right to appoint another Bank as
successor Agent, all in accordance with Clause 12.11.
2.8 General Provisions as to Payment. (a) All Payments to be made by the
Obligors shall be made in Dollars and in immediately available funds to the
Agent at its address specified in or pursuant to Clause 7.1. The Agent
shall promptly distribute to each of the Banks its pro rata share in
accordance with its Percentage Share of each such Payment (other than a
Payment pursuant to Clause 2.6) received by the Agent for the account of
the Bank.
(b) Whenever any payment hereunder, including without limitation, any
payment due to the Agent pursuant to Clause 2.3, 2.4, 2.5, or 2.6,
shall be due on a day which is not a Business Day, the date for
payment thereof shall be extended to the next succeeding Business Day
and any interest payable thereon shall be payable for such extended
time at the specified rate. If the date for any payment is extended by
operation of law or otherwise, interest thereon shall be payable for
such extended time.
(c) Interest and any fees payable hereunder shall be computed on the basis
of a year of 360 days and paid for the actual number of days elapsed
from and including the first day of the period for which they are due
to but excluding the last day thereof.
(d) Any amount owed to the Agent or any Bank under this Agreement not paid
when due shall bear interest, payable upon demand, for each day from
and including the date payment thereof was due to but excluding the
date of actual payment thereof in full as provided in subclause (b) of
Clause 2.3.
2.9 Obligations Absolute. The obligations of the Obligors under this Agreement
shall be absolute, unconditional and irrevocable, and shall be performed
strictly in accordance with the terms of this Agreement, under all
circumstances whatsoever, including without limitation the following
circumstances:
(a) unenforceability for any reason of this Agreement or the Amended Letter
of Credit;
(b) any modification, amendment or waiver of, or any consent to, departure
from, or supplement to, this Agreement or the Amended Letter of
Credit; provided that neither the Agent nor any Bank shall enter into
any written amendment to, or written modification or waiver of, the
Amended Letter of Credit without the consent of the Obligors;
(c) the existence of any claim, set-off, defense or other right which the
Obligors may have at any time against the Beneficiary (or any Person
for whom the Beneficiary may be acting), any Affiliate of the
Beneficiary, the Agent, any Bank or any other Person, whether in
connection with this Agreement, the Amended Letter of Credit, or the
Loan Agreements or any unrelated transaction; provided that nothing
herein shall prevent the assertion of any such claim by separate suit
or compulsory counterclaim;
(d) any statement or any other document presented under the Amended Letter
of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any
respect whatsoever;
(e) payment by the Agent or any Bank under the Amended Letter of Credit
against presentation of a draft or certificate which does not comply
with the terms of the Amended Letter of Credit; and
(f) any other act or omission to act or delay of any kind by any Bank, the
Agent or any other Person or any other event or circumstance
whatsoever which might, but for the provisions of this Clause 2.9,
constitute a legal or equitable discharge of the Obligors' obligations
hereunder;provided that, with respect to clauses (d), (e) and (f)
above, the Obligors shall not be obligated with respect to any
Reimbursement Obligation or other obligation hereunder arising solely
out of the gross negligence, willful misconduct or bad faith of the
Agent or any Bank to which such Reimbursement Obligation or such other
obligation is payable, as the case may be. Nothing in this Agreement
and no failure by the Obligors to perform any of their obligations
hereunder shall affect the several obligations of the Banks hereunder
or under the Amended Letter of Credit.
2.10 Determination of Losses. A certificate or determination notice of any
affected Bank(s) or the Agent, as the case may be, as to any matters
referred to in this Clause 2 shall, absent in manifest error, be conclusive
and binding on the Obligors.
3 REPRESENTATIONS AND WARRANTIES
3.1 In order to induce the Banks and the Agent to enter into this Agreement and
to make the Amended Letter of Credit available, each of the Obligors hereby
represents and warrants (which representations and warranties shall survive
the execution and delivery of this Agreement and the issuance of the
Amended Letter of Credit hereunder) that:
(a) Due Organization and Power. Each of the Obligors and the Guarantor is
duly formed and validly existing in good standing under the laws of
its respective jurisdiction of incorporation, has duly qualified and,
insofar as the Obligors are aware, is authorized to do business as a
foreign corporation in each jurisdiction wherein the nature of the
business transacted thereby makes such qualification necessary, has
full power to carry on its business as now being conducted and to
enter into and perform its respective obligations under the
Transaction Documents to which it is or is to be a party, and has
complied with all statutory, regulatory and other requirements
relative to such business and such agreements the noncompliance with
which could reasonably be expected to have a material adverse effect
on its business, assets or operations, condition (financial or
otherwise).
(b) Authorization and Consents. All necessary corporate action has been
taken to authorize, and all necessary consents and authorizations have
been obtained and remain in full force and effect to permit, each of
the Obligors and the Guarantor to enter into and perform its
obligations under the Transaction Documents to which it is a party
and, in the case of the Obligors, to make all payments required under
this Agreement and, as of the date of this Agreement, no further
consents or authorizations are necessary for the repayment of their
obligations under this Agreement.
(c) Filings, etc. It is not necessary to ensure (i) the legality, validity
or enforceability of this Agreement or any of the Security Documents
that any of them be filed, recorded, registered or enrolled with any
governmental, state or local authority or agency (other than (A) the
recordation of the Mortgages with the relevant ship registry and (B)
the filing of (1) the Earnings Assignments with respect to the
BARRINGTON and the PALMERSTON, (2) the Subcharter Assignments and
(3) the Insurance Assignments with respect to each Vessel, with the
Australian Securities Commission within 45 days of the execution
thereof) or that this Agreement or any Security Document be stamped
with any stamp or similar transaction tax or (ii) the admissibility in
evidence of this Agreement or any Security Document in the courts of
the State of New York, courts of New South Wales, Australia or the
Commonwealth of Australia, that any of them be filed, recorded,
registered or enrolled with any governmental, state or local authority
or agency (other than usual and customary filings and submissions in
the courts of such jurisdictions);
(d) Binding Obligations. The Transaction Documents constitute or, when
executed and delivered, will constitute, legal, valid and binding
obligations of each of the Obligors and the Guarantor as is a party
thereto enforceable against each thereof as is a party thereto in
accordance with their terms, except to the extent that such
enforcement may be limited by equitable principles, principles of
public policy or applicable bankruptcy, insolvency, reorganization,
moratorium or other laws affecting generally the enforcement of
creditors' rights.
(e) No Violation. The execution and delivery of, and the performance of
the provisions of, the Transaction Documents by each of the Obligors
and the Guarantor as is a party thereto, do not, and will not during
the term of this Agreement, contravene (i) any applicable
law,regulation or judicial order existing at the date hereof, (ii) any
material agreement or document to which such Obligor is a party or
which is binding upon it or any of its assets,or (iii)the articles of
incorporation or by-laws (or equivalent documents) of any thereof, nor
will it result in the creation or imposition of any mortgage, charge
(whether fixed or floating) or pledge, any maritime or other lien or
any other security interest of any kind on the assets of any Obligors
(except for those in favor of the Security Trustee on behalf of the
Banks) pursuant to the provisions of any such agreement or document;
(f) No immunity. Neither any of the Obligors nor the Guarantor nor any of
their respective assets are entitled to immunity on the grounds of
sovereignty or otherwise from any legal action or proceeding (which
shall include, without limitation, suit, attachment prior to judgment,
execution or other enforcement);
(g) Litigation. Except as otherwise disclosed in writing to the Banks on
or before the date hereof, no action, suit or proceeding is pending or
threatened against any of the Obligors or the Guarantor before or by
any court, board of arbitration or administrative agency which has a
reasonable likelihood of resulting in any material adverse change in
the business or condition (financial or otherwise) of any of the
Obligors or the Guarantor.
(h) No Default. None of the Obligors or the Guarantor is in default under
any agreement by which it is bound, nor is any thereof in default in
respect of any financial commitment or obligation.
(i) Charters. Each Vessel is subject to a Charter and the Australian
Vessels are also subject to a Sub-Charter. The certified copies of the
Charters and Subcharters delivered to the Agent on or prior to the
date of this Agreement are true and complete copies thereof and
constitute legal, valid and binding obligations of the parties thereto
enforceable against the parties thereto in accordance with their
respective terms, except to the extent that such enforcement may be
limited by equitable principles, principles of public policy or
applicable bankruptcy, insolvency, reorganization, moratorium or other
laws affecting generally the enforcement of creditors' rights, and no
amendments thereof or variations thereto have been proposed or agreed
prior to the date hereof other than immaterial changes, details of
which shall have been forwarded to the Agent. The right of each Owner
to all moneys payable under its respective Charter and the right of
Alliance to payment under the Subcharters are not subject to any right
of set-off or counterclaim or any lien, charge, security interest,
assignment or other encumbrance except in favor of the Agent, the
Security Trustee or the Banks. There are no material defaults on the
part of any party to the Charters or the Subcharters and there is no
accrued right of any Owner to terminate its respective Charter with
the respective Charterers or of Alliance to terminate either
Subcharter with Ampol.
(j) Vessel Ownership, Classification, Seaworthiness and Insurance. On the
Issuance Date:
(i) each Vessel will be in the sole and absolute ownership of the
respective Owner, unencumbered, save and except for the Mortgage
(and the respective Mortgage Amendment in the case of the
Australian Vessels) thereon, and duly registered in the name of
the respective Owner under the laws and flag of the Commonwealth
of Australia or the Commonwealth of the Bahamas, as the case may
be;
(ii) each Vessel will be classed in the highest classification and
rating for vessels of the same age and type with its
classification society (which shall be a member of the
International Association of Classification Societies) or such
other classification society acceptable to the Majority Banks
without any outstanding recommendations deemed material by the
Majority Banks;
(iii)each Vessel will be operationally seaworthy and in every way fit
for service; and
(iv) each Vessel will be insured in accordance with the provisions of
the Mortgage thereon and the requirements thereof in respect of
such insurances will have been complied with.
(k) Financial Statements. Except as otherwise disclosed in writing to the
Banks on or prior to the date hereof, all information and other data
furnished by the Obligors and the Guarantor to the Banks are complete
and correct, and all financial statements furnished by the Obligors
and the Guarantor have been prepared in accordance with GAAP and
accurately and fairly present the financial condition of the parties
covered thereby as of the respective dates thereof and the results of
the operations thereof for the period or respective periods covered by
such financial statements. Since such date or dates there has been no
material adverse change in the financial condition or results of the
operations of any of such parties and none thereof has any contingent
obligations, liabilities for taxes or other outstanding financial
obligations which are material in the aggregate except as disclosed in
such statements, information and data.
(l) Tax Returns and Payments. Each of the Obligors and the Guarantor has
filed all tax returns required to be filed thereby and has paid all
taxes payable thereby which have become due, other than those not yet
delinquent or the nonpayment of which would not have a material
adverse effect on any such party, as the case may be, and except for
those taxes being contested in good faith and by appropriate
proceedings or other acts and for which adequate reserves have been
set aside on its books.
(m) Insurance. Each of the Obligors and the Guarantor has insured its
properties and assets against such risks and in such amounts as are
customary for companies engaged in similar businesses.
(n) Offices. The chief executive office and chief place of business of
each of the Obligors, and the office in which the financial records
relating to the Vessels are kept, is, and will continue to be, located
at Ernst & Young at Ernst & Young Building, 321 Kent Street, Sydney,
Australia or Teekay Shipping Limited at 4th Floor, Euro Canadian
Centre, Marlborough Street and Navy Lion Road, P.O. Box SS 6293,
Nassau, the Bahamas, as the case may be; none of the Obligors
maintains a place of business in Canada, the United States or the
United Kingdom.
(o) Not an Investment Company. Neither the Guarantor, nor any of the
Obligors is an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(p) Equity Ownership. Each of the Obligors is a Wholly Owned Subsidiary of
the Guarantor. On the Issuance Date, none of the Obligors will own any
shares of capital stock, partnership interest or other direct or
indirect equity interest in any corporation, partnership or other
entity.
(q) Environmental Matters. Except as heretofore disclosed in writing to
the Banks (i) each of the Obligors will, when required, be in
compliance with all applicable United States federal and state, local,
foreign and international laws, regulations, conventions and
agreements relating to pollution prevention or protection of human
health or the environment (including, without limitation, ambient air,
surface water, ground water, navigable waters, waters of the
contiguous zone, ocean waters and international waters), including,
without limitation, laws, regulations, conventions and agreements
relating to (1) emissions, discharges, releases or threatened releases
of chemicals, pollutants, contaminants, wastes, toxic substances,
hazardous materials, oil, hazardous substances, petroleum and
petroleum products and by-products ("Materials of Environmental
Concern"), or (2) the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Materials of
Environmental Concern ("Environmental Laws"); (ii) each of the
Obligors will, when required, have all permits, licenses, approvals,
rulings, variances, exemptions, clearances, consents or other
authorizations required under applicable Environmental Laws
("Environmental Approvals") and will, when required, be in full
compliance with all Environmental Approvals required to operate their
business as then being conducted; (iii) none of the Obligors has
received any notice of any claim, action, cause of action,
investigation or demand by any person, entity, enterprise or
government, or any political subdivision, intergovernmental body or
agency, department or instrumentality thereof, alleging potential
liability for, or a requirement to incur, investigatory costs, cleanup
costs, response and/or remedial costs (whether incurred by a
governmental entity or otherwise), natural resources damages, property
damages, personal injuries, attorneys' fees and expenses, or fines or
penalties, in each case arising out of, based on or resulting from
(1) the presence, or release or threat of release into the
environment, of any Materials of Environmental Concern at any
location, whether or not owned by such person, or (2) circumstances
forming the basis of any violation, or alleged violation, of any
Environmental Law or Environmental Approval ("Environmental Claim")
(other than Environmental Claims that have been fully and finally
adjudicated or otherwise determined and all fines, penalties and other
costs, if any, payable by the Obligors in respect thereof have been
paid in full or are fully covered by insurance (including permitted
deductibles)); and (iv) there are no circumstances that may prevent or
interfere with such full compliance in the future.
(r) Pending or Threatened Environmental Claims. Except as heretofore
disclosed in writing to the Banks there is no Environmental Claim
pending or threatened against any Obligor or past or present actions,
activities, circumstances, conditions, events or incidents, including,
without limitation, the release, emission, discharge or disposal of
any Materials of Environmental Concern, that could form the basis of
any Environmental Claim against any Obligor.
(s) Limited Purpose. Each Owner is a special purpose company whose sole
capital asset is its Vessel; no Owner engages in any business other
than the owning of its Vessel.
(t) Permitted Indebtedness. The Loans and the Guaranty thereof are
Indebtedness of the Original Borrowers, VSSI Australia and the
Guarantor, respectively, the incurrence of which is permitted by
Clause 4.3 of the Indenture because the Interest Coverage Ratio (as
such term is defined in the Indenture) shall be greater than 2:1 after
consummation of the transactions contemplated herein.
(u) Survival. All representations, covenants and warranties made herein
and in any certificate or other document delivered pursuant hereto or
in connection herewith shall survive the issuance of the Amended
Letter of Credit.
4 CONDITIONS PRECEDENT
4.1 Conditions Precedent to Issuance of Amended Letter of Credit. The
obligation of the Agent on behalf of the Banks, to issue the Amended Letter
of Credit to the Beneficiary under this Agreement shall be expressly
subject to the following conditions precedent:
(a) the Agent shall have received the following documents in form and
substance satisfactory to the Agent and its counsel:
(i) copies, certified as true and complete by an officer of each of
the Obligors and the Guarantor of excerpts of the resolutions of
each such company's board of directors (and, if any necessary
under appropriate law, shareholders) evidencing approval of the
Transaction Documents to which such company is or is to be a
party and authorizing an appropriate officer or officers or
attorney-in-fact or attorneys-in-fact to execute the same on its
behalf;
(ii) copies, certified as true and complete by an officer of each of
the Obligors and the Guarantor or other applicable party, of all
documents evidencing any other necessary action (including
actions by such parties thereto other than the Obligors or the
Guarantor as may be required by the Agent), approvals or consents
with respect to this Agreement, the Loan Agreements, the Security
Documents and the transactions contemplated hereby and thereby;
(iii)copies, certified as true and complete by an officer of each of
the Obligors and the Guarantor, of the articles or certificate of
incorporation and by-laws (or the equivalent thereof) of each
thereof (unless such Obligor or Guarantor previously provided
such documents in connection with the Original Reimbursement
Agreement, in which case such Obligor or Guarantor shall provide
a certificate from an officer of such Obligor or Guarantor
stating that such documents have not been amended or rescinded
since the date of the Original Reimbursement Agreement);
(iv) good standing certificates or the equivalent thereof with respect
to each of the Obligors and the Guarantor issued by the
appropriate authorities of the respective jurisdiction of
incorporation of such parties; and
(v) executed copies, certified as true and complete by an officer of
the relevant Owner, of the Charter, Subcharter and Management
Agreement relating to its Vessel (unless such Owner previously
provided such documents in connection with the Original
Reimbursement Agreement, in which case such Owner shall provide a
certificate from an officer of such Owner stating that such
documents have not been amended or rescinded since the date of
the Original Reimbursement Agreement);
(vi) on the Date of Issuance, a certificate from an officer or
director of each of the Obligors stating that the representations
and warranties stated in Clause 2 (updated mutatis mutandis to
such date) are true and correct as if made on that date;
(b) the Agent shall have received evidence (unless such evidence shall
have previously been delivered to the Agent and its counsel in
connection with the Original Reimbursement Agreement, in which case
the relevant Obligor shall certify that such evidence continues to
exist and has not in any way been changed or amended) satisfactory to
the Agent and its counsel that:
(i) each of the Vessels is registered in the name of the relevant
Owner under the Australian or Bahamian flag, as the case may be,
and that each Vessel is free and clear of all liens and
encumbrances of record except for the Mortgage (and respective
Mortgage Amendment in the case of the Australian Vessels) thereon
in favor of the Security Trustee for the benefit of the Banks,
each such Mortgage having been recorded and constituting a first
mortgage lien over the relevant Vessel;
(ii) each Vessel is classed in the highest classification and rating
for vessels of the same age and type with its classification
society without any material outstanding recommendations;
(iii)each Vessel is operationally seaworthy and in every way fit for
service; and
(iv) each Vessel is insured in accordance with the provisions of its
respective Mortgage (evidence of which shall include, without
limitation, cover notes, Certificates of Entry and brokers'
letters of undertaking and an opinion of an insurance consultant
retained by the Agent or such other evidence as shall be
reasonably satisfactory to the Agent) and all requirements
thereof in respect of such insurances have been fulfilled;
(c) each Owner shall have duly executed and delivered:
(i) the Mortgage and/or Mortgage Amendment relating to its Vessel,
(ii) the Insurances Assignment relating to its Vessel,
(iii)the Earnings Assignment relating to its Vessel, and
(iv) the Assignment Notices relating to (ii) and (iii) above;
(d) Alliance shall have executed and delivered the Subcharter Assignments,
the Assignment Notices relating thereto and its Consents;
(e) the Guarantor shall have duly executed and delivered:
(i) the Guaranty, and
(ii) the Pledge and related irrevocable proxies and stock powers and
shall have delivered to the Agent the undated resignations of
officers and directors required to be so delivered pursuant to
the Pledge;
(f) Ampol shall have duly executed and delivered its Consents;
(g) Palm Shipping shall have duly executed and delivered its Consent;
(h) the Agent shall have received payment in full of all fees and expenses
due to the Agent and the Banks on the date thereof including, without
limitation, all fees and expenses due under Clause 2.4 and all fees
due the Agent and the Original Banks under the Original Reimbursement
Agreement shall have been paid;
(i) the Banks shall have received evidence satisfactory to them and their
legal advisers that, save for the liens created by the respective
Mortgage, Mortgage Amendment, Earnings Assignment and Insurances
Assignment, there are no liens, charges or encumbrances of any kind
whatsoever on any Vessel or its earnings or insurances except as
permitted hereby or by any of the Security Documents;
(j) the Banks shall be satisfied that none of the Obligors or the
Guarantor is subject to any Environmental Claim which could have a
material adverse effect on the business, assets or results of
operations of any thereof;
(k) the Banks shall have received a complete copy of the consolidated
audited financial report of the Guarantor for the year ending
March 31, 1997, which shall include at least the balance sheet of such
corporation as of the end of such year and the related statements of
income, cash flow and retained earnings for such year all in
reasonable detail, certified by an Acceptable Accounting Firm,
together with their opinion (containing no qualifications which the
Banks deem material);
(l) the Obligors shall have provided such evidence as the Banks may
require documenting the current legal and beneficial ownership of the
shares of the Obligors and the legal ownership of the shares of the
Guarantor; and
(m) the Banks shall have received opinions from (i) Watson, Farley &
Williams, counsel to the Obligors and the Guarantor on matters of New
York law, the Federal law of the United States and Liberian law,
(ii) Norton Smith & Co., special counsel to the Banks on New South
Wales law and Australian law, (iii) Graham, Thompson & Co., special
counsel to the Banks on Bahamian law and (iv) Seward & Kissel, special
counsel to the Banks, in each case in such form as the Banks may
require, as well as such other legal opinions as the Banks shall have
required as to all or any matters under the laws of the United States
of America, the State of New York, the Republic of Liberia, the
Commonwealth of Australia, the State of New South Wales and the
Commonwealth of the Bahamas covering the representations and
conditions which are the subjects of Clauses 3 and 4.
5 PAYMENTS
5.1 Place of Payments, No Set Off. (a) All payments to be made hereunder by the
Obligors shall be made on the due dates of such payments to the Agent at
its account located at Republic National Bank; in favor of Nedship Bank
(America) N.V. Account No. 608 202 444 or to such other place as the Agent
may direct, for the account of the Banks, without set-off or counterclaim
and free from, clear of and without deduction for, any Taxes, provided,
however, that if the Obligors shall at any time be compelled by law to
withhold or deduct any Taxes from any amounts payable to the Banks
hereunder, then, subject to Clause 5.2, the Obligors shall pay such
additional amounts in Dollars as may be necessary in order that the net
amounts received after withholding or deduction shall equal the amounts
which would have been received if such withholding or deduction were not
required and, in the event any withholding or deduction is made, whether
for Taxes or otherwise, the Obligors shall promptly send to the Banks such
documentary evidence with respect to such withholding or deduction as may
be required from time to time by any of the Banks. Notwithstanding the
preceding sentence, the Obligors shall not be required to pay additional
amounts or otherwise indemnify the Banks for or on account of:
(i) Taxes based on or measured by the overall net income of any Bank or
Taxes in the nature of franchise taxes or taxes for the privilege of
doing business imposed by any jurisdiction or any political
subdivision or taxing authority therein unless such are imposed as a
result of the activities of the Obligors within the relevant taxing
jurisdiction;
(ii) Taxes imposed by any jurisdiction or any political subdivision or
taxing authority therein on any Bank that would not have been imposed
but for such Bank's being organized in or conducting business in or
maintaining a place of business in the relevant taxing jurisdiction,
or engaging in activities or transactions in the relevant taxing
jurisdiction that are unrelated to the transactions contemplated by
the Transaction Documents, but only to the extent such Taxes are not
imposed as a result of the activities of any of the Obligors within
the relevant taxing jurisdiction or the jurisdiction of any of the
Obligors under the laws of the taxing jurisdiction;
(iii)Taxes imposed on or with respect to a Bank as a result of a transfer,
sale, assignment, or other disposition by such Bank of any interest in
any Transaction Document, any Note or any Vessel (other than a
transfer pursuant to an exercise of remedies upon an Event of
Default);
(iv) Taxes imposed on, or with respect to, a transferee (or a subsequent
transferee) of an original Bank (and including as such a transferee a
Bank whose shares of stock have been transferred or the purchaser of a
participation in the Loans) to the extent of the excess of such Tax
over the amount of such Tax that would have been imposed on, or with
respect to, such original Bank had there not been a transfer, sale,
assignment or other disposition of the shares of such Bank or a
transfer, sale, assignment or other disposition by such original Bank
of any interest in any Vessel, any Note or any Transaction Document
(in each case, other than any transfer pursuant to the exercise of
remedies as a result of an Event of Default that shall have occurred
and be continuing); or
(v) Taxes imposed on any Bank that would not have been imposed but for any
failure of such Bank to comply with any return filing requirement or
any certification, information, documentation, reporting or other
similar requirement known to such Bank, if such compliance is required
to obtain or establish relief or exemption from or reduction in such
Taxes.
(b) In the event that any Obligor has actual knowledge that the Obligors
are required to, or there arises in any Obligor's reasonable opinion a
substantial likelihood that the Obligors will be required to, pay an
additional amount or otherwise indemnify any Bank for or on account of
any Tax pursuant to Clause 5.1(a), such Obligor will promptly notify
the Agent and each relevant Bank of the nature of such Tax, and shall
furnish such information to the Agent and such Bank with respect to
such Tax, as the Agent or such Bank may reasonably request. In the
event of any knowledge or opinion of an Obligor described in the
preceding sentence, the Obligors, the Agent and each relevant Bank
shall consult in good faith to determine what may be required to avoid
or reduce such Tax, and each shall use reasonable efforts to avoid or
reduce such Tax (so long as such efforts do not, in the reasonable
opinion of any relevant Bank, result in any cost to such Bank or any
modification of the terms or repayment of the Loans).
5.2 Tax Credits. If any Bank obtains the benefit of a credit against its
liability for Taxes imposed by any taxing authority for all or part of the
Taxes as to which the Obligors have paid additional amounts as aforesaid
then such Bank shall reimburse the Obligors for the amount of the credit so
obtained. Each Bank shall use reasonable efforts to file such tax returns
as are necessary to obtain any such credit. In connection therewith, the
Banks may consult with their legal advisers, all fees and expenses of which
shall be for the account of the Obligors.
5.3 Sharing of Setoffs. Each Bank agrees that if it shall, through the exercise
of a right of banker's lien, setoff or counterclaim or pursuant to a
secured claim under Section 506 of the Federal Bankruptcy Code or other
security or interest arising from, or in lieu of, such secured claim,
exercised or received by such Bank under any applicable bankruptcy,
insolvency or other similar law or otherwise, or by any other means other
than pursuant to Clause 2.7 and Clause 8, obtain payment (voluntary or
involuntary) in respect of any of its Reimbursement Obligations as a result
of which the unpaid principal portion of its Reimbursement Obligations (and
accrued and unpaid L/C Fees thereon) shall be proportionately less than the
unpaid principal portion of the Reimbursement Obligations (and accrued and
unpaid L/C Fees thereon) of any other Bank, it shall be deemed
simultaneously to have purchased from such other Bank at face value, and
shall promptly pay to such other Bank the purchase price for, a
participation in the Reimbursement Obligations of such other Bank so that
the aggregate unpaid principal amount of the Reimbursement Obligations (and
accrued and unpaid L/C Fees thereon) and participations in the
Reimbursement Obligations held by each Bank shall be in the same proportion
to the aggregate unpaid principal amount of all Reimbursement Obligations
then outstanding as the principal amount of its Reimbursement Obligations
(and accrued and unpaid L/C Fees thereon) prior to such exercise of
banker's lien, setoff or counterclaim or other event was to the principal
amount of all Reimbursement Obligations outstanding (and accrued and unpaid
L/C Fees thereon) prior to such exercise of banker's lien, setoff or
counterclaim or other event; provided, however, that, if any such purchase
or purchases or adjustments shall be made pursuant to this Clause 5.3 and
the payment giving rise thereto shall thereafter be recovered, such
purchase or purchases or adjustments shall be rescinded to the extent of
such recovery and the purchase price or prices or adjustment restored
without interest. Any Bank holding a participation in any of the
Reimbursement Obligations deemed to have been so purchased may exercise any
and all rights of banker's lien, setoff or counterclaim with respect to any
and all moneys owing to such Bank by reason thereof as fully as if such
Bank had made payment with respect to the Amended Letter of Credit in the
amount of such participation. The Obligors expressly consent to the
foregoing arrangement.
6 EVENTS OF DEFAULT
6.1 In the event that any of the following events shall occur and be
continuing:
(a) Repayments. Any payment due under Clause 2.3 is not paid on the due
date; or
(b) Other Payments. Any fees or other amount becoming payable to the
Agent, the Security Trustee or the Banks under this Agreement (other
than any payment due under Clause 2.3) or under any of the Security
Documents or under any of them is not paid on the due date or within
three (3) Banking Days after the date of demand (as the case may be);
or
(c) Loan Agreement. An Event of Default (as defined in either of the Loan
Agreements) shall occur and be continuing; or
(d) Representations, etc. Any representation, warranty or other statement
made by the Obligors or the Guarantor in this Agreement or in any of
the Security Documents to which it is a party or in any other
instrument, document or other agreement delivered in connection
herewith or therewith proves to have been untrue or misleading in any
material respect as at the date as of which it was made or delivered;
or
(e) Impossibility, Illegality. It becomes impossible or unlawful for the
Obligors or the Guarantor or any of them to fulfill any of the
covenants and obligations contained herein or in any of the Security
Documents to which it is a party or for the Agent, the Security
Trustee or the Banks to exercise any of the rights vested in any of
them hereunder or under any of the Security Documents and such
impossibility or illegality, in the reasonable opinion of the Agent,
the Security Trustee or the Majority Banks, will have a material
adverse effect on their rights hereunder or under any of the Security
Documents or on their right to enforce any thereof; or
(f) Covenants. The Obligors or the Guarantor or any of them defaults in
the performance of any term, covenant or agreement contained in this
Agreement or in any of the Security Documents to which they are a
party or in any of them, or in any other instrument, document or other
agreement delivered in connection herewith or therewith, or there
occurs any other event which constitutes a default under this
Agreement or any of the Security Documents, in each case other than an
Event of Default referred to elsewhere in this Clause 6.1, and such
default, in the reasonable opinion of the Majority Banks, could have a
material adverse effect on their rights hereunder or under any of the
Security Documents or on their right to enforce any thereof and
continues unremedied for a period of thirty (30) days; or
(g) Indebtedness. The Obligors, the Guarantor, or any Wholly Owned
Subsidiary of the Guarantor shall default in the payment when due
(subject to any applicable grace period), whether by acceleration or
otherwise, of any Indebtedness having an outstanding principal amount
of $5,000,000 or more or any party becomes entitled to enforce the
security for any such Indebtedness and such party shall take steps to
enforce the same, unless such default or enforcement is being
contested in good faith and by appropriate proceedings or other acts
and the relevant Obligors, the Guarantor or such Wholly Owned
Subsidiary of the Guarantor as the case may be, shall set aside on its
books adequate reserves with respect thereto, and so long as such
default or enforcement shall not subject any Vessel to material risk
of forfeiture or loss; or
(h) Stock Ownership. There is, without the prior written consent of the
Majority Banks (i) any change in the legal or beneficial stock
ownership or the voting control of the Obligors or (ii) any pledge of
the shares of the Obligors in favor of a party other than the Security
Trustee for the benefit of the Banks or (iii) less than fifty-one
percent (51%) of the issued and outstanding shares of the Guarantor is
held beneficially and of record by the Cirrus Trust and the JTK Trust;
or
(i) Default under the Security Documents. There is an event of default
under any of the Security Documents which shall have occurred and be
continuing; or
(j) Bankruptcy. Any of the Obligors or the Guarantor commences any
proceeding relating to any substantial portion of its property under
any reorganization, arrangement or readjustment of debt, dissolution,
winding up, adjustment, composition, bankruptcy or liquidation law or
statute of any jurisdiction, whether now or hereafter in effect
("Proceeding"), or there is commenced against any of the Obligors or
the Guarantor any Proceeding and such Proceeding remains undismissed
or unstayed for a period of thirty (30) days; or any receiver,
trustee, liquidator or sequestrator of, or for, any of the Obligors or
the Guarantor or any substantial portion of the property of any
thereof is appointed and is not discharged within a period of thirty
(30) days; or any of the Obligors or the Guarantor by any act
indicates consent to or approval of or acquiescence in any Proceeding
or to the appointment of any receiver, trustee, liquidator or
sequestrator of, or for, itself or any substantial portion of its
property; or
(k) Sale of Assets. Any of the Obligors or the Guarantor ceases, or
threatens to cease, its operations or sells or otherwise disposes of,
or threatens to sell or otherwise dispose of, all or substantially all
of its assets or all or substantially all of its assets are seized or
otherwise appropriated; or
(l) Judgments. Any judgment or order is made the effect whereof would be
to render ineffective or invalid this Agreement or the Security
Documents or any of them; or
(m) Inability to Pay Debts. Any of the Obligors or the Guarantor is unable
to pay or admits its inability to pay its debts as they fall due or if
a moratorium shall be declared in respect of any Indebtedness thereof;
or
(n) Financial Position. Any change in the financial position of the
Guarantor which, in the reasonable opinion of the Majority Banks, is
likely to have a material adverse effect on the ability of the
Obligors or the Guarantor to perform its material obligations under
this Agreement, the Security Documents or the Charters; or
(o) Amendment or Assignment of Charters. Any of the Charters or
Subcharters is materially amended or modified or assigned without the
prior written consent of the Majority Banks; or
(p) Termination or Default Under Charters. Any of the Charters or
Subcharters is terminated without the prior written consent of the
Majority Banks, or any party to any thereof defaults or ceases to
perform thereunder for any reason whatsoever, unless, provided that no
other Event of Default has occurred and is continuing, (A) within 180
days of the termination of the Apache Charter by Apache in accordance
therewith, Apache pays to the Security Trustee on behalf of the Banks,
the Termination Payment (as such term is defined in the Apache
Charter) or (B) within 30 days of any default or non-performance of
(1) Ampol under a Subcharter or (2) Apache under the Apache Charter,
the Obligors replace such Subcharter or Apache Charter, as the case
may be, with a charter or subcharter, as the case may be, acceptable
to the Banks;then the Banks' obligation to cause the Agent on their
behalf to issue the Amended Letter of Credit shall cease and the Agent
shall, upon the instructions of the Majority Banks, by notice to the
Obligors, (i) direct the Obligors to pay to the Agent for the benefit
of the Banks, and the Obligors shall immediately pay, an amount equal
to all Letter of Credit Liabilities as of such date less the value of
any cash collateral previously provided to the Banks or Security Agent
on behalf of the Banks hereunder, to be kept as collateral for the
Obligors' obligations in respect of the Amended Letter of Credit until
the Banks' obligations in respect of the Amended Letter of Credit are
canceled and all of the Reimbursement Obligations of the Obligors are
repaid, and declare all sums payable by the Obligors hereunder due and
payable whereupon the same shall forthwith be due and payable without
presentment, demand, protest or notice of any kind, all of which are
hereby expressly waived, and (ii) pay or prepay all other amounts
owing under or in connection with this Agreement and the Security
Documents; provided that upon the happening of an event specified in
subclause (j) or (m) of this Clause 6.1, the Reimbursement
Obligations, accrued interest and any other sums payable hereunder
shall be immediately due and payable without presentment, demand,
protest, declaration or other notice to the Obligors. In any such
event, the Banks, the Agent and/or the Security Trustee may (i)
proceed to protect and enforce their rights by action at law, suit in
equity or in admiralty or other appropriate proceeding, whether for
specific performance of any covenant contained in this Agreement or in
any of the Security Documents, or to enforce any other legal or
equitable right of the Banks, the Agent and/or the Security Trustee,
or (ii) proceed to take any action authorized or permitted under the
terms of any of the Security Documents or by applicable laws for the
collection of all sums due, including, without limitation, the right
to appropriate and hold or apply (directly, by way of set-off or
otherwise) to the payment of the obligations of the Obligors to the
Banks, the Agent and/or the Security Trustee hereunder and/or under
any of the Security Documents (whether or not then due) all moneys and
other amounts of the Obligors, then or thereafter in possession of the
Banks, the Agent and/or Security Trustee, inclusive of the balance of
any deposit account (demand or time, matured or unmatured) of the
Obligors, then or thereafter with the Banks, the Agent and/or Security
Trustee.
6.2 Indemnification. The Obligors agree to, and shall, indemnify and hold
harmless the Agent, the Security Trustee and the Banks against any loss or
costs or expenses (including legal fees and expenses) which the Agent, the
Security Trustee and the Banks sustain or incur as a consequence of any
default in payment of the Reimbursement Obligations or interest accrued
thereon or any other amount payable hereunder or under the Security
Documents (other than costs and expenses caused by the gross negligence or
willful misconduct of the Agent, the Security Trustee or any Bank). The
Agent's, Security Trustee's or Banks' certification of such costs and
expenses shall, absent any manifest error, be conclusive and binding on the
Obligors.
6.3 Application of Moneys. (a) Except as otherwise provided in any Security
Document, all moneys received by the Agent, Security Trustee or Banks under
or pursuant to this Agreement or any of the Security Documents after the
happening of any Event of Default (unless cured to the satisfaction of the
Banks) shall be applied by the Agent in the following manner:
(i) first, in or towards the payment or reimbursement of any expenses or
liabilities incurred by the Agent, the Security Trustee or the Banks
in connection with the ascertainment, protection or enforcement of
their rights and remedies hereunder and under any of the Security
Documents,
(ii) secondly, in or towards the payment of all fees payable by the
Obligors under Clause 2.4;
(iii)thirdly, in or towards payment of any interest owing in respect of
the Reimbursement Obligations,
(iv) fourthly, in or towards payment of any Reimbursement Obligations,
(v) fifthly, in or towards payment of all sums which may be owing to the
Banks, the Agent or the Security Trustee on behalf of the Banks under
this Agreement or into a cash collateral account maintained by the
Agent for amounts which the Banks, in their sole discretion deem
necessary to secure against future claims under the Amended Letter of
Credit,
(vi) sixthly, in or towards payment of all other sums which may be owing to
the Agent, the Security Trustee or the Banks under this Agreement or
under any of the Security Documents, and
(vii)seventhly, the surplus (if any) shall be paid to the Obligors or to
whomsoever else may be entitled thereto.
(b) With respect to any moneys received by the Agent pursuant to the
Security Documents prior to the occurrence of an Event of Default
the Agent shall hold such moneys as collateral in respect of the
Obligors' obligations hereunder, provided, however, that so long
as no Event of Default shall have occurred and be continuing and
the Obligors are in compliance with their obligations under
Clause 7.3, the Agent shall release any such moneys to the
Obligors or to whomsoever the Obligors may direct.
7 COVENANTS
7.1 Each Obligor hereby covenants and undertakes with the Banks, the Agent and
Security Trustee that, from the date hereof and so long as any principal,
interest or other monies are owing in respect of this Agreement and the
Security Documents or any of them:
A. The Obligors will each:
(i) Performance of Agreements. Duly perform and observe, and procure
the observance and performance by all other parties thereto
(other than the Agent, the Security Trustee and the Banks) of,
the terms of this Agreement and the Security Documents;
(ii) Notice of Default; Change in Classification of Vessel. Promptly
inform the Agent of the occurrence of (a) any Event of Default or
of any event which with the giving of notice or lapse of time, or
both, would constitute an Event of Default, (b) the withdrawal of
any Vessel's rating by its classification society or the issuance
by such classification society of any recommendation or notation
affecting class, (c) any litigation or governmental proceeding
pending or threatened against any of the Obligors or the
Guarantor which could reasonably be expected to have a material
adverse effect on the business, assets, operations, property or
financial condition of any such party and (d) any other event or
condition of which it becomes aware which is reasonably likely to
have a material adverse effect on its ability, or the ability of
any other party thereto, to perform its obligations under this
Agreement and the Security Documents or any of them;
(iii)Obtain Consents. Obtain every consent and do all other acts and
things which may from time to time be necessary or advisable for
the continued due performance of all its and any other party's
(other than the Agent's, the Security Trustee's or the Banks')
respective obligations under this Agreement and the Security
Documents;
(iv) Financial Statements. Deliver or cause to be delivered to the
Agent to be distributed by the Agent in accordance with
Clause 12.14:
(a) as soon as available but not later than ninety (90) days
after the end of each fiscal year of the Guarantor complete
copies of the financial reports of the Guarantor (together
with a Compliance Certificate substantially in the form of
Exhibit J, signed by the Chief Financial Officer of the
Guarantor), on a consolidated basis, which shall include at
least the consolidated balance sheet of the Guarantor as of
the end of such year and the related consolidated statements
of income, cash flow and retained earnings for such year,
all in reasonable detail, certified by an Acceptable
Accounting Firm, together with their opinion (without
material qualifications) thereon;
(b) as soon as available but not later than forty-five (45) days
after the end of each of the first three quarters of each
fiscal year of the Guarantor, a balance sheet of the
Guarantor, on a consolidated basis, as at the end of such
quarter and the related consolidated statements of income,
cash flow and retained earnings for such quarter, all in
reasonable detail, unaudited, but certified by the chief
financial officer of the Guarantor, together, in each
instance, with a Compliance Certificate, signed by such
chief financial officer of the Guarantor;
(c) as soon as available, copies of all reports, statements or
other instruments filed with the United States Securities
and Exchange Commission; and
(d) such other statement or statements, lists of property and
accounts, budgets, forecasts, reports and financial
information with respect to the operation and management of
the Vessels and any other vessels owned or operated directly
or indirectly by the Guarantor, as the Agent may from time
to time reasonably request;
(v) Corporate Existence. Do or cause to be done, and procure that the
Guarantor shall do or cause to be done, all things necessary to
preserve and keep in full force and effect their respective
corporate existence, and all licenses, franchises, permits and
assets necessary to the conduct of the business of each such
corporation;
(vi) Books, Records, etc. Keep, and procure that the Guarantor shall
keep, proper books of record and account into which full and
correct entries shall be made, in accordance with GAAP;
(vii)Inspection. Allow, and procure that the Guarantor shall allow,
any representative or representatives designated by the Agent or
any of the Banks, subject to applicable laws and regulations, to
visit and inspect any of the properties of any such party, and,
on request, to examine the books of account, records, reports and
other papers (and to make copies thereof and to take extracts
therefrom) of each such corporation and to discuss the affairs,
finances and accounts of each such corporation, with the officers
and executive employees of each such corporation all at such
reasonable times and as often as the Agent or such Bank
reasonably requests;
(viii) Taxes. Pay and discharge, and cause the Guarantor to pay and
discharge, all taxes, assessments and governmental charges or
levies imposed upon each such corporation or upon such
corporation's income or property prior to the date upon which
penalties attach thereto; provided, however, that such
corporations shall not be required to pay and discharge, or cause
to be paid and discharged, any such tax, assessment, charge or
levy so long as the legality or amount thereof shall be contested
in good faith and by appropriate proceedings or other acts and it
shall set aside on its books adequate reserves with respect
thereto, and so long as such deferment in payment shall not
subject any Vessel to material risk of forfeiture or loss;
(ix) Compliance with Statutes, etc. Do or cause to be done, and
procure that the Guarantor shall do or cause to be done, all
things necessary to comply with all material laws, and the rules
and regulations thereunder, applicable to the Obligors and the
Guarantor and including, without limitation, those laws, rules
and regulations relating to employee benefit plans and
environmental matters;
(x) Environmental Matters. Promptly upon the occurrence of any of the
following conditions, provide to the Agent a certificate of the
chief executive officer thereof, specifying in detail the nature
of such condition and the Obligors' or the Guarantor's proposed
response or the proposed response of any Environmental Affiliate
(as such term is hereinafter defined) of any thereof, as the case
may be: (a) the Obligors' or the Guarantor's receipt or the
receipt by any Environmental Affiliate of any thereof of any
communication whatsoever that alleges that such Person is not in
compliance with any applicable environmental law or environmental
approval, if such noncompliance could reasonably be expected to
have a material adverse effect on the business, assets,
operations, property or financial condition of the Obligors or
the Guarantor, (b) knowledge by the Obligors or the Guarantor or
any Environmental Affiliate of any thereof that there exists any
Environmental Claim pending or threatened against any such Person
which could reasonably be expected to have a material adverse
effect on the business, assets, operations, property or financial
condition of the Guarantor or (c) any release, emission,
discharge or disposal of any material that could form the basis
of any Environmental Claim against the Guarantor or any
Environmental Affiliate if such Environmental Claim could
reasonably be expected to have a material adverse effect on the
business, assets, operations, property or financial condition of
the Guarantor. Upon the written request by the Agent, each
Obligor will submit, and procure that the Guarantor shall submit,
to the Agent at reasonable intervals, a report providing an
update of the status of any issue or claim identified in any
notice or certificate required pursuant to this subclause. For
the purposes of this subclause, "Environmental Claim" shall mean
any claim under federal, state and local environmental, health
and safety laws, statutes or regulations and "Environmental
Affiliate" shall mean any person or entity the liability of which
for Environmental Claims the Obligors or the Guarantor may have
assumed by contract or operation of law;
(xi) Accountants. Retain an Acceptable Accounting Firm as its
independent certified accountants;
(xii)Continue Charters. Continue to charter the Vessels to the
respective Charterer and procure that Alliance shall subcharter
the Australian Vessels to Ampol, and ensure that the terms of
such Charters and Sub-Charters include, inter alia, that the
payments of the Charterers to the Owners under the Charters will,
in the aggregate, be sufficient to cover all payments of the
Owners under this Agreement and any operating and other expenses
of such Owner and that payments by Ampol to Alliance under the
Subcharters will be sufficient to allow Alliance to meet its
obligations under the Charters;
(xiii) Class Certificate. Furnish, or cause to be furnished, to the
Agent, upon any change of a Vessel's classification status or the
issuance of a recommendation affecting class by a Vessel's
classification society or upon the Agent's reasonable request (to
be made no more than once in any calendar year), a confirmation
of class certificate covering each Vessel and evidencing
compliance with the applicable provisions of the Mortgage thereon
within thirty (30) days of such change or such request;
(xiv)Maintenance of Properties. Maintain, or cause to be maintained,
and keep, or cause to be kept, and procure that the Guarantor and
shall maintain, or cause to be maintained, and keep, or cause to
be kept, all properties used or useful in the conduct of its
business in good condition, repair and working order and supplied
with all necessary equipment and will cause to be made necessary
repairs, renewals and replacements thereof so that the business
carried on and in connection therewith and every portion thereof
may be properly and advantageously conducted at all times. In
addition, each Owner shall cause its Vessel to be drydocked as
often as required by such Vessel's classification society and as
a prudent shipowner would require;
(xv) Vessel Management. Cause its Vessel to be managed by the Manager
or such ship manager selected by the Owners and satisfactory to
the Majority Banks pursuant to a written management agreement
acceptable to the Majority Banks;
(xvi) ISM Compliance. Procure:
(a) that any Operator will comply with and ensure that each
Vessel and any Operator by not later than July 1, 1998
comply with the requirements of the ISM Code, including (but
not limited to) the maintenance and renewal of valid
certificates pursuant thereto;
(b) that any Operator will immediately inform the Agent if there
is any threatened or actual withdrawal of its or an
Operator's DOC or the SMC in respect of any Vessel; and
(c) that any Operator will promptly inform the Agent upon the
issuance to the Borrower or any Operator of a DOC and to any
Vessel of an SMC or the receipt by the Borrower or any
Operator of notification that its application for the same
has been realized;
(xvii) Limitation on Restricted Payments.
Procure that the Guarantor will not directly or indirectly declare or
pay any dividend or make any distribution on its capital stock (such
payments being defined as "Restricted Payments") if, at the time of,
and after giving effect to, the proposed Restricted Payment: (A) a
default or Event of Default shall have occurred and be continuing or
(B) the aggregate amount expended for all Restricted Payments (the
amount so expended, if other than in cash, to be determined in good
faith by the Board of Directors, whose determination shall be
conclusive and be evidenced by a Board Resolution) after the date
hereof shall exceed the sum of (1) 50% of the aggregate amount of the
Adjusted Consolidated Net Income (or if Adjusted Consolidated Net
Income is a loss, minus one hundred percent (100%) of such amount) of
the Guarantor accrued on a cumulative basis during the period (taken
as one accounting period) beginning February 1, 1996 and ending on the
last day of the last fiscal quarter preceding such date plus (2) the
aggregate net proceeds (including the fair market value of non-cash
proceeds as determined in good faith by the Board of Directors)
received by the Guarantor (including the amount of any dividends
reinvested in the capital stock of the Guarantor) from the issuance
and sale permitted by the Indenture of capital stock of the Guarantor
(other than redeemable stock), including an issuance or sale for cash
or other property upon the conversion of any Indebtedness of the
Guarantor subsequent to the date hereof, or from the issuance of any
options, warrants or other rights to acquire capital stock of the
Guarantor (in each case, exclusive of any redeemable stock or any
options, warrants or other rights that are redeemable at the option of
the holder, or are required to be redeemed, prior to the Maturity
Date) plus (3) $50,000,000.
The foregoing provision shall not take into account, and shall not be
violated by reason of:
(a) the payment of any dividend within 60 days after the date of
declaration thereof if, at said date of declaration, such payment
would comply with the foregoing paragraph;
(b) the redemption, repurchase, defeasance or other acquisition or
retirement for value of Indebtedness of the Guarantor that is
subordinated in right of payment to the Reimbursement
Obligations, with the proceeds of, or in exchange for,
Indebtedness incurred under Clause 7.1(B)(iii)(III);
(c) the repurchase, redemption or other acquisition by the Guarantor
of capital stock of the Guarantor in exchange for, or out of the
proceeds of a substantially concurrent offering of, shares of
capital stock of the Guarantor (other than redeemable stock);
(d) the acquisition by the Guarantor of its Indebtedness that is
subordinated in right of payment to the Reimbursement Obligations
in exchange for or out of the proceeds of a substantial
concurrent offering of shares of capital stock of the Guarantor
(other than redeemable shares);
(e) payments or distributions pursuant to or in connection with a
consolidation, merger or transfer of assets that complies with
the applicable provisions herein; or
(f) certain purchases, redemptions, acquisitions, cancellations or
other retirements for a nominal value per right of any rights
granted pursuant to any shareholders' rights plan (i.e., a
"poison pill"); provided that in the case of the foregoing
clauses (a) and (b), no Event of Default shall have occurred and
be continuing or occur as a consequence of the actions or
payments set forth therein.
B. None of the Obligors, without the prior written consent of the Majority
Banks, will:
(i) Liens. Create, assume or permit to exist any mortgage, pledge, lien,
charge, encumbrance or any security interest whatsoever upon any of
such party's property or other assets, real or personal, tangible or
intangible, whether now owned or hereafter acquired except:
(a) liens for taxes not yet payable for which adequate reserves have
been maintained;
(b) the Mortgages, the Mortgage Amendments, the Assignments and other
liens in favor of the Security Trustee;
(c) liens, charges and encumbrances against their respective Vessels
permitted to exist under the terms of the Mortgages;
(d) pledges of certificates of deposit or other cash collateral
securing the Obligors' reimbursement obligations in connection
with letters of credit hereafter issued for the account of the
Obligors in connection with the establishment of the financial
responsibility of the Obligors under Title 33 Code of Federal
Regulations ("C.F.R.") Part 130 or Title 46 C.F.R. Part 540, as
the case may be, as the same may be amended or replaced; and
(e) other liens, charges and encumbrances incidental to the conduct
of the business of each such party or the ownership of any such
party's property and assets and which do not in the aggregate
materially detract from the value of each such party's property
or assets or materially impair the use thereof in the operation
of its business;
(ii) Loans and Advances. Make any loans or advances to, or any
investments in, any person, firm, corporation, joint venture
or other entity (including, without limitation, any loan or
advance to any officer, director, stockholder, employee or
customer of any company affiliated with the Obligors or the
Guarantor) except for advances and investments in the normal
course of its business and loans or advances to the
Guarantor;
(iii)Limitation on Indebtedness. (a) Incur, and shall procure
that the Guarantor will not incur, any Indebtedness
excluding Indebtedness hereunder to the Agent, the Security
Trustee or the Banks, Indebtedness under or in connection
with the Loan Agreements and Indebtedness existing (or for
which a written commitment has been made on or before the
date hereof) on the date hereof; provided that the Guarantor
or any of its Subsidiaries may incur Indebtedness if, after
giving effect to the incurrence of such Indebtedness and the
receipt and application of the proceeds therefrom, the
Interest Coverage Ratio of the Guarantor would be greater
than 2:1.
Notwithstanding the foregoing, the Guarantor (or in the case of subclause
(VI) below, Alliance) may incur each and all of the following:
(I) Indebtedness in an aggregate principal amount such that the aggregate
principal amount of the Indebtedness of the Guarantor outstanding
immediately after such incurrence does not exceed the aggregate
principal amount of Indebtedness existing on the date hereof plus
$50,000,000;
(II) Indebtedness of the Guarantor to any Wholly-Owned Subsidiary;
(III)Indebtedness issued in exchange for, or the net proceeds of which are
used to refinance or refund, outstanding Indebtedness of the
Guarantor, other than Indebtedness incurred under clause (I) or (V) of
this paragraph and any refinancings thereof, in an amount not to
exceed the principal amount so exchanged, refinanced or refunded (plus
premiums, accrued and unpaid interest, fees and expenses thereon);
(IV) Indebtedness (A) in respect of performance, surety or appeal bonds
provided in the ordinary course of business, (B) under Currency
Agreements and Interest Rate Agreements; provided that, in the case of
Currency Agreements that relate to other Indebtedness, such Currency
Agreements do not increase the Indebtedness of the Guarantor
outstanding at any time other than as a result of fluctuations in
foreign currency exchange rates or by reason of fees, indemnities and
compensation payable thereunder, and (C) arising from agreements
providing for indemnification, adjustment of purchase price or similar
obligations, or from guarantees or letters of credit, surety bonds or
performance bonds securing any obligations of the Guarantor pursuant
to such agreements, in any case incurred in connection with the
disposition of any business or assets of the Guarantor and not
exceeding the gross proceeds therefrom, other than guarantees of
Indebtedness incurred by any Person acquiring all or any portion of
such business or assets of the Guarantor for the purpose of financing
such acquisition;
(V) Indebtedness in connection with the acquisition of any new
Wholly-Owned Subsidiary; provided that, with respect to this
Clause 7.1(B)(iii)(a)(V), after giving effect to the Incurrence
thereof, the Guarantor could incur at least $1.00 of Indebtedness
pursuant to the first paragraph of this Clause 7.1(B)(iii)(a); and
(VI) Indebtedness of Alliance incurred in the ordinary course of the
operation of vessels or Indebtedness of Alliance to the Guarantor
resulting from advances to Alliance by the Guarantor made in the
ordinary course of business;
(b) For purposes of determining any particular amount of Indebtedness
under this Clause 7.1(B)(iii), guarantees or obligations with
respect to letters of credit supporting Indebtedness otherwise
included in the determination of such particular amount shall not
be included. For purposes of determining compliance with this
Clause 7.1(B)(iii), (i) in the event that an item of Indebtedness
meets the criteria of more than one of the types of Indebtedness
described above in this Clause 7.1(B)(iii), the Guarantor, in its
sole discretion, shall classify such item of Indebtedness and
only be required to include the amount and type of such
Indebtedness in one of such clauses and (ii) the amount of
Indebtedness issued at a price that is less than the principal
amount thereof shall be equal to the amount of the liability in
respect thereof determined in conformity with GAAP.
Notwithstanding any other provision of this Clause 7.1(B)(iii),
the maximum amount of Indebtedness that the Guarantor may incur
pursuant to this Clause 7.1(B)(iii) shall not be deemed to be
exceeded due solely to fluctuations in the exchange rates of
currencies.
(c) The Guarantor shall not incur any Indebtedness that is expressly
subordinated to any other Indebtedness of the Guarantor unless
such Indebtedness, by its terms or the terms of any agreement or
instrument pursuant to which such Indebtedness is issued or
remains outstanding, is also expressly made subordinate to the
Indebtedness of the Guarantor under the Guaranty.
(iv) Guarantees, etc. Assume, guarantee or (other than in the ordinary
course of its business) endorse or otherwise become or remain liable
in connection with any obligation of any Person, firm, company or
other entity except for guaranties in favor of the Banks or the
Security Trustee on behalf of the Banks;
(v) Changes in Business. Change the nature of its business or commence any
other business;
(vi) Use of Corporate Funds. Pay out any funds to any company or Person
except (a) in the ordinary course of business in connection with the
management of the business of the Obligors and the Guarantor,
including the operation and/or repair of the Vessels and (b) the
servicing of the Indebtedness to the Banks;
(vii)Issuance of Shares. Issue or dispose of any shares of its own capital
stock to any Person;
(viii) Consolidation, Merger. Consolidate with, or merge into any Person;
(ix) Changes in Offices or Names. Change the location of the chief
executive office of the Obligors or the Guarantor, the office of the
chief place of business any such parties, or the office of the
Obligors in which the records relating to the earnings or insurances
of the Vessels are kept unless the Banks shall have received thirty
(30) days prior written notice of such change;
(x) Limitation on Transactions with Shareholders and Affiliates. None of
the Obligors will and will procure that the Guarantor will not,
directly or indirectly, enter into, renew or extend any transaction
(including, without limitation, the purchase, sale, lease or exchange
of property or assets, or the rendering of any service) or series of
related transactions with any holder (or any Affiliate of such holder)
of 5% or more of any class of capital stock of the Guarantor or with
any Affiliate of the Guarantor, except upon fair and reasonable terms
no less favorable to the Obligors or the Guarantor than could be
obtained, at the time of such transaction or series of related
transactions or at the time of the execution of the agreement
providing therefor, in a comparable arm's-length transaction with a
Person that is not such a holder or Affiliate.
The foregoing limitation does not limit, and shall not apply to:
(a) transactions or series of related transactions (I) approved by a
majority of the disinterested members of the Board of Directors
as fair to the Obligors or the Guarantor or (II) for which the
Obligors or the Guarantor, as the case may be, delivers to the
Agent a written opinion of a nationally recognized investment
banking firm stating that the transaction is fair to the Obligors
or the Guarantor, as the case may be, from a financial point of
view;
(b) the payment of reasonable and customary regular fees to directors
of the Obligors or the Guarantor who are not employees of the
Obligors or the Guarantor; or
(c) any Restricted Payments not prohibited by Clause 7.1(A)(xvi);
(xi) Change of Flag. Change the flag of any Vessel or the management of
such Vessel;
(xii) Sale of Vessel. Sell, transfer or otherwise dispose of a Vessel; or
(xiii) Modification of Agreements. Except as contemplated by this
Agreement, amend, modify or otherwise change, or allow the Guarantor
to amend, modify or change, any of the Transaction Documents to which
it is a party.
7.2 Valuation of the Vessels. The aggregate fair market value ("FMV") of the
Vessels during the Reimbursement Period shall be greater than or equal to
130% of the Adjusted Stated Amount (at any time, the "Relevant
Percentage"). The FMV of each Vessel shall be determined at the Agent's
discretion, but no less frequently than annually, on the basis of a
valuation (the "Valuation") provided by the Agent. In the event the
Majority Banks or the Obligors disagree with the Agent's Valuation, then
the Obligors and the Agent shall each obtain a separate valuation (the
"Additional Valuations") from separate independent shipbrokers, and the FMV
shall be determined to be the arithmetic average of the Additional
Valuations. Any valuation obtained with respect to the DAMPIER SPIRIT
pursuant to this Clause 7.2 shall be made on the basis of the DAMPIER
SPIRIT as a non-converted trading tanker. The cost of all valuations
obtained hereunder shall be for the account of the Obligors.
7.3 Collateral Maintenance. If the FMV of the Vessels, as determined pursuant
to Clause 7.2 falls below the Relevant Percentage, within a period of ten
(10) Banking Days following receipt by the Obligors of written notice from
the Agent notifying the Obligors of such shortfall and specifying the
amount thereof (which amount shall, in the absence of manifest error, be
deemed to be conclusive and binding on the Obligors) (a) the Obligors shall
deliver to the Agent, upon its request, additional collateral satisfactory
to the Banks, in their sole discretion (including the deposit of cash in a
cash collateral account maintained with the Agent), such that (x) the sum
of (i) the value of the Vessels, as determined in accordance with the
latest valuation delivered pursuant to Clause 7.2, plus (ii) the value of
additional collateral other than cash collateral, such value to be
determined by the Banks when divided by (y) the Adjusted Stated Amount
(less any cash collateral held by the Agent in a cash collateral account)
shall be equal to or greater than the Relevant Percentage or (b) the
Obligors shall prepay the Letter of Credit Liabilities or part thereof
(together with interest thereon) as shall result in the FMV of the Vessels
being not less than the Relevant Percentage.
7.4 Substitution of Collateral. In the event of the sale by VSSI Transport of
the NASSAU SPIRIT or the release of the NASSAU SPIRIT from the lien of the
Mortgage thereon at VSSI Transport's request, VSSI Transport shall
substitute a vessel approved by the Banks (the "Substitute Vessel") and
which meets the following conditions:
(i) the Substitute Vessel complies with the requirements of Clause 4.1(b);
(ii) the aggregate of the FMV of the Substitute Vessel and the BARRINGTON,
PALMERSTON and DAMPIER SPIRIT shall be greater than or equal to the
Relevant Percentage;
(iii)the owner of the Substitute Vessel, if other than VSSI Transport, has
executed an Accession Agreement and has executed a counterpart of the
Note, a Mortgage, an Assignment of Earnings and an Assignment of
Insurances (and related notices and has obtained consents and
agreements relating thereto) and the Guarantor has pledged the shares
of such owner in favor of the Security Trustee as provided with
respect to each other Owner hereunder and has met the conditions,
updated mutadis mutandis, of Clauses 4.1(a), (b), (c), (d), (e), (g),
(h), (i), (j), (k), (l) and (m); and
(iv) the relevant charterer of the Substitute Vessel has executed an
assignment of any subcharter of the Substitute Vessel (and related
notices and has obtained consents and agreements relating thereto).
Upon the satisfaction of the foregoing conditions of this Clause 7.4, the
Security Trustee, on behalf of the Banks, shall release the Mortgage and any
Security Documents relating tothe NASSAU SPIRIT and shall release VSSI Transport
from its obligations hereunder.
8 ASSIGNMENT/PARTICIPATIONS
8.1 Assignment. This Agreement shall be binding upon, and inure to the benefit
of, the Obligors, the Agent, the Security Trustee and the Banks and their
respective successors and assigns, except that the Obligors may not assign
any of their rights or obligations hereunder . The Banks may, with the
prior written consent of the Obligors (such consent not to be unreasonably
withheld) assign a portion of their rights and obligations under this
Agreement to any one or more commercial lenders (the expenses of the Banks
in connection with any such assignment shall be for their own account),
provided, however, in the event of any such assignment, such assignment is
to be made pursuant to an Assignment and Assumption Agreement substantially
in the form of Exhibit I . The Obligors will take all reasonable actions
requested by the Banks to effect such assignment, including, without
limitation, the execution of a written consent to such Assignment and
Assumption Agreement.
8.2 Participations. Any Bank may, with the prior written consent of the
Obligors (such consent not to be unreasonably withheld), at any time sell
to one or more commercial banks or other financial institutions (each of
such commercial banks and other financial institutions being herein called
a "Participant") participating interests in any of its Commitment or other
interests of such Bank hereunder; provided, however, that
(a) no participation contemplated in this Section 8.2 shall relieve such
Bank from its Commitment or its other obligations hereunder,
(b) such Bank shall remain solely responsible for the performance of its
Commitment and such other obligations,
(c) no Participant, unless such Participant is an affiliate of such Bank,
shall be entitled to require such Bank to take or refrain from taking
any action hereunder, except that such Bank may agree with any
Participant that such Bank will not, without such Participant's
consent, take any of the following actions: (i) increase the
Commitment of such Bank, reduce any fees described in Section 2, or
extend the Expiration Date, (ii) extend the due date for, or reduce
the amount of, any scheduled repayment or prepayment of fees,
principal of or interest on any of the Reimbursement Obligations, or
(iii) release any guarantor from its obligations under any guarantee,
and
(d) none of the Obligors shall be required to pay any amount under
Clauses 2.5, 2.6 or 10 that is greater than the amount which it would
have been required to pay had no participating interest been sold.
9 CURRENCY INDEMNITY
9.1 Currency Conversion. If for the purpose of obtaining or enforcing a
judgment in any court in any country it becomes necessary to convert into
any other currency (the "judgment currency") an amount due in Dollars under
this Agreement or any of the Security Documents then the conversion shall
be made, in the discretion of the Banks, at the rate of exchange prevailing
either on the date of default or on the day before the day on which the
judgment is given or the order for enforcement is made, as the case may be
(the "conversion date"), provided that the Banks shall not be entitled to
recover under this clause any amount in the judgment currency which exceeds
at the conversion date the amount in Dollars due under this Agreement
and/or any of the Security Documents.
9.2 Change in Exchange Rate. If there is a change in the rate of exchange
prevailing between the conversion date and the date of actual payment of
the amount due, the Obligors shall pay such additional amounts (if any, but
in any event not a lesser amount) as may be necessary to ensure that the
amount paid in the judgment currency when converted at the rate of exchange
prevailing on the date of payment will produce the amount then due under
this Agreement and/or any of the Security Documents in Dollars; any excess
over the amount due received or collected by the Banks shall be remitted to
the Obligors.
9.3 Additional Debt Due. Any amount due from the Obligors under Clause 9.2
shall be due as a separate debt and shall not be affected by judgment being
obtained for any other sums due under or in respect of this Agreement, the
Loan Agreements and/or any of the Security Documents.
9.4 Rate of Exchange. The term "rate of exchange" in this Clause 9 means the
rate at which the Banks in accordance with their normal practices are able
on the relevant date to purchase Dollars with the judgment currency and
includes any premium and costs of exchange payable in connection with such
purchase.
10 EXPENSES
10.1 The Obligors jointly and severally agree, whether or not the transactions
hereby contemplated are consummated, on demand to pay, or reimburse the
Agent, the Security Trustee and the Banks for their payment of, the
reasonable expenses of the Agent, the Security Trustee and the Banks
incident to said transactions (and in connection with any supplements,
amendments, waivers or consents relating thereto or incurred in connection
with the enforcement or defense of any of the Agent's, Security Trustee's
and Banks' rights or remedies with respect thereto or in the preservation
of the Agent's, the Security Trustee's and the Banks' priorities under the
documentation executed and delivered in connection therewith) including,
without limitation, all reasonable costs and expenses of preparation,
negotiation, execution and administration of this Agreement and the
documents referred to herein, the reasonable fees and disbursements of the
Banks' counsel in connection therewith, including Seward & Kissel, Norton
Smith & Co. and Graham Thompson & Co. as well as the reasonable fees and
expenses of any independent appraisers, surveyors, engineers and other
consultants retained by the Agent, the Security Trustee and the Banks in
connection with this transaction, all costs and expenses, if any, in
connection with the enforcement of this Agreement, and the Security
Documents and stamp and other similar taxes, if any, incident to the
execution and delivery of the documents herein contemplated and to hold the
Banks free and harmless in connection with any liability arising from the
nonpayment of any such stamp or other similar taxes. Such taxes and, if
any, interest and penalties related thereto as may become payable after the
date here of shall be paid immediately by the Obligors to the Agent, the
Security Trustee or the Banks, as the case may be, when liability therefor
is no longer contested by such party or parties or reimbursed immediately
by the Obligors to such party or parties after payment thereof (if the
Agent, the Security Trustee or the Banks, at their sole discretion, chooses
to make such payment).
11 APPLICABLE LAW, JURISDICTION AND WAIVER
11.1 Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.
11.2 Jurisdiction. Each of the Obligors hereby irrevocably submits to the
jurisdiction of the courts of the State of New York and of the United
States District Court for the Southern District of New York in any action
or proceeding brought against it by the Banks under this Agreement or under
any document delivered hereunder and hereby irrevocably agrees that service
of summons or other legal process on it may be served by registered mail
addressed thereto, c/o Watson, Farley & Williams, 380 Madison Avenue, New
York, New York 10017. The service, as herein provided, of such summons or
other legal process in any such action or proceeding shall be deemed
personal service and accepted by the Obligors as such, and shall be legal
and binding upon the Obligors for all the purposes of any such action or
proceeding. Final judgment (a certified or exemplified copy of which shall
be conclusive evidence of the fact and of the amount of any indebtedness of
the Obligors to the Banks) against the Obligors in any such legal action or
proceeding shall be conclusive and may be enforced in other jurisdictions
by suit on the judgment. The Obligors will advise the Banks promptly of any
change of address for the purpose of service of process. Notwithstanding
anything herein to the contrary, the Banks may bring any legal action or
proceeding in any other appropriate jurisdiction.
11.3 WAIVER OF JURY TRIAL. IT IS MUTUALLY AGREED BY AND AMONG THE OBLIGORS, THE
GUARANTOR, THE AGENT, THE SECURITY TRUSTEE AND THE BANKS THAT EACH OF THEM
HEREBY WAIVES TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
BROUGHT BY ANY PARTY HERETO AGAINST ANY OTHER PARTY HERETO ON ANY MATTER
WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT OR
THE SECURITY DOCUMENTS.
12. THE AGENT
12.1 Appointment of Agent. Each of the Banks hereby irrevocably appoints and
authorizes the Agent (which for purposes of this Clause 12 shall be deemed
to include the Agent acting in its capacity as Security Trustee pursuant to
Clause 13) to take such action as agent on its behalf and to exercise such
powers under this Agreement and the Security Documents as are delegated to
the Agent by the terms hereof and thereof. Neither the Agent nor any of its
directors, officers, employees or agents shall be liable for any action
taken or omitted to be taken by it or them under this Agreement, the
Amended Letter of Credit or the Security Documents or in connection
therewith, except for its or their own gross negligence or willful
misconduct.
12.2 Distribution of Payments. Whenever any payment is received by the Agent
from the Obligors for the account of the Banks, or any of them, whether of
Reimbursement Obligations, commissions, fees or otherwise, it will
thereafter cause to be distributed on the same day if received before 11
a.m. New York time, or on the next day if received thereafter, like funds
relating to such payment ratably to the Banks according to their respective
Commitments, as the case may be, in each case to be applied according to
the terms of this Agreement.
12.3 No Duty to Examine, Etc. The Agent shall not be under a duty to examine or
pass upon the validity, effectiveness or genuineness of any of the Security
Documents or any instrument, document or communication furnished pursuant
to this Agreement or in connection therewith or in connection with any
Security Document, and the Agent shall be entitled to assume that the same
are valid, effective and genuine, have been signed or sent by the proper
parties and are what they purport to be.
12.4 Agent as Banks. With respect to that portion of the Amended Letter of
Credit made available by it as a "Bank", the entity which is the Agent
shall have the same rights and powers hereunder as any other Banks and may
exercise the same as though it were not the Agent, and the term "Banks" or
"Banks" shall include the entity which is the Agent in its capacity as a
Bank. The entity which is the Agent and its affiliates may accept deposits
from, lend money to and engage in any kind of business with the Obligors
and the Guarantor as if it were not the Agent.
12.5 (a) Obligations of Agent. The obligations of the Agent under this Agreement
and under the Security Documents are only those expressly set forth herein
and therein.
(b) No Duty to Investigate. The Agent shall not at any time be under any
duty to investigate whether an Event of Default, or an event which
with the giving of notice or lapse of time, or both, would constitute
an Event of Default, has occurred or to investigate the performance of
this Agreement, the Loan Agreements or any of the Security Documents
by the Obligors or the Guarantor.
12.6 (a) Discretion of Agent. The Agent shall be entitled to use its discretion
with respect to exercising or refraining from exercising any rights which
may be vested in it by, and with respect to taking or refraining from
taking any action or actions which it may be able to take under or in
respect of, this Agreement, the Amended Letter of Credit, and the Security
Documents, unless the Agent shall have been instructed by the Majority
Banks or all Banks, as appropriate hereunder, to exercise such rights or to
take or refrain from taking such action; provided, however, that the Agent
shall not be required to take any action which exposes the Agent to
personal liability or which is contrary to this Agreement or applicable
law.
(b) Instructions of Majority Banks. The Agent shall in all cases be fully
protected in acting or refraining from acting under this Agreement,
under the Amended Letter of Credit, under the Guaranty or under any
Security Document in accordance with the instructions of the Majority
Banks or all Banks, as appropriate hereunder, and any action taken or
failure to act pursuant to such instructions shall be binding on all
of the Banks.
12.7 Assumption re Event of Default. Except as otherwise provided in
Clause 12.13, the Agent shall be entitled to assume that no Event of
Default, or event which with the giving of notice or lapse of time, or
both, would constitute an Event of Default, has occurred and is continuing,
unless the Agent has been notified by the Obligors or the Guarantor of such
fact, or has been notified by a Bank that such Bank considers that an Event
of Default or such an event (specifying in detail the nature thereof) has
occurred and is continuing. In the event that the Agent shall have been
notified by the Obligors or any Bank in the manner set forth in the
preceding sentence of any Event of Default or of an event which with the
giving of notice or lapse of time, or both, would constitute an Event of
Default, the Agent shall notify the Banks and shall take action and assert
such rights under this Agreement and under the Security Documents as the
Majority Banks or all Banks, as appropriate hereunder, shall request in
writing.
12.8 No Liability of Agent or Banks. Neither the Agent nor any of the Banks
shall be under any liability or responsibility whatsoever:
(A) To the Obligors or the Guarantor or any other Person or entity as a
consequence of any failure or delay in performance by, or any breach
by, any other Bank or any other Person of any of its or their
obligations under this Agreement or under any Security Document;
(B) To any Bank or Banks, as a consequence of any failure or delay in
performance by, or any breach by, the Obligors or the Guarantor of any
of their respective obligations under this Agreement or under the
Security Documents; or
(C) To any Bank or Banks, for any statements, representations or
warranties contained in this Agreement, in any Security Document or
any document or instrument delivered in connection with the
transaction hereby contemplated; or for the validity, effectiveness,
enforceability or sufficiency of this Agreement, or any Security
Document or any document or instrument delivered in connection with
the transactions hereby contemplated.
12.9 Indemnification of Agent. The Banks agree to indemnify the Agent in its
capacity as Agent and Security Trustee (to the extent not reimbursed by the
Obligors or the Guarantor), pro rata according to the respective amounts of
their Commitments, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever (including legal fees and
expenses incurred in investigating claims and defending itself against such
liabilities) which may be imposed on, incurred by or asserted against the
Agent in any way relating to or arising out of this Agreement, the Amended
Letter of Credit, or any Security Document, any action taken or omitted by
the Agent thereunder or the preparation, administration, amendment or
enforcement of, or waiver of any provision of, this Agreement, the Amended
Letter of Credit, or any Security Document, except that no Banks shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the Agent's or the Security Trustee's gross negligence or
willful misconduct.
12.10Consultation with Counsel. The Agent may consult with legal counsel
selected by it and shall not be liable for any action taken, permitted or
omitted by it in good faith in accordance with the advice or opinion of
such counsel.
12.11Resignation. The Agent may resign at any time by giving 60 days' written
notice thereof to the Banks and the Obligors. Upon any such resignation,
the Majority Banks shall have the right to appoint a successor Agent. If no
successor Agent shall have been so appointed by the Majority Banks and
shall have accepted such appointment within 60 days after the retiring
Agent's giving notice of resignation, then the retiring Agent may, on
behalf of the Banks, appoint a successor Agent which shall be a bank or
trust company of recognized standing. The appointment of any successor
Agent shall be subject to the prior written consent of the Obligors, such
consent not to be unreasonably withheld. After any retiring Agent's
resignation as Agent hereunder, the provisions of this Clause 12 shall
continue in effect for its benefit with respect to any actions taken or
omitted by it while acting as Agent.
12.12Representations of Banks. Each Bank represents and warrants to each other
Bank and the Agent that:
(i) In making its decision to enter into this Agreement and to make its
portion of the Amended Letter of Credit available hereunder, it has
independently taken whatever steps it considers necessary to evaluate
the financial condition and affairs of the Obligors and the Guarantor,
that it has made an independent credit judgment and that it has not
relied upon any statement, representation or warranty by any other
Bank or the Agent; and
(ii) So long as any portion of its Commitments remain outstanding, it will
continue to make its own independent evaluation of the financial
condition and affairs of the Obligors and the Guarantor.
12.13Notification of Event of Default. The Agent hereby undertakes to promptly
notify the Bank, and the Bank hereby promptly undertake to notify the Agent
and the other Banks, of the existence of any Event of Default which shall
have occurred and be continuing of which the Agent or any Bank has actual
knowledge.
12.14Distributing Financial Statements, etc. The Agent shall, upon receipt of
financial statements pursuant to Clause 7.1 A(iv) or other notices received
thereunder, deliver or cause to be delivered copies of such documents to
the Banks without delay.
13 APPOINTMENT OF SECURITY TRUSTEE
Each of the Banks irrevocably appoints the Security Trustee as security
trustee on their respective behalf with regard to the (i) security, powers,
rights, titles, benefits and interests (both present and future)
constituted by and conferred on the Banks or any of them or for the benefit
thereof under or pursuant to this Agreement, the Amended Letter of Credit
or any Security Documents (including, without limitation, the benefit of
all covenants, undertakings, representations, warranties and obligations
given, made or undertaken to any Bank in this Agreement or any Security
Document), (ii) all moneys, property and other assets paid or transferred
to or vested in any Bank or any agent of any Bank or received or recovered
by any Bank or any agent of any Bank pursuant to, or in connection with,
this Agreement or the Security Documents whether from any Obligor or the
Guarantor or any other Person and (iii) all money, investments, property
and other assets at any time representing or deriving from any of the
foregoing, including all interest, income and other sums at any time
received or receivable by any Bank or any agent of any Bank in respect of
the same (or any part thereof). The Security Trustee hereby accepts such
appointment.
14 NOTICES AND DEMANDS
14.1 Notices. All notices, requests, demands and other communications to any
party hereunder shall be in writing (including prepaid overnight courier,
facsimile transmission or similar writing) and shall be given to the
Obligors at the address or telecopy number set out below and to the Banks,
the Agent and the Security Trustee at their address and telecopy number set
out below its name on the signature pages hereto or at such other address
or telecopy number as such party may hereafter specify for the purpose by
notice to each other party hereto. Each such notice, request or other
communication shall be effective (i) if given by telecopy, when such
telecopy is transmitted to the telecopy number specified in this Clause and
telephonic confirmation of receipt thereof is obtained or (ii) if given by
mail, prepaid overnight courier or any other means, when received at the
address specified in this Clause or when delivery at such address is
refused.
If to the Obligors at:
c/o Teekay Shipping Limited
4th Floor
Euro Canadian Centre
Marlborough Street and Navy Lion Road
P.O. Box SS 6293
Nassau, Bahamas
Fax: (242) 328-7330
15 MISCELLANEOUS
15.1 Time of Essence. Time is of the essence of this Agreement but no failure or
delay on the part of the Banks to exercise any power or right under this
Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise by the Banks of any power or right hereunder preclude any
other or further exercise thereof or the exercise of any other power or
right. The remedies provided herein are cumulative and are not exclusive of
any remedies provided by law.
15.2 Unenforceable, etc., Provisions - Effect. In case any one or more of the
provisions contained in this Agreement or in any of the Security Documents
would, if given effect, be invalid, illegal or unenforceable in any respect
under any law applicable in any relevant jurisdiction, said provision shall
not be enforceable against the Obligors but the validity, legality and
enforceability of the remaining provisions herein or therein contained
shall not in any way be affected or impaired thereby.
15.3 References. References herein to Clauses, Schedules and Exhibits are to be
construed as references to clauses of, and schedules and exhibits to, this
Agreement.
15.4 Further Assurances. Each of the Obligors agrees that if this Agreement or
any of the Security Documents shall, in the reasonable opinion of the Agent
or the Majority Banks, at any time be deemed by the Agent or the Majority
Banks for any reason insufficient in whole or in part to carry out the true
intent and spirit hereof or thereof, it will execute or cause to be
executed such other and further assurances and documents as in the opinion
of the Agent or the Majority Banks may be required in order more
effectively to accomplish the purposes of this Agreement or any of the
Security Documents.
15.5 Prior Agreements, Merger. Any and all prior understandings and agreements
heretofore entered into between the Obligors and the Guarantor on the one
part, and the Agent, the Security Trustee or the Banks, on the other part,
whether written or oral, are superseded by and merged into this Agreement
and the other agreements (the forms of which are exhibited hereto) to be
executed and delivered in connection herewith to which the Obligors and the
Guarantor, the Security Trustee and/or Agent and/or the Banks are parties,
which alone fully and completely express the agreements between the
Obligors and the Security Trustee, the Agent and the Banks.
15.6 Joint and Several Obligations. The obligations of the Obligors under this
Agreement and under each provision hereof are joint and several whether or
not so specified in any provision hereof. Each Obligor shall be entitled to
rights of contribution as against the other Obligor, provided, however,
that such rights of contribution shall (a) not in any way condition or
lessen the liability of any Obligor as a joint and several borrower for the
whole of the obligations owed to the Banks hereunder or under the Security
Documents and (b) be fully subject and subordinate to the rights of the
Banks hereunder and under the Security Documents.
15.7 Limitation of Liability. Notwithstanding anything to the contrary contained
in this Agreement or any of the other Security Documents, in the event that
any court or other judicial body of competent jurisdiction determines that
legal principles of fraudulent conveyances, fraudulent transfers or similar
concepts are applicable in evaluating the enforceability against any
particular Obligor or its assets of this Agreement or any Security Document
granted by such Obligor as security for its obligations hereunder and that
under such principles, this Agreement or such Security Documents would not
be enforceable against such Obligor or its assets unless the following
provisions of this Clause 15.7 had effect, then, the maximum liability of
each Obligor hereunder (the "Maximum Liability Amount") shall be limited so
that in no event shall such amount exceed the lesser of (i) the
Indebtedness and (ii) an amount equal to the aggregate, without double
counting, of (a) ninety-five percent (95%) of the such Obligor's Adjusted
Net Worth (as hereinafter defined) on the date hereof, or on the date
enforcement of this Agreement is sought (the "Determination Date"),
whichever is greater, (b) the aggregate fair value of such Obligor's
Subrogation and Contribution Rights (as hereinafter defined) and (c) the
amount of any Valuable Transfer (as hereinafter defined) to such Obligor,
provided that such Obligor's liability under this Agreement shall be
further limited to the extent, if any, required so that the obligations of
such Obligor under this Agreement shall not be subject to being set aside
or annulled under any applicable law relating to fraudulent transfers or
fraudulent conveyances. In determining the limitations, if any, on the
amount of any of such Obligor's obligations hereunder pursuant to the
preceding sentence, any rights of subrogation or contribution (collectively
the "Subrogation and Contribution Rights") which such Obligor may have on
the Determination Date with respect to any other guarantor of the
Indebtedness under applicable law shall be taken into account. As used in
this Clause 15.7, "Indebtedness" of the Obligor shall mean, all of the
Obligor's present or future indebtedness whether for principal, interest,
fees, expenses or otherwise, to the Banks under this Agreement and the
Security Documents. As used herein "Adjusted Net Worth" of the respective
Obligor shall mean, as of any date of determination thereof, an amount
equal to the lesser of (a) an amount equal to the excess of (i) the amount
of the present fair saleable value of the assets of such Obligor over (ii)
the amount that will be required to pay such Obligor's probable liability
on its then existing debts, including contingent liabilities, as they
become absolute and matured, and (b) an amount equal to (i) the excess of
the sum of such Obligor's property at a fair valuation over (ii) the amount
of all liabilities of such Obligor, contingent or otherwise, as such terms
are construed in accordance with applicable laws governing determinations
of the insolvency of debtors. In determining the Adjusted Net Worth of such
Obligor for purposes of calculating the Maximum Liability Amount for such
Obligor, the liabilities of such Obligor to be used in such determination
pursuant to each clause (ii) of the preceding sentence shall in any event
exclude (a) the liability of such Obligor under this Agreement and the
Security Documents to which it is a party, (b) the liabilities of such
Obligor subordinated in right of payment to this Agreement and (c) any
liabilities of such Obligor for Subrogation and Contribution Rights to any
of the other guarantors. As used herein "Valuable Transfer" shall mean, in
respect of any Obligor, (a) all loans, advances or capital contributions
made to such Obligor with proceeds of the Loans, (b) all debt securities or
other obligations of such Obligor acquired from such Obligor or retired by
such Obligor with proceeds of the Loans, (c) the fair market value of all
property acquired with proceeds of the Loans and transferred, absolutely
and not as collateral, to such Obligor, (d) all equity securities of such
Obligor acquired from such Obligor with proceeds of the Loans, and (e) the
value of any other economic benefits in accordance with applicable laws
governing determinations of the insolvency of debtors, in each such case
accruing to such Obligor as a result of this Agreement.
15.8 Release of Palmstar Thistle. Upon satisfaction of the conditions set forth
in Clause 4.1 and issuance of the Amended Letter of Credit, any and all
obligations of Palmstar Thistle under and in connection with the Original
Reimbursement Agreement and any of the security documents executed by
Palmstar Thistle in connection therewith shall be deemed satisfied and
released and the Agent and the Banks shall execute and deliver such
releases and other documents as may reasonably be required to release and
terminate any mortgage and assignments heretofore granted by Palmstar
Thistle in connection with the Original Reimbursement Agreement.
15.9 Entire Agreement; Amendments. This Agreement constitutes the entire
agreement of the parties hereto including all parties added hereto pursuant
to an Assignment and Assumption Agreement. This Agreement may be executed
in any number of counterparts, each of will shall be deemed an original,
but all such counterparts together shall constitute one and the same
instrument. Any provision of this Agreement may be amended or waived if,
but only if, such amendment or waiver is in writing and is signed by the
Obligors and the Majority Banks (and, if the rights or duties of the Banks,
the Agent or the Security Trustee are affected thereby, by the Banks, Agent
or the Security Trustee, as applicable); provided that no amendment or
waiver shall, unless signed by all the Banks, (i) increase or decrease the
Commitment of any Bank or subject any Bank to any additional obligation,
(ii) reduce the Amended Letter of Credit Fee or any other fees hereunder,
(iii) postpone the date fixed for any payment hereunder or for any
termination of any Commitment, (iv) amend Clause 8, (v) waive any condition
precedent to the making of the Loans, (vi) release any collateral or the
Guarantor or (vii) amend or modify this Clause 14.8 or otherwise change the
percentage of the Commitments or the number or category of Banks, which
shall be required for the Banks or any of them to take any action under
this Clause or any other provision of this Agreement.
15.10Headings. In this Agreement, Clause headings are inserted for convenience
of reference only and shall not be taken into account in the interpretation
of this Agreement.
IN WITNESS whereof the parties hereto have caused this Agreement to be duly
executed by their duly authorized representatives as of the day and year first
above written.
BARRINGTON (AUSTRALIA) PTY LIMITED
(ACN 080 850 559)
By
Name: Victoria L. Smith
Title: Attorney-in-Fact
PALMERSTON (AUSTRALIA) PTY LIMITED
(ACN 080 850 586)
By
Name: Victoria L. Smith
Title: Attorney-in-Fact
VSSI AUSTRALIA LIMITED
By
Name: Victoria L. Smith
Title: Attorney-in-Fact
VSSI TRANSPORT INC.
By
Name: Victoria L. Smith
Title: Attorney-in-Fact
ALLIANCE CHARTERING PTY LIMITED
(ACN 080 850 540)
By
Name: Victoria L. Smith
Title: Attorney-in-Fact
COMMITMENTS/PERCENTAGE AMOUNT
Commitment: $26,878,379 NEDSHIP BANK (America) N.V.
Percentage Amount: 34.45946% as Agent, Security Trustee and Bank
Scharlooweg 55
P.O. Box 3107
Curacao, Netherlands Antilles
Attention: Managing Director
Telecopy: (599) 9-652-366
By_______________________________
Name: Monica Treitmeier-McCarthy
Title: Attorney-in-Fact
copies of all notices to:
Nedship International, Inc.
245 Park Avenue
New York, NY 10167-0062
Attention: President
Telecopy: (212) 309-5188
Commitment: $24,770,270 THE BANK OF NEW YORK, as a Bank
Percentage Amount: 31.75676% One Wall Street
New York, N.Y. 10286
Telecopy: (212) 635-7512
By_______________________________
Name:
Title:
Commitment: $26,351,351 LANDESBANK SCHLESWIG-HOLSTEIN,
Percentage Amount: 33.78378% as a Bank
Martensdamm 6
D-24103 Kiel, Germany
Telecopy: 49-431-900-1130
with a copy of all notices to
Landesbank Schleswig-Holstein
United Kingdom
Representative Office
50 Gresham Street
London EC2V 7AY
Telecopy: 011-44-1-71-600-7020
By_______________________________
Name: Monica Treitmeier-McCarthy
Title:Attorney-in-Fact
01029.004 #79655
CONSENT AND AGREEMENT
The undersigned, referred to in the foregoing Amended and Restated
Reimbursement Agreement as the "Guarantor", hereby consents and agrees to said
Agreement and to the documents contemplated thereby and to the provisions
contained therein relating to conditions to be fulfilled and obligations to be
performed by the undersigned pursuant to or in connection with said Agreement
and agrees particularly to be bound by the representations, warranties and
covenants relating to the undersigned contained in Clauses 3, 7 and 10.4 of said
Agreement to the same extent as if the undersigned were a party to said
Agreement.
TEEKAY SHIPPING CORPORATION
By___________________________
Name: Victoria L. Smith
Title: Attorney-in-fact
01029.004 #79655
EXHIBIT 2.37
AMENDMENT NO. 1 TO AMENDED AND RESTATED REIMBURSEMENT AGREEMENT
THIS AMENDMENT NO. 1 TO AMENDED AND RESTATED REIMBURSEMENT
AGREEMENT (this "Amendment") is made as of the ____ day of May, 1999 among
BARRINGTON (AUSTRALIA) PTY LIMITED (ACN 080 850 559) ("Barrington") and
PALMERSTON (AUSTRALIA) PTY LIMITED (ACN 080 850 586) ("Palmerston" and with
Barrington collectively referred to as the "Original Borrowers"), each a company
organized and existing under the laws of New South Wales, Commonwealth of
Australia, and VSSI AUSTRALIA LIMITED, a company organized and existing under
the laws of the Republic of Liberia ("VSSI Australia" and with the Original
Borrowers collectively referred to as the "Borrowers"), VSSI TRANSPORT INC., a
company organized and existing under the laws of the Republic of Liberia ("VSSI
Transport" and with the Borrowers collectively referred to as the "Owners") and
ALLIANCE CHARTERING PTY LIMITED (ACN 080 850 540) ("Alliance") a company
organized and existing under the laws of New South Wales, Commonwealth of
Australia, as account parties ("Alliance" and with the Owners individually
referred to as an "Obligor" and collectively as the "Obligors"), the BANKS
listed on the signature pages thereof and any additional banks as may have
become a party thereto pursuant to Clause 8 thereto (the "Banks") and NEDSHIP
BANK (AMERICA) N.V., as agent (in such capacity, the "Agent") and security
trustee (in such capacity, the "Security Trustee") (the "Agreement") which
Agreement amends several loans and restates that certain reimbursement agreement
dated December 17, 1997 (the "Original Reimbursement Agreement") made among,
inter alia, the Original Borrowers, Palmstar Thistle Inc., a company organized
and existing under the laws of the Republic of Liberia, Alliance, certain of the
Banks, the Agent and the Security Trustee.
WITNESSETH THAT:
WHEREAS, pursuant to the Agreement, the Agent issued an Amended Letter of
Credit;
WHEREAS, the Borrowers have requested, and the Lenders have agreed, to
amend Section 6.1(h) of the Agreement;
NOW, THEREFORE, in consideration of the premises and such other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged by the parties, it is hereby agreed as follows:
1. Definitions. Unless otherwise defined herein, words and expressions
defined in the Agreement shall bear the same meanings ascribed thereto in the
Agreement.
2. Representations and Warranties. Each of the Borrowers hereby reaffirm,
as of the date hereof, each and every representation and warranty made thereby
in the Agreement, the Note and the Security Documents to which it is a party
(updated mutatis mutandis).
3. No Defaults. Each of the Borrowers hereby represent and warrant that as
of the date hereof there exists no Event of Default or any condition which, with
the giving of notice or passage of time, or both, would constitute an Event of
Default.
4. Performance of Covenants. Each of the Borrowers hereby reaffirms that it
has duly performed and observed the covenants and undertakings set forth in the
Agreement, the Note and the Security Documents to which it is a party, on its
part to be performed, and covenants and undertakes to continue to duly perform
and observe such covenants and undertakings, as amended hereby, so long as the
Agreement shall remain in effect.
5. Amendment to the Agreement. Subject to the terms and conditions of this
Amendment, the Agreement is hereby amended and supplemented as follows: (a) The
existing Section
6.1(h) is deleted and replaced by the following: 6.1(h) Change of Control.
There is, without the prior written consent of the Majority Lenders, (i) any
change in the legal or beneficial stock ownership or voting control of any of
the Obligors or (ii) any pledge of the shares of the capital stock of any of the
Obligors in favor of a party other than the Security Trustee or (iii) a Change
of Control in respect of the Guarantor;
(b) The following definition of "Change of Control" is inserted in Section
1.1 immediately following the definition of "Borrowers": "means such time as
(i)(a) prior to the Merger less than a majority of the issued and outstanding
shares of capital stock of the Guarantor are legally and beneficially owned by
the Cirrus Trust and the JTK Trust and (b) after the Merger, a "person" or
"group" (within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act)
other than the Cirrus Trust or the JTK Trust becomes the ultimate "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act) of more than 50% of the
total voting power of the outstanding shares of stock of the Guarantor; or (ii)
individuals who at the beginning of any period of two consecutive years
constituted the Board of Directors (together with any new directors whose
election by the Board of Directors or whose nomination by the Board of Directors
for election by the Guarantor's stockholders was approved by a vote of at least
two-thirds of the members of the Board of Directors then in office who either
were members of the Board of Directors on the date of the closing hereunder or
whose election or nomination for election was previously so approved) cease for
any reason to constitute a t least 50% of the members of the Board of Directors
then in office";
(c) The following definition of "Exchange Act" is inserted in Section 1.1
immediately following the definition of "Event(s) of Default": "means the
Securities and Exchange Act of 1934, as amended";
(d) The following
definition of "Merger" is inserted in Section 1.1 immediately following the
definition of "Materials of Environmental Concern": "means the consummation of
the transaction announced by the Guarantor on March 29, 1999 pursuant to which
the Guarantor shall acquire the outstanding capital stock of Bona Shipholding
Ltd."
6. No Other Amendment. All other terms and conditions of the Agreement
shall remain in full force and effect and the Agreement shall be read and
construed as if the terms of this Amendment were included therein by way of
addition or substitution, as the case may be.
7. Note. By the execution and delivery of this Amendment, each of the
Borrowers hereby consents and agrees that (a) the Note shall remain in full
force and effect notwithstanding the amendment contemplated hereby, and (b) all
references in the Note to the Agreement shall be deemed to refer to the
Agreement as amended by this Amendment.
8. Fees and Expenses. The Borrowers jointly and severally agree to pay
promptly all costs and expenses (including reasonable legal fees) of the Agent
and any Lender in connection with the preparation and execution of this
Amendment.
9. Governing Law. This Amendment shall be governed by and construed in
accordance with the laws of the State of New York.
10. Counterparts. This Amendment may be executed in as many counterparts as
may be deemed necessary or convenient, and by the different parties hereto on
separate counterparts each of which, when so executed, shall be deemed to be an
original but all such counterparts shall constitute but one and the same
agreement.
11. Headings; Amendment. In this Amendment, Clause headings are inserted
for convenience of reference only and shall be ignored in the interpretation of
this Amendment. This agreement cannot be amended other than by written agreement
signed by the parties hereto.
IN WITNESS WHEREOF, each of the parties hereto has executed this Amendment
by its duly authorized representative on the day and year first above written.
BARRINGTON (AUSTRALIA) PTY LIMITED
(ACN 080 850 559)
By ___________________________
Name:
Title:
PALMERSTON (AUSTRALIA) PTY LIMITED
(ACN 080 850 586)
By ___________________________
Name:
Title:
VSSI AUSTRALIA LIMITED
By ___________________________
Name:
Title:
VSSI TRANSPORT INC.
By ___________________________
Name:
Title:
ALLIANCE CHARTERING PTY LIMITED
By ___________________________
Name:
Title:
THE BANK OF NEW YORK
By ___________________________
Name:
Title:
NEDSHIP BANK (AMERICA) N.V.
as Agent, Security Trustee and Bank
By ___________________________
Name:
Title:
LANDESBANK SCHLESWIG-HOLSTEIN
By ___________________________
Name:
Title:
01029.004 #92149
<PAGE>
CONSENT, AGREEMENT AND REAFFIRMATION
The undersigned hereby consents and agrees to all of the terms
and conditions of the Amendments dated the date hereof to each of (i) the Loan
Facility Agreement dated December 18, 1997 between Barrington (Australia) Pty
Limited and Palmerston (Australia) Pty Limited, as Borrowers and Rabo Australia
Limited, as Lender and (ii) the Loan Facility Agreement between VSSI (Australia)
Limited as Borrowers and Rabo Australia Limited as Lender dated April 17, 1998,
and hereby reaffirms its obligations under its Guaranties dated December 18,
1997 and April 17, 1998 executed in connection with the aforementioned Loan
Facility Agreements.
IN WITNESS WHEREOF, the undersigned has caused this Consent,
Agreement and Reaffirmation to be executed as of this _____ day of May, 1999.
NEDSHIP BANK (AMERICA) N.V.
By _______________________
Name:
Title:
01029.004 #92149
EXHIBIT 2.38
Bona Shipholding Ltd
as Borrower
Chase Manhattan plc
as Arranger
Citibank International plc
as Arranger, Trustee And Agent
and others
---------------------------------------------------------------------------
Amended and restated
US$500,000,000
Revolving Loan Agreement
---------------------------------------------------------------------------
<PAGE>
CONTENTS
Clause Page
Part 1 DEFINITIONS AND INTERPRETATION
1. Definitions and Interpretation..........................................1
Part 2 THE FACILITIES
2. The Facilities.........................................................17
3. Utilisation of the Facilities..........................................18
Part 3 INTEREST
4. Payment and Calculation of Interest....................................20
5. Market Disruption and Alternative Interest Rates.......................20
Part 4 REPAYMENT, REDUCTION, CANCELLATION AND PREPAYMENT
6. Repayment and Reduction................................................21
7. Cancellation...........................................................22
Part 5 RISK ALLOCATION
8. Taxes..................................................................24
9. Tax Receipts and Credits...............................................25
10. Changes in Circumstances...............................................26
Part 6 REPRESENTATIONS, COVENANTS AND EVENTS OF DEFAULT
11. Representations........................................................29
12. Financial Information..................................................31
13. Financial Condition and Security.......................................33
14. Covenants..............................................................38
15. Events of Default......................................................40
Part 7 DEFAULT INTEREST AND INDEMNITY
16. Default Interest and Indemnity.........................................44
Part 8 PAYMENTS
17. Currency of Account and Payment........................................46
18. Payments...............................................................46
19. Set-Off................................................................48
20. Sharing................................................................48
Part 9 FEES, COSTS AND EXPENSES
21. Commitment Commission and Fees.........................................50
22. Costs and Expenses.....................................................51
Part 10 AGENCY PROVISIONS
23. The Agent, the Trustee, the Arrangers and the Banks....................52
Part 11 ASSIGNMENTS AND TRANSFERS
24. Assignments and Transfers..............................................57
Part 12 MISCELLANEOUS
25. Calculations and Evidence of Debt......................................59
26. Remedies and Waivers, Partial Invalidity...............................59
27. Notices................................................................60
28. Amendments.............................................................61
Part 13 LAW AND JURISDICTION
29. Law....................................................................63
30. Jurisdiction...........................................................63
<PAGE>
London-3/140335/04 - 61 - C0828/29464
THIS AGREEMENT originally made on 16 December 1998 is amended and restated on 11
June 1999
BETWEEN
(1)......BONA SHIPHOLDING LTD. (the "Borrower");
(2) CHASE MANHATTAN plc and CITIBANK INTERNATIONAL plc (the "Arrangers");
(3) CITIBANK INTERNATIONAL plc (the "Trustee"); and
(4) CITIBANK INTERNATIONAL plc (the "Agent")
(5) THE BANKS (as defined below).
NOW IT IS HEREBY AGREED as follows:
Part 1
DEFINITIONS AND INTERPRETATION
1. Definitions and Interpretation
1.1 Definitions
In this Agreement the following terms have the meanings given to them in
this Clause 1.1.
"A Advance" means, save as otherwise provided herein, an Advance (as
from time to time reduced by repayment or prepayment) made or to be made
by the Banks under the A Facility.
"A Available Commitment" means, in relation to a Bank at any time and
save as otherwise provided herein, its A Commitment at such time less
the aggregate of its portions of A Advances which are then outstanding
and not due for repayment Provided that such amount shall not be less
than zero.
"A Available Facility" means, at any time, the aggregate amount of the A
Available Commitments at such time.
"A Commitment" means, in relation to any Bank at any time and save as
otherwise provided herein, the amount set opposite its name in the
second column of the First Schedule.
"Advance" means, save as otherwise provided herein, an advance under
either Facility made or to be made by the Banks hereunder.
"A Facility" means the revolving dollar loan facility granted to the
Borrower pursuant to paragraph (i) of Clause 2.1 (Grant of Facilities).
"Affiliate" means a corporation or partnership at least 33% of the
equity or partnership capital of which is beneficially owned, directly
or indirectly, by any member of the Parent's Group and the value of the
interest of such member of the Parent's Group therein (as determined in
accordance with US GAAP) is not less than $10,000,000.
"Aggregate A Commitment" means the aggregate for the time being of the
Banks' A Commitments.
"Aggregate B Commitment" means the aggregate for the time being of the
Banks' B Commitments.
"Aggregate Total Commitments" means the aggregate for the time being of
the Banks' Total Commitments.
"Available Commitment" means, in relation to a Bank at any time and save
as otherwise provided herein, the aggregate of its Total Commitment at
such time less the aggregate of its portions of the Advances which have
then been made hereunder.
"Available Facility" means, at any time, the aggregate amount of the
Available Commitments at such time.
"Average Age of the Vessels" at any time means the average age of the
Vessels in the Security Pool at such time, but so that for these
purposes, if an asset in the Security Pool comprises shares in a
vessel-owning company, the vessel owned by that company shall be brought
into account as if it were a Vessel.
"B Advance" means, save as otherwise provided herein, an Advance (as
from time to time reduced by repayment or prepayment) made or to be made
by the Banks under the B Facility.
"Bank" means:
(i) any financial institution named in the First Schedule (The
Banks) (other than one which has ceased to be a party hereto
in accordance with the terms hereof); or
(ii) any financial institution which has become a party hereto in
accordance with the provisions of Clause 24.4 (Assignments by
Banks) or Clause 24.5 (Transfers by Banks).
"Basle Paper" means the paper entitled "International Convergence of
Capital Measurement and Capital Standards" dated July 1988 and prepared
by the Basle Committee on Banking Regulations and Supervision, as
amended in November 1991.
"B Available Commitment" means, in relation to a Bank at any time and
save as otherwise provided herein, its B Commitment at such time less
the aggregate of its portions of B Advances which are then outstanding
and not due for repayment Provided that such amount shall not be less
than zero.
"B Available Facility" means, at any time, the aggregate amount of the B
Available Commitments at such time.
"Bermuda" means the Islands of Bermuda.
"B Commitment" means, in relation to any Bank at any time and save as
otherwise provided herein, the amount set opposite its name in the third
column of the First Schedule.
"B Facility" means the dollar revolving loan facility granted to the
Borrower pursuant to paragraph (ii) of Clause 2.1 (Grant of Facilities).
"Borrower's Group" means the Borrower and its subsidiaries for the time
being.
"Capital Adequacy Requirement" means a request or requirement relating
to the maintenance of capital, including one which makes any change to,
or is based on any alteration in, the interpretation of the Basle Paper
or which increases the amounts of capital required thereunder, other
than a request or requirement made by way of implementation of the Basle
Paper in the manner in which it is being implemented as at the Original
Facility Date.
"Chase Revolver" means the revolving credit facility agreement dated 27
March 1996 between the Borrower, Chemical Bank and others.
"Citibank Revolver" means the revolving credit facility agreement dated
11 October 1994 between the Borrower, Citibank, N.A. and others.
"Commitment Termination Date" means the date which is one month before
the Final Maturity Date.
"Cover Ratio" at any time means, in relation to the A Facility, the
Estimated Value of Security Pool 1 divided by Loan 1 and, in relation to
the B Facility means the Estimated Value of Security Pool 2 divided by
Loan 2.
"Current Assets" means all assets of the members of the Borrower's Group
(excluding Intra-Group Assets) which, in accordance with US GAAP, would
be classed as current assets plus the aggregate of all amounts available
for drawing for more than one year but undrawn under committed credit
lines (excluding the Facilities) made available to any member of the
Borrower's Group by its bankers or by any other financial institution.
"Current Liabilities" means all obligations of the members of the
Borrower's Group to pay money on demand or within one year from the date
of computation and any other obligations of the members of the
Borrower's Group which, in accordance with US GAAP, would be considered
as current liabilities.
"Current Ratio" at any time means Current Assets divided by Current
Liabilities.
"Deeds of Assignment" means the deeds of assignment of earnings and
insurances in the form or substantially the form attached hereto as
Exhibit B (with such amendments as may in the Agent's opinion be
appropriate to reflect the place of registration of the relevant Vessel)
to be executed by the Borrower in favour of the Trustee over the Vessels
as contemplated by paragraph 19 of Part 1, and by paragraph 11 of Part 2
of the Third Schedule.
"Estimated Value" means
(i) (subject to (iii) below in respect of a New Vessel) in respect of a vessel
the average of the most recent estimates of the Market Value thereof set
forth in the summary furnished to the Agent pursuant to Clause 12.6(i)
Provided that if a vessel is the subject of a charter which had an initial
duration of over 24 months and which was approved by the Agent acting on
the instructions of the Banks, the Estimated Value of such vessel shall be
increased (or reduced) to reflect any difference between (a) the amount
determined by the Agent to be the net present value of the charterhire
payable over the remaining period of such charter and (b) the amount
determined by the Agent to be the net present value of the charterhire that
would be payable under a charter of such vessel for such period if it were
to be chartered in the market at charterhire rates current as at the
preceding Quarter Date;
(ii) in respect of any asset in a Security Pool other than a vessel, the most
recent estimate of the value thereof furnished to the Agent pursuant to
Clause 12.6(ii); and
(iii)in respect of a New Vessel and for the purposes only of Clause 3.1(vi) the
value as determined pursuant to Clause 13.9
Provided Always That any Vessel older than 27 years 6 months shall be
deemed to have a value of zero.
"Estimated Value of Security Pool 1" and "Estimated Value of Security
Pool 2" at any time mean the aggregate of the Estimated Values of the
relevant Vessels and the Estimated Values of the other assets in
Security Pool 1, or, as the case may be, the aggregate of the Estimated
Values of the relevant Vessels and the Estimated Values of the other
assets in Security Pool 2 at such time.
"Event of Default" means any circumstance described as such in Clause 15
(Events of Default).
"Excluded Entity" means any subsidiary of the Borrower (i) which is not
controlled, directly or indirectly, by the Borrower and (ii) in which
the Borrower's direct or indirect interest is as holder of equal to or
less than 50% of the issued share capital or as contributor of equal to
or less than 50% of the partnership capital and for these purposes a
company or corporation shall be treated as being controlled by another
if that other company or corporation is able to direct its affairs
and/or to control the composition of its board of directors or
equivalent body Provided Always, for the avoidance of doubt, that
Soponata-Bona Limited shall be an Excluded Entity, for so long as the
Borrower's direct or indirect interest therein is 50% (or less) of the
issued share capital thereof and Soponata-Bona Limited is not controlled
directly or indirectly by the Borrower.
"Existing Swaps" means the two interest rate swap agreements entered
into by the Borrower with Royal Bank of Scotland and BankBoston, both to
expire on February 19 2005 and both for a notional principal amount of
$50,000,000.
"Facilities" means the A Facility and the B Facility granted to the
Borrower in this Agreement and "Facility" shall be construed
accordingly.
"Facility Office" means, in relation to the Agent or any Bank, the
office identified with its signature below (or, in the case of a
Transferee, at the end of the Transfer Certificate to which it is a
party as Transferee) or such other office as it may from time to time
select.
"Final Maturity Date" means the tenth anniversary of the Original
Facility Date.
"Finance Documents" means:
(i) this Agreement;
(ii) the Guarantee;
(iii) the Security Agreements; and
(iv) any other document from time to time entered into in relation
to this Agreement which is agreed between the Agent and the
Borrower to constitute a Finance Document for the purposes
hereof.
"Finance Parties" means the Parent and the Borrower.
"Free Cash" means, on any date, the aggregate amount (expressed in
dollars or as a dollar equivalent) on such date of the then current
market value of:
(i) all amounts which are legally and beneficially owned by the
Borrower and which are standing to the credit of current and
deposit accounts with banks and other deposit taking
institutions excluding any such amount to which the right of
access or use of the owner is blocked or restricted (whether
by an encumbrance or otherwise);
(ii) to the extent not within (i) above, all unencumbered time
deposits with banks and other deposit taking institutions and
certificates of deposit issued, and bills of exchange
accepted, by banks and other deposit taking institutions which
are legally and beneficially owned by the Borrower free from
encumbrances; and
(iii) debt securities quoted on a trading exchange approved by the
Agent acting on the instructions of an Instructing Group which
are rated AA or better by Standard & Poor's Corporation or
such other rating agency as the Agent acting as aforesaid may
approve,
to which the Borrower shall have free, immediate and direct access (but
limited, if appropriate, to that portion thereof which the Borrower
shall be entitled to appropriate for its own account) plus the aggregate
amount (expressed in dollars or as a dollar equivalent) of the items set
out in (i), (ii) and (iii) above which shall be legally and beneficially
owned by any subsidiary of the Borrower and to which the Borrower
(through such subsidiary) shall have free, immediate and direct access
(but limited, if appropriate, to that portion thereof which such
subsidiary shall be entitled to appropriate for its own benefit) as
multiplied by the Relevant Percentage in respect of that subsidiary, but
excluding from such computation (i) Intra-Group Assets and (ii) any
amounts attributable to any Excluded Entity or minority interests.
"Future Vessel" means (subject always to Clause 13.11) any vessel
purchased by the Borrower and which is mortgaged to provide security for
the Borrower's obligations hereunder and which is allocated to Security
Pool 2.
"Guarantee" means the guarantee of the Borrower's obligations hereunder
given by the Parent substantially in the form of Exhibit D.
"Initial Vessels" means the following Vessels:
Vessels flagged in Liberia:
"Bona Shimmer", "Bona Spinner", "Bona Skipper", "Bona Robin",
"Bona Rider", "Bona Rover", "Bona Ray", "Bona Ranger";
Vessels flagged in the Bahamas:
"Bona Forum", "Bona Fulmar", "Bona Foam", "Bona Favour",
"Bona Spring", "Bona Sparrow", "Bona Sailor", "Bona Spray";
Vessels flagged in the Norwegian International Register:
"Bona Fountain", "Bona Fair"
and "Initial Vessel" means any of them;
"Instructing Group" means:
(i) whilst no Advances are outstanding hereunder, a Bank or group
of Banks whose Total Commitments amount (or, if each Bank's
Total Commitment has been reduced to zero, did immediately
before such reduction to zero, amount) in aggregate to more
than 662/3 per cent. of the Aggregate Total Commitments; and
(ii) whilst at least one Advance is outstanding hereunder, a Bank
or group of Banks to whom in aggregate more than 662/3 per
cent. of the Loan is (or immediately prior to its prepayment
or repayment, was then) owed.
"Interest Payment Date" means any date upon which interest is payable
pursuant to Clause 4.1.
"Intra-Group Asset" means (i) any indebtedness which is owed to any
member of the Borrower's Group by any member of the Parent's Group or by
any Affiliate; (ii) any capital contribution made by any member of the
Borrower's Group in any member of the Parent's Group or any Affiliate;
and (iii) any equity security issued by any member of the Parent's Group
or by any Affiliate which is beneficially owned by any member of the
Borrower's Group (the values of (i), (ii) and (iii) to be determined in
accordance with US GAAP).
"ISM Code" means the International Management Code for the Safe
Operation of Ships for pollution prevention adopted by the International
Maritime Organisation.
"Leverage" at any time means Total Liabilities divided by Total Assets.
"Liberia" means the Republic of Liberia.
"LIBOR" means, in relation to any period for which an interest rate is
to be determined hereunder, the rate determined by the Agent to be the
rate displayed on the Telerate screen (or, if there is no such rate on
the Telerate screen, the rate displayed on the Reuters screen) for the
British Bankers' Association rate for deposits in dollars for a period
corresponding to such period at or about 11.00 a.m. on the Quotation
Date therefor Provided that if no such rate is so displayed on either
the Telerate screen or the Reuters screen at such time it means the rate
per annum determined by the Agent to be the arithmetic mean (rounded
upwards, if not already such a multiple, to the nearest whole multiple
of one-thirty-second of one per cent.) of the rates (as notified to the
Agent) at which each of the Reference Banks was offering to prime banks
in the London Interbank Market deposits in dollars for a period
corresponding to such period at such time.
"Liquid Assets" means the aggregate of Free Cash and marketable
securities as defined by US GAAP.
"Loan 1" means the aggregate principal amount outstanding under the A
Facility, from time to time.
"Loan 2" means the aggregate principal amount outstanding under the B
Facility from time to time.
"Loan" means the aggregate principal amount of Loan 1 and Loan 2 for the
time being outstanding hereunder.
"Margin 1" means (a) 0.775% per annum up to (but not including) the
fifth anniversary of the first drawdown hereunder and (b) 0.825% per
annum thereafter until the Final Maturity Date Provided That during such
time as Net Leverage is equal to or less than 50%, (on the basis of the
most recent financial statements delivered pursuant to Clause 12.1 or
Clause 12.2), then the applicable Margin 1 for any A Advance shall be
0.725% p.a. (or, if the rate in (b) would otherwise apply, the
applicable Margin 1 shall be 0.775% p.a.).
"Margin 2" means (a) 0.9% per annum up to (but not including) the fifth
anniversary of the first drawdown hereunder and (b) 0.95% per annum
thereafter until the Final Maturity Date Provided That during such time
as Net Leverage is equal to or less than 50%, (on the basis of the most
recent financial statements delivered pursuant to Clause 12.1 or Clause
12.2), then the applicable Margin 2 for any B Advance shall be 0.85%
p.a. (or, if the rate in (b) would otherwise apply, the applicable
Margin 2 shall be 0.9% p.a.).
"Market Value" means, in relation to a vessel at any time, the sale
value thereof in dollars determined on the basis of a sale (for cash and
prompt delivery) by a willing seller to a willing buyer, free of charter
and encumbrances and at arm's length on normal commercial terms;
"Material Subsidiary" means (i) the Borrower; (ii) Bona Shipping A.S.
and (iii) any subsidiary of the Parent whose assets, as determined in
accordance with US GAAP and as shown from whose most recently available
financial statements, as multiplied by the Relevant Percentage in
respect of such subsidiary, equal or exceed 10% of the value of the
assets of the Parent's Group as determined in accordance with US GAAP
and as shown from the most recently available financial statements of
the Parent's Group Provided that:
(i) in respect of any subsidiary of the Parent, only the value of
its assets as multiplied by the Relevant Percentage in respect
of such subsidiary shall be taken into account in the
computation of the value of the assets of the Parent's Group;
and
(ii) a statement by the auditors of the Parent to the effect that,
in their opinion, a subsidiary is or is not or was or was not
at any particular time a Material Subsidiary shall, in the
absence of manifest error, be conclusive and binding on the
parties hereto;
"Mortgages" means the first preferred (or first priority) ship mortgages
over the Vessels in the form or substantially the form of that attached
hereto as Exhibits C1, C2 and C3 (with such amendments as may in the
Agent's reasonable opinion be appropriate to reflect the place of
registration of the relevant Vessel) to be granted by the Borrower in
favour of the Trustee as contemplated by paragraph 18 of Part 1 and
paragraph 10 of Part 2 of the Third Schedule;
<PAGE>
"Net Leverage" means:
Total Liabilities less (Liquid Assets exceeding $25,000,000)
-------------------------------------------------------------
Total Assets less (Liquid Assets exceeding $25,000,000)
"Newbuilding Facility" means the facility agreement dated 17 June 1997
between the Borrower, Chase Investment Bank Limited, and Citibank
International plc as arrangers and Chase Manhattan Bank Norge AS as
agent and others.
"New Vessels" means New Vessel 1, New Vessel 2, New Vessel 3 and New
Vessel 4 or any combination thereof and "New Vessel" shall be construed
accordingly.
"New Vessel 1" means the vessel scheduled to be delivered by the Yard to
the Borrower in January 1999 and having the Yard's Hull No 1234.
"New Vessel 2" means the vessel scheduled to be delivered by the Yard to
the Borrower in April 1999 and having the Yard's Hull No 1235.
"New Vessel 3" means the vessel scheduled to be delivered by the Yard to
the Borrower in June 1999 and having the Yard's Hull No 1236.
"New Vessel 4" means the vessel scheduled to be delivered by the Yard to
the Borrower in February 2000 if the Borrower exercises its option to
purchase such vessel.
"NIS" means the Norwegian International Ship Register.
"Notice of Drawdown" means a notice substantially in the form set out in
the Fourth Schedule (Notice of Drawdown).
"Option Declaration Date" means 15 July 1999;
"Original Consolidated Financial Statements" means the audited
consolidated financial statements of the Borrower's Group for its
financial year ended 31 December 1997.
"Original Facility Date" means 16 December 1998.
"Parent" means Teekay Shipping Corporation, a Liberian corporation.
"Parent's Group" means the Parent and its subsidiaries for the time
being.
"Potential Event of Default" means any event which may become (with the
passage of time, the giving of notice, the making of any determination
hereunder or any combination thereof) an Event of Default.
"Proportion" means, in relation to a Bank:
(i) whilst no Advances are outstanding hereunder, the proportion
borne by its Total Commitment to the Aggregate Total
Commitments (or, if the Aggregate Total Commitments are then
zero, by its Total Commitment to the Aggregate Total
Commitments immediately prior to their reduction to zero); or
(ii) whilst at least one Advance is outstanding hereunder, the
proportion borne by its share of the Loan to the Loan.
"Quarter Date" means 31 March, 30 June, 30 September and 31 December in
any year.
"Quotation Date" means, in relation to any period for which an interest
rate is to be determined hereunder, the day on which quotations would
ordinarily be given by prime banks in the London Interbank Market for
deposits in dollars for delivery on the first day of that period
Provided that, if, for any such period, quotations would ordinarily be
given on more than one date, the Quotation Date for that period shall be
the last of those dates.
"Reduction Dates" means (i) the date which is 6 months after the
Original Facility Date, (ii) each of the days which fall at six monthly
intervals after such date specified in (i), and (iii) the Final Maturity
Date.
"Reference Banks" means the principal London offices of Citibank N.A.,
The Chase Manhattan Bank, and Christiania Bank og Kreditkasse ASA or
such other Bank or Banks as may from time to time be agreed between the
Borrower and the Agent acting on the instructions of an Instructing
Group.
"Relevant Percentage" means, in respect of any subsidiary of the Parent
at any time, the percentage of the equity share capital or the
partnership capital, as the case may be, of such subsidiary which is
beneficially owned (free from encumbrances) by the Parent at that time.
"Repayment Date" means, in relation to any Advance, the last day of the
Term thereof.
"Security Agreements" means each of the following:
(i) the Mortgages;
(ii) the Deeds of Assignment; and
(iii) any other document from time to time entered into in relation
to this Agreement which it is agreed between the Agent (or, as
the case may be, the Trustee) and the Borrower is to
constitute a Security Agreement for the purposes hereof.
"Security Pool" means Security Pool 1 and Security Pool 2, or either of
them as the context requires.
"Security Pool 1" means the Initial Vessels, the New Vessels and each of
the other assets from time to time mortgaged or charged to secure the
Borrower's obligations under this Agreement and allocated to Security
Pool 1.
"Security Pool 2" means the Future Vessels and each of the other assets
from time to time mortgaged or charged to secure the Borrower's
obligations under this Agreement and allocated to Security Pool 2.
"Security Trust Deed" means the security trust agreement to be entered
into between the Trustee and others in the form or substantially the
form of that attached hereto as Exhibit A whereby the Trustee will hold
the benefit of the Security Documents on behalf of the Beneficiaries (to
be defined therein).
"Soponata - Bona Guarantee" means the guarantee of 50% of the
outstanding amounts from time to time under a $75,000,000 loan agreement
dated 26 June 1996 between Soponata - Bona Limited as borrower,
Christiania Bank og Kreditkasse as agent and others.
"Term" means, save as otherwise provided herein, in relation to any
Advance, the period for which such Advance is borrowed as specified in
the Notice of Drawdown relating thereto.
"Total Assets" means (subject to the second proviso to Clause 13.1) the
aggregate of the assets of the Borrower's Group as determined in
accordance with US GAAP (excluding Intra-Group Assets), but so that for
the purposes of this definition the value attributable to each vessel in
the Borrower's Group's fleet (or, if different, each Vessel) shall be
adjusted to reflect her most recent Estimated Value.
"Total Commitments" means, in relation to a Bank at any time and save as
otherwise provided herein, the amount set opposite its name in the First
Schedule in the column headed "Total Commitment".
"Total Liabilities" means the aggregate of the obligations of the
Borrower and its subsidiaries for the payment of money, whether borrowed
or not and whether present or future, as determined in accordance with
US GAAP.
"Transfer Certificate" means a certificate substantially in the form set
out in the Second Schedule (Form of Transfer Certificate) signed by a
Bank and a Transferee whereby:
(i) such Bank seeks to procure the transfer to such Transferee of
all or a part of such Bank's rights, benefits and obligations
hereunder as contemplated in Clause 24.3 (Assignments and
Transfers by Banks); and
(ii) such Transferee undertakes to perform the obligations it will
assume as a result of delivery of such certificate to the
Agent as is contemplated in Clause 24.5 (Transfers by Banks).
"Transfer Date" means, in relation to any Transfer Certificate, the date
for the making of the transfer as specified in the schedule to such
Transfer Certificate.
"Transferee" means a bank or other financial institution (unless it is
another Bank, approved by the Borrower in writing,) to which a Bank
seeks to transfer all or part of such Bank's rights, benefits and
obligations hereunder.
"US GAAP" at any time means accounting policies generally accepted in
the United States of America at such time.
"Vessels" means the Initial Vessels, the New Vessels and the Future
Vessels or any combination thereof and any other vessel which is
mortgaged to provide security for the Borrower's obligations hereunder
pursuant to any of the provisions of Clause 13.1, 13.2, 13.4 or 13.6 and
"Vessel" shall be construed accordingly.
"Yard" means Samsung Heavy Industries Co. Ltd of Korea.
1.2 Interpretation
Any reference in this Agreement to:
"acting in concert" shall be construed as a reference to any two or more
persons co-operating pursuant to any agreement or arrangement (whether
or not legally binding or formally recorded) in connection with the
acquisition, or attempted acquisition, by any of them of control over
any company;
the "Agent", the "Trustee", or any "Bank" shall be construed so as to
include its and any subsequent successors, Transferees and permitted
assigns in accordance with their respective interests;
a "business day" shall be construed as a reference to a day (other than
a Saturday or Sunday) on which banks generally are open for business in
London, New York City and Oslo;
a "charter" shall be construed as a reference to any agreement (other
than, for the purposes of the definition of "Market Value", a contract
of affreightment) pursuant to which a vessel is, or will be, employed;
the "date hereof" shall be a reference to the date upon which this
Agreement was amended and restated rather than the Original Facility
Date.
an "encumbrance" shall be construed as a reference to a mortgage,
charge, pledge, lien or other encumbrance securing any obligation of any
person, or any other type of preferential arrangement (including title
transfer and retention arrangements) having a similar effect;
the "equivalent" in one currency (in this paragraph the "first
currency") of an amount denominated in another currency (in this
paragraph the "second currency") on any date shall, save as otherwise
provided, be construed as a reference to the amount of the first
currency which could be purchased with that amount of the second
currency at the spot rate of exchange quoted by the Agent in the foreign
exchange market in London at or about 11.00 a.m. on such date for the
purchase of the first currency with the second currency for the second
business day thereafter;
a "guarantee" includes any guarantee, indemnity or other obligation to
pay, purchase, provide funds for the payment of or indemnify against the
consequences of default in the payment of indebtedness of any other
person and any encumbrance which secures the payment of any indebtedness
of any other person;
a "holding company" of a company or corporation shall be construed as a
reference to any company or corporation of which the first-mentioned
company or corporation is a subsidiary;
"indebtedness" shall be construed so as to include any obligation
(whether incurred as principal or as surety) for the payment or
repayment of money, whether present or future, actual or contingent;
"indebtedness for borrowed money" shall be construed as a reference to
any indebtedness of any person for or in respect of:
(i) moneys borrowed or raised;
(ii) amounts raised under any acceptance credit facility;
(iii) amounts raised pursuant to any note purchase facility or the
issue of bonds, notes, debentures, loan stock or similar
instruments;
(iv) amounts raised pursuant to any issue of shares of any member
of the Borrower's Group which are expressed to be redeemable;
(v) the amount of any liability in respect of leases or hire
purchase contracts which would, in accordance with US GAAP be
treated as finance or capital leases;
(vi) the amount of any liability in respect of any purchase price
for assets or services the payment of which is deferred for a
period in excess of one hundred and eighty (180) days;
(vii) all reimbursement obligations whether contingent or not in
respect of amounts paid under a letter of credit or similar
instrument;
(viii) all interest rate and currency swap and similar agreements
obliging the making of payments, whether periodically or upon
the happening of a contingency (and the value of such
indebtedness shall be the mark-to-market valuation of such
transaction at the relevant time);
(ix) amounts raised under any other transaction (including, without
limitation, any forward sale or purchase agreement) having the
commercial effect of a borrowing; and
(x) any guarantee of indebtedness falling within paragraphs (i) to (ix) above.
a "month" is a reference to a period starting on one day in a calendar
month and ending on the numerically corresponding day in the next
succeeding calendar month save that, where any such period would
otherwise end on a day which is not a business day, it shall end on the
next succeeding business day, unless that day falls in the calendar
month succeeding that in which it would otherwise have ended, in which
case it shall end on the immediately preceding business day Provided
that, if a period starts on the last business day in a calendar month or
if there is no numerically corresponding day in the month in which that
period ends, that period shall end on the last business day in that
later month (and references to "months" shall be construed accordingly);
a "person" shall be construed as a reference to any person, firm,
company, corporation, government, state or agency of a state or any
association or partnership (whether or not having separate legal
personality) of two or more of the foregoing;
a "subsidiary" of a company or corporation shall be construed as a
reference to any company or corporation:
(i) which is controlled, directly or indirectly, by the first-mentioned company
or corporation;
(ii) more than half the issued share capital of which is beneficially owned,
directly or indirectly, by the first-mentioned company or corporation; or
(iii)which is a subsidiary of another subsidiary of the first-mentioned company
or corporation
and, for these purposes, a company or corporation shall be treated as
being controlled by another if that other company or corporation is able
to direct its affairs and/or to control the composition of its board of
directors or equivalent body Provided that neither Bona Fortuna KS nor
Bona Freighter KS shall constitute subsidiaries of any member of the
Group;
"tax" shall be construed so as to include any present or future tax,
levy, impost, duty or other charge of a similar nature (including any
penalty or interest payable in connection with any failure to pay or any
delay in paying any of the same);
a "total loss" of a Vessel shall be construed so as to include (a) an
actual, constructive, agreed, arranged or compromised total loss of such
Vessel including such as may occur during a requisition for hire of such
Vessel and (b) the requisition for title of a Vessel (otherwise than by
requisition for hire) by any government or other competent authority or
by any person acting or purporting to act by the authority of the same
and from which such Vessel has not been released within a period of
ninety days of such event occurring;
"VAT" shall be construed as a reference to value added tax including any
similar tax which may be imposed in place thereof from time to time;
"vessel" means any Vessel and any other vessel owned by the Borrower or
any of its subsidiaries; and
the "winding-up", "dissolution" or "administration" of a company or
corporation shall be construed so as to include any equivalent or
analogous proceedings under the law of the jurisdiction in which such
company or corporation is incorporated or any jurisdiction in which such
company or corporation carries on business including the seeking of
liquidation, winding-up, reorganisation, dissolution, administration,
arrangement, adjustment, protection or relief of debtors.
1.3 Currency Symbols
"$" and "dollars" denote lawful currency of the United States of
America.
1.4 Amendments
Save where the contrary is indicated, any reference in this Agreement
to:
(i) this Agreement or any other agreement or document shall be
construed as a reference to this Agreement or, as the case may
be, such other agreement or document as the same may have
been, or may from time to time be, amended, varied or
supplemented;
(ii) a statute shall be construed as a reference to such statute as
the same may have been, or may from time to time be, amended
or re-enacted; and
(iii) a time of day shall be construed as a reference or re-enacted
to London time.
1.5 Headings
Clause, Part and Schedule headings are for ease of reference only.
1.6 Total Loss of Vessel
For the purposes of the Finance Documents, a total loss of a Vessel
shall be deemed to have occurred:
(i) if it consists of an actual total loss, at noon Greenwich Mean
Time on the actual date of loss or, if that is not known, on
the date on which such Vessel was last heard of;
(ii) if it consists of a requisitioning for title, at noon
Greenwich Mean Time on the date on which the same is expressed
to take effect by the person making the same; and
(iii) if it consists of a constructive or compromised or arranged or
agreed total loss, at noon Greenwich Mean Time on the date at
which notice of abandonment of such Vessel is given to her
insurers for the time being or (if her insurers for the time
being do not admit the claim for total loss) at the time on
which a total loss is subsequently adjudged to have occurred
by a competent court or arbitration tribunal or liability in
respect thereof as a total loss is admitted by insurers.
1.7 Construction
In the event of a conflict between any words and expressions defined
herein and any words and expressions used in any of the Security
Agreements, unless otherwise defined therein, the words and expressions
defined herein will prevail for the purpose of the Finance Documents.
Part 2
<PAGE>
THE FACILITIES
2. The Facilities
2.1 Grant of the Facilities
The Banks grant to the Borrower, upon the terms and subject to the
conditions hereof:-
(i) the A Facility being a dollar revolving loan facility in an aggregate
amount of $400,000,000 and;
(ii) the B Facility being a dollar revolving loan facility in an aggregate
amount of $100,000,000.
2.2 Purpose and Application
(i) The A Facility is intended to enable the Borrower (a) to
refinance the outstandings under the Citibank Revolver and the
Chase Revolver and (b) to finance part of the purchase price
of each New Vessel in an amount of up to $30,000,000 (or, in
the case of New Vessel 4 in an amount of up to $25,000,000) on
the date of delivery of such New Vessel;
(ii) The B Facility is intended to enable the Borrower to finance
part of the purchase price of each Future Vessel on the date
of delivery of such Future Vessel (or acquire all the issued
shares in a company which itself owns such Future Vessel)
and accordingly the Borrower shall apply all amounts raised by
it hereunder in or towards such purposes.
2.3 Condition Precedent Documents
Save as the Banks may otherwise agree the Borrower may not deliver:-
(i) the first Notice of Drawdown hereunder unless the Agent has
confirmed to the Borrower that it has received all of the
documents listed in Part 1 of the Third Schedule (Condition
Precedent Documents) (excepting those documents referred to in
paragraphs 6, 7, 15, 16, 17, 18, 19, 20, 22 and 23 thereof
which must be received, in form and substance acceptable to
the Agent, concurrently with the relevant Advance being made)
and that each is, in form and substance, satisfactory to the
Agent;
(ii) any Notice of Drawdown which is in connection with the
delivery of any New Vessel or Future Vessel unless the Agent
(without prejudice to Clause 13.11) has confirmed to the
Borrower that:
(a) it has received all of the relevant documents listed in
Part 2 of the Third Schedule (Condition Precedent
Documents) relating to the New Vessel (or Future Vessel)
to which such Facility relates (excepting those
documents referred to in paragraphs 7, 8, 9, 10, 11 and
12 of Part 2 of the Third Schedule, which must be
received, in form and substance acceptable to the Agent,
concurrently with the relevant Advance being made); and
(b) the Borrower has complied with its obligations under Clause 13.8.
(iii)and that each document referred to in (a) and (b) above is in a form and
substance satisfactory to the Agent.
2.4 Banks' Obligations Several
The obligations of each Bank hereunder are several and the failure by a
Bank to perform its obligations hereunder shall not affect the
obligations of the Borrower towards any other party hereto nor shall any
other party be liable for the failure by such Bank to perform its
obligations hereunder.
3. Utilisation of the Facilities
3.1 Drawdown Conditions
An Advance will be made by the Banks to the Borrower if:
(i) not more than ten nor less than three business days before the
proposed date for the making of such Advance, the Agent has
received from the Borrower a Notice of Drawdown therefor,
receipt of which shall oblige the Borrower to borrow the
amount therein requested on the date therein stated upon the
terms and subject to the conditions contained herein;
(ii) the proposed date for the making of such Advance is a business
day falling before the Commitment Termination Date;
(iii) the proposed date for the making of such Advance is not less
than five business days after the date upon which the previous
Advance (if any) was made hereunder;
(iv) the proposed amount of such Advance is in a minimum amount of
$5,000,000 and subject thereto an integral multiple of
$1,000,000 which is equal to or less than the amount of the A
Available Facility or, as the case may be, the B Available
Facility;
(v) there would not, immediately after the making of such Advance,
be more than six (6) Advances outstanding;
(vi) following the making of any Advance under the A Facility which
increases the amount of the Loan outstanding (other than the
first Advance) Loan 1 shall not exceed seventy-five per cent.
of the Estimated Value of Security Pool 1; Provided that in
relation to an Advance made in respect of the delivery of any
New Vessel from the Yard, the Borrower shall be entitled to
borrow up to $30,000,000 ($25,000,000, in the case of New
Vessel 4) or, if less, up to the Estimated Value of such New
Vessel notwithstanding that such Advance may cause such
percentage to be exceeded;
(vii) following the making of a B Advance which increases the amount
outstanding under the B Facility, Loan 2 shall not exceed
seventy five per cent of the Estimated Value of Security Pool
2;
(viii) the proposed Term of such Advance is a period of one, two,
three, six or twelve months (or such other periods as may be
agreed between the Borrower and the Banks) ending on or before
the Final Maturity Date;
(ix) no Event of Default or Potential Event of Default has occurred
and the representations set out in Clause 11 (Representations)
are true in all material respects on and as of the proposed
date for the making of such Advance; and
(x) following the making of a B Advance (and on the basis of the
statement which shall have been delivered pursuant to Clause
12.8, if applicable) Leverage shall not be more than 75%.
3.2 Each Bank's Participation
Each Bank will participate through its Facility Office in each Advance
made pursuant to Clause 3.1 (Drawdown Conditions) in the proportion
borne by its A Available Commitment to the A Available Facility (in the
case of an A Advance) or (in the case of a B Advance) in the proportion
borne by its B Available Commitment to the B Available Facility in
either case immediately prior to the making of that Advance.
3.3 Reduction of Available Commitment
If a Bank's A Commitment (or, as the case may be, its B Commitment) is
reduced in accordance with the terms hereof after the Agent has received
the Notice of Drawdown for an A Advance (or, as the case may be, a B
Advance), then the amount of that A Advance (or, as the case may be,
that B Advance) shall be reduced accordingly.
3.4 On the second anniversary of the Original Facility Date, the A
Commitment of each Bank shall be permanently reduced by the A Available
Commitment of such Bank immediately prior to such date and the B
Commitment of each Bank shall be permanently reduced by the B Available
Commitment of such Bank immediately prior to such date.
3.5 The first Advance hereunder shall be made under the A Facility which
shall be used to refinance the outstandings and related expenses under
the Citibank Revolver and the Chase Revolver and shall be in an amount
of $285,000,000.
Part 3
<PAGE>
INTEREST
4. Payment and Calculation of Interest
4.1 Payment of Interest
On the Repayment Date relating to each Advance (and, in the case where a
Term has a duration exceeding six months, on the last day of the sixth
of those months) the Borrower shall pay accrued interest on that
Advance.
4.2 Calculation of Interest
The rate of interest applicable to an Advance from time to time during
its Term shall be the rate per annum which is the sum of the applicable
Margin 1 (or the applicable Margin 2 in the case of a B Advance) at such
time and LIBOR on the Quotation Date therefor.
4.3 For the purposes of determining the amount of accrued interest payable
on each Advance on an Interest Payment Date pursuant to Clause 4.1, the
Net Leverage (and accordingly the applicable Margin 1, or as the case
may be, the applicable Margin 2) shall be assumed to be as disclosed in
the most recent financial statements delivered pursuant to Clause 12.1
or Clause 12.2 Provided Always That if, on the basis of the financial
statements delivered in respect of the next following Quarter Date
(having regard to the proviso to the definition of "Margin 1" and the
proviso to the definition of "Margin 2") the Borrower has overpaid (or,
as the case may be, underpaid) interest then the amount so overpaid (or,
as the case may be, underpaid) shall be deducted from (or, as the case
may be, added to) the amount of interest which would otherwise have been
payable by the Borrower on the next following Interest Payment Date.
5. Market Disruption and Alternative Interest Rates
If, in relation to any Advance for which LIBOR falls to be determined in
accordance with the proviso to the definition thereof, the Agent
determines that at or about 11.00 a.m. (London time) on the Quotation
Date for the Term in respect of such Advance none of the Reference Banks
was offering to prime banks in the London Interbank Market deposits in
dollars for the proposed duration of such Term then, notwithstanding the
provisions of Clause 4 (Payment and Calculation of Interest) the length
of the Term of such Advance shall be one month (unless otherwise agreed)
and the rate of interest applicable to such Advance from time to time
during such Term shall be the rate per annum which is the sum of the
applicable Margin 1 (or the applicable Margin 2 in the case of a B
Advance) and the arithmetic mean of the respective rates per annum
notified to the Agent by each Bank before the last day of the Term to be
that which expresses as a percentage rate per annum the cost to it of
funding such Advance during such Term from whatever sources such Bank
may select (and the Agent shall notify the Borrower accordingly).
<PAGE>
Part 4
REPAYMENT, REDUCTION, CANCELLATION AND PREPAYMENT
6. Repayment and Reduction
6.1 Repayment
The Borrower shall repay each Advance made to it in full on the
Repayment Date relating thereto.
6.2 Reduction
(i) subject always to Clause 7.4, on each of the following
Reduction Dates the Aggregate Total Commitments shall be
permanently reduced to the amounts shown opposite such dates
below:-
first Reduction Date $490,000,000
second Reduction Date $480,000,000
third Reduction Date $470,000,000
and not less than five business days prior to each Reduction
Date referred to above in this Clause 6.2(i) the Borrower
shall by notice in writing to the Agent specify whether the
relevant reduction on such Reduction Date shall be applied
against the Aggregate A Commitment or the Aggregate B
Commitment (and in default of such notice, the reduction on
the relevant Reduction Date shall be applied against the
Aggregate B Commitment);
(ii) subject always to Clause 7.4, and without prejudice to Clause 3.4, on each
Reduction Date (other than the Reduction Dates specified in (i) above and
the Final Maturity Date), the Aggregate A Commitment shall be permanently
reduced by an amount equal to one-twenty-fifth (1/25) of the Aggregate A
Commitment as at the second anniversary of the Original Facility Date and
the Aggregate B Commitment shall be permanently reduced by an amount equal
to one-twenty-fifth (1/25) of the Aggregate B Commitment as at the second
anniversary of the Original Facility Date, respectively Provided Always
That if, as at the second anniversary of the Original Facility Date, after
the application of Clause 3.4, and on the basis of the reductions specified
in this Clause 6.2(ii), the sum of the Aggregate A Commitment and the
Aggregate B Commitment on the penultimate Reduction Date (the "Balloon")
would exceed $150,000,000 then the proportion by which the Aggregate A
Commitment and the Aggregate B Commitment would otherwise be reduced on
each of the Reduction Dates specified in this Clause 6.2(ii) shall be
increased by such amount as shall ensure that the Balloon is equal to
$150,000,000 (without prejudice to any further cancellation or deemed
cancellation in accordance with the provisions of this Agreement pursuant
to which the Balloon would be further reduced); and
(iii) on the Final Maturity Date the Aggregate Total Commitments shall be
reduced to zero.
6.3 Rateable Reduction
Each reduction pursuant to Clause 6.2 of Aggregate A Commitment or, as
the case may be, Aggregate B Commitment, shall reduce the Banks' A
Commitments or, as the case may be, the Banks' B Commitments, pro rata.
In any event the amount of the Facilities shall be reduced to zero on
the Final Maturity Date.
6.4 Reduction of Outstandings
If on any date the Loan exceeds the Aggregate Total Commitments on such
date, the Borrower shall repay on such date the amount of the excess and
the repayment of such excess shall reduce the principal amount of such
Advance or Advances as is or are nominated by the Borrower.
6.5 Prepayment
The Borrower may, by giving to the Agent not less than fifteen business
days' notice to that effect, prepay (without penalty but subject to the
Borrower complying with Clause 16.4) the whole or any part of an Advance
(being an amount such that such Advance will be reduced by an amount or
integral multiple of $5,000,000).
6.6 Reborrowing of Prepayments
Subject to the other provisions of this Agreement, any prepayment made
by the Borrower pursuant to Clause 6.5 shall increase the amount of the
A Available Facility or the B Available Facility as the case may be and
may be reborrowed in accordance with the provisions of this Agreement.
6.7 No Other Repayments
The Borrower shall not repay or prepay all or any part of any Advance
outstanding hereunder except at the times and in the manner expressly
provided herein and, subject to the terms and conditions hereof, shall
be entitled to reborrow any amount repaid up to the Available Facilities
at such time.
7. Cancellation
7.1 Cancellation (i) the Borrower may, by giving to the Agent not less than
fifteen business days' prior notice to that effect, cancel the whole or any
part (being an amount or integral multiple of $5,000,000) of the Aggregate
Total Commitments; any such cancellation shall specify the relevant
Facility and shall be applied (a) pro rata against the scheduled reductions
in the Aggregate A Commitment or Aggregate B Commitment as the case may be,
as at each Reduction Date as determined pursuant to Clause 6.2 unless (b),
at the time the relevant notice of cancellation is given, the Borrower is
in breach of any provision of Clause 13.1, in which case the cancelled
amount shall be applied against the relevant Aggregate A Commitment or
Aggregate B Commitment as the case may be, as at each Reduction Date as
determined pursuant to Clause 6.2 in inverse chronological order.
(ii) any such cancellation shall reduce the relevant A Commitment,
or as the case may be, B Commitment, of each Bank rateably. No
premium or other compensation shall be payable by the Borrower
by reason of such cancellation.
(iii) if the Borrower decides not to exercise or does not exercise
its option to purchase New Vessel 4 from the Yard on or before
the Option Declaration Date, the Borrower shall forthwith
notify the Agent accordingly and an amount of $25,000,000 in
respect of the A Facility shall be cancelled automatically
with effect from the date that it has elected not to exercise
such option or the Option Declaration Date (whichever shall
first occur).
7.2 Notice of Cancellation
Any notice of cancellation given by the Borrower pursuant to Clause 7.1
(Cancellation) shall be irrevocable and shall specify the date upon
which such cancellation is to be made and the amount of such
cancellation.
7.3 Repayment of a Bank's Share of the Loan
If any Bank claims indemnification from the Borrower under Clause 8.2
(Tax Indemnity) or Clause 10.1 (Increased Costs), the Borrower may,
within thirty days thereafter and by not less than ten business days'
prior notice to the Agent (which notice shall be irrevocable), cancel
such Bank's Total Commitment whereupon such Bank shall cease to be
obliged to participate in further Advances and its Total Commitment
shall be reduced to zero.
7.4 Satisfaction of Clause 6.2
Subject always to Clause 6.4, the reductions in Aggregate Total
Commitment, Aggregate A Commitment or Aggregate B Commitment (as the
case may be) pursuant to Clause 6.2 (Reduction) shall be deemed to have
been satisfied to the extent a cancellation has been effected pursuant
to Clause 7.1 (Cancellation) and such cancellation has been applied in
accordance with Clause 7.1(i)(a) or Clause 7.1(iii) as the case may be.
Part 5
<PAGE>
RISK ALLOCATION
8. Taxes
8.1 Tax Gross-up
All payments to be made by the Borrower to any person under any of the
Finance Documents shall be made free and clear of and without deduction
for or on account of tax unless the Borrower is required to make such a
payment subject to the deduction or withholding of tax, in which case
the sum payable by the Borrower in respect of which such deduction or
withholding is required to be made shall be increased to the extent
necessary to ensure that, after the making of the required deduction or
withholding, such person receives and retains (free from any liability
in respect of any such deduction or withholding) a net sum equal to the
sum which it would have received and so retained had no such deduction
or withholding been made or required to be made.
8.2 Tax Indemnity
Without prejudice to the provisions of Clause 8.1 (Tax Gross-up), if any
person or the Agent on its behalf is required to make any payment on
account of tax (not being a tax imposed on and calculated by reference
to the net income paid to and received by its Facility Office by the
jurisdiction in which it is incorporated or in which its Facility Office
is located) or otherwise on or in relation to any sum received or
receivable hereunder by such person or the Agent on its behalf
(including any sum received or receivable under this Clause 8) or any
liability in respect of any such payment is asserted, imposed, levied or
assessed against such person or the Agent on its behalf, the Borrower
shall, upon demand of the Agent, promptly indemnify such person against
such payment or liability, together with any interest, penalties, costs
and expenses payable or incurred in connection therewith Provided that
if a Bank or the Agent or the Trustee considers that it is reasonable to
do so and that it would not be otherwise prejudiced thereby, it will,
prior to instructing the Agent to make a demand under this Clause 8.2,
use reasonable endeavours to determine whether any such payment or
liability was correctly or legally imposed or asserted or could
reasonably be mitigated.
8.3 Claims by Banks
If a Bank or the Trustee intends to make a claim pursuant to Clause 8.2
(Tax Indemnity) it shall notify the Agent of the event by reason of
which it is entitled to do so and provide the Agent with a reasonable
written explanation of the basis and calculation of such claim,
whereupon the Agent shall notify the Borrower thereof and provide the
Borrower with a copy of the explanation and calculation which it has
received from such Bank or the Trustee Provided that nothing herein
shall require any Bank or the Trustee to disclose any confidential
information relating to the organisation of its affairs.
9. Tax Receipts and Credits
9.1 Notification of Requirement to Deduct Tax
If, at any time, the Borrower is required by law to make any deduction
or withholding from any sum payable by it under any of the Finance
Documents (or if thereafter there is any change in the rates at which or
the manner in which such deductions or withholdings are calculated), the
Borrower shall promptly notify the Agent, whereupon the Agent shall
notify the Banks and the Trustee accordingly.
9.2 Evidence of Payment of Tax
If the Borrower makes any payment under any of the Finance Documents in
respect of which it is required to make any deduction or withholding, it
shall pay the full amount required to be deducted or withheld to the
relevant taxation or other authority within the time allowed for such
payment under applicable law and shall deliver to the Agent for each
Bank, within thirty days after it has received the same an original
receipt (or a certified copy thereof) issued by such authority
evidencing the payment to such authority of all amounts so required to
be deducted or withheld in respect of that Bank's share of such payment.
9.3 Tax Credits
In the event that an additional payment is made under Clause 8.2 (Tax
Indemnity) and the person for whose benefit such payment is made, in its
sole opinion, determines that it has received or been granted a credit
against relief or remission for, or repayment of, any relevant tax paid
or payable by it in respect of or calculated with reference to the
deduction or withholding giving rise to the relevant payment or
liability, such person shall, to the extent that it can do so without
prejudice to the retention of the amount of such credit, relief,
remission or repayment, pay to the Borrower such amount as such person
shall, in its sole opinion, have concluded to be attributable to the
relevant payment or liability. Any such payment shall be conclusive
evidence of the amount due to the Borrower hereunder and shall be
accepted by the Borrower in full and final settlement of its rights of
reimbursement hereunder in respect of the relevant payment or liability.
Nothing herein contained shall interfere with the right of the Agent or
any Bank to arrange its tax affairs in whatever manner it thinks fit
and, in particular, neither the Agent nor any Bank shall be under any
obligation to claim credit, relief, remission or repayment from or
against its corporate profits or similar tax liability in respect of the
amount of the relevant payment or liability in priority to any other
claims, reliefs, credits or deductions available to it. Any such
reimbursement to be made by a Bank pursuant to this Clause 9.3 (Tax
Credits) shall be made as soon as possible after such credit or
remission or repayment has, in the reasonable opinion of such Bank, been
received or granted.
10.
<PAGE>
Changes in Circumstances
10.1 Increased Costs
If, by reason of (i) any change in law or in its interpretation or
administration coming into effect after the Original Facility Date
and/or (ii) compliance with any Capital Adequacy Requirement or any
other request from or requirement of any central bank or other fiscal,
monetary or other authority coming into effect after the Original
Facility Date compliance with which is obligatory or customary for such
Bank:
(i) a Bank or any holding company of such Bank is unable to obtain
the rate of return on its overall capital which it would have
been able to obtain but for such Bank's entering into or
assuming or maintaining a commitment or performing its
obligations (including its obligation to participate in the
making of Advances) under this Agreement;
(ii) a Bank or any holding company of such Bank incurs a cost as a
result of such Bank's entering into or assuming or maintaining
a commitment or performing its obligations (including its
obligation to participate in the making of Advances) under
this Agreement;
(iii) there is any increase in the cost to a Bank or any holding
company of such Bank of funding or maintaining all or any of
the loans comprised in a class of loans formed by or including
such Bank's share of the Advances; or
(iv) a Bank or any holding company of such Bank becomes liable to
make any payment on account of tax or otherwise (not being a
tax imposed on and calculated by reference to the net income
paid to and received by such Bank's Facility Office by the
jurisdiction in which it is incorporated or in which its
Facility Office is located) on or calculated by reference to
the amount of such Bank's share of the Advances and/or to any
sum received or receivable by it hereunder,
then the Borrower shall, from time to time on demand of the Agent,
promptly pay to the Agent for the account of that Bank amounts
sufficient to hold harmless and indemnify that Bank or such Bank's
holding company from and against, as the case may be, (1) such reduction
in the rate of return on its overall capital, (2) such cost, (3) such
increased cost (or such proportion of such increased cost as is, in the
opinion of that Bank, attributable to its participating in the funding
or maintaining of Advances) or (4) such liability. No claim shall be
made by any Bank under this Clause 10.1 (Increased Costs) in respect of
any increased cost which arises out of a change to applicable law or
regulation affecting that Bank which has been issued prior to the date
of the first drawdown hereunder and compliance with which by that Bank
is commercially reasonable (including, without limitation, any reduction
in return or increased cost which arises as a consequence of any law or
directive implementing the Basle Paper in the manner in which it is
being implemented at the Original Facility Date).
10.2 Increased Costs Claims
A Bank intending to make a claim pursuant to Clause 10.1 (Increased
Costs) shall as soon as reasonably practicable after becoming aware of
the circumstance which would give rise to such a claim notify the Agent
of the event by reason of which it is entitled to do so and provide the
Agent with a reasonable written explanation of the basis and calculation
of such claim, whereupon the Agent shall promptly notify the Borrower
thereof and provide the Borrower with a copy of the explanation and
calculation which it has received from such Bank or Trustee Provided
that nothing herein shall require such Bank to disclose any confidential
information relating to the organisation of its affairs.
10.3 Illegality
If, at any time:
(i) it is unlawful for a Bank to make, fund or allow to remain
outstanding all or part of its share of the Advances, then
that Bank shall, promptly after becoming aware of the same,
deliver to the Borrower through the Agent a notice to that
effect and:
(a) such Bank shall not thereafter be obliged to participate
in the making of any Advances and the amount of its
Total Commitment shall be immediately reduced to zero;
and
(b) if the Agent on behalf of such Bank so requires, the
Borrower shall on such date as the Agent shall have
specified repay such Bank's share of any outstanding
Advances together with accrued interest thereon and all
other amounts owing to such Bank hereunder; or
(ii) it is or will become unlawful for the Borrower to perform or comply with
any or all of its obligations under any Finance Document or any of the
obligations of the Borrower under any Finance Document are not or will
cease to be legal valid and binding, the Agent may by notice to the
Borrower require the Borrower to enter into negotiations with a view to
amending the terms of such Finance Document in such a way as to ensure that
the Borrower's obligations thereunder remain substantially the same but are
lawful or, as the case may be, legal, valid and binding; if within thirty
days following any such notice from the Agent such Finance Document shall
not have been so amended, the Borrower shall, on such date as the Agent may
require, repay the Loan together with accrued interest thereon and any
other sums then due from the Borrower hereunder.
10.4 Mitigation
If circumstances arise which would (or would upon the giving of notice)
result in:
(i) the reduction of a Bank's Total Commitment pursuant to Clause 10.3
(Illegality) ;
(ii) the prepayment of a Bank's share of an Advance pursuant to Clause 10.3
(Illegality);
(iii) an increase in the amount of any payment to be made to or for
account of any Bank pursuant to Clause 8.1(Tax Gross-up); or
(iv) a claim by any Bank for indemnification pursuant to Clause 8.2
(Tax Indemnity) or a claim by any Bank for indemnification
pursuant to Clause 10.1 (Increased Costs),
then, without in any way limiting, reducing or otherwise qualifying the
obligations of the Borrower under any of the Clauses referred to above,
that Bank shall, in consultation with the Borrower and the Agent on
behalf of the Banks, take such reasonable steps as may be reasonably
open to it to mitigate the effects of such circumstances, including by
transferring its Facility Office to another jurisdiction or by assigning
its rights hereunder to another financial institution approved by the
Borrower Provided that no Bank shall have any obligation to transfer its
Facility Office or assign its rights hereunder as aforesaid if it is of
the opinion that to do so would or might have an adverse effect on its
business, operations or financial condition.
<PAGE>
Part 6
REPRESENTATIONS, COVENANTS AND EVENTS OF DEFAULT
11. Representations
Subject to any reservations and/or qualifications as to matter of law
which may be made in the legal opinions referred to in paragraphs 6, 7
and 16 of Part 1 and paragraph 8 of Part 2 of the Third Schedule, the
Borrower represents that:
(i) Status and Due Authorisation It is a corporation duly
organised under the laws of Bermuda with power to enter into
the Finance Documents and to exercise its rights and perform
its obligations under the Finance Documents and all corporate
and other action required to authorise its execution of the
Finance Documents and its performance of its obligations
thereunder has been duly taken.
(ii) No Deductions or Withholding Under the laws of Bermuda in
force at the date hereof, it will not be required to make any
deduction or withholding from any payment it may make under
any of the Finance Documents.
(iii) Claims Pari Passu (Without prejudice to the security to be
constituted by or pursuant to the Security Agreements) under
the laws of Bermuda in force at the date hereof, its
indebtedness hereunder will, to the extent that it exceeds the
realised value of the security therefor, rank at least pari
passu with all its other unsecured indebtedness save that
which is preferred solely by any bankruptcy, insolvency or
other similar laws of general application.
(iv) No Immunity In any proceedings taken in Bermuda in relation to
any of the Finance Documents, it will not be entitled to claim
for itself or any of its assets immunity from suit, execution,
attachment or other legal process.
(v) Governing Law and Judgments In any proceedings taken in
Bermuda in relation to any of the Finance Documents in which
there is an express choice of the law of a particular country
as the governing law thereof that choice of law and any
judgment obtained in that country will be recognised and
enforced.
(vi) Validity and Admissibility in Evidence As at the date hereof
all acts, conditions and things required to be done, fulfilled
and performed in order (a) to enable it lawfully to enter
into, exercise its rights under and perform and comply with
the obligations expressed to be assumed by it in the Finance
Documents, (b) to ensure that the obligations expressed to be
assumed by it in the Finance Documents are legal, valid and
binding and (c) to make the Finance Documents admissible in
evidence in Bermuda have been done, fulfilled and performed.
(vii) No Filing or Stamp Taxes Under the laws of Bermuda in force at
the date hereof, it is not necessary that any of the Finance
Documents be filed, recorded or enrolled with any court or
other authority in Bermuda other than the Registrar of
Companies or that any stamp, registration or similar tax be
paid on or in relation to any of the Finance Documents.
(viii) Binding Obligations The obligations expressed to be assumed by
it in the Finance Documents are legal and valid obligations
binding on it in accordance with the terms of the Finance
Documents.
The Borrower further represents that:
(ix) No Winding-up No member of the Borrower's Group has taken any
corporate action nor have any other steps been taken or legal
proceedings been started or (to the best of the Borrower's
knowledge and belief) threatened against any member of the
Borrower's Group for its winding-up, dissolution,
administration or re-organisation or for the appointment of a
receiver, administrator, administrative receiver, trustee or
similar officer of it or of any or all of its assets or
revenues.
(x) No Material Defaults No member of the Borrower's Group is in
breach of or in default under any agreement to which it is a
party or which is binding on it or any of its assets to an
extent or in a manner which might have a material adverse
effect on the business or financial condition of the
Borrower's Group as a whole.
(xi) No Material Proceedings No action or administrative proceeding
of or before any court or agency which is not covered by
insurance or which might have a material adverse effect on the
business or financial condition of any member of the
Borrower's Group has been started or is reasonably likely to
be started.
(xii) Original Consolidated Financial Statements The Original
Consolidated Financial Statements were prepared in accordance
with US GAAP and give (in conjunction with the notes thereto)
a true and fair view of the financial condition of the
Borrower's Group at the date as of which they were prepared
and the results of the Borrower's Group's operations during
the financial year then ended.
(xiii) No Material Adverse Change Since publication of the third
quarter results for 1998, there has been no material adverse
change in the business or financial condition of any member of
the Borrower's Group.
(xiv) No Undisclosed Liabilities As at the date as of which the
Original Consolidated Financial Statements were prepared no
member of the Borrower's Group had any liabilities (contingent
or otherwise) which were not disclosed thereby (or by the
notes thereto) or reserved against therein nor any unrealised
or anticipated losses arising from commitments entered into by
it which were not so disclosed or reserved against (other than
pursuant to the Soponata - Bona Guarantee).
(xv) No Obligation to Create Security Its execution of this
Agreement and its exercise of its rights and performance of
its obligations hereunder will not result in the existence of
nor oblige any member of the Borrower's Group to create any
encumbrance over all or any of its present or future revenues
or assets, other than pursuant to the Finance Documents.
(xvi) Execution of this Agreement Its execution of the Finance
Documents and its exercise of its rights and performance of
its obligations under any of the Finance Documents do not
constitute and will not result in any breach of any agreement
or treaty to which the Borrower is a party.
(xvii) Year 2000 Problem The Borrower believes (having made
reasonable enquiry) that the Year 2000 Problem (that is, the
risk that any computer hardware or software used by any member
of the Borrower's Group may be unable to recognise and perform
properly any date-sensitive functions involving a date before,
on, or after 31 December 1999) will not have a material
adverse effect on its ability to perform its obligations under
this Agreement.
(xviii) Money Laundering Any borrowing by it hereunder, and the
performance of its obligations hereunder and under the other
Finance Documents, will be for its own account and will not
involve any breach by it of any law or regulatory measure
relating to "money laundering" as defined in Article 1 of the
Directive (91/308/EEC) of the Council of the European
Communities.
12. Financial Information
12.1 Annual Statements
The Borrower shall as soon as the same become available, but in any
event within 180 days after the end of its financial years, deliver to
the Agent in sufficient copies for the Banks its consolidated and (if
requested by the Agent) unconsolidated financial statements for such
financial year.
12.2 Quarterly Statements
The Borrower shall as soon as the same become available, but in any
event within 60 days after the end of each quarterly accounting period
in each of its financial years, deliver to the Agent in sufficient
copies for the Banks its consolidated and (if requested by the Agent)
unconsolidated financial statements for such period.
12.3 Other Financial Information
The Borrower shall from time to time promptly on the request of the
Agent, furnish the Agent with such information about the business and
financial condition of itself and the Borrower's Group as the Agent may
reasonably require.
12.4 Any Communication
The Borrower shall as and when it despatches any communication to its
shareholders deliver to the Agent copies thereof in sufficient copies
for the Banks.
12.5 Requirements as to Financial Statements The Borrower shall ensure that:
(i) each set of financial statements delivered by it pursuant to
this Clause 12 is prepared on the same basis as was used in
the preparation of the Original Consolidated Financial
Statements and in accordance with US GAAP and consistently
applied;
(ii) each set of financial statements delivered by it pursuant to
this Clause 12 is certified by a duly authorised officer of
the Borrower as giving a true and fair view of its financial
condition or, as the case may be, the financial condition of
the Borrower's Group as at the end of the period to which
those financial statements relate and of the results of its
operations or, as the case may be, the Borrower's Group during
such period; and
(iii) each set of financial statements delivered by it pursuant to
Clause 12.1 (Annual Statements) has been audited by an
internationally recognised firm of independent auditors
qualified to audit accounts in accordance with US GAAP.
12.6 Estimated Value of Vessels and of Borrower's Group's Fleet
The Borrower shall (a) within thirty days of each Quarter Date, and (b)
not less than five business days prior to the proposed date for the
making of any B Advance deliver to the Agent:
(i) a summary showing the estimates of the Market Value of each of
the Vessels, and each of the other vessels in the Borrower's
Group's fleet, made by at least three recognised and
independent valuers acceptable to the Agent as at such Quarter
Date (or, as the case may be, as at a date not more than
thirty days prior to the proposed date for the making of such
B Advance),
(ii) a written estimate of the value of any other asset in each
Security Pool prepared (by a recognised and independent valuer
acceptable to the Agent) on the basis established when such
asset was introduced to such Security Pool,
each such estimate to be provided at the sole cost of the Borrower
Provided Always That if valuations have been supplied pursuant to Clause
12.6(i) and the proposed date for the making of such B Advance falls
less than 30 days after the Quarter Date in respect of which such
valuations were prepared, then the Borrower shall be obliged to comply
with Clause 12.6(ii) in respect of such B Advance only if the Agent so
requires.
12.7 Statement of Free Cash, Current Ratio and Leverage
On each date on which it delivers its consolidated and unconsolidated
financial statements pursuant to Clause 12.1 (Annual Statements) and
12.2 (Quarterly Statements), the Borrower shall deliver to the Agent a
statement showing the level of Free Cash, the Current Ratio and Leverage
as at such date, such statement to contain full details of how the same
were determined (if different from the method of the determination used
in the preparation of the previous such statement) and, in the case of
Leverage, to be based on the estimates of the Market Values of the
Vessels and each of the other vessels in the Borrower's Group's fleet
delivered at the same time as the Borrower's most recent consolidated
financial statements.
12.8 Statement of Leverage
On any date on which the Borrower delivers the estimates required to be
supplied pursuant to Clause 12.6(ii) in relation to a B Advance, the
Borrower shall also deliver to the Agent a statement showing the level
of Leverage as at such date (such statement of Leverage to be based on
the estimates of the Market Values of the Vessels so delivered pursuant
to Clause 12.6 (ii).
13. Financial Condition and Security
13.1 Financial Condition of the Borrower's Group
The Borrower shall ensure that at all times the consolidated financial
condition of the Borrower's Group, as evidenced by the Borrower's then
most recent consolidated financial statements shall be such that:
(i) Free Cash is at least $25,000,000 (without prejudice to Clause 13.4);
(ii) the Current Ratio is at least 1:1; and
(iii)Leverage is not more than 75% (or, if the Current Ratio is less than 2:1,
not more than 66.7%),
Provided that if the Borrower changes its accounting policies from those
adopted in its annual report for the year ended 31 December, 1997 or
from US GAAP generally, the Agent, following consultation with the
Borrower and acting on the instructions of the Banks, may by notice to
the Borrower specify an alternative to any of the requirements specified
in paragraphs (ii) and (iii) above which is logical having regard to the
changes in accounting policies that have occurred, in which event the
Borrower shall be obliged to ensure that at all times thereafter the
consolidated financial condition of the Borrower's Group, as evidenced
by the Borrower's then most recent consolidated financial statements, is
such as to meet the alternative requirement so specified
And Provided Further That if :
(iv) any member of the Parent's Group (for the purposes of this proviso a
"guarantor") shall have provided, in favour of the Trustee, a guarantee of
the Borrower's obligations hereunder; and
(v) such guarantee is secured by a first priority or first preferred mortgage
in favour of the Trustee over a vessel owned by such guarantor (together
with a first priority assignment of her insurances and earnings), such
guarantee, mortgage and other security documents being in form and
substance satisfactory to the Agent and consistent (so far as applicable)
with the form of the then existing Security Agreements (and recourse
against such guarantor under such guarantee may be limited to such mortgage
and other security documents); and
(vi) such vessel shall have been approved by the Agent acting on the
instructions of an Instructing Group
then, in calculating the Total Assets (and therefore the Leverage) for
the purposes of this Agreement there shall be deemed to be included, in
the value of Total Assets, the Market Value of any such vessel. Such
vessel shall, for the purposes of this Agreement, be a "Vessel" as
defined.
13.2 Remedy by Parent of Breaches of Financial Covenants
If the Parent or any other member of the Parent's Group has made
available any loan to, or has made an equity contribution in, any member
of the Borrower's Group and a group of Banks comprising an Instructing
Group determines in its discretion that the Borrower would otherwise be
in breach of any of the provisions of Clause 13.1, then the Borrower
shall ensure that the proceeds of such loan or equity contribution (and
whether such proceeds are cash or assets (including without limitation
vessels)) are secured in favour of the Trustee by way of additional
security for the Borrower's obligations hereunder, pursuant to security
documents in form and substance satisfactory to the Agent and (in the
case of security over vessels) consistent with the form of the then
existing Security Agreements.
13.3 Release of Additional Security
If, on the basis of the Borrower's most recent consolidated financial
statements delivered pursuant to Clause 12.1 or, as the case may be,
Clause 12.2,
(i) the Borrower is in compliance with each of the covenants assumed by it in
Clause 13.1 and 13.4; and
(ii) the Trustee has previously been supplied with additional security pursuant
to Clause 13.1 or 13.2,
then the Borrower may by written notice to the Trustee request that such
additional security be released, whereupon, provided no Event of Default
or Potential Event of Default shall have occurred and be continuing, and
the Borrower would thereafter still be in compliance with all its other
obligations under this Agreement, the Trustee shall promptly procure
that such additional security is released at the cost of the Borrower if
the Borrower would thereafter still be in compliance with such covenants
assumed by it in Clause 13.1 and 13.4, but on the assumption that the
value of such additional security were disregarded in the computation of
the Borrower's Free Cash, Current Assets, and Total Assets. For the
purpose of this Clause 13.3, the value of such additional security shall
be as determined by the Agent, acting reasonably, in the case of
additional security other than vessels and shall be determined on the
basis of the most recent estimates of Market Value supplied pursuant to
Clause 12.6, in the case of additional security constituting security
over vessels.
13.4 Free Cash Shortfall
If, on the basis of the Borrower's most recent consolidated financial
statements delivered pursuant to Clause 12.1 or, as the case may be,
Clause 12.2, the aggregate of
(i) Free Cash; and
(ii) the value of any additional security previously supplied to
the Trustee pursuant to this Clause 13.4 (such value to be as
determined on the basis of the most recent estimates of Market
Value supplied pursuant to Clause 12.6)
is less than the greater of
(iii) $75,000,000 x (balance of Loan
outstanding) ; and (375,000,000)
(iv) $25,000,000
(the amount by which the aggregate of Free Cash and the amount
referred to in (ii) above is less than the greater of (iii)
and (iv) above being the "Shortfall"), then, within ten
business days of receipt by the Borrower of written notice
from the Trustee to such effect, the Borrower shall provide
the Trustee additional security for the Borrower's obligations
under the Finance Documents over such vessel or vessels as
shall have previously been approved by the Trustee acting on
the instructions of an Instructing Group, such additional
security to be provided pursuant to security documents in form
and substance satisfactory to the Trustee and consistent with
the form of the then existing Security Agreements.
13.5 Release of Security for Free Cash Shortfall
If, on the basis of the Borrower's most recent consolidated financial
statements delivered pursuant to Clause 12.1 or, as the case may be,
Clause 12.2, the aggregate of Free Cash and the value of the additional
security referred to in paragraph 13.4(ii) above exceeds the amount
determined pursuant to paragraph 13.4(iii) or (iv), as the case may be,
and the Borrower has previously, pursuant to Clause 13.4, provided the
Trustee with additional security as referred to therein, then the
Borrower may by written notice to the Trustee, request that such
additional security be released, whereupon (provided no Event of Default
or Potential Event of Default shall have occurred and be continuing and
the Borrower would thereafter still be in compliance with all its other
obligations under this Agreement (including, without limitation Clause
13.1 and 13.4)) the Trustee shall promptly procure that the same is
released at the cost of the Borrower.
13.6 Loss or Sale of Vessel
If:-
(i) any Vessel shall become a total loss; or
(ii) any Vessel shall be sold,
then the Borrower shall within the period prescribed by Clause 13.7
(Time Periods) at the Borrower's option:
(a) prepay a portion of Loan 1 or, if such Vessel forms part
of the Security Pool 2, Loan 2 and/or
(b) provide to the Trustee additional security for its
obligations under the Finance Documents by way of an
encumbrance over dollar deposits and/or certificates of
deposit made by the Borrower with or, as the case may
be, issued in favour of the Borrower by a bank or
financial institution acceptable to the Agent, such
encumbrance to be created pursuant to a security
document in form and substance satisfactory to the
Agent; and/or
(c) provide to the Trustee additional security for the
Borrower's obligations under the Finance Documents over
such vessel or vessels as shall have previously been
approved by the Agent acting on the instructions of an
Instructing Group, such approval not to be unreasonably
withheld in the case of vessel(s) of a type and size
substantially comparable to the other Vessels, such
additional security to be provided pursuant to security
documents in form and substance satisfactory to the
Agent and consistent with the form of the then existing
Security Agreements
to the extent necessary to ensure that the Cover Ratio in respect of the
A Facility or, as the case may be, the B Facility is restored to the
level at which it was immediately before the occurrence of such total
loss or, as the case may be, the date of completion of such sale
Provided That a prepayment pursuant to Clause 13.6(a) shall be deemed
also to be a cancellation pursuant to Clause 7.1 (Cancellation) of the A
Facility, or, as the case may be, the B Facility, in the amount prepaid.
13.7 Time Periods
For the purposes of Clause 13.6 (Loss or Sale of Vessel) the period in
which the Borrower shall be obliged to do the things specified in Clause
13.6 (Loss or Sale of Vessel) shall be:
(i) where Clause 13.6(i) applies, on the earlier of the last day
of the Term of any current Advance during which the
requisition compensation or insurance proceeds in respect of
the relevant total loss were received and the date which falls
three months after the date of such total loss; and
(ii) where Clause 13.6(ii) applies, on the date of the completion
of the sale of the relevant Vessel.
13.8 Advances for New Vessels or Future Vessels
If the Borrower draws down any Advance to assist in financing or
refinancing the purchase price of any New Vessel or Future Vessel, as
the case may be, on its delivery to the Borrower, the Borrower
undertakes that on or before the date of delivery of such New Vessel or
Future Vessel, as the case may be, it will deliver to the Agent each of
the documents specified in Part 2 of the Third Schedule in relation to
such New Vessel, or Future Vessel, as the case may be, each such
document to be in such form and to be executed and delivered in such
manner as the Agent may reasonably require and as may be necessary to
ensure that any Security Agreement comprised therein provides effective
security for the performance by the Borrower of its obligations
hereunder Provided that if the Borrower does not draw down an Advance to
assist in financing or refinancing the purchase price of a New Vessel
within six months of the contractual delivery date in respect of such
New Vessel, (or, with the consent of the Agent, such consent not to be
unreasonably withheld or delayed, such longer period as the Borrower may
request, and having regard to any wish on the part of the Borrower not
to rescind the relevant building contract with the Yard) the provisions
of this Clause 13.8 (Advances for New Vessels or Future Vessels) shall
not apply and at the expiry of such six month period (or such longer
period as the case may be) the Aggregate A Commitment shall be
permanently reduced by $30,000,000 (or, in the case of New Vessel 4, by
$25,000,000), the A Commitment of each Bank being reduced pro rata.
13.9 Independent Valuation of New Vessels at Delivery
For the purpose of Clause 3.1(vi), and in respect of an Advance made in
respect of the delivery of a New Vessel, the Borrower shall, if the
Agent requires, procure that there shall have been furnished to the
Agent a summary showing the estimates of the Market Value of such Vessel
as at the expected delivery date prepared by at least three recognised
and independent valuers acceptable to the Agent (such estimates to be
dated no earlier than 30 days before such expected delivery date) and
for the purposes of Clause 3.1(vi) the Estimated Value of such New
Vessel shall be the average of such estimates.
13.10 Average Age of Vessels
If at any time the Average Age of the Vessels is more than fifteen years
the Borrower shall, within thirty business days (or such longer period
as the Agent, acting on the instructions of an Instructing Group, may
agree) after such has become the case, either (i) provide to the Trustee
substitute security for the Borrower's obligations under the Finance
Documents over such other newer vessel or vessels as shall have
previously been approved by the Agent acting on the instructions of an
Instructing Group (or, if such vessel(s) shall not be vessel(s)
currently in the Borrower's Group's fleet, approved by the Agent acting
on the instructions of the Instructing Group, such approval not to be
unreasonably withheld in the case of vessel(s) of a type and size
comparable to vessel(s) currently in the Borrower's Group's fleet), such
substitute security to be provided in place of the security over such
Vessel or Vessels as the Borrower may select pursuant to security
documents in form and substance satisfactory to the Agent and consistent
with the form of the then existing Security Agreements or (ii) request
the Security Trustee to release a Vessel or Vessels from the Security
Agreements applicable thereto and thereby bring the Average Age of
Vessels to fifteen years or below, which release the Security Trustee
shall promptly effect after whatever prepayment pursuant to Clause 6.5
(Prepayment), or cancellation pursuant to Clause 7.1 (Cancellation), is
necessary to ensure that after such release, the Cover Ratio will be
what it was immediately before such release Provided Always That any
such prepayment shall be deemed also to be a cancellation pursuant to
Clause 7.1 (Cancellation) of the A Facility (or, if such Vessel forms
part of Security Pool 2, the B Facility), in the amount prepaid.
13.11 Future Vessels
A proposal for the inclusion of a Future Vessel (or all the issued
shares in a company which itself owns such Future Vessel) in Security
Pool 2 shall be communicated in writing to the Agent by the Borrower and
acceptance of such proposal shall be subject to the approval of (and to
any conditions imposed by) an Instructing Group. Each Bank shall use its
reasonable endeavours to indicate its approval or otherwise to such a
proposal within 10 days of receipt by the Agent thereof from the
Borrower.
14. Covenants
The Borrower shall for so long as the Available Facilities exist
hereunder or the Borrower remains under any liability hereunder observe
the following covenants:
(i) Maintenance of Legal Validity The Borrower shall obtain,
comply with the terms of and do all that is necessary to
maintain in full force and effect all authorisations,
approvals, licences and consents required in or by the laws
and regulations of Bermuda and all other applicable
jurisdictions to enable it lawfully to enter into and perform
its obligations under the Finance Documents and to ensure the
legality, validity, enforceability or admissibility in
evidence in Bermuda and all other applicable jurisdictions of
the Finance Documents.
(ii) Notification of Events of Default The Borrower shall promptly,
upon becoming aware of the same, inform the Agent of the
occurrence of any Event of Default or Potential Event of
Default and, upon receipt of a written request to that effect
from the Agent, confirm to the Agent that, save as previously
notified to the Agent or as notified in such confirmation, no
Event of Default or Potential Event of Default has occurred.
(iii) Claims Pari Passu The Borrower shall ensure that at all times
the claims of the Agent, the Arrangers and the Banks against
it under this Agreement rank at least pari passu with the
claims of all its other unsecured creditors save those whose
claims are preferred by any bankruptcy, insolvency,
liquidation or other similar laws of general application.
(iv) Management of Vessels The Borrower shall ensure that the
Vessels (other than "Bona Fair") are at all times technically
and commercially managed by Bona Shipping AS or any other
subsidiary of the Borrower or of Teekay Shipping Corporation.
(v) Classification The Borrower shall ensure that the Vessels
maintain the highest class with Det norske Veritas or, as the
case may be, the Lloyds Register or such other classification
society as is acceptable to the Agent.
(vi) Indebtedness for Borrowed Money The Borrower shall procure
that, save pursuant to (a) this Agreement (b) the
Soponata-Bona Guarantee (c) the Existing Swaps and (d) its
obligations to make future capital contributions to Bona
Fortuna K/S and Bona Freighter K/S if and when called upon
to do so, neither it nor any of its subsidiaries shall incur
any indebtedness for borrowed money Provided Always that the
Borrower may incur indebtedness for borrowed money to the
Parent or any other member of the Parent's Group provided
that such indebtedness is subordinated to the Borrower's
obligations hereunder in terms satisfactory to the Agent
acting on the instructions of an Instructing Group and
provided further that the Borrower may incur indebtedness
for borrowed money to any person not being a member of the
Parent's Group and otherwise than pursuant to the foregoing
paragraphs (a) to (d) inclusive provided that such
indebtedness does not exceed $5,000,000 in aggregate.
(vii) No Charters in The Borrower shall not, and shall procure that
each of its subsidiaries shall not, charter in any vessel,
whether on time, bareboat or voyage charter.
(viii) Negative Pledge The Borrower shall not (other than pursuant
to, or as permitted by, the Security Agreements), and shall
procure that each of its subsidiaries shall not, create, or
permit to subsist, any encumbrance over all or any part of its
present or future revenues or assets.
(ix) Consolidation The Borrower shall not merge or consolidate with
any other entity except where the Borrower is the only
surviving entity.
(x) Registration The Borrower shall ensure that all the Vessels
are registered in Liberia, Bahamas, NIS or (with the consent
of the Agent, not to be unreasonably withheld or delayed) any
other international ship register.
(xi) ISM Compliance The Borrower shall comply (and procure that
the manager of any Vessel not managed by the Borrower
complies) with the ISM Code or any replacement thereof and
in particular (without prejudice to the generality of the
foregoing) ensure that it holds (or procure that the manager
of any Vessel not managed by the Borrower holds) a valid and
current Document of Compliance issued pursuant to the ISM
Code and a valid and current Safety Management Certificate
issued to each Vessel pursuant to the ISM Code; the Borrower
shall, promptly upon request from the Agent, supply the
Agent with copies of the foregoing documents.
(xii) Restriction on Charters The Borrower shall not charter any
Vessel to any member of the Parent's Group or to any
Affiliate.
15. Events of Default
If:
(i) Failure to Pay the Borrower fails to pay any amount of
principal due from it hereunder at the time, in the currency
and in the manner specified herein or, in the case of any sum
due from it hereunder other than principal, the Borrower fails
to pay such sum and such failure continues unremedied for five
business days or, in the case of sums payable on demand, ten
business days after demand has been duly made on the Borrower;
(ii) Misrepresentation any representation or statement made by any
Finance Party in any Finance Document to which it is a party
or in any notice or other document, certificate or statement
delivered by it pursuant thereto or in connection therewith is
or proves to have been incorrect or misleading in any material
respect when made;
(iii) Specific Covenants (a) the Borrower fails duly to perform
or comply with any of the obligations expressed to be
assumed by it in Clause 14 (iv) (Management of Vessels),
Clause 14 (vi) (Indebtedness for Borrowed Money), Clause 14
(ix) (Consolidation) or Clause 14(ix) (Registration) or (b)
the Borrower fails duly to perform or comply with any of the
obligations expressed to be assumed by it in Clause 14(i)
(Maintenance of Legal Validity), Clause 14(ii) (Notification
of Events of Default), Clause 14(iii) (Claims Pari Passu) or
Clause 14(v) (Classification) and such failure is not
remedied within thirty days after the Agent has given notice
thereof to the Borrower or (c) the Guarantor fails duly to
perform or comply with any of the obligations expressed to
be assumed by it in Clause 5 of the Guarantee or (d) the
Guarantor fails duly to perform or comply with any of the
obligations expressed to be assumed by it in Clause 6 of the
Guarantee and such failure is not remedied within 30 days
after the Agent has given written notice thereof to the
Guarantor;
(iv) Financial Condition at any time any of the requirements of
Clause 13 (Financial Condition and Security) are not
satisfied;
(v) Other Obligations the Borrower fails duly to perform or comply
with any other obligation expressed to be assumed by it in any
Finance Document and such failure is not remedied within
thirty days after the Agent has given notice thereof to the
Borrower;
(vi) Cross Default (a) any indebtedness of the Parent, any Material
Subsidiary, or any Affiliate is not paid when due (or within
any applicable grace period applicable thereto) or any
indebtedness of the Parent, any Material Subsidiary, or any
Affiliate is declared to be or otherwise becomes due and
payable prior to its specified maturity and (b) the aggregate
of all such unpaid or accelerated indebtedness referred to in
(a) above exceeds $5,000,000 or its equivalent in any other
currency;
(vii) Insolvency and Rescheduling the Parent, any Material
Subsidiary, or any Affiliate is unable to pay its debts as
they fall due, commences negotiations with any one or more of
its creditors with a view to the general readjustment or
rescheduling of its indebtedness or makes a general assignment
for the benefit of its creditors or a composition with its
creditors;
(viii) Winding-up (otherwise than for the purposes of a
reconstruction on terms previously approved by the Agent
acting on the instructions of an Instructing Group) the
Parent, any Material Subsidiary, or any Affiliate takes any
corporate action or other steps are taken or legal proceedings
are started for its winding-up, dissolution, administration or
re-organisation or for the appointment of a liquidator,
receiver, administrator, administrative receiver, conservator,
custodian, trustee or similar officer of it or of any or all
of its revenues and assets;
(ix) Execution or Distress (a) any execution or distress for an
aggregate amount of $5,000,000 (or its equivalent) in any
other currency is levied against, or an encumbrancer takes
possession of, the whole or any part of, the property,
undertaking or assets of any member of the Parent's Group or
any Affiliate (other than any execution or distress which is
being contested in good faith and which is either discharged
within thirty days or in respect of which adequate security
has been provided within thirty days to the relevant court
or other authority to enable the relevant execution or
distress to be lifted or released), or (b) any member of the
Parent's Group or any Affiliate fails (within thirty days of
being obliged to do so) to comply with or pay any sum for an
aggregate amount in excess of $5,000,000 (or its equivalent
in any other currency) due from it under any final judgment
(being one against which there is no appeal or if a right of
appeal exists, the time limit for making such appeal has
expired) or any final order (being one against which there
is no appeal or if a right of appeal exists, the time limit
for making such appeal has expired) made or given by any
court of competent jurisdiction;
(x) Governmental Intervention by or under the authority of any
government, (a) the management of the Parent or any Material
Subsidiary is wholly or partially displaced or the authority
of the Parent or any Material Subsidiary in the conduct of
its business is wholly or partially curtailed or (b) all or
a majority of the issued shares of the Parent or any
Material Subsidiary or the whole or any part (the market
value of which is ten per cent. or more of the market value
of the whole) of the Parent or any Material Subsidiary's
revenues or assets are seized, nationalised, expropriated or
compulsorily acquired;
(xi) Insurance the Borrower fails to insure any Vessel in
accordance with the requirements of any Security Agreement
relating thereto;
(xii) Repudiation any Finance Party repudiates any Finance Document
to which it is a party or does or causes to be done any act or
thing evidencing an intention to repudiate any such Finance
Document;
(xiii) Validity and Admissibility at any time any act, condition
or thing required to be done, fulfilled or performed in
order (a) to enable any Finance Party lawfully to enter
into, exercise its rights under and perform the respective
obligations expressed to be assumed by it in the Finance
Documents, (b) to ensure that the obligations expressed to
be assumed by the Finance Parties in the Finance Documents
are legal, valid and binding or (c) to make the Finance
Documents admissible in evidence in any applicable
jurisdiction is not done, fulfilled or performed within
thirty days after notification from the Agent to the
Borrower requiring the same to be done, fulfilled or
performed;
(xiv) Illegality at any time it is or becomes unlawful for any
Finance Party to perform or comply with any or all of its
obligations under the Finance Documents to which it is a party
or any of the obligations of the relevant Finance Party
hereunder are not or cease to be legal, valid and binding and
such illegality is not remedied or mitigated to the
satisfaction of the Agent within thirty days after the Agent
has given notice thereof to the Borrower;
(xv) Material Adverse Change at any time there shall occur a change
in the financial condition of any Finance Party or any
Material Subsidiary which materially impairs such Finance
Party's ability to discharge its obligations under the Finance
Documents to which it is a party in the manner provided
therein;
(xvi) Ownership of Borrower The Parent ceases to own beneficially
one hundred per cent. of the issued shares of the Borrower; or
(xvii) Ownership of Parent at any time more than fifty per cent.
(50%) of the issued shares of the Parent shall be beneficially
owned (whether directly or indirectly) by any one person or
any group or persons acting in concert (other than Cirrus
Trust, JTK Trust or any successor thereto)
then, and in any such case and at any time thereafter (if such
Event of Default is continuing), the Agent may (and, if so
instructed by an Instructing Group, shall) by written notice
to the Borrower:
(a) declare the Loan to be immediately due and payable
(whereupon the same shall become so payable together
with accrued interest thereon and any other sums then
owed by the Borrower hereunder) or declare the Loan to
be due and payable on demand of the Agent; and/or
(b) declare that the Available Facilities shall be
cancelled, whereupon the same shall be cancelled and the
amount of each Bank's Total Commitment shall be reduced
to zero
Provided Always That for the purposes of a declaration under
Clause 15(a) or 15(b) in relation only to the Event of Default
referred to in Clause 15(xvii) (Ownership of Parent), the
definition of "Instructing Group" shall be construed as if the
expression "66 2/3 per cent" were replaced by the expression
"50 per cent" wherever it occurs.
15.1 If, pursuant to Clause 15, the Agent declares the Loan to be due and
payable on demand of the Agent, then, and at any time thereafter, the
Agent may (and, if so instructed by an Instructing Group, shall) by
written notice to the Borrower:
(i) call for repayment of the Loan on such date as it may specify
in such notice (whereupon the same shall become due and
payable on such date together with accrued interest thereon
and any other sums then owed by the Borrower hereunder) or
withdraw its declaration with effect from such date as it may
specify in such notice; and/or
(ii) select as the duration of any Term relating to an Advance
which begins whilst such declaration remains in effect a
period of six months or less.
Part 7
<PAGE>
DEFAULT INTEREST AND INDEMNITY
16. Default Interest and Indemnity
16.1 Default Interest Periods
If any sum due and payable by the Borrower hereunder is not paid on the
due date therefor in accordance with the provisions of Clause 18
(Payments) or if any sum due and payable by the Borrower under any
judgment of any court in connection herewith is not paid on the date of
such judgment, the period beginning on such due date or, as the case may
be, the date of such judgment and ending on the date upon which the
obligation of the Borrower to pay such sum (the balance thereof for the
time being unpaid being herein referred to as an "unpaid sum") is
discharged shall be divided into successive periods, each of which
(other than the first) shall start on the last day of the preceding such
period and the duration of each of which shall (except as otherwise
provided in this Clause 16) be selected by the Agent.
16.2 Default Interest
During each such period relating thereto as is mentioned in Clause 16.1
(Default Interest Periods) an unpaid sum shall bear interest at the rate
per annum which is the sum from time to time of two per cent., the
applicable Margin 1 (or the applicable Margin 2, in the case of a B
Advance) at such time, and LIBOR on the Quotation Date therefor Provided
that:
(i) if in relation to any such period LIBOR falls to be
determined in accordance with the proviso to the definition
thereof and none of the Reference Banks was offering dollar
deposits for the requisite period, the rate of interest
applicable to such unpaid sum during such period shall be
the arithmetic mean (rounded upwards, if not already such a
multiple, to the nearest whole multiple of one-thirty-second
of one per cent.) of the rates notified by each Bank to the
Agent before the last day of such period to be those which
express as a percentage rate per annum the cost to it of
funding from whatever source it may select its portion of
such unpaid sum for such period; and
(ii) if such unpaid sum is all or part of an Advance which became
due and payable on a day other than the last day of an
Interest Period relating thereto, the first such period
applicable thereto shall be of a duration equal to the
unexpired portion of that Interest Period and the rate of
interest applicable thereto during such period shall be that
which exceeds by two per cent. the rate which would have been
applicable to it had it not so fallen due.
16.3 Payment of Default Interest
Any interest which shall have accrued under Clause 16.2 (Default
Interest) in respect of an unpaid sum shall be due and payable and shall
be paid by the Borrower at the end of the period by reference to which
it is calculated or on such other dates as the Agent may specify by
written notice to the Borrower.
16.4 Broken Periods
If any Bank or the Agent on its behalf receives or recovers all or any
part of such Bank's share of an Advance otherwise than on the last day
of the Term thereof, the Borrower shall pay to the Agent on demand for
account of such Bank an amount equal to the amount (if any) by which (a)
the additional interest which would have been payable on the amount so
received or recovered had it been received or recovered on the last day
of the Term thereof exceeds (b) the amount of interest which in the
opinion of the Agent would have been payable to the Agent on the last
day of the Term thereof in respect of a dollar deposit equal to the
amount so received or recovered placed by it with a prime bank in London
for a period starting on the third business day following the date of
such receipt or recovery and ending on the last day of the Term thereof.
16.5 Borrower's Indemnity
The Borrower undertakes to indemnify:
(i) each of the Agent, the Arrangers, the Banks and the Trustee
against any cost, claim, loss, expense (including legal fees)
or liability together with any VAT thereon, which any of them
may reasonably sustain or incur as a consequence of the
occurrence of any Event of Default or any default by any
Finance Party in the performance of any of the obligations
expressed to be assumed by it in any of the Finance Documents;
and
(ii) each Bank against any loss it may suffer or reasonably incur
as a result of its funding or making arrangements to fund its
portion of an Advance requested by the Borrower hereunder but
not made by reason of the operation of any one or more of the
provisions hereof (but excluding any loss arising by reason of
that Bank's default).
Each claim for an indemnity from the Borrower under this Clause shall be
accompanied by a written explanation supporting such claim.
16.6 Unpaid Sums as Advances
Any unpaid sum shall (for the purposes of this Clause 16 (Default
Interest and Indemnity) and Clause 10.1 (Increased Costs)) be treated as
an advance and accordingly in this Clause 16 and Clause 10.1 (Increased
Costs)) the term "Advance" includes any unpaid sum and "Term", in
relation to an unpaid sum, includes each such period relating thereto as
is mentioned in Clause 16.1 (Default Interest Periods).
Part 8
<PAGE>
PAYMENTS
17. Currency of Account and Payment
17.1 Currency of Account
The dollar is the currency of account and payment for each and every sum
at any time due from the Borrower hereunder Provided that:
(i) each payment in respect of costs and expenses shall be made
in the currency in which the same were incurred; and
(ii) each payment pursuant to Clause 8.2 (Tax Indemnity) or Clause
10.1 (Increased Costs) shall be made in the currency specified
by the party claiming thereunder.
17.2 Currency Indemnity
If any sum due from the Borrower under any Finance Document or any order
or judgment given or made in relation thereto has to be converted from
the currency (the "first currency") in which the same is payable
hereunder or under such order or judgment into another currency (the
"second currency") for the purpose of (a) making or filing a claim or
proof against the Borrower, (b) obtaining an order or judgment in any
court or other tribunal or (c) enforcing any order or judgment given or
made in relation hereto, the Borrower shall indemnify and hold harmless
each of the persons to whom such sum is due from and against any loss
suffered or incurred as a result of any discrepancy between (i) the rate
of exchange used for such purpose to convert the sum in question from
the first currency into the second currency and (ii) the rate or rates
of exchange at which such person may in the ordinary course of business
purchase the first currency with the second currency upon receipt of a
sum paid to it in satisfaction, in whole or in part, of any such order,
judgment, claim or proof.
18. Payments
18.1 Payments to the Agent
On each date on which this Agreement requires an amount denominated in
dollars to be paid by the Borrower or any of the Banks hereunder, the
Borrower or, as the case may be, such Bank shall make the same available
to the Agent by payment in dollars and in same day funds (or in such
other funds as may for the time being be customary in New York City for
the settlement in New York City of international banking transactions in
dollars) to Citibank, N.A., New York for further account Citibank
International plc account number 10963054 (or such other account or bank
as the Agent may have specified for this purpose).
18.2 Alternative Payment Arrangements
If, at any time, it shall become impracticable (by reason of any action
of any governmental authority or any change in law, exchange control
regulations or any similar event) for the Borrower to make any payments
hereunder in the manner specified in Clause 18.1 (Payments to the
Agent), then the Borrower may agree with each or any of the Banks
alternative arrangements for the payment direct to such Bank of amounts
due to such Bank hereunder Provided that, in the absence of any such
agreement with any Bank, the Borrower shall be obliged to make all
payments due to such Bank in the manner specified herein. Upon reaching
such agreement the Borrower and such Bank shall immediately notify the
Agent thereof and shall thereafter promptly notify the Agent of all
payments made direct to such Bank.
18.3 Payments by the Agent
Save as otherwise provided herein, each payment received by the Agent
for the account of another person pursuant to Clause 18.1 (Payments to
the Agent) shall:
(i) in the case of a payment received for the account of the
Borrower, be made available by the Agent to the Borrower by
application:
(a) first, in or towards payment the same day of any amount
then due from the Borrower hereunder to the person from
whom the amount was so received; and
(b) secondly, in or towards payment the same day to the
account of the Borrower with such bank in New York City
as the Borrower shall have previously notified to the
Agent for this purpose; and
(ii) in the case of any other payment, be made available by the
Agent to the person for whose account such payment was
received (in the case of a Bank, for the account of the
Facility Office) for value the same day by transfer to such
account of such person with such bank in New York City as such
person shall have previously notified to the Agent.
18.4 No Set-off
All payments required to be made by the Borrower under any of the
Finance Documents shall be calculated without reference to any set-off
or counterclaim and shall be made free and clear of and without any
deduction for or on account of any set-off or counterclaim.
18.5 Clawback
Where a sum is to be paid hereunder to the Agent for account of another
person, the Agent shall not be obliged to make the same available to
that other person until it has been able to establish to its
satisfaction that it has actually received such sum, but if it does so
and it proves to be the case that it had not actually received such sum,
then the person to whom such sum was so made available shall on request
refund the same to the Agent together with an amount sufficient to
indemnify the Agent against any cost or loss it may have suffered or
reasonably incurred by reason of its having paid out such sum prior to
its having received such sum.
19. Set-Off
19.1 Contractual Set-off
The Borrower authorises each Bank at any time following the occurrence
of an Event of Default (and so long as the same is continuing) to apply
any credit balance to which the Borrower is entitled on any account of
the Borrower with that Bank in satisfaction of any sum due and payable
from the Borrower to such Bank under any of the Finance Documents but
unpaid; for this purpose, each Bank is authorised to purchase with the
moneys standing to the credit of any such account such other currencies
as may be necessary to effect such application.
19.2 Set-off not Mandatory
No Bank shall be obliged to exercise any right given to it by Clause
19.1 (Contractual Set-off).
20. Sharing
20.1 Redistribution of Payments
If, at any time, the proportion which any Bank (a "Recovering Bank") has
received or recovered (whether by payment, the exercise of a right of
set-off or combination of accounts or otherwise) in respect of its
portion of any payment (a "relevant payment") to be made under this
Agreement by the Borrower for account of such Recovering Bank and one or
more other Banks is greater (the portion of such receipt or recovery
giving rise to such excess proportion being herein called an "excess
amount") than the proportion thereof so received or recovered by the
Bank or Banks so receiving or recovering the smallest proportion
thereof, then:
(i) such Recovering Bank shall inform the Agent of such receipt or
recovery and pay to the Agent an amount equal to such excess
amount;
(ii) there shall thereupon fall due from the Borrower to such
Recovering Bank an amount equal to the amount paid out by such
Recovering Bank pursuant to paragraph (i) above, the amount so
due being, for the purposes hereof, treated as if it were an
unpaid part of such Recovering Bank's portion of such relevant
payment; and
(iii) the Agent shall treat the amount received by it from such
Recovering Bank pursuant to paragraph (i) above as if such
amount had been received by it from the Borrower in respect of
such relevant payment and shall pay the same to the persons
entitled thereto (including such Recovering Bank) pro rata to
their respective entitlements thereto,
Provided that to the extent that any excess amount is attributable to a
payment to a Bank pursuant to paragraph (i)(a) of Clause 18.3 (Payments
by the Agent) such portion of such excess amount as is so attributable
shall not be required to be shared pursuant hereto.
20.2 Repayable Recoveries
If any sum (a "relevant sum") received or recovered by a Recovering Bank
in respect of any amount owing to it by the Borrower becomes repayable
and is repaid by such Recovering Bank, then:
(i) each Bank which has received a share of such relevant sum by
reason of the implementation of Clause 20.1 (Redistribution of
Payments) shall, upon request of the Agent, pay to the Agent
for account of such Recovering Bank an amount equal to its
share of such relevant sum; and
(ii) there shall thereupon fall due from the Borrower to each such
Bank an amount equal to the amount paid out by it pursuant to
paragraph (i) above, the amount so due being, for the purposes
hereof, treated as if it were the sum payable to such Bank
against which such Bank's share of such relevant sum was
applied.
Part 9
<PAGE>
FEES, COSTS AND EXPENSES
21. Commitment Commission and Fees
21.1 Commitment Commission
The Borrower shall pay to the Agent for the account of each Bank a
commitment commission on the amount of such Bank's A Available
Commitment and B Available Commitment from day to day during the period
beginning on the Original Facility Date up to (but not including) the
Commitment Termination Date, such commitment commission to be calculated
at the rate of one half of the applicable Margin 1 from time to time in
the case of such Bank's A Available Commitment and one half of the
applicable Margin 2 from time to time in the case of such Bank's B
Available Commitment.
Commitment commission shall be payable in arrear on the last day of each
successive period of three months starting from the Original Facility
Date and on the Final Maturity Date (each such date a "Commitment
Commission Payment Date") Provided Always That for the purposes of
determining the amount of accrued commitment commission payable on each
Commitment Commission Payment Date the Net Leverage (and accordingly the
applicable Margin 1, or as the case may be, the applicable Margin 2)
shall be assumed to be as disclosed in the most recent financial
statements delivered pursuant to Clause 12.1 (Annual Statements) or
Clause 12.2 (Quarterly Statements) Provided Further That if, on the
basis of the financial statements delivered in respect of the next
following Quarter Date (having regard to the proviso to the definition
of "Margin 1" and the proviso to the definition of "Margin 2") the
Borrower has overpaid (or, as the case may be, underpaid) commitment
commission then the amount so overpaid (or, as the case may be,
underpaid) shall be deducted from (or, as the case may be, added to) the
amount of commitment commission which would otherwise have been payable
by the Borrower on the next following Commitment Commission Payment
Date.
21.2 Participation Fee
The Borrower shall pay to the Agent on the dates therein specified the
arrangement fees specified in the letter of even date herewith from the
Agent to the Borrower, such fees to be distributed by the Agent among
the Banks in the proportions agreed between the Banks prior to the
Original Facility Date.
21.3 Agency Fee
The Borrower shall pay to the Agent for its own account the agency fees
specified in the letter dated the Original Facility Date from the Agent
to the Borrower, such agency fees to be paid at the times, and in the
amounts, specified in such letter.
22. Costs and Expenses
22.1 Transaction Expenses
The Borrower shall, from time to time on demand of the Agent, reimburse
each of the Agent, the Arrangers and the Trustee for all out of pocket
costs and expenses (including reasonable legal fees) together with any
VAT thereon reasonably incurred by it in connection with the
negotiation, preparation and execution of the Finance Documents, any
amendment and/or supplement to or any waiver of any of the obligations
of any Finance Party under the Finance Documents and the completion of
the transactions herein contemplated.
22.2 Preservation and Enforcement of Rights
The Borrower shall, from time to time on demand of the Agent, reimburse
the Agent, the Arrangers and the Banks for all costs and expenses
(including legal fees) together with any VAT thereon reasonably incurred
in or in connection with the preservation and/or enforcement of any of
the rights of the Agent, the Arrangers and the Banks under the Finance
Documents.
22.3 Stamp Taxes
The Borrower shall pay all stamp, registration and other taxes to which
any Finance Document or any judgment given in connection therewith is or
at any time may be subject and shall, from time to time on demand of the
Agent, indemnify the Agent, the Arrangers and the Banks against any
liabilities, costs, claims and expenses resulting from any failure to
pay or any delay in paying any such tax.
22.4 Banks' Liabilities for Costs
If the Borrower fails to perform any of its obligations under this
Clause 22 (Costs and Expenses), each Bank shall, in its Proportion,
indemnify each of the Agent and the Arrangers against any loss incurred
by any of them as a result of such failure and the Borrower shall
forthwith reimburse each Bank for any payment made by it pursuant to
this Clause 22.4.
Part 10
<PAGE>
AGENCY PROVISIONS
23. The Agent, the Trustee, the Arrangers and the Banks
23.1 Appointment of the Agent and the Trustee
The Arrangers and each Bank hereby appoints the Agent and the Trustee to
act as its agent in connection with this Agreement and each other
Finance Document and authorises each of the Agent and the Trustee to
exercise such rights, powers, authorities and discretions as are
specifically delegated to the Agent by the terms of the Finance
Documents together with all such rights, powers, authorities and
discretions as are reasonably incidental thereto. The provisions of this
Clause 23 are, in the case of the Trustee, without prejudice to the
provisions of the Security Trust Deed and, in the event of any conflict
between this Clause 23 and the Security Trust Deed, the provisions of
the Security Trust Deed will prevail.
23.2 Agent's and the Trustee's Discretions
Each of the Agent and the Trustee may:
(i) assume, unless it has, in its capacity as agent for the Banks,
received notice to the contrary from any other party hereto,
that (i) any representation made by any Finance Party in
connection with any of the Finance Documents is true, (ii) no
Event of Default or Potential Event of Default has occurred,
(iii) no Finance Party is in breach of or default under its
obligations under any of the Finance Documents and (iv) any
right, power, authority or discretion vested therein upon an
Instructing Group, the Banks or any other person or group of
persons has not been exercised;
(ii) assume that the Facility Office of each Bank is that
identified with its signature below (or, in the case of a
Transferee, at the end of the Transfer Certificate to which it
is a party as Transferee) until it has received from such Bank
a notice designating some other office of such Bank to replace
its Facility Office and act upon any such notice until the
same is superseded by a further such notice;
(iii) engage and pay for the advice or services of any lawyers,
accountants, surveyors or other experts whose advice or
services may to it seem necessary, expedient or desirable and
rely upon any advice so obtained;
(iv) rely (as to any matters of fact which might reasonably be
expected to be within the knowledge of any Finance Party) upon
a certificate signed by or on behalf of such Finance Party;
(v) rely upon any communication or document believed by it to be genuine;
(vi) refrain from exercising any right, power or discretion vested
in it as agent hereunder unless and until instructed by an
Instructing Group as to whether or not such right, power or
discretion is to be exercised and, if it is to be exercised,
as to the manner in which it should be exercised; and
(vii) refrain from acting in accordance with any instructions of an
Instructing Group to begin any legal action or proceeding
arising out of or in connection with any Finance Document
until it shall have received such security as it may require
(whether by way of payment in advance or otherwise) for all
costs, claims, losses, expenses (including legal fees) and
liabilities together with any VAT thereon which it will or may
expend or incur in complying with such instructions.
23.3 Agent's and Trustee's Obligations
The Agent and the Trustee shall:
(i) promptly inform each Bank of the contents of any notice or
document received by it in its capacity as Agent or Trustee
from any Finance Party under any Finance Document;
(ii) promptly notify each Bank of the occurrence of any Event of
Default or any default by any Finance Party in the due
performance of or compliance with its obligations under any
Finance Document of which the Agent or the Trustee has notice
from any other party hereto;
(iii) save as otherwise provided herein or therein, act as agent or
trustee under the Finance Documents in accordance with any
instructions given to it by an Instructing Group, which
instructions shall be binding on all of the Banks; and
(iv) if so instructed by an Instructing Group, refrain from
exercising any right, power or discretion vested in it as
agent hereunder or under any of the other Finance Documents.
23.4 Excluded Obligations
Notwithstanding anything to the contrary expressed or implied herein,
none of the Agent, the Trustee or the Arrangers shall:
(i) be bound to enquire as to (i) whether or not any
representation made by the any Finance Party in connection
with any Finance Document is true, (ii) the occurrence or
otherwise of any Event of Default or Potential Event of
Default, (iii) the performance by any Finance Document of its
obligations under any of the Finance Documents or (iv) any
breach of or default by any Finance Party of or under its
obligations thereunder;
(ii) be bound to account to any Bank for any sum or the profit
element of any sum received by it for its own account;
(iii) be bound to disclose to any other person any information
relating to any member of the Parent's Group if such
disclosure would or might in its opinion constitute a breach
of any law or regulation or be otherwise actionable at the
suit of any person; or
(iv) be under any obligations other than those for which express provision is
made herein.
23.5 Indemnification
Each Bank shall, in its Proportion, from time to time on demand by the
Agent or, as the case may be, the Trustee, indemnify the Agent, against
any and all reasonable costs, claims, losses, expenses (including legal
fees) and liabilities together with any VAT thereon which the Agent or,
as the case may be, the Trustee may incur, otherwise than by reason of
its own gross negligence or wilful misconduct, in acting in its capacity
as agent or trustee under any of the Finance Documents Provided Always
That this Clause 23.5 (Indemnification) shall not apply to any cost,
claim, loss, expense or liability expressed to be recoverable from the
Borrower under Clause 22.1 (Transaction Expenses), 22.2 (Preservation
and Enforcement of Rights) or 22.3 (Stamp Taxes) (but without prejudice
to Clause 22.4 (Bank's Liabilities for Costs)).
23.6 Exclusion of Liabilities
Neither the Agent, the Trustee and the Arrangers nor any of them accepts
any responsibility for the accuracy and/or completeness of any
information supplied by the any Finance Party in connection with any of
the Finance Documents or for the legality, validity, effectiveness,
adequacy or enforceability of any of the Finance Documents and neither
the Agent, the Trustee and the Arrangers nor any of them shall be under
any liability as a result of taking or omitting to take any action in
relation to any of the Finance Documents, save in the case of gross
negligence or wilful misconduct.
23.7 No Actions
Each of the Banks agrees that it will not assert or seek to assert
against any director, officer or employee of the Agent, the Trustee or
Arrangers any claim it might have against any of them in respect of the
matters referred to in Clause 23.6 (Exclusion of Liabilities).
23.8 Business with the Parent's Group
The Agent, the Trustee and the Arrangers may accept deposits from, lend
money to and generally engage in any kind of banking or other business
with any member of the Parent's Group.
23.9 Resignation
Each of the Agent and the Trustee may resign its appointment under any
Finance Document at any time without assigning any reason therefor by
giving not less than thirty days' prior written notice to that effect to
each of the other parties hereto Provided that no such resignation shall
be effective until a successor for the Agent or, as the case may be, the
Trustee is appointed in accordance with the succeeding provisions of
this Clause 23 or the Security Trust Deed.
23.10 Successor Agent
If the Agent or, as the case may be, the Trustee gives notice of its
resignation pursuant to Clause 23.9 (Resignation), then any Bank whose
participation in the Facility is at least ten per cent. (10%) may be
appointed by an Instructing Group with the Borrower's prior written
consent (such consent not to be unreasonably delayed or withheld) as a
successor to the Agent or, as the case may be, the Trustee by an
Instructing Group during the period of such notice but, if no such
successor is so appointed, the Agent or, as the case may be, the Trustee
may appoint such a successor itself.
23.11 Rights and Obligations
If a successor to the Agent or, as the case may be, the Trustee is
appointed under the provisions of Clause 23.10 (Successor Agent), then
(a) the retiring Agent or, as the case may be, the Trustee shall be
discharged from any further obligation under any of the Finance
Documents but shall remain entitled to the benefit of the provisions of
this Clause 23 and (b) its successor and each of the other parties
hereto shall have the same rights and obligations amongst themselves as
they would have had if such successor had been a party hereto.
23.12 Own Responsibility
It is understood and agreed by each Bank that it has itself been, and
will continue to be, solely responsible for making its own independent
appraisal of and investigations into the financial condition,
creditworthiness, condition, affairs, status and nature of each member
of the Parent's Group and, accordingly, each Bank warrants to the Agent,
the Trustee and the Arrangers that it has not relied on and will not
hereafter rely on the Agent, the Trustee and the Arrangers or any of
them:
(i) to check or enquire on its behalf into the adequacy, accuracy
or completeness of any information provided by any Finance
Party in connection with the Finance Documents or the
transactions contemplated thereby (whether or not such
information has been or is hereafter circulated to such Bank
by the Agent, the Trustee and the Arrangers or any of them);
or
(ii) to assess or keep under review on its behalf the financial
condition, creditworthiness, condition, affairs, status or
nature of any member of the Parent's Group.
23.13 Agency Division Separate
In acting as Agent or, as the case may be, the Trustee hereunder for the
Banks, the Agent or, as the case may be, the Trustee shall be regarded
as acting through its agency division which shall be treated as a
separate entity from any other of its divisions or departments and,
notwithstanding the foregoing provisions of this Clause 23, any
information received by some other division or department of the Agent
or, as the case may be, the Trustee may be treated as confidential and
shall not be regarded as having been given to the Agent's or the
Trustee's agency division.
23.14 Confidential Information
Notwithstanding anything to the contrary expressed or implied herein and
without prejudice to the provisions of Clause 23.13 (Agency Division
Separate), neither the Agent nor the Trustee shall as between itself and
the Banks be bound to disclose to any Bank or other person any
information which is supplied by any member of the Parent's Group to the
Agent in its capacity as agent or trustee hereunder for the Banks and
which is identified by such member of the Parent's Group at the time it
is so supplied as being confidential information.
Part 11
<PAGE>
ASSIGNMENTS AND TRANSFERS
24. Assignments and Transfers
24.1 Binding Agreement
This Agreement shall be binding upon and enure to the benefit of each
party hereto and its or any subsequent successors, Transferees and
permitted assigns.
24.2 No Assignments and Transfers by the Borrower
The Borrower shall not be entitled to assign or transfer all or any of
its rights, benefits and obligations hereunder.
24.3 Assignments and Transfers by Banks
Any Bank may at any time (and at its own cost) assign to any bank or
financial institution all or any of its rights and benefits hereunder or
transfer to any bank or financial institution in accordance with Clause
24.5 (Transfers by Banks) all or any of its rights, benefits and
obligations hereunder Provided that:
(i) (save in the case of an assignment or transfer to any
subsidiary or holding company, or to any subsidiary of any
holding company, of such Bank or to another Bank) no such
assignment or transfer may be made without the prior written
approval of the Borrower, such approval not to be unreasonably
withheld or delayed;
(ii) no Bank shall be entitled to effect any such assignment or
transfer (otherwise than with the prior written approval of
the Borrower) if as a result thereof (and as at the date
thereof) the Borrower would be obliged to make a payment to
the assignee or transferee which it would not have been
obliged to make to such Bank or which is greater than the
payment it would have been obliged to make to the assignor or
transferor;
(iii) no Bank party hereto as at the Original Facility Date shall be
entitled to assign or transfer any of its rights and benefits
hereunder to more than one other bank or financial
institution; and
(iv) a Bank may only assign or transfer the same proportion of its A Commitment
and B Commitment.
24.4 Assignments by Banks
If any Bank assigns all or any of its rights and benefits hereunder in
accordance with Clause 24.3 (Assignments and Transfers by Banks), then,
unless and until the assignee has agreed with the Agent, the Trustee,
the Arrangers and the other Banks that it shall be under the same
obligations towards each of them as it would have been under if it had
been an original party hereto as a Bank (whereupon such assignee shall
become a party hereto as a "Bank"), the Agent, the Trustee, the
Arrangers and the other Banks shall not be obliged to recognise such
assignee as having the rights against each of them which it would have
had if it had been such a party hereto.
24.5 Transfers by Banks
If any Bank wishes to transfer all or any of its rights, benefits and/or
obligations hereunder as contemplated in Clause 24.3 (Assignments and
Transfers by Banks), then such transfer may be effected by the delivery
to the Agent and the Borrower of a duly completed and duly executed
Transfer Certificate in which event, on the later of the Transfer Date
specified in such Transfer Certificate and the fifth business day after
(or such earlier business day endorsed by the Agent on such Transfer
Certificate falling on or after) the date of delivery of such Transfer
Certificate to the Agent:
(i) to the extent that in such Transfer Certificate the Bank party
thereto seeks to transfer its rights, benefits and obligations
hereunder, the Borrower and such Bank shall be released from
further obligations towards one another hereunder and their
respective rights against one another shall be cancelled (such
rights and obligations being referred to in this Clause 24.5
as "discharged rights and obligations");
(ii) the Borrower and the Transferee party thereto shall assume
obligations towards one another and/or acquire rights against
one another which differ from such discharged rights and
obligations only in so far as the Borrower and such Transferee
have assumed and/or acquired the same in place of the Borrower
and such Bank;
(iii) the Agent, the Trustee the Arrangers, such Transferee and the
other Banks shall acquire the same rights and benefits and
assume the same obligations between themselves as they would
have acquired and assumed had such Transferee been an original
party hereto as a Bank with the rights, benefits and/or
obligations acquired or assumed by it as a result of such
transfer; and
(iv) such Transferee shall become a party hereto as a "Bank".
24.6 Transfer Fees
On the date upon which a transfer takes effect pursuant to Clause 24.5
(Transfers by Banks) the Transferee in respect of such transfer shall
pay to the Agent for its own account a transfer fee of $1,000.
24.7 Disclosure of Information
Any Bank may disclose with the prior written consent of the Finance
Parties (such consent in either case not to be unreasonably withheld) to
any actual or potential assignee or Transferee or to any person who may
otherwise enter into contractual relations with such Bank in relation to
this Agreement such information about the Parent, the Borrower and the
Parent's Group as such Bank shall consider appropriate Provided That the
Borrower may require such Bank to obtain from such actual or potential
assignee, Transferee, or such other person, a confidentiality
undertaking (in a form reasonably acceptable to both the Borrower and
such Bank) in relation to such information about the Parent, the
Borrower and/or the Parent's Group as has been supplied to the Banks on
a confidential basis.
Part 12
<PAGE>
MISCELLANEOUS
25. Calculations and Evidence of Debt
25.1 Basis of Accrual
Interest and commitment commission shall accrue from day to day and
shall be calculated on the basis of a year of 360 days and the actual
number of days elapsed.
25.2 Quotations
If on any occasion a Reference Bank or a Bank fails to supply the Agent
with a quotation required of it under the foregoing provisions of this
Agreement, the rate for which such quotation was required shall be
determined from those quotations which are supplied to the Agent.
25.3 Evidence of Debt
Each Bank shall maintain in accordance with its usual practice accounts
evidencing the amounts from time to time lent by and owing to it
hereunder.
25.4 Control Accounts
The Agent shall maintain on its books a control account or accounts in
which shall be recorded (a) the amount of any Advance made or arising
hereunder and each Bank's share therein, (b) the amount of all
principal, interest and other sums due or to become due from the
Borrower hereunder and each Bank's share therein and (c) the amount of
any sum received or recovered by the Agent hereunder and each Bank's
share therein.
25.5 Prima Facie Evidence
In any legal action or proceeding arising out of or in connection with
this Agreement, the entries made in the accounts maintained pursuant to
Clause 25.3 (Evidence of Debt) and Clause 25.4 (Control Accounts) shall
be prima facie evidence of the existence and amounts of the specified
obligations of the Borrower.
25.6 Certificates of Banks
A certificate of a Bank as to (a) the amount by which a sum payable to
it hereunder is to be increased under Clause 8.1 (Tax Gross-up) or (b)
the amount for the time being required to indemnify it against any such
cost, payment or liability as is mentioned in Clause 8.2 (Tax Indemnity)
or Clause 10.1 (Increased Costs) shall, in the absence of manifest
error, be prima facie evidence of the existence and amounts of the
specified obligations of the Borrower.
26. Remedies and Waivers, Partial Invalidity
26.1 Remedies and Waivers
No failure to exercise, nor any delay in exercising, on the part of the
Agent, the Trustee, the Arrangers and the Banks or any of them, any
right or remedy under any of the Finance Documents shall operate as a
waiver thereof, nor shall any single or partial exercise of any right or
remedy prevent any further or other exercise thereof or the exercise of
any other right or remedy. The rights and remedies herein provided are
cumulative and not exclusive of any rights or remedies provided by law.
26.2 Partial Invalidity
If, at any time, any provision hereof is or becomes illegal, invalid or
unenforceable in any respect under the law of any jurisdiction, neither
the legality, validity or enforceability of the remaining provisions
hereof nor the legality, validity or enforceability of such provision
under the law of any other jurisdiction shall in any way be affected or
impaired thereby.
27. Notices
27.1 Communications in Writing
Each communication to be made hereunder shall be made in writing but,
unless otherwise stated, shall be made by facsimile or letter.
27.2 Delivery
Any communication or document to be made or delivered by one party to
the other pursuant to this Agreement shall (unless the other party has
by fifteen days' written notice to the one specified another address or
facsimile number) be made or delivered to that other party at the
address or facsimile number identified with its signature below and
shall be deemed to have been made or delivered (in the case of any
communication made by facsimile) when despatched and the transmission
report of the sender indicates that the facsimile transmission has been
received by the addressee or (in the case of any communication made by
letter) when delivered to that address or (as the case may be) ten days
after being deposited in the post postage prepaid in an envelope
addressed to it at that address Provided that:
(i) if any such communication or document would otherwise be
deemed to have been received on a day which is not a business
day it shall be deemed to have been received on the first
business day thereafter;
(ii) any communication or document to be made or delivered by the
Borrower to a Bank shall be effective only when legibly
received by such Bank and then only if the same is expressly
marked for the attention of the department or officer
identified with such Bank's signature below or as set out in
the relevant Transfer Certificate (or such other department or
officer as such Bank shall from time to time specify for this
purpose);
(iii) if any facsimile transmission has not been legibly received,
the addressee shall as soon as reasonably practicable notify
the giver by telephone and in such circumstances,
notwithstanding any of the foregoing provisions, such
facsimile communication shall not be deemed to be received
until it has been re-transmitted and legibly received; and
(iv) any communication or document to be made or delivered to the Borrower shall
be copied also to:
Bona Shipping AS
Radhusgaten 27
P.O. Box 470 Sentrum
0105 Oslo
Norway
Attn: Finance and Control Department
Fax: 47 22 31 00 01
Tel: 47 22 31 00 00
and to:-
Teekay Shipping (Canada) Ltd.
1400-505 Burrard Street
Vancouver
British Columbia
Canada
Attn: Manager of Finance
Fax : 604 681 3011
Tel : 604 683 3526
27.3 English Language
Each communication and document made or delivered by one party to
another pursuant to this Agreement shall be in the English language or
accompanied by a translation thereof into English certified (by an
officer of the person making or delivering the same) as being a true and
accurate translation thereof and in the event of a conflict between the
original and the English translation thereof, the translation will be
taken to be the definitive version for the purposes of the Finance
Documents.
28. Amendments
28.1 Amendments
If the Agent has the prior consent of an Instructing Group, the Agent,
the Parent and the Borrower may from time to time agree in writing to
amend this Agreement or to waive, prospectively or retrospectively, any
of the requirements of this Agreement and any amendments or waivers so
agreed shall be binding on all parties hereto, provided that no such
waiver or amendment shall subject any party hereto to any new or
additional obligations without the consent of such party.
28.2 Amendments Requiring the Consent of all the Banks
An amendment or waiver which relates to:-
(i) Clause 20 (Sharing) or this Clause 28 (Amendments);
(ii) a change in the principal amount of any Advance, or the
deferral of any Repayment Date or Reduction Date;
(iii) a change in Margin 1 or Margin 2 or the amount of any payment
of interest, fees or any other amount payable hereunder to any
party or the deferral of the date for payment thereof;
(iv) the definition of "Instructing Group"; or
(v) any provision which contemplates the need for the consent or approval
of all the Banks,
shall not be made without the prior consent of all the Banks.
28.3 Exceptions
Notwithstanding any other provisions hereof, the Agent shall not be
obliged to agree to any such amendment or waiver if the same would:
(i) amend or waive this Clause 28.3, Clause 22 (Costs and Expenses) or
Clause 23 (The Agent, the Arrangers and the Banks); or
(ii) otherwise amend or waive any of the Agent's rights hereunder
or subject the Agent or the Arrangers to any additional
obligations hereunder.
Part 13
<PAGE>
LAW AND JURISDICTION
29. Law
29.1 English Law
This Agreement shall be governed by, and shall be construed in
accordance with, English law.
30. Jurisdiction
30.1 Each of the parties hereto irrevocably agrees for the benefit of the
Agent, the Trustee and the Banks that the courts of England shall have
jurisdiction to hear and determine any suit, action or proceeding, and
to settle any disputes, which may arise out of or in connection with
this Agreement and, for such purposes, irrevocably submits to the
jurisdiction of such courts.
30.2 The Borrower irrevocably waives any objection which it might now or
hereafter have to the courts referred to in Clause 30.1 being nominated
as the forum to hear and determine any suit, action or proceeding, and
to settle any disputes, which may arise out of or in connection with
this Agreement and agrees not to claim that any such court is not a
convenient or appropriate forum.
30.3 The Borrower agrees that the process by which any suit, action or
proceeding in England is begun may be served on it by being delivered to
Teekay Shipping (UK) Limited at its registered office for the time being
(which is currently at 49 St. James Street, London SW1A 1JT).
30.4 The submission to the jurisdiction of the courts referred to in Clause
30.1 shall not (and shall not be construed so as to) limit the right of
the Agent, the Trustee or any Bank to take proceedings against the
Borrower in any other court of competent jurisdiction nor shall the
taking of proceedings in any one or more jurisdictions preclude the
taking of proceedings in any other jurisdiction, whether concurrently or
not.
AS WITNESS the hands of the duly authorised representatives of the parties
hereto the day and year first before written.
<PAGE>
THE FIRST SCHEDULE
The Banks
<TABLE>
<CAPTION>
==================================================================================================================
A B Total
Bank Commitment Commitment Commitment
($) ($) ($)
==================================================================================================================
<S> <C> <C> <C>
Citibank, N.A. 48,000,000 12,000,000 60,000,000
The Chase Manhattan Bank 48,000,000 12,000,000 60,000,000
The Royal Bank of Scotland plc 40,000,000 10,000,000 50,000,000
Christiana Bank og Kreditkasse ASA 34,000,000 8,500,000 42,500,000
Den norske Bank 34,000,000 8,500,000 42,500,000
Credit Agricole Indosuez 28,000,000 7,000,000 35,000,000
KBC Finance Ireland 28,000,000 7,000,000 35,000,000
MeesPierson N.V. 28,000,000 7,000,000 35,000,000
Schiffshypothekenbank zu Lubeck AG 26,000,000 6,500,000 32,500,000
BankBoston, N.A. 20,000,000 5,000,000 25,000,000
Landesbank Schleswig-Holstein Girozentrale 20,000,000 5,000,000 25,000,000
Merita Bank plc
Deutsche Bank (Hamburg) 14,400,000 3,600,000 18,000,000
Deutsche Schiffsbank AG 14,000,000 3,500,000 17,500,000
VIKING Ship Finance Limited 9,600,000 2,400,000 12,000,000
8,000,000 2,000,000 10,000,000
--------------
500,000,000
==================================================================================================================
</TABLE>
<PAGE>
THE SECOND SCHEDULE
Form of Transfer Certificate
To: Citibank International plc
TRANSFER CERTIFICATE
relating to the agreement (as from time to time amended, varied, novated or
supplemented, the "Facility Agreement") dated 16th December 1998 as amended and
restated on ___________ 1999 whereby a U.S.$500,000,000 revolving credit
facility was made available to Bona Shipholding Ltd. as borrower by a group of
banks on whose behalf Citibank International plc acted as agent in connection
therewith.
1. Terms defined in the Facility Agreement shall, subject to any contrary
indication, have the same meanings herein. The terms Bank and Transferee
are defined in the schedule hereto.
2. The Bank (i) confirms that the details in the schedule hereto under
the heading "Total Bank's Commitment" or "Advance(s)" accurately
summarises its Total Commitment and/or, as the case may be, its
participation in, and the Term and Repayment Date of, one or more
existing Advances and (ii) requests the Transferee to accept and
procure the transfer to the Transferee of the portion specified in the
schedule hereto of, as the case may be, its Total Commitment and/or
its participation in such Advance(s) by counter-signing and delivering
this Transfer Certificate to the Agent at its address for the service
of notices specified in the Facility Agreement.
3. The Transferee hereby requests the Agent to accept this Transfer
Certificate as being delivered to the Agent pursuant to and for the
purposes of Clause 24.5 (Transfers by Banks) of the Facility Agreement
so as to take effect in accordance with the terms thereof on the
Transfer Date or on such later date as may be determined in accordance
with the terms thereof.
4. The Transferee confirms that it has received a copy of the Finance
Documents together with such other information as it has required in
connection with this transaction and that it has not relied and will not
hereafter rely on the Bank to check or enquire on its behalf into the
legality, validity, effectiveness, adequacy, accuracy or completeness of
any such information and further agrees that it has not relied and will
not rely on the Bank to assess or keep under review on its behalf the
financial condition, creditworthiness, condition, affairs, status or
nature of the Borrower.
5. The Transferee hereby undertakes with the Bank and each of the other
parties to the Facility Agreement that it will perform in accordance
with their terms all those obligations which by the terms of the
Facility Agreement will be assumed by it after delivery of this Transfer
Certificate to the Agent and satisfaction of the conditions (if any)
subject to which this Transfer Certificate is expressed to take effect.
6. The Bank makes no representation or warranty and assumes no
responsibility with respect to the legality, validity, effectiveness,
adequacy or enforceability of the Facility Agreement or any document
relating thereto and assumes no responsibility for the financial
condition of the Borrower or for the performance and observance by the
Borrower of any of its obligations under the Facility Agreement or any
document relating thereto and any and all such conditions and
warranties, whether express or implied by law or otherwise, are hereby
excluded.
7. The Bank hereby gives notice that nothing herein or in the Facility
Agreement (or any document relating thereto) shall oblige the Bank to
(a) accept a re-transfer from the Transferee of the whole or any part
of its rights, benefits and/or obligations under the Facility
Agreement transferred pursuant hereto or (b) support any losses
directly or indirectly sustained or incurred by the Transferee for any
reason whatsoever including the non-performance by the Borrower or any
other party to the Facility Agreement (or any document relating
thereto) of its obligations under any such document. The Transferee
hereby acknowledges the absence of any such obligation as is referred
to in (a) or (b) above.
8. This Transfer Certificate and the rights, benefits and obligations of
the parties hereunder shall be governed by and construed in accordance
with English law.
THE SCHEDULE
1. Bank:
2. Transferee:
3. Transfer Date:
4. Total Commitment:
Bank's A Commitment Portion Transferred
Bank's B Commitment Portion Transferred
5. Advance(s):
Amount of Term and
Bank's Participation Repayment Date Portion Transferred
[Transferor Bank] [Transferee Bank]
By: By:
Date: Date:
Administrative Details of Transferee
Address:
Contact Name:
Account for Payments:
Fax:
Telephone:
<PAGE>
THE THIRD SCHEDULE
Part 1
Condition Precedent Documents for the first Advance hereunder
1. A copy, certified a true copy by a duly authorised officer of the
Borrower, of the Borrower's constitutive documents.
2. A copy, certified a true copy by a duly authorised officer of the
Borrower, of a resolution of the Borrower's Board of Directors approving
the execution, delivery and performance of the Finance Documents and the
terms and conditions of the Finance Documents and authorising a named
person or persons to sign this Agreement and any documents to be
delivered by the Borrower pursuant hereto or pursuant to any of the
other Finance Documents.
3. A certificate of a duly authorised officer of the Borrower setting out
the names and signatures of the persons authorised to sign, on behalf of
the Borrower, this Agreement and the other Finance Documents and any
documents to be delivered by the Borrower pursuant hereto or thereto.
4. A copy, certified a true copy by a duly authorised officer of the
Borrower, of the powers of attorney, if any, issued pursuant to the
resolution referred to in paragraph 2 above.
5. A copy, certified a true copy by or on behalf of the Borrower, of each
such law, decree, consent, licence, approval, registration or
declaration as is, in the opinion of counsel to the Agent, necessary to
render the Finance Documents legal, valid, binding and enforceable, to
make this Agreement admissible in evidence in Bermuda.
6. An opinion of the Agent's counsel in Bermuda, Messrs Conyers, Dill &
Pearman in form and substance satisfactory to the Agent.
7. An opinion of the Agent's English counsel, Messrs. Clifford Chance, in
form and substance satisfactory to the Agent.
8. Evidence that Sinclair Services Limited has agreed to act as the agent
of the Borrower for the service of process in England.
9. A copy, certified a true copy by a director of the Borrower, of the
Original Consolidated Financial Statements.
10. A certificate as at the most recent Quarter Date prior to the Original
Facility Date showing the Borrower's level of Free Cash, Current Ratio
and Leverage at such date.
11. A security trust deed in the form or substantially the form of that
attached hereto as Exhibit A.
12. Evidence that the Borrower has, on or before the date of the first
Advance hereunder, (i) cancelled the whole of the Aggregate Total
Commitments (as defined in the Newbuilding Facility) and the whole of
the Total Commitments (as defined in the Citibank Revolver and the Chase
Revolver) and (ii) given notice of its intention to prepay all amounts
outstanding (as at the date of the of the first Advance hereunder) under
the Citibank Revolver and the Chase Revolver
13. Notice from the Borrower cancelling the whole of the Aggregate Total
Commitments as defined in the Newbuilding Facility and the whole of the
Total Commitments as defined in the Citibank Revolver and the Chase
Revolver.
14. Evidence in form and substance satisfactory to the Agent that each
Initial Vessel is insured in accordance with the requirements of the
relevant Security Agreements.
15. Evidence in form and substance satisfactory to the Agent that each
Initial Vessel is classified with a classification society in accordance
with the requirements of the relevant Security Agreements.
16. An opinion of the counsel to the Agent in the countries in which the
Initial Vessels are registered in form and substance satisfactory to the
Agent.
17. Evidence that there are no other existing mortgages or other
encumbrances (other than permitted liens and other than encumbrances
created to secure the Borrower's obligations under the Citibank Revolver
or the Chase Revolver) over the Initial Vessels or their earnings and
insurances.
18. A Mortgage over each Initial Vessel duly executed and delivered by the
Borrower and registered against each such Initial Vessel in its
appropriate registry.
19. Deeds of Assignment duly executed and delivered by the Borrower in
respect of the earnings and insurances of each Initial Vessel (the said
assignment of earnings to provide that the Trustee shall not be entitled
to require the assigned earnings to be paid to the Trustee thereunder
unless and until an Event of Default has occurred and is continuing).
20. All notices required to be given by the terms of the Deeds of Assignment
referred to in paragraph 19 above.
21. Evidence that all outstandings under the Citibank Revolver and the Chase
Revolver will be met from the proceeds of the first drawdown hereunder.
22. Evidence that all security granted pursuant to the Chase Revolver and
the Citibank Revolver over the Initial Vessels, their insurances or
earnings, shall have been discharged concurrently with the making of the
first Advance hereunder.
23. Confirmation from Clifford Chance as to the status of items referred to
in paragraphs 1 to 22 above, included.
<PAGE>
Part 2
1. A copy, certified a true copy by a duly authorised officer of the
Borrower, of the Borrower's constitutive documents or, where such
documents have not changed since being provided pursuant to paragraph 1
of Part 1 of the Third Schedule, a certificate of a duly authorised
officer of the Borrower to that effect.
2. A copy, certified a true copy by a duly authorised officer of the
Borrower, of a resolution of the Borrower's Board of Directors approving
the execution, delivery and performance of the additional Finance
Documents and the terms and conditions of the additional Finance
Documents and authorising a named person or persons to sign any
documents to be delivered by the Borrower pursuant to such additional
Finance Documents.
3. A certificate of a duly authorised officer of the Borrower setting out
the names and signatures of the persons authorised to sign, on behalf of
the Borrower, the additional Finance Documents and any documents to be
delivered by the Borrower pursuant thereto.
4. A copy, certified a true copy by a duly authorised officer of the
Borrower, of the powers of attorney, if any, issued pursuant to the
resolution referred to in paragraph 2 above.
5. A copy, certified a true copy by or on behalf of the Borrower, of each
such law, decree, consent, licence, approval, registration or
declaration as is, in the opinion of counsel to the Agent, necessary to
render the additional Finance Documents legal, valid, binding and
enforceable, to make them admissible in evidence in Bermuda and to
enable the Borrower lawfully to perform its respective obligations
thereunder.
6. Evidence in form and substance satisfactory to the Agent that the
relevant New Vessel or Future Vessel, as the case may be, is insured in
accordance with the requirements of the relevant Security Agreements.
7. Evidence in form and substance satisfactory to the Agent that the
relevant New Vessel or Future Vessel (as the case may be) is classified
with a classification society in accordance with the requirements of the
relevant Security Agreements.
8. An opinion of the counsel to the Agent in the country in which the New
Vessel or Future Vessel, as the case may be, in respect of which the
relevant Advance is made is to be registered in form and substance
satisfactory to the Agent.
9. Evidence that there are no other existing mortgages or other
encumbrances (other than permitted liens) over the relevant New Vessel
or Future Vessel, as the case may be, or its earnings and insurances.
10. A Mortgage over the relevant New Vessel or Future Vessel (as the case
may be) duly executed and delivered by the Borrower and registered
against such New Vessel or Future Vessel, as the case may be, in its
appropriate registry.
11. A Deed of Assignment duly executed and delivered by the Borrower in
respect of the earnings and insurances of the relevant New Vessel or
Future Vessel, as the case may be, (the said assignment of earnings to
provide that the Trustee shall not be entitled to require the assigned
earnings to be paid to the Trustee thereunder unless and until an Event
of Default has occurred as is continuing).
12. All notices required to be given by the terms of the Deed of Assignment
referred to in paragraph 11 above.
<PAGE>
THE FOURTH SCHEDULE
Notice of Drawdown
From: Bona Shipholding Ltd.
To: Citibank International plc
Dated:
Dear Sirs,
1. We refer to the agreement (as from time to time amended, varied, novated
or supplemented, the "Facility Agreement") dated 16th December 1998 as
amended and restated on __________ 1999 and made between Bona
Shipholding Ltd. as borrower, Chase Manhattan plc and Citibank
International plc as arrangers, Citibank International Plc as agent and
trustee and the financial institutions named therein as Banks. Terms
defined in the Facility Agreement shall have the same meaning in this
notice.
2. We hereby give you notice that, pursuant to the Facility Agreement and
upon the terms and subject to the conditions contained therein, we wish
an Advance to be made to us as follows:
(a) Amount:
(b) Facility: [insert Facility A, Facility B as appropriate]
(c) Drawdown Date:
(d) Term:
3. We confirm that, at the date hereof, the representations set out in
Clause 11 (Representations) of the Facility Agreement are true and no
Event of Default or Potential Event of Default has occurred.
4. The proceeds of this drawdown should be credited to [insert account details].
Yours faithfully
.............................
for and on behalf of
<PAGE>
The Borrower
BONA SHIPHOLDING LTD.
By: RAGNAR BELCK OLSEN
Address: P.O. Box HM1179
Cedar House, 41 Cedar Avenue
Hamilton HM12
Bermuda
Attn: Mr Warren Cabral
Fax: (441) 296 8666
Arranger
CHASE MANHATTAN plc
By: EINAR STAVRUM
Address: 125 London Wall
London EC2Y 5AJ
Attn: Kristian Orssten
Fax: 0171 777 4759
Arranger, Agent and Trustee
CITIBANK INTERNATIONAL plc
By: RORY HUSSEY
Address: P.O. Box 200
Cottons Centre
Hays Lane
London SE1 2QT
Attn: Debbie Caulfield
Fax: 0171 500 4482
<PAGE>
The Banks
CITIBANK, N.A.
By: SIMON BOOTH
Address: P.O. Box 200
Cottons Centre
Hays Lane
London SE1 2QT
Attn: Simon Booth - Global Shipping
Fax: + 44 171 500 2762
THE CHASE MANHATTAN BANK
By: EINAR STAVRUM
Address: 125 London Wall
London EC2Y 5AJ
Attn:Credit matters: Einar Stavrum; Operational matters: European Loan Services
Fax: Credit matters: + 47 22 42 5861; Operational matters: + 44 1202 343 706
THE ROYAL BANK OF SCOTLAND PLC
By: RORY HUSSEY (Attorney)
Address: Shipping Business Centre
P.O. Box 450
5-10 Great Tower Street
London EC3P 3HX
Attn: Graham Locker (Credit matters); Carolyn Peal (Operational matters)
Fax: + 44 171 283 7538
<PAGE>
CHRISTIANIA BANK OG KREDITKASSE ASA
By: PETER D. KNUDSEN OLAV RINGDAL
Address: PB 1166 Sentrum
0106 Oslo
Norway
Attn:Olav Ringdal - Shipping Dept (Credit matters); Aud Sandnes (Operational
matters)
Fax: + 47 22 48 66 68 (Credit matters); + 47 22 48 50 79 (Operational matters)
DEN NORSKE BANK ASA
By: PETER BEHNCKE
Address: Stranden 21
N-0107 Oslo
Norway
Attn:
Fax: + 47 22 48 88 94
CREDIT AGRICOLE INDOSUEZ
By: RORY HUSSEY (Attorney)
Address: 2, quai de President Paul Dommer
92920 Paris La Defense Cedex
France
Attn: Pierre de Fontenay (Credit matters);
Frederic Noel (Operational matters)
Fax: + 33 1 41 89 19 34 (Credit matters);
+ 33 1 41 89 20 79 (Operational matters)
<PAGE>
KBC FINANCE IRELAND
By: RORY HUSSEY (Attorney)
Address: KBC House
International Financial Services Centre
Dublin 1
Ireland
Attn: Peter H. Stowell
Fax: + 353 1 670 0855
MEESPIERSON N.V.
By: RORY HUSSEY (Attorney)
Address: Munkedamsveien 53b
N-0250, Oslo
Norway
Attn: Diederik Legger
Fax: + 47 22 11 49 40
SCHIFFSHYPOTHEKENBANK ZU LUBECK AG
By: TORE EIKELAND NILS CHRISTIAN GREEN
Address: Brandstwiete 1
20457 Hamburg
Germany
Attn: Jorg Zickermann
Fax: + 49 40 3701 4649
<PAGE>
BANKBOSTON, N.A.
By: RORY HUSSEY (Attorney)
Address: 100 Federal Street
Boston MA 02110
USA
Attn: Credit matters: Sean McCarthy; Operational matters: Edward Swiatek
Fax: Credit matters: + 1 617 434 1955; Operational matters: + 1 617 434 9820
LANDESBANK SCHLESWIG-HOLSTEIN GIROZENTRALE
By: DR. JURGEN MONZEL
Address: Martensdamm 6
D-24 103 Kiel
Attn: Matthias Happich
Fax: + 49 431 900 1130
MERITA BANK PLC, LONDON BRANCH
By: HENNY O'BRIEN
Address: 19 Thomas More Street
London, E1 9YW
Attn: Kirsten Kaarre Jensen
Fax: 0171 709 7001
DEUTSCHE BANK AG IN HAMBURG
By: TORE EIKELAND OLIVER TRENNT
Address: Adolphsplatz 7
20457 Hamburg
Germany
Attn: Jorg Zickermann, Ship Financing Dept.
Fax: + 49 40 3701 4649
<PAGE>
DEUTSCHE SCHIFFSBANK AG
By: RORY HUSSEY (Attorney)
Address: Domshof 17
D-28195 Bremen
Germany
Attn: Peter Zimmermann
Fax: + 49 421 323 539
VIKING SHIP FINANCE LTD
By: RORY HUSSEY (Attorney)
Address: Claridenstrasse 40
P.O. Box 645
CH-8021 Zurich
Switzerland
Attn: Alexander Schaffert
Fax: + 41 1 234 4066
EXHIBIT 2.39
BONA SHIPHOLDING LTD
Chase Manhattan plc
Citibank International plc
and Others
---------------------------------------------------------------------------
Amendment and Restatement Agreement relating to an
US$500,000,000
Revolving Loan Agreement
originally made on 16 December 1998
---------------------------------------------------------------------------
<PAGE>
CONTENTS
Clause Page
1. Definitions And Interpretations.........................................1
2. Representations.........................................................2
3. Amendment...............................................................2
4. Incorporation Of Clauses................................................2
Schedule 1 CONDITIONS PRECEDENT......................................4
<PAGE>
London-3/145725/04 - 9 - C0828/29464
THIS AMENDMENT AND RESTATEMENT AGREEMENT is made on 11 June 1999
BETWEEN
(1)......BONA SHIPHOLDING LTD. (the "Borrower");
(2) CHASE MANHATTAN plc and CITIBANK INTERNATIONAL plc (the "Arrangers");
(3) CITIBANK INTERNATIONAL plc (the "Trustee");
(4) CITIBANK INTERNATIONAL plc (the "Agent");
(5) THE BANKS (as defined below).
RECITALS
(A) It is proposed that Bona Shipping Ltd. will amalgamate under the laws of
Bermuda with Northwest Maritime Inc., a subsidiary of Teekay Shipping
Corporation and will itself accordingly become a subsidiary of Teekay
Shipping Corporation.
(B) The parties to the Original Loan Agreement have agreed to enter into
this Amendment and Restatement Agreement pursuant to which the Original
Loan Agreement will be amended and restated.
NOW IT IS HEREBY AGREED as follows:-
1. Definitions and Interpretations
1.1 Definitions
In this Agreement and the Recitals the following terms have the meanings
given to them in this Clause 1.1.
"Amended and Restated Loan Agreement" means the Original Loan Agreement,
as amended by this Agreement.
"Effective Date" means the first date upon which both (i) the Agent
shall have confirmed to the other parties hereto that it has received
all the documents listed in Schedule 1, each in form and substance
satisfactory to it and (ii) no Event of Default or Potential Event of
Default shall have occurred and be continuing (Provided that if the
Effective Date does not occur before 31 December 1999 this Agreement
shall be null and void).
"Guarantee" means the guarantee of the obligations of the Borrower, to
be given by the Guarantor, in respect of its obligations under the
Amended and Restated Loan Agreement substantially in the form of Exhibit
2 to this Agreement.
"Guarantor" means Teekay Shipping Corporation.
"Original Loan Agreement" means the Loan Agreement dated 16 December 1998
between the Borrower, the Arrangers, the Agent, the Trustee and the Banks.
"Original Parent's Consolidated Financial Statements" means the audited
consolidated financial statements of the Guarantor as referred to in
Paragraph 7 of Schedule 1.
1.2 Finance Document
It is agreed that this Agreement is a Finance Document as defined in the
Amended and Restated Loan Agreement.
1.3 Defined Terms
Terms defined in the Amended and Restated Loan Agreement bear the same
meaning herein.
2. Representations
The Borrower repeats those representations set forth in Clause 11 of the
Original Loan Agreement as if each reference therein to "this Agreement"
or "the Finance Documents" included a reference to (a) this Agreement
and (b) the Amended and Restated Loan Agreement.
3. Amendment
With effect from the Effective Date the Original Loan Agreement shall be
amended and restated as set out in Exhibit 1 hereto.
4. Incorporation of Clauses
Clause 22 (Costs and Expenses) Clause 26 (Remedies and Waivers, Partial
Invalidity), Clause 27 (Notices), Clause 29 (Law) and Clause 30
(Jurisdiction) of the Amended and Restated Loan Agreement shall apply to
this Agreement mutatis mutandis but as if references therein to the
Amended and Restated Loan Agreement, or to the Finance Documents, were
references to this Agreement.
5. Fee
In consideration of the Banks' agreement to enter into this Agreement,
the Borrower agrees to pay to the Agent for the account of the Banks a
fee (the "Fee") of 0.2 per cent. of the Aggregate Total Commitments as
at the date hereof, one-half of the Fee being payable on the date hereof
and one half on 31 December 1999, unless the Loan shall by then have
been repaid in which case such second instalment shall not be payable.
6. counterparts
This Agreement may be executed in counterparts, each of which when
executed shall be an original, but all counterparts together shall
constitute one and the same instrument.
AS WITNESS the hands of duly authorised representatives of the parties hereto
the day and year first before written.
SCHEDULE 1
<PAGE>
CONDITIONS PRECEDENT
1. A certificate of a duly authorised officer of each of the Borrower and
Guarantor setting out the names and signatures of the persons authorised
to sign, on behalf of the Borrower and Guarantor, this Agreement and the
Guarantee, respectively and any documents to be delivered by the
Borrower or the Guarantor pursuant hereto or thereto.
2. A certified copy of a board resolution of each of the Borrower and the
Guarantor respectively, authorising the execution of this Agreement and
the Guarantee and a certified copy of any power of attorney issued
pursuant thereto.
3. A copy, certified a true copy by or on behalf of the Borrower (or, as
the case may be, the Guarantor), of each such law, decree, consent,
licence, approval, registration or declaration as is, in the opinion of
counsel to the Banks, necessary to render this Agreement or, as the case
may be, the Guarantee, legal, valid, binding and enforceable in Liberia
and to make this Agreement and the Guarantee admissible in evidence in
Bermuda and Liberia and to enable the Borrower and Guarantor to perform
their obligations hereunder and thereunder.
4. Delivery of legal opinions addressed to the Agent from:
(a) Clifford Chance, English legal advisors to the Agent;
(b) Conyers Dill and Pearman, Bermudan counsel; and
(c) Watson Farley & Williams, Liberian counsel.
5. An executed original of the Guarantee.
6. A Certificate of Amalgamation issued by the Bermuda Registrar of
Companies certifying that Bona Shipholding Ltd. has amalgamated with
Northwest Maritime Inc.
7. A copy, certified by a duly authorised officer of the Guarantor, of the
Guarantor's audited consolidated financial statements for the year ended
31 March 1999.
8. Written confirmation from Teekay Shipping (UK) Limited that it accepts
its appointment as agent for service of process of the Borrower under
the Amended and Restated Loan Agreement and of the Guarantor under the
Guarantee.
<PAGE>
The Borrower
BONA SHIPHOLDING LTD.
By:
Address: P.O. Box HM1179
Cedar House, 41 Cedar Avenue
Hamilton HM12
Bermuda
Attn: Mr Warren Cabral
Fax: (441) 296 8666
Arranger
CHASE MANHATTAN plc
By:
Address: 125 London Wall
London EC2Y 5AJ
Attn: Kristian Orssten
Fax: 0171 777 4759
Arranger, Agent and Trustee
CITIBANK INTERNATIONAL plc
By:
Address: P.O. Box 200
Cottons Centre
Hays Lane
London SE1 2QT
Attn: Debbie Caulfield
Fax: 0171 500 4482
<PAGE>
The Banks
CITIBANK, N.A.
By:
Address: P.O. Box 200
Cottons Centre
Hays Lane
London SE1 2QT
Attn: Simon Booth - Global Shipping
Fax: + 44 171 500 2762
THE CHASE MANHATTAN BANK
By:
Address: 125 London Wall
London EC2Y 5AJ
Attn: Credit matters: Einar Stavrum; Operational matters: European Loan Services
Fax: Credit matters: + 47 22 42 5861; Operational matters: + 44 1202 343 706
THE ROYAL BANK OF SCOTLAND PLC
By:
Address: Shipping Business Centre
P.O. Box 450
5-10 Great Tower Street
London EC3P 3HX
Attn: Graham Locker (Credit matters); Carolyn Peal (Operational matters)
Fax: + 44 171 283 7538
<PAGE>
CHRISTIANIA BANK OG KREDITKASSE ASA
By:
Address: PB 1166 Sentrum
0106 Oslo
Norway
Attn:Olav Ringdal - Shipping Dept (Credit matters); Aud Sandnes (Operational
matters)
Fax: + 47 22 48 66 68 (Credit matters); + 47 22 48 50 79 (Operational matters)
DEN NORSKE BANK ASA
By:
Address: Stranden 21
N-0107 Oslo
Norway
Attn: Solveig Nuland Knoff, Credit Administration
Fax: + 47 22 48 28 94
CREDIT AGRICOLE INDOSUEZ
By:
Address: 2, quai de President Paul Dommer
92920 Paris La Defense Cedex
France
Attn: Pierre de Fontenay (Credit matters);
Frederic Noel (Operational matters)
Fax: + 33 1 41 89 19 34 (Credit matters);
+ 33 1 41 89 20 79 (Operational matters)
<PAGE>
KBC FINANCE IRELAND
By:
Address: KBC House
International Financial Services Centre
Dublin 1
Ireland
Attn: Peter H. Stowell
Fax: + 353 1 670 0855
MEESPIERSON N.V.
By:
Address: Munkedamsveien 53b
N-0250, Oslo
Norway
Attn: Diederik Legger
Fax: + 47 22 11 49 40
SCHIFFSHYPOTHEKENBANK ZU LUBECK AG
By:
Address: Brandstwiete 1
20457 Hamburg
Germany
Attn: Jorg Zickermann
Fax; + 49 40 3701 4649
<PAGE>
BANKBOSTON, N.A.
By:
Address: 100 Federal Street
Boston MA 02110
USA
Attn: Credit matters: Sean McCarthy; Operational matters: Edward Swiatek
Fax: Credit matters: + 1 617 434 1955; Operational matters: + 1 617 434 9820
LANDESBANK SCHLESWIG-HOLSTEIN GIROZENTRALE
By:
Address: Martensdamm 6
D-24 103 Kiel
Attn: Matthias Happich
Fax: + 49 431 900 1130
MERITA BANK PLC, LONDON BRANCH
By:
Address: 19 Thomas More Street
London, E1 9YW
Attn: Kirsten Kaarre Jensen
Fax: 0171 709 7001
DEUTSCHE BANK AG IN HAMBURG
By:
Address: Adolphsplatz 7
20457 Hamburg
Germany
Attn: Jorg Zickermann, Ship Financing Dept.
Fax: + 49 40 3701 4649
<PAGE>
DEUTSCHE SCHIFFSBANK AG
By:
Address: Domshof 17
D-28195 Bremen
Germany
Attn: Peter Zimmermann
Fax: + 49 421 323 539
VIKING SHIP FINANCE LTD
By:
Address: Claridenstrasse 40
P.O. Box 645
CH-8021 Zurich
Switzerland
Attn: Alexander Schaffert
Fax: + 41 1 234 4066
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM TEEKAY
SHIPPING CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> APR-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 220,327
<SECURITIES> 0
<RECEIVABLES> 30,753
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 280,659
<PP&E> 2,291,482
<DEPRECIATION> 624,727
<TOTAL-ASSETS> 1,982,684
<CURRENT-LIABILITIES> 126,503
<BONDS> 1,018,610
0
0
<COMMON> 427,937
<OTHER-SE> 404,130
<TOTAL-LIABILITY-AND-EQUITY> 1,982,684
<SALES> 0
<TOTAL-REVENUES> 377,882
<CGS> 0
<TOTAL-COSTS> 129,532
<OTHER-EXPENSES> 224,778
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 44,996
<INCOME-PRETAX> (19,595)
<INCOME-TAX> 0
<INCOME-CONTINUING> (19,595)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (19,595)
<EPS-BASIC> (0.54)
<EPS-DILUTED> (0.54)
</TABLE>
