* Application to be filed with the Securities and Exchange
Commission, pursuant to Exchange Act Rule 24b-2, for confidential
treatment of certain portions of this exhibit.
LOAN AGREEMENT
DATED MARCH 14, 1994
BY AND AMONG
KREDITANSTALT FUR WIEDERAUFBAU
(as Agent
and Lender)
COMMERZBANK AG, HAMBURG
(as
Syndicate Agent)
COMMERZBANK AG (KIEL BRANCH)
DRESDNER BANK AG in HAMBURG
VEREINS- und WESTBANK AG
DEUTSCHE SCHIFFSBANK AG
NORDDEUTSCHE LANDESBANK-GIROZENTRALE
DEUTSCHE VERKEHRS-BANK AG
BANQUE INTERNATIONALE A LUXEMBOURG S.A.
(as the
Syndicate)
and
AMERICAN PRESIDENT LINES, LTD.
(as
Borrower)
_____________________________________________
Loan Facility
-in respect of the purchase financing-
six (6) container vessels
three (3) contracted with Howaldtswerke-Deutsche Werft AG
three (3) contracted with Daewoo Shipbuilding
& Heavy Machinery, Ltd.
______________________________________________
TABLE OF CONTENTS
Page
RECITALS 1
SECTION 1. DEFINITIONS 2
SECTION 2. THE TRANCHES 14
SECTION 3. INTEREST AND INTEREST PERIODS 18
SECTION 4. THE NOTES 22
SECTION 5. REPAYMENT 26
SECTION 6. SUBSTITUTE BASIS, ILLEGALITY, INCREASED COSTS 34
SECTION 7. CONDITIONS PRECEDENT TO ADVANCE 39
SECTION 8. REPRESENTATIONS AND WARRANTIES 42
SECTION 9. COVENANTS 46
SECTION 10. GRANTING OF PARTICIPATIONS 49
SECTION 11. INDEMNITY 53
SECTION 12. EVENTS OF DEFAULT 58
SECTION 13. FEES 61
SECTION 14. RELATION OF SYNDICATE MEMBERS 63
SECTION 15. MISCELLANEOUS 67
APPENDIX A FORMS OF NOTES
APPENDIX A-1A - KfW FIXED RATE NOTE
APPENDIX A-1B - KfW LIBO RATE NOTE
APPENDIX A-2A - SYNDICATE FIXED RATE NOTE
APPENDIX A-2B - SYNDICATE LIBO RATE NOTE
APPENDIX B FORM OF MORTGAGES
APPENDIX B-1 - FIRST PRIORITY MORTGAGE
APPENDIX B-2 - SECOND PRIORITY MORTGAGE (FOR THE
DAEWOO VESSELS)
APPENDIX C FORM OF ASSIGNMENTS OF INSURANCES
APPENDIX C-1 ASSIGNMENT OF INSURANCES FOR HDW
VESSELS
APPENDIX C-2 ASSIGNMENT OF INSURANCES FOR DAEWOO VESSELS
APPENDIX C-3 SECOND ASSIGNMENT OF INSURANCES FOR
DAEWOO VESSELS
APPENDIX D *
APPENDIX E FORM OF GUARANTEE
APPENDIX F FORM OF ASSIGNMENT AND ACCEPTANCE
APPENDIX G FORM OF ASSIGNMENT AND AGREEMENT AND CONSENT
APPENDIX H AGREEMENT OF APC
APPENDIX I FORM OF AGREEMENT TO ACQUIRE AND CHARTER
SCHEDULE 1 - SYNDICATE MEMBERS
SCHEDULE 2 - FORMS OF NOTICE OF DRAWDOWN
SCHEDULE 2-A - FORM OF NOTICE OF DRAWDOWN FOR ANY HDW
SUBPORTION
SCHEDULE 2-B - FORM OF NOTICE OF DRAWDOWN FOR ANY DAEWOO
SUBPORTION
SCHEDULE 3 - AGGREGATE AMOUNTS AND PERCENTAGE INTERESTS
OF SYNDICATE MEMBERS AS TO EACH DAEWOO
SUBPORTION
SCHEDULE 4 - OPINIONS
SCHEDULE 5 - FORMS OF CONFIRMATION
SCHEDULE 5-A - FORM OF CONFIRMATION FROM HDW TO KFW OF
READINESS TO DELIVER ANY HDW VESSEL
SCHEDULE 5-B - FORM OF CONFIRMATION FROM DAEWOO TO THE
SYNDICATE OF READINESS TO DELIVER ANY
DAEWOO VESSEL
SCHEDULE 5-C - FORM OF CONFIRMATION FROM THE BORROWER TO KFW
OF ITS READINESS TO TAKE DELIVERY OF ANY HDW
VESSEL
SCHEDULE 5-D - FORM OF CONFIRMATION FROM THE BORROWER TO
DAEWOO OF ITS READINESS TO TAKE DELIVERY OF
ANY DAEWOO VESSEL
SCHEDULE 6 - PRINCIPAL INSTALLMENTS OF THE SUBPORTIONS
SCHEDULE 6-A - PRINCIPAL INSTALLMENTS AS TO HDW SUBPORTIONS
SCHEDULE 6-B - PRINCIPAL INSTALLMENTS AS TO DAEWOO
SUBPORTIONS
SCHEDULE 7 - AGENTS FOR SERVICE OF PROCESS
THIS LOAN AGREEMENT is made this 14th day of March, 1994
by and among KREDITANSTALT FUR WIEDERAUFBAU, a public law corporation
incorporated in the Federal Republic of Germany, whose address is
Palmengartenstrasse 5-9, D-60325 Frankfurt am Main ("KfW"); COMMERZBANK
AG, Hamburg, a banking corporation incorporated in the Federal Republic
of Germany whose address is Ness 7-9, D-20457 Hamburg (the "Syndicate
Agent"); the banks listed in Schedule 1 which is attached hereto (each a
"Syndicate Member" and, collectively, the "Syndicate"); and AMERICAN
PRESIDENT LINES, LTD., a Delaware corporation, whose address is 1111
Broadway, Oakland, California 94607 ("APL").
W I T N E S S E T H:
WHEREAS, the Borrower has ordered three (3) container
vessels (the "HDW Vessels") from Howaldtswerke-Deutsche Werft AG
("HDW"), Werftstrasse 112-114, D-24124 Kiel, Federal Republic of Germany
as is more specifically set forth in a certain Shipbuilding Agreement
dated May 10, 1993 (the "HDW Shipbuilding Agreement") between the
Borrower and HDW;
WHEREAS, the Borrower has also ordered three (3)
container vessels (the "Daewoo Vessels") from Daewoo Shipbuilding &
Heavy Machinery, Ltd. ("Daewoo") as is more specifically set forth in a
certain Shipbuilding Agreement dated May 10, 1993 (the "Daewoo
Shipbuilding Agreement") between the Borrower and Daewoo;
WHEREAS, the Borrower wishes to borrow from KfW up to *
Dollars (USD * ) (the "HDW Tranche") for the purchase of the
HDW Vessels;
WHEREAS, the Borrower also wishes to borrow from the
Syndicate up to *
Dollars (USD *) (the "Daewoo Tranche", together with the HDW Ship
Tranche, the "Tranches") for the purchase of the Daewoo Vessels;
WHEREAS, in order to induce KfW and the Syndicate to make
available to the Borrower the HDW Tranche and the Daewoo Tranche
respectively, American President Companies, Ltd. (the "Guarantor") has
agreed to guarantee the obligations of the Borrower under this Agreement
and the Security Documents pursuant to a guarantee attached hereto in
the form of Exhibit E;
WHEREAS, upon the sale of any Vessel to the Transferee on
such Vessel's Delivery Date as contemplated by this Agreement and that
certain Agreement to Acquire and Charter among the Transferee and the
parties hereto, dated the date hereof and attached hereto as Appendix I
(the "Agreement to Acquire and Charter"), (i) the Transferee and not APL
shall be liable for all Vessel Indebtedness relating to that Vessel, the
obligations of the Borrower hereunder with respect to such Vessel
Indebtedness and the obligations of the Borrower under the related
Security Documents and Charter Documents and (ii) such obligations shall
be guaranteed by the Guarantor pursuant to the Guarantee, and (iii) the
Transferee will execute and deliver the other related Daewoo Security
Documents and the Second Security Documents, or the HDW Security
Documents, as the case may be, and shall charter the Vessel to APL under
a Daewoo Charter or an HDW Charter, as applicable.
NOW, THEREFORE, in consideration of the mutual agreements
herein contained, the parties hereto agree as follows:
1. DEFINITIONS
Words and expressions defined hereinabove shall, when
used in this Agreement and in the Schedules and Appendices hereto, have
the meanings therein set out and in addition the following terms shall
have the following meanings:
"*" means HDW * and Daewoo * ,
collectively.
"Additional Amounts" shall have the meaning set forth in
Section 11.02(a).
"Agent" means KfW or any successor agent under this
Agreement.
"Aggregate Amount" means such amounts as set forth in
Schedule 3.
"Agreement to Acquire and Charter" means the Agreement
dated the date hereof among the Borrower, the Lenders and the Transferee
respecting the Transferee's liability for the Vessel Indebtedness for
any of the Vessels delivered to the Transferee and APL's obligation to
charter any such Vessel from the Transferee, together with all Exhibits
thereto.
"Agreement" means this agreement as it may from time to
time be amended, supplemented or otherwise modified.
"* Installment" means:
(i) in respect of each HDW Subportion each of the *
principal installments of that HDW Subportion (calculated on a
basis consistent with that reflected in Schedule 6A hereto as to
an assumed rate of interest of * % per annum) payable on the
Repayment Dates in respect of that HDW Subportion and in the
principal amounts provided in Section 5.01; and
(ii) in respect of each Daewoo Subportion each of the *
principal installments of that Daewoo Subportion (calculated on a
basis consistent with that reflected in Schedule 6B hereto as to
an assumed rate of interest of * % per annum) payable on the
Repayment Dates in respect of that Daewoo Subportion and in the
principal amounts provided in Section 5.02.
"Assignment and Acceptance" shall mean the agreement to
be entered into between any Syndicate Assignee and Assignor pursuant to
Section 10.02(a) and in the form set forth under Appendix F.
"Assignment and Agreement and Consent" shall mean the
assignment of monies payable to KfW or the Syndicate Agent under a
charter by APL to a third party consented and agreed to by a charterer
pursuant to Section 9.02(b) and in the form set forth in Appendix G.
"Assignor" shall have the meaning set forth in Section 10.02(a).
"Borrower" shall have the following meanings:
(i) Prior to any transfer of the Vessels pursuant to the
Agreement to Acquire and Charter, APL shall be the Borrower; and
(ii) From and after the transfer of any Vessel pursuant
to the Agreement to Acquire and Charter, the Transferee shall be
the Borrower with respect to all payment and performance
obligations relating to Vessel Indebtedness of that Vessel
(including but not limited to, Sections 2.02(d), 3, 4, 5, 6, 10,
11, 12, 13.03 and 15.09 of this Agreement) and APL shall be the
Borrower with respect to all other provisions of this Agreement
(including but not limited to, Sections 7, 8 and 9).
"Builder" means, in respect of each Vessel, HDW or
Daewoo, as the case may be.
"Business Day" means a day on which banks are open for
business in London, England, the City of New York, Frankfurt, Germany
and Luxembourg City, Luxembourg.
"Charter Documents" has the meaning set forth in the
Agreement to Acquire and Charter with respect to any Vessel.
"Charters" means the HDW Charters and the Daewoo
Charters.
"Classification Society" means The American Bureau of
Shipping.
"Code" means the Internal Revenue Code of 1986, as
amended from time to time, and the regulations promulgated thereunder.
"Commitment" shall mean the portion of the Facility to be
made available to the Borrower by each Lender.
"Contract Price" means, in respect of each HDW Vessel, *
* in respect of each Daewoo
Vessel,
(USD * ) payable by the Borrower to HDW or Daewoo, as the
case may be, under the relevant Shipbuilding Agreement less any
reductions as of the Delivery Date, which in the case of reductions in
the Deutsche Mark price for any HDW Vessel shall for purposes of
calculating such reduced Contract Price be converted to Dollars using
the USD Equivalent but, for purposes of this Agreement, excluding any
increases in the said price over the original Contract Price set forth
above made in accordance with the provisions of the relevant
Shipbuilding Agreement.
"Daewoo * " shall have the meaning set forth in
Section 5.03.
"Daewoo * Installment" shall have the meaning set
forth in Section 5.02.
"Daewoo Charters" shall mean, collectively, each of the bareboat charter
parties to be entered into on or before the Delivery Date of a Daewoo
Vessel between APL and the Transferee which shall provide, among other
things, for (i) periodic basic hire payments in an amount at least
sufficient to pay installments of principal and interest when due in
respect of the Daewoo Notes, on a "hell and high water" basis, (ii)
supplemental hire payments in an amount sufficient to pay all other
monies due under Sections 11 and 13 and (iii) the complete subordination
of rights and claims of APL under said bareboat charter to the relevant
Daewoo Mortgages, which shall be substantially in the form attached as
Exhibit A to the Agreement to Acquire and Charter.
"Daewoo Charter Assignment" means each and "Daewoo
Charter Assignments" means every first priority assignment of a Daewoo
Charter of a Daewoo Vessel owned by the Transferee to the Syndicate
Agent as security for the Transferee's obligations under the Loan
Documents to which it is a party with respect to the corresponding
Vessel Indebtedness, which shall be substantially in the form attached
as Exhibit C to the Agreement to Acquire and Charter.
"Daewoo Fixed Rate" shall have the meaning set forth in
Section 3.06.
"Daewoo Fixed Rate Notes" means the Notes issued to each
Syndicate Member on the Fixed Rate Conversion Date and "Daewoo Fixed
Rate Note" means any one of them.
"Daewoo Floating Rate" shall have the meaning set forth
in Section 3.06.
"Daewoo LIBO Rate Notes" means the Notes issued by the
Borrower using the Daewoo Floating Rate.
"Daewoo Notes" means the Notes evidencing the Daewoo
Tranche as used pursuant to Section 4.
"Daewoo Notice of Drawdown" shall have the meaning set
forth in Section 2.02(b) and shall be substantially in the form attached
in Schedule 2-B.
"Daewoo Security Documents" shall have the following
meanings:
(i) With respect to any Daewoo Vessel not transferred to
the Transferee pursuant to the Agreement to Acquire and Charter,
the "Daewoo Security Documents" shall mean the Guarantee, the
First Mortgage, the First Assignments of Insurance and the
Assignments and Agreements and Consents in favor of the Syndicate
Agent and/or the Syndicate Members, their successors and assigns;
and
(ii) With respect to any Daewoo Vessel transferred to
the Transferee pursuant to the Agreement to Acquire and Charter,
the "Daewoo Security Documents" shall mean the Guarantee, the
First Mortgage, the First Assignments of Insurance, the
Assignments and Agreements and Consents, and the Charter
Assignments in favor of the Syndicate Agent and/or the Syndicate
Members, their successors and assigns.
"Daewoo Subportion" means, in respect of each Daewoo
Vessel, that portion of the Daewoo Tranche that relates to its purchase
financing and "Daewoo Subportions A-C" shall have the meaning set forth
in Section 2.02.
"Daewoo Tranche" shall have the meaning set forth in
Section 2.02.
"Default Interest Rate" shall means the interest rate set
forth in Section 3.08.
"Delivery Date" means, in respect of each Vessel, the
date on which that Vessel is delivered to and accepted by the Borrower
pursuant to the relevant Shipbuilding Agreement.
"Deutsche Marks" or "DM" means the lawful currency for
the time being of the Federal Republic of Germany.
"Dollars" and "USD" means (i) the lawful currency for the
time being of the United States of America and (ii) in immediately
available and transferable funds or such other funds as are customary
for same day settlement of international Dollar transactions.
"ERISA" means the Employee Retirement Income Security Act
of 1974, as amended from time to time, and the regulations promulgated
and rulings issued thereunder.
"ERISA Affiliate" means with respect to any Person, any
trade or business (whether or not incorporated) which is a member of a
group of which such Person is a member and which is under common control
with such Person within the meaning of Section 414 of the Code, as
amended from time to time, and the regulations promulgated and rulings
issued thereunder.
"Event of Default" means any of the events described in
Section 12.02.
"Event of Loss" means (i) an actual, constructive,
agreed, arranged, or compromised total loss of the Vessel, or (ii)
requisition of title to the Vessel by the United States of America
(whether by voluntary contract of commitment or otherwise) or its flag
state, or (iii) seizure or forfeiture of the Vessel of any kind or
nature whatsoever not released pursuant to Section 16 of the relevant
Mortgage, or (iv) requisition of use, confiscation, seizure or
forfeiture of the Vessel of any kind or nature whatsoever by any
government other than the United States of America (so long as war risk
insurance satisfactory in form, substance and amount to the mortgagee of
such Vessel is in place for the period of such registration) or its flag
state for more than one hundred eighty (180) days. An Event of Loss
shall be deemed to have occurred (a) in the event of an actual total
loss of the Vessel, on the date of such loss, (b) in the event of damage
to the Vessel which results in a constructive, agreed, arranged, or
compromised total loss of the Vessel, on the date of the occurrence of
the event giving rise to such damage, or (c) in the case of any event
referred to in clause (ii), (iii) or (iv) above, on the date of the
occurrence of such event.
"Exchange Bank" means each, and "Exchange Banks" means
every, financial institution with whom the Borrower has a forward
exchange contract or the contracts on the Delivery Date of the HDW
Vessel for amounts to be paid in Deutsche Marks under the HDW
Shipbuilding Agreement.
"Facility" means the loan facility granted by KfW and the
Syndicate to Borrower in the amount of all the Loans.
"Financial Indebtedness" means, in relation to each
Obligor, (a) any indebtedness (whether long or short term) owed to any
bank or financial institution; (b) any liability under any financial
lease or bareboat charter and (c) any guarantee, indemnity or other
assurance against financial loss given by that Obligor in respect of any
of the foregoing.
"First Assignment of Insurances" means, in respect of
each Vessel, the Assignment of its Insurances in the form and upon the
terms and conditions of the draft set out in Appendices C-1 or C-2.
"First Mortgage" means, in respect of each HDW Vessel,
the first priority mortgage on that Vessel securing the whole HDW
Tranche, and in respect of each Daewoo Vessel, the first priority
mortgage on that Vessel securing the whole Daewoo Tranche, in the form
and upon the terms and conditions of the draft set out in Appendix B-1.
"First Mortgagee" means, in respect of a First Mortgage
securing the HDW Tranche, KfW and its successors and assigns pursuant to
that Mortgage and, in respect of a First Mortgage securing the Daewoo
Tranche, the Syndicate Agent and/or the Syndicate Members and their
respective successors and assigns pursuant to that Mortgage.
"Fixed Rate" means, in respect of each Note, the Interest
Rate as determined by either Section 3.05 or 3.06, as the case may be.
"Fixed Rate Conversion Date" means the first day of the
Interest Period immediately succeeding the date on which the Borrower
elects by written notice the Fixed Rate under the relevant HDW
Subportion pursuant to Section 3.05 or a Fixed Rate under the relevant
Daewoo Subportion pursuant to Section 3.06.
"Fixed Rate Notes" means the HDW Fixed Rate Notes and the
Daewoo Fixed Rate Notes and "Fixed Rate Note" means any of them.
"Frankfurt Banking Day" means a day on which banks are
open for business in Frankfurt, Germany.
"Governmental Instrumentality" shall mean and include (i)
any national, provincial, or state government, political subdivision
thereof, or local jurisdiction therein; (ii) any board, commission,
department, division, organ, instrumentality, court, or agency of any
entity specified in clause (i), however constituted; and (iii) any
association, organization, or institution of which any entity specified
in clause (i) is a member or to whose jurisdiction any entity specified
in clause (i) is subject or in whose activities any entity specified in
clause (i) is a participant.
"Guarantee" and "Guarantees" shall have the following
meanings:
(i) Prior to any transfer of the Vessels pursuant to the
Agreement to Acquire and Charter, the "Guarantee" shall mean the
Guarantee dated the date hereof by the Guarantor guaranteeing
APL's obligations under the Loan Agreement and the Security
Documents to which it shall become a party substantially in the
form of Appendix E; and
(ii) From and after the transfer of any Vessel pursuant
to the Agreement to Acquire and Charter, "Guarantees" shall mean,
collectively, the Guarantee described in clause (i) above and the
Guarantee dated the first Delivery Date on which the Transferee
shall acquire a Vessel by the Guarantor guaranteeing the
Transferee's obligations under the Loan Agreement and the
Security Documents to which it shall become a party substantially
in the form of Appendix E.
"Guarantor" means American President Companies, Ltd.
*
"HDW * Installment" shall have the meaning set forth in
Section 5.01.
"HDW Charters" shall mean, collectively, each of the
bareboat charter parties to be entered into on or before the Delivery
Date of an HDW Vessel between APL and the Transferee which shall
provide, among other things for (i) periodic basic hire payments in an
amount at least sufficient to pay installments of principal and interest
when due in respect of the HDW Notes, on a "hell and high water" basis,
(ii) supplemental hire payments in an amount sufficient to pay all other
monies due under Sections 11 and 13 and (iii) the complete subordination
of rights and claims of APL under said bareboat charter to the relevant
HDW Mortgages, which shall be substantially in the form attached as
Exhibit A to the Agreement to Acquire and Charter.
"HDW Charter Assignment" means each and "Charter
Assignments" means every first priority assignment of an HDW Charter of
a given HDW Vessel by the Transferee to the Agent as security for the
Transferee's obligations under the Loan Documents to which it is a party
with respect to the corresponding Vessel Indebtedness, which shall be
substantially in the form attached as Exhibit C to the Agreement to
Acquire and Charter.
"HDW Fixed Rate" shall have the meaning set forth in
Section 3.05.
"HDW Fixed Rate Notes" means the Notes issued to KfW on
the Fixed Rate Conversion Date and "HDW Fixed Rate Note" means any one
of them.
"HDW Floating Rate" shall have the meaning set forth in
Section 3.05.
"HDW LIBO Rate Notes" means the Notes issued by the
Borrower using the HDW Floating Rate.
"HDW Notes" means the Notes evidencing the HDW Tranche as
used pursuant to Section 4.
"HDW Notice of Drawdown" shall have the meaning set forth
in Section 2.01(b) and shall be substantially in the form attached
hereto as Schedule 2-A.
"HDW Security Documents" shall have the following
meanings:
(i) With respect to any HDW Vessel not transferred
pursuant to the Agreement to Acquire and Charter, the "HDW
Security Documents" shall mean the Guarantee, the First Mortgage,
the First Assignment of Insurance and the Assignments and
Agreements and Consents in favor of KfW, its successors and
assigns; and
(ii) With respect to any HDW Vessel transferred pursuant
to the Agreement to Acquire and Charter, the "HDW Security
Documents" shall mean the Guarantee, the First Mortgage, the
First Assignment of Insurance, the Assignments and Agreements and
Consents and the HDW Charter Assignment in favor of KfW, its
successors and assigns.
"HDW Subportion" means, in respect of each HDW Vessel,
that portion of the HDW Tranche that concerns its purchase financing and
"HDW Subportions A-C" shall have the meaning set forth in Section 2.01.
"HDW Tranche" shall have the meaning set forth in Section
2.01.
"Holder" means, in respect of each Note, the Lender which
is registered as the holder of such Note in the relevant Register.
"Incipient Default" shall mean any state of facts, any
event, or any condition of which the Borrower has actual notice which
would constitute an Event of Default but for the requirement that notice
be given or time elapse or both.
"Indemnified Party" shall have the meaning set forth in
Section 11.01.
"Insufficiency" means, with respect to any Plan, the
amount, if any, as determined on an on-going basis by which the present
value of the vested benefits under such Plan exceeds the fair market
value of the assets of such Plan allocable to such benefits.
"Insurances" means, in respect of each Vessel, each and
every policy or contract of insurance or entry into a war risks or
protection and indemnity association (which are now or may hereafter be)
taken out or entered into in respect of that Vessel, her increased value
or disbursements or otherwise howsoever in connection with that Vessel
in order to comply with Borrower's obligations under the First Mortgage
or (if a Daewoo Vessel) the Second Mortgage thereon.
"Interbank Market" means the London Interbank Euro-
Currency Market.
"Interest Determination Date" means two (2) New
York/Frankfurt/London Banking Days prior to the commencement of the
relevant Interest Period on which the Agent or the Syndicate Agent, as
the case may be, will make an interest determination.
*
"Interest Payment Date" means in respect of any HDW
Subportion A-C or any Daewoo Subportion A-C and any * thereof, the
last day of any Interest Period in respect thereof determined in
accordance with Section 3 hereof.
"Interest Period" means each of the successive interest
periods for the HDW and Daewoo Subportions determined in accordance with
Sections 3.01 and 3.02, respectively, and 3.03 of this Agreement.
"Interest Rate" means the rate of interest applicable to
the Loan calculated in accordance with Sections 3.04-3.06, as the case
may be.
"Lenders" means KfW and any assignees of KfW pursuant to
Section 10.01(b) and each member of the Syndicate, including any
Syndicate Assignee and "Lender" means any of them.
"LIBO Rate" shall have the meaning set forth in Section
3.04.
"LIBO Rate Conversion Date" means the first day of the
Interest Period immediately succeeding the last date of the Interest
Period to which a Fixed Rate applies under a Daewoo Subportion pursuant
to Section 3.06.
"LIBO Rate Notes" means both the HDW LIBO Rate Notes or
the Daewoo LIBO Rate Notes and "LIBO Rate Note" means any one of them.
"Loan Documents" means this Agreement, the Agreement to
Acquire and Charter, the HDW Security Documents and the Daewoo Security
Documents.
"Loans" means the loans made by the Lenders under any
Subportion of the HDW Tranche and the Daewoo Tranche, as the case may
be, and "Loan" means any such loan.
"London Banking Day" means a day on which banks are open
for business in London.
"Maximum Daewoo Tranche Amount" means
* United States Dollars
(USD *
"Maximum HDW Tranche Amount" means *
"Mortgages" shall mean, collectively, the First Mortgages
and the Second Mortgages.
"Multiemployer Plan" means a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA to which a Person or any ERISA
Affiliate is making or accruing an obligation to make contributions, or
has within any of the preceding three (3) plan years made or accrued an
obligation to make contributions.
"Multiple Employer Plan" means an employee benefit plan,
other than a Multiemployer Plan, subject to Title IV of ERISA to which a
Person or any ERISA Affiliate, and more than one employer other than
such Person or ERISA Affiliate, is making or accruing an obligation to
make contributions or, in the event that any such plan has been
terminated, to which the Person or any ERISA Affiliate made or accrued
an obligation to make contributions during any of the five (5) plan
years preceding the date of termination of such plan.
"New York Banking Day" means a day on which banks are
open for business in the City of New York.
"Notes" means the HDW Notes and the Daewoo Notes.
"Obligors" means APL, the Transferee and the Guarantor
and "Obligor" means any of them.
"Original Contract Delivery Date" means, in respect of
each Vessel, the date set against its hull number as set forth below,
being the date on which it is scheduled to be delivered under the
Shipbuilding Agreement relating thereto:
Vessel Delivery Date
HDW Hull No. 297 April 12, 1995
HDW Hull No. 298 July 10, 1995
HDW Hull No. 299 November 30, 1995
Daewoo Hull No. 4028 May 30, 1995
Daewoo Hull No. 4029 June 21, 1995
Daewoo Hull No. 4033 October 17, 1995
as each such date may be extended by up to twenty five (25) calendar
days by HDW or Daewoo, as the case may be, under Article 1(e) of the HDW
Shipbuilding Agreement or the Daewoo Shipbuilding Agreement, as the case
may be, but excluding any other extensions thereto which may be
permitted under Article 7 (force majeure) or any other provisions of the
HDW Shipbuilding Agreement or the Daewoo Shipbuilding Agreement, as the
case may be.
"Original Principal Amount" means the aggregate principal
amount of the HDW Notes and the Daewoo Notes, as the case may be.
"Outstanding Indebtedness" means the aggregate principal
amount of the Tranches outstanding together with accrued interest
thereon and all other monies of whatever nature due or to become due and
payable to KfW and the Syndicate in accordance with the terms of this
Agreement and the other Loan Documents.
"Paying Agent" shall have the meaning set forth in
Section 4.04.
"PBGC" means the Pension Benefit Guaranty Corporation, or
any entity or entities succeeding to any or all its functions under
ERISA.
"Percentage Interest" shall mean the interests set forth
in Schedule 3 in respect of the Syndicate Members.
*
"Person" means any individual, corporation, partnership,
business trust, joint venture, association, joint stock company, trust
or other unincorporated organization, whether or not a legal entity, or
any government or agency or political subdivision thereof.
"Plan" means, at any time, any employee pension benefit
plan maintained or contributed to or at any time during the five
calendar years preceding the date of this Agreement was maintained or
contributed to, by APL, the Guarantor, any of its Subsidiaries, or any
ERISA Affiliate of APL, the Guarantor, or its Subsidiaries, which
employee pension benefit plan is covered by Title IV of ERISA or is
subject to the minimum funding standards of the Code.
"Process Agent" shall have the meaning set forth in
Section 15.08.
"Quarter Day" means in each year 31st March, 30th June,
30th September and 31st December.
"Recoveries" means any amounts collected by the Agent or
the Syndicate Agent, as the case may be, subsequent to an Event of
Default.
"Redemption Date" shall have the meaning set forth in
Section 5.04(b).
"Register" shall have the meaning set forth in Section
4.04.
"Registrars" shall have the meaning set forth in Section
4.04.
"Repayment Date" means each date falling six (6) months
after the Delivery Date of each Vessel and each six (6) months
thereafter; provided, however, if such Delivery Date shall occur on the
last Business Day in a calendar month and if there is no numerically
corresponding day in such later month then such later Repayment Date
shall be the last Business Day of such later month, which Repayment Date
shall always be an Interest Payment Date.
"Replacement Mortgage" has the meaning set forth in
Section 20(b) or (c) of each First Mortgage, as applicable, and in
Section 20(b) or (c) of the Second Mortgage, as applicable.
"Second Assignment of Insurances" means, in respect of
each Daewoo Vessel, the second assignment of insurances in favor of the
Agent substantially in the form set out in Appendix C-3.
"Second Charter Assignment" means the second priority
assignment of the Daewoo Charter by the Transferee to KfW substantially
in the form set forth in Exhibit C to the Agreement to Acquire and
Charter.
"Second Mortgage" means, in respect of each Daewoo
Vessel, the second priority mortgage on that Daewoo Vessel in favor of
the Agent securing the whole HDW Tranche in the form and upon the terms
and conditions of the draft set out in Appendix B-2.
"Second Mortgagee" means KfW and its respective
successors and assigns pursuant to the provisions of the Second
Mortgage.
"Second Security Documents" means the Guarantee, the
Second Mortgages, the Second Assignments of Insurances and upon the
transfer of a Daewoo Vessel pursuant to the Agreement to Acquire and
Charter, the Second Charter Assignments.
"Security Documents" means the HDW Security Documents,
the Daewoo Security Documents, the Second Security Documents and
"Security Document" means any of them.
"Shipbuilding Agreements" means the HDW Shipbuilding
Agreement and the Daewoo Shipbuilding Agreement and "Shipbuilding
Agreement" means either of them.
"Subportions" means the HDW Subportions and the Daewoo
Subportions and "Subportion" means any one of them.
"Subsidiary" means a body corporate from time to time of
which another (a) has direct or indirect control or (b) owns directly or
indirectly more than fifty per centum (50%) of the share capital or
similar right of ownership (and in this definition "control" means the
power to direct the management and the policies of a body corporate,
whether through the ownership of voting capital, by contract or
otherwise).
"Substitute Basis" shall have the meaning set forth in
Section 6.01(c).
"Suspension Notice" shall mean the notice given by the
Agent or the Syndicate Agent to the Borrower pursuant to Section
6.01(a).
"Syndicate Agent" shall mean Commerzbank AG, Hamburg, or
any successor syndicate agent under this Agreement.
"Syndicate Assignee" shall have the meaning set forth in
Section 10.02(a).
"Tangible Net Worth" means, with respect to the
Guarantor, the aggregate of all assets of the Guarantor which would, in
accordance with generally accepted United States accounting principles,
appear as assets on the consolidated balance sheet of the Guarantor,
less the sum of (i) all liabilities and indebtedness on such balance
sheet and (ii) all intangible assets such as goodwill, patents,
trademarks, franchises, licenses and other like intangibles.
"Tax" shall be construed so as to include, by reference
to any applicable jurisdiction, any present or future tax, levy, impost,
deduction, duty or other charge or withholding of a similar nature
imposed by a Governmental Instrumentality (including, without
limitation, any interest or penalty payable in connection with any
failure to pay or any delay in paying any of the same) and "taxation"
shall be interpreted accordingly.
"Termination Event" means (i) a "reportable event," as
such term is described in Section 4043 of ERISA (other than a
"reportable event" not subject to the provision for thirty (30) day
notice to the PBGC), or an event described in Section 4068 of ERISA, or
(ii) the withdrawal of APL, the Guarantor or any ERISA Affiliate from a
Multiple Employer Plan during a plan year in which it was a "substantial
employer", as such term is defined in Section 4001(a)(2) of ERISA, or
the incurrence of liability by APL, the Guarantor or any ERISA Affiliate
under Section 4064 of ERISA upon the termination of a Multiple Employer
Plan, or (iii) the filing of a notice of intent to terminate a Plan or
the treatment of a Plan amendment as a termination under Section 4041A
of ERISA, or (iv) the institution of proceedings to terminate a Plan by
the PBGC under Section 4042 of ERISA, or (v) any other event or
condition which might constitute grounds under Section 4042 of ERISA for
the termination of, or the appointment of a trustee to administer, any
Plan.
*
"Transferee" shall mean APL Newbuildings, Ltd.
"USD Equivalent" shall mean the Dollar amount calculated
under the USD Exchange Rate.
"USD Exchange Rate" shall mean 1 Dollar per * Deutsche
Mark, which is based on average rates of exchange for such currencies
obtained by the Borrower under forward exchange contracts submitted to
Haight, Gardner, Poor & Havens by letter of the Guarantor dated August
20, 1993.
"Value Test" shall have the meaning set forth in Section
5.03(c).
"Vessel Indebtedness" means, in respect of each Vessel,
all sums owing, actually or contingently, by the Borrower to the
relevant Lender(s) in respect of that Subportion which relates to that
Vessel under this Agreement (whether by way of repayment of principal,
payment of commitment commission, payment of interest or default
interest, payment upon any indemnity, reimbursement for costs or
otherwise howsoever).
"Vessels" means the HDW Vessels and the Daewoo Vessels
and "Vessel" means any of them.
"Withdrawal Liability" shall have the meaning given such
term under Part I of Subtitle E of Title IV of ERISA.
2. THE TRANCHES
2.01 The HDW Tranche. (a) The HDW Subportions. Upon the
terms and subject to the conditions set forth in this
Agreement, KfW agrees to make available to the Borrower
as its Commitment up to three (3) advances in the
aggregate principal amount of up to the lesser of (i) *
or (ii) * of the Total Contract Price *
of the three (3) HDW Vessels based on the
Contract Price of each such Vessel calculated as of each
Vessel's Delivery Date using the USD Exchange Rate (the
"HDW Tranche"). Such maximum loan amounts may be reduced
from time to time to take into account any reductions in
the Contract Price of any HDW Vessel calculated using the
USD Equivalent at the request of APL, but any reductions
made in loan amounts shall not thereafter be eligible for
borrowing. The obligation of the Borrower to repay each
of the three (3) advances (the "HDW Subportions A-C")
under the HDW Tranche shall be evidenced by the HDW
Notes. It is expressly understood and agreed that the
Borrower shall have no right to receive, and KfW shall
have no obligation to disburse, any amount in respect of
any HDW Subportion greater than the lesser of (i)
* or (ii)
* of the * Contract Price of a
Vessel calculated as of such Vessel's Delivery Date.
(b) Disbursement of the HDW Subportion. Each
HDW Subportion shall be disbursed on at least five (5)
Business Days' written notice (the "HDW Notice of
Drawdown") from APL (and the Transferee if it is to be
the owner of the related Vessel) to the Agent specifying
the Delivery Date, which shall be a Business Day. If
after the giving of an HDW Notice of Drawdown it becomes
apparent that the Delivery Date will not occur on the
date specified as the Delivery Date in such notice, APL
(and the Transferee if it is to be the owner of the
related Vessel) shall immediately give notice to the
Agent specifying a new Delivery Date (if known to APL)
and requesting the Agent either to (i) reemploy the
deposits acquired for the purpose of funding such HDW
Subportion until the new Delivery Date, or (ii) liquidate
such deposits. If the deposits acquired for the purpose
of funding such HDW Subportion are liquidated, the Agent
shall not have the obligation to disburse such HDW
Subportion until it shall have received a new HDW Notice
of Drawdown in accordance with the provisions set forth
herein.
Not later than 11:00 a.m. (New York City time) on
the Delivery Date, and upon fulfillment of the conditions
in Section 7 hereof, the Agent will make such HDW
Subportion available to (i) the Exchange Banks the
amounts owed to the Exchange Banks under the relevant
forward exchange contracts on the Delivery Date
simultaneously with irrevocable confirmation from each of
the Exchange Banks of release of the respective Deutsche
Marks to an account designated by HDW in fulfillment of
APL's payment obligations to HDW on the Delivery Date
under the HDW Shipbuilding Agreement and (ii) any
remaining balance to APL in same day funds at the account
specified in the HDW Notice of Drawdown.
If for any reason (other than solely by default of
the Agent) an HDW Subportion is not drawn down on the
Delivery Date specified in the HDW Notice Drawdown, APL
shall reimburse the Agent on demand for its losses and
expenses in accordance with Section 11.01(a).
(c) Expiration of the Commitment. The
commitment by KfW to provide funds for any HDW Subportion
shall expire if the relevant HDW Vessel has not been
delivered within two hundred seventy (270) days after its
Original Contract Delivery Date. KfW may determine in
its sole discretion (but without obligation on its part)
whether and on what conditions, which will include
payment of the indemnity pursuant to Section 11, any
Delivery Date may be extended beyond such two hundred
seventy (270) day period.
2.02 The Daewoo Tranche. (a) The Daewoo Subportions.
Upon the terms and subject to the conditions set forth in
this Agreement, each Syndicate Member agrees, severally
but not jointly, to make available to the Borrower as its
Commitment up to three (3) advances, which together with
the advances made by the other Syndicate Members, shall
be the lesser of (i) an aggregate principal amount of up
to
*
or (ii) * of the Total Contract Price of the three
Daewoo Vessels based on the Contract Price of each such
Vessel (the "Daewoo Tranche"); provided, however, that
the maximum Subportion in each case shall not exceed the
sum of * of the Contract Price of each Daewoo Vessel as
of its Delivery Date. Such maximum loan amounts may be
reduced from time to time to take into account any
reductions in such Contract Price at the request of APL,
but any reductions made in loan amounts shall not
thereafter be eligible for borrowing. The total amount
of each Loan to be made available by each Syndicate
Member in respect of a Daewoo Subportion shall not exceed
at any time the Aggregate Amount for such Syndicate
Member and shall be equal to such Member's Percentage
Interest of the Daewoo Tranche. The obligation of the
Borrower to repay each of the three advances (the "Daewoo
Subportions A-C") under the Daewoo Tranche shall be
evidenced by the Daewoo Notes. It is expressly
understood and agreed that the Borrower shall have no
right to receive, and no Syndicate Member shall have any
obligation to disburse, any amount in respect of any
Daewoo Subportion greater than such Member's Percentage
Interest of the Contract Price for each Daewoo Vessel.
The failure of any Syndicate Member to advance any amount
which it is obligated to advance hereunder in respect of
any Daewoo Subportion shall not relieve it or any other
Syndicate Member of the obligation to make such advances,
but no Syndicate Member or the Syndicate Agent shall be
responsible for the failure of any other Syndicate Member
to advance its Aggregate Amount to the Borrower in
respect of any Daewoo Subportion.
(b) Disbursement of the Daewoo Subportion.
Each Daewoo Subportion shall be disbursed on at least
five (5) Business Days' written notice (the "Daewoo
Notice of Drawdown") from APL (and the Transferee if it
is to be the owner of the related Vessel) to the
Syndicate Agent specifying the Delivery Date, which shall
be a Business Day. APL (and the Transferee if it is to
be the owner of the related Vessel) may request in such
Daewoo Notice of Drawdown that, as a condition of the
drawdown by the Borrower, the Syndicate Members make
their respective portions of the Daewoo Subportion
available to the Syndicate Agent one Business Day prior
to the Delivery Date specified in such Daewoo Notice of
Drawdown and confirmation to APL (and the Transferee if
it is to be the owner of the related Vessel) by the
Syndicate Agent that all of the Commitment has been made
available on such date. If the Syndicate Members are
requested to make their Commitment available before the
Delivery Date as set forth herein, for purposes of
determining the first Repayment Date and the Interest
Period, the Delivery Date shall be deemed to be the date
that the Syndicate was requested to make its Commitment
available.
Not later than 10:00 a.m. (New York City time) on
such Delivery Date or on the Business Day immediately
preceding the Delivery Date if so requested by APL (and
the Transferee if it is to be the owner of the related
Vessel), each Syndicate Member shall make the portion of
the Daewoo Subportion which it is obligated to make under
Section 2.02(a) available to the Syndicate Agent in same-
day funds at their account set forth in Section 5.07, and
upon fulfillment of the conditions in Section 7 hereof,
for disbursement to the Borrower on the Delivery Date in
same-day funds at the location to be specified by APL
(and the Transferee if it is to be the owner of the
related Vessel) in the relevant Daewoo Notice of
Drawdown.
If after the giving of a Daewoo Notice of Drawdown
it becomes apparent that the Delivery Date will not occur
on the date specified as the Delivery Date in such
notice, APL (and the Transferee if it is to be the owner
of the related Vessel) shall immediately give notice to
the Syndicate Agent specifying a new Delivery Date (if
known to APL) and requesting the Syndicate Agent either
to (i) reemploy the deposits acquired for the purpose of
funding such Daewoo Subportion until the new Delivery
Date, or (ii) liquidate such deposits. If the deposits
acquired for the purpose of funding such Daewoo
Subportion are liquidated, the Syndicate Agent shall not
have the obligation to disburse such Daewoo Subportion
until it shall have received a new Daewoo Notice of
Drawdown in accordance with the provisions set forth
herein.
If APL (and the Transferee if it is to be the
owner of the related Vessel) shall have requested in a
Daewoo Notice of Drawdown that the Syndicate Members'
Commitment be made available to the Syndicate Agent one
Business Day prior to the Delivery Date, the Syndicate
Agent shall confirm to APL (and the Transferee if it is
to be the owner of the related Vessel) by telefax no
later than 6:00 p.m. (Frankfurt time) on such date
whether or not the total Commitment has been made
available. If the Syndicate Agent shall have informed
APL (and the Transferee if it is to be the owner of the
related Vessel) that the total Commitment is not
available and APL does not respond in writing to the
contrary by 10:00 a.m. (New York time) on the following
Business Day, the Syndicate Agent may assume that APL has
given notice to delay the Delivery Date and shall
reemploy the deposits acquired on an overnight basis
unless otherwise instructed in writing by APL.
If for any reason (other than solely by default of
the Syndicate Agent) a Daewoo Subportion is not drawn
down on the Delivery Date specified in the Daewoo Notice
of Drawdown, APL shall reimburse the Syndicate Agent
and/or the Syndicate Members on demand for its losses and
expenses in accordance with Section 11.01(a).
(c) Expiration of the Commitment. The
Commitment by each Syndicate Member to provide funds for
any Daewoo Subportion shall expire if the relevant Daewoo
Vessel has not been delivered within two hundred seventy
(270) days after its Original Contract Delivery Date.
The Syndicate Members may determine in their sole
discretion (but without obligation on their part) whether
and on what conditions, which will include payment of the
indemnity pursuant to Section 11, any Delivery Date may
be extended beyond such 270-day period.
(d) Syndicate Member Commitment Assumed. Unless
(i) the Syndicate Agent shall have received notice from a
Syndicate Member prior to any Delivery Date that such
Syndicate Member will not make available to the Syndicate
Agent such Member's ratable portion of the related Daewoo
Subportion, or (ii) APL shall not have requested in its
relevant Notice of Drawdown that the Syndicate Agent
request that each Syndicate Member's Commitment be
available in the Syndicate Agent's account one (1)
Business Day prior to any Delivery Date, the Syndicate
Agent may assume that such Member has made such portion
available to the Syndicate Agent on such Delivery Date in
accordance with subsection (b) of this Section 2.02 and
the Syndicate Agent may, in reliance upon such
assumption, make available to the Borrower thereof on
such date a corresponding amount. If the Syndicate Agent
makes such corresponding amount available, and to the
extent that such Member shall not have so made such
ratable portion of the Daewoo Subportion available to the
Syndicate Agent, such Syndicate Member and the Borrower
severally agree to repay to the Syndicate Agent forthwith
on demand such corresponding amount together with
interest thereon, for each day from the date such amount
is made available to the Borrower until the date such
amount is repaid to the Syndicate Agent, at (i) in the
case of the Borrower, the interest rate applicable at the
time to the related Daewoo Subportion and (ii) in the
case of such Member at an interest rate specified by the
Syndicate Agent. If such Syndicate Member shall repay to
the Syndicate Agent such corresponding amount, such
amount so repaid shall constitute such Member's portion
of that Daewoo Subportion for purposes of this Agreement,
and to the extent of any such repayment, the Borrower
shall be reimbursed in the amount of any payment made by
it not necessary to fund such Syndicate Member's portion.
Nothing in this Section 2.02(d) shall be deemed to
relieve any Syndicate Member from its obligation to
fulfill its Commitment hereunder or to prejudice any
rights which APL or the Transferee, as the case may be,
may have against any Syndicate Member as a result of any
default by such Syndicate Member in funding its
Commitment hereunder.
3. INTEREST AND INTEREST PERIODS
3.01 HDW Interest. In respect of each HDW Subportion, each
Interest Period by reference to which the LIBO Rate is to
be determined by the Agent in respect of that Subportion,
and each Interest Period with respect to which the
Borrower elects to have fixed rate funding under Section
3.05 with respect to such Subportion, shall be of *
3.02 Daewoo Interest. In respect of each Daewoo Subportion,
each Interest Period by reference to which the LIBO Rate
is to be determined by the Syndicate Agent in respect of
that Subportion, and each Interest Period with respect to
which the Borrower elects to have fixed rate funding
under Section 3.06 with respect to such Subportion, shall
be of *
3.03 Interest Periods. Notwithstanding the provisions of
Sections 3.01 and 3.02 above:
(a) the first Interest Period in respect of each
Subportion will commence on the Delivery Date of the
Vessel relating thereto and each subsequent Interest
Period will commence forthwith upon the expiry of the
previous Interest Period in respect of that Subportion;
(b) if any Interest Period would otherwise end on
a day which is not a Business Day, that Interest Period
shall be extended to the next succeeding day which is a
Business Day;
(c) if any Interest Period commences on the last
Business Day in a calendar month and if there is no
numerically corresponding day in the month in which such
Interest Period ends, such Interest Period shall end on
the last Business Day in that later month; and
(d) the parties hereto may make any necessary
adjustments to the duration of any Interest Period in
respect of any Subportion so as to ensure that it ends on
a Repayment Date relative to that Subportion.
3.04 *
3.05 HDW Tranche Interest. (a) *
(b) *
(c) *
(d) *
3.06 Daewoo Tranche Interest. (a) *
(b) *
(c) *
3.07 Determination of Interest Rates. Each determination of a
rate of interest by the Agent or the Syndicate Agent, as
the case may be, in respect of any Subportion under this
Agreement shall, save in the case of manifest error, be
final and binding upon the Borrower and shall be promptly
notified by the Agent or the Syndicate Agent, as the case
may be, to the Borrower.
3.08 Default Interest. (a) If the Borrower fails to pay any
sum on the due date for payment owing to KfW hereunder
(and irrespective of whether KfW has given the Borrower
any notice in respect of such failure), the Borrower
shall become liable to pay default interest which shall
accrue on the amount of any such overdue sum from such
due date until the date of payment in the manner provided
in Section 5.06 to the Agent of the full amount of such
overdue sum at the rate per annum *
* and such default interest shall be payable by the
Borrower on demand of the Agent and shall be compounded
monthly.
(b) If the Borrower fails to pay any sum on the
due date for payment hereunder owing to the Syndicate
Agent or any Syndicate Member (and irrespective of
whether the Syndicate Agent has given the Borrower any
notice in respect of such failure), the Borrower shall
become liable to pay default interest which shall accrue
on the amount of any such overdue sum from such due date
until the date of payment in the manner provided in
Section 5.07 to the Syndicate Agent of the full amount of
such overdue sum at the rate per annum *
* and such default interest shall
be payable by the Borrower on demand of the Syndicate
Agent and shall be compounded monthly.
4. THE NOTES
4.01 Notes: Title and Terms. (a) The HDW Notes. The Notes
issued hereunder evidencing the HDW Tranche shall be
designated as HDW Notes. The HDW Notes shall be
substantially in the form set forth in Appendix *
The HDW Notes shall be dated the date of
issuance thereof and shall bear interest in accordance
with Section 3.05 hereto. If an HDW Vessel is to be
transferred to a Transferee pursuant to the Agreement to
Acquire and Charter on the Delivery Date of such Vessel,
the HDW Notes relating to such Vessel shall be issued by
the Transferee, as Borrower, upon execution and delivery
of the related Charter Documents.
(b) The Daewoo Notes. The Notes issued hereunder
evidencing the Daewoo Tranche shall be designated as
Daewoo Notes. The Daewoo Notes shall be substantially in
the form set forth in Appendix A-2 if a Daewoo Fixed Rate
Note, and Appendix A-2B if a Daewoo LIBO Rate Note. The
Daewoo Notes shall be dated the date of issuance thereof
and shall bear interest in accordance with Section 3.06
hereto. If a Daewoo Vessel is to be transferred to a
Transferee pursuant to the Agreement to Acquire and
Charter on the Delivery Date of such Vessel, the Daewoo
Notes relating to such Vessel shall be issued by the
Transferee, as Borrower, upon execution and delivery of
the related Charter Documents.
4.02 Issuance and Terms of Notes. The Notes shall be issued
to the relevant Lender against payment therefor in
accordance with the following: (a) The Notes shall be
issued to the relevant Lender on the Delivery Date of the
related Vessel; (b) each Note (including the Fixed Rate
Notes when issued on a Fixed Rate Conversion Date)
shall be dated the date of issuance; (c) the aggregate
principal amount of Notes shall be the Original Principal
Amount; (d) the principal amount of the Notes shall be
payable in accordance with Section 5; (e) each Note shall
be payable as to principal and interest therein to the
Holder thereof or its registered assigns in accordance
with Section 5.06 or 5.07, as applicable; and (f) no
Notes may be issued in a denomination of less than *
.
The principal and interest payable on the HDW or
Daewoo Fixed Rate Notes shall be payable in accordance
with the amortization schedule attached thereto unless
otherwise provided herein or therein.
Each Note shall bear interest as provided in
Section 3.04, 3.05 or 3.06 of this Agreement on the
unpaid principal amount thereof from time to time
outstanding from the date thereof and shall be payable in
accordance with the provisions set forth in Sections 5.01
and 5.02.
The Notes shall be executed on behalf of the
Borrower by its President or one of its Vice Presidents
or its Treasurer or one of its Assistant Treasurers or
another of its duly authorized officers. Notes bearing
the signatures of individuals who were at any time the
proper officers of the Borrower shall bind the Borrower,
notwithstanding that such individuals or any of them have
ceased to hold such offices prior to the delivery of such
Notes.
4.03 Exchange of Notes After Interest Conversion. On a Fixed
Rate Conversion Date or a LIBO Rate Conversion Date (in
the case of the Daewoo Notes), the Interest Rate on the
Notes relating to a particular Subportion shall be
converted to a Fixed Rate or a LIBO Rate, as the case may
be. Upon such conversion, the relevant Holders shall
tender the related LIBO Rate Notes or the Fixed Rate
Notes then outstanding to the relevant Registrar for
exchange in accordance with Section 4.05 for the new
Fixed Rate Notes or LIBO Rate Notes having the same
aggregate principal amount, which Fixed Rate Notes or
LIBO Rate Notes shall be entitled to the benefits of the
relevant Guarantee and the security interests granted
under the related Security Documents. Upon request of
the relevant Registrar in accordance with Section 4.05,
the Borrower shall execute and deliver a Fixed Rate Note
or LIBO Rate Note in accordance with Section 4.02 hereof.
4.04 Registrar and Paying Agent. The Agent and the Syndicate
Agent shall maintain an office or agency where the
related Notes may be presented for registration of
transfer or for exchange (the "Registrars") and an office
or agency where such Notes may be presented for payment
or for exchange (the "Paying Agent"). Each Registrar
shall keep a register (the "Register") with respect to
the Notes issued under its Tranche and to their transfer
and exchange.
4.05 Transfer and Exchange. As required by Section 4.03 and
at the option of any Holder thereof, Notes may be
exchanged for an equal aggregate principal amount of
other Notes of the same maturity and type (except as to
exchanges pursuant to Section 4.03) and of any
denominations of *
or more or transferred in accordance with
the provisions of Section 10.01(b) in the case of the HDW
Notes and Section 10.02(a) in the case of the Daewoo
Notes upon surrender of the Notes to be exchanged at the
principal office of the relevant Registrar, or at any
office or agency maintained for such purpose pursuant to
Section 4.04. Whenever any Note or Notes are so
surrendered, the relevant Registrar shall deliver to the
Borrower a written request for a replacement Note or
Notes which request shall include instruction as to
completion of the form of the Notes and Schedule 1
thereto. Upon receipt of such request, the Borrower
shall execute and deliver to the relevant Registrar the
replacement Note or Notes which the Holder or the
transferee, as the case may be, is entitled to receive;
provided that the Borrower shall not be obligated to
execute and deliver any replacement Note upon transfer
until it shall have received the notice required by
Section 10.01(b) in the case of the HDW Notes or until
the Syndicate Agent has complied with Section 10.01(d) in
the case of the Daewoo Notes. Such replacement Note or
Notes shall indicate any * exercised by the
Borrower and the adjustments thereto on Schedule 1 to any
Note or Notes. Nothing in this Section 4.05 shall be
construed to establish any obligation or liability of the
Borrower to any Person with respect to any transfer or
exchange other than its responsibility to promptly
execute and deliver replacement Notes upon the request of
the relevant Registrar.
All Notes issued upon any registration of transfer
or exchange of Notes, as provided in, and subject to,
this Section 4.05 shall be the valid obligations of the
Borrower, evidencing the same obligations, and entitled
to the same security and benefits under this Agreement,
as the Notes surrendered upon such registration of
transfer or exchange.
Every Note presented or surrendered for
registration of transfer or exchange shall (if so
required by the Registrar) be duly endorsed by, or be
accompanied by a written instrument of transfer in form
satisfactory to the Registrar duly executed by, the
Holder thereof or such Holder's attorney duly authorized
in writing.
No service charge shall be made to a Holder for
any registration of transfer or exchange of Notes, but
each Registrar may require payment of a sum sufficient to
cover any tax or other governmental charge that may be
imposed in connection with any registration of transfer
or exchange of Notes, other than exchanges pursuant to
Section 4.03 not involving any transfer.
Each Registrar shall not be required (i) to
register the transfer of or to exchange any Note during a
period beginning at the opening of business fifteen (15)
Business Days before the day of the mailing of a notice
of redemption of Notes pursuant to Section 5.04 and
ending at the close of business on the day of such
mailing, or (ii) to register the transfer of or to
exchange any Note called for redemption pursuant to such
Section 5.04.
4.06 Holder Lists; Ownership of Notes. (a) The Agent and the
Syndicate Agent shall preserve in as current a form as is
reasonably practicable the most recent list available to
it of the names and addresses of Holders of the HDW and
the Daewoo Notes, respectively.
(b) Ownership of the Notes shall be proved by the
Register kept by the relevant Registrar. Prior to due
presentment for registration of transfer of any Note, the
Agent, the Syndicate Agent, the Paying Agent and the
Registrars may deem and treat the Person in whose name
any Note is registered as the absolute owner of such Note
for the purpose of receiving payment of principal,
premium, if any, and (subject to the provision herein
regarding the applicable record dates) interest on such
Note and for all other purposes whatsoever, whether or
not such Note is overdue, and none of the Agent, the
Syndicate Agent, the Lenders, the Paying Agent or the
Registrars shall be affected by notice to the contrary.
In addition, the Registrar for the Syndicate Agent shall
record the names and addresses as required by Section
10.02(c) hereof. The Holder lists referred to in Section
4.06(a) shall be made available to the Borrower upon its
written request delivered to the relevant Registrar or
the Agent or the Syndicate Agent, as the case may be.
4.07 Mutilated, Destroyed, Lost or Stolen. If any Note shall
become mutilated, destroyed, lost or stolen, the Borrower
shall issue, execute, and deliver, in replacement
thereof, as applicable, a new Note of the same type and
having the same maturity, payable to the same Holder in
the same principal amount and dated the same date as the
Note so mutilated, destroyed, lost or stolen pursuant to
a written request from the relevant Registrar with
instructions as to completion of the form of the
replacement Note and Schedule 1 thereto. If the Note
being replaced has become mutilated, such Note shall be
surrendered to the Agent or the Syndicate Agent, as the
case may be. If the Note being replaced has been
destroyed, lost or stolen, the Holder of such Note shall
furnish to the Borrower and the Agent or the Syndicate
Agent, as the case may be, (i) such security or indemnity
as may be required by it to save the Borrower and the
Agent or the Syndicate Agent, as the case may be,
harmless, and (ii) evidence satisfactory to the Borrower
and the Agent or the Syndicate Agent, as the case may be,
of the destruction, loss or theft of such Note and of the
ownership thereof. Nothing in this Section 4.07 shall be
construed to establish any obligation or liability of the
Borrower to any Person with respect to mutilated,
destroyed, lost or stolen Notes other than its
responsibility to promptly execute and deliver any
replacement Notes upon the request of the relevant
Registrar.
4.08 Cancellation. The Registrar and any Paying Agent shall
forward to the Agent or the Syndicate Agent, as the case
may be, all Notes surrendered to them for replacement,
redemption, registration of transfer, exchange or
payment. The Agent or the Syndicate Agent, as the case
may be, shall cancel all Notes surrendered for
replacement, redemption, registration of transfer,
exchange, payment or cancellation and shall return
promptly all cancelled Notes to the Borrower.
5. REPAYMENT
5.01 HDW Tranche. The Borrower shall repay each HDW
Subportion by payment of *
semiannual installments of principal (each *
Installment") in accordance with
Section 5.06. *
to the
Notes evidencing the indebtedness relating to that
Subportion and shall be payable on each Repayment Date.
Notwithstanding anything herein to the contrary, if any
Repayment Date shall occur on a date which is not a
Business Day, then such principal installment shall be
payable on the next succeeding Business Day; provided,
however, if such succeeding Business Day falls on the
next month, such principal installment shall be payable
on the preceding Business Day. The Borrower shall pay
interest on each HDW Subportion on each Interest Payment
Date for that Subportion in accordance with Section 5.06.
The final principal payment schedule will be provided by
the Agent for each HDW subportion upon disbursement of
such Subportion.
5.02 Daewoo Tranche. The Borrower shall repay each Daewoo
Subportion by payment of * semiannual installments
of principal (each *
Installment") in accordance with Section 5.07.
* to
the Notes evidencing the indebtedness relating to that
Subportion and shall be payable on each Repayment Date.
Notwithstanding anything herein to the contrary, if any
Repayment Date shall occur on a date which is not a
Business Day, then such principal installment shall be
payable on the next succeeding Business Day; provided,
however, if such succeeding Business Day falls on the
next month, such principal installment shall be payable
on the preceding Business Day. The Borrower shall pay
interest on each Daewoo Subportion on each Interest
Payment Date for that Subportion in accordance with
Section 5.07. The final principal payment schedule will
be provided by the Syndicate Agent for each Daewoo
Subportion upon disbursement of such Subportion.
5.03 *
*
*
5.04 Prepayment. (a) Voluntary Prepayment. Subject to no
Event of Default, or Incipient Default, having occurred
and being continuing, the Borrower may prepay at its
option the outstanding principal amount of any
Subportion, in accordance with Section 5.06 or 5.07, as
applicable, in whole or in part, but any partial
prepayment may be made only in inverse order of maturity;
*
on the
date set for such repayment set forth below, together
with (i) interest accrued thereon to such date; (ii) a
prepayment commission of * % of the principal amount of
each such Subportion so prepaid in respect of any
* Notes and/or * Notes during
the period running from the Delivery Date of the related
Vessel and ending on the sixth anniversary thereof with
no such commission to be charged thereafter; and (iii)
any amounts owed under Section 11 hereof, with respect to
the Subportion being prepaid; provided that, unless the
Agent or the Syndicate Agent, as the case may be, shall
otherwise agree, partial prepayments may only be made in
amounts aggregating not less than *
or integral multiples thereof. If
the Borrower shall elect to make any such optional
prepayment, the Borrower shall deliver a notice
conforming to the requirements of Section 15.04, at least
ten (10) Business Days prior to the date it selects for
such prepayment, to the Agent and the Syndicate Agent.
If prepayment is made in respect of any Daewoo
Subportion, the Commitment of each Syndicate Member shall
be reduced pro rata by the amount of such prepayment, and
each one of the Dollar amounts set forth in Schedule 3
hereto shall be reduced accordingly. Any notice of
prepayment given as aforesaid shall be irrevocable and
shall oblige the Borrower to make such prepayment on the
date specified in the notice. Any Note or part thereof
so prepaid may not be reissued.
(b) Mandatory Prepayment.
(i) If an Event of Loss shall occur with
respect to any Vessel after its delivery,
the Borrower shall give prompt written
notice thereof to the Agent or the
Syndicate Agent, as the case may be, and
as soon as practicable thereafter, the
Borrower shall give such parties written
notice of the date on which all of the
Notes pertaining to that Subportion shall
be redeemed (the "Redemption Date"), which
date shall be a Business Day and shall be
not earlier than ten (10) Business Days
after the date notice of the Redemption
Date is given and not later than the one
hundred eightieth (180th) day after the
date of such Event of Loss; provided,
however, that for purposes of a
requisition of use, confiscation, seizure
or forfeiture of such Vessel as set forth
in clause (iv) of the definition for
"Event of Loss," the Redemption Date shall
be no later than the sixtieth (60th) day
after the date of such Event of Loss.
(ii) On the Redemption Date, the Borrower shall
pay to the Agent or the Syndicate Agent,
as the case may be, funds equal to the (x)
principal amount outstanding under the
relevant Subportion plus interest accrued
thereon, and (y) any amounts owed under
Section 11 hereof, with respect to the
Subportion relating to the Vessel having
suffered an Event of Loss.
(iii) All monies received under this Section
5.04(b) prior to the Redemption Date by
the Agent, the Syndicate Agent or any
Lender shall be credited against the
payment obligations of the Borrower under
Section 5.04(b)(ii) hereof.
(iv) Subject to no Event of Default, or
Incipient Default, having occurred and
being continuing, if any of the Lenders
receive any proceeds from insurance or
compensation as to such Event of Loss, in
excess of the payment obligations to it of
the Borrower under Section 5.04(b)(ii)
hereof, the balance of such proceeds shall
be paid to the Borrower.
(c) Release of Mortgage After Prepayment. Upon
prepayment by the Borrower of any HDW or Daewoo
Subportion in full, the Agent and/or the Syndicate Agent,
as the case may be, shall release the Mortgage(s) on the
Vessel relating to such Subportion so long as no Event of
Default or Incipient Default shall have then occurred and
be continuing. All costs and expenses reasonably
incurred by the Agent, the Syndicate Agent and any Lender
(excluding any legal fees and expenses by any Lender
other than the Agent or the Syndicate Agent) in
connection with such release and discharge of such
Mortgage(s), including, but not limited to, any indemnity
payments set forth in Section 11 hereof then due and
payable, shall be for the account of, and payable by, the
Borrower.
(d) *
*
5.05 No Deduction or Set-off. All amounts payable by the
Borrower under this Agreement and/or under any of the
Loan Documents to which the Borrower is a party,
including amounts payable under this Section 5, shall be
paid in full without set-off or counterclaim or
retention. Nothing contained in this Section 5.05 shall
be construed to be a waiver, modification, alteration, or
release of any claims which the Borrower may have at any
time during the period any Subportion is outstanding or
subsequent thereto for damages for equitable relief, not
inconsistent with this Section 5.05, for breach by the
Agent, the Syndicate Agent or any Lender, or any other
Person of any provisions in any of the Loan Documents or
for any loss due to any acts taken by any of the parties
hereto or thereto.
5.06 Accounts for Payments under the HDW Tranche. All
payments to be made by the Borrower to the Agent
hereunder in USD shall be made not later than 2:00 p.m.
(New York time) on the date upon which the relevant
payment is due either (i) by transferring such amounts in
immediately available funds by wire for credit to *
, or to such other commercial bank in the
United States of America as shall be specified in a
written notice to the Borrower received by the Borrower
at least three (3) Business Days prior to any date of
payment (which notice shall be effective until rescinded
or changed by like notice) for credit to an account
maintained by the Agent with such bank, in either case,
under two (2) days' prior direct advice to the receiving
bank indicating the amount of the funds and the
transferring bank.
5.07 Accounts for Payments under the Daewoo Tranche. All
payments to be made by the Borrower to the Syndicate
Agent hereunder in USD shall be made not later than 2:00
p.m. (New York time) on the date upon which the relevant
payment is due by transferring such amounts in
immediately available funds by wire for credit to *
, under two (2)
days' prior direct advice to Commerzbank AG, Kiel Branch,
* , indicating the amount of the
funds and the transferring bank or to such other
commercial bank in the United States of America as shall
be specified in a written notice to the Borrower received
by the Borrower at least three (3) Business Days prior to
any date of payment (which notice shall be effective
until rescinded or changed by like notice) for credit to
an account maintained by the Syndicate Agent with such
bank.
5.08 Satisfaction of Borrower's Payment Obligations. Any
payment required hereunder and made in accordance with
Sections 5.06 or 5.07 shall be deemed for all purposes to
have been satisfied and duly made; provided, however,
that if any such payment to the Agent or the Syndicate
Agent, as the case may be, shall be recovered by the
Borrower's trustee in bankruptcy or any other Person
under any applicable bankruptcy law, such payment shall
be deemed not to have been made.
5.09 Application of Payments. (a) Any sums received or
recovered by the Agent in exercise of the Agent's rights
(i) upon or after the occurrence and continuance of an
Event of Default may be applied to the items set forth in
clauses FIRST, SECOND, THIRD and SEVENTH below (in that
order), or as otherwise provided in the Loan Documents if
such Event of Default shall have been cured or waived
prior to acceleration, and as set forth in clauses FIRST
through EIGHTH below if the HDW Notes have been
accelerated, or (ii) following an Incipient Default shall
be held until such Incipient Default has been cured or
waived, in which case the same shall be applied as
otherwise provided in the Loan Documents, or until such
Incipient Default becomes an Event of Default, in which
event the same shall be applied pursuant to subclause (i)
of this clause (a):
First: in payment to the Agent of any costs
(including legal costs and expenses) incurred by the
Agent in effecting such Recoveries and unpaid agency
fees;
Second: in payment to the Agent of commitment
commission due on the HDW Tranche;
Third: in payment to the Agent of any interest
due in respect of all HDW Subportions;
Fourth: *
Fifth: in payment to the Agent of any prepayment
compensation payable in accordance with this Agreement
(including, without limitation, any amounts payable under
Section 11) due in respect of any HDW Subportion;
Sixth: in payment to the Agent of the outstanding
principal balances of all HDW Subportions;
Seventh: in payment to the Agent of the balance,
if any, of the Outstanding Indebtedness then due;
Eighth: the balance, if any, in payment to the
Borrower or whomsoever else shall be entitled thereto.
(b) Any sums received or recovered by the
Syndicate Agent in the exercise of the Syndicate's rights
consequent (i) upon or after the occurrence and
continuance of an Event of Default may be applied to the
items set forth in clauses FIRST, SECOND, THIRD and
SEVENTH below (in that order), or as otherwise provided
in the Loan Documents if such Event of Default shall have
been cured or waived prior to acceleration, and as set
forth in clauses FIRST through EIGHTH below if the Daewoo
Notes have been accelerated, or (ii) following an
Incipient Default shall be held until such Incipient
Default has been cured or waived, in which case the same
shall be applied as otherwise provided in the Loan
Documents, or until such Incipient Default becomes an
Event of Default, in which event the same shall be
applied pursuant to subclause (i) of this clause (b):
First: in payment to the Syndicate Agent of any
costs (including legal costs and expenses) incurred by
the Syndicate Agent in effecting such Recoveries and
unpaid agency fees;
Second: in payment ratably to the Syndicate of
commitment commission due on the Daewoo Tranche;
Third: in payment ratably to the Syndicate of any
interest due in respect of all Daewoo Subportions;
Fourth: *
Fifth: in payment ratably to the Syndicate of any
prepayment compensation payable in accordance with this
Agreement (including, without limitation, any amounts
payable under Section 11) due in respect of all Daewoo
Subportions;
Sixth: in payment ratably to the Syndicate of the
outstanding principal balances of all Subportions;
Seventh: in payment ratably to the Syndicate of
the balance, if any, of the Outstanding Indebtedness,
then due;
Eighth: the balance, if any, in payment to the
Borrower.
5.10 Any prepayment required to be made or elected to be made
by the Borrower pursuant to this Section 5 or Section 6
shall not constitute acceleration of the affected Loan or
Subportion.
6. SUBSTITUTE BASIS, ILLEGALITY, INCREASED COSTS
6.01 Market Disturbance.
(a) Notwithstanding anything to the contrary in
this Agreement, if and each time that at any time prior
to the commencement of any Interest Period in respect of
any Subportion the Agent or the Syndicate Agent, as the
case may be, shall have determined in good faith (which
determination shall be conclusive and binding on the
parties hereto) that:
(i) by reason of changes arising after
the date of the Agreement affecting the Interbank
Market adequate and fair means do not exist for
ascertaining the rate of interest applicable to
such Subportion during the next succeeding
Interest Period pursuant to Section 3.04; or
(ii) deposits in Dollars of equal
duration to such Interest Period will not be
available to it in the Interbank Market in
sufficient amounts in the ordinary course of
business to fund the Subportion during the next
succeeding Interest Period; or
(iii) by reason of any material change in
applicable law or regulation or of any change in
national or international financial or economic
conditions the Agent or any Syndicate Member, as
the case may be, is unable to fund or to continue
to fund a Subportion during the next succeeding
Interest Period by deposits obtained in the
Interbank Market;
then the Agent or the relevant Syndicate Member, as the
case may be, shall promptly give a Suspension Notice for
that Interest Period, containing full particulars thereof
in reasonable detail to the Borrower.
(b) Suspension of Drawdown. If a Suspension
Notice is given by the Agent or any Syndicate Member, as
the case may be, before the advance of a Subportion in
accordance with Section 2.01 or 2.02, as the case may be,
then the Agent or the Syndicate Agent, as the case may
be, shall not be obliged to make the advance until notice
to the contrary is given by the Agent or the Syndicate
Agent, as the case may be. During the period of thirty
(30) days from the giving of such Suspension Notice, the
Agent or the Syndicate Agent, as the case may be, shall
consult in good faith with the Borrower with a view to
agreeing to an alternative basis for the advance of such
Subportion. If such alternative basis is agreed between
the Borrower and the Agent or the Syndicate Agent, as the
case may be, it shall apply in accordance with its terms.
(c) Substitute Basis.
(i) If a Subportion has been advanced
before a Suspension Notice is given by the Agent
or the Syndicate Agent, as the case may be, the
Agent or the Syndicate Agent, as the case may be,
shall, during a period of thirty (30) days from
the date of such Suspension Notice, negotiate in
good faith with a view to agreeing to an
alternative basis (the "Substitute Basis") for
maintaining the Loan during such Interest Period.
If at the expiry of such thirty-day period, a
Substitute Basis shall have been agreed between
the affected Lender, as the case may be, and the
Borrower, the Substitute Basis shall be effective
retroactively to the beginning of such Interest
Period. Each Substitute Basis so agreed shall be
binding on the Borrower and the affected Lender
and shall be treated as a part of this Agreement.
(ii) If at the expiry of such thirty (30)
day period, no Substitute Basis shall have been so
agreed, then, subject to sub-paragraph (d) below,
the interest rate basis to apply during such
Interest Period as to the commitment of each
affected Lender shall be determined in accordance
with Section 3.05(a)(i) or 3.06(b), as the case
may be, or the margin set forth in Section 3.05 or
3.06, as the case may be, plus such rate as such
affected Lender shall determine and certify to the
Agent or the Syndicate Agent, as the case may be,
(such certificate to set out the basis for
computation of such rate and to be conclusive in
the absence of manifest error). Such rates shall
be
* (in
good faith and using reasonable endeavors) to
minimize the interest cost to the Borrower of its
Loan for such Interest Period (and if such
affected Lender certifies that it is unable to
fund its Loan in the Interbank Market, such cost
may be based on the funding thereof in alternative
currencies and markets). The affected Lender, as
the case may be, shall give prompt notice to the
Borrower of such rate certified as aforesaid.
(d) So long as any Substitute Basis is in force,
the Agent or the Syndicate Agent, as the case may be, in
consultation with the Borrower, shall from time to time,
but not less often than monthly, review whether or not
the circumstances referred to in this Section 6.01 still
prevail with a view to returning to the normal provisions
of this Agreement.
(e) If the affected Lenders determine a
Substitute Basis in accordance with Section 6.01(c)(ii),
the Borrower shall notify the Agent or the Syndicate
Agent and the affected Lender, as the case may be, in
writing within five (5) Business Days of the receipt of
such demand from the Agent or the Syndicate Agent, as the
case may be, whether or not it rejects such Substitute
Basis. If the Borrower does not reject by telex or in
writing, such Substitute Basis shall apply in accordance
with its terms. If the Borrower notifies the Agent or
the Syndicate Agent, as the case may be, of its rejection
of such Substitute Basis as aforesaid, then the Borrower
shall forthwith prepay to the Agent or the Syndicate
Agent, as the case may be, the Loan of the affected
Lender together with interest accrued thereon at such
Substitute Basis.
6.02 Change of Circumstances. (a) If any law, regulation or
treaty which comes into force after the date of this
Agreement or official directive (whether or not having
the force of law) which is issued after the date of this
Agreement or the interpretation or application thereof by
any authority charged with the administration or
application thereof:
(i) imposes, modifies or deems applicable any reserve
and/or special deposit requirements against or in
respect of assets or liabilities of, or deposits
with or for the account of, or its loans or credit
extended by, the relevant Lender(s) or its
applicable lending office with respect to any
Subportion; or
(ii) imposes on the relevant Lender(s) or its
applicable lending office any other condition with
respect to this Agreement or any Subportion of the
Tranches or their funding; or
(iii) If the relevant Lender(s) or its applicable
lending office complies with any request,
requirement, law, regulation or directive (which
is made or comes into force after the date of this
Agreement) from any central bank or other
applicable fiscal monetary or other authority
(whether or not having the force of law)
and as a result of any of the foregoing clause (i), (ii)
or (iii):
(A) the cost to such Lender(s) of making, funding or
maintaining any Subportion is increased; or
(B) the amount of principal, interest or other amount
payable to such Lender(s) or the effective return
to such Lender(s) hereunder is reduced; or
(C) such Lender shall be subject to any change in
Taxes, with respect to advancing or maintaining
its share of a Subportion or shall change the
basis of taxation of payments to any Lender of the
principal or interest in respect of a Subportion
or its obligation to fund any Subportion (except
for (1) changes in the rate of tax on the overall
net income of a Lender or its applicable lending
office imposed by the jurisdiction in which the
Lender's principal office or applicable lending
office is located and (2) a tax referred to in
Section 11.02(a));
(iv) Then and in any such case:
(A) each Lender shall promptly notify the Borrower of
any event of which it has knowledge which will
entitle it to compensation pursuant to this
Section 6.02 and will verify whether it can
designate a different lending office or take such
other action which will avoid the need for or
reduce the amount of such compensation which will
not, in the sole judgment of such Lender, be
otherwise disadvantageous to such Lender;
(B) upon demand from time to time by such Lender the
Borrower shall pay to such Lender such amount
(which may be in the form of an increased rate or
a different method of calculating interest or
otherwise as such Lender shall reasonably
determine) as shall compensate such Lender for
such increased cost or reduction. Such Lender
shall promptly furnish to the Borrower in good
faith a certificate setting out in reasonable
detail the event giving rise to such compensation,
the amount thereof and the manner in which it has
been calculated and such certificate shall in the
absence of manifest error be conclusive; and
(C) the Borrower may, subject to giving to such Lender
not less than ten (10) Business Days' prior notice
of such prepayment, prepay each Loan so affected
together with all interest accrued thereon and all
fees and other amounts payable to such Lender
hereunder (including, without limitation, amounts
payable under Section 11 and any applicable
prepayment commission as set forth under Section
5.04(a)).
6.03 Illegality. Notwithstanding anything to the contrary
herein contained, if any change in law, regulation or
treaty or in the interpretation or application thereof by
any authority charged with the administration or
application thereof shall make it unlawful for any Lender
to make, fund or maintain its Loan in respect of any
Subportion thereof or to give effect to its obligations
as contemplated hereby, such Lender may, by written
notice thereof to the Agent or the Syndicate Agent, as
the case may be, who shall promptly give notice to the
Borrower and the other Lenders in respect of such
Subportion, declare that such Lender's obligations under
this Agreement in respect of the Subportion thereof has
or will become unlawful. The affected Lender shall
undertake its best efforts to maintain its Commitment
through any commercial means practicable which, in the
sole opinion of such Lender shall not be disadvantageous
to such Lender, including designating a different lending
office. If no such means is available in the sole
opinion of such Lender, or if the Borrower shall not
agree to such means, then the affected Lender's
obligations under this Agreement shall terminate
forthwith. Upon termination of any affected Lender's
obligations under the Agreement, the Borrower shall
prepay on the next following Repayment Date applicable to
each Loan advanced by such affected Lender, (or on such
earlier date, if any, as may be required as a result of
any such change) each such Loan so affected together with
all interest accrued thereon and all fees and other
amounts payable to such Lender hereunder (including,
without limitation, amounts payable under Section 11).
Such Lender's obligations hereunder to advance any
undisbursed amount of any such Subportion thereof so
affected shall be cancelled on the giving of such notice.
7. CONDITIONS PRECEDENT TO ADVANCE
Each Lender's obligation to make its part of the HDW and
the Daewoo Subportions available to the Borrower on each
Delivery Date is expressly conditioned upon the following
preconditions being satisfied and upon receipt by the
Agent or the Syndicate Agent, as the case may be, of the
following documents and evidence, as the case may be, on
or before a closing to be held on the Delivery Date at
the offices of Haight, Gardner, Poor & Havens, 195
Broadway, New York, New York 10007, or at such other
place as may be agreed upon by the Borrower, the Agent
and the Syndicate Agent:
(a) Each of the Borrower and the Guarantor shall
be a corporation duly organized and existing in good
standing under the laws of the jurisdiction of its
incorporation; each of the Borrower and the Guarantor
shall have full corporate power and authority to own its
assets, conduct its business as then being conducted, and
enter into and consummate the transactions contemplated
hereby and by the other Loan Documents to which it is a
party, and the Agent or the Syndicate Agent, as the case
may be, shall have received (i) a certified copy of the
certificate of incorporation of each of the Borrower and
the Guarantor, (ii) a certificate of the Secretary of
each of the Borrower and the Guarantor attaching the
minutes or resolutions of its Board of Directors
authorizing the transactions contemplated herein, (iii) a
certificate from the Secretary of each of the Borrower
and the Guarantor or evidencing the authority of the
persons executing the Loan Documents, to which it is a
party, to execute and deliver such Loan Documents and
such Obligor to perform under the Loan Documents to which
it is a party, and (iv) a certificate of good standing as
to each of the Borrower and the Guarantor, all in form
and substance reasonably satisfactory to the Agent or the
Syndicate Agent, as the case may be, and its special
counsel;
(b) not less than five (5) days (or such shorter
period as the Agent or the Syndicate Agent, as the case
may be, may agree) before the proposed date for the
making of each such Subportion, the Agent or the
Syndicate Agent, as the case may be, shall have received
an HDW or a Daewoo Notice of Drawdown, as the case may
be, from the Borrower;
(c) no Event of Default shall have occurred and
be continuing and no Incipient Default shall have
occurred and be continuing and the Borrower and the
Guarantor shall provide an officer's certificate to such
effect in form and substance reasonably satisfactory to
the Agent or the Syndicate Agent, as the case may be, and
its special counsel;
(d) there shall not have occurred any material
adverse change in the financial condition of either of
the Borrower or the Guarantor which in the reasonable
opinion of the Agent and/or the Syndicate Agent would
materially and adversely affect the ability of (x) the
Borrower to perform its obligations as to the repayment
of the Facility by the installments together with
interests thereon herein set out or to perform its
obligations under the Loan Agreement and the Security
Documents to which it is or will become a party, or (y)
the Guarantor to perform its obligations under the
Guarantee;
(e) all representations and warranties of each of
the Obligors contained in this Agreement and each of the
Loan Documents to which each of them is, respectively, a
party being true and correct in all material respects on
that Delivery Date, except insofar as they relate
exclusively to an earlier date, and each Obligor shall
provide officer's certificates confirming such matters;
(f) all governmental and other consents,
licenses, approvals and authorizations, if any, required
with respect to the performance of the Borrower and the
Guarantor under the Loan Documents to which it is a party
shall have been obtained and shall not have been revoked
and, if requested by the Agent or the Syndicate Agent or
its special counsel, true and complete copies of any of
the same shall be provided;
(g) all Uniform Commercial Code financing
statements or other document necessary, or reasonably
requested by the Agent or the Syndicate Agent, to perfect
its security interests under any of the Security
Documents in the United States of America, the Marshall
Islands or any other relevant jurisdiction;
(h) certificate of the Borrower that it has
delivered to each of the Agent and the Syndicate Agent a
complete copy of the relevant Shipbuilding Agreement to
the relevant Vessel including any subsequent amendments
or supplements thereto not previously furnished;
(i) copies of the Bill of Sale and the Builder's
Commercial Invoice and the Builder's Certificate to the
relevant Vessel from HDW or Daewoo, as the case may be,
to the Borrower;
(j) all fees under Section 13 hereof accrued and
due to the relevant Lenders have been paid in full and
confirmation from HDW or Daewoo, as the case may be, of
payment as to all amounts then due under the relevant
Shipbuilding Contract as to the Vessel being delivered;
(k) (x) if the Vessel is to be transferred to the
Transferee pursuant to the Agreement to Acquire and
Charter, then evidence that such Vessel is duly
registered in the name and ownership of the Transferee
under the law and flag of the Republic of The Marshall
Islands, free of registered liens except the relevant
Mortgage(s); and (y) if the Vessel is not to be
transferred to the Transferee, then evidence that such
Vessel is duly registered in the name and ownership of
the Borrower under the laws and flag of its registry,
free of registered liens except the relevant Mortgage(s);
provided that, notwithstanding anything to the contrary
in this Loan Agreement or any other Loan Document, any
Vessel may be initially documented upon its Delivery Date
under the laws and flag of the United States, if written
notice of the intention to so document such Vessel is
given to the Agent or the Syndicate Agent, as the case
may be, not less than sixty (60) days prior to such
Delivery Date, and the parties hereto shall make such
changes to the Loan Documents and take such actions
(including, but not limited to, the selection of an
approved trustee to act as mortgagee for the relevant
Lenders and appropriate modification of the Loan
Documents) which are consistent with the Loan Documents
and which such parties may reasonably deem necessary to
effectuate this proviso clause, and provided further
that, notwithstanding anything to the contrary in this
Loan Agreement or any other Loan Document, APL may
transfer any Vessel to the Transferee pursuant to, and
for all purposes of this Agreement and the Agreement to
Acquire and Charter prior to the Delivery Date of such
Vessel by assignment of the related HDW Shipbuilding
Agreement or Daewoo Shipbuilding Agreement, as the case
may be, to the extent the same relates to such Vessel, to
the Transferee, and the parties shall make such changes
to the Loan Documents which are consistent with the Loan
Documents and which such parties may reasonably deem
necessary to effectuate this provided further clause;
(l) each Loan Document, in respect of such Vessel
duly executed, delivered and, where appropriate,
registered or recorded (together with any documents to be
executed pursuant to the terms thereof, including without
limitation, notices of the Assignment(s) of Insurances);
(m) confirmation from HDW or Daewoo, as the case
may be, in the form set forth in Schedule 5-A or 5-B,
respectively;
(n) confirmation from the Borrower in the form
set forth in Schedules 5-C or 5-D, as the case may be;
(o) certificate of acceptance of the relevant
Vessel by an authorized representative of the Borrower as
to the Vessel;
(p) an independent broker's report, in form and
substance reasonably satisfactory to the Agent or the
Syndicate Agent, as the case may be, describing all
insurance then carried and maintained with respect to the
Vessel and the expiration date thereof, together with
certificates of insurance in accordance with Section
29(f)(i) of the Vessel's Mortgage(s), including a written
confirmation from such broker in a form and substance
reasonably satisfactory to the Agent or the Syndicate
Agent, as the case may be, that such insurance complies
with the terms of Section 29 of the Vessel's Mortgage(s);
(q) interim class certificate (dated not more
than ten (10) days prior to the relevant Delivery Date)
evidencing that such Vessel is in class and classed in
the highest classification for vessels of the same age
and type by the Classification Society;
(r) copies of all documents to be delivered by
HDW or Daewoo, as the case may be, under Article
17(a)(ii) of the relevant Shipbuilding Agreement;
(s) each of the Lenders shall have received
executed originals of the opinions set forth as Schedules
4A and 4B hereto as well as such other opinions from such
counsel as each Lender shall reasonably request and each
of the Lenders shall have received from its special
counsel, Haight, Gardner, Poor & Havens, a favorable
opinion, in form and substance satisfactory to the
Lenders, as to such matters incident to the transactions
contemplated hereby as any such Lender may reasonably
request; and
(t) if the Vessel is to be transferred to the
Transferee pursuant to the Agreement to Acquire and
Charter, then all conditions precedent to the
Transferee's obligations on the related Delivery Date set
forth in Section 3 of the Agreement to Acquire and
Charter shall have been satisfied.
8. REPRESENTATIONS AND WARRANTIES
APL represents and warrants to each of the Lenders that:
(a) APL is a corporation duly organized and
validly existing in good standing under the laws of its
jurisdiction of incorporation with full corporate power
and authority to conduct its business as the same is
presently conducted;
(b) APL has legal power and authority to enter
into and carry out the terms of this Agreement and each
of the Loan Documents to which the Borrower will be a
party;
(c) each of this Agreement and the other Loan
Documents to which APL will be a party has been duly
authorized by all necessary action, corporate or other,
on the part of APL, and this Agreement constitutes, and
upon due execution and delivery by APL, each of the other
Loan Documents will constitute, in accordance with their
respective terms, legal, valid and binding instruments
enforceable against APL, except to the extent limited by
applicable bankruptcy, reorganization, insolvency,
moratorium or other laws of general application relating
to or affecting the enforcement of creditors' rights from
time to time in effect;
(d) except as previously disclosed to the
Syndicate Agent and the Agent in writing, there are no
actions, suits or proceedings pending or, to APL's
knowledge, threatened against APL, any of its properties
affecting the Loan Documents or the transactions
contemplated thereby which would, if adversely
determined, materially and adversely affect the
performance of APL of its obligations (if any)
thereunder;
(e) the consummation of the transactions
contemplated by, and compliance by APL with all the terms
and provisions of, the Loan Documents to which APL is or
will be a party will not violate any provisions of the
Certificate of Incorporation or By-laws of APL and will
not result in a breach of the terms and provisions of, or
constitute a default under, any other agreement or
undertaking by APL or by which it or any of its property
is bound or any order of any court or administrative
agency entered in any proceedings binding on APL, or
violate any applicable statute, rule or regulation;
(f) APL is not in default and no condition exists
which with notice or lapse of time or both would
constitute a default by APL, in any respect which would
materially and adversely affect the ability of APL to
perform its obligations under this Agreement, any other
Loan Document, under any mortgage, loan agreement, deed
of trust, indenture or other agreement with respect
thereto or evidence of indebtedness to which it is a
party or by which it is bound, and is not in violation of
or in default, in any respect which would materially and
adversely affect the ability of APL to perform its
obligations under this Agreement or any other Loan
Document, under any order, writ, judgment or decree of
any court, arbitrator or governmental authority,
commission, board, agency or instrumentality, domestic or
foreign;
(g) APL has more than one place of business and
the present location of the place of business which is
its chief executive office is 1111 Broadway, Oakland,
California 94607;
(h) APL has no knowledge of any actual or
proposed deficiency or additional assessment in
connection with any Taxes which either in any case or in
the aggregate would be materially adverse to APL and
which would materially and adversely affect the ability
of APL to perform its obligations under any of the Loan
Documents;
(i) all Taxes (other than taxes based on or
measured by income and withholding taxes), liability for
the payment of which has been incurred by APL in
connection with the execution, delivery and performance
by it of each Loan Document to which it is or will be a
party, have been paid (or provided for in its accounts if
not payable on or prior to the Delivery Date of the
respective Vessel);
(j) all governmental consents, licenses,
permissions, approvals, registrations or authorizations
or declarations required (i) to enable it lawfully to
enter into and perform its respective obligations under
this Agreement and each of the other Loan Documents to
which it is or will be a party and (ii) to ensure that
its respective obligations hereunder and thereunder are
legal, valid and enforceable have been obtained or made
and are in full force and effect or will be obtained or
made and be in full force and effect on the date any such
document is executed and delivered; and (iii) in a case
when no transfer of a Vessel to the Transferee has
occurred on the Delivery Date of such Vessel pursuant to
the terms of the Agreement to Acquire and Charter to make
the Mortgages admissible in evidence in the Republic of
The Marshall Islands and the United States of America,
will be obtained or made and be in full force and effect
on the date any such Mortgage is executed and delivered;
(k) it has not taken any corporate action nor, to
its knowledge, have any other steps been taken or legal
proceedings been started or threatened against it for its
winding-up, dissolution or reorganization or for the
appointment of a receiver, administrative receiver,
administrator, trustee or similar officer of it or of any
or all of its respective assets and revenues;
(l) except as provided by applicable laws of
bankruptcy, insolvency, liquidation or similar laws of
general application, its obligations under this Agreement
and each of the other Loan Documents rank and will rank
at least pari passu in priority of payment, and as to
security having the priority contemplated by the Loan
Documents, and in all other respects with all its
respective other indebtedness;
(m) except for registration of the First Mortgage
on each Vessel and the Second Mortgage on each Daewoo
Vessel with the offices of Deputy Commissioner of
Maritime Affairs, the Republic of The Marshall Islands
(including any other Loan Document required by the laws
of the country of its registry to be filed with the
Mortgage), it is not necessary to ensure the legality,
validity, enforceability or admissibility in evidence of
this Agreement or any of the Security Documents to which
it is or will be a party in the United States of America
or, to the best of its knowledge, elsewhere, that it be
filed, recorded or enrolled with any governmental
authority or agency in the United States of America, the
Republic of The Marshall Islands or, to the best of its
knowledge, elsewhere, that it be stamped with any stamp,
registration or similar transaction tax in the United
States of America, the Republic of The Marshall Islands
or, to the best of its knowledge, elsewhere;
(n) each Shipbuilding Agreement is in full force
and effect and, to the best of the knowledge and belief
of APL, the relevant Builder is not in default
thereunder;
(o) APL is a wholly owned Subsidiary of the
Guarantor;
(p) as of each Delivery Date, (i) no written
representation, warranty or statement or other document
provided by APL in connection with the negotiation of
this Agreement or pursuant to any Loan Document at the
time when given is or was untrue or contains or contained
any misrepresentation of a material fact or omits or
omitted to state any material fact necessary to make any
such statement herein or therein not misleading and (ii)
all financial projections, if any, prepared by APL or the
Guarantor and made available to any Lender have been
prepared in good faith based upon reasonable assumptions
(it being understood that such projections are subject to
significant uncertainties and contingencies, many of
which are beyond APL's and the Guarantor's control, and
that no assurances can be given that any such projections
will be realized);
(q) to the best knowledge of APL (i) each Plan
maintained by APL and each ERISA Affiliate is in
substantial compliance in all material respects with
ERISA; (ii) no Plan maintained by APL or any ERISA
Affiliate is insolvent or in reorganization; (iii) no
Insufficiency or Termination Event has occurred or is
reasonably expected to occur, and no "accumulated funding
deficiency" exists and no "variance" from the "minimum
funding standard" has been granted (each such term as
defined in Part III, Subtitle B, of Title I of ERISA)
with respect to any Plan in which APL or any of its
Subsidiaries, or any ERISA Affiliate is a participant;
(iv) neither APL nor any ERISA Affiliate has incurred, or
is reasonably expected to incur, any Withdrawal Liability
to any Multiemployer Plan; (v) neither APL, its
Subsidiaries, nor any ERISA affiliate has received any
notification that any Multiemployer Plan in which it is a
participant is in reorganization or has been terminated,
within the meaning of Title IV of ERISA, and no such
Multiemployer Plan is reasonably expected to be in
reorganization or terminated within the meaning of Title
IV of ERISA; (vi) no lien imposed under the Code or ERISA
on the assets of APL or any Subsidiary or any ERISA
Affiliate exists or is likely to arise on account of any
Plan; (vii) no material liability will be incurred by
APL, its Subsidiaries, or any ERISA Affiliate if any of
them should terminate contributions to any other employee
benefit plan maintained by them;
(r) none of the proceeds of the Loan will be
used to purchase or carry margin stock within the
meanings of Regulations G, T, U and X of the Board of
Governors of the Federal Reserve System. APL is not
engaged in the business of extending credit for the
purpose of purchasing or carrying margin stock within the
meaning of Regulations G, T, U or X of the Board of
Governors of the Federal Reserve System;
(s) it is not an "investment company" or a
company "controlled" by an "investment company" (as each
of such terms is defined or used in the Investment
Company Act of 1940, as amended);
(t) in the event that a Vessel is not
delivered to the Transferee, on its Delivery Date, such
Vessel delivered will be duly documented in the name of
APL under the flag of the country of its registry;
(u) in the event that a Vessel is not
delivered to the Transferee, on its Delivery Date, such
Vessel delivered will be in the absolute and unencumbered
ownership of APL except as contemplated by this Agreement
and the Security Documents; and
(v) on the Delivery Date of any Vessel under a
Charter, the representations and warranties contained in
Section 1 of such Charter shall be accurate and the
Lenders may rely on such representations and warranties
as if set forth herein in full.
9. COVENANTS
9.01 Affirmative Covenants. APL covenants with each of the
Lenders that it shall:
(a) do all that is necessary to maintain in full
force and effect its corporate existence in good standing
under the laws of its jurisdiction of incorporation and
use its best efforts to obtain, comply with the terms of
and do all that is necessary to maintain in full force
and effect all authorizations, approvals, licenses and
consents required in or by the laws of its jurisdiction
of incorporation and the United States of America and any
other relevant jurisdiction to enable APL to enter into
and perform its respective obligations under this
Agreement and the other Loan Documents and the Charter
Documents to which APL is or will become a party and to
ensure the legality, validity, enforceability or
admissibility in evidence in the United States of America
of this Agreement, the said Loan Documents and said
Charter Documents and to comply with the terms of and to
do all that is necessary to maintain in full force and
effect all authorizations, approvals, licenses and
consents required in or by the national laws of the
Republic of The Marshall Islands to enable APL (or the
Transferee in respect of any Vessel transferred to the
Transferee pursuant to the Agreement to Acquire and
Charter) to enter into and perform its obligations under
the Mortgages and to ensure the legality, validity,
enforceability and admissibility in evidence in such
country of each Mortgage;
(b) apply the advances in respect of each
Subportion made pursuant to this Agreement on each
Delivery Date in respect of the Vessel acquired or to be
acquired by APL only towards financing the Contract Price
of such Vessel to be acquired by APL on such Delivery
Date;
(c) on its respective Delivery Date ensure that
the Vessel to be acquired by APL is (i) delivered by the
relevant Builder to the Borrower free and clear of all
liens and encumbrances and (ii) classified by the
Classification Society with the highest classification
for vessels of the same age and type;
(d) from time to time on the request of the
Lenders, but at the expense of APL, do all such acts and
execute or procure the execution of all such assurances
and documents as the Agent or the Syndicate Agent may
reasonably consider necessary for giving full effect to
this Agreement or for more effectively subjecting the
security interests under the Security Documents and the
Charter Documents to which it is or will be a party to
the liens of such Security Documents and such Charter
Documents or more effectively subject such security
interests to the performance of the provisions thereof;
(e) promptly inform the Agent and the Syndicate
Agent of the occurrence of any Incipient Default or an
Event of Default and upon receipt of a written request
from the Agent or the Syndicate Agent to do so, confirm
to the Agent or the Syndicate Agent, as the case may be,
that save as previously notified to the Agent or the
Syndicate Agent, as the case may be, to the best of the
knowledge of APL, no Event of Default has occurred;
(f) if APL's agent for service of process
referred to in Section 15.08 shall for any reason cease
to be validly appointed, ensure that another such agent
is appointed (and ensure that such agent acknowledges
such appointment to the Agent or Syndicate Agent, as the
case may be) in a manner reasonably satisfactory to the
Agent or the Syndicate Agent, as the case may be;
(g) APL shall send to the Agent and the Syndicate
Agent as soon as possible, (i) but in no event later than
one hundred twenty (120) days after the end of each
fiscal year, its consolidated audited accounts of all
consolidated financial statements of APL, such financial
statements to be prepared in accordance with generally
accepted United States of America accounting principles
at such time consistently applied and a report thereon by
Arthur Andersen & Co. or other independent public
auditors of internationally recognized standing as may be
acceptable to the Agent and the Syndicate Agent, (ii)
copies of all quarterly reports filed with the Securities
and Exchange Commission and, within seventy-five (75)
days after the end of each of the first three (3)
quarters of its fiscal year, unaudited consolidated
statements of income and changes in financial position of
APL and related balance sheets for each such period, all
certified as true and correct by a senior financial
officer of the Borrower, (iii) as soon as the same is
instituted (or, to the knowledge of APL threatened),
details of any litigation, arbitration or administrative
proceedings against or involving it or the Vessels which
if adversely determined would have a material adverse
effect on APL, or construction of the Vessels, (iv)
together with the annual financial statements to be
provided in accordance with clause (i) above a
certificate of a financial officer of APL that no Event
of Default and Incipient Default has occurred and is
continuing, and (v) from time to time, and on demand,
such additional financial or other information relating
to APL and the Vessels as may be reasonably requested by
the Agent or the Syndicate Agent;
(h) the Borrower shall advise the Agent and the
Syndicate Agent promptly in writing of any proposed
amendments or supplements to any of the Shipbuilding
Agreements, which, individually or taken together with
any past amendments or supplements, would (i) cause the
original Contract Price stated in the Shipbuilding
Agreement of any Vessel to increase by more than five
percent (5%), (ii) change the terms and currency of
payment, or (iii) cause the TEU container slot capacity
of any of the Vessels not to be approximately *
, with each and every such amendment to be first approved
in writing by the Agent and the Syndicate Agent. Copies
of all amendments to the Shipbuilding Agreements shall be
promptly furnished to the Agent and the Syndicate Agent;
and
(i) APL hereby releases Howaldtswerke-Deutsche
Werft AG under the HDW Shipbuilding Agreement from any
obligations or responsibilities of Howaldtswerke-Deutsche
Werft AG pursuant to Section 4(g) of the HDW Shipbuilding
Agreement.
9.02 Negative Covenants. (a) APL shall not without the prior
consent of the Agent and the Syndicate Agent consolidate
or amalgamate with, or merge into, any other entity, or
sell, convey, transfer, lease, or otherwise dispose of
all or substantially all of its assets, including but not
limited to, by dividend (whether by one transaction or a
series of transactions and whether related or not);
provided, however, that it may consolidate or amalgamate
with, or merge into, any other entity, or sell, convey,
transfer, lease, or otherwise dispose of all or
substantially all of its assets if the buyer, assignee or
transferee corporation (the "Assignee") shall be a
solvent corporation organized and existing under the laws
of the United States of America or any state thereof
following such transaction and shall have executed and
delivered an agreement, in form and substance reasonably
satisfactory to the Agent and the Syndicate Agent,
containing an assumption by the Assignee of the due and
punctual performance and observance of all covenants and
obligations of APL hereunder and under any other Loan
Documents to which it is or shall be a party, and
confirming the accuracy of any representations and
warranties made herein and in each other such Loan
Document as of the dates herein or therein required with
respect to such Assignee; and provided further that
immediately following such transaction, no Incipient
Default or Event of Default shall have occurred and be
continuing.
(b) Except with respect to the HDW Charters and
the Daewoo Charters, APL shall not demise charter any HDW
Vessel or Daewoo Vessel without the prior written
approval of the Agent or the Syndicate Agent,
respectively. APL may time charter any of the Vessels if
the terms of such time charter do not violate applicable
law or regulations of the United States of America and
the jurisdiction of its registry; provided that (i) APL
remains fully liable for all its obligations under the
Security Documents and (ii) for time charters having a
duration of six (6) months or longer (and any demise
charters to which the Agent or the Syndicate Agent, as
the case may be, shall have given its written consent) a
first priority assignment in the form set forth in
Appendix G of all monies due under such charter shall be
accepted in favor of the Agent or the Syndicate Agent, as
the case may be. In the case of any time charter having
a time charter term in excess of one (1) year including
any permitted renewals or extensions, other than those
that become effective only upon mutual agreement of the
parties to such charters, APL will provide to the Agent
or the Syndicate Agent, as the case may be, five (5)
days' prior written notice of its intent to enter into
any such time charter and as soon thereafter as is
practicable APL shall give the Agent or the Syndicate
Agent, as the case may be, a copy of such time charter
and insurance certificates evidencing that insurance
complying with Section 29 of the relevant Mortgage will
be in force with respect to the subject Vessels during
such time charter. In addition, APL will include (or
require the inclusion) in such time charter of
appropriate provisions which provide that such time
charter is expressly subject and subordinate to all the
terms of the related Mortgage(s), as the case may be, and
the rights of the mortgagee(s) thereunder in the event of
a foreclosure or repossession.
10. GRANTING OF PARTICIPATIONS
10.01 KfW. (a) KfW may grant participations to one or more banks or
other entities in or to all or any part of its rights and
obligations under this Agreement and the Security
Documents to which it is a party (including, without
limitation, all or a portion of its contribution to the
HDW Tranche); provided, however, that, notwithstanding
the grant of any such participation by KfW, such
participation, the right to grant such a participation,
and any agreement pursuant to which KfW may grant a
participation shall be expressly subject to the following
conditions and limitations: (u) the prior written
approval of the Borrower, which approval shall not be
unreasonably withheld, (v) KfW's and the Borrower's
obligations and rights under this Agreement and such
Security Documents (including, without limitation, its
contribution to the HDW Tranche) shall remain unchanged,
(w) KfW shall remain the "Holder" of all of the HDW
Tranche, (x) KfW shall remain solely responsible to the
other parties hereto and thereto for the performance of
its obligations, (y) KfW shall remain the Agent for all
purposes of this Agreement and such Security Documents,
and (z) the Borrower and the Syndicate Agent shall
continue to deal solely and directly with KfW in
connection with KfW and the Borrower's rights and
obligations under this Loan Agreement and such Security
Documents.
(b) Upon an occurrence of an Event of Default,
KfW may assign all or a portion of its rights and
obligations under this Agreement and the Security
Documents to which it is a party to any existing
participants in the HDW Tranche and the consent of the
Borrower shall not be required for any such assignments.
Upon assignment of KfW to the assignee, KfW shall
promptly notify the Borrower in writing of the name and
lending office of the assignee and the amount of its
rights and obligations so assigned.
10.02 The Syndicate. (a) Each Syndicate Member may assign to
one or more banks or other entities all or a portion of
its rights and obligations under this Agreement and the
other Loan Documents (including, without limitation, all
or a portion of the Subportions owing to it); provided,
however, that each such assignment that is not to a then
existing Syndicate Member hereunder shall be subject to,
and shall not be effective until the effective date
specified in the Assignment and Acceptance (a form of
which is hereto attached as Appendix F, the "Assignment
and Acceptance") and satisfaction of the following
conditions: (i) each such assignment shall be
consummated only with prompt written notice by the
assigning Syndicate Member (the "Assignor") to the
Borrower, the Agent, the Syndicate Agent and the other
Syndicate Members, (ii) the prior written approval of the
Borrower and the Syndicate Agent, which approval shall
not be unreasonably withheld, (iii) each such assignment
may be a percentage of all of the Assignor's rights and
obligations under this Agreement, (iv) the amount of the
Commitment of the Assignor being assigned pursuant to
each such assignment (determined as of the date of the
Assignment and Acceptance with respect to such
assignment) shall be governed by the following
restrictions: (w) for amounts to be assigned over *
, there are no restrictions as to assignment except for
those set forth herein; (x) for amounts between *
,the amount to be assigned by the Assignor shall
represent the total amount of the Commitment then held by
such Assignor; (y) for amounts less than *
, assignments may only be made to existing Syndicate
Members; and (z) in no event shall any amount assigned be
less than * and shall be an integral multiple of
* in excess thereof (unless such
assignment is for all of the Assignor's Aggregate
Amount), and (v) the parties to each such assignment
shall execute and deliver to the Syndicate Agent, for its
acceptance and recording in the Register and to the
Borrower, an Assignment and Acceptance, together with a
processing and recordation fee payable to the Syndicate
Agent as shall be agreed by the Syndicate Agent and such
Assignor. Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in
each Assignment and Acceptance, which effective date
shall be at least five (5) Business Days after the
execution thereof, (x) the Syndicate Assignee shall,
without further act, be a party hereto, and, to the
extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and
Acceptance, have the rights and obligations of a Lender
hereunder and under the other Loan Documents, and (y) the
Assignor shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights and be
released from its obligations under this Agreement and
the other Loan Documents. Any assignment or purported
assignment not in compliance with this Section shall be
void and of no effect. Each Syndicate Assignee shall, if
eligible to do so, prior to the first date on which
interest or fees are payable hereunder for its account,
deliver to the Borrower, promptly upon its request, the
forms in respect of reduction of or exemption from
withholding taxes described in subclause (iv) of Section
11.02(a).
(b) By executing and delivering an Assignment and
Acceptance, the Assignor thereunder and the Syndicate
Assignee thereunder confirm to and agree with each other
and the other parties hereto as follows: (i) other than
as provided in such Assignment and Acceptance, such
Assignor makes no representation or warranty and assumes
no responsibility with respect to any statements,
warranties, or representations made in connection with
this Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this
Agreement or any other instrument or document furnished
pursuant hereto; (ii) such Assignor makes no
representation or warranty and assumes no responsibility
with respect to the financial condition of the Borrower
or the performance or observance by the Borrower of any
of its obligations under this Agreement or any other
instrument or document furnished pursuant hereto; (iii)
such Syndicate Assignee confirms that it has received a
copy of this Agreement, together with copies of the
financial statements produced by the Borrower or the
Guarantor and the other Loan Documents, and such other
documents and information as it has deemed appropriate to
make its own credit analysis and decision to enter into
such Assignment and Acceptance; (iv) such Syndicate
Assignee will, independently and without reliance upon
the Syndicate Agent, the Assignor and any other Syndicate
Member, and based on such documents and information as it
shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under
this Agreement; (v) such Syndicate Assignee appoints and
authorizes the Syndicate Agent to take such action as
agent on its behalf and to exercise such powers under
this Agreement as are delegated to the Syndicate Agent by
the terms hereof, together with such powers as are
reasonably incidental thereto; and (vi) such Syndicate
Assignee agrees that it will perform in accordance with
their terms all of the obligations which by the terms of
this Agreement are required to be performed by it as a
Lender.
(c) The Syndicate Agent shall maintain or shall
cause its Registrar to maintain at its address referred
to in Section 15.04 of this Agreement, in the Register a
record of the names and addresses of the Syndicate
Members as set forth under Section 4.06 hereof. The
entries in the Register shall be conclusive and binding
for all purposes, absent manifest error, on the Agent,
the Syndicate Agent and the Lenders and each of them may
treat each Person whose name is recorded in the Register
as a Syndicate Member hereunder for all purposes of this
Agreement. The Register shall be available for
inspection by any Syndicate Lender at any reasonable time
and from time to time upon reasonable prior notice and
each shall be entitled to make copies thereof at its
expense.
(d) Upon its receipt of an Assignment and
Acceptance executed by an Assignor and an Assignee, the
Syndicate Agent shall, if such Assignment and Acceptance
has been completed and is in substantially the form of
Appendix F hereto, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein
in the Register (including the transfer of the Daewoo
Notes to such Syndicate Assignee by the Assignor), and
(iii) give prompt notice and an executed counterpart
thereto to the Borrower.
(e) Each Syndicate Member and the Syndicate
Agent may grant participations to one or more banks or
entities in or to all or any part of its rights and
obligations under this Agreement (including, without
limitation, all or a portion of the Subportions owing to
it) and Security Documents; provided, however, that,
notwithstanding the grant of any such participation by
any Syndicate Member, such participation, the right to
grant such a participation and any agreement pursuant to
which a Syndicate Member may grant a participation, shall
be expressly subject to the following conditions and
limitations: (i) such Lender's obligations and rights
under this Agreement and the other Loan Documents to
which the Syndicate Member is a party (including without
limitation, its Commitment to the Borrower hereunder)
shall remain unchanged, (ii) such Syndicate Member shall
remain solely responsible to the other parties hereto for
the performance of such obligations, (iii) such Syndicate
Member shall remain the "Holder" of any such Subportion
for all purposes of this Agreement, (iv) the Borrower,
the Agent, the Syndicate Agent and the other Syndicate
Member shall continue to deal solely and directly with
such Syndicate Member in connection with such Syndicate
Member's rights and obligations under this Agreement, (v)
such Syndicate Member shall continue to be able to agree
to any modification or amendment of this Agreement or any
waiver hereunder without the consent, approval, or vote
of any such participant or group of participants, other
than modifications, amendments, and waivers which (A)
postpone any date fixed for any payment of, or reduce any
payment of, principal of or interest on such Syndicate
Member's Aggregate Amount or any fees or other amounts
payable under this Agreement, or (B) increase the amount
of such Syndicate Member's Commitment, or (C) change the
interest rates payable under this Agreement, or (D)
release all or substantially all of the security provided
that if a Syndicate Member agrees to any modification or
waiver relating to items (A) through (D), the Borrower,
the Syndicate Agent and each other Syndicate Member may
conclusively assume that such Syndicate Member duly
received any necessary consent of each of its
participants, and (vi) except as contemplated by the
immediately preceding clause (v), no participant shall be
deemed to be or to have any of the rights and obligations
of a Lender hereunder. The prior written approval of the
Borrower, which approval shall not be unreasonably
withheld, shall be required before any proposed
participant is given any information obtained from the
Borrower or the Guarantor.
11. INDEMNITY
11.01 General Indemnity. The Borrower undertakes to indemnify
and hold harmless each of the Lenders, the Syndicate
Agent and their successors and assigns (each hereinafter
referred to as an "Indemnified Party") on a full
indemnity basis:
(a) the Borrower shall reimburse the Agent, the
Syndicate Agent and/or the Syndicate Members, as the case
may be, on demand for all losses (excluding loss of
anticipated profits) or expenses incurred as a
consequence of the Borrower's failure to drawdown on the
Delivery Date specified in a Notice of Drawdown, *
(b) from and against all and any costs, loss
(excluding loss of anticipated profits) or other expense
including, without limitation, *
;
(c) from and against any loss (excluding loss of
anticipated profits) or expenses any Indemnified Party
may suffer or incur as a result of payment to the Agent
or the Syndicate Agent, as the case may be, as a
consequence of (i) receiving any *
Installment of any Subportion earlier or later than at
the times and in the amounts and the manner set out in
Section 5.01 or Section 5.02, as the case may be, or (ii)
prepayment of any Subportion under Sections 5.04(a),
5.04(b), 6.01, 6.02, 6.03 or 12.01(a), including, without
limitation, any losses suffered as a result of
reemploying deposits from third parties acquired for the
purpose of funding such Subportion or any portion
thereof, * ,
at a rate of return lower than the cost of acquiring the
deposits or any expense incurred in liquidating such
deposits, or (iii) any losses which may arise by interest
subsidies foregone; and
(d) from and against any losses or expenses
(including legal fees and any value added tax thereon)
incurred by any Indemnified Party in the preservation or
enforcement of any of the collateral or the rights of
such Indemnified Party thereto under this Agreement or
any of the Security Documents.
11.02 Tax Indemnity. (a) The Borrower shall pay to any Holder
who is a resident of a *
within the meaning of the provisions of an income tax
convention between the United States of America and such
country, as in effect on the date such Holder acquires
its Notes, such amounts ("Additional Amounts") as may be
necessary in order that every net payment of the
principal of and interest on a Note or any other
Outstanding Indebtedness, after withholding for or on
account of any present or future Tax, assessment or
governmental charge imposed by the United States of
America or any political subdivision or taxing authority
thereof or therein upon or as a result of such payment,
will not be less than the amount provided herein or in
the Notes; provided, however, that the foregoing
obligation to pay Additional Amounts shall not apply to
any one or more of the following:
(i) *
(ii) *
(iii) *
(iv) *
(v) *
nor will Additional Amounts be paid with respect to
payment of the principal of or interest on a Note to a
Person other than the sole beneficial owner of such
payment to the extent such beneficial owner would not
have been entitled to the Additional Amounts had such
beneficial owner been the Holder of a Note.
(b) Notwithstanding the foregoing, the Borrower
shall indemnify each Holder of a Note for any and all
franchise taxes and taxes based on gross or net income
imposed on such Holder by any taxing authority (i) by
reason of the incorporation or residence of the Borrower
in the jurisdiction of such taxing authority or (ii) by
reason of the presence of any property securing such
Holder's Note in the jurisdiction of such taxing
authority. The amount of the indemnity payable hereunder
shall be sufficient to restore the Holder to which it is
paid to the same position such Holder would have been in
had the Tax giving rise to such indemnity not been
incurred.
(c) The Borrower shall pay to the Agent or the
Syndicate Agent, as the case may be, all stamp or similar
taxes or duties required to be paid under any applicable
law of any jurisdiction in order to render any of the
Loan Documents or any of the Notes admissible in evidence
or enforceable therein. To the extent any amount paid
under this Section 11.02(c) gives rise to additional Tax
payable by any Holder, the Borrower shall pay such Holder
an amount sufficient to restore that Holder to the same
position that Holder would have been in had such amount
not been incurred.
(d) If the Borrower would become obligated to pay
any Additional Amounts on the Notes with respect to any
Holder in accordance with paragraph (a) of this Section,
then the Borrower may prepay the Notes of any such
Holder, at the option of the Borrower exercised at any
time when such obligation continues to exist, at a
prepayment price equal to the 100% of the principal
amount thereof, together with accrued interest to the
date fixed for redemption, in accordance with the
provisions of Section 5.04(a).
(e) Regardless of whether a Holder is entitled to
payment of any Additional Amount under Section 11.02(a),
the Borrower shall promptly notify any relevant Holder if
the Borrower is required by any Governmental
Instrumentality to make any deduction or withholding from
any amount payable by the Borrower under this Agreement.
The Borrower shall immediately provide any relevant
Holder with an official receipt of the relevant
Governmental Instrumentality or other evidence acceptable
to the relevant Holder of the amounts so deducted or
withheld.
(f) If any deduction or withholding is made
from any payment hereunder on account of a liability for
Tax of any Holder with respect to which the Borrower is
not required to pay any Additional Amount under Section
11.02(a), the Borrower shall be obliged to adopt any
alternative method of making such payment (including
making the payment to a Person other than such Holder) as
may be proposed by such Holder so as to avoid or reduce
any such deduction or withholding; provided, however,
that the Borrower shall be under no obligation to adopt
such alternative method of payment if the cost to the
Borrower of making such payment is increased.
(g) If, as a result of any indemnity paid by
Borrower, a Holder at any time realizes any tax savings
not previously taken into account in computing the amount
of the indemnity, that Holder shall promptly pay to the
Borrower the amount of such tax savings; provided,
however, that no Holder is required to make any payment
to Borrower pursuant to this Section 11.02(g) so long as
an Event of Default shall be continuing or if the
Borrower shall not have theretofore made all payments due
to all Holders under this Agreement. The relevant Holder
shall estimate the amount of such tax savings, refunds,
and other reductions in Taxes and shall furnish the
Borrower with a certificate showing, in reasonable
detail, the reasons and basis for such calculations,
which shall be furnished in good faith by such Holder,
and such amount calculated by such Holder shall, absent
manifest error, be conclusive. In determining the amount
of such tax savings due to the indemnity, all amounts
which give rise to a tax savings to the Holder shall be
deemed to be utilized in the order that taxes are paid or
deemed paid by the Holder (or in the case of any payments
hereunder, by the Borrower on behalf of the Holder). In
no event will any Person have any right to inspect the
books, records, tax returns, or other documents of any
Holder, and the positions to be taken by any Holder on or
with respect to its tax returns and in any tax
proceedings shall be within its sole control.
(h) In the event an income tax convention between
the United States of America * is
terminated or superseded by a new convention and the
Borrower becomes liable to pay Additional Amounts to one
or more Holders resident in * , such
Holders shall use their best efforts to designate
different lending offices to hold their Notes so as to
reduce, to the greatest extent possible, the Additional
Amounts payable by the Borrower; provided, however, that
any designation of a different lending office pursuant to
this Section 11.02(h) shall not be considered an
assignment, rebooking or transfer for purposes of Section
11.02(a)(i).
11.03 Transaction Costs. Whether or not the transactions
herein contemplated shall be consummated (unless such
failure to consummate shall be solely by reason of the
default of any Lender, in which case, the Borrower shall
not be obligated to pay expenses of such defaulting
Lender), the Borrower shall pay to the Agent and the
Syndicate Agent and/or the Syndicate Members all
reasonable expenses incurred by the Agent and the
Syndicate Agent and/or the Syndicate Members relating to
this Agreement and the other Loan Documents, including
but not limited to:
(a) the reasonable costs of preparation,
negotiation, execution, delivery, reproduction of the
Loan Documents;
(b) the reasonable fees and disbursements of
Lenders' special counsel, Haight, Gardner, Poor & Havens;
(c) all reasonable expenses including without
limitation, reasonable fees and expenses of Lenders'
special counsel, Haight, Gardner, Poor & Havens, related
to any amendments, waivers or consents with respect to
the Loan Documents;
(d) all reasonable expenses including, without
limitation, reasonable fees and expenses of Lenders'
special counsel, Haight, Gardner, Poor & Havens, related
to the execution of any additional security or
documentation which may at any time be required to be
granted or delivered to any Lender under Section 9.02(b)
and any other provision of this Agreement or required by
any of the Security Documents;
(e) the Borrower shall pay all stamp,
registration and other taxes to which this Agreement or
any of the other Loan Documents or any judgment or order
given or made in connection herewith or therewith is or
at any time may be subject and shall indemnify the
Lenders against any liabilities, costs, claims and
expenses resulting from any failure to pay or any delay
in paying any such tax; and
(f) the reasonable fees and expenses of any
counsel or appraiser for the purpose of issuing an
opinion or an appraisal required by any provision of this
Agreement and any other Loan Document.
The obligations of the Company under this Section
11.03 shall survive the payment or prepayment of the
Tranches and any transfer of the Notes.
11.04 Notice and Certification. Any Holder wishing to invoke
any of the indemnities provided in Sections 11.01 and
11.02 shall notify the Borrower as soon as practicable
(with a copy to the Agent and the Syndicate Agent). Such
notice shall include a certificate setting forth the
basis for the determination of the amount of any amount
payable. Such certificate shall show in reasonable
detail the reasons and the basis for the calculation
thereof, be submitted in good faith to the Borrower and
the Agent or the Syndicate Agent, as the case may be, by
the affected Lender. Such certificate shall, in the
absence of manifest error, be conclusive evidence of the
fact and amount of such indemnities and shall be final
and binding on the Borrower and such Holder.
12. EVENTS OF DEFAULT
12.01 Remedies. Notwithstanding anything herein to the
contrary, upon the occurrence and continuance of any of
the Events of Default stipulated in this Section 12 or at
any time thereafter and while such Event of Default shall
be continuing, each of the Agent and the Syndicate Agent
may take any one or more of the following actions:
(a) by written notice to the Borrower, declare
the outstanding principal amount of the Outstanding
Indebtedness relating to all or any Subportions of the
HDW Tranche and the Daewoo Tranche, respectively, to be
immediately due and payable by the Borrower (except that
no notice shall be required upon the occurrence of an
Event of Default under paragraphs (m) or (n) of Section
12.02), whereupon the same shall become so payable;
and/or
(b) by written notice to the Borrower, declare
that any undrawn Subportion of an HDW or Daewoo Tranche,
respectively, shall be cancelled, whereupon the same
shall be cancelled and any accrued commitment fees,
indemnities under Section 11, and all other amounts
payable to the extent the same relates to the cancelled
Tranche hereunder shall become immediately due and
payable by the Borrower; and/or
(c) exercise all or any of its rights and powers
under and in accordance with any one or more of the
relevant Security Documents.
Each Holder hereby appoints the Agent or the
Syndicate Agent, as the case may be, the attorney-in-fact
for such Holder for purposes of any bankruptcy or
reorganization proceeding, whether or not such Holder has
filed a separate claim in any such proceeding. Any
receiver, assignee or trustee in bankruptcy or
reorganization is hereby authorized by each Holder to
make such payments to the Agent or the Syndicate Agent,
as the case may be, (and each Holder shall be deemed by
its acceptance of his Note to waive hereby any right to
receive such payments except from the Agent or the
Syndicate Agent, as the case may be, and to pay to the
Agent or the Syndicate Agent, as the case may be, any
amount due under Section 12.
12.02 Event of Default. An Event of Default shall occur under
this Agreement if:
(a) any Obligor fails to pay to the Agent or the
Syndicate Agent, as the case may be, on the due date for
payment thereof in the currency and in the manner
specified herein or therein any sum of principal,
interest, commission or fees payable by the Borrower
under the terms of this Agreement and such default
remains unremedied for three (3) Business Days after the
due date; or
(b) any Obligor fails to pay to the Agent or the
Syndicate Agent, as the case may be, in the currency and
in the manner specified herein or therein any other
monies expressed to be payable by any of the Obligors
upon demand of the Agent or the Syndicate Agent, as the
case may be, under the terms of this Agreement and/or any
of the related Security Documents or Charter Documents to
which any of the Obligors is a party within fifteen (15)
Business Days following the date of such a demand; or
(c) the Insurances on any Vessel are cancelled
due to non-payment of premiums and otherwise not
immediately replaced or any Vessel otherwise ceases to be
insured in accordance with the provisions of this
Agreement and/or of the First Mortgage or the Second
Mortgage on that Vessel; or
(d) any of the Obligors is in breach in the
performance or observance of any other terms or
conditions of this Agreement or in any of the Loan
Documents, the Charter Documents or the Security
Documents (other than the Mortgages) to which any of them
is a party (not being a default which falls within
paragraphs (a), (b) or (c) of this Section) and if it is
capable of being remedied such breach is not remedied
within thirty (30) days after receipt by the Borrower of
notice of such breach from the Agent or the Syndicate
Agent, as the case may be; or
(e) there occurs any event which constitutes an
Event of Default under any Mortgage on any Vessel; or
(f) any Mortgage or Replacement Mortgage on
any Vessel ceases to be valid and enforceable and duly
registered on that Vessel having the priority of record
required under the terms of this Agreement or any
Security Document or the liens or security interests
created or intended to be created thereunder cease to be
in full force and effect; or
(g) any Obligor is in default in the payment
when due of any sum or sums which aggregate in excess of
Five Million Dollars (USD5,000,000) at any one time under
any documentation relating to any other Financial
Indebtedness whatsoever (excluding for this purpose the
HDW Tranche and the Daewoo Tranche), and such Financial
Indebtedness shall have been accelerated in accordance
with the terms thereof; or
(h) there is a final, unappealable and
enforceable judgment made against any Obligor greater
than 5% of the Tangible Net Worth of the Guarantor, which
is not covered by insurance and is not satisfied or
stayed within sixty (60) days after such judgment; or
(i) any Vessel shall suffer an Event of Loss
and the proceeds of the Insurances or relevant
requisition compensation, if any, are not paid to the
Agent or Syndicate Agent, as the case may be, within one
hundred and eighty (180) days of the occurrence of such
Event of Loss in an amount at least equal to the
aggregate of the outstanding balances of the relevant
Subportion(s) advanced by the relevant Lender(s) to
finance that Vessel together with all interest accrued
thereon, if that amount is not paid by or upon the order
of the Borrower to the Agent or the Syndicate Agent, as
the case may be, within the said period of one hundred
and eighty (180) days; or
(j) any representation or warranty made by or
on behalf of any Obligor in this Agreement or in any of
the Security Documents or in the Agreement to Acquire and
Charter or by the Borrower or the Guarantor in any
certificate, statement or other document issued by or on
behalf of any Obligor pursuant to this Agreement shall
prove to have been incorrect or misleading in any
material respect when made or deemed made; or
(k) without the prior written consent of the
Agent and the Syndicate Agent, there is a merger or
consolidation of any Obligor with any other corporation
or other entity other than otherwise permitted in this
Agreement, the Guarantee or in the Agreement to Acquire
and Charter; or
(l) any license, authorization, consent or
approval at any time necessary to enable any Obligor to
comply with its obligations under this Agreement and/or
any of the Security Documents is revoked or not granted
or fails to remain in full force and effect for a period
of thirty (30) days after notice thereof from the Agent
or the Syndicate Agent, as the case may be, with respect
to any Vessel; or
(m) any Obligor shall file, or consent by answer
or otherwise to the filing against it of a petition for
relief or reorganization or arrangement or any other
petition in bankruptcy, for liquidation or seek any
relief or forbearance under any bankruptcy or insolvency
or other similar law, (i) make an assignment for the
benefit of its creditors, or (ii) consent to the
appointment of a custodian, receiver, trustee or other
officer with similar powers of itself or any substantial
part of its property; or
(n) a court or governmental authority of
competent jurisdiction in an involuntary case under
applicable bankruptcy laws, as now or hereafter
constituted or any insolvency or similar law shall enter
an order appointing, without consent by APL, the
Transferee, or the Guarantor with respect thereto a
custodian, receiver, trustee or other officer with
similar powers with respect to it or with respect to any
substantial part of its property, or constituting an
order for relief or approving a petition for relief or
reorganization or any other petition in bankruptcy or for
liquidation or to take advantage of any bankruptcy or
insolvency law or any jurisdiction, or ordering the
dissolution, winding-up or liquidation of APL, the
Transferee, or the Guarantor with respect thereto, as the
case may be, and any such order or petition is not
dismissed or stayed within sixty (60) days after the
earlier of the entering of any such order or the approval
of any such petition.
13. FEES
13.01 Commitment Commission. (a) APL shall pay to the Agent a
commitment commission at * .
Such commission shall accrue from day to day for the
duration of the period from October 1, 1993 and
continuing until final disbursement of the HDW Tranche
and to be paid by APL to the Agent quarterly in arrears
on each Quarter Day on the last Delivery Date of the HDW
Vessels or such earlier date as its commitment shall
expire in accordance with the terms of this Agreement or
the Shipbuilding Agreement shall be cancelled or
terminated in respect of a Vessel or Vessels not yet
delivered.
(b) APL shall pay to the Syndicate Agent for the
account of the Syndicate a commitment commission at * .
Such commission shall accrue from day to day for the
duration of the period from October 1, 1993 and
continuing until final disbursement of the Daewoo Tranche
and to be paid by APL to the Syndicate Agent in arrears
for the account of the Syndicate Members on each Quarter
Day and on the last Delivery Date of the Daewoo Vessels
or such earlier date as its commitment shall expire in
accordance with the terms of this Agreement or the
Shipbuilding Agreement shall be cancelled or terminated
in respect of a Vessel or Vessels not yet delivered.
13.02 Participation Fees. (a) APL shall pay to the Agent, a
participation fee in the amount of *.
The remaining participation fee shall be payable
on a pro rata basis on the Delivery Date of each HDW
Vessel, but, in the event of cancellation of the
Commitment of the Agent to fund any Subportion, the
remaining participation fee shall be payable on a pro
rata basis, no later than the cancellation date in
respect to such Subportion.
If the HDW Tranche is reduced in accordance with
the terms of this Agreement, then APL shall pay to the
Agent, *.
APL hereby accepts that these fees shall not be
refunded by the Agent irrespective of whether or not any
Subportion in respect of the HDW Tranche is made by the
Agent under this Agreement or the Commitment on the part
of the Agent to make the Loans or any of them is
cancelled in accordance with the provisions of this
Agreement.
(b) APL shall pay to the Syndicate Agent for
the account of the Syndicate (for sharing among the
Syndicate Members in proportions to be agreed upon by
them), a participation fee in the amount of * .
The remaining participation fee shall be payable
on a pro rata basis on the Delivery Date of each Daewoo
Vessel, but, in the event of cancellation of the
Commitment of the Syndicate to fund any Subportion, the
remaining participation fee shall be payable on a pro
rata basis, no later than the cancellation date in
respect to such Subportion.
If the Daewoo Tranche is reduced in accordance
with the terms of this Agreement, then APL shall pay to
the Syndicate, * .
APL hereby accepts that these fees shall not be
refunded by the Syndicate irrespective of whether or not
any Subportion in respect of the Daewoo Tranche is made
by the Syndicate under this Agreement or the Commitment
on the part of the Syndicate to make the Loans or any of
them is cancelled in accordance with the provisions of
this Agreement.
13.03 Agency Fees.
The Borrower shall pay to the Agent a non-refundable
fixed agency fee of *
such fee to be paid within three (3) Frankfurt/New York
Business Days following the date of execution of this
Agreement by the Borrower and annually on the anniversary
of such date thereafter so long as any part of the HDW
Tranche remains outstanding.
The Agent agrees to pay from such agency fee paid
to the Syndicate Agent its agency fee in the amount of *
, such amount to be due and payable upon receipt by the
Agent of the agency fee from the Borrower.
14. RELATION OF SYNDICATE MEMBERS
14.01 Syndicate Members and Syndicate Agent.
*
14.02 Pro Rata Sharing.
*
*
14.03 Setoff.
*
14.04 Approvals.
*
*
14.05 Exculpation.
*
14.06 Indemnification.
*
14.07 Syndicate Agent as Syndicate Member.
*
14.08 Notice of Transfer; Resignation.
*
*
14.09 Credit Decision; Not Trustee.
*
15. MISCELLANEOUS
15.01 Calculations and Evidence of Debt. (a) Commitment
commission, interest on each Subportion, interest on
overdue payments, if any, and any compensation for
prepayments under this Agreement shall be calculated on
the basis of the actual number of days elapsed over a
year of three hundred sixty (360) days.
(b) If any payment expressed in USD falls due under this
Agreement on a day which is not a Business Day in the
City of New York, the Borrower may effect payment on the
next New York Business Day. This provision does not
affect the Borrower's obligation under Section 5 to pay
interest up to the date of actual payment in accordance
with Section 5.08.
(c) In any legal action or proceedings arising
out of or in connection with this Agreement, the entries
made in the accounts maintained by the Agent or the
Syndicate Agent pursuant to Section 4.06 shall, in the
absence of manifest error, be prima facie evidence of the
existence and extent of the obligations of the Borrower
therein recorded.
15.02. Currency of Account. (a) The Dollar is the currency of account
of each and every sum due from the Borrower to KfW and
the Syndicate under this Agreement in respect of any
Subportion.
(b) If after the occurrence of any Event of
Default, any sum is due from the Borrower under this
Agreement or if any order or judgment given or made in
relation hereto has to be converted from the currency
("the first currency") in which the same is payable
hereunder or under such order or judgment into another
currency ("the second currency") for the purpose of:
(i) making or filing a claim or proof against
the Borrower;
(ii) obtaining an order or judgment in any
court or tribunal; or
(iii) enforcing any order or judgment given or
made in relation hereto; then
the Borrower shall indemnify and hold harmless the
Lenders from and against any damages or losses suffered
as a result of any discrepancy between (A) the rate of
exchange used for such purpose to convert the sum in
question from the first currency into the second currency
and (B) the rate or rates of exchange at which any Lender
may in the ordinary course of business purchase the first
currency with the second currency in the Frankfurt
foreign exchange market upon receipt of a sum paid to it
in satisfaction, in whole or in part, of any such order,
judgment, claim or proof. The above indemnity shall
constitute a separate and independent obligation of the
Borrower from its other obligations and shall apply
irrespective of any indulgence granted by such Lender.
15.03 Partial Invalidity. If at any time any provision hereof
is or becomes illegal, invalid or unenforceable in any
respect under the law of any jurisdiction, neither the
legality, validity or enforceability of the remaining
provisions hereof nor the legality, validity or
enforceability of such provision under the laws of any
other jurisdiction shall in any way be affected or
impaired thereby.
15.04 Notices. (a) Each notice, demand or other communication
to be made hereunder shall be made in writing but, unless
otherwise stated, may be made by telex.
(b) Any notice, demand or other communication to
be made or delivered by any party to another party
pursuant to this Agreement shall (unless that other
Person has by fifteen (15) days' notice to the other
parties specified another address) be made or delivered
to that party at its address mentioned below and shall be
deemed to have been made or delivered when (in the case
of telex) the addressee's answerback shall have been
received at the end of the transmission thereof or (in
the case of any letter) when delivered to that address by
telecopy or personally or when actually received by the
relevant party after being deposited in the post first-
class postage prepaid in an envelope addressed to it at
that address:
(i) if to the Borrower or to the Guarantor to
it at 1111 Broadway, Oakland, California
94607, Telefax No. (510) 272-8931, Telex
No. 671 4840, Answerback "APL OAK",
Attention: Treasurer;
(ii) if to KfW to it at Palmengartenstrasse 5-
9, D-60325 Frankfurt am Main, Federal
Republic of Germany, Telefax No. 49-7431-
2944 or 7431-2198, Telex No. 415256-0
Answerback "KWD", Attention: Mr. Andreas
Uibeleisen or Mr. Wolfgang Pfisterer;
(iii) if to the Syndicate Agent, to it at Ness 7-
9, D-20457 Hamburg, Federal Republic of
Germany, Telefax No. 49-40-3683-4068,
Telex No.
212391, Answerback "CBKD", Attention: Mr.
Stefan E. Kuch;
(iv) if to the Syndicate, to the addresses of
each member as set forth in Schedule 1.
(c) Each notice, demand or other communication
made or delivered by one party to another pursuant to
this Agreement or any of the Security Documents shall be
in the English language or accompanied by a certified
English translation.
15.05 Benefit of the Agreement. (a) This Agreement shall be
binding upon and inure to the benefit of each party
hereto and its successors and permitted assigns.
(b) APL may not without the Lenders' consent
assign or transfer all or any of its rights, benefits and
obligations hereunder including, without limitation, its
claim for disbursement of any Subportion of any of the
Tranches other than to the Transferee in accordance with
the terms of the Agreement to Acquire and Charter.
15.06 Remedies and Waivers. No failure to exercise nor any
delay in exercising on the part of the Lenders of any
right, power, privilege or remedy hereunder shall operate
as a waiver thereof, nor shall any single or partial
exercise of any right, power, privilege or remedy prevent
any further or other exercise thereof or the exercise of
any other right, power, privilege or remedy. The rights
and remedies herein provided are cumulative and not
exclusive of any rights or remedies provided by law.
15.07 Law. This Agreement shall be governed by and construed
in accordance with laws of the State of New York (other
than the law of the State of New York governing choice of
law).
15.08 Jurisdiction. Each party hereto, namely APL, the
Borrower, the Agent, the Syndicate Agent and the
Syndicate Members each (a) hereby irrevocably submits
itself to the jurisdiction of the Supreme Court of the
State of New York, New York County and to the
jurisdiction of the United States District Court for the
Southern District of New York for the purposes of any
suit, action or other proceeding arising out of this
Agreement or any other Loan Document, Security Document
or Charter Document referred to therein, or the subject
matter hereof or thereof or any of the transactions
contemplated hereby or thereby, brought by any of the
parties or their respective successors, subrogees or
assigns, (b) hereby irrevocably agrees that all claims in
respect of such action or proceeding may be heard and
determined, in such New York State or Federal court, and
(c) to the extent that it has or hereafter may acquire
any immunity from jurisdiction of any court or from any
legal process, hereby waives such immunity, and agrees
not to assert, by way of motion, as a defense, or
otherwise, in any such suit, action or proceeding, (i)
any claim that it is not personally subject to the
jurisdiction of the above-named New York State or Federal
courts, (ii) that the suit, action or proceeding is
brought in an inconvenient forum, that the venue of the
suit, action or proceeding is improper, or (iii) that
this Agreement or the subject matter hereof may not be
enforced in or by such courts or under any applicable
law. Each party hereby consents to service of process in
any suit, action or other proceeding arising out of this
Agreement or the subject matter hereof or any of the
transactions contemplated hereby and hereby appoints the
Persons set forth in Schedule 7 (each a "Process Agent")
as its attorneys-in-fact to receive service of process in
such action, suit or proceeding, it being agreed that
service upon its Process Agent shall constitute valid
service upon such party and its successors and assigns.
Each party agrees that (x) the sole responsibilities of
its Process Agent shall be (i) to receive such process,
(ii) to send a copy of any such process so received to
the party naming it as Process Agent, by registered
airmail, return receipt requested, at its address set
forth in Section 15.04(b) hereof, or at the last address
filed in writing by it with the Process Agent and (iii)
to give prompt telegraphic notice of receipt thereof to
the party at such address and (y) the Process Agent shall
have no responsibility for the receipt or nonreceipt by
the party of such process, nor for any performance or
nonperformance by it or its respective successors or
assigns. Each party hereby agrees to pay to its Process
Agent such compensation as shall be agreed upon from time
to time by it and the Process Agent for the Process
Agent's services hereunder. Each party hereby agrees
that its submission to jurisdiction and its designation
of the Process Agent set forth above is made for the
express benefit of each of the other parties hereto and
their respective successors, subrogees and assigns. Each
party agrees that it will at all times continuously
maintain a Process Agent to receive service of process in
the City of New York or San Francisco, California, on
behalf of itself and its properties with respect to this
Agreement, and in the event that, for any reason, the
Process Agent named by a party pursuant to this Section
15.08 shall no longer serve as Process Agent to receive
service of process on such party's behalf, such party
shall promptly appoint a successor Process Agent. Each
party further agrees that a final judgment against it in
any such action or proceeding shall be conclusive, and
may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law, a
certified or true copy of which final judgment shall be
conclusive evidence of the fact and of the amount of any
indebtedness or liability of the party therein described;
provided, that nothing in this Section 15.08 shall affect
the right of the above parties hereto or their respective
successors, subrogees or assigns to serve legal process
in any other manner permitted by law or affect the right
of said parties or their respective successors, subrogees
or assigns to bring any action or proceeding against any
other such party or its property in the courts of other
jurisdictions. In the event of the transfer of all or
substantially all the assets and business of the Process
Agent to any other corporation, by consolidation, merger,
sale of assets or otherwise, such other corporation shall
be substituted hereunder for such Process Agent with the
same effect as if named herein in place of such Process
Agent. THE BORROWER, APL AND EACH LENDER HEREBY WAIVES
TRIAL BY JURY IN ANY JUDICIAL PROCEEDING TO WHICH IT IS A
PARTY INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
(WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY
WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS
AGREEMENT, ANY OTHER LOAN DOCUMENT, ANY SECURITY DOCUMENT
OR ANY CHARTER DOCUMENT REFERRED TO THEREIN, OR THE
RELATIONSHIP ESTABLISHED HEREUNDER AND WHETHER ARISING OR
ASSERTED BEFORE OR AFTER THE DATE HEREOF OR BEFORE OR
AFTER THE PAYMENT, OBSERVANCE AND PERFORMANCE IN FULL OF
THE BORROWER'S, APL'S OR SUCH LENDER'S OBLIGATIONS UNDER
THIS AGREEMENT.
15.09 Confidentiality. Each of the Borrower, APL, the Agent
and the Syndicate Members agree to maintain the
confidentiality of all information provided by any of the
parties hereto to any of the other parties hereto or any
participant or assign contemplated pursuant to this
Agreement, the Guarantee, any Security Document or any
Charter Document and will not use such information for
purpose other than for the extension and acceptance of
credit under such documents, and will not disclose the
same to third parties other than such participants and
assignees. Notwithstanding the foregoing, following the
execution of this Agreement (a) each party may make
public disclosure of the existence and amount of the
Facility hereunder and of the identity of the parties
hereto, (b) each party may file a copy of this Agreement,
the Guarantee, any Security Document or any Charter
Document in any public record in which it is required by
law to be filed, and (c) each party may make such other
public disclosure of the terms and conditions hereof and
of this Agreement or any Security Document to create or
perfect any security interest contemplated hereby or as
it may be required by law, in the opinion of its counsel,
to make or at the request of and required by any
regulatory or supervisory authority having jurisdiction
over it.
15.10 No Recourse. No recourse shall be had for the payment of
the principal of, or the premium, if any, or interest on
any Note, or for any claim based thereon, or otherwise in
respect thereof or of the Outstanding Indebtedness
represented thereby, or against any incorporator,
stockholder, officer or director, as such past, present
or future, of any Obligor or of any successor
corporation, either directly or through any Obligor or
any successor corporation, whether by virtue of any
constitutional provision, statute or rule of law, or by
the enforcement of any assessment or penalty otherwise;
it being expressly agreed and understood that this
Agreement and the Notes are solely corporate obligations,
and that no personal liability whatsoever shall attach
to, or be incurred by, any incorporator, stockholder,
officer or director, as such past, present or future of
the Borrower or of any successor corporation, either
directly or through an Obligor or any successor
corporation, because of the incurring of the indebtedness
hereby authorized or under or by reason of any of the
obligations, covenants, promises or agreements contained
in this Agreement or in any of the Notes or to be implied
herefrom or therefrom, and that all liability, if any, of
that character against every such incorporator,
stockholder, officer and director is, by the acceptance
of the Notes and as a condition of, and as part of the
consideration for, the execution of this Agreement and
the issue of the Notes, expressly waived and released;
provided, however, that nothing in the foregoing shall
diminish the obligations of the Guarantor under the
Guarantee.
15.11 Complete Agreement. This Agreement, together with the
other Loan Documents and the Charter Documents, contains
the entire agreement among the parties hereto with
respect to the subject matter hereof and supersedes all
prior written or oral communications or agreements with
respect thereto.
AS WITNESS the hands of the duly authorized
representatives of the parties hereto the day and year first before
written.
KREDITANSTALT FUR WIEDERAUFBAU
/s/ Hans Reich / Peter Klaus
By: Hans Reich / Peter Klaus
Title: Board Member / Director
COMMERZBANK AG, HAMBURG
/s/ Joachim Hagemann
By: Joachim Hagemann
Title: Senior Vice-President
/s/ Stefan Kuch
By: Stefan Kuch
Title: Vice-President
COMMERZBANK AG (KIEL BRANCH)
/s/ Franz-Josef Cleas
By: Franz-Josef Claes
Title: Director
/s/
By:
Title:
DRESDNER BANK AG in HAMBURG
/s/ Gerhard Roller
By: Gerhard Roller
Title: Senior Manager
/s/ Claus-Dieter Bottcher
By: Claus-Dieter Bottcher
Title: Assistant Manager
VEREINS- und WESTBANK AG
/s/ Suzzane Martens
By: Suzzane Martens
Title: Assistent Vice-President
/s/ Jorgen Kopcke
By: Jorgen Kopcke
Title: Senior Vice-President
DEUTSCHE SCHIFFSBANK AG
/s/ Wulf-Peter Schiering
By: Wulf-Peter Schiering
Title: Senior General Manager and
Attorney-in-Fact
NORDDEUTSCHE LANDESBANK -
GIROZENTRALE
/s/ Friedrich Huech
By: Friedrich Huech
Title: Senior Vice-President
/s/ Jurgen Hartmann
By: Jurgen Hartmann
Title: Vice-President
DEUTSCHE VERKEHRS-BANK AG
/s/ Peter Spincke
By: Peter Spincke
Title: Director
/s/ Joachim Winkler
By: Joachim Winkler
Title: Director
BANQUE INTERNATIONALE A LUXEMBOURG
S.A.
/s/ Jean-Pierre Vernier
By: Jean-Pierre Vernier
Title: First Vice-President
AMERICAN PRESIDENT LINES, LTD.
/s/ Will M. Storey
By: Will M. Storey
Title: Executive Vice-President
[Schedules to be
added to Notes]
APPENDIX A-1A
FORM OF FIXED RATE NOTES
[HDW Vessel]
NOTE
No. $
[ ]
Issued in connection with
the purchase financing of
three (3) container vessels
INTEREST RATE MATURITY DATE ISSUE
DATE
[ ] (the "Company"), for
value received, hereby promises to pay to [ ] or
registered assigns the principal sum of ________________ DOLLARS
(USD____________) on the maturity date specified above. This Note shall
bear interest at the rate specified above on the unpaid principal amount
thereof from time to time outstanding from the date thereof to but
excluding the date due at the Interest Rate for each Interest Period
beginning on or after the Fixed Rate Conversion Date (as defined in the
Loan Agreement referred to below) and shall be payable in arrears on
each Interest Payment Date on a basis of the actual number of days
elapsed over a year of three hundred sixty (360) days including the
first day of the relevant Interest Period or portion thereof but
excluding such Interest Payment Date. Principal on this Note shall be
payable on each Repayment Date in the amounts set forth in Schedule 1
attached hereto subject to any HDW * exercised by the Company pursuant
to Section 5.03 of the Loan Agreement. Capitalized terms contained
herein and not defined herein shall have the meanings specified in a
certain Loan Agreement dated March 14, 1994 (the "Loan Agreement") by
and among American President Lines, Ltd., Kreditanstalt fur
Wiederaufbau, Commerzbank AG, Hamburg, Commerzbank AG (Kiel Branch),
Dresdner Bank AG in Hamburg, Vereins-und Westbank AG, Deutsche
Schiffsbank AG, Norddeutsche Landesbank-Girozentrale, Deutsche Verkehrs-
Bank AG and Banque Internationale a Luxembourg S.A.
The interest so payable, and punctually paid or duly
provided for, on any such Interest Payment Date will, as provided in the
Loan Agreement, be paid by the Company to the Agent for payment to the
Person in whose name this Note is registered at the close of business on
the date for payment of such interest. Any such interest not so
punctually paid or duly provided for shall be paid together with default
interest which shall accrue on the amount of such overdue sum in the
case of payments due as more fully provided in the Loan Agreement.
Under the Loan Agreement, the Company is obligated to pay
interest on and the principal of this Note to the Agent in the manner as
provided therein, in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public
and private debts.
This Note is subject to prepayment and acceleration as
more fully described in the Loan Agreement.
This Note is one of a duly authorized issue of Notes
issued and to be issued under the Loan Agreement.
Reference is made to the Loan Agreement and all
supplements and amendments thereto (a copy of which is on file with the
Company at its principal corporate office) for a more complete statement
of the terms and provisions thereof, including a statement of the
properties thereby conveyed, pledged and assigned, the nature and extent
of the security, the respective rights thereunder of the Company and the
Holders of the Notes, and the terms upon which the Notes are, and are to
be, executed and delivered, to all of which terms and conditions in the
Loan Agreement each Holder hereof agrees by its acceptance of this Note.
If an Event of Default shall occur and be continuing, the
principal of the Notes may be declared due and payable in the manner and
with the effect provided in the Loan Agreement and the Agent may
exercise the rights and remedies provided for therein.
The right of the Holder of this Note to institute action
for any remedy under the Loan Agreement, including the enforcement of
payment of any amount due hereon, is subject to certain restrictions
specified in the Loan Agreement.
As provided in the Loan Agreement and subject to certain
limitations therein set forth, this Note is transferable, and upon
surrender of this Note for registration of transfer at the principal
office of the Registrar, or at the office or agency maintained for such
purpose, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Registrar duly executed by, the
Holder or his attorney duly authorized in writing, one or more new Notes
of the same maturity and type and of authorized denominations and for
the same aggregate principal amount will be issued to the designated
transferee or transferees.
As provided in the Loan Agreement and subject to certain
limitations therein set forth, Notes are exchangeable for Fixed Rate
Notes for a like aggregate principal amount of Notes of the same
maturity and type and of authorized denominations, as requested by the
Holder surrendering the same, upon presentation thereof for such purpose
at the principal office of the Registrar, or at an office or agency
maintained for such purpose.
Prior to due presentment for registration of exchange or
transfer of this Note, the Agent, the Paying Agent and the Registrar may
deem and treat the Person in whose name this Note is registered as the
absolute owner hereof for the purpose of receiving payment of the
principal of and interest on this Note and for all other purposes
whatsoever whether or not this Note be overdue, and neither the Agent,
the Paying Agent nor the Registrar shall be affected by notice to the
contrary.
This Note shall not be entitled to any benefit under the
Loan Agreement or be valid or obligatory for any purpose unless this
Note has been executed on behalf of the Company by the manual signature
of an authorized officer of the Company.
AS PROVIDED IN THE LOAN AGREEMENT, THIS NOTE SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
NEW YORK (OTHER THAN THE LAW OF THE STATE OF NEW YORK GOVERNING CHOICE
OF LAW).
IN WITNESS WHEREOF, the Company has caused this
instrument to be duly executed under its corporate seal.
[
]
By:___________________
[Title]
Attest:
By:_______________________
[Title]
Issue Date:
APPENDIX A-1B
FORM OF LIBO RATE NOTE
[HDW Vessel]
NOTE
No. $_______________
[ ]
Issued in connection with
the purchase financing
of three (3) container vessels
Issue Date: __________, ____
MATURITY DATE
__________, ____
[ ] (the "Company"), for value
received, hereby promises to pay to the order of [ ]
or registered assigns the principal sum of _____________________________
DOLLARS (USD___________) on the maturity date specified above. This
Note shall bear interest on the unpaid principal amount hereof from time
to time outstanding from the date hereof to but excluding the date due
at the Interest Rate for each Interest Period (as such term is defined
in the Loan Agreement referred to below) and shall be payable in arrears
on each Interest Payment Date on a basis of the actual number of days
elapsed over a year of three hundred sixty (360) days including the
first day of the relevant Interest Period or portion thereof but
excluding such Interest Payment Date), until the principal hereof is
paid. Principal on this Note shall be payable on each Repayment Date in
the amounts set forth in Schedule 1 attached hereto subject to any HDW
* exercised by the Company pursuant to Section 5.03 of the Loan
Agreement. Capitalized terms contained herein and not defined herein,
shall have the meanings specified in a certain Loan Agreement
dated March 14, 1994 (the "Loan Agreement") by and among American
President Lines, Ltd., Kreditanstalt fur Wiederaufbau, Commerzbank AG,
Hamburg, Commerzbank AG (Kiel Branch), Dresdner Bank AG in Hamburg,
Vereins-und Westbank AG, Deutsche Schiffsbank AG, Norddeutsche
Landesbank-Girozentrale, Deutsche Verkehrs-Bank AG and Banque
Internationale a Luxembourg S.A.
The interest so payable, and punctually paid or duly
provided for, on any such Interest Payment Date will, as provided in the
Loan Agreement, be paid by the Company to the Agent for payment to the
Person in whose name this Note is registered at the close of business on
the date for payment of such interest. Any such interest not so
punctually paid or duly provided for shall be paid together with default
interest which shall accrue on the amount of such overdue sum in the
case of payments due as more fully provided in the Loan Agreement.
Under the Loan Agreement, the Company is obligated to pay
interest on and the principal of this Note to the Agent in the manner as
provided therein, in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public
and private debts.
This Note is subject to prepayment and acceleration as
more fully described in the Loan Agreement.
This Note is one of a duly authorized issue of Notes
issued and to be issued under the Loan Agreement.
Reference is made to the Loan Agreement and all
supplements and amendments thereto (a copy of which is on file with the
Company at its principal corporate office) for a more complete statement
of the terms and provisions thereof, including a statement of the
properties thereby conveyed, pledged and assigned, the nature and extent
of the security, the respective rights thereunder of the Company, and
the Holders of the Notes, and the terms upon which the Notes are, and
are to be, executed and delivered, to all of which terms and conditions
in the Loan Agreement each Holder hereof agrees by its acceptance of
this Note.
On the Fixed Rate Conversion Date, the Interest Rate on
this Note shall be converted to the Fixed Rate. Upon such conversion,
the Holders shall exchange this Note for a new Fixed Rate Note or Notes
by delivery of this Note to the principal office of the Registrar or at
an office or agency maintained for that purpose.
If an Event of Default shall occur and be continuing, the
principal of this Note may be declared due and payable in the manner and
with the effect provided in the Loan Agreement and the Agent may
exercise whatever rights and remedies provided for therein.
The right of the Holder of this Note to institute action
for any remedy under the Loan Agreement, including the enforcement of
payment of any amount due hereon, is subject to certain restrictions
specified in the Loan Agreement.
As provided in the Loan Agreement and subject to certain
limitations therein set forth, this Note is transferable, and upon
surrender of this Note for registration of transfer at the principal
office of the Registrar, or at the office or agency maintained for such
purpose, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Registrar duly executed by, the
Holder or his attorney duly authorized in writing, one or more new Notes
of the same maturity and type and of authorized denominations and for
the same aggregate principal amount will be issued to the designated
transferee or transferees.
As provided in the Loan Agreement and subject to certain
limitations therein set forth, this Note is exchangeable for a like
aggregate principal amount of LIBO Rate Notes of the same maturity and
type and of authorized denominations, as requested by the Holder
surrendering the same, upon presentation thereof for such purpose at the
principal office of the Registrar, or at an office or agency maintained
for such purpose.
Prior to due presentment for registration of exchange or
transfer of this Note, the Agent, the Paying Agent and the Registrar may
deem and treat the Person in whose name this Note is registered as the
absolute owner hereof for the purpose of receiving payment of the
principal of and interest on this Note and for all other purposes
whatsoever whether or not this Note be overdue, and neither the Agent,
the Paying Agent nor the Registrar shall be affected by notice to the
contrary.
This Note shall not be entitled to any benefit under the
Loan Agreement or be valid or obligatory for any purpose unless this
Note has been executed pursuant to the provisions in the Loan Agreement.
AS PROVIDED IN THE LOAN AGREEMENT, THIS NOTE SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
NEW YORK.
IN WITNESS WHEREOF, the Company has caused this
instrument to be duly executed under its corporate seal.
[
]
By:___________________
Title:
Attest:
By:_____________________
Title:
SCHEDULE 1
Maturity Dates, Principal Amounts and
Initial Interest Rates of Notes
Principal Interest
Maturity Date Amount Rate
[Schedules to be
added to Notes]
APPENDIX A-2A
FORM OF FIXED RATE NOTES
[Daewoo Vessel]
NOTE
No.______________$_____________
[ ]
Issued in connection with
the purchase financing of
three (3) container vessels
INTEREST RATE MATURITY DATE ISSUE
DATE
[ ] (the "Company"), for value
received, hereby promises to pay to [ ] or registered
assigns the principal sum of ________________ DOLLARS (USD____________)
on the maturity date specified above. This Note shall bear interest at
the rate specified above on the unpaid principal amount thereof from
time to time outstanding from the date thereof to but excluding the date
due at the Interest Rate for each Interest Period beginning on or after
the Fixed Rate Conversion Date (as defined in the Loan Agreement
referred to below) and shall be payable in arrears on each Interest
Payment Date on a basis of the actual number of days elapsed over a year
of three hundred sixty (360) days including the first day of the
relevant Interest Period or portion thereof but excluding such Interest
Payment Date. Principal on this Note shall be payable on each Repayment
Date in the amounts set forth in Schedule 1 attached hereto subject to
any Daewoo * exercised by the Company pursuant to Section 5.03 of the
Loan Agreement. Capitalized terms contained herein and not defined
herein shall have the meanings specified in a certain Loan Agreement
dated March 14, 1994 (the "Loan Agreement") by and among American
President Lines, Ltd., Kreditanstalt fur Wiederaufbau, Commerzbank AG,
Hamburg, Commerzbank AG (Kiel Branch), Dresdner Bank AG in Hamburg,
Vereins-und Westbank AG, Deutsche Schiffsbank AG, Norddeutsche
Landesbank-Girozentrale, Deutsche Verkehrs-Bank AG and Banque
Internationale a Luxembourg S.A.
The interest so payable, and punctually paid or duly
provided for, on any such Interest Payment Date will, as provided in the
Loan Agreement, be paid by the Company to the Syndicate Agent for
payment to the Person in whose name this Note is registered at the close
of business on the date for payment of such interest. Any such interest
not so punctually paid or duly provided for shall be paid together with
default interest which shall accrue on the amount of such overdue sum in
the case of payments due as more fully provided in the Loan Agreement.
Under the Loan Agreement, the Company is obligated to pay
interest on and the principal of this Note to the Syndicate Agent in the
manner as provided therein, in such coin or currency of the United
States of America as at the time of payment is legal tender for payment
of public and private debts.
This Note is subject to prepayment and acceleration as
more fully described in the Loan Agreement.
This Note is one of a duly authorized issue of Notes
issued and to be issued under the Loan Agreement.
Reference is made to the Loan Agreement and all
supplements and amendments thereto (a copy of which is on file with the
Company at its principal corporate office) for a more complete statement
of the terms and provisions thereof, including a statement of the
properties thereby conveyed, pledged and assigned, the nature and extent
of the security, the respective rights thereunder of the Company and the
Holders of the Notes, and the terms upon which the Notes are, and are to
be, executed and delivered, to all of which terms and conditions in the
Loan Agreement each Holder hereof agrees by its acceptance of this Note.
On a LIBO Rate Conversion Date, the Interest Rate on this
Note shall be converted to a LIBO Rate. Upon such conversion, the
Holders shall exchange this Note for a new LIBO Rate Note or Notes by
delivery of this Note to the principal office of the Registrar or at an
office or agency maintained for that purpose.
If an Event of Default shall occur and be continuing, the
principal of the Notes may be declared due and payable in the manner and
with the effect provided in the Loan Agreement and the Syndicate Agent
may exercise the rights and remedies provided for therein.
The right of the Holder of this Note to institute action
for any remedy under the Loan Agreement, including the enforcement of
payment of any amount due hereon, is subject to certain restrictions
specified in the Loan Agreement.
As provided in the Loan Agreement and subject to certain
limitations therein set forth, this Note is transferable, and upon
surrender of this Note for registration of transfer at the principal
office of the Registrar, or at the office or agency maintained for such
purpose, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Registrar duly executed by, the
Holder or his attorney duly authorized in writing, one or more new Notes
of the same maturity and type and of authorized denominations and for
the same aggregate principal amount will be issued to the designated
transferee or transferees.
As provided in the Loan Agreement and subject to certain
limitations therein set forth, Notes are exchangeable for a like
aggregate principal amount of Notes of the same maturity and type and of
authorized denominations, as requested by the Holder surrendering the
same, upon presentation thereof for such purpose at the principal office
of the Registrar, or at an office or agency maintained for such purpose.
Prior to due presentment for registration of exchange or
transfer of this Note, the Syndicate Agent, the Paying Agent and the
Registrar may deem and treat the Person in whose name this Note is
registered as the absolute owner hereof for the purpose of receiving
payment of the principal of and interest on this Note and for all other
purposes whatsoever whether or not this Note be overdue, and neither the
Syndicate Agent, the Paying Agent nor the Registrar shall be affected by
notice to the contrary.
This Note shall not be entitled to any benefit under the
Loan Agreement or be valid or obligatory for any purpose unless this
Note has been executed on behalf of the Company by the manual signature
of an authorized officer of the Company.
AS PROVIDED IN THE LOAN AGREEMENT, THIS NOTE SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
NEW YORK (OTHER THAN THE LAW OF THE STATE OF NEW YORK GOVERNING CHOICE
OF LAW).
IN WITNESS WHEREOF, the Company has caused this
instrument to be duly executed under its corporate seal.
[ ]
By:___________________
[Title]
Attest:
By:_______________________
[Title]
Issue Date:
APPENDIX A-2B
FORM OF LIBO RATE NOTE
[Daewoo Vessel]
NOTE
No. $_______________
[ ]
Issued in connection with
the purchase financing
of three (3) container vessels
Issue Date: __________, _____
MATURITY DATE
__________, ____
[ ] (the "Company"), for value
received, hereby promises to pay to the order of [ ]
or registered assigns the principal sum of _____________________________
DOLLARS (USD___________) on the maturity date specified above. This
Note shall bear interest on the unpaid principal amount hereof from time
to time outstanding from the date hereof to but excluding the date due
at the Interest Rate for each Interest Period (as such term is defined
in the Loan Agreement referred to below) and shall be payable in arrears
on each Interest Payment Date on a basis of the actual number of days
elapsed over a year of three hundred sixty (360) days including the
first day of the relevant Interest Period or portion thereof but
excluding such Interest Payment Date), until the principal hereof is
paid. Principal on this Note shall be payable on each Repayment Date in
the amounts set forth in Schedule 1 attached hereto subject to any
Daewoo * exercised by the Company pursuant to Section 5.03 of the
Loan Agreement. Capitalized terms contained herein and not defined
herein, shall have the meanings specified in a certain Loan Agreement
dated March 14, 1994 (the "Loan Agreement") by and among American
President Lines, Ltd., Kreditanstalt fur Wiederaufbau, Commerzbank AG,
Hamburg, Commerzbank AG (Kiel Branch), Dresdner Bank AG in Hamburg,
Vereins-und Westbank AG, Deutsche Schiffsbank AG, Norddeutsche
Landesbank-Girozentrale, Deutsche Verkehrs-Bank AG and Banque
Internationale a Luxembourg S.A.
The interest so payable, and punctually paid or duly
provided for, on any such Interest Payment Date will, as provided in the
Loan Agreement, be paid by the Company to the Syndicate Agent for
payment to the Person in whose name this Note is registered at the close
of business on the date for payment of such interest. Any such interest
not so punctually paid or duly provided for shall be paid together with
default interest which shall accrue on the amount of such overdue sum in
the case of payments due as more fully provided in the Loan Agreement.
Under the Loan Agreement, the Company is obligated to pay
interest on and the principal of this Note to the Syndicate Agent in the
manner as provided therein, in such coin or currency of the United
States of America as at the time of payment is legal tender for payment
of public and private debts.
This Note is subject to prepayment and acceleration as
more fully described in the Loan Agreement.
This Note is one of a duly authorized issue of Notes
issued and to be issued under the Loan Agreement.
Reference is made to the Loan Agreement and all
supplements and amendments thereto (a copy of which is on file with the
Company at its principal corporate office) for a more complete statement
of the terms and provisions thereof, including a statement of the
properties thereby conveyed, pledged and assigned, the nature and extent
of the security, the respective rights thereunder of the Company, and
the Holders of the Notes, and the terms upon which the Notes are, and
are to be, executed and delivered, to all of which terms and conditions
in the Loan Agreement each Holder hereof agrees by its acceptance of
this Note.
On a Fixed Rate Conversion Date, the Interest Rate on
this Note shall be converted to a Fixed Rate. Upon such conversion, the
Holders shall exchange this Note for a new Fixed Rate Note or Notes by
delivery of this Note to the principal office of the Registrar or at an
office or agency maintained for that purpose.
If an Event of Default shall occur and be continuing, the
principal of this Note may be declared due and payable in the manner and
with the effect provided in the Loan Agreement and the Syndicate Agent
may exercise whatever rights and remedies provided for therein.
The right of the Holder of this Note to institute action
for any remedy under the Loan Agreement, including the enforcement of
payment of any amount due hereon, is subject to certain restrictions
specified in the Loan Agreement.
As provided in the Loan Agreement and subject to certain
limitations therein set forth, this Note is transferable, and upon
surrender of this Note for registration of transfer at the principal
office of the Registrar, or at the office or agency maintained for such
purpose, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Registrar duly executed by, the
Holder or his attorney duly authorized in writing, one or more new Notes
of the same maturity and type and of authorized denominations and for
the same aggregate principal amount will be issued to the designated
transferee or transferees.
As provided in the Loan Agreement and subject to certain
limitations therein set forth, this Note is exchangeable for a like
aggregate principal amount of LIBO Rate Notes of the same maturity and
type and of authorized denominations, as requested by the Holder
surrendering the same, upon presentation thereof for such purpose at the
principal office of the Registrar, or at an office or agency maintained
for such purpose.
Prior to due presentment for registration of exchange or
transfer of this Note, the Syndicate Agent, the Paying Agent and the
Registrar may deem and treat the Person in whose name this Note is
registered as the absolute owner hereof for the purpose of receiving
payment of the principal of and interest on this Note and for all other
purposes whatsoever whether or not this Note be overdue, and neither the
Syndicate Agent, the Paying Agent nor the Registrar shall be affected by
notice to the contrary.
This Note shall not be entitled to any benefit under the
Loan Agreement or be valid or obligatory for any purpose unless this
Note has been executed pursuant to the provisions in the Loan Agreement.
AS PROVIDED IN THE LOAN AGREEMENT, THIS NOTE SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
NEW YORK (OTHER THAN THE LAW OF THE STATE OF NEW YORK GOVERNING CHOICE
OF LAW).
IN WITNESS WHEREOF, the Company has caused this
instrument to be duly executed under its corporate seal.
[
]
By:___________________
Title:
Attest:
By:_____________________
Title:
SCHEDULE 1
Maturity Dates, Principal Amounts and
Initial Interest Rates of Notes
Principal
Maturity Date Amount Interest
Rate
APPENDIX B-1
[FORM SUBJECT TO REVISION TO
CONFORM TO LAWS OF FLAG STATE]
FIRST PREFERRED SHIP MORTGAGE ON
THE " " TO
[ ]
THIS FIRST PREFERRED SHIP MORTGAGE dated this _ day of [ ], 199 ,
made and given by [ ], a [ ]
corporation (the "Borrower") to [ ], a [ ]
organized and existing under the Laws of the Federal Republic of Germany
[for the Daewoo Mortgages, the Syndicate Agent and the Syndicate Members
shall be named as mortgagees] (the "Mortgagee", which term shall include
the Mortgagee's successors and assignees).
WHEREAS:
A. The Borrower is the sole owner of the Republic of The
Marshall Islands flag vessel, " ", Official No. , of
Gross Tons and Net Tons (the "Vessel", which term shall include
all of the boilers, engines, machinery, bowsprits, masts, spars, sails,
rigging, boats, anchors, cables, apparel, furniture, fitting, equipment
and all other appurtenances to the Vessel appertaining or belonging,
whether now owned or hereafter acquired, whether on board or not, and
all additions, improvements and replacements hereafter made in or to the
Vessel, or any part thereof, or in or to the equipment and appurtenances
aforesaid, but shall exclude any leased equipment).
B. Pursuant to that certain Loan Agreement dated March
14, 1994 among [the Borrower] [American President Lines, Ltd. ("APL")],
the Mortgagee and [other Lender] (the "Loan Agreement") (a copy of which
without Exhibits is attached hereto as Exhibit A), the Mortgagee has
agreed to make loans with respect to three (3) vessels, including the
Vessel, to [the Borrower] [APL], or to [APL Newbuildings, Ltd. ("APLN")]
[the Borrower], with respect to such of said Vessels to be owned by [the
Borrower] [APL] or to be transferred by [the Borrower] [APL] to, and
owned by [APLN] [the Borrower], pursuant to that certain Agreement to
Acquire and Charter, dated the date of the Loan Agreement, among [the
Borrower] [APL], [APLN] [the Borrower], the Mortgagee and [other Lender]
[(a copy of which is attached as Exhibit A-1)], such loans to be in an
aggregate amount not to exceed [ ] United States Dollars (USD
) (collectively, the "Loans"), as evidenced in part by Notes
in the aggregate principal amount of United States
Dollars (USD _____________) dated , 199 (the "[HDW] [Daewoo]
Notes"), with respect to the Vessel by the Borrower in favor of the
Mortgagee (a form of which without Exhibits is attached hereto as
Exhibit B), and in order to induce the Mortgagee to make the loans, the
Borrower has agreed to grant this Mortgage to the Mortgagee to secure
the Borrower's obligations to the Mortgagee under the [HDW] [Daewoo]
Notes and its obligations relating thereto under the Loan Agreement, and
the remainder of the Loans as evidence by other [HDW] [Daewoo] notes,
whether issued by the Borrower or [APLN] [APL] with respect to such
vessels other than the Vessel.
C. The term "Obligations" shall mean all of the
obligations of the Borrower to pay any amount under this Mortgage, the
Loan Agreement insofar as they relate to the [HDW] [Daewoo] Tranche
Loans and the [HDW] [Daewoo] Notes to the Mortgagee [and the Syndicate
Members] whether by way of reimbursement, interest, indemnity or for any
other reasons whatsoever.
D. To secure payment of the Obligations to the
Mortgagee, the Borrower has duly authorized the execution, delivery and
recording of this First Preferred Ship Mortgage under and pursuant to
the laws of the Republic of The Marshall Islands.
[E. Borrower, on the date hereof, has entered into that
certain bareboat charter dated ____________, 199_ (the [HDW] [Daewoo]
Charter) with APL (the "Charterer").]
NOW, THEREFORE, THIS DEED, WITNESSETH:
That the Borrower, in consideration of the premises and
other valuable consideration, the receipt whereof is hereby
acknowledged, and for the purpose of securing payment of the Obligations
and to secure the performance, observance and accuracy of and compliance
with all the covenants, representations, warranties, terms and
conditions in the [HDW] [Daewoo] Notes, the Loan Agreement insofar as it
relates to the [HDW] [Daewoo] Notes, in favor of the Mortgagee [and the
Syndicate Members] and in this Mortgage expressed, for the benefit of
the Mortgagee, has granted, conveyed, mortgaged, pledged, assigned,
transferred, set over and confirmed and does by these presents grant,
convey, mortgage, pledge, assign, transfer, set over and confirm unto
the Mortgagee the whole of the Vessel;
TO HAVE AND TO HOLD the same unto the Mortgagee forever
in accordance with the terms herein set forth for the enforcement of the
payment of the Obligations and to secure the performance, observance and
accuracy of and compliance with all the covenants, representations,
warranties, terms and conditions contained in the [HDW] [Daewoo] Notes,
the Loan Agreement insofar as it relates to the [HDW] [Daewoo] Notes,
the Loans and this Mortgage expressed, for the benefit of the Mortgagee;
PROVIDED ONLY and the conditions of these presents are
such that if and when the Mortgagee shall have received (i) the full
amount of the Obligations or (ii) the full amount required to be paid in
respect of the Subportion of the [HDW] [Daewoo] Tranche relating to the
Vessel evidenced by the [HDW] [Daewoo] Notes in accordance with the
provisions of Section 5.04 of the Loan Agreement, together with payment
of all other amounts then due and owing secured by this Mortgage, these
presents and the rights of the Mortgagee hereunder shall cease,
determine and be void, otherwise to be and remain in full force and
effect.
The Borrower for itself, its successors and assignees,
hereby covenants and agrees with the Mortgagee that the Vessel is to be
held by the Mortgagee as long as the obligation of the Borrower under
the [HDW] [Daewoo] Notes, the Loan Agreement to the extent it relates to
the [HDW] [Daewoo] Notes and this Mortgage remains in force, subject to
the further covenants, conditions, provisions, terms and uses
hereinafter set forth.
ARTICLE I
REPRESENTATIONS OF THE BORROWER
(1) The Borrower is a corporation duly organized and
validly existing in good standing under the laws of the jurisdiction of
its incorporation with full corporate power and authority to conduct its
business as the same is presently conducted;
(2) the Borrower has legal power and authority to enter
into and carry out the terms of this Mortgage;
(3) this Mortgage has been duly authorized by all
necessary action, corporate or other, on the part of the Borrower, and
this Mortgage constitutes, and upon due execution and delivery by the
Borrower the Mortgage will constitute, in accordance with its respective
terms, a legal, valid and binding instrument enforceable against the
Borrower, except to the extent limited by applicable bankruptcy,
reorganization, insolvency, moratorium or other laws of general
application relating to or affecting the enforcement of creditors'
rights from time to time in effect;
(4) except as previously disclosed to the Mortgagee in
writing, there are no actions, suits or proceedings pending or, to the
Borrower's knowledge, threatened against the Borrower or any of its
properties affecting the Mortgage which would materially and adversely
affect the ability of the Borrower to perform its obligations hereunder;
(5) the consummation of the transactions contemplated
by, and compliance by the Borrower with all the terms and provisions of,
the Mortgage will not violate any provisions of the Certificate of
Incorporation or Bylaws of the Borrower and will not result in a breach
of the terms and provisions of, or constitute a default under, any other
agreement or undertaking by the Borrower or by which it or any of its
property is bound or any order of any court or administrative agency
entered in any proceedings binding on the Borrower, or violate any
applicable statute, rule or regulation;
(6) the Borrower is not in default and no condition
exists which with notice or lapse of time or both would constitute a
default by the Borrower, in any respect which would materially and
adversely affect the ability of the Borrower to perform its obligations
under this Mortgage, under any mortgage, loan agreement, deed of trust,
indenture or other agreement with respect thereto or evidence of
indebtedness to which it is a party or by which it is bound, and is not
in violation of or in default, in any respect which would materially and
adversely affect the ability of the Borrower to perform its obligations
under this Mortgage, under any order, writ, judgment or decree of any
court, arbitrator or governmental authority, commission, board, agency
or instrumentality, domestic or foreign;
(7) the Borrower has more than one place of business and
the location of the place of business which is its chief executive
office is 1111 Broadway, Oakland, California 94607;
(8) all taxes (other than taxes based on or measured by
income), liability for the payment of which has been incurred by the
Borrower in connection with the execution, delivery and performance by
it of the Mortgage, have been paid (or provided for in its accounts if
not payable on or prior to the delivery date of the Vessel);
(9) all governmental consents, licenses, permissions,
approvals, registrations or authorizations or declarations required (i)
to enable it lawfully to enter into and perform its respective
obligations under this Mortgage, (ii) to ensure that its respective
obligations hereunder and thereunder are legal, valid and enforceable
and (iii) to make this Mortgage admissible in evidence in the Republic
of The Marshall Islands, and the United States of America has been
obtained or made and are in full force and effect;
(10) it has not taken any corporate action nor to its
knowledge have any other steps been taken or legal proceedings been
started or threatened against it for its winding-up, dissolution or
reorganization or for the appointment of a receiver, administrative
receiver, administrator, trustee or similar officer of it or of any or
all of its respective assets and revenues;
(11) except for registration of this Mortgage in
accordance with the provisions of the Republic of the Marshall Islands'
Maritime Act of 1990, as amended, it is not necessary to ensure the
legality, validity, enforceability or admissibility in evidence of this
Mortgage in the country of the Borrower or the United States of America,
or the flag of its registry or, to the best of its knowledge, elsewhere,
that it be filed, recorded or enrolled with any governmental authority
or agency in the country of the Borrower or, to the best of its
knowledge, elsewhere, or that it be stamped with any stamp, registration
or similar transaction tax in the country of the Borrower or the United
States of America, or the flag of its registry or to the best of its
knowledge, elsewhere;
(12) the Vessel is duly documented in the name of the
Borrower under the flag of the Republic of The Marshall Islands; and
(13) the Vessel is in the absolute and unencumbered
ownership of the Borrower except as contemplated by this Mortgage [and
the Second Mortgage].
ARTICLE II
COVENANTS OF THE BORROWER
(14) The Borrower represents and warrants that it
lawfully owns and possesses the Vessel free from any mortgage, security
interest, lien or charge whatsoever other than the Mortgage and
covenants with the Mortgagee that it shall warrant and defend the title
to and lawful possession of the Vessel and every part thereof for the
benefit of the Mortgagee, and shall hold harmless and indemnify the
Mortgagee against the claims and demands of all Persons whomsoever
arising as the result of any mortgage, security interest, lien or charge
whatsoever on the Vessel; provided that the Borrower's foregoing
obligations (other than its agreements to defend title and indemnify and
hold the Mortgagee harmless) shall not apply to the following:
(a) liens for crew's wages ("Crew's Wages") and salvage
(including contract salvage) which shall not have been due and payable
for more than ten (10) days after termination of a voyage or which shall
then be contested in good faith by the Borrower [or the Charterer] in
appropriate proceedings diligently prosecuted and shall not subject the
Vessel or any part thereof to risk, forfeiture or loss, or in any
material way prejudice or impair the Mortgagee's rights or interest in
or under the Mortgage;
(b) liens for Crew's Wages and salvage (including
contract salvage) and general average which are either unclaimed or
covered by insurance;
(c) liens incident to current operations (except for
Crew's Wages, salvage and general average) not more than thirty (30)
days past due, liens for the wages of a stevedore when employed directly
by the Shipowner or the operator, master or any agent of the Vessel, or
liens covered by insurance and any deductible applicable thereto;
(d) liens for repairs or with respect to changes made in
the Vessel pursuant to Section 25(b) hereof;
(e) in the event the use of or title to the Vessel is
requisitioned by any government or any agency thereof insofar as it
relates to possession of the Vessel;
[(f) in the case of a Daewoo Vessel, the Second
Mortgage];
(g) liens for taxes or assessments or other governmental
charges and levies not yet due and payable, or the validity of which is
being contested by the Borrower [or the Charterer] in good faith by
appropriate proceedings upon stay of execution of the enforcement
thereof and for which adequate reserves in accordance with Generally
Accepted Accounting Principles or other appropriate provision has been
made;
(h) in the case of any actual or constructive total loss
or an agreed or compromised total loss of the Vessel insofar as it
relates to possession of the Vessel; and
(i) insofar as it relates to possession of the Vessel,
to charters permitted by the terms of this Mortgage and the Loan
Agreement and by applicable law [and to subcharters permitted by the
terms of the [HDW] [Daewoo] Charter];
provided that any liens described in paragraphs (c), (d) and [(g)]
hereof shall be permitted only to the extent they are subordinate to
lien of the Mortgage.
(15)(a) Neither the Borrower, any charterer, the master
of the Vessel nor any other Person has or shall have any right, power or
authority to create, incur or permit to be placed or imposed upon the
Vessel any lien whatsoever, other than this Mortgage [the Second
Mortgage] and the liens referred to in Section 14 hereof.
(b) The Borrower shall forthwith remove or cause to be
removed within thirty (30) days of its knowledge thereof any lien or
encumbrance (other than the items referred to in Section 14(e), (h) and
(i) of this Article II) which shall be filed against the Vessel, unless
the same is being contested by appropriate proceedings in good faith and
(i) such proceedings shall suspend the collection of the related claim
from the Vessel, (ii) neither the Vessel nor any interest therein would
be in any danger of being sold, forfeited or lost during the pendency of
such proceedings, and (iii) the Borrower or the Charterer shall have
furnished such security, if any, or cause or make adequate provision for
release prior to foreclosure, sale, or similar disposition as may be
required in such proceedings.
(16) If the Vessel shall be attached, levied upon or
taken into custody by virtue of any legal proceeding in any court or
tribunal or by any government or other authority, the Borrower or the
Charterer shall promptly notify the Mortgagee thereof by telex and
within fifteen (15) days after any such arrest (except in the case of
requisition or other taking by any government or governmental body)
shall cause the Vessel to be released within thirty (30) days and shall
promptly notify the Mortgagee thereof in the manner aforesaid.
(17) Except as provided in the Granting Clause hereof
the Borrower has not assigned, pledged or otherwise granted a security
interest in or lien on, and shall not assign, pledge or otherwise grant
a security interest in or lien on, the whole or any part of, any rights
assigned by the Granting Clause hereof.
[Include Second Mortgage in case of a Daewoo Vessel]
(18) Upon the occurrence of any Event of Default, the
Borrower shall promptly notify the Mortgagee by telex or telecopy,
confirmed by letter, unless such Event of Default shall have been cured.
(19) The Borrower shall make all payments of principal
and interest on the [HDW] [Daewoo] Notes and shall perform in full its
obligations and liabilities under this Mortgage and the Loan Agreement
to the extent it relates to the [HDW] [Daewoo] Notes and the [HDW]
[Daewoo] Security Documents.
(20) (a) The Borrower represents and warrants that on
the date hereof the Vessel is, and the Borrower covenants with the
Mortgagee that it shall (subject to clauses (b) and (c) below) hereafter
remain, documented under the laws of the Republic of The Marshall
Islands.
(b) The Borrower shall have the right to change the
registry and flag of the Vessel to the registry and flag of the Republic
of Panama, the Republic of Liberia, the Republic of Vanuatu and the
Commonwealth of The Bahamas. Prior to any such change in registry and
flag, the Borrower shall (i) obtain all necessary approvals of
governmental authorities including, without limitation, those of the
then current country of the Vessel's registry and the jurisdiction of
its incorporation, if any, and otherwise comply with all applicable law
if any, (ii) execute and deliver to the Mortgagee, in form and substance
reasonably satisfactory to the Mortgagee, and after execution by the
Mortgagee and immediately after the registration of the Vessel, file for
recordation, a replacement mortgage for this Mortgage (the "Replacement
Mortgage"), with terms and conditions substantially similar to the terms
and conditions of this Mortgage, which Replacement Mortgage shall
constitute a first priority lien on the Vessel and shall be in
compliance with all applicable laws and regulations of any such country
where the Vessel is re-registered and re-flagged, and immediately after
the filing of the Replacement Mortgage for recordation deliver to the
Mortgagee (A) an opinion of counsel reasonably satisfactory to the
Mortgagee confirming that any Replacement Mortgage constitutes such a
first priority lien under the laws and regulations of such country and
is a "preferred mortgage" within the meaning of 46 U.S.C. Section
31301(b)(B), and that, if there shall have been any change in the
applicable laws and regulations of such country of re-registration and
re-flagging after March 14, 1994, such change does not materially
adversely affect the interests of the Mortgagee with respect to the
Vessel, and (B) a certificate of the Borrower that the Vessel is duly
documented under the laws of the country where the Vessel is
re-registered and re-flagged, and that the Vessel is free of any claim,
lien, charge, mortgage or other encumbrance of any character (except the
Replacement Mortgage [and the Second Mortgage]). In connection with any
such change of registry and flag, the Mortgagee shall, at the request of
the Borrower and at the Borrower's cost and expense, and upon compliance
with subclauses (i) and (ii) of this clause (b), execute and deliver to
the Borrower the Replacement Mortgage, an instrument in recordable form
duly acknowledging the satisfaction and discharge of this Mortgage, and
any other instrument or document necessary or appropriate for the
orderly consummation of the change in registry and flag and replacement
of the Mortgage. Notwithstanding the foregoing, no such reflagging shall
be permitted (x) if an Event of Default or Incipient Default shall have
occurred and be continuing or (y) if in the sole opinion of the
Mortgagee such reflagging will, or may be expected to, adversely affect
the rights or remedies of the Mortgagee under the Loan Documents, the
value of the Vessel, or will be or may otherwise be expected to be,
disadvantageous to the Mortgagee.
(c) The Borrower shall have the right to change the
registry and flag of the Vessel to the registry and flag of the United
States of America. Prior to any such change in registry and flag, the
Borrower shall (i) obtain all necessary approvals of governmental
authorities including, without limitation, those of the then current
country of the Vessel's registry and the jurisdiction of its
incorporation, if any, and otherwise comply with all applicable law, if
any, (ii) execute and deliver to the Mortgagee (or an approved trustee
to act as mortgagee), a replacement mortgage with terms and conditions
substantially the same as the terms and conditions of this Mortgage, in
form and substance reasonably satisfactory to the Mortgagee (the
"Replacement Mortgage"), and after execution by the Mortgagee and
immediately after the registration of the Vessel, file for recordation,
the Replacement Mortgage for this Mortgage, which Replacement Mortgage
shall constitute a first priority lien on the Vessel and shall be in
compliance with all applicable laws and regulations of the United States
of America, and, immediately after the filing of the Replacement
Mortgage for recordation, deliver to the Mortgagee (A) an opinion of
counsel reasonably satisfactory to the Mortgagee confirming that any
Replacement Mortgage constitutes such a first "preferred" ship mortgage
under the laws and regulations of the United States of America and (B) a
certificate of the Borrower that the Vessel is duly documented under the
laws of the United States of America, and that the Vessel is free of any
claim, lien, charge, mortgage or other encumbrance of any character
(except the Replacement Mortgage [and the Second Mortgage] [and the
Charter]). In connection with any such change of registry and flag, the
Mortgagee shall, at the request of the Borrower and at the Borrower's
cost and expense, and upon compliance with subclauses (i) and (ii) of
this clause (c), execute and deliver to the Borrower the Replacement
Mortgage, an instrument in recordable form duly acknowledging the
satisfaction and discharge of this Mortgage, and any other instrument or
document necessary or appropriate for the orderly consummation of the
change in registry and flag and replacement of the Mortgage.
Notwithstanding the foregoing, no such reflagging shall be permitted if,
an Event of Default or Incipient Default shall have occurred and be
continuing.
(21) The Borrower (x) shall not cause or permit the
Vessel to be operated in any manner contrary to applicable law except to
the extent that such provision shall have been contested in good faith
by the Borrower in appropriate proceedings diligently prosecuted and
shall not subject the Vessel to risk, forfeiture or loss, or in any
material way prejudice or impair the Mortgagee's rights or interests in
or under the Mortgage, (y) shall not operate the Vessel in any way
contrary to any of the terms or conditions of the insurance required by
Section 29 hereof (unless it shall first have arranged for continuation
of the coverage afforded thereby), and (z) shall not abandon the Vessel
in any foreign port unless (i) there shall have been an actual or
constructive total loss or an agreed or compromised total loss of the
Vessel; or (ii) there has been any other loss with respect to the Vessel
and the Borrower shall not have had reasonable time to repair or rectify
the same; or (iii) the use or title of the Vessel has been taken or
requisitioned by any government or governmental authority; provided,
however, that if an Event of Default shall have occurred and be
continuing, the Borrower shall not abandon the Vessel unless it shall
have first received the written consent of the Mortgagee.
(22) The Borrower shall pay and discharge or cause to be
paid and discharged when due and payable all claims against, and taxes,
assessments, governmental charges, fines and penalties imposed on, the
Vessel or the Vessel's cargo; provided, however, that the Borrower shall
have the right to contest or cause to be contested, in good faith and by
appropriate proceedings, any such claim, tax, assessment, governmental
charge, fine or penalty and, pending such contest, may defer the payment
thereof so long as such contest or deferment in payment shall not
subject the Vessel or any part thereof to risk or forfeiture or loss, or
in any material way prejudice or impair the Mortgagee's rights or
interests in or under the Mortgage.
(23) The Borrower shall, at its expense and at no cost
to the Mortgagee, comply with and satisfy all of the provisions of the
flag of the Republic of The Marshall Islands, in order to establish,
record and maintain the Mortgage as a preferred mortgage thereunder on
the Vessel until it is re-registered, reflagged and the Mortgage is
replaced by a Replacement Mortgage as provided in Section 20(b) hereof.
(24) The Borrower shall place and at all times and
places shall retain a properly certified copy of the Mortgage on board
the Vessel with her papers and shall cause such certified copy and such
papers to be exhibited to any and all Persons having business with the
Vessel and to any representative of the Mortgagee. The Borrower shall
also place and keep prominently displayed on the Vessel a framed printed
or typewritten notice in plain type which shall cover a space of not
less than six inches wide by nine inches high (or of such other
dimensions as may be required by law) reading substantially as follows:
"NOTICE OF FIRST PREFERRED SHIP MORTGAGE"
"This Vessel is owned by [ ] a
[ ] corporation (the "Shipowner"), and is covered by a
First Preferred Ship Mortgage in favor of [ ],
under authority of the Republic of The Marshall Islands. Under
the terms of said Mortgage, neither the Shipowner, any charterer,
the master of the Vessel nor any other person has any right,
power or authority to create, incur or permit to be placed or
imposed upon this Vessel any lien whatsoever other than the lien
of said Mortgage and liens for wages of a stevedore when employed
directly by the Shipowner, operator, master, or any agent of the
Vessel, for Crews' Wages, for general average, for salvage, and,
to the extent subordinate to the lien of said Mortgage, for
certain liens incident to current operations or for repairs or
changes permitted by the Mortgage."
(25)(a) The Borrower shall at all times and without cost
or expense to the Mortgagee (i) maintain and preserve, or cause to be
maintained and preserved, the Vessel in good running order and repair,
so that the Vessel shall be, insofar as due diligence can make her so,
strong and well and sufficiently tackled, apparelled, furnished,
equipped and in every respect seaworthy and in good operating condition,
ordinary wear and tear and depreciation excepted; and (ii) keep the
Vessel, or cause her to be kept, in such condition as will entitle her
to the highest classification and rating for vessels of the same age and
type of The American Bureau of Shipping, and annually shall furnish to
the Mortgagee a certificate by The American Bureau of Shipping that such
classification is maintained; provided that in any event the Borrower
shall notify the Mortgagee of any change in the classification of the
Vessel; and provided, further, that the foregoing shall not apply if
there shall have been an Event of Loss or during such period as (1) the
Vessel has been taken or requisitioned by any government or governmental
body or (2) there has been any other loss with respect to the Vessel and
the Borrower shall not have had a reasonable time to repair the same.
The Borrower shall furnish from time to time upon reasonable demand of
the Mortgagee such information and documents as the Mortgagee may
require concerning the classification of the Vessel. Except during any
period in which the provided further proviso in the first sentence of
this paragraph shall apply, the Vessel shall, and the Borrower covenants
that she will, at all times comply with all applicable laws, treaties
and conventions of the Republic of The Marshall Islands and all rules
and regulations issued thereunder, and shall have on board as and when
required thereby valid certificates showing compliance therewith except
to the extent that such provision shall have been contested in good
faith by the Borrower in appropriate proceeding diligently prosecuted,
so long as such proceeding shall not subject the Vessel or any part
thereof to risk or forfeiture or loss, or in any material way prejudice
or impair the Mortgagee's rights or interests in or under the Mortgage.
(b) The Borrower shall not make, or permit to be made,
any substantial change in the structure, type or speed of the Vessel or
change in her rig unless it shall have received the Mortgagee's prior
written approval thereto, which approval shall not be unreasonably
withheld or delayed; provided, however, that no such approval need be
obtained in respect of any change which shall be necessary to comply
with the requirements of the United States Coast Guard, the Republic of
The Marshall Islands or The American Bureau of Shipping in order to
entitle the Vessel to the classification and rating required by
paragraph (a) hereof.
(c) Until an Event of Default shall occur, the Borrower
(i) shall be suffered and permitted to retain actual possession and use
of the Vessel and (ii) shall have the right, from time to time, in its
discretion, and without application to the Mortgagee, and without
obtaining a release thereof by the Mortgagee, to dispose of, free from
the lien hereof, any boilers, engines, machinery, bowsprits, masts,
spars, sails, rigging, boats, anchors, apparel, furniture, equipment or
any other appurtenances to the Vessel that are no longer useful,
necessary, profitable or advantageous in the operation of the Vessel,
first or simultaneously replacing the same by new boilers, engines,
machinery, bowsprits, masts, spars, sails, rigging, boats, anchors,
apparel, furniture, fittings, equipment or other appurtenances of at
least equal value to the Borrower which shall forthwith become subject
to the lien of this Mortgage.
(26) The Borrower shall at all reasonable times afford
the Mortgagee or its authorized representatives full and complete access
to the Vessel for the purpose of inspecting or surveying the same and
her papers and, at the request and expense of the Mortgagee, the
Borrower shall deliver or cause to be delivered for inspection by such
parties copies of any and all contracts and documents relating to the
Vessel, whether on board or not.
(27) The Borrower shall not sell, demise charter [except
for the [HDW] [Daewoo] Charters], mortgage (except by this Mortgage [and
the Second Mortgage]) or transfer the Vessel (except any sale of the
Vessel after repayment of the amounts of the related subportion of the
[HDW] [Daewoo] Tranche in accordance with Section 5.04 of the Loan
Agreement or by way of requisition or other governmental taking by the
United States of America or the Republic of The Marshall Islands or in
accordance with Section 9.02(b) of the Loan Agreement) without the prior
written consent of the Mortgagee, which consent shall not be
unreasonably withheld. Any such written consent to any one sale, demise
charter, mortgage or transfer shall not be construed to be a waiver of
this provision with respect to any subsequent proposed sale, demise
charter, mortgage or transfer. Any sale, demise charter, mortgage or
transfer of the Vessel shall be subject to the provisions of the
Mortgage and the lien thereof.
(28) The Borrower will reimburse the Mortgagee promptly
for any and all expenditures which the Mortgagee may from time to time
make, lay out or expend in providing protection in respect of insurance,
discharge or purchase of any liens, taxes, dues, assessments,
governmental charges, tolls, fines and penalties imposed, repairs,
attorneys' fees and other matters as the Borrower is obligated herein to
provide but fails to provide. Such obligation of the Borrower to
reimburse the Mortgagee shall constitute Obligations secured by this
Mortgage, and shall be payable by the Borrower on demand, together with
interest thereon from the date of demand until the date of payment (both
before and after judgment) at the Default Interest Rate (as such rate is
set forth in Section 3.08[(a)][(b)] of the Loan Agreement). The
Mortgagee, though privileged so to do, shall be under no obligation to
the Borrower to make any such expenditures, nor shall the making thereof
relieve the Borrower of any default in that respect.
(29)(a) The Borrower shall, at its own expense, provide
and maintain insurance on or with respect to the Vessel and the
operation thereof, as follows:
(1) Marine navigating risk hull and machinery
insurance and marine war navigating risk hull and machinery
insurance, together with, at the Borrower's option, such amounts
of increased value and total loss only insurance as are permitted
by such hull and machinery insurance policies. While the Vessel
is idle or laid up, at the option of the Borrower and in lieu of
the coverage described in the immediately preceding sentence,
port risk hull and machinery insurance may be taken out on the
Vessel by the Borrower. The foregoing insurance shall be in
aggregate amounts equal at all times to the greater of (a) one
hundred ten percent (110%) of the aggregate amount of the
[HDW][Daewoo] Notes outstanding and (b) the full commercial value
of the Vessel. Any of the foregoing may provide for a deductible
amount approved by the Mortgagee, but no consent or approval of
the Mortgagee shall be required for a deductible amount of up to
One Million United States Dollars (USD1,000,000) with respect to
any one accident, occurrence or event. The preceding sentence
shall not apply in the event of an actual, constructive,
compromised or agreed total loss of the Vessel. All policies of
insurance required under this Section 29(a)(1) shall, unless the
Mortgagee shall otherwise consent in writing, be under the
broadest forms which are carried by prudent shipowners for
similar vessels engaged in similar trades (at the time of issue
of the policies in question) and approved by the Mortgagee. The
Borrower shall have the right to procure in excess of the above
requirements for its own sole benefit.
(2) Marine and war risk, full form protection and
indemnity insurance with such clubs or insurance companies
acceptable to the Mortgagee, for such amounts as the Mortgagee
may require or approve. Such protection and indemnity insurance
shall be maintained in the broadest forms generally available in
the United States/United Kingdom markets and shall include a
cross liability endorsement, if obtainable. The Borrower shall
have the right to carry, for its own benefit, excess protection
and indemnity insurance and marine multiliability insurance. The
Mortgagee shall have the right to approve the amounts of
deductibles; provided, however, that no approval of the Mortgagee
shall be required if such deductibles aggregate not more than
Five Hundred Thousand United States Dollars (USD500,000) with
respect to any single accident, occurrence or event excluding
cargo and Five Hundred Thousand United States Dollars
(USD500,000) per vessel voyage with respect to total cargo or
property carried on such voyage.
(3) Insurance against liability under law or
international convention arising out of pollution, spillage or
leakage in an amount not less than the greater of:
(y) the maximum amount available, as that
amount may from time to time change, from
the International Group of Protection and
Indemnity Associations or alternatively
such sources of pollution, spillage or
leakage coverage as are commercially
available in any absence of such coverage
by the International Group as shall be
carried by prudent shipowners for similar
vessels engaged in similar trades plus
amounts available from customary excess
insurers of such risks as excess amounts
shall be carried by prudent shipowners for
similar vessels engaged in similar trades;
and
(z) the amounts required by the laws or
regulations of the United States of
America and any applicable jurisdiction in
which the Vessel may be trading from time
to time except to the extent that any such
laws or regulations shall have been
contested in good faith by the Borrower
[or the Charterer] in appropriate
proceedings diligently prosecuted, as long
as such proceedings or the failure to
provide such insurance shall not subject
the Vessel or any part thereof to risk,
forfeiture or loss, or in any material way
prejudice or impair the Mortgagee's rights
or interests in or under this Mortgage.
The foregoing insurance shall be against such risks and in such
form as are in the reasonable opinion of the Mortgagee, necessary
or advisable for the protection of the interests of the
Mortgagee.
(4) Single interest mortgagee's insurance
covering the Mortgagee against any acts or omissions of the
Borrower whereby marine and war risk hull and machinery insurance
covered by this paragraph (a) shall or may be suspended, impaired
or defeated; and any loss under such insurance shall be payable
directly to the Mortgagee. Such single interest mortgagee's
insurance may, at the option of the Mortgagee, be placed by the
Mortgagee at the expense of the Borrower, unless the Borrower can
arrange coverage acceptable to the Mortgagee at cheaper rates
which can be directly placed by the Mortgagee.
(5) Mortgagee's additional perils insurance
(pollution), and any loss under such insurance shall be payable
directly to the Mortgagee. Such additional perils insurance may,
at the option of the Mortgagee, be placed by the Mortgagee at the
expense of the Borrower, unless the Borrower can arrange
acceptable coverage to the Mortgagee at cheaper rates which can
be directly placed by the Mortgagee.
(6) The Borrower shall carry at its own expense,
for the benefit of the Mortgagee, (i) in connection with any
voyage outside the territorial waters of the United States of
America, such insurance against political risks of confiscation
and expropriation by any government (except the United States of
America and the country of registry) as would be carried by
prudent owners and operators on similar voyages, (ii) additional
insurance in such amounts and against such risks arising from or
connected with the ownership or operation of the Vessel as from
time to time may be commonly insured against and may be
reasonably required by the Mortgagee and (iii) such other
insurance as may at the time be required by applicable law except
to the extent that such law shall have been contested in good
faith by the Borrower [or the Charterer] in appropriate
proceedings diligently prosecuted as long as such proceedings or
the failure to provide such insurance shall not subject the
Vessel or any part thereof to risk, forfeiture or loss, or in any
material way prejudice or impair the Mortgagee's rights or
interests in or under this Mortgage.
(b) (1) All insurance required to be taken out and
maintained pursuant to the terms of this Mortgage (except
insurance pursuant to Section 29(a)(4) and (5) of this
Article II) shall name the Mortgagee (as Mortgagee) [the Second
Mortgagee as defined in subsection (c), below (if a Daewoo
Vessel)], the Borrower and any permitted charterer, as named
insured or additional named insured, and the policies or
certificates of insurance shall provide that there shall be no
recourse against the Mortgagee [or the Second Mortgagee] for the
payment of premiums, commissions, club calls, assessments or
advances.
(2) All insurance carried pursuant to paragraph
(a) of this Section 29 shall contain provisions or endorsements
stating that such insurance is primary insurance without any
right of contribution with respect to any insurance carried by or
on behalf of the Mortgagee [or any other Syndicate Members] [or
the Second Mortgagee] other than as provided pursuant to this
Section 29 on the same interest insured.
(3) The policies in respect of insurance carried
pursuant to paragraph (a) hereof shall provide that at least ten
(10) days' prior written notice shall be given to the Mortgagee
and the Borrower by the underwriters of any cancellation for the
nonpayment of premiums, commissions, club calls, assessments or
advances. Each policy in respect of such insurance shall further
provide that (except in the case of automatic termination and
cancellation clauses pursuant to the terms of the war risk
policies other than for nonpayment of premium) at least ten (10)
days' prior written notice shall be given to the Mortgagee [and
the Second Mortgagee] and the Borrower by the underwriter of any
termination, cancellation, lapse or material modification of the
terms of such policy. Each policy in respect of such insurance
shall contain provisions waiving underwriters' rights of
subrogation thereunder against any assured named in such policy.
The Mortgagee shall have the right, but not the obligation, to
pay any such amounts on behalf of the Borrower which shall not
have been timely paid by the Borrower and to recover such amounts
together with interest pursuant to this Section 29.
(c) All policies of insurance in respect of
insurance required to be taken out and maintained pursuant to the terms
of this Mortgage or other evidence thereof (except policies taken out
pursuant to Sections 29(a)(4) and (a)(5) of this Article II) shall
provide that losses thereunder shall be payable (i) until this Mortgage
shall have been discharged, first to the Mortgagee for application
pursuant to this Mortgage; [(ii) and after underwriters shall have been
given written notice by the Mortgagee of discharge of this Mortgage, to
Kreditanstalt fur Wiederaufbau as mortgagee (the "Second Mortgagee")
under a Second Preferred Ship Mortgage dated [ ], 199__
for application pursuant to the Second Mortgage] and (iii) thereafter,
to the Borrower; provided, however, that such policies of insurance or
other evidence thereof shall provide that:
(1) In the case of insurance carried pursuant to
paragraph (a)(1) of this Section 29 (to the extent liability
insurances are afforded thereunder) or pursuant to paragraph
(a)(2) of this Section:
(i) if the Borrower shall not have
incurred the loss, damage or expense in question, any loss under
such insurance may be paid directly to the Person by whom such
liability covered by such policies has been incurred (whether or
not an Incipient Default or an Event of Default then exists); and
(ii) if the Borrower shall have incurred the
loss, damage or expense in question or if the Borrower shall have
paid the loss, damage or expense in question and shall have
presented to the underwriters satisfactory evidence that the
liability insured against has been discharged or is being
discharged simultaneously with such payment, any such loss under
such insurance shall be paid to the Borrower or to its order in
reimbursement if there is not then an existing Event of Default
or Incipient Default of which the underwriter has written notice
from the Mortgagee, or, if there is such an existing Event of
Default or Incipient Default, to the Mortgagee to apply such
amounts in accordance with Section 39 hereof, or (y) if such
Event of Default or Incipient Default shall have been cured or
waived, in which case such amounts shall be applied as otherwise
provided in this Section 29, and if the Mortgage shall have been
discharged, such loss shall be paid to the Borrower; and
(iii) upon the occurrence of an Event of
Loss, all insurance payments and other compensation therefor
shall be paid to the Mortgagee for application in accordance with
Section 5.04(b) of the Loan Agreement.
(2) In the case of insurance carried pursuant to
paragraph (a)(1) of this Section (to the extent liability
insurances are not afforded thereunder), so long as the accident,
occurrence or event does not result in an Event of Loss, payment
of all losses up to Two Million United States Dollars
(USD2,000,000) (or such higher figure as the Mortgagee may from
time to time approve) by all insurance underwriters with respect
to any one accident, occurrence or event may be made (i) directly
for the repair or other charges involved, (ii) directly to the
Borrower or to its order as reimbursement if the Borrower or any
permitted charterer shall have first fully repaired the damage
and paid the cost thereof and any other charges involved, and the
underwriters shall have received evidence that such repair and
payment have been made or will be made simultaneously with the
payment by the underwriters; provided that if such loss exceeds
Two Million United States Dollars (USD2,000,000), the
underwriters shall not make payment without first obtaining the
prior written consent of the Mortgagee, which consent shall not
be unreasonably withheld, and provided, further, that if the
underwriters shall have received written notice from the
Mortgagee as to the occurrence of an Event of Default or
Incipient Default, unless the underwriters shall thereafter have
been notified by the Mortgagee in writing that such Event of
Default or Incipient Default has been cured or waived, in which
event all such payments shall be made to the Mortgagee for
application in accordance with Section 39 hereof, and after the
Mortgage has been satisfied and discharged, to the Borrower or to
its order.
(d) In the event that a claim is made against the
Vessel for loss, damage or expense which is covered by insurance, and it
is necessary for the Borrower to obtain a bond or to supply other
security to prevent arrest of the Vessel or to release the Vessel from
arrest on account of such claim, the Mortgagee, on written request of
the Borrower, shall assign to any Person executing a surety or guaranty
bond or other agreement to save or release the Vessel from such arrest
all right, title and interest of the Mortgagee in and to such insurance
proceeds covering such loss, damage or expense as collateral security to
indemnify against liability under such bond or other agreement.
(e) The Borrower shall have the duty and
responsibility to make all proofs of loss and taken any and all other
steps necessary to effect collections from underwriters for any loss
under any insurance carried pursuant to paragraph (a) of this Section
29.
(f)(1) The Borrower shall furnish, or cause to be
furnished, to the Mortgagee [and the Second Mortgagee] on the date
hereof and annually (between each January 15th and no later than March
15th) thereafter, copies of (i) cover notes, (ii) policies of insurance,
(iii) letters of undertaking, if any, and (iv) a detailed report signed
by independent marine insurance brokers designated by the Borrower and
satisfactory to the Mortgagee describing the insurance carried on or
with respect to the Vessel and the operation thereof and stating, in
effect, that such insurance complies in all respects with the applicable
requirements of this Section.
(2) Such report shall state that, in the opinion
of such insurance broker, the forms of policies or other evidence
of such insurance and the amounts of insurance and other terms
are (i) not less than what is necessary or advisable for the
protection of the interests of the Mortgagee and (ii) are
customary at the time for vessels of similar size, type, trade
and cargo. Such report shall set forth any recommendations such
insurance broker may have for additional or reduced insurance
which prudent shipowners or operators of vessels of similar size,
type, trade and cargo are then carrying. Such report shall
further state that, in the opinion of such independent insurance
broker, all insurance carried pursuant to paragraph (a) of this
Section 29 is underwritten by insurance companies, underwriters'
associations or underwriting funds which should be satisfactory
to the Mortgagee.
(3) The Borrower shall cause such independent
insurance broker to agree (i) to advise the Mortgagee [and the
Second Mortgagee] promptly of any default in the payment of any
premium, commission, club call, assessment or advance required
(whether for new insurance or for insurance replacing, renewing
or extending existing insurance) and of any other act, omission
or event of which such independent insurance broker has knowledge
and which in its sole judgment (A) might invalidate or render
unenforceable, or cause the cancellation or lapse or prevent the
renewal or extension of, in whole or in part, any insurance
carried pursuant to paragraph (a) of this Section, (B) has
resulted or might result in any material modification of the
terms of any such insurance or (C) has or might result in any
such insurance not being in compliance with the applicable
requirements of this Section and (ii) to furnish the Mortgagee
[and the Second Mortgagee] from time to time, upon request,
detailed information with respect to any of the insurance carried
on or with respect to the Vessel or the operation thereof.
(g) In addition, upon request from time to time, the
Borrower shall deliver, or cause or be delivered to the Mortgagee
evidence satisfactory to the Mortgagee that the insurance required to be
provided and maintained pursuant to this Section 29 has been issued and
is then in full force and effect.
(h) The Borrower shall cause all insurance required to
be provided and maintained by this Mortgage to be carried with marine
insurance companies, underwriters' associations or underwriting funds
approved by the Mortgagee, which approval shall not be unreasonably
withheld or delayed.
(i) The Borrower shall not declare or agree upon a
compromised, constructive or agreed total loss of the Vessel without the
prior written consent of the Mortgagee which approvals shall not be
unreasonably withheld.
(j) The Borrower agrees that it will not do any act or
voluntarily suffer or permit any act to be done whereby any insurance
shall or may be suspended, impaired or defeated and will not suffer or
permit the Vessel to engage in any voyage or to carry out any operations
not permitted under the insurance policies in effect without first
covering the Vessel to the amount herein provided with insurance
satisfactory to the Mortgagee in all other respects for such voyage or
such operations.
ARTICLE III
EVENTS OF DEFAULT AND REMEDIES
(30) The term "Event of Default", whenever used herein,
means any one of the following events:
(a) Default by the Borrower in the due and punctual
observance and performance of any provisions of Sections 14, 15(b) 16,
17, 20, 21(y) and (z), 23, 27 and 29(a), (b), (f) and (j) hereof (and to
the extent that such default exposes the Vessel to forfeiture, Sections
21(x) and 22 hereof); or
(b) Default (other than as specified in paragraph (a) or
(b) of this Section 30) in the due and punctual observance and
performance of any of the covenants of the Borrower herein and
continuance of such default for thirty (30) days after written notice
thereof from the Mortgagee to the Borrower or the Guarantor, as the case
may be; or
(c) An Event of Default shall have occurred under the
Loan Agreement.
(31) If an Event of Default shall have occurred and be
continuing, the Mortgagee shall be entitled to, without further notice
or demand, declare the whole or any part of the Obligations to be
forthwith due and payable, upon which declaration the principal of and
interest on the [HDW] [Daewoo] Notes shall become immediately due and
payable together with interest thereafter on overdue principal at the
Default Interest Rate; provided that the occurrence of an Event of
Default under Sections 12.02(m) and (n) of the Loan Agreement shall be
deemed to be a declaration by the Mortgagee as aforesaid, whereupon the
Mortgagee may:
(a) Enforce and exercise all or any of its rights and
powers as a secured party or mortgagee under and in accordance with the
[HDW] [Daewoo] Security Documents at law, in equity, or in admiralty;
(b) Exercise all the rights and remedies in foreclosure
and otherwise given to mortgagees by the country of its registry, or by
the applicable laws of any jurisdiction where the Vessel or other
security may be found, and initiate and prosecute such other judicial,
extra-judicial, or administrative proceedings as it may consider
appropriate to recover any or all sums due, or declared due, on the
[HDW][Daewoo] Notes and all other Obligations, with the right to enforce
payment of said sum against any assets of the Borrower, whether they are
covered by any [KfW] [Daewoo] Security Document or otherwise, and in
connection therewith obtain a decree ordering the sale of the Vessel in
accordance with paragraph (e) of this Section 31;
(c) Have a receiver of the Vessel appointed as a matter
of right in any suit under this Section (and any such receiver may have
the rights of the Mortgagee under paragraphs (e) and (f) of this Section
31);
(d) Take possession of the Vessel, with or without legal
proceedings, at any place where the Vessel may be found (and the
Borrower or other Person in possession of the Vessel shall forthwith
surrender possession of the Vessel to the Mortgagee on demand), and the
Mortgagee shall, subject to any governmental approval required under the
country of its registry, or any other applicable law, have the right,
but shall not be obligated, to manage, insure, maintain, repair, employ,
lay up, hold, charter, lease, operate or otherwise use the Vessel for
such period and under such terms as it may reasonably deem most
expedient for its interest, accounting only for the net profits, if any,
arising from such use and charging against all receipts from such use of
the Vessel, all reasonable charges and expenses in connection with such
use;
(e) Sell the Vessel at public sale with sealed bids, on
such terms and conditions as it deems best, free of any claim of the
Borrower and, except as provided by law, any other Person, upon advance
notice of ten (10) consecutive days published in a newspaper authorized
to publish legal notices of that kind in San Francisco, California, and
by sending notice of such sale no later than the date of first
publication, by telegraph, cable, telecopy or telex, to the Borrower as
provided in Section 49 hereof. Any such sale may be held at such place
and at such time as the Mortgagee by notice may have specified, or may
be adjourned by the Mortgagee from time to time by announcement at the
time and place appointed for such sale or for such adjourned sale, and
without further notice or publication the Mortgagee may make any such
sale at the time and place to which the same shall be so adjourned. Any
such sale may be conducted without bringing the Vessel to the place
designated for such sale. The Mortgagee or (subject to the provisions
of the laws of the country of its registry and any other applicable law)
any Holder may become the purchaser at any such sale, and shall have the
right to credit on the purchase price any and all sums of money due in
respect of the [HDW] [Daewoo] Notes or other Obligations; and
(f) Accept a conveyance of title to, and to take without
legal process (and the Borrower or other Person in possession shall
forthwith surrender possession to the Mortgagee), the whole or any part
of the Vessel wherever the same may be, and to take possession of and
hold the same.
(32) The Borrower hereby irrevocably appoints the
Mortgagee the true and lawful attorney of the Borrower, in its name and
stead, to make all necessary transfers of the whole or any part of the
Vessel in connection with a sale, use or other disposition pursuant to
Section 31 hereof, and for that purpose to execute all necessary
instruments of assignment and transfer. Nevertheless, the Borrower
shall, if so requested by the Mortgagee, ratify and confirm any sale,
assignment, transfer or delivery by executing and delivering such proper
bill of sale, assignment, conveyance, instrument of transfer or other
instrument as may be designated in such request.
(33) A sale of the Vessel made pursuant hereto whether
under the power of sale hereby granted or any judicial proceedings,
shall operate to divest all right, title and interest of any nature
whatsoever of the Borrower therein and thereto, and shall bar the
Borrower, its successors and assigns, and all Persons claiming by,
through or under them. No purchaser shall be bound to inquire whether
notice has been given or whether any Event of Default has occurred, or
as to the propriety of the sale, or as to application of the proceeds
thereof.
(34)(a) In the event that the Vessel shall be arrested
or detained by a marshal or other officer of any court of law, equity or
admiralty jurisdiction in any country of the world or by any government
or other authority and shall not be released from arrest or detention
within thirty (30) days from the date of arrest or detention, the
Borrower hereby authorizes the Mortgagee, in the name of the Borrower,
to apply for and receive possession of and to take possession of the
Vessel with all of the rights and powers that the Borrower might have,
possess and exercise in any such event. This authorization is
irrevocable.
(b) The Borrower irrevocably authorizes the Mortgagee or
its appointees (with full power of substitution) to appear in the name
of the Borrower in any court of any country or nation of the world where
a suit is pending against the Vessel because of or on account of any
alleged lien or claim against the Vessel from which the Vessel shall not
have been released in accordance with Section 16 hereof.
(35) The Mortgagee is hereby appointed as attorney-in-
fact of the Borrower, during the continuance of any Event of Default, in
the name of the Borrower to demand, collect, receive, compromise and sue
for, so far as may be permitted by law, all freights, hire, earnings,
issues, revenues, compensation, income and profits of the Vessel, and
all amounts due from underwriters under any insurance thereon as payment
of losses or as return premiums or otherwise, salvage awards and
recoveries, recoveries in general average or otherwise, and to make,
give and execute in the name of the Borrower acquittances, receipts,
releases or other discharges for the same, whether under seal or
otherwise, and to endorse and accept in the name of the Borrower all
checks, notes, drafts, warrants, agreements and all other instruments in
writing with respect to the foregoing.
(36)(a) The Borrower covenants that upon acceleration of
maturity pursuant to Section 31 hereof, the Borrower will pay to the
Mortgagee the whole amount then due and payable on the Obligations plus
an amount calculated in accordance with Section 11 of the Loan
Agreement. If the Borrower fails to pay such amount forthwith upon
receipt of such notice, the Mortgagee, in its own name and as agent, may
institute a judicial proceeding for the collection of the amount so due
and unpaid, and prosecute such proceeding to judgment or final decree,
and may enforce the same against the Borrower or any other obligor upon
the [HDW] [Daewoo] Notes and collect the money adjudged or decreed to be
payable in the manner provided by law out of the property of the
Borrower or any other obligor upon the [HDW] [Daewoo] Notes, wherever
situated. All monies collected by the Mortgagee under this Section
shall be applied by the Mortgagee in accordance with the provisions of
Section 39 hereof.
(b) If an Event of Default shall occur and be
continuing, irrespective of whether notice of acceleration shall have
been given pursuant to Section 31 hereof, the Mortgagee may in its
discretion proceed to protect its rights and the rights of the Holders
of the [HDW] [Daewoo] Notes by such appropriate judicial proceedings as
the Mortgagee shall deem most effectual to protect any such rights, or
to protect any other proper right, power or remedy then available to the
Mortgagee under any [HDW][Daewoo] Security Document.
(37) In case there shall be pending proceedings for the
bankruptcy or for the reorganization of the Borrower or any other
obligor on the [HDW] [Daewoo] Notes under the Bankruptcy Code of the
United States of America or any other applicable law or in connection
with the insolvency of the Borrower or any other obligor on the [HDW]
[Daewoo] Notes or in case a receiver or trustee shall have been
appointed for its property, or any other obligor on the Notes, its
creditors or its property, the Mortgagee, irrespective of whether the
principal of the [HDW] [Daewoo] Notes shall then be due and payable as
therein expressed or by declaration or otherwise, shall be entitled and
empowered to intervene in such proceedings or otherwise, to file and
prove a claim or claims for the whole amount of principal and interest
owing and unpaid in respect of the [HDW] [Daewoo] Notes and the
remainder of the Loans under the [HDW] [Daewoo] Tranche, and to file
such other papers or documents as may be necessary or advisable in order
to have the claims of the Mortgagee and of the Holders allowed in any
judicial proceeding relative to the Borrower or any obligor on such
[HDW] [Daewoo] Notes, its creditors, or its property, and to collect and
receive any money or other property payable or deliverable on any such
claims, and to distribute the same after the deduction of any amount
payable to the Mortgagee under Section 39 hereof. Nothing contained in
this Mortgage shall be deemed to give the Mortgagee any right to accept
or consent to any plan of reorganization or otherwise by action of any
character in any such proceeding to waive or change in any way any right
of any Holder or to constitute a waiver by the Borrower of its right to
contest the validity of any claim made against it.
(38) All rights of action and claims under this Mortgage
or the [HDW] [Daewoo] Notes may be prosecuted and enforced by the
Mortgagee without the possession of the Notes or any other evidence of
such indebtedness or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Mortgagee shall be
brought in its own name as agent, and any recovery of judgment shall,
after provision for the payment of the reasonable compensation,
expenses, disbursements and advances of the Mortgagee, its agents and
counsel, be for the benefit of the Holders of the [HDW] [Daewoo] Notes.
(39) Any monies collected by the Mortgagee pursuant to
any sale of the Vessel or other enforcement of any of its rights
hereunder or under any other [HDW] [Daewoo] Security Document on account
of the occurrence of an Event of Default or Incipient Default by the
Mortgagee shall be distributed in accordance with Section 5.09[(a)][(b)]
of the Loan Agreement.
(40) No Holder shall have any right to institute any
independent proceeding, judicial or otherwise, with respect to this
Mortgage and the other [HDW] [Daewoo] Security Documents or for any
other remedy hereunder or thereunder except the Mortgagee.
(41) Notwithstanding any other provision of this Article
III, each Holder of an [HDW] [Daewoo] Note shall have the right which is
absolute and unconditional to receive payment (whether directly or
through its agent) of the principal of and interest on such Holder's
[HDW] [Daewoo] Notes, as and when the same shall become due, and to
demand payment thereof, and such right shall not be impaired or affected
without the consent of such Holder.
(42) No right or remedy herein conferred upon or
reserved to the Mortgagee or such Holders is intended to be exclusive of
any other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every other
right and remedy given hereunder or under the other [HDW] [Daewoo]
Security Documents or now or hereafter existing at law, in equity, in
admiralty, by statute or otherwise. The assertion or employment of any
right or remedy hereunder or otherwise shall not prevent the concurrent
or subsequent assertion or employment of any other right or remedy
hereunder or otherwise.
(43) No delay or omission of the Mortgagee or any Holder
to exercise any right or remedy accruing upon any Event of Default nor
any course of dealings between the Mortgagee, the Holders (or any of
them) and the Borrower shall impair any such right or remedy or
constitute a waiver of any Event of Default or an acquiescence therein
nor shall any single exercise or partial exercise of any such right or
remedy preclude any other exercise thereof or any exercise of any other
or further right or remedy; nor shall the acceptance by the Mortgagee of
any security or any payment of any part of the Obligations maturing
after any Event of Default or of any payment on account of any past
default be construed to be a waiver of any right to take advantage of
any future Event of Default or of any past Event of Default not
completely cured thereby. Every right or remedy given by this Mortgage
or any other [HDW] [Daewoo] Security Document or by law to the Mortgagee
or the Holders may be exercised from time to time, and as often and in
such order as may be deemed expedient, by the Mortgagee or the Holders,
as the case may be.
(44) In case the Mortgagee shall have proceeded to
enforce any right, power or remedy under this Mortgage or under any
other [HDW] [Daewoo] Security Document by foreclosure, entry or
otherwise, and such proceeding shall have been discontinued or abandoned
for any reason or shall have been adversely determined to the Mortgagee,
then, and in every such case, the Borrower and the Mortgagee shall be
restored to their former positions and rights hereunder with respect to
the property subject or intended to be subject to this Mortgage or any
other [HDW] [Daewoo] Security Documents, as the case may be, and all
rights, remedies and powers of the Mortgagee shall continue as if no
such proceedings had been taken.
(45) Subject to the provisions of Section 31 hereof, the
Mortgagee shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Mortgagee
under this Mortgage or any other [HDW] [Daewoo] Security Document or
exercising any trust or power conferred on the Mortgagee herein or
therein.
ARTICLE IV
SUNDRY PROVISIONS
(46) For the purposes of recording this First Preferred
Mortgage as required by the Republic of The Marshall Islands' Maritime
Act of 1990, as amended, the total amount of this Mortgage is (i) [
] United States Dollars (USD[ ]), and (ii) interest
and performance of mortgage covenants . The date of maturity is [
]. The discharge amount is the same as the total amount.
(47) All the covenants, promises, stipulations and
agreements of the Borrower contained in this Mortgage shall bind the
Borrower, its successors and assignees, and shall inure to the benefit
of the Mortgagee.
(48) Wherever and whenever herein any right, power or
authority is granted or given to the Mortgagee, such right, power or
authority may be exercised in all cases by the Mortgagee or such agent
or agents as it may appoint; and the authorized acts of such agent or
agents when taken shall constitute the act of the Mortgagee hereunder.
(49) Any notice or demand or other communication to the
Borrower or the Mortgagee under this Mortgage shall be made in
accordance with Section 15.04 of the Loan Agreement.
(50) The Borrower will pay to the Mortgagee on demand:
(a) All monies whatsoever which the Mortgagee
reasonably and in good faith 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 Mortgage or in or about the exercise by the
Mortgagee of any of the powers vested in it hereunder; and
(b) The amount of all expenses of any kind whatsoever,
stamp duties (if any), registration fees and any other charges incurred
by the Mortgagee in connection with the registration of this Mortgage.
(51) The Mortgagee shall, without prejudice to its
other rights and powers hereunder, be entitled (but not bound) at any
time and from time to time, to take any such action as it may in its
discretion think fit for the purpose of protecting the security created
by this Mortgage, and each and every expense or liability reasonably and
in good faith so incurred by the Mortgagee in or about the protection of
the security shall be repayable to it by the Borrower on demand.
(52) The Mortgagee shall be entitled at any time and
from time to time to delegate all or any of the powers and discretions
vested in it by this Mortgage (including, without limitation, the power
vested in it by virtue of Section 32 hereof) in such manner, upon such
terms and to such persons as the Mortgagee in its absolute discretion
may think fit.
(53) The provisions of this Mortgage shall be governed
by and construed in accordance with the Laws of the Republic of The
Marshall Islands and, to the extent applicable, the internal laws of the
State of New York.
[(54) Deutsche Schiffsbank AG may not without the prior
written consent of its public trustee (Treuhander) sell, assign, waive
or encumber its interest in this mortgage until the Loans and all
interest on the Loans have been repaid in full.]1
(55) No course of dealing between the Mortgagee and the
Borrower or any delay or failure on the part of the Mortgagee thereof in
exercising any rights hereunder shall operate as a waiver of any rights
of the Mortgagee thereof or of the preferred status of this Mortgage.
IN WITNESS WHEREOF, the Borrower has caused this Mortgage
to be duly executed by its authorized representative the day and year
first above written.
[ ]
_____________________________
Name:
Title:
[Notarial Acknowledgement complying with Marshall Islands law to
be added.]
APPENDIX B-2
[FORM SUBJECT TO REVISION TO
CONFORM TO LAWS OF FLAG STATE]
SECOND PREFERRED SHIP MORTGAGE ON
THE " " TO
KREDITANSTALT FUR WIEDERAUFBAU
THIS SECOND PREFERRED SHIP MORTGAGE dated this _ day of [ ], 199__,
made and given by [ ], a [ ] corporation
(the "Borrower") to Kreditanstalt fur Wiederaufbau, a public law
corporation organized and existing under the Laws of the Federal
Republic of Germany (the "Mortgagee", which term shall include the
Mortgagee's successors and assignees).
WHEREAS:
A. The Borrower is the sole owner of the Republic of The
Marshall Islands flag vessel, " ", Official No. , of
Gross Tons and Net Tons (the "Vessel", which term shall include
all of the boilers, engines, machinery, bowsprits, masts, spars, sails,
rigging, boats, anchors, cables, apparel, furniture, fitting, equipment
and all other appurtenances to the Vessel appertaining or belonging,
whether now owned or hereafter acquired, whether on board or not, and
all additions, improvements and replacements hereafter made in or to the
Vessel, or any part thereof, or in or to the equipment and appurtenances
aforesaid, but shall exclude any leased equipment).
B. Pursuant to that certain Loan Agreement dated March
14, 1994 among [the Borrower] [American President Lines, Ltd. ("APL")],
the Mortgagee and [other Lender] (the "Loan Agreement") (a copy of which
without Exhibits is attached hereto as Exhibit A), the Mortgagee has
agreed to make loans with respect to three (3) vessels, including the
Vessel, to [the Borrower] [APL], or to [APL Newbuildings, Ltd. ("APLN")]
[the Borrower], with respect to such of said Vessels to be owned by [the
Borrower] [APL] or to be transferred by [the Borrower] [APL] to, and
owned by [APLN] [the Borrower], pursuant to that certain Agreement to
Acquire and Charter, dated the date of the Loan Agreement, among [the
Borrower] [APL], [APLN] [the Borrower], the Mortgagee and [other Lender]
[(a copy of which is attached as Exhibit A-1)], such loans to be in an
aggregate amount not to exceed [ ] United States Dollars (USD
) (collectively, the "Loans"), as evidenced in part by Notes in the
aggregate principal amount of United States Dollars
(USD______________) dated , 199 (THE "[HDW] [Daewoo] Notes"),
with respect to the Vessel by the Borrower in favor of the Mortgagee (a
form of which without Exhibits is attached hereto as Exhibit B), and in
order to induce the Mortgagee to make the loans, the Borrower has agreed
to grant this Mortgage to the Mortgagee to secure the Borrower's
obligations to the Mortgagee under the [HDW] [Daewoo] Notes and its
obligations relating thereto under the Loan Agreement, and the remainder
of the Loans as evidence by other [HDW] [Daewoo] notes, whether issued
by the Borrower or [APLN] [APL] with respect to such vessels other than
the Vessel.
C. The term "Obligations" shall mean all of the
obligations of the Borrower to pay any amount under this Mortgage, the
Loan Agreement insofar as they relate to the HDW Tranche Loans and the
HDW Notes to the Mortgagee whether by way of reimbursement, interest,
indemnity or for any other reasons whatsoever.
D. To secure payment of the Obligations to the
Mortgagee, the Borrower has duly authorized the execution, delivery and
recording of this Second Preferred Ship Mortgage under and pursuant to
the laws of the Republic of The Marshall Islands.
[E. Borrower, on the date hereof has entered into that
certain bareboat charter dated __________, 199__ (the Daewoo Charter
with APL (the "Charterer").]
NOW, THEREFORE, THIS DEED, WITNESSETH:
That the Borrower, in consideration of the premises and
other valuable consideration, the receipt whereof is hereby
acknowledged, and for the purpose of securing payment of the Obligations
and to secure the performance, observance and accuracy of and compliance
with all the covenants, representations, warranties, terms and
conditions in the HDW Notes, the Loan Agreement insofar as it relates to
the HDW Notes, in favor of the Mortgagee and in this Mortgage expressed
or implied, for the benefit of the Mortgagee, has granted, conveyed,
mortgaged, pledged, assigned, transferred, set over and confirmed and
does by these presents grant, convey, mortgage, pledge, assign,
transfer, set over and confirm unto the Mortgagee the whole of the
Vessel;
TO HAVE AND TO HOLD the same unto the Mortgagee forever
in accordance with the terms herein set forth for the enforcement of the
payment of the Obligations and to secure the performance, observance and
accuracy of and compliance with all the covenants, representations,
warranties, terms and conditions contained in the HDW Notes, the Loan
Agreement insofar as it relates to the HDW Notes, the Loans and this
Mortgage expressed or implied, for the benefit of the Mortgagee;
SUBJECT AND SUBORDINATE HOWEVER, to a First Preferred
Ship Mortgage dated [ ], 199_ (the "First Mortgage") in favor of
[ ] as the mortgagee (the "First Mortgagee"), as the
same may be amended and supplemented in accordance with its terms
without increasing the principal amount of indebtedness thereby secured.
PROVIDED ONLY and the conditions of these presents are
such that if and when the Mortgagee shall have received of (i) the full
amount of the Obligations or (ii) the full amount required to be paid in
respect of the Subportion of the Daewoo Tranche relating to the Vessel
evidenced by the Daewoo Notes in accordance with the provisions of
Section 5.04 of the Loan Agreement, together with payment of all other
amounts then due and owing and secured by this Mortgage, these presents
and the rights of the Mortgagee hereunder shall cease, determine and be
void, otherwise to be and remain in full force and effect.
The Borrower for itself, its successors and assignees,
hereby covenants and agrees with the Mortgagee that the Vessel is to be
held by the Mortgagee as long as the obligation of the Borrower under
the HDW Notes, the Loan Agreement to the extent it relates to the HDW
Notes and this Mortgage remains in force, subject to the further
covenants, conditions, provisions, terms and uses hereinafter set forth.
ARTICLE I
REPRESENTATIONS OF THE BORROWER
(1) The Borrower is a corporation duly organized and
validly existing in good standing under the laws of the jurisdiction of
its incorporation with full corporate power and authority to conduct its
business as the same is presently conducted;
(2) the Borrower has legal power and authority to enter
into and carry out the terms of this Mortgage;
(3) this Mortgage has been duly authorized by all
necessary action, corporate or other, on the part of the Borrower, and
this Mortgage constitutes, and upon due execution and delivery by the
Borrower the Mortgage will constitute, in accordance with its respective
terms, a legal, valid and binding instrument enforceable against the
Borrower, except to the extent limited by applicable bankruptcy,
reorganization, insolvency, moratorium or other laws of general
application relating to or affecting the enforcement of creditors'
rights from time to time in effect;
(4) except as previously disclosed to the Mortgagee in
writing, there are no actions, suits or proceedings pending or, to the
Borrower's knowledge, threatened against the Borrower or any of its
properties affecting the Mortgage which would materially and adversely
affect the ability of the Borrower to perform its obligations hereunder.
(5) the consummation of the transactions contemplated
by, and compliance by the Borrower with all the terms and provisions of,
the Mortgage will not violate any provisions of the Certificate of
Incorporation or Bylaws of the Borrower and will not result in a breach
of the terms and provisions of, or constitute a default under, any other
agreement or undertaking by the Borrower or by which it or any of its
property is bound or any order of any court or administrative agency
entered in any proceedings binding on the Borrower, or violate any
applicable statute, rule or regulation;
(6) the Borrower is not in default and no condition
exists which with notice or lapse of time or both would constitute a
default by the Borrower, in any respect which would materially and
adversely affect the ability of the Borrower to perform its obligations
under this Mortgage, under any mortgage, loan agreement, deed of trust,
indenture or other agreement with respect thereto or evidence of
indebtedness to which it is a party or by which it is bound, and is not
in violation of or in default, in any respect which would materially and
adversely affect the ability of the Borrower to perform its obligations
under this Mortgage, under any order, writ, judgment or decree of any
court, arbitrator or governmental authority, commission, board, agency
or instrumentality, domestic or foreign;
(7) the Borrower has more than one place of business and
the location of the place of business which is its chief executive
office is 1111 Broadway, Oakland, California 94607;
(8) all taxes (other than taxes based on or measured by
income), liability for the payment of which has been incurred by the
Borrower in connection with the execution, delivery and performance by
it of the Mortgage, have been paid (or provided for in its accounts if
not payable on or prior to the delivery date of the Vessel);
(9) all governmental consents, licenses, permissions,
approvals, registrations or authorizations or declarations required (i)
to enable it lawfully to enter into and perform its respective
obligations under this Mortgage, (ii) to ensure that its respective
obligations hereunder and thereunder are legal, valid and enforceable
and (iii) to make this Mortgage admissible in evidence in the Republic
of The Marshall Islands, and the United States of America has been
obtained or made and are in full force and effect;
(10) it has not taken any corporate action nor to its
knowledge have any other steps been taken or legal proceedings been
started or threatened against it for its winding-up, dissolution or
reorganization or for the appointment of a receiver, administrative
receiver, administrator, trustee or similar officer of it or of any or
all of its respective assets and revenues;
(11) except for registration of this Mortgage in
accordance with the provisions of the Republic of The Marshall Islands'
Maritime Act of 1990, as amended, it is not necessary to ensure the
legality, validity, enforceability or admissibility in evidence of this
Mortgage in the country of the Borrower or the United States of America,
or the flag of its registry or, to the best of its knowledge, elsewhere,
that it be filed, recorded or enrolled with any governmental authority
or agency in the country of the Borrower or, to the best of its
knowledge, elsewhere, or that it be stamped with any stamp, registration
or similar transaction tax in the country of the Borrower or the United
States of America, or the flag of its registry or, to the best of its
knowledge, elsewhere;
(12) the Vessel is duly documented in the name of the
Borrower under the flag of the Republic of The Marshall Islands; and
(13) the Vessel is in the absolute and unencumbered
ownership of the Borrower except as contemplated by this Mortgage and
the First Mortgage.
ARTICLE II
COVENANTS OF THE BORROWER
(14) The Borrower represents and warrants that it
lawfully owns and possesses the Vessel free from any mortgage, security
interest, lien or charge whatsoever other than the First Mortgage and
covenants with the Mortgagee that it shall warrant and defend the title
to and lawful possession of the Vessel and every part thereof for the
benefit of the Mortgagee, and shall hold harmless and indemnify the
Mortgagee against the claims and demands of all Persons whomsoever
arising as the result of any mortgage (other than the First Mortgage),
security interest, lien or charge whatsoever on the Vessel; provided
that the Borrower's foregoing obligations (other than its agreements to
defend title and indemnify and hold the Mortgagee harmless) shall not
apply to the following:
(a) liens for crew's wages ("Crew's Wages") and salvage
(including contract salvage) which shall not have been due and payable
for more than ten (10) days after termination of a voyage or which shall
then be contested in good faith by the Borrower [or the Charterer] in
appropriate proceedings diligently prosecuted and shall not subject the
Vessel or any part thereof to risk, forfeiture or loss, or in any
material way prejudice or impair the Mortgagee's rights or interest in
or under the Mortgage;
(b) liens for Crew's Wages and salvage (including
contract salvage) and general average which are either unclaimed or
covered by insurance;
(c) liens incident to current operations (except for
Crew's Wages, salvage and general average) not more than thirty (30)
days past due, liens for the wages of a stevedore when employed directly
by the Shipowner or the operator, master or any agent of the Vessel, or
liens covered by insurance and any deductible applicable thereto;
(d) liens for repairs or with respect to changes made in
the Vessel pursuant to Section 25(b) hereof;
(e) in the event the use of or title to the Vessel is
requisitioned by any government or any agency thereof insofar as it
relates to possession of the Vessel;
(f) liens for taxes or assessments or other governmental
charges and levies not yet due and payable, or the validity of which is
being contested by the Borrower [or the Charterer] in good faith by
appropriate proceedings upon stay of execution of the enforcement
thereof and for which adequate reserves in accordance with Generally
Accepted Accounting Principles or other appropriate provision has been
made;
(g) in the case of any actual or constructive total loss
or an agreed or compromised total loss of the Vessel insofar as it
relates to possession of the Vessel; and
(h) insofar as it relates to possession of the Vessel,
to charters permitted by the terms of this Mortgage and the Loan
Agreement and by applicable law [and to subcharters permitted by the
terms of the Daewoo Charter];
provided that any liens described in paragraphs (c), (d) and (f) hereof
shall be permitted only to the extent they are subordinate to the
Mortgage.
(15)(a) Neither the Borrower, any charterer, the master
of the Vessel nor any other Person has or shall have any right, power or
authority to create, incur or permit to be placed or imposed upon the
Vessel any lien whatsoever, other than the First Mortgage, this Mortgage
and the liens referred to in Section 14, hereof.
(b) The Borrower shall forthwith remove or cause to be
removed within thirty (30) days of its knowledge thereof any lien or
encumbrance (other than the items referred to in Sections 14(d), (g) and
(h) of this Article III) which shall be filed against the Vessel, unless
the same is being contested by appropriate proceedings in good faith and
(i) such proceedings shall suspend the collection of the related claim
from the Vessel, (ii) neither the Vessel nor any interest therein would
be in any danger of being sold, forfeited or lost during the pendency of
such proceedings, and (iii) the Borrower or the Charterer shall have
furnished such security, if any, or cause or make adequate provision for
release prior to foreclosure, sale or similar disposition as may be
required in such proceedings.
(16) If the Vessel shall be attached, levied upon or
taken into custody by virtue of any legal proceeding in any court or
tribunal or by any government or other authority, the Borrower or the
Charterer shall promptly notify the Mortgagee thereof by telex and
within fifteen (15) days after any such arrest (except in the case of
requisition or other taking by any government or governmental body)
shall cause the Vessel to be released within thirty (30) days and shall
promptly notify the Mortgagee thereof in the manner aforesaid.
(17) Except as provided in the Granting Clause hereof
the Borrower has not assigned, pledged or otherwise granted a security
interest in or lien on, and shall not assign, pledge or otherwise grant
a security interest in or lien on, the whole or any part of, any rights
assigned by the Granting Clause hereof.
(18) Upon the occurrence of any Event of Default or
Incipient Default, the Borrower shall promptly notify the Mortgagee by
telex, confirmed by letter, unless such Event of Default or Incipient
Default shall have been cured.
(19) The Borrower shall make all payments of principal
and interest on the HDW Notes and shall perform in full its obligations
and liabilities under this Mortgage and the Loan Agreement to the extent
it relates to the HDW Notes and the HDW Security Documents.
(20) (a) The Borrower represents and warrants that on
the date hereof the Vessel is, and the Borrower covenants with the
Mortgagee that it shall (subject to clauses (b) and (c) below) hereafter
remain, documented under the laws of the Republic of The Marshall
Islands.
(b) The Borrower shall have the right to change the
registry and flag of the Vessel to the registry and flag of the Republic
of Panama, the Republic of Liberia, the Republic of Vanuatu and the
Commonwealth of The Bahamas. Prior to any such change in registry and
flag, the Borrower shall (i) obtain all necessary approvals of
governmental authorities including, without limitation, those of the
then current country of the Vessel's registry and the jurisdiction of
its incorporation, if any, and otherwise comply with all applicable law
if any, (ii) execute and deliver to the Mortgagee, in form and substance
reasonably satisfactory to the Mortgagee, and after execution by the
Mortgagee and immediately after the registration of the Vessel, file for
recordation, a replacement mortgage for this Mortgage (the "Replacement
Mortgage"), with terms and conditions substantially similar to the terms
and conditions of this Mortgage, which Replacement Mortgage shall
constitute a first priority lien on the Vessel and shall be in
compliance with all applicable laws and regulations of any such country
where the Vessel is re-registered and re-flagged, and immediately after
the filing of the Replacement Mortgage for recordation deliver to the
Mortgagee (A) an opinion of counsel reasonably satisfactory to the
Mortgagee confirming that any Replacement Mortgage constitutes such a
first priority lien under the laws and regulations of such country and
is a "preferred mortgage" within the meaning of 46 U.S.C. Section
31301(b)(B), and that, if there shall have been any change in the
applicable laws and regulations of such country of re-registration and
re-flagging after March 14, 1994, such change does not materially
adversely affect the interests of the Mortgagee with respect to the
Vessel, and (B) a certificate of the Borrower that the Vessel is duly
documented under the laws of the country where the Vessel is re-
registered and re-flagged, and that the Vessel is free of any claim,
lien, charge, mortgage or other encumbrance of any character (except the
Replacement Mortgage and the First Mortgage). In connection with any
such change of registry and flag, the Mortgagee shall, at the request of
the Borrower and at the Borrower's cost and expense, and upon compliance
with subclauses (i) and (ii) of this clause (b), execute and deliver to
the Borrower the Replacement Mortgage, an instrument in recordable form
duly acknowledging the satisfaction and discharge of this Mortgage, and
any other instrument or document necessary or appropriate for the
orderly consummation of the change in registry and flag and replacement
of the Mortgage. Notwithstanding the foregoing, no such reflagging
shall be permitted if (x) an Event of Default or Incipient Default shall
have occurred and be continuing or (y) if, in the sole opinion of the
Mortgagee, such reflagging will, or may be expected to, adversely affect
the rights or remedies of the Mortgagee under the Loan Documents, the
value of the Vessel, or will be or may otherwise be expected to be,
disadvantageous to the Mortgagee.
(c) The Borrower shall have the right to change the
registry and flag of the Vessel to the registry and flag of the United
States of America. Prior to any such change in registry and flag, the
Borrower shall (i) obtain all necessary approvals of governmental
authorities including, without limitation, those of the then current
country of the Vessel's registry and the jurisdiction of its
incorporation, if any, and otherwise comply with all applicable law, if
any, (ii) execute and deliver to the Mortgagee (or an approved trustee
to act as mortgagee) a replacement mortgage with terms and conditions
substantially the same as the terms and conditions of this Mortgage, in
form and substance reasonably satisfactory to the Mortgagee (the
"Replacement Mortgage"), and after execution by the Mortgagee and
immediately after the registration of the Vessel, file for recordation,
the Replacement Mortgage for this Mortgage, which Replacement Mortgage
shall constitute a first priority lien on the Vessel and shall be in
compliance with all applicable laws and regulations of the United States
of America, and, immediately after the filing of the Replacement
Mortgage for recordation, deliver to the Mortgagee (A) an opinion of
counsel reasonably satisfactory to the Mortgagee confirming that any
Replacement Mortgage constitutes such a first "preferred" ship mortgage
under the laws and regulations of the United States of America and (B) a
certificate of the Borrower that the Vessel is duly documented under the
laws of the United States of America, and that the Vessel is free of any
claim, lien, charge, mortgage or other encumbrance of any character
(except the Replacement Mortgage and the First Mortgage [and the
Charter]). In connection with any such change of registry and flag, the
Mortgagee shall, at the request of the Borrower and at the Borrower's
cost and expense, and upon compliance with subclauses (i) and (ii) of
this clause (c), execute and deliver to the Borrower the Replacement
Mortgage, an instrument in recordable form duly acknowledging the
satisfaction and discharge of this Mortgage, and any other instrument or
document necessary or appropriate for the orderly consummation of the
change in registry and flag and replacement of the Mortgage.
Notwithstanding the foregoing, no such reflagging shall be permitted if,
an Event of Default or Incipient Default shall have occurred and be
continuing.
(21) The Borrower (x) shall not cause or permit the
Vessel to be operated in any manner contrary to applicable law except to
the extent that such provision shall have been contested in good faith
by the Borrower in appropriate proceedings diligently prosecuted and
shall not subject the Vessel to risk, forfeiture or loss, or in any
material way prejudice or impair the Mortgagee's rights or interests in
or under the Mortgage, (y) shall not operate the Vessel in any way
contrary to any of the terms or conditions of the insurance required by
Section 29 hereof (unless it shall first have arranged for continuation
of the coverage afforded thereby), and (z) shall not abandon the Vessel
in any foreign port unless (i) there shall have been an actual or
constructive total loss or an agreed or compromised total loss of the
Vessel; or (ii) there has been any other loss with respect to the Vessel
and the Borrower shall not have had reasonable time to repair or rectify
the same, or (iii) the use or title of the Vessel has been taken or
requisitioned by any government or governmental authority; provided,
however, that if an Event of Default shall have occurred and be
continuing, the Borrower shall not abandon the Vessel unless it shall
have first received the written consent of the Mortgagee.
(22) The Borrower shall pay and discharge or cause to be
paid and discharged when due and payable all claims against, and taxes,
assessments, governmental charges, fines and penalties imposed on, the
Vessel or the Vessel's cargo; provided, however, that the Borrower shall
have the right to contest or cause to be contested, in good faith and by
appropriate proceedings, any such claim, tax, assessment, governmental
charge, fine or penalty and, pending such contest, may defer the payment
thereof so long as such contest or deferment in payment shall not
subject the Vessel or any part thereof to risk or forfeiture or loss, or
in any material way prejudice or impair the Mortgagee's rights or
interests in or under the Mortgage.
(23) The Borrower shall, at its expense and at no cost
to the Mortgagee, comply with and satisfy all of the provisions of the
flag of the Republic of The Marshall Islands, in order to establish,
record and maintain the Mortgage as a preferred mortgage thereunder on
the Vessel until it is re-registered, reflagged and the Mortgage is
replaced by a Replacement Mortgage as provided in Section 20(b) hereof.
(24) The Borrower shall place and at all times and
places shall retain a properly certified copy of the Mortgage on board
the Vessel with her papers and shall cause such certified copy and such
papers to be exhibited to any and all Persons having business with the
Vessel and to any representative of the Mortgagee. The Borrower shall
also place and keep prominently displayed on the Vessel a framed printed
or typewritten notice in plain type which shall cover a space of not
less than six inches wide by nine inches high (or of such other
dimensions as may be required by law) reading substantially as follows:
"NOTICE OF PREFERRED SHIP MORTGAGES"
"This Vessel is owned by [ ], a
[ ] corporation (the "Shipowner"), and is covered by
a First Preferred Ship Mortgage in favor of [ ]
as Mortgagee, and a Second Preferred Ship Mortgage in favor of
Kreditanstalt fur Wiederaufbau as Mortgagee, each under authority
of the Republic of The Marshall Islands. Under the terms of said
Mortgages, neither the Shipowner, any charterer, the master of
the Vessel nor any other person has any right, power or authority
to create, incur or permit to be placed or imposed upon this
Vessel any lien whatsoever other than the lien of said Mortgage
and liens for wages of a stevedore when employed directly by the
Shipowner, operator, master, or any agent of the Vessel, for
Crews' Wages, for general average, for salvage, and, to the
extent subordinate to the lien of said Mortgage, for certain
liens incident to current operations or for repairs or changes
permitted by the Mortgage."
(25)(a) The Borrower shall at all times and without cost
or expense to the Mortgagee (i) maintain and preserve, or cause to be
maintained and preserved, the Vessel in good running order and repair,
so that the Vessel shall be, insofar as due diligence can make her so,
strong and well and sufficiently tackled, apparelled, furnished,
equipped and in every respect seaworthy and in good operating condition,
ordinary wear and tear and depreciation excepted; and (ii) keep the
Vessel, or cause her to be kept, in such condition as will entitle her
to the highest classification and rating for vessels of the same age and
type of The American Bureau of Shipping, and annually shall furnish to
the Mortgagee a certificate by The American Bureau of Shipping that such
classification is maintained; provided that in any event the Borrower
shall notify the Mortgagee of any change in the classification of the
Vessel; and provided, further, that the foregoing shall not apply if
there shall have been an Event of Loss or during such period as (1) the
Vessel has been taken or requisitioned by any government or governmental
body or (2) there has been any other loss with respect to the Vessel and
the Borrower shall not have had a reasonable time to repair the same.
The Borrower shall furnish from time to time upon reasonable demand of
the Mortgagee such information and documents as the Mortgagee may
require concerning the classification of the Vessel. Except during any
period in which the provided further proviso in the first sentence of
this paragraph shall apply, the Vessel shall, and the Borrower covenants
that she will, at all times comply with all applicable laws, treaties
and conventions of the Republic of The Marshall Islands and all rules
and regulations issued thereunder, and shall have on board as and when
required thereby valid certificates showing compliance therewith except
to the extent that such provision shall have been contested in good
faith by the Borrower in appropriate proceedings diligently prosecuted
so long as such proceeding shall not subject the Vessel or any part
thereof to risk or forfeiture or loss, or in any material way prejudice
or impair the Mortgagee's rights or interests in or under the Mortgage.
(b) The Borrower shall not make, or permit to be made,
any substantial change in the structure, type or speed of the Vessel or
change in her rig unless it shall have received the Mortgagee's prior
written approval thereto, which approval shall not be unreasonably
withheld or delayed; provided, however, that no such approval need be
obtained in respect of any change which shall be necessary to comply
with the requirements of the United States Coast Guard, the Republic of
The Marshall Islands or The American Bureau of Shipping in order to
entitle the Vessel to the classification and rating required by
paragraph (a) hereof.
(c) Until an Event of Default shall occur, the Borrower
(i) shall be suffered and permitted to retain actual possession and use
of the Vessel and (ii) shall have the right, from time to time, in its
discretion, and without application to the Mortgagee, and without
obtaining a release thereof by the Mortgagee, to dispose of, free from
the lien hereof, any boilers, engines, machinery, bowsprits, masts,
spars, sails, rigging, boats, anchors, apparel, furniture, equipment or
any other appurtenances to the Vessel that are no longer useful,
necessary, profitable or advantageous in the operation of the Vessel,
first or simultaneously replacing the same by new boilers, engines,
machinery, bowsprits, masts, spars, sails, rigging, boats, anchors,
apparel, furniture, fittings, equipment or other appurtenances of at
least equal value to the Borrower which shall forthwith become subject
to the lien of this Mortgage.
(26) The Borrower shall at all reasonable times afford
the Mortgagee or its authorized representatives full and complete access
to the Vessel for the purpose of inspecting or surveying the same and
her papers and, at the request and expense of the Mortgagee, the
Borrower shall deliver or cause to be delivered for inspection by such
parties copies of any and all contracts and documents relating to the
Vessel, whether on board or not.
(27) The Borrower shall not sell, demise charter [except
for the Daewoo Charters], mortgage (except by this Mortgage and the
First Mortgage) or transfer the Vessel (except any sale of the Vessel
after repayment of the amounts of the related Subportion of the HDW
Tranche in accordance with Section 5.04 of the Loan Agreement or by way
of requisition or other governmental taking by the United States of
America or the Republic of The Marshall Islands or in accordance with
Section 9.02(b) of the Loan Agreement) without the prior written consent
of the Mortgagee, which consent shall not be unreasonably withheld. Any
such written consent to any one sale, demise charter, mortgage or
transfer shall not be construed to be a waiver of this provision with
respect to any subsequent proposed sale, demise charter, mortgage or
transfer. Any sale, demise charter, mortgage or transfer of the Vessel
shall be subject to the provisions of the Mortgage and the lien thereof.
(28) The Borrower will reimburse the Mortgagee promptly
for any and all expenditures which the Mortgagee may from time to time
make, lay out or expend in providing protection in respect of insurance,
discharge or purchase of any liens, taxes, dues, assessments,
governmental charges, tolls, fines and penalties imposed, repairs,
attorneys' fees and other matters as the Borrower is obligated herein to
provide but fails to provide. Such obligation of the Borrower to
reimburse the Mortgagee shall constitute Obligations secured by this
Mortgage, and shall be payable by the Borrower on demand, together with
interest thereon from the date of demand until the date of payment (both
before and after judgment) at the Default Interest Rate (as such rate is
set forth in Section 3.08(a) of the Loan Agreement). The Mortgagee,
though privileged so to do, shall be under no obligation to the Borrower
to make any such expenditures, nor shall the making thereof relieve the
Borrower of any default in that respect.
(29)(a) Subject always to the prior rights of the First
Mortgagee under the First Mortgage, the Borrower shall (i) until the
First Mortgage shall have been satisfied and discharged, in accordance
with the provisions of the First Mortgage, except that the Borrower
shall provide to the Mortgagee the single interest Mortgagee's insurance
referred to in Section 29(a)(4) and (5) below, and (ii) thereafter, in
accordance with the insurance provisions set forth below in this Section
29, at its own expense, provide and maintain insurance on or with
respect to the Vessel and the operation thereof, as follows:
(1) Marine navigating risk hull and machinery
insurance and marine war navigating risk hull and machinery
insurance, together with, at the Borrower's option, such amounts
of increased value and total loss only insurance as are permitted
by such hull and machinery insurance policies. While the Vessel
is idle or laid up, at the option of the Borrower and in lieu of
the coverage described in the immediately preceding sentence,
port risk hull and machinery insurance may be taken out on the
Vessel by the Borrower. The foregoing insurance shall be in
aggregate amounts equal at all times to the greater of (a) the
amounts of such coverage required by the First Mortgage and (b)
the full commercial value of the Vessel. Any of the foregoing
may provide for a deductible amount approved by the Mortgagee,
but no consent or approval of the Mortgagee shall be required for
a deductible amount of up to One Million United States Dollars
(USD1,000,000) with respect to any one accident, occurrence or
event. The preceding sentence shall not apply in the event of an
actual, constructive, compromised or agreed total loss of the
Vessel. All policies of insurance required under this Section
29(a)(1) shall, unless the Mortgagee shall otherwise consent in
writing, be under the broadest forms which are carried by prudent
shipowners for similar vessels engaged in similar trades (at the
time of issue of the policies in question) and approved by the
Mortgagee. The Borrower shall have the right to procure in
excess of the above requirements for its own sole benefit.
(2) Marine and war risk, full form protection and
indemnity insurance with such clubs or insurance companies
acceptable to the Mortgagee, for such amounts as the Mortgagee
may require or approve. Such protection and indemnity insurance
shall be maintained in the broadest forms generally available in
the United States of America/United Kingdom markets shall include
a cross liability endorsement, if obtainable. The Borrower shall
have the right to carry, for its own benefit, excess protection
and indemnity insurance and marine multiliability insurance. The
Mortgagee shall have the right to approve the amounts of
deductibles; provided, however, that no approval of the Mortgagee
shall be required if such deductibles aggregate not more than
Five Hundred Thousand United States Dollars (USD500,000) with
respect to any single accident, occurrence or event excluding
cargo and Five Hundred Thousand United States Dollars
(USD500,000) per vessel voyage with respect to total cargo or
property carried on such voyage.
(3) Insurance against liability under law or
international convention arising out of pollution, spillage or
leakage in an amount not less than the greater of:
(y) the maximum amount available, as that
amount may from time to time change, from
the International Group of Protection and
Indemnity Associations or alternatively
such sources of pollution, spillage or
leakage coverage as are commercially
available in any absence of such coverage
by the International Group as shall be
carried by prudent shipowners for similar
vessels engaged in similar trades plus
amounts available from customary excess
insurers of such risks as such excess
amounts shall be carried by prudent
shipowners for similar vessels engaged in
similar trades; and
(z) the amounts required by the laws or
regulations of the United States of
America and any applicable jurisdiction in
which the Vessel may be trading from time
to time except to the extent that any such
laws or regulations shall have been
contested in good faith by the Borrower
[or the Charterer] in appropriate
proceedings diligently prosecuted, as long
as such proceedings or the failure to
provide such insurance shall not subject
the Vessel or any part thereof to risk,
forfeiture or loss, or in any material way
prejudice or impair the Mortgagee's rights
or interests in or under this Mortgage.
The foregoing insurance shall be against such risks and in such
form as are in the reasonable opinion of the Mortgagee, necessary
or advisable for the protection of the interests of the
Mortgagee.
(4) Single interest mortgagee's insurance
covering the Mortgagee against any acts or omissions of the
Borrower whereby marine and war risk hull and machinery insurance
covered by this paragraph (a) shall or may be suspended, impaired
or defeated; and any loss under such insurance shall be payable
directly to the Mortgagee. Such single interest mortgagee's
insurance may, at the option of the Mortgagee, be placed by the
Mortgagee at the expense of the Borrower, unless the Borrower can
arrange coverage acceptable to the Mortgagee at cheaper rates
which can be directly placed by the Mortgagee.
(5) Mortgagee's additional perils insurance
(pollution) and any loss under such insurance shall be payable
directly to the Mortgagee. Such additional perils insurance may,
at the option of the Mortgagee, be placed by the Mortgagee at the
expense of the Borrower, unless the Borrower can arrange coverage
acceptable to the Mortgagee at cheaper rates which can be
directly placed by the Mortgagee.
(6) The Borrower shall carry at its own expense,
for the benefit of the Mortgagee, (i) in connection with any
voyage outside the territorial waters of the United States of
America, such insurance against political risks of confiscation
and expropriation by any government (except the United States of
America and the country of registry) as would be carried by
prudent owners and operators on similar voyages, (ii) additional
insurance in such amounts and against such risks arising from or
connected with the ownership or operation of the Vessel as from
time to time may be commonly insured against and may be
reasonably required by the Mortgagee and (iii) such other
insurance as may at the time be required by applicable law except
to the extent that such law shall have been contested in good
faith by the Borrower [or the Charterer] in appropriate
proceedings diligently prosecuted as long as such proceedings or
the failure to provide such insurance shall not subject the
Vessel or any part thereof to risk, forfeiture or loss, or in any
material way prejudice or impair the Mortgagee's rights or
interests in or under this Mortgage.
(b) (1) All insurance required to be taken out and
maintained pursuant to the terms of this Mortgage (except
insurance pursuant to Section 29(a)(4) and (5) of this Article
II) shall name the Mortgagee (as Mortgagee), the Borrower and any
permitted charterer, as named insured or additional named
insured, and the policies or certificates of insurance shall
provide that there shall be no recourse against the Mortgagee for
the payment of premiums, commissions, club calls, assessments or
advances.
(2) All insurance carried pursuant to paragraph
(a) of this Section 29 shall contain provisions or endorsements
stating that such insurance is primary insurance without any
right of contribution with respect to any insurance carried by or
on behalf of the Mortgagee other than as provided pursuant to
this Section 29 on the same interest insured.
(3) The policies in respect of insurance carried
pursuant to Section 29(a) hereof shall provide that at least ten
(10) days' prior written notice shall be given to the Mortgagee
and the Borrower by the underwriters of any cancellation for the
nonpayment of premiums, commissions, club calls, assessments or
advances. Each policy in respect of such insurance shall further
provide that (except in the case of automatic termination and
cancellation clauses pursuant to the terms of the war risk
policies other than for nonpayment of premium) at least ten (10)
days prior written notice shall be given to the Mortgagee and the
Borrower by the underwriter of any termination, cancellation,
lapse or material modification of the terms of such policy. Each
policy in respect of such insurance shall contain provisions
waiving underwriters' rights of subrogation thereunder against
any assured named in such policy. The Mortgagee shall have the
right, but not the obligation, to pay any such amounts on behalf
of the Borrower which shall not have been timely paid by the
Borrower and to recover such amounts together with interest
pursuant to Section 29 hereof.
(c) All policies of insurance in respect of insurance
required to be taken out and maintained pursuant to the terms of this
Mortgage or other evidence thereof (except policies taken out pursuant
to Section 29(a)(4) and (5) of this Article II) shall provide that
losses thereunder shall be payable (i) until this Mortgage shall have
been discharged and underwriters shall have been given written notice of
such discharge by the First Mortgagee, to the First Mortgagee for
application pursuant to the First Mortgage and (ii) thereafter, to the
Mortgagee for application pursuant to this Mortgage and (iii) finally,
to the Borrower; provided, however, that such policies of insurance or
other evidence thereof shall provide that:
(1) In the case of insurance carried pursuant to
paragraph (a)(1) of this Section 29 (to the extent liability
insurances are afforded thereunder) or pursuant to paragraph
(a)(2) of this Section 29:
(i) if the Borrower shall not have
incurred the loss, damage or expense in question, any loss under
such insurance may be paid directly to the Person by whom such
liability covered by such policies has been incurred (whether or
not an Incipient Default or Event of Default then exists); and
(ii) if the Borrower shall have incurred the
loss, damage or expense in question or if the Borrower shall have
paid the loss, damage or expense in question and shall have
presented to the underwriters satisfactory evidence that the
liability insured against has been discharged or is being
discharged simultaneously with such payment, any such loss under
such insurance shall be paid to the Borrower or to its order in
reimbursement if there is not then an existing Event of Default
or Incipient Default of which the underwriter has written notice
from the Mortgagee, or, if there is such an existing Event of
Default or Incipient Default, to the First Mortgagee to (x) apply
such amounts in accordance with the First Mortgage or (y) if such
Event of Default or Incipient Default shall have been cured or
waived, in which case such amounts shall be applied as otherwise
provided in this Section 29, and if the Mortgage shall have been
discharged, such loss shall be paid to the Borrower; and
(iii) Upon the occurrence of an Event of
Loss, all insurance payments and other compensation therefor
shall be paid to the Mortgagee for application in accordance with
Section 5.04(b) of the Loan Agreement.
(2) In the case of insurance carried pursuant to
paragraph (a)(1) of this Section (to the extent liability
insurances are not afforded thereunder), so long as the accident,
occurrence or event does not result in an Event of Loss, payment
of all losses up to Two Million United States Dollars
(USD2,000,000) (or such higher figure as the Mortgagee may from
time to time approve) by all insurance underwriters with respect
to any one accident, occurrence or event may be made (i) directly
for the repair or other charges involved, (ii) directly to the
Borrower or to its order as reimbursement if the Borrower or any
permitted charterer shall have first fully repaired the damage
and paid the cost thereof and any other charges involved, and the
underwriters shall have received evidence that such repair and
payment have been made or will be made simultaneously with the
payment by the underwriters; provided that if such loss exceeds
Two Million United States Dollars (USD2,000,000), the
underwriters shall not make payment without first obtaining the
prior written consent of the Mortgagee, which consent shall not
be unreasonably withheld; and provided, further, that if the
underwriters shall have received written notice from the
Mortgagee as to the occurrence of an Event of Default or
Incipient Default unless the underwriters shall thereafter have
been notified by the Mortgagee in writing that such Event of
Default or Incipient Default has been cured or waived, in which
event all such payments shall be made to the Mortgagee for
application in accordance with Section 39 hereof, and after the
Mortgage has been satisfied and discharged, to the Borrower or to
its order.
(d) In the event that a claim is made against the Vessel
for loss, damage or expense which is covered by insurance, and it is
necessary for the Borrower to obtain a bond or to supply other security
to prevent arrest of the Vessel or to release the Vessel from arrest on
account of such claim, the Mortgagee, on written request of the
Borrower, shall assign to any Person executing a surety or guaranty bond
or other agreement to save or release the Vessel from such arrest all
right, title and interest of the Mortgagee in and to such insurance
proceeds covering such loss, damage or expense as collateral security to
indemnify against liability under such bond or other agreement.
(e) The Borrower shall have the duty and responsibility
to make all proofs of loss and taken any and all other steps necessary
to effect collections from underwriters for any loss under any insurance
carried pursuant to paragraph (a) of this Section.
(f) (1) The Borrower shall furnish, or cause to be
furnished, to the Mortgagee on the date hereof and annually
(between each January 15th and no later than March 15th)
thereafter, copies of (1) cover notes, (ii) policies of
insurance, (iii) letters of undertaking, if any, and (iv) a
detailed report signed by independent marine insurance brokers
designated by the Borrower and satisfactory to the Mortgagee
describing the insurance carried on or with respect to the Vessel
and the operation thereof and stating, in effect, that such
insurance complies in all respects with the applicable
requirements of this Section.
(2) Such report shall state that, in the opinion
of such insurance broker, the forms of policies or other evidence
of such insurance and the amounts of insurance and other terms
are (i) not less than what is necessary or advisable for the
protection of the interests of the Mortgagee and (ii) are
customary at the time for vessels of similar size, type, trade
and cargo. Such report shall set forth any recommendations such
insurance broker may have for additional or reduced insurance
which prudent shipowners or operators of vessels of similar size,
type, trade and cargo are then carrying. Such report shall
further state that, in the opinion of such independent insurance
broker, all insurance carried pursuant to paragraph (a) of this
Section 29 is underwritten by insurance companies, underwriters'
associations or underwriting funds which should be satisfactory
to the Mortgagee.
(3) The Borrower shall cause such independent
insurance broker to agree (i) to advise the Mortgagee promptly of
any default in the payment of any premium, commission, club call,
assessment or advance required (whether for new insurance or for
insurance replacing, renewing or extending existing insurance)
and of any other act, omission or event of which such independent
insurance broker has knowledge and which in its sole judgment (A)
might invalidate or render unenforceable, or cause the
cancellation or lapse or prevent the renewal or extension of, in
whole or in part, any insurance carried pursuant to paragraph (a)
of this Section, (B) has resulted or might result in any material
modification of the terms of any such insurance or (C) has or
might result in any such insurance not being in compliance with
the applicable requirements of this Section and (ii) to furnish
the Mortgagee from time to time, upon request, detailed
information with respect to any of the insurance carried on or
with respect to the Vessel or the operation thereof.
(g) In addition, upon request from time to time, the
Borrower shall deliver, or cause or be delivered to the Mortgagee
evidence satisfactory to the Mortgagee that the insurance required to be
provided and maintained pursuant to this Section has been issued and is
then in full force and effect.
(h) The Borrower shall cause all insurance required to
be provided and maintained by this Mortgage to be carried with marine
insurance companies, underwriters' associations or underwriting funds
approved by the Mortgagee, which approval shall not be unreasonably
withheld or delayed.
(i) The Borrower shall not declare or agree upon a
compromised, constructive or agreed total loss of the Vessel without the
prior written consent of the Mortgagee which approval shall not be
unreasonably withheld.
(j) The Borrower agrees that it will not do any act or
voluntarily suffer or permit any act to be done whereby any insurance
shall or may be suspended, impaired or defeated and will not suffer or
permit the Vessel to engage in any voyage or to carry out any operations
not permitted under the insurance policies in effect without first
covering the Vessel to the amount herein provided with insurance
satisfactory to the Mortgagee in all other respects for such voyage or
such operations.
ARTICLE III
EVENTS OF DEFAULT AND REMEDIES
(30) The term "Event of Default", whenever used herein,
means any one of the following events:
(a) Default by the Borrower in the due and punctual
observance and performance of any provisions of Sections 14, 15(b), 16,
20, 21(y) and (z), 23, 27 and 29(a), (b), (f) and (j) hereof (and to the
extent that such default exposes the Vessel to forfeiture, Sections
21(x) and 22) hereof; or
(b) Default (other than as specified in paragraph (a) or
(b) of this Section 30) in the due and punctual observance and
performance of any of the covenants of the Borrower herein and
continuance of such default for thirty (30) days after written notice
thereof from the Mortgagee to the Borrower or the Guarantor, as the case
may be; or
(c) An Event of Default shall have occurred under the
Loan Agreement;
(31) If an Event of Default shall have occurred and be
continuing, the Mortgagee shall be entitled to, subject to Section 54
hereof, without further notice or demand, declare the whole or any part
of the Obligations to be forthwith due and payable, upon which
declaration the principal of and interest on the HDW Notes shall become
immediately due and payable together with interest thereafter on overdue
principal at the Default Interest Rate; provided that the occurrence of
an Event of Default under Section 12.02(m) and (n) of the Loan Agreement
shall be deemed to be a declaration by the Mortgagee as aforesaid,
whereupon the Mortgagee may:
(a) Enforce and exercise all or any of its rights and
powers as a secured party or mortgagee under and in accordance with the
Second Security Documents at law, in equity, or in admiralty;
(b) Exercise all the rights and remedies in foreclosure
and otherwise given to mortgagees by the country of its registry, or by
the applicable laws of any jurisdiction where the Vessel or other
security may be found, and initiate and prosecute such other judicial,
extra-judicial, or administrative proceedings as it may consider
appropriate to recover any or all sums due, or declared due, on the HDW
Notes and all other Obligations, with the right to enforce payment of
said sum against any assets of the Borrower, whether they are covered by
any Second Security Document or otherwise, and in connection therewith
obtain a decree ordering the sale of the Vessel in accordance with
paragraph (e) of this Section 31;
(c) Have a receiver of the Vessel appointed as a matter
of right in any suit under this Section (and any such receiver may have
the rights of the Mortgagee under paragraphs (e) and (f) of this Section
31);
(d) Take possession of the Vessel, with or without legal
proceedings, at any place where the Vessel may be found (and the
Borrower or other Person in possession of the Vessel shall forthwith
surrender possession of the Vessel to the Mortgagee on demand), and the
Mortgagee shall, subject to any governmental approval required under the
country of its registry, or any other applicable law, have the right,
but shall not be obligated, to manage, insure, maintain, repair, employ,
lay up, hold, charter, lease, operate or otherwise use the Vessel for
such period and under such terms as it may reasonably deem most
expedient for its interest, accounting only for the net profits, if any,
arising from such use and charging against all receipts from such use of
the Vessel, all reasonable charges and expenses in connection with such
use;
(e) Sell the Vessel at public sale with sealed bids, on
such terms and conditions as it deems best, free of any claim of the
Borrower and, except as provided by law, any other Person, upon advance
notice of ten (10) consecutive days published in a newspaper authorized
to publish legal notices of that kind in San Francisco, California, and
by sending notice of such sale no later than the date of first
publication by telegraph, cable, telecopy or telex, to the Borrower as
provided in Section 49 hereof. Any such sale may be held at such place
and at such time as the Mortgagee by notice may have specified, or may
be adjourned by the Mortgagee from time to time by announcement at the
time and place appointed for such sale or for such adjourned sale, and
without further notice or publication the Mortgagee may make any such
sale at the time and place to which the same shall be so adjourned. Any
such sale may be conducted without bringing the Vessel to the place
designated for such sale. The Mortgagee or (subject to the provisions
of the laws of the country of its registry and any other applicable law)
any Holder may become the purchaser at any such sale, and shall have the
right to credit on the purchase price any and all sums of money due in
respect of the HDW Notes or other Obligations; and
(f) Accept a conveyance of title to, and to take without
legal process (and the Borrower or other Person in possession shall
forthwith surrender possession to the Mortgagee), the whole or any part
of the Vessel wherever the same may be, and to take possession of and
hold the same.
(32) Subject to Section 54 hereof, the Borrower hereby
irrevocably appoints the Mortgagee the true and lawful attorney of the
Borrower, in its name and stead, to make all necessary transfers of the
whole or any part of the Vessel in connection with a sale, use or other
disposition pursuant to Section 31 hereof, and for that purpose to
execute all necessary instruments of assignment and transfer.
Nevertheless, the Borrower shall, if so requested by the Mortgagee,
ratify and confirm any sale, assignment, transfer or delivery by
executing and delivering such proper bill of sale, assignment,
conveyance, instrument of transfer or other instrument as may be
designated in such request.
(33) A sale of the Vessel made pursuant hereto, whether
under the power of sale hereby granted or any judicial proceedings,
shall operate to divest all right, title and interest of any nature
whatsoever of the Borrower therein and thereto, and shall bar the
Borrower, its successors and assigns, and all Persons claiming by,
through or under them. No purchaser shall be bound to inquire whether
notice has been given or whether any Event of Default has occurred, or
as to the propriety of the sale, or as to application of the proceeds
thereof.
(34) Subject to Section 54 hereof:
(a) In the event that the Vessel shall be arrested or
detained by a marshal or other officer of any court of law, equity or
admiralty jurisdiction in any country of the world or by any government
or other authority and shall not be released from arrest or detention
within thirty (30) days from the date of arrest or detention, the
Borrower hereby authorizes the Mortgagee, in the name of the Borrower,
to apply for and receive possession of and to take possession of the
Vessel with all of the rights and powers that the Borrower might have,
possess and exercise in any such event. This authorization is
irrevocable.
(b) The Borrower irrevocably authorizes the Mortgagee or
its appointees (with full power of substitution) to appear in the name
of the Borrower in any court of any country or nation of the world where
a suit is pending against the Vessel because of or on account of any
alleged lien or claim against the Vessel from which the Vessel shall not
have been released in accordance with Section 16 hereof.
(35) Subject to Section 54 hereof, the Mortgagee is
hereby appointed as attorney-in-fact of the Borrower, during the
continuance of any Event of Default, in the name of the Borrower to
demand, collect, receive, compromise and sue for, so far as may be
permitted by law, all freights, hire, earnings, issues, revenues,
compensation, income and profits of the Vessel, and all amounts due from
underwriters under any insurance thereon as payment of losses or as
return premiums or otherwise, salvage awards and recoveries, recoveries
in general average or otherwise, and to make, give and execute in the
name of the Borrower acquittances, receipts, releases or other
discharges for the same, whether under seal or otherwise, and to endorse
and accept in the name of the Borrower all checks, notes, drafts,
warrants, agreements and all other instruments in writing with respect
to the foregoing.
(36)(a) The Borrower covenants that upon acceleration of
maturity pursuant to Section 31 hereof, the Borrower will pay to the
Mortgagee the whole amount then due and payable on the Obligations plus
an amount calculated in accordance with Section 11 of the Loan
Agreement. If the Borrower fails to pay such amount forthwith upon
receipt of such notice, the Mortgagee, in its own name and as agent, may
institute a judicial proceeding for the collection of the amount so due
and unpaid, and prosecute such proceeding to judgment or final decree,
and may enforce the same against the Borrower or any other obligor upon
the HDW Notes and collect the money adjudged or decreed to be payable in
the manner provided by law out of the property of the Borrower or any
other obligor upon the HDW Notes, wherever situated. All monies
collected by the Mortgagee under this Section 36 shall be applied by the
Mortgagee in accordance with the provisions of Section 39 hereof.
(b) Subject to Section 54 hereof, if an Event of Default
shall occur and be continuing, irrespective of whether notice of
acceleration shall have been given pursuant to Section 31 hereof, the
Mortgagee may in its discretion proceed to protect its rights and the
rights of the Holders of the HDW Notes by such appropriate judicial
proceedings as the Mortgagee shall deem most effectual to protect any
such rights, or to protect any other proper right, power or remedy then
available to the Mortgagee under any Second Security Document.
(37) Subject to Section 54 hereof, in case there shall
be pending proceedings for the bankruptcy or for the reorganization of
the Borrower or any other obligor on the HDW Notes under the Bankruptcy
Code of the United States of America or any other applicable law or in
connection with the insolvency of the Borrower or any other obligor on
the HDW Notes or in case a receiver or trustee shall have been appointed
for its property, or any other obligor on the HDW Notes, its creditors
or its property, the Mortgagee, irrespective of whether the principal of
the HDW Notes shall then be due and payable as therein expressed or by
declaration or otherwise, shall be entitled and empowered to intervene
in such proceedings or otherwise, to file and prove a claim or claims
for the whole amount of principal and interest owing and unpaid in
respect of the HDW Notes, and to file such other papers or documents as
may be necessary or advisable in order to have the claims of the
Mortgagee and of the Holders allowed in any judicial proceeding relative
to the Borrower or any obligor on such HDW Notes, its creditors, or its
property, and to collect and receive any money or other property payable
or deliverable on any such claims, and to distribute the same after the
deduction of any amount payable to the Mortgagee under Section 39
hereof. Nothing contained in this Mortgage shall be deemed to give the
Mortgagee any right to accept or consent to any plan of reorganization
or otherwise by action of any character in any such proceeding to waive
or change in any way any right of any Holder or to constitute a waiver
by the Borrower of its right to contest the validity of any claim made
against it.
(38) All rights of action and claims under this Mortgage
or the HDW Notes may be prosecuted and enforced by the Mortgagee without
the possession of the HDW Notes or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the
Mortgagee shall be brought in its own name as agent, and any recovery of
judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Mortgagee, its
agents and counsel, be for the benefit of the Holders of the HDW Notes.
(39) Subject to Section 54 hereof, any monies collected
by the Mortgagee pursuant to any sale of the Vessel or other enforcement
of any of its rights hereunder or under any other Second Security
Document on account of the occurrence of an Event of Default or
Incipient Default by the Mortgagee shall be distributed in accordance
with Section 5.09[(a)] of the Loan Agreement.
(40) No Holder shall have any right to institute any
independent proceeding, judicial or otherwise, with respect to this
Mortgage and the other Second Security Documents or for any other remedy
hereunder or thereunder except the Mortgagee.
(41) Notwithstanding any other provision of this Article
III, each Holder of an HDW Note shall have the right which is absolute
and unconditional to receive payment (whether directly or through its
agent) of the principal of and interest on such Holder's HDW Note, as
and when the same shall become due, and to demand payment thereof, and
such right shall not be impaired or affected without the consent of such
Holder.
(42) No right or remedy herein conferred upon or
reserved to the Mortgagee or such Holders is intended to be exclusive of
any other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every other
right and remedy given hereunder or under the other Second Security
Documents or now or hereafter existing at law, in equity, in admiralty,
by statute or otherwise. The assertion or employment of any right or
remedy hereunder or otherwise shall not prevent the concurrent or
subsequent assertion or employment of any other right or remedy
hereunder or otherwise.
(43) No delay or omission of the Mortgagee or any Holder
to exercise any right or remedy accruing upon any Event of Default nor
any course of dealings between the Mortgagee, the Holders (or any of
them) and the Borrower shall impair any such right or remedy or
constitute a waiver of any Event of Default or an acquiescence therein
nor shall any single exercise or partial exercise of any such right or
remedy preclude any other exercise thereof or any exercise of any other
or further right or remedy; nor shall the acceptance by the Mortgagee of
any security or any payment of any part of the Obligations maturing
after any Event of Default or of any payment on account of any past
default be construed to be a waiver of any right to take advantage of
any future Event of Default or of any past Event of Default not
completely cured thereby. Every right or remedy given by this Mortgage
or any other Second Security Document or by law to the Mortgagee or the
Holders may be exercised from time to time, and as often and in such
order as may be deemed expedient, by the Mortgagee or the Holders, as
the case may be.
(44) In case the Mortgagee shall have proceeded to
enforce any right, power or remedy under this Mortgage or under any
other Second Security Document by foreclosure, entry or otherwise, and
such proceeding shall have been discontinued or abandoned for any reason
or shall have been adversely determined to the Mortgagee, then, and in
every such case, the Borrower and the Mortgagee shall be restored to
their former positions and rights hereunder with respect to the property
subject or intended to be subject to this Mortgage or any other Second
Security Document, as the case may be, and all rights, remedies and
powers of the Mortgagee shall continue as if no such proceedings had
been taken.
(45) Subject to the provisions of Sections 31 and 54
hereof, the Mortgagee shall have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the
Mortgagee under this Mortgage or any other Second Security Document or
exercising any trust or power conferred on the Mortgagee herein or
therein.
ARTICLE IV
SUNDRY PROVISIONS
(46) For the purposes of recording this Second Preferred
Mortgage as required by the Republic of The Marshall Islands Maritime
Act of 1990, as amended, the total amount of this Mortgage is (i) [
] United States Dollars (USD[ ]), and (ii) interest and
performance of mortgage covenants. The date of maturity is [ ]. The
discharge amount is the same as the total amount.
(47) All the covenants, promises, stipulations and
agreements of the Borrower contained in this Mortgage shall bind the
Borrower, its successors and assignees, and shall inure to the benefit
of the Mortgagee.
(48) Wherever and whenever herein any right, power or
authority is granted or given to the Mortgagee, such right, power or
authority may be exercised in all cases by the Mortgagee or such agent
or agents as it may appoint; and the authorized acts of such agent or
agents when taken shall constitute the act of the Mortgagee hereunder.
(49) Any notice or demand or other communication to the
Borrower or the Mortgagee under this Mortgage shall be made in
accordance with Section 15.04 of the Loan Agreement.
(50) The Borrower will pay to the Mortgagee on demand:
(a) All monies whatsoever which the Mortgagee
reasonably and in good faith 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 Mortgage or in or about the exercise by the
Mortgagee of any of the powers vested in it hereunder; and
(b) The amount of all expenses of any kind whatsoever,
stamp duties (if any), registration fees and any other charges incurred
by the Mortgagee in connection with the registration of this Mortgage.
(51) The Mortgagee shall, without prejudice to its other
rights and powers hereunder, be entitled (but not bound) at any time and
from time to time, to take any such action as it may in its discretion
think fit for the purpose of protecting the security created by this
Mortgage, and each and every expense or liability reasonably and in good
faith so incurred by the Mortgagee in or about the protection of the
security shall be repayable to it by the Borrower on demand.
(52) The Mortgagee shall be entitled at any time and
from time to time to delegate all or any of the powers and discretions
vested in it by this Mortgage (including, without limitation, the power
vested in it by virtue of Section 32 hereof) in such manner, upon such
terms and to such persons as the Mortgagee in its absolute discretion
may think fit.
(53) The provisions of this Mortgage shall be governed
by and construed in accordance with the Laws of the Republic of The
Marshall Islands and, to the extent applicable, to the internal laws of
the State of New York.
(54) Notwithstanding any other provision of this
Mortgage, the rights of the Mortgagee hereunder are expressly made
subject and subordinate in all respects to the First Mortgage and all
provisions of this Mortgage shall be construed according to the
following:
(a) Anything herein to the contrary notwithstanding this
Mortgage is subject and subordinate to the First Mortgage, and the
rights and powers granted to the Mortgagee herein are subject and are
subordinate to the corresponding rights and powers granted to the First
Mortgagee under the First Mortgage and may not be exercised in a manner
as to impair or prejudice such rights and powers under the First
Mortgage except as provided herein.
(b) The Mortgagee will release this Mortgage upon the
written request of the First Mortgagee in conjunction with any sale or
transfer of the Vessel under the provisions of Section 31 of the First
Mortgage.
(c) This Mortgage has the right of succession on payment
or discharge of the First Mortgage.
(d) Anything herein to the contrary notwithstanding,
until the First Mortgage shall have been satisfied and discharged the
Mortgagee may exercise the rights and remedies other than those set
forth in Sections 31(a) and (b) and 34 hereof only under the following
circumstances:
(i) with the prior written consent of the First
Mortgagee; or
(ii) the Mortgagee shall have tendered to the
First Mortgagee all amounts secured by the First Mortgage; or
(iii) the First Mortgagee shall have seized or
arrested the Vessel and commenced foreclosure proceedings or the
commencement of a bankruptcy, reorganization or receivership or similar
proceeding involving the Borrower under; or
(iv) upon prior written notice to the First
Mortgagee of its intent to do so, exercise the rights provided in
Section 35 hereof (except as and to the extent the First Mortgagee shall
otherwise direct in the event it determines to exercise its
corresponding rights under the First Mortgage); provided that any moneys
collected shall be forthwith surrendered to the First Mortgagee for
application under the First Mortgage.
(e) To the extent that the provisions of the First
Mortgage or the exercise by the First Mortgagee of any rights under the
First Mortgage require the Borrower to do something prohibited hereby or
refrain from doing something required hereby or by the Mortgagee, or
require a distribution of funds other than as provided herein, no Event
of Default, or Incipient Default, hereunder shall result from the
Borrower's compliance with such provisions or actions. This Section 54
shall not, however, relieve the Borrower from the obligation of
complying with the provisions of this Mortgage to the extent that they
require different or additional performance than that required by the
First Mortgage or the First Mortgagee so long as the same does not
require performance that would result in an Event of Default, or with
the passage or time or notice, or both, would result in an Event of
Default, under the First Mortgage.
(f) Until the First Mortgage shall have been satisfied
and discharged, this Mortgage shall not be amended, modified or
supplemented without the prior written consent of the First Mortgagee.
(55) No course of dealing between the Mortgagee and the
Borrower or any delay or failure on the part of the Mortgagee thereof in
exercising any rights hereunder shall operate as a waiver of any rights
of the Mortgagee thereof or of the preferred status of this Mortgage.
IN WITNESS WHEREOF, the Borrower has caused this Mortgage
to be duly executed by its authorized representative the day and year
first above written.
[ ]
_____________________________
Name:
Title:
[Notarial Acknowledgment complying with Marshall Islands law to
be added.]
EXHIBIT C
[ ]
Re: [ ]
Dear Sirs:
This refers to the Second Preferred Ship Mortgage (the
"Mortgage"), dated today by [ ] (such shipowner, its
successors and assigns, the "Shipowner") to KREDITANSTALT FUR
WIEDERAUFBAU, as mortgagee (such mortgagee and its successors and
assigns, the "Mortgagee") relating to the Vessel, [ ], Official
Number [ ]. Terms defined in the Mortgage when used herein have the
same meanings as so defined. You are the mortgagee (such mortgagee and
its successors and assigns, the "First Mortgagee") under the First
Preferred Ship Mortgage dated [ ], 199_(the "First Mortgage"),
relating to the Vessel.
Anything in the Mortgage to the contrary notwithstanding,
so long as the obligations secured by the First Mortgage remains
outstanding and in consideration of the First Mortgagee consenting to
the Mortgage, the Mortgagee hereby acknowledges and agrees that (a) the
lien of the Mortgage and all the terms, provisions and conditions
thereof and the rights of the Mortgagee thereunder are subject and
subordinate in all respects to the First Mortgage and the lien created
thereby and the Mortgagee agrees to comply with the provisions of
Section 54 of the Mortgage, (b) the Mortgagee will release the Mortgage
upon the written request of the First Mortgagee in conjunction with any
sale or transfer of the Vessel in accordance with Section 31 of the
First Mortgage, (c) none of the rights, powers or remedies as against
the Vessel, including foreclosure, provided for in the Mortgage shall be
exercised by or on behalf of the Mortgagee in advance of the foreclosure
of the lien of the First Mortgagee (or the commencement of a bankruptcy,
reorganization or receivership or similar proceeding involving the
Shipowner as debtor) without the written consent of the First Mortgagee;
provided, however, that the Mortgagee may, after giving prior notice to
the First Mortgage of its intent to do so, but without obtaining such
written consent, exercise its rights provided in Section 35 of the
Mortgage (except as and to the extent the First Mortgagee shall
otherwise direct in the event it determines to exercise its
corresponding rights under the First Mortgage provided that any monies
collected or received by the Mortgagee through such exercise shall be
forthwith surrendered to the First Mortgagee for application under the
First Mortgage, and (d) the Mortgage shall not be amended, modified or
supplemented without the prior written consent of the First Mortgagee;
provided, however, that nothing in the foregoing shall be construed to
inhibit the Mortgagee (i) from establishing and protecting in any
foreclosure proceeding in respect of the Vessel commenced by anyone
other than the Mortgagee, or in any bankruptcy, reorganization,
receivership or similar proceeding involving the Shipowner as debtor,
the status of the Mortgagee as a secured creditor of the Shipowner with
the priority granted in the Mortgage or (ii) from exercising for the
benefit of the HDW Notes issued pursuant to the Loan Agreement, as and
when in its sole discretion it may from time to time determine, any
right, power or remedy against the Vessel (including, without
limitation, the acceleration or maturity of such Notes or the
commencement of, and participation in, bankruptcy, reorganization or
receivership proceedings involving the Shipowner as debtor) to which the
Mortgagee shall be or become entitled, other than under the Mortgage,
whether or not such right, power or remedy is the same as or similar to
the rights, powers or remedies of the Mortgagee set forth in the
Mortgage.
Very truly yours,
KREDITANSTALT FUR WIEDERAUFBAU
By: __________________________
Name:
Title:
Accepted and Agreed:
[ ]
By: _______________
Name:
Title:
APPENDIX C-1
FORM OF ASSIGNMENT OF INSURANCE
The undersigned [ ], a corporation organized
and existing under the laws of [ ] [("Owner") and American President
Lines, Ltd., a corporation organized and existing under the laws of Delaware
(the "Charterer")] (collectively the "Assignor[s]"), in consideration of One
Dollar ($1) lawful money of the United States of America, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, pursuant to the Agreement to Acquire and Charter dated March 14,
1994 (the "Acquisition Agreement") by and among the Assignor, Commerzbank AG
(Kiel Branch), Dresdner Bank AG in Hamburg, Vereins-und Westbank AG, Deutsche
Schiffsbank AG, Norddeutsche Landesbank - Girozentrale, Commerzbank AG, Hamburg,
Deutsche Verkehrs-Bank AG, Banque Internationale a Luxembourg S.A. and
Kreditanstalt fur Wiederaufbau ("the Assignee") and as owner of the [insert name
and official number of HDW Vessel] (the "Vessel") [and American President Lines,
Ltd. as the bareboat charterer of the Vessel], [each] Assignor has sold,
transferred and set over and by this instrument, do sell, assign, transfer and
set over unto the Assignee mortgagee of the Vessel under a First Preferred
Mortgage dated the date hereof (the "Mortgage"), and unto the Assignee's
successors and assigns, as such mortgagee, to it and its successors' and
assigns' own proper use and benefit, all right, title and interest of the
[respective] Assignor under, in and to (i) all policies and contracts of
insurance (which expression includes all entries of the Vessel in Protection and
Indemnity Associations or War Risk Associations) in respect of the Vessel
whether now or hereafter to be effected, and all renewals of or replacements for
the same, (ii) when the context so admits, any reinsurance of such insurances,
(iii) all claims, returns of premium and other monies and claims for monies due
and to become due under said insurances or in respect of said insurances, (iv)
all other rights of [each] Assignor [respectively] under or in respect of said
insurances, and (v) any proceeds of any of the foregoing.
It is expressly agreed that anything herein contained to the
contrary notwithstanding, [each] Assignor shall remain liable under said
insurances to perform all of the [respective] obligations assumed by it
thereunder, and the Assignee shall have no obligation or liability under said
insurances by reason of or arising out of this instrument of assignment nor
shall the Assignee be required or obligated in any manner to perform or fulfill
any obligations of [each] Assignor respectively under or pursuant to said
insurances or to make any payment or to make any inquiry as to the nature or
sufficiency of any payment received by it, or to present or file any claim, or
to take any other action to collect or enforce the payment of any amounts which
may have been assigned to it or to which it may be entitled hereunder at any
time or times.
It is expressly agreed anything herein to the contrary
notwithstanding that (i) unless and until an Incipient Default or an Event of
Default is continuing and has not been cured or waived and unless and until the
Assignee shall have notified the underwriters in writing of such an Incipient
Default or Event of Default, or (ii) unless and until the Vessel shall have
become an actual or constructive total loss or a compromised or arranged total
loss or requisition of title, [each] Assignor shall be entitled to exercise all
of its rights, including the right to receive insurance proceeds payable in
respect of the insurances hereby assigned (except as otherwise provided in the
loss payable clauses attached hereto and except for amounts payable in respect
of single interest mortgagee's insurance and mortgagee's additional perils
insurance (pollution)) to the same extent as if none of the rights had been
assigned hereby.
[Each] Assignor does hereby constitute the Assignee, its
successors and assigns, [such] Assignor's true and lawful attorney, irrevocably,
with full power (in the name of [such] Assignor or otherwise), upon an event of
default under the Loan Agreement or the Mortgage having occurred and in
accordance with the provisions thereof, to ask, require, demand, receive,
compound and give acquittance for any and all monies and claims for monies due
and to become due under or arising out of said insurances, to endorse any checks
or other instruments or orders in connection therewith and to file any claims or
to take any action or institute any proceedings which the Assignee may deem to
be necessary or advisable in the premises.
[Each] Assignor hereby covenants and agrees (A) to procure that
notice of this Assignment shall be duly given to all underwriters and brokers,
(B) that where the consent of any underwriter is required pursuant to any of the
claims for monies due and monies due assigned hereby that it shall be obtained
and evidence thereof shall be given to the Assignee, or, in the alternative,
that in the case of protection and indemnity coverage, the Assignor[s] shall
obtain a letter of undertaking by the underwriters duly noting the interest of
the Assignee, and (C) that there shall be duly endorsed upon all slips, cover
notes, policies, certificates of entry or other instruments issued or to be
issued in connection with the insurances assigned hereby such clauses as to loss
payees as the Assignee may require or approve. In all cases, unless otherwise
agreed in writing by the Assignee, such slips, cover notes, notices,
certificates of entry or other instruments shall provide that there will be no
recourse against the Assignee for payment of premiums, calls or assessments.
[Each] Assignor further covenants and agrees that in the event the Assignee
shall agree that any insurance is placed with a "captive insurer," all such
amounts shall be reinsured in a manner satisfactory to the Assignee and all
monies and claims for monies under policies of reinsurance shall be assigned to
the Assignee and/or there shall be a "cut through" clause respecting such
reinsurance satisfactory in its sole discretion to the Assignee.
[Each] Assignor agrees that at any time and from time to time,
upon the written request of the Assignee, [such] Assignor will promptly and duly
execute and deliver any and all such further instruments and documents as the
Assignee may deem desirable in obtaining the full benefits of this Assignment
and of the rights and powers herein granted.
[Each] Assignor does hereby warrant and represent that it has not
assigned or pledged, and hereby covenants that, without the prior written
consent thereto of the Assignee, so long as this instrument of assignment shall
remain in effect, they will not assign or pledge the whole or any part of the
right, title and interest hereby assigned to anyone other than the Assignee, its
successors or assigns, and it will not take or omit to take any action, the
taking or omission of which might result in an alteration or impairment of said
insurances, of this Assignment or of any of the rights created by said
insurances or this Assignment.
This assignment to the Assignee shall take effect immediately
upon the execution hereof and the powers and authorities granted to the
Assignee, its successors and assigns, herein, having been given for valuable
consideration, are hereby declared to be irrevocable.
[Each] Assignor agrees that the Assignee is hereby appointed its
attorney-in-fact and may execute on [each] Assignor's behalf and file any
financing statements under the Uniform Commercial Code or notices respecting the
Companies Register, or papers of similar purpose or effect in respect of this
Assignment which the Assignee deems appropriate.
All notices or other communications which are required to be made
to the Assignee hereunder shall be made by telex or facsimile transmission,
confirmed by postage prepaid letter to:
if to the Assignor [Charterer], addressed to:
American President Lines, Ltd.
1111 Broadway
Oakland, California 94607
Attention: Treasurer
Telecopy: (510) 272-8931
Telex: 671 4840 APL OAK
[if to the Owner, addressed to:
APL Newbuildings, Ltd.
1111 Broadway
Oakland, California 94607
Attention: Treasurer
Telecopy: (510) 272-8931
Telex: 671 4840 APL OAK]
if to the Assignee, addressed to:
Kreditanstalt fur Wiederaufbau
Palmengartenstrasse 5-9
Postfach 11-11-41
D-60325 Frankfurt am Main
Federal Republic of Germany
Attention: Mr. Andreas Uibeleisen
Mr. Wolfgang Pfisterer
Telecopy: 49-7431-2944 or 49-7431-2198
Telex: 415256-0 KWD
or at such other address as may have been furnished in writing by the Assignee.
Any consents, waivers, approvals or other actions to be given or taken by the
Assignee hereunder shall be effective if contained in a writing signed by the
Assignee or such other person or persons as the Assignee may from time to time
appoint, and forwarded to the Assignor[s] at its [their respective] address[es]
as provided in Section 7 of the Acquisition Agreement.
Any payments made pursuant to the terms hereof shall be payable
to the Assignee to such account or accounts as may, from time to time, be
designated by the Assignee.
Upon payment in full to the Assignee of all amounts due and owing
thereto under each of the HDW Security Documents (as such term is defined in the
Acquisition Agreement) relating to the Vessel, this Assignment shall terminate.
This Assignment shall be governed by the laws of the State of New
York (other than the law of the State of New York governing choice of law) and
shall not be amended or altered nor shall any provision hereto be waived except
by an amendment or waiver in writing signed by the Assignee.
[SIGNATURE APPEARS ON NEXT PAGE.]
IN WITNESS WHEREOF, the Assignor[s] has [have] caused this
Assignment respecting the Vessel's insurances to be duly executed this _____ day
of ________, 199_.
[ ]
[Owner]
By:____________________
Title:
[ ]
[Charterer]
By:____________________
Title:
NOTICE OF ASSIGNMENT
OF INSURANCE
PLEASE TAKE NOTICE that the Undersigned, Owner [and Charterer] of
the [Insert name and official number of HDW Vessel] has assigned to
KREDITANSTALT FUR WIEDERAUFBAU, mortgagee, under a certain First Preferred
Mortgage dated the date hereof covering said Vessel, all of the Undersigned's
right, title and interest in and to any and all insurances respecting said
Vessel including all monies payable and to become payable thereunder or in
connection therewith (including return of premium). This Notice and the
attached Loss Payable Clauses shall be endorsed on all policies and certificates
of entry evidencing such insurances.
Dated: ________, 199_
[ ]
[Owner]
By: ____________________________
Title:
[ ]
[Charterer]
By: ____________________________
Title:
Loss Payable Clause
Hull and War Risks
[Loss, if any, payable to Kreditanstalt fur Wiederaufbau (the
"Mortgagee"), for distribution by it in accordance with the terms of the
Mortgage in favor of the Mortgagee, except that, in the case of any loss
involving any damage to the Vessel or liability of the Vessel, the Underwriters
may pay directly for the repair, salvage, liability or other charges involved
or, if the Shipowner [or the Charterer] shall have first fully repaired the
damage and paid the cost thereof, or discharged the liability or paid all of the
salvage or other charges and Underwriters shall have received evidence that such
repair and payment have been made or will be made simultaneously with the
payment by the Underwriters and there is not an Event of Default or Incipient
Default, written notice of which the Mortgagee has given the Underwriters, then
the Underwriters may pay the Shipowner [or the Charterer, as the case may be,],
as reimbursements therefor; provided, further, that if such damage involves a
loss in excess of USD 2,000,000 or its equivalent, the Underwriters shall not
make such payment without first obtaining the written consent of the Mortgagee.
In the event of an actual or constructive total loss or a
compromised or arranged total loss or requisition of title, all insurance
payment therefor shall be paid to the Mortgagee, for distribution by it in
accordance with the terms of the Mortgage in favor of the Mortgagee.]
Loss Payable Clause
Protection and Indemnity
[If APL Newbuildings, Ltd. (the "Shipowner") or American
President Lines, Ltd. (the "Charterer")] shall have incurred the loss, if any,
payable to Kreditanstalt fur Wiederaufbau (the "Mortgagee"), for distribution by
it in accordance with the terms of the Mortgage, except that, any loss may be
paid directly to the person to whom liability covered by this insurance has been
incurred if the Shipowner [or the Charterer] shall not have incurred the loss,
damage or expense in question, or, unless there is an Event of Default or an
Incipient Default, written notice of which the Mortgagee has given the
underwriters, to the Shipowner [or to the Charterer] to reimburse it for any
loss, damage or expenses incurred by it and covered by this insurance, provided
the underwriters shall have first evidence that the liability insured against
has been discharged.]
APPENDIX C-2
FORM OF ASSIGNMENT OF INSURANCE
The undersigned [ ], a
corporation organized and existing under the laws of [ ] [("Owner")
and American President Lines Ltd., a corporation organized and existing
under the laws of __________ (the "Charterer")] (collectively, the
"Assignor[s]"), in consideration of One Dollar ($1) lawful money of the
United States of America, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, pursuant to
the Agreement to Acquire and Charter dated March 14, 1994 (the
"Acquisition Agreement") by and among the Assignor, Kreditanstalt fur
Wiederaufbau, Commerzbank AG (Kiel Branch), Dresdner Bank AG in Hamburg,
Vereins-und Westbank AG, Deutsche Schiffsbank AG, Norddeutsche
Landesbank-Girozentrale, Deutsche Verkehrs-Bank AG, Banque
Internationale a Luxembourg S.A. and Commerzbank AG, Hamburg, as Agent
("the Assignee"), and as owner of the [insert name and official number
of Daewoo Vessel] (the "Vessel"), [each] Assignor has sold, assigned,
transferred and set over and by this instrument, do sell, assign,
transfer and set over unto the Assignee mortgagee of the Vessel under a
First Preferred Mortgage dated the date hereof (the "Mortgage"), and
unto the Assignee's successors and assigns, as such mortgagee, to it and
its successors' and assigns' own proper use and benefit, all right,
title and interest of the [respective] Assignor under, in and to (i) all
policies and contracts of insurance (which expression includes all
entries of the Vessel in Protection and Indemnity Associations or War
Risk Associations) in respect of the Vessel whether now or hereafter to
be effected, and all renewals of or replacements for the same, (ii) when
the context so admits, any reinsurance of such insurances, (iii) all
claims, returns of premium and other monies and claims for monies due
and to become due under said insurances or in respect of said
insurances, (iv) all other rights of [each] Assignor[s] [respectively]
under or in respect of said insurances, and (v) any proceeds of any of
the foregoing.
It is expressly agreed that anything herein contained to
the contrary notwithstanding, [each] Assignor shall remain liable under
said insurances to perform all of the [respective] obligations assumed
by it thereunder, and the Assignee shall have no obligation or liability
under said insurances by reason of or arising out of this instrument of
assignment nor shall the Assignee be required or obligated in any manner
to perform or fulfill any obligations of [each] Assignor respectively
under or pursuant to said insurances or to make any payment or to make
any inquiry as to the nature or sufficiency of any payment received by
it or to present or file any claim, or to take any other action to
collect or enforce the payment of any amounts which may have been
assigned to it or to which it may be entitled hereunder at any time or
times.
It is expressly agreed anything herein to the contrary
notwithstanding that (i) unless and until an Incipient Default or an
Event of Default is continuing and has not been cured or waived and
unless and until the Assignee shall have notified the underwriters in
writing of such an Incipient Default or Event of Default, or (ii) unless
and until the Vessel shall have become an actual or constructive total
loss or a compromised or arranged total loss or requisition of title,
[each] Assignor shall be entitled to exercise all of its rights,
including the right to receive insurance proceeds payable in respect of
the insurances hereby assigned (except as otherwise provided in the loss
payable clauses attached hereto and except for amounts payable in
respect of single interest mortgagee's insurance and mortgagee's
additional perils insurance (pollution) to the same extent as if none of
the rights had been assigned hereby.
[Each] Assignor does hereby constitute the Assignee, its
successors and assigns, [such] Assignor's true and lawful attorney,
irrevocably, with full power (in the name of [such] Assignor or
otherwise), upon an event of default under the Loan Agreement or the
Mortgage having occurred and in accordance with the provisions thereof,
to ask, require, demand, receive, compound and give acquittance for any
and all monies and claims for monies due and to become due under or
arising out of said insurances, to endorse any checks or other
instruments or orders in connection therewith and to file any claims or
to take any action or institute any proceedings which the Assignee may
deem to be necessary or advisable in the premises.
[Each] Assignor hereby covenants and agrees (A) to
procure that notice of this Assignment shall be duly given to all
underwriters and brokers, (B) that where the consent of any underwriter
is required pursuant to any of the claims for monies due and monies due
assigned hereby that it shall be obtained and evidence thereof shall be
given to the Assignee, or, in the alternative, that in the case of
protection and indemnity coverage, the Assignor[s] shall obtain a letter
of undertaking by the underwriters duly noting the interest of the
Assignee, and (C) that there shall be duly endorsed upon all slips,
cover notes, policies, certificates of entry or other instruments issued
or to be issued in connection with the insurances assigned hereby such
clauses as to loss payees as the Assignee may require or approve. In
all cases, unless otherwise agreed in writing by the Assignee, such
slips, cover notes, notices, certificates of entry or other instruments
shall provide that there will be no recourse against the Assignee for
payment of premiums, calls or assessments. [Each] Assignor further
covenants and agrees that in the event the Assignee shall agree that any
insurance is placed with a "captive insurer," all such amounts shall be
reinsured in a manner satisfactory to the Assignee and all monies and
claims for monies under policies of reinsurance shall be assigned to the
Assignee and/or there shall be a "cut through" clause respecting such
reinsurance satisfactory in its sole discretion to the Assignee.
[Each] Assignor agrees that at any time and from time to
time, upon the written request of the Assignee, [such] Assignor will
promptly and duly execute and deliver any and all such further
instruments and documents as the Assignee may deem desirable in
obtaining the full benefits of this Assignment and of the rights and
powers herein granted.
[Each] Assignor does hereby warrant and represent that it
has not assigned or pledged, and hereby covenants that, without the
prior written consent thereto of the Assignee, so long as this
instrument of assignment shall remain in effect, they will not assign or
pledge the whole or any part of the right, title and interest hereby
assigned to anyone other than the Assignee, its successors or assigns,
and it will not take or omit to take any action, the taking or omission
of which might result in an alteration or impairment of said insurances,
of this Assignment or of any of the rights created by said insurances or
this Assignment.
This assignment to the Assignee shall take effect
immediately upon the execution hereof and the powers and authorities
granted to the Assignee, its successors and assigns, herein, having been
given for valuable consideration, are hereby declared to be irrevocable.
[Each] Assignor agrees that the Assignee is hereby
appointed its attorney-in-fact and may execute on [each] Assignor's
behalf and file any financing statements under the Uniform Commercial
Code or notices respecting the Companies Register, or papers of similar
purpose or effect in respect of this Assignment which the Assignee deems
appropriate.
All notices or other communications which are required to
be made to the Assignee hereunder shall be made by telex or facsimile
transmission, confirmed by postage prepaid letter to:
if to the Assignor [Charterer], addressed to:
American President Lines, Ltd.
1111 Broadway
Oakland, California 94607
Attention: Treasurer
Telecopy: (510) 272-8931
Telex: 671 4840 APL OAK
[if to the Owner, addressed to:
APL Newbuildings, Ltd.
1111 Broadway
Oakland, California 94607
Attention: Treasurer
Telecopy: (510) 272-8931
Telex: 671 4840 APL OAK]
if to the Assignee, to:
Commerzbank AG, Hamburg
Ness 7-9
D-20457 Hamburg
Federal Republic of Germany
Attention: Stefan E. Kuch
Telecopy: 49-40-3683-4068
Telex: 212391 CBKD
or at such other address as may have been furnished in writing by the
Assignee. Any consents, waivers, approvals or other actions to be given
or taken by the Assignee hereunder shall be effective if contained in a
writing signed by the Assignee or such other person or persons as the
Assignee may from time to time appoint, and forwarded to the Assignor[s]
at its [their respective] address[es] as provided in Section 7 of the
Acquisition Agreement.
Any payments made pursuant to the terms hereof shall be
payable to the Assignee to such account or accounts as may, from time to
time, be designated by the Assignee.
Upon payment in full to the Assignee of all amounts due
and owing thereto under each of the Daewoo Security Documents (as such
term is defined in the Acquisition Agreement) relating to the Vessel,
this Assignment shall terminate.
This Assignment shall be governed by the laws of the
State of New York (other than the law of the State of New York governing
choice of law) and shall not be amended or altered nor shall any
provision hereto be waived except by an amendment or waiver in writing
signed by the Assignee.
[SIGNATURE APPEARS ON NEXT PAGE.]
IN WITNESS WHEREOF, the Assignor[s] [have] caused this
Assignment respecting the Vessel's insurances to be duly executed this
_____ day of _________, 199_.
[
] [Owner]
By:__________________________
Title:
[
]
[Charterer]
By:__________________________
Title:
NOTICE OF ASSIGNMENT
OF INSURANCE
PLEASE TAKE NOTICE that the Undersigned, Owner [and
Charterer] of the [insert name and official number of Daewoo Vessel] has
assigned to COMMERZBANK AG, HAMBURG as syndicate agent and mortgagee
under a certain First Preferred Mortgage dated the date hereof covering
said Vessel, all of the Undersigned's right, title and interest in and
to any and all insurances respecting said Vessel, including all monies
payable and to become payable thereunder or in connection therewith
(including return of premium). This Notice and the attached Loss
Payable Clauses shall be endorsed on all policies and certificates of
entry evidencing such insurances.
Dated: __________, 199_
[
]
[Owner]
By:____________________________
Title:
[ ]
[Charterer]
By:_________________________
Title:
Loss Payable Clause
Hull and War Risks
[Loss, if any, payable to Commerzbank AG as the Syndicate
Agent (the "Mortgagee"), for distribution by it in accordance with the
terms of the Mortgage in favor of the Mortgagee except that, in the case
of any loss involving any damage to the Vessel or liability of the
Vessel, the Underwriters may pay directly for the repair, salvage,
liability or other charges involved or, if the Shipowner [or the
Charterer] shall have first fully repaired the damage and paid the cost
thereof, or discharged the liability or paid all of the salvage or other
charges and Underwriters shall have received evidence that such repair
and payment have been made or will be made simultaneously with the
payment by the Underwriters and there is not an Event of Default or
Incipient Default, written notice of which the Mortgagee has given the
Underwriters, then the Underwriters may pay the Shipowner [or the
Charterer, as the case may be,] as reimbursements therefor; provided,
further, that if such damage involves a loss in excess of USD2,000,000
or its equivalent, the Underwriters shall not make such payment without
first obtaining the written consent of the Mortgagee.
In the event of an actual or constructive total loss or a
compromised or arranged total loss or requisition of title, all
insurance payment therefor shall be paid to the Mortgagee, for
distribution by it in accordance with the terms of the Mortgage in favor
of the Mortgagee.]
Loss Payable Clause
Protection and Indemnity
[If APL Newbuildings, Ltd. (the "Shipowner") or American
President Lines, Ltd. (the "Charterer")] shall have incurred the loss,
if any, payable to Commerzbank AG (the "Mortgagee"), for distribution by
it in accordance with the terms of the Mortgage, except that, any loss
may be paid directly to the person to whom liability covered by this
insurance has been incurred if the Shipowner [or the Charterer] shall
not have incurred the loss, damage or expense in question, or, unless
there is an Event of Default or Incipient Default, written notice of
which the Mortgagee has given the underwriters, to the Shipowner [or to
the Charterer] to reimburse it for any loss, damage or expenses incurred
by it and covered by this insurance, provided the underwriters shall
have first evidence that the liability insured against has been
discharged.
APPENDIX C-3
FORM OF SECOND ASSIGNMENT OF INSURANCE
The undersigned [ ], a
corporation organized and existing under the laws of [ ] [("Owner")
and American President Lines, Ltd., a corporation organized and existing
under the laws of ___________ (the "Charterer")] ([collectively,] the
"Assignor[s]"), in consideration of One Dollar ($1) lawful money of the
United States of America, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, pursuant to
the Agreement to Acquire and Charter dated March 14, 1994 (the
"Acquisition Agreement") by and among the Assignor, Kreditanstalt fur
Wiederaufbau (the "Assignee"), Commerzbank AG (Kiel Branch), Dresdner
Bank AG in Hamburg, Vereins-und Westbank AG, Deutsche Schiffsbank AG,
Norddeutsche Landesbank-Girozentrale, Deutsche Verkehrs-Bank AG, Banque
Internationale a Luxembourg S.A. and Commerzbank AG, Hamburg, as Agent
and as owner of the [insert name and official number of Daewoo Vessel]
(the "Vessel") [(and American President Lines, Ltd. as the bareboat
charterer of the Vessels], [each] Assignor has sold, assigned,
transferred and set over and by this instrument, do sell, assign,
transfer and set over and grant a second priority security interest,
subject only to a first priority security interest granted to
Commerzbank AG unto the Assignee mortgagee of the Vessel under a Second
Preferred Mortgage dated the date hereof (the "Mortgage"), and unto the
Assignee's successors and assigns, as such mortgagee, to it and its
successors' and assigns' own proper use and benefit, all right, title
and interest of the [respective] Assignor under, in and to (i) all
policies and contracts of insurance (which expression includes all
entries of the Vessel in Protection and Indemnity Associations or War
Risk Associations) in respect of the Vessel whether now or hereafter to
be effected, and all renewals of or replacements for the same, (ii) when
the context so admits, any reinsurance of such insurances, (iii) all
claims, returns of premium and other monies and claims for monies due
and to become due under said insurances or in respect of said
insurances, (iv) all other rights of [each] Assignor [respectively]
under or in respect of said insurances, and (v) any proceeds of any of
the foregoing.
It is expressly agreed that anything herein contained to
the contrary notwithstanding, [each] Assignor shall remain liable under
said insurances to perform all of the [respective] obligations assumed
by it thereunder, and the Assignee shall have no obligation or liability
under said insurances by reason of or arising out of this instrument of
assignment nor shall the Assignee be required or obligated in any manner
to perform or fulfill any obligations of [each] Assignor [respectively]
under or pursuant to said insurances or to make any payment or to make
any inquiry as to the nature or sufficiency of any payment received by
it, or to present or file any claim, or to take any other action to
collect or enforce the payment of any amounts which may have been
assigned to it or to which it may be entitled hereunder at any time or
times.
It is expressly agreed anything herein to the contrary
notwithstanding that (i) unless and until an Incipient Default or an
Event of Default is continuing and has not been cured or waived and
unless and until the Assignee shall have notified the underwriters in
writing of such an Incipient Default or Event of Default, or (ii) unless
and until the Vessel shall have become an actual or constructive total
loss or a compromised or arranged total loss or requisition of title,
[each] Assignor shall be entitled to exercise all of its rights,
including the right to receive insurance proceeds payable in respect of
the insurances hereby assigned (except as otherwise provided in the loss
payable clauses attached hereto and except for amounts payable in
respect of single interest mortgagee's insurance and mortgagee's
additional perils insurance (pollution) to the same extent as if none of
the rights had been assigned hereby.
Subject only to a First Assignment of Insurances in favor
of Commerzbank AG, [each] Assignor does hereby constitute the Assignee,
its successors and assigns, [such] Assignor's true and lawful attorney,
irrevocably, with full power (in the name of [such] Assignor or
otherwise), upon an event of default under the Loan Agreement or the
Mortgage having occurred and in accordance with the provisions thereof,
to ask, require, demand, receive, compound and give acquittance for any
and all monies and claims for monies due and to become due under or
arising out of said insurances, to endorse any checks or other
instruments or orders in connection therewith and to file any claims or
to take any action or institute any proceedings which the Assignee may
deem to be necessary or advisable in the premises.
[Each] Assignor hereby covenants and agrees (A) to
procure that notice of this Assignment shall be duly given to all
underwriters and brokers, (B) that where the consent of any underwriter
is required pursuant to any of the claims for monies due and monies due
assigned hereby that it shall be obtained and evidence thereof shall be
given to the Assignee, or, in the alternative, that in the case of
protection and indemnity coverage, the Assignor[s] shall obtain a letter
of undertaking by the underwriters duly noting the interest of the
Assignee, and (C) that there shall be duly endorsed upon all slips,
cover notes, policies, certificates of entry or other instruments issued
or to be issued in connection with the insurances assigned hereby such
clauses as to loss payees as the Assignee may require or approve. In
all cases, unless otherwise agreed in writing by the Assignee, such
slips, cover notes, notices, certificates of entry or other instruments
shall provide that there will be no recourse against the Assignee for
payment of premiums, calls or assessments. [Each] Assignor further
covenants and agrees that in the event the Assignee shall agree that any
insurance is placed with a "captive insurer," all such amounts shall be
reissued in a manner satisfactory to the Assignee and all monies and
claims for monies under policies of reinsurance shall be assigned to the
Assignee and/or there shall be a "cut through" clause respecting such
reinsurance satisfactory in its sole discretion to the Assignee.
[Each] Assignor agrees that at any time and from time to
time, upon the written request of the Assignee, [such] Assignor will
promptly and duly execute and deliver any and all such further
instruments and documents as the Assignee may deem desirable in
obtaining the full benefits of this Assignment and of the rights and
powers herein granted.
[Each] Assignor does hereby warrant and represent that,
except for the First Assignment of Insurances in favor of Commerzbank
AG, it has not assigned or pledged, and hereby covenants that, without
the prior written consent thereto of the Assignee, so long as this
instrument of assignment shall remain in effect, they will not assign or
pledge the whole or any part of the right, title and interest hereby
assigned to anyone other than the Assignee, its successors or assigns,
and it will not take or omit to take any action, the taking or omission
of which might result in an alteration or impairment of said insurances,
of this Assignment or of any of the rights created by said insurances or
this Assignment.
This assignment to the Assignee shall take effect
immediately upon the execution hereof and the powers and authorities
granted to the Assignee, its successors and assigns, herein, having been
given for valuable consideration, are hereby declared to be irrevocable.
[Each] Assignor agrees that the Assignee is hereby
appointed its attorney-in-fact and may execute on [such] Assignor's
behalf and file any financing statements under the Uniform Commercial
Code or notices respecting the Companies Register, or papers of similar
purpose or effect in respect of this Assignment which the Assignee deems
appropriate.
All notices or other communications which are required to
be made to the Assignee hereunder shall be made by telex or facsimile
transmission, confirmed by postage prepaid letter to:
if to the Assignor [Charterer], addressed to:
American President Lines, Ltd.
1111 Broadway
Oakland, California 94607
Attention: Treasurer
Telecopy: (510) 272-8931
Telex: 671 4840 APL OAK
[if to the Owner, addressed to:
APL Newbuildings, Ltd.
1111 Broadway
Oakland, California 94607
Attention: Treasurer
Telecopy: (510) 272-8931
Telex: 671 4840 APL OAK]
if to the Assignee, addressed to:
Kreditanstalt fur Wiederaufbau
Palmengartenstrasse 5-9
Postfach 11-11-41
D-60325 Frankfurt am Main
Federal Republic of Germany
Attention: Mr. Andreas Uibeleisen
Mr. Wolfgang Pfisterer
Telecopy: 49-7431-2944 or 49-7431-2198
Telex: 415256-0 KWD
or at such other address as may have been furnished in writing by the
Assignee. Any consents, waivers, approvals or other actions to be given
or taken by the Assignee hereunder shall be effective if contained in a
writing signed by the Assignee or such other person or persons as the
Assignee may from time to time appoint, and forwarded to the Assignor[s]
at its [their respective] address[es] as provided in Section 7 of the
Acquisition Agreement.
Any payments made pursuant to the terms hereof shall be
payable to the Assignee to such account or accounts as may, from time to
time, be designated by the Assignee.
Upon payment in full to Assignee of all amounts due and
owing thereto under each of the Second Security Documents (as such term
is defined in the Acquisition Agreement) relating to the Vessel, this
Assignment shall terminate.
This Assignment shall be governed by the laws of the
State of New York (other than the law of the State of New York governing
choice of law) and shall not be amended or altered nor shall any
provision hereto be waived except by an amendment or waiver in writing
signed by the Assignee.
[SIGNATURE APPEARS ON NEXT PAGE.]
IN WITNESS WHEREOF, the Assignor[s] [have] caused this
Assignment respecting the Vessel's Insurances to be duly executed this
_____ day of_________, 199_.
[
]
[Owner]
By:_____________________________
Title:
[
]
[Charterer]
By:____________________________
Title:
NOTICE OF ASSIGNMENT
OF INSURANCE
PLEASE TAKE NOTICE that the Undersigned, Owner [and
Charterer] of the [insert name and official number of Daewoo Vessel] has
assigned to KREDITANSTALT FUR WIEDERAUFBAU as agent and mortgagee under
a certain Second Preferred Mortgage dated the date hereof covering said
Vessel, all of the Undersigned's right, title and interest in and to any
and all insurances respecting said Vessel, including all monies payable
and to become payable thereunder or in connection therewith (including
return of premium), subject only to a First Assignment of Insurances in
favor of Commerzbank AG, as Syndicate Agent and Mortgagee under a First
Preferred Mortgage dated the date hereof. This Notice and the attached
Loss Payable Clauses shall be endorsed on all policies and certificates
of entry evidencing such insurances.
Dated: __________, 199_
[
]
[Owner]
By:____________________________
Title:
[ ]
[Charterer]
By:____________________________
Title:
Loss Payable Clause
Hull and War Risks
[Subject only to an Assignment of Insurance dated
_______, 199_ by the Shipowner in favor of Commerzbank, AG, loss, if
any, payable to Kreditanstalt fur Wiederaufbau (the "Mortgagee"), for
distribution by it in accordance with the terms of the Mortgage in favor
of the Mortgagee except that, in the case of any loss involving any
damage to the Vessel or liability of the Vessel, the Underwriters may
pay directly for the repair, salvage, liability or other charges
involved or, if the Shipowner [or the Charterer] shall have first fully
repaired the damage and paid the cost thereof, or discharged the
liability or paid all of the salvage or other charges and Underwriters
shall have received evidence that such repair and payment have been made
or will be made simultaneously with the payment by the Underwriters and
there is not an Event of Default or Incipient Default, notice of which
the Mortgagee has given the Underwriters, then the Underwriters may pay
the Shipowner [or the Charterer, as the case may be,], as reimbursements
therefor; provided, further, that if such damage involves a loss in
excess of USD2,000,000 or its equivalent, the Underwriters shall not
make such payment without first obtaining the written consent of the
Mortgagee.
Subject only to an Assignment of Insurance dated _______,
199_ by the Shipowner in favor of Commerzbank, AG, in the event of an
actual or constructive total loss or a compromised or arranged total
loss or requisition of title, all insurance payment therefor shall be
paid to the Mortgagee, for distribution by it in accordance with the
terms of the Mortgage in favor of the Mortgagee.]
Loss Payable Clause
Protection and Indemnity
Subject to an Assignment of Insurance dated [ ], 199
by the Shipowner to Commerzbank AG, if APL Newbuildings, Ltd. (the
"Shipowner") or American President Lines, Ltd. (the "Charterer") shall
have incurred the loss, if any, payable to Kreditanstalt fur
Wiederaufbau (the "Mortgagee"), for distribution by it in accordance
with the terms of the Mortgage, except that, any loss may be paid
directly to the person to whom liability covered by this insurance has
been incurred if the Shipowner shall not have incurred loss, damage or
expense in question, or, unless there is an Event of Default or an
Incipient Default, written notice of which the Mortgagee has given the
underwriters, to the Shipowner [or to the Charterer] to reimburse it for
any loss, damage or expenses incurred by it and covered by this
insurance, provided the underwriters shall have first evidence that the
liability insured against has been discharged.
APPENDIX D*
APPENDIX E
_________________________________________________________________
_________________________________________________________________
GUARANTEE
dated as of ____________, 199
by
AMERICAN PRESIDENT COMPANIES, LTD.
(as Guarantor)
in favor of
KREDITANSTALT FUR WIEDERAUFBAU
(as Agent and
Lender)
and
COMMERZBANK AG, HAMBURG
(as Syndicate Agent)
COMMERZBANK AG (KIEL BRANCH)
DRESDNER BANK AG IN HAMBURG
VEREINS-und WESTBANK AG
DEUTSCHE SCHIFFSBANK AG
NORDDEUTSCHE LANDESBANK-GIROZENTRALE
DEUTSCHE VERKEHRS-BANK AG
BANQUE INTERNATIONALE A LUXEMBOURG S.A.
(as the Syndicate)
_________________________________________________________________
_________________________________________________________________
GUARANTEE, dated as of _________, 199 , by AMERICAN
PRESIDENT COMPANIES, LTD., a Delaware corporation (the "Guarantor"), in
favor of Kreditanstalt fur Wiederaufbau, a corporation organized and
existing under the laws of the Federal Republic of Germany whose address
is Palmengartenstrasse 5-9, Postfach 11-11-41, D-60325, Frankfurt am
Main ("KfW"), COMMERZBANK AG (HAMBURG), a banking corporation
incorporated in the Federal Republic of Germany whose address is Ness 7-
9, D-20457 Hamburg, (the "Syndicate Agent") and the banks listed in
Schedule 1 which is attached hereto (KfW, the Syndicate Agent and such
banks hereinafter referred to as the "Obligees"). Capitalized terms used
herein and not otherwise defined herein shall have the meanings set
forth in the Loan Agreement dated March 14, 1994 (the "Loan Agreement")
by and among the Obligees and American President Lines, Ltd., a Delaware
corporation ("APL").
WHEREAS, pursuant to the Loan Agreement and the Agreement
to Acquire and Charter dated as of March 14, 1994 by and among American
President Lines, Ltd., APL Newbuildings, Ltd. and the Obligees, at the
option of APL, APL or APL Newbuildings Ltd. will be obligated for any
Notes issued by it under the Loan Agreement and related Vessel
Indebtedness with respect to the purchase financing of certain of the
HDW or Daewoo Vessels;
WHEREAS, the registered owner of each Vessel in
accordance with the Loan Documents shall be the sole obligor under all
Notes issued by it under the Loan Agreement, and all related Vessel
Indebtedness, with respect to the purchase financing for such Vessel;
WHEREAS, the Guarantor, which is the beneficial owner of
all the issued and outstanding capital stock of ________, is entering
into this Guarantee in consideration of the Obligees entering into the
Loan Agreement and purchasing the Notes (as defined in the Loan
Agreement). Accordingly, the Guarantor hereby agrees with the Obligees
as follows:
SECTION 1. GUARANTEE
1.1 The Guarantee. The Guarantor hereby guarantees as
primary obligor and not as a surety the full and punctual payment and,
to the fullest extent permitted by applicable law, performance when due
of all amounts payable and actions required by ________ under the Loan
Documents. Upon failure by ________ to pay punctually any such payment
required by it to be paid within any applicable grace periods permitted
under such agreements and documents, the Guarantor shall forthwith on
demand pay the amount not so paid in immediately available funds as
specified in the Loan Agreement. Upon payment or performance by the
Guarantor of any obligation of ________ pursuant to this Section 1.1,
________'s obligation with respect to such payment or performance under
the Loan Agreement or any Loan Document as the case may be shall
terminate.
1.2 Guarantee Unconditional. The obligations of the
Guarantor hereunder shall be irrevocable, unconditional and absolute
without regard to:
(a) any amendment, consent or release in respect
of any of the terms of any of the Loan Documents or of the
obligations under any thereof of any Person (provided only that
such amendment, consent or release is effected in accordance with
the terms of such Loan Documents); or
(b) any taking, holding, exchange, release, non-
perfection or invalidity of any direct or indirect security for
any obligation of ________ under the Loan Documents; or
(c) any change in the corporate existence,
structure or ownership of ________, or any insolvency,
bankruptcy, reorganization or other similar proceeding affecting
________ or its assets; or
(d) the existence of any claim, setoff or other
rights which the Guarantor may have at any time against ________,
HDW or Daewoo; or
(e) any defense arising by reason of any
invalidity, unenforceability or other defense of ________, or
other defense of the Guarantor or by reason of the cessation from
any cause whatsoever of the liability either in whole or in part
of ________ to pay any amount payable by ________ under the Loan
Documents; or
(f) any consent, release, renewal, refinancing,
refunding, amendment or modification of or addition or supplement
to or waiver of any of the terms of any of the Loan Documents or
of any other agreement which may be made relating to any of the
Loan Documents or of the obligations under any thereof of any
Person (provided only that such consent, release, renewal,
refinancing, refunding, amendment or modification of or addition
or supplement to or waiver is effected in accordance with the
terms of such Loan Documents); or
(g) any exercise or non-exercise of any right,
power, privilege or remedy under or in respect of this Guarantee
or any other Loan Document, or any waiver of any such right,
power, privilege or remedy or of any default in respect of any
Loan Document, or any receipt of any collateral security or any
sale, exchange, surrender, release, discharge, failure to perfect
or to continue perfected, loss, abandonment or alteration of, or
other dealing with, any collateral security by whomsoever at any
time pledged or mortgaged to secure, or however securing, any of
the Guarantor's obligations or any liabilities (including
liabilities of any Guarantor hereunder) incurred directly or
indirectly in respect thereof.
1.3 Discharge Only Upon Payment in Full; Reinstatement
in Certain Circumstances. The Guarantor's obligations hereunder shall
remain in full force and effect until the amounts payable by ________
under the Loan Documents shall have been paid in full or the obligations
of ________ thereunder have otherwise terminated, whichever is earlier.
If at any time any amount payable by ________ under the Loan Documents
is rescinded or must be otherwise restored or returned upon the
insolvency, bankruptcy or reorganization of ________ or otherwise, the
Guarantor's obligations hereunder with respect to such payment shall be
reinstated at such time as though such payment had not been made.
1.4 Waiver. The Guarantor irrevocably waives acceptance
of this Guarantee, presentment, demand except as required pursuant to
Section 1.1 hereof, protest, and notice, as well as any requirement that
at any time any action be taken by any Person against ________ or any
other Person.
1.5 Subrogation. Upon making any payment hereunder, the
Guarantor shall be subrogated to the rights of the Obligee under the
Loan Documents against ________ with respect to such payment; provided
that the Guarantor shall have no right of subrogation and waives, to the
fullest extent permitted by applicable law, any right to any security in
any right or property which is the subject of any Loan Document and to
exercise any remedy which the Obligees have or may hereafter have
against ________ for payment of money under the Loan until all amounts
payable by _______ under the Loan Documents have been paid in full or
the obligations of ________ thereunder have otherwise terminated,
whichever is earlier. Nothing contained in this Guarantee shall
preclude the Guarantor, as the corporate parent of ________, and not as
a subrogee, from causing ________ to make payments or perform such
actions as are required to be performed by ________ under the Loan
Documents.
1.6 Payment and Performance Guarantee; No Set-Off or
Deductions; No Waiver. The Guarantor hereby agrees that (a) this
Guarantee is a guarantee of payment and performance and not of
collection, and shall continue in full force and effect and be binding
upon the Guarantor, its successors and assigns; and (b) amounts payable
hereunder shall be paid when due without set-off or reduction for any
reason whatsoever; provided, however, that nothing contained in this
Section shall be construed to be a waiver, modification, alteration or
release of any claims which the Guarantor may have for damages or
equitable relief for any breach by the Obligees of any provision of the
Loan Agreement or any other Loan Document or for any loss due to any
acts taken by the Obligees thereunder.
1.7 Obligations Unaffected. Any Obligee may, at any
time and from time to time, without the consent of, or notice to, the
Guarantor, without incurring responsibility to the Guarantor and without
impairing, diminishing, or discharging, releasing, suspending,
prejudicing or terminating the obligations of the Guarantor hereunder,
in accordance with the terms and conditions of the Loan Documents and in
whole or in part, take or refrain from taking (either directly or
indirectly) any and all actions with respect to the Guarantor's
obligations, this Guarantee, the other Loan Documents, any collateral
security at any time granted or received for any of the Guarantor's
obligations, or any Person (including any Guarantor) that such Obligee
determines in its sole discretion to be necessary or appropriate,
whether or not such action or refraining from action varies or increases
the risk of, such Guarantor; provided, however, that any amount received
by any such Obligee as a result of any such action shall correspondingly
reduce the Guarantor's obligations hereunder.
SECTION 2. Representations and Warranties of the
Guarantor. The Guarantor represents and warrants to each Obligee that:
2.1 the Guarantor is a corporation duly organized and
validly existing in good standing under the laws of the jurisdiction of
its incorporation with full corporate power and authority to conduct its
business as the same is presently conducted;
2.2 the Guarantor has legal power and authority to enter
into and carry out the terms of this Guarantee;
2.3 this Guarantee has been duly authorized by all
necessary action, corporate or other, on the part of the Guarantor, and
this Guarantee constitutes in accordance with its terms, a legal, valid
and binding instrument enforceable against the Guarantor, except to the
extent limited by applicable bankruptcy, reorganization, insolvency,
moratorium or other laws of general application relating to or affecting
the enforcement of creditors' rights from time to time in effect;
2.4 except as previously disclosed to the Syndicate
Agent and the Agent in writing, there are no actions, suits or
proceedings pending or, to the Guarantor's knowledge, threatened against
the Guarantor, which question the validity of this Guarantee or action
taken or to be taken by the Guarantor pursuant to this Guarantee which
would, if adversely determined, materially and adversely affect the
performance by the Guarantor of its obligations hereunder;
2.5 the execution and delivery of this Guarantee by the
Guarantor and the performance by the Guarantor of its obligations under
this Guarantee will not violate any provisions of the Certificate of
Incorporation or Bylaws of the Guarantor and will not result in a breach
of the terms and provisions of, or constitute a default under, any other
agreement or undertaking by the Guarantor or by which it or any of its
property is bound or any order of any court or administrative agency
entered in any proceedings binding on the Guarantor, or violate any
applicable statute, rule or regulation;
2.6 the Guarantor is not in default and no Incipient
Default has occurred, in any respect which would materially and
adversely affect the ability of the Guarantor to perform its obligations
under this Guarantee, under any mortgage, loan agreement, deed of trust,
indenture or other agreement with respect thereto or evidence of
indebtedness to which it is a party or by which it is bound, and is not
in violation of or in default, in any respect which would materially and
adversely affect the ability of the Guarantor to perform its obligations
under this Guarantee, under any order, writ, judgment or decree of any
court, arbitrator or governmental authority, commission, board, agency
or instrumentality, domestic or foreign;
2.7 the Guarantor has more than one place of business
and the present location of the place of business which is its chief
executive office is 1111 Broadway, Oakland, California 94607;
2.8 the Guarantor has no knowledge of any actual or
proposed deficiency or additional assessment in connection with any
Taxes which either in any case or in the aggregate would be materially
adverse to the Guarantor and which would materially and adversely affect
the ability of the Guarantor to perform its obligations hereunder;
2.9 all Taxes (other than taxes based on or measured by
income and withholding taxes), liability for the payment of which has
been incurred by the Guarantor in connection with the execution,
delivery and performance by it of each Loan Document to which it is or
will be a party, have been paid (or provided for in its accounts if not
payable on or prior to the delivery date of the respective Vessel);
2.10 all governmental consents, licenses, permissions,
approvals, registrations or authorizations or declarations required (i)
to enable it lawfully to enter into and perform its payment obligations
under this Guarantee and to require ________ to perform its other
obligations under each of the Loan Documents to which ________ is a
party, (ii) to ensure that its respective obligations under clause (i)
hereunder are legal, valid and enforceable and (iii) to make this
Guarantee admissible in evidence have been obtained or made and are in
full force and effect;
2.11 it has not taken any corporate action nor to its
knowledge have any other steps been taken or legal proceedings been
started or threatened against it for its winding-up, dissolution or
reorganization or for the appointment of a receiver, administrative
receiver, administrator, trustee or similar officer of it or of any or
all of its respective assets and revenues;
2.12 (i) no written representation, warranty or
statement made or other document provided by the Guarantor in connection
with the negotiation of this Guarantee at the time when given is or was
untrue or contains or contained any misrepresentation of a material fact
or omits or omitted to state any material fact necessary to make any
such statement herein or therein not misleading and (ii) all financial
projections, if any, prepared by the Borrower or the Guarantor and made
available to any Lender have been prepared in good faith based upon
reasonable assumptions (it being understood that such projections are
subject to significant uncertainties and contingencies, many of which
are beyond the Borrower's and the Guarantor's control, and that no
assurances can be given that any such projections will be realized);
2.13 ERISA. To the best knowledge of the Guarantor (i)
each Plan maintained by the Guarantor and each ERISA Affiliate is in
substantial compliance in all material respects with ERISA; (ii) no Plan
maintained by the Guarantor or any ERISA Affiliate is insolvent or in
reorganization; (iii) no Insufficiency or Termination Event has occurred
or is reasonably expected to occur, and no "accumulated funding
deficiency" exists and no "variance" from the "minimum funding standard"
has been granted (each such term as defined in Part III, Subtitle B, of
Title I of ERISA) with respect to any Plan in which the Guarantor or any
of its Subsidiaries, or any ERISA Affiliate is a participant; (iv)
neither the Guarantor nor any ERISA Affiliate has incurred, or is
reasonably expected to incur, any Withdrawal Liability to any
Multiemployer Plan; (v) neither the Guarantor, its Subsidiaries, nor any
ERISA affiliate has received any notification that any Multiemployer
Plan in which it is a participant is in reorganization or has been
terminated, within the meaning of Title IV of ERISA and no such
Multiemployer Plan is reasonably expected to be in reorganization or
terminated within the meaning of Title IV of ERISA; (vi) no lien imposed
under the Code or ERISA on the assets of the Guarantor or any Subsidiary
or any ERISA Affiliate exists or is reasonably expected to arise on
account of any Plan; (vii) no material liability will be incurred by the
Guarantor, its Subsidiaries, or any ERISA Affiliate if any of them
should terminate contributions to any other employee benefit plan
maintained by them;
2.14 it is not an "investment company" or a company
"controlled" by an "investment company" (as each of such terms is
defined or used in the Investment Company Act of 1940, as amended).
SECTION 3. Covenants of the Guarantor. The Guarantor
covenants to each Obligee that:
3.1 The Guarantor will not consolidate or amalgamate
with, or merge into, any other entity, or sell, convey, transfer, lease,
or otherwise dispose of all or substantially all of its assets,
including, but not limited to, by dividend (whether by one transaction
or a series of transactions and whether related or not); provided,
however, that it may consolidate or amalgamate with, or merge into, any
other entity, or sell, convey, transfer, lease, or otherwise dispose of
all or substantially all of its assets if the buyer, assignee or
transferee corporation (the "Assignee") shall be a solvent corporation
organized and existing under the laws of the United States of America or
any state thereof following such transaction and shall have executed and
delivered an agreement, in form and substance reasonably satisfactory to
the Obligees, containing an assumption by the Assignee of the due and
punctual performance and observance of all covenants and obligations of
the Guarantor hereunder, and confirming the accuracy of any
representations and warranties made herein as of the date hereof
required with respect to such Assignee; and provided further that
immediately following such transaction, no Incipient Default or Event of
Default shall have occurred and be continuing.
SECTION 4. Financial Statements.
4.1 The Guarantor shall, as soon as possible, provide to
the Agent and the Syndicate Agent (a) but in no event later than one
hundred twenty (120) days after the end of each fiscal year, its
consolidated audited accounts of all consolidated financial statements
of the Guarantor, such financial statements to be prepared in accordance
with generally accepted United States of America accounting principles
at such time consistently applied and a report thereon by Arthur
Andersen & Co. or other independent public auditors of internationally
recognized standing as may be acceptable to the Agent and the Syndicate
Agent, (b) copies of all quarterly reports filed with the Securities and
Exchange Commission and, within seventy-five (75) days after the end of
the first three (3) quarters of its fiscal year, unaudited consolidated
statements of income and changes in financial position of the Guarantor
and related balance sheets for each such period, all certified as true
and correct by a financial officer of the Guarantor, (c) as soon as the
same is instituted (or, to the knowledge of the Guarantor threatened),
details of any litigation, arbitration or administrative proceedings
against or involving the Guarantor, ________ or the Vessels which if
adversely determined would have a material adverse effect on the
Guarantor, ________ and its other subsidiaries on a consolidated basis,
or construction of the Vessels, and (d) from time to time, and on
demand, such additional financial or other information relating to the
Guarantor as may be reasonably requested by the Agent or the Syndicate
Agent.
SECTION 5. Miscellaneous
5.1 No failure on the part of any Obligee to exercise,
no delay in exercising, and no course of dealing with respect to, any
right or remedy hereunder will operate as a waiver thereof; nor will any
single or partial exercise of any right or remedy hereunder preclude any
other further exercise of any other right or remedy. This Guarantee may
not be amended or modified except by written agreement of the Guarantor
and the Obligees.
5.2 All notices or other communications required under
the terms and provisions hereof shall be made in the manner provided in
Section 15.04 of the Loan Agreement addressed as follows: to (i)
Kreditanstalt fur Wiederaufbau at: Palmengartenstrasse 5-9, D-60325
Frankfurt am Main (if by hand), Postfach 11-11-41, D-60046 Frankfurt am
Main (if by mail), Federal Republic of Germany, Telefax No.: 7431-2944
or 7431-2198; (ii) to Commerzbank AG at: Ness 7-9, D-20457 Hamburg,
Federal Republic of Germany, Attention: Stefan E. Kuch, Telefax No.: 49-
40-3683-4068; (iii) to the other Obligees to the addresses as set forth
in Schedule 1; and (iv) to the Guarantor at: 1111 Broadway, Oakland,
California 94607; Attention: Treasurer, Telefax No.: (510) 272-8931.
5.3 The terms of this Guarantee shall be binding upon,
and inure to the benefit of, the Guarantor and the Obligees and their
respective successors and assigns.
5.4 No recourse shall be had for the payment of any
amount payable hereunder against any incorporator, stockholder, officer
or director, as such, past, present or future, of the Guarantor or of
any successor corporation, either directly or through the Guarantor or
any successor corporation, whether by virtue of any constitutional
provision, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise; it being expressly agreed and
understood that this Guarantee is solely a corporate obligation, and
that no personal liability whatsoever shall attach to, or be incurred
by, any incorporator, stockholder, officer or director, as such, past,
present or future, of the Guarantor or of any successor corporation,
because of the incurring of the indebtedness hereby authorized or under
or by reason of any of the obligations, covenants, promises or
agreements contained in this Guarantee or to be implied herefrom, and
that all liability, if any, of that character against every such
incorporator, stockholder, officer and director is, by the acceptance of
this Guarantee and as a condition of, and as part of the consideration
for, the execution of this Guarantee, expressly waived and released.
5.5 This Guarantee shall be construed in accordance with
and governed by the laws of the State of New York (other than the law of
the State of New York governing choice of law).
5.6 The Guarantor (a) hereby irrevocably submits itself
to the jurisdiction of the Supreme Court of the State of New York, New
York County and to the jurisdiction of the United States District Court
for the Southern District of New York for the purposes of any suit,
action or other proceeding arising out of this Agreement or any other
Loan Document referred to therein, or the subject matter hereof or
thereof or any of the transactions contemplated hereby or thereby,
brought by any of the Obligees or their respective successors, subrogees
or assigns, (b) hereby irrevocably agrees that all claims in respect of
such action or proceeding may be heard and determined, in such New York
State or Federal court, and (c) to the extent that it has or hereafter
may acquire any immunity from jurisdiction of any court or from any
legal process, hereby waives such immunity, and agrees not to assert, by
way of motion, as a defense, or otherwise, in any such suit, action or
proceeding, (i) any claim that it is not personally subject to the
jurisdiction of the above-named New York State or Federal courts, (ii)
that the suit, action or proceeding is brought in an inconvenient forum,
that the venue of the suit, action or proceeding is improper, or
(iii) that this Guarantee or the subject matter hereof may not be
enforced in or by such courts or under any applicable law. The
Guarantor hereby consents to service of process in any suit, action or
other proceeding arising out of this Guarantee or the subject matter
hereof or any of the transactions contemplated hereby and hereby
appoints the Person set forth in Schedule 7 of the Loan Agreement as
Process Agent for the Borrower (the "Process Agent") as its attorneys-in-
fact to receive service of process in such action, suit or proceeding,
it being agreed that service upon the Process Agent shall constitute
valid service upon the Guarantor and its successors and assigns. The
Guarantor agrees that (x) the sole responsibilities of the Process Agent
shall be (i) to receive such process, (ii) to send a copy of any such
process so received to the Guarantor, by registered airmail, return
receipt requested, at its address set forth in Section 5.2 hereof, or at
the last address filed in writing by it with the Process Agent and (iii)
to give prompt telegraphic notice of receipt thereof to the Guarantor at
such address and (y) the Process Agent shall have no responsibility for
the receipt or nonreceipt by the Guarantor of such process, nor for any
performance or nonperformance by it or its respective successors or
assigns. The Guarantor hereby agrees to pay to the Process Agent such
compensation as shall be agreed upon from time to time by it and the
Process Agent for the Process Agent's services hereunder. The Guarantor
hereby agrees that its submission to jurisdiction and its designation of
the Process Agent set forth above is made for the express benefit of
each of the Obligees and their respective successors, subrogees and
assigns. The Guarantor agrees that it will at all times continuously
maintain a Process Agent to receive service of process in the City of
New York or San Francisco, California on behalf of itself and its
properties with respect to this Agreement, and in the event that, for
any reason, the Process Agent named pursuant to this Section 5.6 shall
no longer serve as Process Agent to receive service of process on the
Guarantor's behalf, the Guarantor shall promptly appoint a successor
Process Agent. The Guarantor further agrees that a final judgment
against the Guarantor in any such action or proceeding shall be
conclusive, and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law, a certified or true
copy of which final judgment shall be conclusive evidence of the fact
and of the amount of any indebtedness or liability of the Guarantor
therein described; provided that nothing in this Section 5.6 shall
affect the right of the Guarantor or the Obligees or their respective
successors, subrogees or assigns to serve legal process in any other
manner permitted by law or affect the right of the Guarantor or the
Obligees or their respective successors, subrogees or assigns to bring
any action or proceeding against the Guarantor or the Obligees, as the
case may be, or its property in the courts of other jurisdictions. In
the event of the transfer of all or substantially all the assets and
business of the Process Agent to any other corporation, by
consolidation, merger, sale of assets or otherwise, such other
corporation shall be substituted hereunder for the Process Agent with
the same effect as if named herein in place of the Process Agent. THE
GUARANTOR HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING TO
WHICH IT IS A PARTY INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
(WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT
OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT, ANY OTHER LOAN
DOCUMENT REFERRED TO THEREIN, OR THE RELATIONSHIP ESTABLISHED HEREUNDER
AND WHETHER ARISING OR ASSERTED BEFORE OR AFTER THE DATE HEREOF OR
BEFORE OR AFTER THE PAYMENT, OBSERVANCE AND PERFORMANCE IN FULL OF THE
GUARANTOR'S OBLIGATIONS UNDER THIS AGREEMENT.
5.7 Currency of Account. (a) The Dollar is the
currency of account or each and every sum due from the Guarantor to the
Obligees under this Guarantee in respect of any of the Obligations.
(b) If after the occurrence of any Event of Default, any
sum is due from the Guarantor under this Guarantee or if any order or
judgment given or made in relation hereto has to be converted from the
currency ("the first currency") in which the same is payable hereunder
or under such order or judgment into another currency ("the second
currency") for the purpose of:
(i) making or filing a claim or proof against the
Guarantor;
(ii) obtaining an order or judgment in any court or
tribunal; or
(iii) enforcing any order or judgment given or made in
relation hereto.
(c) The Guarantor shall indemnify and hold harmless the
Obligees from and against any damages or losses suffered as a result of
any discrepancy between (A) the rate of exchange used for such purpose
to convert the sum in question from the first currency into the second
currency and (B) the rate or rates of exchange at which any Obligee may
in the ordinary course of business purchase the first currency with the
second currency in the Frankfurt foreign exchange market upon receipt of
a sum paid to it in satisfaction, in whole or in part, of any such
order, judgment, claim or proof. The above indemnity shall constitute a
separate and independent obligation of the Guarantor from its other
obligations and shall apply irrespective of any indulgence granted by
such Obligee.
5.8 If any term of this Guarantee and any other
application thereof shall be invalid or unenforceable, the remainder of
this Guarantee and any other application of such terms shall not be
affected thereby.
5.9 This Guarantee shall be binding upon, inure to the
benefit of, and be enforceable by, the Guarantor and each of the
Obligees and their respective successors and assigns.
IN WITNESS WHEREOF, the Guarantor has caused this
Guarantee to be duly executed as of the date first set forth herein.
AMERICAN PRESIDENT
COMPANIES, LTD.
By:
_____________________________
Title:
SCHEDULE 1
NAMES AND ADDRESSES OF SYNDICATE MEMBERS
Syndicate Member Address
Commerzbank AG (Kiel Branch) Holstenstrasse 64
D-24103 Kiel
Federal Republic of Germany
Attention: Mr. Claes
Telex: 292898 CBKD
Telecopy: 49-431-9974-372
Dresdner Bank AG in Hamburg Jungfernstieg 22
D-20354 Hamburg
Federal Republic of Germany
Attention: Mr. Roller
Mr.
Bottcher
Telex: 2157170 DR D
Telecopy: 49-40-3501-3818
Vereins- und Westbank AG Alter Wall 22
D-20457 Hamburg
Federal Republic of Germany
Attention: Mr. Kopcke
Mrs.
Mertens
Telex: 215164 VH D
Telecopy: 49-40-3692-3696
Deutsche Schiffsbank AG Domshof 17
D-28195 Bremen
Federal Republic of Germany
Attention: Mr. Pieper
Mr. Onnen
Telex: 244870 DSBR D
Telecopy: 49-421-323539
Norddeutsche Landesbank - Georgsplatz 1
Girozentrale D-30159 Hannover
Federal Republic of Germany
Attention: Mr. Hartmann
Telex: 921634 GZH D
Telecopy: 49 511 36 14785
Deutsche Verkehrs-Bank AG Filiale Hamburg
Ballindamm 6
D-20095 Hamburg
Federal Republic of Germany
Attention: Mr. Spincke
Telex: 402077 DVB
Telecopy: 49-40-308004-12
Banque Internationale a
Luxembourg S.A. 2 Boulevard Royal
L-2953 Luxembourg
Attention: Mr. Jean Pierre
Vernier
Telex: 3326 BIL LU
Telecopy: 35-2-4590-2010
APPENDIX F
FORM OF ASSIGNMENT AND ACCEPTANCE
Dated _________________,
Reference is made to the Loan Agreement, dated as of
March 14, 1994 (the "Loan Agreement") by and among American President
Lines, Ltd. ("the Borrower"), Kreditanstalt fur Wiederaufbau (the
"Agent"), Commerzbank AG, Hamburg (the "Syndicate Agent"), and
Commerzbank AG (Kiel Branch), Dresdner Bank AG in Hamburg, Vereins-und
Westbank AG, Deutsche Schiffsbank AG, Deutsche Verkehrs-Bank AG,
Nordeutsche Landesbank-Girozentrale and Banque Internationale a
Luxembourg S.A. (the "Syndicate"). Terms defined in the Loan Agreement
are used herein with the same meaning.
____________________________ (the "Assignor") and
_________________________ (the "Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the
Assignee, and the Assignee hereby purchases and assumes from the
Assignor, a %2 interest in and to all of the Assignor's rights and
obligations under the Loan Agreement and the other Loan Documents as of
the Effective Date, as defined in paragraph 4 below, including, without
limitation, such percentage interest in the Assignor's Commitment as in
effect on the Effective Date, together with the Notes in respect of such
Facility (a copy of which Notes, endorsed to Assignee, is hereto
attached).
2. The Assignor (i) represents and warrants that as
of the date hereof its Commitment (without giving effect to assignments
thereof which have not yet become effective) is United
States Dollars (USD__________) and the aggregate outstanding principal
amount of the Facility owing and each Note payable to it (without giving
effect to assignments thereof which have not yet become effective) is
United States Dollars (USD__________) in respect of the
Facility; (ii) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that
such interest is free and clear of any adverse claim; (iii) represents
and warrants that this Assignment and Acceptance is not in violation of
the restrictions set forth in clause (iv) of Section 10.02 (a) of the
Loan Agreement; (iv) makes no representation or warranty and assumes no
responsibility with respect to (x) any statements, warranties or
representations made in or in connection with the Loan Agreement, (y)
the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Loan Agreement, (z) or any other instrument
or document furnished pursuant thereto; and (v) makes no representation
or warranty and assumes no responsibility with respect to the financial
condition of the Borrower or the performance or observance by the
Borrower of any of its obligations under the Loan Agreement or any other
instrument or document furnished pursuant thereto.
3. The Assignee (i) confirms that it has received a
copy of the Loan Agreement and the other Loan Documents, together with
copies of the financial statements referred to in the Loan Agreement,
and such other documents and information as it has deemed appropriate to
make its own credit analysis and decision to enter into this Assignment
and Acceptance; (ii) agrees that it will, independently and without
reliance upon the Assignor or any Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the
Loan Agreement; (iii) appoints and authorizes the Syndicate Agent to
take such action as agent on its behalf and to exercise such powers
under the Loan Agreement as are delegated to the Syndicate Agent by the
terms thereof, together with such powers as are reasonably incidental
thereto and ratifies the appointment of Commerzbank AG Hamburg as
Syndicate Agent; (iv) agrees that it will perform in accordance with
their terms all of the obligations which by the terms of the Loan
Agreement are required to be performed by it as a Syndicate Member; (v)
specifies as its lending office (and address for notices) the offices
set forth beneath its name on the signature page hereof; and (vi)
attaches hereto an executed counterpart signature page to the Loan
Agreement (reflecting the Assignee's aggregate Commitment after giving
effect hereto, if applicable).
4. The effective date for this Assignment and
Acceptance shall be _____________________ (the "Effective Date").
Following the execution of this Assignment and Acceptance, two (2)
counterparts will be promptly delivered by the Assignee to the Syndicate
Agent for acceptance and recording by the Syndicate Agent, and the
Syndicate Agent shall promptly forward a counterpart to the Borrower.
5. Upon such acceptance and recording, as of the
Effective Date, (i) the Assignee shall be a party to the Loan Agreement
and, to the extent provided in this Assignment and Acceptance, have the
rights and obligations of a Lender thereunder and (ii) the Assignor
shall, to the extent provided in this Assignment and Acceptance,
relinquish its rights and be released from its obligations under the
Loan Agreement.
6. Upon such acceptance and recording, from and after
the Effective Date, the Agent shall make all payments under the Loan
Agreement in respect of the assignment effected hereby (including,
without limitation, all payments of principal, interest and commitment
fees with respect thereto) to the Assignee. The Assignor and Assignee
shall make all appropriate adjustments in payments under the Loan
Agreement for periods prior to the Effective Date directly between
themselves.
7. This Assignment and Acceptance shall be governed
by, and shall be construed in accordance with, the laws of the State of
New York (other than the law of the State of New York governing choice
of law). This Assignment and Acceptance may be executed in any number
of counterparts, each of which when so executed shall be deemed to be an
original, and all of which when taken together shall constitute one and
the same agreement.
[NAME OF ASSIGNOR)
By:___________________________
Title:
[NAME OF ASSIGNEE]
By:_________________
__________
Title:
[INSERT LENDING
OFFICES]
Appendix G
[NAME OF CHARTERER] [SUBCHARTERER] CHARTER HIRE ASSIGNMENT
FROM
[ ], Assignor
TO
[ ], Assignee
CONSENTED TO BY
_________________________, Charterer
Dated: ____________ __, ____
_____________
_____________
___________ [SUB]CHARTER HIRE ASSIGNMENT
This Assignment dated _________ __, ____, is made between
(i) [AMERICAN PRESIDENT LINES LTD., a Delaware corporation] [APL
NEWBUILDINGS, LTD., a Nevada corporation] (the "Assignor") and (ii) [
].
WITNESSETH
WHEREAS, American President Lines, Ltd. entered into that
certain Loan Agreement dated March 14, 1994 (the "Loan Agreement") by
and among Kreditanstalt fur Wiederaufbau, as Agent and Lender, the
Commerzbank AG, Hamburg, as Syndicate Agent, and Commerzbank AG (Kiel
Branch), Dresdner Bank AG in Hamburg, Vereins- und Westbank AG, Deutsche
Schiffsbank AG, Deutsche Verkehrs-Bank AG, Norddeutsche Landesbank-
Girozentrale and Banque Internationale a Luxembourg S.A. as the
Syndicate.
WHEREAS, the Vessel was delivered to [Owner] Assignor by
the Builder on ________ __, 199_, [transferred by the Owner to the
Assignor], documented in the name of Assignor under the flag of the
Republic of The Marshall Islands, named the _________ and given
[Official No. ______]; and
WHEREAS, Assignor has given a first [preferred] ship
mortgage on the Vessel dated ________ __, 199__ (the "Mortgage") in
favor of Assignee, as mortgagee to secure the Assignee's promissory
notes given to the Assignee (the "Notes") dated the same date and other
Obligations as defined in the Mortgage (the "Obligations").
WHEREAS, Section 9.02(b) of the Loan Agreement and
Section 27 of the Mortgage, requires that the Assignor shall grant a
first priority interest in monies and claims for monies due and to
become due to Assignor under certain demise charters and time charters
to be entered into by Assignor from time to time, as further security
for the Obligations.
WHEREAS, concurrently herewith, Assignor is entering into
a ___________________ charter with _________________ dated as of
__________ __, ____ providing for the chartering of the Vessel to
_______ for [a term of ______ (___) years, with options (the "__________
Charter") and the ________ Charter is one of the types of charters
referred to in Section 9.02(b) of the Loan Agreement and Section (27) of
the Mortgage.
WHEREAS, Assignor desires to assign, to secure its
Obligations under the Mortgage, charter hire and all other monies
payable under the ________ Charter to Assignor, to Assignee to secure
the Obligations; and
NOW, THEREFORE, in consideration of the premises and the
mutual covenants contained herein and other good and valuable
consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
1. All capitalized terms used herein which are not
otherwise defined herein shall have the meanings set forth in the
Mortgage.
2. Assignor hereby sells, pledges, hypothecates,
assigns, transfers and sets over unto the Assignee and unto Assignee's
successors and assigns, not absolutely but as security only for the
performance by Assignor of its Obligations, and grants to Assignee a
first priority security interest in all right, title and interest of
Assignor in and to all monies due and to become due and claims for
monies due and to become due to Assignor under, and all claims for
damages arising out of the breach of, the _______ Charter, together with
any extensions, renewals, modifications, changes or amendments of the
_______________ Charter and any and all proceeds of the foregoing.
3. Assignor hereby agrees, represents and warrants
that:
(a) The _______ Charter is in full force and effect
and enforceable in accordance with its terms;
(b) Assignor is not in default of any of the terms of
the ________ Charter;
(c) Neither the whole nor any part of the right, title
and interest hereby assigned are the subject of any present assignment
or pledge other than the assignment contained herein, and so long as
this Assignment shall remain in effect, Assignor will not, without the
prior written consent thereto of the Assignee, assign or pledge the
whole or any part of the right, title and interest hereby assigned to
anyone other than the Assignee, its successors or assigns;
(d) Assignor will not take or omit to take any action,
the taking or omission of which might result in any alteration or
impairment of the ________ Charter or this Assignment or any of the
rights created by said _______ Charter or this Assignment;
(e) To the knowledge of Assignor, _________________ is
not in default of any of the terms of the ___ Charter;
(f) Assignor will not enter into or consent to any
amendment, modification or other alteration of the _______ Charter
without first obtaining the prior written consent to the Assignee. Any
amendment, modification or other alternation made without the written
consent of the Assignee shall be null and void. The Assignee shall not
unreasonably withhold consent to any amendment, modification or other
alteration of the _________ Charter which does not adversely affect the
rights and interests assigned hereunder.
4. Notwithstanding this Assignment, it is
acknowledged, understood and agreed that:
(a) Assignor will remain liable to perform all of the
owner's obligations and duties under the ________ Charter, including,
but not limited to, its duties as owner upon redelivery of the Vessel by
_________ and with respect to warranty claims, regardless of this
Assignment to the Assignee;
(b) Assignor will be deemed the owner under the
________ Charter except as expressly set forth herein;
(c) Assignee shall have no obligation or liability
under the _________ Charter by reason of or arising out of this
Assignment, nor to make any inquiry as to the nature or sufficiency of
any payment received by Assignor, nor to present or file any claim, nor
to take any other action to collect or enforce the payment of any
amounts which may have been assigned to them or to which they may be
entitled under this Assignment at any time or times;
(d) So long as no default (as that term is defined in
the _________ Charter) arising out of any act or omission of the
_________ has occurred, is continuing and shall not have been cured and
waived, neither Assignee, Assignor or any successor and assignee thereof
shall interfere with _________ possession and its peaceful and quiet
enjoyment of the Vessel.
5. Upon the occurrence of an Event of Default under
the Mortgage which shall be continuing and upon acceleration of all or
any portion of the Notes pursuant to Section 12.01(a) of the Loan
Agreement and upon written notice thereof to Assignor and
______________, the Assignor agrees to authorize and direct ________ to
make payment of all monies due and to become due under or arising out of
the _________ Charter in accordance with the payment provisions set
forth in the Loan Agreement and all in accordance with and pursuant to
the ____________ Charter, this Assignment and the Agreement and the
Consent to Assignment of _____________ attached hereto as Annex A, which
is incorporated by this reference herein, and does hereby constitute the
Assignee, its successors and assigns, Assignor's true and lawful
attorneys, irrevocably, with full power (in the name of Assignor or
otherwise), to ask, require, demand, receive, compound and give
acquittance for any and all monies, and claims for monies and rights
hereby assigned, to endorse any checks or other instruments or orders in
connection therewith and to file any claims or take any action or
institute any proceedings which Assignee may deem to be necessary or
advisable in the premises. Any action or proceeding brought by Assignee
pursuant to any of the provisions hereof or of the _________ Charter and
any claim made by Assignee hereunder or thereunder, may be compromised,
withdrawn or otherwise dealt with by Assignee without any notice to, or
approval of, Assignor, and shall be binding upon Assignor in all matters
affecting the rights of Assignor against Assignee and _________, if any,
under the _________ Charter and thereafter, Assignor shall have no
further rights against Assignee as to any such action or proceedings so
compromised, withdrawn or otherwise dealt with by Assignee.
6. Assignor hereby irrevocably authorizes Assignee,
at Assignor's expense to file such financing and continuation statements
relating to this Assignment, without Assignor's signature, as to
Assignee at its option may deem appropriate and appoints Assignee as
Assignor's attorney-in-fact to execute any such statements in Assignor's
name and to perform all other acts which Assignee may deem appropriate
to perfect and continue the security interest conferred hereby.
7. In the event that Assignee becomes entitled to
exercise any of its rights hereunder and shall, in its judgment decline
to take any action, Assignee shall give prompt notice to Assignor and
Assignor shall have the right and option to take such actions as it
deems necessary.
8. This Assignment shall be governed by the laws of
the State of New York (other than the law of the State of New York
governing choice of law) and may not be amended or changed except by an
instrument in writing signed by the party against whom enforcement is
sought.
9. Assignor hereby authorizes Assignee to execute and
file financing statements and amendments thereto as provided in Article
9 of the Uniform Commercial Code.
10. Terms used herein and not otherwise defined shall
have the meanings as defined in the Mortgage.
[The remainder of this page has been left intentionally blank.]
IN WITNESS WHEREOF, the undersigned have hereunto caused
this instrument to be duly executed as of the day and year first above
written.
[
]
BY:
_______________________
Title
[
]
BY:
_______________________
Title
Annex A
to ________________ Charter Assignment
[CHARTERER'S] AGREEMENT AND CONSENT TO ASSIGNMENT
PRESIDENT __________________
In consideration of the sum of $1.00 and other good and
valuable consideration, the receipt of which is hereby acknowledged, and
the covenants and agreements of the parties hereto,
__________________________________________, a __________________
corporation (the "Charterer"), hereby acknowledges notice of and
consents to the assignment of the monies due and to become due and
claims for monies due and to become due under the _______________
Charter given in the ________________ Charter Assignment of even date
herewith with respect to the ___________________ a copy of such
Assignment being attached hereto and agrees and confirms that:
(a) The _______________ Charter and the rights and any
claims of the Charterer thereunder shall be subject and subordinate to
the [first preferred ship mortgage] dated __________ (the "Mortgage") in
favor of the Assignee and the rights of the Assignee thereunder. Upon
written notice by the Assignee to ____________________ that an Event of
Default under the Mortgage has occurred and is continuing and that
Assignee has accelerated all or part of the [HDW] [Daewoo] Notes
pursuant to the Loan Agreement it will make payment of all monies due
and to become due to [ ] ("Assignor") under
or pursuant to the ______________ Charter in accordance with the payment
provisions set forth in Section 5 of the Loan Agreement direct for
credit to Assignee's account, until receipt of written notice from the
Assignee that such Notes have been paid in full, after which time such
payment shall be made direct to such bank account as may be provided in
the ________________ Charter or otherwise as Assignor may from time to
time designate;
(b) Any such payment shall be final and _____________
will not seek to recover from Assignor or Assignee any monies paid to
either Assignor or the Assignee by virtue of the aforesaid assignment;
(c) It will not agree to, allow or permit any
amendment to, modification of, or other alteration in, the _____________
Charter without the prior written consent of Assignor and, so long as
the Obligations are outstanding, Assignee.
______________________________
, Charterer
By:
_________________________
Title:
APPENDIX H
AGREEMENT OF AMERICAN PRESIDENT COMPANIES, LTD.
American President Companies, Ltd. ("APC") hereby
confirms its obligations under the Guarantee dated the date hereof in
favor of Kreditanstalt fur Wiederaufbau, Agent (the "Agent"),
Commerzbank AG, Hamburg, Syndicate Agent (the "Syndicate Agent"), and
Commerzbank AG (Kiel Branch), Dresdner Bank AG in Hamburg, Vereins- und
Westbank AG, Deutsche Schiffsbank AG, Norddeutsche Landesbank-
Girozentrale, Deutsche Verkehrs-Bank AG and Banque Internationale a
Luxembourg S.A. as the Syndicate (the "Syndicate"), guaranteeing the
obligations of American President Lines, Ltd. ("APL") under the Loan
Agreement dated the date hereof (the "Loan Agreement") among APL, the
Agent, the Syndicate Agent and the Syndicate, and the other Loan
Documents to which it is or will become a party. APC acknowledges that
it has reviewed all of the terms and conditions set forth in the Loan
Documents and each of the obligations of the Borrower set forth therein.
APC further confirms that it will issue a new Guarantee
in favor of the Agent, the Syndicate Agent and the Syndicate in respect
of obligations of the Transferee on the first Delivery Date, if and when
APL exercises its option under the Agreement to Acquire and Charter to
transfer a Vessel or Vessels to APL Newbuildings, Ltd. (the
"Transferee"). APC represents and warrants that both APL and the
Transferee are wholly owned subsidiaries of APC.
Capitalized terms used herein and not defined herein
shall have the meanings set forth in the Loan Agreement.
Dated: March 14, 1994
AMERICAN PRESIDENT
COMPANIES, LTD.
By:
_______________________________
Name:
Title:
APPENDIX I
AGREEMENT TO
ACQUIRE AND CHARTER
BY AND AMONG
AMERICAN PRESIDENT LINES, LTD.,
Transferor,
APL NEWBUILDINGS, LTD.,
Transferee,
KREDITANSTALT FUR WIEDERAUFBAU
(as Agent and Lender),
COMMERZBANK AG, HAMBURG
(as Syndicate Agent),
COMMERZBANK AG (KIEL BRANCH),
DRESDNER BANK AG (HAMBURG),
VEREINS-und WEST BANK AG,
DEUTSCHE SCHIFFSBANK AG
NORDDEUTSCHE LANDESBANK-GIROZENTRALE and
DEUTSCHE VERKEHRS-BANK AG
BANQUE INTERNATIONALE A LUXEMBOURG S.A.
(as the Syndicate)
Dated March 14, 1994
TABLE OF CONTENTS
Page
RECITALS 1
SECTION 1. DEFINITIONS 2
SECTION 2. TRANSFER AND CHARTER OF THE VESSELS 3
SECTION 3. CONDITIONS PRECEDENT TO TRANSFEREE'S
OBLIGATIONS ON A DELIVERY DATE 4
SECTION 4. REPRESENTATIONS AND WARRANTIES OF TRANSFEREE 6
SECTION 5. COVENANTS 9
SECTION 6. NOTICES 13
SECTION 7. COUNTERPARTS 13
SECTION 8. MODIFICATION 13
SECTION 9. SUCCESSORS AND ASSIGNS 13
SECTION 10. GOVERNING LAW 13
SECTION 11. ASSIGNMENT 13
SECTION 12. SEVERABILITY 14
SECTION 13. TABLE OF CONTENTS; HEADINGS 14
EXHIBIT A. FORM OF DAEWOO CHARTER OR HDW CHARTER
EXHIBIT B. FORM OF CERTIFICATE OF DELIVERY
AND ACCEPTANCE
EXHIBIT C. FORM OF CHARTER ASSIGNMENT AND SECOND
CHARTER ASSIGNMENT AND CONSENT
SCHEDULE 1 NAMES AND ADDRESSES OF SYNDICATE MEMBERS
AGREEMENT TO
ACQUIRE AND CHARTER
THIS AGREEMENT TO ACQUIRE AND CHARTER ("Acquisition
Agreement") dated this 14th day of March, 1994 by and among AMERICAN
PRESIDENT LINES, LTD., a Delaware corporation (the "Transferor"), APL
NEWBUILDINGS, LTD., a Nevada corporation (the "Transferee"),
KREDITANSTALT FUR WIEDERAUFBAU, a public law corporation incorporated in
the Federal Republic of Germany ("KfW"); COMMERZBANK AG (Hamburg), a
banking corporation incorporated in the Federal Republic of Germany (the
"Syndicate Agent") and the banks listed in Schedule 1 which is attached
hereto (each a "Syndicate Member" and, collectively, "the Syndicate").
WITNESSETH:
WHEREAS, the Transferor has ordered three (3)container
vessels (the "HDW Vessels") from Howaldtswerke-Deutsche Werft AG ("HDW")
as is more specifically set forth in a certain Shipbuilding Agreement
dated May 10, 1993, as amended (the "HDW Shipbuilding Agreement")
between the Transferor and HDW;
WHEREAS, the Transferor has also ordered three (3)
container vessels (the "Daewoo Vessels") from Daewoo Shipbuilding &
Heavy Machinery, Ltd. ("Daewoo") as is more specifically set forth in a
certain Shipbuilding Agreement dated May 10, 1993, as amended (the
"Daewoo Shipbuilding Agreement") between the Transferor and Daewoo (the
HDW Vessels and the Daewoo Vessels being individually referred to as a
Vessel and, collectively, as the "Vessels");
WHEREAS, the Transferor, KfW, the Syndicate Agent and the
Syndicate entered into a Loan Agreement dated March 14, 1994, 1994
providing a loan facility in respect of the HDW Vessels and the Daewoo
Vessels under which the Transferor may borrow from KfW up to *
(the "HDW Tranche") for the purchase of the HDW Vessels; and may borrow
from the Syndicate up to *
(the "Daewoo Tranche") for the purchase of the Daewoo Vessels;
WHEREAS, in order to induce KfW and the Syndicate to make
available to the Transferor the HDW Tranche and the Daewoo Tranche,
respectively, American President Companies, Ltd., a Delaware
corporation, and the corporate parent of the Transferor and the
Transferee, has, under the Guarantee, guaranteed the obligations of the
Transferor under the Loan Agreement and the other Loan Documents;
WHEREAS, concurrently with the sale of any Vessel from
HDW or Daewoo, as the case may be, to the Transferor, the Transferor may
transfer all of its right, title and interest in the Vessel to the
Transferee, and the Transferee shall thereupon assume all of the
obligations relating to the Vessel Indebtedness in respect of that
Vessel, including but not limited to the execution and delivery of all
of the Security Documents relevant to such Vessel;
WHEREAS, concurrently, with the transfer of each Vessel
in each of the Daewoo and HDW Tranche to the Transferee, the Transferor
shall enter into a Charter for such Vessels to be so transferred, as
evidenced by the execution of the Daewoo Charter or the HDW Charter,
respectively, with respect to each Vessel delivered under such Tranche
each in the form of Exhibit A to this Acquisition Agreement;
WHEREAS, concurrently with, the execution and delivery of
each Charter the Transferee will assign all of its right, title and
interest in and to (i) such Charter to KfW if it relates to an HDW
Vessel, (ii) such Charter to the Syndicate Agent and the Syndicate if it
is a Daewoo Vessel, and (iii) a second priority assignment of the
Charter to KfW if it is a Daewoo Vessel, as security for its obligations
assumed under the Loan Documents to which it is a party with respect to
the related Vessel Indebtedness;
WHEREAS, concurrently with the transfer to the Transferee
of the first Vessel delivered under a Charter, the Guarantor will
execute and deliver to the Lenders the Guarantee which shall guarantee
all obligations of the Transferee as Borrower under the Loan Agreement
and the other Loan Documents;
NOW, THEREFORE, in consideration of mutual agreements
herein contained, the portion hereto agree as follows:
SECTION 1. Definitions.
A. The terms "hereof," "herein," "hereby," "hereto,"
"hereunder" and "herewith" refer to this Agreement as the same
may be supplemented or amended;
B. Reference to a given agreement or instrument is a
reference to that agreement or instrument as originally executed,
and as modified, amended, supplemented and restated through the
date as of which reference is made to that agreement or
instrument.
C. All capitalized terms used in this Acquisition
Agreement including the Whereas clauses hereof which are not
defined herein shall have the meanings ascribed to them in the
Loan Agreement and in the Schedules and Appendices to the Loan
Agreement. In addition, the following capitalized terms shall
have the meanings set forth below:
"Bill of Sale" means, with respect to a given Vessel, a
valid and sufficient bill of sale in recordable form in the Republic of
The Marshall Islands made by the Transferor in favor of the Transferee,
dated the relevant Delivery Date, and transferring title to the Vessel
(including its equipment) free and clear of all liens, claims and
encumbrances.
"Certificate of Delivery and Acceptance" means, with
respect to a given Vessel, a certificate in the form of Exhibit B-1 or B-
2, as the case may be, to this Acquisition Agreement dated on the
Vessel's Delivery Date, evidencing the delivery of that Vessel to the
Transferee and its acceptance by the Transferee.
"Charter Assignment" means each, and "Charter
Assignments" means every, first priority assignment of each HDW Charter
and each Daewoo Charter by the Transferee to KfW and to the Syndicate
Agent and the Syndicate, respectively, as security for the Transferee's
obligations under the Loan Documents to which it is a party with respect
to the corresponding Vessel Indebtedness and in the form of Exhibit C to
this Acquisition Agreement.
"Charter Documents" means this Acquisition Agreement the
* Agreement Assignment, the Bills of Sale, the Certificates of
Delivery and Acceptance, the Charters, the Charter Assignments and the
Second Charter Assignments.
*
"Second Charter Assignment and Consent" means each, and
"Second Charters Assignments" means every, second priority assignment of
a Daewoo Charter by the Transferee to KfW as security for the
Transferee's obligations under the Loan Documents with respect to the
Vessel Indebtedness under the HDW Tranche relating to the Vessel covered
by such Daewoo Charter and in the form of Exhibit C to this Acquisition
Agreement.
"Solvent" means, with respect to the Transferee on a
Delivery Date, that on such date each of the following is true: (1) the
fair market value of the assets of the Transferee is greater than the
total amount of liabilities (including contingent liabilities) of the
Transferee, (ii) the present fair salable value of the assets of the
Transferee is greater than the amount that will be required to pay the
probable liabilities of the Transferee for its debts as they become
absolute and matured, (iii) the Transferee is able to realize upon its
assets and pay its debts and any other liabilities, including contingent
obligations, as they mature and (iv) the Transferee does not have
unreasonably small capital. In making the determinations required by
(i) and (ii) hereof, it will be deemed that (a) the fair market value or
fair salable value, as the case may be, of any Vessels owned by the
Transferee is at least 85% of the purchase price of such Vessels, and
(b) any loan made to the Transferee by the Guarantor or the Transferor
in connection with the purchase of the Vessels is treated for purposes
of this definition only as a capital contribution to the Transferee.
SECTION 2. Transfer and Charter of the Vessels.
A. On each Delivery Date, upon the satisfaction of
all conditions precedent set forth in Section 7 of the Loan
Agreement and Sections 2 and 3 of this Acquisition Agreement, the
Lenders shall make their Commitment available and the Transferor
shall purchase the relevant Vessel from HDW or Daewoo, as the
case may be.
B. Simultaneously with the actions specified in Section
2.A, the Transferor shall transfer the Vessel to the Transferee
pursuant to the terms of this Acquisition Agreement. The Vessel
will be registered under the laws of the Republic of The Marshall
Islands in the name of the Transferee, and the Transferee will
record a first preferred mortgage in substantially the form
attached to the Loan Agreement, and with respect to the Daewoo
Vessels, a second preferred mortgage in substantially the form
attached to the Loan Agreement covering the Vessel in favor of
the relevant Lenders.
C. Simultaneously with the actions specified in Section
2.B, the Transferor shall charter each such Vessel from the
Transferee and the Transferee shall charter such Vessel to the
Transferor, pursuant to the relevant Charter.
D. Simultaneously with the actions specified in Section
2.B, the Transferee shall undertake the Vessel Indebtedness
corresponding to the Vessel.
E. Delivery and presentation of all documents to
complete the transactions contemplated herein shall be made at
the Closing to be held on a Delivery Date convened pursuant to
the Loan Agreement.
SECTION 3. Conditions Precedent to Transferee's Obligations on a
Delivery Date.
The Transferee's obligations to undertake all of the
payment and certain performance obligations relating to the Vessel's
Indebtedness in respect of a given Vessel is expressly conditioned upon
the following preconditions being satisfied and upon receipt by the
Agent or the Syndicate Agent, as the case may be, of the following
documents and evidenced on or before a closing to be held on the
Delivery Date at the offices of Haight, Gardner, Poor & Havens, 195
Broadway, New York, New York 10007, or at such other place as may be
agreed upon by the Transferor, Transferee, the Agent and the Syndicate
Agent:
(a) The Transferee shall be a corporation duly
organized and existing in good standing under the laws of
the jurisdiction of its incorporation; the Transferee
shall have full corporate power and authority to own its
assets, conduct its business as then being conducted, and
enter into and consummate the transactions contemplated
hereby and by the Charter Documents and the Security
Documents to which it is a party, and the Agent or the
Syndicate Agent, as the case may be, shall have received
(1) a certified copy of the certificate of incorporation
of the Transferee, (2) a certificate of the Secretary of
the Transferee attaching the minutes or resolutions of
its Board of Directors authorizing the transactions
contemplated herein, (3) a certificate from the Secretary
of the Transferee or evidencing the authority of the
persons executing the Security Documents and the Charter
Documents, to which it is a party, to execute and deliver
such Security Documents and Charter Documents and the
Transferee to perform under the Security Charter
Documents to which it is a party, and (4) a certificate
of good standing as to the Transferee, all in form and
substance reasonably satisfactory to the Agent or the
Syndicate Agent, as the case may be, and its special
counsel;
(b) the Agent and the Syndicate Agent shall have
received no later than sixty (60) days prior to the
above-referenced closing, written notice from the
Transferor of its intention of transferring the related
Vessel to the Transferee in accordance with the
provisions of this Acquisition Agreement;
(c) no Event of Default shall have occurred and
be continuing and no Incipient Default shall have
occurred and be continuing and the Transferee shall
provide an officer's certificate to such effect in form
and substance reasonably satisfactory to the Agent or the
Syndicate Agent, as the case may be, and its special
counsel;
(d) there shall not have occurred any material
adverse change in the financial condition of the
Transferee which in the reasonable opinion of the Agent
and/or the Syndicate would materially and adversely
affect the ability of the Transferee to perform its
obligations as to the repayment of the Facility by the
installments together with interests thereon herein set
out or to perform its obligations under the Loan
Documents, to which it is or will become a party;
(e) all representations and warranties of the
Transferee contained in this Acquisition Agreement being
true and correct in all material respects on that
Delivery Date, except insofar as they relate exclusively
to an earlier date, and the Transferee shall provide
officer's certificates confirming such matters;
(f) all governmental and other consents,
licenses, approvals and authorizations, if any, required
with respect to the performance of (i) the Transferee
under this Acquisition Agreement and the other Loan
Documents and Charter Documents and (ii) the Transferor
under this Acquisition Agreement and the other Loan
Documents and Charter Documents, to which it is a party
shall have been obtained and shall not have been revoked
and, if requested by the Agent or the Syndicate Agent or
its special counsel, copies of any of the same shall be
provided;
(g) all Uniform Commercial Code financing
statements or other document necessary, or reasonably
requested by the Agent or the Syndicate Agent, to perfect
its security interests under any of the Security
Documents and the Charter Documents in the United States
of America, jurisdiction of registration of such Vessel
or any other relevant jurisdiction;
(h) copies of the Bill of Sale to the relevant
Vessel from the Transferor to the Transferee;
(i) evidence that such Vessel is duly registered
in the name and ownership of the Transferee under the
laws and flag of the Republic of The Marshall Islands,
free of registered liens except the relevant Mortgage(s);
(j) each Loan Document and Charter Document, in
respect of such Vessel shall have been duly executed,
delivered and, where appropriate, registered or recorded
(together with any documents to be executed pursuant to
the terms thereof, including without limitation, notices
of the Assignment(s) of Insurance);
(k) each of the Lenders shall have received
executed originals of the opinions as to the Transferee
substantially in the form attached as Schedule 4 to the
Loan Agreement as well as such other opinions from such
counsel as each Lender shall reasonably request and each
of the Lenders shall have received from its special
counsel, Haight, Gardner, Poor & Havens, a favorable
opinion, in form and substance satisfactory to the
Lenders, as to such matters incident to the transactions
contemplated hereby as any such Lender may reasonably
request;
(l) all conditions precedent as set forth in
Section 7 of the Loan Agreement shall have been
satisfied.
SECTION 4. Representations and Warranties of Transferee.
The Transferee represents and warrants to each of the
Lenders that:
(a) the Transferee is a corporation duly
organized and validly existing in good standing under the
laws of its jurisdiction of incorporation with full
corporate power and authority to conduct its business as
the same is presently conducted;
(b) the Transferee has legal power and authority
to enter into and carry out the terms of this Acquisition
Agreement and each of the other Loan Documents and the
Charter Documents to which the Transferee will be a
party;
(c) each of this Acquisition Agreement, the other
Loan Documents and the Charter Documents to which the
Transferee will be a party has been duly authorized by
all necessary action, corporate or other, on the part of
the Transferee, and this Acquisition Agreement
constitutes, and upon due execution and delivery by the
Transferee, each of the other Loan Documents and the
Charter Documents will constitute, in accordance with
their respective terms, legal, valid and binding
instruments enforceable against the Transferee, except to
the extent limited by applicable bankruptcy,
reorganization, insolvency, moratorium or other laws of
general application relating to or affecting the
enforcement of creditors' rights from time to time in
effect;
(d) except as previously disclosed to the
Syndicate Agent and the Agent in writing, there are no
actions, suits or proceedings pending or, to the
Transferee's knowledge, threatened against the
Transferee, any of its properties affecting this
Acquisition Agreement, the other Loan Documents, the
Charter Documents or the transactions contemplated
thereby which would materially and adversely affect the
performance of the Transferee of its obligations (if any)
thereunder;
(e) the consummation of the transactions
contemplated by, and compliance by the Transferee with
all the terms and provisions of, this Acquisition
Agreement, the other Loan Documents and the Charter
Documents to which the Transferee is or will be a party
will not violate any provisions of the Certificate of
Incorporation or Bylaws of the Transferee and will not
result in a breach of the terms and provisions of, or
constitute a default under, any other agreement or
undertaking by the Transferee or by which it or any of
its property is bound or any order of any court or
administrative agency entered in any proceedings binding
on the Transferee, or violate any applicable statute,
rule or regulation;
(f) the Transferee is not in default and no
condition exists which with notice or lapse of time or
both would constitute a default by the Transferee, in any
respect which would materially and adversely affect the
ability of the Transferee to perform its obligations
under this Acquisition Agreement, any other Loan
Document, any Charter Document, under any mortgage, loan
agreement, deed of trust, indenture or other agreement
with respect thereto or evidence of indebtedness to which
it is a party or by which it is bound, and is not in
violation of or in default, in any respect which would
materially and adversely affect the ability of the
Transferee to perform its obligations under this
Acquisition Agreement, any other Loan Document, or any
Charter Document, under any order, writ, judgment or
decree of any court, arbitrator or governmental
authority, commission, board, agency or instrumentality,
domestic or foreign;
(g) the Transferee has only one place of business
which is also the location of the place of business which
is its chief executive office is 1111 Broadway, Oakland,
California 94607;
(h) the Transferee has no knowledge of any actual
or proposed deficiency or additional assessment in
connection with any Taxes which either in any case or in
the aggregate would be materially adverse to the
Transferee and which would materially and adversely
affect the ability of the Transferee to perform its
obligations under this Acquisition Agreement, any of the
other Loan Documents or any of the Charter Documents;
(i) all Taxes (other than taxes based on or
measured by income and withholding taxes), liability for
the payment of which has been incurred by the Transferee
in connection with the execution, delivery and
performance by it of this Acquisition Agreement, each
other Loan Document and Charter Document to which it is
or will be a party, have been paid (or provided for in
its accounts if not payable on or prior to the Delivery
Date of the respective Vessel);
(j) all governmental consents, licenses,
permissions, approvals, registrations or authorizations
or declarations required (i) to enable it lawfully to
enter into and perform its respective obligations under
this Acquisition Agreement, each of the other Loan
Documents and each of the Charter Documents to which it
is or will be a party and (ii) to ensure that its
respective obligations hereunder and thereunder are
legal, valid and enforceable have been obtained or made
and are in full force and effect or will be obtained or
made and be in full force and effect on the date any such
document is executed and delivered; and all governmental
consents, licenses, permissions, approvals, registrations
or authorizations or declarations of the country of
registry of each vessel required (A) to enable it
lawfully to enter into and perform its obligations under
the Mortgages, (B) to ensure that its obligations
thereunder are legal, valid and enforceable and (C) to
make the Mortgages admissible in evidence in the country
in which each Vessel is registered and the United States
of America, will be obtained or made and be in full force
and effect on the date any such Mortgage is executed and
delivered;
(k) it has not taken any corporate action nor, to
its knowledge, have any other steps been taken or legal
proceedings been started or threatened against it for its
winding-up, dissolution or reorganization or for the
appointment of a receiver, administrative receiver,
administrator, trustee or similar officer of it or of any
or all of its respective assets and revenues;
(l) except as provided by applicable laws of
bankruptcy, insolvency, liquidation or similar laws of
general application, its obligations under this
Acquisition Agreement, each of the other Loan Documents,
and each of the Charter Documents rank and will rank at
least pari passu in priority of payment, and as to
security having the priority contemplated by the Loan
Documents and in all other respects with all its
respective other indebtedness;
(m) except for registration of the First Mortgage
on each Vessel and the Second Mortgage on each Daewoo
Vessel at the country of its registry (including any
other Loan Document or Charter Document required by the
laws of the country of its registry to be filed with the
Mortgage), it is not necessary to ensure the legality,
validity, enforceability or admissibility in evidence of
this Acquisition Agreement, any of the other Loan
Documents or any of the Charter Documents to which it is
or will be a party in the United States of America or, to
the best of its knowledge, elsewhere or that it be filed,
recorded or enrolled with any governmental authority or
agency in the United States of America or, to the best of
its knowledge, elsewhere, that it be stamped with any
stamp, registration or similar transaction tax in the
United States of America or, to the best of its
knowledge, elsewhere;
(n) the Transferee is a wholly owned Subsidiary
of the Guarantor;
(o) the Transferee does not maintain any Plans;
(p) none of the proceeds of the Loan will be
used to purchase or carry margin stock within the
meanings of Regulations G, T, U and X of the Board of
Governors of the Federal Reserve System. The Transferee
is not engaged in the business of extending credit for
the purpose of purchasing or carrying margin stock within
the meaning of Regulations G, T, U or X of the Board of
Governors of the Federal Reserve System;
(q) it is not an "investment company" or a
company "controlled" by an "investment company" (as each
of such terms is defined or used in the Investment
Company Act of 1940, as amended);
(r) each Vessel delivered will be duly
documented in the name of the Transferee under the flag
of the Republic of The Marshall Islands; and
(s) each Vessel delivered will be in the
absolute and unencumbered ownership of the Transferee
except as contemplated by this Acquisition Agreement, the
other Loan Documents and the Charter Documents.
(t) the Transferee is, and immediately after
the relevant Lender advances its Commitment will be,
Solvent.
SECTION 5. Covenants.
A. Affirmative Covenants. The Transferee covenants
with each of the Lenders that it shall:
(a) do all that is necessary to maintain in full
force and effect its corporate existence in good standing
under the laws of its jurisdiction of incorporation and
use its best efforts to obtain, comply with the terms of
and do all that is necessary to maintain in full force
and effect all authorizations, approvals, licenses and
consents required in or by the laws of its jurisdiction
of incorporation and the United States of America and any
other relevant jurisdiction to enable the Transferee to
enter into and perform its obligations under the Loan
Documents and the Charter Documents to which the
Transferee is or will become a party and to ensure the
legality, validity, enforceability or admissibility in
evidence in the United States of America of the Loan
Documents and the Charter Documents to which the
Transferee is or will become a party and to comply with
the terms of and to do all that is necessary to maintain
in full force and effect all authorizations, approvals,
licenses and consents required in or by the national laws
of the Republic of The Marshall Islands to enable the
Transferee to enter into and perform its obligations
under the Mortgages and to ensure the legality, validity,
enforceability and admissibility in evidence in such
country of each Mortgage;
(b) from time to time on the request of the
Lenders, but at the expense of the Transferee, do all
such acts and execute or procure the execution of all
such assurances and documents as the Agent or the
Syndicate Agent may reasonably consider necessary for
giving full effect to the Loan Documents and the Charter
Documents to which it is or will become a party or for
more effectively subjecting the security interests under
the Security Documents and Charter Documents to which it
is or will be a party to the liens of such Security
Documents or more effectively subject such security
interests to the performance of the provisions thereof;
(c) promptly inform the Agent and the Syndicate
Agent of the occurrence of any Incipient Default or an
Event of Default and upon receipt of a written request
from the Agent or the Syndicate Agent to do so, confirm
to the Agent or the Syndicate Agent, as the case may be,
that save as previously notified to the Agent or the
Syndicate Agent, as the case may be, to the best of the
knowledge of the Transferee, no Event of Default has
occurred;
(d) if the Transferee's agent for service of
process referred to in Section 10 shall for any reason
cease to be validly appointed, ensure that another such
agent is appointed (and ensure that such agent
acknowledges such appointment to the Agent or Syndicate
Agent, as the case may be) in a manner reasonably
satisfactory to the Agent or the Syndicate Agent, as the
case may be;
(e) the Transferee shall send to the Agent and
the Syndicate Agent as soon as possible, (i) but in no
event later than one hundred twenty (120) days after the
end of each fiscal year, its accounts of all financial
statements of the Transferee, such financial statements
to be prepared in accordance with generally accepted
United States of America accounting principles at such
time consistently applied all certified as true and
correct by a senior financial officer of the Transferee,
(ii) as soon as the same is instituted (or, to the
knowledge of the Transferee threatened), details of any
litigation, arbitration or administrative proceedings
against or involving it or the Vessels which if adversely
determined would have a material adverse effect on the
Transferee, or operation of the Vessels, (iv) together
with the annual financial statements to be provided in
accordance with clause (i) above a certificate of a
financial officer of the Transferee that no Event of
Default and Incipient Default has occurred and is
continuing, and (v) from time to time, and on demand,
such additional financial or other information relating
to the Transferee and the Vessels as may be reasonably
requested by the Agent or the Syndicate Agent;
B. Negative Covenants.
(1) The Transferee shall not without prior
consent of the Agent and the Syndicate
Agent consolidate or amalgamate with, or
merge into, any other entity, or sell,
convey, transfer, lease, or otherwise
dispose of all or substantially all of its
assets, including but not limited to, by
dividend (whether by one transaction or a
series of transactions and whether related
or not); provided, however, that it may
consolidate or amalgamate with, or merge
into, any other entity, or sell, convey,
transfer, lease, or otherwise dispose of
all or substantially all of its assets if
the buyer, assignee or transferee
corporation (the "Assignee") shall be a
solvent corporation organized and existing
under the laws of the United States of
America or any state thereof following
such transaction and shall have executed
and delivered an agreement, in form and
substance reasonably satisfactory to the
Agent and the Syndicate Agent, containing
an assumption by the Assignee of the due
and punctual performance and observance of
all covenants and obligations of the
Transferee hereunder and under the other
Loan Documents and the Charter Documents
to which it is or shall be a party, and
confirming the accuracy of any
representations and warranties made herein
and in each such other Loan Document and
Charter Document as of the dates herein or
therein required with respect to such
Assignee; and provided further, that
immediately following such transaction, no
Incipient Default or Event of Default
shall have occurred and be continuing.
(2) Except for the Charters, the Transferee
shall not charter any HDW Vessel or Daewoo
Vessel without the prior written approval
of the Agent and the Syndicate Agent,
respectively.
(3) The Transferee will not create or permit
to subsist any lien on the whole or any
part of its present or future assets
except for liens permitted under Section
14 of the Mortgage.
(4) The Transferee shall not make or threaten
to make any substantial changes in its
business as presently conducted, namely
that of a single purpose corporation
owning any of the HDW or Daewoo Vessels
and chartering such Vessels to the
Transferor, and the Transferee shall not
form any subsidiaries.
(5) The Transferee will not create, incur,
assume or allow to exist any Financial
Indebtedness, nor enter into any financing
lease or undertake any material capital
commitment (including but not limited to
the purchase of any capital asset), except
as contemplated hereby.
(6) The Transferee will not make any loan or
advance or extend credit to any Person or
issue or enter into any guarantee or
indemnity or otherwise become directly or
contingently liable for the obligations,
stocks or dividends of, or own, purchase,
repurchase or acquire (or agree
contingently to do so) any stock,
obligations or securities of, or any other
interest in, or make any capital
contribution to, or any other investment
in, any Person, firm or corporation. The
Transferee will not issue any capital
stock or any options, warrants or other
rights with respect to, or securities
convertible into, its capital stock,
except to the Guarantor.
(7) The Transferee will not acquire any
equity, share capital, assets or
obligations of any corporation or other
entity, except as contemplated hereby, and
it will not permit any of its voting
shares or capital stock to be held by any
party other than the Guarantor.
(8) Without the consent of the Agent in the
case of the HDW Vessels and the Syndicate
Agent in the case of the Daewoo Vessels,
the Transferee will not amend, repeal or
modify, its Articles of Incorporation or
other similar documents relating to the
governance of the Transferee.
SECTION 6. Notices.
Notices required or permitted by the terms of this
Acquisition Agreement or any other Loan Document or Charter Document
shall be made in accordance with Section 15.04 of the Loan Agreement.
SECTION 7. Counterparts.
This agreement may be executed in separate counterparts,
each of which, when executed and delivered shall be an original, but all
such counterparts shall together constitute but one and the same
instrument.
SECTION 8. Modification.
Neither this Acquisition Agreement nor any of its terms
may be terminated, amended, supplemented, waived or modified orally, but
only by an instrument in writing signed by the party against which the
enforcement of the termination, amendment, supplement, waiver or
modification is sought.
So long as any Vessel is subject to a Mortgage, neither
this Acquisition Agreement nor any of its terms as the same relate to
that Vessel may be terminated, amended, supplemented, waived or modified
without the prior written consent of KfW or the Syndicate Agent or the
Syndicate, as the case may be.
SECTION 9. Successors and Assigns.
The terms of this Acquisition Agreement shall be binding
upon, and inure to the benefit of, each of the parties hereto, and their
respective successors and assigns.
SECTION 10. Governing Law.
This Acquisition Agreement shall be construed and enforced in
accordance with and governed by the applicable law of the State of New
York (other than the law of the State of New York governing choice of
law), and the Transferee hereby submits itself to New York jurisdiction
and agrees to observe and perform the agreements and covenants and shall
have the rights contained in Section 15.08 of the Loan Agreement to the
same extent and under the same terms and conditions so provided in said
Section 15.08.
SECTION 11. Assignment.
The rights of any Party hereunder may not be assigned,
whether by operation of law or otherwise, except to the extent permitted
by Sections 5.B.(1) of this Acquisition Agreement and Section 10 of the
Loan Agreement, without the consent of the other parties hereto.
SECTION 12. Severability.
If any provision hereof is invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions, and of such provisions in
other jurisdictions, shall not be affected or impaired thereby.
SECTION 13. Table of Contents; Headings.
The Table of Contents and the headings of the Sections
herein are for convenience only and shall not affect the construction or
meaning of any provision of this Acquisition Agreement.
[THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties have caused this
Acquisition Agreement to be duly executed by their respective officers
as of the day and year first above written.
KREDITANSTALT FUR WIEDERAUFBAU
/s/
By:
Title:
COMMERZBANK AG, HAMBURG
/s/
By:
Title:
/s/
By:
Title:
COMMERZBANK AG (KIEL BRANCH)
/s/
By:
Title:
/s/
By:
Title:
DRESDNER BANK AG in HAMBURG
/s/
By:
Title:
/s/
By:
Title:
VEREINS- und WESTBANK AG
/s/
By:
Title:
/s/
By:
Title:
DEUTSCHE SCHIFFSBANK AG
/s/
By:
Title:
NORDDEUTSCHE LANDESBANK -
GIROZENTRALE
/s/
By:
Title:
/s/
By:
Title:
DEUTSCHE VERKEHRS-BANK AG
/s/
By:
Title:
/s/
By:
Title:
BANQUE INTERNATIONALE A LUXEMBOURG
S.A.
/s/
By:
Title:
AMERICAN PRESIDENT LINES, LTD.
/s/
By:
Title:
APL NEWBUILDINGS, LTD.
/s/
By:
Title:
TO THE EXTENT THAT THIS BAREBOAT CHARTER PARTY CONSTITUTES CHATTEL PAPER
(AS SUCH TERM IS DEFINED IN THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN
ANY APPLICABLE JURISDICTION), NO SECURITY INTEREST IN THIS BAREBOAT
CHARTER PARTY MAY BE CREATED OR PERFECTED THROUGH THE TRANSFER OR
POSSESSION OF ANY COUNTERPART OTHER THAN THE ORIGINAL EXECUTED
COUNTERPART CONTAINING THE ACKNOWLEDGEMENT THEREOF EXECUTED BY
[KREDITANSTALT FUR WIEDERAUFBAU AS AGENT] [COMMERZBANK AG AS SYNDICATE
AGENT] ON THE SIGNATURE PAGE THEREOF.
EXHIBIT A
FORM OF [HDW] [DAEWOO]
BAREBOAT CHARTER PARTY
THIS BAREBOAT CHARTER PARTY (the "Charter") dated this
___ day of ______________, 19 , between ______________________, a
corporation organized and existing under the laws of _________
(hereinafter "Owner") and American President Lines, Ltd., a corporation
organized and existing under the laws of Delaware (hereinafter called
"Charterer" or "APL").
W I T N E S S E T H:
WHEREAS, APL has heretofore entered into that certain
Loan Agreement dated ________, 1994 (the "Loan Agreement"), by and among
APL, as Borrower, Kreditanstalt fur Wiederaufbau ("KfW"), Commerzbank AG
(Hamburg) (the "Syndicate Agent"), and the banks listed on Schedule ___
thereto (each, a "Syndicate Member" and, collectively, the "Syndicate"),
as Lenders, with respect to the purchase financing of six (6) container
vessels, including the Vessel described below, and American President
Companies, Ltd. ("APC") has heretofore entered into that certain
Guarantee dated ________, 199 (the "Guarantee"), relating to Owner's
obligations under the Loan Agreement as established pursuant to the
below-defined Acquisition Agreement;
WHEREAS, the date hereof is the Delivery Date of the
below-described Vessel pursuant to the Loan Agreement;
WHEREAS, as contemplated by Section 7(k) of the Loan
Agreement, APL has entered into that certain Agreement to Acquire and
Charter (the "Acquisition Agreement") among Owner and the parties to the
Loan Agreement, pursuant to which APL has transferred to Owner, and
Owner has accepted title to, and is currently the disponent owner of,
the Republic of The Marshall Islands flag vessel PRESIDENT
______________, Official Number _________ (the "Vessel") which term
shall include all the boilers, engines, machinery, bowsprits, masts,
spars, sails, riggings, boats, anchors, cables, apparel, furniture,
fittings, equipment and all other appurtenances to the Vessel
appertaining or belonging, whether now owned or hereafter acquired,
whether on board or not on board, and all additions, improvements and
replacements hereafter made in and to the Vessel, or any part thereof,
or in or to the appurtenances and equipment aforesaid, but shall exclude
leased equipment), and Owner has undertaken all of the payment and
certain of the performance obligations relating to Vessel Indebtedness
in respect of the Vessel under the Loan Agreement, as Borrower (as such
term is defined in the Loan Agreement) (the "Owner Obligations");
WHEREAS, pursuant to the Acquisition Agreement, APL is
permitted, at its option, to transfer to Owner, and Owner has agreed
upon the exercise of such option by APL, to accept title to any or all
of the other [HDW] [Daewoo] Vessels (each of such other [HDW] [Daewoo]
Vessels which is so transferred, together with the above-referenced
Vessel, referred to individually herein as a "Vessel" and collectively
as the "Vessels"), on their respective Delivery Dates pursuant to the
Loan Agreement;
WHEREAS, Owner has simultaneously herewith entered into a
First Mortgage on the Vessel in favor of [KfW] [the Syndicate Agent or
the Syndicate Members] (the "Vessel Lender") [and has also entered into
a Second Mortgage on the Vessel in favor of KfW], in substantially the
form of the First Mortgage set forth in Appendix B-1 [and Appendix B-2,
respectively] to the Loan Agreement as security for the Owner
Obligations in respect of the Vessel, and all other Loans made under the
[Daewoo Tranche] [HDW Tranche] (as such term is defined in the Loan
Agreement) (individually, a "Mortgage" and collectively, the
"Mortgages");
WHEREAS, as contemplated by Section 9.02(h) of the Loan
Agreement and by the Acquisition Agreement, as a condition to the
transfer of the Vessel and any other Vessels pursuant to the Acquisition
Agreement, Owner has agreed to let and demise the Vessel and Charterer
has agreed to hire the Vessel from Owner, on the terms and conditions
set forth in this Charter, such charter of the Vessel to be effective
upon the execution and delivery of this Charter;
WHEREAS, as further contemplated by the Acquisition
Agreement, as further conditions to the transfer of the Vessel and the
other Vessels pursuant to the Acquisition Agreement simultaneously
herewith Owner is entering into the Charter Assignment relating to the
Charter in favor of the Vessel Lender [and the Second Charter Assignment
in favor of [KfW], and Charterer is consenting to such Charter
Assignment [and such Second Charter Assignment] pursuant to this
Charter; and
WHEREAS, capitalized terms used herein but not defined
herein shall have the meanings assigned to them in the Loan Agreement
and the Acquisition Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained, the receipt and adequacy of which is
hereby acknowledged, Owner and Charterer hereby agree as follows:
1. REPRESENTATIONS OF CHARTERER.
(a) Charterer is a corporation duly organized and
validly existing in good standing under the laws of Delaware with full
corporate power and authority to conduct its business as the same is
presently conducted.
(b) Charterer has legal power and authority to enter
into and carry out the terms of this Charter.
(c) This Charter has been duly authorized by all
necessary action, corporate or other, on the part of Charterer, and this
Charter constitutes, and upon due execution and delivery by Charterer,
the Charter will constitute, in accordance with its respective terms, a
legal, valid and binding instrument enforceable against Charterer,
except to the extent limited by applicable bankruptcy, reorganization,
insolvency, moratorium or other laws of general application relating to
or affecting the enforcement of creditors' rights from time-to-time in
effect.
(d) Except as previously disclosed to Owner, the Agent
and the Syndicate Agent in writing, there are no actions, suits or
proceedings pending or, to Charterer's knowledge, threatened against
Charterer, or any of its properties affecting the Charter or the
transactions contemplated thereby which would, if adversely determined,
materially and adversely affect the performance of Charterer of its
obligations hereunder.
(e) The consummation of the transactions contemplated
by, and compliance by Charterer with all the terms and provisions of,
the Charter will not violate any provisions of the Certificate of
Incorporation or bylaws of Charterer and will not result in a breach of
the terms and provisions of, or constitute a default under, any other
agreement or undertaking by Charterer or by which it or any of its
property is bound or any order of any court or administrative agency
entered in any proceedings binding on Charterer, or violate any
applicable statute, rule or regulation.
(f) Charterer is not in default and no condition exists
which with notice or lapse of time or both would constitute a default by
Charterer, in any respect which would materially and adversely affect
the ability of Charterer to perform its obligations under this Charter,
under any mortgage, loan agreement, deed of trust, indenture or other
agreement with respect thereto or evidence of indebtedness to which it
is a party or by which it is bound, and is not in violation of or in
default, in any respect which would materially and adversely affect the
ability of Charterer to perform its obligations under this Charter,
under any order, writ, judgment or decree of any court, arbitrator or
governmental authority, commission, board, agency or instrumentality,
domestic or foreign.
(g) Charterer has more than one place of business and
the location of the place of business which is its chief executive
office is 1111 Broadway, Oakland, California 94607.
(h) All taxes (other than taxes based on or measured by
income and withholding taxes), liability for the payment of which has
been incurred by Charterer as such in connection with the execution,
delivery and performance by it of the Charter, have been paid (or
provided for in its accounts if not payable) on or prior to the delivery
date of the Vessel.
(i) All consents, licenses, permissions, approvals,
registrations or authorizations or declarations required by United
States of America federal, state and local governments and the
government of the jurisdiction of incorporation of Charterer and any
applicable foreign jurisdiction (1) to enable it lawfully to enter into
and perform its respective obligations under this Charter, (2) to ensure
that its obligations hereunder are legal, valid and enforceable, and (3)
to make this Charter admissible in evidence in the United States of
America and such country of Charterer's incorporation have been obtained
or made and are in full force and effect.
(j) It has not taken any corporate action nor to its
knowledge has any other steps been taken or legal proceedings been
started or threatened against it for its winding-up, dissolution or
reorganization or for the appointment of a receiver, administrative
receiver, administrator, trustee or similar officer of it or of any or
all of its respective assets and revenues.
2. PERIOD OF CHARTER AND BASIS OF CHARTER HIRE.
(a) Owner agrees to charter and Charterer agrees to hire
the Vessel delivered hereunder on the terms and conditions herein set
forth for a period from the date hereof with respect to the Vessel,
until payment in full on the due date of the final installment of
principal and interest with respect to the Subportion relating to the
Vessel pursuant to Section 5 of the Loan Agreement (together with all
other amounts relating to such Subportion payable in accordance with the
terms of the Loan Agreement, unless earlier terminated in accordance
with the terms hereof upon payment of all such principal and interest
and such other amounts (said period with respect to each Vessel
hereinafter referred to as its "Charter Period").
(b) Subject to the provisions of Section 24(b)(i)
hereof, Charter hire ("Charter Hire") shall be paid by Charterer to
Owner in amount of (i) principal and interest due with respect to the
Subportion relating to the Vessel from the Borrower to the Agent
pursuant to Sections 3, 4, 5, 6 and 12 of the Loan Agreement, and the
related [HDW] [Daewoo] Notes issued by Owner pursuant to Section 4 of
the Loan Agreement, at the times and places, in the manner and to the
parties set forth in said sections and such Notes, [including without
limitation the provisions of Section 3.05(a) with respect to * ]3,
Section 3.08 with respect to default interest, Section 5.03 with respect
to
* , and Section 5.04 with respect to prepayment and (ii) all
indemnity payments required under Section 11 of the Loan Agreement when
due and payable. Upon payment in full (upon maturity or through
prepayment pursuant to Section 5.04 of the Loan Agreement), of all such
amounts with respect to any Subportion, together with any Supplemental
Charter Hire required to be paid with respect thereto pursuant to clause
(d) of this Section 2, this Charter shall terminate with respect to the
Vessel.
(c) This Charter may not be cancelled or terminated,
except in accordance with the expressed provisions hereof, for any
reason whatsoever and Charterer shall have no right to be relieved or
discharged from obligation or liability under this Charter except as
otherwise expressly provided herein for any reason whatsoever.
Charterer hereby waives, to the extent permitted by applicable law, any
and all rights which it may now have or which at any time hereafter may
be conferred upon it by statute or otherwise, to terminate, cancel, quit
or surrender this Charter except as otherwise expressly provided herein.
Charterer acknowledges and agrees that its obligation to pay all Charter
Hire and Supplemental Charter Hire pursuant to this Section 2 and all
other amounts payable on behalf of Owner to [the Agent] [the Syndicate
Agent] and the [Holders of the Daewoo Notes] pursuant to the terms of
this Charter shall be absolute and unconditional under any and all
circumstances, shall not be subject to any counterclaim, set-off,
deduction, abatement or defense based upon any claim Charterer may have
against Owner, the Agent, the Syndicate Agent or any other Lender or any
other Person whatsoever, and shall remain in full force and effect
without regard to, and shall not be released, discharged or in any way
effected by any circumstance or condition (whether or not Charterer
shall have knowledge or notice thereof), including, without limitation:
(i) any amendment or modification of this Charter, the Loan Agreement,
any agreements relating to any thereof or any other instrument or
agreement applicable to the Vessel or any part thereof or any assignment
or transfer of any thereof or any furnishing or acceptance of additional
security, or any release of any security, or any failure or inability to
perfect any security; (ii) any failure on the part of the Owner to
perform or comply with any term of this Charter or any failure on the
part of the Agent, the Syndicate Agent or any other Lender to perform or
comply with the terms of the Loan Agreement or any other instrument
agreement applicable thereto; (iii) any waiver, consent, change,
extension, indulgence or other action or inaction under or in respect to
this Charter or any other such instrument or agreement, or any exercise
or nonexercise of any right, remedy, power or privilege under or in
respect of any such instrument or agreement; (iv) any bankruptcy,
insolvency, reorganization, arrangement, readjustment, composition,
liquidation or similar proceeding with respect to Owner, the Agent, the
Syndicate Agent, the Guarantor, any Lender or any affiliate of any of
them, or their respective properties or creditors, or any action taken
by any court, trustee, receiver or liquidating agent in any such
proceeding, including, without limitation, any termination or rejection
of this Charter or any assignment of either thereof by any court,
trustee, receiver or liquidating agent of Charterer or Owner or of any
of their respective properties in any such proceeding; (v) limitation on
the liability or obligations of Charterer under this Charter or any
termination, or cancellation (except as expressly provided in this
Charter), frustration, invalidity, irregularity or unenforceability, in
whole or in part, of this Charter or any term hereof or any lack of
power or authority of Charterer or Owner to enter into this Charter;
(vi) any assignment or other transfer of this Charter by Owner (whether
pursuant to Section 30 hereof or otherwise) or any lien, charge or
encumbrance, from whatever source arising, on or affecting Charterer's
estate in, or any subchartering of, all or any part of the Vessel
(whether or not pursuant to the express provisions of this Charter or
otherwise); (vii) any damage to, or loss, destruction, requisition,
seizure, forfeiture or marshal's or other sale of, the Vessel or any
exercise of rights with respect to the Vessel under the Mortgage[s];
(viii) any libel, attachment, levy, detention, sequestration or taking
into custody of the Vessel, or any interruption or prevention of or
restriction on or interference with the use or possession of the Vessel;
(ix) any title defect or encumbrance or any dispossession from the
Vessel by title paramount or otherwise; (x) any act, omission,
misrepresentation or breach on the part of Owner under this Charter or
any other agreement at any time existing between Owner and Charterer, or
under any statute, law or governmental regulation; (xi) any other
circumstance whatsoever which might otherwise constitute a legal or
equitable discharge or defense of a charterer and irrespective of any
other circumstance which might otherwise limit the recourse against
Charterer; (xii) any defect in the seaworthiness, condition, design,
operation or fitness for use of the Vessel or the ineligibility of the
Vessel for any particular trade; or (xiii) any other occurrence or
condition whatsoever, foreseen or unforeseen, whether similar or
dissimilar to the foregoing, now existing or hereafter occurring.
Even though Charterer shall be deprived of or limited in
the use of the Vessel in any respect or for any length of time, whether
or not by reason of some act, omission or breach on the part of Owner,
Charterer or any other party, whether or not resulting from accident and
whether or not without fault on the part of Charterer, Charterer will
continue to make all payments required of Charterer by the terms of this
Charter, whether for Charter Hire, Supplemental Charter Hire or
otherwise, without interruption or abatement, unless and until this
Charter shall have terminated with respect to the Vessel in accordance
with the express provisions hereof. If, for any reason whatsoever, this
Charter shall be terminated in whole or in part by operation of law or
otherwise, except as specifically provided herein, Charterer nonetheless
agrees to pay an amount equal to each payment of Charter Hire,
Supplemental Charter Hire or other amounts, at the time such payment
would have become due and payable in accordance with the terms hereof
had this Charter not been terminated in whole or in part.
Nothing contained in this clause (c) shall be construed
to be a waiver, modification, alteration or release of any claims which
Charterer may have at any time during the Charter Period or subsequent
thereto for damages or equitable relief, for breach by Owner or APL of
any provisions in any of the Charter Documents or the Loan Documents, or
by the Vessel Lender of any provisions in any of the Loan Documents, or
for any loss due to any acts taken by any of the parties hereto or
thereto.
(d) As supplemental charter hire ("Supplemental Charter
Hire"), Charterer shall pay as and when due any and all amounts (other
than principal and interest on the [HDW] [Daewoo] Notes, including
interest at the Default Interest Rate) payable by Owner pursuant to the
Loan Agreement with respect to the Subportion relating to each Vessel,
at the times and places, and in the manner and to the parties set forth
in such agreements.
3. DELIVERY AND ACCEPTANCE.
Owner hereby lets, demises and delivers the Vessel to
Charterer and Charterer hereby accepts delivery of the Vessel, pursuant
to the terms of this Charter. IT IS AGREED THAT OWNER MAKES NO WARRANTY
OR REPRESENTATION, EITHER EXPRESSED OR IMPLIED, AS TO TITLE TO, AS TO
THE DESIGN, CONDITION, MERCHANTABILITY OR SEAWORTHINESS OF, AS TO THE
QUALITY OF THE MATERIAL, EQUIPMENT OR WORKMANSHIP IN OR AS TO THE
CONSUMABLE STORES ON BOARD THE VESSEL, OR AS TO THE FITNESS OF THE
VESSEL FOR ANY PARTICULAR PURPOSE OR AS TO THE ELIGIBILITY OF THE VESSEL
FOR ANY PARTICULAR TRADE, OR ANY OTHER WARRANTY OR REPRESENTATION
WHATSOEVER.
4. REDELIVERY.
At the expiration of its Charter Period, the Vessel
(unless lost) shall be redelivered by Charterer to Owner at the end of
the voyage then in progress at a safe berth to be selected by Owner at a
port to be designated by Owner or another mutually agreed port.
5. OPERATING LIMITS.
Charterer shall have the full use of the Vessel, and may
operate the Vessel throughout the world, for the carriage of any lawful
cargoes in any lawful trade on voyages for which the Vessel is suitable
and for which insurance is procured by Charterer and in effect prior to
entering such trades. All necessary insurance required for the trades
in which the Vessel is engaged will be procured by Charterer pursuant to
Section 17 hereof and paid for by Charterer.
6. CONDITION OF VESSEL ON DELIVERY.
(a) The Vessel, upon its delivery hereunder, shall be
documented under the laws of the Republic of The Marshall Islands. No
change will be made in the registry of the Vessel without the approval
of Owner and compliance by Owner with the terms of Section (20)(b) of
the applicable [Mortgage] [Mortgages].
(b) On its delivery, the Vessel is classed _________. On
its delivery, the Vessel shall be in good running order and repair, and
will be, insofar as due diligence shall make it so, strong and well and
sufficiently tackled, apparelled, furnished, equipped and in good
operating condition, ordinary wear and tear and depreciation excepted.
(c) By its acceptance of delivery of the Vessel,
Charterer acknowledges that the Vessel is in all respects satisfactory
to Charterer and such delivery shall constitute full performance by
Owner of all of Owner's obligations hereunder, relating to the condition
of the Vessel, required to be performed by Owner prior to the delivery.
7. INSPECTIONS.
(a) Owner and Charterer shall agree on a single surveyor
appointed for the purpose of determining and stating in writing the
condition of the Vessel at the time of redelivery. If not less than ten
(10) days prior to redelivery, Owner and Charterer shall fail to have
agreed on the surveyor to be appointed for such purpose, either party
may request The American Bureau of Shipping, New York, to make such
appointment, and the surveyor so appointed shall perform such survey.
The expense of the aforesaid surveyor shall be shared equally by Owner
and Charterer. Owner and Charterer may have their own representative in
attendance at all surveys.
(b) Prior to redelivery of the Vessel, the auxiliary
machinery, generators, main propulsion units and boilers may be opened
for inspection only by mutual agreement between Owner and Charterer, in
which event any damage disclosed shall be repaired as may be required
prior to redelivery. The expense of repair shall be paid by Charterer.
If no repairs are found necessary as a result of opening said machinery,
the cost of opening will be borne by the party requesting the opening.
8. MAINTENANCE AND CLASSIFICATION.
Charterer shall be charged with full responsibility for
maintenance and repair of the Vessel throughout the Charter Period and
shall at all times, without expense to Owner, maintain and preserve the
Vessel in good running order and repair, so that the Vessel shall be,
insofar as due diligence can make it so, strong and well and
sufficiently tackled, apparelled, furnished, equipped and supplied and
in every respect seaworthy and good operating condition, ordinary wear
and tear excepted. Furthermore, Charterer shall maintain the Vessel so
as to enable it to the highest classification and rating of The American
Bureau of Shipping for vessels of the same age and type. On redelivery,
any outstanding requirements shall be taken care of by Charterer, or as
Charterer may otherwise mutually agree with Owner in respect thereto.
Owner will authorize The American Bureau of Shipping to release all
records to Charterer relating to the Vessel.
9. INVENTORY.
A complete inventory of the Vessel's entire outfit,
equipment, furniture, furnishings, appliances, spare and replacement
parts whether owned, pooled or shared with other operators, and of all
unbroached consumable stores and slop chest is warranted by Owner at
delivery. An inventory shall be taken and mutually agreed upon by
representatives of Charterer and Owner at the time of redelivery. The
cost of taking such inventory shall be borne equally by Charterer and
Owner. Charterer shall pay all shortfalls from the delivery inventory at
the current market prices at the port of redelivery, except as may be
otherwise mutually agreed.
10. FUEL AND LUBRICANTS.
Charterer shall accept and pay for all fuel and
lubricants in storage tanks on board at the time of the Vessel's
delivery hereunder and, correspondingly, Owner shall accept and pay for
all such fuel and lubricants in storage tanks left on board at the time
of redelivery. Each shall pay for fuel and lubricants in storage tanks
at the last invoiced price paid therefor.
11. USE OF EQUIPMENT.
(a) Charterer shall have the use of the Vessel and its
outfit, equipment (including cabin, crew, galley and container lashing
equipment), furniture, furnishings, appliances, spare and replacement
parts on board the Vessel or ashore as available and shown in the
inventory at delivery under this Charter, and Charterer shall at all
times, and at its own expense, comply with and discharge Owner's
obligations, and shall be entitled to all the benefits and rights of
Owner, under Section (25)(a) of the [Mortgage] [Mortgages] as to
maintenance of the Vessel and its classification and compliance with all
applicable laws, treaties, conventions, rules and regulations of
[state/country of flag], all in accordance with the terms of said
Section (25)(a).
(b) Charterer furnished outfit, equipment (including
cabin, crew, galley and container lashing equipment), furniture,
furnishings, appliances, spare and replacement parts on board the Vessel
and not shown in the inventory or supplemental inventories as Owner
furnished at the time of delivery shall remain the property of
Charterer, and Charterer at the time of redelivery shall have the right
to remove such items or at its option may leave such items on board the
Vessel. All items left aboard the Vessel at the termination of the
Charter with respect to the Vessel shall be deemed abandoned to Owner.
(c) Charterer shall be at liberty to fit any additional
equipment required for the services of Charterer, beyond what is on
board at commencement of Charter with respect to the Vessel, such work
to be done at its time and expense, and such equipment to be considered
its property, and Charterer shall be at liberty to remove such equipment
at its time and expense during or prior to the expiry of this Charter
with respect to the Vessel; provided that such removal shall in no way
significantly alter the condition of the Vessel at the time of its
redelivery to Owner. All additional equipment left aboard the Vessel at
the termination of the Charter shall be deemed abandoned to Owner.
Charterer shall make no substantial change in the structure, type or
speed of the Vessel or change its rig without first obtaining the
written approval of Owner and the Vessel Lender; provided, however, that
no such approval need be obtained in respect of any change which shall
be necessary to comply with the requirements of the United States Coast
Guard, [state/country of flag], or The American Bureau of Shipping in
order to entitle the Vessel to the classification and rating required
above.
12. WARRANTY CLAIMS.
Charterer has retained, and not assigned to Owner, its
rights under the [HDW] [Daewoo] Shipbuilding Agreement with respect to
the Vessel with [Howaldtswerke-Deutsche Werft AG] [Daewoo Shipbuilding &
Heavy Machinery Ltd.] (the "Shipyard") relating to the condition and
performance of the Vessel, including its replacement and repair warranty
rights under said contract, and its rights with respect to the standby
letter of credit relating to such warranty rights, and it is agreed
that:
(a) Charterer may negotiate and process all warranty
claims directly with the Shipyard and shall provide Owner with prior
notice of all warranty claims whenever reasonably practicable;
(b) Owner will cooperate with Charterer in processing
all Vessel warranty claims against the Shipyard if requested by
Charterer; and
(c) All fees and expenses incurred to prosecute or
litigate Vessel warranty claims against the Shipyard shall be borne by
Charterer.
13. OWNER AND VESSEL LENDER INSPECTIONS.
Charterer shall at all reasonable times afford Owner and
the Vessel Lender, or their respective authorized representatives, full
and complete access to the Vessel for the purpose of inspecting or
surveying the same and its papers and, at the request and expense of
Owner or the Vessel Lender, Charterer shall deliver for inspection by
such requesting party copies of any and all contracts and documents
relating to the Vessel, whether on board or not on board.
14. LAY-UP.
Notwithstanding anything to the contrary in this Charter,
Charterer may at any time during the period of this Charter, lay-up the
Vessel at a safe place so long as permitted by the applicable Mortgage
in which case Charterer's obligations under this Charter shall include,
during the period of lay-up, taking the customary precautions for the
maintenance and safety of the Vessel and of paying, in addition to all
other amounts required under this Charter, all other expenses
attributable to such precautions and to the laying-up of the Vessel.
15. CHARTERER TO MAN.
During the period of this Charter, Charterer shall at its
expense, and by its own procurement, man, victual, navigate, operate,
supply, and fuel the Vessel and shall pay all charges and expenses of
every kind and nature whatsoever incident to the use and operation of
the Vessel under this Charter.
16. CONDITION ON REDELIVERY OF VESSEL.
(a) The Vessel shall be redelivered to Owner (unless
lost) pursuant to the terms of this Charter in all respects in the same
condition of operation and repair as when delivered, except as otherwise
provided herein or mutually agreed, ordinary wear and tear not affecting
class excepted. Unless otherwise agreed between the parties and, except
as provided in paragraph (b) of this Section 16, Charterer shall repair
all damages to the Vessel occurring during the Charter Period, and shall
replace all lost, worn out or otherwise non-operating items, to the
extent necessary to put each Vessel in all respects in the same
condition of operation and repair as when delivered, ordinary wear and
tear not affecting class excepted. If, at the time of redelivery,
repairs, renewals, replacements or other obligations for which Charterer
is liable remain to be accomplished and it is mutually agreed between
the parties that such items need not be accomplished before redelivery,
Charterer shall pay the agreed upon cost of such items. At the
redelivery survey provided for in Section 7 hereof, the surveyor
representing both Charterer and Owner shall determine and state the
repairs or work necessary to place the Vessel on the date of redelivery
in the condition and class required in this Charter, which statement
shall include all repairs or work required by outstanding classification
requirements of The American Bureau of Shipping or marine inspection
requirements of the United States Coast Guard, if applicable, in effect
with respect to the Vessel as of the date of the redelivery to place it
in such condition.
(b) Owner agrees that upon the redelivery Charterer
shall have no obligation to renew or repair the Vessel's cell guides,
which shall be returned in "as is, where is" condition.
17. RISK OF LOSS, INSURANCE.
Charterer hereby assumes all of the risks and liability
resulting from or arising out of Charterer's possession, use, operation
or storage of the Vessel, and Charterer shall at all times, at its own
expense, comply with and discharge Owner's obligations under Section
(29) of the [Mortgage] [Mortgages] as to the maintenance of insurance on
the Vessel, and shall be entitled to all the benefits and rights of
Owner under said section, during the Charter Period (and shall, along
with Owner and the Vessel Lender, be named as an assured, additional
assured, and loss payee, as applicable), all in accordance with the
provisions of said section. In any case where Charterer shall be
obligated to give notice to the Vessel Lender pursuant to this Section
17, Charterer shall also give simultaneous notice to Owner.
18. ACTUAL OR CONSTRUCTIVE TOTAL LOSS.
If an Event of Loss shall occur, Charterer shall (i) give
prompt written notice thereof to Owner and the Vessel Lender, (ii)
deposit with the Vessel Lender for the account of Owner, on or before
the Redemption Date, all amounts required to be paid by Owner to the
Vessel Lender on such date pursuant to Section 5.04(b)(ii) of the Loan
Agreement, (iii) pay to Owner any insurance proceeds or other
compensation, in excess of its payment obligations pursuant to subclause
(ii) hereof, and (iv) be entitled to the credit referred to in Section
5.04(b)(iii) with respect to its payment obligations pursuant to
subclause (ii) hereof. Upon Charterer's payment pursuant to subclause
(ii) hereof (to the extent modified by subclause (iv) hereof), this
Charter shall terminate.
19. BILLS OF LADING.
Charterer shall utilize its customary contracts of
affreightment, including its long form and short form bills of lading,
the standard form of Military Sealift Command Shipping Agreement, and
cargo charter parties all of which foregoing documents shall include
Clause Paramount, Liberties Clause, General Average Clause, New Jason
Clause, and Both-to-Blame Collision Clause.
20. GENERAL AND PARTICULAR AVERAGE.
Average adjusters, appointed by Charterer from a list of
adjusters satisfactory to Owner, shall attend to the settlement and
collection of both general and particular average losses subject to the
customary charges. Charterer agrees to assist the adjuster in preparing
the average statement and to take all other possible measures to protect
the interests of the Vessel and Owner.
21. SALVAGE.
All earned salvage will be for Charterer's account.
22. LIENS.
(a) Neither Charterer nor the Master of the Vessel nor
any other Person shall have the right, power, or authority to create,
incur or permit to be placed upon the Vessel any liens whatsoever other
than those permitted by Section 14 of the Mortgage, and shall hold
harmless and indemnify Owner and the Vessel Lender against the claims
and demands of all Persons whomsoever arising as a result of any
mortgage, security interest, lien or charge whatsoever on the Vessel,
except that such undertaking by Charterer shall not apply to the lien of
the [Mortgage] [Mortgages].
(b) Charterer shall at all times, at its own cost and
expense, comply with and discharge Owner's obligations under Sections
(15), (16) and (22) of the [Mortgage] [Mortgages] with respect to the
release and discharge of any lien or levy against the Vessel, and shall
give notice to Owner if it shall be required to give notice to the
Vessel Lender pursuant to said Section (16).
(c) Charterer agrees to carry a properly certified copy
of this Charter and the [Mortgage] [Mortgages] with the ship's papers on
board the Vessel, and agrees to exhibit the same to any person having
business with such Vessel and to any representative of the Vessel
Lender, and agrees also to exhibit the same to any representative of
Owner on demand.
(d) Charterer further agrees to fasten in the Vessel in
a prominent place, and to maintain during the Charter Period a framed
printed or typewritten notice in plain type and which shall cover a
space of not less than six (6) inches wide by nine (9) inches high (or
of such other dimensions as may be required by law) reading
substantially as follows:
"NOTICE OF FIRST [AND SECOND] PREFERRED
SHIP MORTGAGE[S] AND CHARTER
THIS VESSEL IS OWNED BY APL NEWBUILDINGS, LTD., A NEVADA
CORPORATION (THE "SHIPOWNER"), AND IS CHARTERED BY AMERICAN
PRESIDENT LINES, LTD., A DELAWARE CORPORATION, AND IS COVERED BY
A FIRST PREFERRED SHIP MORTGAGE IN FAVOR OF [KREDITANSTALT FUR
WIEDERAUFBAU] [SYNDICATE AGENT OR SYNDICATE MEMBERS] [AND A
SECOND PREFERRED SHIP MORTGAGE IN FAVOR OF KREDITANSTALT FUR
WIEDERAUFBAU], UNDER AUTHORITY OF THE REPUBLIC OF THE MARSHALL
ISLANDS. UNDER THE TERMS OF SAID MORTGAGE[S] AND CHARTER,
NEITHER THE SHIPOWNER, ANY CHARTERER, THE MASTER OF THE VESSEL
NOR ANY OTHER PERSON, HAS ANY RIGHT, POWER OR AUTHORITY TO
CREATE, INCUR OR PERMIT TO BE PLACED OR IMPOSED UPON THIS VESSEL
ANY LIEN WHATSOEVER OTHER THAN THE LIEN OF SAID MORTGAGE[S] AND
LIENS FOR WAGES OF A STEVEDORE WHEN EMPLOYED DIRECTLY BY THE
SHIPOWNER, OPERATOR, MASTER, OR ANY AGENT OF THE VESSEL, FOR
CREW'S WAGES, FOR GENERAL AVERAGE, FOR SALVAGE, AND, TO THE
EXTENT SUBORDINATE TO THE LIEN OF SAID MORTGAGE[S], FOR CERTAIN
LIENS INCIDENT TO CURRENT OPERATIONS OR FOR REPAIRS OR CHANGES
PERMITTED BY THE MORTGAGE[S]."
23. TRANSFER OF ASSIGNMENT.
Charterer shall not, without Owner's and the Vessel
Lender's prior written consent, sell, demise, charter, transfer, or
assign this Charter or any interest therein, or, without such consent,
make any arrangement whereby the maintenance, management, or operation
of the Vessel is to be performed by any other person, except with
respect to requisition or other governmental taking, and except that
Charterer may subcharter the Vessel on a time basis as long as Charterer
shall, at its own cost and expense, comply with Section 9.02(b) of the
Loan Agreement; provided that, notwithstanding such subcharter,
Charterer remains fully liable for all of its obligations under the
Charter Documents. Charterer shall have the right to voyage charter the
Vessel, or to arrange for space or slot charters of a portion of the
Vessel in connection with Charterer's normal liner service.
24. EVENTS OF DEFAULT AND REMEDIES.
(a) The following shall constitute an event of default
under this Charter (hereinafter called a "Event of Default"):
(i) An Event of Default shall have occurred under the
Loan Agreement or [the Mortgage] [or the Second
Mortgage]; or
(ii) Charterer's failure to duly and punctually observe
and perform any of the covenants of Charterer herein and
the continuance of such failure for thirty (30) days
after written notice thereof from Owner to Charterer; or
(iii) Any representation or warranty made by or on
behalf of Charterer in this Charter or in any of the
Charter Documents, or by Charterer in any certificate,
statement or other document issued by or on behalf of
Charterer pursuant to this Charter shall prove to have
been incorrect or misleading in any material respect when
made or deemed made; or
(iv) Any license, authorization, consent or approval at
any time necessary to enable Charterer to comply with its
obligations under this Charter and/or any of the Charter
Documents with respect to the Vessel is revoked or not
granted or fails to remain in full force and effect for a
period of thirty (30) days after notice thereof from the
Vessel Lender.
(b) If an Event of Default shall have occurred and be
continuing:
(i) If the Vessel Lender shall have declared or shall
have been deemed to have declared the whole or any part
of the outstanding principal amount of the [HDW] [Daewoo]
Notes to be immediately due and payable by Owner pursuant
to Section 12.01 of the Loan Agreement and Section (31)
of the Mortgage[s], Charterer shall be immediately
obligated to pay Charter Hire in an amount equal to such
principal amount and interest thereon and interest
thereafter on overdue principal at the Default Interest
Rate;
(ii) Upon such declaration or deemed declaration of
acceleration pursuant to clause (i) hereof, Owner may:
(A) Institute and prosecute any judicial, extra-
judicial, or administrative proceedings as it may
consider appropriate to recover any or all sums due, or
declared due, with respect to Charter Hire and with
respect to any Supplemental Charter Hire due, with the
right to enforce payment of said sums against any assets
of Charterer;
(B) Owner may take possession of the Vessel, with
or without legal proceedings, at any place where the
Vessel may be found (and Charterer shall forthwith
surrender possession of the Vessel to Owner on demand);
and
(C) Owner may terminate Charterer's rights under
this Charter.
(c) In case there shall be pending proceedings for the
bankruptcy or for the reorganization of Charterer under any applicable
law or in connection with the insolvency of Charterer or in case a
receiver or trustee shall have been appointed for its property or its
creditors, Owner or the Vessel Lender as assignee of the Owner,
irrespective of whether Charter Hire shall then be due and payable as
herein expressed or by declaration of acceleration or otherwise, shall
be entitled and empowered to intervene in such proceedings or otherwise,
to file and prove a claim or claims for the whole amount of Charter Hire
or Supplemental Charter Hire owing and unpaid, and to file such other
papers or documents as may be necessary or advisable in order to have
the claims of Owner allowed in any judicial proceeding relative to
Charterer, its creditors, or its property, and to collect and receive
any money or other property payable or deliverable on any such claims,
and to have the same applied pursuant to Section 5.09 [(a)] [(b)] of the
Loan Agreement. Nothing contained in this Charter shall be deemed to
give Owner any right to accept or consent to any plan of reorganization
or otherwise by action of any character in any such proceeding to waive
or change in any way any right of any Holder.
(d) Any monies collected by Owner pursuant to
enforcement of any of its rights hereunder or under any other Charter
Document on account of the occurrence of an Event of Default by or on
behalf of Owner shall be payable to the Vessel Lender and distributed in
accordance with Section 5.09[(a)] [(b)] of the Loan Agreement.
(e) No right or remedy herein conferred upon or reserved
to Owner is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be
cumulative and, in addition to every other right and remedy given
hereunder or under the other Charter Documents or now or hereafter
existing at law, in equity, in admiralty, by statute or otherwise. The
assertion or employment of any right or remedy hereunder or otherwise
shall not prevent the concurrent or subsequent assertion or employment
of any other right or remedy hereunder or otherwise.
(f) No delay or omission of Owner to exercise any right
or remedy accruing upon any Event of Default nor any course of dealings
between Owner and Charterer shall impair any such right or remedy or
constitute a waiver of any Event of Default or an acquiescence therein
nor shall any single exercise or partial exercise of any such right or
remedy preclude any other exercise thereof or any exercise of any other
or further right or remedy; nor shall the acceptance by Owner of any
security or any payment of any part of Charter Hire or Supplemental
Charter Hire maturing after any Event of Default or of any payment on
account of any past default be construed to be a waiver of any right to
take advantage of any future Event of Default or of any past Event of
Default not completely cured thereby. Every right or remedy given by
this Charter or any other Charter Document or by law to Owner may be
exercised from time-to-time, and as often and in such order as may be
deemed expedient, by Owner.
(g) In case Owner shall have proceeded to enforce any
right, power or remedy under this Charter or under any other Charter
Document, and such proceeding shall have been discontinued or abandoned
for any reason or shall have been adversely determined to Owner, then,
and in every such case, Charterer and Owner shall be restored to their
former positions and rights hereunder with respect to the property
subject or intended to be subject to this Charter or any other Charter
Documents, as the case may be, and all rights, remedies and powers of
Owner shall continue as if no such proceedings had been taken.
(h) Subject to the provisions of Section 24(b) hereof,
Owner shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to Owner under this
Charter or any other Charter Document.
(i) Charterer hereby expressly waives demand and
presentment for payment, notice of nonpayment, protest, notice of
protest, notice of dishonor, bringing of suit, and diligence in taking
any action to collect amounts called for under this Charter at any time
in connection herewith.
(j) No right or remedy herein conferred upon or reserved
to Owner is intended to be exclusive, but cumulative and in addition to
any other right and remedy given hereunder or under the other Charter
Documents.
25. SPECIAL CONDITIONS; SUBORDINATION TO THE LIEN OF THE MORTGAGE[S].
(a) During the period of this Charter, Charterer may
substitute its own stack marks and insignia for those of Owner on the
Vessel.
(b) Owner shall effect initial registry of the Vessel in
the official name designated by Charterer.
(c) This Charter and each and every provision hereof
shall be subject and subordinate to each and every provision of the
Mortgage[s] in each and every right and any remedy of any party hereto
is subject and subordinate to each and every right and remedy of any
party to the Mortgage[s]. Any lien of the Charterer against the Vessel
for breach of this Charter (whether pleaded and proved as a tort or
otherwise) shall be subject and subordinate to the lien of the
Mortgage[s]. Charterer agrees not to take any action under this Charter
or otherwise which would violate, or cause Owner to violate, any
provisions of the [Mortgage] [Mortgages]. Without limiting the
generality of the foregoing, and in addition to all other obligations
assumed by Charterer hereunder, Charterer will at all times, and at its
own expense, comply with and discharge Owner's obligations, and shall be
entitled to all the benefits and rights of Owner, under the following
sections of the [Mortgage] [Mortgages], all in accordance with the
provisions of said sections: (i) Section (18) with respect to notice of
Events of Default, (ii) Section (21) with respect to operation of the
Vessel in accordance with law, (iii) Section (23) with respect to the
maintenance of the [Mortgage] [Mortgages], (iv) Section 25(c) with
respect to dealing with the Vessel's equipment (in connection with which
Charterer may act without Owner's consent whenever Mortgagee consent is
not required), and (v) Sections (28), (50)(a) and (b) and (51) with
respect to the payment or reimbursement of expenses.
26. OWNERSHIP.
So long as this Charter shall be in effect, Charterer's
interest in the Vessel shall be solely that of a bareboat charterer.
There shall be no option to purchase or other right to acquire a legal
or equitable ownership interest in the Vessel permitted or impled so
long as this Charter shall be in effect. Any contract or implied right
of Charterer to a legal or equitable interest in the Vessel made or
given while this Charter is in effect shall be void and unenforceable.
27. AMENDMENT.
This Charter shall be binding upon, in or to the benefit
of and enforceable by the parties hereto and their respective successors
and assigns. Neither this Charter nor any provision hereof may be
amended, modified, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which enforcement
of the amendment, modification, waiver, discharge or termination is
sought; provided that no such amendment, modification, waiver, discharge
or termination shall be made without the prior written consent of the
Vessel Lender.
28. APPLICABLE LAW.
This Charter shall be construed and governed in
accordance with the admiralty and maritime law of the United States of
America and where applicable the law of the State of New York (other
than the law of the State of New York governing choice of law).
29. NOTICES.
All notices or other communications by either party to
the other shall be in writing. If such notice is to the Charterer, it
shall be addressed to:
American President Lines, Ltd.
1111 Broadway
Oakland, CA 94607
Telephone: (510) 272-8000
Facsimile: (510) 272-8932
Telex: 671 4840
Answerback: APL OAK
Attention: Treasurer
If to Owner, it shall be addressed to:
APL Newbuildings, Ltd.
1111 Broadway
Oakland, CA 94607
Telephone: (510) 272-8000
Facsimile: (510) 272-8932
Telex: 671 4840
Answerback: APL OAK
Attention: Treasurer
Any notices or communications provided for herein shall
be deemed to have been given, unless otherwise expressly provided
herein, at the time of mailing when (in the case of telex) the
addressee's answerback shall have been received at the end of the
transmission thereof or (in the case of any letter) when
delivered to that address by facsimile or personally) or when
actually received by the relevant party after being deposited in
the post, first class, postage prepaid, in an envelope addressed
as above. Any party shall have the right to change the address
at which it is to receive notices upon fifteen (15) days prior
written notice.
30. CONSENT TO ASSIGNMENT.
Charterer hereby consents to the assignment of all of
Owner's rights, title and interest in and to this Charter to
[KfW] [Syndicate Agent or Syndicate Members] pursuant to the
[HDW] [Daewoo] Charter Assignment as security for the payment and
performance of the Owner Obligations with respect to the Vessel [and the
second priority security assignment of all such right, title and
interest in this KfW pursuant to the Second Charter Assignment, as
security for certain obligations of Owner to KfW under the Loan
Agreement] and agrees to make all payments due hereunder to the accounts
specified and otherwise in accordance with Section [5.06][5.07] of the
Loan Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Charter to be executed the day and year first above written.
OWNER
APL NEWBUILDINGS,
LTD.
By:
_________________________
Its:
_________________________
CHARTERER
AMERICAN PRESIDENT
LINES, LTD.
By:
_________________________
Its:
_________________________
RECEIPT OF ORIGINAL EXECUTED
COUNTERPART ACKNOWLEDGED:
[Name]
By:__________________________
EXHIBIT B-1 TO
THE AGREEMENT TO
ACQUIRE AND CHARTER
Kreditanstalt fur Wiederaufbau
Palmengartenstrasse 5-9
D - 60325 Frankfurt am Main
Date: 19
Re.: Container Vessel identified by Howaldtswerke-Deutsche Werft AG
(the "Builder") as Yard No. (297) (298) (299) ("the Vessel") -
B IV a F(W) 753
Dear Sirs,
We refer to an agreement ("the Acquisition Agreement") dated ( )
199_ and made between yourselves as Agent and Lender and ourselves as
Transferee. Terms defined in the Acquisition Agreement have the same
meanings herein.
In relation to the Vessel, we hereby confirm that we are ready to take
delivery of and accept the Vessel under the [Acquisition Agreement]
[Shipbuilding Agreement].
We also confirm that the Vessel is recommended for class " " with
The American Bureau of Shipping as per the photocopy or duplicate
provisional certificate attached hereto, and that there is no lien nor
encumbrance on the Vessel other than the lien in favor of the Builder in
respect of the final installment of the Contract Price under the
Shipbuilding Agreement in the amount of DM( ) for the
Vessel payable on delivery under the [Acquisition Agreement]
[Shipbuilding Agreement].
Yours faithfully,
for and on behalf of
APL NEWBUILDINGS, LTD.
EXHIBIT B-2
TO THE AGREEMENT TO
ACQUIRE AND CHARTER
Commerzbank AG
Ness 7-9
D-20457 Hamburg
Date: 19
Re.: Container Vessel identified by Daewoo Shipbuilding & Heavy
Machinery, Ltd. (the "Builder") as Yard No. ( ) ( )
( ) ("the Vessel")
Dear Sirs,
We refer to an agreement ("the Acquisition Agreement") dated ( )
199_ and made between yourselves as Syndicate Agent and ourselves as
Transferee. Terms defined in the Acquisition Agreement have the same
meanings herein.
In relation to the Vessel, we hereby confirm that we are ready to take
delivery of and accept the Vessel under the [Acquisition
Agreement][Shipbuilding Agreement].
We also confirm that the Vessel is recommended for class " " with
The American Bureau Shipping as per the photocopy or duplicate
provisional certificate attached hereto, and that there is no lien nor
encumbrance on the Vessel other than the lien in favor of the Builder in
respect of the final installment of the Contract Price under the
Shipbuilding Agreement in the amount of USD( ) for the
Vessel payable on delivery under the Shipbuilding Agreement.
Yours faithfully,
for and on behalf of
APL NEWBUILDINGS, LTD.
Exhibit C to
Agreement to
Acquire and Charter
[HDW] [DAEWOO] [SECOND] CHARTER ASSIGNMENT
FROM
APL NEWBUILDINGS, LTD., the Assignor
TO
[KREDITANSTALT FUR WIEDERAUFBAU, the Assignee]
[COMMERZBANK AG, HAMBURG, as Syndicate Agent, the Assignee]
Dated: __________, 19__
[HDW] [DAEWOO] [SECOND] CHARTER ASSIGNMENT
This [Second] Charter Assignment dated __________ __, 199_ is
made between (i) APL NEWBUILDINGS, LTD., a Nevada corporation (the
"Assignor") and (ii) KREDITANSTALT FUR WIEDERAUFBAU, a public law
company incorporated in the Federal Republic of Germany. [(ii)
COMMERZBANK AG, Hamburg, a banking corporation incorporated in the
Federal Republic of Germany.
W I T N E S S E T H:
WHEREAS, American President Lines, Ltd. ("APL") has
heretofore entered into that certain Loan Agreement dated ________, 1994
(the "Loan Agreement"), by and among APL, as Borrower, Kreditanstalt fur
Wiederaufbau ("KfW"), Commerzbank AG (Hamburg) (the Syndicate Agent),
and the banks listed on Schedule I thereto (each, a "Syndicate Member"
and, collectively, the "Syndicate"), as Lenders, with respect to the
purchase financing of six (6) container vessels, including the Vessel
described below, and American President Companies, Ltd. ("APC") has
heretofore entered into that certain Guarantee dated _______, 199_ (the
"Guarantee"), relating to APL's obligations under the Loan Agreement and
the Assignor's obligations under the Loan Agreement as established
pursuant to the below-defined Acquisition Agreement.
WHEREAS, the date hereof is the Delivery Date of the
below-described [HDW] [Daewoo] Vessel pursuant to the Loan Agreement;
WHEREAS, as contemplated by Section 7(k) of the Loan
Agreement, APL has entered into that certain Agreement to Acquire and
Charter (the "Acquisition Agreement") among the Assignor and the parties
to the Loan Agreement, pursuant to which APL has transferred to the
Assignor, and the Assignor has accepted title to, and is currently the
disponent owner of, the Republic of The Marshall Islands flag vessel
PRESIDENT _______________, Official Number __________ (the "Vessel"),
and the Assignor has undertaken all of the payment and certain of the
performance obligations relating to Vessel Indebtedness in respect of
the Vessel under the Loan Agreement, (the "Owner Obligations");
WHEREAS, pursuant to the Acquisition Agreement, APL is
permitted, at its option, to transfer to the Assignor, and the Assignor
has agreed, at its option, to accept, title to any and all of the other
[HDW] [Daewoo] Vessels (each of such other [HDW] [Daewoo] Vessels which
is so transferred together with the above-referenced Vessel, referred to
individually herein as a "Vessel" and collectively as the "Vessels", on
their respective Delivery Dates pursuant to the Loan Agreement;
WHEREAS, the Assignor has simultaneously herewith entered
into a First Mortgage on the Vessel in favor of [KfW] the Syndicate
and/or Agent or the Syndicate Members (the "Vessel Lender") [and has
also entered into a Second Mortgage on the Vessel in favor of KfW], as
security for the Owner Obligations in respect of the Vessel, and the
Assignor shall, upon their respective Delivery Dates, enter into a First
Mortgage in such form in favor of the Vessel Lender [and a Second
Mortgage thereon in favor of KfW with respect to each of the other
Vessels];
WHEREAS, as contemplated by Section 9.02(h) of the Loan
Agreement and by the Acquisition Agreement, as a condition to the
transfer of the Vessel and any other Vessels pursuant to the Acquisition
Agreement, the Assignor has let and demised the Vessel to American
President Lines, Ltd. as charterer, ("the Charterer") and Charterer has
hired the Vessel from the Assignor on the terms and conditions set forth
in the [HDW] [Daewoo] Charter, dated the date hereof, such charter of
the Vessel being effective upon the execution and delivery of the
Charter;
WHEREAS, as further contemplated by the Acquisition
Agreement, as further conditions to the transfer of the Vessel and the
other Vessels pursuant to the Acquisition Agreement the Assignor is
entering into this [Second] Charter Assignment relating to the [HDW]
[Daewoo] Charter in favor of the Vessel Lender [and the Second Charter
Assignment of the Daewoo Charter in favor of KfW], and the Charterer is
consenting to such Charter Assignment and such Second Charter Assignment
pursuant to the [HDW] [Daewoo] Charter;
WHEREAS, capitalized terms used herein but not defined
herein shall have the meanings assigned to them in the Loan Agreement
and the Acquisition Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants contained herein and other good and valuable
consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
1. The Assignor hereby sells, pledges, hypothecates, assigns,
transfers and sets over unto the Assignee and unto the Assignee's
successors and assigns, not absolutely but as security only for the
performance by the Assignor of the Owner Obligations, and grants to the
Assignee a first priority security interest [second priority security
interest] in all right, title and interest of the Assignor in and to the
[HDW] [Daewoo] Charter, all monies due and to become due and claims for
monies due and to become due, and all claims for damages arising out of
the breach of, the [HDW] [Daewoo] Charter, together with any extensions,
renewals, modifications, changes or amendments of the
[HDW] [Daewoo] Charter and any and all proceeds of the foregoing.
2. The Assignor hereby agrees, represents and warrants that:
(a) The [HDW] [Daewoo] Charter is in full force and
effect and enforceable in accordance with its terms;
(b) The Assignor is not in default of any of the terms
of the [HDW] [Daewoo] Charter;
(c) Neither the whole nor any part of the right, title
and interest hereby assigned are the subject of any present assignment
or pledge other than the assignment contained herein [and the Second
Charter Assignment in favor of KfW], and so long as this Charter
Assignment [Second Charter Assignment] shall remain in effect, the
Assignor will not, without the prior written consent thereto of the
Assignee and, assign or pledge the whole or any part of the right, title
and interest hereby assigned to anyone other than the Assignee, its
successors or assigns;
(d) The Assignor will not take or omit to take any
action, the taking or omission of which might result in any alteration
or impairment of the [HDW] [Daewoo] Charter or this Charter Assignment
[Second Charter Assignment] or any of the rights created by the [HDW]
[Daewoo] Charter or this Charter Assignment [Second Charter Assignment];
(e) To the knowledge of the Assignor, the Charterer is
not in default of any of the terms of the [HDW] [Daewoo] Charter;
(f) [Subject to the rights of the Assignee under the
Charter Assignment] [The] Assignor will not enter into or consent to any
amendment, modification or other alteration of the [HDW] [Daewoo]
Charter without first obtaining the prior written consent of the
Assignee. Any amendment, modification or other alteration made without
the written consent of the Assignee shall be null and void.
3. Notwithstanding this Assignment, it is acknowledged,
understood and agreed that:
(a) The Assignor will remain liable to perform all of
the owner's obligations and duties under the [HDW] [Daewoo] Charter.
(b) The Assignor will be deemed the owner under the
[HDW] [Daewoo] Charter except as expressly set forth herein.
(c) The Assignee shall have no obligation or liability
under or pursuant to the [HDW] [Daewoo] Charter by reason of or arising
out of this Assignment, nor to present or file any claim, nor to take
any other action to collect or enforce the performance obligations of
the Charterer or payment of any amounts which have been assigned to them
or to which they may be entitled under this Charter Assignment [Second
Charter Assignment] at any time or times;
(d) So long as no Event of Default (as that term is
defined in the Loan Agreement and the First Mortgage [the Second
Mortgage]) has occurred, is continuing and shall not have been cured and
waived, neither the Assignee, the Assignor nor any successor thereof
shall interfere with the Charterer's possession and its peaceful and
quiet enjoyment of the Vessel.
4. The Assignor confirms to the Assignee its authorization and
direction to the Charterer in the [HDW] [Daewoo] Charter to make payment
of all monies due and to become due under or arising out of the [HDW]
[Daewoo] Charter at the time and in the manner set forth in Section 2(b)
of the [HDW] [Daewoo] Charter.
5. The Assignor does hereby constitute the Assignee, its
successors and assigns, the Assignor's true and lawful attorneys,
irrevocably, with full power (in the name of the Assignor or otherwise),
upon an Event of Default under the Loan Agreement or the First Mortgage
[the Second Mortgage], and in accordance therewith, to ask, require,
demand, receive, compound and give acquittance for any and all monies,
and claims for monies and rights hereby assigned, to endorse any checks
or other instruments or orders in connection therewith and to file any
claims or take any action or institute any proceedings which the
Assignee may deem to be necessary or advisable in the premises.
6. The Assignor hereby irrevocably authorizes the Assignee, at
the Assignor's expense, to file such financing and continuation
statements relating to this Charter Assignment [Second Charter
Assignment] without the Assignor's signature, as the Assignee at its
option may deem appropriate and appoints the Assignee as the Assignor's
attorney-in-fact to execute any such statements in the Assignor's name
and to perform all other acts which the Assignee may deem appropriate to
perfect and continue the security interest conferred hereby.
7. The assignment of the [HDW] [Daewoo] Charter to the Assignee
provided for herein shall take effect immediately upon the execution
hereof and the powers and authorities granted to the Assignee, its
successors or assigns herein, having been given for valuable
consideration, are hereby declared to be irrevocable.
8. The Assignor hereby agrees that at any time and from time to
time, upon the written request of the Assignee, its successors and
assigns, it will promptly and duly execute and deliver any and all such
further instruments and documents as the Assignee, its successors or
assigns, may reasonably require in order to obtain the full benefits of
this Second Charter Assignment and of the rights and powers herein
granted.
9. This [Second] Charter Assignment shall be governed by the
laws of the State of New York (other than the law of the State of New
York governing choice of law) and may not be amended or changed except
by an instrument in writing signed by the party against whom enforcement
is sought.
10. The Assignor hereby authorizes the Assignee to execute and file
financing statements and amendments thereto as provided in Article 9 of
the Uniform Commercial Code.
IN WITNESS WHEREOF, the Assignor has caused this
instrument to be duly executed as of the day and year first above
written.
By:
__________________________
Title:
SCHEDULE 1
NAMES AND ADDRESSES OF SYNDICATE MEMBERS
Syndicate Member Address
Commerzbank AG (Kiel Branch) Holstenstrasse 64
D-24103 Kiel
Federal Republic of Germany
Attention: Mr. Claes
Telex: 292898 CBKD
Telecopy: 49-431-9974-372
Dresdner Bank AG in Hamburg Jungfernstieg 22
D-20354 Hamburg
Federal Republic of Germany
Attention: Mr. Roller
Mr.
Bottcher
Telex: 2157170 DR D
Telecopy: 49-40-3501-3818
Vereins- und Westbank AG Alter Wall 22
D-20457 Hamburg
Federal Republic of Germany
Attention: Mr. Kopcke
Mrs.
Mertens
Telex: 215164 VH D
Telecopy: 49-40-3692-3696
Deutsche Schiffsbank AG Domshof 17
D-28195 Bremen
Federal Republic of Germany
Attention: Mr. Pieper
Mr. Onnen
Telex: 244870 DSBR D
Telecopy: 49-421-323539
Norddeutsche Landesbank - Georgsplatz 1
Girozentrale D-30159 Hannover
Federal Republic of Germany
Attention: Mr. Hartmann
Telex: 921634 GZH D
Telecopy: 49 511 36 14785
Deutsche Verkehrs-Bank AG Filiale Hamburg
Ballindamm 6
D-20095 Hamburg
Federal Republic of Germany
Attention: Mr. Spincke
Telex: 402077 DVB
Telecopy: 49-40-308004-12
Banque Internationale a
Luxembourg S.A. 2 Boulevard Royal
L-2953 Luxembourg
Attention: Mr. Jean Pierre
Vernier
Telex: 3326 BIL LU
Telecopy: 35-2-4590-2010
SCHEDULE 1
NAMES AND ADDRESSES OF SYNDICATE MEMBERS
Syndicate Member Address
Commerzbank AG (Kiel Branch) Holstenstrasse 64
D-24103 Kiel
Federal Republic of Germany
Attention: Mr. Claes
Telex: 292898 CBKD
Telecopy: 49-431-9974-372
Dresdner Bank AG in Hamburg Jungfernstieg 22
D-20354 Hamburg
Federal Republic of Germany
Attention: Mr. Roller
Mr.
Bottcher
Telex: 2157170 DR D
Telecopy: 49-40-3501-3818
Vereins- und Westbank AG Alter Wall 22
D-20457 Hamburg
Federal Republic of Germany
Attention: Mr. Kopcke
Mrs.
Mertens
Telex: 215164 VH D
Telecopy: 49-40-3692-3696
Deutsche Schiffsbank AG Domshof 17
D-28195 Bremen
Federal Republic of Germany
Attention: Mr. Pieper
Mr. Onnen
Telex: 244870 DSBR D
Telecopy: 49-421-323539
Norddeutsche Landesbank - Georgsplatz 1
Girozentrale D-30159 Hannover
Federal Republic of Germany
Attention: Mr. Hartmann
Telex: 921634 GZH D
Telecopy: 49 511 36 14785
Deutsche Verkehrs-Bank AG Filiale Hamburg
Ballindamm 6
D-20095 Hamburg
Federal Republic of Germany
Attention: Mr. Spincke
Telex: 402077 DVB
Telecopy: 49-40-308004-12
Banque Internationale a
Luxembourg S.A. 2 Boulevard Royal
L-2953 Luxembourg
Attention: Mr. Jean Pierre
Vernier
Telex: 3326 BIL LU
Telecopy: 35-2-4590-2010
SCHEDULE 2A
Kreditanstalt fur Wiederaufbau
Palmengartenstrasse 5 - 9
D - 60325 Frankfurt am Main
Date: 199_
Re: Notice of Drawdown in respect of container vessel
"President " identified by Howaldtswerke-Deutsche Werft
AG as Yard No. (297) (298) (299)
Loan No.: F(W)
Dear Sirs,
We refer to the Loan Agreement dated 1994 made between
ourselves and yourselves as the Agent and Lender. Terms defined in the
Loan Agreement shall have the same meaning in this Notice.
We hereby give you notice that, pursuant to Section 2.01(b) of the Loan
Agreement and on (date of proposed advance), we propose to drawdown the
HDW Subportion (A) (B) (C) in the sum of US$( ) upon the
terms and subject to the conditions contained therein.
We hereby request you to make the Advance in respect of HDW Subportion
(A) (B) (C) by paying the following sum(s) to the following account(s)
in order to finance such amount of the Contract Price paid or payable by
us to the Builder under the HDW Shipbuilding Agreement, provided for
under Section 2.01(a) of the Loan Agreement:
Account Bank Beneficiary Amount
No. US$
Yours faithfully,
AMERICAN PRESIDENT LINES, LTD.
By
Title:
SCHEDULE 2B
Commerzbank AG
Ness 7-9
D-20457 HamburgDate: 199__
Re.: Notice of Drawdown in respect of container vessel
"President " identified by Daewoo Shipbuilding
& Heavy Machinery, Ltd. as Yard No.
Dear Sirs,
We refer to the Loan Agreement dated 1994 made between
ourselves and yourselves as the Syndicate Agent. Terms defined in the
Loan Agreement shall have the same meaning in this Notice.
We hereby give you notice that, pursuant to Section 2.02(b) of the Loan
Agreement and on (date of proposed advance), we propose to drawdown the
Daewoo Subportion (A) (B) (C) in the sum of US$( ) upon the terms and
subject to the conditions contained therein.
We hereby request you to make the Advance in respect of HDW Subportion
(A) (B) (C) by paying the following sum(s) to the following account(s)
in order to finance such amount of the Contract Price paid or payable by
us to the Builder under the Daewoo Shipbuilding Agreement as provided
for under Section 2.02(a) of the Loan Agreement:
Account Bank Beneficiary Amount
No. US$
Yours faithfully,
AMERICAN PRESIDENT LINES, LTD.
SCHEDULE 3
MAXIMUM AGGREGATE AMOUNTS AND PERCENTAGE INTERESTS OF
EACH SYNDICATE MEMBER FOR EACH OF THE DAEWOO SUBPORTIONS
Syndicate Member Aggregate Amount Percentage
Interest
*
SCHEDULE 4-A
FORM OF OPINION OF LILLICK & CHARLES
[ ] ,
199_
TO THE PARTIES SET FORTH ON
SCHEDULE A ATTACHED HERETO
Re: American President Lines, Ltd.
Dear Sirs:
We have acted as special counsel to American President
Lines, Ltd. ("APL"), a Delaware corporation, APL Newbuildings, Ltd., a
Nevada corporation and American President Companies, Ltd., a Delaware
corporation (together, the "AP Companies"), in connection with the
purchase financing and chartering of six container vessels pursuant to
the Loan Agreement dated __________, 1994 (the "Loan Agreement") by and
among APL, Kreditanstalt fur Wiederaufbau, Commerzbank AG (Kiel Branch),
Dresdner Bank AG in Hamburg, Vereins-und Westbank AG, Deutsche
Schiffsbank AG, Norddeutsche Landesbank-Girozentrale, Deutsche Verkehrs-
Bank AG, Banque Internationale a Luxembourg S.A. and Commerzbank AG,
Hamburg, and an Agreement to Acquire and Charter dated ______________,
1994 (the "Acquisition Agreement") by and among APL, APL Newbuildings,
Ltd., Kreditanstalt fur Wiederaufbau, Commerzbank AG (Kiel Branch),
Dresdner Bank AG in Hamburg, Vereins-und Westbank AG, Deutsche
Schiffsbank AG, Norddeutsche Landesbank-Girozentrale, Deutsche Verkehrs-
Bank AG, Banque Internationale a Luxembourg S.A. and Commerzbank AG,
Hamburg. Capitalized terms used herein and not defined shall have the
meanings ascribed to them in the Loan Agreement.
In this connection, we have examined originals or
photostatic or certified copies of the Loan Documents, Charter Documents
and all such other corporate documents and such certificates or
comparable documents of public officials as we have deemed relevant and
necessary for the basis of our opinions hereinafter set forth. In such
examination, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals and the
conformity with the original documents submitted to us as copies and the
authenticity of the originals of such latter documents. As to any
question of fact material to the opinions expressed in this letter where
factual matters have not been independently established, we have relied
upon certificates of the AP Companies and we have not independently
verified such factual matters.
Our opinion is limited to the federal laws of the United
States of America, the General Corporation law of the State of Delaware,
[Nevada corporate law] and the internal laws of the States of New York
and California, and we express no opinion as to the effect on the
matters covered by this opinion of the laws of any other jurisdiction.
In rendering these opinions, we have examined and relied on the opinion
of Peter A.V. Huegel, Senior Counsel of the AP Companies, dated the date
hereof and delivered to you pursuant to Section 7(s) of the Loan
Agreement.
Based upon the foregoing, and subject to the
qualifications expressed herein, we are of the opinion that:
1. Each of the AP Companies is a duly incorporated
and validly existing corporation in good standing under the laws of its
jurisdiction of incorporation and has full corporate authority to enter
into the Loan Documents and Charter Documents to which it is a party,
and to perform all obligations under the relevant Loan Documents and
Charter Documents to be performed by it.
2. Each of the Loan Documents and Charter Documents
has been duly authorized by all necessary corporate action on the part
of the AP Companies party thereto, and has been duly executed and
delivered by each of the AP Companies party thereto, and each of the
Loan Documents and Charter Documents constitutes the legal, valid and
binding obligation of each of the AP Companies, party thereto,
enforceable against such AP Company in accordance with its terms, except
as to enforceability as limited by applicable bankruptcy, fraudulent
conveyance, insolvency, moratorium, reorganization and similar laws
affecting the rights of creditors, and except as limited by equitable
principles of general application, including, without limitation
concepts of materiality, reasonableness, good faith and fair dealing,
public policy and the possible unavailability of specific performance or
injunctive relief (regardless of whether such enforceability is
considered in a proceeding in equity or at law), and no opinion is
expressed herein as to the specific remedy that any court, other
governmental authority or arbitrator may grant, impose or render.
3. The execution and delivery by each of the AP
Companies of each of the Loan Documents and Charter Documents, to which
it is a party, and the performance by such AP Company of its obligations
thereunder, will not contravene any applicable law, ordinance, order,
rule or regulation or any provision of such AP Company's articles of
incorporation or bylaws.
4. No approval, consent or permission of, or filing,
registration or qualification with, any governmental authority of the
United States of America or the States of New York and California is
required in connection with the execution or delivery by any of the AP
Company of the Loan Documents and Charter Documents, to which it is a
party, or the performance by any of the AP Companies, of its obligations
under the Loan Documents and Charter Documents, to which it is a party
other than (a) any such approvals, consents or permissions which have
been previously obtained and which are in full force and effect and (b)
routine permits from, inspections by, and filings with, governmental
authorities that are required or will be required from time to time in
connection with the operation of the Vessel.
5. The Mortgage with respect to the Vessel [insert
name of Vessel] has been duly received for record and has been duly
recorded at [ ] on the date hereof, all in accordance with the
laws of the Republic of The Marshall Islands, and constitutes a first
"preferred mortgage" within the meaning of Section 31301(6)(B) of Title
46 of the United States Code, entitled to the benefits accorded a
preferred mortgage on a foreign vessel under Sections 31325 and 31326 of
Title 46. Sections 31325 and 31326 of Title 46 have replaced subsections
(K), (L), (M) and (N) of the United States Ship Mortgage Act of 1920, as
amended.
[Similar opinion to be added for Second Mortgage in the
case of a Daewoo Vessel.]
6. On the Delivery Date, the Vessel is free and clear
of any liens other than liens permitted pursuant to Section 14 of the
Mortgage; and except for the documentation of the Vessel in the name of
the Borrower which is the owner of the Vessel, under the laws and
regulations of the
[ ], which has duly occurred and is in full force and effect,
there is no other filing, documentation, registration or other action
required or advisable in order to perfect title to the Vessel in the
Borrower as against any third parties.
7. The Charter Assignment creates the security
interest it purports to create in the [HDW][Daewoo] Charter covering the
Vessel and no filings, recordings, notices or other actions are
necessary or advisable in order to perfect such security interest except
as follows: in the case of the Charter Assignment, the filing of
Uniform Commercial Code Financing Statements in the States of California
[and_____] which filings have been made.
[Similar opinion to be added covering the Second Charter
Assignment in the case of a Daewoo Vessel.]
8. No taxes, liability for the payment of which has
been incurred by any of the AP Companies are payable in connection with
the execution and delivery of the Loan Documents other than the filing
fees payable in connection with the filing and recording of the Mortgage
[and the Second Mortgage.], [except for taxes that have been paid];
provided, however, that no opinion is given with respect to taxes based
on or measured by income or withholding taxes.
The opinions set forth above are subject to the following
qualifications.
a. For purposes of the opinion set forth in clause 6,
we have relied solely on the opinion of counsel in the Republic of The
Marshall Islands with respect to the records regarding recordation of
mortgages and other liens of the Republic of The Marshall Islands, and
on the representations of APL set forth in Section 8 of the Loan
Agreement.
b. For the purposes of the opinion set forth in
clauses 5 and 6, we have relied solely on the opinion of [counsel in the
Republic of The Marshall Islands] as to the due execution of the
Mortgage, the due documentation of the Vessel, and the due registration
of the Mortgage, all under the laws of the Republic of The Marshall
Islands.
c. For the purposes of the opinion set forth in
clause 2, we have assumed the due authentication, execution and delivery
of the Loan Documents and Charter Documents by all non-AP Companies
parties thereto.
d. This opinion is limited to the matters stated
herein and no opinion is implied or may be inferred beyond the matters
expressly stated. The opinions expressed above are based solely on
applicable laws, statutes, ordinances, rules and regulations and facts,
all as in existence on this date, and we assume no obligation to update
or supplement such opinions to reflect any facts or circumstances which
may hereafter come to our attention or any changes in applicable laws,
statutes, ordinances, rules, regulations or facts which may hereafter
occur.
e. This opinion is rendered as of the date hereof and
is being issued solely for the benefit of the addressees hereto, and may
not be relied upon, or used for any purpose, by any other Person without
our prior written consent other than P.A.V. Huegel, Senior Counsel of
the AP Companies in connection with his opinion rendered to you pursuant
to Section 7(s) of the Loan Agreement.
Very truly yours,
LILLICK & CHARLES
By
SCHEDULE A
KREDITANSTALT FUR WIEDERAUFBAU
COMMERZBANK AG (KIEL BRANCH)
DRESDNER BANK AG IN HAMBURG
VEREINS- UND WESTBANK AG
DEUTSCHE SCHIFFSBANK AG
COMMERZBANK AG, HAMBURG
NORDDEUTSCHE LANDESBANK-GIROZENTRALE
DEUTSCHE VERKEHRS-BANK AG
BANQUE INTERNATIONALE A LUXEMBOURG S.A.
SCHEDULE 4-B
FORM OF OPINION OF IN-HOUSE COUNSEL
[ ] ,
199_
TO THE PARTIES SET FORTH ON
SCHEDULE A ATTACHED HERETO
Re: American President Lines, Ltd.
Dear Sirs:
I am senior counsel to American President Lines, Ltd.
("APL"), a Delaware corporation, APL Newbuildings, Ltd., a Nevada
corporation and American President Companies, Ltd., a Delaware
corporation (together, the "AP Companies") and I render this opinion in
connection with the purchase financing [and chartering] of six container
vessels pursuant to the Loan Agreement dated ____________, 1994 (the
"Loan Agreement") by and among APL, Kreditanstalt fur Wiederaufbau,
Commerzbank AG (Kiel Branch), Dresdner Bank AG in Hamburg, Vereins-und
Westbank AG, Deutsche Schiffsbank AG, Norddeutsche Landesbank-
Girozentrale, Deutsche Verkehrs-Bank AG, Banque Internationale a
Luxembourg S.A. and Commerzbank AG, Hamburg, and an Agreement to Acquire
and Charter dated ___________, 1994 (the "Acquisition Agreement") by and
among APL, APL Newbuildings, Ltd., Kreditanstalt fur Wiederaufbau,
Commerzbank AG (Kiel Branch), Dresdner Bank AG in Hamburg, Vereins-und
Westbank AG, Deutsche Schiffsbank AG, Norddeutsche Landesbank-
Girozentrale, Deutsche Verkehrs-Bank AG, Banque Internationale a
Luxembourg S.A. and Commerzbank AG, Hamburg. Capitalized terms used
herein and not defined shall have the meanings ascribed to them in the
Loan Agreement.
In this connection, I have examined originals or
photostatic or certified copies of the Loan Documents, the Charter
Documents and all such other corporate documents and such certificates
or comparable documents of public officials as I have deemed relevant
and necessary for the basis of my opinions hereinafter set forth. In
such examination, I have assumed the genuineness of all signatures, the
authenticity of all documents submitted to me as originals, the
conformity with the originals of all documents submitted to me as copies
and the authenticity of the originals of such latter documents. As to
any question of fact material to the opinions expressed in this letter,
where factual matters have not been independently established. I have
relied upon certificates of officers of the AP Companies, and I have not
independently verified such factual matters.
I am an active member of the bar of the State of
California only and the opinions expressed herein are limited to the
laws of the State of California, the federal laws of the United States
of America, [Nevada corporate law] and the General Corporation Law of
the State of Delaware. Insofar as my opinions given herein relate to
(i) Nevada corporate law or (ii) the admiralty or maritime laws or
regulations of any jurisdiction, I have relied upon the opinion of this
date given to you by the law firms of ____________________ and Lillick &
Charles, respectively. In connection with my opinions given in
paragraphs 6 and 7 below, I have relied upon the representations of
other officers of the AP Companies.
I note that the "governing law" provision in the Loan
Documents (other than the Mortgages) and the Charter Documents provides
that the laws of the State of New York are to govern. In my opinion a
court applying California conflict of laws rules would give effect to
such choice of New York law; however, I express no opinion as to what
law a court applying any other State's conflict of laws rules would
apply.
Based upon the foregoing, and subject to the
qualifications set forth herein, I am of the opinion that:
1. Each of the AP Companies is a duly incorporated
and validly existing corporation in good standing under the laws of its
jurisdiction of incorporation and has full corporate authority to enter
into the Loan Documents and the Charter Documents to which it is a
party, and to perform all obligations under the relevant Loan Documents
and Charter Documents to be performed by it.
2. Each of the Loan Documents and the Charter
Documents has been duly authorized by all necessary corporate action on
the part of the AP Companies party thereto, and has been duly, executed
and delivered by each of the AP Companies party thereto, and each of the
Loan Documents constitutes the legal, valid and binding obligation of
each of the AP Companies, party thereto, enforceable against such AP
Company in accordance with its terms, except as limited by applicable
bankruptcy, fraudulent conveyance, insolvency, moratorium,
reorganization and similar laws affecting the rights of creditors and
except as limited by equitable principles of general application,
including, without limitation, concepts of materiality, reasonableness,
good faith and fair dealing, public policy and possible unavailability
of the remedy of specific performance or injunctive relief (regardless
of whether such enforceability is considered in a proceeding in equity
or at law), and no opinion is expressed herein as to the specific remedy
that any court or other governmental authority, or arbitration can
grant, impose or render.
3. The execution and delivery by each of the AP
Companies of each of the Loan Documents and the Charter Documents to
which it is a party, and the performance by such AP Company of its
obligations thereunder, will not contravene any provision of such AP
Company's articles of incorporation or bylaws, and, to the best of my
knowledge, will not conflict with, result in a breach of or constitute a
default under, any indenture, mortgage, loan agreement, deed of trust or
other instrument of indebtedness to which such AP Company is subject or
by which such AP Company or any of the property of such AP Company is
bound, and will not result in the creation or imposition of a lien upon
any asset of such AP Company (other than liens contemplated by or
created pursuant to the Loan Documents and the Charter Documents)
resulting from any act of or claim against such AP Company.
4. No actions, suits, investigations or other
proceedings against any of the AP Companies are pending or, on the basis
of my current actual knowledge, threatened against any of the AP
Companies which, if determined adversely to any of the AP Companies,
would materially adversely affect such AP Company's ability to perform
its obligations under the Loan Documents and the Charter Documents to
which it is a party.
5. No approval, consent or permission of, or filing,
registration or qualification with, any governmental authority of the
United States of America or the States of Delaware, Nevada or California
is required in connection with the execution or delivery by any AP
Company of the Loan Documents and the Charter Documents to which it is a
party, or the performance by any AP Company, of its obligations under
the Loan Documents and the Charter Documents to which it is a party,
other than (i) any such approvals, consents or permissions which have
been previously obtained and which are in full force and effect, and
(ii) routine permits from, inspections by and filings with, governmental
authorities that are required or will be required from time to time in
connection with the operation of the Vessel.
6. All taxes (other than taxes based on or measured
by income or withholding taxes), liability for the payment of which has
been incurred by an AP Company in connection with the execution,
delivery and performance by it of each Loan Document and the Charter
Documents to which it is or will be a party, have been paid (or provided
for in its accounts if not payable on or prior to the Delivery Date of
the Vessel [insert Vessel's name].
7. None of the proceeds of the Facility will be used
to purchase or carry margin stock within the meanings of Regulations G,
T, U and X of the Board of Governors of the Federal Reserve System. APL
is not engaged in the business of extending credit for the purpose of
purchasing or carrying margin stock within the meaning of Regulations G,
T, U or X of the Board of Governors of the Federal Reserve System.
8. APL is not an "investment company" or a company
"controlled" by an "investment company" (as each of such terms is
defined or used in the Investment Company Act of 1940, as amended).
The opinions set forth above are subject to the following
qualifications.
a. For the purpose of the opinion set forth in clause
2, we have assumed the due authorization, execution and delivery of the
Loan Documents and the Charter Documents by all non-AP Companies parties
thereto.
b. This opinion is limited to the matters stated
herein and no opinion is implied or may be inferred beyond the matters
expressly stated. The opinions expressed above are based solely on
applicable laws, statutes, ordinances, rules and regulations and facts,
all as in existence on this date, and I assume no obligation to update
or supplement such opinions to reflect any facts or circumstances which
may hereafter come to my attention or any changes in applicable laws,
statutes, ordinances, rules, regulations or facts which may hereafter
occur.
c. This opinion is rendered as of the date hereof and
being issued solely for the benefit of the addressees hereto, and may
not be relied upon, or used for any purpose, by any other Person without
my prior written consent other than Lillick & Charles in connection with
their opinion rendered to you pursuant to Section 7(s) of the Loan
Agreement.
Very truly
yours,
SCHEDULE A
KREDITANSTALT FUR WIEDERAUFBAU
COMMERZBANK AG (KIEL BRANCH)
DRESDNER BANK AG IN HAMBURG
VEREINS- UND WESTBANK AG
DEUTSCHE SCHIFFSBANK AG
COMMERZBANK AG, HAMBURG
NORDDEUTSCHE LANDESBANK-GIROZENTRALE
DEUTSCHE VERKEHRS-BANK AG
BANQUE INTERNATIONALE A LUXEMBOURG S.A.
SCHEDULE 5A
Kreditanstalt fur Wiederaufbau
Palmengartenstrasse 5-9
D- 60325 Frankfurt am Main
Date: 19
Re.: Container Vessel " " identified by us as Yard
No. (297) (298) (299) ("the Vessel") - B IV a F(W) 753
Dear Sirs,
We refer to the Shipbuilding Agreement between ourselves as "the
Builder" and American President Lines Ltd. as "the Purchaser" contained
in a shipbuilding agreement dated May 10, 1993 made between the
Purchaser of the first part and ourselves of the other part [, as
amended,] ("the Contract") concerning the construction and supply of the
Vessel. Please find enclosed a true copy of the Builder's Certificate
relating to the Vessel.
In relation to the Vessel, we hereby confirm that:
(a) we have received payment of all sums due to us under the Contract
other than the sum of DM ( ) which is now due
to us;
(b) the definite contract price for the Vessel under the Contract is
DM ( );
(c) the Vessel is ready for delivery and acceptance by the Purchaser
under the Contract and is free from any lien or encumbrance other
than (i) our lien in respect of the said sum of DM ( )
payable on delivery which will be automatically discharged upon
payment of such sum, and
(d) we will deliver the Vessel to the Purchaser upon receipt of the
above amount and upon advice from the Purchaser that it is ready
to accept such delivery and to that end we enclose an undated
Protocol of Delivery and Acceptance Certificate signed by
ourselves which may be dated and delivered by you upon such
receipt and advice.
We also enclose a copy of an invoice relating to the total purchase
price of the Vessel.
Yours faithfully,
for and on behalf of
HOWALDTSWERKE-DEUTSCHE WERFT AG
Director
SCHEDULE 5B
Commerzbank AG
Ness 7-9
D - 20457 Hamburg
Date: 19
Re: Container Vessel " " identified by us as
Yard No. ( ) ( ) ( ) ("the Vessel")
Dear Sirs,
We refer to the Shipbuilding Agreement between ourselves as "the
Builder" and American President Lines Ltd. as "the Purchaser" contained
in a shipbuilding agreement date May 10, 1993 made between the Purchaser
of the first part and ourselves of the other part [, as amended,] ("the
Contract") concerning the construction and supply of the Vessel. Please
find enclosed a true copy of the Builder's Certificate relating to the
Vessel.
In relation to the Vessel, we hereby confirm that:
(a) we have received payment of all sums due to us under the Contract
other than the sum of USD ( ) which is now due
to us;
(b) the definite contract price for the Vessel under the Contract is
USD ( );
(c) the Vessel is ready for delivery and acceptance by the Purchaser
under the Contract and is free from any lien or encumbrance other
than (i) our lien in respect of the said sum of USD ( )
payable on delivery which will be automatically discharged upon
payment of such sum, and
(d) we will deliver the Vessel to the Purchaser upon receipt of the
above amount and upon advice from the Purchaser that it is ready
to accept such delivery and to that end we enclose an undated
Protocol of Delivery and Acceptance Certificate signed by
ourselves which may be dated and delivered by you upon such
receipt and advice.
We also enclose a copy of an invoice relating to the total purchase
price of the Vessel.
Yours faithfully,
for and on behalf of
DAEWOO SHIPBUILDING & HEAVY MACHINERY, LTD.
Director
SCHEDULE 5C
Kreditanstalt fur Wiederaufbau
Palmengartenstrasse 5-9
D - 60325 Frankfurt am Main
Date: 19
Re.: Container Vessel identified by Howaldtswerke-Deutsche Werft AG as
Yard No. (297) (298) (299) ("the Vessel") -B IV a F(W) 753
Dear Sirs,
We refer to an agreement ("the Loan Agreement") dated ( ) 1994 and
made between yourselves as Agent and Lender and ourselves as Borrower.
Terms defined in the Loan Agreement have the same meanings herein.
In relation to the Vessel, we hereby confirm that we are ready to take
delivery of and accept the Vessel under the Shipbuilding Agreement.
We also confirm that the Vessel is recommended for class " " with
The American Bureau of Shipping as per the photocopy or duplicate
provisional certificate attached hereto, and that there is no lien nor
encumbrance on the Vessel other than the lien in favor of the Builder in
respect of the final installment of the Contract Price under the
Shipbuilding Agreement in the amount of DM( ) for the
Vessel payable on delivery under the Shipbuilding Agreement.
Yours faithfully,
for and on behalf of
AMERICAN PRESIDENT LINES, LTD.
SCHEDULE 5D
Commerzbank AG
Ness 7-9
D-20457 Hamburg
Date: 19
Re.: Container Vessel identified by Daewoo Shipbuilding & Heavy
Machinery, Ltd. as Yard No. ( ) ( ) ( ) ("the
Vessel")
Dear Sirs,
We refer to an agreement ("the Loan Agreement") dated ( ) 1994
and made between yourselves as Syndicate Agent and ourselves as
Borrower. Terms defined in the Loan Agreement have the same meanings
herein.
In relation to the Vessel, we hereby confirm that we are ready to take
delivery of and accept the Vessel under the Shipbuilding Agreement.
We also confirm that the Vessel is recommended for class " " with
The American Bureau of Shipping as per the photocopy or duplicate
provisional certificate attached hereto, and that there is no lien nor
encumbrance on the Vessel other than the lien in favor of the Builder in
respect of the final installment of the Contract Price under the
Shipbuilding Agreement in the amount of USD( ) for the
Vessel payable on delivery under the Shipbuilding Agreement.
Yours faithfully,
for and on behalf of
AMERICAN PRESIDENT LINES, LTD.
SCHEDULE 6A*
SCHEDULE 6B
Daewoo Scheduled Installments
(amounts per $1,000,000 of initial value of each relevant subportion)
Semi-Annual Payment Due at Principal Balance
Period # End of Period Remaining at End of Period
*
SCHEDULE 7
NAMES AND ADDRESSES OF PROCESS AGENTS
Party Name and Address of
Process Agents
American President Lines, Ltd. Lillick & Charles
Two Embarcadero
Center, 27th
Flr.
San Francisco,
California
94111
Attention: Donald T.
Gray,
Esq.
APL Newbuildings, Ltd. Lillick & Charles
Two Embarcadero
Center, 27th
Flr.
San Francisco,
California
94111
Attention: Donald
T. Gray,
Esq.
American President Companies, Ltd. Lillick & Charles
Two Embarcadero
Center, 27th
Flr.
San Francisco,
California
94111
Attention: Donald
T. Gray,
Esq.
Kreditanstalt fur
Wiederaufbau Haight, Gardner,
Poor & Havens
195 Broadway
New York, New York
10007
Attention: Thomas
J. Whalen,
Esq.
Commerzbank AG, Hamburg Haight, Gardner,
Poor & Havens
195 Broadway
New York, New York
10007
Attention: Thomas
J. Whalen,
Esq.
Commerzbank AG, (Kiel Branch) Haight, Gardner,
Poor & Havens
195 Broadway
New York, New York
10007
Attention: Thomas
J. Whalen,
Esq.
Dresdner Bank AG in Hamburg Haight, Gardner,
Poor & Havens
195 Broadway
New York, New York
10007
Attention: Thomas
J. Whalen,
Esq.
Vereins- und Westbank AG Haight, Gardner,
Poor & Havens
195 Broadway
New York, New York
10007
Attention: Thomas
J. Whalen,
Esq.
Deutsche Schiffsbank AG Haight, Gardner,
Poor & Havens
195 Broadway
New York, New York
10007
Attention: Thomas
J. Whalen,
Esq.
Norddeutsche Landesbank- Haight, Gardner,
Poor & Havens
Girozentrale 195 Broadway
New York, New York
10007
Attention: Thomas
J. Whalen,
Esq.
Deutsche Verkehrs-Bank AG Haight, Gardner,
Poor & Havens
195 Broadway
New York, New York
10007
Attention: Thomas
J. Whalen, Esq.
Banque Internationale Haight, Gardner,
Poor & Havens
a Luxembourg S.A. 195 Broadway
New York, New York
10007
Attention: Thomas
J. Whalen,
Esq.
_______________________________
1 (Only to appear in Daewoo mortgage)
2 Specify percentage in no more than 4 decimal points.
3 Insert in HDW Vessel Charter only.