SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
[X] For the quarterly period ended December 31, 1999
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from ___________ to ___________
Commission File Number: 0-20961
COMMODORE HOLDINGS LIMITED
--------------------------
(Exact Name of Registrant as Specified in its Charter)
BERMUDA N/A
------- ---
(State or other Jurisdiction (IRS Employer
of incorporation or organization) Identification Number)
4000 Hollywood Boulevard, Suite 385, South Tower, Hollywood, FL 33021
- --------------------------------------------------------------- -----
(Address of Principal Executive Offices) (Zip Code)
(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) has been
subject to such filing requirements for the past 90 days.
Yes _X_ No ___
The Registrant had 7,649,118 shares of Common Stock outstanding at February 14,
2000.
<PAGE>
Commodore Holdings Limited
Table of Contents
Page No.
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets 2
Consolidated Statements of Operations 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 Disclosure about Market Risk 10
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 11
Item 6. Exhibits and Reports on Form 8-K 11
<PAGE>
Part I
Item 1. FINANCIAL STATEMENTS
COMMODORE HOLDINGS LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1999 1999
------------ -------------
(UNAUDITED) (AUDITED)
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 8,257,000 $20,504,000
Restricted cash 4,897,000 977,000
Trade and other receivables, net 1,786,000 1,044,000
Due from affiliates 2,908,000 2,903,000
Inventories 3,061,000 2,614,000
Prepaid expenses 5,418,000 2,214,000
Other current assets 279,000 69,000
------------ -------------
Total current assets 26,606,000 30,325,000
Property and equipment, net 55,266,000 49,722,000
Investment in joint ventures 1,663,000 1,974,000
Long-term receivable - affiliate 5,006,000 4,973,000
Other assets 4,664,000 1,693,000
------------ -------------
$93,205,000 $88,687,000
============ =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt $ 4,996,000 $ 3,652,000
Accounts payable 11,758,000 8,692,000
Accrued liabilities 1,276,000 1,695,000
Due to affiliates 1,218,000 1,564,000
Customer deposits 10,929,000 8,720,000
Accrued interest 228,000 192,000
Capital lease obligations 170,000 61,000
------------ -------------
Total current liabilities 30,575,000 24,576,000
Long-term debt, including capital lease obligations
of $375,000 and $171,000, respectively 26,281,000 26,996,000
Minority interest in subsidiaries 3,594,000 2,940,000
Stockholders' equity
Preferred stock - authorized 10,000,000 shares
of $.01 par value; issued and outstanding 400,000
and 400,000 shares, respectively 4,000 4,000
Common stock - authorized 100,000,000 shares
of $.01 par value; issued and outstanding
7,649,118 and 7,647,618 shares, respectively 76,000 76,000
Paid-in capital 21,485,000 21,481,000
Retained earnings 11,190,000 12,614,000
------------ -------------
Total stockholders' equity 32,755,000 34,175,000
------------ -------------
$93,205,000 $88,687,000
============ =============
</TABLE>
The accompanying notes are an integral part of these statements Page 2
<PAGE>
COMMODORE HOLDINGS LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED DECEMBER 31, 1999 AND 1998
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended
December 31,
1999 1998
-------------------------
<S> <C> <C>
Revenues $12,297,000 $12,288,000
Expenses
Operating 10,397,000 9,070,000
Marketing, selling and administrative 1,969,000 1,959,000
Depreciation and amortization 688,000 610,000
-------------------------
13,054,000 11,639,000
-------------------------
Operating (loss) income (757,000) 649,000
Other income (expense)
Interest income 163,000 111,000
Interest expense (469,000) (386,000)
Minority interest share of loss of consolidated joint ventures 280,000 199,000
Equity in net (loss) of unconsolidated joint ventures (310,000) (310,000)
-------------------------
(336,000) (386,000)
-------------------------
Net (loss) earnings before cumulative effect of change in
accounting principle and provision for preferred stock dividend (1,093,000) 263,000
Cumulative effect of change in accounting principle 231,000 --
-------------------------
Net (loss) earnings before provision for preferred stock dividend (1,324,000) 263,000
Provision for preferred stock dividend 100,000 --
-------------------------
Net (loss) earnings available for common stockholders $(1,424,000) $ 263,000
=========================
(Loss) earnings per share available for common stockholders - Basic
Net (loss) earnings before cumulative effect of change in
accounting principle $ (0.16) $ 0.04
Cumulative effect of change in accounting principle (0.03) --
-------------------------
Net (loss) earnings available for common stockholders $ (0.19) $ 0.04
=========================
Weighted average number of common stock outstanding - Basic 7,648,000 7,355,000
=========================
(Loss) earnings per share available for common stockholders - Diluted
Net (loss) earnings before cumulative effect of change in
accounting principle $ (0.16) $ 0.03
Cumulative effect of change in accounting principle (0.03) --
-------------------------
Net (loss) earnings available for common stockholders $ (0.19) $ 0.03
=========================
Weighted average number of common stock outstanding - Diluted 7,648,000 8,641,000
=========================
</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 THREE MONTHS ENDED DECEMBER 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, 1999 400,000 $4,000 7,647,618 $76,000 $21,481,000 $12,614,000 $34,175,000
Issuance of
common stock 1,500 - 4,000 - 4,000
Net loss - - - - - (1,424,000) (1,424,000)
-----------------------------------------------------------------------------------------
Balances at
December 31, 1999 400,000 $4,000 7,649,118 $76,000 $21,485,000 $11,190,000 $32,755,000
=========================================================================================
</TABLE>
The accompanying notes are an integral part of this statement Page 4
<PAGE>
COMMODORE HOLDINGS LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED DECEMBER 31, 1999 AND 1998
(UNAUDITED)
<TABLE>
<CAPTION>
1999 1998
------------ -----------
<S> <C> <C>
Cash flows from operating activities
Net (loss) earnings $ (1,324,000) $ 263,000
Adjustments to reconcile net earnings to net cash
provided by operating activities
Cumulative effect of change in accounting principle 231,000 -
Depreciation of property and equipment 688,000 610,000
Amortization of deferred drydock 197,000 400,000
Amortization of deferred loan costs 27,000 -
Fair value of options to nonemployees - 88,000
Undistributed equity in loss of joint ventures 310,000 310,000
(Increase) decrease in operating assets
Restricted cash (3,920,000) (166,000)
Trade and other receivables (742,000) 169,000
Due from affiliates (5,000) (291,000)
Inventories (447,000) 299,000
Prepaid expenses and other current assets (3,611,000) (1,120,000)
Other assets (3,229,000) 258,000
Increase (decrease) in operating liabilities
Accounts payable 3,066,000 (1,158,000)
Accrued liabilities (419,000) 195,000
Due to affiliate (346,000) 751,000
Customer and other deposits 2,209,000 (758,000)
Accrued interest 36,000 21,000
------------ -----------
Net cash used in operating activities (7,279,000) (129,000)
Cash flows from investing activities
Capital expenditures (6,231,000) (701,000)
Long-term receivable-affiliate (33,000) (24,000)
Increase in minority interest in subsidiaries 654,000 (200,000)
------------ -----------
Net cash used in investing activities (5,610,000) (925,000)
Cash flows from financing activities
Principal payments on debt (736,000) (10,757,000)
Proceeds from long-term debt, net 1,474,000 9,663,000
Proceeds from exercise of warrants 4,000 507,000
Preferred stock dividends paid (100,000) -
------------ -----------
Net cash provided by (used in) financing activities 642,000 (587,000)
Net decrease in cash and cash equivalents (12,247,000) (1,641,000)
Cash and cash equivalents at beginning of period 20,504,000 3,172,000
------------ -----------
Cash and cash equivalents at end of period $ 8,257,000 $ 1,531,000
============ ===========
Supplemental disclosure of cash flow information
Cash paid during the period for interest $ 673,000 $ 365,000
============ ===========
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 three months ended December 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 months
ended December 31, 1999 and 1998 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, 1999,
contained in the Company's annual report on Form 10-K.
2. EARNINGS PER SHARE. The Company's basic earnings per share is calculated by
dividing net earnings available for common shareholders 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 (loss) Net (loss)
months ended earnings- Basic Basic earnings- Diluted Diluted
December 31, Basic Shares EPS Diluted Shares EPS
- ------------ --------- ------ --- --------- ------ ---
<S> <C> <C> <C> <C> <C> <C>
1999 ($1,424,000) 7,648,000 ($0.19) ($1,424,000) 7,648,000 ($0.19)
1998 $ 263,000 7,355,000 $0.04 $ 263,000 8,641,000 $0.03
</TABLE>
Included in diluted shares are common stock equivalents relating to
options and warrants of 0 and 1,286,000 for the three months ended December 31,
1999 and 1998, respectively. Common stock equivalents were not considered in the
calculation of diluted earnings per share, for the period ended December 31,
1999, due to their antidilutive effect.
3. INVESTMENT IN JOINT VENTURES.
A condensed summary of the assets and liabilities and results of
operations of the joint ventures follows:
<TABLE>
<CAPTION>
As of
December 31,
-----------------------------
1999 1998
---- ----
<S> <C> <C>
Current assets $ 4,422,000 $2,805,000
Property and equipment, net 4,207,000 4,139,000
Other assets 567,000 667,000
----------- ----------
Total assets $ 9,196,000 $7,611,000
=========== ==========
Current liabilities $ 4,895,000 $4,712,000
Other liabilities 303,000 556,000
Partners' capital accounts 3,998,000 2,343,000
----------- ----------
Total liabilities and
partners' capital $ 9,196,000 $7,611,000
============ ==========
</TABLE>
Page 6
<PAGE>
Quarter
Ended December 31,
--------------------------------------
1999 1998
---- ----
Revenues $5,797,000 $4,969,000
Expenses 6,727,000 5,589,000
---------- ----------
Net loss $ (930,000) $ (620,000)
========== =========
4. SUBSEQUENT EVENT. On January 28, 2000, Crown Cruises of Panama, Inc., a
wholly owned subsidiary of the Company, purchased the 916-passenger cruise ship
Crown Dynasty (the "Vessel") from Crown Dynasty, Inc., a Panamanian corporation
(the "Seller"), for $86,200,000. Prior to such purchase, the Company operated
the Vessel pursuant to a bareboat charter with the Seller. The Seller granted
the Company an option to purchase the Vessel as part of the charter. In
connection with the Company's exercise of its option to purchase the Vessel, the
parties agreed to apply the $4,500,000 security deposit under the charter to
the purchase price for the Vessel. The purchase price in such option was
determined through arm's length negotiations between the Company and the Seller.
The Company financed its purchase of the Vessel through loans in the
aggregate principal amount of $51,720,000 from Merita Bank Plc, Christiana Bank
og Kreditkasse ASA, and Skandinaviska Enskilda Banken AB (publ), and through a
loan in the principal amount of $24,480,000 provided by EFF-Shipping Limited, an
affiliate of the Seller. Such loans are guaranteed by the Company and secured by
mortgages on the Vessel and certain other collateral related to the Vessel. The
Company also used the proceeds from the issuance of 10% convertible subordinated
debentures in the principal amount of $5,000,000 dollars and 10% Series B
Convertible Preferred Stock with a face value of $5,000,000 dollars to finance
the balance of the purchase price. The debentures and preferred stock are
convertible into Common Stock beginning twelve months after issuance at $4.0625
per share. Sales of the underlying Common Stock are restricted to not more than
25% of the total number of shares of Common Stock that could be issued upon
conversion per quarter, which amount increases if the Company demands
conversion, which it may do in certain cases. The Company also redeemed
$4,000,000 of Series B Convertible Preferred Stock at face value in connection
with the new issuances. The net proceeds from these financings, after reduction
for the redemption of the $4,000,000 of Series B Convertible Preferred Stock,
was approximately $81,131,000. The Company obtained the balance of the purchase
price for the Vessel from cash from its operations.
The Seller of the Vessel is an affiliate of EffJohn International,
B.V., the company from whom the Company acquired the Commodore Cruise Line
assets in 1995. The Seller operated the Vessel as a cruise ship between 1993,
when the Vessel was built, and 1995. The Seller then chartered the Vessel to
others for use as a cruise ship. Upon taking delivery of the Vessel pursuant to
the charter, the Company renovated and launched the Vessel as the first ship
operating under its premium Crown Cruise Line brand.
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 December 31, 1999, Compared to Three Months Ended
December 31, 1998
Revenues increased by $9,000 for the quarter ended December 31, 1999
compared to the quarter ended December 31, 1998 primarily due to the addition of
the Crown Dynasty to the Company's fleet, which increase was largely offset by
a reduction in revenues from the Enchanted Isle due to the drydock of the vessel
for 21 days. The Company extended its regularly scheduled dry-dock on the
Enchanted Isle to allow the start of the installation of a sprinkler system. The
Company is not required to install a sprinkler system until October 2005 but
elected to have the start of the installation commence in December 1999 to avoid
another drydock for such purchase at a later date.
The Company's operating expenses increased by $1,327,000, or 14.6%,
primarily due to the addition of the Crown Dynasty to the Company's fleet and
start-up expenses associated with the Company's launch of both this ship and its
new premium Crown Cruise Line brand. This increase was partially offset by a
decline in operating expenses for the Enchanted Isle, which was in drydock for
21 days. Depreciation and amortization increased by $78,000, or 12.8%, due to
the additional capital expenditures incurred by the Company (and the associated
increase in the value of this ship) in conjunction with the installation of a
sprinkler system on the Universe Explorer in fiscal 1999.
The minority interests in the Company's consolidated joint ventures
(Sea-Comm and Albuferra) are reflected in the $280,000 and $199,000 line item
for "Minority interest share in loss of consolidated joint ventures" for the
three months ended December 31, 1999 and 1998, respectively. During both the
quarters ended December 31, 1999 and 1998, this loss related primarily to
Sea-Comm.
"Equity in loss of unconsolidated joint ventures" during the first
quarter of fiscal 2000 represents losses associated with the Company's Coronado
Seas, LLC joint venture, which began shoreside operations during the quarter.
The Company expects these losses to continue into the next quarter in that
cruise operations between San Diego, California and Rosarito, Mexico are
expected to begin in March 2000. The Company accounts for the Coronado joint
venture under the equity method. The Company's 33% investment resulted in a net
loss of $310,000 for the quarter ended December 31, 1999. The Company's Capri
Cruises joint venture was at a breakeven for the quarter as compared to a loss
of $310,000 for the quarter ended December 31, 1998, as Capri Cruises improved
its passenger loads and on-board revenue during the quarter ended December
31, 1999.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital deficiency was $3,969,000, at December
31, 1999 versus working capital of $5,749,000 at September 30, 1999. The
Company's working capital deficiency was primarily due to the costs related to
renovations of the Enchanted Sun as well as negative cash flows from operations
for the quarter.
Cash flows from operations used $7,279,000 and $129,000 for the first
three months ended December 31, 1999 and 1998, respectively. Cash flows used in
operations consisted primarily of the loss for the quarter, increases in prepaid
expenses and other assets (due to the
Page 8
<PAGE>
dry-docking of both the Enchanted Isle and the Crown Dynasty) and an increase in
restricted cash, primarily due to the $4,500,000 deposit placed with the owners
of the Crown Dynasty to secure the charter of the vessel. This deposit was used
as part of the downpayment for the purchase of the vessel in January 2000. Cash
flows provided by operations consisted primarily of increases in customer and
other deposits (due to the addition of the Crown Dynasty), and increases in
accounts payable (due to payments owed on the construction in progress on the
Enchanted Sun).
The Company's cash flow used in investing activities in the first
quarter of fiscal 2000 increased from that of the same quarter in the prior
fiscal year by $4,685,000. The primary reason for the increase was the capital
expenditures related to the renovation of the Enchanted Sun, which increase
was partially offset by the additional investment made by the Company's partner
in Albuferra in October 1999.
The Company's cash flow provided by financing activities was $642,000
during the three months ended December 31, 1999 as compared to $80,000 used in
financing during the three months ended December 31, 1998. The cash flow
provided in the quarter ended December 31, 1999 was primarily due to the
Company's drawdown on the remainder of the proceeds of the Nordbanken loan (for
the renovation of the Enchanted Sun), which was partially offset by the payments
the Company made on its various loans in the quarter. During the quarter ended
December 31, 1998, the Company refinanced the loan secured by the Universe
Explorer, which accounted for the increases in the principal payments and
proceeds from long-term debt during that quarter. The net proceeds from this
loan were approximately $1,100,000.
At December 31, 1999, the Company owed $30,902,000 pursuant the EffJohn
Loan, Key Loan, NationsBank Loan and Nordbanken Loan, which loans bear interest
at 6.97%, 9.14%, 7.30% and 7.79%, respectively.
On January 28, 2000, Crown Cruises of Panama, Inc., a wholly owned
subsidiary of the Company, purchased the 916-passenger cruise ship Crown Dynasty
(the "Vessel") from Crown Dynasty, Inc., a Panamanian corporation (the
"Seller"), for $86,200,000. Prior to such purchase, the Company operated the
Vessel pursuant to a bareboat charter with the Seller. The Seller granted the
Company an option to purchase the Vessel as part of the charter. In connection
with the Company's exercise of its option to purchase the Vessel, the parties
agreed to apply the $4,500,000 security deposit under the charter to the
purchase price for the Vessel. The purchase price in such option was determined
through arm's length negotiations between the Company and the Seller.
The Company financed its purchase of the Vessel through loans in the
aggregate principal amount of $51,720,000 from Merita Bank Plc, Christiana Bank
og Kreditkasse ASA, and Skandinaviska Enskilda Banken AB (publ), and through a
loan in the principal amount of $24,480,000 provided by EFF-Shipping Limited, an
affiliate of the Seller. Such loans are guaranteed by the Company and secured by
mortgages on the Vessel and certain other collateral related to the Vessel. The
Company also used the proceeds from the issuance of 10% convertible subordinated
debentures in the principal amount of $5,000,000 dollars and 10% Series B
Convertible Preferred Stock with a face value of $5,000,000 dollars to finance
the balance of the purchase price. The debentures and preferred stock are
convertible into Common Stock beginning twelve months after issuance at $4.0625
per share. Sales of the underlying Common Stock are restricted to not more than
25% of the total number of shares of Common Stock that could be issued upon
conversion per quarter, which amount increases if the Company demands
conversion, which it may do in certain cases. The Company also redeemed
$4,000,000 of Series B Convertible Preferred Stock at face value in connection
with the new issuances. The net proceeds from these financings, after reduction
for the redemption of the $4,000,000 of Series B Convertible Preferred Stock,
was approximately $81,131,000. The Company obtained the balance of the purchase
price for the Vessel from cash from its operations.
The Seller of the Vessel is an affiliate of EffJohn International,
B.V., the company from whom the Company acquired the Commodore Cruise Line
assets in 1995. The Seller operated the Vessel as a cruise ship between 1993,
when the Vessel was built, and 1995. The Seller then chartered the Vessel to
others for use as a cruise ship. Upon taking delivery of the Vessel
Page 9
<PAGE>
pursuant to the charter, the Company renovated and launched the Vessel as the
first ship operating under its premium Crown Cruise Line brand.
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 $52,000.
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 by $34,000, $20,000, and
$5,000, respectively, in each of its fiscal years 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
Not applicable.
Item 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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 First Amendment to the Space Charter Agreement dated November 19, 1999, by and
between Crown Cruises Limited and Atkinson and Mullen, Inc. d/b/a "Apple Vacations"*
10.2 Loan Agreement for the principal amount of $45,000,000 dated January 24, 2000 by
and among Merita Bank Plc, Christiana Bank OG Kreditkasse ASA, Skandinaviska
Enskilda Banken AB (publ) and Crown Cruises of Panama, Inc.
10.3 First Priority Naval Mortgage dated January 28, 2000 made by Crown Cruises of Panama,
Inc. in favor of Merita Bank Plc
10.4 Guarantee and Indemnity Agreement dated January 24, 2000 between the Company
and Merita Bank Plc for $45,000,000 Loan
10.5 Loan Agreement in the principal amount of $6,720,000 dated January 24, 2000 by and
among Merita Bank Plc, Christiana Bank OG Kreditkasse ASA, Skandinaviska
Enskilda Banken AB (publ) and Crown Cruises of Panama, Inc.
10.6 Second Priority Naval Mortgage dated January 28, 2000 made by Crown Cruises of Panama,
Inc. in favor of Merita Bank Plc
10.7 Guarantee and Indemnity Agreement dated January 24, 2000 between the Company
and Merita Bank Plc for $6,720,000 Loan
10.8 Loan Agreement in the principal amount of $24,480,000 dated January 24, 2000 by and
between EFF-Shipping Limited and Crown Cruises of Panama, Inc.
10.9 Third Priority Naval Mortgage dated January 28, 2000 executed by Crown Cruises of
Panama, Inc. in favor of EFF-Shipping Limited
</TABLE>
Page 11
<PAGE>
<TABLE>
<S> <C>
10.10 Guarantee and Indemnity Agreement dated January 24, 2000 between the Company
and EFF-Shipping Limited for $24,480,000 Loan
10.11 Addendum No. 1 dated October 7, 1999, to Bareboat Charter Party dated March 1, 1999
between Crown Cruises Limited and Crown Dynasty, Inc., as further amended by Addendum
No. 2 dated October 13, 1999 and Addendum No. 3 dated January 24, 2000, and the
Memorandum of Agreement, which is an exhibit (1) thereto.
27 Financial Data Schedule.
</TABLE>
*Portions of this document have been 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.
(1) Incorporated by reference from the Company's Current Report on Form 8-K
dated February 9, 2000.
B. Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended December 31,
1999.
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)
February 14, 2000
Page 13
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------------------ ------------------------------------------------------------------------------------------------
<S> <C>
10.1 First Amendment to the Space Charter Agreement dated November 19, 1999, by and
between Crown Cruises Limited and Atkinson and Mullen, Inc. d/b/a "Apple Vacations"*
10.2 Loan Agreement for the principal amount of $45,000,000 dated January 24, 2000 by
and among Merita Bank Plc, Christiana Bank OG Kreditkasse ASA, Skandinaviska
Enskilda Banken AB (publ) and Crown Cruises of Panama, Inc.
10.3 First Priority Naval Mortgage dated January 28, 2000 executed by Crown Cruises of
Panama, Inc. in favor of Merita Bank Plc
10.4 Guarantee and Indemnity Agreement dated January 24, 2000 between the Company
and Merita Bank Plc for $45,000,000 Loan
10.5 Loan Agreement in the principal amount of $6,720,000 dated January 24, 2000 by and
among Merita Bank Plc, Christiana Bank OG Kreditkasse ASA, Skandinaviska
Enskilda Banken AB (publ) and Crown Cruises of Panama, Inc.
10.6 Second Priority Naval Mortgage dated January 28, 2000 executed by Crown Cruises of
Panama, Inc. in favor of Merita Bank Plc
10.7 Guarantee and Indemnity Agreement dated January 24, 2000 between the Company
and Merita Bank Plc for $6,720,000 Loan
10.8 Loan Agreement in the principal amount of $24,480,000 dated January 24, 2000 by and
between EFF-Shipping Limited and Crown Cruises of Panama, Inc.
10.9 Third Priority Naval Mortgage dated January 28, 2000 executed by Crown Cruises of
Panama, Inc. in favor of EFF-Shipping Limited
10.10 Guarantee and Indemnity Agreement dated January 24, 2000 between the Company
and EFF-Shipping Limited for $24,480,000 Loan
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.
FIRST AMENDMENT TO SPACE CHARTER
MV "CROWN DYNASTY"
THIS FIRST AMENDMENT TO SPACE CHARTER (the "First Amendment") is made
this 19th day of November, 1999 by and between CROWN CRUISES LIMITED, a Bermuda
corporation ("Owners"), as disponent owners of the Panamanian flag vessel MV
CROWN DYNASTY (the "Vessel") and ATKINSON AND MULLEN, INC., a Pennsylvania
corporation doing business as "APPLE VACATIONS" ("Space Charterers").
A. On July 12, 1999, Owners and Space Charterers entered in a
space charter (the "Space Charter") with respect to the
Vessel.
B. Owners and Space Charterers wish to modify and clarify certain
provisions of the Space Charter in this First Amendment.
In furtherance of the foregoing, the parties hereby amend the Space
Charter as follows:
1. SPACE CHARTER HIRE.
Section 6(a) is hereby amended by adding a new subsection (vii) as follows:
Charter Hire shall be payable to Owners bi-weekly in advance.
2. SECURITY FOR SPACE CHARTERERS' AND OWNERS' OBLIGATIONS.
Section 6(b) is hereby amended by adding a new subsection (iii) as follows:
The parties acknowledge that the SC Letter of Credit and the Owners'
Letter of Credit are required to be issued in the face amount of * each pursuant
to Section 6 of the Space Charter. Notwithstanding this requirement, the parties
have agreed that they will each initially obtain their respective letters of
credit in the face amount of *. Each of Owners and Space Charterers reserve the
right to require that such letter of credit be increased to the full amount of *
at any time during the time such letter of credit is required to be in effect
under the terms of the Space Charter. Neither party shall waive its right to
require that the other party obtain such letter of credit in such increased
amount by virtue of its agreement to accept a letter of credit in the face
amount of * at this time.
3. ESCROW.
Sections 6(d) and 6(e) are hereby deleted in their entirety.
- ------------------
* Market text omitted pursuant to an application for an order for
confidential treatment by Commodore Holding Limited.
<PAGE>
4. RATIFICATION.
Except as specifically amended herein, all of the terms of the Space
Charter shall remain in full force and effect.
5. COUNTERPARTS.
This First Amendment may be signed in counterparts.
IN WITNESS WHEREOF, the parties have executed this First Amendment with
effect as of the date first set forth above.
CROWN CRUISES LIMITED
By: /s/ Alan Pritzker
---------------------------------
Chief Financial Officer
ATKINSON AND MULLEN, INC.,
DOING BUSINESS AS APPLE VACATIONS
By: ILLEGIBLE
---------------------------------
Assistant Secretary
2
EXHIBIT 10.2
MERITA BANK PLC
CHRISTIANIA BANK OG KREDITKASSE ASA
SKANDINAVISKA ENSKILDA BANKEN AB (PUBL)
(as lenders)
- and -
MERITA BANK PLC
(as agent)
- and -
CROWN CRUISES OF PANAMA, INC.
(as borrower)
- and -
MERITA BANK PLC
(as trustee)
------------------------------
LOAN AGREEMENT
RE USD45,000,000 REVOLVING FACILITY
------------------------------
Sinclair Roche & Temperley
Royex House
5 Aldermanbury Square
London EC2V 7LE
Tel: 0171 452 4000
Fax: 0171 452 4001
Ref: GFS/242921
<PAGE>
INDEX OF CONTENTS
CLAUSE SUBJECT PAGE
- ------ ------- ----
1. Purpose and Definitions..................................................1
2. The Lenders' Commitment..................................................9
3. Availability............................................................10
4. Interest................................................................11
5. Repayment...............................................................13
6. Compulsory Prepayment...................................................13
7. Commitment, Arrangement and Agency Fees.................................14
8. Indemnity...............................................................15
9. Payments................................................................18
10. Application of Moneys...................................................19
11. Default.................................................................22
12. Security................................................................25
13. Representations and Warranties..........................................26
14. Covenants...............................................................28
15. Set-off and Sharing of Payments.........................................33
16. Assignment and Participation............................................34
17. Miscellaneous...........................................................36
18. Notices.................................................................36
19. Proper Law and Jurisdiction.............................................37
Schedule A : Conditions Precedent...........................................38
Schedule B : Financial Ratios...............................................42
<PAGE>
Signature Pages.............................................................43
Appendix I : Form of Utilization Notice.....................................45
Appendix II : Form of Compliance Certificate................................46
<PAGE>
THIS AGREEMENT is made the 24th day of January, 2000
BETWEEN:-
(1) THE LENDERS (as hereinafter defined);
(2) THE AGENT (as hereinafter defined);
(3) THE BORROWER (as hereinafter defined); and
(4) THE TRUSTEE (as hereinafter defined).
IT IS HEREBY AGREED as follows:-
1. PURPOSE AND DEFINITIONS
1.1 This agreement contains the terms and conditions upon which the
Lenders, with the Agent acting as their agent, will make available to
the Borrower a secured revolving loan facility of up to but not
exceeding forty five million United States Dollars (USD45,000,000) at
any one time.
1.2 In this agreement the following words and expressions shall have the
following meanings:-
"AGENT"
means Merita Bank Plc, a company incorporated under the laws of Finland
acting through its London branch having its principal place of business
at 19 Thomas More Street, London E1W 1YF in its capacity as agent for
the Lenders pursuant to the Deed of Agency and Trust;
"BORROWED MONEY"
means Indebtedness incurred in respect of (i) money borrowed or raised,
(ii) any bond, note, loan stock, debenture or similar instrument, (iii)
acceptance or documentary credit facilities, (iv) deferred payments for
assets or services acquired other than for provisions, bunkers, spare
parts or services acquired in the ordinary course of, and incidental
to, the operation of the Vessel, (v) rental payments under and any
amounts payable on termination of leases (whether in respect of ships,
land, machinery,
<PAGE>
- 2 -
equipment or otherwise) entered into primarily as a method of raising
finance or of financing the acquisition of the asset leased, (vi)
guarantees, bonds, stand-by letters of credit or other instruments
issued in connection with the performance of contracts and (vii)
guarantees or other assurances against financial loss in respect of
Indebtedness of any person, firm or company falling within any of (i)
to (vi) above;
"BORROWER"
means Crown Cruises of Panama, Inc., a company incorporated under the
laws of Panama with its registered office at c/o Galindo Arias & Lopez,
Scotia Plaza No. 18, Avenida Federico Boyd & Calle No. 51, Piso 9, 10 &
11, Panama, Republic of Panama;
"BRIDGE LOAN FACILITY"
means the loan of six million seven hundred and twenty thousand United
States Dollars (USD6,720,000) made available by the Lenders to the
Borrower under the Bridge Loan Facility Agreement;
"BRIDGE LOAN FACILITY AGREEMENT"
means the agreement of even date herewith made between the parties
hereto in respect of the Bridge Loan Facility;
"BRIDGE LOAN SECURITIES"
means the securities provided or to be provided to the Agent pursuant
to the Bridge Loan Facility Agreement as security for the Bridge Loan
Facility;
"BUSINESS DAY"
means any day on which banks and foreign exchange markets in Helsinki,
Oslo, London and New York are open for the transaction of business of
the nature contemplated in this agreement;
"CHARTER"
means the space charter in respect of the Vessel made or to be made
between the Borrower as owner and the Charterer as charterer;
<PAGE>
- 3 -
"CHARTERER"
means Crown Cruises Limited, a company incorporated under the laws of
Bermuda with its registered office at c/o Francis & Forest, Corner
House, 20 Parliament Street, Hamilton HM12, Bermuda;
"CONTRIBUTIONS"
means the proportions of the Loan (and, where the context so requires,
any relevant part thereof) set out opposite the names of the Lenders on
the signature pages of this agreement and "Contribution" means any one
of them;
"DEED OF AGENCY AND TRUST"
means the deed of even date herewith made between the Agent, the
Trustee and the Lenders whereby the Agent is appointed agent for the
Lenders in respect of this agreement and the Trustee declares a trust
in respect of the other Security Documents;
"DRAWDOWN DATE"
means the date on which the relevant Drawing is advanced pursuant to
clause 3 hereof;
"DRAWING"
means any one amount advanced or to be advanced in accordance with a
notice in respect thereof given pursuant to clause 3.1(C) hereof and
"Drawings" means more than one of them;
"EARNINGS ACCOUNT"
means the account in the name of the Borrower at the Agent's New York
office at 437 Madison Avenue, New York, N.Y. 10022;
"EARNINGS ASSIGNMENT"
means the assignment executed pursuant to clause 12.1(C) hereof;
"ENCUMBRANCE"
means any mortgage, charge, pledge, lien, assignment, hypothecation,
title retention, preferential right or trust arrangement and any other
security agreement or arrangement;
"ESL"
means EFF-Shipping Limited, a company incorporated under the laws of
the Cayman Islands with its registered office at the offices of Huntlaw
Corporate Services Ltd.,
<PAGE>
- 4 -
The Huntlaw Building, P.O. Box 1350, George Town, Grand Cayman, Cayman
Islands;
"EVENT OF DEFAULT"
means any of the events or circumstances specified in clause 11.1
hereof;
"GAAP"
means accounting principles generally accepted in the United States of
America and consistently applied;
"GUARANTOR"
means Commodore Holdings Limited, a company incorporated under the laws
of Bermuda with its registered office at c/o Francis & Forest, Corner
House, 20 Parliament Street, Hamilton HM12, Bermuda;
"INDEBTEDNESS"
means any obligation for the payment or repayment of money, whether as
principal or as surety and whether present or future, actual or
contingent;
"INSURANCE ASSIGNMENT"
means the assignment executed pursuant to clause 12.1(B) hereof;
"INTEREST PERIOD"
means any period determined in accordance with the provisions of clause
4.1 hereof for the calculation of interest on the Loan or any relevant
part thereof;
"LENDERS"
means the banks and financial institutions whose names and lending
offices appear under and who have signed under the heading "The
Lenders" on the signature pages of this agreement and "Lender" means
any one of them;
"LOAN"
means up to but not exceeding the Maximum Sum or, where the context so
requires, the aggregate amount of any Drawing(s) from time to time
unrepaid and outstanding;
<PAGE>
- 5 -
"MANAGEMENT AGREEMENT"
means the agreement for the management of the Vessel made or to be made
between the Borrower and the Manager;
"MANAGER"
means New Commodore Cruise Lines Limited, a company incorporated under
the laws of Bermuda with its registered office at c/o Francis & Forest,
Corner House, 20 Parliament Street, Hamilton HM12, Bermuda;
"MARGIN"
means one and three quarters per cent (1.75%) per annum;
"MAXIMUM SUM"
means the lesser from time to time of:-
(i) forty five million United States Dollars (USD45,000,000) which
sum shall be automatically reduced by the following amounts on
the following dates:-
REDUCTION DATE
USD on the final day of each of the seventh to
416,667 the twenty fourth months inclusive after
the first Drawdown Date
USD on the final day of each of the twenty
312,500 fifth to the seventy second months
inclusive after the first Drawdown Date
USD on the Termination Date
22,499,994
and which sum may be further reduced (in inverse order to the
above reductions) by the Borrower pursuant to clause 3.1(H)
hereof;
(ii) sixty five per cent (65%) of the market value of the Vessel
(assessed in accordance with clause 11.1(L) hereof) plus the
value of any additional security provided to (and still held
by) the Lender pursuant to clause 11.1(L) hereof; and
<PAGE>
- 6 -
(iii) (from and after a Total Loss or sale of the Vessel) zero
United States Dollars (USD0.00);
"MOA"
means the agreement for the sale and purchase of the Vessel made or to
be made between the Seller and the Borrower;
"MORTGAGE"
means the first Panamanian naval mortgage over the Vessel executed
pursuant to clause 12.1(A) hereof;
"PERMITTED LIENS"
means liens for current crews' wages and salvage and liens incurred in
the ordinary course of trading the Vessel up to an aggregate amount at
any time not exceeding five per cent (5%) of the charter-free sale
value of the Vessel (such market value to be conclusively determined as
the average of the latest three (3) valuations obtained by the Agent as
provided in clause 8.2 hereof);
"REFERENCE BANKS"
means the Lenders;
"SECURITY DOCUMENTS"
means the Deed of Agency and Trust and the documents executed pursuant
to clause 12.1 hereof and any other document or documents from time to
time providing and/or evidencing and/or constituting security in
respect of the Loan;
"SECURITY PARTIES"
means the Borrower, the Guarantor and the Manager and any other party
to any of the Security Documents from time to time (other than the
Seller, ESL, the Lenders, the Agent and the Trustee) and "Security
Party" means any one of them;
"SELLER"
means Crown Dynasty Inc., a company incorporated under the laws of
Panama with its registered office at Vallarino, Vallarino & Garcia -
Maritano, 20th Floor, Banco Continental Building, Calle 50 y Aquilino
De La Guardia, Panama City, Panama;
<PAGE>
- 7 -
"SELLER'S CREDIT"
means the seller's credit in the sum of twenty four million four
hundred and eighty thousand United States Dollars (USD24,480,000)
procured by the Seller for the Borrower from ESL pursuant to the MOA
and made available to the Borrower by ESL under the Seller's Credit
Agreement;
"SELLER'S CREDIT AGREEMENT"
means the agreement made or to be made between ESL and the Borrower in
respect of the Seller's Credit;
"SELLER'S CREDIT SECURITIES"
means the securities provided or to be provided to ESL pursuant to the
Seller's Credit Agreement as security for the Seller's Credit;
"SUB-CHARTER"
means the space sub-charter of the Vessel made or to be made between
the Charterer as disponent owner and the Sub-Charterer as charterer on
back to back terms with the Charter;
"SUB-CHARTERER"
means Atkinson and Mullen, Inc. doing business as Apple Vacations, a
company incorporated under the laws of Pennsylvania with its registered
office at 7 Campus Boulevard, Newtown Square, Pennsylvania 19073,
U.S.A.;
"SUBJECT DOCUMENTS"
means this agreement, the Security Documents, the MOA, the Charter, the
Sub-Charter, the Management Agreement, the Bridge Loan Facility
Agreement, the Bridge Loan Securities, the Seller's Credit Agreement,
the Seller's Credit Securities and any and all documents executed
pursuant to any one or more of these documents;
"TERMINATION DATE"
means the earlier of the date falling seventy two (72) months after the
first Drawdown Date and the date (if any) when the loan facility made
available hereunder is cancelled in accordance with the provisions of
this agreement;
<PAGE>
- 8 -
"TOTAL LOSS"
means:-
(i) actual or constructive or compromised or agreed or arranged
total loss of the Vessel; or
(ii) requisition for title or other compulsory acquisition of the
Vessel otherwise than by requisition for hire; or
(iii) capture, seizure, arrest, detention or confiscation of the
Vessel by any government or by persons acting or purporting to
act on behalf of any government unless the Vessel is released
and restored to the Borrower from such capture, seizure,
arrest or detention within thirty (30) days after the
occurrence thereof;
"TRUSTEE"
means Merita Bank Plc, a company incorporated under the laws of Finland
acting through its London branch having its principal place of business
at 19 Thomas More Street, London E1W 1YF in its capacity as trustee
pursuant to the Deed of Agency and Trust;
"UNITED STATES DOLLARS" and "USD"
mean the lawful currency of the United States of America; and
"VESSEL"
means the motor vessel named "Crown Dynasty" now registered under
Panamanian flag in the ownership of the Seller which is to remain
registered under Panamanian flag in the ownership of the Borrower
pursuant to the MOA.
1.3 References to any document shall be construed to mean that document as
amended and/or varied and/or supplemented from time to time with the
agreement of the relevant parties and (where such consent is required
by the terms of this agreement or the relevant document) with the
consent of the Agent and/or the Lenders and/or the Trustee.
1.4 Clause headings are inserted for convenience of reference only and
shall be ignored in
<PAGE>
- 9 -
the interpretation of this agreement.
2. THE LENDERS' COMMITMENT
2.1 In reliance upon the representations and warranties contained in clause
13 hereof and in the Security Documents and subject to the terms and
conditions of this agreement the Lenders will make the Loan available
to the Borrower for the purpose of financing (in part) the purchase of
the Vessel by the Borrower pursuant to the MOA.
2.2 Each of the Lenders shall advance its Contribution to each Drawing.
2.3 The liability of each of the Lenders hereunder is several and none of
the Lenders shall be responsible for any failure by any other Lender to
meet its obligations hereunder nor shall any such failure relieve the
Borrower or any other Lender of all or any of its respective
obligations hereunder. If any Lender shall fail to advance its
Contribution in circumstances where the Agent has already advanced the
Loan or any relevant part thereof to the Borrower then the Borrower
shall forthwith upon the demand of the Agent repay to the Agent an
amount equal to any such Contribution together with any interest
accrued thereon. The Agent shall not be obliged to advance the Loan or
any part thereof to the Borrower other than such Contribution(s) as the
Agent has received from the Lenders.
3. AVAILABILITY
3.1 On and as from the date hereof the Borrower shall be entitled to draw
upon the Loan provided always that:-
(A) all items specified in schedule A hereto have been received by
the Agent and are in form and substance satisfactory to the
Agent;
(B) no Event of Default and no event which with the giving of
notice and/or lapse of time would constitute an Event of
Default has occurred;
(C) the Agent has received a written notice from the Borrower in
the form set out in appendix I hereto indicating the
Borrower's intention to draw upon the Loan not less than four
(4) Business Days prior to the date of relevant Drawing (in
the case of the first Drawing) and not less than three (3)
Business Days prior to the date of relevant Drawing (in the
case of each subsequent Drawing);
<PAGE>
- 10 -
(D) the first Drawing shall be used for the purchase described in
clause 2.1 hereof;
(E) no Drawing shall amount to less than one million United States
Dollars (USD1,000,000) and no Drawing shall increase the Loan
to a sum in excess of the Maximum Sum;
(F) no Drawing shall be made if another Drawing remains unrepaid
and outstanding unless the full amount of the new Drawing is
to be applied immediately in or towards repayment of that
other Drawing;
(G) to the extent that the outstanding amount of the Loan is
reduced by virtue of a repayment or prepayment made by the
Borrower to the Agent to a level below the Maximum Sum the
Borrower shall again be entitled to make Drawings subject
always to the other provisions of this clause 3.1;
(H) the Borrower shall be entitled in whole or in part to cancel
the loan facility made available under this agreement with
effect from the final day of the then current
Interest Period by giving the Lender not less than five (5)
days written notice to that effect, provided that any part
cancellation shall be in an amount of not less than one
million United States Dollars (USD1,000,000) and shall take
effect as a reduction in the Maximum Sum in accordance with
subclause (i) of the definition thereof but in inverse order
to the reductions provided in that subclause; and
(I) the first Drawing must be made no later than 31 January 2000
and no Drawing shall be made after the Termination Date.
3.2 The Lenders may in their absolute discretion allow any Drawing to be
made notwithstanding that the Agent has not received all the items
specified in schedule A hereto and in this event the Borrower hereby
covenants to procure the delivery of all the missing items to the Agent
within thirty (30) days after the Drawdown Date of the relevant
Drawing.
<PAGE>
- 11 -
4. INTEREST
4.1 The Borrower shall pay interest on the Loan from the first Drawdown
Date for each successive Interest Period which shall, subject to
clauses 4.3 and 6.2 hereof, be one (1) month provided always that:-
(A) if the relevant funds are not available to the Lenders for any
Interest Period the Agent shall be entitled to determine
conclusively the length of that Interest Period;
(B) if an Interest Period will expire after the due date for
repayment of any Drawing remaining unrepaid and outstanding
that Interest Period shall be shortened to expire on that due
date; and
(C) if an Interest Period would otherwise expire on a day which is
not a Business Day that Interest Period shall be extended to
expire on the next succeeding Business Day unless that next
succeeding Business Day falls within a fresh month in which
event that Interest Period shall be shortened to expire on the
immediately preceding Business Day.
4.2 Subject to clauses 4.3 and 6.2 hereof the Borrower shall pay interest
on the Loan or any relevant part thereof for each Interest Period at
the rate certified conclusively (save for manifest error) by the Agent
to be the aggregate of the Margin and the rate per cent per annum for
that Interest Period quoted by Telerate Screen 3750 (rounded up to the
nearest one sixteenth of one per cent)(or, if the Telerate system is
not working, by Reuters Page ISDA (rounded up to the nearest one
sixteenth of one per cent) or, if neither the Telerate system nor the
Reuters system is working, the average rate per cent per annum (rounded
up to the nearest one sixteenth of one per cent) at which deposits of
amounts of United States Dollars equivalent to or comparable with the
Loan or relevant part thereof are offered to the Reference Banks (or
two of them if one is unable to quote a rate) for that Interest Period
in the London Inter-bank Market at or about 11.00 a.m. (London time)
two (2) Business Days (in London only) prior to the commencement of
that Interest Period. Such interest shall accrue and be payable on the
actual number of days elapsed, shall be calculated on the basis of a
year of three hundred and sixty (360) days and shall be paid on the
final day of that Interest Period and (if that Interest Period is
longer than one (1) month) at one (1) monthly intervals.
4.3 In the event of default by the Borrower in the payment of any sum
whatsoever due
<PAGE>
- 12 -
under this agreement (including interest) the Borrower shall pay
interest on that sum from the due date until payment (after as well as
before judgement) at a rate certified conclusively (save for manifest
error) by the Agent to be three and a half per cent (3.5 %) per annum
over the average cost to the Lenders (rounded up to the nearest one
sixteenth of one per cent) of funding their respective Contributions to
that sum for such periods as the Agent in its absolute discretion may
think fit on the Business Day succeeding that on which it became aware
of the default and for so long as that sum remains unpaid that rate
shall be re-calculated on the same basis. Such interest shall accrue
and be payable on each day elapsing, shall be calculated on the basis
of a year of three hundred and sixty (360) days and shall be paid on
the demand of the Agent. In default of payment such interest shall be
compounded.
4.4 The Agent shall as soon as reasonably practicable notify the Borrower
of each rate of interest payable on the Loan or any relevant part
thereof under this clause 4.
5. REPAYMENT
5.1 Subject to clauses 6 and 11.1 hereof the Borrower shall repay each
Drawing one (1) month after the Drawdown Date in respect thereof.
6. COMPULSORY PREPAYMENT
6.1 If for any reason whatsoever beyond the control of any one or more of
the Lenders it shall become unlawful or impossible for such one or more
of the Lenders to maintain or give effect to all or part of its or
their obligations as contemplated by this agreement and evidence
substantiating that unlawfulness or impossibility has been produced by
such one or more of the Lenders to the Agent then:-
(A) the obligation of such one or more of the Lenders to advance
funds under clause 2.2 hereof and to participate in the Loan
or the relevant part thereof shall cease;
(B) the Borrower shall forthwith upon the demand of the Agent
repay to the Agent for the benefit of such one or more of the
Lenders the amount of its or their Contribution(s) to the Loan
or the relevant part thereof together with interest
<PAGE>
- 13 -
accrued thereon and any sums due to such one or more of the
Lenders by virtue of that repayment under clause 8.5 hereof;
and
(C) the Maximum Sum shall be reduced by the amount of the
Contribution(s) of such one or more of the Lenders to the
Loan.
6.2 If the Agent shall:-
(A) determine in good faith that by reason of circumstances
affecting the London Inter-Bank Market generally adequate and
reasonable means do not exist for ascertaining the rate of
interest payable on the Loan or any relevant part thereof for
any Interest Period in accordance with clause 4.2 hereof; or
(B) receive notice from any one or more of the Lenders that it
would not be practicable or possible for such one or more of
the Lenders to fund or continue to fund its or their
Contribution(s) to the Loan or any relevant part thereof in
the London Inter-Bank Market,
then the Agent shall inform the Borrower in writing to that effect and
unless the Lenders and the Borrower shall agree acceptable alterations
to the terms of this agreement (on the basis of an alternative source
of funds available to the relevant Lenders) then:-
(i) the obligation of the relevant Lenders to advance
funds under clause 2.2 hereof and to participate in
the Loan or the relevant part thereof shall cease;
(ii) the Agent shall give notice to the Borrower
terminating the participation of the relevant Lenders
in the Loan or the relevant part thereof whereafter
the amount of its or their Contribution(s) to the
Loan or the relevant part thereof together with
interest accrued thereon shall become repayable by
the Borrower within thirty (30) days thereafter; and
(iii) the Maximum Sum shall be reduced by the amount of the
Contribution(s) of the relevant Lenders to the Loan.
<PAGE>
- 14 -
7. COMMITMENT, ARRANGEMENT AND AGENCY FEES
7.1 The Borrower shall pay to the Agent for the benefit of the Lenders a
commitment fee of zero point seven five per cent (0.75%) per annum on
the undrawn amount of the Maximum Sum from the date hereof to the
Termination Date. Such commitment fee shall accrue and be payable on
each day elapsing and shall be paid at one (1) monthly intervals after
the date hereof.
7.2 The Borrower shall pay to the Agent for the benefit of the Lenders on
the date hereof an arrangement fee of four hundred and fifty thousand
United States Dollars (USD450,000), which fee the Borrower hereby
accepts has been fully earned on the date hereof.
7.3 The Borrower shall pay to the Agent for the benefit of the Agent an
agency fee of five thousand United States Dollars (USD5,000) per annum.
Such agency fee shall accrue and be payable on each day elapsing after
the first Drawdown Date and shall be paid in advance on the first
Drawdown Date and at twelve (12) monthly intervals thereafter.
8. INDEMNITY
8.1 If any change in law or regulation or in the interpretation thereof or
if compliance by any one or more of the Lenders with any direction
request or requirement (whether or not having the force of law) of any
central bank or other authority shall:-
(A) subject any one or more of the Lenders to any tax with respect
to the Loan or any part thereof (other than tax on overall net
income);
(B) change the basis of taxation to any one or more of the Lenders
of payments of principal or interest or any other payment due
or to become due hereunder;
(C) impose or modify any reserve, liquidity or capital adequacy
requirements or require the making of any special deposits
affecting any one or more of the Lenders; or
(D) impose on any one or more of the Lenders any other condition
affecting the Loan or any part thereof whether or not any
Drawing has been advanced
<PAGE>
- 15 -
and the result is either to increase the cost to any one or more of the
Lenders of making or maintaining or committing to make its or their
Contribution(s) to the Loan or any part thereof or to reduce the amount
of any payment received by any one or more of the Lenders hereunder or
to reduce the rate of return which any one or more of the Lenders would
have been able to obtain on its or their overall capital but for
entering into and/or performing this agreement and evidence
substantiating the situation has been produced by such one or more of
the Lenders to the Agent then:-
(i) the Agent shall use its best efforts promptly to
notify the Borrower in writing of the situation;
(ii) the Borrower shall pay to the Agent forthwith upon
the demand of the Agent such amount as will
compensate such one or more of the Lenders for such
additional cost or such reduction and a certificate
of the additional amount or amounts so required
submitted by the Agent to the Borrower shall save for
manifest error be conclusive evidence thereof; and
(iii) any such demand may be made by the Agent at any time
before or after repayment of the Loan.
8.2 All legal fees and other reasonable costs and expenses whatsoever
(including without limitation the costs of obtaining, not more than
twice in each period of twelve (12) months after the date hereof,
valuations of the Vessel from three (3) independent shipbrokers
acceptable to the Agent) incurred by the Agent and/or the Trustee
and/or any one or more of the Lenders in connection with any one or
more of this agreement, the Security Documents and any other documents
executed pursuant hereto or thereto shall be paid by the Borrower
forthwith upon demand by the Agent on a full indemnity basis whether or
not any Drawing is advanced.
8.3 The Borrower shall pay forthwith upon demand by the Agent all stamp,
registration and other duties (including any such duties payable by the
Agent and/or the Trustee and/or any one or more of the Lenders) imposed
by any authority in respect of any one or more of this agreement, the
Security Documents and any other documents executed pursuant hereto or
thereto or otherwise in connection with the Loan.
8.4 Without prejudice to the rights of the Agent and/or the Trustee and/or
the Lenders
<PAGE>
- 16 -
under or pursuant to clause 11 hereof the Borrower shall indemnify the
Agent and/or the Trustee and/or any one or more of the Lenders fully
forthwith upon demand by the Agent for any and all losses damages
and/or expenses whatsoever incurred by the Agent and/or the Trustee
and/or such one or more of the Lenders:-
(A) as a result of any Drawing not being advanced for any reason
whatsoever in accordance with a notice given pursuant to
clause 3.1(C) hereof (provided that no Lender whose default
has caused that Drawing not to be advanced may claim any
indemnity under this clause 8.4(A));
(B) as a result of an Event of Default;
(C) in perfecting, protecting the value of or enforcing any of its
or their rights or securities under any one or more of this
agreement, the Security Documents and any other documents
executed pursuant hereto or thereto or in attempting so to do;
or
(D) as a result of any payment hereunder, whether pursuant to a
judgment or otherwise, being made, obtained or enforced in a
currency other than United States Dollars.
8.5 In the event that the whole or part of any Drawing is repaid or prepaid
otherwise than on the final day of an Interest Period in respect
thereof the Borrower shall (A) indemnify any one or more of the Lenders
fully forthwith upon demand by the Agent for any and all losses damages
and/or expenses incurred by such one or more of the Lenders in
liquidating or reemploying fixed deposits acquired from third parties
to maintain its or their Contribution(s) to that Drawing or the
relevant part thereof (as the case may be) until the expiry of the then
current Interest Period in respect thereof and (B) pay to any one or
more of the Lenders forthwith on demand any sums due to such one or
more of the Lenders as a result of that repayment or prepayment under
clause 8.6 hereof.
8.6 The Borrower shall indemnify any one or more of the Lenders fully
forthwith upon demand by the Agent for all losses, premiums, penalties,
costs and expenses whatsoever incurred by such one or more of the
Lenders in connection howsoever with any interest rate "swap", "cap" or
other transaction entered into or to be entered
<PAGE>
- 17 -
into or arranged by such one or more of the Lenders at the request or
on behalf of the Borrower at any time and from time to time with any
counterparty a direct or indirect commercial purpose of which is to
limit or offset the exposure of the Borrower to future increases of
floating interest rates in connection howsoever with this agreement.
8.7 The indemnities contained in this clause 8 shall apply irrespective of
any indulgence granted to the Borrower or any other party from time to
time and shall continue in full force and effect notwithstanding any
payment in favour of the Agent and/or the Trustee and/or any one or
more of the Lenders and any amount due from the Borrower under this
clause 8 will be due as a separate debt and shall not be affected by
judgment being obtained for any other sums due under any one or more of
this agreement, the Security Documents and any other documents executed
pursuant hereto or thereto.
9. PAYMENTS
9.1 All payments by the Borrower hereunder shall be made to the Agent's
account with such bank or banks as the Agent shall nominate from time
to time.
9.2 Subject to the sub-clauses of this clause 9.2 all payments by the
Borrower hereunder shall be made in full without set-off or
counterclaim and free and clear of and without deduction or withholding
for or on account of any tax of any jurisdiction.
(A) If the Borrower is required by law to make any deduction or
withholding from any payment hereunder for or on account of
tax, it shall do so and the sum due from the Borrower in
respect of such payment shall be increased to the extent
necessary to ensure that, after the making of such deduction
or withholding, the Agent receives and each relevant party
retains (free of any liability in respect of any such
deduction or withholding) a net sum equal to the sum it would
have received and retained had no deduction or withholding
been required to be made.
(B) If at any time the Borrower is required by law to make any
deduction or withholding from any sum payable by it hereunder
(or if thereafter there is any change in the rates at which or
the manner in which such deductions or withholdings are
calculated) the Borrower shall promptly and fully notify the
Agent accordingly.
<PAGE>
- 18 -
(C) If the Borrower makes any payment hereunder in respect of
which it is required by law to make any deduction or
withholding it shall pay the full amount to be deducted or
withheld to the relevant taxation or other authority within
the time allowed for such payment under applicable law and
shall deliver to the Agent within thirty (30) days after it
has made such payment to the applicable authority the
appropriate receipt or certificate issued by such authority or
the Borrower as the case may be evidencing the payment to such
authority of all amounts so required to be deducted or
withheld from such payment.
9.3 If any sum becomes due for payment hereunder on a day which is not a
Business Day the due date for payment shall be extended to the next
succeeding Business Day unless that next succeeding Business Day falls
within a fresh month in which event the due date for payment shall be
brought forward to the immediately preceding Business Day. Any interest
payable shall be adjusted accordingly.
9.4 All payments hereunder shall be made in United States Dollars not later
than 11.00 a.m. (New York time) on the due dates therefor in such funds
as may be customary for the same day settlement of international
banking transactions in United States Dollars in New York City provided
that payments in respect of costs and expenses shall be made in the
currencies in which the same are incurred.
9.5 The Agent shall open and maintain on its books a control account in the
name of the Borrower showing the advance of each Drawing and the
computation and payment of interest and all other sums due hereunder.
The Borrower's obligations to repay each Drawing and to pay interest
thereon and to pay all other sums due hereunder shall be evidenced by
the entries from time to time made in the control account opened and
maintained under this clause 9.5 which entries will be conclusive and
binding in the absence of manifest error.
10. APPLICATION OF MONEYS
10.1 All moneys assigned to the Agent and/or the Trustee and/or the Lenders
under the Earnings Assignment shall be paid to the Earnings Account.
<PAGE>
- 19 -
10.2 Subject to clause 10.4 hereof all moneys paid to the Earnings Account
shall be applied by the Agent as follows:-
(A) first in payment of any and all sums whatsoever due and
payable to the Agent and/or the Trustee and/or any one or more
of the Lenders hereunder (such sums to be paid in such order
as the Agent may in its sole discretion elect);
(B) second in retention in the Earnings Account of amounts
equivalent in aggregate to the amount of interest next falling
due to be paid hereunder;
(C) third in payment of the costs (if any) incurred by the
Borrower in the normal day to day business of operating the
Vessel;
(D) fourth in accordance with the relevant provisions of the
Bridge Loan Facility Agreement; and
(E) fifth in retention of any credit balance in the Earnings
Account
Provided That:-
(i) sums retained in the Earnings Account pursuant to
clauses 10.2(B) and (E) hereof shall be held on
deposit at rates of interest normally paid by the
Agent to customers for deposits of like amount and
maturity and any interest accruing thereon shall be
credited to the Earnings Account at monthly intervals;
(ii) sums retained in the Earnings Account pursuant to
clause 10.2(B) hereof shall be applied by the Agent in
or towards payment of interest due hereunder on the
due dates for payment thereof; and
(iii) nothing herein contained shall be deemed to affect the
absolute obligation of the Borrower to pay interest on
and to repay each Drawing as provided in clauses 4 and
5 hereof.
10.3 Subject to clause 10.4 hereof all moneys payable to the Agent and/or
the Trustee and/or the Lenders under the Insurance Assignment and any
other moneys payable to the Agent and/or the Trustee and/or the Lenders
by any one or more of the Security Parties under any one or more of
this agreement, the Security Documents and any
<PAGE>
- 20 -
other documents executed pursuant hereto or thereto the application of
which is not specifically provided for by another clause hereof shall
be paid to the Agent's account with such bank or banks as the Agent may
nominate from time to time and shall be applied by the Agent as
follows:-
(A) all moneys received from a Total Loss or sale of the Vessel
shall be applied as follows:-
(i) first in accordance with clause 10.2(A) hereof;
(ii) second in repayment of the Loan, in payment of
accrued interest thereon and in payment of any sums
due to any one or more of the Lenders by virtue of
that repayment under clause 8.5 hereof;
(iii) third in accordance with the relevant provisions of
the Bridge Loan Facility Agreement; and
(iv) fourth in payment of any credit balance to the
Borrower or to whomsoever may be entitled thereto;
and
(B) all moneys not covered by clause 10.3(A) hereof shall be applied as
follows:-
(i) first in accordance with clause 10.2(A) hereof;
(ii) second (in respect only of moneys received by virtue
of the Insurance Assignment) in reimbursement to the
Borrower for such of the costs (if any) incurred by
the Borrower in effecting the repair of the damage in
respect of which those moneys are received as the
Agent shall approve (such approval not to be
unreasonably withheld) and in payment to the Earnings
Account of all moneys received in respect of loss of
hire insurances (if any);
(iii) third in repayment of the Loan, in payment of accrued
interest thereon and in payment of any sums due to any
one or more of the Lenders by virtue of that repayment
under clause 8.5 hereof;
<PAGE>
- 21 -
(iv) fourth in accordance with the relevant provisions of
the Bridge Loan Facility Agreement; and
(v) fifth in payment of any credit balance to the
Borrower or to whomsoever may be entitled thereto.
10.4 From and after the giving of notice by the Agent to the Borrower
pursuant to clause 11.1 hereof all moneys whatsoever received or
recovered by the Agent or the Trustee or any one or more of the Lenders
from any one or more of the Security Parties under any one or more of
this agreement, the Security Documents and any other documents executed
pursuant hereto or thereto or from any other party under any one or
more of the Mortgage, the Earnings Assignment and the Insurance
Assignment and all moneys from time to time standing to the credit of
the Earnings Account shall be paid to the Agent's account with such
bank or banks as the Agent may nominate from time to time and shall be
applied by the Agent as follows:-
(A) first in accordance with clause 10.2(A) hereof, subject to any
right the Agent or the Trustee or any one or more of the
Lenders may have to delay any such application in order to
maximise its or their claim;
(B) second in accordance with the relevant provisions of the
Bridge Loan Facility Agreement; and
(C) third in payment of any credit balance to the Borrower or to
whomsoever may be entitled thereto.
11. DEFAULT
11.1 The Agent may by notice in writing to the Borrower declare the loan
facility made available hereunder to be cancelled and the Loan to be
immediately repayable with accrued interest thereon (plus any sums due
to any one or more of the Lenders by virtue of that repayment under
clause 8.5 hereof) and any security held by the Agent or the Trustee or
any one or more of the Lenders shall become immediately enforceable if
any of the following events occurs:-
<PAGE>
- 22 -
(A) failure by the Borrower to pay promptly on the due date
therefor any sum whatsoever due for payment by it under this
agreement;
(B) any one or more of the Security Parties and ESL making default
in the observance or performance of any other obligation
covenant or undertaking contained in any one or more of this
agreement, the Security Documents and any other documents
executed pursuant hereto or thereto and (if the same is in the
opinion of the Agent capable of remedy) the continuation of
that default unremedied for a period of fifteen (15) days;
(C) any of the representations and warranties made or deemed to
have been made in any one or more of this agreement, the
Security Documents and any other documents executed pursuant
hereto or thereto being inaccurate or misleading when made or
becoming inaccurate or misleading at any time hereafter were
the same to be repeated in relation to the facts subsisting at
that time (whether or not any such repetition actually
occurs);
(D) any event of default occurring under any one or more of the
Security Documents;
(E) the fulfilment of any one or more of the obligations covenants
and undertakings contained in any one or more of this
agreement, the Security Documents and any other documents
executed pursuant hereto or thereto or the exercise of any of
the rights vested in the Agent and/or the Trustee and/or any
one or more of the Lenders hereunder or thereunder becoming
either unlawful under any applicable law or unauthorised by
any authority having jurisdiction or otherwise impossible;
(F) a bona fide petition being presented or an order being made or
an effective resolution being passed for the commencement of
any proceedings for the liquidation winding-up or
re-organisation of any one or more of the Security Parties
except for the purpose of and followed by an amalgamation or
reconstruction the terms of which shall have been previously
approved in writing by the Agent;
(G) a distress or execution being levied or enforced upon or sued
out against any part of the assets of any one or more of the
Security Parties which in the Agent's opinion would have a
material adverse effect on any one or more of
<PAGE>
- 23 -
the Security Parties and not being satisfied removed or
discharged within fourteen (14) days;
(H) the holder of any Encumbrance taking possession of or a
liquidator, administrator, receiver, administrative receiver,
trustee or similar officer being appointed in respect of the
whole or a substantial part of the assets of any one or more
of the Security Parties;
(I) any one or more of the Security Parties being unable or
admitting its inability to pay its or their lawful debts as
they mature or convening a meeting of or preparing to enter
into any arrangement or composition with or making a general
assignment for the benefit of its or their creditors or being
adjudicated bankrupt or insolvent;
(J) any other Borrowed Money of any one or more of the Security
Parties becoming due or becoming capable of being declared due
prior to its stated date of maturity by reason of default on
the part of any one or more of the Security Parties;
(K) any one or more of the Security Parties ceasing to carry on or
suspending or threatening to cease to carry on or to suspend
its or their business or a substantial part of the assets or
business of any one or more of the Security Parties being
seized confiscated or expropriated;
(L) the market value of the Vessel (such market value to be
conclusively determined as the average of the latest three (3)
valuations obtained by the Agent as provided in clause 8.2
hereof) at any time falling below one hundred and fifty five
per cent (155%) of the amount of the Loan then outstanding and
the Borrower failing either to prepay the relevant part of the
Loan or to provide additional security acceptable to the Agent
within fourteen (14) days after receiving written notice from
the Agent to that effect;
(M) a Total Loss occurring and either (i) the Agent not being
satisfied at any time in its absolute discretion that the
Total Loss is adequately covered by insurance and that the
relevant insurance proceeds will be paid to the Agent or
<PAGE>
- 24 -
(ii) any insurance claim in respect thereof being rejected by
the underwriters at any time or (iii) the Agent failing to
receive the insurance proceeds in respect thereof within one
hundred and eighty (180) days thereafter;
(N) any one or more of the Subject Documents being repudiated or
terminated without the prior written consent of the Agent;
(O) a material adverse change occurring in the business, assets or
financial condition of any one or more of the Security Parties
which may reasonably be considered to affect its or their
ability to comply with all or any of its or their respective
obligations under any one or more of the Subject Documents; or
(P) an event of default occurring under the Bridge Loan Facility
Agreement or the Seller's Credit Agreement.
12. SECURITY
12.1 As security for the Loan, interest thereon and all other sums due and
to become due hereunder the Borrower shall provide the Agent with the
following documents in form and substance satisfactory to the Agent
which documents shall be executed in favour of the Trustee and be held
by the Trustee on trust for the Agent, the Trustee and the Lenders and
their respective successors, assignees and transferees on the terms of
the Deed of Agency and Trust:-
(A) duly registered first Panamanian naval mortgage over the
Vessel duly executed by the Borrower;
(B) first priority assignment duly executed by the Borrower of all
insurances whatsoever in respect of the Vessel and loss of its
earnings and all compensation in respect of the requisition
for title or other compulsory acquisition of the Vessel (with
the exception of requisition hire);
(C) first priority assignment duly executed by the Borrower of the
benefit of all earnings whatsoever of the Vessel (including
requisition hire);
(D) guarantee and indemnity duly executed by the Guarantor;
(E) first priority charge over all the authorised and issued
shares in the Borrower
<PAGE>
- 25 -
duly executed by the Guarantor;
(F) tripartite agreement duly executed by (i) the Agent, the
Trustee and the Lenders, (ii) Neptun Maritime Oyj and ESL and
(iii) the Borrower and the Guarantor coordinating the
interests of ESL under the Seller's Credit Agreement and the
Seller's Credit Securities with those of the Agent and/or the
Trustee and/or the Lenders under this agreement and the other
Security Documents; and
(G) letter of subordination duly executed by the Manager
subordinating its interests under the Management Agreement to
those of the Agent and/or the Trustee and/or the Lenders under
this agreement.
13. REPRESENTATIONS AND WARRANTIES
13.1 The Borrower hereby represents and warrants that:-
(A) each of the Security Parties is a duly incorporated company
validly existing and in good standing under the laws of its
country of incorporation and all the shares in the Borrower
are beneficially owned by the Guarantor;
(B) each of the Security Parties has full power and authority to
execute deliver and perform such of the Subject Documents to
which it is a party;
(C) each of the Security Parties has taken all necessary corporate
or other action required to authorise the execution delivery
and performance of such of the Subject Documents to which it
is a party;
(D) all consents licences approvals or authorisations whatsoever
required to make the Subject Documents legal valid enforceable
and admissible in evidence have been obtained and are in full
force and effect;
(E) from and after execution and delivery thereof each of the
Subject Documents will constitute legal valid and binding
obligations of the parties thereto (other than the Agent, the
Trustee and the Lenders) enforceable in accordance with
<PAGE>
- 26 -
its terms and will not contravene any applicable law or
regulation or any contractual constitutional or other
restriction binding on any of the parties thereto (other than
the Agent, the Trustee and the Lenders);
(F) as at the date hereof no material litigation or administrative
proceedings of or before any board of arbitration, Court or
Governmental authority or agency is pending or (to the
Borrower's knowledge) threatened the result of which would or
might be to have a material adverse effect on the business
assets or financial condition of any one or more of the
Security Parties;
(G) the copies of any of the Subject Documents delivered or to be
delivered to the Agent hereunder constitute the full agreement
between the parties thereto with respect to the subject matter
thereof and none of the parties thereto is in default
thereunder;
(H) all historic financial information and other documentation
submitted to the Agent by or on behalf of the Borrower in
connection herewith is accurate and correct in all material
respects and not misleading;
(I) the claims of the Agent and/or the Trustee and/or the Lenders
against the Borrower under this agreement will rank at least
pari passu with the claims of all unsecured creditors of the
Borrower other than claims of such creditors to the extent
that they are statutorily preferred;
(J) each Security Party and its business and assets (including,
without limitation, all computer systems, all systems and
equipment containing embedded microchips (including leased
systems and equipment) and any other systems, equipment or
parts of the business or assets whatsoever of that Security
Party whose proper functioning or operation is capable of
being affected by the incorrect processing, storing,
calculation or recognition of dates, together with all
software and data in connection with any of the foregoing)
shall at all times comply with the requirements of Year 2000
Conformity as defined in "A DEFINITION OF YEAR 2000 CONFORMITY
REQUIREMENTS" issued by the British Standards Institution (BSI
DISC PD2000-1:1998) or such later reviewed, revised or amended
version thereof as may be published by the British Standards
Institution from time to time (in which case the later version
shall be the relevant one for the purposes of this clause);
and
<PAGE>
- 27 -
(K) no Event of Default has occurred or is continuing and no event
which with the giving of notice and/or lapse of time would
constitute an Event of Default has occurred or is continuing.
14. COVENANTS
14.1 The Borrower hereby covenants that from the date hereof until the
Borrower has no remaining obligations, actual or contingent, under this
agreement:-
(A) the Borrower will file all requisite tax returns and will pay
all tax as shown to be due and payable on such returns or any
of the assessments made against it (other than those being
contested in good faith);
(B) the Borrower will carry on and conduct its business in a
proper and efficient manner and will duly pay all outgoings as
and when they fall due and in particular without limiting the
generality of the foregoing will duly observe and perform all
the terms and conditions of any contract of employment of the
Vessel to be observed and performed by it;
(C) the Borrower will prepare or cause to be prepared, in
accordance with GAAP, annual audited accounts for the Borrower
and unaudited quarterly accounts for the Borrower; the
Borrower will furnish the Agent with copies of the audited
annual accounts no later than ninety five (95) days after the
end of each financial year and copies of the unaudited
quarterly accounts no later than fifty (50) days after the end
of each financial quarter; the audited annual accounts shall
include profit and loss accounts and balance sheets certified
and audited by an accountant acceptable to the Agent which
shall include Grant Thornton L.L.P.;
(D) the Borrower will provide the Agent in a form acceptable to
the Agent no later than ten (10) days after the end of each
month monthly management information (including traffic
statistics, cash flows, booking reports and outstanding trade
debt) in respect of the Borrower;
(E) the Borrower shall procure that the Earnings Account is opened
and
<PAGE>
- 28 -
maintained at the bank specified in the definition thereof in
clause 1.2 hereof and shall not keep any accounts with any
bank other than the Agent unless otherwise agreed specifically
with the Agent;
(F) the Borrower shall promptly furnish to the Agent all such
accounts and financial information concerning any one or more
of the Security Parties and the Vessel as the Agent may from
time to time reasonably require including without limiting the
generality of the foregoing cash flow analyses, budgets and
details of the operating costs of the Vessel;
(G) the Vessel, its earnings and the interests of the Agent and/or
the Trustee and/or the Lenders as mortgagees of the Vessel
shall be insured with such underwriters insurance offices and
clubs for such amounts for such risks in such form and upon
such conditions as are satisfactory to the Agent from time to
time provided that the amount of each of the marine and war
risks insurances shall not in any event be less than the
greater from time to time of (i) the market value of the
Vessel and (ii) one hundred and twenty per cent (120%) of the
aggregate amount of the Loan, the Bridge Loan Facility and the
Seller's Credit then outstanding;
(H) the Borrower will not without the prior written consent of the
Agent:-
(i) create or allow to subsist any Encumbrance over any
of its assets or any part thereof save for Permitted
Liens and those created by any of the Security
Documents;
(ii) incur any liability in respect of Borrowed Money
except for unsecured Borrowed Money subordinated to
the Loan hereunder;
(iii) make loans or advances to others (except for loans or
advances made in the ordinary course of business in
connection with the chartering and/or operation
and/or repair of the Vessel);
(iv) except in connection with the chartering and/or
operation and/or repair of the Vessel incur any other
liability to a third party which in the opinion of
the Agent is of a substantial nature;
(v) consolidate with any other company or merge into any
company;
<PAGE>
- 29 -
(vi) engage in any business other than the ownership
operation chartering and management of the Vessel;
(vii) guarantee endorse or otherwise become or remain
liable in respect of the obligations of any person
firm or corporation;
(viii) pay any dividends or other distributions or issue any
new shares or transfer any shares;
(ix) sell or otherwise dispose of the Vessel or any share
therein or any other asset (the Agent's consent not
to be unreasonably withheld);
(x) make or allow any alteration to or waiver of the
terms of any one or more of the Subject Documents;
(xi) appoint any manager of the Vessel other than the
Manager;
(xii) change the class, flag or employment of the Vessel as
a passenger cruise ship; or
(xiii) make any acquisitions or investments other than the
regular dry-docking and maintenance of the Vessel
(the Agent's consent not to be unreasonably
withheld);
(I) the Borrower will procure that the amount standing to the
credit of the Earnings Account shall not at any time fall
below two million United States Dollars (USD2,000,000);
(J) for so long as any sums remain actually or contingently
outstanding under or pursuant to this agreement or any of the
Security Documents the Borrower shall not repay the Seller's
Credit more quickly than by fifty eight (58) monthly
instalments commencing fifteen (15) months after the first
Drawdown Date, the first amounting to six hundred and twelve
thousand United States Dollars (USD612,000), the second to the
fifty seventh each amounting to two hundred and four thousand
United States Dollars (USD204,000) and the final
<PAGE>
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instalment amounting to the balance of the Seller's Credit;
(K) from and after the occurrence of an Event of Default the
Borrower shall not, after receiving written notice from the
Agent to that effect, make any payment of principal or
interest in respect of the Seller's Credit for so long as that
Event of Default is continuing;
(L) the Borrower shall procure that its Debt Service Coverage
Ratio (calculated as set out below, with the first such
calculation being made twelve (12) months after the first
Drawdown Date and the subsequent calculations being made at
three (3) monthly intervals thereafter) shall not be less than
the ratio specified in item 1 in schedule B hereto (for the
period of twelve (12) months after the first Drawdown Date)
and the ratio specified in item 2 in schedule B hereto (for
any period thereafter) and for this purpose the Debt Service
Coverage Ratio shall be calculated in accordance with the
following formula:-
EBITDA
-------------------
Financial Expenses
where
"EBITDA" means, for the previous period of twelve (12) months,
the aggregate of:
(i) Net Income (but excluding gains and losses from the
sale of assets or reserves relating thereto and items
classified as extraordinary or non-recurring) from the
Borrower's operations for such period and for this
purpose Net Income means the consolidated net income
of the Borrower as determined in accordance with GAAP;
and
(ii) the aggregate amounts deducted in determining Net
Income for such period in respect of depreciation,
amortisation, taxes, deferred income and interest
expense of the Borrower; and
<PAGE>
- 31 -
"Financial Expenses" means, for the previous period of twelve
(12) months, the sum of:
(i) the aggregate principal payable or paid during such
period on any Borrowed Money of the Borrower (other
than the scheduled principal repayment in respect of
the Bridge Loan Facility and principal repayments
under this agreement to the extent that they were
redrawn during the same period);
(ii) aggregate interest expense (including, without
limitation, capitalised interest accrued during such
period) of the Borrower for such period; and
(iii) all rent and any capital lease obligations or
operating lease obligations by which the Borrower is
bound which are payable or paid during such period as
calculated in accordance with GAAP and derived from
the then latest accounts of the Borrower;
(M) not later than six (6) months prior to the due date for full
repayment of the Bridge Loan Facility the Borrower shall
demonstrate to the Lenders' satisfaction that sufficient cash
or committed facilities are available to enable the Borrower
to repay the Bridge Loan Facility in full on the due date
therefor;
(N) the Borrower shall provide the Agent with compliance
certificates in relation to the relevant financial covenants
contained in this agreement in the form set out in appendix II
hereto on or before the first Drawdown Date and at three (3)
monthly intervals after the first Drawdown Date and, for the
avoidance of doubt, the covenant in clause 14.1(L) hereof
shall not be deemed to be a 'relevant financial covenant' for
the purposes of this clause 14.1(N) until the date falling
twelve (12) months after the first Drawdown Date;
(O) the Borrower will promptly inform the Agent if any Event of
Default or any event which with the giving of notice and/or
lapse of time would constitute an Event of Default occurs or
if any event occurs which may materially adversely affect its
ability to perform any of its obligations under any one or
more of this agreement, the Security Documents and any other
documents executed pursuant hereto or thereto; and
<PAGE>
- 32 -
(P) the Borrower will from time to time at the request of the
Agent execute and deliver to the Agent or procure the
execution and delivery to the Agent of all such documents as
the Agent shall deem desirable in its absolute discretion for
giving full effect to this agreement and for perfecting,
protecting the value of or enforcing any rights or securities
granted to the Agent and/or the Trustee and/or the Lenders
under any one or more of this agreement, the Security
Documents and any other documents executed pursuant hereto or
thereto.
15. SET-OFF AND SHARING OF PAYMENTS
15.1 The Agent, the Trustee and each of the Lenders are hereby authorised to
combine any and all accounts held by the Borrower with any of them at
any of their respective offices and to apply (without any prior notice)
any credit balance to which the Borrower is then beneficially entitled
on any such account (whether or not that credit balance is then due to
the Borrower) in or towards satisfaction of any sums then due and
payable by the Borrower hereunder. For that purpose the Agent, the
Trustee and each of the Lenders are hereby authorised to use all or
part of that credit balance to buy such other currency or currencies as
may be required to enable any of them to effect that application. The
Agent, the Trustee and the Lenders shall not be obliged to exercise any
of their rights under this clause, which shall be without prejudice and
in addition to any right of set off, combination of accounts, lien or
other rights to which any of them at any time otherwise is entitled
(whether by operation of law, contract or otherwise).
15.2 If pursuant to clause 15.1 hereof or otherwise any Lender shall at any
time receive appropriate or otherwise obtain from any one or more of
the Security Parties any payment on account of principal interest or
other sums due from the Borrower hereunder (which are not due solely to
that Lender under the terms of this agreement) in a greater proportion
than its Contribution then that Lender shall remit via the Agent to
such of the other Lenders as have received a smaller proportion of that
payment than their Contributions such sums as shall ensure that each
Lender receives a proportion of that payment corresponding to its
Contribution and each such remittance shall be treated for the purposes
of this agreement as having been made to the receiving Lender by the
Borrower instead of the Lender by whom such remittance was made
Provided Always That if at any time thereafter that payment is required
by a
<PAGE>
- 33 -
court of competent jurisdiction to be returned to the Borrower or any
third party each of the Lenders shall return the relevant percentage
thereof.
16. ASSIGNMENT AND PARTICIPATION
16.1 This agreement shall be binding upon and inure to the benefit of the
Agent, the Trustee, the Lenders and each of them and the Borrower and
their respective successors and assigns.
16.2 The Borrower may not assign its rights or obligations hereunder without
the prior written consent of the Agent.
16.3 Each of the Lenders may at any time with the prior written consent of
the Agent and the Borrower (such consents not to be unreasonably
withheld and no such consent to be required at all from the Borrower if
an Event of Default has occurred and is subsisting) assign transfer or
grant participations in all or part of its Contribution to the Loan or
any part thereof and its rights and obligations hereunder to any other
bank or financial institution and for this purpose:-
(A) no such consents shall be required from the Agent or the
Borrower if the other bank or financial institution is either
another of the Lenders or a subsidiary company, holding
company or sister company of the relevant Lender;
(B) the Agent, the Trustee and the relevant Lender shall be at
liberty to disclose on a confidential basis to any such
assignee transferee or grantee (or to any potential such
assignee transferee or grantee) all such information
concerning any one or more of the Security Parties, the Vessel
and the Subject Documents as the Agent, the Trustee and the
relevant Lender may deem appropriate; and
(C) the Borrower shall upon demand by the Agent and at the expense
of the relevant Lender execute and deliver to the Agent all
such documents and do all such acts and things as the Agent
may deem necessary or desirable in its absolute discretion for
giving full effect to any such assignment transfer or
participation.
16.4 The Agent and/or the Trustee may at any time signify its or their
intention to resign by giving written notice to the Borrower and the
Lenders provided that such resignation shall not take effect until a
successor Agent and/or Trustee (as the case may be) has
<PAGE>
- 34 -
been appointed and has accepted that appointment. After the giving of
such notice, a successor Agent and/or Trustee shall be appointed in
accordance with the relevant provisions of the Deed of Agency and Trust
and the Lenders shall procure that the successor Agent and/or Trustee
shall give to the Borrower written notice of its acceptance of
appointment. Upon its appointment as Agent and/or Trustee, such
successor Agent and/or Trustee shall succeed to and become vested with
all the rights powers and privileges and duties of the retiring Agent
and/or Trustee, and the retiring Agent and/or Trustee shall be
discharged from its duties and obligations under this agreement.
17. MISCELLANEOUS
17.1 Time shall be of the essence of this agreement but no failure or delay
on the part of the Agent or the Trustee or any one or more of the
Lenders to exercise any power or right hereunder shall operate as a
waiver of such power or right nor shall any single or partial exercise
of any power or right hereunder preclude any other or further exercise
thereof or the exercise of any other power or right hereunder. The
powers and rights provided to the Agent or the Trustee or any one or
more of the Lenders in this agreement are cumulative and shall not
exclude any powers or rights provided to the Agent or the Trustee or
any one or more of the Lenders by law.
17.2 In the event of any of the provisions contained in any one or more of
this agreement, the Security Documents and any other documents executed
pursuant hereto or thereto being invalid, illegal or unenforceable in
any respect under any law, the validity, legality and enforceability of
the remaining provisions herein or therein contained shall not in any
way be affected or impaired thereby.
17.3 Neither the Agent nor the Trustee nor any of the Lenders shall be
liable for any failure to meet its obligations hereunder resulting from
any cause whatsoever beyond its control.
18. NOTICES
18.1 Any notice or other correspondence in connection herewith required to
be sent or given by the Borrower to the Agent or the Trustee or any one
or more of the Lenders
<PAGE>
- 35 -
shall be sent to the Agent in the English language at 19 Thomas More
Street, London E1W 1YF (telex no. 290562 facsimile no. +44 171 709
7001) or to such other address or addresses as may from time to time be
notified by the Agent to the Borrower for such purpose.
18.2 Any notice or other correspondence in connection herewith required to
be sent or given by the Agent or the Trustee or any one or more of the
Lenders to the Borrower shall be sent to the Borrower in the English
language at c/o Commodore Holdings Limited, 4000 Hollywood Boulevard,
Suite 385-S, Hollywood, Fl 33021, U.S.A., Attention: Chief Financial
Officer (facsimile no. +954 921 2147) with copies to Kathleen L
Deutsch, P.A., Broad and Cassel, Miami Center - Suite 3000, 201 S.
Biscayne Boulevard, Miami, Fl 33131, U.S.A. (facsimile no. +305 373
9443) or to such other address or addresses as the Borrower may from
time to time notify to the Agent in writing and shall be deemed to have
been validly given and received on the date of dispatch if sent by
telex and five (5) days after having been posted if sent by prepaid
first class or airmail post.
19. PROPER LAW AND JURISDICTION
19.1 This agreement shall be governed by and construed in accordance with
the Laws of England and for the exclusive benefit of the Agent, the
Trustee and the Lenders the Borrower hereby irrevocably submits to the
jurisdiction of the High Courts of Justice in England. Such submission
shall not limit the right of the Agent, the Trustee and the Lenders to
commence any proceedings relating to this agreement (in addition or
alternatively) in any other jurisdiction which the Agent deems fit. The
Borrower hereby irrevocably authorises and appoints Consult Marine of
58 London Fruit Exchange, Brushfield Street, London E1 6EP as its agent
in England for the acceptance of service of legal proceedings on it
hereunder.
<PAGE>
- 36 -
IN WITNESS whereof the parties hereto have executed this agreement the day and
year first above written.
THE LENDERS
MERITA BANK PLC *
Lending Office:-
19 Thomas More Street
London E1W 1YF
By: /s/ Kirsten Kaarre Jensen
-------------------------------------
CHRISTIANIA BANK OG KREDITKASSE ASA *
Lending Office:-
Middelthunsgate 17
0368 Oslo
Norway
By: /s/ Ulv E. Aasland
-------------------------------------
SKANDINAVISKA ENSKILDA BANKEN AB (PUBL) *
Lending Office:-
2 Cannon Street
London EC4M 6XX
By: /s/ Jonathan Pratt
-------------------------------------
THE AGENT
MERITA BANK PLC
By: /s/ Kirsten Kaarre Jensen
-------------------------------------
<PAGE>
- 37 -
THE BORROWER
CROWN CRUISES OF PANAMA, INC.
By: /s/ Jeffrey I. Binder
-------------------------------------
THE TRUSTEE
MERITA BANK PLC
By: /s/ Kirsten Kaarre Jensen
-------------------------------------
All in the presence of:-
EXHIBIT 10.3
CROWN CRUISES OF PANAMA, INC.
- and -
MERITA BANK PLC
------------------------------
FIRST NAVAL MORTGAGE
- on the -
m.v. "CROWN DYNASTY"
------------------------------
Sinclair Roche & Temperley
Royex House
5 Aldermanbury Square
London EC2V 7LE
Tel: 0171 452 4000
Fax: 0171 452 4001
Ref: GFS/242921
<PAGE>
INDEX OF CONTENTS
CLAUSE HEADING PAGE NO.
- ------ ------- --------
1. Definitions..............................................................2
2. Owner's Covenant to Pay..................................................5
3. Mortgage.................................................................6
4. Owner's Covenants as to Insurance........................................7
5. Owner's Covenants as to Operation & Maintenance.........................12
6. Expenses................................................................17
7. Protection and Maintenance of Security..................................18
8. Events of Default.......................................................19
9. Enforcement of Rights...................................................19
10. Application of Moneys...................................................22
11. No Waiver...............................................................22
12. Power of Delegation.....................................................22
13. Power of Attorney.......................................................23
14. Further Assurance.......................................................23
15. Benefit.................................................................23
16. Amount Secured by Mortgage..............................................23
17. Notices.................................................................24
18. Governing Law, Severability, Etc. ......................................24
19. Miscellaneous...........................................................25
20. Recording of This Mortgage..............................................25
<PAGE>
THIS FIRST NAVAL MORTGAGE is made the day 28th of January, 2000 by CROWN CRUISES
OF PANAMA, INC. a company incorporated under the laws of Panama with its
registered office at c/o Galindo Arias & Lopez, Scotia Plaza No. 18, Avenida
Federico Boyd & Calle No. 51, Piso 9, 10 & 11, Panama, Republic of Panama ("the
Owner") in favour of MERITA BANK PLC a company incorporated under the laws of
Finland acting through its London branch having its principal place of business
at 19 Thomas More Street, London E1W 1YF ("the Trustee" which expression shall
include its successors and permitted assigns) as trustee for the Beneficiaries.
WHEREAS:-
(A) The Owner is the sole owner of the whole of the motor vessel named
"CROWN DYNASTY" built in Valencia, Spain at Union Naval de Levante duly
documented in the name of the Owner under the laws and flag of the
Republic of Panama under Provisional Patente of Navigation Number
22465-PEXT-5 having radio call letters in the international Code of
Signals 3FJX3 with a gross capacity in tons of 19,089 net capacity
in tons of 8,103 length of 140.08 meters breadth of 22.50 meters and
depth of 7.20 meters number of masts number of bridges
number of main decks and number of funnels .
(B) By a loan agreement dated the 24th day of January 2000 made between (1)
the Lenders (as therein defined), (2) Merita Bank Plc ("the Agent") as
agent for the Lenders, (3) the Owner and (4) the Trustee (hereinafter
as the same may from time to time be amended, varied or supplemented
called "the Loan Agreement") the Lenders have agreed to make available
to the Owner a revolving credit facility of up to forty five million
United States Dollars (USD45,000,000) at any one time ("the Loan" which
expression shall also mean where the context so requires the amount
thereof from time to time outstanding) on the terms and conditions
therein set forth. The Owner is as at the date hereof justly indebted
to the Lenders in the amount of the Loan repayable with interest
thereon on the terms and conditions hereinafter set out. A copy of the
form of the Loan Agreement in the form executed is attached hereto and
forms an integral part hereof.
(C) Pursuant to the terms and conditions of the Loan Agreement, the Owner
has drawn the maximum amount of the Loan.
(D) The Lenders agreed to advance the Loan on condition that the Owner
should execute
<PAGE>
- 2 -
and deliver to the Trustee such a first priority mortgage of the Vessel
as hereinafter appears.
(E) In fulfilment of the said condition and in order to secure the payment
to the Trustee and the Beneficiaries of the Outstanding Indebtedness
(as hereinafter defined) and the performance and observance of and
compliance with all the covenants terms and conditions in this Mortgage
contained expressed or implied the Owner has duly authorised the
execution and delivery of this Mortgage and is duly permitted to give
as security for the payment of the Outstanding Indebtedness and the
performance and observance of and compliance with all the said
covenants terms and conditions a first preferred mortgage on the Vessel
under and pursuant to the laws of the Republic of Panama.
(F) By a deed of agency and trust dated January 28, 2000 made between (1)
the Agent, (2) the Trustee and (3) the Lenders it has been agreed that
the benefit of this Mortgage shall be held by the Trustee on trust for
itself, the Agent and the Lenders and its and their respective
successors, assignees and transferees (together "the Beneficiaries").
NOW THIS MORTGAGE WITNESSETH AND IT IS HEREBY AGREED as follows:-
1. DEFINITIONS
1.1 In this Mortgage unless the context otherwise requires any term defined
in the preamble or recitals hereto has the meaning ascribed to it
therein and:-
"DEFAULT RATE"
means interest at the rate calculated in accordance with clause 4.3 of
the Loan Agreement;
"EVENT OF DEFAULT"
means any of the events set out in clause 8 hereof;
"INSURANCES"
means all policies and contracts of insurance (which expression
includes all entries of
<PAGE>
- 3 -
the Vessel in a protection and indemnity or war risks association)
which are from time to time taken out or entered into in respect of the
Vessel and her earnings or otherwise howsoever in connection with the
Vessel with the exception of mortgagees interest insurances;
"OUTSTANDING INDEBTEDNESS"
means the aggregate of all sums of money whatsoever now or in the
future actually or contingently due or owing to the Trustee and the
Beneficiaries under the Security Documents or any of them;
"PERSON"
includes any body of persons;
"REQUISITION COMPENSATION"
means all moneys or other compensation whatsoever payable by reason of
the requisition for title or other compulsory acquisition of the Vessel
(otherwise than by requisition for hire) or the capture, seizure,
arrest, detention or confiscation of the Vessel by any government or by
persons acting or purporting to act on behalf of any government;
"SECURITY DOCUMENTS"
means the Loan Agreement, this Mortgage and any other document as may
have been or may hereafter be executed to secure the Loan;
"SECURITY PERIOD"
means the period commencing on the date hereof and terminating upon
discharge of the security created by the Security Documents by
irrevocable payment in full of the Outstanding Indebtedness;
"TOTAL LOSS"
means:-
(i) actual or constructive or compromised or agreed or arranged
total loss of the Vessel; or
(ii) requisition for title or other compulsory acquisition of the
Vessel otherwise than by requisition for hire; or
(iii) capture, seizure, arrest, detention or confiscation of the
Vessel by any
<PAGE>
- 4 -
government or by persons acting or purporting to act on behalf
of any government unless the Vessel is released and restored
to the Owner from such capture, seizure, arrest or detention
within thirty (30) days after the occurrence thereof; and
"VESSEL"
means the vessel described in Recital (A) hereto and includes her
engines, machinery, boats, tackle, outfit, spare gear, fuel, consumable
or other stores, belongings and appurtenances whether on board or
ashore and whether now owned or hereafter acquired.
1.2 In clause 4.1(A) hereof:-
"EXCESS RISKS"
means the proportion of claims for general average and salvage charges
and under the ordinary running down clause not recoverable in
consequence of the value at which a vessel is assessed for the purpose
of such claims exceeding her insured value;
"PROTECTION AND INDEMNITY RISKS"
means the usual risks covered by associations that are members of the
International Group of P. & I. Associations including without
limitation pollution risks (whether relating to oil or otherwise
howsoever) and the proportion not recoverable in case of collision
under the ordinary running down clause; and
"WAR RISKS"
includes the risks of mines and all risks excluded from the standard
form of English marine policy by the free of capture and seizure
clause.
1.3 This Mortgage shall be read together with the Loan Agreement.
1.4 Clause headings are inserted for convenience of reference only and
shall be ignored in the interpretation of this Mortgage.
<PAGE>
- 5 -
2. OWNER'S COVENANT TO PAY
2.1 In consideration of the premises the Owner covenants with the Trustee
as follows:-
(A) to repay each Drawing at the time and in the manner specified
in clause 5 of the Loan Agreement;
(B) to pay interest on the Loan at the rate at the times and in
the manner specified in clause 4 of the Loan Agreement;
(C) to pay interest at the Default Rate (both before and after any
judgment) on any sum or sums payable under the Security
Documents which is not paid on the due date;
(D) to pay each and every other sum of money that may be or become
owing to the Beneficiaries or any of them under the terms of
the Security Documents or any of them at the times and in the
manner specified therein;
(E) to pay to and/or indemnify the Beneficiaries or any of them
for such additional amounts as may be necessary in order that
all payments under this Mortgage after deduction or
withholding for or on account of all present or future taxes
(other than corporate taxes on the overall net income of the
Beneficiaries or any of them) imposed by any competent
authority in any jurisdiction relative to the Owner shall be
no less than such payments would have been had there been no
such taxes; and
(F) to perform observe and comply with the obligations, covenants,
terms and conditions set out in this Mortgage.
2.2 Notwithstanding anything to the contrary contained in this clause 2 the
Outstanding Indebtedness shall become immediately payable on demand
upon the happening of any Event of Default.
3. MORTGAGE
3.1 In consideration of the premises and in order to secure by this
Mortgage the repayment of each Drawing plus interest at the rate set
forth in the Loan Agreement
<PAGE>
- 6 -
and the payment of all such other sums as may hereafter from time to
time and at any other time form part of the Outstanding Indebtedness
and to secure the performance and observance of and compliance with the
covenants terms and conditions herein contained, the Owner in
accordance with the provisions of Chapter V Title IV of Book Second of
the Code of Commerce of the Republic of Panama and of the pertinent
provisions of the Civil Code and other legislation of the Republic of
Panama hereby executes and constitutes a First Preferred Naval Mortgage
on the whole of the Vessel in favour of the Trustee (as trustee for the
Beneficiaries) to have and to hold the same unto the Trustee its
successors and assigns forever upon the terms herein set forth,
Provided Only and the condition of these presents is such that if the
Owner its successors and assigns shall pay or cause to be paid to the
Beneficiaries the Outstanding Indebtedness as and when the same shall
become due and payable in accordance with the terms of the Loan
Agreement and this Mortgage and shall observe and comply with the
covenants, terms and conditions in the Loan Agreement and this Mortgage
contained expressed or implied to be performed, observed or complied
with by and on the part of the Owner then these presents and the rights
hereunder shall cease determine and be void and the Trustee will, at
the request and cost of the Owner, execute a release in such form as
the Owner may reasonably require, of the security created by this
Mortgage.
3.2 It is declared and agreed that the security created by this Mortgage
shall be held by the Trustee as a continuing security for the payment
of the Outstanding Indebtedness and the performance and observance of
and compliance with all of the covenants terms and conditions contained
in the Security Documents and that the security so created shall not be
satisfied by any intermediate payment or satisfaction of any part of
the amount hereby and thereby secured and that the security so created
shall be in addition to and shall not in any way be prejudiced or
affected by any collateral or other security now or hereafter held by
the Trustee for all or any part of the moneys hereby and thereby
secured and that every power and remedy given to the Trustee hereunder
shall be an addition to and not a limitation of any and every other
power or remedy vested in the Trustee under any of the other Security
Documents or at law and that all the powers so vested in the Trustee
may be exercised from time to time and as often as the Trustee may deem
expedient.
4. OWNER'S COVENANTS AS TO INSURANCE
4.1 The Owner covenants with the Trustee and undertakes throughout the
Security Period:-
<PAGE>
- 7 -
(A) at the Owner's expense to insure and keep the Vessel insured
in United States Dollars (or such other currency as the
Trustee may approve in writing) against (a) fire and usual
marine risks (including excess risks), (b) war risks, (c)
protection and indemnity risks, (d) oil pollution liability
risks in excess of the limit of cover for oil pollution
liability included within the protection and indemnity risks,
(e) loss of hire and (f) any other risks which the Trustee may
from time to time require;
(B) to effect the Insurances (a) generally in such amounts and
upon such terms as shall from time to time be approved in
writing by the Trustee, through such brokers (hereinafter
called "the approved brokers") and with such insurance
companies underwriters war risks and protection and indemnity
associations as shall from time to time be approved in writing
by the Trustee, and (b) in particular 01. (in respect of all
risks within the protection and indemnity insurances other
than oil pollution risks) in an unlimited amount, or (if
unlimited cover ceases to be available) in the maximum amount
available to the Owner for the Vessel in the market from time
to time; 02. (in respect of oil pollution liability risks
included within the protection and indemnity insurances) in
the maximum amount available to the Owner for the Vessel in
the market from time to time; and 03. (in respect of oil
pollution liability risks in excess of the limit of cover
included in the protection and indemnity insurances) in such
amount and upon such terms as the Trustee may from time to
time require;
(C) to renew the Insurances at least fourteen (l4) days before the
relevant policies or contracts expire and to procure that the
approved brokers shall promptly confirm in writing to the
Trustee as and when each such renewal is effected;
(D) punctually to pay premiums calls contributions or other sums
payable in respect of all the Insurances and to produce all
relevant receipts when so required by the Trustee;
(E) to arrange for the execution of such guarantees as may from
time to time be required by a protection and indemnity or war
risks association;
(F) to procure that the interests of the Trustee and the
Beneficiaries shall be duly endorsed upon all slips cover
notes policies certificates of entry or other
<PAGE>
- 8 -
instruments of insurance issued or to be issued in connection
with the Insurances and in particular, but without limitation,
if so required by the Trustee, (but without liability as
between the Owner and the Trustee for premiums or calls) to
procure that the Trustee be named as co-assured;
(G) to procure that all such instruments of insurance as are
referred to in sub-clause (F) above shall be deposited with
the Trustee (or with such other person as the Trustee may from
time to time direct) and that the approved brokers furnish the
Trustee with a letter or letters of undertaking in such form
as may be required by the Trustee;
(H) to procure that the protection and indemnity and/or war risks
associations wherein the Vessel is entered shall (if so
required by the Trustee) furnish the Trustee with a letter or
letters of undertaking in such form as may be required by the
Trustee;
(I) to operate and manage the Vessel or procure that the Vessel is
operated and managed strictly in conformity with the terms of
the instruments of insurance referred to in sub-clause (F)
above (including any warranties express or implied therein)
and in particular:
(i) to ensure that the Vessel's classification,
structure, operation and management are maintained
strictly in conformity with any warranty as to class,
structure, operation or management or any other
provision as to class, structure, operation or
management contained in the Insurances and to this
end to submit the Vessel or cause the Vessel to be
submitted to such periodical or other surveys as may
be required by the Vessel's classification society,
salvage association or otherwise howsoever not less
than fourteen (14) days before the date upon which
such surveys fall due;
(ii) promptly and fully to implement any and all
requirements or recommendations contained in any
report issued upon or following any of the surveys
referred to in sub-clause (i) above and promptly
after such surveys have been carried out to provide
evidence satisfactory to
<PAGE>
- 9 -
the Trustee that this has been done together with
confirmation from the relevant approved brokers that
the Vessel complies with such of the Insurances to
which such surveys are relevant;
(iii) (without prejudice to clauses 4.1(G) and (H) hereof)
to procure that the approved brokers furnish the
Trustee with a letter of undertaking in terms
satisfactory to the Trustee in which the approved
brokers undertake (inter alia) to give the Trustee
notice of any failure by the Owner to comply with any
warranty as to the Vessel's class or structure;
(iv) to comply strictly with the requirements of any
legislation relating to pollution or protection of
the environment which may from time to time be
applicable to the Vessel in any jurisdiction in which
the Vessel shall trade and in particular (if the
Vessel is to trade in the United States of America
and Exclusive Economic Zone (as defined in the Act))
to comply strictly with the requirements of the
United States Oil Pollution Act 1990 ("the Act") and
before any such trade is commenced and during the
entire period during which such trade is carried on:-
(a) to pay any additional premiums required to
maintain protection and indemnity cover for
oil pollution up to the limit available to
the Owner for the Vessel in the market;
(b) to make all such quarterly or other voyage
declarations as may from time to time be
required by the Vessel's protection and
indemnity association in order to maintain
such cover, and promptly to deliver to the
Trustee copies of such declarations;
(c) to submit the Vessel to such additional
periodic, classification, structural or
other surveys which may be required by the
Vessel's protection and indemnity insurers
to maintain cover for such trade and
promptly to deliver to the Trustee copies of
reports made in respect of such surveys;
(d) to implement any recommendations contained
in the reports issued following the surveys
referred to in sub-clause (c) above
<PAGE>
- 10 -
within the time limit specified therein, and
provide evidence satisfactory to the Trustee
that the protection and indemnity insurers
are satisfied that this has been done; and
(e) in addition to the foregoing (if such trade
is in the United States of America and
Exclusive Economic Zone):
(01) to obtain and retain a certificate
of financial responsibility under
the Act in form and substance
satisfactory to the United States
Coast Guard and to provide the
Trustee with a copy thereof;
(02) to procure that the protection and
indemnity insurances do not contain
a US Trading Exclusion Clause or any
other provision analogous thereto
and to provide the Trustee with
evidence that this is so; and
(03) strictly to comply with any
operational or structural
regulations issued from time to time
by any relevant authorities under
the Act so that at all times the
Vessel falls within the provisions
which limit strict liability under
the Act for oil pollution;
(v) before allowing the Vessel to enter or trade to any
zone which is declared a war zone or which is
rendered dangerous by reason of hostility in any part
of the world (whether war be declared or not) to
effect such special insurance cover as the Trustee
may require; and
(vi) to notify the Trustee forthwith by letter or in case
of urgency by telex of any requirement or
recommendation made by any insurer or classification
society which has not been complied with prior to
fourteen (14) days before the date by which it is
required to be complied with;
(J) to apply all sums receivable in respect of the Insurances as
are paid to the
<PAGE>
- 11 -
Owner for the purpose of making good the loss and fully
repairing all damage in respect whereof the insurance moneys
shall have been received;
(K) not to make any alteration which would or could reasonably be
expected to have a material adverse effect on the rights or
interest of the Trustee and/or the Beneficiaries to any of the
terms in any of the instruments of insurance referred to in
sub-clause (F) above which have been approved by the Trustee
and not to make, do, consent or agree to any act or omission
which would or might render any such instrument of insurance
invalid, void, voidable or unenforceable or render any sum
payable thereunder repayable in whole or in part;
(L) not without the prior approval of the Trustee to settle,
compromise or abandon any claim under the Insurances for Total
Loss or for a major casualty; and
(M) to indemnify the Trustee and the Beneficiaries fully forthwith
upon demand for any and all costs and expenses incurred by the
Trustee and/or the Beneficiaries from time to time:
(i) in effecting for the benefit of the Trustee and/or
the Beneficiaries in such amount, upon such terms,
through such insurance brokers and with such
insurance company or underwriter as the Trustee shall
in its sole discretion elect (i) a mortgagee's
interest insurance policy on the Vessel and (ii) an
insurance policy against the possible consequences of
pollution involving the Vessel, including without
limitation, the risk of expropriation or
sequestration of the Vessel, the imposition of a lien
or encumbrance of any kind having priority over this
Mortgage or a claim against the Vessel exceeding the
amount receivable in respect of pollution under the
Vessel's protection and indemnity insurances; and
(ii) in obtaining from time to time a report or reports on
the adequacy of the Insurances from an insurance
adviser appointed by the Trustee.
4.2 The Trustee shall be entitled from time to time to review the terms of
clause 4.1 hereof in order to provide for changes occurring after the
date of this Mortgage in
<PAGE>
- 12 -
legislation or circumstances affecting the Owner, the Vessel, the
Insurances, the laws of any jurisdiction or any other matters which the
Trustee deems relevant, and to modify its requirements in respect of
the Insurances in the light of such changes. Any such modification,
once notified in writing by the Trustee to the Owner shall be binding
on the Owner and take effect as an amendment to clause 4.1 hereof.
5. OWNER'S COVENANTS AS TO OPERATION & MAINTENANCE
5.1 The Owner covenants with the Trustee and undertakes throughout the
Security Period:-
(A) to keep the Vessel registered as a Panamanian ship and not to
do or suffer to be done anything whereby such registration may
be forfeited or imperilled;
(B) not (without the previous consent in writing of the Trustee)
to make any modification to the Vessel which would result in
any substantial change in the structure type or speed of the
Vessel;
(C) at all times to maintain and preserve the Vessel in good
working order and repair so as to maintain the highest class
available to vessels of her type and so that the Vessel is in
every respect seaworthy and in good operating condition and to
maintain and preserve the Vessel in such good working order
and condition as to comply with the requirements of the
Vessel's insurers and of the laws, regulations and
requirements (statutory or otherwise) from time to time
applicable to vessels registered under the laws and flag of
the Republic of Panama and if so required with the
requirements of the laws and government of any State colony
country province or dependency where the Vessel may trade and
to renew and replace all parts and appurtenances thereof when
and as they shall be worn out damaged lost or destroyed by
others of a similar nature and of at least equal quality;
(D) to permit the Trustee or to procure that the Trustee be
permitted by surveyors or other persons appointed by it in
that behalf to board the Vessel at all reasonable times for
the purpose of inspecting her condition and her class or other
records or for the purpose of satisfying themselves in regard
to proposed or executed repairs and to afford all proper
facilities for such inspections;
(E) to pay and discharge or to cause to be paid and discharged all
debts damages
<PAGE>
- 13 -
and liabilities whatsoever which have given or may give rise
to maritime or possessory liens on or claims enforceable
against the Vessel and in event of arrest of the Vessel
pursuant to legal process or in event of her detention in
exercise or purported exercise of any such lien as aforesaid
to procure the release of the Vessel from such arrest or
detention forthwith upon receiving notice thereof by providing
bail or otherwise as the circumstances may require;
(F) not to employ the Vessel or suffer her employment in any trade
or business which is forbidden by international law or is
otherwise illicit or in carrying illicit or prohibited goods
or in any manner whatsoever which renders her liable to
condemnation in a Prize Court or to destruction seizure or
confiscation and in event of hostilities in any part of the
world (whether war be declared or not) not to employ the
Vessel or suffer her employment in carrying goods which are or
may be declared contraband or to enter or trade to any zone
which is declared a war zone or which is rendered dangerous by
reason of such hostilities unless the Trustee shall have first
given its consent in writing;
(G) to take all reasonable precautions to prevent any
infringements of any anti drug legislation in any jurisdiction
in which the Vessel shall trade and in particular (if the
Vessel is to trade in the United States of America) to take
all reasonable precautions to prevent any infringements of the
Anti-Drug Abuse Act of 1986 of the United States of America
(as the same may be amended and/or re-enacted from time to
time hereafter) and for this purpose to enter into a "Carrier
Initiative Agreement" with the United States' Customs Service
and to procure that the same or a similar agreement is
maintained in full force and effect and that the Owner's
obligations thereunder are performed in respect of the Vessel;
(H) to comply with all laws, regulations, conventions and
agreements whatsoever applicable to the Vessel in any
jurisdiction in which the Vessel shall trade relating to
pollution or protection of the environment howsoever;
(I) promptly to furnish to the Trustee all such information as it
may from time to time reasonably require regarding the Vessel
her employment position and
<PAGE>
- 14 -
engagements particulars of all towages and salvages and copies
of all charters and other contracts for her employment or
otherwise howsoever concerning her;
(J) to notify the Trustee forthwith by letter or in case of
urgency by telex of:-
(i) any accident to the Vessel involving repairs the cost
whereof will or is likely to exceed one million five
hundred thousand United States Dollars (USD1,500,000)
(or the equivalent in any other currency);
(ii) any occurrence in consequence whereof the Vessel has
become or is likely to become a Total Loss;
(iii) any requirement or recommendation made by any
competent authority which has not been complied with
prior to fourteen (14) days before the date by which
it is required to be complied with; and
(iv) any arrest of the Vessel or the exercise or purported
exercise of any lien on the Vessel or her earnings;
(K) promptly to pay all tolls dues and other outgoings whatsoever
in respect of the Vessel and as and when the Trustee may so
require to furnish satisfactory evidence that the wages and
allotments and insurance and pension contributions of the
Master and crew are being regularly paid and that all
deductions from crew's wages in respect of any tax liability
are being properly accounted for and that the Master has no
claim for disbursements other than those incurred by him in
the ordinary course of trading on the voyage then in progress;
(L) not without the previous consent of the Trustee in writing
(which the Trustee shall have full liberty to withhold) to let
the Vessel:-
(i) on demise charter for any period;
(ii) by any time or consecutive voyage charter for a term
which exceeds or which by virtue of any optional
extensions therein contained is likely to exceed
Thirteen (l3) months' duration;
<PAGE>
- 15 -
(iii) on terms whereby more than Two (2) months' hire (or
the equivalent) is payable in advance; or
(iv) below the market rate prevailing at the time when the
Vessel is fixed;
(M) not without the previous consent in writing of the Trustee
(and then only subject to such terms as the Trustee may
impose) to mortgage charge or otherwise assign the Vessel or
any share therein or to suffer the creation of any such
mortgage charge or assignment to or in favour of any person
other than the Trustee;
(N) not without the previous consent in writing of the Trustee to
sell or agree to sell or otherwise dispose of the Vessel or
any share therein or change the flag of the Vessel;
(O) not to put the Vessel into the possession of any person for
the purpose of work being done upon her in an amount exceeding
or likely to exceed one million five hundred thousand United
States Dollars (USD1,500,000) (or the equivalent in any other
currency) unless:-
(i) in the case of damage repairs to the Vessel, the
Trustee is satisfied that the cost of such repairs
(other than any deductible) is covered by the
Insurances; or
(ii) in the case of a scheduled drydocking the Trustee is
satisfied that adequate financial provision has been
made for payment in respect thereof; or
(iii) the Trustee is satisfied that the person into whose
possession the Vessel is to be delivered has agreed
to waive any repairer's or similar possessory lien
for work carried out to the Vessel by such person;
(P) to keep proper books of account in respect of the Vessel and
her earnings and as and when required by the Trustee to make
such books available for inspection on behalf of the Trustee;
<PAGE>
- 16 -
(Q) to comply with all the requirements and formalities under any
applicable legislation of the Republic of Panama necessary to
perfect this Mortgage as a valid and enforceable first
preferred mortgage upon the Vessel and to furnish to the
Trustee from time to time such evidence as the Trustee may
reasonably request to satisfy itself with respect to the
Owner's compliance with the provisions of this sub-clause;
(R) to place and retain a copy of this Mortgage certified by the
appropriate Panamanian authorities with the Vessel's papers on
board the Vessel and any other certificates or other documents
required by law and to cause each such certified copy and such
papers to be brought to the attention of the master for the
time being of the Vessel and to be exhibited on demand to any
persons having business with the Vessel or to any
representative of the Trustee;
(S) to comply, or procure that the operator of the Vessel will
comply, with the International Management Code for the Safe
Operation of Ships and for Pollution Prevention adopted by the
International Maritime Organisation (as the same may be
amended from time to time) ("the ISM Code") or any replacement
of the ISM Code and in particular, without prejudice to the
generality of the foregoing, as and when required to do so by
the ISM Code and at all times thereafter, (i) to hold, or
procure that the operator of the Vessel holds, a valid
Document of Compliance (being a document issued to a vessel
operator as evidence of its compliance with the requirements
of the ISM Code) duly issued to the Owner or the operator (as
the case may be) pursuant to the ISM Code and a valid Safety
Management Certificate (being a document issued to a vessel as
evidence that the vessel operator and its shipboard management
operate in accordance with an approved structured and
documented system enabling the personnel of that vessel
operator to implement effectively the safety and environmental
protection policy of that vessel operator) duly issued to the
Vessel pursuant to the ISM Code, (ii) to provide the Trustee
with copies of any such Document of Compliance and Safety
Management Certificate as soon as the same are issued and
(iii) to keep, or procure that there be kept, on board the
Vessel a copy of any such Document of Compliance and the
original of any such Safety Management Certificate; and
(T) to procure that the Vessel (including, without limitation, all
computer systems,
<PAGE>
- 17 -
all systems and equipment containing embedded microchips
(including leased systems and equipment) and any other
systems, equipment or parts of the Vessel whatsoever whose
proper functioning or operation is capable of being affected
by the incorrect processing, storing, calculation or
recognition of dates, together with all software and data in
connection with any of the foregoing) shall at all times
comply with the requirements of Year 2000 Conformity as
defined in "A DEFINITION OF YEAR 2000 CONFORMITY REQUIREMENTS"
issued by the British Standards Institution (BSI DISC
PD2000-1:1998) or such later reviewed, revised or amended
version thereof as may be published by the British Standards
Institution from time to time (in which case the later version
shall be the relevant one for the purposes of this clause).
6. EXPENSES
6.1 The Owner undertakes to pay to the Trustee on demand all moneys
whatsoever which the Trustee and/or the Beneficiaries shall or may
expend be put to or become liable for in or about the protection
maintenance or enforcement of the security created by this Deed and the
other Security Documents or in or about the exercise by the Trustee
and/or the Beneficiaries of any of the powers vested in it or them
under this Deed or under any of the other Security Documents and to pay
interest thereon at the Default Rate from the date of demand until the
date of actual receipt (whether before or after any relevant judgment).
6.2 The Owner undertakes to pay on demand to the Trustee (or as it may
direct) the amount of all investigation and legal expenses of any kind
whatsoever stamp duties (if any) registration fees and any other
charges incurred by the Trustee and/or the Beneficiaries in connection
with the preparation completion and registration of the Security
Documents or otherwise in connection with the Outstanding Indebtedness
and the security therefor.
7. PROTECTION AND MAINTENANCE OF SECURITY
7.1 The Trustee shall without prejudice to its other rights and powers
hereunder be entitled (but not bound) at any time and as often as may
be necessary to take any such
<PAGE>
- 18 -
action as it may in its absolute discretion think fit for the purpose
of protecting the security created by this Deed and the other Security
Documents and each and every expense or liability so incurred by the
Trustee and/or the Beneficiaries in or about the protection of the
security shall be repayable to the Trustee by the Owner on demand
together with interest thereon at the Default Rate from the date of
demand until the date of actual receipt whether before or after any
relevant judgment.
7.2 Without prejudice to the generality of the foregoing:-
(A) if the provisions of clause 4.1 hereof or any of them are not
complied with the Trustee shall be at liberty to effect and
thereafter to maintain all such insurances upon the Vessel as
in its discretion it may think fit;
(B) if the provisions of clause 5.1(C) and 5.1(D) hereof or any of
them are not complied with the Trustee shall be at liberty to
arrange for the carrying out of such repairs and/or surveys as
it deems expedient or necessary; and
(C) if the provisions of clause 5.1(E) hereof or any of them are
not complied with the Trustee shall be at liberty to pay and
discharge all such debts, damages and
liabilities as are therein mentioned and/or to take any such
measures as it deems expedient or necessary for the purpose of
securing the release of the Vessel,
and each and every expense or liability so incurred by the Trustee
and/or the Beneficiaries shall be recoverable from the Owner as
provided in clause 7.1 hereof together with interest thereon at the
Default Rate.
8. EVENTS OF DEFAULT
8.1 Upon the happening of any of the following events the Lenders shall
cease to be under any further obligation to make the Loan available and
the Outstanding Indebtedness shall immediately become payable on
demand:-
(A) the happening of any of the events of default specified in
clause 11.1 of the Loan Agreement; or
(B) anything is done or suffered or omitted to be done by the
Owner which in the reasonable opinion of the Trustee has
imperilled or is likely to imperil the
<PAGE>
- 19 -
security created by the Security Documents.
9. ENFORCEMENT OF RIGHTS
9.1 Upon demand being made for payment of the Outstanding Indebtedness
under clause 8 hereof interest shall accrue thereon at the Default Rate
from the date of demand until the date of payment (as well after as
before judgment) and the security created by this Mortgage shall be
enforceable so that the Trustee shall be entitled as and when it may
see fit to put into force and exercise all the powers possessed by it
as mortgagee of the Vessel and in particular:-
(A) to exercise all rights and remedies in foreclosure and
otherwise given to mortgagees by the provisions of Article
1527 of the Code of Commerce and any other legislation or code
affecting the same;
(B) to bring suit at law in equity or in admiralty as it may be
advised to recover judgment for any and all amounts due
hereunder and collect the same out of any and all property of
the Owner whether covered by this Mortgage or otherwise;
(C) to take and enter into possession of the Vessel wherever the
same may be without legal process and (if it has acted in good
faith) without being responsible for loss or damage and the
Owner or other person in possession forthwith upon demand of
the Trustee shall surrender to the Trustee possession of the
Vessel and the Trustee, without being responsible for loss or
damage where it has acted in good faith may hold lay up lease
charter operate or otherwise use the Vessel for such time and
upon such terms as it may deem to be for its best advantage
and for that purpose may employ such agents managers masters
officers crews surveyors and servants as it shall think fit
and may repair and reclass the Vessel accounting only for the
net profits if any arising from such use and charging upon all
receipts from such use or from the sale of the Vessel by court
proceeds or pursuant to sub-clause (G) below all costs
expenses charges damages or losses by reason of such use and
if at any time the Trustee shall avail itself of the right
herein given it to take the Vessel and shall take her the
Trustee shall have the right to dock the Vessel for a
<PAGE>
- 20 -
reasonable time at any place at the cost and expense of the
Owner;
(D) to require that all policies contracts and other records
relating to the Insurances (including details of and
correspondence concerning outstanding claims) be forthwith
delivered to such adjusters and/or brokers and/or other
insurers as the Trustee may nominate;
(E) to collect recover compromise and give a good discharge for
all claims then outstanding or thereafter arising under the
Insurances or any of them and to take over or institute (if
necessary using the name of the Owner) all such proceedings in
connection therewith as the Trustee in its absolute discretion
thinks fit and to permit any brokers through whom collection
or recovery is effected to charge the usual brokerage
therefor;
(F) to discharge compound release or compromise liens and/or
claims in respect of the Vessel which have given or may give
rise to any charge or lien on the Vessel or which are or may
be enforceable by proceedings against the Vessel;
(G) without being responsible for loss or damage (if it has acted
in good faith) sell the Vessel at any place and at such time
as the Trustee may specify and in such manner and on such
terms and conditions as the Trustee may deem advisable free
from any claim by the Owner in admiralty in equity at law or
by statute except that notice of sale will be given by
publication in a newspaper of general circulation in the city
of Panama, Republic of Panama, not less than twenty (20)
calendar days in advance of the sale to satisfy the
requirement of notice of sale to the Owner and the other
registered mortgagees, if any, contained in Article 1527 of
the Panama Code of Commerce. Such notice shall be necessary
only in respect of the initial date of sale and should an
adjournment of the sale be deemed necessary, a new date, time
and place for the sale may be set by the Trustee at the time
of the adjournment without need for any further notice. In the
event that the Vessel is sold under any power contained herein
the Owner will if and when required by the Trustee execute
such form of conveyance of the Vessel as the Trustee may
direct or approve; and
(H) to manage insure maintain and repair the Vessel and to employ
sail or lay up the Vessel in such manner and for such period
as the Trustee in its discretion deems expedient and for the
purposes aforesaid the Trustee shall be entitled to
<PAGE>
- 21 -
do all acts and things incidental or conducive thereto and
in particular to enter into such arrangements respecting the
Vessel her insurance management maintenance repair
classification and employment in all respects as if the
Trustee were the owner of the Vessel and without being
responsible for any loss thereby incurred in the absence of
gross negligence or wilful default on the part of the Trustee,
Provided always that upon any sale of the Vessel or any share therein
by the Trustee pursuant to sub-clause (G) above the purchaser shall not
be bound to see or enquire whether the Trustee's power of sale has
arisen in the manner herein provided and the sale shall be deemed to be
within the power of the Trustee and the receipt of the Trustee for the
purchase money shall effectively discharge the purchaser who shall not
be concerned with the manner of application of the proceeds of sale or
be answerable therefor in any way.
10. APPLICATION OF MONEYS
10.1 All moneys received by the Trustee in respect of a sale of the Vessel
or any share therein or otherwise pursuant to the provisions of this
Mortgage and all moneys received and retained by the Trustee in respect
of the Insurances and Requisition Compensation pursuant to this
Mortgage shall be applied by the Trustee in accordance with the
relevant provisions of clause 10 of the Loan Agreement.
11. NO WAIVER
11.1 No delay or omission of the Trustee or the Beneficiaries to exercise
any right or power vested in it or them under the Security Documents or
any of them shall impair such right or power or be construed as a
waiver of or an acquiescence in any default by the Owner and no express
waiver given by the Trustee and/or the Beneficiaries in relation to any
default by the Owner or breach by the Owner of any of its obligations
under this Mortgage shall prejudice the right of the Trustee under this
Mortgage arising from any subsequent default or breach (whether or not
such subsequent default or breach is of a nature different from the
previous default or breach) nor shall the giving by the Trustee and/or
the Beneficiaries of any consent to the doing of any act which by the
terms of this Mortgage requires the consent of the Trustee prejudice
the
<PAGE>
- 22 -
right of the Trustee to give or withhold as it sees fit is consent to
the doing of any other similar act.
12. POWER OF DELEGATION
12.1 The Trustee shall be entitled at any time and as often as may be
expedient to delegate all or any of the powers and discretions vested
in it by the Security Documents or any of them (including the power
vested in it by virtue of clause 13 hereof) in such manner upon such
terms and to such persons as the Trustee in its absolute discretion may
think fit.
13. POWER OF ATTORNEY
13.1 The Owner irrevocably appoints the Trustee as its attorney for the
duration of the Security Period for the purpose of doing in its name
all acts which the Owner itself could do in relation to the Vessel,
Provided However that such power shall not be exercisable by or on
behalf of the Trustee unless the security created by this Mortgage has
become enforceable pursuant to clause 9 hereof.
13.2 The exercise of such power by or on behalf of the Trustee shall not put
any person dealing with the Trustee upon any enquiry as to whether the
security created by this Mortgage has become enforceable pursuant to
clause 9 hereof nor shall such person be in any way affected by notice
that the security has not become enforceable and the exercise by the
Trustee of such power shall be conclusive evidence of its right to
exercise the same.
14. FURTHER ASSURANCE
14.1 The Owner further undertakes at its own expense to execute sign perfect
do and (if required) register every such further assurance document act
or thing as in the opinion of the Trustee may be necessary or desirable
for the purpose of more effectually mortgaging and charging the Vessel
or perfecting the security constituted by this Mortgage or contemplated
by the other Security Documents.
15. BENEFIT
15.1 The Owner hereby acknowledges and agrees that the benefit of this
Mortgage shall be held by the Trustee on trust for the Beneficiaries
and the Owner hereby covenants that
<PAGE>
- 23 -
this Mortgage shall remain in full force and effect and shall fully
secure all the Beneficiaries.
16. AMOUNT SECURED BY MORTGAGE
16.1 A certificate submitted by the Trustee to the Public Registry Office in
Panama or to any court of law or public authority as to the amount due
or to become due from the Owner under this Mortgage shall in the
absence of manifest error be conclusive and binding on the Owner for
all purposes.
17. NOTICES
17.1 The provisions of clause 18 of the Loan Agreement shall apply mutatis
mutandis in respect of any certificate, notice or demand given or made
under this Mortgage.
18. GOVERNING LAW, SEVERABILITY, ETC.
18.1 This Mortgage shall be construed and enforceable in accordance with the
laws of the Republic of Panama.
18.2 The Owner agrees that the Trustee shall have liberty but shall not be
obliged to take any proceedings in the courts of any country to protect
or enforce the security hereby constituted or to enforce any provisions
of the Security Documents or to recover payment of the Outstanding
Indebtedness and for the purpose of any proceeding for the enforcement
of the security created by this Mortgage and/or the other Security
Documents the Owner hereby submits to the jurisdiction of the courts of
any country of the choice of the Trustee.
18.3 If any provision in this Mortgage or any other of the Security
Documents is or becomes invalid or unenforceable under any applicable
law the provisions thereof shall in all other respects remain in full
force and effect and the provision in question shall be ineffective to
the extent (but only to the extent) of its nonconformity with the
requirement of the applicable law and if it is competent to the parties
to waive any requirements which would otherwise operate as aforesaid
those requirements are hereby waived to the extent permitted by such
law to the end that the Mortgage and the other Security Documents shall
be valid binding and enforceable in accordance
<PAGE>
- 24 -
with their respective terms.
18.4 Each and every power and remedy herein given to the Trustee shall be
cumulative and shall be in addition to every other power and remedy
herein given or now or hereafter existing at law in equity admiralty or
by statute and each and every power and remedy whether herein given or
otherwise existing may be exercised from time to time and as
often and in such order as may be deemed expedient by the Trustee and
the exercise or the beginning of the exercise of any power or remedy
shall not be construed to be a waiver of the right to exercise at the
same time or thereafter any other power or remedy.
19. MISCELLANEOUS
19.1 This Mortgage may be executed in any number of counterparts each of
which shall be an original but such counterparts shall together
constitute but one and the same instrument.
19.2 The English text of this Mortgage is the authentic text and in the
event of any differences arising on translation recourse shall be had
to the English text.
20. RECORDING OF THIS MORTGAGE
20.1 The parties hereby confer a special power of attorney on the firm of
lawyers named Quijano & Associates of the City of Panama in the
Republic of Panama empowering such firm of lawyers to take all
necessary steps to record this instrument of mortgage and the
prohibitions contained in clauses 5.1(M) and (N) hereof and a
certificate pursuant to clause 15 hereof in the appropriate registries
in the City of Panama in accordance with the laws of the Republic of
Panama with full power of substitution in respect of the special power
of attorney herein granted.
IN WITNESS whereof this Mortgage has been executed the day and year first above
written.
SIGNED SEALED and DELIVERED )
as a DEED )
by CROWN CRUISES OF PANAMA, INC. )
acting by )
/s/ Jeffrey I. Binder )
- ---------------------------------------
its duly appointed )
)
in the presence of:- )
<PAGE>
- 25 -
ACCEPTANCE OF MORTGAGE
The Undersigned mortgagee MERITA BANK PLC a corporation organised and subsisting
under the laws of Finland Does Hereby Accept the foregoing Mortgage executed in
its favour by CROWN CRUISES OF PANAMA, INC. a corporation incorporated according
to the laws of Panama on the 29th day of October, 1999 covering the Panamanian
flag Vessel m.v. "CROWN DYNASTY" and does hereby accept the said Mortgage in all
respects and agrees to all terms and conditions of the said Mortgage
Dated the 28th day of January Two thousand.
SIGNED SEALED and DELIVERED )
as a DEED )
by MERITA BANK PLC )
acting by )
/s/ Kirsten Kaarre Jensen )
- ---------------------------------------
its duly appointed )
Attorney )
in the presence of:- )
EXHIBIT 10.4
COMMODORE HOLDINGS LIMITED
-and-
MERITA BANK PLC
------------------------------
GUARANTEE AND INDEMNITY
relating to obligations of
Crown Cruises of Panama, Inc.
re USD45,000,000 revolving facility
------------------------------
Sinclair Roche & Temperley
Royex House
5 Aldermanbury Square
London EC2V 7LE
Tel: 0171 452 4000
Fax: 0171 452 4001
Ref: GFS/242921
<PAGE>
INDEX OF CONTENTS
CLAUSE NO. HEADING PAGE NO.
- ---------- ------- --------
1. Definitions and Construction.............................................2
2. Representations and Warranties...........................................3
3. Guarantee and Indemnity..................................................4
4. Expenses.................................................................4
5. Continuing Guarantee.....................................................5
6. Undertakings.............................................................6
7. Enforcement.............................................................12
8. Currency Indemnity......................................................14
9. Benefit.................................................................15
10. Miscellaneous...........................................................15
11. Notices.................................................................16
12. Governing Law and Jurisdiction..........................................17
Schedule A : Financial Figures, Ratios and Percentages......................18
Form of Compliance Certificate...............................................20
<PAGE>
THIS GUARANTEE AND INDEMNITY is given the 24th day of January, 2000
BY:-
(1) COMMODORE HOLDINGS LIMITED, a company incorporated and registered under
the laws of Bermuda whose registered office is at c/o Francis & Forest,
Corner House, 20 Parliament Street, Hamilton HM12, Bermuda (the
"Guarantor" which expression shall include the successors and permitted
assigns of the Guarantor) in favour of:-
(2) MERITA BANK PLC, a company incorporated under the laws of Finland
acting through its London branch having its principal place of business
at 19 Thomas More Street, London E1W 1YF (the "Trustee" which
expression shall include its successors and assigns) as trustee for the
Beneficiaries.
WHEREAS:
(A) By a loan agreement dated January 24, 2000 made between (1) the Lenders
(as therein defined), (2) Merita Bank Plc (the "Agent") as agent for
the Lenders, (3) Crown Cruises of Panama, Inc. (the "Borrower") and (4)
the Trustee the Lenders agreed to make available to the Borrower a
revolving loan facility of up to forty five million United States
Dollars (USD45,000,000) at any one time pursuant to and subject to the
terms and conditions therein contained.
(B) In order to induce the Lenders to enter into the Agreement and to
advance the Loan to be advanced thereunder and as a condition precedent
thereto the Guarantor has agreed to give the guarantee and indemnity
herein contained.
(C) By a deed of agency and trust dated January 28, 2000 made between (1)
the Agent, (2) the Trustee and (3) the Lenders it has been agreed that
the benefit of this Guarantee and Indemnity shall be held by the
Trustee on trust for itself, the Agent and the Lenders and its and
their respective successors, assignees and transferees (together "the
Beneficiaries" and individually "Beneficiary").
NOW THIS DEED WITNESSETH as follows:-
1. DEFINITIONS AND CONSTRUCTION
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1.1 In this Guarantee and Indemnity unless the context otherwise requires:-
"AGREEMENT"
means the loan agreement referred to in Recital (A) above as
supplemented by any amendment or supplement thereto which may from time
to time be agreed to by the Trustee, the Beneficiaries and the
Borrower;
"DEFAULT RATE"
means the rate of interest calculated in accordance with clause 4.3 of
the Agreement;
"INDEBTEDNESS"
means the Loan together with all interest accrued thereon and all other
moneys, costs, fees and expenses whatsoever which from time to time may
be or become owing or due and payable to the Trustee or any one or more
of the Beneficiaries pursuant to the Agreement or any of the Security
Documents;
"LOSS"
means any and all losses, costs, expenses, damages, claims, demands,
rights of set-off and/or counterclaim incurred by the Trustee or any
one or more of the Beneficiaries in respect of or in connection with
the Agreement and/or the Security Documents or any liability arising
therefrom;
"SECURED OBLIGATIONS"
means all covenants, agreements, warranties, conditions and provisions
expressed or implied on the part of the Borrower to be performed,
observed or complied with under the Agreement including, without
limitation, the due and punctual payment of the principal sum and all
interest and other moneys expressed to be payable by the Borrower in
accordance with the terms of the Agreement;
"THIS GUARANTEE"
means this Guarantee and Indemnity.
1.2 Unless otherwise defined herein or the context otherwise requires,
words and expressions defined in the Agreement shall have the same
meanings herein. Clause headings are inserted for convenience only and
shall be ignored in the interpretation
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of this Guarantee.
2. REPRESENTATIONS AND WARRANTIES
2.1 The Guarantor hereby represents and warrants to the Trustee that as of
the date hereof and (save in respect of sub-paragraph (B)(ii) below) as
continuing warranties until all of the Indebtedness shall have been
paid and discharged in full:-
(A) The Guarantor has full power and authority to make and perform
this Guarantee and the same constitutes the legal, valid and
binding obligations of the Guarantor enforceable in accordance
with its terms;
(B) The making and performance by the Guarantor of this Guarantee
will in no way exceed the powers granted to the Guarantor by,
or violate in any respect any provision of (i) any mortgage,
charge, deed, contract or other undertaking or instrument to
which the Guarantor is a party or which is binding on the
Guarantor or any of the assets of the Guarantor; or (ii) any
law or regulation or any order or decree of any governmental
authority, agency or court; or (iii) the Memorandum and/or
Articles of Association (or equivalent corporate documents) of
the Guarantor;
(C) All consents, licences, approvals or authorisations which are
required in connection with the execution, validity,
performance or enforceability of this Guarantee have been
obtained and are and will continue to be valid and subsisting;
(D) Save as disclosed to the Trustee in writing, the Guarantor is
not in default under any agreement to which the Guarantor is a
party or by which the Guarantor may be bound, nor in respect
of any financial commitment or obligation;
(E) The Guarantor is not engaged in litigation or arbitration
before any court or before any tribunal which might if
determined against the Guarantor have a material adverse
effect on the financial condition of the Guarantor and there
is no claim against the Guarantor which, with the passage of
time might result in any such litigation or arbitration; and
(F) The Guarantor has received a copy of the Agreement and
approves of and
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agrees to the terms and conditions thereof.
3. GUARANTEE AND INDEMNITY
3.1 The Guarantor hereby unconditionally and irrevocably:-
(A) guarantees the due and punctual performance and observance of
and compliance with the Secured Obligations by the Borrower in
accordance with the terms of the Agreement and the Guarantor
hereby covenants that, if any amount of principal or interest
or other moneys payable by the Borrower under the Agreement
shall not be paid when the same shall be due and payable,
whether on maturity or otherwise, the Guarantor will,
forthwith on demand, make such payment, or cause such payment
to be made, to the Trustee (as trustee for the Beneficiaries)
in the manner specified by the Trustee together with all
interest expressed to accrue on any such amount pursuant to
the Agreement until the date of receipt by the Trustee; and
(B) without prejudice to (A) above and as a separate and
independent obligation thereto indemnifies and agrees to
indemnify the Trustee and the Beneficiaries upon the written
demand of the Trustee in respect of any Loss which the Trustee
or any one or more of the Beneficiaries may suffer or incur in
good faith directly or indirectly as a result of or in
connection with any failure by the Borrower fully and
effectually to perform, observe and/or comply with the Secured
Obligations.
4. EXPENSES
4.1 The Guarantor further agrees to pay to the Trustee on demand on a full
indemnity basis all commissions, charges, costs and expenses of
whatsoever nature incurred by the Trustee and/or the Beneficiaries in
the administration, preservation and enforcement of any of the
Trustee's rights hereunder together with interest thereon (both before
and after judgment) at the Default Rate from the date of demand until
the date of receipt by the Trustee compounded on such days in the year
as the Trustee reasonably may select.
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5. CONTINUING GUARANTEE
5.1 This Guarantee shall:-
(A) be a continuing security and shall be construed and take
effect as security for all of the Secured Obligations until
they shall have been satisfied and discharged in full and the
Guarantor hereby waives any right of set-off or counter-claim
which the Guarantor may otherwise have had against the Trustee
or any one or more of the Beneficiaries;
(B) be in addition to any other guarantee, indemnity or other
security which the Trustee and/or the Beneficiaries may now or
hereafter hold in respect of all or any of the Secured
Obligations whether from the Guarantor or otherwise, and shall
be binding on the Guarantor notwithstanding that any other
Security Party shall fail to give the security to be provided
by it or shall be released from any such security or such
security shall be varied;
(C) not be discharged by the granting to any Security Party of
time or any other indulgence or by compounding with any
Security Party or by any variation whatsoever of any of the
Secured Obligations or by any actual or alleged invalidity,
irregularity or unenforceability of or defect in any of the
Secured Obligations or in any of the provisions of the
Agreement or any one or more of the Security Documents or by
the absence of any action to enforce any of the rights of the
Trustee and/or the Beneficiaries thereunder or by any act or
circumstance whatsoever whereby this Guarantee would or might
otherwise but for the provisions of this Clause have been so
discharged;
(D) remain in full force and effect notwithstanding any change in
the name, constitution or otherwise of any Security Party or
the Trustee or any of the Beneficiaries or their respective
successors and assigns or the absorption or amalgamation of
any thereof by or with any other corporate entity.
6. UNDERTAKINGS
6.1 The Guarantor agrees with represents and undertakes to the Trustee
that:-
(A) If the Guarantor becomes liable to make any payment pursuant
to Clause 3 hereof, then the Guarantor will not thereafter
make demand for payment of any moneys for the time being due
to the Guarantor from any Security Party or
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exercise any other right or remedy to which the Guarantor is
entitled in respect of such moneys unless and until all moneys
whatsoever owing by all Security Parties to the Trustee and
the Beneficiaries have been irrevocably paid in full;
(B) If any Security Party shall become insolvent or shall be wound
up or liquidated, the Guarantor shall not (unless so required
by the Trustee and then only on condition that the Guarantor
holds the benefit of any claim in such insolvency or
liquidation upon trust to pay any amounts recovered thereunder
to the Trustee) prove in such insolvency, winding-up or
liquidation until all moneys whatsoever owing by all Security
Parties to the Trustee and the Beneficiaries have been
irrevocably paid in full;
(C) The Guarantor has not taken and will not take from any
Security Party any security whatsoever for the moneys hereby
secured and, notwithstanding the foregoing, any such security
now or hereafter held by the Guarantor shall be held in trust
for the Trustee and the Beneficiaries and for their benefit in
respect of the obligations of the Guarantor hereunder;
(D) The Guarantor will not exercise any right to which the
Guarantor may be entitled as a surety until all moneys
whatsoever owing or due and payable by all Security Parties to
the Trustee and the Beneficiaries have been irrevocably paid
in full;
(E) The Guarantor hereby waives any right to require the Trustee
and/or the Beneficiaries to proceed first against any Security
Party and/or to give notice to or demand on any Security Party
whatsoever;
(F) All payments to be made hereunder shall be made in immediately
available funds without set-off or counter-claim and free and
clear of and without deduction for or on account of any
present or future taxes of any nature now or hereafter
imposed, levied, collected, withheld, deducted or assessed by
any taxing and/or governmental authority whatsoever or
wheresoever unless the Guarantor is compelled by law to deduct
such taxes. In that event all such taxes shall be borne by the
Guarantor or, if under the provisions of any applicable law
this stipulation cannot be applied, then the Guarantor shall
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increase the payments to the Trustee so that the net amounts
received by the Trustee shall be equal to the full amounts
which the Trustee would have received had payment not been
made subject to such taxes; provided that taxes payable by the
Trustee or any Beneficiary on its profits arising by virtue of
the transaction herein described in the countries in which it
carries on business shall not be included in the foregoing. As
used in this sub-clause the term "taxes" includes all levies,
imposts, duties, charges, fees, deductions and withholdings
whatsoever and any restriction or condition resulting in a
charge.
If the Guarantor is required to deduct taxes, the Guarantor
will promptly thereafter deliver all receipts and other
documents relating thereto to the Trustee.
If and when the Trustee or any Beneficiary shall receive (in
its reasonable opinion) a credit in respect of any taxes
deducted by the Guarantor and to which this sub-clause refers,
it shall allow the Guarantor a credit against amounts due or
to become due under the Agreement or any one or more of the
Security Documents (the "Guarantor's Credit") of such amount
as shall be fair and reasonable in the opinion of the Trustee
or that Beneficiary in respect of any such credit as is
received by the Trustee or that Beneficiary or, if all of the
Indebtedness shall have been repaid in full, shall make a
payment to the Guarantor equal to the amount of the
Guarantor's Credit. Neither the Trustee nor any Beneficiary
shall be under any obligation to discuss or reveal its tax
affairs with the Guarantor;
(G) The Guarantor shall give to the Trustee all such information
as the Trustee may request with regard to the performance by
the Security Parties of their respective obligations under the
Agreement and the Security Documents;
(H) The Guarantor shall not without the prior written consent of
the Trustee (such consent not to be unreasonably withheld)
sell, convey, transfer or otherwise dispose (whether by a
single transaction or in a series of transactions, related or
not) of any assets;
(I) All the authorised and issued share capital of the Borrower is
and will remain wholly owned and controlled by the Guarantor;
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(J) The Guarantor shall prepare or cause to be prepared, in
accordance with GAAP and deliver to the Trustee annual audited
financial statements of the Guarantor within ninety five (95)
days of the end of the annual accounting periods of the
Guarantor and quarterly unaudited accounts of the Guarantor
within fifty (50) days of the end of each quarter together
with copies of all notices sent to shareholders or any class
of shareholders and such financial and other information
concerning the Guarantor as the Trustee shall reasonably
require;
(K) The Guarantor shall not make any single acquisition or
investment costing more than one million United States Dollars
(USD1,000,000) without the prior written consent of the
Trustee (such consent not to be unreasonably withheld);
(L) The Guarantor shall not incur any liability in respect of
Borrowed Money or guarantee endorse or otherwise become or
remain liable in respect of the obligations of any person firm
or corporation without the prior written consent of the
Trustee (such consent not to be unreasonably withheld);
(M) The Guarantor shall not pay any dividend for any shares except
preferred shares on the following terms:-
(i) no covenant or undertaking binding upon the Guarantor
is or would be breached by the payment of such
dividend; and
(ii) the aggregate amount of any such dividends paid in
any one period of twelve (12) months does not exceed
four hundred thousand United States Dollars
(USD 400,000),
Provided That, in respect of any preferred share issued by the
Guarantor prior to the date of the Agreement, the Guarantor
(subject only to (i) above) shall be entitled to pay dividends
in the maximum amount of twelve per cent (12%) per annum of
the price at which the relevant preferred share was issued;
(N) The Guarantor shall procure that it has cash which is freely
available, which is not subject to any Encumbrance and which
amounts to not less than the amount specified in item 1 in
schedule A hereto on the first Drawdown Date and not less than
the amount specified in item 2 in schedule A hereto at all
times thereafter Provided that all sums standing to the credit
of the Earnings
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Account after all the applications have been made in
accordance with clause 10.2 of the Agreement shall be deemed
for the purposes of this clause to be cash which is freely
available to the Guarantor and not subject to any Encumbrance;
(O) The Guarantor shall procure that its Debt Service Coverage
Ratio (calculated at three (3) monthly intervals as set out
below) shall not be less than the ratio specified in item 3 in
schedule A hereto (for the period from the first Drawdown Date
to 30 September 2002) and the ratio specified in item 4 in
schedule A hereto (for any period after 30 September 2002) and
for this purpose the Debt Service Coverage Ratio shall be
calculated on a consolidated basis in accordance with the
following formula:-
EBITDA
-------------------
Financial Expenses
where
"EBITDA" means, for the previous period of twelve (12) months,
the aggregate of:
(i) Net Income (but excluding gains and losses from the
sale of assets or reserves relating thereto and items
classified as extraordinary or non-recurring) from
the Guarantor's operations for such period and for
this purpose Net Income means the consolidated net
income of the Guarantor as determined in accordance
with GAAP; and
(ii) the aggregate amounts deducted in determining Net
Income for such period in respect of depreciation,
amortisation, taxes, deferred income and interest
expense of the Guarantor; and
"Financial Expenses" means, for the previous period of twelve
(12) months, the sum of:
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(i) the aggregate principal payable or paid during such
period on any Borrowed Money of the Guarantor (other
than the scheduled principal repayment in respect of
the Bridge Loan Facility and principal repayments
under the Agreement to the extent that they were
redrawn during the same period);
(ii) aggregate interest expense (including, without
limitation, capitalised interest accrued during such
period) of the Guarantor for such period; and
(iii) all rent and any capital lease obligations or
operating lease obligations by which the Guarantor is
bound which are payable or paid during such period as
calculated in accordance with GAAP and derived from
the then latest accounts of the Guarantor;
(P) The Guarantor shall procure that its Capital (Solvency) Ratio
(calculated as set out below) shall not be less than the
percentage specified in item 5 in schedule A hereto (for the
period from the first Drawdown Date to 30 September 2001), the
percentage specified in item 6 in schedule A hereto (for the
period from 1 October 2001 to 30 September 2002) and the
percentage specified in item 7 in schedule A hereto (for any
period after 30 September 2002) and for this purpose the
Capital (Solvency) Ratio shall be calculated on a consolidated
basis in accordance with the following formula:-
x
-
y
where
"x"
means the Guarantor's Book Tangible Net Worth (calculated in
accordance with clause 6.1(Q) hereof); and
"y"
means the book value of all the assets of the Guarantor
(calculated in accordance with GAAP);
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(Q) The Guarantor shall procure that its Book Tangible Net Worth
(calculated as set out below) shall not be less than the
amount specified in item 8 in schedule A hereto (during the
period from the first Drawdown Date to 30 September 2000) and
the amount specified in item 9 in schedule A hereto (after 30
September 2000) and for this purpose the Book Tangible Net
Worth shall be the book value of all assets calculated in
accordance with GAAP (excluding goodwill but including all
proceeds from any interest only loans which have been approved
in advance by the Agent as at the date of this Guarantee and
the proceeds of any preferred share issue made prior to the
date of this Guarantee) less total liabilities calculated in
accordance with GAAP (including without limitation the net
present value of financial lease commitments, estimated
compensation to third parties in the event of termination of
contracts, contingent tax liabilities and guarantee
obligations for the benefit of third parties but excluding any
debt of the Guarantor existing as at the date of this
Guarantee and subordinated by its terms to the Secured
Obligations);
(R) The Guarantor shall provide the Trustee with compliance
certificates in relation to the relevant financial covenants
contained in this Guarantee in the form attached hereto on or
before the first Drawdown Date and at three (3) monthly
intervals after the first Drawdown Date.
7. ENFORCEMENT
7.1 The Guarantor agrees, acknowledges and declares that:-
(A) In order to give effect to this Guarantee the Trustee and the
Beneficiaries shall be at liberty to act as though the
Guarantor were the principal debtor and obligor in respect of
the Secured Obligations and in the event of the winding-up,
dissolution, reconstruction or amalgamation in which or as a
consequence of which any Security Party loses its separate
corporate identity the Guarantor shall become liable to the
Trustee and the Beneficiaries for the payment of all moneys
expressed to be payable by the Security Parties to the Trustee
and/or the Beneficiaries pursuant to the Agreement and the
Security Documents and the performance and observance of and
compliance with all the Secured
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Obligations;
(B) Any release, settlement or discharge in relation to the
obligations of the Guarantor hereunder shall be conditional
upon no security, disposition or payment to the Trustee or the
Beneficiaries in respect of any of the Indebtedness being
avoided or reduced by virtue of any provisions or enactments
relating to bankruptcy, insolvency or liquidation and if any
such security, disposition or payment be avoided or reduced as
aforesaid, this Guarantee shall continue to apply in respect
of the amount of such security, disposition or payment and the
Guarantor shall indemnify the Trustee and the Beneficiaries in
respect thereof;
(C) The Trustee and the Beneficiaries may take such action as the
Trustee and the Beneficiaries in their own discretion may
consider appropriate against any other Security Party or
Parties to recover moneys due and payable in respect of the
Secured Obligations, the Guarantor, however, remaining liable
under this Guarantee for payment and discharge of all moneys
payable in respect thereof;
(D) The Trustee and each of the Beneficiaries shall be entitled
(after a demand for payment has been made hereunder but
without further notice) to procure the setting-off of any
liability of the Guarantor hereunder against any moneys
standing to the credit of any account or accounts which the
Guarantor may now or hereafter have with the Trustee or any of
the Beneficiaries at any of their respective offices or with
any subsidiary or parent company of any one of them (whether
or not those moneys are then due to the Guarantor) and, for
this purpose, to combine any and all such accounts and to use
all or part of those moneys to buy such other currency or
currencies as may be required to enable the Trustee or any of
the Beneficiaries to effect that setting-off. The Trustee and
the Beneficiaries shall also be entitled to retain as security
for the discharge of the liability of the Guarantor hereunder
all securities or other property of the Guarantor held by the
Trustee or any one or more of the Beneficiaries at any of
their respective offices and/or by any subsidiary or parent
company of any one of them (whether for safe custody or
otherwise);
(E) Notwithstanding that the Secured Obligations and any moneys
due from the
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Guarantor hereunder shall have been complied with, paid or
discharged, the Trustee shall be entitled to retain this
Guarantee and refrain from releasing the Guarantor from this
Guarantee for such period thereafter as the Trustee may
determine and in the event of bankruptcy, winding-up or any
similar proceedings being commenced in respect of any Security
Party or any other person as may have performed, paid or
discharged any of the Secured Obligations within such period
as aforesaid, the Trustee shall be at liberty to retain this
Guarantee and any security held for the obligations of the
Guarantor hereunder and refrain from releasing the Guarantor
from this Guarantee and may retain such security for and
during such period as the Trustee may determine;
(F) For the purpose of enabling the Trustee and/or the
Beneficiaries to sue any other Security Party or to prove in
its winding-up, liquidation or bankruptcy or in any similar
proceedings for any moneys due and unpaid by the Borrower, the
Trustee may at any time place and keep for such time as it may
think fit any moneys received hereunder to the credit of an
interest bearing suspense account without any obligation on
the part of the Trustee to apply the same or any part thereof
in or towards the discharge of the Indebtedness;
(G) The certificate of the Trustee as to the sum of money owed by
any Security Party shall, in the absence of manifest error, be
conclusive for any purpose and binding on the Guarantor.
8. CURRENCY INDEMNITY
8.1 Any amount received by the Trustee or any Beneficiary in connection
herewith in a currency (the "Relevant Currency") other than the
currency in which the same should be received pursuant to the terms
hereof (the "Agreed Currency") whether pursuant to a judgment or order
of a court or tribunal of any jurisdiction or any enforcement
proceedings or otherwise howsoever in connection herewith or otherwise
shall only constitute a discharge to the Guarantor to the extent of the
amount of the Agreed Currency which the Trustee or the relevant
Beneficiary is able, promptly on receipt, to purchase in such foreign
exchange market as the Trustee or the relevant Beneficiary may select
with the amount of the Relevant Currency so received.
If:-
(A) the amount of the Agreed Currency which the Trustee or the
relevant
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Beneficiary is so able to purchase is less than the amount of
the Agreed Currency due to the Trustee or the relevant
Beneficiary hereunder; and/or
(B) any condition imposed in relation to the conversion of any
amount paid in the Relevant Currency into the Agreed Currency
including, without limitation, any condition imposed by any
exchange control authority, reduces the amount in the Agreed
Currency which the Trustee or the relevant Beneficiary
actually receives for the amount of such payment in the
Relevant Currency below that amount which it would have
received had such condition not been imposed;
the Guarantor will indemnify and hold the Trustee or the relevant
Beneficiary harmless against any loss, damage, costs and/or expenses
arising as a result.
8.2 The above indemnity shall constitute a separate and independent
obligation from the other obligations contained herein shall give rise
to a separate and independent cause of action and shall continue in
full force and effect notwithstanding any judgment or order for amounts
due hereunder.
9. BENEFIT
9.1 The Guarantor hereby acknowledges and agrees that the benefit of this
Guarantee and Indemnity shall be held by the Trustee on trust for the
Beneficiaries and the Guarantor hereby covenants that this Guarantee
and Indemnity shall remain in full force and effect and shall fully
secure all the Beneficiaries. The Guarantor may not assign or transfer
rights or obligations hereunder without the prior written consent of
the Trustee (which may be withheld).
10. MISCELLANEOUS
10.1 The Guarantor hereby agrees that at any time and from time to time,
upon the request of the Trustee, the Guarantor will promptly and duly
execute and deliver and/or procure the execution and delivery of any
and all such further instruments and documents as may be deemed
desirable by the Trustee for the purpose of obtaining for the Trustee
and the Beneficiaries the full benefits hereof and of the rights and
powers herein granted.
10.2 Any provisions contained herein prohibited by or unlawful or
unenforceable under any applicable law shall, to the extent required by
such law, be ineffective without
<PAGE>
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modifying the remaining provisions hereof. Where however the provisions
of any such applicable law may be waived, they are hereby waived by the
Guarantor to the fullest extent permitted by such law with the intent
that this Guarantee shall be valid, binding and enforceable in
accordance with its terms.
10.3 Time is of the essence of this Guarantee but no failure or delay by the
Trustee or the Beneficiaries in exercising any right, power or
privilege hereunder and no course of dealing between any Security Party
and the Trustee or the Beneficiaries shall operate as a waiver thereof,
nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein are cumulative and not
exclusive of any rights or remedies which the Trustee and/or the
Beneficiaries would otherwise have. No notice to or demand on the
Guarantor shall entitle the Guarantor to any other or further notice or
demand in similar or other circumstances or constitute a waiver of the
rights of the Trustee or the
Beneficiaries to any other or further action in any circumstances
without notice or demand.
11. NOTICES
11.1 Any demand or notice to be given hereunder shall be in writing and sent
by prepaid first class or airmail letter post or telex or facsimile or
delivered by hand addressed to the Guarantor as follows:-
Commodore Holdings Limited
4000 Hollywood Boulevard
Suite 385-S
Hollywood
Fl 33021
USA
Attention Chief Financial Officer
Facsimile No: + 954 921 2147)
with a copy to:-
Kathleen L Deutsch, P.A.
Broad and Cassel
Miami Center - Suite 3000
201 S. Biscayne Boulevard
<PAGE>
- 16 -
Miami
Fl 33131
USA
Facsimile no. + 305 373 9443
or to such other person or address as the Guarantor may notify in
writing to the other party hereto.
11.2 Any such notice shall be deemed to have been validly given and received
on the date of despatch if sent by telex and five (5) days after having
been posted if sent by post.
12. GOVERNING LAW AND JURISDICTION
12.1 This Guarantee and all agreements entered into pursuant or supplemental
hereto shall be governed by and construed in accordance with English
law.
12.2 The Guarantor hereby Submits for the exclusive benefit of the Trustee
and the Beneficiaries to the jurisdiction of the English Courts and
appoints Consult Marine whose registered office is for the time being
at 58 London Fruit Exchange, Brushfield Street, London E1 6EP or such
other person as the Guarantor may with the prior written approval of
the Trustee from time to time appoint to be the attorney of the
Guarantor for the purpose of accepting service on behalf of the
Guarantor of any writ, notice, order, judgment or other legal process
with respect hereto or any matter arising hereout and agrees that
failure by any such process agent to give notice of such service of
process to the Guarantor shall not impair or affect the validity of
such service or of any judgment based thereon. The aforesaid submission
shall not limit the right of the Trustee and the Beneficiaries to
commence proceedings against the Guarantor in any jurisdiction they may
think fit or in two or more jurisdictions.
<PAGE>
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IN WITNESS whereof this Guarantee has been executed as a deed the day and year
first before written.
SIGNED SEALED and DELIVERED )
as a Deed by )
COMMODORE HOLDINGS LIMITED )
acting by )
/s/ Jeffrey I. Binder )
- ---------------------------------------
its duly appointed )
Chairman of the Board )
)
in the presence of:- )
EXHIBIT 10.5
MERITA BANK PLC
CHRISTIANIA BANK OG KREDITKASSE ASA
SKANDINAVISKA ENSKILDA BANKEN AB (PUBL)
(as lenders)
- and -
MERITA BANK PLC
(as agent)
- and -
CROWN CRUISES OF PANAMA, INC.
(as borrower)
- and -
MERITA BANK PLC
(as trustee)
-----------------------
LOAN AGREEMENT
RE USD6,720,000 BRIDGE LOAN
-----------------------
Sinclair Roche & Temperley
Royex House
5 Aldermanbury Square
London EC2V 7LE
Tel: 0171 452 4000
Fax: 0171 452 4001
Ref: GFS/242921
<PAGE>
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INDEX OF CONTENTS
CLAUSE SUBJECT PAGE
- ------ ------- ----
1. PURPOSE AND DEFINITIONS..........................................1
2. THE LENDERS' COMMITMENT..........................................8
3. AVAILABILITY.....................................................9
4. INTEREST.........................................................9
5. REPAYMENT.......................................................11
6. COMPULSORY AND VOLUNTARY PREPAYMENT.............................11
7. ARRANGEMENT FEE.................................................14
8. INDEMNITY.......................................................14
9. PAYMENTS........................................................17
10. APPLICATION OF MONEYS...........................................19
11. DEFAULT.........................................................21
12. SECURITY........................................................24
13. REPRESENTATIONS AND WARRANTIES..................................25
14. COVENANTS.......................................................27
15. SET-OFF AND SHARING OF PAYMENTS.................................32
16. ASSIGNMENT AND PARTICIPATION....................................33
17. MISCELLANEOUS...................................................35
18. NOTICES.........................................................35
19. PROPER LAW AND JURISDICTION.....................................36
SCHEDULE A : CONDITIONS PRECEDENT............................................37
<PAGE>
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SCHEDULE B : FINANCIAL RATIOS ...............................................41
APPENDIX I : FORM OF UTILIZATION NOTICE......................................44
APPENDIX II : FORM OF COMPLIANCE CERTIFICATE..................................45
<PAGE>
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THIS AGREEMENT is made the 24th day of January, 2000
BETWEEN:-
(1) THE LENDERS (as hereinafter defined);
(2) THE AGENT (as hereinafter defined);
(3) THE BORROWER (as hereinafter defined); and
(4) THE TRUSTEE (as hereinafter defined).
IT IS HEREBY AGREED as follows:-
1. PURPOSE AND DEFINITIONS
1.1 This agreement contains the terms and conditions upon which the
Lenders, with the Agent acting as their agent, will make available to
the Borrower a secured bridge loan of six million seven hundred and
twenty thousand United States Dollars (USD6,720,000).
1.2 In this agreement the following words and expressions shall have the
following meanings:-
"AGENT"
means Merita Bank Plc, a company incorporated under the laws of Finland
acting through its London branch having its principal place of business
at 19 Thomas More Street, London E1W 1YF in its capacity as agent for
the Lenders pursuant to the Deed of Agency and Trust;
"BORROWED MONEY"
means Indebtedness incurred in respect of (i) money borrowed or raised,
(ii) any bond, note, loan stock, debenture or similar instrument, (iii)
acceptance or documentary credit facilities, (iv) deferred payments for
assets or services acquired other than for provisions, bunkers, spare
parts or services acquired in the ordinary course of, and incidental
to, the operation of the Vessel, (v) rental payments under and any
amounts payable on termination of leases (whether in respect of ships,
land, machinery,
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equipment or otherwise) entered into primarily as a method of raising
finance or of financing the acquisition of the asset leased, (vi)
guarantees, bonds, stand-by letters of credit or other instruments
issued in connection with the performance of contracts and (vii)
guarantees or other assurances against financial loss in respect of
Indebtedness of any person, firm or company falling within any of (i)
to (vi) above;
"BORROWER"
means Crown Cruises of Panama, Inc., a company incorporated under the
laws of Panama with its registered office at c/o Galindo Arias & Lopez,
Scotia Plaza No. 18, Avenida Federico Boyd & Calle No. 51, Piso 9, 10 &
11, Panama, Republic of Panama;
"BUSINESS DAY"
means any day on which banks and foreign exchange markets in Helsinki,
Oslo, London and New York are open for the transaction of business of
the nature contemplated in this agreement;
"CHARTER"
means the space charter in respect of the Vessel made or to be made
between the Borrower as owner and the Charterer as charterer;
"CHARTERER"
means Crown Cruises Limited, a company incorporated under the laws of
Bermuda with its registered office at c/o Francis & Forest, Corner
House, 20 Parliament Street, Hamilton HM12, Bermuda;
"CONTRIBUTIONS"
means the proportions of the Loan (and, where the context so requires,
any relevant part thereof) set out opposite the names of the Lenders on
the signature pages of this agreement and "Contribution" means any one
of them;
"DEED OF AGENCY AND TRUST"
means the deed of even date herewith made between the Agent, the
Trustee and the Lenders whereby the Agent is appointed agent for the
Lenders in respect of this
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agreement and the Trustee declares a trust in respect of the other
Security Documents;
"DRAWDOWN DATE"
means the date on which the Loan is advanced pursuant to clause 3
hereof;
"EARNINGS ACCOUNT"
means the account in the name of the Borrower at the Agent's New York
office at 437 Madison Avenue, New York, N.Y. 10022;
"EARNINGS ASSIGNMENT"
means the assignment executed pursuant to clause 12.1(C) hereof;
"ENCUMBRANCE"
means any mortgage, charge, pledge, lien, assignment, hypothecation,
title retention, preferential right or trust arrangement and any other
security agreement or arrangement;
"ESL" means EFF-Shipping Limited, a company incorporated under the laws
of the Cayman Islands with its registered office at the offices of
Huntlaw Corporate Services Ltd, The Huntlaw Building, P.O. Box 1350,
George Town, Grand Cayman, Cayman Islands;
"EVENT OF DEFAULT"
means any of the events or circumstances specified in clause 11.1
hereof;
"GAAP"
means accounting principles generally accepted in the United States of
America and consistently applied;
"GUARANTOR"
means Commodore Holdings Limited, a company incorporated under the laws
of Bermuda with its registered office at c/o Francis & Forest, Corner
House, 20 Parliament Street, Hamilton HM12, Bermuda;
"INDEBTEDNESS"
means any obligation for the payment or repayment of money, whether as
principal or as surety and whether present or future, actual or
contingent;
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"INSURANCE ASSIGNMENT"
means the assignment executed pursuant to clause 12.1(B) hereof;
"INTEREST PERIOD"
means any period determined in accordance with the provisions of clause
4.1 hereof for the calculation of interest on the Loan or any relevant
part thereof;
"LENDERS"
means the banks and financial institutions whose names and lending
offices appear under and who have signed under the heading "The
Lenders" on the signature pages of this agreement and "Lender" means
any one of them;
"LOAN"
means six million seven hundred and twenty thousand United States
Dollars (USD6,720,000) or, where the context so requires, the aggregate
amount thereof from time to time outstanding;
"MANAGEMENT AGREEMENT"
means the agreement for the management of the Vessel made or to be made
between the Borrower and the Manager;
"MANAGER"
means New Commodore Cruise Lines Limited, a company incorporated under
the laws of Bermuda with its registered office at c/o Francis & Forest,
Corner House, 20 Parliament Street, Hamilton HM12, Bermuda;
"MARGIN"
means two per cent (2%) per annum (during the period of twelve (12)
months after the Drawdown Date), two and a half per cent (2.5%) per
annum (during the next following period of six (6) months) and three
per cent (3%) per annum (thereafter);
"MOA"
means the agreement for the sale and purchase of the Vessel made or to
be made between the Seller and the Borrower;
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"MORTGAGE"
means the second Panamanian naval mortgage over the Vessel executed
pursuant to clause 12.1(A) hereof;
"PERMITTED LIENS"
means liens for current crews' wages and salvage and liens incurred in
the ordinary course of trading the Vessel up to an aggregate amount at
any time not exceeding five per cent (5%) of the charter-free sale
value of the Vessel (such market value to be conclusively determined as
the average of the latest three (3) valuations obtained by the Agent as
provided in clause 8.2 hereof);
"REFERENCE BANKS"
means the Lenders;
"REVOLVING LOAN FACILITY"
means the revolving loan facility of up to but not exceeding forty five
million United States Dollars (USD45,000,000) at any one time made
available by the Lenders to the Borrower under the Revolving Loan
Facility Agreement;
"REVOLVING LOAN FACILITY AGREEMENT"
means the agreement of even date herewith made between the parties
hereto in respect of the Revolving Loan Facility;
"REVOLVING LOAN SECURITIES"
means the securities provided or to be provided to the Agent pursuant
to the Revolving Loan Facility Agreement as security for the Revolving
Loan Facility;
"SECURITY DOCUMENTS"
means the Deed of Agency and Trust and the documents executed pursuant
to clause 12.1 hereof and any other document or documents from time to
time providing and/or evidencing and/or constituting security in
respect of the Loan;
"SECURITY PARTIES"
means the Borrower, the Guarantor and the Manager and any other party
to any of the Security Documents from time to time (other than the
Seller, ESL, the Lenders, the Agent and the Trustee) and "Security
Party" means any one of them;
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"SELLER"
means Crown Dynasty Inc., a company incorporated under the laws of
Panama with its registered office at Vallarino, Vallarino & Garcia -
Maritano, 20th Floor, Banco Continental Building, Calle 50 y Aquilino
De La Guardia, Panama City, Panama;
"SELLER'S CREDIT"
means the seller's credit in the sum of twenty four million four
hundred and eighty thousand United States Dollars (USD24,480,000)
procured by the Seller for the Borrower from ESL pursuant to the MOA
and made available to the Borrower by ESL under the Seller's Credit
Agreement;
"SELLER'S CREDIT AGREEMENT"
means the agreement made or to be made between ESL and the Borrower in
respect of the Seller's Credit;
"SELLER'S CREDIT SECURITIES"
means the securities provided or to be provided to ESL pursuant to the
Seller's Credit Agreement as security for the Seller's Credit;
"SUB-CHARTER"
means the space sub-charter of the Vessel made or to be made between
the Charterer as disponent owner and the Sub-Charterer as charterer on
back to back terms with the Charter;
"SUB-CHARTERER"
means Atkinson and Mullen, Inc. doing business as Apple Vacations, a
company incorporated under the laws of Pennsylvania with its registered
office at 7 Campus Boulevard, Newtown Square, Pennsylvania 19073,
U.S.A.;
"SUBJECT DOCUMENTS"
means this agreement, the Security Documents, the MOA, the Charter, the
Sub-Charter, the Management Agreement, the Revolving Loan Facility
Agreement, the Revolving Loan Securities, the Seller's Credit
Agreement, the Seller's Credit Securities and any and all documents
executed pursuant to any one or more of these documents;
<PAGE>
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"TOTAL LOSS"
means:-
(i) actual or constructive or compromised or agreed or arranged
total loss of the Vessel; or
(ii) requisition for title or other compulsory acquisition of the
Vessel otherwise than by requisition for hire; or
(iii) capture, seizure, arrest, detention or confiscation of the
Vessel by any government or by persons acting or purporting to
act on behalf of any government unless the Vessel is released
and restored to the Borrower from such capture, seizure,
arrest or detention within thirty (30) days after the
occurrence thereof;
"TRUSTEE"
means Merita Bank Plc, a company incorporated under the laws of Finland
acting through its London branch having its principal place of business
at 19 Thomas More Street, London E1W 1YF in its capacity as trustee
pursuant to the Deed of Agency and Trust;
"UNITED STATES DOLLARS" and "USD"
mean the lawful currency of the United States of America; and
"VESSEL"
means the motor vessel named "CROWN DYNASTY" now registered under
Panamanian flag in the ownership of the Seller which is to remain
registered under Panamanian flag in the ownership of the Borrower
pursuant to the MOA.
1.3 References to any document shall be construed to mean that document as
amended and/or varied and/or supplemented from time to time with the
agreement of the relevant parties and (where such consent is required
by the terms of this agreement or the relevant document) with the
consent of the Agent and/or the Lenders and/or the Trustee.
1.4 Clause headings are inserted for convenience of reference only and
shall be ignored in
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the interpretation of this agreement.
2. THE LENDERS' COMMITMENT
2.1 In reliance upon the representations and warranties contained in clause
13 hereof and in the Security Documents and subject to the terms and
conditions of this agreement the Lenders will make the Loan available
to the Borrower for the purpose of financing (in part) the purchase of
the Vessel by the Borrower pursuant to the MOA.
2.2 Each of the Lenders shall advance its Contribution to the Loan or any
relevant part thereof.
2.3 The liability of each of the Lenders hereunder is several and none of
the Lenders shall be responsible for any failure by any other Lender to
meet its obligations hereunder nor shall any such failure relieve the
Borrower or any other Lender of all or any of its respective
obligations hereunder. If any Lender shall fail to advance its
Contribution in circumstances where the Agent has already advanced the
Loan or any relevant part thereof to the Borrower then the Borrower
shall forthwith upon the demand of the Agent repay to the Agent an
amount equal to any such Contribution together with any interest
accrued thereon. The Agent shall not be obliged to advance the Loan or
any part thereof to the Borrower other than such Contribution(s) as the
Agent has received from the Lenders.
3. AVAILABILITY
3.1 The Loan shall be advanced in one amount and applied in accordance with
clause 2.1 hereof provided that:-
(A) all items specified in schedule A hereto have been received by
the Agent and are in form and substance satisfactory to the
Agent;
(B) no Event of Default and no event which with the giving of
notice and/or lapse of time would constitute an Event of
Default has occurred;
(C) not less than four (4) Business Days prior to the date upon
which the Borrower
<PAGE>
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requires the Loan to be advanced the Agent has received a
written notice from the Borrower in the form set out in
appendix I hereto; and
(D) the obligation of the Lenders to make the Loan available to
the Borrower shall expire on 31 January 2000 if the Loan is
not advanced on or before that date.
3.2 The Lenders may in their absolute discretion allow the Loan to be
advanced notwithstanding that the Agent has not received all the items
specified in schedule A hereto and in this event the Borrower hereby
covenants to procure the delivery of all the missing items to the Agent
within thirty (30) days after the Drawdown Date.
4. INTEREST
4.1 The Borrower shall pay interest on the Loan from the Drawdown Date for
each successive Interest Period which shall, subject to clauses 4.3 and
6.2 hereof, be either one (1), three (3) or six (6) months at the
option of the Borrower provided always that:-
(A) the Borrower shall exercise the said option by notice in
writing to the Agent not later than three (3) Business Days
prior to the commencement of each Interest Period failing
which the Borrower shall be deemed to have opted for an
Interest Period of six (6) months;
(B) if the relevant funds are not available to the Lenders for an
Interest Period of the length opted for (or deemed to be opted
for) by the Borrower the Agent shall be entitled to determine
conclusively the length of that Interest Period;
(C) if an Interest Period will expire after the due date for
repayment of the Loan that Interest Period shall be shortened
to expire on that due date; and
(D) if an Interest Period would otherwise expire on a day which is
not a Business Day that Interest Period shall be extended to
expire on the next succeeding Business Day unless that next
succeeding Business Day falls within a fresh month in which
event that Interest Period shall be shortened to expire on the
immediately preceding Business Day. In this event the next
succeeding Interest Period shall in the absolute discretion of
the Agent (and subject always to this clause 4.1 (D)) expire
the relevant number of months after either (i) that next
succeeding or immediately preceding Business Day (as the case
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may be) or (ii) the day on which the preceding Interest Period
would have expired if it had not been so extended or shortened
(as the case may be) or (iii) the day on which the preceding
Interest Period would have expired if no Interest Period had
ever been so extended or shortened.
4.2 Subject to clauses 4.3 and 6.2 hereof the Borrower shall pay interest
on the Loan or any relevant part thereof for each Interest Period at
the rate certified conclusively (save for manifest error) by the Agent
to be the aggregate of the relevant Margin and the rate per cent per
annum for that Interest Period quoted by Telerate Screen 3750 (rounded
up to the nearest one sixteenth of one per cent)(or, if the Telerate
system is not working, by Reuters Page ISDA (rounded up to the nearest
one sixteenth of one per cent) or, if neither the Telerate system nor
the Reuters system is working, the average rate per cent per annum
(rounded up to the nearest one sixteenth of one per cent) at which
deposits of amounts of United States Dollars equivalent to or
comparable with the Loan or relevant part thereof are offered to the
Reference Banks (or two of them if one is unable to quote a rate) for
that Interest Period in the London Inter-bank Market at or about 11.00
a.m. (London time) two (2) Business Days (in London only) prior to the
commencement of that Interest Period. Such interest shall accrue and be
payable on the actual number of days elapsed, shall be calculated on
the basis of a year of three hundred and sixty (360) days and shall be
paid on the final day of that Interest Period and (if that Interest
Period is longer than one (1) month) at one (1) monthly intervals.
4.3 In the event of default by the Borrower in the payment of any sum
whatsoever due under this agreement (including interest) the Borrower
shall pay interest on that sum from the due date until payment (after
as well as before judgement) at a rate certified conclusively (save for
manifest error) by the Agent to be five per cent (5%) per annum over
the average cost to the Lenders (rounded up to the nearest one
sixteenth of one per cent) of funding their respective Contributions to
that sum for such periods as the Agent in its absolute discretion may
think fit on the Business Day succeeding that on which it became aware
of the default and for so long as that sum remains unpaid that rate
shall be re-calculated on the same basis. Such interest shall accrue
and be payable on each day elapsing, shall be calculated on the basis
of a year of three hundred and sixty (360) days and shall be paid on
the demand of the Agent. In default of payment such interest shall be
compounded.
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4.4 The Agent shall as soon as reasonably practicable notify the Borrower
of each rate of interest payable on the Loan or any relevant part
thereof under this clause 4.
5. REPAYMENT
5.1 Subject to clauses 6 and 11.1 hereof the Borrower shall repay the Loan
in one amount on the date falling twenty four (24) months after the
Drawdown Date.
6. COMPULSORY AND VOLUNTARY PREPAYMENT
6.1 If for any reason whatsoever beyond the control of any one or more of
the Lenders it shall become unlawful or impossible for such one or more
of the Lenders to maintain or give effect to all or part of its or
their obligations as contemplated by this agreement and evidence
substantiating that unlawfulness or impossibility has been produced by
such one or more of the Lenders to the Agent then:-
(A) the obligation of such one or more of the Lenders to advance
funds under clause 2.2 hereof and to participate in the Loan
or the relevant part thereof shall cease;
(B) the Borrower shall forthwith upon the demand of the Agent
repay to the Agent for the benefit of such one or more of the
Lenders the amount of its or their Contribution(s) to the Loan
or the relevant part thereof together with interest accrued
thereon and any sums due to such one or more of the Lenders by
virtue of that repayment under clause 8.5 hereof; and
(C) the Loan or the relevant part thereof shall be reduced by the
amount of the Contribution(s) of such one or more of the
Lenders thereto.
6.2 If the Agent shall:-
(A) determine in good faith that by reason of circumstances
affecting the London Inter-Bank Market generally adequate and
reasonable means do not exist for ascertaining the rate of
interest payable on the Loan or any relevant part thereof for
any Interest Period in accordance with clause 4.2 hereof; or
(B) receive notice from any one or more of the Lenders that it
would not be
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practicable or possible for such one or more of the Lenders to
fund or continue to fund its or their Contribution(s) to the
Loan or any relevant part thereof in the London Inter-Bank
Market,
then the Agent shall inform the Borrower in writing to that effect and
unless the Lenders and the Borrower shall agree acceptable alterations
to the terms of this agreement (on the basis of an alternative source
of funds available to the relevant Lenders) then:-
(i) the obligation of the relevant Lenders to advance
funds under clause 2.2 hereof and to participate in
the Loan or the relevant part thereof shall cease;
(ii) the Agent shall give notice to the Borrower
terminating the participation of the relevant Lenders
in the Loan or the relevant part thereof whereafter
the amount of its or their Contribution(s) to the Loan
or the relevant part thereof together with interest
accrued thereon shall become repayable by the Borrower
in full on the final day of the then current Interest
Period; and
(iii) the Loan or the relevant part thereof shall be reduced
by the amount of the Contribution(s) of the relevant
Lenders thereto.
6.3 The Borrower shall be obliged to prepay the whole of the Loan (together
with accrued interest thereon and any sum due to any one or more of the
Lenders by virtue of that prepayment under clause 8.5 hereof) upon the
successful completion of any new rights issue by the Guarantor.
6.4 If the Borrower makes any repayment or prepayment of principal in
respect of the Seller's Credit the Borrower shall be obliged
simultaneously to pay to the Agent an equivalent amount in or towards
prepayment of the Loan (together with accrued interest thereon and any
sum due to any one or more of the Lenders by virtue of that prepayment
under clause 8.5 hereof).
6.5 The Borrower may prepay the whole or part of the Loan together with
interest accrued thereon on the final day of any Interest Period in
respect of the Loan provided that:-
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(A) the Borrower shall simultaneously pay to the Agent any sums
due to any one or more of the Lenders by virtue of that
prepayment under clause 8.5 hereof;
(B) any part prepayment of the Loan shall amount to a whole
multiple of one hundred thousand United States Dollars
(USD100,000);
(C) the Borrower shall have given the Agent not less than thirty
(30) days written notice of its intention to make such
prepayment (which once given shall be irrevocable) specifying
such day and the amount of intended prepayment and accompanied
by such evidence as the Agent may require that any
governmental or other consents for such prepayment have been
obtained or will be forthcoming; and
(D) no sums prepaid hereunder may be reborrowed under this
agreement.
7. ARRANGEMENT FEE
7.1 The Borrower shall pay to the Agent for the benefit of the Lenders on
the date hereof an arrangement fee of one hundred and thirty four
thousand four hundred United States Dollars (USD134,400), which fee the
Borrower hereby accepts has been fully earned on the date hereof.
8. INDEMNITY
8.1 If any change in law or regulation or in the interpretation thereof or
if compliance by any one or more of the Lenders with any direction
request or requirement (whether or not having the force of law) of any
central bank or other authority shall:-
(A) subject any one or more of the Lenders to any tax with respect
to the Loan or any part thereof (other than tax on overall net
income);
(B) change the basis of taxation to any one or more of the Lenders
of payments of principal or interest or any other payment due
or to become due hereunder;
(C) impose or modify any reserve, liquidity or capital adequacy
requirements or require the making of any special deposits
affecting any one or more of the Lenders; or
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(D) impose on any one or more of the Lenders any other condition
affecting the Loan or any part thereof whether or not the Loan
has been advanced
and the result is either to increase the cost to any one or more of the
Lenders of making or maintaining or committing to make its or their
Contribution(s) to the Loan or any part thereof or to reduce the amount
of any payment received by any one or more of the Lenders hereunder or
to reduce the rate of return which any one or more of the Lenders would
have been able to obtain on its or their overall capital but for
entering into and/or performing this agreement and evidence
substantiating the situation has been produced by such one or more of
the Lenders to the Agent then:-
(i) the Agent shall use its best efforts promptly to
notify the Borrower in writing of the situation;
(ii) the Borrower shall pay to the Agent forthwith upon
the demand of the Agent such amount as will
compensate such one or more of the Lenders for such
additional cost or such reduction and a certificate
of the additional amount or amounts so required
submitted by the Agent to the Borrower shall save for
manifest error be conclusive evidence thereof; and
(iii) any such demand may be made by the Agent at any time
before or after repayment of the Loan.
8.2 All legal fees and other reasonable costs and expenses whatsoever
(including without limitation the costs of obtaining, not more than
twice in each period of twelve (12) months after the date hereof,
valuations of the Vessel from three (3) independent shipbrokers
acceptable to the Agent) incurred by the Agent and/or the Trustee
and/or any one or more of the Lenders in connection with any one or
more of this agreement, the Security Documents and any other documents
executed pursuant hereto or thereto shall be paid by the Borrower
forthwith upon demand by the Agent on a full indemnity basis whether or
not the Loan is advanced.
8.3 The Borrower shall pay forthwith upon demand by the Agent all stamp,
registration
<PAGE>
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and other duties (including any such duties payable by the Agent and/or
the Trustee and/or any one or more of the Lenders) imposed by any
authority in respect of any one or more of this agreement, the Security
Documents and any other documents executed pursuant hereto or thereto
or otherwise in connection with the Loan.
8.4 Without prejudice to the rights of the Agent and/or the Trustee and/or
the Lenders under or pursuant to clause 11 hereof the Borrower shall
indemnify the Agent and/or the Trustee and/or any one or more of the
Lenders fully forthwith upon demand by the Agent for any and all losses
damages and/or expenses whatsoever incurred by the Agent and/or the
Trustee and/or such one or more of the Lenders:-
(A) as a result of the Loan not being advanced for any reason
whatsoever in accordance with a notice given pursuant to
clause 3.1(C) hereof (provided that no Lender whose default
has caused the Loan not to be advanced may claim any indemnity
under this clause 8.4(A));
(B) as a result of an Event of Default;
(C) in perfecting, protecting the value of or enforcing any of its
or their rights or securities under any one or more of this
agreement, the Security Documents and any other documents
executed pursuant hereto or thereto or in attempting so to do;
or
(D) as a result of any payment hereunder, whether pursuant to a
judgment or otherwise, being made, obtained or enforced in a
currency other than United States Dollars.
8.5 In the event that the whole or part of the Loan is repaid or prepaid
otherwise than on the final day of an Interest Period in respect
thereof the Borrower shall (A) indemnify any one or more of the Lenders
fully forthwith upon demand by the Agent for any and all losses damages
and/or expenses incurred by such one or more of the Lenders in
liquidating or reemploying fixed deposits acquired from third parties
to maintain its or their Contribution(s) to the Loan or the relevant
part thereof (as the case may be) until the expiry of the then current
Interest Period in respect thereof and (B) pay to any one or more of
the Lenders forthwith on demand any sums due to such one or more of the
Lenders as a result of that repayment or prepayment under clause 8.6
hereof.
8.6 The Borrower shall indemnify any one or more of the Lenders fully
forthwith upon
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demand by the Agent for all losses, premiums, penalties, costs and
expenses whatsoever incurred by such one or more of the Lenders in
connection howsoever with any interest rate "swap", "cap" or other
transaction entered into or to be entered into or arranged by such one
or more of the Lenders at the request or on behalf of the Borrower at
any time and from time to time with any counterparty a direct or
indirect commercial purpose of which is to limit or offset the exposure
of the Borrower to future increases of floating interest rates in
connection howsoever with this agreement.
8.7 The indemnities contained in this clause 8 shall apply irrespective of
any indulgence granted to the Borrower or any other party from time to
time and shall continue in full force and effect notwithstanding any
payment in favour of the Agent and/or the Trustee and/or any one or
more of the Lenders and any amount due from the Borrower under this
clause 8 will be due as a separate debt and shall not be affected by
judgment being obtained for any other sums due under any one or more of
this agreement, the Security Documents and any other documents executed
pursuant hereto or thereto.
9. PAYMENTS
9.1 All payments by the Borrower hereunder shall be made to the Agent's
account with such bank or banks as the Agent shall nominate from time
to time.
9.2 Subject to the sub-clauses of this clause 9.2 all payments by the
Borrower hereunder shall be made in full without set-off or
counterclaim and free and clear of and without deduction or withholding
for or on account of any tax of any jurisdiction.
(A) If the Borrower is required by law to make any deduction or
withholding from any payment hereunder for or on account of
tax, it shall do so and the sum due from the Borrower in
respect of such payment shall be increased to the extent
necessary to ensure that, after the making of such deduction
or withholding, the Agent receives and each relevant party
retains (free of any liability in respect of any such
deduction or withholding) a net sum equal to the sum it would
have received and retained had no deduction or withholding
been required to be made.
<PAGE>
- 20 -
(B) If at any time the Borrower is required by law to make any
deduction or withholding from any sum payable by it hereunder
(or if thereafter there is any change in the rates at which or
the manner in which such deductions or withholdings are
calculated) the Borrower shall promptly and fully notify the
Agent accordingly.
(C) If the Borrower makes any payment hereunder in respect of
which it is required by law to make any deduction or
withholding it shall pay the full amount to be deducted or
withheld to the relevant taxation or other authority within
the time allowed for such payment under applicable law and
shall deliver to the Agent within thirty (30) days after it
has made such payment to the applicable authority the
appropriate receipt or certificate issued by such authority or
the Borrower as the case may be evidencing the payment to such
authority of all amounts so required to be deducted or
withheld from such payment.
9.3 If any sum becomes due for payment hereunder on a day which is not a
Business Day the due date for payment shall be extended to the next
succeeding Business Day unless that next succeeding Business Day falls
within a fresh month in which event the due date for payment shall be
brought forward to the immediately preceding Business Day. Any interest
payable shall be adjusted accordingly.
9.4 All payments hereunder shall be made in United States Dollars not later
than 11.00 a.m. (New York time) on the due dates therefor in such funds
as may be customary for the same day settlement of international
banking transactions in United States Dollars in New York City provided
that payments in respect of costs and expenses shall be made in the
currencies in which the same are incurred.
9.5 The Agent shall open and maintain on its books a control account in the
name of the Borrower showing the advance of the Loan and the
computation and payment of interest and all other sums due hereunder.
The Borrower's obligations to repay the Loan and to pay interest
thereon and to pay all other sums due hereunder shall be evidenced by
the entries from time to time made in the control account opened and
maintained under this clause 9.5 which entries will be conclusive and
binding in the absence of manifest error.
10. APPLICATION OF MONEYS
<PAGE>
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10.1 All moneys assigned to the Agent and/or the Trustee and/or the Lenders
under the Earnings Assignment shall be paid to the Earnings Account.
10.2 Subject to the relevant provisions of the Revolving Loan Facility
Agreement and to clause 10.4 hereof all moneys paid to the Earnings
Account shall be applied by the Agent as follows:-
(A) first in payment of any and all sums whatsoever due and
payable to the Agent and/or the Trustee and/or any one or more
of the Lenders hereunder (such sums to be paid in such order
as the Agent may in its sole discretion elect);
(B) second in retention in the Earnings Account of amounts
equivalent in aggregate to the amount of interest next falling
due to be paid hereunder; and
(C) third in retention of any credit balance in the Earnings
Account
Provided That:-
(i) sums retained in the Earnings Account pursuant to
clauses 10.2(B) and (C) hereof shall be held on
deposit at rates of interest normally paid by the
Agent to customers for deposits of like amount and
maturity and any interest accruing thereon shall be
credited to the Earnings Account at monthly intervals;
(ii) sums retained in the Earnings Account pursuant to
clause 10.2(B) hereof shall be applied by the Agent in
or towards payment of interest due hereunder on the
due dates for payment thereof; and
(iii) nothing herein contained shall be deemed to affect the
absolute obligation of the Borrower to pay interest on
and to repay the Loan as provided in clauses 4 and 5
hereof.
10.3 Subject to the relevant provisions of the Revolving Loan Facility
Agreement and to clause 10.4 hereof all moneys payable to the Agent
and/or the Trustee and/or the Lenders under the Insurance Assignment
and any other moneys payable to the Agent and/or the Trustee and/or the
Lenders by any one or more of the Security Parties under any one or
more of this agreement, the Security Documents and any other
<PAGE>
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documents executed pursuant hereto or thereto the application of which
is not specifically provided for by another clause hereof shall be paid
to the Agent's account with such bank or banks as the Agent may
nominate from time to time and shall be applied by the Agent as
follows:-
(A) all moneys received from a Total Loss or sale of the Vessel
shall be applied as follows:-
(i) first in accordance with clause 10.2(A) hereof;
(ii) second in repayment of the Loan, in payment of accrued
interest thereon and in payment of any sums due to any
one or more of the Lenders by virtue of that repayment
under clause 8.5 hereof; and
(iii) third in payment of any credit balance to the
Borrower or to whomsoever may be entitled thereto;
and
(B) all moneys not covered by clause 10.3(A) hereof shall be
applied as follows:-
(i) first in accordance with clause 10.2(A) hereof;
(ii) second (in respect only of moneys received by virtue
of the Insurance Assignment) in reimbursement to the
Borrower for such of the costs (if any) incurred by
the Borrower in effecting the repair of the damage in
respect of which those moneys are received as the
Agent shall approve (such approval not to be
unreasonably withheld) and in payment to the Earnings
Account of all moneys received in respect of loss of
hire insurances (if any);
(iii) third in repayment of the Loan, in payment of accrued
interest thereon and in payment of any sums due to any
one or more of the Lenders by virtue of that repayment
under clause 8.5 hereof; and
(iv) fourth in payment of any credit balance to the
Borrower or to whomsoever may be entitled thereto.
<PAGE>
- 23 -
10.4 Subject to the relevant provisions of the Revolving Loan Facility
Agreement, from and after the giving of notice by the Agent to the
Borrower pursuant to clause 11.1 hereof all moneys whatsoever received
or recovered by the Agent or the Trustee or any one or more of the
Lenders from any one or more of the Security Parties under any one or
more of this agreement, the Security Documents and any other documents
executed pursuant hereto or thereto or from any other party under any
one or more of the Mortgage, the Earnings Assignment and the Insurance
Assignment and all moneys from time to time standing to the credit of
the Earnings Account shall be paid to the Agent's account with such
bank or banks as the Agent may nominate from time to time and shall be
applied by the Agent as follows:-
(A) first in accordance with clause 10.2(A) hereof, subject to any
right the Agent or the Trustee or any one or more of the
Lenders may have to delay any such application in order to
maximise its or their claim; and
(B) second in payment of any credit balance to the Borrower or to
whomsoever may be entitled thereto.
11. DEFAULT
11.1 The Agent may by notice in writing to the Borrower declare the Loan to
be immediately repayable with accrued interest thereon (plus any sums
due to any one or more of the Lenders by virtue of that repayment under
clause 8.5 hereof) and any security held by the Agent or the Trustee or
any one or more of the Lenders shall become immediately enforceable if
any of the following events occurs:-
(A) failure by the Borrower to pay promptly on the due date
therefor any sum whatsoever due for payment by it under this
agreement;
(B) any one or more of the Security Parties and ESL making default
in the observance or performance of any other obligation
covenant or undertaking contained in any one or more of this
agreement, the Security Documents and any other documents
executed pursuant hereto or thereto and (if the same is in the
opinion of the Agent capable of remedy) the continuation of
that default unremedied for a period of fifteen (15) days;
(C) any of the representations and warranties made or deemed to
have been made
<PAGE>
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in any one or more of this agreement, the Security Documents
and any other documents executed pursuant hereto or thereto
being inaccurate or misleading when made or becoming
inaccurate or misleading at any time hereafter were the same
to be repeated in relation to the facts subsisting at that
time (whether or not any such repetition actually occurs);
(D) any event of default occurring under any one or more of the
Security Documents;
(E) the fulfilment of any one or more of the obligations covenants
and undertakings contained in any one or more of this
agreement, the Security Documents and any other documents
executed pursuant hereto or thereto or the exercise of any of
the rights vested in the Agent and/or the Trustee and/or any
one or more of the Lenders hereunder or thereunder becoming
either unlawful under any applicable law or unauthorised by
any authority having jurisdiction or otherwise impossible;
(F) a bona fide petition being presented or an order being made or
an effective resolution being passed for the commencement of
any proceedings for the liquidation winding-up or
re-organisation of any one or more of the Security Parties
except for the purpose of and followed by an amalgamation or
reconstruction the terms of which shall have been previously
approved in writing by the Agent;
(G) a distress or execution being levied or enforced upon or sued
out against any part of the assets of any one or more of the
Security Parties which in the Agent's opinion would have a
material adverse effect on any one or more of the Security
Parties and not being satisfied removed or discharged within
fourteen (14) days;
(H) the holder of any Encumbrance taking possession of or a
liquidator, administrator, receiver, administrative receiver,
trustee or similar officer being appointed in respect of the
whole or a substantial part of the assets of any one or more
of the Security Parties;
<PAGE>
- 25 -
(I) any one or more of the Security Parties being unable or
admitting its inability to pay its or their lawful debts as
they mature or convening a meeting of or preparing to enter
into any arrangement or composition with or making a general
assignment for the benefit of its or their creditors or being
adjudicated bankrupt or insolvent;
(J) any other Borrowed Money of any one or more of the Security
Parties becoming due or becoming capable of being declared due
prior to its stated date of maturity by reason of default on
the part of any one or more of the Security Parties;
(K) any one or more of the Security Parties ceasing to carry on or
suspending or threatening to cease to carry on or to suspend
its or their business or a substantial part of the assets or
business of any one or more of the Security Parties being
seized confiscated or expropriated;
(L) the market value of the Vessel (such market value to be
conclusively determined as the average of the latest three (3)
valuations obtained by the Agent as provided in clause 8.2
hereof) at any time falling below one hundred and thirty five
per cent (135%) of the aggregate amount of the Loan and the
Revolving Loan Facility then outstanding and the Borrower
failing either to prepay the relevant part of the Loan and/or
the Revolving Loan Facility or to provide additional security
acceptable to the Agent within fourteen (14) days after
receiving written notice from the Agent to that effect;
(M) a Total Loss occurring and either (i) the Agent not being
satisfied at any time in its absolute discretion that the
Total Loss is adequately covered by insurance and that the
relevant insurance proceeds will be paid to the Agent or (ii)
any insurance claim in respect thereof being rejected by the
underwriters at any time or (iii) the Agent failing to receive
the insurance proceeds in respect thereof within one hundred
and eighty (180) days thereafter;
(N) any one or more of the Subject Documents being repudiated or
terminated without the prior written consent of the Agent;
(O) a material adverse change occurring in the business, assets or
financial condition of any one or more of the Security Parties
which may reasonably be considered to affect its or their
ability to comply with all or any of its or their
<PAGE>
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respective obligations under any one or more of the Subject
Documents; or
(P) an event of default occurring under the Revolving Loan
Facility Agreement or the Seller's Credit Agreement.
12. SECURITY
12.1 As security for the Loan, interest thereon and all other sums due and
to become due hereunder the Borrower shall provide the Agent with the
following documents in form and substance satisfactory to the Agent
which documents shall be executed in favour of the Trustee and be held
by the Trustee on trust for the Agent, the Trustee and the Lenders and
their respective successors, assignees and transferees on the terms of
the Deed of Agency and Trust:-
(A) duly registered second Panamanian naval mortgage over the
Vessel duly executed by the Borrower;
(B) second priority assignment duly executed by the Borrower of
all insurances whatsoever in respect of the Vessel and loss of
its earnings and all compensation in respect of the
requisition for title or other compulsory acquisition of the
Vessel (with the exception of requisition hire);
(C) second priority assignment duly executed by the Borrower of
the benefit of all earnings whatsoever of the Vessel
(including requisition hire);
(D) guarantee and indemnity duly executed by the Guarantor;
(E) second priority charge over all the authorised and issued
shares in the Borrower duly executed by the Guarantor;
(F) tripartite agreement duly executed by (i) the Agent, the
Trustee and the Lenders, (ii) Neptun Maritime Oyj and ESL and
(iii) the Borrower and the Guarantor coordinating the
interests of ESL under the Seller's Credit Agreement and the
Seller's Credit Securities with those of the Agent and/or the
Trustee and/or the Lenders under this agreement and the other
Security Documents; and
<PAGE>
- 27 -
(G) letter of subordination duly executed by the Manager
subordinating its interests under the Management Agreement to
those of the Agent and/or the Trustee and/or the Lenders under
this agreement.
13. REPRESENTATIONS AND WARRANTIES
13.1 The Borrower hereby represents and warrants that:-
(A) each of the Security Parties is a duly incorporated company
validly existing and in good standing under the laws of its
country of incorporation and all the shares in the Borrower
are beneficially owned by the Guarantor;
(B) each of the Security Parties has full power and authority to
execute deliver and perform such of the Subject Documents to
which it is a party;
(C) each of the Security Parties has taken all necessary corporate
or other action required to authorise the execution delivery
and performance of such of the Subject Documents to which it
is a party;
(D) all consents licences approvals or authorisations whatsoever
required to make the Subject Documents legal valid enforceable
and admissible in evidence have been obtained and are in full
force and effect;
(E) from and after execution and delivery thereof each of the
Subject Documents will constitute legal valid and binding
obligations of the parties thereto (other than the Agent, the
Trustee and the Lenders) enforceable in accordance with its
terms and will not contravene any applicable law or regulation
or any contractual constitutional or other restriction binding
on any of the parties thereto (other than the Agent, the
Trustee and the Lenders);
(F) as at the date hereof no material litigation or administrative
proceedings of or before any board of arbitration, Court or
Governmental authority or agency is pending or (to the
Borrower's knowledge) threatened the result of which would or
might be to have a material adverse effect on the business
assets or financial condition of any one or more of the
Security Parties;
(G) the copies of any of the Subject Documents delivered or to be
delivered to the
<PAGE>
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Agent hereunder constitute the full agreement between the
parties thereto with respect to the subject matter thereof and
none of the parties thereto is in default thereunder;
(H) all historic financial information and other documentation
submitted to the Agent by or on behalf of the Borrower in
connection herewith is accurate and correct in all material
respects and not misleading;
(I) the claims of the Agent and/or the Trustee and/or the Lenders
against the Borrower under this agreement will rank at least
pari passu with the claims of all unsecured creditors of the
Borrower other than claims of such creditors to the extent
that they are statutorily preferred;
(J) each Security Party and its business and assets (including,
without limitation, all computer systems, all systems and
equipment containing embedded microchips (including leased
systems and equipment) and any other systems, equipment or
parts of the business or assets whatsoever of that Security
Party whose proper functioning or operation is capable of
being affected by the incorrect processing, storing,
calculation or recognition of dates, together with all
software and data in connection with any of the foregoing)
shall at all times comply with the requirements of Year 2000
Conformity as defined in "A DEFINITION OF YEAR 2000 CONFORMITY
REQUIREMENTS" issued by the British Standards Institution (BSI
DISC PD2000-1:1998) or such later reviewed, revised or amended
version thereof as may be published by the British Standards
Institution from time to time (in which case the later version
shall be the relevant one for the purposes of this clause);
and
(K) no Event of Default has occurred or is continuing and no event
which with the giving of notice and/or lapse of time would
constitute an Event of Default has occurred or is continuing.
14. COVENANTS
14.1 The Borrower hereby covenants that from the date hereof until the
Borrower has no remaining obligations, actual or contingent, under this
agreement:-
<PAGE>
- 29 -
(A) the Borrower will file all requisite tax returns and will pay
all tax as shown to be due and payable on such returns or any
of the assessments made against it (other than those being
contested in good faith);
(B) the Borrower will carry on and conduct its business in a
proper and efficient manner and will duly pay all outgoings as
and when they fall due and in particular without limiting the
generality of the foregoing will duly observe and perform all
the terms and conditions of any contract of employment of the
Vessel to be observed and performed by it;
(C) the Borrower will prepare or cause to be prepared, in
accordance with GAAP, annual audited accounts for the Borrower
and unaudited quarterly accounts for the Borrower; the
Borrower will furnish the Agent with copies of the audited
annual accounts no later than ninety five (95) days after the
end of each financial year and copies of the unaudited
quarterly accounts no later than fifty (50) days after the end
of each financial quarter; the audited annual accounts shall
include profit and loss accounts and balance sheets certified
and audited by an accountant acceptable to the Agent which
shall include Grant Thornton L.L.P.;
(D) the Borrower will provide the Agent in a form acceptable to
the Agent no later than ten (10) days after the end of each
month monthly management information (including traffic
statistics, cash flows, booking reports and outstanding trade
debt) in respect of the Borrower;
(E) the Borrower shall procure that the Earnings Account is opened
and maintained at the bank specified in the definition thereof
in clause 1.2 hereof and shall not keep any accounts with any
bank other than the Agent unless otherwise agreed specifically
with the Agent;
(F) the Borrower shall promptly furnish to the Agent all such
accounts and financial information concerning any one or more
of the Security Parties and the Vessel as the Agent may from
time to time reasonably require including without limiting the
generality of the foregoing cash flow analyses, budgets and
details of the operating costs of the Vessel;
(G) the Vessel, its earnings and the interests of the Agent and/or
the Trustee and/or
<PAGE>
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the Lenders as mortgagees of the Vessel shall be insured with
such underwriters insurance offices and clubs for such amounts
for such risks in such form and upon such conditions as are
satisfactory to the Agent from time to time provided that the
amount of each of the marine and war risks insurances shall
not in any event be less than the greater from time to time of
(i) the market value of the Vessel and (ii) one hundred and
twenty per cent (120%) of the aggregate amount of the Loan,
the Revolving Loan Facility and the Seller's Credit then
outstanding;
(H) the Borrower will not without the prior written consent of the
Agent:-
(i) create or allow to subsist any Encumbrance over any of
its assets or any part thereof save for Permitted
Liens and those created by any of the Security
Documents or the Revolving Loan Securities;
(ii) incur any liability in respect of Borrowed Money
except for the Revolving Loan Facility and unsecured
Borrowed Money subordinated to the Loan hereunder;
(iii) make loans or advances to others (except for loans or
advances made in the ordinary course of business in
connection with the chartering and/or operation and/or
repair of the Vessel);
(iv) except in connection with the chartering and/or
operation and/or repair of the Vessel incur any other
liability to a third party which in the opinion of the
Agent is of a substantial nature;
(v) consolidate with any other company or merge into any
company;
(vi) engage in any business other than the ownership
operation chartering and management of the Vessel;
(vii) guarantee endorse or otherwise become or remain
liable in respect of the obligations of any person
firm or corporation;
(viii) pay any dividends or other distributions or issue any
new shares or
<PAGE>
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transfer any shares;
(ix) sell or otherwise dispose of the Vessel or any share
therein or any other asset (the Agent's consent not
to be unreasonably withheld);
(x) make or allow any alteration to or waiver of the
terms of any one or more of the Subject Documents;
(xi) appoint any manager of the Vessel other than the
Manager;
(xii) change the class, flag or employment of the Vessel as
a passenger cruise ship; or
(xiii) make any acquisitions or investments other than the
regular dry-docking and maintenance of the Vessel
(the Agent's consent not to be unreasonably
withheld);
(I) the Borrower will procure that the amount standing to the
credit of the Earnings Account shall not at any time fall
below two million United States Dollars (USD2,000,000);
(J) the Borrower shall not make any repayment of principal in
respect of the Seller's Credit prior to the full repayment of
the Loan unless:-
(i) the Borrower and the Guarantor evidence full
compliance with this agreement and the Revolving
Credit Facility Agreement for the previous and the
ensuing periods of twelve (12) months by way of cash
flow projections and budgets to the satisfaction of
the Agent; and
(ii) an equivalent amount is paid to the Agent by way of
prepayment of the Loan pursuant to clause 6.5 hereof;
(K) from and after the occurrence of an Event of Default the
Borrower shall not, after receiving written notice from the
Agent to that effect, make any payment of principal or
interest in respect of the Seller's Credit for so long as that
Event of Default is continuing;
(L) the Borrower shall procure that its Debt Service Coverage
Ratio (calculated as
<PAGE>
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set out below, with the first such calculation being made
twelve (12) months after the Drawdown Date and the subsequent
calculations being made at three (3) monthly intervals
thereafter) shall not be less than the ratio specified in item
1 in schedule B hereto (for the period of twelve (12) months
after the Drawdown Date) and the ratio specified in item 2 in
schedule B hereto (for any period thereafter) and for this
purpose the Debt Service Coverage Ratio shall be calculated in
accordance with the following formula:-
EBITDA
--------------------
Financial Expenses
where
"EBITDA" means, for the previous period of twelve (12) months,
the aggregate of:
(i) Net Income (but excluding gains and losses from the
sale of assets or reserves relating thereto and items
classified as extraordinary or non-recurring) from the
Borrower's operations for such period and for this
purpose Net Income means the consolidated net income
of the Borrower as determined in accordance with GAAP;
and
(ii) the aggregate amounts deducted in determining Net
Income for such period in respect of depreciation,
amortisation, taxes, deferred income and interest
expense of the Borrower; and
"Financial Expenses" means, for the previous period of twelve
(12) months, the sum of:
(i) the aggregate principal payable or paid during such
period on any Borrowed Money of the Borrower (other
than the scheduled principal repayment in respect of
the Loan and principal repayments under the Revolving
Loan Facility Agreement to the extent that they were
redrawn during the same period);
<PAGE>
- 33 -
(ii) aggregate interest expense (including, without
limitation, capitalised interest accrued during such
period) of the Borrower for such period; and
(iii) all rent and any capital lease obligations or
operating lease obligations by which the Borrower is
bound which are payable or paid during such period as
calculated in accordance with GAAP and derived from
the then latest accounts of the Borrower;
(M) not later than six (6) months prior to the due date for full
repayment of the Loan the Borrower shall demonstrate to the
Lenders' satisfaction that sufficient cash or committed
facilities are available to enable the Borrower to repay the
Loan in full on the due date therefor;
(N) the Borrower shall provide the Agent with compliance
certificates in relation to the relevant financial covenants
contained in this agreement in the form set out in appendix II
hereto on or before the Drawdown Date and at three (3) monthly
intervals after the Drawdown Date and, for the avoidance of
doubt, the covenant in clause 14.1(L) hereof shall not be
deemed to be a 'relevant financial covenant' for the purposes
of this clause 14.1(N) until the date falling twelve (12)
months after the Drawdown Date;
(O) the Borrower will promptly inform the Agent if any Event of
Default or any event which with the giving of notice and/or
lapse of time would constitute an Event of Default occurs or
if any event occurs which may materially adversely affect its
ability to perform any of its obligations under any one or
more of this agreement, the Security Documents and any other
documents executed pursuant hereto or thereto; and
(P) the Borrower will from time to time at the request of the
Agent execute and deliver to the Agent or procure the
execution and delivery to the Agent of all such documents as
the Agent shall deem desirable in its absolute discretion for
giving full effect to this agreement and for perfecting,
protecting the value of or enforcing any rights or securities
granted to the Agent and/or the Trustee and/or the Lenders
under any one or more of this agreement, the Security
<PAGE>
- 34 -
Documents and any other documents executed pursuant hereto or
thereto.
15. SET-OFF AND SHARING OF PAYMENTS
15.1 The Agent, the Trustee and each of the Lenders are hereby authorised to
combine any and all accounts held by the Borrower with any of them at
any of their respective offices and to apply (without any prior notice)
any credit balance to which the Borrower is then beneficially entitled
on any such account (whether or not that credit balance is then due to
the Borrower) in or towards satisfaction of any sums then due and
payable by the Borrower hereunder. For that purpose the Agent, the
Trustee and each of the Lenders are hereby authorised to use all or
part of that credit balance to buy such other currency or currencies as
may be required to enable any of them to effect that application. The
Agent, the Trustee and the Lenders shall not be obliged to exercise any
of their rights under this clause, which shall be without prejudice and
in addition to any right of set off, combination of accounts, lien or
other rights to which any of them at any time otherwise is entitled
(whether by operation of law, contract or otherwise).
15.2 If pursuant to clause 15.1 hereof or otherwise any Lender shall at any
time receive appropriate or otherwise obtain from any one or more of
the Security Parties any payment on account of principal interest or
other sums due from the Borrower hereunder (which are not due solely to
that Lender under the terms of this agreement) in a greater proportion
than its Contribution then that Lender shall remit via the Agent to
such of the other Lenders as have received a smaller proportion of that
payment than their Contributions such sums as shall ensure that each
Lender receives a proportion of that payment corresponding to its
Contribution and each such remittance shall be treated for the purposes
of this agreement as having been made to the receiving Lender by the
Borrower instead of the Lender by whom such remittance was made
Provided Always That if at any time thereafter that payment is required
by a court of competent jurisdiction to be returned to the Borrower or
any third party each of the Lenders shall return the relevant
percentage thereof.
16. ASSIGNMENT AND PARTICIPATION
16.1 This agreement shall be binding upon and inure to the benefit of the
Agent, the Trustee, the Lenders and each of them and the Borrower and
their respective successors and assigns.
<PAGE>
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16.2 The Borrower may not assign its rights or obligations hereunder without
the prior written consent of the Agent.
16.3 Each of the Lenders may at any time with the prior written consent of
the Agent and the Borrower (such consents not to be unreasonably
withheld and no such consent to be required at all from the Borrower if
an Event of Default has occurred and is subsisting) assign transfer or
grant participations in all or part of its Contribution to the Loan or
any part thereof and its rights and obligations hereunder to any other
bank or financial institution and for this purpose:-
(A) no such consents shall be required from the Agent or the
Borrower if the other bank or financial institution is either
another of the Lenders or a subsidiary company, holding
company or sister company of the relevant Lender;
(B) the Agent, the Trustee and the relevant Lender shall be at
liberty to disclose on a confidential basis to any such
assignee transferee or grantee (or to any potential such
assignee transferee or grantee) all such information
concerning any one or more of the Security Parties, the Vessel
and the Subject Documents as the Agent, the Trustee and the
relevant Lender may deem appropriate; and
(C) the Borrower shall upon demand by the Agent and at the expense
of the relevant Lender execute and deliver to the Agent all
such documents and do all such acts and things as the Agent
may deem necessary or desirable in its absolute discretion for
giving full effect to any such assignment transfer or
participation.
16.4 The Agent and/or the Trustee may at any time signify its or their
intention to resign by giving written notice to the Borrower and the
Lenders provided that such resignation shall not take effect until a
successor Agent and/or Trustee (as the case may be) has been appointed
and has accepted that appointment. After the giving of such notice, a
successor Agent and/or Trustee shall be appointed in accordance with
the relevant provisions of the Deed of Agency and Trust and the Lenders
shall procure that the successor Agent and/or Trustee shall give to the
Borrower written notice of its acceptance of appointment. Upon its
appointment as Agent and/or Trustee, such successor Agent and/or
Trustee shall succeed to and become vested with all the rights
<PAGE>
- 36 -
powers and privileges and duties of the retiring Agent and/or Trustee,
and the retiring Agent and/or Trustee shall be discharged from its
duties and obligations under this agreement.
17. MISCELLANEOUS
17.1 Time shall be of the essence of this agreement but no failure or delay
on the part of the Agent or the Trustee or any one or more of the
Lenders to exercise any power or right hereunder shall operate as a
waiver of such power or right nor shall any single or partial exercise
of any power or right hereunder preclude any other or further exercise
thereof or the exercise of any other power or right hereunder. The
powers and rights provided to the Agent or the Trustee or any one or
more of the Lenders in this agreement are cumulative and shall not
exclude any powers or rights provided to the Agent or the Trustee or
any one or more of the Lenders by law.
17.2 In the event of any of the provisions contained in any one or more of
this agreement, the Security Documents and any other documents executed
pursuant hereto or thereto being invalid, illegal or unenforceable in
any respect under any law, the validity, legality and enforceability of
the remaining provisions herein or therein contained shall not in any
way be affected or impaired thereby.
17.3 Neither the Agent nor the Trustee nor any of the Lenders shall be
liable for any failure to meet its obligations hereunder resulting from
any cause whatsoever beyond its control.
18. NOTICES
18.1 Any notice or other correspondence in connection herewith required to
be sent or given by the Borrower to the Agent or the Trustee or any one
or more of the Lenders shall be sent to the Agent in the English
language at 19 Thomas More Street, London E1 9YW (telex no. 290562
facsimile no. +44 171 709 7001) or to such other address or addresses
as may from time to time be notified by the Agent to the Borrower for
such purpose.
18.2 Any notice or other correspondence in connection herewith required to
be sent or given by the Agent or the Trustee or any one or more of the
Lenders to the Borrower shall be sent to the Borrower in the English
language at c/o Commodore Holdings Limited, 4000 Hollywood Boulevard,
Suite 385-S, Hollywood, Fl 33021, U.S.A.,
<PAGE>
- 37 -
Attention: Chief Financial Officer (facsimile no. +954 921 2147) with
copies to Kathleen L Deutsch, P.A., Broad and Cassel, Miami Center -
Suite 3000, 201 S. Biscayne Boulevard, Miami, Fl 33131, U.S.A.
(facsimile no. +305 373 9443) or to such other address or addresses as
the Borrower may from time to time notify to the Agent in writing and
shall be deemed to have been validly given and received on the date of
dispatch if sent by telex and five (5) days after having been posted if
sent by prepaid first class or airmail post.
19. PROPER LAW AND JURISDICTION
19.1 This agreement shall be governed by and construed in accordance with
the Laws of England and for the exclusive benefit of the Agent, the
Trustee and the Lenders the Borrower hereby irrevocably submits to the
jurisdiction of the High Courts of Justice in England. Such submission
shall not limit the right of the Agent, the Trustee and the Lenders to
commence any proceedings relating to this agreement (in addition or
alternatively) in any other jurisdiction which the Agent deems fit. The
Borrower hereby irrevocably authorises and appoints Consult Marine of
58 London Fruit Exchange, Brushfield Street, London E1 6EP as its agent
in England for the acceptance of service of legal proceedings on it
hereunder.
<PAGE>
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IN WITNESS whereof the parties hereto have executed this agreement the day and
year first above written.
THE LENDERS
MERITA BANK PLC *
Lending Office:-
19 Thomas More Street
London E1W 1YF
By: /s/ Kirsten Kaarre Jensen
-------------------------------------
CHRISTIANIA BANK OG KREDITKASSE ASA *
Lending Office:-
Middelthunsgate 17
0368 Oslo
Norway
By: /s/ Ulv E. Aasland
-------------------------------------
SKANDINAVISKA ENSKILDA BANKEN AB (PUBL) *
Lending Office:-
2 Cannon Street
London EC4M 6XX
By: /s/ Jonathan Pratt
-------------------------------------
THE AGENT
MERITA BANK PLC
By: /s/ Kirsten Kaarre Jensen
-------------------------------------
<PAGE>
- 39 -
THE BORROWER
CROWN CRUISES OF PANAMA, INC.
By: /s/ Jeffrey I. Binder
-------------------------------------
THE TRUSTEE
MERITA BANK PLC
By: /s/ Kirsten Kaarre Jensen
-------------------------------------
All in the presence of:-
EXHIBIT 10.6
CROWN CRUISES OF PANAMA, INC.
- and -
MERITA BANK PLC
-------------------------
SECOND NAVAL MORTGAGE
- on the -
m.v. "CROWN DYNASTY"
-------------------------
Sinclair Roche & Temperley
Royex House
5 Aldermanbury Square
London EC2V 7LE
Tel: 0171 452 4000
Fax: 0171 452 4001
Ref: GFS/242921
<PAGE>
- 2 -
INDEX OF CONTENTS
CLAUSE HEADING PAGE NO.
- ------ ------- --------
1. DEFINITIONS.............................................................2
2. OWNER'S COVENANT TO PAY.................................................5
3. MORTGAGE................................................................6
4. OWNER'S COVENANTS AS TO INSURANCE.......................................7
5. OWNER'S COVENANTS AS TO OPERATION & MAINTENANCE........................12
6. EXPENSES...............................................................18
7. PROTECTION AND MAINTENANCE OF SECURITY.................................18
8. EVENTS OF DEFAULT......................................................19
9. ENFORCEMENT OF RIGHTS..................................................19
10. APPLICATION OF MONEYS..................................................22
11. NO WAIVER..............................................................22
12. POWER OF DELEGATION....................................................22
13. POWER OF ATTORNEY......................................................23
14. FURTHER ASSURANCE......................................................23
15. BENEFIT................................................................23
16. AMOUNT SECURED BY MORTGAGE.............................................24
17. NOTICES................................................................24
18. GOVERNING LAW, SEVERABILITY, ETC. .....................................24
19. MISCELLANEOUS..........................................................25
20. RECORDING OF THIS MORTGAGE.............................................25
<PAGE>
- 3 -
THIS SECOND NAVAL MORTGAGE is made the 28th day of January 2000 by CROWN CRUISES
OF PANAMA, INC. a company incorporated under the laws of Panama with its
registered office at c/o Galindo Arias & Lopez, Scotia Plaza No. 18, Avenida
Federico Boyd & Calle No. 51, Piso 9, 10 & 11, Panama, Republic of Panama ("the
Owner") in favour of MERITA BANK PLC a company incorporated under the laws of
Finland acting through its London branch having its principal place of business
at 19 Thomas More Street, London E1W 1YF ("the Trustee" which expression shall
include its successors and permitted assigns) as trustee for the Beneficiaries.
WHEREAS:-
(A) The Owner is the sole owner of the whole of the motor vessel named
"CROWN DYNASTY" built in Valencia, Spain at Union Naval de Levante duly
documented in the name of the Owner under the laws and flag of the
Republic of Panama under Provisional Patente of Navigation Number
22465-PEXT-5 having radio call letters in the international Code
of Signals 3FJX3 with a gross capacity in tons of 19,089 net capacity
in tons of 8,103 length of 140.08 meters breadth of 22.50 meters and
depth of 7.20 meters number of masts __________ number of bridges
___________ number of main decks and number of ______________ funnels
_____________.
(B) By a loan agreement dated the 24th day of January 2000 made between (1)
the Lenders (as therein defined), (2) Merita Bank Plc ("the Agent") as
agent for the Lenders, (3) the Owner and (4) the Trustee (hereinafter
as the same may from time to time be amended, varied or supplemented
called "the Loan Agreement") the Lenders have agreed to make available
to the Owner a bridge loan of six million seven hundred and twenty
thousand United States Dollars (USD6,720,000) ("the Loan" which
expression shall also mean where the context so requires the amount
thereof from time to time outstanding) on the terms and conditions
therein set forth. The Owner is as at the date hereof justly indebted
to the Lenders in the amount of the Loan repayable with interest
thereon on the terms and conditions hereinafter set out. A copy of the
form of the Loan Agreement in the form executed is attached hereto and
forms an integral part hereof.
(C) Pursuant to the terms and conditions of the Loan Agreement, the Owner
has drawn the whole of the Loan in a single amount.
<PAGE>
- 4 -
(D) The Lenders agreed to advance the Loan on condition that the Owner
should execute and deliver to the Trustee such a second priority
mortgage of the Vessel as hereinafter appears.
(E) In fulfilment of the said condition and in order to secure the payment
to the Trustee and the Beneficiaries of the Outstanding Indebtedness
(as hereinafter defined) and the performance and observance of and
compliance with all the covenants terms and conditions in this Mortgage
contained expressed or implied the Owner has duly authorised the
execution and delivery of this Mortgage and is duly permitted to give
as security for the payment of the Outstanding Indebtedness and the
performance and observance of and compliance with all the said
covenants terms and conditions a second preferred mortgage on the
Vessel under and pursuant to the laws of the Republic of Panama.
(F) By a deed of agency and trust dated January 28, 2000 made between (1)
the Agent, (2) the Trustee and (3) the Lenders it has been agreed that
the benefit of this Mortgage shall be held by the Trustee on trust for
itself, the Agent and the Lenders and its and their respective
successors, assignees and transferees (together "the Beneficiaries").
(G) By a first preferred mortgage of even date herewith ("the Prior
Mortgage") the Owner has mortgaged the Vessel in favour of Merita Bank
Plc ("the Prior Mortgagee") as trustee for itself and others.
NOW THIS MORTGAGE WITNESSETH AND IT IS HEREBY AGREED as follows:-
1. DEFINITIONS
1.1 In this Mortgage unless the context otherwise requires any term defined
in the preamble or recitals hereto has the meaning ascribed to it
therein and:-
"DEFAULT RATE"
means interest at the rate calculated in accordance with clause 4.3 of
the Loan Agreement;
<PAGE>
- 5 -
"EVENT OF DEFAULT"
means any of the events set out in clause 8 hereof;
"INSURANCES"
means all policies and contracts of insurance (which expression
includes all entries of the Vessel in a protection and indemnity or war
risks association) which are from time to time taken out or entered
into in respect of the Vessel and her earnings or otherwise howsoever
in connection with the Vessel with the exception of mortgagees interest
insurances;
"OUTSTANDING INDEBTEDNESS"
means the aggregate of all sums of money whatsoever now or in the
future actually or contingently due or owing to the Trustee and the
Beneficiaries under the Security Documents or any of them;
"PERSON"
includes any body of persons;
"REQUISITION COMPENSATION"
means all moneys or other compensation whatsoever payable by reason of
the requisition for title or other compulsory acquisition of the Vessel
(otherwise than by requisition for hire) or the capture, seizure,
arrest, detention or confiscation of the Vessel by any government or by
persons acting or purporting to act on behalf of any government;
"SECURITY DOCUMENTS"
means the Loan Agreement, this Mortgage and any other document as may
have been or may hereafter be executed to secure the Loan;
"SECURITY PERIOD"
means the period commencing on the date hereof and terminating upon
discharge of the security created by the Security Documents by
irrevocable payment in full of the Outstanding Indebtedness;
"TOTAL LOSS"
means:-
(i) actual or constructive or compromised or agreed or arranged
total loss of the Vessel; or
<PAGE>
- 6 -
(ii) requisition for title or other compulsory acquisition of the
Vessel otherwise than by requisition for hire; or
(iii) capture, seizure, arrest, detention or confiscation of the
Vessel by any government or by persons acting or purporting to
act on behalf of any government unless the Vessel is released
and restored to the Owner from such capture, seizure, arrest
or detention within thirty (30) days after the occurrence
thereof; and
"VESSEL"
means the vessel described in Recital (A) hereto and includes her
engines, machinery, boats, tackle, outfit, spare gear, fuel, consumable
or other stores, belongings and appurtenances whether on board or
ashore and whether now owned or hereafter acquired.
1.2 In clause 4.1(A) hereof:-
"EXCESS RISKS"
means the proportion of claims for general average and salvage charges
and under the ordinary running down clause not recoverable in
consequence of the value at which a vessel is assessed for the purpose
of such claims exceeding her insured value;
"PROTECTION AND INDEMNITY RISKS"
means the usual risks covered by associations that are members of the
International Group of P. & I. Associations including without
limitation pollution risks (whether relating to oil or otherwise
howsoever) and the proportion not recoverable in case of collision
under the ordinary running down clause; and
"WAR RISKS"
includes the risks of mines and all risks excluded from the standard
form of English marine policy by the free of capture and seizure
clause.
1.3 This Mortgage shall be read together with the Loan Agreement.
1.4 Clause headings are inserted for convenience of reference only and
shall be ignored in
<PAGE>
- 7 -
the interpretation of this Mortgage.
2. OWNER'S COVENANT TO PAY
2.1 In consideration of the premises the Owner covenants with the Trustee
as follows:-
(A) to repay the Loan at the time and in the manner specified in
clause 5 of the Loan Agreement;
(B) to pay interest on the Loan at the rate at the times and in
the manner specified in clause 4 of the Loan Agreement;
(C) to pay interest at the Default Rate (both before and after any
judgment) on any sum or sums payable under the Security
Documents which is not paid on the due date;
(D) to pay each and every other sum of money that may be or become
owing to the Beneficiaries or any of them under the terms of
the Security Documents or any of them at the times and in the
manner specified therein;
(E) to pay to and/or indemnify the Beneficiaries or any of them
for such additional amounts as may be necessary in order that
all payments under this Mortgage after deduction or
withholding for or on account of all present or future taxes
(other than corporate taxes on the overall net income of the
Beneficiaries or any of them) imposed by any competent
authority in any jurisdiction relative to the Owner shall be
no less than such payments would have been had there been no
such taxes; and
(F) to perform observe and comply with the obligations, covenants,
terms and conditions set out in this Mortgage.
2.2 Notwithstanding anything to the contrary contained in this clause 2 the
Outstanding Indebtedness shall become immediately payable on demand
upon the happening of any Event of Default.
<PAGE>
- 8 -
3. MORTGAGE
3.1 In consideration of the premises and in order to secure by this
Mortgage the repayment of the Loan plus interest at the rate set forth
in the Loan Agreement and the payment of all such other sums as may
hereafter from time to time and at any other time form part of the
Outstanding Indebtedness and to secure the performance and observance
of and compliance with the covenants terms and conditions herein
contained, the Owner in accordance with the provisions of Chapter V
Title IV of Book Second of the Code of Commerce of the Republic of
Panama and of the pertinent provisions of the Civil Code and other
legislation of the Republic of Panama hereby executes and constitutes a
Second Preferred Naval Mortgage on the whole of the Vessel in favour of
the Trustee (as trustee for the Beneficiaries) subject to the rights of
the Prior Mortgagee under the Prior Mortgage to have and to hold the
same unto the Trustee its successors and assigns forever upon the terms
herein set forth, Provided Only and the condition of these presents is
such that if the Owner its successors and assigns shall pay or cause to
be paid to the Beneficiaries the Outstanding Indebtedness as and when
the same shall become due and payable in accordance with the terms of
the Loan Agreement and this Mortgage and shall observe and comply with
the covenants, terms and conditions in the Loan Agreement and this
Mortgage contained expressed or implied to be performed, observed or
complied with by and on the part of the Owner then these presents and
the rights hereunder shall cease determine and be void and the Trustee
will, at the request and cost of the Owner, execute a release in such
form as the Owner may reasonably require, of the security created by
this Mortgage.
3.2 It is declared and agreed that the security created by this Mortgage
shall be held by the Trustee as a continuing security for the payment
of the Outstanding Indebtedness and the performance and observance of
and compliance with all of the covenants terms and conditions contained
in the Security Documents and that the security so created shall not be
satisfied by any intermediate payment or satisfaction of any part of
the amount hereby and thereby secured and that the security so created
shall be in addition to and shall not in any way be prejudiced or
affected by any collateral or other security now or hereafter held by
the Trustee for all or any part of the moneys hereby and thereby
secured and that every power and remedy given to the Trustee hereunder
shall be an addition to and not a limitation of any and every other
power or remedy vested in the Trustee under any of the other Security
Documents or at law and that all the powers so vested in the Trustee
may be exercised from time to time and as often as the Trustee may deem
expedient.
<PAGE>
- 9 -
4. OWNER'S COVENANTS AS TO INSURANCE
4.1 The Owner covenants with the Trustee and undertakes throughout the
Security Period:-
(A) at the Owner's expense to insure and keep the Vessel insured
in United States Dollars (or such other currency as the
Trustee may approve in writing) against (a) fire and usual
marine risks (including excess risks), (b) war risks, (c)
protection and indemnity risks, (d) oil pollution liability
risks in excess of the limit of cover for oil pollution
liability included within the protection and indemnity risks,
(e) loss of hire and (f) any other risks which the Trustee may
from time to time require;
(B) to effect the Insurances (a) generally in such amounts and
upon such terms as shall from time to time be approved in
writing by the Trustee, through such brokers (hereinafter
called "the approved brokers") and with such insurance
companies underwriters war risks and protection and indemnity
associations as shall from time to time be approved in writing
by the Trustee, and (b) in particular 01. (in respect of all
risks within the protection and indemnity insurances other
than oil pollution risks) in an unlimited amount, or (if
unlimited cover ceases to be available) in the maximum amount
available to the Owner for the Vessel in the market from time
to time; 02. (in respect of oil pollution liability risks
included within the protection and indemnity insurances) in
the maximum amount available to the Owner for the Vessel in
the market from time to time; and 03. (in respect of oil
pollution liability risks in excess of the limit of cover
included in the protection and indemnity insurances) in such
amount and upon such terms as the Trustee may from time to
time require;
(C) to renew the Insurances at least fourteen (l4) days before the
relevant policies or contracts expire and to procure that the
approved brokers shall promptly confirm in writing to the
Trustee as and when each such renewal is effected;
(D) punctually to pay premiums calls contributions or other sums
payable in respect of all the Insurances and to produce all
relevant receipts when so required by the Trustee;
<PAGE>
- 10 -
(E) to arrange for the execution of such guarantees as may from
time to time be required by a protection and indemnity or war
risks association;
(F) to procure that the interests of the Trustee and the
Beneficiaries shall be duly endorsed upon all slips cover
notes policies certificates of entry or other instruments of
insurance issued or to be issued in connection with the
Insurances and in particular, but without limitation, if so
required by the Trustee, (but without liability as between the
Owner and the Trustee for premiums or calls) to procure that
the Trustee be named as co-assured;
(G) subject to the rights of the Prior Mortgagee under the Prior
Mortgage to procure that all such instruments of insurance as
are referred to in sub-clause (F) above shall be deposited
with the Trustee (or with such other person as the Trustee may
from time to time direct) and that the approved brokers
furnish the Trustee with a letter or letters of undertaking in
such form as may be required by the Trustee;
(H) subject to the rights of the Prior Mortgagee under the Prior
Mortgage to procure that the protection and indemnity and/or
war risks associations wherein the Vessel is entered shall (if
so required by the Trustee) furnish the Trustee with a letter
or letters of undertaking in such form as may be required by
the Trustee;
(I) to operate and manage the Vessel or procure that the Vessel is
operated and managed strictly in conformity with the terms of
the instruments of insurance referred to in sub-clause (F)
above (including any warranties express or implied therein)
and in particular:
(i) to ensure that the Vessel's classification,
structure, operation and management are maintained
strictly in conformity with any warranty as to class,
structure, operation or management or any other
provision as to class, structure, operation or
management contained in the Insurances and to this
end to submit the Vessel or cause the Vessel to be
submitted to such periodical or other surveys as may
be required by the Vessel's classification society,
salvage association or otherwise howsoever not less
than fourteen (14) days before the date upon which
such surveys fall due;
<PAGE>
- 11 -
(ii) promptly and fully to implement any and all
requirements or recommendations contained in any
report issued upon or following any of the surveys
referred to in sub-clause (i) above and promptly
after such surveys have been carried out to provide
evidence satisfactory to the Trustee that this has
been done together with confirmation from the
relevant approved brokers that the Vessel complies
with such of the Insurances to which such surveys are
relevant;
(iii) (without prejudice to clauses 4.1(G) and (H) hereof)
subject to the rights of the Prior Mortgagee under
the Prior Mortgage to procure that the approved
brokers furnish the Trustee with a letter of
undertaking in terms satisfactory to the Trustee in
which the approved brokers undertake (inter alia) to
give the Trustee notice of any failure by the Owner
to comply with any warranty as to the Vessel's class
or structure;
(iv) to comply strictly with the requirements of any
legislation relating to pollution or protection of
the environment which may from time to time be
applicable to the Vessel in any jurisdiction in which
the Vessel shall trade and in particular (if the
Vessel is to trade in the United States of America
and Exclusive Economic Zone (as defined in the Act))
to comply strictly with the requirements of the
United States Oil Pollution Act 1990 ("the Act") and
before any such trade is commenced and during the
entire period during which such trade is carried on:-
(a) to pay any additional premiums required to
maintain protection and indemnity cover for
oil pollution up to the limit available to
the Owner for the Vessel in the market;
(b) to make all such quarterly or other voyage
declarations as may from time to time be
required by the Vessel's protection and
indemnity association in order to maintain
such cover, and promptly to deliver to the
Trustee copies of such declarations;
(c) to submit the Vessel to such additional
periodic, classification, structural or
other surveys which may be required by the
Vessel's protection and indemnity insurers
to maintain cover for
<PAGE>
- 12 -
such trade and promptly to deliver to the
Trustee copies of reports made in respect
of such surveys;
(d) to implement any recommendations contained
in the reports issued following the surveys
referred to in sub-clause (c) above within
the time limit specified therein, and
provide evidence satisfactory to the Trustee
that the protection and indemnity insurers
are satisfied that this has been done; and
(e) in addition to the foregoing (if such trade
is in the United States of America and
Exclusive Economic Zone):
(01) to obtain and retain a certificate
of financial responsibility under
the Act in form and substance
satisfactory to the United States
Coast Guard and to provide the
Trustee with a copy thereof;
(02) to procure that the protection and
indemnity insurances do not contain
a US Trading Exclusion Clause or
any other provision analogous
thereto and to provide the Trustee
with evidence that this is so; and
(03) strictly to comply with any
operational or structural
regulations issued from time to
time by any relevant authorities
under the Act so that at all times
the Vessel falls within the
provisions which limit strict
liability under the Act for oil
pollution;
(v) before allowing the Vessel to enter or trade to any
zone which is declared a war zone or which is
rendered dangerous by reason of hostility in any part
of the world (whether war be declared or not) to
effect such special insurance cover as the Trustee
may require; and
(vi) to notify the Trustee forthwith by letter or in case
of urgency by telex of any requirement or
recommendation made by any insurer or
<PAGE>
- 13 -
classification society which has not been complied
with prior to fourteen (14) days before the date by
which it is required to be complied with;
(J) to apply all sums receivable in respect of the Insurances as
are paid to the Owner for the purpose of making good the loss
and fully repairing all damage in respect whereof the
insurance moneys shall have been received;
(K) not to make any alteration which would or could reasonably be
expected to have a material adverse effect on the rights or
interest of the Trustee and/or the Beneficiaries to any of the
terms in any of the instruments of insurance referred to in
sub-clause (F) above which have been approved by the Trustee
and not to make, do, consent or agree to any act or omission
which would or might render any such instrument of insurance
invalid, void, voidable or unenforceable or render any sum
payable thereunder repayable in whole or in part;
(L) not without the prior approval of the Trustee to settle,
compromise or abandon any claim under the Insurances for Total
Loss or for a major casualty; and
(M) to indemnify the Trustee and the Beneficiaries fully forthwith
upon demand for any and all costs and expenses incurred by the
Trustee and/or the Beneficiaries from time to time:
(i) in effecting for the benefit of the Trustee and/or
the Beneficiaries in such amount, upon such terms,
through such insurance brokers and with such
insurance company or underwriter as the Trustee shall
in its sole discretion elect (i) a mortgagee's
interest insurance policy on the Vessel and (ii) an
insurance policy against the possible consequences of
pollution involving the Vessel, including without
limitation, the risk of expropriation or
sequestration of the Vessel, the imposition of a lien
or encumbrance of any kind having priority over this
Mortgage or a claim against the Vessel exceeding the
amount receivable in respect of pollution under the
Vessel's protection and indemnity insurances; and
<PAGE>
- 14 -
(ii) in obtaining from time to time a report or reports on
the adequacy of the Insurances from an insurance
adviser appointed by the Trustee.
4.2 The Trustee shall be entitled from time to time to review the terms of
clause 4.1 hereof in order to provide for changes occurring after the
date of this Mortgage in legislation or circumstances affecting the
Owner, the Vessel, the Insurances, the laws of any jurisdiction or any
other matters which the Trustee deems relevant, and to modify its
requirements in respect of the Insurances in the light of such changes.
Any such modification, once notified in writing by the Trustee to the
Owner shall be binding on the Owner and take effect as an amendment to
clause 4.1 hereof.
5. OWNER'S COVENANTS AS TO OPERATION & MAINTENANCE
5.1 The Owner covenants with the Trustee and undertakes throughout the
Security Period:-
(A) to keep the Vessel registered as a Panamanian ship and not to
do or suffer to be done anything whereby such registration may
be forfeited or imperilled;
(B) not (without the previous consent in writing of the Trustee)
to make any modification to the Vessel which would result in
any substantial change in the structure type or speed of the
Vessel;
(C) at all times to maintain and preserve the Vessel in good
working order and repair so as to maintain the highest class
available to vessels of her type and so that the Vessel is in
every respect seaworthy and in good operating condition and to
maintain and preserve the Vessel in such good working order
and condition as to comply with the requirements of the
Vessel's insurers and of the laws, regulations and
requirements (statutory or otherwise) from time to time
applicable to vessels registered under the laws and flag of
the Republic of Panama and if so required with the
requirements of the laws and government of any State colony
country province or dependency where the Vessel may trade and
to renew and replace all parts and appurtenances thereof when
and as they shall be worn out damaged lost or destroyed by
others of a similar nature and of at least equal quality;
(D) to permit the Trustee or to procure that the Trustee be
permitted by surveyors or other persons appointed by it in
that behalf to board the Vessel at all
<PAGE>
- 15 -
reasonable times for the purpose of inspecting her condition
and her class or other records or for the purpose of
satisfying themselves in regard to proposed or executed
repairs and to afford all proper facilities for such
inspections;
(E) to pay and discharge or to cause to be paid and discharged all
debts damages and liabilities whatsoever which have given or
may give rise to maritime or possessory liens on or claims
enforceable against the Vessel and in event of arrest of the
Vessel pursuant to legal process or in event of her detention
in exercise or purported exercise of any such lien as
aforesaid to procure the release of the Vessel from such
arrest or detention forthwith upon receiving notice thereof by
providing bail or otherwise as the circumstances may require;
(F) not to employ the Vessel or suffer her employment in any trade
or business which is forbidden by international law or is
otherwise illicit or in carrying illicit or prohibited goods
or in any manner whatsoever which renders her liable to
condemnation in a Prize Court or to destruction seizure or
confiscation and in event of hostilities in any part of the
world (whether war be declared or not) not to employ the
Vessel or suffer her employment in carrying goods which are or
may be declared contraband or to enter or trade to any zone
which is declared a war zone or which is rendered dangerous by
reason of such hostilities unless the Trustee shall have first
given its consent in writing;
(G) to take all reasonable precautions to prevent any
infringements of any anti drug legislation in any jurisdiction
in which the Vessel shall trade and in particular (if the
Vessel is to trade in the United States of America) to take
all reasonable precautions to prevent any infringements of the
Anti-Drug Abuse Act of 1986 of the United States of America
(as the same may be amended and/or re-enacted from time to
time hereafter) and for this purpose to enter into a "Carrier
Initiative Agreement" with the United States' Customs Service
and to procure that the same or a similar agreement is
maintained in full force and effect and that the Owner's
obligations thereunder are performed in respect of the Vessel;
(H) to comply with all laws, regulations, conventions and
agreements whatsoever
<PAGE>
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applicable to the Vessel in any jurisdiction in which the
Vessel shall trade relating to pollution or protection of the
environment howsoever;
(I) promptly to furnish to the Trustee all such information as it
may from time to time reasonably require regarding the Vessel
her employment position and engagements particulars of all
towages and salvages and copies of all charters and other
contracts for her employment or otherwise howsoever concerning
her;
(J) to notify the Trustee forthwith by letter or in case of
urgency by telex of:-
(i) any accident to the Vessel involving repairs the cost
whereof will or is likely to exceed one million five
hundred thousand United States Dollars (USD1,500,000)
(or the equivalent in any other currency);
(ii) any occurrence in consequence whereof the Vessel has
become or is likely to become a Total Loss;
(iii) any requirement or recommendation made by any
competent authority which has not been complied with
prior to fourteen (14) days before the date by which
it is required to be complied with; and
(iv) any arrest of the Vessel or the exercise or purported
exercise of any lien on the Vessel or her earnings;
(K) promptly to pay all tolls dues and other outgoings whatsoever
in respect of the Vessel and as and when the Trustee may so
require to furnish satisfactory evidence that the wages and
allotments and insurance and pension contributions of the
Master and crew are being regularly paid and that all
deductions from crew's wages in respect of any tax liability
are being properly accounted for and that the Master has no
claim for disbursements other than those incurred by him in
the ordinary course of trading on the voyage then in progress;
(L) not without the previous consent of the Trustee in writing
(which the Trustee shall have full liberty to withhold) to let
the Vessel:-
(i) on demise charter for any period;
<PAGE>
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(ii) by any time or consecutive voyage charter for a term
which exceeds or which by virtue of any optional
extensions therein contained is likely to exceed
Thirteen (l3) months' duration;
(iii) on terms whereby more than Two (2) months' hire (or
the equivalent) is payable in advance; or
(iv) below the market rate prevailing at the time when the
Vessel is fixed;
(M) not without the previous consent in writing of the Trustee
(and then only subject to such terms as the Trustee may
impose) to mortgage charge or otherwise assign the Vessel or
any share therein or to suffer the creation of any such
mortgage charge or assignment to or in favour of any person
other than the Trustee;
(N) not without the previous consent in writing of the Trustee to
sell or agree to sell or otherwise dispose of the Vessel or
any share therein or change the flag of the Vessel;
(O) not to put the Vessel into the possession of any person for
the purpose of work being done upon her in an amount exceeding
or likely to exceed one million five hundred thousand United
States Dollars (USD1,500,000) (or the equivalent in any other
currency) unless:-
(i) in the case of damage repairs to the Vessel, the
Trustee is satisfied that the cost of such repairs
(other than any deductible) is covered by the
Insurances; or
(ii) in the case of a scheduled drydocking the Trustee is
satisfied that adequate financial provision has been
made for payment in respect thereof; or
(iii) the Trustee is satisfied that the person into whose
possession the Vessel is to be delivered has agreed
to waive any repairer's or similar
<PAGE>
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possessory lien for work carried out to the Vessel by
such person;
(P) to keep proper books of account in respect of the Vessel and
her earnings and as and when required by the Trustee to make
such books available for inspection on behalf of the Trustee;
(Q) to comply with all the requirements and formalities under any
applicable legislation of the Republic of Panama necessary to
perfect this Mortgage as a valid and enforceable second
preferred mortgage upon the Vessel and to furnish to the
Trustee from time to time such evidence as the Trustee may
reasonably request to satisfy itself with respect to the
Owner's compliance with the provisions of this sub-clause;
(R) to place and retain a copy of this Mortgage certified by the
appropriate Panamanian authorities with the Vessel's papers on
board the Vessel and any other certificates or other documents
required by law and to cause each such certified copy and such
papers to be brought to the attention of the master for the
time being of the Vessel and to be exhibited on demand to any
persons having business with the Vessel or to any
representative of the Trustee;
(S) to comply, or procure that the operator of the Vessel will
comply, with the International Management Code for the Safe
Operation of Ships and for Pollution Prevention adopted by the
International Maritime Organisation (as the same may be
amended from time to time) ("the ISM Code") or any replacement
of the ISM Code and in particular, without prejudice to the
generality of the foregoing, as and when required to do so by
the ISM Code and at all times thereafter, (i) to hold, or
procure that the operator of the Vessel holds, a valid
Document of Compliance (being a document issued to a vessel
operator as evidence of its compliance with the requirements
of the ISM Code) duly issued to the Owner or the operator (as
the case may be) pursuant to the ISM Code and a valid Safety
Management Certificate (being a document issued to a vessel as
evidence that the vessel operator and its shipboard management
operate in accordance with an approved structured and
documented system enabling the personnel of that vessel
operator to implement effectively the safety and environmental
protection policy of that vessel operator) duly issued to the
Vessel pursuant to the ISM Code, (ii) to provide the Trustee
with copies of any such Document of Compliance and Safety
Management Certificate as soon as the same are issued and
(iii) to keep,
<PAGE>
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or procure that there be kept, on board the Vessel a copy of
any such Document of Compliance and the original of any such
Safety Management Certificate; and
(T) to procure that the Vessel (including, without limitation, all
computer systems, all systems and equipment containing
embedded microchips (including leased systems and equipment)
and any other systems, equipment or parts of the Vessel
whatsoever whose proper functioning or operation is capable of
being affected by the incorrect processing, storing,
calculation or recognition of dates, together with all
software and data in connection with any of the foregoing)
shall at all times comply with the requirements of Year 2000
Conformity as defined in "A DEFINITION OF YEAR 2000 CONFORMITY
REQUIREMENTS" issued by the British Standards Institution (BSI
DISC PD2000-1:1998) or such later reviewed, revised or amended
version thereof as may be published by the British Standards
Institution from time to time (in which case the later version
shall be the relevant one for the purposes of this clause).
6. EXPENSES
6.1 The Owner undertakes to pay to the Trustee on demand all moneys
whatsoever which the Trustee and/or the Beneficiaries shall or may
expend be put to or become liable for in or about the protection
maintenance or enforcement of the security created by this Deed and the
other Security Documents or in or about the exercise by the Trustee
and/or the Beneficiaries of any of the powers vested in it or them
under this Deed or under any of the other Security Documents and to pay
interest thereon at the Default Rate from the date of demand until the
date of actual receipt (whether before or after any relevant judgment).
6.2 The Owner undertakes to pay on demand to the Trustee (or as it may
direct) the amount of all investigation and legal expenses of any kind
whatsoever stamp duties (if any) registration fees and any other
charges incurred by the Trustee and/or the Beneficiaries in connection
with the preparation completion and registration of the Security
Documents or otherwise in connection with the Outstanding Indebtedness
and the security therefor.
<PAGE>
- 20 -
7. PROTECTION AND MAINTENANCE OF SECURITY
7.1 The Trustee shall without prejudice to its other rights and powers
hereunder be entitled (but not bound) at any time and as often as may
be necessary to take any such action as it may in its absolute
discretion think fit for the purpose of protecting the security created
by this Deed and the other Security Documents and each and every
expense or liability so incurred by the Trustee and/or the
Beneficiaries in or about the protection of the security shall be
repayable to the Trustee by the Owner on demand together with interest
thereon at the Default Rate from the date of demand until the date of
actual receipt whether before or after any relevant judgment.
7.2 Without prejudice to the generality of the foregoing:-
(A) if the provisions of clause 4.1 hereof or any of them are not
complied with the Trustee shall be at liberty to effect and
thereafter to maintain all such insurances upon the Vessel as
in its discretion it may think fit;
(B) if the provisions of clause 5.1(C) and 5.1(D) hereof or any of
them are not complied with the Trustee shall be at liberty to
arrange for the carrying out of such repairs and/or surveys as
it deems expedient or necessary; and
(C) if the provisions of clause 5.1(E) hereof or any of them are
not complied with the Trustee shall be at liberty to pay and
discharge all such debts, damages and liabilities as are
therein mentioned and/or to take any such measures as it deems
expedient or necessary for the purpose of securing the release
of the Vessel,
and each and every expense or liability so incurred by the Trustee
and/or the Beneficiaries shall be recoverable from the Owner as
provided in clause 7.1 hereof together with interest thereon at the
Default Rate.
8. EVENTS OF DEFAULT
8.1 Upon the happening of any of the following events the Lenders shall
cease to be under any further obligation to make the Loan available and
the Outstanding Indebtedness shall immediately become payable on
demand:-
<PAGE>
- 21 -
(A) the happening of any of the events of default specified in
clause 11.1 of the Loan Agreement; or
(B) anything is done or suffered or omitted to be done by the
Owner which in the reasonable opinion of the Trustee has
imperilled or is likely to imperil the security created by the
Security Documents.
9. ENFORCEMENT OF RIGHTS
9.1 Upon demand being made for payment of the Outstanding Indebtedness
under clause 8 hereof interest shall accrue thereon at the Default Rate
from the date of demand until the date of payment (as well after as
before judgment) and the security created by this Mortgage shall be
enforceable so that the Trustee, subject to the rights of the Prior
Mortgagee under the Prior Mortgage, shall be entitled as and when it
may see fit to put into force and exercise all the powers possessed by
it as mortgagee of the Vessel and in particular:-
(A) to exercise all rights and remedies in foreclosure and
otherwise given to mortgagees by the provisions of Article
1527 of the Code of Commerce and any other legislation or code
affecting the same;
(B) to bring suit at law in equity or in admiralty as it may be
advised to recover judgment for any and all amounts due
hereunder and collect the same out of any and all property of
the Owner whether covered by this Mortgage or otherwise;
(C) to take and enter into possession of the Vessel wherever the
same may be without legal process and (if it has acted in good
faith) without being responsible for loss or damage and the
Owner or other person in possession forthwith upon demand of
the Trustee shall surrender to the Trustee possession of the
Vessel and the Trustee, without being responsible for loss or
damage where it has acted in good faith may hold lay up lease
charter operate or otherwise use the Vessel for such time and
upon such terms as it may deem to be for its best advantage
and for that purpose may employ such agents managers masters
officers crews surveyors and servants as it shall think fit
and
<PAGE>
- 22 -
may repair and reclass the Vessel accounting only for the net
profits if any arising from such use and charging upon all
receipts from such use or from the sale of the Vessel by court
proceeds or pursuant to sub-clause (G) below all costs
expenses charges damages or losses by reason of such use and
if at any time the Trustee shall avail itself of the right
herein given it to take the Vessel and shall take her the
Trustee shall have the right to dock the Vessel for a
reasonable time at any place at the cost and expense of the
Owner;
(D) to require that all policies contracts and other records
relating to the Insurances (including details of and
correspondence concerning outstanding claims) be forthwith
delivered to such adjusters and/or brokers and/or other
insurers as the Trustee may nominate;
(E) to collect recover compromise and give a good discharge for
all claims then outstanding or thereafter arising under the
Insurances or any of them and to take over or institute (if
necessary using the name of the Owner) all such proceedings in
connection therewith as the Trustee in its absolute discretion
thinks fit and to permit any brokers through whom collection
or recovery is effected to charge the usual brokerage
therefor;
(F) to discharge compound release or compromise liens and/or
claims in respect of the Vessel which have given or may give
rise to any charge or lien on the Vessel or which are or may
be enforceable by proceedings against the Vessel;
(G) without being responsible for loss or damage (if it has acted
in good faith) sell the Vessel at any place and at such time
as the Trustee may specify and in such manner and on such
terms and conditions as the Trustee may deem advisable free
from any claim by the Owner in admiralty in equity at law or
by statute except that notice of sale will be given by
publication in a newspaper of general circulation in the city
of Panama, Republic of Panama, not less than twenty (20)
calendar days in advance of the sale to satisfy the
requirement of notice of sale to the Owner and the other
registered mortgagees, if any, contained in Article 1527 of
the Panama Code of Commerce. Such notice shall be necessary
only in respect of the initial date of sale and should an
adjournment of the sale be deemed necessary, a new date, time
and place for the sale may be set by the Trustee at the time
of the adjournment without need for any further notice. In the
event that the Vessel is sold under any power contained herein
the Owner will if and when required by the Trustee execute
<PAGE>
- 23 -
such form of conveyance of the Vessel as the Trustee may
direct or approve; and
(H) to manage insure maintain and repair the Vessel and to employ
sail or lay up the Vessel in such manner and for such period
as the Trustee in its discretion deems expedient and for the
purposes aforesaid the Trustee shall be entitled to do all
acts and things incidental or conducive thereto and in
particular to enter into such arrangements respecting the
Vessel her insurance management maintenance repair
classification and employment in all respects as if the
Trustee were the owner of the Vessel and without being
responsible for any loss thereby incurred in the absence of
gross negligence or wilful default on the part of the Trustee,
Provided Always that upon any sale of the Vessel or any share therein
by the Trustee pursuant to sub-clause (G) above the purchaser shall not
be bound to see or enquire whether the Trustee's power of sale has
arisen in the manner herein provided and the sale shall be deemed to be
within the power of the Trustee and the receipt of the Trustee for the
purchase money shall effectively discharge the purchaser who shall not
be concerned with the manner of application of the proceeds of sale or
be answerable therefor in any way.
10. APPLICATION OF MONEYS
10.1 All moneys received by the Trustee in respect of a sale of the Vessel
or any share therein or otherwise pursuant to the provisions of this
Mortgage and all moneys received and retained by the Trustee in respect
of the Insurances and Requisition Compensation pursuant to this
Mortgage shall be applied by the Trustee in accordance with the
relevant provisions of clause 10 of the Loan Agreement.
11. NO WAIVER
11.1 No delay or omission of the Trustee or the Beneficiaries to exercise
any right or power vested in it or them under the Security Documents or
any of them shall impair such right or power or be construed as a
waiver of or an acquiescence in any default by the Owner and no express
waiver given by the Trustee and/or the Beneficiaries in
<PAGE>
- 24 -
relation to any default by the Owner or breach by the Owner of any of
its obligations under this Mortgage shall prejudice the right of the
Trustee under this Mortgage arising from any subsequent default or
breach (whether or not such subsequent default or breach is of a nature
different from the previous default or breach) nor shall the giving by
the Trustee and/or the Beneficiaries of any consent to the doing of any
act which by the terms of this Mortgage requires the consent of the
Trustee prejudice the right of the Trustee to give or withhold as it
sees fit is consent to the doing of any other similar act.
12. POWER OF DELEGATION
12.1 The Trustee shall be entitled at any time and as often as may be
expedient to delegate all or any of the powers and discretions vested
in it by the Security Documents or any of them (including the power
vested in it by virtue of clause 13 hereof) in such manner upon such
terms and to such persons as the Trustee in its absolute discretion may
think fit.
13. POWER OF ATTORNEY
13.1 The Owner irrevocably appoints the Trustee as its attorney for the
duration of the Security Period for the purpose of doing in its name
all acts which the Owner itself could do in relation to the Vessel,
Provided However that such power shall not be exercisable by or on
behalf of the Trustee unless the security created by this Mortgage has
become enforceable pursuant to clause 9 hereof and shall in any event
be subject to the rights of the Prior Mortgagee under the Prior
Mortgage.
13.2 The exercise of such power by or on behalf of the Trustee shall not put
any person dealing with the Trustee upon any enquiry as to whether the
security created by this Mortgage has become enforceable pursuant to
clause 9 hereof nor shall such person be in any way affected by notice
that the security has not become enforceable and the exercise by the
Trustee of such power shall be conclusive evidence of its right to
exercise the same.
14. FURTHER ASSURANCE
14.1 The Owner further undertakes at its own expense to execute sign perfect
do and (if required) register every such further assurance document act
or thing as in the opinion of the Trustee may be necessary or desirable
for the purpose of more effectually
<PAGE>
- 25 -
mortgaging and charging the Vessel or perfecting the security
constituted by this Mortgage or contemplated by the other Security
Documents.
15. BENEFIT
15.1 The Owner hereby acknowledges and agrees that the benefit of this
Mortgage shall be held by the Trustee on trust for the Beneficiaries
and the Owner hereby covenants that this Mortgage shall remain in full
force and effect and shall fully secure all the Beneficiaries.
16. AMOUNT SECURED BY MORTGAGE
16.1 A certificate submitted by the Trustee to the Public Registry Office in
Panama or to any court of law or public authority as to the amount due
or to become due from the Owner under this Mortgage shall in the
absence of manifest error be conclusive and binding on the Owner for
all purposes.
17. NOTICES
17.1 The provisions of clause 18 of the Loan Agreement shall apply mutatis
mutandis in respect of any certificate, notice or demand given or made
under this Mortgage.
18. GOVERNING LAW, SEVERABILITY, ETC.
18.1 This Mortgage shall be construed and enforceable in accordance with the
laws of the Republic of Panama.
18.2 The Owner agrees that the Trustee shall have liberty but shall not be
obliged to take any proceedings in the courts of any country to protect
or enforce the security hereby constituted or to enforce any provisions
of the Security Documents or to recover payment of the Outstanding
Indebtedness and for the purpose of any proceeding for the enforcement
of the security created by this Mortgage and/or the other Security
Documents the Owner hereby submits to the jurisdiction of the courts of
any country of the choice of the Trustee.
<PAGE>
- 26 -
18.3 If any provision in this Mortgage or any other of the Security
Documents is or becomes invalid or unenforceable under any applicable
law the provisions thereof shall in all other respects remain in full
force and effect and the provision in question shall be ineffective to
the extent (but only to the extent) of its nonconformity with the
requirement of the applicable law and if it is competent to the parties
to waive any requirements which would otherwise operate as aforesaid
those requirements are hereby waived to the extent permitted by such
law to the end that the Mortgage and the other Security Documents shall
be valid binding and enforceable in accordance with their respective
terms.
18.4 Each and every power and remedy herein given to the Trustee shall be
cumulative and shall be in addition to every other power and remedy
herein given or now or hereafter existing at law in equity admiralty or
by statute and each and every power and remedy whether herein given or
otherwise existing may be exercised from time to time and as often and
in such order as may be deemed expedient by the Trustee and the
exercise or the beginning of the exercise of any power or remedy shall
not be construed to be a waiver of the right to exercise at the same
time or thereafter any other power or remedy.
19. MISCELLANEOUS
19.1 This Mortgage may be executed in any number of counterparts each of
which shall be an original but such counterparts shall together
constitute but one and the same instrument.
19.2 The English text of this Mortgage is the authentic text and in the
event of any differences arising on translation recourse shall be had
to the English text.
20. RECORDING OF THIS MORTGAGE
20.1 The parties hereby confer a special power of attorney on the firm of
lawyers named Quijano & Associates of the City of Panama in the
Republic of Panama empowering such firm of lawyers to take all
necessary steps to record this instrument of mortgage and the
prohibitions contained in clauses 5.1(M) and (N) hereof and a
certificate pursuant to clause 15 hereof in the appropriate registries
in the City of Panama in accordance with the laws of the Republic of
Panama with full power of substitution in respect of the special power
of attorney herein granted.
<PAGE>
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IN WITNESS whereof this Mortgage has been executed the day and year first above
written.
SIGNED SEALED and DELIVERED )
as a DEED )
by )
acting by )
CROWN CRUISES OF PANAMA, INC. )
its duly appointed )
/s/ Jeffrey I. Binder )
- ---------------------------------------
in the presence of:- )
<PAGE>
- 28 -
ACCEPTANCE OF MORTGAGE
The Undersigned mortgagee MERITA BANK PLC a corporation organised and subsisting
under the laws of Finland does hereby accept the foregoing Mortgage executed in
its favour by CROWN CRUISES OF PANAMA, INC., a corporation incorporated
according to the laws of Panama on the 29th day of October, 1999 covering the
Panamanian flag Vessel m.v. "CROWN DYNASTY" and does hereby accept the said
Mortgage in all respects and agrees to all terms and conditions of the said
Mortgage
Dated the 28th day of January Two thousand.
SIGNED SEALED and DELIVERED )
as a DEED )
by MERITA BANK PLC )
acting by )
/s/ Kirsten Kaarre Jensen )
- ---------------------------------------
its duly appointed )
Attorney )
in the presence of:- )
EXHIBIT 10.7
COMMODORE HOLDINGS LIMITED
-and-
MERITA BANK PLC
-------------------------------
GUARANTEE AND INDEMNITY
relating to obligations of
Crown Cruises of Panama, Inc.
re USD6,720,000 bridge loan
-------------------------------
Sinclair Roche & Temperley
Royex House
5 Aldermanbury Square
London EC2V 7LE
Tel: 0171 452 4000
Fax: 0171 452 4001
Ref: GFS/242921
<PAGE>
- 2 -
INDEX OF CONTENTS
CLAUSE HEADING PAGE NO.
- ------ ------- --------
1. DEFINITIONS AND CONSTRUCTION.............................................2
2. REPRESENTATIONS AND WARRANTIES...........................................3
3. GUARANTEE AND INDEMNITY..................................................4
4. EXPENSES.................................................................5
5. CONTINUING GUARANTEE.....................................................5
6. UNDERTAKINGS.............................................................6
7. ENFORCEMENT.............................................................12
8. CURRENCY INDEMNITY......................................................14
9. BENEFIT.................................................................15
10. MISCELLANEOUS...........................................................15
11. NOTICES.................................................................16
12. GOVERNING LAW AND JURISDICTION..........................................17
SCHEDULE A : FINANCIAL FIGURES, RATIOS AND PERCENTAGES........................18
FORM OF COMPLIANCE CERTIFICATE ...............................................20
<PAGE>
- 3 -
THIS GUARANTEE AND INDEMNITY is given the 24th day of January 2000
BY:-
(1) COMMODORE HOLDINGS LIMITED, a company incorporated and registered under
the laws of Bermuda whose registered office is at c/o Francis & Forest,
Corner House, 20 Parliament Street, Hamilton HM12, Bermuda (the
"Guarantor" which expression shall include the successors and permitted
assigns of the Guarantor) in favour of:-
(2) MERITA BANK PLC, a company incorporated under the laws of Finland
acting through its London branch having its principal place of business
at 19 Thomas More Street, London E1W 1YF (the "Trustee" which
expression shall include its successors and assigns) as trustee for the
Beneficiaries.
WHEREAS:
(A) By a loan agreement dated January 24, 2000 made between (1) the Lenders
(as therein defined), (2) Merita Bank Plc (the "Agent") as agent for
the Lenders, (3) Crown Cruises of Panama, Inc. (the "Borrower") and (4)
the Trustee the Lenders agreed to make available to the Borrower a loan
of six million seven hundred and twenty thousand United States Dollars
(USD6,720,000) pursuant to and subject to the terms and conditions
therein contained.
(B) In order to induce the Lenders to enter into the Agreement and to
advance the Loan to be advanced thereunder and as a condition precedent
thereto the Guarantor has agreed to give the guarantee and indemnity
herein contained.
(C) By a deed of agency and trust dated January 28, 2000 made between (1)
the Agent, (2) the Trustee and (3) the Lenders it has been agreed that
the benefit of this Guarantee and Indemnity shall be held by the
Trustee on trust for itself, the Agent and the Lenders and its and
their respective successors, assignees and transferees (together "the
Beneficiaries" and individually "Beneficiary").
NOW THIS DEED WITNESSETH as follows:-
1. DEFINITIONS AND CONSTRUCTION
<PAGE>
- 4 -
1.1 In this Guarantee and Indemnity unless the context otherwise requires:-
"AGREEMENT"
means the loan agreement referred to in Recital (A) above as
supplemented by any amendment or supplement thereto which may from time
to time be agreed to by the Trustee, the Beneficiaries and the
Borrower;
"DEFAULT RATE"
means the rate of interest calculated in accordance with clause 4.3 of
the Agreement;
"INDEBTEDNESS"
means the Loan together with all interest accrued thereon and all other
moneys, costs, fees and expenses whatsoever which from time to time may
be or become owing or due and payable to the Trustee or any one or more
of the Beneficiaries pursuant to the Agreement or any of the Security
Documents;
"LOSS"
means any and all losses, costs, expenses, damages, claims, demands,
rights of set-off and/or counterclaim incurred by the Trustee or any
one or more of the Beneficiaries in respect of or in connection with
the Agreement and/or the Security Documents or any liability arising
therefrom;
"SECURED OBLIGATIONS"
means all covenants, agreements, warranties, conditions and provisions
expressed or implied on the part of the Borrower to be performed,
observed or complied with under the Agreement including, without
limitation, the due and punctual payment of the principal sum and all
interest and other moneys expressed to be payable by the Borrower in
accordance with the terms of the Agreement;
"THIS GUARANTEE"
means this Guarantee and Indemnity.
1.2 Unless otherwise defined herein or the context otherwise requires,
words and expressions defined in the Agreement shall have the same
meanings herein. Clause headings are inserted for convenience only and
shall be ignored in the interpretation
<PAGE>
- 5 -
of this Guarantee.
2. REPRESENTATIONS AND WARRANTIES
2.1 The Guarantor hereby represents and warrants to the Trustee that as of
the date hereof and (save in respect of sub-paragraph (B)(ii) below) as
continuing warranties until all of the Indebtedness shall have been
paid and discharged in full:-
(A) The Guarantor has full power and authority to make and perform
this Guarantee and the same constitutes the legal, valid and
binding obligations of the Guarantor enforceable in accordance
with its terms;
(B) The making and performance by the Guarantor of this Guarantee
will in no way exceed the powers granted to the Guarantor by,
or violate in any respect any provision of (i) any mortgage,
charge, deed, contract or other undertaking or instrument to
which the Guarantor is a party or which is binding on the
Guarantor or any of the assets of the Guarantor; or (ii) any
law or regulation or any order or decree of any governmental
authority, agency or court; or (iii) the Memorandum and/or
Articles of Association (or equivalent corporate documents) of
the Guarantor;
(C) All consents, licences, approvals or authorisations which are
required in connection with the execution, validity,
performance or enforceability of this Guarantee have been
obtained and are and will continue to be valid and subsisting;
(D) Save as disclosed to the Trustee in writing, the Guarantor is
not in default under any agreement to which the Guarantor is a
party or by which the Guarantor may be bound, nor in respect
of any financial commitment or obligation;
(E) The Guarantor is not engaged in litigation or arbitration
before any court or before any tribunal which might if
determined against the Guarantor have a material adverse
effect on the financial condition of the Guarantor and there
is no claim against the Guarantor which, with the passage of
time might result in any such litigation or arbitration; and
(F) The Guarantor has received a copy of the Agreement and
approves of and
<PAGE>
- 6 -
agrees to the terms and conditions thereof.
3. GUARANTEE AND INDEMNITY
3.1 The Guarantor hereby unconditionally and irrevocably:-
(A) guarantees the due and punctual performance and observance of
and compliance with the Secured Obligations by the Borrower in
accordance with the terms of the Agreement and the Guarantor
hereby covenants that, if any amount of principal or interest
or other moneys payable by the Borrower under the Agreement
shall not be paid when the same shall be due and payable,
whether on maturity or otherwise, the Guarantor will,
forthwith on demand, make such payment, or cause such payment
to be made, to the Trustee (as trustee for the Beneficiaries)
in the manner specified by the Trustee together with all
interest expressed to accrue on any such amount pursuant to
the Agreement until the date of receipt by the Trustee; and
(B) without prejudice to (A) above and as a separate and
independent obligation thereto Indemnifies and agrees to
indemnify the Trustee and the Beneficiaries upon the written
demand of the Trustee in respect of any Loss which the Trustee
or any one or more of the Beneficiaries may suffer or incur in
good faith directly or indirectly as a result of or in
connection with any failure by the Borrower fully and
effectually to perform, observe and/or comply with the Secured
Obligations.
4. EXPENSES
4.1 The Guarantor further agrees to pay to the Trustee on demand on a full
indemnity basis all commissions, charges, costs and expenses of
whatsoever nature incurred by the Trustee and/or the Beneficiaries in
the administration, preservation and enforcement of any of the
Trustee's rights hereunder together with interest thereon (both before
and after judgment) at the Default Rate from the date of demand until
the date of receipt by the Trustee compounded on such days in the year
as the Trustee reasonably may select.
<PAGE>
- 7 -
5. CONTINUING GUARANTEE
5.1 This Guarantee shall:-
(A) be a continuing security and shall be construed and take
effect as security for all of the Secured Obligations until
they shall have been satisfied and discharged in full and the
Guarantor hereby waives any right of set-off or counter-claim
which the Guarantor may otherwise have had against the Trustee
or any one or more of the Beneficiaries;
(B) be in addition to any other guarantee, indemnity or other
security which the Trustee and/or the Beneficiaries may now or
hereafter hold in respect of all or any of the Secured
Obligations whether from the Guarantor or otherwise, and shall
be binding on the Guarantor notwithstanding that any other
Security Party shall fail to give the security to be provided
by it or shall be released from any such security or such
security shall be varied;
(C) not be discharged by the granting to any Security Party of
time or any other indulgence or by compounding with any
Security Party or by any variation whatsoever of any of the
Secured Obligations or by any actual or alleged invalidity,
irregularity or unenforceability of or defect in any of the
Secured Obligations or in any of the provisions of the
Agreement or any one or more of the Security Documents or by
the absence of any action to enforce any of the rights of the
Trustee and/or the Beneficiaries thereunder or by any act or
circumstance whatsoever whereby this Guarantee would or might
otherwise but for the provisions of this Clause have been so
discharged;
(D) remain in full force and effect notwithstanding any change in
the name, constitution or otherwise of any Security Party or
the Trustee or any of the Beneficiaries or their respective
successors and assigns or the absorption or amalgamation of
any thereof by or with any other corporate entity.
6. UNDERTAKINGS
6.1 The Guarantor agrees with represents and undertakes to the Trustee
that:-
(A) If the Guarantor becomes liable to make any payment pursuant
to Clause 3 hereof, then the Guarantor will not thereafter
make demand for payment of
<PAGE>
- 8 -
any moneys for the time being due to the Guarantor from any
Security Party or exercise any other right or remedy to which
the Guarantor is entitled in respect of such moneys unless and
until all moneys whatsoever owing by all Security Parties to
the Trustee and the Beneficiaries have been irrevocably paid
in full;
(B) If any Security Party shall become insolvent or shall be wound
up or liquidated, the Guarantor shall not (unless so required
by the Trustee and then only on condition that the Guarantor
holds the benefit of any claim in such insolvency or
liquidation upon trust to pay any amounts recovered thereunder
to the Trustee) prove in such insolvency, winding-up or
liquidation until all moneys whatsoever owing by all Security
Parties to the Trustee and the Beneficiaries have been
irrevocably paid in full;
(C) The Guarantor has not taken and will not take from any
Security Party any security whatsoever for the moneys hereby
secured and, notwithstanding the foregoing, any such security
now or hereafter held by the Guarantor shall be held in trust
for the Trustee and the Beneficiaries and for their benefit in
respect of the obligations of the Guarantor hereunder;
(D) The Guarantor will not exercise any right to which the
Guarantor may be entitled as a surety until all moneys
whatsoever owing or due and payable by all Security Parties to
the Trustee and the Beneficiaries have been irrevocably paid
in full;
(E) The Guarantor hereby waives any right to require the Trustee
and/or the Beneficiaries to proceed first against any Security
Party and/or to give notice to or demand on any Security Party
whatsoever;
(F) All payments to be made hereunder shall be made in immediately
available funds without set-off or counter-claim and free and
clear of and without deduction for or on account of any
present or future taxes of any nature now or hereafter
imposed, levied, collected, withheld, deducted or assessed by
any taxing and/or governmental authority whatsoever or
wheresoever unless the Guarantor is compelled by law to deduct
such taxes. In that event all such taxes shall be borne by the
Guarantor or, if under the provisions of any
<PAGE>
- 9 -
applicable law this stipulation cannot be applied, then the
Guarantor shall increase the payments to the Trustee so that
the net amounts received by the Trustee shall be equal to the
full amounts which the Trustee would have received had payment
not been made subject to such taxes; provided that taxes
payable by the Trustee or any Beneficiary on its profits
arising by virtue of the transaction herein described in the
countries in which it carries on business shall not be
included in the foregoing. As used in this sub-clause the term
"taxes" includes all levies, imposts, duties, charges, fees,
deductions and withholdings whatsoever and any restriction or
condition resulting in a charge.
If the Guarantor is required to deduct taxes, the Guarantor
will promptly thereafter deliver all receipts and other
documents relating thereto to the Trustee.
If and when the Trustee or any Beneficiary shall receive (in
its reasonable opinion) a credit in respect of any taxes
deducted by the Guarantor and to which this sub-clause refers,
it shall allow the Guarantor a credit against amounts due or
to become due under the Agreement or any one or more of the
Security Documents (the "Guarantor's Credit") of such amount
as shall be fair and reasonable in the opinion of the Trustee
or that Beneficiary in respect of any such credit as is
received by the Trustee or that Beneficiary or, if all of the
Indebtedness shall have been repaid in full, shall make a
payment to the Guarantor equal to the amount of the
Guarantor's Credit. Neither the Trustee nor any Beneficiary
shall be under any obligation to discuss or reveal its tax
affairs with the Guarantor;
(G) The Guarantor shall give to the Trustee all such information
as the Trustee may request with regard to the performance by
the Security Parties of their respective obligations under the
Agreement and the Security Documents;
(H) The Guarantor shall not without the prior written consent of
the Trustee (such consent not to be unreasonably withheld)
sell, convey, transfer or otherwise dispose (whether by a
single transaction or in a series of transactions, related or
not) of any assets;
<PAGE>
- 10 -
(I) All the authorised and issued share capital of the Borrower is
and will remain wholly owned and controlled by the Guarantor;
(J) The Guarantor shall prepare or cause to be prepared, in
accordance with GAAP, and deliver to the Trustee annual
audited financial statements of the Guarantor within ninety
five (95) days of the end of the annual accounting periods of
the Guarantor and quarterly unaudited accounts of the
Guarantor within fifty (50) days of the end of each quarter
together with copies of all notices sent to shareholders or
any class of shareholders and such financial and other
information concerning the Guarantor as the Trustee shall
reasonably require;
(K) The Guarantor shall not make any single acquisition or
investment costing more than one million United States Dollars
(USD1,000,000) without the prior written consent of the
Trustee (such consent not to be unreasonably withheld);
(L) The Guarantor shall not incur any liability in respect of
Borrowed Money or guarantee endorse or otherwise become or
remain liable in respect of the obligations of any person firm
or corporation without the prior written consent of the
Trustee (such consent not to be unreasonably withheld);
(M) The Guarantor shall not pay any dividend for any shares except
preferred shares on the following terms:-
(i) no covenant or undertaking binding upon the Guarantor
is or would be breached by the payment of such
dividend; and
(ii) the aggregate amount of any such dividends paid in
any one period of twelve (12) months does not exceed
four hundred thousand United States Dollars
(USD400,000),
Provided That, in respect of any preferred share issued by the
Guarantor prior to the date of the Agreement, the Guarantor
(subject only to (i) above) shall be entitled to pay dividends
in the maximum amount of twelve per cent (12%) per annum of
the price at which the relevant preferred share was issued;
(N) The Guarantor shall procure that it has cash which is freely
available, which is not subject to any Encumbrance and which
amounts to not less than the
<PAGE>
- 11 -
amount specified in item 1 in schedule A hereto on the
Drawdown Date and not less than the amount specified in item 2
in schedule A hereto at all times thereafter Provided that all
sums standing to the credit of the Earnings Account after all
the applications have been made in accordance with clause 10.2
of the Agreement shall be deemed for the purposes of this
clause to be cash which is freely available to the Guarantor
and not subject to any Encumbrance;
(O) The Guarantor shall procure that its Debt Service Coverage
Ratio (calculated at three (3) monthly intervals as set out
below) shall not be less than the ratio specified in item 3 in
schedule A hereto (for the period from the Drawdown Date to 30
September 2002) and the ratio specified in item 4 in schedule
A hereto (for any period after 30 September 2002) and for this
purpose the Debt Service Coverage Ratio shall be calculated on
a consolidated basis in accordance with the following
formula:-
EBITDA
------------------
Financial Expenses
where
"EBITDA" means, for the previous period of twelve (12) months,
the aggregate of:
(i) Net Income (but excluding gains and losses from the
sale of assets or reserves relating thereto and items
classified as extraordinary or non-recurring) from
the Guarantor's operations for such period and for
this purpose Net Income means the consolidated net
income of the Guarantor as determined in accordance
with GAAP; and
(ii) the aggregate amounts deducted in determining Net
Income for such period in respect of depreciation,
amortisation, taxes, deferred income and interest
expense of the Guarantor; and
"Financial Expenses" means, for the previous period of twelve
(12) months,
<PAGE>
- 12 -
the sum of:
(i) the aggregate principal payable or paid during such
period on any Borrowed Money of the Guarantor (other
than the scheduled principal repayment in respect of
the Loan and principal repayments under the Revolving
Loan Facility Agreement to the extent that they were
redrawn during the same period);
(ii) aggregate interest expense (including, without
limitation, capitalised interest accrued during such
period) of the Guarantor for such period; and
(iii) all rent and any capital lease obligations or
operating lease obligations by which the Guarantor is
bound which are payable or paid during such period as
calculated in accordance with GAAP and derived from
the then latest accounts of the Guarantor;
(P) The Guarantor shall procure that its Capital (Solvency) Ratio
(calculated as set out below) shall not be less than the
percentage specified in item 5 in schedule A
hereto (for the period from the Drawdown Date to 30 September
2001), the percentage specified in item 6 in schedule A hereto
(for the period from 1 October 2001 to 30 September 2002) and
the percentage specified in item 7 in schedule A hereto (for
any period after 30 September 2002) and for this purpose the
Capital (Solvency) Ratio shall be calculated on a consolidated
basis in accordance with the following formula:-
x
------------------
y
where
"x"
means the Guarantor's Book Tangible Net Worth (calculated in
accordance with clause 6.1(Q) hereof); and
"y"
<PAGE>
- 13 -
means the book value of all the assets of the Guarantor
(calculated in accordance with GAAP);
(Q) The Guarantor shall procure that its Book Tangible Net Worth
(calculated as set out below) shall not be less than the
amount specified in item 8 in schedule A hereto (during the
period from the Drawdown Date to 30 September 2000) and the
amount specified in item 9 in schedule A hereto (after 30
September 2000) and for this purpose the Book Tangible Net
Worth shall be the book value of all assets calculated in
accordance with GAAP (excluding goodwill but including all
proceeds from any interest only loans which have been approved
in advance by the Agent as at the date of this Guarantee and
the proceeds of any preferred share issue made prior to the
date of this Guarantee) less total liabilities calculated in
accordance with GAAP (including without limitation the net
present value of financial lease commitments, estimated
compensation to third parties in the event of termination of
contracts, contingent tax liabilities and guarantee
obligations for the benefit of third parties but excluding any
debt of the Guarantor existing as at the date of this
Guarantee and subordinated by its terms to the Secured
Obligations);
(R) The Guarantor shall provide the Trustee with compliance
certificates in relation to the relevant financial covenants
contained in this Guarantee in the form attached hereto on or
before the Drawdown Date and at three (3) monthly intervals
after the Drawdown Date.
7. ENFORCEMENT
7.1 The Guarantor agrees, acknowledges and declares that:-
(A) In order to give effect to this Guarantee the Trustee and the
Beneficiaries shall be at liberty to act as though the
Guarantor were the principal debtor and obligor in respect of
the Secured Obligations and in the event of the winding-up,
dissolution, reconstruction or amalgamation in which or as a
consequence of which any Security Party loses its separate
corporate identity the Guarantor shall become liable to the
Trustee and the Beneficiaries for the payment of all moneys
expressed to be payable by the Security Parties to the Trustee
and/or
<PAGE>
- 14 -
the Beneficiaries pursuant to the Agreement and the Security
Documents and the performance and observance of and compliance
with all the Secured Obligations;
(B) Any release, settlement or discharge in relation to the
obligations of the Guarantor hereunder shall be conditional
upon no security, disposition or payment to the Trustee or the
Beneficiaries in respect of any of the Indebtedness being
avoided or reduced by virtue of any provisions or enactments
relating to bankruptcy, insolvency or liquidation and if any
such security, disposition or payment be avoided or reduced as
aforesaid, this Guarantee shall continue to apply in respect
of the amount of such security, disposition or payment and the
Guarantor shall indemnify the Trustee and the Beneficiaries in
respect thereof;
(C) The Trustee and the Beneficiaries may take such action as the
Trustee and the Beneficiaries in their own discretion may
consider appropriate against any other Security Party or
Parties to recover moneys due and payable in respect of the
Secured Obligations, the Guarantor, however, remaining liable
under this Guarantee for payment and discharge of all moneys
payable in respect thereof;
(D) The Trustee and each of the Beneficiaries shall be entitled
(after a demand for payment has been made hereunder but
without further notice) to procure the setting-off of any
liability of the Guarantor hereunder against any moneys
standing to the credit of any account or accounts which the
Guarantor may now or hereafter have with the Trustee or any of
the Beneficiaries at any of their respective offices or with
any subsidiary or parent company of any one of them (whether
or not those moneys are then due to the Guarantor) and, for
this purpose, to combine any and all such accounts and to use
all or part of those moneys to buy such other currency or
currencies as may be required to enable the Trustee or any of
the Beneficiaries to effect that setting-off. The Trustee and
the Beneficiaries shall also be entitled to retain as security
for the discharge of the liability of the Guarantor hereunder
all securities or other property of the Guarantor held by the
Trustee or any one or more of the Beneficiaries at any of
their respective offices and/or by any subsidiary or parent
company of any one of them (whether for safe custody or
otherwise);
<PAGE>
- 15 -
(E) Notwithstanding that the Secured Obligations and any moneys
due from the Guarantor hereunder shall have been complied
with, paid or discharged, the Trustee shall be entitled to
retain this Guarantee and refrain from releasing the Guarantor
from this Guarantee for such period thereafter as the Trustee
may determine and in the event of bankruptcy, winding-up or
any similar proceedings being commenced in respect of any
Security Party or any other person as may have performed, paid
or discharged any of the Secured Obligations within such
period as aforesaid, the Trustee shall be at liberty to retain
this Guarantee and any security held for the obligations of
the Guarantor hereunder and refrain from releasing the
Guarantor from this Guarantee and may retain such security for
and during such period as the Trustee may determine;
(F) For the purpose of enabling the Trustee and/or the
Beneficiaries to sue any other Security Party or to prove in
its winding-up, liquidation or bankruptcy or in any similar
proceedings for any moneys due and unpaid by the Borrower, the
Trustee may at any time place and keep for such time as it may
think fit any moneys received hereunder to the credit of an
interest bearing suspense account without any obligation on
the part of the Trustee to apply the same or any part thereof
in or towards the discharge of the Indebtedness;
(G) The certificate of the Trustee as to the sum of money owed by
any Security Party shall, in the absence of manifest error, be
conclusive for any purpose and binding on the Guarantor.
8. CURRENCY INDEMNITY
8.1 Any amount received by the Trustee or any Beneficiary in connection
herewith in a currency (the "Relevant Currency") other than the
currency in which the same should be received pursuant to the terms
hereof (the "Agreed Currency") whether pursuant to a judgment or order
of a court or tribunal of any jurisdiction or any enforcement
proceedings or otherwise howsoever in connection herewith or otherwise
shall only constitute a discharge to the Guarantor to the extent of the
amount of the Agreed Currency which the Trustee or the relevant
Beneficiary is able, promptly on receipt, to purchase in such foreign
exchange market as the Trustee or the relevant Beneficiary may select
with the amount of the Relevant Currency so received.
If:-
<PAGE>
- 16 -
(A) the amount of the Agreed Currency which the Trustee or the
relevant Beneficiary is so able to purchase is less than the
amount of the Agreed Currency due to the Trustee or the
relevant Beneficiary hereunder; and/or
(B) any condition imposed in relation to the conversion of any
amount paid in the Relevant Currency into the Agreed Currency
including, without limitation, any condition imposed by any
exchange control authority, reduces the amount in the Agreed
Currency which the Trustee or the relevant Beneficiary
actually receives for the amount of such payment in the
Relevant Currency below that amount which it would have
received had such condition not been imposed;
the Guarantor will indemnify and hold the Trustee or the relevant
Beneficiary harmless against any loss, damage, costs and/or expenses
arising as a result.
8.2 The above indemnity shall constitute a separate and independent
obligation from the other obligations contained herein shall give rise
to a separate and independent cause of action and shall continue in
full force and effect notwithstanding any judgment or order for amounts
due hereunder.
9. BENEFIT
9.1 The Guarantor hereby acknowledges and agrees that the benefit of this
Guarantee and Indemnity shall be held by the Trustee on trust for the
Beneficiaries and the Guarantor hereby covenants that this Guarantee
and Indemnity shall remain in full force and effect and shall fully
secure all the Beneficiaries. The Guarantor may not assign or transfer
rights or obligations hereunder without the prior written consent of
the Trustee (which may be withheld).
10. MISCELLANEOUS
10.1 The Guarantor hereby agrees that at any time and from time to time,
upon the request of the Trustee, the Guarantor will promptly and duly
execute and deliver and/or procure the execution and delivery of any
and all such further instruments and documents as may be deemed
desirable by the Trustee for the purpose of obtaining for the Trustee
and the Beneficiaries the full benefits hereof and of the rights and
powers herein granted.
10.2 Any provisions contained herein prohibited by or unlawful or
unenforceable under
<PAGE>
- 17 -
any applicable law shall, to the extent required by such law, be
ineffective without modifying the remaining provisions hereof. Where
however the provisions of any such applicable law may be waived, they
are hereby waived by the Guarantor to the fullest extent permitted by
such law with the intent that this Guarantee shall be valid, binding
and enforceable in accordance with its terms.
10.3 Time is of the essence of this Guarantee but no failure or delay by the
Trustee or the Beneficiaries in exercising any right, power or
privilege hereunder and no course of dealing between any Security Party
and the Trustee or the Beneficiaries shall operate as a waiver thereof,
nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein are cumulative and not
exclusive of any rights or remedies which the Trustee and/or the
Beneficiaries would otherwise have. No notice to or demand on the
Guarantor shall entitle the Guarantor to any other or further notice or
demand in similar or other circumstances or constitute a waiver of the
rights of the Trustee or the Beneficiaries to any other or further
action in any circumstances without notice or demand.
11. NOTICES
11.1 Any demand or notice to be given hereunder shall be in writing and sent
by prepaid first class or airmail letter post or telex or facsimile or
delivered by hand addressed to the Guarantor as follows:-
Commodore Holdings Limited
4000 Hollywood Boulevard
Suite 385-S
Hollywood
Fl 33021
USA
Attention Chief Financial Officer
Facsimile No: + 954 921 2147)
with a copy to:-
Kathleen L Deutsch, P.A.
Broad and Cassel
Miami Center - Suite 3000
<PAGE>
- 18 -
201 S. Biscayne Boulevard
Miami
Fl 33131
USA
Facsimile no. + 305 373 9443
or to such other person or address as the Guarantor may notify in
writing to the other party hereto.
11.2 Any such notice shall be deemed to have been validly given and received
on the date of despatch if sent by telex and five (5) days after having
been posted if sent by post.
12. GOVERNING LAW AND JURISDICTION
12.1 This Guarantee and all agreements entered into pursuant or supplemental
hereto shall be governed by and construed in accordance with English
law.
12.2 The Guarantor hereby Submits for the exclusive benefit of the Trustee
and the Beneficiaries to the jurisdiction of the English Courts and
appoints Consult Marine whose registered office is for the time being
at 58 London Fruit Exchange, Brushfield Street, London E1 6EP or such
other person as the Guarantor may with the prior written approval of
the Trustee from time to time appoint to be the attorney of the
Guarantor for the purpose of accepting service on behalf of the
Guarantor of any writ, notice, order, judgment or other legal process
with respect hereto or any matter arising hereout and agrees that
failure by any such process agent to give notice of such service of
process to the Guarantor shall not impair or affect the validity of
such service or of any judgment based thereon. The aforesaid submission
shall not limit the right of the Trustee and the Beneficiaries to
commence proceedings against the Guarantor in any jurisdiction they may
think fit or in two or more jurisdictions.
<PAGE>
- 19 -
IN WITNESS whereof this Guarantee has been executed as a deed the day and year
first before written.
SIGNED SEALED and DELIVERED )
as a DEED )
by COMMODORE HOLDINGS LIMITED )
acting by )
/s/ Jeffrey I. Binder )
- ---------------------------------------
its duly appointed )
Chairman of the Board )
in the presence of:- )
EXHIBIT 10.8
EFF-SHIPPING LIMITED
(as lender)
- and -
CROWN CRUISES OF PANAMA, INC.
(as borrower)
-----------------------------
LOAN AGREEMENT
RE USD24,480,000 SELLER'S CREDIT
-----------------------------
Sinclair Roche & Temperley
Royex House
5 Aldermanbury Square
London EC2V 7LE
Tel: 0171 452 4000
Fax: 0171 452 4001
Ref: GFS/243417
<PAGE>
- 2 -
INDEX OF CONTENTS
CLAUSE SUBJECT PAGE
- ------ ------- ----
1. PURPOSE AND DEFINITIONS..........................................1
2. THE LENDER'S COMMITMENT..........................................8
3. AVAILABILITY.....................................................8
4. INTEREST.........................................................9
5. REPAYMENT.......................................................11
6. COMPULSORY AND VOLUNTARY PREPAYMENT.............................11
7. ARRANGEMENT FEE.................................................13
8. INDEMNITY.......................................................13
9. PAYMENTS........................................................15
10. APPLICATION OF MONEYS...........................................17
11. DEFAULT.........................................................20
12. SECURITY........................................................22
13. REPRESENTATIONS AND WARRANTIES..................................23
14. COVENANTS.......................................................25
15. SET-OFF.........................................................30
16. ASSIGNMENT AND PARTICIPATION....................................30
17. MISCELLANEOUS...................................................31
18. NOTICES.........................................................32
19. PROPER LAW AND JURISDICTION.....................................32
SCHEDULE A : CONDITIONS PRECEDENT............................................33
<PAGE>
- 3 -
SCHEDULE B: FINANCIAL RATIOS................................................36
APPENDIX I : FORM OF UTILIZATION NOTICE......................................38
APPENDIX II : FORM OF COMPLIANCE CERTIFICATE..................................39
<PAGE>
- 4 -
THIS AGREEMENT is made the 24th day of January 2000
BETWEEN:-
(1) THE LENDER (as hereinafter defined); and
(2) THE BORROWER (as hereinafter defined).
IT IS HEREBY AGREED as follows:-
1. PURPOSE AND DEFINITIONS
1.1 This agreement contains the terms and conditions upon which the Lender
will make available to the Borrower a secured loan of twenty four
million four hundred and eighty thousand United States Dollars
(USD24,480,000).
1.2 In this agreement the following words and expressions shall have the
following meanings:-
"AGENT"
means Merita Bank Plc, a company incorporated under the laws of Finland
acting through its London branch having its principal place of business
at 19 Thomas More Street, London E1W 1YF in its capacity as agent for
the Banks;
"BANKS"
means Merita Bank Plc, Christiania Bank og Kreditkasse ASA and
Skandinaviska Enskilda Banken AB (publ);
"BORROWED MONEY"
means Indebtedness incurred in respect of (i) money borrowed or raised,
(ii) any bond, note, loan stock, debenture or similar instrument, (iii)
acceptance or documentary credit facilities, (iv) deferred payments for
assets or services acquired other than for provisions, bunkers, spare
parts or services acquired in the ordinary course of, and incidental
to, the operation of the Vessel, (v) rental payments under and any
amounts payable on termination of leases (whether in respect of ships,
land, machinery, equipment or otherwise) entered into primarily as a
method of raising finance or of financing the acquisition of the asset
leased, (vi) guarantees, bonds, stand-by letters of
<PAGE>
- 5 -
credit or other instruments issued in connection with the performance
of contracts and (vii) guarantees or other assurances against financial
loss in respect of Indebtedness of any person, firm or company falling
within any of (i) to (vi) above;
"BORROWER"
means Crown Cruises of Panama, Inc., a company incorporated under the
laws of Panama with its registered office at c/o Galindo Arias & Lopez,
Scotia Plaza No. 18, Avenida Federico Boyd & Calle No. 51, Piso 9, 10 &
11, Panama, Republic of Panama;
"BRIDGE LOAN FACILITY"
means the loan of six million seven hundred and twenty thousand United
States Dollars (USD6,720,000) made available by the Banks to the
Borrower under the Bridge Loan Facility Agreement;
"BRIDGE LOAN FACILITY AGREEMENT"
means the agreement of even date herewith made between (1) the Banks,
(2) the Agent as agent for the Banks, (3) the Borrower and (4) the
Trustee as security trustee for the Banks in respect of the Bridge Loan
Facility;
"BRIDGE LOAN SECURITIES"
means the securities provided or to be provided to the Agent pursuant
to the Bridge Loan Facility Agreement as security for the Bridge Loan
Facility;
"BUSINESS DAY"
means any day on which banks and foreign exchange markets in Helsinki,
Oslo, London and New York are open for the transaction of business of
the nature contemplated in this agreement;
"CHARTER"
means the space charter in respect of the Vessel made or to be made
between the Borrower as owner and the Charterer as charterer;
"CHARTERER"
means Crown Cruises Limited, a company incorporated under the laws of
Bermuda
<PAGE>
- 6 -
with its registered office at c/o Francis & Forest, Corner House, 20
Parliament Street, Hamilton HM12, Bermuda;
"DRAWDOWN DATE"
means the date on which the Loan is advanced pursuant to clause 3
hereof;
"EARNINGS ACCOUNT"
means the account in the name of the Borrower at the Agent's New York
office at 437 Madison Avenue, New York, N.Y. 10022;
"EARNINGS ASSIGNMENT"
means the assignment executed pursuant to clause 12.1(C) hereof;
"ENCUMBRANCE"
means any mortgage, charge, pledge, lien, assignment, hypothecation,
title retention, preferential right or trust arrangement and any other
security agreement or arrangement;
"EVENT OF DEFAULT"
means any of the events or circumstances specified in clause 11.1
hereof;
"GAAP"
means accounting principles generally accepted in the United States of
America and consistently applied;
"GUARANTOR"
means Commodore Holdings Limited, a company incorporated under the laws
of Bermuda with its registered office at c/o Francis & Forest, Corner
House, 20 Parliament Street, Hamilton HM12, Bermuda;
"INDEBTEDNESS"
means any obligation for the payment or repayment of money, whether as
principal or as surety and whether present or future, actual or
contingent;
"INSURANCE ASSIGNMENT"
means the assignment executed pursuant to clause 12.1(B) hereof;
"INTEREST PERIOD"
means any period determined in accordance with the provisions of clause
4.1 hereof
<PAGE>
- 7 -
for the calculation of interest on the Loan or any relevant part
thereof;
"LENDER"
means EFF-Shipping Limited, a company incorporated under the laws of
the Cayman Islands with its registered office at the offices of Huntlaw
Corporate Services Ltd., The Huntlaw Building, P O Box 1350, George
Town, Grand Cayman, Cayman Islands;
"LOAN"
means twenty four million four hundred and eighty thousand United
States Dollars (USD24,480,000) or, where the context so requires, the
aggregate amount thereof from time to time outstanding;
"MANAGEMENT AGREEMENT"
means the agreement for the management of the Vessel made or to be made
between the Borrower and the Manager;
"MANAGER"
means New Commodore Cruise Lines Limited, a company incorporated under
the laws of Bermuda with its registered office at c/o Francis & Forest,
Corner House, 20 Parliament Street, Hamilton HM12, Bermuda;
"MARGIN"
means four per cent (4%) per annum;
"MOA"
means the agreement for the sale and purchase of the Vessel made or to
be made between the Seller and the Borrower;
"MORTGAGE"
means the third Panamanian naval mortgage over the Vessel executed
pursuant to clause 12.1(A) hereof;
"PERMITTED LIENS"
means liens for current crews' wages and salvage and liens incurred in
the ordinary course of trading the Vessel up to an aggregate amount at
any time not exceeding five
<PAGE>
- 8 -
per cent (5%) of the charter-free sale value of the Vessel (such market
value to be conclusively determined as the average of the latest three
(3) valuations obtained by the Agent as provided in clause 8.2 of The
Revolving Loan Facility Agreement);
"REFERENCE BANKS"
means the Banks;
"REPAYMENT INSTALMENTS"
means the instalments of principal for repayment of the Loan specified
in clause 5.1 hereof and "Repayment Instalment" means any one of them;
"REVOLVING LOAN FACILITY"
means the revolving loan facility of up to but not exceeding forty five
million United States Dollars (USD45,000,000) at any one time made
available by the Banks to the Borrower under the Revolving Loan
Facility Agreement;
"REVOLVING LOAN FACILITY AGREEMENT"
means the agreement of even date herewith made between (1) the Banks,
(2) the Agent as agent for the Banks, (3) the Borrower and (4) the
Trustee as security trustee for the Banks in respect of the Revolving
Loan Facility;
"REVOLVING LOAN SECURITIES"
means the securities provided or to be provided to the Agent pursuant
to the Revolving Loan Facility Agreement as security for the Revolving
Loan Facility;
"SECURITY DOCUMENTS"
means the documents executed pursuant to clause 12.1 hereof and any
other document or documents from time to time providing and/or
evidencing and/or constituting security in respect of the Loan;
"SECURITY PARTIES"
means the Borrower, the Guarantor and the Manager and any other party
to any of the Security Documents from time to time (other than the
Lender, the Seller, the Banks, the Agent and the Trustee) and "Security
Party" means any one of them;
<PAGE>
- 9 -
"SELLER"
means Crown Dynasty Inc., a company incorporated under the laws of
Panama with its registered office at Vallarino, Vallarino &
Garcia-Maritano, 20th Floor, Banco Continental Building, Calle 50 y
Aquilino De La Guardia, Panama City, Panama;
"SUB-CHARTER"
means the space sub-charter of the Vessel made or to be made between
the Charterer as disponent owner and the Sub-Charterer as charterer on
back to back terms with the Charter;
"SUB-CHARTERER"
means Atkinson and Mullen, Inc. doing business as Apple Vacations, a
company incorporated under the laws of Pennsylvania with its registered
office at 7 Campus Boulevard, Newtown Square, Pennsylvania 19073,
U.S.A.;
"SUBJECT DOCUMENTS"
means this agreement, the Security Documents, the MOA, the Charter, the
Sub-Charter, the Management Agreement, the Revolving Loan Facility
Agreement, the Revolving Loan Securities, the Bridge Loan Facility
Agreement, the Bridge Loan Securities and any and all documents
executed pursuant to any one or more of these documents;
"TOTAL LOSS"
means:-
(i) actual or constructive or compromised or agreed or arranged
total loss of the Vessel; or
(ii) requisition for title or other compulsory acquisition of the
Vessel otherwise than by requisition for hire; or
(iii) capture, seizure, arrest, detention or confiscation of the
Vessel by any government or by persons acting or purporting to
act on behalf of any government unless the Vessel is released
and restored to the Borrower from such capture, seizure,
arrest or detention within thirty (30) days after the
occurrence thereof;
"TRUSTEE"
means Merita Bank Plc, a company incorporated under the laws of Finland
acting through its London branch having its principal place of business
at 19 Thomas More
<PAGE>
- 10 -
Street, London E1W 1YF in its capacity as security trustee for the
Banks;
"UNITED STATES DOLLARS" and "USD"
mean the lawful currency of the United States of America; and
"VESSEL"
means the motor vessel named "Crown Dynasty" now registered under
Panamanian flag in the ownership of the Seller which is to remain
registered under Panamanian flag in the ownership of the Borrower
pursuant to the MOA.
1.3 References to any document shall be construed to mean that document as
amended and/or varied and/or supplemented from time to time with the
agreement of the relevant parties and (where such consent is required
by the terms of this agreement or the relevant document) with the
consent of the Agent and/or the Banks and/or the Trustee and/or the
Lender.
1.4 Clause headings are inserted for convenience of reference only and
shall be ignored in the interpretation of this agreement.
2. THE LENDER'S COMMITMENT
2.1 In reliance upon the representations and warranties contained in clause
13 hereof and in the Security Documents and subject to the terms and
conditions of this agreement the Lender will make the Loan available to
the Borrower for the purpose of financing (in part) the purchase of the
Vessel by the Borrower pursuant to the MOA.
3. AVAILABILITY
3.1 The Loan shall be advanced in one amount and applied in accordance with
clause 2.1 hereof provided that:-
(A) all items specified in schedule A hereto have been received by
the Lender and are in form and substance satisfactory to the
Lender;
(B) no Event of Default and no event which with the giving of
notice and/or lapse
<PAGE>
- 11 -
of time would constitute an Event of Default has occurred;
(C) not less than four (4) Business Days prior to the date upon
which the Borrower requires the Loan to be advanced the Lender
has received a written notice from the Borrower in the form
set out in appendix I hereto; and
(D) the obligation of the Lender to make the Loan available to the
Borrower shall expire on 31 January 2000 if the Loan is not
advanced on or before that date.
3.2 The Lender may in its absolute discretion allow the Loan to be advanced
notwithstanding that it has not received all the items specified in
schedule A hereto and in this event the Borrower hereby covenants to
procure the delivery of all the missing items to the Lender within
thirty (30) days after the Drawdown Date.
4. INTEREST
4.1 The Borrower shall pay interest on the Loan from the Drawdown Date for
each successive Interest Period which shall, subject to clauses 4.3 and
6.2 hereof, be either one (1), three (3) or six (6) months at the
option of the Borrower provided always that:-
(A) the Borrower shall exercise the said option by notice in
writing to the Lender not later than three (3) Business Days
prior to the commencement of each Interest Period failing
which the Borrower shall be deemed to have opted for an
Interest Period of six (6) months;
(B) if the relevant funds are not available to the Lender for an
Interest Period of the length opted for (or deemed to be opted
for) by the Borrower the Lender shall be entitled to determine
conclusively the length of that Interest Period;
(C) if an Interest Period will expire after the due date for
payment of the next following Repayment Instalment there shall
be a separate Interest Period in respect of that Repayment
Instalment expiring on the due date for payment thereof and
the interest rate relating to that Repayment Instalment shall
be separately fixed accordingly; and
<PAGE>
- 12 -
(D) if an Interest Period would otherwise expire on a day which is
not a Business Day that Interest Period shall be extended to
expire on the next succeeding Business Day unless that next
succeeding Business Day falls within a fresh month in which
event that Interest Period shall be shortened to expire on the
immediately preceding Business Day. In this event the next
succeeding Interest Period shall in the absolute discretion of
the Lender (and subject always to this clause 4.1 (D)) expire
the relevant number of months after either (i) that next
succeeding or immediately preceding Business Day (as the case
may be) or (ii) the day on which the preceding Interest Period
would have expired if it had not been so extended or shortened
(as the case may be) or (iii) the day on which the preceding
Interest Period would have expired if no Interest Period had
ever been so extended or shortened.
4.2 Subject to clauses 4.3 and 6.2 hereof and to clause 14.1(K) of both the
Revolving Loan Facility Agreement and the Bridge Loan Facility
Agreement, the Borrower shall pay interest on the Loan or any relevant
part thereof for each Interest Period at the rate certified
conclusively (save for manifest error) by the Lender to be the
aggregate of the Margin and the rate per cent per annum for that
Interest Period quoted by Telerate Screen 3750 (rounded up to the
nearest one sixteenth of one per cent)(or, if the Telerate system is
not working, by Reuters Page ISDA (rounded up to the nearest one
sixteenth of one per cent) or, if neither the Telerate system nor the
Reuters system is working, the average rate per cent per annum (rounded
up to the nearest one sixteenth of one per cent) at which deposits of
amounts of United States Dollars equivalent to or comparable with the
Loan or relevant part thereof are offered to the Reference Banks (or
two of them if one is unable to quote a rate) for that Interest Period
in the London Inter-bank Market at or about 11.00 a.m. (London time)
two (2) Business Days (in London only) prior to the commencement of
that Interest Period. Such interest shall accrue and be payable on the
actual number of days elapsed, shall be calculated on the basis of a
year of three hundred and sixty (360) days and shall be paid on the
final day of that Interest Period and (if that Interest Period is
longer than one (1) month) at one (1) monthly intervals.
4.3 In the event of default by the Borrower in the payment of any sum
whatsoever due under this agreement (including interest) the Borrower
shall pay interest on that sum from the due date until payment (after
as well as before judgement) at a rate certified conclusively (save for
manifest error) by the Lender to be five per cent (5 %) per annum over
the cost to the Lender of funding that sum for such periods as the
Lender in its absolute discretion may think fit on the Business Day
succeeding that on which
<PAGE>
- 13 -
it became aware of the default and for so long as that sum remains
unpaid that rate shall be re-calculated on the same basis. Such
interest shall accrue and be payable on each day elapsing, shall be
calculated on the basis of a year of three hundred and sixty (360) days
and shall be paid on the demand of the Lender. In default of payment
such interest shall be compounded.
4.4 The Lender shall as soon as reasonably practicable notify the Borrower
of each rate of interest payable on the Loan or any relevant part
thereof under this clause 4.
5. REPAYMENT
5.1 Subject to clauses 6 and 11.1 hereof and to clauses 14.1(J) and (K) of
both the Revolving Loan Facility Agreement and the Bridge Loan Facility
Agreement, the Borrower shall repay the Loan in fifty eight (58)
instalments. The first such instalment shall amount to six hundred and
twelve thousand United States Dollars (USD612,000), the second to the
fifty seventh such instalments inclusive shall each amount to two
hundred and four thousand United States Dollars (USD204,000) and the
final instalment shall amount to the balance of the Loan. The first
instalment shall be paid on the date falling fifteen (15) months after
the Drawdown Date and the subsequent instalments shall be paid at one
(1) monthly intervals thereafter. If by virtue of the operation of
clause 14.1(K) of the Revolving Loan Facility Agreement and/or the
Bridge Loan Facility Agreement any such instalment is not paid or is
only partly paid, then, unless and until the Event of Default causing
the operation of that clause 14.1(K) has been remedied or waived to the
satisfaction of the Banks and the Banks have agreed and notified to the
Lender and the Borrower the basis on which payment of instalments
hereunder may be reestablished, the due date for payment of that
instalment or the balance thereof (as the case may be) shall be
postponed to the due date for payment of the final instalment.
Notwithstanding the operation of that clause 14.1(K), any failure by
the Borrower to pay any such instalment in full on the date originally
scheduled therefor shall constitute an Event of Default under clause
11.1(A) hereof and shall (inter alia) entitle the Lender to charge
interest under clause 4.3 hereof on the unpaid sum from the originally
scheduled date.
6. COMPULSORY AND VOLUNTARY PREPAYMENT
<PAGE>
- 14 -
6.1 If for any reason whatsoever beyond the control of the Lender it shall
become unlawful or impossible for the Lender to maintain or give effect
to all or part of its obligations as contemplated by this agreement the
obligation of the Lender to make the Loan available to the Borrower
shall cease and the Borrower shall forthwith upon the demand of the
Lender, but subject to clauses 14.1(J) and (K) of both the Revolving
Loan Facility Agreement and the Bridge Loan Facility Agreement, repay
the Loan (or such part thereof as the Lender shall specify in writing)
together with interest accrued thereon and any sums due to the Lender
by virtue of that repayment under clause 8.5 hereof.
6.2 If the Lender shall determine in good faith that:-
(A) by reason of circumstances affecting the London Inter-Bank
Market generally adequate and reasonable means do not exist
for ascertaining the rate of interest payable on the Loan or
any relevant part thereof for any Interest Period in
accordance with clause 4.2 hereof; or
(B) it would not be practicable or possible for the Lender to fund
or continue to fund the Loan or any relevant part thereof in
the London Inter-Bank Market,
then the Lender shall inform the Borrower in writing to that effect and
unless the Lender and the Borrower shall agree acceptable alterations
to the terms of this agreement (on the basis of an alternative source
of funds available to the Lender) the obligation of the Lender to make
the Loan or relevant part thereof available to the Borrower shall cease
and the Borrower shall, subject to clauses 14.1(J) and (K) of both the
Revolving Loan Facility Agreement and the Bridge Loan Facility
Agreement, be obliged on receiving a written notice from the Lender to
that effect to repay the Loan or the relevant part thereof together
with interest accrued thereon on the final day of the then current
Interest Period.
6.3 The Borrower may, subject to clauses 14.1(J) and (K) of both the
Revolving Loan Facility Agreement and the Bridge Loan Facility
Agreement, prepay the whole or part of the Loan together with interest
accrued thereon on the final day of any Interest Period in respect of
the Loan provided that:-
(A) the Borrower shall simultaneously pay to the Lender any sums
due to the Lender by virtue of that prepayment under clause
8.5 hereof;
<PAGE>
- 15 -
(B) any part prepayment of the Loan shall amount to a whole
multiple of one hundred thousand United States Dollars
(USD100,000);
(C) the Borrower shall have given the Lender not less than thirty
(30) days written notice of its intention to make such
prepayment (which once given shall be irrevocable) specifying
such day and the amount of intended prepayment and accompanied
by such evidence as the Lender may require that any
governmental or other consents for such prepayment have been
obtained or will be forthcoming; and
(D) no sums prepaid hereunder may be reborrowed under this
agreement.
7. ARRANGEMENT FEE
7.1 Subject to clause 8.2 hereof, no arrangement fee shall be payable by
the Borrower in connection with the Loan.
8. INDEMNITY
8.1 If any change in law or regulation or in the interpretation thereof or
if compliance by the Lender with any direction request or requirement
(whether or not having the force of law) of any central bank or other
authority shall:-
(A) subject the Lender to any tax with respect to the Loan or any
part thereof (other than tax on overall net income);
(B) change the basis of taxation to the Lender of payments of
principal or interest or any other payment due or to become
due hereunder;
(C) impose or modify any reserve, liquidity or capital adequacy
requirements or require the making of any special deposits
affecting the Lender; or
(D) impose on the Lender any other condition affecting the Loan or
any part thereof whether or not the Loan has been advanced
and the result is either to increase the cost to the Lender of making
or maintaining or committing to make the Loan or any part thereof or to
reduce the amount of any payment received by the Lender hereunder or to
reduce the rate of return which the
<PAGE>
- 16 -
Lender would have been able to obtain on its overall capital but for
entering into and/or performing this agreement then the Borrower shall
forthwith upon demand by the Lender pay to the Lender such amount as
the Lender certifies to be necessary to indemnify the Lender fully for
such additional cost or reduction. Any such demand may be made by the
Lender at any time before or after repayment of the Loan.
8.2 All legal fees and other reasonable costs and expenses whatsoever
(other than the costs of valuing the Vessel) incurred by the Lender in
connection with any one or more of this agreement, the Security
Documents and any other documents executed pursuant hereto or thereto
shall be paid by the Borrower forthwith upon demand by the Lender on a
full indemnity basis whether or not the Loan is advanced.
8.3 The Borrower shall pay forthwith upon demand by the Lender all stamp,
registration and other duties (including any such duties payable by the
Lender) imposed by any authority in respect of any one or more of this
agreement, the Security Documents and any other documents executed
pursuant hereto or thereto or otherwise in connection with the Loan.
8.4 Without prejudice to the rights of the Lender under or pursuant to
clause 11 hereof the Borrower shall indemnify the Lender fully
forthwith upon demand by the Lender for any and all losses damages
and/or expenses whatsoever incurred by the Lender:-
(A) as a result of the Loan not being advanced for any reason
whatsoever (other than default by the Lender) in accordance
with a notice given pursuant to clause 3.1(C) hereof;
(B) as a result of an Event of Default;
(C) in perfecting, protecting the value of or enforcing any of its
rights or securities under any one or more of this agreement,
the Security Documents and any other documents executed
pursuant hereto or thereto or in attempting so to do; or
(D) as a result of any payment hereunder, whether pursuant to a
judgment or otherwise, being made, obtained or enforced in a
currency other than United
<PAGE>
- 17 -
States Dollars.
8.5 In the event that the whole or part of the Loan is repaid or prepaid
otherwise than on the final day of an Interest Period in respect
thereof the Borrower shall (A) indemnify the Lender fully forthwith
upon demand by the Lender for any and all losses damages and/or
expenses incurred by the Lender in liquidating or reemploying fixed
deposits acquired from third parties to maintain the Loan or the
relevant part thereof (as the case may be) until the expiry of the then
current Interest Period in respect thereof and (B) pay to the Lender
forthwith on demand any sums due to the Lender as a result of that
repayment or prepayment under clause 8.6 hereof.
8.6 The Borrower shall indemnify the Lender fully forthwith upon demand by
the Lender for all losses, premiums, penalties, costs and expenses
whatsoever incurred by the Lender in connection howsoever with any
interest rate "swap", "cap" or other transaction entered into or to be
entered into or arranged by the Lender at the request or on behalf of
the Borrower at any time and from time to time with any counterparty a
direct or indirect commercial purpose of which is to limit or offset
the exposure of the Borrower to future increases of floating interest
rates in connection howsoever with this agreement.
8.7 The indemnities contained in this clause 8 shall apply irrespective of
any indulgence granted to the Borrower or any other party from time to
time and shall continue in full force and effect notwithstanding any
payment in favour of the Lender and any amount due from the Borrower
under this clause 8 will be due as a separate debt and shall not be
affected by judgment being obtained for any other sums due under any
one or more of this agreement, the Security Documents and any other
documents executed pursuant hereto or thereto.
9. PAYMENTS
9.1 All payments by the Borrower hereunder shall be made to the Lender's
account with such bank or banks as the Lender shall nominate from time
to time.
9.2 Subject to the sub-clauses of this clause 9.2 all payments by the
Borrower hereunder shall be made in full without set-off or
counterclaim and free and clear of and without
<PAGE>
- 18 -
deduction or withholding for or on account of any tax of any
jurisdiction.
(A) If the Borrower is required by law to make any deduction or
withholding from any payment hereunder for or on account of
tax, it shall do so and the sum due from the Borrower in
respect of such payment shall be increased to the extent
necessary to ensure that, after the making of such deduction
or withholding, the Lender receives and retains (free of any
liability in respect of any such deduction or withholding) a
net sum equal to the sum it would have received and retained
had no deduction or withholding been required to be made.
(B) If at any time the Borrower is required by law to make any
deduction or withholding from any sum payable by it hereunder
(or if thereafter there is any change in the rates at which or
the manner in which such deductions or withholdings are
calculated) the Borrower shall promptly and fully notify the
Lender accordingly.
(C) If the Borrower makes any payment hereunder in respect of
which it is required by law to make any deduction or
withholding it shall pay the full amount to be deducted or
withheld to the relevant taxation or other authority within
the time allowed for such payment under applicable law and
shall deliver to the Lender within thirty (30) days after it
has made such payment to the applicable authority the
appropriate receipt or certificate issued by such authority or
the Borrower as the case may be evidencing the payment to such
authority of all amounts so required to be deducted or
withheld from such payment.
9.3 If any sum becomes due for payment hereunder on a day which is not a
Business Day the due date for payment shall be extended to the next
succeeding Business Day unless that next succeeding Business Day falls
within a fresh month in which event the due date for payment shall be
brought forward to the immediately preceding Business Day. Any interest
payable shall be adjusted accordingly. In the event that the due date
for payment of any Repayment Instalment is so extended or brought
forward the due date for payment of the next following Repayment
Instalment shall not be affected thereby.
9.4 All payments hereunder shall be made in United States Dollars not later
than 11:00 a.m. (New York time) on the due dates therefor in such funds
as may be customary for the same day settlement of international
banking transactions in United States
<PAGE>
- 19 -
Dollars in New York City provided that payments in respect of costs and
expenses shall be made in the currencies in which the same are
incurred.
9.5 The Lender shall open and maintain on its books a control account in
the name of the Borrower showing the advance of the Loan and the
computation and payment of interest and all other sums due hereunder.
The Borrower's obligations to repay the Loan and to pay interest
thereon and to pay all other sums due hereunder shall be evidenced by
the entries from time to time made in the control account opened and
maintained under this clause 9.5 which entries will be conclusive and
binding in the absence of manifest error.
10. APPLICATION OF MONEYS
10.1 All moneys assigned to the Lender under the Earnings Assignment shall
be paid to the Earnings Account.
10.2 Subject to the relevant provisions of the Revolving Loan Facility
Agreement and the Bridge Loan Facility Agreement (including, without
limitation, clauses 14.1(I), (J) and (K) of both those agreements) and
to clause 10.4 hereof all moneys paid to the Earnings Account shall be
applied by the Agent as follows:-
(A) first in payment of any and all sums whatsoever certified by
the Lender to the Agent to be due and payable to the Lender
hereunder (such sums to be paid in such order as the Lender
may in its sole discretion elect);
(B) second in retention in the Earnings Account of amounts
equivalent in aggregate to the amount of interest next falling
due to be paid hereunder; and
(C) third in retention of any credit balance in the Earnings
Account
Provided That:-
(i) sums retained in the Earnings Account pursuant to
clause 10.2(B) hereof shall be applied by the Agent in
or towards payment to the Lender of interest due
hereunder on the due dates for payment thereof;
<PAGE>
- 20 -
and
(ii) nothing herein contained shall be deemed to affect the
absolute obligation of the Borrower to pay interest on
and to repay the Loan as provided in clauses 4 and 5
hereof.
10.3 Subject to the relevant provisions of the Revolving Loan Facility
Agreement and the Bridge Loan Facility Agreement (including, without
limitation, clauses 14.1(J) and (K) of both those agreements) and to
clause 10.4 hereof all moneys payable to the Lender under the Insurance
Assignment and any other moneys payable to the Lender by any one or
more of the Security Parties under any one or more of this agreement,
the Security Documents and any other documents executed pursuant hereto
or thereto the application of which is not specifically provided for by
another clause hereof shall be paid to the Lender's account with such
bank or banks as the Lender may nominate from time to time and shall be
applied by the Lender as follows:-
(A) all moneys received from a Total Loss or sale of the Vessel
shall be applied as follows:-
(i) first in payment of any and all sums whatsoever due
and payable to the Lender hereunder (such sums to be
paid in such order as the Lender may in its sole
discretion elect);
(ii) second in repayment of Repayment Instalments and
accrued interest thereon in reverse order of maturity
and in payment of any sums due to the Lender by virtue
of that repayment under clause 8.5 hereof; and
(iii) third in payment of any credit balance to the
Borrower or to whomsoever may be entitled thereto;
and
(B) all moneys not covered by clause 10.3(A) hereof shall be
applied as follows:-
(i) first in accordance with clause 10.3(A)(i) hereof;
(ii) second (in respect only of moneys received by virtue
of the Insurance Assignment) in reimbursement to the
Borrower (if not already reimbursed pursuant to the
relevant provisions of the Revolving Loan Facility
Agreement and/or the Bridge Loan Facility Agreement)
for such of the costs (if any) incurred by the
Borrower in effecting the
<PAGE>
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repair of the damage in respect of which those moneys
are received as the Lender shall approve (such
approval not to be unreasonably withheld) and in
payment to the Earnings Account of all moneys
received in respect of loss of hire insurances (if
any);
(iii) third in payment of Repayment Instalments and accrued
interest thereon in reverse order of maturity and in
payment of any sums due to the Lender by virtue of
that repayment under clause 8.5 hereof; and
(iv) fourth in payment of any credit balance to the
Borrower or to whomsoever may be entitled thereto.
10.4 Subject to the relevant provisions of the Revolving Loan Facility
Agreement and the Bridge Loan Facility Agreement (including, without
limitation, clauses 14.1(J) and (K) of both those agreements), from and
after the giving of notice by the Lender to the Borrower pursuant to
clause 11.1 hereof all moneys whatsoever received or recovered by the
Lender under any one or more of this agreement, the Security Documents
and any other documents executed pursuant hereto or thereto and all
moneys from time to time standing to the credit of the Earnings Account
shall be paid to the Lender's account with such bank or banks as the
Lender may nominate from time to time and shall be applied by the
Lender as follows:-
(A) first in accordance with clause 10.3(A)(i) hereof, subject to
any right the Lender may have to delay any such application in
order to maximise its claim; and
(B) second in payment of any credit balance to the Borrower or to
whomsoever may be entitled thereto.
11. DEFAULT
11.1 The Lender may by notice in writing to the Borrower declare the Loan to
be immediately repayable with accrued interest thereon (plus any sums
due to the Lender by virtue of that repayment under clause 8.5 hereof)
and any security held by the Lender shall become immediately
enforceable if any of the following events occurs:-
<PAGE>
- 22 -
(A) failure by the Borrower to pay promptly on the due date
therefor any sum whatsoever due for payment by it under this
agreement;
(B) any one or more of the Security Parties and the Trustee making
default in the observance or performance of any other
obligation covenant or undertaking contained in any one or
more of this agreement, the Security Documents and any other
documents executed pursuant hereto or thereto and (if the same
is in the opinion of the Lender capable of remedy) the
continuation of that default unremedied for a period of
fifteen (15) days;
(C) any of the representations and warranties made or deemed to
have been made in any one or more of this agreement, the
Security Documents and any other documents executed pursuant
hereto or thereto being inaccurate or misleading when made or
becoming inaccurate or misleading at any time hereafter were
the same to be repeated in relation to the facts subsisting at
that time (whether or not any such repetition actually
occurs);
(D) any event of default occurring under any one or more of the
Security Documents;
(E) the fulfilment of any one or more of the obligations covenants
and undertakings contained in any one or more of this
agreement, the Security Documents and any other documents
executed pursuant hereto or thereto or the exercise of any of
the rights vested in the Lender hereunder or thereunder
becoming either unlawful under any applicable law or
unauthorised by any authority having jurisdiction or otherwise
impossible;
(F) a bona fide petition being presented or an order being made or
an effective resolution being passed for the commencement of
any proceedings for the liquidation winding-up or
re-organisation of any one or more of the Security Parties
except for the purpose of and followed by an amalgamation or
reconstruction the terms of which shall have been previously
approved in writing by the Lender;
(G) a distress or execution being levied or enforced upon or sued
out against any part of the assets of any one or more of the
Security Parties which in the Lender's opinion would have a
material adverse effect on any one or more of
<PAGE>
- 23 -
the Security Parties and not being satisfied removed or
discharged within fourteen (14) days;
(H) the holder of any Encumbrance taking possession of or a
liquidator, administrator, receiver, administrative receiver,
trustee or similar officer being appointed in respect of the
whole or a substantial part of the assets of any one or more
of the Security Parties;
(I) any one or more of the Security Parties being unable or
admitting its inability to pay its or their lawful debts as
they mature or convening a meeting of or preparing to enter
into any arrangement or composition with or making a general
assignment for the benefit of its or their creditors or being
adjudicated bankrupt or insolvent;
(J) any other Borrowed Money of any one or more of the Security
Parties becoming due or becoming capable of being declared due
prior to its stated date of maturity by reason of default on
the part of any one or more of the Security Parties;
(K) any one or more of the Security Parties ceasing to carry on or
suspending or threatening to cease to carry on or to suspend
its or their business or a substantial part of the assets or
business of any one or more of the Security Parties being
seized confiscated or expropriated;
(L) a Total Loss occurring and either (i) the Lender not being
satisfied at any time in its absolute discretion that the
Total Loss is adequately covered by insurance and that the
relevant insurance proceeds will be paid to the Lender or (ii)
any insurance claim in respect thereof being rejected by the
underwriters at any time or (iii) the Lender failing to
receive the insurance proceeds in respect thereof within one
hundred and eighty (180) days thereafter;
(M) any one or more of the Subject Documents being repudiated or
terminated without the prior written consent of the Lender;
(N) a material adverse change occurring in the business, assets or
financial
<PAGE>
- 24 -
condition of any one or more of the Security Parties which may
reasonably be considered to affect its or their ability to
comply with all or any of its or their respective obligations
under any one or more of the Subject Documents; or
(O) an event of default occurring under the Revolving Loan
Facility Agreement or the Bridge Loan Facility Agreement.
12. SECURITY
12.1 As security for the Loan, interest thereon and all other sums due and
to become due hereunder the Borrower shall provide the Lender with the
following documents in form and substance satisfactory to the Lender:-
(A) duly registered third Panamanian naval mortgage over the
Vessel duly executed by the Borrower;
(B) third priority assignment duly executed by the Borrower of all
insurances whatsoever in respect of the Vessel and loss of its
earnings and all compensation in respect of the requisition
for title or other compulsory acquisition of the Vessel (with
the exception of requisition hire);
(C) third priority assignment duly executed by the Borrower of the
benefit of all earnings whatsoever of the Vessel (including
requisition hire);
(D) guarantee and indemnity duly executed by the Guarantor;
(E) third priority charge over all the authorised and issued
shares in the Borrower duly executed by the Guarantor;
(F) tripartite agreement duly executed by (i) the Agent, the
Trustee and the Banks, (ii) Neptun Maritime Oyj and the Lender
and (iii) the Borrower and the Guarantor allowing the
execution of the other Security Documents and coordinating the
Lender's interests under this agreement and the other Security
Documents with those of the Agent and/or the Trustee and/or
the Banks under (i) the Revolving Loan Facility Agreement and
the Revolving Loan Securities and (ii) the Bridge Loan
Facility Agreement and the Bridge Loan Securities; and
<PAGE>
- 25 -
(G) letter of subordination duly executed by the Manager
subordinating its interests under the Management Agreement to
those of the Lender under this agreement.
13. REPRESENTATIONS AND WARRANTIES
13.1 The Borrower hereby represents and warrants that:-
(A) each of the Security Parties is a duly incorporated company
validly existing and in good standing under the laws of its
country of incorporation and all the shares in the Borrower
are beneficially owned by the Guarantor;
(B) each of the Security Parties has full power and authority to
execute deliver and perform such of the Subject Documents to
which it is a party;
(C) each of the Security Parties has taken all necessary corporate
or other action required to authorise the execution delivery
and performance of such of the Subject Documents to which it
is a party;
(D) all consents licences approvals or authorisations whatsoever
required to make the Subject Documents legal valid enforceable
and admissible in evidence have been obtained and are in full
force and effect;
(E) from and after execution and delivery thereof each of the
Subject Documents will constitute legal valid and binding
obligations of the parties thereto (other than the Agent, the
Trustee, the Banks and the Lender) enforceable in accordance
with its terms and will not contravene any applicable law or
regulation or any contractual constitutional or other
restriction binding on any of the parties thereto (other than
the Agent, the Trustee, the Banks and the Lender);
(F) as at the date hereof no material litigation or administrative
proceedings of or before any board of arbitration, Court or
Governmental authority or agency is pending or (to the
Borrower's knowledge) threatened the result of which would or
might be to have a material adverse effect on the business
assets or financial
<PAGE>
- 26 -
condition of any one or more of the Security Parties;
(G) the copies of any of the Subject Documents delivered or to be
delivered to the Lender hereunder constitute the full
agreement between the parties thereto with respect to the
subject matter thereof and none of the parties thereto is in
default thereunder;
(H) all historic financial information and other documentation
submitted to the Lender by or on behalf of the Borrower in
connection herewith is accurate and correct in all material
respects and not misleading;
(I) the claims of the Lender against the Borrower under this
agreement will rank at least pari passu with the claims of all
unsecured creditors of the Borrower other than claims of such
creditors to the extent that they are statutorily preferred;
(J) each Security Party and its business and assets (including,
without limitation, all computer systems, all systems and
equipment containing embedded microchips (including leased
systems and equipment) and any other systems, equipment or
parts of the business or assets whatsoever of that Security
Party whose proper functioning or operation is capable of
being affected by the incorrect processing, storing,
calculation or recognition of dates, together with all
software and data in connection with any of the foregoing)
shall at all times comply with the requirements of Year 2000
Conformity as defined in "A DEFINITION OF YEAR 2000 CONFORMITY
REQUIREMENTS" issued by the British Standards Institution (BSI
DISC PD2000-1:1998) or such later reviewed, revised or amended
version thereof as may be published by the British Standards
Institution from time to time (in which case the later version
shall be the relevant one for the purposes of this clause);
and
(K) no Event of Default has occurred or is continuing and no event
which with the giving of notice and/or lapse of time would
constitute an Event of Default has occurred or is continuing.
14. COVENANTS
<PAGE>
- 27 -
14.1 The Borrower hereby covenants that from the date hereof until the
Borrower has no remaining obligations, actual or contingent, under this
agreement:-
(A) the Borrower will file all requisite tax returns and will pay
all tax as shown to be due and payable on such returns or any
of the assessments made against it (other than those being
contested in good faith);
(B) the Borrower will carry on and conduct its business in a
proper and efficient manner and will duly pay all outgoings as
and when they fall due and in particular without limiting the
generality of the foregoing will duly observe and perform all
the terms and conditions of any contract of employment of the
Vessel to be observed and performed by it;
(C) the Borrower will prepare or cause to be prepared, in
accordance with GAAP, annual audited accounts for the Borrower
and unaudited quarterly accounts for the Borrower; the
Borrower will furnish the Lender with copies of the audited
annual accounts no later than ninety five (95) days after the
end of each financial year and copies of the unaudited
quarterly accounts no later than fifty (50) days after the end
of each financial quarter; the audited annual accounts shall
include profit and loss accounts and balance sheets certified
and audited by an accountant acceptable to the Lender which
shall include Grant Thornton L.L.P.;
(D) the Borrower will provide the Lender in a form acceptable to
the Lender no later than ten (10) days after the end of each
month monthly management information (including traffic
statistics, cash flows, booking reports and outstanding trade
debt) in respect of the Borrower;
(E) the Borrower shall procure that the Earnings Account is opened
and maintained at the bank specified in the definition thereof
in clause 1.2 hereof and shall not keep any accounts with any
bank other than the Agent unless otherwise agreed specifically
with the Agent;
(F) the Borrower shall promptly furnish to the Lender all such
accounts and financial information concerning any one or more
of the Security Parties and the Vessel as the Lender may from
time to time reasonably require including without limiting the
generality of the foregoing cash flow analyses, budgets
<PAGE>
- 28 -
and details of the operating costs of the Vessel;
(G) the Vessel, its earnings and the interests of the Lender as
mortgagee of the Vessel shall be insured with such
underwriters insurance offices and clubs for such amounts for
such risks in such form and upon such conditions as are
satisfactory to the Lender from time to time provided that the
amount of each of the marine and war risks insurances shall
not in any event be less than the greater from time to time of
(i) the market value of the Vessel and (ii) one hundred and
twenty per cent (120%) of the aggregate amount of the Loan,
the Revolving Loan Facility and the Bridge Loan Facility then
outstanding;
(H) the Borrower will not without the prior written consent of the
Lender:-
(i) create or allow to subsist any Encumbrance over any of
its assets or any part thereof save for Permitted
Liens and those created by any of the Security
Documents or the Revolving Loan Securities or the
Bridge Loan Securities;
(ii) incur any liability in respect of Borrowed Money
except for the Revolving Loan Facility, the Bridge
Loan Facility and unsecured Borrowed Money
subordinated to the Loan hereunder;
(iii) make loans or advances to others (except for loans or
advances made in the ordinary course of business in
connection with the chartering and/or operation and/or
repair of the Vessel);
(iv) except in connection with the chartering and/or
operation and/or repair of the Vessel incur any other
liability to a third party which in the opinion of the
Lender is of a substantial nature;
(v) consolidate with any other company or merge into any
company;
(vi) engage in any business other than the ownership
operation chartering and management of the Vessel;
<PAGE>
- 29 -
(vii) guarantee endorse or otherwise become or remain
liable in respect of the obligations of any person
firm or corporation;
(viii) pay any dividends or other distributions or issue any
new shares or transfer any shares;
(ix) sell or otherwise dispose of the Vessel or any share
therein or any other asset (the Lender's consent not
to be unreasonably withheld);
(x) make or allow any alteration to or waiver of the
terms of any one or more of the Subject Documents;
(xi) appoint any manager of the Vessel other than the
Manager;
(xii) change the class, flag or employment of the Vessel as
a passenger cruise ship; or
(xiii) make any acquisitions or investments other than the
regular dry-docking and maintenance of the Vessel
(the Lender's consent not to be unreasonably
withheld);
(I) the Borrower will procure that the amount standing to the
credit of the Earnings Account shall not at any time fall
below two million United States Dollars (USD2,000,000);
(J) the Borrower shall procure that its Debt Service Coverage
Ratio (calculated as set out below, with the first such
calculation being made twelve (12) months after the Drawdown
Date and the subsequent calculations being made at three (3)
monthly intervals thereafter) shall not be less than the ratio
specified in item 1 in schedule B hereto (for the period of
twelve (12) months after the Drawdown Date) and the ratio
specified in item 2 in schedule B hereto (for any period
thereafter) and for this purpose the Debt Service Coverage
Ratio shall be calculated in accordance with the following
formula:-
EBITDA
------------------
Financial Expenses
<PAGE>
- 30 -
where
"EBITDA" means, for the previous period of twelve (12) months,
the aggregate of:
(i) Net Income (but excluding gains and losses from the
sale of assets or reserves relating thereto and items
classified as extraordinary or non-recurring) from the
Borrower's operations for such period and for this
purpose Net Income means the consolidated net income
of the Borrower as determined in accordance with GAAP;
and
(ii) the aggregate amounts deducted in determining Net
Income for such period in respect of depreciation,
amortisation, taxes, deferred income and interest
expense of the Borrower; and
"Financial Expenses" means, for the previous period of twelve
(12) months, the sum of:
(i) the aggregate principal payable or paid during such
period on any Borrowed Money of the Borrower (other
than the scheduled principal repayment in respect of
the Bridge Loan Facility and principal repayments
under the Revolving Loan Facility Agreement to the
extent that they were redrawn during the same period);
(ii) aggregate interest expense (including, without
limitation, capitalised interest accrued during such
period) of the Borrower for such period; and
(iii) all rent and any capital lease obligations or
operating lease obligations by which the Borrower is
bound which are payable or paid during such period as
calculated in accordance with GAAP and derived from
the then latest accounts of the Borrower;
(K) the Borrower shall provide the Lender with compliance
certificates in relation to the relevant financial covenants
contained in this agreement in the form set out in appendix II
hereto on or before the Drawdown Date and at three (3)
<PAGE>
- 31 -
monthly intervals after the Drawdown Date and, for the
avoidance of doubt, the covenant in clause 14.1(J) hereof
shall not be deemed to be a 'relevant financial covenant' for
the purposes of this clause 14.1(K) until the date falling
twelve (12) months after the Drawdown Date;
(L) the Borrower will promptly inform the Lender if any Event of
Default or any event which with the giving of notice and/or
lapse of time would constitute an Event of Default occurs or
if any event occurs which may materially adversely affect its
ability to perform any of its obligations under any one or
more of this agreement, the Security Documents and any other
documents executed pursuant hereto or thereto; and
(M) the Borrower will from time to time at the request of the
Lender execute and deliver to the Lender or procure the
execution and delivery to the Lender of all such documents as
the Lender shall deem desirable in its absolute discretion for
giving full effect to this agreement and for perfecting,
protecting the value of or enforcing any rights or securities
granted to the Lender under any one or more of this agreement,
the Security Documents and any other documents executed
pursuant hereto or thereto.
15. SET-OFF
15.1 The Lender is hereby authorised to combine any and all accounts held by
the Borrower with the Lender at any of the Lender's offices and to
apply (without any prior notice) any credit balance to which the
Borrower is then beneficially entitled on any such account (whether or
not that credit balance is then due to the Borrower) in or towards
satisfaction of any sums then due and payable by the Borrower
hereunder. For that purpose the Lender is hereby authorised to use all
or part of that credit balance to buy such other currency or currencies
as may be required to enable it to effect that application. The Lender
shall not be obliged to exercise any of its rights under this clause,
which shall be without prejudice and in addition to any right of set
off, combination of accounts, lien or other rights to which it at any
time otherwise is entitled (whether by operation of law, contract or
otherwise).
16. ASSIGNMENT AND PARTICIPATION
16.1 This agreement shall be binding upon and inure to the benefit of the
Lender and the Borrower and their respective successors and assigns.
<PAGE>
- 32 -
16.2 The Borrower may not assign its rights or obligations hereunder without
the prior written consent of the Lender.
16.3 The Lender may at any time with the prior written consent of the
Borrower (such consent not to be unreasonably withheld and not to be
required at all if an Event of Default has occurred and is subsisting)
assign transfer or grant participations in all or part of its rights
and obligations hereunder and for this purpose:-
(A) no such consents shall be required from the Borrower if such
assignee, transferee or grantee is a subsidiary company,
holding company or sister company of the Lender;
(B) the Lender shall be at liberty to disclose on a confidential
basis to any such assignee transferee or grantee (or to any
potential such assignee transferee or grantee) all such
information concerning any one or more of the Security
Parties, the Vessel and the Subject Documents as the Lender
may deem appropriate; and
(C) the Borrower shall upon demand by and at the expense of the
Lender execute and deliver to the Lender all such documents
and do all such acts and things as the Lender may deem
necessary or desirable in its absolute discretion for giving
full effect to any such assignment transfer or participation.
17. MISCELLANEOUS
17.1 Time shall be of the essence of this agreement but no failure or delay
on the part of the Lender to exercise any power or right hereunder
shall operate as a waiver of such power or right nor shall any single
or partial exercise of any power or right hereunder preclude any other
or further exercise thereof or the exercise of any other power or right
hereunder. The powers and rights provided to the Lender in this
agreement are cumulative and shall not exclude any powers or rights
provided to the Lender by law.
17.2 In the event of any of the provisions contained in any one or more of
this agreement, the Security Documents and any other documents executed
pursuant hereto or thereto
<PAGE>
- 33 -
being invalid, illegal or unenforceable in any respect under any law,
the validity, legality and enforceability of the remaining provisions
herein or therein contained shall not in any way be affected or
impaired thereby.
17.3 The Lender shall not be liable for any failure to meet its obligations
hereunder resulting from any cause whatsoever beyond its control.
18. NOTICES
18.1 Any notice or other correspondence in connection herewith required to
be sent or given by the Borrower to the Lender shall be sent to the
Lender in the English language at c/o Neptun Maritime Oyj, Bulevardi
1A, FIN-00100 Helsinki, Finland, Attention: Finance Department
(facsimile no. + 358 9 180 4640) or to such other address or addresses
as may from time to time be notified by the Lender to the Borrower for
such purpose.
18.2 Any notice or other correspondence in connection herewith required to
be sent or given by the Lender to the Borrower shall be sent to the
Borrower in the English language at c/o Commodore Holdings Limited,
4000 Hollywood Boulevard, Suite 385-S, Hollywood, Fl 33021, U.S.A.,
Attention: Chief Financial Officer (facsimile no. +954 921 2147) with
copies to Kathleen L Deutsch, P.A., Broad and Cassel, Miami Center -
Suite 3000, 201 S. Biscayne Boulevard, Miami, Fl 33131, U.S.A.
(facsimile no. +305 373 9443) or to such other address or addresses as
the Borrower may from time to time notify to the Lender in writing and
shall be deemed to have been validly given and received on the date of
dispatch if sent by telex and five (5) days after having been posted if
sent by prepaid first class or airmail post.
19. PROPER LAW AND JURISDICTION
19.1 This agreement shall be governed by and construed in accordance with
the Laws of England and for the exclusive benefit of the Lender the
Borrower and the Lender hereby irrevocably submit to the jurisdiction
of the High Courts of Justice in England. The Borrower hereby
irrevocably authorises and appoints Consult Marine of 58 London Fruit
Exchange, Brushfield Street, London E1 6EP as its agent in England for
the acceptance of service of legal proceedings on it hereunder.
<PAGE>
- 34 -
IN WITNESS whereof the parties hereto have executed this agreement the day and
year first above written.
SIGNED by )
/s/ Per Arvid Skult )
- ---------------------------------------
for and on behalf of )
EFF-SHIPPING LIMITED )
in the presence of:- )
SIGNED by )
/s/ Jeffrey I. Binder )
- ---------------------------------------
for and on behalf of )
CROWN CRUISES OF PANAMA, INC. )
in the presence of:- )
EXHIBIT 10.9
CROWN CRUISES OF PANAMA, INC.
- and -
EFF-SHIPPING LIMITED
------------------------
THIRD NAVAL MORTGAGE
- on the -
m.v. "CROWN DYNASTY"
------------------------
Sinclair Roche & Temperley
Royex House
5 Aldermanbury Square
London EC2V 7LE
Tel: 0171 452 4000
Fax: 0171 452 4001
Ref: GFS/243417
<PAGE>
- 2 -
INDEX OF CONTENTS
CLAUSE HEADING PAGE NO.
- ------ ------- --------
1. DEFINITIONS...............................................................2
2. OWNER'S COVENANT TO PAY...................................................5
3. MORTGAGE..................................................................6
4. OWNER'S COVENANTS AS TO INSURANCE.........................................7
5. OWNER'S COVENANTS AS TO OPERATION & MAINTENANCE..........................12
6. EXPENSES.................................................................18
7. PROTECTION AND MAINTENANCE OF SECURITY...................................18
8. EVENTS OF DEFAULT........................................................19
9. ENFORCEMENT OF RIGHTS....................................................20
10. APPLICATION OF MONEYS....................................................22
11. NO WAIVER................................................................22
12. POWER OF DELEGATION......................................................23
13. POWER OF ATTORNEY........................................................23
14. FURTHER ASSURANCE........................................................23
15. AMOUNT SECURED BY MORTGAGE...............................................24
16. NOTICES..................................................................24
17. GOVERNING LAW, SEVERABILITY, ETC. .......................................24
18. MISCELLANEOUS............................................................25
19. RECORDING OF THIS MORTGAGE...............................................25
<PAGE>
- 3 -
THIS THIRD NAVAL MORTGAGE is made the 28th day of January 2000 by CROWN CRUISES
OF PANAMA, INC. a company incorporated under the laws of Panama with its
registered office at c/o Galindo Arias & Lopez, Scotia Plaza No. 18, Avenida
Federico Boyd & Calle No. 51, Piso 9, 10 & 11, Panama, Republic of Panama ("the
Owner") in favour of EFF-SHIPPING LIMITED. a company incorporated under the laws
of the Cayman Islands with its registered office at the offices of Huntlaw
Corporate Services Ltd., The Huntlaw Building, PO Box 1350, George Town, Grand
Cayman, Cayman Islands ("the Mortgagee" which expression shall include its
successors and permitted assigns).
WHEREAS:-
(A) The Owner is the sole owner of the whole of the motor vessel named
"CROWN DYNASTY" built in Valencia, Spain at Union Naval de Levante duly
documented in the name of the Owner under the laws and flag of the
Republic of Panama under Provisional Patente of Navigation Number
22465-PEXT-5 having radio call letters in the international Code of
Signals 3FJX3 with a gross capacity in tons of 19,089 net capacity in
tons of 8,103 length of 140.08 meters breadth of 22.50 meters and depth
of 7.20 meters number of masts _____________ number of bridges number
of main decks _____________ and number of funnels
_____________ .
(B) By a loan agreement dated the 24th day of January 2000 made between (1)
the Mortgagee and (2) the Owner (hereinafter as the same may from time
to time be amended, varied or supplemented called the "Loan Agreement")
the Mortgagee has agreed to make available to the Owner a loan of
twenty four million four hundred and eighty thousand United States
Dollars (USD24,480,000) (the "Loan" which expression shall also mean
where the context so requires the amount thereof from time to time
outstanding) on the terms and conditions therein set forth. The Owner
is as at the date hereof justly indebted to the Mortgagee in the amount
of the Loan repayable with interest thereon on the terms and conditions
hereinafter set out. A copy of the form of the Loan Agreement in the
form executed is attached hereto and forms an integral part hereof.
(C) Pursuant to the terms and conditions of the Loan Agreement, the Owner
has drawn the whole of the Loan in a single amount.
(D) The Mortgagee agreed to advance the Loan on condition that the Owner
should
<PAGE>
- 4 -
execute and deliver to the Mortgagee such a third priority mortgage of
the Vessel as hereinafter appears.
(E) In fulfilment of the said condition and in order to secure the payment
to the Mortgagee of the Outstanding Indebtedness (as hereinafter
defined) and the performance and observance of and compliance with all
the covenants terms and conditions in this Mortgage contained expressed
or implied the Owner has duly authorised the execution and delivery of
this Mortgage and is duly permitted to give as security for the payment
of the Outstanding Indebtedness and the performance and observance of
and compliance with all the said covenants terms and conditions a third
preferred mortgage on the Vessel under and pursuant to the laws of the
Republic of Panama.
(F) By first and second preferred mortgages of even date herewith ("the
Prior Mortgages") the Owner has mortgaged the Vessel in favour of
Merita Bank Plc ("the Prior Mortgagee") as trustee for itself and
others.
NOW THIS MORTGAGE WITNESSETH AND IT IS HEREBY AGREED as follows:-
1. DEFINITIONS
1.1 In this Mortgage unless the context otherwise requires any term defined
in the preamble or recitals hereto has the meaning ascribed to it
therein and:-
"DEFAULT RATE"
means interest at the rate calculated in accordance with clause 4.3 of
the Loan Agreement;
"EVENT OF DEFAULT"
means any of the events set out in clause 8 hereof;
"INSURANCES"
means all policies and contracts of insurance (which expression
includes all entries of the Vessel in a protection and indemnity or war
risks association) which are from time to time taken out or entered
into in respect of the Vessel and her earnings or otherwise
<PAGE>
- 5 -
howsoever in connection with the Vessel with the exception of
Mortgagees interest insurances;
"OUTSTANDING INDEBTEDNESS"
means the aggregate of all sums of money whatsoever now or in the
future actually or contingently due or owing to the Mortgagee under the
Security Documents or any of them;
"PERSON"
includes any body of persons;
"REQUISITION COMPENSATION"
means all moneys or other compensation whatsoever payable by reason of
the requisition for title or other compulsory acquisition of the Vessel
(otherwise than by requisition for hire) or the capture, seizure,
arrest, detention or confiscation of the Vessel by any government or by
persons acting or purporting to act on behalf of any government;
"SECURITY DOCUMENTS"
means the Loan Agreement, this Mortgage and any other document as may
have been or may hereafter be executed to secure the Loan;
"SECURITY PERIOD"
means the period commencing on the date hereof and terminating upon
discharge of the security created by the Security Documents by
irrevocable payment in full of the Outstanding Indebtedness;
"TOTAL LOSS"
means:-
(i) actual or constructive or compromised or agreed or arranged
total loss of the Vessel; or
(ii) requisition for title or other compulsory acquisition of the
Vessel otherwise than by requisition for hire; or
(iii) capture, seizure, arrest, detention or confiscation of the
Vessel by any government or by persons acting or purporting to
act on behalf of any government unless the Vessel is released
and restored to the Owner from such
<PAGE>
- 6 -
capture, seizure, arrest or detention within thirty (30) days
after the occurrence thereof; and
"VESSEL"
means the vessel described in Recital (A) hereto and includes her
engines, machinery, boats, tackle, outfit, spare gear, fuel, consumable
or other stores, belongings and appurtenances whether on board or
ashore and whether now owned or hereafter acquired.
1.2 In clause 4.1(A) hereof:-
"EXCESS RISKS"
means the proportion of claims for general average and salvage charges
and under the ordinary running down clause not recoverable in
consequence of the value at which a vessel is assessed for the purpose
of such claims exceeding her insured value;
"PROTECTION AND INDEMNITY RISKS"
means the usual risks covered by associations that are members of the
International Group of P. & I. Associations including without
limitation pollution risks (whether relating to oil or otherwise
howsoever) and the proportion not recoverable in case of collision
under the ordinary running down clause; and
"WAR RISKS"
includes the risks of mines and all risks excluded from the standard
form of English marine policy by the free of capture and seizure
clause.
1.3 This Mortgage shall be read together with the Loan Agreement.
1.4 Clause headings are inserted for convenience of reference only and
shall be ignored in the interpretation of this Mortgage.
2. OWNER'S COVENANT TO PAY
2.1 In consideration of the premises the Owner covenants with the Mortgagee
as follows:-
<PAGE>
- 7 -
(A) to repay the Loan to the Mortgagee by the instalments at the
times and in the manner specified in clause 5 of the Loan
Agreement;
(B) to pay interest on the Loan to the Mortgagee at the rate at
the times and in the manner specified in clause 4 of the Loan
Agreement;
(C) to pay interest at the Default Rate to the Mortgagee (both
before and after any judgment) on any sum or sums payable
under the Security Documents which is not paid to the
Mortgagee on the due date;
(D) to pay each and every other sum of money that may be or become
owing to the Mortgagee under the terms of the Security
Documents or any of them at the times and in the manner
specified therein;
(E) to pay to and/or indemnify the Mortgagee for such additional
amounts as may be necessary in order that all payments under
this Mortgage after deduction or withholding for or on account
of all present or future taxes (other than corporate taxes on
the overall net income of the Mortgagee) imposed by any
competent authority in any jurisdiction relative to the Owner
shall be no less than such payments would have been had there
been no such taxes; and
(F) to perform observe and comply with the obligations, covenants,
terms and conditions set out in this Mortgage.
2.2 Notwithstanding anything to the contrary contained in this clause 2 the
Owner shall be entitled to prepay the Loan in whole or in part in
accordance with the provisions of clause 6.3 of the Loan Agreement.
2.3 Notwithstanding anything to the contrary contained in this clause 2 the
Outstanding Indebtedness shall become immediately payable on demand
upon the happening of any Event of Default.
3. MORTGAGE
3.1 In consideration of the premises and in order to secure by this
Mortgage the
<PAGE>
- 8 -
repayment to the Mortgagee of the Loan plus interest at the rate set
forth in the Loan Agreement and the payment of all such other sums as
may hereafter from time to time and at any other time form part of the
Outstanding Indebtedness and to secure the performance and observance
of and compliance with the covenants terms and conditions herein
contained, the Owner in accordance with the provisions of Chapter V
Title IV of Book Second of the Code of Commerce of the Republic of
Panama and of the pertinent provisions of the Civil Code and other
legislation of the Republic of Panama hereby executes and constitutes a
Third Preferred Naval Mortgage on the whole of the Vessel in favour of
the Mortgagee subject to the rights of the Prior Mortgagee under the
Prior Mortgages to have and to hold the same unto the Mortgagee its
successors and assigns forever upon the terms herein set forth,
Provided Only and the condition of these presents is such that if the
Owner its successors and assigns shall pay or cause to be paid to the
Mortgagee its successors or assigns the Outstanding Indebtedness as and
when the same shall become due and payable in accordance with the terms
of the Loan Agreement and this Mortgage and shall observe and comply
with the covenants, terms and conditions in the Loan Agreement and this
Mortgage contained expressed or implied to be performed, observed or
complied with by and on the part of the Owner then these presents and
the rights hereunder shall cease determine and be void and the
Mortgagee will, at the request and cost of the Owner, execute a release
in such form as the Owner may reasonably require, of the security
created by this Mortgage.
3.2 It is declared and agreed that the security created by this Mortgage
shall be held by the Mortgagee as a continuing security for the payment
of the Outstanding Indebtedness and the performance and observance of
and compliance with all of the covenants terms and conditions contained
in the Security Documents and that the security so created shall not be
satisfied by any intermediate payment or satisfaction of any part of
the amount hereby and thereby secured and that the security so created
shall be in addition to and shall not in any way be prejudiced or
affected by any collateral or other security now or hereafter held by
the Mortgagee for all or any part of the moneys hereby and thereby
secured and that every power and remedy given to the Mortgagee
hereunder shall be an addition to and not a limitation of any and every
other power or remedy vested in the Mortgagee under any of the other
Security Documents or at law and that all the powers so vested in the
Mortgagee may be exercised from time to time and as often as the
Mortgagee may deem expedient.
4. OWNER'S COVENANTS AS TO INSURANCE
<PAGE>
- 9 -
4.1 The Owner covenants with the Mortgagee and undertakes throughout the
Security Period:-
(A) at the Owner's expense to insure and keep the Vessel insured
in United States Dollars (or such other currency as the
Mortgagee may approve in writing) against (a) fire and usual
marine risks (including excess risks), (b) war risks, (c)
protection and indemnity risks, (d) oil pollution liability
risks in excess of the limit of cover for oil pollution
liability included within the protection and indemnity risks,
(e) loss of hire and (f) any other risks which the Mortgagee
may from time to time require;
(B) to effect the Insurances (a) generally in such amounts and
upon such terms as shall from time to time be approved in
writing by the Mortgagee, through such brokers (hereinafter
called "the approved brokers") and with such insurance
companies underwriters war risks and protection and indemnity
associations as shall from time to time be approved in writing
by the Mortgagee, and (b) in particular 01. (in respect of all
risks within the protection and indemnity insurances other
than oil pollution risks) in an unlimited amount, or (if
unlimited cover ceases to be available) in the maximum amount
available to the Owner for the Vessel in the market from time
to time; 02. (in respect of oil pollution liability risks
included within the protection and indemnity insurances) in
the maximum amount available to the Owner for the Vessel in
the market from time to time; and 03. (in respect of oil
pollution liability risks in excess of the limit of cover
included in the protection and indemnity insurances) in such
amount and upon such terms as the Mortgagee may from time to
time require;
(C) to renew the Insurances at least fourteen (l4) days before the
relevant policies or contracts expire and to procure that the
approved brokers shall promptly confirm in writing to the
Mortgagee as and when each such renewal is effected;
(D) punctually to pay premiums calls contributions or other sums
payable in respect of all the Insurances and to produce all
relevant receipts when so required by the Mortgagee;
(E) to arrange for the execution of such guarantees as may from
time to time be required by a protection and indemnity or war
risks association;
<PAGE>
- 10 -
(F) to procure that the interests of the Mortgagee shall be duly
endorsed upon all slips cover notes policies certificates of
entry or other instruments of insurance issued or to be issued
in connection with the Insurances and in particular, but
without limitation, if so required by the Mortgagee, (but
without liability as between the Owner and the Mortgagee for
premiums or calls) to procure that the Mortgagee be named as
co-assured;
(G) subject to the rights of the Prior Mortgagee under the Prior
Mortgages to procure that all such instruments of insurance as
are referred to in sub-clause (F) above shall be deposited
with the Mortgagee (or with such other person as the Mortgagee
may from time to time direct) and that the approved brokers
furnish the Mortgagee with a letter or letters of undertaking
in such form as may be required by the Mortgagee;
(H) subject to the rights of the Prior Mortgagee under the Prior
Mortgages to procure that the protection and indemnity and/or
war risks associations wherein the Vessel is entered shall (if
so required by the Mortgagee) furnish the Mortgagee with a
letter or letters of undertaking in such form as may be
required by the Mortgagee;
(I) to operate and manage the Vessel or procure that the Vessel is
operated and managed strictly in conformity with the terms of
the instruments of insurance referred to in sub-clause (F)
above (including any warranties express or implied therein)
and in particular:
(i) to ensure that the Vessel's classification,
structure, operation and management are maintained
strictly in conformity with any warranty as to class,
structure, operation or management or any other
provision as to class, structure, operation or
management contained in the Insurances and to this
end to submit the Vessel or cause the Vessel to be
submitted to such periodical or other surveys as may
be required by the Vessel's classification society,
salvage association or otherwise howsoever not less
than fourteen (14) days before the date upon which
such surveys fall due;
<PAGE>
- 11 -
(ii) promptly and fully to implement any and all
requirements or recommendations contained in any
report issued upon or following any of the surveys
referred to in sub-clause (i) above and promptly
after such surveys have been carried out to provide
evidence satisfactory to the Mortgagee that this has
been done together with confirmation from the
relevant approved brokers that the Vessel complies
with such of the Insurances to which such surveys are
relevant;
(iii) (without prejudice to clauses 4.1(G) and (H) hereof)
subject to the rights of the Prior Mortgagee under
the Prior Mortgages to procure that the approved
brokers furnish the Mortgagee with a letter of
undertaking in terms satisfactory to the Mortgagee in
which the approved brokers undertake (inter alia) to
give the Mortgagee notice of any failure by the Owner
to comply with any warranty as to the Vessel's class
or structure;
(iv) to comply strictly with the requirements of any
legislation relating to pollution or protection of
the environment which may from time to time be
applicable to the Vessel in any jurisdiction in which
the Vessel shall trade and in particular (if the
Vessel is to trade in the United States of America
and Exclusive Economic Zone (as defined in the Act))
to comply strictly with the requirements of the
United States Oil Pollution Act 1990 ("the Act") and
before any such trade is commenced and during the
entire period during which such trade is carried on:-
(a) to pay any additional premiums required to
maintain protection and indemnity cover for
oil pollution up to the limit available to
the Owner for the Vessel in the market;
(b) to make all such quarterly or other voyage
declarations as may from time to time be
required by the Vessel's protection and
indemnity association in order to maintain
such cover, and promptly to deliver to the
Mortgagee copies of such declarations;
(c) to submit the Vessel to such additional
periodic, classification,
<PAGE>
- 12 -
structural or other surveys which may be
required by the Vessel's protection and
indemnity insurers to maintain cover for
such trade and promptly to deliver to the
Mortgagee copies of reports made in respect
of such surveys;
(d) to implement any recommendations contained
in the reports issued following the surveys
referred to in sub-clause (c) above within
the time limit specified therein, and
provide evidence satisfactory to the
Mortgagee that the protection and indemnity
insurers are satisfied that this has been
done; and
(e) in addition to the foregoing (if such trade
is in the United States of America and
Exclusive Economic Zone):
(01) to obtain and retain a certificate
of financial responsibility under
the Act in form and substance
satisfactory to the United States
Coast Guard and to provide the
Mortgagee with a copy thereof;
(02) to procure that the protection and
indemnity insurances do not contain
a US Trading Exclusion Clause or any
other provision analogous thereto
and to provide the Mortgagee with
evidence that this is so; and
(03) strictly to comply with any
operational or structural
regulations issued from time to time
by any relevant authorities under
the Act so that at all times the
Vessel falls within the provisions
which limit strict liability under
the Act for oil pollution;
(v) before allowing the Vessel to enter or trade to any
zone which is declared a war zone or which is
rendered dangerous by reason of hostility in any part
of the world (whether war be declared or not) to
effect such special insurance cover as the Mortgagee
may require; and
(vi) to notify the Mortgagee forthwith by letter or in
case of urgency by telex of any requirement or
recommendation made by any insurer or classification
society which has not been complied with prior to
<PAGE>
- 13 -
fourteen (14) days before the date by which it is
required to be complied with;
(J) to apply all sums receivable in respect of the Insurances as
are paid to the Owner for the purpose of making good the loss
and fully repairing all damage in respect whereof the
insurance moneys shall have been received;
(K) not to make any alteration which would or could reasonably be
expected to have a material adverse effect on the rights or
interest of the Mortgagee to any of the terms in any of the
instruments of insurance referred to in sub-clause (F) above
which have been approved by the Mortgagee and not to make, do,
consent or agree to any act or omission which would or might
render any such instrument of insurance invalid, void,
voidable or unenforceable or render any sum payable thereunder
repayable in whole or in part;
(L) not without the prior approval of the Mortgagee to settle,
compromise or abandon any claim under the Insurances for Total
Loss or for a major casualty; and
(M) to indemnify the Mortgagee fully forthwith upon demand for any
and all costs and expenses incurred by the Mortgagee from time
to time:
(i) in effecting for the benefit of the Mortgagee in such
amount, upon such terms, through such insurance
brokers and with such insurance company or
underwriter as the Mortgagee shall in its sole
discretion elect (i) a Mortgagee's interest insurance
policy on the Vessel and (ii) an insurance policy
against the possible consequences of pollution
involving the Vessel, including without limitation,
the risk of expropriation or sequestration of the
Vessel, the imposition of a lien or encumbrance of
any kind having priority over this Mortgage or a
claim against the Vessel exceeding the amount
receivable in respect of pollution under the Vessel's
protection and indemnity insurances; and
(ii) in obtaining from time to time a report or reports on
the adequacy of the Insurances from an insurance
adviser appointed by the Mortgagee.
<PAGE>
- 14 -
4.2 The Mortgagee shall be entitled from time to time to review the terms
of clause 4.1 hereof in order to provide for changes occurring after
the date of this Mortgage in legislation or circumstances affecting the
Owner, the Vessel, the Insurances, the laws of any jurisdiction or any
other matters which the Mortgagee deems relevant, and to modify its
requirements in respect of the Insurances in the light of such changes.
Any such modification, once notified in writing by the Mortgagee to the
Owner shall be binding on the Owner and take effect as an amendment to
clause 4.1 hereof.
5. OWNER'S COVENANTS AS TO OPERATION & MAINTENANCE
5.1 The Owner covenants with the Mortgagee and undertakes throughout the
Security Period:-
(A) to keep the Vessel registered as a Panamanian ship and not to
do or suffer to be done anything whereby such registration may
be forfeited or imperilled;
(B) not (without the previous consent in writing of the Mortgagee)
to make any modification to the Vessel which would result in
any substantial change in the structure type or speed of the
Vessel;
(C) at all times to maintain and preserve the Vessel in good
working order and repair so as to maintain the highest class
available to vessels of her type and so that the Vessel is in
every respect seaworthy and in good operating condition and to
maintain and preserve the Vessel in such good working order
and condition as to comply with the requirements of the
Vessel's insurers and of the laws, regulations and
requirements (statutory or otherwise) from time to time
applicable to vessels registered under the laws and flag of
the Republic of Panama and if so required with the
requirements of the laws and government of any State colony
country province or dependency where the Vessel may trade and
to renew and replace all parts and appurtenances thereof when
and as they shall be worn out damaged lost or destroyed by
others of a similar nature and of at least equal quality;
(D) to permit the Mortgagee or to procure that the Mortgagee be
permitted by surveyors or other persons appointed by it in
that behalf to board the Vessel at all reasonable times for
the purpose of inspecting her condition and her class or other
records or for the purpose of satisfying themselves in regard
to
<PAGE>
- 15 -
proposed or executed repairs and to afford all proper
facilities for such inspections;
(E) to pay and discharge or to cause to be paid and discharged all
debts damages and liabilities whatsoever which have given or
may give rise to maritime or possessory liens on or claims
enforceable against the Vessel and in event of arrest of the
Vessel pursuant to legal process or in event of her detention
in exercise or purported exercise of any such lien as
aforesaid to procure the release of the Vessel from such
arrest or detention forthwith upon receiving notice thereof by
providing bail or otherwise as the circumstances may require;
(F) not to employ the Vessel or suffer her employment in any trade
or business which is forbidden by international law or is
otherwise illicit or in carrying illicit or prohibited goods
or in any manner whatsoever which renders her liable to
condemnation in a Prize Court or to destruction seizure or
confiscation and in event of hostilities in any part of the
world (whether war be declared or not) not to employ the
Vessel or suffer her employment in carrying goods which are or
may be declared contraband or to enter or trade to any zone
which is declared a war zone or which is rendered dangerous by
reason of such hostilities unless the Mortgagee shall have
first given its consent in writing;
(G) to take all reasonable precautions to prevent any
infringements of any anti drug legislation in any jurisdiction
in which the Vessel shall trade and in particular (if the
Vessel is to trade in the United States of America) to take
all reasonable precautions to prevent any infringements of the
Anti-Drug Abuse Act of 1986 of the United States of America
(as the same may be amended and/or re-enacted from time to
time hereafter) and for this purpose to enter into a "Carrier
Initiative Agreement" with the United States' Customs Service
and to procure that the same or a similar agreement is
maintained in full force and effect and that the Owner's
obligations thereunder are performed in respect of the Vessel;
(H) to comply with all laws, regulations, conventions and
agreements whatsoever applicable to the Vessel in any
jurisdiction in which the Vessel shall trade
<PAGE>
- 16 -
relating to pollution or protection of the environment
howsoever;
(I) promptly to furnish to the Mortgagee all such information as
it may from time to time reasonably require regarding the
Vessel her employment position and engagements particulars of
all towages and salvages and copies of all charters and other
contracts for her employment or otherwise howsoever concerning
her;
(J) to notify the Mortgagee forthwith by letter or in case of
urgency by telex of:-
(i) any accident to the Vessel involving repairs the cost
whereof will or is likely to exceed one million five
hundred thousand United States Dollars (USD1,500,000)
(or the equivalent in any other currency);
(ii) any occurrence in consequence whereof the Vessel has
become or is likely to become a Total Loss;
(iii) any requirement or recommendation made by any
competent authority which has not been complied with
prior to fourteen (14) days before the date by which
it is required to be complied with; and
(iv) any arrest of the Vessel or the exercise or purported
exercise of any lien on the Vessel or her earnings;
(K) promptly to pay all tolls dues and other outgoings whatsoever
in respect of the Vessel and as and when the Mortgagee may so
require to furnish satisfactory evidence that the wages and
allotments and insurance and pension contributions of the
Master and crew are being regularly paid and that all
deductions from crew's wages in respect of any tax liability
are being properly accounted for and that the Master has no
claim for disbursements other than those incurred by him in
the ordinary course of trading on the voyage then in progress;
(L) not without the previous consent of the Mortgagee in writing
(which the Mortgagee shall have full liberty to withhold) to
let the Vessel:-
(i) on demise charter for any period;
(ii) by any time or consecutive voyage charter for a term
which exceeds or
<PAGE>
- 17 -
which by virtue of any optional extensions therein
contained is likely to exceed Thirteen (l3) months'
duration;
(iii) on terms whereby more than Two (2) months' hire (or
the equivalent) is payable in advance; or
(iv) below the market rate prevailing at the time when the
Vessel is fixed;
(M) not without the previous consent in writing of the Mortgagee
(and then only subject to such terms as the Mortgagee may
impose) to mortgage charge or otherwise assign the Vessel or
any share therein or to suffer the creation of any such
mortgage charge or assignment to or in favour of any person
other than the Mortgagee;
(N) not without the previous consent in writing of the Mortgagee
to sell or agree to sell or otherwise dispose of the Vessel or
any share therein or change the flag of the Vessel;
(O) not to put the Vessel into the possession of any person for
the purpose of work being done upon her in an amount exceeding
or likely to exceed one million five hundred thousand United
States Dollars (USD1,500,000) (or the equivalent in any other
currency) unless:-
(i) in the case of damage repairs to the Vessel, the
Mortgagee is satisfied that the cost of such repairs
(other than any deductible) is covered by the
Insurances; or
(ii) in the case of a scheduled drydocking the Mortgagee
is satisfied that adequate financial provision has
been made for payment in respect thereof; or
(iii) the Mortgagee is satisfied that the person into whose
possession the Vessel is to be delivered has agreed
to waive any repairer's or similar possessory lien
for work carried out to the Vessel by such person;
<PAGE>
- 18 -
(P) to keep proper books of account in respect of the Vessel and
her earnings and as and when required by the Mortgagee to make
such books available for inspection on behalf of the
Mortgagee;
(Q) to comply with all the requirements and formalities under any
applicable legislation of the Republic of Panama necessary to
perfect this Mortgage as a valid and enforceable third
preferred mortgage upon the Vessel and to furnish to the
Mortgagee from time to time such evidence as the Mortgagee may
reasonably request to satisfy itself with respect to the
Owner's compliance with the provisions of this sub-clause;
(R) to place and retain a copy of this Mortgage certified by the
appropriate Panamanian authorities with the Vessel's papers on
board the Vessel and any other certificates or other documents
required by law and to cause each such certified copy and such
papers to be brought to the attention of the master for the
time being of the Vessel and to be exhibited on demand to any
persons having business with the Vessel or to any
representative of the Mortgagee;
(S) to comply, or procure that the operator of the Vessel will
comply, with the International Management Code for the Safe
Operation of Ships and for Pollution Prevention adopted by the
International Maritime Organisation (as the same may be
amended from time to time) ("the ISM Code") or any replacement
of the ISM Code and in particular, without prejudice to the
generality of the foregoing, as and when required to do so by
the ISM Code and at all times thereafter, (i) to hold, or
procure that the operator of the Vessel holds, a valid
Document of Compliance (being a document issued to a vessel
operator as evidence of its compliance with the requirements
of the ISM Code) duly issued to the Owner or the operator (as
the case may be) pursuant to the ISM Code and a valid Safety
Management Certificate (being a document issued to a vessel as
evidence that the vessel operator and its shipboard management
operate in accordance with an approved structured and
documented system enabling the personnel of that vessel
operator to implement effectively the safety and environmental
protection policy of that vessel operator) duly issued to the
Vessel pursuant to the ISM Code, (ii) to provide the Mortgagee
with copies of any such Document of Compliance and Safety
Management Certificate as soon as the same are issued and
(iii) to keep, or procure that there be kept, on board the
Vessel a copy of any such Document of Compliance and the
original of any such Safety Management
<PAGE>
- 19 -
Certificate; and
(T) to procure that the Vessel (including, without limitation, all
computer systems, all systems and equipment containing
embedded microchips (including leased systems and equipment)
and any other systems, equipment or parts of the Vessel
whatsoever whose proper functioning or operation is capable of
being affected by the incorrect processing, storing,
calculation or recognition of dates, together with all
software and data in connection with any of the foregoing)
shall at all times comply with the requirements of Year 2000
Conformity as defined in "A DEFINITION OF YEAR 2000 CONFORMITY
REQUIREMENTS" issued by the British Standards Institution (BSI
DISC PD2000-1:1998) or such later reviewed, revised or amended
version thereof as may be published by the British Standards
Institution from time to time (in which case the later version
shall be the relevant one for the purposes of this clause).
6. EXPENSES
6.1 The Owner undertakes to pay to the Mortgagee on demand all moneys
whatsoever which the Mortgagee shall or may expend be put to or become
liable for in or about the protection maintenance or enforcement of the
security created by this Deed and the other Security Documents or in or
about the exercise by the Mortgagee of any of the powers vested in it
under this Deed or under any of the other Security Documents and to pay
interest thereon at the Default Rate from the date of demand until the
date of actual receipt (whether before or after any relevant judgment).
6.2 The Owner undertakes to pay on demand to the Mortgagee (or as it may
direct) the amount of all investigation and legal expenses of any kind
whatsoever stamp duties (if any) registration fees and any other
charges incurred by the Mortgagee in connection with the preparation
completion and registration of the Security Documents or otherwise in
connection with the Outstanding Indebtedness and the security therefor.
7. PROTECTION AND MAINTENANCE OF SECURITY
7.1 The Mortgagee shall without prejudice to its other rights and powers
hereunder be
<PAGE>
- 20 -
entitled (but not bound) at any time and as often as may be necessary
to take any such action as it may in its absolute discretion think fit
for the purpose of protecting the security created by this Deed and the
other Security Documents and each and every expense or liability so
incurred by the Mortgagee in or about the protection of the security
shall be repayable to it by the Owner on demand together with interest
thereon at the Default Rate from the date of demand until the date of
actual receipt whether before or after any relevant judgment.
7.2 Without prejudice to the generality of the foregoing:-
(A) if the provisions of clause 4.1 hereof or any of them are not
complied with the Mortgagee shall be at liberty to effect and
thereafter to maintain all such insurances upon the Vessel as
in its discretion it may think fit;
(B) if the provisions of clause 5.1(C) and 5.1(D) hereof or any of
them are not complied with the Mortgagee shall be at liberty
to arrange for the carrying out of such repairs and/or surveys
as it deems expedient or necessary; and
(C) if the provisions of clause 5.1(E) hereof or any of them are
not complied with the Mortgagee shall be at liberty to pay and
discharge all such debts, damages and liabilities as are
therein mentioned and/or to take any such measures as it deems
expedient or necessary for the purpose of securing the release
of the Vessel,
and each and every expense or liability so incurred by the Mortgagee
shall be recoverable from the Owner as provided in clause 7.1 hereof
together with interest thereon at the Default Rate.
8. EVENTS OF DEFAULT
8.1 Upon the happening of any of the following events the Mortgagee shall
cease to be under any further obligation to make the Loan available and
the Outstanding Indebtedness shall immediately become payable to the
Mortgagee on demand:-
(A) the happening of any of the events of default specified in
clause 11.1 of the Loan Agreement; or
(B) anything is done or suffered or omitted to be done by the
Owner which in the
<PAGE>
- 21 -
reasonable opinion of the Mortgagee has imperilled or is
likely to imperil the security created by the Security
Documents.
9. ENFORCEMENT OF RIGHTS
9.1 Upon the Mortgagee's demanding payment of the Outstanding Indebtedness
under clause 8 hereof interest shall accrue thereon at the Default Rate
from the date of demand until the date of payment (as well after as
before judgment) and the security created by this Mortgage shall be
enforceable so that the Mortgagee, subject to the rights of the Prior
Mortgagee under the Prior Mortgages, shall be entitled as and when it
may see fit to put into force and exercise all the powers possessed by
it as mortgagee of the Vessel and in particular:-
(A) to exercise all rights and remedies in foreclosure and
otherwise given to mortgagees by the provisions of Article
1527 of the Code of Commerce and any other legislation or code
affecting the same;
(B) to bring suit at law in equity or in admiralty as it may be
advised to recover judgment for any and all amounts due
hereunder and collect the same out of any and all property of
the Owner whether covered by this Mortgage or otherwise;
(C) to take and enter into possession of the Vessel wherever the
same may be without legal process and (if it has acted in good
faith) without being responsible for loss or damage and the
Owner or other person in possession forthwith upon demand of
the Mortgagee shall surrender to the Mortgagee possession of
the Vessel and the Mortgagee, without being responsible for
loss or damage where it has acted in good faith may hold lay
up lease charter operate or otherwise use the Vessel for such
time and upon such terms as it may deem to be for its best
advantage and for that purpose may employ such agents managers
masters officers crews surveyors and servants as it shall
think fit and may repair and reclass the Vessel accounting
only for the net profits if any arising from such use and
charging upon all receipts from such use or from the sale of
the Vessel by court proceeds or pursuant to sub-clause (G)
below all costs expenses charges damages or losses by reason
of such use and if at any time the Mortgagee shall avail
itself of the right herein given it to take
<PAGE>
- 22 -
the Vessel and shall take her the Mortgagee shall have the
right to dock the Vessel for a reasonable time at any place at
the cost and expense of the Owner;
(D) to require that all policies contracts and other records
relating to the Insurances (including details of and
correspondence concerning outstanding claims) be forthwith
delivered to such adjusters and/or brokers and/or other
insurers as the Mortgagee may nominate;
(E) to collect recover compromise and give a good discharge for
all claims then outstanding or thereafter arising under the
Insurances or any of them and to take over or institute (if
necessary using the name of the Owner) all such proceedings in
connection therewith as the Mortgagee in its absolute
discretion thinks fit and to permit any brokers through whom
collection or recovery is effected to charge the usual
brokerage therefor;
(F) to discharge compound release or compromise liens and/or
claims in respect of the Vessel which have given or may give
rise to any charge or lien on the Vessel or which are or may
be enforceable by proceedings against the Vessel;
(G) without being responsible for loss or damage (if it has acted
in good faith) sell the Vessel at any place and at such time
as the Mortgagee may specify and in such manner and on such
terms and conditions as the Mortgagee may deem advisable free
from any claim by the Owner in admiralty in equity at law or
by statute except that notice of sale will be given by
publication in a newspaper of general circulation in the city
of Panama, Republic of Panama, not less than twenty (20)
calendar days in advance of the sale to satisfy the
requirement of notice of sale to the Owner and the other
registered mortgagees, if any, contained in Article 1527 of
the Panama Code of Commerce. Such notice shall be necessary
only in respect of the initial date of sale and should an
adjournment of the sale be deemed necessary, a new date, time
and place for the sale may be set by the Mortgagee at the time
of the adjournment without need for any further notice. In the
event that the Vessel is sold under any power contained herein
the Owner will if and when required by the Mortgagee execute
such form of conveyance of the Vessel as the Mortgagee may
direct or approve; and
<PAGE>
- 23 -
(H) to manage insure maintain and repair the Vessel and to employ
sail or lay up the Vessel in such manner and for such period
as the Mortgagee in its discretion deems expedient and for the
purposes aforesaid the Mortgagee shall be entitled to do all
acts and things incidental or conducive thereto and in
particular to enter into such arrangements respecting the
Vessel her insurance management maintenance repair
classification and employment in all respects as if the
Mortgagee were the owner of the Vessel and without being
responsible for any loss thereby incurred in the absence of
gross negligence or wilful default on the part of the
Mortgagee,
Provided Always that upon any sale of the Vessel or any share therein
by the Mortgagee pursuant to sub-clause (G) above the purchaser shall
not be bound to see or enquire whether the Mortgagee's power of sale
has arisen in the manner herein provided and the sale shall be deemed
to be within the power of the Mortgagee and the receipt of the
Mortgagee for the purchase money shall effectively discharge the
purchaser who shall not be concerned with the manner of application of
the proceeds of sale or be answerable therefor in any way.
10. APPLICATION OF MONEYS
10.1 All moneys received by the Mortgagee in respect of a sale of the Vessel
or any share therein or otherwise pursuant to the provisions of this
Mortgage and all moneys received and retained by the Mortgagee in
respect of the Insurances and Requisition Compensation pursuant to this
Mortgage shall be applied by the Mortgagee in accordance with the
relevant provisions of clause 10 of the Loan Agreement.
11. NO WAIVER
11.1 No delay or omission of the Mortgagee to exercise any right or power
vested in it under the Security Documents or any of them shall impair
such right or power or be construed as a waiver of or an acquiescence
in any default by the Owner and no express waiver given by the
Mortgagee in relation to any default by the Owner or breach by the
Owner of any of its obligations under this Mortgage shall prejudice the
right of the Mortgagee under this Mortgage arising from any subsequent
default or breach (whether or not such subsequent default or breach is
of a nature different from the previous default or breach) nor shall
the giving by the Mortgagee of any consent to the doing of any act
which by the terms of this Mortgage requires the consent of the
Mortgagee prejudice the right of the Mortgagee to give or withhold as
it sees fit is
<PAGE>
- 24 -
consent to the doing of any other similar act.
12. POWER OF DELEGATION
12.1 The Mortgagee shall be entitled at any time and as often as may be
expedient to delegate all or any of the powers and discretions vested
in it by the Security Documents or any of them (including the power
vested in it by virtue of clause 13 hereof) in such manner upon such
terms and to such persons as the Mortgagee in its absolute discretion
may think fit.
13. POWER OF ATTORNEY
13.1 The Owner irrevocably appoints the Mortgagee as its attorney for the
duration of the Security Period for the purpose of doing in its name
all acts which the Owner itself could do in relation to the Vessel,
Provided However that such power shall not be exercisable by or on
behalf of the Mortgagee unless the security created by this Mortgage
has become enforceable pursuant to clause 9 hereof and shall in any
event be subject to the rights of the Prior Mortgagee under the Prior
Mortgages.
13.2 The exercise of such power by or on behalf of the Mortgagee shall not
put any person dealing with the Mortgagee upon any enquiry as to
whether the security created by this Mortgage has become enforceable
pursuant to clause 9 hereof nor shall such person be in any way
affected by notice that the security has not become enforceable and the
exercise by the Mortgagee of such power shall be conclusive evidence of
its right to exercise the same.
14. FURTHER ASSURANCE
14.1 The Owner further undertakes at its own expense to execute sign perfect
do and (if required) register every such further assurance document act
or thing as in the opinion of the Mortgagee may be necessary or
desirable for the purpose of more effectually mortgaging and charging
the Vessel or perfecting the security constituted by this Mortgage or
contemplated by the other Security Documents.
15. AMOUNT SECURED BY MORTGAGE
<PAGE>
- 25 -
15.1 A certificate submitted by the Mortgagee to the Public Registry Office
in Panama or to any court of law or public authority as to the amount
due or to become due from the Owner to the Mortgagee under this
Mortgage shall in the absence of manifest error be conclusive and
binding on the Owner for all purposes.
16. NOTICES
16.1 The provisions of clause 18 of the Loan Agreement shall apply mutatis
mutandis in respect of any certificate, notice or demand given or made
under this Mortgage.
17. GOVERNING LAW, SEVERABILITY, ETC.
17.1 This Mortgage shall be construed and enforceable in accordance with the
laws of the Republic of Panama.
17.2 The Owner agrees that the Mortgagee shall have liberty but shall not be
obliged to take any proceedings in the courts of any country to protect
or enforce the security hereby constituted or to enforce any provisions
of the Security Documents or to recover payment of the Outstanding
Indebtedness and for the purpose of any proceeding for the enforcement
of the security created by this Mortgage and/or the other Security
Documents the Owner hereby submits to the jurisdiction of the courts of
any country of the choice of the Mortgagee.
17.3 If any provision in this Mortgage or any other of the Security
Documents is or becomes invalid or unenforceable under any applicable
law the provisions thereof shall in all other respects remain in full
force and effect and the provision in question shall be ineffective to
the extent (but only to the extent) of its nonconformity with the
requirement of the applicable law and if it is competent to the parties
to waive any requirements which would otherwise operate as aforesaid
those requirements are hereby waived to the extent permitted by such
law to the end that the Mortgage and the other Security Documents shall
be valid binding and enforceable in accordance with their respective
terms.
17.4 Each and every power and remedy herein given to the Mortgagee shall be
cumulative and shall be in addition to every other power and remedy
herein given or now or hereafter existing at law in equity admiralty or
by statute and each and every power and remedy whether herein given or
otherwise existing may be exercised from time to
<PAGE>
- 26 -
time and as often and in such order as may be deemed expedient by the
Mortgagee and the exercise or the beginning of the exercise of any
power or remedy shall not be construed to be a waiver of the right to
exercise at the same time or thereafter any other power or remedy.
18. MISCELLANEOUS
18.1 This Mortgage may be executed in any number of counterparts each of
which shall be an original but such counterparts shall together
constitute but one and the same instrument.
18.2 The English text of this Mortgage is the authentic text and in the
event of any differences arising on translation recourse shall be had
to the English text.
19. RECORDING OF THIS MORTGAGE
19.1 The parties hereby confer a special power of attorney on the firm of
lawyers named Quijano & Associates of the City of Panama in the
Republic of Panama empowering such firm of lawyers to take all
necessary steps to record this instrument of mortgage and the
prohibitions contained in clauses 5.1(M) and (N) hereof and a
certificate pursuant to clause 15 hereof in the appropriate registries
in the City of Panama in accordance with the laws of the Republic of
Panama with full power of substitution in respect of the special power
of attorney herein granted.
IN WITNESS whereof this Mortgage has been executed the day and year first above
written.
SIGNED SEALED and DELIVERED )
as a DEED )
by CROWN CRUISES OF PANAMA, INC. )
acting by )
/s/ Jeffrey I. Binder )
- ---------------------------------------
its duly appointed )
)
in the presence of:- )
<PAGE>
- 27 -
ACCEPTANCE OF MORTGAGE
The Undersigned Mortgagee EFF-SHIPPING LIMITED a corporation organised and
subsisting under the laws of the Cayman Islands DOES HEREBY ACCEPT the foregoing
Mortgage executed in its favour by CROWN CRUISES OF PANAMA, INC. a corporation
incorporated according to the laws of Panama on the 29th day of October, 1999
covering the Panamanian flag Vessel m.v. "CROWN DYNASTY" and does hereby accept
the said Mortgage in all respects AND AGREES to all terms and conditions of the
said Mortgage
Dated the 28th day of January Two thousand.
SIGNED SEALED and DELIVERED )
as a DEED )
by EFF-SHIPPING LIMITED )
acting by )
/s/ Per Arvid Skult )
- ---------------------------------------
its duly appointed )
Attorney )
in the presence of:- )
EXHIBIT 10.10
COMMODORE HOLDINGS LIMITED
-and-
EFF-SHIPPING LIMITED
--------------------------------
GUARANTEE AND INDEMNITY
relating to obligations of
Crown Cruises of Panama, Inc.
re USD24,480,000 seller's credit
--------------------------------
Sinclair Roche & Temperley
Royex House
5 Aldermanbury Square
London EC2V 7LE
Tel: 0171 452 4000
Fax: 0171 452 4001
Ref: GFS/243417
<PAGE>
- 2 -
INDEX OF CONTENTS
CLAUSE NO. HEADING PAGE NO.
- ---------- ------- --------
1. DEFINITIONS AND CONSTRUCTION......................................1
2. REPRESENTATIONS AND WARRANTIES....................................2
3. GUARANTEE AND INDEMNITY...........................................3
4. EXPENSES..........................................................4
5. CONTINUING GUARANTEE..............................................4
6. UNDERTAKINGS......................................................5
7. ENFORCEMENT......................................................11
8. CURRENCY INDEMNITY...............................................13
9. BENEFIT..........................................................14
10. MISCELLANEOUS....................................................14
11. NOTICES..........................................................15
12. GOVERNING LAW AND JURISDICTION...................................16
SCHEDULE A : FINANCIAL FIGURES, RATIOS AND PERCENTAGES........................17
FORM OF COMPLIANCE CERTIFICATE................................................19
<PAGE>
- 3 -
THIS GUARANTEE AND INDEMNITY is given the 24th day of January 2000
BY:-
(1) COMMODORE HOLDINGS LIMITED, a company incorporated and registered under
the laws of Bermuda whose registered office is at c/o Francis & Forest,
Corner House, 20 Parliament Street, Hamilton HM12, Bermuda (the
"Guarantor" which expression shall include the successors and permitted
assigns of the Guarantor) in favour of:-
(2) EFF-SHIPPING LIMITED., a company incorporated under the laws of the
Cayman Islands with its registered office at the offices of Huntlaw
Corporate Services Ltd., The Huntlaw Building, P O Box 1350, George
Town, Grand Cayman, Cayman Islands (the "Lender" which expression shall
include its successors and assigns).
WHEREAS:
(A) By a loan agreement dated January 24, 2000 made between (1) the Lender
and (2) Crown Cruises of Panama, Inc. (the "Borrower") the Lender
agreed to make available to the Borrower a loan of twenty four million
four hundred and eighty thousand United States Dollars (USD24,480,000)
pursuant to and subject to the terms and conditions therein contained.
(B) In order to induce the Lender to enter into the Agreement and to
advance the Loan to be advanced thereunder and as a condition precedent
thereto the Guarantor has agreed to give the guarantee and indemnity
herein contained.
NOW THIS DEED WITNESSETH as follows:-
1. DEFINITIONS AND CONSTRUCTION
1.1 In this Guarantee and Indemnity unless the context otherwise requires:-
"AGREEMENT"
means the loan agreement referred to in Recital (A) above as
supplemented by any amendment or supplement thereto which may from time
to time be agreed to by the Lender and the Borrower;
<PAGE>
- 4 -
"DEFAULT RATE"
means the rate of interest calculated in accordance with clause 4.3 of
the Agreement;
"INDEBTEDNESS"
means the Loan together with all interest accrued thereon and all other
moneys, costs, fees and expenses whatsoever which from time to time may
be or become owing or due and payable to the Lender pursuant to the
Agreement or any of the Security Documents;
"LOSS"
means any and all losses, costs, expenses, damages, claims, demands,
rights of set-off and/or counterclaim incurred by the Lender in respect
of or in connection with the Agreement and/or the Security Documents or
any liability arising therefrom;
"SECURED OBLIGATIONS"
means all covenants, agreements, warranties, conditions and provisions
expressed or implied on the part of the Borrower to be performed,
observed or complied with under the Agreement including, without
limitation, the due and punctual payment of the principal sum and all
interest and other moneys expressed to be payable by the Borrower in
accordance with the terms of the Agreement;
"THIS GUARANTEE"
means this Guarantee and Indemnity.
1.2 Unless otherwise defined herein or the context otherwise requires,
words and expressions defined in the Agreement shall have the same
meanings herein. Clause headings are inserted for convenience only and
shall be ignored in the interpretation of this Guarantee.
2. REPRESENTATIONS AND WARRANTIES
2.1 The Guarantor hereby represents and warrants to the Lender that as of
the date hereof and (save in respect of sub-paragraph (B)(ii) below) as
continuing warranties until all of the Indebtedness shall have been
paid and discharged in full:-
(A) The Guarantor has full power and authority to make and perform
this
<PAGE>
- 5 -
Guarantee and the same constitutes the legal, valid and
binding obligations of the Guarantor enforceable in accordance
with its terms;
(B) The making and performance by the Guarantor of this Guarantee
will in no way exceed the powers granted to the Guarantor by,
or violate in any respect any provision of (i) any mortgage,
charge, deed, contract or other undertaking or instrument to
which the Guarantor is a party or which is binding on the
Guarantor or any of the assets of the Guarantor; or (ii) any
law or regulation or any order or decree of any governmental
authority, agency or court; or (iii) the Memorandum and/or
Articles of Association (or equivalent corporate documents) of
the Guarantor;
(C) All consents, licences, approvals or authorisations which are
required in connection with the execution, validity,
performance or enforceability of this Guarantee have been
obtained and are and will continue to be valid and subsisting;
(D) Save as disclosed to the Lender in writing, the Guarantor is
not in default under any agreement to which the Guarantor is a
party or by which the Guarantor may be bound, nor in respect
of any financial commitment or obligation;
(E) The Guarantor is not engaged in litigation or arbitration
before any court or before any tribunal which might if
determined against the Guarantor have a material adverse
effect on the financial condition of the Guarantor and there
is no claim against the Guarantor which, with the passage of
time might result in any such litigation or arbitration; and
(F) The Guarantor has received a copy of the Agreement and
approves of and agrees to the terms and conditions thereof.
3. GUARANTEE AND INDEMNITY
3.1 The Guarantor hereby unconditionally and irrevocably:-
(A) GUARANTEES the due and punctual performance and observance of
and compliance with the Secured Obligations by the Borrower in
accordance with the terms of the Agreement and the Guarantor
hereby covenants that, if any amount of principal or interest
or other moneys payable by the Borrower under
<PAGE>
- 6 -
the Agreement shall not be paid when the same shall be due and
payable, whether on maturity or otherwise, the Guarantor will,
forthwith on demand, make such payment, or cause such payment
to be made, to the Lender in the manner specified by the
Lender together with all interest expressed to accrue on any
such amount pursuant to the Agreement until the date of
receipt by the Lender; and
(B) without prejudice to (A) above and as a separate and
independent obligation thereto indemnifies and agrees to
indemnify the Lender upon the written demand of the Lender in
respect of any Loss which the Lender may suffer or incur in
good faith directly or indirectly as a result of or in
connection with any failure by the Borrower fully and
effectually to perform, observe and/or comply with the Secured
Obligations.
4. EXPENSES
4.1 The Guarantor further agrees to pay to the Lender on demand on a full
indemnity basis all commissions, charges, costs and expenses of
whatsoever nature incurred by the Lender in the administration,
preservation and enforcement of any of the Lender's rights hereunder
together with interest thereon (both before and after judgment) at the
Default Rate from the date of demand until the date of receipt by the
Lender compounded on such days in the year as the Lender reasonably may
select.
5. CONTINUING GUARANTEE
5.1 This Guarantee shall:-
(A) be a continuing security and shall be construed and take
effect as security for all of the Secured Obligations until
they shall have been satisfied and discharged in full and the
Guarantor hereby waives any right of set-off or counter-claim
which the Guarantor may otherwise have had against the Lender;
(B) be in addition to any other guarantee, indemnity or other
security which the Lender may now or hereafter hold in respect
of all or any of the Secured Obligations whether from the
Guarantor or otherwise, and shall be binding on
<PAGE>
- 7 -
the Guarantor notwithstanding that any other Security Party
shall fail to give the security to be provided by it or shall
be released from any such security or such security shall be
varied;
(C) not be discharged by the granting to any Security Party of
time or any other indulgence or by compounding with any
Security Party or by any variation whatsoever of any of the
Secured Obligations or by any actual or alleged invalidity,
irregularity or unenforceability of or defect in any of the
Secured Obligations or in any of the provisions of the
Agreement or any one or more of the Security Documents or by
the absence of any action to enforce any of the rights of the
Lender thereunder or by any act or circumstance whatsoever
whereby this Guarantee would or might otherwise but for the
provisions of this Clause have been so discharged;
(D) remain in full force and effect notwithstanding any change in
the name, constitution or otherwise of any Security Party or
the Lender or their respective successors and assigns or the
absorption or amalgamation of any thereof by or with any other
corporate entity.
6. UNDERTAKINGS
6.1 The Guarantor agrees with represents and undertakes to the Lender
that:-
(A) If the Guarantor becomes liable to make any payment pursuant
to Clause 3 hereof, then the Guarantor will not thereafter
make demand for payment of any moneys for the time being due
to the Guarantor from any Security Party or exercise any other
right or remedy to which the Guarantor is entitled in respect
of such moneys unless and until all moneys whatsoever owing by
all Security Parties to the Lender have been irrevocably paid
in full;
(B) If any Security Party shall become insolvent or shall be wound
up or liquidated, the Guarantor shall not (unless so required
by the Lender and then only on condition that the Guarantor
holds the benefit of any claim in such insolvency or
liquidation upon trust to pay any amounts recovered thereunder
to the Lender) prove in such insolvency, winding-up or
liquidation until all
<PAGE>
- 8 -
moneys whatsoever owing by all Security Parties to the Lender
have been irrevocably paid in full;
(C) The Guarantor has not taken and will not take from any
Security Party any security whatsoever for the moneys hereby
secured and, notwithstanding the foregoing, any such security
now or hereafter held by the Guarantor shall be held in trust
for the Lender and for their benefit in respect of the
obligations of the Guarantor hereunder;
(D) The Guarantor will not exercise any right to which the
Guarantor may be entitled as a surety until all moneys
whatsoever owing or due and payable by all Security Parties to
the Lender have been irrevocably paid in full;
(E) The Guarantor hereby waives any right to require the Lender to
proceed first against any Security Party and/or to give notice
to or demand on any Security Party whatsoever;
(F) All payments to be made hereunder shall be made in immediately
available funds without set-off or counter-claim and free and
clear of and without deduction for or on account of any
present or future taxes of any nature now or hereafter
imposed, levied, collected, withheld, deducted or assessed by
any taxing and/or governmental authority whatsoever or
wheresoever unless the Guarantor is compelled by law to deduct
such taxes. In that event all such taxes shall be borne by the
Guarantor or, if under the provisions of any applicable law
this stipulation cannot be applied, then the Guarantor shall
increase the payments to the Lender so that the net amounts
received by the Lender shall be equal to the full amounts
which the Lender would have received had payment not been made
subject to such taxes; provided that taxes payable by the
Lender on its profits arising by virtue of the transaction
herein described in the countries in which it carries on
business shall not be included in the foregoing. As used in
this sub-clause the term "taxes" includes all levies, imposts,
duties, charges, fees, deductions and withholdings whatsoever
and any restriction or condition resulting in a charge.
If the Guarantor is required to deduct taxes, the Guarantor
will promptly thereafter deliver all receipts and other
documents relating thereto to the Lender.
<PAGE>
- 9 -
If and when the Lender shall receive (in its reasonable
opinion) a credit in respect of any taxes deducted by the
Guarantor and to which this sub-clause refers, it shall allow
the Guarantor a credit against amounts due or to become due
under the Agreement or any one or more of the Security
Documents (the "Guarantor's Credit") of such amount as shall
be fair and reasonable in the opinion of the Lender in respect
of any such credit as is received by the Lender or, if all of
the Indebtedness shall have been repaid in full, shall make a
payment to the Guarantor equal to the amount of the
Guarantor's Credit. The Lender shall be under no obligation to
discuss or reveal its tax affairs with the Guarantor;
(G) The Guarantor shall give to the Lender all such information as
the Lender may request with regard to the performance by the
Security Parties of their respective obligations under the
Agreement and the Security Documents;
(H) The Guarantor shall not without the prior written consent of
the Lender (such consent not to be unreasonably withheld)
sell, convey, transfer or otherwise dispose (whether by a
single transaction or in a series of transactions, related or
not) of any assets;
(I) All the authorised and issued share capital of the Borrower is
and will remain wholly owned and controlled by the Guarantor;
(J) The Guarantor shall prepare or cause to be prepared, in
accordance with GAAP, and deliver to the Lender annual audited
financial statements of the Guarantor within ninety five (95)
days of the end of the annual accounting periods of the
Guarantor and quarterly unaudited accounts of the Guarantor
within fifty (50) days of the end of each quarter together
with copies of all notices sent to shareholders or any class
of shareholders and such financial and other information
concerning the Guarantor as the Lender shall reasonably
require;
(K) The Guarantor shall not make any single acquisition or
investment costing more than one million United States Dollars
(USD1,000,000) without the prior written consent of the Lender
(such consent not to be unreasonably withheld);
<PAGE>
- 10 -
(L) The Guarantor shall not incur any liability in respect of
Borrowed Money or guarantee endorse or otherwise become or
remain liable in respect of the obligations of any person firm
or corporation without the prior written consent of the Lender
(such consent not to be unreasonably withheld);
(M) The Guarantor shall not pay any dividend for any shares except
preferred shares on the following terms:-
(i) no covenant or undertaking binding upon the Guarantor
is or would be breached by the payment of such
dividend; and
(ii) the aggregate amount of any such dividends paid in
any one period of twelve (12) months does not exceed
four hundred thousand United States Dollars
(USD400,000),
Provided That, in respect of any preferred share issued by the
Guarantor prior to the date of the Agreement, the Guarantor
(subject only to (i) above) shall be entitled to pay dividends
in the maximum amount of twelve per cent (12%) per annum of
the price at which the relevant preferred share was issued;
(N) The Guarantor shall procure that it has cash which is freely
available, which is not subject to any Encumbrance and which
amounts to not less than the amount specified in item 1 in
schedule A hereto on the Drawdown Date and not less than the
amount specified in item 2 in schedule A hereto at all times
thereafter Provided that all sums standing to the credit of
the Earnings Account after all the applications have been made
in accordance with clause 10.2 of the Agreement shall be
deemed for the purposes of this clause to be cash which is
freely available to the Guarantor and not subject to any
Encumbrance;
(O) The Guarantor shall procure that its Debt Service Coverage
Ratio (calculated at three (3) monthly intervals as set out
below) shall not be less than the ratio specified in item 3 in
schedule A hereto (for the period from the Drawdown Date to 30
September 2002) and the ratio specified in item 4 in schedule
A hereto (for any period after 30 September 2002) and for this
purpose the Debt Service Coverage Ratio shall be calculated on
a consolidated basis in accordance with the following
formula:-
<PAGE>
- 11 -
EBITDA
------------------
Financial Expenses
where
"EBITDA" means, for the previous period of twelve (12) months,
the aggregate of:
(i) Net Income (but excluding gains and losses from the
sale of assets or reserves relating thereto and items
classified as extraordinary or non-recurring) from
the Guarantor's operations for such period and for
this purpose Net Income means the consolidated net
income of the Guarantor as determined in accordance
with GAAP; and
(ii) the aggregate amounts deducted in determining Net
Income for such period in respect of depreciation,
amortisation, taxes, deferred income and interest
expense of the Guarantor; and
"Financial Expenses" means, for the previous period of twelve
(12) months, the sum of:
(i) the aggregate principal payable or paid during such
period on any Borrowed Money of the Guarantor (other
than the scheduled principal repayment in respect of
the Bridge Loan Facility and principal repayments
under the Revolving Loan Facility Agreement to the
extent that they were redrawn during the same
period);
(ii) aggregate interest expense (including, without
limitation, capitalised interest accrued during such
period) of the Guarantor for such period; and
(iii) all rent and any capital lease obligations or
operating lease obligations
<PAGE>
- 12 -
by which the Guarantor is bound which are payable or
paid during such period as calculated in accordance
with GAAP and derived from the then latest accounts
of the Guarantor;
(P) The Guarantor shall procure that its Capital (Solvency) Ratio
(calculated as set out below) shall not be less than the
percentage specified in item 5 in schedule A hereto (for the
period from the Drawdown Date to 30 September 2001), the
percentage specified in item 6 in schedule A hereto (for the
period from 1 October 2001 to 30 September 2002) and the
percentage specified in item 7 in schedule A hereto (for any
period after 30 September 2002) and for this purpose the
Capital (Solvency) Ratio shall be calculated on a consolidated
basis in accordance with the following formula:-
x
------------------
y
where
"x"
means the Guarantor's Book Tangible Net Worth (calculated in
accordance with clause 6.1(Q) hereof); and
"y"
means the book value of all the assets of the Guarantor
(calculated in accordance with GAAP);
(Q) The Guarantor shall procure that its Book Tangible Net Worth
(calculated as set out below) shall not be less than the
amount specified in item 8 in schedule A hereto (during the
period from the Drawdown Date to 30 September 2000) and the
amount specified in item 9 in schedule A hereto (after 30
September 2000) and for this purpose the Book Tangible Net
Worth shall be the book value of all assets calculated in
accordance with GAAP (excluding goodwill but including all
proceeds from any interest only loans which have been approved
in advance by the Agent as at the date of this Guarantee and
the proceeds of any preferred share issue made prior to the
date of this Guarantee) less total liabilities calculated in
accordance with GAAP (including without limitation the net
present value of financial lease commitments, estimated
<PAGE>
- 13 -
compensation to third parties in the event of termination of
contracts, contingent tax liabilities and guarantee
obligations for the benefit of third parties but excluding any
debt of the Guarantor existing as at the date of this
Guarantee and subordinated by its terms to the Secured
Obligations);
(R) The Guarantor shall provide the Lender with compliance
certificates in relation to the relevant financial covenants
contained in this Guarantee in the form attached hereto on or
before the Drawdown Date and at three (3) monthly intervals
after the Drawdown Date.
7. ENFORCEMENT
7.1 The Guarantor agrees, acknowledges and declares that:-
(A) In order to give effect to this Guarantee the Lender shall be
at liberty to act as though the Guarantor were the principal
debtor and obligor in respect of the Secured Obligations and
in the event of the winding-up, dissolution, reconstruction or
amalgamation in which or as a consequence of which any
Security Party loses its separate corporate identity the
Guarantor shall become liable to the Lender for the payment of
all moneys expressed to be payable by the Security Parties to
the Lender pursuant to the Agreement and the Security
Documents and the performance and observance of and compliance
with all the Secured Obligations;
(B) Any release, settlement or discharge in relation to the
obligations of the Guarantor hereunder shall be conditional
upon no security, disposition or payment to the Lender in
respect of any of the Indebtedness being avoided or reduced by
virtue of any provisions or enactments relating to bankruptcy,
insolvency or liquidation and if any such security,
disposition or payment be avoided or reduced as aforesaid,
this Guarantee shall continue to apply in respect of the
amount of such security, disposition or payment and the
Guarantor shall indemnify the Lender in respect thereof;
(C) The Lender may take such action as the Lender in its own
discretion may consider appropriate against any other Security
Party or Parties to recover
<PAGE>
- 14 -
moneys due and payable in respect of the Secured Obligations,
the Guarantor, however, remaining liable under this Guarantee
for payment and discharge of all moneys payable in respect
thereof;
(D) The Lender shall be entitled (after a demand for payment has
been made hereunder but without further notice) to procure the
setting-off of any liability of the Guarantor hereunder
against any moneys standing to the credit of any account or
accounts which the Guarantor may now or hereafter have with
the Lender at any of its offices or with any subsidiary or
parent company of the Lender (whether or not those moneys are
then due to the Guarantor) and, for this purpose, to combine
any and all such accounts and to use all or part of those
moneys to buy such other currency or currencies as may be
required to enable the Lender to effect that setting-off. The
Lender shall also be entitled to retain as security for the
discharge of the liability of the Guarantor hereunder all
securities or other property of the Guarantor held by the
Lender at any of its offices and/or by any subsidiary or
parent company of the Lender (whether for safe custody or
otherwise);
(E) Notwithstanding that the Secured Obligations and any moneys
due from the Guarantor hereunder shall have been complied
with, paid or discharged, the Lender shall be entitled to
retain this Guarantee and refrain from releasing the Guarantor
from this Guarantee for such period thereafter as the Lender
may determine and in the event of bankruptcy, winding-up or
any similar proceedings being commenced in respect of any
Security Party or any other person as may have performed, paid
or discharged any of the Secured Obligations within such
period as aforesaid, the Lender shall be at liberty to retain
this Guarantee and any security held for the obligations of
the Guarantor hereunder and refrain from releasing the
Guarantor from this Guarantee and may retain such security for
and during such period as the Lender may determine;
(F) For the purpose of enabling the Lender to sue any other
Security Party or to prove in its winding-up, liquidation or
bankruptcy or in any similar proceedings for any moneys due
and unpaid by the Borrower, the Lender may at any time place
and keep for such time as it may think fit any moneys received
hereunder to the credit of an interest bearing suspense
account without any obligation on the part of the Lender to
apply the same or any part thereof in or towards the discharge
of the Indebtedness;
<PAGE>
- 15 -
(G) The certificate of the Lender as to the sum of money owed by
any Security Party shall, in the absence of manifest error, be
conclusive for any purpose and binding on the Guarantor.
8. CURRENCY INDEMNITY
8.1 Any amount received by the Lender in connection herewith in a currency
(the "Relevant Currency") other than the currency in which the same
should be received pursuant to the terms hereof (the "Agreed Currency")
whether pursuant to a judgment or order of a court or tribunal of any
jurisdiction or any enforcement proceedings or otherwise howsoever in
connection herewith or otherwise shall only constitute a discharge to
the Guarantor to the extent of the amount of the Agreed Currency which
the Lender is able, promptly on receipt, to purchase in such foreign
exchange market as the Lender may select with the amount of the
Relevant Currency so received.
If:-
(A) the amount of the Agreed Currency which the Lender is so able
to purchase is less than the amount of the Agreed Currency due
to the Lender hereunder; and/or
(B) any condition imposed in relation to the conversion of any
amount paid in the Relevant Currency into the Agreed Currency
including, without limitation, any condition imposed by any
exchange control authority, reduces the amount in the Agreed
Currency which the Lender actually receives for the amount of
such payment in the Relevant Currency below that amount which
it would have received had such condition not been imposed;
the Guarantor will indemnify and hold the Lender harmless against any
loss, damage, costs and/or expenses arising as a result.
8.2 The above indemnity shall constitute a separate and independent
obligation from the other obligations contained herein shall give rise
to a separate and independent cause of action and shall continue in
full force and effect notwithstanding any judgment or order for amounts
due hereunder.
<PAGE>
- 16 -
9. BENEFIT
9.1 The Guarantor may not assign or transfer rights or obligations
hereunder without the prior written consent of the Lender (which may be
withheld).
10. MISCELLANEOUS
10.1 The Guarantor hereby agrees that at any time and from time to time,
upon the request of the Lender, the Guarantor will promptly and duly
execute and deliver and/or procure the execution and delivery of any
and all such further instruments and documents as may be deemed
desirable by the Lender for the purpose of obtaining for the Lender the
full benefits hereof and of the rights and powers herein granted.
10.2 Any provisions contained herein prohibited by or unlawful or
unenforceable under any applicable law shall, to the extent required by
such law, be ineffective without modifying the remaining provisions
hereof. Where however the provisions of any such applicable law may be
waived, they are hereby waived by the Guarantor to the fullest extent
permitted by such law with the intent that this Guarantee shall be
valid, binding and enforceable in accordance with its terms.
10.3 Time is of the essence of this Guarantee but no failure or delay by the
Lender in exercising any right, power or privilege hereunder and no
course of dealing between any Security Party and the Lender shall
operate as a waiver thereof, nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein
are cumulative and not exclusive of any rights or remedies which the
Lender would otherwise have. No notice to or demand on the Guarantor
shall entitle the Guarantor to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the rights of
the Lender to any other or further action in any circumstances without
notice or demand.
11. NOTICES
11.1 Any demand or notice to be given hereunder shall be in writing and sent
by prepaid first class or airmail letter post or telex or facsimile or
delivered by hand addressed to the Guarantor as follows:-
<PAGE>
- 17 -
Commodore Holdings Limited
4000 Hollywood Boulevard
Suite 385-S
Hollywood
Fl 33021
USA
Attention Chief Financial Officer
Facsimile No: + 954 921 2147)
with a copy to:-
Kathleen L Deutsch, P.A.
Broad and Cassel
Miami Center - Suite 3000
201 S. Biscayne Boulevard
Miami
Fl 33131
USA
Facsimile no. + 305 373 9443
or to such other person or address as the Guarantor may notify in
writing to the other party hereto.
11.2 Any such notice shall be deemed to have been validly given and received
on the date of despatch if sent by telex and five (5) days after having
been posted if sent by post.
12. GOVERNING LAW AND JURISDICTION
12.1 This Guarantee and all agreements entered into pursuant or supplemental
hereto shall be governed by and construed in accordance with English
law.
12.2 The Guarantor and the Lender HEREBY SUBMIT for the exclusive benefit of
the Lender to the jurisdiction of the English Courts and the Guarantor
appoints Consult Marine whose registered office is for the time being
at 58 London Fruit Exchange, Brushfield Street, London E1 6EP or such
other person as the Guarantor may with the prior written approval of
the Lender from time to time appoint to be the attorney of the
Guarantor for the purpose of accepting service on behalf of the
Guarantor of any writ, notice, order, judgment or other legal process
with respect hereto or any matter arising
<PAGE>
- 18 -
hereout and agrees that failure by any such process agent to give
notice of such service of process to the Guarantor shall not impair or
affect the validity of such service or of any judgment based thereon.
<PAGE>
- 19 -
IN WITNESS whereof this Guarantee has been executed as a deed the day and year
first before written.
SIGNED SEALED AND DELIVERED )
as a Deed )
BY COMMODORE HOLDINGS LIMITED )
acting by )
/s/ Jeffrey I. Binder )
- ---------------------------------------
its duly appointed )
Chairman of the Board )
in the presence of:- )
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-END> DEC-31-1999
<CASH> 8,257,000
<SECURITIES> 0
<RECEIVABLES> 1,786,000
<ALLOWANCES> 0
<INVENTORY> 3,061,000
<CURRENT-ASSETS> 26,606,000
<PP&E> 61,976,000
<DEPRECIATION> 6,710,000
<TOTAL-ASSETS> 93,205,000
<CURRENT-LIABILITIES> 30,575,000
<BONDS> 26,281,000
0
0
<COMMON> 76,000
<OTHER-SE> 32,679,000
<TOTAL-LIABILITY-AND-EQUITY> 93,205,000
<SALES> 0
<TOTAL-REVENUES> 12,297,000
<CGS> 0
<TOTAL-COSTS> 13,054,000
<OTHER-EXPENSES> 30,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 469,000
<INCOME-PRETAX> (1,093,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,093,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 231,000
<NET-INCOME> (1,424,000)
<EPS-BASIC> (0.19)
<EPS-DILUTED> (0.19)
</TABLE>
