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): July 12, 2006
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 (Commission File Number) (I.R.S. Employer
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of 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. below):
_
|_| 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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The information set forth below in Item 2.03 is incorporated into this Item 1.01
by reference.
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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On July 12, 2006, Matson Navigation Company, Inc. ("Matson"), a
wholly-owned subsidiary of Alexander & Baldwin, Inc. (the "Company"), drew $70
million under its $105 million 10-year Senior Secured Reducing Revolving Credit
Facility (the "Facility") with DnB NOR Bank ASA ("DnB NOR"). The Facility was
described in the Company's Form 8-K dated June 28, 2005 and filed with the
Securities and Exchange Commission on July 1, 2005, which is incorporated herein
by reference. A portion of the funds borrowed under the Facility was used in
connection with Matson's purchase of a new containership, the MV Maunalei, which
Matson took delivery of on July 12, 2006. The balance of the funds borrowed
under the Facility was used for other general corporate purposes. The foregoing
description is qualified in its entirety by the terms of the Promissory Note,
dated July 12, 2006, by Matson in favor of DnB Nor; First Preferred Ship
Mortgage, dated July 12, 2006, by Matson in favor of DnB Nor; Assignment of
Earnings, dated July 12, 2006, by Matson in favor of DnB Nor; and Assignment of
Insurances, dated July 12, 2006 by Matson in favor of DnB Nor, which are
attached hereto as Exhibit 10.1.
Item 9.01 Financial Statements and Exhibits
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(d) Exhibits
10.1 Promissory Note, dated July 12, 2006, by Matson in
favor of DnB Nor; First Preferred Ship Mortgage,
dated July 12, 2006, by Matson in favor of DnB Nor;
Assignment of Earnings, dated July 12, 2006, by
Matson in favor of DnB Nor; and Assignment of
Insurances, dated July 12, 2006 by Matson in favor of
DnB Nor.
SIGNATURE
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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: July 14, 2006
ALEXANDER & BALDWIN, INC.
/s/ Christopher J. Benjamin
---------------------------------
Christopher J. Benjamin
Senior Vice President, Chief Financial
Officer and Treasurer
PROMISSORY NOTE
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U.S.$105,000,000.00 July 12, 2006
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 28th day of June, 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
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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.
(SIGNATURE PAGE FOLLOWS)
IN WITNESS WHEREOF, the Borrower has executed and delivered
this Note on the date and year first above written.
MATSON NAVIGATION COMPANY, INC.
By: /s/ Kevin C. O'Rourke
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Name: Kevin C. O'Rourke
Title: Senior Vice President
ADVANCES
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PAYMENTS OF PRINCIPAL
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Date Amount of Amount of Principal Unpaid Principal Notation
Advance Paid or Prepaid Balance Made By
________________________________________________________________________________
________________________________________________________________________________
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FIRST PREFERRED SHIP MORTGAGE
on the
UNITED STATES FLAG VESSEL
MAUNALEI
OFFICIAL NUMBER 1181627
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 July 12, 2006
================================================================================
SYNOPSIS OF FIRST PREFERRED SHIP MORTGAGE
-----------------------------------------
Name of Vessel: MAUNALEI
Official Number of Vessel: 1181627
Type of Instrument: First Preferred Ship Mortgage
Date of Instrument: July 12, 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
12th day of July, 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
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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").
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WHEREAS:
A. The Owner is the sole owner of the whole of the vessel
MAUNALEI, Official Number 1181627, of 25,324 gross tons, 12,538 net tons, built
in Philadelphia, Pennsylvania (the "Vessel"), and registered and documented in
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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
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Borrower, (ii) the banks and financial institutions listed on Schedule 1
thereto, as lenders (the "Lenders"), and (iii) DnB NOR Bank ASA, acting through
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its New York Branch, as security trustee (in such capacity, the "Security
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Trustee") and as administrative agent (in such capacity, the "Administrative
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Agent") for the Lenders, the Security Trustee has agreed to serve in such
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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
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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.
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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
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Law 100-710 (46 USC Section 30101 et seq.) (the "Ship Mortgage Act").
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NOW, THEREFORE, THIS MORTGAGE WITNESSETH:
1. Definitions: In this Mortgage, unless the context
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otherwise requires:
(A) (i) "Classification Society" means American Bureau of
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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
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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
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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
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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
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partnership, general partnership, syndicate, joint
venture, association, trust, unincorporated
organization, trustee or other legal representative;
(vi) "Requisition Compensation" means all moneys or other
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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
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date hereof and terminating upon discharge of the
security created by this Mortgage by payment in full
of the Obligations;
(ix) "Total Loss" means:
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(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
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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
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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
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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
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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.
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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
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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");
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(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: /s/ Kevin C. O'Rourke
-------------------------------
Name: Kevin C. O'Rourke
Title: Senior Vice President
ACKNOWLEDGMENT
--------------
STATE OF CALIFORNIA )
): ss:
COUNTY OF ALAMEDA )
On this 3rd day of July, 2006, before me, a Notary Public in and for
the State of California, City and County of Alameda, personally appeared
KEVIN C. O'ROURKE, Senior Vice President of Matson Navigation Company, Inc., a
Hawaii corporation, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name is subscribed to the within
instrument and acknowledged to me that he executed the same in his authorized
capacity, and that by his signature(s) on the instrument, the person or the
entity upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
/s/ April Gee
---------------------------------
Notary Public
My commission expires: November 7, 2009
EXHIBIT 1
to
First Preferred Ship Mortgage
CREDIT AGREEMENT
[Filed as Exhibit 10.1 of the form 8-K filed on July 1, 2005.]
EXHIBIT 2
to
First Preferred Ship Mortgage
PROMISSORY NOTE
[Filed as part of this Exibit 10.1.]
================================================================================
ASSIGNMENT OF EARNINGS
in favor of
DnB NOR BANK ASA,
acting through its New York Branch,
as Security Trustee for the Lenders
July 12, 2006
MAUNALEI
================================================================================
ASSIGNMENT OF EARNINGS
----------------------
MAUNALEI
THIS ASSIGNMENT (this "Assignment") is made the 12th day of
July, 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. 1181627;
(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: /s/ Kevin C. O'Rourke
------------------------------
Name: Kevin C. O'Rourke
Title: Senior Vice President
EXHIBIT 1
---------
EARNINGS ASSIGNMENT NOTICE
--------------------------
TO:
TAKE NOTICE:
(a) that by an Assignment of Earnings dated the ___ day of June, 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. 1181627, 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. 16304998), at the above address of
the Assignee (or at such other place as the Assignee may direct).
DATED THIS ____day of June, 2006.
MATSON NAVIGATION COMPANY, INC.
By: _________________________________
Name:
Title:
EXHIBIT 2
---------
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 Charter party 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:
================================================================================
ASSIGNMENT OF INSURANCES
in favor of
DnB NOR BANK ASA,
acting through its New York Branch,
as Security Trustee
July 12, 2006
MAUNALEI
================================================================================
ASSIGNMENT OF INSURANCES
------------------------
MAUNALEI
THIS ASSIGNMENT (this "Assignment") is made the 12th day of
July, 2006, by 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. 1181627;
(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 nder 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.
(SIGNATURE PAGE FOLLOWS)
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.,
as Assignor
By: /s/ Kevin C. O'Rourke
--------------------------------
Name: Kevin C. O'Rourke
Title: Senior Vice President
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: See Schedule 1 attached hereto.
TAKE NOTICE:
(a) that by an Assignment of Insurances dated the 12th day
of July, 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. 1181627, 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 12th day of July, 2006.
MATSON NAVIGATION COMPANY, INC.
By: /s/ Kevin C. O'Rourke
---------------------------
Name: Kevin C. O'Rourke
Title: Senior Vice President
We hereby acknowledge receipt of the
foregoing Notice of Assignment and agree to
act in accordance with the terms thereof:
By: ________________________________
Name:
Title:
SCHEDULE 1
----------
Schedule of Insurers on the "M/V Maunalei":
(1) Marine Hull & Machinery, etc.
-----------------------------
Underwriters at Lloyd's - Syndicate 1209 Lead 21.3258%
Groupama General Insurance Company, Ltd. (Dex) 3.3333%
Allianz Marine & Aviation Versicherungs AG 3.9772%
Marine Insurance Company Limited 4.5455%
GE Frankona Reinsurance Limited 2.2727%
Aspen Insurance Company UK Limited 4.5455%
AXA Corporate Solutions Assurance SA 18.7500%
Generali France Assurances IARD 8.7500%
Gard Marine & Energy Ltd. 10.0000%
American Hull Insurance Syndicate 10.0000%
XL Specialty Insurance Company 7.5000%
American Home Assurance Company 5.0000%
New York Marine & General Insurance Company 2.5000%
Navigators Insurance Company 2.5000%
-------
Total 100.0000%
(2) Marine Increased Value
----------------------
Underwriters at Lloyd's - Syndicate 1209 Lead 43.8258%
Allianz Marine & Aviation Versicherungs AG 3.9772%
Groupama General Insurance Company, Ltd. (Dex) 3.3333%
Marine Insurance Company Limited 26.3637%
Aspen Insurance Company UK Limited 17.5000%
GE Frankona Reinsurance Limited 5.0000%
-------
Total 100.0000%
(3) War Risk Hull & Machinery and Increased Value
---------------------------------------------
Underwriters at Lloyd's - (Syndicate 1209 Lead) 20.9091%
Allianz Marine & Aviation Versicherungs AG 3.9772%
Marine Insurance Company Limited 6.8410%
Aspen Insurance Company UK Limited 6.0000%
GE Frankona Reinsurance Limited 2.2727%
Navigators Insurance Company 20.0000%
New York Marine & General Insurance Company 10.0000%
Groupement D'Assurances De Risques Exceptionnels (GAREX) 30.0000%
--------
Total 100.0000%
GAREX Security
Allianz Marine & Aviation (France) 33.90%
AXA Corporate Solution Assurance 43.39%
Generali France Assurances 8.13%
Groupama Transport 14.58%
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100.00%
It is hereby mutually understood and agreed between the parties that the
Groupement D'Assurances De Risques Exceptionnels acts for and on behalf of
the Companies listed above, severally but not jointly, each for its own
share as it appears above next to the name of each Company.
(4) Protection & Indemnity
----------------------
The Standard Steamship Owner's Protection & Indemnity
Association (Europe) Limited 100.00%