EXECUTION COPY
MILLENIUM SEACARRIERS, INC.
$100,000,000
REPRESENTING 100,000 UNITS CONSISTING OF
12% FIRST PRIORITY SHIP MORTGAGE NOTES DUE 2005
AND WARRANTS TO PURCHASE 500,000 SHARES OF COMMONSTOCK
PURCHASE AGREEMENT
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July 20, 1998
CREDIT SUISSE FIRST BOSTON CORPORATION
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
c/o Credit Suisse First Boston Corporation
Eleven Madison Avenue,
New York, N.Y. 10010-3629
Dear Sirs:
1. INTRODUCTORY. Millenium Seacarriers, Inc., a Cayman Islands
corporation (the "Issuer"), proposes, subject to the terms and conditions stated
herein, to issue and sell to the several initial purchasers named in Schedule A
hereto (the "Purchasers") $100,000,000, Representing 100,000 Units (the
"Units"), each Unit consisting of one of its 12% First Priority Ship Mortgage
Notes Due 2005 in a principal amount at maturity of $1,000 and one Warrant (each
a "Warrant") to purchase 5 shares of common stock, par value $1 per share (the
"Common Stock") of the Issuer at the exercise price of $.01 per share. The Notes
and Warrants are collectively referred to herein as the "Offered Securities".
The Notes will be unconditionally guaranteed on a senior basis by each of the
Issuer's subsidiaries that owns a Mortgaged Vessel (as herein defined) on the
Closing Date (as herein defined) or thereafter, identified on the signature
pages to this Agreement or to an amendment thereto (the "Subsidiary
Guarantors"). The Notes will be issued under an indenture dated as of July 15,
1998 (the "Indenture"), among the Issuer, the Subsidiary Guarantors and The
First National Bank of Maryland, a national banking association, as trustee (the
"Trustee"), on a private placement basis pursuant to an exemption under Section
4(2) of the United States Securities Act of 1933 (the "Securities Act"). The
guarantees of the Subsidiary Guarantors are herein referred to as the
"Guarantees". The Warrants will be issued under a warrant agreement dated as of
July 15, 1998 (the "Warrant Agreement") between the Issuer and The First
National Bank of Maryland as warrant agent (the "Warrant Agent").
To secure, among other things, the Notes and its respective Guarantee,
each Subsidiary Guarantor will pledge and assign to the Collateral Agent (as
defined) all its right, title and interest in and to (i) the vessel (the
"Mortgaged Vessel") owned by it, pursuant to a Mortgage (as defined in the
Indenture), substantially in the form heretofore agreed to be
issued in favor of the Collateral Agent, (ii) all the policies and contracts of
insurance taken out from time to time in respect of its Mortgaged Vessel
pursuant to an Assignment of Insurance (an "Insurance Assignment"), (iii) if
applicable, the time charterparty earnings and hire (the "Charter") and freights
relating to its Mortgaged Vessel pursuant to the Indenture, and (iv) all
accounts maintained in the name of the Collateral Agent pursuant to which any
proceeds of (i) and (ii) will be delivered under the circumstances described in
the Collateral Agency Agreement and all accounts maintained in the name of the
Trustee pursuant to which any proceeds of (iii) will be delivered under the
circumstances described in the Indenture.
The Notes will also be secured by, among other things, a pledge by the
Issuer of all the issued and outstanding capital stock of each Subsidiary
Guarantor (the "Pledged Stock") pursuant to the Indenture and by the escrow
account created pursuant to the terms of the Escrow Agreement, dated as of July
15, 1998 (the "Escrow Agreement"), between the Issuer and The First National
Bank of Maryland, as escrow agent (the "Escrow Agent"), into which the net
proceeds of the Offering will be delivered and held under the circumstances
described in the Escrow Agreement. The Subsidiary Guarantors will obtain certain
commercial and technical management services from the sole shareholder of the
Issuer, Millenium Management Inc., a Cayman Islands corporation ("MMI"), and,
pursuant to certain subcontracts from MMI, from Kylco Maritime Limited ("Kylco
Greece") and Kylco Maritime (USA) Limited ("Kylco USA" and, collectively,
"Kylco").
The rights of the various creditors of the Issuer and the
Subsidiary Guarantors will be governed by a Collateral Agency and Intercreditor
Agreement dated as of July 15, 1998 (the "Collateral Agency Agreement"), among
the Issuer, the Subsidiary Guarantors, The First National Bank of Maryland, as
collateral agent and trustee (the " Collateral Agent") and Bank of New York. The
Indenture, the Mortgages the Collateral Agency Agreement, the Insurance
Assignments and the Escrow Agreement, collectively, will hereinafter be referred
to as the "Security Documents".
The Issuer and the Subsidiary Guarantors hereby agree, jointly and
severally, with the several Purchasers as follows:
2. REPRESENTATIONS AND WARRANTIES OF THE ISSUER AND THE SUBSIDIARY
GUARANTORS. The Issuer and the Subsidiary Guarantors, jointly and severally,
represent and warrant to, and agree with, the Purchasers that:
(a) A preliminary offering circular and an offering circular
relating to the Offered Securities to be offered by the Purchasers have
been prepared by the Issuer and the Subsidiary Guarantors. Such
preliminary offering circular and offering circular, as supplemented as
of the date of this Agreement, together with any other document
approved by the Issuer and the Subsidiary Guarantors for use in
connection with the contemplated resale of the Offered Securities are
hereinafter collectively referred to as the "Offering Document". On the
date of this Agreement, the Offering Document does not include any
untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The preceding
sentence does not apply to statements in or omissions from the Offering
Document based upon written information furnished to the Issuer by any
Purchaser through Credit Suisse First Boston Corporation ("CSFBC")
specifically for use therein, it being expressly understood and agreed
that the only such information is that described as such in Section
7(b).
(b) The Issuer has been duly incorporated and is an existing
corporation in good standing under the laws of the Cayman Islands, with
power and authority (corporate and other) to own its properties and
conduct its business as described in the Offering Document; and the
Issuer is duly qualified to do business as a foreign corporation in
good standing in all other jurisdictions in which its ownership or
lease of property or the conduct of its business requires such
qualification.
(c) Each of the subsidiaries of the Issuer (including the
Subsidiary Guarantors), MMI, Kylco Greece and Kylco USA has been duly
incorporated and is an existing corporation in good standing under the
laws of the jurisdiction of its incorporation, with power and authority
(corporate and other) to own its properties and conduct its business as
described in the Offering Document; and each of the subsidiaries of the
Issuer (including the Subsidiary Guarantors), MMI, Kylco Greece and
Kylco USA is duly qualified to do business as a foreign corporation in
good standing in all other jurisdictions in which its ownership or
lease of property or the conduct of its business requires such
qualification; all the issued and outstanding capital stock of each
subsidiary of the Issuer (including the Subsidiary Guarantors) has been
duly authorized and validly issued and is fully paid and nonassessable;
and the capital stock of each subsidiary of the Issuer (including the
Subsidiary Guarantors) owned by the Issuer, directly or through
subsidiaries, is owned free from liens, encumbrances and defects.
(d) Each of the Indenture (including the Guarantees), the
Warrant Agreement, the Collateral Agency Agreement, the Insurance
Assignments and the Escrow Agreement has been duly authorized; Each
Mortgage (a "Committed Mortgage") to be entered into with respect to
the Existing Vessels and the Committed Vessels (as such terms are
defined in the Offering Document) has been duly authorized; the Offered
Securities have been duly authorized; and when the Offered Securities
are delivered and paid for pursuant to this Agreement on the Closing
Date (as defined below), each of the Indenture (including the
Guarantees), the Warrant Agreement, the Collateral Agency Agreement,
the Insurance Assignments, the Escrow Agreement and the Mortgages on
the Existing Vessels will have been duly executed and delivered and
will conform to the description thereof contained in the Offering
Document, such Offered Securities will have been duly executed,
authenticated, issued and delivered and will conform to the description
thereof contained in the Offering Document, and each of the Indenture
(including the Guarantees), the Warrant Agreement, the Collateral
Agency Agreement, the Insurance Assignments, the Escrow Agreement and
the Mortgages on the Existing Vessels and such Offered Securities will
constitute valid and legally binding obligations of the Issuer and the
Subsidiary Guarantors, as the case may be, enforceable in accordance
with their terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general
equity principles. When the Warrants are delivered and paid for
pursuant to this Agreement on the Closing Date, such Warrants will be
convertible into the shares of Common Stock, ("Underlying Shares") of
the Issuer in accordance with the terms of the Warrant Agreement; the
Underlying Shares initially issuable upon conversion of such Warrants
have been duly authorized and reserved for issuance upon such
conversion and, when issued upon such conversion, will be validly
issued, fully paid and nonassessable and will conform to the
description thereof contained in the Offering Document; and the holders
of capital stock of the Issuer or instruments convertible into or
exercisable for shares of capital stock of the Issuer have no
preemptive rights or rights to have "anti-dilution" or similar
adjustments made in connection with the issuance of the Warrants or the
Underlying Shares. Upon proper filing or recording in the appropriate
registry and filing offices in Liberia, Cyprus, Panama, the Cayman
Islands or the Bahamas, as the case may be, the Committed Mortgages
will create valid, first perfected mortgages (except as permitted by
the Indenture) on the Mortgaged Vessels in the related jurisdiction
securing the payment of the Notes and the Guarantees in accordance with
the terms thereof, the Indenture and the Collateral Agency Agreement
and, upon such filing, the Mortgaged Vessels will be free and clear of
all Liens other than Permitted Liens (each as defined in the
Indenture), except the Committed Mortgages and the Lien of the
Indenture (and except as permitted by the Indenture). On the Closing
Date and upon delivery to the Trustee of certificates evidencing the
Pledged Stock, the Indenture will create valid, first perfected
security interests on the Pledged Stock securing the Notes in
accordance with the terms thereof and the Pledged Stock will be free
and clear of all Liens (other than the Lien of the Indenture). On the
Closing Date and upon delivery of the Escrowed Proceeds, the Escrow
Agreement will create a valid, perfected security interest in the
Escrowed Proceeds in accordance with the terms of thereof and the
Escrowed Proceeds will be free and clear of all Liens (other than the
Lien of the Escrow Agreement).
(e) No consent, approval, authorization, or order of, or
filing with, any governmental agency or body or any court is required
for the consummation of the transactions contemplated by this Agreement
in connection with the issuance and sale of the Offered Securities by
the Issuer and the Subsidiary Guarantors, except for such filings of
the Mortgages in the appropriate offices of Liberia, Cyprus, Panama,
the Cayman Islands and the Bahamas in order to perfect the security
interests created thereby and except for such filings with the
Securities and Exchange Commission (the "Commission") as are required
in connection with the Registration Rights Agreement (as hereafter
defined).
(f) Except as disclosed in the Offering Document, under
current laws and regulations of the Cayman Islands, Liberia, Cyprus, or
any jurisdiction in which the Issuer or any of the Subsidiary
Guarantors is incorporated or resident for tax purposes and any
political subdivision thereof, all interest, principal, premium, if
any, and other payments due or made on the Offered Securities may be
paid by the Issuer or by the Subsidiary Guarantors to the holder
thereof in United States dollars and all such payments made to holders
thereof who are nonresidents of the Cayman Islands, Liberia, Cyprus, or
any jurisdiction in which the Issuer or any of the Subsidiary
Guarantors is incorporated or resident for tax purposes will not be
subject to income, withholding or other taxes under laws and
regulations of the Cayman Islands, Liberia, Cyprus, or any jurisdiction
in which the Issuer or any of the Subsidiary Guarantors is incorporated
or resident for tax purposes or any political subdivision or taxing
authority thereof or therein and will otherwise be free and clear of
any other tax, duty, withholding or deduction in the Cayman Islands,
Liberia, Cyprus, or any jurisdiction in which the Issuer or any of the
Subsidiary Guarantors is incorporated or resident for tax purposes or
any political subdivision or taxing authority thereof or therein and
without the necessity of obtaining any governmental authorization in
the Cayman Islands, Liberia, Cyprus, or any jurisdiction in which the
Issuer or any of the Subsidiary Guarantors is incorporated or resident
for tax purposes or any political subdivision or taxing authority
thereof or therein.
(g) Each of this Agreement and the Registration Rights
Agreement, dated the date hereof, among the Issuer, the Subsidiary
Guarantors and the Purchasers (the "Registration Rights Agreement"),
has been duly authorized by the Issuer and the Subsidiary Guarantors
and, when executed and delivered thereby, will constitute valid and
legally binding obligations of the Issuer and the Subsidiary Guarantors
signatory hereto, as the case may be, enforceable in accordance with
its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditors' rights and to general equity principles.
(h) The execution, delivery and performance of the Indenture
(including the Guarantees), the Warrant Agreement, the Collateral
Agency Agreement, the Insurance Assignments, the Escrow Agreement, the
Mortgages, this Agreement and the Registration Rights Agreement, and
the issuance and sale of the Offered Securities and compliance with the
terms and provisions thereof will not result in a breach or violation
of (i) any of the terms and provisions of, or constitute a default
under, any statute, rule, regulation or order of any governmental
agency or body or any court, domestic or foreign, having jurisdiction
over the Issuer or the Subsidiary Guarantors or any subsidiary of the
Issuer or the Subsidiary Guarantors or any of their respective
properties, (ii) any agreement or instrument to which the Issuer or the
Subsidiary Guarantors or any such subsidiary is a party or by which the
Issuer or the Subsidiary Guarantors or any such subsidiary is bound or
to which any of the properties of the Issuer or the Subsidiary
Guarantors or any such subsidiary is subject, or (iii) the charter or
by-laws or other organizational documents of the Issuer or the
Subsidiary Guarantors or any such subsidiary; and the Issuer has full
power and authority to authorize, issue and sell the Offered
Securities, and each of the Subsidiary Guarantors has full power and
authority to authorize and issue the Guarantees, as contemplated by
this Agreement.
(i) Except as disclosed in the Offering Document, each of the
Issuer, the Subsidiary Guarantors, their respective subsidiaries, MMI,
Kylco Greece and Kylco USA has good and marketable title to all real
properties and all other properties and assets owned by them, including
the Mortgaged Vessels owned by the Subsidiary Guarantors on the Closing
Date, in each case free from liens, encumbrances and defects that would
materially affect the value thereof or materially interfere with the
use made or to be made thereof by them; and except as disclosed in the
Offering Document, each of the Issuer, the Subsidiary Guarantors, their
respective subsidiaries, MMI, Kylco Greece and Kylco USA holds any
leased real or personal property under valid and enforceable leases
with no exceptions that would materially interfere with the use made or
to be made thereof by them.
(j) Each of the Issuer, the Subsidiary Guarantors, their
respective subsidiaries, MMI, Kylco Greece and Kylco USA possesses
adequate certificates, authorities or permits issued by appropriate
governmental agencies or bodies necessary to conduct the business now
operated by it and has not received any notice of proceedings relating
to the revocation or modification of any such certificate, authority or
permit that, if determined adversely to the Issuer, the Subsidiary
Guarantors or any of their respective subsidiaries, or to MMI, Kylco
Greece or Kylco USA, as the case may be, would individually or in the
aggregate have a material adverse effect on the Issuer, the Subsidiary
Guarantors and their respective subsidiaries, taken as a whole, or to
MMI, Kylco Greece or Kylco USA, as the case may be.
(k) No labor dispute with the employees of the Issuer or the
Subsidiary Guarantors or any of their respective subsidiaries, or of
MMI, Kylco Greece or Kylco USA, exists or, to the knowledge of the
Issuer or the Subsidiary Guarantors, is imminent that might have a
material adverse effect on the Issuer and the Subsidiary Guarantors and
their respective subsidiaries, taken as a whole, or on MMI, Kylco
Greece and Kylco USA, as the case may be.
(l) The Issuer, the Subsidiary Guarantors and their respective
subsidiaries, and MMI, Kylco Greece and Kylco USA, own, possess or can
acquire on reasonable terms, adequate trademarks, trade names and other
rights to inventions, know-how, patents, copyrights, confidential
information and other intellectual property (collectively,
"intellectual property rights") necessary to conduct the business now
operated by each of them, or presently utilized by each of them, and
have not received any notice of infringement of or conflict with
asserted rights of others with respect to any intellectual property
rights that, if determined adversely to the Issuer, the Subsidiary
Guarantors or any of their respective subsidiaries, or MMI, Kylco
Greece or Kylco USA, as the case may be, would, individually or in the
aggregate, have a material adverse effect on the Issuer, the Subsidiary
Guarantors and their respective subsidiaries taken as a whole, or on
MMI, Kylco Greece or Kylco USA, as the case may be.
(m) Except as disclosed in the Offering Document, none of the
Issuer, the Subsidiary Guarantors, any of their respective
subsidiaries, MMI, Kylco Greece and Kylco USA is in violation of any
statute, rule, regulation, decision or order of any governmental agency
or body or any court, domestic or foreign, relating to the use,
disposal or release of hazardous or toxic substances or relating to the
protection or restoration of the environment or human exposure to
hazardous or toxic substances (collectively, "environmental laws"),
owns or operates any real property contaminated with any substance that
is subject to any environmental laws, is liable for any off-site
disposal or contamination pursuant to any environmental laws, or is
subject to any claim relating to any environmental laws, which
violation, contamination, liability or claim would individually or in
the aggregate have a material adverse effect on the Issuer, the
Subsidiary Guarantors and their respective subsidiaries taken as a
whole, or on MMI, Kylco Greece or Kylco USA, as the case may be; and
neither the Issuer nor any of the Subsidiary Guarantors is aware of any
pending investigation which might lead to such a claim.
(n) Except as disclosed in the Offering Document, there are no
pending actions, suits or proceedings against or affecting the Issuer,
the Subsidiary Guarantors, any of their respective subsidiaries, MMI,
Kylco Greece, Kylco USA, or any of their respective properties that, if
determined adversely to the Issuer, the Subsidiary Guarantors or any of
their respective subsidiaries, or to MMI, Kylco Greece or Kylco USA,
would individually or in the aggregate have a material adverse effect
on the condition (financial or other), business, properties or results
of operations of the Issuer, the Subsidiary Guarantors and their
respective subsidiaries taken as a whole, or on MMI, Kylco Greece or
Kylco USA, as the case may be, or would materially and adversely affect
the ability of the Issuer or the Subsidiary Guarantors to perform their
respective obligations, if any, under the Indenture, the Warrant
Agreement, the Escrow Agreement, the Collateral Agency Agreement, the
Mortgages, the Insurance Assignments, the Registration Rights Agreement
or this Agreement, or which are otherwise material in the context of
the sale of the Offered Securities; and no such actions, suits or
proceedings are threatened or, to the Issuer's or any of the Subsidiary
Guarantors' knowledge, contemplated.
(o) The historical financial statements included in the
Offering Document comply as to form in all material respects with the
applicable accounting requirements of the Securities Act and the
Securities Exchange Act of 1934 (the "Exchange Act"), and the related
published rules and regulations thereunder; such financial statements
present fairly the financial position of the Issuer and its
consolidated subsidiaries as of the dates shown and their results of
operations and cash flows for the periods shown, and such financial
statements have been
prepared in conformity with generally accepted accounting principles in
the United States applied on a consistent basis; the assumptions used
in preparing, and the estimates disclosed in, the forecasted financial
information under the caption "Certain Financial Forecast Information"
represent management's current best assumptions and estimates as of
July 20, 1998 of the anticipated results of operations for the Issuer
and its consolidated subsidiaries for the year ended December 31, 1999,
and the assumptions disclosed therein are all those the Issuer and the
Subsidiary Guarantors believe are significant to the forecasted
financial information.
(p) Except as disclosed in the Offering Document, since the
date of the latest audited financial statements included in the
Offering Document, there has been no material adverse change, nor any
development or event involving a prospective material adverse change,
in the condition (financial or other), business, properties or results
of operations of the Issuer, the Subsidiary Guarantors and their
respective subsidiaries, taken as a whole, and, except as disclosed in
or contemplated by the Offering Document, there has been no dividend or
distribution of any kind declared, paid or made by the Issuer or any
Subsidiary Guarantor on any class of its capital stock.
(q) Neither the Issuer nor any of the Subsidiary Guarantors is
an open-end investment company, unit investment trust or face-amount
certificate company that is or is required to be registered under
Section 8 of the United States Investment Company Act of 1940 (the
"Investment Company Act"), nor is either a closed-end investment
company required to be registered, but not registered, thereunder; and
neither the Issuer nor any of the Subsidiary Guarantors is and, after
giving effect to the offering and sale of the Offered Securities and
the application of the proceeds thereof as described in the Offering
Document, will be, an "investment company" as defined in the Investment
Company Act.
(r) No securities of the same class (within the meaning of
Rule 144A(d)(3) under the Securities Act) as the Offered Securities are
listed on any national securities exchange registered under Section 6
of the Exchange Act or quoted in a U.S. automated inter-dealer
quotation system.
(s) The offer and sale of the Offered Securities by the Issuer
to the several Purchasers in the manner contemplated by this Agreement
will be exempt from the registration requirements of the Securities Act
by reason of Section 4(2) thereof and Regulation S under the Securities
Act ("Regulation S"); and prior to the effectiveness of a registration
statement as contemplated in the Registration Rights Agreement, it is
not necessary to qualify an indenture in respect of the Offered
Securities under the United States Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act").
(t) Neither the Issuer, the Subsidiary Guarantors, nor any of
their affiliates, nor any person acting on their behalf (i) has, within
the six-month period prior to the date hereof, offered or sold in the
United States or to any U.S. person (as such terms are defined in
Regulation S under the Securities Act) the Offered Securities or any
security of the same class or series as the Offered Securities or (ii)
has offered or will offer or sell the Offered Securities (A) in the
United States by means of any form of general solicitation or general
advertising within the meaning of Rule 502(c) under the Securities Act
or (B) with respect to any such securities sold in reliance on Rule 903
of Regulation S, by means of any directed selling efforts within the
meaning of Rule 902(c) of Regulation S. The Issuer, the Subsidiary
Guarantors, their affiliates and any person acting on their behalf have
complied and will comply with the offering restrictions requirement
of Regulation S. The Issuer and the Subsidiary Guarantors have not
entered and will not enter into any contractual arrangement with
respect to the distribution of the Offered Securities except for this
Agreement and the Registration Rights Agreement.
(u) The proceeds to the Issuer from the offering of the
Offered Securities will be used as described in the Offering Document.
(v) The Issuer, the Subsidiary Guarantors and each of their
respective subsidiaries, and each of MMI, Kylco Greece and Kylco USA,
have insurance covering their respective vessels, properties,
operations, personnel and businesses, which insurance is in amounts and
insures against such losses and risks as are adequate to protect the
Issuer, the Subsidiary Guarantors and their respective subsidiaries,
and MMI, Kylco Greece and Kylco USA, as the case may be, and their
respective businesses. None of the Issuer, the Subsidiary Guarantors,
any of their respective subsidiaries, MMI, Kylco Greece and Kylco USA
has received notice from any insurer or agent of such insurer that
capital improvements or other expenditures are required or necessary to
be made in order to continue such insurance.
(w) None of the Issuer, the Subsidiary Guarantors, any of
their respective subsidiaries, any of their respective affiliates, and
any director, officer, agent, employee or other person associated with
or acting on behalf of the Issuer, the Subsidiary Guarantors, any of
their respective subsidiaries and any of their respective affiliates
has (i) used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expense relating to political activity;
(ii) made any direct or indirect unlawful payment to any foreign or
domestic government official or employee from corporate funds; (iii)
violated or is in violation of any provision of the Foreign Corrupt
Practices Act of 1977; or (iv) made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment.
(x) The representations and warranties made by the Issuer and
the Subsidiary Guarantors in the Security Documents to which they are a
party will, when such documents are executed and delivered, be true and
correct in all material respects; PROVIDED, HOWEVER, that those
representations and warranties that are qualified as to their
materiality in the Security Documents will be true and correct in all
respects.
(y) There is no "substantial U.S. market interest" as defined
in Rule 902(n) of Regulation S in the Company's debt securities or in
the Common Stock to be purchased upon exercise of the Warrants.
(z) The Issuer is not, nor does it expect to be in the future,
a "passive foreign investment company" as defined in Section 1297 of
the U.S. Internal Revenue Code, as amended, and the Treasury
Regulations promulgated thereunder.
3. PURCHASE, SALE AND DELIVERY OF OFFERED SECURITIES. On the basis of
the representations, warranties and agreements herein contained, but subject to
the terms and conditions herein set forth, the Issuer agrees to sell to the
Purchasers, and the Purchasers agree to purchase from the Issuer, at a purchase
price of $930.93 per Unit plus accrued interest (if any) on the Notes from July
24, 1998 to the Closing Date (as hereinafter defined), the respective number of
Units set forth opposite the names of the several Purchasers in Schedule A
hereto.
The Issuer will deliver against payment of the purchase price the
Offered Securities to be offered and sold by the Purchasers in reliance on
Regulation S (the "Regulation S Securities") in the form of one or more
permanent global Units (each of which will consist of the one or more global
Notes and one or more global Warrants) in registered form without interest
coupons (the "Regulation S Global Securities") which will be deposited with the
Trustee, as custodian for The Depository Trust Company ("DTC") for the
respective accounts of the DTC participants for Morgan Guaranty Trust Company of
New York, Brussels office, as operator of the Euroclear System ("Euroclear"),
and Cedel Bank societe anonyme ("Cedel") and registered in the name of Cede &
Co., as nominee for DTC. The Company will deliver against payment of the
purchase price the Offered Securities to be purchased by each Purchaser
hereunder and to be offered and sold by each Purchaser in reliance on Rule 144A
under the Securities Act (the "144A Securities") in the form of one permanent
global Unit (which will consist of one Global Note and one Global Warrant) in
definitive form without interest coupons (the "Restricted Global Securities")
deposited with the Trustee as custodian for DTC and registered in the name of
Cede & Co., as nominee for DTC. The Regulation S Global Securities and the
Restricted Global Securities shall be assigned separate CUSIP numbers. The
Restricted Global Securities shall include the legend regarding restrictions on
transfer set forth under "Transfer Restrictions" in the Offering Document. Until
the termination of the restricted period (as defined in Regulation S) with
respect to the offering of the Offered Securities, interests in the Regulation S
Global Securities may only be held by the DTC participants for Euroclear and
Cedel. Interest in any permanent global Securities will be held only in
book-entry form through Euroclear, Cedel or DTC, as the case may be, except in
the limited circumstances described in the Offering Document.
Payment for the Regulation S Securities and the 144A Securities shall
be made by the Purchasers in Federal (same day) funds by official check or
checks or wire transfer to an account at a bank acceptable to CSFBC drawn to the
order of the Issuer at the office of Cravath, Swaine & Moore, Worldwide Plaza,
825 Eighth Avenue, New York, New York 10019-7475 at 10:00 A.M., (New York time),
on July 24, 1998 or at such other time not later than seven full business days
thereafter as CSFBC and the Issuer determine, such time being herein referred to
as the "Closing Date", against delivery to the Trustee as custodian for DTC of
(i) the Regulation S Global Securities representing all of the Regulation S
Securities for the respective accounts of the DTC participants for Euroclear and
Cedel and (ii) the Restricted Global Securities representing all of the Offered
144A Securities. The Regulation S Global Securities and the Restricted Global
Securities will be made available for checking at the above office of Cravath,
Swaine & Moore at least 24 hours prior to the Closing Date.
4. REPRESENTATIONS BY PURCHASERS; RESALE BY PURCHASERS. (a) Each
Purchaser severally represents and warrants to the Issuer and the Subsidiary
Guarantors that it is an "accredited investor" within the meaning of Regulation
D under the Securities Act.
(b) Each Purchaser severally acknowledges that the Offered Securities
have not been registered under the Securities Act and may not be offered or sold
within the United States or to, or for the account or benefit of U.S. persons
except in accordance with Regulation S or pursuant to an exemption from the
registration requirements of the Securities Act. Each Purchaser severally
represents and agrees that it has offered and sold the Offered Securities, and
will offer and sell the Offered Securities (i) as part of its distribution at
any time and (ii) otherwise until 40 days after the later of the commencement of
the offering and the Closing Date, only in accordance with Rule 903 or Rule 144A
under the Securities Act ("Rule 144A"). Accordingly, neither such Purchaser nor
its affiliates, nor any person acting on its or their behalf, have engaged or
will engage in any directed selling efforts with respect to the Offered
Securities, and such Purchaser, its affiliates and all persons acting on its or
their behalf have complied and will comply
with the offering restrictions requirement of Regulation S. Each Purchaser
severally agrees that, at or prior to confirmation of sale of the Offered
Securities, other than a sale pursuant to Rule 144A, such Purchaser will have
sent to each distributor, dealer or person receiving a selling concession, fee
or other remuneration that purchases the Offered Securities from it during the
restricted period a confirmation or notice to substantially the following
effect:
"The Securities covered hereby have not been registered under
the U.S. Securities Act of 1933 (the "Securities Act") and may
not be offered or sold within the United States or to, or for
the account or benefit of, U.S. persons (i) as part of their
distribution at any time or (ii) otherwise until 40 days after
the date of the commencement of the offering and the closing
date, except in either case in accordance with Regulation S
(or Rule 144A, if available) under the Securities Act. Terms
used above have the meanings given to them by Regulation S."
(c) Each Purchaser severally agrees that it and each of its affiliates
have not entered and will not enter into any contractual arrangement with
respect to the distribution of the Offered Securities except with the prior
written consent of the Issuer.
(d) Each Purchaser severally agrees that it and each of its affiliates
will not offer or sell the Offered Securities in the United States by means of
any form of general solicitation or general advertising within the meaning of
Rule 502(c) under the Securities Act, including, but not limited to (i) any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or radio, (ii)
any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising or (iii) any web site maintained by such
Purchaser and its affiliates. Each Purchaser severally agrees, with respect to
resales made by it in reliance on Rule 144A of any of the Offered Securities, to
deliver either with the confirmation of such resale or otherwise prior to
settlement of such resale a notice to the effect that such resale of such
Offered Securities has been made in reliance upon the exemption from the
registration requirements of the Securities Act provided by Rule 144A.
(e) Each Purchaser severally represents and agrees that (i) it has not
offered or sold and prior to the date six months after the date of issue of the
Offered Securities will not offer or sell any Offered Securities to persons in
the United Kingdom except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as principal or agent)
for the purposes of their businesses or otherwise in circumstances which have
not resulted and will not result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities Regulations 1995; (ii) it
has complied and will comply with all applicable provisions of the Financial
Services Act 1986 with respect to anything done by it in relation to the Offered
Securities in, from or otherwise involving the United Kingdom; and (iii) it has
only issued or passed on and will only issue or pass on in the United Kingdom
any document received by it in connection with the issue of the Offered
Securities to a person who is of a kind described in Article 11(3) of the
Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996
or is a person to whom such document may otherwise lawfully be issued or passed
on.
(f) Each Purchaser severally represents and agrees that it has not
offered, sold or distributed the Offered Securities to members of the public in
the Cayman Islands; PROVIDED, HOWEVER, that, notwithstanding the foregoing, the
several Purchasers are not prohibited from offering, selling or distributing
such Offered Securities to exempted or ordinary non-resident companies which are
not carrying on a business in the Cayman Islands.
5. CERTAIN AGREEMENTS OF THE ISSUER AND THE SUBSIDIARY GUARANTORS. The
Issuer and the Subsidiary Guarantors agree, jointly and severally, with the
several Purchasers that:
(a) The Issuer will advise CSFBC promptly of any proposal to
amend or supplement the Offering Document and will not effect such
amendment or supplementation without CSFBC's consent. If, at any time
prior to the completion of the resale of the Offered Securities by the
Purchasers, any event occurs as a result of which the Offering Document
as then amended or supplemented would include an untrue statement of a
material fact or omit to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading, the Issuer promptly will notify
CSFBC of such event and promptly will prepare, at its own expense, an
amendment or supplement which will correct such statement or omission.
Neither CSFBC's consent to, nor the Purchasers' delivery to offerees or
investors of, any such amendment or supplement shall constitute a
waiver of any of the conditions set forth in Section 6.
(b) The Issuer will furnish to CSFBC copies of any preliminary
offering circular, the Offering Document and all amendments and
supplements to such documents, in each case as soon as available and in
such quantities as CSFBC reasonably requests, and the Issuer will
furnish to CSFBC on the Closing Date four copies of the Offering
Document signed by a duly authorized officer of the Issuer, one of
which will include the independent accountants' reports therein
manually signed by such independent accountants. At any time when the
Issuer is not subject to Section 13 or 15(d) of the Exchange Act and is
not exempt from reporting pursuant to Rule 12g3-2(b) under the Exchange
Act, the Issuer will promptly furnish or cause to be furnished to CSFBC
(and, upon request, to each of the other Purchasers) and, upon request
of holders and prospective purchasers of the Offered Securities, to
such holders and purchasers, copies of the information required to be
delivered to holders and prospective purchasers of the Offered
Securities pursuant to Rule 144A(d)(4) under the Securities Act (or any
successor provision thereto) in order to permit compliance with Rule
144A in connection with resales by such holders of the Offered
Securities. The Issuer will pay the expenses of printing and
distributing to the Purchasers all such documents.
(c) The Issuer will arrange for the qualification of the
Offered Securities for sale and the determination of their eligibility
for investment under the laws of such jurisdictions in the United
States and Canada as CSFBC designates and will continue such
qualifications in effect so long as required for the resale of the
Offered Securities by the Purchasers, provided that neither the Issuer
nor any of the Subsidiary Guarantors will be required to qualify as a
foreign corporation or to file a general consent to service of process
in any such state or province.
(d) So long as any Offered Securities are outstanding, during
the period of seven years after the Closing Date, the Issuer will
furnish to CSFBC and, upon request, to the other Purchaser, as soon as
practicable after the end of each fiscal year, a copy of its annual
report to stockholders for such year; and the Issuer will furnish to
CSFBC and, upon request, to each other Purchaser (i) as soon as
available, a copy of each report or financial statement furnished to or
filed with the Commission or any securities exchange on which any class
of securities of the Issuer is listed, and (ii) from time to time, such
other information concerning the Issuer as CSFBC may reasonably
request.
(e) During the period of two years after the Closing Date, the
Issuer will, upon request, furnish to CSFBC, the other Purchaser and
any holder of Offered Securities a copy of the restrictions on transfer
applicable to the Offered Securities.
(f) During the period of two years after the Closing Date, the
Issuer will not, and will not permit any of its affiliates (as defined
in Rule 144 under the Securities Act) to, resell any of the Offered
Securities that have been reacquired by any of them.
(g) During the period of two years after the Closing Date,
neither the Issuer nor any of the Subsidiary Guarantors will be or
become, an open-end investment company, unit investment trust or
face-amount certificate company that is or is required to be registered
under Section 8 of the Investment Company Act, or is, or will be or
become, a closed-end investment company required to be registered, but
not registered, under the Investment Company Act.
(h) The Issuer or the Subsidiary Guarantors will pay all
expenses (together with VAT where applicable) incidental to the
performance of their obligations under this Agreement, the Warrant
Agreement and the Security Documents, including (i) the fees and
expenses of the Trustee, the Warrant Agent, the Collateral Agent, the
Escrow Agent and their respective professional advisers; (ii) all
expenses in connection with the execution, issue, authentication,
packaging and initial delivery of the Offered Securities, the
preparation and printing of this Agreement, the Offered Securities, the
Indenture, the Offering Document and amendments and supplements
thereto, and any other document relating to the issuance, offer, sale
and delivery of the Offered Securities; (iii) the cost of listing the
Offered Securities on the Luxembourg Stock Exchange and qualifying the
Offered Securities for trading in The Portalsm Market ("PORTAL") and
any expenses incidental thereto; and (iv) the cost of any advertising
approved by the Issuer in connection with the issue of the Offered
Securities. The Issuer or the Subsidiary Guarantors will also pay or
reimburse the Purchasers (to the extent incurred by them) for any
expenses (including reasonable fees and disbursements of counsel)
incurred in connection with qualification of the Offered Securities for
sale under the laws of such jurisdictions in the United States and
Canada as CSFBC designates and the printing of memoranda relating
thereto, for any fees charged by investment rating agencies for the
rating of the Offered Securities, for all travel expenses of the
Purchasers', the Issuer's and the Subsidiary Guarantors' officers and
employees and any other expenses of the Purchasers, the Issuer and the
Subsidiary Guarantors in connection with attending or hosting meetings
with prospective purchasers of the Offered Securities and for expenses
incurred in distributing preliminary offering circulars and the
Offering Document (including any amendments and supplements thereto) to
the Purchasers.
(i) In connection with the offering, until CSFBC shall have
notified the Issuer and the other Purchaser of the completion of the
resale of the Offered Securities, neither the Issuer nor any of its
affiliates has or will, either alone or with one or more other persons,
bid for or purchase for any account in which it or any of its
affiliates has a beneficial interest any Offered Securities or attempt
to induce any person to purchase any Offered Securities; and neither it
nor any of its affiliates will make bids or purchases for the purpose
of creating actual, or apparent, active trading in, or of raising the
price of, the Offered Securities.
(j) The Issuer and the Subsidiary Guarantors will indemnify
and hold harmless the Purchasers against any documentary, stamp or
similar issuance tax, including any interest and penalties, on the
creation, issuance and sale of the
Offered Securities and on the execution and delivery of this Agreement.
All payments to be made by the Issuer or the Subsidiary Guarantors
hereunder shall be made without withholding or deduction for or on
account of any present or future taxes, duties or governmental charges
whatsoever unless the Issuer or the Subsidiary Guarantors are compelled
by law to deduct or withhold such taxes, duties or charges. In that
event, the Issuer or the Subsidiary Guarantors shall pay such
additional amounts as may be necessary in order that the net amounts
received after such withholding or deduction shall equal the amounts
that would have been received if no withholding or deduction had been
made.
(k) The Issuer will cause each Offered Security to bear the
legend set forth in the form of note attached as Exhibit 1 to the Rule
144A/Regulation S Appendix to the Indenture until such legend shall no
longer be necessary or advisable because the Offered Securities are no
longer subject to the restrictions on transfer
described therein.
(l) The proceeds to the Issuer from the offering of the
Offered Securities will be used as described in the Offering Document.
(m) For a period of 180 days after the date of the initial
offering of the Offered Securities by the Purchasers, the Issuer will
not offer, sell, contract to sell, pledge or otherwise dispose of,
directly or indirectly, (a) any United States dollar-denominated debt
securities issued or guaranteed by the Issuer and having a maturity of
more than one year from the date of issue (b) any shares of Common
Stock of the Issuer or securities convertible or exchangeable or
exercisable for shares of Common Stock of the Issuer or warrants or
other rights to purchase shares of Common Stock of the Issuer or
publicly disclose the intention to make any such offer, sale, pledge or
disposal, without the prior written consent of CSFBC. The Issuer will
not at any time offer, sell, contract to sell, pledge or otherwise
dispose of, directly or indirectly, any securities under circumstances
where such offer, sale, pledge, contract or disposition would cause the
exemption afforded by Section 4(2) of the Securities Act or the safe
harbor of Regulation S thereunder to cease to be applicable to the
offer and sale of the Offered Securities.
(n) The Issuer and the Subsidiary Guarantors will use their
best commercially reasonable efforts to have the Offered Securities
listed on the Luxembourg Stock Exchange.
6. CONDITIONS OF THE OBLIGATIONS OF THE PURCHASERS. The obligations of
the several Purchasers to purchase and pay for the Offered Securities will be
subject to the accuracy of the representations and warranties on the part of the
Issuer and the Subsidiary Guarantors herein, to the accuracy of the statements
of officers of the Issuer and the Subsidiary Guarantors made pursuant to the
provisions hereof, to the performance by the Issuer and the Subsidiary
Guarantors of their respective obligations hereunder and to the following
additional conditions precedent:
(a) The Purchasers shall have received a letter, dated the
date of this Agreement and attaching a form of the letter to be
delivered pursuant to subsection (j) of this Section from Coopers &
Lybrand, in form and substance satisfactory to the Purchasers
concerning the financial information with respect to the Issuer and the
Subsidiary Guarantors (and their predecessors) set forth in the
Offering Document.
(b) Subsequent to the execution and delivery of this
Agreement, there shall not have occurred (i) a change in U.S. or
international financial, political or economic conditions or currency
exchange rates or exchange controls as would, in
the judgment of CSFBC, be likely to prejudice materially the success of
the proposed issue, sale or distribution of the Offered Securities,
whether in the primary market or in respect of dealings in the
secondary market, or (ii) (A) any change, or any development or event
involving a prospective change, in the condition (financial or other),
business, properties or results of operations of the Issuer, the
Subsidiary Guarantors or their respective subsidiaries which, in the
judgment of CSFBC, is material and adverse and makes it impractical or
inadvisable to proceed with completion of the offering or the sale of
and payment for the Offered Securities; (B) any downgrading in the
rating of any debt securities of the Issuer by any "nationally
recognized statistical rating organization" (as defined for purposes of
Rule 436(g) under the Securities Act), or any public announcement that
any such organization has under surveillance or review its rating of
any debt securities of the Issuer (other than an announcement with
positive implications of a possible upgrading, and no implication of a
possible downgrading, of such rating); (C) any suspension or limitation
of trading in securities generally on the New York Stock Exchange or
any setting of minimum prices for trading on such exchange or such
market, or any suspension of trading of any securities of the Issuer on
any exchange or in the over-the-counter market; (D) any banking
moratorium declared by U.S. Federal or New York authorities; or (E) any
outbreak or escalation of major hostilities in which the United States
is involved, any declaration of war by Congress or any other
substantial national or international calamity or emergency if, in the
judgment of CSFBC, the effect of any such outbreak, escalation,
declaration, calamity or emergency makes it impractical or inadvisable
to proceed with completion of the offering or the sale of and payment
for the Offered Securities.
(c) The Purchasers shall have received an opinion, dated the
Closing Date, of Thacher Proffitt & Wood, U.S. and Liberian maritime
counsel for the Issuer and the Subsidiary Guarantors, that:
(i) assuming due authorization, execution and
delivery by the Issuer and the non-Liberian Subsidiary
Guarantors, as the case may be, the Offered Securities conform
to the description thereof contained in the Offering Document
and each of the Security Documents, the Warrant Agreement and
the Offered Securities constitute valid and legally binding
obligations of the Issuer and the Subsidiary Guarantors, as
the case may be, enforceable in accordance with their terms,
subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and
to general equity principles;
(ii) neither the Issuer nor any of the Subsidiary
Guarantors is and, after giving effect to the offering and
sale of the Offered Securities and the application of the
proceeds thereof as described in the Offering Document, will
be an "investment company" as defined in the Investment
Company Act;
(iii) no consent, approval, authorization or order
of, or filing with, any Liberian, New York or Federal
governmental agency or body or any court is required for the
consummation of the transactions contemplated by this
Agreement in connection with the issuance or sale of the
Offered Securities by the Issuer and the issuance of the
Guarantees by the Subsidiary Guarantors, except such as may be
required under state securities laws and except for the filing
and registration of the Liberian Mortgages in the Office of
the Deputy Commissioner of Maritime Affairs of the Republic of
Liberia;
(iv) the execution, delivery and performance by the
Issuer and the Subsidiary Guarantors of each of the Security
Documents, the Warrant Agreement, this Agreement and the
Registration Rights Agreement, and the issuance and sale of
the Offered Securities and the issuance of Guarantees by the
Subsidiary Guarantors and compliance with the terms and
provisions thereof will not result in a breach or violation of
any of the terms and provisions of, or constitute a default
under, any statute, rule, regulation or order of any Liberian,
New York or U.S. Federal governmental agency or body or any
court having jurisdiction over the Issuer or the Subsidiary
Guarantors or any of their respective properties, or any
agreement or instrument to which the Issuer or the Subsidiary
Guarantors is a party or by which the Issuer or the Subsidiary
Guarantors is bound or to which any of the properties of the
Issuer or the Subsidiary Guarantors is subject, or the charter
or by-laws (or other organizational documents) of the Liberian
Subsidiary Guarantors;
(v) such counsel has no reason to believe that the
Offering Document, or any amendment or supplement thereto, as
of the date hereof and as of the Closing Date, contained any
untrue statement of a material fact or omitted to state any
material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading; the descriptions in the Offering Document of
statutes, legal and governmental proceedings and contracts and
other documents are accurate and fairly present the
information called for with respect to such statutes, legal
and governmental proceedings and contracts and other documents
and fairly summarize the matters referred to therein; it being
understood that such counsel need express no opinion as to the
financial statements or other financial or statistical data
contained in the Offering Document;
(vi) it is not necessary in connection with (A) the
offer, sale and delivery of the Offered Securities by the
Issuer to the Purchasers pursuant to this Agreement or (B) the
resales of the Offered Securities by the Purchasers in the
manner contemplated by this Agreement, to register the Offered
Securities under the Securities Act or to qualify an indenture
in respect thereof under the Trust Indenture Act;
(vii) assuming the Trustee is without notice of any
"adverse claim" as such term is defined in the Uniform
Commercial Code of New York (the "NYUCC"), upon execution and
delivery of the Indenture by the Issuer and the delivery to
the Trustee of certificates evidencing the Pledged Stock
together with stock powers relating thereto executed in blank,
the Trustee will have a valid, first priority perfected
security interest in the Pledged Stock, free and clear of any
liens or encumbrances;
(viii) the Escrow Agreement, the Indenture, the
Insurance Assignments and each Liberian Mortgage will create
in favor of the Escrow Agent, the Trustee and the Collateral
Agent, respectively, a valid security interest in the Issuer's
or each Liberian Subsidiary Guarantor's, as the case may be,
right, title and interest in and to the Collateral (as defined
in the Indenture) covered thereby, and no filing is necessary
in the State of New York under the NYUCC to perfect such
security interest.
(ix) each of the Liberian Subsidiary Guarantors has
been duly incorporated, is validly existing as a corporation
in good standing under the laws of Liberia and has the
corporate power and authority to own its
property and to conduct its business as described in the
Offering Document; and all the issued shares of capital stock
of [insert names of Liberian subsidiaries] have been duly
authorized and validly issued and, assuming issuance against
payment therefor, are fully paid and nonassessable and
registered in the name of the Issuer;
(x) each of the Liberian Subsidiary Guarantors is the
registered owner of the Mortgaged Vessel listed opposite its
name in the Offering Document, free and clear of any Liens (as
such terms is defined in the Indenture and except as permitted
by the Indenture) of record, except for the lien of a mortgage
(and the related assignments of earnings and insurance) held
by the holders of certain indebtedness outstanding on the
Mortgaged Vessels (the "Existing Indebtedness") to be repaid
on the Closing Date and for the lien of the related Liberian
Mortgage;
(xi) each Liberian Charter, if applicable, has been
duly authorized, executed and delivered by the applicable
Liberian Subsidiary Guarantor;
(xii) the statements made in the Offering Document
under "Enforcement of Civil Liabilities", "Risk
Factors--Enforcement of Mortgages", "Description of the
Notes--Guarantees", "The Mortgages", and "Certain United
States Federal Income Tax Consequences", to the extent that
they constitute matters of law or legal conclusions, fairly
present the information disclosed therein in all material
respects;
(xiii) upon the recording of a Mortgage with respect
to a Liberian Mortgaged Vessel in the Office of the Deputy
Commissioner of Maritime Affairs of the Republic of Liberia at
the Port of New York in accordance with the laws of Liberia on
the Closing Date, such Mortgage will create a valid and
enforceable first preferred ship mortgage lien covering the
related Liberian Mortgaged Vessel which it purports to create,
with such Mortgage being the only preferred mortgage lien on
the related Liberian Mortgaged Vessel;
(xiv) the security interests created by the Security
Documents do not require any action to be taken under or
pursuant to the laws of Liberia (except as contemplated by
clause (xiv) above) or the State of New York, in order to
create or perfect such security interests or to permit the
Trustee, the Collateral Agent or the Escrow Agent, as the case
may be, to enforce its rights under the Security Documents
creating the same;
(xv) the choice of New York law to govern this
Agreement, the Registration Rights Agreement, the Indenture,
the Warrant Agreement, the Escrow Agreement, the Collateral
Agency Agreement, the Insurance Assignments and the Offered
Securities constitutes a valid choice of law insofar as the
law of Liberia is concerned. The submission by the Issuer and
the Liberian Subsidiary Guarantors to the non-exclusive
jurisdiction of any Federal or state court in the Borough of
Manhattan, The City of New York (a "New York court"), is a
valid submission insofar as the law of Liberia is concerned;
(xvi) in a suit on the merits brought before a
Liberian court, a Liberian court will respect and enforce the
agreement of the parties as to judgment in a foreign currency;
(xvii) a judgment granted by a foreign court against
the Issuer or any Subsidiary Guarantor may be enforced in
Liberia without a retrial on the merits of the matter;
(xviii) neither the Issuer nor the Subsidiary
Guarantors nor any of their respective properties has any
immunity from jurisdiction of any court or from any legal
process under the laws of Liberia; and
(xix) the Liberian Mortgages conform in all material
respects to the description thereof in the Offering Document.
(d) The Purchasers shall have received an opinion, dated the
Closing Date, of Maples & Calder, special Cayman counsel for the Issuer
and Cayman Subsidiary Guarantors, that:
(i) each of the Issuer and MMI has been duly
incorporated, is validly existing as a corporation in good
standing under the laws of the Cayman Islands and has the
corporate power and authority to own its property and to
conduct its business as described in the Offering Document,
and each of the Issuer and MMI is duly qualified to do
business as a foreign corporation in good standing in all
other jurisdictions in which its ownership or lease of
property or the conduct of its business requires such
qualification;
(ii) each of the Cayman Subsidiary Guarantors has
been duly incorporated, its validly existing as a corporation
in good standing under the laws of Cayman Islands and has the
corporate power and authority to own its property and to
conduct its business as described in the offering document;
(iii) the authorized capital stock of the Issuer and
each Cayman Subsidiary Guarantor conforms as to legal matters
to the description thereof contained in the Offering Document;
(iv) all the issued shares of capital stock of the
Issuer have been duly authorized and validly issued and,
assuming issuance against payment therefor, are fully paid and
nonassessable and registered in the name of MMI; the shares of
Common Stock initially issuable upon conversion of the
Warrants have been duly authorized and reserved for issuance
upon such conversion; and all the issued shares of capital
stock of [insert names of the Cayman Subsidiaries] have been
duly authorized and validly issued and, assuming issuance
against payment therefore, are fully paid and nonassessable
and registered in the name of the Issuer;
(v) the Warrants are convertible into Common Stock of
the Issuer in accordance with the terms of the Warrant
Agreement and the holders of capital stock of the Issuer have
no preemptive rights or rights to have "anti-dilution" or
similar adjustments made in connection with the issuance of
the Warrants or the Underlying Shares;
(vi) the Offered Securities have been duly
authorized, executed, issued and delivered and conform to the
description thereof contained in the Offering Document;
(vii) each of the Indenture, the Warrant Agreement,
the Escrow Agreement, the Collateral Agency Agreement, this
Agreement and the Registration Rights Agreement has been duly
authorized, executed and delivered by the Issuer;
(viii) there is no tax, levy, impost, deduction,
charge or withholding imposed by the Cayman Islands or any
political subdivision or taxing authority thereof or therein
either (1) on or by virtue of the execution, or delivery or
performance or continued validity of any of the Indenture, the
Warrant Agreement, the Escrow Agreement, the Collateral Agency
Agreement or any Mortgage or any other document referred to
therein or to be furnished thereunder (including the Offered
Securities) or (2) on any payment to be made by the Issuer or
any Subsidiary Guarantor pursuant to any of the Indenture, the
Warrant Agreement, the Escrow Agreement, the Collateral Agency
Agreement, the Offered Securities or any Mortgage. All filing,
registration and recording fees required under the laws of the
Cayman Islands in connection with the Security Document or the
Warrant Agreement or other fees necessary to assure the
validity, effectiveness and priority of any liens, charges and
encumbrances created thereby have been paid;
(ix) no consent, approval, authorization or order of
or filing with, any governmental authority or regulatory body
or court of the Cayman Islands is required for the execution,
delivery and performance of the Indenture, the Warrant
Agreement, the Collateral Agency Agreement and the Escrow
Agreement by the respective parties thereto, and no such
consent, approval or authorization or order of or filing is
required for the exercise by the Trustee, the Warrant
Agreement, the Collateral Agent or the Escrow Agent, as the
case may be, of the rights and remedies granted to it under
any of the Security Documents or the Warrant Agreement, except
for a filing and registration of the Cayman Islands Mortgages
in [insert appropriate location], or for the consummation of
the transactions contemplated by this Agreement in connection
with the issuance or sale of the Offered Securities by the
Issuer and the issuance of the Guarantees by the Subsidiary
Guarantors;
(x) the execution, delivery and performance of the
Collateral Agency Agreement, the Indenture, the Warrant
Agreement, the Escrow Agreement, this Agreement and the
Registration Rights Agreement, and the issuance and sale of
the Offered Securities and compliance with the terms and
provisions thereof will not result in a breach or violation of
any of the terms and provisions of, or constitute a default
under, any statute, rule, regulation or order of any
governmental agency or body or any court of the Cayman Islands
having jurisdiction over the Issuer or the Subsidiary
Guarantors or any subsidiary of the Issuer or the Subsidiary
Guarantors or any of their respective properties, or any
agreement or instrument to which the Issuer or the Subsidiary
Guarantors or any such subsidiary is a party or by which the
Issuer or the Subsidiary Guarantors or any such subsidiary is
bound or to which any of the Issuer or the Subsidiary
Guarantors or any such subsidiary is subject, or the charter
or by-laws (or other organizational documents) of the Issuer,
and the Issuer has full power and authority to authorize,
issue and sell the Offered Securities as contemplated by this
Agreement;
(xi) the statements in the Offering Circular under
the caption "Risk Factors -- Enforcement of Mortgages",
"Certain Foreign Tax Considerations -- Cayman Islands Tax
Considerations" and in the paragraph regarding Cayman Islands
maritime law under the caption "The Mortgages" insofar as such
statements constitute summaries of the legal matters,
documents or proceedings referred to therein, fairly present
the information called for with respect to such legal matters,
documents and proceedings and fairly summarize the matters
referred to therein;
(xii) the security interests created by the Security
Documents do not require any action to be taken under or
pursuant to the laws of Cayman Islands in order to create or
perfect such security interests or to permit the Trustee, the
Collateral Agent or the Escrow Agent, as the case may be, to
enforce its rights under the Security Document creating the
same, other than (i) the delivery by the Issuer of the stock
certificates of each of the Subsidiary Guarantors to the
Trustee, (ii) due and timely notice of the assignments of
earnings to charterers and third parties and (iii) due and
timely notice of each of the Insurance Assignments to
underwriters and third parties, as well as the consent of such
underwriters or such third parties where the terms of
insurance policies, other insurance documents or provisions of
applicable law so require;
(xiii) the choice of New York law to govern this
Agreement, the Registration Rights Agreement, the Indenture,
the Warrant Agreement, the Collateral Agency Agreement, the
Escrow Agreement and the Offered Securities constitutes a
valid choice of law insofar as the law of the Cayman Islands
is concerned. The submission by the Issuer and the Subsidiary
Guarantors to the non-exclusive jurisdiction of any Federal or
state court in the Borough of Manhattan, The City of New York
(a "New York court") is a valid submission insofar as the law
of the Cayman Islands is concerned;
(xiv) in a suit on the merits brought before a Cayman
Islands court, a Cayman Islands court will respect and enforce
the agreement of the parties as to judgment in a foreign
currency;
(xv) a judgment granted by a foreign court against
the Issuer or a Guarantor may be enforced in the Cayman
Islands without a retrial on the merits of the matter; and
(xvi) none of the Issuer or the Subsidiary Guarantors
nor any of their respective properties has any immunity from
jurisdiction of any court or from any legal process under the
laws of the Cayman Islands.
(e) The Purchasers shall have received an opinion of Andreas
Demetriades Law Office, special Cypriot counsel for the Issuer and the
Cypriot Subsidiary Guarantors, that:
(i) each of the Cypriot Subsidiary Guarantors has
been duly incorporated, is validly existing as a corporation
in good standing under the laws of Cyprus and has the
corporate power and authority to own its property and to
conduct its business as described in the Offering Document;
(ii) the authorized capital stock of each of the
Cypriot Subsidiary Guarantors conforms as to legal matters to
the description thereof contained in the Offering Document;
(iii) all the issued shares of capital stock of each
of the Cypriot Subsidiary Guarantors have been duly authorized
and validly issued and, assuming issuance against payment
therefor, are fully paid and nonassessable and registered in
the name of the Issuer;
(iv) each of the Indenture, the Collateral Agency
Agreement, the Insurance Assignments, this Agreement and the
Cypriot Mortgages has been authorized, executed and delivered
by the Cypriot Subsidiary Guarantors;
(v) each of the Cypriot Subsidiary Guarantors is the
registered owner of the Mortgaged Vessel listed opposite its
name in the Offering Document, free and clear of any Liens (as
such term is defined in the Indenture and except as permitted
by the Indenture) of record, except for the lien of a mortgage
(and the related assignments of earnings and insurance) held
by the holders of the Existing Indebtedness to be repaid on
the Closing Date and for the lien of the related Cypriot
Mortgage;
(vi) each Cypriot Charter, if applicable, has been
duly authorized, executed and delivered by the applicable
Cypriot Subsidiary Guarantor;
(vii) there is no tax, levy, impost, deduction,
charge or withholding imposed by Cyprus or any political
subdivision or taxing authority thereof or therein either (1)
on or by virtue of the execution, or delivery or performance
or continued validity of any Security Document or any other
document referred to therein or to be furnished thereunder
(including the Offered Securities) or (2) on any payment to be
made by the Issuer or any Subsidiary Guarantor pursuant to the
Offered Securities or any Security Document. All filing,
registration and recording fees required under the laws of
Cyprus in connection with any Security Document or other fees
necessary to assure the validity, effectiveness and priority
of any liens, charges and encumbrances created thereby have
been paid;
(viii) insofar as any matter of Cypriot law is
addressed therein, the statements made in the Offering
Document under "Risk Factors-- Enforcement of Mortgages",
"Description of the Notes--Guarantees", "The Mortgages" and
"Certain Foreign Tax Considerations--Cypriot Tax
Considerations", to the extent that they constitute matters of
law or legal conclusions, fairly present the information
disclosed therein in all material respects;
(ix) no consent, approval, authorization or order of
or filing with, any governmental authority or regulatory body
or court of Cyprus is required for the execution, delivery and
performance of the Indenture, the Collateral Agency Agreement
and the Escrow Agreement by the respective parties thereto,
and no such consent, approval, authorization or order of or
filing is required for the exercise by the Trustee, the
Collateral Agent or the Escrow Agent, as the case may be, of
the rights and remedies granted to it under any of the
Security Documents, except for the filing and registration of
the Cypriot Mortgages;
(x) the execution, delivery and performance of the
security Documents and this Agreement and compliance with the
terms and provisions thereof will not result in a breach or
violation of any of the terms and provisions of, or constitute
a default under, any statute, rule, regulation or order of any
governmental agency or body or any court of Cyprus having
jurisdiction over the Cypriot Subsidiary Guarantors or any of
their respective properties, or any agreement or instrument to
which any of the Cypriot Subsidiary Guarantors is a party or
by which any of the Cypriot Subsidiary Guarantors is bound or
to which any of the properties of the Cypriot Subsidiary
Guarantors is subject, or the charter or by-laws (or other
organizational documents) of the Cypriot Subsidiary
Guarantors;
(xi) upon the recording of a Mortgage with respect to
a Cypriot Mortgaged Vessel at the Cypriot consulate in New
York City, New York, U.S.A., after receiving permission from
the Registrar of Cyprus Ships on the Closing Date, such
Mortgage will create the first preferred mortgage lien
covering the related Cypriot Mortgaged Vessel which it
purports to create, with such Mortgage being the only
preferred mortgage lien on the related Cypriot Mortgaged
Vessel;
(xii) the security interests created by the Security
Documents do not require any action to be taken under or
pursuant to the laws of Cyprus in order to create or perfect
such security interests or to permit the Trustee, the
Collateral Agent or the Escrow Agent, as the case may be, to
enforce its rights under the Security Document creating the
same, other than (i) the delivery by the Issuer of the stock
certificates of each of the Subsidiary Guarantors to the
Trustee, (ii) due and timely notice of the assignments of
earnings to charterers and third parties and (iii) due and
timely notice of each of the Insurance Assignments to
underwriters and third parties, as well as the consent of such
underwriters or such third parties where the terms of
insurance policies, other insurance documents or provisions of
applicable law so require;
(xiii) the choice of New York law to govern this
Agreement, the Registration Rights Agreement, the Indenture,
the Collateral Agency Agreement, the Escrow Agreement, the
Insurance Assignments and the Offered Securities constitutes a
valid choice of law insofar as the law of Cyprus is concerned.
The submission by the Issuer and the Subsidiary Guarantors to
the non-exclusive jurisdiction of any Federal or state court
in the Borough of Manhattan, The City of New York (a "New York
court") is a valid submission insofar as the law of Cyprus is
concerned;
(xiv) in a suit on the merits brought before a
Cypriot court, a Cypriot court will respect and enforce the
agreement of the parties as to judgment in foreign currency;
(xv) a judgment granted by a foreign court against
the Issuer or a Subsidiary Guarantor may be enforced in Cyprus
without a retrial on the merits of the matter;
(xvi) none of the Issuer or the Subsidiary Guarantors
nor any of their respective properties has any immunity from
jurisdiction of any court or from any legal process under the
laws of Cyprus; and
(xvii) the Cypriot Mortgages conform in all material
respects to the description thereof in the Offering Document.
(f) The Purchasers shall have received an opinion, dated the
Closing Date, of Patton Moreno & Asvat, special Panamanian counsel for
the Issuer, that:
(i) the security interests created by the Security
Documents do not require any action to be taken under or
pursuant to the laws of Panama in order to create or perfect
such security interests or to permit the Trustee to enforce
its rights under the Security Document creating the same;
(ii) all filing, registration and recording fees
required under the laws of Panama in connection with the
Panamanian Mortgage or other fees necessary to assure the
validity, effectiveness and priority of any liens, charges and
encumbrances created thereby have been paid, except for those
fees required in connection with permanent registration of the
Panamanian Mortgaged Vessels;
(iii) the Mortgages have been preliminarily
registered against each Panamanian Mortgaged Vessel in the
Public Registry Office of the Republic of Panama and such
registration of the Mortgages constitutes due recording or
registration thereof in accordance with Panamanian law in a
public registry or central office and all other actions
required to constitute each Mortgage a First Preferred Naval
Mortgage on each Vessel under the laws of the Republic of
Panama have been taken; so long as the Mortgages in respect of
each Vessel are filed for permanent registration at the Panama
Public Registry Office within six months from the date of
their preliminary registration, the Panamanian Mortgages will
rank from the date of preliminary registration as a First
Preferred Naval Mortgage over the respective Panamanian
Vessel;
(iv) the Panamanian Mortgage conforms in all material
respects to the description thereof in the Offering Document;
and
(v) the statements in the Offering Document under
"Enforcement of Civil Liabilities", "Risk Factors--Enforcement
of Mortgages", "Description of the Notes -- Guarantees", and
"The Mortgages", to the extent that they constitute matters of
law or legal conclusions, fairly present the information
disclosed therein in all material respects.
(g) the Purchasers shall have received an opinion, dated the
Closing Date, of Basil T. Patkos, special Liberian tax counsel for the
Issuer, that:
(i) insofar as any matter of Liberian law is
addressed therein, the statements made in the Offering
Document under "Certain Foreign Tax Considerations--Liberian
Tax Considerations", to the extent that they constitute
matters of law or legal conclusions, fairly present the
information disclosed therein in all material respects; and
(ii) there is no tax, levy, impost, deduction, charge
or withholding imposed by Liberia or any political subdivision
or taxing authority thereof or therein either (1) on or by
virtue of the execution, or delivery or performance or
continued validity of any Security Document or any other
document referred to therein or to be furnished thereunder
(including the Offered Securities) or (2) on any payment to be
made by the Issuer or any Subsidiary Guarantor pursuant to the
Offered Securities or any Security Document. All filing,
registration and recording fees required under the laws of
Liberia in connection with any security document or other fees
necessary to assure the validity, effectiveness and priority
of any liens, charges and encumbrances created thereby have
been paid.
(h) The Purchasers shall have received from Cravath, Swaine &
Moore, counsel for the Purchasers, such opinion, dated the Closing
Date, with respect to the validity of the Offered Securities, the
Offering Document, the exemption from registration for the offer and
sale of the Offered Securities by the Issuer to the Purchasers and the
resales by the Purchasers as contemplated hereby and other related
matters as the Purchasers may require, and the Issuer shall have
furnished to such counsel such documents as they request for the
purpose of enabling them to pass upon such matters. In rendering such
opinion, Cravath, Swaine & Moore may rely as to the incorporation of
the Issuer and the Subsidiary Guarantors and all other matters governed
by Cayman, Liberian, Cypriot, Panamanian and Bahamian law upon the
opinions of Thacher Proffitt & Wood, Maples & Calder, Law Offices of
Basil T. Patkos, Andreas Demetriades Law Offices, and Patton Moreno &
Asvat referred to above.
(i) The Purchasers shall have received a certificate, dated
the Closing Date, of the President or any Vice President and a
principal financial or accounting officer of the Issuer in which such
officers, to the best of their knowledge after reasonable
investigation, shall state that (i) the representations and warranties
of the Issuer and the Subsidiary Guarantors, respectively, in this
Agreement are true and correct, (ii) the Issuer and the Subsidiary
Guarantors, respectively, have complied with all agreements and
satisfied all conditions on their respective parts to be performed or
satisfied hereunder at or prior to the Closing Date, (iii) the
execution, delivery and performance of the Security Documents, the
Warrant Agreement, this Agreement and the Registration Rights
Agreement, and the issuance and sale of the Offered Securities and
compliance with the terms and provisions thereof will not result in a
breach or violation of any of the terms and provisions of, or
constitute a default under, any agreement or instrument to which the
Issuer or the Subsidiary Guarantors is a party or by which the Issuer
or the Subsidiary Guarantors is bound or to which any of the properties
of the Issuer or the Subsidiary Guarantors is subject, (iv) all shares
of the Issuer and the Subsidiary Guarantors are owned, directly or
indirectly, by MMI and the Issuer, respectively, free and clear of any
pledge, lien, security interest, charge, claim, equity or encumbrance
of any kind, except for the security interest created under the
Indenture, (v) there are no outstanding rights, warrants or options to
acquire, or instruments convertible into or exchangeable for, any
shares of capital stock of the Issuer or any of the Subsidiary
Guarantors, and (vi) subsequent to the dates of the most recent
financial statements in the Offering Document there has been no
material adverse change, nor any development or event involving a
prospective material adverse change, in the condition (financial or
other), business, properties or results of operations of the Issuer and
its subsidiaries taken as a whole except as set forth in or
contemplated by the Offering Document.
(j) The Purchasers shall have received a letter, dated the
Closing Date, of Coopers & Lybrand which meets the requirements of, and
in form and substance identical to the form of letter referred to in
subsection (a) of this Section, and attached as Exhibit A hereto, with
only such changes as are reasonably acceptable to the Purchasers and
their counsel.
(k) The Issuer and the Subsidiary Guarantors shall have
furnished to you and the Trustee a copy of the Charters with respect to
each applicable Mortgaged Vessel substantially in the form heretofore
delivered to you certified by the Issuer and the respective Subsidiary
Guarantor to be true and correct;
(l) The Issuer shall have delivered to the Trustee a
Certificate of Ownership issued by the respective authorities of the
Republic of Liberia, Cyprus or Panama, with respect to each Existing
Vessel showing that each Subsidiary Guarantor is the sole owner of its
Mortgaged Vessel free and clear of all Liens, except Liens created
pursuant to the Mortgages and Permitted Liens (as defined in the
Indenture);
(m) The Issuer shall have delivered to the Trustee the stock
certificates evidencing the Pledged Stock pledged to the Trustee
pursuant to the Indenture, together with stock powers executed in
blank;
(n) The Issuer shall have delivered to the Trustee its
irrevocable proxy pursuant to the Indenture with respect to the Pledged
Stock;
(o) The Purchasers shall have received for each Mortgaged
Vessel a letter from two of the following appraisers: Associated
Shipbroking S.C.S., A.L. Burbank (Shipbroking) Ltd., H. Clarkson and
Company Limited, Equator Shipbroking Ltd., Fearnleys, R.S. Platou
Shipbrokers a.s. and Simpson, Spence & Young, in form and substance
satisfactory to CSFBC, setting forth their determination of the
Appraised Value (as defined in the Indenture), dated no earlier than
February 25, 1998, which average Appraised Values shall, for each
Mortgaged Vessel, not be less than the value set forth below opposite
such Mortgaged Vessel:
Average
Appraised Value
Mortgaged Vessel (in thousands)
- - - - ---------------- --------------
Clipper Harmony......................... $5,175
Clipper Golden Hind..................... $4,375
Clipper Atlantic........................ $1,625
Clipper Pacific......................... $1,675
Monica Marissa.......................... $3,625
Millenium Amethyst...................... $3,000
Millenium Yama.......................... $3,500
Millenium Aleksander.................... $8,688
Millenium Elmar......................... $8,125
Millenium Leader........................ $8,100
Millenium Hawk.......................... $7,113
Millenium Eagle......................... $6,825
Millenium Osprey........................ $7,113
Millenium Falcon........................ $5,613
Millenium Condor........................ $5,613
Millenium Majestic...................... $3,050
(p) With respect to each Mortgaged Vessel, the Purchasers
shall have received a copy of the most recent and currently valid
Classification Certificate that is in the Issuer's or any Subsidiary
Guarantor's possession, from the classification societies listed below:
MORTGAGED VESSEL CLASSIFICATION SOCIETY
Clipper Harmony......................... Lloyds Register
Clipper Golden Hind..................... Germanicher Lloyd
Clipper Atlantic........................ Germanicher Lloyd
Clipper Pacific......................... Lloyds Register
Monica Marissa.......................... Lloyds Register
Millenium Amethyst...................... American Bureau of Shipping
Millenium Yama.......................... American Bureau of Shipping
Millenium Aleksander.................... Russian Society
Millenium Elmar......................... Russian Society
Millenium Leader........................ Lloyds Register
Millenium Hawk.......................... Det Norske Veritas
Millenium Eagle......................... Det Norske Veritas
Millenium Osprey........................ Det Norske Veritas
Millenium Falcon........................ Lloyds Register
Millenium Condor........................ Lloyds Register
Millenium Majestic...................... American Bureau of Shipping
(q) On the Closing Date, the Collateral Agent shall have
received each of the Mortgages duly executed by the Subsidiary Guarantors that
own the Existing Vessels and dated on or before the Closing Date.
(r) The Issuer and the Subsidiary Guarantors that own the
Existing Vessels shall have made irrevocable arrangements, acceptable to counsel
for the Purchasers, for the repayment in full, on the Closing Date, of all
Indebtedness (as defined in the Indenture) outstanding on the Closing Date and
under each agreement related thereto; all commitments to lend under such
agreements shall have been permanently terminated; all security interests
related shall have been discharged; and the Purchasers shall have received duly
executed documentation either evidencing or necessary for such repayment,
termination and discharge, in each case in the form satisfactory to counsel for
the Purchasers.
(s) The explanatory going-concern paragraph in the Report of
the Independent Accountants dated April 13, 1998, included in the Offering
Document shall have been removed.
(t) This Agreement or an amendment thereto shall have been
duly authorized, executed and delivered by all Subsidiary Guarantors on the
Closing Date.
(u) The Equity Contribution (as such term is defined in the
Offering Document) and related financings (including the deposit of $85.2
million in the Escrow Account (as such term is defined in the Offering
Document)) shall have been consummated.
(v) The Purchasers shall have received, on the Closing Date,
four copies of the Offering Document signed by a duly authorized officer of the
Issuer, one of which includes the independent accountants' report therein
(without legends or any other qualification or explanatory paragraph and
otherwise in form and substance acceptable to the Purchasers) manually signed by
such independent accountants.
The Issuer will furnish the Purchasers with such conformed copies of
such opinions, certificates, letters and documents as CSFBC reasonably requests.
CSFBC may in its sole discretion waive compliance with any conditions to the
obligations of the Purchasers hereunder, whether in respect the Closing Date or
otherwise.
7. INDEMNIFICATION AND CONTRIBUTION. (a) The Issuer and the Subsidiary
Guarantors will jointly and severally indemnify and hold harmless each Purchaser
against any losses, claims, damages or liabilities, joint or several, to which
such Purchaser may become subject, under the Securities Act or the Exchange Act
or otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any breach of any of the
representations and warranties of the Issuer and the Subsidiary Guarantors
contained herein or any untrue statement or alleged untrue statement of any
material fact contained in the Offering Document, or any amendment or supplement
thereto, or any related preliminary offering circular, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and will reimburse
each Purchaser for any legal or other expenses reasonably incurred by such
Purchaser in connection with investigating or defending any such loss, claim,
damage, liability or action as such expenses are incurred; PROVIDED, HOWEVER,
that neither the Issuer nor the Subsidiary Guarantors will be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement in or omission
or alleged omission from any of such documents in reliance upon and in
conformity with written information furnished to the Issuer or the Subsidiary
Guarantors by any Purchaser through CSFBC specifically for use therein, it being
understood and agreed that the only such information consists of the information
described as such in subsection (b) below.
(b) Each Purchaser will severally and not jointly indemnify and hold
harmless the Issuer and the Subsidiary Guarantors against any losses, claims,
damages or liabilities to which the Issuer or the Subsidiary Guarantors may
become subject, under the Securities Act or the Exchange Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Offering Document, or any
amendment or supplement thereto, or any related preliminary offering circular,
or arise out of or are based upon the omission or the alleged omission to state
therein a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Issuer or the
Subsidiary Guarantors by such Purchaser through CSFBC specifically for use
therein, and will reimburse any legal or other expenses reasonably incurred by
the Issuer or the Subsidiary Guarantors in connection with investigating or
defending any such loss, claim, damage, liability or action as such expenses are
incurred, it being understood and agreed that the only such information
furnished by any Purchaser consists of the following information in the Offering
Document: the last paragraph at the bottom of the cover page concerning the
terms of the offering by the Purchasers, the legend concerning over-allotments
and stabilizing on the inside front cover page and, paragraphs three, six and
nine and each second sentence of paragraphs four and eight under the caption
"Plan of Distribution"; it being expressly agreed and acknowledged by the Issuer
and the Subsidiary Guarantors that the Purchasers have not provided, and shall
bear no responsibility or liability under this paragraph (b) for, the
information contained under the caption "Certain Forecast Financial Information"
in the Offering Document.
(c) Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under
subsection (a) or (b) above, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
under subsection (a) or (b) above. In case any such action is brought against
any indemnified party and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party (who shall not, except with the consent of the indemnified
party, be counsel to the indemnifying party), and after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party under this Section for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof other than
reasonable costs of investigation. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any
pending or threatened action in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party unless such settlement includes an unconditional release of
such indemnified party from all liability on any claims that are the subject
matter of such action.
(d) If the indemnification provided for in this Section is unavailable
or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in subsection (a) or (b) above (i) in such proportion as
is appropriate to reflect the relative benefits received by the Issuer or the
Subsidiary Guarantors on the one hand and the Purchasers on the other from the
offering of the Offered Securities or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Issuer or the Subsidiary Guarantors on
the one hand and the Purchasers on the other in connection with the statements
or omissions which resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative benefits
received by the Issuer or the Subsidiary Guarantors on the one hand and the
Purchasers on the other shall be deemed to be in the same proportion as the
total net proceeds from the offering (before deducting expenses) received by the
Issuer bear to the total discounts and commissions received by the Purchasers
from the Issuer under this Agreement. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Issuer, the Subsidiary Guarantors or the
Purchasers and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission. The
amount paid by an indemnified party as a result of the losses, claims, damages
or liabilities referred to in the first sentence of this subsection (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any action or
claim which is the subject of this subsection (d). Notwithstanding the
provisions of this subsection (d), no Purchaser shall be required to contribute
any amount in excess of the amount by which the total price at which the Offered
Securities purchased by it were resold exceeds the amount of any damages which
such Purchaser has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. The Purchasers'
obligations in this subsection (d) to contribute are several in proportion to
their respective purchase obligations and not joint.
(e) The obligations of the Issuer and the Subsidiary Guarantors under
this Section shall be in addition to any liability which the Issuer and the
Subsidiary Guarantors may otherwise have and shall extend, upon the same terms
and conditions, to each person, if any, who controls any Purchaser within the
meaning of the Securities Act or the Exchange Act; and the obligations of the
Purchasers under this Section shall be in addition to any liability which the
respective Purchasers may otherwise have and shall extend, upon the same terms
and conditions, to each person, if any, who controls the Issuer and the
Subsidiary Guarantors within the meaning of the Securities Act or the Exchange
Act.
8. DEFAULT OF PURCHASERS. If any Purchaser or Purchasers default in
their obligations to purchase any Offered Securities hereunder and arrangements
satisfactory to CSFBC and the Issuer for the purchase of such Offered Securities
by other persons are not made within 36 hours after such default, this Agreement
will terminate without liability on the part of any non-defaulting Purchaser or
the Issuer, except as provided in Section 9. As used in this Agreement, the term
"Purchaser" includes any person substituted for a Purchaser under this Section.
Nothing herein will relieve a defaulting Purchaser from liability for its
default.
9. SURVIVAL OF CERTAIN REPRESENTATIONS AND OBLIGATIONS. The respective
indemnities, agreements, representations, warranties and other statements of the
Issuer, the Subsidiary Guarantors or their respective officers and of the
several Purchasers set forth in or made pursuant to this Agreement will remain
in full force and effect, regardless of any investigation, or statement as to
the results thereof, made by or on behalf of any Purchaser, the Issuer, the
Subsidiary Guarantors or any of their respective representatives, officers or
directors or any controlling person, and will survive delivery of and payment
for the Offered Securities. If this Agreement is terminated pursuant to Section
8 or if for any reason the purchase of the Offered Securities by the Purchasers
is not consummated, the Issuer and the Subsidiary Guarantors shall remain
responsible for the expenses to be paid or reimbursed by either of them pursuant
to Section 5 and the respective obligations of the Issuer, the Subsidiary
Guarantors and the Purchasers pursuant to Section 7 shall remain in effect. If
the purchase of the Offered Securities by the Purchasers is not consummated for
any reason other than solely because of the termination of this Agreement
pursuant to Section 8 or the occurrence of any event specified in clause (C),
(D) or (E) of Section 6(b)(ii), the Issuer or the Subsidiary Guarantors will
reimburse the Purchaser for all out-of-pocket expenses (including fees and
disbursements of counsel) reasonably incurred by it in connection with the
offering of the Offered Securities.
10. NOTICES. All communications hereunder will be in writing and, if
sent to the Purchasers will be mailed, delivered or telecopied and confirmed to
the Purchasers, c/o Credit Suisse First Boston Corporation, Eleven Madison
Avenue, New York, NY 10010- 3629, Attention: Investment Banking
Department--Transactions Advisory Group, telephone: (212) 325-2107, telecopy:
(212) 325-8278, or, if sent to the Issuer or the Subsidiary Guarantors, will be
mailed, delivered or telecopied and confirmed to them In care of Maples and
Calder, P.O. Box 309, South Church Street, George Town, Grand Cayman, Cayman
Islands, British West Indies, Attention: Gareth Griffiths, telephone: (345)
949-8066, telecopy: (345) 949-8080; PROVIDED, HOWEVER, that any notice to a
Purchaser pursuant to Section 7 will be mailed, delivered or telegraphed and
confirmed to such Purchaser.
11. SUCCESSORS. This Agreement will enure to the benefit of and be
binding upon the parties hereto and their respective successors and the
controlling persons referred to in Section 7, and no other person will have any
right or obligation hereunder, except that holders of Offered Securities shall
be entitled to enforce the agreements for their benefit contained in the second
and third sentences of Section 5(b) hereof against the Issuer or the Subsidiary
Guarantors as if such holders were parties thereto.
12. REPRESENTATION OF PURCHASERS. In connection with this purchase, any
action taken by CSFBC as representative of the Purchasers will be binding upon
all Purchasers.
13. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
14. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS.
The Issuer and the Subsidiary Guarantors hereby submit to the
non-exclusive jurisdiction of the Federal and state courts in the Borough of
Manhattan in The City of New York in any suit or proceeding arising out of or
relating to this Agreement or the transactions contemplated hereby. The Issuer
and the Subsidiary Guarantors irrevocably appoint Kylco Maritime (USA) Inc., as
their authorized agent in the Borough of Manhattan in The City of New York upon
which process may be served in any such suit or proceeding, and agree that
service of process upon such agent, and written notice of said service to the
Issuer or the Subsidiary Guarantors, as the case may be, by the person serving
the same to the address provided in Section 9, shall be deemed in every respect
effective service of process upon the Issuer or the Subsidiary Guarantors, as
the case may be, in any such suit or proceeding. The Issuer and the Subsidiary
Guarantors further agree to take any and all action as may be necessary to
maintain such designation and appointment of such agent in full force and effect
for a period of seven years from the date of this Agreement.
The obligation of the Issuer and the Subsidiary Guarantors in respect
of any sum due to any Purchaser shall, notwithstanding any judgment in a
currency other than United States dollars, not be discharged until the first
business day, following receipt by such Purchaser of any sum adjudged to be so
due in such other currency, on which (and only to the extent that) such
Purchaser may in accordance with normal banking procedures purchase United
States dollars with such other currency; if the United States dollars so
purchased are less than the sum originally due to such Purchaser hereunder, the
Issuer and the Subsidiary Guarantors agree, as a separate obligation and
notwithstanding any such judgment, to indemnify, jointly and severally, such
Purchaser against such loss. If the United States dollars so purchased are
greater than the sum originally due to such Purchaser hereunder, such Purchaser
agrees to pay to the Issuer or the Subsidiary Guarantors, as the case may be, an
amount equal to the excess of the dollars so purchased over the sum originally
due to such Purchaser hereunder.
If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return to us one of the counterparts hereof,
whereupon it will become a binding agreement among the Issuer, the Subsidiary
Guarantors and the several Purchasers in accordance with its terms.
Very truly yours,
MILLENIUM SEACARRIERS, INC.
by /s/ Vassilios M. Livanos
-------------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
RAPID OCEAN CARRIERS LIMITED
by /s/ Vassilios M. Livanos
------------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
IVY NAVIGATION LIMITED
by /s/ Vassilios M. Livanos
------------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
OAKMONT SHIPPING AND TRADING LIMITED
by /s/ Vassilios M. Livanos
------------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
TOPSCALE SHIPPING COMPANY LIMITED
by /s/ Vassilios M. Livanos
------------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
CONIFER SHIPPING COMPANY LIMITED
by /s/ Vassilios M. Livanos
------------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
MILLENIUM MAJESTIC, INC.
by /s/ Vassilios M. Livanos
------------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
MILLENIUM YAMA, INC.
by /s/ Vassilios M. Livanos
------------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
MILLENIUM AMETHYST, INC.
by /s/ Vassilios M. Livanos
------------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
MILLENIUM ELMAR, INC.
by /s/ Vassilios M. Livanos
------------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
MILLENIUM ALEKSANDER, INC.
by /s/ Vassilios M. Livanos
------------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
MILLENIUM II, INC.
by /s/ Vassilios M. Livanos
------------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
MILLENIUM III, INC.
by /s/ Vassilios M. Livanos
------------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
MILLENIUM IV, INC.
by /s/ Vassilios M. Livanos
------------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
MILLENIUM V, INC.
by /s/ Vassilios M. Livanos
------------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
MILLENIUM VI, INC.
by /s/ Vassilios M. Livanos
------------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
MILLENIUM VI, INC.
by /s/ Vassilios M. Livanos
------------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
MILLENIUM VII, INC.
by /s/ Vassilios M. Livanos
------------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
Millenium VIII, Inc.
by /s/ Vassilios M. Livanos
------------------------------
Name: Vassilios M. Livanos
Title: Chief Executive Officer
The foregoing Purchase Agreement
is hereby confirmed and accepted
as of the date first above written.
CREDIT SUISSE FIRST BOSTON CORPORATION
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
BY: CREDIT SUISSE FIRST BOSTON CORPORATION
by /s/ Joseph D. Fashano
-------------------------------------------
Name: Joseph D. Fashano
Title: Director
Schedule A
PURCHASER NUMBER OF UNITS
Credit Suisse First Boston Corporation 80,000
Donaldson, Lufkin & Jenrette
Securities Corporation 20,000
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Total............................................. 100,000