FORM 10 - Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report under Section 13 or 15 (d) of
the Securities Exchange Act of 1934
For the Quarterly Period Ended March 31, 1999
Commission File Number: 0-20961
COMMODORE HOLDINGS LIMITED
--------------------------
(Exact Name of Registrant as Specified in its Charter)
BERMUDA
-------
(State or other Jurisdiction of incorporation or organization)
N/A
---
(IRS Employer Identification Number)
4000 HOLLYWOOD BOULEVARD, SUITE 385, SOUTH TOWER, HOLLYWOOD, FL 33021
---------------------------------------------------------------------
(Address of Principal Offices)
(954) 967-2100
--------------
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant has (1) 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) been subject to such filing
requirements for the past 90 days.
Yes _x_ No ___
7,446,130 Shares of Common Stock outstanding at May 14, 1999
<PAGE>
Commodore Holdings Limited
Table of Contents
Page No.
Part I Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets 2
Consolidated Statements of Earnings 3
Consolidated Statement of Stockholders' Equity 4
Consolidated Statements of Cash Flows 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
Item 3. Quantitative and Qualitative Disclosures 10
About Market Risk
Part II Other Information
Item 1. Legal Proceedings 11
Item 2. Changes in Securities and Use of Proceeds 11
Item 3. Defaults upon Senior Securities 11
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 5. Other Information 12
Item 6. A - Exhibits 12
B - Reports on Form 8-K 12
<PAGE>
Part I: Financial Information
Item 1: Financial Statements
COMMODORE HOLDINGS LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, SEPTEMBER 30,
1999 1998
----------------------- ----------------------
(UNAUDITED) (AUDITED)
ASSETS
<S> <C> <C>
Current assets
Cash and cash equivalents $ 9,921,000 $ 3,172,000
Restricted cash 4,194,000 2,326,000
Trade and other receivables, net 751,000 482,000
Due from affiliates 1,903,000 1,061,000
Inventories 1,443,000 1,466,000
Prepaid expenses 3,448,000 2,865,000
Other current assets 87,000 77,000
----------------------- ----------------------
Total current assets 21,747,000 11,449,000
Property and equipment, net 37,771,000 38,296,000
Investment in Joint Venture 1,156,000 1,481,000
Long-term receivable - affiliate 5,727,000 2,550,000
Investments - restricted - 4,629,000
Other assets 1,636,000 732,000
----------------------- ----------------------
$ 68,037,000 $ 59,137,000
======================= ======================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt $ 2,853,000 $ 4,393,000
Note payable - 1,300,000
Accounts payable 6,699,000 6,457,000
Accrued liabilities 1,259,000 710,000
Due to affiliates 1,702,000 1,201,000
Customer deposits 9,097,000 7,741,000
Accrued interest 94,000 73,000
----------------------- ----------------------
Total current liabilities 21,704,000 21,875,000
Long-term debt 15,961,000 12,445,000
Minority interest in subsidiary 559,000 228,000
Stockholders' equity
Preferred stock - authorized 10,000,000 shares
of $.01 par value; issued and outstanding 400,000
shares in 1999 and 0 in 1998 4,000 --
Common stock - authorized 100,000,000 shares
of $.01 par value; issued and outstanding
7,439,821 shares in 1999 and 7,264,821 in 1998 74,000 72,000
Paid-in capital 20,749,000 16,348,000
Retained earnings 8,986,000 8,169,000
----------------------- ----------------------
Total stockholders' equity 29,813,000 24,589,000
----------------------- ----------------------
$ 68,037,000 $ 59,137,000
======================= ======================
</TABLE>
The accompanying notes are an integral part of these statements.
Page 2
<PAGE>
COMMODORE HOLDINGS LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE THREE MONTHS AND FOR THE SIX MONTHS ENDED MARCH 31, 1999 AND 1998
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
MARCH 31, MARCH 31,
1999 1998 1999 1998
----------------------------------- ----------------------------------
<S> <C> <C> <C> <C>
Revenues $11,978,000 $13,858,000 $24,266,000 $ 25,386,000
Expenses
Operating 7,416,000 10,703,000 16,486,000 19,052,000
Marketing, selling and administrative 2,267,000 1,768,000 4,226,000 3,991,000
Depreciation and amortization 481,000 547,000 1,091,000 1,056,000
------------------------------------ ----------------------------------
10,164,000 13,018,000 21,803,000 24,099,000
------------------------------------ ---------------------------------
Operating income 1,814,000 840,000 2,463,000 1,287,000
Other income (expense)
Interest income 176,000 114,000 287,000 259,000
Interest expense (411,000) (422,000) (797,000) (886,000)
Minority interest share of (earnings) loss
of consolidated joint venture (531,000) 101,000 (332,000) 155,000
Equity in net (loss) of unconsolidated
joint venture (266,000) - (576,000) -
------------------------------------ ----------------------------------
(1,032,000) (207,000) (1,418,000) (472,000)
------------------------------------ ----------------------------------
Net earnings before preferred
stock dividend 782,000 633,000 1,045,000 815,000
Preferred stock dividend 67,000 70,000 67,000 142,000
----------------------------------- ----------------------------------
Net earnings available for
common stockholders $ 715,000 $ 563,000 $ 978,000 $ 673,000
=================================== ==================================
Earnings per share available for common
stockholders - Basic $ 0.10 $ 0.10 $ 0.13 $ 0.12
====================================== ===============================
Weighted average number of common stock
outstanding - Basic 7,440,000 5,605,000 7,397,000 5,593,000
====================================== ===============================
Earnings per share available for common
stockholders - Diluted $ 0.09 $ 0.08 $ 0.12 $ 0.12
====================================== ===============================
Weighted average number of common stock
outstanding - Diluted 8,921,000 7,939,000 8,791,000 7,445,000
====================================== ===============================
</TABLE>
The accompanying notes are an integral part of these statements.
Page 3
<PAGE>
COMMODORE HOLDINGS LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED MARCH 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
PREFERRED STOCK COMMON STOCK
---------------------------------------------- ADDITIONAL
NUMBER OF PAR NUMBER OF PAR PAID-IN RETAINED
SHARES VALUE SHARES VALUE CAPITAL EARNINGS TOTAL
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances at
September 30, 1998 - $ - 7,264,821 $72,000 $16,348,000 $8,169,000 $24,589,000
Fair value of options to
nonemployees - - - - 230,000 - 230,000
Issuance of common stock 175,000 2,000 505,000 - 507,000
Issuance of preferred stock 400,000 4,000 3,666,000 - 3,670,000
Preferred stock dividend - - - - - (161,000) (161,000)
Net earnings - - - - - 978,000 978,000
------------------------------------------------------------------------------------------------
Balances at
March 31, 1999 400,000 $4,000 7,439,821 $74,000 $20,749,000 $8,986,000 $29,813,000
================================================================================================
</TABLE>
The accompanying notes are an integral part of these statements.
Page 4
<PAGE>
COMMODORE HOLDINGS LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED MARCH 31, 1999 AND 1998
(UNAUDITED)
<TABLE>
<CAPTION>
1999 1998
---------------- -----------------
<S> <C> <C>
Cash flows from operating activities
Net earnings $1,045,000 $ 815,000
Adjustments to reconcile net earnings to net cash
provided by operating activities
Depreciation of property and equipment 1,091,000 1,056,000
Amortization of deferred drydock 770,000 917,000
Fair value of options to nonemployees 88,000 127,000
Undistributed equity in loss of joint venture 576,000 -
(Increase) decrease in operating assets
Restricted cash (1,868,000) (47,000)
Trade and other receivables (269,000) 6,000
Due from affiliate (842,000) (124,000)
Inventory 23,000 742,000
Prepaid expenses and other current assets (1,363,000) (1,265,000)
Other assets (448,000) 3,000
Increase (decrease) in operating liabilities
Accounts payable 242,000 (89,000)
Accrued liabilities 549,000 (299,000)
Due to affiliate 501,000 400,000
Customer and other deposits 1,356,000 1,963,000
Accrued interest 21,000 -
---------------- -----------------
Net cash provided by operating activities 1,472,000 4,205,000
Cash Flows from investing activities
Capital expenditures (566,000) (3,064,000)
Long-term receivable - affiliate (3,177,000) (48,000)
Investments - restricted 4,629,000 -
Investment in unconsolidated joint venture (251,000) (1,000,000)
(Decrease) in minority interest in subsidiary 331,000 (56,000)
---------------- -----------------
Net cash provided by (used in) investing activities 966,000 (4,168,000)
Cash flows from financing activities
Principal payments of long-term debt (11,425,000) (2,196,000)
Proceeds from long-term debt 12,100,000 -
Proceeds from sale of preferred stock, net 3,670,000 -
Proceeds from exercise of warrants 507,000 -
Proceeds from sale of convertible subordinated debentures - 1,426,000
Payment of loan costs (313,000)
Preferred stock dividends (228,000) (228,000)
---------------- -----------------
Net cash provided by (used in) financing activities 4,311,000 (998,000)
---------------- -----------------
Net increase (decrease) in cash and cash equivalents 6,749,000 (961,000)
Cash and cash equivalents at beginning of period 3,172,000 3,531,000
---------------- -----------------
Cash and cash equivalents at end of period $9,921,000 $ 2,570,000
================ =================
Supplemental disclosure of cash flow information
Cash paid during the period for interest $ 673,000 $ 846,000
================ =================
Cash paid during the period for taxes $ - $ -
================ =================
</TABLE>
The accompanying notes are an integral part of these statements.
Page 5
<PAGE>
COMMODORE HOLDINGS LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The Financial Statements for the six months ended March 31, 1999 and 1998,
included herein have been prepared by Commodore Holdings Limited (the "Company")
without audit pursuant to the rules and regulations of the Securities and
Exchange Commission. All adjustments which are, in the opinion of management,
necessary for a fair statement for the results of the three and six months are
included. Certain information and footnote disclosure normally included in
Financial Statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations. These financial statements should be read in conjunction with the
financial statements for the year ended September 30, 1998, contained in the
Company's annual report on Form 10-K.
2. FAIR VALUE OF OPTIONS TO NONEMPLOYEES. During the first six months of fiscal
1999, the Company issued warrants to purchase 131,633 shares of common stock to
nonemployees providing a variety of consulting services to the Company. Under
the application of FASB #123 the Company has valued these warrants at
approximately $230,000; $88,000 of which was recorded as part of marketing,
selling and administrative expense in the first six months of fiscal 1999.
3. EARNINGS PER SHARE. The Company's basic earnings per share is calculated by
dividing net earnings available for common stockholders by the weighted average
shares outstanding during the period. The computation of diluted earnings per
share includes all dilutive common stock equivalents in the weighted average
shares outstanding.
Financial Accounting Standards Board (FASB) Statement No. 128 "Earnings Per
Share" requires the dual presentation of basic and diluted earnings per share on
the face of the statement of earnings. The reconciliation between the
computation is as follows:
<TABLE>
<CAPTION>
THREE NET NET
MONTHS ENDED EARNINGS- BASIC BASIC EARNINGS- DILUTED DILUTED
MARCH 31, BASIC SHARES EPS DILUTED SHARES EPS
- --------- --------- ------ --- --------- ------ ---
<S> <C> <C> <C> <C> <C> <C>
1999 $715,000 7,440,000 $0.10 $782,000 8,921,000 $0.09
1998 $563,000 5,605,000 $0.10 $670,000 7,939,000 $0.08
</TABLE>
<TABLE>
<CAPTION>
SIX NET NET
MONTHS ENDED EARNINGS- BASIC BASIC EARNINGS- DILUTED DILUTED
MARCH 31, BASIC SHARES EPS DILUTED SHARES EPS
- --------- --------- ------ --- --------- ------ ---
<S> <C> <C> <C> <C> <C> <C>
1999 $978,000 7,397,000 $0.13 $1,045,000 8,791,000 $0.12
1998 $673,000 5,593,000 $0.12 $859,000 7,445,000 $0.12
</TABLE>
Included in diluted shares are common stock equivalents relating to options,
warrants, convertible debt and preferred stock of 1,481,000 and 2,334,000 for
the three months ended March 31, 1999 and 1998, respectively and 1,394,000 and
1,852,000 for the six months ended March 31, 1999 and 1998, respectively. Net
earnings were adjusted to calculate the diluted earnings per share by adding
back $67,000 and $107,000 of preferred stock dividend and interest expense,
relating to the preferred stock and convertible debentures, for the three months
ending March 31, 1999 and
Page 6
<PAGE>
1998. Net earnings were adjusted to calculate the diluted earnings per share by
adding back $67,000 and $186,000 of preferred stock dividend and interest
expense, relating to the preferred stock and convertible debentures, for the six
months ending March 31, 1999 and 1998.
4. INVESTMENT IN JOINT VENTURE. In March 1998, the Company chartered the M/V
Enchanted Capri (formerly the Island Holiday) for a period ending on January 1,
2003 (see note B to the Company's financial statements for the year ended
September 30, 1998). The Company is accounting for the joint venture under the
equity method. The Company's 50% investment in Capri Cruises resulted in a net
loss of $266,000 and $576,000 for the three and six months ended March 31, 1999
as it defined its market.
A condensed summary of the assets and liabilities and results of operations of
the joint venture follows:
<TABLE>
<CAPTION>
AS OF
MARCH 31,
1999
-------------
<S> <C>
Current assets $ 3,138,000
Property and equipment, net 4,147,000
Other assets 458,000
-------------
Total assets $ 7,743,000
=============
Current liabilities $ 4,836,000
Other liabilities 596,000
Partners' capital accounts 2,311,000
-------------
Total liabilities and
partners' capital $ 7,743,000
=============
</TABLE>
<TABLE>
<CAPTION>
QUARTER SIX MONTHS
ENDING ENDING
MARCH 31, MARCH 31,
1999 1999
------------ -----------
<S> <C> <C>
Revenues $ 5,174,000 $10,143,000
Expenses 5,705,000 11,294,000
------------ -----------
Net loss $ 531,000 $ 1,151,000
============ ===========
</TABLE>
5. PREFERRED STOCK. In January 1999, the Company closed on a $4,000,000
private offering of its Series B Convertible Preferred Stock. The preferred
stock accrues dividends at the rate of 10% per annum and is convertible
into the Company's Common Stock at the rate of $5.50 per share beginning 18
months from the date of issuance. The net proceeds to the Company were
$3,670,000 after deducting brokers' commissions and expenses of the
offering.
Page 7
<PAGE>
Item 2:
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The following is an analysis of the Company's results of operations, liquidity
and capital resources. To the extent that such analysis contains statements
which are not of a historical nature, such statements are forward-looking
statements, which involve risks and uncertainties. These risks include competing
in a saturated industry against modern and larger fleets; the ability of the
Company to obtain additional financing for the acquisition of additional ships;
a high percentage of debt on assets owned by the Company, the potential for
additional governmental regulations; the need for expensive upgrades and/or
maintenance to aging vessels; general economic factors in markets where the
Company operates; and other factors discussed in the Company's filings with the
Securities and Exchange Commission.
RESULTS OF OPERATIONS
Three Months Ended March 31, 1999, Compared to Three Months Ended March 31, 1998
Revenues decreased by $1,880,000, or 13.6%, for the quarter ended March 31, 1999
compared to the quarter ended March 31, 1998 primarily due to the Universe
Explorer being out of service for the first 47 days of the quarter for
installation of a sprinkler system. The Universe Explorer operated a 21-day
Caribbean program in January 1998.
The Company's operating expenses decreased by $3,287,000, or 30.7%, primarily
due to the Universe Explorer being out of service for the first 47 days of the
quarter for installation of a sprinkler system. The Company's marketing, selling
and administrative expenses increased by $499,000, or 28.2%, for the three
months ended March 31, 1999 compared to the three months ended March 31, 1998,
due to more aggressive marketing in fiscal 1999 as well as higher administrative
expenses due to the addition of personnel in connection with the Company's
expanding operations.
Seawise's interest in the Company's Sea-Comm joint venture is reflected in the
($531,000) and $101,000 line item for "Minority interest share of (earnings)
loss of consolidated joint venture" for the three months ended March 31, 1999
and 1998. Sea-Comm earned $1,062,000 for the three months ended March 31, 1999
and lost $202,000 during the three months ended March 31, 1998. The improvement
in earnings was primarily due to the Universe Explorer not operating a Caribbean
program in fiscal 1999 as it did in fiscal 1998. This program was unprofitable
in fiscal 1998.
"Equity in net (loss) of unconsolidated joint venture" represents losses
associated with the Company's Capri Cruises joint venture, which began
operations in June 1998 and operates one vessel on two- and five-day cruises
from New Orleans. The Company accounts for the Capri Cruises joint venture under
the equity method. The Company's 50% investment resulted in a net loss of
$266,000 for the quarter ended March 31, 1999 as Capri Cruises defined its
market.
Six Months Ended March 31, 1999, Compared to Six Months Ended March 31, 1998
Revenues decreased by $1,120,000, or 4.4%, for the six months ended March 31,
1999 compared to the six months ended March 31, 1998 primarily due to the
Universe Explorer being out of service for 60 days of the first six months of
fiscal 1999 for the installation of a sprinkler system.
The Company's operating expenses decreased by $2,566,000, or 13.5%, primarily
due to the Universe Explorer being out of service for 60 days of the first six
months of fiscal 1999 for the installation of a sprinkler system. The Company's
marketing, selling and administrative expenses increased by $235,000, or 5.9%,
for the six months ended March 31, 1999 compared to the six
Page 8
<PAGE>
months ended March 31, 1998, due to more aggressive marketing in fiscal 1999 as
well as higher administrative expenses due to the addition of personnel in
connection with the Company's expanding operations.
Seawise's interest in the Company's Sea-Comm joint venture is reflected in the
($332,000) and $155,000 line item for "Minority interest share of (earnings)
loss of consolidated joint venture" for the six months ended March 31, 1999 and
1998. Sea-Comm earned $664,000 for the six months ended March 31, 1999 and lost
$310,000 during the six months ended March 31, 1998. The improvement in earnings
was primarily due to the Universe Explorer not operating a Caribbean program in
fiscal 1999 as it did in fiscal 1998.
"Equity in net (loss) of unconsolidated joint venture" represents a loss of
$576,000 for the six months ended March 31, 1999 associated with the Capri
Cruises joint venture as Capri Cruises defined its market.
LIQUIDITY AND CAPITAL RESOURCES
The Company had working capital of $43,000 at March 31, 1999 as compared to a
working capital deficiency of $10,426,000 at September 30, 1998. The improvement
in the Company's working capital position was primarily due to the private sale
of $4,000,000 of preferred stock as well as a change in the Company's FMC
arrangement. The Company has arranged for a surety bond to guarantee the
Enchanted Isle's FMC requirements thereby freeing the $4,629,000 deposit that
had been securing the Company's FMC certificate.
Cash flows from operations provided $1,472,000 and $4,205,000 for the first six
months of fiscal 1999 and 1998, respectively. Cash flows from operations
declined for the first half of fiscal 1999 primarily due to increases in
restricted cash associated with the escrow of passenger deposits for the
Enchanted Capri, prepaid expenses associated with drydock expenses, other
assets, amounts due from affiliate and the Company's undistributed equity in the
losses associated with Capri Cruises.
Cash flows from investing activities provided $966,000 for the six months ended
March 31, 1999 and used $4,168,000 for the six months ended March 31, 1998.
During the six months ended March 31, 1999, the Company invested $566,000 in
capital expenditures and recorded a receivable, from its partner, Seawise, of
approximately $3,200,000, relating primarily to the installation of the
sprinkler system on the Universe Explorer. This receivable is being repaid over
the next seven years, pursuant to the terms of the Company's Sea-Comm joint
venture agreement, as amended. The improvement in cash flows for the first half
of fiscal 1999 is primarily attributable to the Company's new FMC arrangement
and increase in customer deposits, which was partially offset by the amounts
recorded due to the installation of the Universe Explorer sprinkler system.
Cash flows from financing activities provided $4,311,000 during the six months
ended March 31, 1999 and used $998,000 during the six months ended March 31,
1998. This increase was primarily due to the proceeds from the Key Loan as well
as proceeds from a $2,100,000 loan from Nationsbank to finance a portion of the
sprinkler system installation aboard the Universe Explorer (the "NationsBank
Loan"). The NationsBank Loan, which is secured by a letter of credit provided by
Seawise, has a term of 5.5 years and bears an interest rate of LIBOR plus 1.5%.
At March 31, 1999, the Company owed $18,814,000 pursuant to the EffJohn Loan,
Key Loan and Nationsbank Loan which bear interest at 6.97%, 9.14% and 7.30%
respectively. The EffJohn Loan and Key Loan are secured by mortgages on the
Company's vessels.
In January 1999, the Company closed on a $4,000,000 private offering of its
Series B Convertible Preferred Stock. The preferred stock accrues dividends at
the rate of 10% per annum and is
Page 9
<PAGE>
convertible into the Company's Common Stock at the rate of $5.50 per share
beginning 18 months from the date of issuance. The net proceeds to the Company
were $3,670,000 after deducting brokers' commissions and expenses of the
offering.
The Company expects to fund the cash needs for its Capri Cruises operation from
cash from its established operations until such venture becomes profitable.
Capri Cruises is continuing to experience losses as it defines its market. The
Company expects that such losses will decline as Capri Cruises establishes its
market niche. There can be no assurance that Capri Cruises' losses will not have
a material adverse effect on the Company.
In June 1997, the FASB issued Statement of Financial Accounting Standard No. 130
(SFAS 130), "Reporting Comprehensive Income." SFAS 130 establishes standards for
reporting and display of comprehensive income and its components in financial
statements. This new standard was adopted by the Company for fiscal 1999 and
does not have a significant effect on the consolidated financial statements.
In June 1997, the FASB also issued Statement of Financial Accounting Standard
No. 131 (SFAS 131), "Disclosure About Segments of an Enterprise and Related
Information." The Company has adopted this new standard and does not believe
that this standard will have a significant effect on its consolidated financial
statements or related disclosures.
INFLATION
The impact of inflation on the Company's operations has not been significant to
date. There can be no assurance that a high rate of inflation in the future
would not have an adverse effect on the Company's operations.
Item 3: Quantitative and Qualitative Disclosures About Market Risk
The Company's major market risk exposure is to changing interest rates. The
Company's policy is to manage interest rate risk through the use of a
combination of fixed and floating rate instruments, with respect to both its
liquid assets and its debt instruments.
The Company maintains a portion of its cash and cash equivalents in financial
instruments with original maturities of three months or less. These financial
instruments are subject to interest rate declines. An immediate decline of 10%
in interest rates would reduce the Company's annual interest income by $62,000.
The Key Loan is a variable rate loan; however, the Company has purchased
interest rate protection for such loan in the form of an interest rate swap. As
a result, although the Key Loan bears interest at the prime rate plus 80 basis
points, the interest rate swap provides that the rate shall effectively be fixed
at 9.14% over the term of the loan. The Nationsbank Loan is also a variable rate
loan; however, the Company has also purchased interest rate protection for such
loan in the form of an interest rate swap. As a result, although the Nationsbank
Loan bears interest at LIBOR plus 150 basis points, the interest rate swap
provides that the rate shall effectively be fixed at 7.3% over the term of the
loan. The EffJohn Loan bears interest at LIBOR plus 2%, and thus is affected by
changes in interest rates. In the event that interest rates increased by 10%,
the Company's interest obligation would increase $22,000, $39,000, $22,000 and
$6,000, respectively, in each of its fiscal years 1999, 2000, 2001, and 2002.
Page 10
<PAGE>
Part II: Other Information
Item 1. LEGAL PROCEEDINGS
Not applicable
Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On January 14, 1999, the Company sold 400,000 shares of its
Series B Convertible Preferred Stock (the "Series B Stock") to an
unaffiliated third party for $4,000,000. The Series B Stock is
convertible into common stock, beginning 18 months from the date of
issuance, at a rate of $5.50 per share. The sale of Series B Stock was
exempt from registration pursuant to Section 4(2) of the Securities Act
of 1933, as amended (the "Securities Act").
Item 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) (1) The Annual Meeting of Stockholders (the "Annual
Meeting") was held on Thursday, February 11, 1999
at the offices of Broad and Cassel, Miami Center,
Suite 3000, 201 South Biscayne Boulevard, Miami,
Florida 33131.
(2) The continuation of the Annual Meeting (the
"Continuation Meeting") of Stockholders was held
on Thursday, March 11, 1999 at the offices of
Broad and Cassel, Miami Center, Suite 3000, 201
South Biscayne Boulevard, Miami, Florida 33131.
(b) The following individuals were elected directors
until the annual meeting of stockholders to be held
in the year 2002 or until their successors are
elected and qualified:
<TABLE>
<CAPTION>
VOTES AGAINST OR ABSTENTIONS AND BROKER
VOTES FOR WITHHELD NON-VOTES
--------- -------- ---------
<S> <C> <C> <C>
Jeffrey B. Rabin 7,276,739 7,350 ---
Ronald K. Stern 7,276,239 7,850 ---
</TABLE>
The new directors replace Arnold Francis and Gordon Hill, who
chose not to run for re-election. The term of office for each of the
following directors continued after the meeting: Jeffrey I. Binder,
Ralph V. De Martino, Mark J. Maged and Frederick A. Mayer.
(c) (1) Other Matters Voted on at the Annual Meeting.
The stockholders also voted to appoint Grant Thornton
LLP as the Company's independent auditors for the
1999 fiscal year and to authorize the Board of
Directors to set the auditor's fees.
<TABLE>
<CAPTION>
VOTES AGAINST OR ABSTENTIONS AND BROKER
VOTES FOR WITHHELD NON-VOTES
--------- -------- ---------
<S> <C> <C>
7,273,493 2,000 8,650
</TABLE>
Page 11
<PAGE>
(2) Other Matters Voted on at the Continuation
Meeting.
The stockholders voted on a proposal to
amend the Company 1995 Stock Plan to increase the
number of shares of the Company's Common Stock
reserved for issuance from an aggregate of 500,000
shares to an aggregate of 1,000,000 shares.
<TABLE>
<CAPTION>
VOTES AGAINST OR ABSTENTIONS AND BROKER
VOTES FOR WITHHELD NON-VOTES
--------- -------- ---------
<S> <C> <C>
2,368,497 351,750 4,569,402
</TABLE>
(d) Not applicable.
Item 5. OTHER INFORMATION
Not applicable
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------------------ ------------------------------------------------------------------------------------------------
<S> <C>
10.1 Charter Agreement dated March 1, 1999 between Crown Dynasty Inc. and Crown Cruises Limited*
10.2 Form of Stock Purchase Agreement
10.3 Loan Agreement dated February 12, 1999 between the Company and NationsBank, N.A.
10.4 Promissory Note dated February 12, 1999 in the principal amount of $2,100,000 executed by the
Company in favor of NationsBank, N.A.
10.5 International Swap Dealers Association, Inc. Master Agreement dated February 12, 1999 between
the Company and NationsBank, N.A., Schedule to Master Agreement and Confirmation thereto
27 Financial Data Schedule.
</TABLE>
* Portions of this document omitted pursuant to an application for an order for
confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act
of 1934, as amended.
B. Reports on Form 8-K
During the quarter ended March 31, 1999, the Company filed a
Current Report on Form 8-K dated February 19, 1999. In Item 5 of such report,
the Company reported the sale of 400,000 shares of the Company's Series B
Convertible Preferred Stock in a private offering.
Page 12
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
COMMODORE HOLDINGS LIMITED
(Registrant)
/s/ ALAN PRITZKER
---------------------------
Alan Pritzker
Vice President, Finance and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
May 14, 1999
Page 13
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------------------ ------------------------------------------------------------------------------------------------
<S> <C>
10.1 Charter Agreement dated March 1, 1999 between Crown Dynasty Inc. and Crown Cruises Limited*
10.2 Form of Stock Purchase Agreement
10.3 Loan Agreement dated February 12, 1999 between the Company and NationsBank, N.A.
10.4 Promissory Note dated February 12, 1999 in the principal amount of $2,100,000 executed by the
Company in favor of NationsBank, N.A.
10.5 International Swap Dealers Association, Inc. Master Agreement dated February 12, 1999 between
the Company and NationsBank, N.A., Schedule to Master Agreement and Confirmation thereto
27 Financial Data Schedule.
</TABLE>
EXHIBIT 10.1
THE BALTIC AND INTERNATIONAL MARITIME COUNCIL
(BIMCO)
STANDARD BAREBOAT CHARTER
CODE NAME: "BARECON 89"
PART I
- --------------------------------------------------------------------------------
1. Shipbroker
None
- --------------------------------------------------------------------------------
2. Place and date
March 1, 1999 Hollywood Florida
- --------------------------------------------------------------------------------
3. Owner/Place of business
Crown Dynasty Inc.
Panama
- --------------------------------------------------------------------------------
4. Bareboat charterers (Charterers) Place of business
Crown Cruises Ltd.
Bermuda
- --------------------------------------------------------------------------------
5. Vessel's name, Call Sign and Flag (CL 0(o))
NORWEGIAN DYNASTY, 3FJX3, Panama
(The name of the Vessel shall be changed to "Crown Dynasty")
- --------------------------------------------------------------------------------
6. Type of Vessel
Motor Passenger / Cruise Vessel
- --------------------------------------------------------------------------------
7. GRT/NRT
10,080 / 8,103
- --------------------------------------------------------------------------------
8. When/Where built
1992 by Union Navel de Levante S.A., Valencia, Spain
- --------------------------------------------------------------------------------
9. Total DWT (abt.) in metric tone on summer/freeboard
- -
- --------------------------------------------------------------------------------
10. Class (CL 9)
DNV 1A1 Passenger Ship NAUT-8 EO
- --------------------------------------------------------------------------------
11. Date of last special survey by the Vessel's classification society
- -
- --------------------------------------------------------------------------------
12. Further particulars of Vessel (also indicate minimum number of months'
validity of class certificates agreed acc. to CL 14)
See clause 27.
- --------------------------------------------------------------------------------
13. Port or Place of delivery (CL 2)
West Coast, USA in Owners' option
- --------------------------------------------------------------------------------
14. Time for delivery (CL 3)
1.10.1999
- --------------------------------------------------------------------------------
15. Cancelling date (CL 4)
30.10.1999
- --------------------------------------------------------------------------------
16. Port or Place of redelivery (CL 14)
US port to be declared by the Charterers a minimum of 12 months prior to the
expiration of the Charter.
- --------------------------------------------------------------------------------
17. Running days' notice if other than stated in CL 3
- --------------------------------------------------------------------------------
18. Frequency of dry-docking if other than stated in CL 9(f)
As required by Classification Society or by any relevant or authorized
regulating body.
- --------------------------------------------------------------------------------
19. Trading limits (CL 5)
The Charterers' intended trade is,
Always afloat. Worldwide trading within IWL but always within the Vessel's
operational capacity. Cuba, Iraq, Iran, North Korea, Cambodia, Yemen, countries
of former Yugoslavia and countries under UN embargo or trade restrictions always
excluded.
The itinerary and employment of the Vessel is subject to the Owner's approval,
which shall not be unreasonably withheld.
- --------------------------------------------------------------------------------
20. Charter period
four (4) years +/- 7 days. See clause 39.
- --------------------------------------------------------------------------------
21. Charter hire (CL 10)
Annual base charter hire [*].
See clause 40.
- --------------------------------------------------------------------------------
22. Rate of interest payable acc. to CL 10(f) and, if applicable, acc. to
PART IV
10% per annum.
- --------------------------------------------------------------------------------
23. Currency and method of payment (CL 10)
USO, by bank transfer to Owners' account.
- --------------------------------------------------------------------------------
(CONTINUED)
*MARKED TEXT OMITTED PURSUANT TO AN APPLICATION FOR AN ORDER FOR CONFIDENTIAL
TREATMENT BY COMMODORE HOLDINGS LIMITED.
Printed by The BIMCO Charter Party Editor
<PAGE>
(CONTINUED) "BARECON 89" Standard Bareboat Charter PART I
- --------------------------------------------------------------------------------
24. Place of payment; also state beneficiary and bank account (CL 10)
Owners bank account:
Nordbanken, Stockholm
39687737220
Crown Dynasty Inc. UNL 198
- --------------------------------------------------------------------------------
25. Bank guarantee/bond (sum and place) (CL 22) (optional)
See clause 47.
- --------------------------------------------------------------------------------
26. Mortgage(s), if any, (state whether CL 11(a) or (b) applies; if 11(b)
applies state date of Deed(s) of Covenant and name of Mortgagee(s)/Place of
business) (CL 11)
See clause 38.
- --------------------------------------------------------------------------------
27. Insurance (marine and war risks) (state value acc. to CL 12(f) or, if
applicable, acc. to CL 13(k)) (also state if CL 13 applies)
USD 120,000,000.00
Clause 12 applies.
See clause 37.
- --------------------------------------------------------------------------------
28. Additional insurance cover, if any, for Owners' account limited to
(CL 12(b)) or, if applicabale, (CL 13(g))
Mortgagees' interest insurance. See clause 37.
- --------------------------------------------------------------------------------
29. Additional insurance cover, if any, for Charterers' account limited to
(CL 12(b)) or, if applicable, (CL 13(g))
- --------------------------------------------------------------------------------
30. Latent defects (only to be filled in if period other than stated in CL 2)
See cl. 30.
- --------------------------------------------------------------------------------
31. War cancellation (indicate countries agreed) (CL 24)
Finland, Sweden, Russia, USA, China, Norway, Germany, France.
- --------------------------------------------------------------------------------
32. Brokerage commission and to whom payable (CL 25)
- --------------------------------------------------------------------------------
33. Law and arbitration (state 26.f., 26.2, or 26.3. of CL 26 as agreed; if
26.3. agreed, also state place of arbitration) (CL 26)
See clause 65.
- --------------------------------------------------------------------------------
34. Number of additional clauses covering special provisions, if agreed
27-67.
- --------------------------------------------------------------------------------
35. Newbuilding Vessel (indicate with "yes" or "no" whether Part III applies)
(optional)
- --------------------------------------------------------------------------------
36. Name of place of Builders (only to be filled in if Part III applies)
- --------------------------------------------------------------------------------
37. Vessel's Yard Building No. (only to be filled in if Part III applies)
- --------------------------------------------------------------------------------
38. Date of Building Contract (only to be filled in if Part III applies)
- --------------------------------------------------------------------------------
39. Hire/Purchase agreement (indicate with "yes" or "no" whether Part IV
applies) (optional)
No.
- --------------------------------------------------------------------------------
40. Bareboat Charter Registry (indicate with "yes" or "no" whether Part V
applies) (optional)
- --------------------------------------------------------------------------------
41. Flag and Country of the Bareboat Charter Registry (only to be filled in if
Part V applies)
- --------------------------------------------------------------------------------
42. Country of the Underlying Registry (only to be filled in if Part V applies)
- --------------------------------------------------------------------------------
PREAMBLE - It is mutually agreed that this Contract shall be performed subject
to the conditions contained in this Charter which shall include PART I and PART
II. In the event of a conflict of conditions, the provisions of PART I shall
prevail over those of PART II to the extent of such conflict but no further. It
is further mutually agreed that PART III and/or PART IV and/or PART V shall only
apply and shall only form part of this Charter if expressly agreed and stated in
Boxes 35, 39 and 40. If PART III and/or PART IV and/or PART V apply, it is
further mutually agreed that in the event of a conflict of conditions, the
provisions of PART I and PART II shall prevail over those of PART III and/or
PART IV and/or PART V to the extent of such conflict but no further.
- --------------------------------------------------------------------------------
Signature (Owners)
CROWN DYNASTY INC.
/s/ PATRICK DOYLE
Patrick Doyle
- --------------------------------------------------------------------------------
Signature (Charterers)
CROWN CRUISES LTD.
/s/ FREDERICK A. MAYER
FREDERICK A. MAYER
- --------------------------------------------------------------------------------
Printed by The BIMCO Charter Party Editor
<PAGE>
PART II
"BARECON 89" Standard Bareboat Charter
1. Definitions
In this Charter, the following terms shall have the meanings hereby assigned
to them:
"THE OWNERS" shall mean the person or company registered as Owners of the
Vessel.
"THE CHARTERERS" shall mean the Bareboat charterers and shall not be
construed to mean a time charterer or a voyage charterer.
2. Delivery (NOT APPLICABLE TO NEWBUILDING VESSELS)
The Vessel shall be delivered and taken over by the Charterers at the port
or place indicated in Box 13, in such ready AND SAFE berth as the
Charterers may direct.
SEE CLAUSE 30.
3. Time for Delivery (NOT APPLICABLE TO NEWBUILDING VESSELS)
The Vessel to be delivered not before the date indicated in Box 14 unless
with the Charterers' consent.
Unless otherwise agreed in Box 17, the Owners to give the Charterers not
less than 30 running days' preliminary and not less than 14 days' definite
notice of the date on which the Vessel is expected to be ready for delivery.
The Owners to keep the Charterers closely advised of possible changes in the
Vessel's position.
4. Cancelling (NOT APPLICABLE TO NEWBUILDING VESSELS)
Should the Vessel not be delivered latest by the cancelling date indicated
in Box 15, the Charterers to have the option of cancelling this Charter
without prejudice to any claim the Charterers may otherwise have on the
Owners under the Charter.
If it appears that the Vessel will be delayed beyond the cancelling date,
the Owners shall, as soon as they are in a position to state with reasonable
certainty the day on which the Vessel should be ready, give notice thereof
to the Charterers asking whether they will exercise their option of
cancelling, and the option must then be declared within one hundred and
sixty-eight (168) hours of the receipt by the Charterers of such notice. If
the Charterers do not then exercise their option of cancelling, the seventh
day after the readiness date stated in the Owners' notice shall be regarded
as a new cancelling date for the purpose of this Clause.
5. Trading Limits
The Vessel shall be employed in lawful trades for the carriage of suitable
lawful merchandise AND PASSENGERS AND THEIR LUGGAGE within the trading
limits indicated in Box 19.
The Charterers undertake not to employ the Vessel or suffer the Vessel to be
employed otherwise than in conformity with the terms of the instruments of
insurance (including any warranties expressed or implied therein) without
first obtaining the consent to such employment of the Insurers and complying
with such requirements as to extra premium or otherwise as the Insurers may
prescribe. If required, the Charterers shall keep the Owners and the
Mortgagees advised of the intended employment of the Vessel.
The Charterers also undertake not to employ the Vessel or suffer her
employment in any trade or business which is forbidden by the law of any
country to which the Vessel may sail or is otherwise illicit or in carrying
illicit or prohibited goods or in any manner whatsoever which may render her
liable to condemnation, destruction, seizure or confiscation.
Notwithstanding any other provisions contained in this Charter it is agreed
that nuclear fuels or radioactive products or waste are specifically
excluded from the cargo permitted to be loaded or carried under this
Charter. This exclusion does not apply to radio-isotopes used or intended to
be used for any industrial, commercial, agricultural, medical or scientific
purposes provided the Owners' prior approval has been obtained to loading
thereof.
6. Surveys (NOT APPLICABLE TO NEWBUILDING VESSELS) (SEE CL. 29)
SURVEY ON DELIVERY AND REDELIVERY. - The Owners and Charterers shall each
appoint surveyors for the purpose of determining and agreeing in writing the
condition of the Vessel at the time of delivery and redelivery hereunder.
The Owners shall bear all expenses of the On-Survey including loss of time,
if any, and the Charterers shall bear all expenses of the Off-Survey
including loss of time, If any, at the rate of hire per day or pro rata,
also including in each case the cost of any docking and undocking, if
required, in connection herewith.
7. Inspection
INSPECTION - The Owners shall have the right at any time to inspect or
survey the Vessel or instruct a duly authorised surveyor to carry out such
survey on their behalf to ascertain the condition of the Vessel and satisfy
themselves that the Vessel is being properly repaired and maintained.
Inspection or survey in dry-dock shall be made only when the Vessel shall be
in dry-dock for the Charterers' purpose. However, the Owners shall have the
right to require the Vessel to be dry-docked for inspection if the
Charterers are not docking her at normal classification intervals. The fees
for such inspection or survey shall in the event of the Vessel being found
to be in the condition provided in Clause 9 of this Charter be payable by
the Owners and shall be paid by the Charterers only in the event of the
Vessel being found to require repairs or maintenance in order to achieve the
condition so provided. All time taken in respect of inspection, survey or
repairs shall count as time on hire and shall form part of the Charter
period.
The Charterers shall also permit the Owners to inspect the Vessel's log
books whenever requested and shall whenever required by the Owners AND/OR
MORTGAGEES furnish them with full information regarding any casualties or
other accidents or damage to the Vessel. For the purpose of this Clause, the
Charterers shall keep the Owners advised of the intended employment of the
Vessel.
8. Inventories and Consumable Oil and Stores
A complete inventory of the Vessel's entire equipment, outfit, appliances
and of all consumable stores on board the Vessel shall be made by the
Charterers in conjunction with the Owners on delivery and again on
redelivery of the Vessel. SEE CLAUSES 31-33.
9. Maintenance and Operation
(a) The Vessel shall during the Charter period be AT THE FULL RISK AND in
the full possession and at the absolute disposal for all purposes of the
Charterers and under their complete control in every respect. The Charterers
shall maintain the Vessel, her machinery, boilers, HOTEL AND CATERING AND
CASINO EQUIPMENT, appurtenances and spare parts in a good state of repair,
in efficient operating condition and in accordance with good commercial
maintenance practice FOR FIRST CLASS CRUISE VESSELS and, they shall keep
the Vessel with unexpired classification of the class indicated in Box 10
and with other required certificates in force at all times. SEE CLAUSE 35.
The Charterers to take immediate steps to have the necessary repairs done
within a reasonable time failing which the Owners shall have the right of
withdrawing the Vessel from the service of the Charterers without noting
any protest and without prejudice to any claim the Owners may otherwise
have against the Charterers under the Charter. SEE CLAUSE 36.
The Charterers are required to establish and maintain financial security or
responsibility in respect of oil or other pollution damage as required by
any government, including Federal, state or municipal or other division of
authority thereof, to enable the Vessel, without penalty or charge, lawfully
to enter, remain at, or leave any port, place, territorial or contiguous
waters of any country, state or municipality in performance of this Charter
without any delay. This obligation shall apply whether or not such
requirements have been lawfully imposed by such government or division or
authority thereof. The Charterers shall make and maintain all arrangements
by bond or otherwise as may be necessary to satisfy such requirements at the
Charterers' sole expense and the Charterers shall indemnify the Owner
against all consequences whatsoever (including loss of time) for any failure
or inability to do so.
This computer generated form is printed by authority of BIMCO. Any insertion or
deletion to the form must be clearly visible. In event of any modification being
made to the preprinted text of this document, which is not clearly visible, the
original BIMCO approved document shall apply. BIMCO assume no responsibility
for any loss or damage caused as a result of discrepancies between the original
BIMCO document and this document.
<PAGE>
PART II
"BARECON 89" Standard Bareboat Charter
(b) The Charterers shall at their own expense and by their own procurement
man, victual, navigate, operate, supply, fuel and repair the Vessel
whenever required during the Charter period and they shall pay all charges
and expenses of every kind and nature whatsoever incidental to their use and
operation of the Vessel under this Charter, including any foreign general
municipality and/or state taxes. The Master, officers and crew of the Vessel
shall be the servants of the Charterers for all purposes whatsoever, even if
for any reason appointed by the Owners.
Charterers shall comply with the regulations regarding officers and crew in
force in the country of the Vessel's flag or any other applicable law.
(c) During the currency of this Charter, the Vessel shall retain THE NEW
name as indicated in Box 5 and shall remain under and fly the flag as
indicated in Box 5. Provided, however, that the Charterers shall have the
liberty to paint the Vessel in their own colours, install and display their
funnel insignia and fly their own house flag. Painting and re-painting,
instalment and re-instalment to be for the Charterers' account and time used
thereby to count as time on hire.
(d) The Charterers shall make no structural changes in the Vessel or changes
in the machinery, boilers, appurtenances or spare parts thereof without in
each instance first securing the Owners' approval thereof. If the Owners
AND MORTGAGEES so agree, the Charterers shall, if the Owners so require,
restore the Vessel to its former condition before the termination of the
Charter.
(e) The Charterers shall have the use of all outfit, equipment, and
appliances on board the Vessel at the time of delivery, provided the same or
their substantial equivalent shall be returned to the Owners on redelivery
in the same good order and condition as when received, ordinary wear and
tear excepted. The Charterers shall from time to time during the Charter
period replace such items of equipment as shall be so damaged or worn as to
be unfit for use. The Charterers are to procure that all repairs to or
replacement of any damaged, worn or lost parts or equipment be effected in
such manner (both as regards workmanship and quality of materials) as not to
diminish the value of the Vessel. The Charterers have the right to fit
additional equipment at their expense and risk but the Charterers shall
remove such equipment at the end of the period if requested by the Owners.
Any equipment including radio equipment on hire on the Vessel at time of
delivery shall be kept and maintained by the Charterers and the Charterers
shall assume the obligations and liabilities of the Owners under any lease
contracts in connection therewith and shall reimburse the Owners for all
expenses incurred in connection therewith, also for any new equipment
required in order to comply with radio regulations.
(f) The Charterers shall dry-dock the Vessel and clean and paint her
underwater parts whenever the same may be necessary, but not less than once
in every eighteen calendar months after delivery unless otherwise agreed in
Box 18.
10. Hire SEE CLAUSES 40 AND 41
(a) The Charterers shall pay to the Owners of the BASE CHARTER hire of the
Vessel at the lump sum OF [*] per calendar month commencing on and
from the date and hour of her delivery to the Charterers and at and after
the agreed lump sum for any part of a month. Hire to continue until the date
and hour when the Vessel is redelivered by the Charterers to her Owners.
(b) Payment of BASE CHARTER Hire, except for the first and last month's
Hire, if sub-clause (c) of this Clause is applicable, shall be made in cash
without discount every month in advance on the first day of each month in
the currency and in the manner indicated in Box 23 and at the place
mentioned in Box 24.
(c) Payment of BASE CHARTER Hire for the first and last month's Hire if less
than a full month shall be calculated proportionally according to the number
of days in the particular calendar month and advance payment to be effected
accordingly.
(d) Should the Vessel be lost or missing. BASE CHARTER Hire to cease from
the date and time when she was lost or last heard of. Any BASE CHARTER Hire
paid in advance to be adjusted accordingly. SEE CLAUSE 48.
(f) Any delay in payment of Hire shall entitle the Owners to an interest at
the rate per annum as agreed in Box 22. If Box 22 has not been filed in the
current market rate in the country where the Owners have their Principal
Place of Business shall apply.
11. Mortgage
SEE CLAUSE 38.
12. Insurance and Repairs SEE CLAUSE 37.
(a) During the Charter period the Vessel shall be kept insured by the
Charterers at their expense against marine, war and Protection and indemnity
risks in such form AND TERMS AND BY SUCH INSURERS as the Owners AND
MORTGAGEES shall in writing approve, which approval shall not be
unreasonably withheld. Such marine war and P. and I. insurances shall be
arranged by the Charterers to protect the interests of both the Owners and
the Charterers and mortgagees (if any), and the Charterers shall be at
liberty to protect under such insurance, the interests of any managers they
may appoint. All insurance policies shall be in the joint names of the
Owners and the Charterers as their interests may appear.
If the Charterers fail to arrange and keep any of the insurances provided
for under the provisions of sub-clause (a) above in the manner described
therein, the Owners shall notify the Charterers whereupon the Charterers
shall rectify the position within seven running days, failing which Owners
shall have the right to withdraw the Vessel from the service of the
Charterers without prejudice to any claim the Owners may otherwise have
against the Charterers.
The Charterers shall, subject to the approval of the Owners AND THE
MORTGAGEES and the Underwriters, effect all insured repairs and shall
undertake settlement of all costs in connection with such repairs as well as
insured charges, expenses and liabilities (reimbursement to be secured by
the Charterers from the Underwriters) to the extent of coverage under the
insurances herein provided for.
The Charterers also to remain responsible for and to effect repairs and
settlement of costs and expenses incurred thereby in respect of all other
repairs not covered by the insurances and/or not exceeding any possible
franchise(s) or deductibles provided for in the insurances.
All time used for repairs under the provisions of sub-clause (a) of this
Clause and for repairs of latent defects according to Clause 2 above
including any deviation shall count as time on hire and shall form part of
the Charter period.
(b) If the conditions of the above insurances permit additional insurance to
be placed by the parties, such cover shall be limited to the amount for each
party set out in Box 28 and Box 29, respectively. The Owners or the
Charterers as the case may be shall immediately furnish the other party with
particulars of any additional insurance effected, including copies of any
cover notes or policies and the written consent of the insurers of any such
required insurance in any case where the consent of such insurers is
necessary.
(c) Should the Vessel become an actual, constructive, compromised or agreed
total loss under the insurances required under sub-clause (a) of Clause 12,
all insurance payments for such loss shall be paid to the Mortgagee, in the
manner described in the Deed(s) of Covenant, who shall distribute the moneys
between themselves, the Owners and the Charterers according to their
respective interests. The Charterers undertake to notify the Owners and the
Mortgagee, of any occurrences in consequence of which the Vessel is likely
to become a Total Loss as defined in the Clause.
(d) If the Vessel becomes an actual, constructive, compromised or agreed
total loss under the insurances arranged by the Charterers in accordance
with sub-clause (a) of this Clause, this Charter shall terminate as of the
date of such loss.
(e) The Owners shall upon the request of the Charterers, promptly execute
such documents as may be required to enable the Charterers to abandon the
Vessel to insurers and claim a constructive total loss.
This computer generated form is printed by authority of BIMCO. Any insertion or
deletion to the form must be clearly visible. In event of any modification being
made to the preprinted text of this document, which is not clearly visible, the
original BIMCO approved document shall apply. BIMCO assume no responsibility
for any loss or damage caused as a result of discrepancies between the original
BIMCO document and this document.
*MARKED TEXT OMITTED PURSUANT TO AN APPLICATION FOR AN ORDER FOR CONFIDENTIAL
TREATMENT BY COMMODORE HOLDINGS LIMITED.
<PAGE>
PART II
"BARECON 89" Standard Bareboat Charter
(f) For the purpose of insurance coverage against marine and war risks under
the provisions of sub-clause (a) of this Clause, the value of the Vessel is
the sum indicated in Box 27.
13. DELETED.
14. Redelivery
The Charterers shall at the expiration of the Charter period redeliver the
Vessel at a safe and ice-free port or place as indicated in Box 16. The
Charterers shall give the Owners not less than 30 running days' preliminary
and not less than 14 days' definite notice of expected date, range of ports
of redelivery or port or place of redelivery. Any changes thereafter in
Vessel's position shall be notified immediately to the Owners.
Should the Vessel be ordered on a voyage by which the Charter period may be
exceeded the Charterers to have the use of the Vessel to enable them to
complete the voyage, provided it could be reasonably calculated that the
voyage would allow redelivery about the time fixed for the termination of
the Charter.
The Vessel shall be redelivered to the Owners in the same or as good
structure, state, condition and class as that in which she was delivered,
fair wear and tear not affecting class excepted.
The Vessel upon redelivery shall have her survey cycles up to date and class
certificates valid for at least the number of months agreed in CLAUSES 30
AND 43. SEE CLAUSES 42-44.
15. Non-Lien and Indemnity
The Charters will not suffer, nor permit to be continued, any lien or
encumbrance incurred by them or their agents, which might have priority over
the title and interest of the Owners in the Vessel.
The Charterers further agree to fasten to the Vessel in a conspicuous place
and to keep so fastened during the Charter period a notice reading as
follows:-
"This Vessel is the property of (name of Owners). It is under charter to
(name of Charterers) and by the terms of the Charter Party neither the
Charterers nor the Master have any right, power or authority to create,
incur or permit to be imposed on the Vessel any lien whatsoever."
The Charterers shall indemnify and hold the Owners harmless against any
lien of whatsoever nature arising upon the Vessel during the Charter period
while she is under the control of the Charterers, and against any claims
against the Owners arising out of or in relation to the operation of the
Vessel by the Charterers. Should the Vessel be arrested by reason of claims
or liens arising out of her operation hereunder by the Charterers, the
Charterers shall at their own expense take all reasonable steps to secure
that within a reasonable time the Vessel is released and at their own
expense put up bail to secure release of the Vessel.
16. Lien
The Owners to have a lien upon all cargoes and sub-freights AND EARNINGS
belonging to the
Charterers and any VOYAGE/CRUISE freight for all claims under this Charter,
and
the Charterers to have a lien on the Vessel for all moneys paid in advance
and not earned.
17. Salvage
All salvage and towage performed by the Vessel shall be for the Charterers'
benefit and the cost of repairing damage occasioned thereby shall be borne
by the Charterers.
18. Wreck Removal
In the event of the Vessel becoming a wreck or obstruction to navigation the
Charterers shall indemnify the Owners against any sums whatsoever which the
Owners shall become liable to pay and shall pay in consequence of the Vessel
becoming a wreck or obstruction in navigation.
19. General Average
General Average, if any, shall be adjusted according to the York-Antwerp
Rules 1974 or any subsequent modification thereof current at the time of the
casualty.
The Charter Hire not to contribute to General Average.
20. Assignment and Sub-Demise
The Charterers shall not assign this Charter nor sub-demise the Vessel
except with the prior consent in writing of the Owners AND THE MORTGAGEES
which shall not be unreasonably withheld and subject to such terms and
conditions as the Owners AND THE MORTGAGEES shall approve.
21. SEE CLAUSE 48.
22. SEE CLAUSE 47.
<PAGE>
PART II
"BARECON 89" Standard Bareboat Charter
23. Requisition/Acquisition
(a) In the event of this Requisition for Hire of the Vessel by any
governmental or other competent authority (hereinafter referred to as
"Requisition for Hire") irrespective of the date during the Charter period
when "Requisition for Hire" may occur and irrespective of the length thereof
and whether or not it be for an indefinite or a limited period of time, and
irrespective of whether it may or will remain in force for the remainder of
the Charter period, this Charter shall not be deemed thereby or thereupon to
be frustrated or otherwise terminated and the Charterers shall continue to
pay the stipulated hire in the manner provided by this Charter until the
time when the Charter would have terminated pursuant to any of the
provisions hereof always provided however that in the event of "Requisition
for Hire" any Requisition Hire or compensation received or receivable by the
Owners shall be payable to the Charterers during the remainder of the
Charter period or the period of the "Requisition for Hire" whichever be the
shorter.
The Hire under this Charter shall be payable to the Owners from the same
time as the Requisition Hire is payable to the Charterers.
(b) In the event of the Owners being deprived of their ownership in the
Vessel by the Compulsory Acquisition of the Vessel or requisition for title
by any governmental or other competent authority (hereinafter referred to as
"Compulsory Acquisition"), then, irrespective of the date during the Charter
period when "Compulsory Acquisition" may occur, this Charter shall be deemed
terminated as of the date of such "Compulsory Acquisition". In such event
Charter Hire to be considered as earned and to be paid up to the date and
time of such "Compulsory Acquisition".
24. SEE CLAUSE 51.
25. DELETED.
26. Law and Arbitration
SEE CLAUSE 65.
This computer generated form is printed by authority of BIMCO. Any insertion or
deletion to the form must be clearly visible. In event of any modification being
made to the preprinted text of this document, which is not clearly visible, the
original BIMCO approved document shall apply. BIMCO assume no responsibility
for any loss or damage caused as a result of discrepancies between the original
BIMCO document and this document.
<PAGE>
RIDER TO BAREBOAT CHARTERPARTY
CONCERNING NORWEGIAN DYNASTY
27. DESCRIPTION OF THE VESSEL
The description of the Vessel is:
<TABLE>
<S> <C>
Call sign : 3FJX3
Class : DNV +1A1, passenger ship NAUT-B EO
Register Number : Panama 22465 - PEXT
Passenger capacity : 916 passengers (according to Passenger Ship
Safety Certificate
Passenger cabins and berths : As per Annex
Total capacity: : l,200 persons (passengers and crew members)
Built by : Union Naval de Levante S.A. 1993
Length : 163,81 m
Breadth : 22,50 m
Height : 43,20 m
Main Engine Power : 3279 kw* 4 = 13210 kw
</TABLE>
28. PRESENT CHARTER
The Parties acknowledge that the Vessel is presently chartered by
Trafalgar House Lines Limited (ex. Cunard Line Limited) under a
bareboat charter agreement (the "Present Charter"). Trafalgar House
Lines Limited has further entered into a management agreement with
Norwegian Cruise Line Limited (both jointly and separately referred to
as "the Present Charterers"), who under that agreement are employing
the vessel in their trade, and that the Owners have not themselves
managed the Vessel during the Present Charter. The Parties further
acknowledge that the Vessel cannot be delivered to the Charterers
before the Present Charterers have redelivered the Vessel to the Owners
and that the Owners shall have no liability for any delay or breach in
the redelivery on the Present Charterers' part.
29. INSPECTION
The Charterers accept that due to the Present Charter of the Vessel the
Owners are only allowed to arrange inspection of the Vessel as
stipulated in a standard Barecon 89 clause 7. Therefore the inspection
shall be carried out fully observing and limited to what is allowed by
the provisions of such Barecon clause. If a drydocking is arranged
under the Present Charter, then the Charterers have a right to attend
subject to the said standard Barecon clause 7.
The Charterers shall have the right to at their expense to arrange for
an underwater inspection by a diver approved by the Classification
Society at the time of the delivery. A video film of the
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inspection shall be made. The extent of the inspection and the
conditions under which it is performed shall be to the satisfaction of
the Classification Society, who shall participate in the inspection.
Such inspection shall be performed only to record the delivery
condition of the Vessel. The delivery of the Vessel to the Charterers
is not subject to such inspection.
If damages to the underwater parts are found to have taken place before
the delivery of the Vessel then the Parties obligation concerning them
shall be determined in accordance with clause 30 of this charter.
30. Condition of the vessel at delivery
The Vessel is chartered with simultaneous delivery to the Charterers
upon redelivery from the Present Charter to the Owners in the condition
and equipped as she is at the time of such redelivery. According to
the Present Charter the following clauses determine such condition:
- Standard Barecon 89 clause 14.
- "THE CLASS CERTIFICATES SHALL BE FREE OF RECOMMENDATIONS AND
THOSE FOR HULL SHALL BE VALID FOR AT LEAST 12 MONTHS, BUT THE
PARTIES SHALL DO THEIR BEST TO PROLONG THE VALIDITY FOR
MAXIMUM 24 MONTHS AT THE TIME OF DELIVERY AND REDELIVERY
RESPECTIVELY. AT DELIVERY AND REDELIVERY THE MACHINERY CYCLES
SHALL BE UP TO DATE WITH NO ITEMS FALLING DUE FOR ATTENTION
FOR THREE MONTHS THEREAFTER."
- "EQUIPMENT
THE VESSEL WILL BE DELIVERED WITH DECK, ENGINE, HOTEL AND
CATERING AREAS EQUIPPED AS THEY PRESENTLY ARE INCLUDING CASINO
AND COMPUTER EQUIPMENT AND SOFTWARE. THE OWNERS SHALL PROVIDE
THE CHARTERERS WITH A FULL INVENTORY LIST ON ANY HOTEL AND
CATERING EQUIPMENT/ITEMS ONBOARD AT THE TIME OF DELIVERY. SUCH
LIST SHALL BE CHECKED AND SIGNED BY BOTH PARTIES. THE
CHARTERERS SHALL BE ENTITLED TO USE ALL SUCH EQUIPMENT AND
ITEMS. THE CHARTERERS SHALL HAVE THE RIGHT TO SELECT AND/OR
REJECT ANY AND ALL EXISTING CONCESSION CONTRACTS OR EQUIPMENT
LEASE AGREEMENTS. THIS REVIEW WILL BE COMPLETED BEFORE
SIGNING. THE CHARTERERS SHALL REDELIVER THE VESSEL EQUIPPED
WITH CORRESPONDING AMOUNT OF EQUIPMENT OF EQUAL QUALITY,
ORDINARY WEAR AND TEAR EXCEPTED.
THE CHARTERERS ARE ENTITLED TO PUT ONBOARD FOR THEIR ACCOUNT
AND AT THEIR EXPENSE ANY CASH REGISTER OR COMPUTER SYSTEMS,
ENTERTAINMENT OR ANY OTHER EQUIPMENT FOR THE ENTERTAINMENT OF
THE PASSENGERS. THE CHARTERERS SHALL TAKE ALL SUCH EQUIPMENT
ASHORE AT THE TIME OF REDELIVERY.
THE CHARTERERS SHALL AT THEIR OWN EXPENSE FROM TIME TO TIME
DURING THE CHARTER PERIOD PROMPTLY REPLACE, RENEW OR OBTAIN
SUBSTITUTIONS FOR SUCH ITEMS AND EQUIPMENT AS SHALL BE SO
DAMAGED OR WORN AS TO BE UNFIT FOR USE, PROVIDED ALWAYS THAT
IN ANY SUCH CASE TITLE TO ANY PART REPLACED, RENEWED OR
SUBSTITUTED SHALL REMAIN WITH THE OWNERS UNTIL THE PART WHICH
REPLACED IT OR THE NEW OR SUBSTITUTED PART BECOMES THE
PROPERTY OF THE OWNERS OR
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<PAGE>
IS REPLACED, RENEWED OR SUBSTITUTED BY PART WHICH THEREUPON
BECOME THE PROPERTY OF THE OWNERS AND THE CHARTERERS AGREE
THAT IF ANY REPLACEMENT, RENEWED OR SUBSTITUTED PART IS NOT
THE PROPERTY OF THE OWNERS, THEY WILL AS SOON AS PRACTICABLE
REPLACE THE SAME WITH A PART WHICH THEREUPON BECOMES THE
PROPERTY OF THE OWNERS."
- "GOODS FOR SALE
THE VESSEL SHALL BE FULLY STOCKED FOR NORMAL CRUISING. THE
CHARTERERS SHALL RECEIVE ALL ON BOARD STOCKS WHETHER OPENED OR
UNOPENED AT THE COMMENCEMENT OF THE CHARTER FREE OF CHARGE.
THE CHARTERERS SHALL PROVIDE THE SAME STOCK LEVELS AT THE
CONCLUSION OF THE CHARTER.
AT THE COMMENCEMENT OF THE CHARTER PERIOD THE CHARTERERS SHALL
BE RESPONSIBLE TO PAY FOR ONLY THE FOLLOWING ITEMS ON BOARD
THE VESSEL:
1. FOOD
2. ALCOHOLIC BEVERAGES AND SOFTDRINKS
3. ON BOARD CASH
4. ON BOARD FUEL AT THE LOCAL SPOT PRICE.
THE OWNERS SHALL BE RESPONSIBLE TO PAY FOR THE LIKE ITEMS AT
THE CONCLUSION OF THIS CHARTER."
- "BUNKERS
THE VESSEL TO BE DELIVERED WITH MINIMUM BUNKERS AND TO BE
REDELIVERED WITH APPROXIMATELY THE SAME QUANTITY, WHICH SHALL
IN ANY CASE BE SUFFICIENT TO REACH THE NEAREST BUNKERING PORT.
THE CHARTERERS SHALL TAKE OVER AND AND PAY AT DELIVERY AND THE
OWNERS AT REDELIVERY BUNKERS AND LUBOILS ONBOARD AS PER LOCAL
MARKET PRICE AT THE PORT OF DELIVERY AND REDELIVERY,
RESPECTIVELY".
The delivery of the Vessel under this Charter shall take place as
agreed in this clause whether or not the Vessel fully complies with the
agreed redelivery condition under the Present Charter. The Owners shall
do their utmost to obtain redelivery/delivery in the condition agreed
in the Present Charter. If in the reasonable opinion of the Charterers
there are defects in the Vessel's actual delivery condition as compared
to her agreed redelivery/delivery condition, then the Charterers shall
at the time of delivery provide a detailed list of reservations to the
Owners, who shall hold the Present Charterers responsible for such
defects. Such defects shall be repaired by the Charterers at their
time and expense after delivery. The Owners shall assign all their
rights towards the Present Charterers under the Present Charter to the
Charterers. The Owners shall furthermore in every way, including
claiming in their own name on behalf of the Charterers, assist the
Charterers in obtaining compensation for their expenses and damages
caused by such defects.
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<PAGE>
31. EQUIPMENT
The Vessel will be delivered with deck, engine, hotel and catering
areas equipped in accordance with the Equipment clause in the Present
Charter as described in clause 30 above. The parties shall jointly
check that the equipment listed in the inventory list is in good
working condition onboard and sign the inventory list at the time of
delivery with any remarks as necessary. The Charterers shall be
entitled to use all such equipment and items. The Charterers shall
redeliver the Vessel equipped with corresponding amount of equipment of
equal quality.
The Charterers are entitled to put onboard for their account and at
their expense any cash register or computer systems, entertainment or
any other equipment for the entertainment of the passengers. The
Charterers shall take all such equipment ashore at the time of
redelivery, if requested by the Owners.
The Charterers shall at their own expense from time to time during the
charter period promptly replace, renew or obtain substitutions for such
items and equipment as shall be so damaged or worn as to be unfit for
use, provided always that in any such case title to any part replaced,
renewed or substituted shall remain with the Owners until the part
which replaced it or the new or substituted part becomes the property
of the Owners or is replaced, renewed or substituted by part which
thereupon become the property of the Owners. The Charterers agree that
if any replacement, renewed or substituted part is not the property of
the Owners, they will as soon as practicable replace the same.
32. GOODS FOR SALE
Bonded stores, taxfree goods or other goods for sale to the passengers
shall be onboard on delivery in accordance with the corresponding
clause in the Present Charter as described above in clause 30.
33. BUNKERS AND LUBOILS
The Vessel shall delivered with minimum bunkers luboils and redelivered
with approximately the same quantity, which shall in any case be
sufficient to reach the nearest bunkering port. The Charterers shall
take over and pay for bunkers and luboils as per Owners' net contract
price and the Owners shall take over and pay for the same at
Charterers' net contract price.
During the charter the Charterers shall provide proper fuel to the
Vessel to enable the main propulsion and auxiliary machinery to operate
efficiently and without harmfull effects.
34. THE OFFICERS, CREW AND MANAGEMENT STANDARDS
The Charterers shall employ only Officers and crew properly licensed in
accordance with all applicable laws and regulations in order to
maintain the Owners' existing standard for the Vessel.
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<PAGE>
The Charterers guarantee throughout this Charter that they apply the
standards of ISM Code in their management of the Vessel both onboard
and ashore. The Owner is entitled at any time during the charter period
to inspect the Vessel and the Charterers and their shipmanagers office
ashore in order to verify that the Charterers fully apply with the ISM
Code requirements. In case any material breach or omission is found,
the Owners are entitled to require the Charterers to remedy such breach
by giving a five days written notice thereof, failing which the Owners
shall have the right of withdrawing the Vessel from the services of the
Charterers without noting any further protest and without prejudice to
any claim the Owners may otherwise have against the Charterers under
the Charter.
The Charterers undertake to provide certification confirming their and
their Managers compliance with the ISM Code standards 30 days before
delivery.
The Owners and the Mortgagees shall have the right to approve or to
reject the Managers to be used by the Charterers, who shall in good
time prior to appointment in writing give any proposals in this
respect for the Owners' and the Mortgagees' consideration.
The Charterers shall insure that the Vessel shall at all times be fit
to go to sea without endangering human life by reason of the
condition, or the unsuitability for its purpose, of either the Vessel
or its machinery or equipment or any part of the Vessel or its
machinery or equipment or undermanning or overloading or unsafe or
improper loading or any other matter relevant to the safety of the
Vessel.
35. MAINTENANCE AND OPERATION
The good commercial maintenance practice under clause 9 above shall be
deemed to include the maintenance and operation of the Vessel by the
Charterers in accordance with:
(i) the relevant regulations, requirements and recommendations of
the classification society;
(ii) the relevant regulations, requirements and recommendations of
the country and flag of the Vessel's registry;
(iii) IMO regulations;
(iv) all other applicable regulations, requirements and
recommendations.
(v) Builder's operations and maintenance manuals;
(vi) Owner's operations and maintenance manuals;
(vii) engine manufacturers recommended maintenance and service
schedules.
The Charterers will without request notify the Owners immediately of
any incident likely to involve repairs costing more than USD 500,000 or
other circumstances which place or appear
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<PAGE>
likely to place the Vessel in jeopardy. The Charterers shall give the
Owners reasonable notice of repairs costing or likely to cost more than
USD 500,000 and of drydocking or barging of Vessel.
36. STRUCTURAL CHANGES AND ALTERATIONS
The Charterers are not allowed to do any structural changes in the
Vessel without the Owners prior written approval, which shall not be
unreasonably withheld. The Charterers shall provide the Owners with
drawings and specifications for their approval. If such major
structural changes are not applicable or usable in the Owners' traffic
and the Owners inform the Charterers in writing thereof when such
drawings and specifications have been presented, the Charterers shall
at their expense restore the Vessel to its original condition before
redelivery in respect of such structural changes.
The Parties acknowledge that the Charterers may need to adapt, alter,
modify or improve the spaces reserved for the passengers and the crew.
Such works are not deemed to be structural changes. The Charterers are
entitled to carry out such works at their expense. The Charterers are,
at the time of redelivery, obliged to remove all such adaptations,
alterations, modifications or improvements made into the Vessel or to
restore the Vessel to its original condition, unless the Owners refrain
from such demand.
Any improvement, structural changes or new equipment becoming necessary
for the continued operation of the Vessel by reason of new class
requirements or by compulsory legislation shall be at the Charterers'
account and the Charterers shall not have any right to recover from the
Owners any part of the cost for such improvements, changes or new
equipment either during the period of this charter or at redelivery of
the Vessel. The Owners prior approval shall however always be obtained.
37. INSURANCE
The insurances prescribed in clause 12 above shall be taken and placed
on the Nordic, London or US markets.
All the marine and war and strike insurances shall be arranged on
documentation approved by the Mortgagees. The Parties shall assign to
the Mortgagees their rights to all insurance compensations and all
amounts payable under such insurances in accordance with Loss Payable
Clauses as required by the Mortgagees (see Assignment and Security
Agreement). Both Parties shall give the relevant insurers Notices of
Assignment in accordance with the Mortgagees requirement. In the event
that the Mortgagees shall obtain or shall require the Owners to obtain
Mortgagees interest insurance cover, such insurance cover shall be
taken out at the expense of the Owners.
The Charterers shall, 60 days prior to the estimated delivery of the
Vessel to the Charterers, furnish the Owners with Letters of
Undertaking from each Insurer and P & I Club, or their respective
Insurance Brokers, confirming that the Vessel is insured from the time
of delivery in
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<PAGE>
accordance with the terms of the Charterparty, failing which the Owners
are entitled to terminate this charterparty with immediate effect
without noting any further protest and without prejudice to any claim
the Owners may otherwise have against the Charterers under the Charter.
The Charterers shall deliver to the Owners and to the Mortgagees,
whenever so requested by the Owner and/or by the Mortgagees, the
originals of all covernotes, binders and policies related to the
insurances mentioned in Clause 12 for the purpose of inspection and
safe-keeping or shall, if the Mortgages shall have discharged, deliver
same to the Owners.
The Charterers shall furnish to the Owners and to the Mortgagees
Insurers' statements declaring that the premiums or calls corresponding
to all the insurances mentioned in Clause 12 have been paid.
38. MORTGAGE
The Vessel chartered under this Charter is financed by mortgages
registered on the Vessel. The Charterers undertake that they will
comply with all such instructions or directions in regard to the
employment, insurances, repairs and maintenance of the Vessel, etc., as
agreed in a tri-partite agreement to be entered into between the
Owners, the Charterers and the Mortgagees in the enclosed form and
content.
In addition to what has been agreed above in clauses 12 and 37 both the
Owners and the Charterers recognize the priority of the Mortgagees'
interests, which shall not be affected by this charterparty. Both
Parties undertake to enter into any customary assignment and security
agreements and sign and execute any further customary deeds and/or
documents, which the Mortgagees' may reasonably require before
delivery of the Vessel to the Charterers. The Owners are not obliged to
deliver the Vessel before such agreements, deed and/or documents have
been signed and executed to the satisfaction of the Mortgagee(s). The
Owners shall after executing this Charter Party request the Mortgagees
to provide drafts of the additional agreements and deeds required by
them and to negotiate the same with the Charterers in good time prior
to the delivery of the Vessel under this Charter Party and so as to
avoid delaying such delivery.
The Mortgagees are:
<TABLE>
<S> <C> <C>
- 1st Panamanian Naval Mortgage: Nordbanken
- 2nd Panamanian Naval Mortgage: Nordbanken
Christiania Bank og Kreditkasse
Skandinaviska Enskilda Banken
Merita Bank
- 3rd Panamanian Naval Mortgage: Nordbanken
Christiania Bank og Kreditkasse
Skandinaviska Enskilda Banken
Merita Bank
- 4th Panamanian Naval Mortgage: Merita Bank
Skandinaviska Enskilda Banken
</TABLE>
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<PAGE>
The Owners are entitled to effect further mortgages on the Vessel and
the Charterers undertake to sign and execute any customary assignment
and security agreements and/or any further customary deeds and/or
documents, which the Mortgagees' may reasonably require before delivery
of the Vessel to the Charterers.
39. CHARTER PERIOD
The Charter shall be 4 years commencing October 1, 1999. The Charterers
shall have the right to extend the charter period with one 4 years'
period followed by one 2 years' period. The Charterers shall declare
such option(s) in writing at the latest 15 months prior to the expiry
of the relevant period. Each optional period shall be for /plus or
minus/ 7 days in the Charterers option.
40. HIRE
The Charter Hire payable under this Charter consist of the Base Charter
Hire and Share of Profit Hire.
The annual Base Charter Hire shall be [*] payable [*] monthly in
advance as agreed in Box 21 and clause 10 above.
The Charterers shall be pay to the Owners as Share of Profit Hire [*]
of the net result of the Vessel after Base Charter Hire up to a total
of [*] annual charter hire and thereafter [*] of the net result. The
net result of Vessel shall be computed in accordance with GAAP with
overhead limited to [*] for purposes of the charter hire computation.
The Share of Profit Hire shall be payable in arrears quarterly on the
20th day after the end of the relevant quarter. The payment shall be
made in accordance with the provisions concerning payment of Base
Charter Hire in clause 10 as far as applicable
The Charterers shall provide the Owners at the latest on the 7th day
after the end of a quarter a calculation of the net results and amount
of Share of Profit Hire payable for that quarter. Unless the Owners
have at the latest within 7 days after receipt of the calculation
declared their rejection of the calculation it will be deemed approved
as basis for the payment for the relevant quarter.
The Charterers shall each year 90 days after end of their fiscal year
deliver to the Owners audited accounts in respect of the preceding
calender year for the final adjustment and conciliation of the Share
of Profit Hire based on the actual and audited net results. The balance
in respect of the Share of Profit Hire shall be paid by the respective
party to the other party within 15 days from receipt of the audited
accounts.
The Owners may, at its own expense, appoint an auditor of an
internationally known firm of auditors to review and audit the
Charterers' earnings, expenses and accounts for verifying the
correctness of calculations for the Share of Profit Hire. The
Charterers will subject to no less
*MARKED TEXT OMITTED PURSUANT TO AN APPLICATION FOR AN ORDER FOR CONFIDENTIAL
TREATMENT BY COMMODORE HOLDINGS LIMITED.
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<PAGE>
than 7 days prior notice of such request make available to such
auditor, during normal business hours, all books, records, accounts and
information and shall provide such assitance as such auditor may
reasonably request.
In case the Owners have any remarks on such earnings, expenses and
accounts on the basis of such audit or otherwise the Owners have the
right to ask for corresponding corrections or amendments to be made. In
case no agreement has been reached within 3 months from such demand,
the Owners are entitled to refer the matter to arbitration.
41. DEFERRED CHARTERHIRE
The Charterers shall provide the Owners in advance every month
commencing on the 1st August 1999 a cash flow forecast and supporting
documentation concerning both the Charterers and the Guarantor for a
rolling 12 month period.
If the Charterers and the Guarantor prove to the Owners' reasonable
satisfaction that a cash flow deficit will exist for the period from
the 1st October 1999 to the 31st December 1999, the Owners shall allow
the Charterers to defer a portion of the Charter Hire due. Such portion
shall not exceed [*] per day. The Charterers shall pay the lesser of
the total deferred Charter Hire or [*], on the 1st January 2000.
If the Charterers and the Guarantor prove to the Owners' reasonable
satisfaction that a cash flow deficit will exist for the period from
the 1st January 2000 to the 31st March 2000, exclusive of the repayment
of the deferred Charter Hire under preceding subpara, the Owners shall
allow the Charterers to defer a portion of the Charter Hire due. Such
portion shall not exceed [*] per day. The total deferred Charter Hire
at 31st March 2000 shall be paid by the Charterers in full evenly
spread during a twelve month period beginning on the 1st April 2000.
Notwithstanding the repayment provisions in the preceding subparas of
this clause and if at any time the Charterers and the Guarantors cash
flow is positive, the amount of such positive cash flow shall be fully
used to repay the deferred Charter Hire or any part thereof.
42. DRYDOCKING AT REDELIVERY
In connection with the redelivery the Charterers shall place the vessel
in drydock at the port of redelivery for inspection by the
Classification Society of the bottom and other underwater parts below
the Summer Load Line. If the rudder, propeller, bottom or other
underwater parts below the Summer Load Line be found broken, damaged or
defective, so as to affect the vessel's clean certificate of class,
such defects shall be made good at the Charterers' expense to
Classification Society's satisfaction without qualification on such
underwater parts.
Whilst the vessel is in drydock, and if required by the Owners or the
representative of the Classification Society, the Charterers shall
arrange to have the tail-end shafts drawn. Should same be condemned or
found defective so as to affect the vessel's clean certificate of
class, shaft(s) shall
*MARKED TEXT OMITTED PURSUANT TO AN APPLICATION FOR AN ORDER FOR CONFIDENTIAL
TREATMENT BY COMMODORE HOLDINGS LIMITED.
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<PAGE>
be renewed or made good at the Charterers' expense to the
Classification Society's satisfaction without qualification. If no
defects are found, then the Owners shall pay for all expenses.
The expenses in connection with putting the vessel in and taking her
out of drydock, including drydock dues and the Classification
Surveyor's fees shall be paid by the Charterers.
The Charterers shall bring the vessel to the drydock and from the
drydock to the place of redelivery at their own expense.
During delivery drydocking the Owners have the right at their expense
to carry out other work at their expense. All cost of labour, material
and extra time of drydock by virtue of such Owners work to be for the
Owners' account. The Charterers shall have the right to deliver the
Vessel in drydock whilst the Owners' works are still continuing
provided that the Vessel is proven to be in the condition required for
redelivery. If the Vessel is delivered during drydocking at the
Charterers request then the Owners shall still bear the expenses for
taking the vessel from the drydock to the agreed place of redelivery.
43 CONDITION OF THE VESSEL AT REDELIVERY
The requirements for the Vessel's delivery condition shall be mirrored
at redelivery.
The Charterers shall redeliver the Vessel in the same condition as on
delivery fair wear and tear excluded. The Charterers shall redeliver
the Vessel with clean certificates of class, which shall throughout
this charterparty be deemed to mean certificates without conditions of
class, conditions of authority and/or recommendations of class. The
Vessel's passenger, cargo, safety, national and international
certificates shall be clean, which shall throughout this charterparty
be deemed to mean certificates without any limitations, restrictions,
dispensations ot other conditions, and valid at the time of redelivery.
44 GOODS FOR SALE AND SPARES AT REDELIVERY
The goods for sale belonging the Charterers and other Charterers
property onboard shall be taken ashore before redelivery of the Vessel.
The Charterers shall redeliver the Vessel with spare parts fulfilling
the minimum requirements of the classification society. The Owners
shall take over at cost all spareparts exceedings such minimum
requirements at redelivery.
45 CERTIFICATES
The Charterers shall procure at their expense issuance of all bonds
and/or certificates of financial responsibility as required by the U.S.
Federal Maritime Commission, or any other national body,
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for the carriage of passengers, in joint names of the Owners and the
Charterers, including but not limited to
(i) liability for non-performance
(ii) liability for death or injury
The Charterers shall in addition upon expiry of the present certificate
procure issuance of a U.S. Coast Guard Certificate, or any other
relevant national authority, for water pollution responsibility.
46. PASSENGER LIABILITY
The Charterers shall bear all liability whatsoever in respect of
carriage of passengers and their luggage. The Charterers undertake to
use conditions of the Athens Convention of 1974, as amended, on
carriage of passengers and their luggage by sea which provide similar
rights to limit liability or such other conditions of the liability
regime as may apply from time to time for relevant international
cruise service. The Charterers guarantee further that such conditions
of carriage contain a clause providing the Owners the same protection
against passengers as the Charterers have. In case the Owners shall be
held responsible for personal injury or death of a passenger or damage,
loss or delay to luggage, the Owners have full rights of recourse
against the Charterers, who undertake to indemnify the Owners and hold
them fully harmless of any such liabilities.
The Charterers shall obtain approval from the Protection and Indemnify
Club of the passenger tickets and include in such tickets a clause
clearly indicating that Vessel is operated by the Charterers under a
Bareboat Charterparty with the Owners.
47. SECURITY
The payment of Charter Hire and any and all other amounts due under
this Charter shall be guaranteed by Commodore Holdings Limited in
accordance with the terms of the enclosed Guarantee, which shall be
delivered to the Owners at latest upon signing of the final
documentation.
The payment of the Charter Hire and any and all amounts due under this
Charter shall further more be secured by a second mortgage in the
vessel Enchanted Isle plus a security interest in advance deposits in
excess of FMC bonding requirements if available and to the extent
permitted by the FMC which shall be in an amount equal to 6 months'
Charter Hire. No further mortgages to be taken in the said vessel
unless otherwise agreed. Commodore Holdings Limited is entitled to
substitute the mortgage and the security interest at any time with a
bank guarantee equal to 6 months' charter hire. Security to be in place
at signing of the final documentation.
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48 TERMINATION BY DEFAULT
The Owners and the Charterers agree that it is a fundamental term and
condition of the Charterparty that none of the following events shall
occur during the Charter Period and that the occurrence of any of the
following events shall constitute a repudiatory breach of this
Charterparty by the Charterers:
a) The Charterers shall fail to pay Charter Hire on any due date
therefore in accordance with the provisions of Clause 10 or
Clause 40 or Clause 41 or the Charterers fail to pay any other
sum hereunder, which sum is payable on demand, and fail to
rectify such breach within seven (7) business days after
receipt of the Owners written notice thereof;
b) the Charterers and/or Commodore Holdings Limited shall be in
material breach of its obligations concerning the security and
fail to rectify such breach within seven (7) business days
after receipt of the Owners written notice thereof;
c) any decree or order shall be made by any court adjudging the
Charterers bankrupt or insolvent under the laws of any
competent jurisdiction or any order shall be made or
resolution passed by the Charterers for the appointment of a
liquidator, receiver, trustee, curator or sequestrator (or
similar official) of themselves or of all or a substantial
part of their assets;
d) The Charterers shall enter into any composition or other
arrangements with their creditors generally;
e) any material provision of this Charterparty becomes illegal,
invalid or inforceable;
f) any material provision of the security becomes illegal,
invalid or inforceable and the Charterers fail to rectify such
breach or provide substitute security acceptable to the Owners
within seven (7) business days after receipt of the Owners
written notice thereof;
g) the Vessel is arrested, confiscated, seized, taken in
execution, impounded, forfeited, detained in exercise or
purported exercise of any possessory lien or other claim, or
otherwise taken from the possession of the Charterers other
than as mentioned in clause 23, and other than as a result of
a claim against the Vessel, the Owner or any prior Charterers
accruing prior to the inception of this charter, and the
Charterers shall fail to procure the release of the Vessel
within a period of twenty-one (21) days; and
then the Owners may at their option terminate this Charterparty by
notice to the Charterers and retake possession of the Vessel.
The effective date of termination hereunder shall be the date the
Vessel returns to a port for the disembarkation of passengers at the
conclusion of its cruise. Termination shall be without prejudice to
the rights and obligations to the parties hereto, which have accrued
prior to the effective date of termination.
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49. WITHDRAWAL
a) In the case of Charterers' default authorizing the withdrawal
of the Vessel by the Owners, the Owners and the Charterers
shall each appoint surveyors for the purpose of determining
and agreeing in writing the condition of the Vessel at the
time of re-delivery subsequent to the withdrawal, and the
Charterers shall bear all expenses of the Survey including
loss of time, if any, at the rate of hire per day, also
including the cost of any docking and undocking, if required,
in connection herewith.
b) In case of withdrawal of the Vessel as mentioned above, the
provisions concerning redelivery above shall be applied as far
as possible.
c) In the case of Charterers' default in redelivering the Vessel
in the event of Vessel's withdrawal as mentioned in subclause
(a) of this clause, any delay in the re-delivery of the Vessel
by the Charterers shall entitle the Owners to receive from the
Charterers, in addition to the Hire to be paid by the
Charterers, an amount per day equivalent to two times the
daily hire.
50. INDEMNITY
If for any reason the Owners are obligated to pay any claims, fines,
penalties or expenses resulting from the operation of the Vessel under
this charterparty, the Charterers shall indemnify the Owners against
all losses damages and expenses reasonably incurred arising or
resulting from such claims, fines, penalties or expenses except such
obligations resulting from the Owners failure to comply with its
obligations under this charterparty or resulting from the Owner's
negligence or willful misconduct. The Owners shall indemnify the
Charterers against all losses, damages, and expenses arising or
resulting from claims, fines, penalties or expenses resulting from the
Owner's negligence or willful misconduct.
The Charterers furthermore agree to indemnify the Owners at all times
against all costs or expenses in defence of any claim against the
Owners, the Vessel or any other vessel owned by the Owners, its mother
company, its subsidiaries or associated companies concerning matters
falling under the Charterers liability in accordance with this
charterparty.
Moneys becoming due by the Charterer to the Owner under the indemnities
contained in this clause or elsewhere in this Charterparty shall be
paid on demand made by the Owner or the Charterer as the case may be
and shall be paid together with interest thereon at the rate pre-
scribed in box 22 from the due date to the date of reimbursement.
51. WAR
1. For the purpose of this Clause, the words:
(a) "Owners" shall mean the registered owners of the
Vessel, Crown Dynasty Inc.
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(b) "War Risks" shall include any war (whether actual or
threatened), act of war, civil war, hostilities,
revolution, rebellion, civil commotion, warlike
operations, the laying of mines (whether actual or
reported), acts of piracy, acts of terrorists, acts
of hostility or malicious damage, blockades (whether
imposed against all vessels or imposed selectively
against vessels of certain flags or ownership, or
against certain cargoes or crews or otherwise
howsoever), by any person, body, terrorist or
political group, or the Government of any state
whatsoever, which, in the reasonable judgement of the
Master and/or the Owners, may be dangerous or are
likely to be or to become dangerous to the Vessel,
her cargo, crew or other persons on board the Vessel.
2. The Vessel, unless the written consent of the Owners first be
obtained, which consent shall, however, not be unreasonably
withheld, shall not be ordered or required to sail to or
through any port, place area or zone (whether of land or sea),
or any waterway or canal, where the Vessel will be exposed to
war risks. Should the Vessel be within any area where she is
exposed to such war risks, the Owners may in their reasonable
discreation require the Charterers to leave that zone.
The Owners shall at their sole discretion decide whether or
not the Vessel is allowed to trade to any war risk area
regardless of whether the officers and crew of the Vessel are
willing to proceed to or remain in that area.
3. The Vessel shall not be required to load contraband cargo, or
to pass through any blockade, whether such blockade be imposed
on all vessels, or is imposed selectively in any way
whatsoever against vessels of certain flags or ownership, or
against certain cargoes or crews or otherwise howsoever, or to
proceed to an area where she shall be subject, or is likely to
be subject to a belligerent's right of search and/or
confiscation.
4. (a) The Owners may effect war risks insurance in
respect of the Hull and Machinery of the Vessel and
their other interests (including, but not limited to,
loss of earnings and detention, the crew and their
Protection and Indemnity Risks), and the premiums
and/or calls thereof shall be for their account.
(b) If the Underwriters of such insurance should require
payment of premiums and/or calls because, pursuant to
the Charterers' orders, the Vessel is within, or is
due to enter and remain within, any area or areas
which are specified by such Underwriters as being
subject to additional premiums because of war risks,
then such premiums and/or calls shall be reimbursed
by the Charterers to the Owners at the same time as
the next payment of hire is due.
5. The Vessel shall have liberty:
(a) to comply with all orders, directions,
recommendations or advice as to departure, arrival,
routes, sailing in convoy, ports call, stoppages,
destinations, discharge of cargo, delivery, or in any
other way whatsoever, which are given by the Govern-
ment of the Nation under whose flag the Vessel sails,
or other Government to
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whose laws the Owners are subject, or any other
Government, body or group whatsoever acting with the
power to compel compliance with their orders or
directions;
(b) to comply with the order, directions or
recommendations of any war risks underwriters who
have the authority to give the same under the terms
the war risks insurance;
(c) to comply with the terms of any resolution of the
Security Council of the United Nations, any
directives of the European Community, the effective
orders of any other Supranational body which has the
right to issue and give the same, and with national
laws aimed at enforcing the same to which the Owners
are subject, and to obey the orders and directions of
those who are charged with their enforcement;
(d) to divert and discharge at any other port any cargo
or part thereof which may render the Vessel liable to
confiscation as a contraband carrier.
6. If in compliance with any of the provisions of this Clause anything
is done or not done, such shall not be deemed a deviation, but shall be
considered as due fulfillment of this Charterparty.
7. Either party may cancel this Charterparty on the outbreak of war or
hostilities between any two or more of the countries mentioned in box
31.
52. SALE OF VESSEL
The Owners shall give the Charterers notification in writing about any
good faith interest shown by a third party in purchasing the Vessel.
The Owners shall be entitled to arrange usual sale inspection of the
Vessel and her classification records and the Charterers shall allow
such inspection(s) by prospective Buyers.
Notwithstanding the agreed period of this Charter the Owners are
entitled to sell the Vessel at any time after signing this agreement
and throughout this charter to a third party by giving a notice in
writing to the Charterers of their intention to sell and terminate the
Charter upon sale and delivery of the Vessel to the Buyers. The
Charterers have, after receipt of such notice, a right to exercise
their purchase option as described in clause 53 below or to purchase
the Vessel on the same or matching terms as agreed between the Owners
and a third party Buyer. The Charterers shall declare their use of
this right within 90 days after notice of the Owners' intention to sell
and terminate. In case the Charterers do not exercise their rights
under this clause then the Owners are entitled to sell and deliver the
Vessel in accordance with the notice given 12 months after the 90 days
period has elapsed and the Charter will terminate on the said date of
sale and delivery. Such period can be shortened by mutual agreement.
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The Owners are entitled to sell the Vessel with this charter at any
time during this charter to a third party subject to the Charterers
written consent of the Buyer, which shall not be unreasonably
withheld.
53. PURCHASE OPTION
The Charterers have the option to purchase the Vessel at any time
during the validity of this Charter. The Charterers shall declare in
writing the use of such option 6 months in advance. The price of the
Vessel on the 1st October 1999 is agreed to be [*] and each month
thereafter at a price equal to [*] less [*] for each month thereafter
during which the Charter has been in effect without default and Charter
Hire paid without default, less an amount equal to the total Charter
Hire paid to date in excess of [*] per annum base charter rate.
The terms of delivery shall be as per enclosed Memorandum of Agreement
(Exhibit )
54. PARTICIPATION IN BOARD OF DIRECTORS
The Owners shall have the right during the charter period to require
the Charterers to appoint one member to the Commodore Holdings
Limited's Board of Directors. Commodore Holdings Limited and the
Charterers shall provide access to the Vessel and it's officers for
inspection purposes as well as to all financial and operational
information of the vessel.
55. SUBSTITUTION OF THE VESSEL
The Owners shall have the right to substitute Leeward for Dynasty. The
Owners shall give notice in writing to the Charterers no later than
March 31, 1999. In such case this Charter will be replaced by a
identical Charter between the Charterers and the Owners of Leeward,
Crown Jewel Inc. however with the following amendments:
i) The annual Base Charter Hire for Leeward shall be [*] plus a
Share of Profit Hire of [*] of the net result of Leeward after
Base Charter Hire up to [*], plus [*] of the net result up to
[*], plus [*] of the net result thereafter. The net result of
Leeward shall be computed in accordance with GAAP with actual
overhead limited to [*] for purposes of the charter hire
computation.
ii) The Charterers shall have the right to purchase Leeward on
October 21, 1999 for [*] and each month thereafter at a price
equal to [*] less [*] for each month the Charter has been in
effect without default and Charter Hire paid without default,
less an amount equal to the total charterhire paid to date in
excess of [*] per annum base charter rate.
iii) Delivery of Leeward to take place on October 21, 1999 in
Miami, Florida.
*MARKED TEXT OMITTED PURSUANT TO AN APPLICATION FOR AN ORDER FOR CONFIDENTIAL
TREATMENT BY COMMODORE HOLDINGS LIMITED.
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<PAGE>
iv) Delivery of Leeward shall take place as agreed in clause 30
above for the Norwegian Dynasty, but replacing the clauses
from Norwegian Dynasty's Present Charter with corresponding
clauses in the Leeward Present Charter.
v) Other logical amendments due to change of Vessel.
56. TRADE NAME
The Present Charterers have the right to use the trade name Crown
Cruise Line until redelivery of the Vessel. Thereafter the Owners
assign to the Charterers any and all rights to use the trade name Crown
Cruise Line during the charter period and after its expiry, unless the
expiry is caused by the Charterers or the Guarantors' default, in which
case all rights to the trade name shall remain with the Owners. The
Owners shall be entitled to maintain its own company name.
57. SPARE PARTS POOL
The Owners have agreed with Crown Jewel Inc., SuperStar Gemini Limited
and Cunard Line Limited on a spare parts pool concerning a tailshaft
and two port and two starboard propeller blades. This agreement can
only be assigned at the consent of the other parties. The Owners
undertake to use their best endeavours to obtain agreement from the
other parties in favour of the Charterers.
58. NOTICES
Any notices to be given to the Owners under this Agreement shall be
sent in writing by registered letter or telefax and addressed to:
Neptun Maritime Oyj
Bulevardi 1A
00100 Helsinki
Finland
telefax -358-9-1804640
Any notices to be given to the Charterers under this Agreement shall be
sent in writing by registered letter or telefax and addressed to:
Commodore Holdings Limited
4000 Hollywood Boulevard
Suite 385 South Tower
Hollywood, Florida 32021
telefax (954) 967-2147
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<PAGE>
Any such notice shall be deemed to have reached the party to whom its
was addressed, when despatched and acknowledged received (in case of
telefax) or when delivered (in case of registered letter).
59. NO WAIVER
No delay, failure or forbearance by a party to exercise (in whole or in
part) any right, power or remedy under, or in connection with, this
Charter will operate as a waiver. No waiver of any breach of any
provision of this Charter will be effective unless that waiver is in
writing and signed by the party against whom that waiver is claimed. No
waiver of any breach will be, or be deemed to be, a waiver of any other
or subsequent breach.
60. ENTIRE AGREEMENT
This Charter shall enter into force upon lifting of all subjects agreed
in a Memorandum of Agreement dated 14.12.1998 between Commodore
Holdings Limited and EJI Cruise Vessels N.V. Upon entry into force this
Agreement shall contain all the understandings and agreements what-
soever kind and nature existing between the Parties in respect of this
Agreement, the rights, interests, undertakings, agreements and
obligations of the Parties and shall supersede all previous and
contemporaneous negotiations and agreements.
This Agreement may not be amended, altered or modified except by a
written instrument executed by each of the Parties to this Agreement.
61. INVALIDITY
If any term or provision of this Charterparty or the application
thereof to any person or circumstances shall to any extent be invalid
or unenforceable the remainder of this Charterparty or application of
such term or provision to persons or circumstances (other than those as
to which it is already invalid or unenforceable) shall (to the extent
that such invalidity or unenforceability does not materially affect the
operation of this Charterparty) not be affected thereby and each term
and provision of this Charterparty shall be valid and be enforceable to
the fullest extent permitted by law.
62. FURTHER ASSURANCES AND UNDERTAKINGS
Each party shall make all applications and execute all other documents
and do all other acts and things as may be necessary to implement and
to carry out its obligations under, and the intent of, this Charter.
The parties shall act in good faith to each other in respect of any
dealings or matters under, or in connection with, this Charter.
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<PAGE>
63. NO PARTNERSHIP
Nothing in this Charter creates, constitutes or evidences any
partnership, joint venture, agency, trust or employer/employee
relationship between the parties, and no party may make, or allow to be
made any representation that any such relationship exists between the
parties. No party shall have the authority to act for, or incur any
obligation on behalf of, the other party, except as expressly provided
in this Charter.
64. CUMULATIVE RIGHTS
The rights, powers and remedies provided in this Charter are cumulative
and not exclusive of any rights, powers or remedies at law or in equity
unless specifically otherwise stated.
65. LAW AND JURISDICTION
This Agreement shall be governed by and construed in accordance with
English law and any dispute arising out of this Agreement shall be
referred to arbitration in London in accordance with the Arbitration
Acts 1950 and 1979 or any statutory modification or re-enactment
thereof for the time being in force. Unless the parties agree upon a
sole arbitrator, one arbitrator shall be appointed by each party and
the arbitrators so appointed shall appoint a third arbitrator, the
decision of the three-man tribunal thus constituted or any two of them,
shall be final. On the receipt by one party of the nomination in
writing of the other party's arbitrator, that party shall appoint their
arbitrator within fourteen days, failing which the decision of the
single arbitrator appointed shall be final.
66. INTERPRETATION
Unless the context otherwise requires:
(a) reference to a section, clause, sub-clause, schedule or a
party is a reference to such in this Charter unless otherwise
stated.
(b) reference to the Charter Period commencing as being in effect
from a specified date or ending on or ceasing to be in effect
on a specified date means the Charter Period is inclusive of
those dates provided that Hire shall be payable in accordance
with lines 191 to 194 for parts of those days.
(c) reference to:
(i) the singular includes the plural and vice versa;
(ii) any gender includes all genders; and
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(iii) individuals includes corporations and vice versa;
(d) reference to any legislation or to any provision of any
legislation (including regulations and orders) includes:
(i) legislation or provisions as from time to time
amended, re-enacted or substituted and, unless
specifically otherwise stated, refers to United
Kingdom legislation and provisions; and
(ii) any statutory instruments, regulations and orders
issued under any such legislation or provision;
(e) reference to any document includes reference to such document
(and, where applicable, any of its provisions) as amended,
novated, supplemented, or replaced from time to time;
(f) reference to times of day or dates are to GMT times and dates
respectively unless in each case specifically otherwise
stated;
(g) time shall be of the essence;
(h) the annexes and any attachment to this Charter form part of
this Charter;
(i) reference to a party, or "parties" includes its employees,
agents, successors, permitted assigns, executors,
administrators and other representatives;
(j) "written" and "in writing" include any means of reproducing
words, figures or symbols in a tangible and visible form;
(k) reference to any amount, money or money's worth shall be in
United States currency unless in each case specifically
otherwise stated;
(l) if any ambiguity or inconsistency arises between a provision
in this Charter and any document used in connection with this
Charter, this Charter shall prevail;
(m) words and expressions defined or explained in the schedule to
this Charter shall have the same meaning in this Charter and
reference in the schedule to "the Owners" and "the Charterers"
shall mean "Owner" and "Charterer" respectively as defined in
this Charter;
(n) a right or power granted or reserved may be exercised from
time to time and at any time unless specifically otherwise
stated;
(o) any word or expression cognate with any word or expression
defined in this Charter shall have a meaning corresponding to
the meaning of the defined word or expression;
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67. CONFIDENTIALITY
Each party must at all times keep confidential, treat as privileged,
and not directly or indirectly make or allow any disclosure of, or use
of, any provision of this Charter or any information relating to any
provision or subject matter of this Charter, or any information
directly or indirectly obtained form another party under or in
connection with this Charter, except to the extent:
(a) required by law
(b) necessary to satisfy the requirements of any applicable
recognised stock exchange;
(c) that parties otherwise agree in writing;
(d) necessary to obtain the benefit, and to carry out obligations
under, this Charter;
(e) the information is or become available in the public domain
without breach by a party of its confidentiality obligations
under this clause or at law.
Neither party shall make any announcement in relation to the amount of
Hire except after first consulting with the other party.
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EXHIBIT 10.2
FORM OF STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is dated as of this ___
day of ____________, 1999 between Commodore Holdings Limited, a Bermuda
corporation (the "Company"), and ________________ (the "Purchaser").
R E C I T A L S:
WHEREAS, the Company has authorized the issuance of 1,000,000 shares of
Series B Convertible Preferred Stock (the "Series B Preferred Stock") with
rights, preferences and limitations as set out in EXHIBIT A attached hereto (the
"Preferred Stock Terms");
WHEREAS, the Company desires to sell and the Purchaser desires to
purchase _______ shares of Series B Preferred Stock, which shares provide the
right, in certain circumstances, to convert such Series B Preferred Stock into
shares (the "Conversion Shares") of the Company's common stock, par value $.01
per share (the "Common Stock");
NOW, THEREFORE, in consideration of the mutual agreements, covenants,
warranties and representations contained herein and for other valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto do hereby agree as follows:
1. PURCHASE OF SERIES B PREFERRED STOCK; OPTION AND RIGHT OF FIRST
REFUSAL. The Company hereby sells, conveys and transfers to the Purchaser and
the Purchaser hereby purchases from the Company ______ shares of Series B
Preferred Stock (the "Shares"), at a price of $10.00 per share (the "Share
Purchase Price"). The aggregate Purchase Price for the Shares of Series B
Preferred Stock purchased hereunder shall be __________ (the "Purchase Price").
In addition, Purchaser shall have an option to purchase any remaining shares of
Series B Preferred Stock (up to _______ shares of Series B Preferred Stock) (the
"Additional Shares") at the Share Purchase Price for a period of ninety (90)
days after the date hereof (the "Option Period") pursuant to the terms set forth
in this Agreement, subject to any prior sale of Additional Shares by the
Company. In the event Purchaser wishes to exercise such option, Purchaser must
both notify the Company of its intent to exercise such option and deliver the
Share Purchase Price for the number of shares Purchaser elects to purchase
within the Option Period. In the event the Company elects to sell Additional
Shares during the Option Period, Purchaser shall have a right of first refusal
to purchase such Additional Shares at the Share Purchase Price. In the event the
Company receives and wishes to accept such an offer, it shall promptly notify
Purchaser of its intent to accept such offer and provide the terms of such offer
to Purchaser. Purchaser shall have a period of five (5) days after the receipt
of such notice from the Company to exercise its right of first refusal. The
closing of such purchase shall occur on or before the date set forth in the
offer from the third party, and if no closing date is included in such offer,
the closing shall occur within thirty (30) days after Purchaser's exercise of
its right of first refusal.
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2. DELIVERIES BY THE PARTIES. On the date hereof:
(a) The Company is delivering to the Purchaser certificate(s)
evidencing the Shares issued on the date hereof.
(b) The Purchaser is delivering to the Company payment, by
wire transfer or check, of the Purchase Price for the Shares.
3. REPRESENTATIONS OF THE PURCHASER. The Purchaser acknowledges,
represents and warrants to the Company as follows:
(a) RECEIPT OF CORPORATE INFORMATION. The Purchaser is
familiar with the business and financial condition of the Company, has been
provided access and an opportunity to review all material agreements, books and
records of the Company, has had the opportunity to ask questions and receive
answers concerning the terms and conditions of his purchase of the Shares and to
obtain any additional information which the Company possesses or can acquire
without unreasonable effort or expense.
(b) RISKS. The Purchaser acknowledges and understands that the
purchase of the Shares and the underlying Conversion Shares involves a high
degree of risk and is suitable only for persons of adequate financial means who
have no need for liquidity in this investment in that (i) the Purchaser may not
be able to liquidate the investment in the event of an emergency; (ii)
transferability is extremely limited; and (iii) in the event of a disposition,
the Purchaser could sustain a complete loss of its entire investment. The
Purchaser is sufficiently experienced in financial and business matters to be
capable of evaluating the merits and risks of an investment in the Company; has
evaluated such merits and risks, including risks particular to the Purchaser's
situation; and the Purchaser has determined that this investment is suitable for
the Purchaser. The Purchaser has adequate financial resources and can bear a
complete loss of the Purchaser's investment.
(c) ACCREDITED INVESTOR STATUS. The Purchaser is an
"accredited investor" as defined in Rule 501(a) of Regulation D promulgated by
the Securities and Exchange Commission (the "SEC") under the Securities Act of
1933, as amended (the "Securities Act").
(d) INVESTMENT INTENT. The Purchaser hereby represents that
the Shares and the underlying Conversion Shares are being acquired for the
Purchaser's own account with no intention of distributing such Shares and the
underlying Conversion Shares to others. The Purchaser has no contract,
undertaking, agreement or arrangement with any person to sell, transfer or
otherwise distribute to any person or to have any person sell, transfer or
otherwise distribute for the Purchaser the Shares, the Conversion Shares or any
interest therein. The Purchaser currently is not engaged, nor does the Purchaser
plan to engage within the currently foreseeable future, in any discussion with
any person regarding such a sale, transfer or other distribution of the Shares,
the Conversion Shares or any interest therein.
(e) COMPLIANCE WITH FEDERAL, STATE AND FOREIGN SECURITIES
LAWS. The Purchaser understands that the Shares and the underlying Conversion
Shares have not been
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registered under the Securities Act or applicable state or foreign securities
laws. The Purchaser understands that the Shares and the underlying Conversion
Shares must be held indefinitely unless the sale or other transfer thereof is
subsequently registered under the Securities Act and applicable state and
foreign securities laws or an exemption from such registration is available. The
Purchaser realizes also that his right to transfer the underlying Conversion
Shares is subject to certain volume restrictions set forth in Section 6 of this
Agreement and that he may not be able to sell or dispose of the Shares or the
underlying Conversion Shares as there may be no public or other market for them.
The Purchaser understands that certificates evidencing the Shares and the
underlying Conversion Shares being purchased hereunder shall bear a legend
substantially as follows:
The Shares represented by this certificate have not
been registered under the Securities Act of 1933 or
any applicable state or foreign law. They may not be
offered for sale, sold, transferred or pledged
without (1) registration under the Securities Act of
1933 and any applicable state and foreign law, or (2)
an opinion (reasonably satisfactory to the Company)
of counsel that registration is not required.
(f) AUTHORITY; ENFORCEABILITY. The Purchaser has the full
right, power, and authority to execute and deliver this Agreement and perform
its covenants and agreements hereunder. This Agreement has been duly executed
and delivered and constitutes the valid and legally binding obligation of the
Purchaser, enforceable against the Purchaser in accordance with its terms except
as such enforceability may be limited by (i) bankruptcy, insolvency, moratorium
or similar laws affecting the enforcement of creditors' rights generally or by
the principles governing the availability of specific performance, injunctive
relief and other equitable remedies (regardless of whether such enforceability
is considered in equity or at law), including requirements of reasonableness and
good faith in the exercise of rights and remedies hereunder; (ii) applicable
laws and court decisions which may limit or render unenforceable certain terms
and provisions contained herein, but which do not substantially interfere with
the practical realization of the benefits hereof, except for the economic
consequences of any procedural delay which may be imposed by, relate to or
result from such laws and court decisions; and (iii) the limitations on the
enforceability of the securities indemnification provisions set forth herein by
reason of matters of public policy.
(g) NONCONTRAVENTION. Neither the execution of this Agreement,
nor the consummation of the transactions contemplated hereby, will constitute a
violation of or default under, or conflict with, any judgment, decree, statute
or regulation of any governmental authority applicable to the Purchaser or any
contract, commitment, agreement or restriction of any kind to which the
Purchaser is a party or by which its assets are bound. The execution and
delivery of this Agreement does not, and the consummation of the transactions
described herein will not, violate applicable law, or any mortgage, lien,
agreement, indenture, lease or understanding (whether oral or written) of any
kind outstanding relative to the Purchaser.
(h) APPROVALS. No approval, authorization, consent, order or
other action of, or filing with, any person, firm or corporation or any court,
administrative agency or other
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governmental authority is required in connection with the execution and delivery
of this Agreement by the Purchaser or the consummation of the transactions
described herein.
4. REPRESENTATIONS OF THE COMPANY. The Company acknowledges, represents
and warrants to the Purchaser as follows:
(a) CORPORATE ORGANIZATION. The Company is duly organized,
validly existing and in good standing under the laws of Bermuda and has full
corporate power, authority and legal right to own its properties and to conduct
the businesses in which it is now engaged. The Company is duly licensed or
qualified to transact business as a foreign corporation and is in good standing
in each jurisdiction where the ownership or lease of its assets or the operation
of its business requires such qualification, except where the failure to be so
qualified would not have a material adverse effect on the business, operations,
property or financial or other condition of the Company (a "Material Adverse
Effect").
(b) AUTHORITY. The Company has full corporate power and
authority to execute and deliver this Agreement and the Shares and to perform
all of its covenants and agreements hereunder. The execution and delivery by the
Company of this Agreement and the Shares, the performance by the Company of its
covenants and agreements hereunder and the consummation by the Company of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action.
(c) ENFORCEABILITY. This Agreement and the Shares have been
duly executed and delivered and constitute the valid and legally binding
obligations of the Company, enforceable against the Company in accordance with
their terms except as such enforceability may be limited by (i) bankruptcy,
insolvency, moratorium or similar laws affecting the enforcement of creditors'
rights generally or by the principles governing the availability of specific
performance, injunctive relief and other equitable remedies (regardless of
whether such enforceability is considered in equity or at law), including
requirements of reasonableness and good faith in the exercise of rights and
remedies hereunder; (ii) applicable laws and court decisions which may limit or
render unenforceable certain terms and provisions contained herein, but which do
not substantially interfere with the practical realization of the benefits
hereof, except for the economic consequences of any procedural delay which may
be imposed by, relate to or result from such laws and court decisions; and (iii)
the limitations on the enforceability of the securities indemnification
provisions set forth herein by reason of matters of public policy.
(d) NONCONTRAVENTION. Neither the execution and delivery of
this Agreement and the Shares by the Company, nor the consummation of the
transactions contemplated hereby, nor the performance by the Company of its
covenants and agreements hereunder (i) violate any provision of the Memorandum
of Association or Bye-Laws of the Company; (ii) violate any existing law,
statute, ordinance, regulation, or any order, judgment or decree of any court or
governmental agency to which the Company is a party or by which the Company or
any of its assets is bound; or (iii) conflict with or will result in any breach
of any of the terms of or constitute a default under or result in the
termination of or the creation of any lien pursuant to the terms of any
indenture, mortgage, real property lease, securities purchase agreement, credit
or
4
<PAGE>
loan agreement or other material agreement to which the Company is a party or by
which the Company or any of its assets is bound, to the extent such violation
thereof, conflict therewith, breach thereof, default thereunder or termination
thereof would have a Material Adverse Effect.
(e) THE SHARES. The Shares have been duly and validly
authorized and, when issued for the consideration herein provided, will be duly
and validly issued, fully paid and nonassessable.
(f) APPROVALS. Except as may be required under federal, state
and Bermuda securities laws (which have been or, in the case of compliance
required on a post-sale basis, will be complied with), the execution, delivery
and performance of this Agreement by the Company does not require (i) the
consent, waiver, approval, license or authorization of or any filing with any
person or any governmental authority; or (ii) the approval or authorization of
the shareholders of the Company.
5. REGISTRATION RIGHTS.
(a) PIGGYBACK REGISTRATION. If the Company shall determine to
register any of its securities either for its own account or the account of a
security holder or holders exercising their respective demand registration
rights, other than a registration relating solely to employee benefit plans, or
a registration relating solely to a Rule 145 transaction, or a registration on
any registration form that does not permit secondary sales, the Company will:
i. promptly give written notice to the
Purchaser; and
ii. use its reasonable best efforts to include
in such registration (and any related
qualification under blue sky laws or other
compliance), and in any underwriting
involved therein, all the Conversion Shares,
which may include all or a part of the
Purchaser's Conversion Shares specified in a
written request or requests, made by the
Purchaser and received by the Company within
twenty (20) days after the written notice
from the Company described in clause (i)
above is mailed or delivered by the Company;
provided, however, that if, in the written
opinion of the Company's managing
underwriter, if any, for such offering, the
inclusion of the Conversion Shares requested
to be registered, when added to the
securities being registered by the Company
or the selling security holder(s), would
exceed the maximum amount of the Company's
securities that can be marketed without
otherwise materially and adversely affecting
the entire offering, then the Company may
exclude from such offering all or that
portion of the Conversion Shares requested
to be so registered, so that the total
number of securities to be
5
<PAGE>
registered is within the maximum number of
shares that, in the opinion of the managing
underwriter, may be marketed without
otherwise materially and adversely affecting
the entire offering.
The Purchaser agrees to sell his Conversion Shares on the same terms as
the sale of other shares of Common Stock in the offering and agrees to execute
such documents as shall be reasonably requested by the Company or its counsel in
connection with such offering.
If the registration of which the Company gives notice is for a
registered public offering involving an underwriting, the Company shall so
advise the Purchaser as a part of the written notice given pursuant to this
Section. In such event, the right of the Purchaser to registration pursuant to
this Section shall be conditioned upon the Purchaser's participation in such
underwriting, the inclusion of the Purchaser's Conversion Shares in the
underwriting to the extent provided herein and the Purchaser's written agreement
not to sell or otherwise dispose of the Conversion Shares for such period of
time as may be required by the underwriter or underwriters. The Purchaser
proposing to distribute his securities through such underwriting shall (together
with the Company and the other holders of securities of the Company with
registration rights to participate therein distributing his securities through
such underwriting) enter into an underwriting agreement in customary form with
the representative of the underwriter or underwriters selected by the Company.
(b) EXPENSES OF REGISTRATION. All registration expenses
incurred in connection with any registration, qualification or compliance
pursuant to this Section (including filing fees, printing expenses, blue sky
fees, and fees and expenses of the Company's counsel and accountants) shall be
borne by the Company. All expenses incurred by the Purchaser for his own counsel
or accountants and all selling expenses relating to the Conversion Shares
(including underwriter discounts, non-accountable expense allowances and
commissions) shall be borne by the Purchaser on the basis of the number of
Conversion Shares so registered on his behalf.
(c) INDEMNIFICATION
i. The Company will indemnify the Purchaser,
each of its officers, directors and
partners, legal counsel, and accountants and
each person controlling the Purchaser within
the meaning of Section 15 of the Securities
Act, with respect to which registration,
qualification, or compliance has been
effected pursuant to this Section, against
all expenses, claims, losses, damages, and
liabilities (or actions, proceedings, or
settlements in respect thereof) arising out
of or based on any untrue statement (or
alleged untrue statement) of a material fact
contained in any prospectus, offering
circular, or other document (including any
related registration statement,
notification, or the like), incident to any
such registration, qualification, or
compliance, or based on any omission (or
alleged omission) to state therein a
material fact required to be stated therein
or necessary to make the statements therein
not misleading, or any violation by the
Company of the Securities Act or any rule or
regulation thereunder applicable
6
<PAGE>
to the Company and relating to action or
inaction required of the Company in
connection with any such registration,
qualification, or compliance, and will
reimburse the Purchaser, each of its
officers, directors, partners, legal
counsel, and accountants and each person
controlling the Purchaser, for any legal and
any other expenses reasonably incurred in
connection with investigating and defending
or settling any such claim, loss, damage,
liability, or action, provided that the
Company will not be liable in any such case
to the extent that any such claim, loss,
damage, liability, or expense arises out of
or is based on any untrue statement or
omission based upon written information
furnished to the Company by the Purchaser
and stated to be specifically for use
therein. It is agreed that the indemnity
agreement contained in this Section shall
not apply to amounts paid in settlement of
any such loss, claim, damage, liability, or
action if such settlement is effected
without the consent of the Company (which
consent has not been unreasonably withheld).
ii. The Purchaser will, if Conversion Shares
held by him are included in the securities
as to which such registration,
qualification, or compliance is being
effected, indemnify the Company, each of its
directors, officers, partners, legal
counsel, and accountants and each
underwriter, if any, of the securities
covered by such a registration statement,
each person who controls the Company or such
underwriter within the meaning of Section 15
of the Securities Act, other shareholder,
and each of their officers, directors, and
partners, against all claims, losses,
damages and liabilities (or actions in
respect thereof) arising out of or based on
any untrue statement (or alleged untrue
statement) of a material fact contained in
any such registration statement, prospectus,
offering circular, or other document, or any
omission (or alleged omission) to state
therein a material fact required to be
stated therein or necessary to make the
statements therein, in light of the
circumstances in which they were made not
misleading, and will reimburse the Company
and other shareholders, directors, officers,
partners, legal counsel, and accountants,
persons, underwriters, or control persons
for any legal or any other expenses
reasonably incurred in connection with
investigating or defending any such claim,
loss, damage, liability, or action, in each
case to the extent, but only to the extent,
that such untrue statement (or alleged
untrue statement) or omission (or alleged
omission) is made in such registration
statement, prospectus, offering circular, or
other document in reliance upon and in
conformity with written information
furnished to the Company by the Purchaser
and stated to be specifically for use
therein provided, however, that the
obligations of the Purchaser hereunder shall
not apply to amounts paid in settlement of
any such claims, losses, damages, or
liabilities (or actions in respect thereof)
if such
7
<PAGE>
settlement is effected without the consent
of the Purchaser (which consent shall not be
unreasonably withheld), and provided that in
no event shall any indemnity under this
Section exceed the gross proceeds from the
offering received by the Purchaser.
(d) INCOME TAX IMPLICATIONS. In the event the Purchaser sells
his Conversion Shares in an underwritten offering pursuant to this section, the
Company or its subsidiaries, as appropriate, shall have the right to deduct from
all amounts paid in cash, any federal, state or local taxes as required by law
to be withheld from such payments, and in the case of issuances of Conversion
Shares, the Purchaser may be required to pay the Company or its subsidiary, as
appropriate, the amount of any such taxes which the Company or its subsidiary is
required to withhold with respect to such Conversion Shares.
6. PAYMENT OF DIVIDENDS. The Board of Directors shall declare cash
dividends on the Series B Preferred Stock at the end of each calendar quarter
unless prohibited by applicable law. Such dividends shall be paid in accordance
with the Preferred Stock Terms.
7. RESTRICTION ON SALES OF COMMON STOCK. Any holder of Series B
Preferred Stock may not sell more than 25% of the maximum number of Conversion
Shares that it could receive upon conversion of all of its Series B Preferred
Stock during any 90-day period, without the Company's prior written consent. The
number of shares of Series B Preferred Stock that may be sold during any 90-day
period shall be increased to 50% of the maximum number of Conversion Shares that
it could receive upon conversion of all of its Series B Preferred Stock if the
Company delivers a Notice of Conversion (as defined in the Preferred Stock
Terms) to the holders of Series B Preferred Stock.
8. NOTICES. All notices, reports and other communications to the
Purchaser or the Company hereunder shall be in writing, shall refer specifically
to this Agreement and shall be hand delivered or sent by overnight courier,
facsimile transmission or by registered mail or certified mail, return receipt
requested, postage prepaid, in each case to the respective persons and addresses
specified below (or to such other persons or addresses as may be specified in
writing to the other party):
If to the Purchaser, to: ________________________
________________________
________________________
Fax No.: (___) ________
If to the Company, to: Commodore Holdings Limited
9350 South Dixie Highway
Suite 1220
Miami, FL 33156
Attn: Jeffrey I. Binder, Chairman
Fax No.: (305) 670-0194
8
<PAGE>
With Copy to: Kathleen L. Deutsch, P.A.
Broad and Cassel
Miami Center - Suite 3000
201 S. Biscayne Boulevard
Miami, FL 33131
Fax No.: (305) 373-9443
Any notice or communication given in conformity with this Section shall
be deemed to be effective when received by the addressee if delivered by hand or
overnight courier or by facsimile (with confirmation of transmission), and three
days after mailing, if mailed.
9. NO IMPLIED WAIVERS; RIGHTS CUMULATIVE. No failure on the part of the
Purchaser or the Company to exercise and no delay in exercising any right,
power, remedy or privilege under this Agreement or provided by statute or at law
or in equity or otherwise, including, without limitation, the right or power to
terminate this Agreement, shall impair, prejudice or constitute a waiver of any
such right, power, remedy or privilege or be construed as a waiver of any breach
of this Agreement or as an acquiescence therein, nor shall any single or partial
exercise of any such right, power, remedy or privilege preclude any other or
further exercise thereof or the exercise of any other right, power, remedy or
privilege.
10. AMENDMENTS. No amendment, modification, waiver, termination or
discharge of any provision of this Agreement, nor consent to any departure
therefrom, shall in any event be effective unless the same shall be in writing
specifically identifying this Agreement and the provision(s) intended to be
amended, modified, waived, terminated or discharged and signed by the Purchaser
and the Company, and each amendment, modification, waiver, termination or
discharge shall be effective only in the specific instance and for the specific
purpose for which given. No provision of this Agreement shall be varied,
contradicted or explained by any oral agreement, course of dealing or
performance or any other matter not set forth in an agreement in writing and
signed by the Purchaser and the Company.
11. INTEGRATION. This Agreement, including any Exhibits hereto,
represents the entire understanding and agreement of the parties with respect to
the subject matter hereof. No other representations, statements or warranties
have been made, other than what is written herein.
12. COSTS OF PARTIES; ATTORNEYS' FEES. Each party shall bear its own
costs in connection with this Agreement and the transactions contemplated
hereby. Except as otherwise set forth herein, all costs and expenses, including
reasonable attorneys' fees, incurred in the enforcement of this Agreement, shall
be paid to the prevailing party by the non-prevailing party, upon demand.
13. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
each of which shall be deemed an original.
14. GOVERNING LAW. This Agreement shall be enforced, governed and
construed in all respects in accordance with the internal laws, and not the laws
pertaining to conflicts or
9
<PAGE>
choice of laws, of the State of Florida.
15. NO BROKERS. The Purchaser represents to the Company that he has not
employed or dealt with any broker, agent or finder in respect of the
transactions provided for herein. The Company acknowledges that it has dealt
with such a broker, agent or finder in respect of the transactions provided for
herein and that it shall be solely responsible for compensating such person.
Each party hereto agrees to indemnify and hold harmless the other party hereto
from and against all fees, in any way resulting from any contract or
understanding existing between the indemnifying party and such broker, agent or
finder.
IN WITNESS WHEREOF, the parties hereto, through their duly authorized
officers, have executed this Agreement as of the date first written above.
COMPANY:
COMMODORE HOLDINGS LIMITED
By:
-----------------------------------
Name: JEFFREY I. BINDER
---------------------------------
Title: CHAIRMAN OF THE BOARD
-------------------------------
PURCHASER:
--------------------------------------
Name: --------------------------------
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<PAGE>
EXHIBIT A
COMMODORE HOLDINGS LIMITED
SERIES B CONVERTIBLE PREFERRED STOCK
RIGHTS, PREFERENCES & LIMITATIONS
The Series B Convertible Preferred Stock (the "Series B Preferred
Stock") shall have the following rights, preferences and limitations:
A. DIVIDENDS. The holders of the Series B Preferred Stock shall be
entitled to receive, when and as declared by the Board of Directors, out of the
funds of Commodore Holdings Limited (the "Company") legally available therefor,
cash dividends at the rate of 10% per annum and no more, payable quarterly
within thirty (30) days after the end of each calendar quarter. Such cash
dividends on Series B Preferred Stock shall be cumulative so that, if for any
quarter cash dividends at the specified rate shall not have been declared and
paid or set apart for payment on the Series B Preferred Stock outstanding, the
deficiency shall be declared and paid or set apart for payment prior to the
making of any dividend or other distribution on the Company's common stock, par
value $0.01 per share (the "Common Stock"). Cash dividends on Series B Preferred
Stock shall accrue from the date of issue of such Series B Preferred Stock. Upon
the payment of all dividends, current and accumulated, at the specified rate
upon the outstanding Series B Preferred Stock, the Directors of the Company may
declare and pay dividends upon the Common Stock.
B. CONVERSION.
1. VOLUNTARY CONVERSION. Each share of Series B Preferred
Stock shall be convertible into a number of shares of Common Stock (the
"Conversion Shares") based upon a conversion price per share of Common Stock of
$5.50 (the "Conversion Price"). Unless a holder of Series B Preferred Stock and
the Company agree otherwise, Series B Preferred Stock shall be convertible at
any time commencing eighteen (18) months after the date of issuance. Conversion
shall be effective on the third business day following the receipt by the
Company of the Notice of Conversion (as hereafter defined) from the holder of
the Series B Preferred Stock, together with the original stock certificate
evidencing the Series B Preferred Stock, executed stock powers and signatures
guaranteed.
The Conversion Price provided for herein shall be subject to the
following adjustments:
(i) If the Company shall declare and pay to the holders of the
shares of Common Stock a dividend in shares of Common Stock, the Conversion
Price in effect immediately prior to the date fixed for the determination of
shareholders entitled to such dividends shall be proportionately decreased
(adjusted to the nearest 1/1,000 of a share of Common Stock), such adjustment to
become effective immediately after the date fixed for such determination.
A-1
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(ii) If the Company shall subdivide the outstanding shares of
Common Stock into a greater number of shares of Common Stock or combine the
outstanding shares of Common Stock into a smaller number of shares of Common
Stock, the Conversion Price in effect immediately prior to such subdivision or
combination, as the case may be, shall be proportionately decreased or increased
(adjusted to the nearest 1/1,000 of a share of Common Stock), as the case may
require, such decrease or increase, as the case may be, to become effective when
such subdivision or combination becomes effective.
(iii) In the case of any reclassification or change of
outstanding shares of Common Stock issuable upon the conversion of the Series B
Preferred Stock, or in the case of any consolidation or merger of the Company
with or into another corporation, or in the case of any sale or conveyance to
another corporation of all or substantially all of the property of the Company,
the holder of each share of Series B Preferred Stock then outstanding shall have
the right thereafter, so long as such holder's conversion right hereunder shall
exist, to convert such Series B Preferred Stock into the same kind and amount of
shares of stock and other securities and property receivable upon such
reclassification, change, consolidation, merger, sale or conveyance by a holder
of the number of shares of Common Stock of the Company into which such shares of
Series B Preferred Stock might have been converted immediately prior to such
reclassification, change, consolidation, merger, sale or conveyance, and shall
have no other conversion rights under these provisions; PROVIDED, HOWEVER, that
effective provision(s) shall be made, in the Articles or Certificate of
Incorporation of the resulting, surviving or successor corporation or otherwise,
so that the provisions set forth herein for the protection of the conversion
rights of the shares of Series B Preferred Stock shall thereafter become
applicable, as nearly as reasonably may be, to any such other shares of stock
and other securities and property deliverable upon conversion of the shares of
Series B Preferred Stock remaining outstanding or other convertible preferred
shares receivable by the holders in place thereof; and provided, further, that
any such resulting, surviving, or successor corporations shall expressly assume
the obligation to deliver, upon the exercise of the conversion privilege, such
shares, securities, or property as the holders of the shares of Series B
Preferred Stock remaining outstanding, or other convertible preferred shares
receivable by the holders in place thereof, shall be entitled to receive
pursuant to the provisions hereof, and to make provisions for the protection of
the conversion right as above provided.
In case securities or property other than shares of Common Stock shall
be issuable or deliverable upon the conversion as aforesaid, then all references
in this section shall be deemed to apply, so far as appropriate and as nearly as
may be, to such other securities or property. The subdivision or combination of
shares of Common Stock at any time outstanding into a greater or lesser number
of shares of Common Stock (whether with or without par value) shall not be
deemed to be a reclassification of the Common Stock of the Company for the
purposes of this subsection (iii).
Except as provided in the foregoing subsections (i-iii), there shall be
no adjustments to the Conversion Price received upon conversion set forth above.
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<PAGE>
2. MANDATORY CONVERSION. Unless a holder of Series B Preferred
Stock and the Company agree otherwise, at any time after the Company files a
registration statement with the Securities and Exchange Commission ("SEC") with
respect to the sale of the Conversion Shares and such registration statement has
been declared effective by the SEC, the Company shall have the right to force
conversion of up to twenty-five percent (25%) of the shares of the Series B
Preferred Stock during any ninety (90) day period at the Conversion Price if at
any time the closing bid price of the Company's Common Stock on The Nasdaq Stock
Market equals or exceeds 150% of the Conversion Price per share for any ten (10)
consecutive trading days (a "Conversion Trigger Date"). For a period of ten (10)
business days after the Conversion Trigger Date, the Company shall have the
right to deliver to any or all of the holders of Series B Preferred Stock a
Notice of Conversion, which states that the Company has elected to exercise its
right to demand conversion of the number of shares of Series B Preferred Stock
into Common Stock as set forth in such Notice of Conversion. The Notice of
Conversion shall state the date that the conversion shall be effective (the
"Conversion Date"), which shall not be earlier than the date the Notice of
Conversion is delivered to the holders of the Series B Preferred Stock.
3. NOTICE OF CONVERSION. In order to convert Series B
Preferred Stock into Common Stock, the holder or the Company, as the case may
be, must deliver a notice of conversion (the "Notice of Conversion"), in the
form attached hereto. Notices of Conversion shall be deemed delivered on the
date sent, if personally delivered or sent by facsimile (with confirmation of
transmission) to the address of record for each holder, or, if sent to the
Company, to the Company's Chief Executive Officer at the Company's principal
place of business, or when actually received if sent by another method. The
Notice of Conversion, if sent by a holder of Series B Preferred Stock, shall be
accompanied by a facsimile (which shall be followed by an original within one
(1) business day) or original certificate evidencing the Series B Preferred
Stock to be converted.
4. CONVERSION PROCEDURE. The Company shall use its reasonable
best efforts to cause its transfer agent to issue the Common Stock within three
(3) business days after the Company receives a fully executed Notice of
Conversion and original certificates for the Series B Preferred Stock with
executed stock powers and signatures guaranteed. The Company shall bear the cost
associated with the issuance of the Common Stock. The Common Stock shall be
issued with a restrictive legend indicating that it was issued in a transaction
which is exempt from registration under the Securities Act of 1933, as amended,
and that it cannot be transferred unless it is so registered, or an exemption
from registration is available, in the opinion of counsel to the Company. The
Common Stock shall be issued in the same name as the person who is the holder of
the Series B Preferred Stock unless, in the opinion of counsel to the Company,
such transfer can be made in compliance with applicable securities laws. The
person in whose name the certificates of Common Stock are so registered shall be
treated as a common stockholder of the Company on the date the Common Stock
certificates are so issued. With respect to Mandatory Conversion, each holder of
Series B Preferred Stock shall deliver to the Company the appropriate number of
shares of Series B Preferred Stock promptly after the Company's delivery of the
Notice of Conversion, together with executed stock powers with signatures
guaranteed. In the event a holder of Series B Preferred Stock fails to deliver
shares of Series B Preferred Stock after the Company's delivery of the Notice of
Conversion, such shares of Series B Preferred
A-3
<PAGE>
Stock shall be deemed to have been converted into Common Stock at the Conversion
Price on the Conversion Date and shall be issued and held by the Company until
the appropriate certificates for Series B Preferred Stock are presented for
cancellation with executed stock powers and signatures guaranteed. The
certificates representing the Series B Preferred Stock shall be cancelled, as
reflected in the records of the Company on the date of issuance of the Common
Stock.
5. RESERVATION OF COMMON STOCK ISSUABLE UPON CONVERSION. The
Company shall at all times reserve and keep available out of its authorized but
unissued shares of Common Stock, such number of its shares of Common Stock as
shall from time to time be sufficient to effect the conversion of all then
outstanding shares of Series B Preferred Stock, the sufficiency of which shall
be determined by using the Conversion Price.
C. NO PREEMPTIVE RIGHTS. No holder of the Series B Preferred Stock
shall be entitled, as a right, to purchase or subscribe for any part of the
unissued capital stock of the Company, or to purchase or subscribe for any
bonds, certificates of indebtedness, debentures, or other securities convertible
into or carrying options or warrants to purchase stock or other securities of
the Company or by its nominee or nominees, or to have any other preemptive
rights now or hereafter defined by the laws of Bermuda.
D. NO VOTING RIGHTS. Holders of Series B Preferred Stock shall not have
voting rights.
E. LIQUIDATION PREFERENCE. Series B Preferred Stock shall have a
liquidation preference equal to $10.00 per share of Series B Preferred Stock
plus accrued and unpaid dividends.
F. NO FRACTIONAL SHARES. The Series B Preferred Stock shall not be
converted into fractions of a share and, where applicable, will be rounded down
to the nearest whole number of shares upon conversion into Common Stock.
A-4
<PAGE>
EXHIBIT A
NOTICE OF CONVERSION
(To be executed by the registered Holder in order to convert Series B
Preferred Stock)
The undersigned hereby irrevocably elects to convert _______ shares of
Series B Preferred Stock into shares of Common Stock of COMMODORE HOLDINGS
LIMITED (the "Company") according to the rights, preferences and limitations of
the Series B Preferred Stock, as of the date written below.
Date of Conversion: *
--------------------
Signature:
--------------------------------
Name:
---------------------------
Signature Guarantee:
----------------------
Address:
----------------------------------
------------------------------------------
Social Security No.
-----------------------
*The Conversion Date shall be the third business day following the Company's
receipt of the original stock certificate evidencing the Series B Preferred
Stock with executed stock powers and signatures guaranteed and the Notice of
Conversion or, in the case of a Mandatory Conversion, the date set forth in the
Notice of Conversion.
EXHIBIT 10.3
LOAN AGREEMENT
THIS LOAN AGREEMENT (the "Agreement") dated as of February 12, 1999, by
and between NATIONSBANK, N.A., a national banking association ("Bank"), and
COMMODORE HOLDINGS LIMITED, a Bermuda corporation ("Borrower").
In consideration of the Loan or Loans described below and the mutual
covenants and agreements contained herein, and intending to be legally bound
hereby, Bank and Borrower agree as follows:
1. DEFINITIONS AND REFERENCE TERMS. In addition to any other terms
defined herein, the following terms shall have the meaning set forth with
respect thereto:
(A) BORROWER: COMMODORE HOLDINGS LIMITED, a Bermuda corporation.
(B) BORROWER'S ADDRESS: 4000 Hollywood Boulevard, Suite 385-S,
Hollywood, Florida 33021.
(C) HAZARDOUS MATERIALS. Hazardous Materials include all materials
defined as hazardous materials or substances under any local, state or federal
environmental laws, rules or regulations, and petroleum, petroleum products, oil
and asbestos.
(D) LETTER OF CREDIT. Letter of Credit shall mean the standby
letter(s) of credit securing the Loan.
(E) LOAN. Any loan described in Section 2 hereof and any subsequent
loan which states that it is subject to this Loan Agreement.
(F) LOAN DOCUMENTS. Loan Documents means this Loan Agreement and any
and all promissory notes executed by Borrower in favor of Bank and all other
documents, instruments, guarantees, certificates and agreements executed and/or
delivered by Borrower, any guarantor or third party in connection with this Loan
including, without limitation, any ISDA Agreement, Pledge Agreement and Tax
Indemnity Agreement entered into between Borrower and Bank and the Letter of
Credit.
(G) ACCOUNTING TERMS. All accounting terms not specifically defined
or specified herein shall have the meanings generally attributed to such terms
under generally accepted accounting principles ("GAAP"), as in effect from time
to time, consistently applied, with respect to the financial statements
referenced in Section 3(g) hereof.
2. LOAN. Bank hereby agrees to make (or has made) one or more loans
to
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Borrower in the aggregate principal face amount of $2,100,000. The obligation to
repay the loans is evidenced by a promissory note or notes dated even date
herewith (the promissory note or notes together with any and all renewals,
extensions or rearrangements thereof being hereafter collectively referred to as
the "Note") having a maturity date, repayment terms and interest rate as set
forth in the Note.
3. REPRESENTATIONS AND WARRANTIES. Borrower hereby represents and
warrants to Bank as follows:
(A) GOOD STANDING. Borrower is a corporation, duly organized,
validly existing and in good standing under the laws of the Colony of Bermuda
and has the power and authority to own its property and to carry on its business
in each jurisdiction in which Borrower does business.
(B) AUTHORITY AND COMPLIANCE. Borrower has full power and authority
to execute and deliver the Loan Documents and to incur and perform the
obligations provided for therein, all of which have been duly authorized by all
proper and necessary action of the appropriate governing body of Borrower. No
consent or approval of any public authority or other third party is required as
a condition to the validity of any Loan Document, and Borrower is in compliance
in all material respects with all laws and regulatory requirements to which it
is subject.
(C) BINDING AGREEMENT. This Agreement and the other Loan Documents
executed by Borrower constitute valid and legally binding obligations of
Borrower, enforceable in accordance with their terms.
(D) LITIGATION. There is no proceeding involving Borrower pending
or, to the knowledge of Borrower, threatened before any court or governmental
authority, agency or arbitration authority, except as disclosed to Bank in the
Borrower's Form 10-K for the fiscal year ended September 30, 1998, or disclosed
in writing and acknowledged by Bank prior to the date of this Agreement.
(E) NO CONFLICTING AGREEMENTS. There is no charter, bylaw, stock
provision, partnership agreement or other document pertaining to the
organization, power or authority of Borrower and no provision of any existing
agreement, mortgage, indenture or contract binding on Borrower or affecting its
property, which would conflict with or in any way prevent the execution,
delivery or carrying out of the terms of this Agreement and the other Loan
Documents.
(F) TAXES. All taxes and assessments due and payable by Borrower
have been paid or are being contested in good faith by appropriate proceedings
and the Borrower has filed all tax returns which it is required to file.
2
<PAGE>
(G) FINANCIAL STATEMENTS. The financial statements of Borrower
heretofore delivered to Bank have been prepared in accordance with GAAP applied
on a consistent basis throughout the period involved and fairly present
Borrower's financial condition as of the date or dates thereof, and there has
been no material adverse change in Borrower's financial condition or operations
since ____________, 19__ (December 31, 1998, if not filled in). All factual
information furnished by Borrower to Bank in connection with this Agreement and
the other Loan Documents is and will be accurate and complete in all material
respects on the date as of which such information is delivered to Bank and is
not and will not be incomplete by the omission of any material fact necessary to
make such information not misleading.
(H) PLACE OF BUSINESS. Borrower's chief executive office is located
at 4000 Hollywood Boulevard, Suite 385-S, Hollywood, Florida 33021.
(I) ENVIRONMENTAL. The conduct of Borrower's business operations and
the condition of Borrower's property does not and is not reasonably anticipated
to violate any federal laws, rules or ordinances for environmental protection,
regulations of the Environmental Protection Agency, any applicable local or
state law, rule, regulation or rule of common law or any judicial interpretation
thereof relating primarily to the environment or Hazardous Materials, except for
any such violations that, either individually or in the aggregate, do not have a
materially adverse effect on the Borrower and its subsidiaries taken as a whole.
(J) CONTINUATION OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made under this Agreement shall be deemed to be
made at and as of the date hereof and at and as of the date of any advance under
any Loan.
4. AFFIRMATIVE COVENANTS. Until full payment and performance of all
obligations of Borrower under the Loan Documents, Borrower will, unless Bank
consents otherwise in writing (and without limiting any requirement of any other
Loan Document):
(A) FINANCIAL STATEMENTS AND OTHER INFORMATION. Maintain a system of
accounting reasonably satisfactory to Bank and in accordance with GAAP applied
on a consistent basis throughout the period involved. Unless written notice of
another location is given to Bank, Borrower's books and records will be located
at Borrower's chief executive office set forth above. All financial statements
called for below shall be prepared in form and content reasonably acceptable to
Bank and, with respect to the annual consolidated financial statements of
Borrower, shall be audited by Grant Thornton or any successor independent
certified public accountants reasonably acceptable to Bank.
In addition, Borrower will:
(i) Furnish to Bank audited consolidated financial statements of
Borrower for each fiscal year of Borrower, within one hundred fifty (150) days
after the close of each such fiscal year.
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<PAGE>
(ii) Furnish to Bank unaudited consolidated financial statements
(including a balance sheet and profit and loss statement) of Borrower for each
of the first three (3) fiscal quarters of each fiscal year of Borrower, within
fifty (50) days after the close of each such period.
(iii) Furnish to Bank a compliance certificate for (and executed by
an authorized representative of) Borrower concurrently with and dated as of the
date of delivery of each of the financial statements as required in
subparagraphs 4(a)(i) and 4(a)(ii) above, containing a certification that the
financial statements of even date are true and correct in all material respects
and that the Borrower is not in default under the terms of this Agreement.
(iv) Furnish to Bank promptly such additional information, reports
and statements respecting the business operations and financial condition of
Borrower from time to time, as Bank may reasonably request, including but not
limited to Borrower's Forms 10-Q and 10-K.
(B) EXISTENCE AND COMPLIANCE. Maintain its existence, good standing and
qualification to do business, where required and comply in all material respects
with all laws, regulations and governmental requirements including, without
limitation, environmental laws applicable to it or to any of its property,
business operations and transactions.
(C) ADVERSE CONDITIONS OR EVENTS. Promptly advise Bank in writing of
(i) any condition, event or act which comes to its attention that would or might
materially adversely affect Borrower's financial condition or operations or
Bank's rights under the Loan Documents, (ii) any litigation filed against
Borrower which reasonably could be expected to have a material adverse effect on
the Borrower, and (iii) any event that has occurred that would constitute an
event of default under any Loan Documents.
(D) TAXES AND OTHER SIMILAR OBLIGATIONS. Pay all of its taxes,
assessments and other similar obligations, including, but not limited to taxes,
costs or other expenses arising out of this transaction, as the same become due
and payable, except to the extent the same are being contested in good faith by
appropriate proceedings in a diligent manner.
(E) MAINTENANCE. Maintain all of its tangible property in good
condition and repair and make all necessary replacements thereof, and preserve
and maintain all licenses, trademarks, privileges, permits, franchises,
certificates and the like necessary for the operation of its business.
5. DEFAULT. Any of the following shall constitute an event of
default by the Borrower hereunder:
(A) An event of default pursuant to the Note shall constitute an
event of
4
<PAGE>
default under this Agreement.
(B) The failure of the Letter of Credit to remain in full force and
effect.
(C) The failure of the expiry date of the Letter of Credit to be
extended for an additional period of at least twelve (12) months if the Letter
of Credit is due to expire within sixty (60) days.
(D) The failure of the Letter of Credit to be replaced by a letter of
credit from an institution satisfactory to the Bank in the Bank's sole
discretion within ten (10) days following notice from the Bank that the Bank is
not satisfied with the financial capacity of the institution issuing and/or
confirming the Letter of Credit, which determination shall be in the Bank's sole
discretion.
6. REMEDIES UPON DEFAULT. If an event of default shall occur, Bank
shall have all rights, powers and remedies available under each of the Loan
Documents as well as all rights and remedies available at law or in equity.
Without limiting the generality of the foregoing, the Bank shall have the right
to draw against the Letter of Credit upon: (i) a monetary default under any of
the Loan Documents; and/or (ii) a default under PARAGRAPHS 5(B), 5(C) and/or
5(D) of this Agreement. Prior to proceeding against the Borrower following a
monetary event of default, Bank agrees to utilize commercially reasonable
efforts to present the Letter of Credit for payment; provided, however, the Bank
shall not be required to institute any legal proceedings in connection
therewith.
7. NOTICES. All notices, requests or demands which any party is
required or may desire to give to any other party under any provision of this
Agreement must be in writing delivered to the other party at the following
address:
To Borrower: Commodore Holdings Limited
4000 Hollywood Boulevard, Suite 385-S
Hollywood, Florida 33021
Attention: Chief Executive Officer
With a copy to: Kathleen L. Deutsch, P.A.
Broad and Cassel
201 South Biscayne Boulevard, Suite 3000
Miami, Florida 33131
To Bank: NationsBank, N.A.
One Financial Plaza, 10th Floor
Fort Lauderdale, Florida 33394
Attention: Allen Brown, Senior Vice President
5
<PAGE>
With a copy to: Mark K. Somerstein, Esq.
Ruden, McClosky, Smith, Schuster & Russell, P.A.
200 East Broward Boulevard, 15th Floor
Fort Lauderdale, Florida 33301
or to such other address as any party may designate by written notice to the
other party. Each such notice, request and demand shall be deemed given or made
as follows:
(A) If sent by mail, upon the earlier of the date of receipt or five
(5) days after deposit in the U.S. Mail, first class postage prepaid;
(B) If sent by any other means, upon delivery.
8. COSTS, EXPENSES AND ATTORNEYS' FEES. Borrower shall pay to Bank
immediately upon demand the full amount of all costs and expenses, including
reasonable attorneys' fees (which fees, exclusive of costs, are limited to Ten
Thousand Dollars ($10,000) with respect to attorneys' fees associated with the
initial documentation of the Loan), incurred by Bank in connection with (a)
negotiation and preparation of this Agreement and each of the Loan Documents,
and (b) all other costs and attorneys' fees incurred by Bank for which Borrower
is obligated to reimburse Bank in accordance with the terms of the Loan
Documents.
9. MISCELLANEOUS. Borrower and Bank further covenant and agree as
follows, without limiting any requirement of any other Loan Document:
(A) CUMULATIVE RIGHTS AND NO WAIVER. Each and every right granted to
Bank under any Loan Document, or allowed it by law or equity shall be cumulative
of each other and may be exercised in addition to any and all other rights of
Bank, and no delay in exercising any right shall operate as a waiver thereof,
nor shall any single or partial exercise by Bank of any right preclude any other
or future exercise thereof or the exercise of any other right. Borrower
expressly waives any presentment, demand, protest or other notice of any kind,
including but not limited to notice of intent to accelerate and notice of
acceleration. No notice to or demand on Borrower in any case shall, of itself,
entitle Borrower to any other or future notice or demand in similar or other
circumstances.
(B) APPLICABLE LAW. This Loan Agreement and the rights and
obligations of the parties hereunder shall be governed by and interpreted in
accordance with the laws of Florida and applicable United States federal law.
(C) AMENDMENT. No modification, consent, amendment or waiver of any
provision of this Loan Agreement, nor consent to any departure by Borrower
therefrom, shall be effective unless the same shall be in writing and signed by
an officer of Bank, and then shall be effective only in the specified instance
and for the purpose for which given. This Loan Agreement is binding upon
Borrower, its successors and assigns, and inures to the benefit of
6
<PAGE>
Bank, its successors and assigns; however, no assignment or other transfer of
Borrower's rights or obligations hereunder shall be made or be effective without
Bank's prior written consent, nor shall it relieve Borrower of any obligations
hereunder. There is no third party beneficiary of this Loan Agreement.
(D) DOCUMENTS. All documents, certificates and other items required
under this Loan Agreement to be executed and/or delivered to Bank shall be in
form and content reasonably satisfactory to Bank and its counsel.
(E) PARTIAL INVALIDITY. The unenforceability or invalidity of any
provision of this Loan Agreement shall not affect the enforceability or validity
of any other provision herein and the invalidity or unenforceability of any
provision of any Loan Document to any person or circumstance shall not affect
the enforceability or validity of such provision as it may apply to other
persons or circumstances.
(F) INDEMNIFICATION. Notwithstanding anything to the contrary
contained in Section 9(g), Borrower shall indemnify, defend and hold Bank and
its successors and assigns harmless from and against any and all claims,
demands, suits, losses, damages, assessments, fines, penalties, costs or other
expenses (including reasonable attorneys' fees and court costs) arising from or
in any way related to any of the transactions contemplated hereby, including but
not limited to actual or threatened damage to the environment, agency costs of
investigation, personal injury or death, or property damage, due to a release or
alleged release of Hazardous Materials, arising from Borrower's business
operations, any other property owned by Borrower or in the surface or ground
water arising from Borrower's business operations, or gaseous emissions arising
from Borrower's business operations or any other condition existing or arising
from Borrower's business operations resulting from the use or existence of
Hazardous Materials, whether such claim proves to be true or false. Borrower
further agrees that its indemnity obligations shall include, but are not limited
to, liability for damages resulting from the personal injury or death of an
employee of the Borrower, regardless of whether the Borrower has paid the
employee under the workmen' s compensation laws of any state or other similar
federal or state legislation for the protection of employees. The term "property
damage" as used in this paragraph includes, but is not limited to, damage to any
real or personal property of the Borrower, the Bank, and of any third parties.
The Borrower's obligations under this paragraph shall survive the repayment of
the Loan.
(G) SURVIVABILITY. All covenants, agreements, representations and
warranties made herein or in the other Loan Documents shall survive the making
of the Loan and shall continue in full force and effect so long as the Loan is
outstanding or the obligation of the Bank to make any advances under the Loan
shall not have expired.
10. ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES
HERETO RELATED SOLELY TO THOSE ARISING OUT OF OR
7
<PAGE>
RELATING TO THIS INSTRUMENT, AGREEMENT OR DOCUMENT OR ANY RELATED INSTRUMENTS,
AGREEMENTS OR DOCUMENTS, INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED
TORT, SHALL BE DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH THE FEDERAL
ARBITRATION ACT (OR IF NOT APPLICABLE, THE APPLICABLE STATE LAW), THE RULES OF
PRACTICE AND PROCEDURE FOR THE ARBITRATION OF COMMERCIAL DISPUTES OF
J.A.M.S./ENDISPUTE OR ANY SUCCESSOR THEREOF ("J.A.M.S."), AND THE "SPECIAL
RULES" SET FORTH BELOW. IN THE EVENT OF ANY INCONSISTENCY, THE SPECIAL RULES
SHALL CONTROL. JUDGMENT UPON ANY ARBITRATION AWARD MAY BE ENTERED IN ANY COURT
HAVING JURISDICTION. ANY PARTY TO THIS INSTRUMENT, AGREEMENT OR DOCUMENT MAY
BRING AN ACTION, INCLUDING A SUMMARY OR EXPEDITED PROCEEDING, TO COMPEL
ARBITRATION OF ANY CONTROVERSY OR CLAIM TO WHICH THIS AGREEMENT APPLIES IN ANY
COURT HAVING JURISDICTION OVER SUCH ACTION.
(A) SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN THE CITY OF
FORT LAUDERDALE, FLORIDA, AND ADMINISTERED BY J.A.M.S. WHO WILL APPOINT AN
ARBITRATOR; IF J.A.M.S. IS UNABLE OR LEGALLY PRECLUDED FROM ADMINISTERING THE
ARBITRATION, THEN THE AMERICAN ARBITRATION ASSOCIATION WILL SERVE. ALL
ARBITRATION HEARINGS WILL BE COMMENCED WITHIN 90 DAYS OF THE DEMAND FOR
ARBITRATION; FURTHER, THE ARBITRATOR SHALL ONLY, UPON A SHOWING OF CAUSE, BE
PERMITTED TO EXTEND THE COMMENCEMENT OF SUCH HEARING FOR UP TO AN ADDITIONAL 60
DAYS.
(B) RESERVATION OF RIGHTS. NOTHING IN THIS ARBITRATION PROVISION
SHALL BE DEEMED TO (I) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE
STATUTES OF LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS INSTRUMENT,
AGREEMENT OR DOCUMENT; OR (II) BE A WAIVER BY BANK OF THE PROTECTION AFFORDED TO
IT BY 12 U.S.C. SEC. 91 OR ANY SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III)
LIMIT THE RIGHT OF BANK HERETO (A) TO EXERCISE SELF HELP REMEDIES SUCH AS (BUT
NOT LIMITED TO) SETOFF, OR (B) TO FORECLOSE AGAINST ANY REAL OR PERSONAL
PROPERTY COLLATERAL, OR (C) TO OBTAIN FROM A COURT PROVISIONAL OR ANCILLARY
REMEDIES SUCH AS (BUT NOT LIMITED TO) INJUNCTIVE RELIEF, WRIT OF POSSESSION OR
THE APPOINTMENT OF A RECEIVER. BANK MAY EXERCISE SUCH SELF HELP RIGHTS,
FORECLOSE UPON SUCH PROPERTY, OR OBTAIN SUCH PROVISIONAL OR ANCILLARY REMEDIES
BEFORE, DURING OR AFTER THE PENDENCY OF ANY ARBITRATION PROCEEDING BROUGHT
PURSUANT TO THIS INSTRUMENT, AGREEMENT OR DOCUMENT. NEITHER THIS EXERCISE OF
SELF HELP REMEDIES NOR THE INSTITUTION OR MAINTENANCE OF AN ACTION FOR
FORECLOSURE OR PROVISIONAL OR ANCILLARY REMEDIES SHALL CONSTITUTE A WAIVER OF
THE RIGHT OF ANY PARTY, INCLUDING THE
8
<PAGE>
CLAIMANT IN ANY SUCH ACTION, TO ARBITRATE THE MERITS OF THE CONTROVERSY OR CLAIM
OCCASIONING RESORT TO SUCH REMEDIES.
11. NO ORAL AGREEMENT. THIS WRITTEN LOAN AGREEMENT AND THE OTHER
LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed under seal by their duly authorized representatives as of the
date first above written.
WITNESS: BORROWER:
COMMODORE HOLDINGS LIMITED, a Bermuda
corporation
/s/ Nicole D. Saunders By: /s/ Alan Pritzker (SEAL)
- --------------------------- ------------------------------
83 Shirley Street Print Name: Alan Pritzker
- --------------------------- ------------------------------
Title: Chief Financial Officer
------------------------------
BANK:
NATIONSBANK, N.A.
/s/ Donica Hall By: /s/ Allen H. Brown
- --------------------------- ------------------------------
83 Shirley Street Print Name: Allen H. Brown
- --------------------------- ------------------------------
Title: Senior Vice President
------------------------------
9
<PAGE>
COMMONWEALTH OF THE BAHAMAS )
) SS:
CITY OF NASSAU )
I HEREBY CERTIFY that on this day, before me, an officer duly
authorized in the Commonwealth and the City aforesaid to take acknowledgments,
the foregoing instrument was acknowledged before me by Alan Pritzker, the CFO of
COMMODORE HOLDINGS LIMITED, a Bermuda corporation, freely and voluntarily under
authority duly vested in him/her by said corporation and that the seal affixed
thereto is the true corporate seal of said corporation. He/She is personally
known to me or who has produced U.S. Passport as identification.
WITNESS my hand and official seal in the Commonwealth and City last
aforesaid this 12th day of February, 1999.
/s/ Cherise F.V. Cox
-----------------------------------------------
Notary Public, Commonwealth of the Bahamas
Cherise F.V. Cox
-----------------------------------------------
Typed, printed or stamped name of Notary Public
My Commission Expires: Dec. 31st 1999
COMMONWEALTH OF BAHAMAS )
) SS:
CITY OF NASSAU )
I HEREBY CERTIFY that on this day, before me, an officer duly
authorized in the Commonwealth aforesaid and in the City aforesaid to take
acknowledgments, the foregoing instrument was acknowledged before me by Allen
Brown, the Senior Vice President of NATIONSBANK, N.A., a national banking
association, freely and voluntarily under authority duly vested in him/her by
said association and that the seal affixed thereto is the true corporate seal of
said association. He/She is personally known to me or who has produced Florida
Drivers License as identification.
WITNESS my hand and official seal in the Commonwealth and City last
aforesaid this 12th day of February, 1999.
/s/ Cherise F.V. Cox
-----------------------------------------------
Notary Public
Cherise F.V. Cox
-----------------------------------------------
Typed, printed or stamped name of Notary Public
Commission Expires: Dec. 31st 1999
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<PAGE>
AFFIDAVIT FOR EXECUTION OF LOAN AGREEMENT
WITHOUT THE STATE OF FLORIDA
COMMONWEALTH OF THE BAHAMAS )
) SS:
CITY OF NASSAU )
BEFORE ME, the undersigned Notary Public, duly authorized in the
Commonwealth and City aforesaid to administer oaths and take acknowledgments,
personally appeared the undersigned, to me well known and to me known to be the
persons described as witnesses to the foregoing Loan Agreement and who witnessed
the execution and delivery of the foregoing Loan Agreement, and who, first being
duly sworn by me did each depose, say and acknowledge before me that they were
present at the time that the said Loan Agreement was executed, that they saw the
same executed and delivered by Alan Pritzker, and that the other subscribing
witness was likewise present and witnessed the execution and delivery of the
foregoing Loan Agreement, to a representative of NationsBank, N.A. at the City
of Nassau, Commonwealth of the Bahamas.
/s/ Donica Hall
-------------------------------------------------
Subscribing Witness
Print Name: Donica Hall
-------------------------------------------------
Address: 83 Shirley House
-------------------------------------------------
Sandringham House
-------------------------------------------------
/s/ Nicole D. Saunders
-------------------------------------------------
Subscribing Witness
Print Name: Nicole S. Saunders
-------------------------------------------------
Address: 83 Shirley House
-------------------------------------------------
Sandringham House
-------------------------------------------------
SWORN TO AND SUBSCRIBED before me and acknowledged to me this 12th day
of February, 1999.
/s/ Cherise F.V. Cox (SEAL)
-----------------------------------------------
Notary Public, Commonwealth of the Bahamas
Printed Name: Cherise F.V. Cox
-----------------------------------------------
Address: 83 Shirley House
-----------------------------------------------
Sandringham House
-----------------------------------------------
My Commission Expires: Dec. 31st 1999
My Commission No. is: N/A
EXHIBIT 10.4
NationsBank, N.A.
Promissory Note
Effective Date: February 12, 1999 [X] New [_] Renewal - This note is a renewal
of note #
Amount: $2,100,000.00 Maturity Date: August 12, 2004
<TABLE>
<S> <C>
Bank: Borrower:
NationsBank, N.A. Commodore Holdings Limited, a Bermuda corporation
Banking Center: Commercial Growth 4000 Hollywood Boulevard, Suite 385-S
One Financial Plaza, 10th Floor Hollywood, Florida 33021
Fort Lauderdale, Florida 33394
County: Broward County: Broward
(Street address including county) (Name and street address, including county)
======================================== =================================================
</TABLE>
FOR VALUE RECEIVED, the undersigned Borrower unconditionally (and jointly and
severally, if more than one) promises to pay to the order of Bank, its
successors and assigns, without setoff, at its offices indicated at the
beginning of this Note, or at such other place as may be designated by Bank, the
principal amount of Two Million One Hundred Thousand Dollars ($2,100,000), or so
much thereof as may be advanced from time to time in immediately available
funds, together with interest computed daily on the outstanding principal
balance hereunder, at an annual interest rate, and in accordance with the
payment schedule, indicated below.
[THIS NOTE CONTAINS SOME PROVISIONS PRECEDED BY BOXES. IF A BOX IS MARKED, THE
PROVISION APPLIES TO THIS TRANSACTION; IF IT IS NOT MARKED, THE PROVISION DOES
NOT APPLY TO THIS TRANSACTION.]
1. RATE.
[X] INTEREST RATE. The Rate shall be the Eurodollar Rate, plus one and one-half
percent (1.5%) per annum. The "Eurodollar Rate" is a fluctuating rate of
interest equal to the one month rate of interest (rounded upwards, if necessary
to the nearest 1/100 of 1%) appearing on Telerate Page 3750 (or any successor
page) as the one month London interbank offered rate for deposits in Dollars at
approximately 11:00 a.m. (London time) on the second preceding business day, as
adjusted from time to time in Bank's sole discretion for then-applicable reserve
requirements, deposit insurance assessment rates and other regulatory costs. If
for any reason such rate is not available, the term "Eurodollar Rate" shall mean
the fluctuating rate of interest equal to the one month rate of interest
(rounded upwards, if necessary to the nearest 1/100 of 1%) appearing on Reuters
Screen LIBO Page as the one month London interbank offered rate for deposits in
Dollars at approximately 11:00 a.m. (London time) on the second preceding
business day, as adjusted from time to time in Bank's sole discretion for
then-applicable reserve requirements, deposit insurance assessment rates and
other regulatory costs; provided, however, if more than one rate is specified on
Reuters Screen LIBO Page, the applicable rate shall be the arithmetic mean of
all such rates.
[_] PRIME RATE. The Rate shall be the Prime Rate, plus ______________________
percent, per annum. The "Prime Rate" is the fluctuating rate of interest
established by Bank from time to time, at its discretion, whether or not such
rate shall be otherwise published. The Prime Rate is established by Bank as an
index and may or may not at any time be the best or lowest rate charged by Bank
on any loan.
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<PAGE>
NationsBank, N.A.
[_] FIXED RATE. The Rate shall be fixed at _______________________ percent per
annum.
Notwithstanding any provision of this Note, Bank does not intend to charge and
Borrower shall not be required to pay any amount of interest or other charges in
excess of the maximum permitted by the applicable law of the State of Florida;
if any higher rate ceiling is lawful, then that higher rate ceiling shall apply.
Any payment in excess of such maximum shall be refunded to Borrower or credited
against principal, at the option of Bank.
2. ACCRUAL METHOD. Unless otherwise indicated, interest at the Rate set forth
above will be calculated by the 365/360 day method (a daily amount of interest
is computed for a hypothetical year of 360 days; that amount is multiplied by
the actual number of days for which any principal is outstanding hereunder). If
interest is not to be computed using this method, the method shall be __________
3. RATE CHANGE DATE. Any Rate based on a fluctuating index or base rate will
change, unless otherwise provided, each time and as of the date that the index
or base rate changes. If the Rate is to change on any other date or at any other
interval, the change shall be: _____________
In the event any index is discontinued, Bank shall substitute an index
determined by Bank to be comparable, in its sole discretion.
4. PAYMENT SCHEDULE. All payments received hereunder shall be applied first to
the payment of any expense or charges payable hereunder or under any other loan
documents executed in connection with this Note, then to interest due and
payable, with the balance applied to principal, or in such other order as Bank
shall determine at its option.
[_] PRINCIPAL PLUS ACCRUED INTEREST. Principal shall be paid in consecutive
equal installments of $__________________, plus accrued interest, payable [_]
monthly, [_] quarterly or [_] _________________, commencing on ________________,
19_______, and continuing on the [_] same day, [_] last day of each successive
month, quarter or other period (as applicable) thereafter, with a final payment
of all unpaid principal and accrued interest due on
_____________________________, 19_______.
[_] FIXED PRINCIPAL AND INTEREST. Principal and interest shall be paid in
consecutive equal installments of $___________________ , payable [_] monthly,
[_] quarterly or [_] __________________, commencing on __________________,
19______, and continuing on the [_] same day, [_] last day of each successive
month, quarter or other period (as applicable) thereafter, with a final payment
of all unpaid principal and interest due thereon on
________________________________________, 19_____. If, on any payment date,
accrued interest exceeds the installment amount set forth above, Borrower will
also pay such excess as and when billed.
[_] SINGLE PRINCIPAL PAYMENT. Principal shall be paid in full in a single
payment on ______________________________, 19_______. Interest thereon shall be
paid [_] at maturity, or else [_] monthly, [_] quarterly or [_]
___________________________, commencing on ________________________________,
19________, and continuing on the [_] same day, [_] last day of each successive
month, quarter or other period (as applicable) thereafter, with a final payment
of all unpaid interest at the stated maturity of this Note.
[X] OTHER. Accrued and unpaid interest, together with the principal amounts set
forth on EXHIBIT A attached hereto shall be due and payable March 12, 1999, and
on the same day of each month thereafter. The outstanding principal balance,
together with all accrued but unpaid interest, shall be due and payable August
12, 2004.
5. REVOLVING FEATURE.
[_] Borrower may borrow, repay and reborrow hereunder at any time, up to a
maximum aggregate amount outstanding at any one time equal to the principal
amount of this Note, provided that Borrower is not in default under any
provision of this Note, any other documents executed in connection with this
Note, or any other note or other loan documents now or hereafter executed in
connection with any other obligation of Borrower to Bank, and provided that the
borrowings hereunder do not exceed any borrowing base or other limitation on
borrowings by Borrower. Bank shall incur no liability for its refusal to advance
funds based upon its determination that any conditions of such further advances
have not been met. Bank records of the amounts borrowed from time to time shall
be conclusive proof thereof.
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<PAGE>
NationsBank, N.A.
[_] UNCOMMITTED FACILITY. Borrower acknowledges and agrees that,
notwithstanding any provisions of this Note or any other documents executed in
connection with this Note, Bank has no obligation to make any advance, and that
all advances are at the sole discretion of Bank.
[_] OUT-OF-DEBT PERIOD. For a period of at least
_____________________________ consecutive days during [_] each fiscal year, [_]
any consecutive 12-month period, Borrower shall fully pay down the balance of
this Note, so that no amount of principal or interest and no other obligation
under this Note remains outstanding.
6. AUTOMATIC PAYMENT.
[_] Borrower has elected to authorize Bank to effect payment of sums due
under this Note by means of debiting Borrower's account number
______________________________________________. This authorization shall not
affect the obligation of Borrower to pay such sums when due, without notice, if
there are insufficient funds in such account to make such payment in full on the
due date thereof, or if Bank fails to debit the account.
7. WAIVERS, CONSENTS AND COVENANTS. Borrower, any indorser or guarantor hereof,
or any other party hereto (individually an "Obligor" and collectively
"Obligors") and each of them jointly and severally: (a) waive presentment,
demand, protest, notice of demand, notice of intent to accelerate, notice of
acceleration of maturity, notice of protest, notice of nonpayment, notice of
dishonor, and any other notice required to be given under the law to any Obligor
in connection with the delivery, acceptance, performance, default or enforcement
of this Note, any indorsement or guaranty of this Note, or any other documents
executed in connection with this Note, including, without limitation, the Loan
Agreement dated even date herewith (collectively, the "Loan Documents"); (b)
consent to all delays, extensions, renewals or other modifications of this Note
or the Loan Documents, or waivers of any term hereof or of the Loan Documents,
or release or discharge by Bank of any of Obligors, or release, substitution or
exchange of any security for the payment hereof, except that the Bank shall not,
except as set forth in the Memorandum of Agreement Regarding Debt Service and
Drawing Rights between Seawise Foundation, Inc. and NationsBank, N.A. dated on
or about the date hereof, release the bank guarantee, letter of credit or
similar instrument originally provided as a standby source of payment of the
sums due under this Note (the "Letter of Credit") unless the Bank receives a
comparable bank guarantee, letter of credit or similar instrument in replacement
for the Letter of Credit prior to its expiration that is reasonably acceptable
to the Bank, or, except as otherwise expressly provided in the Loan Documents,
the failure to act on the part of Bank, or, except as otherwise expressly
provided in the Loan Documents, any indulgence shown by Bank (without notice to
or further assent from any of Obligors), and agree that no such action, failure
to act or failure to exercise any right or remedy by Bank shall in any way
affect or impair the obligations of any Obligors or be construed as a waiver by
Bank of, or otherwise affect, any of Bank's rights under this Note, under any
indorsement or guaranty of this Note or under any of the Loan Documents; and (c)
agree to pay, on demand, all costs and expenses of collection or defense of this
Note or of any indorsement or guaranty hereof and/or the enforcement or defense
of Bank's rights with respect to, or the administration, supervision,
preservation, or protection of, or realization upon, any property securing
payment hereof, including, without limitation, reasonable attorney's and
paralegal's fees, including fees related to any suit, mediation or arbitration
proceeding, out of court payment agreement, trial, appeal, bankruptcy
proceedings or other proceeding, in such amount as may be determined reasonable
by any arbitrator or court, whichever is applicable.
8. INDEMNIFICATION. Obligors agree to promptly pay, indemnify and hold Bank
harmless from all State and Federal taxes of any kind, except State and Federal
taxes on the income of the Bank, and other liabilities with respect to or
resulting from the execution and/or delivery of this Note or any advances made
pursuant to this Note. If this Note has a revolving feature and is secured by a
mortgage, Obligors expressly consent to the deduction of any applicable taxes
from each taxable advance extended by Bank.
9. PREPAYMENTS. Except as contemplated by any interest rate swap or ISDA
agreement, prepayments may be made in whole or in part at any time.
10. DELINQUENCY CHARGE. To the extent permitted by law, a delinquency charge may
be imposed in an amount not to exceed four percent (4%) of any payment that is
more than fifteen days late.
11. EVENTS OF DEFAULT. The following are events of default hereunder: (a) the
failure to pay any obligation, liability or indebtedness under this Note or any
Loan Documents, within three (3) days following the due date (without the
requirement
4
<PAGE>
NationsBank, N.A.
for the giving of notice) (whether upon demand, at maturity or by acceleration);
(b) the failure of the Borrower to perform or observe any other agreement,
covenant, term or condition contained in this Note or any of the Loan Documents,
and such failure is not remedied within thirty (30) calendar days after written
notice thereof shall have been received by the Borrower from the Bank (provided,
however, there shall be no notice and right to cure a default with respect to
Paragraphs 5(b), 5(c) and/or 5(d) of the Loan Agreement; (c) the commencement of
a proceeding against any Obligor for dissolution or liquidation, the voluntary
or involuntary termination or dissolution of any Obligor or the merger or
consolidation of any Obligor with or into another entity; (d) the insolvency of,
the business failure of, the appointment of a custodian, trustee, liquidator or
receiver for or for any of the property of, the assignment for the benefit of
creditors by, or the filing of a petition under bankruptcy, insolvency or
debtor's relief law or the filing of a petition for any adjustment of
indebtedness, composition or extension by or against any Obligor; (e) the
determination by Bank that any representation or warranty made to Bank by any
Obligor in any Loan Documents or otherwise was, when it was made, untrue or
materially misleading in any material respect as determined by the Bank in the
Bank's sole discretion, acting reasonably; (f) the failure of any Obligor to
timely deliver financial statements as required by the Loan Agreement; (g) the
entry of a judgment against any Obligor in excess of One Million Dollars
($1,000,000) in the aggregate which is not dismissed or bonded within thirty
(30) days; (h) the seizure or forfeiture of, or the issuance of any writ of
possession, garnishment or attachment, or any turnover order for any property of
any Obligor where the amount involved is in excess of One Million Dollars
($1,000,000) in the aggregate; (i) a decline in the Borrower's net worth in
excess of One Million Dollars ($1,000,000) from that existing on the Borrower's
September 30, 1998 audited financial statement furnished by the Borrower; or (j)
the failure of Borrower's business to comply in any material respect with any
law or regulation controlling its operation.
12. REMEDIES UPON DEFAULT. Whenever there is a default under this Note (a) the
entire balance outstanding hereunder shall, at the option of Bank, become
immediately due and payable and any obligation of Bank to permit further
borrowing under this Note shall immediately cease and terminate, and/or (b) to
the extent permitted by law, the Rate of interest on the unpaid principal shall
be increased at Bank's discretion up to the maximum rate allowed by law, or if
none, 25% per annum (the "Default Rate"). The provisions herein for a Default
Rate shall not be deemed to extend the time for any payment hereunder or to
constitute a "grace period" giving Obligors a right to cure any default. At
Bank's option, any accrued and unpaid interest, fees or charges may, for
purposes of computing and accruing interest on a daily basis after the due date
of the Note or any installment thereof, be deemed to be a part of the principal
balance, and interest shall accrue on a daily compounded basis after such date
at the Default Rate provided in this Note until the entire outstanding balance
of principal and interest is paid in full. Additionally, Bank shall have all
rights and remedies available under each of the Loan Documents, as well as all
rights and remedies available at law or in equity; provided, however, that Bank
shall not, upon a default under this Note, exercise any common law or statutory
right of set off against any property of the Borrower. Any judgment rendered on
this Note shall bear interest at the highest rate of interest permitted pursuant
to Chapter 687, Florida Statutes. Prior to proceeding against the Borrower
hereunder following a monetary default under this Note, Bank agrees to utilize
commercially reasonable efforts to present the "Letter of Credit" (as defined in
the Loan Agreement) for payment; provided, however, the Bank shall not be
required to institute any legal proceedings in connection therewith.
13. NON-WAIVER. The failure at any time of Bank to exercise any of its options
or any other rights hereunder shall not constitute a waiver thereof, nor shall
it be a bar to the exercise of any of its options or rights at a later date. All
rights and remedies of Bank shall be cumulative and may be pursued singly,
successively or together, at the option of Bank. The acceptance by Bank of any
partial payment shall not constitute a waiver of any default or of any of Bank's
rights under this Note. No waiver of any of its rights hereunder, and no
modification or amendment of this Note, shall be deemed to be made by Bank
unless the same shall be in writing, duly signed on behalf of Bank; each such
waiver shall apply only with respect to the specific instance involved, and
shall in no way impair the rights of Bank or the obligations of Obligors to Bank
in any other respect at any other time.
14. APPLICABLE LAW, VENUE AND JURISDICTION. This Note and the rights and
obligations of Borrower and Bank shall be governed by and interpreted in
accordance with the law of the State of Florida. In any litigation in connection
with or to enforce this Note or any indorsement or guaranty of this Note or any
Loan Documents, Obligors, and each of them, irrevocably consent to and confer
personal jurisdiction on the courts of the State of Florida or the United States
located within the State of Florida and expressly waive any objections as to
venue in any such courts. Nothing contained herein shall, however, prevent Bank
from bringing any action or exercising any rights within any other state or
jurisdiction or from obtaining personal jurisdiction by any other means
available under applicable law. The interest rate charged on this Note is
authorized by Chapter 655, Florida Statutes and Section 687.12, Florida
Statutes.
5
<PAGE>
NationsBank, N.A.
15. PARTIAL INVALIDITY. The unenforceability or invalidity of any provision of
this Note shall not affect the enforceability or validity of any other provision
herein and the invalidity or unenforceability of any provision of this Note or
of the Loan Documents to any person or circumstance shall not affect the
enforceability or validity of such provision as it may apply to other persons or
circumstances.
16. BINDING EFFECT. This Note shall be binding upon and inure to the benefit of
Borrower, Obligors and Bank and their respective successors, assigns, heirs and
personal representatives, provided, however, that no obligations of Borrower or
Obligors hereunder can be assigned without prior written consent of Bank.
17. CONTROLLING DOCUMENT. To the extent that this Note conflicts with or is in
any way incompatible with any other document related specifically to the loan
evidenced by this Note, this Note shall control over any other such document,
and if this Note does not address an issue, then each other such document shall
control to the extent that it deals most specifically with an issue.
18. ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES HERETO
RELATING SOLELY TO THOSE ARISING OUT OF OR RELATING TO THIS INSTRUMENT,
AGREEMENT OR DOCUMENT OR ANY RELATED INSTRUMENTS, AGREEMENTS OR DOCUMENTS,
INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT, SHALL BE
DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH THE FEDERAL ARBITRATION ACT
(OR IF NOT APPLICABLE, THE APPLICABLE STATE LAW), THE RULES OF PRACTICE AND
PROCEDURE FOR THE ARBITRATION OF COMMERCIAL DISPUTES OF J.A.M.S./ENDISPUTE OR
ANY SUCCESSOR THEREOF ("J.A.M.S."), AND THE "SPECIAL RULES" SET FORTH BELOW. IN
THE EVENT OF ANY INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL. JUDGMENT UPON
ANY ARBITRATION AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. ANY PARTY
TO THIS INSTRUMENT, AGREEMENT OR DOCUMENT MAY BRING AN ACTION, INCLUDING A
SUMMARY OR EXPEDITED PROCEEDING, TO COMPEL ARBITRATION OF ANY CONTROVERSY OR
CLAIM TO WHICH THIS AGREEMENT APPLIES IN ANY COURT HAVING JURISDICTION OVER SUCH
ACTION.
A. SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN THE CITY OF FORT
LAUDERDALE, FLORIDA, AND ADMINISTERED BY J.A.M.S. WHO WILL APPOINT AN
ARBITRATOR; IF J.A.M.S. IS UNABLE OR LEGALLY PRECLUDED FROM ADMINISTERING THE
ARBITRATION, THEN THE AMERICAN ARBITRATION ASSOCIATION WILL SERVE. ALL
ARBITRATION HEARINGS WILL BE COMMENCED WITHIN 90 DAYS OF THE DEMAND FOR
ARBITRATION; FURTHER, THE ARBITRATOR SHALL ONLY, UPON A SHOWING OF CAUSE, BE
PERMITTED TO EXTEND THE COMMENCEMENT OF SUCH HEARING FOR UP TO AN ADDITIONAL 60
DAYS.
B. RESERVATION OF RIGHTS. NOTHING IN THIS ARBITRATION PROVISION SHALL BE
DEEMED TO (I) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE STATUTES OF
LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS INSTRUMENT, AGREEMENT OR
DOCUMENT; OR (II) BE A WAIVER BY BANK OF THE PROTECTION AFFORDED TO IT BY 12
U.S.C. SEC. 91 OR ANY SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III) LIMIT THE
RIGHT OF BANK HERETO (A) TO EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED
TO) SETOFF, OR (B) TO FORECLOSE AGAINST ANY REAL OR PERSONAL PROPERTY
COLLATERAL, OR (C) TO OBTAIN FROM A COURT PROVISIONAL OR ANCILLARY REMEDIES SUCH
AS (BUT NOT LIMITED TO) INJUNCTIVE RELIEF, WRIT OF POSSESSION OR THE APPOINTMENT
OF A RECEIVER. BANK MAY EXERCISE SUCH SELF HELP RIGHTS, FORECLOSE UPON SUCH
PROPERTY, OR OBTAIN SUCH PROVISIONAL OR ANCILLARY REMEDIES BEFORE, DURING OR
AFTER THE PENDENCY OF ANY ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS
INSTRUMENT, AGREEMENT OR DOCUMENT. NEITHER THIS EXERCISE OF SELF HELP REMEDIES
NOR THE INSTITUTION OR MAINTENANCE OF AN ACTION FOR FORECLOSURE OR PROVISIONAL
OR ANCILLARY REMEDIES SHALL CONSTITUTE A WAIVER OF THE RIGHT OF ANY PARTY,
INCLUDING THE CLAIMANT IN ANY SUCH ACTION, TO ARBITRATE THE MERITS OF THE
CONTROVERSY OR CLAIM OCCASIONING RESORT TO SUCH REMEDIES.
BORROWER REPRESENTS TO BANK THAT THE PROCEEDS OF THIS LOAN ARE TO BE USED
PRIMARILY FOR BUSINESS, COMMERCIAL OR AGRICULTURAL PURPOSES. BORROWER
ACKNOWLEDGES HAVING READ AND UNDERSTOOD, AND AGREES TO BE BOUND BY, ALL TERMS
AND CONDITIONS OF THIS NOTE AND HEREBY EXECUTES THIS NOTE UNDER SEAL AS OF THE
DATE HERE ABOVE WRITTEN.
NOTICE OF FINAL AGREEMENT. THIS WRITTEN PROMISSORY NOTE REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
6
<PAGE>
NationsBank, N.A.
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
If this Note is secured by a mortgage on real property, documentary stamp taxes
have been paid and affixed to the mortgage.
EXECUTION DATE: _____________________________________
BORROWER
COMMODORE HOLDINGS LIMITED, a Bermuda corporation
By: /s/ Alan Pritzker (SEAL)
-------------------------------------------------
Name: Alan Pritzker
-------------------------------------------------
Title: Chief Financial Officer
-------------------------------------------------
COMMONWEALTH OF THE BAHAMAS )
) SS:
CITY OF NASSAU )
I HEREBY CERTIFY that on this day, before me, an officer duly
authorized in the Commonwealth and the City aforesaid to take acknowledgments,
the foregoing instrument was acknowledged before me by Alan Pritzker, the CFO of
COMMODORE HOLDINGS LIMITED, a Bermuda corporation, freely and voluntarily under
authority duly vested in him/her by said corporation and that the seal affixed
thereto is the true corporate seal of said corporation. He/She is personally
known to me or who has produced ______________________ as identification.
WITNESS my hand and official seal in the Commonwealth and City last
aforesaid this 12th day of February, 1999.
/s/ Cherise F.V. Cox
-------------------------------------------------
Notary Public, Commonwealth of the Bahamas
Cherise F.V. Cox
-------------------------------------------------
Typed, printed or stamped name of Notary Public
My Commission Expires: Dec. 31st 1999
7
<PAGE>
NationsBank, N.A.
EXHIBIT A TO PROMISSORY NOTE
8
<PAGE>
NationsBank, N.A.
AFFIDAVIT FOR EXECUTION OF NOTE
WITHOUT THE STATE OF FLORIDA
COMMONWEALTH OF THE BAHAMAS )
) SS:
CITY OF NASSAU )
BEFORE ME, the undersigned Notary Public, duly authorized in the
Commonwealth and City aforesaid to administer oaths and take acknowledgments,
personally appeared the undersigned, to me well known and to me known to be the
persons described as witnesses to the foregoing Note and who witnessed the
execution and delivery of the foregoing Note, and who, first being duly sworn by
me did each depose, say and acknowledge before me that they were present at the
time that the said Note was executed, that they saw the same executed and
delivered by Alan Pritzker, and that the other subscribing witness was
likewise present and witnessed the execution and delivery of the foregoing Note,
to a representative of NationsBank, N.A. at the City of Nassau, Commonwealth of
the Bahamas.
/s/ Donica Hall
--------------------------------------------
Subscribing Witness
Print Name: Donica Hall
--------------------------------------------
Address: 83 Shirley Street
--------------------------------------------
Sandringham House
--------------------------------------------
/s/ Nicole B. Saunders
--------------------------------------------
Subscribing Witness
Print Name: Nicole B. Saunders
--------------------------------------------
Address: 83 Shirley Street
--------------------------------------------
Sandringham House
--------------------------------------------
SWORN TO AND SUBSCRIBED before me and acknowledged to me this 12th day
of February, 1999.
/s/ Cherise F.V. Cox (SEAL)
-------------------------------------------
Notary Public, Commonwealth of the Bahamas
Printed Name: Cherise F.V. Cox
--------------------------------------------
Address: 83 Shirley Street
--------------------------------------------
Sandringham House
--------------------------------------------
My Commission Expires: Dec. 31st 1999
My Commission No. is: N/A
9
EXHIBIT 10.5
(Multicurrency--Cross Border)
ISDA
International Swap Dealers Association, Inc.
MASTER AGREEMENT
dated as of: FEBRUARY 5, 1999
----------------
NATIONSBANK, N.A. and COMMODORE HOLDINGS LIMITED
- ------------------------------------------- --------------------------------
have entered and/or anticipate entering into one or more transactions (each a
"Transaction") that are or will be governed by this Master Agreement, which
includes the schedule (the "Schedule"), and the documents and other confirming
evidence (each a "Confirmation") exchanged between the parties confirming those
Transactions.
Accordingly, the parties agree as follows:
1. INTERPRETATION
(a) DEFINITIONS. The terms defined in Section 14 and in the Schedule will have
the meanings therein specified for the purpose of this Master Agreement.
(b) INCONSISTENCY. In the event of any inconsistency between the provisions of
the Schedule and the other provisions of this Master Agreement, the Schedule
will prevail. In the event of any inconsistency between the provisions of any
Confirmation and this Master Agreement (including the Schedule), such
Confirmation will prevail for the purpose of the relevant Transaction.
(c) SINGLE AGREEMENT. All Transactions are entered into in reliance on the fact
that this Master Agreement and all Confirmations form a single agreement between
the parties (collectively referred to as this "Agreement"), and the parties
would not otherwise enter into any Transactions.
2. OBLIGATIONS
(a) GENERAL CONDITIONS.
(i) Each party will make each payment or delivery specified in each
Confirmation to be made by it, subject to the other provisions of this
Agreement.
(ii) Payments under this Agreement will be made on the due date for
value on that date in the place of the account specified in the
relevant Confirmation or otherwise pursuant to this Agreement, in
freely transferable funds and in the manner customary for payments in
the required currency. Where settlement is by delivery (that is, other
than by payment), such delivery will be made for receipt on the due
date in the manner customary
<PAGE>
for the relevant obligation unless otherwise specified in the relevant
Confirmation or elsewhere in this Agreement.
(iii) Each obligation of each party under Section 2(a)(i) is subject to
(1) the condition precedent that no Event of Default or Potential Event
of Default with respect to the other party has occurred and is
continuing, (2) the condition precedent that no Early Termination Date
in respect of the relevant Transaction has occurred or been effectively
designated and (3) each other applicable condition precedent specified
in this Agreement.
(b) CHANGE OF ACCOUNT. Either party may change its account for receiving a
payment or delivery by giving notice to the other party at least five Local
Business Days prior to the scheduled date for the payment or delivery to which
such change applies unless such other party gives timely notice of a reasonable
objection to such change.
(c) NETTING. If on any date amounts would otherwise be payable: --
(i) in the same currency; and
(ii) in respect of the same Transaction
by each party to the other, then, on such date, each party's obligation to make
payment of any such amount will be automatically satisfied and discharged and,
if the aggregate amount that would otherwise have been payable by one party
exceeds the aggregate amount that would otherwise have been payable by the other
party, replaced by an obligation upon the party by whom the larger aggregate
amount would have been payable to pay to the other party the excess of the
larger aggregate amount over the smaller aggregate amount.
The parties may elect in respect of two or more Transactions that a net amount
will be determined in respect of all amounts payable on the same date in the
same currency in respect of such Transactions, regardless of whether such
amounts are payable in respect of the same Transaction. The election may be made
in the Schedule or a Confirmation by specifying that subparagraph (ii) above
will not apply to the Transactions identified as being subject to the election,
together with the starting date (in which case subparagraph (ii) above will not,
or will cease to, apply to such Transactions from such date). This election may
be made separately for different groups of Transactions and will apply
separately to each pairing of Offices through which the parties make and receive
payments or deliveries.
(d) DEDUCTION OR WITHHOLDING FOR TAX.
(i) GROSS-UP. All payments under this Agreement will be made without
any deduction or withholding for or on account of any Tax unless such
deduction or withholding is required by any applicable law, as modified
by the practice of any relevant governmental revenue authority, then in
effect. If a party is so required to deduct or withhold, then that
party ("X") will: --
(1) promptly notify the other party ("Y") of such requirement;
<PAGE>
(2) pay to the relevant authorities the full amount required to be
deducted or withheld (including the full amount required to be
deducted or withheld from any additional amount paid by X to Y
under this Section 2(d)) promptly upon the earlier of determining
that such deduction or withholding is required or receiving notice
that such amount has been assessed against Y;
(3) promptly forward to Y an official receipt (or a certified
copy), or other documentation reasonably acceptable to Y,
evidencing such payment to such authorities; and
(4) if such Tax is an Indemnifiable Tax, pay to Y, in addition to
the payment to which Y is otherwise entitled under this Agreement,
such additional amount as is necessary to ensure that the net
amount actually received by Y (free and clear of Indemnifiable
Taxes, whether assessed against X or Y) will equal the full amount
Y would have received had no such deduction or withholding been
required. However, X will not be required to pay any additional
amount to Y to the extent that it would not be required to be paid
but for: --
(A) the failure by Y to comply with or perform any agreement
contained in Section 4(a)(i), 4(a)(iii) or 4(d); or
(B) the failure of a representation made by Y pursuant to
Section 3(f) to be accurate and true unless such failure would
not have occurred but for (I) any action taken by a taxing
authority, or brought in a court of competent jurisdiction, on
or after the date on which a Transaction is entered (regardless
of whether such action is taken or brought with respect to a
party to this Agreement) or (II) a Change in Tax Law.
(ii) LIABILITY. IF:--
(1) X is required by any applicable law, as modified by the
practice of any relevant governmental revenue authority, to
make any deduction or withholding in respect of which X would
not be required to pay an additional amount to Y under Section
2(d)(i)(4);
(2) X does not so deduct or withhold; and
(3) a liability resulting from such Tax is assessed directly
against X.
then, except to the extent Y has satisfied or then satisfies the
liability resulting from such Tax, Y will promptly pay to X the amount
of such liability (including any related liability for interest, but
including any related liability for penalties only if Y has failed to
comply with or perform any agreement contained in Section 4(a)(i),
4(a)(iii) or 4(d)).
(e) DEFAULT INTEREST; OTHER AMOUNTS. Prior to the occurrence or effective
designation of an Early Termination Date in respect of the relevant Transaction,
a party that defaults in the performance of any payment obligation will, to the
extent permitted by law and subject to Section 6(c), be required to pay interest
(before as well as after judgment) on the overdue amount
<PAGE>
to the other party on demand in the same currency as such overdue amount, for
the period from (and including) the original due date for payment to (but
excluding) the date of actual payment, at the Default Rate. Such interest will
be calculated on the basis of daily compounding and the actual number of days
elapsed. If, prior to the occurrence or effective designation of an Early
Termination Date in respect of the relevant Transaction, a party defaults in the
performance of any obligation required to be settled by delivery, it will
compensate the other party on demand if and to the extent provided for in the
relevant Confirmation or elsewhere in this Agreement.
3. REPRESENTATIONS
Each party represents to the other party (which representations will be deemed
to be repeated by each party on each date on which a Transaction is entered
into and, in the case of the representations in Section 3(f), at all times until
the termination of this Agreement) that:--
(a) BASIC REPRESENTATIONS.
(i) STATUS. It is duly organized and validly existing under the laws of
the jurisdiction of its organization or incorporation and, if relevant
under such laws, in good standing;
(ii) POWERS. It has the power to execute this Agreement and any other
documentation relating to this Agreement to which it is a party, to
deliver this Agreement and any other documentation relating to this
Agreement that it is required by this Agreement to deliver and to
perform its obligations under this Agreement and any obligations it has
under any Credit Support Document to which it is a party and has taken
all necessary action to authorize such execution, delivery and
performance;
(iii) NO VIOLATION OR CONFLICT. Such execution, delivery and
performance do not violate or conflict with any law applicable to it,
any provision of its constitutional documents, any order or judgment of
any court or other agency of government applicable to it or any of its
assets or any contractual restriction binding on or affecting it or any
of its assets;
(iv) CONSENTS. All governmental and other consents that are required to
have been obtained by it with respect to this Agreement or any Credit
Support Document to which it is a party have been obtained and are in
full force and effect and all conditions of any such consents have been
complied with; and
(v) OBLIGATIONS BINDING. Its obligations under this Agreement and any
Credit Support Document to which it is a party constitute its legal,
valid and binding obligations, enforceable in accordance with their
respective terms (subject to applicable bankruptcy, reorganization,
insolvency, moratorium or similar laws affecting creditors' rights
generally and subject, as to enforceability, to equitable principles of
general application (regardless of whether enforcement is sought in a
proceeding in equity or at law)).
(b) ABSENCE OF CERTAIN EVENTS. No Event of Default or Potential Event of Default
or, to its knowledge, Termination Event with respect to it has occurred and is
continuing and no such event or circumstance would occur as a result of its
entering into or performing its obligations under this Agreement or any Credit
Support Document to which it is a party.
<PAGE>
(c) ABSENCE OF LITIGATION. There is not pending or, to its knowledge, threatened
against it or any of its Affiliates any action, suit or proceeding at law or in
equity or before any court, tribunal, governmental body, agency or official or
any arbitrator that is likely to affect the legality, validity or enforceability
against it of this Agreement or any Credit Support Document to which it is a
party or its ability to perform its obligations under this Agreement or such
Credit Support Document.
(d) ACCURACY OF SPECIFIED INFORMATION. All applicable information that is
furnished in writing by or on behalf of it to the other party and is identified
for the purpose of this Section 3(d) in the Schedule is, as of the date of the
information, true, accurate and complete in every material respect.
(e) PAYER TAX REPRESENTATIONS. Each representation specified in the Schedule as
being made by it for the purpose of this Section 3(e) is accurate and true.
(f) PAYEE TAX REPRESENTATIONS. Each representation specified in the Schedule as
being made by it for the purpose of this Section 3(f) is accurate and true.
4. AGREEMENTS
Each party agrees with the other that, so long as either party has or may have
any obligation under this agreement or under any credit support document to
which it is a party:-
(a) FURNISH SPECIFIED INFORMATION. It will deliver to the other party or, in
certain cases under subparagraph (iii) below, to such government or taxing
authority as the other party reasonably directs: --
(i) any forms, documents or certificates relating to taxation specified
in the Schedule or any Confirmation;
(ii) any other documents specified in the Schedule or any Confirmation;
and
(iii) upon reasonable demand by such other party, any form or document
that may be required or reasonably requested in writing in order to
allow such other party or its Credit Support Provider to make a payment
under this Agreement or any applicable Credit Support Document without
any deduction or withholding for or on account of any Tax or with such
deduction or withholding at a reduced rate (so long as the completion,
execution or submission of such form or document would not materially
prejudice the legal or commercial position of the party in receipt of
such demand), with any such form or document to be accurate and
completed in a manner reasonably satisfactory to such other party and
to be executed and to be delivered with any reasonably required
certification.
in each case by the date specified in the Schedule or such Confirmation or, if
none is specified, as soon as reasonable practicable.
<PAGE>
(b) MAINTAIN AUTHORIZATIONS. It will use all reasonable efforts to maintain in
full force and effect all consents of any governmental or other authority that
are required to be obtained by it with respect to this Agreement or any Credit
Support Document to which it is a party and will use all reasonable efforts to
obtain any that may become necessary in the future.
(c) COMPLY WITH LAWS. It will comply in all material respects with all
applicable laws and orders to which it may be subject if failure so to comply
would materially impair its ability to perform its obligations under this
Agreement or any Credit Support Document to which it is a party.
(d) TAX AGREEMENT. It will give notice of any fialure of a representation made
by it under Section 3(f) to be accurate and true promptly upon learning of such
failure.
(e) PAYMENT OF STAMP TAX. Subject to Section 11, it will pay any Stamp Tax
levied or imposed upon it or in respect of its execution or performance of this
Agreement by a jurisdiction in which it is incorporated, organized, managed and
controlled, or considered to have its seat, or in which a branch or office
through which it is acting for the pupose of this Agreement is located ("Stamp
Tax Jurisdiction") and will indemnify the other party against any Stamp Tax
levied or imposed upon the other party or in respect of the other party's
execution or performance of this Agreement by any such Stamp Tax Jurisdition
which is not also a Stamp Tax Jurisdiction with respect to the other party.
5. EVENTS OF DEFAULT AND TERMINATION EVENTS
(a) EVENTS OF DEFAULT. The occurrence at any time with respect to a party or, if
applicable, any Credit Support Provider of such party or any Specified Entity of
such party of any of the following events constitutes an event of default (an
"Event of Default") with respect to such party:
(i) FAILURE TO PAY OR DELIVER. Failure by the party to make, when due,
any payment under this Agreement or delivery under Section 2(a)(i) or
2(e) required to be made by it if such failure is not remedied on or
before the third Local Business Day after notice of such failure is
given to the party;
(ii) BREACH OF AGREEMENT. Failure by the party to comply with or
perform any agreement or obligation (other than an obligation to make
any payment under this Agreement or delivery under Section 2(a)(i) or
2(e) or to give notice of a Termination Event or any agreement or
obligation under Section 4(a)(i), 4(a)(iii) or 4(d)) to be complied
with or performed by the party in accordance with this Agreement if
such failure is not remedied on or before the thirtieth day after
notice of such failure is given to the party;
(iii) CREDIT SUPPORT DEFAULT.
(1) Failure by the party or any Credit Support Provider of such
party to comply with or perform any agreement or obligation to be
complied with or performed by it in accordance with any Credit
Support Document if such failure is continuing after any applicable
grace period has elapsed;
<PAGE>
(2) the expiration or termination of such Credit Support Document
or the failing or ceasing of such Credit Support Document to be in
full force and effect for the purpose of this Agreement (in either
case other than in accordance with its terms) prior to the
satisfaction of all obligations of such party under each
Transaction to which such Credit Support Document relates without
the written consent of the other party; or
(3) the party or such Credit Support Provider disaffirms,
disclaims, repudiates or rejects, in whole or in part, or
challenges the validity of, such Credit Support Document;
(iv) MISREPRESENTATION. A representation (other than a representation
under Section 3(e) or (f) made or repeated or deemed to have been made
or repeated by the party, or any Credit Support Provider of such party
in this Agreement or any Credit Support Document proves to have been
incorrect or misleading in any material respect when made or repeated
or deemed to have been made or repeated;
(v) DEFAULT UNDER SPECIFIED TRANSACTION. The party, any Credit Support
Provider of such party or any applicable Specified Entity of such party
(1) defaults under a Specified Transaction and, after giving effect to
any applicable notice requirement or grace period, there occurs a
liquidation of, an acceleration of obligations under, or an early
termination of, that Specified Transaction, (2) defaults, after giving
effect to any applicable notice requirement or grace period, in making
any payment or delivery due on the last payment, delivery or exchange
date of, or any payment on early termination of, a Specified
Transaction (or such default continues for at least three Local
Business Days if there is no applicable notice requirement or grace
period) or (3) disaffirms, disclaims, repudiates or rejects, in whole
or in part, a Specified Transaction (or such action is taken by any
person or entity appointed or empowered to operate it or act on its
behalf);
(vi) CROSS DEFAULT. If "Cross Default" is specified in the Schedule as
applying to the party, the occurrence or existence of (1) a default,
event of default or other similar condition or event (however
described) in respect of such party, any Credit Support Provider of
such party or any applicable Specified Entity of such party under one
or more agreements or instruments relating to Specified Indebtedness of
any of them (individually or collectively) in an aggregate amount of
not less than the applicable Threshold Amount (as specified in the
Schedule) which has resulted in such Specified Indebtedness becoming,
or becoming capable at such time of being declared, due and payable
under such agreements or instruments, before it would otherwise have
been due and payable or (2) a default by such party, such Credit
Support Provider or such Specified Entity (individually or
collectively) in making one or more payments on the due date thereof in
an aggregate amount of not less than the applicable Threshold Amount
under such agreements or instruments (after giving effect to any
applicable notice requirement or grace period);
(vii) BANKRUPTCY. The party, any Credit Support Provider of such party
or any applicable Specified Entity of such party:
<PAGE>
(1) is dissolved (other than pursuant to a consolidation,
amalgamation or merger); (2) becomes insolvent or is unable to pay
its debts or fails or admits in writing its inability generally to
pay its debts as they become due; (3) makes a general assignment,
arrangement or composition with or for the benefit of its
creditors; (4) institutes or has instituted against it a proceeding
seeking a judgment of insolvency or bankruptcy or any other relief
under any bankruptcy or insolvency law or other similar law
affecting creditors' rights, or a petition is presented for its
winding-up or liquidation, and, in the case of any such proceeding
or petition instituted or presented against it, such proceeding or
petition (A) results in a judgment of insolvency or bankruptcy or
the entry of an order for relief or the making of an order for its
winding-up or liquidation or (B) is not dismissed, discharged,
stayed or restrained in each case within 30 days of the institution
or presentation thereof; (5) has a resolution passed for its
winding-up, official management or liquidation (other than pursuant
to a consolidation, amalgamation or merger); (6) seeks or becomes
subject to the appointment of an administrator, provisional
liquidator, conservator, receiver, trustee, custodian or other
similar official for it or for all or substantially all its assets;
(7) has a secured party take possession of all or substantially all
its assets or has a distress, execution, attachment, sequestration
or other legal process levied, enforced or sued on or against all
or substantially all its assets and such secured party maintains
possession, or any such process is not dismissed, discharged,
stayed or restrained, in each case within 30 days thereafter; (8)
causes or is subject to any event with respect to it which, under
the applicable laws of any jurisdiction, has an analogous effect to
any of the events specified in clauses (1) to (7) (inclusive); or
(9) takes any action in furtherance of, or indicating its consent
to, approval of, or acquiescence in, any of the foregoing acts; or
(viii) MERGER WITHOUT ASSUMPTION. The party or any Credit Support
Provider of such party consolidates or amalgamates with, or merges with
or into, or transfers all or substantially all its assets to, another
entity and, at the time of such consolidation, amalgamation, merger or
transfer:--
(1) the resulting, surviving or transferee entity fails to assume
all the obligations of such party or such Credit Support Provider
under this Agreement or any Credit Support Document to which it or
its predecessor was a party by operation of law or pursuant to an
agreement reasonably satisfactory to the other party to this
Agreement; or
(2) the benefits of any Credit Support Document fail to extend
(without the consent of the other party) to the performance by such
resulting, surviving or transferee entity of its obligations under
this Agreement.
(b) TERMINATION EVENTS. The occurrence at any time with respect to a party or,
if applicable, any Credit Support Provider of such party or any Specified Entity
of such party of any event specified below constitutes an Illegality if the
event is specified in (i) below, a Tax Event if the event is specified in (ii)
below or a Tax Event Upon Merger if the event is specified in (iii) below, and,
if specified to be applicable, a Credit Event Upon Merger if the event is
specified pursuant to (iv) below or an Additional Termination Event if the event
is specified pursuant to (v) below:--
<PAGE>
(i) ILLEGALITY. Due to the adoption of, or any change in, any
applicable law after the date on which a Transaction is entered into,
or due to the promulgation of, or any change in, the interpretation by
any court, tribunal or regulatory authority with competent jurisdiction
of any applicable law after such date, it becomes unlawful (other than
as a result of a breach by the party of Section 4(b)) for such party
(which will be the Affected Party):--
(1) to perform any absolute or contingent obligation to make a
payment or delivery or to receive a payment or delivery in respect
of such Transaction or to comply with any other material provision
of this Agreement relating to such Transaction; or
(2) to perform, or for any Credit Support Provider of such party to
perform, any contingent or other obligation which the party (or
such Credit Support Provider) has under any Credit Support Document
relating to such Transaction;
(ii) TAX EVENT. Due to (x) any action taken by a taxing authority, or
brought in a court of contempt jurisdiction, on or after the date on
which a Transaction is entered into (regardless of whether such action
is taken or brought with respect to a party to this Agreement) or (y) a
Change in Tax Law, the party (which will be the Affected Party) will,
or there is a substantial likelihood that it will, on the next
succeeding Scheduled Payment Date (1) be required to pay to the other
party an additional amount in resepct of an Indemnifiable Tax under
Section 2(d)(i)(4) (except in respect of interest under Section 2(e),
6(d)(ii) or 6(e)) or (2) receive a payment from which an amount is
required to be deducted or withheld for or on account of a Tax (except
in respect of interest under Section 2(e), 6(d)(ii) or 6(e)) and no
additional amount it required to be paid in respect of such Tax under
Section 2(d)(i)(4) (other than by reason of Section 2(d)(i)(4)(A) or
(B)).
(iii) TAX EVENT MERGER. The party (the "Burdened Party") on the next
succeeding Scheduled Payment Date will either (1) be required to pay an
additional amount in respect of an Indemnifiable Tax under Section
2(d)(i)(4) (except in respect of interest under Section 2(e), 6(d)(ii)
or 6(e)) or (2) receive a payment from which an amount has been
deducted or withheld for or on account of any Indemnifiable Tax in
respect of which the other party is not required to pay an additional
amount (other than by reason of Section 2(d)(i)(4)(A) or (B)), in
either case as a result of a party consolidating or a malgamating with,
or merging with or into, or transferring all or substantially all its
assets to, another entity (which will be the Affected Party) where such
action does not constitute an event described in Section 5(a)(viii);
(iv) CREDIT EVENT UPON MERGER. If "Credit Event Upon Merger" is
specified in the Schedule as applying to the party, such party ("X"),
any Credit Support Provider of X or any applicable Specified Entity of
X consolidates or amalgamates with, or merges with or into, or
transfers all or substantially all its assets to, another entity and
such action does not constitute an event described in Section
5(a)(viii) but the creditworthiness of the resulting, surviving or
transferee entity is materially weaker than that of X, such Credit
Support Provider or such Specified Entity, as the case may be,
immediately prior to such
<PAGE>
action (and, in such event, X or its successor or transferee, as
appropriate, will be the Affected Party); or
(v) ADDITIONAL TERMINATION EVENT. If any "Additional Termination Event"
is specified in the Schedule or any Confirmation as applying, the
occurrence of such event (and, in such event, the Affected Party or
Affected Parties shall be as specified for such Additional Termination
Event in the Schedule or such Confirmation).
(c) EVENT OF DEFAULT AND ILLEGALITY. If an event or circumstance which would
otherwise constitute or give rise to an Event of Default also constitutes an
Illegality, it will be treated as an Illegality and will not constitute an Event
of Default.
6. EARLY TERMINATION
(a) RIGHT TO TERMINATE FOLLOWING EVENT OF DEFAULT. If at any time an Event of
Default with respect to a party (the "Defaulting Party") has occurred and is
then continuing, the other party (the "Non-defaulting Party") may, by not more
than 20 days notice to the Defaulting Party specifying the relevant Event of
Default, designate a day not earlier than the day such notice is effective as an
Early Termination Date in respect of all outstanding Transactions. If, however,
"Automatic Early Termination" is specified in the Schedule as applying to a
party, then an Early Termination Date in respect of all outstanding Transactions
will occur immediately upon the occurrence with respect to such party of an
Event of Default specified in Section 5 (a)(vii)(1), (3), (5), (6) or, to the
extent analogous thereto, (8), and as of the time immediately preceding the
institution of the relevant proceeding or the presentation of the relevant
petition upon the occurrence with respect to such party of an Event of Default
specified in Section 5(a)(vii)(4) or, to the extent analogous thereto, (8).
(b) RIGHT TO TERMINATE FOLLOWING TERMINATION EVENT.
(i) NOTICE. If a Termination Event occurs, an Affected Party will,
promptly upon becoming aware of it, notify the other party, specifying
the nature of that Termination Event and each Affected Transaction and
will also give such other information about that Termination Event as
the other party may reasonably require.
(ii) TRANSFER TO AVOID TERMINATION EVENT. If either an Illegality under
Section 5(b)(i)(1) or a Tax Event occurs and there is only one Affected
Party, or if a Tax Event Upon Merger occurs and the Burdened Party is
the Affected Party, the Affected Party will, as a condition to is right
to designate an Early Termination Date under Section 6(b)(iv), use all
reasonable efforts (which will not require such party to incur a loss,
excluding immaterial, incidential expenses) to transfer within 20 days
after it gives notice under Section 6(b)(i) all its rights and
obligations under this Agreement in respect of the Affected
Transactions to another of its Offices or Affiliates so that such
Termination Event ceases to exist.
If the Affected Party is not able to make such a transfer it will give
notice to the other party to that effect within such 20 day period,
whereupon the other party may
<PAGE>
effect such a transfer within 30 days after the notice is given under
Section 6(b)(i).
Any such transfer by a party under this Section 6(b)(ii) will be
subject to and conditional upon the prior written consent of the other
party, which consent will not be withheld if such other party's
policies in effect at such time would permit it to enter into
transactions with the transferee on the terms proposed.
(iii) TWO AFFECTED PARTIES. If an Illegality under Section 5(b)(i)(1)
or a Tax Event occurs and there are two Affected Parties, each party
will use all reasonable efforts to reach agreement within 30 days after
notice thereof is given under Section 6(b)(i) on action to avoid that
Termination Event.
(iv) RIGHT TO TERMINATE. If:--
(1) a transfer under Section (b)(ii) or an agreement under Section
6(b)(iii), s the case may be, has not been affected with respect to
all Affected Transactions within 30 days after an Affected Party
gives notice under section 6(b)(i); or
(2) an Illegality under Section 5(b)(i)(2), a Credit Event Upon
Merger or an Additional Termination Event occurs, or a Tax Event
Upon Merger occurs and the Burdened Party is not the Affected
Party.
either party in the case of an Illegality, any Burdened Party in the case of a
Tax Event Upon Merger, any Affected Party in the case of a Tax Eent or an
Additional Termination Event if there is more than one Affected Party, or the
party which is not the Affected Party in the case of a Credit Event Upon Merger
or an Additional Termination Event if there is only one Affected Party may, by
not more than 20 days notice to the other party and provided that the relevant
Termination Event is then continuing, designate a day not earlier than the day
such notice is effective as an Early Termination Date in respect of all Affected
Transactions.
(c) EFFECT OF DESIGNATION.
(i) If notice designating an Early Termination Date is given under
Section 6(a) or (b), the Early Termination Date will occur on the date
so designated, whether or not the relevant Event of Default or
Termination Event is then continuing.
(ii) Upon the occurrence or effective designation of an Early
Termination Date, no further payments or deliveries under Section
2(a)(i) or 2(e) in respect of the Terminated Transactions will be
required to be made, but without prejudice to the other provisions of
this Agreement. The amount, if any, payable in respect of an Early
Termination Date shall be determined pursuant to Section 6(e).
<PAGE>
(d) CALCULATIONS.
(i) STATEMENT. On or as soon as reasonably practicable following the
occurrence of an Early Termination Date, each party will make the
calculations on its part, if any, contemplated by Section 6(e) and will
provide to the other party a statement (1) showing, in reasonable
detail, such calculations (including all relevant quotations and
specifying any amount payable under Section 6(e)) and (2) giving
details of the relevant account to which any amount payable to it is to
be paid. In the absence of written confirmation from the source of a
quotation obtained in determining a Market Quotation, the records of
the party obtaining such quotation will be conclusive evidence of the
existence and accuracy of such quotation.
(ii) PAYMENT DATE. An amount calculated as being due in respect of any
Early Termination Date under Section 6(e) will be payable on the day
that notice of the amount payable is effective (in the case of an Early
Termination Date which is designated or occurs as a result of an Event
of Default) and on the day which is two Local Business Days after the
day on which notice of the amount payable is effective (in the case of
an Early Termination Date which is designated as a result of a
Termination Event). Such amount will be paid together with (to the
extent permitted under applicable law) interest thereon (before as well
as after judgment), from (and including) the relevant Early Termination
Date to (but excluding) the date such amount is paid, at the Applicable
Rate. Such interest will be calculated on the basis of daily
compounding and the actual number of days elapsed.
(e) PAYMENTS ON EARLY TERMINATION. If an Early Termination Date occurs, the
following provisions shall apply based on the parties' election in the Schedule
of a payment measure, either "Market Quotation" or "Loss", and a payment method,
either the "First Method" or the "Second Method". If the parties fail to
designate a payment measure or payment method in the Schedule, it will be deemed
that "Market Quotation" or the "Second Method", as the case may be, shall apply.
The amount, if any, payable in respect of an Early Termination Date and
determined pursuant to this Section will be subject to any Set-off.
(i) EVENTS OF DEFAULT. If the Early Termination results from an Event
of Default:
(1) FIRST METHOD AND MARKET QUOTATION. If the First Method and
Market Quotation apply, the Defaulting Party will pay to the
Non-defaulting Party the excess, if a positive number, of (A) the
sum of the Settlement Amount (determined by the Non-defaulting
Party) in respect of the Terminated Transactions and the
Termination Currency Equivalent of the Unpaid Amounts owing to the
Non-defaulting Party over (B) the Termination Currency Equivalent
of the Unpaid Amounts owing to the Defaulting Party.
(2) FIRST METHOD AND LOSS. If the First Method and Loss apply, the
Defaulting Party will pay to the Non-defaulting Party, if a
positive number, the Non-defaulting Party's Loss in respect of this
Agreement.
(3) SECOND METHOD AND MARKET QUOTATION. If the Second Method and
Market Quotation apply, an amount will be payable equal to (A) the
sum of the Settlement Amount (determined by the Non-defaulting
Party) in respect of the Terminated Transactions and the
Termination Currency Equivalent of the Unpaid Amounts owing to the
Non-defaulting
<PAGE>
Party less (B) the Termination Currency Equivalent of the Unpaid
Amounts owing to the Defaulting Party. If that amount is a positive
number, the Defaulting Party will pay it to the Non-defaulting
Party; if it is a negative number, the Non-defaulting Party will
pay the absolute value of that amount to the Defaulting Party.
(4) SECOND METHOD AND LOSS. If the Second Method and Loss apply, an
amount will be payable equal to the Non-defaulting Party's Loss in
respect of this Agreement. If that amount is a positive number, the
Defaulting Party will pay it to the Non-defaulting Party; if it is
a negative number, the Non-defaulting Party will pay the absolute
value of that amount to the Defaulting Party.
(ii) TERMINATION EVENTS. If the Early Termination Date results from a
Termination Event:
(1) ONE AFFECTED PARTY. If there is one Affected Party, the amount
payable will be determined in accordance with Section 6(e)(i)(3),
if Market Quotation applies, or Section 6(e)(i)(4), if Loss
applies, except that, in either case, references to the Defaulting
Party and to the Non-defaulting Party will be deemed to be
references to the Affected Party and the party which is not the
Affected Party, respectively, and, if Loss applies and fewer than
all the Transactions are being terminated, Loss shall be calculated
in respect of all Terminated Transactions.
(2) TWO AFFECTED PARTIES. If there are two Affected Parties:
(A) if Market Quotation applies, each party will determine a
Settlement Amount in respect of the Terminated Transactions,
and an amount will be payable equal to (I) the sum of (a)
one-half of the difference between the Settlement Amount of the
party with the higher Settlement Amount ("X") and the
Settlement Amount of the party with the lower Settlement Amount
("Y") and (b) the Termination Currency Equivalent of the Unpaid
Amounts owing to X less (II) the Termination Currency
Equivalent of the Unpaid Amounts owing to Y; and
(B) if Loss applies, each party will determine its Loss in
respect of this Agreement (or, if fewer than all the
Transactions are being terminated, in respect of all Terminated
Transactions) and an amount will be payable equal to one-half
of the difference between the Loss of the party with the higher
Loss ("X") and the Loss of the party with the lower Loss ("Y").
If the amount payable is a positive number, Y will pay it to X; if it
is a negative number, X will pay the absolute value of that amount to
Y.
(iii) ADJUSTMENT FOR BANKRUPTCY. In circumstances where an Early
Termination Date occurs because "Automatic Early Termination" applies
in respect of a party, the amount determined under this Section 6(e)
will be subject to such adjustments as are appropriate and permitted by
law to reflect any payments or deliveries made by one party to the
other under this Agreement (and retained by such other party) during
the period from the
<PAGE>
relevant Early Termination Date to the date for payment determined
under Section 6(d)(ii).
(iv) PRE-ESTIMATE. The parties agree that if Market Quotation applies
an amount recoverable under this Section 6(e) is a reasonable
pre-estimate of loss and not a penalty. Such amount is payable for the
loss of bargain and the loss of protection against future risks and
except as otherwise provided in this Agreement neither party will be
entitled to recover any additional damages as a consequence of such
losses.
7. TRANSFER
Subject to Section 6(b)(ii), neither this Agreement nor any interest or
obligation in or under this Agreement may be transferred (whether by way of
security or otherwise) by either party without the prior written consent of the
other party, except that: --
(a) a party may make such a transfer of this Agreement pursuant to a
consolidation or amalgamation with, or merger with or into, or transfer of all
or substantially all its assets to, another entity (but without prejudice to any
other right or remedy under this Agreement); and
(b) a party may make such a transfer of all or any part of its interest in any
amount payable to it from a Defaulting Party under Section 6(e).
Any purported transfer that is not in compliance with this Section will be void.
8. CONTRACTUAL CURRENCY
(a) PAYMENT IN THE CONTRACTUAL CURRENCY. Each payment under this Agreement will
be made in the relevant currency specified in this Agreement for that payment
(the "Contractual Currency"). To the extent permitted by applicable law, any
obligation to make payments under this Agreement in the Contractual Currency
will not be discharged or satisfied by any tender in any currency other than the
Contractual Currency, except to the extent such tender results in the actual
receipt by the party to which payment is owed, acting in a reasonable manner and
in good faith in converting the currency so tendered into the Contractual
Currency, of the full amount in the Contractual Currency of all amounts payable
in respect of this Agreement. If for any reason the amount in the Contractual
Currency so received falls short of the amount in the Contractual Currency
payable in respect of this Agreement, the party required to make the payment
will, to the extent permitted by applicable law, immediately pay such additional
amount in the Contractual Currency as may be necessary to compensate for the
shortfall. If for any reason the amount in the Contractual Currency so received
exceeds the amount in the Contractual Currency payable in respect of this
Agreement, the party receiving the payment will refund promptly the amount of
such excess.
(b) JUDGMENTS. To the extent permitted by applicable law, if any judgment or
order expressed in a currency other than the Contractual Currency is rendered
(i) for the payment of any amount owing in respect of this Agreement or (ii)
for the payment of any amount relating to any early termination in respect of
this Agreement or (iii) in respect of a judgment or order of another court for
the payment of any amount described in (i) or (ii) above, the party seeking
<PAGE>
recovery, after recovery in full of the aggregate amount to which such party is
entitled pursuant to the judgment or order, will be entitled to receive
immediately from the other party the amount of any shortfall of the Contractual
Currency received by such party as a consequence of sums paid in such other
currency and will refund promptly to the other party any excess of the
Contractual Currency received by such party as a consequence of sums paid in
such other currency if such shortfall or such excess arises or results from any
variation between the rate of exchange at which the Contractual Currency is
converted into the currency of the judgment or order for the purposes of such
judgment or order and the rate of exchange at which such party is able, acting
in a reasonable manner and in good faith in converting the currency received
into the Contractual Currency, to purchase the Contractual Currency with the
amount of the currency of the judgment or order actually received by such party.
The term "rate of exchange" includes, without limitation, any premiums and costs
of exchange payable in connection with the purchase of or conversion into the
Contractual Currency.
(c) SEPARATE INDEMNITIES. To the extent permitted by applicable law, these
indemnities constitute separate and independent obligations from the other
obligations in this Agreement, will be enforceable as separate and independent
causes of action, will apply notwithstanding any indulgence granted by the party
to which any payment is owed and will not be affected by judgment being obtained
or claim or proof being made for any other sums payable in respect of this
Agreement.
(d) EVIDENCE OF LOSS. For the purpose of this Section 8, it will be sufficient
for a prty to demonstrate that it would have suffered a loss bad an actual
exchange or purchase been made.
9. MISCELLANEOUS
(a) ENTIRE AGREEMENT. This Agreement constitutes the entire agreement and
understanding of the parties with respect to its subject matter and supersedes
all oral communication and prior writings with respect thereto.
(b) AMENDMENTS. No amendment, modification or waiver in respect of this
Agreement will be effective unless in writing (including a writing evidenced by
a facsimile transmission) and executed by each of the parties or confirmed by an
exchange of telexes or electronic messages on an electronic messaging system.
(c) SURVIVAL OF OBLIGATIONS. Without prejudice to Sections 2(a)(iii) and
6(c)(ii), the obligations of the parties under this Agreement will survive the
termination of any Transaction.
(d) REMEDIES CUMULATIVE. Except as provided in this Agreement, the rights,
powers, remedies and privileges provided in this Agreement are cumulative and
not exclusive of any rights, powers, remedies and privileges provided by law.
(e) COUNTERPARTS AND CONFIRMATIONS.
(i) This Agreement (and each amendment, modification and waiver in
respect of it) may be executed and delivered in counterparts (including
by facsimile transmission), each of which will be deemed an original.
<PAGE>
(ii) The parties intend that they are legally bound by the terms of
each Transaction from the moment they agree to those terms (whether
orally or otherwise). A Confirmation shall be entered into as soon as
practicable and may be executed and delivered in counterparts
(including by facsimile transmission) or be created by an exchange of
telexes or by an exchange of electronic messages on an electronic
messaging system, which in each case will be sufficient for all
purposes to evidence a binding supplement to this Agreement. The
parties will specify therein or through another effective means that
any such counterpart, telex or electronic message constitutes a
Confirmation.
(f) NO WAIVER OF RIGHTS. A failure or delay in exercising any right, power or
privilege in respect of this Agreement will not be presumed to operate as a
waiver, and a single or partial exercise of any right, power or privilege will
not be presumed to preclude any subsequent or further exercise, of that right,
power or privilege or the exercise of any other right, power or privilege.
(g) HEADINGS. The headings used in this Agreement are for convenience of
reference only and are not to affect the construction of or to be taken into
consideration in interpreting this Agreement.
10. OFFICES; MULTIBRANCH PARTIES
(a) If Section 10(a) is specified in the Schedule as applying, each party that
enters into a Transaction through an Office other than its head or home office
represents to the other party that, notwithstanding the place of booking office
or jurisdiction of incorporation or organization of such party, the obligations
of such party are the same as if it had entered into the Transaction through its
head or home office. This representation will be deemed to be repeated by such
party on each date on which a Transaction is entered into.
(b) Neither party may change the Office through which it makes and receives
payments or deliveries for the purpose of a Transaction without the prior
written consent of the other party.
(c) If a party is specified as a Multibranch Party in the Schedule, such
Multibranch Pary may make and receive payments or deliveries under any
Transaction through any Office listed in the Schedule, and the Office through
which it makes and receives payments or deliveries with respect to a Transaction
will be specified in the relevant Confirmation.
11. EXPENSES
A Defaulting Party will, on demand, indemnify and hold harmless the other party
for and against all reasonable out-of-pocket expenses, including legal fees and
Stamp Tax, incurred by such other party by reason of the enforcement and
protection of its rights under this Agreement or any Credit Support Document to
which the Defaulting Party is a party or by reason of the early termination of
any Transaction, including, but not limited to, costs of collection.
<PAGE>
12. NOTICES
(a) EFFECTIVENESS. Any notice or other communication in respect of this
Agreement may be given in any manner set forth below (except that a notice or
other communication under Section 5 or 6 may not be given by facsimile
transmission or electronic messaging system) to the address or number or in
accordance with the electronic messaging system details provided (see the
Schedule) and will be deemed effective as indicated:--
(i) if in writing and delivered in person or by courier, on the date it
is delivered;
(ii) if sent by telex, on the date the recipient's answerback is
received;
(iii) if sent by facsimile transmission, on the date that transmission
is received by a responsible employee of the recipient in legible form
(it being agreed that the burden of proving receipt will be on the
sender and will not be met by a transmission report generated by the
sender's facsimile machine);
(iv) if sent by certified or registered mail (airmail, if overseas) or
the equivalent (return receipt requested), on the date that mail is
delivered or its delivery is attempted; or
(v) if sent by electronic messaging system, on the date that electronic
message is received.
unless the date of that delivery (or attempted delivery) or that receipt, as
applicable, is not a Local Business Day or that communication is delivered (or
attempted) or received, as applicable, after the close of business on a Local
Business Day, in which case that communication shall be deemed given and
effective on the first following day that is a Local Business Day.
(b) CHANGE OF ADDRESSES. Either party may by notice to the other change the
address, telex or facsimile number or electronic messaging system details at
which notices or other communications are to be given to it.
13. GOVERNING LAW AND JURISDICTION
(a) GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the law specified in the Schedule.
(b) JURISDICTION. With respect to any suit, action or proceedings relating to
this Agreement ("Proceedings"), each party irrevocably:
(i) submits to the jurisdiction of the English courts, if this
Agreement is expressed to be governed by English law, or to the
non-exclusive jurisdiction of the courts of the State of New York and
the United States District Court located in the Borough of Manhattan in
New York City, if this Agreement is expressed to be governed by the
laws of the State of New York; and
(ii) waives any objection which it may have at any time to the laying
of venue of any Proceedings brought in any such court, waives any claim
that such Proceedings have been brought in an inconvenient forum and
further waives the right to object, with respect to such Proceedings,
that such court does not have any jurisdiction over such party.
<PAGE>
Nothing in this Agreement precludes either party from bringing Proceedings in
any other jurisdiction (outside, if this Agreement is expressed to be governed
by English law, the Contracting States, as defined in Section 1(3) of the Civil
Jurisdiction and Judgments Act 1982 or any modification, extension or
re-enactment thereof for the time being in force) nor will the bringing of
Proceedings in any one or more jurisdictions preclude the bringing of
Proceedings in any other jurisdiction.
(c) SERVICE OF PROCESS. Each party irrevocably appoints the Process Agent (if
any) specified opposite its name in the Schedule to receive, for it and on its
behalf, service of process in any Proceedings. If for any reason any party's
Process Agent is unable to act as such, such party will promptly notify the
other party and within 30 days appoint a substitute process agent acceptable to
the other party. The parties irrevocably consent to service of process given in
the manner provided for notices in Section 12. Nothing in this Agreement will
affect the right of either party to serve process in any other manner permitted
by law.
(d) WAIVER OF IMMUNITIES. Each party irrevocably waives, to the fullest extent
permitted by applicable law, with respect to itself and its revenues and assets
(irrespective of their use or intended use), all immunity on the grounds of
sovereignty or other similar grounds from (i) suit, (ii) jurisdiction of any
court, (iii) relief by way of injunction, order for specific performance or for
recovery of property, (iv) attachment of its assets (whether before or after
judgment) and (v) execution or enforcement of any judgment to which it or its
revenues or assets might otherwise be entitled in any Proceedings in the courts
of any jurisdiction and irrevocably agrees, to the extent permitted by
applicable law, that it will not claim any such immunity in any Proceedings.
14. Definitions
As used in this Agreement:
"ADDITIONAL TERMINATION EVENT" has the meaning specified in Section 5(b).
"AFFECTED PARTY" has the meaning specified in Section 5(b).
"AFFECTED TRANSACTIONS" means (a) with respect to any Termination Event
consisting of an Illegality, Tax Event or Tax Event Upon Merger, all
Transactions affected by the occurrence of such Termination Event and (b) with
respect to any other Termination Event, all Transactions.
"AFFILIATE" means, subject to the Schedule, in relation to any person, any
entity controlled, directly or indirectly, by the person, any entity that
controls, directly or indirectly, the person or any entity directly or
indirectly under common control with the person. For this purpose, "control" of
any entity or person means ownership of a majority of the voting power of the
entity or person.
"APPLICABLE RATE" means:
(a) in respect of obligations payable or deliverable (or which would have been
but for Section 2(a)(iii)) by a Defaulting Party, the Default Rate;
(b) in respect of an obligation to pay an amount under Section 6(e) of either
party from and after the date (determined in accordance with Section 6(d)(ii))
on which that amount is payable, the Default Rate;
(c) in respect of all other obligations payable or deliverable (or which would
have been but for Section 2(a)(iii))by a Non-defaulting Party, the Non-default
Rate; and
<PAGE>
(d) in all other cases, the Termination Rate.
"BURDENED PARTY"has the meaning specified in Section 5(b).
"CHANGE IN TAX LAW" means the enactment, promulgation, execution or ratification
of, or any change in or amendment to, any law (or in the application or official
interpretation of any law) that occurs on or after the date on which the
relevant Transaction is entered into.
"CONSENT" includes a consent, approval, action, authorization, exemption,
notice, filing, registration or exchange control consent.
"CREDIT EVENT UPON MERGER" has the meaning specified in Section 5(b).
"CREDIT SUPPORT DOCUMENT" means any agreement or instrument that is specified as
such in this Agreement.
"CREDIT SUPPORT PROVIDER" has the meaning specified in the Schedule.
"DEFAULT RATE" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the relevant payee (as certified by it) if it
were to fund or of funding the relevant amount plus 1% per annum.
"DEFAULTING PARTY" has the meaning specified in Section 6(a).
"EARLY TERMINATION DATE" means the date determined in accordance with Section
6(a) or 6(b)(iv).
"EVENT OF DEFAULT" has the meaning specified in Section 5(a) and, if applicable,
in the Schedule.
"ILLEGALITY" has the meaning specified in Section 5(b).
"INDEMNIFIABLE TAX" means any Tax other than a Tax that would not be imposed in
respect of a payment under this Agreement but for a present or former connection
between the jurisdiction of the government or taxation authority imposing such
Tax and the recipient of such payment or a person related to such recipient
(including, without limitation, a connection arising from such recipient or
related person being or having been a citizen or resident of such jurisdiction,
or being or having been organized, present or engaged in a trade or business in
such jurisdiction, or having or having had a permanent establishment or fixed
place of business in such jurisdiction, but excluding a connection arising
solely from such recipient or related person having executed, delivered,
performed its obligations or received a payment under, or enforced, this
Agreement or a Credit Support Document).
"LAW" includes any treaty, law, rule or regulation (as modified, in the case of
tax matters by the practice of any relevant governmental revenue authority) and
"LAWFUL" and "UNLAWFUL" will be construed accordingly.
"LOCAL BUSINESS DAY" means, subject to the Schedule, a day on which commercial
banks are open for business (including dealings in foreign exchange and foreign
currency deposits) (a) in relation to any obligation under Section 2(a)(i), in
the place(s) specified in the relevant
<PAGE>
Confirmation or, if not so specified, as otherwise agreed by the parties in
writing or determined pursuant to provisions contained, or incorporated by
reference, in this Agreement, (b) in relation to any other payment, in the place
where the relevant account is located and, if different, in the principal
financial centre, if any, of the currency of such payment, (c) in relation to
any notice or other communication, including notice contemplated under Section
5(a)(i), in the city specified in the address for notice provided by the
recipient and, in the case of a notice contemplated by Section 2(b), in the
place where the relevant new account is to be located and (d) in relation to
Section 5(a)(v)(2), in the relevant locations for performance with respect to
such Specified Transaction.
"LOSS" means, with respect to this Agreement or one or more Terminated
Transactions, as the case may be, and a party, an amount that party reasonably
determines in good faith to be its total losses and costs (or gain, in which
case expressed as a negative number) in connection with this Agreement or that
Terminated Transaction or group of Terminated Transactions, as the case may be,
including any loss of bargain, cost of funding or, at the election of such party
but without duplication, loss or cost incurred as a result of its terminating,
liquidating, obtaining or reestablishing any hedge or related trading position
(or any gain resulting from any of them). Loss includes losses and costs (or
gains) in respect of any payment or delivery required to have been made
(assuming satisfaction of each applicable condition precedent) on or before the
relevant Early Termination Date and not made, except, so as to avoid
duplication, if Section 6(e)(i)(1) or (3) or 6(e)(ii)(2)(A) applies. Loss does
not include a party's legal fees and out-of-pocket expenses referred to under
Section 11. A party will determine its Loss as of the relevant Early Termination
Date, or, if that is not reasonably practicable, as of the earliest date
thereafter as is reasonably practicable. A party may (but need not) determine
its Loss by reference to quotations of relevant rates or prices from one or more
leading dealers in the relevant markets.
"MARKET QUOTATION" means, with respect to one or more Terminated Transactions
and a party making the determination, an amount determined on the basis of
quotations from Reference Market-makers. Each quotation will be for an amount,
if any, that would be paid to such party (expressed as a negative number) or by
such party (expressed as a positive number) in consideration of an agreement
between such party (taking into account any existing Credit Support Document
with respect to the obligations of such party) and the quoting Reference
Market-maker to enter into a transaction (the "Replacement Transaction") that
would have the effect of preserving for such party the economic equivalent of
any payment or delivery (whether the underlying obligation was absolute or
contingent and assuming the satisfaction of each applicable condition precedent)
by the parties under Section 2(a)(i) in respect of such Terminated Transaction
or group of Terminated Transactions that would, but for the occurrence of the
relevant Early Termination Date, have been required after that date. For this
purpose, Unpaid Amounts in respect of the Terminated Transaction or group of
Terminated Transactions are to be excluded but, without limitation, any payment
or delivery that would, but for the relevant Early Termination Date, have been
required (assuming satisfaction of each applicable condition precedent) after
that Early Termination Date is to be included. The Replacement Transaction would
be subject to such documentation as such party and the Reference Market-maker
may, in good faith, agree. The party making the determination (or its agent)
will request each Reference Market-maker to provide its quotation to the extent
reasonably practicable as of the same day and time (without regard to different
time zones) on or as soon as reasonably practicable after the relevant Early
Termination Date. The day and time as of which those quotations are to be
<PAGE>
obtained will be selected in good faith by the party obliged to make a
determination under Section 6(e), and, if each party is so obliged, after
consultation with the other. If more than three quotations are provided, the
Market Quotation will be the arithmetic mean of the quotations, without regard
to the quotations having the highest and lowest values. If exactly three such
quotations are provided, the Market Quotation will be the quotation remaining
after disregarding the highest and lowest quotations. For this purpose, if more
than one quotation has the same highest value or lowest value, then one of such
quotations shall be disregarded. If fewer than three quotations are provided, it
will be deemed that the Market Quotation in respect of such Terminated
Transaction or group of Terminated Transactions cannot be determined.
"NON-DEFAULT RATE" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the Non-defaulting Party (as certified by it) if
it were to fund the relevant amount.
"NON-DEFAULTING PARTY" has the meaning specified in Section 6(a).
"OFFICE" means a brnach or office of a party, which may be such party's head or
home office.
"POTENTIAL EVENT OF DEFAULT" means any event which, with the giving of notice or
the lapse of time or both, would constitute an Event of Default.
"REFERENCE MARKET-MAKERS" means four leading dealers in the relevant market
selected by the party determining a Market Quotation in good faith (a) from
among dealers of the highest credit standing which satisfy all the criteria that
such party applies generally at the time in deciding whether to offer or to make
an extension of credit and (b) to the extent practicable, from among such
dealers having an office in the same city.
"RELEVANT JURISDICTION" means, with respect to a party, the jurisdictions (a) in
which the party is incorporated, organized, managed and controlled or considered
to have its seat, (b) where an Office through which the party is acting for
purposes of this Agreement is located, (c) in which the party executes this
Agreement and (d) in relation to any payment, from or through which such payment
is made.
"SCHEDULED PAYMENT DATE" means a date on which a payment or delivery is to be
made under Section 2(a)(i) with respect to a Transaction.
"SET-OFF" means set-off, offset, combination of accounts, right of retention or
withholding or similar right or requirement to which the payer of an amount
under Section 6 is entitled or subject (whether arising under this Agreement,
another contract, applicable law or otherwise) that is exercised by, or imposed
on, such payer.
"SETTLEMENT AMOUNT" means, with respect to a party and any Early Termination
Date, the sum of:
(a) the Termination Currency Equivalent of the Market Quotations (whether
positive or negative) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation is determined; and
<PAGE>
(b) such party's Loss (whether positive or negative and without reference to any
Unpaid Amounts) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation cannot be determined or would not (in
the reasonable belief of the party making the determination) produce a
commercially reasonable result.
SPECIFIED ENTITY" has the meaning specified in the Schedule.
"SPECIFIED INDEBTEDNESS" means, subject to the Schedule, any obligation (whether
present or future, contingent or otherwise, as principal or surety or otherwise)
in respect of borrowed money.
"SPECIFIED TRANSACTION" means, subject to the Schedule, (a) any transaction
(including an agreement with respect thereto) now existing or hereafter entered
into between one party to this Agreement (or any Credit Support Provider of such
party or any applicable Specified Entity of such party) and the other party to
this Agreement (or any Credit Support Provider of such other party or any
applicable Specified Entity of such other party) which is a rate swap
transaction, basis swap, forward rate transaction, commodity swap, commodity
option, equity or equity index swap, equity or equity index option, bond option,
interest rate option, foreign exchange transaction, cap transaction, floor
transaction, collar transaction, currency swap transaction, cross-currency rate
swap transaction, currency option or any other similar transaction (including
any option with respect to any of these transactions), (b) any combination of
these transactions and (c) any other transaction identified as a Specified
Transaction in this Agreement or the relevant confirmation.
"STAMP TAX" means any stamp, registration, documentation or similar tax.
"TAX" means any present or future tax, levy, impost, duty, charge, assessment or
fee of any nature (including interest, penalties and additions thereto) that is
imposed by any government or other taxing authority in respect of any payment
under this Agreement other than a stamp, registration, documentation or similar
tax.
"TAX EVENT" has the meaning specified in Section 5(b).
"TAX EVENT UPON MERGER" has the meaning specified in Section 5(b).
"TERMINATED TRANSACTIONS" means with respect to any Early Termination Date (a)
if resulting from a Termination Event, all Affected Transactions and (b) if
resulting from an Event of Default, all Transactions (in either case) in effect
immediately before the effectiveness of the notice designating that Early
Termination Date (or, if "Automatic Early Termination" applies, immediately
before that Early Termination Date).
"TERMINATION CURRENCY" has the meaning specified in the Schedule.
"TERMINATION CURRENCY EQUIVALENT" means, in respect of any amount denominated in
the Termination Currency, such Termination Currency amount and, in respect of
any amount denominated in a currency other that the Termination Currency (the
"Other Currency"), the amount in the Termination Currency determined by the
party making the relevant determination
<PAGE>
as being required to purchase such amount of such Other Currency as at the
relevant Early Termination Date, or if the relevant Market Quotation or Loss (as
the case may be), is determined as of a later date, that later date, with the
Termination Currency at the rate equal to the spot exchange rate of the foreign
exchange agent (selected as provided below) for the purchase of such Other
Currency with the Termination Currency at or about 11:00 a.m. (in the city in
which such foreign exchange agent is located) on such date as would be customary
for the determination of such a rate for the purchase of such Other Currency for
value on the relevant Early Termination Date or that later date. The foreign
exchange agent will, if only one party is obliged to make a determination under
Section 6(e), be selected in good faith by that party and otherwise will be
agreed by the parties.
"TERMINATION EVENT" means Illegality or, if specified to be applicable, a Credit
Event Upon Merger or an Additional Termination Event.
"TERMINATION RATE" means a rate per annum equal to the arithmetic mean of the
cost (without proof or evidence of any actual cost) to each party (as certified
by such party) if it were to fund or of funding such amounts.
"UNPAID AMOUNTS" owing to any party means, with respect to an Early Termination
Date, the aggregate of (a) in respect of all Terminated Transactions, the
amounts that became payable (or that would have become payable but for Section
2(a)(iii)) to such party under Section 2(a)(i) on or prior to such Early
Termination Date and which remain unpaid as at such Early Termination Date and
(b) in respect of each Terminated Transaction, for each obligation under Section
2(a)(i) which was (or would have been but for Section 2(a)(iii)) required to be
settled by delivery to such party on or prior to such Early Termination Date and
which has not been so settled as at such Early Termination Date, an amount equal
to the fair market value of that which was (or would have been) required to be
delivered as of the originally scheduled date for delivery, in each case
together with (to the extent permitted under applicable law) interest, in the
currency of such amounts, from (and including) the date such amounts or
obligations were or would have been required to have been paid or performed to
(but excluding) such Early Termination Date, at the Applicable Rate. Such
amounts of interest will be calculated on the basis of daily compounding and the
actual number of days elapsed. The fair market value of any obligation referred
to in clause (b) above shall be reasonably determined by the party obliged to
make the determination under Section 6(e) or, if each party is so obliged, it
shall be the average of the fair market values reasonably determined by both
parties.
IN WITNESS WHEREOF the parties have executed this document on the
respective dates specified below with effect from the date specified on the
first page of this document.
NATIONSBANK, N.A. COMMODORE HOLDINGS LIMITED
- ---------------------------------- ----------------------------------
(NAME OF PARTY) (NAME OF PARTY)
By: /s/ ROGER H. HEINTZELMAN By: /s/ ALAN PRITZKER
------------------------------- ----------------------------------
Name: Roger H. Heintzelman Name: Alan Pritzker
Title: Vice President Title: Chief Financial Officer
Date: 3/8/99 Date: 2/12/99
<PAGE>
(Multicurrency--Cross Border)
ISDA
International Swap Dealers Association, Inc.
SCHEDULE
TO THE
MASTER AGREEMENT
dated as of FEBRUARY 5, 1999
between NATIONSBANK, N.A. and COMMODORE HOLDINGS LIMITED
("Party A") ("Party B")
PART 1: TERMINATION PROVISION
(a) "CREDIT AGREEMENT" means the Loan Agreement to be entered into on or
about February 10, 1999, by and between NationsBank, N.A., as Bank, and
Commodore Holdings Limited, as Borrower, as amended, modified,
supplemented, restated or replaced from time to time with the consent
of Party A.
(b) "SPECIFIED ENTITY" means in relation to Party A for the purpose of:
Section 5(a)(v) (Default under Specified Transaction), none;
Section 5(a)(vi) (Cross Default), none;
Section 5(a)(vii) (Bankruptcy), none; and
Section 5(a)(iv) (Credit Even Upon Merger), none;
in relation to Party B for the purpose of:
Section 5(a)(v) (Default under Specified Transaction), none;
Section 5(a)(vi) (Cross Default), none;
Section 5(a)(vii) (Bankruptcy), none; and
Section 5(a)(iv) (Credit Even Upon Merger), none;
(c) "SPECIFIED TRANSACTION" will have the meaning specified in Section 14.
<PAGE>
(d) The "CROSS DEFAULT" provisions of Section 5(a)(vi) (as amended in
Part 5(f))
will apply to Party A and
will apply to Party B.
In connection therewith, "SPECIFIED INDEBTEDNESS" with respect to Party
A will not have the meaning specified in Section 14, and such
definition shall be replaced by the following: "any obligation in
respect of the payment of moneys (whether present or future, contingent
or otherwise, as principal or surety or otherwise), except that such
term shall not include obligations in respect of deposits received in
the ordinary course of a party's banking business."
"SPECIFIED INDEBTEDNESS" with respect to Party B shall mean any and all
obligations under the Credit Agreement.
"THRESHOLD AMOUNT" means with respect to Party A an amount equal to
three percent (3%) of Party A's Shareholders' Equity and with respect
to Party B, any amount.
With respect to Party B, any event of default (howsoever defined) under
the Credit Agreement shall be an Event of Default under this Agreement.
"SHAREHOLDERS' EQUITY" means with respect to a party or its Credit
Support Provider the sum determined in accordance with generally
accepted accounting principles in such party's or Credit Support
Provider's jurisdiction of incorporation or organization, consistently
applied, as at the end of such party's or Credit Support Provider's
most recently completed fiscal year.
(e) The "CREDIT EVENT UPON MERGER" provisions of Section 5(b)(iv)
will apply to Party A
will apply to Party B.
(f) The "AUTOMATIC EARLY TERMINATION" provision of Section 6(a)
will not apply to Party A
will not apply to Party B.
(g) PAYMENTS ON EARLY TERMIANTION. For the purposes of Section 6(e):
(i) Loss will apply.
(ii) The Second Method will apply.
(h) "TERMINATION CURRENCY" means United States Dollars.
(i) "ADDITIONAL TERMINATION EVENT. Additional Termination Event will apply.
The following event shall constitute an Additional Termination Event
if:
Party A ceases to be a party to the Credit Agreement.
<PAGE>
PART 2: TAX REPRESENTATIONS
(a) PAYER TAX REPRESENTATIONS. For the purpose of Section 3(e) of this
Agreement, Party A and Party B will make the following
representations:--
It is not required by any applicable law, as modified by the practice of any
relevant governmental revenue authority of any Releveant Jurisdiction to make
any deduction or withholding for or on account of any Tax from any payment
(other than interest under section 2(e), 6(d)(ii) or 6(e) of this Agreement) to
be made by it to the other party under this Agreement. In making this
representation, it may rely on (x) the accuracy of any representations made by
the other party pursuant to Section 3(f) of this Agreement, (y) the satisfaction
of the agreement contained in Section 4(a)(i) or 4(a)(iii) of this Agreement and
the accuracy and effectiveness of any document provided by the other party
prusuant to Section 4(a)(i) or 4(a)(iii) of this Agreement and (z) the
satisfaction of the agreement of the other party contained in Section 4(d) of
this Agreement, PROVIDED that it shall not be a breach of this representation
where reliance is placed on clause (y) and the other party does not deliver a
form or document under Section 4(a)(iii) by reason of material prejudice to its
legal or commercial position.
(b) PAYEE TAX REPRESENTATIONS. For the purpose of Section 3(f) of this
Agreement, Party A and Party B will make the following representations
specified below, if any:
Not applicable.
PART 3: AGREEMENT TO DELIVER DOCUMENTS
For the purpose of Section 4(a)(i) and (ii) of this Agreement, each party agrees
to deliver the following documents:
(a) Tax forms, documents or certificates to be delivered are:
<TABLE>
<CAPTION>
PARTY
REQUIRED
TO DELIVER
DOCUMENT FORM/DOCUMENT/CERTIFICATE DATE BY WHICH TO BE DELIVERED
--------------------------- ---------------------------------- -----------------------------
<S> <C> <C>
Party A and Party B Any form, document or Upon request.
certificate as may be required
pursuant to Section 4(a)(iii) of
this Agreement.
</TABLE>
<PAGE>
(b) Other documents to be delivered are:
<TABLE>
<CAPTION>
PARTY REQUIRED
TO DELIVER DATE BY WHICH TO COVERED BY SECTION 3(D)
DOCUMENT FORM/DOCUMENT/CERTIFICATE BE DELIVERED REPRESENTATION
--------------------- ----------------------------------- --------------------- ---------------------------
<S> <C> <C> <C>
Party A and Party B Certified copies of all corporate Upon execution and Yes
authorizations and any other delivery of this
documents with respect to the Agreement
execution, deliver and
performance of this Agreement and
any Credit Support Document
Party A and Party B Certificate of authority and Upon execution and Yes
specimen signatures of delivery of this
individuals executing this Agreement
Agreement any Credit Support
Document and Confirmations
</TABLE>
PART 4: MISCELLANEOUS
(a) ADDRESS FOR NOTICES. For the purpose of Section 12(a) of this
Agreement:
Address for notice or communications to Party A:
NationsBank, N.A.
100 N. Tryon St., NC1-007-13-01
Charlotte, North Carolina 28255
Attention: Derivatives Documentation Unit
(Telex: 669959; Answerback: NATIONSBK CHA)
Facsimile: 704-386-4113
Address for notice or communications to Party B:
Commodore Holdings Limited
Attention: Mr. Alan Pritzker, CFO
4000 Hollywood Boulevard, #385-S
Hollywood, Florida 33021
Telephone No.: 954-967-2103
Facsimile No.: 954-967-2147
(b) PROCESS AGENT. For the purpose of Section 13(c):
Party A appoints as its Process Agent: Not applicable.
Party B appoints as its Process Agent:
Commodore Holdings Limited
Attention: Mr. Alan Pritzker, CFO
<PAGE>
4000 Hollywood Boulevard, #385-S
Hollywood, Florida 33021
Telephone No.: 954-967-2103
Facsimile No.: 954-967-2147
(c) OFFICES. The provisions of Section 10(a) will apply to this Agreement.
(d) MULTIBRANCH PARTY. For the purpose of Section 10 of this Agreement:
Party A is not a Multibranch Party.
Party B is not a Multibranch Party.
(e) CALCULATION AGENT. The Calculation Agent is Party A.
(f) CREDIT SUPPORT DOCUMENT. Details of any Credit Support Document:
Not Applicable
(g) CREDIT SUPPORT PROVIDER.
Credit Support Provider means in relation to Party A: Not Applicable.
Credit Support Provider means in relation to Party B: Not Applicable.
(h) GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the laws of the State of New York (without reference to
its conflict of laws doctrine).
(i) NETTING OF PAYMENTS. All amounts payable on the same date, in the same
currency and in respect of the same Transaction shall be netted in
accordance with Section 2(c) of this Agreement. The election contained
in the last paragraph of Section 2(c) of this Agreement shall not apply
for the purposes of this Agreement.
(j) "AFFILIATE" will have the meaning specified in Section 14 of this
Agreement.
PART 5: OTHER PROVISIONS
(a) DELIVER OF CONFIRMATIONS. For each Transaction entered into hereunder,
Party A shall promptly send to Party B a Confirmation via facsimile
transmission. Party B agrees to respond to such Confirmation within two
(2) Business Days, either confirming agreement thereto or requesting a
correction of any error(s) contained therein. Failure by Party A to
send a Confirmation or of Party B to respond within such period shall
not affect the validity or enforceability of such Transaction. Absent
manifest error, there shall be a presumption that the terms contained
in such Confirmation are the terms of the Transaction.
<PAGE>
(b) BANKRUPTCY. Section 5(a)(vii)(3) of this Agreement is hereby amended by
the substitution of the following therefor:
"(3) sends a notice covering a meeting to propose a voluntary
arrangement of creditors, or any class thereof, or makes a general
assignment, arrangement or composition with or for the benefit of its
creditors, or any class thereof;"
(c) FURNISHING SPECIFIED INFORMATION. Section 4(a)(iii) is hereby amended
by inserting "promptly upon the earlier of (i)" in lieu of the word
"upon" at the beginning thereof and inserting "or (ii) such party
learning that the form or document is required" before the word "any"
on the first line thereof.
(d) NOTICE BY FACSIMILE TRANSMISSION. Section 12(a) is hereby amended by
inserting the words "2(b)," between the word "Section" and the number
"5" and inserting the words "or 13(c)" between the number "6" and the
word "may" in the second line thereof.
(e) RECORDING OF CONVERSATIONS. Each party to this Agreement acknowledges
and agrees to the tape recording of conversations between the parties
to this Agreement whether by one or other or both of the parties or
their agents, and that any such tape recordings may be submitted in
evidence in any Proceedings relating to the Agreement.
(f) CROSS DEFAULT. Section 5(a)(vi) of this Agreement is hereby amended
adding the following after the semicolon at the end thereof:
"provided, however, that notwithstanding the foregoing (but subject to
any provision to the contrary contained in any such agreement or
instrument), an Event of Default shall not occur under either (1) or
(2) above if the default, event of default or other similar condition
or event referred to in (1) or the failure to pay referred to in (2) is
caused not (even in part) by the unavailability of funds but is cause
solely due to a technical or administrative error which has been
remedied within three Business Days after notice of such failure is
given to the party."
(g) Section 3(a) of this Agreement is amended by (i) deleting the word
"and" at the end of clause (iv); (ii) deleting the period at the end of
clause (v) and inserting therein"; and"; and (iii) by inserting the
following additional representation:
"(vi) ELIGIBLE SWAP PARTICIPANT. It is an "eligible swap participant"
as defined under the regulations of the Commodity Futures Trading
Commission, currently at 17 CFR Section 35.1(b)(2)."
(h) Section 3 is revised so as to add the following Section (g) at the end
thereof:
"(g) RELATIONSHIP BETWEEN PARTIES. Each party represents to the
other party and will be deemed to represent to the other party
on the date on which it enters into a Transaction that (absent
a written agreement between the parties that expressly imposes
affirmative obligations to the contrary for that Transaction):
<PAGE>
(i) NON-RELIANCE. It is acting for its own account, and
it has made its own independent decisions to enter
into that Transaction and as to whether that
Transaction is appropriate or proper for it based
upon its won judgment and upon advice form such
advisors as it has deemed necessary. It is not
relying on any communication (written or oral) of the
other party as investment advice or as a
recommendation to enter into that Transaction; it
being understood that information and explanations
related to the terms and conditions of a Transaction
shall not be considered investment advice or a
recommendation to enter into that Transaction.
Further, such party has not received from the other
party any assurance or guarantee as to the expected
results of that Transaction.
(ii) EVALUATION AND UNDERSTANDING. It is capable of
evaluating and understanding (on its own behalf or
through independent professional advice), and
understands and accepts, the terms, conditions and
risks of that Transaction. It is also capable of
assuming, and assumes, the financial and other risks
of that Transaction.
(iii) STATUS OF PARTIES. The other party is not acting as
an agent, fiduciary or advisor for it in respect of
that Transaction."
(i) WAIVER OF RIGHT TO TRAIL BY JURY. EACH PARTY HEREBY IRREVOCABLY WAIVES
ANY AND ALL RIGHTS TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY.
(j) INCORPORATION BY REFERENCE OF TERMS OF CREDIT AGREEMENT. The covenants,
terms and provisions of, including all representations and warranties
of Party B contained in the Credit Agreement, as in effect as of the
date of this Agreement, are hereby incorporated by reference in, and
made part of, this Agreement to the same extent as if such covenants,
terms, and provisions were set forth in full herein. Party B hereby
agrees that, during the period commencing with the date of this
Agreement through and including such date on which all of Party B's
obligations under this Agreement are fully performed, Party B will (a)
observe, perform, and fulfill each and every such covenant, term, and
provision applicable to Party B, as such covenants, terms, and
provisions, may be amended from time to time after the date of this
Agreement with the consent of Party A and (b) deliver to Party A at the
address for notices to Party A provided in Part 4 each notice,
document, certificate or other writing as Party B is obligated to
furnish to any other party to the Credit Agreement. In the even the
Credit Agreement terminates or becomes no longer binding on Party B
prior to the termination of this Agreement, such covenants, terms, and
provisions (other than those requiring payments in respect of amounts
owed under the Credit Agreement) will remain in force and effect for
purposes of this Agreement as though set forth in full herein until the
date on which al of Party B's obligations under this Agreement are
fully performed, and this Agreement is terminated.
Accepted and agreed:
NATIONSBANK, N.A. COMMODORE HOLDINGS LIMITED
By: /s/ ROGER H. HEINTZELMAN By: /s/ ALAN PRITZKER
------------------------------- ----------------------------------
Name: Roger H. Heintzelman Name: Alan Pritzker
Title: Vice President Title: Chief Financial Officer
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<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
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0
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