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Exhibit 4.11 | ||||||||
Exhibit 4.12 |
2
3
4
5
STOCKHOLDERS EQUITY | ||||||||||||||||||||||||
Common Stock and Additional Paid-in | ||||||||||||||||||||||||
Dropdown | Capital | |||||||||||||||||||||||
Predecessor | Thousands of | Retained | ||||||||||||||||||||||
Equity | Common | Earnings / | ||||||||||||||||||||||
(notes 1, 2) | Shares | Class A | Class B | (Deficit) | Total | |||||||||||||||||||
$ | # | $ | $ | $ | $ | |||||||||||||||||||
Balance as at December 31, 2009
|
109,911 | 32,000 | 246,628 | 125 | (40,482 | ) | 316,182 | |||||||||||||||||
|
||||||||||||||||||||||||
Net income
|
959 | 7,051 | 8,010 | |||||||||||||||||||||
Net change in parents equity in Dropdown
Predecessor
|
93,198 | 93,198 | ||||||||||||||||||||||
Proceeds from follow-on issuance of
Class A common shares, net of offering
costs of $4.6 million
(note 8)
|
11,392 | 134,920 | 134,920 | |||||||||||||||||||||
Acquisition of
Helga Spirit LLC, Yamuna
Spirit LLC,
and
Kaveri Spirit LLC
from
Teekay Corporation
(note 2)
|
(204,068 | ) | 35,384 | (168,684 | ) | |||||||||||||||||||
Dividends declared to Teekay Corporation
|
(14,950 | ) | (14,950 | ) | ||||||||||||||||||||
Dividends declared to other parties
|
(24,178 | ) | (24,178 | ) | ||||||||||||||||||||
|
||||||||||||||||||||||||
Balance as at September 30, 2010
|
| 43,392 | 381,548 | 125 | (37,175 | ) | 344,498 | |||||||||||||||||
|
6
1. |
Basis of Presentation
|
2. |
Dropdown Predecessor
|
7
3. |
Adoption of New Accounting Pronouncements
|
4. |
Investment in Term Loans
|
5. |
Fair Value Measurements
|
8
5. |
Fair Value Measurements (Contd)
|
September 30, 2010 | ||||||||||||
Carrying | Fair | |||||||||||
Fair Value | Amount | Value | ||||||||||
Hierarchy | Asset/ (Liability) | Asset/ (Liability) | ||||||||||
Level (1) | $ | $ | ||||||||||
|
||||||||||||
Cash and cash equivalents
|
11,224 | 11,224 | ||||||||||
Investment in term loans
|
115,775 | 115,775 | ||||||||||
Non-current amounts due from affiliates
|
1,664 | 1,664 | ||||||||||
Long-term debt
|
(419,528 | ) | (370,093 | ) | ||||||||
Derivative instruments
|
||||||||||||
Interest rate swap agreements
|
Level 2 | (24,789 | ) | (24,789 | ) |
(1) |
The fair value hierarchy level is only applicable to each item on the consolidated balance
sheets that is recorded at fair value on a recurring basis.
|
6. |
Long-Term Debt
|
September 30, 2010 | December 31, 2009 | |||||||
$ | $ | |||||||
|
||||||||
Revolving credit facility due 2017
|
394,328 | 277,328 | ||||||
Term Loan due through 2017
|
25,200 | 27,900 | ||||||
Long-term debt of Dropdown
Predecessor
(note 2)
|
| 175,503 | ||||||
|
||||||||
|
419,528 | 480,731 | ||||||
Less current portion
|
3,600 | 5,400 | ||||||
|
||||||||
Total
|
415,928 | 475,331 | ||||||
|
9
7. |
Derivative Instruments
|
Fair Value / | ||||||||||||||||||||
Interest | Principal | Carrying Amount | Weighted-Average | Fixed | ||||||||||||||||
Rate | Amount | Asset / (Liability) | Remaining Term | Interest Rate | ||||||||||||||||
Index | $ | $ | (Years) | (%) (1) | ||||||||||||||||
LIBOR-Based Debt:
|
||||||||||||||||||||
U.S. Dollar-denominated interest rate swap
|
USD LIBOR 3M | 100,000 | (23,899 | ) | 7.0 | 5.55 | ||||||||||||||
U.S. Dollar-denominated interest rate swap
|
USD LIBOR 3M | 70,000 | (385 | ) | 1.8 | 0.85 | ||||||||||||||
U.S. Dollar-denominated interest rate swap
|
USD LIBOR 3M | 45,000 | (505 | ) | 2.8 | 1.19 |
(1) |
Excludes the margin the Company pays on its variable-rate debt, which as of September 30,
2010 was 0.6%.
|
8. |
Capital Stock
|
10
9. |
Commitments and Contingencies
|
10. |
Related Party Transactions
|
a. |
On April 14, 2010, the Company acquired from Teekay Corporation its subsidiaries Kaveri
Spirit L.L.C. and Yamuna Spirit L.L.C., which each owns a Suezmax tanker, the
Kaveri Spirit
and the
Yamuna Spirit
, respectively for a total of $124.2 million. On May 11, 2010, the
Helga Spirit L.L.C., which owns an Aframax tanker, the
Helga Spirit
, was sold from Teekay
Corporation to Teekay Tankers for $44.5 million. Preceding the sale of the Helga Spirit
L.L.C. to Teekay Tankers, Teekay Corporation contributed a beneficial interest in the
vessels time charter to the Helga Spirit L.L.C. As described in Note 2, the acquisitions
were accounted for as reorganizations of entities under common control and accounted for on
a basis similar to the pooling of interest basis. The consideration consisted of $136.8
million in cash and 2.6 million shares of our Class A common stock, with a value of $32.0
million. The issuance of the 2.6 million Class A common stock has been reflected as a
non-cash transaction in our statement of cash flow for the nine months ended September 30,
2010. The portion of the purchase price paid in cash was financed with net proceeds of a
follow-on public offering of $102.9 million (see Note 8), and the net proceeds of $17.3
million from the sale of the
Falster Spirit
(see Note 12) as well as using $9.2 million of
the Companys working capital and drawing $7.0 million on the Tranche A Revolver (see Note
6).
|
b. |
During the three and nine months ended September 30, 2010, $nil and $1.0 million of
general and administrative expenses attributable to the operations of the Dropdown
Predecessor were incurred by Teekay Corporation and have been allocated to the Company.
During the three and nine months ended September 30, 2009, $0.9 million and $2.8 million of
general and administrative expenses attributable to the operations of the Dropdown
Predecessor were incurred by Teekay Corporation and have been allocated to the Company.
|
c. |
During the three and nine months ended September 30, 2010, $nil and $1.2 million of
interest expenses attributable to the operations of the Dropdown Predecessor were incurred
by Teekay Corporation and have been allocated to the Company. During the three and nine
months ended September 30, 2009, $0.7 million and $3.4 million of interest expenses
attributable to the operations of the Dropdown Predecessor were incurred by Teekay
Corporation and have been allocated to the Company.
|
d. |
The amounts due to and from affiliates at September 30, 2010 and December 31, 2009, are
without interest or stated terms of repayment.
|
e. |
During the three and nine months ended September 30, 2010, $1.0 million and $6.9
million, respectively, of revenues were earned as a result of the Company chartering out
the
Nassau Spirit
to Teekay Corporation under a fixed-rate time-charter contract. During
the three and nine months ended September 30, 2009, $3.4 million and $10.4 million,
respectively, of revenues were earned as a result of the Company chartering out the
Nassau
Spirit
to Teekay Corporation under a fixed-rate time-charter contract. In August 2009, the
Company exercised its option to extend the time-charter contract by one year. The
time-charter contract for the
Nassau Spirit
expired on July 28, 2010 and has now been
replaced by a 12-month time-charter contract with a third party, starting immediately after
the expiration of the time-charter contract with Teekay Corporation.
|
f. |
Pursuant to a long-term management agreement with Teekay Tankers Management Services
Ltd., a wholly owned subsidiary of Teekay Corporation (the
Manager
), the Company incurred
total management fees of $1.7 million and $4.8 million for the three and nine months ended
September 30, 2010, respectively, and $1.5 million and $4.2 million for the three and nine
months ended September 30, 2009, respectively, for commercial, technical, strategic,
administrative services and performance fees. The commercial services portion of the
management fee of $0.3 million and $0.7 million for the three and nine months ended
September 30, 2010, respectively, and $0.2 million and $0.7 million for the three and nine
months ended September 30, 2009, respectively, have been recorded as voyage expenses. A
portion of the technical management fee that represents crew training costs are recorded in
vessel operating expenses in the amounts of $0.3 million and $0.6 million for the three and
nine months ended September 30, 2010, respectively, and $0.1 million and $0.4 million for
the three and nine months ended September 30, 2009, respectively. Crew training costs were
previously recorded in general and administrative expenses in the prior year and have been
reclassified to vessel operating expenses for comparative purposes in the consolidated
statements of income. The remainder of the management fees is included in general and
administrative expenses and for the three and nine months ended September 30, 2010 were
$1.2 million and $3.4 million, respectively, and for the three and nine months ended
September 30, 2009 were $1.1 million and $3.1 million, respectively.
|
11
10. |
Related Party Transactions (Contd)
|
g. |
In addition to the management fees paid to the Manager for services provided under the
long-term management agreement with the Manager as described in Note 10f, the Company also
incurred crewing and manning costs which are recorded in vessel operating expenses on the
consolidated statements of income. For the three and nine months ended September 30, 2010,
the Company incurred $5.1 million and $16.0 million, respectively, for crewing and manning
costs, of which $1.7 million was payable to the Manager as reimbursement for its related
expenses as at September 30, 2010 and included in accrued liabilities on the consolidated
balance sheets. For the three and nine months ended September 30, 2009, the Company
incurred $5.4 million and $16.7 million, respectively, for crewing and manning costs, of
which $2.2 million was payable to the Manager as at December 31, 2009 and included in
accrued liabilities on the consolidated balance sheets.
|
h. |
Pursuant to pooling arrangements managed by certain wholly-owned subsidiaries of Teekay
(collectively the
Pool Managers
), the Company incurred pool management fees during the
three and nine months ended September 30, 2010 of $0.3 million and $1.1 million,
respectively, and during the three and nine months ended September 30, 2009, of $0.5
million and $1.6 million, respectively, with respect to Company vessels that participate in
the pooling arrangements. The Pool Managers provide commercial services to the pool
participants and administer the pools in exchange for a fee currently equal to 1.25% of the
gross revenues attributable to each pool participants vessels and a fixed amount per
vessel per day which ranges from $275 (for the Suezmax tanker pool) to $350 (for the
Aframax tanker pool). Voyage revenues and voyage expenses of the Companys vessels
operating in these pool arrangements are pooled with the voyage revenues and voyage
expenses of other pool participants. The resulting net pool revenues, calculated on a
time-charter equivalent basis, are allocated to the pool participants according to an
agreed formula. The Company accounts for the net allocation from the pools as net pool
revenues from affiliates on the consolidated statements of income (loss). For the three
and nine months ended September 30, 2010, the Companys allocation from the pools were net
of $3.2 million and $12.8 million, respectively, of voyage expense. For the three and nine
months ended September 30, 2009, the Companys allocation from the pools were net of $4.3
million and $12.8 million, respectively, of voyage expense. The pool receivable from
affiliates as at September 30, 2010 and December 31, 2009 was $4.2 million and $11.8
million, respectively.
|
12
11. |
Earnings Per Share
|
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | September 30, | September 30, | |||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
$ | $ | $ | $ | |||||||||||||
|
||||||||||||||||
Net (loss) income
|
(269 | ) | (2,856 | ) | 8,010 | 33,062 | ||||||||||
Add: Net loss (income) attributable to the Dropdown
Predecessor
|
| 1,339 | (959 | ) | (4,208 | ) | ||||||||||
|
||||||||||||||||
Net (loss) income available for common stockholders
|
(269 | ) | (1,517 | ) | 7,051 | 28,854 | ||||||||||
|
||||||||||||||||
|
||||||||||||||||
Weighted-average number of common shares
|
43,391,744 | 32,000,000 | 39,260,672 | 27,512,821 | ||||||||||||
|
||||||||||||||||
Common shares and common share equivalents outstanding at
end of period
|
43,391,744 | 32,000,000 | 43,391,744 | 32,000,000 | ||||||||||||
|
||||||||||||||||
|
||||||||||||||||
(Loss) earnings per common share:
|
||||||||||||||||
- Basic and diluted
|
(0.01 | ) | (0.05 | ) | 0.18 | 1.05 |
12. |
Vessel Sales
|
13. |
Accounting Pronouncements Not Yet Adopted
|
14. |
Subsequent Events
|
13
14
|
Voyage charters participating in pooling arrangements, which are charters for shorter
intervals that are priced on a current or spot market rate and then adjusted for pool
participation based on predetermined criteria; and
|
|
|
Time charters, whereby vessels are chartered to customers for a fixed period of time at
rates that are generally fixed, but may contain a variable component based on inflation,
interest rates or current market rates.
|
Voyage Charter | Time Charter | |||
Typical contract length
|
Single voyage | One year or more | ||
Hire rate basis
(1)
|
Varies | Daily | ||
Voyage expenses
(2)
|
We pay | Customer pays | ||
Vessel operating expenses
(3)
|
We pay | We pay | ||
Off-hire
(4)
|
Customer does not pay | Customer does not pay |
(1) |
Hire rate
refers to the basic payment from the charterer for the use of the vessel.
|
|
(2) |
Voyage expenses are all expenses unique to a particular voyage, including any bunker fuel
expenses, port fees, cargo loading and unloading expenses, canal tolls, agency fees and
commissions.
|
|
(3) |
Vessel operating expenses include crewing, repairs and maintenance, insurance, stores, lube
oils and communication expenses.
|
|
(4) |
Off-hire
refers to the time a vessel is not available for service.
|
|
Our financial results reflect the results of the interests in vessels acquired from Teekay
Corporation for all periods the vessels were under common control.
As at September 30, 2010,
we have acquired from Teekay five Suezmax tankers and one Aframax tanker at various times
since our initial public offering. The recent acquisition of the
Kaveri Spirit
,
Yamuna Spirit
and
Helga Spirit
occurred during the second quarter of 2010, and more information about these
purchases are included above under Significant Transactions in 2010 above. These
acquisitions from Teekay were deemed to be business acquisitions between entities under common
control. Accordingly, we have accounted for these transactions in a manner similar to the
pooling of interest method. Under this method of accounting our financial statements, for
periods prior to the date the interests in these vessels were actually acquired by us, are
recast to include the results of these acquired vessels. The periods recast include all
periods that we and the acquired vessels were both under common control of Teekay and had
begun operations. As a result, our consolidated statements of income for the three and nine
months ended September 30, 2010 and 2009, reflect the financial results of the
Kaveri Spirit
,
the
Yamuna Spirit
and the
Helga Spirit
purchased in April 2010 and May 2010, respectively, for
the period under common control of Teekay prior to the acquisition of the vessels by us, and
such results for such periods are collectively referred to as the
Dropdown Predecessor
.
|
|
Our voyage revenues are affected by cyclicality in the tanker markets.
The cyclical nature
of the tanker industry causes significant increases or decreases in the revenue we earn from
our vessels, particularly those we trade in the spot market. This affects the amount of
dividends, if any, we pay on our common stock from period to period.
|
|
Tanker rates also fluctuate based on seasonal variations in demand.
Tanker markets are
typically stronger in the winter months as a result of increased oil consumption in the
northern hemisphere but weaker in the summer months as a result of lower oil consumption in
the northern hemisphere and increased refinery maintenance. In addition, unpredictable weather
patterns during the winter months tend to
disrupt vessel scheduling, which historically has increased oil price volatility and oil
trading activities in the winter months. As a result, revenues generated by our vessels have
historically been weaker during the quarters ended June 30 and September 30, and stronger in
the quarters ended March 31 and December 31.
|
15
|
Our vessel operating expenses are facing industry-wide cost pressures.
The oil shipping
industry has experienced a global manpower shortage due to significant growth in the world
fleet. This shortage resulted in crew wage increases during the last three years although to a
lesser degree in 2009 as well as the first half of 2010. We expect the trend of significant
crew compensation increases to abate in the short term. However, this could change if market
conditions adjust. In addition, factors such as pressure on raw material prices and changes in
regulatory requirements could also increase operating expenditures. In 2009, we took various
measures in an effort to reduce costs, improve operational efficiencies, and mitigate the
impact of inflation and price increases and have continued this effort during 2010.
|
|
The amount and timing of drydockings of our vessels can significantly affect our revenues
between periods.
Our vessels are normally offhire when they are being drydocked. During the
three and nine months ended September 30, 2010, one and three of our vessels were drydocked,
respectively. The total number of days of offhire relating to drydocking during the three and
nine months ended September 30, 2010 were 21.7 days and 128.2 days, respectively. For our
existing fleet, there are no drydockings scheduled in the fourth quarter of 2010 or in 2011.
|
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
September 30, | September 30, | |||||||||||||||||||||||
(in thousands of U.S. dollars except percentages) | 2010 | 2009 | % Change | 2010 | 2009 | % Change | ||||||||||||||||||
|
||||||||||||||||||||||||
Voyage revenues
|
27,932 | 26,703 | 4.6 | 94,451 | 108,377 | (12.8 | ) | |||||||||||||||||
Interest income from investment in term loans
|
2,413 | | | 2,413 | | | ||||||||||||||||||
Less: Voyage expenses
|
(398 | ) | (1,329 | ) | (70.1 | ) | (1,950 | ) | (2,415 | ) | (19.3 | ) | ||||||||||||
|
||||||||||||||||||||||||
Net revenues
|
29,947 | 25,374 | 18.0 | 94,914 | 105,962 | (10.4 | ) | |||||||||||||||||
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||
Vessel operating expenses
|
9,392 | 9,392 | | 29,240 | 29,701 | (1.6 | ) | |||||||||||||||||
Depreciation and amortization
|
9,722 | 9,525 | 2.1 | 29,591 | 28,975 | 2.1 | ||||||||||||||||||
General and administrative
|
1,782 | 2,897 | (38.5 | ) | 5,805 | 7,603 | (23.6 | ) | ||||||||||||||||
Loss on sale of vessels
|
1,901 | | | 1,864 | | | ||||||||||||||||||
|
||||||||||||||||||||||||
Income from operations
|
7,150 | 3,560 | 100.8 | 28,414 | 39,683 | (28.4 | ) | |||||||||||||||||
|
||||||||||||||||||||||||
Interest expense
|
(1,653 | ) | (1,834 | ) | (9.9 | ) | (4,919 | ) | (8,499 | ) | (42.1 | ) | ||||||||||||
Interest income
|
15 | 12 | 25.0 | 51 | 60 | (15.0 | ) | |||||||||||||||||
Realized and unrealized (loss) gain on derivative
instruments
|
(5,577 | ) | (4,564 | ) | 22.2 | (14,940 | ) | 2,279 | (755.6 | ) | ||||||||||||||
Other loss net
|
(204 | ) | (30 | ) | 580.0 | (596 | ) | (461 | ) | 29.3 | ||||||||||||||
|
||||||||||||||||||||||||
Net (loss) income
|
(269 | ) | (2,856 | ) | 90.6 | 8,010 | 33,062 | (75.8 | ) | |||||||||||||||
|
16
Three Months Ended | Three Months Ended | |||||||||||||||||||||||
September 30, 2010 | September 30, 2009 | |||||||||||||||||||||||
Net | Average | Net | Average | |||||||||||||||||||||
Voyage | TCE per | Voyage | TCE per | |||||||||||||||||||||
Revenues (1) | Revenue | Revenue | Revenues (2) | Revenue | Revenue | |||||||||||||||||||
(in thousands) | Days | Day (1) | (in thousands) | Days | Day (2) | |||||||||||||||||||
|
||||||||||||||||||||||||
Voyage-charter contracts Aframax
|
$ | 3,166 | 214 | $ | 14,806 | $ | 2,926 | 258 | $ | 11,334 | ||||||||||||||
Voyage-charter contracts Suezmax
|
$ | 3,394 | 184 | $ | 18,445 | $ | 5,695 | 367 | $ | 15,534 | ||||||||||||||
Time-charter contracts Aframax
|
$ | 14,055 | 552 | $ | 25,466 | $ | 15,807 | 536 | $ | 29,484 | ||||||||||||||
Time-charter contracts Suezmax
(3)
|
$ | 7,648 | 276 | $ | 27,712 | $ | 2,869 | 92 | $ | 31,182 | ||||||||||||||
|
||||||||||||||||||||||||
Total
(4)
|
$ | 28,263 | 1,226 | $ | 23,058 | $ | 27,297 | 1,253 | $ | 21,787 | ||||||||||||||
|
(1) |
Excludes a total of $0.6 million in internal pool management fees and commissions payable by
us to Teekay for commercial management for our vessels and $0.1 million in offhire bunker
expenses.
|
|
(2) |
Excludes a total of $0.9 million in internal pool management fees and commissions payable by
us to Teekay for commercial management for our vessels and $1.0 million in offhire bunker
expenses.
|
|
(3) |
The
Ganges Spirit, Narmada Spirit
and
Yamuna Spirit
earned profit-share amounts of $nil, $0.1
million and $nil, respectively, for the three months ended September 30, 2010 compared to
$nil, $nil and $nil, respectively, in the same period of 2009. The
Ganges Spirit
and
Yamuna
Spirit
are employed on a time-charter contract at a base rate of $30,500 per day with a profit
sharing agreement whereby we are entitled to the second $3,000 per day of the vessels
earnings above the base rate and to 50 percent of any earnings above $33,500 per day and the
profit-share component is calculated as 50 percent of a specified average daily rate for the
month in excess of $19,500 for the
Narmada Spirit
. The profit share amount is determined on a
monthly basis for the
Narmada Spirit
and on an annual basis in the second quarter of each year
for the period from June 1 to May 31 for both the
Ganges Spirit
and
Yamuna Spirit
profit-share
amounts. The TCE rate per day for the Suezmax time-charter fleet for the three months ended
September 30, 2010 and 2009, was $27,255 and $31,182, respectively, excluding the profit share
amount recognized in the quarter.
|
|
(4) |
The TCE rate per day for total fleet for the three months ended September 30, 2010 and 2009,
was $22,955 and $21,787, respectively, excluding the profit-share amount recognized in the
quarter.
|
Nine Months Ended | Nine Months Ended | |||||||||||||||||||||||
September 30, 2010 | September 30, 2009 | |||||||||||||||||||||||
Net | Average | Net | Average | |||||||||||||||||||||
Voyage | TCE per | Voyage | TCE per | |||||||||||||||||||||
Revenues (1) | Revenue | Revenue | Revenues (2) | Revenue | Revenue | |||||||||||||||||||
(in thousands) | Days | Day (1) | (in thousands) | Days | Day (2) | |||||||||||||||||||
|
||||||||||||||||||||||||
Voyage-charter contracts Aframax
|
$ | 13,827 | 783 | $ | 17,667 | $ | 15,992 | 877 | $ | 18,227 | ||||||||||||||
Voyage-charter contracts Suezmax
|
$ | 14,748 | 542 | $ | 27,220 | $ | 31,257 | 1,087 | $ | 28,756 | ||||||||||||||
Time-charter contracts Aframax
|
$ | 42,981 | 1,611 | $ | 26,686 | $ | 50,101 | 1,672 | $ | 29,959 | ||||||||||||||
Time-charter contracts Suezmax
(3)
|
$ | 23,632 | 819 | $ | 28,857 | $ | 12,164 | 273 | $ | 44,558 | ||||||||||||||
|
||||||||||||||||||||||||
Total
(4)
|
$ | 95,188 | 3,755 | $ | 25,356 | $ | 109,514 | 3,909 | $ | 28,011 | ||||||||||||||
|
(1) |
Excludes a total of $2.0 million in internal pool management fees and commissions payable by
us to Teekay for commercial management for our vessels and $0.7 million in offhire bunker
expenses.
|
|
(2) |
Excludes a total of $2.4 million in internal pool management fees and commissions payable by
us to Teekay for commercial management for our vessels and $1.2 million in offhire bunker
expenses.
|
17
(3) |
The
Ganges Spirit
,
Narmada Spirit
and
Yamuna Spirit
earned profit-share amounts of $0.2
million, $1.3 million and $0.2 million, respectively, for the nine months ended September 30,
2010 compared to $3.7 million, $nil and $nil, respectively, in the same period of 2009. The
Ganges Spirit
and
Yamuna Spirit
are employed on a time-charter contract at a base rate of
$30,500 per day with a profit sharing agreement whereby we are entitled to the second $3,000
per day of the vessels earnings above the base rate and to 50 percent of any earnings above
$33,500
per day and the profit-share component is calculated as 50 percent of a specified average daily
rate for the month in excess of $19,500 for the
Narmada Spirit.
The profit share amount is
determined on a monthly basis for the
Narmada Spirit
and on an annual basis in the second
quarter of each year for the period from June 1 to May 31 for both the
Ganges Spirit
and
Yamuna
Spirit
profit-share amounts. The TCE rate per day for the Suezmax time-charter fleet for the
nine months ended September 30, 2010 and 2009 was $26,779 and 31,148, respectively, excluding
the profit share amount recognized in the quarter.
|
|
(4) |
The TCE rate per day for total fleet for the nine months ended September 30, 2010 and 2009,
was $24,903 and $27,075, respectively, excluding the profit-share amount recognized in the
quarter.
|
|
an increase of $3.3 million for the three and nine months ended September 30, 2010,
resulting from more revenues days in 2010 from the
Kyeema Spirit
,
Kareela Spirit
, and
Kanata Spirit
which had drydockings and repositioning days in the third quarter of 2009;
|
|
an increase of $2.4 million for the three and nine months ended September 30, 2010,
resulting from interest income from an investment in term loans of $115 million. This
investment earns a total yield of approximately 10 percent. The transaction was executed
mid-July 2010;
|
|
a net increase of $1.3 million and $0.7 million for the three and nine months ended
September 30, 2010, respectively, relating to the change in employment of the
Yamuna Spirit
which was trading in the Gemini Pool during the three months ended September 30, 2009
compared to its current time-charter employment;
|
|
an increase of $0.9 million and $0.5 million for the three and nine months ended
September 30, 2010, respectively, resulting from lower offhire bunker expense;
|
|
an increase of $0.7 million and $0.9 million for the three months ended September 30,
2010 relating to an increase in Suezmax and Aframax earnings, respectively, on voyage
charter arrangements because the respective spot markets were stronger during this period
compared to the same period in 2009;
|
|
a net increase of $0.5 million for the three months ended September 30, 2010 relating to
the change in employment of the
Narmada Spirit
which was trading in the Gemini Pool during
the three months ended September 30, 2009 and currently on time-charter employment
|
|
a net increase of $0.3 million for the three months and nine months ended September 30,
2010 relating to the change in employment of the
Everest Spirit
which was trading in the
Aframax Pool during the the third quarter of 2009 and currently on time-charter employment;
and
|
|
an increase of $0.3 million and $0.4 million for the three and nine months ended
September 30, 2010, respectively, resulting from lower pool management fees and commissions
for vessel commercial management.
|
|
a net decrease of $2.4 million for the nine months ended September 30, 2010,
respectively, relating to the change in employment of the
Narmada Spirit
which was trading
in the Gemini Pool during the nine months ended September 30, 2009 compared to its current
time-charter employment;
|
|
a decrease of $2.1 million and $2.7 million for the three and nine months ended
September 30, 2010, respectively, relating to the lower rates earned by our Aframax
vessels, on time-chartered contracts;
|
|
a net decrease of $2.0 million and $4.7 million for the three and nine months ended
September 30, 2010, respectively, relating to the change in employment of the
Matterhorn
Spirit
which was earning time-charter revenues during the three and nine months ended
September 30, 2009 compared to its current spot voyage employment during the three and nine
months ended September 30, 2010;
|
|
a decrease of $1.2 million and $0.5 million for the nine months ended September 30, 2010
relating to a decrease in Suezmax and Aframax earnings on voyage charters, respectively,
resulting from weaker spot markets in the nine months ended September 30, 2010 compared to
the same period in 2009;
|
|
a decrease of $0.1 million and $2.0 million for the three and nine months ended
September 30, 2010, respectively, relating to the lower profit-sharing amounts earned by
the three applicable Suezmax tankers compared to the same period in 2009;
|
|
a decrease of $1.5 million and $2.9 million for the three and nine months ended
September 30, 2010, respectively, relating to the lower revenues associated with the sale
of the
Falster Spirit
and
Sotra Spirit
; and
|
|
a decrease of $0.3 million and $2.2 million for the three and nine months ended
September 30, 2010, respectively, relating to the offhire days for the
Erik Spirit
,
Sotra
Spirit
, and
Matterhorn Spirit
drydockings which occurred during the nine months ended
September 30, 2010.
|
18
|
a decrease in the debt balance of the Dropdown Predecessor from Teekay Corporation (the
Push-Down Debt
), combined with the decrease in associated interest rates, resulted in
decreases of $0.7 million and $2.2 million for the three and nine months ended September
30, 2010, respectively. The Push-Down Debt from Teekay Corporation consists of an
allocation of Teekays corporate credit facilities. Upon the Dropdown of the
Yamuna Spirit,
the
Kaveri Spirit,
and the
Helga Spirit
in the second quarter of 2010, these corporate
credit facilities were repaid;
|
|
a decrease in the realized LIBOR rates which resulted in decreases of $0.1 million and
$1.1 million for the three and nine months ended September 30, 2010 and 2009, respectively;
|
|
an increase in loan balances outstanding at September 30, 2010 compared to the same
period in 2009 which resulted in $0.5 million and $0.2 million increase in interest expense
for the three and nine months ended September 30, 2010 and 2009, respectively.
|
19
|
incurring or guaranteeing additional indebtedness;
|
|
|
making certain negative pledges or granting certain liens; and
|
|
|
selling, transferring, assigning or conveying assets
|
|
declare our obligations under the agreements immediately due and payable and terminate any
further loan commitments; and
|
|
|
foreclose on any of our vessels or other assets securing the related loans.
|
Nine Months Ended | Nine Months Ended | |||||||
September 30, 2010 | September 30, 2009 | |||||||
(in thousands) | (in thousands) | |||||||
Net cash flow from operating activities
|
48,460 | $ | 68,100 | |||||
Net cash flow from / (used) in financing activities
|
37,199 | (76,341 | ) | |||||
Net cash flow used in investing activities
|
(84,847 | ) | (5,061 | ) |
20
Remainder | 2011 | 2013 | ||||||||||||||||||
of | and | and | Beyond | |||||||||||||||||
(in millions of U.S. dollars) | Total | 2010 | 2012 | 2014 | 2014 | |||||||||||||||
|
||||||||||||||||||||
U.S. Dollar-Denominated Obligations:
|
||||||||||||||||||||
Long-term debt
(1)
|
419.5 | 0.9 | 7.2 | 27.4 | 384.0 | |||||||||||||||
Technical vessel management and administrative fees
|
43.6 | 0.9 | 7.1 | 7.1 | 28.5 | |||||||||||||||
Newbuilding installments
(2)
|
49.0 | 9.8 | 19.6 | 19.6 | | |||||||||||||||
|
||||||||||||||||||||
Total
|
512.1 | 11.6 | 33.9 | 54.1 | 412.5 | |||||||||||||||
|
(1) |
Excludes expected interest payments of $1.2 million (2010), $9.6 million (2011 and 2012),
$9.0 million (2013 and 2014) and $8.3 million (beyond 2014). Expected interest payments are
based on the existing interest rate on the fixed-rate loan and a weighted average rate of
1.01% which includes a margin of 0.6% at September 30, 2010 on the variable-rate loan. The
expected interest payments do not reflect the effect of an interest rate swap that we have
used to hedge certain of our floating-rate debt.
|
|
(2) |
We have a 50% interest in a joint venture that has entered into an agreement for the
construction of a VLCC. As at September 30, 2010, the remaining commitments on the vessel,
excluding capitalized interest and other miscellaneous construction costs, totaled $98.0
million of which our share is $49.0 million. Please read Item 1 Financial Statements: Note 9
Commitments and Contingencies
|
21
|
our future growth prospects and opportunities, including future vessel acquisitions;
|
|
tanker market fundamentals, including the balance of supply and demand in the tanker market
and spot tanker charter rates and oil demand;
|
|
the effectiveness of our chartering strategy in capturing upside opportunities and reducing
downside risks;
|
|
the sufficiency of working capital for short-term liquidity requirements;
|
|
our reliance on external financing sources to fund acquisitions and expansion capital
expenditures;
|
|
crewing costs for vessels;
|
|
the duration of drydockings;
|
|
potential newbuilding order cancellations;
|
|
construction and delivery delays in the tanker industry generally;
|
|
the future valuation of goodwill;
|
|
future capital expenditure commitments and the financing requirements for such commitments;
|
|
our compliance with, and the effect on our business and operating results of, covenants
under our credit facilities;
|
|
our hedging activities relating to foreign exchange, interest rate and spot market risks;
and
|
|
the ability of the counterparties to our derivative contracts to fulfill their contractual
obligations.
|
22
Expected Maturity Date | Fair Value | |||||||||||||||||||||||||||||||||||
Remainder | Asset / | |||||||||||||||||||||||||||||||||||
of 2010 | 2011 | 2012 | 2013 | 2014 | Thereafter | Total | (Liability) | Rate (1) | ||||||||||||||||||||||||||||
(in millions of U.S. dollars, except percentages) | ||||||||||||||||||||||||||||||||||||
Long-Term Debt:
|
||||||||||||||||||||||||||||||||||||
Variable Rate
(2)
|
| | | | 20.2 | 374.1 | 394.3 | (345.8 | ) | 1.01 | % | |||||||||||||||||||||||||
Fixed Rate
|
0.9 | 3.6 | 3.6 | 3.6 | 3.6 | 9.9 | 25.2 | (24.3 | ) | 4.06 | % | |||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
Interest Rate Swap:
|
||||||||||||||||||||||||||||||||||||
Contract Amount
(2) (3)
|
| | 70.0 | 45.0 | | 100.0 | 215.0 | (24.8 | ) | 3.71 | % |
(1) |
Rate refers to the weighted-average effective interest rate for our long-term debt, including
the margin we pay on our variable-rate debt, and the average fixed rate we pay under our
interest rate swap agreement, which excludes the margin we pay on our variable-rate debt.
|
|
(2) |
Interest payments on U.S. Dollar-denominated debt and interest rate swap are based on LIBOR.
|
|
(3) |
The average variable rate paid to us under our interest rate swap is set quarterly at the
three-month LIBOR.
|
23
4.11 |
Shareholders Agreement dated September 30, 2010 for a U.S. $98,000,000 shipbuilding contract
among Teekay Tankers Holding Ltd., Kriss Investment Company and High-Q Investment Ltd.
|
|||
|
||||
4.12 |
Purchase Agreement dated November 1, 2010 between Teekay Corporation and Teekay Tankers Ltd.
For the sale and purchase of the entire membership interests in Esther Spirit L.L.C., and
Iskmati Spirit L.L.C.
|
24
25
TEEKAY TANKERS LTD.
Dated: November 30, 2010
By:
/s/ Vincent Lok
Vincent Lok
Chief Financial Officer
(Principal Financial and Accounting Officer)
PRIVATE & CONFIDENTIAL | EXECUTION VERSION |
1. DEFINITIONS
|
4 | |||
2. OBJECTIVES
|
8 | |||
3. SHARES
|
9 | |||
4. FINANCING
|
10 | |||
5. THE SHIPBUILDING CONTRACT
|
13 | |||
6. DIRECTORS, MANAGEMENT, SIGNING AUTHORITIES
|
13 | |||
7. GENERAL MEETINGS
|
16 | |||
8. OFFICE
|
17 | |||
9. ACCOUNTS AND AUDITORS
|
18 | |||
10. MANAGEMENT
|
20 | |||
11. DISTRIBUTION OF SURPLUS
|
21 | |||
12. CO-OPERATION AND CONFIDENTIALITY
|
23 | |||
13. TRANSFER OF SHARES
|
24 | |||
14. DEADLOCK
|
27 | |||
15. DEFAULT
|
28 | |||
16. SHARE DISPOSITIONS
|
32 | |||
17. MATTERS REQUIRING SHAREHOLDERS APPROVAL
|
33 | |||
18. SALE OR DISPOSAL OF VESSEL
|
36 | |||
19. TERMINATION
|
37 | |||
20. NOTICES
|
37 | |||
21. COSTS AND EXPENSES
|
38 | |||
22. NATURE AND PREVALENCE OF AGREEMENT
|
38 | |||
23. SUCCESSORS AND ASSIGNS
|
39 | |||
24. LAW AND JURISDICTION
|
39 | |||
25. REPRESENTATIONS AND WARRANTIES
|
40 | |||
26. COMPLETION
|
41 |
FIRST SCHEDULE
|
Technical Management Agreement | |
SECOND SCHEDULE
|
Commercial Management Agreement | |
THIRD SCHEDULE
|
Supervision Agreement | |
FOURTH SCHEDULE
|
Shipbuilding Contract | |
FIFTH SCHEDULE
|
Shareholder Loan Agreement | |
SIXTH SCHEDULE
|
Charterparty Agreement |
(1) |
TEEKAY TANKERS HOLDINGS LIMITED, a Marshall Islands corporation, of Trust Company Complex,
Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (Teekay );
|
(2) |
KRISS INVESTMENTS COMPANY, a Liberian corporation, of 80 Broad Street, Monrovia, the Republic
of Liberia (Kriss);
|
(3) |
HIGH-Q INVESTMENTS LIMITED, a Hong Kong corporation of Room 2103, 21
st
Floor,
Shanghai Industrial Investment Building, 48-62 Hennessy Road, Wanchai, Hong Kong (the
Company)
|
(A) |
The Company was incorporated with limited liability under the laws of Hong Kong on
26
th
day of June 2009. At the time of its incorporation, the Company had an
authorised share capital of HK$ 10,000 divided into 10,000 Shares (as defined in Clause 1.1
below) of a single class each with a par value of HK$1.00 each of which one Share was issued
to and fully paid for by Kriss; and
|
(B) |
On 30
th
September 2010, the Company issued one additional Share to Teekay
whereupon Kriss and Teekay each hold one Share of the Company, each accounting for 50% of the
entire issued share capital of the Company; and
|
(C) |
The Company as buyer has entered into a Shipbuilding Contract (as defined in Clause 1.1
below); and
|
(D) |
The parties hereto desire to enter into this Agreement for the purposes of regulating their
relationship with each other and certain aspects of the affairs of and their dealings with the
Company; and
|
(E) |
The Company has agreed with the Shareholders that it will comply with the terms and
conditions of this Agreement insofar as they relate to the Company and to the extent permitted
by law.
|
1. |
DEFINITIONS
|
1.1. |
In this Agreement, unless the context otherwise requires:-
|
4
5
6
1.2. |
Clause headings in this Agreement and the table of contents are for convenience only and have
no legal effect;
|
1.3. |
In this Agreement references to Clauses and Exhibits are to clauses of and exhibits to this
Agreement and, unless the context otherwise requires, words importing the singular include the
plural and vice versa, words importing one gender include both and references to persons
include bodies corporate and unincorporated.
|
7
1.4. |
This Agreement shall mean this Agreement as amended, varied or restated from time to time.
|
2. |
CONDITIONS; OBJECTIVES AND BUSINESS
|
2.1 |
The Company is to build the Vessel for delivery on or before 26th November 2013 subject to
the terms and upon the conditions of the Shipbuilding Contract.
|
2.2 |
The Company shall have as its sole business, the acquisition, ownership, chartering,
operation and eventual disposal of the Vessel.
|
2.3 |
The Company shall acquire the Vessel from the Builder upon the terms and conditions set forth
in the Shipbuilding Contract and for the Purchase Price.
|
2.4 |
Day to day management of the Vessel, after delivery, including but not limited to matters
such as manning, maintenance and repair, insurance cover and other necessary works regarding
the Vessels operation subject to a most competitive quote shall be delegated by the Company
to the Technical Manager pursuant to the Technical Management Agreement.
|
2.5 |
Supervision of the construction, trials and delivery of the Vessel shall be delegated by the
Company to the Supervisor pursuant to the Supervision Agreement. Teekay shall be entitled to
send its own representative to the Builders yard at its own expense, as observer only and
without remuneration.
|
2.6 |
The Company and the Shareholders shall use their best endeavours to obtain financing from
Lenders for the purchase price of the Vessel to be advanced in accordance with the terms of
the Loan Agreement.
|
2.7 |
This Agreement and the obligations of the parties hereunder shall only become effective upon
the fulfilment of Clause 26, SAVE AND EXCEPT THAT this
|
8
3. |
SHAREHOLDING AND CAPITAL CONTRIBUTION
|
3.1. |
The Company is a corporation incorporated under the laws of Hong Kong with an authorised
capital of 10,000 shares of nominal value HK$ 1.00 each.
|
3.2 |
As at the date of this Agreement, two (2) Shares have been issued by the Company and fully
paid for a consideration of HK$ 1.00 per Share.
|
3.3 |
The Shareholders Loans will be advanced by the Shareholders in amounts and at times to be
determined by the Board provided that:
|
(i) |
the funds required by the Company to fund the payment of the pre-delivery
instalments of the Purchase Price under the Shipbuilding Contract shall, to the extent
that the same are not financed by the Lenders be, provided by the Shareholders;
|
(ii) |
the amount to be provided by each Shareholder shall be such proportion of the
aggregate amount then required by the Company as is equal to the proportionate
shareholding held by that Shareholder in the Company;
|
(iii) |
the terms and conditions of the Shareholders Loans (in particular but not
limited to the amount of such Shareholder Loan and date of advancement of such loan by
the Shareholder) must be agreed by that Shareholder in advance; and
|
(iv) |
each party will make payment by a telex or telegraphic transfer to such bank
as the Board shall direct.
|
9
3.4 |
Each Shareholder confirms and undertakes that it will hold its Share as the registered and
beneficial holder at all times subject to and upon the terms and conditions of this Agreement.
|
4 |
FINANCING
|
4.1 |
The parties hereby acknowledge:
|
(a) |
that it is intended that a portion of the Purchase Price and of the
pre-delivery costs for the Vessel will be financed by the Lenders upon and subject to
the terms and conditions of the Loan Agreement and the Security Documents, which terms
and conditions are expected to include, but not be limited to, a requirement that
there be a first mortgage on the Vessel, the earnings, requisition compensation and
insurances of the Vessel and, if required by the Lenders, a guarantee from the
Shareholders in proportion to their respective shareholding in the Company, and by
funds provided by the Shareholders by way of loan to the Company in proportion to
their respective Shareholdings in the Company;
|
(b) |
that it is hereby agreed that if a guarantee is required by the Lender from
the Shareholders of the Company in respect of the Loan, then it will be contributed on
the basis that Kriss or an Associate or a holding company of Kriss provides a
guarantee of 50% of the liability of the Company and that Teekay or an Associate or a
holding company of Teekay provides a guarantee of 50% of the liability of the Company;
and
|
(c) |
that the Shareholders will endeavour to arrange that up to 70% of the
Purchase Price will be financed by way of the Loan on the best available terms.
|
10
4.2 |
The parties shall each be at liberty at any time to propose refinancing from time to time of
the Loan or any agreed refinancing thereof and any such refinanced loan shall be treated
mutatis mutandis as if it were the Loan referred to herein. Before any commitment to such
refinancing is made the approval of all of the Shareholders to the terms thereof shall be
obtained.
|
4.3 |
The Company shall generally seek to meet its liabilities and obligations from its own funds
or from funds advanced to the Company by third parties, without recourse to loans, guarantees
or other support provided by the Shareholders or any of their Associates.
|
4.4 |
The obligations of the Company in respect of any Shareholders Loans shall be subordinated to
the obligations of the Company in respect of the Loan and of the Company to reimburse and
indemnify the Shareholders in respect of any payment made under any guarantee of the
obligation of the Company, whether to the Lender or to the Builder.
|
4.5 |
The Shareholders agree that:
|
(a) |
if the Company needs funds to enable it to repay principal or pay interest in
respect of the Loan or any expenses incurred in operating the Vessel or for
|
11
(b) |
if a Shareholder fails to make a Shareholders Loan within 7 days after it
falls due in the amount or at the time specified pursuant to Clause 4.5 (a) for the
making of such Shareholders Loan, then, without prejudice to any other rights of the
other Shareholder, the other Shareholder may advance the amount in question to the
Company, on behalf of the defaulting Shareholder (and the amount in question shall be
deemed to be a debt due from the defaulting Shareholder to the Shareholder who made
the additional funds available). Such Shareholder shall be entitled to recover the
amount so advanced from the defaulting Shareholder as a debt repayable upon demand
together with interest thereon at the rate of two per cent (2%) per month (both before
and after judgment) from the date of such advance to the date of actual payment,
together with all accrued interest. For the avoidance of doubt such interest shall be
payable only by the defaulting Shareholder and not by the Company.
|
4.6 |
In the event that there is dispute as to the amount of Shareholder Loan, if required by a
Shareholder, the auditors for the time being of the Company shall, at the expense of the
Company, certify what the financial or capital requirements of the Company are at any
particular time and the decision of the auditors as to the amount required in respect of
Shareholders Loans shall be final and binding on the Shareholders.
|
4.7 |
Subject to Clause 3.3, Clause 4.5 and Clause 11, all Shareholders Loans shall be interest
free and shall be repayable on demand, provided that repayment thereof in
|
12
4.8 |
Subject to the requirements of the Loan Agreement and the Security Documents and subject to
Clause 11, unless otherwise agreed by all Shareholders, no dividend shall be payable by the
Company unless and until all Shareholders Loans for the time being outstanding have been
repaid in full.
|
4.9 |
Subject to Clause 11, no Shareholder shall demand or accept any repayment of a Shareholders
Loan in whole or in part unless the other Shareholders who have also made Shareholders Loans
available shall have first agreed in writing. In the event of any repayment in whole or in
part of any Shareholders Loan, the Company shall at the same time make a repayment of the
Shareholders Loan owing to the other Shareholders, which repayment shall be in proportion to
the amounts repaid of all other Shareholders Loans if the repayment is of part only of the
Shareholders Loans. However the Company shall repay first the Shareholders Loan advanced under
clause 4.6(b) to the Shareholder who the made the advance plus interest.
|
5 |
THE SHIPBUILDING CONTRACT
|
5.1 |
It is hereby agreed that the Vessel shall upon delivery by the Builder pursuant to the
Shipbuilding Contract and acceptance by the Company forthwith enter service under the
Charterparty.
|
6 |
DIRECTORS, MANAGEMENT, SIGNING AUTHORITIES
|
6.1 |
From the date upon which it becomes a Shareholder, Teekay shall have the right to nominate
and maintain up to two (2) Directors (the Teekay Directors) and remove the same and Kriss
shall have the right to nominate and maintain up to two
|
13
6.2 |
Any increase in the number of Directors must be agreed by all of the Shareholders. Unless
otherwise agreed by all of the Shareholders, the total number of Directors shall be four (4).
|
6.3 |
To comply with mandatory requirements of the laws of Hong Kong or any other applicable
jurisdiction, the number of directors appointed by each Shareholder shall be such that at
least one such Director will be appointed by each Shareholder and will be the nominee of such
Shareholder for all purposes.
|
6.4 |
Any Director may appoint another individual as his alternate to represent him at any meetings
of the Board which he is unable to attend, provided that his appointment of an alternate is
approved in writing by the Shareholder nominating such Director.
|
6.5 |
The Chairman of the Company shall not have a second or casting vote whether at meetings of
Directors or of Shareholders.
|
6.6 |
Subject clause 14.1(b), no decision or action shall be taken and no resolution passed by the
Board unless the same shall be approved by not less than the majority of the Directors present
at such meeting and entitled to vote, always provided a quorum of the Board is present and
acting throughout the meeting concerned.
|
14
6.7 |
Any Director or officer of the Company may convene a meeting of the Board at any time
provided that each Director is given at least twenty one (21) days notice of the time, date,
place and agenda of such meeting, unless all Directors have agreed to waive such notice or
accept short notice of such meeting.
|
6.8 |
All Directors meetings shall be held in Hong Kong unless consented to specifically by the
Shareholders. No Directors meeting shall be held in Canada and any Directors meeting
purported to be convened or held in Canada shall be void and of no effect and any action taken
at any such purported meeting shall be without force or effect.
|
6.9 |
The quorum for meetings of the Board shall be two (2) Directors for the time being of the
Company provided that both one (1) Teekay Director and one (1) Kriss Director shall be
present.
|
6.10 |
Minutes of each meeting of the Board shall be sent by the Chairman to each Director and his
alternate (if any) as soon as practicable after the holding of such meeting.
|
6.11 |
A resolution in writing or by cable, telex or telecopier signed or approved by cable, telex
or telecopier by all the Directors shall be as valid and effectual as if it had been duly
passed at a meeting of the Board duly convened and held. Any such resolution may consist of
several documents in like form each signed by one or more Directors.
|
6.12 |
The Company shall appoint such bankers in Hong Kong, New York City, and elsewhere as may be
decided from time to time by the Board and there shall be no change in such appointment
without the approval of the Board.
|
6.13 |
All cheques, bills of exchange and other instructions given to any bank or financial
institution on behalf of the Company shall require two (2) signatories, both of whom shall be
persons to whom express authority has been granted by the Board.
|
15
6.14 |
Subject to the provisions of the Loan Agreement and the Security Documents, all earnings of
the Vessel will be remitted to a bank account in the name of the Company.
|
6.15 |
The Secretary shall be such person the Board shall appoint as Secretary of the Company and
need not be a Director.
|
6.16 |
Meetings of the Board may be held by conference telephone or other like telecommunications
device, provided all persons can hear each other at the same time.
|
6.17 |
Wah Kwong Maritime Transport Holdings Limited will be appointed as secretary by the Company
to provide all secretarial matters and to deal with day to day regulatory and statutory
matters affecting the Company, including, without limitation, the making of all necessary
statutory and other returns by the Company. Wah Kwong Maritime Transport Holdings Limited will
be appointed as treasurer by the Company to supervise the running of the Company treasury and
bank accounts together with creation and maintenance of all bookkeeping and accounting records
and database, including preparation of financial statements in accordance with Clause 9
hereto, for which they shall be remunerated at USD 20,000 per year or otherwise agreed by the
Board.
|
7 |
GENERAL MEETINGS
|
7.1 |
Subject to clause 14.1(b), no business shall be transacted at any Shareholders general
meeting of the Company unless a quorum of members is present at the time when the meeting
proceeds to business and continues to be present throughout the meeting. Shareholders (which
consists of both Teekay and Kriss) present in person or by proxy or by their duly authorised
representatives holding in aggregate not less than sixty six and two thirds per cent (66-2/3%)
of the issued Shares of the
|
16
7.2 |
Minutes of each general meeting of the Company shall be sent by the Chairman of such meeting
to each Shareholder as soon as practicable after the holding of such meeting. The Chairman of
a general meeting of the Company shall not have any vote.
|
7.3 |
A resolution in writing or by cable, telex or telecopier signed or approved by cable telex or
telecopier by all Shareholders shall be as valid and effectual as if it has been duly passed
at a general meeting of the Company duly convened and held. Any such resolution may consist of
several documents in like form each signed or authenticated by or on behalf of one or more
Shareholders.
|
7.4 |
Any director or officer of the Company or, any Shareholder may convene a general meeting of
the Shareholders of the Company with advance notice of not less than 21 days being sent to the
Shareholders and an annual general meeting of the Shareholders will be convened each year for
the Company to receive the audited accounts and Directors report on the affairs of the
Company. At least twenty one (21) days notice shall be given to all Shareholders of the venue
(including date and time) of any general meeting of the Company and of the matters for
consideration at such meeting.
|
8 |
OFFICE
|
8.1 |
The registered office of the Company shall be at 2103, 21
st
Floor, Shanghai
Industrial Investment Building, 48-62 Hennessy Road, Wanchai, Hong Kong.
|
17
8.2 |
The establishment of any office in any other jurisdiction shall require the written consent
of the parties.
|
9 |
ACCOUNTS AND AUDITORS
|
9.1 |
Unless otherwise resolved by the Board, the financial year for the Company shall end on the
31st day of December in each year during this Agreement with the first year ending on 31st
December 2011.
|
9.2 |
The accounts for the Company shall be kept in United States Dollars and shall be kept in
accordance with Hong Kong Financial Reporting Standards (HKFRS). Should either of the
Shareholders require additional information or reporting standards for their own purposes, the
Company will assist with their instructions at the relevant Shareholders cost.
|
9.3 |
The auditors of the Company shall be a first class firm of certified public accountants as
may be appointed at any general meeting of the Shareholders of the Company. The auditors of
the Company shall, as a condition of their appointment, agree to allow the primary auditors of
the Shareholders to review and rely on their audit work, where necessary.
|
9.4 |
Management accounts for the Company shall be provided to the Shareholders for the three month
and year to date periods ending on 31
st
March, 30
th
June,
30
th
September and 31
st
December, commencing on 31
st
December, 2010 and no later than 8 business days after the end of each of these three month
periods. The management accounts will consist of a statement of income, balance sheet and
supplementary schedule reconciling to US GAAP (if accounts are kept in HKFRS). In addition,
annual audited financial statements shall be provided to the Shareholders no later than 45
calendar days following the fiscal year ending 31
st
December, commencing with the
period ending 31
st
December, 2011.
|
18
9.5 |
The Company shall confirm the existing budget for the subsequent three month period to the
Shareholders or provide an updated forecast for the subsequent three month period no later
than 4 business days after the end of the ensuing three month period as stated in Section 9.4
above.
|
(a) |
a projected profit and loss account; and
|
(b) |
a balance sheet forecast
|
9.6 |
The Company shall submit an annual operating budget in respect of all anticipated income and
expenses in respect of the Vessel for the ensuing accounting period.
|
(a) |
an operating budget (including estimated capital expenditure
requirements) and balance sheet forecast;
|
(b) |
an estimate of the working capital requirements contained in
a cashflow statement, including the amount of the drydock reserve;
|
(c) |
a projected profit and loss account;
|
(d) |
an indication of the amount (if any) which it is considered
prudent to retain out of the previous financial years distributable profits
to meet the working capital requirements;
|
(e) |
a report by the finance manager of the Company, which shall
include an analysis of the results of the Company as shown in its annual
accounts compared with the Annual Budget for the previous year;
|
19
9.7 |
Each Shareholder shall have access to the accounting books and records of the Company at all
reasonable times and shall be entitled to take and keep copies thereof.
|
10 |
MANAGEMENT
|
10.1 |
The parties hereto shall procure that the Company enters into the Loan, the Security
Documents, and the Transaction Documents and fulfils the terms and conditions of all such
agreements.
|
10.2 |
Criteria for selection of Technical Manager
|
(a) |
The Company shall instruct the Technical Manager as to the required reporting
criteria and method.
|
(b) |
The Technical Manager shall ensure that throughout the validity of their
appointment there shall be a valid SIRE inspection report available to Oil majors
within the OCIMF SIRE system and that the Vessel remains acceptable, with no holds,
with the following Oil Companies namely, Shell, BP, ExxonMobil, Chevron,
ConocoPhillips, Total, and Statoil. In case the Vessel is placed on hold or considered
unacceptable to two of the above Oil companies over a period of 90 days, the Company
may exercise their right to transfer technical management to another provider who will
be subject to these same criteria.
|
(c) |
The Technical Manager further warrants to have submitted a management self
assessment with OCIMF TMSA, that as a minimum meets all requirements of Stage 2 under
all elements, except Elements 11 and 11A where the Technical Manager shall meet Stage
4 requirements. If the Company should determine that the Technical Manager has failed
to meet such TMSA criteria, then the Company may exercise their right to transfer
technical management to another provider who will be subject to these same criteria.
|
20
(d) |
The Technical Manager shall ensure that the Vessel has no more than two
vessel detentions by Port State Authorities over any one year period. In the case that
the Vessel has Port State Authority detentions in excess of this limit, the Company
may exercise their right to transfer technical management to another provider who will
be subject to these same criteria.
|
11 |
DISTRIBUTION OF SURPLUS
|
11.1 |
Subject to the terms and conditions of the Security Documents and to Clause 4.9 and (in the
case of approving dividends) to the passing of a resolution of the Shareholders at a General
Meeting as described in Clause 7.1, the net cash surplus of the Company (if any) from time to
time shall be distributed as follows:
|
(a) |
First: if for any reason any payment to the Lenders has been deferred, in
payment to the Lenders of the amount deferred;
|
(b) |
Second: in and towards repayment of the Shareholders Loans by, in the case of
the partial repayment of Shareholders Loans, a pro rata reduction of each Shareholders
Loan, calculated by reference to the amount outstanding of each Shareholders Loan
subject to clause 4.9;
|
(c) |
Third: provided obligations under the Loan have been met in full and the
Shareholders Loans have been repaid in full, in the payment of a dividend to the
Shareholders in proportion to their respective shareholdings for the time being in the
Company; and
|
(d) |
Last: if the Vessel is sold and all liabilities are discharged in respect of
the Vessel and the Company the balance of funds remaining will be distributed as a
dividend to the Shareholders.
|
21
11.2 |
For the purposes of this Agreement Net cash surplus shall mean the gross income of the
Company (including any proceeds derived from the sale of the Vessel) less:
|
(a) |
all Vessel Expenses (For the purposes of this Agreement the expression
Vessel Expenses shall mean:-
|
(i) |
wages, salaries and other benefits for the officers and crew
of the Vessel;
|
(ii) |
the costs of maintenance and repairs of the Vessel;
|
(iii) |
the costs of insurances maintained for the Vessel, as
required by the Company, including loss of hire insurance and social
responsibility insurance and entries with P&I Clubs and pollution protection
associations;
|
(iv) |
the provisioning and victualling of the Vessel;
|
(v) |
the costs of lubricants and other such items; and
|
(vi) |
all other expenses which the Company is obligated to pay
pursuant to any other commercial, trading or operating liability);
|
(b) |
any interest and financing costs;
|
||
(c) |
any taxes incurred by the Company during the period;
|
(d) |
any provision that is deemed prudent by the Board for anticipated expenditure
or losses;
|
(e) |
all principal repayments to be made in respect of the Loan Agreement during
the accounting period in relation to which the net profits are calculated; and
|
22
(f) |
all amounts required to be retained in accordance with the Loan Agreement.
|
11.3 |
In considering the making of any payment to Shareholders, the Shareholders shall have regard
to the interests of the Company and to maintaining an adequate cash flow for the Company at
all times.
|
11.4 |
Although the parties may make available advances to the Company pursuant to Clause 4, no
Shareholder shall be obligated to contribute in the winding up or liquidation or receivership
or if the Company has had a manager or receiver of the Company or of its assets appointed by
creditors or a court of competent jurisdiction, unless otherwise required by law.
|
12 |
CO-OPERATION AND CONFIDENTIALITY
|
12.1 |
Each Shareholder agrees to:
|
(a) |
exercise its votes at general meetings of the Company and to procure that its
nominees as Directors, vote at Directors meetings to ensure the complete observance of
the terms and provisions of this Agreement; and
|
(b) |
do or procure to be done all such acts, assurances, deeds and other things
including without limitation, the procuring of any necessary amendments to the
Articles as may be necessary fully and effectually to carry out the terms and
provisions of this Agreement.
|
12.2 |
Each Shareholder will maintain strict confidence and secrecy in respect of all information of
a proprietary nature received by it directly or indirectly pursuant to this Agreement and each
Shareholder will use its best endeavours to procure that its or their respective officers and
affiliates, and the Company and its respective
|
23
12.3 |
Notwithstanding the provisions of Clause 12.2, the parties shall be entitled to disclose
information relating to this Agreement to their legal and taxation advisers and to their
auditors and, if agreed by both parties, shall be entitled to disclose such information to the
Builder and the Lenders (so far as necessary) and any other party providing finance for the
construction and/or the purchase by the Company of the Vessel.
|
13 |
TRANSFER OF SHARES
|
13.1 |
No transfer of any share in the Company shall be made at all by any Shareholder unless: (i)
it is made pursuant to the provisions of this Clause 13 and (ii) it involves all of the Shares
in, and the whole of the Shareholder Loans held by the Shareholder in question.
|
13.2 |
A Shareholder (the Vendor) proposing to transfer the shares registered in its name and its
Shareholder Loans shall serve notice in writing (a Sale Notice) on the Company that it
wishes to transfer the said shares and the said Shareholder Loans (the Sale Shares which
expression shall include the Shareholder Loans).
|
24
13.3 |
If the Company shall notify the Vendor within 28 days after the later of the date of service
of the Sale Notice or the determination of the Transfer Price (the Acceptance Period) that
the other Shareholder has agreed to purchase the Sale Shares (including the Shareholder Loans)
(such notice to specify whether the other Shareholder agrees to purchase at the price fixed by
the Vendor in the Sale Notice or at the Transfer Price) the Vendor shall be bound, upon
payment by the other Shareholder of the price for the Sale Shares (including the Shareholder
Loans) fixed by the Vendor in the Sale Notice or, as the case may be, the Transfer Price, to
transfer the Sale Shares (including the Shareholder Loans) to the other Shareholder. The other
Shareholder shall be bound to pay the Vendor the price for the Sale Shares (including the
Shareholder Loans) purchased by it within 14 days of the expiry of the Acceptance Period.
|
13.4 |
If during the Acceptance Period the other Shareholder declines to purchase the Sale Shares
(including the Shareholder Loans), the Vendor shall be at liberty within a period of 90 days
from the expiry of the Acceptance Period to sell and transfer all the Sale Shares (and the
Shareholder Loans) to any person at any price provided it is not less than the price per share
fixed by the Vendor in the Sale Notice or, if a Transfer Price shall have been fixed and it is
lower than the price per share so fixed by the Vendor, not less than that Transfer Price.
|
13.5 |
If the Vendor, after having become bound as aforesaid, makes default in transferring the Sale
Shares (including the Shareholder Loans) to the other Shareholder, the Company may receive the
purchase money and the Vendor shall be deemed to have appointed any one Director or the
Secretary of the Company as the agent of the Vendor to execute a transfer of the Sale Shares
and the Shareholder Loans to the other Shareholder and, upon the execution of such transfer,
the Company shall hold the purchase money in trust for the Vendor. The
|
25
13.6 |
All shares sold pursuant to this Clause 13 shall, subject to the Loan Agreement and the
Security Documents, be transferred free from all liens, charges and encumbrances whatsoever,
and (unless otherwise agreed between the transferor and the other Shareholders) with all
rights and benefits attaching thereto at the date of sale.
|
13.7 |
No Shareholder shall sell, transfer, mortgage, charge or otherwise encumber or grant any
other interest with respect to its Shares without the prior written consent of the other
Shareholder except as expressly provided by this Agreement. The provisions of Clause 13 shall
not apply to any sale of shares and Shareholder Loans by a Shareholder to another person who
is a member of the same group of companies as that to which the Shareholder in question
belongs, which in the case of Wah Kwong means Wah Kwong Maritime Transport Holdings Limited
and any subsidiary thereof and in the case of Teekay means Teekay Corporation and any
subsidiary thereof, provided that notice of such transfer is given to the other Shareholder
and the purchaser of the shares and Shareholder Loans will agree to sell its shares and
Shareholder Loans back to a member of the relevant group if it ceases to be a member of that
group.
|
13.8 |
Notwithstanding any of the provisions of this clause 13, the rights of the parties (or any
successor to any of them) hereunder are subject and subordinate to the rights of the Lenders
under the Loan Agreement and the Security Documents.
|
26
14 |
DEADLOCK
|
14.1 | (a) |
If a meeting of the Shareholders or the Directors is
convened properly by notice and either a Shareholder
frustrates the holding of the Shareholders meeting by its
failure to be present or no Director of the relevant class
of Directors attends a meeting of the Board, then those
present at such meeting shall fix another date for the
meeting in question and shall give at least 14 days notice
of such reconvened meeting to the Shareholders as well as
to the Directors and of all matters for consideration at
such meeting.
|
|
(b) |
Subject to clause 17, the failure by the person or persons who failed to
attend the original meeting to attend the re-convened meeting without reasonable cause
shall entitle the Shareholder or the Directors present at the reconvened meeting to
pass such resolutions regarding the matters for consideration at such meeting and to
commit the Company accordingly.
|
14.2 |
If the Shareholders are unable to resolve any deadlock as to the operation of the Company
such that either Shareholder elects by notice in writing given to the other Shareholder to
invoke the procedure set out in this Clause 14.2, within 30 days of the receipt by the other
Shareholder of such notice, each Shareholder shall deliver a sealed tender addressed to the
other Shareholder for all the Shares in the Company owned by the other Shareholder and shall
deposit such tender with the auditors for the time being of the Company. Upon the expiration
of the said 30 days, the auditors shall in the presence of representatives of each of the
Shareholders open such tenders. The auditors shall forthwith declare the highest tender and
the successful tenderer shall within 14 days of the auditors said declaration pay the other
Shareholder the amount tendered for the other Shareholders shares together with any other
amounts due as hereinafter provided and the other Shareholder shall forthwith upon receipt of
such moneys transfer to the successful tenderer all the Shares in the Company and Shareholder
Loans belonging to the other Shareholder. All such tenders shall be based on the net asset
|
27
14.3 |
In the event that procedures referred to in this clause are invoked, the Shareholders shall
cooperate to ensure that all obligations of the unsuccessful Shareholder are discharged in
respect of the Company and the Vessel.
|
15 |
DEFAULT
|
15.1 | (a) |
If a Shareholder shall be in material breach of its
obligations under this Agreement or if a default under the
Loan Agreement or Security Documents shall occur as a
result of the act or omission of a Shareholder (the
Shareholder in breach or otherwise in default is called
herein the Defaulting Party), then the other Shareholder
may give notice (the Default Notice) of such default to
the Defaulting Party.
|
|
(b) |
If the Defaulting Party has not remedied the default in question within
thirty (30) days of its receipt of the Default Notice then, but without prejudice to
any other remedies the other Shareholder may have (including the right to recover from
the Defaulting Party any moneys then due from the Defaulting Party, while giving
credit for any moneys owed to the Defaulting Party by the other Shareholder), the
Defaulting Party shall be deemed to have given notice to the Company and the other
Shareholder effective on the last day of the said thirty (30) day period in respect of
all its Shares in the Company and its Shareholder Loan offering them for sale to the
other Shareholder and specifying as the fair value and consideration
|
28
(c) |
In such event, the Defaulting Party shall be deemed to constitute the Company
as the Defaulting Partys agent for the sale of the Sale Shares (which expression
shall mean the Shares and Shareholder Loans of the Defaulting Party) to the other
Shareholder.
|
(d) |
The other Shareholder, provided it is willing and agrees, (such agreement to
be irrevocable) may purchase the Sale Shares at the said price of HK$ 1.00 or, if
higher, the Transfer Price fixed pursuant to Clause 15.4.
|
(e) |
Once notice is deemed to be given as provided above the Defaulting Party may
not withdraw from such sale of the Sale Shares without the consent in writing of the
other Shareholder. Unless the other Shareholder shall agree a Transfer Price with the
Defaulting Party or that the Defaulting Party need not sell the Sale Shares, the
Company shall instruct its auditors to determine the Transfer Price.
|
15.2 | (a) |
The Company shall notify the Defaulting Party within 28 days after the later of the date
upon which notice is deemed to have been given or the determination of the Transfer Price (the
Acceptance Period) whether the other Shareholder has agreed to purchase the Sale Shares.
|
|
(b) |
The Defaulting Party shall be bound, upon payment by the other Shareholder of
the price of HK$ 1.00 for the Sale Shares or, as the case may be, the Transfer Price,
to transfer the Sale Shares to the other Shareholder.
|
29
(c) |
The other Shareholder shall be bound to pay the Defaulting Party the relevant
price fixed for the Sale Shares within 14 days of the expiry of the Acceptance Period.
|
15.3 |
If a Shareholder is dissolved, goes into liquidation or appoints, or there is appointed a
receiver or manager of all or a part of its assets, or there is a breach by that Shareholder
of the terms of Clause 13, such Shareholder or, as the case may be, the liquidator or receiver
or manager of that Shareholder shall be deemed to have given notice to the Company as
described in the 15.1 (b) at a price equal to the Transfer Price. The date upon which such
notice shall be deemed to be given shall be the date of the dissolution of the Shareholder or
the appointment of the liquidator or receiver or manager as the case may be. A Shareholder to
whom the provisions of this Clause 15.3 apply is called a Dissolving Party in Clause 15.4.
|
15.4 |
(a) The Transfer Price for the Sale Shares shall be the sum of:
|
(i) |
the amount that would be realised in respect of any
Shareholder Loan then owing to the Defaulting Party or Dissolving Party (minus
any amounts owing by the Defaulting Party or Dissolving Party to the Company
and to the other Shareholder in respect of the Company and its affairs), if
the Company were to be placed in liquidation at the time at which the notice
of sale of the Sale Shares is deemed to be given, taking into account all
other actual and contingent liabilities of the Company and any priority or
preferment accorded to any creditor of the Company, whether pursuant to the
Loan Agreement, the Security Documents or otherwise, on the basis that such
priority or preferment has been validly and effectively granted to the
creditor in question and calculated on the basis that all other unsecured or
non preferred obligations of the Company rank and shall be paid in priority to
the Shareholder Loans; plus
|
30
(ii) |
the value of the Shares held by the Defaulting Party or
Dissolving Party calculated on the same basis as described above, provided
that if the value ascribed to the Sale Shares is a negative value, the
Transfer Price shall be deemed to be HK$ 1.00 for all of the Sale Shares.
|
(b) |
The costs of determining the Transfer Price shall include the fees and
expenses of the said auditors and the said shipbrokers and any expenses incurred by
the Company in supplying them with information required by them in order to determine
the Transfer Price and shall be paid by the Defaulting Party or Dissolving Party.
|
15.5 |
All Shares transferred pursuant to this Clause 15 shall, subject to the Loan Agreement and
the Security Documents, be transferred free from all liens, charges and encumbrances
whatsoever, and with all rights and benefits attaching thereto at the date of sale.
|
15.6 |
If the Defaulting Party or Dissolving Party defaults in transferring the Sale Shares to the
other Shareholder, the Company may receive the purchase money and the
|
31
15.7 |
The other Shareholder shall be entitled to purchase the whole, but not part only, of the Sale
Shares.
|
16 |
SHARE DISPOSITIONS
|
16.1 |
Each Shareholder undertakes to procure that if such Shareholder agrees to transfer all or any
of its Shares and its Shareholder Loan to another party and the other Shareholder has
consented thereto, the transferee of such Shares and Shareholder Loans shall, before any
transfer is presented to the Company or the Board for registration, execute an acknowledgement
under seal, covenanting and agreeing to be bound by all the terms and provisions of this
Agreement or such of the same as shall be appropriate, as if such transferee were a party
hereto in place of such Shareholder (in the case of a transfer of all such Shareholders
shares and its Shareholder Loan) or in addition to such Shareholder (in the case of a transfer
of part of such Shareholders shares and its Shareholder Loan) and the Shareholders shall
procure that the Directors shall not approve or pass for registration such transfer unless and
until the transferee has executed such an acknowledgement.
|
16.2 |
If, notwithstanding the provisions of Clause 16.1, a transferee becomes registered as a
member of the Company without executing such an acknowledgement the Shareholder which
transferred the shares so registered shall, until such an
|
32
17 |
MATTERS REQUIRING SHAREHOLDERS APPROVAL
|
17.1 |
Except with the prior written approval of all Shareholders, no change shall be made in the
nature of the business carried on by the Company and no resolution shall be proposed or passed
for:
|
(a) |
the change of the name of the Company;
|
||
(b) |
the change of the number of directors
|
||
(c) |
the variation of any rights attaching to the Shares in any way
|
||
(d) |
consolidate, subdivide, convert, increase or reduce any of its share capital
|
||
(e) |
carry on any business other than the objectives as stated in Clause 2 hereof
|
||
(f) |
the entering into of any contract, arrangement or commitment which involves
capital expenditure in excess of US$100,000.00
|
||
(g) |
declare, make or pay any distribution of capital, income and/or dividends to
the Shareholders otherwise than in accordance with the proportion to which the number
of Shares held by each Shareholder bears to the total number of Shares issued.
|
||
(h) |
the alteration of the Articles of Association of the Company other than for
the purpose of giving effect to the terms and condition of this Agreement;
|
||
(i) |
the increase of the authorised or issued share capital of the Company;
|
33
(j) |
the capitalization of any of the profits or reserves of the Company;
|
||
(k) |
the winding-up of the Company;
|
||
(l) |
the purchase, sale, acquisition, pledging, mortgaging, hypothecation,
charging or other disposal of any major asset of the Company except under the terms
and conditions of the Loan Agreement;
|
||
(m) |
the issue or transfer of debentures, bonds, notes or other securities,
whether outright or as security for any debt, liability or obligation of the Company
or otherwise;
|
||
(n) |
the acquisition of, participation in, merger or amalgamation with any body
corporate, partnership or the form of legal entity by the Company;
|
||
(o) |
the establishment of any business for the Company other than as described
herein or which is necessarily incidental to the business described herein;
|
||
(p) |
the termination, variation or amendment of any of the Technical Management
Agreement, the Commercial Management Agreement or the Supervision Agreement including
the appointment of any person in place of the other party to the relevant agreement;
|
||
(q) |
the entering into (other than the Charterparty) or variation or termination
of any charterparty (including the Charterparty);
|
||
(r) |
the variation or termination of the Shipbuilding Contract;
|
||
(s) |
the entering into and/or the variation or termination of the Loan Agreement
and/or the Security Documents;
|
34
(t) |
the incurring by the Company of any indebtedness except in respect of the
Loan and Shareholders or otherwise in the ordinary course of business of the Company;
|
(u) |
the sale, transfer, lease, assignment, or other disposals of a material part
of the undertaking, property and/or assets of the Company or any contract so to do
otherwise than in the ordinary course of its business;
|
(v) |
the granting of any guarantee, indemnity or security or creating any
mortgage, charge or encumbrance in respect of any part of the assets or undertaking of
the Company which involves an amount greater than US$500,000.00;
|
(w) |
enter into any transaction with any Shareholder otherwise than on normal
commercial terms and on an arms length basis (save and except for the Shareholder
Loans);
|
(x) |
the acquisition, whether by formation or otherwise, of any subsidiary, or the
permission of the disposal or dilution of its interest, directly or indirectly, in any
subsidiary or acquire shares in any company or the disposition of any shares in any
company or acquisition or disposition of any loans or loan capital;
|
(y) |
except as contemplated herein the entering into of any agreements, contracts
or other arrangements between the Company and any of the parties hereto or between the
Company and any shareholder or direct or indirect affiliate of the parties.
|
35
17.2 |
For the avoidance of doubt the declaration and payment of dividends shall require a
resolution passed at a Shareholders meeting as provided in Clause 7.1 subject only to Clause
4.9.
|
18 |
SALE OR DISPOSAL OF VESSEL
|
18.1 |
Subject as provided in the Shipbuilding Contract, the Loan Agreement and the Security
Documents the Vessel shall not be sold unless the Shareholders agree that the Company shall do
so.
|
18.2 |
In the event of sale, the Shareholders shall endeavour to procure that the Vessel shall be
sold on such terms so that the proceeds of sale shall be sufficient to discharge the
liabilities of the Company in respect of:
|
(a) |
all sums due in respect of the Loan;
|
||
(b) |
the Shareholder Loans;
|
||
(c) |
any indebtedness of the Company to third parties.
|
18.3 |
Subject to the terms of the Loan Agreement and the Security Documents, if the Vessel is sold
or otherwise disposed of or becomes an actual, constructive, arranged or compromised total
loss, the proceeds of such sale, disposal and insurance claim or any compensation payable in
respect of such confiscation or requisition shall as between the parties hereto only be
applied as follows:-
|
(a) |
first, in payment of all sums due in respect of the Loan;
|
(b) |
secondly, in repayment of any outstanding claims of the third party creditors
of the Company;
|
36
(c) |
thirdly, in repayment of the Shareholder Loans, subject to clause 4.12; and
|
(d) |
fourthly, by way of dividend to the Shareholders or distribution following
the dissolution of the Company.
|
19 |
TERMINATION
|
19.1 |
This Agreement shall terminate when the number of Shareholders falls to one or the Company is
wound up by resolution of the Shareholders or by an order of a court, or if a liquidator is
otherwise appointed.
|
19.2 |
The termination of this Agreement for any reason shall not prejudice or affect any rights or
obligations under this Agreement arising prior to termination
|
20 |
NOTICES
|
20.1 |
All notices, requests, demands and other communications under this Agreement or in connection
herewith shall be given or made to or upon the parties in writing delivered personally or by
email, registered letter, telex, telegram, facsimile or cable (provided that all facsimile
transmissions shall be confirmed by telex or by letter at the time sent) and shall be
addressed to the appropriate party at the address set forth below or at such other address or
place as such party may designate in writing.
|
37
21 |
COSTS AND EXPENSES
|
21.1 |
All expenses incurred by a Shareholder in connection with the negotiation and execution of
this Agreement shall be borne by that Shareholder.
|
22 |
NATURE AND PREVALENCE OF AGREEMENT
|
22.1 |
This Agreement and the documents referred to herein embody all the terms and conditions
agreed upon between the parties, as to the subject matter of this Agreement and supersede and
cancel in all respects all previous letters of intent correspondence, understandings,
agreements and undertakings (if any) between the parties with respect to the subject matter
hereto whether such be written or oral.
|
22.2 |
No provision of this Agreement shall, or shall be deemed to, constitute a partnership or
agency between the Shareholders.
|
38
22.3 |
If there is any conflict or inconsistency between any of the terms of the Articles and any of
the terms of this Agreement, the terms of this Agreement shall prevail to the extent permitted
by law, and, if the Shareholders shall so require, each Shareholder shall vote or cause to be
voted the Shares owned by him as necessary so as to cause the Articles of the Company and
by-laws, or both, as the case may be, to be amended to resolve such conflict in favour of the
provisions of this Agreement.
|
22.4 |
This Agreement shall not be amended, supplemented or modified except by written instruments
signed or on behalf of all Shareholders.
|
22.5 |
The Company is made a party to this Agreement not only for the purpose of taking rights under
this Agreement but for the purpose of confirming that it is aware of and will (but only to the
extent that it can and is legally permitted to do so) observe the terms of this Agreement.
|
23 |
SUCCESSORS AND ASSIGNS
|
23.1 |
This Agreement shall be binding upon, and enure for the benefit of, the Shareholders and
their respective successors,
|
23.2 |
No Shareholder may assign or transfer any of its rights or obligations under this Agreement
except as and to the extent provided in this Agreement.
|
24 |
LAW AND JURISDICTION
|
24.1 |
This Agreement is governed by and shall be construed in accordance with English law.
|
24.2 |
Any dispute or difference between the parties hereto in respect of this Agreement shall be
submitted to Arbitration in London before a sole arbitrator to be appointed
|
39
24.3 |
A person who is not a party to this Agreement has no right under the Contracts (Right of
Third Parties) Act 1999 to enforce or enjoy the benefit of any terms of this Agreement.
|
25 |
REPRESENTATIONS AND WARRANTIES
|
25.1 |
Each of the parties hereto represents and warrants to the other parties hereto that:
|
(a) |
where it is a corporation:
|
(i) |
it is duly established and validly existing under the laws of
its place of incorporation and has the power to carry on the business it now
conducts and intends to conduct;
|
(ii) |
it has the corporate capacity to enter into and perform all
its obligations under this Agreement and has taken and will take all necessary
corporate actions to authorize the execution, delivery and performance of this
Agreement and the other documents referred to herein;
|
(iii) |
the execution, delivery and performance by it of this
Agreement and the other documents referred to herein will not (i) violate any
provisions of any existing law applicable to it or any of its assets, or any
documents to which it is party or which is binding on it or any of its assets,
or (ii) oblige it to create any encumbrance on the whole or any part of its
assets except pursuant to the terms hereof; and
|
40
(iv) |
its obligations under this Agreement constitute legal, valid
and binding obligations of it enforceable in accordance with its terms; and
|
25.2 |
Kriss represents and warrants to and covenants with Teekay that Wah Kwong Maritime Transport
Holdings Limited shall remain directly as the shareholder of 100% of the issued share capital
of Kriss as at the date of this Agreement and throughout the term of this Agreement.
|
25.3 |
Kriss confirms that none of the activities contemplated by them or the Company in connection
with this Agreement violate or will violate or will cause Teekay to violate any terms of the
Foreign Corrupt Practices Act of the United States of America (the Act) and Kriss further
confirms that it is not, and none of its Associates nor the Company are, a government entity
or political party in China and that no officer, director, stockholder, employee, or agent of
Kriss or its Associates or the Company is a Foreign Official as such term is defined in the
Act.
|
25.4 |
Kriss confirms that none of the information it will share with Teekay as a consequence of the
activities contemplated by this Agreement is or will be information likely to be classified as
state secrets of China or will be provided to Teekay in violation of any state secret law or
regulation of China.
|
26 |
COMPLETION OF THE TRANSACTION DOCUMENTS
|
26.1 |
Completion of the Transaction Documents will take place as soon as practicable and not later
than 30 September 2010 in the offices of Kriss in Hong Kong or elsewhere as may be agreed.
|
26.2 |
At Completion, the following documents or matters must be accomplished:
|
41
(a) |
board meetings will be held of the Company to approve all the transactions to
which it is to be a party described in Clause 2, to authorise the execution of such
documents to which the Company is respectively to be a party and to receive the
resignation of such directors and officers of the Company as are to resign and to
effect the appointment of such directors and officers of the Company as it is agreed
are to be appointed;
|
(b) |
Kriss and Teekay will each provide the other with copies of resolutions of
their respective boards approving the transactions described herein authorising the
execution of those documents referred to in this Agreement to which they are to be
parties;
|
(c) |
the Company and the other relevant parties will execute and deliver the
Transaction Documents and all other documents required to be executed hereunder.
|
SIGNED by
|
) | |||
for and on behalf of
|
) | |||
TEEKAY TANKERS HOLDINGS LTD.
|
) | |||
in the presence of:
|
||||
|
||||
SIGNED by Mr. George Sze Kwong Chao
|
) | |||
for and on behalf of
|
) | |||
KRISS INVESTMENT COMPANY
|
) | |||
in the presence of
|
) |
42
44
45
1. Appointment
|
48 | |||
2. Management Services
|
48 | |||
3. Managers basic obligations
|
51 | |||
4. Information, accounts, statements and reports
|
52 | |||
5. Reimbursement
|
53 | |||
6. Duration of appointment
|
54 | |||
7. Remuneration of manager
|
57 | |||
8. Ratification and indemnity
|
57 | |||
9. Force majeure
|
58 | |||
10. Notices and miscellaneous
|
58 | |||
11. Law and jurisdiction
|
59 |
46
(1) |
HIGH-Q INVESTMENTS LIMTED
, a corporation organized and
existing under the laws of Hong Kong, having its registered
office at Room 2103, 21/F Shanghai Industrial Investment
Building, 48-62 Hennessy Road, Wanchai, Hong Kong (the
Owner
);
|
(2) |
[
]
(the
Manager
)
|
(A) |
The Owner is the owner of a DWT 319,000 Crude Oil Carrier (the
Vessel
), currently under
construction with Shanghai Jiangnan-Changxing Shipbuilding Co., Ltd with Hull No. H1250.
|
(B) |
The Owner wishes to appoint the Manager to act as commercial manager for the Owner in respect
of the Vessel on the terms set out below.
|
47
1. |
APPOINTMENT
|
1.01. |
The Owner hereby appoints the Manager to be its commercial manager and the commercial
manager of the Vessel upon and subject to the terms and conditions of this Agreement.
|
1.02 |
The Manager hereby accepts such appointment by the Owner and hereby agrees to act as the
commercial manager of the Vessel upon and subject to the terms and conditions of this
Agreement.
|
2. |
MANAGEMENT SERVICES
|
2.01 |
As from the date specified in Clause 6.01 the Manager shall perform and/or provide, or cause
to be performed and/or provided, the management services set out below and shall have power,
in the name of the Owner or otherwise on behalf of the Owner, to do and perform all acts,
deeds, matters and things which may be necessary or expedient for the performance or provision
of all or any of such management services or ancillary thereto or otherwise in relation to the
proper and efficient management, operation, trading and sale of the Vessel subject to Clause
2.01(b), inter alia:-
|
(a) |
to negotiate and conclude employment on behalf of the Vessel
whether by way of charterparty or contract of affreightment provided the
Manager will not have the power to conclude any charterparty on behalf of the
Owner whereby the Vessel is let
|
48
(b) |
to attend to all matters relating to the administration and
fulfilment of any contracts of employment for the Vessel; and
|
(c) |
to provide advice and guidance to the Owner on sale and
purchase matters including, but not limited to, identifying suitable vessels
for purchasing, performing pre-purchase inspection, change of flag and
registration, identifying prospective buyers, drafting and developing
appropriate memoranda of agreement, delivering vessels for sale or scrap.
|
2.02 |
The Manager shall (without prejudice to the generality of any of the obligations, duties,
powers and discretions vested in the Manager under or pursuant to this Agreement) be entitled,
and the Owner hereby authorises and empowers the Manager, to:-
|
(a) |
delegate all or part of its duties hereunder (subject to the
prior written approval of the Owner) to any person provided that such
delegation will not include the power to conclude any charterparty on behalf
of the Owner whereby the Vessel is let on demise charter, or voyage
charterparty for a duration estimated to exceed [
] months or on a time
charterparty.
|
49
(b) |
employ such agents or ship or insurance brokers as it deems
necessary or expedient (with liberty to appoint any person associated with the
Manager in any such capacity);
|
(c) |
open, continue and operate such banking account or accounts
as it deems necessary or expedient in connection with the commercial
management of the Vessel;
|
(d) |
delegate, subject to the prior written approval of the Owner,
any of it obligations, duties, powers, discretions or rights under this
Agreement.
|
(e) |
obtain legal advice in relation to disputes or other matters
affecting the interests of the Owner in respect of the Vessel; and
|
(d) |
subject to the approval of the Owner, bring and/or defend
and/or settle on behalf of the Owner actions, claims, suits or proceedings in
connection with the Vessel or any of the matters entrusted to the Manager
under or pursuant to this Agreement.
|
2.03 |
The Manager may utilise the Vessel within its own cargo requirements or time charter the
Vessel to itself and shall trade the Vessel on the same basis as they trade other Vessels of a
similar size, flag and description. Where the Vessel is utilised for the Managers own
internal business, the rate of charterhire and terms of employment shall be fair and
reasonable having regard to the market conditions then prevailing, but if the Owner disputes
the rates and terms, then the matter shall be referred to a panel of three
|
50
2.04 |
The Manager shall not fix the Vessel on a time charter without first advising the Owner of
the proposed terms so that the shareholders of the Owner can have an option to fix the Vessel
on the same terms. If the shareholders exercise such option then the Manager shall be obliged
to fix with such shareholder(s). This option shall be a continuing right of the Owner and
its shareholders exercisable continuously throughout the appointment of the Manager.
|
3. |
MANAGERS BASIC OBLIGATIONS
|
3.01 |
The Manager hereby undertakes at all times during its appointment as the Owners commercial
manager to use, subject to clause 3.02, its best endeavours to:-
|
(a) |
manage all commercial matters relating to the Vessel efficiently and in
accordance with sound ship management practice for the Owner so far as reasonably
practicable in accordance with the Owners instructions as advised to the Manager from
time to time.
|
(b) |
protect and promote the interests of the Owner in all matters directly or
indirectly relating to all commercial matters pertaining to the Vessel and the
operation, trading and sale of the Vessel; and
|
51
(c) |
manage all matters relating to the commercial and financial administration of
the Vessel.
|
4. |
INFORMATION, ACCOUNTS, STATEMENTS AND REPORTS
|
4.01 |
The Manager shall keep proper books, records, accounts and vouchers relating to the
commercial management of the Vessel and shall make the same available for inspection and audit
on behalf of the Owner at such times as may be mutually agreed.
|
4.02 |
The Manager shall regularly each month furnish the Owner within such time limits as shall be
agreed, voyage accounts and statements monthly, quarterly, half-yearly and yearly management
accounts and statements, including accounts and statements of earning, income and expenditure,
and accounts and statements in respect of the Vessel to be established or maintained pursuant
to clause 5.03 and shall also furnish to the Owner such other accounts, statements, reports
and forecasts or earnings, income expenditure and other matters as the Owner may from time to
time reasonably require.
|
52
5. |
REIMBURSEMENT
|
5.01 |
The Manager shall at its own cost and expense, provide all office accommodation, equipment,
stationery and staff required for the performance or provision of its services as the
commercial manager of the Vessel.
|
5.02 |
The Owner shall (in addition to the payment to the Manager of remuneration as provided in
Clause 7) reimburse and indemnify the Manager for and in respect of all duly documented and
supported disbursements, costs and expenses of whatsoever kind properly and necessarily or
reasonably paid, sustained or incurred by the Manager in or about the performance or provision
of any of its services under this Agreement and, without prejudice to the generality of the
foregoing, the Owner shall so reimburse and indemnify the Manager for an in respect of the
following:-
|
(a) |
all agency and sub-agency fees (if any);
|
(b) |
all travelling, accommodation and other costs and expenses or allowances paid
or incurred in respect of or paid to any employees or servants of the Manager, in
connection with the performance or provision of any of the services under this
Agreement;
|
53
(c) |
all costs and expenses of communications by whatever means other than those
directly associated with the day to day employment of the Vessel;
|
(d) |
all expenses to be duly and properly documented and supported with official
receipts if applicable;
|
(e) |
all disbursements, costs and expense of whatever kind paid or incurred with
the insurance of the Vessel.
|
6. |
DURATION OF APPOINTMENT
|
6.01 |
Subject to Clause 6.02, the appointment of the Manager to be the commercial manager of the
Vessel under this Agreement shall begin on [
] OR [
] months prior to the date of delivery of
the Vessel and such appointment shall continue until terminated upon receipt of not less than
three (3) months prior written notice by either party to the other.
|
6.02 |
Without prejudice to all other legal rights and remedies of either party hereto under or
pursuant to this Agreement:-
|
(a) |
the Manager shall be entitled to terminate its appointment hereunder by
immediate notice to the Owner if any of the following events occurs:-
|
54
(i) |
the Owner ceases to be the owner of the Vessel; or
|
(ii) |
the Vessel becomes an actual or constructive or compromised
or arranged total loss; or
|
(iii) |
the Vessel is requisitioned for title or any other
compulsory acquisition of the Vessel occurs otherwise than by requisition for
hire; or
|
(b) |
the Owner shall be entitled to terminate the Managers appointment as the
commercial manager of the Vessel by immediate notice to the Manager if any moneys
payable by the Manager to the Owner for or in respect of which the Manager is
accountable to the Owner, whether under or pursuant to this Agreement or otherwise,
are not paid or accounted for in full by the Manager to the Owner within a period of
thirty (30) days from the date of any demand by the Owner for the payment or for an
account thereof.
|
(c) |
either party shall be entitled to terminate the Managers appointment as the
manager of the Vessel by immediate notice in writing to the other if any of the
following events occurs:-
|
55
(i) |
the other party makes default under any term or provision of
this Agreement (other than in respect of the payment or accounting for of any
moneys), which is not remedied to the entire satisfaction of the party giving
notice within thirty (30) days from the date of notice by such party
requesting action to remedy the same; or
|
(ii) |
any licence or permit required to enable either party to
perform any of its obligations under or pursuant to this Agreement is wholly
or partially revoked, withdrawn, sustained or terminated or expires and is not
renewed or otherwise fails to remain in full force, validity and effect and
such circumstances as are considered by the party giving notice to be
material; or
|
(iii) |
an order is made by an competent court or other appropriate
authority or resolution passed by either party for bankruptcy, dissolution or
winding-up or for the appointment of a liquidator, receiver or trustee of
either party or of all or a substantial part of its assets, save for the
purposes of amalgamation or reorganisation (not involving or arising out of
insolvency) the terms of which have received the prior written approval of the
other party; or
|
(iv) |
either party stops payment to creditors generally, or is
unable or admits inability to pay its debts s they fall due, or enters into
any composition or other arrangement with its creditors generally, or is
adjudicated or found bankrupt or insolvent; or
|
56
(v) |
either party ceases to carry on business, or a substantial
part of the business, properties or assets of either party are seized or
appropriated.
|
7. |
REMUNERATION OF MANAGER
|
7.01 |
The Manager will receive as remuneration for its services as the manager of the Vessel under
this Agreement [a commission of [
]% on all hire, freight, deadfreight, demurrage earned by
the Vessel] OR [an annual basic management fee of USD[
] [which shall be payable by equal
monthly instalments in advance of the first monthly instalment being payable on [
] and
subsequent monthly instalments being payable at monthly intervals thereafter]].
|
7.02 |
All payments by the Owner to the Manager under or pursuant to Clause 7.01 shall e without
set-off, counterclaim, condition or qualification and free and clear of and without any
deduction or withholding whatsoever and shall be made in United States Dollars by deduction by
the Manager from the income earned by the Vessel.
|
8 |
RATIFICATION AND INDEMNITY
|
8.01 |
The Owner hereby ratifies and confirms and agrees to ratify and confirm whatsoever the
Manager shall do or purport to do properly, lawfully and without gross negligence under or
pursuant to this Agreement.
|
57
8.02 |
The Owner hereby undertakes and agrees that it will indemnify and hold harmless the Manager
from and against all actions, claims, demands, suits, proceedings, losses, liabilities,
damages, costs, charges and expenses whatsoever, taken, or made by or against the Manager or
sustained, suffered or incurred by the Manager in the course of performance or provision of
any of the services referred to in this Agreement provided the same do not arise directly or
indirectly as a result of gross negligence or wilful default by the Manager hereunder.
|
9. |
FORCE MAJEURE
|
9.01 |
Notwithstanding anything to the contrary contained in this Agreement, if either party shall
be rendered unable to carry out the whole or any part of its obligations under this Agreement
by reason of force majeure, including, but not limited to, acts of God, acts of governmental
authorities, strikes, war, riot and any other causes of such nature, then the performance of
the obligations under this Agreement of such party as they are affected by such cause shall be
excused during the continuance of any liability so caused, but such inability shall so far as
possible be remedied with all reasonable despatch.
|
9.02 |
Either party suffering any such inability shall promptly notify the other party of the nature
of such inability, the action (if any) being taken by such party to remedy such inability and
the date (if any) when such party ceases to be under such inability.
|
10. |
NOTICES AND MISCELLANEOUS
|
58
10.01 |
All notices, requests, demands, consents and other communications under this Agreement or in
connection herewith shall be given or made to or upon the parties in writing delivered
personally or by post or facsimile and shall be addressed to the appropriate party at the
address set forth below or at such other address or place as such party may designate in
writing:-
|
10.02 |
This Agreement is personal to the parties and is not capable of being assigned in whole or
in part by either party, unless agreed by the other party.
|
10.03 |
None of the provisions of this Agreement shall be deemed to constitute a partnership or
joint venture between the parties for any purpose.
|
11. |
LAW AND JURISDICTION
|
59
11.01 |
This Agreement is governed by and shall be construed in accordance with the laws of England
and Wales.
|
11.02 |
Any dispute or difference between the parties hereto in respect of this Agreement shall be
submitted to [Arbitration in London]. If a party wishes a dispute to be resolved by
arbitration it will give notice to the other party setting forth particulars of the dispute
and nominating a person to act as Arbitrator of the dispute. The dispute shall be referred to
a single Arbitrator who shall be appointed by the parties hereto or failing agreement between
them by the Chairman for the time being of the London Maritime Arbitrators Association. Any
such arbitration shall (subject as hereinafter provided) otherwise be in accordance with and
subject to the provisions of the Arbitration Act 1996 or any statutory re-enactment or
modification thereof for the time being in force.
|
11.03 |
A person who is not a party to this Agreement has no right under the Contracts (Right of
Third Parties) Act 1999 to enforce or enjoy the benefit of any terms of this Agreement.
|
Name
|
: | |||
|
||||
Date built
|
: |
60
Name of builder
|
: | |||
|
||||
Flag of Registry
|
: | |||
|
||||
Net tonnage
|
: | |||
|
||||
Gross tonnage
|
: | |||
|
||||
Classed
|
: | |||
|
||||
SIGNED
by
|
) | |||
for and on behalf of
|
) | |||
|
) | |||
in the presence of:
|
) | |||
|
||||
SIGNED
by
|
) | |||
for and on behalf of
|
) | |||
|
) | |||
in the presence of:
|
) |
61
62
63
64
(1) |
HIGH-Q INVESTMENTS LIMITED
, a company incorporated under the laws of Hong Kong and having its
registered office at Room 2103, 21st Floor, Shanghai Industrial Investment Building, 48-62
Hennessy Road, Wanchai, Hong Kong (
Borrower
) and
|
(2) |
[
]
, a company incorporated under the laws of the Marshall Islands and havings its
correspondence address at [
] (
Lender
)
|
1. |
DEFINITIONS
|
1.01 |
In this Agreement the following expressions except where the context otherwise requires, have
the following meanings:-
|
1.1
|
Agreement | means this Loan Agreement as originally executed and as may be amended/supplemented from time to time; | ||
|
||||
1.2
|
Business Day | means a day on which commercial banks are open for business in Hong Kong and [ ]; | ||
|
||||
1.3
|
Event of Default | means any one of the events of default mentioned in Clause 6 hereof; | ||
|
||||
1.4
|
Hong Kong | means the Hong Kong Special Administrative Region of the Peoples Republic of China; | ||
|
||||
1.5
|
Indebtedness | means the Loan and all other moneys due or to become due from the Borrower to the Lender under this Agreement; and | ||
|
||||
1.6
|
Loan | means the sum of USD[ ] made available to the Borrower hereunder. | ||
|
||||
1.7
|
USD or US$ | means the lawful currency of the United States of |
- 1 -
2. |
THE OBLIGATIONS OF THE LENDER AND THE BORROWER
|
2.01 |
Subject to the terms and conditions of this Agreement, the Lender agrees to advance the Loan
to the Borrower
|
2.02 |
In consideration of the Lender to advancing the Loan under this Agreement, the Borrower
hereby covenants with the Lender that the Borrower will pay to the Lender the Indebtedness in
the manner and at the time provided for payment herein.
|
3. |
REPAYMENT
|
3.01 |
The Borrower shall repay the Loan in the manner as and when the Lender by notice in writing
to the Borrower declares that the Indebtedness and all other sums owing or payable hereunder
or any part thereof have become due and payable, whereupon the same shall become due and
payable within 3 Business Days from the date of the written notice. The giving of notice by
the Lender is subject to clause 4.9 of the Shareholder Agreement dated [
] made between the
Borrower, the Lender and [___].
|
4. |
REPRESENTATIONS AND WARRANTIES
|
4.01 |
The Borrower hereby represents and warrants to the Lender that the Borrower is a
company duly incorporated with limited liability and in good standing under the laws
of Hong Kong and has full power to carry on its business as it is now being conducted.
|
4.02 |
The Borrower warrants to the Lender that the Borrower has the power and authority to enter
into and comply with the terms of this Agreement and that the payment obligations of the
Borrower will at all times rank at least pari passu with its other unsecured indebtedness.
|
5. |
EVENTS OF DEFAULT
|
5.01 |
Each of the following events shall be an Event of Default:-
|
(i) |
if the Borrower shall fail to pay the Indebtedness hereunder or any part
thereof on the date on which the same is due and payable, or in the case of any sum
expressed to be payable on demand, forthwith upon any such demand for the payment
thereof being made; or
|
(ii) |
if the Borrower shall fail to perform or observe any of its other obligations
hereunder;
|
(iii) |
if in respect of the Borrower:-
|
(a) |
any order shall be made by a court or other appropriate
authority or any resolution shall be passed for bankruptcy, liquidation,
winding up or dissolution of any of them;
|
- 2 -
(b) |
a distress or execution shall be levied or enforced upon
against any of their properties or assets;
|
(c) |
any of them shall stop payment to creditors generally or shall
be unable to pay their respective debts;
|
5.02 |
The Borrower shall notify the Lender forthwith in writing of any occurrence of an Event of
Default or any event which might constitute an Event of Default.
|
5.03 |
The Lender may at any time after the happening of an Event of Default by notice in writing to
the Borrower declare that the Indebtedness and all other sums owing or payable hereunder have
become immediately due and payable, whereupon the same shall become immediately due and
payable.
|
6. |
FEES, COSTS AND EXPENSES
|
6.01 |
The Borrower shall pay or reimburse to the Lender on demand:
|
(i) |
all reasonable expenses (including legal expenses on a full-indemnity basis)
incurred by the Lender in connection with the preparation, negotiation and enforcement
of this Agreement; and
|
(ii) |
all stamp and other duties and taxes (if any) to which this Agreement may be
subject; and
|
(iii) |
all costs, charges and expenses (including legal expenses) incurred, and all
payments made, by the Lender in the lawful exercise of the powers hereby conferred
upon the Lender or in connection with any action taken by the Lender in suing for or
recovering any sum due from the Borrower hereunder.
|
7. |
NOTICES AND SERVICE OF PROCEEDINGS
|
7.01 |
Any notice or certificate required to be given by the Borrower to the Lender or by the Lender
to the Borrower shall be in writing and shall be deemed to have been so given if addressed to
the respective addressee at its address as hereinbefore mentioned or such other address as may
from time to time be notified by the Borrower to the Lender or vice-versa.
|
7.02 |
Any notice delivered personally shall be deemed to have been given at the time of such
delivery. Any notice despatched by letter postage prepaid shall be deemed to have been given
seven (7) Business Days after posting. Any notice sent by facsimile transmission shall be
deemed to have been given at the time of despatch.
|
8. |
MISCELLANEOUS
|
- 3 -
8.01 |
No provisions hereof may be amended, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against whom enforcement of the amendment, waiver,
discharge or termination is sought.
|
8.02 |
Any failure or delay by the Lender to exercise any of its rights hereunder shall not
constitute waiver thereof nor shall any course of dealing constitute waiver or estoppel.
|
9. |
APPLICABLE LAW AND JURISDICTION
|
9.01 |
This Agreement is governed by and shall be construed in accordance with the laws of
England and Wales. Any dispute or difference between the parties hereto in respect of this
Agreement shall be submitted to [Arbitration in London].
|
9.02 |
A person who is not a party to this Agreement has no right under the Contracts (Right of
Third Parties) Act 1999 to enforce or enjoy the benefit of any terms of this Agreement.
|
- 4 -
THE
BORROWER
|
||||||||
SIGNED
by
|
) | |||||||
for and on behalf of
|
) | Director | ||||||
HIGH-Q INVESTMENTS LIMITED
|
) | |||||||
in the presence of:
|
) | |||||||
|
||||||||
THE LENDER
|
||||||||
SIGNED
by
|
) | |||||||
|
)
) |
|||||||
in the presence of:
|
) |
- 5 -
- 6 -
Clause | Name | Page | ||||
|
||||||
1
|
Definitions and Interpretation | 1 | ||||
2
|
Agreement for Sale | 6 | ||||
3
|
Consideration | 6 | ||||
4
|
Completion | 7 | ||||
5
|
Warranties | 8 | ||||
6
|
Indemnities | 11 | ||||
7
|
Further Indemnities | 13 | ||||
8
|
Costs | 14 | ||||
9
|
Other Provisions | 14 | ||||
10
|
Notices | 17 | ||||
11
|
Termination | 17 | ||||
12
|
Governing Law and Jurisdiction | 17 |
Schedule | Name | Page | ||||
|
||||||
1
|
Disclosure Schedule | 19 | ||||
|
||||||
2
|
The Interests Transfer Documents | 22 | ||||
|
||||||
3
|
Warranties and Representations | 23 | ||||
|
||||||
4
|
The Vessels | 37 | ||||
|
||||||
5
|
The Consideration Formula | 38 | ||||
|
||||||
Execution Page | 39 |
(1) |
TEEKAY CORPORATION
, a corporation incorporated in the Marshall Islands company having offices
at Fourth Floor, Belvedere Building, 69 Pitts Bay Road, Hamilton, HM 08 Bermuda (the
Vendor
)
|
(2) |
TEEKAY TANKERS LTD.
, a corporation incorporated in the Marshall Islands company having a
principal office at Fourth Floor, Belvedere Building, 69 Pitts Bay Road, Hamilton, HM 08
Bermuda (the
Purchaser
)
|
(A) |
The Vendor is the legal and beneficial owner of the Interests.
|
(B) |
The Vendor has offered the Vessels for sale to the Purchaser on an
en bloc
basis for an
amount equal to the Consideration.
|
(C) |
The Purchaser has accepted the offer, which involves, amongst other things, the sale of the
Interests by the Vendor to the Purchaser.
|
(D) |
This Agreement sets out the terms upon which the Vendor and the Purchaser agree to the sale
and purchase of the Interests.
|
1 |
DEFINITIONS AND INTERPRETATION
|
|
1.1 |
Definitions
|
1
(a) |
any violation or correction of violation of Environmental Laws by the
Vendor or any member of the Vendors Group; or
|
(b) |
any event or condition associated with ownership or operation by the Vendor
or any member of the Vendors Group of the Interests (including, without limitation,
the presence of Hazardous Substances on, under, about or migrating to or from any of
the Vessels or the disposal or release of Hazardous Substances generated by operation
of any of the Vessels), including, without limitation:
|
(i) |
the cost and expense of any investigation, assessment,
evaluation, monitoring, containment, cleanup, repair, restoration,
remediation or other corrective action required or necessary under
Environmental Laws;
|
(ii) |
the cost or expense of the preparation and implementation
of any closure, remedial, corrective action or other plans required or
necessary under Environmental Laws; and
|
(iii) |
the cost and expense for any environmental or toxic tort
pre-trial, trial or appellate legal or litigation support work,
|
2
(a) |
substances which contain substances defined in or regulated under
applicable Environmental Laws;
|
(b) |
petroleum and petroleum products, including crude oil and any fractions
thereof;
|
(c) |
natural gas, synthetic gas and any mixtures thereof;
|
(d) |
any substances with respect to which a federal, state, foreign or local
agency requires environmental investigation, monitoring, reporting or remediation;
|
(e) |
any hazardous waste or solid waste, within the meaning of any Environmental
Law;
|
(f) |
any solid, hazardous, dangerous or toxic chemical, material, waste or
substance, within the meaning of and regulated by any Environmental Law;
|
(g) |
any radioactive material; and
|
(h) |
any asbestos-containing materials that represent a health hazard.
|
(a) |
an order has been made or an effective resolution passed or other
proceedings or actions taken (including, without limitation, the presentation of a
petition) with a view to its administration, bankruptcy, winding-up, liquidation or
dissolution; or
|
(b) |
it has had a receiver, administrative receiver, manager or administrator
appointed over all or any substantial part of its undertaking or assets; or
|
(c) |
any event has occurred or situation arisen in any jurisdiction that has a
substantially similar effect to any of the foregoing.
|
3
4
1.2 |
Interpretation
|
1.2.1 |
Reference to:
|
(a) |
a
Party
includes its successors and permitted assigns;
|
(b) |
a person includes a legal or natural person, partnership, trust, company,
government or local authority department or other body (whether corporate or
unincorporated);
|
(c) |
a statutory or regulatory body shall include its successors and any
substituted body;
|
(d) |
the singular includes the plural and vice versa; and
|
(e) |
one gender includes all genders.
|
1.2.2 |
Unless otherwise stated, a reference to a Clause, sub-clause or Schedule is a reference to a
Clause or sub-clause of, or Schedule to, this Agreement and a reference to this Agreement
includes its Schedules.
|
5
1.2.3 |
Clause headings in this Agreement and in the Schedules are for ease of reference only and do
not affect its construction.
|
1.2.4 |
In construing this Agreement the so-called
eusdem generis
rule does not apply and
accordingly the interpretation of general words shall not be restricted by words indicating a
particular class or particular examples.
|
2 |
AGREEMENT FOR SALE
|
|
2.1 |
Sale and purchase of Interests
|
2.2 |
Further matters
|
3 |
CONSIDERATION
|
|
3.1 |
Determination of the Consideration
|
The Consideration shall be determined in accordance with the Consideration Formula.
|
3.2 |
Payment of Consideration
|
3.3 |
Vendors Undertakings
|
(a) |
that on Closing, it shall procure that none of the Companies shall have any
net liabilities other than the liabilities Disclosed in the Disclosure Schedule;
|
(b) |
following the Closing Date and upon receiving any notices, correspondence,
information or enquiries in relation to any of the Companies, the Interests, the
Vessels or the Transaction Documents, it shall forthwith pass copies thereof to the
Purchaser and shall hold on trust for the Companies and account forthwith for any
monies received after the Closing Date on account of any of the Companies.
|
6
4 |
COMPLETION
|
4.1 |
Timing and place of Closing
|
4.2 |
Vendors Closing obligations
|
(a) |
duly executed transfers in respect of the Interests in favour of the
Purchaser, or as it may direct, further details of which are set out in Schedule 2
(
The Interests Transfer Documents
);
|
(b) |
the certificates, if any, for the Interests (or an indemnity in the
approved form for any lost certificates) further details of which are set out in
Schedule 2 (
The Interests Transfer Documents
);
|
(c) |
certified copies of the minutes of a meeting of the directors of the Vendor
(certified as at the date of Closing to be a certified copy of such resolutions in
full force and effect and certifying that such resolutions have not been revoked),
confirming that it has authorised the transfer of the Interests to the Purchaser;
|
(d) |
all statutory and minute books (in every case written up to, but not
including, the Closing Date), common seals, certificates of formation and
certificates of amendment (or equivalent), cheque books, bank mandates and other
books and records (whether statutory, financial or otherwise) of each of the
Companies as applicable and all certificates and documents of title relating to any
investments of each of the Companies;
|
(e) |
the original or certified true copies of the Transaction Documents;
|
(f) |
the original or certified true copies of the Relevant Documents;
|
(g) |
evidence satisfactory to the Purchaser that all amounts payable by the
Companies under any loan facilities made available by the Vendor (other than with
respect to amounts Disclosed as liabilities in the Disclosure Schedule), any bank,
financial institution, or any other person whether on the basis of any Security
Interest provided by any of the Companies, and whether in relation to the Vessels or
otherwise, have been paid in full and all associated Security Interests (other than
those identified in the Disclosure Schedule) and any other agreements or obligations
entered into by any of the Companies for the benefit of itself or any other person
have been terminated or released and, where applicable, reassigned to the Companies
or to the person giving the same;
|
(h) |
evidence satisfactory to the Purchaser that all necessary approvals in
connection with the sale and purchase of the Interests have been obtained; and
|
(i) |
if the Closing Date is not the date of this Agreement, the duly executed
certificate of an officer of the Vendor dated on the Closing Date, in form reasonably
acceptable to the Purchaser, certifying on behalf of the Vendor to the accuracy of
representations and Warranties of the Vendor contained in this Agreement.
|
7
4.3 |
Purchasers Closing obligations
|
4.4 |
Closing obligations not fulfilled
|
4.4.1 |
If either Party fails, for any reason, to comply with any of its obligations under the
foregoing provisions of this Clause 4 (
Completion
), the other Party may, at its option:
|
(a) |
by written notice to the first Party defer the date for Closing by one or
more periods that shall not exceed 20 Business Days in aggregate in respect of either
all of the parties obligations under the foregoing provisions of this Clause 4
(
Completion
) or such of those obligations that have not been complied with; or
|
(b) |
proceed to Closing so far as practicable but without prejudice to the
second Partys rights (whether under this Agreement or the general law) as regards
the obligations with which the first Party has not complied; or
|
||
(c) |
waive all or any of the obligations in question of the first Party.
|
4.4.2 |
If Closing is deferred to another date in accordance with Clause 4.4.1(a), and Closing is
effected, the provisions of this Agreement shall apply as if that other date were the Closing
Date.
|
4.5 |
Post Completion Adjustment Statements
|
4.5.1 |
Within 30 Business Days after the Closing Date the Vendor shall procure the preparation of
the Post Completion Adjustment Statements and shall send them to the Purchaser.
|
4.5.2 |
The Purchaser shall review the Post Completion Adjustment Statements and, on the date 15
Business Days after the date of the Post Completion Adjustment Statements, the Vendor or the
Purchaser (as appropriate) shall pay any such additional payments as set out in the Post
Completion Adjustment Statements to the other Party.
|
5 |
WARRANTIES
|
5.1 |
General
|
8
5.2 |
Claims
|
(a) |
the disputing and/or settlement of any Claims and any steps taken to avoid
and advice sought in connection with any actual, threatened or anticipated Claims;
|
(b) |
any legal proceedings in which any member of the Purchasers Group or any
of the Companies makes a Claim; and
|
||
(c) |
the enforcement of any such settlement or judgement.
|
5.3 |
Reliance on Warranties
|
(a) |
the Purchaser has been induced to enter and is entering into this Agreement
and the other Transaction Documents on the basis of and in reliance upon the
Warranties;
|
(b) |
the Purchaser may rely on the Warranties to the exclusion of any other
information, and that, with the exception of matters set forth in the Disclosure
Schedule, the Purchasers rights in respect thereof will not be in any way impaired
as a result of any other information being possessed by or available to any member of
the Purchasers Group Companies or any officer, employee, professional or financial
adviser of, or person acting on behalf of, the Purchaser or any member of the
Purchasers Group.
|
5.4 |
Warranties are separate and independent
|
5.5 |
Reduction in Consideration
|
5.6 |
Awareness of Vendor and Ordinary Course of Business
|
9
5.7 |
Provision of information
|
(a) |
any of the Warranties or any statement of fact contained elsewhere in this
Agreement, any Relevant Document or any Transaction Document; or
|
(b) |
the Disclosure Schedule or any other disclosure made or information
provided (or purportedly made or provided) under this Clause 5.7 (
Provision of
information
); or
|
(c) |
any matter or question connected with or arising out of any of the
foregoing,
|
5.8 |
Disclosure in Disclosure Schedule
|
5.9 |
Notification of potential Claims before Closing
|
5.10 |
Organisation and good standing
|
5.11 |
Due authorisation
|
5.12 |
No impediments
|
5.13 |
Survival
|
5.13.1 |
Subject to Clause 5.13.2 and to the limitations and other provisions of this Agreement and
the Transaction Documents, the representations and warranties of the Vendor contained in this
Agreement (including the Schedules hereto), the Disclosure Schedule and the Relevant Documents
shall survive the Closing and remain in full force and effect for a period of 12 months after
the Closing Date.
|
10
5.13.2 |
Warranties in paragraph 1(b), paragraph 1(c), paragraph 11 (
Taxation
) and paragraph 12(a)
of Schedule 3 (
Warranties and Representations
) to this Agreement shall survive until, and
shall terminate upon, the date of expiration of the applicable statute of limitations with
respect to the liability in question.
|
5.13.3 |
The covenants and agreements of the Vendor contained in this Agreement and the Transaction
Documents that by their terms extend beyond the Closing Date shall not terminate until all
obligations with respect thereto have been performed or satisfied or shall have expired or
been terminated in accordance with their terms.
|
6 |
INDEMNITIES
|
6.1 |
Indemnification by the Vendor
|
(a) |
Losses and Expenses to the Purchaser, any member of the Purchasers Group
or any of the Companies arising out of or related to the breach of any
representation, warranty, covenant or agreement of the Vendor in this Agreement
(including the Schedules hereto), the Disclosure Schedule and the Transaction
Documents, to the extent Vendor is notified by the Purchaser of such Losses or
Expenses prior to expiration of the applicable survival period set forth in Clause
6.1 (
Survival
);
|
(b) |
Covered Environmental Losses relating to the Interests to the extent that
the Vendor is notified by the Purchaser of any such Covered Environmental Losses
within five (5) years after the Closing Date;
|
(c) |
Losses or Expenses to the Purchaser, each member of the Purchasers Group
or any of the Companies arising from:
|
(i) |
the failure of any member of the Purchasers Group,
immediately after the Closing Date, to be the owner of such ownership
interests in and to the Interests as are necessary to enable any member of
the Purchasers Group to own and operate the Interests in substantially the
same manner that the Interests were owned and operated by any member of the
Vendors Group immediately prior to the Closing Date; or
|
(ii) |
the failure of any member of the Purchasers Group to have
on the Closing Date any consent or governmental permit necessary to allow any
member of the Purchasers Group to own or operate the Interests in
substantially the same manner that the Interests were owned and operated by
any member of the Vendors Group immediately prior to the Closing Date,
|
(d) |
all federal, state, foreign and local income tax liabilities attributable
to the operation of the Interests prior to the Closing Date.
|
11
6.2 |
Limited on liability
|
6.3 |
Notice
|
6.4 |
Conduct of claims
|
6.4.1 |
The Vendor shall have the right to control all aspects of the defence of (and any
counterclaims with respect to) any claims brought against the Purchaser, any member of the
Purchasers Group or any of the Companies that are covered by the indemnification set forth in
Clause 6.1 (
Indemnification by the Vendor
), including, without limitation, the selection of
counsel, determination of whether to appeal any decision of any court and the settling of any
such matter or any issues relating thereto; provided, however, that no such settlement shall
be entered into without the consent (which consent shall not be unreasonably withheld) of the
Purchaser (with the concurrence of the conflicts committee of the Purchaser) unless it
includes a full release of the Purchaser, any member of the Purchasers Group and each of the
Companies from such matter or issues, as the case may be.
|
6.4.2 |
The Purchaser agrees to cooperate fully with the Vendor with respect to all aspects of the
defence of any claims covered by the indemnification set forth in Clause 6.2 (
Indemnification
by the Vendor
), including, without limitation, the prompt furnishing to the Vendor of any
correspondence or other notice relating thereto that the Purchaser, any member of the
Purchasers Group or any of the Companies may receive, permitting the names of such parties to
be utilized in connection with such defence, the making available to the Vendor of any files,
records or other information of such parties that the Vendor considers relevant to such
defence and the making available to the Vendor of any employees of the Purchaser, any member
of the Purchasers Group or any of the Companies; provided, however, that in connection
therewith the Vendor agrees to use reasonable efforts to minimize the impact thereof on the
operations of such parties and further agrees to maintain the confidentiality of all files,
records and other information furnished by any such party pursuant to this Clause 6.4 (
Conduct
of claims
).
|
6.4.3 |
In no event shall the obligation of the Purchaser to cooperate with the Vendor as set forth
in Clause 6.4 (
Conduct of claims
) be construed as imposing upon the Purchaser an obligation
to hire and pay for counsel in connection with the defence of any claims covered by the
indemnification set forth in this Clause 6 (
Indemnities
); provided, however, that the
Purchaser may, at its own option, cost and expense, hire and pay for counsel in connection
with any such defence.
|
6.4.4 |
The Vendor agrees to keep any such counsel hired by the Purchaser reasonably informed as to
the status of any such defence (including providing such counsel with such information related
to any such defence as such counsel may reasonably request) but the Vendor shall have the
right to retain sole control over such defence.
|
12
6.5 |
Reduction in indemnity payment
|
6.5.1 |
In determining the amount of any Loss or Expense for which the Purchaser, any member of the
Purchasers Group or each of the Companies are entitled to indemnification under this
Agreement, the gross amount of the indemnification will be reduced by
|
(a) |
any insurance proceeds realized by such parties, and such correlative
insurance benefit shall be net of any incremental insurance premium that becomes due
and payable by such parties as a result of such claim; and
|
||
(b) |
all amounts recovered by such parties under contractual indemnities from third persons.
|
6.6 |
Realisation of insurance proceeds
|
6.6.1 |
The Purchaser hereby agrees to use commercially reasonable efforts to realize any applicable
insurance proceeds or amounts recoverable under such contractual indemnities; provided,
however, that the costs and expenses (including, without limitation, court costs and
reasonable attorneys fees) of the Purchaser, any member of the Purchasers Group or any of
the Companies in connection with such efforts shall be promptly reimbursed by the Vendor in
advance of any determination of whether such insurance proceeds or other amounts will be
recoverable.
|
6.7 |
Sole and exclusion remedies, waiver
|
6.7.1 |
The Purchaser hereby acknowledges and agrees that its sole and exclusive remedy with respect
to any and all claims relating to the subject matter of this Agreement and the other
Transaction Documents shall be pursuant to the indemnification provisions set forth in this
Clause 6 (
Remedies of the Purchaser
).
|
6.7.2 |
In furtherance of Clause 6.7.1, the Purchaser hereby waives, to the fullest extent permitted
under applicable law, any and all rights, claims and causes of action it may have against the
Vendor and any member of the Vendors Group arising under or based upon any federal, state,
foreign or local statute, law, ordinance, rule or regulation (including, without limitation,
any such rights, claims or causes of action arising under or based upon common law or
otherwise).
|
7 |
FURTHER INDEMNITIES
|
7.1 |
Loan Facility
|
7.1.1 |
The Purchaser agrees at all times to indemnity and hold harmless the Vendor from and against
all Losses and Expenses incurred by the Vendor and the B Borrowers relating to, or arising
directly or indirectly in any manner or for any cause or reason whatsoever under the Facility
Agreement and the other documents entered into in connection with the Loan Facility if such
Losses and Expenses result from a breach by the Purchaser or any of the A Borrowers of the
Financing Arrangements under the Loan Facility.
|
7.1.2 |
The Vendor agrees at all times to indemnify and hold harmless the Purchaser and Esther
Spirit L.L.C. and Iskmati Spirit L.L.C. from and against all Losses and Expenses incurred by
the Purchaser and the A Borrowers relating to or arising directly or indirectly in any manner
or for any cause or reason whatsoever under the Facility Agreement and the other documents
entered into in connection with the Loan Facility if such Losses or Expenses result from a
breach by the Vendor or any of the B Borrowers of the Financing Arrangements under the Loan
Facility.
|
13
8 |
COSTS
|
9 |
OTHER PROVISIONS
|
9.1 |
Entire agreement
|
9.2 |
Assignment
|
9.2.1 |
This Agreement shall be binding on and enure for the benefit of each Partys successors and
permitted assigns. Save as provided in Clause 9.2.2, no Party shall, without the prior
written consent of the other Party, assign, transfer, charge or deal in any other manner with
this Agreement or any of its rights (whether to damages or otherwise) or obligations arising
under or in connection with the Agreement, or purport to do any of the same, nor sub-contract
any or all of its obligations under this Agreement, and any such assignment, transfer, charge
or dealing shall be void for all purposes.
|
9.2.2 |
The Purchaser may assign all or any part of its rights and benefits under this Agreement to
any member of the Purchasers Group.
|
9.2.3 |
Subject to and upon any succession or assignment permitted by this Agreement, any such
successor or assignee shall in its own right be able to enforce any term of this Agreement in
accordance with the terms of this Agreement as if it were a party, but until such time shall
have no rights whether as a third party or otherwise. The Vendor shall have no greater
liabilities towards any successor or assignee of the Purchaser than it would have had to the
Purchaser had the Purchaser remained fully and solely entitled under this Agreement.
|
9.3 |
Right of set-off, deductions and withholdings and Tax on payments
|
9.3.1 |
The Purchaser shall not be entitled to set off against the Consideration any sums owing to
it by the Vendor.
|
9.3.2 |
If any deduction or withholding is required by law to be made from any payment from one
Party to another Party under this Agreement or any other Transaction Document, the Party
making the payment shall increase the amount thereof so as to ensure that the recipient
receives and is able to retain that amount that it would have received and retained had the
payment not been the subject matter of such deduction or withholding provided always that if
the recipient is entitled to a credit or some other benefit as a consequence of the payment to
it being the subject matter of a deduction or withholding it shall use its reasonable
endeavours to utilise the credit (whether by set off, or by claiming a repayment in respect
thereof, or otherwise) or benefit so arising and in the event that it is able so to do it
shall repay to the Party who made the payment an amount equal to the credit or benefit so
utilised, provided always that this Clause is without prejudice to the limitations on the
Vendors liabilities as set
out in Clause 6 (
Indemnities
). For the avoidance of doubt, this Clause 9.3.2 shall not
impose upon the recipient of the payment any obligation to utilise any credit or benefit
in priority to any other economic credit or benefit available to it or to pay to the Party
making the payment an amount greater than that by which the original payment was increased
under this Clause 9.3 (
Right of set-off, deductions and withholdings and Tax on payments
).
|
14
9.3.3 |
If any payment from the Vendor to the Purchaser under this Agreement or any other
Transaction Document is liable to Tax in the hands of the Purchaser, the Vendor shall increase
the payment by such an amount as will ensure that the Purchaser is able to receive and retain,
after paying Tax in respect of its receipt, an amount equal to that which would otherwise have
been paid to it had the receipt not been subject to Tax in its hands, provided always that
this Clause is without prejudice to the limitations on the Vendors liabilities as set out in
Clause 6 (
Remedies of the Purchaser
). The parties shall agree to the amount of any increase
in a relevant payment to give effect to this Clause 9.3 (
Right of set-off, deductions and
withholdings and Tax on payments
). In the event that the parties are not able to agree the
amount of any increase, the amount thereof shall be certified by the Purchasers auditors
acting as experts whose decision in respect thereof shall be binding on the relevant parties
except in the case of manifest error.
|
9.4 |
Waivers, rights and remedies
|
9.4.1 |
No failure or delay on the part of either Party to this Agreement in exercising any right or
remedy provided by law or under this Agreement shall impair such right or remedy or operate as
a waiver or variation of it or preclude its exercise at any subsequent time and no single or
partial exercise of any such right or remedy shall preclude or restrict any other or further
exercise of it or the exercise of any other right or remedy.
|
9.4.2 |
A waiver by either Party to this Agreement of a breach of or default under this Agreement or
under any other Transaction Document shall not constitute a waiver of any other breach or
default, shall not affect the other terms of this Agreement or any other Transaction Document
or the rights of any other person thereto and shall not prevent the Purchaser or the Vendor
(as the case may be) from subsequently requiring compliance with the waived obligation.
|
9.4.3 |
Any waiver (in whole or in part) of any right or remedy under this Agreement must be set out
in writing, signed by or on behalf of the person granting the waiver and may be given subject
to any conditions thought fit by the grantor and, unless otherwise expressly stated, any
waiver shall be effective only in the instance and only for the purpose for, and in favour of
the person to, which it is given.
|
9.4.4 |
Unless specifically provided in this Agreement or otherwise, the rights and remedies of the
Purchaser and the Vendor under or pursuant to any other Transaction Document are cumulative,
may be exercised as often as the Purchaser or the Vendor, as applicable considers appropriate
and are in addition to its rights and remedies under the general law.
|
9.5 |
Variations
|
9.6 |
Effect of Closing
|
15
9.7 |
Provisions of Agreement severable
|
9.8 |
Interest for late payment
|
9.9 |
Counterparts
|
9.10 |
Further assurances
|
9.11 |
Third party rights
|
16
10 |
NOTICES
|
10.1 |
General
|
11 |
TERMINATION
|
|
11.1 |
Termination
|
(a) |
by the mutual written consent of Vendor and Purchaser;
|
||
(b) |
by the Vendor, in the event of a material breach by the Purchaser of any
representation, Warranty, covenant or agreement of the Purchaser contained herein
that has not been cured or is not curable by the Closing Date; or
|
||
(c) |
by the Purchaser, in the event of a material breach by the Vendor of any
representation, Warranty, covenant or agreement of the Vendor contained herein that
has not been cured or is not curable by the Closing Date.
|
11.2 |
Effect of Termination
|
12 |
GOVERNING LAW AND JURISDICTION
|
12.1 |
English law
|
17
12.2 |
Jurisdiction
|
12.2.1 |
Subject to Clause 12.2.3, the courts of England have exclusive jurisdiction to settle any
dispute arising out of or in connection with this Agreement (including a dispute regarding the
existence, validity or termination of this Agreement) or any non-contractual obligations
arising out of or in connection with this Agreement (a
Dispute
).
|
12.2.2 |
The Parties agree that the courts of England are the most appropriate and convenient courts
to settle Disputes and accordingly no Party will argue to the contrary.
|
12.2.3 |
No Party shall be prevented from taking proceedings relating to a Dispute in any other
courts with jurisdiction.
|
12.3 |
Service of process
|
(a) |
irrevocably appoints Teekay Shipping (UK) Limited, 2
nd
Floor, 86
Jermyn Street, London, SW1Y 6JD, United Kingdom, as its agent for service of process
in relation to any proceedings before the English courts in connection with this
Agreement; and
|
(b) |
agrees that failure by a process agent to notify the that Party of the
process will not invalidate the proceedings concerned.
|
18
A
|
Finance Documents | |||||
|
||||||
A.1
|
Loan Facility | |||||
|
||||||
Document | Parties | Date | ||||
|
||||||
1
|
Facility Agreement | (i) the Borrowers, including Esther Spirit L.L.C. and Iskmati Spirit L.L.C., (ii) the Lenders (as defined), (iii) Nordea Bank Finland PLC as Agent, (iv) Nordea Bank Finland PLC as Security Trustee, (v) Nordea Bank Norge ASA and others as Mandated Lead Arrangers, (vi) Nordea Bank Norge ASA and others as Bookrunner and (vii) HSH Nordbank AG as Swap Provider | 28 November 2007 | |||
|
||||||
2
|
Guarantee and Indemnity in respect of various obligations of A Borrowers |
(i) the Vendor
(ii) the Security Trustee |
28 November 2007 | |||
|
||||||
3
|
Deed of Release and Guarantee and Indemnity |
(i) the Security Trustee
(ii) the Vendor |
18 December 2007 | |||
|
||||||
4
|
Guarantee and Indemnity in respect of various obligations of B Borrowers |
(i) the Purchaser
(ii) the Security Trustee |
18 December 2007 | |||
|
||||||
5
|
Guarantee and Indemnity in respect of various obligations of B Borrowers |
(i) the Vendor
(ii) the Security Trustee |
28 November 2007 | |||
|
||||||
6
|
ISDA Master Agreement |
(i) HSH Nordbank AG
(ii) the A Borrowers |
28 November 2007 | |||
|
||||||
7
|
ISDA Novation Agreement |
(i) HSH Nordbank AG
(ii) the Vendor (iii) the A Borrowers |
28 November 2007 | |||
|
||||||
8
|
Pledge Agreement in relation to A Borrowers |
(i) the Purchaser
(ii) the Security Trustee |
18 December 2007 | |||
|
||||||
9
|
Pledge Agreement in relation to B Borrowers |
(i) the Vendor
(ii) the Security Trustee |
18 December 2007 |
19
Document | Parties | Date | ||||
|
||||||
|
m.v. Esther Spirit | |||||
|
||||||
10
|
First Priority Bahamas Ship Mortgage over m.v. Esther Spirit | Esther Spirit L.L.C. | 30 November 2007 | |||
|
||||||
11
|
Deed of Covenants | Esther Spirit L.L.C. | 30 November 2007 | |||
|
||||||
12
|
Deed of Assignment |
(i) Esther Spirit L.L.C.
(ii) the Security Trustee |
30 November 2007 | |||
|
||||||
13
|
Notice of Assignment | Esther Spirit L.L.C | 30 November 2007 | |||
|
||||||
14
|
Loss Payable Clause | Esther Spirit L.L.C | undated | |||
|
||||||
|
m.v. Iskmati Spirit | |||||
|
||||||
15
|
First Priority Bahamas Ship Mortgage over m.v. Iskmati Spirit | Iskmati Spirit L.L.C | 30 November 2007 | |||
|
||||||
16
|
Deed of Covenants |
(i) Iskmati Spirit L.L.C.
(ii) Security Trustee |
30 November 2007 | |||
|
||||||
17
|
Deed of Assignment |
(i) Iskmati Spirit L.L.C.
(ii) Security Trustee |
30 November 2007 | |||
|
||||||
18
|
Notice of Assignment | Iskmati Spirit L.L.C. | 30 November 2007 | |||
|
||||||
19
|
Loss Payable Clause | Iskmati Spirit L.L.C. | undated |
B |
Vessel Documents
|
1 |
CSC Charter relating to the m.v. Esther Spirit dated 18 May 2010 and made between (i)
Teekay Chartering and (ii) CSC.
|
2 |
Addendum No.1 to the CSC Charter dated 25 June 2010 and made between (i) Teekay Chartering
and (ii) CSC.
|
|
3 |
Side letter relating to the CSC Charter dated 13 June 2010 and executed by Nanjing.
|
20
4 |
Pool Agreement dated 1 December 2003 and made between (i) Gemini Tankers L.L.C (Gemini) and
(ii) the Participants (as defined therein).
|
5 |
Addendum No. 1 to the Pool Agreement dated 1 January 2010 and made between (i) Gemini, (ii)
the Participants (as described therein) and (ii) Gemini Pool LLC AS
.
|
|
6 |
BMA Transcript of Register in respect of m.v. Esther Spirit dated 10 August 2004.
|
|
7 |
BMA Transcript of Register in respect of m.v. Iskmati Spirit dated 17 April 2008.
|
|
8 |
Det Norske Veritas Class Status Report in respect of the m.v. Esther Spirit dated 12 October 2010.
|
|
20 |
Det Norske Veritas Class Status Report in respect of the m.v. Iskmati Spirit dated 12 October 2010.
|
21
1 |
Certificate of Limited Liability Interest of Esther Spirit L.L.C., signed by its member, the
Vendor and duly endorsed by the Vendor for transfer to the Purchaser.
|
2 |
Certificate of Limited Liability Interest of Iskmati Spirit L.L.C., signed by its member, the
Vendor and duly endorsed by the Vendor for transfer to the Purchaser.
|
22
1 |
The Companies and the Interests
|
(a) |
Information
|
Each of the Companies are duly formed, organised and validly existing and in good standing
under the laws of The Republic of the Marshall Islands. Each of the Companies have the
requisite power and authority to own and operate their properties and assets and to carry
on their businesses.
|
(b) |
Title to Interests
|
The Interests constitute 100% of the issued capital of each of the Companies, the Vendor
is the sole legal and beneficial owner of the Interests, and no claim has been made by any
person to be entitled to any of them. The Interests have been duly authorized, properly
allotted and validly issued and are fully paid, or credited as fully paid, and
non-assessable. Save as Disclosed there is no Security Interest, option, conversion
right, right to acquire, or other adverse interest, right, equity, claim or potential
claim of any description on or over or affecting any of the Interests nor are there any
agreements, arrangements or commitments to give or create any such Security Interest,
right or claim, and no claim has been made by any person to be entitled to any.
|
(c) |
No arrangements relating to share capital
|
(d) |
No capital reorganisation
|
(i) |
made any issue of securities by way of capitalisation of profits or
reserves (including share premium account and capital redemption reserve); or
|
(ii) |
repaid, purchased or redeemed any shares of any class of their share
capital or otherwise reduced their share capital or any class of it;
|
23
(e) |
No agreement/arrangement
|
(i) |
the transfer or disposal of the Interests or any interest therein or any
restriction thereon or obligation relating thereto;
|
(ii) |
the exercise of votes at meetings of the board of any of the Companies (if
any) or of the holders of any class of Interests; or
|
(iii) |
the right to appoint or remove any directors or officers of any the
Companies (where applicable).
|
(f) |
No Security Interest over assets
|
2 |
The Vendor
|
(a) |
Capacity of Vendor
|
(i) |
it has the requisite power and authority to enter into this Agreement and
the Transaction Documents to which it is a party and perform all its obligations
thereunder;
|
(ii) |
this Agreement and the Transaction Documents to which it is a party
constitute (or will constitute when executed) its legal, valid and binding
obligations enforceable against it in accordance with their terms;
|
(iii) |
it has the power and authority to absolutely and unconditionally sell and
transfer the full legal and beneficial ownership in the Interests registered in its
name to the Purchaser on the terms set out in this Agreement;
|
(iv) |
the execution and delivery of this Agreement and the Transaction Documents
and performance by it of the obligations thereunder do not and will not result in a
breach of, or constitute any default under, any law or regulation, any order,
judgement or decree by any court or governmental agency to which it is a party or by
which it is bound, its Articles of Incorporation and Bylaws or any agreement to which
it is a party;
|
(v) |
all consents, licences, approvals and authorisations required by it in
connection with this Agreement and the Transaction Documents to which it is a party
and the transactions contemplated thereby have been obtained and are in full force
and effect;
|
(vi) |
no action, suit, proceeding, litigation or dispute against it or any member
of the Vendors Group is presently taking place or pending or, to its knowledge,
threatened that would or might reasonably be expected to inhibit its ability to
perform its obligations under this Agreement and the Transaction Documents to which
it is a party or that could materially and adversely affect the Interests; and
|
24
(vii) |
in so far as it is a body corporate:
|
(A) |
it is a body corporate duly incorporated and validly
existing under the laws of the jurisdiction in which it is incorporated;
|
(B) |
no Insolvency Event has occurred in relation to it and no
events or circumstances have arisen that entitle or could entitle any person
to take any action, appoint any person, commence proceedings or obtain any
order instigating an Insolvency Event.
|
(b) |
Vendor/Companies relationship
|
(i) |
owe any indebtedness or other liability and which in aggregate exceeds
$100,000 to any of the Companies whether actually or contingently, whether solely or
jointly with any other person and whether as principal or surety, and there is no
such indebtedness or liability and which in aggregate exceeds $100,000 due or owing
by any of the Companies to the Vendor, or any member of the Vendors Group and there
is no guarantee or Security Interest in respect of any such indebtedness or liability
outstanding;
|
(ii) |
are party to any agreement, arrangement or understanding, other than this
Agreement and the Transaction Documents, with any of the Companies or relating to any
of the Companies or the Interests in which the Vendor, any member of the Vendors
Group is or has been interested, whether directly or indirectly, and there is no
agreement, arrangement or understanding to which any of the Companies are a party and
in which the Vendor, or any member of the Vendors Group has or has had an interest,
whether directly or indirectly; or
|
(iii) |
is entitled to a claim of any nature against any of the Companies, or
which individually does not exceed $100,000, or has assigned to any person the
benefit of a claim against any of the Companies to which it would otherwise be
entitled.
|
3 |
Agreements
|
(a) |
Disclosure of Relevant Documents
|
(b) |
Enforceability of and compliance with agreements
|
(i) |
the Vendor has no reason to believe that any of the Companies will be
unable to complete and fulfil each of the Relevant Documents to which they are a
party by the due date and in accordance with its terms;
|
(ii) |
each of the Companies are in the possession or in the control of each
Relevant Document to which they are a party;
|
(iii) |
so far as the Vendor is aware, there are no written or oral agreements
that derogate from the obligations of any person other than the Companies or increase
the obligations of any of the Companies under the Relevant Documents to which they
are a party;
|
(iv) |
each Relevant Document has been validly executed by the relevant Company,
is valid and subsisting, has not been terminated and is fully enforceable against
that Company and, to the Vendors knowledge, the other parties to such agreement in
accordance with its terms;
|
25
(v) |
none of such Relevant Documents are subject to a Security Interest granted
or created by any of the Companies or any member of the Vendors Group other than
under the terms of the Relevant Document;
|
(vi) |
to the Vendors knowledge, there is no and has not been, at any time, any
breach of, or any default in the performance of, the terms of any such Relevant
Documents by any person other than the relevant Company nor are there any
circumstances likely to give rise to such breach or default. None of the Companies
have granted any time or indulgence, or waived any right, in relation to any Relevant
Document to which they are a part and, in particular, but without prejudice to the
generality of the foregoing, all amounts due and payable under such agreements have
been duly paid in full on, or within a reasonable period of, the due date for payment
of the same;
|
(vii) |
so far as the Vendor is aware, each of the Companies have fulfilled all of
its obligations and performed and observed all warranties, undertakings, covenants
and agreements on its part to be fulfilled, performed and observed under each
Relevant Document to which they are a party;
|
(viii) |
no notice of any intention to terminate, repudiate, rescind, modify or disclaim any
provision of any Relevant Document has been given by any of the Companies or, so far
as the Vendor is aware, received from a person other than the Companies by the
Companies in respect of any Relevant Document;
|
(ix) |
so far as the Vendor is aware, each of the Companies have paid all Taxes,
duties, imposts and other charges payable in respect of the Relevant Documents to
which they are a party so far as such Taxes, duties, imposts and other charges fall
upon each of the Companies and have become due and payable;
|
(x) |
all necessary licences, approvals and consents required by any of the
Companies prior to the entry into of each of the Relevant Documents and for their
continuation were duly obtained and are subsisting and, to the Vendors knowledge, no
circumstances have arisen that may lead to withdrawal or failure to renew, if
applicable, of any such licence, approval or consent;
|
(xi) |
there are no disputes or outstanding claims pending or, to the Vendors
knowledge, threatened against any of the Companies under the Relevant Documents and,
to the Vendors knowledge, no person is entitled to make, or has threatened to make,
a claim against any of the Companies in respect of any representation, breach of
condition or warranty or other express or implied term relating to any of the
Relevant Documents and no matter exists that would or might enable a person other
than the Companies themselves to make such a claim or raise a set-off, deduction,
withholding or counterclaim in any action for breach of any Relevant Document or
otherwise give any person other than the Companies the right to withhold or delay
payment of any sum due from them under the terms of the Relevant Document or the
performance of any of their obligations thereunder;
|
(xii) |
so far as the Vendor is aware, no person (other than the parties to the
Relevant Documents) has any rights (including any Security Interests) in respect of
any such Transaction Documents or the assets the subject thereof;
|
(xiii) |
the execution of this Agreement by the Vendor and the exercise of its rights and
performance of its obligations under the Agreement does not constitute and will not
result in any breach of any Relevant Document or other agreement or treaty to which
the Vendor or any of the Companies are a party;
|
26
(xiv) |
the obligations expressed to be assumed by the Vendor in this Agreement
are legal and valid obligations, binding on them in accordance with the terms of this
Agreement and no limit on any of their powers will be exceeded as a result of the
transaction contemplated by this Agreement or the performance by the Vendor, of its
obligations herein; and
|
(xv) |
so far as the Vendor is aware, no Insolvency Event has occurred in relation
to any third party to any Relevant Documents.
|
(c) |
No powers of attorney
|
(d) |
Change of control
|
(i) |
entitle any person to modify or terminate any Relevant Document or other
arrangement with any of the Companies;
|
(ii) |
result in the breach by the Companies under any of the terms, conditions or
provisions of any Relevant Document or other instrument to which any of the Companies
are now a party;
|
(iii) |
result in any present or future Indebtedness becoming due and payable or
capable of being declared due and payable prior to its stated maturity; or
|
(iv) |
entitle any person to receive from any of the Companies any finders fee,
brokerage or other commission in connection with the sale of the Interests.
|
(e) |
Offers and tenders
|
(f) |
Joint Ventures etc
|
(g) |
Competition/Anti-trust
|
27
(h) |
Restrictive practices
|
(i) |
Directors or Officers
|
4 |
Financial Arrangements
|
(a) |
Indebtedness
|
(b) |
Financing Arrangements
|
(c) |
Loans by the Companies
|
(d) |
Debts
|
(e) |
No guarantee or Security Interests
|
28
(f) |
No indemnities given by the Companies
|
(g) |
Bank accounts
|
5 |
Assets, Liabilities and other Arrangements
|
(a) |
No other assets and liabilities
|
(b) |
Business activity
|
6 |
Properties
|
7 |
Insurance
|
8 |
Litigation and other Disputes
|
(a) |
No proceedings
|
29
(b) |
No orders or judgements
|
(c) |
No unlawful acts
|
9 |
Compliance with Legal Requirements
|
(a) |
Compliance by each of the Companies
|
(b) |
Ultra vires
|
(c) |
Returns
|
(d) |
Limited Liability Company Agreements
|
(e) |
Books and records
|
30
(f) |
Company names
|
(g) |
Consents and licences
|
(h) |
No penalties or fines
|
(i) |
No investigations and inquiries
|
10 |
Employment
|
11 |
Taxation
|
(a) |
Tax Residence
|
(i) |
Each of the Companies are and have always been resident in The Marshall
Islands for the purposes of Taxation and none of the Companies have ever been
resident in any other country for the purposes of Taxation or treated as so resident
for the purposes of any double taxation agreement.
|
(ii) |
None of the Companies have ever traded through a branch, agency or
permanent establishment situated outside The Marshall Islands.
|
(iii) |
No circumstances exist whereby a person not resident in The Marshall
Islands is assessable and chargeable to tax in the name of any of the Companies.
|
31
(b) |
Disclosures, Notices, Returns, Clearances and Records
|
(i) |
All notices, reports, disclosures, accounts, computations, statements,
assessments, registrations, de-registrations and any other information that ought to
have been made or supplied by or in respect of any of the Companies for any Taxation
purposes have been made or supplied on a proper basis, were punctually submitted,
were accurate and complete when submitted and remain accurate and complete and are
not the subject of any dispute, enquiry or investigation with any Taxation Authority,
and, to the Vendors knowledge, there are no present circumstances that are likely to
give rise to any such dispute, enquiry or investigation.
|
(ii) |
No action has been taken by any of the Companies in respect of which any
consent or clearance from any Taxation Authority was required except in circumstances
where such consent or clearance was validly obtained, and no conditions were
attaching thereto.
|
(iii) |
Each of the Companies have made and submitted each claim, disclaimer,
election, notice and consent to have been made and submitted, and details of all such
claims, disclaimers, elections, notices and consents are set forth in the Disclosure
Schedule.
|
(iv) |
None of the Companies have ever been subject to any enquiry, visit, audit,
investigation or discovery order by any Taxation Authority nor, to the Vendors
knowledge, are there any circumstances existing that make it likely that any such
enquiry, visit, audit, investigation or discovery order will be made in the next 12
months.
|
(v) |
The Disclosure Schedule sets out details of all notices given by any
Taxation Authority to or in relation to each of the Companies, the provisions of
which remain in force.
|
(vi) |
Each of the Companies have sufficient records relating to past events to
permit accurate calculation of the Taxation liability or relief that would arise upon
a disposal or realisation on completion of each asset owned by each of the Companies
before Closing.
|
(vii) |
Except as set out in the Disclosure Schedule, each of the Companies
Taxation affairs are not dependent on or subject to any concession, agreement or
other formal or informal arrangement with any Taxation Authority.
|
(c) |
All Tax Paid
|
(i) |
All Taxation for which each of the Companies are liable and that ought to
have been paid has been paid on a timely basis to the appropriate Taxation Authority.
|
(ii) |
None of the Companies have paid, within the three years ending on the date
of this Agreement, nor will become liable to pay, any interest, penalty, fine or
surcharge to any Taxation Authority.
|
(iii) |
None of the Companies have received from any Taxation Authority (and have
not subsequently repaid to or settled with that Taxation Authority) any payment to
which they were not entitled or any notice in which their liability to Taxation was
understated.
|
32
(d) |
Stamp Duty
|
(e) |
U.S. Tax Classification
|
12 |
Miscellaneous
|
(a) |
No brokers fees
|
(b) |
Effect of entering into this Agreement
|
(i) |
conflict with or result in the breach of or constitute a default under any
of the terms, conditions or provisions of:
|
(A) |
any agreement or instrument to which any of the Companies
are now a party, including the Transaction Documents; or
|
(B) |
each of the Companies Limited Liability Agreement or
give rise to or cause to become exercisable any right of pre-emption or
right of first refusal; or
|
(C) |
any loan to or mortgage created by any of the Companies
or any lien, lease, order, judgment, award, injunction, decree, ordinance or
regulation or any other restriction of any kind or character to which any
property of any of the Companies are subject or by which any of the
Companies are bound;
|
(ii) |
result in any present or future Indebtedness becoming due or capable of
becoming due and payable prior to its stated maturity;
|
(iii) |
relieve any other party to an agreement or arrangement with any of the
Companies, including the Transaction Documents, of its obligations thereunder
(whether contractual or otherwise) or enable it to vary or terminate its rights or
obligations thereunder or determine any right or benefit enjoyed by any of the
Companies or to exercise any right, whether under an agreement with, or otherwise in
respect of, any of the Companies;
|
(iv) |
result in the creation or imposition of any Security Interest on any assets
of any of the Companies;
|
(v) |
cause any of the Companies to lose the benefit of any right or privilege it
presently enjoys;
|
33
(vi) |
cause any person who normally does business with any of the Companies not
to continue to do so on the same basis as previously; or
|
(vii) |
cause any licence or authority necessary or desirable for the continuation
of any of the Companies respective businesses to be determined or not renewed or
continued or renewed on less favourable terms.
|
(c) |
Accurate information provided
|
(d) |
Disclosure Schedule etc. accurate
|
(e) |
All information disclosed
|
13 |
Insolvency
|
(a) |
No Insolvency event
|
14 |
The Vessels
|
(a) |
Vessel Commitments
|
(i) |
each Vessel is properly registered in the name of the relevant Company
under and pursuant to the flag and law of the Bahamas and all fees due and payable in
connection with such registration have been paid;
|
(ii) |
each Vessel is entered with Det Norske Veritas (or another classification
society of like standing) and has the highest classification rating issued by such
society for a vessel of the type, age and class of that Vessel;
|
34
(iii) |
each Vessel is in class without any recommendations or notation as to
class or other requirement of the relevant classification society, and if any Vessel
is in a port, they are in such condition that they can not be detached by any port
state authority or the flag state authority for any deficiency;
|
(iv) |
each Vessel is owned free of all maritime liens, encumbrances and mortgages
except those that have been Disclosed in the Disclosure Schedule and accepted by the
Purchaser and the terms of any charters that continue beyond the Closing Date,
mortgages and loan documents do not prohibit the sale of any of the Companies;
|
(v) |
each Vessel has been maintained in a proper and efficient manner in
accordance with internationally accepted standards for good ship maintenance, are in
good operating order, condition and repair and are seaworthy and all repairs made to
any of the Vessels during the last two years and all known scheduled repairs due to
be made and all know deficiencies have been Disclosed in the Disclosure Schedule;
|
||
(vi) |
none of the Vessels are:
|
(A) |
under arrest or otherwise detained;
|
(B) |
other than in the ordinary course of business, in the
possession of any person (other than their master and crew) or subject to a
possessory lien; or
|
(C) |
other than in the ordinary course of business, subject to
any other lien;
|
(vii) |
each Vessel complies in all material respects with all laws, the
requirements of any government agency having jurisdiction over any Vessel, the
provisions of all international conventions and the provisions of the rules and
regulations issued under international conventions applicable to that Vessel;
|
(viii) |
each Vessel is supplied with valid and up-to-date safety, safety construction,
safety equipment, radio, loadline, health, tonnage, trading and other certificates or
documents as may for the time being be prescribed by the law of the flag of that
Vessel or of any other pertinent jurisdiction, or that would otherwise be deemed
necessary by a shipowner acting in accordance with internationally accepted standards
for good ship management and operations; and
|
(ix) |
no blacklisting or boycotting of any description whatsoever has been
applied or currently exists against or in respect of any Vessel.
|
(b) |
The CSC Charter
|
(i) |
the m.v. Esther Spirit has been delivered by the relevant Company to and
accepted on an unconditional basis by the relevant Charterer for service under and in
accordance with the terms and conditions of the CSC Charter;
|
(ii) |
the CSC Charter has been validly executed by the parties thereto and is in
full force and effect;
|
(iii) |
no amendment or modification has been made to the terms of the CSC Charter
and the terms of the CSC Charter are in substantially the same form as Disclosed;
|
(iv) |
the charter period in respect of the CSC Charter is two years plus or minus
30 days in relevant Charterers option; and
|
||
(v) |
the m.v. Esther Spirit went on hire on 19 July 2010;
|
35
(c) |
The Pool Agreement
|
(i) |
the m.v. Iskmati Spirit has been delivered by Iskmati Spirit L.L.C for
service under and in accordance with the terms and conditions of the Pool Agreement;
|
(ii) |
the Pool Agreement has been validly executed by the parties thereto and is
in full force and effect; and
|
(iii) |
no amendment or modification has been made to the terms of the Pool
Agreement and the terms of the Pool Agreement are in substantially the same form as
Disclosed.
|
36
Vessel
|
ISKMATI SPIRIT | |||
|
||||
Built
|
2003 | |||
|
||||
Yard
|
Hyundai | |||
|
||||
Class
|
Det Norske Veritas | |||
|
||||
|
+ 1A1 Tanker for Oil ESP EO VCS-2 NAUTICUS (Newbuilding) | |||
|
||||
Flag
|
Bahamas | |||
|
||||
Place of Registration
|
Nassau | |||
|
||||
Call sign
|
C6WJ4 | |||
|
||||
IMO (Registration) No.
|
9236353 | |||
|
||||
Grt/Nrt
|
84789/53755 |
37
Charter Free Valuation
|
$ | 44,000,000 | ||
Contract Value
|
$ | (300,000 | ) | |
Financing Value
|
$ | 2,400,000 | ||
|
||||
|
||||
|
$ | 46,100,000 |
Charter Free Valuation
|
$ | 58,200,000 | ||
Financing Value
|
$ | 3,200,000 | ||
|
||||
|
||||
|
$ | 61,400,000 |
38
Executed by
|
) | |||
TEEKAY CORPORATION
acting by
|
) | |||
|
) |
Executed by
|
) | |||
TEEKAY TANKERS LTD.
|
) | |||
acting by
|
) |
39