UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 28, 2005
ALEXANDER & BALDWIN, INC.
(Exact name of registrant as specified in its charter)
Hawaii 0-565 99-0032630
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(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
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incorporation) Identification No.)
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822 Bishop Street, P. O. Box 3440
Honolulu, Hawaii 96801
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(Address of principal executive office and zip code)
(808) 525-6611
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(Registrant's telephone number, including area code)
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2.):
_
|_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
_
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
_
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
_
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement
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On June 28, 2005, Matson Navigation Company, Inc. ("Matson"), a wholly
owned subsidiary of Alexander & Baldwin, Inc. ("A&B"), entered into a $105
million 10-year Senior Secured Reducing Revolving Credit Facility (the
"Facility") with DnB NOR Bank ASA ("DnB NOR"), attached hereto as Exhibit 10.1.
The funds borrowed under the Facility will be used in connection with Matson's
purchase of a new containership, the MV Maunalei, for which Matson expects to
take delivery during the second quarter of 2006.
The MV Maunalei is the second of two containerships that Matson, in
February 2005, agreed to purchase from the Kvaerner Philadelphia Shipyard, Inc.
("Kvaerner") at a price of $144.4 million each. The Kvaerner contracts were
described in the Company's Form 8-K dated February 24, 2005 and filed with the
Securities and Exchange Commission on February 25, 2005. The financing for the
first vessel, the MV Manulani, was described in a Form 8-K dated May 19, 2005
and filed with the Securities and Exchange Commission on May 25, 2005.
The Facility provides for a 10-year commitment upon execution of the
agreement. Funding, however, will not occur until delivery of the MV Maunalei in
June 2006. The initial borrowing, upon delivery of the vessel, will be no more
than the lesser of $105 million or 75 percent of the total delivered cost of the
vessel. The maximum amount that can be drawn on the Facility declines in eight
annual commitment reductions of $10.5 million each, commencing on the second
anniversary of the closing date.
Although the entire $105 million could be drawn in 2006, concurrent
with the delivery of the MV Maunalei, Matson may choose initially to draw a
lesser amount. Matson may also re-borrow up to the maximum permitted by the
Facility, as described above. Amounts borrowed under the Facility will bear
interest at the one-, three-, six-, or twelve-month London Interbank Offered
Rate ("LIBOR"), at Matson's option, plus 0.375 percent for the first five years
or plus 0.450 percent for the second five years.
Matson's principal financial covenants include:
a) Maintaining a minimum net worth of the greater of $250 million or 65
percent of Matson's shareholders' equity as of the end of the prior
fiscal year.
b) Matson's working capital must remain positive.
c) Funded debt to Matson's net worth may not exceed 200 percent.
The Facility allows DnB NOR to place all or portions of the balances
with lenders that are acceptable to Matson and requires the application of
amounts received upon the sale of the MV Maunalei to the then-outstanding
balances. If the amounts received upon the sale of the vessel are not sufficient
to satisfy the outstanding balances, the shortfall would be due in a balloon
payment.
The Facility is secured by a first preferred mortgage on the MV
Maunalei and also includes an assignment of the vessel's earnings and
insurances. The form of these three agreements, which will be executed upon
funding of the Facility and delivery of the vessel, are included in Exhibit 10.1
of this Form 8-K as Exhibits B, C and D, respectively, to the Facility.
If Matson ceases to be a wholly owned subsidiary of A&B, the Facility
provides for additional financial covenants. Neither A&B nor Matson have any
other loans with DnB NOR.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
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Off-Balance Sheet Arrangement of a Registrant
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The information set forth under Item 1.01 is incorporated herein by
reference.
Item 9.01 Financial Statements and Exhibits
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(c) Exhibits
10.1 Senior Secured Reducing Revolving Credit Agreement between
Matson Navigation Company, Inc. and DnB NOR Bank ASA dated
June 28, 2005.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: June 28, 2005
ALEXANDER & BALDWIN, INC.
/s/ Christopher J. Benjamin
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Christopher J. Benjamin
Vice President and Chief Financial Officer
EXECUTION VERSION
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CREDIT FACILITY PROVIDING FOR A
US$105,000,000
SENIOR SECURED REDUCING REVOLVING CREDIT FACILITY
TO BE MADE AVAILABLE TO
MATSON NAVIGATION COMPANY, INC.
BY
and the Banks and Financial Institutions
identified on Schedule 1, as Lenders
AND
DnB NOR BANK ASA,
acting through its New York Branch,
as Arranger, Administrative Agent and Security Trustee,
================================================================================
as of June 28, 2005
CONTENTS
PAGE
1. DEFINITIONS................................................................1
1.1 Specific Definitions..............................................1
1.2 Computation of Time Periods; Other Definitional
Provisions.......................................................13
1.3 Accounting Terms.................................................13
1.4 Certain Matters Regarding Materiality............................13
1.5 Forms of Documents...............................................13
2. REPRESENTATIONS AND WARRANTIES............................................13
2.1 Representations and Warranties...................................13
(a) Due Organization and Power.......................................13
(b) Authorization and Consents.......................................14
(c) Binding Obligations..............................................14
(d) No Violation.....................................................14
(e) Filings; Stamp Taxes.............................................14
(f) Litigation.......................................................14
(g) No Default.......................................................14
(h) Vessel...........................................................15
(i) Citizenship......................................................15
(j) Insurance........................................................15
(k) Financial Information............................................15
(l) Tax Returns......................................................15
(m) ERISA............................................................15
(n) Chief Executive Office...........................................16
(o) Foreign Trade Control Regulations................................16
(p) Environmental Matters and Claims.................................16
(q) Compliance with ISM Code, ISPS Code and MTSA.....................17
(r) No Threatened Withdrawal of DOC, ISSC or SMC.....................17
(s) Liens............................................................17
(t) Indebtedness.....................................................17
(u) No Proceedings to Dissolve.......................................17
(v) Solvency.........................................................17
(w) Compliance with Laws.............................................18
(x) Survival.........................................................18
3. THE ADVANCES..............................................................18
(a) Purposes.........................................................18
(b) Making of the Advances...........................................18
3.2 Drawdown Notice..................................................19
3.3 Effect of Drawdown Notice........................................19
3.4 Notation of Advances.............................................19
4. CONDITIONS................................................................20
4.1 Conditions Precedent to this Credit Agreement....................20
4.2 Conditions Precedent to the Availability of the
Facility and the Initial Advance.................................20
(a) Corporate Authority..............................................20
(b) The Vessel.......................................................20
(c) Security Documents...............................................21
(d) Building Contract................................................21
(e) Recording of the Mortgage........................................21
(f) Delivered Cost...................................................21
(g) Debt Agreements..................................................21
(h) ISM DOC and ISSC.................................................21
(i) Environmental Claims.............................................22
(j) Fees.............................................................22
(k) Compliance Certificate...........................................22
(l) Evidence of Rating...............................................22
(m) Promissory Note..................................................22
(n) Legal Opinions...................................................22
4.3 Further Conditions Precedent.....................................22
(a) Drawdown Notice..................................................22
(b) Representations and Warranties...................................22
(c) No Event of Default..............................................22
(d) No Change in Laws................................................22
(e) No Material Adverse Effect.......................................23
4.4 Breakfunding Costs...............................................23
4.5 Satisfaction after Drawdown......................................23
5. REPAYMENT AND PREPAYMENT..................................................23
5.1 Repayment........................................................23
5.2 Scheduled Reductions of the Facility.............................23
5.3 Voluntary Prepayment; Re-borrowing...............................23
5.4 Optional Permanent Reduction of Facility.........................24
5.5 Mandatory Prepayments............................................24
(a) Sale or Loss of Vessel...........................................24
(b) Breach of Financial Covenant.....................................24
(c) Impossibility; Illegality; Actual or Asserted
Invalidity.......................................................24
5.6 Interest and Costs with Prepayments/Application
of Prepayments...................................................25
5.7 Pro-rata Reduction of Commitments................................25
6. INTEREST AND RATE.........................................................25
6.1 Applicable Rate..................................................25
6.2 Default Rate.....................................................25
6.3 Interest Periods.................................................25
6.4 Interest Payments................................................26
7. PAYMENTS .................................................................26
7.1 Place of Payments, No Set Off....................................26
7.2 Tax Credits......................................................27
7.3 Sharing of Setoffs...............................................27
7.4 Computations; Banking Days. (a).................................28
8. EVENTS OF DEFAULT.........................................................28
8.1 Events of Default................................................28
(a) Non-Payment of Principal.........................................28
(b) Non-Payment of Interest or Other Amounts.........................28
(c) Representations..................................................28
(d) Mortgage.........................................................28
(e) Certain Covenants................................................29
(f) Covenants........................................................29
(g) Indebtedness.....................................................29
(h) Change in Business...............................................29
(i) Bankruptcy.......................................................29
(j) Termination of Operations; Sale of Assets........................29
(k) Judgments........................................................29
(l) Inability to Pay Debts...........................................30
(m) ERISA Debt.......................................................30
8.2 Indemnification..................................................30
8.3 Application of Moneys............................................30
9. COVENANTS.................................................................31
9.1 Affirmative Covenants............................................31
(a) Performance of Agreements........................................31
(b) Notice of Default, etc...........................................31
(c) Obtain Consents..................................................31
(d) Financial Information............................................32
(e) Vessel Valuations................................................32
(f) Corporate Existence; Citizenship.................................33
(g) Books and Records................................................33
(h) Taxes and Assessments............................................33
(i) Inspection.......................................................33
(j) Inspection and Survey Reports....................................33
(k) Compliance with Statutes, Agreements, etc........................33
(l) Environmental Matters............................................33
(m) ERISA............................................................34
(n) Vessel Management................................................34
(o) ISM Code, ISPS Code and MTSA Matters.............................34
(p) Brokerage Commissions, etc.......................................34
(q) Insurance........................................................34
(r) Credit Rating....................................................34
9.2 Negative Covenants...............................................34
(a) Liens............................................................35
(b) Distributions....................................................36
(c) Indebtedness.....................................................36
(d) Consolidation and Merger.........................................36
(e) Sale of Assets...................................................37
(f) Sale of Stock and Indebtedness of Subsidiaries...................37
(g) Sale and Lease-Back..............................................37
(h) Transactions with Affiliates and Stockholders....................37
(i) Loans, Advances and Investments..................................38
(j) Terrorism Sanction Regulations...................................38
(k) Change of Flag, Class or Ownership...............................38
(l) Changes in Offices...............................................39
(m) Change Fiscal Year...............................................39
(n) No Money Laundering..............................................39
(o) Use of Proceeds..................................................39
9.3 Financial Covenants..............................................39
(a) Long-Term Debt to Net Worth Ratio................................39
(b) Net Worth........................................................39
(c) Working Capital..................................................39
(d) Contingent Net Worth.............................................39
(e) Contingent Collateral Value to Outstandings Ratio................39
10. ASSIGNMENT................................................................40
11. ILLEGALITY, INCREASED COST, NON-AVAILABILITY, ETC.........................40
11.1 Illegality.......................................................40
11.2 Increased Costs..................................................41
11.3 Nonavailability of Funds.........................................41
11.4 Lender's Certificate Conclusive..................................42
11.5 Compensation for Losses..........................................42
12. CURRENCY INDEMNITY........................................................42
12.1 Currency Conversion..............................................42
12.2 Change in Exchange Rate..........................................42
12.3 Additional Debt Due..............................................42
12.4 Rate of Exchange.................................................43
13. FEES AND EXPENSES.........................................................43
13.1 Fees.............................................................43
13.2 Expenses.........................................................43
14. APPLICABLE LAW, JURISDICTION AND WAIVER...................................43
14.1 Applicable Law...................................................43
14.2 Jurisdiction.....................................................44
14.3 WAIVER OF JURY TRIAL.............................................44
15. THE AGENTS................................................................44
15.1 Appointment of Agents............................................44
15.2 Security Trustee as Trustee......................................44
15.3 Distribution of Payments.........................................45
15.4 Holder of Interest in Note.......................................45
15.5 No Duty to Examine, Etc..........................................45
15.6 Agents as Lenders................................................45
15.7 Acts of the Agents...............................................45
15.8 Certain Amendments...............................................46
15.9 Assumption re Event of Default...................................46
15.10 Limitations of Liability.........................................46
15.11 Indemnification of the Agents....................................47
15.12 Consultation with Counsel........................................47
15.13 Resignation......................................................47
15.14 Representations of Lenders.......................................47
15.15 Notification of Event of Default.................................48
16. NOTICES AND DEMANDS.......................................................48
16.1 Notices..........................................................48
17. MISCELLANEOUS.............................................................48
17.1 Time of Essence..................................................48
17.2 Unenforceable, etc., Provisions--Effect..........................48
17.3 References.......................................................49
17.4 Further Assurances...............................................49
17.5 Prior Agreements, Merger.........................................49
17.6 Entire Agreement; Amendments.....................................49
17.7 Counterparts; Execution..........................................49
17.8 Indemnification..................................................49
17.9 Headings.........................................................50
17.10 WAIVER OF IMMUNITY...............................................50
SCHEDULE
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1 The Lenders and the Initial Commitments
2 Disclosure
3 Approved Ship Brokers
EXHIBITS
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A Form of Note
B Form of United States Mortgage
C Form of Earnings Assignment
D Form of Insurances Assignment
E Form of Assignment and Assumption Agreement
F Form of Compliance Certificate
G Form of Drawdown Notice
H Form of Interest Notice
SENIOR SECURED REDUCING
REVOLVING CREDIT FACILITY
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THIS SENIOR SECURED REDUCING REVOLVING CREDIT AGREEMENT (this "Credit Agreement"
or this "Agreement") is made as of the 28th day of June, 2005, by and among (1)
MATSON NAVIGATION COMPANY, INC., a corporation incorporated under the laws of
the State of Hawaii (the "Borrower"), (2) the banks and financial institutions
listed on Schedule 1, as lenders (together with any bank or financial
institution which becomes a Lender pursuant to Article 10, the "Lenders"), and
(3) DnB NOR BANK ASA, acting through its New York Branch ("DnB NOR"), as
arranger, as administrative agent for the Lenders (in such capacity, the
"Administrative Agent") and as security trustee for the Lenders (in such
capacity, the "Security Trustee" and together with the Administrative Agent, the
"Agents").
WITNESSETH THAT:
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WHEREAS, the Borrower wishes to partially finance the acquisition costs
of one (1) 27,300 dwt container ship (the "Vessel") currently under construction
by Kvaerner Philadelphia Shipyard Inc. (the "Builder"), which Vessel when
delivered is to be registered with the name MV MAUNALEI under the laws and flag
of the United States of America;
WHEREAS, at the request of the Borrower, each of the Agents have agreed
to serve in its respective capacity provided for under the terms of this Credit
Agreement and the Lenders have agreed to provide to the Borrower a secured
reducing revolving credit facility in the amount of up to the lesser of (i)
US$105,000,000 or (ii) seventy-five percent (75%) of the Delivered Cost of the
Vessel;
NOW, THEREFORE, in consideration of the premises set forth above, the
covenants and agreements hereinafter set forth, and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as set forth below:
1. DEFINITIONS
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1.1 Specific Definitions. In this Credit Agreement the words and
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expressions specified below shall, except where the context otherwise requires,
have the meanings attributed to them below:
"Acceptable Accounting Firm" means Deloitte & Touche LLP, or such other
recognized international accounting firm as
shall be approved by the Administrative Agent,
such approval not to be unreasonably withheld;
"Administrative Agent" shall have the meaning ascribed thereto in the
preamble;
"Advance(s)" means any amount advanced to the Borrower with
respect to the Facility or (as the context may
require) the aggregate amount of all such
Advances outstanding at the applicable time;
"Affiliate" means with respect to any Person, any other
Person directly or indirectly controlled by or
under common control with such Person. For the
purposes of this definition, "control"
(including, with correlative meanings, the terms
"controlled by" and "under common control with")
as applied to any Person means the possession
directly or indirectly of the power to direct
or cause the direction of the management and
policies of that Person whether through
ownership of voting securities or by contract or
otherwise;
"Agents" shall have the meaning ascribed thereto in the
preamble;
"Applicable Rate" means any rate of interest applicable to the
Facility from time to time pursuant to Section
6.1;
"Assigned Moneys" means sums assigned to or received by the Agents
pursuant to any Security Document;
"Assignment and Assumption means the Assignment and Assumption Agreement(s)
Agreement(s)" executed pursuant to Section 10 substantially in
the form set out in Exhibit E;
"Assignment Notices" means
(i) notices with respect to the Earnings
Assignment substantially in the form
set out in Exhibit 1 thereto; and
(ii) notices with respect to the Insurances
Assignment substantially in the form
set out in Exhibit 3 thereto;
"Assignments" means the Earnings Assignment and the Insurances
Assignment;
"Available Amount" means the maximum aggregate amount of the
Facility available on any given date as such
shall be reduced from time to time pursuant to
Sections 5.2, 5.4 and 5.5
"Banking Day(s)" means day(s) on which banks are open for the
transaction of business in London, England,
New York, New York, and Oakland, California;
"Borrower" shall have the meaning ascribed thereto in the
preamble;
"Builder" means Kvaerner Philadelphia Shipyard Inc., a
corporation organized under the laws of
Pennsylvania;
"Building Contract" means that certain contract for the construction
and sale of the Vessel dated February 14, 2005
by and between the Borrower and the Builder;
"Capital Assets" means all assets other than current assets, and
shall not include any amounts in the Capital
Construction Fund;
"Capital Construction Fund" means the fund established and maintained by the
Borrower in accordance with Section 607 of the
Merchant Marine Act, 1936, as amended;
"Capitalized Lease means with respect to any Person, any rental
Obligations" obligation of such Person which, under GAAP, is
or will be required to be capitalized on the
books of such Person, taken at the amount
thereof accounted for as indebtedness (net of
interest expense) in accordance with such
principles;
"Change of Control" means any "person" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act)
other than Alexander & Baldwin, Inc. becomes the
beneficial owner (as defined in Rules 13d-3
and 13d-5 under the Exchange Act), directly or
indirectly, of 50% or more of the total voting
power or ownership interest of the Borrower
unless pursuant to the initial public offering
or any secondary public offering of the shares
of the Borrower;
"Classification Society" means American Bureau of Shipping, Germanischer
Lloyd, Lloyd's Register, Det Norske Veritas or
any member of the International Association of
Classification Societies with whom the Vessel is
entered and who conducted periodic physical
surveys and/or inspections of the Vessel;
"CLO" shall have the meaning ascribed thereto in
Section 10;
"Code" means the Internal Revenue Code of 1986, as
amended, and any successor statute and
regulation promulgated thereunder;
"COFR" means a Certificate of Financial Responsibility
or similar instrument maintained in accordance
with any Environmental Law;
"Collateral" means all property or other assets, real or
personal, tangible or intangible, whether now
owned or hereafter acquired in which any Agent
or any Lender has been granted a security
interest pursuant to a Security Document;
"Commitment(s)" means in relation to a Lender, the portion of
the Facility set out opposite its name in
Schedule 1 or, as the case may be, in any
relevant Assignment and Assumption Agreement, as
such amount shall be reduced from time to time
pursuant to Section 5; provided, however, that
the total aggregate Commitments shall, at all
times, equal the Available Amount;
"Commitment Fee" shall have the meaning ascribed thereto in
Section 13.1;
"Commitment Letter" means the Commitment Letter dated May 3, 2005
and entered into by the Borrower and DnB NOR in
respect of the Facility;
"Compliance Certificate" means a certificate certifying the compliance by
the Borrower with all of its covenants contained
herein and showing the calculations thereof in
reasonable detail, executed and delivered by the
chief financial officer of the Borrower to the
Administrative Agent from time to time pursuant
to Section 9.1(d) in the form set out in Exhibit
F, or in such other form as the Administrative
Agent may agree;
"Consolidated Net Earnings" means, for any period, the consolidated net
income of the Borrower and its Subsidiaries as
determined in accordance with GAAP;
"Constructive Knowledge" means, with respect to any Person, knowledge of
a particular fact, circumstance or set of facts
or circumstances which could be obtained by
exercising the degree of care which a person of
ordinary diligence would exercise in the same or
similar circumstances;
"Credit Agreement" means this agreement, as the same shall be
amended, modified or supplemented from time to
time;
"Default Rate" shall have the meaning ascribed thereto in
Section 6.2;
"Delivered Cost" means, with respect to the Vessel, the sum of
(i) $144,391,000 (representing the purchase
price of the Vessel under the Building
Contract), (ii) the costs of all owner furnished
equipment, (iii) interest accrued during
construction, (iv) changes and extras, (v) the
estimated costs associated with the delivery
voyage from the Builder's yard to Los Angeles,
California and (vi) the aggregate of all
shipyard supervisory costs incurred by the
Borrower with respect to the Vessel prior to the
delivery of the Vessel, as certified by the
Chief Financial Officer of the Borrower;
"DnB NOR" shall have the meaning ascribed thereto in the
preamble;
"DOC" means a document of compliance issued to an
Operator in accordance with rISM Code;
"Dollars" and the sign "$" means the legal currency, at any relevant time
hereunder, of the United States of America and,
in relation to all payments hereunder, in same
day funds settled through the New York Clearing
House1 Interbank Payments System (or such other
Dollar funds as may be determined by the
Administrative Agent to be customary for the
settlement in New York City of banking
transactions of the type herein involved);
"Drawdown Date(s)" means the dates, each being a Banking Day, upon
which the Borrower has requested that an
Advance be made available to the Borrower, and
such Advance is made, as provided in Section 3;
provided, however that the final Drawdown Date
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shall not fall later than the day occurring
one (1) month prior to the Final Payment Date;
"Drawdown Notice" shall have the meaning ascribed thereto in
Section 3.2;
"Earnings Assignment" means the assignment in respect of the earnings
of the Vessel from any and all sources, to be
executed by the Borrower in favor of the
Security Trustee pursuant to Section 4.2(c),
substantially in the form set out in Exhibit C;
"Environmental Affiliate(s)" means any person or entity, the liability of
which for Environmental Claims the Borrower
or any Subsidiary thereof may have assumed by
contract or operation of law;
"Environmental Approval(s)" shall have the meaning ascribed thereto in
Section 2.1(p);
"Environmental Claim(s)" shall have the meaning ascribed thereto in
Section 2.1(p);
"Environmental Law(s)" shall have the meaning ascribed thereto in
Section 2.1(p);
"ERISA" means the Employment Retirement Income Security
Act of 1974, as amended;
"ERISA Affiliate" means a trade or business (whether or not
incorporated) which is under common control with
the Borrower within the meaning of Sections
414(b), (c), (m) or (o) of the Code;
"Event(s) of Default" means any of the events set out in Section 8.1;
"Exchange Act" shall mean the Securities and Exchange Act of
1934, as amended;
"Facility" means the credit facility to be made available
by the Lenders to the Borrower hereunder in
multiple Advances pursuant to Section 3 in
the maximum aggregate principal amount of the
lesser of (i) One Hundred Five Million Dollars
($105,000,000) and (ii) seventy-five percent
(75%) of the Delivered Cost of the Vessel;
"Fair Market Value" means, in respect of the Vessel, the average of
two charter-free valuations on an "as is",
"willing seller, willing buyer" basis of such
vessel for use in a U.S. Jones Act service from
ship brokers listed in Schedule 3 and selected
by the Borrower or such other independent ship
brokers approved by the Majority Lenders, no
such valuation to be dated more than thirty (30)
days prior to the date on which a determination
of Fair Market Value is required pursuant to
this Credit Agreement;
"Final Payment Date" means the date that is ten (10) years from the
date hereof unless such date is not a Banking
Day in which case the Final Payment Date shall
be the Banking day immediately preceding such
ten (10) year anniversary of the date hereof;
"Financial Covenant Breach" shall have the meaning ascribed thereto in
Section 5.5(b);
"GAAP" shall have the meaning ascribed thereto in
Section 1.3;
"Indebtedness" means, with respect to any Person at any date of
determination (without duplication), (i) any
obligation payable more than one year from the
date of creation thereof, which is shown on the
balance sheet as a liability in accordance with
GAAP (including Capitalized Lease Obligations
but excluding reserves for deferred income taxes
and other reserves to the extent that such
reserves do not constitute an obligation),
(ii) endorsements (other than endorsements of
negotiable instruments for collection in the
ordinary course of business), guarantees and
other contractually incurred contingent
liabilities (whether direct or indirect) in
connection with the obligations of any Person,
to the extent that such obligations are payable
more than one year from the date of creation
thereof (including all guarantees of
Indebtedness of another Person) and (iii)
obligations under any contract providing for the
making of loans, advances or capital
contributions to any Person, or for the purchase
of any property from any Person, in each case in
order to enable such Person primarily to
maintain working capital, net worth or any
other balance sheet condition or to pay debts,
dividends or expenses, to the extent that such
obligations are payable more than one year from
the date of creation thereof; provided that any
--------
obligation shall be treated as Indebtedness,
regardless of its term, if such obligation is
renewable pursuant to the terms thereof or of a
revolving credit or similar agreement effective
for more than one year after the date of the
creation of such obligation, or may be payable
out of the proceeds of a revolving credit or
similar agreement effective for more than one
year after the date such agreement was entered
into pursuant to the terms of such agreement;
"Indemnitee" shall have the meaning ascribed thereto in
Section 17.7;
"Initial Advance" means the first Advance to be made under the
Facility;
"Insurances Assignment" means the assignment in respect of the
insurances over the Vessel to be executed by the
Borrower in favor of the Security Trustee
pursuant to Section 4.2(c), substantially in the
form set out in Exhibit D;
"Interest Notice" means a notice from the Borrower to the
Administrative Agent specifying the duration of
any relevant Interest Period, each substantially
in the form of Exhibit H;
"Interest Payment Date" means each date on which accrued interest on the
Facility shall be payable pursuant to Section
6.4;
"Interest Period(s)" means period(s) of one (1), three (3), six (6)
or twelve (12) months as selected by the
Borrower or as otherwise agreed among the
Lenders and the Borrower;
"Interest Rate Agreements" means any interest rate protection agreement,
interest rate future agreement, interest rate
option agreement, interest rate swap agreement,
interest rate cap agreement, interest rate
collar agreement, interest rate hedge agreement
or other similar agreement or arrangement
entered into between the Borrower or any
Affiliate of the Borrower with DnB NOR, which is
designed to protect the Borrower against
fluctuations in interest rates applicable under
this Credit Agreement, to or under which the
Borrower, or any of the Borrower's Affiliates
is a party or a beneficiary on the date of this
Credit Agreement or becomes a party or a
beneficiary hereafter;
"ISM Code" means the International Safety Management Code
for the Safe Operating of Ships and for
Pollution Prevention constituted pursuant to
Resolution A.741(18) of the International
Maritime Organization and incorporated into
the Safety of Life at Sea Convention and
includes any amendments or extensions thereto
and any regulation issued pursuant thereto;
"ISPS Code" means the International Ship and Port Facility
Security Code adopted by the International
Maritime Organization (as the same may be
amended from time to time);
"ISSC" means a valid and current International Ship
Security Certificate issued under the ISPS
Code;
"Lender(s)" shall have the meaning ascribed thereto in the
preamble;
"LIBOR" means the rate (rounded upward to the nearest
1/16th of one percent) for deposits of Dollars
for a period equivalent to the relevant Interest
Period at or about 11:00 a.m. (London time) on
the second London Banking Day before the first
day of such period as displayed on Telerate
page 1050 (British Bankers' Association
Interest Settlement Rates) (or such other page
as may replace such page 1050 on such system or
on any other system of the information vendor
for the time being designated by the British
Bankers' Association to calculate the BBA
Interest Settlement Rate (as defined in the
British Bankers' Association's Recommended
Terms and Conditions ("BBAIRS" terms) dated
August 1985)), provided that if on such date no
such rate is so displayed for the relevant
Interest Period, LIBOR for such period shall be
the rate determined by the Administrative Agent
as the offered rate for deposits of Dollars in
an amount approximately equal to the amount in
relation to which LIBOR is to be determined for
a period equivalent to the relevant Interest
Period to prime banks in the London Interbank
Market at or about 11:00 a.m. (London time) on
the second Banking Day before the first day of
such period;
"Lien" means any mortgage, pledge, security interest,
encumbrance, deposit arrangement, lien
(statutory or otherwise) or charge of any kind
(including any agreement to give any of the
foregoing, any conditional sale or other title
retention agreement, any lease in the nature
thereof, and the filing of or agreement to give
any financing statement (exclusive of financing
statements filed for precautionary purposes
only) under the Uniform Commercial Code of any
jurisdiction) or any other type of preferential
arrangement for the purpose, or having the
effect, of protecting a creditor against loss or
securing the payment or performance of an
obligation;
"Long-Term Debt" means, with respect to the Borrower, as of any
date, the total notes, bonds, debentures,
equipment obligations and other evidence of
Indebtedness that would be included in long term
debt in accordance with GAAP, which term shall
include any guarantee or other liability for the
debt of any other Person not otherwise included
on the balance sheet of the Borrower; provided,
--------
such term shall not include any non-recourse
liability of any unconsolidated entity for which
the Borrower has no legal liability;
"Majority Lenders" means, at any time, Lenders holding an aggregate
of more than 66.67% of the Advances then
outstanding;
"Margin" means during the period from the date of this
Credit Agreement up to the fifth (5th)
anniversary hereof 0.375% per annum and
thereafter 0.450% per annum;
"Material Adverse Effect" shall mean a material adverse effect on (i) the
ability of the Borrower to repay the Advances
or perform any of its obligations hereunder or
under the Note, (ii) the ability of the Borrower
to perform its obligations under any Security
Documents or (iii) the business, property,
assets, liabilities, operations, condition
(financial or otherwise) or prospects of the
Borrower and its Subsidiaries taken as a whole;
"Materials of Environmental shall have the meaning ascribed thereto in
Concern" Section 2.1(p);
"Moody's" means Moody's Investor Services, Inc.;
"Mortgage" means the first preferred United States ship
mortgage on the Vessel, to be executed by the
Borrower in favor of the Security Trustee
pursuant to Section 4.2(c), substantially in the
form set out in Exhibit B;
"MTSA" means the Maritime and Transportation Security
Act, 2002, as amended, inter alia, by Public
Law 107-295;
"Multiemployer Plan" means, at any time, a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA to
which the Borrower or any ERISA Affiliate is
making or accruing an obligation to make
contributions or has within any of the three
preceding plan years made or accrued an
obligation to make contributions;
"Multiple Employer Plan" means, at any time, an employee benefit plan,
other than a Multiemployer Plan, subject to
Title IV or ERISA, to which the Borrower or any
ERISA Affiliate, and one or more employers other
than the Borrower or an ERISA Affiliate, is
making or accruing an obligation to make
contributions or, in the event that any such
plan has been terminated, to which the Borrower
or any ERISA Affiliate made or accrued an
obligation to make contributions during any of
the five plan years preceding the date of
termination of such plan;
"Net Worth" means, as of any date, the total of paid-in
capital stock, paid-in surplus, earned surplus
and appropriated surplus, and all other amounts
that would be included in net worth in
accordance with GAAP, but exclusive of (i) any
receivables from any stockholder, director,
officer or employee of the Borrower or from any
Related Party (other than current receivables
arising out of the ordinary course of business
and not outstanding for more than sixty (60)
days) and (ii) any increment resulting from the
reappraisal of assets;
"Note" means the promissory note to be executed by the
Borrower to the order of the Administrative
Agent pursuant to Section 4.2(m), to evidence
the Facility, substantially in the form set out
in Exhibit A;
"Operator" means the Person who is concerned with the
operation of the Vessel and falls within the
definition of "Company" set out in rule 1.1.2 of
the ISM Code;
"PBGC" means the Pension Benefit Guaranty Corporation;
"Person" means any individual, sole proprietorship,
corporation, partnership (general or limited),
limited liability company, business trust, bank,
trust company, joint venture, association, joint
stock company, trust or other unincorporated
organization, whether or not a legal entity, or
any government or agency or political
subdivision thereof;
"Plan" means any employee benefit plan (other than a
Multiemployer Plan or a Multiple Employer Plan)
covered by Title IV of ERISA;
"Proceeding" shall have the meaning ascribed thereto in
Section 8.1(i);
"Rating" means, with respect to the Borrower, the
long-term unsecured debt rating as determined by
S&P or Moody's;
"Rating Drop" means the Rating of the Borrower falls below
either BBB with S&P or Baa2 with Moody's;
"Reduction Date(s)" means each of (i) the date that is two (2) years
from the date of this Credit Agreement and
(ii) the last day of each twelve (12) month
period thereafter up to and including the
Final Payment Date;
"Regulation T" means Regulation T of the Board of Governors of
the Federal Reserve System, as in effect from
time to time;
"Regulation U" means Regulation U of the Board of Governors of
the Federal Reserve System, as in effect from
time to time;
"Regulation X" means Regulation X of the Board of Governors of
the Federal Reserve System, as in effect from
time to time;
"Related Party(ies)" means one that can exercise control or
significant influence over the management and/or
operating policies of another Person, to the
extent that one of the Persons may be prevented
from fully pursuing its own separate interests;
"Related Parties" consist of all Affiliates of
an enterprise, including (i) its management and
their immediate families, (ii) its principal
owners and their immediate families, (iii) its
investments accounted for by the equity method,
(iv) beneficial employee trusts that are managed
by the management of the enterprise, and (v) any
Person that may, or does, deal with the
enterprise and has ownership of, control over,
or can significantly influence the management or
operating policies of another Person to the
extent that an arm's-length transaction may not
be achieved;
"Restricted Investment" means any loan or advance to, or purchase of or
investment in any stock, notes, obligations or
securities or, any other interest in, or any
capital contribution to, any Affiliate or any
Person with any ownership interest in any
Affiliate;
"S&P" means Standard & Poor's Rating Services, a
division of McGraw-Hill, Inc.;
"Security Document(s)" means the Mortgage, the Assignments and the
related Uniform Commercial Code filings that may
be executed or delivered as security for the
Facility and the Borrower's obligations in
connection therewith;
"Security Trustee" shall have the meaning ascribed thereto in the
preamble;
"SMC" means the safety management certificate issued
in respect of each Vessel in accordance with
rule 13 of the ISM code;
"Subsidiary(ies)" means, with respect to any Person, any business
entity of which more than 50% of the outstanding
voting stock or other equity interest is owned
directly or indirectly by such Person and/or one
or more other Subsidiaries of such Person;
"Superior Rating" means a Rating of A- or higher with S&P (if then
rated by S&P) and A3 or higher with Moody's
(if then rated by Moody's);
"Taxes" means any present or future income or other
taxes, levies, duties, charges, fees, deductions
or withholdings of any nature now or hereafter
imposed, levied, collected, withheld or assessed
by any taxing authority whatsoever, except for
taxes on or measured by the overall net income
of each Lender imposed by its jurisdiction of
incorporation or applicable lending office, the
United States of America, the State or City of
New York or any governmental subdivision or
taxing authority of any thereof or by any other
taxing authority having jurisdiction over such
Lender (unless such jurisdiction is asserted by
reason of the activities of the Borrower or any
of the Subsidiaries);
"Termination Event" means (i) a "reportable event," as defined in
Section 403 of ERISA (other than a "reportable
event" not subject to the provision for 30-day
notice to the PBGC), (ii) the withdrawal of the
Borrower or any ERISA Affiliate from a
Multiemployer Plan during a plan year in which
it was a "substantial employer," as defined in
Section 4001(a)(2) of ERISA, or the incurrence
of liability by the Borrower or any ERISA
Affiliate under Section 4064 of ERISA upon the
termination of a Multiple Employer Plan, (iii)
the filing of a notice of intent to terminate
a Plan under Section 4041 of ERISA or the
treatment of a Multiemployer Plan amendment as
a termination under Section 4041A of ERISA,
(iv) the institution of proceedings to terminate
a Plan or a Multiemployer Plan, or (v) any other
event or condition which might constitute
grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee
to administer, any Plan or Multiemployer Plan;
"Total Loss" shall have the meaning ascribed thereto in the
Mortgage;
"Vessel" means the 27,300 dwt United States flag
container vessel bearing Hull No. BN460 being
constructed by the Builder registered or to be
registered with the name MV MAUNALEI under the
ownership of the Borrower under the flag of the
United States of America; and
"Withdrawal Liability(ies)" shall have the meaning given to such term under
Part 1 of Subtitle E of Title IV of ERISA.
1.2 Computation of Time Periods; Other Definitional Provisions. In this
----------------------------------------------------------
Credit Agreement, the Note and the Security Documents, in the computation of
periods of time from a specified date to a later specified date, the word "from"
means "from and including" and the words "to" and "until" each mean "to but
excluding"; words importing either gender include the other gender; references
to "writing" include printing, typing, lithography and other means of
reproducing words in a tangible visible form; the words "including," "includes"
and "include" shall be deemed to be followed by the words "without limitation";
references to articles, sections (or subdivisions of sections), exhibits,
annexes or schedules are to this Credit Agreement, the Note or such Security
Document, as applicable; references to agreements and other contractual
instruments (including this Credit Agreement, the Note and the Security
Documents) shall be deemed to include all subsequent amendments, amendments and
restatements, supplements, extensions, replacements and other modifications to
such instruments (without, however, limiting any prohibition on any such
amendments, extensions and other modifications by the terms of this Credit
Agreement, the Note or any Security Document); references to any matter that is
"approved" or requires "approval" of a party shall mean approval given in the
sole and absolute discretion of such party unless otherwise specified.
1.3 Accounting Terms. Unless otherwise specified herein, all accounting
----------------
terms used in this Credit Agreement, the Note and in the Security Documents
shall be interpreted, and all financial statements and certificates and reports
as to financial matters required to be delivered to the Administrative Agent or
to the Lenders under this Credit Agreement shall be prepared, in accordance with
generally accepted accounting principles for the United States ("GAAP") as from
----
time to time in effect.
1.4 Certain Matters Regarding Materiality. To the extent that any
-------------------------------------
representation, warranty, covenant or other undertaking of the Borrower in this
Credit Agreement is qualified by reference to those which are not reasonably
expected to result in a "Material Adverse Effect" or language of similar import,
no inference shall be drawn therefrom that any Agent or Lender has knowledge or
approves of any noncompliance by the Borrower with any governmental rule.
1.5 Forms of Documents. Except as otherwise expressly provided in this
------------------
Credit Agreement, references to documents or certificates "substantially in the
form" of Exhibits to another document shall mean that such documents or
certificates are duly completed in the form of the related Exhibits with
substantive changes subject to the provisions of Section 17.6 of this Credit
Agreement, as the case may be, or the correlative provisions of the Security
Documents.
2. REPRESENTATIONS AND WARRANTIES
------------------------------
2.1 Representations and Warranties. In order to induce the Agents and the
------------------------------
Lenders to enter into this Credit Agreement and to induce the Lenders to make
the Facility available, the Borrower hereby represents and warrants to the
Agents and the Lenders (which representations and warranties shall be made as of
the date of this Credit Agreement and the Note and on the date of the drawdown
of each Advance hereunder) that:
(a) Due Organization and Power. the Borrower is duly formed
--------------------------
and is validly existing in good standing under the laws of its jurisdiction
of incorporation or formation, is qualified and authorized to do business as a
foreign corporation in each jurisdiction wherein the nature of its business
makes such a qualification necessary, has full power to carry on its business as
now being conducted and to enter into and perform its obligations under this
Credit Agreement, the Note and the Security Documents, and to the actual
knowledge or Constructive Knowledge of an officer of the Borrower has complied
with all statutory, regulatory and other requirements relative to such business
and such agreements, the non-compliance of which would have a Material Adverse
Effect;
(b) Authorization and Consents. all necessary corporate
--------------------------
action has been taken to authorize, and all necessary consents and
authorities have been obtained and remain in full force and effect to permit,
the Borrower to enter into and perform its obligations under this Credit
Agreement, the Note and the Security Documents and to borrow, service and repay
the Advances and, as of the date of this Credit Agreement, no further consents
or authorities are necessary for the service and repayment of the Advances or
any part thereof;
(c) Binding Obligations. this Credit Agreement, the Note
-------------------
and the Security Documents constitute or will, when executed and delivered,
constitute the legal, valid and binding obligations of the Borrower enforceable
against the Borrower in accordance with their respective terms, except to the
extent that such enforcement may be limited by equitable principles, principles
of public policy or applicable bankruptcy, insolvency, reorganization,
moratorium or other laws affecting generally the enforcement of creditors'
rights;
(d) No Violation. the execution and delivery of, and the
------------
performance of the provisions of, this Credit Agreement, the Note and those of
the Security Documents by the Borrower do not contravene any applicable law or
regulation existing at the date hereof or any contractual restriction binding on
the Borrower or the certificate of incorporation or by-laws (or equivalent
instruments) thereof and that the proceeds of the Advances shall be used by the
Borrower exclusively for its own account or for the account of a Subsidiary or
Affiliate of the Borrower;
(e) Filings; Stamp Taxes. other than the recording of the
--------------------
Mortgages with the National Vessel Documentation Center of the United States
Coast Guard, and the filing of Uniform Commercial Code Financing Statements
in the State of Hawaii in respect of the Assignments, and the payment and filing
or recording fees consequent thereto, it is not necessary for the legality,
validity, enforceability or admissibility into evidence of this Credit
Agreement, the Note or the Security Documents that any of them or any document
relating thereto be registered, filed, recorded or enrolled with any court or
authority in any relevant jurisdiction or that any stamp, registration or
similar Taxes be paid on or in relation to this Agreement, the Note or any of
the Security Documents;
(f) Litigation. no action, suit or proceeding is pending or
----------
threatened against the Borrower or any Subsidiary before any court, board of
arbitration or administrative agency which is reasonably likely to result in a
Material Adverse Effect;
(g) No Default. neither the Borrower nor any Subsidiary is
----------
in default under any material agreement by which it is bound, or is in default
in respect of any Indebtedness;
(h) Vessel. upon the date of delivery of the Vessel to the
------
Borrower and, with respect to subclauses (i) and (iv) below, at any time
thereafter, the Vessel:
(i) will be in the sole and absolute ownership
of the Borrower and duly registered in the
Borrower's name under the flag of the United
States of America, unencumbered, save and
except for the Mortgage recorded against it
and as permitted thereby and with all
appropriate endorsements for operation under
the coastwise trade of the United States of
America;
(ii) will be classed in the highest
classification and rating for vessels of the
same age and type with the Classification
Society without any material outstanding
recommendations affecting class;
(iii) will be operationally seaworthy and in every
way fit for its intended service; and
(iv) will be insured in accordance with the
provisions of the Mortgage recorded against
it and the requirements thereof in respect
of such insurances will have been complied
with;
(i) Citizenship the Borrower is a citizen of the United
-----------
States within the meaning of Section 2 of the Shipping Act of 1916, as amended,
is qualified to own and operate vessels in the coastwise trade of the United
States, and is in compliance with the citizenship requirements imposed under the
Merchant Marine Act, 1920, as amended, or any other applicable United States
laws for entities engaged in foreign trade;
(j) Insurance. the Borrower and each Subsidiary has insured
---------
its properties and assets against such risks and in such amounts as are
customary for companies engaged in similar businesses;
(k) Financial Information. on or prior to the date hereof,
---------------------
all financial statements, information and other data furnished by the Borrower
to the Administrative Agent are complete and correct, such financial statements
have been prepared in accordance with GAAP and accurately and fairly present
the financial condition of the parties covered thereby as of the respective
dates thereof and the results of the operations thereof for the period or
respective periods covered by such financial statements, and, since the date of
the Borrower's financial statements most recently delivered to the
Administrative Agent, there has been no Material Adverse Effect as to any of
such parties and none thereof has any contingent obligations, liabilities for
taxes or other outstanding financial obligations, except as disclosed in such
statements, information and data;
(l) Tax Returns. the Borrower and each Subsidiary have filed
-----------
all tax returns required to be filed by them and have paid all taxes payable by
them which have become due, other than those not yet delinquent and except for
those taxes being contested in good faith and by appropriate proceedings or
other acts and for which adequate reserves shall have been set aside on its
books;
(m) ERISA. the execution and delivery of this Credit
-----
Agreement and the consummation of the transactions hereunder will not involve
any prohibited transaction within the meaning of ERISA or Section 4975 of the
Code and no condition exists or event or transaction has occurred in connection
with any Plan maintained or contributed to by the Borrower or any Subsidiary or
any ERISA Affiliate resulting from the failure of any thereof to comply with
ERISA insofar as ERISA applies thereto which may result in the Borrower or
any such Subsidiary or any ERISA Affiliate incurring any liability, fine or
penalty;
(n) Chief Executive Office. the Borrower's chief executive
----------------------
office and chief place of business and the office in which the records relating
to the earnings and other receivables of the Borrower are kept is located at
555 12th Street, Oakland, California or such other office or office for which
the Borrower has provided written notice to the Administrative Agent in
accordance with the terms of this Agreement;
(o) Foreign Trade Control Regulations. to the actual
---------------------------------
knowledge or Constructive Knowledge of an officer of the Borrower, none of the
transactions contemplated herein will violate the provisions of any statute or
regulation enacted to prohibit or limit economic transactions with foreign
Persons including, without limitation, the Foreign Assets Control Regulations of
the United States of America (Title 31, Code of Federal Regulations, Chapter V,
Part 500, as amended), any of the provisions of the Cuban Assets Control
Regulations of the United States of America (Title 31, Code of Federal
Regulations, Chapter V, Part 515, as amended), any of the provisions of the
Iranian Transaction Regulations of the United States of America (Title 31, Code
of Federal Regulations, Chapter V, Part 560, as amended), any of the provisions
of the Iraqi Sanctions Regulations (Title 31, Code of Federal Regulations,
Chapter V, Part 575, as amended) or any of the provisions of the Regulations of
the United States of America Governing Transactions in Foreign Shipping of
Merchandise (Title 31, Code of Federal Regulations, Chapter V, Part 505, as
amended), the violation of which would have a Material Adverse Effect;
(p) Environmental Matters and Claims. (a) except as
--------------------------------
heretofore disclosed in writing to the Administrative Agent and the Lenders (i)
the Borrower, each of its Subsidiaries and their Affiliates will, when required
to operate their business as then being conducted, be in compliance with all
applicable United States federal and state, local, foreign and international
laws, regulations, conventions and agreements relating to pollution prevention
or protection of human health or the environment (including, without limitation,
ambient air, surface water, ground water, navigable waters, waters of the
contiguous zone, ocean waters and international waters), including, without
limitation, laws, regulations, conventions and agreements relating to (1)
emissions, discharges, releases or threatened releases of chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous materials, oil, hazardous
substances, petroleum and petroleum products and by-products ("Materials of
Environmental Concern"), or (2) the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Materials of
Environmental Concern ("Environmental Laws") (except as to all of the above,
where the failure to do so would not be reasonably likely to have a Material
Adverse Effect); (ii) the Borrower, each of its Subsidiaries and their
Affiliates will, when required, have all permits, licenses, approvals, rulings,
variances, exemptions, clearances, consents or other authorizations required
under applicable Environmental Laws ("Environmental Approvals") and will, when
required, be in compliance with all Environmental Approvals required to operate
their business as then being conducted (except where the failure to comply with,
obtain or renew such permits, licenses, rulings, variances, exemptions,
clearances, consents or other authorizations would not be reasonably likely to
have a Material Adverse Effect); (iii) none of the Borrower, any Subsidiary nor
any Affiliate thereof has received any notice of any claim, action, cause of
action, investigation or demand by any person, entity, enterprise or government,
or any political subdivision, intergovernmental body or agency, department
or instrumentality thereof, alleging potential liability which would be
reasonably likely to have a Material Adverse Effect or a requirement to incur,
investigator costs, cleanup costs, response and/or remedial costs (whether
incurred by a governmental entity or otherwise), natural resources damages,
property damages, personal injuries, attorneys' fees and expenses, or fines or
penalties which would be reasonably likely to have a Material Adverse Effect, in
each case arising out of, based on or resulting from (1) the presence, or
release or threat of release into the environment, of any Materials of
Environmental Concern at any location, whether or not owned by such person, or
(2) circumstances forming the basis of any violation, or alleged violation, of
any Environmental Law or Environmental Approval ("Environmental Claim") (other
than Environmental Claims that have been fully and finally adjudicated or
otherwise determined and all fines, penalties and other costs, if any, payable
by the Borrower in respect thereof have been paid in full or which are fully
covered by insurance (including permitted deductibles)); and (iv) there are no
circumstances that may prevent or interfere with such full compliance in the
future; and (b) except as heretofore disclosed in writing to the Administrative
Agent and the Lenders there is no Environmental Claim pending or threatened
against the Borrower, any Subsidiary or any Affiliate thereof and there are no
past or present actions, activities, circumstances, conditions, events or
incidents, including, without limitation, the release, emission, discharge or
disposal of any Materials of Environmental Concern, that could form the basis of
any Environmental Claim against such persons the adverse disposition of which
may result in a Material Adverse Effect;
(q) Compliance with ISM Code, ISPS Code and MTSA. upon the
--------------------------------------------
delivery of the Vessel, the Vessel will comply and, with respect to the
operation of the Vessel, the Operator will comply with the requirements of the
ISM Code, the ISPS Code and the MTSA including (but not limited to) the
maintenance and renewal of valid certificates pursuant thereto;
(r) No Threatened Withdrawal of DOC, ISSC or SMC. there is
--------------------------------------------
no actual or, to the best of the Borrower's knowledge, threatened withdrawal of
any Operator's DOC or the Vessel's ISSC or SMC or other certification or
documentation related to the ISM Code, the ISPS Code or otherwise required for
the operation of the Vessel;
(s) Liens. as of the date of this Agreement, other than as
-----
disclosed on Schedule 2 or as permitted hereby, there are no Liens of any kind
on any vessels or other material property owned by the Borrower or any
Subsidiary of the Borrower;
(t) Indebtedness. other than as disclosed in any filings
------------
with the United States Securities and Exchange Commission related to the
Borrower by the Borrower or an Affiliate of the Borrower, the Borrower (and its
Subsidiaries on a consolidated basis) has no Indebtedness;
(u) No Proceedings to Dissolve. there are no proceedings or
--------------------------
actions pending or contemplated by the Borrower, or contemplated by any third
party, to dissolve or terminate the Borrower;
(v) Solvency. with respect to the Borrower, (a) the sum of
--------
its assets, at a fair valuation, does and will exceed its liabilities,
including, to the extent they are reportable as such in accordance with GAAP,
contingent liabilities, (b) the present fair market salable value of its assets
is not and shall not be less than the amount that will be required to pay its
probable liability on its then existing debts, including, to the extent they are
reportable as such in accordance with GAAP, contingent liabilities, as they
mature, (c) it does not and will not have unreasonably small working capital
with which to continue its business and (d) it has not incurred, does not intend
to incur and does not believe it will incur, debts beyond its ability to pay
such debts as they mature;
(w) Compliance with Laws. the Borrower is in compliance with
--------------------
all applicable laws except where the failure to comply would not alone or in the
aggregate result in a Material Adverse Effect; and
(x) Survival. all representations and warranties made herein
--------
and in any certificate or other document delivered pursuant hereto or in
connection herewith shall be made as of the date of this Agreement and as of the
date of the making of the Advances and the issuance of the Note.
3. THE ADVANCES
------------
3.1 (a) Purposes. The Lenders shall make the Advances available to the
--------
Borrower for the purpose of acquiring the Vessel, for working capital and for
general corporate purposes of the Borrower and its Subsidiaries.
(b) Making of the Advances. (i) Each of the Lenders, relying upon each
----------------------
of the representations and warranties set out in Section 2, hereby severally and
not jointly agrees with the Borrower that, subject to and upon the terms of this
Credit Agreement, it will, not later than 11:00 A.M. (New York City time) (in
the case of the Initial Advance not later than 9:30 A.M. (New York City time))
on the Drawdown Date of each Advance (except as provided in subsection (ii) of
this Section), make its portion of the relevant Advance, in Federal or other
funds immediately available in New York City to the Administrative Agent at its
address and to such account as set forth on Schedule 1 or to such account of the
Administrative Agent most recently designated by it for such purpose by notice
to the Lenders. Unless the Administrative Agent determines that any applicable
condition specified in Section 4.1, 4.2 or 4.3 has not been satisfied, the
Administrative Agent will make the funds so received from the Lenders available
to the Borrower at the address set forth in the Drawdown Notice, subject to the
receipt of the funds by the Administrative Agent as provided in the immediately
preceding sentence, not later than 2:30 P.M. (New York City time) (in the case
of the Initial Advance not later than 11:00 A.M. (New York City time)) on the
date of such Advance, and in any event as soon as practicable after receipt. The
Initial Advance, subject to the other terms and conditions hereof, shall be in a
minimum amount of Five Million Dollars (US$5,000,000) and in multiples of One
Million Dollars (US$1,000,000). All other Advances, subject to the other terms
and conditions hereof, shall be in a minimum amount of Two Million Dollars
(US$2,000,000) and in multiples of One Million Dollars (US$1,000,000).
(ii) If any Lender makes a new Advance hereunder to
the Borrower on a day on which the Borrower is to repay all or any part of an
outstanding Advance from such Lender, such Lender shall apply the proceeds of
its new Advance to make such repayment and only an amount equal to the
difference (if any) between the amount being borrowed from such Lender and the
amount being repaid shall be made available by such Lender to the Administrative
Agent as provided in subsection (i) of this Section, or remitted by the Borrower
to the Administrative Agent for repayment to such Lender, as the case may be.
(iii) Unless the Administrative Agent shall have
received notice from a Lender prior to the Drawdown Date of any Advance that
such Lender will not make available to the Administrative Agent such Lender's
share of such Advance, the Administrative Agent may assume that such Lender has
made such share available to the Administrative Agent on the date of such
Advance in accordance this Section 3.1 and the Administrative Agent may, in
reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent that such Lender shall not have so
made such share available to the Administrative Agent, such Lender and the
Borrower (but without duplication) severally agree to repay to the
Administrative Agent forthwith on demand such corresponding amount together with
interest thereon, for each day from the date such amount is made available to
the Borrower until the date such amount is repaid to the Administrative Agent,
at (i) in the case of the Borrower, a rate per annum equal to the higher of (y)
the LIBOR rate for overnight or weekend deposits plus the Margin and (z) the
interest rate applicable thereto pursuant to Section 6.1 and (ii) in the case of
such Lender, the LIBOR rate for overnight or weekend deposits. If such Lender
shall repay to the Administrative Agent such corresponding amount, such amount
so repaid shall constitute such Lender's Advance included in such Advance for
purposes of this Credit Agreement as of the date such Advance was made. Nothing
in this subsection (b)(iii) shall be deemed to relieve any Lender of its
obligation to make Advances to the extent provided in this Credit Agreement. In
the event that the Borrower is required to repay an Advance to the
Administrative Agent pursuant to this Section 3.1(b)(iii), as between the
Borrower and the defaulting Lender, the liability for any breakfunding costs as
described in Section 4.3 shall be borne by the defaulting Lender. If the
defaulting Lender has not paid any such breakage costs upon demand by the
Administrative Agent therefor, the Borrower shall pay such breakage costs upon
demand by the Administrative Agent and the Borrower shall be entitled to recover
any such payment for breakfunding costs made by the Borrower from the defaulting
Lender.
3.2 Drawdown Notice. The Borrower shall, at least three (3) Banking Days
---------------
before a Drawdown Date, serve a notice (a "Drawdown Notice"), substantially in
the form of Exhibit G, on the Administrative Agent, which notice shall (a) be in
writing addressed to the Administrative Agent, (b) be effective on receipt by
the Administrative Agent, (c) specify the amount of such Advance to be drawn,
(d) specify the Banking Day on which such Advance is to be drawn and, subject to
the terms of Section 6.3 hereof, the Interest Period, (e) specify the
disbursement instructions and (f) be irrevocable.
3.3 Effect of Drawdown Notice. Such Drawdown Notice shall be deemed to
-------------------------
constitute a warranty by the Borrower (a) that the representations and
warranties stated in Section 2 (updated mutatis mutandis) are true and correct
------- --------
on and as of the date of such Drawdown Notice and will be true and correct on
and as of the relevant Drawdown Date as if made on such date, and (b) that no
Event of Default nor any event which with the giving of notice or lapse of time
or both would constitute an Event of Default has occurred and is continuing.
3.4 Notation of Advances. Each Advance made by the Lenders to the Borrower
--------------------
shall be evidenced by a notation of the same made by the Administrative Agent on
the grid attached to the Note, which notation, absent manifest error, shall be
prima facie evidence of the amount of the relevant Advance.
4. CONDITIONS
----------
4.1 Conditions Precedent to this Credit Agreement. The obligation of the
---------------------------------------------
Lenders to enter into this Agreement shall be expressly subject to the Borrower
having duly executed and delivered to the Administrative Agent this Credit
Agreement.
4.2 Conditions Precedent to the Availability of the Facility and the
----------------------------------------------------------------
Initial Advance. The obligation of the Lenders to make the Facility available to
- ---------------
the Borrower and to make the Initial Advance under this Credit Agreement shall
be expressly subject to the following conditions precedent:
(a) Corporate Authority. the Administrative Agent shall have
-------------------
received the following documents in form and substance satisfactory to the
Administrative Agent:
(i) copies, certified as true and complete by an
officer of the Borrower, of the resolutions
of the board of directors of the Borrower
evidencing approval of the transactions
contemplated by this Credit Agreement, the
Note and the Security Documents and
authorizing an appropriate officer or
officers or attorney-in-fact or
attorneys-in-fact to execute the same on its
behalf, or other evidence of such approvals
and authorizations;
(ii) copies, certified as true and complete by an
officer of the Borrower, of all documents
evidencing any other necessary action
(including actions by such parties thereto
other than the Borrower), approvals or
consents with respect to the transactions
contemplated by this Credit Agreement, the
Note and the Security Documents;
(iii) copies, certified as true and complete by an
officer of the Borrower, of its certificate
and/or articles of incorporation and
by-laws, or equivalent instruments thereof;
(iv) certificates of the jurisdiction of
incorporation or formation, as the case may
be, of the Borrower as to the good standing
thereof;
(b) The Vessel. the Administrative Agent shall have received
----------
upon delivery of the Vessel to the Borrower (unless at the time of delivery of
the Vessel the Borrower has a Superior Rating then within five (5) Banking Days
after the delivery of the Vessel to the Borrower) evidence satisfactory to it
that the Vessel:
(i) is in the sole and absolute ownership of the
Borrower and duly registered under the flag
of the United States of America,
unencumbered, save and except for the
Mortgage recorded against it and as
permitted thereby, and with all appropriate
endorsements for operation under the
coastwise trade of the United States of
America;
(ii) on the delivery date of the Vessel from the
Builder is classed in the highest
classification and rating for vessels of the
same age and type with the Classification
Society without any outstanding
recommendations affecting class;
(iii) on the delivery date of the Vessel from the
Builder is operationally seaworthy and in
every way fit for its intended service; and
(iv) is insured in accordance with the provisions
of the Mortgage recorded against it and the
requirements thereof in respect of such
insurances have been complied with;
(c) Security Documents. the Borrower shall have duly
------------------
executed and delivered to the Administrative Agent upon delivery of the Vessel
to the Borrower (unless at the time of delivery of the Vessel the Borrower has a
Superior Rating then within five (5) Banking Days after the delivery of the
Vessel to the Borrower):
(i) the Mortgage;
(ii) an Insurances Assignment;
(iii) an Earnings Assignment;
(iv) the Assignment Notices with respect to the
Insurances Assignment and Earnings
Assignment;
(v) Uniform Commercial Code Financing Statements
for filing with the State of Hawaii and in
such other jurisdictions as the
Administrative Agent may reasonably require;
(d) Building Contract. the Administrative Agent shall have
-----------------
received a copy of the Building Contract, certified as true and complete by
an officer of the Borrower;
(e) Recording of the Mortgage. the Administrative Agent
-------------------------
shall have received satisfactory evidence that the Mortgage has been duly
delivered for recordation to the National Vessel Documentation Center upon
delivery of the Vessel to the Borrower (unless at the time of delivery of the
Vessel the Borrower has a Superior Rating then within five (5) Banking Days
after the delivery of the Vessel to the Borrower);
(f) Delivered Cost. the Administrative Agent shall have
--------------
received upon delivery of the Vessel to the Borrower (unless at the time of
delivery of the Vessel the Borrower has a Superior Rating then within five (5)
Banking Days after the delivery of the Vessel to the Borrower) a certificate
from the Chief Financial Officer of the Borrower certifying the Delivered Cost
with respect to the Vessel;
(g) Debt Agreements. the Administrative Agent shall have
---------------
received from the Borrower a list, to be attached hereto as Schedule 2, of all
agreements evidencing or relating to Indebtedness of the Borrower or any of its
Subsidiaries which is (i) in an amount greater than or equal to One Million
Dollars ($1,000,000) (ii) to remain outstanding after giving effect to the
Facility and (iii) not included in the Borrower's lastest available unaudited
quarterly or audited annual financial statements;
(h) ISM DOC and ISSC. the Administrative Agent shall have
----------------
received upon delivery of the Vessel to the Borrower (unless at the time of
delivery of the Vessel the Borrower has a Superior Rating then within five (5)
Banking Days after the delivery of the Vessel to the Borrower) a copy of the
DOC, ISSC and any COFRs with respect to the Vessel;
(i) Environmental Claims. the Administrative Agent shall be
--------------------
satisfied that neither the Borrower nor any of its Subsidiaries or their
Affiliates is subject to any Environmental Claim the adverse disposition of
which would result in a Material Adverse Effect;
(j) Fees. the Administrative Agent shall have received
----
payment in full of all fees and expenses then due to the Agents and/or the
Lenders under Section 13;
(k) Compliance Certificate. the Administrative Agent having
----------------------
received a Compliance Certificate with respect to the most recently ended fiscal
quarter;
(l) Evidence of Rating. the Administrative Agent having
------------------
received evidence satisfactory to it of the Rating of the Borrower;
(m) Promissory Note. the Borrower having duly executed and
---------------
delivered to the Administrative Agent the Note; and
(n) Legal Opinions. the Administrative Agent, on behalf of
--------------
the Agents and the Lenders, shall have received legal opinions addressed to the
Administrative Agent from (i) Kevin O'Rourke, Senior Vice President & General
Counsel for the Borrower, (ii) Nixon Peabody LLP, special counsel to the
Borrower, (iii) Cades Schuttes, special Hawaii counsel to the Borrrower, and
(iv) Seward & Kissel LLP,. special counsel to the Agents and Lenders, in each
case in such form as the Administrative Agent may reasonably require, as well as
such other legal opinions as the Administrative Agent shall have reasonably
required as to all or any matters under the laws of the United States of
America, the State of New York and the State of Hawaii covering the
representations and conditions which are the subjects of Sections 2, 4.1 and
4.2.
4.3 Further Conditions Precedent. The obligation of the Lenders to make any
----------------------------
Advance available to the Borrower under this Credit Agreement shall be expressly
and separately subject to the following further conditions precedent on the
relevant Drawdown Date:
(a) Drawdown Notice. the Administrative Agent having
---------------
received a Drawdown Notice in accordance with the terms of Section 3.2;
(b) Representations and Warranties. the representations
------------------------------
stated in Section 2 (updated mutatis mutandis to such date) being true and
correct as if made on and as of that date;
(c) No Event of Default. no Event of Default having occurred
-------------------
and being continuing and no event having occurred and being continuing which,
with the giving of notice or lapse of time, or both, would constitute an Event
of Default;
(d) No Change in Laws. the Administrative Agent being
-----------------
satisfied that no change in any applicable laws, regulations, rules or in the
interpretation thereof shall have occurred which make it unlawful for the
Borrower to make any payment as required under the terms of this Credit
Agreement, the Note, the Security Documents or any of them; and
(e) No Material Adverse Effect. there having been no
--------------------------
Material Adverse Effect since the date of this Agreement.
4.4 Breakfunding Costs. In the event that, on the date specified for the
------------------
making of an Advance in any Drawdown Notice, the Lenders shall not be obligated
under this Credit Agreement to make such Advance available due to one or more
conditions precedent in Section 4.1, 4.2 or 4.3 not being satisfied or waived,
the Borrower shall indemnify and hold the Lenders fully harmless against any
losses which the Lenders (or any thereof) may sustain as a result of borrowing
or agreeing to borrow funds to meet the drawdown requirement of such Drawdown
Notice and the certificate of the relevant Lender or Lenders shall, absent
manifest error, be conclusive and binding on the Borrower as to the extent of
any such losses.
4.5 Satisfaction after Drawdown. Without prejudice to any of the other
---------------------------
terms and conditions of this Credit Agreement, in the event the Lenders, in
their sole discretion, make any Advance prior to the satisfaction of all or any
of the conditions referred to in Sections 4.1, 4.2 or 4.3, the Borrower hereby
covenants and undertakes to satisfy or procure the satisfaction of such
condition or conditions within fourteen (14) days after the relevant Drawdown
Date (or such longer period as the Lenders, in their sole discretion, may
agree).
5. REPAYMENT AND PREPAYMENT
------------------------
5.1 Repayment. Subject to the provisions of this Section 5 regarding
---------
application of prepayments, the Borrower shall, on each Reduction Date, repay
that amount necessary to reduce the outstanding aggregate amount of the Facility
to an amount that is not more than the then Available Amount and, on the Final
Payment Date, the Borrower shall repay the then aggregate outstanding amount of
the Facility. If at any time the aggregate outstanding Advances under the
Facility exceeds the total Commitments at such time, the Borrower shall
immediately repay (together with the costs and expenses provided for in Section
5.6) an amount equal to such excess.
5.2 Scheduled Reductions of the Facility. Subject to the following
------------------------------------
provisions of this Section 5, the Available Amount shall be reduced on each of
the first eight (8) Reduction Dates by Ten Million Five Hundred Thousand Dollars
($10,500,000) and on the Final Payment Date to zero. On each Reduction Date,
each Lender's Commitment shall be reduced by an amount equal to the proportion
of the amount by which the Available Amount is to be so reduced on that date
which its Commitment bears to the total Commitments on that date.
5.3 Voluntary Prepayment; Re-borrowing. The Borrower may prepay, upon three
----------------------------------
(3) Banking Days written notice, any outstanding Advance or any portion thereof,
without penalty, provided that if such prepayment is made on a day other than
the last day of the Interest Period of such Advance such prepayment shall be
made together with the costs and expenses provided for in Section 5.6. Each
prepayment shall be in a minimum amount of Two Million Dollars ($2,000,000) and
shall be in an integral multiple of One Million Dollars ($1,000,000) or the full
amount of the then outstanding Advances. Subject to the limits and upon the
conditions herein provided (including the reductions of the Commitments provided
in Section 5.2), the Borrower may from time to time prepay the Advances and
thereafter re-borrow such Advances or a portion thereof up to the then Available
Amount.
5.4 Optional Permanent Reduction of Facility. The Borrower shall have the
----------------------------------------
right, at any time and from time to time, to, without penalty, permanently
reduce the Facility, provided that the Administrative Agent receives three (3)
business days prior written notice of such reduction and the Lenders are
reimbursed for any redeployment costs with respect to any Advances, or portions
thereof, that are prepaid on any day other than the last day of the applicable
Interest Period(s) in the event that such prepayment is necessary to reduce the
aggregate outstanding Advances under the Facility to the then Available Amount
after giving effect to any such permanent reduction in the Facility. Each such
permanent reduction shall be equal to or shall exceed Two Million Dollars
($2,000,000) and shall be in an integral multiple of One Million Dollars
($1,000,000) or the full amount of the then outstanding Advances; provided,
however, that each of the remaining scheduled reductions of the Available Amount
pursuant to Section 5.2 hereof shall be reduced on a pro rata basis by an amount
equal to the reduction of the Available Amount pursuant to this Section 5.4. The
Borrower shall make a prepayment of the Advances in an amount equal to that
amount necessary to reduce the outstanding aggregate amount of the Facility to
an amount equal to the Available Amount as reduced pursuant to the previous
sentence and to the extent required to be in compliance with Section 5.1 or, if
applicable, Section 9.3(e).
5.5 Mandatory Prepayments.
---------------------
(a) Sale or Loss of Vessel. On (i) any sale of the Vessel or
----------------------
(ii) the earlier of (x) ninety (90) days after the Total Loss of the Vessel or
(y) the date on which the insurance proceeds in respect of such loss are
received by the Borrower or the Administrative Agent as assignee thereof, the
Available Amount and the Commitments shall be reduced to zero. The Borrower
shall make a prepayment of the Advances in an amount equal to that amount
necessary to reduce the outstanding aggregate amount of the Facility to zero.
(b) Breach of Financial Covenant. Upon the occurrence and
----------------------------
during the continuation of a breach (a "Financial Covenant Breach") by the
Borrower of a covenant set forth in Section 9.3 of this Credit Agreement, the
Lenders shall not be obligated to make any Advance available for borrowing.
Within thirty (30) days of a Financial Covenant Breach, the Borrower shall make
a prepayment of the Advances in an amount equal to that amount necessary to
reduce the outstanding aggregate amount of the Facility to zero. On the
thirtieth (30th) day following a Financial Covenant Breach, the Available Amount
and the Commitments shall reduced to zero unless on or before such thirtieth
(30th) day, such Financial Covenant Breach has been cured.
(c) Impossibility; Illegality; Actual or Asserted
---------------------------------------------
Invalidity. In the event that (i) it becomes impossible or unlawful for the
- ----------
Borrower to fulfill any of its covenants or obligations hereunder, under the
Note or under any of the Security Documents or for any of the Lenders to
exercise any of the rights vested in any of them hereunder, under the Note or
under any of the Security Documents, (ii) the Borrower is unable to perform or
admits its inability to perform under this Credit Agreement, the Note or any
Security Document, (iii) the Borrower asserts the invalidity of this Credit
Agreement, the Note or any Security Document or (iv) this Credit Agreement, the
Note or any Security Document is determined to be invalid, then the Borrower
shall within two (2) Banking Days of written notice from the Administrative
Agent make a prepayment of the Advances in an amount equal to that amount
necessary to reduce the outstanding aggregate amount of the Facility to zero
and the Available Amount shall be reduced to zero.
5.6 Interest and Costs with Prepayments/Application of Prepayments. Any
--------------------------------------------------------------
prepayment of the Advances made hereunder (including, without limitation, those
made pursuant to Sections 5 and 9) shall be subject to the condition that on the
date of prepayment all accrued interest to the date of such prepayment shall be
paid in full with respect to the Advances or portions thereof being prepaid,
together with any and all costs or expenses incurred by any Lender in connection
with any breaking of funding (as certified by such Lender, which certification
shall, absent any manifest error, be conclusive and binding on the Borrower);
provided, however, that any prepayment of an Advance or portion thereof made on
the last day of the Interest Period with respect thereto shall be without
penalty, premium, breakfunding costs or breakfunding expenses. All prepayments
of Advances shall be applied toward the installments of the Advances in inverse
order of their due dates for payment.
5.7 Pro-rata Reduction of Commitments. If the Available Amount is reduced
---------------------------------
pursuant to Sections 5.4 or 5.5 hereof or any other provision of this Credit
Agreement, each Lender's Commitment shall be reduced on the Reduction Dates
falling on or after the date of such reduction by the same proportion as that by
which the Available Amount is so reduced and the remaining reductions pursuant
to Section 5.2 shall be adjusted proportionately to reflect such reduction.
6. INTEREST AND RATE
-----------------
6.1 Applicable Rate. Each Advance shall bear interest at the Applicable
---------------
Rate, which shall be the rate per annum which is equal to the aggregate of (a)
LIBOR for the relevant Interest Period plus (b) the Margin. The Applicable Rate
shall be determined by the Administrative Agent two (2) Banking Days prior to
the first (1st) day of the relevant Interest Period and the Administrative Agent
shall promptly notify the Borrower in writing of the Applicable Rate as and when
determined. Each such determination, absent manifest error, shall be conclusive
and binding upon the Borrower.
6.2 Default Rate. Any amounts due under this Credit Agreement, not paid
------------
when due, whether by acceleration or otherwise, shall bear interest thereafter
from the due date thereof until the date of payment at a rate per annum equal to
the greater of (i) the Applicable Rate, plus two percent (2.0%) per annum or
(ii) LIBOR for overnight or weekend deposits, as the case may be, plus the
Margin plus two percent (2.0%) per annum (the "Default Rate"). In addition,
following the occurrence of any Event of Default and until such Event of Default
is cured to the satisfaction of the Majority Lenders, the Facility shall bear
interest at the Default Rate.
6.3 Interest Periods. The Borrower shall give the Administrative Agent an
----------------
Interest Notice specifying the Interest Period selected at least three (3)
Banking Days prior to the end of any then existing Interest Period, which notice
the Administrative Agent agrees to forward on to all Lenders on a same day basis
or as soon as practicable. If at the end of any then existing Interest Period
the Borrower fails to give an Interest Notice, the relevant Interest Period
shall be three (3) months. The Borrower's right to select an Interest Period
shall be subject to (i) the limitations set forth in Section 11.3 hereof and
(ii) the restriction that no selection of an Interest Period shall be effective
unless no Event of Default or event which, with the giving of notice or lapse of
time, or both, would constitute an Event of Default shall have occurred and be
continuing. No more than six (6) Interest Periods shall be outstanding at any
one time; provided, however, that the Borrower and the Administrative Agent may
agree to consolidate Interest Periods from various Advances in order to
accommodate this provision.
6.4 Interest Payments. Accrued interest on the Facility shall be payable in
-----------------
arrears on the last day of each Interest Period, except that if the Borrower
shall select an Interest Period in excess of three (3) months, accrued interest
shall be payable during such Interest Period on each three (3) month anniversary
of the commencement of such Interest Period and upon the end of such Interest
Period.
7. PAYMENTS
--------
7.1 Place of Payments, No Set Off. (a) All payments to be made hereunder by
-----------------------------
the Borrower shall be made to the Administrative Agent, not later than 1:00 P.M.
New York time (any payment received after 1:00 P.M. New York time shall be
deemed to have been paid on the next Banking Day) on the due date of such
payment, at its office located at 200 Park Avenue, New York, New York 10166, USA
or to such other office of the Administrative Agent as the Administrative Agent
may direct, without set-off or counterclaim and, subject to Section 7.1(c), free
from, clear of, and without deduction or withholding for, any Taxes, provided,
however, that if the Borrower shall at any time be compelled by law to withhold
or deduct any Taxes from any amounts payable to the Lenders hereunder, then the
Borrower shall pay such additional amounts in Dollars as may be necessary in
order that the net amounts received after withholding or deduction shall equal
the amounts which would have been received if such withholding or deduction were
not required and, in the event any withholding or deduction is made, whether for
Taxes or otherwise, the Borrower shall promptly send to the Administrative Agent
such documentary evidence with respect to such withholding or deduction as may
be required from time to time by the Lenders.
(b) Each Lender that is not a citizen or resident of the
United States of America, a corporation, partnership or other entity created or
organized in or under the laws of the United States (or any jurisdiction
thereof), or any estate or trust that is subject to federal income taxation
regardless of the source of its income (a "Non-U.S. Lender") shall deliver to
the Borrower and the Administrative Agent two copies of each U.S. Internal
Revenue Service Form W-8BEN or Form W-8ECI, or any subsequent versions thereof
or successors thereto, or, in the case of a Non-U.S. Lender claiming exemption
from U.S. federal withholding tax under Section 871(h) or 881(c) of the Code
with respect to payments of "portfolio interest", a Form W-8, or any subsequent
versions thereof or successors thereto (and, if such Non-U.S. Lender delivers a
Form W-8, a certificate representing that such Non-U.S. Lender is not a "bank"
for purposes of Section 881(c) of the Code, is not a 10-percent shareholder
(within the meaning of Section 871(h)(3)(B) of the Code) of Borrower and is not
a controlled foreign corporation related to Borrower (within the meaning of
Section 864(d)(4) of the Code)), properly completed and duly executed by such
Non-U.S. Lender claiming complete exemption from all payments by Borrower under
this Agreement. Such forms shall be delivered by each Non-U.S. Lender on or
before the initial Drawdown Date (and in the case of an assignee, on or prior to
the effective date of the relevant assignment). In addition, each Non-U.S.
Lender shall deliver such forms promptly upon the obsolescence or invalidity of
any form previously delivered by such Non-U.S. Lender. Each Non-U.S. Lender
shall promptly notify the Borrower at any time it determines that it is no
longer in a position to provide any previously delivered certificate to the
Borrower (or any other form of certification adopted by the U.S. taxing
authorities for such purpose). Notwithstanding any other provision of this
subsection, a Non-U.S. Lender shall not be required to deliver any form pursuant
to this subsection that such Non-U.S. Lender is not legally able to deliver.
(c) The Borrower will not be required to pay any
additional amounts in respect of United States Federal income tax pursuant to
Section 7.1 to any Lender for the account of any lending office of such Lender:
(i) if the obligation to pay such additional amounts would not have arisen but
for a failure by such Lender to comply with its obligations under Section 7.1(b)
in respect of such lending office; (ii) if such Lender shall have delivered to
the Borrower a Form W-8BEN and/or Form W-8ECI (or any subsequent versions
thereof or successors thereto) in respect of such lending office pursuant to
Section 7.1(b), and such Lender shall not at any time be entitled to exemption
from deduction or withholding of United States Federal income tax in respect of
payments by the Borrower hereunder for the account of such lending office for
any reason other than a change in United States law, treaty or regulations or in
the official interpretation of such law, treaty or regulations by any
governmental authority charged with the interpretation or administration thereof
(whether or not having the force of law) after the date of delivery of such Form
W-8BEN and/or Form W-8ECI (or any subsequent versions thereof or successors
thereto); or (iii) if the Lender shall have delivered to the Borrower a Form W-8
(or any subsequent versions thereof or successors thereto) in respect of such
lending office pursuant to Section 7.1(b), and such Lender shall not at any time
be entitled to exemption from deduction or withholding of United States Federal
income tax in respect of payments by the Borrower hereunder for the account of
such lending office for any reason other than a change in the United States law
or regulations or any applicable tax treaty or regulations or in the official
interpretation of any such law, treaty or regulations by any governmental
authority charged with the interpretation or administration thereof (whether or
not having the force of law) after the date of delivery of such Form W-8 (or
subsequent versions thereof or successors thereto).
(d) If the Lender becomes subject to Taxes because of its
failure to deliver a form required under Section 7.1(b), the Borrower, at such
Lender's expense, shall take such steps as such Lender shall reasonably request
to assist such Lender to recover such Taxes if, in the judgment of the Borrower
such steps would avoid the need for, or reduce the amount of, any Taxes required
to be deducted from or in respect of any sum payable hereunder to such Lender
and would not, in the judgment of the Borrower, be disadvantageous to the
Borrower.
7.2 Tax Credits. If any Lender obtains the benefit of a credit against the
-----------
liability thereof for federal income taxes imposed by any taxing authority for
all or part of the Taxes as to which the Borrower has paid additional amounts as
aforesaid, then such Lender shall pay an amount to the Borrower which that
Lender determines will leave it (after such payment) in the same position as it
would have been had the Tax payment not been made by the Borrower. Each Lender
agrees that in the event that Taxes are imposed on account of the situs of its
loans hereunder, such Lender, upon acquiring knowledge of such event, shall, if
commercially reasonable and if, in the opinion of that Lender, is not
prejudicial to it, shift such loans on its books to another office of such
Lender so as to avoid the imposition of such Taxes. Nothing contained in this
clause shall in any way prejudice the right of the Lenders to arrange their tax
affairs in such way as they, in their sole discretion, deem appropriate. In
particular, no Lender shall be required to obtain such tax credit, if this
interferes with the way such Lender normally deals with its tax affairs.
7.3 Sharing of Setoffs. Each Lender agrees that if it shall, through the
------------------
exercise of a right of banker's lien, setoff or counterclaim or pursuant to a
secured claim under Section 506 of the Federal Bankruptcy Code or other security
or interest arising from, or in lieu of, such secured claim, exercised or
received by such Lender under any applicable bankruptcy, insolvency or other
similar law or otherwise, or by any other means, obtain payment (voluntary or
involuntary) in respect of any Advance or Advances as a result of which its
funded Commitment shall be proportionately less than the funded Commitment of
any other Lender, it shall be deemed simultaneously to have purchased from such
other Lender at face value, and shall promptly pay to such other Lender the
purchase price for, a participation in the funded Commitment of such other
Lender so that the aggregate funded Commitment of each Lender shall be in the
same proportion to the aggregate funded Commitments then outstanding as its
funded Commitment prior to such exercise of banker's lien, setoff or
counterclaim or other event was to the principal amount of all funded
Commitments outstanding prior to such exercise of banker's lien, setoff or
counterclaim or other event; provided, however, that, if any such purchase or
purchases or adjustments shall be made pursuant to this Section 7.3 and the
payment giving rise thereto shall thereafter be recovered, such purchase or
purchases or adjustments shall be rescinded to the extent of such recovery and
the purchase price or prices or adjustment restored without interest. Any Lender
holding a participation in a funded Commitment deemed to have been so purchased
may exercise any and all rights of banker's lien, setoff or counterclaim with
respect to any and all moneys owing to such Lender by reason thereof as fully as
if such Lender had made an Advance in the amount of such participation. The
Borrower expressly consents to the foregoing arrangement.
7.4 Computations; Banking Days. (a) Unless otherwise specifically
--------------------------
indicated in this Credit Agreement, all computations of interest and fees shall
be made by the Administrative Agent or the Lenders, as the case may be, on the
basis of a 360-day year, in each case for the actual number of days (including
the first day but excluding the last day) occurring in the period for which
interest or fees are payable. Each determination by the Administrative Agent or
the Lenders of an interest rate or fee hereunder shall be conclusive and binding
for all purposes, absent manifest error;
(b) Whenever any payment hereunder or under the Note shall
be stated to be due on a day other than a Banking Day, such payment shall be due
and payable on the next succeeding Banking day unless the next succeeding
Banking Day falls in the following calendar month, in which case it shall be
payable on the immediately preceding Banking Day.
8. EVENTS OF DEFAULT
-----------------
8.1 Events of Default. The occurrence of any of the following events shall
-----------------
be an Event of Default:
(a) Non-Payment of Principal. any payment of principal is
------------------------
not paid within three (3) Banking Days of the due date or date of demand (as the
case may be); or
(b) Non-Payment of Interest or Other Amounts. any interest
----------------------------------------
or any other amount becoming payable to the Administrative Agent or any Lender
under this Credit Agreement, under the Note or under any of the Security
Documents is not paid within three (3) Banking Days of the due date or date of
demand (as the case may be); or
(c) Representations. any representation, warranty or other
---------------
statement made by the Borrower in this Credit Agreement or in any of the
Security Documents or in any other instrument, document or other agreement
delivered in connection herewith or therewith proves to have been untrue or
misleading in any material respect as at the date as of which made or confirmed;
or
(d) Mortgage. there is an event of default under any
--------
Mortgage; or
(e) Certain Covenants. the Borrower defaults in the due and
-----------------
punctual observance or performance of any covenant contained in Sections 5.5,
9.1(b), 9.1(f), 9.1(l), 9.1(o)(ii), 9.1(q), 9.2(a), 9.2(d) or 9.2(k); or
(f) Covenants. the Borrower (i) defaults in the due and
---------
punctual observance or performance of any other term, covenant or agreement
contained in this Credit Agreement, in the Note, in any of the Security
Documents or in any other instrument, document or other agreement delivered in
connection herewith or therewith, or there occurs any other event which
constitutes a default under this Credit Agreement, under the Note or under any
of the Security Documents, in each case other than an Event of Default referred
to elsewhere in this Section 8.1, and such default continues unremedied for a
period of thirty (30) days after the earlier of (i) actual knowledge or
Constructive Knowledge thereof by an officer, director or manager of the
Borrower or (ii) the Borrower having been notified thereof by the Administrative
Agent; or
(g) Indebtedness. the Borrower shall default in the payment
------------
when due of any Indebtedness in excess of $25,000,000 or of any other
indebtedness in excess of $25,000,000 and such Indebtedness or indebtedness is,
or by reason of such default is subject to being, accelerated or any party
becomes entitled to enforce the security for any such Indebtedness or
indebtedness and such party shall take steps to enforce the same, unless such
default or enforcement is being contested in good faith and by appropriate
proceedings or other acts and the Borrower shall set aside on its books adequate
reserves with respect thereto; or
(h) Change in Business. the Borrower shall cease to carry on
------------------
the business of container transportation as its core business; or
(i) Bankruptcy. the Borrower or any Subsidiary of the
----------
Borrower commences any proceeding under any reorganization, arrangement or
readjustment of debt, dissolution, winding up, adjustment, composition,
bankruptcy or liquidation law or statute of any jurisdiction, whether now or
hereafter in effect (a "Proceeding"), or there is commenced against any thereof
any Proceeding and such Proceeding remains undismissed or unstayed for a period
of thirty (30) days or any receiver, trustee, liquidator or sequestrator of, or
for, any thereof or any substantial portion of the property of any thereof is
appointed and is not discharged within a period of thirty (30) days or any
thereof by any act indicates consent to or approval of or acquiescence in any
Proceeding or the appointment of any receiver, trustee, liquidator or
sequestrator of, or for, itself or of, or for, any substantial portion of its
property; or
(j) Termination of Operations; Sale of Assets. except as
-----------------------------------------
expressly permitted under this Credit Agreement, the Borrower ceases its
operations or sells or otherwise disposes of all or substantially all of its
assets or all or substantially all of the assets of the Borrower are seized or
otherwise appropriated; or
(k) Judgments. any judgment or order is made, the effect
---------
whereof would be to render ineffective or invalid this Credit Agreement, the
Note or any of the Security Documents or any material provision thereof, or the
Borrower asserts that any such agreement or provision thereof is invalid; or
final judgments or orders for the payment of money in excess of $25,000,000 (or
its equivalent in any other currency) in the aggregate for the Borrower and all
of its Subsidiaries shall be rendered against the Borrower and/or any of its
Subsidiaries and such judgments or orders shall continue unsatisfied and
unstayed for a period of thirty (30) consecutive days; or
(l) Inability to Pay Debts. the Borrower or any Subsidiary
----------------------
of the Borrower is unable to pay or admits its inability to pay its debts as
they fall due or a moratorium shall be declared in respect of any material
indebtedness of the Borrower or any such Subsidiary of the Borrower; or
(m) ERISA Debt. (i) the Borrower or any ERISA Affiliate
----------
fails to pay when due an amount or amounts aggregating in excess of $5,000,000
which it or they have become liable to pay under Title IV of ERISA or (ii) the
Borrower or any ERISA Affiliate, individually or collectively, fails to pay when
due any Withdrawal Liability or liability upon the happening of a Termination
Event and the aggregate of all such Withdrawal Liabilities and such other
liabilities exceeds $25,000,000.
Upon and during the continuance of any Event of Default, the Lenders' obligation
to make any Advance available shall cease and the Administrative Agent may, and
on the instructions of the Majority Lenders shall, by notice to the Borrower,
declare the entire unpaid balance of the then outstanding Advances, accrued
interest and any other sums payable by the Borrower hereunder or under the Note
due and payable, whereupon the same shall forthwith be due and payable without
presentment, demand, protest or notice of any kind (except for such
declaration), all of which are hereby expressly waived; provided that upon the
happening of an event specified in subsections (i) or (l) of this Section 8.1
with respect to the Borrower, the Note shall be immediately due and payable
without declaration or other notice to the Borrower. In such event, the Lenders
may proceed to protect and enforce their rights by action at law, suit in equity
or in admiralty or other appropriate proceeding, whether for specific
performance of any covenant contained in this Credit Agreement, in the Note or
in any Security Document, or in aid of the exercise of any power granted herein
or therein, or the Lenders may proceed to enforce the payment of the Note or to
enforce any other legal or equitable right of the Lenders, or proceed to take
any action authorized or permitted under the terms of any Security Document or
by applicable law for the collection of all sums due, or so declared due, on the
Note. Without limiting the foregoing, the Borrower agrees that during the
continuance of any Event of Default each of the Lenders shall have the right to
appropriate and hold or apply (directly, by way of set-off or otherwise) to the
payment of the obligations of the Borrower to the Lenders hereunder and/or under
the Note (whether or not then due) all moneys and other amounts of the Borrower
then or thereafter in possession of any Lender, the balance of any deposit
account (demand or time, mature or unmatured) of the Borrower then or thereafter
with any Lender and every other claim of the Borrower then or thereafter against
any of the Lenders.
8.2 Indemnification. The Borrower agrees to, and shall, indemnify and hold
---------------
the Agents and the Lenders harmless against any loss, as well as against any
costs or expenses (including legal fees and expenses), which any of the Agents
or the Lenders sustains or incurs as a consequence of any default in payment of
the principal amount of the Facility, interest accrued thereon or any other
amount payable hereunder, under the Note or under any Security Documents,
including, but not limited to, all actual losses incurred in liquidating or re-
employing fixed deposits made by third parties or funds acquired to effect or
maintain the Facility or any portion thereof; provided, however, that no such
-------- -------
indemnity obligation shall be effective if, and to the extent, any such loss,
cost or expense is the result of the gross negligence or willful misconduct of
any Agent or Lender. Subject to the foregoing proviso, any Lenders'
certification of such costs and expenses shall, absent any manifest error, be
conclusive and binding on the Borrower.
8.3 Application of Moneys. Except as otherwise provided in any Security
---------------------
Document, all moneys received by the Agents or the Lenders under or pursuant to
this Credit Agreement, the Note or any of the Security Documents after the
happening of any Event of Default (unless cured to the satisfaction of the
Majority Lenders) shall be applied by the Administrative Agent in the following
manner:
(a) first, in or towards the payment or reimbursement of
any expenses or liabilities incurred by the Agents,
or the Lenders in connection with the ascertainment,
protection or enforcement of their rights and
remedies hereunder, under the Note and under any of
the Security Documents,
(b) secondly, in or towards payment of any interest owing
in respect of the Facility,
(c) thirdly, in or towards repayment of principal of the
Facility,
(d) fourthly, in or towards payment of all other sums
which may be owing to the Agents, or any of them, or
the Lenders under this Credit Agreement, under the
Note, under the Commitment Letter or under any of the
Security Documents, and
(e) fifthly, in or towards payments of any amounts then
owed under any Interest Rate Agreement, and
(f) sixthly, the surplus (if any) shall be paid to the
Borrower or to whosoever else may be entitled
thereto.
9. COVENANTS
---------
9.1 Affirmative Covenants. The Borrower hereby covenants and undertakes
---------------------
with the Lenders that, from the date hereof and so long as any principal,
interest or other moneys are owing in respect of this Credit Agreement, under
the Note or under any of the Security Documents, the Borrower will:
(a) Performance of Agreements. duly perform and observe the
-------------------------
terms of this Credit Agreement, the Note and the Security Documents;
(b) Notice of Default, etc. promptly upon, and in any event
-----------------------
no later than five (5) Banking Days after, obtaining knowledge thereof,
inform the Administrative Agent of the occurrence of (a) any Event of Default or
of any event which, with the giving of notice or lapse of time, or both, would
constitute an Event of Default, (b) any litigation or governmental proceeding
pending or threatened against it or against any of its Subsidiaries which could
reasonably be expected to have a Material Adverse Effect, including but not
limited to, in respect of any Environmental Claim, (c) the withdrawal of the
Vessel's rating by its Classification Society or the issuance by the
Classification Society of any material recommendation or notation affecting
class and (d) any other event or condition which is reasonably likely to have a
Material Adverse Effect;
(c) Obtain Consents. without prejudice to Section 2.1 and
---------------
this Section 9.1, obtain every consent and do all other acts and things which
may from time to time be necessary or reasonably advisable for the continued due
performance of all its obligations under this Credit Agreement, the Note and the
Security Documents;
(d) Financial Information. deliver to each Lender via the
---------------------
Administrative Agent who will distribute to the other Lenders:
(i) as soon as available but not later than one
hundred twenty (120) days after the end of
each fiscal year of the Borrower, complete
paper or electronic copies of the
consolidated financial reports of the
Borrower and its Subsidiaries (together
with a Compliance Certificate), all in
reasonable detail, which shall include at
least the consolidated balance sheet of the
Borrower and its Subsidiaries as of the end
of such year and the related consolidated
statements of income and sources and uses
of funds for such year, which shall be
audited reports prepared by an Acceptable
Accounting Firm;
(ii) as soon as available but not later than
sixty (60) days after the end of each of the
first three quarters of each fiscal year of
the Borrower, a paper or electronic
quarterly interim consolidated balance sheet
of the Borrower and its Subsidiaries and the
related consolidated profit and loss
statements and sources and uses of funds
(together with a Compliance Certificate),
all in reasonable detail, unaudited, but
certified to be true and complete by the
chief financial officer of the Borrower;
(iii) within ten (10) days of the Borrower's
receipt thereof, paper or electronic copies
of all other reports submitted to the
Company or any of its Subsidiaries by
independent accountants in connection with
any material annual, interim, or special
audit made by them of the books of the
Borrower;
(iv) upon the occurrence of an Event of Default
or any event which with the giving of notice
or the lapse or time or both would
constitute an Event of Default, such other
statements (including, without limitation,
monthly consolidated statements of operating
revenues and expenses), lists of assets and
accounts, budgets, forecasts, reports and
other financial information with respect to
its business as the Administrative Agent may
from time to time request, certified to be
true and complete by the chief financial
officer of the Borrower;
(e) Vessel Valuations. upon the occurrence of and at all
-----------------
times after and during the continuance of a Rating Drop, for inclusion with
each Compliance Certificate in respect of the second quarter of each fiscal year
delivered pursuant to Section 9.1(d)(ii), the Borrower shall obtain two
valuations from any of the ship brokers identified on Schedule 3 selected by the
Borrower addressed to the Administrative Agent of the Fair Market Value of the
Vessel; such valuations are to be at the Borrower's cost. In the event the
Borrower fails or refuses to obtain the valuations required pursuant to this
Section 9.1(e) within ten (10) days of the due date thereof, the Administrative
Agent will be authorized to obtain such valuations, at the Borrower's cost, from
two approved ship brokers listed on Schedule 3 or other independent shipbrokers
selected by the Administrative Agent, which valuations shall be deemed the
equivalent of valuations duly obtained by the Borrower pursuant to this Section
9.1(e) and shall be at the Borrower's cost, but the Agent's actions in doing so
shall not excuse any default of the Borrower under this Section 9.1(e);
(f) Corporate Existence; Citizenship. do or cause to be done
--------------------------------
all things necessary to (i) preserve and keep in full force and effect its
corporate existence and all licenses, franchises, permits and assets necessary
to the conduct of its business; and (ii) remain a citizen of the United States
within the meaning of Section 2 of the Shipping Act of 1916, as amended, and in
compliance with the citizenship requirements imposed under the Merchant Marine
Act, 1920, as amended, or any other applicable United States laws for entities
engaged in foreign trade;
(g) Books and Records. at all times keep its financial
-----------------
statements in accordance with GAAP;
(h) Taxes and Assessments. pay and discharge all taxes,
---------------------
assessments and governmental charges or levies imposed upon it or upon its
income or property prior to the date upon which penalties attach thereto;
provided, however, that it shall not be required to pay and discharge, or cause
to be paid and discharged, any such tax, assessment, charge or levy so long as
the legality thereof shall be contested in good faith and by appropriate
proceedings or other acts and it shall set aside on its books adequate reserves
with respect thereto;
(i) Inspection. allow upon ten (10) Banking Days notice from
----------
the Administrative Agent, any representative or representatives designated by
the Administrative Agent, subject to applicable laws and regulations, to visit
and inspect, at the cost and expense of the Administrative Agent, any of its
properties, and, on request, to examine its books of account, records, reports,
agreements and other papers and to discuss its affairs, finances and accounts
with its officers, all at such times and as often as the Administrative Agent
requests; provided, however, that, except during the occurrence and
-------- -------
continuance of an Event of Default or any event which with the giving of notice
or the lapse or time or both would constitute an Event of Default, any such
visit, inspection or examination shall not be conducted more frequently than
annually and all costs and expenses associated with any such inspection shall be
for the account of the Borrower;
(j) Inspection and Survey Reports. if the Lenders shall so
-----------------------------
request, the Borrower shall provide the Lenders with copies of all internally
generated inspection or survey reports on the Vessel;
(k) Compliance with Statutes, Agreements, etc. do or cause
------------------------------------------
to be done all things necessary to comply with all contracts or agreements to
which it is a party and all laws, and the rules and regulations thereunder,
applicable to the Borrower, including, without limitation, those laws, rules and
regulations relating to employee benefit plans and environmental matters, the
non-compliance with which would have a Material Adverse Effect;
(l) Environmental Matters. promptly upon the occurrence of
---------------------
any of the following conditions, provide to the Administrative Agent a
certificate of an executive officer thereof, specifying in detail the nature of
such condition and its proposed response or the response of its Environmental
Affiliates: (a) its receipt or the receipt by any Environmental Affiliates of
the Borrower of any written communication whatsoever that alleges that such
person is not in compliance with any applicable Environmental Law or
Environmental Approval, if such noncompliance could reasonably be expected to
have a Material Adverse Effect, (b) knowledge by it, or by any Environmental
Affiliates of the Borrower that there exists any Environmental Claim pending or
threatened against any such person, which could reasonably be expected to have a
Material Adverse Effect, or (c) any release, emission, discharge or disposal of
any material that could form the basis of any Environmental Claim against it or
against any Environmental Affiliates of the Borrower, if such Environmental
Claim could reasonably be expected to have a Material Adverse Effect. Upon the
written request by the Administrative Agent, it will submit to the
Administrative Agent at reasonable intervals, a report providing an update of
the status of any issue or claim identified in any notice or certificate
required pursuant to this subsection;
(m) ERISA. forthwith upon learning of the occurrence of any
-----
material liability of the Borrower or any ERISA Affiliate pursuant to ERISA in
connection with the termination of any Plan or withdrawal or partial withdrawal
of any multi-employer plan (as defined in ERISA) or of a failure to satisfy the
minimum funding standards of Section 412 of the Code or Part 3 of Title I of
ERISA by any Plan for which the Borrower or any ERISA Affiliate is plan
administrator (as defined in ERISA), furnish or cause to be furnished to the
Lenders written notice thereof;
(n) Vessel Management. cause the Vessel to be managed by the
-----------------
Borrower or a wholly-owned subsidiary thereof or other manager under
arrangements that are on an arms' length basis;
(o) ISM Code, ISPS Code and MTSA Matters. procure that the
------------------------------------
Operator will (i) comply with (A) the ISM Code and the ISPS Code in
accordance with the implementation schedule thereof, including (but not
limited to) the maintenance and renewal of valid certificates pursuant thereto
and (B) the MTSA; (ii) promptly undertake to cure, and in any event cure within
30 days, any identified material deficiencies with respect to the Vessel's
compliance with (A) the ISM Code and the ISPS Code in accordance with the
implementation schedule thereof, including (but not limited to) the maintenance
and renewal of valid certificates pursuant thereto and (B) the MTSA; and (iii)
immediately inform the Administrative Agent if there is any threatened or actual
withdrawal, suspension, cancellation or modification of its DOC or the ISSC or
the SMC in respect of the Vessel; and (iv) promptly inform the Administrative
Agent upon the issuance to the Borrower or Operator of a DOC and the issuance to
the Vessel of an ISSC and an SMC;
(p) Brokerage Commissions, etc. indemnify and hold each of
--------------------------
the Agents and the Lenders harmless from any claim for any brokerage commission,
fee, or compensation from any broker or third party resulting from the
transactions contemplated hereby;
(q) Insurance. maintain with financially sound and reputable
---------
insurance companies, insurance on all their respective properties and against
all such risks and in at least such amounts as are usually insured against by
companies of established reputation engaged in the same or similar business from
time to time; and
(r) Credit Rating. maintain at all times a Rating with
-------------
either S&P or Moody's and annually on each anniversary of the date of this
Credit Agreement provide to the Administrative Agent evidence of such
Rating(s).
9.2 Negative Covenants. The Borrower hereby covenants and undertakes with
------------------
the Lenders that, from the date hereof and so long as any principal, interest or
other moneys are owing in respect of this Credit Agreement, under the Note or
under any of the Security Documents, the Borrower will not without the prior
written consent of the Majority Lenders (or all of the Lenders if required by
Section 15.8):
(a) Liens. create, assume or suffer to exist any Lien upon
-----
any of its property or assets, whether now owned or hereafter acquired, except
(i) Liens for taxes not yet due or which are
being actively contested in good faith by
appropriate proceedings, in each case for
which adequate reserves have been
maintained,
(ii) Liens (other than Liens pursuant to ERISA)
incidental to the conduct of its business or
the ownership of its property and assets
which were not incurred in connection with
the borrowing of money or the obtaining of
advances or credit, and which do not in the
aggregate materially detract from the value
of its property or assets or materially
impair the use thereof in the operation of
its business,
(iii) Liens on property or assets of a Subsidiary
securing obligations of such Subsidiary to
the Borrower or another Subsidiary,
(iv) Liens on container(s) and equipment acquired
subsequent to the date of this Agreement
(including Liens in connection with
financing or capitalized leases), securing
Indebtedness of the Borrower or any
Subsidiary permitted by paragraph 9.2(c);
provided that any such Lien may arise at any
--------
time after the date on which the encumbered
container(s) or equipment were acquired if
such Lien relates to a cross border lease of
such container(s) or equipment where (A) the
lease or financing agreement provides that
in the event of the bankruptcy or insolvency
of the lessor, lessee, trustee or other
lease transaction party, a default or
casualty, or any other type of lease
termination event (whether scheduled or
otherwise), title to the leased containers
or equipment reverts to the Borrower or such
Subsidiary, (B) the aggregate amount of
lease payments and consideration paid to
obtain reconveyance of title to the leased
containers or equipment does not exceed the
original cost thereof, (C) no security
interest, financing statement or similar
filings are made in the United States of
America in respect of the leased containers
or equipment for the benefit of any Person
other than the Company or such Subsidiary
and (D) prior to such Lien becoming
effective, the Company or such Subsidiary
receives a legal opinion of counsel to the
lessor and trustee, if any, to the effect
that the agreements referred to in subclause
(A) of this clause (iv) are valid and
legally binding agreements, enforceable
against the lessor or trustee, if any, in
accordance with their respective terms,
(v) Liens on Capital Assets acquired subsequent
to the date of this Agreement (excluding any
asset consisting of, or acquired with,
insurance proceeds received in connection
with any asset owned on the date of this
Agreement) securing Indebtedness of the
Borrower and Subsidiaries permitted by
clause (iii) of paragraph 9.2(c),
(vi) Liens encumbering the Borrower's Capital
Construction Fund to the extent incurred in
connection with Borrower's financing of
obligations constituting "qualified
withdrawals" under regulations adopted by
the Maritime Administration under the
Merchant Marine Act, 1936, as amended,
(vii) any Lien existing on any property of any
Person at the time it becomes a Subsidiary,
or existing prior to the time of acquisition
upon any property acquired by the Borrower
or any Subsidiary through purchase, merger
or consolidation or otherwise, whether or
not assumed by the Borrower or such
Subsidiary; provided that (a) any such Lien
--------
shall not encumber any other property of the
Borrower or such Subsidiary, and (b) the
aggregate amount of Indebtedness secured by
all such Liens is at all times permitted by
paragraph 9.2(c),
(viii) Liens permitted under the Mortgage;
(ix) Liens in the Collateral in favor of the
Administrative Agent or the Security Trustee
to secure the obligations of the Borrower
under this Agreement, Note and the Security
Documents; and
(x) Liens disclosed on Schedule 2 on the date
of this Agreement;
provided that, other than Liens permitted under the Mortgage, no Liens shall be
permitted in or on the Collateral;
(b) Distributions. pay or declare any dividend on any class
-------------
of stock or make any other distribution on account of any class of its stock, or
redeem, purchase or otherwise acquire, directly or indirectly, any shares of its
stock or make any Restricted Investment (all of the foregoing being herein
called "Restricted Payments") if at the time any proposed Restricted Payment is
to be made, or after giving effect to any proposed Restricted Payment, an Event
of Default exists or would exist or a Financial Covenant Breach exists at the
time;
(c) Indebtedness. create, incur, assume or suffer to exist
------------
any Indebtedness, except
(i) Indebtedness of any Subsidiary to the
Borrower or another Subsidiary,
(ii) Indebtedness of Subsidiaries in an aggregate
principal amount at no time in excess of
$25,000,000 (exclusive of Indebtedness
permitted by clause (i) or (iii) hereof),
(iii) Indebtedness of Subsidiaries described in
clause (v) of paragraph (a) and Indebtedness
of the Borrower; provided that the aggregate
principal amount thereof shall at no time
exceed an amount equal to 200% of Net Worth
at such time;
(d) Consolidation and Merger. enter into any transaction of
------------------------
merger, consolidation or other combination with any other Person; provided that
--------
(i) any Subsidiary may merge with the Borrower;
provided that the Borrower shall be the
--------
continuing or surviving corporation and no
Event of Default will result therefrom,
(ii) any Subsidiary may merge with another
Subsidiary, and
(iii) the Borrower may merge, consolidate or
combine with any other corporation; provided
--------
that (a) immediately after such merger,
consolidation or combination, no Event of
Default shall exist and (b) if the Borrower
is not the continuing or surviving
corporation, the successor corporation shall
be a solvent corporation organized under the
laws of any state of the United States of
America and shall expressly assume in
writing all of the obligations of the
Borrower under this Agreement, including all
covenants herein contained, and such
successor or acquiring corporation shall be
substituted for the Borrower with the same
effect as if it had been named herein as a
party hereto;
(e) Sale of Assets. sell, lease or transfer or otherwise
--------------
dispose of any Capital Asset to any Person, except that during any rolling
twelve-month period, the Borrower may sell or otherwise dispose of Capital
Assets (other than Capital Assets constituting part of the Collateral unless the
Borrower shall pay and discharge all of its obligations under or in connection
with this Agreement, the Note and the Security Documents prior to or
concurrently with such sale pursuant to Section 5.5) which constituted up to 10%
of the total value of the assets of the Borrower as of December 31, 2004, so
long as (A) such Capital Assets sold contributed less than 25% of the
Consolidated Net Earnings in each of the three fiscal years immediately
preceding any such sale and (B) such Capital Assets, when considered together
with all other Capital Assets sold or otherwise disposed of subsequent to
December 31, 2004, do not constitute in excess of 30% of the total value of the
assets of the Borrower as of December 31, 2004;
(f) Sale of Stock and Indebtedness of Subsidiaries. sell or
----------------------------------------------
otherwise dispose of, or part with control of, any shares of stock or
Indebtedness of any Subsidiary, except to the Borrower or another Subsidiary,
and except that all shares of stock and Indebtedness of any Subsidiary at the
time owned by or owed to the Borrower and all Subsidiaries may be sold as an
entirety for a cash consideration which represents their fair value (as
determined in good faith by the Board of Directors of the Borrower), at the time
of sale of the shares of stock and Indebtedness so sold, and provided that at
the time of such sale, such Subsidiary shall not own, directly or indirectly,
any shares of stock or Indebtedness of any other Subsidiary (unless all of the
shares of stock and Indebtedness of such other Subsidiary owned, directly or
indirectly, by the Borrower and all Subsidiaries are simultaneously being sold
as permitted by this paragraph 9.2(f));
(g) Sale and Lease-Back. enter into any arrangement with any
-------------------
lender or investor or to which such lender or investor is a party providing for
the leasing by the Borrower or any Subsidiary of real or personal property owned
by the Borrower or any Subsidiary as of December 31, 2004 (including any such
property acquired with insurance proceeds received in connection with any real
or personal property owned by the Borrower or any Subsidiary on such date),
which has been or is to be sold or transferred by the Borrower or any Subsidiary
to such lender or investor or to any Person to whom funds have been or are to be
advanced by such lender or investor on the security of such property or rental
obligations of the Borrower or any Subsidiary;
(h) Transactions with Affiliates and Stockholders. directly
---------------------------------------------
or indirectly, purchase, acquire or lease any property from, or sell, transfer
or lease any property to, or otherwise deal with, in the ordinary course of
business or otherwise (i) any Affiliate, (ii) any Person owning, beneficially or
of record, directly or indirectly, either individually or together with all
other Persons to whom such Person is related by blood, adoption or marriage,
stock of the Borrower or stock of any Person owning stock of the Borrower (of
any class having ordinary voting power for the election of directors)
aggregating 5% or more of such voting power or (iii) any Person related by
blood, adoption or marriage to any Person described or coming within the
provisions of clause (i) or (ii) of this paragraph 9.2(h) provided that the
--------
Borrower and Subsidiaries may enter into such transactions on terms no less
favorable to the Borrower or Subsidiary than if no such relationship existed,
including (subject in each case to the limitations of paragraph 9.2(b))
Restricted Payments and transactions of the Borrower involving the sale or
purchase of shares of the Borrower's stock;
(i) Loans, Advances and Investments. make or permit to
-------------------------------
remain outstanding any loan or advance to, or own, purchase or acquire any
stock, obligations or securities of, or any other interest in, or make any
capital contribution to, any Person, except that the Borrower or any Subsidiary
may
(i) make or permit to remain outstanding loans
or advances to any Subsidiary;
(ii) own, purchase or acquire stock, obligations
or securities of a Subsidiary or of a Person
which immediately after such purchase or
acquisition will be a Subsidiary;
(iii) acquire and own stock, obligations or
securities received in settlement of debt
(created in the ordinary course of business)
owing to the Borrower or any Subsidiary,
(iv) make investments in accordance with the
resolutions of the Board of Directors of the
Company; provided that such resolutions
--------
authorize only investments rated investment
grade by S&P, Moody's, or any other
nationally recognized credit rating agency,
(v) make Restricted Investments to the extent
permitted by paragraph 9.2(b); and
(vi) make other investments, loans and advances
(other than Restricted Investments which
may be made only to the extent permitted
by paragraph 9.2(b)) which in aggregate
(at original cost) do not exceed
$30,000,000;
Notwithstanding the foregoing, amounts in the Capital Construction Fund may be
invested only as provided in clause (iv) above; or
(j) Terrorism Sanction Regulations. become, or permit any
------------------------------
Subsidiary to become, a Person described or designated in the Specially
Designated Nationals and Blocked Persons List of the Office of Foreign Assets
Control or in Section 1 of the Anti-Terrorism Order, or to knowingly engage, or
permit any Subsidiary to knowingly engage, in any dealings or transactions with
any such Person;
(k) Change of Flag, Class or Ownership. change the flag of
----------------------------------
the Vessel other than to a jurisdiction acceptable to the Majority Lenders,
change the Classification Society of the Vessel other than to another member of
the International Association of Classification Societies, or change the
immediate or ultimate ownership of the Vessel;
(l) Changes in Offices. change the location of the chief
------------------
executive office of the Borrower or the office of the Borrower in which the
records relating to the earnings or insurances of the Vessel are kept unless the
Lenders shall have received sixty (60) days prior written notice of such change;
(m) Change Fiscal Year. change its fiscal year;
------------------
(n) No Money Laundering. in connection with this Credit
-------------------
Agreement or any of the Security Documents, contravene any law, official
requirement or other regulatory measure or procedure implemented to combat
"money laundering" (as defined in Article 1 of the Directive (91/308/EEC) of the
Council of the European Communities) and comparable United States Federal and
state laws. In addition, the Borrower confirms that it is the beneficiary
(within the meaning of Section 8 of the German Money Laundering Act
(Geldwaschegesetz)) for each Advance made or to be made available to it. The
Borrower will promptly inform the Lenders (by written notice to the Agent) if
the Borrower is not or ceases to be the beneficiary and will provide in writing
the name and address of the beneficiary. The Borrower shall be informed from
time to time of any changes in any foreign laws, official requirements or other
regulatory measures or procedures with which it is required to comply under this
subsection (n) by each Lender subject to such laws, requirements, measures or
procedures; and
(o) Use of Proceeds. will not use the proceeds of Advances
---------------
in violation of Regulations U or X and will not violate Regulation T.
9.3 Financial Covenants. The Borrower hereby covenants and undertakes with
-------------------
the Lenders that, from the date hereof and so long as any principal or interest
are outstanding or other moneys are owing in respect of this Credit Agreement,
under the Note or under any of the Security Documents, the Borrower will:
(a) Long-Term Debt to Net Worth Ratio. maintain at all times
---------------------------------
a ratio of Long-Term Debt to Net Worth of not more than 2.0 to 1.0;
(b) Net Worth. maintain at all times a Net Worth of not less
---------
than the greater of (i) Two Hundred Fifty Million Dollars ($250,000,000) or
(ii) sixty five percent (65%) of the shareholders equity of the Borrower as
reported in its most recently prepared audited annual financial reports
delivered pursuant to Section 9.1(d)(i);
(c) Working Capital. maintain at all times positive working
---------------
capital;
(d) Contingent Net Worth. upon the occurrence and at all
--------------------
times after a Change of Control, maintain a Net Worth of not less than Three
Hundred Fifty Million Dollars ($350,000,000) plus fifty percent (50%) of all
quarterly net income, to the extent such net income is positive, earned after
the effective date of such Change of Control; and
(e) Contingent Collateral Value to Outstandings Ratio. upon
-------------------------------------------------
the occurrence and at all times after and during the continuance of a Rating
Drop, maintain a ratio of the Fair Market Value of the Vessel to the outstanding
amount of the Facility of at least 1.20 to 1.00; such ratio to be tested on the
day it becomes applicable and annually thereafter;
10. ASSIGNMENT
----------
This Credit Agreement shall be binding upon, and inure to the benefit of, the
Borrower and the Lenders, the Agents and their respective successors and
assigns, except that the Borrower may not assign any of its rights or
obligations hereunder. Each Lender shall be entitled to assign its rights and
obligations under this Credit Agreement or grant participation(s) in the
Facility to any subsidiary, holding company or other affiliate of such Lender,
to any subsidiary or other affiliate company of any thereof or to any other
bank, financial institution or collateralized loan obligation fund or trust
("CLO") approved by the Administrative Agent and the Borrower, which approval
shall not be unreasonably withheld; provided, however, (i) that no consent of
-------- -------
the Borrower shall be required if an Event of Default has occurred and is
continuing at the time of such assignment and (ii) that no such consent shall be
required if the assignee is, immediately prior to giving effect to such
assignment, another bank, financial institution, an Affiliate of the assigning
Lender or a CLO advised by a Lender (in a minimum amount of not less than
$5,000,000), and such Lender shall forthwith give notice of any such assignment
or participation to the Borrower and pay the Administrative Agent an assignment
fee of $3,000 for each such assignment or participation which is not made to a
subsidiary, holding company or affiliate of the assigning Lender; provided,
--------
however, that any such assignment must be made pursuant to an Assignment and
- -------
Assumption Agreement. The Borrower will take all actions requested by the Agents
or any Lender to effect such assignment, including, without limitation, the
execution of a written consent to any Assignment and Assumption Agreement.
The Administrative Agent shall, on behalf of the Borrower, maintain at its
address a copy of each Assignment and Assumption Agreement delivered to it and a
register (the "Register") for the recordation of the names and addresses of the
Lenders and the Commitment of, and principal amount of the Facility owing to,
each Lender from time to time. The entries in the Register shall be conclusive,
in the absence of manifest error, and the Borrower, the Administrative Agent and
the Lenders shall treat each Person whose name is recorded in the Register as
the owner of the Commitments, Facility and any Notes evidencing such Facility
recorded therein for all purposes of this Agreement. Any assignment of any
Commitment and/or Facility shall be effective only upon appropriate entries with
respect thereto being made in the Register. Any assignment or transfer of all or
part of a Commitment and/or Facility shall be registered on the Register only if
accompanied by a duly executed Assignment and Assumption Agreement. The Register
shall be available for inspection by the Borrower or any Lender (with respect to
any entry relating to such Lender's Commitments and Facility) at any reasonable
time and from time to time upon reasonable prior notice.
11. ILLEGALITY, INCREASED COST, NON-AVAILABILITY, ETC.
--------------------------------------------------
11.1 Illegality. In the event that by reason of any change in any applicable
----------
law, regulation or regulatory requirement or in the interpretation thereof, a
Lender has a basis to conclude that it has become unlawful for any Lender to
maintain or give effect to its obligations as contemplated by this Credit
Agreement, such Lender shall inform the Administrative Agent and the Borrower to
that effect, whereafter the liability of such Lender to make its Commitment
available shall forthwith cease and the Borrower shall be required either to
repay to such Lender that portion of the Facility advanced by such Lender
immediately or, if such Lender so agrees, to repay such portion of the Facility
to such Lender on the last day of any then current Interest Period in accordance
with and subject to the provisions of Section 11.5. In any such event, but
without prejudice to the aforesaid obligations of the Borrower to repay such
portion of the Facility, the Borrower and the relevant Lender shall negotiate in
good faith with a view to agreeing on terms for making such portion of the
Facility available from another jurisdiction or otherwise restructuring such
portion of the Facility on a basis which is not unlawful.
11.2 Increased Costs. If any change in applicable law, regulation or
---------------
regulatory requirement (including any applicable law, regulation or regulatory
requirement which relates to capital adequacy or liquidity controls or which
affects the manner in which any Lender allocates capital resources under this
Credit Agreement), or in the interpretation or application thereof by any
governmental or other authority, shall:
(i) subject any Lender to any Taxes with respect
to its income from the Facility, or any part
thereof, or
(ii) change the basis of taxation to any Lender
of payments of principal or interest or any
other payment due or to become due pursuant
to this Credit Agreement (other than a
change in the basis effected by the
jurisdiction of organization of such Lender,
the jurisdiction of the principal place of
business of such Lender, the United States
of America, the State or City of New York
or any governmental subdivision or other
taxing authority having jurisdiction over
such Lender (unless such jurisdiction is
asserted by reason of the activities of the
Borrower) or such other jurisdiction where
the Facility may be payable), or
(iii) impose, modify or deem applicable any
reserve requirements or require the making
of any special deposits against or in
respect of any assets or liabilities of,
deposits with or for the account of, or
loans by, a Lender, or
(iv) impose on any Lender any other condition
affecting the Facility or any part thereof,
and the result of the foregoing is either to increase the cost to such Lender of
making available or maintaining its Commitment or any part thereof or to reduce
the amount of any payment received by such Lender, then and, in any such case,
if such increase or reduction, in the opinion of such Lender, materially affects
the interests of such Lender under or in connection with this Credit Agreement:
(a) the Lender shall notify the Administrative Agent and the
Borrower of the happening of such event, and
(b) the Borrower agrees forthwith upon demand to pay to such
Lender such amount as such Lender certifies to be necessary to compensate such
Lender for such additional cost or such reduction.
11.3 Nonavailability of Funds. If the Administrative Agent shall determine
------------------------
that, by reason of circumstances affecting the London Interbank Market
generally, adequate and reasonable means do not or will not exist for
ascertaining the Applicable Rate for the Facility for any Interest Period, the
Administrative Agent shall give notice of such determination to the Borrower.
The Majority Lenders shall then determine the interest rate and/or Interest
Period to be substituted for those which would otherwise have applied under this
Credit Agreement. If the Majority Lenders are unable to agree upon such a
substituted interest rate and/or Interest Period within thirty (30) days of the
giving of such determination notice, the Administrative Agent shall set an
interest rate and Interest Period to take effect from the expiration of the
Interest Period in effect at the date of determination, which rate shall be
equal to the Margin plus the cost to the Lenders (as certified by each Lender)
of funding the Facility. In the event the state of affairs referred to in this
Section 11.3 shall extend beyond the end of the Interest Period, the foregoing
procedure shall continue to apply until circumstances are such that the
Applicable Rate may be determined pursuant to Section 6.
11.4 Lender's Certificate Conclusive. A certificate or determination notice
-------------------------------
of any Lender as to any of the matters referred to in this Section 11 shall,
absent manifest error, be conclusive and binding on the Borrower.
11.5 Compensation for Losses. Where the Facility or any portion thereof is
-----------------------
to be repaid by the Borrower pursuant to this Section 11, the Borrower agrees
simultaneously with such repayment to pay to the relevant Lender all accrued
interest to the date of actual payment on the amount repaid and all other sums
then payable by the Borrower to the relevant Lender pursuant to this Credit
Agreement, together with such amounts as may be certified by the relevant Lender
to be necessary to compensate such Lender for any actual loss, premium or
penalties incurred or to be incurred thereby on account of funds borrowed to
make, fund or maintain its Commitment or such portion thereof for the remainder
(if any) of the then current Interest Period or Interest Periods, if any, but
otherwise without penalty or premium.
12. CURRENCY INDEMNITY
------------------
12.1 Currency Conversion. If, for the purpose of obtaining or enforcing a
-------------------
judgment in any court in any country, it becomes necessary to convert into any
other currency (the "judgment currency") an amount due in Dollars under this
Credit Agreement, the Note or any of the Security Documents, then the conversion
shall be made, in the discretion of the Administrative Agent, at the rate of
exchange prevailing either on the date of default or on the day before the day
on which the judgment is given or the order for enforcement is made, as the case
may be (the "conversion date"), provided that the Administrative Agent shall not
be entitled to recover under this section any amount in the judgment currency
which exceeds at the conversion date the amount in Dollars due under this Credit
Agreement, the Note and/or any of the Security Documents.
12.2 Change in Exchange Rate. If there is a change in the rate of exchange
-----------------------
prevailing between the conversion date and the date of actual payment of the
amount due, the Borrower shall pay such additional amounts (if any, but, in any
event, not a lesser amount) as may be necessary to ensure that the amount paid
in the judgment currency, when converted at the rate of exchange prevailing on
the date of payment, will produce the amount then due under this Credit
Agreement, the Note and/or any of the Security Documents in Dollars; any excess
over the amount due received or collected by the Lenders shall be remitted to
the Borrower.
12.3 Additional Debt Due. Any amount due from the Borrower under this
-------------------
Section 12 shall be due as a separate debt and shall not be affected by judgment
being obtained for any other sums due under or in respect of this Credit
Agreement, the Note and/or any of the Security Documents.
12.4 Rate of Exchange. The term "rate of exchange" in this Section 12 means
----------------
the rate at which the Administrative Agent in accordance with its normal
practices is able on the relevant date to purchase Dollars with the judgment
currency and includes any premium and costs of exchange payable in connection
with such purchase.
13. FEES AND EXPENSES
-----------------
13.1 Fees. During the period beginning on the date of this Credit Agreement
----
and ending on the earlier of the Final Payment Date and the date of the
expiration or termination of this Agreement, the Borrower shall pay to the
Administrative Agent (for the account of the Lenders), quarterly in arrears,
with the final payment to be made on the earlier of the Final Payment Date and
the date of the expiration or termination of this Agreement, a commitment fee
(the "Commitment Fee") equal to four tenths of one percent (0.40%) per annum of
the Margin, payable on the difference between the Available Amount and the
average daily amount of the outstanding Advances. The Commitment Fee shall be
calculated on the basis of a 365/6-day year for the actual number of days
(including the first day but excluding the last day) occurring in the period for
which the Commitment Fee is payable. The Borrower shall also pay to the Agents
such fees as the parties have agreed pursuant to the Commitment Letter and the
date of this Agreement shall be deemed the "Closing Date" as such term is used
therein.
13.2 Expenses. The Borrower agrees, whether or not the transactions hereby
--------
contemplated are consummated, on demand to pay, or reimburse the Agents for
their payment of, the expenses of the Agents and (after the occurrence and
during the continuance of an Event of Default) the Lenders incident to said
transactions (and in connection with any supplements, amendments, waivers or
consents relating thereto or incurred in connection with the enforcement or
defense of any of the Agents' and the Lenders' rights or remedies with respect
thereto or in the preservation of the Agent's and the Lenders' priorities under
the documentation executed and delivered in connection therewith), including,
without limitation, all costs and expenses of preparation, negotiation,
execution and administration of this Credit Agreement and the documents referred
to herein, the fees and disbursements of the Agents' and Lenders' counsel in
connection therewith, as well as the fees and expenses of any independent
appraisers, surveyors, engineers, inspectors and other consultants retained by
the Agents in connection with this Agreement and the transactions contemplated
hereby and under the Security Documents that are expressly permitted herein to
be so retained by the Agents, all costs and expenses, if any, in connection with
the enforcement of this Credit Agreement, the Note and the Security Documents
and stamp and other similar taxes, if any, incident to the execution and
delivery of the documents (including, without limitation, the Note) herein
contemplated and to hold the Agents and the Lenders free and harmless in
connection with any liability arising from the nonpayment of any such stamp or
other similar taxes. Such taxes and, if any, interest and penalties related
thereto as may become payable after the date hereof shall be paid immediately by
the Borrower to the Agents or the Lenders, as the case may be, when liability
therefor is no longer contested by such party or parties or reimbursed
immediately by the Borrower to such party or parties after payment thereof (if
the Agents or the Lenders, at their sole discretion, chooses to make such
payment).
14. APPLICABLE LAW, JURISDICTION AND WAIVER
---------------------------------------
14.1 Applicable Law. This Credit Agreement shall be governed by, and
--------------
construed in accordance with, the laws ofthe State of New York.
14.2 Jurisdiction. The Borrower hereby irrevocably submits to the
------------
jurisdiction of the courts of the State of New York and of the United States
District Court for the Southern District of New York in any action or proceeding
brought against it by any of the Lenders or the Agents under this Credit
Agreement or under any document delivered hereunder and hereby irrevocably
agrees that valid service of summons or other legal process on it may be
effected by serving a copy of the summons and other legal process in any such
action or proceeding on the Borrower by mailing or delivering the same by hand
to the Borrower at the address indicated for notices in Section 16.1. The
service, as herein provided, of such summons or other legal process in any such
action or proceeding shall be deemed personal service and accepted by the
Borrower as such, and shall be legal and binding upon the Borrower for all the
purposes of any such action or proceeding. Final judgment (a certified or
exemplified copy of which shall be conclusive evidence of the fact and of the
amount of any indebtedness of the Borrower to the Lenders or the Agent) against
the Borrower in any such legal action or proceeding shall be conclusive and may
be enforced in other jurisdictions by suit on the judgment. The Borrower will
advise the Administrative Agent promptly of any change of address for the
purpose of service of process. Notwithstanding anything herein to the contrary,
the Lenders may bring any legal action or proceeding in any other appropriate
jurisdiction.
14.3 WAIVER OF JURY TRIAL. IT IS MUTUALLY AGREED BY AND AMONG THE BORROWER,
--------------------
THE AGENT AND THE LENDERS THAT EACH OF THEM HEREBY WAIVES TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY PARTY HERETO AGAINST ANY OTHER
PARTY HERETO ON ANY MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED
WITH THIS AGREEMENT, THE NOTE OR THE SECURITY DOCUMENTS.
15. THE AGENTS
----------
15.1 Appointment of Agents. Each of the Lenders irrevocably appoints and
---------------------
authorizes the Agents severally each to take such action as agent on its behalf
and to exercise such powers under this Credit Agreement, the Note and the
Security Documents as are delegated to such Agent by the terms hereof and
thereof. No Agent nor any of their respective directors, officers, employees or
agents shall be liable for any action taken or omitted to be taken by it or them
under this Credit Agreement, the Note or the Security Documents or in connection
therewith, except for its or their own gross negligence or willful misconduct.
15.2 Security Trustee as Trustee. Each of the Lenders irrevocably appoints
---------------------------
the Security Trustee as trustee on its behalf with regard to (i) the security,
powers, rights, titles, benefits and interests (both present and future)
constituted by and conferred on the Lenders or any of them or for the benefit
thereof under or pursuant to this Credit Agreement, the Note or any of the
Security Documents (including, without limitation, the benefit of all covenants,
undertakings, representations, warranties and obligations given, made or
undertaken to any Lender in the Agreement, the Note or any Security Document),
(ii) all moneys, property and other assets paid or transferred to or vested in
any Lender or any agent of any Lender or received or recovered by any Lender or
any agent of any Lender pursuant to, or in connection with, this Credit
Agreement, the Note or the Security Documents whether from the Borrower or any
other person and (iii) all money, investments, property and other assets at any
time representing or deriving from any of the foregoing, including all interest,
income and other sums at any time received or receivable by any Lender or any
agent of any Lender in respect of the same (or any part thereof). The Security
Trustee hereby accepts such appointment.
15.3 Distribution of Payments. Whenever any payment is received by the
------------------------
Administrative Agent from the Borrower for the account of the Lenders, or any of
them, whether of principal or interest on the Note, commissions, fees under
Section 13 or otherwise, it will thereafter cause to be distributed on the same
day if received before 3 p.m. New York time, or on the next day if received
thereafter, like funds relating to such payment ratably to the Lenders according
to their respective Commitments, in each case to be applied according to the
terms of this Credit Agreement.
15.4 Holder of Interest in Note. The Agents may treat each Lender as the
--------------------------
holder of all of the interest of such Lender in the Note.
15.5 No Duty to Examine, Etc. The Agents shall not be under a duty to
------------------------
examine or pass upon the validity, effectiveness or genuineness of any of this
Credit Agreement, the Note, the Security Documents or any instrument, document
or communication furnished pursuant to this Credit Agreement or in connection
therewith or in connection with the Note or any Security Document, and the
Agents shall be entitled to assume that the same are valid, effective and
genuine, have been signed or sent by the proper parties and are what they
purport to be.
15.6 Agents as Lenders. With respect to that portion of the Facility made
-----------------
available by it, each Agent shall have the same rights and powers hereunder as
any other Lender and may exercise the same as though it were not an Agent, and
the term "Lender" or "Lenders" shall include each Agent in its capacity as a
Lender. Each Agent and its affiliates may accept deposits from, lend money to
and generally engage in any kind of business with, the Borrower, as if it were
not an Agent.
15.7 Acts of the Agents. Each Agent shall have duties and reasonable
------------------
discretion, and shall act as follows:
(a) Obligations of the Agents. The obligations of each
-------------------------
Agent under this Credit Agreement, under the Note and under the Security
Documents are only those expressly set forth herein and therein.
(b) No Duty to Investigate. No Agent shall at any time be
----------------------
under any duty to investigate whether an Event of Default, or an event which,
with the giving of notice or lapse of time, or both, would constitute an Event
of Default, has occurred or to investigate the performance of this Credit
Agreement, the Note or any Security Document by the Borrower.
(c) Discretion of the Agents. Each Agent shall be entitled
------------------------
to use its discretion with respect to exercising or refraining from exercising
any rights which may be vested in it by, and with respect to taking or
refraining from taking any action or actions which it may be able to take under
or in respect of, this Credit Agreement, the Note and the Security Documents,
unless the Administrative Agent shall have been instructed by the Majority
Lenders to exercise such rights or to take or refrain from taking such action;
provided, however, that no Agent shall be required to take any action which
- -------- -------
exposes such Agent to personal liability or which is contrary to this Credit
Agreement or applicable law.
(d) Instructions of Majority Lenders. Each Agent shall in
--------------------------------
all cases be fully protected in acting or refraining from acting under this
Credit Agreement, under the Note, or under any Security Document in accordance
with the instructions of the Majority Lenders, and any action taken, or failure
to act pursuant to such instructions, shall be binding on all of the Lenders.
15.8 Certain Amendments. Neither this Credit Agreement, the Note nor any of
------------------
the Security Documents nor any terms hereof or thereof may be amended unless
such amendment is approved by the Borrower and the Majority Lenders, provided
that no such amendment shall, without the written consent of each Lender
affected thereby, (i) reduce the interest rate, amend the definition of Margin
or extend the time of a scheduled payment of principal or interest or fees on
the Facility, or reduce the principal amount of the Facility or any fees
hereunder, (ii) increase or decrease the Commitment of any Lender or subject any
Lender to any additional obligation (it being understood that a waiver of any
Event of Default, other than a payment default, or any mandatory repayment of
Facility shall not constitute a change in the terms of any Commitment of any
Lender), (iii) amend, modify or waive any provision of this Section 15.8,
(iv) amend the definition of Majority Lenders or any other definition referred
to in this Section 15.8, (v) consent to the assignment or transfer by the
Borrower of any of its rights and obligations under this Credit Agreement,
(vi) release the Borrower from any of its obligations under any Security
Document except as expressly provided herein or in such Security Document or
(vii) amend any provision relating to the maintenance of collateral under
Section 9.3(e); provided, further, that approval by all Lenders shall be
required for any amendment or waivers with respect to Section 5.5 of this Credit
Agreement. All amendments approved by the Majority Lenders under this Section
15.8 must be in writing and signed by the Borrower, each of the Lenders
comprising the Majority Lenders and, if applicable, each Lender affected thereby
and any such amendment shall be binding on all the Lenders; provided, however,
-------- -------
that any amendments or waivers with respect to Section 5.5 of this Credit
Agreement must be in writing and signed by the Borrower and all of the Lenders.
15.9 Assumption re Event of Default. Except as otherwise provided in Section
------------------------------
15.15, the Administrative Agent shall be entitled to assume that no Event of
Default, or event which with the giving of notice or lapse of time, or both,
would constitute an Event of Default, has occurred and is continuing, unless the
Administrative Agent has been notified by the Borrower of such fact, or has been
notified by a Lender that such Lender considers that an Event of Default or such
an event (specifying in detail the nature thereof) has occurred and is
continuing. In the event that the Administrative Agent shall have been notified,
in the manner set forth in the preceding sentence, by the Borrower or any Lender
of any Event of Default or of an event which with the giving of notice or lapse
of time, or both, would constitute an Event of Default, the Administrative Agent
shall notify the Lenders and shall take action and assert such rights under this
Credit Agreement, under the Note and under Security Documents as the Majority
Lenders shall request in writing.
15.10 Limitations of Liability. Neither any Agent nor any of the Lenders
------------------------
shall be under any liability or responsibility whatsoever:
(a) to the Borrower or any other person or entity as a
consequence of any failure or delay in performance by, or any breach by, any
other Lenders or any other person of any of its or their obligations under this
Credit Agreement or under any Security Document;
(b) to any Lender or Lenders as a consequence of any
failure or delay in performance by, or any breach by, the Borrower of any of its
respective obligations under this Credit Agreement, under the Note or under
the Security Documents; or
(c) to any Lender or Lenders for any statements,
representations or warranties contained in this Credit Agreement, in any
Security Document or in any document or instrument delivered in connection with
the transaction hereby contemplated; or for the validity, effectiveness,
enforceability or sufficiency of this Credit Agreement, the Note, any Security
Document or any document or instrument delivered in connection with the
transactions hereby contemplated.
15.11 Indemnification of the Agents. The Lenders agree to indemnify each
-----------------------------
Agent (to the extent not reimbursed by the Borrower), pro rata according to the
respective amounts of their Commitments, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever (including
legal fees and expenses incurred in investigating claims and defending itself
against such liabilities) which may be imposed on, incurred by or asserted
against, such Agent in any way relating to or arising out of this Credit
Agreement, the Note or any Security Document, any action taken or omitted by
such Agent thereunder or the preparation, administration, amendment or
enforcement of, or waiver of any provision of, this Credit Agreement, the Note
or any Security Document, except that no Lender shall be liable for any portion
of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from such Agent's
gross negligence or willful misconduct.
15.12 Consultation with Counsel. Each of the Agents may consult with legal
-------------------------
counsel reasonably selected by such Agent and shall not be liable for any action
taken, permitted or omitted by it in good faith in accordance with the advice or
opinion of such counsel.
15.13 Resignation. Any Agent may resign at any time by giving thirty (30)
-----------
days' written notice thereof to the other Agents, the Lenders and the Borrower.
Upon any such resignation, the Lenders shall have the right to appoint a
successor Agent. If no successor Agent shall have been so appointed by the
Lenders and shall have accepted such appointment within thirty (30) days after
the retiring Agent's giving notice of resignation, then the retiring Agent may,
on behalf of the Lenders, appoint a successor Agent which shall be a bank or
trust company of recognized standing. Any resignation by an Agent pursuant to
this Section 15.13 shall be effective only upon the appointment of a successor
Agent. The appointment of any successor Agent shall be subject to the prior
written consent of the Borrower, such consent not to be unreasonably withheld.
After any retiring Agent's resignation as Agent hereunder, the provisions of
this Section 15 shall continue in effect for its benefit with respect to any
actions taken or omitted by it while acting as Agent.
15.14 Representations of Lenders. Each Lender represents and warrants to
--------------------------
each other Lender and each Agent that:
(a) in making its decision to enter into this Credit
Agreement and to make its Commitment available hereunder, it has independently
taken whatever steps it considers necessary to evaluate the financial condition
and affairs of the Borrower, that it has made an independent credit judgment and
that it has not relied upon any statement, representation or warranty by any
other Lender or any Agent; and
(b) so long as any portion of its Commitment remains
outstanding, it will continue to make its own independent evaluation of the
financial condition and affairs of the Borrower.
15.15 Notification of Event of Default. The Administrative Agent hereby
--------------------------------
undertakes to promptly notify the Lenders, and the Lenders hereby promptly
undertake to notify the Administrative Agent and the other Lenders, of the
existence of any Event of Default, which shall have occurred and be continuing,
of which the Administrative Agent or Lender has actual knowledge.
16. NOTICES AND DEMANDS
-------------------
16.1 Notices. All notices, requests, demands and other communications to any
-------
party hereunder shall be in writing (including prepaid overnight courier,
facsimile transmission or similar writing) and shall be given to the Borrower at
the address or facsimile number set forth below and to the Lenders and the
Agents at their address and facsimile numbers set forth in Schedule 1 or at such
other address or facsimile numbers as such party may hereafter specify for the
purpose by notice to each other party hereto. Each such notice, request or other
communication shall be effective (i) if given by facsimile, when such facsimile
is transmitted to the facsimile number specified in this Section 16.1 and
telephonic confirmation of receipt thereof is obtained within such party's
normal business hours on the next occurring Banking Day or (ii) if given by
mail, prepaid overnight courier or any other means, when received at the address
specified in this Section or when delivery at such address is refused.
If to the Borrower:
Matson Navigation Company, Inc.
555 - 12th Street
Oakland, California 94607
Facsimile No.: (510) 628-7330
Attention: Senior Vice President and Chief Financial Officer
17. MISCELLANEOUS
-------------
17.1 Time of Essence. Time is of the essence with respect to the obligations
---------------
of the Borrower under this Credit Agreement but no failure or delay on the part
of any Lender or any Agent to exercise any power or right under this Credit
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise by any Lender or any Agent of any power or right hereunder preclude any
other or further exercise thereof or the exercise of any other power or right.
The remedies provided herein are cumulative and are not exclusive of any
remedies provided by law.
17.2 Unenforceable, etc., Provisions-Effect. In case any one or more of the
--------------------------------------
provisions contained in this Credit Agreement, the Note or in any Security
Document would, if given effect, be invalid, illegal or unenforceable in any
respect under any law applicable in any relevant jurisdiction, said provision
shall not be enforceable against the Borrower, but the validity, legality and
enforceability of the remaining provisions herein or therein contained shall not
in any way be affected or impaired thereby.
17.3 References. References herein to Sections, Exhibits and Schedules are
----------
to be construed as references to sections of, exhibits to, and schedules to,
this Credit Agreement, unless the context otherwise requires.
17.4 Further Assurances. The Borrower agrees that if this Credit Agreement,
------------------
the Note or any Security Document shall, in the reasonable opinion of the
Lenders, at any time be deemed by the Lenders for any reason insufficient in
whole or in part to carry out the true intent and spirit hereof or thereof, it
will execute or cause to be executed such other and further assurances and
documents as in the reasonable opinion of the Lenders may be required in order
to more effectively accomplish the purposes of this Credit Agreement, the Note
or any Security Document.
17.5 Prior Agreements, Merger. Any and all prior understandings and
------------------------
agreements heretofore entered into between the Borrower on the one part, and the
Agents or the Lenders, on the other part, whether written or oral, other than
the Commitment Letter, are superseded by and merged into this Credit Agreement
and the other agreements (the forms of which are exhibited hereto) to be
executed and delivered in connection herewith to which the Borrower, the Agents
and/or the Lenders are parties, which alone fully and completely express the
agreements between the Borrower, the Agents and the Lenders.
17.6 Entire Agreement; Amendments. This Credit Agreement constitutes the
----------------------------
entire agreement of the parties hereto, including all parties added hereto
pursuant to an Assignment and Assumption Agreement. Subject to Section 15.8, any
provision of this Credit Agreement, the Note or any Security Document may be
amended or waived if, but only if, such amendment or waiver is in writing and is
signed by the Borrower, the Agents and the Majority Lenders.
17.7 Counterparts; Execution. This Credit Agreement may be executed in any
-----------------------
number of counterparts, each of which shall be deemed an original, but all such
counterparts together shall constitute one and the same instrument. Delivery of
an executed counterpart of this Credit Agreement by facsimile or electronic
transmission will be deemed as effective as delivery of an originally executed
counterpart. Any party delivering an executed counterpart of this Credit
Agreement by facsimile or electronic transmission shall also deliver an
originally executed counterpart as soon as practicable, but the failure of any
party to deliver an originally executed counterpart of this Credit Agreement
will not affect the validity or effectiveness of this Credit Agreement.
17.8 Indemnification. The Borrower agrees to indemnify each Lender and each
---------------
Agent, their respective successors and assigns, and their respective officers,
directors, employees, representatives and agents (each an "Indemnitee") from,
and hold each of them harmless against, any and all losses, liabilities, claims,
damages, expenses, obligations, penalties, actions, judgments, suits, costs or
disbursements of any kind or nature whatsoever (including, without limitation,
the fees and disbursements of counsel for such Indemnitee in connection with any
investigative, administrative or judicial proceeding commenced or threatened,
whether or not such Indemnitee shall be designated a party thereto) that may at
any time (including, without limitation, at any time following the payment of
the obligations of the Borrower hereunder) be imposed on, asserted against or
incurred by, any Indemnitee as a result of, or arising out of or in any way
related to or by reason of, (a) any violation by the Borrower or any
Environmental Affiliate (or any charterer or other operator of the Vessel) of
any applicable Environmental Law, (b) any Environmental Claim arising out of the
management, use, control, ownership or operation of property or assets by the
Borrower or any Environmental Affiliate (or, after foreclosure, by any Lender or
any Agent or any of their respective successors or assigns), (c) the breach of
any representation, warranty or covenant set forth in Sections 2.1 (p) or
9.1(l), (d) the Facility (including the use of the proceeds of the Facility and
any claim made for any brokerage commission, fee or compensation from any
Person), or (e) the execution, delivery, performance or non-performance of this
Credit Agreement, the Note, any Security Document, or any of the documents
referred to herein or contemplated hereby (whether or not the Indemnitee is a
party thereto); provided, however, that no such indemnity obligation shall be
effective if any such loss, liability, claim, damage, expense, obligation,
penalty, action, judgment, suit, cost or disbursement is the result of the gross
negligence of willful misconduct of any Agent or Lender. If and to the extent
that the obligations of the Borrower under this Section are unenforceable for
any reason, the Borrower agrees to make the maximum contribution to the payment
and satisfaction of such obligations which is permissible under applicable law.
The obligations of the Borrower under this Section 17.7 shall survive the
termination of this Credit Agreement and the repayment to the Lenders of all
amounts owing thereto under or in connection herewith.
17.9 Headings. In this Credit Agreement, section headings are inserted for
--------
convenience of reference only and shall not be taken into account in the
interpretation of this Credit Agreement.
17.10 WAIVER OF IMMUNITY. TO THE EXTENT THAT THE BORROWER HAS OR HEREAFTER
------------------
MAY ACQUIRE ANY IMMUNITY FROM SUIT, JURISDICTION OF ANY COURT OR ANY LEGAL P
ROCESS (WHETHER THROUGH ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF
EXECUTION, EXECUTION OF A JUDGMENT, OR FROM ANY OTHER LEGAL PROCESS OR REMEDY)
WITH RESPECT TO ITSELF OR ITS PROPERTY, THE BORROWER HEREBY IRREVOCABLY WAIVES
SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS CREDIT AGREEMENT AND THE
OTHER SECURITY DOCUMENTS.
IN WITNESS whereof, the parties hereto have caused this Credit Agreement to be
duly executed by their duly authorized representatives as of the day and year
first above written.
MATSON NAVIGATION COMPANY, INC.
By: /s/ M. J. Cox
----------------------------------
Name: M. J. Cox
Title: Sr. VP and CFO
DnB NOR BANK ASA, acting through its New
York Branch, as Administrative Agent and
Security Trustee
By: /s/ Sanjiv Nayar
----------------------------------
Name: Sanjiv Nayar
Title: Senior Vice President
By: /s/ Nikolai A. Nachamkin
----------------------------------
Name: Nikolai A. Nachamkin
Title: Senior Vice President
The Lenders:
DnB NOR BANK ASA,
acting through its New York Branch
By: /s/ Sanjiv Nayar
----------------------------------
Name: Sanjiv Nayar
Title: Senior Vice President
By: /s/ Nikolai A. Nachamkin
----------------------------------
Name: Nikolai A. Nachamkin
Title: Senior Vice President
ING BANK N.V.
By: /s/ H. L. Baker
----------------------------------
Name: H. L. Baker
Title: Director
By: /s/ Rory Hussey
----------------------------------
Name: Rory Hussey
Title: Managing Director
Schedule 1
Lenders Commitment
DnB NOR Bank ASA $67,500,000
New York Branch
200 Park Avenue
New York, New York 10166-0396
Facsimile No.: 212 681 3900
Telephone No.: 212 681 3858
Email: Erlend.Bryn@dnbnor.no
Attention: Mr. Erlend Bryn
ING Bank N.V. $37,500,000
60 London Wall
London EC2M 5TQ
United Kingdom
Facsimile No.: +44 20 7767 1880
Telephone No.: +44 20 7767 7252
Email: david.rolls@uk.ing.com
Attention: David Rolls
Schedule 2
Disclosure
1. INDEBTEDNESS - For Purposes of Section 4.2 (g):
----------------------------------------------
(a) Amended and Restated Note Agreement between Matson Navigation
Company, Inc. and The Prudential Insurance Company of America,
dated as of May 19, 2005:
$15,000,000 Series A Senior Secured Notes Due August 19, 2010
$105,000,000 Series B Senior Secured Notes Due May 19, 2020
2. LIENS - For Purposes of Sections 2.1(s) and 9.2(a)(x):
-----------------------------------------------------
(a) First Preferred Ship Mortgage on the MV MANUKAI, Official
Number 1141163, dated as of September 5, 2003 ($55,000,000);
(b) First Preferred Ship Mortgage on the MV MAUNAWILI, Official
Number 1153166, dated as of July 30, 2004 ($55,000,000); and
(c) First Preferred Ship Mortgage on the MV MANULANI, Official
Number 1168529, dated as of May 19, 2005 ($120,000,000).
Schedule 3
Approved Ship Brokers
Clarkson's
Fearnleys
Platou
Braemar
Simpson, Spence & Young
Bassoe
Mallory, Jones, Lynch Flynn & Associates
Jacq. Pierot Jr. & Sons, Inc.
Compass Maritime Services LLC
Barry Rogliano Salles
EXHIBIT A
PROMISSORY NOTE
U.S.$105,000,000.00 ____________, 200_
New York, New York
FOR VALUE RECEIVED, MATSON NAVIGATION COMPANY, INC., a
corporation incorporated under the laws of the State of Hawaii, with offices at
555 12th Street, Oakland, California 94607 (the "Borrower"), hereby promises to
pay to the order of DnB NOR BANK ASA, a Norwegian banking company acting through
its New York Branch, as administrative agent (in such capacity, the
"Administrative Agent") for the Lenders, at its office at 200 Park Avenue, 31st
Floor, New York, New York 10166, or as it may otherwise direct, the principal
sum of One Hundred Five Million United States Dollars (U.S. $105,000,000.00) or,
if less, the aggregate unpaid principal amount of the Advances from time to time
outstanding made available by the Lenders to the Borrower pursuant to the Credit
Agreement dated as of the _____ day of _______, 2005 (the "Credit Agreement") by
and among (i) the Borrower, (ii) the banks and financial institutions listed on
Schedule 1 thereto, as lenders (the "Lenders"), and (iii) DnB NOR Bank ASA,
acting through its New York Branch, as security trustee and as administrative
agent for the Lenders. The Borrower shall repay the indebtedness represented by
this Note as provided in Section 5 of the Credit Agreement. This Note may be
prepaid on such terms as provided in the Credit Agreement.
Words and expressions used herein (including those in the
foregoing paragraph) and defined in the Credit Agreement shall have the same
meaning herein as therein defined.
The Borrower shall also pay interest on the Advances from the
date of drawdown until payment in full at the rates determined from time to time
in accordance with Section 6 of the Credit Agreement, which provisions are
incorporated herein with full force and effect as if they were fully set forth
herein. Any principal payment not paid when due, whether on an installment
payment date or by acceleration, shall bear interest thereafter at the Default
Rate. All interest shall accrue and be calculated on the actual number of days
elapsed and on the basis of a 360-day year.
Both principal and interest are payable in Dollars to the
Administrative Agent, for the account of the Lenders, as the Administrative
Agent may direct, in immediately available same day funds.
The Administrative Agent shall endorse the amount and the date
of the making of the Advances and any prepayment or payment of principal
hereunder on the grid annexed hereto and made a part hereof, which endorsement
shall constitute prima facie evidence of the accuracy of the information so
----- -----
endorsed; provided, however, that any failure to endorse such information on
-------- -------
such grid shall not in any manner affect the obligation of the Borrower to make
payment of principal and interest in accordance with the terms of the Credit
Agreement and this Note.
If this Note or any payment required to be made hereunder
becomes due and payable on a day which is not a Banking Day, the due date
thereof shall be extended until the next following Banking Day and interest
shall be payable during such extension at the rate applicable immediately prior
thereto, unless such next following Banking Day falls in the following calendar
month, in which case the due date thereof shall be adjusted to the immediately
preceding Banking Day and interest payable on such due date shall reflect the
actual number of days in the interest period ending on such preceding Banking
Day.
This Note is the Note referred to in the Credit Agreement and
is entitled to the security and benefits therein provided, including, but not
limited to, such security as provided in the Security Documents, as defined in
the Credit Agreement. Upon the occurrence of any Event of Default under Section
8 of the Credit Agreement, the principal hereof and accrued interest hereon may
be declared to be (or, with respect to certain Events of Default, automatically
shall become) immediately due and payable.
In the event that any holder of this Note shall institute any
action for the enforcement or the collection of this Note, there shall be
immediately due and payable, in addition to the unpaid balance hereof, all late
charges and all costs and expenses of such action, including reasonable
attorneys' fees.
The Borrower hereby waives presentment, protest, demand for
payment, diligence, notice of dishonor and of nonpayment, and any and all other
notices or demands in connection with the delivery, acceptance, performance,
default or enforcement of this Note, hereby waives and renounces all rights to
the benefits of any statute of limitations and any moratorium, appraisement,
exemption and homestead now provided or which may hereafter be provided by any
federal or state statute, including, without limitation, exemptions provided by
any federal or state statute, including, without limitation, exemptions provided
by or allowed under any federal or state bankruptcy or insolvency laws, both as
to itself and as to all of its property, whether real or personal, against the
enforcement and collection of the obligations evidenced by this Note and any and
all extensions, renewals and modifications hereof and hereby consents to any
extensions of time, renewals, releases of any party to this Note, waiver or
modification that may be granted or consented to by the holder of this Note.
The Borrower agrees that its liabilities hereunder are
absolute and unconditional without regard to the liability of any other party
and that no delay on the part of the holder hereof in exercising any power or
right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any power or right hereunder preclude other or further
exercise thereof or the exercise of any other power or right.
If at any time this transaction would be usurious under
applicable law, then regardless of any provision contained in the Credit
Agreement or this Note or any other agreement made in connection with this
transaction, it is agreed that (a) the total of all consideration which
constitutes interest under applicable law that is contracted for, charged or
received upon the Credit Agreement, this Note or any other agreement shall under
no circumstances exceed the maximum rate of interest authorized by applicable
law, if any, and any excess shall be credited to the Borrower and (b) if the
Administrative Agent elects to accelerate the maturity of, or if the Borrower
prepays the indebtedness described in this Note, any amounts which because of
such action would constitute interest may never include more than the maximum
rate of interest authorized by applicable law and any excess interest, if any,
provided for in the Credit Agreement, in this Note or otherwise, shall be
credited to the Borrower automatically as of the date of acceleration or
prepayment.
THE UNDERSIGNED, AND THE LENDER BY ITS ACCEPTANCE HEREOF, EACH
HEREBY WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING IN
RESPECT OF ANY MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH
THIS NOTE.
This Note shall be governed by and construed in accordance
with the laws of the State of New York.
IN WITNESS WHEREOF, the Borrower has executed and delivered
this Note on the date and year first above written.
MATSON NAVIGATION COMPANY, INC.
By: _______________________________
Name:
Title:
ADVANCES
--------
PAYMENTS OF PRINCIPAL
---------------------
Date Amount of Advance Amount of Principal Unpaid Principal Notation
Paid or Prepaid Balance Made By
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EXHIBIT B
==========================================================================
FIRST PREFERRED SHIP MORTGAGE
on the
UNITED STATES FLAG VESSEL
MAUNALEI
OFFICIAL NUMBER [__________]
MATSON NAVIGATION COMPANY, INC.,
as Owner
to
DnB NOR BANK ASA,
acting through its New York Branch,
as Security Trustee for the Lenders,
as Mortgagee
Dated as of _________, 2006
================================================================================
SYNOPSIS OF FIRST PREFERRED SHIP MORTGAGE
Name of Vessel: MAUNALEI
Official Number of Vessel: __________
Type of Instrument: First Preferred Ship Mortgage
Date of Instrument: __________, 2006
Name of Owner: Matson Navigation Company, Inc.
Percentage of Vessel Owned: 100%
Address of Owner: 555 - 12th Street, 8th Floor
Oakland, California 94607
Name of Mortgagee: DnB NOR Bank ASA
Address of Mortgagee: 200 Park Avenue, 31st Floor
New York, New York 10166
Total Amount of Mortgage: One Hundred Five Million United States
Dollars (US$105,000,000) (exclusive of
interest, expenses and fees)
FIRST PREFERRED SHIP MORTGAGE
-----------------------------
THIS FIRST PREFERRED SHIP MORTGAGE is made and given this
_____ day of _____, 2006 by MATSON NAVIGATION COMPANY, INC., a Hawaii
corporation, with offices at 555 - 12th Street, 8th Floor, Oakland, California
94607 (the "Owner") in favor of DnB NOR BANK ASA, acting through its New York
-----
Branch, a bank incorporated under the laws of the Kingdom of Norway with offices
at 200 Park Avenue, 31st Floor, New York, New York 10166, as security trustee
for the Lenders (as such term is defined in Recital B below) (the "Mortgagee").
---------
WHEREAS:
A. The Owner is the sole owner of the whole of the vessel
MAUNALEI, Official Number ____________, of _________ gross tons, _________ net
tons, built in Philadelphia, Pennsylvania (the "Vessel"), and registered and
------
documented in the name of the Owner under the laws and flag of the United States
of America at the National Vessel Documentation Center.
B. By a Credit Agreement dated as of June 28, 2005 (the
"Credit Agreement", a conformed copy of the form of which without schedules or
----------------
exhibits is annexed hereto as Exhibit 1), made by and between (i) the Owner, as
---------
Borrower, (ii) the banks and financial institutions listed on Schedule 1
thereto, as lenders (the "Lenders"), and (iii) DnB NOR Bank ASA, acting through
-------
its New York Branch, as security trustee (in such capacity, the "Security
--------
Trustee") and as administrative agent (in such capacity, the "Administrative
- ------- --------------
Agent") for the Lenders, the Security Trustee has agreed to serve in such
- -----
capacity under the Credit Agreement and the Lenders have agreed to provide to
the Borrower a senior secured reducing revolving credit facility in the maximum
principal amount of ONE HUNDRED FIVE MILLION UNITED STATES DOLLARS
(U.S.$105,000,000) (the "Facility"). The obligation of the Owner to repay the
--------
Facility under the Credit Agreement being evidenced by a promissory note dated
the date hereof from the Owner to the order of the Administrative Agent (the
"Note"), a copy of the form of the Note being attached hereto as Exhibit 2.
---- ---------
The Facility, and interest, fees and commissions thereon are to be repaid or
paid, as the case may be, as provided in the Credit Agreement.
C. The Owner, in order to secure the payment of the
Obligations, as that term is defined in subsection 1(A)(iv) hereof, and to
secure the performance and observance of and compliance with all the covenants,
terms and conditions in the Credit Agreement and in this Mortgage contained to
be performed, observed and complied with by and on the part of the Owner, has
duly authorized the execution and delivery of this Mortgage under and pursuant
to the United States Ship Mortgage Act, 1920, as amended, inter alia, by Public
----- ----
Law 100-710 (46 USC Section 30101 et seq.) (the "Ship Mortgage Act").
-- ----
NOW, THEREFORE, THIS MORTGAGE WITNESSETH:
1. Definitions: In this Mortgage, unless the context
-----------
otherwise requires:
(A) (i) "Classification Society" means American Bureau of
----------------------
Shipping, Germanischer Lloyd, Lloyd's Register, Det
Norske Veritas or any member of the International
Association of Classification Societies with whom the
Vessel is entered and who conducts periodic physical
surveys and/or inspections of the Vessel;
(ii) "Earnings" includes all freight, hire and passage
--------
moneys, compensation payable in event of requisition
of the Vessel for hire, remuneration for salvage and
towage services, demurrage and detention moneys and
any other earnings whatsoever payable and belonging
to the Owner due or to become due in respect of the
Vessel at any time during the Security Period;
(iii) "Insurances" includes all policies and contracts of
----------
insurance and all entries of the Vessel in a
protection and indemnity or war risks association or
club which are from time to time taken out or
entered into pursuant to this Mortgage in respect of
the Vessel and its Earnings or otherwise howsoever
in connection with the Vessel;
(iv) "Obligations" means the obligations of the Owner
-----------
under or in connection with the Credit Agreement,
the Note, this Mortgage, any other Security Document
and any Interest Rate Agreement, including but not
limited to the obligations to repay the Facility
when due;
(v) "Person" means an individual, corporation, limited
------
partnership, general partnership, syndicate, joint
venture, association, trust, unincorporated
organization, trustee or other legal representative;
(vi) "Requisition Compensation" means all moneys or other
------------------------
compensation payable and belonging to the Owner
during the Security Period by reason of requisition
for title or other compulsory acquisition of the
Vessel or otherwise than by requisition for hire;
(vii) "Security Documents" when used herein shall have the
------------------
same meaning as in the Credit Agreement;
(viii) "Security Period" means the period commencing on the
---------------
date hereof and terminating upon discharge of the
security created by this Mortgage by payment in full
of the Obligations;
(ix) "Total Loss" means:
----------
(a) actual, constructive or compromised or
arranged total loss of the Vessel;
(b) requisition for title or other compulsory
acquisition of the Vessel (otherwise than by
requisition for hire) which shall continue
for thirty (30) days; or
(c) capture, seizure, arrest, detention or
confiscation of the Vessel by any government
or by Persons acting or purporting to act on
behalf of any government unless the Vessel
be released and restored to the Owner from
such capture, seizure, arrest, detention or
confiscation within thirty (30) days after
the occurrence thereof; and
(x) "Vessel" means the whole of the vessel described in
------
Recital A hereof and includes its engines, machinery,
boats, boilers, masts, rigging, anchors, chains, cables,
apparel, tackle, outfit, spare gear, fuel, consumable
or other stores, freights, belongings and
appurtenances, whether on board or ashore, whether
now owned or hereafter acquired, and all additions,
improvements and replacements hereafter made in or to
said vessel, or any part thereof, or in or to the
stores, belongings and appurtenances aforesaid except
such equipment or stores which, when placed aboard
said vessel, do not become the property of the Owner.
(B) In Section 5(B) hereof:
(i) "excess risks" means the proportion of claims for
------------
general average and salvage charges and under the
ordinary running-down clause not recoverable in
consequence of the value at which a vessel is
assessed for the purpose of such claims exceeding her
insured value;
(ii) "protection and indemnity risks" means the usual
------------------------------
risks covered by a United States or an English or
another protection and indemnity association or club
acceptable to the Mortgagee including the proportion
not recoverable in case of collision under the
ordinary running-down clause; and
(iii) "war risks" means the risk of mines and all risks
---------
excluded from the standard form of United States
marine policy by the War, Strikes and Related
Exclusion Clause.
(C) Unless otherwise defined herein, terms defined in the Credit
Agreement shall have the same meaning when used herein.
(D) This Mortgage shall be read together with the Credit Agreement but
in case of any conflict between the two, the provisions of the Credit Agreement
shall prevail.
2. Grant of Mortgage; Representations and Warranties.
-------------------------------------------------
2.1 In consideration of the premises and of other good and
valuable consideration, the receipt and adequacy whereof are hereby
acknowledged, and in order to secure the payment of the Obligations and to
secure the performance and observance of and compliance with the covenants,
terms and conditions in the Credit Agreement, the Note, this Mortgage and the
other Security Documents contained, the Owner has granted, conveyed and
mortgaged and does by these presents grant, convey and mortgage to and in favor
of the Mortgagee, its successors and assigns, the whole of the Vessel TO HAVE
-- ----
AND TO HOLD the same unto the Mortgagee, its successors and assigns, forever,
- --- -- ----
upon the terms set forth in this Mortgage for the enforcement of the payment of
the Obligations and to secure the performance and observance of and compliance
with the covenants, terms and conditions in this Mortgage, the Credit Agreement,
the Note and the other Security Documents contained;
PROVIDED, ONLY, and the conditions of these presents are such
that, if the Owner and/or its successors or assigns shall pay or cause to be
paid to the Lender, its respective successors and assigns, the Obligations as
and when the same shall become due and payable in accordance with the terms of
this Mortgage, the Credit Agreement, the Note and the other Security Documents
and shall perform, observe and comply with all and singular of the covenants,
terms and conditions in this Mortgage, the Credit Agreement, the Note and the
other Security Documents contained to be performed, observed or complied with by
and on the part of the Owner or its successors or assigns, all without delay or
fraud and according to the true intent and meaning hereof and thereof, then,
these presents and the rights of the Mortgagee under this Mortgage shall cease
and determine and, in such event, the Mortgagee agrees by accepting this
Mortgage, at the expense of the Owner, to execute all such documents as the
Owner may reasonably require to discharge this Mortgage under the laws of the
United States of America; otherwise to be and remain in full force and effect.
2.2 The Owner hereby represents and warrants to the Mortgagee
that on the date hereof:
(A) the Owner is a corporation duly organized, validly
existing and in good standing under the laws of the State of Hawaii qualified to
own and register the Vessel under the United States flag and to operate the
Vessel in the coastwise trade of the United States of America;
(B) the Owner lawfully owns the whole of the Vessel free from
any security interest, debt, lien, mortgage, charge, encumbrance or other
adverse interest, other than the encumbrance of this Mortgage and except as
permitted by Section 5(N) hereof; and
(C) the Vessel is tight, staunch and strong and well and
sufficiently tackled, appareled, furnished and equipped and in all respects
seaworthy.
3. Payment of Obligations. The Owner hereby further covenants
----------------------
and agrees to pay the Obligations when due to the Mortgagee or its successors or
assigns; provided that the recourse of the Mortgagee hereunder shall be limited
to the Vessel, the proceeds of the sale of the Vessel whether pursuant to this
Mortgage or otherwise and any moneys received by the Mortgagee pursuant to any
of the Security Documents.
4. Covenants Regarding Security Granted Hereunder. It is
----------------------------------------------
declared and agreed that:
(A) The security created by this Mortgage shall be held by the
Mortgagee as a continuing security for the payment of the Obligations and that
the security so created shall not be satisfied by any intermediate payment or
satisfaction of any part of the amount hereby secured.
(B) Any settlement or discharge under this Mortgage between
the Mortgagee and the Owner shall be conditional upon no security or payment to
the Mortgagee or the Lenders, related to or which reduces the obligations
secured hereby, by the Owner or any other Person being avoided or set-aside or
ordered to be refunded or reduced by virtue of any provision or enactment
relating to bankruptcy, insolvency or liquidation for the time being in force,
and if such condition is not satisfied, the Mortgagee shall be entitled to
recover from the Owner on demand the value of such security or the amount of any
such payment as if such settlement or discharge had not occurred.
(C) The rights of the Mortgagee under this Mortgage and the
security hereby constituted shall not be affected by any act, omission, matter
or thing which, but for this provision, might operate to impair, affect or
discharge such rights and security, including without limitation, and whether or
not known to or discoverable by the Owner, the Mortgagee or any other Person:
(i) any time or waiver granted to, or
composition with, the Owner or any other
Person; or
(ii) the taking, variation, compromise, renewal
or release of or refusal or neglect to
perfect or enforce any rights, remedies or
securities against the Owner or any other
Person; or
(iii) any legal limitation, disability,
dissolution, incapacity or other
circumstances relating to the Owner or any
other Person; or
(iv) any amendment or supplement to the Credit
Agreement, the Note or any of the Security
Documents; or
(v) the unenforceability, invalidity or
frustration of any obligations of the Owner
or any other Person under the Credit
Agreement, the Note or any of the Security
Documents.
(D) The Owner acknowledges and agrees that it has not received
any security from any Person for the granting of this Mortgage and it will not
take any such security without the prior written consent of the Mortgagee, and
the Owner will hold any security taken in breach of this provision in trust for
the Mortgagee.
(E) Until the Obligations have been unconditionally and
irrevocably paid and discharged in full to the satisfaction of the Mortgagee,
the Owner shall not by virtue of any payment made under the Credit Agreement,
the Note or this Mortgage on account of such moneys and liabilities or by virtue
of any enforcement by the Mortgagee of its right under or the security
constituted by this Mortgage:
(i) be entitled to exercise any right of
contribution from any co-surety liable in
respect of such moneys and liabilities under
any other guarantee, security or agreement;
or
(ii) exercise any right of set-off or
counterclaim against any such co-surety; or
(iii) receive, claim or have the benefit of any
payment, distribution, security or indemnity
from any such co-surety; or
(iv) unless so directed by the Mortgagee (which
the Owner shall prove in accordance with
such directions), claim as a creditor of any
such co-surety in competition with the
Mortgagee.
The Owner shall hold in trust for the Mortgagee and forthwith
pay or transfer (as appropriate) to the Mortgagee any such payment (including an
amount equal to any such set-off), distribution or benefit of such security,
indemnity or claim in fact received by it.
(F) The Owner hereby irrevocably subordinates all of its
rights of subrogation (whether contractual, statutory, under common law or
otherwise) to the claims of the Mortgagee against any Person and all
contractual, statutory or common law rights of contribution, reimbursement,
indemnification and similar rights and claims against any Person which
arise in connection with, or as a result of, the Credit Agreement or this
Mortgage until full and final payment of all of the Obligations.
5. Affirmative Covenants and Insurances. The Owner further
------------------------------------
covenants with the Mortgagee and undertakes at all times throughout the Security
Period:
(A) to comply with and satisfy all the requisites and
formalities established by the laws of the State of Hawaii in respect of its
legal existence and good standing and to maintain its status as a citizen of
the United States, within the meaning of Section 2 of the United States
Shipping Act, 1916, as amended (the "Shipping Act"), eligible to own and operate
------------
the Vessel in the coastwise trade of the United States, and to give evidence in
respect of the foregoing to the Mortgagee;
(B) (i) to insure and keep the Vessel insured or cause or
procure the Vessel to be insured and to be kept insured at no expense to the
Mortgagee (or, with regard to the insurance cover described in (d) below,
to reimburse the Mortgagee therefor) in regard to:
(a) all risks hull and machinery (including excess
risks);
(b) war risks (including war protection and indemnity
liability) covering, inter alia, the perils of
confiscation, expropriation, nationalization, seizure
and blocking; and
(c) protection and indemnity risks (including pollution risks)
(ii) with respect to the Vessel, to effect the Insurances
aforesaid or to cause or procure the same to be effected:
(a) in the cases of the Insurances referred to in
subsections (i) (a) and (b) above, (x) in such
amounts as shall be at least equivalent to One
Hundred Twenty Percent (120%) of the Available Amount
of the Facility, and all such insurance shall be
payable in lawful money of the United States of
America, and (y) upon such terms (including
provisions as to named insureds and loss payees and
prior notice of cancellation) and with such
deductibles as shall from time to time be approved by
the Mortgagee;
(b) in the case of the protection and indemnity
Insurances referred to in subsection (i)(c) above
payable in lawful money of the United States of
America, to the full extent commercially available
and to include provisions as to loss payees and prior
notice of cancellation in form and substance
satisfactory to the Mortgagee; and
(c) with first class insurance companies, underwriters
and protection and indemnity associations or clubs as
shall from time to time be approved by the Mortgagee
(hereinafter called "the Insurers");
------------
(iii) to renew all such Insurances or cause or procure the
same to be renewed before the relevant policies or contracts expire and to
procure that the Insurers or the firm of insurance brokers referred to herein
below shall promptly confirm in writing to the Mortgagee as and when each such
renewal is effected;
(iv) to procure concurrently with the execution hereof and
thereafter at intervals of not more than twelve (12) calendar months, a detailed
report from a firm of independent marine insurance brokers, appointed by the
Owner and acceptable to the Mortgagee, with respect to the Insurances together
with their opinion to the Mortgagee that the Insurances comply with the
provisions of this Section 5(B), such report and opinion to be addressed and
delivered promptly to the Mortgagee and the costs of such report and opinion to
be for the account of the Owner;
(v) to cause the said independent marine insurance brokers or
the Insurers to agree to use reasonable efforts to advise the Mortgagee promptly
of any failure to renew any of the Insurances and of any default in payment of
any premium and of any other act or omission on the part of the Owner of which
they have knowledge and which might, in their opinion, invalidate or render
unenforceable, or cause the lapse of or prevent the renewal or extension of,
in whole or in part, any Insurances on the Vessel;
(vi) to cause the said independent marine insurance brokers to
agree to mark their records and to use their best efforts to advise the
Mortgagee, at least fourteen (14) days prior to the expiration date of any of
the Insurances, that such Insurances have been renewed or replaced with new
insurance which complies with the provisions of this Section 5(B);
(vii) duly and punctually to pay or to cause duly and
punctually to be paid all premiums, calls, contributions or other sums payable
in respect of all such Insurances, to produce or to cause to be produced all
relevant receipts when so required by the Mortgagee and duly and punctually to
perform and observe or to cause duly and punctually to be performed and observed
any other obligations and conditions under all such Insurances;
(viii) to execute or use reasonable efforts to cause to be
executed such guarantees as may from time to time be required by any relevant
protection and indemnity association or club;
(ix) to procure that all policies, binders, cover notes or
other instruments of the Insurances referred to in subsections (i)(a) and
(b) above shall be taken out in the name of the Owner, with the Mortgagee as an
additional assured (without liability for premiums), as its or their respective
interests may appear, and shall incorporate a loss payable clause naming the
Mortgagee as loss payee prepared in compliance with the terms of this Mortgage
and such loss payable clause to be in any event in form and substance acceptable
to the Mortgagee and all policies, binders, cover notes or other instruments
referred to in subsection (i) shall provide (a) for prior notice of at least
fourteen (14) days (seven (7) days with respect to war risks) to be given to
the Mortgagee before cancellation of insurance for any reason whatsoever and
for a waiver of liability for payment of premiums as to the Mortgagee; provided,
--------
however, that unless otherwise required by the Mortgagee by notice to the
- -------
underwriters, although all losses under such Insurances are payable to the
Mortgagee, in case of any such losses involving any damage to any Vessel the
underwriters may pay direct for the repair, salvage and other charges involved
or, if the Owner shall have first fully repaired the damage or paid all of the
salvage and other charges may pay the Owner as reimbursement therefor, provided,
--------
further, however, that if such damage involves a loss in excess of
- ------- -------
U.S.$2,500,000, or its equivalent, the underwriters shall not make such payment
without first obtaining the written consent thereto of the Mortgagee and (b) in
the event that the Vessel shall be insured under any form of fleet cover,
undertakings that the brokers, underwriters, association or club (as the case
may be) will not set off claims relating to the Vessel against premiums, calls
or contributions in respect of any other vessel or other insurance and that the
insurance cover of the Vessel will not be cancelled by reason of non-payment of
premiums, calls or contributions relating to any other vessel or other
insurance;
(x) to procure that all entries, policies, binders, cover
notes or other instruments of the Insurances referred to in subsection (i)(c)
above incorporate a loss payable clause naming the Mortgagee as loss payee
prepared in compliance with the terms of this Mortgage and such loss payable
clause to be in any event in form and substance acceptable to the Mortgagee and
shall provide for prior notice of at least fourteen (14) days to be given to the
Mortgagee before cancellation of insurance for any reason whatsoever and for a
waiver of liability for payment of premiums, backcalls and assessments as to the
Mortgagee, it being agreed that although such insurance is payable to the
Mortgagee so long as no Event of Default has occurred and is continuing under
this Mortgage, any loss payments under any such insurance on the Vessel may be
paid directly to the Owner to reimburse it for any loss, damage or expenses
incurred by it and covered by such insurance or to the Person to whom any
liability covered by such insurance has been incurred;
(xi) to procure that originals or photocopies of all such
instruments of Insurances as are referred to in subsections (ix) and (x) above
shall be from time to time deposited with the Mortgagee after receipt by the
Owner thereof and that the Insurers shall, if so requested by the Mortgagee,
furnish the Mortgagee with a letter or letters of undertaking in such form
as may be reasonably required by the Mortgagee in respect of such Insurances;
(xii) not to change any terms of any Insurances or suffer
them to be changed, or change underwriters of any Insurances or suffer them to
be changed in a manner that would be inconsistent with the provisions of
this Mortgage, without the Mortgagee's prior written approval;
(xiii) not to employ the Vessel or suffer the Vessel to be
employed otherwise than in conformity with the terms of all policies, binders,
cover notes or other instruments of the Insurances (including any warranties
express or implied therein) without first obtaining the written consent of the
Insurers to such employment (if required by such Insurers) and complying with
such requirements as to extra premiums or otherwise as the Mortgagee and/or the
Insurers may prescribe; and
(xiv) to do all things necessary and proper, and execute
and deliver all documents and instruments to enable the Mortgagee to collect or
recover any moneys to become due the Mortgagee in respect of the Insurances.
(C) To keep and to cause the Vessel to be kept in a good
and efficient state of repair so as to enable her to maintain her present class
with its Classification Society and so as to enable her to qualify to navigate
the routes presently permitted under, and subject to the existing conditions as
are set forth in, the current United States Coast Guard Certificates of
Inspection covering the Vessel and so as to comply with the provisions of such
Certification of Inspection, as well as all laws, regulations and other
requirements (statutory or otherwise) from time to time applicable to a similar
vessel of her age, type and trade registered under the flag of the United
States of America, and to procure that all repairs to or replacements of any
damaged, worn or lost parts or equipment be effected in such manner (both as
regards workmanship and quality of materials) as not to diminish the value of
the Vessel;
(D) To submit or to cause the Vessel to be submitted on a
timely basis to such periodic or other surveys as may be required for
classification purposes and, if requested by the Mortgagee, to supply or to
cause to be supplied to the Mortgagee copies of all survey and inspection
reports and confirmations of class issued in respect thereof;
(E) To permit the Mortgagee, by surveyors or other Persons
appointed by it in its behalf, to board the Vessel at a reasonable time during
each calendar year or, during the continuance of an Event of Default, at all
reasonable times during each calendar year for the purpose of inspecting her
condition or for the purpose of satisfying themselves in regard to proposed or
executed repairs and to afford or to cause to be afforded all proper facilities
for such inspections, provided that such inspections will cause no undue delay
to the Vessel;
(F) (i) To pay and discharge or to cause to be paid and
discharged all debts, damages and liabilities whatsoever which have given or may
give rise to maritime or possessory liens on or claims enforceable against the
Vessel except to the extent permitted by Section 5(N) hereof, and (ii) in event
of arrest of the Vessel pursuant to legal process or in event of her detention
in exercise or purported exercise of any such lien as aforesaid to procure the
release of the Vessel from such arrest or detention within fifteen (15) days of
receiving notice thereof by providing bail or otherwise as the circumstances may
require;
(G) Not to knowingly employ the Vessel or suffer her
employment in any trade or business which is forbidden by the laws of the United
States of America or is otherwise illicit or in carrying illicit or prohibited
goods or in any manner whatsoever which may render her liable to condemnation in
a Prize Court or to destruction, seizure or confiscation and in event of
hostilities in any part of the world (whether war be declared or not), not to
knowingly employ the Vessel or suffer her employment in carrying any contraband
goods or to enter or trade to any zone which is declared a war zone by any
government or by the Vessel's War Risks Insurers unless the required extra war
risk insurance cover has been obtained for the Vessel;
(H) Upon the occurrence and during the continuation of a
Event of Default, promptly to furnish or to use its best efforts to cause
promptly to be furnished to the Mortgagee all such information as the Mortgagee
may from time to time reasonably request regarding the Vessel, her employment,
position and engagements, particulars of all towages and salvages and copies of
all charters and other contracts for her employment or otherwise howsoever
pertaining to the Vessel;
(I) Promptly after learning of the same to notify or cause to
be notified the Mortgagee forthwith in writing of:
(i) any accident to the Vessel involving repairs the cost
whereof will or is likely to exceed U.S.$2,500,000
(or the equivalent in any other currency);
(ii) any occurrence in consequence whereof the Vessel has
become or is likely to become a Total Loss;
(iii) any material requirement or recommendation made by
any Insurer or Classification Society or by any
competent authority which is not complied with in
accordance with reasonable commercial practices;
(iv) any arrest of the Vessel or the exercise or purported
exercise of any lien on the Vessel or her Earnings;
and
(v) any occurrence of circumstances forming the basis of
an Environmental Claim which, if adversely
determined, would likely have a Material Adverse
Effect.
(J) To keep or to cause to be kept proper books of account of
the Owner in respect of the Vessel and her Earnings and, if requested by the
Mortgagee, to make or to cause to be made such books available for inspection on
behalf of the Mortgagee at a reasonable time and on reasonable notice during
each calendar year, or during the continuance of an Event of Default, at any
time during each calendar year, and to furnish or cause to be furnished
satisfactory evidence that the wages and allotments and the insurance and
pension contributions of the Master and crew are being regularly paid and that
all deductions from crew's wages in respect of any tax liability are being
properly accounted for and that the Master has no claim for disbursements other
than those incurred by him in the ordinary course of trading on the voyage then
in progress;
(K) To assign and provide that Requisition Compensation is
applied in accordance with Section 8 hereof as if received in respect of the
sale of the Vessel;
(L) Not, without the previous consent in writing of the
Mortgagee, to put the Vessel or suffer her to be put into the possession of any
Person for the purpose of work being done upon her other than routine
drydockings and ordinary maintenance in an amount exceeding or likely to exceed
U.S.$2,500,000 (or the equivalent in any other currency) unless such work is
fully covered by insurance, subject to applicable deductibles satisfactory to
the Mortgagee, or unless such Person shall first have given to the Mortgagee
and on terms satisfactory to it a written undertaking not to exercise any lien
on the Vessel or her Earnings for the cost of such work or otherwise;
(M) To keep the Vessel registered under the flag of the
United States of America qualified to operate in the foreign trade of the United
States of America and to do or suffer to be done nothing whereby such
registration may be forfeited or imperiled;
(N) To keep and to cause the Vessel to be kept free and clear
of all liens, charges, mortgages and encumbrances except in favor of the
Mortgagee, and except for crew's wages remaining unpaid in accordance with
reasonable commercial practices, wages of stevedores when employed directly by
the Vessel or for collision or salvage or general average, liens in favor of
suppliers of necessaries or other similar liens arising in the ordinary course
of its business, accrued for not more than thirty (30) days (unless any such
lien is being contested in good faith and by appropriate proceedings or other
acts and the Owner shall have set aside on its books adequate reserves with
respect to such lien and so long as such deferment in payment shall not subject
the Vessel to forfeiture or loss) or liens for loss, damage or expense which are
fully covered by insurance, subject to applicable deductibles satisfactory to
the Mortgagee, or in respect of which a bond or other security has been posted
by or on behalf of the Owner with the appropriate court or other tribunal to
prevent the arrest or secure the release of the Vessel from arrest, and not,
except in favor of the Mortgagee, to pledge, charge, assign or otherwise
encumber (in favor of any Person other than the Mortgagee) her Insurances,
Earnings or Requisition Compensation or to suffer the creation of any such
pledge, charge, assignment or encumbrance as aforesaid to or in favor of any
Person other than the Mortgagee;
(O) To comply with Section 5.5 of the Credit Agreement with
respect to any sale of the Vessel or Total Loss of the Vessel.
(P) To pay promptly to the Mortgagee all moneys (including
reasonable fees of counsel) whatsoever which the Mortgagee shall or may expend,
be put to or become liable for, in or about the protection, maintenance or
enforcement of the security created by this Mortgage or in or about the
exercise by the Mortgagee of any of the powers vested in it hereunder and to pay
interest thereon at the Default Rate from the date whereon such expense or
liability was incurred by the Mortgagee;
(Q) To comply with all declaration and reporting requirements
imposed by the protection and indemnity club or insurers including, without
limitation, the quarterly declarations required by the U.S. Oil Pollution
Section 20/2/91, and to pay all premiums required to maintain in force the
necessary U.S. Oil Pollution Cover;
(R) To comply with and satisfy all the requisites and
formalities established by the laws of the United States of America to perfect
this Mortgage as a legal, valid and enforceable first preferred ship mortgage
upon the Vessel and to furnish to the Mortgagee from time to time such proofs
as the Mortgagee may reasonably request for its satisfaction with respect to the
compliance by the Owner with the provisions of this Section 5(R);
(S) Not without the previous consent of the Mortgagee in
writing, which consent shall not be unreasonably withheld, to enter into any
demise, bareboat or time charter with any entity unless (i) the charter is
subject to and subordinate to the rights of the Mortgagee under this Mortgage,
(ii) the terms and conditions of such charter are on an arm's length basis,
(iii) in the case of charters having a duration in excess of one (1) year, such
charters contain the following provision:
"This Charter is subject and subordinate to a First Preferred
Ship Mortgage in favor of DnB NOR BANK ASA, as Mortgagee, and
to each of the rights and remedies of said Mortgagee under
said Mortgage and shall be terminable at the option of said
Mortgagee in the event of the foreclosure of said Mortgage by
said Mortgagee, which option shall be exercisable by the
Mortgagee within thirty (30) days of such foreclosure;
provided that the Mortgagee has actual knowledge of such
--------
Charter."
and (iv) the Owner shall, within ten (10) calendar days of entering into any
such charter having a duration in excess of one (1) year, transmit a copy of the
charter to the Mortgagee;
(T) To place or to cause to be placed and at all times and
places to retain or to cause to be retained a properly certified copy of this
Mortgage on board the Vessel with her papers and cause this Mortgage to be
exhibited to any and all Persons having business with the Vessel which might
give rise to any lien thereon other than liens for crew's wages and salvage, and
to any representative of the Mortgagee on demand; and to place and keep or to
cause to be placed and kept prominently displayed in the chart room and in the
Master's cabin of the Vessel a framed printed notice in plain type in English of
such size that the paragraph of reading matter shall cover a space not less than
six inches wide by nine inches high, reading as follows:
"NOTICE OF MORTGAGE"
------------------
This Vessel is owned by Matson Navigation Company, Inc., and
is subject to a first preferred ship mortgage (the "First
-----
Mortgage") in favor of DnB NOR Bank ASA under the authority of
--------
the United States Ship Mortgage Act, 1920, as amended inter
alia, by Public Law 100-710 (46 USC Section 30101 et seq.).
Under the terms of the said First Mortgage, neither the Owner
nor any charterer nor the Master of this Vessel nor any other
Person has any power, right or authority whatsoever to create,
incur or permit to be imposed upon this Vessel any lien or
encumbrance except for crew's wages, salvage, general average
and for wages of stevedores when employed directly by this
Vessel."
6. Mortgagee's Right to Cure. Without prejudice to any other
-------------------------
rights of the Mortgagee hereunder:
(i) in the event that the provisions of Section 5(B)
hereof or any of them shall not be complied with, the
Mortgagee shall be at liberty, but not obligated, to
effect and thereafter to replace, maintain and renew
all such Insurances upon the Vessel as it in its sole
discretion may deem advisable;
(ii) in the event that the provisions of Section 5(C)
and/or 5(D) hereof or any of them shall not be
complied with, the Mortgagee shall be at liberty, but
not obligated, to arrange for the carrying out of
such repairs and/or surveys as it deems expedient or
necessary; and
(iii) in the event that the provisions of Section 5(F)
hereof or any of them shall not be complied with, the
Mortgagee shall be at liberty, but not obligated, to
pay and discharge all such debts, damages and
liabilities as are therein mentioned and/or to take
any such measures as it deems expedient or necessary
for the purpose of securing the release of the
Vessel;
Any and all expenses incurred by the Mortgagee
(including fees of counsel) in respect of its performances
under the foregoing subsections (i), (ii), and (iii) shall be
paid by the Owner on demand, with interest thereon at the rate
provided for in Section 5(P) hereof from the date when such
expenses were incurred by the Mortgagee.
7. Events of Default and Remedies.
------------------------------
(A) In case any one or more of the following events herein
termed an "Event of Default" shall occur and shall not have been received:
----------------
(i) an Event of Default stipulated in Section 8.1 of the
Credit Agreement shall occur and be continuing;
(ii) a default by the Owner occurs in the due and punctual
observance of any of the covenants contained in
subsections (B) (other than subclauses (iv), (vi) and
(xi) thereof), (F), (G), (I), (K), (L), (M), (N),
(O), (Q), (R), (S), or (T) of Section 5 of this
Mortgage; or
(iii) a default by the Owner occurs in the due and punctual
observance of any of the covenants contained in
subsections (A), (C), (D), (E), (H), (J), or (P) or
subclauses (iv), (vi) or (xi) of subsection (B) of
Section 5 of this Mortgage and such default continues
unremedied for a period of thirty (30) days.
(B) If any Event of Default shall occur, the Mortgagee shall
be entitled:
(i) to demand payment by written notice of the Obligations,
whereupon such payment shall be immediately due and
payable, anything contained in the Credit Agreement, the
Note, this Mortgage or any of the other Security Documents
to the contrary notwithstanding and without prejudice to
any other rights and remedies of the Mortgagee under the
Credit Agreement, the Note, this Mortgage or any of the
other Security Documents, provided, however, that if,
before any sale of the Vessel, all defaults shall have
been remedied in a manner satisfactory to the Mortgagee,
the Mortgagee may waive such defaults by written notice
to the Owner; but no such waiver shall extend to or
affect any subsequent or other default or impair any
rights and remedies consequent thereon;
(ii) at any time and as often as may be necessary to take any
such action as the Mortgagee may in its discretion deem
advisable for the purpose of protecting the security
created by this Mortgage and each and every expense or
liability (including reasonable fees of counsel) so
incurred by the Mortgagee in or about the protection of
such security shall be repayable to it by the Owner
promptly after demand, together with interest thereon at
the Default Rate from the date when such expense or
liability was incurred by the Mortgagee. The Owner shall
promptly execute and deliver to the Mortgagee such
documents or cause promptly to be executed and delivered
to the Mortgagee such documents, if any, and shall
promptly do and perform such acts, if any, as in the
opinion of the Mortgagee or its counsel may be necessary
or advisable to facilitate or expedite the protection,
maintenance and enforcement of the security created by
this Mortgage;
(iii) to exercise all the rights and remedies in foreclosure
and otherwise given to the Mortgagee by any applicable
law, including those under the provisions of the Ship
Mortgage Act;
(iv) to take possession of the Vessel, wherever the same may
be, without prior demand and without legal process
(when permissible under applicable law) and cause the
Owner or other Person in possession thereof forthwith
upon demand of the Mortgagee to surrender to the
Mortgagee possession thereof as demanded by the
Mortgagee;
(v) to require that all policies, contracts and other
records relating to the Insurances (including details
of and correspondence concerning outstanding claims) be
forthwith delivered to such adjusters, brokers or other
insurers as the Mortgagee may nominate;
(vi) to collect, recover, compromise and give a good
discharge for all claims then outstanding or thereafter
arising under the Insurances or any of them and to take
over or institute (if necessary using the name of the
Owner) all such proceedings in connection therewith as
the Mortgagee in its absolute discretion deems
advisable and to permit the brokers through whom
collection or recovery is effected to charge the usual
brokerage therefor;
(vii) to discharge, compound, release or compromise claims
against the Owner in respect of the Vessel which have
given or may give rise to any charge or lien thereon or
which are or may be enforceable by proceedings there
against;
(viii) to take appropriate judicial proceedings for the
foreclosure of this Mortgage and/or for the enforcement
of the Mortgagee's rights hereunder or otherwise;
recover judgment for any amount due in respect of the
Credit Agreement, the Note, this Mortgage or any of the
other Security Documents and collect the same out of
any property of the Owner;
(ix) to sell the Vessel at public auction, free from any
claim of or by the Owner of any nature whatsoever by
first giving notice of the time and place of sale with
a general description of the property in the following
manner:
(a) by publishing such notice for ten (10)
consecutive days in a daily newspaper of
general circulation published in New York
City;
(b) if the place of sale should not be New York
City, then also by publication of a similar
notice in a daily newspaper, if any,
published at the place of sale; and
(c) by sending a similar notice by telecopy
confirmed by registered mail to the Owner at
its address hereinafter set forth at least
fourteen (14) days prior to the date of
sale.
Such sale of the Vessel may be held at such place as
the Mortgagee in such notices may have specified, or
such sale may be adjourned by the Mortgagee from time
to time by announcement at the time and place appointed
for such sale or for such adjourned sale and without
further notice or publication the Mortgagee may make
such sale at the time and place to which the same shall
be so adjourned; and such sale may be conducted without
bringing the Vessel to the place designated for such
sale and in such manner as the Mortgagee may deem to be
for its best advantage, and the Mortgagee may become
the purchaser at such sale.
(x) pending sale of the Vessel (either directly or indirectly)
to manage, charter, lease, insure, maintain and repair
the Vessel and to employ or lay up the Vessel upon such
terms, in such manner and for such period as the Mortgagee
in its absolute discretion deems expedient, and which is
permitted by applicable law, and for the purpose aforesaid
the Mortgagee shall be entitled to do all lawful acts and
things incidental or conducive thereto and in particular
to enter into such arrangements respecting the Vessel, her
insurance, management, maintenance, repair,
classification and employment in all respects as if the
Mortgagee were the owner of the Vessel and without being
responsible for any loss thereby incurred;
(xi) to recover from the Owner on demand any such losses as
may be incurred by the Mortgagee in or about the
exercise of the powers vested in the Mortgagee under
Section 7(B)(x) above with interest thereon at the
Default Rate from the date when such losses were
incurred by the Mortgagee; and
(xii) to recover from the Owner on demand all expenses,
payments and disbursements (including fees and expenses
of counsel) incurred by the Mortgagee in or about or
incidental to the exercise by it of any of the powers
vested in it hereunder together with interest thereon
at the Default Rate from the date when such expenses,
payments or disbursements were incurred by it;
PROVIDED, ALWAYS, that any sale of the Vessel or any interest therein by the
Mortgagee pursuant to Section 7(B)(ix) above shall operate to divest all right,
title and interest of the Owner, its successors and assigns, in or to the Vessel
so sold and upon such sale the purchaser shall not be bound to see or inquire
whether the Mortgagee's power of sale has arisen in the manner herein provided
and the sale shall be deemed to be within the power of the Mortgagee and the
receipt of the Mortgagee for the purchase money shall effectively discharge the
purchaser who shall not be concerned with the manner of application of the
proceeds of sale or be in any way answerable therefor.
In case the Mortgagee shall have proceeded to enforce any
right, power or remedy under this Mortgage by foreclosure, entry or otherwise,
and such proceedings shall have been discontinued or abandoned for any reason or
shall have been determined adversely to the Mortgagee, then and in every such
case the Owner and the Mortgagee shall be restored to their former positions and
rights hereunder with respect to the property, subject or intended to be subject
to this Mortgage, and all rights, remedies and powers of the Mortgagee shall
continue as if no such proceedings had been taken.
(C) Notwithstanding the foregoing, it is understood that a
Total Loss of the Vessel shall not be deemed to be a default under this
Mortgage, the Credit Agreement, the Note, the other Security Documents, or any
of them.
8. Application of Proceeds. The proceeds of any sale made
-----------------------
either under the power of sale hereby granted to the Mortgagee or under a
judgment or decree in any judicial proceedings for the foreclosure of this
Mortgage or for the enforcement of any remedy granted to the Mortgagee
hereunder, any net earnings arising from the management, charter or other use of
the Vessel by the Mortgagee under any of the powers herein contained or by law
provided and the proceeds of any and all Insurances and any claims for damages
on account of the Vessel or the Owner of any nature whatsoever and any
Requisition Compensation, shall be applied as follows:
First: To the payment of all costs and expenses (together
with interest thereon as hereinbefore provided)
incurred by the Mortgagee, including the reasonable
compensation of its agents and attorneys, by reason
of any sale, retaking, management or operation of
the Vessel and all other sums payable to the
Mortgagee hereunder by reason of any expenses or
liabilities incurred or advances made by it for the
protection, maintenance and enforcement of the
security or of any of its rights hereunder or in the
pursuit of any remedy hereby conferred; and at the
option of the Mortgagee to the payment of all taxes,
assessments or liens claiming priority over the
lien of this Mortgage;
Second: To the payment of the Obligations in the manner
provided in the Credit Agreement; and
Third: Any surplus thereafter remaining, to the Owner or to
the Owner's successors in interest or assigns, or to
whomsoever may be lawfully entitled to receive the
same.
In the event that the proceeds are insufficient to pay the amounts specified in
paragraphs "First" and "Second" above, the Mortgagee shall be entitled to
collect the balance from the Owner or any other Person liable therefor.
9. No Waiver. No delay or omission of the Mortgagee to
---------
exercise any right or power vested in it under the Credit Agreement, the Note,
this Mortgage, the other Security Documents or any of them shall impair such
right or power or be construed as a waiver thereof or as acquiescence in any
default by the Owner hereunder, nor shall the acceptance by the Mortgagee of any
payments in connection with this Mortgage from any source be deemed a waiver
hereunder. However, if at any time after an Event of Default and prior to the
actual sale of the Vessel by the Mortgagee or prior to any foreclosure
proceedings the Owner cures all Events of Default and pays all expenses,
advances and damages to the Mortgagee consequent on such Events of Default, with
interest at the Default Rate from the date when such expenses, advances and
damages were incurred, then the Mortgagee may accept such cure and payment and
restore the Owner to its former position, but such action shall not affect any
subsequent Event of Default or impair any rights consequent thereon.
10. Delegation of Power. The Mortgagee shall be entitled at
-------------------
any time and as often as may be expedient to delegate all or any of the powers
and discretions vested in it by this Mortgage (including the power vested in it
by virtue of Section 12 hereof) in such manner and upon such terms and to such
Persons as the Mortgagee in its absolute discretion may deem advisable.
11. Indemnity. Without prejudice to any other rights and
---------
remedies of the Mortgagee under the Credit Agreement, the Note, this Mortgage or
any of the other Security Documents, the Owner hereby agrees and undertakes to
indemnify the Mortgagee against all obligations and liabilities whatsoever and
whensoever arising which the Mortgagee may incur in good faith in respect of, in
relation to or in connection with the Vessel or otherwise howsoever in relation
to or in connection with the enforcement of the Mortgagee's rights hereunder or
under any of the other Security Documents to which the Owner is a party;
provided, however, that no such indemnity obligation shall be effective if any
such obligation or liability is the result of the gross negligence or willful
misconduct of the Mortgagee.
12. Power of Attorney.
-----------------
(A) The Owner hereby irrevocably appoints the Mortgagee as its
attorney-in-fact for the duration of the Security Period to do in its name or in
the name of the Owner all acts which the Owner, or its successors or assigns,
could do in relation to the Vessel, including without limitation, to demand,
collect, receive, compromise, settle and sue for (insofar as the Mortgagee
lawfully may) all freights, hire, earnings, issues, revenues, income and profits
of the Vessel, and all amounts due from underwriters under the Insurances as
payment of losses or as return premiums or otherwise, salvage awards and
recoveries, recoveries in general average or otherwise, and all other sums due
or to become due to the Owner or in respect of the Vessel, and to make, give and
execute in the name of the Owner, acquittance, receipts, releases or other
discharges for the same, whether under seal or otherwise, to take possession of,
sell or otherwise dispose of or manage or employ, the Vessel, to execute and
deliver charters and a bill of sale with respect to the Vessel, and to endorse
and accept in the name of the Owner all checks, notes, drafts, warrants,
agreements and all other instruments in writing with respect to the foregoing.
PROVIDED, HOWEVER, that, unless the context otherwise permits under this
Mortgage, such power shall not be exercisable by or on behalf of the Mortgagee
unless and until any Event of Default shall occur and shall not be exercisable
after all defaults have been cured.
(B) The exercise of the power granted in this Section 12 by or
on behalf of the Mortgagee shall not require any Person dealing with the
Mortgagee to conduct any inquiry as to whether any such Event of Default has
occurred and is continuing, nor shall such Person be in any way affected by
notice that any such Event of Default has not occurred nor is continuing, and
the exercise by the Mortgagee of such power shall be conclusive evidence of its
right to exercise the same.
13. Appointment of Receiver. If any legal proceedings shall be
-----------------------
taken to enforce any right under this Mortgage, the Mortgagee shall be entitled
as a matter of right to the appointment of a receiver of the Vessel and of the
freights, hire, earnings, issues, revenues, income and profits due or to become
due and arising from the operation thereof.
14. Commencement of Proceedings. The Mortgagee shall have the
---------------------------
right to commence proceedings in the courts of any country having competent
jurisdiction and in particular the Mortgagee shall have the right to arrest and
take action against the Vessel at whatever place the Vessel shall be found lying
and for the purpose of any action which the Mortgagee may bring before the local
court for the jurisdiction of such court or other judicial authority and the
Owner agrees that for the purpose of proceedings against the Vessel any writ,
notice, judgment or other legal process or documents may be served upon the
Master of the Vessel (or upon anyone acting as the Master) and that such service
shall be deemed good service on the Owner for all purposes.
15. Partial Invalidity. In the event that any provision or
------------------
provisions of this Mortgage shall be declared invalid, void or otherwise
inoperative by any present or future court of competent jurisdiction in any
country, the Owner will, without prejudice to any other right and remedy of the
Mortgagee under the Credit Agreement, the Note, this Mortgage, the other
Security Documents or any of them, execute and deliver such other and further
instruments and do such things as in the opinion of the Mortgagee or its counsel
will be necessary or advisable to carry out the true intent and spirit of this
Mortgage. In any event, any such declaration of partial invalidity shall not
affect the validity of any other provision or provisions of this Mortgage, or
the validity of this Mortgage as a whole.
16. Cumulative Remedies. Each and every power and remedy in
-------------------
this Mortgage specifically given to the Mortgagee shall be in addition to every
other power and remedy herein or in the Credit Agreement, the Note or the other
Security Documents specifically given or now or hereafter existing at law, in
equity, admiralty, or by statute, and each and every power and remedy whether
specifically in this Mortgage or in the Credit Agreement, the Note or the other
Security Documents given or otherwise existing may be exercised from time to
time and as often and in such order as may be deemed expedient by the Mortgagee,
and the exercise or the beginning of the exercise of any such power or remedy
shall not be construed to be a waiver of the right to exercise at the same time
or thereafter any other power or remedy under the Credit Agreement, the Note,
this Mortgage or any other Security Documents.
17. Recordation of Mortgage. For the purpose of recording this
-----------------------
First Preferred Mortgage the total amount is One Hundred Five Million United
States Dollars (U.S.$105,000,000) (exclusive of interest, expenses and fees) and
interest and performance of mortgage covenants. The discharge amount is the same
as the total amount and there is no separate discharge amount for the Vessel. It
is not intended that this Mortgage shall include property other than the Vessel,
and it shall not include property other than the Vessel as the term "vessel" is
used in Subsection (c)(2) of Section 31322 of Title 46 United States Code, as
amended. Notwithstanding the foregoing, for property other than the Vessel, if
any should be determined to be covered by this Mortgage, the discharge amount is
zero point zero one percent (0.01%) of the total amount.
18. No Waiver of Preferred Status. Anything herein to the
-----------------------------
contrary notwithstanding, it is intended that nothing herein shall waive the
preferred status of this Mortgage under the Ship Mortgage Act or under the
corresponding provisions of any other jurisdiction in which it is sought to be
enforced and that, if any provision or portion thereof herein shall be construed
to waive the preferred status of this Mortgage, then such provision to such
extent shall be void and of no effect.
19. Counterparts. This Mortgage may be executed in any number
------------
of counterparts each of which shall be an original but such counterparts shall
together constitute but one and the same instrument.
20. Notices. Notices and other communications hereunder shall
-------
be in writing and shall be sent in accordance with the Credit Agreement.
21. Rights of Owner. Unless one or more Events of Default
---------------
shall have occurred and be continuing, the Owner (a) shall be suffered and
permitted to retain actual possession and use of the Vessel and (b) shall have
the right, from time to time in its discretion, and without application to the
Mortgagee, and without obtaining a release thereof by the Mortgagee, to dispose
of, free from the lien hereof, any boilers, engines, machinery, masts, spars,
sails, rigging, boats, anchors, cables, chains, tackle, apparel, furniture,
fittings, equipment or any other appurtenances of the Vessel that are no longer
useful, necessary, profitable or advantageous in the operation of the Vessel,
first or simultaneously replacing the same by new boilers, engines, machinery,
masts, spars, sails, rigging, boats, anchors, cables, chains, tackle, apparel,
furniture, fittings, equipment or any other appurtenances of substantially equal
value to the Owner, which shall forthwith become subject to the lien of this
Mortgage.
22. Waiver; Amendment. None of the terms and conditions of
-----------------
this Mortgage may be changed, waived, modified or varied in any manner
whatsoever unless in writing duly signed by the Owner and the Mortgagee.
23. Successors and Assigns. All the covenants, promises,
----------------------
stipulations and agreements of the Owner and all the rights and remedies of the
Mortgagee contained in this Mortgage shall bind the Owner, its successors and
assigns, and shall inure to the benefit of the Mortgagee, its successors and
assigns, whether so expressed or not.
24. Applicable Law. This Agreement shall be governed by, and
--------------
construed in accordance with, the laws of the United States of America.
25. Headings. In this Mortgage, section headings are inserted
--------
for convenience of reference only and shall be ignored in the interpretation of
this Mortgage.
IN WITNESS WHEREOF, the Owner has executed this First
Preferred Ship Mortgage for the MAUNALEI by its duly authorized representative
on the day and year first above written.
MATSON NAVIGATION COMPANY, INC.,
as Owner
By: _________________________________
Name:
Title:
ACKNOWLEDGMENT
--------------
STATE OF CALIFORNIA )
): ss:
COUNTY OF ALAMEDA )
On this [_____] day of [_____], 2005, before me, a Notary Public in and
for the State of California, City and County of Alameda, personally appeared
_____________________, duly known to me to be the
_______________________________ of Matson Navigation Company, Inc., a Hawaii
corporation, the entity described herein, who executed the First Preferred Ship
Mortgage annexed hereto, and who acknowledged to me that he executed said
Mortgage on behalf of said entity by the authority set forth in the documents
constituting and governing such entity.
WITNESS my hand and official seal.
---------------------------------
Notary Public
My commission expires: ____________________
EXHIBIT 1
to
First Preferred Ship Mortgage
CREDIT AGREEMENT
EXHIBIT 2
to
First Preferred Ship Mortgage
PROMISSORY NOTE
EXHIBIT C
================================================================================
ASSIGNMENT OF EARNINGS
in favor of
DnB NOR BANK ASA,
acting through its New York Branch,
as Security Trustee for the Lenders
__________, 2006
MAUNALEI
================================================================================
ASSIGNMENT OF EARNINGS
----------------------
MAUNALEI
THIS ASSIGNMENT (this "Assignment") is made the ___ day of
___________, 2006, from MATSON NAVIGATION COMPANY, INC., a Hawaii corporation,
with offices at 555 12th Street, Oakland, California 94607 (the "Assignor"), in
favor of DnB NOR BANK ASA, acting through its New York Branch, a bank
incorporated under the laws of the Kingdom of Norway with offices at 200 Park
Avenue, 31st Floor, New York, New York 10166, as security trustee for and on
behalf of the Lenders (as such term is defined in Recital B below).
W I T N E S S E T H T H A T :
WHEREAS:
(A) The Assignor is the sole owner of the whole of the United
States flag vessel MAUNALEI (the "Vessel"), Official No. ________;
(B) By a Credit Agreement dated as of June 28, 2005 (the
"Credit Agreement"), made by and between (i) the Assignor, as borrower, (ii) the
banks and financial institutions listed on Schedule 1 thereto, as lenders (the
"Lenders"), and (iii) DnB NOR Bank ASA, acting through its New York Branch, as
security trustee (in such capacity, the "Security Trustee") and as
administrative agent (in such capacity, the "Administrative Agent" and together
with the Lenders and the Security Trustee, the "Creditors") for the Lenders, the
Security Trustee has agreed to serve in such capacity under the Credit Agreement
and the Lenders have agreed to provide to the Borrower a senior secured reducing
revolving credit facility in the maximum principal amount of One Hundred Five
Million United States Dollars (U.S.$105,000,000) (the "Facility");
(C) It is a condition precedent to the Lenders making the
Facility available to the Assignor under the Credit Agreement that the Assignor
execute and deliver to the Assignee, as security for the obligations of the
Assignor to the Creditors under or in connection with the Credit Agreement, the
Note and the Security Documents, an assignment of all of the Assignor's right,
title and interest in and to the earnings and requisition compensation of the
Vessel.
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by the Assignor:
1. Defined Terms. Unless otherwise defined herein, terms
-------------
defined in the Credit Agreement shall have the same meanings when used herein.
2. Grant of Security. As security for the payments and
-----------------
performance by the Assignor for the indebtedness liabilities and obligations of
the Assignor from time to time under the Credit Agreement, the Note, the
Security Documents and any Interest Rate Agreement, the Assignor, as legal and
beneficial owner, does hereby assign, transfer and set over unto the Assignee,
for the benefit of the Assignee and its successors and assigns, and does hereby
grant the Assignee a security interest in, all of the Assignor's right, title
and interest in and to (i) all moneys and claims for moneys due and to become
due thereto, whether as charter hire, freights, loans, indemnities, payments or
otherwise, under, and all claims for damages arising out of any breach of, any
bareboat, time or voyage charter, contract of affreightment or other contract
for the use or employment of the Vessel, (ii) all remuneration for salvage and
towage services, demurrage and detention moneys and any other earnings
whatsoever due or to become due to the Assignor arising from the use or
employment of the Vessel, (iii) all moneys or other compensation payable by
reason of requisition for title or for hire or other compulsory acquisition of
the Vessel, and (iv) all proceeds of all of the foregoing (collectively, the
"Earnings").
3. Notice of Assignment. Upon the occurrence and during the
--------------------
continuation of an Event of Default, the Assignor will (a) promptly give notice,
in the form annexed hereto as Exhibit 1, of this Assignment to any time
charterer of the Vessel and (b) use its best efforts to cause any time charterer
of the Vessel under any charter having a duration in excess of twelve (12)
months to execute a Consent and Agreement, in the form annexed hereto Exhibit 2,
to this Assignment and deliver such Consent and Agreement to the Assignee.
4. Payment. Unless otherwise directed by the Assignee, upon
-------
the occurrence and during the continuation of an Event of Default, the Assignor
shall cause (i) all Earnings assigned hereby, whether as charter hire, freight,
indemnities or otherwise, to be paid directly to the Assignee to such account as
the Assignee shall direct for the account of the Assignor and (ii) all charter
parties, contracts of affreightment or any such other contracts of employment of
the Vessel to specify that payments due the Assignor be made directly to the
Assignee for credit to the above referenced account. The Assignor does hereby
pledge, assign and grant to the Assignee a security interest in all right, title
and interest of the Assignor in and to the above referenced account. Subject to
the restrictions set forth in the Credit Agreement and Section 8 hereof, prior
to an Event of Default, the Assignor may utilize all Earnings in any manner and
for any purpose it determines in its sole discretion.
5. Performance under Charters; No Duty of Inquiry. It is
----------------------------------------------
hereby expressly agreed that, anything contained herein to the contrary
notwithstanding, the Assignor shall remain liable under all charters and
contracts pertaining to the Vessel to which it is a party to perform the
obligations assumed by it thereunder, and the Assignee shall have no obligation
or liability under any such charter or contract by reason of or arising out of
the assignment contained herein, nor shall the Assignee be required to assume or
be obligated in any manner to perform or fulfill any obligation of the Assignor
under or pursuant to any such charter or contract or to make any payment or make
any inquiry as to the nature or sufficiency of any payment received by the
Assignee, or, unless and until indemnified to its satisfaction, to present or
file any claim or to take any other action to collect or enforce the payment of
any amounts which may have been assigned to it or to which it may be entitled
hereunder or pursuant hereto at any time or times.
6. Requisition. The Assignor shall promptly notify the
-----------
Assignee in writing of the commencement and termination of any period during
which the Vessel may be requisitioned.
7. Employment of Vessel. Upon the occurrence and during the
--------------------
continuance of an Event of Default, the Assignor hereby further covenants and
undertakes promptly to furnish the Assignee with all such information as it may
from time to time require regarding the employment, position and engagements of
the Vessel.
8. Negative Pledge. The Assignor does hereby warrant and
---------------
represent that it has not assigned or pledged, and hereby covenants that it will
not assign or pledge so long as this Assignment shall remain in effect, any of
its right, title or interest in the whole or any part of the moneys and claims
hereby assigned to anyone other than the Assignee, and it will not take or omit
to take any action, the taking or omission of which might result in an
alteration or impairment of the rights hereby assigned or any of the rights
created in this Assignment; and the Assignor does hereby irrevocably appoint and
constitute the Assignee as the Assignor's true and lawful attorney-in-fact with
full power (in the name of the Assignor or otherwise) should an Event of Default
have occurred and be continuing to ask, require, demand, receive, compound and
give acquittance for any and all moneys and claims for moneys assigned hereby,
to endorse any checks or other instruments or orders in connection therewith, to
file any claims or take any action or institute any proceedings which the
Assignee may deem to be necessary or advisable in the premises and to file any
and all Uniform Commercial Code financing statements or renewals thereof in
connection with this Assignment without the signature of the Assignor which the
Assignee may deem to be necessary or advisable in order to perfect or maintain
the security interest granted hereby.
9. Application of Proceeds. All moneys collected or received
-----------------------
from time to time by the Assignee pursuant to this Assignment shall be dealt
with as provided in the Credit Agreement.
10. Further Assurances. The Assignor agrees that at any time
------------------
and from time to time, upon the written request of the Assignee, the Assignor
will promptly and duly execute and deliver any and all such further instruments
and documents as the Assignee may reasonably deem necessary in obtaining the
full benefits of this Assignment and of the rights and powers herein granted.
11. Remedies Cumulative and Not Exclusive; No Waiver. Each and
------------------------------------------------
every right, power and remedy herein given to the Assignee shall be cumulative
and shall be in addition to every other right, power and remedy of the Assignee
now or hereafter existing at law, in equity or by statute, and each and every
right, power and remedy, whether herein given or otherwise existing, may be
exercised from time to time, in whole or in part, and as often and in such order
as may be deemed expedient by the Assignee, and the exercise or the beginning of
the exercise of any right, power or remedy shall not be construed to be a waiver
of the right to exercise at the same time or thereafter any other right, power
or remedy. No delay or omission by the Assignee or any of the Creditors in the
exercise of any right or power or in the pursuance of any remedy accruing upon
any breach or default by the Assignor shall impair any such right, power or
remedy or be construed to be a waiver of any such right, power or remedy or to
be an acquiescence therein; nor shall the acceptance by the Assignee or any of
the Creditors of any security or of any payment of or on account of any of the
amounts due from the Assignor to the Assignee and maturing after any breach or
default or of any payment on account of any past breach or default be construed
to be a waiver of any right to take advantage of any future breach or default or
of any past breach or default not completely cured thereby.
12. Invalidity. If any provision of this Assignment shall at
----------
any time for any reason be declared invalid, void or otherwise inoperative by a
court of competent jurisdiction, such declaration or decision shall not affect
the validity of any other provision or provisions of this Assignment, or the
validity of this Assignment as a whole. In the event that it should transpire
that by reason of any law or regulation, or by reason of a ruling of any court,
or by any other reason whatsoever, the assignment herein contained is either
wholly or partly defective, the Assignor hereby undertakes to furnish the
Assignee with an alternative assignment or alternative security and/or to do all
such other acts as, in the sole opinion of the Assignee, shall be required in
order to ensure and give effect to the full intent of this Assignment.
13. Continuing Security. It is declared and agreed that the
-------------------
security created by this Assignment shall be held by the Assignee as a
continuing security for the payment of all moneys which may at any time and from
time to time be or become payable by the Assignor under the Credit Agreement,
the Note, the other Security Documents or any Interest Rate Agreement and that
the security so created shall not be satisfied by an intermediate payment or
satisfaction of any part of the amount hereby secured and that the security so
created shall be in addition to and shall not in any way be prejudiced or
affected by any collateral or other security now or hereafter held by the
Assignee or any other Creditor for all or any part of the moneys hereby secured.
14. Waiver; Amendment. None of the terms and conditions of
-----------------
this Assignment may be changed, waived, modified or varied in any manner
whatsoever unless in writing duly signed by the Assignee and the Assignor (with
the consent of the Majority Lenders).
15. Termination. If the Assignor shall pay and discharge all
-----------
of its obligations under or in connection with the Credit Agreement, the Note,
the other Security Documents and the Interest Rate Agreements, if any, or is
released therefrom in accordance with the terms thereof, all of the right, title
and interest herein assigned shall revert to the Assignor and this Assignment
shall terminate.
16. WAIVER OF JURY TRIAL. EACH OF THE ASSIGNOR, AND BY ITS
--------------------
ACCEPTANCE HEREOF, THE ASSIGNEE, HEREBY WAIVES TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY PARTY HERETO OR ANY BENEFICIARY HEREOF
ON ANY MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS
ASSIGNMENT.
17. Notices. Notices and other communications hereunder shall
-------
be in writing and shall be sent in accordance with the Credit Agreement.
18. Governing Law. This Assignment shall be governed by and
-------------
construed in accordance with the laws of the State of New York.
19. Submission to Jurisdiction. The Assignor hereby
--------------------------
irrevocably submits to the jurisdiction of the courts of the State of New York
and of the United States District Court for the Southern District of New York
in any action or proceeding brought against it by any of the Creditors under
this Assignment or under any document delivered hereunder and hereby irrevocably
agrees that valid service of summons or other legal process on it may be
effected by serving a copy of the summons and other legal process in any such
action or proceeding on the Assignor by mailing or delivering the same by hand
to the Assignor at the address indicated for notices in Section 17. The service,
as herein provided, of such summons or other legal process in any such action or
proceeding shall be deemed personal service and accepted by the Assignor as
such, and shall be legal and binding upon the Assignor for all the purposes of
any such action or proceeding. Final judgment (a certified or exemplified copy
of which shall be conclusive evidence of the fact and of the amount of any
indebtedness of the Assignor to the Creditors) against the Assignor in any such
legal action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment. The Assignor will advise the Assignee
promptly of any change of address for the purpose of service of process.
Notwithstanding anything herein to the contrary, the Creditors may bring any
legal action or proceeding in any other appropriate jurisdiction.
20. Severability. If any provision hereof is invalid and
------------
unenforceable in any jurisdiction, then, to the fullest extent permitted by law,
(i) the other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in favor of the Assignee in order
to carry out the intentions of the parties hereto as nearly as may be possible;
and (ii) the invalidity and unenforceability of any provision hereof in any
jurisdiction shall not affect the validity or enforceability of such provision
in any other jurisdiction.
21. Counterparts. This Assignment may be signed in any number
------------
of counterparts, each of which shall be an original with the same effect as if
the signatures thereto and hereto were upon the same instrument.
22. Headings. In this Assignment, Section headings are
-------
inserted for convenience of reference only and shall be ignored in the
interpretation hereof.
(SIGNATURE PAGE FOLLOWS)
IN WITNESS WHEREOF, the Assignor has caused this Assignment of
Earnings to be executed on the day and year first above written.
MATSON NAVIGATION COMPANY, INC.,
as Assignor
By: ____________________________________
Name:
Title:
EARNINGS ASSIGNMENT NOTICE
--------------------------
TO:
TAKE NOTICE:
(a) that by an Assignment of Earnings dated the ___ day of
_________, 2006 made by us to DnB NOR BANK ASA, acting through
its New York Branch, as Security Trustee, 200 Park Avenue, New
York, New York 10166 (the "Assignee"), we, the owner of the
United States flag vessel MAUNALEI (the "Vessel"), Official
No. _________, have assigned to the Assignee as from the date
hereof a security interest in all our right, title and
interest in and to:
(i) all moneys and claims for moneys due and to become due
thereto, whether as charter hire, freights, loans,
indemnities, payments or otherwise, under, and all
claims for damages arising out of any breach of, any
bareboat, time or voyage charter, contract of
affreightment or other contract for the use or
employment of the Vessel;
(ii) all remuneration for salvage and towage services,
demurrage and detention moneys and any other earnings
whatsoever due or to become due to the undersigned
arising from the use or employment of the Vessel;
(iii) all moneys or other compensation payable by reason of
requisition for title or for hire or other compulsory
acquisition of the Vessel; and
(iv) all proceeds of all of the foregoing.
(b) that you are hereby irrevocably authorized and instructed
to pay as from the date hereof all of such aforesaid moneys to
the Assignee, for the account of the undersigned (Account No.
_________), at the above address of the Assignee (or at such
other place as the Assignee may direct).
DATED THIS ____day of _____, 2006.
MATSON NAVIGATION COMPANY, INC.
By: _________________________________
Name:
Title:
CONSENT AND AGREEMENT
---------------------
The undersigned, being the charterer of the United States flag vessel
MAUNALEI (the "Vessel") from MATSON NAVIGATION COMPANY, INC. (the "Owner") under
the Charterparty dated ____________, 200_ between the undersigned and the Owner
(as at any time amended, the "Charter") which is the subject of an Assignment of
Earnings (the "Assignment") by the Owner to DnB NOR Bank ASA, acting through its
New York Branch, as Security Trustee (the "Assignee"), in consideration of One
Dollar lawful money of the United States of America to it in hand paid, hereby
acknowledges notice of and agrees that it will make payment of all moneys due
and to become due under the Charter directly to the Assignee to be credited to
the account of the undersigned (Account No. _______________), until receipt of
written notice from the Assignee to the contrary, provided, however, that this
Consent and Agreement is without prejudice to any right which the undersigned
may have under the Charter including but not limited to the rights to make
deductions from payments of hire to the extent of claims which the undersigned
may have against the Vessel under the Charter and in respect of which the
undersigned is entitled to make deductions from charter hire pursuant to the
relevant provisions of the Charter.
DATED THIS _____ day of _________, 20__.
---------------------------------------
By: _________________________________
Name:
Title:
EXHIBIT D
================================================================================
ASSIGNMENT OF INSURANCES
in favor of
DnB NOR BANK ASA,
acting through its New York Branch,
as Security Trustee
__________, 2006
MAUNALEI
================================================================================
ASSIGNMENT OF INSURANCES
------------------------
MAUNALEI
THIS ASSIGNMENT (this "Assignment") is made the ___ day of
______, 2006, MATSON NAVIGATION COMPANY, INC., a HAWAII corporation, with
offices at 555 12th Street, Oakland, California 94607 (the "Assignor"), in favor
of DnB NOR BANK ASA, acting through its New York Branch, a bank incorporated
under the laws of the Kingdom of Norway with offices at 200 Park Avenue, 31st
Floor, New York, New York 10166, as security trustee for and on behalf of the
Lenders (as such term is defined in Recital B below).
W I T N E S S E T H T H A T:
WHEREAS:
(A) The Assignor is the sole owner of the whole of the United
States flag vessel MAUNALEI (the "Vessel"), Official No. ________;
(B) By a Credit Agreement dated as of June 28, 2005 (the
"Credit Agreement"), made by and between (i) the Assignor, as borrower, (ii) the
banks and financial institutions listed on Schedule 1 thereto, as lenders (the
"Lenders"), and (iii) DnB NOR Bank ASA, acting through its New York Branch, as
security trustee (in such capacity, the "Security Trustee") and as
administrative agent (in such capacity, the "Administrative Agent" and together
with the Lenders and the Security Trustee, the "Creditors") for the Lenders, the
Security Trustee has agreed to serve in such capacity under the Credit Agreement
and the Lenders have agreed to provide to the Borrower a senior secured reducing
revolving credit facility in the maximum principal amount of One Hundred Five
Million United States Dollars (U.S.$105,000,000) (the "Facility"); and
(C) It is a condition precedent to the Lenders making the
Facility available to the Assignor under the Credit Agreement that the Assignor
execute and deliver to the Assignee, as security for the obligations of the
Assignor to the Creditors under or in connection with the Credit Agreement, the
Note and the Security Documents, an assignment of any and all insurances taken
out in respect of the Vessel and its earnings.
NOW, THEREFORE, in consideration of the premises and of other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by the Assignor:
1. Defined Terms. Unless otherwise defined herein, terms
-------------
defined in the Credit Agreement shall have the same meanings when used herein.
2. Grant of Security. As security for the payments and
-----------------
performance by the Assignor for the indebtedness liabilities and obligations of
the Assignor from time to time under the Credit Agreement, the Note, the
Security Documents and any Interest Rate Agreement, the Assignor as legal and
beneficial owner does hereby assign, transfer and set over unto the Assignee,
for the benefit of the Assignee and its successors and assigns, and does hereby
grant the Assignee a security interest in, all of the Assignor's right, title
and interest in, to and under all policies and contracts of insurance, including
the Assignor's rights under all entries in any Protection and Indemnity or War
Risks Association or Club, which are from time to time taken out by or for the
Assignor in respect of the Vessel, her hull, machinery, freights, disbursements,
profits or otherwise, and all the benefits thereof including, without
limitation, all claims of whatsoever nature, as well as return premiums (all of
which are herein collectively called the "Insurances"), and in and to all moneys
and claims for moneys in connection therewith and all proceeds of all of the
foregoing.
3. Notices; Loss Payable Clauses. (A) All Insurances, except
-----------------------------
entries in Protection and Indemnity Associations or Clubs or insurances effected
in lieu of such entries, relating to the Vessel shall contain a loss payable and
notice of cancellation clause in the form of Exhibit 1 hereto or in such other
---------
form as the Assignee may agree.
(B) All entries in Protection and Indemnity Associations or
Clubs or insurances effected in lieu of such entries relating to the Vessel
shall contain a loss payable and notice of cancellation clause in the form of
Exhibit 2 hereto or in such other form as the Assignee may agree.
- ---------
4. Covenants and Undertakings. The Assignor hereby covenants
--------------------------
with the Assignee that:
(A) It will do or permit to be done each and every act or
thing which the Assignee may from time to time require to be done for the
purpose of enforcing the Assignee's rights under this Assignment and will allow
its name to be used as and when required by the Assignee for that purpose; and
(B) It will forthwith give notice in the form set out in
Exhibit 3 attached hereto, or cause its insurance brokers to give notice, of
- ---------
this Assignment to all insurers, underwriters, clubs and associations providing
insurance in connection with the Vessel and her earnings and make reasonable
efforts to procure that such notice is endorsed on all the policies and entries
of insurances in respect of the Vessel and her earnings.
5. No Duty of Inquiry. The Assignee shall not be obliged to
------------------
make any inquiry as to the nature or sufficiency of any payment received by it
hereunder or to make any claim or take any other action to collect any moneys or
to enforce any rights and benefits hereby assigned to the Assignee or to which
the Assignee may at any time be entitled hereunder except such reasonable action
as may be requested by any underwriter, association or club. The Assignor shall
remain liable to perform all the obligations assumed by it in relation to the
property hereby assigned and the Assignee shall be under no obligation of any
kind whatsoever in respect thereof or be under any liability whatsoever
(including, without limitation, any obligation or liability with respect to the
payment of premiums, calls, assessments or any other sums at any time due and
owing in respect of the Insurances) in the event of any failure by the Assignor
to perform such obligations.
6. Negative Pledge. The Assignor does hereby warrant and
---------------
represent that it has not assigned or pledged, and hereby covenants that it will
not assign or pledge so long as this Assignment shall remain in effect, any of
its right, title or interest in the whole or any part of the moneys and claims
hereby assigned, to anyone other than the Assignee, and it will not take or omit
to take any action, the taking or omission of which might result in an
alteration or impairment of the rights hereby assigned or any of the rights
created in this Assignment; and the Assignor hereby irrevocably appoints and
constitutes the Assignee as the Assignor's true and lawful attorney-in-fact with
full power (in the name of the Assignor or otherwise) should an Event of Default
(as such term is defined in the Credit Agreement) have occurred and be
continuing to ask, require, demand, receive, compound and give acquittance for
any and all moneys and claims for moneys assigned hereby, to endorse any checks
or other instruments or orders in connection therewith and to file any claims or
take any action or institute any proceedings which the Assignee may deem to be
necessary or advisable and otherwise to do any and all things which the Assignor
itself could do in relation to the property hereby assigned including but not
limited to filing any and all Uniform Commercial Code financing statements or
renewals thereof in connection with this Assignment without the signature of
the Assignor which the Assignee may deem to be necessary or advisable in order
to perfect or maintain the security interest granted hereby.
7 . Further Assurances. The Assignor agrees that any time and
------------------
from time to time upon the written request of the Assignee it will promptly and
duly execute and deliver to the Assignee any and all such further instruments
and documents as the Assignee may reasonably deem necessary in obtaining the
full benefits of this Assignment and of the rights and powers herein granted.
8 . Remedies Cumulative and Not Exclusive; No Waiver. Each and
------------------------------------------------
every right, power and remedy herein given to the Assignee shall be cumulative
and shall be in addition to every other right, power and remedy of the Assignee
and the Creditors now or hereafter existing at law, in equity or by statute, and
each and every right, power and remedy, whether herein given or otherwise
existing, may be exercised from time to time, in whole or in part, and as often
and in such order as may be deemed expedient by the Assignee, and the exercise
or the beginning of the exercise of any right, power or remedy shall not be
construed to be a waiver of the right to exercise at the same time or thereafter
any other right, power or remedy. No delay or omission by the Assignee or any of
the Creditors in the exercise of any right or power in the pursuance of any
remedy accruing upon any breach or default by the Assignor shall impair any such
right, power or remedy or be construed to be a waiver of any such right, power
or remedy or to be an acquiescence therein; nor shall the acceptance by the
Assignee or any of the Creditors of any security or of any payment of or on
account of any of the amounts due from the Assignor under or in connection with
the Credit Agreement or any document delivered in connection therewith and
maturing after any breach or default or of any payment on account of any past
breach or default be construed to be a waiver of any right to take advantage of
any future breach or default or of any past breach or default not completely
cured thereby.
9. Invalidity. If any provision of this Assignment shall at
----------
any time for any reason be declared invalid, void or otherwise inoperative by a
court of competent jurisdiction, such declaration or decision shall not affect
the validity of any other provision or provisions of this Assignment, or the
validity of this Assignment as a whole. In the event that it should transpire
that by reason of any law or regulation, or by reason of a ruling of any court,
or by any other reason whatsoever, the assignment herein contained is either
wholly or partly defective, the Assignor hereby undertakes to furnish the
Assignee with an alternative assignment or alternative security and/or to do all
such other acts as, in the sole opinion of the Assignee, shall be required in
order to ensure and give effect to the full intent of this Assignment.
10. Continuing Security. It is declared and agreed that the
-------------------
security created by this Assignment shall be held by the Assignee as a
continuing security for the payment of all moneys which may at any time and from
time to time be or become payable by the Assignor under the Credit Agreement,
the Note, the other Security Documents or any Interest Rate Agreement and that
the security so created shall not be satisfied by an intermediate payment or
satisfaction of any part of the amount hereby secured and that the security so
created shall be in addition to and shall not in any way be prejudiced or
affected by any collateral or other security now or hereafter held by the
Assignee or any other Creditor for all or any part of the moneys hereby secured.
11. Waiver; Amendment. None of the terms and conditions of
-----------------
this Assignment may be changed, waived, modified or varied in any manner
whatsoever unless in writing duly signed by the Assignee and the Assignor (with
the consent of the Majority Lenders).
12. Termination. If the Assignor shall pay and discharge all
-----------
of its obligations under or in connection with the Credit Agreement, the Note,
the other Security Documents and the Interest Rate Agreements, if any, or is
released therefrom in accordance with the terms thereof, all of the right, title
and interest herein assigned shall revert to the Assignor and this Assignment
shall terminate.
13. WAIVER OF JURY TRIAL. EACH OF THE ASSIGNOR, AND BY ITS
--------------------
ACCEPTANCE HEREOF, THE ASSIGNEE, HEREBY WAIVES TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY PARTY HERETO OR ANY BENEFICIARY
HEREOF ON ANY MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH
THIS ASSIGNMENT.
14. Notices. Notices and other communications hereunder shall
-------
be in writing and shall be sent in accordance with the Credit Agreement.
15. Governing Law. This Assignment shall be governed by and
-------------
construed in accordance with the laws of the State of New York.
16. Submission to Jurisdiction. The Assignor hereby
--------------------------
irrevocably submits to the jurisdiction of the courts of the State of New York
and of the United States District Court for the Southern District of New York in
any action or proceeding brought against it by any of the Creditors under this
Assignment or under any document delivered hereunder and hereby irrevocably
agrees that valid service of summons or other legal process on it may be
effected by serving a copy of the summons and other legal process in any such
action or proceeding on the Assignor by mailing or delivering the same by hand
to the Assignor at the address indicated for notices in Section 14. The service,
as herein provided, of such summons or other legal process in any such action or
proceeding shall be deemed personal service and accepted by the Assignor as
such, and shall be legal and binding upon the Assignor for all the purposes of
any such action or proceeding. Final judgment (a certified or exemplified copy
of which shall be conclusive evidence of the fact and of the amount of any
indebtedness of the Assignor to the Creditors) against the Assignor in any such
legal action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment. The Assignor will advise the Assignee
promptly of any change of address for the purpose of service of process.
Notwithstanding anything herein to the contrary, the Creditors may bring any
legal action or proceeding in any other appropriate jurisdiction.
17. Severability. If any provision hereof is invalid and
------------
unenforceable in any jurisdiction, then, to the fullest extent permitted by law,
(i) the other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in favor of the Assignee in order
to carry out the intentions of the parties hereto as nearly as may be possible;
and (ii) the invalidity and unenforceability of any provision hereof in any
jurisdiction shall not affect the validity or enforceability of such provision
in any other jurisdiction.
18. Counterparts. This Assignment may be signed in any number
------------
of counterparts, each of which shall be an original with the same effect as if
the signatures thereto and hereto were upon the same instrument.
19. Headings. In this Assignment, Section headings are
--------
inserted for convenience of reference only and shall be ignored in the
interpretation hereof.
IN WITNESS WHEREOF, the Assignor has caused this Assignment of
Insurances to be executed and delivered on the day and year first above written.
MATSON NAVIGATION COMPANY, INC.
By: __________________________________
Name:
Title:
EXHIBIT 1
---------
to
Assignment of Insurances
LOSS PAYABLE CLAUSE
-------------------
Hull and Machinery (War Risks)
------------------------------
Loss, if any, payable to DnB NOR Bank ASA, as Mortgagee, for
distribution by it to itself and to Matson Navigation Company, Inc., as Owner,
as their respective interests may appear, or order, except that, unless
underwriters have been otherwise instructed by notice in writing from the
Mortgagee, in the case of any loss involving any damage to the Vessel or
liability of the Vessel, the underwriters may pay directly for the repair,
salvage, liability or other charges involved or, if the Owner shall have first
fully repaired the damage and paid the cost thereof, or discharged the liability
or paid all of the salvage or other charges, then the underwriters may pay the
Owner as reimbursement therefor; provided, however, that if such damage involves
-------- -------
a loss of U.S. $2,500,000 or more or its equivalent, the underwriters shall not
make such payment without first obtaining the written consent thereto of the
Mortgagee.
In the event of the actual total loss or agreed, compromised
or constructive total loss of the Vessel, payment shall be made to DnB NOR Bank
ASA, as Mortgagee, for distribution by it to itself and to the Owner as their
respective interests appear.
The Mortgagee shall be advised:
(1) at least fourteen (14) days before cancellation of this
insurance may take effect;
(2) of any failure to renew any such insurance at least
fourteen (14) days prior to the date of renewal thereof;
(3) of any act or omission or of any event of which the
insurer has knowledge and which might invalidate or render
unenforceable in whole or in part any such insurance; and
(4) of any default in the payment of any premium with respect
to, or the material alteration of, any such insurances.
EXHIBIT 2
---------
to
Assignment of Insurances
LOSS PAYABLE CLAUSE
-------------------
Protection and Indemnity
------------------------
Payment of any recovery that Matson Navigation Company, Inc.
(the "Owner") is entitled to make out of the funds of the Association in respect
of any liability, costs or expenses incurred by him shall be made to the Owner
or to his order unless and until the Association receives notice from DnB NOR
Bank ASA, as Mortgagee, that the Owner is in default under the Mortgage, in
which event all recoveries shall thereafter be paid to the Mortgagee for
distribution by it to itself and the Owner, as their respective interests may
appear, or order; provided, always, that no liability whatsoever shall attach to
-------- ------
the Association, its managers or their agents for failure to comply with the
latter obligation until after the expiry of two (2) business days from the
receipt of such notice.
The Mortgagee shall be advised:
(1) at least fourteen (14) days before cancellation of this
insurance may take effect;
(2) of any failure to renew any such insurance at least
fourteen (14) days prior to the date of renewal thereof;
(3) of any act or omission or of any event of which the
insurer has knowledge and which might invalidate or render
unenforceable in whole or in part any such insurance; and
(4) of any default in the payment of any premium with respect
to, or the material alteration of, any such insurances.
EXHIBIT 3
---------
to
Assignment of Insurances
NOTICE OF ASSIGNMENT OF INSURANCES
----------------------------------
TO:
TAKE NOTICE:
(a) that by an Assignment of Insurances dated the ___ day of
__________, 2006 made by us to DnB NOR Bank ASA, as security
trustee (the "Assignee"), a copy of which is attached hereto,
we have assigned to the Assignee as from the date hereof,
inter alia, all our right, title and interest in, to and under
----- ----
all policies and contracts of insurance, including our rights
under all entries in any Protection and Indemnity or War Risk
Association or Club, which are from time to time taken out by
us in respect of the United States flag vessel MAUNALEI (the
"Vessel"), Official No. [____], and its earnings and all the
benefits thereof including all claims of whatsoever nature
(all of which together are hereinafter called the
"Insurances").
(b) that you are hereby irrevocably authorized and
instructed to pay as from the date hereof all
payments under
(i) all Insurances, except entries in Protection
and Indemnity Associations or Clubs or
insurances effected in lieu of such entries,
relating to the Vessel in accordance with
the loss payable clause in Exhibit 1 of the
Assignment of Insurances; and
(ii) all entries in Protection and Indemnity
Associations or Clubs or insurances affected
in lieu of such entries relating to the
Vessel in accordance with the loss payable
clause in Exhibit 2 of the Assignment of
Insurances.
(c) that you are hereby instructed to endorse the
assignment, notice of which is given to you herein,
on all policies or entries relating to the Vessel.
DATED AS OF THE __ day of ________, 2006.
MATSON NAVIGATION COMPANY, INC.
By: ________________________________
Name:
Title:
We hereby acknowledge receipt of the foregoing Notice of Assignment and agree to
act in accordance with the terms thereof:
By: ________________________________
Name:
Title:
EXHIBIT E
================================================================================
FORM OF
ASSIGNMENT AND ASSUMPTION AGREEMENT
between
[NAME OF ASSIGNOR]
and
[NAME OF ASSIGNEE]
__________, 200__
================================================================================
EXHIBIT E
ASSIGNMENT AND ASSUMPTION AGREEMENT
-----------------------------------
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Agreement"),
dated as of ___________, 2005 among [NAME OF ASSIGNOR], a [bank]/[corporation]
organized under the laws of [JURISDICTION OF ASSIGNOR] (the "Assignor"), and
[NAME OF ASSIGNEE], a [bank]/[corporation] organized under the laws of
[JURISDICTION OF ASSIGNEE] (the "Assignee"), supplemental to:
(i) by a Credit Agreement dated as of ________, 2005 (the
"Credit Agreement"), made by and between (i) Matson Navigation Company,
Inc., a Hawaiian corporation, as borrower (the "Borrower"), (ii) the
banks and financial institutions listed on Schedule 1 thereto, as
lenders (the "Lenders"), and (iii) DnB NOR Bank ASA, acting through its
New York Branch, as security trustee (in such capacity, the "Security
Trustee") and as administrative agent (in such capacity, the
"Administrative Agent" and together with the Security Trustee, the
"Agents") for the Lenders, the Agents have agreed to service in their
respective capacities under the Credit Agreement and the Lenders have
agreed to provide to the Borrower a senior secured reducing revolving
credit facility in the maximum principal amount of One Hundred Five
Million United States Dollars (U.S.$105,000,000) (the "Facility");
(ii) the promissory note from the Borrower in favor of the
Administrative Agent dated ______, 2005 (the "Note") evidencing the
Facility; and
(iii) the Security Documents (as such term is defined in the
Credit Agreement).
Except as otherwise defined herein, terms defined in the
Credit Agreement shall have the same meaning when used herein.
In consideration of the premises and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. The Assignor hereby sells, transfers and assigns o%
(US$o) of its right, title and interest in, to and under the Credit Agreement,
under the Note (including, without limitation, its interest in the indebtedness
evidenced by the Note) and under the Security Documents to the Assignee.
Simultaneously herewith, the Assignee shall pay to the Assignor US$o; which is
equal to the product derived by multiplying (a) US$o, being the sum of the
present outstanding principal balance of all Advances, by (b) the Assignor's
percentage of interest in the Facility transferred pursuant hereto.
2. The Assignee hereby assumes o% (US$o) of the obligations of
the Assignor under the Credit Agreement (including, but not limited to, the
obligation to advance its respective percentage of any Advance as and when
required) and shall hereinafter be deemed a "Lender" for all purposes of the
Credit Agreement, the Note, the Security Documents and any other Assignment and
Assumption Agreement(s), the Assignee's Commitment thereunder being US$o in
respect of the Facility.
3. The Assignee shall pay an administrative fee of US$3,000 to
the Administrative Agent to reimburse the Administrative Agent for its cost in
processing the assignment and assumption herein contained.
4. All references in the Note and in each of the Security
Documents to the Credit Agreement shall be deemed to be references to the Credit
Agreement as assigned and assumed pursuant to the terms hereof.
5. The Assignee irrevocably designates and appoints the
Administrative Agent as its agent and irrevocably authorizes the Administrative
Agent to take such action on its behalf and to exercise such powers on its
behalf under the Credit Agreement, under the Note and under the other Security
Documents, each as supplemented hereby, as are delegated to the Administrative
Agent by the terms of each thereof, together with such powers as are reasonably
incidental thereto all as provided in Section 15 of the Credit Agreement.
6. Every notice or demand under this Agreement shall be in
writing and may be given by telecopy and shall be sent as follows:
If to the Assignor:
[NAME OF ASSIGNOR]
[ADDRESS]
Telecopy No.:
Attention:
If to the Assignee
[NAME OF ASSIGNEE]
[ADDRESS]
Telecopy No.:
Attention:
Every notice or demand hereunder shall be deemed to have been received at the
time of receipt thereof.
7. EACH OF THE ASSIGNOR, AND BY ITS ACCEPTANCE HEREOF, THE
ASSIGNEE, HEREBY WAIVES TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
BROUGHT BY ANY PARTY HERETO OR ANY BENEFICIARY HEREOF ON ANY MATTER WHATSOEVER
ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT.
8. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.
9. This Agreement may be executed in several counterparts with
the same effect as if the parties executing such counterparts shall have all
executed one agreement as of the date hereof, each of which counterparts when
executed and delivered shall be deemed to be an original and all of such
counterparts together shall constitute this Agreement.
(SIGNATURE PAGE FOLLOWS)
IN WITNESS WHEREOF, the parties hereto have caused this [instrument]
[Assignment and Assumption Agreement] to be duly executed as of the day and year
first above written.
[NAME OF ASSIGNOR]
By: ____________________________
Name:
Title:
[NAME OF ASSIGNEE]
By: ___________________________
Name:
Title:
EXHIBIT F
================================================================================
FORM OF COMPLIANCE CERTIFICATE
from
MATSON NAVIGATION COMPANY, INC.
to
DnB NOR BANK ASA
acting through its New York Branch,
as Administrative Agent
___________, 2005
================================================================================
FORM OF COMPLIANCE CERTIFICATE
------------------------------
CERTIFICATE OF THE CHIEF FINANCIAL OFFICER
OF
MATSON NAVIGATION COMPANY, INC.
FOR THE PERIOD ENDED ______________
The undersigned, being the [chief financial officer] of MATSON
NAVIGATION COMPANY, INC., a Hawaiian corporation (the "Borrower"), hereby
--------
certifies, on behalf of the Borrower, to DnB NOR BANK ASA, as administrative
agent (the "Administrative Agent"), in connection with that certain credit
--------------------
agreement, dated as of ______, 2005 (the "Credit Agreement"), by and among (i)
the Borrower, as borrower, (ii) the banks and financial institutions listed on
Schedule 1 thereto, as lenders (the "Lenders"), and (iii) DnB NOR Bank ASA,
acting through its New York Branch, as security trustee and as administrative
agent for the Lenders, as follows:
(i) that I have reviewed the financial statements of the
Borrower dated as of ________________ and for the
________ period then ended and such statements fairly
present the financial condition of the Borrower as of the
dates indicated and the results of their operations and
cash flows for the periods indicated; and
(ii) that I have reviewed the terms of the Credit Agreement,
the Note and the Security Documents (collectively, the
"Transaction Documents") and have made, or caused to be
---------------------
made under my supervision, a review in reasonable detail
of the transactions and the condition of the Borrower
during the accounting period covered by the financial
statements referred to in clause (i) above; and
(iii) such review has not disclosed the existence during or at
the end of such accounting period of any condition or
event that constitutes an Event of Default nor any event
which with the giving of notice or lapse of time or both
would constitute an Event of Default, nor do I have
knowledge of the existence of any such condition or event
as at the date of this Certificate [EXCEPT, [IF SUCH
CONDITION OR EVENT EXISTED OR EXISTS, DESCRIBE THE NATURE
AND PERIOD OF EXISTENCE THEREOF AND WHAT ACTION THE
BORROWER OR ANY OTHER ENTITY, AS THE CASE MAY BE, HAS
TAKEN, IS TAKING AND PROPOSES TO TAKE WITH RESPECT
THERETO]]; and
(iv) the Borrower is in compliance with the covenants
contained in Section 9 of the Credit Agreement and in
each other Transaction Document to which it is a party,
including, without limitation the covenants set forth in
Sections 9.3(a), 9.3(b), 9.3(c), [9.3(d) and 9.3(e)], and
Annex A attached hereto shows the calculation thereof in
reasonable detail.
Capitalized terms used herein without definition have the
meaning ascribed thereto in the Credit Agreement.
IN WITNESS WHEREOF, the undersigned has executed this
Compliance Certificate as of this _____ day of ___________, 200_.
MATSON NAVIGATION COMPANY, INC.
By: ___________________________________
Name:
Title: [Chief Financial Officer]
ANNEX A
-------
to
Compliance Certificate
1. Section 9.3(a) - Long-Term Debt to Net Worth Ratio:
--------------------------------------------------
A. The total notes, bonds, debentures, equipment obligations
and other evidence of Indebtedness that would be included in
long term debt in accordance with GAAP, including any
guarantee or other liability for the debt of any other Person
not otherwise included on the balance sheet of the Borrower $__________
TO
B. The total of paid-in capital stock, paid-in surplus, earned
surplus and appropriated surplus, and all
other amounts that would be included in net worth in
accordance with GAAP, but exclusive of (i) any receivables
from any stockholder, director, officer or employee of the
Borrower or from any Related Party (other than current
receivables arising out of the ordinary course of business and
not outstanding for more than sixty (60) days) and (ii) any
increment resulting from the reappraisal of assets; $__________
Requirement per Credit Agreement at all times of not more than 2.00:1.00
Actual = _____:1.00
2. Section 9.3(c) - Net Worth:
--------------------------
The total of paid-in capital stock, paid-in surplus, earned surplus
and appropriated surplus, and all other amounts that would be
included in net worth in accordance with GAAP, but exclusive of
(i) any receivables from any stockholder, director, officer or
employee of the Borrower or from any Related Party (other than
current receivables arising out of the ordinary course of
business and not outstanding for more than sixty (60) days) and
(ii) any increment resulting from the reappraisal of assets; $__________
Minimum Requirement per Credit Agreement:
The greater of:
$250,000,000
or
65% of the most recent reported shareholder
equity of the Borrower (as reported in the
annual audited financials)
3. Section 9.3(c) - Working Capital
--------------------------------
Working capital (as determined in accordance
with GAAP) $___________
Working capital must be positive at all times
[The following only if applicable]
4. Section 9.3(d) - Contingent Net Worth
-------------------------------------
The total of paid-in capital stock, paid-in surplus,
earned surplus and appropriated surplus, and all
other amounts that would be included in net worth in
accordance with GAAP, but exclusive of (i) any receivables
from any stockholder, director, officer or employee of the
Borrower or from any Related Party (other than current
receivables arising out of the ordinary course of
business and not outstanding for more than sixty
(60) days) and (ii) any increment resulting from the
reappraisal of assets; $__________
Minimum Requirement per Credit Agreement:
$350,000,000
plus
50% of all quarterly net income earned
after the effective date of a Change of
Control
[The following only if applicable]
5. Section 9.3(e) - Contingent Collateral Value to Outstandings Ratio
------------------------------------------------------------------
A. Fair Market Value of the Vessel Actual = $__________
B. Outstanding amount of the Facility Actual = $__________
Ratio ________:1.00
After the Rating of the Borrower falls below either BBB with S&P or
Baa2 with Moody's, the ratio of the Fair Market Value of the Vessel to
of the outstanding amount of the Facility shall not be less than
EXHIBIT G
DRAWDOWN NOTICE
---------------
________, 200_
DnB NOR Bank ASA,
New York Branch
200 Park Avenue
31st Floor
New York, NY 10166
Ladies and Gentlemen:
Please be advised that, in accordance with Section 3.2 of the
Credit Agreement (the "Credit Agreement") among (i) Matson Navigation Company,
Inc., a Hawaiian corporation, as borrower (the "Borrower"), (ii) the banks and
financial institutions listed on Schedule 1 thereto, as lenders (the "Lenders"),
and (iii) DnB NOR Bank ASA, acting through its New York Branch, as security
trustee and as administrative agent for the Lenders, [to be] dated as of
________, 2005, the undersigned hereby requests that an Advance (as defined in
the Credit Agreement) be advanced to the Borrower as follows:
Drawdown Date: ___________, 200_
Interest Period: [one, three, six or
twelve] months
Amounts to be drawndown:
Advance US$____________
Disbursement Instructions:
The undersigned hereby represents and warrants that (a) the
representations and warranties stated in Section 2 of the Credit Agreement
(updated mutatis mutandis) are true and correct on the date hereof and will be
------- --------
true and correct on the Drawdown Date specified above as if made on such date
unless stated to relate to a specific earlier date, in which case such
representations and warranties shall be true and correct in all material
respects as of such earlier date, and (b) no Event of Default has occurred and
is continuing or will have occurred and be continuing on the Drawdown Date, and
no event has occurred or is continuing which, with the giving of notice or lapse
of time, or both, would constitute an Event of Default.
The undersigned hereby covenants and undertakes that, in the
event that on the date specified for making available the Advance as stated
above, the Lenders shall not be obliged under the Credit Agreement to make the
Advance available, the undersigned shall indemnify and hold the Lenders fully
harmless against any losses which the Lenders may sustain as a result of
borrowing or agreeing to borrow funds to meet the drawdown requirements as
stated above, and the certificate of the Administrative Agent shall (save and
except for manifest error) be conclusive and binding on the undersigned as to
the extent of any losses sustained by the Lenders.
This Drawdown Notice is effective upon receipt by you and
shall be irrevocable.
Very truly yours,
MATSON NAVIGATION COMPANY, INC.
By: _________________________________
Name:
Title:
EXHIBIT H
INTEREST NOTICE
---------------
_________, 200_
DnB NOR Bank ASA,
New York Branch
200 Park Avenue
31st Floor
New York, NY 10166
Ladies and Gentlemen:
Please be advised that, in accordance with of the Credit
Agreement (the "Credit Agreement") among (i) Matson Navigation Company, Inc., a
Hawaiian corporation, as borrower (the "Borrower"), (ii) the banks and financial
institutions listed on Schedule 1 thereto, as lenders (the "Lenders"), and (iii)
DnB NOR Bank ASA, acting through its New York Branch, as security trustee and as
administrative agent for the Lenders, the Borrower hereby notifies you that the
duration of the Interest Period[s] to commence [insert date of commencement of
next Interest Period(s)] with respect to $[Insert amount of relevant Advance to
which Interest Period should apply] [and $[Insert amount of relevant Advance],
respectively,] shall be as follows:
Interest Period: [one, three, six or twelve] months
[Interest Period: [one, three, six or twelve] months]
The undersigned hereby represents and warrants that (a) the
representations and warranties stated in Section 2 of the Credit Agreement
(updated mutatis mutandis) are true and correct as of the date hereof unless
------- --------
stated to relate to a specific earlier date, in which case such representations
and warranties shall be true and correct in all material respects as of such
earlier date, and (b) no Event of Default has occurred and is continuing or will
have occurred, and no event has occurred or is continuing which, with the giving
of notice or lapse of time, or both, would constitute an Event of Default.
Very truly yours,
MATSON NAVIGATION COMPANY, INC.
By: ______________________________
Name:
Title: