UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F
(Mark One)
[X] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g)
OF THE SECURITIES EXCHANGE ACT OF 1934
OR
[ ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended ____________________________________________________
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________________________________________
Commission file number________________________________________________________
Securities registered or to be registered pursuant to section 12(b) of the Act.
Title of each class Name of each exchange
on which registered
NONE
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Securities registered or to be registered pursuant to section 12(g) of the Act.
Common Shares, par value one dollar per share.
Securities for which there is a reporting obligation pursuant to Section 15(d)
of the Act.
Indicate the number of outstanding shares of each of the issuer's classes of capital or common shares as of the close of the period covered by the annual report.
56,012,000 common shares, par value one dollar per share.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark which financial statement item the registrant has elected to follow.
TABLE OF CONTENTS
Page
CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS....................1
ITEM 1. Identity Of Directors, Senior Management and Advisers............2
ITEM 2. Offer Statistics and Expected Timetable..........................3
ITEM 3. Key Information..................................................3
ITEM 4. Information On The Company......................................14
ITEM 5. Operating and Financial Review and Prospects....................36
ITEM 6. Directors, Senior Management and Employees......................54
ITEM 7. Major Shareholders and Related Party Transactions...............56
ITEM 8. Financial Information...........................................61
ITEM 9. The Offer and Listing...........................................62
ITEM 10. Additional Information..........................................63
ITEM 11. Quantitative and Qualitative Disclosures About Market Risk......73
ITEM 12. Description of Securities Other Than Equity Securities..........74
ITEM 13. Dividend Arrearages and Delinquencies...........................74
ITEM 14. Material Modifications to the Rights of Security Holders
and Use of Proceeds.............................................74
ITEM 15. Reserved........................................................74
ITEM 16. Reserved........................................................74
ITEM 17. Financial Statements............................................74
ITEM 18. Financial Statements............................................74
INDEX TO COMBINED FINANCIAL STATEMENTS......................................F-1
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CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS
This registration statement contains assumptions, expectations, projections, intentions and beliefs about future events, in particular under Item 4, "Information on the Company - Our Business Strategy" and Item 5, "Operating and Financial Review and Prospects". These statements are intended as "forward-looking statements." We may also from time to time make forward-looking statements in our periodic reports to the United States Securities and Exchange Commission, other information sent to our stockholders, and other written materials. We caution that assumptions, expectations, projections, intentions and beliefs about future events may and often do vary from actual results and the differences can be material.
All statements in this document that are not statements of historical fact are forward-looking statements. Forward-looking statements include, but are not limited to, such matters as:
o future operating or financial results;
o statements about future, pending or recent acquisitions, business strategy, areas of possible expansion, and expected capital spending or operating expenses;
o statements about LNG market trends, including charter rates, development of a spot market, factors affecting supply and demand, and opportunities for the profitable trading of LNG;
o expectations about the availability of vessels to purchase, the time which it may take to construct new vessels, or vessels' useful lives; and
o our ability to obtain additional financing.
When used in this document, words such as "believe," "intend," "anticipate," "estimate," "project," "forecast," "plan," "potential," "will," "may," "should," and "expect" and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.
We undertake no obligation to publicly update or revise any forward-looking statements contained in this registration statement, whether as a result of new information, future events or otherwise, except as required by law. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this registration statement might not occur, and our actual results could differ materially from those anticipated in these forward-looking statements.
PART I
ITEM 1. Identity Of Directors, Senior Management and Advisers
Directors and Executive Officers
Name Business Address Position
---- ---------------- --------
John Fredriksen Sandy Beach Apartments Chairman of the Board,
Block 3, Flat Y3431 President and Director
61 Amathountos Avenue
4532 Ayios Tychonas Area
CY-3105 Limassol
Cyprus
Tor Olav Troim Anna Court Deputy Chairman of the Board,
Block I, Flat B2 Chief Executive Officer, Vice
Georgiou 1 President and Director
Yermasoyia
CY 4040 Limassol
Cyprus
A. Shaun Morris Cedar House Director
41 Cedar Avenue
P.O. Box HM 1179
HM EX Hamilton Bermuda
Timothy Counsell Cedar House Director
41 Cedar Avenue
P.O. Box HM 1179
HM EX Hamilton Bermuda
Sveinung Stohle 30 Marsh Wall Executive Vice President
London, United Kingdom
E14 9TP
Graeme McDonald 30 Marsh Wall Chairman of Golar Management
London, United Kingdom Limited and Technical Director
E14 9TP
Graham Griffiths 30 Marsh Wall General Manager of the Fleet
London, United Kingdom
E14 9TP
Kate Blankenship Par-la-Ville Place, Chief Accounting Officer and
14 Par-la-Ville Road, Company Secretary
4th Floor
Hamilton, HM 08, Bermuda
Graham Robjohns 30 Marsh Wall Group Financial Controller
London, United Kingdom
E14 9TP
Auditors
Name Address
---- -------
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PricewaterhouseCoopers Harman House
1 George Street
Uxbridge, London UB8 1QQ
United Kingdom
ITEM 2. Offer Statistics and Expected Timetable
Not Applicable
ITEM 3. Key Information
Selected Financial Data
The following selected consolidated and combined financial and other data summarize our historical consolidated and combined financial information. The selected combined financial data as of and for the six months ended June 30, 2002 and 2001 have been derived from our unaudited financial statements and, in the opinion of our management, include all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of that information. We derived the information as of and for the years ended December 31, 2001, 2000 and 1999 from our audited combined and consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States, or U.S. GAAP, and the information as of and for the year ended December 31, 1998, from our unaudited combined and consolidated financial statements prepared in accordance with U.S. GAAP. This information should be read in conjunction with "Operating and Financial Review and Prospects" and our historical financial statements and the notes thereto included elsewhere in this registration statement.
We are a holding company formed on May 10, 2001. We acquired our liquefied natural gas, or LNG, operations from Osprey Maritime Limited, a company indirectly controlled by our Chairman, President and controlling shareholder, John Fredriksen. The LNG operations were a fully integrated business of Osprey Maritime Limited prior to our acquisition. Accordingly, the following financial information for the year ended December 31, 2000 and 1999 and for periods that include the five months to May 31, 2001 has been derived from the financial statements and accounting records of Osprey Maritime Limited and reflects significant assumptions and allocations. The following annual historical financial information does not reflect any significant changes that will occur in the operations and funding of the LNG operations as a result of our acquisition. See "Unaudited Pro-Forma Financial Information." Consequently, our financial position, results of operations and cash flows could differ from those that would have resulted if we operated autonomously or as an entity independent of Osprey Maritime Limited in the period for which annual historical financial data are presented for the year ended December 31, 2000 and 1999 and for periods that include the five months to May 31, 2001 below, and, similarly may not be indicative of our future operating results or financial performance. The financial information for the six months ended June 30, 2002 reflects the results of operations and cash flows of our business on a stand alone business under the new ownership structure.
We do not include selected financial information for the year ended December 31, 1997. Osprey acquired its LNG operations by purchasing Gotaas-Larsen Shipping Corporation from an unrelated third party on July 31, 1997. Gotaas-Larsen had substantial other operations in addition to its LNG operations. Osprey acquired financial information relating to Gotaas-Larsen as a whole, but did not acquire separate financial records relating to Gotaas-Larsen's LNG operations. Therefore, we are not able to prepare financial statements for the results of Gotaas-Larsen's LNG operations or to include summary financial data for the year ended December 31, 1997.
At or for the At or for the
Six Months Fiscal Year
Ended Ended
June 30 December 31
2002 2001 2001 2000 1999 1998
------- ------- ------- ------ ------- -------
(in thousands of $, except (unaudited)(unaudited) (unaudited)
per common share data
and fleet data)
Income Statement Data:
Total operating revenues 64,520 53,779 114,223 113,009 81,792 78,254
Vessel operating costs (1) 13,594 11,410 24,537 20,973 18,249 19,969
Administrative expenses 2,708 2,656 8,232 7,715 7,935 10,007
Restructuring costs -- 1,894 1,894 -- -- --
Depreciation and amortization 15,682 16,238 31,614 36,488 29,464 29,715
Net operating income 32,536 21,581 47,946 47,833 26,144 18,563
Net financial expenses (17,375) (22,422) (41,617) (44,820) (27,764) (31,591)
Net income (loss) before 15,161 (841) 6,329 3,013 (1,620) (13,028)
income taxes and minority
interests
Income taxes and minority (42) 1,702 1,963 3,517 237 (236)
interests
Net income (loss) 15,119 (2,543) 4,366 (504) (1,857) (12,792)
Earnings (loss) per common
share - basic and diluted (2) 0.27 (0.05) 0.08 (0.01) (0.03) (0.23)
Cash dividends per
common share -- -- -- -- -- --
Weighted average number 56,012 56,012 56,012 56,012 56,012 56,012
of shares - basic (2)
Weighted average number 56,019 56,012 56,019 56,012 56,012 56,012
of shares - diluted (2)
Balance Sheet Data (at
end of period):
Cash and cash equivalents 51,613 37,874 57,569 5,741 2,567 1,806
Restricted cash and
short-term investments 13,235 13,690 14,163 13,091 -- --
Short-term investments -- 18,417 -- 14,231 -- --
Amounts due from related
parties 231 27 261 -- -- --
Newbuildings 234,216 32,612 132,856 -- 158,110 --
Vessels and equipment, net 630,313 648,737 641,371 765,559 541,922 568,959
Total assets 941,344 763,067 855,991 817,990 724,101 594,264
Current portion of
long-term debt 42,341 25,603 41,053 10,171 -- --
Current indebtedness due 16,259 -- 85,278 12,000 12,000 --
to related parties
Long-term debt 593,478 508,918 483,276 204,329 126,308 --
Long-term debt due to
related parties 32,703 -- -- 287,400 329,400 352,400
Minority interest 18,188 25,765 25,820 26,011 14,250 --
Stockholders' equity 189,515 163,552 174,397 257,034 225,056 220,641
Common shares outstanding(2) 56,012 56,012 56,012 56,012 56,012 56,012
Fleet Data (unaudited)
Number of vessels at end of 6 6 6 6 5 5
period (3)
Average number of vessels 6 6 6 6 5 5
during period (3)
Average age of vessels 20.9 19.9 20.4 19.4 22.1 21.1
Total calendar days
for fleet 1,086 1,086 2,190 2,182 1,825 1,825
Total operating days for
fleet (4) 1,064 991 2,060 2,103 1,673 1,566
Average daily time charter
earnings (5) $58,900 $51,000 $53,600 $50,900 $43,300 $42,100
Average daily vessel
operating costs (6) $12,500 $10,500 $11,200 $9,600 $10,000 $10,900
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Footnotes
(1) Vessel operating expenses are the direct costs associated with running a
vessel including crew wages, vessel supplies, routine repairs, maintenance
and insurance. In addition, they include an allocation of overheads
allocable to vessel operating expenses.
(2) Since our financial results were "carved out" of those of Osprey, we did
not record any specific share capital for the period before we acquired
Osprey's LNG assets and operations. To provide a measurement of earnings
per share, we use for basic earnings per share the 12,000 shares issued in
connection with the formation of Golar on May 10, 2001 and the subsequent
issuance of 56 million shares in our Norwegian placement as described in
Note 1 to our Combined Financial Statements. Basic earnings per share is
computed based on the income (loss) available to common shareholders and
the weighted average number of shares outstanding. The computation of
diluted earnings per share assumes the conversion of potentially dilutive
instruments.
(3) We own 60 percent of one of our vessels and 100 percent of our remaining
five vessels.
(4) The operating days for our fleet is the total number of days in a given
period that the vessels were in our possession less the total number of
days offhire. We define days offhire as days spent on repairs, drydockings,
special surveys and vessel upgrades or awaiting employment during which we
do not earn charter hire.
(5) We calculate average daily time charter earnings by dividing our time
charter revenues by the number of calendar days minus days for scheduled
offhire. We do this calculation on a vessel by vessel basis.
(6) We calculate average daily vessel operating costs by dividing vessel
operating costs by the number of calendar days. We do this calculation on a
vessel by vessel basis.
Capitalization and indebtedness
The following table sets forth our unaudited capitalization as of September 30, 2002 calculated on an actual basis at June 30, 2002 adjusted to reflect drawdown from and repayment of our various facilities and the reclassification of amounts deemed current.
This table should be read with "Operating and Financial Review and Prospects" and the audited financial statements, unaudited interim financial statements, unaudited pro-forma combined financial information and other financial information included in this Registration Statement.
As
Actual Adjusted
(in thousands of $) (Unaudited)
Current portion of long-term debt 42,341 (a) 43,135
Short-term debt due to related parties 16,259 (b) -
Long-term debt 593,478 (a) 587,557
Long-term debt due to related parties 32,703 (b) 48,962
--------- ----------
Total Debt 684,781 (c) 679,654
--------- ----------
Stockholders' equity
Share Capital 56,012 56,012
Additional Paid in Capital 112,281 112,281
Accumulated Other Comprehensive Income (Loss) (1,472) (1,472)
Retained Earnings 22,694 22,694
--------- ----------
Total Stockholders' equity 189,515 189,515
--------- ----------
--------- ----------
Total capitalization 874,296 869,169
========== ==========
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(a) This adjustment reflects repayments of debt which occurred between July 1, 2002 and September 30, 2002, drawdown under an existing facility and the reclassification of amounts deemed current as of September 30, 2002.
Between July 1, 2002 and September 30, 2002, $7.5 million of debt was repaid in relation to the Golar LNG facility and $2.4 million relating to capitalized interest was drawndown under the Newbuilding facility.
(b) This adjustment reflects the reclassification of amounts deemed current as of September 30, 2002. At June 30, 2002 outstanding loans from Greenwich totaled $49.0 million, of which $16.3 million was due in October 2002.
In September, 2002, Greenwich confirmed the availability of an extension to these loans such that the total amount drawn down under this facility of $49.0 million can remain outstanding, if required, until December 2003.
(c) At September 30, 2002 our indebtedness consisted of the following:
(in thousands of $)
Unaudited
Related party loans from Greenwich 48,962
Mazo facility 198,917
Golar LNG facility 297,500
Newbuilding facility 134,275
----------
679,654
----------
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All loans are secured principally by existing vessels or vessels under construction.
The related party loans from Greenwich were financed by Greenwich through third party bank borrowings, which we have guaranteed. Our guarantee of Greenwich's third party loans are secured by an assignment of the related shipbuilding contacts, refund guarantees and, where applicable, the shipowning subsidiaries' bank accounts.
The Mazo facility is secured by a mortgage on the vessel Golar Mazo, the capital stock of the partly-owned subsidiary that owns the vessel, and an assignment to the lender of the vessel's earnings, insurance and the vessel's charter. In addition, in connection with the Mazo facility, a collateral agreement has been entered into with a bank consortium and a bank Trust Company. This agreement requires that certain cash balances, representing interest and principal payments for defined future periods, be held by the Trust Company during the period of the Mazo loan.
The Golar LNG facility is secured by a mortgage on each of our five wholly-owned vessels, the capital stock of our wholly-owned shipowning subsidiaries which owns each vessel, and an assignment to the lender of our wholly-owned vessels' earnings, insurance and the vessels' charters.
The Newbuilding facility is secured by the shipbuilding contract for hull number 2215, and a pledge of the shipowning subsidiary's bank accounts and capital stock.
Pro-Forma Financial Information
We are a holding company formed on May 10, 2001, that currently owns and operates a fleet of six LNG carriers. We own five of our vessels through wholly-owned subsidiaries and we have a 60 percent interest in the sixth vessel. This last vessel, the Golar Mazo, was delivered to us in January 2000 as a newbuilding. Additionally, we have contracts to build four LNG carriers. Our six LNG carriers are all currently employed under long-term charter contracts.
Our business was originally founded in 1946 as Gotaas-Larsen Shipping Corporation. Gotaas-Larsen entered the LNG shipping business in 1970, and was acquired by Osprey Maritime Limited, a Singapore publicly traded company, in 1997.
In August 2000, World Shipholding Ltd., a company indirectly controlled by John Fredriksen, our chairman, president and controlling shareholder, commenced an acquisition of Osprey. World Shipholding gained a controlling interest of more than 50 percent of Osprey in November 2000 and increased this interest to over 90 percent in January 2001. World Shipholding completed its acquisition in May 2001. This acquisition was accounted for as a step-by-step purchase transaction and the purchase price was therefore allocated to the assets and liabilities acquired based on their fair value as of each acquisition date with vessels being valued on the basis of discounted expected future cash flows. In each step of the acquisition, the fair value of the net assets acquired exceeded the purchase price with resulting negative goodwill allocated to the recorded values of the vessels. These purchase price allocations were pushed down and reflected in our financial statements from February 1, 2001.
On May 31, 2001, we acquired the LNG shipping interests of Osprey, which included one newbuilding contract and an option for a further newbuilding contract. We also entered into a purchase agreement with Seatankers Management Company Ltd., to purchase its one newbuilding contract for a LNG carrier and its option to build three new LNG carriers.
In addition to controlling Seatankers, Mr. Fredriksen indirectly controls 50.01 percent of our shares through World Shipholding. As required under U.S. GAAP, our purchase of the LNG operations of Osprey and Seatankers has been reflected in our financial statements as transactions between entities under common control. We have recorded the LNG assets and liabilities we acquired at the amounts previously reflected in the books of World Shipholding and Seatankers on what is known as a "predecessor basis". Under the predecessor basis of accounting, tangible and intangible assets acquired and liabilities assumed are recorded in our books at the amount at which they would have been recorded in the books of World Shipholding and Seatankers. The difference between our purchase price and this predecessor basis was reflected as a reduction in equity in a capital reorganization.
The following unaudited pro-forma condensed statement of operations gives effect to our acquisition of the LNG interests of Osprey and Seatankers under the predecessor basis of accounting the push down of World Shipholding's basis of accounting, and our capital reorganization as if these events had occurred on and from January 1, 2001. The pro-forma condensed statement of operations is presented for illustrative purposes only. The pro-forma adjustments are based upon available information and assumptions that management believes are reasonable. The pro-forma condensed statement of operations does not purport to represent what the results of operations would actually have been if the acquisition had in fact occurred on such date, nor do they purport to project our results of operations for any future period or as of any date, respectively.
The unaudited pro-forma condensed statement of operations does not give effect to any restructuring costs or to any potential costs savings or other operating efficiencies that could result from our acquisition of the LNG interests of Osprey and Seatankers. The unaudited pro-forma condensed statement of operations should be read in conjunction with our financial statements and the related notes, and the other financial information included elsewhere in this Registration Statement.
Our condensed historical statement of operations for the year ended December 31, 2001 is derived from the audited historical statements of operations included in Item 18 of this Registration Statement.
Unaudited Pro-Forma Combined Statement of Operations for the Year Ended December 31, 2001
Golar Pro-Forma Golar
Notes Historical Adjustments Pro-Forma
----- ---------- ----------- ---------
(in thousands of $, except
per share data)
Total operating revenues 114,223 -- 114,223
Vessel operating costs 24,537 -- 24,537
Administrative expenses 8,232 -- 8,232
Restructuring expenses 1,894 -- 1,894
Depreciation and amortization 1 31,614 (621) 30,993
----------------------------------
Net operating income 47,946 621 48,567
----------------------------------
Interest income 3,254 -- 3,254
Interest expense 2 (32,508) 866 --
Other financial items 3 (12,363) 4,935 (7,428)
----------------------------------
Income before taxes and
minority interest 6,329 6,422 12,751
----------------------------------
Minority interest 1,607 -- 1,607
Taxes 356 -- 356
----------------------------------
Net income 4,366 6,422 10,788
----------------------------------
Earnings per share -
basic and diluted 4 $0.08 $0.11 $0.19
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Notes to Pro-Forma Unaudited Combined Statements of Operations
1. This adjustment reflects the estimated adjustment to depreciation and amortization expense had the push down basis of accounting been applied as of January 1, 2001.
2. In May 2001 we entered into a secured loan facility for an amount of $325 million that was specifically obtained for financing the acquisition of the LNG interests of Osprey. This adjustment represents the estimated decrease in interest expense that would have occurred if the financing had taken place as of January 1, 2001. The pro-forma adjustment for the year ended December 31, 2001 for interest expense is calculated as follows:
Interest from
(in thousands of $, except Interest Annual January 1, 2001
interest rate) Amount Rate Interest to May 31, 2001(c)
-------------- ------ ---- -------- -----------------
Golar LNG facility (a) $325,000 5.49%(b) $17,843 $7,434
Interest expense associated
with the refinanced facility 8,300
reflected in the financial
statements from January 1,
2001 to May 31, 2001
-----------------
Total pro-forma interest 866
adjustment
-----------------
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(a) Assumes the entire principal balance of $325 million was outstanding
from January 1, 2001 to May 31, 2001.
(b) Interest on the Golar LNG facility is based on LIBOR + 1.50 percent.
As of May 31, 2001 the three month LIBOR rate was 3.99 percent.
A change in the underlying interest rate of 1/8 percent for the Golar LNG facility would result in an increase/decrease in interest expense of $406,000 for the year ended December 31, 2001. (c) Calculated by taking 5/12th of the annual interest calculation.
3. This adjustment represents the estimated adjustment of amortization of deferred charges and financing fees resulting from our recapitalization. In particular, it assumes the refinancing of five of our vessels in accordance with the financing terms we obtained in May 2001 as mentioned above.
The adjustment also reflects the elimination of the financial impact of interest rate swaps maintained by Osprey and allocated to us in the preparation of the combined historical financial statements until our May 2001 separation. These swap agreements were not assumed by us.
The adjustment comprises the following amounts:
(in thousands of $)
Amortization of deferred charges and financing fees 3,056
Impact of elimination of interest rate swaps 1,879
-------------
4,935
-------------
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The pro-forma adjustment for amortization of deferred charges and financing fees is calculated as follows:
Amortization of deferred charges and financing fees reflected in the financial statements from January 1, 2001 to May 31, 2001 associated with refinanced Facility (939)
4. To provide a measurement of pro forma earnings per share, we use for basic earnings per share the 12,000 shares issued in connection with the formation of Golar on May 10, 2001 and the subsequent issuance of 56 million shares in our Norwegian placement as described in Note 1 to our Audited Financial Statements. Pro forma earnings per share is computed based on the income (loss) available to common shareholders and the weighted average number of shares outstanding. As noted in Note 9 to the Audited Financial Statements, the increase in weighted average outstanding shares for potentially dilutive securities was approximately 7,000 shares.
Risk Factors
Some of the following risks relate principally to our business or to the industry in which we operate. Other risks relate principally to the securities market and ownership of our shares. Any of these risks, or any additional risks not presently known to us or that we currently deem immaterial, could significantly and adversely affect our business, our financial condition, our operating results and the trading price of our shares.
Risks Related to our Business
Currently, we generate substantially all of our revenue under six long-term agreements with two customers, and the unanticipated loss of any of these agreements or either customer would likely interrupt our related cash flow.
We currently generate substantially all of our revenue under a total of six long-term charters with two large and established customers. In the year ended December 31, 2001, British Gas accounted for 40 percent and Pertamina accounted for 55 percent of our total operating revenues, respectively. All of our charters have fixed terms, but might nevertheless be lost in the event of unanticipated developments such as a customer's breach. Our customers may terminate their charters with us if, among other events, the relevant vessel is lost or damaged beyond repair. The unanticipated loss of any of these charters or either customer would likely interrupt our related cash flow because we cannot be sure that we would be able to enter into attractive replacement charters on short notice. A persistent and continued interruption of our cash flow could, in turn, substantially and adversely affect our financial condition.
If construction of any of the four LNG carriers we have ordered were to be substantially delayed or left incomplete, our earnings and financial condition could suffer.
We have binding contracts for the construction of four new LNG carriers, or newbuildings, by two established Korean shipyards. While each shipbuilding contract contains a liquidated damages clause requiring the shipyard to refund a portion of the purchase price if delivery of a vessel is delayed more than 30 days, any such delay could adversely affect our earnings and our financial condition. In addition, if these shipyards were unable to deliver a particular vessel on time, we might be unable to perform under a related long-term charter and our earnings and financial condition could suffer.
Completion of our newbuilding program is dependent on additional debt financing.
To pay the anticipated installments on the construction cost of our four newbuildings, we will need to obtain further loans or other financing in the amount of approximately $316 million as at October 2002. It is standard in the shipping industry to finance between 60 and 80 percent of the purchase price of vessels, or construction cost in the case of newbuildings, through traditional bank financing. In the case of vessels that have charter coverage, the debt finance percentage may increase significantly. One of our newbuildings has been employed on a long-term charter with British Gas and we have obtained financing for 100 percent of the cost of the vessel. If we were to obtain 60 percent debt financing to cover the installments due on our three remaining unfinanced newbuildings, this would equate to additional finance of approximately $235 million of the $316 million required. For further information concerning our future financing plans, including our current reliance on related party financing, see Item 5; "Operating and Financial Review and Prospects, Liquidity and Capital Resources - Newbuilding Contracts and Capital Commitments". To the extent we do not timely obtain necessary financing for a newbuilding, the completion of that newbuilding could be delayed or we could suffer financial loss, including the loss of all or a portion of the progress payments we had made to the shipyard.
We are considering various alternatives for the employment of our newbuildings, failure to find profitable employment for them could adversely affect our operations.
We will incur substantial costs for the four newbuildings that we have ordered. The first newbuilding that will be delivered to us has been employed on a long-term charter that will commence on delivery. We are considering various employment opportunities for the remaining three newbuildings that may include medium-term or long-term charter contracts, trading in the developing spot LNG carrier charter market, that is, carrying LNG under short-term contracts of up to one year or on a per voyage basis, and entering LNG trading. If we cannot obtain profitable employment for these vessels, our earnings will suffer. If we are unable to secure term charter coverage for a newbuilding, we may be unable to obtain the financing necessary to complete that newbuilding. In addition, whether or not we employ our newbuildings profitably, we must service the debt that we incur to finance them.
If we do not accomplish our strategic objective of entering into other areas of the LNG industry, we may incur losses and our strategy to continue growing and increasing operating margins may not be realized.
A part of our strategy reflects our assessment that we should be able to expand profitably into areas of the LNG industry other than the carriage of LNG. We have not previously been involved in other LNG industry businesses and our expansion into these areas may not be profitable. Our strategy to possibly expand into LNG trading as a principal is subject to material risks concerning availability of LNG production and terminal capacity, and expansion of a spot trading market for LNG and inherent trading risk. Our plan does not currently envision trading energy derivatives. Our plan to consider opportunities to integrate vertically into upstream and downstream LNG activities depends materially on our ability to identify attractive partners and projects and obtain project financing at a reasonable cost.
Our loan agreements impose restrictions that may adversely affect our earnings or that may prevent our shipowning subsidiaries, and our intermediate holding company that owns them, from taking actions that could be in our shareholders' best interest.
Covenants in our loan agreements limit the ability of all our shipowning subsidiaries to:
o merge into or consolidate with any other entity or sell or otherwise dispose of all or substantially all of their assets;
o make or pay equity distributions;
o incur additional indebtedness;
o incur or make any capital expenditure; or
o materially amend, or terminate, any of our current charter contracts or management agreements.
In addition, if the ownership interest in us of John Fredriksen, our chairman, and his affiliated entities falls below 25 percent of our share capital, a default of a $325 million loan agreement to which we are a party would occur.
In addition, covenants in our loan agreements may effectively prevent us from paying dividends should our board of directors wish to do so and may require us to obtain permission from our lenders to engage in some other corporate actions. Our lenders' interests may be different from those of our shareholders and we cannot guarantee investors that we will be able to obtain our lenders' permission when needed. This may adversely affect our earnings and prevent us from taking actions that could be in our shareholders' best interests.
If we do not maintain the financial ratios contained in our loan agreements, we could face acceleration of the due date of our bank loans and the loss of our vessels.
Our loan agreements require us to maintain specific financial levels and ratios, including minimum available cash, ratios of current assets to current liabilities (excluding current long-term debt) and ratios of net debt to earnings before interest, tax, depreciation and amortization. Although we currently comply with these requirements, if we were to fall below these levels we would be in default of our loans and the due date of our debt could be accelerated, which could result in the loss of our vessels.
Servicing our debt substantially limits our funds available for other purposes.
A large part of our cash flow from operations must go to paying principal and interest on our debt. As of September 30, 2002, our total indebtedness was $680 million and our ratio of indebtedness to total capital was 79 percent. We may incur additional debt of as much as $316 million to fund completion of our four newbuildings, and we may incur additional indebtedness to fund our possible expansion into other areas of the LNG industry. Debt payments reduce our funds available for expansion into other parts of the LNG industry, working capital, capital expenditures and other purposes. In addition, our business is capital intensive and requires significant capital outlays that result in high fixed costs. We cannot assure investors that our existing and future contracts will provide revenues adequate to cover all of our fixed and variable costs.
Maritime claimants could arrest our vessels, which could interrupt our cash flow.
If we are in default on some kinds of obligations, such as those to our crew members, suppliers of goods and services to our vessels or shippers of cargo, these parties may be entitled to a maritime lien against one or more of our vessels. In many jurisdictions, a maritime lien holder may enforce its lien by arresting a vessel through foreclosure proceedings. In a few jurisdictions, claimants could try to assert "sister ship" liability against one vessel in our fleet for claims relating to another of our vessels. The arrest or attachment of one or more of our vessels could interrupt our cash flow and require us to pay to have the arrest lifted. Under some of our present charters, if the vessel is arrested or detained for as little as 14 days as a result of a claim against us, we may be in default of our charter and the charterer may terminate the charter.
It may be difficult to serve process on or enforce a United States judgment against us, our officers, our directors or some of our experts or to initiate an action based on United States federal or state securities laws outside of the United States.
We are a Bermuda corporation and our executive offices are located outside of the United States. Our officers and directors and some of the experts named in this registration statement reside outside of the United States. In addition, substantially all of our assets and the assets of our officers, directors and some of our experts are located outside of the United States. As a result, you may have difficulty serving legal process within the United States upon us or any of these persons or enforcing a judgment obtained in a U.S. court to the extent assets located in the United States are insufficient to satisfy the judgment. In addition, there is uncertainty as to whether the courts outside of the United States would enforce judgments of United States courts obtained against us or our officers and directors or entertain original actions predicated on the civil liability provisions of the United States federal or state securities laws. As a result, it may be difficult for you to enforce judgments obtained in United States courts against our directors, officers and non-U.S. experts or to bring an action against our directors, officers or non-U.S. experts outside of the United States that is based on United States federal or state securities law.
We may not be exempt from U.S. taxation on our U.S. source shipping income, which would reduce our net income and cash flow by the amount of the applicable tax.
If we are not eligible for exemption from tax under Section 883 of the U.S. Internal Revenue Code, we will be subject to a four percent tax on our U.S. source shipping income, which is comprised of 50 percent of our shipping income attributable to the transport of cargoes to or from United States ports. We believe that if we were not eligible for exemption, under Section 883, our potential tax liability for the three calendar years 1999, 2000 and 2001 would have been $174,987, $29,458 and $487,000, respectively. Although we currently believe we are exempt from tax under Section 883 and intend to take this position on our U.S. tax return, reproposed regulations under Section 883, if they become final as proposed, may not permit us to continue to claim exemption from tax under Section 883.
Many of our seafaring employees are covered by industry-wide collective bargaining agreements and the failure of industry groups to renew those agreements may disrupt our operations and adversely affect our earnings.
We employ approximately 600 seafarers, of which a significant portion are subject to industry-wide collective bargaining agreements that set basic standards. We cannot assure you that these agreements will prevent labor interruptions. Any labor interruptions could disrupt our operations and harm our financial performance.
If we are treated as a passive foreign investment company, a U.S. investor in our common shares would be subject to disadvantageous rules under U.S. tax laws.
If we are treated as a passive foreign investment company in any year, U.S. holders of our shares would be subject to unfavorable U.S. federal income tax treatment. We do not believe that we were a passive foreign investment company in 2001 or will be in any future year. However, passive foreign investment company classification is a factual determination made annually and thus may be subject to change if the portion of our income derived from other passive sources, including the spot trading of LNG for our own account, were to increase substantially. Moreover, the Internal Revenue Services may disagree with our position that time charters do not give rise to passive income for purposes of the passive foreign investment company rules. Accordingly, there is a possibility that we could be treated as a passive foreign investment company for 2001 or for any future year. Please see Item 10, "Additional Information; Taxation - U.S. Taxation of U.S. Holders" for a description of the passive foreign investment company rules.
Terrorist attacks, such as the attacks on the United States on September 11, 2001, and other acts of violence or war may affect the financial markets and our business, results of operations and financial condition.
As a result of the September 11, 2001 terrorist attacks and subsequent events, there has been considerable uncertainty in the world financial markets. The full effect of these events, as well as concerns about future terrorist attacks, on the financial markets is not yet known, but could include, among other things, increased volatility in the price of securities. These uncertainties could also adversely affect our ability to obtain additional financing on terms acceptable to us or at all.
Future terrorist attacks may also negatively affect our operations and financial condition and directly impact our vessels or our customers. Future terrorist attacks could result in increased volatility of the financial markets in the United States and globally and could result in an economic recession in the United States or the world. Any of these occurrences could have a material adverse impact on our operating results, revenue, and costs.
Risks Related to the LNG Shipping Industry
Over time, charter rates for LNG carriers may fluctuate substantially. If rates happen to be lower at a time when we are seeking a charter for a vessel, our earnings will suffer.
Charter rates for LNG carriers fluctuate over time as a result of changes in the supply-demand balance relating to current and future LNG carrier capacity. This supply-demand relationship largely depends on a number of factors outside our control. The LNG market is closely connected to world natural gas prices and energy markets, which we cannot predict. A substantial or extended decline in natural gas prices could adversely affect our charter business as well as our business opportunities. Our ability from time to time to charter or re-charter any vessel at attractive rates will depend on, among other things, then prevailing economic conditions in the LNG industry.
The LNG transportation industry is competitive and if we do not continue to compete successfully, our earnings could be adversely affected.
Although we currently generate substantially all of our revenue under long-term contracts, the LNG transportation industry is competitive, especially with respect to the negotiation of long-term charters. Furthermore, new competitors with greater resources could enter this industry and operate larger fleets through consolidations, acquisitions, or the purchase of new vessels, and may be able to offer lower charter rates and more modern fleets. If we do not continue to compete successfully, our earnings could be adversely affected. Competition may also prevent us from achieving our goal of profitably expanding into other areas of the LNG industry.
Shipping companies generally must conduct operations in many parts of the world, and accordingly their vessels are exposed to international risks which could reduce revenue or increase expenses.
Shipping companies, including those that own LNG carriers, conduct global operations. Changing economic, regulatory and political conditions in some countries, including political and military conflicts, have from time to time resulted in attacks on vessels, mining of waterways, piracy, terrorism and other efforts to disrupt shipping. The terrorist attacks against targets in the United States on September 11, 2001 and the military response by the United States may increase the likelihood of acts of terrorism worldwide. Acts of terrorism, regional hostilities or other political instability could affect LNG trade patterns and reduce our revenue or increase our expenses. Further, we could be forced to incur additional and unexpected costs in order to comply with changes in the laws or regulations of the nations in which our vessels operate. These additional costs could have a material adverse impact on our operating results, revenue, and costs.
Our insurance coverage may not suffice in the case of an accident or incident.
The operation of any ocean-going vessel carries an inherent risk of catastrophic marine disaster and property loss caused by adverse weather conditions, mechanical failures, human error, hostilities and other circumstances or events. The transportation of LNG is subject to the risk of LNG leakage and business interruptions due to political circumstances in foreign countries, hostilities and labor strikes. Events such as these may result in lost revenues and increased costs for us.
We carry insurance to protect against the accident-related risks involved in the conduct of our business and environmental damage and pollution insurance. However, we cannot assure investors that we have adequately insured ourselves against all risks, that any particular claim will be paid out of such insurance or that we will be able to procure adequate insurance coverage at commercially reasonable rates or at all in the future. More stringent environmental regulations at times in the past have resulted in increased costs for insurance against the risks of environmental damage or pollution. Our insurance policies contain deductibles for which we will be responsible. They also contain limitations and exclusions that, although we believe them to be standard in the shipping industry, may increase our costs or lower our profits. Moreover, if the mutual insurance protection and indemnity association that provides our tort insurance coverage were to suffer large unanticipated claims related to the vessel owners, including us, that it covers, we could face additional insurance costs.
If any of our LNG carriers discharged fuel oil into the environment, we might incur significant liability that would increase our expenses.
As with all vessels using fuel oil for their engines, international environmental conventions, laws and regulations, including United States' federal laws, apply to our LNG carriers. If any of the vessels that we own or operate were to discharge fuel oil into the environment, we could face claims under these conventions, laws and regulations. We must also carry evidence of financial responsibility for our vessels under these regulations. United States law also permits individual states to impose their own liability regimes with regard to oil pollution incidents occurring within their boundaries, and a number of states have enacted legislation providing for unlimited liability for oil spills.
Any future changes to the laws and regulations governing LNG carrier vessels could increase our expenses to remain in compliance.
The laws of the nations where our vessels operate as well as international treaties and conventions regulate the production, storage, and transportation of LNG. While we believe that we comply with current International Maritime Organization, or IMO, regulations, any future noncompliance could subject us to increased liability, lead to decreases in available insurance coverage for affected vessels and result in the denial of access to, or detention in, some ports. Furthermore, in order to continue complying in the future with United States federal and state laws and regulations as then in force, or with then current regulations adopted by the IMO, and with any other future regulations, we may be forced to incur additional costs relating to such matters as LNG carrier construction, maintenance and inspection requirements, development of contingency plans for potential leakages and insurance coverage.
Risks Related to our Common Shares
Our Chairman effectively controls us and may have the ability to effectively control the outcome of significant corporate actions.
John Fredriksen, our chairman, and his affiliated entities beneficially own 50.01 percent of our outstanding common shares. As a result, Mr. Fredriksen and his affiliated entities have the ability to effectively control the outcome of matters on which our shareholders are entitled to vote, including the election of all directors and other significant corporate actions.
Our annual historical financial information may not accurately reflect what our results of operations, financial position and cash flows would have been had we been a separate, stand-alone entity during the periods presented.
All of the annual historical financial information that we have included in this registration statement has been carved out from the consolidated financial statements and information of Osprey. We were not a separate, stand-alone entity for the annual periods presented and therefore this financial information may not accurately reflect what our results of operations, financial position and cash flows would have been had we been a separate, stand-alone entity during the periods presented. In addition, the annual historical information is not necessarily indicative of what our results of operations, financial position or cash flows will be in the future.
Because we are a Bermuda corporation, you may have less recourse against us or our directors than shareholders of a U.S. company have against the directors of that U.S Company.
Because we are a Bermuda company the rights of holders of our common shares will be governed by Bermuda law and our memorandum of association and bye-laws. The rights of shareholders under Bermuda law may differ from the rights of shareholders in other jurisdictions. Among these differences is a Bermuda law provision that permits a company to exempt a director from liability for any negligence, default, or breach of a fiduciary duty except for liability resulting directly from that director's fraud or dishonesty. Our bye-laws provide that no director or officer shall be liable to us or our shareholders unless the director's or officer's liability results from that person's fraud or dishonesty. Our bye-laws also require us to indemnify a director or officer against any losses incurred by that director or officer resulting from their negligence or breach of duty except where such losses are the result of fraud or dishonesty. In addition, under Bermuda law the directors of a Bermuda company owe their duties to that company, not to the shareholders. Bermuda law does not generally permit shareholders of a Bermuda company to bring an action for a wrongdoing against the company, but rather the company itself is generally the proper plaintiff in an action against the directors for a breach of their fiduciary duties. These provisions of Bermuda law and our bye-laws, as well as other provisions not discussed here, may differ from the law of jurisdictions with which investors may be more familiar and may substantially limit or prohibit shareholders ability to bring suit against our directors.
ITEM 4. Information On The Company
History and Development of the Company
We are a holding company formed on May 10, 2001 and we currently own and operate a fleet of six liquefied natural gas, or LNG, carriers. We are engaged in the acquisition, ownership, operation and chartering of LNG carriers through our subsidiaries. We own five of our vessels through wholly-owned subsidiaries and we have a 60 percent interest in the owning company of the sixth vessel. This sixth vessel, the Golar Mazo, was delivered to us in January 2000 as a newbuilding. Additionally, we have contracts to build four LNG carriers. Our six LNG carriers are all currently employed under long-term charter contracts. We have also entered into a long-term charter for one of our newbuildings.
We are incorporated under the laws of the Islands of Bermuda and maintain our principal executive headquarters at Par-la-Ville Place, 14 Par-la-Ville Road, Hamilton, Bermuda. Our principal ship-management offices are located at 30 Marsh Wall, London, United Kingdom.
Our business was originally founded in 1946 as Gotaas-Larsen Shipping Corporation. Gotaas-Larsen entered the LNG shipping business in 1970 and was acquired by Osprey Maritime Limited, then a Singapore listed publicly traded company, in 1997. In August 2000, World Shipholding Ltd., a company indirectly controlled by John Fredriksen, our chairman, president and controlling shareholder, commenced an acquisition of Osprey. World Shipholding gained a controlling interest of more than 50 percent of Osprey in November 2000 and increased this interest to over 90 percent in January 2001. World Shipholding completed its acquisition in May 2001. Osprey was delisted from the Singapore Stock Exchange in May of 2001.
On May 21, 2001, we acquired the LNG shipping interests of Osprey, which included one newbuilding contract and an option for a further newbuilding contract. We also entered into a purchase agreement with Seatankers Management Company Ltd., a company indirectly controlled by our chairman, John Fredriksen, to purchase its one newbuilding contract for an LNG carrier and its options to build three new LNG carriers. Two of the newbuilding options have since been exercised and two have expired.
Business Overview
The Natural Gas Industry
Natural gas has been over the last two decades, and is expected to be, one of the world's fastest growing energy sources over the next 20 years. Already responsible for 25 percent of the world's energy supply, the International Energy Agency, or IEA, projects that demand for natural gas will rise by 2.7 per cent per annum over the next two decades. According to the IEA, new power plants are expected to provide the majority of this incremental demand.
The rate of growth of natural gas consumption has been almost twice that of oil consumption during the last decade. The primary factors contributing to the growth of natural gas demand include:
o Costs: Technological advances and economies of scale have resulted in reduced prospecting, processing and transportation costs for natural gas, thereby lowering capital expenditures.
o Environmental: Natural gas is a clean-burning fuel. It produces less carbon dioxide and other pollutants and particles per unit of energy production than coal, fuel oil and other common hydrocarbon fuel sources.
o Demand from Power Generation: According to the IEA, natural gas is the fastest growing fuel source for electricity generation worldwide. While coal is currently the predominant fuel source for power generation, accounting for nearly 33 percent of total consumption for that purpose, natural gas use is expected to grow from 19 percent of power fuel consumption in 1999 to 26 percent by 2020.
o Market Deregulation: Deregulation of the gas and electric power industry in the United States, Europe and Japan, along with a trend towards further privatization and liberalization of natural gas markets, has resulted in new entrants and an increased market for natural gas.
o Significant Natural Gas Reserves: Approximately half of the world's remaining hydrocarbon reserves are natural gas.
Europe, the former Soviet Union and the United States accounted for approximately 74 percent of total world consumption of natural gas in 2000. In these areas, there is a highly developed pipeline grid and natural gas usage is diversified among the different sectors described below. In 2000, Asia accounted for 12 percent of the world natural gas consumption with Japan being the largest consumer.
The primary applications for natural gas include the following:
o Power Generation: Natural gas is increasingly used to generate electricity. In the United States, the consumption of natural gas for this purpose increased 11 percent per year on a compound annual basis from 1996 to 2000. In 2000, the power generation sector constituted 25 percent of total natural gas consumption in Western Europe and 14 per cent of the total natural gas consumption in the United States. In South Korea and Japan, where most of the natural gas is imported by sea, power generation accounted for 33 percent of total gas consumption in 2000.
o Industrial: Industrial consumers include manufacturers, businesses involved in extraction or refining of minerals, agriculture and the construction industry. In the industrial sector, natural gas is used for plant operations, cogeneration of electric power, and as an industrial feedstock for producing products such as methanol, hydrogen, dimethyl ether, and other organic chemical products. In 2000, the industrial sector constituted 46 percent of total natural gas consumption in the United States, 28 percent of total natural gas consumption in Western Europe, 19 percent in South Korea, but only two percent of total natural gas consumption in Japan.
o Residential: Natural gas consumed in the residential sector is used mainly for heating, air conditioning and cooking. In 2000, the residential sector constituted 24 percent of total natural gas consumption in the United States and 29 percent of total natural gas consumption in Western Europe.
o Commercial: In the commercial sector, natural gas is used mainly for heating and air conditioning. Commercial consumers include non-manufacturing establishments such as office buildings, shopping centers, hotels, paper and pulp processing plants, fisheries and governmental agencies. In 2000, the commercial sector accounted for 16 percent of total natural gas consumption in the United States, but only eight percent of total natural gas consumption in Western Europe.
Minor volumes of natural gas in its compressed form, known as compressed natural gas, or CNG, are also used for transportation, mainly for buses and larger vehicles such as trucks.
The LNG Industry
Overview
Of the natural gas consumed worldwide in 2000, 5.7 percent was supplied as LNG. LNG is liquefied natural gas, produced by cooling natural gas to -163(degree)C (-256(Degree) Fahrenheit), which is just below the boiling point of LNG's main constituent, methane. LNG is produced in liquefaction plants situated around the globe near gas deposits. In its liquefied state, LNG occupies approximately 1/600th the volume of its gaseous state. Liquefaction makes it possible to transport natural gas efficiently and safely by sea in specialized vessels known as LNG carriers. LNG is stored at slightly above atmospheric pressure in cryogenic tanks. LNG is converted back to natural gas in regasification plants by raising its temperature.
LNG Transmission Process
Step 1 Step 2 Step 3
Liquefaction Shipping Regasification
------------ -------- --------------
[GRAPHIC OMITTED]
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Source: BP
The first LNG project was developed in the mid-1960s and in the mid-1970s LNG began to play a larger role as energy companies developed remote gas reserves that could not be served by pipelines in a cost-efficient manner. The LNG industry has historically been characterized by the following:
o Expectation of Security and Diversification of Supply: East Asian countries, led by Japan, searching for a non-OPEC, non-oil source of energy, have been the dominant consumers of LNG. The LNG import trade has grown strongly in markets with few domestic hydrocarbon resources.
o High Project Cost: Most projects have been highly capital intensive, with the success of projects tied to exploiting remote gas fields that could sustain production over periods as long as 30 years.
o Long-Term Contracts: The high capital expenditures associated with LNG projects have necessitated long-term contracts. Typically, pricing has been tied to the price of oil and contracts have been for large volumes on a take or pay basis. Pre-selling all planned production and plant capacity has been used to finance projects. The long-term charter of LNG carriers to carry the LNG has been an integral part of any project.
o Concentrated Production: The Middle East and Southeast Asia, together with Algeria, have historically accounted for the overwhelming majority of LNG production.
Historical and Prospective Growth in Demand for LNG
Over the last two decades, LNG consumption has shown sustained growth of 8.1 percent per year - far higher than the 1.1 percent annual growth in the consumption of oil. Fearnleys Consultants A.S, or Fearnleys, projects overall LNG trade to grow at a rate of approximately six percent per annum from now until 2010. By 2010, LNG trade is expected to equal 179 million tonnes, up from approximately 100 million tonnes in 2000. The Information Administration of the United States Department of Energy forecasts annual growth of eight percent in LNG imports into the United States through 2020. There is no guarantee that this will happen.
In recent years, the global LNG industry has been in transition, changing from the old model of long-term contracts with dedicated ships attached to the specific trade routes and gas pricing tied to the price of different hydrocarbon fuels such as oil and coal, to a more flexible market model for gas contract volumes, contract periods, gas prices and ship allocation. While this new model is still in its infancy, some of the key factors influencing its growth are:
o Deregulation of Power and Gas Industries in Asia, North America and Europe: With trends toward deregulation and further privatization in Asia and Europe, many utilities are reluctant to rely solely on long-term take or pay contracts with fixed volumes and price structures.
o Improved Competitiveness: During the last decade, LNG's commercial competitiveness has improved dramatically. Costs associated with natural gas field development have fallen and LNG production facilities have become cheaper, larger and more efficient. The cost of shipping has also declined due to significantly reduced costs of LNG carrier construction and the prolonged lives of LNG carriers.
o Projects with Paid Down Infrastructure: After being in operation for two to three decades, several LNG projects have satisfied their project finance. The owners of these projects are now able to offer more flexibility in considering contract terms.
o Access to Remote Gas Reserves: New areas of exploration due to advances in exploration production technology have yielded more potential natural gas production projects.
As a result of these factors and other industry developments, the following trends are driving the global LNG market:
o Strong Growth in Demand: Due to improved competitiveness, demand for natural gas as a preferred source of energy, has been growing in both Asia and in the counties bordering the Atlantic Basin, which includes the Atlantic Ocean and adjacent bodies of water bordered by North and South America to the west and the west coast of Europe and Africa to the east.
o Surplus LNG from Projects: In many cases, LNG liquefaction plants have the ability to produce more LNG than the volumes required under a project's long-term contract. During build-up periods for contractual volumes, there are also often potential excess volumes for export. The growth of liquefaction capacity makes more LNG available for potential short-term contracts or spot trading.
o Gas Flaring and LNG Production: Capture of flared gas from oil fields associated with oil production constitutes a new source of natural gas. In many producing regions, the gas associated with oil field operations has been either reinjected into the reservoir or flared. Environmental regulations have increasingly prohibited the practice of flaring.
o Emergence of New Contract Structure: Increasingly, LNG trade is expected to be contracted for the short-term, in smaller volumes with built-in flexibility to move deliveries to third parties.
o Improved Gas Power Plant Efficiency: The power generation sector has recently increased its consumption of natural gas as a result of the development of combined cycle gas turbines. These turbines are a competitive means of generating electricity and are considered to be more environmentally sound than those methods used in the production of electricity using coal and fuel oil.
o Growth in Atlantic Basin LNG Trade: While the region is also served by pipelines, the Atlantic Basin, in particular, may see increased LNG trade due to recent growth in exports of LNG from newly commissioned production facilities in Trinidad & Tobago and Nigeria. Atlantic Basin countries present a wide range of potential markets, including several European countries and the United States.
o Interest in New Infrastructure: The overall market growth has resulted in increased interest in both onshore and offshore LNG production and receiving capacities.
Production and Consumption of LNG
Production
There are three major regional areas that supply LNG. These are first, Southeast Asia, including Australia, Malaysia, Brunei and Indonesia, second the Middle East, including Qatar, Oman and United Arab Emirates with facilities planned in Iran and Yemen, and third, the Atlantic Basin countries, including Algeria, Libya, Nigeria and Trinidad with facilities planned in Egypt, Angola, Venezuela and Norway. There is also an LNG export facility in the United States (Alaska) that primarily supplies Japan. New production facilities are planned in Iran, Egypt, Angola, Nigeria, Venezuela and Norway. Qatar, Oman, Trinidad and Nigeria have all began large scale LNG production in recent years.
Total exports and imports of LNG were just above 100 million tonnes in 2000. This amount is projected by Fearnleys to increase to approximately 179 million tonnes by 2010. The twelve exporting countries represented above have sixteen liquefaction facilities that, combined, can produce approximately 125 million tonnes of LNG per year.
The largest exporters are listed below based on data for 2000 contained in the BP Statistical Review of World Energy, June 2001.
o Indonesia 26.1 million tonnes of LNG or 26.1% of exports o Algeria 19.2 million tonnes of LNG or 19.2% of exports o Malaysia 15.3 million tonnes of LNG or 15.3% of exports o Qatar 10.2 million tonnes of LNG or 10.2% of exports o Australia 7.4 million tonnes of LNG or 7.4% of exports |
Other LNG producing countries and areas include Brunei, Oman, Nigeria, United Arab Emirates, Trinidad & Tobago, Libya and Alaska. Based on published reports, a number of existing LNG exporting plants are either being expanded, or are planning expansion. These include plants in Australia, Brunei, Indonesia-Bontang, Malaysia, Nigeria, Oman, Trinidad & Tobago and two LNG projects in Qatar.
Consumption
The two major areas that dominate worldwide consumption of LNG are East Asia, including Japan, South Korea and Taiwan, and Europe, specifically France, Spain, Italy, Belgium and Turkey. East Asia currently accounts for approximately 71 percent of the global LNG market while Europe accounts for approximately 23 percent. The United States presently accounts for approximately five percent of the global LNG market, but has experienced a growth in LNG imports in recent years.
There are currently 11 LNG importing countries with 38 importing terminals. Two of these countries - Greece and Puerto Rico - commenced accepting deliveries in 2000. The largest LNG importers in 2000 were as follows:
o Japan 52.9 million tonnes of LNG or 52.9% of total imports o South Korea 14.4 million tonnes of LNG or 14.4% of total imports o France 8.2 million tonnes of LNG or 8.2% of total imports o Spain 6.2 million tonnes of LNG or 6.2% of total imports o United States 4.6 million tonnes of LNG or 4.6% of total imports |
Japan and South Korea are currently the two largest importers of LNG, accounting for approximately 67 percent of the world total LNG imports in 2000. Almost all natural gas consumption in Japan and South Korea is based on LNG imports. According to published reports, work is in progress to build up to 15 additional LNG import facilities in China, India, the Bahamas, Brazil, Italy, Japan, Mexico, Spain, Portugal, Taiwan and Turkey, among others.
In January 2000, the Chinese government formally approved a plan to import LNG into Guangdong, near Hong Kong, with a targeted start-up date of 2005. In India, an LNG terminal at Dabhol is currently being completed, and in 2000 contracts were entered into for the construction of LNG import terminals in Dahej and Cochin.
The cost of constructing LNG import facilities has decreased. This has enabled small or low volume markets such as Puerto Rico, the Dominican Republic and Greece to receive imports on a cost-effective basis.
Imports of LNG into the United States in 2000 increased by 70 percent from 1999 to around 4.6 million tonnes. During 2000, two LNG import terminals were operated in the United States, one in Lake Charles, Louisiana, and one in Boston, Massachusetts. Two terminals, one at Elba Island, Georgia and one at Cove Point, Maryland are being reactivated, primarily due to increased LNG import demand in the United States. The Elba Island terminal was opened by the end of 2001. Cove Point has a scheduled reopening during the second half of 2002. This will approximately double United States LNG import capacity by the end of 2002. Expansion plans exist for the Lake Charles, Elba Island and Cove Point facilities.
The largest LNG trade route in recent years has been Indonesia to Japan while the second largest has been Malaysia to Japan. The world's largest seaborne LNG trades are shown in the graph below.
LNG Trades
Worlds Largest LNG Trade Routes 1998-2000
[BAR CHART OMITTED]
Golar Mazo: Charter through 2017; options through 2027.
Golar Spirit: Charter through 2006; options through 2008.
Khannur: Charter through 2009; options through 2019.
Gimi: Charter through 2011; options through 2021.
Hilli: Charter through 2012; options through 2022.
Golar Freeze: Charter through 2008.
Newbuild 2215: Charter from 2003 through 2023; options through 2033.
Million Tonnes
per Year
--------------
Total Trade 1998 83.3
Total Trade 1999 91.5
Total Trade 2000 100.0
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Source: BP Statistical Review of World Energy, June 2001
Emerging Spot Market and Short-Term Trades. In 2000, there were 112 LNG trade routes, an increase of 62 percent from 1995. According to Fearnleys, the main reason for this rapid increase has been the advent of spot and short-term trading activity in LNG. The spot market utilizes surplus export capacity and shipping on routes other than, or not necessarily the same as, those for which a facility was originally dedicated. Spot activity refers to single cargo or non-project related series of cargoes over a pre-set period generally not exceeding one year. Short-term trading activity for the purposes of this discussion refers to contracts of up to four years. During the 1990s, the volume of spot and short-term trading activity rose from virtually zero in 1990 to approximately eight percent of total world trade in LNG in 1999, according to Fearnleys.
A combination of the following key factors may favor the development of a spot market, particularly in the Atlantic Basin:
o excess LNG production above long-term contracted volumes;
o increased receiving capacity by reopening and expansions of United States import facilities;
o new and increased receiving capacity in Europe;
o spare LNG shipping capacity;
o deregulation and liberalization of natural gas markets and prices; and
o liquidity in the derivatives market for natural gas.
In order to utilize market opportunities, unsold LNG volumes, spare shipping and terminal capacity, industry participants may enter the spot or short-term LNG market to:
o take advantage of arbitrage opportunities between LNG markets and regions; and
o manage variations in demand due to seasonal fluctuations and increased regasification during peak demand periods.
Pipelines versus LNG
Natural gas pipelines are the main alternative to seaborne transportation of LNG. According to Fearnleys, transporting natural gas as LNG is generally a more economical form of natural gas transportation as compared to pipelines for distances over 2,000 miles. Pipelines are often the most economical means of transporting natural gas over short distances, assuming an easy pipe-laying route. However, a number of economic and non-economic factors affect the decision whether to import gas through a pipeline. These include:
o the nature of the terrain along the supply route;
o the political stability of the countries or regions through which the pipeline passes;
o access to land for the pipeline; and
o regulatory obstacles.
LNG, by contrast, may be shipped directly to the port that is nearest to the point of consumption. Since LNG is easily storable, LNG may also serve for "peakshaving", or increasing regasification during peak demand periods for natural gas or as extra supplies if there is an interruption in the normal supply to the local energy market. Further, shipping LNG by sea provides considerably greater flexibility than transporting natural gas through pipelines, which are fixed-route structures.
LNG Transportation
LNG delivery depends on availability of LNG carriers. While these specialized and high cost vessels are generally chartered long-term to satisfy the transportation needs of a specific LNG trade route, the emerging short-term and spot trading market for LNG should require separate carrier capacity for its needs.
Demand for LNG Shipping
Demand for LNG carriers is commonly measured by the volume of LNG carried multiplied by the distance traveled between LNG producers and importers, expressed in cubic meter-nautical miles or cbm-miles. In 2000, shipments of LNG measured in cbm-miles increased approximately 20 percent from 1999, and shipped LNG volumes increased by nine percent. As a result, demand for LNG carriers in 2000 increased at a rate that exceeded the increase in shipped volumes.
The graph below compares the development of seaborne trade of LNG by volume with cbm-miles of LNG carried since 1990.
Seaborne LNG Trade Development
[BAR CHART OMITTED]
Source: BP, Fearnleys, Petroleum Economist
As the graph shows, cbm-miles as an indicator of demand for shipping have grown more than LNG volumes over the past few years, indicating that average shipping distance in nautical miles is increasing.
The LNG Fleet
Supply of LNG Carriers. As of November 1, 2001, the world fleet consisted of 127 LNG carriers with a total capacity of 14.3 million cbm. The average age of the fleet was 14.9 years. There were known orders for 47 new LNG carriers to be constructed for delivery from the balance of 2001 through the end of 2005. In addition, seven newbuilding orders were placed that were subject to final approval. Of these seven orders, three were for the Snohvit project in Norway and four were for the Nigerian LNG expansion project. As of April 2002 the world fleet consisted of 128 LNG carriers with a total capacity of approximately 14.5 million cbm. Historical and projected LNG fleet development is shown in the graph below.
LNG Fleet Development Start of Year
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* Data for the years 2002 through 2005 are based on scheduled newbuilding deliveries and assume no scrapping/losses.
Source: Fearnleys
Most LNG carrier newbuildings follow standard ship designs with a cargo capacity generally between 120,000-140,000 cubic meters. There are also several smaller LNG ships, often built for dedicated trades. According to Fearnleys, 96 out of the existing 128 LNG carriers, including all 47 LNG carriers known to be on order, are in the 120,000-140,000 cbm size bracket. Four main factors determine this design:
o port restrictions;
o cargo containment system design;
o economies of scale achieved by building larger ships; and
o vessel speed.
LNG carriers have a longer service life than conventional tankers or bulk carriers, with a possible economic life of approximately 40 years. Therefore a significant number of LNG carriers that were built in the mid-1970s still actively trade. In recent contract renewals, LNG vessels have been placed under time charters with terms surpassing those vessels' 40th anniversaries. As a result, limited scrapping of LNG carriers has occurred.
Ownership Structure. There are relatively few independent ship owners in the LNG business as compared with other merchant shipping sectors. The major LNG project exporters or importers control most of the LNG fleet. Independent LNG shipowners, in addition to Golar, include Bergesen D.Y. and Leif Hoegh & Co., Mitsui O.S.K. Lines in association with, amongst others, Nippon Yusen Kaisha, K-Line and Exmar N.V.
LNG Shipyard Capacity. The estimated building time for an LNG carrier is 30-34 months. Berths suitable for building LNG carriers can also be used to build large crude or dry bulk carriers, cruise ships, large container vessels and large offshore units. Demand for such ships tends to influence a shipyard's LNG newbuilding capacity and LNG newbuilding prices. The following yards are licensed to build LNG carriers:
o Korea: Daewoo Heavy Industries, Hyundai Heavy Industries, Hanjin Heavy Industries & Construction Co., Ltd, Samsung Heavy Industries Co. Ltd.
o Japan: NKK Corp., Mitsui Engineering & Shipbuilding Co., Ltd., Mitsubishi Heavy Industries, Kawasaki Heavy Industries Co., Ltd., Ishikawajima-Harima Heavy Industries Co., Ltd.
o Europe: Kvaerner Masa Yard, Chantiers de L'Atlantique, HDW, IZAR, Fincantieri
o United States: Newport News, Avondale
Only IZAR, the four Korean yards and three Japanese yards have had recent experience with LNG shipbuilding. The United States yards have not competed for international newbuilding orders in recent years.
LNG Vessel Cargo Containment Systems. LNG carriers principally use three LNG vessel containment system designs:
o two membrane designs (Technigaz and Gaztransport)
o a spherical design (Moss-Rosenberg)
Of the current world fleet, approximately 60 percent use the Moss-Rosenberg spherical design while 40 percent use one of the two membrane designs. Of South Korea's four LNG shipbuilding yards, three build vessels using the membrane designs. Both the membrane and spherical designs have proven to be capable of transporting LNG over a long period of time with limited wear and tear.
Current Orderbook. Based on current yard availability, the delivery date for a new LNG vessel ordered today is likely to be in 2005. Any new project/trade with LNG vessel demand before 2005 may have to rely on third party tonnage until potential new orders can be delivered.
LNG Newbuilding Trends. LNG carriers continue to be built for long-term contracts of 20-25 years duration tied to new export and import facilities. Major oil and gas companies such as Royal Dutch Shell, BG and BP, which have interests in several export and import terminals, have ordered new LNG carriers. Based on publicly available reports, these ordered LNG carriers are not yet tied to any specific projects or long-term LNG sale and purchase agreements, but are expected to supplement these companies' existing LNG activities around the world. The cost to build LNG tankers has fluctuated from $280 million in the early 1990s to approximately $160-175 million at the end of 2001.
Barriers to Entry in LNG Shipping. The principal barriers to entry to the LNG shipping business include the high cost of LNG vessels, charterers' and financiers' requirements such as experience in the operation of gas vessels, history of quality operations, financial strength and the need for highly qualified personnel. The LNG shipping business is a small and highly specialized shipping segment compared to other bulk shipping segments and is dominated by oil majors and LNG project owners and operators. Since LNG shipping is relatively capital intensive, sufficient funding and credit ratings are important commercial elements. It is also costly and demanding for yards to be accepted and receive a license to build the different designs.
Our Business Strategy
Our strategic objective is to use our position among independent LNG operators to become a leader in vertically integrated LNG services. In pursuit of this objective, we plan to expand and diversify our LNG shipping operations, capitalize on our shipping assets and specialized industry knowledge, and exploit available arbitrage opportunities afforded by price differentials for natural gas worldwide. Depending on market conditions, we will consider entering LNG trading activities and vertically integrating into further attractive LNG activities such as liquefaction and regasification. We set forth below our three principal strategies and what we believe to be the attractive market opportunities related to them.
Maximize earnings from our LNG shipping business. We benefit from long-term contracts that provide stable cash flows and the opportunities for attractive margins. To further enhance the earnings from our LNG shipping business, we plan to:
o Capitalize on attractive charter contracts. We have entered into construction agreements for four new LNG carriers. The first newbuilding that will be delivered to us has been employed on a long-term charter to a British Gas subsidiary, which will commence on delivery. We are considering various employment opportunities for the remaining three newbuildings that may include medium-term or long-term charter contracts, trading in the developing spot LNG carrier charter market, that is, carrying LNG under short-term contracts of up to one year or on a per voyage basis, and entering LNG trading.
o Expand our fleet to increase revenues and earnings. We may expand our fleet through new orders or by acquiring existing LNG carriers from third parties. Such acquisitions can give us additional flexibility to avail ourselves of opportunities either in the long-term contract market or the emerging spot market.
o Continue building scale to increase operating efficiencies and enhance margins. We are working to identify areas in which we can reduce costs and increase productivity. Three of our current vessels are sister ships and the newbuildings that we have ordered will consist of a pair of sister ships. This allows us to reduce operating costs per vessel by sharing spare parts, inventories, equipment, and avoiding excess administrative costs. As we expand our fleet, we also believe we will be able to reduce incremental costs per vessel and increase margins.
Embark on LNG trading activities. If market conditions are favorable, we will consider expanding our LNG shipping operations by using our industry knowledge to begin trading LNG as a principal. We believe that trading LNG can enhance our returns. We may seek long-term supply contracts for the delivery of LNG at a fixed price because we believe that these contracts would strengthen our ability to take advantage of LNG trading opportunities resulting from pricing disparities in an LNG spot market. We may also pursue trading through alliances with large, well-established LNG industry participants that have access to LNG resources and LNG markets. We would expect such a strategic partner to contribute its unused LNG production and liquefaction capacity or its excess regasification capacity and related access to LNG consumers. In return, we would use an uncommitted vessel to carry the related LNG. We are currently discussing such alliances with a number of well-established LNG industry participants. We may also embark on such trading activities independently. We do not currently intend to trade LNG or natural gas derivatives.
Vertically integrate into upstream and downstream LNG activities. We are considering pursuing opportunities to leverage our expanded shipping assets and our LNG industry knowledge to integrate vertically into the liquefaction and regasification of LNG. We believe this can enhance our overall margins while at the same time diversifying our sources of income from LNG. In pursuit of this strategy, we will consider investing in both established LNG operations and technologies as well as newly developing technologies, such as offshore liquefaction and regasification operations.
All of these strategies require the consideration and approval of our board of directors and we cannot guarantee investors that we will pursue any of them. If approved, capital projects of this nature typically require substantial investment over several years.
Competitive Strengths
We believe that our features listed below distinguish us from other participants in the LNG transportation industry.
o Our market position and LNG shipping experience. We believe that we are the only company focusing exclusively on the LNG transportation industry, and that we have established our position as a leading independent owner and operator of LNG carriers. We plan to build on this position with our four commissioned newbuildings. The loading, carriage and delivery of LNG require special expertise. We have accumulated this expertise through more than 25 years of operating LNG carriers. Our vessels and crews have loaded cargoes from virtually all of the world's LNG export terminals and have delivered cargoes to every major LNG import facility in the world. We believe that this experience and the quality of our vessels make us an attractive service provider to both current and potential customers.
o Our fleet and newbuildings. We operate a high-quality and well-maintained fleet and have been successful at keeping unscheduled offhire to a minimum while our vessels are on charter. We have embarked on a six-year, $29.5 million refurbishment and modernization program for our four vessels built during the 1970s. Upon the completion of this program, we believe that our existing vessels will be able to serve through their 40th anniversaries. We have also contracted for the construction of four new LNG carriers, giving us more available vessels over the next three years than any other independent LNG carrier. Two of these vessels are scheduled for delivery in 2003 and two are scheduled for delivery in 2004. Due in part to the limited number of shipyards qualified to build LNG carriers, we believe that these contracts and options may provide us with a competitive advantage by allowing us to deploy new LNG carriers sooner than our competitors.
o Customer and industry relationships. We have strong long-term customer relationships with many of the industry's largest customers, including British Gas, Pertamina, the state-owned gas company of Indonesia, and the National Gas Shipping Company of Abu Dhabi. Our in-house management has experience with major oil and gas producers. In addition, we believe that our relationship, through our chairman, with one of the world's largest groups of shipping interests, gives us a competitive advantage in our relationships with shipyards and other suppliers.
o Our management's success in rapidly identifying and exploiting business opportunities. Our senior management has a record of assembling teams who can rapidly exploit market opportunities as they arise. We believe that our exclusive focus on the LNG industry has positioned us well to take advantage of the new competitive dynamics of a sector in transition.
Customers
We currently have customer relationships with three large participants in the LNG industry, although most of our revenues are derived from two customers. Our customers are Methane Services Limited, a subsidiary of British Gas, Pertamina, the state-owned oil and gas company of Indonesia, and the National Gas Shipping Company, which provides LNG shipping services to the state-owned Abu Dhabi National Oil Company.
Pertamina, which charters two LNG carriers from us, began exporting LNG in 1977 and operates two export terminals: one in Arun, Indonesia, which it operates in partnership with Mobil Oil Indonesia, Inc., a division of Exxon Mobil Corp., and another in Bontang, Indonesia, which it operates in partnership with Total S.A., Unocal Corporation and Virginia International Company. We have had charters with Pertamina since 1989. Our revenues from Pertamina were $26.1 million in 1999, $59.5 million in 2000 and $62.8 million in 2001. This reflects the commencement of the Golar Mazo charter in 2000 and constitutes 32 percent, 53 percent and 55 percent of our revenues for those years, respectively. Pertamina's customers include Korea Gas Company, the state-owned LNG import company of the Republic of Korea, and the Chinese Petroleum Company, the Taiwanese state oil and gas company.
Methane Services Limited, a wholly owned subsidiary of British Gas, has chartered LNG carriers from us and our predecessors since 2000. Our revenue from British Gas was $7.2 million in 2000 and $45.8 million in 2001, constituting six percent and 40 percent of our revenues for those years respectively. As the result of renegotiation of the British Gas charters and assuming minimal unscheduled offhire, our revenue from British Gas is expected to increase to approximately $70 million in 2002. British Gas is involved in natural gas exploration and production and international downstream businesses. Through its interest in the export project in Trinidad & Tobago, British Gas is a leading producer of LNG among countries on the Atlantic Basin. British Gas owns two LNG carriers that it currently charters to a third party while it charters four vessels from us.
The National Gas Shipping Company has contracted with us to provide management services for four LNG carriers that it owns. Since 1994, the National Gas Shipping Company, a subsidiary of the Abu Dhabi National Oil Company, has provided shipping services to the state owned Abu Dhabi Gas Liquefaction Company. The vessels that we manage for the National Gas Shipping Company are currently employed delivering LNG pursuant to long-term supply contracts between the Abu Dhabi Gas Liquefaction Company and the Tokyo Electric Power Company of Japan.
Competition
While virtually all of the existing world LNG carrier fleet is committed to long-term charters, there is competition for employment of vessels whose charters are expiring and vessels that are under construction. Competition for long-term LNG charters is based primarily on price, vessel availability, size, age and condition of the vessel, relationships with LNG carrier users and the quality, LNG experience and reputation of the operator. In addition, vessels coming off charter and newly constructed vessels may operate in the emerging LNG carrier spot market that covers short-term charters of one year or less as well as voyage charters.
While we believe that we are the only independent LNG carrier owner and operator that focuses solely on LNG, other independent shipping companies also own and operate LNG carriers and have new vessels under construction. These companies include Bergesen DY ASA (Norway) and Exmar S.A. (Belgium). Two Japanese shipowning groups, Mitsui O.S.K. Lines and Nippon Yusen Kaisha, provide LNG shipping services exclusively to Japanese LNG companies.
In addition to independent LNG operators, some of the major oil and gas producers, including Royal Dutch/Shell, BP Amoco, and British Gas own LNG carriers and are reported to have contracted for the construction of new LNG carriers.
As discussed above we are considering strategic opportunities in other areas of the LNG industry. To the extent we do expand into new businesses, there can be no assurance that we will be able to compete successfully in those areas. Our new businesses may involve competitive factors which differ from those in the carriage of LNG and may include participants that have greater financial strength and capital resources than us.
LNG Shipping Operations
We currently own five LNG carriers and have a 60 percent share in another through a joint venture with the Chinese Petroleum Corporation, the Taiwanese state oil and gas company. Each of our vessels is registered in the Republic of Liberia. Two of these vessels serve routes between Indonesia and Taiwan and South Korea, while four are involved in the transportation of LNG from facilities in the Middle East and Algeria to ports in the United States and Europe.
Our Current Fleet
The following table lists the LNG carriers that we currently own or have under construction and that are committed under charters:
Year of Capacity, Current Charter
Vessel Name Delivery cbm. Charterer Expiration
----------- -------- -------- --------- ---------------
Golar Mazo(1) 2000 135,000 Pertamina 2017
Golar Spirit 1981 128,000 Pertamina 2006
Khannur 1977 125,000 British Gas 2009
Golar Freeze 1977 125,000 British Gas 2008
Gimi 1976 125,000 British Gas 2011
Hilli 1975 125,000 British Gas 2012
Hull No.2215 2003 138,000 British Gas 2023
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(1) We own a 60 percent interest in the Golar Mazo through a joint venture with the remaining 40 percent owned by Chinese Petroleum Corporation. The charter rate listed for the Golar Mazo is on a wholly-owned basis.
The charters for two of our vessels, the Golar Mazo and Golar Spirit provide for annual amounts of charter hire, payable in monthly installments. The charters for our other vessels all provide for daily rates of hire, payable monthly in advance.
Our fleet represents approximately 4.5 percent of the worldwide fleet by number, and at 758,000 cbm represents approximately 5.7 percent of worldwide LNG vessel capacity by volume.
Our Charters
All of our current LNG carriers are on long-term time charters to LNG producers and importers. These charters provide us with stable income and cash flows. In addition to their potential for earning revenues over the course of their useful lives, we believe that our LNG carriers may also have significant residual value when they are released from service.
Pertamina Charters. Two of our vessels, the Golar Mazo and the Golar Spirit, are chartered by Pertamina, the state-owned oil and gas company of Indonesia. The Golar Mazo, which we jointly own with the Chinese Petroleum Corporation, transports LNG from Indonesia to Taiwan under a 17 year time charter that expires in 2017. The Golar Spirit is employed on a 17-year time charter that expires in 2006. Pertamina has options to extend the Golar Mazo charter for two additional periods of five years each, and to extend the Golar Spirit charter for up to two years.
Under the Pertamina charters, the operating costs of the vessel are borne by Pertamina on a cost pass-through basis. Pertamina may suspend its payment obligations under the charter agreement for periods when the vessels are not able to transport cargo for various reasons. These periods, which are also called offhire periods, may result from, among other causes, mechanical breakdown or other accident, the inability of the crew to operate the vessel, the arrest or other detention of the vessel as the result of a claim against us, or the cancellation of the vessel's class certification. Payments are not suspended during scheduled maintenance. The charters automatically terminate in the event of the loss of a vessel.
British Gas Charters. Methane Services Limited, a subsidiary of British Gas, charters four of our vessels on long-term time charters. These vessels, the Golar Freeze, Khannur, Gimi, and Hilli, each transport LNG from export facilities in the Middle East and Atlantic Basin nations to ports on the east coast of the United States and in Europe. The trading routes of these vessels are determined by Methane Services Limited. BG Asia Pacific PTE Limited, another subsidiary of British Gas, has executed a charter for one of our newbuildings that is currently under construction. This charter will commence when the vessel is delivered, which is expected to occur in March of 2003. The current charter for the Golar Freeze expires in March 2003. However in July 2002 agreement was reached whereby British Gas will charter the Golar Freeze for a five year period until March 2008. The charter for the Khannur expires in 2009, the charter for the Gimi expires in 2011 and the charter for the Hilli expires in 2012.
Charter Renewal Options
Pertamina Charters. Pertamina has the option to extend the charter of the Golar Mazo and the Golar Spirit. Pertamina may extend the charter of Golar Mazo that expires in 2017, for up to 10 years by exercising the right to extend for one or two additional five year periods. Pertamina must give two years notice of any decision to extend. The revenue during the period of charter extension will be subject to adjustments based on our actual operating costs during the period of the extension. For the Golar Spirit, Pertamina may extend the charter beyond its current expiration in 2006 for up to two years. As with the Golar Mazo, the hire rate during any extension is subject to adjustment to reflect actual operating expenses during the term.
British Gas Charters. With the exception of the Golar Freeze charter, each of the British Gas charters, including the charter for the newbuilding, is subject to options on the part of British Gas to extend those charters for two five-year periods. If British Gas does not exercise its option to renew the Hilli charter, it may designate a redelivery date between January 1, 2011 and December 31, 2012. The terms of the Hilli charter contained in the chart below and the preceding table assumes that British Gas will chose a redelivery date of December 31, 2012. British Gas must notify us of whether it will exercise its option by June 30, 2003, and, if the option is not exercised, to specify the redelivery date by June 30, 2004. The hire rates for Khannur, Gimi and Hilli will be increased from January 1, 2010 onwards and thereafter subject to adjustments based on escalation of three percent per annum of the operating costs of the vessel.
The following chart summarizes the current charters and renewal options for each of our vessels and newbuildings that have charter coverage arranged:
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Newbuildings
We have executed newbuilding contracts for the delivery of four LNG carriers.
The following table summarizes our newbuilding projects, all of which have capacities of approximately 138,000 cbm:
Hull No. Shipbuilder Contract Price Date Delivery Expected -------- ----------- -------------- ---------------------- 2215 Daewoo $162M March 2003 1444 Hyundai $165.6M December 2003 2220 Daewoo $165M March 2004 1460 Hyundai $166.3M November 2004 |
The selection of and investment in newbuildings is a key strategic decision for us. We believe that years of experience in the shipping industry have equipped our senior management with the experience to determine when to acquire options for newbuildings and when to order the construction of newbuildings and the scope of those constructions. Our senior management has established relationships with several shipyards, and this has enabled us to access the currently limited shipyard slots to build LNG carriers.
Senior Management of Golar LNG Limited
Our senior management makes strategic and commercial decisions that relate to our business, and analyzes and recommends to our board of directors areas of possible expansion into other areas of the LNG supply chain. Our senior management is responsible for:
o Vessel charters. Decisions relating to our current business opportunities, including the negotiation of charters for our existing fleet and for our newbuildings.
o Financing decisions. Decisions regarding our capital structure, overall debt and equity financing, use of financing alternatives, the selection and negotiation of financing to fund the construction of our newbuildings and the consideration of financing alternatives for projects in other areas of the LNG supply chain that we may consider.
o Newbuilding contracts. Decisions relating to investments in newbuildings, including determining when these investments should be made and the negotiation of newbuilding contracts with selected shipyards.
o Future business strategies. Decisions regarding our possible expansion into other areas of the LNG supply chain.
Golar Management Limited
We provide all of our own vessel management services through our wholly owned subsidiary Golar Management, which has its offices in London. The technical functions exercised by Golar Management include operational support, vessel maintenance and technical support, crewing and accounting services. We do not contract out to third parties any of our vessel management services. We have a fleet manager and vessel superintendents who regularly inspect the vessels in our fleet. Golar Management provides the following services to the vessels in our fleet of LNG carriers:
o supervision of routine maintenance and repair of the vessel required to keep each vessel in good and efficient condition; including the preparation of comprehensive drydocking specifications and the supervision of each drydocking;
o oversight of compliance with applicable regulations, including licensing and certification requirements, and the required inspections of each vessel to ensure that it meets the standards set forth by classification societies and applicable legal jurisdictions as well as our internal corporate requirements and the standards required by our customers;
o engagement and provision of qualified crews (masters, officers, cadets and ratings) and attendance to all matters regarding discipline, wages and labor relations;
o arrangements to supply the necessary stores and equipment for each vessel; and
o continual monitoring of fleet performance and the initiation of necessary remedial actions to ensure that financial and operating targets are met.
Ship Management
We are focused on maximizing revenue from each vessel. Through a process of continual evaluation and maintenance, our management team has been able to limit unscheduled offhire due to equipment failure or repair while our vessels have been employed. Our ability to minimize unscheduled offhire while our vessels have been employed is in part a result of our policy of having our crews perform most of the necessary maintenance on our vessels while underway, rather than placing the vessels in drydocking for longer periods of time. Since we do not earn hire from a vessel while it is in drydock for unscheduled repairs, or for scheduled maintenance that exceeds a specified number of days, we believe that the expense of the additional crew members is outweighed by the additional revenue that we receive.
To further minimize drydocking costs and ensure compliance with the latest industry standards, we have embarked on a six-year, $29.5 million program to refurbish and modernize our four vessels built in the 1970s. As with the regularly scheduled maintenance on our vessels, this program will be carried out while our vessels are under way or when they are already scheduled to be in drydock. This program is not expected to require any additional offhire days for our vessels. We expect that this modernization program will allow us to operate each of these vessels to their 40th anniversary. In addition, this program will allow our ships to access additional LNG loading and receiving terminals by upgrading or replacing cargo handling and other systems to meet the latest requirements established by some LNG facilities. Although we have not experienced any material operational problems with any of our vessels, we believe that the capital expenditure of this program will result in lower maintenance costs in the future. We also believe this program will help us maintain our proven safety record and ability to meet customer delivery deadlines.
Third Party Ship Management
In addition to managing our own fleet, we provide management services to LNG carriers owned by selected third parties. We currently manage four vessels for the National Gas Shipping Company, a subsidiary of the Abu Dhabi National Oil Company. These vessels are currently engaged on the route between the Das Island LNG terminal in Abu Dhabi and various ports in Japan. Our management agreements with National Gas Shipping Company terminate in 2006 but may be canceled at any time by either party on 12 months prior notice.
The table below summarizes the LNG carriers that we manage for the National Gas Shipping Company:
Year Capacity in
Vessel Name Built Type cbm. Flag
----------- ----- ---- ---- ----
Mubaraz 1996 Moss-Rosenberg 137,500 Liberia
Mraweh 1996 Moss-Rosenberg 137,500 Liberia
Al Hamra 1997 Moss-Rosenberg 137,500 Liberia
Umm Al Ashtan 1997 Moss-Rosenberg 137,500 Liberia
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Employees
We hire all of our officers and crew through our manning offices in Bilbao, in Spain and Manila, in the Philippines. Each of our crew members undergoes a structured training process that we have developed to ensure that our crew and officers will have the required specialized knowledge and experience to operate our vessels. In addition to the specialized knowledge required to handle LNG cargoes, LNG carrier officers and crew must also have knowledge and experience in operating vessels with steam turbine engines. Because we use our own manning agencies, our officers and crews are employed exclusively on our vessels. On average, we have employed our vessel captains for 16 years, while the average tenure of our chief officers and chief engineers is more than 15 years.
As of December 31, 2001, we employed approximately 646 people, consisting of 46 shore-based personnel and 600 seagoing employees. As of December 31, 1999 and 2000, we employed approximately 50 shore-based and 597 and 605 seagoing employees, respectively. Our masters and officers are mostly Spanish and Scandinavian, and our crews are mostly Filipino. Our shore-based personnel currently include 29 employees in our Golar Management office in London, five people in our manning office in Bilbao and 11 people in our Manila manning office. Our Filipino employees are subject to collective bargaining agreements, which are requirements of the Philippine government. These agreements set industry-wide minimum standards, terms and conditions. We have not had any labor disputes with our employees under the collective bargaining agreements and consider our workplace relations to be good.
Properties
We do not own any interest in real property. We sublease approximately 8,000 square feet of office space in London for our ship management operations. In addition, we have leasehold interests in two London offices that we formerly occupied which we have assigned or sublet to unrelated third parties. We lease approximately 835 square feet of office space in Manila for our Philippine crewing operations, and approximately 540 square feet of office space in Bilbao, Spain for our crewing operations.
Legal Proceedings
There are not any legal proceedings or claims that we believe will have, individually or in the aggregate, a material adverse effect on our company, our financial condition, profitability, liquidity or our results of operations. From time to time in the future we or our subsidiaries may be subject to various legal proceedings and claims in the ordinary course of business.
In connection with the renewal of the British Gas charters, we have settled claims arising from the negotiation of the initial charters.
Insurance
General
The operation of any vessel, including LNG carriers, has inherent risks. These risks include mechanical failure, personal injury, collision, property loss, vessel or cargo loss or damage and business interruption due to political circumstances in foreign countries, hostilities and labor strikes. In addition, there is always an inherent possibility of marine disaster, including explosion, spills and other environmental mishaps, and the liabilities arising from owning and operating vessels in international trade. While we believe that our present insurance coverage is adequate, not all risks can be insured, and there can be no guarantee that any specific claim will be paid, or that we will always be able to obtain adequate insurance coverage at reasonable rates. These and other risks discussed under Item 3, "Key Information; Risk Factors" could result in liability to us and could cause loss of revenue, increased costs or loss of reputation.
Hull and Machinery Insurance
We have obtained hull and machinery insurance on all our vessels against marine and war risks, which include the risks of damage to our vessels, salvage or towing costs, and also insure against actual or constructive total loss of any of our vessels. Our vessels are each covered with deductibles of $150,000 per vessel per incident, except in the event of a total loss, in which case there is no deductible. We have also arranged additional total loss coverage for each vessel. This coverage, which is called hull interest and freight interest coverage, provides us additional coverage for amounts not economically insurable under our hull and machinery insurance and responds in the event of the total loss of a vessel. The following chart lists the amount each of our vessels is insured for in the event of a total loss:
Vessel Current Insured Value(US$) ------ -------------------------- Golar Mazo (based on 100% ownership) 300 million Golar Spirit 180 million Golar Freeze 114 million Hilli 102 million Gimi 102 million Khannur 114 million Total: 912 million |
Loss of Hire Income
We have also obtained specific loss of hire insurance to protect us against loss of income in the event one of our vessels cannot be employed due to damage that is covered under the terms of our hull and machinery insurance. Under our loss of hire income policies, our insurer will pay us the daily rate agreed in respect of each vessel for each day, in excess of 14 days, that the vessel cannot be employed as a result of damage, for a maximum of 240 days. The following chart lists the approximate daily rate and the total amount that we have insured for each vessel:
Vessel Daily rate coverage, Total coverage,
------ effective January 1, effective January 1,
2002 (US$) 2002 (US$)
---------- ----------
Golar Mazo (based on 100,000 24.0 million
100% ownership)
Golar Spirit 80,000 19.2 million
Golar Freeze 65,000 15.6 million
Hilli 43,000 10.3 million
Gimi 43,000 10.3 million
Khannur 43,000 10.3 million
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Protection and Indemnity Insurance
Protection and indemnity insurance, which covers our third-party legal liabilities in connection with our shipping activities, is provided by a mutual protection and indemnity association, (or "P&I club"). This includes third-party liability and other expenses related to the injury or death of crew members, passengers and other third-party persons, loss or damage to cargo, claims arising from collisions with other vessels or from contact with jetties or wharves and other damage to other third-party property, including pollution arising from oil or other substances, and other related costs, including wreck removal. Subject to the capping discussed below, our coverage, except for pollution, is unlimited.
Our current protection and indemnity insurance coverage for pollution is $1 billion per vessel per incident. The fourteen P&I clubs that comprise the International Group of Protection and Indemnity Clubs insure approximately 90 percent of the world's commercial tonnage and have entered into a pooling agreement to reinsure each association's liabilities. Each P&I club has capped its exposure in this pooling agreement so that the maximum claim covered by the pool and its reinsurance would be approximately $4.25 billion per accident or occurrence. We are a member of the "UK Club" which is the largest P&I club in the International Group. As a member of the P&I club, we are subject to a call for additional premiums based on the club's claims record, as well as the claims record of all other members of the P&I clubs comprising the International Group. However, our P&I club has reinsured the risk of additional premium calls to limit our additional exposure to 134 percent of our current annual costs. This reinsurance is subject to a cap, and there is the risk that the full amount of the additional call would not be covered by this reinsurance.
The owners of the four vessels that we manage for the National Gas Shipping Company maintain all marine insurances on those vessels. We are protected by contractual defenses and by the National Gas Shipping Company's contractual obligation to name us as a co-insured in the policies it maintains for the vessels we manage for it. In addition, we carry shipmanager's liability insurance for each of the vessels we manage for the National Gas Shipping Company. Shipmanager's liability insurance protects us against losses caused by our own negligence in connection with the management of these vessels which the owner of the vessel could recover from us under the management contract. This insurance has a limit of $20 million with a deductible of $50,000.
Environmental and other Regulations
Governmental and international agencies extensively regulate the handling and carriage of LNG. These regulations include international conventions and national, state and local laws and regulations in the countries where our vessels operate or where our vessels are registered. We cannot predict the ultimate cost of complying with these regulations, or the impact that these regulations will have on the resale value or useful lives of our vessels. Various governmental and quasi-governmental agencies require us to obtain permits, licenses and certificates for the operation of our vessels. Although we believe that we are substantially in compliance with applicable environmental laws and regulations and have all permits, licenses and certificates required for our operations, future non- compliance or failure to maintain necessary permits or approvals could require us to incur substantial costs or temporarily suspend operation of one or more of our vessels.
A variety of governmental and private entities inspect our vessels on both a scheduled and unscheduled basis. These entities, each of which may have unique requirements and each of which conducts frequent vessel inspections, include local port authorities, such as the U.S. Coast Guard, harbor master or equivalent, classification societies, flag state, or the administration of the country of registry, charterers, terminal operators and LNG producers.
Regulation by the International Maritime Organization
The International Maritime Organization, or IMO, is a specialized agency organized by the United Nations that provides international regulations affecting the practices of those in shipping and international maritime trade. The requirements contained in the International Management Code for the Safe Operation of Ships and for Pollution Prevention, or ISM Code, promulgated by the IMO, affect our operations. The ISM Code requires the party with operational control of a vessel to develop an extensive safety management system that includes, among other things, the adoption of a safety and environmental protection policy setting forth instructions and procedures for operating its vessels safely and also describing procedures for responding to emergencies. Golar Management is certified as an approved ship manager under the ISM Code.
The ISM Code requires that vessel operators obtain a safety management certificate, issued by each flag state, for each vessel they operate. This certificate evidences onboard compliance with code requirements. No vessel can obtain a certificate unless its shore-based manager has also been awarded and maintains a Document of Compliance, issued under the ISM Code. Each of the vessels in our fleet has received a safety management certificate.
Vessels that transport gas, including LNG carriers, are also subject to regulation under the International Gas Carrier Code, or IGC, published by the IMO. The IGC provides a standard for the safe carriage of LNG and certain other liquid gases by proscribing the design and construction standards of vessels involved in such carriage. Compliance with the IGC must be evidenced by a Certificate of Fitness for the Carriage of Liquefied Gases of Bulk. Each of our vessels is in compliance with the IGC and each of our newbuilding contracts requires that the vessel receive certification that it is in compliance with applicable regulations before it is delivered. Noncompliance with the IGC or other applicable IMO regulations, may subject a shipowner or a bareboat charterer to increased liability, may lead to decreases in available insurance coverage for affected vessels and may result in the denial of access to, or detention in, some ports. Both the U.S. Coast Guard and European Union authorities have indicated that vessels not in compliance with the ISM Code will be prohibited from trading in their respective ports.
The IMO also promulgates ongoing amendments to the international convention for the Safety of Life at Sea 1974 and its protocol of 1988, otherwise known as SOLAS. This provides rules for the construction of ships and regulations for their operation with respect to safety issues. It requires the provision of lifeboats and other life-saving appliances, requires the use of the General Maritime Global Distress and Safety System which is an international radio equipment and watchkeeping standard, afloat and at shore stations, and relates to the Treaty on the Standards of Training and Certification of Watchkeeping Officers, or STCW, also promulgated by IMO. Flag states which have ratified the convention and the treaty generally employ the classification societies, which have incorporated SOLAS and STCW requirements into their class rules, to undertake surveys to confirm compliance.
Environmental Regulation--OPA/CERCLA
The U.S. Oil Pollution Act of 1990, or OPA, established an extensive regulatory and liability regime for environmental protection and cleanup of oil spills. OPA affects all owners and operators whose vessels trade with the United States or its territories or possessions, or whose vessels operate in the waters of the United States, which include the U.S. territorial waters and the two hundred nautical mile exclusive economic zone of the United States. The Comprehensive Environmental Response, Compensation and Liability Act of 1980, or CERCLA, applies to the discharge of hazardous substances whether on land or at sea. While OPA and CERCLA would not apply to the discharge of LNG, they may affect us because we carry oil as fuel and lubricants for our engines, and the discharge of these could cause an environmental hazard. Under OPA, vessel operators, including vessel owners, managers and bareboat or "demise" charterers, are "responsible parties" who are all liable regardless of fault, individually and as a group, for all containment and clean-up costs and other damages arising from oil spills from their vessels. These "responsible parties" would not be liable if the spill results solely from the act or omission of a third party, an act of God or an act of war. The other damages aside from clean-up and containment costs are defined broadly to include:
o natural resource damages and related assessment costs;
o real and personal property damages;
o net loss of taxes, royalties, rents, profits or earnings capacity;
o net cost of public services necessitated by a spill response, such as protection from fire, safety or health hazards; and
o loss of subistence use of natural resources.
OPA limits the liability of responsible parties for vessels other than crude oil tankers to the greater of $600 per gross ton or $500,000 per vessel. These limits of liability do not apply, however, where the incident is caused by violation of applicable U.S. federal safety, construction or operating regulations, or by the responsible party's gross negligence or willful misconduct. These limits likewise do not apply if the responsible party fails or refuses to report the incident or to cooperate and assist in connection with the substance removal activities. This limit is subject to possible adjustment for inflation. OPA specifically permits individual states to impose their own liability regimes with regard to oil pollution incidents occurring within their boundaries, and some states have enacted legislation providing for unlimited liability for discharge of pollutants within their waters. In some cases, states which have enacted their own legislation have not yet issued implementing regulations defining shipowners' responsibilities under these laws.
CERCLA, which also applies to owners and operators of vessels, contains a similar liability regime and provides for cleanup, removal and natural resource damages. Liability under CERCLA is limited to the greater of $300 per gross ton or $5 million. As with OPA, these limits of liability do not apply where the incident is caused by violation of applicable U.S. federal safety, construction or operating regulations, or by the responsible party's gross negligence or willful misconduct or if the responsible party fails or refuses to report the incident or to cooperate and assist in connection with the substance removal activities. OPA and CERCLA each preserve the right to recover damages under existing law, including maritime tort law. We anticipate that we will be in compliance with OPA, CERCLA and all applicable state regulations in the ports where our vessels will call.
OPA requires owners and operators of vessels to establish and maintain with the U.S. Coast Guard evidence of financial responsibility sufficient to meet the limit of their potential strict liability under OPA. The U.S. Coast Guard has enacted regulations requiring evidence of financial responsibility in the amount of $900 per gross ton for vessels other than oil tankers, coupling the OPA limitation on liability of $600 per gross ton with the CERCLA liability limit of $300 per gross ton. Under the regulations, evidence of financial responsibility may be demonstrated by insurance, surety bond, self-insurance or guaranty. Under OPA regulations, an owner or operator of more than one vessel is required to demonstrate evidence of financial responsibility for the entire fleet in an amount equal only to the financial responsibility requirement of the vessel having the greatest maximum liability under OPA/CERCLA. Each of our shipowning subsidiaries that has vessels trading in U.S. waters has applied for, and obtained from the U.S. Coast Guard National Pollution Funds Center, three-year certificates of financial responsibility, supported by guarantees which we purchased from an insurance-based provider. We believe that we will be able to continue to obtain the requisite guarantees and that we will continue to be granted certificates of financial responsibility from the U.S. Coast Guard for each of our vessels that is required to have one.
Environmental Regulation--Other
Most U.S. states that border a navigable waterway have enacted environmental pollution laws that impose strict liability on a person for removal costs and damages resulting from a discharge of oil or a release of a hazardous substance. These laws may be more stringent than U.S. federal law. The European Union has proposed regulations, which, if adopted, may regulate the transmission, distribution, supply and storage of natural gas and LNG at land based facilities. It is not clear what form these regulations, if adopted, would take.
Inspection by Classification Societies
Every seagoing vessel must be "classed" by a classification society. The classification society certifies that the vessel is "in class," signifying that the vessel has been built and maintained in accordance with the rules of the classification society and complies with applicable rules and regulations of that particular class of vessel as laid down by that society.
For maintenance of the class certificate, regular and extraordinary surveys of hull, machinery, including the electrical plant and any special equipment classed, are required to be performed by the classification society, to ensure continuing compliance. Most vessels are drydocked every three to five years for inspection of the underwater parts and for repairs related to inspections. If any defects are found, the classification surveyor will issue a "recommendation" which must be rectified by the shipowner within prescribed time limits. The classification society also undertakes on request of the flag state other surveys and checks that are required by the regulations and requirements of that flag state. These surveys are subject to agreements made in each individual case and/or to the regulations of the country concerned.
Most insurance underwriters make it a condition for insurance coverage that a vessel be certified as "in class" by a classification society which is a member of the International Association of Classification Societies. All of our vessels have been certified as being "in class". The Golar Mazo and each of the vessels that we manage for the National Gas Shipping Corporation are certified by Lloyds Register, and our wholly owned vessels are each certified by Det norske Veritas, both members of the International Association of Classification Societies.
In-House Inspections
We inspect all of our vessels on a regular basis, both at sea and while the vessels are in port. Each vessel in our fleet is inspected on a semiannual basis by our fleet safety officer and by our technical superintendent. The results of these inspections, which are conducted both in port and underway, result in a report containing recommendations for improvements to the overall condition of the vessel, maintenance, safety and crew welfare. Based in part on these evaluations, we create and implement a program of continual maintenance for our vessels and their systems. Our maintenance program, like our vessel modernization, is performed while underway whenever possible. Those projects that do require the ship to be taken out of service are only performed during a vessel's scheduled offhire period.
Organizational Structure
As is customary in the shipping industry, we own our vessels, and our newbuildings while under construction, through separate wholly-owned subsidiaries. With the exception of the Golar Mazo, we own a 100 percent interest in each of our vessel and newbuilding owning subsidiaries. We own the Golar Mazo in a joint venture with the Chinese Petroleum Corporation in which we own 60 percent and Chinese Petroleum owns the remaining 40 percent of the vessel owning company. Our vessel management services and vessel manning services are provided through separate, wholly-owned subsidiaries.
The following chart lists each of our subsidiaries, the subsidiaries' purpose and its country of organization. Unless otherwise indicated, we own 100 percent of each subsidiary.
Jurisdiction of
Subsidiary Incorporation Purpose
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Golar Gas Holding Company Inc. Republic of Liberia Holding Company
Golar Maritime (Asia) Inc. Republic of Liberia Holding Company
Gotaas-Larsen Shipping Republic of Liberia Holding Company
Corporation
Oxbow Holdings Inc. British Virgin Islands Holding Company
Golar Gas Cryogenics Inc. Republic of Liberia Vessel ownership
Golar Gimi Inc. Republic of Liberia Vessel ownership
Golar Hilli Inc. Republic of Liberia Vessel ownership
Golar Khannur Inc. Republic of Liberia Vessel ownership
Golar Freeze Inc. Republic of Liberia Vessel ownership
Faraway Maritime Shipping Inc. Republic of Liberia Vessel ownership
(60% ownership)
Golar LNG 2215 Corporation Republic of Liberia Vessel ownership
Golar LNG 1444 Corporation Republic of Liberia Vessel ownership
Golar LNG 1460 Corporation Republic of Liberia Vessel ownership
Golar LNG 2220 Corporation Republic of Liberia Vessel ownership
Golar International Ltd. Republic of Liberia Vessel management
Golar Maritime Services Inc. Philippines Vessel management
Golar Maritime Services, S.A. Spain Vessel management
Gotaas-Larsen International Republic of Liberia Vessel management
Ltd.
Golar Management Limited Bermuda Management
Golar Maritime Limited Bermuda Management
Aurora Management Inc. Republic of Liberia Management
(90% ownership)
Golar Management(UK) Limited United Kingdom Dormant
Gloar Freeze (Bermuda) Limited Bermuda Dormant
Golar Khannur (Bermuda) Limited Bermuda Dormant
Golar Gimi (Bermuda) Limited Bermuda Dormant
Golar Hilli (Bermuda) Limited Bermuda Dormant
Golar Spirit (Bermuda) Limited Bermuda Dormant
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ITEM 5. Operating and financial review and prospects
Overview and Background
The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes, and the other financial information included elsewhere in this document. Our financial statements have been prepared in accordance with U.S. GAAP. This discussion includes forward-looking statements based on assumptions about our future business. Our actual results could differ materially from those contained in the forward-looking statements.
The following discussion assumes that our business was operated as a separate corporate entity prior to its inception. Prior to May 10, 2001, we did not exist as a corporate entity, and prior to May 31, 2001, our business was operated as part of the shipping business of Osprey. For the years ended December 31, 2000 and 1999, the combined financial statements presented have been carved out of the consolidated financial statements of Osprey. For the period from January 1, 2001 to May 31, 2001, our financial statement activity has also been carved out of the consolidated financial statements of Osprey, and from that date to December 31, 2001, all of our results were reflected in the stand-alone consolidated financial statements of Golar as a separate entity. In addition, some costs have been reflected in the historical combined financial statements which are not necessarily indicative of the costs that Golar would have incurred had it operated as an independent, stand-alone entity for all periods presented.
In August 2000, World Shipholding Ltd commenced an acquisition of Osprey and gained a controlling interest of more than 50 percent of Osprey in November 2000. This interest increased to over 90 percent in January 2001 and World Shipholding completed its acquisition in May 2001. This acquisition was accounted for by World Shipholding as a step-by-step purchase transaction and the purchase price was therefore allocated to the assets and liabilities acquired based on their fair value as of each acquisition date, with vessels being valued on the basis of discounted expected future cash flows. In each step of the acquisition, the fair value of the net assets acquired exceeded the purchase price with resulting negative goodwill allocated to the recorded values of the vessels. These purchase price allocations were pushed down and reflected in Osprey's financial statements from February 1, 2001.
Effective May 31, 2001, we acquired the LNG shipping interests of Osprey, which included one newbuilding contract and an option for a further newbuilding contract. We also entered into a purchase agreement with Seatankers, to purchase its one newbuilding contract for a LNG carrier and its option to build three new LNG carriers.
In addition to controlling Seatankers, Mr. Fredriksen indirectly controls 50.01 percent of our shares through World Shipholding. As required under U.S. GAAP, our purchase of the LNG operations of Osprey and Seatankers has been reflected in our financial statements as transactions between entities under common control. We have recorded the LNG assets and liabilities we acquired at the amounts previously reflected in the books of World Shipholding and Seatankers on what is known as a "predecessor basis". Under the predecessor basis of accounting, tangible and intangible assets acquired and liabilities assumed are recorded in our books at the amount at which they would have been recorded on the books of World Shipholding and Seatankers. The difference between our purchase price and this predecessor basis was reflected as a reduction in equity in a capital reorganization.
Current Business
Our activities are currently focused on the long-term chartering of our LNG carriers and the management of four LNG carriers for a third party, both of which provide us with stable and predictable cash flows.
Vessels may operate under different charter arrangements including time charters and bareboat charters. A time charter is a contract for the use of a vessel for a specific period of time at a specified daily rate. Under a time charter, the charterer pays substantially all of the vessel voyage costs, which consist primarily of fuel and port charges. A bareboat charter is also a contract for the use of a vessel for a specific period of time at a specified daily rate but the charterer pays the vessel operating costs as well as voyage costs. Operating costs include crew wages, vessel supplies, routine repairs, maintenance, lubricating oils and insurance. We define charters for a period of less than one year as short-term, charters for a period of between one and four year as medium-term and charters for a period of more than four year as long-term.
All of our LNG carriers are employed under long-term time charters, which do not come up for renewal until 2006 and later. Consequently, our revenues for the period 1998 to 1999, when several of our vessels served under short-term charters with intervals during which they were seeking employment, may not be representative of our results for 2000, 2001 and subsequent periods. The following table sets out our current charters, including future committed charters, and their expirations:
Current
Charter Charterers Renewal
Vessel Name Annual Charter Hire Expiration Option Periods
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Golar Mazo $31.0 million / year* 2017 5 years plus 5 years
Golar Spirit $21.0 million / year 2006 1 year plus 1 year
Khannur $15.6 million / year 2009 5 years plus 5 years
Golar Freeze $23.7 million / year 2003 None
Golar Freeze $20.1 million / year 2008 None
Gimi $15.6 million / year 2009 5 years plus 5 years
Hilli $15.6 million / year 2011 5 years plus 5 years
Hull No. 2215 $24.6 million / year** 2023 5 years plus 5 years
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* On a wholly-owned basis ** Commencing in 2003
The long-term contracts for the Golar Spirit and Golar Mazo are time charters but the economic terms are analogous to bareboat contracts, under which the vessels are paid a fixed rate of hire and the vessel operating costs are borne by the charterer on a cost pass through basis. The payment of operating costs by the charterer are recognized as additional revenue over and above the fixed rate noted in the table above. These contracts therefore contain no escalation clauses.
Predecessor Business
The following table sets out the employment of the LNG carriers now owned by us during the period 1998 to 2001.
Vessel Name 1998 1999 2000 and 2001
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Golar Mazo Not applicable (a) Not applicable (a) Long-term time charter
to Pertamina commenced
on delivery in 2000
Golar Spirit Long-term time Long-term time Long-term time charter
charter to charter to to Pertamina
Pertamina Pertamina
Khannur Short-term Short-term Short-term charters
charters charters until start of
long-term time charter
with British Gas in
December 2000
Golar Freeze Medium-term Medium-term Short-term charters
charter charter until start of
long-term time charter
with British Gas in
November 2000
Gimi Short-term Short-term Short-term charters
charters charters until start of
long-term time charter
with British Gas in
May 2001
Hilli Medium-term Medium-term Medium-term charter
charter charter until start of
long-term time charter
with British Gas in
September 2000
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(a) This vessel was delivered to us and began trading on January 15, 2000.
At the time of Osprey's acquisition of Gotaas-Larsen, the LNG carriers had come off long-term time charters and two of the vessels were in lay-up throughout 1997. These two vessels began to trade in early 1998. During 1998, 1999 and through 2000 prior to the start of the British Gas time charters, the Golar Freeze and Hilli were continuously employed under medium-term charters. During the same period the Khannur and Gimi were operating under short-term time charters. For the latter two vessels, this employment resulted in some periods between charters when those vessels were offhire waiting for charters and therefore not earning charter hire. In the second half of 2000, and the first half of 2001, these four vessels, then owned by Osprey, were committed to long-term time charters with a subsidiary of British Gas at rates that were lower than prevailing market rates. The employment under these charters results in minimal periods of offhire, generally limited to scheduled offhire for drydocking. We have subsequently renegotiated the charters paid by British Gas, and have had the charters extended to the dates shown above.
Current management took over the Osprey LNG business in February 2001, when World Shipholding had acquired more than 90 percent of Osprey's shares. Between February and May 2001, World Shipholding acquired almost all of the remaining shares by continued open market purchases.
Beginning in February 2001, the new management of Osprey restructured the business. New management reduced costs by rationalizing the corporate structure, reducing staff, and closing the Singapore office. Management also took steps to control and begin reducing vessel operating costs in areas such as crew costs and spare parts inventory. Cost reductions should also result from purchasing supplies in conjunction with other companies indirectly controlled by our chairman and principal shareholder, Mr. Fredriksen. Through effective management responsiveness to cost issues, we expect to be able to continue to increase our cash flow from operations in future periods.
Factors Affecting Our Results
The principal factors that have affected, and are expected to continue to affect, our core LNG shipping business are:
o The employment of our vessels and the number of unscheduled offhire days
o Non-utilization for vessels not subject to charters
o Vessel operating expenses
o Administrative expenses
o Depreciation expenses
o Net interest expense
Operating revenues are primarily generated by charter rates paid for our short-term, medium-term and long-term charters and are therefore related to both our ability to secure continuous employment for our vessels as well as the rates that we secure for these charters. Four of our ships currently under charter with a subsidiary of British Gas have derived a cashflow benefit from negotiated rate increases that have taken effect from August 1, 2001 for one vessel and from January 1, 2002 for the other three. Because all of our existing ships are now employed on long-term charters, we expect future revenues to be higher and more stable than was the case in 1998 and 1999.
The number of days that our vessels earn hire substantially influences our results. We attempt to minimize unscheduled offhire by conducting a program of continual maintenance for our vessels. The charter coverage we have for all our vessels has resulted in a minimal number of waiting days in 2000 and 2001. We have also had a low number of unscheduled offhire days and expect this to continue.
Our vessels may be out of service, that is, offhire, for three main reasons: scheduled drydocking or special survey or maintenance, which we refer to as scheduled offhire, days spent waiting for a charter, which we refer to as waiting time and unscheduled repairs or maintenance, which we refer to as unscheduled offhire. Generally, for vessels that are under a time charter, hire is paid for each day that a vessel is available for service. However, two of our long-term charters provide for an allowance of a specified number of days every two years that our vessels may be in drydock, and provide that the vessel will only be placed offhire if the number of days in drydock every two years exceeds that allowance. The shipping industry uses average daily time charter earnings, or TCE, to measure revenues per vessel in dollars per day for vessels on charters. We calculate TCE by taking time charter revenues earned and dividing by the number of days in the period less scheduled offhire.
Our exposure to credit risk is limited as our long-term charterers pay monthly in advance. This trend is expected to continue as all of our vessels are under long-term charters with customers with whom the Company has a positive collection history.
Vessel operating expenses include direct vessel operating costs associated with running a vessel and an allocation of shore-based overhead costs directly related to vessel management. Vessel operating costs include crew wages, which are the most significant component, vessel supplies, routine repairs, maintenance, lubricating oils and insurance. Accordingly, the level of this operating cost is directly related to the number of vessels we own. Overhead allocated to vessels includes certain technical and operational support, information technology, legal, accounting and corporate costs that are related to vessel operating activity. These costs are allocated based on internal cost studies, which management believes are reasonable estimates. We believe that there are opportunities to further reduce these vessel operating costs and have implemented a program to do so.
Administrative expenses are composed of general corporate overhead including primarily personnel costs, corporate services, public filing fees, property costs and expenses related to other similar functions. Personnel costs comprise approximately 60 percent of our administrative expenses and include salaries, pension costs, fringe benefits, travel costs and social insurance. We expect that the streamlining of our operations resulting from our Singapore office closure and London office relocation will allow us to reduce administration expenses in future periods. In addition, the restructuring of senior management positions will further contribute to reduced administrative expenses.
Depreciation expense, or the periodic cost charged to our income for the reduction in usefulness and long-term value of our ships, is also related to the number of vessels we own. We depreciate the cost of our vessels, less their estimated residual value, over their estimated useful life on a straight-line basis. We amortize our deferred drydocking costs over two to five years based on each vessel's next anticipated drydocking. No charge is made for depreciation of newbuildings until they are delivered. We amortize our office equipment and fittings over three to six years based on estimated economic useful life.
Interest expense in the carved out combined financial statements relates to a debt facility in Osprey that was specifically designated to LNG operations and a facility specific to the Golar Mazo. Interest expense depends on the overall levels of borrowing we incur and may significantly increase when we acquire ships or on the delivery of newbuildings. During a newbuilding construction period, interest expense incurred is capitalized in the cost of the newbuilding. Interest expense may also change with prevailing interest rates although the effect of these changes may be reduced by interest rate swaps or other derivative instruments. We currently have a portion of our floating rate debt in the amount of $189.4 million swapped to fixed rate, and we may also enter into interest rate swap arrangements on our other debt if this is considered to be advantageous to us. Interest income in the carved out combined financial statements includes an allocation of Osprey group interest income. The Osprey group operated a centralized treasury system and did not have separate bank accounts for each of its subsidiaries. There were separate bank accounts for Golar Mazo. For the remaining LNG activities, interest income has been allocated in the carved out combined financial statements based on operating cashflows, net of debt service.
Other financial items are composed of financing fee arrangement costs, amortization of deferred financing costs, market valuation adjustment for interest rate derivatives and foreign exchange gain/loss. The market valuation adjustment for our interest rate derivatives may have a significant impact on our results of operations and financial position although it does not impact our liquidity. Foreign exchange gains and losses are minimal as our activities are primarily denominated in US dollars.
Since most of these key items are directly related to the number of LNG carriers we own, the acquisition or divestment of additional vessels and entry into additional newbuilding contracts would cause corresponding changes in our results.
Although inflation has had a moderate impact on operating expenses, interest costs, drydocking expenses and corporate overheads, management does not expect inflation to have a significant impact on direct costs in the current and foreseeable economic environment.
A number of factors could substantially affect the results of operations of our core long-term charter LNG shipping business as well as the future expansion of any spot market business. These factors include the pricing and level of demand for natural gas and specifically LNG. Other uncertainties that could also substantially affect these results include changes in the number of new LNG importing countries and regions and availability of surplus LNG from projects around the world, as well as structural LNG market changes allowing greater flexibility and enhanced competition with other energy sources.
Possible Future LNG Industry Business Activities
Depending on market conditions, we may diversify our operations. Our senior management is currently considering spot chartering of LNG carriers, trading LNG for our own account and vertically integrated infrastructure investments.
The LNG spot market has only recently developed and it is at an early stage. Rates payable in that market may be uncertain and volatile. The supply and demand balance for LNG carriers is also uncertain. These factors could influence any decision to enter into the LNG spot market or the results of operations from any spot market activities.
Factors which could substantially affect our entry into the LNG trading market and our results from any such trading activities include the level of demand for LNG, price disparities for LNG in various parts of the world, the availability of spot charters and regasification capacity in certain importing countries and regions.
All future possible LNG activities are also dependant on our management's decisions regarding the utilization of our assets. In the longer term, results of operations may also be affected by strategic decisions by management as opportunities arise to make investments in LNG logistics infrastructure facilities to secure access to markets as well as to take advantage of potential industry consolidation.
In February 2002, we announced our participation in a joint venture headed by Marathon Oil Company to construct and operate a major LNG import facility on Mexico's Baja Peninsula. Other participants in the project include Grupo GGS, S.A. de C.V., a Mexican company involved in the development of various infrastructure projects, including oil and natural gas projects. It is anticipated that the project will commence operations during the first quarter of 2006. Upon its completion, the project would consist of a LNG marine terminal, regasification facility, natural gas power generation plant and as well as infrastructure to export natural gas and electricity to the United States, and for distribution within Mexico. The project may employ up to ten LNG carriers. We expect that our investment in the project would be financed through both internal and external resources. This project is still in its early stages, and its completion depends on several factors, including obtaining necessary project financing, regulatory approvals, and market conditions. The size of our ultimate investment in this project has not yet been determined.
In June 2002 we announced that we had signed a heads of agreement (letter of intent) with the Italian offshore and contracting company Saipem SPA for the joint marketing and development of Floating Regasification Terminals, or FRT's, for the Italian gas market. The concept is based on the conversion of a Moss type LNG carrier (`Moss type' is in reference to the type and shape of the cargo tanks), either existing or newly built. The activities will be managed through a dedicated joint venture, where Saipem will handle the engineering and technical aspects of the FRT's. We will contribute to the joint venture by identifying suitable LNG carriers as well as providing maritime expertise. The ultimate size of our investment has yet to be determined.
Critical Accounting Policies
The preparation of the Company's financial statements in accordance with accounting principles generally accepted in the United States requires that management make estimates and assumptions affecting the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The following is a discussion of the accounting policies applied by the Company that are considered to involve a higher degree of judgment in their application. See Note 2. to the Company's audited Consolidated and Combined Financial Statements and Notes thereto included herein for details of all of the Company's material accounting policies.
Carve out of the Financial Statements of Osprey
For the year ended December 31, 2001 and the six months ended June 30, 2001, the five months to May 31, 2001, have been carved out of the financial statements of Osprey and are presented on a combined basis. For the seven months from June 1, 2001 to December 31, 2001 and the six months ended June 30, 2002, the financial statements of Golar as a separate entity are presented on a consolidated basis. For the years ended December 31, 2000 and 1999 the combined financial statements presented herein have been carved out of the financial statements of Osprey.
Osprey is a shipping company with activities that include oil tankers and product carriers as well as LNG carriers. Where Osprey's assets, liabilities, revenues and expenses relate to the LNG business, these have been identified and carved out for inclusion in these financial statements. Where Osprey's assets, liabilities, revenues and expenses relate to one specific line of business but not the LNG business, these have been identified and not included in these financial statements. The preparation of the carved out financial statements requires allocation of certain assets and liabilities and revenues and expenses where these items are not identifiable as related to one specific activity. Management has deemed the related allocations are reasonable to present the financial position, results of operations, and cash flows of the Company. The financial position, results of operations and cash flows of the Company are not necessarily indicative of those that would have been achieved had the Company operated autonomously for all years presented as the Company may have made different operational and investment decisions as a Company independent of Osprey.
Vessels and Depreciation
The cost of the Company's vessels is depreciated on a straight-line basis over the vessels' remaining economic useful lives. Management estimates the useful life of the Company's vessels to be 40 years and this is a common life expectancy applied in the LNG shipping industry. If the estimated economic useful life is incorrect, an impairment loss could result in future periods. The vessels held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. In assessing the recoverability of the vessels' carrying amounts, the Company must make assumptions regarding estimated future cash flows. Factors we consider important which could effect recoverability and trigger impairment include significant underperformance relative to expected operating results and significant negative industry or economic trends.
Results of Operations
Our results for the year ended December 31, 2001 compared with the year ended December 31, 2000 and for the six months ended June 30, 2002 compared with the six months ended June 30, 2001 are affected by several key factors:
o the pushdown of purchase accounting adjustments on January 31, 2001, resulting from the acquisition of Osprey by World Shipholding, thereby recording in our books a significant reduction in vessel carrying values;
o the application of the predecessor basis of accounting with effect from May 31, 2001 resulting from our acquisition of the LNG interest of Osprey and Seatankers;
o the issue of new equity and refinancing of our principal loan facility with effect from May 31, 2001 in connection with the acquisition by Golar of the LNG business of Osprey;
o restructuring costs incurred in connection with the reorganization of our operations, in particular the closure of Osprey's Singapore office and associated employment severance costs; and
o the adoption of Statement of Financial Accounting Standards No. 133, "Accounting for Derivatives and Hedging Activities".
The impact of these factors is discussed in more detail below.
Six months ended June 30, 2002 compared with the six months ended June 30, 2001
Operating Revenues. Total operating revenues increased twenty percent from $53.8 million in the six months ended June 30, 2001 to $64.5 million in the comparable period of 2002. This increase resulted primarily from higher charter rates associated with long-term charters and a decrease in offhire days. The fleet earned an average daily time charter rate of $58,900 and $51,000 in the six months ended June 30, 2002 and 2001, respectively. The increase in rates from 2001 to 2002 was due to increased rates in respect of the Hilli, Gimi and Khannur, effective January 1, 2002 and a rate increase in respect of the Golar Freeze effective August 1, 2001. In the six months ended June 30, 2002 and 2001 total days offhire were 22.5 and 95, respectively. The decrease is due to the fact that three vessels underwent drydocking during 2001 whilst there was no loss of income associated with the drydocking of one vessel in 2002.
Vessel Operating Expenses. Vessel operating expenses increased 19 percent from $11.4 million in the 2001 period to $13.6 million in the six months ended June 30, 2002. This was principally attributable to increased crew costs, pension costs and insurance costs. Crew costs account for approximately $0.9 million of the increase due to a combination a higher level of surplus crew and costs associated with crew reorganization. Pension costs in 2002 were $0.6 million higher as determined by our actuarial valuations. Insurance costs increased approximately $0.3 million due to the payment of two deductibles for vessel operating repairs and a general increase in the market rates for insurance. In the six months ended June 30, 2002 and 2001, the average daily operating costs of our vessels were $12,500 and $10,500, respectively. Included in these amounts are $1,027 per day and $937 per day, respectively of overheads allocable to vessel operating expenses. These are onshore costs such as technical and operational staff support, information technology and legal, accounting and corporate costs attributable to vessel operations. These costs are allocated based on internal cost studies, which management believes are reasonable estimates.
Administrative Expenses. Administrative expenses were $2.7 million in each of the six months ended June 30, 2002 and 2001. In the six months ended June 30, 2002 compared with the six months ended June 30, 2001, a reduction in employee and property related administration expenses was offset by an increase in cost relating to the planned public offering in the United States.
Restructuring costs. Restructuring costs of $1.9 million in the six months ended June 30, 2001 consist primarily of employment severance costs incurred in connection with the restructuring of Osprey's Singapore operations following the acquisition by World Shipholding. This reflects costs associated with the Singapore office closure and the related personnel whose employment was terminated. These costs were not repeated in 2002.
Earnings before interest, tax, depreciation and amortization, or EBITDA. EBITDA increased 28 percent from $37.8 million in the six months ended June 30, 2001 to $48.2 million in the comparable period of 2002, principally due to the increase in operating revenues.
Depreciation and Amortization. Depreciation and amortization decreased three percent from $16.2 million in the six months ended June 30, 2001 to $15.7 million in the comparable period of 2002. This decrease is due to the reduction in carrying values of the vessels of approximately $109.8 million that resulted from World Shipholding's purchase of Osprey and was reflected in our financial statements beginning February 1, 2001. As discussed in Note 1 to the financial statements, the fair values of Osprey's assets and liabilities as determined by independent appraisal, based on discounted future cashflows, exceeded the purchase price paid by World Shipholding. This difference was reflected as a reduction in the carrying value of our vessels.
Net Financial Expenses. Interest income was $0.6 million and $2.2 million for the six months ended June 30, 2002 and 2001, respectively. Interest expense was $12.0 million and $17.6 million for the six months ended June 30, 2002 and 2001, respectively. This decrease of 32 percent reflects a combination of lower average interest rates and the restructuring of the Company's debt in the first half of 2001. In May 2001, the Company refinanced its existing facility for the five wholly-owned vessels and obtained significantly improved margins. Other financial items decreased to $5.9 million for the six months ended June 30, 2002 from $6.9 million in the six months ended June 30, 2001. For the six months ended June 30, 2002 and June 30, 2001, other financial items include a charge for the mark to market valuation of derivative instruments of $5.2 million and $3.3 million, respectively. In addition, we incurred financing fees of approximately $3.3 million in the six months ended June 30, 2001 in connection with the accelerated amortization of the deferred fees on the existing loan facility due to its refinancing.
Minority Interest and Income Taxes. Minority interest consists of the 40 percent interest in the Golar Mazo, for both periods. Income taxes, which relate to the taxation of the United Kingdom branch operations of a subsidiary and certain interest income, were insignificant in both periods.
Net Income (Loss). As a result of the foregoing, net income was $15.1 million in the six months ended June 30, 2002 compared to a net loss of $2.5 million in the six months ended June 30, 2001.
Year ended December 31, 2001, compared with the year ended December 31, 2000
Operating Revenues. Total operating revenues increased one percent from $113.0 million in 2000 to $114.2 million in 2001. This resulted primarily from higher average charter rates and an increase in the number of days trading for the Golar Mazo, offset by an increase in scheduled offhire days. The fleet earned an average daily time charter rate of $53,600 and $50,900 in 2001 and 2000, respectively. Total operating revenues were reduced due to an increased number of offhire days associated with the scheduled drydocking of three vessels in 2001. In the years ended December 31, 2001 and 2000 total days offhire were 130 and 79, respectively.
Vessel Operating Expenses. Vessel operating expenses increased 17 percent from $21.0 million in 2000 to $24.5 million in 2001. This was principally attributable to increased crew costs, pension costs and insurance costs. Crew costs account for approximately $1.1 million of the increase due to a combination of pay increases, changes to shift patterns that increased manning levels and a slightly higher level of surplus crew. Pension costs in 2001 were $1.6 million higher as determined by our actuarial valuations. Insurance costs increased approximately $0.6 million due to the payment of a deductible for an insured vessel operating repair and a general increase in the market rates for insurance. In the years ended December 31, 2001 and 2000, the average daily operating costs of our vessels were $11,200 and $9,600, respectively. Included in these amounts are $928 per day and $872 per day, respectively of overheads allocable to vessel operating expenses. These are onshore costs such as technical and operational staff support, information technology and legal, accounting and corporate costs attributable to vessel operations. These costs are allocated based on internal cost studies, which management believes are reasonable estimates. We expect to reduce our future vessel operating expenses by leveraging the purchasing power of related companies, by increasing utilization of our crew pool, and through the gradual change of crew nationalities to lower cost, but equally qualified crews, consistent with industry practice. In addition, we plan to leverage overhead functions by increasing fleet size without corresponding incremental increases in overhead spending.
Administrative Expenses. Administrative expenses increased seven percent from $7.7 million in 2000 to $8.2 million in 2001, principally due to a charge of $2.4 million of expenses relating to a planned public offering in the United States. Offsetting this amount was reduced property costs and the absence of costs associated with financing activities which took place in 2000. We relocated our London office facilities during September 2000 and closed our Singapore office during May 2001, which reduced property costs from $1.2 million for the year ended December 31, 2000 to $0.8 million for the year ended December 31, 2001.
We anticipate lower recurring administrative expenses in the future as a result of the elimination of the Singapore head office cost and associated compensation costs of Singapore personnel whose functions have been transferred to existing offices in London and Bermuda.
Restructuring costs. Restructuring costs of $1.9 million in the year ended December 31, 2001 consist primarily of employment severance costs incurred in connection with the restructuring of Osprey's Singapore operations following the acquisition by Word Shipholding. As noted above, we anticipate certain costs savings for administrative expenses going forward as a result of the reduction in senior management costs as well as reduced property expenses.
EBITDA. EBITDA decreased six percent from $84.3 million in 2000 to $79.6 million in 2001, principally due to the increase in vessel operating expenses.
Depreciation and Amortization. Depreciation and amortization decreased 13 percent from $36.5 million in 2000 to $31.6 million in 2001. This decrease is due to the reduction in carrying values of the vessels of approximately $109.8 million that resulted from World Shipholding's purchase of Osprey and was reflected in our financial statements beginning February 1, 2001.
Net Financial Expenses. Interest income was $3.3 million and $2.1 million for the years ended December 31, 2001 and 2000, respectively. This increase reflects a higher average cash balance for the Golar Mazo in the 2001 period. Interest expense was $32.5 million and $44.5 million for the years ended December 31, 2001 and 2000, respectively. This decrease of 27 percent reflects a combination of lower average interest rates and an increase in capitalized interest from $196,000 in 2000 to $2,627,000 in 2001. In May 2001, we refinanced the facility for the five wholly-owned vessels and obtained significantly improved margins. Other financial items increased to $12.4 million for the year ended December 31, 2001 from $2.4 million in the year ended December 31, 2000, primarily due to a mark to market charge of $8.2 million relating to the application of a new accounting pronouncement for derivative instruments. In addition, during the first half of 2001, we wrote off $2.3 million of deferred finance fees as a result of refinancing a loan facility.
Minority Interest and Income Taxes. Minority interest, consisting of the 40 percent interest in the Golar Mazo, decreased from $3.4 million in 2000 to $1.6 million in 2001, principally due to the impact of the mark to market charge for derivative instruments of $6.3 million. Income taxes, which relate to the taxation of the United Kingdom branch operations of a subsidiary and certain interest income, were insignificant in both periods.
Net Income (Loss). As a result of the foregoing, we earned net income of $4.4 million in 2001, increased from a net loss of $0.5 million in 2000.
Year ended December 31, 2000, compared with the year ended December 31, 1999
Our results for the year ended December 31, 2000 compared with the year ended December 31, 1999 are affected primarily by the delivery of the Golar Mazo on January 15, 2000.
Operating Revenues. Total operating revenues increased 38 percent from $81.8 in 1999 to $113.0 million in 2000. The fleet earned an average daily time charter rate of $50,900 and $43,300 in 2000 and 1999, respectively. On January 15, 2000 the vessel Golar Mazo was delivered to us and commenced its long-term time charter on the same date. The Golar Mazo thereby contributed $33.3 million in 2000. Golar Spirit was operated throughout 1999 and 2000 on its long-term time charter which gave a contribution of $26.0 million in both years. Operating revenues in 2000 were also improved by the reduction in number of offhire days. In the year ended December 31, 2000, total days offhire were 79 compared with 152 in 1999 due to the commencement of British Gas long-term charters in 2000 for our four LNG carriers, the Hilli, Gimi, Khannur and Golar Freeze. Offsetting these positive factors was a reduction in earnings as these four vessels during 1999 operated under either short-term or medium-term time charters, earning an average rate of $40,100 per day. Commencing with the long-term time charters with British Gas, earning for these four vessels were reduced to an average rate of $36,100 per day in 2000.
Vessel Operating Expenses. Vessel operating expenses increased 15 percent from $18.3 million in 1999 to $21.0 million in 2000. $3.3 million of this increase is attributable to the inclusion of the Golar Mazo in 2000. This increase is partly offset by reduced expenses for the rest of the fleet principally for stores, repairs and spare parts, due to operating efficiencies. The average daily operating costs of our vessels was $9,600 in 2000 compared with $10,000 in 1999. Included in these amounts in each of 2000 and 1999 is $872 per vessel per day of overheads allocable to vessel operating expenses.
Administrative Expenses. Administrative expenses decreased three percent from $7.9 million in 1999 to $7.7 million in 2000. In 2000 we benefited by moving to lower cost premises but this was offset by higher salary costs due to exceptional staff bonus payments. The decrease from 1999 also reflects the fact that in 1999 we incurred a $0.5 million non-recurring charge associated with expected losses on certain sub-lease arrangements relating to office premises.
Earnings before Interest, Tax, Depreciation and Amortization. In 2000, EBITDA increased 52 percent from $55.6 million in 1999 to $84.3 million, primarily due to the impact of the additional time charter revenues resulting from the operation of the Golar Mazo.
Depreciation and Amortization. Depreciation and amortization increased 24 percent from $29.5 million in 1999 to $36.5 million in 2000, as a result of the inclusion of the Golar Mazo from January 2000.
Net Financial Expenses. Interest income was $2.1 million in 2000 compared with $3.6 million in 1999, a decrease of 42 percent. This is due to a substantial loan repayment that affected the net operating cash flows and consequent allocation of interest income. Interest expense was $44.5 million in 2000 compared with $26.4 million in 1999, an increase of 69 percent. This increase is partially attributable to the drawdown on a loan facility of $88.2 million in January 2000 to assist in financing the delivery installment of the Golar Mazo. The Company had total debt outstanding of $513.9 million at December 31, 2000 compared with $467.7 million at December 31, 1999. In 2000, interest expense increased due to the delivery of the Golar Mazo. In the prior period, interest expense of $7.5 million was capitalized in the construction cost of the vessel.
Minority Interest and Income Taxes. In the year ended December 31, 2000 minority interest was $3.4 million, representing the 40 percent interest in the owning company of the Golar Mazo. Prior to this vessel's delivery in January 2000, there was no operating revenues and all predelivery expenditure had been capitalized in the cost of the vessel. Income taxes relate to the taxation of a United Kingdom branch of a subsidiary and tax on interest income received by certain other subsidiaries of the Company and were insignificant in both periods.
Net Income (Loss). As a result of the foregoing, a net loss of $1.9 million in 1999 decreased to a net loss of $0.5 million in 2000.
Liquidity and Capital Resources
We operate in a capital intensive industry and our predecessor business has historically financed its purchase of LNG carriers and other capital expenditures through a combination of borrowings from commercial banks, cash generated from operations and equity capital. Our liquidity requirements relate to servicing our debt, funding our newbuilding program, funding the equity portion of investments in vessels, funding working capital and maintaining cash reserves against fluctuations in operating cash flows.
Revenues from our time charters and our management contracts are received monthly in advance. Inventory requirements, consisting primarily of fuel, lubricating oil and spare parts, are low due to the majority of these items being paid for by the charterer under time charters. We believe our current resources are sufficient to meet our working capital requirements; however, our newbuilding program, currently consisting of four committed contracts, will result in increased financing and working capital requirements, which are described further below. Payments for our newbuildings are made as construction progresses in accordance with our contracts with shipyards.
We have sufficient facilities to meet our anticipated funding needs until August 2003. As of October 2002 additional facilities of $316 million will be needed to meet commitments under the newbuilding construction program in August 2003 and thereafter. It is standard in the shipping industry to finance between 60 and 80 percent of the purchase price of vessels, or construction cost in the case of newbuildings, through traditional bank financing. In the case of vessels that have term charter coverage, the debt finance percentage may increase significantly. One of our newbuildings has been employed on a long-term charter with British Gas and we have obtained financing for 100 percent of the cost of the vessel. If we were to obtain 60 percent debt financing to cover the installments due on our three remaining unfinanced newbuildings, this would equate to additional finance of approximately $235 million of the $316 million required.
It is intended that the funding for our commitments under the newbuilding construction program will come from a combination of debt finance, lease arrangements for existing vessels and cash flow from operations. Alternatively, if market and economic conditions favor equity financing, we may raise equity to fund a portion of the construction costs. We are in advanced negotiations with a number of financial institutions and others to provide sufficient facilities to meet these construction commitments in full as they fall due. Details of newbuilding commitments and proposed funding arrangements are detailed below.
Our funding and treasury activities are conducted within corporate policies to maximize investment returns while maintaining appropriate liquidity for our requirements. Cash and cash equivalents are held primarily in U.S. dollars. We have not made use of derivative instruments other than for risk management purposes.
The following table summarizes our cashflows from operating, investing and financing activities:
(in millions of $) Six Six Year Year Year
Months Months Ended Ended Ended
Ended Ended December December December
June 30 June 30 31 2001 31 2000 31 1999
2002 2001
------ ------ ------ ------ -----
Net cash provided by operating 32.1 12.9 42.0 29.5 18.8
activities
Net cash used in investing (103.3) (572.5) (657.9) (122.8) (27.4)
activities
Net cash provided by financing 65.3 591.7 667.7 96.5 9.4
activities
Net increase (decrease) in (5.9) 32.1 51.8 3.1 0.8
cash and cash equivalents
Cash and cash equivalents at 57.5 5.7 5.7 2.6 1.8
beginning of period
Cash and cash equivalents at 51.6 37.8 57.5 5.7 2.6
end of period
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With our incorporation and recapitalization in May 2001, our short-term liquid resources increased modestly. As of June 30, 2002 and December 31, 2001 the Company had unrestricted cash and cash equivalents of $51.6 million and $57.5 million, respectively. In addition, at June 30, 2002 and December 31, 2001, we had restricted cash of $13.2 million and $14.2 million, respectively that represents balances retained on accounts in accordance with certain of our loan covenants. These amounts are in contrast to cash and cash equivalent balances at December 31, 2000 and 1999 of $5.7 million and $2.6 million, respectively with $13.1 million of funds at December 31, 2000 also placed in restricted cash deposits and short term interest bearing deposits.
We generated cash from operations of $32.1 million in the six months ended June 30, 2002 compared with $12.9 million generated in the first six months of 2001. In 2001, we generated cash from operations of $42.0 million compared with $29.5 million in 2000. In 1999, we generated cash from operations of $18.8.
Net cash used in investing activities in the six months ended June 30, 2002 totaled $103.3 million, of which $101.4 million related to newbuilding purchase installments. Net cash used in investing activities in the year ended December 31, 2001 totaled $657.9 million, of which $572.5 million was in the six months ended June 30, 2001, mainly as a result of $530.9 million used in the acquisition of the LNG interests of Osprey and Seatankers and $140.0 million towards ship construction and refurbishment. This compares with $122.8 million and $27.4 million used in these activities in the years ended December 31, 2000 and 1999, respectively. In 2000, investing activities consisted primarily of a payment of $94.0 million for the final purchase installment for the LNG newbuilding, the Golar Mazo, as well as a cash investment of $27.3 million in short term interest bearing deposits.
Net cash provided by financing activities was $65.3 million in the six months ended June 30, 2002 compared with $591.7 million in the six months ended June 30, 2001. Financing in the six months ended June 30, 2002 came from a new loan facility from Lloyds TSB Bank PLC of which $131.9 million was drawndown in the period, and $16.3 million from a related party. Repayments of debt totaled $73.0 million in the six month period of which $52.6 million was to a related party. Net cash provided by financing activities was $667.7 million in the year ended December 31, 2001, of which $591.7 million was in the six months ended June 30, 2001, compared with $96.5 million and $9.4 million in the year ended December 31, 2000 and 1999, respectively. Financing in 2001 came principally from a new $325 million floating rate loan facility undertaken to refinance floating rate facilities, and from net proceeds of $275.8 million from our equity placement in Norway, both of which occurred in May 2001. We were able to obtain a substantial reduction in interest margins over LIBOR through this refinancing that should provide us with greater financial flexibility and debt capacity in the future. In addition, we received $85.3 from a related party, Greenwich, as discussed below. Repayments of loan facilities totaled $15.2 million in 2001. Financing activity in 2000 related principally to the drawdown of long-term debt for financing the final delivery installment for the Golar Mazo.
In connection with the acquisition of its LNG operations in 1997, Osprey entered into a secured loan facility for an amount of $352.4 million; this facility provided for floating rate interest of LIBOR plus 2.5 percent to 4.0 percent. In May 2001, following the formation of Golar in its current legal form, in connection with the acquisition of the LNG interests of Osprey and Seatankers, we refinanced our five wholly-owned LNG carriers and recapitalized Golar. We acquired these interests for $530.9 million (net of cash acquired). In May 2001, the $352.4 million facility was repaid and the Company entered into a new secured loan facility with a banking consortium for an amount of $325 million, the Golar LNG facility. This six year facility bears floating rate interest of LIBOR plus 1.5 percent. The loan is repayable in 22 quarterly installments and a final balloon payment of $147.5 million. The long-term debt is secured by a mortgage on our five wholly owned vessels, Golar Spirit, Khannur, Gimi, Hilli and Golar Freeze. In our financial statements for the year ended December 31, 2001, the interest expense to May 31, 2001 relates to the carved out Osprey facility while the expense for the remaining seven months of 2001 relates to the new $325 million facility and the loans from a related party, Greenwich, as discussed further below. The balance of the acquisition price was financed from the net proceeds of $275.8 million we raised through the equity placement in Norway. In June 2001, $32.5 million of the proceeds of the share issue was used to finance the first delivery installment due on one of the newbuilding contracts as discussed further below.
On November 26, 1997 Osprey entered into a loan facility of $214.5 million secured by a mortgage on the vessel Golar Mazo. This facility, which we assumed from Osprey, bears floating rate interest of LIBOR plus 0.865 percent. The loan is repayable in bi-annual installments that commenced on June 28, 2001. The balance of the facility, on a 100 percent basis, at December 31, 2001 totaled $204.3 million. In connection with the Mazo facility, Osprey entered into a collateral agreement with the banking consortium and a bank Trust Company. This agreement requires that certain cash balances, representing interest and principal payments for defined future periods, be held by the Trust Company during the period of the loan.
During the second half of 2001, and the first half of 2002, we undertook borrowing arrangements with Greenwich Holdings Limited, a company indirectly controlled by Mr. Fredriksen, to provide initial funding under three of our newbuilding contracts discussed in further detail below.
In August 2001, we obtained a loan of $32.6 million from Greenwich in order to finance the first installment due on newbuilding hull number 2215. The loan was for a period of one year and bore floating rate interest of LIBOR plus 2.5 percent. Related to this, a subsidiary of Golar guaranteed a loan of $32.6 million made to Greenwich by Nordea and Den norske Bank ASA, both Scandinavian banks, and entered into an assignment and security agreement, in respect of its' shipbuilding contract, with Den norske Bank as security agent. In September 2001, we obtained an additional $20 million in loan finance from Greenwich by way of an addendum to the loan of $32.6 million in relation to hull number 2215, in order to finance the second installment on this vessel. The loan was for a period of six months and bore floating rate interest of LIBOR plus 2.5 percent. These loans totaling $52.6 million have been repaid out of the new bank facility discussed below.
In August 2001, we obtained a loan of $32.7 million from Greenwich in order to finance the first installments due on newbuilding hull numbers 1460 and 2220. The loan is for a period of one year and bears floating rate interest of LIBOR plus 2.5 percent. In connection with this, two subsidiaries of Golar have guaranteed a loan of $32.7 million made to Greenwich by Nordea and Den norske Bank ASA and they have both entered into an assignment and security agreement in respect of their shipbuilding contracts with Den norske Bank as security agent.
After these transactions, at December 31, 2001, we had total long-term debt outstanding of $609.6 million, compared with $513.9 million and $467.7 million at December 31, 2000 and 1999, respectively.
The outstanding debt of $609.6 million as of December 31, 2001 was repayable as follows:
Year ending December 31,
(in millions of $)
2002 126.3
2003 42.0
2004 43.1
2005 46.7
2006 55.4
2007 and later 296.1
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609.6
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On December 31, 2001, we signed a loan agreement with Lloyds TSB Bank Plc to finance 100 percent of the cost of one of our newbuildings, hull number 2215, after we secured a 20 year charter for this vessel. The agreement allows us to draw down a maximum of $180 million to cover the contract price, costs of supervising the building process and interest costs of the draw down part of the loan up to delivery. In March 2002 we drew down $99.2 million on the loan facility signed with Lloyds TSB Bank Plc. This draw down was used for the purpose of financing the third installment of $32.4 million on newbuilding number 2215 and, in addition as discussed above, $52.6 million was used to re-pay loans from Greenwich in respect of the same vessel. In June 2002 we drew down a further $32.7 to finance the fourth installment of $32.4 million and associated interest and commitment costs.
In June 2002, we obtained $16.3 million in loan finance from Greenwich by way of an addendum to an existing loan agreement in respect of newbuilding hull numbers 1460 and 2220 in order to finance the second installment due on newbuilding hull number 1444. In connection with this, a subsidiary of Golar has guaranteed a loan of $16.3 million made to Greenwich by Nordea and Den norske Bank ASA and has entered into an assignment and security agreement in respect of its shipbuilding contract with Den norske Bank as security agent. This addendum also extended the repayment date of the original loan, $32.7 million, from August 2002 until August 2003. The $16.3 million loan is for a period of four months and bears floating rate interest of LIBOR plus 2.625 percent. This rate also applies to the original $32.7 million loan from June 2002. This rate increases to LIBOR plus three percent on any amounts still outstanding as at February 20, 2003.
After these transactions, at June 30, 2002, we had total long-term debt outstanding of $684.8 million which was repayable as follows:
Year ending December 31,
(in millions of $)
2002 (six months to December 31, 2002) 36.9
2003 77.1
2004 46.5
2005 50.1
2006 59.6
2007 and later 414.6
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684.8
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In September 2002, Greenwich confirmed the availability of an extension to the $32.7 million loan and the $16.3 million loan in respect of hull numbers 1460, 2220 and 1444. Both amounts can remain outstanding, if required, until December 2003. Greenwich also confirmed the availability of an additional $15 million facility for the payment of newbuilding installments should it be required.
In October 2002, we signed a loan agreement with some of the Golar LNG facility Lenders in respect of a facility in the amount of up to $60 million to be secured on the Company's existing five wholly-owned vessels as second priority charges. The agreement allows us to draw down a maximum of $60 million to assist in the financing of our newbuilding installment payments.
In addition to mortgage security, some of our debt is also collateralized through pledges of shares by guarantor subsidiaries of Golar. Our existing financing agreements impose operation and financing restrictions on us which may significantly limit or prohibit, among other things, our ability to incur additional indebtedness, create liens, sell capital shares of subsidiaries, make certain investments, engage in mergers and acquisitions, purchase and sell vessels, enter into time or consecutive voyage charters or pay dividends without the consent of our lenders. In addition, our lenders may accelerate the maturity of indebtedness under our financing agreements and foreclose upon the collateral securing the indebtedness upon the occurrence of certain events of default, including our failure to comply with any of the covenants contained in our financing agreements. We are required under our $325 million facility to maintain available cash of at least $25 million, and to maintain an asset to current liability ratio, excluding current long-term debt, of not less than 1.5 to 1. As of the end of each fiscal quarter up to the end of 2003, the ratio of our total outstanding debt, reduced by our then available cash, to earnings before interest, tax, depreciation and amortization on an annualized basis shall not be more than 6.5 to 1. This ratio is reduced to 6 to 1 in 2004 and 5 to 1 for all subsequent periods. We are required under our Mazo facility (in which we have a sixty percent interest) to maintain in an account (the `debt service reserve' account) controlled by the trustee, an amount equal to six months interest and principal debt repayment. After the first five years from delivery (January 2000) this is reduced to an amount equal to five months interest and principal debt repayment. For the six months ended 28 June 2002 this amounted to $12.7 million. We are additionally required to place each month into a separate account (the `collateral' account) also controlled by the trustee, an amount equal to one month's interest and principal debt repayment. The funds built up in the collateral account are used to pay the interest and principal due at each six monthly repayment date. There is also a requirement to maintain a debt service coverage ratio of 1.10:1, which is calculated by dividing six month's charter hire by six month's interest and principal debt repayment As of June 30, 2002, December 31, 2001, 2000 and 1999, we complied with all covenants of our various debt agreements.
Newbuilding Contracts and Capital Commitments
As of December 31, 2001, we had contracts to build four new LNG carriers. Amounts payable under these contracts, totaling approximately $658.9 million, excluding financing costs, are due in installments over the period to December 2004, with approximately $423.5 falling due after September 30, 2002. We also have budgeted capital expenditure of approximately $25 million over the next six years in connection with our vessels refurbishment program.
As of October 2002, the Company had total loan facilities of $304 million, to finance its newbuilding program. These consist of a $180 million facility from Lloyds TSB Bank Plc ($162 million is in respect of the contract cost and the balance is for associated finance costs and other sundry items) of which $129.6 million has been drawn down to finance newbuilding installments, $64.0 million from a related party, Greenwich, of which $49.0 million has been drawn down as discussed in Note 28 to the Company's financial statements, and the $60 million facility from some of the Golar LNG Facility lenders. The Company will then require additional financing of approximately $316 million to fund all of its newbuilding construction commitments.
The commitments up to August 2003 will be funded from existing facilities and cash generated from operations. Additional facilities are required to meet progress payments from August 2003 and further progress payments arising periodically thereafter until completion of the program in 2004.
Our senior management evaluates funding alternatives depending on the prevailing market conditions. We anticipate that the additional financing required to fund the completion of the remaining newbuilding construction costs will come from a combination of additional debt financing and cash from operations, supplemented by equity proceeds as circumstances may warrant or permit. It is standard in the shipping industry to finance between 60 and 80 per cent of the construction cost of newbuildings through traditional bank financing and in the case of vessels that have charter coverage, the debt finance percentage may increase significantly. We may finance up to 100 percent of these newbuilding costs through additional tranches of bank debt secured by the respective newbuildings. We would make such borrowings as needed while construction proceeds. Alternatively, if market and economic conditions favor equity financing at any such time, we may use somewhat less debt and instead raise equity to fund a larger portion of these costs. Currently, we have a charter contract for one of our newbuildings and we are seeking long-term charters for two of our newbuildings. We are considering dedicating the fourth newbuilding to the spot market. The charter coverage of a newbuilding may affect our ability to finance its completion.
As at September 30, 2002, approximately $235.5 million has been paid as installments under the newbuilding contracts. The following table sets out as at September 30, 2002 the estimated timing of the remaining commitments under our present newbuilding contracts over the next five years. Actual dates for the payment of installments may vary due to progress of the construction.
These estimated timings take into account the rescheduling of installment payments for two of our newbuildings. Both shipyards have offered and we have accepted revised payment terms in consideration of an amount equivalent to an interest charge of between six and eight percent interest per annum. The effect of these amendments to the timing of payments is to delay a total of $81.1 million from 2002 and 2003 until payment of $32.5 million in December 2003 and $48.6 million in March 2004.
Hull No. Hull No. Hull No. Hull No. Total
(in millions of $) 1444 2215 2220 1460
--------------------------------------------------------------------------------
2002 (three months) 16.3 -- 16.2 16.5 49.0
2003 100.6 32.4 32.4 33.0 198.4
2004 -- -- 84.0 92.1 176.1
2005 -- -- -- -- --
2006 and later -- -- -- -- --
_______ ______ _______ _______ ______
Total 116.9 32.4 132.6 141.6 423.5
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Recently Issued Accounting Standards and Securities and Exchange Commission Rules
In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivatives and Hedging Activities" ("FAS 133"). SFAS 133 as amended by FAS 137 and FAS 138, establishes accounting and reporting standards for derivative instruments and hedging activities. It requires an entity to recognize all derivatives as either assets or liabilities on the balance sheet and measure those instruments at fair value. Changes in the fair value of derivatives are recorded each period in current earnings or other comprehensive income, depending on whether a derivative is designated as part of a hedge transaction and, if it is, the type of hedge transaction. The Company adopted SFAS 133 on January 1, 2001 and upon initial adoption recognized the fair value of its derivatives as liabilities of $2.8 million and a charge of $2.8 million was made to other comprehensive income.
In June 2001, the FASB approved SFAS No. 141, "Accounting for Business Combinations" which requires the application of the purchase method including the identification of the acquiring enterprise for each transaction. SFAS No. 141 applies to all business combinations initiated after June 30, 2001 and all business combinations accounted for by the purchase method that are completed after June 30, 2001. The adoption of SFAS No. 141 by the Company did not have any impact on the Company's consolidated results of operations, financial position or liquidity.
In June 2001, the FASB approved SFAS No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142"). SFAS No. 142 applies to all acquired intangible assets whether acquired singularly, as part of a group, or in a business combination. SFAS No. 142 will supersede APB Opinion No. 17, "Intangible Assets". This statement is effective for fiscal years beginning after December 15, 2001. The adoption of SFAS No. 142 by the Company did not have any impact on the Company's consolidated results of operations, financial position or liquidity.
In August 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations" ("SFAS 143"). SFAS No. 143 requires the fair value of a legal liability related to an asset retirement to be recognized in the period in which it is incurred. The associated asset retirement costs must be capitalized as part of the carrying amount of the related long-lived asset and subsequently amortized to expense. Subsequent changes in the liability will result from the passage of time(interest cost) and revision to cash flow estimates. This statement is effective for fiscal years beginning after June 15, 2002. The effect on the Company of adopting SFAS 143 is under evaluation.
In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS 144"). The objectives of SFAS 144 are to address significant issues relating to the implementation of FASB Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of", and to develop a single accounting model based on the framework established in SFAS 121, for long-lived assets to be disposed of by sale. The standard requires that long-lived assets that are to be disposed of by sale be measured at the lower of book value or fair value less cost to sell. Additionally, the standard expands the scope of discontinued operations to include all components of an entity with operations that can be distinguished from the rest of the entity and will be eliminated from the ongoing operations of the entity in a disposal transaction. This statement is effective for fiscal years beginning after December 15, 2001, and generally, its provisions are to be applied prospectively. The adoption of SFAS No. 144 by the Company did not have any impact on the Company's consolidated results of operations, financial position or liquidity.
In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections". This Statement rescinds FASB Statement No. 4, Reporting Gains and Losses from Extinguishment of Debt, and an amendment of that Statement, FASB Statement No. 64, Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements. This Statement also rescinds FASB Statement No. 44, Accounting for Intangible Assets of Motor Carriers. This Statement amends FASB Statement No. 13, Accounting for Leases, to eliminate an inconsistency between the required accounting for sale-leaseback transactions and the required accounting for certain lease modifications that have economic effects that are similar to sale-leaseback transactions. This Statement also amends other existing authoritative pronouncements to make various technical corrections, clarify meanings, or describe their applicability under changed conditions. This statement is generally for transactions occurring after May 15, 2002. The adoption of SFAS No. 145 by the Company did not have any impact on the Company's consolidated results of operations, financial position or liquidity.
In July 2002, the Financial Accounting Standards Board issued SFAS 146, "Accounting for Costs Associated with Exit or Disposal Activities" ("SFAS 146"). The Statement requires companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of a commitment to an exit or disposal plan. SFAS 146 will be applied by the Company prospectively to exit or disposal activities initiated after December 31, 2002.
See Item 11 for a discussion of quantitative and qualitative disclosures about market risks.
ITEM 6. Directors, Senior Management and Employees
Directors and senior management
Set forth below are the names, ages and positions of our directors and executive officers:
Name Age Position
---- --- --------
John Fredriksen 58 Chairman of the Board, President and
Director
Tor Olav Troim 39 Deputy Chairman of the Board, Chief
Executive Officer, Vice President and
Director
A. Shaun Morris 42 Director
Timothy Counsell 44 Director
Sveinung Stohle 43 Executive Vice President
Graeme McDonald 45 Chairman of Golar Management and
Technical Director
Graham Griffiths 58 General Manager of the Fleet
Kate Blankenship 37 Secretary, Chief Accounting Officer
Graham Robjohns 37 Group Financial Controller
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Biographical information with respect to each of our directors and executive officers is set forth below.
John Fredriksen has served as the chairman of our board of directors, our president and a director since our inception in May 2001. He has been the chief executive officer, chairman of the board, president and a director of Frontline Ltd. since 1997. Frontline Ltd. is a Bermuda based tanker owner and operator listed on the New York Stock Exchange and the Oslo Stock Exchange. Mr. Fredriksen has served for over eight years as a director of Seatankers, a ship operating company.
Tor Olav Troim has served as our chief executive officer, our vice-president and a director since our inception in May 2001. He has been the vice president and a director of Frontline Ltd. since 1996. He also served as deputy chairman of Frontline Ltd. in 1997. Until April 2000, Mr. Troim was the chief executive officer of Frontline Management, a management company that is a subsidiary of Frontline Ltd. Mr. Troim also serves as a consultant to Seatankers and since May 2000, has been a director and vice-chairman of Knightsbridge Tankers Limited, a Bermuda based, Nasdaq National Market listed tanker owner. He is a director of Aktiv Inkasso ASA, Northern Oil ASA, both Norwegian Oslo Stock Exchange listed companies, and Northern Offshore Ltd., a Bermuda company listed on the Oslo Stock Exchange. Prior to his service with Frontline, from January 1992, Mr. Troim served as managing director and a member of the board of directors of DNO AS, a Norwegian oil company.
A. Shaun Morris has served as a non-executive director since our inception in May 2001. He has also been a non-executive director of Frontline Ltd. since November 1997. He is currently a Partner at Appleby, Spurling & Kempe and has been with that firm since 1988.
Timothy Counsell has served as a non-executive director since our inception in May 2001. He is a partner in the law firm of Appleby Spurling & Kempe, and joined the firm in 1990. He is currently an alternate director of Bona Shipholding Ltd.
Sveinung Stohle has served as our executive vice president with responsibility for strategy and commercial activities since August 2001. He formerly served as general manager for Nigeria LNG's marketing and shipping division since 1997. He has extensive LNG experience and had held various management positions in upstream and downstream affiliates of the TotalFinaElf Group since 1984.
Graeme McDonald is chairman of Golar Management and Technical Director. He was previously general manager of the fleet, a position he held with Osprey, since 1998. He has worked in the shipping industry since 1973 and held various positions with Royal Dutch Shell companies, including manager of LNG shipping services at Shell International Trading and Shipping Company Ltd. and manager of LNG marine operations at Shell Japan Ltd.
Graham J. Griffiths joined us in October 2001 and is general manager of the fleet. He has over 30 years experience in the shipping industry, including 20 years sea-going experience. Prior to joining us he was a technical manager for V Ships Singapore and has held various positions in V Ships since 1986. He has extensive experience in newbuilding projects and day to day management of oil tankers, chemical/product tankers, gas carriers and dry bulk vessels.
Kate Blankenship has served as our secretary and chief accounting officer since our inception in May 2001. She has been the chief accounting officer and secretary of Frontline Ltd since 1994 and of Knightsbridge Tankers since 2000. Prior to 1994, she was a manager with KPMG Peat Marwick in Bermuda. She is a member of the Institute of Chartered Accountants in England and Wales.
Graham Robjohns has served as our group financial controller since May, 2001. He was financial controller of Osprey Maritime (Europe) Ltd from March 2000 to May 2001. From 1992 to March 2000 he worked for Associated British Foods Plc. and then Case Technology Ltd (Case), both manufacturing businesses, in various financial management positions and as a director of Case. Prior to 1992, he worked for PricewaterhouseCoopers (formally Coopers & Lybrand) in their corporation tax department. He is a member of the Institute of Chartered Accountants in England and Wales.
Compensation
We paid aggregate cash compensation to our directors and executive officers as a group in the amount of $516,700 in 2001. Our directors do not receive any benefits upon termination of their directorships.
Share ownership
The following table sets forth information as of September 30, 2002, regarding the total amount of common shares owned by all of our officers and directors on an individual basis:
Name Position Shares
---- -------- ------
John Fredriksen Chairman of the Board, 28,012,000*
President and Director
Kate Blankenship Secretary, Chief Accounting 5,000
Officer
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* Mr. Fredriksen does not own any of our shares directly. The shares shown next to Mr. Fredriksen's name are held by Osprey. See Item 7, "Major Shareholders and Related Party Transactions." Mr. Fredriksen indirectly controls Osprey. World Shipholding Ltd. holds over 99 percent of the outstanding stock of Osprey. World Shipholding Ltd. is wholly-owned by Greenwich, which is, in turn, indirectly controlled by Mr. Fredriksen.
Option Plan
Our board of directors adopted the Golar LNG Limited Employee Share Option Plan in February 2002. The plan authorizes our board to award, at its discretion, options to purchase our common shares to employees of Golar LNG Limited, and any of its subsidiaries, who are contracted to work more than 20 hours per week and to any director of Golar LNG Limited or its subsidiaries. A total of two million of our common shares have been reserved for issuance to our qualifying employees.
Under the terms of the plan, our board may determine the exercise price of the options, provided that the exercise price per share is not lower than the then current market value. No option may be exercised prior to the first anniversary of the grant of the option except that the option will become immediately exercisable if the option holder's employment is terminated (other than for cause) or in the event of the option holder's death. All options will expire on the tenth anniversary of the option's grant or at such earlier date as the board may from time to time prescribe. The Plan will expire 10 years from its date of adoption.
In July 2001, our board approved the issuance of options to John Fredriksen for the purchase of 200,000 common shares at a price of $5.75, and options to Tor Olav Troim and Sveinung Stohle to purchase 100,000 common shares each at an exercise price of $5.75.
ITEM 7. Major Shareholders and Related Party Transactions.
Major shareholders
The following table sets forth information regarding the owners of more than five percent of all common shares of which we are aware as of September 30, 2002. Our major shareholders have the same voting rights as all other holders of our Common Shares.
Percentage of Outstanding
Name Number of Shares Common Shares
---- ---------------- -------------
Osprey Maritime
Limited* 28,012,000 50.01
Morgan Stanley & 6,162,770 11.00
Co. Inc. (as
nominee)
State Street Bank 2,809,300 5.01
and Trust Co.
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* Our Common Shares held by Osprey Maritime Limited are indirectly controlled by our Chairman, John Fredriksen, who indirectly controls Osprey.
As at September 30, 2002, 3,641,400 of the Company's Common Shares are held by seven holders of record in the United States.
Related party transactions
There are no provisions in our Memorandum of Association or Bye-Laws regarding related party transactions. However, our management's policy is to enter into related party transactions solely on terms that are at least equivalent to terms we would be able to obtain from unrelated third parties. The Bermuda Companies Act of 1981 provides that a company, or one of its subsidiaries, may enter into a contract with an officer of the company, or an entity in which an officer has a material interest, if the officer notifies the Directors of its interest in the contract or proposed contract. The related party transactions that we have entered into are discussed below.
Osprey Maritime Limited. Osprey is our largest shareholder with 50.01 per cent of our outstanding common shares. On May 21, 2001, we entered into a purchase agreement with Osprey in which we agreed to purchase five LNG carriers and a 60 percent interest in a sixth LNG carrier, one newbuilding contract and an option for an additional newbuilding contract.
The purchase price paid for the LNG operations of Osprey was $525.9 million based on an agreed gross value of the LNG carriers of $635.0 million, plus the amount of net book value of all other non-shipping assets of the companies acquired. The purchase price paid was net of an amount of $128.7 million, being 60 percent of the loan assumed relating to the financing of the Golar Mazo and cash of $27.2 million. Additionally, the Company paid $2.5 million to Osprey for the assignment of the newbuilding contract and options. Furthermore, immediately prior to the sale, certain inter-company balances due to the companies forming the LNG operations of Osprey from other Osprey companies totaling $450.3 million were forgiven.
We agreed to provide services to Osprey for the management of two of Osprey's VLCCs. In the seven months ended December 2001, management fees of $106,667 were charged to Osprey in relation to such services of which there was no outstanding balance at December 31, 2001. In addition, at December 31, 2001 an amount of $261,000 was due from Osprey in respect of costs recharged in connection with the above services.
We believe that the price we paid to Osprey for its interests, and our service agreement with the company was not more than the price we would have paid to a third party in an arm's-length transaction and are under terms similar to those that would be arranged with other parties.
Historically the Company has been an integrated part of Osprey Maritime. As such, the Singapore and London office locations of Osprey have provided general and corporate management services for both the Company as well as other Osprey entities and operations. As described in Note 2, management has allocated costs related to these operations based on the number of vessels managed. Amounts allocated to the Company and included within vessel operating expenses, administrative expenses and depreciation expense were $3,227,000, $9,662,000 and $9,449,000, for the years ended December 31, 2001, 2000 and 1999, respectively.
Seatankers Management Company. Seatankers is indirectly controlled by our chairman, John Fredriksen. On May 28, 2001, the Company entered into a purchase agreement with Seatankers to purchase its one newbuilding contract for a LNG carrier and options to build three new LNG carriers. The Company paid $2.5 million to Seatankers for the assignment of the newbuilding contract and options. We believe that the price we paid to Seatankers for the assignment was not more than the price we would have paid to a third party in an arm's-length transaction.
In the year ended December 31, 2001 and the six months ended June 30, 2002, Seatankers has provided insurance administration services to the Company. In the year ended December 31, 2001 and the six months ended June 30, 2002, management fees to Seatankers of $10,000 and $10,000, respectively, have been incurred by Golar and as at each of December 31, 2001 and June 30, 2002, an amount of $10,000 was due to Seatankers in respect of these fees incurred.
Frontline Management (Bermuda). Frontline Management is a subsidiary of Frontline Ltd., a publicly listed company, and is indirectly controlled by our chairman, John Fredriksen. With effect from June 1, 2001, we entered into an agreement with Frontline Management (Bermuda) Ltd. for administrative services. Under the management agreement, Frontline Management provides budgetary and accounting support services, maintains our corporate records, technical vessel supervision services, ensures our compliance with applicable laws and requirements and assists us with corporate finance matters.
In the year ended December 31, 2001, and the six months ended June 30, 2002, we have incurred management fees to Frontline of $258,962 and $177,750, respectively. As at December 31, 2001 and June 30, 2002, an amount of $547,966 and $92,000 was due to Frontline in respect of these management fees and costs incurred.
We believe that the compensation we pay to Frontline Management for its administrative and management services is not more than the price we would have paid to third parties in an arm's-length transaction and are under terms similar to those that would be arranged with other parties.
Greenwich Holdings Limited ("Greenwich") - Newbuilding credit facilities
Greenwich is indirectly controlled by our chairman, John Fredriksen. Greenwich entered into two loan agreements with Nordea (formerly named Christiania Bank og Kreditkasse ASA) and Den norske Bank ASA, as lenders and Nordea, as facility agent and security agent, pursuant to which the lenders agreed to lend Greenwich an aggregate amount of approximately $85.3 million. Pursuant to two separate promissory notes, Greenwich has on-loaned the proceeds of its credit facilities with Nordea and Den norske Bank ASA to us. The proceeds of these loans were used to finance installments under our newbuilding contracts. Of this amount $52.6 million in relation to hull number 2215 has been repaid as discussed below. In addition a further $16.3 million has been advanced to us as part of an addendum to the loan in respect of hull numbers 2220 and 1460, again as discussed below.
Hull No. 2215
Pursuant to a loan agreement dated August 2, 2001 between Greenwich, as borrower, Nordea and Den norske Bank ASA, as lenders and Nordea as agent, the lenders agreed to lend to Greenwich up to $32.6 million. The loan is for the purpose of assisting Greenwich in financing the payment by us of the first installment of $32.6 million (20 percent of the contract price) due under a shipbuilding contract, dated May 2, 2001, between Osprey, as buyer, and Daewoo Shipbuilding & Marine Engineering Co., Ltd., as builder, providing for the construction of one 138,000 cmb LNG carrier, hull number 2215. Osprey assigned its interest in that shipbuilding contract to us. The loan accrued interest at a rate equal to the sum of LIBOR plus 1.5 percent per annum and was to mature 364 days after the drawdown date of the loan, which was August 6, 2001. We paid directly to the lenders a non-refundable arrangement fee of $169,000 in respect of this loan.
Pursuant to a promissory note dated August 7, 2001, Greenwich on-loaned the proceeds of the loan to us at an interest rate equal to LIBOR plus 2.5 percent. This loan was to mature 360 days after the date of the promissory note. Under the loan agreement and the guarantee to the lenders, we subordinated our obligation to repay the loan made by Greenwich to us to our obligations and those of Greenwich to the lenders. A subsidiary of Golar guaranteed the loan and secured it with an assignment of the shipbuilding contract, the related refund guarantee issued by the Korea Export and Import Bank, and a pledge of our shipowning subsidiaries' bank accounts. No consideration was paid by Greenwich for the provision of the guarantee.
On September 24, 2001, Greenwich borrowed an additional $20 million from Nordea and Den norske Bank ASA pursuant to an amendment to the August 2, 2001 loan. This loan was under the same terms but for a period of six months. We paid directly to the lenders a non-refundable arrangement fee of $78,000 in respect of this loan.
Pursuant to an addendum to the promissory note dated August 7, 2001, Greenwich on-loaned the proceeds of the loan to us at an interest rate equal to LIBOR plus 2.5 percent. This loan was to mature 182 days after the date of the promissory note. The proceeds of this loan from Greenwich was used to pay the second installment due under the newbuilding contract for hull number 2215. Under the loan agreement and the guarantee we have as for the initial loan subordinated our obligation to repay the loan made by Greenwich to us to our obligations and those of Greenwich to the lenders. No consideration was paid by Greenwich for the provision of the guarantee.
In December 2001 the Company signed a loan agreement with Lloyds TSB Bank Plc for the purpose of financing part of the building of newbuilding hull number 2215 for an amount up to $180 million to include ship yard costs, capitalized interest and building supervision charges. In March 2002 the Company drew down $66.8 million on this loan facility and $52.6 million was used to re-pay the two loans from Greenwich.
Hulls No. 1460, 2220 and 1444
Pursuant to a loan agreement dated August 20, 2001, between Greenwich, as borrower, Nordea and Den norske Bank ASA, as lenders and Den norske Bank ASA, as facility agent and security agent, the lenders have agreed to lend to Greenwich up to $32.7 million. This loan was for the purpose of assisting Greenwich in financing the payment by us of the first installment of each of two newbuilding contracts, representing 10 percent of the total contract price of each vessel. The initial installment under the first contract, dated July 31, 2001, between our wholly owned subsidiary Golar LNG 2220 Corporation and Daewoo Shipbuilding & Marine Engineering Co., Ltd., as builder, providing for the construction of one 138,000 cmb LNG carrier hull number 2220, was in the amount of $16.2 million. The initial installment under the second contract dated July 24, 2001, between our wholly owned subsidiary Golar LNG 1460 Corporation and Hyundai Heavy Industries Co. Ltd., as builder, providing for the construction of one 140,000 cmb LNG carrier hull number 1460, was in the amount of $16.5 million. The loan accrues interest at a rate equal to the sum of LIBOR plus 1.5 percent per annum and matures 364 days after the drawdown date of the loan, which was September 25, 2001 and August 21, 2001, respectively. We paid directly to the lenders a non-refundable arrangement fee of $169,000 in respect of this loan.
Pursuant to a promissory note dated August 21, 2001 in respect of Golar LNG 1460 Corporation Greenwich on-loaned the proceeds of the loan in the amount $16.5 million to finance the initial installment due under our newbuilding contract. The loan accrues interest at a rate equal to LIBOR plus 2.5 percent and matures 360 days after the date of the promissory note. Pursuant to a promissory note dated September 25, 2001 in respect of Golar LNG 2220 Corporation Greenwich has on-loaned the proceeds of the loan in the amount $16.2 million to finance the initial installment due under our newbuilding contract. The loan accrues interest at a rate equal to LIBOR plus 2.5 percent and matures 360 days after the date of the promissory note. In connection with this, two subsidiaries of Golar have guaranteed the loan and have secured the loan with an assignment of the shipbuilding contracts and the related refund guarantee issued by the Korea Export and Import Bank. No consideration was paid by Greenwich for the provision of the guarantee.
Under the loan agreement and the guarantee to the lenders, we have subordinated our obligation to repay the loan made by Greenwich to us to our obligations and those of Greenwich to the lenders. As of December 31, 2001, $291,000 of interest due to Greenwich in connection with the above loans was outstanding.
On June 11, 2002, Greenwich borrowed an additional $16.3 million from Nordea and Den norske Bank ASA pursuant to an amendment to the August 20, 2001 loan. This loan is for the purpose of assisting Greenwich in financing the payment by us of the second installment under a contract dated May 10, 2001, between our wholly owned subsidiary Golar LNG 1444 Corporation and Hyundai Heavy Industries Co. Ltd., as builder, providing for the construction of one 137,000 cmb LNG carrier hull number 1444. Under this amendment to the loan agreement the total outstanding loan accrues interest at a rate of equal to LIBOR plus 1.625 percent and from February 20, 2003 at a rate equal to LIBOR plus 2.0 percent. The amendment provides for the repayment date on the original $32.7 million loan to be extended to August 19, 2003 and for the additional $16.3 million to be four months after draw down on June 11, 2002. We paid directly to the lenders a non-refundable arrangement fee of $323,000 in respect of this loan amendment.
Pursuant to an addendum to the promissory note dated August 21, 2001, Greenwich on-loaned the proceeds of the loan to us at an interest rate equal to LIBOR plus 2.625 percent until February 20, 2003 and thereafter at a rate equal to LIBOR plus 3.0 percent. This loan was to mature four months after the date of the promissory note. In connection with this, two subsidiaries of Golar have guaranteed the loan and have secured the loan with an assignment of the shipbuilding contracts and the related refund guarantee issued by the Korea Export and Import Bank. The proceeds of this loan from were used to pay the second installment due under the newbuilding contract for hull number 1444. Under the loan agreement and the guarantee we have as for the initial loan subordinated our obligation to repay the loan made by Greenwich to us to our obligations and those of Greenwich to the lenders. No consideration was paid by Greenwich for the provision of the guarantee.
In the six months ended June 30, 2002 the Company paid interest of $1,230,560 to Greenwich in respect of a loan finance received. At June 30, 2002 $661,392 of the interest due to Greenwich was outstanding.
In September 2002, Greenwich confirmed the availability of an extension to the loan facility in respect of hull numbers 1460, 2220 and 1444. The total amount drawn down under this facility of $49.0 million can remain outstanding, if required, until December 2003. Greenwich also confirmed the availability of an additional $15 million facility for the payment of newbuilding installments should it be required.
Graeme McDonald
Golar Management holds a promissory note executed by Mr. McDonald, Chairman of Golar Management and Technical Director, on April 21, 1998, under which Mr. McDonald promises to pay to Golar Management the principal sum of (pound)20,900 in monthly installments of (pound)317.55. The note carries an interest rate of three percent and an acceleration clause in the event Mr. McDonald's employment with us is terminated for any reason or in the event of a default on payment by Mr. McDonald. Payments under the note commenced in May 1998 and the principal balance as of December 31, 2001 was (pound)8,577 or approximately $12,400.
ITEM 8. Financial Information.
Consolidated Statements and Other Financial Information
See Item 18.
Dividend Distribution Policy
Any future dividends declared will be at the discretion of the board of directors and will depend upon our financial condition, earnings and other factors. Our ability to declare dividends is also regulated by Bermuda law, which prohibits us from paying dividends if, at the time of distribution, we will not be able to pay our liabilities as they fall due or the value of our assets is less than the sum of our liabilities, issued share capital and share premium.
In addition, since we are a holding company with no material assets other than the shares of our subsidiaries through which we conduct our operations, our ability to pay dividends will depend on our subsidiaries' distributing to us their earnings and cash flow. Some of our loan agreements limit or prohibit our subsidiaries' ability to make distributions to us without the consent of our lenders.
ITEM 9. The Offer and Listing
Listing Details and Markets
We intend to list our Common Shares on the Nasdaq National Market under the symbol "GLNG". Our common shares have traded on the Oslo Stock Exchange since July 12, 2001 under the symbol "GOL". The following table sets forth the high and low trading price in Norwegian Kroner for each month since July, 2001,* and the average daily trading volume for each month:
Our Common Shares
---------------------------------------------------
Price Per Share Average
------------------------------------- Daily
Trading
Monthly High Low Period End Volume
-------- -------- ---------- -----------
(in NOK) (in NOK) (in NOK) (thousands)
2002
September 44.00 35.50 42.00 22.31
August 48.00 39.00 45.00 24.52
July 47.00 38.00 46.00 58.32
June 53.00 43.50 46.00 91.20
May 55.00 50.00 51.00 68.60
April 58.50 52.00 55.00 117.27
March 62.00 52.50 58.50 208.84
February 53.00 47.00 51.00 112.96
January 52.00 43.00 49.00 146.74
2001
December 47.00 44.50 47.00 91.18
November 50.00 43.50 47.00 222.04
October 45.00 37.00 42.00 106.60
September 60.00 42.00 44.50 80.01
August 63.00 54.00 57.00 117.94
July (since July 12) 65.00 56.00 60.00 141.47
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* On September 30, 2002, the exchange rate between the Norwegian Kroner and the U.S. dollar was 7.4681NOK to one U.S. Dollar.
Markets
Our common shares are currently trading on the Oslo Stock Exchange. We have submitted an application to list our Common Shares on the Nasdaq National Market, however, we cannot assure you that our application will be granted.
ITEM 10. Additional Information
This section summarizes our share capital and the material provisions of our Memorandum of Association and Bye-Laws, including rights of holders of our shares. The description is only a summary and does not describe everything that our Articles of Association and Bye-Laws contain. Copies of our Memorandum of Association and Bye-Laws are filed with the SEC as an exhibit to this Registration Statement.
Share capital
We have one class of shares, our common shares, par value one dollar per share. There are a total of 100,000,000 authorized shares, of which 56,012,000 are issued and outstanding.
We issued 12,000 common shares, par value $1.00 per share to Osprey on May 10, 2001. On May 21, 2001, we filed a certificate of deposit of memorandum of increase of share capital, raising the number of our authorized common shares to 100 million. On May 21, 2001, we issued 56,000,000 of our authorized shares in connection with a Norwegian placement in which we raised $280 million. As part of this Norwegian placement, Osprey purchased 28 million common shares. Osprey paid the purchase price for these shares of $140 million entirely through the transfer of its LNG operations to us effective May 31, 2001. All of our common shares are currently held through the Norwegian Central Securities Depository, which is referred to as the VPS System. The VPS System is Norway's paperless centralized securities registry. As of May 21, 2002, we had 335 shareholders of record.
We reserved 2,000,000 shares of our authorized but unissued shares for stock options awards to directors and certain key personnel. In July, 2001, the board awarded options to purchase 200,000 common shares at an exercise price of $5.75 per share to our chairman, John Fredriksen, and options to purchase 100,000 common shares at an exercise price of $5.75 per share to our vice president and director, Tor Olav Tr0im, and to our executive vice president, Sveinung Stohle.
Memorandum of Association and Bye-Laws
Our Memorandum of Association and Bye-laws. The object of our business, as stated in Section six of our Memorandum of Association, is to engage in any lawful act or activity for which companies may be organized under The Companies Act, 1981 of Bermuda, or the Companies Act, other than to issue insurance or re-insurance, to act as a technical advisor to any other enterprise or business or to carry on the business of a mutual fund. Our Memorandum of Association and Bye-laws do not impose any limitations on the ownership rights of our shareholders.
Under our Bye-laws, annual shareholder meetings will be held in accordance with the Companies Act at a time and place selected by our board of directors. The quorum at any annual or general meeting is equal to one or more shareholders, either present in person or represented by proxy, holding in the aggregate shares carrying 33 1/3 percent of the exercisable voting rights. The meetings may be held at any place, in or outside of Bermuda, that is not a jurisdiction which applies a controlled foreign company tax legislation or similar regime. Special meetings may be called at the discretion of the board of directors and at the request of shareholders holding at least one-tenth of all outstanding shares entitled to vote at a meeting. Annual shareholder meetings and special meetings must be called by not less than seven days' prior written notice specifying the place, day and time of the meeting. The board of directors may fix any date as the record date for determining those shareholders eligible to receive notice of and to vote at the meeting.
Directors. Our directors are elected by a majority of the votes cast by the shareholders in general meeting. The quorum necessary for the transaction of the business of the board of directors may be fixed by the board but unless so fixed, equals those individuals constituting a majority of the board of directors who are present in person or by proxy. Executive directors serve at the discretion of the board of directors.
The minimum number of directors comprising the Board of Directors at any time shall be two. The Board currently comprises four directors. The minimum and maximum number of directors comprising the Board from time to time shall be determined by way of an ordinary resolution of the shareholders of the Company. The shareholders may, at general meeting by ordinary resolution, determine that one or more vacancies in the board of directors be deemed casual vacancies. The board of directors, so long as a quorum remains in office, shall have the power to fill such casual vacancies. Each director will hold office until the next annual general meeting or until his successor is appointed or elected. The shareholders may call a Special General Meeting for the purpose of removing a director, provided notice is served upon the concerned director 14 days prior to the meeting and he is entitled to be heard. Any vacancy created by such a removal may be filled at the meeting by the election of another person by the shareholders or in the absence of such election, by the board.
Subject to the provisions of the Companies Act, a director of a company may, notwithstanding his office, be a party to or be otherwise interested in any transaction or arrangement with that company, and may act as director, officer, or employee of any party to a transaction in which the company is interested. Under our Bye-laws, provided an interested director declares the nature of his or her interest immediately thereafter at a meeting of the board of directors, or by writing to the directors as required by the Companies Act, a director shall not by reason of his office be held accountable for any benefit derived from any outside office or employment. The vote of an interested director, provided he or she has complied with the provisions of the Companies Act and our Bye-laws with regard to disclosure of his or her interest, shall be counted for purposes of determining the existence of a quorum.
Dividends. Holders of common shares are entitled to receive dividend and distribution payments, pro rata based on the number of common shares held, when, as and if declared by the board of directors, in its sole discretion. Any future dividends declared will be at the discretion of the board of directors and will depend upon our financial condition, earnings and other factors.
As a Bermuda exempted company, we are subject to Bermuda law relating to the payment of dividends. We have been advised by our Bermuda counsel, Appleby, Spurling & Kempe, that we may not pay any dividends if, at the time the dividend is declared or at the time the dividend is paid, there are reasonable grounds for believing that, after giving effect to that payment;
o we will not be able to pay our liabilities as they fall due; or
o the realizable value of our assets, is less than an amount that is equal to the sum of our
(a) liabilities,
(b) issued share capital, which equals the product of the par value of each common share and the number of common shares then outstanding, and
(c) share premium, which equals the aggregate amount of consideration paid to us for such common shares in excess of their par value.
In addition, since we are a holding company with no material assets, and conduct our operations through subsidiaries, our ability to pay any dividends to shareholders will depend on our subsidiaries' distributing to us their earnings and cash flow. Some of our loan agreements currently limit or prohibit our subsidiaries' ability to make distributions to us.
Material contracts
Golar LNG Facility for LNG Asset Acquisitions
On May 31, 2001, our wholly-owned subsidiary, Golar Gas Holding Company, entered into a loan agreement for $325 million with Nordea, Den norske Bank ASA, Citibank, N.A. and Fortis Bank (Nederland) N.V., under which Nordea serves as administrative agent and security agent. The proceeds of this loan were used to finance part of our acquisition of the LNG operations of Osprey and Seatankers.
The loan accrues floating interest at a rate per annum equal to the aggregate of LIBOR, which is the London Inter Bank Offered Rate, plus 1.5 per cent per annum. The loan has a term of six years and is repayable in 22 quarterly installments and a final balloon payment of $147.5 million. The loan may be prepaid in whole or in part without premium or penalty, except for losses and other reasonable costs and expenses incurred as a result of our prepayment.
In addition to a first preferred ship mortgage on each of our vessels, except the Golar Mazo, to the lenders, the loan is secured by a pledge of the capital stock of our shipowning subsidiaries, and an assignment of our vessels' earnings, insurance, and the vessels' charters to the lenders. The loan agreement and related documents also contain a number of restrictive covenants that, subject to specified exceptions, limit the ability of Golar Gas Holding Company and our shipowning subsidiaries' to among other things:
o merge into or consolidate with another entity or sell or otherwise dispose of all or substantially all of their assets;
o make or pay equity distributions;
o incur additional indebtedness;
o incur or make any capital expenditure, other than capital expenditures for vessel upgrades required by our charterers;
o materially amend, or terminate, any of our current charter contracts or management agreements; and
o enter into any business other than owning the shipowning companies, in the case of Golar Gas Holding Company, and owning and operating the ships, in the case of the shipowning subsidiaries.
The agreement also contains an event of default if, among other things, John Fredriksen and his affiliated entities cease to be the beneficial or legal owner of at least 25 percent of our common shares.
Hull No. 2215 Loan
On December 31, 2001, our wholly owned subsidiary, Golar LNG 2215 Corporation entered into a loan agreement for $180 million with Lloyds TSB Bank Plc. The proceeds of this loan are to be used to finance 100 percent of the cost of one of our newbuilding, hull number 2215. In March of 2002, we drew down $99.2 million on the facility for the purpose of financing the third installment on our new building contract and to repay amounts borrowed from Greenwich to pay for the first two installments on this newbuild. In June 2002 we drew down a further $32.7 million for the purpose of financing the fourth installment and associated interest and commitment costs. The loan currently accrues interest at the rate of LIBOR plus 1.45 percent until delivery and 1.15 percent from delivery. The loan is repayable in 144-monthly installments, with a final balloon payment of approximately $118 million. The loan is secured by first preferred ship mortgage on hull number 2215, as well as an assignment of the vessel's earnings, insurance and charter rights.
Second Priority Loan Facility
On October 11, 2002, our wholly owned subsidiary, Golar Gas Holding Company, Inc. entered into a loan agreement for an amount up to $60 million with certain of the lenders under the Golar LNG Facility, being Nordea Bank Norge ASA, Den norske Bank ASA and Fortis Bank (Nederland) N.V. The proceeds of this loan are to be used to assist in the financing of our newbuilding installments.
The loan accrues floating interest at a rate per annum equal to the aggregate of LIBOR, which is the London Inter Bank Offered Rate, plus 2.0 per cent per annum, increasing by 0.25 percent per annum on 30 November 2004 and 30 November 2005. The loan has a term of four years and eight months and is repayable in 15 quarterly installments of $4 million commencing in November 2003. The loan may be prepaid in whole or in part without premium or penalty, except for losses and other reasonable costs and expenses incurred as a result of our prepayment.
In addition to a second preferred ship mortgage on each of our vessels, except the Golar Mazo, to the lenders, the loan is secured by a second priority pledge of the capital stock of our shipowning subsidiaries, and an second priority assignment of our vessels' earnings, insurance, and the vessels' charters to the lenders. The loan agreement and related documents also contain a number of restrictive covenants that are consistent with those in the Golar LNG Facility.
Taxation
The following discussion is a summary of the material tax considerations relevant to us and an investment decision by a U.S. holder and a non-U.S. holder, as defined below, with respect to our common shares. This discussion does not purport to deal with the tax consequences of owning common shares to all categories of investors, some of which, such as dealers in securities, U.S. holders who own 10 percent or more of our voting shares and investors whose functional currency is not the U.S. dollar, may be subject to special rules. U.S. holders and non-U.S. holders should consult their own tax advisors concerning the overall tax consequences arising in their own particular situation under U.S. federal, state, local or foreign law of the ownership of common shares.
Bermuda Tax Considerations
The following are the material Bermuda tax consequences of our activities to us and to shareholders owning common shares. We are incorporated in Bermuda. Under current Bermuda law, we are not subject to tax on income or capital gains, and no Bermuda withholding tax will be imposed upon payments of dividends by us to our shareholders. No Bermuda tax is imposed on shareholders with respect to the sale or exchange of common shares. Furthermore, we have received from the Minister of Finance of Bermuda under the Exempted Undertaking Tax Protection Act of 1966, as amended, an undertaking that, if Bermuda enacts any legislation imposing any tax computed on profits or income or computed on any capital asset, gain or appreciation, or any tax in the nature of an estate, duty or inheritance tax, the imposition of such tax will not be applicable to us or any of our operations or to our common shares obligations until March 2016. As an exempted company, we are liable to pay to the Bermuda government an annual registration fee calculated on a sliding-scale basis by reference to our assessable capital, that is, our authorized capital plus any share premium.
U.S. Federal Income Tax Considerations
The following are the material U.S. federal income tax consequences to us and to U.S. holders and non-U.S. holders, as defined below, regarding (1) our operations and the operations of our vessel holding subsidiaries and (2) the acquisition, ownership and disposition of our common shares. The following discussion of U.S. federal income tax matters is based on the Internal Revenue Code of 1986, as amended, or the "Code", judicial decisions, administrative pronouncements, and existing and proposed regulations (or reproposed regulations) issued by the U.S. Department of the Treasury, all of which are subject to change, possibly with retroactive effect. In addition, the discussion is based, in part, on the description of our business as described above and assumes that we conduct our business as so described.
United States Taxation of Our Company
Taxation of Operating Income: In General
We anticipate that substantially all of our gross income will be derived from the use and operation of vessels in international commerce and that this income will principally consist of freights from the transportation of cargoes, hire or lease from time or voyage charters and the performance of services directly related thereto, which we refer to as "shipping income". Unless exempt from U.S. taxation under Section 883 of the Code, we will be subject to U.S. federal income taxation, in the manner discussed below, to the extent our shipping income is derived from sources within the United States.
Shipping income that is attributable to transportation that begins or ends, but that does not both begin and end, in the United States will be considered to be 50 percent derived from sources within the United States. Shipping income attributable to transportation that both begins and ends in the United States will be considered to be 100 percent derived from sources within the United States. We do not engage in transportation that gives rise to 100 percent U.S. source income.
Shipping income attributable to transportation exclusively between non-U.S. ports will be considered to be 100 percent derived from sources outside the United States. Shipping income derived from sources outside the United States will not be subject to U.S. federal income tax.
Based upon our anticipated shipping operations, our vessels will be operated in various parts of the world, including to or from U.S. ports. For the three calendar years 1999, 2000, and 2001 the U.S. source income that we derived from our vessels trading to U.S. ports was $4,374,678, $736,470, and $12,200,000, respectively, and the potential U.S. federal income tax liability resulting from this income, in the absence of our qualification for exemption from taxation under Section 883, as described below, would have been $174,987, $29,458, and $487,000, respectively.
Application of Code Section 883
Under Section 883 of the Code, we will be exempt from U.S. taxation on our U.S. source shipping income, if both of the following conditions are met:
o we are organized in a qualified foreign country which is one that grants an equivalent exemption from tax to corporations organized in the United States in respect of the shipping income for which exemption is being claimed under Section 883 ("the country of organization requirement"); and
o more than 50 percent of the value of our stock is treated as owned, directly or indirectly, by individuals (qualified shareholders") who are "residents" of qualified foreign countries (the "ownership requirement").
The U.S. Treasury Department has recognized (i) Bermuda, our country of incorporation, and (ii) the country of incorporation of each of our subsidiaries, as a qualified foreign country. Accordingly, we expect to satisfy the country of organization requirement.
In respect of the ownership requirement, Section 883 provides a special publicly-traded rule which exempts us from having to satisfy the ownership requirement if our shares are considered to be "primarily and regularly traded on an established securities market" located in our country of organization, Bermuda, in another qualified foreign country or in the United States, which we refer to as the "publicly-traded test".
Proposed regulations interpreting Section 883 were promulgated by the U.S.
Treasury Department on February 8, 2000. These proposed regulations were
withdrawn and replaced in their entirety by reproposed regulations interpreting
Section 883 promulgated by the U.S. Treasury Department on August 1, 2002. The
reproposed regulations will apply to taxable years beginning thirty days or more
after the date the reproposed regulations are published as final regulations in
the Federal Register. As a result, such regulations will not be effective for
the current calendar year 2002. A public hearing on the reproposed regulations
has been scheduled by the U.S. Treasury Department for November 12, 2002. At
this time, it is unclear when the reproposed regulations will be finalized and
whether they will be finalized in their present form.
The reproposed regulations provide, in pertinent part, that stock of a foreign corporation will be considered to be "primarily traded" on an established securities market if the number of shares that are traded during any taxable year on that market exceeds the number of shares traded during that year on any other established securities market.
At present, the sole class of shares that is issued and outstanding is our common shares, and our common shares are listed only on the Oslo Stock Exchange, which is an established securities market in Norway. Norway has been recognized by the U.S. Treasury Department as a qualified foreign country. Upon completion of this listing of our common shares, we expect that our common shares will also be listed on the Nasdaq National Market, which is an established securities market in the United States. For the taxable year ending December 31, 2001, the aggregate number of common shares that is traded on the Oslo Stock Exchange exceeded the aggregate number of shares traded on any other established securities market.
The reproposed regulations further provide that stock will generally be considered to be "regularly traded" on a securities market if:
o stock representing more than 50 percent of the issuer's outstanding shares, by voting power and value, is listed on such market, known as the 50 percent listing threshold;
o stock is traded on such market, other than in de minimis quantities, on at least 60 days during the taxable year, or 1/6 of the days in a short taxable year, known as the trading frequency threshold; and
o the aggregate number of shares of stock traded on such market is at least ten percent of the average number of shares outstanding during such year, or as appropriately adjusted in the case of a short taxable year, known as the trading volume threshold.
We currently satisfy the 50 percent listing threshold in respect of our common shares listed on the Oslo Stock Exchange and we will also satisfy the 50 percent listing threshold in respect of our common shares listed on the Nasdaq National Market upon completion of this listing.
Our shares are currently traded on the Oslo Stock Exchange on a level sufficient to satisfy the trading frequency and trading volume thresholds. The reproposed regulations provide that the trading frequency threshold and the trading volume threshold will be deemed satisfied if stock is traded on an established securities market in the United States and the stock is regularly quoted by dealers making a market in the stock ("U.S. securities market exception"). We expect that our common shares will be regularly quoted on the Nasdaq National Market by one or more dealers that make a market in our common shares and therefore will qualify for the U.S. securities market exception.
Notwithstanding the foregoing, the reproposed regulations provide, in pertinent part, that stock will not be considered to be regularly traded on an established securities market for any taxable year in which 50 percent or more of the outstanding shares of that stock, by vote and value, are owned, within the meaning of the regulations, on any year by persons who each own five per cent or more of the value of the outstanding shares of that stock, known as the five percent override rule. The five percent override rule will not apply, however, if we can establish that qualified shareholders own sufficient shares of our stock to preclude non-qualified shareholders from owning 50 percent or more of the total value of our stock for more than half the number of days during the taxable year ("five percent override exception").
Based on our existing shareholdings, we would presently be subject to the five percent override rule and in the absence of our being able to qualify for the five percent override exception, we would not qualify for the special publicly-traded rule exempting us from having to satisfy the ownership requirement. We believe that our ability to satisfy either the five percent override exception or the ownership requirement in accordance with the reproposed regulations as currently drafted, in particular those provisions applicable to determining an individual taxpayer's residence or tax home, could be open to question.
Until the reproposed regulations are promulgated in final form and come into force, however, we intend to take the position on our U.S. tax return filings that we satisfy the publicly traded requirements of the statute as well as the ownership requirement and, therefore, we are entitled to exemption from U.S. federal income tax under Section 883 in respect of our U.S.-source shipping income.
Taxation in Absence of Internal Revenue Code Section 883 Exemption
Four percent Gross Basis Tax Regime
To the extent the benefits of Section 883 are unavailable with respect to any item of U.S. source income, our U.S.-source shipping income, to the extent not considered to be "effectively connected" with the conduct of a U.S. trade or business as discussed below, would be subject to a four percent tax imposed by Code Section 887 on a gross basis, without benefit of deductions. As discussed above, we expect that substantially less than half of our shipping income will involve the transportation of cargoes to or from United States ports. In no event would the maximum effective rate of U.S. federal income tax on our shipping income exceed two percent.
Net Basis and Branch Tax Regime
To the extent the benefits of the Section 883 exemption are unavailable and our U.S. source shipping income is considered to be "effectively connected" with the conduct of a U.S. trade or business, as described below, any such "effectively connected" U.S. source shipping income, net of applicable deductions, would be subject to the U.S. federal corporate income tax currently imposed at rates of up to 35 percent. In addition, we may be subject to the 30 percent "branch-level" taxes (or such lesser tax as provided by an applicable income tax treaty) on earnings effectively connected with the conduct of such trade or business, as determined after allowance for certain adjustments, and on certain interest paid or deemed paid attributable to the conduct of their U.S. trade or business.
Our U.S. source shipping income will be considered "effectively connected" with the conduct of a U.S. trade or business only if:
o we have, or are considered to have, a fixed place of business in the United States involved in the earning of shipping income; and
o substantially all of our U.S. source shipping income is attributable to regularly scheduled transportation, such as the operation of a vessel that follows a published schedule with repeated sailings at regular intervals between the same points for voyages that begin or end in the United States.
We do not intend to have, or permit circumstances that would result in having, any of our vessels operating to the United States on a regularly scheduled basis or an office or other fixed place of business in the United States involved in the earning of shipping income. Based on the foregoing and on the expected mode of our shipping operations, we believe that none of our U.S. source shipping income will be "effectively connected" with the conduct of a U.S. trade or business.
Gain on Sale of Vessels
To the extent any of our vessels makes more than an occasional voyage to U.S. ports, we may be considered to be engaged in the conduct of a U.S. trade or business. As a result, except to the extent the gain on the sale of a vessel is incidental to our shipping income, any U.S. source gain on the sale of a vessel may be partly or wholly subject to U.S. federal income tax as "effectively connected" income (determined under rules different from those discussed above) under the net basis and branch tax regime described above. However, we intend to structure sales of our vessels in such a manner, including effecting the sale and delivery of vessels outside of the United States, as to not give rise to U.S. source gain.
U.S. Taxation of U.S. Holders
The term U.S. holder means a beneficial owner of our common shares that is a U.S. citizen or resident, U.S. corporation or other U.S. entity taxable as a corporation, an estate, the income of which is subject to U.S. federal income taxation regardless of its source, or a trust if a court within the U.S. is able to exercise primary jurisdiction over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust and owns our common shares as a capital asset, generally, for investment purposes.
If a partnership holds our common shares, the tax treatment of a partner will generally depend upon the status of the partner and upon the activities of the partnership. If you are a partner in a partnership holding our common shares, you should consult your tax advisor.
Distributions
Any distributions made by us with respect to our common shares to a U.S. holder will generally constitute dividends, taxable as ordinary income, to the extent of our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Distributions in excess of our earnings and profits will be treated first as a non-taxable return of capital to the extent of the U.S. holder's tax basis in his common shares on a dollar for dollar basis and thereafter as capital gain. Because we are not a U.S. corporation, U.S. holders that are corporations will not be entitled to claim a dividends received deduction with respect to any distributions they receive from us. Dividends paid with respect to our common shares will generally be treated as "passive income" or, in the case of certain types of U.S. holders, "financial services income", for purposes of computing allowable foreign tax credits for U.S. foreign tax credit purposes.
Sale, Exchange or other Disposition of Our Common Shares
Subject to the discussion below under "Passive Foreign Investment Company," a U.S. holder generally will recognize taxable gain or loss upon a sale, exchange or other disposition of our common shares in an amount equal to the difference between the amount realized by the U.S. holder from such sale, exchange or other disposition and the U.S. holder's tax basis in the common shares. Such gain or loss will be treated as long-term capital gain or loss if the U.S. holder's holding period is greater than one year at the time of the sale, exchange or other disposition. Such capital gain or loss will generally be treated as U.S.-source income or loss, as applicable, for U.S. foreign tax credit purposes. A U.S. holder's ability to deduct capital losses is subject to certain limitations.
Anti-Deferral Regimes
Notwithstanding the above rules regarding distributions and dispositions, special rules may apply to some U.S. holders (or to the direct or indirect beneficial owners of some non-U.S. holders) if one or more anti-deferral regimes discussed below are applicable. The rules regarding each of these regimes are complex, and U.S. holders should consult their tax advisers with respect to the applicability and impact of these regimes to their ownership of our shares.
Passive Foreign Investment Company We will be a "passive foreign investment company" if either:
o 75 percent or more of our gross income (including the gross income of any subsidiary of which we own, directly or indirectly, 25 percent or more of the value of its stock) in a taxable year is passive income; or
o at least 50 percent of our assets (including the assets of any subsidiary) in a taxable year (averaged over the year and generally determined based upon value) are held for the production of, or produce, passive income.
To date, our subsidiaries and we have derived most of our income from time and voyage charters, and we expect to continue to do so. This income should be treated as services income, which is not passive income for passive foreign investment company purposes. However, passive income would include amounts derived by reason of the temporary investment of funds raised in an offering and amounts derived through spot trading of LNG for our own account.
On the basis of the above, we believe that we are not currently a passive foreign investment company and do not expect to be a passive foreign investment company in the foreseeable future. However, because there are uncertainties in the application of the passive foreign investment company rules (including whether the Internal Revenue Service disagrees with the conclusion that time and voyage charters do not give rise to passive income for purposes of the passive foreign investment company income test), and because it is an annual test, there can be no assurance that we will not become a passive foreign investment company in any year.
If we become a passive foreign investment company (and regardless of whether we remain a passive foreign investment company), each U.S. holder who is treated as owning our shares during any period in which we are so classified, for purposes of the passive foreign investment company rules would be liable to pay tax, at the then highest prevailing income tax rates on ordinary income, plus interest, upon certain excess distributions and upon disposition of our shares including, under certain circumstances, a disposition pursuant to an otherwise tax free reorganization, as if the distribution or gain had been recognized ratably over the U.S. holder's entire holding period of our shares. An excess distribution generally includes dividends or other distributions received from a passive foreign investment company in any taxable year of a U.S. holder to the extent that the amount of those distributions exceeds 125 percent of the average distributions made by the passive foreign investment company during a specified base period. The tax at ordinary rates and interest would not be imposed if the U.S. holder makes a mark-to-market election, as discussed below. Further, a U.S. holder that acquires our shares from a decedent (other than certain non-resident aliens) whose holding period for the shares includes time when we were a passive foreign investment company would be denied the normally available step-up of income tax basis for the shares to fair market value at the date of death and instead would have a tax basis limited to the lower of fair market value of the shares or decedent's tax basis.
In some circumstances, a U.S. holder may avoid the unfavorable consequences of the passive foreign investment company rules by making a qualified electing fund election with respect to us. A qualified electing fund election effectively would require an electing U.S. holder to include in income its pro rata share of our ordinary earnings and net capital gain. However, a U.S. holder cannot make a qualified electing fund election with respect to us unless we comply with certain reporting requirements and we do not intend to provide the required information. If we become a passive foreign investment company and, provided our shares are regularly traded on a "qualified exchange", a U.S. holder may make a mark-to-market election. A "qualified exchange" includes a foreign exchange that is regulated by a governmental authority in which the exchange is located and with respect to which certain other requirements are met. The Internal Revenue Service has not yet identified specific foreign exchanges that are "qualified" for this purpose. The Nasdaq National Market, on which our common shares will be traded, is a qualified exchange for U.S. federal income tax purposes. Under the election, any excess of the fair market value of the shares at the close of any tax year over the U.S. holder's adjusted basis in the shares is included in the U.S. holder's income as ordinary income. In addition, the excess, if any, of the U.S. holder's adjusted basis at the close of any taxable year over fair market value is deductible in an amount equal to the lesser of the amount of the excess or the net mark-to-market gains on the shares that the U.S. holder included in income in previous years. If a U.S. holder makes a mark-to-market election after the beginning of its holding period, the U.S. holder does not avoid the interest charge rule discussed above with respect to the inclusion of ordinary income attributable to periods before the election.
Foreign Personal Holding Company
We will be a foreign personal holding company, for United States federal income tax purposes, if both:
o five or fewer individuals who are United States citizens or residents own or are deemed to own (under applicable attribution rules) more than 50 percent of all classes of our stock measured by voting power or value; and
o we receive at least 60 percent (50 percent in years other than our first taxable year as a foreign personal holding company) of our gross income (regardless of source), as specifically adjusted, from certain passive sources.
If we are classified as a foreign personal holding company, a portion of our "undistributed foreign person holding company income" (as defined for U.S. federal income tax purposes) would be imputed to all of our U.S. holders who are shareholders on the last taxable day of our taxable year, or, if earlier, the last day on which we are classifiable as a foreign personal holding company. That portion of our income would be taxable as a dividend, even if no cash dividend is actually paid. U.S. holders who dispose of their shares prior to the date set forth above would not be subject to a tax under these rules. In addition, an individual U.S. holder who acquires our common shares from a decedent would be denied the step-up of tax basis of such shares to fair market value on the decedent's date of death which would otherwise be available and instead would have a tax basis equal to the lower of fair market value or the decedent's basis. We believe that we are not a foreign personal holding company. However, no assurance can be given that we will not qualify as a foreign personal holding company in the future.
U.S. Taxation of "Non-U.S. Holders"
A beneficial owner of our common shares that is not a U.S. holder is referred in this offering as a "non-U.S. holder."
Dividends on Our Common Shares
Non-U.S. holders generally will not be subject to U.S. federal income tax or withholding tax on dividends made by us with respect to our common shares, unless the dividends are effectively connected with the non-U.S. holder's conduct of a trade or business in the U.S. or where the non-U.S. holder is entitled to the benefits of an income tax treaty with respect to those dividends, the dividends are attributable to a permanent establishment maintained by the non-U.S. holder in the U.S.
Sale, Exchange or Other Disposition of Our Common Shares
Non-U.S. holders generally will not be subject to U.S. federal income tax or withholding tax on any gain realized upon the sale, exchange or other disposition of our common shares, unless: (i) the gain is effectively connected with the non-U.S. holder's conduct of a trade or business in the U.S. or where the non-U.S. holder is entitled to the benefits of an income tax treaty with respect to that gain, that gain is attributable to a permanent establishment maintained by the non-U.S. holder in the U.S.; or (ii) the non-U.S. holder is an individual who is present in the U.S. for 183 days or more during the taxable year of disposition and other conditions are met.
If the non-U.S. holder is engaged in a U.S. trade or business for U.S. federal income tax purposes, the income from our common shares, including dividends on the common shares and the gain from the sale, exchange or other disposition of the shares that is effectively connected with the conduct of that trade or business, will generally be subject to regular U.S. federal income tax in the same manner as discussed in the previous section relating to the taxation of U.S. holders. In addition, if you are a corporate non-U.S. holder, your earnings and profits that are attributable to the effectively connected income, which are subject to certain adjustments, may be subject to an additional branch profits tax at a rate of 30 percent, or at a lower rate as may be specified by an applicable income tax treaty.
Backup Withholding and Information Reporting
In general, dividend payments, or other taxable distributions, made within the U.S. to you will be subject to information reporting requirements and "backup withholding" tax if you are a non-corporate U.S. holder and you:
o fail to provide an accurate taxpayer identification number;
o are notified by the Internal Revenue Service that you have failed to report all interest or dividends required to be shown on your federal income tax returns; or
o in certain circumstances, fail to comply with applicable certification requirements.
Non-U.S. holders may be required to establish their exemption from information reporting and backup withholding by certifying their status on IRS Form W-8BEN.
If you sell your common shares to or through a U.S. office or broker, the payment of the proceeds is subject to both U.S. backup withholding and information reporting unless you certify that you are a non-U.S. person, under penalties of perjury, or you otherwise establish an exemption. If you sell your common shares through a non-U.S. office of a non-U.S. broker and the sales proceeds are paid to you outside the U.S., then information reporting and backup withholding generally will not apply to that payment. However, U.S. information reporting requirements, but not backup withholding, will apply to a payment of sales proceeds, even if that payment is made to you outside the U.S., if you sell your common shares through a non-U.S. office of a broker that is a U.S. person or has some other contacts with the U.S.
You generally may obtain a refund of any amounts withheld under backup withholding rules that exceed your income tax liability by filing a refund claim with the U.S. Internal Revenue Service, provided that the required information is furnished to the Internal Revenue Service.
Documents on display
When the SEC declares this Registration Statement effective, we will be subject to the informational requirements of the Securities Exchange Act of 1934, as amended. In accordance with these requirements we will file reports and other information with the SEC. These materials, including this registration statement and the accompanying exhibits, may be inspected and copied at the public reference facilities maintained by the Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549. You may obtain information on the operation of the public reference room by calling 1 (800) SEC-0330, and you may obtain copies at prescribed rates from the Public Reference Section of the Commission at its principal office in Washington, D.C. 20549. The SEC maintains a website (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC.
ITEM 11. Quantitative and Qualitative Disclosures about Market Risk
We are exposed to various market risks, including primarily interest rate and foreign currency exchange risk. We do not enter into derivative instruments for speculative or trading purposes. In certain situations, we may enter into derivative instruments to achieve an economic hedge of the risk exposure. With the adoption of FAS 133, certain economic hedge relationships may no longer qualify for hedge accounting due to the extensive documentation and strict criteria of the new standard.
Interest rate risk. A significant portion of our long-term debt is subject to adverse movements in interest rates. Our interest rate risk management policy permits economic hedge relationships in order to reduce the risk associated with adverse fluctuations in interest rates. We use interest rate caps, floors and swaps to manage the exposure to adverse movements in interest rates. Interest rate swaps are used to convert floating rate debt obligations to a fixed rate in order to achieve an overall desired position of fixed and floating rate debt. Interest rate caps and floors are used in combination to lock in an acceptable range of floating rates. Credit exposures are monitored on a counterparty basis, with all new transactions subject to senior management approval.
As of June 30, 2002, December 31, 2001 and 2000, the notional amount of the interest rate swaps outstanding was $189.4 million, $194.8 million and $350.8 million, respectively. The notional amount of the interest rate caps and floors outstanding as of June 30, 2002, December 31, 2001 and 2000 was $zero, $zero and $29.2 million, respectively. The principal of the loans outstanding as of June 30, 2002, December 31, 2001 and 2000 was $684.8 million, $609.6 million and $513.9 million, respectively. The notional amounts disclosed as of December 31, 2000 represent the notional amount after the carve out and push down from Osprey. For disclosures of the fair value of the derivatives and debt obligations outstanding as of December 31, 2001 and 2000, see Note 21 to the Financial Statements.
Foreign currency risk. Periodically, the Company may be exposed to foreign currency exchange fluctuations as a result of expenses paid by certain subsidiaries in currencies other than U.S. dollars (primarily Sterling, Filipino Pesos and Pesetas). There is a risk that currency fluctuations will have a negative effect on the value of the Company's cash flows. As of June 30, 2002, December 31, 2001, 2000 and 1999, there was no significant exposure to a foreign currency. We have not entered into derivative contracts to minimize this transaction risk.
ITEM 12. Description of Securities other than equity securities
Not Applicable.
ITEM 13. Dividend Arrearages and delinquencies
Neither we nor any of our subsidiaries have been subject to a material default in the payment of principal, interest, a sinking fund or purchase fund installment or any other material default that was not cured within 30 days.
ITEM 14. Material Modifications to the Rights of Security Holders and use
of proceeds
Not Applicable.
ITEM 15. Reserved
ITEM 16. Reserved
ITEM 17. Financial statements
Not Applicable.
ITEM 18. Financial Statements
We specifically incorporate by reference in response to this item the report of the independent auditors, the consolidated financial statements and the notes to the consolidated financial statements appearing on pages F-1 through F-40.
ITEM 19. Exhibits
Number Description of Exhibit
1.1 Memorandum of Association of Golar LNG Limited as adopted on May
9, 2001
1.2 Bye-Laws of Golar LNG Limited as adopted on May 10, 2001
1.3 Certificate of Incorporation as adopted on May 11, 2001
1.4 Articles of Amendment of Memorandum of Association of Golar LNG
Limited as adopted by our shareholders on June 1, 2001
(increasing the Company's authorized capital)
4.1 Loan Agreement, between Golar LNG 2215 Corporation and Lloyds TSB
Bank, Plc, dated December 31, 2001.
4.2 Loan Agreement, between Golar Gas Holding Company, Inc. and
Christiania Bank og Kreditkasse, Den norske Bank, Citibank and
Fortis Bank, dated May 31, 2001
4.3 Loan Agreement, between Faraway Maritime Shipping Company and
Bank of Taiwan dated November 26, 1997
4.4 Purchase Agreement, between Golar LNG Limited and Osprey Maritime
Limited, dated May 21, 2001
4.5 Sale and Purchase Agreement, between Golar LNG Limited and
Seatankers Management Co. Ltd., dated May 21, 2001
4.6 Golar LNG Limited Stock Option Plan
4.7 Service Agreement between Golar LNG Limited and Graeme McDonald
4.8 Management Agreement between Golar LNG Limited and Frontline
Management (Bermuda) Limited, dated February 21, 2002
4.9 Loan Agreement, between Golar Gas Holding Company, Inc. and
Nordea Bank Norge ASA as agent and Nordea Bank Norge ASA, Den
norske Bank ASA and Fortis Bank (Nederland) N.V., dated October
11, 2002
8.1 Golar LNG Limited Subsidiaries
10.1 Consent of Fearnley Consultants A/S
10.2 Consent of Petroleum Economist to its use as a source in Item 4,
Information on the Company - The LNG Industry
10.3 Consent of the International Energy Agency to its use as a source
in Item 4, Information on the Company - The LNG Industry
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SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this registration statement on its behalf.
Golar LNG Limited
By: /s/ Kate Blankenship
------------------------------------
Name: Kate Blankenship
Title: Chief Accounting Officer
Date: November 27, 2002
---------------------------
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GOLAR LNG LIMITED
INDEX TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
Page
Report of Independent Accountants.....................................F-2
Audited Consolidated and Combined Statements of Operations
for the years ended December 31, 2001, 2000 and 1999..................F-3
Audited Consolidated and Combined Statements of Comprehensive
Income for the years ended December 31, 2001, 2000 and 1999...........F-4
Audited Consolidated and Combined Balance Sheets
as of December 31, 2001 and 2000......................................F-5
Audited Consolidated and Combined Statements of Cash Flows
for the years ended December 31, 2001, 2000 and 1999..................F-6
Audited Consolidated and Combined Statements of
Changes in Stockholders' Equity for the years
ended December 31, 2001 and 2000 .....................................F-7
Notes to Consolidated and Combined Financial Statements...............F-8
Unaudited Consolidated and Combined Statements of Operations
for the six months ended June 30, 2002 and 2001......................F-30
Unaudited Consolidated Balance Sheets as of
June 30, 2002 and December 31, 2001..................................F-31
Unaudited Consolidated and Combined Statements of Cash Flows
for the six months ended June 30, 2002 and 2001......................F-32
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Notes to Unaudited Interim Consolidated
and Combined Financial Statements....................................F-33
Report of Independent Accountants
To the Board of Directors and Stockholders of Golar LNG Limited
In our opinion, the accompanying consolidated and combined balance sheets and the related consolidated and combined statements of operations, comprehensive income, stockholders' equity and cash flows present fairly, in all material respects, the financial position of Golar LNG Limited and its subsidiaries (the "Company") at December 31, 2001 and 2000, and the results of their operations and their cash flows for the years ended December 31, 2001, 2000 and 1999 in conformity with accounting principles generally accepted in the United States of America, on the basis described in Note 2. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
As discussed in Note 1, the Company is considering various funding strategies for its capital commitments, including payments due in 2003, under long-term shipbuilding contracts for which it has not yet obtained full financing.
PricewaterhouseCoopers
London, United Kingdom
April 2, 2002, except as to the third paragraph in Note 1, the final three paragraphs in Note 14 and Note 28 (B) which are as of October 15, 2002
Golar LNG Limited
Consolidated and Combined Statements of Operations for the years ended December
31, 2001, 2000 and 1999
(in thousands of $, except per share data)
Note 2001 2000 1999
Operating revenues
Time charter revenues 112,324 110,705 79,007
Vessel management fees 1,899 2,304 2,785
--------------------------------------------- ------ ------------- ------------ -------------
Total operating revenues 114,223 113,009 81,792
--------------------------------------------- ------ ------------- ------------ -------------
Operating expenses
Vessel operating expenses 24,537 20,973 18,249
Administrative expenses 8,232 7,715 7,935
Restructuring expenses 6 1,894 - -
Depreciation and amortization 31,614 36,488 29,464
--------------------------------------------- ------ ------------- ------------ -------------
Total operating expenses 66,277 65,176 55,648
--------------------------------------------- ------ ------------- ------------ -------------
Operating income 47,946 47,833 26,144
--------------------------------------------- ------ ------------- ------------ -------------
Financial income (expenses)
Interest income 3,254 2,124 3,553
Interest expense (32,508) (44,539) (26,414)
Other financial items 7 (12,363) (2,405) (4,903)
--------------------------------------------- ------ ------------- ------------ -------------
Net financial expenses (41,617) (44,820) (27,764)
--------------------------------------------- ------ ------------- ------------ -------------
Income (loss) before income taxes
and minority interest 6,329 3,013 (1,620)
--------------------------------------------- ------ ------------- ------------ -------------
Minority interest in net income 1,607 3,439 -
of subsidiaries
Income taxes 8 356 78 237
--------------------------------------------- ------ ------------- ------------ -------------
Net income (loss) 4,366 (504) (1,857)
============================================= ====== ============= ============ =============
Earnings (loss) per share
Basic and diluted 9 $0.08 $(0.01) $(0.03)
============================================= ====== ============= ============ =============
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The accompanying notes are an integral part of these financial statements.
Golar LNG Limited
Consolidated and Combined Statements of Comprehensive Income for the years ended
December 31, 2001, 2000 and 1999
(in thousands of $)
2001 2000 1999
Net income (loss) 4,366 (504) (1,857)
Other Comprehensive income (loss), net of tax:
Recognition of minimum pension liability (1,472) (3,598) -
Recognition of transition obligation under FAS 133 (2,850) - -
Reversal of transition obligation under FAS 133 64 - -
----------------------------------------------------- -------- -------------- -------------
Other comprehensive income (loss) (4,258) (3,598) -
===================================================== ======== ============== =============
----------------------------------------------------- -------- -------------- -------------
Comprehensive income (loss) 108 (4,102) (1,857)
===================================================== ======== ============== =============
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The accompanying notes are an integral part of these financial statements.
Golar LNG Limited
Consolidated and Combined Balance Sheets as of December 31, 2001 and 2000
(in thousands of $)
Note 2001 2000
ASSETS
Current Assets
Cash and cash equivalents 57,569 5,741
Restricted cash and short-term investments 14,163 13,091
Short term investments - 14,231
Trade accounts receivable 11 188 111
Other receivables, prepaid expenses and accrued income 12 2,602 3,303
Amounts due from related parties 13 261 -
Inventories 2,650 2,059
--------------------------------------------------------- ------- --------------- ---------------
Total current assets 77,433 38,536
Newbuildings 14 132,856 -
Vessels and equipment, net 15 641,371 765,559
Deferred charges 16 4,177 2,856
Goodwill 17 - 9,439
Other long term assets 154 1,600
--------------------------------------------------------- ------- --------------- ---------------
Total assets 855,991 817,990
========================================================= ======= =============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt 21 41,053 10,171
Current indebtedness due to related parties 21 85,278 12,000
Trade accounts payable 1,995 1,799
Accrued expenses 18 7,684 7,281
Amounts due to related parties 1,049 -
Other current liabilities 19 18,887 2,403
--------------------------------------------------------- ------- --------------- ---------------
Total current liabilities 155,946 33,654
Long-term liabilities
Long-term debt 21 483,276 204,329
Long-term debt due to related parties 21 - 287,400
Other long-term liabilities 22 16,552 9,562
--------------------------------------------------------- ------- --------------- ---------------
Total liabilities 655,774 534,945
Commitments and contingencies (See Note 27)
Minority interest 25,820 26,011
Stockholders' equity 174,397 257,034
--------------------------------------------------------- ------- --------------- ---------------
Total liabilities and stockholders' equity 855,991 817,990
========================================================= ======= =============== ===============
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The accompanying notes are an integral part of these financial statements.
Golar LNG Limited
Consolidated and Combined Statements of Cash Flows for the years ended December
31, 2001, 2000 and 1999 (in thousands of $)
Note 2001 2000 1999
Operating activities
Net income (loss) 4,366 (504) (1,857)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 31,680 36,488 29,464
Amortization of deferred charges 2,097 1,359 1,742
Income attributable to minority interests 1,607 3,439 -
Drydocking expenditure (10,222) (6,694) -
Trade accounts receivable (77) (4) 167
Inventories (591) 257 (351)
Prepaid expenses and accrued income 725 188 200
Amount due from/to related companies (238) (5,217) (5,829)
Trade accounts payable 196 274 (3,461)
Accrued expenses 267 (1,116) (2,668)
Other current liabilities 12,233 1,039 1,442
----- --------------------------------------------- ----- ------------ ------------- -------------
Net cash provided by operating activities 42,043 29,509 18,849
----- --------------------------------------------- ----- ------------ ------------- -------------
Investing activities
Cash paid for Osprey's LNG interests, net (530,945) - -
of cash acquired
Investment in associated company and 17 - - (14,176)
subsidiary
Additions to newbuildings 14 (132,856) (93,960) (10,245)
Additions to vessels and equipment (7,258) (2,900) (3,030)
Restricted cash and short term investments (1,072) (13,091) -
Purchase of short term investments - (14,231) -
Proceeds from maturity of short term 14,231 - -
investments
Proceeds from sales of other assets - 1,334 -
----- --------------------------------------------- ----- ------------ ------------- -------------
Net cash used in investing activities (657,900) (122,848) (27,451)
----- --------------------------------------------- ----- ------------ ------------- -------------
Financing activities
Proceeds from long-term debt 21 325,000 88,191 8,879
Proceeds from short term debt due to 21 85,278 - -
related parties
Repayments of long-term debt (15,170) - -
Financing costs paid (3,231) - (286)
Contribution from minority shareholders - 8,322 770
Proceeds from issuance of equity 275,808 - -
----- --------------------------------------------- ----- ------------ ------------- -------------
Net cash provided by financing 667,685 96,513 9,363
activities
----- --------------------------------------------- ----- ------------ ------------- -------------
Net increase in cash and cash equivalents 51,828 3,174 761
Cash and cash equivalents at beginning of period 5,741 2,567 1,806
Cash and cash equivalents at end of period 57,569 5,741 2,567
=================================================== ===== ============ ============= =============
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest paid, net of capitalized interest 37,811 42,662 23,080
Income taxes paid 411 268 45
Non-cash investing and financing activities:
Forgiveness of intercompany payables, 13 455,890 - -
dividend out and return of capital
Liabilities assumed in business combination 214,500 - 117,430
===== ============================================= ===== ============ ============= =============
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The accompanying notes are an integral part of these financial statements.
Golar LNG Limited
Consolidated and Combined Statements of Changes in Stockholders' Equity for the
years ended December 31, 2001 and 2000
(in thousands of $, except number of shares)
Note Invested Amounts Share Additional Accumulated Retained Total
Equity due Capital Paid Other Earnings Stockholders'
from in Comprehensive Equity
Related Capital Income
Parties
Combined balance at 225,056
December 31, 1999 1,016,792 (791,736) - - - -
Net income (loss) (504) - - - - - (504)
Change in amounts due from
parent and affiliates - 36,080 - - - - 36,080
Other comprehensive loss - - - - (3,598) - (3,598)
---------------------------- ------ ---------- -------- -------- -------- - ---------- ------- ----------
Combined balance at 257,034
December 31, 2000 1,016,288 (755,656) - - (3,598) -
Push down of World
Shipholding Ltd. basis 23 (133,758) - - - 6,384 - (127,374)
Net loss (3,210) - - - - - (3,210)
Change in amounts due from
parent and affiliates 13 - 299,766 - - - - 299,766
Other comprehensive loss - - - (2,786) - (2,786)
---------------------------- ------ ---------- -------- ------- -------- ---------- ------- ----------
Combined balance at May 879,320 (455,890) - - - - 423,430
31, 2001
Issue of ordinary shares, 24 - - 56,012 219,796 - - 275,808
net of issuance costs
Forgiveness of
inter-company balances, 13 (455,890) 455,890 - - - - -
dividend out and return of
capital
Purchase of the Golar LNG -
businesses from Osprey
Maritime and Seatankers, (423,430) (107,515) - - (530,945)
Ltd, entities under common -
control
Net income - - - - - 7,576 7,576
Other comprehensive loss - - - - (1,472) - (1,472)
---------------------------- ------ ---------- -------- ------- -------- ---------- ------- ----------
Consolidated balance at - - 56,012 112,281 (1,472) 7,576 174,397
December 31, 2001
============================ ====== ========== ======== ======= ======== =========== ======= ==========
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The accompanying notes are an integral part of these financial statements.
Golar LNG Limited
Notes to Consolidated and Combined Financial Statements
1. GENERAL
Golar LNG Limited (the "Company" or "Golar") was incorporated in Hamilton, Bermuda on May 10, 2001 for the purpose of acquiring the liquefied natural gas ("LNG") shipping interests of Osprey Maritime Limited ("Osprey") and of Seatankers Management Co. Ltd. ("Seatankers"). Osprey, through its parent World Shipholding Ltd. ("World Shipholding"), and Seatankers, are both indirectly controlled by Mr. John Fredriksen. Mr. Fredriksen is a Director, the Chairman and President of Golar. Osprey acquired its LNG interests in 1997 through the acquisition of Gotaas Larsen Shipping Corporation ("Gotaas Larsen").
The Company owns and operates a fleet of six liquefied natural gas ("LNG") carriers, five of which are currently under long term charter contracts and one of which is under a medium-term charter. The Company owns five of its vessels through wholly owned subsidiaries and has a 60 per cent interest in the sixth vessel. Additionally, the Company is building four new LNG carriers at a cost of $658.9 million excluding financing costs.
The Company has sufficient facilities to meet its anticipated funding needs until August 2003. These facilities include $15 million from a related party which can be drawn down as needed in 2003 until such time as permanent financing has been secured. As at October 2002 additional facilities of $316 million will be needed to meet commitments under the newbuilding construction program in August 2003 and thereafter. It is intended that these facilities will come from a combination of debt finance, lease arrangements for existing vessels and cash flow from operations. Alternatively, if market and economic conditions favor equity financing, the Company may raise equity to fund a portion of the construction costs. The Company is in advanced negotiations with a number of financial institutions and others to provide sufficient facilities to meet these construction commitments in full as they fall due. Accordingly, the financial statements have been prepared on a going concern basis of accounting.
Acquisition of Osprey by World Shipholding
In August 2000, World Shipholding commenced the acquisition of Osprey, a publicly listed Singapore company with LNG tankers, oil tankers and product tankers. World Shipholding gained a controlling interest of more than 50 per cent of Osprey in November 2000. In January 2001, World Shipholding's interest increased to over 90 per cent and the acquisition was completed in May 2001. The acquisition of Osprey by World Shipholding was accounted for as a purchase transaction and the purchase price was therefore allocated to the assets and liabilities acquired based on their fair value as of each acquisition date with vessels being valued on the basis of independent appraisals. The fair value of the net assets acquired exceeded the purchase price. As such, the negative goodwill associated with the acquisition has been allocated to reduce the values of the vessels and the new basis reflected in Golar LNG's financial statements through push down accounting (as indicated in Note 23), which occurred on January 31, 2001.
Acquisition of LNG interests by Golar LNG Limited
On May 21, 2001, the Company entered into purchase agreements with Osprey and Seatankers to purchase its LNG shipping interests. These LNG shipping interests comprised the ownership of LNG carriers, a contract and options to build LNG vessels and a management organization that provides management services for LNG carriers owned by the Company and third parties. To finance the purchase of the LNG operations, the Company raised $280 million through the placement in Norway of 56 million shares at a price of $5.00 per share. Osprey subscribed for 28 million shares with the remaining 28 million shares being subscribed by private investors. In addition, a wholly-owned subsidiary of the Company raised $325 million through a credit facility secured by the underlying vessels. The purchase price for the LNG operations was $530.9 million as indicated below:
(in millions of $)
Proceeds from share issuance 280.0
Credit facility 325.0
-------
605.0
Less: transaction fees and expenses (4.2)
Less: surplus cash available (69.9)
-------
Purchase price 530.9
Less: net assets acquired (423.4)
-------
Excess of purchase price over net assets acquired 107.5
=======
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The purchase price included amounts paid to Osprey and Seatankers totaling $5.0 million for the assignment of newbuilding contracts and options. The purchase price paid was net of an amount of $128.7 million, being 60 per cent of the loan assumed relating to the financing of the Golar Mazo as described in Note 21. Additionally, the Company forgave certain intercompany receivables totaling $455.9 million.
Mr. John Fredriksen indirectly controls 50.01 per cent of the Company through the initial 12,000 shares issued at the Company's formation and the 28 million shares purchased by Osprey. As required under generally accepted accounting principles in the United States, the purchase of the LNG operations has been treated by the Company as a transaction between entities under common control. The Company recorded the LNG assets and liabilities acquired from World Shipholding and Seatankers at the amounts previously reflected in the books of World Shipholding and Seatankers on what is known as a "predecessor basis". The difference between the purchase price as described above and the net assets recorded in the Company's books using the predecessor basis was reflected as a reduction in equity in the amount of $107.5 million.
2. ACCOUNTING POLICIES
Basis of accounting
The financial statements are prepared in accordance with accounting principles generally accepted in the United States. Investments in companies in which the Company directly or indirectly holds more than 50 per cent of the voting control are consolidated in the financial statements. All inter-company balances and transactions have been eliminated. Investments in companies in which the Company holds between 20 per cent and 50 per cent of an ownership interest, and over which the Company exercises significant influence, are accounted for using the equity method.
For the year ended December 31, 2001, the five months to May 31, 2001, have been carved out of the financial statements of Osprey and are presented on a combined basis. For the seven months from June 1, 2001 to December 31, 2001, the financial statements of Golar as a separate entity are presented on a consolidated basis. For the years ended December 31, 2000 and 1999 the combined financial statements presented herein have been carved out of the financial statements of Osprey. With effect from May 31, 2001 the predecessor basis of accounting has been applied to the acquisition of the LNG interests of Osprey and Seatankers as discussed above. The financial statements for the year ended December 31, 2001, therefore reflect the following:
o the pushdown of purchase accounting adjustments with effect from January 31, 2001 (resulting from the acquisition of Osprey by World Shipholding);
o the application of the predecessor basis of accounting with effect from May 31, 2001 resulting from the Company's acquisition of the LNG interest of Osprey and Seatankers; and
o the establishment of a new equity and debt structure with effect from May 31, 2001 in connection with the common control acquisition by Golar of the LNG business of Osprey and the carry over of the historic basis from this date;
These events are explained further elsewhere in these Notes.
The accompanying financial statements include the financial statements of the corporations listed in Note 3.
Osprey is a shipping company with activities that include oil tankers and product carriers as well as LNG carriers. Where Osprey's assets, liabilities, revenues and expenses relate to the LNG business, these have been identified and carved out for inclusion in these financial statements. Where Osprey's assets, liabilities, revenues and expenses relate to one specific line of business but not the LNG business, these have been identified and not included in these financial statements. The preparation of the carved out financial statements requires allocation of certain assets and liabilities and expenses where these items are not identifiable as related to one specific activity. Administrative overheads of Osprey that cannot be related to a specific vessel type of operations have been allocated based on the number of vessels in Ospreys' fleet including its tanker operations. The Osprey group operated a centralized treasury system and did not have separate banks accounts for each of its subsidiaries. For the LNG operations there were separate bank accounts for Golar Mazo and for the remaining LNG activities interest income has been allocated in the carved out combined financial statements based on operating cash flows, net of debt servicing. Management has deemed the related allocations are reasonable to present the financial position, results of operations, and cash flows of the Company. Management believes the various allocated amounts would not materially differ from those that would have been achieved had Golar operated on a stand-alone basis for all periods presented. The financial position, results of operations and cash flows of the Company are not necessarily indicative of those that would have been achieved had the Company operated autonomously for all years presented as the Company may have made different operational and investment decisions as a Company independent of Osprey.
During the period of Osprey's ownership of the LNG business, overhead costs allocated, as described above, are derived from costs associated with the corporate headquarters in Singapore and from the London office which managed and still does manage the operations of the business. The amount of costs, presented as part of administrative expenses, that was allocated from the Singapore headquarters was $743,000, $3,000,000 and $1,353,000 for the years ended December 31, 2001, 2000 and 1999 respectively. In addition, of the $1,894,000 restructuring expenses incurred during 2001, $1,598,000 was allocated from the Singapore headquarters.
The preparation of financial statements in accordance with generally accepted accounting principles requires that management make estimates and assumptions affecting the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The financial statements do not purport to be indicative of either our future financial position or results of operations had Golar been a stand-alone entity for the periods presented.
Revenue and expense recognition
Revenues and expenses are recognized on the accrual basis. Revenues generated from time charter hire are recorded over the term of the charter as service is provided. Revenues generated from management fees are also recorded ratably over the term of the contract as service is provided. Revenues include minimum lease payments under time charters as well as the reimbursement of certain vessel operating costs.
Vessel operating costs include an allocation of administrative overheads that relate to vessel operating activity which includes certain technical and operational support staff for the vessels, information technology, legal, accounting, and corporate costs. These costs are allocated based on internal cost studies, which management believes are reasonable estimates. For the years ended December 31, 2001, 2000 and 1999, $2,033,000, $1,909,000 and $1,591,000 have been allocated to vessel operating costs, respectively.
Cash and cash equivalents
The Company considers all demand and time deposits and highly liquid investments with original maturities of three months or less to be equivalent to cash.
Short term investments
The Company considers all short-term investments as held to maturity in accordance with Statement of Financial Accounting Standards No. 115 "Accounting for Certain Investments in Debt and Equity Securities". These investments are carried at amortized cost. The Company places its short-term investments primarily in fixed term deposits with high credit quality financial institutions.
Inventories
Inventories, which are comprised principally of lubricating oils and ship spares, are stated at the lower of cost or market value. Cost is determined on a first-in, first-out basis.
Newbuildings
The carrying value of newbuildings represents the accumulated costs to the balance sheet date, which the Company has had to pay by way of purchase installments, and other capital expenditures together with capitalized loan interest. No charge for depreciation is made until the vessel is delivered.
Vessels and equipment
Vessels and equipment are stated at cost less accumulated depreciation. The cost of vessels and equipment less the estimated residual value is depreciated on a straight-line basis over the assets' remaining useful economic lives.
Included in vessels and equipment is drydocking expenditure which is capitalized when incurred and amortized over the period until the next anticipated drydocking, which is generally between two and five years. For vessels which are newly built or acquired and for the amounts reflected as part of the push down of the World Shipholding basis, the consideration paid is allocated between drydocking and other vessels costs to reflect the different useful lives of the component assets.
Useful lives applied in depreciation are as follows:
Vessels 40 years Deferred drydocking expenditure two to five years Office equipment and fittings three to six years |
Impairment of long-lived assets
Long-lived assets that are held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In addition, long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less estimated costs to sell.
Deferred charges
Costs associated with long term financing, including debt arrangement fees, are deferred and amortized over the term of the relevant loan. Amortization of deferred loan costs is included in Other Financial Items.
Goodwill
Goodwill represents the excess of the purchase price over the fair value of assets acquired in business acquisitions accounted for under the purchase method. Goodwill is presented net of accumulated amortization and is being amortized on a straight-line basis over a period of approximately 20 years.
Derivatives
The Company enters into interest rate swap transactions from time to time to hedge a portion of its exposure to floating interest rates. These transactions involve the conversion of floating rates into fixed rates over the life of the transactions without an exchange of underlying principal. Hedge accounting is used to account for these swaps provided certain hedging criteria are met. As of January 1, 2001, the Company adopted Statement of Financial Accounting Standard ("SFAS") No. 133, "Accounting for Derivatives and Hedging Activities" ("SFAS 133"). Certain hedge relationships met the hedge criteria prior to SFAS 133, but do not meet the criteria for hedge accounting under SFAS 133. Upon initial adoption, the company recognized the fair value of its derivatives as liabilities of $2.8 million and a charge of $2.8 million was made to other comprehensive income.
Pre-SFAS 133
Hedge accounting is applied where the derivative reduces the risk of the underlying hedged item and is designated at inception as a hedge with respect to the hedged item. Additionally, the derivative must result in payoffs that are expected to be inversely correlated to those of the hedged item. Derivatives are measured for effectiveness both at inception and on an ongoing basis. When hedge accounting is applied, the differential between the derivative and the underlying hedged item is accrued as interest rates change and recognized as an adjustment to interest expense. The related amount receivable from or payable to counterparties is included in accrued interest income or expense, respectively. Prior to January 1, 2001, the fair values of the interest rate swaps are not recognized in the financial statements.
If a derivative ceases to meet the criteria for hedge accounting, any subsequent gains and losses are currently recognized in income. If a hedging instrument is sold or terminated prior to maturity, gains and losses continue to be deferred until the hedged instrument is recognized in income. Accordingly, should a swap be terminated while the underlying debt remains outstanding, the gain or loss is adjusted to the basis of the underlying debt and amortized over its remaining useful life.
Post-SFAS 133
SFAS 133, as amended by SFAS 137 "Accounting for Derivative Instruments and Hedging Activities-Deferral of the Effective Date of FASB Statement No.133" and SFAS 138 "Accounting for Certain Derivative Instruments and Certain Hedging Activities an amendment of FASB Statement No. 133", requires an entity to recognize all derivatives as either assets or liabilities on the balance sheet and measure these instruments at fair value. Changes in the fair value of derivatives are recorded each period in current earnings or other comprehensive income, depending on whether a derivative is designated as part of a hedge transaction and, if it is, the type of hedge transaction. In order to qualify for hedge accounting under SFAS 133, certain criteria and detailed documentation requirements must be met.
The Company does not enter into derivative contracts for speculative or trading purposes.
Foreign currencies
The Company's functional currency is the U.S. dollar as all revenues are received in U.S. dollars and a majority of the Company's expenditures are made in U.S. dollars. The Company reports in U.S. dollars.
Transactions in foreign currencies during the year are translated into U.S. dollars at the rates of exchange in effect at the date of the transaction. Foreign currency monetary assets and liabilities are translated using rates of exchange at the balance sheet date. Foreign currency non-monetary assets and liabilities are translated using historical rates of exchange. Foreign currency transaction gains or losses are included in the consolidated statements of operations.
Stock-based compensation
Under Statement of Financial Accounting Standards No. 123 ("SFAS 123"), "Accounting for Stock-Based Compensation", disclosures of stock-based compensation arrangements with employees are required and companies are encouraged, but not required, to record compensation costs associated with employee stock option awards, based on estimated fair values at the grant dates. The Company has chosen to account for stock-based compensation using the intrinsic value method prescribed in Accounting Principles Board Opinion No. 25 ("APB 25") "Accounting for Stock Issued to Employees" and has disclosed the required pro forma effect on net income and earning per share as if the fair value method of accounting as prescribed in SFAS 123 had been applied (see Note 24).
Earnings (loss) per share
Basic earnings per share ("EPS") is computed based on the income (loss) available to common stockholders and the weighted average number of shares outstanding for basic EPS. Diluted EPS includes the effect of the assumed conversion of potentially dilutive instruments (see Note 9).
3. SUBSIDIARIES AND INVESTMENTS
Name Country of Principal Activities Percentage held
Incorporation as of December 31, 2001
Golar Gas Holding Company Inc. Liberia Holding 100
Golar Maritime (Asia) Inc. Liberia Holding 100
Gotaas-Larsen Shipping Corporation Liberia Holding 100
Oxbow Holdings Inc. British Virgin Holding 100
Islands
Golar Gas Cryogenics Inc. Liberia Vessel ownership 100
Golar Gimi Inc. Liberia Vessel ownership 100
Golar Hilli Inc. Liberia Vessel ownership 100
Golar Khannur Inc. Liberia Vessel ownership 100
Golar Freeze Inc. Liberia Vessel ownership 100
Faraway Maritime Shipping Inc. Liberia Vessel ownership 60
Golar LNG 2215 Corporation Liberia Vessel ownership 100
Golar LNG 1444 Corporation Liberia Vessel ownership 100
Golar LNG 1460 Corporation Liberia Vessel ownership 100
Golar LNG 2220 Corporation Liberia Vessel ownership 100
Golar International Ltd. Liberia Vessel management 100
Golar Maritime Services Inc. Philippines Vessel management 100
Golar Maritime Services, S.A. Spain Vessel management 100
Gotaas-Larsen International Ltd. Liberia Vessel management 100
Golar Management Limited Bermuda Management 100
Golar Maritime Limited Bermuda Management 100
Aurora Management Inc. Liberia Management 90
|
4. ADOPTION OF NEW ACCOUNTING STANDARDS
In June 2001, the FASB approved SFAS No. 141, "Accounting for Business Combinations" ("SFAS 141"), which requires the application of the purchase method including the identification of the acquiring enterprise for each transaction. SFAS No. 141 applies to all business combinations initiated after June 30, 2001 and all business combinations accounted for by the purchase method that are completed after June 30, 2001. The adoption of SFAS No. 141 by the Company did not have any impact on the Company's consolidated results of operations, financial position, or liquidity.
In June 2001, the FASB approved SFAS No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142"). SFAS No. 142 applies to all acquired intangible assets whether acquired singly, as part of a group, or in a business combination. SFAS No. 142 will supersede APB Opinion No. 17, "Intangible Assets". This statement is effective for fiscal years beginning after December 15, 2001. The adoption of SFAS No. 142 by the Company did not have any impact on the Company's consolidated results of operations, financial position, or liquidity.
In August 2001, the FASB approved SFAS No. 143, "Accounting for Asset Retirement Obligations" ("SFAS 143"). SFAS No. 143 requires the fair value of a legal liability related to an asset retirement be recognized in the period in which it is incurred. The associated asset retirement costs must be capitalized as part of the carrying amount of the related long-lived asset and subsequently amortized to expense. Subsequent changes in the liability will result from the passage of time (interest cost) and revision to cash flow estimates. This statement is effective for fiscal years beginning after June 15, 2002. The effect on the Company of adopting FAS 143 is under evaluation.
In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS 144"). The objectives of SFAS 144 are to address significant issues relating to the implementation of FASB Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of", and to develop a single accounting model based on the framework established in SFAS 121, for long-lived assets to be disposed of by sale. The standard requires that long-lived assets that are to be disposed of by sale be measured at the lower of book value or fair value less cost to sell. Additionally, the standard expands the scope of discontinued operations to include all components of an entity with operations that can be distinguished from the rest of the entity and will be eliminated from the ongoing operations of the entity in a disposal transaction. This statement is effective for fiscal years beginning after December 15, 2001, and generally, its provisions are to be applied prospectively. The Company is currently evaluating the impact of this statement on its results of operations, financial position, and liquidity. However, management does not expect that the adoption of the SFAS No. 144 will have a material effect on the Company's results of operations, financial position or liquidity.
5. SEGMENTAL INFORMATION
The Company has not presented segmental information as it considers it operates in one reportable segment, the LNG carrier market. The Company's fleet is all operating under time charters, five of which are long-term, and these charters are with two charterers, British Gas and Pertamina. In time charters, the charterer, not the Company, controls the choice of which routes the Company's vessel will serve. These routes can be worldwide. Accordingly, the Company's management, including the chief operating decision makers, does not evaluate the Company's performance either according to customer or geographical region.
6. RESTRUCTURING EXPENSES
Restructuring expenses of $1.9 million in the year ended December 31, 2001 consist of employment severance costs for management and administrative employees in London and Singapore incurred in connection with the restructuring of Osprey's operations following the acquisition by World Shipholding which was completed prior to May 31, 2001. These have been allocated to the Company based on the number of vessels in Ospreys' fleet including its tanker operations. The total number of employees terminated, from which the cost has been allocated, was 17. The cost of $1.9 million represents the actual cost and employee numbers are actual numbers terminated, there being no provision brought forward or carried forward.
7. OTHER FINANCIAL ITEMS
(in thousands of $) 2001 2000 1999
Amortization of deferred financing costs 2,097 1,359 1,742
Financing arrangement fees and other costs 1,857 983 3,042
Market valuation adjustment for interest
rate derivatives 8,221 - -
Foreign exchange loss 188 63 119
-------------------------------------------- ------- ------- -------
12,363 2,405 4,903
============================================ ======= ======= =======
8. TAXATION
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Bermuda
Under current Bermuda law, the Company is not required to pay taxes in Bermuda on either income or capital gains. The Company has received written assurance from the Minister of Finance in Bermuda that, in the event of any such taxes being imposed, the Company will be exempted from taxation until the year 2016.
United States
Pursuant to the Internal Revenue Code of the United States (the "Code"), U.S. source income from the international operations of ships is generally exempt from U.S. tax if the Company operating the ships meets certain requirements. Among other things, in order to qualify for this exemption, the company operating the ships must be incorporated in a country which grants an equivalent exemption from income taxes to U.S. citizens and U.S. corporations and must be more than 50 per cent owned by individuals who are residents, as defined, in such country or another foreign country that grants an equivalent exemption to U.S. citizens and U.S. corporations. The management of the Company believes that by virtue of the above provisions, it was not subject to tax on its U.S. source income.
A reconciliation between the income tax expense resulting from applying the U.S. Federal statutory income tax rate and the reported income tax expense has not been presented herein as it would not provide additional useful information to users of the financial statements as the Company's net income is subject to neither Bermuda nor U.S. tax.
Other Jurisdictions
Current taxation relates to the taxation of a United Kingdom branch of a subsidiary and tax on interest income received by certain other subsidiaries of the Company. The Company records deferred income taxes to reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company recorded deferred tax assets (liabilities) of $154,000 and $163,000 at December 31, 2001 and 2000, respectively. These assets and liabilities relate to differences for depreciation and pension liabilities.
9. EARNINGS (LOSS) PER SHARE
The Company's capital structure was determined with the capital reorganization that took place on May 31, 2001. For the periods prior to May 31, 2001, the preparation of the carved out combined financial statements did not result in the recording of any specific share capital. To provide a measurement of EPS, the computation of basic EPS is based on the shares issued in connection with the formation of the Company and the subsequent placement of 56 million shares as described in Note 1. The computation of diluted EPS assumes the foregoing and the conversion of potentially dilutive instruments. There were no dilutive securities outstanding during the years ended December 31, 2000 and 1999.
The components of the numerator for the calculation of basic and diluted EPS are as follows:
(in thousands of $) 2001 2000 1999 Net income (loss) available to stockholders 4,366 (504) (1,857) =============================================== ======= ======= ======= |
The components of the denominator for the calculation of basic EPS and diluted EPS are as follows:
(in thousands ) 2001 2000 1999
Basic earnings per share:
Weighted average number of common shares 56,012 56,012 56,012
outstanding
=============================================== ======= ======= =======
Diluted earnings per share:
Weighted average number of common shares 56,012 56,012 56,012
outstanding
Dilutive share options 7 - -
---------------------------------------------- ------ ------- -------
56,019 56,012 56,012
=============================================== ======= ======= =======
10. LEASES
|
Rental income
The minimum future revenues to be received on time charters as of December 31, 2001 were as follows:
Year ending December 31, Total (in thousands of $) 2002 122,177 2003 121,098 2004 122,339 2005 123,307 2006 120,344 2007 and later 950,590 ---------------------------------------------------------------------------- Total 1,559,855 ============================================================================ |
The long-term contracts for two of the Company's vessels are time charters but the economic terms are analogous to bareboat contracts, under which the vessels are paid a fixed rate of hire and the vessel operating costs are borne by the charterer on a costs pass through basis. The pass through of operating costs is not reflected in the minimum lease revenues set out above.
The cost and accumulated depreciation of the vessels leased to a third party at December 31, 2001 were approximately $735.5 million and $29.3 million respectively and at December 31, 2000 were approximately $867.6 million and $104.4 million respectively.
Rental expense
The Company is committed to make rental payments under operating leases for office premises. The future minimum rental payments under the Company's non-cancelable operating leases are as follows:
Year ending December 31, (in thousands of $) 2002 946 2003 798 2004 658 2005 - 2006 - 2007 and later - ------------------------------------------------------------------------- Total minimum lease payments 2,402 ========================================================================= |
Total minimum lease payments have been reduced by minimum sublease rentals under non-cancelable leases of approximately $1,425,000 for each of the years ended December 31, 2002 and 2003, and $1,306,000 for the year ended December 31, 2004.This relates to former office space that the Company no longer occupies. At the time the Company entered into this sublease arrangement, a provision was recognized for the difference between the Company's future obligation under the lease agreement and its anticipated sublease income over the remaining term of the lease. This provision is recognized as a reduction to rental expense over the life of the lease agreement and eliminates the Company's ongoing rental expense for these facilities. The provision is recorded in other current liabilities and other long-term liabilities. The provision balance at December 31, 2001 and 2000 was $2,194,000 and $2,644,000, respectively, of which $885,000 and $626,000 is shown in other current liabilities at December 31, 2001 and 2000, respectively. Total rental expense for operating leases was $2,101,000, $1,642,000 and $1,791,000 for the years ended December 31, 2001, 2000 and 1999, respectively and total sublease income was approximately $1,158,000, $839,000 and $852,000 for the years ended December 31, 2001, 2000 and 1999, respectively. The amortization of the provision described above was $450,000, $344,500 and $367,000 for the years ended December 31, 2001, 2000 and 1999, respectively.
11. TRADE ACCOUNTS RECEIVABLE
Trade accounts receivable are presented net of allowances for doubtful accounts amounting to $nil and $211,000, as of December 31, 2001 and December 31, 2000, respectively.
12. OTHER RECEIVABLES, PREPAID EXPENSES AND ACCRUED INCOME
(in thousands of $) 2001 2000
Other receivables 2,023 2,314
Prepaid expenses 312 116
Accrued interest income 267 873
-------------------------------------------------------------------------
2,602 3,303
=========================================================================
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13. DUE FROM RELATED COMPANIES
Amounts due from related companies as at December 31, 2001 of $261,000 represents fees due from Osprey for management of two VLCCs and seconded staff costs (Note 26).
Amounts due from related companies as at December 31, 2000 represent inter-company balances with Osprey and the effect of the carve-out of the LNG operations from the Osprey group. Included in this balance is an amount of $299.4 million relating to the Gotaas Larsen loan facility in the Osprey group as discussed in Note 21. The balance of $755.6 million at December 31, 2000 was reduced to $676.5 million in May 2001 primarily by the repayment of $78.8 million of the Gotaas Larsen loan facility. As part of the acquisition of the LNG interests by the Company in May 2001, the balance was eliminated as follows:
(in thousands of $)
Forgiveness of intercompany balances, dividend out
and return of capital 450,298
Elimination of carve out adjustments 5,592
---------------------------------------------------------------------------
455,890
---------------------------------------------------------------------------
Repayment of GL facility (Note 21) 220,635
---------------------------------------------------------------------------
676,525
===========================================================================
14. NEWBUILDINGS
(in thousands of $) 2001 2000
Purchase price installments at end of period 129,864 -
Interest and other costs capitalized at end of period 2,992 -
-------------------------------------------------------------------------
132,856 -
=========================================================================
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In January 2000, the newbuilding Golar Mazo was delivered to the company and was transferred from Newbuildings to Vessels and equipment.
The amount of interest capitalized in relation to newbuildings was $2,637,000 and $196,000 for the years ended December 31, 2001 and 2000, respectively.
The Company has contracts to build four new LNG carriers at a total cost of $658.9 million, excluding financing costs. As at December 31, 2001, the installments for these vessels were due to be paid as follows:
(in millions of $)
Paid in 12 months to 31 December 2001 129.7
Payable in 12 months to 31 December 2002 170.8
Payable in 12 months to 31 December 2003 230.8
Payable in 12 months to 31 December 2004 127.6
-----
658.9
=====
|
At December 31, 2001, the Company did not have facilities in place to finance its entire newbuilding program. As of October 2002 the Company had total loan facilities of $304 million, to finance its newbuilding program. These consist of a $180 million facility from Lloyds TSB Bank Plc ($162 million is in respect of the contract cost and the balance is for associated finance costs and other sundry items) of which $129.6 million has been drawn down to finance newbuilding installments, $64.0 million from a related party, Greenwich, of which $49.0 million has been drawn down as discussed in Note 28 and a $60 million facility from certain of the Golar LNG facility Lenders. The Company will then require additional financing of approximately $316 million to fund all of its newbuilding construction commitments.
In August 2002 the Company negotiated revised payment terms for newbuilding installments. This has resulted in the installments due in the years ended December 31, 2002, 2003 and 2004 being changed to $154.6 million, $198.4 million and $176.1 million respectively.
The commitments up to August 2003 will be funded from existing facilities and cash generated from operations. Additional facilities are required to meet progress payments from August 2003 and further installments arising periodically thereafter until completion of the program in 2004.
15. VESSELS AND EQUIPMENT, NET
(in thousands of $) 2001 2000 Cost 671,697 871,597 Accumulated depreciation (30,326) (106,038) -------------------------------------------------------------------------- Net book value 641,371 765,559 ========================================================================== |
Included in the above amounts as at December 31, 2001 and 2000 is equipment with a net book value of $1,337,000 and $2,404,000, respectively.
Depreciation expense for the years ended December 31, 2001, 2000 and 1999 was $31,614,000, $35,991,000 and $29,464,000 respectively. Depreciation expense is shown net of amounts allocated to other Osprey entities totaling $367,000, $702,000 and $603,000 for the years ended December 31, 2001, 2000 and 1999, respectively.
16. DEFERRED CHARGES
Deferred charges represent financing costs, principally bank fees that are capitalized and amortized to other financial items over the life of the debt instrument. The deferred charges are comprised of the following amounts:
(in thousands of $) 2001 2000
Debt arrangement fees 4,647 4,783
Accumulated amortization (470) (1,927)
--------------------------------------------------------------------------
4,177 2,856
==========================================================================
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17. GOODWILL
Goodwill is stated net of related accumulated amortization as follows:
(in thousands of $) 2001 2000
Goodwill - 9,936
Accumulated amortization - (497)
--------------------------------------------------------------------------
- 9,439
==========================================================================
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On March 24, 1999, the Company increased its ownership in Faraway Maritime Shipping, Inc ("Faraway") from 40 per cent to 60 per cent for cash consideration of $14.2 million, net of cash acquired of $0.4 million. At that time, Faraway had a newbuilding contract for the construction of the Golar Mazo, a LNG carrier. The acquisition has been accounted for by the purchase method of accounting. Accordingly, goodwill has been recognized for the amount of the excess of the purchase price over the fair value of the net assets acquired and is amortized on a straight-line basis over 20 years. The amortization of goodwill commenced in January 2000 following the delivery of the Golar Mazo. At the date of acquisition Faraway had no other business other than this newbuilding contract. Accordingly in 1999 and earlier years, Faraway reported no revenue, costs or net income in its financial statements.
The goodwill was assigned no value from January 31, 2001 following the acquisition of Osprey by World Shipholding and this has also been recorded in the application of predecessor basis in the books of the Company.
18. ACCRUED EXPENSES
(in thousands of $) 2001 2000
Vessel operating and drydocking expenses 3,160 3,343
Administrative expenses 2,787 892
Interest expense 1,426 173
Provision for financing arrangement fees and other costs 115 2,622
Provision for tax 196 251
----------------------------------------------------------------------------
7,684 7,281
============================================================================
|
Accrued administrative expenses as at December 31, 2001 include $2.4 million costs associated with the indefinite postponement of a public offering of the company's shares in the United States of America.
19. OTHER CURRENT LIABILITIES
(in thousands of $) 2001 2000
Deferred drydocking and operating cost revenue 1,200 1,777
Revenue received in advance 5,964 -
Marked to market interest rate swaps valuation 10,838 -
Other provisions 885 626
----------------------------------------------------------------------------
18,887 2,403
============================================================================
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20. PENSIONS
The Company has two pension plans covering substantially all of the employees of the Company and Osprey. Benefits are based on the employee's years of service and compensation. Net periodic pension plan costs are determined using the Projected Unit Credit Cost method. The Company's plans are funded by the Company in conformity with the funding requirements of the applicable government regulations and actuarial recommendations. Plan assets consist of both fixed income and equity funds managed by professional fund managers.
The components of net periodic benefit costs are as follows:
(in thousands of $) 2001 2000 1999 Service cost 1,407 1,161 1,398 Interest cost 3,346 3,066 2,695 Expected return on plan assets (2,620) (3,021) (2,899) Amortization of prior service cost - - - Recognized actuarial loss 615 (18) 67 -------------------------------------------------------------------------- Net periodic benefit cost 2,748 1,188 1,261 ========================================================================== |
The net periodic benefit costs include amounts relating to the employees of Osprey, a related party. The Company continues to administer the plans on behalf of Osprey and has charged a management fee to Osprey that includes a proportionate cost of plan contributions as well as certain administration costs. As such, in the preparation of historical financial statements, the Company has reduced administration expenses by $473,000, for the year ended December 31, 2001, $951,000 for the year ended December 31, 2000 and $520,000 for the year ended December 31, 1999, to reflect administration expenses as if this management agreement had existed for all periods presented.
The change in benefit obligation and plan assets and reconciliation of funded status as of December 31 are as follows:
(in thousands of $) 2001 2000
Reconciliation of benefit obligation:
Benefit obligation at January 1 45,836 41,423
Service cost 1,407 1,161
Interest cost 3,346 3,066
Participant contributions - -
Actuarial (gain)/loss 1,514 2,833
Foreign currency exchange rate changes (66) -
Benefit payments (2,461) (2,647)
----------------------------------------------------------------------------
Benefit obligation at December 31 49,576 45,836
============================================================================
Reconciliation of fair value of plan assets:
Fair value of plan assets at January 1 33,309 38,921
Actual return on plan assets (3,903) (4,515)
Employer contributions 1,453 1,550
Participant contributions - -
Foreign currency exchange rate changes (72) -
Benefit payments (2,461) (2,647)
---------------------------------------------------------------------------
Fair value of plan assets at December 31 28,326 33,309
===========================================================================
Excess (deficit) of plan assets (21,250) (12,527)
over projected benefit obligation (1)
Unrecognized prior service cost - -
Unrecognized actuarial loss (gain) 7,479 10,019
---------------------------------------------------------------------------
Net amount recognized (13,771) (2,508)
===========================================================================
|
(1) The Company's plans are composed of two plans that are both underfunded at December 31, 2001 and one plan that is overfunded and one plan that is underfunded at December 31, 2000.
The details of these plans are as follows:
December 31, 2001 December 31, 2000
UK Scheme Marine scheme UK scheme Marine scheme
(in thousands of $)
Accumulated benefit obligation (6,318) (37,255) (5,489) (34,152)
----------------------------------------------------------------------------------------
Projected benefit obligation (6,539) (43,037) (6,060) (39,776)
Fair value of plan assets 5,569 22,757 6,701 26,608
----------------------------------------------------------------------------------------
Funded status (970) (20,280) 641 (13,168)
========================================================================================
|
The amounts recognized in the Company's balance sheet as of December 31 were as follows:
(in thousands of $) 2001 2000 Prepaid benefit cost - 1,438 Accrued benefit liability (15,243) (7,544) Minimum pension liability 1,472 3,598 --------------------------------------------------------------------------- Net amount recognized (13,771) (2,508) =========================================================================== |
The weighted average assumptions used in accounting for the Company's plans at December 31 are as follows:
2001 2000
Discount rate 7.1% 7.3%
Expected return on plan assets 8.0% 8.0%
Rate of compensation increase 4.0% 4.0%
21. DEBT
(in thousands of $) 2001 2000
Total long-term debt due to third parties 524,329 214,500
Total long-term debt due to related parties - 299,400
Total short-term debt due to related parties 85,278 -
----------------------------------------------------------------------------
Total debt 609,607 513,900
Less: current portion of long-term debt
due to third parties (41,053) (10,171)
Less: current portion long-term debt and
short-term debt due to related parties (85,278) (12,000)
----------------------------------------------------------------------------
483,276 491,729
============================================================================
|
The outstanding debt as of December 31, 2001 is repayable as follows:
Year ending December 31, (in thousands of $) 2002 126,332 2003 42,014 2004 43,056 2005 46,689 2006 55,421 2007 and later 296,095 ---------------------------------------------------------------------------- Total 609,607 ============================================================================ |
The weighted average interest rate for debt, which is denominated in US dollars, as of December 31, 2001 and 2000 was 6.3 per cent and 8.6 per cent, respectively. All of the Company's debt is US Dollar denominated floating rate debt.
The Company refinanced its debt facility covering five of its vessels in May 2001 as discussed further below and thereby extended its loan repayment profile and eliminated the balloon payment that would have been due in 2002.
At December 31, 2001, the debt of the Company comprised the following, details of which are set out below:
(in thousands of $)
Greenwich loans 85,278
Mazo facility 204,329
Golar LNG facility 320,000
---------------------------------------------------------------------------
609,607
===========================================================================
|
For the purposes of the carved out combined financial statements for the years ended December 31, 2000 and 1999, two tranches of debt have been included.
1. In connection with the acquisition of the LNG operations of Gotaas Larsen by Osprey in 1997, Osprey entered into a secured loan facility (the "GL Facility") for an amount of $352.4 million. The GL Facility provided for floating rate interest of LIBOR plus 2.5 per cent to 4.0 per cent. The loan was initially for 22 months, repayable in quarterly installments. The balance of this loan was extended for a three years period until the third quarter of 2002. This loan has been carved out and is reflected in the balance sheet as short-term and long-term debt due to related parties and offset within equity by an amount due from related parties. This loan was retired by Osprey in May 2001, as discussed below.
2. On November 26, 1997 Osprey entered into a secured loan facility (the "Mazo facility") with a banking consortium for an amount of $214.5 million. This facility bears floating rate interest of LIBOR plus 0.865 per cent. The repayment terms are six monthly commencing on June 28, 2001. The long-term debt is secured by a mortgage on the vessel Golar Mazo.
In connection with the Mazo facility, Osprey also entered into a collateral agreement with the same banking consortium and a bank Trust Company. This agreement requires that certain cash balances, representing interest and principal repayments for defined future periods, be held by the Trust Company during the period of the loan. These balances are referred to in these financial statements as restricted cash.
In May 2001 the GL Facility was retired by Osprey and related party balances were cancelled and the Golar group entered into a secured loan facility (the "Golar LNG Facility") with a banking consortium for an amount of US$325 million. This six year facility bears floating rate interest of LIBOR plus 1.5 per cent. The loan is repayable in 22 quarterly installments and a final balloon payment of $147.5 million. The long-term debt is secured by a mortgage on the vessels Golar Spirit, Khannur, Gimi, Hilli and Golar Freeze. In November 2001, an amendment to the Golar LNG Facility was signed which accelerates the repayment terms such that the final balloon payment reduces to $147.5 million. The repayments are increased by $10 million in 2002 and $7.5 million in 2003; in 2004 and 2005 they are unchanged and they decrease by $2.5 million in 2006 and 2007. In 2007 the final repayment is reduced by $12.5 million to $147.5 million.
In August 2001, Golar obtained a loan of $32.6 million from Greenwich, in order to finance the first installment due on newbuilding hull number 2215. The loan is for a period of 360 days and bears floating rate interest of LIBOR plus 2.5 per cent. A subsidiary of Golar guaranteed a loan of $32.6 million made to Greenwich by Nordea and Den norske Bank and entered into an assignment and security agreement in respect of its shipbuilding contract with Den norske Bank as security agent. No consideration has been paid or will be paid by Greenwich for the provision of the guarantee.
In August 2001, Golar obtained a loan of $32.7 million from Greenwich, in order to finance the first installments due on newbuilding hull numbers 1460 and 2220. The loan is for a period of one year and bears floating rate interest of LIBOR plus 2.5 per cent. In connection with this, two subsidiaries of Golar have guaranteed a loan of $32.7 million made to Greenwich by Nordea and Den norske Bank and they have both entered into an assignment and security agreement in respect of their shipbuilding contracts with Den norske Bank as security agent. No consideration has been paid by Greenwich for the provision of the guarantee.
In September 2001, Golar obtained an additional $20 million in loan finance from Greenwich, by way of an addendum to the loan of $32.6 million in relation to hull 2215, in order to finance the second instalment on this vessel. The loan is for a period of six months and bears floating rate interest of LIBOR plus 2.5 per cent.
The rate of interest that Greenwich pays to the banks providing the above facilities is LIBOR plus 1.5 per cent.
In December 2001 the Company signed a loan agreement with Lloyds TSB bank Plc for the purpose of financing part of the building of newbuilding hull number 2215 for an amount up to $180 million to include ship yard costs, capitalized interest and building supervision charges.
Certain of the Company's debt is collateralized by ship mortgages and, in the case of some debt, pledges of shares by each guarantor subsidiary. The existing financing agreements impose operation and financing restrictions which may significantly limit or prohibit, among other things, the Company's ability to incur additional indebtedness, create liens, sell capital shares of subsidiaries, make certain investments, engage in mergers and acquisitions, purchase and sell vessels, enter into time or consecutive voyage charters or pay dividends without the consent of our lenders. In addition, lenders may accelerate the maturity of indebtedness under financing agreements and foreclose upon the collateral securing the indebtedness upon the occurrence of certain events of default, including a failure to comply with any of the covenants contained in the financing agreements. Various debt agreements of the Company contain certain covenants, which require compliance with certain financial ratios. Such ratios include equity ratio covenants and minimum free cash restrictions. As of December 31, 2001 and 2000 the Company complied with the debt covenants of its various debt agreements.
22. OTHER LONG-TERM LIABILITIES
(in thousands of $) 2001 2000
Pension obligations 15,243 7,544
Other provisions 1,309 2,018
--------------------------------------------------------------------------
16,552 9,562
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====================================================================+=====
23. PUSH DOWN ACCOUNTING
The effect of push down accounting in January 2001 was to reduce the value of assets and liabilities recorded by Golar to reflect the change in basis realized as a result of World Shipholding's acquisition of Osprey as follows:
(in thousands of $)
Vessels and equipment, net 109,832
Deferred charges 1,702
Goodwill 9,439
Pension obligations 9,999
FAS 133 transition obligation 2,786
----------------------------------------------------------------------------
133,758
============================================================================
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24. SHARE CAPITAL AND SHARE OPTIONS
The Company was incorporated on May 10, 2001 and 12,000 common shares of $1.00 par value each were issued to the initial shareholder. In May 2001, the Company issued 56,000,000 common shares at a price of $5.00 per share in a placement in Norway subscribed to by approximately 130 financial investors. These shares were issued to finance the acquisition of the LNG interest of Osprey as described in Note 1.
At December 31, 2001, authorized and issued share capital is as follows:
Authorized share capital:
(in thousands of $, except share numbers)
100,000,000 common shares of $1.00 each 100,000 ============================================================================ Issued share capital: (in thousands of $, except share numbers) 56,012,000 common shares of $1.00 each 56,012 ============================================================================ |
In July 2001, the Board of the Company approved the grant of options to eligible employees to acquire an aggregate amount of up to 2,000,000 shares in the company. In July 2001, the Board of Golar approved the grant of options to acquire 400,000 shares at a subscription price of $5.75 to certain directors and officers of the Company. These options vest on July 18, 2002 and are exercisable for a maximum period of nine years following the first anniversary date of the grant. The weighted average fair value of the options granted in the year ended December 31, 2001 was $1.785. The fair value of the option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions used for the grant in the year ended December 31, 2001: risk free interest rate of 4.39 per cent; expected life of five years, expected volatility of 20 per cent, expected dividend yield of zero per cent.
Compensation cost of $47,300 has been recognized in the year ended December 31, 2001 in connection with the grant of the 400,000 options. This amount represents the difference between the subscription price of $5.75 and the market price of $6.01 (the equivalent to NOK56 at the exchange rate of NOK9.3153 to $1.00) on the date of grant, recognized over the vesting period of the options.
Had the compensation costs for the plan been determined consistent with the fair value method recommended in SFAS 123, the Company's net income and earnings per share would have been reduced to the following pro forma amounts:
(in thousands of $, except per share data) 2001
Net income
As reported 4,366
Pro-forma 4,089
Basic and diluted earnings per share
As reported $0.08
Pro-forma $0.07
|
In February 2002, the Board of Golar approved an employee share option scheme. Under the terms of the scheme, options may be granted to any director or eligible employee of the Company or its subsidiaries. Options are exercisable for a maximum period of nine years following the first anniversary date of the grant. The exercise price for the options may not be less than the average of the fair market value of the underlying shares for the three trading days before the date of grant. The number of shares granted under the plans may not in any ten year period exceed seven per cent of the issued share capital of the Company. No consideration is payable for the grant of an option.
25. FINANCIAL INSTRUMENTS
Interest rate risk management
In certain situations, the Company may enter into financial instruments to reduce the risk associated with fluctuations in interest rates. The Company has a portfolio of swaps that convert floating rate interest obligations to fixed rates, which from an economic perspective hedge the interest rate exposure. The Company does not hold or issue instruments for speculative or trading purposes. The counterparties to such contracts are Credit Lyonnais, Bank of Taiwan, Credit Agricole Indosuez, The Fuji Bank, Limited, and the Industrial Bank of Japan, Limited. Credit risk exists to the extent that the counterparties are unable to perform under the contracts.
Prior to the adoption of SFAS 133, all interest rate derivatives were designated and effective as hedges of the Company's exposure to interest rate fluctuations. After the adoption of SFAS 133 on January 1, 2001, hedge accounting has not been applied. As a result of the adoption of SFAS 133, the Company recorded a transition adjustment of $2.8 million on January 1, 2001. For the purpose of the carved-out combined financial statements for the years ended December 31, 2000 and 1999, the portfolio of swaps has been allocated based on the proportion of hedged loans that have been carved out and pushed down from Osprey.
The Company manages its debt portfolio with interest rate swap agreements in U.S. dollars to achieve an overall desired position of fixed and floating interest rates. The Company has entered into the following interest rate swap transactions involving the payment of fixed rates in exchange for LIBOR:
Notional Amount
Instrument December 31, December 31, Maturity Fixed Interest
2001 2000 Dates Rates
(in thousands of $)
Interest rate swaps:
Receiving floating, pay fixed 194,829 350,793 2001 - 2009 5.47% to
6.52%
Interest rate options:
Caps - 29,159 2001 8.00%
|
At December 31, 2001, the notional principal amount of the debt outstanding subject to such swap agreements was $195.0 million (2000 - $380.0 million).
Foreign currency risk
The majority of the vessels' gross earnings are receivable in U.S. dollars. The majority of the Company's transactions, assets and liabilities are denominated in U.S. dollars, the functional currency of the Company. There is a risk that currency fluctuations will have a negative effect on the value of the Company's cash-flows. The Company has not entered into derivative contracts to reduce its exposure to transaction risk. Accordingly, such risk may have an adverse effect on the Company's financial condition and results of operations.
Fair values
The carrying value and estimated fair value of the Company's financial instruments at December 31, 2001 and 2000 are as follows:
2001 2001 2000 2000
(in thousands of $) Carrying Fair Value Carrying Fair Value
Value Value
Non-Derivatives:
Cash and cash equivalents 57,569 57,569 5,741 5,741
Restricted cash and short-term 14,163 14,163 13,091 13,091
investments
Short-term investments - - 14,231 14,231
Long-term debt 524,329 524,329 513,900 513,900
Short-term debt 85,278 85,278 - -
Derivatives:
Interest rate swap
Asset - - - 162
Liability (10,838) (10,838) - (4,810)
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The carrying value of cash and cash equivalents, which are highly liquid, is a reasonable estimate of fair value.
The estimated fair value for restricted cash and short-term investments is considered to be equal to the carrying value since they are placed for periods of less than six months.
The estimated fair value for long-term debt is considered to be equal to the carrying value since it bears variable interest rates which are reset on a quarterly or six monthly basis.
The fair value of interest rate swaps is estimated by obtaining quotes from the related banking institution.
Concentrations of risk
There is a concentration of credit risk with respect to cash and cash equivalents, restricted cash and short-term investments to the extent that substantially all of the amounts are carried with the Nordea Bank of Finland PLC, The Industrial Bank of Japan and The Bank of New York. However, the Company believes this risk is remote as these banks are high credit quality financial institutions.
During the year ended December 31, 2001, two customers accounted for substantial amount of the total revenues of the company. The Company's revenues and associated accounts receivable are derived from its four time charters with British Gas, two time charters with Pertamina and, to a much more limited extent, from its four management contracts with National Gas Shipping Company Limited (Abu Dhabi) ("NGSCO"). Pertamina is a state enterprise of the Republic of Indonesia. Credit risk is mitigated by the long-term contracts with Pertamina being on a ship-or-pay basis. Also, under the various contracts the Company's vessel hire charges are paid by the Trustee and Paying Agent from the immediate sale proceeds of the delivered gas. The Trustee must pay the shipowner before Pertamina and the gas sales contracts are with the Chinese Petroleum Corporation and KOGAS. The Company considers the credit risk of British Gas and NGSCO to be low.
During the years ended December 31, 2001, 2000 and 1999, British Gas, Pertamina and two other companies, Ras Laffan Liquified Natural Gas Co Ltd and SK Shipping Co Ltd, each accounted for more than 10% of gross revenue in one or more years.
During 1999, SK Shipping, Pertamina and Ras Laffan accounted for $32.5 million, $26.1 million and $8.2 million respectively. During 2000, Pertamina and Ras Laffan accounted for $59.5 million and $16.3 million respectively. During 2001, Pertamina and British Gas accounted for $62.8 million and $45.8 million respectively.
26. RELATED PARTY TRANSACTIONS
Golar was incorporated for the purpose of acquiring the LNG shipping interests of Osprey and Seatankers. Osprey, through its parent World Shipholding, and Seatankers are indirectly controlled by Mr. John Fredriksen. The purchase price paid for the LNG operations of Osprey was $525.9 million based on an agreed gross value of the LNG carriers of $635.0 million, plus the amount of net book value of all other non-shipping assets of the companies acquired. The purchase price paid was net of an amount of $128.7 million, being 60 per cent of the loan assumed relating to the financing of the Golar Mazo as described in Note 21 and cash of $27.2 million. Furthermore, the Company paid $2.5 million to Osprey for the assignment of a newbuilding contract and options. Additionally, immediately prior to the sale, certain inter-company balances due to the companies forming the LNG shipping interests of Osprey from other Osprey Companies totaling $450.3 million were forgiven. On May 28, 2001, the Company entered into a purchase agreement with Seatankers to purchase its one newbuilding contract for a LNG carrier and options to build three new LNG carriers. The Company paid $2.5 million to Seatankers for the assignment of the newbuilding contract and options.
In August 2001, Golar obtained a loan of $32.6 million from Greenwich Holdings Limited ("Greenwich"), a company affiliated with John Fredriksen, who indirectly controls the Company's largest shareholder, Osprey, in order to finance the first installment due on newbuilding hull number 2215. The loan is for a period of 360 days and bears floating rate interest of LIBOR plus 2.5 per cent. A subsidiary of Golar guaranteed a loan of $32.6 million made to Greenwich by Nordea and Den norske Bank and entered into an assignment and security agreement, in respect of its' shipbuilding contract, with Den norske Bank as security agent. No consideration has been paid or will be paid by Greenwich for the provision of the guarantee.
In August 2001, Golar obtained a loan of $32.7 million from Greenwich, in order to finance the first installments due on newbuilding hull numbers 1460 and 2220. The loan is for a period of one year and bears floating rate interest of LIBOR plus 2.5 per cent. In connection with this, two subsidiaries of Golar have guaranteed a loan of $32.7 million made to Greenwich by Nordea and Den norske Bank and they have both entered into an assignment and security agreement, in respect of their shipbuilding contracts, with Den norske Bank as security agent. No consideration has been paid by Greenwich for the provision of the guarantee.
In September 2001, Golar obtained an additional $20 million in loan finance from Greenwich, by way of an addendum to the loan of $32.6 million in relation to hull 2215, in order to finance the second instalment on this vessel. The loan is for a period of six months and bears floating rate interest of LIBOR plus 2.5 per cent. No consideration has been paid by Greenwich for the provision of the guarantee.
For each of the loans from Greenwich noted above the Company has paid loan arrangement fees directly to the lending banks. These fees amounted to $415,700 in total.
During the year ended December 31, 2001 the rate of interest that Greenwich paid to the banks providing the above facilities was LIBOR plus 1.5 per cent. As at December 31, 2001, $291,000 of the interest due to Greenwich was outstanding.
Historically the Company has been an integrated part of Osprey Maritime. As such, the Singapore and London office locations of Osprey have provided general and corporate management services for both the Company as well as other Osprey entities and operations. As described in Note 2, management has allocated costs related to these operations based on the number of vessels managed. Amounts allocated to the Company and included within vessel operating expenses, administrative expenses and depreciation expense were $3,227,000, $9,662,000 and $9,449,000, for the years ended December 31, 2001, 2000 and 1999, respectively.
In the year ended December 31, 2001 Frontline Management (Bermuda) Limited, a subsidiary of Frontline Ltd. ("Frontline") has provided services to the company. These services include management support, corporate services and administrative services. In the year ended December 31, 2001 management fees to Frontline of $258,962 have been incurred by Golar. As at December 31, 2001 an amount of $547,966 was due to Frontline in respect of these fees and costs incurred. Frontline is a publicly listed company. Its principal shareholder is Hemen Holding Limited, a company indirectly controlled by John Fredriksen.
The Company agreed to provide services to Osprey for the management of two of Osprey's VLCC's until November 2001. In the seven months ended December 2001, management fees of $106,667 were charged to Osprey in relation to such services of which $nil was outstanding at December 31, 2001. In addition as at December 31, 2001 an amount of $261,000 was due from Osprey in respect of costs recharged in relation to the above services.
In the year ended December 31, 2001 Seatankers has provided insurance administration services to the Company. In the year ended December 31, 2001 management fees to Seatankers of $10,000 have been incurred by Golar. As at December 31, 2001 an amount of $10,000 was due to Seatankers in respect of these fees incurred.
Golar Management holds a promissory note executed by Mr. McDonald, Chairman of Golar Management and Technical Director, on April 21, 1998, under which Mr. McDonald promises to pay to Golar Management the principal sum of (pound)20,900 in monthly installments of (pound)317.55. The note carries an interest rate of three per cent and an acceleration clause in the event Mr. McDonald's employment with us is terminated for any reason or in the event of a default on payment by Mr. McDonald. Payments under the note commenced in May 1998 and the principal balance as of December 31, 2001 was (pound)8,577 or approximately $12,400
Management believes transactions with related parties are under terms similar to those that would be arranged with other parties.
27. COMMITMENTS AND CONTINGENCIES
Assets Pledged
(in thousands of $) December 31, December 31,
2001 2000
Vessels pledged under long-term loans 609,607 513,900
===============================================================================
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Other Contractual Commitments and contingencies
The Company currently insures the legal liability risks for its shipping activities with the United Kingdom Mutual Steamship Assurance Association (Bermuda), a mutual protection and indemnity association. Prior to February 2001 the Company insured such risks with The Britannia Steam Ship Insurance Association Ltd. As a member of a mutual association, the Company is subject to calls payable to the association based on the Company's claims record in addition to the claims records of all other members of the association. A contingent liability exists to the extent that the claims records of the members of the association in the aggregate show significant deterioration, which results in additional calls on the members.
28. SUBSEQUENT EVENTS
A) January 1, 2002 to March 31, 2002
In March 2002 the Company drew down $66.8 million on the loan facility signed with Lloyds TSB Bank Plc. for the purpose of financing the newbuilding number 2215. $52.6 million was used to re-pay loans from Greenwich in respect of the same vessel (see Note 26). In addition in March 2002 the third installment of $32.4 million in relation to newbuilding number 2215 was paid and was financed by drawing down on the loan facility.
In March 2002 the second installment of $16.2 million in relation to newbuilding number 2220 was paid and was financed from cash reserves.
B) April 1, 2002 onwards
Since April 1, 2002 the Company has rescheduled certain of its installment payments for its newbuildings. This rescheduling is in consideration of interest payable to the relevant shipyards on the outstanding amount at rates between six and eight per cent per annum.
The following table summarizes installment payments made since April 1, 2002 and future rescheduled installments
Hull No. Hull No. Hull No. Hull No. Total
(in millions of $) 1444 2215 2220 1460
Payments from April 1, 2002
to September 30, 2002 16.3 32.4 8.4 57.1
===================================================================================
Future Payments
2002 (three months) 16.3 16.2 16.5 49.0
2003 100.6 32.4 32.4 33.0 198.4
2004 84.0 92.1 176.1
2005
2006 and later
Total 116.9 32.4 132.6 141.6 423.5
===================================================================================
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In June 2002, Golar obtained $16.3 million in loan finance from Greenwich, a related party, by way of an addendum to an existing loan agreement in respect of newbuilding hull numbers 1460 and 2220 in order to finance the second installment due on newbuilding hull number 1444. In connection with this, a subsidiary of Golar has guaranteed a loan of $16.3 million made to Greenwich by Nordea and Den norske Bank ASA and has entered into an assignment and security agreement in respect of its shipbuilding contract with Den norske Bank as security agent. No consideration has been paid by Greenwich for the provision of the guarantee. This addendum also extended the repayment date of the original loan, $32.7 million, from August 2002 until August 2003. The additional loan of $16.3 million is available for a period of four months and bears interest at a rate of LIBOR plus 2.625 per cent. This rate also applies to the original $32.7 million from June 2002. The rate increases to LIBOR plus three per cent on any amounts still outstanding as at February 20, 2003. The Company paid directly to the lenders a non-refundable arrangement fee of $323,000 in respect of this loan amendment. The rate of interest that Greenwich pays to the banks providing the above facilities is LIBOR plus 1.625 per cent.
In July 2002, the Company announced that it had reached agreement with British Gas to extend the charter of the Golar Freeze for a period of five years upon the expiration of the current charter in March 2003.
In September 2002, Greenwich confirmed the availability of an extension to the loan facility in respect of hull numbers 1460, 2220 and 1444. The total amount drawn down under this facility of $49.0 million can remain outstanding, if required, until December 2003. Greenwich also confirmed the availability of an additional $15 million facility for the payment of newbuilding installments should it be required.
In October 2002, the Company signed a loan agreement with certain of the Golar LNG facility lenders in respect of a facility in the amount of up to $60 million to be secured on the Company's existing five wholly-owned vessels as second priority charges. The agreement allows us to draw down a maximum of $60 million to assist in the financing of our newbuilding installment payments.
Golar LNG Limited
Unaudited Consolidated and Combined Condensed Statements of Operations for the
six months ended June 30, 2002 and 2001
(in thousands of $, except per share data)
Six months Six months
ended June ended June 30,
30, 2002 2001
Operating revenues
Time charter revenues 63,735 52,787
Vessel management fees 785 992
-------------------------------------------------------------------------------
Total operating revenues 64,520 53,779
-------------------------------------------------------------------------------
Operating expenses
Vessel operating expenses 13,594 11,410
Administrative expenses 2,708 2,656
Restructuring expenses - 1,894
Depreciation and amortization 15,682 16,238
-------------------------------------------------------------------------------
Total operating expenses 31,984 32,198
-------------------------------------------------------------------------------
Operating Income 32,536 21,581
-------------------------------------------------------------------------------
Financial income (expenses)
Interest income 578 2,151
Interest expense (12,045) (17,634)
Other financial items (5,908) (6,939)
-------------------------------------------------------------------------------
Net financial expenses (17,375) (22,422)
-------------------------------------------------------------------------------
Income (loss) before income taxes
and minority interest 15,161 (841)
-------------------------------------------------------------------------------
Minority interest in net income of subsidiaries (50) 1,552
Income taxes 92 150
-------------------------------------------------------------------------------
Net income (loss) 15,119 (2,543)
===============================================================================
Earnings (loss) per share
Basic and diluted $0.27 ($0.05)
===============================================================================
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Golar LNG Limited
Unaudited Consolidated and Condensed Balance Sheet as of June 30, 2002 and 31
December 2001
(in thousands of $)
June 30, December 31,
Note 2002 2001
ASSETS
Current Assets
Cash and cash equivalents 51,613 57,569
Restricted cash and short-term investments 13,235 14,163
Trade accounts receivable - 188
Other receivables, prepaid expenses
and accrued 3,008 2,602
income
Amounts due from related parties 231 261
Inventories 2,571 2,650
--------------------------------------------------------------------------
Total current assets 70,658 77,433
Newbuildings 3 234,216 132,856
Vessels and equipment, net 630,313 641,371
Deferred charges 6,003 4,177
Other long term assets 154 154
--------------------------------------------------------------------------
Total assets 941,344 855,991
===========================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt 4 42,341 41,053
Current indebtedness due to related parties 4 16,259 85,278
Trade accounts payable 1,693 1,995
Accrued expenses 10,078 7,684
Amounts due to related parties 870 1,049
Other current liabilities 19,331 18,887
--------------------------------------------------------------------------
Total current liabilities 90,572 155,946
Long-term liabilities
Long-term debt 4 593,478 483,276
Long-term debt due to related parties 4 32,703 -
Other long-term liabilities 16,888 16,552
--------------------------------------------------------------------------
Total liabilities 733,641 655,774
Minority interest 18,188 25,820
Stockholders' equity 189,515 174,397
--------------------------------------------------------------------------
Total liabilities and stockholders' equity 941,344 855,991
==========================================================================
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Golar LNG Limited
Unaudited Consolidated and Combined Condensed Statements of Cash Flows for the
six months ended June 30, 2002 and 2001
(in thousands of $)
Six months Six months
ended June ended June 30,
30, 2002 2001
Operating activities
Net income (loss) 15,119 (2,543)
Adjustments to reconcile net income (loss) to net cash
Provided by operating activities:
Depreciation and amortization 15,682 16,238
Amortization of deferred charges 550 1,801
(Loss) income attributable to minority (50) 1,552
interests
Drydocking expenditure (1,757) (5,476)
Trade accounts receivable 188 40
Inventories 79 (499)
Prepaid expenses and accrued income (406) (1,107)
Amount due from/to related companies (149) (5,585)
Trade accounts payable (302) 287
Accrued expenses 3,184 456
Other current liabilities (11) 7,716
------------------------------------------------------------------------------------------------
Net cash provided by operating activities 32,127 12,880
------------------------------------------------------------------------------------------------
Investing activities
Cash paid for Osprey's LNG interests, net of - (530,945)
cash acquired
Additions to newbuildings (101,360) (32,612)
Additions to vessels and equipment (2,866) (4,138)
Restricted cash and short term investments 928 (599)
Purchase of short term investments - (18,417)
Proceeds from maturity of short term - 14,231
investments
------------------------------------------------------------------------------------------------
Net cash used in investing activities (103,298) (572,480)
------------------------------------------------------------------------------------------------
Financing activities
Proceeds from long-term debt 131,902 325,000
Proceeds from short term debt due to related 16,259 -
parties
Repayments of long-term debt (20,412) (4,979)
Repayments of short term debt due to related (52,575) -
parties
Financing costs paid (2,376) (2,788)
Dividends paid to minority shareholders (7,583) -
Proceeds from issuance of equity - 274,500
------------------------------------------------------------------------------------------------
Net cash provided by financing activities 65,215 591,733
------------------------------------------------------------------------------------------------
Net increase in cash and cash equivalents (5,956) 32,133
Cash and cash equivalents at beginning of period 57,569 5,741
Cash and cash equivalents at end of period 51,613 37,874
================================================================================================
Supplemental disclosure for cash flow information:
Non-cash investing and financing activities:
Forgiveness of intercompany payables, dividend out and return of capital - 455,890
Liabilities assumed in business combination - 214,500
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Golar LNG Limited
Notes to Unaudited Consolidated and Combined Financial Statements
1. GENERAL
The accompanying financial statements and footnotes have been condensed and therefore do not contain all disclosures required by generally accepted accounting principles. These statements should be read in conjunction with the Company's audited consolidated and combined financial statements.
The statements as of and for the six month periods ended June 30, 2002 and June 30, 2001 are unaudited. In the opinion of management, the unaudited interim financial statements contain all adjustments (which were of a normal recurring nature) necessary for a fair statement of the results for the interim periods.
The results of operations for the six month periods ended June 30, 2002 and June 30, 2001 are not necessarily indicative of those for a full fiscal year.
The Company has sufficient facilities to meet its anticipated funding needs until August 2003. These facilities include $15 million from a related party which can be drawn down as needed in 2003 until such time as permanent financing has been secured. As at October 2002 additional facilities of $316 million will be needed to meet commitments under the newbuilding construction program in August 2003 and thereafter. It is intended that these facilities will come from a combination of debt finance, lease arrangements for existing vessels and cash flow from operations. Alternatively, if market and economic conditions favor equity financing, the Company may raise equity to fund a portion of the construction costs. The Company is in advanced negotiations with a number of financial institutions and others to provide sufficient facilities to meet these construction commitments in full as they fall due. Accordingly, the financial statements have been prepared on a going concern basis of accounting.
2. ADOPTION OF NEW ACCOUNTING STANDARDS
In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections". This Statement rescinds FASB Statement No. 4, Reporting Gains and Losses from Extinguishment of Debt, and an amendment of that Statement, FASB Statement No. 64, Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements. This Statement also rescinds FASB Statement No. 44, Accounting for Intangible Assets of Motor Carriers. This Statement amends FASB Statement No. 13, Accounting for Leases, to eliminate an inconsistency between the required accounting for sale-leaseback transactions and the required accounting for certain lease modifications that have economic effects that are similar to sale-leaseback transactions. This Statement also amends other existing authoritative pronouncements to make various technical corrections, clarify meanings, or describe their applicability under changed conditions. This statement is generally for transactions occurring after May 15, 2002. The adoption of SFAS No. 144 by the Company did not have any impact on the Company's consolidated results of operations, financial position or liquidity.
In July 2002, the Financial Accounting Standards Board issued SFAS 146, "Accounting for Costs Associated with Exit or Disposal Activities" ("SFAS 146"). The Statement requires companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of a commitment to an exit or disposal plan. SFAS 146 will be applied by the Company prospectively to exit or disposal activities initiated after December 31, 2002.
3. NEWBUILDINGS
(in thousands of $) June 30, December 31,
2002 2001
Purchase price installments at end of period 227,135 129,864
Interest and other costs capitalized at end of period 7,081 2,992
-------------------------------------------------------------------------------
234,216 132,856
===============================================================================
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The Company has contracts to build four new LNG carriers at a total cost of $658.9 million, excluding financing costs. As at June 30, 2002, the installments for these vessels were due to be paid as follows:
(in millions of $)
Paid in 18 months to June 30, 2002 227.1
Payable in six months to December 31, 2002 57.3
Payable in 12 months to December 31, 2003 198.4
Payable in 12 months to December 31, 2004 176.1
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658.9
=====
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At June 30, 2002, the Company did not have facilities in place to finance its entire newbuilding program. As of October 11, 2002 the Company had total loan facilities of $304 million, to finance its newbuilding program. These consist of a $180 million facility from Lloyds TSB Bank Plc ( $162 million is in respect of the contract cost and the balance is for associated finance costs and other sundry items) of which $129.6 million has been drawn down to finance newbuilding installments, $64.0 million from a related party, Greenwich, of which $49.0 million has been drawn down and a $60 million facility from certain of the Golar LNG facility lenders. The Company will then require additional financing of approximately $316 million to fund all of its newbuilding construction commitments.
Since June 30, 2002 the Company has rescheduled certain of its installment payments for its newbuildings. This rescheduling is in consideration of interest payable to the relevant shipyards on the outstanding amount at rates between six and eight per cent per annum. This has resulted in the installments due in the six months to December 31, 2002 and years ended December 31, 2003 and 2004 being changed to $57.3 million, $198.4 million and $176.1 million respectively.
4. DEBT
In the six month period from January 1, 2002 to June 30, 2002, the Company has drawn down additional debt and the debt outstanding at June 30, 2002 was as follows:
(in thousands of $) June 30, December 31,
2002 2001
Total long-term debt due to third parties 635,819 524,329
Total long-term debt due to related parties 32,703 -
Total short-term debt due to related parties 16,259 85,278
----------------------------------------------------------------------------
Total debt 684,781 609,607
Less: current portion of long-term debt
due to third parties (42,341) (41,053)
Less: current portion of long-term debt and
short-term debt due to related parties (16,259) (85,278)
----------------------------------------------------------------------------
626,181 483,276
============================================================================
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The outstanding debt as of June 30, 2002 is repayable as follows:
Year ending December 31, (in thousands of $) 2002 (six months to December 31, 2002) 36,901 2003 77,142 2004 46,532 2005 50,133 2006 59,494 2007 and later 414,579 ---------------------------------------------------------------------------- Total 684,781 ============================================================================ |
In September 2002 Greenwich Holdings Ltd, a related party, confirmed the availability of an extension of its outstanding loans, totaling $49.0 million until December 2003, should this be required.
At June 30, 2002, the debt of the Company comprised the following:
(in thousands of $)
Greenwich loans 48,962
Mazo facility 198,917
Golar LNG facility 305,000
Lloyds TSB facility 131,902
-----------------------------------------------------------------------------
684,781
=============================================================================
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5. RELATED PARTY TRANSACTIONS
In March 2002 the Company repaid loans from Greenwich Holdings Limited ("Greenwich") totaling $52.6 million. Greenwich is a company affiliated with Mr. John Fredriksen, who indirectly controls the Company's largest shareholder, Osprey Maritime Limited.
In June 2002, Golar obtained $16.3 million in loan finance from Greenwich, a related party, by way of an addendum to an existing loan agreement in respect of newbuilding hull numbers 1460 and 2220 in order to finance the second installment due on newbuilding hull number 1444. In connection with this, a subsidiary of Golar has guaranteed a loan of $16.3 million made to Greenwich by Nordea and Den norske Bank ASA and has entered into an assignment and security agreement in respect of its shipbuilding contract with Den norske Bank as security agent. No consideration has been paid by Greenwich for the provision of the guarantee. This addendum also extended the repayment date of the original loan, $32.7 million, from August 2002 until August 2003. The additional loan of $16.3 million is available for a period of four months and bears interest at a rate of LIBOR plus 2.625 per cent. This rate also applies to the original $32.7 million from June 2002. The rate increases to LIBOR plus three per cent on any amounts still outstanding as at February 20, 2003. The Company paid directly to the lenders a non-refundable arrangement fee of $323,000 in respect of this loan amendment. The rate of interest that Greenwich pays to the banks providing the above facilities is LIBOR plus 1.625 per cent.
In the six months ended June 30, 2002 the Company paid interest of $1,230,560 to Greenwich in respect of loan finance received. As at June 30, 2002 $661,392 of the interest due to Greenwich was outstanding.
In the six months ended June 30, 2002 Frontline Management (Bermuda) Limited, a subsidiary of Frontline Ltd. ("Frontline") has provided services to the company. These services include management support, corporate services and administrative services. In the six months ended June 30, 2002, management fees to Frontline of $177,750 have been incurred by Golar. As at June 30, 2002 an amount of $92,000 was due to Frontline in respect of these fees and costs incurred. Frontline is a publicly listed company. Its principal shareholder is Hemen Holding Limited, a company indirectly controlled by John Fredriksen.
In the six months ended June 30, 2002 Seatankers Management Co. Ltd., which is indirectly controlled by Mr. John Fredriksen, has provided insurance administration services to the Company. In the six months ended June 30, 2002, management fees to Seatankers of $10,000 have been incurred by Golar. As at June 30, 2002 an amount of $10,000 was due to Seatankers in respect of these fees incurred.
Golar Management holds a promissory note executed by Mr. McDonald, Chairman of Golar Management and Technical Director, on April 21, 1998, under which Mr. McDonald promises to pay to Golar Management the principal sum of (pound)20,900 in monthly installments of (pound)317.55. The note carries an interest rate of three per cent and an acceleration clause in the event Mr. McDonald's employment with us is terminated for any reason or in the event of a default on payment by Mr. McDonald. Payments under the note commenced in May 1998 and the principal balance as of June 30, 2002 was (pound)6,789 or approximately $10,400.
Management believes transactions with related parties are under terms similar to those that would be arranged with other parties.
6. SUBSEQUENT EVENTS
In July 2002, the Company announced that it had reached agreement with British Gas to extend the charter of the Golar Freeze for a period of five years upon the expiration of the current charter in March 2003.
In September 2002, Greenwich confirmed the availability of an extension to the loan facility in respect of hull numbers 1460, 2220 and 1444. The total amount drawn down under this facility of $49.0 million can remain outstanding, if required, until December 2003. Greenwich also confirmed the availability of an additional $15 million facility for the payment of newbuilding installments should it be required.
In October 2002, the Company signed a loan agreement with certain of the Golar LNG facility lenders in respect of a facility in the amount of up to $60 million to be secured on the Company's existing five wholly-owned vessels as second priority charges. The agreement allows us to draw down a maximum of $60 million to assist in the financing of our newbuilding installment payments.
EXHIBIT 1.1
FORM No.2
[LOGO]
BERMUDA
THE COMPANIES ACT 1981
MEMORANDUM OF ASSOCIATION OF COMPANY LIMITED BY SHARES
Section 7(1) and (2)
MEMORANDUM OF ASSOCIATION
OF
1. The liability of the members of the Company is limited to the amount (if any) for the time being unpaid on the shares respectively held by them.
2. We, the undersigned, namely,
Name and Address Nationality Number of Shares Bermudian Status
Subscribed (Yes or No)
A. Shaun Morris
Cedar House
41 Cedar Avenue
Hamilton HM 12, Bermuda British 1 Yes
Rachael M. Larhan
Cedar House
41 Cedar Avenue
Hamilton HM 12, Bermuda British 1 Yes
Donna S. Outerbridge
Cedar House
41 Cedar Avenue
Hamilton HM 12, Bermuda British 1 Yes
Joy F. Thompson
Cedar House
41 Cedar Avenue
Hamilton HM 12, Bermuda British 1 Yes
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do hereby respectively agree to take such number of shares of the Company as may be allotted to us respectively by the provisional directors of the Company, not exceeding the number of shares for which we have respectively subscribed, and to satisfy such calls as may be made by the directors, provisional directors or promoters of the Company in respect of the shares allotted to us respectively.
3. The Company is to be a Exempted Company as defined by the Companies Act 1981.
4. The company, with the consent of the Minister of Finance, has power to hold land situate in Bermuda not exceeding _____in all, including the following parcels:-
Not applicable.
5. The authorised share capital of the Company is US$12,000.00 divided into 12,000 shares of US$1.00 each.
The minimum subscribed share capital of the Company is $12,000.00 in the United States currency.
6. The objects for which the Company is formed and incorporated are:-
As set forth in paragraphs (b) to (n) and (p) to (u) inclusive of the Second Schedule to the Companies Act 1981.
7. The Company has the powers set out in The Schedule annexed hereto.
THE COMPANIES ACT
SECOND SCHEDULE (section 11(2))
Subject to Section 4A, a company may by reference include in its memorandum any of the following objects, that is to say the business of -
(a) insurance and re-insurance of all kinds;
(b) packaging of goods of all kinds;
(c) buying, selling and dealing in goods of all kinds;
(d) designing and manufacturing of goods of all kinds;
(e) mining and quarrying and exploration for metals, minerals, fossil fuels and precious stones of all kinds and their preparation for sale or use;
(f) exploring for, the drilling for, the moving, transporting and refining petroleum and hydro carbon products including oil and oil products;
(g) scientific research including the improvement, discovery and development of processes, inventions, patents and designs and the construction, maintenance and operation of laboratories and research centres;
(h) land, sea and air undertakings including the land, ship and air carriage of passengers, mails and goods of all kinds;
(i) ships and aircraft owners, managers, operators, agents, builders and repairers;
(j) acquiring, owning, selling, chartering, repairing or dealing in ships and aircraft;
(k) travel agents, freight contractors and forwarding agents;
(l) dock owners, wharfingers, warehousemen;
(m) ship chandlers and dealing in rope, canvas oil and ship stores of all kinds;
(n) all forms of engineering;
(o) developing, operating, advising or acting as technical consultants to any other enterprise or business;
(p) farmers, livestock breeders and keepers, graziers, butchers, tanners and processors of and dealers in all kinds of live and dead stock, wool, hides, tallow, grain, vegetables and other produce;
(q) acquiring by purchase or otherwise and holding as an investment inventions, patents, trade marks, trade names, trade secrets, designs and the like;
(r) buying, selling, hiring, letting and dealing in conveyances of any sort; and
(s) employing, providing, hiring out and acting as agent for artists, actors, entertainers of all sorts, authors, composers, producers, directors, engineers and experts or specialists of any kind;
(t) to acquire by purchase or otherwise and hold, sell, dispose of and deal in real property situated outside Bermuda and in personal property of all kinds wheresoever situated;
(u) to enter into any guarantee, contract of indemnity or suretyship and to assure, support or secure with or without consideration or benefit the performance of any obligations of any person or persons and to guarantee the fidelity of individuals filling or about to fill situations of trust or confidence;
(v) to be and carry on business of a mutual fund within the meaning of section 156A.
Provided that none of these objects shall enable the company to carry on restricted business activity as set out in the Ninth Schedule except with the consent of the Minister.
Signed by each subscriber in the presence of at least one witness attesting the signature thereof:-
/s/ [ILLEGIBLE] /s/ Dionne Hackett
---------------------------- ----------------------------
/s/ [ILLEGIBLE] /s/ Dionne Hackett
---------------------------- ----------------------------
/s/ [ILLEGIBLE] /s/ Dionne Hackett
---------------------------- ----------------------------
/s/ [ILLEGIBLE] /s/ Dionne Hackett
---------------------------- ----------------------------
(Subscribers) (Witnesses)
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SUBSCRIBED this 9th day of May, 2001.
STAMP DUTY (To be affixed)
Not Applicable
The Schedule
(REFERRED TO IN CLAUSE 7 OF THE MEMORANDUM OF ASSOCIATION)
(a) to borrow and raise money in any currency or currencies and to secure or discharge any debt or obligation in any manner and in particular (without prejudice to the generality of the foregoing) by mortgages of or charges upon all or any part of the undertaking; property and assets (present and future) and uncalled capital of the company or by the creation and issue of securities;
(b) to enter into any guarantee, contract of indemnity or suretyship and in particular (without prejudice to the generality of the foregoing) to guarantee, support or secure, with or without consideration, whether by personal obligation or by mortgaging or charging all or any part of the undertaking, property and assets (present and future) and uncalled capital of the company or by both such methods or in any other manner, the performance of any obligations or commitments of, and the repayment or payment of the principal amounts of and any premiums, interest, dividends and other moneys payable on or in respect of any securities or liabilities of, any person, including (without prejudice to the generality of the foregoing) any company which is for the time being a subsidiary or a holding company of the company or another subsidiary of a holding company of the company or otherwise associated with the company;
(c) to accept, draw, make, create, issue, execute, discount, endorse, negotiate and deal in bills of exchange, promissory notes, and other instruments and securities, whether negotiable or otherwise;
(d) to sell, exchange, mortgage, charge, let on rent, share of profit, royalty or otherwise, grant licences, easements, options, servitudes and other rights over, and in any other manner deal with or dispose of, all or any part of the undertaking, property and assets (present and future) of the company for any consideration and in particular (without prejudice to the generality of the foregoing) for any securities;
(e) to issue and allot securities of the company for cash or in payment or part payment for any real or personal property purchased or otherwise acquired by the company or any services rendered to the company or as security for any obligation or amount (even if less than the nominal amount of such securities) or for any other purpose;
(f) to grant pensions, annuities, or other allowances, including allowances on death, to any directors, officers or employees or former directors, officers or employees of the company or any company which at any time is or was a subsidiary or a holding company or another subsidiary of a holding company of the company or otherwise associated with the company or of any predecessor in business of any of them, and to the relations, connections or dependants of any such persons, and to other persons whose service or services have directly or indirectly been of
THE COMPANIES ACT 1981
FIRST SCHEDULE (section 11(1))
A company limited by shares, or other company having a share capital, may exercise all or any of the following powers subject to any provision of law or its memorandum -
(1) [REPEALED BY 1992:51]
(2) to acquire or undertake the whole or any part of the business, property and liabilities of any person carrying on any business that the company is authorised to carry on;
(3) to apply for, register, purchase, lease, acquire, hold, use, control, license, sell, assign, or dispose of patents, patent rights, copyrights, trade marks, formulae, licences, inventions, processes, distinctive marks and similar rights;
(4) to enter into partnership or into any arrangement for sharing of profits, union of interests, co-operation, joint venture, reciprocal concession or otherwise with any person carrying on or engaged in or about to carry on or engage in any business or transaction that the company is authorised to carry on or engage in or any business or transaction capable of being conducted so as to benefit the company;
(5) to take or otherwise acquire and hold securities in any other body corporate having objects altogether or in part similar to those of the company or carrying on any business capable of being conducted so as to benefit the company;
(6) subject to section 96 to lend money to any employee or to any person having dealings with the company or with whom the company proposes to have dealings or to any other body corporate any of whose shares are held by the company;
(7) to apply for, secure or acquire by grant, legislative enactment, assignment, transfer, purchase or otherwise and to exercise, carry out and enjoy any charter, license, power, authority, franchise, concession, right or privilege, that any government or authority or any body corporate or other public body may be empowered to grant, and to pay for, aid in and contribute toward
carrying it into effect and to assume any liabilities or obligations incidental thereto;
(8) to establish and support or aid in the establishment and support of associations, institutions, funds or trusts for the benefit of employees or former employees of the company or its predecessors, or the dependants or connections of such employees or former employees, and grant pensions and allowances, and make payments towards insurance or for any object similar to those set forth in this paragraph, and to subscribe or guarantee money for charitable, benevolent, educational or religious objects or for any exhibition or for any public, general or useful objects;
(9) to promote any company for the purpose of acquiring or taking over any of the property and liabilities of the company of for any other purpose that may benefit the company;
(10) to purchase, lease, take in exchange, hire or otherwise acquire any personal property and any rights or privileges that the company considers necessary or convenient for the purposes of its business;
(11) to construct, maintain, alter, renovate and demolish any buildings or works necessary or convenient for its objects;
(12) to take land in Bermuda by way of lease or letting agreement for a term not exceeding fifty years, being land BONA FIDE required for the purposes of the business of the company and with the consent of the Minister granted in his discretion to take land in Bermuda by way of lease or letting agreement for a term not exceeding twenty-one years in order to provide accommodation or recreational facilities for its officers and employees and when no longer necessary for any of the above purposes to terminate or transfer the lease or letting agreement;
(13) expect to the extent, if any, as may be otherwise expressly provided in its incorporating Act or memorandum and subject to this Act every company shall have power to invest the moneys of the Company by way of mortgage of real or personal property of every description in Bermuda or elsewhere and to sell, exchange, vary, or dispose of such mortgage as the company shall from time to time determine;
(14) to construct, improve, maintain, work, manage, carry out or control any roads, ways, tramways, branches or sidings, bridges, reservoirs, watercourses, wharves, factories, warehouses, electric works, shops, stores and other works and conveniences that may advance the interests of
the
company and contribute to, subsidise or otherwise assist or take part in the construction, improvement, maintenance, working, management, carrying out or control thereof;
(15) to raise and assist in raising money for, and aid by way of bonus, loan, promise, endorsement, guarantee or otherwise, any person and guarantee the performance or fulfilment of any contracts or obligations of any person, and in particular guarantee the payment of the principal of and interest on the debt obligations of any such person;
(16) to borrow or raise or secure the payment of money in such manner as "the company may think fit;
(17) to draw, make, accept, endorse, discount, execute and issue bills of exchange, promissory notes, bills of lading, warrants and other negotiable or transferable instruments;
(18) when properly authorised to do so, to sell, lease, exchange or otherwise dispose of the undertaking of the company or any part thereof as an entirety or substantially as an entirety for such consideration as the company thinks fit;
(19) to sell, improve, manage, develop, exchange, lease, dispose of, turn to account or otherwise deal with the property of the company in the ordinary course of its business;
(20) to adopt such means of making known the products of the company as may seem expedient, and in particular by advertising, by purchase and exhibition of works of art or interest, by publication of books and periodicals and by granting prizes and rewards and making donations;
(21) to cause the company to be registered and recognised in any foreign jurisdiction, and designate persons therein according to the laws of that foreign jurisdiction or to represent the company and to accept service for and on behalf of the company of any process or suit;
(22) to allot and issue fully-paid shares of the company in payment or part payment of any property purchased or otherwise acquired by the company or for any past services performed for the company;
(23) to distribute among the members of the company in cash, kind, specie or otherwise as may be resolved, by way of dividend, bonus or in any other manner considered advisable, any property of the company, but not so as to decrease the capital of the company unless the distribution is made for the
purpose of enabling the company to be dissolved or the distribution, apart from this paragraph, would be otherwise lawful;
(24) to establish agencies and branches;
(25) to take or hold mortgages, hypothecs, liens and charges to secure payment of the purchase price, or of any unpaid balance of the purchase price, of any part of the property of the company of whatsoever kind sold by the company, or for any money due to the company from purchasers and others and to sell or otherwise dispose of any such mortgage, hypothec, lien or charge;
(26) to pay all costs and expenses of or incidental to the incorporation and organization of the company;
(27) to invest and deal with the moneys of the company not immediately required for the objects of the company in such manner as may be determined;
(28) to do any of the things authorised by this Schedule and all things authorised by its memorandum as principals, agents, contractors, trustees or otherwise, and either alone or in conjunction with others;
(29) to do all such other things as are incidental or conducive to the attainment of the objects and the exercise of the powers of the company.
Every company may exercise its powers beyond the boundaries of Bermuda to the extent to which the laws in force where the powers are sought to be exercised permit.
EXHIBIT 1.2
BYE-LAWS
of
GOLAR LNG LIMITED
I HEREBY CERTIFY that the within written Bye-Laws are a true copy of the Bye-Laws of Golar LNG Limited as subscribed by the subscribers to the Memorandum of Association and approved at the Statutory meeting of the above Company on the 10 May 2001.
/s/ [ILLEGIBLE] Secretary |
[SEAL]
Prepared by Messrs Appleby Spurling & Kempe Cedar House 41 Cedar Avenue Hamilton, Bermuda
INTERPRETATION
1. In these Bye-Laws unless the context otherwise requires-
- "Associate" means:
(a) in respect of an individual, such individual's spouse, former spouse, sibling, aunt, uncle, nephew, niece or lineal ancestor or descendant, including any step-child and adopted child and their issue and step parents and adoptive parents and their issue or lineal ancestors;
(b) in respect of an individual, such individual's partner and such partner's relatives (within the categories set out in (a) above);
(c) in respect of an individual or body corporate, an employer or employee (including, in relation to a body corporate, any of its directors or officers);
(d) in respect of a body corporate, any person who controls such body corporate, and any other body corporate if the same person has control of both or if a person has control of one and persons who are his Associates, or such person and persons who are his Associates, have control of the other, or if a group of two or more persons has control of each body corporate, and the groups either consist of the same persons or could be regarded as consisting of the same persons by treating (in one or more cases) a member of either group as replaced by a person of whom he is an Associate. For the purposes of this paragraph, a person has "control" of a body corporate if either (i) the directors of the body corporate or of any other body corporate which has control of it (or any of them) are accustomed to acting in accordance with his instructions or (ii) he is entitled to exercise, or control the exercise of, one-third or more of the votes attaching to all of the issued shares of the body corporate or of another body corporate which has control of it (provided that where two or more persons acting in concert satisfy either of the above conditions, they are each to be taken as having control of the body corporate);
- "Bermuda" means the Islands of Bermuda;
- "Board" means the Board of Directors of the Company or the Directors present at a meeting of Directors at which there is a quorum;
- "Business Day" means a day on which banks are open for the transaction of general banking business in each of Oslo, Norway, New York, USA and Hamilton, Bermuda;
- "Company" means the company incorporated in Bermuda under the name of Golar LNG Limited on the 10th day of May, 2001;
- "Companies Acts" means every Bermuda statute from time to time in force concerning limited companies insofar as the same applies to the Company;
- "Extraordinary Resolution" means a resolution passed by a majority of not less than two-thirds of the votes cast at a general meeting of the Company;
- "Listing Exchange" means any stock exchange or quotation system upon which any of the shares of the Company are listed from time to time;
- "Ordinary Resolution" means a resolution passed by a simple majority of votes cast at a general meeting of the Company;
- "Oslo Stock Exchange" means the Oslo Stock Exchange;
- "paid up" means paid up or credited as paid up;
- "Register" means the Register of Shareholders of the Company and includes any branch Register;
- "Registered Office" means the registered office for the time being of the Company;
- "Registrar" means Christiania Bank og Kreditkasse ASA, Verdipapirservice, or such other person or body corporate who may from time to time be appointed by the Board in place of Christiania Bank og Kreditkasse ASA, Verdipapirservice, as Registrar of the Company under these Bye-laws;
- "Registration Office" means the place where the Board may from time to time determine to keep a branch Register of Shareholders and where (except in cases where the Board otherwise directs) the transfer and documents of title are to be lodged for registration;
- "Seal" means the common seal of the Company and includes any duplicate thereof;
- "Secretary" includes a temporary or assistant Secretary and any person appointed by the Board to perform any of the duties of the Secretary; 3
- "Shareholder" means a shareholder of the Company;
- "these Bye-Laws" means these Bye-Laws in their present form or as from time to time amended;
- "VPS" means "Verdipapirsentralen", the computerized central share registry maintained in Oslo, Norway for bodies corporate whose shares are listed for trading on the Oslo Stock Exchange, and includes any successor registry;
- for the purpose of these Bye-Laws a body corporate shall be deemed to be present in person if its representative duly authorized pursuant to the Companies Acts is present;
- words importing the singular number also include the plural number and vice versa;
- words importing the masculine gender also include the feminine and neuter genders respectively;
- words importing persons also include companies and associations or bodies of persons, whether corporate or unincorporated;
- references to writing shall include typewriting, printing, lithography, facsimile, photography and other modes of reproducing or reproducing words in a legible and non-transitory form;
- unless otherwise defined herein, any words or expressions defined in the Companies Acts in force at the date when these Bye-Laws or any part thereof are adopted shall bear the same meaning in these Bye-Laws or such part (as the case may be);
- headings in these Bye-Laws are inserted for convenience of reference only and shall not affect the construction thereof.
REGISTERED OFFICE
2. The Registered Office shall be at such place in Bermuda as the Board shall from time to time appoint.
SHARE RIGHTS
3. Subject to the Companies Acts and any special rights conferred on the holders of any other share of class of shares, any share in the Company may be issued with or have attached thereto such preferred, deferred, qualified or other special rights or such restrictions, whether in regard to dividend, voting, return of capital or otherwise, as the Company may by Ordinary Resolution determine.
4. Subject to the Companies Acts, any preference shares may, with the sanction of an Ordinary Resolution, be issued on terms:
(a) that they are to be redeemed on the happening of a specified event or on a given date; and/or
(b) that they are liable to be redeemed at the option of the Company; and/or
(c) if authorized by the Memorandum/Incorporating Act of the Company, that they are liable to be redeemed at the option of the holder.
The terms and manner of redemption shall be either as the Company may in general meeting determine or, in the event that the Company in general meeting may have so authorized, as the Board of Directors or any committee thereof may by resolution determine before the issuance of such shares.
MODIFICATION OF RIGHTS
5. Subject to the Companies Acts, all or any of the rights for the time being attached to any class of shares for the time being issued may from time to time (whether or not the Company is being wound up) be altered or abrogated with the consent in writing of the holders of not less than seventy-five percent in nominal value of the issued shares of that class or with the sanction of a resolution passed by a majority of seventy-five percent of the votes cast at a separate general meeting of the holders of such shares voting in person or by proxy. To any such separate general meeting, all the provisions of these Bye-Laws as to general meetings of the Company shall mutatis mutandis apply, but so that:
(a) the necessary quorum at any such meeting shall be two or more persons (or in the event that there is only one holder of the shares of the relevant class, one person) holding or representing by proxy in the aggregate at least one third in nominal value of the shares of the relevant class;
(b) every holder of shares of the relevant class present in person or by proxy shall be entitled on a poll to one vote for every such share held by him; and
(c) any holder of shares of the relevant class present in person or by proxy may demand a poll.
6. The rights conferred upon the holders of any shares or class of shares shall not, unless otherwise expressly provided in the rights attaching to or the terms of issue of such shares, be deemed to be altered by the creation or issue of further shares ranking pari passu therewith.
SHARES
7. Subject to the provisions of these Bye-Laws, the unissued shares of the Company (whether forming part of the original capital or any increased capital) shall be at the disposal of the Board, which may offer, allot, grant options over or otherwise dispose of them to such persons at such times and for such consideration and upon such terms and conditions as the Board may determine.
8. The Board may in connection with the issue of any shares exercise all powers of paying commission and brokerage conferred or permitted by law.
9. Except as ordered by a court of competent jurisdiction, as required by law or as otherwise provided in these Bye-Laws, no person shall be recognized by the Company as holding any share upon trust and the Company shall not be bound by or required in any way to recognize (even when having notice thereon) any equitable, contingent, future or partial interest in any share or any interest in any fractional part of a share or any other right in respect of any share except an absolute right to the entirety thereof in the registered holder.
10. No shares shall be issued until they are fully paid except as may be prescribed by an Ordinary Resolution.
CERTIFICATES
11. The preparation, issue and delivery of certificates shall be governed by the Companies Acts. A person whose name is entered in the Register as the holder of any shares shall be entitled to receive within two months of a demand for same a certificate for such shares under the Seal of the Company as prima facie evidence of title of such person to such shares. In the case of a share held jointly by several persons, delivery of a certificate for such share to one of several joint holders shall be sufficient delivery to all.
12. If a share certificate is defaced, lost or destroyed it may be replaced without fee but on such terms (if any) as to evidence, indemnity and payment of the costs and out of pocket expenses of the Company in investigating such evidence and preparing such indemnity as the Board may think fit and, in case of defacement, on delivery of the old certificate to the Company.
13. All certificates for share or loan capital or other securities of the Company (other than letters of allotment, scrip certificates and other like documents) shall, except to the extent that the terms and conditions for the time being relating thereto otherwise provide, be issued under the Seal. The Board may by resolution determine, either generally or in any particular case, that any signatures on any such certificates need not be autographic but may be affixed to such certificates by mechanical means or may be printed thereon or that such certificates need not be signed by any persons.
LIEN
14. The Company shall have a first and paramount lien on every share (not being a fully paid share) for all moneys, whether presently payable or not, called or payable, at a date fixed by or in accordance with the terms of issue of such share in respect of such share, and the Company shall also have a first and paramount lien on every share (other than a fully paid share) standing registered in the name of a Shareholder, whether singly or jointly with any other person, for all the debts and liabilities of such Shareholder or his estate to the Company, whether the same shall have been incurred before or after notice to the Company of any interest of any person other than such Shareholder, and whether the time for the payment or discharge of the same shall have actually arrived or not, and notwithstanding that the same are joint debts or liabilities of such Shareholder or his estate and any other person, whether a Shareholder or not. The Companys lien on a share shall extend to all dividends payable thereon. The Board may at any time, either generally or in any particular case, waive any lien that has arisen or declare any share to be wholly or in part exempt from the provisions of this Bye-Law.
15. The Company may sell, in such manner as the Board may think fit, any share on which the Company has a lien, but no sale shall be made unless some sum in respect of which the lien exists is presently payable nor until the expiration of fourteen days after a notice in writing stating and demanding payment of the sum presently payable and giving notice of the intention to sell in default of such payment has been served on the holder for the time being of the share.
16. The net proceeds of sale by the Company of any shares on which it has a lien shall be applied in or towards payment or discharge of the debt or liability in respect of which the lien exists so far as the same is presently payable, and any residue shall (subject to a like lien for debts or liabilities not presently payable as existed upon the share prior to the sale) be paid to the holder of the share immediately before such sale. For giving effect to any such sale the Board may authorize some person to transfer the share sold to the purchaser thereof. The purchaser shall be registered as the holder of the share and he shall not be bound to see to the application of the purchase money nor shall his title to the share be affected by any irregularity or invalidity in the proceedings relating to the sale.
CALLS ON SHARES
17. The Board may from time to time make calls upon the Shareholders in respect of any moneys unpaid on their shares (whether on account of the par value of the shares or by way of premium) and not by the terms of issue thereof made payable at a date fixed by or in accordance with such terms of issue, and each Shareholder shall (subject to the Company serving upon him at least seven days notice specifying the time or times and place of payment) pay to the Company at the time or times and place so specified the amount called on his shares. A call may be revoked or postponed as the Board may determine.
18. A call may be made payable by installments and shall be deemed to have been made at the time when the resolution of the Board authorizing the call was passed.
19. The joint holders of a share shall be jointly and severally liable to pay all calls in respect thereof.
20. If a sum called in respect of the share shall not be paid before or on the day appointed for payment thereof, the person from whom the sum is due shall pay interest on the sum from the day appointed for the payment thereof to the time of actual payment at such rate as the Board may determine, but the Board shall be at liberty to waive payment of such interest wholly or in part.
21. Any sum which, by the terms of issue of a share, becomes payable on allotment or at any date fixed by or in accordance with such terms of issue, whether on account of the nominal amount of the share or by way of premium, shall for all the purposes of these Bye-Laws be deemed to be a call duly made, notified and payable on the date on which, by the terms of issue, the same becomes payable and, in case of non- payment, all the relevant provisions of these Bye-Laws as to payment of interest, forfeiture or otherwise shall apply as if such sum had become payable by virtue of a call duly made and notified.
22. The Board may on the issue of shares differentiate between the allottees or holders as to the amount of calls to be paid and the times of payment.
FORFEITURE OF SHARES
23. If a Shareholder fails to pay any call or installment of a call on the day appointed for payment thereof, the Board may at any time thereafter during such time as any part of such call or installment remains unpaid serve a notice on him requiring payment of so much of the call or installment as is unpaid, together with any interest which may have accrued.
24. The notice shall name a further day (not being less than fourteen days from the date of the notice) on or before which, and the place where, the payment required by the notice is to be made and shall state that, in the event of non-payment on or before the day and at the place appointed, the shares in respect of which such call is made or installment is payable will be liable to be forfeited. The Board may accept the surrender of any share liable to be forfeited hereunder and, in such case, reference in these Bye-Laws to forfeiture shall include surrender.
25. If the requirements of any such notice as aforesaid are not compiled with, any share in respect of which such notice has been given may at any time thereafter, before payment of all calls or installments and interest due in respect thereof has been made, be forfeited by a resolution of the Board to that effect.
Such forfeiture shall include all dividends declared in respect of the forfeited shares and not actually paid before the forfeiture.
26. When any share has been forfeited, notice of the forfeiture shall be served upon the person who was before forfeiture the holder of the share; but no forfeiture shall be in any manner invalidated by any omission or neglect to give such notice as aforesaid.
27. A forfeited share shall be deemed to be the property of the Company and may be sold, re-offered or otherwise disposed of either to the person who was, before forfeiture, the holder thereof or entitled thereto or to any other person upon such terms and in such manner as the Board shall think fit, and, at any time before a sale, re-allotment or disposition, the forfeiture may be canceled on such terms as the Board may think fit.
28. A person whose shares have been forfeited shall thereupon cease to be a Shareholder in respect of the forfeited shares, but shall, notwithstanding the forfeiture, remain liable to pay to the Company all moneys which at the date of forfeiture were presently payable by him to the Company in respect of the shares with interest thereon at such rate as the Board may determine from the date of forfeiture until payment, and the Company may enforce payment without being under any obligation to make any allowance for the value of the shares forfeited.
29. An affidavit in writing that the deponent is a Director or the Secretary and that a share has been duly forfeited on the date stated in the affidavit shall be conclusive evidence of the facts therein stated as against all persons claiming to be entitled to the share. The Company may receive the consideration (if any) given for the share on the sale, re-allotment or disposition thereof and the Board may authorize some person to transfer the share to the person to whom the same is sold, re-allotted or disposed of, and he shall thereupon be registered as the holder of the share and shall not be bound to see to the application of the purchase money (if any) nor shall his title to the share be affected by any irregularity or invalidity in the proceedings relating to the forfeiture, sale, re-allotment or disposal of the share.
REGISTER OF SHAREHOLDERS
30. The Secretary shall establish and maintain the Register of Shareholders at the Registered Office in the manner prescribed by the Companies Acts. Unless the Board otherwise determines, the Register of Shareholders shall be open to inspection in the manner prescribed by the Companies Acts between 10:00 a.m. and 12:00 noon on every working day. Unless the Board so determines, no Shareholder or intending Shareholder shall be entitled to have entered in the Register any indication of any trust or any equitable, contingent, future or partial interest in any share or any interest in any fractional part of a share and if any such entry exists or is permitted by the Board it shall not be deemed to abrogate any of the provisions of Bye-Law 9.
31. Subject to the Companies Act, the Company may keep a branch Register of Shareholders in any place, and the Board may make and vary such regulations as it determines in respect of the keeping of any such Register and maintaining a Registration Office in connection therewith.
REGISTER OF DIRECTORS AND OFFICERS
32. The Secretary shall establish and maintain a register of the Directors and Officers of the Company as required by the Companies Acts. The register of Directors and Officers shall be open to inspection in the manner prescribed by the Companies Acts between 10:00 a.m. and 12:00 noon on every working day.
TRANSFER OF SHARES
33. Subject to the Companies Acts and to such of the restrictions contained in these Bye-Laws as may be applicable and to the provisions of any applicable United States securities laws including without limitation the United States Securities Act, 1933, as amended, and the rules promulgated thereunder, any Shareholder may transfer all or any of his shares by an instrument of transfer in the usual common form or in any other form which the Board may approve
34. The instrument of transfer of a share shall be signed by or on behalf of the transferor and, where any share is not fully-paid, the transferee. The transferor shall be deemed to remain the holder of the share until the name of the transferee is entered in the Register in respect thereof. Should the Company be permitted to do so under the laws of Bermuda, the Board may, either generally or in any particular case, upon request by the transferor or the transferee, accept mechanically or electronically (including a transfer by a London Stock Exchange nominee to whom no certificate was issued) executed transfer and may also make such regulations with respect to transfer in addition to the provisions of these Bye-Laws as it considers appropriate. The Board may, in its absolute discretion decline to register any transfer of any share which is not a fully-paid share.
- The Board shall decline to register the transfer of any share, and shall direct the Registrar to decline (and the Registrar shall decline) to register the transfer of any interest in any share held through the VPS, to a person where the Board is of the opinion that such transfer might breach any law or requirement of any authority or any Listing Exchange until it has received such evidence as it may require to satisfy itself that no such breach would occur.
- The Board may decline to register the transfer of any share, and may direct the Registrar to decline (and the Registrar shall decline if so requested) to register the transfer of any interest in any share held through the VPS, if the registration of such transfer would be likely, in the opinion of the Board, to result in fifty percent or more of the aggregate issued share capital of the Company or shares of the Company to which are attached fifty percent or more of the votes attached to all outstanding shares of the Company being held or owned directly or indirectly, (including, without limitation, through the VPS) by a person or persons resident for tax purposes in a jurisdiction which applies a controlled foreign company tax legislation or a similar tax regime which, in the Board's opinion, will have the effect that Shareholders are taxed individually for a proportion of the Company's profits (a "CFT Jurisdiction"), provided that this provision shall not apply to the registration of shares in the name of the Registrar as nominee of persons whose interests in such shares are reflected in the VPS, but shall apply, mutatis mutandis, to interests in shares of the Company held by persons through the VPS.
- For the purposes of this Bye-Law 34, each Shareholder (other than the Registrar in respect of those shares registered in its name in the Register as nominee of persons whose interests in such shares are reflected in the VPS) shall be deemed to be resident for tax purposes in the jurisdiction specified in the address shown in the Register for such Shareholder, and each person whose interests in shares are reflected in the VPS shall be deemed to be resident for tax purposes in the jurisdiction specified in the address shown in the VPS for such person. If such Shareholder or person is not resident for tax purpose in such jurisdiction or if there is a subsequent change in his residence for
tax purposes, such Shareholder shall notify the Company immediately of his residence for tax purposes.
- Where any Shareholder or person whose interests in shares are reflected in the VPS fails to notify the Company in accordance with the foregoing, the Board and the Registrar may suspend sine die such Shareholder's or person's entitlement to vote or otherwise exercise any rights attaching to the shares or interests therein and to receive payments of income or capital which become due or payable in respect of such shares or interests and the Company shall have no liability to such Shareholder or person arising out of the late payment or non-payment of such sums and the Company may retain such sums for its own use and benefit. In addition to the foregoing the Board and the Registrar may dispose of the shares in the Company or interests herein of such Shareholder or person at the best price reasonably obtainable in all the circumstances. Where a notice informing such Shareholder or person of the proposed disposal of his shares or interests therein has been served, his shares or interest therein may not be transferred otherwise than in accordance with this Bye-Law 34 and any other purported transfer of such shares or interests therein shall not be registered in the books of the Company or the VPS and shall be null and void.
- The provision of these Bye-Laws relating to the protection of purchaser of shares sold under lien or upon forfeiture shall apply mutatis mutandis to a disposal of shares or interests therein by the Company or the Registrar in accordance with this Bye-Law.
- Without limiting the generality of the foregoing, the Board may also decline to register any transfer unless:-
(i) the instrument of transfer is duly stamped and lodged with the Company accompanied by the certificate for the shares to which it relates if any and such other evidence as the Board may reasonably require to show the right of the transferor to make the transfer;
(ii) the instrument of transfer is in respect of only one class of share; and
(iii) where applicable, the permission of the Bermuda Monetary Authority with respect thereto has been obtained.
- Subject to any directions of the Board from time to time in force the Secretary may exercise the powers and discretion of the Board under this Bye-Law 34 and Bye-Laws 33 and 35.
- If fifty percent or more of the aggregate issued share capital of the Company or shares to which are attached fifty percent or more of the votes attached to all outstanding shares of the Company are found to be held or owned directly or indirectly (including, without limitation, through the VPS) by a person or persons resident for tax purposes in a CFT Jurisdiction, other than the Registrar in respect of those shares registered in its name in the Register as nominee of persons whose interests in such shares are reflected in the VPS, the Board shall make an announcement to such effect through the Listing Exchange(s), and the Board and the Registrar shall thereafter be entitled and required to dispose of such number of shares of the Company or interests therein held or owned by such persons as will result in the percentage of the aggregate issued share capital of the Company held or owned as aforesaid being less than fifty percent, and, for these purposes, the Board and the Registrar shall in such case dispose of shares or interests
therein owned by persons resident for tax purposes in the CFT Jurisdiction in question on the basis that the shares or interests therein most recently acquired shall be the first to be disposed of (i.e. on the basis of last acquired first sold) save where there is a breach of the obligation to notify tax residency pursuant to the foregoing, in which event the shares or interests therein of the person in breach thereof shall be sold first. Shareholders shall not be entitled to raise any objection to the disposal of their shares, but the provisions of these Bye-Laws relating to the protection of purchasers of shares sold under lien or upon forfeiture shall apply mutatis mutandis to any disposal of shares or interests therein made in accordance with this Bye-Law.
35. If the Board declines to register a transfer it shall, within sixty days after the date on which the instrument of transfer was lodged, send to the transferee notice of such refusal.
36. No fee shall be charged by the Company for registering any transfer, probate, letters of administration, certificate of death or marriage, power of attorney, distringas or stop notice, order of court or other instrument relating to or affecting the title to any share, or otherwise making an entry in the Register relating to any share.
TRANSMISSION OF SHARES
37. In the case of the death of a Shareholder, the survivor or survivors, where the deceased was a joint holder, and the estate representative, where he was sole holder, shall be the only person recognized by the Company as having any title to his shares; but nothing herein contained shall release the estate of a deceased holder (whether sole or joint) from any liability in respect of any share held by him solely or jointly with other persons. For the purpose of this Bye-Law 37, "estate representative" means the person to whom probate or letters of administration has or have been granted in Bermuda or, failing any such person, such other person as the Board may in its absolute discretion determine to be the person recognized by the Company for the purpose of this Bye-Law.
38. Any person becoming entitled to a share in consequence of the death of a Shareholder or otherwise by operation of applicable law may, subject as hereafter provided and upon such evidence being produced as may from time to time be required by the Board as to his entitlement, either be registered himself as the holder of the share or elect to have some person nominated by him registered as the transferee thereof. If the person so becoming entitled elects to be registered himself, he shall deliver or send to the Company a notice in writing signed by him stating that he so elects. If he shall elect to have another person registered, he shall signify his election by signing an instrument of transfer of such share in favor of that other person. All the limitations, restrictions and provisions of these Bye-Laws relating to the right to transfer and the registration of transfer of shares shall be applicable to any such notice or instrument of transfer as aforesaid as if the death of the Shareholder or other event giving rise to the transmission had not occurred and the notice or instrument of transfer was an instrument of transfer shared by such Shareholder.
39. A person becoming entitled to a share in consequence of the death of a Shareholder or otherwise by operation of applicable law shall (upon such evidence being produced as may from time to time be required by the Board as to his entitlement) be entitled to receive and may give a discharge for any dividends or other moneys payable in respect of the share, but he shall not be entitled in respect of the share to receive notices of or to attend or vote at general meetings of the Company or, save as aforesaid, to exercise in respect of the share any of the rights or privileges of a Shareholder until he shall have become registered as the holder thereof. The Board may at any time give notice requiring such person to elect either to be registered himself or to transfer the share and if the notice is not complied with within sixty days the Board may thereafter withhold payment of all dividends and other moneys payable in respect of the shares until the requirements of the notice have been complied with.
40. Subject to any directions of the Board from time to time in force, the Secretary may exercise the powers and discretions of the Board under Bye-Laws 37, 38 and 39.
INCREASE OF CAPITAL
42. The Company may from time to time increase its capital by such sum to be divided into shares of such par value as the Company by Ordinary Resolution shall prescribe.
44. The new shares shall be subject to all the provisions of these Bye-Laws with reference to lien, the payment of calls, forfeiture, transfer, transmission and otherwise.
ALTERATION OF CAPITAL
45. The Company may from time to time by Ordinary Resolution:
(a) divide its shares into several classes and attach thereto respectively any preferential, deferred, qualified or special rights, privileges or conditions;
(b) consolidate and divide all or any of its share capital into shares of larger par value than its existing shares;
(c) sub-divide its shares or any of them into shares of smaller amount than is fixed by its memorandum, so, however, that in the sub-division the proportion between the amount paid and the amount, if any, un paid on each reduced share shall be the same as it was in the case of the share from which the reduced share is derived;
(d) make provision for the issue and allotment of shares which do not carry any voting rights;
(e) cancel shares which at the date of the passing of the resolution in that behalf have not been taken or agreed to be taken by any person and diminish the amount of its share capital by the amount of the shares so cancelled;
(f) change the currency denomination of its share capital.
Where any difficulty arises in regard to any division, consolidation, or sub-division under this Bye-Law 45, the Board may settle the same as it thinks expedient and, in particular, may arrange for the sale of the shares representing fractions and the distribution of the net proceeds of sale in due proportion amongst the Shareholders who would have been entitled to the fractions, and, for this purpose, the Board may authorize some person to transfer the shares representing fractions to the purchaser thereof, who shall not be bound to see to the application of the purchase money nor shall his title to the shares be affected by any irregularity or invalidity in the proceedings relating to the sale.
46. Subject to the provisions of the Companies Act and to any confirmation or consent required by law or these Bye-Laws, the Company may be Ordinary Resolution from time to time convert any preference shares into redeemable preference shares.
47. The Company may from time to time purchase its own shares on such terms and in such manner as may be authorized by the Board of Directors, subject to the rules, if applicable, of the Listing Exchange(s).
In the event the Company conducts a tender offer for its shares, any such offer which is made through the facilities of any or all Listing Exchange(s) shall be expressed as being conditional upon no Shareholders or persons resident for tax purposes in a CFT Jurisdiction owning or controlling fifty percent or more of the issued share capital or the votes attaching to the issued and outstanding share capital of the Company following such purchase.
Any share so purchased shall be treated as cancelled, and the amount of the Company's issued share capital shall be diminished by the nominal value of the shares purchased, but such purchase shall not be taken as reducing the amount of the Company's authorized share capital.
REDUCTION OF CAPITAL
48. Subject to the Companies Acts, its memorandum and any confirmation or consent required by law or these Bye-Laws, the Company may from time to time by Ordinary Resolution authorize the reduction of its issued share capital or any capital redemption reserve fund or any share premium or contributed surplus account in any manner.
49. In relation to any such reduction the Company may be Ordinary Resolution determine the terms upon which such reduction is to be effected, including, in the case of a reduction of part only of a class of shares, those shares to be affected.
GENERAL MEETINGS
50. The Board shall convene and the Company shall hold general meetings as Annual General Meetings in accordance with the requirements of the Companies Acts at such times and places subject to the limitation set out below as the Board shall appoint. The Board may whenever it thinks fit, and shall when required by the Companies Acts, convene general meetings other than Annual General Meetings which shall be called Special General Meetings. Any such Annual or Special General Meeting shall be held at any place other than in a CFT Jurisdiction.
NOTICE OF GENERAL MEETINGS
51. An Annual General Meeting shall be called by not less than seven days notice in writing and a Special General Meeting shall be called by not less than seven days notice in writing. The notice period shall be exclusive of the day on which the notice is served or deemed to be served and of the day on which the meeting to which it relates is to be held and shall specify the place, day and time of the meeting, and in the case of a Special General Meeting, the general nature of the business to be considered. Notice of every general meeting shall be given in any manner permitted by Bye-Laws 127 and 128 to all Share holders. Notwithstanding that a meeting of the Company is called by shorter notice than that specified in this Bye-Law, it shall be deemed to have been duly called if it is so agreed:
(a) in the case of a meeting called as an Annual General Meeting by all the Shareholders entitled to attend and vote thereat;
(b) in the case of any other meeting by a majority in number of the Shareholders having the right to attend and vote at the meeting, being a majority together holding not less than ninety-five percent in nominal value of the shares giving that right; provided that notwithstanding any provision of these Bye-Laws, no Shareholder shall be entitled to attend any general meeting unless notice in writing of the intention to attend and vote in person or by proxy signed by or on behalf of the Shareholder (together with the power of attorney or other authority, if any, under which it is signed or a notarially certified copy thereof) addressed to the Secretary is deposited (by post, courier, facsimile transmission or other electronic means) at the Registered Office at least 48 hours before the time appointed for holding the general meeting or adjournment thereof.
52. The accidental omission to give notice of a meeting or (in cases where instruments of proxy are sent out with the notice) the accidental omission to send such instrument of proxy to or the non-receipt of notice of a meeting or such instrument of proxy by any person entitled to receive such notice shall not invalidate the proceedings at that meeting.
53. The Board may convene a Special General Meeting whenever it thinks fit. A Special General Meeting shall also be convened by the Board on the written requisition of Shareholders holding at the date of the deposit of the requisition not less than one tenth in nominal value of the paid-up capital of the Company which as at the date of the deposit carries the right to vote at a general meeting of the Company. The requisition must state the purposes of the meeting and must be signed by the requisitionists and deposited at the registered office of the Company, and may consist of several documents in like form each signed by one or more of the requisitionists.
PROCEEDINGS AT GENERAL MEETING
54. No business shall be transacted at any general meeting unless the requisite quorum is present when the meeting proceeds to business, but the absence of a quorum shall not preclude the appointment, choice or election of a chairman which shall not be treated as part of the business of the meeting. Save as otherwise provided by these Bye-Laws, the quorum at any general meeting shall be constituted by one or more shareholders, either present in person or represented by proxy, holding in the aggregate shares carrying 33 1/3% of the voting rights entitled to be exercised at such meeting.
55. If within five minutes (or such longer time as the chairman of the meeting may determine to wait) - after the time appointed for the meeting, a quorum is not present, the meeting, if convened on the requisition of Shareholders, shall be dissolved. In any other case, it shall stand adjourned to such other day and such other time and place as the chairman of the meeting may determine and at such adjourned meeting two Shareholders or, in the event that there is only one Shareholder, one Shareholder, present in person or by proxy (whatever the number of shares held by them) shall be a quorum. The Company shall give not less than five days notice of any meeting adjourned through want of a quorum and such notice shall state that two Shareholders or, in the event that there is only one Shareholder, one Shareholder, present in person or by proxy (whatever the number of shares held by them) shall be a quorum.
56. A meeting of the Shareholders or any class thereof may be held by means of such telephone, electronic or other communication facilities as permit all persons participating in the meeting to communicate with each other simultaneously and instantaneously and participation in such meeting shall constitute presence in person at such meeting.
57. Each Director and the Company's auditor and Secretary shall be entitled to attend and speak at any general meeting of the Company.
58. The Chairman (if any) of the Board or, in his absence, the President shall preside as chairman at every general meeting. If there is no such Chairman or President, or if at any meeting neither the Chairman nor the President is present within five minutes after the time appointed for holding the meeting, or if neither of them is willing to act as chairman, the Directors present shall choose one of their number to act or if one Director only is present he shall preside as chairman if willing to act. If no Director is present or if each of the Directors present declines to take the chair, the persons present and entitled to vote on a poll shall elect one of their number to be chairman.
59. The chairman of the meeting may, with the consent of those present at any meeting at which a quorum is present (and shall if so directed by the meeting), adjourn the meeting from time to time and from place to place but no business shall be transacted at any adjourned meeting except business which might lawfully have been transacted at the meeting from which the adjournment took place. When a meeting is adjourned for thirty days or more, notice of the adjourned meeting shall be given as in the case of an original meeting.
60. Save as expressly provided by these Bye-Laws, it shall not be necessary to give any notice of an adjournment or of the business to be transacted at an adjourned meeting.
VOTING
61. Save where as greater majority is required by the Companies Acts or these Bye-Laws, any question proposed for consideration at any general meeting shall be decided on by Ordinary Resolution.
62. The Board may, with the sanction of an Ordinary Resolution, amalgamate the Company with another company (whether or not the Company is the surviving company and whether or not such an amalgamation involves a change in the jurisdiction of the Company).
63. At any general meeting, a resolution put to the vote of the meeting shall be decided on a show of hands unless (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) a poll is demanded by;
(a) the chairman of the meeting; or
(b) at least three shareholders present in person or represented by proxy; or
(c) any shareholder or shareholders present in person or represented by proxy and holding between them not less than one tenth of the total voting rights of all the shareholders having the right to vote at such meeting; or
(d) a shareholder or shareholders present in person or represented by proxy holding shares conferring the right to vote at such meeting, being shares on which an aggregate sum has been paid up equal to at least one-tenth of the total sum paid up on all such shares conferring such right.
Unless a poll is so demanded and the demand is not withdrawn, a declaration by the chairman that a resolution has, on a show of hands, been carried or carried unanimously or by a particular majority or not carried by a particular majority or lost shall be final and conclusive, and an entry to that effect in the Minute Book of the Company shall be conclusive evidence of the fact without proof of the number of votes recorded for or against such resolution.
64. A poll demanded on the election of a chairman, or on a question of adjournment, shall be taken forth with. A poll demanded on any other question shall be taken in such manner and either forthwith or at such time (being not later than three months after the date of the demand) and place as the chairman shall direct. It shall not be necessary (unless the chairman otherwise directs) for notice to be given of a poll.
65. The demand for a poll shall not prevent the continuance of a meeting for the transaction of any business other than the question on which the poll has been demanded and it may be withdrawn at any time before the close of the meeting or the taking of the poll whichever is the earlier.
66. On a poll, votes may be cast either personally or by proxy.
67. A person entitled to more than one vote on a poll need not use all his votes or cast all the votes he uses in the same way.
68. If a poll is duly demanded, the result of the poll shall be deemed to be the resolution of the meeting at which the poll is demanded.
69. In the case of any equality of votes at a general meeting, whether on a show of hands or on a poll, the chairman of such meeting shall not be entitled to a second or casting vote.
70. Subject to the provisions of these Bye-Laws and to any special rights or restrictions as to voting for the time being attached to any shares, every Shareholder who is present in person or by proxy or proxies shall have one vote for every share of which he is the holder.
71. In the case of joint holders of a share, the vote of the senior joint holder who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders, and for this purpose seniority shall be determined by the order in which the names stand in the Register in respect of the joint holding.
72. A Shareholder who is a patient for any purpose of any statute or applicable law relating to mental health or in respect of whom an order has been made by any Court having jurisdiction for the protection or management of the affairs of persons incapable of managing their own affairs may vote by his receiver, committee, curator bonis or other person in the nature of a receiver, committee or curator bonis appointed by such Court and such receiver, committee, curator bonis or other person may vote by proxy, and may otherwise act and be treated as such Shareholder for the purpose of general meetings.
73. No Shareholder shall, unless the Board otherwise determines, be entitled to vote at any general meeting unless all calls or other sums presently payable by him in respect of shares in the Company have been paid.
74. If (i) any objection shall be raised to the qualification of any voter or
(ii) any votes have been counted which ought not to have been counted or which
might have been rejected or (iii) any votes are not counted which ought to have
been counted, the objection or error shall not vitiate the decision of the
meeting or adjourned meeting on any resolution unless the same is raised or
pointed out at the meeting or, as the case may be, the adjourned meeting at
which the vote objected to is given or tendered or at which the error occurs.
Any objection or error shall be referred to the chairman of the meeting and
shall only vitiate the decision of the meeting on any resolution if the chairman
decides that the same may have affected the decision of the meeting. The
decision of the chairman on such matters shall be final and conclusive.
PROXIES AND CORPORATE REPRESENTATIVES
75. A Shareholder may appoint one or more proxies to attend at a general meeting of the Company and to vote on his behalf and proxies appointed by a single Shareholder need not all exercise their vote in the same manner. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney authorized by him in writing or, if the appointor is a body corporate, either under its seal or under the hand of an officer, attorney or other person authorized to sign the same.
76. Any Shareholder may appoint a standing proxy or (if a body corporate) representative by depositing at the Registered Office a proxy or (if a body corporate) an authorization and such proxy or authorization shall be valid for all general meetings and adjournments thereof until notice of revocation is received at the Registered Office. Where a standing proxy or authorization exists, its operation shall be deemed to have been suspended at any general meeting or adjournment thereof at which the Shareholder is present or in respect of which the Shareholder has specially appointed a proxy or representative. The Board may from time to time require such evidence as it shall deem necessary as to the due execution and continuing validity of any such standing proxy or authorization and the operation of any such standing proxy or authorization shall be deemed to be suspended until such time as the Board determines that it has received the requested evidence or other evidence satisfactory to it.
77. Subject to Bye-Law 76, the instrument appointing a proxy together with such other evidence as to its due execution as the Board may from time to time require, shall be delivered at the Registered Office, at the place of the meeting, or at such place as may be specified in the notice convening the meeting or in any notice of any adjournment, or, in either case, in any document sent therewith, prior to the holding of the meeting or adjourned meeting at which the person named in the instrument proposes to vote or, in the case of a poll taken subsequent to the date of a meeting or adjourned meeting, before the time appointed for the taking of the poll and in default the instrument of proxy shall not be treated as valid.
78. Instruments of proxy shall be in any common form or in such other form as the Board may approve and the Board may, if it thinks fit, send out with the notice of any meeting forms of instruments of proxy for use at that meeting. The instrument of proxy shall be deemed to confer authority to vote on any amendment of a resolution put to the meeting for which it is given as the proxy thinks fit. The instrument of proxy shall unless the contrary is stated therein be valid as well for any adjournment of the meeting as for the meeting to which it relates.
79. A vote given in accordance with the terms of an instrument of proxy shall be valid notwithstanding the previous death or insanity of the principal or revocation of the instrument of proxy or of the authority under which it was executed, provided that no intimation in writing of such death, insanity or revocation shall have been received by the Company at the Registered Office, the place of the meeting or such other place as may be specified for the delivery of instruments of proxy in the notice convening the meeting or other documents sent therewith before the commencement of the meeting or adjourned meeting, or the taking of the poll, at which the instrument of proxy is used.
80. Subject to the Companies Acts, the Board may at its discretion waive any of the provisions of these Bye-Laws related to proxies or authorizations and, in particular, may accept such verbal or other assurances as it thinks fit as to the right of any person to attend and vote on behalf of any Shareholder at general meetings.
APPOINTMENT AND REMOVAL OF DIRECTORS
82. The number of Directors shall be such number not less than two as the Company by Ordinary Resolution may from time to time determine and each Director shall hold office until the next annual general meeting following his election or until his successor is elected.
83. The Company shall at the Annual General Meeting and may in a general meeting by Ordinary Resolution determine the minimum and the maximum number of Directors and may by Ordinary Resolution determine that one or more vacancies in the Board shall be deemed casual vacancies for the purposes of these Bye-Laws. Without prejudice to the power of the Company in any general meeting in pursuance of any of the provisions of these Bye-Laws to appoint any person to be a Director, the Board, so long as a quorum of Directors remains in office, shall have power at any time and from time to time to appoint any individual to be a Director so as to fill a casual vacancy.
84. The Company may in a Special General Meeting called for that purpose remove a Director provided notice of any such meeting shall be served upon the Director concerned not less than fourteen days before the meeting and he shall be entitled to be heard at that meeting. Any vacancy created by the removal of a Director at a Special General Meeting may be filled at the Meeting by the election of another person as Director in his place or, in the absence of any such election, by the Board.
RESIGNATION AND DISQUALIFICATION OF DIRECTORS
85. The office of a Director shall be vacated upon the happening of any of the following events:
(a) if he resigns his office by notice in writing delivered to the Registered Office or tendered at a meeting of the Board;
(b) if he becomes of unsound mind or a patient for any purpose of any statute or applicable law relating to mental health and the Board resolves that he shall be removed from office;
(c) if he becomes bankrupt or compounds with his creditors;
(d) if he is prohibited by law from being a Director; or
(e) if he ceases to be a Director by virtue of the Companies Acts or is removed from office pursuant to these Bye-Laws.
ALTERNATE DIRECTORS
86. (a) The Company may by Ordinary Resolution elect a person or persons qualified to be Directors to act as Directors in the alternative to any of the Directors of the Company or may authorize the Board to appoint such Alternate Directors and a Director may appoint and remove his own Alternate Director.
Any appointment or removal of an Alternate Director by a Director shall be effected by depositing a notice of appointment or removal with the Secretary at the Registered Office, signed by such Director, and such appointment or removal shall become effective on the date of receipt by the Secretary. Any Alternate Director may be removed by Ordinary Resolution of the Company and, if appointed by the Board, may be removed by the Board. Subject as aforesaid, the office of Alternate Director shall continue until the next annual election of Directors or, if earlier, the date on which the relevant Director ceases to be a Director. An Alternate Director may also be a Director in his own right and may act as alternate to more than one Director.
(b) A Director may at any time, by notice in writing signed by him delivered to the Registered Office of the Company or at a meeting of the Board, appoint any person (including another Director) to act as Alternate Director in his place during his absence and may in like manner at any time determine such appointment. If such person is not another Director such appointment unless previously approved by the Board shall have effect only upon and subject to being so approved. The appointment of an Alternate Director shall determine on the happening of any event which, were he a Director, would cause him to vacate such office or if his appointor ceases to be a Director.
DIRECTORS' FEES AND ADDITIONAL REMUNERATION AND EXPENSES
87. The amount, if any, of Directors' fees shall from time to time be determined by the Company by Ordinary Resolution and in the absence of a determination to the contrary in general meeting, such fees shall be deemed to accrue from day to day. Each Director may be paid his reasonable traveling, hotel and incidental expenses properly incurred in attending and returning from meetings of the Board or committees constituted pursuant to these Bye-Laws or general meetings and shall be paid all expenses properly and reasonably incurred by him in the conduct of the Company's business or in the discharge of his duties as a Director. Any Director who, by request, goes or resides abroad for any purposes of the Company or who performs services which in the opinion of the Board go beyond the ordinary duties of a Director may be paid such extra remuneration (whether by way of salary, commission, participation in profits or otherwise) as the Board may determine, and such extra remuneration shall be in addition to any remuneration provided for by or pursuant to any other of these Bye-Laws.
DIRECTORS' INTERESTS
88. (a) A Director may hold any other office or place of profit with the Company (except that of auditor) in conjunction with his office of Director for such period and upon such terms as the Board may determine and may be paid such extra remuneration therefor (whether by way of salary, commission, participation in profits or otherwise) as the Board may determine, and such extra remuneration shall be in addition to any remuneration provided for by or pursuant to any other of these Bye-Laws.
(b) A Director may act by himself or his firm in a professional capacity for the Company (otherwise than as auditor) and he or his firm shall be entitled to remuneration for professional services as if he were not a Director.
(c) Subject to the provisions of the Companies Acts, a Director may notwithstanding his office be a party to or otherwise interested in any transaction or arrangement with the Company or in which the Company is otherwise interested and may be a director or other officer of, employed by, a party to any transaction or arrangement with, or otherwise interested in any body corporate promoted by the Company or in which the Company is interested. The Board may also cause the voting power conferred by the shares in any other body corporate held or owned by the Company to be exercised in such manner in all respects as it thinks fit, including the exercise thereof in favor of any resolution appointing the Directors or any of them to be directors or officers of such other body corporate, or voting or providing for the payment of remuneration to the directors or officers of such other body corporate.
(d) So long as, where it is necessary, he declares the nature of his interest at the first opportunity as a meeting of the Board or by writing to the Directors as required by the Companies Acts, a Director shall not by reason of his office be accountable to the Company for any benefit which he derives from any office or employment to which these Bye-Laws allow him to be appointed or from any transaction or arrangement in which these Bye-Laws allow him to be interested, and no such transaction or arrangement shall be liable to be avoided on the ground of any interest or benefit.
(e) Subject to the Companies Acts and any further disclosure required thereby, a general notice to the Directors by a Director or officer declaring that he is a director or officer or has an interest in a person and is to be regarded as interested in any transaction or arrangement made with that person, shall be a sufficient declaration of interest in relation to any transaction or arrangement so made.
POWER AND DUTIES OF THE BOARD
89. Subject to the provisions of the Companies Acts and these Bye-Laws and to any directions given by the Company in general meeting, the Board shall manage the business of the Company and may pay all expenses incurred in promoting and incorporating the Company and may exercise all the powers of the Company. No alteration of these Bye-Laws and no such direction shall invalidate any prior act of the Board which would have been valid if that alteration had not been made or that direction had not been given. The powers given by this Bye-Law shall not be limited by any special power given to the Board by these Bye-Laws and a meeting of the Board at which a quorum is present shall be competent to exercise all the powers, authorities and discretions for the time being vested in or exercisable by the Board.
90. The Board may exercise all the powers of the Company to borrow money and to mortgage or charge all or any part of the undertaking property and assets (present and future) and uncalled capital of the Company and to issue debentures and other securities, whether outright or as collateral security for any debt, liability or obligation of the Company or of any other persons.
91. All checks, promissory notes, drafts, bills of exchange and other instruments, whether negotiable or transferable or not, and all receipts for money paid to the Company shall be signed, drawn, accepted, endorsed or otherwise executed, as the case may be, in such manner as the Board shall from time to time by resolution determine.
92. The Board on behalf of the Company may provide benefits, whether by the payment of gratuities or pensions or otherwise, for any person including any Director or former Director who has held any executive office or employment with the Company or with any body corporate which is or has been a subsidiary or affiliate of the Company or a predecessor in the business of the Company or of any such subsidiary or affiliate, and to any member of his family or any person who is or was dependent on him, and may contribute to any fund and pay premiums for the purchase or provision of any such gratuity, pension or other benefit, or for the insurance of any such person in connection with the provision of pensions.
93. The Board may from time to time appoint one or more of its body to be a managing director, joint managing director or an assistant managing director or to hold any other employment or executive office with the Company for such period and upon such terms as the Board may determine and may revoke or terminate any such appointments. Any such revocation or termination as aforesaid shall be without prejudice to any claim for damages that such Director may have against the Company or the Company may have against such Director for any breach of any contract of service between him and the Company which may be involved in such revocation or termination. Any person so appointed shall receive such remuneration (if any, whether by way of salary, commission, participation in profits or otherwise) as the Board may determine, and either in addition to or in lien of his remuneration as a Director.
DELEGATION OF THE BOARD'S POWERS
94. The Board may by power of attorney appoint any company, firm or person or any fluctuating body of persons, whether nominated directly or indirectly by the Board, to be the attorney or attorneys of the Company for such purposes and with such power, authorities and discretions (not exceeding those vested in or exercisable by the Board under these Bye-Laws) and for such period and subject to such conditions as it may think fit, and any such power of attorney may contain such provisions for the protection and convenience of persons dealing with any such attorney and of such attorney as the Board may think fit, and may also authorize any such attorney to sub-delegate all or any of the powers, authorities and discretions vested in him. The Board may revoke or vary any such delegation of power, but no person dealing in good faith with such delegate without notice of such revocation or variation shall be affected by such revocation or variation.
95. The Board may entrust to and confer upon any Director or officer or, without prejudice to the provisions of Bye-Law 97, other individual any of the powers exercisable by it upon such terms and conditions with such restrictions as it thinks fit, and either collaterally with, or to the exclusion of its own powers, and may from time to time revoke or vary all or any of such powers but no person dealing in good faith and without notice of such revocation or variation shall be affected thereby.
96. The Board may delegate any of its powers, authorities or discretions to committees, consisting of such person or persons (whether a member or members of its body or not) as it thinks fit. Any committee so formed shall, in the exercise of the powers, authorities and
discretions so delegated, conform to any regulations which may be imposed upon it by the Board. The Board may revoke or vary any such delegation of its powers, authorities and discretions, but no person dealing in good faith and without notice of such revocation or variation shall be affected thereby.
PROCEEDINGS OF THE BOARD
97. The Board may meet for the despatch of business, adjourn and otherwise regulate its meetings as it thinks fit, provided that Board meetings are to be held outside CFT Jurisdictions. Questions arising at any meeting shall be determined by a majority of votes cast. In the case of an equality of votes the motion shall be deemed to have been lost. A Director may, and the Secretary on the requisition of a Director shall, at any time summon a Board meeting.
98. Notice of a Board meeting shall be deemed to be duly given to a Director if it is given to him personally or by word of mouth or sent to him by post, cable, telex, telecopier or other mode of representing or reproducing words in a legible and non-transitory form at his last known address or any other address given by him to the Company for this purpose. A Director may waive notice of any meeting either prospectively or retrospectively.
99. (a) The quorum necessary for the transaction of the business of the Board may be fixed by the Board and, unless so fixed at any other number, shall be individuals constituting a majority of the Board. Any Director who ceases to be a Director at a Board meeting may continue to be present and to act as a Director and be counted in the quorum until the termination of the Board meeting if no other Director objects and if otherwise a quorum of Directors would not be present.
(b) Subject to the provisions of Bye-Law 89, a Director who to his knowledge is in any way, whether directly or indirectly, interested in a contract or proposed contract, transaction or arrangement with the Company and has complied with the provisions of the Companies Acts and these Bye-Laws with regard to disclosure of his interest shall be entitled to vote in respect of any contract, transaction or arrangement in which he is so interested and if he shall do so his vote shall be counted, and he shall be taken into account in ascertaining whether a quorum is present.
100. So long as a quorum of Directors remains in office, the continuing Directors may act notwithstanding any vacancy in the Board but, if no such quorum remains, the continuing Directors or a sole continuing Director may act only for the purpose of calling a general meeting.
101. The Chairman (if any) of the Board or, in his absence, the President shall preside as chairman at every meeting of the Board. If there is no such Chairman or President, or if at any meeting neither the Chairman nor the President is present within five minutes after the time appointed for holding the meeting, or if neither of them is willing to act as chairman, the Directors present may choose one of their number to be chairman of the meeting.
102. The meetings and proceedings of any committee consisting of two or more members shall be governed by the provisions contained in these Bye-Laws for regulating the meetings and proceedings of the Board so far as the same are applicable and are not superseded by any regulations imposed by the Board.
103. A resolution in writing signed by all the Directors for the time being entitled to receive notice of a meeting of the Board or by all the members of a committee for the time being shall be as valid and effectual as a resolution passed at a meeting of the Board or, as the case may be, of such committee duly called and constituted. Such resolution may be contained in one document or in several documents in the like form each signed by one or more of the Directors or members of the committee concerned.
104. A meeting of the Board or a committee appointed by the Board may be held by means of such telephone, electronic or other communication facilities as permit all persons participating in the meeting to communicate with each other simultaneously and instantaneously and participation in such a meeting shall constitute presence in person at such meeting. A meeting of the Board or committee appointed by the Board held in the foregoing manner shall be deemed to take place at the place where the largest group of participating Directors or committee members has assembled or, if no such group exists, at the place where the chairman of the meeting participates. The Board or relevant committee shall use its best endeavours to ensure that any such meeting is not deemed to have been held in a CFT Jurisdiction, and the fact that one or more Directors may be present at such teleconference by virtue of his being physically in a CFT Jurisdiction shall not deem such meeting to have taken place in such jurisdiction.
105. All acts done by the Board or by any committee or by any person acting as a Director or member of a committee or any person duly authorized by the Board or any committee, shall, notwithstanding that it is afterwards discovered that there was some defect in the appointment of any member of the Board or such committee or person acting as aforesaid or that they or any of them were disqualified or had vacated their office, be as valid as if every such person had been duly appointed and was qualified and had continued to be a Director, member of such committee or person so authorized.
OFFICERS
106. The officers of the Company shall include a President and a Vice-President who shall be Directors and shall be elected by the Board as soon as possible after the statutory meeting and each annual general meeting. In addition, the Board may appoint one of the Directors to be Chairman of the Board and any person, whether or not he is a Director to hold such other office (including any additional Vice-Presidencies) as the Board may from time to time determine. Any person elected or appointed pursuant to this Bye-Law shall hold office for such period and upon such terms as the Board may determine and the Board may revoke or terminate any such election or appointment. Any such revocation or termination shall be without prejudice to any claim for damages that such officer may have against the Company or the Company may have against such officer for any breach of any contract of service between him and the Company which may be involved in such revocation or termination. Save as provided in the Companies Acts or these Bye-Laws, the powers and duties of the officers of the Company shall be such (if any) as are determined from time to time by the Board.
MINUTES
107. The Directors shall cause minutes to be made and books kept for the purpose of recording:
(a) all appointments of officers made by the Directors;
(b) the names of the Directors and other persons (if any) present at each meeting of Directors and of any committee;
(c) all proceedings at meetings of the Company, of the holders of any class of shares in the Company, and of committees; and
(d) all proceedings of managers (if any).
SECRETARY
108. The Secretary shall be appointed by the Board at such remuneration (if any) and upon such terms as it may think fit and any Secretary so appointed may be removed by the Board.
The duties of the Secretary shall be those prescribed by the Companies Acts together with such other duties as shall from time to time be prescribed by the Board.
109. A provision of the Companies Acts or these Bye-Laws requiring or authorizing a thing to be done by or to a Director and the Secretary shall not be satisfied by its being done by or to the same person acting both as Director and as, or in the place of, the Secretary.
THE SEAL
110. (a) The Seal shall consist of a circular metal device with the name of the Company around the outer margin thereof and the country and year of incorporation across the center thereof. Should the Seal not have been received by the Registered Office in such form at the date of adoption of these Bye-Laws then, pending such receipt, any document requiring to be sealed with the Seal shall be sealed by affixing a red wafer seal to the document with the name of the Company and the country and year of incorporation typewritten across the center thereof.
(b) The Board shall provide for the custody of every Seal. A Seal shall only be used by authority of the Board or of a committee of the Board authorized by the Board in their behalf. Subject to these Bye-Laws, any instrument to which a Seal is affixed shall be signed by a Director and by the Secretary or by a second Director; provided that the Secretary or a Director may affix a Seal over his signature only to authenticate copies of these Bye-Laws, the minutes of any meeting or any other documents requiring authentication.
DIVIDENDS AND OTHER PAYMENTS
111. The Board may from time to time declare cash dividends or distributions out of contributed surplus to be paid to the Shareholders according to their rights and interests including interim dividends as appear to the Board of justified by the position of the Company. The Board may also pay any fixed cash dividend which is payable on any shares of the Company half yearly or on such other dates, whenever the position of the Company in the opinion of the Board, justifies such payment.
112. Except insofar as the rights attaching to, or the terms of issue of, any share otherwise provide:
(a) all dividends or distributions out of contributed surplus may be declared and paid according to the amounts paid up on the shares in respect of which the dividend or distribution is paid and an amount paid up on a share in advance of calls may be treated for the purpose of this Bye-Law as paid-up on the share;
(b) dividends or distributions out of contributed surplus may be apportioned and paid pro rata according to the amounts paid up on the shares during any portion or portions of the period in respect of which the dividend or distribution is paid.
113. The Board may deduct from any dividend, distribution or other moneys payable to a Shareholder by the Company on or in respect of any share all sums of money (if any) presently payable by him to the Company on account of calls or otherwise in respect of shares of the Company.
114. No dividend, distribution or other moneys payable by the Company on or in respect of any share bear interest against the Company unless otherwise provided by the rights attached to such share.
115. Any dividend distribution, interest or other sum payable in cash to the holder of shares may be paid by check or warrant sent through the mail addressed to the holder at his address in the Register or, in the case of joint holders, addressed to the holder whose name stands first in the Register in respect of the shares at his registered address as appearing in the Register or addressed to such person at such address as the holder or joint holders may in writing direct. Every such check or warrant shall, unless the holder or joint holders otherwise direct, be made payable to the order of the holder or, in the case of joint holders, to the order of the holder whose name stands first in the Register in respect of such shares, and shall be sent at his or their risk, and payment of the check or warrant by the bank on which it is drawn shall constitute a good discharge to the Company. Any one of two or more joint holders may give effectual receipts for any dividends, distributions or other moneys payable or property distributable in respect of the shares held by such joint holders.
116. Any dividend or distribution out of contributed surplus unclaimed for a period of six years from the date of declaration of such dividend or distribution shall be forfeited and shall revert to the Company, and the payment by the Board of any unclaimed dividend, distribution, interest or other sum payable on or in respect of the share into a separate account shall not constitute the Company a trustee in respect thereof.
117. The Board may direct payment or satisfaction of any dividend or distribution out of contributed surplus wholly or in part by the distribution of specific assets and, in particular, of paid up shares or debentures of any other body corporate, and where any difficulty arises in regard to such distribution or dividend the Board may settle it as it thinks expedient and, in particular, may authorize any person to sell and transfer any fractions or may ignore fractions altogether and may fix the value for distribution or dividend purposes of any such specific assets and may determine that cash payments shall be made to any Shareholders upon the basis of the value so fixed in order to secure equality of distribution and may vest any such specific assets in trustees as may seem expedient to the Board.
RESERVES
118. The Board may, before recommending or declaring any dividend or distribution out of contributed surplus, set aside such sums as it thinks proper as reserves which shall, at the discretion of the Board, be applicable for any purpose of the Company and pending such application may, also at such discretion, either be employed in the business of the Company or be invested in such investments as the Board may from time to time think fit. The Board may also without placing the same to reserve carry forward any sums which it may think it prudent not to distribute.
CAPITALIZATION OF PROFITS
119. The company may, upon the recommendation of the Board, at any time and from time to time resolve by Ordinary Resolution to the effect that it is desirable to capitalize all or any part of any amount for the time being standing to the credit of any reserve or fund which is available for distribution or to the credit of any share premium account or any capital redemption reserve fund and accordingly that such amount be set free for distribution amongst the Shareholders or any class of Shareholders who would be entitled thereto if distributed by way of dividend and in the same proportions, provided that the same be not paid in cash but be applied either in or towards paying up amounts for the time being unpaid on any shares in the Company held by such Shareholders respectively or in payment up in full of unissued shares, debentures or other obligations of the Company, to be allotted, distributed and credited as fully paid among such Shareholders, or partly in one way or partly in the other, and the Board shall give effect to such resolution, provided that for the purpose of this Bye-Law, a share premium account and a capital redemption reserve fund may be applied only in paying up of unissued shares to be issued to such Shareholders credited as fully paid and provided further that any sum standing to the credit of a share premium account may only be applied in crediting as fully paid shares of the same class as that from which the relevant share premium was derived.
120. Where any difficulty arises in regard to any distribution under the last preceding Bye-Law, the Board may settle the same as it thinks expedient and, in particular, may authorize any person to sell and transfer any fractions, may resolve that the distribution should be as nearly as may be practicable in the correct proportion but not exactly so, or may ignore fractions altogether, and may determine that cash payments should be made to any Shareholders in order to adjust the rights of all parties, as may seem expedient to the Board. The Board may appoint any person to sign on behalf of the persons entitled to participate in the distribution any contract necessary or desirable for giving effect thereto and such appointment shall be effective and binding upon the Shareholders.
RECORD DATES
121. Notwithstanding any other provision of these Bye-Laws the Directors may fix any date as the record date for:
(a) determining the Members entitled to receive any dividend or other distribution and such record date may be on, or not more than 30 days before or after, any date on which such dividend or distribution is declared;
(b) determining the Members entitled to receive notice of and to vote at any general meeting of the Company.
ACCOUNTING RECORDS
122. The Board shall cause to be kept accounting records sufficient to give a fair presentation in all material respects of the state of the Company's affairs and to show and explain its transactions in accordance with the Companies Acts.
123. The records of account shall be kept at the Registered Office or at such other place or places as the Board thinks fit and shall at all times be open to inspection by the Directors; PROVIDED that if the records of account are kept at some place outside Bermuda, there shall be kept at an office of the Company in Bermuda such records as will enable the Director to ascertain with reasonable accuracy the financial position of the Company at the end of each three-month period. No Shareholder (other than an officer of the Company) shall have any right to inspect any accounting record or book or document of the Company except as required by any Listing Exchange, by law, by regulations or as authorized by the Board or by Ordinary Resolution.
124. A copy of every balance sheet and statement of income and expenditure, including every document required by law to be annexed thereto, which is to be laid before the Company in general meeting, together with a copy of the auditor's report, shall be sent to each person entitled thereto in accordance with the requirements of the Companies Acts.
AUDIT
125. Save and to the extent that an audit is waived in the manner permitted by the Companies Acts, auditors shall be appointed and their duties regulated in accordance with the Companies Acts, any other applicable law and such requirements not inconsistent with the Companies Acts as the Board may from time to time determine, save that the fees of the auditor shall be determined by Ordinary Resolution.
SERVICE OF NOTICES AND OTHER DOCUMENTS
126. Any notice or other document (including a share certificate) shall be in writing (except where otherwise expressly stated) and may be served on or delivered to any Shareholder by the Company either personally or by sending it through the mail (by airmail where applicable) in a prepaid letter addressed to such Shareholder at his address as appearing in the Register or by delivering it to or leaving it at such registered address. In the case of joint holders of a share, service or delivery of any notice or other document on or to one of the joint holders shall for all purposes be deemed as sufficient service on or delivery to all the joint holders. Any notice or other document if sent by mail shall be deemed to have been served or delivered two Business Days after it was put in the mail; and, in proving such service or delivery, it shall be sufficient to prove that the notice or document was properly addressed, stamped and put in the mail.
127. Any notice of a general meeting of the Company shall be deemed to be duly given to a Shareholder if it is sent to him by cable, telex, telecopier or other mode of representing or reproducing words in a legible and non-transitory form at his address as appearing in the Register or any other address given by him to the Company for this purpose. Any such notice shall be deemed to have been served two Business Days after its dispatch.
128. Any notice or other document delivered, sent or given to a Shareholder in any manner permitted by these Bye-Laws shall, notwithstanding that such Shareholder is then dead or bankrupt or that any other event has occurred, and whether or not the Company has received notice of the death or bankruptcy or name of such Shareholder as sole or joint holder unless his name shall, at the time of the service or delivery of the notice or document, have been removed from the Register as the holder of the share, and such service or delivery shall for all purposes be deemed as sufficient service or delivery of such notice or document on all persons interested (whether jointly with or as claiming through or under him) in the share.
WINDING UP
129. If the Company shall be wound up, the liquidator may, with the sanction of an Extraordinary Resolution and any other sanction required by the Companies Acts, divide among the Shareholders in specie or kind the whole or any part of the assets of the Company (whether they shall consist of property of the same kind or not) and may for such purposes set such values as he deems fair upon any property to be divided as aforesaid and may determine how such division shall be carried out as between the Shareholders or different classes of Shareholders. The liquidator may, with the like sanction, vest the whole or any part of such assets in trustees upon such trust for the benefit of the contributors as the liquidator, with the like sanction, shall think fit, but so that no Shareholder shall be compelled to accept any shares or other assets upon which there is any liability.
INDEMNITY
130. Subject to the proviso below every person who is or was a Director, officer of the Company or member of a committee constituted under Bye-Law 96 (the "Company Indemnitee") or who is or was a director or officer of any of the Company's subsidiaries ("Subsidiary Indemnitee") shall be indemnified out of the funds of the Company against all civil liabilities, loss, damage or expense (including but not limited to liabilities under contract, tort and statute or any applicable foreign law or regulation and all reasonable legal and other costs and expenses properly payable) incurred or suffered by him as such Director, officer of the Company or committee member, or as a director or officer of any of the Company's subsidiaries and the indemnity contained in this Bye-Law shall extend to any person acting as a Director, officer of the Company or committee member, or as a director or officer of any of the Company's subsidiaries in the reasonable belief that he has been so appointed or elected notwithstanding any defect in such appointment or election PROVIDED ALWAYS that the indemnity contained in this Bye-Law shall not extend to any matter which would render it void pursuant to the Companies Acts.
131. Every Company Indemnitee or Subsidiary Indemnitee shall be indemnified out of the funds of the Company against all liabilities incurred by him as such Company Indemnitee or Subsidiary Indemnitee in defending any proceedings, whether civil or criminal, in which judgment is given in his favor, or in which he is acquitted, or in connection with any application under the Companies Acts in which relief from liability is granted to him by the court.
132. To the extent that any Company Indemnitee or Subsidiary Indemnitee is entitled to claim an indemnity pursuant to these Bye-Laws in respect of amounts paid or discharged by him, the relevant indemnity shall take effect as an obligation of the Company to reimburse the person making such payment or effecting such discharge. The expenses incurred by the Company Indemnitee or Subsidiary Indemnitee pursuant to Bye-Laws 130 and 131 in any threatened or pending legal suits or proceedings shall be paid by the Company in advance upon the written request of the Company Indemnitee or Subsidiary Indemnitee upon proper documentation of such costs having been incurred. The same indemnity applies to expenses incurred in any proceedings where such Company Indemnitee or Subsidiary Indemnitee is a party or threatened to be made a party to any legal suits or proceedings by or in the rights of the Company or any of the Companys subsidiaries to procure a judgment in its favor by reason of the fact that the Company Indemnitee or Subsidiary Indemnitee is or was such Company Indemnitee or Subsidiary Indemnitee. Provided, however, that the Company Indemnitee or
Subsidiary Indemnitee shall under take to repay such amount to the extent that it is ultimately determined that the Company Indemnitee or Subsidiary Indemnitee is not entitled to indemnification.
133. Subject to the Companies Acts, the Company may purchase and maintain for any Company Indemnitee or Subsidiary Indemnitee, insurance against any liability arising in connection with his office with the Company or any of the Company's subsidiaries.
134 The Company shall indemnify its officers and directors to the fullest extent possible except as prohibited by the Companies Act. Without limiting the foregoing, the Officers and Directors (such term to include, for the purposes of this Bye-law, any alternate director or any person appointed to any committee by the Board or any person who is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise (including, without limitation, any subsidiary of the Company) and every one of them, and their heirs, executors and administrators, shall be indemnified and secured harmless out of the assets of the Company from and against all actions, costs, charges, losses, damages and expenses which they or any of them, their heirs, executors or administrators, shall or may incur or sustain by or by reason of any act done, concurred in or omitted (actual or alleged) in or about the execution of their duty, or supposed duty, or in their respective offices or trusts, and none of them shall be answerable for the acts, receipts, neglects or defaults of the others of them or for joining in any receipts for the sake of conformity, or for any bankers or other persons with whom any moneys or effects belonging to the Company shall or may be lodged or deposited for safe custody, or for insufficiency or deficiency of any security upon which any moneys of or belonging to the Company shall be placed out on or invested, or for any other loss, misfortune or damage which may happen in the execution of their respective offices or trusts, or in relation thereto, provided that this indemnity shall not extend to any matter in respect of which such person is, or may be, found guilty of fraud or dishonesty.
135 The Company may purchase and maintain insurance to protect itself and any Director, Officer or other person entitled to indemnification pursuant to these Bye-laws to the fullest extent permitted by law.
136 All reasonable expenses incurred by or on behalf of any person entitled to
indemnification pursuant to these Bye-laws in connection with any
proceeding shall be advanced to such person by the Company within twenty
(20) business days after the receipt by the Company of a statement or
statements from such person requesting such advance or advances from time
to time, whether prior to or after final disposition of such proceeding.
Such statement or statements shall reasonably evidence the expenses
incurred by such person and, if required by law or requested by the Company
at the time of such advance, shall include or be accompanied by an
undertaking by or on behalf of such person to repay the amounts advanced if
it should ultimately be determined that such person is not entitled to be
indemnified against such expenses pursuant to these Bye-laws.
137 The right of indemnification and advancement of expenses provided in these Bye-laws shall not be exclusive of any other rights to which those seeking indemnification may otherwise be entitled, and the provisions of these Bye-laws
shall inure to the benefit of the heirs and legal representatives of any person entitled to indemnity under these Bye-laws and shall be applicable to proceedings commenced or continuing after the adoption of these Bye-laws, whether arising from acts or omissions occurring before or after such adoption. Any repeal or modification of the foregoing provisions of this section shall not adversely affect any right or protection existing at the time of such repeal or modification.
138 The Company and each Shareholder agrees to waive any claim or right of action it might have, whether individually or by or in the right of the Company, against any Director or Officer, and no Director or Officer shall have any liability for monetary damages, on account of any action taken by such Director or Officer, or the failure of such Director or Officer to take any action in the performance of his duties with or for the Company, provided that such waiver shall not extend to any matter in respect of which such person is, or may be, found guilty of fraud or dishonesty.
139 The Board may provide indemnification and advancement of expenses to the employees of the Company for their acts or omissions as the Board may, from time to time, determine.
ALTERATION OF BYE-LAWS
140. These Bye-Laws may be amended from time to time in the manner provided for in the Companies Acts, provided that any such amendment shall only become operative to the extent that it has been confirmed by Ordinary Resolution.
BYE-LAWS
OF
GOLAR LNG LIMITED
We, being the subscribers to the Memorandum of Association of the above company hereby subscribe to the above written Bye-Laws pursuant to section 13(4) of the Companies Act 1981.
NAME SIGNATURE A. Shaun Morris /s/ A. Shaun Morris ------------------------- ------------------------- Rachael M. Lathan /s/ Rachael M. Lathan ------------------------- ------------------------- Donna S. Outerbridge /s/ Donna S. Outerbridge ------------------------- ------------------------- Joy F. Thompson /s/ Joy F. Thompson ------------------------- ------------------------- |
Dated this 10th day of May 2001.
GOLAR LNG LIMITED
UNANIMOUS WRITTEN RESOLUTIONS
The undersigned, being all the Directors of Golar LNG Limited (the "Company"), a company incorporated in the Islands of Bermuda, pursuant to Bye-law 103 of the Company's Bye-laws HEREBY ADOPT the following resolutions effective May 21, 2001. These Unanimous Written Resolutions may be executed in counterparts, and a copy shall be inserted into the Company's Minute Book. Any action taken herein shall be of the same force and effect as if adopted at a duly convened meeting of the Board of Directors (the "Board" or the "Directors") of the Company.
WHEREAS, the Company wishes to establish a sub-register of its register of members in the Norwegian paperless securities system (the "VPS") to be operated by Christiania Bank og Kreditkasse ASA ("CBK") and it is proposed that the Company enter into a sub-registrar agreement with CBK (the "Sub-Registrar Agreement").
WHEREAS, the Company intends to purchase all of Osprey Maritime Ltd.'s ("Osprey") LNG related activities which inter alia, includes five wholly and one part owned LNG tanker vessel, a management organization, several management agreements and a newbuilding contract for a further LNG tanker with an option to contract another vessel for a purchase price of no less than US$512,500,000 (as further detailed in the proposed agreement documenting the terms of the purchase (the "Purchase Agreement"));
WHEREAS, the Company intends to purchase a newbuilding contract for an LNG tanker with an option to contract one further vessel and a letter agreement providing an option to contract a further two LNG tankers from Seatankers Management Co. Ltd. ("Seatankers") at a purchase price of no less than US$2,500,000 (as further detailed in the proposed agreement documenting the terms of the purchase (the "Sale and Purchase Agreement"));
WHEREAS, the Company proposes to part finance the acquisition of Osprey's LNG business and the contracts to be acquired from Seatankers by way of a private placement (the "Placement") of up to 56,000,000 ordinary shares of US$1.00 par value at a subscription price of US$5.00 with its parent company, Osprey, a group of professional investors composed by US Accredited Investors (as defined in Regulation D of the United States Securities Act 1933) and non-US investors of similar statute;
WHEREAS, the Company has agreed to engage the services of Orkla Enskilda Securities ASA and Fearnley Fonds ASA as advisors (the "Advisors") to the Company in relation to and management of the Placement and it is proposed that the Company enter into a mandate agreement (the "MANDATE AGREEMENT") with the Advisors;
WHEREAS, the Company, in order to assume all of Osprey's and Seatankers' rights and obligations under the contracts for newbuildings to be acquired will need to execute
certain novation agreements (the "NOVATION AGREEMENTS") with the relevant yards;
WHEREAS, the Company intends to establish single purpose subsidiaries as Liberian limited companies for the purpose of assuming the obligations under each of the newbuilding contracts to be acquired from Osprey and Seatankers;
WHEREAS, the Company intends to assist Osprey with the financing of the first installment due under the newbuilding contract to acquired by way of having a subsidiary, to be formed, provide Osprey with an interest free loan in the amount of approximately US$32,000,000;
WHEREAS, the Company intends to finance the loan to be provided by the subsidiary to Osprey with a loan to the subsidiary in the amount of US$32,000,000 to be provided by Christiania Bank og Kreditkasse ASA and it is propose that the Company enter into a loan agreement (the "Loan Agreement") with CBK in connection with this loan;
WHEREAS, Christiania Bank og Kreditkasse ASA has required that the Company's obligation to repay the loan of US$32,000,000 is guaranteed by Greenwich Holdings Ltd. ("Greenwich");
WHEREAS, Hemen Holding Ltd. ("Hemen") is the sole shareholder of the Company and WHEREAS Osprey, Seatankers, Hemen and Greenwich are all affiliated with the Company by virtue of the fact that they are each controlled by Mr. John Fredriksen.
WHEREAS, the Company intends to apply for a listing of its shares on the Oslo Stock Exchange;
WHEREAS, in order to further the objectives referred to above, it is necessary for the Company to enter into the following agreements (hereinafter collectively referred to as the "Agreements");
a. the Mandate Agreement with Orkla Enskilda Securities ASA and Fearnley Fonds ASA;
b. the Purchase Agreement with Osprey;
c. the Sale and Purchase Agreement with Seatankers;
d. a duplicate subscription agreement with each participant in the Placement;
e. the Sub-Registrar Agreement with Christiania Bank og Kreditkasse ASA;
f. the Loan Agreement with Christiania Bank og Kreditkassee ASA;
g. Novation Agreements with (i) Daewoo Shipbuilding and Engineering Corporation Ltd., (ii) Hyundai Corporation and Hyundai Heavy Industries Co. Ltd. and (iii) Samsung Heavy Industries;
WHEREAS, draft copies of the agreements referred to in (a), (b), (c) and (d) above have been produced to the Directors and the Directors hereby confirm that each carefully consider the obligations to be undertaken by the Company pursuant to the transactions contemplated by each of these agreements;
WHEREAS, the Directors have been informed of the main terms and conditions relevant to the agreements referred to in (e), (f) and (g) above and have carefully considered the obligations to be undertaken by the Company pursuant to the transactions contemplated by each of these agreements.
WHEREAS, in order to facilitate the Placement of its shares as referred to above, it is necessary for the Company to increase its authorised capital.
WHEREAS it is necessary for the Company to increase the number of Directors on its Board of Directors, Messrs Morris and Counsell identified below having agreed to act.
After due consideration it is hereby RESOLVED as follows:-
1. that the above described transactions be and they are hereby approved as being in the best interests of the Company, and the actions of the Directors, Officers and agents of the Company acting individually or together with another or others to date in connection therewith be and are hereby approved, ratified and confirmed;
2. that the Agreements are and each one is hereby approved, confirmed and ratified, and that any director or officer of the Company and any of the attorneys hereinafter mentioned be authorised on behalf of the Company to sign, execute under the common seal of the Company, his personal seal or otherwise, as appropriate, and deliver the Agreements and any amendments or supplements thereto which such officer or attorney may in his absolute discretion deem necessary or desirable and any and all other documents, instruments or things to be entered into or done in connection therewith and with the arrangements contemplated thereby;
3. that the actions of the Directors acting individually or together with another or others to date in negotiating, entering into, agreeing, executing and delivering the Agreements for and on behalf of the Company, and the performance by the Directors acting individually or together with another or others to date of all acts deeds and things whatsoever in connection with any amendments or modifications to the Agreements be and they are hereby approved, confirmed and ratified;
4. that the Directors and Officers of the Company acting individually or together with another or others be and they are hereby authorised to do all such other acts, deeds and things as the Company itself may lawfully do howsoever arising in connection with Agreements in the performance of the Company's obligations thereunder or the furtherance of the intentions, expressed in the foregoing resolutions, including but not limited to, the execution and delivery of any other agreements, deeds, documents or certificates as the individual or individuals acting may in his or their absolute discretion approve, such approval to be conclusively evidenced by his or their
execution thereof;
5. that the Directors hereby confirm that on the date from which the Company or the relevant subsidiary is to provide the US$32,000,000 interest free loan to Osprey, there are reasonable grounds for believing that the Company is, and after the giving of such financial assistance will be able to pay its liabilities as they become due and accordingly pursuant to section 39A (2A) of the Companies Act 1981 of Bermuda the giving of such financial assistance is not prohibited;
6. that the Company do grant a Power of Attorney to NICHOLAS SHERRIFF, JOHN SAWYER and MARTIN BENNY each of 12 Grosvenor Place, London SWIX 7HH, England. TOR OLAV TROIM, OLA LORENTZON and TOM JEBSEN each of Bryggegt 3, 0112 Oslo, Norway and ERLING LIND of Wiersholm, Mellbye & Bech, Ruselokkveien 26, N-0115 Oslo, Norway appointing each of them as attorneys of the Company (the "Attorney") to act jointly or severally on behalf of the Company and in its name or his or their names for the purpose of signing, executing under hand or his or their personal seals, as appropriate, and delivering the Agreements, it being acknowledged that the execution and delivery of such Agreements or any of them by the Attorney shall be conclusive evidence binding upon the Company of approval by such Attorney and of approval thereof by the Directors of the Company and generally of agreeing executing under hand or his or their personal seals, as appropriate, and doing any and all such other documents, acts or things as may in the entire discretion of such Attorney be appropriate or necessary in connection with the said Agreements or the arrangements contemplated thereby.
7. that the form of power of attorney attached as Appendix 1 hereto be executed on behalf of the Company and that the Common Seal of the Company be affixed thereto in accordance with the provisions of the Company's Bye-Laws;
8. that the Board do hereby recommend to the sole shareholder that the authorised share capital of the Company be increased from US$12,000 to US$100,000,000 by the creation of 99,998,000 additional shares of par value US$1.00 each, provided that this resolution shall not take effect until all the conditions in the Subscription Agreement have been met;
9. that Appleby, Spurling and Kempe be and they are hereby authorised and directed to make application to the Bermuda Regulatory Authorities for permission:-
(i) for the Company to be exempted from the usual requirement under Part
III of the Companies Act 1981 of Bermuda to file a prospectus in
connection with the placement; and
(ii) for the Company to issue up to 56,000,000 of the additional shares
created pursuant to the increase in the share capital of the Company
referred to in paragraph 7 above to those Subscribers with whom
Subscription Agreements will be made;
(iii) for the Company to reserve 2,000,000 of the authorised but unissued
shares as
part of option agreements for directors and/or key personnel at 115 percent of the issue price in the Placement.
and that all action taken to date by Appleby, Spurling & Kempe in connection with the foregoing is hereby approved, ratified and confirmed;
10. that the Directors and Officers of the Company acting individually or together with another be and they are hereby authorised to execute such documents as may be necessary for the purpose of applying for a listing of the Company's shares on the Oslo Stock Exchange;
11. that the Board hereby acknowledges that the Placement of shares in the Company is subject to and conditional upon the requisite permissions referred to in paragraph 9 above being granted by the Bermuda Regulatory Authorities; and
12. that the Board be and they are hereby authorised to agree any other matters whatsoever in connection with the Placement and the matters relating thereto.
13. that Messrs Shaun Morris and Timothy Counsell of Appleby Spurling and Kempe, Attorneys in Bermuda, be approved and appointed as Directors of the Company.
/s/ Tor Olav Troim May 21, 2001
-------------------- ------------------
Tor Olav Troim Date
/s/ John Fredriksen May 21, 2001
-------------------- ------------------
John Fredriksen Date
5
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APPENDIX I
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that GOLAR LNG LIMITED, (the "Company") a company organised and existing under the laws of Bermuda with its registered office at Mercury House, 101 Front Street, Hamilton HM 12, Bermuda has constituted and appointed NICHOLAS SHERRIFF, JOHN SAWYER and MARTIN BENNY each of 12 Grosvenor Place, London SW1X 7HH, England, TOR OLAV TROIM, OLA LORENTZON and TOM JEBSEN each of Bryggegt 9, 0112 Oslo, Norway and ERLING LIND of Wiersholm, Mellbye & Bech, Ruselokkveien 26, N-0115 Oslo. Norway (the "Attorneys") as the true and lawful Attorneys-in-Fact of the Company so that they may act jointly or severally on behalf of the Company according to the following powers and terms:
1. To negotiate, sign, execute under hand or his or their personal seals, as
appropriate, and deliver on behalf of the Company a Mandate Agreement with
Orkla Enskilda Securities ASA and Fearnley Fonds ASA (the "Mandate
Agreement"), a Purchase Agreement with Osprey Maritime Ltd (the "Purchase
Agreement"); a Sale and Purchase Agreement with Seatankers Management Co.
Ltd. (the "Sale and Purchase Agreement"), a duplicate subscription
agreement with each participant in a private placement (the "Placement") of
the Company's shares (the "Subscription Agreements"), a Sub-Registrar
Agreement with Christiania Bank og Kreditkasse ASA (the "Sub-Registrar
Agreement"), a Loan Agreement with Christiania Bank og Kreditkasse ASA (the
"Loan Agreement") and Novation Agreements with (i) Daewoo Shipbuilding and
Engineering Corporation Ltd., (ii) Hyundai Corporation and Hyundai Heavy
Industries Co. Ltd. and (iii) Samsung Heavy Industries (the Novation
Agreements");
2. To negotiate, sign, execute under hand or his or their personal seals, as
appropriate, and deliver on behalf of the Company any documents required in
connection with the establishment of subsidiaries of the Company.
3. Generally to execute under hand or his or their personal seals, as
appropriate, make, sign and do any such other agreements, instruments,
documents, matters or things as the Attorney in his absolute discretion
deems desirable or expedient in connection with the Placement, the
establishment of subsidiaries of the Company and the Mandate Agreement, the
Purchase Agreement; the Sale and Purchase Agreement, the Subscription
Agreements, the Sub-Registrar Agreement, the Loan Agreement and the
Novation Agreements (together the "Agreements") and/or the transactions or
arrangements contemplated thereby, and to do any acts, deeds, matters and
things whatsoever which in the Attorney's absolute discretion may in any
way be requisite or proper for giving full effect to the Placement, the
establishment of subsidiaries of the Company and the Agreements and/or the
transactions or arrangements contemplated thereby and/or for authenticating
and/or giving full effect to the laws and usages of any country whose laws
have to be complied with in the carrying out of any of the mandates
conferred by this Power of Attorney and to certify on behalf of the Company
as true copies all documents required pursuant to the above.
4. For any and all the purposes herein mentioned, as and when the Attorney may
deem necessary or expedient, to appear before and make applications to
Registrars, Consuls, Consul Agents, Commissioners, Deputy Commissioners,
Harbour Masters, Port Officials, Maritime Administrators, Public Registry
Officials, Notaries, Customs and Excise and any other authorities.
5. To appoint a substitute to carry out all or any of the objects herein
authorised and to revoke any such appointment.
The Company hereby ratifies and confirms and agrees to ratify and confirm whatsoever the Attorney shall do or purpose to do by reason of this presents.
This Power of Attorney shall be valid for a period of 12 months from the date hereof.
This Power of Attorney is governed by the laws of Bermuda.
IN WITNESS WHEREOF GOLAR LNG LIMITED has caused this Power of Attorney to be duly executed this 31st day of May, 2001 in accordance with its constitutional documents and the laws of Bermuda.
The Common Seal of GOLAR LNG LIMITED
was hereunto affixed in the presence of:
[SEAL]
GOLAR LNG LIMITED
UNANIMOUS WRITTEN RESOLUTIONS
The undersigned, being all the Directors of Golar LNG Limited (the "Company"), a company incorporated in the Islands of Bermuda, pursuant to Bye-law 103 of the Company's Bye-laws, HEREBY ADOPT the following resolutions set out below effective May 31, 2001. These Unanimous Written Resolutions may be executed in counterparts, and a copy shall be inserted into the Company's Minute Book. Any action taken herein shall be of the same force and effect as if adopted at a duly convened meeting of the Board of Directors (the "Board" or the "Directors") of the Company.
WHEREAS
1. The Directors referred to the Unanimous Written Resolutions of the Directors of the Company effective May 21, 2001.
2. As set out in the Unanimous Written Resolutions of the Directors of the Company effective May 19, 2001, the Company proposes to part finance the acquisition of Osprey's LNG business and the contracts to be acquired from Seatankers by way of a private placement (the "Placement") of up to 56,000,000 ordinary shares of US$1.00 par value at a subscription price of US$5.00 and proposes to authorise the issue (the "Share Issue") of up to 56,012,000 ordinary shares of US$1.00 par value to the account of the Company's sub-registrar Christiania Bank og Kreditkasse, Oslo, Norway ("CBK") as nominee for the subscribers to the Placement for subsequent allocation to the VPS accounts of the subscribers and the holder of the current share capital of 12,000 ordinary shares:
3. The Share Issue referred to in 2. above is conditional upon the Company receiving:
(i) Requisite approvals from the Bermuda Monetary Authority; and
(ii) Duly completed subscription agreements for each participant in the Placement
4. The Secretary has confirmed that the Company had adequate authorised and unissued share capital available for issuance in connection with Placement referred to in 2. above.
5. In addition to the part finance of the acquisitions contemplated by the Resolutions referred to in 1. above, the Company proposes to finance the remainder of the acquisition of Osprey's LNG business and the Seatankers' newbuilding contract by way of a loan to be granted to Golar Gas Holding Co. Inc. by a syndicate of banks led by Christiania Bank og Kreditkasse ASA in the amount of US $325,000,000, such loan to be secured against the LNG tanker vessels to be acquired from Osprey, guaranteed by the Company and made available to the Company by way of repayment of debts acquired from Osprey and loans to the Company;
6. In order to further the objectives referred to in 5. above, it is necessary
for the Company to consider the terms of the agreements and documents
referred to in (a) below and to enter into the following agreements (b) to
(d) (hereinafter collectively referred to as the "Agreements"):
(a) Loan Agreement for a loan of US $325,000,000 to Golar Gas Holding Company, Inc. provided by the banks and financial institutions listed therein (the "Loan Agreement") together with, for the reference of the Director(s), the Security Documents as defined in the Loan Agreement excepting those to which the Company is party and referred to in (b), (c) and (d) below;
(b) Agency Agreement relating to the Loan Agreement to which the Company is party as one of the Guarantors;
(c) Guarantee given by the Company is favour of Den Norske Bank ASA (as security agent and trustee for the benefit of the Creditors as defined in the Loan Agreement);
(d) Subordination Agreement to be entered into by the Company relating to security in respect of certain vessels identified therein in favour of Den Norske Bank ASA as above;
7. Draft copies of the agreements referred to in 6. (b), (c) and (d) above have been produced to the Directors and the Directors hereby confirm that each carefully considered the obligations to be undertaken by the Company pursuant to the transactions contemplated by each of these agreements;
8. The Company proposes to apply for a listing of its shares on the Oslo Stock Exchange and proposes to authorise Fearnley Fonds ASA to make the listing application (the "Listing Application") to the Oslo Stock Exchange on the Company's behalf.
9. In connection with the transactions contemplated by the Resolutions referred to in 1. above, the Company proposes that simultaneously with the purchase of the Osprey LNG business referred to therein, the Company will contribute both its 100% holding in Oxbow Holdings Inc and its 50% interest in Golar Gas Cryogenics Inc. to Golar Gas Holding Company Inc.
RESOLVED as follows:-
A. that the above described transactions be and they are hereby approved as being in the best interests of the Company, and the actions of the Directors, Officers and agents of the Company acting individually or together with another or others to date in connection therewith be and are hereby approved, ratified and confirmed and the Directors hereby confirm that on the date from which the Company is to provide the Guarantee, there are reasonable grounds for believing that the Company is, and after the giving of such financial assistance will be able to pay its liabilities as they become due and accordingly pursuant to section 39A (2A) of the Companies Act 1981 of Bermuda the giving of such financial assistance is not prohibited;
B. that the Share Issue be approved subject to the conditions set forth in 3(i) and (ii) above and the Secretary be authorised to instruct the Company's sub-registrar Christiania Bank og Kreditkasse, Oslo, Norway ("CBK") to issue up to 56,012,000 to be issued in connection with the Placement, as and when appropriate.
C. that the Agreements are and each one is hereby approved, confirmed and ratified, and that any Director or Officer of the Company be and hereby is authorised to execute each of the Agreements (under hand or under seal as appropriate) or to witness the affixation of the common seal for and on behalf of the Company in the manner provided in the Bye-laws of the Company;
D. that an application for a listing of the Company's shares on the Oslo Stock Exchange be and is hereby approved and that Fearnley Fonds ASA be and are hereby authorised to make the Listing Application to the Oslo Stock Exchange on the Company's behalf.
E. that simultaneously with the purchase of the Osprey LNG business contemplated by the Resolutions referred to in 1. above, the Company will contribute both its 100% holding in Oxbow Holdings Inc and its 50% interest in Golar Gas Cryogenics Inc. to Golar Gas Holding Company Inc.
F. that the actions of the Directors acting individually or together with another or others to date in negotiating, entering into, agreeing, executing and delivering the Agreements for an on behalf of the Company, and the performance by the Directors acting individually or together with another or others to date of all acts deeds and things whatsoever in connection with any amendments or modifications to the Agreements be and they are hereby approved, confirmed and ratified;
G. that the Directors and Officers of the Company acting individually or together with another or others be and they are hereby authorised to do all such other acts, deeds and things as the Company itself may lawfully do howsoever arising in connection with the Placement, the Share Issue, the Listing Application and the Agreements in the performance of the Company's obligations thereunder or the furtherance of the intentions expressed in the foregoing resolutions, including but not limited to, the execution and delivery of any other agreements, deeds, documents or certificates as the individual or individuals acting may in his or their absolute discretion approve, such approval to be conclusively evidenced by his or their execution thereof;
H. that the Company do grant a Power of Attorney to NICHOLAS SHERRIFF, PETER
COSTALAS, JOHN SAWYER and MARTIN BENNY each of 12 Grosvenor Place, London
SWIX 7HH, England, TOR OLAV TROIM, OLA LORENTZON and TOM JEBSEN each of
Bryggegt 3, 0112 Oslo, Norway, ERLING LIND of Wiersholm, Mellbye & Bech,
Rusel0kkveien 26, N-0115 Oslo, Norway, GARY WOLFE, HADLEY S. ROE, ROBERT E.
LUSTRIN and EDWARD S. HORTON each of Seward & Kissel, One Battery Park Plaza,
New York, NY 10004, USA and GEOK HIANG LEE appointing each of them as
attorneys of the Company (the "Attorney") to act jointly or severally on
behalf of the Company and in
its name or his or their names for the purpose of signing, executing under hand or his or their personal seals, as appropriate, and delivering and documents required in connection with the Placement, the Share Issue, the Listing Application and the Agreements, it being acknowledged that the execution and delivery of such documents and Agreements or any of them by the Attorney shall be conclusive evidence binding upon the Company of approval by such Attorney and of approval thereof by the Directors of the Company and generally of agreeing executing under hand or his or their personal seals, as appropriate, and doing any and all such other documents, acts or things as may in the entire discretion of such Attorney be appropriate or necessary in connection with the said Agreements or the arrangements contemplated thereby.
I. that the form of power of attorney attached as Appendix 1 hereto be executed on behalf of the Company and that the Common Seal of the Company be affixed thereto in accordance with the provisions of the Company's Bye-Laws;
---------------------------- ------------------------------ Tor Olav Troim Date ---------------------------- ------------------------------ John Fredriksen Date ---------------------------- ------------------------------ Timothy J. Counsell Date /s/ Shaun Morris May 31, 2001 ---------------------------- ------------------------------ Shaun Morris Date |
its name or his or their names for the purpose of signing, executing under hand or his or their personal seals, as appropriate, and delivering and documents required in connection with the Placement, the Share Issue, the Listing Application and the Agreements, it being acknowledged that the execution and delivery of such documents and Agreements or any of them by the Attorney shall be conclusive evidence binding upon the Company of approval by such Attorney and of approval thereof by the Directors of the Company and generally of agreeing executing under hand or his or their personal seals, as appropriate, and doing any and all such other documents, acts or things as may in the entire discretion of such Attorney be appropriate or necessary in connection with the said Agreements or the arrangements contemplated thereby.
I that the form of power of attorney attached as Appendix 1 hereto be executed on behalf of the Company and that the Common Seal of the Company be affixed thereto in accordance with the provisions of the Company's Bye-laws;
---------------------------- ------------------------------ Tor Olav Troim Date ---------------------------- ------------------------------ John Fredriksen Date /s/ Timothy J. Counsell 31 May 2001 ---------------------------- ------------------------------ Timothy J. Counsell Date ---------------------------- ------------------------------ Shaun Morris Date |
of the Company (the "Attorney") to act jointly and severally on behalf of the Company and in its name or his or their names for the purpose of signing, executing under hand or his or their personal seals, as appropriate, and delivering and documents required in connection with the Placement, the Share Issue, the Listing Application and the Agreements, it being acknowledged that the execution and delivery of such documents and Agreements or any of them by the Attorney shall be conclusive evidence binding upon the Company of approval by such Attorney and of approval thereof by the Directors of the Company and generally of agreeing executing under hand or his or their personal seals, as appropriate, and doing any and all such other documents, acts or things as may in the entire discretion of such Attorney be appropriate or necessary in connection with the said Agreements or the arrangements contemplated thereby.
I. that the form of power of attorney attached as Appendix I hereto be executed on behalf of the Company and that the Common Seal of the Company be affixed thereto in accordance with the provisions of the Company's Bye-Laws;
/s/ Tor Olav Troim May 31st - 2001 ---------------------------- ------------------------------ Tor Olav Troim Date /s/ John Fredriksen May 31st 2001 ---------------------------- ------------------------------ John Fredriksen Date ---------------------------- ------------------------------ Timothy J. Counsell Date ---------------------------- ------------------------------ Shaun Morris Date |
APPENDIX I
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that GOLAR LNG LIMITED (the "Company") a company
organised and existing under the laws of Bermuda with its registered office at
Mercury House, 101 Front Street, Hamilton HM 12, Bermuda has constituted and
NICHOLAS SHERRIFF, PETER COSTALAS, JOHN SAWYER and MARTIN BENNY each of 12
Grosvenor Place, London, SWIX 7HH, England, TOR OLAV TROIM, OLA LORENTZON and
TOM JEBSEN each of Bryggegt 3, 0112, Oslo, Norway, ERLING LIND of Wiersholm,
Mellbye & Bech, Ruselokkveien 26, N-0115 Oslo, Norway, GARY WOLFE, HADLEY S.
ROE. ROBERT E. LUSTRIN and EDWARD S. HORTON each of Seward & Kissel, One Battery
Park Plaza, New York, NY 10004, USA and GEOK HIANG LEE (the "Attorneys") as the
true and lawful Attorneys-in-Fact of the Company so that they may act jointly or
severally on behalf of the Company according to the following powers and terms:
1. (a) To negotiate, sign, execute under hand or his or their personal seals,
as appropriate, and deliver on behalf of the Company a loan agreement (the
"Loan Agreement") for a loan facility of $325,000,000 to be made available
to Golar Gas Holding Company, Inc., an agency agreement (the "Agency
Agreement") relating to the Loan Agreement, a guarantee (the "Guarantee")
to be provided by the Company in favour of Den Norske Bank ASA as security
agent and trustee for the benefit of the Creditors as defined in the Loan
Agreement, and a subordination agreement (the "Subordination Agreement") to
be entered into by the Company relating to security in respect of certain
vessels identified therein, in favour of Den Norske Bank ASA (the Loan
Agreement, the Agency Agreement, the Guarantee and the Subordination
Agreement together the "Agreements");
(b) To negotiate, sign, execute under hand or his or their personal seals,
as appropriate, and deliver on behalf of the Company any documents required
in connection with the private placement (the "Placement") by the Company
of up to 56,000,000 ordinary shares of US$1.00 par value at a subscription
price of US$5.00 each.
(c) To negotiate, sign, execute under hand or his or their personal seals,
as appropriate, and deliver on behalf of the Company any documents required
in connection with the issue (the "Share Issue") of up to 56,012,000
ordinary shares of US$1.00 par value to the account of the Company's
sub-registrar Christiania Bank og Kreditkasse, Oslo, Norway ("CBK") as
nominee for the subscribers to the Placement for subsequent allocation to
the VPS accounts of the subscribers and the holder of the current share
capital of 12,000 ordinary shares;
(d) To negotiate, sign, execute under hand or his or their personal seals,
as appropriate, and deliver on behalf of the Company any documents required
in connection with an application for a listing (the "Listing Application")
of its shares on the Oslo Stock Exchange;
2. Generally to execute under hand or his or their personal seals, as
appropriate, make, sign and do any such other agreements, instruments,
documents, matters or things as the Attorney in his absolute discretion
deems desirable or expedient in connection with the Agreements, the
Placement, the Share Issue, the Listing Application and/or the transactions
or arrangements contemplated thereby, and to do any acts, deeds, matters
and things whatsoever which in the Attorney's absolute discretion may in
any way be requisite or proper for giving full effect to the Agreements,
the Placement, the Share Issue, the Listing Application and/or the
transactions or arrangements contemplated thereby and/or for authenticating
and/or giving full effect to the laws and usages of any
country whose laws have to be complied with in the carrying out of any of
the mandates conferred by this Power of Attorney and to certify on behalf
of the Company as true copies all documents required pursuant to the above.
3 For any and all the purposes herein mentioned, as and when the Attorney may
deem necessary or expedient, to appear before and make applications to
Registrars, Consuls, Consul Agents, Commissioners, Deputy Commissioners,
Harbour Masters, Port Officials, Maritime Administrators, Public Registry
Officials, Notaries, Customs and Excise and any other authorities.
4 To appoint a substitute to carry out all or any of the objects herein
authorised and to revoke any such appointment.
The Company hereby ratifies and confirms and agrees to ratify and confirm whatsoever the Attorney shall do or purport to do by reason of this presents.
This Power of Attorney shall be valid for a period of 12 months from the date hereof.
This Power of Attorney is governed by the laws of Bermuda.
IN WITNESS WHEREOF GOLAR LNG LIMITED has caused this Power of Attorney to be duly executed this 31st day of May, 2001 in accordance with its constitutional documents and the laws of Bermuda.
The Common Seal of GOLAR LNG LIMITED
was hereunto affixed in the presence of:
[SEAL]
/s/ Timothy J. Counsell /s/ [ILLEGIBLE]
--------------------------------- ------------------------------
Director Secretary
|
EXHIBIT 1.3
FORM NO.6 Registration No. 30506
[LOGO]
CERTIFICATE OF INCORPORATION
I hereby in accordance with section 14 of THE COMPANIES ACT 1981 issue this Certificate of Incorporation and do certify that on the 10th day of May, 2001
GOLAR LNG LIMITED
was registered by me in the Register maintained by me under the provisions of the said section and that the status of the said company is that of an exempted company.
[SEAL] Given under my hand and the Seal of the
REGISTRAR OF COMPANIES this 11th day of
May, 2001.
/s/ [ILLEGIBLE]
for Acting Registrar of Companies
|
EXHIBIT 1.4
FORM NO.7a REGISTRATION NO. 30506
[LOGO]
CERTIFICATE OF DEPOSIT OF
MEMORANDUM OF INCREASE OF SHARE CAPITAL
THIS IS TO CERTIFY that a Memorandum of Increase of Share Capital
of
GOLAR LNG LIMITED
was delivered to the Registrar of Companies on the 1st day of June, 2001 in accordance with section 45(3) of THE COMPANIES ACT 1981 ("the Act").
[SEAL] Given under my hand and Seal of the
Registrar of Companies this 20th day of
JUNE, 2001.
/s/ [ILLEGIBLE]
for REGISTRAR OF COMPANIES
|
GOLAR LNG LIMITED
I, Timothy J. Counsell, Director of GOLAR LNG LIMITED, a company incorporated and existing under the laws of the Islands of Bermuda, DO HEREBY CERTIFY that the following is a true and correct copy of a Written Resolution duly adopted by the Shareholder of the Company effective 21 May 2001:
"That the Shareholder does hereby accept the recommendation of the Board of Directors of the Company that the authorised share capital of the Company be increased from US$12,000.00 to US$100,000,000.00 by the creation of 99,988,000 additional shares of par value US$ 1.00 each. The Shareholder hereby acknowledges that this resolution, shall not take effect until all the conditions in the Subscription Agreement relating to the Placement have been met."
IN WITNESS WHEREOF I have hereunto set my signature and affixed the seal of Golar LNG Limited this 31st day of May 2001.
[SEAL] /s/ Timothy J. Counsell
----------------------------
Timothy J. Counsell
Director
GOLAR LNG LIMITED
|
FORM NO. 7
[LOGO]
DEPOSITED in the office of the Registrar of Companies on the 31st day of May 2001, in accordance with the provisions of section 45(3) of the Companies Act 1981.
Minimum Share Capital of the Company US$ 12,000.00
Authorized Share Capital of the Company US$ 12,000.00
Increase of Share Capital as authorized
by a resolution passed at a Written
Resolution of the Company on the 21st
day of May 2001. US$ 99,988,000.00
--------------------
AUTHORIZED SHARE CAPITAL AS INCREASED US$ 100,000,000.00
--------------------
|
DULY STAMPED in the amount of NIL being the stamp duty payable on the amount of increase of share capital of the Company in accordance with the provisions of the Stamp Duties Act, 1976.
/s/ Timothy J. Counsell --------------------------- Timothy J. Counsell Director |
DATED THIS 31st day of May 2001.
NOTE: This memorandum must be filed in the office of the Registrar of Companies within thirty days after the date on which the resolution increasing the share capital has effect and must be accompanied by a copy of the resolution and the prescribed fee.
Exhibit 4.1
GOLAR LNG 2215 CORPORATION
(as borrower)
- and -
LLOYDS TSB BANK PLC
(as lender)
STEPHENSON HARWOOD
One St. Paul's Churchyard
London EC4M 8SH
Tel: 020 7329 4422
Fax: 020 7606 0822
Ref: 748
CONTENTS
Page
1 Definitions and Interpretation...................................3
2 The Loan and its Purpose........................................15
3 Conditions Precedent and Subsequent.............................16
4 Representations and Warranties..................................22
5 Repayment and Prepayment........................................24
6 Funding of Balloon and Interest.................................25
7 Fees............................................................30
8 Security Documents..............................................30
9 Covenants.......................................................31
10 Cash and Earnings Accounts......................................35
11 Events of Default...............................................36
12 Set-Off and Lien................................................40
13 Assignment and Sub-Participation................................41
14 Payments, Mandatory Prepayment, Reserve
Requirements and Illegality...................................41
15 Communications..................................................44
16 General Indemnities.............................................45
17 Miscellaneous...................................................46
18 Law and Jurisdiction............................................49
Schedule 1...................................................50
Annuity and Interest Rates...................................50
Schedule 2...................................................51
Calculation of the Mandatory Cost............................51
|
LOAN AGREEMENT
Dated: 2001
BETWEEN:-
(1) GOLAR LNG 2215 CORPORATION, a company incorporated according to the law
of the Republic of Liberia, with registered office at 80 Broad Street,
Monrovia, Liberia ("the Borrower"); and
(2) LLOYDS TSB BANK PLC, acting through its Ship Finance Department at PO
Box 787. 6-8 Eastcheap, London EC3M 1AE, England ("the Bank").
WHEREAS:-
(A) On the terms and subject to the conditions of the Building Contract,
the Builder has agreed to construct the Vessel for, and deliver the
Vessel to, the Borrower.
(B) On delivery of the Vessel by the Builder to the Borrower, the Borrower
intends to register the Vessel under the flag of the Republic of
Liberia.
(C) The Bank has agreed to advance to the Borrower an aggregate amount not
exceeding one hundred and eighty million Dollars ($180,000,000) in
order to assist the Borrower in financing and/or refinancing the
purchase price of the Vessel pursuant to the Building Contract and
pre-delivery costs associated therewith and approved by the Bank
|
IT IS AGREED as follows:-
1 Definitions and Interpretation
1.1 Definitions
In this Agreement:-
1.1.1 "the Accounts" means the Cash Account and the Earnings Account.
1.1.2 "the Account Security Deeds" means the Account Security Deeds referred to in Clause 8.1.3.
1.1.3 "the Address for Service" means Golar Management Limited, 30 Marsh Wall, London E14 9TP or, in relation to any of the Security Parties, such other address in England and Wales as that Security Party may from time to time designate by no fewer than ten days' written notice to the Bank.
1.1.4 "the Administration" has the meaning given to it in paragraph 1.1.3 of the ISM Code.
1.1.5 "the Advance Date", in relation to any Drawing, means the date on which that Drawing is advanced by the Bank to the Borrower pursuant to Clause 2.
1.1.6 "the Assignment" means the deed of assignment of the Insurances, Earnings, Charter Rights and Requisition Compensation referred to in Clause 8.2.2.
1.1.7 "the Availability Termination Date" means 30 June 2003 or such later date as the Bank may in its discretion agree, such agreement not to be unreasonably withheld provided that the Charter and the Refund Guarantee shall remain in full force and effect on the date such agreement is given and that they will remain in full force and effect for the duration of the extended period.
1.1.8 "Balloon" shall have the meaning given to it in Clause 5.1.
1.1.9 "Break Costs" means all costs, losses, premiums or penalties incurred by the Bank as shall be conclusively certified by the Bank (save in the case of manifest error) in the circumstances contemplated by Clause 16.4, or as a result of it receiving any prepayment of all or any part of the Loan (whether pursuant to Clause 5 or otherwise), or any other payment under or in relation to the Security Documents on a day other than the due date for payment of the sum in question, and includes (without limitation) any losses or costs incurred in liquidating or re-employing deposits from third parties acquired to effect or maintain the Loan, and any liabilities, expenses or losses incurred by the Bank in terminating or reversing, or otherwise in connection with, any interest rate and/or currency swap, transaction or arrangement entered into by the Bank to hedge any exposure arising under this Agreement, or in terminating or reversing, or otherwise in connection with, any open position arising under this Agreement.
1.1.10 "the Builder" means Daewoo Shipbuilding & Marine Engineering Co. Ltd of the Republic of Korea.
1.1.11 "the Building Contract" means the contract dated 2 May 2001 (as amended by a novation agreement dated 28 May 2001) on the terms and subject to the conditions of which the Builder has agreed to construct the Vessel for, and deliver the Vessel to, the Borrower as the same may be amended, novated or supplemented from time to time.
1.1.12 "the Building Contract Assignment" means the deed of assignment of Building Contract and Refund Guarantee referred to in Clause 8.1.1.
1.1.13 "Business Day" means a day on which banks are open for the transaction of business of the nature contemplated by this Agreement (and not authorised by law to close) in New York, United States of America; London, England and any other financial centre which the Bank may consider appropriate for the operation of the provisions of this Agreement.
1.1.14 "Cash Account" means the bank account to be opened in the
name of the Borrower with the Bank and designated "LTSB Re:
Golar LNG 2215 Corporation - Cash Account -11397893".
1.1.15 "Charter" means the time charterparty in respect of the Vessel for a term of not less than twenty (20) years entered or to be entered into between the Borrower and the Charterer or, as the context may require, the bareboat charter replacing the time charter in accordance with the provisions of the time charter as amended, novated, supplemented or replaced from time to time.
1.1.16 "Charterer" means BG Asia Pacific Pte. Limited of 83 Clemenceau Avenue, #14-08 UE Square (Shell House), Singapore 239920, being a wholly-owned subsidiary of BG Group plc.
1.1.17 "Charter Rights" means all rights and benefits accruing to the Borrower under or arising out of the Charter and not forming part of the Earnings.
1.1.18 "Commitment Commission" means the commitment commission to be paid by the Borrower to the Bank pursuant to Clause 7.1.
1.1.19 a "Communication" means any notice, approval, demand, request or other communication from one party to this Agreement to the other.
1.1.20 "the Communications Address" means c/o Golar Management Limited, 30 Marsh Wall, London E14 9TP (fax no: 020 7517 8601) marked for the attention of the Finance Department.
1.1.21 "the Company" means, at any given time, the company responsible for the Vessel's compliance with the ISM Code pursuant to paragraph 1.1.2 of the ISM Code.
1.1.22 "Currency of Account" means, in relation to any payment to be made to the Bank under or pursuant to any of the Security Documents, the currency in which that payment is required to be made by the terms of the relevant Security Document.
1.1.23 "Default Rate" means the rate being the aggregate of the Margin and two per centum (2%) per annum above the cost to the Bank of obtaining funds in amount similar to the amount of the Indebtedness or any relevant part of the Indebtedness for such periods as the Bank shall determine in its discretion.
1.1.24 "the Delivery Advance Date" means the Advance Date of the Drawing relating to the Delivery Instalment.
1.1.25 "the Delivery Instalment" means the Instalment payable on delivery of the Vessel by the Builder to the Borrower.
1.1.26 "DOC" means a valid Document of Compliance issued for the Company by the Administration pursuant to paragraph 13.2 of the ISM Code.
1.1.27 "Dollars" and "$" each means available and freely transferable and convertible funds in lawful currency of the United States of America.
1.1.28 "Drawdown Notice" means a notice complying with Clause 2.3.
1.1.29 "Drawing" means a part of the Loan advanced by the Bank to the Borrower in accordance with Clause 2.3.
1.1.30 "Earnings" means all hires, freights, pool income and other sums payable to or for the account of the Borrower in respect of the Vessel including (without limitation) all remuneration for salvage and towage services, demurrage and detention moneys, contributions in general average, compensation in respect of any requisition for hire, and damages and other payments (whether awarded by any court or arbitral tribunal or by agreement or otherwise) for breach, termination or variation of any contract for the operation, employment or use of the Vessel.
1.1.31 "the Earnings Account" means a bank account to be opened in the name of the Borrower with the Bank and designated "Golar LNG 2215 Corporation - Earnings Account - 11397907".
1.1.32 "Encumbrance" means any mortgage, charge (fixed or floating), pledge, lien, assignment, hypothecation, preferential right, option, title retention or trust arrangement or any other agreement or arrangement which has the effect of creating security or payment priority.
1.1.33 "Event of Default" means any of the events set out in Clause 11.2.
1.1.34 "Environmental Affiliate" means any agent or employee of the Borrower or any other Relevant Party or any person having a contractual relationship with the Borrower or any other Relevant Party in connection with any Relevant Ship or its operation or the carriage of cargo and/or passengers thereon and/or the provision of goods and/or services on or from a Relevant Ship.
1.1.35 "Environmental Approval" means any consent, authorisation, licence or approval of any governmental or public body or authorities or courts applicable to any Relevant Ship or its operation or the carriage of cargo and/or passengers thereon and/or the provisions of goods and/or services on or from a Relevant Ship required under any Environmental Law.
1.1.36 "Environmental Claim" means any and all enforcement, clean-up, removal or other governmental or regulatory actions or orders instituted or completed pursuant to any Environmental Law or any Environmental Approval together with claims made by any third party relating to damage, contribution, loss or injury, resulting from any actual or threatened emission, spill, release or discharge of a Material of Environmental Concern from any Relevant Ship.
1.1.37 "Environmental Laws" means all national, international and state laws, rules, regulations, treaties and conventions applicable to any Relevant Ship pertaining to the pollution or protection of human health or the environment including, without limitation, the carriage of Materials of Environmental Concern and actual or threatened emissions, spills, releases or discharges of Materials of Environmental Concern. 1.1.38 "Excess Amount" means that part of the Loan outstanding from time to time and not forming part of the Balloon.
1.1.39 "the Facility Period" means the period beginning on the date of this Agreement and ending on the date when the whole of the Indebtedness has been repaid in full and the Borrower has ceased to be under any further actual or contingent liability to the Bank under or in connection with the Security Documents.
1.1.40 "the Guarantee" means the guarantee and indemnity of the Guarantor referred to in Clause 8.1.2.
1.1.41 "the Guarantor" means Golar LNG Limited, a company incorporated according to the laws of Bermuda with its registered office at Par-la-Ville Place, Fourth Floor, 14 Par-la-Ville Road, Hamilton HM08, Bermuda and/or (where the context permits) any other person or company who shall at any time during the Facility Period give to the Bank a guarantee and/or indemnity for the repayment of all or part of the Indebtedness.
1.1.42 "the Indebtedness" means the Loan; all other sums of any nature (together with all interest on any of those sums) which from time to time may be payable by the Borrower to the Bank pursuant to the Security Documents; any damages payable as a result of any breach by the Borrower of any of the Security Documents; and any damages or other sums payable as a result of any of the obligations of the Borrower under or pursuant to any of the Security Documents being disclaimed by a liquidator or any other person, or, where the context permits, the amount thereof for the time being outstanding.
1.1.43 "Instalment" means an instalment of the purchase price of the Vessel payable by the Borrower pursuant to the Building Contract.
1.1.44 "Insurances" means all policies and contracts of insurance (including all entries in protection and indemnity or war risks associations) which are from time to time taken out or entered into in respect of or in connection with the Vessel or her increased value or the Earnings and (where the context permits) all benefits thereof, including all claims of any nature and returns of premium.
1.1.45 "Interest Payment Date" means each date for the payment of interest in accordance with Clause 6.
1.1.46 "Interest Period" means each interest period as determined pursuant to Clause 6.
1.1.47 "the ISM Code" means the International Management Code for the Safe Management of Ships and for Pollution Prevention, as adopted by the Assembly of the International Maritime Organisation on 4 November 1993 by resolution A.741 (18) and incorporated on 19 May 1994 as chapter IX of the Safety of Life at Sea Convention 1974.
1.1.48 "law" means any law, statute, treaty, convention, regulation, instrument or other subordinate legislation or other legislative or quasi-legislative rule or measure, or any order or decree of any government, judicial or public or other body or authority, or any directive, code of practice, circular, guidance note or other direction issued by any competent authority or agency (whether or not having the force of law).
1.1.49 "LIBOR" means the rate displayed as the British Bankers' Association Interest Settlement Rate on any information service selected by the Bank on which that rate is displayed, for deposits in Dollars of amounts equal to the amount of the Loan or any relevant part of the Loan for a period equal in length to the relevant Interest Period, or (if the Bank is for any reason unable to ascertain that rate) the rate (rounded upwards to the nearest whole multiple of one-sixteenth of one per centum) at which deposits in Dollars of amounts comparable to the amount of the Loan (or any relevant part of the Loan) are offered to the Bank in the London Interbank market for a period equal in length to the relevant Interest Period.
1.1.50 "the Loan" means the aggregate amount from time to time advanced by the Bank to the Borrower pursuant to Clause 2 or, where the context permits, the amount advanced and for the time being outstanding.
1.1.51 "the Managers" means Golar Management Limited, or such other commercial and/or technical managers of the Vessel nominated by the Borrower as the Bank may in its discretion approve.
1.1.52 "Mandatory Cost" means the cost imputed to the Bank of compliance with the mandatory liquid asset requirements of the Bank of England and/or the banking supervision or other costs imposed by the Financial Services Authority, determined in accordance with the Schedule.
1.1.53 "the Margin" means:-
(a) for the period commencing on the first Advance Date and ending on the Delivery Advance Date (the last date excluded), one point four five per centum (1.45%) per annum; and
(b) for the period commencing on the Delivery Advance
Date and ending on the last date of the Facility
Period, the percentage per annum determined by
reference to the Standard and Poors ("S&P") rating
of the Charterer from time to time as more
particularly set out in the table below:-
S &P rating Margin (%) per annum
------------------------- -----------------------
A 1.125
------------------------- -----------------------
BBB + 1.15
------------------------- -----------------------
BBB 1.20
------------------------- -----------------------
BBB - 1.25
------------------------- -----------------------
BB 1.40
------------------------- -----------------------
B 1.50
|
Provided that if, at any time after the Delivery Advance Date, the rating for the Charterer shall at any time fall below an S&P rating of "B", the Bank and the Borrower shall, in the Bank's option, agree a new higher rate for the Margin.
1.1.54 "Material of Environmental Concern" means and include pollutants, contaminants, toxic substances, oil as defined in the United States Oil Pollution Act of 1990 and all hazardous substances as defined in the United States Comprehensive Environmental Response, Compensation and Liability Act 1990.
1.1.55 "the Maximum Loan Amount" means one hundred and eighty million Dollars ($180,000,000).
1.1.56 "the Mortgagees' Insurances" means all policies and contracts of mortgagees' interest insurance, mortgagees' additional perils (oil pollution) insurance and any other insurance from time to time taken out by the Bank in relation to the Vessel, the cost of which shall, for the avoidance of doubt, be for the Borrower's account.
1.1.57 "the Mortgage" means the first preferred mortgage referred to in Clause 8.2.1.
1.1.58 "Operating Expenses" means expenses properly and reasonably incurred by the Borrower in connection with the operation, employment, maintenance, repair and insurance of the Vessel.
1.1.59 "Permitted Encumbrance" means any Encumbrance which has the prior written approval of the Bank, or any Encumbrance arising either by operation of law or in the ordinary course of the business of the Borrower which is promptly discharged.
1.1.60 "the Pledgor" means the Guarantor in its capacity as sole legal and beneficial shareholder of the Borrower.
1.1.61 "Potential Event of Default" means any event which, with the giving of notice and/or the passage of time and/or the satisfaction of any materiality test, would constitute an Event of Default.
1.1.62 "Pounds", "Sterling" and "(pound)" each means available and freely transferable and convertible funds in lawful currency of the United Kingdom.
1.1.63 "Proceedings" means any suit, action or proceedings begun by the Bank arising out of or in connection with the Security Documents.
1.1.64 "Quiet Enjoyment Letter" means a letter addressed by the Bank to the Charterer in a form acceptable to the Bank.
1.1.65 "the Refund Guarantee" means irrevocable letter of guarantee number M0902-107-LG-00057 issued by the Refund Guarantor in favour of the Borrower pursuant to the Building Contract on 19 July 2001.
1.1.66 "the Refund Guarantor" means the Export-Import Bank of Korea.
1.1.67 "Relevant Party" means the Borrower and any other Security Party.
1.1.68 "Relevant Ship" means the Vessel and any other vessel from time to time (whether before or after the date of this Agreement) owned, managed or crewed by or chartered to, any Relevant Party.
1.1.69 "Repayment Date" means the date for payment of any Repayment Instalment in accordance with Clause 5.
1.1.70 "Repayment Instalment" means any instalment of the Loan to be repaid by the Borrower pursuant to Clause 5.
1.1.71 "Requisition Compensation" means all compensation or other money which may from time to time be payable to the Borrower as a result of the Vessel being requisitioned for title or in any other way compulsorily acquired (other than by way of requisition for hire).
1.1.72 "the Security Documents" means this Agreement, the Building Contract Assignment, the Guarantee, the Share Pledge, the Mortgage, the Assignment, the Account Security Deed, the Master Agreement and any other Credit Support Documents or (where the context permits) any one or more of them, and any other agreement or document which may at any time be executed by any person as security for the payment of all or any part of the Indebtedness.
1.1.73 "Security Parties" means the Borrower, the Guarantor, the Pledgor, and any other person or company who may at any time during the Facility Period be liable for, or provide security for, all or any part of the Indebtedness, including, for the avoidance of doubt, the Charterer if the Charter is at any time a bareboat charter and "Security Party" means any one of them.
1.1.74 "the Share Pledge" means the pledge of the issued share capital of the Borrower referred to in Clause 8.1.4.
1.1.75 "SMC" means a valid safety management certificate issued for the Vessel by or on behalf of the Administration pursuant to paragraph 13.4 of the ISM Code.
1.1.76 "SMS" means a safety management system for the Vessel developed and implemented in accordance with the ISM Code and including the functional requirements, duties and obligations required by the ISM Code.
1.1.77 "Taxes" means all taxes, levies, imposts, duties, charges, fees, deductions and withholdings (including any related interest, fines, surcharges and penalties) and any restrictions or conditions resulting in any charge, other than taxes on the overall net income of the Bank, and "Tax" and "Taxation" shall be interpreted accordingly.
1.1.78 "Total Loss" means:-
(a) an actual, constructive, arranged, agreed or compromised total loss of the Vessel; or
(b) the requisition for title or compulsory acquisition of the Vessel by or on behalf of any government or other authority (other than by way of requisition for hire); or
(c) the capture, seizure, arrest, detention or confiscation of the Vessel, unless the Vessel is released and returned to the possession of the Borrower within one month after the capture, seizure, arrest, detention or confiscation in question.
1.1.79 "the Tripartite Agreement" means the tripartite agreement attached to the Quiet Enjoyment Letter.
1.1.80 "the Vessel" means the LNG tanker having the Builder's hull number 2215 currently under construction by the Builder for the Borrower pursuant to the Building Contract and, on delivery to the Borrower, intended to be registered under the flag of the Republic of Liberia in the ownership of the Borrower and everything now or in the future belonging to her on board and ashore.
1.2 Interpretation
In this Agreement:-
1.2.1 words denoting the plural number include the singular and vice versa;
1.2.2 words denoting persons include corporations, partnerships, associations of persons (whether incorporated or not) or governmental or quasi-governmental bodies or authorities and vice versa;
1.2.3 references to Recitals, Clauses and Appendices are references to recitals and clauses of, and appendices to, this Agreement;
1.2.4 references to this Agreement include the Recitals and the Appendices;
1.2.5 the headings and contents page(s) are for the purpose of reference only, have no legal or other significance, and shall be ignored in the interpretation of this Agreement;
1.2.6 references to any document (including, without limitation, to all or any of the Security Documents) are, unless the context otherwise requires, references to that document as amended, supplemented, novated or replaced from time to time;
1.2.7 references to statutes or provisions of statutes are references to those statutes, or those provisions, as from time to time amended, replaced or re-enacted;
1.2.8 references to the Bank include its successors, transferees and assignees;
1.2.9 references to times of day are to London time.
1.3 Offer letter
This Agreement supersedes the terms and conditions contained in any correspondence relating to the subject matter of this Agreement exchanged between the Bank and the Borrower or their representatives prior to the date of this Agreement.
2 The Loan and its Purpose
2.1 Agreement to lend Subject to the terms and conditions of this Agreement, and in reliance on each of the representations and warranties made or to be made in or in accordance with each of the Security Documents, the Bank agrees to advance to the Borrower an aggregate amount not exceeding the Maximum Loan Amount to be used by the Borrower for the purpose referred to in Recital (C).
2.2 Drawings Subject to satisfaction by the Borrower of the conditions set out in Clause 3.1 and Clause 3.2 or 3.3 (as appropriate), and subject to Clause 2.3, the Loan shall be advanced to the Borrower in no more than ten (10) Drawings (but excluding Drawings utilised to pay any interest accruing prior to delivery of the Vessel) (or such other number as the Bank, in its discretion, may agree) in each case by the Bank transferring the amount of the Drawing in accordance with the Borrower's instructions by such method of funds transfer as the Bank and the Borrower shall agree.
2.3 Advance of Drawings Each Drawing shall be advanced in Dollars on a Business Day, provided that the Borrower shall have given to the Bank not fewer than one Business Day's notice in writing materially in the form set out in Appendix A of the required Advance Date. Each Drawdown Notice once given shall be irrevocable and shall constitute a warranty by the Borrower that:-
2.3.1 all conditions precedent to the advance of the Drawing requested in that Drawdown Notice will have been satisfied on or before the Advance Date requested;
2.3.2 no Event of Default or Potential Event of Default will then have occurred;
2.3.3 no Event of Default or Potential Event of Default will result from the advance of the Drawing in question; and
2.3.4 there has been no material adverse change in the business, affairs or financial condition of any of the Security Parties from that pertaining at the date of this Agreement.
2.4 Restrictions on Drawings No more than one Drawing may be requested in respect of each Instalment, and no Drawing in respect of an Instalment shall be in an amount exceeding the amount due and payable by the Borrower to the Builder pursuant to the Builder's invoice in respect of the Instalment in question (and any additional costs and expenses duly authorised by the Bank), as evidenced by the copy invoice delivered by the Borrower to the Bank pursuant to Clause 3.2 or 3.3.
2.5 Availability Termination Date The Bank shall be under no obligation to advance all or any part of the Loan after the Availability Termination Date.
2.6 Application of Loan Without prejudice to the obligations of the Borrower under this Agreement, the Bank shall not be obliged to concern itself with the application by the Borrower of any Drawing or the Loan.
2.7 Loan and control accounts The Bank will open and maintain such loan and control accounts for the Borrower as the Bank shall in its discretion consider necessary or desirable.
3 Conditions Precedent and Subsequent
3.1 Conditions Precedent - General Before the Bank shall have any obligation to advance any part of the Loan, the Borrower shall deliver or cause to be delivered to or to the order of the Bank the following documents and evidence:-
3.1.1 Evidence of incorporation Such evidence as the Bank may reasonably require that each Security Party was duly incorporated in its country of incorporation and remains in existence and, where appropriate, in good standing, with power to enter into, and perform its obligations under, those of the Security Documents to which it is, or is intended to be, a party, including (without limitation) a copy, certified by a director or the secretary of the Security Party in question as true, complete, accurate and unamended, of all documents establishing or limiting the constitution of each Security Party.
3.1.2 Corporate authorities Fax copies of a resolution of the directors of each Security Party and a resolution of the shareholders of each Security Party other than the Guarantor if required (together, where appropriate, with signed waivers of notice of any directors' or shareholders' meetings) approving, and authorising or ratifying the execution of, those of the Security Documents to which that Security Party is or is intended to be a party and all matters incidental thereto.
3.1.3 Officer's certificate Fax copies of a certificate signed by a duly authorised officer of each of the Security Parties setting out the names of the directors, officers and shareholders of that Security Party.
3.1.4 Power of attorney Fax copies of the notarially attested and legalised power of attorney of each of the Security Parties under which any documents are to be executed or transactions undertaken by that Security Party.
3.1.5 Building Contract and Refund Guarantee A photocopy, certified as true, accurate and complete by a director or the secretary of the Borrower, of (a) the Building Contract, together (where appropriate) with such documents as the Bank may reasonably require to evidence the nomination of the Borrower as purchaser of the Vessel pursuant to the Building Contract, and (b) the Refund Guarantee, in each case together with all addenda, amendments or supplements.
3.1.6 Charter A photocopy, certified as true, accurate and complete by a director or the secretary of the Borrower of the Charter together with all addenda, amendments or supplements.
3.1.7 Quiet enjoyment letter The quiet enjoyment letter from the Bank to the Charterer duly acknowledged by the Charterer.
3.1.8 Security Documents This Agreement and the Security Documents referred to in Clause 8.1 together with all notices and other documents required by any of them, duly executed.
3.1.9 Notices of assignment The notices of assignment required by the Building Contract Assignment duly executed by the Borrower and acknowledged by the Builder and the Refund Guarantor, as the context may require, together with evidence of the authority of the persons signing the acknowledgement on behalf of each of the Builder and the Refund Guarantor.
3.1.10 The Pledge Documents If requested by the Bank, the Pledge Documents required by the Share Pledge.
3.1.11 Process agent A letter from Golar Management Limited accepting their appointment by each of the Security Parties as agent for service of Proceedings pursuant to the Security Documents.
3.1.12 Technical Report A report by a surveyor and/or other technical adviser instructed by the Bank to review the Building Contract and the Vessel's specifications confirming that they are in all respects acceptable to the Bank.
3.1.13 Evidence of payment Receipted invoices or such other evidence satisfactory to the Bank that the Borrower has paid the first two Instalments due under the Building Contract.
3.2 Conditions Precedent - pre-delivery Before the Bank shall have any obligation to advance to the Borrower any Drawing in respect of an Instalment other than the Delivery Instalment or any Drawing in respect of any other pre-delivery costs and expenses authorised by the Bank, the Borrower shall, in addition to the documents and evidence delivered pursuant to Clause 3.1, deliver or cause to be delivered to the Bank the following additional documents and evidence:-
3.2.1 Invoice In the case of a Drawing relating to an Instalment, a photocopy, certified as true, accurate and complete by a director or the secretary of the Borrower, of the invoice issued by the Builder evidencing the obligation of the Borrower to pay the relevant Instalment to the Builder pursuant to the Building Contract on a date no later than the proposed Advance Date of the Drawing in question.
3.2.2 Evidence of costs and expenses In the case of a Drawing relating to pre-delivery costs and expenses authorised by the Bank other than an Instalment, such evidence as the Bank may require, evidencing the obligation of the Borrower to pay the pre-delivery costs and expenses in question on a date no later than the proposed Advance Date of the Drawing in question.
3.2.3 Drawdown Notice A Drawdown Notice.
3.3 Conditions Precedent - Delivery Instalment Before the Bank shall have any obligation to advance to the Borrower a Drawing in respect of the Delivery Instalment, the Borrower shall, in addition to the documents and evidence delivered pursuant to Clause 3.1, deliver or cause to be delivered to the Bank the following additional documents and evidence:-.
3.3.1 Officer's certificate A certificate signed by a duly authorised officer of each of the Security Parties dated no later than five (5) Business Days before the Delivery Advance Date confirming that none of the documents and evidence delivered to the Bank pursuant to Clauses 3.1.1, 3.1.2 and 3.1.4 has been amended, modified or revoked in any way since its delivery to the Bank.
3.3.2 Vessel documents Photocopies, certified as true, accurate and complete by a director or the secretary of the Borrower, of:-
(a) the invoice issued by the Builder and countersigned by the Vessel's classification society evidencing the obligation of the Borrower to pay the Delivery Instalment to the Builder pursuant to the Building Contract on a date no later than the proposed Delivery Advance Date;
(b) the builder's certificate and/or bill of sale transferring title in the Vessel to the Borrower free of all encumbrances, maritime liens or other debts;
(c) the protocol of delivery and acceptance evidencing the unconditional physical delivery of the Vessel by the Builder to the Borrower pursuant to the Building Contract;
(d) the declaration of warranty issued by the Builder to the Borrower pursuant to the Building Contract;
(e) the management agreement between the Borrower and the Managers relating to the Vessel;
(f) the Vessel's Safety Construction, Safety Equipment, Safety Radio, Load Line and IOPP Certificates;
(g) the Vessel's Certificate of Financial Responsibility issued pursuant to the United States Oil Pollution Act 1990;
(h) the Vessel's SMC; and
(i) the Company's DOC;
in each case together with all addenda, amendments or supplements.
3.3.3 Evidence of ownership A fax copy of the certificate(s) of ownership and encumbrance (or equivalent) issued by the Registrar of Ships (or equivalent official) at the Vessel's existing port of registry confirming that the Vessel is on the Delivery Advance Date owned by the Borrower and free of registered Encumbrances.
3.3.4 Evidence of insurance Evidence that the Vessel is, or will from the Delivery Advance Date be, insured in the manner required by the Security Documents and that letters of undertaking will be issued in the manner required by the Security Documents, together with (if required by the Bank) a written report regarding the Insurances by an insurance adviser appointed by the Bank in a form acceptable to the Bank.
3.3.5 Certificate of class A fax copy of an interim Certificate of Class for hull and machinery confirming that the Vessel is classed with the highest class applicable to vessels of her type with Det norske Veritas or such other classification society as may be acceptable to the Bank.
3.3.6 Survey report A report by a surveyor and/or other technical adviser instructed by the Bank to inspect the Vessel confirming that the condition of the Vessel is in all respects acceptable to the Bank.
3.3.7 Security Documents The Security Documents referred to in Clause 8.2 together with all notices and other documents required by any of them, duly executed and, in the case of the Mortgage, registered with first priority through the Registrar of Ships (or equivalent official) at the Vessel's port of registry.
3.3.8 Drawdown Notice A Drawdown Notice.
3.3.9 Mandates Such duly signed forms of mandate, and/or other evidence of opening of the Accounts, as the Bank may require.
3.3.10 Legal opinions Confirmation satisfactory to the Bank that all legal opinions required by the Bank will be given substantially in the form required by the Bank.
3.4 Conditions Subsequent - first Drawing The Borrower undertakes to deliver or to cause to be delivered to the Bank on, or as soon as practicable after, the Advance Date of the first Drawing, the following additional documents and evidence:-
3.4.1 Companies Act registrations Evidence that the prescribed particulars of the Building Contract Assignment and the Share Pledge have been delivered to the Registrar of Companies of England and Wales within the statutory time limit.
3.4.2 Originals or photocopies Originals or photocopies, certified as true, accurate and complete by a director or the secretary of the Borrower, of any document which was supplied to the Bank as a fax copy pursuant to Clause 3.1.
3.5 Conditions Subsequent - Delivery Advance The Borrower undertakes to deliver or to cause to be delivered to the Bank on, or as soon as practicable after, the Delivery Advance Date, the following additional documents and evidence:-
3.5.1 Evidence of registration Evidence of permanent registration of the Vessel and the Mortgage (with first priority) with the Registrar of Ships (or equivalent official) at the Vessel's port of registry.
3.5.2 Letters of undertaking Letters of undertaking as required by the Security Documents in form and substance acceptable to the Bank.
3.5.3 Legal opinions Such legal opinions as the Bank shall require.
3.5.4 Companies Act registrations Evidence that the prescribed particulars of the Security Documents have been delivered to the Registrar of Companies of England and Wales within the statutory time limit.
3.5.5 Originals or photocopies Originals or photocopies certified as true, accurate and complete by a director or the secretary of the Borrower, of any document which was supplied to the Bank as a fax copy pursuant to Clause 3.3.
3.5.6 Master's receipt The master's receipt for the Mortgage.
3.6 No waiver If the Bank in its sole discretion agrees to advance any Drawing to the Borrower before all of the documents and evidence required by Clause 3.1 and/or 3.2 and/or 3.3 have been delivered to or to the order of the Bank, the Borrower undertakes to deliver all outstanding documents and evidence to or to the order of the Bank no later than the date specified by the Bank, and the Bank's advance of the Drawing shall not be taken as a waiver of its right to require production of all the documents and evidence required by Clauses 3.1, 3.2 and 3.3.
3.7 Form and content All documents and evidence delivered to the Bank pursuant to this Clause shall:-
3.7.1 be in form and substance acceptable to the Bank;
3.7.2 be accompanied, if required by the Bank, by translations into the English language, certified in a manner acceptable to the Bank;
3.7.3 if required by the Bank, be certified, notarised, legalised or attested in a manner acceptable to the Bank.
3.8 Event of Default The Bank shall be under no obligation to advance any part of the Loan nor to act on any Drawdown Notice if, at the date of any Drawdown Notice or at the date on which the advance of a Drawing is requested in any Drawdown Notice, an Event of Default or Potential Event of Default shall have occurred, or if an Event of Default or Potential Event of Default would result from the advance of the Drawing in question.
4 Representations and Warranties
The Borrower represents and warrants to the Bank at the date of this Agreement and (by reference to the facts and circumstances then pertaining) at the date of each Drawdown Notice, at each Advance Date and at each Interest Payment Date as follows:-
4.1 Incorporation and capacity Each of the Security Parties is a body corporate duly constituted and existing and (where applicable) in good standing under the law of its country of incorporation, in each case with perpetual corporate existence and the power to sue and be sued, to own its assets and to carry on its business, and all of the corporate shareholders (if any) of each Security Party are duly constituted and existing under the laws of their countries of incorporation with perpetual corporate existence and the power to sue and be sued, to own their assets and to carry on their business.
4.2 Solvency None of the Security Parties is insolvent or in liquidation or administration or subject to any other insolvency procedure, and no receiver, administrative receiver, administrator, liquidator, trustee or analogous officer has been appointed in respect of any of the Security Parties or all or any part of their assets.
4.3 Binding obligations The Building Contract does, and the Security Documents when duly executed and delivered will, constitute the legal, valid and binding obligations of the Security Parties enforceable in accordance with their respective terms.
4.4 Satisfaction of conditions All acts, conditions and things required to be done and satisfied and to have happened prior to the execution and delivery of the Security Documents in order to constitute the Security Documents the legal, valid and binding obligations of the Security Parties in accordance with their respective terms have been done, satisfied and have happened in compliance with all applicable laws.
4.5 Registrations and consents With the exception only of the registrations referred to in Clauses 3.4 and 3.5, all (if any) consents, licences, approvals and authorisations of, or registrations with or declarations to, any governmental authority, bureau or agency which may be required in connection with the execution, delivery, performance, validity or enforceability of the Security Documents have been obtained or made and remain in full force and effect and the Borrower is not aware of any event or circumstance which could reasonably be expected adversely to affect the right of any of the Security Parties to hold and/or obtain renewal of any such consents, licences, approvals or authorisations.
4.6 Disclosure of material facts The Borrower is not aware of any material facts or circumstances which have not been disclosed to the Bank and which might, if disclosed, have adversely affected the decision of a person considering whether or not to make loan facilities of the nature contemplated by this Agreement available to the Borrower.
4.7 No material litigation There is no action, suit, arbitration or administrative proceeding pending or to its knowledge about to be pursued before any court, tribunal or governmental or other authority which would, or would be likely to, have a materially adverse effect on the business, assets, financial condition or creditworthiness of any of the Security Parties.
4.8 No breach of law or contract The execution, delivery and performance of the Security Documents will not contravene any contractual restriction or any law binding on any of the Security Parties or on any shareholder (whether legal or beneficial) of any of the Security Parties, or the constitutional documents of any of the Security Parties, nor result in the creation of, nor oblige any of the Security Parties to create, any Encumbrance over all or any of its assets, with the exception of the Encumbrances created by or pursuant to the Security Documents, and, in entering into those of the Security Documents to which it is, or is to be, a party, and in borrowing the Loan, the Borrower is acting for its own account.
4.9 No deductions The Borrower is not required to make any deduction or withholding from any payment which it may be obliged to make to the Bank under or pursuant to the Security Documents.
4.10 No established place of business in the United Kingdom or United States None of the Security Parties has, nor will any of them have during the Facility Period, an established place of business in the United Kingdom or the United States of America.
4.11 Use of Loan The Loan will be used for the purpose specified in Recital (C).
4.12 Completeness of Documents The certified copy documents provided or to be provided by the Borrower to the Bank in accordance with Clauses 3.1.5, 3.1.6, 3.2.1 and 3.3.2 do, or will, constitute the full agreement between (i) the Builder and the Borrower and the Refund Guarantor and the Borrower in relation to the construction, sale and purchase of the Vessel, and (ii) the Borrower and the Charterer in relation to the time chartering of the Vessel, and, in each case, there are no commissions, rebates, premiums or other payments due other than in the ordinary course of business or as disclosed to, and approved in writing by, the Bank.
5 Repayment and Prepayment
5.1 Repayment The Borrower agrees to repay the Loan to the Bank by (a)
one hundred and forty four (144) consecutive monthly Repayment
Instalments and (b) a balloon payment in the amount of one hundred
and eighteen million Dollars ($118,000,000) (the "Balloon")
payable concurrently with the final Repayment Instalment, the
first Repayment Date being the earlier of (i) the date upon which
the Borrower delivers the Vessel to the Charterer under the
Charter (whether immediately ex-Builder's yard or in Trinidad) and
(ii) the date which is one calendar month after the Delivery
Advance Date and subsequent Repayment Dates being at consecutive
intervals of one calendar month thereafter. Subject always to the
provisions of Clause 5.2, the amount of each Repayment Instalment
shall be the amount shown as principal in the column headed
"Principal Repayment" in Schedule 1.
5.2 Reduction of Balloon If the aggregate amount advanced to the Borrower is less than the Maximum Loan Amount, each Repayment Instalment (including the Balloon) the Balloon shall be reduced pro rata.
5.3 Prepayment The Borrower may prepay the Loan in whole or in part in an amount equal to one million Dollars ($1,000,000) or an integral multiple of that amount (or as otherwise may be agreed by the Bank) provided that it has first given to the Bank not fewer than ten (10) days' prior written notice expiring on a Business Day of its intention to do so. Any notice pursuant to this Clause once given shall be irrevocable and shall oblige the Borrower to make the prepayment referred to in the notice on the Business Day specified in the notice, together with all interest accrued on the amount prepaid up to and including that Business Day.
5.4 Prepayment indemnity If the Borrower shall, subject always to Clause 5.3, make a prepayment on a Business Day other than the last day of an Interest Period in respect of the whole of the Loan, it shall, in addition to the amount prepaid and accrued interest, pay to the Bank any amount which the Bank may certify is necessary to compensate the Bank for any Break Costs incurred by the Bank as a result of the making of the prepayment in question.
5.5 Application of prepayments Any prepayment in an amount less than the Indebtedness shall be applied in satisfaction or reduction first of any costs and other amounts outstanding (including, for the avoidance of doubt, any Break Costs); secondly of all interest outstanding; thirdly of the Balloon; and fourthly of the Repayment Instalments in inverse order of maturity.
5.6 No reborrowing No amount repaid or prepaid pursuant to this Agreement may in any circumstances be reborrowed.
6 Funding of Balloon and Interest
6.1 Determination of Funding Rate for the Balloon The Borrower
irrevocably authorises the Bank to obtain at the Bank's
discretion, subject always to the provisions of Clause 9.2.13 on a
Business Day nominated by the Borrower, in accordance with its
normal practices, a rate in the London Interbank Market for fixed
rate funds in amounts and maturities appropriate to match the
repayment of the Balloon in accordance with Clause 5.1 and on the
basis that interest will accrue on the Balloon at the aggregate of
(a) the fixed rate obtained by the Bank and (b) the Margin
(together "the Funding Rate"), the amount of each such payment to
be calculated by the Bank whose certification shall be final (save
in the case of manifest error).
6.2 Assumptions The Borrower acknowledges that the form of Schedule 1 annexed to this Agreement is by way of example only and has been calculated upon the assumptions that (a) the interest rate payable on the Balloon will be seven point three four per cent (7.340%) per annum, and (b) the amount of the Balloon will be one hundred and eighteen million Dollars (US$118,000,000). If, (when the Bank has fixed the Funding Rate in accordance with Clause 6.1) any of such assumptions proves to be incorrect, the Bank shall reissue Schedule 1. The revised schedule shall constitute Schedule 1 to this Agreement for all purposes and each reference to "Schedule 1" in this Agreement shall thereafter be a reference to such revised schedule, unless and until further revised in accordance with this Agreement and the Bank's calculation and certification of such revised schedule shall (in the absence of manifest error) be conclusive.
6.3 Payment of Interest in respect of the Balloon Interest shall accrue on the Balloon from day to day at the Funding Rate and accrued interest (other than interest at the Default Rate, in respect of which Clause 6.12 shall apply) shall be paid on each Repayment Date in the amount specified in the column headed "Interest Payment - Balloon" in Schedule 1.
6.4 Notification of Funding Rate The Bank shall notify the Borrower promptly of the Funding Rate applicable to the Balloon determined by it under this Clause 6.
6.5 Market disruption: non-availability
6.5.1 If and whenever the Bank decides (which decision shall, in the absence of manifest error, be conclusive):
(a) that adequate and fair means do not exist for ascertaining the Funding Rate; or
(b) that deposits in Dollars are not available to the Bank in the London Interbank Market in the ordinary course of business in sufficient amounts to fund the Balloon;
the Bank shall give a notice (a "Determination Notice") to the Borrower. A Determination Notice shall contain particulars of the relevant circumstances giving rise to its issue. After the giving of any Determination Notice the undrawn amount of the Balloon (if any) shall not be advanced or borrowed until notice to the contrary is given to the Borrower by the Bank.
6.5.2 During the period of ten (10) days after any Determination Notice has been given by the Bank pursuant to Clause 6.5.1, the Bank shall certify an alternative basis (the "Substitute Basis") for maintaining the continuing drawing of the Balloon. The Substitute Basis may (without limitation) include alternative interest periods, alternative currencies or alternative rates of interest but shall include a margin above the cost of funds to the Bank equivalent to the Margin. Each Substitute Basis so certified shall be binding upon the Borrower and shall take effect in accordance with its terms from the date specified in the Determination Notice until such time as the Bank notifies the Borrower that none of the circumstances specified in Clause 6.5.1 continues to exist whereupon the normal interest rate fixing provisions of this Agreement shall apply.
6.6 Interest Periods for the Excess Amount The period during which any part of the Excess Amount shall be outstanding pursuant to this Agreement shall be divided into consecutive Interest Periods of either:
6.6.1 three, six, nine or twelve months' duration; or
6.6.2 such other duration as may be agreed by the Bank in its discretion.
6.7 Beginning and end of Interest Periods in respect of the Excess Amount The first Interest Period in respect of the Excess Amount or a part thereof shall begin on the first Advance Date. Notwithstanding Clause 6.6 the first Interest Period in respect of each Drawing or a part thereof forming part of the Excess Amount other than the first shall be of such a length as to end on the same date as the then current Interest Period applicable to the remainder of the Excess Amount, and the final Interest Period in respect of the Excess Amount shall end on the Repayment Date applicable to the final Repayment Instalment for the Loan.
6.8 Interest Periods to meet Repayment Dates After delivery of the Vessel pursuant to the Building Contract, if an Interest Period does not expire on the next Repayment Date, there shall, in respect of each part of the Excess Amount equal to a Repayment Instalment falling due for payment before the expiry of that Interest Period, be a separate Interest Period which shall expire on the relevant Repayment Date in respect of the Excess Amount, and the Interest Period selected or agreed shall apply to the balance of the Excess Amount only.
6.9 Interest rate for the Excess Amount During each Interest Period interest shall accrue on the Excess Amount at the rate determined by the Bank to be the aggregate of (a) the Margin, (b) LIBOR determined at or about 11.00 a.m. on the second Business Day prior to the beginning of that Interest Period and (c) the Mandatory Cost.
6.10 Accrual and payment of interest Interest on the Excess Amount shall accrue from day to day, shall be calculated on the basis of a 360 day year and the actual number of days elapsed (or, in any circumstance where market practice differs, in accordance with the prevailing market practice) and shall be paid by the Borrower to the Bank on the last day of each Interest Period in respect of their Excess Amount and additionally during any Interest Period exceeding three months, on the last day of each successive three month period after the beginning of that Interest Period.
6.11 Ending of Interest Periods Each Interest Period applicable to the Excess Amount shall, subject to Clauses 6.7 and 6.8, end on the date which numerically corresponds to the date on which the immediately preceding Interest Period in respect of the Excess Amount or a part thereof ended (or, in the case of the first Interest Period, to the first Advance Date) in the calendar month which is the number of months selected or agreed after the calendar month in which the immediately preceding Interest Period in respect of the Excess Amount ended (or, in the case of the first Interest Period, in which the first Advance Date occurred), except that:-
6.11.1 if there is no numerically corresponding date in the calendar month in which the Interest Period in respect of the Excess Amount (or a part thereof) ends, the Interest Period in respect of the Excess Amount (or a part thereof) shall end on the last Business Day in that calendar month; and
6.11.2 if any Interest Period in respect of the Excess Amount (or a part thereof) would end on a day which is not a Business Day, that Interest Period in respect of the Excess Amount (or a part thereof) shall end on the next succeeding Business Day (unless the next succeeding Business Day falls in the next calendar month, in which event the Interest Period in respect of the Excess Amount (or a part thereof) in question shall end on the next preceding Business Day).
Any adjustment made pursuant to Clause 6.11.1 or 6.11.2 shall be ignored for the purpose of determining the date on which any subsequent Interest Period shall end.
6.12 Default Rate If an Event of Default shall occur, the whole of the Indebtedness shall, from the date of the occurrence of the Event of Default, bear interest up to the date of actual payment (both before and after judgment) at the Default Rate, compounded at such intervals as the Bank shall in its discretion determine, which interest shall be payable from time to time by the Borrower to the Bank on demand.
6.13 Determinations conclusive Each determination of an interest rate made by the Bank in accordance with Clause 6 shall (save in the case of manifest error or on any question of law) be final and conclusive.
6.14 Determination of Funding Rate for the Excess Amount The Borrower may, provided no Event of Default has occurred which is continuing and subject to the Bank's consent such consent not to be unreasonably withheld, elect to fix the rate of interest pursuant to this Clause 6 payable in respect of the Excess Amount by giving to the Bank not less than three (3) Business Days written notice of its intention to do so. If the Borrower makes such an election pursuant to this Clause 6.14, the Borrower irrevocably authorises the Bank to obtain at the Bank's discretion, in accordance with its normal practices, a rate in the London Interbank Market for fixed rate funds in amounts and maturities appropriate to match the repayment of the Excess Amount or, as appropriate, the balance of the Excess Amount by one hundred and forty four (144) or, if appropriate, the number of Repayment Instalments still outstanding at the date on which the election contained in this Clause 6.14 shall become effective, monthly Repayment Instalments in accordance with Clause 5.1 and on the basis that interest will accrue on the Loan at the aggregate of (a) the cost of funds to the Bank (as determined by the Bank), (b) the Margin and (c) the Mandatory Cost ( together "the Funding Rate"), the amount of each such payment and the proportion of each such payment which is allocated to principal or interest to be calculated by the Bank on an annuity basis.
6.15 Payment of Interest in respect of the Excess Amount If the Borrower elects to fix the rate of interest in accordance with and pursuant to Clause 6.14 interest shall accrue on the Loan from day to day at the Funding Rate and accrued interest (other than interest at the Default Rate, in respect of which Clause 6.12 shall apply) shall be paid on each Repayment Date in respect of the Excess Amount in an amount as notified by the Bank to the Borrower which amount shall constitute a new Schedule 1 to this Agreement and which, save in the case of manifest error, shall be binding on the Borrower with regard to repayment of principal and interest.
6.16 Notification of Funding Rate The Bank shall notify the Borrower promptly of the Funding Rate determined by it under this Clause 6.16.
6.17 Market disruption: non-availability
6.17.1 If an election has been made pursuant to the provisions of Clause 6.14 if and whenever the Bank decides (which decision shall, in the absence of manifest error, be conclusive):
(a) that adequate and fair means do not exist for ascertaining the Funding Rate; or
(b) that deposits in Dollars are not available to the Bank in the London Interbank Market in the ordinary course of business in sufficient amounts to fund the Loan;
the Bank shall give a notice (a "Determination Notice") to the Borrower. A Determination Notice shall contain particulars of the relevant circumstances giving rise to its issue. After the giving of any Determination Notice the undrawn amount of the Excess Amount (if any) shall not be advanced or borrowed until notice to the contrary is given to the Borrower by the Bank.
6.17.2 During the period of ten (10) days after any Determination Notice has been given by the Bank pursuant to clause 6.17.1, the Bank shall certify an alternative basis (the "Substitute Basis") for maintaining the Excess Amount. The Substitute Basis may (without limitation) include alternative interest periods, alternative currencies or alternative rates of interest but shall include a margin above the cost of funds to the Bank equivalent to the Margin. Each Substitute Basis so certified shall be binding upon the Borrower and shall take effect in accordance with its terms from the date specified in the Determination Notice until such time as the Bank notifies the Borrower that none of the circumstances specified in clause 6.17.1 continues to exist whereupon the normal interest rate fixing provisions of this Agreement shall apply.
7 Fees
7.1 Arrangement fee The Borrower shall pay to the Bank an arrangement fee of one million two hundred and fifty thousand Dollars ($1,250,000) by way of two instalments, of which two hundred and fifty thousand Dollars ($250,000) shall be paid on or before the earlier to occur of the delivery of the Vessel by the Builder to the Borrower and the Availability Termination Date and the balance of one million Dollars ($1,000,000) shall be paid immediately upon demand by way of written notice from the Bank to the Borrower.
7.2 Commitment commission The Borrower shall pay to the Bank a
commitment commission calculated at the rate of one half of one
per centum (1/2%) per annum on the undrawn amount of the Loan from
time to time from the earlier of the date of this Agreement and 15
January 2002 to the earlier to occur of (a) the date on which the
Maximum Loan Amount shall have been advanced to the Borrower and
(b) the Availability Termination Date, both dates inclusive. The
Commitment Commission will accrue from day to day on the basis of
a 360 day year and the actual number of days elapsed, and shall be
paid quarterly in arrears with a final pro rata payment on the
earlier to occur of the date on which the Maximum Loan Amount
shall have been advanced to the Borrower and the Availability
Termination Date.
8 Security Documents
As security for the repayment of the Indebtedness, the Borrower shall execute and deliver to the Bank or cause to be executed and delivered to the Bank, the following Security Documents in such forms and containing such terms and conditions as the Bank shall require:-
8.1 pre-delivery on or before the first Advance Date:-
8.1.1 the Building Contract Assignment a deed of assignment of the Building Contract and Refund Guarantee;
8.1.2 the Guarantee the guarantee and indemnity of the Guarantor;
8.1.3 the Account Security Deeds account security deeds, one in respect of all amounts from time to time standing to the credit of the Cash Account and one in respect of all amounts from time to time standing to the credit of the Earnings Account; and
8.1.4 the Share Pledge if requested by the Bank, a pledge of all the issued shares of the Borrower.
8.2 post-delivery on or before the Delivery Advance Date:-
8.2.1 the Mortgage a first preferred mortgage over the Vessel; and
8.2.2 the Assignment a deed of assignment of the Insurances, Earnings, Charter Rights, and Requisition Compensation.
9 Covenants
9.1 Negative covenants
The Borrower will not without the Bank's prior written consent:-
9.1.1 no disposals or third party rights dispose of or create or permit to arise or continue any Encumbrance or other third party right on or over all or any part of its present or future assets or undertaking other than any Permitted Encumbrances existing from time to time; nor
9.1.2 no borrowings borrow any money or incur any obligations under leases other than pursuant to this Agreement except in respect of inter-company loans which have been fully subordinated to the Bank's rights under the Security Documents in a manner acceptable to the Bank; nor
9.1.3 no repayments repay any loans made to it except in respect of inter-company loans or amounts made available to it by the Guarantor; nor
9.1.4 no substantial liabilities except in the ordinary course of business, incur any liability to any third party which is in the opinion of the Bank of a substantial nature; nor
9.1.5 no other business engage in any business other than the ownership, operation, chartering and management of the Vessel; nor
9.1.6 no loans or other financial commitments make any loan nor enter into any guarantee or indemnity or otherwise voluntarily assume any actual or contingent liability in respect of any obligation of any other person; nor
9.1.7 no sale of Vessel sell or otherwise dispose of the Vessel or any shares in the Vessel nor agree to do so; nor
9.1.8 no chartering after Event of Default following the occurrence and during the continuation of an Event of Default let the Vessel on charter or renew or extend any charter or other contract of employment of the Vessel (nor agree to do so) other than under the Charter; nor
9.1.9 no change in management appoint anyone other than the Managers as commercial or technical managers of the Vessel, nor terminate or materially vary the arrangements for the commercial or technical management of the Vessel, nor permit the Managers to change the sub-contractors or delegate the commercial or technical management of the Vessel to any third party except as already notified to the Bank; nor
9.1.10 no change in ownership or control permit any change in its beneficial ownership and control from that advised to the Bank at the date of this Agreement.
9.1.11 no amendments to Charter agree to any substantial or material amendment to or variation of the Charter, nor excuse the Charterer from performance of any of its obligations pursuant to the Charter.
9.2 Positive covenants
9.2.1 Registration of Vessel The Borrower undertakes to maintain the registration of the Vessel under the flag referred to in Recital (B) from the Delivery Advance Date and for the remainder of the Facility Period.
9.2.2 Financial statements The Borrower will supply to the Bank,
without request, (a) the Borrower's annual financial
statements for each financial year of the Borrower ending
during the Facility Period, containing (amongst other
things) the Borrower's profit and loss account for, and
balance sheet at the end of, each such financial year,
prepared in accordance with generally accepted
international accounting principles and practices
acceptable to the Bank consistently applied, and audited by
a firm of chartered accountants (or equivalent) acceptable
to the Bank, in each case within one hundred and eighty
(180) days of the end of the financial year to which they
relate and (b) the quarterly unaudited financial management
statements for each financial quarter of the Borrower
ending during the Facility Period within sixty (60) days
after the end of the quarter to which they relate. The
Borrower will procure that the Bank is given the like
information relating to the Guarantor within the same time
frames as aforementioned.
9.2.3 Other information The Borrower will promptly supply to the Bank copies of all financial and other information from time to time given by the Borrower to its shareholders and such information and explanations as the Bank may from time to time require in connection with the operation of the Vessel and the Borrower's profit and liquidity, and will procure that the Bank be given the like information and explanations relating to all other Security Parties (other than the Charterer).
9.2.4 Evidence of goodstanding The Borrower will from time to time on the request of the Bank provide the Bank with evidence in form and substance satisfactory to the Bank that the Security Parties and all corporate shareholders of any of the Security Parties remain in good standing.
9.2.5 Evidence of current COFR Without limiting the Borrower's obligations under Clause 9.2.3, the Borrower will from time to time on the request of the Bank provide the Bank with such evidence as the Bank may reasonably require that the Vessel has a valid and current Certificate of Financial Responsibility pursuant to the United States Oil Pollution Act 1990.
9.2.6 ISM Code compliance The Borrower will:-
(a) procure that the Vessel remains, from the Delivery Advance Date and for the remainder of the Facility Period, subject to a SMS;
(b) maintain a valid and current SMC for the Vessel from the Delivery Advance Date and for the remainder of the Facility Period;
(c) if not itself the Company, procure that the Company maintains a valid and current DOC from the Delivery Advance Date and for the remainder of the Facility Period;
(d) immediately notify the Bank in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the Vessel's SMC or of the Company's DOC;
(e) immediately notify the Bank in writing of any "accident" or "major non-conformity", as each of those terms is defined in the Guidelines on the Implementation of the International Safety Management Code by Administrations adopted by the Assembly of the International Maritime Organisation pursuant to Resolution A.788(19), and of the steps being taken to remedy the situation; and
(f) not without the prior written consent of the Bank (which will not be unreasonably withheld) change the identity of the Company.
9.2.7 Inspection of records The Borrower will permit the inspection of its financial records and accounts from time to time by the Bank or its nominee.
9.2.8 Pari passu obligations The Borrower will ensure that, throughout the Facility Period, the obligations of the Security Parties under or pursuant to the Security Documents rank at least pari passu with all other existing or future indebtedness, obligations or liabilities of the Security Parties, other than any mandatorily preferred by law.
9.2.9 Notification of Event of Default The Borrower will immediately notify the Bank in writing of the occurrence of any Event of Default or Potential Event of Default.
9.2.10 Valuations The Borrower will at the request of the Bank, but no more than once in each twelve (12) month period, provide the Bank with a valuation of the Vessel (on the basis of an arm's length sale on normal commercial terms and free of any existing charter or other contract of employment), such valuation to be obtained by the Borrower's existing panel of valuation brokers (namely, Fearnleys, Platou and Basso) (or such other brokers as may be acceptable to the Bank) the cost of such valuation to be for the account of the Borrower. In addition, the Borrower will provide the Bank with copies of such other valuations of the Vessel as may be obtained from time to time by the said valuation brokers.
9.2.11 Performance of Charter The Borrower will perform the Charter in accordance with its terms and will not without the prior written consent of the Bank terminate or purport to terminate the Charter (irrespective of the terms of the Charter) the Borrower acknowledging by its execution of this Agreement that, if any such consent is given by the Bank, the Bank shall be under no liability in the event that any termination of the Charter is subsequently adjudged to constitute a repudiation of the Charter.
9.2.12 Mandatory Prepayment If, at any time:-
(a) before the Delivery Advance Date, any of the circumstances set out in Clauses 11.2.5 or 11.2.6 occurs in relation to the Builder or the Refund Guarantor; or
(b) after the Delivery Advance Date, any of the circumstances set out in Clauses 11.2.5 or 11.2.6 occurs in relation to the Charterer; or
(c) before the Delivery Advance Date, either the Building Contract or the Refund Guarantee is terminated, revoked, cancelled or repudiated or otherwise ceases to remain in full force and effect; or
(d) during the Facility Period the Charter is terminated, revoked, cancelled or repudiated or otherwise ceases to remain in full force and effect;
the Indebtedness (including all accrued interest) shall immediately be prepaid. Clause 5.4 shall apply to that prepayment if it is made on a day other than the last day of an Interest Period in respect of the whole of the Loan.
9.2.13 Hedging enter into hedging arrangements satisfactory to the Bank in all respects in respect of an amount equal to the Balloon by no later than 15 February 2002 for the duration of the period up to and including the date of repayment of the Balloon pursuant to Clause 5.1.
9.2.14 Tripartite Agreement immediately enter into the Tripartite Agreement and immediately procure that the Charterer enters into the Tripartite Agreement should the Charter become a bareboat charter.
10 Cash and Earnings Accounts
10.1 Maintenance of Accounts The Borrower shall maintain the Accounts with the Bank from the Delivery Advance Date and for the remainder of the Facility Period free of Encumbrances and rights of set off other than as created by or pursuant to the Security Documents.
10.2 Earnings The Borrower shall procure that there is credited to the Earnings Account all Earnings and any Requisition Compensation.
10.3 Application of Earnings Account The Borrower shall procure that there is transferred from the Earnings Account (and irrevocably authorises the Bank to transfer from the Earnings Account) to the Bank:-
10.3.1 on each Repayment Date, the amount of the Repayment Instalment then due;
10.3.2 on each Interest Payment Date, the amount of interest then due; and
10.3.3 to the extent that the Monthly Payment Amount has not been made in accordance with Clause 10.5 an amount equal to any shortfall.
10.4 Borrower's obligations not affected If for any reason the amount standing to the credit of the Earnings Account shall be insufficient to pay any Repayment Instalment or to make any payment of interest when due, the Borrower's obligation to pay that Repayment Instalment or to make that payment of interest shall not be affected.
10.5 Transfers to Cash Account If at any time after the Delivery Advance Date, the Excess Amount shall be subject to a floating interest rate in accordance with the provisions of Clauses 6.6 - 6.11, then the Borrower shall procure that there is paid to the Cash Account (from sums standing to the credit of the Earnings Account or otherwise) during each calendar month an amount of not less than three hundred and thirty three thousand three hundred and thirty three Dollars ($333,333) (each such payment a "Monthly Payment Amount"). The Borrower's obligation to effect payments to the Cash Account as aforesaid shall continue until such time as the balance standing to the credit of the Cash Account shall be in an amount of five million Dollars ($5,000,000) (the "Cap"); it is agreed that the period for such obligation, the amount of the Monthly Payment Amount and the amount of the Cap can be varied upon the request of the Borrower and upon terms acceptable to the Bank.
10.6 Amendments to Cap If the Borrower and the Bank shall agree to fix the rate of interest for the whole or part of the Excess Amount in accordance with the provisions of Clause 6.14, the Bank and the Borrower will negotiate in good faith to agree a new Cap (the "New Cap") and new "Monthly Payment Amount" on terms acceptable to the Bank.
10.7 Release of Surplus Any amount in excess of the Cap or any New Cap (as the case may be) or in excess of the amounts required to be standing to the credit of the Cash Account pursuant to Clause 10.5 shall (unless an Event of Default shall have occurred and be continuing) be released to or to the order of the Borrower
10.8 Restriction on withdrawal During the Facility Period no sum may be withdrawn from the Accounts (except in accordance with this Clause) without the prior written consent of the Bank but for the avoidance of doubt may be utilised in respect of prepayments in accordance with Clause 5.3, 5.4 and 5.5. For the avoidance of doubt provided no Event of Default has occurred which is continuing, and provided the obligations pursuant to Clause 10.5 have been fulfilled, any surplus money standing to the credit of the Earnings Account and/or the Cash Account shall be at the free disposal of the Borrower.
10.9 Relocation of Accounts At any time following the occurrence and during the continuation of an Event of Default, the Bank may without the consent of the Borrower relocate either or both of the Accounts to any other branch of the Bank, without prejudice to the continued application of this Clause and the rights of the Bank under or pursuant to the Security Documents.
11 Events of Default
11.1 The Bank's rights If any of the events set out in Clause 11.2 occurs, the Bank may at its discretion by notice to the Borrower declare itself to be under no further obligation to the Borrower under or pursuant to this Agreement and may declare all or any part of the Indebtedness (including such unpaid interest as shall have accrued) to be immediately payable, in which event the Indebtedness (or the part of the Indebtedness referred to in the Bank's notice) shall immediately become due and payable without any further demand or notice of any kind.
11.2 Events of Default The events referred to in Clause 11.1 are:-
11.2.1 payment default if the Borrower defaults in the payment of any part of the Indebtedness when due; or
11.2.2 other default if any of the Security Parties fails to observe or perform any of the covenants, conditions, undertakings, agreements or obligations on its part contained in any of the Security Documents or shall in any other way be in breach of or do or cause to be done any act repudiating or evidencing an intention to repudiate any of the Security Documents; or
11.2.3 misrepresentation or breach of warranty if any representation or warranty made or repeated, or any other information given, by any of the Security Parties to the Bank in or leading up to or during the currency of any of the Security Documents, or in or pursuant to any notice or other document delivered to the Bank under or pursuant to any of the Security Documents, is false or incorrect or misleading in any respect which the Bank in its discretion considers to be material; or
11.2.4 execution if a distress or execution or other process of a court or authority is levied on any of the property of any of the Security Parties before or after final judgment or by order of any competent court or authority and is not satisfied within seven days of levy; or
11.2.5 insolvency events if any of the Security Parties:-
(a) resolves to appoint, or applies for or consents to the appointment of, a receiver, administrative receiver, trustee, administrator or liquidator of itself or of all or part of its assets; or
(b) is unable or admits its inability to pay its debts as they fall due; or
(c) makes a general assignment for the benefit of creditors or enters into a moratorium on payment of any of its indebtedness; or
(d) ceases trading or threatens to cease trading; or
(e) has appointed an Inspector under the Companies Act 1985 or any statutory provision which the Bank in its discretion considers analogous thereto; or
11.2.6 insolvency proceedings if any proceedings are commenced or threatened, or any order or judgment is given by any court, for the bankruptcy, liquidation, winding up, administration or re-organisation of any of the Security Parties or for the appointment of a receiver, administrative receiver, administrator, liquidator or trustee of any of the Security Parties or of all or part of the assets of any of the Security Parties, or if any person appoints or purports to appoint such receiver, administrative receiver, administrator, liquidator or trustee;
11.2.7 impossibility or illegality if any event occurs which would, or would with the passage of time, render performance of any of the Security Documents by any of the Security Parties impossible, unlawful or unenforceable by the Bank; or
11.2.8 conditions subsequent if any of the conditions set out in Clause 3.4 or 3.5 is not satisfied within the time reasonably required by the Bank; or
11.2.9 revocation or modification of consents etc. if any consent, licence, approval, authorisation, filing, registration or other requirement of any governmental, judicial or other public body or authority which is now, or which at any time during the Facility Period becomes, necessary to enable any of the Security Parties to comply with any of their obligations in or pursuant to any of the Security Documents is not obtained or is revoked, suspended, withdrawn or withheld, or is modified in a manner which the Bank considers is, or may be, prejudicial to its interests, or ceases to remain in full force and effect; or
11.2.10 curtailment of business if the business of any of the Security Parties is wholly or partially curtailed or suspended by any intervention by or under authority of any government, or if all or a substantial part of the undertaking, property or assets of any of the Security Parties is seized, nationalised, expropriated or compulsorily acquired by or under authority of any government; or
11.2.11 loss of Vessel if the Vessel or any other vessel which may from time to time be mortgaged to the Bank as security for the repayment of all or any part of the Indebtedness is destroyed, abandoned, confiscated, forfeited, condemned as prize or becomes a Total Loss, except that a Total Loss shall not be an Event of Default if:-
(a) the Vessel or other vessel is insured in accordance with the Security Documents; and
(b) no insurer has refused to meet or has disputed the claim for Total Loss and it is not apparent to the Bank in its discretion that any such refusal or dispute is likely to occur; and
(c) payment of all insurance proceeds in respect of the Total Loss is made in full to the Bank within one hundred and twenty days of the occurrence of the casualty giving rise to the Total Loss in question or such longer period as the Bank may in its discretion agree; or
11.2.12 acceleration of other indebtedness if any other indebtedness or obligation for borrowed money of any of the Security Parties becomes due or capable of being declared due prior to its stated maturity by reason of default on the part of that Security Party, or is not repaid or satisfied at maturity; or
11.2.13 challenge to registration if the registration of the Vessel or the Mortgage is contested or becomes void or voidable or liable to cancellation or termination, or if the validity or priority of the Mortgage is contested; or
11.2.14 war if the country of registration of the Vessel becomes involved in war (whether or not declared) or civil war or is occupied by any other power and the Bank in its discretion considers that, as a result, the security conferred by the Security Documents is materially prejudiced; or
11.2.15 Margin if, in the event that the Charterer's S&P rating falls below "B", the Bank and the Borrower fails to agree a new rate for the Margin within ten (10) Business Days thereof.
11.2.16 notice of termination if the Guarantor gives notice to the Bank to determine its obligations under the Guarantee; or
11.2.17 material adverse change etc. if anything is done or permitted or omitted to be done by any of the Security Parties which in the reasonable opinion of the Bank jeopardises or imperils (or may jeopardise or imperil) the rights conferred on the Bank by the Security Documents, or if there occurs (in the opinion of the Bank) any material adverse change in the business, affairs or financial condition of any of the Security Parties from that pertaining at the date of this Agreement; or
11.2.18 analogous events if any event which (in the opinion of the Bank) is analogous to any of the events set out above shall occur.
12 Set-Off and Lien
12.1 Set-off The Borrower irrevocably authorises the Bank at any time after all or any part of the Indebtedness shall have become due and payable to set off without notice any liability of the Borrower to the Bank (whether present or future, actual or contingent, and irrespective of the branch or office, currency or place of payment) against any credit balance from time to time standing on any account of the Borrower (whether current or otherwise and whether or not subject to notice) with any branch of the Bank in or towards satisfaction of the Indebtedness and, in the name of the Bank or the Borrower, to do all acts (including, without limitation, converting or exchanging any currency) and execute all documents which may be required to effect such application.
12.2 Lien The Bank shall have a lien on and be entitled to retain and realise as additional security for the repayment of the Indebtedness any cheques, drafts, bills, notes or negotiable or non-negotiable instruments and any stocks, shares or marketable or other securities and property of any kind of the Borrower (or of the Bank as agent or nominee of the Borrower) from time to time held by the Bank, whether for safe custody or otherwise.
12.3 Restrictions on withdrawal Despite any term to the contrary in relation to any deposit or credit balance at any time on any account of the Borrower with the Bank, no such deposit or balance shall be repayable or capable of being assigned, mortgaged, charged or otherwise disposed of or dealt with by the Borrower during the Facility Period except in accordance with the Security Documents, but the Bank may from time to time permit the withdrawal of all or any part of any such deposit or balance without affecting the continued application of this Clause.
12.4 Application The Borrower irrevocably authorises the Bank to apply all sums which the Bank may receive:-
12.4.1 pursuant to a sale or other disposition of the Vessel or any right, title or interest in the Vessel; or
12.4.2 by way of payment to the Bank of any sum in respect of the Building Contract, Refund Guarantee, Insurances, Earnings, Charter Rights or Requisition Compensation; or
12.4.3 otherwise arising under or in connection with any of the Security Documents
in or towards satisfaction, or by way of retention on account, of the Indebtedness, in such manner as the Bank may in its discretion determine.
13 Assignment and Sub-Participation
13.1 Right to assign The Bank may assign or transfer all or any of its rights under or pursuant to the Security Documents to any other branch of the Bank or to any other bank or financial institution, and may grant sub-participations in all or any part of the Loan and in the case of any assignment or transfer to another bank or financial institution after consultation with the Borrower, the Bank taking into consideration any reasonable objection of the Borrower to such proposed assignment or transfer.
13.2 Borrower's co-operation The Borrower will co-operate fully with the Bank in connection with any assignment, transfer or sub-participation; will execute and procure the execution of such documents as the Bank may require in connection therewith; and irrevocably authorises the Bank to disclose to any proposed assignee, transferee or sub-participant (whether before or after any assignment, transfer or sub-participation and whether or not any assignment, transfer or sub-participation shall take place) all information relating to the Security Parties, the Loan or the Security Documents which the Bank may in its discretion consider necessary or desirable.
13.3 Rights of assignee Any assignee, transferee or sub-participant of the Bank shall (unless limited by the express terms of the assignment, transfer or sub-participation) take the full benefit of every provision of the Security Documents benefiting the Bank.
14 Payments, Mandatory Prepayment, Reserve Requirements and Illegality
14.1 Payments All amounts payable by the Borrower under or pursuant to any of the Security Documents shall be paid to such accounts at such banks as the Bank may from time to time direct to the Borrower, and (unless payable in any other Currency of Account) shall be paid in Dollars in same day funds (or such funds as are required by the authorities in the United States of America for settlement of international payments for immediate value). Payments shall be deemed to have been received by the Bank on the date on which the Bank receives authenticated advice of receipt, unless that advice is received by the Bank on a day other than a Business Day or at a time of day (whether on a Business Day or not) when the Bank in its discretion considers that it is impossible or impracticable for the Bank to utilise the amount received for value that same day, in which event the payment in question shall be deemed to have been received by the Bank on the Business Day next following the date of receipt of advice by the Bank.
14.2 No deductions or withholdings All payments (whether of principal or interest or otherwise) to be made by the Borrower pursuant to the Security Documents shall, subject only to Clause 14.3, be made free and clear of and without deduction for or on account of any Taxes or other deductions, withholdings, restrictions, conditions or counterclaims of any nature.
14.3 Grossing-up If at any time any law requires (or is interpreted to require) the Borrower to make any deduction or withholding from any payment, or to change the rate or manner in which any required deduction or withholding is made, the Borrower will promptly notify the Bank and, simultaneously with making that payment, will pay to the Bank whatever additional amount (after taking into account any additional Taxes on, or deductions or withholdings from, or restrictions or conditions on, that additional amount) is necessary to ensure that, after making the deduction or withholding, the Bank receives a net sum equal to the sum which it would have received had no deduction or withholding been made.
14.4 Evidence of deductions If at any time the Borrower is required by law to make any deduction or withholding from any payment to be made by it pursuant to any of the Security Documents, the Borrower will pay the amount required to be deducted or withheld to the relevant authority within the time allowed under the applicable law and will, no later than thirty days after making that payment, deliver to the Bank an original receipt issued by the relevant authority, or other evidence acceptable to the Bank, evidencing the payment to that authority of all amounts required to be deducted or withheld.
14.5 Rebate If the Borrower makes any deduction or withholding from any payment under or pursuant to any of the Security Documents, and the Bank subsequently receives a refund or allowance from any tax authority which the Bank identifies as being referable to that deduction or withholding, the Bank shall, as soon as reasonably practicable, pay to the Borrower an amount equal to the amount of the refund or allowance received, if and to the extent that it may do so without prejudicing its right to retain that refund or allowance and without putting itself in any worse financial position than that in which it would have been had the deduction or withholding not been required to have been made. Nothing in this Clause shall be interpreted as imposing any obligation on the Bank to apply for any refund or allowance nor as restricting in any way the manner in which the Bank organises its tax affairs, nor as imposing on the Bank any obligation to disclose to the Borrower any information regarding its tax affairs or tax computations.
14.6 Adjustment of due dates If any payment or transfer of funds to be made under any of the Security Documents, other than a payment of interest on the Loan shall be due on a day which is not a Business Day, that payment shall be made on the next succeeding Business Day (unless the next succeeding Business Day falls in the next calendar month in which event the payment shall be made on the next preceding Business Day). Any such variation of time shall be taken into account in computing any interest in respect of that payment.
14.7 Change in law If, by reason of the introduction of any law, or any change in any law, or the interpretation or administration of any law, or in compliance with any request or requirement from any central bank or any fiscal, monetary or other authority:-
14.7.1 the Bank (or the holding company of the Bank) shall be subject to any Tax with respect to payments of all or any part of the Indebtedness; or
14.7.2 the basis of Taxation of payments to the Bank in respect of all or any part of the Indebtedness shall be changed; or
14.7.3 any reserve requirements shall be imposed, modified or deemed applicable against assets held by or deposits in or for the account of or loans by any branch of the Bank; or
14.7.4 the manner in which the Bank allocates capital resources to its obligations under this Agreement or any ratio (whether cash, capital adequacy, liquidity or otherwise) which the Bank is required or requested to maintain shall be affected; or
14.7.5 there is imposed on the Bank (or on the holding company of the Bank) any other condition in relation to the Indebtedness or the Security Documents;
and the result of any of the above shall be to increase the cost to the Bank (or to the holding company of the Bank) of the Bank making or maintaining the Loan or to cause the Bank to suffer (in its opinion) a material reduction in the rate of return on its overall capital below the level which it reasonably anticipated at the date of this Agreement and which it would have been able to achieve but for its entering into this Agreement and/or performing its obligations under this Agreement the Borrower shall from time to time pay to the Bank on demand the amount which shall compensate the Bank (or the holding company of the Bank) for such additional cost or reduced return. A certificate signed by an authorised signatory of the Bank setting out the amount of that payment and the basis of its calculation shall be submitted to the Borrower and shall be conclusive evidence of such amount save for manifest error or on any question of law.
14.8 Illegality and impracticality Notwithstanding anything contained in the Security Documents, the obligation of the Bank to advance or maintain the Loan shall terminate in the event that a change in any law or in the interpretation of any law by any authority charged with its administration shall make it unlawful or, in the opinion of the Bank, impracticable for the Bank to advance or maintain the Loan. In that event the Bank shall, by written notice to the Borrower, declare its obligations to be immediately terminated. If all or any part of the Loan shall have been advanced by the Bank to the Borrower, the Indebtedness (including all accrued interest) shall be prepaid within thirty days from the date of such notice. Clause 5.4 shall apply to that prepayment if it is made on a day other than the last day of an Interest Period in respect of the whole of the Loan.
14.9 Changes in market circumstances If at any time the Bank determines (which determination shall be final and conclusive and binding on the Borrower) that, by reason of changes affecting the London Interbank market, adequate and fair means do not exist for ascertaining the rate of interest on the Loan pursuant to this Agreement:-
14.9.1 the Bank shall give notice to the Borrower of the occurrence of such event; and
14.9.2 the Bank shall as soon as reasonably practicable certify to the Borrower in writing the effective cost to the Bank of maintaining the Loan for such further period as shall be selected by the Bank and the rate of interest payable by the Borrower for that period; or, if that is not acceptable to the Borrower,
14.9.3 the Bank will negotiate with the Borrower in good faith with a view to modifying this Agreement to provide a substitute basis for the Loan which is financially a substantial equivalent to the basis provided for in this Agreement.
If, within thirty days of the giving of the notice referred to in Clause 14.9.1, the Borrower and the Bank fail to agree in writing on a substitute basis for the Loan, the Borrower will immediately prepay the Indebtedness. Clause 5.4 shall apply to that prepayment if it is made on a day other than the last day of an Interest Period in respect of the whole of the Loan.
14.10 Non-availability of currency If the Bank is for any reason unable
to obtain Dollars in the London Interbank market and is, as a
result, or as a result of any other contingency affecting the
London Interbank market, unable to advance or maintain the Loan in
Dollars, the Bank shall give notice to the Borrower and the Bank's
obligations to make the Loan available shall immediately cease. In
that event, if all or any part of the Loan shall have been
advanced by the Bank to the Borrower, the Bank will negotiate with
the Borrower in good faith with a view to establishing a mutually
acceptable basis for funding the Loan from an alternative source.
If the Bank and the Borrower have failed to agree in writing on a
basis for funding the Loan from an alternative source by 11.00
a.m. on the second Business Day prior to the end of the then
current Interest Period, the Borrower will (without prejudice to
its other obligations under or pursuant to this Agreement,
including, without limitation, its obligation to pay interest on
the Loan, arising on the expiry of the then current Interest
Period) prepay the Indebtedness to the Bank on the expiry of the
then current Interest Period.
15 Communications
15.1 Method Any Communication may be given, delivered, made or served (as the case may be) under or in relation to this Agreement by letter, telex or fax and shall be in the English language and sent addressed:-
15.1.1 in the case of the Bank to the Bank at its address at the head of this Agreement (fax no: + 44 20 7661 4638) marked for the attention of: Ship Finance Department; and
15.1.2 in the case of the Borrower to the Communications Address;
or to such other address, telex or fax number as the Bank or the Borrower may designate for itself by written notice to the other.
15.2 Timing A Communication shall be deemed to have been duly given, delivered, made or served to or on, and received by, the Borrower:-
15.2.1 in the case of a telex when answered back;
15.2.2 in the case of a fax when the sender receives one or more transmission reports showing the whole of the Communication to have been transmitted to the correct fax number;
15.2.3 if delivered to an officer of the Borrower or left at the Communications Address at the time of delivery or leaving; or
15.2.4 if sent by registered post on receipt at the Communication Address.
A Communication shall only be deemed to have been duly given, delivered, made or served to or on, and received by, the Bank on actual receipt of the whole of that Communication by the Bank.
15.3 Indemnity The Borrower shall indemnify the Bank against any cost, claim, liability, loss or expense (including legal fees and any Value Added Tax or any similar or replacement tax (if applicable)) which the Bank may sustain or incur as a consequence of any Communication sent by or on behalf of the Borrower by fax not being received by its intended recipient, or being received incomplete, or by reason of any Communication purportedly having been sent by or on behalf of the Borrower having been sent fraudulently.
16 General Indemnities
16.1 Currency In the event of the Bank receiving or recovering any amount payable under any of the Security Documents in a currency other than the Currency of Account, and if the amount received or recovered is insufficient when converted into the Currency of Account at the date of receipt to satisfy in full the amount due, the Borrower shall, on the Bank's written demand, pay to the Bank such further amount in the Currency of Account as is sufficient to satisfy in full the amount due and that further amount shall be due to the Bank as a separate debt under this Agreement.
16.2 Costs and expenses The Borrower will, within fourteen days of the Bank's written demand, reimburse the Bank for all costs and expenses (including Value Added Tax or any similar or replacement tax if applicable) of and incidental to:-
16.2.1 the negotiation, preparation, execution and registration of the Security Documents (whether or not any of the Security Documents are actually executed or registered and whether or not all or any part of the Loan is advanced) including, for the avoidance of doubt costs and disbursements incurred in connection with the technical report, the insurance report, the survey report and legal opinions pursuant to Clauses 3.1.12, 3.3.4, 3.3.6 and 3.3.10 respectively PROVIDED THAT the first such seventy five thousand Pounds ((pound)75,000) of such costs and expenses as conclusively certified by the Bank (save in the case of manifest error) shall be for the Bank's account;
16.2.2 any amendments, addenda or supplements to any of the Security Documents (whether or not completed);
16.2.3 any other documents which may at any time be required by the Bank to give effect to any of the Security Documents or which the Bank is entitled to call for or obtain pursuant to any of the Security Documents (including, without limitation, all premiums and other sums from time to time payable by the Bank in relation to the Mortgagees' Insurances); and
16.2.4 the exercise of the rights, powers, discretions and remedies of the Bank under or pursuant to the Security Documents.
16.3 Events of Default The Borrower shall indemnify the Bank from time to time on demand against all losses and costs incurred or sustained by the Bank as a consequence of any Event of Default, including (without limitation) any Break Costs.
16.4 Funding costs The Borrower shall indemnify the Bank from time to time on demand against all losses and costs incurred or sustained by the Bank if, for any reason, any Drawing is not advanced to the Borrower after the relevant Drawdown Notice has been given to the Bank, or is advanced on a date other than that requested in the Drawdown Notice (unless, in either case, as a result of any default by the Bank), including (without limitation) any Break Costs.
16.5 Protection and enforcement The Borrower shall indemnify the Bank from time to time on demand against all losses, costs and liabilities which the Bank may from time to time sustain, incur or become liable for in or about the protection, maintenance or enforcement of the rights conferred on the Bank by the Security Documents or in or about the exercise or purported exercise by the Bank of any of the rights, powers, discretions or remedies vested in it under or arising out of the Security Documents, including (without limitation) any losses, costs and liabilities which the Bank may from time to time sustain, incur or become liable for by reason of the Bank being mortgagee of the Vessel and/or a lender to the Borrower, or by reason of the Bank being deemed by any court or authority to be an operator or controller, or in any way concerned in the operation or control, of the Vessel.
16.6 Liabilities of Bank The Borrower will from time to time reimburse the Bank on demand for all sums which the Bank may pay or become actually or contingently liable for on account of the Borrower or in connection with the Vessel (whether alone or jointly or jointly and severally with any other person) including (without limitation) all sums which the Bank may pay or guarantees which it may give in respect of the Insurances, any expenses incurred by the Bank in connection with the maintenance or repair of the Vessel or in discharging any lien, bond or other claim relating in any way to the Vessel, and any sums which the Bank may pay or guarantees which it may give to procure the release of the Vessel from arrest or detention.
16.7 Taxes The Borrower shall pay all Taxes to which all or any part of the Indebtedness or any of the Security Documents may be at any time subject and shall indemnify the Bank on demand against all liabilities, costs, claims and expenses resulting from any omission to pay or delay in paying any such Taxes.
17 Miscellaneous
17.1 Waivers No failure or delay on the part of the Bank in exercising any right, power, discretion or remedy under or pursuant to any of the Security Documents, nor any actual or alleged course of dealing between the Bank and the Borrower, shall operate as a waiver of, or acquiescence in, any default on the part of any Security Party, unless expressly agreed to do so in writing by the Bank, nor shall any single or partial exercise by the Bank of any right, power, discretion or remedy preclude any other or further exercise of that right, power, discretion or remedy, or the exercise by the Bank of any other right, power, discretion or remedy.
17.2 No oral variations No variation or amendment of any of the Security Documents shall be valid unless in writing and signed on behalf of the Bank.
17.3 Severability If at any time any provision of any of the Security Documents is invalid, illegal or unenforceable in any respect that provision shall be severed from the remainder and the validity, legality and enforceability of the remaining provisions shall not be affected or impaired in any way.
17.4 Successors etc. The Security Documents shall be binding on the Security Parties and on their successors and permitted transferees and assignees, and shall inure to the benefit of the Bank and its successors, transferees and assignees. The Borrower may not assign nor transfer any of its rights under or pursuant to any of the Security Documents without the prior written consent of the Bank.
17.5 Further assurance If any provision of the Security Documents shall be invalid or unenforceable in whole or in part by reason of any present or future law or any decision of any court, or if the documents at any time held by the Bank are considered by the Bank for any reason insufficient to carry out the terms of this Agreement, then from time to time the Borrower will promptly, on demand by the Bank, execute or procure the execution of such further documents as in the opinion of the Bank are necessary to provide adequate security for the repayment of the Indebtedness.
17.6 Other arrangements The Bank may, without prejudice to its rights under or pursuant to the Security Documents, at any time and from time to time, on such terms and conditions as it may in its discretion determine, and without notice to the Borrower, grant time or other indulgence to, or compound with, any other person liable (actually or contingently) to the Bank in respect of all or any part of the Indebtedness, and may release or renew negotiable instruments and take and release securities and hold funds on realisation or suspense account without affecting the liabilities of the Borrower or the rights of the Bank under or pursuant to the Security Documents.
17.7 Advisers The Borrower irrevocably authorises the Bank, at any time and from time to time during the Facility Period, to consult insurance advisers on any matters relating to the Insurances, including, without limitation, the collection of insurance claims, and from time to time to consult or retain advisers or consultants to monitor or advise on any other claims relating to the Vessel. The Borrower will provide such advisers and consultants with all information and documents which they may from time to time require and will reimburse the Bank on demand for all costs and expenses incurred by the Bank in connection with the consultation or retention of such advisers or consultants.
17.8 Delegation The Bank may at any time and from time to time delegate to any person any of its rights, powers, discretions and remedies pursuant to the Security Documents on such terms as it may consider appropriate (including the power to sub-delegate).
17.9 Rights etc. cumulative Every right, power, discretion and remedy conferred on the Bank under or pursuant to the Security Documents shall be cumulative and in addition to every other right, power, discretion or remedy to which it may at any time be entitled by law or in equity. The Bank may exercise each of its rights, powers, discretions and remedies as often and in such order as it deems appropriate. The exercise or the beginning of the exercise of any right, power, discretion or remedy shall not be interpreted as a waiver of the right to exercise that or any other right, power, discretion or remedy either simultaneously or subsequently.
17.10 No enquiry The Bank shall not be concerned to enquire into the powers of the Security Parties or of any person purporting to act on behalf of any of the Security Parties, even if any of the Security Parties or any such person shall have acted in excess of their powers or if their actions shall have been irregular, defective or informal, whether or not the Bank had notice thereof.
17.11 Continuing security The security constituted by the Security Documents shall be continuing and shall not be satisfied by any intermediate payment or satisfaction until the Indebtedness shall have been repaid in full and the Bank shall be under no further actual or contingent liability to any third party in relation to the Vessel, the Insurances, Earnings, Charter Rights or Requisition Compensation or any other matter referred to in the Security Documents.
17.12 Security cumulative The security constituted by the Security Documents shall be in addition to any other security now or in the future held by the Bank for or in respect of all or any part of the Indebtedness, and shall not merge with or prejudice or be prejudiced by any such security or any other contractual or legal rights of the Bank, nor affected by any irregularity, defect or informality, or by any release, exchange or variation of any such security. Section 93 of the Law of Property Act 1925 and all provisions which the Bank considers analogous thereto under the law of any other relevant jurisdiction shall not apply to the security constituted by the Security Documents.
17.13 Re-instatement If the Bank takes any steps to exercise any of its rights, powers, remedies or discretions pursuant to the Security Documents and the result shall be adverse to the Bank, the Borrower and the Bank shall be restored to their former positions as if no such steps had been taken.
17.14 No liability Neither the Bank nor any agent or employee of the Bank, nor any receiver and/or manager appointed by the Bank, shall be liable for any losses which may be incurred in or about the exercise of any of the rights, powers, discretions or remedies of the Bank under or pursuant to the Security Documents nor liable as mortgagee in possession for any loss on realisation or for any neglect or default of any nature for which a mortgagee in possession might otherwise be liable.
17.15 Rescission of payments etc. Any discharge, release or reassignment by the Bank of any of the security constituted by, or any of the obligations of any Security Party contained in, any of the Security Documents shall be (and be deemed always to have been) void if any act (including, without limitation, any payment) as a result of which such discharge, release or reassignment was given or made is subsequently wholly or partially rescinded or avoided by operation of any law.
17.16 Subsequent Encumbrances If, the Bank receives notice of any subsequent Encumbrance affecting the Vessel, the Building Contract, the Refund Guarantee or all or any part of the Insurances, Earnings, Charter Rights or Requisition Compensation or the Accounts, the Bank may open a new account in its books for the Borrower. If the Bank does not open a new account, then (unless the Bank gives written notice to the contrary to the Borrower) as from the time of receipt by the Bank of notice of such subsequent Encumbrance, all payments made to the Bank shall be treated as having been credited to a new account of the Borrower and not as having been applied in reduction of the Indebtedness.
17.17 Releases If the Bank shall at any time in its discretion release any party from all or any part of any of the Security Documents, the liability of any other party to the Security Documents shall not be varied or diminished.
17.18 Discretions Unless otherwise expressly indicated, where the Bank is stated in the Security Documents to have a discretion and/or where the opinion of the Bank is referred to and/or where the consent, agreement or approval of the Bank is required for any course of action, or where anything is required to be acceptable to the Bank, the Bank shall have a sole, absolute and unfettered discretion and/or may give or withhold its consent, agreement or approval at its sole, absolute and unfettered discretion.
17.19 Certificates Any certificate or statement signed by an authorised signatory of the Bank purporting to show the amount of the Indebtedness (or any part of the Indebtedness) or any other amount referred to in any of the Security Documents shall, save for manifest error or on any question of law, be conclusive evidence as against the Borrower of that amount.
17.20 Survival of representations and warranties The representations and warranties on the part of the Borrower contained in this Agreement shall survive the execution of this Agreement and the advance of the Loan.
17.21 Counterparts This Agreement may be executed in any number of counterparts each of which shall be original but which shall together constitute the same instrument.
17.22 Contracts (Rights of Third Parties) Act 1999 No term of the Agreement is enforceable by a person who is not a party to it.
17.23 Alternative Arrangements
17.23.1 If the Borrower wishes to enter into other arrangements in respect of the operation the Vessel, the Bank shall, if so requested in writing by the Borrower, discuss in good faith for a period of up to 60 days the possible restructuring of the security arrangements contemplated by this Agreement so as to permit such arrangements but such restructuring may only be implemented if the Bank approves it in writing (such approval not to be unreasonably withheld) and such supplemental documentation entered into and conditions precedent fulfilled as the Bank may in its absolute discretion require.
If any such restructuring is approved in principle by the Bank, the Bank shall co-operate in good faith with the Borrower in the implementation of such restructuring within such period as may be agreed at the relevant time.
18 Law and Jurisdiction
18.1 Governing law This Agreement shall in all respects be governed by and interpreted in accordance with English law.
18.2 Jurisdiction For the exclusive benefit of the Bank, the parties to this Agreement irrevocably agree that the courts of England are to have jurisdiction to settle any disputes which may arise out of or in connection with this Agreement and that any Proceedings may be brought in those courts.
18.3 Alternative jurisdictions Nothing contained in this Clause shall limit the right of the Bank to commence any Proceedings against the Borrower in any other court of competent jurisdiction nor shall the commencement of any Proceedings against the Borrower in one or more jurisdictions preclude the commencement of any Proceedings in any other jurisdiction, whether concurrently or not.
18.4 Waiver of objections The Borrower irrevocably waives any objection which it may now or in the future have to the laying of the venue of any Proceedings in any court referred to in this Clause, and any claim that those Proceedings have been brought in an inconvenient or inappropriate forum, and irrevocably agrees that a judgment in any Proceedings commenced in any such court shall be conclusive and binding on it and may be enforced in the courts of any other jurisdiction.
18.5 Service of process Without prejudice to the right of the Bank to use any other method of service permitted by law, the Borrower irrevocably agrees that any writ, notice, judgment or other legal process shall be sufficiently served on it if addressed to it and left at or sent by post to the Address for Service, and in that event shall be conclusively deemed to have been served at the time of leaving or, if sent by registered post, on receipt at the Address for Service.
IN WITNESS of which the parties to this Agreement have executed this Agreement the day and year first before written.
Schedule 1
Annuity and Interest Rates
Schedule 2
Calculation of the Mandatory Cost
(a) The Mandatory Cost for the Loan for each Interest Period is the rate determined by the Bank in accordance with the following formulae:
(i) where the Loan is denominated in Sterling:
(ii) where the loan is denominated in any other Permitted Currency:
where on the day of application of the formula:
B is the percentage of the Bank's eligible liabilities (in excess of any stated minimum) which the Bank of England requires the Bank to hold on a non-interest-bearing deposit account in accordance with its cash ratio requirements;
Y is the rate at which Sterling deposits are offered by the Bank to
leading banks in the London Interbank market at or about 11.00
a.m. on that day for the Interest Period in question;
S is the percentage of the Bank's eligible liabilities which the Bank of England requires the Bank to place as a special deposit;
Z is the interest rate per annum allowed by the Bank of England on special deposits; and
F is the charge payable by the Bank to the Financial Services Authority under paragraph 2.02 or 2.03 (as appropriate) of the Fees Regulations or the equivalent provisions in any replacement regulations (with, for this purpose, the figure for the minimum amount in paragraph 2.02b or such equivalent provision deemed to be zero), expressed in pounds per (pound)1 million of the fee base of the Bank.
(b) For the purpose of this Schedule :
(i) "eligible liabilities" and "special deposits" have the meanings given to them at the time of application of the formula by the Bank of England;
(ii) "fee base" has the meaning given to it in the Fees Regulations;
(iii) "Fees Regulations" means:-
(A) up to and including 31 March 2002, the Banking Supervision (Fees) Regulations 2001; and
(B) after that date any regulations governing the payment of fees for banking supervision;
(c) In the application of the formula B, Y, S and Z are included in the formula as figures and not as percentages, e.g. if B = 0.5% and Y = 15%, BY is calculated as 0.5. x 15.
(d) (i) The formula is applied on the first day of each Interest Period.
(ii) Each rate calculated in accordance with the formula is, if necessary, rounded upward to four decimal places.
(e) If a change in circumstances has rendered, or will render, the formula inappropriate, the Bank shall notify the Borrower of the manner in which the Mandatory Cost will subsequently be calculated. The manner of calculation so notified by the Bank shall, in the absence of manifest error, be binding on the Borrower.
SIGNED by ) duly authorised for and on behalf ) of GOLAR LNG 2215 CORPORATION ) SIGNED by ) duly authorised for and on behalf ) of LLOYDS TSB BANK PLC ) |
APPENDIX A
To: Lloyds TSB Bank plc
From: Golar LNG 2215 Corporation
[Date]
Dear Sirs,
Drawdown Notice
We refer to the Loan Agreement dated 2001 made between ourselves and yourselves ("the Agreement").
Words and phrases defined in the Agreement have the same meaning when used in this Drawdown Notice.
Pursuant to Clause 2.3 of the Agreement, we irrevocably request that you advance a Drawing of [ ] to us on 200 , which is a Business Day, by paying the amount of the Drawing to the Builder [in accordance with instructions given to you by the Builder].
We warrant that the representations and warranties contained in Clause 4 of the Agreement are true and correct at the date of this Drawdown Notice and will be true and correct on 200 ; that no Event of Default nor Potential Event of Default has occurred and is continuing, and that no Event of Default or Potential Event of Default will result from the advance of the Drawing requested in this Drawdown Notice.
[We select the period of [ ] months as the first Interest Period.]
Yours faithfully
.......................
For and on behalf of
Golar LNG 2215 Corporation
CONFORMED COPY
Exhibit 4.2
LOAN AGREEMENT
for a
USD325,000,000
Term Loan
to
Golar Gas Holding Company, Inc.
provided by
the banks and financial
institutions listed herein
Lead Arrangers
Christiania Bank og Kreditkasse ASA
Den norske Bank ASA
Citibank, N.A.
and
Fortis Bank (Nederland) N.V.
Swap Banks
Den norske Bank ASA
and
Christiania Bank og Kreditkasse ASA
Administrative Agent
Christiania Bank og Kreditkasse
Security Agent
Den norske Bank ASA
Book Runner
Citibank, N.A.
NORTON ROSE
Contents
Clause Page
1 Purpose and definitions...............................................3
2 The Commitments and the Loan.........................................27
3 Interest.............................................................29
4 Repayment and prepayment.............................................31
5 Fees commission and expenses.........................................36
6 Payments and taxes; accounts and calculations........................37
7 Representations and warranties.......................................39
8 Undertakings.........................................................46
9 Conditions...........................................................70
10 Events of Default....................................................70
11 Indemnities..........................................................75
12 Unlawfulness and increased costs.....................................76
13 Set-off, pro rata payments...........................................78
14 Accounts.............................................................79
15 Transfer and lending office..........................................81
16 Administrative Agent, Security Agent
and Reference Banks..................................................84
17 Tax Lease Option.....................................................85
18 Notices and other matters............................................85
19 Governing law and jurisdiction.......................................87
Part 1 - The Banks and their Commitments....................................88
Part 2 - The Swap Banks.....................................................89
Schedule 2 The Ships........................................................90
Schedule 3 Form of Drawdown Notice..........................................94
Schedule 4 Documents and evidence required as
conditions precedent.............................................95
Schedule 5 Form of Transfer Certificate.....................................101
Schedule 6 Calculation of Additional Cost...................................107
Schedule 7 Form of officer's certificate
(referred to in clause 8.1(e)(ii)(D))............................110
|
THIS AGREEMENT is dated 31 May 2001 and made BETWEEN:
(1) GOLAR GAS HOLDING COMPANY, INC. as Borrower;
(2) CHRISTIANIA BANK OG KREDITKASSE ASA, DEN NORSKE BANK ASA, CITIBANK, N.A.
and FORTIS BANK (NEDERLAND) N.V. as Lead Arrangers;
(3) the banks and financial institutions whose names and addresses are set out in part 1 of schedule 1 as lenders;
(4) the banks and financial institutions whose names and addresses are set out in part 2 of schedule 1 as Swap Banks;
(5) CHRISTIANIA BANK OG KREDITKASSE ASA as Administrative Agent;
(6) DEN NORSKE BANK ASA as Security Agent; and
(7) CITIBANK, N.A. as Book Runner.
IT IS AGREED as follows:
1 Purpose and definitions
1.1 Purpose
This Agreement sets out the terms and conditions upon and subject to which the Banks agree, according to their several obligations, to make available to the Borrower a term loan of up to USD325,000,000 to be used for the purpose of enabling the Borrower to refinance certain existing indebtedness in respect of the Ships, and to provide liquidity support and working capital.
1.2 Definitions
In this Agreement, unless the context otherwise requires:
"Account Bank" means Christiania Bank og Kreditkasse ASA acting through its office at P.O. Box 1166, Sentrum, 0107 Oslo, Norway (in respect of the Cash Collateral Account and one of the Earnings Accounts) and through its office at Lloyds Chambers, 1 Portsoken Street, London E1 8RU (in respect of the other Earnings Accounts) and includes any other bank designated in writing by the Administrative Agent (at the request of the Borrower and acting on the instructions of the Majority Banks) to be an "Account Bank" for the purposes of the Security Documents (whether generally or in relation to a specific Earnings Account);
"Additional Cost" means, in relation to any period, a percentage calculated for such period at an annual rate determined in accordance with schedule 6;
"Administrative Agent" means Christiania Bank og Kreditkasse ASA of P.O. Box 1166, Sentrum, 0107 Oslo, Norway or such other person as may be appointed administrative agent for the Banks pursuant to the Agency Agreement;
"Affiliate" of any specified person means any other person directly or indirectly controlling, or controlled by, or under direct or indirect common control with such specified person;
"Agency Agreement" means the agency agreement executed or (as the context may require) to be executed between the Lead Arrangers, the Swap Banks, the Administrative Agent, the Security Agent, the Banks, the Borrower and the Guarantors in the agreed form;
"Annual Financial Statements" means annual:
(a) financial statements of the Parent, the Borrower and each Owning Company;
(b) consolidated financial statements of the Golar LNG Group including Oxbow and Golar Maritime; and
(c) consolidated financial statements of the Golar LNG Group excluding Oxbow and Golar Maritime,
each comprising a profit and loss account and a balance sheet and cash flow statement and audited by the Auditors;
"Annualised EBITDA" means at any relevant date the EBITDA for the three month period ending on such date multiplied by four (4);
"Approved Brokers" means, in relation to a Ship, such firm of insurance brokers, appointed by its Owning Company, as may from time to time be approved in writing by the Administrative Agent for the purposes of this Agreement;
"Approved Charter" means, in relation to a Ship as at the date hereof, the charterparty in respect of such Ship (if any) details of which are specified in Part 2 of schedule 2 and, in relation to Golar Mazo, means the Pertamina Charter;
"Approved Charterer" means, in relation to a Ship or Golar Mazo, the person who is the charterer or employer of such Ship under an Approved Charter of such Ship or Golar Mazo;
"Approved Management Agreement" means, in relation to each Ship:
(a) as at the date hereof, the management agreement between the relevant Owning Company and the Initial Manager thereof providing (inter alia) for the Initial Manager to provide the technical management of (inter alia) such Ship, details of which are specified in Part 2 of schedule 2;
(b) as at the date hereof, the sub-management agreement dated 1 January 1999 between the Initial Manager and the Initial Sub-Manager providing (inter alia) for the Initial Sub-Manager to provide the technical management of (inter alia) such Ship; and
(c) any future management agreement relative (inter alia) to that Ship entered into by the relevant Owning Company with an Approved Manager on terms previously approved by the Administrative Agent (such approval not to be unreasonably withheld);
"Approved Manager" means, in relation to a Ship:
(a) for the time being, the Initial Manager and the Initial Sub-Manager for that Ship (including, but not limited to, any other manager or sub-manager to whom the Initial Manager may delegate its management of such Ship on terms, inter alia, that the Initial Manager remains wholly responsible as principal to the relevant Owning Company for the due performance of the relevant management obligations); or
(b) any other entity appointed with the prior written consent of the Administrative Agent as manager or sub-manager of such Ship,
and, in relation to Golar Mazo, means Aurora Management Inc. of 80 Broad Street, Monrovia, Liberia and Gotaas-Larsen International Ltd. as sub-manager;
"Auditors" means PricewaterhouseCoopers or another first class firm of international accountants;
"Banking Day" means a day on which dealings in deposits in Dollars are carried on in the London Interbank Eurocurrency Market and (other than Saturday or Sunday) on which banks are open for business in London, New York City and Oslo (or any other relevant place of payment under clause 6);
"Banks" means the banks and financial institutions listed in part 1 of schedule 1 and includes their successors in title and assignees and transferees;
"Borrower" means Golar Gas Holding Company, Inc., a company incorporated in Liberia whose registered office is at 80 Broad Street, Monrovia, Liberia;
"Borrowed Money" means Indebtedness incurred in respect of:
(a) money borrowed or raised and debit balances at banks;
(b) any bond, note, loan stock, debenture or similar debt instrument;
(c) acceptance or documentary credit facilities;
(d) receivables sold or discounted (otherwise than on a non-recourse basis);
(e) deferred payments for assets or services acquired (other than assets or services acquired on normal commercial terms in the ordinary course of business where payment is deferred by no more than 180 days);
(f) Capitalised Lease Obligations;
(g) any other transaction (including without limitation forward sale or purchase agreements) having the commercial effect of a borrowing or raising of money;
(h) guarantees in respect of Indebtedness of any person falling within any of (a) to (g) above; and
(i) preference share capital in the Borrower or any other member of the Golar Gas Group which is or may be redeemable prior to the Final Repayment Date and/or the full and final discharge of all Indebtedness and liabilities of the Borrower under this Agreement;
"Breakage Costs" shall have the meaning ascribed to it in clause 11.1;
"capital expenditure" means expenditure incurred in:
(i) improving, upgrading or refurbishing any of the Ships or any other vessels or other fixed assets of the Golar Gas Group;
(ii) the acquisition of buildings, plant, machinery, vessels or other fixed tangible assets of the Golar Gas Group or other expenditure which is to be treated as capital expenditure in accordance with GAAP including Capitalised Lease Obligation commitments
but does not include expenditure on repairing or maintaining any of the Ships or any other vessels or other fixed assets;
"Capitalised Lease Obligation" of any person means the obligation to pay rent or other payment amounts under a lease of (or other Borrowed Money arrangements conveying the right to use) real or personal property which is required to be classified and accounted for as a capitalised lease or a liability on the face of a balance sheet of such person in accordance with GAAP;
"Cash Balances" means, at any relevant time, an amount equal to the aggregate amount which is, at such time, credited to and/or invested in Earnings Accounts;
"Cash Reserve" means, in relation to any date (the "Calculation Date"), the aggregate of:
(a) an amount equal to the aggregate of:
(i) the product of:
(A) an amount equal to the applicable fraction of the aggregate of the repayment instalment projected to fall due under clause 4.1 on the first Repayment Date following the Calculation Date multiplied by
(B) the number of accrual dates falling on or before the relevant Calculation Date and after the Repayment Date immediately preceding the Calculation Date; and
(ii) the product of:
(A) an amount equal to the applicable fraction of the amount of interest falling due for payment in respect of each part of the Loan at the end of each Interest Period current at the Calculation Date multiplied by
(B) the number of accrual dates falling on or before the Calculation Date and after the beginning of the relevant Interest Period;
(iii) and for the purpose of paragraphs (i) and (ii) above:
(A) the "accrual dates" mean the date falling fourteen
(14) days after the Drawdown Date and each of the
dates falling at monthly intervals after such date
and prior to Final Repayment Date;
(B) the "applicable fraction" means, in relation to paragraph (i), a fraction having a numerator of one and a denominator equal to the number of accrual dates falling between the first Repayment Date following the Calculation Date and the immediately preceding Repayment Date or, if the first Repayment Date following the Calculation Date is the first Repayment Date, the Drawdown Date and, in relation to paragraph (ii) above, means a fraction having a numerator of one and a denominator equal to the number of accrual dates falling within the relevant Interest Period; and
(b) an amount equal to the Expenditure Provision accrued for the period from the relevant start dates (as "start date" is defined in the definition of "Expenditure Provision") up to the Calculation Date in respect of expenditure which is projected to be paid after the Calculation Date and, for the purpose of this definition, any Expenditure Provision shall be deemed to accrue on a daily basis from the relevant start dates to the relevant expenditure dates (as "expenditure date" is defined in the definition of "Expenditure Provision");
"Casualty Amount" means five million Dollars (USD5,000,000) (or the equivalent in any other currency);
"Charter Guarantee" means, in relation to a Ship or Golar Mazo:
(a) as at the date hereof, any guarantee in respect of the current Approved Charter of that Ship which is specified in Part 2 of schedule 2 or Golar Mazo; and
(b) any other guarantee, letter of credit, Encumbrance or other security given by any person to the relevant Owning Company in respect of the obligations of the Approved Charterer under an Approved Charter of that Ship or Golar Mazo;
"Charter Guarantor" means, in relation to a Ship or Golar Mazo, any person who has given a Charter Guarantee to the Owning Company of that Ship or (as the case may be) Faraway;
"Classification" means, in relation to each Ship, the classification set forth against the name of such Ship in Part 1 of schedule 2 with its Classification Society or such other classification as the Administrative Agent shall, at the request of its Owning Company, have agreed in writing shall be treated as the Classification of such Ship for the purposes of this Agreement;
"Classification Society" means, in relation to any Ship, the classification society set forth against the name of such Ship in Part 1 of schedule 2 or such other classification society which the Administrative Agent shall, at the request of its Owning Company, have agreed in writing shall be treated as its Classification Society for the purposes of this Agreement;
"Commitment" means, in relation to a Bank, the amount set out opposite its name in schedule 1 or, as the case may be, in any relevant Transfer Certificate, as reduced by any relevant term of this Agreement;
"Compulsory Acquisition" means requisition for title or other compulsory acquisition, requisition, appropriation, expropriation, deprivation, forfeiture or confiscation for any reason of a vessel by any Government Entity or other competent authority, whether de jure or de facto, but shall exclude requisition for use or hire not involving requisition of title;
"Contribution" means, in relation to a Bank, the principal amount of the Loan owing to such Bank at any relevant time;
"control" when used with respect to any person means either the ownership of more than 50 per cent of the voting share capital (or equivalent rights of ownership) of such person or the power to direct the management and policies of such person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and the terms "controlling" and "controlled" shall be construed accordingly;
"Creditors" means the Lead Arrangers, the Administrative Agent, the Security Agent, the Book Runner, the Banks and the Swap Banks;
"Cumulative Net Income" means, at any relevant date, the consolidated net income of the Borrower and its Subsidiaries (other than Oxbow, Golar Maritime and Faraway) after all expenses (ship operating and selling, general and administrative), depreciation and amortisation, interest expenses, taxes and any other charges to the profit and loss account, all as determined in accordance with GAAP for the period from 1 January 2001 to the end of the financial quarter of the Golar Gas Group which most recently ended at least sixty (60) days before the relevant date;
"Current Assets" means, on a consolidated basis, the current assets (as determined in accordance with GAAP) of the Golar Gas Group (excluding for this purpose, Oxbow, Golar Maritime and Faraway);
"Current Liabilities" means, on a consolidated basis, the current liabilities (as determined in accordance with GAAP) of the Golar Gas Group (excluding for this purpose, Oxbow, Golar Maritime and Faraway);
"Default" means any Event of Default or any event or circumstance which with the giving of notice or lapse of time or the satisfaction of any other condition (or any combination thereof) would constitute an Event of Default;
"Disposal Repayment Date" shall have the meaning ascribed thereto in clause 4.3;
"Dollars" and "USD" mean the lawful currency of the United States of America and in respect of all payments to be made under any of the Security Documents mean funds which are for same day settlement in the New York Clearing House Interbank Payments System (or such other U.S. dollar funds as may at the relevant time be customary for the settlement of international banking transactions denominated in U.S. dollars);
"Drawdown Date" means any date, being a Banking Day, falling not later than the Latest Drawdown Date, on which the Loan is or is to be drawn down;
"Drawdown Notice" means a notice substantially in the terms of schedule 3;
"Earnings" means, in relation to any Mortgaged Ship or Golar Mazo, all moneys whatsoever from time to time due or payable to the relevant Owning Company or (in the case of Golar Mazo) Faraway during the Security Period arising out of the use or operation of such Mortgaged Ship or Golar Mazo including (but without limiting the generality of the foregoing) all freight, hire and passage moneys, income arising out of pooling arrangements, compensation payable to the relevant Owning Company or (as the case may be) Faraway in the event of requisition of such Mortgaged Ship or Golar Mazo for hire, remuneration for salvage or towage services, demurrage and detention moneys and damages for breach (or payments for variation or termination) of any charterparty or other contract for the employment of such Mortgaged Ship or Golar Mazo and any sums recoverable under any loss of earnings insurance;
"Earnings Account" means any of the accounts of the Borrower or the Owning Company of any Mortgaged Ship or all of the Owning Companies with an Account Bank designated in writing by the Administrative Agent (at the request of the Borrower or (where an existing Earnings Account is to be closed by the relevant Account Bank) the Administrative Agent and in either case acting on the instructions of the Majority Banks) to be an Earnings Account for the purposes of the Security Documents (and includes any fixed term deposit contract or account associated with such account and/or arranged through the Account Bank as contemplated by clause 14.1(b)(iii)) and which is subject to an effective Encumbrance in favour of the Security Agent as security for the obligations of the Borrower under this Agreement in accordance with clause 14 and "Earnings Accounts" means all of such accounts and fixed term deposit contracts and/or accounts;
"Earnings Account Security" means a deed of assignment executed or (as the context may require) to be executed by any person in favour of the Security Agent in respect of (inter alia) an Earnings Account as security for the obligations of the Borrower under this Agreement in the agreed form or in such other form as the Administrative Agent may reasonably require for the purpose of creating effective security over such account under any applicable laws;
"EBITDA" means, for any period, the earnings before interest, taxes and depreciation and amortisation (calculated as income from operations plus any depreciation and amortisation, Interest Expense, and taxes on overall net income deducted in calculating income from operations in respect of such period) of the Golar Gas Group (excluding for this purpose Oxbow, Golar Maritime and Faraway) determined in accordance with GAAP on a consolidated basis;
"Eligible Swap Contract" means the swap contracts dated 31 May 2001 and entered into between the Borrower and the Swap Banks upon and pursuant to the Swap confirmation (reference ) and incorporating the terms and conditions of the ISDA Master Agreement made between the Borrower and each of the Swap Banks for the purpose of swapping for and/or capping to a fixed interest rate the Borrower's exposure under this Agreement to fluctuations in Dollar interest rates on a minimum of fifty per cent (50%) of the Loan for a period of at least sixty (60) months from the Drawdown Date and based on a repayment schedule corresponding to the Repayment Dates and at least half of the repayment instalments due hereunder on each such Repayment Date;
and "continuing Eligible Swap Contract" means, at any relevant time, an Eligible Swap Contract under which any party thereto has or may have continuing actual or contingent obligations at such time;
"Eligible Swap Liabilities" means Swap Liabilities owing to any Swap Bank incurred under an Eligible Swap Contract;
"Encumbrance" means any mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, security deposit arrangement, trust arrangement or security interest or other encumbrance of any kind securing any obligation of any person or any type of preferential arrangement (including, without limitation, conditional sale or title transfer and/or retention arrangements having a similar effect);
"Environmental Approval" means any consent, authorisation, licence or approval of any governmental or public body or authorities or courts applicable to any vessel or its operation required under any Environmental Law;
"Environmental Claim" means any and all enforcement, clean-up, removal or other governmental or regulatory actions or orders instituted or completed pursuant to any Environmental Law or any Environmental Approval together with claims made by any third party relating to damage, contribution, loss or injury, resulting from any actual or threatened emission, spill, release or discharge of a Pollutant from any vessel;
"Environmental Laws" means all national, international and state laws, rules, regulations, treaties and conventions applicable to any vessel pertaining to the pollution or protection of human health or the environment including, without limitation, the carriage of Pollutants and actual or threatened emissions, spills, releases or discharges of Pollutants;
"Equity Distribution" means, in relation to a person, any of the following:
(a) the purchase, redemption or other acquisition for any value by such person or any Subsidiary of such person of any ordinary or preference shares of such person's share capital;
(b) the repayment, redemption or acquisition for value by such person or any Subsidiary of such person of any other form of Equity Finance received or raised by such person; or
(c) the declaration or payment of any dividend, interest, commission or other costs or charges of a periodic nature in respect of Equity Finance or the distribution of any of such person's present or future assets, undertakings, rights or revenues to any of its shareholders;
"Equity Finance" means:
(a) the issue for cash of ordinary shares in the Borrower;
(b) the issue for cash of preference shares in the Borrower (other than preference share capital which constitutes Borrowed Money of the Borrower);
(c) the incurring of Subordinated Debt; or
(d) any combination of the foregoing;
"Event of Default" means any of the events or circumstances described in clause 10.1;
"Expenditure Provision" means, in relation to any period, the aggregate of the relevant fractions of the amounts of all relevant expenditure which is projected in accordance with clause 1.10 to be paid on dates falling after the expiry of such period and for this purpose:
(a) the "relevant fraction" means, in relation to an item of relevant expenditure, the fraction whose numerator is the number of accrual days in respect of such relevant expenditure falling during such period and whose denominator is the total number of such accrual days in respect of such relevant expenditure;
(b) "relevant expenditure" means:
(i) costs of repairing and maintaining and making good any of the Mortgaged Ships at that Ship's routine scheduled drydocking or repairing any damage incurred during or before the relevant period and the costs of such drydocking; and
(ii) capital expenditure on a Mortgaged Ship which is projected to be paid after the end of the relevant period in accordance with clause 1.10 pursuant to a legally binding contract entered into during or before the relevant period provided that such capital expenditure is permitted pursuant to clause 8.3(b);
(c) an "accrual day" means, in relation to any relevant expenditure, each date falling after the start date for such expenditure up to and including the date (the "expenditure date") upon which the relevant expenditure is projected to be paid in accordance with clause 1.10; and
(d) "start date" means, in the case of expenditure falling within paragraph (b)(i), the date of completion of the relevant Mortgaged Ship's last drydocking or, in the case of damage, the date such damage occurred and, in the case of expenditure falling within paragraph (b)(ii), the date upon which the relevant legally binding contract is entered into;
"Faraway" means Faraway Maritime Shipping Company Limited a company incorporated in Liberia whose registered office is at 80 Broad Street, Monrovia, Liberia;
"Faraway Documents" means:
(a) the Faraway Shareholders Agreement;
(b) the Golar Mazo Management Agreement;
(c) the articles of incorporation and bye-laws of Faraway; and
(d) the Faraway Loan Agreement;
"Faraway Loan Agreement" means the agreement dated as of 26 November 1997 for a secured loan facility of up to USD214,500,000 made between (inter alios) Bank of Taiwan as lead arranger, the banks and financial institutions referred to therein as lenders, Indosuez Asia Shipfinance Services Limited as agent and Faraway as borrower and any future loan agreement entered into by Faraway in accordance with clause 8.6(d);
"Faraway Shareholders' Agreement" means the shareholders agreement dated 14 June 1997 between Oxbow, Chinese Petroleum Corporation and Golar Maritime;
"Final Repayment Date" means, subject to clause 6.4, the date falling seventy-two (72) months after the Drawdown Date;
"Flag State" means the Republic of Liberia or such other state or territory as the Banks may approve, at the request of the relevant Owning Company, as being the "Flag State" of such Ship for the purposes of the Security Documents;
"Free Available Cash" means, at any relevant time, the amount of the Cash Balances, freely available for use by the Borrower and/or any of the Owning Companies which may, notwithstanding any Encumbrance, right of set-off or agreement with any other party, be withdrawn and/or encashed and used by it for any lawful purpose without restriction (save pursuant to the Security Documents);
"GAAP" means generally accepted accounting principles in the United States of America consistently applied;
"General Assignment" means, in relation to a Ship, a general assignment in respect of such Ship executed or (as the context may require) to be executed by the relevant Owning Company in favour of the Security Agent in the agreed form and "General Assignments" means all of such general assignments;
"Golar Gas Group" means the Borrower and its Subsidiaries (other than Faraway unless Faraway becomes a wholly owned Subsidiary of the Borrower);
"Golar LNG Group" means the Parent and its Subsidiaries and for the purposes of the definitions of "Annual Financial Statements" and "Quarterly Financial Statements" (and the expression "Golar LNG Group" where used in such definitions) any company or entity whose accounts are to be consolidated with those of the Parent in accordance with GAAP shall be treated as a Subsidiary of the Parent;
"Golar Maritime" means Golar Maritime (Asia) Inc. a company incorporated in Liberia whose registered office is at 80 Broad Street, Monrovia, Liberia;
"Golar Mazo" means m.v. "GOLAR MAZO" registered under Liberian flag in the ownership of Faraway under Official Number 11170;
"Golar Mazo Management Agreement" means the management agreement dated as of 28 October 1997 in respect of Golar Mazo between (1) Faraway and (2) Aurora Management Inc.;
"Government Entity" means and includes (whether having a distinct legal personality or not) any national or local government authority, board, commission, department, division, organ, instrumentality, court or agency and any association, organisation or institution of which any of the foregoing is a member or to whose jurisdiction any of the foregoing is subject or in whose activities any of the foregoing is a participant;
"Guarantees" means each of the Subsidiary Guarantee, the Managers' Guarantee and the Parent Guarantee and "Guarantee" means any of them;
"Guarantor" means any of the Parent, the Initial Manager, the Initial Sub-Manager and the Subsidiary Guarantors and "Guarantors" means all of them;
"Indebtedness" means any obligation for the payment or repayment of money, whether as principal or as surety and whether present or future, actual or contingent;
"Initial Manager" means Osprey Maritime Management Limited of Warner Building, 85 Reid Street, Hamilton HM12, Bermuda;
"Initial Sub-Manager" means Osprey Maritime (Europe) Ltd. of Warner Building, 85 Reid Street, Hamilton HM12, Bermuda;
"Insurances" means, in relation to any Mortgaged Ship or Golar Mazo, all policies and contracts of insurance (which expression includes all entries of such vessel in a protection and indemnity or war risks association) which are from time to time during the Security Period in place or taken out or entered into by or for the benefit of the relevant Owning Company or (in the case of Golar Mazo) Faraway (whether in the sole name of such Owning Company or (as the case may be) Faraway or in the joint names of such Owning Company or (in the case of Golar Mazo) Faraway and any other person) in respect of such Ship or Golar Mazo or otherwise howsoever in connection with such Ship or Golar Mazo and all benefits thereof (including claims of whatsoever nature and return of premiums);
"Interest Expense" means, for any period, interest charges and related expenses for such period of the Golar Gas Group determined (excluding for this purpose Oxbow, Golar Maritime and Faraway) in accordance with GAAP on a consolidated basis;
"Interest Period" means, in relation to the Loan, each period for the calculation of interest in respect of the Loan ascertained in accordance with clauses 3.2 and 3.3;
"ISM Code" means the International Safety Management Code for the Safe Operation of Ships and for Pollution Prevention constituted pursuant to Resolution A.741 (18) of the International Maritime Organisation and incorporated into the Safety of Life at Sea Convention and includes any amendments or extensions of it and any regulation issued pursuant to it;
"Latest Drawdown Date" means 15 August 2001 or such later date as the Banks in their absolute discretion agree in writing;
"Lead Arrangers" means Christiania Bank og Kreditkasse ASA of P.O. Box 1166, Sentrum, 0107 Oslo, Norway, Den norske Bank ASA of Stranden 21, N-0021 Oslo, Norway and Citibank, N.A. of 33 Canada Square, Canary Wharf, London E14 SLB and Fortis Bank (Nederland) N.V., Oslo Branch of Munkedamsveien 53b, NO-0250 Oslo, Norway and "Lead Arranger" means any of them;
"LIBOR" means, in relation to a particular period, the rate for deposits of Dollars for a period equivalent to such period at or about 11 am (London time) on the second London Banking Day before the first day of such period as displayed on Telerate page 3750 (British Bankers' Association Interest Settlement Rates) (or such other page as may replace such page 3750 on such system or on any other system of the information vendor for the time being designated by the British Bankers' Association to calculate the BBA Interest Settlement Rate (as defined in the British Bankers' Association's Recommended Terms and Conditions ("BBAIRS" terms) dated August, 1985)), provided that if on such date no such rate is so displayed, LIBOR for such period shall be the arithmetic mean (rounded upward if necessary to four decimal places) of the rates respectively quoted to the Administrative Agent by each of the Reference Banks at the request of the Administrative Agent as such Reference Bank's offered rate for deposits of Dollars in an amount approximately equal to the amount in relation to which LIBOR is to be determined for a period equivalent to such period to prime banks in the London Interbank Market at or about 11 am (London time) on the second Banking Day before the first day of such period;
"Loan" means the aggregate principal amount borrowed, or to be borrowed, by the Borrower on the Drawdown Date or (as the context may require) the aggregate principal amount owing to the Banks under this Agreement at any relevant time;
"LondonBanking Day" means a day on which banks are open for business in London;
"Loss Payable Clauses" means the provisions regulating the manner of payment of sums receivable under the Insurances of a Ship which are to be incorporated in the relevant insurance documents, such Loss Payable Clauses to be in the forms set out in schedule 1 to the General Assignments or in such other forms as may from time to time be agreed in writing by the Administrative Agent;
"Majority Banks" means Banks the aggregate of whose Commitments exceed sixty six and two thirds per cent. (662/3%) of the Total Commitments save that, where the Commitments of a single Bank exceed, or the aggregate Commitments of Banks which are Affiliates of each other together exceed, sixty six and two thirds per cent. (662/3%) of the Total Commitments, "Majority Banks" shall mean Banks the aggregate of whose Commitments exceed the Commitment of such single Bank or the aggregate of the Commitments of such Banks who are Affiliates of each other;
"Manager's Undertaking" means, in relation to a Ship, an agreement entered or (as the context may require) to be entered into between the Approved Manager of such Ship and the Security Agent in the agreed form;
"Managers' Guarantee" means the joint and several guarantee issued or (as the context may require) to be issued by the Initial Manager and the Initial Sub-Manager in favour of the Security Agent in the agreed form;
"Margin" means 1.5%;
"Minimum Free Available Cash" means an amount equal to USD25,000,000 except that, unless either:
(a) on or before 31 December 2002 the Approved Charterer of m.v. "GOLAR FREEZE" described in schedule 2 exercises its option under its Approved Charter of such Ship to extend the period of such Approved Charter to at least 1 January 2013; or
(b) if (a) above does not apply, the Owning Company for such Ship enters into an Approved Charter for such Ship and:
(i) the Ship is delivered to the relevant Approved Charterer no later than the earlier of 1) the date falling twelve (12) months after the option referred to in (a) above has either lapsed or been cancelled and 2) 31 December 2003 (the "Option Lapse Date");
(ii) the minimum firm period of such charter is at least seven years;
(iii) the Approved Charterer (or, if a Charter Guarantee is given in respect of its obligations under the charter, the relevant Charter Guarantor) has a long term credit rating of at least BBB+ from Standard & Poor's Rating Services (and Baa1 from Moodys Investors Services Inc. or any other rating agency approved in writing by the Administrative Agent for such purpose);
(iv) charterhire under such charter is calculated and payable in Dollars;
(v) the Administrative Agent is satisfied that the charterhire payable thereunder (assuming annual average offhire not exceeding 14 days per annum) (or, if such charter is a demise charter, the time charter equivalent thereof as determined by the Administrative Agent) will be no less than the charterhire which would have been received by the relevant Owning Company during the period to the Final Repayment Date if (a) above had applied
in which event "Minimum Free Available Cash" shall, as from the anniversary of the Option Lapse Date, mean USD30,000,000;
"month" means a period beginning in one calendar month and ending in the next calendar month on the day numerically corresponding to the day of the calendar month on which it started, provided that (i) if the period started on the last Banking Day in a calendar month or if there is no such numerically corresponding day, it shall end on the last Banking Day in such next calendar month and (ii) if such numerically corresponding day is not a Banking Day, the period shall end on the next following Banking Day in the same calendar month but if there is no such Banking Day it shall end on the preceding Banking Day and "months" and "monthly" shall be construed accordingly; "Mortgage" means, in relation to a Ship, a first preferred mortgage of such Ship executed or (as the context may require) to be executed by the relevant Owning Company in favour of the Security Agent in the agreed form and "Mortgages" means all of such mortgages;
"Mortgaged Ship" means, at any relevant time, any Ship which is at such time subject to a Mortgage and/or Earnings, the Insurances and Requisition Compensation of which are subject to an Encumbrance pursuant to the relevant Mortgage and General Assignment and a Ship shall for the purposes of this Agreement be deemed to be a Mortgaged Ship as from the date that the Mortgage of that Ship shall have been executed and registered in accordance with this Agreement until whichever shall be the earlier of (i) the due performance by the Borrower of all its obligations under clause 4.3 following the sale or Total Loss of such Ship and (ii) the end of the Security Period;
"Net Debt" means, on a consolidated basis, an amount equal to the aggregate of all Borrowed Money of the Golar Gas Group (excluding for this purpose Oxbow, Golar Maritime and Faraway) other than Subordinated Debt minus Free Available Cash;
"Net Sale Proceeds" means, in relation to a Ship or Golar Mazo, the sale price of such ship received by the relevant Owning Company or Faraway (after deducting the relevant Owning Company's or Faraway's reasonable costs and out-of-pocket expenses incurred in connection with such sale including reasonable and proper costs of drydocking the relevant ship and carrying out any repairs on the ship for the purposes of complying with its obligations under the relevant sale agreement);
"Notice of Assignment of Insurances" means, in relation to a Ship, a notice of assignment in the form set out in schedule 2 to the relevant General Assignment or in such other form as may from time to time be required or agreed in writing by the Administrative Agent;
"Operating Costs" means, in relation to any Mortgaged Ship during any period, all moneys paid by or on behalf of the Owning Company of such Ship during such period in respect of:
(a) liabilities incurred for the purpose of operating such Ship including costs of manning, insuring, repairing, maintaining and drydocking such Ship;
(b) all proper and reasonable expenses of managing and administering the corporate affairs of such Owning Company;
(c) any remuneration of the Approved Manager of such Ship under the Approved Management Agreement for such Ship;
(d) amounts incurred by way of capital expenditure on the relevant Ship which is permitted under clause 8.3(b);
(e) amounts required to discharge liabilities or obligations to third parties incurred in the ordinary course of the operation of such Mortgaged Ship;
(f) the repair or making good any loss or damage arising out of a casualty to the Ship or any collision, accident or other circumstances resulting in death or personal injury to any person and/or damage to any property or economic interests; and
(g) any amount equal to the approved proportion of any proper and reasonable costs and expenses of managing and administering the corporate affairs of the Borrower (and, for this purpose, the approved proportion shall be such proportion as may from time to time be approved in writing by the Administrative Agent having regard to the number of vessels owned by, or bareboat chartered to, members of the Golar Gas Group);
"Osprey" means Osprey Maritime Limited of 10 Collyer Quay #19-08, Ocean Building, Singapore 049315;
"Owning Company" means, in relation to a Ship, the company incorporated in Liberia whose registered office is at Broad Street, Monrovia, Liberia whose name is set forth against the name of such Ship in Part 1 of schedule 2 and "Owning Companies" means all of such companies;
"Oxbow" means Oxbow Holdings Inc. a company incorporated in the British Virgin Islands whose registered office is at PO Box 3321, Road Town, Tortola, British Virgin Islands;
"Parent" means Golar LNG Ltd. a company incorporated in Bermuda whose registered office is at Mercury House, 101 Front Street, Hamilton, Bermuda;
"Parent Guarantee" means the guarantee issued or (as the context may require) to be issued by the Parent in favour of the Security Agent in the agreed form;
"Permitted Encumbrance" means:
(a) any Encumbrance created pursuant to the Security Documents;
(b) Permitted Liens; and
(c) the first preferred mortgage over Golar Mazo dated 6 January 2000 executed by Faraway as security for the Faraway Loan Agreement and any other Security Document (as defined in the Faraway Loan Agreement);
"Permitted Liens" means, to the extent not yet required to be discharged pursuant to the terms of the relevant Mortgage:
(a) any ship repairer's or outfitter's possessory lien in respect of a vessel owned by a member of the Golar Gas Group provided that (i) the lien on such vessel is for an amount not exceeding USD2,000,000, (ii) all such liens (including the relevant lien) on all vessels owned by members of the Golar Gas Group at the time such lien arises or is conferred by contract are for an aggregate amount not exceeding an amount equal to the product of USD2,000,000 multiplied by the number of Mortgaged Ships at the relevant time and (iii) no such lien shall be deemed a Permitted Lien if it is incurred at a time when a Default has occurred and is continuing until such time as the Default is no longer continuing;
(b) any ship repairer's lien or outfitter's possessory lien not falling within paragraph (a) of this definition but which has been previously approved in writing by the Majority Banks;
(c) any lien on a vessel for current master's, officer's or crew's wages outstanding in the ordinary course of trading; and
(d) any lien for salvage;
"Pertamina" means Perusahaan Pertambangan Minyak Dan Gas Bumi Negara a state enterprise of the Republic of Indonesia;
"Pertamina Charter" means the time charterparty relative to Golar Mazo dated 2 July 1997 made between (1) Faraway as owner and (2) Pertamina as charterer, which is scheduled to expire on 31 December 2017;
"Pollutant" means and includes pollutants, contaminants, toxic substances, oil as defined in the United States Oil Pollution Act of 1990 and all hazardous substances as defined in the United States Comprehensive Environmental Response, Compensation and Liability Act 1980;
"Port of Registry" means, in relation to each Ship, the port (if any) set forth against the name of such Ship in Part 1 of schedule 2 or such other port of registry (if any) in a Mortgaged Ship's Flag State approved in writing by the Administrative Agent acting on the instructions of the Banks at which such Ship is, or is to be registered on, or at any relevant time after, the date hereof;
"Quarterly Financial Statements" means quarterly:
(i) financial statements of the Parent, the Borrower and each Owning Company;
(ii) consolidated financial statements of the Golar LNG Group; and
(iii) consolidated financial statements of the Golar Gas Group excluding Oxbow and Golar Maritime,
prepared as at 31 March, 30 June and 30 September (but not 31 December) in each year (or three, six or nine (but not twelve) months after the commencement of the Borrower's accounting period should its accounting reference date be changed, with the prior written consent of the Administrative Agent (acting on the instructions of the Banks) from 31 December) comprising a profit and loss account and a balance sheet and a cash flow statement;
"Reference Banks" means Christiania Bank og Kreditkasse ASA, Den norske Bank ASA, Citibank, N.A. and Fortis Bank (Nederland) N.V. and/or any other Bank appointed as such pursuant to the Agency Agreement;
"Registry" means, in relation to each Ship, such registrar, commissioner or representative of the relevant Flag State who is duly authorised and empowered to register the relevant Ship, the relevant Owning Company's title to such Ship and the relevant Mortgage under the laws and flag of the relevant Flag State;
"Relevant Fraction" shall mean for the purpose of the definition of "Relevant Insured Amount" and clause 4.3, a fraction whose numerator is the market value of the relevant Mortgaged Ship and whose denominator is the aggregate of the market values of all the Mortgaged Ships (including such Mortgaged Ship) at the relevant date;
"Relevant Insured Amount" means, in relation to a Mortgaged Ship as at any relevant date, an amount in Dollars equal to the Relevant Fraction as at such date of the Loan as at such date;
"Relevant Jurisdiction" means any jurisdiction in which or where any Security Party is incorporated, resident, domiciled, has a permanent establishment, carries on, or has a place of business or is otherwise effectively connected;
"Repayment Dates" means, subject to clause 6.3, the date falling six (6) months after the Drawdown Date and each of the dates falling at intervals of three (3) months after such date up to and including the Final Repayment Date;
"Requisition Compensation" means, in relation to a Mortgaged Ship or Golar Mazo, all sums of money or other compensation from time to time payable during the Security Period by reason of the Compulsory Acquisition of such Ship or Golar Mazo;
"Restricted Associate" means any associate of the Borrower other than an associate which is:
(a) a wholly owned Subsidiary of the Borrower;
(b) a Subsidiary of the Borrower unless any part of the share capital of such Subsidiary is owned by any person who is an associate of the Borrower which is not a wholly-owned Subsidiary of the Borrower;
"Rollover Date" means the last day of an Interest Period;
"Security Agent" means Den norske Bank ASA of Stranden 21, N-0021 Oslo, Norway or such other person as may be appointed security agent and trustee for the Banks and the Swap Banks pursuant to the Agency Agreement;
"Security Documents" means this Agreement, the Mortgages, the General Assignments, the Subsidiary Pledges, the Guarantees, the Agency Agreement, the Manager's Undertakings, the Subordination Deed, any Earnings Account Security, the Eligible Swap Contracts and any other documents as may have been or shall from time to time after the date of this Agreement be executed to guarantee and/or secure all or any part of, any moneys from time to time owing by the Borrower pursuant to this Agreement (whether or not any such document also secures moneys from time to time owing pursuant to any other document or agreement);
"Security Party" means any person who may at any time be a party to any of the Security Documents (other than a Creditor);
"Security Period" means the period commencing on the date of this Agreement and so long as any moneys are owing, actually or contingently, under the Security Documents and while all or any part of the Loan or the Commitments remain outstanding;
"Ships" means each of the ships listed in Part 1 of schedule 2 and "Ship" means any of them;
"Ship Security Documents" means, in relation to a Ship, the Mortgage and the General Assignment in respect of such Ship;
"Solvent" means with respect to any person on a particular date, that on such date (i) the fair market value of the assets of such person is greater than the total amount of liabilities (including the present or expected value of contingent liabilities) of such person, (ii) the present fair salable value of the assets of such person is greater than the amount that will be required to pay the probable liabilities of such person for its debts as they become absolute and matured, (iii) such person is able to realise upon its assets and pay its debts and other liabilities, including contingent obligations, as they mature, (iv) such person does not have unreasonably small capital and (v) such person does not intend to or believe it will incur debts beyond its ability to pay as they mature;
"Subordinated Debt" of a person means any Indebtedness of the Borrower or any of its Subsidiaries which is a Security Party owing to the Parent which is subject to the Subordination Deed; "Subordination Deed" means a deed entered or (as the context may require) to be entered into between the Guarantors, the Borrower, Gotaas-Larsen Shipping Corporation and the Security Agent in the agreed form;
"Subsidiary" of a person means any company or entity directly or indirectly controlled by such person and a "wholly owned Subsidiary" of a person means a Subsidiary which has no members except such person and that person's wholly owned Subsidiaries and its or their nominees;
"Subsidiary Guarantee" means the joint and several guarantee issued or (as the context may require) to be issued by the Owning Companies, Oxbow and Golar Maritime in favour of the Security Agent in the agreed form;
"Subsidiary Guarantor" means any of the Owning Companies, Oxbow and Golar Maritime and "Subsidiary Guarantors" means all of them;
"Subsidiary Pledge" means, in relation to an Owning Company, Oxbow or Golar Maritime, the pledge of all of the issued stock of such company executed or (as the context may require) to be executed by the Borrower in favour of the Security Agent in the agreed form and "Subsidiary Pledges" means all of such pledges;
"Swap Banks" means, the banks and financial institutions listed in Part 2 of schedule1 and includes their successors in title and assignees and transferees;
"Swap Liabilities" means Indebtedness incurred in respect of swaps, forward exchange contracts, futures and other derivatives and guarantees in respect of such Indebtedness;
"Tax Lease Option" means the option referred to in clause 17;
"Taxes" includes all present and future taxes, levies, imposts, duties, fees or charges of whatever nature together with interest thereon and penalties in respect thereof and "Taxation" shall be construed accordingly;
"Total Commitments" means, at any relevant time, the total of the Commitments of all the Banks at such time;
"Total Loss" in relation to a Ship or Golar Mazo means:
(a) actual, constructive, compromised or arranged total loss of such vessel; or
(b) the Compulsory Acquisition of such vessel; or
(c) the hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation of such vessel (other than where the same amounts to the Compulsory Acquisition of such vessel) by any Government Entity, or by persons acting or purporting to act on behalf of any Government Entity, unless the vessel be released and restored to the relevant Owning Company or Faraway from such hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation within 60 days after the occurrence thereof;
"Total Loss Repayment Date" means, in relation to a Mortgaged Ship or Golar Mazo, the date which is the earlier of:
(a) the date one hundred and twenty (120) days after such ship became a Total Loss or such later date as may be agreed in writing by the Administrative Agent (acting on the instructions of the Majority Banks) if they are satisfied that the relevant Mortgaged Ship or Golar Mazo was properly insured at the time of such Total Loss and that insurance proceeds in respect of such Total Loss will be recovered in amounts sufficient to enable the Borrower to comply with its prepayment obligations under clauses 4.3 of this Agreement arising as a consequence of such Total Loss and will be applied in accordance with the Security Documents by the later date so agreed; and
(b) the date upon which insurance proceeds or Requisition Compensation in respect of such Total Loss are received by the relevant Owning Company (or the Security Agent as the relevant Owning Company's assignee pursuant to the relevant General Assignment) or Faraway;
"Transfer Certificate" means a transfer certificate for the purposes of clause 15.3 substantially in the form set out in schedule 5 (or in such other form as the Banks may approve or require);
"Transferee Bank" and "Transferor Bank" shall have the meaning ascribed to those expressions in clause 15.3; and
"Underlying Documents" means collectively the Approved Charters, the Faraway Documents, the Pertamina Charter and the Approved Management Agreements
1.3 Insurance terms
In clause 8.4(a):
(a) "excess risks" means the proportion (if any) of claims for general average, salvage and salvage charges and under the ordinary collision clause not recoverable in consequence of the value at which a Ship is assessed for the purpose of such claims exceeding her insured value;
(b) "protection and indemnity risks" means the usual risks (including oil pollution) covered by a United Kingdom protection and indemnity association or a protection and indemnity association which is managed in the United Kingdom or Norway (including, without limitation, the proportion (if any) of any sums payable to any other person or persons in case of collision which are not recoverable under the hull and machinery policies by reason of the incorporation therein of Clause 8 of the Institute Time Clauses (Hulls) (1/11/95) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision) or (if placed on Norwegian terms) means protection and indemnity risks as defined in the Norwegian Marine Insurance Plan of 1996 as amended; and
(c) "war risks" includes those risks covered by the standard form of English marine policy with Institute War and Strikes Clauses - Time (1/11/95) attached or similar cover or (if placed on Norwegian terms means the war risks described in the Norwegian Marine Insurance Plan of 1966 as amended).
1.4 Accounting terms
All accounting terms not otherwise defined in this Agreement shall have the meanings assigned to them in accordance with GAAP (whether or not such is indicated in this Agreement).
1.5 Headings
Clause headings and the table of contents are inserted for convenience of reference only and shall be ignored in the interpretation of this Agreement.
1.6 Construction of certain terms
In any Security Document unless the context otherwise requires:
(a) references to clauses and schedules are to be construed as references to clauses of, and schedules to, such Security Document and references to such Security Document include its schedules;
(b) references to (or to any specified provision of) any Security Document or any other document shall be construed as references to such Security Document, that provision or that document as in force for the time being and as amended in accordance with terms thereof, or, as the case may be, with the agreement of the relevant parties and (where such consent is, by the terms of any Security Document or the relevant document, required to be obtained as a condition to such amendment) with the consent of the Administrative Agent;
(c) references to a "regulation" include any present or future regulation, rule, directive, requirement, request or guideline (whether or not having the force of law) of any agency, authority, central bank or government department or any self-regulatory or other national or supra-national authority;
(d) words importing the plural shall include the singular and vice versa;
(e) references to a time of day are to London time;
(f) references to a person shall be construed as references to an individual, firm, company, corporation, unincorporated body of persons or any Government Entity;
(g) references to any person includes such person's assignees and successors in title;
(h) references to a "guarantee" include references to an indemnity or other assurance against financial loss including, without limitation, an obligation to purchase assets or services as a consequence of a default by any other person to pay any Indebtedness and "guaranteed" shall be construed accordingly; and
(i) references to any enactment shall be deemed to include references to such enactment as re-enacted, amended or extended.
1.7 Majority Banks
Where this Agreement provides for any matter to be determined by reference to the opinion of the Majority Banks or to be subject to the consent or request of the Majority Banks or for any action to be taken on the instructions of the Majority Banks, such opinion, consent, request or instructions shall (as between the Banks) only be regarded as having been validly given or issued by the Majority Banks if all the Banks shall have received prior notice of the matter on which such opinion, consent, request or instructions are required to be obtained and the relevant majority of Banks shall have given or issued such opinion, consent, request or instructions but so that the Borrower shall be entitled (and bound) to assume that such notice shall have been duly received by each Bank and that the relevant majority shall have been obtained to constitute Majority Banks whether or not this is in fact the case.
1.8 Agreed forms
In this Agreement, any document expressed to be "in the agreed form" means a document in a form agreed by (and for the purposes of identification signed by or on behalf of) the Borrower and the Administrative Agent or (in the case of any of the other Security Documents) a document in the form actually executed by both the relevant Security Party or relevant Security Parties and the Security Agent.
1.9 Meaning of "associate" and each "acting in concert"
For the purposes of this Agreement:
(a) any question whether a person is an associate of another person is to be determined in accordance with the following provisions of this clause (any provision that a person is an associate of another person being taken to mean that they are associates of each other);
(b) a person is an associate of an individual if that person is the individual's husband or wife or is a relative, or the husband or wife of a relative, of the individual or of the individual's husband or wife;
(c) a person is an associate of any person with whom he is in partnership, and of the husband or wife or a relative of any individual with whom he is in partnership;
(d) a person is an associate of any person whom he employs or by whom he is employed;
(e) a person in his capacity as trustee of a trust (other than a pension scheme or an employees' share scheme) is an associate of another person if the beneficiaries of the trust include, or the terms of the trust confer a power that may be exercised for the benefit of, that other person or an associate of that other person;
(f) a company or other entity is an associate of another company or entity:
(i) if the same person has control of both, or a person has control of one and persons who are his associates, or he and persons who are his associates, have control of the other; or
(ii) if a group of two or more persons has control of each company or other entity, and the groups either consist of the same persons or could be regarded as consisting of the same persons by treating (in one or more cases) a member of either group as replaced by a person of whom he is an associate;
(g) a company is an associate of another person if that person is a director of or has control of it or if that person and persons who are his associates together have control of it;
(h) any two or more persons acting together to secure or exercise control of a company or other entity shall be treated in relation to that company or other entity as associates of each other and of any person acting on the instructions of any of them to secure or exercise control of the company or other entity,
(i) for the purposes of this clause 1.9:
(i) a person is a relative of an individual if he is that individual's brother, sister, uncle, aunt, nephew, niece, lineal ancestor or lineal descendant, treating:
(A) any relationship of the half blood as a relationship of the whole blood and the stepchild or adopted child of any person as his child; and
(B) an illegitimate child as the legitimate child of his mother and reputed father;
and any references in this Agreement to a husband or wife include a former husband or wife and a reputed husband or wife;
(ii) any director or other officer of a company or other entity is to be treated as employed by that company or other entity;
(j) a person is to be taken as having control of a company or other entity if:
(i) that person owns more than 50 per cent of the voting share capital (or equivalent rights of ownership) of such company or entity; or
(ii) such person has the power to direct the policies and management of such company or entity by contract or otherwise
and where two or more persons together satisfy either of the above conditions, they are to be taken as having control of the company or entity; and
(k) persons acting in concert comprise persons who, pursuant to an agreement or understanding (whether formal or informal), actively co-operate, through the acquisition by any of them of shares in a company to obtain or consolidate control over ten (10) per cent or more of (i) the ordinary share capital or (ii) the voting rights attributable to the ordinary share capital of that company and for this purpose persons who are associates of each other shall be presumed to be persons acting in concert unless the contrary is demonstrated to the satisfaction of the Administrative Agent.
1.10 Calculation of Expenditure Provision
(a) When the amount of the Expenditure Provision is required for the purposes of this Agreement as at any date any expenditure in respect of which that Expenditure Provision applies, the Expenditure Provision which is required to be projected by reference to any date falling and/or any period expiring after such date shall be calculated and projected by the Borrower in accordance with this clause 1.10 and certified in a statement as required by clause 8.1(e)(ii) in each case to the reasonable satisfaction of the Administrative Agent.
(b) Such amounts or relevant part thereof shall be projected on such assumptions as the Administrative Agent shall approve in writing (such approval not to be unreasonably withheld) including (without limitation) assumptions as to:
(i) the Dollar amount and timing of any expenditure in relation to which the Expenditure Provision falls to be determined, and
(ii) and any assumptions referred to in the definition of Expenditure Provision.
(c) If the Administrative Agent is, after reasonable consultation with the Borrower and after consideration of any further information provided by the Borrower, not satisfied with the Borrower's calculation or projection of the relevant amounts, the Administrative Agent may recalculate such amount or projection thereof (acting reasonably having regard to the information available to it for such purpose and reasonable prudent assumptions) and the amount as so recalculated by the Administrative Agent shall be binding on the Borrower and the Banks for the purpose of this Agreement.
2 The Commitments and the Loan
2.1 Amount
Upon and subject to the terms and conditions of this Agreement and in reliance on the representations and warranties in clause 7, the Banks agree to lend to the Borrower the principal sum of up to USD325,000,000. The obligation of each Bank under this Agreement shall be to contribute that proportion of the Loan which, as at the Drawdown Date, its Commitment bears to the Total Commitments.
2.2 Obligations several
The obligations of each Bank under this Agreement are several; the failure of any Bank to perform such obligations shall not relieve any other Bank, the Lead Arrangers, the Administrative Agent, the Security Agent or the Borrower of any of their respective obligations or liabilities under this Agreement nor shall the Lead Arrangers, the Administrative Agent, or the Security Agent be responsible for the obligations of any Bank (except for its own obligations, if any, as a Bank) nor shall any Bank be responsible for the obligations of any other Bank under this Agreement.
2.3 Interests several
Notwithstanding any other term of this Agreement (but without prejudice to the provisions of this Agreement relating to or requiring action by the Majority Banks) the interests of the Lead Arrangers, the Administrative Agent, the Security Agent and the Banks are several and the amount due to the Lead Arrangers, the Administrative Agent, the Security Agent (each for its own account) and to each Bank is a separate and independent debt. The Lead Arrangers, the Administrative Agent, the Security Agent and any Bank shall have the right to protect and enforce its rights arising out of this Agreement and it shall not be necessary for the Lead Arrangers, the Administrative Agent, the Security Agent or any Bank (as the case may be) to be joined as an additional party in any proceedings for this purpose.
2.4 Drawdown
Subject to the terms and conditions of this Agreement, the Loan shall be made to the Borrower following receipt by the Administrative Agent from the Borrower of a Drawdown Notice not later than 10 a.m. (Oslo time) on the fifth Banking Day before the proposed Drawdown Date. A Drawdown Notice shall be effective on actual receipt by the Administrative Agent and, once given, shall, subject as provided in clause 3.7(a), be irrevocable.
2.5 Amount
The principal amount specified in the Drawdown Notice for borrowing on the Drawdown Date shall, subject to the terms and conditions of this Agreement, not exceed USD325,000,000.
2.6 Availability
Upon receipt of a Drawdown Notice complying with the terms of this Agreement the Administrative Agent shall promptly notify each Bank thereof and of the date on which the Loan is to be made and, subject to the provisions of clause 8.6, on such date on which the Loan is to be drawn down each of the Banks shall make available to the Administrative Agent its portion of the Loan for payment by the Administrative Agent in accordance with clause 6.2.
2.7 Application of proceeds
Without prejudice to the Borrower's obligations under clause 8.1(c), none of the Creditors shall have any responsibility for the application of proceeds of the Loan by the Borrower.
2.8 Termination of Commitments
If the Loan is not drawn down by the Latest Drawdown Date, the Commitments shall thereupon be automatically cancelled.
3 Interest
3.1 Normal interest rate
The Borrower shall pay interest on the Loan in respect of each Interest Period relating thereto on each Rollover Date (or, in the case of an Interest Period of more than three months, by instalments, the first three months from the commencement of such Interest Period and the subsequent instalments at intervals of three months or, if shorter, the period from the date of the preceding instalment until the Rollover Date relative to such Interest Period) at the rate per annum determined by the Administrative Agent to be the aggregate of (a) the Margin, (b) the Additional Cost (if any) and (c) LIBOR. Any portion of the interest equal to Additional Cost shall be for the account of Banks whose participation in the Loan is subject to the Additional Cost.
3.2 Selection of Interest Periods
The Borrower may by notice received by the Administrative Agent not later than 10 a.m. (Oslo time) on the third Banking Day before the beginning of each Interest Period specify whether such Interest Period shall have a duration of one (1), three (3) or six (6) months (or such other period as the Borrower may select and all of the Banks may agree in writing) but the Borrower may not select an Interest Period of one month's duration if there have, during the preceding period of twelve months, commenced two Interest Periods of one month's duration.
3.3 Determination of Interest Periods
Every Interest Period shall be of the duration specified by the Borrower pursuant to clause 3.2 but so that:
(a) the first Interest Period in respect of the Loan shall commence on the Drawdown Date and each subsequent Interest Period for the Loan shall commence on the last day of the previous Interest Period;
(b) if any Interest Period would otherwise overrun a Repayment Date, then the Loan shall be divided into parts, so that there is one part in the aggregate amount of the repayment instalment due on each Repayment Date falling during that Interest Period and having an Interest Period ending on the relevant Repayment Date and another part in the amount of the balance of the Loan having an Interest Period ascertained in accordance with clause 3.2 and the other provisions of this clause 3.3; and
(c) if the Borrower fails to specify the duration of an Interest Period in accordance with the provisions of clause 3.2 and this clause 3.3 such Interest Period shall have a duration of three (3) months or such other period as shall comply with this clause 3.3.
3.4 Default interest
If the Borrower fails to pay any sum (including, without limitation, any sum payable pursuant to this clause 3.4) on its due date for payment under any of the Security Documents, the Borrower shall pay interest on such sum on demand from the due date up to the date of actual payment (as well after as before judgment) at a rate determined by the Administrative Agent pursuant to this clause 3.4. The period beginning on such due date and ending on such date of payment shall be divided into successive periods of not more than three months as selected by the Administrative Agent (after consultation with the Banks) each of which (other than the first, which shall commence on such due date) shall commence on the last day of the preceding such period. The rate of interest applicable to each such period shall be the aggregate (as determined by the Administrative Agent of (a) two per cent (2%) per annum, (b) Margin, (c) the Additional Cost and (d) LIBOR for such period provided that if such unpaid sum is an amount of principal which became due and payable, by reason of a declaration by the Administrative Agent under clause 10.2(a) or a prepayment pursuant to clauses 4.3, 4.6, 4.7 or 12.1 on a date other than a Repayment Date relating thereto, the first such period selected by the Administrative Agent shall be of a duration equal to the period between the due date of such principal sum and such Repayment Date and interest shall be payable on such principal sum during such period at a rate of two per cent (2%) per annum above the aggregate of the Margin, the Additional Cost and the rate of LIBOR applicable thereto immediately before it shall have become so due and payable. Default interest shall be due and payable on the last day of each such period as determined by the Administrative Agent pursuant to this clause 3.4 or, if earlier, on the date on which the sum in respect of which such default interest is accruing shall actually be paid. If, for the reasons specified in clause 3.7(a) the Administrative Agent is unable to determine a rate in
accordance with the foregoing provisions of this clause 3.4, each Bank shall promptly notify the Administrative Agent of the cost of funds to such Bank and interest on any sum not paid on its due date for payment shall be calculated for each Bank at a rate determined by the Administrative Agent to be two per cent (2%) per annum above the aggregate of the Margin, the Additional Cost and the cost of funds to such Bank. Each Bank shall (without prejudice to the obligation of the Borrower to pay such interest) provide reasonable detail as to the basis on which it has determined such cost of funds.
3.5 Notification of interest rate
The Administrative Agent shall notify the Borrower and the Banks promptly of each rate of interest determined by it under this clause 3.
3.6 Reference Bank quotations
If any Reference Bank is unable or otherwise fails to furnish a quotation for the purpose of calculating LIBOR pursuant to the proviso contained in the definition of LIBOR the interest rate shall be determined, subject to clause 3.7, on the basis of the quotations furnished by the remaining Reference Banks.
3.7 Market disruption; non-availability
(a) If and whenever, at any time prior to the commencement of any Interest Period:
(i) the Administrative Agent shall have determined (which determination shall, in the absence of manifest error, be conclusive) that adequate and fair means do not exist for ascertaining LIBOR during such Interest Period in accordance with the definition of LIBOR in clause 1.2; or
(ii) where applicable, none of the Reference Banks supplies the Administrative Agent with a quotation for the purpose of calculating LIBOR; or
(iii) the Administrative Agent shall have received notification from Banks with Contributions aggregating more than one third of the Loan (or, prior to the Drawdown Date, Commitments aggregating not less than one third of the Total Commitments) that deposits in Dollars are not available to such Banks in the London Interbank Market in the ordinary course of business in sufficient amounts to fund their Contributions for such Interest Period or, where applicable in accordance with the definition of LIBOR in clause 1.2, that the arithmetic mean of the quotations for LIBOR supplied by the Reference Banks does not accurately reflect the cost to such Banks of obtaining such deposits,
the Administrative Agent shall forthwith give notice (a "Determination Notice") thereof to the Borrower and to each of the Banks. A Determination Notice shall contain particulars of the relevant circumstances giving rise to its issue.
(b) After the giving of any Determination Notice, the undrawn amount of the Commitment shall not be borrowed until notice to the contrary is given to the Borrower by the Administrative Agent.
(c) During the period of 10 days after any Determination Notice has been given by the Administrative Agent under clause 3.7(a) each Bank shall certify an alternative basis (the "Substitute Basis") for maintaining its Contribution. The Substitute Basis may (without limitation) include alternative interest periods, alternative currencies or alternative rates of interest but shall include a margin above the cost of funds (including Additional Cost if any) to such Bank equivalent to the Margin. Each Substitute Basis so certified shall be binding upon the Borrower and shall take effect in accordance with its terms from the date specified in the Determination Notice until such time as the Administrative Agent notifies the Borrower that none of the circumstances specified in clause 3.7(a) continues to exist whereupon the normal interest rate fixing provisions of the Agreement shall apply.
4 Repayment and prepayment
4.1 Repayment
The Borrower shall repay the Loan by twenty three (23) instalments, one such instalment to be repaid on each of the Repayment Dates. Subject to the provisions of this Agreement:
(a) the first eight (8) instalments shall each be in the amount of USD5,000,000;
(b) the ninth (9th) to the sixteenth (16th) instalments shall each be in the amount of USD7,500,000;
(c) the seventeenth (17th) to the twentieth (20th) instalments shall each be in the amount of USD10,000,000;
(d) the twenty first (21st) and twenty second (22nd) instalments shall each be in the amount of USD12,500,000; and
(e) the twenty third and final instalment shall be in the amount of USD160,000,000.
If the amount of the Loan advanced on the Drawdown Date is less than USD325,000,000, each of the said amounts shall be reduced pro rata to the amount so advanced.
4.2 Voluntary prepayment
The Borrower may prepay the Loan in whole or in part (being USD1,000,000 or whole multiples of USD1,000,000) on any Rollover Date relating to the part of the Loan to be prepaid without premium or penalty subject always to the payment by the Borrower of any Breakage Costs in accordance with clause 11.1 hereof and provided that immediately prior to, and immediately after such prepayment, the Borrower will be in compliance with the financial covenants in clause 8.5,
4.3 Prepayment on Total Loss and sale, etc.
(a) Before Drawdown Date
On a Ship or Golar Mazo becoming a Total Loss (or suffering damage or being involved in an incident which in the opinion of the Administrative Agent, in consultation with the Borrower, may result in such Ship or Golar Mazo subsequently being determined to be a Total Loss) before the Drawdown Date, the obligation of the Banks to advance the Loan shall immediately cease and the Commitments shall be reduced to zero.
(b) Thereafter
If, on or after the Drawdown Date:
(i) a Mortgaged Ship or Golar Mazo becomes a Total Loss;
(ii) a Mortgaged Ship or Golar Mazo is sold;
(iii) an Owning Company is sold by the Borrower (unless such Owning Company has already sold or refinanced its Ship or such Ship has become a Total Loss); or
(iv) Oxbow or Golar Maritime sells any of their shares in Faraway (unless Golar Mazo has already been sold by Faraway or has become a Total Loss),
the Commitments shall be reduced on the applicable Disposal Repayment Date by the relevant Disposal Repayment Amount. If, upon reduction of the Commitments by such Disposal Repayment Amount, the aggregate of the Contributions at such time exceeds the Commitments as thereby reduced, the Borrower shall on such Disposal Repayment Date prepay such amount of the Loan as will ensure that immediately thereafter the aggregate amount of the Contributions will not exceed the Commitments as so reduced.
(c) Defined terms
For the purposes of this clause 4.3:
"Disposal Repayment Amount" means in relation to a Disposal Reduction Date, the amount in Dollars which is either:
(i) in relation to a Ship which has become a Total Loss, the amount which is 115% of the Relevant Fraction of the Loan as at the Disposal Reduction Date; or
(ii) in relation to Golar Mazo where it has become a Total Loss, 60% of the minimum amount for which Golar Mazo was required to have been insured under this Agreement (after taking into account the amount due under the Faraway Loan Agreement and other liabilities in respect of such vessel (but not liabilities owed to any Restricted Associate)); or
(iii) in relation to a Ship which is being sold, the amount which is 115% of the Relevant Fraction of the Loan as at the Disposal Reduction Date; or
(iv) in relation to Golar Mazo where it has been sold, 60% of the value of Golar Mazo as determined in accordance with clause 4.3(d) (after taking into account the amount due under the Faraway Loan Agreement and other liabilities in respect of such vessel (but not liabilities owed to any Restricted Associate)); or
(v) in relation to a sale of an Owning Company, the amount which is the higher of:
(A) the value of such Owning Company determined in accordance with clause 4.3(d); and
(B) the value of such Owning Company's Ship as determined in accordance with clause 4.3(d); or
(vi) in relation to a sale of Oxbow and Golar Maritime shares in Faraway, the amount which is the higher of:
(A) the value of such shares determined in accordance with clause 4.3(d); and
(B) 60% of the value of Golar Mazo determined in accordance with clause 4.3(d) and other liabilities (but not liabilities owed to any Restricted Associate)); and
"Disposal Repayment Date" means:
(i) where a Ship or Golar Mazo has become a Total Loss, its Total Loss Repayment Date; or
(ii) where a Ship is being sold in accordance with clause 8.4(n), the date upon which the sale of such Ship is completed by the transfer of title to such Ship to the purchaser in exchange for payment of the relevant purchase price; or
(iii) where Golar Mazo is being sold, the last day of the calendar quarter during which the sale of Golar Mazo was completed or, if earlier, the date upon which 60% of all or substantially all of the proceeds of sale of Golar Mazo (net of any amounts due under the Faraway Loan Agreement and any other liabilities (but not liabilities owed to any Restricted Associate)) are distributed to Oxbow and Golar Maritime by or on behalf of Faraway (whether by way of dividend or otherwise); or
(iv) where an Owning company is being sold, or Oxbow and Golar Maritime are selling any of their shares in Faraway, the date upon which such sale is completed.
(d) Valuation of Ships, Owning Companies and Faraway shares
(i) Ships
For the purposes of this clause 4.3 and to determine the Relevant Fraction of the Loan, the Mortgaged Ships shall be valued in accordance with clause 8.2 at the cost of the Borrower save that, in the case of the sale of such a Ship, the value of such Mortgaged Ship shall, for the purposes of this clause, be deemed to be the Net Sale Proceeds of such Ship or, if higher and if the purchaser is a Restricted Associate, the value of such Mortgaged Ship as determined in accordance with clause 8.2.
(ii) Golar Mazo
For the purposes of this clause 4.3, the value of Golar Mazo shall be 60% of its value as determined in accordance with clause 8.2, as at the relevant Disposal Repayment Date, save that, in the case of a sale of Golar Mazo, the value of Golar Mazo shall be deemed to be 60% of the Net Sale Proceeds of Golar Mazo or, if higher, and if the purchaser is a Restricted Associate, 60% of the value of Golar Mazo as determined in accordance with clause 8.2.
(iii) Owning Companies
For the purposes of this clause 4.3, the value of an Owning Company shall be the proceeds of sale of such Owning Company or, if higher and if the purchaser of the Owning Company is a Restricted Associate, an amount equal to the value of such Owning Company's Ship as at the relevant Disposal Repayment Date which shall be determined in accordance with clause 8.2.
(iv) Faraway shares
For the purposes of this clause 4.3, the value of Oxbow and Golar Maritime's shares in Faraway shall be the proceeds of sale of such shares or, if higher and if the purchaser of such shares is a Restricted Associate, be deemed to be the higher of 1) 60% of the value of Golar Mazo as determined in accordance with clause 8.2 (net of amounts owing under the Faraway Loan Agreement and any other liabilities in respect of such vessel other than to Restricted Associates) and 2) 60% of the net asset value of Faraway (being for this purpose the aggregate of the value of Golar Mazo as determined in accordance with clause 8.2 and the value of the other assets of Faraway as shown in the latest accounts of Faraway delivered to the Administrative Agent under clause 8.6 less amounts owing to the financiers of Golar Mazo and any other liabilities of Faraway other than liabilities owed to any Restricted Associate) as at the relevant Disposal Repayment Date.
(e) Valuation conclusive and costs
The values determined in accordance with clause 4.3(d) shall be binding upon the parties hereto for the purposes of determining the Disposal Reduction Amount for a Disposal Reduction Date and all costs in connection with the Administrative Agent obtaining any valuation for such purpose shall be borne by the Borrower.
(f) Date of Total Loss
For the purpose of this Agreement, a Total Loss shall be deemed to have occurred:
(i) in the case of an actual total loss of a vessel on the actual date and at the time such vessel was lost or, if such date is not known, on the date on which the vessel was last reported;
(ii) in the case of a constructive total loss of a vessel, upon the date and at the time notice of abandonment of such vessel is given to the insurers of such vessel for the time being (provided a claim for total loss is admitted by such insurers) or, if such insurers do not forthwith admit such a claim, at the date and at the time at which either a total loss is subsequently admitted by the insurers or a total loss is subsequently adjudged by a competent court of law or arbitration panel to have occurred or, if earlier, the date falling six months after notice of abandonment of such vessel was given to the insurers;
(iii) in the case of a compromised or arranged total loss, on the date upon which a binding agreement as to such compromised or arranged total loss has been entered into by the insurers of the relevant vessel;
(iv) in the case of Compulsory Acquisition of a vessel, on the date upon which the relevant requisition of title or other compulsory acquisition of such vessel occurs; and
(v) in the case of hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation of a vessel (other than where the same amounts to Compulsory Acquisition of such vessel) by any Government Entity, or by persons purporting to act on behalf of any Government Entity, which deprives the owner of the vessel of the use of such vessel for more than 60 days, upon the expiry of the period of 60 days after the date upon which the relevant hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation occurred.
(g) Application of Total Loss and sale proceeds
Provided no Default has occurred and is continuing and provided the Borrower shall have complied with clauses 4.3 and 4.4, any of the following moneys:
(i) insurance moneys or Requisition Compensation in respect of a Total Loss of a Ship; or
(ii) any proceeds of sale of a Ship, an Owning Company or any of Oxbow and Golar Maritime's shares in Faraway; or
(iii) moneys distributed by or on behalf of Faraway representing 60% of all or substantially all of any insurance moneys or Requisition Compensation in respect of a Total Loss of Golar Mazo or proceeds of sale of Golar Mazo (in each case net of any amounts due under the Faraway Loan Agreement and other liabilities in respect of such vessel other than liabilities owed to any Restricted Associate);
received by the Administrative Agent or the Security Agent pursuant to any Security Document shall be paid to the relevant Owning Company or Oxbow and Golar Maritime or (if and to the extent necessary to ensure compliance with clause 4.3) retained by the Administrative Agent for application in or towards making any prepayment and paying any other moneys required under clauses 4.3 and 4.4. For this purpose, any such moneys so received (or the relevant part thereof) may be applied, if the Borrower and the Security Party to whom such moneys belong so requests the Administrative Agent in writing before the date of receipt thereof, in effecting any prepayment required in accordance with clause 4.3 and paying related amounts due under clause 4.5. The surplus (if any) remaining after such payments shall be paid to the Earnings Account for application in accordance with clause 4 of the Agency Agreement.
4.4 Amounts payable on prepayment
Any prepayment under this Agreement shall be made together with:
(a) accrued interest on the amount to be prepaid to the date of such
prepayment (calculated in respect of the period during which the
relevant Substitute Basis has applied by virtue of clause 3.7(c),
at a rate per annum equal to the aggregate of (i) the Margin and
(ii) the cost (including any Additional Cost) to such Bank of
funding its Contribution for such period);
(b) any additional amounts payable under clauses 6.7 and 12.2; and
(c) all other sums payable by the Borrower to the relevant Bank under this Agreement or any of the other Security Documents including, without limitation any amounts payable under clause 11.
4.5 Notice of prepayment; reduction of repayment instalments
No prepayment may be effected under clause 4.2 or 4.6 unless the Borrower
shall have given the Administrative Agent at least ten Banking Days'
notice of its intention to make such prepayment. Every notice of
prepayment shall be effective only on actual receipt by the
Administrative Agent, shall be irrevocable, shall specify the amount to
be prepaid and shall oblige the Borrower to make such prepayment on the
date specified. No amount prepaid may be reborrowed. Any amount prepaid
under clause 4.2 shall be applied in reducing the repayment instalments
under clause 4.1 in inverse order of maturity or (if the Borrower so
requests in writing in the notice of its intention to make such
prepayment) in order of maturity. Any amount prepaid pursuant to clause
4.3 (other than amounts prepaid due to a sale or Total Loss of Golar Mazo
or a sale of shares in Faraway which shall be applied in inverse order of
maturity) shall be applied in reducing the repayment instalments under
clause 4.1 pro rata. Any amount prepaid under clause 4.6 or 4.7 shall be
applied in reducing the repayment instalments under clause 4.1 in inverse
order of maturity.
The Borrower may not prepay the Loan or any part thereof save as expressly provided in this Agreement.
4.6 Additional voluntary prepayment
The Borrower may also prepay (in whole but not in part only), without premium or penalty, but without prejudice to its obligations under clauses 3.7, 6.7 and 12.2:
(a) the Contribution of any Bank to which the Borrower shall have become obliged to pay additional amounts under clauses 6.7 or 12.2; or
(b) any Bank's Contribution to which a Substitute Basis applies by virtue of clause 3.7(c).
Upon any notice of such prepayment being given, the Commitment of the relevant Bank shall be reduced to zero and for the avoidance of doubt, any amount prepaid under this clause 4.6 shall be applied in reducing the repayment instalments under clause 4.1 pro rata.
4.7 Faraway dividends
Upon receipt (whether by payment to an Earnings Account or otherwise) by Oxbow and/or Golar Maritime of any dividend or other amount from Faraway), the Borrower shall immediately prepay such part of the Loan as is equal to one third of such part of such dividend or other amount as was funded by cash received by Faraway after the Drawdown Date and in respect of amounts accrued after the Drawdown Date.
5 Fees commission and expenses
5.1 Fees and commissions
The Borrower shall pay to the Administrative Agent:
(a) Arrangement fee
on the date of this Agreement, for the account of the Administrative Agent (for distribution between itself and the other Lead Arrangers in proportion to their respective Commitments), an arrangement fee of an amount agreed between the Borrower and the Lead Arrangers in a separate letter;
(b) Commitment commission
on the dates falling at three (3) monthly intervals from 15 May 2001 (the "underwriting date") and prior to the Drawdown Date, and on the Drawdown Date itself or (if applicable) the date of cancellation in full of the Total Commitments, for the account of each Bank, commitment commission computed from the underwriting date at the rate of 0.625% (zero point six two five per cent) per annum on the amount of the daily undrawn and uncancelled amount of such Bank's Commitment; and
(c) Agency fee
in advance on the Drawdown Date and on each anniversary of the date of this Agreement until no moneys are owing under the Security Documents and the Borrower is no longer under any obligation, actual or contingent, under this Agreement, for the account of the Administrative Agent, an agency fee of an amount agreed between the Borrower and the Administrative Agent in a separate letter.
The fees and commission referred to in clauses 5.1(a) and 5.1(b) shall be payable by the Borrower whether or not the Loan is ever made.
5.2 Expenses
The Borrower shall pay to the Administrative Agent on a full indemnity basis on demand all reasonable expenses (including legal, printing and out-of-pocket expenses) incurred:
(a) by any of the Creditors in connection with the negotiation, preparation, execution and, where relevant, registration of the Security Documents, the syndication of the Loan (including, without limitation, preparation of any information memoranda) and of any amendment or extension of or the granting of any waiver or consent under, any of the Security Documents; and
(b) any of the Creditors in contemplation of, or otherwise in connection with, the enforcement of, or preservation of any rights under, any of the Security Documents or otherwise in respect of the moneys owing under any of the Security Documents
together with interest at the rate referred to in clause 3.4 from the date on which such expenses were incurred, to the date of payment (as well after as before judgment).
5.3 Value added tax
All fees, commissions and expenses payable pursuant to this clause 5 shall be paid together with an amount equal to any value added tax payable by any Creditor in respect of such fees and expenses. Any value added tax chargeable in respect of any services supplied by any Creditor under this Agreement shall, on delivery of a value added tax invoice, be paid in addition to any sum agreed to be paid hereunder.
5.4 Stamp and other duties
The Borrower shall pay all stamp, documentary, registration or other like duties or taxes (including any duties or taxes payable by the Creditors) imposed on or in connection with any of the Underlying Documents or the Security Documents and shall indemnify the Creditors against any liability arising by reason of any delay or omission by the Borrower to pay such duties or taxes.
6 Payments and taxes; accounts and calculations
6.1 No set-off or counterclaim; distribution to the Banks
The Borrower acknowledges that in performing their obligations under this Agreement, the Banks will be incurring liabilities to third parties in relation to the funding of amounts to the Borrower, such liabilities matching the liabilities of the Borrower to the Banks and that it is reasonable for the Banks to be entitled to receive payments from the Borrower gross on the due date in order that the Banks are put in a position to perform their matching obligations to the relevant third parties. Accordingly all payments to be made by the Borrower under any of the Security Documents shall be made in full, without any set-off or counterclaim whatsoever and, subject as provided in clause 6.7, free and clear of any deductions or withholdings, in Dollars (except for costs, charges or expenses which shall, at the request of the Administrative Agent, be payable in the currency in which they are incurred) on the due date to the account of the Administrative Agent at such bank as the Administrative Agent may from time to time specify for this purpose. Save where this Agreement specifically provides for a payment to be made for the account of a particular Bank (including, without limitation, clauses 3.1, 4.6, 5.2, 6.7, 11.1, 11.2, 11.3, 12.1 and 12.2) in which case the Administrative Agent shall distribute the relevant payment to the Bank concerned, payments to be made by the Borrower under this Agreement shall be for the account of all the Banks and the Administrative Agent shall forthwith distribute such payments in like funds as are received by the Administrative Agent to the Banks rateably in accordance with their Commitments or Contributions, as the case may be.
6.2 Payments by the Banks
All sums to be advanced by the Banks to the Borrower under this Agreement shall be remitted in Dollars on the Drawdown Date to the account of the Administrative Agent at such bank as the Administrative Agent may have notified to the Banks and shall be paid by the Administrative Agent on such date in like funds as are received by the Administrative Agent to the account specified in the Drawdown Notice.
6.3 Administrative Agent may assume receipt
Where any sum is to be paid under any of the Security Documents to the Administrative Agent for the account of another person, the Administrative Agent may assume that the payment will be made when due and the Administrative Agent may (but shall not be obliged to) make such sum available to the person so entitled. If it proves to be the case that such payment was not made to the Administrative Agent, then the person to whom such sum was so made available shall on request refund such sum to the Administrative Agent together with interest thereon sufficient to compensate the Administrative Agent for the cost of making available such sum up to the date of such repayment and the person by whom such sum was payable shall indemnify the Administrative Agent and/or person to whom such sum was made available by the Administrative Agent for any and all loss or expense which the Administrative Agent or such person may sustain or incur as a consequence of such sum not having been paid on its due date.
6.4 Non-Banking Days
When any payment under any of the Security Documents would otherwise be due, or any Repayment Date would otherwise fall, on a day which is not a Banking Day, the due date for payment or (as the case may be) such Repayment Date shall be extended to the next following Banking Day unless such Banking Day falls in the next calendar month in which case payment shall be made, or (as the case may be) such Repayment Date shall fall, on the immediately preceding Banking Day.
6.5 Calculations
All interest, commissions, fees and other payments of an annual nature under any of the Security Documents shall accrue from day to day and be calculated on the basis of actual days elapsed and a 360 day year.
6.6 Certificates conclusive
Any certificate or determination of the Administrative Agent or any Bank as to any rate of interest or any other amount pursuant to and for the purposes of any of the Security Documents shall, in the absence of manifest error, be conclusive and binding on the Borrower and (in the case of a certificate or determination by the Administrative Agent) on the Banks.
6.7 Grossing-up for Taxes
If at any time the Borrower is required to make any deduction or withholding in respect of Taxes from any payment due under any of the Security Documents for the account of any Creditor (or if the Administrative Agent is required to make any deduction or withholding from a payment to another Creditor, the sum due from the Borrower in respect of such payment shall, be increased to the extent necessary to ensure that, after the making of such deduction or withholding, the relevant Creditor receives on the due date for such payment (and retains, free from any liability in respect of such deduction or withholding), a net sum equal to the sum which it would have received had no such deduction or withholding been required to be made and the Borrower shall indemnify each Creditor against any losses or costs incurred by such Creditor by reason of any failure of the Borrower to make any such deduction or withholding or by reason of any increased payment not being made on the due date for such payment. The Borrower shall promptly deliver to the Administrative Agent any receipts, certificates or other proof evidencing the amounts (if any) paid or payable in respect of any deduction or withholding as aforesaid.
6.8 Grossing-up for Taxes - Banks
If at any time any Bank is required to make any deduction or withholding in respect of Taxes from any payment due under any of the Security Documents for the account of the Administrative Agent or the Security Agent, the sum due from such Bank in respect of such payment shall be increased to the extent necessary to ensure that, after the making of such deduction or withholding, the Administrative Agent and the Security Agent receives on the due date for such payment (and retains free from any liability in respect of such deduction or withholding) a net sum equal to the sum which it would have received had no such deduction or withholding been required to be made and each Bank shall indemnify the Administrative Agent and the Security Agent against any losses or costs incurred by either of them by reason of any failure of such Bank to make any such deduction or withholding or by reason of any increased payment not being made on the due date for such payment.
6.9 Bank accounts
Each Bank shall maintain, in accordance with its usual practice, an account or accounts evidencing the amounts from time to time lent by, owing to and paid to it under the Security Documents. The Administrative Agent shall maintain a control account showing the Loan and other sums owing to the Administrative Agent, the Security Agent and the Banks under the Security Documents and all payments in respect thereof made from time to time. The control account shall, in the absence of manifest error, be conclusive as to the amount from time to time owing to the Administrative Agent, the Security Agent and the Banks under the Security Documents.
6.10 Partial payments
If, on any date on which a payment is due to be made by the Borrower under any of the Security Documents, the amount received by the Administrative Agent from the Borrower falls short of the total amount of the payment due to be made by the Borrower on such date then, without prejudice to any rights or remedies available to the Administrative Agent, the Security Agent and the Banks under any of the Security Documents, the Administrative Agent shall apply the amount actually received from the Borrower in or towards discharge of the obligations of the Borrower under the Security Documents in the following order, notwithstanding any appropriation made, or purported to be made, by the Borrower:
(a) firstly, in or towards payment, on a pro-rata basis, of any unpaid fees, costs and expenses of the Administrative Agent and the Security Agent under any of the Security Documents;
(b) secondly, in or towards payment to the Lead Arrangers of any portion of the arrangement fee payable under clause 5.1(a) which remains unpaid;
(c) thirdly, in or towards payment to the Banks, on a pro rata basis, of any accrued commitment commission payable under clause 5.1(b) which shall have become due but remains unpaid;
(d) fourthly, in or towards payment to the Administrative Agent, of any proportion of the agency fee payable under clause 5.1(c) which shall have become due but remains unpaid;
(e) fifthly, in or towards payment to the Banks, on a pro-rata basis, of any accrued interest which shall have become due but remains unpaid;
(f) sixthly, in or towards payment to the Banks, on a pro-rata basis, of any principal which shall have become due but remains unpaid; and
(g) seventhly, in or towards payment of any other sum which shall have become due but remains unpaid (and, if more than one such sum so remains unpaid, on a pro-rata basis).
The order of application set out in this clause 6.10(b) to (g) may be varied by the Administrative Agent if all the Banks so direct.
7 Representations and warranties
7.1 Continuing representations and warranties
The Borrower represents and warrants to each of the Creditors that:
(a) Due incorporation
each of the Security Parties is duly incorporated and validly existing under the laws of its country of incorporation as a limited liability company and has power to carry on its business as it is now being conducted and to own its property and other assets;
(b) Corporate power
the Borrower has power to borrow the Commitments and each of the Security Parties has power to execute and deliver and perform its obligations under the Security Documents and the Underlying Documents to which it is or is to be a party; all necessary corporate, shareholder and other action has been taken to authorise the execution, delivery and performance of the same and no limitation on the powers of any Security Party to borrow will be exceeded as a result of the obligations of such Security Party under the Security Documents;
(c) Binding obligations
the Security Documents constitute or will, when executed, constitute valid, legally binding and enforceable obligations of the relevant Security Parties;
(d) No conflict with other obligations
the execution and delivery of, the performance of its obligations under, and compliance with the provisions of, the relevant Underlying Documents and the Security Documents by the relevant Security Parties will not:
(i) contravene any existing applicable law, statute, rule or regulation or any judgment, decree or permit to which any Security Party is subject;
(ii) conflict with, or result in any breach of any of the terms of, or constitute a default under, any agreement or other instrument to which any Security Party is a party or is subject or by which it or any of its property is bound;
(iii) contravene or conflict with any provision of the constitutional documents of any Security Party; or
(iv) result in the creation or imposition of or oblige any Security Party or any other member of the Golar Gas Group to create any Encumbrance (other than a Permitted Encumbrance) on any of the undertakings, assets, rights or revenues of any Security Party or any other member of the Golar Gas Group;
(e) No filings required
save for the registration of the Mortgages with the relevant Registry under the laws of the relevant Flag State, the registration or presentation of particulars of charge of any of the Security Documents in the British Virgin Islands or England with the relevant Registrar of Companies, it is not necessary to ensure the legality, validity, enforceability or admissibility in evidence of the Underlying Documents or any of the Security Documents that they or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere in any Relevant Jurisdiction or that any stamp, registration or similar tax or charge be paid in any Relevant Jurisdiction on or in relation to the Underlying Documents and each of the Underlying Documents and the Security Documents is in proper form for its enforcement in the courts of each Relevant Jurisdiction except that for enforcement of any such document in a court of competent jurisdiction in Liberia, a stamp must be affixed to such document prior to its presentation to the court;
(f) Choice of law
the choice of English law to govern the Underlying Documents, the Security Documents (other than the Mortgages) and the submissions therein by the Security Parties to the non-exclusive jurisdiction of the English courts are valid and binding;
(g) No immunity
no Security Party nor any of its assets is entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgement, execution or other enforcement);
(h) Owning Companies, Oxbow and Golar Maritime Subsidiaries of the Borrower
each of the Owning Companies (other than Golar Gas Cryogenics Inc.) and Golar Maritime is a wholly owned Subsidiary of the Borrower and Golar Gas Cryogenics Inc. and Oxbow will on the Drawdown Date be wholly owned Subsidiaries of the Borrower; and
(i) Shareholdings in the Borrower
the Parent will on the Drawdown Date own directly or indirectly, legally and beneficially, all the issued share capital of the Borrower.
7.2 Initial representations and warranties
The Borrower represents and warrants (and shall be deemed to represent and warrant) to each of the Creditors:
(a) No default in respect of other Indebtedness
no Security Party nor any other member of the Golar LNG Group is (nor would with the giving of notice or lapse of time or the satisfaction of any other condition or combination thereof be) in breach of or in default under any agreement relating to Indebtedness to which it is a party or by which it may be bound and no member of the Golar Gas Group is liable for Borrowed Money or Swap Liabilities save as are permitted by clause 8.3(i);
(b) Information
the information and reports furnished by any Security Party to the Administrative Agent, the Lead Arrangers, the Security Agent or the Banks in connection with the negotiation and preparation of the Security Documents was, to the best of such Security Party's and the Borrower's knowledge and belief fair and accurate in all material respects when given (or, in the case of any projections, was based on reasonable assumptions) subject to any qualifications given in writing at the time of giving such information or contained within such information and there are no other facts the omission of which would have made any fact or statement therein misleading in any material respect;
(c) Compliance with Environmental Laws and Approvals
except as may already have been disclosed by the Borrower prior to the date of this Agreement in writing to, and acknowledged in writing by, the Administrative Agent:
(i) to the best of the Borrower's knowledge and belief after due enquiry, all members of the Golar LNG Group have complied in all respects with the provisions of all applicable Environmental Laws;
(ii) to the best of the Borrower's knowledge and belief after due enquiry, all members of the Golar LNG Group have obtained all Environmental Approvals and are in compliance in all respects with all such applicable Environmental Approvals; and
(iii) no member of the Golar LNG Group has received any notice of any Environmental Claim against any member of the Golar LNG Group, Faraway, any Ship or Golar Mazo;
(d) No Environmental Claims
except as may already have been disclosed by the Borrower prior to the date of this Agreement in writing to, and acknowledged in writing by, the Administrative Agent, there is no Environmental Claim pending or, to the best of the Borrower's knowledge and belief after due enquiry, threatened against any member of the Golar LNG Group, Faraway, any Ship or Golar Mazo;
(e) No Environmental incidents
except as may already have been disclosed by the Borrower prior to the date of this Agreement in writing to, and acknowledged in writing by, the Administrative Agent, to the best of the Borrower's knowledge and belief after due enquiry there has been no emission, spill, release or discharge of a Pollutant from any Ship or Golar Mazo;
(f) No other Environmental problems
except as may have already been disclosed by the Borrower prior to the date of this Agreement in writing to and acknowledged in writing by, the Administrative Agent, to the best of the knowledge and belief of the Borrower and its directors and other officers (having made due enquiry) there are no circumstances arising from any breach of Environmental Laws or which may give rise to an Environmental Claim which constitutes, or may give rise to, the Event of Default specified in clause 10.1(y);
(g) Copies true and complete
the copies of the Underlying Documents delivered or to be delivered to the Administrative Agent pursuant to clause 9.1 are, or will when delivered be, true and complete copies of such documents; each of such documents will when delivered constitute valid, binding and enforceable obligations of the members of the Golar Gas Group who are parties thereto and there will have been no amendments or variations thereof or defaults thereunder;
(h) Consents obtained
every consent, authorisation, licence or approval of, or registration with or declaration to, governmental or public bodies or authorities or courts required by any Security Party (and considered by the Administrative Agent, in its absolute discretion, to be material) to authorise, or required by any Security Party in connection with, the execution, delivery, validity, enforceability or admissibility in evidence of the Underlying Documents and each of the Security Documents or the performance by any Security Party of its obligations under the Security Documents has been obtained or made and is in full force and effect and there has been no default in the observance of any condition or restriction (if any) imposed in, or in connection with, any of the same and except as disclosed in writing by the Borrower to the Administrative Agent prior to the date of this Agreement;
(i) Pari passu
the obligations of the Borrower under this Agreement are direct, general and unconditional obligations of the Borrower and rank at least pari passu with all other present and future unsecured and unsubordinated Indebtedness of the Borrower;
(j) No withholding Taxes
no Taxes are imposed by withholding or otherwise on any payment to be made by any Security Party under the Underlying Documents or the Security Documents or are imposed on or by virtue of the execution or delivery by any Security Party of the Underlying Documents or the Security Documents or any other document or instrument to be executed or delivered under any of the Security Documents;
(k) No Default
no Default has occurred and is continuing;
(l) Ships
each Ship will on the Drawdown Date be:
(i) in the absolute ownership of the relevant Owning Company free and clear of all Encumbrances other than current crew wages and the relevant Mortgage who will on the Drawdown Date be the sole, legal and beneficial owner of such Ship;
(ii) registered in the name of the relevant Owning Company through the relevant Registry as a ship under the laws and flag of the relevant Flag State;
(iii) operationally seaworthy and in every way fit for service;
(iv) classed with the relevant Classification free of all overdue requirements and recommendations of the relevant Classification Society;
(v) managed by an Approved Manager under an Approved Management Agreement; and
(vi) continuing in the service of the relevant Approved Charterer under its Approved Charter (if any);
(m) Golar Mazo
Golar Mazo will on the Drawdown Date be:
(i) in the absolute ownership of Faraway who will on the Drawdown Date be the sole, legal and beneficial owner of Golar Mazo;
(ii) registered in the name of Faraway as a ship under the laws and flag of the Republic of Liberia;
(iii) operationally seaworthy and in every way fit for service;
(iv) classed with the classification +100A1, Liquefied Gas Carrier free of all overdue requirements and recommendations of Lloyd's Register of Shipping;
(v) managed by an Approved Manager under the Golar Mazo Management Agreement; and
(vi) continuing in the service of Pertamina under the Pertamina Charter;
(n) Compliance with Approved Charters
Each Owning Company has complied in all material respects with the provisions of the relevant Approved Charter;
(o) Compliance with ISM Code
each Owning Company and Approved Manager has complied at all material times in all material respects with the ISM Code;
(p) No litigation
no litigation, arbitration or administrative proceeding is taking place, pending or, to the knowledge of the officers of any of the Borrower, threatened against any Security Party or any other member of the Golar LNG Group which could have a material adverse effect on the business, assets or financial condition of any Security Party;
(q) Ship's employment
other than pursuant to the Approved Charters, neither any Ship nor Golar Mazo is nor will on or before the Drawdown Date be subject to any charter or contract or to any agreement to enter into any charter or contract which, if entered into after the date of this Agreement would have required the consent of the Security Agent under this Agreement and there is no agreement or arrangement whereby the Earnings of any Ship after the date of this Agreement may be shared with any other person;
(r) Freedom from Encumbrances
none of the Ships nor Golar Mazo nor their respective its Earnings, Insurances or Requisition Compensation nor any other properties or rights which are, or are to be, the subject of any of the Security Documents nor any part thereof will be on the Drawdown Date subject to any Encumbrance other than for current crew wages and the relevant Security Documents;
(s) Shareholdings in Parent
the Parent is a wholly owned Subsidiary of Osprey;
(t) No material adverse change
there has been no material adverse change in the consolidated financial position of the Golar Gas Group from that set forth in the pro forma financial statements referred to in clause 7.2(x); and
(u) Faraway ownership
40% of the issued share capital of Faraway is legally and beneficially owned by Oxbow and 20% is legally and beneficially owned by Golar Maritime and the remaining 40% of such share capital is legally and beneficially owned by Chinese Petroleum Corporation;
(v) Liability to Taxation
save and except as disclosed in writing by the Borrower to the Administrative Agent prior to the date of this Agreement, no member of the Golar Gas Group is liable for or subject to any Taxes imposed by any fiscal authority of or within any taxing jurisdiction (including any international, national, municipal, state, local or other taxing jurisdiction) by reason of a connection between any member of the Golar Gas Group and such taxing jurisdiction or carrying on business in such jurisdiction or by reason of any member of the Golar Gas Group carrying on business in such jurisdiction not being a connection arising solely as a result of a vessel being located in that jurisdiction, or loading or discharging at a port within that jurisdiction, in the ordinary course of the business of a member of the Golar Gas Group as owner and/or operator and/or charterer and/or manager of such vessel;
(w) Faraway Borrowed Money
Faraway is not liable for, and has not incurred, any Borrowed Money except pursuant to the Faraway Loan Agreement;
(x) Financial statements
the pro forma annual financial statements in respect of the financial year ended as of 31 May 2001 as delivered to the Administrative Agent have been prepared in accordance with GAAP which have been consistently applied and present fairly and accurately the financial position of the Borrower and each Owning Company and the consolidated financial position of the Golar Gas Group (excluding Oxbow, Golar Maritime and Faraway) respectively as at such date and the results of the operations of the Borrower and each Owning Company and the consolidated results of the Golar Gas Group (excluding Oxbow, Golar Maritime and Faraway) respectively for the financial year ended on such date and, as at such date, neither the Borrower nor any Owning Company nor the Golar Gas Group (excluding Oxbow, Golar Maritime and Faraway) had any liabilities (contingent or otherwise) or any unrealised or anticipated losses which are not disclosed by, or reserved against or provided for in, such financial statements and, in respect of any contingent liabilities (whether or not material), with a description of the basis for the liability and an explanation of why the liability is not deemed to be material;
(y) Initial Approved Manager
following the Drawdown Date and the restructuring of the Golar LNG Group, the existing employees of the Initial Manager will continue to be employed on substantially the same basis; and
(z) Solvency
the Borrower and each Guarantor is Solvent and will continue to be Solvent at and after the Drawdown Date.
7.3 Repetition of representations and warranties
On and as of the Drawdown Date and on each Rollover Date and any other date for the payment of interest under clause 3.1, the Borrower shall be deemed to repeat the representations and warranties in clause 7.1 as if made with reference to the facts and circumstances existing on such day and on and as of the Drawdown Date, the Borrower shall be deemed to repeat the representations and warranties in clause 7.2.
7.4 Warranty as to future financial statements
On and as of each Rollover Date, the Borrower shall be deemed to represent and warrant to each of the Creditors that the then latest Annual Financial Statements then delivered to the Administrative Agent (if any) have been prepared in accordance with GAAP and present fairly and accurately the financial positions of the Borrower, the Parent, the Owning Companies, Oxbow and Golar Maritime and the consolidated financial positions of the Golar LNG Group (excluding Oxbow, Golar Maritime and Faraway) respectively as at the end of the financial period to which the same relate and the results of the operations of the Borrower, the Parent, the Owning Companies, Oxbow and Golar Maritime and the consolidated results of the operations of the Golar LNG Group (excluding Oxbow, Golar Maritime and Faraway) respectively for the financial period to which the same relate and, as at the end of such financial period, neither the Borrower, the Parent, the Owning Companies, Oxbow and Golar Maritime nor the Golar LNG Group nor the Golar Gas Group (excluding Oxbow, Golar Maritime and Faraway) had any significant liabilities (contingent or otherwise) or any unrealised or anticipated losses which are not disclosed by, or reserved against or provided for in, such financial statements.
8 Undertakings
8.1 General
The Borrower undertakes with each of the Creditors that throughout the Security Period it will:
(a) Notice of Default
promptly inform the Administrative Agent of any occurrence of which it becomes aware which in the Borrower's reasonable opinion might materially and adversely affect the ability of any Security Party to perform their obligations under any of the Security Documents and, without limiting the generality of the foregoing, will inform the Administrative Agent of any Default forthwith upon becoming aware thereof and will from time to time, if so requested by the Administrative Agent, confirm to the Administrative Agent in writing that, save as otherwise stated in such confirmation, no Default has occurred and is continuing;
(b) Consents and licences
without prejudice to clauses 7 and 8.6, obtain or cause to be obtained, maintain in full force and effect and comply in all material respects with the conditions and restrictions (if any) imposed in, or in connection with, every consent, authorisation, licence or approval of governmental or public bodies or authorities or courts and do, or cause to be done, all other acts and things which may from time to time be necessary or desirable under applicable law for the continued due performance of all the obligations of the Security Parties under each of the Security Documents;
(c) Use of proceeds
use the Loan exclusively for the purpose specified in clause 1.1;
(d) Pari passu
ensure that its obligations under this Agreement shall at all times rank at least pari passu with all its other present and future unsecured and unsubordinated Indebtedness with the exception of any obligations which are mandatorily preferred by law and not by contract;
(e) Financial statements, budgets, cashflows and certificates
(i) Accounts
prepare Annual Financial Statements in accordance with GAAP consistently applied in respect of each financial year and cause the same to be reported on by the Auditors and prepare Quarterly Financial Statements on the same basis as the Annual Financial Statements and deliver sufficient copies of the same to the Administrative Agent for distribution to the Banks as soon as practicable but not later than 120 days (in the case of Annual Financial Statements) or 60 days (in the case of Quarterly Financial Statements) (or, in either such case, such longer period as may be agreed in writing by the Administrative Agent) after the end of the financial period to which they relate;
(ii) Budgets, cashflow projections etc.,
deliver to the Administrative Agent, for distribution to the Banks sufficient copies of the following documents:
(A) not later than 30 days after the end of each financial year, a budget and cash flow projection for the Golar Gas Group for the next twelve months;
(B) not later than 30 days after the end of each half year period, a cash flow projection for the Golar Gas Group for the next six months; and
(C) at least thirty (30) days prior to the date on which it is proposed to make a payment of any Equity Distribution under proviso (A) to clause 8.3(c), a statement (certified by the Chairman or President of the Borrower or, in his, her or their absence, any other officer of the Borrower for the time being acceptable to the Administrative Agent) of the amount of the proposed Equity Distribution and the Cumulative Net Income up to the end of the financial quarter most recently ended, the aggregate amounts of Equity Distributions previously made pursuant to clause 8.3(c)(A), the amount of the Free Available Cash at such date and the Cash Reserve as at the relevant date accompanied by a certificate by the Chairman or President of the Borrower or, in his, her or their absence, any other officer of the Borrower for the time being acceptable to the Administrative Agent that the payment of such Equity Distribution will comply with proviso (A) to clause 8.3(c);
(D) Certificate of compliance with clause 8.5
at the same time as the Borrower delivers to the Administrative Agent, pursuant to clause 8.1(e)(i), copies of the Annual Financial Statements or Quarterly Financial Statements (as the case may be) the Borrower shall provide a statement signed by the Chief Financial Officer or another senior officer of the Borrower (in substantially the form set out in schedule 7 confirming:
1) the respective amounts of:
o the Cash Balances, the Cash Reserve and Minimum Free Available Cash
o Current Assets, Current Liabilities and the current portion of Long Term Debt
o Annualised EBITDA and Interest Expense
o Net Debt
in respect of or, as the case may be, as at the end of the financial period expiring on the date as at and for which the relevant financial statements were prepared (or, in the case of Annualised EBITDA, calculated by reference to the three month period expiring on such date) (or, in the case of Interest Expense, for the twelve month period expiring on such date) and that such amounts were calculated in accordance with this Agreement and GAAP;
2) that such Annual Financial Statements or Quarterly Financial Statements were prepared in accordance with GAAP or, if not so prepared, setting forth full details of the adjustments required to be made to such statements to reflect GAAP as necessary to calculate the amounts referred to in sub-paragraph (A) above;
3) that as at the date to which the relevant financial statements are made up, the Borrower was in compliance with the covenants and undertakings set out in clause 8.5 (or, if it was not in such compliance, indicating the extent of the breach and the steps intended to be taken to remedy the same); and
4) that, as at the date not more than seven days prior to the delivery of the certificate, no Default has occurred and is continuing (or, if such is not the case, specifying the same);
(iii) Faraway accounts
deliver to the Administrative Agent, for distribution to the Banks, sufficient copies for all the Banks of, in each case at the time of issue thereof any financial statements or reports issued by Faraway to Oxbow and Golar Maritime;
(f) Delivery of reports
deliver to the Administrative Agent, for distribution to the Banks, sufficient copies for all the Banks of, in each case at the time of issue thereof every report, circular, notice or other document issued by any member of the Golar LNG Group to its creditors or (in the case of the Parent) shareholders generally;
(g) Provision of further information
provide the Administrative Agent with such financial and other information concerning the Security Parties, other members of the Golar LNG Group and their respective affairs as the Administrative Agent or any Bank (acting through the Administrative Agent) may from time to time reasonably require;
(h) Tax filings and payment of Taxes
file or cause to be filed all tax returns required to be filed in all jurisdictions in which it and any other members of the Golar LNG Group are situate or carry on business or are otherwise subject to Taxation and pay all Taxes shown to be due and payable on such returns or any assessments made against it (other than those being contested in good faith where such payment may be lawfully withheld) and adequate reserves have been made for such payment should it be found to be payable;
(i) Legal proceedings
upon becoming aware that the same may be threatened or pending and in any case immediately after the commencement thereof give to the Administrative Agent notice in writing of any litigation or arbitration or administrative proceedings or any dispute affecting the Borrower or any other members of the Golar LNG Group any of their respective assets, rights or revenues which if determined against it might materially and adversely affect the ability of the Borrower duly to perform and observe its obligations under any of the Security Documents;
(j) Obligations under Security Documents
duly and punctually perform each of the obligations expressed to be assumed by it under the Security Documents;
(k) Insurance
insure and keep insured all its properties and assets with underwriters or insurance companies of repute to such extent and against such risks as prudent companies engaged in businesses similar to its own are normally insured;
(l) Pension schemes
within 60 days of the Drawdown Date (or such later date as the Administrative Agent (acting on the instructions of the Majority Banks) may agree), deliver to the Administrative Agent a valuation of the pension schemes for the time being operated for the benefit of employees of members of the Golar LNG Group and, if such valuation shows a deficit of USD5,000,000 or more on a discontinuance basis, take such steps as the Banks may reasonably require to remedy or otherwise provide for such deficit; and
(m) Compliance with laws and regulations
comply with the terms and conditions of all laws, regulations, agreements, licences and concessions material to the carrying on of their business.
8.2 Valuation of Ships
(a) Valuation of Ships and Golar Mazo
Each Mortgaged Ship and Golar Mazo shall be valued in Dollars as at each Disposal Repayment Date by two independent firms of shipbrokers one appointed by the Administrative Agent and the other nominated by the Borrower from a list of firms from time to time approved in writing by the Administrative Agent or, failing such nomination (within seven (7) days of a request from the Administrative Agent to nominate a firm) or approval, appointed by the Administrative Agent in its sole discretion (each valuation to be made on the basis of a sale for prompt delivery for cash at arms length on normal commercial terms as between a willing buyer and a willing seller taking into account the benefit of any Approved Charter or any other charterparty or other engagement concerning each vessel and, if the Administrative Agent requires such valuation to be made after physical inspection, with such physical inspection having been carried out).
Unless one of such valuations is for an amount which is 110% or
more of the other, the mean of such valuations shall constitute
the value of the relevant vessel for the purposes of this clause
8.2. If one such valuation is for such amount, the Administrative
Agent shall appoint (at the cost of the Borrower) a third
independent firm of shipbrokers to value such vessel on the same
basis and in the same manner and the mean of all three such
valuations shall constitute the value of the relevant vessel for
the purposes of this clause 8.2.
The value of each vessel as most recently determined in accordance with the provisions of this clause 8.2 shall be binding upon the parties hereto until such time as any further such valuations shall be obtained.
(b) Information
The Borrower undertakes to the Administrative Agent to supply to the Administrative Agent and to any such shipbrokers such information concerning each Ship and its condition as such shipbrokers may reasonably require for the purpose of making any such valuations.
(c) Costs
All costs in connection with the Administrative Agent obtaining any valuation of the Mortgaged Ships referred to in this clause shall be borne by the Borrower.
8.3 Negative undertakings concerning the Borrower and the Golar Gas Group
The Borrower undertakes with each of the Creditors that throughout the Security Period it will not, and will procure that none of the other members of the Golar Gas Group (which shall, for this purpose only, exclude Faraway unless and until it has become a wholly owned Subsidiary of the Borrower) will, without the prior written consent of the Administrative Agent (acting on the instructions of the Majority Banks):
(a) No merger
merge or consolidate with any other person;
(b) Capital expenditure
incur or make any capital expenditure, except for capital expenditure in upgrading a Mortgaged Ship to meet the requirements of a third party charterer or on upgrading or improving any Mortgaged Ship for other operational purposes provided that such expenditure on any Mortgaged Ship does not in any period of 30 consecutive months exceed USD5,000,000;
(c) Equity Distributions
make or pay any Equity Distribution provided however that:
(A) provided no Default has occurred and is continuing, the Borrower may (subject to having first provided the applicable statement and certificate required under clause 8.1(e)(ii)(C)) on any date (the "Relevant Date") pay or make a dividend provided that after paying or making such dividend the aggregate of all dividends paid or made pursuant to this paragraph (A), effected on or before the Relevant Date will not exceed an amount equal to one half of its Cumulative Net Income at the Relevant Date and provided:
1) no Default has occurred and is continuing; and
2) the Free Available Cash at the Relevant Date will, following the payment of the dividend above and any related withdrawal from an Eligible Account under clause 14.1(b)(iv), equal or exceed not less than an amount equal to the sum of USD35,000,000 minus the Cash Reserve as the Relevant Date;
(B) any Subsidiary of the Borrower may make Equity Distributions to the Borrower or a wholly owned Subsidiary of the Borrower;
(C) the Borrower may pay Equity Distributions to the Parent of an amount equal to all dividends and other amounts received by Oxbow and/or Golar Maritime from Faraway and credited to an Earnings Account which remain after making any mandatory prepayment required under clause 4.3 or 4.7 as a result of receipt of such dividend or other amounts by Oxbow and/or Golar Maritime;
(d) Amendments to, and termination of, Approved Management Agreements
agree to, or permit or suffer, any material amendment of, or material variation in the terms of, or cancel or rescind or otherwise terminate any Approved Management Agreement save for a termination of the appointment of any Approved Manager provided that upon such termination a new Approved Manager has been appointed pursuant to an Approved Management Agreement on terms approved in writing by the Administrative Agent (acting on the instructions of the Majority Banks) (such approval and instructions not to be unreasonably withheld);
(e) Series of disposals
sell, convey, transfer, lease or otherwise dispose of all or a substantial part of the assets of the Borrower or of the Golar Gas Group taken as a whole (whether by one transaction or a series of transactions and whether related or not) (and, for the avoidance of doubt, a Mortgaged Ship or the Golar Gas Group's interest in share capital of Faraway shall not be deemed substantial for the purpose of this clause 8.3(e));
(f) Other business
in the case of an Owning Company, undertake any business other than the ownership and operation of its Ship and in the case of the Borrower, undertake any business other than owning to the Owning Companies, Oxbow and Golar Maritime and in the case of Oxbow and Golar Maritime, undertake any business other than the ownership of their respective shares in Faraway;
(g) Acquisitions
in the case of an Owning Company, acquire or own any further assets other than its Ship and its rights arising under the Underlying Documents and other contracts entered into by or on behalf of the relevant Owning Company in the ordinary course of its business of owning and operating such Ship and chartering such Ship and, in the case of the Borrower, acquire or own any further assets other than the shares in the Owning Companies and its rights arising under the Underlying Documents and other contracts entered into by or on behalf of the Borrower in the ordinary course of its business and, in the case of Oxbow and Golar Maritime, acquire or own any further assets other than their respective shares in Faraway and their rights arising under the Faraway Documents and other contracts entered into by or on behalf of Oxbow or Golar Maritime in the ordinary course of their business;
(h) Other obligations
in the case of an Owning Company, incur or permit to exist any obligations except for obligations arising under the Approved Management Agreement for its Ship, any relevant charter, or the Security Documents or contracts entered into in the ordinary course of its business of owning, operating and chartering such Ship and, in the case of the Borrower, Oxbow and Golar Maritime incur or permit to exist any obligations except for obligations arising under the Security Documents and contracts entered into by or on behalf of the Borrower, Oxbow or (as the case may be) Golar Maritime in the ordinary course of their business and, in the case of Oxbow and Golar Maritime only, under the Faraway Documents;
(i) No borrowing or swaps
incur or permit to exist any Borrowed Money or Swap Liabilities of any member of the Golar Gas Group except for:
(i) Borrowed Money pursuant to the Security Documents;
(ii) Borrowed Money owing by the Borrower or a wholly owned Subsidiary of the Borrower to the Borrower or another wholly owned Subsidiary of the Borrower (other than Oxbow or Golar Maritime);
(iii) Eligible Swap Liabilities; and
(iv) Subordinated Debt;
(j) Repayment of borrowings from Restricted Associates
repay the principal of, or pay interest on or any other sum in connection with any of its Borrowed Money owed to any Restricted Associate;
(k) Repayment of borrowings
in the case of an Owning Company, repay the principal of, or pay interest on or any other sum in connection with any of its Borrowed Money except for Borrowed Money owing to the Creditors pursuant to the Security Documents, to the extent permitted by this Agreement, Subordinated Debt owing to the Parent and, provided no Event of Default has occurred and is continuing, Borrowed Money owing to other members of the Golar Gas Group (other than Oxbow, Golar Maritime or Faraway);
(l) Sureties
except pursuant to the Security Documents, permit any of its Indebtedness to any person to be guaranteed by any person (other than the Borrower) and save (in the case of a member of the Golar Gas Group which owns or bareboat charters a vessel) for guarantees or indemnities from time to time required in the ordinary course by any protection and indemnity or war risks association with which its vessel is entered, guarantees required to procure the release of such vessel from any arrest, detention, attachment or levy or guarantees or undertakings required for the salvage of such vessel and guarantees required to obtain certificates of financial responsibility required for the lawful trading and operation of its vessel;
(m) Subsidiaries
form or acquire or permit to exist any Subsidiaries other than the Owning Companies, Golar Maritime, Oxbow, Faraway and any other direct wholly owned Subsidiary of the Borrower incorporated for the purpose of facilitating the management and operation of the Ships and which does not own or charter vessels or other fixed assets;
(n) Encumbrances
permit any Encumbrance to subsist, arise or be created or extended over all or any part of its present or future undertaking, assets, rights or revenues to secure or prefer any present or future Indebtedness or other liability or any other obligation of any person save for Permitted Encumbrances;
(o) Guarantees and counter indemnities
issue, or permit to remain outstanding, any guarantees or indemnities or otherwise become directly or contingently liable for the obligations of, or in favour of, any person or issue, or permit to remain outstanding, any indemnity or other obligation to reimburse or secure to any other person in respect of any such guarantee, indemnity or Encumbrance issued or granted by such person in respect of obligations of any person except:
(i) pursuant to the Security Documents;
(ii) guarantees or indemnities from time to time required in the ordinary course by any protection and indemnity or war risks association with which a vessel which it owns is entered;
(iii) guarantees required to procure the release of such vessel from any arrest, detention, attachment or levy or guarantees or undertakings required for the salvage of such a vessel;
(iv) guarantees by the Borrower (but not guarantees in respect of Borrowed Money or Swap Liabilities if such Borrowed Money or Swap Liabilities are not permitted by the express terms of clause 8.3(i)) of obligations of its wholly owned Subsidiaries (except Oxbow, Golar Maritime and Faraway) arising under agreements entered into by them in the ordinary course of their businesses; or
(p) Loans
make or permit to be outstanding any loans or grant or permit to be outstanding any credit to any person or agree to do so other than:
(i) customary trade credit to third party customers in the ordinary course of business; and
(ii) loans to the Borrower and/or wholly owned Subsidiaries of the Borrower (except Oxbow, Golar Maritime and Faraway); and
(iii) the deposit of funds with an Account Bank by crediting the same to an Earnings Account;
(q) Disposals
sell, transfer, lend or otherwise dispose of any part of its present or future undertaking, assets, rights or revenues to any person (other than the Borrower or a wholly owned Subsidiary of the Borrower) unless the Borrower has previously notified the Administrative Agent in writing and demonstrates to the satisfaction of the Majority Banks that such sale, transfer, loan or other disposal will be on arms length terms and for not less than open market value;
(r) Accounting reference date
change its annual accounting reference date from 31st December;
(s) Chartering-in
charter-in or hire any vessel from any person; or
(t) Sale and leaseback transactions
directly or indirectly, enter into, assume, guarantee or otherwise become liable with respect to any sale and leaseback transaction (being for these purposes an arrangement relating to property now owned or hereafter acquired whereby the Borrower or a Subsidiary of the Borrower transfers such property to a person and leases it back from such person and accounted for as a Capitalised Lease Obligation) save as contemplated by any Tax Lease Option permitted under clause 17.
8.4 Ship covenants
The Borrower hereby covenants with each of the Creditors and undertakes throughout the Security Period that each Owning Company will:
(a) Insurance
(i) Insured risks, amounts and terms
insure and keep its Mortgaged Ship insured free of cost and expense to the Security Agent and in the name of the relevant Owning Company (but in the case of the insurances referred to in sub-paragraph (A) below, no other person, save with the prior written consent of the Security Agent and subject to such person having, if so required by the Security Agent and to the satisfaction of the Security Agent, executed a first priority assignment in favour of the Security Agent of such person's interest in the Insurances of such Ship on similar terms to the assignment by the relevant Owning Company in the relevant General Assignment) or, if so required by the Security Agent, in the joint names of the relevant Owning Company and the Security Agent, the Administrative Agent and/or the Banks (but without liability on the part of the Security Agent, the Administrative Agent and/or the Banks for premiums or calls):
(A) against fire and usual marine risks (including excess risks) and war risks, on an agreed value basis, in such amounts (but not in any event less than the higher of (1) 120% of the Relevant Insured Amount for such Mortgaged Ship and (2) its market value as most recently determined in accordance with clause 8.2 prior to the commencement of the period of the relevant policy) and upon such terms as shall from time to time be approved in writing by the Security Agent;
(B) against protection and indemnity risks (including pollution risks for a minimum amount of USD1,000,000,000 or such higher or lower maximum amount of cover against pollution risks as shall at any time be available by entry of the relevant Ship with, and/or arrangement by, and/or under any cover arranged by, or through either a protection and indemnity association which is a member of either the "International Group" of protection and indemnity associations (or any successor organisation designated by the Security Agent for this purpose) or the International Group (or such successor organisation) itself or, if the International Group or any such successor ceases to exist or ceases to provide or arrange any cover for pollution risks, or any supplemental cover for pollution risks over and above that afforded by the basic entry of the Ship with its protection and
indemnity association, the maximum aggregate amount of cover against pollution risks as shall be available on the open market and by basic entry with a protection and indemnity association provided that, if the Ship in question has ceased trading or is in lay up (and its cargo fully discharged) and in either case has discharged all cargo, the level of pollution risks cover afforded by ordinary protection and indemnity cover available through a member of the International Group or such successor organisation or, as the case may be, on the open market in such circumstances shall be sufficient for such purpose) for ships of the same type, size, age and flag as the relevant Ship) for the full value and tonnage of such Ship (as approved in writing by the Security Agent) and upon such terms as shall from time to time be approved in writing by the Security Agent; and
(C) in respect of any Mortgaged Ship which is not at the relevant time chartered by demise, against loss of hire in such amounts (but in any event not less than the rate of charterhire payable under the relevant charter for such Ship) and upon such terms (but in any event for periods of not less than 240 days per claim less a 14 day deductible) as shall from time to time be approved in writing by the Security Agent;
and pay the Security Agent the cost (as conclusively certified by the Security Agent) of:
1) mortgagees' interest insurance and/or additional perils (pollution) cover which the the Security Agent may from time to time effect in respect of any Mortgaged Ship or all of the Mortgaged Ships upon such terms and in such amount (not exceeding an amount equal to 120 per cent. of the Relevant Insured Amount for such Mortgaged Ship or (as the case may be where all of the Mortgaged Ships are so insured under one policy) 120 per cent. of the Loan prior to the commencement of the period of the relevant policy) as the Security Agent acting on the instructions of the Majority Banks shall deem desirable;
2) any other insurance cover which the Security Agent may from time to time effect in respect of any Mortgaged Ship and/or in respect of the interest of any or all of the Creditors in relation to such Mortgaged Ship or potential third party liability of any or all of the Creditors in relation to such Mortgaged Ship as the Security Agent shall reasonably deem desirable having regard to (x) any limitations in respect of amount or extent of cover which may from time to time be applicable to any of the other insurances referred to in this clause 8.4(a) and are not customarily applicable on the date of this Agreement and/or (y) any change in the practice of leading banks providing loans to finance ships which carry Pollutants as to the insurances which they require to be taken out to protect their security interests in such ships and/or their liability to third parties as a consequence of financing such ships and/or taking a security interest in such ships and/or (z) changes of applicable laws (or the judicial or official interpretation thereof) concerning the priority of Environmental Claims as against ship mortgages and/or the liability of mortgagees and lenders in relation to Environmental Claims;
(ii) Approved brokers, insurers and associations
effect the insurances aforesaid in Dollars or such other currency as the Security Agent may approve and through the Approved Brokers (if any) and with such insurance companies and/or underwriters as shall from time to time be approved in writing by the Security Agent; provided however that the insurances against war risks and protection and indemnity risks may be effected by the entry of any Mortgaged Ship with such war risks and protection and indemnity associations as shall from time to time be approved in writing by the Security Agent;
(iii) Fleet liens, set-off and cancellation
if any of the insurances referred to in 8.4(a)(i) form part of a fleet cover, procure that the Approved Brokers shall (if so required by the Security Agent) undertake to the Security Agent that they shall neither set off against any claims in respect of any Mortgaged Ship any premiums due in respect of other vessels under such fleet cover or any premiums due for other insurances, nor cancel the insurance for reason of non-payment of premiums for other vessels under such fleet cover or of premiums for such other insurances, and shall undertake to issue a separate policy in respect of each Mortgaged Ship if and when so requested by the Security Agent;
(iv) Payment of premiums and calls
punctually pay all premiums, calls, contributions or other sums payable in respect of all such insurances and produce all relevant receipts or other evidence of payment when so required by the Security Agent;
(v) Renewal
at least 14 days (or such shorter period as the Security Agent may from time to time agree) before the relevant policies, contracts or entries expire, notify the Security Agent of the names of the brokers and/or the war risks and protection and indemnity associations proposed to be employed by the relevant Owning Company or any other party for the purposes of the renewal of such insurances and of the amounts in which such insurances are proposed to be renewed and the risks to be covered and, subject to compliance with any requirements of the Security Agent pursuant to this clause 8.4(a), procure that appropriate instructions for the renewal of such insurances on the terms so specified are given to the Approved Brokers and/or to the approved war risks and protection and indemnity associations at least 10 days (or such shorter period as the Security Agent may from time to time agree) before the relevant policies, contracts or entries expire, and that the Approved Brokers and/or the approved war risks and protection and indemnity associations will at least 7 days before such expiry (or within such shorter period as the Security Agent may from time to time agree) confirm in writing to the Security Agent as and when such renewals have been effected in accordance with the instructions so given;
(vi) Guarantees
arrange for the execution and delivery of such guarantees or indemnities as may from time to time be required by any protection and indemnity or war risks association;
(vii) Hull policy documents, notices, loss payable clauses and brokers' undertakings
deposit with the Approved Brokers (or procure the deposit of) all slips, cover notes, policies, certificates of entry or other instruments of insurance from time to time issued in connection with such of the insurances referred to in clause 8.4(a)(i) as are effected through the Approved Brokers and procure that the interest of the Security Agent, the Administrative Agent and the Banks shall be endorsed thereon by incorporation of the relevant Loss Payable Clause and by means of a Notice of Assignment of Insurances (signed by the relevant Owning Company and by any other assured who shall have assigned its interest in the Insurances to the Security Agent) and that the Security Agent shall be furnished with pro forma copies thereof and, unless the insurances are placed, to the satisfaction of the Security Agent, upon the terms of the Norwegian Marine Insurance Plan of 1996 as amended, a letter or letters of undertaking from the Approved Brokers in such form as shall from time to time be required by the Security Agent;
(viii) Associations' loss payable clauses, undertakings and certificates
procure that any protection and indemnity and/or war risks associations in which any Mortgaged Ship is for the time being entered shall endorse the relevant Loss Payable Clause on the relevant certificate of entry or policy and shall furnish the Security Agent with a copy of such certificate of entry or policy and, unless the insurances are placed, to the satisfaction of the Security Agent, upon the terms of the Norwegian Marine Insurance Plan of 1996 as amended, a letter or letters of undertaking in such form as shall from time to time be required by the Security Agent;
(ix) Extent of cover and exclusions
take all necessary action and comply with all requirements which may from time to time be applicable to the Insurances (including, without limitation, the making of all requisite declarations within any prescribed time limits and the payment of any additional premiums or calls) so as to ensure that the Insurances are not made subject to any exclusions or qualifications to which the Security Agent has not given its prior written consent and are otherwise maintained on terms and conditions from time to time approved in writing by the Security Agent;
(x) Independent report
if so requested by the Security Agent where there has, in the reasonable opinion of the Security Agent, been a significant change in circumstances or the insurance arrangements or the status of any insurer or association which may, in the reasonable opinion of the Security Agent, affect the interests of the Banks, but at the cost of the Borrower, furnish the Security Agent from time to time with a detailed report signed by an independent firm of marine insurance brokers appointed by the Security Agent dealing with the insurances maintained on any Mortgaged Ship and stating the opinion of such firm as to the adequacy thereof;
(xi) Collection of claims
do all things necessary and provide all documents, evidence and information to enable the Security Agent to collect or recover any moneys which shall at any time become due in respect of the Insurances;
(xii) Employment of Ships
not employ any Mortgaged Ship or suffer such Ship to be employed otherwise than in conformity with the terms of the Insurances (including any warranties express or implied therein) without first obtaining the consent of the insurers to such employment and complying with such requirements as to extra premium or otherwise as the insurers may prescribe;
(xiii) Application of recoveries
apply all sums receivable under the Insurances which are paid to the relevant Owning Company in accordance with the Loss Payable Clauses in repairing all damage and/or in discharging the liability in respect of which such sums shall have been received;
(xiv) Further insurance assignments
unless the relevant Mortgaged Ship is insured against the risks referred to in clause 8.4(a)(i)(A) upon the terms of the Norwegian Insurance Plan of 1996 as amended, not permit the insurances referred to in such clause to be effected in the name of any person (other than the Security Agent and/or the other Creditors) unless such person has to the satisfaction of the Security Agent executed a first priority assignment of the Security Agent of such person's interest in the Insurances of such Ship on similar terms (mutatis mutandis) to the assignment by the relevant Owning Company in the relevant General Assignment;
(b) Ship's name and registration
(i) not change the name of any Mortgaged Ship without first notifying the Administrative Agent;
(ii) keep each Mortgaged Ship registered under the laws of its Flag State at the relevant Port of Registry;
(iii) not do or suffer to be done anything, or omit to do anything the doing or omission of which could or might result in such registration being forfeited or imperilled or which could or might result in a Mortgaged Ship being required to be registered otherwise than under the laws of its Flag State at the relevant Port of Registry;
(iv) not register any Mortgaged Ship or permit its registration under any other flag or at any other port without the prior written consent of the Administrative Agent;
(v) if the said registration of a Mortgage Ship is for a limited period, renew the registration of such Ship at least 45 days prior to the expiry of such registration and provide evidence of such renewal to the Administrative Agent at least 30 days prior to such expiry;
(c) Repair
keep each Mortgaged Ship and its equipment, outfit and appurtenances tight, staunch, strong, in good condition and in all respects seaworthy and fit for its intended service and in a good and efficient state of repair and procure that all repairs to or replacement of any damaged, worn or lost parts or equipment are effected in such manner (both as regards workmanship and quality of materials) as not to diminish the value of such Ship;
(d) Modification; removal of parts; equipment owned by third parties
not without the prior written consent of the Security Agent or suffer any other person to:
(i) make any modification to any Mortgaged Ship in consequence of which her structure, type or performance characteristics could or might be materially altered or her value materially reduced; or
(ii) remove any material part of any Mortgaged Ship or any equipment the value of which is such that its removal from such Ship would materially reduce the value of such Ship without replacing the same with equivalent parts or equipment which are owned by the relevant Owning Company free from Encumbrances; or
(iii) install on any Mortgaged Ship any equipment owned by a third party which cannot be removed without causing damage to the structure or fabric of such Ship;
(e) Maintenance of class; compliance with regulations
at all times and without cost or expense to any Creditor keep its Mortgaged Ship, or cause her to be kept, in such condition as will entitle her to the highest classification and rating for vessels of the same age and type in the Classification Society or other classification society of like standing approved by the Administrative Agent and to deliver annually to the Administrative Agent a certificate from such class society showing such classification to be maintained and will without cost or expense to the Administrative Agent irrevocably and unconditionally instruct and authorise the classification society of its Mortgaged Ship, and shall request the classification society to give an undertaking to the Security Agent as follows:
(i) to send to the Administrative Agent, following receipt of a written request from the Administrative Agent, certified true copies of all original class records held by the classification society relating to the Mortgaged Ship;
(ii) to allow the Administrative Agent (or its agents), at any time and from time to time, to inspect the original class and related records of the relevant Owning Company and its Mortgaged Ship at the offices of the classification society and to take copies of them;
(iii) following receipt of a written request from the Administrative Agent:
(A) to advise of any facts or matters which may result in or have resulted in a change, suspension, discontinuance, withdrawal or expiry of any Mortgaged Ship's class under the rules or terms and conditions of the relevant Owning Company's or the relevant Mortgaged Ship's membership of the classification society; and
(B) to confirm that the relevant Owning Company is not in default of any of its contractual obligations or liabilities to the classification society and, without limiting the foregoing, that it has paid in full all fees or other charges due and payable to the classification society; and
(C) if the relevant Owning Company is in default of any of its contractual obligations or liabilities to the classification society, to specify to the Administrative Agent in reasonable detail the facts and circumstances of such default, the consequences thereof, and any remedy period agreed or allowed by the classification society; and
(D) to notify the Administrative Agent immediately in writing if the classification society receives notification from any Owning Company or any other person that a Mortgaged Ship's classification society is to be changed.
Notwithstanding the above instructions and undertaking given for the benefit of the Administrative Agent, each Owning Company shall continue to be responsible to the classification society for the performance and discharge of all its obligations and liabilities relating to or arising out of or in connection with the contract it has with the classification society, and nothing herein or therein shall be construed as imposing any obligation or liability of the Administrative Agent to the classification society;
(f) Surveys
submit each Mortgaged Ship to continuous surveys and such periodical or other surveys as may be required for classification purposes and, if so requested by the Administrative Agent or if the survey report relates to or recommends or requires repairs and/or other work the cost of which will or may exceed the Casualty Amount, supply to the Administrative Agent copies of all survey reports issued in respect thereof;
(g) Inspection
ensure that the Administrative Agent, by surveyors or other persons appointed by it for such purpose, may board any Mortgaged Ship at all reasonable times without interfering with the operation of such Ship for the purpose of inspecting her and to afford all proper facilities for such inspections and for this purpose to give to the Administrative Agent reasonable advance notice of any intended drydocking of any Mortgaged Ship (whether for the purpose of classification, survey or otherwise)(provided that any such surveyor or other person shall undertake confidentiality with respect to disclosure of the results of such inspection to any third parties other than the Creditors and their advisers);
(h) Prevention of and release from arrest
promptly in accordance with good ship owning practice pay and discharge all debts, damages, liabilities and outgoings whatsoever which have given or may give rise to maritime, statutory or possessory liens on, or claims enforceable against, each Mortgaged Ship, her Earnings or Insurances or any part thereof and, in the event of a writ or libel being filed against any Mortgaged Ship, her Earnings or Insurances or any part thereof, or of any of the same being arrested, attached or levied upon pursuant to legal process or purported legal process or in the event of detention of any Mortgaged Ship in exercise or purported exercise of any such lien or claim as aforesaid, procure the release of such Ship, her Earnings and Insurances from such arrest, detention attachment or levy or, as the case may be, the discharge of the writ or libel forthwith upon, or in any event within ten (10) Banking Days after, receiving notice thereof by providing bail or procuring the provision of security or otherwise as the circumstances may require;
(i) Employment
not employ any Mortgaged Ship or permit her employment in any manner, trade or business which is forbidden by international law, or which is unlawful or illicit under the law of any relevant jurisdiction, or in carrying illicit or prohibited goods, or in any manner whatsoever which may render her liable to condemnation in a prize court, or to destruction, seizure, confiscation, penalty or sanctions and, in the event of hostilities in any part of the world (whether war be declared or not), not employ any Mortgaged Ship or permit her employment in carrying any contraband goods, or enter or trade to or to continue to trade in any zone which has been declared a war zone by any Government Entity or by the relevant Ship's war risks insurers unless the prior written consent of the Administrative Agent is obtained and such special insurance cover as the Administrative Agent may require shall have been effected by the relevant Owning Company at its expense;
(j) Information
promptly furnish the Administrative Agent with all such information as it may from time to time reasonably require regarding each Mortgaged Ship, her Insurances, her employment, position and engagements, particulars of all towages and salvages, and copies of all charters and other contracts for her employment entered into by the relevant Owning Company, or otherwise howsoever concerning her;
(k) Notification of certain events
notify the Administrative Agent forthwith by telefax or other means of telecommunication in permanent written form thereafter confirmed by letter of:
(i) any damage to any Mortgaged Ship requiring repairs the cost of which will or might exceed its Casualty Amount;
(ii) any occurrence in consequence of which any Mortgaged Ship has or may become a Total Loss;
(iii) any requisition of any Mortgaged Ship for hire;
(iv) any requirement or recommendation made in relation to any Mortgaged Ship by any insurer or its Classification Society or by any competent authority which is not complied with in accordance with its terms;
(v) any arrest or detention of any Mortgaged Ship or any exercise or purported exercise of a lien or other claim on such Ship or her Earnings or Insurances or any part thereof;
(vi) the occurrence of any material Environmental Claim against the relevant Owning Company, any Mortgaged Ship or any other member of the Golar LNG Group or any other ship from time to time owned, technically managed or crewed by, or bareboat chartered to, any member of the Golar LNG Group or any incident, event or circumstances which may give rise to any such Environmental Claim or an Event of Default specified in clause 10.1(y);
(l) Payment of outgoings and evidence of payments
promptly pay all tolls, dues and other outgoings whatsoever in respect of each Mortgaged Ship and her Earnings and Insurances and keep proper books of account in respect of each Mortgaged Ship and her Earnings and, as and when the Administrative Agent may so require, make such books available for inspection on behalf of the Administrative Agent, and furnish satisfactory evidence that the wages and allotments and the insurance and pension contributions of the Master and crew are being promptly and regularly paid and that all deductions from crew's wages in respect of any applicable tax liability are being properly accounted for and that the Master has no claim for disbursements other than those incurred by him in the ordinary course of trading on the voyage then in progress;
(m) Encumbrances
not without the prior written consent of the Administrative Agent acting on the instructions of all of the Banks (and then only subject to such conditions as the Administrative Agent may impose in accordance with such instructions) create or purport or agree to create or permit to arise or subsist any Encumbrance (other than Permitted Encumbrances) over or in respect of any Mortgaged Ship, any share or interest therein or in any other part of the Mortgaged Property (as defined in the General Assignment in respect of such Ship);
(n) Sale or other disposal
not without the prior written consent of the Administrative Agent acting on the instructions of the Majority Banks (and then only subject to such conditions as the Administrative Agent may impose in accordance with such instructions) sell, agree to sell, transfer, abandon or otherwise dispose of any Mortgaged Ship or any share or interest therein if the Net Sale Proceeds of such Ship will or may be insufficient to enable the Borrower to comply with its obligations under clause 4.3 of this Agreement arising upon the sale of such Ship (including (without limitation) prepayment in full of the Loan if required by clause 4.3) and the Borrower has not first demonstrated to the reasonable satisfaction of the Administrative Agent that the Borrower will have other funds available to it provided by way of Equity Finance to enable it to comply with such obligations upon completion of the sale of such Ship;
(o) Chartering
except pursuant to an Approved Charter referred to in Part 2 of schedule 2 not without the prior written consent of the Administrative Agent acting on the instructions of the Lead Arrangers (which the Administrative Agent shall have full liberty to withhold in accordance with such instructions) and, if such consent is given, only subject to such conditions as the Administrative Agent may impose:
(i) let any Mortgaged Ship on demise charter for any period;
(ii) let any Mortgaged Ship by any time or consecutive voyage charter for a term which exceeds or which by virtue of any optional extensions therein contained may exceed twelve months' duration;
(iii) de-activate or lay up the relevant Ship;
(iv) let any Mortgaged Ship other than on arms' length terms;
provided always that:
(A) such consent shall not be withheld if the proposed charterer or charter guarantor has a long term credit rating of at least BBB+ from Standard & Poor's Ratings Services and Baa1 from Moodys Investors Services Inc. or any other rating agency approved in writing by the Administrative Agent for such purpose; and
(B) in respect of the matters referred to in sub-paragraph (ii) of this sub-clause the Administrative Agent's consent shall be deemed to have been given thereto if the Borrower shall not have been informed by the Administrative Agent either in writing or by word of mouth that such consent is refused within five (5) Banking Days (in London) of the time at which the relevant Owning Company's application for such consent was received by the Administrative Agent;
(p) Sharing of Earnings
not without the prior written consent of the Administrative Agent acting on the instructions of the Majority Banks (and then only subject to such conditions as the Administrative Agent may impose in accordance with such instructions) to enter into any agreement or arrangement whereby the Earnings of any Mortgaged Ship may be shared with any other person;
(q) Payment of Earnings
to procure that the Earnings of any Mortgaged Ship are paid to the Security Agent at all times if and when the same shall be or shall have become so payable in accordance with the Security Documents and that any Earnings of any Mortgaged Ship which are so payable and which are in the hands of a relevant Owning Company's brokers or agents are duly accounted for and paid over to the Security Agent forthwith on demand;
(r) Repairers' liens
not without the prior written consent of the Administrative Agent put any Mortgaged Ship into the possession of any person for the purpose of work being done upon her unless either:
(i) such person shall first have given to the Administrative Agent in terms satisfactory to it, a written undertaking not to exercise any lien on the relevant Ship or her Earnings for the cost of such work or otherwise; or
(ii) any such lien of such person would be a Permitted Lien;
(s) Manager
not appoint a manager of any Mortgaged Ship other than an Approved Manager;
(t) Notice of Mortgage
place and at all times and places retain a properly certified copy of each Mortgage (which shall form part of the relevant Ship's documents) on board each Mortgaged Ship with her papers and cause such certified copy of such Mortgage to be exhibited to any and all persons having business with such Ship which might create or imply any commitment or encumbrance whatsoever on or in respect of such Ship (other than a lien for crew's wages and salvage) and to any representative of the Security Agent and place and keep prominently displayed in the navigation room and in the Master's cabin of each Mortgaged Ship a framed printed notice in plain type reading as follows:
"NOTICE OF MORTGAGE"
This Ship is subject to a first priority mortgage in favour of [here insert name of Security Agent] of [here insert address of Security Agent]. Under the said mortgage, neither the Borrower nor any charterer nor the Master of this Ship has any right, power or authority to create, incur or permit to be imposed upon this Ship any commitments or encumbrances whatsoever other than for crew's wages and salvage"
and in terms of the said notice it is hereby agreed that save and subject as otherwise herein provided, neither the relevant Owning Company nor any charterer nor the Master of any Mortgaged Ship nor any other person has any right, power or authority to create, incur or permit to be imposed upon any Mortgaged Ship any lien whatsoever other than for crew's wages and salvage;
(u) Conveyance on default
where a Mortgaged Ship is (or is to be) sold in exercise of any power contained in the relevant Mortgage or otherwise conferred on the Security Agent, execute, forthwith upon request by the Security Agent, such form of conveyance of such Ship as the Security Agent may require;
(v) Anti-drug abuse
without prejudice to clause 8.4(i), take all necessary and proper precautions to prevent any infringements of the Anti-Drug Abuse Act of 1986 of the United States of America or any similar legislation applicable to any Mortgaged Ship in any jurisdiction in or to which any Mortgaged Ship shall be employed or located or trade or which may otherwise be applicable to any Mortgaged Ship and/or the relevant Owning Company;
(w) Compliance with Environmental Laws
to comply in all material respects with all Environmental Laws applicable to it and/or its Mortgaged Ship including, without limitation, requirements relating to manning and establishment of financial responsibility and to obtain and comply with all Environmental Approvals applicable to its and/or its Mortgaged Ship; and
(x) Compliance with ISM Code
comply at all material times in all material respects with the ISM Code.
8.5 Financial undertakings
The Borrower undertakes with each of the Creditors throughout the Security Period that it will ensure that:
(a) Free Available Cash
at all times the Free Available Cash shall not be less than the Minimum Free Available Cash at the relevant time;
(b) Working Capital
as at the end of each quarterly period during and at the end of each financial year of the Borrower, the ratio of Current Assets to Current Liabilities (excluding the current portion of long-term debt) shall not be less than one point five (1.5) to (1); and
(c) Leverage
as at 30 June 2002 and as at the end of each subsequent quarterly period during and at the end of each financial year the Borrower, the ratio of Net Debt as at the end of such period to Annualised EBITDA calculated by reference to such quarter shall not exceed:
(i) six point five (6.5) to one (1) for quarterly periods ending during or at the end of 2002 and 2003;
(ii) six (6) to one (1) for quarterly periods ending during and at the end of 2004; and (iii) five (5) to one (1) for all subsequent quarterly periods.
8.6 Undertakings concerning Faraway and Golar Mazo
The Borrower hereby undertakes with each of the Creditors that it will throughout the Security Period until such time as either Golar Mazo has been sold or become a Total Loss or Oxbow and Golar Maritime have sold their shares in Faraway as contemplated in clause 5.3 and in any such case, the relevant Disposal Repayment Date has occurred and the Borrower has complied with its obligations under clause 5.3 arising upon such sale or Total Loss of Golar Mazo or sale of shares in Faraway:
(a) Faraway activities
use its best efforts to cause Faraway to ensure the following, which best efforts shall include, without limitation, giving instructions to directors of Faraway elected or appointed by Oxbow or Golar Maritime and otherwise voting its Faraway shares in order to ensure that:
(i) Debt
Faraway does not create, incur, assume or suffer to exist or directly or indirectly guarantee or in any other manner become directly or indirectly liable for the payment of any Borrowed Money secured by an Encumbrance over Golar Mazo other than Borrowed Money under the Faraway Loan Agreement and any refinancing as contemplated by clause 8.6(d);
(ii) Encumbrances
Faraway does not create, incur, assume or suffer to exist any Encumbrance of any kind upon the Golar Mazo, her Earnings, Insurances or Requisition Compensation or the Pertamina Charter (other than Permitted Encumbrances);
(iii) Insurance
Golar Mazo is appropriately insured, in accordance with good industry practice:
(A) against fire and usual marine risks (including excess risks) and war risks, on an agreed value basis, for an amount not less than its market value as determined in accordance with clause 8.2 as at the first day of the period of the relevant policy; and
(B) against protection and indemnity risks (including pollution risks for a minimum amount of USD1,000,000,000 or such higher or lower maximum amount of cover against pollution risks as shall at any time be available by entry of Golar Mazo with, and/or arrangement by, and/or under any cover arranged by, or through, either a protection and indemnity association which is a member of either the "International Group" of protection and indemnity associations or any successor organisation designated by the Administrative Agent for this purpose or the International Group or such successor organisation itself or, if the International Group or any such successor ceases to exist or ceases to provide cover for pollution risks, the maximum amount of cover against pollution risks as shall be available on the open market provided that, if Golar Mazo has ceased trading or is in lay up and in either case has discharged all cargo, the level of pollution risks cover afforded by the ordinary protection and indemnity cover available through a member of the International Group or such successor organisation or, as the case may be, on the open market in such circumstances shall be sufficient for such purpose) for its full value and tonnage
and that Faraway will punctually pay all premiums, calls, contributions or other sums payable in respect of such insurance and comply in all respects with all requirements which may from time to time be applicable to such insurances;
(iv) Repair/operational
the terms of clauses 8.4(a)(xii), (c), (d), (e), (f), (h),
(i), (j), (k) and (l) complied with in relation to Golar
Mazo as if references to a Mortgaged Ship were references
to Golar Mazo;
(v) Sale of Golar Mazo
Faraway does not sell, agree to sell, transfer, abandon or otherwise dispose of Golar Mazo unless the Borrower complies with its obligations under clause 5.3 arising upon a sale of Golar Mazo;
(vi) No merger
Faraway does not merge or consolidate with any other person save with the prior written consent of the Banks (not to be unreasonably withheld if such merger or consolidation will have no material adverse affect on the overall value of the security constituted by the Security Documents at such time);
(vii) Control of operations
ensure that one or more of the Parent's wholly owned Subsidiaries at all times control, by virtue of a management agreement or otherwise, the day to day operation of Golar Mazo including (without limitation) maintenance, drydocking, crewing and insurance;
(viii) Faraway Documents
not, without the prior written consent of the Administrative Agent (such consent not to be unreasonably withheld):
(A) Variations
agree, or permit Faraway to agree, any material variation of any of the Faraway Documents;
(B) Releases and waivers
release any other party, or permit Faraway to release any other party, from any of its material obligations under any of the Faraway Documents or waive any breach of its material obligations thereunder or consent to any such act or omission of such party as would otherwise constitute such breach; or
(C) Termination
determine or permit Faraway to determine any of the Faraway Documents;
(b) Sale of Faraway
ensure that Oxbow and Golar Maritime shall not, without the prior written consent of the Banks, sell or otherwise dispose of any of their shares or stock in Faraway unless the Borrower complies with its obligations under clause 4.3 arising upon a sale of Oxbow and Golar Maritime's shares in Faraway or any of their rights, title and interest in or under any of the Faraway Documents;
(c) Payments by Faraway
ensure that all dividends and other amounts payable by Faraway to Oxbow and Golar Maritime are paid to an Earnings Account unless and until the Security Administrative Agent otherwise directs pursuant to the Faraway Pledge;
(d) Refinancing of Golar Mazo
not refinance the existing Indebtedness under the Faraway Loan Agreement in respect of Golar Mazo without the prior written consent of the Banks (not to be unreasonably withheld) provided always that it shall be reasonable for the Bank to refuse their consent if such refinancing will have a material adverse affect on the overall value of the security constituted by the Security Documents at such time; and
(e) Additional security
upon the request of the Administrative Agent (acting on the instructions of the Majority Banks) procure that Oxbow and Golar Maritime grant in favour of the Security Agent such additional second priority security over their shares in Faraway and use its best endeavours to obtain any necessary consent to such security under the Faraway Loan Agreement.
8.7 Undertakings concerning Approved Charters and Charter Guarantees
The Borrower hereby undertakes with each of the Creditors that it will, and will procure that the Owning Companies will, throughout the Security Period:
(a) Negative undertakings
not, without the previous written consent of the Administrative Agent (such consent not to be unreasonably withheld):
(i) Variations
agree to any material variation of any Approved Charter or any Charter Guarantee; or
(ii) Releases and waivers
release any Approved Charterer or Charter Guarantor from any of its material obligations under an Approved Charter or Charter Guarantee or waive any breach of its material obligations thereunder or consent to any such act or omission of an Approved Charterer or Charter Guarantor as would otherwise constitute such breach; or
(iii) Termination
determine an Approved Charter for any reason whatsoever;
(b) Performance of charter obligations
perform its obligations under each Approved Charter and use all reasonable endeavours to procure that the Approved Charterer and any Charter Guarantor shall perform their respective obligations under the Approved Charter and any Charter Guarantee;
(c) Information
supply to the Administrative Agent all informations, accounts and records that may be necessary or of assistance to enable the Administrative Agent to verify the amount of all payments of charterhire and any other amount payable under any Approved Charter and/or the Charter Guarantee; and
(d) Assignability of charters
enter into an Approved Charter in respect of any Mortgaged Ship the nature or terms of which do not permit the rights of the relevant Owning Company to receive moneys under such charter to be assigned to the Security Administrative Agent pursuant to the relevant General Assignment.
9 Conditions
9.1 Documents and evidence
The obligation of each Bank to make its Commitment available shall be subject to the condition that the Administrative Agent, or its duly authorised representative, shall have received:
(a) at the date of this Agreement or by such later date (no later than four Banking Days before the first Drawdown Date) as the Administrative Agent may agree the documents and evidence specified in schedule 4 part 1; and
(b) on or prior to the Drawdown Date the documents and evidence specified in schedule 4 part 2,
in form and substance satisfactory to the Administrative Agent.
9.2 General conditions precedent
The obligation of each Bank to make its Commitment available shall be subject to the further conditions that, at the time of the giving of the Drawdown Notice and on the Drawdown Date:
(a) the representations and warranties contained in clauses 7.1, 7.2 and 7.3 are true and correct on and as of each such time as if each was made with respect to the facts and circumstances existing at such time; and
(b) no Default shall have occurred and be continuing or would result from the making of the Loan.
9.3 Waiver of conditions precedent
The conditions specified in this clause 9 are inserted solely for the
benefit of the Banks and may be waived on their behalf in whole or in
part and with or without conditions by the Administrative Agent acting on
the instruction of the Majority Banks (save that waiver of the conditions
requiring the documents and evidence specified in paragraphs (a), (b),
(e) and (i) of schedule 4 part 1 and (a), (b) and (h) of part 2 of
schedule 4 shall require the instructions of all of the Banks).
9.4 Notification to Banks
The Administrative Agent shall notify the Banks promptly after receipt by it of the documents and evidence referred to in clause 9.1 in form and substance satisfactory to it.
10 Events of Default
10.1 Events
There shall be an Event of Default if:
(a) Non-payment: any Security Party fails to pay any sum due by it under any of the Security Documents at the time, in the currency and in the manner stipulated in the Security Documents (and so that, for this purpose, sums payable on demand shall be treated as having been paid at the stipulated time if paid within three Banking Days of demand) and such failure continues for more than three Banking Days after written notice of non-payment by the Administrative Agent; or
(b) Breach of Insurance and certain other obligations: any relevant Owning Company fails to obtain and/or maintain the Insurances in accordance with the requirements of the Security Documents for any of the Mortgaged Ships or if any insurer in respect of such Insurances cancels the Insurances or disclaims liability by reason, in either case, of mis-statement in any proposal for the Insurances or for any other failure or default on the part of any relevant Owning Company or any other person or the Borrower commits any breach of or omits to observe any of the obligations or undertakings expressed to be assumed by it under clauses 8.3 or 8.5 to 8.7 (inclusive); or
(c) Breach of other obligations: any Security Party commits any breach
of or omits to observe any of its obligations or undertakings
expressed to be assumed by it under any of the Security Documents
(other than those referred to in clauses 10.1(a) and 10.1(b))
which are considered by the Majority Banks to be material and, in
respect of any such breach or omission which in the opinion of the
Majority Banks is capable of remedy, such action as the Majority
Banks may require shall not have been taken within thirty (30)
days of the Administrative Agent notifying the relevant Security
Party of such default and of such required action; or
(d) Misrepresentation: any representation or warranty made or deemed to be made or repeated by or in respect of any Security Party in or pursuant to any of the Security Documents or in any notice, certificate or statement referred to in or delivered under any of the Security Documents is or proves to have been incorrect or misleading in any material respect when made or deemed to be made or repeated; or
(e) Cross-default: at any time the aggregate amount at such time of:
(i) any Borrowed Money or Swap Liabilities of any Security Party or any other member of the Golar LNG Group which is not paid when due and remains unpaid;
(ii) any Borrowed Money of any Security Party or any other member of the Golar LNG Group which has become (whether by declaration or automatically in accordance with the relevant agreement or instrument constituting the same), or is capable of being declared due and payable prior to the date when it would otherwise have become due (unless as a result of the exercise by the relevant person of a voluntary right of prepayment or upon mandatory prepayment as a result of a change of law or other circumstances not constituting an event of default under, or breach of, any agreement regulating and/or securing the relevant Borrowed Money);
(iii) any facility or commitment available to any Security Party or any other member of the Golar LNG Group relating to Borrowed Money which has been withdrawn, suspended or cancelled by reason of any default (however described) of the person concerned;
(iv) the amount of Swap Liabilities of any Security Party or any other member of the Golar LNG Group which are due or capable of being declared due upon early termination of the relevant transaction by the relevant counterparty; and
(v) any amounts demanded of, but not paid when due and remaining unpaid by any Security Party or any other member of the Golar LNG Group under any guarantee in respect of Borrowed Money or Swap Liabilities
exceeds USD5,000,000; or
(f) Legal process: any judgment or order made against the Borrower is not stayed or complied with within 30 days or a creditor attaches or takes possession of, or a distress, execution, sequestration or other process is levied or enforced upon or sued out against, all or a substantial part of the undertakings, assets, rights or revenues of the Borrower and is not discharged within 30 days; or
(g) Insolvency: the Borrower becomes insolvent or stops or suspends making payments (whether of principal or interest) with respect to all or any class of its debts or announces an intention to do so; or
(h) Reduction or loss of capital: a meeting is convened by the Borrower for the purpose of passing any resolution to purchase, reduce or redeem any of its share capital (save and to the extent that such purchase reduction or redemption of share capital is permitted by clause 8.3(c)); or
(i) Winding up: any petition is presented by the Borrower, the shareholders of the Borrower or its directors or other step is taken by the Borrower, the shareholders of the Borrower or its directors for the purpose of winding up the Borrower or an order is made or resolution passed for the winding up of the Borrower or a notice is issued convening a meeting for the purpose of passing any such resolution; or
(j) Administration: any petition is presented or other step is taken by the Borrower or its directors for the purpose of the appointment of an administrator of the Borrower or an administration order is made in relation to the Borrower; or
(k) Appointment of receivers and managers: any administrative or other receiver is appointed of the Borrower or all or any substantial part of its assets and/or undertaking or any other steps are taken to enforce any Encumbrance over all or any substantial part of the assets of the Borrower; or
(l) Compositions: the Borrower enters into any kind of composition, compromise or arrangement with its creditors generally (or any class of them); or
(m) Analogous proceedings: there occurs, in relation to the Borrower, in any Relevant Jurisdiction or to the jurisdiction of whose courts any part of their assets is subject, any event which, in the reasonable opinion of the Administrative Agent, appears in that country or territory to correspond with, or have an effect equivalent or similar to, any of those mentioned in clauses 10.1(g) to (l) (inclusive) or the Borrower otherwise becomes subject, in any such country or territory, to the operation of any law relating to insolvency, bankruptcy or liquidation; or
(n) Cessation of business: the Borrower suspends or ceases to carry on its business; or
(o) Seizure: all or a material part of the undertaking, assets, rights or revenues of, or shares or other ownership interests in, the Borrower are seized, nationalised, expropriated or compulsorily acquired by or under the authority of any government; or
(p) Other parties: any of the events or circumstances described in clauses 10.1(f) to (o) (inclusive) arises or occurs (mutatis mutandis) in relation to any of:
(i) any other Security Party; or
(ii) any other member of the Golar LNG Group; or
(iii) Faraway; or
(q) Invalidity: any of the Security Documents shall at any time and for any reason become invalid or unenforceable or otherwise cease to remain in full force and effect in any respect which the Majority Banks consider to be material or if the validity or enforceability of any of the Security Documents shall at any time and for any reason be contested by any Security Party which is a party thereto, or if any such Security Party shall deny that it has any, or any further, liability thereunder; or
(r) Unlawfulness: it becomes impossible or unlawful at any time for any Security Party, to fulfil any of the covenants and obligations expressed to be assumed by it in any of the Security Documents or for the Security Agent to exercise the rights or any of them vested in it or them under any of the Security Documents or otherwise; or
(s) Repudiation: any Security Party repudiates any of the Security Documents or does or causes or permits to be done any act or thing evidencing an intention to repudiate any of the Security Documents; or
(t) Encumbrances enforced: any Encumbrance (other than Permitted Liens) in respect of any of the property (or part thereof) which is the subject of any of the Security Documents is enforced; or
(u) Material adverse change: there occurs a material adverse change in the financial condition of the Borrower or any member of the Golar LNG Group or of the Golar LNG Group taken as a whole the effect of which is, in the opinion of the Administrative Agent, materially to imperil, delay or prevent the due fulfilment by such person of any of their respective obligations contained in the Security Documents; or
(v) Arrest: any Mortgaged Ship or Golar Mazo is arrested, confiscated, seized, taken in execution, impounded, forfeited, detained in exercise or purported exercise of any possessory lien or other claim and the relevant Owning Company or (as the case maybe) Faraway shall fail to procure the release of such Ship or Golar Mazo within a period of ten (10) Banking Days thereafter (or such longer period as the Administrative Agent may agree in writing); or
(w) Registration: the registration of any Mortgaged Ship under the laws and flag of the relevant Flag State is cancelled or terminated or, where applicable, not renewed without the prior written consent of the Administrative Agent; or
(x) Unrest: the Flag State of any Mortgaged Ship or any Relevant Jurisdiction becomes involved in hostilities or civil war or there is a seizure of power in the Flag State or any Relevant Jurisdiction by unconstitutional means if, in any such case, such event could in the opinion of the Administrative Agent may be expected to have a material adverse effect on the security created by any of the Security Documents and, within 14 days of notice from the Administrative Agent to do so, the relevant Owning Company has not taken all such action as the Administrative Agent may require to ensure that such circumstances will not have such an effect; or
(y) Environment: the Borrower or any other member of the Golar LNG Group fails or has failed to comply with any applicable Environmental Law or any applicable Environmental Approval or any Mortgaged Ship or Golar Mazo or any other vessel is or has been involved in any incident which gives rise, has given rise or may give rise, to an Environmental Claim against any member of the Golar LNG Group or any vessel owned by, or bareboat chartered to, any member of the Golar LNG Group if, in any such case, such non-compliance or incident or the consequences thereof could, in the opinion of the Administrative Agent and having regard to any insurance cover available to meet any liabilities arising in relation to such incident, have a material adverse effect on (i) the business, assets, operations, property or financial condition of the Borrower or any Owning Company or Faraway or the Golar LNG Group as a whole or (ii) the security created by any of the Security Documents or (iii) the ability of the Security Agent to enforce the Security Documents in accordance with their terms; or
(z) P&I: the Borrower, the Owning Company of any Mortgaged Ship or Faraway or any other person fails or omits to comply with any requirements of the protection and indemnity association or other insurer with which such Mortgaged Ship or Golar Mazo is entered for insurance or insured against protection and indemnity risks (including oil pollution risks) to the effect that any such cover (including without limitation) cover (including, without limitation, cover in such of liability for Environmental Claims arising in jurisdictions where such Mortgaged Ship or (as the case maybe) Golar Mazo operates or trades) is, or may be liable to cancellation, qualification or exclusion at any time; or
(aa) Termination of Approved Charter: any Approved Charter of any Mortgaged Ship or Golar Mazo is cancelled or terminated by the relevant Approved Charterer by reason of the Owning Company's or Faraway's breach; or
(bb) Termination of Approved Management Agreements: any Approved Management Agreement is cancelled or rescinded or otherwise terminated in relation to a Mortgaged Ship or Golar Mazo for any reason whatsoever without the prior written consent of the Administrative Agent (acting on the instructions of the Majority Banks); or
(cc) Change of control:
save with the prior written consent of the Banks (which the Banks shall have full liberty to withhold):
(i) the Borrower is not, or ceases to be a wholly owned Subsidiary of the Parent; or
(ii) the Owning Companies, Oxbow or Golar Maritime are not or cease to be wholly owned Subsidiaries of the Borrower (save where, in the case of an Owning Company, such Owning Company is sold as contemplated by clause 4.3 and the Borrower has complied with its obligations under clause 4.3 arising on such sale); or
(iii) Oxbow and Golar Maritime cease to hold at least 60% of the issued share capital in Faraway (save where the shares are sold as contemplated by clause 4.3, where the Borrower has complied with its obligations under clause 4.3 arising on such sale); or
(dd) Stock exchange listing of Parent: save with the prior consent of Majority Banks, the issued ordinary share capital of the Parent is not listed on the Oslo Stock Exchange or the New York Stock Exchange within ninety (90) days of the Drawdown Date or ceases to be so listed or;
(ee) Sale of shares in Parent: Osprey or any directly or indirectly wholly owned Subsidiary of Greenwich Holdings Limited ("Greenwich") shall, save with the prior written consent of the Majority Banks, at any time prior to the stock exchange listing of the Parent on the Oslo or New York Stock Exchange cease to be legal and beneficial owner, directly or indirectly, of at least 50% of the ordinary share capital of the Parent; or
(ff) Ownership interest in Parent: except with the prior written consent of all of the Banks, following the stock exchange listing of the Parent on the Oslo or New York Stock Exchange, Osprey or any directly or indirectly wholly owned Subsidiary of Greenwich or Greenwich itself ceases to be the legal and beneficial owner, directly or indirectly, of at least 25% of the ordinary share capital of the Parent; or
(gg) Greenwich guarantee: Greenwich commits any breach of or omits to observe any of its obligations under the guarantee of even date herewith executed by Greenwich in favour of the Security Agent or such guarantee shall at any time and for any reason become invalid or unenforceable or otherwise cease to remain in full force and effect otherwise than in accordance with its terms.
10.2 Acceleration
The Administrative Agent, if so requested by the Majority Banks, shall without prejudice to any other rights of the Banks, at any time after the happening of an Event of Default which is then continuing by notice to the Borrower declare that:
(a) the obligation of each Bank to make its Commitment available shall be terminated, whereupon the Total Commitments shall be reduced to zero forthwith; and/or
(b) the Loan and all interest and commitment commission accrued and all other sums payable under the Security Documents have become due and payable, whereupon the same shall, immediately or in accordance with the terms of such notice, become due and payable.
10.3 Demand basis
If, pursuant to clause 10.2(b) the Administrative Agent declares the Loan to be due and payable on demand, the Administrative Agent may (and, if so instructed by the Majority Banks, shall) by written notice to the Borrower (a) call for repayment of the Loan on such date as may be specified whereupon the Loan shall become due and payable on the date so specified together with all interest and any commitment commission accrued and all other sums payable under this Agreement or (b) withdraw such declaration with effect from the date specified in such notice.
11 Indemnities
11.1 Miscellaneous indemnities
The Borrower shall on demand indemnify each Creditor, without prejudice to any of their other rights under any of the Security Documents, against any loss or expense which such Creditor shall certify as sustained or incurred by it as a consequence of:
(a) any default in payment by the Borrower of any sum under any of the Security Documents when due;
(b) the occurrence of any Event of Default;
(c) receiving or recovering all or any part of a sum unpaid otherwise than on the due date for the payment of interest in respect thereof;
(d) any prepayment of the Loan or part thereof being made under clauses 4.2, 4.3, 4.6 or 12.1, or any other repayment or prepayment of the Loan or part thereof being made otherwise than on a Rollover Date being repair or prepaid; or
(e) the Loan or any part thereof not being made for any reason (excluding any default by the relevant Creditor) on the date specified in the Drawdown Notice once given
including, in any such case, but not limited to, any loss or expense sustained or incurred by any Creditor in maintaining or funding its Contribution or any part thereof or in liquidating or re-employing deposits from third parties acquired or contracted for to fund, effect or maintain its Contribution or any part thereof (collectively "Breakage Costs").
11.2 Currency indemnity
If any sum due from the Borrower under any of the Security Documents or
any order or judgment given or made in relation thereto has to be
converted from the currency (the "first currency") in which the same is
payable under the relevant Security Document or under such order or
judgment into another currency (the "second currency") for the purpose of
(a) making or filing a claim or proof against the Borrower, (b) obtaining
an order or judgment in any court or other tribunal or (c) enforcing any
order or judgment given or made in relation to any of the Security
Documents, the Borrower shall indemnify and hold harmless each Creditor
from and against any loss suffered as a result of any difference between
(i) the rate of exchange used for such purpose to convert the sum in
question from the first currency into the second currency and (ii) the
rate or rates of exchange at which the relevant Creditor may in the
ordinary course of business purchase the first currency with the second
currency upon receipt of a sum paid to it in satisfaction, in whole or in
part, of any such order, judgment, claim or proof. Any amount due from
the Borrower under this clause 11.2 shall be due as a separate debt and
shall not be affected by judgment being obtained for any other sums due
under or in respect of any of the Security Documents and the term "rate
of exchange" includes any premium and costs of exchange payable in
connection with the purchase of the first currency with the second
currency.
11.3 Environmental indemnity
The Borrower shall indemnify each Creditor on demand and hold each Creditor harmless from and against all costs, expenses, payments, charges, losses, demands, liabilities, actions, proceedings (whether civil or criminal), penalties, fines, damages, judgements, orders, sanctions or other outgoings of whatever nature ("Losses") which may be suffered, incurred or paid by, or made or asserted against the relevant Creditor at any time, whether before or after the repayment in full of principal and interest under this Agreement, relating to, or arising directly or indirectly in any manner or for any cause or reason whatsoever out of an Environmental Claim made or asserted against the such Creditor if such Environmental Claim would not have been, or been capable of being, made or asserted against the relevant Creditor if it had not entered into any of the Security Documents and/or exercised any of its rights, powers and discretions thereby conferred and/or performed any of its obligations thereunder and/or been involved in any of the transactions contemplated by the Security Documents.
12 Unlawfulness and increased costs
12.1 Unlawfulness
It is or becomes contrary to any law or resolution for any Bank to maintain its Commitment or to fund its Contribution or contribute to the Loan, such Bank shall promptly inform the Administrative Agent and the Administrative Agent shall notify the Borrower whereupon:
(a) such Bank's Commitment shall be reduced to zero;
(b) the undrawn portion of the Total Commitments shall be reduced by the same proportion which (immediately prior to its reduction to zero) the Commitments of the relevant Bank bore to the aggregate of the Total Commitments (including such Bank's Commitment); and
(c) the Borrower shall be obliged to prepay the Contributions of such Bank either (i) forthwith or (ii) on a future specified date not being earlier than the latest date permitted by the relevant law or regulation.
Any prepayment pursuant to this clause 12.1 shall be made together with all amounts referred to in clause 4.4.
12.2 Increased costs
If the result of any change in, or in the interpretation or application of, or the introduction of, any law or any regulation, request or requirement (whether or not having the force of law, but, if not having the force of law, with which any Bank or, as the case may be, its holding company habitually complies), including (without limitation) those relating to Taxation, capital adequacy, liquidity, reserve assets, cash ratio deposits and special deposits, is to:
(a) subject any Bank to Taxes or change the basis of Taxation of any Bank with respect to any payment under any of the Security Documents (other than Taxes or Taxation on the overall net income, profits or gains of such Bank imposed in the jurisdiction in which its principal or lending office under this Agreement is located); and/or
(b) increase the cost to, or impose an additional cost on, any Bank or its holding company in making or keeping its Commitment available or funding its Contribution or otherwise in maintaining its obligations under this Agreement; and/or
(c) reduce the amount payable or the effective return to any Bank under any of the Security Documents; and/or
(d) reduce any Bank's or its holding company's rate of return on its overall capital by reason of a change in the manner in which it is required to allocate capital resources to its obligations under any of the Security Documents; and/or
(e) require any Bank or its holding company to make a payment or forgo a return on or calculated by reference to any amount received or receivable by it under any of the Security Documents; and/or
(f) require any Bank or its holding company to incur or sustain a loss (including a loss of future potential profits) by reason of being obliged to deduct all or part of the Bank's Commitment or Contribution from its capital for regulatory purposes,
then and in each such case (subject to clause 12.3):
(i) such Bank shall notify the Borrower in writing of such event promptly upon its becoming aware of the same; and
(ii) the Borrower shall on demand, made at any time whether or not the relevant Bank's Contribution has been repaid, pay to the Administrative Agent for the account of such Bank the amount which such Bank specifies (in a certificate setting forth the basis of the computation of such amount but not including any matters which such Bank or its holding company regards as confidential) is required to compensate such Bank and/or (as the case may be) its holding company for such liability to Taxes, cost, reduction, payment, forgone return or loss.
For the purposes of this clause 12.2 "holding company" means the company or entity (if any) within the consolidated supervision of which the relevant Bank is included.
12.3 Exception
Nothing in clause 12.2 shall entitle any Bank to compensation for any such increased costs, reduction, payment or foregoing return to the extent that the same is the subject of an additional payment under clause 6.7 or is taken into account in calculating the Additional Cost.
12.4 Mitigation
If circumstances arise which would, or would upon the giving of notice, result in:
(a) the Borrower being required to make an increased payment to a Bank pursuant to clause 6.7
(b) the reduction of the Commitments of a Bank to zero or the Borrower being required to prepay any Bank's Contribution pursuant to clause 12.1; or
(c) the Borrower being required to make a payment to a Bank to compensate such Bank or its holding company for a liability to Taxes, increased or additional cost, reduction, payment, foregone return or loss pursuant to clause 12.2(f)(ii)
then, without in any way limiting, reducing or otherwise qualifying the obligations of the Borrower under clauses 6.7 and 12, the Administrative Agent and the relevant Bank shall endeavour to take such reasonable steps (and/or, in the case of clause 12.2(f)(ii) and where the increased or additional cost, reduction, payment, foregone return or loss is that of its holding company, endeavour to procure that its holding company takes such reasonable steps) as may be open to it (or, as the case may be, its holding company) to mitigate or remove such circumstances including (in the case of a Bank) the transfer of its rights and obligations under this Agreement to another bank or financial institution) unless to do so might (in the opinion of the relevant Bank) be prejudicial to such Bank (or, as the case may be, its holding company) or be in conflict with such Bank's (or, as the case may be, its holding company's) or the Administrative Agent's general banking policies or involve such Bank (or, as the case may be, its holding company) or the Administrative Agent in expense or an increased administrative burden.
13 Set-off, pro rata payments
13.1 Set-off
The Borrower authorises each Bank (without prejudice to any of such Bank's rights at law, in equity or otherwise), [at any time when an Event of Default has occurred and is continuing and] without notice to the Borrower:
(a) to apply any credit balance to which the Borrower is then entitled standing upon any account of the Borrower with any branch of such Bank in or towards satisfaction of any sum due and payable from the Borrower to such Bank under any of the Security Documents;
(b) in the name of the Borrower or such Bank to do all such acts and to execute all such documents as may be necessary or expedient to effect such application; and
(c) to combine and/or consolidate all or any accounts in the name of the Borrower with such Bank.
For such purposes, each Bank is authorised to purchase with the moneys standing to the credit of such account such other currencies as may be necessary to effect such application. No Bank shall be obliged to exercise any right given to it by this clause 13.1. Each Bank shall notify the Administrative Agent and the Borrower forthwith upon the exercise or purported exercise of any right of set-off giving full details in relation thereto and the Administrative Agent shall inform the other Banks.
13.2 Pro rata payments
(a) If at any time any Bank (the "Recovering Bank") receives or recovers any amount owing to it by the Borrower under this Agreement by direct payment, set-off or in any manner other than by payment through the Administrative Agent pursuant to clause 6.1 or 6.10 (not being a payment received from a Transferee Bank or a sub-participant in such Bank's Contribution or any other payment of an amount due to the Recovering Bank for its sole account pursuant to clauses 3.1, 3.7, 4.6, 5.2, 6.7, 11.1, 11.2, 11.3, 12.1, 12.2) the Recovering Bank shall, within two Banking Days of such receipt or recovery (a "Relevant Receipt") notify the Administrative Agent of the amount of the Relevant Receipt. If the Relevant Receipt exceeds the amount which the Recovering Bank would have received if the Relevant Receipt had been received by the Administrative Agent and distributed pursuant to clause 6.1 or 6.10 as the case may be) then:
(i) within two Banking Days of demand by the Administrative Agent, the Recovering Bank shall pay to the Administrative Agent an amount equal (or equivalent) to the excess;
(ii) the Administrative Agent shall treat the excess amount so paid by the Recovering Bank as if it were a payment made by the Borrower and shall distribute the same to the Banks (other than the Recovering Bank) in accordance with clause 6.10; and
(iii) as between the Borrower and the Recovering Bank the excess amount so re-distributed shall be treated as not having been paid but the obligations of the Borrower to the other Banks shall, to the extent of the amount so re-distributed to them, be treated as discharged.
(b) If any part of the Relevant Receipt subsequently has to be wholly or partly refunded by the Recovering Bank (whether to a liquidator or otherwise) each Bank to which any part of such Relevant Receipt was so re-distributed shall on request from the Recovering Bank repay to the Recovering Bank such Bank's pro rata share of the amount which has to be refunded by the Recovering Bank.
(c) Each Bank shall on request supply to the Administrative Agent such information as the Administrative Agent may from time to time request for the purpose of this clause 13.2
(d) Notwithstanding the foregoing provisions of this clause 13.2 no Recovering Bank shall be obliged to share any Relevant Receipt which it receives or recovers pursuant to legal proceedings taken by it to recover any sums owing to it under this Agreement with any other party which has a legal right to, but does not, either join in such proceedings or commence and diligently pursue separate proceedings to enforce its rights in the same or another court (unless the proceedings instituted by the Recovering Bank are instituted by it without prior notice having been given to such party through the Administrative Agent).
13.3 No release
For the avoidance of doubt it is hereby declared that failure by any Recovering Bank to comply with the provisions of clause 13.2 shall not release any other Recovering Bank from any of its obligations or liabilities under clause 13.2.
13.4 No charge
The foregoing provisions of this clause 13 shall not, and shall not be construed so as to, constitute a charge by a Bank over all or any part of a sum received or recovered by it in the circumstances mentioned in clause 13.2.
14 Accounts
14.1 Undertakings concerning Earnings Accounts
The Borrower undertakes with each of the Creditors that throughout the Security Period it will procure that:
(a) Payments to Earnings Accounts
unless and until the Security Agent otherwise directs pursuant to the General Assignments or any other Security Document, the following will be paid to the Earnings Accounts:
(i) all Earnings of the Mortgaged Ships;
(ii) all dividends or other amounts received by Oxbow and Golar Maritime from Faraway;
(iii) all payments to the Borrower and/or any of the Owning Companies under any Eligible Swap Contracts;
(iv) all moneys payable under the Insurances of any Mortgaged Ships which are payable to the relevant Owning Company or its order in accordance with the relevant Loss Payable Clauses and the General Assignments;
(v) all surplus proceeds of any sale or Total Loss or any proceeds of sale of an Owning Company or any of Oxbow and Golar Maritime's shares in Faraway after the Borrower has made any prepayment required under clause 4.3; and
(vi) the amount (including interest) of any fixed term deposit account or contract referred to in clause 14.1(b)(iii) upon maturity of the relevant fixed term;
(b) Withdrawals from Earnings Accounts
withdrawals are made from any Earnings Account only for the purpose of:
(i) paying amounts then due under the Security Documents (other than any prepayment of the Loan pursuant to clauses 4.3 or 4.6 of this Agreement but, for the avoidance of doubt, withdrawals from Earnings Accounts may be made for the purpose of making a prepayment required under clause 12.1);
(ii) paying amounts then due in respect of Eligible Swap Liabilities or the Operating Costs of Mortgaged Ships;
(iii) payment of funds from one Earnings Account to another or (provided that the relevant account or contract will be subject to a valid Earnings Account security and notice of assignment thereof has been given to, and acknowledged by, the Account Bank in accordance with such Earnings Account Security) their investment in a Dollar fixed term deposit account or contract placed or made with the Account Bank on terms that the funds so invested and interest earned thereon shall be credited to such Earnings Account on maturity of the relevant fixed term deposit account or contract;
(iv) payment of Equity Distributions permitted under provisos (A) or (C) to clause 8.3(c);
(v) discharging other liabilities or meeting any other expenditure incurred by the Owning Companies which have been demonstrated to the satisfaction of the Administrative Agent to have been reasonably and properly incurred in the ordinary course of the relevant Owning Company's business of owning and operating its Mortgaged Ship (which shall not, for the avoidance of doubt, include any capital expenditure not falling within the definition of Operating Costs and shall not include any other expenditure in respect of any liability arising or incurred in breach of this Agreement); or
and that (notwithstanding the foregoing) no withdrawal whatsoever is made from any Earnings Account if, immediately following such withdrawal, the Free Available Cash would be less than the Minimum Free Available Cash;
(c) Security over accounts
if an account is to be designated as an Earnings Account for the purposes of the Security Documents there is duly delivered to the Security Agent at or before the time such account is so designated:
(i) a deed of assignment (an "Account Charge") in respect of such account, duly executed by the relevant account party in such form as the Security Agent may reasonably require (which shall, so far as the Security Agent considers the circumstances permit), be based upon the agreed form of the Earnings Accounts Security or in such other form as the Security Agent may reasonably require for the purpose of creating effective security over such account under any applicable laws;
(ii) such notices to, and acknowledgements from, the relevant Account Bank as may be required by such Account Charge;
(iii) in relation to the account holder executing such Account Charge and such Account Charge itself such documents and evidence in form and substance satisfactory to the Security Agent of the kind referred to in paragraphs (a), (b), (c) and (d) of Part 1 of schedule 4 as the Security Agent may reasonably require and that such account has been opened; and
(iv) such satisfactory legal opinion as the Security Agent may reasonably require as to the execution, validity and effectiveness of such Account Charge
provided that the Security Agent may waive the delivery of the documents and evidence referred to in paragraphs (i) and/or (iv) if it considers that an existing Account Charge constitutes effective and satisfactory security over such account.
15 Transfer and lending office
15.1 Benefit and burden
This Agreement shall be binding upon, and enure for the benefit of, each of the Creditors and the Borrower and their respective successors.
15.2 No assignment by Borrower
The Borrower may not assign or transfer any of its rights or obligations under any of the Security Documents.
15.3 Transfers
Any Bank (the "Transferor Bank") may at any time, cause all or any part of its rights, benefits and/or obligations under this Agreement and the Security Documents to be transferred to its Subsidiaries, affiliates or associates or to a federal reserve bank, central bank or other monetary or regulatory authority having jurisdiction over such Banks without the consent of the Borrower or so long as no Default is then continuing, with the consent of the Borrower (such consent not to be unreasonably withheld (and for the purposes of this clause 15.3, it shall be deemed unreasonable for the Borrower to withhold such consent on the grounds that any proposed transfer by a Bank of part of its rights, benefits and/or obligations would result in the number of Banks being increased if, after such transfer, there would be no more than 15 Banks)), to any other bank or financial institution (a "Transferee Bank") by delivering to the Administrative Agent a Transfer Certificate duly completed and duly executed by the Transferor Bank and the Transferee Bank.
Any transfer by a Bank shall be offered and effected in compliance with all applicable laws and regulations. If the Borrower fails to respond to a request for such consent within ten (10) days of such request being made, the Borrower shall be deemed to have given such consent. No such transfer is binding on, or effective in relation to, the Borrower, the Administrative Agent, or the Security Agent unless it is effected or evidenced by a Transfer Certificate which complies with the provisions of this clause 15.3 and is signed by or on behalf of the Transferor Bank, the Transferee Bank and the Administrative Agent (on behalf of itself, the Borrower, the Security Agent and the other Banks). Upon signature of any such Transfer Certificate by the Administrative Agent, which signature shall be effected as promptly as is practicable after such Transfer Certificate has been delivered to the Administrative Agent, and subject to the terms of such Transfer Certificate, such Transfer Certificate shall have effect as set out below.
The following further provisions shall have effect in relation to any Transfer Certificate:
(a) a Transfer Certificate may be in respect of a Bank's rights in respect of all or part, of its Commitment and shall be in respect of the same proportion of its Contribution;
(b) a Transfer Certificate shall only be in respect of rights and obligations of the Transferor Bank in its capacity as a Bank and shall not transfer its rights and obligations as Administrative Agent or Security Agent or in any other capacity, as the case may be and such other rights and obligations may only be transferred in accordance with any applicable provisions of the Agency Agreement;
(c) a Transfer Certificate shall take effect in accordance with English law as follows:
(i) to the extent specified in the Transfer Certificate, the Transferor Bank's payment rights and all its other rights (other than those referred to in paragraph (b) above) under this Agreement are assigned to the Transferee Bank absolutely, free of any defects in the Transferor Bank's title and of any rights or equities which the Borrower had against the Transferor Bank;
(ii) the Transferor Bank's Commitment is discharged to the extent specified in the Transfer Certificate;
(iii) the Transferee Bank becomes a Bank with a Contribution and an undrawn Commitment of the amount specified in the Transfer Certificate;
(iv) the Transferee Bank becomes bound by all the provisions of this Agreement and the Security Documents which are applicable to the Banks generally, including those about pro-rata sharing and the exclusion of liability on the part of, and the indemnification of, the Administrative Agent and the Security Agent in accordance with the provisions of the Agency Agreement and to the extent that the Transferee Bank becomes bound by those provisions, the Transferor Bank ceases to be bound by them;
(v) the Contributions which the Transferee Bank makes after the Transfer Certificate comes into effect rank in point of priority and security in the same way as it would have ranked had it been made by the Transferor Bank, assuming that any defects in the Transferor Bank's title and any rights or equities of any Security Party against the Transferor Bank had not existed; and
(vi) the Transferee Bank becomes entitled to all the rights under this Agreement which are applicable to the Banks generally, including but not limited to those relating to the Majority Banks and those under clauses 3.7, 5 and 12, and to the extent that the Transferee Bank becomes entitled to such rights, the Transferor Bank ceases to be entitled to them;
(d) the rights and equities of the Borrower or of any other Security Party referred to above include, but are not limited to, any right of set off and any other kind of cross-claim; and
(e) the Borrower, the Security Agent and the Banks hereby irrevocably authorise and instruct the Administrative Agent to sign any such Transfer Certificate on its behalf (and, in the case of the Security Agent, on behalf of any Security Party which has in the relevant Security Document given a corresponding authorisation and instruction to the Security Agent) and undertake not to withdraw, revoke or qualify such authority or instruction at any time. Promptly upon its signature of any Transfer Certificate, the Administrative Agent shall notify the Borrower, the Security Agent the Transferor Bank, the Transferee Bank and the other Banks.
15.4 Reliance on Transfer Certificate
(a) The Administrative Agent shall be entitled to rely on any Transfer Certificate believed by it to be genuine and correct and to have been presented or signed by the persons by whom it purports to have been presented or signed, and shall not be liable to any of the parties to this Agreement and the Security Documents for the consequences of such reliance.
(b) The Administrative Agent shall at all times during the continuation of this Agreement maintain a register in which it shall record the name, Commitments, or, as the case may be, Contributions and administrative details (including the lending office) from time to time of each Bank holding Transfer Certificates and the date at which the transfer referred to in such Transfer Certificate held by each Bank was transferred to such Bank, and the Administrative Agent shall make the said register available for inspection by any Bank, the Security Agent and the Borrower during normal banking hours upon receipt by the Administrative Agent of reasonable prior notice requesting the Administrative Agent to do so.
(c) The entries on the said register shall, in the absence of manifest error, be conclusive in determining the identities of the Commitments or, as the case may be, the Contributions and the Transfer Certificates held by the Banks from time to time and the principal amounts of such Transfer Certificates and may be relied upon by the Administrative Agent, the Security Agent and the other Security Parties for all purposes in connection with this Agreement and the Security Documents.
15.5 Transfer fees and expenses
If any Bank causes the transfer of all or any part of its rights, benefits and/or obligations under the Security Documents, it shall pay to the Administrative Agent for its own account a registration fee of USD1,000 for each transfer, and shall also pay to the Administrative Agent on demand all out of pocket costs, fees and expenses (including, but not limited to, legal fees and expenses), and all value added tax thereon, certified by the Administrative Agent as having been reasonably and properly incurred by it in connection with such transfer.
15.6 Documenting transfers
If any Bank transfers all or any part of its rights, benefits and/or obligations as provided in clause 15.3 the Borrower undertakes, immediately on being requested to do so by the Administrative Agent and at the cost of the Transferor Bank, to enter into, and procure that the other Security Parties shall enter into, such documents as may be necessary or desirable to transfer to the Transferee Bank all or the relevant part of such Bank's interest in the Security Documents and all relevant references in this Agreement to such Bank shall thereafter be construed as a reference to the Bank and/or its Transferee Bank (as the case may be) to the extent of their respective interests.
15.7 Sub-participation
A Bank may sub-participate all or any part of its rights and/or obligations under the Security Documents without the consent of, or notice to, the Borrower.
15.8 Lending office
Each Bank shall lend through its office at the address specified in 0 or, as the case may be, in any relevant Transfer Certificate or through any other office of such Bank selected from time to time by it through which such Bank wishes to lend for the purposes of this Agreement. If the office through which such Bank is lending is changed pursuant to this clause 15.8, such Bank shall notify the Administrative Agent promptly of such change and the Administrative Agent shall notify the Borrower.
15.9 Disclosure of information
Any Bank may (with the prior written consent of the Borrower such consent not to be unreasonable withheld or delayed) disclose to a prospective assignee, substitute or transferee or to any other person who may propose entering into contractual relations with such Bank in relation to this Agreement such information about the Borrower as such Bank shall consider appropriate.
15.10 Assignments by Swap Banks
The Swap Banks may assign their rights under the Security Documents to any person to whom they assign their rights under the relevant Eligible Swap Contracts, provided that the assignee has entered into an undertaking in such form as the Security Agent may require agreeing to be bound by the terms of the Security Documents.
16 Administrative Agent, Security Agent and Reference Banks
16.1 Appointment of the Administrative Agent and the Security Agent
The terms and basis on which the Administrative Agent and the Security Agent have been appointed by the Banks as facility agent and by the Banks and the Swap Banks as security agent and trustee respectively are set out in the Agency Agreement including, among other things, the manner in which any decision to exercise any right, powers, discretion or authority or to carry out any duty are to be made between the Banks, the Swap Banks, the Administrative Agent and the Security Agent.
16.2 Reference Banks
If (a) the whole of the Contributions (if any) of any Reference Bank is prepaid or (b) the Commitments (if any) of any Reference Bank are reduced to zero in accordance with clauses 4.6 or 12 or (c) a Reference Bank transfers the whole of its rights and obligations (if any) as a Bank under this Agreement or (d), where applicable, any Reference Bank ceases to provide quotations to the Administrative Agent for the purposes of determining LIBOR, the Administrative Agent may, acting on the instructions of the Majority Banks, terminate the appointment of such Reference Bank and appoint another Bank to replace such Reference Bank.
17 Tax Lease Option
If the Borrower or an Owning Company wishes to incur Borrowed Money by means of a Capitalised Lease Obligation in respect of a Mortgaged Ship, the Banks shall, if so requested in writing by the Borrower, discuss in good faith for a period of up to 60 days the possible restructuring of the security arrangements contemplated by this Agreement so as to permit such incurrence of Borrowed Money but such restructuring may only be implemented if all of the Banks approve it in writing (such approval not to be unreasonably withheld) and such supplemental documentation entered into and conditions precedent fulfilled as the Banks may in their absolute discretion require. It is acknowledged by all parties that the restructuring of the security may include the granting of second priority security to secure the relevant Capitalised Lease Obligation and the Swap Banks acknowledge that their second priority rights to the Mortgaged Ships shall be postponed and/or replaced with alternative security acceptable to the Swap Banks to be agreed at the relevant time.
If any such restructuring is approved in principle by the Banks and the Swap Banks, the Banks and the Swap Banks shall co-operate in good faith with the Borrower in the implementation of such restructuring within such period as may be agreed at the relevant time.
If in the course of seeking the approval of the Banks to the Tax Lease Option, a majority of the Banks the aggregate of whose Commitments and/or Contribution (as the case may be) exceeds 662/3% of the Total Commitments, agree to the restructuring proposal (the "consenting banks") then the consenting banks shall if requested to do so by the Borrower co-operate with the Borrower to try to arrange for the Commitment and/or Contribution (as the case may be) of the Banks who do not agree the restructuring proposal (the "dissenting banks") to be transferred to a substitute or replacement bank (a "substitute bank") provided that if no substitute bank can be found within such reasonable period as may be agreed by the Administrative Agent at the relevant time to assume the Contribution and/or Commitment of the dissenting bank or banks, the Borrower agrees that the approval of all the Banks to the Tax Lease Option shall be deemed to be required.
18 Notices and other matters
18.1 Notices
Every notice, request, demand or other communication under this Agreement or (unless otherwise provided therein) under any of the other Security Documents shall:
(a) be in writing delivered personally or by first-class prepaid letter (airmail if available) or facsimile transmission or other means of telecommunication in permanent written form;
(b) be deemed to have been received, subject as otherwise provided in the relevant Security Document, in the case of a letter, when delivered personally or 7 days after it has been put in to the post and, in the case of a facsimile transmission or other means of telecommunication in permanent written form, at the time of despatch (provided that if the date of despatch is not a business day in the country of the addressee or if the time of despatch is after the close of business in the country of the addressee it shall be deemed to have been received at the opening of business on the next such business day); and
(c) be sent:
(i) to the Borrower at:
Golar Gas Holding Company, Inc. c/o Osprey Maritime (Europe) Ltd.
30 Marsh Wall
London E14 9TP
Fax no: (44) 207 517 8601
Attention: The President
(ii) to the Administrative Agent at:
Christiania Bank og Kreditkasse ASA
P.O. Box 1166, Sentrum
0107 Oslo
Norway
Fax no: 00 47 22 48 66 68 Attention: Shipping Dept.
(iii) to the Security Agent at:
Stranden 21
N-0021 Oslo
Norway
Fax no: 00 47 22 48 28 94 Attention: Credit Administration Shipping
(iv) to each Bank at its address, telex or fax number specified in schedule 1 or in any relevant Transfer Certificate,
(v) to the Swap Banks in accordance with the terms of the relevant Eligible Swap Contracts,
or to such other address and/or numbers as is notified by one party to the other party under this Agreement.
18.2 No implied waivers, remedies cumulative
No failure or delay on the part of any Creditor to exercise any power, right or remedy under any of the Security Documents shall operate as a waiver thereof, nor shall any single or partial exercise by any Creditor of any power, right or remedy preclude any other or further exercise thereof or the exercise of any other power, right or remedy. The remedies provided in the Security Documents are cumulative and are not exclusive of any remedies provided by law.
18.3 Further assurance
The Borrower undertakes that the Security Documents shall both at the date of execution and delivery thereof and so long as any moneys are owing under any of the Security Documents, be valid and binding obligations of the respective parties thereto and the rights of the Creditors thereunder enforceable in accordance with their respective terms and that they will, at their expense, execute, sign, perfect and do, and will procure the execution, signing, perfecting and doing by each of the other Security Parties of, any and every such further assurance, document, act or thing as in the reasonable opinion of the Administrative Agent may be necessary or desirable for perfecting the security contemplated or constituted by the Security Documents.
18.4 Conflicts
In the event of any conflict between this Agreement and any of the other
Security Documents, the provisions of this Agreement shall prevail.
18.5 English language
All certificates, instruments and other documents to be delivered under or supplied in connection with any of the Security Documents shall be in the English language or shall be accompanied by a certified English translation upon which the Administrative Agent shall be entitled to rely.
18.6 Contracts (Rights of Third Parties) Act 1999
No term of this Agreement is enforceable under the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Agreement.
19 Governing law and jurisdiction
19.1 Law
This Agreement is governed by and shall be construed in accordance with English law.
19.2 Submission to jurisdiction
The Borrower agrees, for the benefit of the Creditors, that any legal action or proceedings arising out of or in connection with this Agreement against the Borrower or any of its assets may be brought in the English courts. The Borrower irrevocably and unconditionally submits to the jurisdiction of such courts and irrevocably designates, appoints and empowers Frontline Management (UK) Ltd. at present of 12 Grosvenor Place, London SW1X 7HH to receive for it and on its behalf, service of process issued out of the English courts in such legal action or proceedings. The submission to such jurisdiction shall not (and shall not be construed so as to) limit the right of any Creditor to take proceedings against the Borrower in the courts of any other competent jurisdiction nor shall the taking of proceedings in any one or more jurisdictions preclude the taking of proceedings in any other jurisdiction, whether concurrently or not. The parties further agree that only the courts of England and not those of any other State shall have jurisdiction to determine any claim which the Borrower may have against any Creditor arising out of or in connection with this Agreement.
IN WITNESS whereof the parties to this Agreement have caused this Agreement to be duly executed on the date first above written. Schedule 1
Schedule 1
Part 1 - The Banks and their Commitments
Name Address and fax number Commitment
USD
---- ---------------------- ----------
Christiania Bank og Kreditkasse ASA P.O. Box 1166, Sentrum 81,250,000
0107 Oslo
Norway
Fax: +47 22 48 42 78
Attention: International Loan
Administration
Den norske Bank ASA Stranden 21 81,250,000
N-0021 Oslo
Norway
Fax: (47) 22 48 28 94
Attention: Loan Administration
Citibank, N.A. 33 Canada Square 81,250,000
Canary Wharf
London
E14 5LB
Fax: (44) 207 986 2762
Attention: Simon Booth
Fortis Bank (Nederland) N.V. Credit Administration 81,250,000
Fortis Bank (Nederland) N.V.,
Oslo Branch
Munkedamsveien 53b, NO-0250 Oslo
Norway
Telephone: (47) 23 11 49 52
Fax: (47) 23 11 49 40
Attention: Francis Birkeland
Loan Administration Department
Fortis Bank (Nederland) N.V.
Coolsingel 93, 3012 AE Rotterdam,
The Netherlands
Telephone: (31) 10 401 61 42 / 62 54
Fax: (31) 10 401 61 18
Attention: Frans Schreuder/ Pieter van
Wijk / Leo Vrijland / Aad Blok
Total: 325,000,000
|
Part 2
The Swap Banks
Name Address and fax number
---- -----------------------
Christiania Bank og Kreditkasse ASA P.O. Box 1166, Sentrum
0107 Oslo
Norway
Fax: +47 22 48 42 78
Attention: International
Loan Administration
Den norske Bank ASA Stranden 21
N-0021 Oslo
Norway
|
Fax: (47) 22 48 28 94 Attention: Loan Administration
Schedule 2 The Ships
Part 1
Details of the Ships
Name Owning Company Official No. Classification Classification
---- -------------- ------------ -------------- --------------
Society
GOLAR SPIRIT Golar Gas Faraway Inc. 6945 +1A1 Tanker for DnV
Liquified Gas EO SBM
HILLI Golar Hilli Inc. 5391 +1A1 Tanker for DnV
Liquified Gas EO SBM
GIMI Golar Gimi Inc. 5683 +1A1 Tanker for DnV
Liquified Gas EO SBM
KHANNUR Golar Khannur Inc. 5978 +1A1 Tanker for DnV
Liquified Gas EO SBM
GOLAR FREEZE Golar Freeze Inc. 5824 +1A1 Tanker for DnV
Liquified Gas EO SBM
In this schedule "DnV" means Det Norske Veritas.
|
Part 2
Details of Approved Charterers, Charter Guarantees and Management Agreements as at the date of this Agreement
GOLAR SPIRIT
Approved Charter
Time charter dated 9 September 1983 between Pertamina and Golar Gas Cryogenics Inc. as amended by Addendum No. 1 dated 2 July 1986 and Addendum No. 2 dated 20 February 1990 expiry on or about 1 December 2006 subject to charterer's option to extend.
Charter Guarantee
None.
Approved Management Agreement
Management Agreement dated 1 January 1999 between Golar Gas Cryogenics Inc. and Osprey Maritime Management Limited.
HILLI
Approved Charter
Short term pre-emption charter dated 7 September 2000 between Golar Hilli Inc. and Methane Services Limited entered into pursuant to the Master Agreement covering period until delivery under long term charter.
Long term charter to be entered into between Golar Hilli Inc. and Methane Services Limited in accordance with the notice of exercise of option under the Master Agreement dated 3 May 2001, such charter to expire during 2013, subject to charterer's option to extend.
Charter Guarantee
(a) Guarantee dated 7 September 2000 from BG International Limited in favour of Golar Hilli Inc. (in respect of pre-emption charter).
(b) Guarantee dated 8 May 2001 from BG International Limited in favour of Golar Hilli Inc. (in respect of long term charter).
Approved Management Agreement
Management Agreement dated 1 January 1999 between Golar Hilli Inc. and Osprey Maritime Management Limited.
GIMI
Approved Charter
Short term pre-emption charter to be entered into between Golar Gimi Inc. and Methane Services Limited pursuant to the Master Agreement covering period until delivery under long term charter.
Long term time charter dated 28 January 2000 between Golar Gimi Inc. and Methane Services Limited entered into pursuant to the Master Agreement expiry during 2012 subject to charterer's option to extend.
Charter Guarantee
Guarantee dated 2 March 2000 from BG International Limited in favour of Golar Gimi Inc. (in respect of long term charter)
Approved Management Agreement
Management Agreement dated 1 January 1999 between Golar Gimi Inc. and Osprey Maritime Management Limited.
KHANNUR
Approved Charter
Short term pre-emption charter dated 30 November 2000 between Golar Khannur Inc. and Methane Services Limited entered into pursuant to the Master Agreement covering period until delivery under long term charter.
Long term time charter dated 12 August 1999 between Golar Khannur Inc. and Methane Services Limited as amended by Addendum No. 1 dated December 1999 entered into pursuant to the Master Agreement expiry during 2009 subject to charterer's option to extend.
Charter Guarantee
Guarantee dated 30 November 2000 from BG International Limited in favour of Golar Khannur Inc. (in respect of long term charter).
Approved Management Agreement
Management Agreement dated 1 January 1999 between Golar Khannur Inc. and Osprey Maritime Management Limited.
GOLAR FREEZE
Approved Charter
Short term pre-emption charter dated 7 September 2000 between Golar Freeze Inc. and Methane Services Limited entered into pursuant to the Master Agreement, such charter to expire on 31 December 2002 subject to charterer's option to extend or enter into a long term charter in accordance with the terms of the Master Agreement.
Charter Guarantee
Guarantee dated 7 September 2000 from BG International Limited and in favour of Golar Freeze Inc. (in respect of the short term charter).
Approved Management Agreement
Management Agreement dated 1 January 1999 between Golar Freeze Inc. and Osprey Maritime Management Limited.
In this schedule "Master Agreement" means the master agreement dated 12 August 1999 as amended by addendum no. 1 thereto dated 5 January 2000 between Golar Khannur Inc., Golar Freeze Inc., Golar Gimi Inc., Golar Hilli Inc., Osprey Maritime Limited and Methane Services Limited. Schedule 3
Schedule 3 Form of Drawdown Notice
To: [Name and address of Administrative Agent] Attention:
[o] 2001 USD325,000,000 Loan Agreement dated [o] 2001
We refer to the above Loan Agreement and hereby give you notice that we wish to draw the Loan (in the amount of USD[325,000,000]) on [o] 2001 and select an Interest Period in respect thereof of [o] months. The funds should be credited to [name and number of account] with [New York City].
We confirm that:
(a) no Default has occurred and is continuing or will result from our borrowing the Loan;
(b) the representations and warranties contained in clauses 7.1 and 7.2 of the Loan Agreement are true and correct at the date hereof as if made with respect to the facts and circumstances existing at such date; and
(c) the borrowing to be effected by the drawdown of the Loan will be within our corporate powers, has been validly authorised by appropriate corporate action and will not cause any limit on our borrowings (whether imposed by statute, regulation, agreement or otherwise) to be exceeded.
Words and expressions defined in the Loan Agreement shall have the same meanings where used herein.
For and on behalf of
[Name of Borrower]
Schedule 4
Documents and evidence required as conditions precedent
(referred to in clause 9.1)
Part 1
(General)
(a) Constitutional documents
copies, certified by an officer of each Security Party as true, complete and up to date copies of all documents which contain or establish or relate to the constitution of that Security Party;
(b) Corporate authorisations
copies of resolutions of the directors and stockholders of each Security Party approving such of the Underlying Documents and the Security Documents to which such Security Party is, or is to be, party and authorising the signature, delivery and performance of such Security Party's obligations thereunder, certified by an officer of such Security Party as:
(i) being true and correct;
(ii) being duly passed at meetings of the directors of such Security Party and (if applicable) of the stockholders of such Security Party each duly convened and held;
(iii) not having been amended, modified or revoked; and
(iv) being in full force and effect,
together with originals or certified copies of the certificates of any powers of attorney issued by any Security Party pursuant to such resolutions and a certificate by an Officer of each Security Party that no proceedings are pending or contemplated for the bankruptcy or liquidation of the relevant company;
(c) Certificate of incumbency
a list of directors and officers of each Security Party specifying the names and positions of such persons, certified by an officer of such Security Party to be true, complete and up to date;
(d) Consents and approvals
a certificate from an officer of each Security Party that no consents, authorisations, licences or approvals are necessary for such Security Party, in the case of the Borrower, to borrow the Commitments and/or grant security for such borrowing and, in the case of the other Security Parties, to guarantee and/or grant security for the borrowing by the Borrower of the Commitments pursuant to this Agreement and (in the case of all Security Parties) to execute, deliver and perform the Security Documents and the Underlying Documents insofar as such Security Party is a party thereto;
(e) Guarantees
the Guarantees, duly executed by the Guarantors;
(f) Underlying Documents
a copy, certified as a true and complete copy by an officer of the Borrower or other person acceptable to the Administrative Agent of each of Underlying Documents;
(g) Accounts and account security
evidence that the Earnings Accounts have been opened and the Earnings Account Security has been duly executed by the relevant parties;
(h) Fees and expenses
evidence that the fees due under clause 5.1 have been paid in full and that an amount of USD500,000 has been paid to the Administrative Agent on account of the expenses referred to in clause 5.2; and
(i) Private placement
evidence that the private placement in respect of the Parent has been fully subscribed to and the proceeds have been received or will be received by the Parent within 7 days of the Drawdown Date.
Part 2
(Drawdown of Loan)
(a) Ships' conditions
evidence that each Ship and Golar Mazo:
(i) Registration and Encumbrance
is registered in the name of the relevant Owning Company or (as the case may be) Faraway through the relevant Registry as a ship under the laws of the Flag State at the Port of Registry and that such Ship and Golar Mazo and its Earnings, Insurances and Requisition Compensation are free of Encumbrances other than Permitted Encumbrances;
(ii) Classification
maintains its Classification free of all overdue requirements and recommendations of its Classification Society;
(iii) Insurance
is insured in accordance with the provisions of the Security Documents and all requirements of the Security Documents in respect of such insurance have been complied with;
(iv) Management
is managed by the relevant Approved Manager under the Approved Management Agreement relative thereto;
(v) Approved Charters
where there is an Approved Charter for a Ship as at the date of this Agreement, is in service under such Approved Charter;
(b) Mortgages and General Assignments
the Mortgages and General Assignments for the Ships, each duly executed by the relevant Owning Company together with any supplements thereto;
(c) Mortgage registration
evidence that the Mortgages for the Ships have been registered against the Ships at the Registry with first priority;
(d) Cash position
evidence that USD25,000,000 has been credited to an Earnings Account;
(e) Manager's Undertakings
the Manager's Undertakings, duly executed by the Approved Managers;
(f) Subordination Deed
the Subordination Deed duly executed by the parties thereto;
(g) Subsidiary Pledges
the Subsidiary Pledges, duly executed by the Borrower and filed in the register of mortgages and charges of the relevant Subsidiary, together with the other documents required to be delivered to the Security Agent thereunder;
(h) Notices of assignment and acknowledgements
duly executed notices of assignment (together with original duly executed acknowledgements thereof) required by the terms of the Security Documents and in the forms prescribed by such Security Documents;
(i) Liberian opinion
an opinion of Holland & Knight LLP special legal advisers on matters of Liberian law to the Banks;
(j) Bermuda opinion
an opinion of Conyers Dill & Pearman, special legal advisers in Bermuda to the Banks;
(k) British Virgin Islands opinion
an opinion of Conyers Dill & Pearman, special legal advisers in the British Virgin Islands to the Banks;
(l) Cyprus opinion
an opinion of Chrysses Demetriades & Co., special legal advisers in Cyprus to the Banks;
(m) English opinion
an opinion of Norton Rose, special legal advisers in England to the Banks;
(n) Further opinions
any such further legal opinion as may be required by the Administrative Agent;
(o) Process agents
a copy, certified as a true copy by the Borrower's solicitors or other person acceptable to the Administrative Agent of a letter from each Security Party's agent for receipt of service of proceedings referred to in the Security Documents (other than the Mortgages in respect of all of the Ships) accepting its appointment as such agent;
(p) Insurance opinion
an opinion from Messrs Aon Grieg AS of Norway, insurance consultants to the Administrative Agent, on the insurances effected or to be effected in respect of the Ships upon and following the Drawdown Date;
(q) Indebtedness
evidence satisfactory to the Administrative Agent that the Borrower, the Owning Companies, Oxbow and Golar Maritime have no outstanding indebtedness or contingent liabilities;
(r) Pro forma financial statements
the pro forma financial statements for the year ending as of 31 May 2001 referred to in clause 7.2(x), together with an operational budget for the Owning Companies and Faraway and the Ships and Golar Mazo for the year beginning 1 July 2001;
(s) Hedging
the Eligible Swap Contracts duly executed by the relevant parties thereto;
(t) Technical report
a technical report (satisfactory to the Administrative Agent) by surveyors acceptable to the Administrative Agent and dated not earlier than ten days prior to the Drawdown Date, in respect of the useful life of the Ships;
(u) Osprey Maritime Limited
evidence satisfactory to the Administrative Agent that the operational management of Osprey Maritime Limited has been transferred to the Golar LNG Group;
(v) Parent, Borrower and Guarantor liabilities
evidence that the Parent, the Borrower and the other Guarantors have no Indebtedness other than:
(i) under the Security Documents;
(ii) adjustments of hire due to other members of the Golar LNG Group and Osprey; and
(iii) inter-company liabilities within the Golar LNG Group in respect of operational costs due to the Approved Managers;
(w) Costs and expenses
evidence that all amounts owing under clause 5 which are due on the Drawdown Date or have been demanded by the Administrative Agent under clause 5 on or before the Drawdown Date have been or will be paid in full on the Drawdown Date;
(x) Maximum Liability Amount
(i) a certificate of the Borrower as to the Adjusted Net Worth and Valuable Transfers (each as defined in the Subsidiary Guarantee) of and received by applicable to each of the Subsidiary Guarantors as at the date of issue of the Subsidiary Guarantee;
(ii) evidence as to subordination of intercompany debt of Subsidiary Guarantors prior to the issue of the Subsidiary Guarantee sufficient to ensure that the Adjusted Net Worth (as defined in the Subsidiary Guarantee) of each Subsidiary Guarantor is a positive figure and that any such inter-company indebtedness remaining after the issue of the Subsidiary Guarantee is subordinated in the terms required by clause 2.3 of the Subsidiary Guarantee;
(iii) evidence as to the application of the full proceeds of the Loan in making Valuable Transfers (as defined in the Subsidiary Guarantee) to the Subsidiary Guarantors in the form of loans made by the Borrower to the Subsidiary Guarantors;
(y) Corporate organisation
evidence that the Parent has paid the full consideration for the purchase of the share capital in the Borrower and that the representations and warranties in clauses 7.1(h) (shareholdings in Owning Companies, Oxbow and Golar Maritime), 7.1(j) (shareholdings in Borrower), 7.2(s) (shareholdings in Parent) and 7.2(y) (shareholdings in Faraway) are true and correct;
(z) Letters of quiet enjoyment
the letters of quiet enjoyment issued by the Security Agent or, in respect of the "Golar Spirit", the notice of financing issued by Golar Gas Cryogenics Inc. duly acknowledged by the relevant Approved Charterers;
(aa) Side letters
any side letters to any of the Security Documents duly executed by the parties thereto together with any documents required pursuant to such side letters;
(bb) Fee letter, funding indemnity letter and syndication letter
the fee letter, the funding indemnity letter and the syndication letter duly executed by the parties thereto; and
(cc) Greenwich Guarantee
the guarantee of Greenwich Holdings Limited duly executed in a form acceptable to the Banks.
Schedule 5
Form of Transfer Certificate
(referred to in clause 16.3)
Transfer Certificate
Banks are advised not to employ Transfer Certificates or otherwise to assign or transfer interests in the Loan Agreement without further ensuring that the transaction complies with all applicable laws and regulations, including the Financial Services Act 1986 and regulations made thereunder and similar statutes which may be in force in other jurisdictions
To: [o], as agent on its own behalf and for and on behalf of the Borrower, the Security Agent and the Banks defined in the Loan Agreement referred to below.
o 200o Attention: [o]
This certificate ("Transfer Certificate") relates to a Loan Agreement dated [o] 2001 (the "Loan Agreement") and made between (1) Golar Gas Holding Company, Inc. (the "Borrower"), (2) Christiania Bank og Kreditkasse ASA, Den norske Bank ASA, Citibank, N.A. and Fortis Bank (Nederland) N.V. (3), the banks and financial institutions defined therein as banks (the "Banks"), (4) Christiania Bank og Kreditkasse ASA as Administrative Agent, (5) Den norske Bank ASA as Security Agent and (6) Citibank, N.A. as Book Runner for a loan facility of up to USD325,000,000. Terms defined in the Loan Agreement shall, unless otherwise defined herein, have the same meanings herein as therein.
In this Certificate:
the "Transferor" means [full name] of [lending office]; and
the "Transferee" means [full name] of [lending office].
1 The Transferor with full title guarantee assigns to the Transferee absolutely all rights and interests (present, future or contingent) which the Transferor has as a Bank under or by virtue of the Loan Agreement and all the Security Documents in relation to [ ] per centum ([ ]%) of the Contribution of the Transferor (or its predecessors in title) which are set out below:
Date of Contribution Amount
[o] USD [o]
2 By virtue of this Transfer Certificate and clause 15 of the Loan Agreement, the Transferor is discharged [entirely from its undrawn Commitment which amounts to USD[o]] [from [o] per centum ([o]%) of its undrawn Commitment, which percentage represents USD[o]].]
3 The Transferee hereby requests the Borrower, the Administrative Agent, the Security Agent and the Banks to accept the executed copies of this Transfer Certificate as being delivered pursuant to and for the purposes of clause 15.3 of the Loan Agreement so as to take effect in accordance with the terms thereof on [date of transfer].
4 The Transferee:
(i) confirms that it has received a copy of the Loan Agreement and the Security Documents together with such other documents and information as it has required in connection with the transaction contemplated thereby;
(ii) confirms that it has not relied and will not hereafter rely on the Transferor, the Administrative Agent or the Security Agent to check or enquire on its behalf into the legality, validity, effectiveness, adequacy, accuracy or completeness of the Loan Agreement, any of the Security Documents or any such documents or information;
(iii) agrees that it has not relied and will not rely on the Transferor, the Administrative Agent, the Security Agent or the Banks to assess or keep under review on its behalf the financial condition, creditworthiness, condition, affairs, status or nature of the Borrower or any other Security Party (save as otherwise expressly provided therein);
(iv) warrants that it has power and authority to become a party to the Loan Agreement and has taken all necessary action to authorise execution of this Transfer Certificate and to obtain all necessary approvals and consents to the assumption of its obligations under the Loan Agreement and the Security Documents;
(v) acknowledges and accepts the provisions of paragraph 4(iii) above; and
(vi) if not already a Bank, appoints the Administrative Agent to act as its agent and the Security Agent to act as its trustee as provided in the Agreement and the Security Documents and agrees to be bound by the terms of the Agency Agreement.
5 The Transferor:
(i) warrants to the Transferee that it has full power to enter into this Transfer Certificate and has taken all corporate action necessary to authorise it to do so;
(ii) warrants to the Transferee that this Transfer Certificate is binding on the Transferor under the laws of England, [the country in which the Transferor is incorporated and the country in which its lending office is located]; and
(iii) agrees that it will, at its own expense, execute any documents which the Transferee reasonably requests for perfecting in any relevant jurisdiction the Transferee's title under this Transfer Certificate or for a similar purpose.
6 The Transferee hereby undertakes with the Transferor and each of the other parties to the Loan Agreement and the other Security Documents that it will perform in accordance with its terms all those obligations which by the terms of the Loan Agreement and the other Security Documents will be assumed by it after delivery of the executed copies of this Transfer Certificate to the Administrative Agent and satisfaction of the conditions (if any) subject to which this Transfer Certificate is expressed to take effect.
7 By execution of this Transfer Certificate on their behalf by the Administrative Agent and in reliance upon the representations and warranties of the Transferee, the Borrower, the Administrative Agent, the Security Agent, the Book Runner and the Banks accept the Transferee as a party to the Loan Agreement and the Security Documents with respect to all those rights and/or obligations which by the terms of the Loan Agreement and the Security Documents will be assumed by the Transferee (including those about pro-rata sharing and the exclusion of liability on the part of, and the indemnification of, the Administrative Agent and the Security Agent as provided by the Agency Agreement and the Loan Agreement) after delivery of the executed copies of this Transfer Certificate to the Administrative Agent and satisfaction of the conditions (if any) subject to which this Transfer Certificate is expressed to take effect.
8 None of the Transferor, the Administrative Agent, the Security Agent, the Book Runner or the Banks:
(i) makes any representation or warranty nor assumes any responsibility with respect to the legality, validity, effectiveness, adequacy or enforceability of the Agreement or any of the Security Documents or any document relating thereto;
(ii) assumes any responsibility for the financial condition of the Borrower or any other Security Party or any party to any such other document or for the performance and observance by the Borrower or any other Security Party or any party to any such other document (save as otherwise expressly provided therein) and any and all such conditions and warranties, whether express or implied by law or otherwise, are hereby excluded (except as aforesaid).
9 The Transferor and the Transferee each undertake that they will on demand fully indemnify the Administrative Agent and the Security Agent in respect of any claim, proceeding, liability or expense which relates to or results from this Transfer Certificate or any matter concerned with or arising out of it unless caused by the Administrative Agent's or Security Agent's gross negligence or wilful misconduct, as the case may be.
10 The agreements and undertakings of the Transferee in this Transfer Certificate are given to and for the benefit of and made with each of the other parties to the Agreement and the Security Documents.
11 This Transfer Certificate shall be governed by, and construed in accordance with, English law.
Transferor Transferee
By: By:
Dated: Dated:
Agent
Agreed for and on behalf of itself as Administrative Agent, the Borrower, the Security Agent, the Book Runner, the Banks and all other parties to the Agency Agreement
DEN NORSKE BANK ASA
By:
Dated:
Note: The execution of this Transfer Certificate alone may not transfer a proportionate share of the Transferor's interest in the security constituted by the Security Documents in the Transferor's or Transferee's jurisdiction. It is the responsibility of each individual Bank to ascertain whether any other documents are required to perfect a transfer of such a share in the Transferor's interest in such security in any such jurisdiction and, if so, to seek appropriate advice and arrange for execution of the same.
The Schedule
Outstanding Contribution USD [o] Undrawn Commitment ($) USD [o] Portion Transferred [o]% |
Administrative Details of Transferee
Name of Transferee:
Lending Office:
Contact Person
(Loan Administration Department):
Telephone:
Fax:
Contact Person
(Credit Administration Department):
Telephone:
Fax:
Account for payments:
Schedule 6 Calculation of Additional Cost
1 The Additional Cost is an addition to the interest rate to compensate the Banks for the cost of compliance with (a) the requirements of the Bank of England and/or the Financial Services Authority (or, in either case, any other authority which replaces all or any of its functions) or (b) the requirements of the European Central Bank.
2 On the first day of each Interest Period (or as soon as possible thereafter) the Administrative Agent shall calculate, as a percentage rate, a rate (the "Additional Cost Rate") for each Bank, in accordance with the paragraphs set out below. The Additional Cost will be calculated by the Administrative Agent as a weighted average of the Banks' Additional Cost Rates (weighted in proportion to the Commitments of each Bank in the Loan) and will be expressed as a percentage rate per annum.
3 The Additional Cost Rate for any Bank lending from an office in a Participating Member State will be the percentage notified by that Bank to the Administrative Agent as the cost of complying with the minimum reserve requirements of the European Central Bank.
4 The Additional Cost Rate for any Bank lending from an office in the United Kingdom will be calculated by the Administrative Agent as follows:
(a) in relation to an amount in Sterling:
[OBJECT OMITTED]per cent. per annum
(b) in relation to an amount in any currency other than Sterling:
[OBJECT OMITTED]per cent. per annum.
Where:
A is the percentage of Eligible Liabilities (assuming these to be in excess of any stated minimum) which that Bank is from time to time required to maintain as an interest free cash ratio deposit with the Bank of England to comply with cash ratio requirements.
B is the percentage rate of interest (excluding the Margin and the Additional Cost) payable for the relevant Interest Period on the Loan.
C is the percentage (if any) of Eligible Liabilities which that Bank is required from time to time to maintain as interest bearing Special Deposits with the Bank of England.
D is the percentage rate per annum payable by the Bank of England to the Administrative Agent on interest bearing Special Deposits.
E is the rate of charge payable by that Bank to the Financial Services Authority pursuant to the Fees Regulations (but, for this purpose, ignoring any minimum fee required pursuant to the Fees Regulations) and expressed in pounds per (pound)1,000,000 of the Fee Base of that Bank.
5 For the purposes of this schedule:
(a) "Eligible Liabilities" and "Special Deposits" have the meanings given to them from time to time under or pursuant to the Bank of England Act 1998 or (as may be appropriate) by the Bank of England;
(b) "Fees Regulations" means the Banking Supervision (Fees) Regulations 2001 or such other law or regulation as may be in force from time to time in respect of the payment of fees for banking supervision;
(c) "Fee Base" has the meaning given to it, and will be calculated in accordance with, the Fees Regulations; and
(d) "Participating Member State" means any member state of the European Communities that adopts or has adopted the euro as its lawful currency in accordance with legislation of the European Union relating to European Monetary Union.
6 In application of the above formulae, A, B, C and D will be included in the formulae as percentages (i.e. 5 per cent. will be included in the formula as 5 and not as 0.05). A negative result obtained by subtracting D from B shall be taken as zero. The resulting figures shall be rounded to four decimal places.
7 Each Bank shall supply any information required by the Administrative Agent for the purpose of calculating its Additional Cost Rate. In particular, but without limitation, each Bank shall supply the following information in writing on or prior to the date on which it becomes a Bank:
(a) its jurisdiction of incorporation and the jurisdiction of the office through which it will perform its obligations under this Agreement; and
(b) any other information that the Administrative Agent may reasonably require for such purpose.
Each Bank shall promptly notify the Administrative Agent in writing of any change to the information provided by it pursuant to this paragraph.
8 The percentages or rates of charge of each Bank for the purpose of A, C and E above shall be determined by the Administrative Agent based upon the information supplied to it pursuant to paragraph 7 above and on the assumption that, unless a Bank notifies the Administrative Agent to the contrary, each Bank's obligations in relation to cash ratio deposits, Special Deposits and the Fees Regulations are the same as those of a typical bank from its jurisdiction of incorporation with an office in the same jurisdiction as the office through which it is performing its obligations under this Agreement.
9 The Administrative Agent shall have no liability to any person if such determination results in an Additional Cost Rate which over or under compensates any Bank and shall be entitled to assume that the information provided by any Bank pursuant to paragraphs 3 and 7 above is true and correct in all respects.
10 The Administrative Agent shall distribute the additional amounts received as a result of the Additional Cost to the Lenders on the basis of the Additional Cost Rate for each Bank based on the information provided by each Bank pursuant to paragraphs 3 and 7 above.
11 Any determination by the Administrative Agent pursuant to this schedule in relation to a formula, the Additional Cost, an Additional Cost Rate or any amount payable to a Bank shall, in the absence of manifest error, be conclusive and binding on all the parties to this Agreement.
12 The Administrative Agent may from time to time, after consultation with the Borrower and the Banks, determine and notify to all the parties to this Agreement any amendments which are required to be made to this schedule in order to comply with any change in law, regulation or any requirements from time to time imposed by the Bank of England, the Financial Services Authority or the European Central Bank (or, in any case, any other authority which replaces all or any of its functions) and any such determination shall, in the absence of manifest error, be conclusive and binding on all the parties to this Agreement.
Schedule 7
Form of officer's certificate (referred to in clause 8.1(e)(ii)(D))
Officer's Certificate issued pursuant to a USD325,000,000 Term Loan Agreement dated [o] 2001
I, [o], the Chief Financial Officer of Golar Gas Holding Company, Inc. (the "Borrower"), hereby certify that:
1 Attached hereto are the latest [Annual Financial Statements][Quarterly Financial Statements] for the [o] period ended on [o] (the "Reference Date") for the Borrower. Such financial statements [were prepared in accordance with GAAP] [were not prepared in accordance with GAAP and attached hereto is a statement of the full details of the adjustments required to such statements to reflect GAAP as necessary to calculate the amounts referred to in paragraph 2 below].
2 Attached hereto is a statement of the respective amounts of:
o the Cash Balances[, the Cash Reserve] and Minimum Free Available Cash
o Current Assets, Current Liabilities and the current portion of Long Term Debt
o Annualised EBITDA and Interest Expense
o Net Debt,
as at, and for each relevant period ended on, the Reference Date.
3 The Borrower has complied with each of the financial undertakings set out in clause 8.5 of the Loan Agreement and is not in default in the performance or observance of any of such covenants [specify any exceptions].
4 As at [date] no Default has occurred and is continuing [specify any exceptions].
5 The person executing this certificate on our behalf has full information concerning our financial affairs and has executed the same after having made due investigation and enquiry as to the accuracy of the information herein contained.
Terms used herein and not otherwise defined herein shall have the meanings set forth in the said Loan Agreement. This certificate is rendered pursuant to clause 8.1(e)(ii)(D) of the Loan Agreement.
IN WITNESS WHEREOF, the undersigned has set his hand this [o] day of [o] [20o].
GOLAS GAS HOLDING COMPANY, INC.
By: ...................................................
Chief Financial Officer
The Borrower SIGNED by PETER COSTALAS ) for and on behalf of ) GOLAR GAS HOLDING COMPANY, INC. ) pursuant to a Power of Attorney ) PETER COSTALAS dated 31 May 2001 ) Attorney-in-fact Christiania Bank og Kreditkasse ASA SIGNED by AMANDA CLIFFORD ) for and on behalf of ) CHRISTIANIA BANK OG KREDITKASSE ASA ) - Part of Nordea ) as the Administrative Agent, ) a Lead Arranger, a Swap Bank and as a Bank ) pursuant to a Power of Attorney ) AMANDA CLIFFORD dated 30 May 2001 ) Attorney-in-fact Den norske Bank ASA SIGNED by AMANDA CLIFFORD ) for and on behalf of ) DEN NORSKE BANK ASA ) as the Security Agent, ) a Lead Arranger, a Swap Bank and as a Bank ) pursuant to a Power of Attorney ) AMANDA CLIFFORD dated 30 May 2001 ) Attorney-in-fact Citibank, N.A. SIGNED by SIMON BOOTH ) for and on behalf of ) CITIBANK, N.A. ) as the Book Runner, a Lead Arranger and as a Bank ) SIMON BOOTH by its authorised signatory ) Authorised signatory Fortis Bank (Nederland) N.V. SIGNED by AMANDA CLIFFORD ) for and on behalf of ) FORTIS BANK (NEDERLAND) N.V. ) as a Lead Arranger and as a Bank ) pursuant to a Power of Attorney ) AMANDA CLIFFORD dated 30 May 2001 ) Attorney-in-fact |
Exhibit 4.3
Dated as of the 26th day of November 1997
Secured Loan Facility
of up to US$214,500,000
made by
BANK OF TAIWAN
(as Lead Arranger)
CREDIT AGRICOLE INDOSUEZ
THE FUJI BANK, LIMITED
THE INDUSTRIAL BANK OF JAPAN, LIMITED
(as Arrangers)
CREDIT LYONNAIS, OFFSHORE BANKING UNIT, TAIPEI
(as Senior Manager)
THE BANKS and FINANCIAL INSTITUTIONS
referred to in Schedule 1
(the Lenders)
and
INDOSUEZ ASIA SHIPFINANCE SERVICES LIMITED
(as Agent)
to
AMENDED AND RESTATED FINANCIAL AGREEMENT
CONTENTS
Clause Heading Page No. ------ ------- -------- 1. Purpose and Definitions..........................................4 2. The Facility....................................................15 3. Interest and Interest Periods...................................17 4. Repayment and Prepayment........................................18 5. Fees and Expenses...............................................18 6. Payments and Taxes; Accounts and Calculations...................19 7. Representations and Warranties..................................21 8. Undertakings....................................................25 9. Conditions......................................................30 10. Events of Default...............................................31 11. Indemnities.....................................................34 12. Unlawfulness, Increased Costs, Alternative Interest Rates.......35 13. Security and Set-off............................................33 14. Assignment and Lending Offices..................................40 15. Agent and the Lenders...........................................42 16. Notices and other Matters.......................................42 17. Law and Jurisdiction............................................43 |
I. Form of Charter Assignment
II. Form of Collateral Agreement
III. Form of Contract Assignment
IV. Form of Deed of Charge
V. Form of General Assignment
VI. Form of Guarantee and Swap Receipts Assignment
VII. Form of Management Contracts Assignment
VIII. Form of Mortgage
THIS AGREEMENT is made as of the 26th day of November One thousand nine hundred and ninety-seven
BETWEEN:
(1) FARAWAY MARITIME SHIPPING COMPANY, as borrower;
(2) BANK OF TAIWAN, as lead arranger;
(3) CREDIT AGRICOLE INDOSUEZ, THE FUJI BANK, LIMITED and THE INDUSTRIAL BANK OF JAPAN, LIMITED, as arrangers;
(4) CREDIT LYONNAIS, OFFSHORE BANKING UNIT, TAIPEI, as senior manager;
(5) THE BANKS AND FINANCIAL INSTITUTIONS referred to in Schedule 1, as lenders; and
(6) INDOSUEZ ASIA SHIPFINANCE SERVICES LIMITED, as agent and security trustee.
BY WHICH IT IS AGREED as follows:
1. PURPOSE AND DEFINITIONS
1.01 This Agreement sets out the terms and conditions upon and subject to
which the Lenders agree to make available to the Borrower a secured
loan of up to Dollars Two hundred and fourteen million five hundred
thousand ($214,500,000) or (subject as provided in Clause 2.01(b))
such lesser amount as represents seventy eight per centum (78%) of the
Total Project Cost to be used for the purpose of assisting the
Borrower in financing its acquisition of the Vessel (as such
capitalised terms are defined below).
1.02 In this Agreement, unless the context otherwise requires:
"Additional Swap Agreements" means each interest rate exchange
agreement approved by the Agent made or to be made between the
Borrower and any party who is not a Counterparty on terms whereby the
Borrower agrees to pay a fixed amount of interest on 28th June and/or
28 December of any year, and includes any renewal, replacement,
substitute or addendum to such agreement made from time to time;
"Advance" means each borrowing of a portion of the Commitment in
respect of the Contract Price Tranche or the Fees and Development
Costs Tranche by the Borrower or (as the context may require) the
principal amount of such borrowing for the time being outstanding;
Page 4
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"Affiliate" means of any person means any other person which, directly
or indirectly, controls or is controlled by or is under common control
with such person; for the purposes of this definition "control" when
used with respect to any specified person means the power to direct
the management and policies of such person, directly or indirectly,
whether through ownership of voting securities, by contract or
otherwise, and the terms "controlling" and "controlled" have meanings
correlative to the foregoing;
"Agent" means Indosuez Asia Shipfinance Services Limited, a company
incorporated under the laws of Hong Kong, having its registered office
at 45th Floor, One Exchange Square, 8 Connaught Place, Central, Hong
Kong or such other person as may be appointed as agent and security
trustee for the Lenders pursuant to the Security Sharing Agreement;
"Arrangers" means Credit Agricole Indosuez, The Fuji Bank, Limited and
The Industrial Bank of Japan, Limited, being three of the Lenders
under this Agreement and arrangers of this facility, and references to
"the Arrangers" shall be construed as including the Lead Arranger;
"Assignee" has the meaning ascribed thereto in Clause 14.03;
"Bank Guarantee" means the bank guarantee issued or to be issued by a
Bank Guarantor in favour of the Borrower pursuant to Section 13.3 of
the Contract, in the form annexed as Appendix 3 to the Contract;
"Bank Guarantor" means each first-class European, American, Japanese,
Hong Kong or Taiwanese bank or group of banks to issue a Bank
Guarantee in accordance with the terms of the Contract;
"Banking Day" means, a day (excluding Saturday) on which dealings in
deposits in Dollars are carried on in the London interbank market and
(if payment is required to be made on such day) on which banks are
open for business in London, New York, Paris, Singapore, Tokyo, Taipei
and Hong Kong and any other relevant place of payment under Clause 6
and in respect of notices, requests, demands and other communications
under Clause 16.01, means a day on which banks are open for business
in the country of the addressee;
"Borrowed Money" means Indebtedness incurred in respect of (i) money
borrowed or raised, (ii) any bond, note, loan stock, debenture or
similar instrument, (iii) acceptance or documentary credit facilities,
(iv) deferred payments for assets or services acquired, (v) rental
payments under leases (whether in respect of land, machinery,
equipment or otherwise) entered into primarily as a method of raising
finance or of financing the acquisition of the asset leased, (vi)
guarantees, bonds, stand-by letters of credit or other instruments
issued in connection with the performance of contracts and (vii)
guarantees or other assurances against financial loss in respect of
Indebtedness of any person falling within any of paragraphs (i) to
(vi) above;
|
"Borrower" means FARAWAY MARITIME SHIPPING COMPANY, a company incorporated under the laws of the Republic of Liberia, having its registered office at 80 Broad Street, Monrovia, Republic of Liberia;
"Builder" means Mitsubishi Heavy Industries, Ltd., of Japan;
"Cash Available" means, in respect of each repayment period, the aggregate of (i) the Owner's Cost Component, and (ii) a portion of the Operating Cost Component equal to the amount of Taxes (as that term is defined in the Collateral Agreement) deducted from the Owner's Cost Component, actually received by the Borrower during that repayment period;
"Chargors" means together CPC, Oxbow and Golar Maritime, and "Chargor" means each or any one of them as the context may require;
"Charter" means the time charterparty dated 2nd July 1997 a certified true copy of which has been provided to the Agent, entered into between the Borrower and the Charterer for the Vessel to be on hire to the Charterer throughout the Loan Period at a rate of charterhire sufficient to enable the Borrower to meet its obligations under this Agreement and the Security Documents and the operating expenses of the Vessel;
"Charter Assignment" means the assignment of the Charter to be made between the Borrower and the Agent (in its capacity as security trustee for and on behalf of the Counterparties and the Lenders) as security for the Borrower's obligations under this Agreement, being in the form attached as Appendix I hereto;
"Charterer" means Perusahaan Pertambangan Minyak dan Gas Bumi Negara (Pertamina), a state enterprise of the Republic of Indonesia having an office at Gedung Patra, Second Floor, Jalan Gatot Soebroto 32-34, Jakarta Selatan, Republic of Indonesia;
"Charterer's Consent" means the consent of the Charterer to the Charter Assignment and certain of the other Security Documents in the form attached as Schedule 2 to the Charter Assignment;
"Collateral Agreement" means the agreement made or to be made between the Borrower, the Trustee, the Lenders and the Agent governing the accounts for the receipt and application of charterhire and other earnings of the Vessel, being in the form attached as Appendix II hereto;
"Commitment" means in relation to each Lender the amount set opposite its name in Schedule 1, being the amount which such Lender will make available to the Borrower hereunder, and in relation to the Lenders together means the aggregate thereof, in each case as reduced by any relevant term of this Agreement;
"Contract" means the shipbuilding and sales contract dated 14th June 1997, together with all assignments, amendments, modifications, supplements and addenda thereto from time to time, and made between the Contractor of the one part and the Borrower of the second part, with the consent and agreement of the Builder whereby the Contractor and the Builder have agreed to build, launch, complete and deliver the Vessel to the Borrower, a certified true copy of which has been delivered to the Agent;
"Contract Assignment" means the assignment of the Contract to be made between the Borrower and the Agent (in its capacity as security trustee for and on behalf of the Counterparties and the Lenders) as security for the Borrower's obligations under this Agreement, being in the form attached as Appendix III hereto;
"Contract Price" means the total price payable by the Borrower to the Contractor for the Vessel under the Contract, namely Dollars Two hundred and thirty five million ($235,000,000);
"Contract Price Tranche" means that part of each Lender's Commitment or Contribution which is available or has been drawn down to meet the whole or part of an instalment of the Contract Price under Clause 2.04;
"Contractor" means Mitsubishi Corporation (Hong Kong) Ltd., of Hong Kong;
"Contribution" means the principal amount of the Loan owing to a Lender at any relevant time;
"Counterparties" means any of (i) the Lenders, and/or (ii) any subsidiary or holding company of a Lender which is approved in writing by the Agent acting on the instructions of the Arrangers, as the case may be, which enters into a Swap Agreement with the Borrower;
"CPC" means Chinese Petroleum Corporation, a company incorporated under the laws of the Republic of China, having its principal office at 83 Section 1, Chung Hwa Road, 10031 Taipei, Taiwan, Republic of China;
"Debt/Equity Ratio" means at any relevant time the ratio of (i) the aggregate amount drawn down by the Borrower under this Agreement against (ii) the aggregate amount of paid capital and subordinated shareholders loan made available to the Borrower by the Chargors;
"Debt Service Reserve" has the meaning ascribed to it in the Collateral Agreement;
"Deed of Charge" means the deed of charge whereby the whole of the issued and outstanding share capital of the Borrower is charged in favour of the Agent (in its capacity as security trustee for and on behalf of the Counterparties and the Lenders) to be made between the Chargors and the Agent as security for the Borrower's obligations under this Agreement, being in the form attached as Appendix IV hereto;
"Deed of Guarantee" means the performance guarantee issued by Osprey Maritime Limited in favour of the Charterer, in the form annexed as Exhibit B to the Charter;
"Default" means any Event of Default or any event which with the giving of notice or lapse of time or the satisfaction of any other condition (or any combination thereof) would constitute an Event of Default;
"Delivery Date" means the date, being a Banking Day, on which the Vessel is delivered to, and accepted by, the Borrower under the Contract;
"Development Costs" means all costs in relation to the construction and outfitting of the Vessel including but not limited to consultancy and legal services, administration, plan approval, supervision, initial stores, positioning costs and spares;
"Dollars" and "$" mean the lawful currency at any relevant time hereunder of the United States of America and in respect of all payments to be made under this Agreement or any of the other Security Documents mean funds which are for same day settlement in the New York Clearing House Interbank Payments System (or such other U.S. dollar funds as may at the relevant time be customary for the settlement of international banking transactions denominated in U.S. dollars);
"Drawdown Date" means, in respect of each Advance, the date being a Banking Day during the Drawdown Period, on which such Advance is or is to be advanced;
"Drawdown Notice" means a notice substantially in the terms of Schedule 2;
"Drawdown Period" means the period from the date of this Agreement and ending on 31st December 2000 or the period ending on such earlier date (if any) (i) which is the Delivery Date or (ii) on which the aggregate of all Advances is equal to the total of the Commitment or (iii) on which the Commitment is reduced to zero pursuant to Clause 10.02 or 12;
"Earnings Account" has the meaning ascribed to such term in the Collateral Agreement;
"Encumbrance" means any mortgage, charge (whether fixed or floating), pledge, lien (save for those arising in the normal course of business), hypothecation, assignment, security interest or other encumbrance of any kind securing or any right conferring a priority of payment in respect of any obligation of any person;
"Event of Default" means any of the events or circumstances described in Clause 10.01;
"Fee Letter" means the letter agreement made or to be made between the Borrower and the Agent relating to the Lenders' and the Arrangers' management fee and an annual agency fee;
"Fees and Development Costs Tranche" means that part of each Lender's Commitment and/or Contribution which is available for, or is drawn down to make, payment of:
(i) Development Costs pursuant to the terms of Clause 2.04(b)(i); and
(ii) interest, commitment fees, trustee fees, management fees and agency fees prior to the Delivery Date pursuant to the terms of Clause 2.05(b),
not exceeding in aggregate Dollars Thirty one million two hundred thousand ($31,200,000);
"Final Fees and Development Costs Amount" means an amount comprising:
(i) expenses, approved by the Agent against presentation of invoices and/or receipts, in respect of permissible Development Costs; and
(ii) a further amount to fund interest, commitment fees, management fees, agency fees and trustee fees unpaid at the Delivery Date in respect of the period commencing on the last Interest Payment Date before the Delivery Date and ending on the Funded Amounts Date,
calculated by the Agent so that the aggregate of the Final Fees and Development Costs Amount and all Advances made at any time under Clause 2.04(a) and Clause 2.04(b) does not exceed the lesser of (a) Dollars Two hundred and fourteen million five hundred thousand ($214,500,000), and (b) seventy eight per centum (78%) of the Total Project Cost;
"Final Maturity Date" means 28th June 2013;
"First Hire Payment Date" has the meaning ascribed to such term in section 1.20 of the Charter;
"First Repayment Date" means 28th June 2001;
"Floating Rate" means the rate of interest for the time being chargeable on the Loan, determined in accordance with Clause 3.02;
"Funded Amounts Date" means the date notified by the Borrower to the Agent, in the Drawdown Notice relating to the final instalment of the Contract Price Tranche, being a date not more then ten (10) days after the Delivery Date which the Borrower anticipates will be the First Hire Payment Date;
"General Assignment" means the assignment of all insurances, requisition compensation and earnings (excluding charterhire) relating to the Vessel to be made between the Borrower and the Agent (in its capacity as security trustee for and on behalf of the Counterparties and the Lenders) as security for the Borrower's obligations under this Agreement, being in the form attached as Appendix V hereto;
"GLIL" means Gotaas - Larsen International Ltd., of 80 Broad Street, Monrovia, Liberia;
"Golar Maritime" means Golar Maritime (Asia) Inc., a company incorporated under the laws of the Republic of Liberia, having its registered office at 80 Broad Street, Monrovia, Republic of Liberia;
"Good Management Undertaking" means the letter of undertaking of even date herewith between Golar Gas Holding Company Inc. and the Agent relating to the obligations of GLIL under the Sub-management Agreement;
"Guarantee and Swap Receipts Assignment" means the assignment of the Bank Guarantee, the Performance Bond and the Refund Guarantees and of the moneys payable to the Borrower under the Swap Agreement to be made between the Borrower and the Agent (in its capacity as security trustee for and on behalf of the Counterparties and the Lenders) as security for the Borrower's obligations under this Agreement, being in the form attached as Appendix VI hereto;
"Indebtedness" means any obligation for the payment or repayment of money, whether as principal or as surety and whether present or future, actual or contingent, primary or collateral, several or joint, secured or unsecured;
"Indonesian Taxes" has the meaning ascribed to such term in section 1.30 of the Charter;
"Information Memorandum" means the information memorandum dated November 1997, describing, amongst other matters, the Relevant Documents and the Vessel, the transactions contemplated by this Agreement and other related matters;
"Interest Payment Date" means the last day of each Interest Period;
"Interest Period" means in relation to each Advance and the Loan each period for the calculation of interest in respect of such Advance or the Loan ascertained in accordance with Clauses 3.02 and 3.03, but subject to Clause 12.03;
"Lead Arranger" means Bank of Taiwan, being one of the Lenders under this Agreement and the lead arranger of this facility;
"Lenders" means the banks and other financial institution or their associates listed in Schedule 1 (including any other branch or office through which each such Lender may be acting from time to time pursuant to Clause 14.06) and includes the successors in title, Assignees and Transferees of the Lenders or any or each of them, as the case may be, and "Lender" means any of them as the context may require;
"Letters of Undertaking" means the letters of undertaking bearing even date with this Agreement written by parties approved by the Agent and addressed to the Agent, certified copies of which have been given to each of the Lenders and "Letter of Undertaking" means each and any of them;
"Libor" means, in relation to a particular period, the arithmetic mean (rounded upward if necessary to five decimal places) of the London Interbank offered rate for Dollar deposits for a period equal to such period at or about 11 a.m. (London time) on the second Banking Day before the first day of such period as displayed on the page 3750 on the Telerate screen (or such other page as may from time to time replace such page for the purpose of displaying London Interbank offered rates of major banks for Dollar deposits), provided that if on such date the offered rates of less than two banks are so displayed, Libor for such period shall be the arithmetic mean (rounded upwards as aforesaid) of the rates respectively quoted to the Agent by each of the Lead Arranger and the Arrangers at the request of the Agent as such Arranger's offered rate for Dollar deposits in an amount approximately equal to the amount in relation to which Libor is to be determined for a period equivalent to such period to prime banks in the London Interbank Market at or about 11 a.m. (London time) on the second Banking Day before the first day of such period;
"Loan" means the aggregate principal amount owing to the Lenders under this Agreement at any relevant time;
"Loan Period" means the period from the date of this Agreement to the date upon which all moneys owing by the Borrower to the Lenders and/or the Agent under or pursuant to this Agreement and the Security Documents are paid in full;
"Majority Lenders" means Lenders, the aggregate of whose Contributions equals or exceeds seventy five per centum (75.0%) of the Loan or, prior to drawdown of the Loan, the aggregate of whose Commitments equals or exceeds seventy five per centum (75.0%) of the total Commitments of all the Lenders;
"Management Agreement" means the ship management agreement made or to be made between the Borrower and the Manager pursuant to which the Manager is appointed to provide technical management of the Vessel, a certified true copy of which has been delivered to the Agent;
"Management Contracts Assignment" means the assignment of the Management Agreement and the Sub-Management Agreement to be executed by the Borrower and the Manager in favour of the Agent (in its capacity as security trustee for and on behalf of the Counterparties and the Lenders) as security for the Borrower's obligations under this Agreement, being in the form attached as Appendix VII hereto;
"Manager" means Aurora Management Inc. of 80 Broad Street, Monrovia, Republic of Liberia and includes any replacement manager appointed with the approval of the Agent (such approval not to be unreasonably withheld);
"Margin" means from the date of drawdown of the first Advance hereunder until the Delivery Date, nought point four two five per centum (0.425%) per annum and thereafter, nought point eight six five per centum (0.865%) per annum;
"month" means a period beginning in one calendar month and ending in the next calendar month on the day numerically corresponding to the day of the calendar month on which it started Provided that (i) if the period started on the last Banking Day in a calendar month or if there is no such numerically corresponding day, it shall end on the last Banking Day in such next calendar month and (ii) if such numerically corresponding day is not a Banking Day, the period shall end on the next following Banking Day in the same calendar month but if there is no such Banking Day it shall end on the preceding Banking Day and "months" and "monthly" shall be construed accordingly;
"Mortgage" means the first preferred Liberian ship mortgage of the Vessel to be executed by the Borrower in favour of the Agent (acting in its capacity as security trustee for and on behalf of the Counterparties and the Lenders) as security for the Borrower's obligations under this Agreement, being in the form attached as Appendix VIII hereto;
"Net Interest" means, in respect of any Interest Payment Date:
(a) the aggregate of (i) the interest payable by the Borrower under this Agreement and (ii) any amounts payable by the Borrower under each Swap Agreement and Additional Swap Agreement;
less
(b) amounts receivable by the Borrower under each Swap Agreement and Additional Swap Agreement,
in each case on the relevant Interest Payment Date;
"Outstanding Indebtedness" means the aggregate of the Loan and interest accrued and accruing thereon, all commitment and other fees accrued and accruing hereunder and all other sums of money from time to time owing by the Borrower to the Lenders, or any of them, actually or contingently, under this Agreement and the Security Documents, or any of them;
"overall control" means in relation to any company:
(a) having the power, exercisable without the consent or concurrence of any other person, to appoint or remove all or the majority of the directors of the company, provided nobody else has such power; or
(b) owning or controlling more than half of the issued share capital of the company; or
(c) owning or controlling more than half of the voting power of the company;
"Owner's Cost Component" has the meaning ascribed to such term in section 1.40 of the Charter;
"Oxbow" means Oxbow Holdings Inc., a corporation incorporated under the laws of the British Virgin Islands, having its registered office at Drake Chambers, Tortola, British Virgin Islands;
"Performance Bond" means the performance bond dated 13th June 1997 executed by The Tokai Bank, Ltd. in favour of the Borrower in respect of the Builder's obligations under the Contract, in the form annexed as Appendix I to the Contract;
"Permitted Encumbrance" means any Encumbrance created pursuant to the Security Documents or permitted to exist pursuant to the terms of this Agreement or the Security Documents;
"Receiver" means any receiver, manager or similar officer appointed by the Agent in respect of the security granted under the Security Documents;
"Receiving Bank" means Credit Agricole Indosuez, Hong Kong branch, 42nd - 45th Floor, One Exchange Square, Central, Hong Kong;
"Refund Guarantees" means the refund guarantees executed or to be executed by the Bank Guarantors in favour of the Borrower pursuant to the Contract in the form annexed as Appendix II to the Contract and "Refund Guarantee" means each or any one of them;
"Related Company" of a person means any Subsidiary of such person, any company of which such person is a Subsidiary and any Subsidiary of any such company;
"Relevant Documents" means together the Bank Guarantee, the Charter, the Contract, the Shareholders Agreement, the Management Agreement, the Performance Bond, the Refund Guarantees, the Performance Guarantee, the Sub-management Agreement, the Sales Contract, the Trustee and Paying Agent Agreement, the Security Sharing Agreement and each of the Security Documents and "Relevant Document" means each or any one of them as the context may require;
"Repayment Dates" means, subject to Clause 6.04, the First Repayment Date and each of the subsequent dates set out in Schedule 4;
"Sales Contract" means the contract dated 25th October 1995 made between the Charterer and CPC for the sale and purchase of liquefied natural gas, described in the Charter, a certified true copy of which has been delivered to the Agent;
"Scheduled Delivery Date" has the meaning ascribed to it in section 1.46 of the Charter;
"Security Documents" includes (i) the Charter Assignment, (ii) the
Charterer's Consent, (iii) the Collateral Agreement, (iv) the Letters
of Undertaking, (v) the Contract Assignment, (vi) the Deed of Charge,
(vii) the General Assignment, (viii) the Management Contracts
Assignment, (ix) the Mortgage, (x) the Guarantee and Swap Receipts
Assignment, (xi) the Swap Agreement, (xii) the Good Management
Undertaking (xiii) the Security Sharing Agreement and (xiv) any such
other documents as may have been or shall from time to time hereafter
be executed to secure the Loan, the Swap Debt, interest and all other
moneys from time to time owing (whether the same shall be due and
payable or not) by the Borrower pursuant to this Agreement, the Swap
Agreements and/or to all or any of such documents;
"Security Sharing Agreement" means the security sharing agreement (if any), to be entered into before the first Advance is made pursuant to this Agreement, among the Lenders, the Borrower, the Counterparties, the Agent and any other party approved by the Agent relating to the security granted to secure the Borrower's obligations under this Agreement together with all assignments, amendments, modifications, supplements and addenda thereto from time to time;
"Shareholders Agreement" means the agreement dated 14th June 1997 made between the Chargors with respect to the regulation of the affairs of the Borrower, a certified true copy of which has been given to the Agent;
"Sub-management Agreement" means the sub-contract agreement made or to be made between the Manager and the Sub-manager pursuant to which the Sub-manager will provide technical management for the operation of the Vessel, a certified true copy of which has been delivered to the Agent;
"Sub-manager" means GLIL as sub-contractor of the Manager under the Sub-management Agreement and includes any replacement sub-contractor appointed with the approval of the Agent (such approval not to be unreasonably withheld);
"Subsidiary" of a person means any company or entity directly or indirectly controlled by such person for which purpose "control" means either ownership of more than fifty per centum (50%) of the voting share capital (or equivalent right of ownership) of such company or entity or power to direct its policies and management whether by contract or otherwise;
"Swap Agreement" means the interest rate exchange agreement, or interest rate exchange agreements, as the case may be, made or to be made within thirty (30) days of the date of this Agreement in each case between the Borrower and one or more of the Counterparties whereby each Counterparty will provide to the Borrower an interest rate swap facility to limit the Borrower's exposure to adverse movements in interest rates, and any renewal, replacement, substitute of or addendum to such agreement from time to time made with the approval of the Agent and "Swap Agreements" means any and all of them as the context may require;
"Swap Debt" means, in relation to the Borrower, all termination sums and other amounts payable by the Borrower from time to time under or in connection with each Swap Agreement;
"Taxes" includes all present and future taxes, levies, imposts, duties, fees or charges of whatever nature together with interest thereon and penalties in respect thereof and "Taxation" shall be construed accordingly;
"Total Loss" means actual or constructive or compromised or arranged total loss of the Vessel, requisition for title or other compulsory acquisition of the Vessel (otherwise than by requisition for hire) or capture, seizure, arrest, detention or confiscation of the Vessel by any government or by persons acting or purporting to act on behalf of any government unless the Vessel be released and restored to the Borrower from such capture, seizure, arrest, detention or confiscation within one (1) month after the occurrence thereof;
"Total Project Cost" means the aggregate of (a) the Contract Price of the Vessel, (b) interest accrued on Advances made prior to the Delivery Date, (c) the Development Costs (d) interest accrued on the Loan for the period commencing on (and including) the Delivery Date and ending on the Funded Amounts Date and (e) commitment and other fees payable to the Lenders and/or the Agent and/or the Trustee under or pursuant to this Agreement, each as conclusively determined by the Agent immediately before the Delivery Date;
"Transfer Certificate" means a certificate substantially in the terms
of Schedule 5;
"Transferee" has the meaning ascribed thereto in Clause 14.03;
"Trustee" means The Industrial Bank of Japan Trust Company of One
State Street, New York, New York, 10004, United States of America;
"Trustee and Paying Agent Agreement" means the trustee and paying
agent agreement dated 4th March 1997 made between inter alia the
Charterer and Bank of America National Trust and Savings Association,
New York Branch, as trustee and paying agent pursuant to inter alia
the Sales Contract, a certified true copy of which has been delivered
to the Agent;
"Trustee Fee Letter" means the letter agreement made or to be made
between the Borrower and the Trustee relating to an annual Trustee
fee;
"Vessel" means the 135,000 m3 loading capacity liquefied natural gas
carrier presently under construction under the Contract having
Builder's Hull No. 2148 and which on delivery will be registered in
the ownership of the Borrower under the laws and flag of the Republic
of Liberia.
1.03 Clause headings and the table of contents are inserted for convenience
of reference only and shall be ignored in the interpretation of this
Agreement.
1.04 In this Agreement and the Security Documents an event, circumstance or
situation will be deemed to be "material" if:
(a) in relation to a matter to which a monetary value can be
attached, it has a value or potential value if realised in
respect of any single item in excess of Dollars Three hundred
thousand ($300,000) and in relation to all such matters at any
one time in excess in aggregate of Dollars Two million
($2,000,000);
(b) in relation to all matters (whether financial or otherwise), it
is of such a nature that the directors of the Borrower, acting
honestly and reasonably, if they were to consider the effect or
potential effect of such matter would draw the conclusion either
(i) that it would have, or potentially would have, an adverse
effect on the ability of the Borrower or any other party (other
than the Lenders or the Agent) to any of the Relevant Documents
to perform its respective obligations thereunder as they fall due
or (ii) that it is a matter of which a prudent lender in a
facility of this nature would wish to be aware and, if aware,
would hold the opinion expressed in sub-paragraph (c) below;
(c) in relation to a matter of which the Agent and/or the Lenders are
aware, is of such nature that the Majority Lenders in their
reasonable opinion consider to be material and advise the Agent
accordingly.
1.05 In this Agreement, unless the context otherwise requires:
(a) references to Clauses and Schedules are to be construed as
references to clauses of, and schedules to, this Agreement and
references to this Agreement include its Schedules;
(b) references to (or to any specified provision of) this Agreement
or any other document shall be construed as references to this
Agreement, that provision or that document as in force for the
time being and as amended in accordance with terms thereof, or,
as the case may be, with the agreement of the relevant parties
and (where such consent is by the terms of this Agreement or the
relevant document, required to be obtained as a condition to such
amendment being permitted) the prior written consent of the
Agent;
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(c) references to any enactment shall be deemed to include references to such enactment as re-enacted, amended, extended, consolidated or replaced, and any orders decrees, proclamations, regulations, instruments or other subordinate legislation made thereunder;
(d) words importing the plural shall include the singular and vice versa; and
(e) references to a person shall be construed as references to an individual, firm, company, corporation, unincorporated body of persons or any State or any agency thereof.
2. THE FACILITY
2.01 (a) The Lenders, relying upon each of the representations and
warranties in Clause 7, agree to lend to the Borrower upon and
subject to the terms of this Agreement, the principal sum of up
to Dollars Two hundred and fourteen million five hundred thousand
($214,500,000) or (subject to paragraph (b) below) such lesser
sum as is equal to seventy eight per centum (78%) of the Total
Project Cost as agreed between the Borrower and the Agent by
reference to budgeted expenses approved from time to time by the
Agent and incurred by the Borrower up to delivery of the Vessel
on hire under the Charter.
(b) In the event that seventy eight per centum (78%) of the Total
Project Cost is less than Dollars Two hundred and fourteen
million five hundred thousand ($214,500,000), the Lenders,
relying upon each of the representations and warranties in Clause
7, grant to the Borrower the option to require the Lenders to
lend to the Borrower, on the Delivery Date and upon and subject
to the terms of this Agreement, a further principal sum in an
amount equal to the difference between:
(i) Dollars Two hundred and fourteen million five hundred
thousand ($214,500,000); and
(ii) seventy eight per centum (78%) of the Total Project Cost,
provided that the Borrower shall, immediately upon drawdown of
any amount made available by the Lenders under this Clause
2.01(b), pay such amount to the Earnings Account, and instruct
the Trustee to transfer such amounts to the Collateral Account
(as defined in the Collateral Agreement) to be applied to
establish the Debt Service Reserve.
2.02 The obligations of each Lender under this Agreement shall be to
contribute to each Advance that proportion of each Advance which its
Commitment represents of the total Commitments of all of the Lenders.
2.03 The obligations of each Lender under this Agreement are several. The
failure of any Lender to perform its obligations under this Agreement
shall not relieve the other Lenders or the Agent or the Borrower of
any of their respective obligations or liabilities under this
Agreement nor shall the Agent or any Lender be responsible for the
obligations of any other Lender under this Agreement. However, in the
event that the Borrower suffers any loss or damage due to any Lender's
failure other than as expressly provided for in this Agreement, that
Lender shall indemnify the Borrower for such loss or damage.
2.04 Subject to the terms of this Agreement, the Borrower may drawdown the
Commitment by Advances in Dollars in the following manner:
(a) up to four (4) Advances, comprising the Contract Price Tranche,
may be drawndown as follows:
(i) the first (1st) Advance shall be in an amount equal to
Dollars Twenty three million five hundred thousand
($23,500,000) on or after the Banking Day upon which the
second (2nd) instalment of the Contract Price is due and
payable to the Contractor under Section 8.2(b) of the
Contract;
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(ii) the second (2nd) Advance shall be in an amount equal to
Dollars Forty seven million ($47,000,000) on or after the
Banking Day upon which the third (3rd) instalment of the
Contract Price is due and payable to the Contractor under
Section 8.2(c) of the Contract;
(iii) the third (3rd) Advance shall be in an amount equal to
Dollars Forty seven million ($47,000,000) on or after the
Banking Day upon which the fourth (4th) instalment of the
Contract Price is due and payable to the Contractor under
Section 8.2(d) of the Contract; and
(iv) the fourth (4th) and final Advance shall be made on the Delivery Date and shall be in an amount equal to the aggregate of (1) the final instalment of the Contract Price due and payable to the Contractor under Section 8.2(e) of the Contract, and (2) the Final Fees and Development Costs Amount;
(b) by Advances, comprising the Fees and Development Costs Tranche, which will be available for drawdown:
(i) in respect of Advances intended to fund permissible Development Costs, in amounts of no less than Dollars One million ($1,000,000) available for drawdown on the twenty-eighth (28th) day of March, June, September and December during the Drawdown Period (save for the Delivery Date) against presentation to the Agent of invoices and/or receipts in respect of permissible Development Costs; and
(ii) in respect of Advances intended to fund payment of interest, commitment fees, management fees, agency fees and trustee fees prior to the Delivery Date, in accordance with Clause 2.05(b),
subjectin each case to the Agent being satisfied that, upon making the relevant Advance, the Debt/Equity Ratio will not exceed 78:22;
(c) by an Advance, comprising the funds made available for
drawdown on the Delivery Date in accordance with Clause
2.01(b), subject to the Agent being satisfied that, upon
making that Advance and any other Advance being made at
that time, the Loan will not exceed Dollars Two hundred and
fourteen million five hundred thousand ($214,500,000).
2.05 (a) Subject to the terms and conditions of this Agreement, an Advance
shall be made to the Borrower during the Drawdown Period
following receipt by the Agent from the Borrower of a Drawdown
Notice no later than 10:00 am (Hong Kong time) on the fifth (5th)
Banking Day before the date on which the Advance is intended to
be made. A Drawdown Notice shall be effective on actual receipt
by the Agent and, once given, shall, subject as provided in
Clause 12.03(a), be irrevocable.
(b) Unless otherwise agreed between the parties, during the Drawdown
Period the Agent shall give notice to the Borrower six (6)
Banking Days before each Interest Payment Date and each due date
for payment of interest, commitment fees, agency fees and other
expenses under Clause 5, of the sum so falling due. The Borrower
may, at any time following receipt of such a notice from the
Agent but not later than three (3) Banking Days before the due
date for the sum falling due, agree with the Agent an adjustment
to the relevant amount specified in the notice. Whether or not
the Agent and the Borrower shall have agreed an adjustment to the
amount specified in the notice, the Borrower shall be deemed to
have given, and the Agent shall have been deemed to have
received, a Drawdown Notice in respect of the amount specified in
the notice (or such other amount agreed between the Agent and the
Borrower in accordance with the preceding sentence) for an
Advance in an amount equal to, and for the purpose of payment of,
such interest, commitment fees, agency fees or other expenses so
falling due.
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2.06 Upon receipt of each Drawdown Notice complying with the terms of this
Agreement the Agent shall notify the Lenders thereof and of the
proposed Drawdown Date specified therein and, subject to the
provisions of Clause 9, the Lenders shall make their respective
Commitments to the relevant Advance available to the Agent in
accordance with Clause 6.02.
2.07 If any part of the Commitment is not drawn down on the last day of the
Drawdown Period, the Lenders' obligation to make any further Advance
shall terminate on such day and shall be cancelled.
2.08 The Borrower shall have the right, not earlier than six months before
the Scheduled Delivery Date (as adjusted in accordance with the terms
of the Charter), upon giving the Agent not less than ten (10) Banking
Days prior written notice, to cancel without penalty not more than
Dollars Twelve million ($12,000,000) of the Commitment in respect of
the Fees and Development Costs Tranche undrawn at the date of such
notice.
3. INTEREST AND INTEREST PERIODS
3.01 The Borrower shall pay interest on each Advance and the Loan in
respect of each Interest Period relating thereto on each Interest
Payment Date for the period from the date on which such Advance was
drawn down or (as the case may be) for the period from the immediately
preceding Interest Payment Date at the relevant Floating Rate for the
time being.
3.02 The Floating Rate in respect of each Advance and the Loan shall be,
for each Interest Period relative thereto, but subject to Clause 3.04
(in respect of overdue amounts) and Clause 12.03, the annual rate of
interest which is conclusively (save for manifest error) certified by
the Agent to the Borrower to be the aggregate of (i) the Margin, and
(ii) Libor for a period equal to and for value on the first day of the
relevant Interest Period were being offered to first class banks in
the London interbank eurocurrency market at or about 11:00 a.m.
(London time) on the second (2nd) Banking Day before the first (1st)
day of such Interest Period.
3.03 Each Interest Period shall have a duration of six (6) months (or such
longer or shorter period as may be agreed between the Borrower and the
Lenders) provided always that:
(a) the first Interest Period in respect of the first Advance shall
commence on the date on which such Advance is made and shall end
on 28th June or 28th December of the current year, whichever is
the next to occur;
(b) each subsequent Interest Period shall commence forthwith upon the
expiry of the previous Interest Period and shall end six (6)
calendar months later on which is the next to occur of 28th June
or 28th December;
(c) the first Interest Period for each Advance after the first
Advance shall expire on the same day as the current Interest
Period for the Loan; and
(d) all interest Periods shall end on the Final Maturity Date.
3.04 If the Borrower fails to pay any sum (including, without limitation,
any sum payable pursuant to this Clause 3.04) on its due date for
payment under this Agreement or any of the Security Documents the
Borrower shall pay interest on such sum on demand from the due date up
to the date of actual payment (as well after as before judgment) at a
rate determined by the Agent to be two per centum (2%) per annum above
the Floating Rate for such period not exceeding six (6) months as the
Agent may determine from time to time in amounts comparable with the
sum not paid. Such interest shall be due and payable on the last day
of each period as determined by the Agent and each such date shall,
for the purposes of this Agreement, be treated as an Interest Payment
Date. Provided that if such sum is of principal which became due and
payable on a date other than an Interest Payment Date relating
thereto, the first such period selected by the Agent shall be of a
duration equal to the period between the due date of such principal
sum and such Interest Payment Date and interest shall be payable on
such principal sum during such period at a rate two per centum (2%)
above the rate applicable thereto immediately before it fell due. If,
for the reasons specified in Clause 12.03 (a) (i), the Agent is unable
to determine a rate in accordance with the foregoing provisions of
this Clause 3.04, interest shall be calculated at a rate determined by
the Agent to be two per centum (2%) per annum above the aggregate of
the Margin and the cost of funds to the Lenders.
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3.05 The Agent shall notify the Borrower and the Lenders promptly of each
rate of interest determined by it under this Clause 3. The certificate
of the Agent as to any rate of interest determined by it (after
consultation with the Lenders) pursuant to this Agreement shall in the
absence of manifest error, be conclusive and binding on the Borrower
and the Lenders.
4. REPAYMENT AND PREPAYMENT
4.01 The Borrower shall repay the Loan together with accrued interest
thereon calculated in accordance with Clause 3 on the dates and in the
amounts set out in Schedule 4 PROVIDED ALWAYS the Outstanding
Indebtedness (if any) then remaining shall be repaid in full on the
Final Maturity Date.
4.02 The Borrower may prepay the Loan in whole or part (being Dollars One
million ($1,000,000) or any larger sum which is an integral multiple
of Dollars One million ($1,000,000)) on any date following the
Delivery Date together with accrued interest to the date of prepayment
and any other sum then payable under this Agreement and/or the
Security Documents (or any of them), provided that the Agent shall
have received from the Borrower not less than thirty (30) days' notice
of its intention to make such prepayment, specifying the amount to be
prepaid and the date of prepayment.
4.03 The Borrower shall prepay the Loan, together with accrued interest to
the date of prepayment, and all other sums payable by the Borrower
pursuant to this Agreement and/or the Security Documents (or any of
them), including, without limitation, any amounts payable under Clause
11 within one hundred and twenty (120) days of the Vessel becoming a
Total Loss and for the purpose of this Agreement:
(a) an actual total loss of the Vessel shall be deemed to have
occurred at the actual date and time the Vessel was lost but in
the event of the date of the loss being unknown then the actual
total loss shall be deemed to have occurred on the date on which
the Vessel was last reported; and
(b) a constructive total loss shall be deemed to have occurred at the
date and time notice of abandonment of the Vessel is given to the
insurers of the Vessel for the time being (provided a claim for
total loss is admitted by such insurers) or, if such insurers do
not admit such a claim, at the date and time at which a total
loss is subsequently adjudged by a competent court of law to have
occurred.
4.04 Every notice of prepayment shall be effective only on actual receipt
by the Agent, shall, once given, be irrevocable and shall oblige the
Borrower to make such prepayment on the date specified. No amount of
the Loan prepaid may be re-borrowed and any amount prepaid pursuant to
Clause 4.02 shall be applied in reducing the repayment instalments
under Clause 4.01 in inverse order of their due dates for payment. The
Borrower may not prepay the Loan or any part thereof save as expressly
provided in this Agreement.
5. FEES AND EXPENSES
5.01 Subject to Clause 5.03, the Borrower shall pay to the Agent for
account of the Lenders pro rata according to their respective
Commitments whether or not any part of the Loan is drawndown
hereunder, a commitment fee at the rate of nought point two five per
centum (0.25%) per annum on the undrawn portion of the Commitment (if
any) from time to time in Dollars, such commitment fee to accrue from
the date of this Agreement and to be paid in Dollars semi-annually in
arrears on 28th June and 28th December of each year up to and
including the last day of the Drawdown Period calculated on the exact
number of days elapsed and a three hundred and sixty (360) day year.
5.02 The Borrower shall pay to the Agent for account of the Lead Arranger,
the Arrangers and the Lenders as may be agreed between them a
non-refundable management fee in accordance with the Fee Letter, such
management fee being payable on the day of drawdown of the first
Advance under this Agreement.
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5.03 The Borrower shall pay to:
(a) the Agent an annual agency fee in advance in accordance with the
Fee Letter; and
(b) the Trustee an annual trustee fee in advance in accordance with
the Trustee Fee Letter,
in each case payable on the date of signing this Agreement and
thereafter on 28th December of each year throughout the Loan Period.
5.04 The Borrower shall pay to the Agent on demand:
(a) all reasonable expenses (including communication, travelling,
legal, printing and out-of-pocket expenses) properly incurred by
the Lenders and/or the Agent in connection with the negotiation,
preparation, execution, syndication and, where relevant,
registration of this Agreement and the Security Documents and of
any amendment or extension or the granting of any waiver or
consent under this Agreement and/or any of the Security
Documents;
(b) all expenses (including legal and out-of-pocket expenses)
incurred by the Lenders and/or the Agent in contemplation of, or
otherwise in connection with, the enforcement of, or preservation
of any rights under, this Agreement and/or any of the Security
Documents, or otherwise in respect of the moneys owing under this
Agreement and/or any of the Security Documents; and
(c) interest at the rate referred to in Clause 3.04 on such expenses
from the date on which such expenses were demanded from the
Borrower to the date of payment (as well after as before
judgment).
5.05 The Borrower shall pay all stamp, documentary, registration or other
like duties, taxes, fees or charges (including any duties, taxes, fees
or charges payable by the Lenders and/or the Agent) imposed on or in
connection with this Agreement and/or any of the Security Documents or
the Loan and shall indemnify the Lenders and/or the Agent against any
liability arising by reason of any delay or omission by the Borrower
to pay such duties, taxes, fees or charges.
6. PAYMENTS AND TAXES; ACCOUNTS AND CALCULATIONS
6.01 All payments to be made by the Borrower under this Agreement and/or
any of the Security Documents shall be made in full, without any
set-off or counterclaim whatsoever and, subject as provided in Clause
6.07, free and clear of any deductions or withholdings, in Dollars not
later than 10:00 a.m. (local time) on the due date to the Receiving
Bank for the account of the Agent or to such other account as the
Agent shall have notified to the Borrower. Save as otherwise expressly
agreed by the parties hereto, such payments shall be for the account
of the Lenders according to their respective Contributions and the
Agent shall forthwith distribute such payments to the Lenders in like
funds as are received by the Agent. Payments due from the Agent to the
Lenders shall be made to the Lenders at such accounts as they notify
to the Agent from time to time.
6.02 All sums to be advanced by the Lenders under this Agreement shall be
remitted in Dollars, on the relevant Drawdown Date of each Advance to
such account of the Agent as the Agent may have notified the Lenders
and shall be paid by the Agent on that date in like funds as are
received by the Agent to the account of the Borrower or to such
account as the Borrower may direct as specified in the relevant
Drawdown Notice.
6.03 Where any sum is to be paid hereunder to the Agent for account of
another person, the Agent may assume that the payment will be made
when due and may (but shall not be obliged to) make such sum available
to the person so entitled. If it proves to be the case that such
payment was not made to the Agent, then the persons to whom such sum
was so made available shall on request refund such sum to the Agent
together with interest thereon sufficient to compensate the Agent for
the cost of making available such sum up to the date of such
repayment. The provisions of this Clause 6.03 shall be without
prejudice to the Borrower's rights against the Lender concerned under
Clause 2.03 where any Lender has failed to make any payment due to the
Agent for the account of the Borrower on its due date.
6.04 When any payment under this Agreement or any of the Security Documents
would otherwise be due on a day which is not a Banking Day, the due
date for payment shall be extended to the next following Banking Day
unless such Banking Day falls in the next calendar month in which case
payment shall be made on the immediately preceding Banking Day.
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6.05 All interest and other payments of an annual nature under this
Agreement or any of the Security Documents shall accrue from day to
day and be calculated on the basis of actual days elapsed and a three
hundred and sixty (360) day year.
6.06 Any certificate or determination of the Agent (after consultation with
the Lead Arranger, the Arrangers, and the Lenders as to any rate of
interest or any other amount payable under this Agreement or any of
the Security Documents) shall, in the absence of manifest error, be
conclusive and binding on the Borrower and on each of the Lenders.
6.07 Subject to the provision of this Clause 6, if at any time any
applicable law, regulation or regulatory requirement or any
governmental authority, monetary agency or central bank requires the
Borrower to make any deduction or withholding in respect of Taxes from
any payment due under this Agreement or any of the Security Documents,
the sum due from the Borrower in respect of such payment shall be
increased to the extent necessary to ensure that, after the making of
such deduction or withholding, the Agent and each of the Lenders
receive on the due date for such payment (and retains free from any
liability in respect of such deduction or withholding) a net sum equal
to the sum which they would have received had no such deduction or
withholding been required to be made and the Borrower shall indemnify
the Lenders and the Agent against any losses or costs incurred by them
by reason of any failure of the Borrower to make any such deduction or
withholding or by reason of any increased payment not being made on
the due date for such payment. The Borrower shall promptly deliver to
the Agent any receipts, certificates or other proof evidencing the
amounts (if any) paid or payable in respect of any deduction or
withholding as aforesaid.
6.08 (a) is entitled, without material rearrangement of its Tax affairs,
to receive, or is granted by any relevant Tax authority, any
credit against or relief from its liability to any Tax), in
respect of any Tax on account of which a deduction or withholding
has been made from any sum payable by the Borrower under or in
relation to this Agreement and in respect of which the Borrower
has paid in full an increased amount pursuant to Clause 6, then
such Relevant Person shall to the extent that it can do so
without affecting its rights as against the relevant Tax
authority to retain such credit or relief, act (but without any
legal obligation to do so) in good faith so as to refund to the
Borrower that amount (not exceeding the amount by which the
relevant amount payable by the Borrower was increased to
compensate for such deduction or withholding) of such credit or
relief which is determined by such Relevant Person in its sole
discretion to be attributable to such deduction or withholding
after subtracting any reasonable expenses attributable to the
determination thereof Provided that this provision shall in no
way interfere with the liberty of each Relevant Person to arrange
its tax affairs in whatsoever manner it thinks fit or oblige a
Relevant Person to disclose details of the same to the Borrower.
(b) The Agent and each Lender shall consider any request from the
Borrower to take action to avoid the incidence of any deduction
or withholding by applying for any appropriate relief, waiver or
exemption from the same, and in addition shall consider in their
absolute discretion, subject to indemnification by the Borrower
for any costs incurred by the Lenders and/or the Agent and to
obtaining any necessary consents and authorisations, fulfilling
its obligations through another lending office or transferring
its rights and obligations at par to one or more of its
Affiliates if such transfer would result in there being no
requirement for a deduction or withholding Provided that neither
the Agent or any Lender shall by reason of this Clause 6.08(b) be
under any legal obligation to take any action whatsoever.
6.09 Notwithstanding anything to the contrary in this Agreement or in any
of the other Security Documents, the Borrower shall not (unless an
Event of Default has occurred and is continuing) be obliged to make
any payment to or for the account of the Agent or any Lender in
respect of any of the following:
(a) (save as set out in Clause 5) the normal administrative costs and
expenses of the Agent or any Lender;
(b) any Tax on or in respect of the overall net income of the Agent
or any Lender or of a division or branch of the Agent or any
Lender wherever imposed;
(c) penalties, additions to Taxes, fines or interest on Taxes which
would not have arisen but for a reasonably avoidable delay or
failure by the Agent or any Lender in the filing of Tax returns
or payment of Taxes assessed on the Agent or any Lender, which
delay or failure has not directly or indirectly been consented
to, caused by or requested by the Borrower; or
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(d) any Tax which would not have arisen for an act or omission of the
Agent or any Lender which constitutes wilful misconduct or gross
negligence on its part.
6.10 Each Lender shall maintain, in accordance with its usual practice, an
account or accounts evidencing the amounts from time to time lent by,
owing to and paid to it, under this Agreement and the Security
Documents. The Agent will maintain a control account showing the Loan
and other sum owing by the Borrower under this Agreement and all
payments in respect thereof made by the Borrower from time to time.
Such control account shall in the absence of manifest error be
conclusive as to the amount from time to time owing by the Borrower
under this Agreement and the Security Documents.
7. REPRESENTATIONS AND WARRANTIES
7.01 Save as disclosed to the Agent in writing before submission of the
first (1st) Drawdown Notice under this Agreement, the Borrower hereby
represents and warrants to the Lenders and the Agent that:
(a) the Borrower is duly incorporated, validly existing in
goodstanding under the laws of the Republic of Liberia, has full
power to borrow the Loan, and to carry on its business and to
enter into and perform its obligations under this Agreement, and
the Relevant Documents to which it is or will be a party, is in
compliance in all material respects with all statutory and other
requirements relative to its business, and has taken all
necessary corporate and other action and has obtained all
necessary consents to authorise the borrowing and incurring of
indebtedness under, and the execution, delivery and performance
of, this Agreement and the Relevant Documents to which it is or
will be a party; this Agreement and, as executed and delivered,
constitutes and such Relevant Documents, when executed and
delivered and (in the case of the Mortgage) when duly recorded
will constitute, valid and legally binding obligations of the
Borrower enforceable in accordance with their respective terms
except insofar as enforcement may be limited by any applicable
laws relating to bankruptcy, insolvency, administration and
similar laws affecting creditors rights generally, and except
insofar as stated in any qualification or reservation contained
in any original legal opinion given for the purpose of or as a
condition precedent to this Agreement;
(b) the parties (other than the Lenders, the Counterparties and the
Agent) to the Relevant Documents have full power to enter into
and perform their respective obligations under the Relevant
Documents (other than the Sales Contract and the Trustee and
Paying Agent Agreement) to which each of them is or will be a
party (and in connection therewith all necessary corporate or
other action has been taken and all necessary consents and
approvals have been obtained) and such Relevant Documents, when
executed and delivered, will constitute the valid and legally
binding obligations of each such party enforceable in accordance
with their respective terms except insofar as enforcement may be
limited by any applicable laws relating to bankruptcy,
insolvency, administration and similar laws affecting creditors'
rights generally, and except insofar as stated in any
qualification or reservation contained in any original legal
opinion given for the purpose of or as a condition precedent to
this Agreement;
(c) the execution, delivery and performance of this Agreement and the
Relevant Documents to which the Borrower, the Chargors, the
Manager and the Sub-Manager (as the case may be) are or will
become respectively parties will not (i) contravene any
applicable law, regulation or material contractual restriction
binding on the Borrower or the other parties thereto; or (ii)
result in any material breach of or default under any agreement
or other instrument to which the Borrower or such party is
subject; or (iii) contravene any provision of the incorporation
documents of the Borrower or such party; or (iv) result in the
creation or imposition of or oblige the Borrower or such party to
create any Encumbrance (other than a Permitted Encumbrance) on
any of their respective material undertakings, or any of their
respective assets, rights or revenues;
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(d) no material litigation, arbitration or administrative proceeding is pending or threatened against the Borrower, any of its assets, the Manager, or the Sub-Manager insofar as the Borrower is aware;
(e) the Borrower is not in material default under any agreement or other instrument, or in material default in the payment or performance of any of its obligations for Borrowed Money;
(f) the latest audited financial statements of the Borrower (if any, or, if there are none, the first and thereafter each subsequent financial statement of the Borrower delivered to the Agent pursuant to Clause 8.01 (e)) have been prepared in accordance with generally accepted accounting principles and practices which have been consistently applied, and present fairly and accurately the financial position of the Borrower as at the date of the said accounts and the results of the operations of the Borrower for the financial year ended on such date, and as at such date, the Borrower had no significant liabilities (contingent or otherwise) which are not disclosed by, or reserved against in, such financial statements or any unrealised or anticipated losses;
(g) there has been no material adverse change in the financial position of the Borrower from that set forth in the financial statements referred to in Clause 7.01(f);
(h) no Default, whether or not any requirement for notice and/or lapse of time (or both) and/or any other condition has been satisfied, has occurred and is continuing;
(i) the choice by the Borrower of English law to govern this Agreement and the other Relevant Documents to which it is a party (other than the Mortgage and the Collateral Agreement) and the choice by the Borrower of New York law to govern the Collateral Agreement and the submission by the Borrower to the non-exclusive jurisdiction of the English courts are valid and binding except insofar as enforcement may be limited by any applicable laws relating to bankruptcy, insolvency, administration and similar laws affecting creditors' rights generally, and except insofar as stated in any qualification or reservation contained in any original legal opinion given for the purpose of or as a condition precedent to this Agreement;
(j) neither the Borrower, the Manager or the Sub-Manager nor any of their respective assets are entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgment, execution or other enforcement);
(k) the Vessel is or will on the Delivery Date and thereafter be:
(i) in the absolute and (save for a first mortgage in favour of the Agent and for Permitted Encumbrances) unencumbered ownership of the Borrower as the sole, legal and beneficial owner of such Vessel;
(ii) registered in the name of the Borrower under the laws and flag of the Republic of Liberia;
(iii) operationally seaworthy and in every way fit for service (except as notified in writing to the Agent); and
(iv) (save for changes to the Vessels classification approved in advance and in writing by the Agent) classed "+100A1, Liquefied Gas Carrier, Ship Type 2G" + LMSC, UMS, NAVI, SCM, *IWS" with Lloyd's Register of Shipping, free from any requirements and recommendations of the said classification society which must be complied with by the Borrower as a condition of the maintenance of the Vessel's class, it being agreed that the Borrower shall, in relation to the period following the Delivery Date, be deemed in compliance with its warranty in this respect, provided that it duly complies with all such requirements and recommendations within the relevant period permitted for compliance by the said classification society;
(l) the obligations of the Borrower under this Agreement are direct, general and unconditional obligations of the Borrower;
(m) the Borrower has disclosed to the Lenders all its material liabilities (actual and contingent) and Indebtedness;
(n) every material consent, authorisation, licence or approval of, or registration with or declaration to, governmental or public bodies or authorities or courts required by the Borrower to authorise, or required by the Borrower in connection with, the execution, delivery, validity, enforceability or admissibility in evidence of this Agreement and each of the Relevant Documents to which it is or will be a party or the performance by the Borrower of its obligations hereunder or thereunder has been or, in the case of the Relevant Documents to which it is or will be a party, will prior to the execution thereof have been obtained or made and is or, in the case of the Relevant Documents to which it is or will be a party, will prior to the execution thereof be in full force and effect and there has been no material default in the observance of any of the conditions or restrictions imposed in or in connection with any of the same;
(o) the written information, exhibits and reports furnished by the Borrower to the Agent in connection with the negotiation and preparation of this Agreement and each of the Relevant Documents, and in particular all information provided in writing by the Borrower, the Chargors and the issuers of the Letters of Undertaking used to prepare the Information Memorandum, are at the time of being made available and at the time of the first Advance true and accurate in all material respects and not misleading, do not omit material facts and all reasonable enquiries have been made to verify the facts and statements contained therein; there are no other material facts the omission of which would make any fact or statement therein misleading;
(p) no Taxes (other than Indonesian Taxes) are imposed by withholding or otherwise on any payment to be made under this Agreement or the Relevant Documents (other than the Sales Contract and the Trustee and Paying Agent Agreement) or are imposed on or by virtue of the execution or delivery of this Agreement or the Relevant Documents (other than the Sales Contract and the Trustee and Paying Agent Agreement) or any other document or instrument to be executed or delivered hereunder or thereunder;
(q) save for the registration of the Mortgage at the Office of the Deputy Commissioner of Maritime Affairs in the Republic of Liberia, it is not necessary to ensure the legality validity, enforceability or admissibility in evidence of this Agreement or any of the Relevant Documents (other than the Trustee and Paying Agent Agreement and the Sales Contract) that it or they or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere in the Republic of China, the Republic of Liberia, Indonesia or England or that any stamp, registration or similar tax or charge be paid in the Republic of China, the Republic of Liberia, Indonesia or England on or in relation to this Agreement or any of the Relevant Documents (other than the Trustee and Paying Agent Agreement and the Sales Contract);
(r) this Agreement and each of the Relevant Documents (other than the Trustee and Paying Agent Agreement and the Sales Contract) is (or will upon execution be) in proper form for its enforcement in the courts of England;
(s) none of the Vessel, her Earnings, Insurances or Requisition Compensation (each as defined in the Mortgage) the Charter, the Contract, the Refund Guarantees, the Bank Guarantee, the Performance Bond, the Management Agreement, the Sub-management Agreement or any part thereof is or will be, subject to any Encumbrance save for any Permitted Encumbrance;
(t) all advances, loans or other monies made available to the Borrower by its shareholders or stockholders or any related or associated company rank after and inferior to the Loan and the Borrower's Indebtedness under this Agreement;
(u) the Borrower has not established a place of business in the United Kingdom;
(v) the entire issued share capital of the Borrower comprises one thousand (1,000) shares of par value $1.00 per share registered as to 400 shares in the name of CPC, 400 shares in the name of Oxbow and 200 shares in the name of Golar Maritime;
(w) the copies of the Relevant Documents (other than the Security Documents) and all other written information, documentary evidence and certificates delivered or to be delivered to the Agent pursuant to Clause 9.01 and/or in connection with the Information Memorandum are, or will when delivered be, genuine, true and complete copies of such documents; the Relevant Documents (other than the Sales Contract and the Trustee and Paying Agent Agreement) constitute, or when executed will constitute, valid and binding obligations of the Borrower and the other parties thereto enforceable in accordance with their respective terms (except insofar as enforcement may be limited by any applicable laws relating to bankruptcy, insolvency, administration and similar laws affecting creditors' rights generally, and except insofar as stated in any qualification or reservation contained in any original legal opinion given for the purpose of or as a condition precedent to this Agreement) and no material amendments thereof or variations thereto have been made or will, without the consent of the Agent, be made;
(x) each Refund Guarantee and the Bank Guarantee is, or upon issuance will be, in full force, validity and effect and constitutes, or upon issuance will constitute valid and legally binding obligations of its issuing Bank Guarantor, enforceable against its issuing Bank Guarantor, in accordance with its terms except insofar as enforcement may be limited by any applicable laws relating to bankruptcy, insolvency, administration and similar laws affecting creditors' rights generally, and except insofar as stated in any qualification or reservation contained in any original legal opinion given for the purpose of or as a condition precedent to this Agreement;
(y) the Performance Bond is, or upon issuance will be, in full force, validity and effect and constitutes, or upon issuance will constitute valid and legally binding obligations of The Tokai Bank, Ltd., enforceable against The Tokai Bank, Ltd. in accordance with its terms except insofar as enforcement may be limited by any applicable laws relating to bankruptcy, insolvency, administration and similar laws affecting creditors' rights generally, and except insofar as stated in any qualification or reservation contained in any original legal opinion given for the purpose of or as a condition precedent to this Agreement; and
(z) the Borrower has not entered into any other material agreements other than the Relevant Documents and other than agreements entered into by the Borrower in the ordinary course of business.
7.02 The representations and warranties in Clause 7.01 (other than those set out in Clause 7.01(o), (p), (q) and (r) and so that the representation and warranty in Clause 7.01 (f) shall for this purpose refer to the then latest audited financial statements delivered to the Agent under Clause 8.01(e)) shall be deemed to be repeated by the Borrower on and as of each day from the date of this Agreement until all moneys due or owing by the Borrower under this Agreement and the Security Documents have been paid in full as if made with reference to the facts and circumstances existing at each such date.
8. UNDERTAKINGS
8.01 The Borrower hereby undertakes with the Lenders and the Agent that,
from the date of this Agreement and so long as any moneys are owing
under this Agreement or the Security Documents, the Borrower will:
(a) promptly inform the Agent of any occurrence of which it becomes
aware which might materially and adversely affect its ability to
perform its obligations under this Agreement and/or any of the
Relevant Documents and, without limiting the generality of the
foregoing, will inform the Agent of any Default forthwith upon
becoming aware thereof;
(b) without prejudice to Clauses 7.02 and 9, obtain or cause to be
obtained, maintain in full force and effect and comply in all
material respects with the conditions and restrictions (if any)
imposed in or in connection with every consent, authorisation,
licence or approval of governmental or public bodies or
authorities or courts and do, or cause to be done, all other acts
and things, which may from time to time be necessary or desirable
under applicable law for the continued due performance of all its
obligations under this Agreement and each of the Relevant
Documents;
(c) use the Loan exclusively for the purposes specified in Clause
1.01;
(d) file or cause to be filed all tax returns required to be filed in
all jurisdictions in which it is situated or carries on business
or is otherwise subject to Taxation and pay all Taxes shown to be
due and payable on such returns or any assessments made against
it (other than those being contested in good faith and where such
payment may be lawfully withheld);
(e) prepare audited financial statements of the Borrower in
accordance with generally accepted accounting principles and
practices in the United States of America (or such other
generally accepted accounting principles consented to by the
Agent, such consent not to be unreasonably withheld) consistently
applied in respect of each financial year and cause the same to
be certified by its auditors and prepare unaudited financial
statements of the Borrower in respect of the first six (6) month
period of each of its financial years on the same basis as the
annual statements and deliver as many copies of the same as the
Agent may reasonably require for distribution to the Lenders as
soon as practicable, but not later than one hundred and twenty
(120) days (in the case of audited financial statements) or
ninety (90) days (in the case of unaudited financial statements)
after the end of the financial period to which they relate;
(f) deliver to the Agent for distribution to the Lenders and the
Agent as many copies as the Agent may reasonably require of every
report, circular, notice or like document issued by the Borrower,
the Manager, and each of the Chargors to its shareholders or
creditors generally, in each case at the time of issue thereof;
(g) provide the Agent with such financial and other information
concerning the Borrower, the Manager, the Sub-manager, each of
the issuers of the Letters of Undertaking and each of the
Chargors and its affairs as the Agent may from time to time
reasonably require including, without limitation, unaudited
financial statements in respect of the first six (6) month period
of each of its financial years and audited financial statements
in respect of each financial year and details of any material
litigation pending or, to the knowledge of the Borrower,
threatened against the Borrower, the Manager, the Sub-Manager,
the issuers of the Letters of Undertaking or the Chargors or the
Vessel;
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(h) duly and punctually perform and use its best endeavours to
procure the due and punctual performance by each of the other
parties (other than the Lenders and the Agent) of each of their
respective material obligations under the Relevant Documents;
(i) ensure that its obligations under this Agreement and the Relevant
Documents to which it is a party rank at all times at least pari
passu with all its other present and future unsecured
Indebtedness except as mandatorily preferred by law and not by
contract;
(j) provide the Agent with copies on a monthly basis of all progress
reports, change orders and test results and notice and results of
sea and gas trials and all such other information as the Agent
may reasonably require regarding the Contract and the
construction of the Vessel including, without limitation,
evidence of the Charterer's approval of all relevant stages of
construction in order to satisfy the Lenders that the Charterer
will accept the Vessel under the Charter on the Delivery Date;
(k) if any event occurs or circumstance exists as a result of which
the information which has been provided by it to the Agent
hereunder would include an untrue statement of a material fact or
omit to state any material fact or any fact necessary to make the
statements therein, in the light of the circumstances under which
they were made, not misleading, the Borrower will inform the
Agent and will promptly furnish to the Agent updated or revised
information which will correct such untrue statement or include
such omitted fact;
(l) to provide such co-operation and assistance as may reasonably be
required by any independent technical consultant appointed by and
at the cost of the Borrower (having first consulted with the
Lenders as to the identity and suitability of the technical
consultant) to oversee or report on the construction, maintenance
and/or operation of the Vessel at any time;
(m) twelve (12) months prior to the expiry of the Swap Agreement,
agree whether any interest rate hedging strategy is necessary in
order to protect the interests of the Lenders in relation to
interest payments scheduled to be made under this Agreement, and
if the same is considered in good faith by the Agent to be
prudent (having regard to the then prevailing market interest
rates and their volatility and the amount of the Loan then
outstanding) to agree the scope and duration of such strategy;
and
(n) submit to the Agent, before the Delivery Date, a schedule for and
its policies in relation to establishing reserves to fund day to
day and scheduled operating expenses of the Vessel over the term
of the Charter and to fund contingency reserves.
8.02 The Borrower hereby undertakes with the Lenders and the Agent that
during the Loan Period the Borrower shall not, without the express
prior written consent and approval of the Lenders:
(a) permit after the Delivery Date any Encumbrance to exist upon the
Vessel (other than (1) the Mortgage and Permitted Encumbrances,
(2) liens for taxes not delinquent or being contested in good
faith, (3) deposits or pledges to secure performance of bids,
tenders, contracts (other than contracts for the payment of
Borrowed Money), leases, public or statutory obligations, surety
or appeal bonds, or other deposits or pledges for purposes of
like general nature incurred in the ordinary course of business,
(4) liens for current crews' wages and liens for salvage, (5)
liens or other Encumbrances arising in the ordinary course of
business or by operation of law (each of (2) to (5) inclusive
above being deemed to be Permitted Encumbrances for the purposes
of this Clause 8.02)); or sell all or part of, the Vessel; or
(b) cause any debentures to be issued, nor create, incur, permit to
exist or assume any mortgage, pledge, lien, fixed or floating
charge or other security interest or Encumbrance upon or with
respect to any of its property or assets or assign or otherwise
convey any rights to receive income, other than Permitted
Encumbrances; or
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(c) create, incur, assume, suffer to exist or in any manner become or
remain liable for any Indebtedness for Borrowed Money or for
lease rentals, other than (1) Indebtedness under the Contract or
normally associated with the day to day operation of the Vessel,
or otherwise in the normal course of business, in each case which
is not material, (2) Indebtedness under this Agreement and the
other Security Documents and (3) Indebtedness, including all
shareholder's advances, which by its terms is subordinate and
subject in right of payment to the prior payment in full of the
Indebtedness under or pursuant to this Agreement and the Security
Documents; or
(d) assume, guarantee, endorse, contingently agree to purchase or
provide funds for the payment of, agree to maintain the net worth
or working capital of or otherwise support or "keep well" or
otherwise become liable in respect of any material obligation of
any person, except (1) by the endorsement of negotiable
instruments for deposit or collection or similar transactions in
the ordinary course of business, or (2) in favour of the Lenders
and/or the Agent; or
(e) make any loan or advance to any person, other than loans or
advances which are made in the ordinary course of business and
which are not material; or
(f) incur any Indebtedness to any of the Chargors or any of its or
their associated companies which does not rank after its
Indebtedness under this Agreement in priority of payment; or
(g) redeem, repay, purchase, cancel or otherwise return, acquire or
reduce all or any class or part of its issued share or loan
capital (the written consent of the Lenders not to be
unreasonably withheld); or
(h) permit any transfer or change in the registered ownership of any
of its issued shares at the date of this Agreement, or allot or
issue any new shares, or grant or permit the granting of any
option to acquire any of its issued or unissued shares (the
written consent of the Lenders not to be unreasonably withheld);
or
(i) acquire any vessel other than the Vessel; or
(j) carry on or engage in or be concerned with any business or
activities except those of owner and operator of an ocean-going
vessel and activities incidental thereto; or
(k) sell, lease, transfer or otherwise dispose of, or (save for
requisitions for hire or requisitions of title) cease to exercise
full and direct control over any part of its present or future
undertaking, properties, assets, rights or revenues (whether by
one or series of transactions, related or not); or
(l) change its accounting periods or its auditors (the written
consent of the Lenders not to be unreasonably withheld); or
(m) factor, sell, assign, discount or otherwise dispose of any
present or future book or other debts, claims or securities for
money; or
(n) form or co-operate in the formation of, or purchase or acquire
any Subsidiary; or
(o) permit any change to be made in its overall control or permit any
material change to be made in its management (the written consent
of the Lenders not to be unreasonably withheld); or
(p) amalgamate, merge or consolidate with any other company or person
or undertake, undergo, enter into or become subject to any kind
of reconstruction or reorganisation or any scheme or arrangement
for any of the foregoing; or
(q) up to and including the Delivery Date, permit its Debt/Equity
Ratio to be more than 78:22.
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8.03 The Borrower hereby undertakes with the Lenders and/or the Agent that,
from the Delivery Date and so long as any moneys are owing under this
Agreement or any of the other Security Documents, the Borrower will:
(a) ensure that the Vessel is:
(i) in the absolute and unencumbered ownership of the Borrower
and registered in the name of the Borrower, subject only to
the Mortgage and any Permitted Encumbrances, which will be
registered against the Vessel through the Office of the
Deputy Commissioner of Maritime Affairs of the Republic of
Liberia in New York;
(ii) on each occasion immediately before the vessel leaves any
port, operationally sea-worthy and in every way fit for
service under and in compliance with the terms of the
Charter;
(iii) classed and insured in accordance with the provisions of
the Mortgage and the General Assignment; and
(iv) on time charter to the Charterer (or any other party to
which the Charterer is entitled to assign its rights under
the Charter in circumstances where it remains fully liable
under the Charter) under the Charter (or on time charter to
any other charterer under any other charter in replacement
of the Charter which the Borrower may enter into with the
prior written consent of the Lenders which the Lenders may
withhold entirely at their discretion) at a rate of hire
sufficient to meet the operating and maintenance expenses
of the Vessel and the Borrower's payment obligations under
this Agreement and the Security Documents;
(b) not permit any company other than the Manager or such other
company as shall be approved in writing by the Agent (such
consent not to be unreasonably withheld), to be the manager of
the Vessel;
(c) not permit any company other than Gotaas-Larsen International
Limited, or such other company as shall be approved in writing by
the Agent (such approval not to be unreasonably withheld,
provided (without limitation) that the Agent may withhold its
consent if the rights or interests of the Agent and/or the
Lenders might be adversely affected) to be the Sub-manager of the
Vessel under the Sub-Management Agreement;
(d) not without the consent of the Lenders (such consent not to be
unreasonably withheld) change the flag or registry of the Vessel;
and
(e) ensure that the Borrower shall furnish the Agent for distribution
to the Lenders from time to time promptly on request:
(i) documentary evidence of the Vessel's provisional
registration (and subsequently the Vessel's permanent
registration, which the Borrower undertakes to obtain
within 270 days of the Delivery Date) in the name of the
Borrower under the laws and flag of the Republic of
Liberia;
(ii) all such information as the Agent shall from time to time
reasonably require regarding the Vessel, her employment,
position and engagements, particulars of all towages and
salvages, copies of all charters and other contracts for
her employment or otherwise howsoever concerning her;
(iii) at the request of the Agent, on no more than one occasion
in each twelve (12) month period, provide the Agent at the
expense of the Borrower with a valuation report of the
Vessel by an independent broker or valuer acceptable in all
respects to the Agent; and
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(iv) all such information as the Agent shall from time to time
reasonably require regarding all insurances on or in
respect of the Vessel and copies of all policies, cover
notes and all other contracts of insurance which are from
time to time taken out or entered into in respect of the
Vessel or otherwise howsoever in connection with the Vessel
so that the Agent is at all times able to determine whether
the Vessel has been adequately insured as provided for in
the Mortgage and the General Assignment;
(f) disclose to the Agent all material agreements relevant to the
Loan and the Relevant Documents made by or between the Borrower
and any other parties to any Relevant Document, and to disclose
any other material agreements relevant to the Loan and the
Relevant Documents of which it becomes aware;
(g) provide the Agent for distribution to the Lenders financial
information relating to the Vessel and its operations when
requested and in any event semi-annually;
(h) upon first demand by the Agent and subject always to the Borrower
obtaining the consent of the Charterer, which the Borrower
undertakes to use its best endeavours to obtain), transfer the
Vessel from the Liberian Registry to such other registry as the
Agent and the Borrower may agree, or failing agreement such
registry as the Agent may nominate, and subject to a new mortgage
in favour of the Agent such form as the Agent may require.
8.04 The Borrower hereby undertakes with the Lenders and the Agent that:-
(a) without prejudice to any other retentions to be made pursuant to
the provisions of the Security Documents, the Borrower shall
establish with the Trustee a debt reserve fund which, for the
period of five (5) years from the Delivery Date shall, once
established, be:
(i) in the period up to and including the First Repayment Date
maintained in an amount not less than the aggregate amounts
of principal, Net Interest and other moneys payable by the
Borrower under the Financial Agreement, the Swap Agreements
and the Additional Swap Agreements on the First Repayment
Date; and
(ii) following the First Repayment Date, maintained in an amount
not less than the aggregate amounts of principal, Net
Interest and other moneys payable by the Borrower under the
Financial Agreement, the Swap Agreements and the Additional
Swap Agreements during a period of six (6) months from the
first day of each Interest Period (such sum as conclusively
certified by the Agent in accordance with Clause 5.04 of
the Collateral Agreement) and thereafter (provided (i)
there has been no default which is continuing under this
Clause 8.04(a) and (ii) the Agent has expressly consented
having first obtained approval from the Majority Lenders)
shall be maintained in an amount not less than a sum equal
to five (5) months' debt service requirement (certified as
aforesaid) for the remainder of the Security Period;
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(b) on the first Repayment Date and thereafter throughout the remainder of the Loan Period, the Borrower shall maintain a debt service coverage ratio ("DCR") at or above 1.10:1 where
Cash Available
Loan principal, Net Interest and fees and expenses payable under this Agreement and the Security Documents (i) in respect of the first Repayment Date, in the six months immediately preceding the first Repayment Date, and (ii) in respect of any other Repayment Date, in the period commencing on (but excluding) the immediately preceding Repayment Date and completing on (and including) the next ensuing Repayment Date (each a "repayment period"); and
(c) the Borrower will not without the prior written consent of the Agent pay any dividends prior to the first Repayment Date and thereafter only out of funds standing to the credit of the Surplus Account (as defined in the Collateral Agreement) and subject to (i) compliance with the provisions of sub-clauses (a) and (b) above, (ii) maintaining the Debt Service Reserve as required by clause 5 of the Collateral Agreement, and (iii) no Default having occurred and continuing, and (iv) the Borrower confirming in writing to the Agent that it does not anticipate any cash deficiency which might prevent it meeting forecasted operating costs and capital expenditure of the Vessel and scheduled payments under this Agreement, the Swap Agreements and the Additional Swap Agreements during the immediately succeeding 12 month period.
9. CONDITIONS
9.01 The obligation of the Lenders to make the COMMITMENT AVAILABLE shall
be subject to the condition that the Agent, or its duly authorised
representative, shall have received no later than SEVEN (7) BANKING
DAYS before the day on which the FIRST DRAWDOWN NOTICE for an Advance
is given, the documents and evidence specified in PART 1 OF SCHEDULE 3
in form and substance satisfactory to the Agent.
9.02 The obligation of the Lenders to make EACH SUBSEQUENT ADVANCE other
than the Advance on the Delivery Date shall be subject to the
condition that the Agent, or its duly authorised representative, shall
have received no later than the DATE ON WHICH THE DRAWDOWN NOTICE FOR
SUCH ADVANCE IS GIVEN, the documents and evidence specified in PART 2
OF SCHEDULE 3, in form and substance satisfactory to the Agent.
9.03 The obligation of the Lenders to make the ADVANCE ON THE DELIVERY DATE
available or to maintain the Loan on or after the Delivery Date, shall
be subject to the condition that the Agent, or its duly authorised
representative, shall have received NO LATER THAN THE DATE ON WHICH
THE DRAWDOWN NOTICE for such Advance is given, the documents and
evidence specified in PART 3 OF SCHEDULE 3, in form and substance
satisfactory to the Agent.
9.04 The obligation of the Lenders to make the ADVANCE ON THE DELIVERY DATE
available or to maintain the Loan on or after the Delivery Date, shall
be subject to the condition that the Agent, or its duly authorised
representative, shall have received ON OR PRIOR TO THE DELIVERY DATE
the documents and evidence specified in PART 4 OF SCHEDULE 3 in form
and substance satisfactory to the Agent.
Page 30
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9.05 The obligation of the Lenders to make any Advance is subject to the
further condition that at the time of giving each Drawdown Notice for,
and at the time of the making of, each Advance:
(a) the representations and warranties set out in Clauses 7.01 and
7.02 (and so that the representation and warranty in Clause 7.01
(f) shall for this purpose refer to the then latest audited
financial statements delivered to the Agent under Clause 8.01
(e)) are true and correct on and as of each such time as if each
was made with respect to the facts and circumstances existing at
such time; and
(b) no Default shall have occurred and be continuing or would result
from the making of the Advance.
9.06 Not later than seven (7) Banking Days prior to the date on which any
Advance is to be drawndown or, as the case may be, each Interest
Payment Date, the Agent may request and the Borrower shall, not later
than two (2) Banking Days prior to such date if it is practicable to
do so, or otherwise (with the consent of the Agent) as soon as
possible thereafter, deliver to the Agent on such request further
information as to any or all of the matters which are the subject of
Clauses 7, 8, 9 and 10.
9.07 The conditions precedent set out in this Clause 9 are inserted for the
sole benefit of the Lenders, and may be waived on their behalf in
whole or in part and with or without conditions by the Lenders on or
before the relevant Drawdown Date without prejudicing the right of the
Agent acting on instructions from the Lenders to require fulfilment of
such conditions in whole or in part at any time thereafter.
10. EVENTS OF DEFAULT
10.01 There shall be an Event of Default if:
(a) the Borrower fails to pay any sum payable by it under this
Agreement and/or any of the Relevant Documents at the time
stipulated in this Agreement or such Relevant Document within two
(2) Banking Days of the due date (or, in the case of any sum
payable on demand, within five (5) Banking Days of demand) or in
the currency or in the manner stipulated in this Agreement or
such Relevant Document; or
(b) the Borrower or any other party (if any, other than the Lenders,
the Counterparties and the Agent) commits any material breach of
or omits to observe any of its obligations or undertakings under
this Agreement and/or any of the Relevant Documents (other than
the Sales Contract and the Trustee and Paying Agent Agreement and
other than as referred to in sub-clause (a) above) and, in
respect of any such breach or omission or any Event of Default
described below which in the reasonable opinion of the Agent is
capable of remedy, such action as the Agent may reasonably
require shall not have been taken within seven (7) Banking Days
of the Agent notifying the Borrower or, as the case may be, such
other party of such default and of such required action; or
(c) any representation or warranty made or deemed to be made or
repeated by or in respect of the Borrower or any other party (if
any, other than the Lenders, the Counterparties and the Agent) in
or pursuant to this Agreement and/or any of the Relevant
Documents or in any notice, certificate or statement referred to
in or delivered under this Agreement and/or any of the Relevant
Documents is or proves to have been materially incorrect in any
material respect with reference to the facts existing at the date
on which such representation or warranty was made or deemed to be
made or repeated and the Majority Lenders consider the same is
likely to have an adverse affect on the ability of the Borrower
or such other party to fulfil its respective material obligations
under this Agreement or under any of the Relevant Documents; or
(d) any material Indebtedness of the Borrower is not paid when due or
becomes due or capable of being declared due prior to the date
when it would otherwise have become due (unless as a result of
the exercise by the Borrower of a voluntary right of prepayment)
or any material guarantee or indemnity given by the Borrower in
respect of Indebtedness is not honoured when due and called upon;
or
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(e) any consent, authorisation, licence or approval of or registration with or declaration to governmental or public bodies or authorities or courts required by the Borrower or any other party (if any, other than the Lenders, the Counterparties and the Agent) to authorise, or required by the Borrower or any other party (if any, other than the Lenders, the Counterparties and the Agent) in connection with, the execution, delivery, validity, enforceability or admissibility in evidence of this Agreement and/or any of the Relevant Documents or the performance by the Borrower or any such party of its obligations hereunder or thereunder is modified in a manner unacceptable to the Agent or is not granted or is revoked or terminated or expires and is not renewed or otherwise ceases to be in full force and effect or the Borrower or any such party defaults in the observance of any of the conditions or restrictions imposed in or in connection with any of the same and the Majority Lenders consider the same is likely to have an adverse affect on the ability of the Borrower, or such other party, to fulfil its respective material obligations under this Agreement or any of the Relevant Documents; or
(f) a creditor attaches or takes possession of, or a distress, execution, sequestration or other process is levied or enforced upon or sued out against any of the material undertakings, assets, rights or revenues of the Borrower and is not discharged within seven (7) Banking Days; or
(g) the Borrower suspends payment of its debts or is unable or admits inability to pay its debts as they fall due or commences negotiations with one or more of its creditors with a view to the general readjustment or rescheduling of all or part of its indebtedness or proposes or enters into any composition or other arrangement for the benefit of its creditors generally or proceedings are commenced in relation to the Borrower under any law, regulation or procedure relating to reconstruction or readjustment of debts; or
(h) the Borrower takes any action or any legal proceedings are started or other steps taken for (i) the Borrower to be adjudicated or found bankrupt or insolvent (ii) other than pursuant to a voluntary reconstruction or voluntary amalgamation, the winding-up or dissolution of the Borrower or (iii) other than pursuant to a voluntary reconstruction or voluntary amalgamation, the appointment of a liquidator, trustee, receiver or similar officer of the Borrower or of the whole or any part of its undertakings, assets, rights or revenues save for those actions or legal proceedings considered by the Agent in its sole discretion to be vexatious or malicious and which are discharged or stayed within 30 days ; or
(i) any event occurs or proceedings is taken with respect to the Borrower in any jurisdiction to which it is subject which has an effect equivalent or similar to any of the events mentioned in Clause 10.01(f), (g) or (h); or
(j) the Borrower suspends or ceases or threatens to suspend or cease to carry on its business; or
(k) all or a part deemed material by the Majority Lenders of the undertakings, assets, rights or revenues of, or shares or other ownership interests in, the Borrower are seized, nationalised, expropriated or compulsorily acquired by or under the authority of any government (save that this paragraph (k) shall not apply in relation to the Vessel in circumstances where the Insurance proceeds (if any) in relation to such seizure, nationalisation, expropriation or compulsory acquisition are sufficient to repay, and result in the repayment in full of, the Outstanding Indebtedness with 120 days of such occurrence); or
(l) any of the Relevant Documents shall at any time and for any reason become invalid or unenforceable or otherwise cease to remain in full force and effect, or if the validity or enforceability of any of the Relevant Documents shall at any time and for any reason be contested by any party thereto (other than the Lenders, the Counterparties and the Agent), or if any such party shall deny that it has any, or any further, liability thereunder or it becomes impossible or unlawful for the Borrower or any other party (if any) to any of the Relevant Documents (other than the Lenders, the Counterparties and the Agent) to fulfil any of the material covenants and obligations contained in any of the Relevant Documents or for the Lenders and/or the Agent to exercise the rights or any of them vested in it thereunder or otherwise; or
(m) there occurs, in the opinion of the Majority Lenders, a material adverse change in the financial condition of the Borrower by reference to the financial statements referred to in Clause 7.01(f) and/or Clause 8.01 (e); or
(n) any other event occurs or circumstance arises which, in the opinion of the Majority Lenders, is likely materially and adversely to affect either (i) the ability of the Borrower or any other party (if any, other than the Lenders, the Counterparties and the Agent) to perform all or any of their respective obligations under or otherwise to comply with the terms of this Agreement and/or any of the Relevant Documents or (ii) the security created by this Agreement and/or any of the Relevant Documents; or
(o) any Encumbrance in respect of any of the property (or part thereof) which is the subject of the Security Documents (or any of them) becomes enforceable; or
(p) there is any change in the ultimate legal or beneficial ownership of the shares in the Borrower or, without the prior written consent of the Agent, the Manager or the Sub-manager; or
(q) the Borrower or any other party (other than the Lenders, the Counterparties and the Agent) repudiates this Agreement or any of the Relevant Documents or does or causes or permits to be done any act or thing evidencing an intention to repudiate this Agreement or any of the Relevant Documents; or
(r) any of the Relevant Documents is breached in any material respect or terminated or cancelled by any party thereto (other than the Lenders, the Counterparties and the Agent) or any moneys assigned pursuant to any of the Security Documents are paid other than as provided therein; or
(s) any of the events referred to in paragraphs (d), (f), (g), (h),
(i) or (j) above occurs mutatis mutandis in relation to the
Charterer, the Manager, the Sub-manager, the issuers of the
Letters of Undertaking, any of the Chargors or, prior to the
Delivery Date, the Contractor or the Builder (save, in the case
of the Manager and/or the Sub-manager, in circumstances where a
replacement acceptable to the Agent is appointed within seven (7)
Banking Days and subject to such conditions as the Agent may see
fit); or
(t) the Borrower, the Manager or the Sub-manager fails to comply with
all national and international conventions, laws, and the rules
and regulations thereunder, applicable to the Borrower, the
Manager, the Sub-manager or the Vessel, including without
limitation, all other national and international conventions,
laws, rules and regulations relating to environmental matters,
including discharges of oil, petroleum, petroleum products and
distillates, chemicals, pollutions and other substances if such
failure, in the opinion of the Majority Lenders, could reasonably
be expected to have a material adverse effect on the business,
assets, operations, property or financial condition of the
Borrower or on the security created by the Security Documents; or
(u) the Borrower, the Manager, the Sub-manager or the Vessel is
involved in any incident involving the non-compliance with any
national or international or other conventions, laws, rules and
regulations relating to environmental matters, including
discharges of oil, petroleum, petroleum distillates and other
substances, if such incident could in the opinion of the Majority
Lenders reasonably be expected to have a material adverse effect
on the business, assets, operations, property or financial
condition of the Borrower or on the security created by the
Security Documents and in respect of any such non-compliance
which in the opinion of the Majority Lenders is capable of remedy
such action as the Agent may require shall not have been taken
within ten (10) Banking Days of the Agent notifying the Borrower
of such required action; or
(v) the Borrower or any other relevant party fails or omits to comply
with any requirements of the Vessel's protection and indemnity
association to the effect that any cover (including without
limitation, U.S. Oil Pollution liability if the Vessel if trading
to the United States) is or may be liable to cancellation or
exclusion at any time and, in the case of any exclusion, the
rights of the Lenders, the Counterparties and/or the Agent might
be materially affected; or
(w) if for any reason the Vessel is not delivered to, and accepted
by, the Borrower under the Contract on or before 31st December
2000 and the Borrower has not established to the satisfaction of
the Majority Lenders that their interests are not adversely
affected.
10.02 The Agent may and if so requested by the Majority Lenders shall,
without prejudice to any other rights of the Lenders, at any time
after the happening of an Event of Default so long as the same is
continuing by notice to the Borrower declare that:
(a) the obligation of the Lenders to make any Advance to the Borrower
shall be terminated, whereupon the aggregate Commitment shall be
reduced to zero forthwith; and/or
(b) the Loan and all interest accrued and all other sums payable
under this Agreement and the Security Documents have become due
and payable, whereupon the same shall, immediately or in
accordance with the terms of such notice, become due and payable.
11. INDEMNITIES
11.01 The Borrower hereby undertakes and agrees to indemnify the Lenders and
the Agent on demand, without prejudice to any of the other rights of
the Lenders and the Agent under this Agreement and/or any of the
Security Documents, against any loss (including any breakage costs and
any loss incurred as a result of unwinding any interest rate swap
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arrangements contained in any Swap Agreement) or expense in excess of any additional interest received by the Lenders and/or the Agent pursuant to Clause 3.04 which the Lenders and/or the Agent shall certify as sustained or incurred by it as a consequence of (i) any default in payment by the Borrower of any sum under this Agreement or any of the Security Documents when due, (ii) the occurrence of any Event of Default, (iii) any prepayment of the Loan or part thereof being made under Clauses 4.02, 4.03, 12.01, 12.02, or 12.03 otherwise
than on the last day of an Interest Period relating to the part of the
Loan prepaid or (iv) any Advance not being drawn down for any reason
(excluding any default by the Lenders and the Agent) after a Drawdown
Notice has been given, including, in any such case, but not limited
to, any loss or expense sustained or incurred in maintaining or
funding the Advance or any part thereof or in liquidating or
re-employing deposits from third parties acquired to effect or
maintain the Loan or any part thereof.
11.02 If any sum due from the Borrower under this Agreement or any of the
Security Documents or any order or judgment given or made in relation
hereto has to be converted from the currency ("the first currency") in
which the same is payable under this Agreement or the relevant
Security Document or under such order or judgment into another
currency ("the second currency") for the purpose of (i) making or
filing a claim or proof against the Borrower, (ii) obtaining an order
or judgment in any court or other tribunal or (iii) enforcing any
order or judgment given or made in relation to this Agreement or any
of the Security Documents, the Borrower shall indemnify and hold
harmless the Lenders and/or the Agent, as the case may be, from and
against any loss suffered as a result of any difference between (a)
the rate of exchange used for such purpose to convert the sum in
question from the first currency into the second currency and (b) the
rate or rates of exchange at which the Lenders and/or the Agent, as
the case may be, may in the ordinary course of business purchase the
first currency with the second currency upon receipt of a sum paid to
it in satisfaction, in whole or in part, of any such order, judgment,
claim or proof. Any amount due from the Borrower under this Clause
11.02 shall be due as a separate debt and shall not be affected by
judgment being obtained for any other sums due under or in respect of
this Agreement or any of the Security Documents and the term "rate of
exchange" includes any premium and costs of exchange payable in
connection with the purchase of the first currency with the second
currency. Provided that there is no continuing Default and that the
Borrower has paid all amounts outstanding under this Agreement and the
Security Documents, any surplus arising from any exchange operation
referred to in this Clause 11.02 shall be promptly paid by the Agent
or the Lender concerned (as the case may be) to the Borrower or as it
may direct. If amounts remain outstanding under this Agreement and/or
the Security Documents, then any such surplus shall be paid by the
Agent or the Lender concerned to the Earnings Account (as defined in
the Collateral Agreement).
11.03 The Borrower shall not be obliged under this Clause 11 to indemnify
any Lender or the Agent against a loss or liability to the extent that
such loss or liability is a direct result of the wilful misconduct of
that Lender or the Agent, as the case may be.
12. UNLAWFULNESS, INCREASED COSTS, ALTERNATIVE INTEREST RATES
12.01 If any law, regulation or regulatory requirement or any judgment,
order or direction of any court, tribunal or authority binding upon
the Lenders in the jurisdiction in which they are respectively formed
or has their respective principal or lending office or in which any
action is required to be performed by them for the purposes of this
Agreement (whether or not in force before the date of this Agreement)
renders it unlawful for any Lender to make or maintain its Commitment
or maintain or fund the Loan or any part thereof or to carry out any
of its other obligations under this Agreement such Lender shall
promptly inform the Agent who shall forthwith inform the Borrower. If
it shall be so unlawful for any Lender to maintain or fund its
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Commitment or the Loan, the Agent shall, at the request and on behalf
of such Lender, shall give notice to the Borrower reducing such
Lender's Commitment to zero and/or requiring the Borrower to prepay
such Lender's Contribution by the latest date permitted by such law,
regulation, regulatory requirement, judgment, order or direction and
the Borrower shall prepay such Lender's Contribution in accordance
with and subject to the terms of such notice and the provisions of
Clause 12.04. Without prejudice to the obligation of the Borrower to
make such prepayment, the Borrower, the Agent and such Lender shall
negotiate in good faith for a period not exceeding thirty (30) days
with a view to such Lender making available its Commitment and/or
maintaining its Contribution in whole or part in a manner which is not
unlawful.
12.02 If any law, regulation or regulatory requirement or any judgment,
order or direction of any court, tribunal or authority binding upon
any Lender in the jurisdiction in which it is formed or has its
principal or lending office or in which any action is required to be
performed by it for the purposes of this Agreement taking effect after
the date of this Agreement or if compliance by such Lender with any
direction, request or requirement (whether or not having the force of
law) of any monetary agency, central bank or competent governmental or
other authority shall:
(a) subject such Lender to Taxes or change the basis of Taxation of
such Lender with respect to any payment under this Agreement
(other than Taxes or Taxation on the overall net income of such
Lender imposed in the jurisdiction in which its principal or
lending office under this Agreement is located); or
(b) impose, modify or deem applicable any reserve requirements or
require the making of any special deposits against or in respect
of any assets or liabilities of, deposits with or for the account
of, or loans by, such Lender; or
(c) impose on such Lender any other condition with respect to this
Agreement or its obligations under this Agreement,
and, as a result of any of the foregoing, the cost to such Lender of
making or keeping its Commitment available or maintaining or funding
its Contribution is increased or the amount payable or the effective
return to such Lender under this Agreement is reduced or such Lender
makes a payment or forgoes a return on or calculated by reference to
any amount payable to it under this Agreement, then and in each such
case:
(i) such Lender shall forthwith notify the Agent whereupon the Agent
shall forthwith notify the Borrower. The notification shall give
particulars in reasonable detail of the circumstances giving rise
to the event and of how such Lender may be affected;
(ii) without in any way limiting, reducing or otherwise qualifying the
obligations of the Borrower under this Agreement, such Lender
shall, in consultation with the Agent, endeavour to take such
reasonable steps as may be open to it to mitigate or remove such
circumstances including (without obligation) the transfer of its
rights and obligations under this Agreement to another of its
lending offices or an Affiliate, in each case not affected by the
relevant circumstances unless to do so might (in the opinion of
such Lender) be prejudicial to such Lender or be in conflict with
such Lender's general banking policies or involve such Lender in
expense or an increased administrative burden;
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(iii)on demand the Borrower shall pay to the Agent for the account of
such Lender the amount which such Lender specifies (in a
certificate setting forth the basis of the computation of such
amount) is required to compensate such Lender for such increased
cost, reduction, payment or forgone return. The Borrower's
obligation to make any such payment shall be conditional upon the
Agent delivering to the Borrower with each such demand a
certificate from such Lender specifying in reasonable detail the
nature of the increased cost and the dates from which it applied;
and
(iv) the Borrower may, at any time after receipt of such demand and
certificate notify the Agent that it will prepay all (but not
part only) of such Lender's Contribution to the Loan whereupon
the Borrower shall prepay an amount equal to such Lender's
Contribution to the Loan in accordance with and subject to the
provisions of Clause 12.04.
Any demand under Clause 12.02 (iii) may be made at any time whether or
not the Loan has been repaid.
12.03 Clause 12.02 does not apply to, and no amount shall be recoverable
from the Borrower in respect of, any increased cost:
(a) which is compensated in full by the operation of Clause 6.07; or
(b) which is, or is attributable to, any Tax on the overall net
income or profits of the affected Lender.
12.04 (a) If and whenever, at any time prior to the commencement of any
Interest Period in respect of any Advance, the Agent shall have
determined (which determination shall, in the absence of manifest
error, be conclusive) that:
(i) adequate and fair means do not exist for ascertaining the
Floating Rate during such Interest Period pursuant to
Clause 3.02; or
(ii) deposits in Dollars are not available to the Lenders in the
London interbank market in sufficient amounts in the
ordinary course of business for such Interest Period; or
(iii) by reason of circumstances affecting the London interbank
market generally it is impracticable for the Lenders to
fund or continue to fund such Advance during such Interest
Period;
the Agent shall forthwith give notice (a "Determination Notice")
of such determination to the Borrower and to each of the Lenders.
After the giving of any Determination Notice the Commitment shall
not be borrowed until notice to the contrary is given by the
Agent to the Borrower.
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(b) During the period of ten (10) days after any Determination Notice has been given by the Agent under Clause 12.04 (a), the Agent shall certify (having consulted with the Borrower and the Lenders) an alternative basis (the "Substitute Basis") for the making or continuation of the Loan. The Substitute Basis may (without limitation) include alternative interest periods, alternative currencies or alternative rates of interest but shall include a margin above the cost of funds to the Lenders equivalent to the Margin. The Substitute Basis shall be binding upon the Borrower and shall take effect in accordance with its terms from the date specified in the Determination Notice. During the period when a Substitute Basis is in force the Borrower, the Agent and the Lenders shall consult not less frequently than once every thirty (30) days with a view to reverting to the other provisions of this Agreement as soon as practicable.
(c) If the Borrower determines that it does not wish to continue to borrow the Loan on the basis of the Substitute Basis it shall so notify the Agent within ten (10) days of receipt of the
certificate specifying such Substitute Basis, whereupon the
Borrower shall forthwith prepay the Loan in accordance with and
subject to the provisions of Clause 12.05 together with accrued
interest to the date of prepayment, calculated from the date
specified in the Determination Notice at a rate per annum equal
to the rate certified by the Agent to be an interest rate
equivalent to the aggregate of (a) the Margin and (b) the cost to
the Lenders of funding the Loan during the period commencing on
the date specified in the Determination Notice and ending on the
date of prepayment.
12.05 When the Loan is prepaid by the Borrower pursuant to this Clause 12
the Borrower shall, at the time of such prepayment, pay to the Agent
accrued interest thereon to the date of actual payment, any additional
amount payable under Clause 12.02 and all other sums payable by the
Borrower to the Agent and/or the Lenders pursuant to this Agreement
(including, without limitation, any amounts payable under Clause 11)
and pursuant to the Security Documents or any of them.
13. SECURITY AND SET-OFF
13.01 All moneys received by the Agent under or pursuant to this Agreement
or any of the Security Documents and expressed to be applicable in
accordance with the provisions of this Clause 13.01 shall be applied
by the Agent in the following manner:
(a) first in accordance with clause 8 of the Security Sharing
Agreement;
(b) secondly the surplus (if any) shall be paid to the Borrower or to
whomsoever else may be entitled to receive such surplus.
13.02 The Borrower hereby authorises the Lenders at any time following the
occurrence of a Default for so long as the same is continuing without
prejudice to any of the Lenders' rights at law, in equity or
otherwise, and without notice to the Borrower:
(a) to apply any credit balance standing upon any account of the
Borrower with any branch of the Lenders and in whatever currency
in or towards satisfaction of any sum due to the Lenders under
this Agreement and/or any of the Security Documents;
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(b) in the name of the Borrower and/or any of the Lenders to do all such acts and execute all such documents as may be necessary or expedient to effect such application; and
(c) to combine and/or consolidate all or any accounts in the name of the Borrower with the Lenders.
For all or any of the above purposes the Lenders are authorised to purchase with the monies standing to the credit of such account or accounts such other currencies as may be necessary to effect such application. The Lenders shall not be obliged to exercise any right given to them by this Clause 13.02. The Lenders shall notify the
Borrower and the Agent forthwith upon the exercise or purported
exercise of any right of set-off giving full details in relation
thereto.
13.03 If at any time the proportion which any Lender has received or
recovered (whether by set-off or otherwise) in respect of its portion
of any sum due from the Borrower to the Lenders under this Agreement
(other than a sum received for the account of that Lender alone
pursuant to Clauses 6.07 or 12) is greater (the amount of the excess
being referred to in this Clause 13.03 as the "excess amount") than
the proportion of such sum received or recovered by the Lender
receiving or recovering the smallest or no proportion of its portion
of such sum:
(a) such Lender shall promptly notify the Agent and shall pay to the
Agent an amount equal to the excess amount and the Agent shall
notify the Borrower of receipt of such amount;
(b) the Agent shall treat such payment as if it were a payment by the
Borrower on account of the sum due to all the Lenders (including
the Lender to which the payment was made) to ensure that all the
Lenders share rateably (in accordance with their respective
Contributions to the Loan) in the benefit of such amount equal to
the excess amount; and
(c) as between the Borrower and such Lender the excess shall be
treated as not having been paid
Provided that:
(i) such Lender shall not be obliged to share any excess amount which
it receives as a result of or in connection with legal
proceedings which it takes to recover sums owing to it under this
Agreement with any other Lender which has a legal right to, but
does not, join in such proceedings (unless such proceedings are
instituted without prior notice having been given by such Lender
to the other Lenders through the Agent); and
(ii) if any part of the relevant receipt by such Lender is thereafter
required to be repaid to the Borrower, the other Lenders shall
repay to the Agent for the account of such Lender such amount as
shall be necessary to ensure that all the Lenders share rateably
(in accordance with their respective Contributions to the Loan)
in the amount of the receipt retained and the other provisions of
(b) and (c) above shall apply only to the retained amount.
13.04 The Borrower hereby undertakes that
(a) except insofar as enforcement may be limited by any applicable
laws relating to bankruptcy, insolvency, administration and
similar laws affecting creditors' rights generally, and except
insofar as stated in any qualification or reservation contained
in any original legal opinion given for the purpose of or as a
condition precedent to this Agreement, the Security Documents
shall both at the date of execution and delivery thereof and, so
long as any moneys are owing under this Agreement or thereunder,
be valid and binding obligations of the respective parties
thereto and rights of the Lenders and the Agent enforceable in
accordance with their respective terms; and
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(b) it will, at its own expense, execute, sign, deliver, register,
perfect and do and perform any and every such further mortgage,
charge, pledge, lien, hypothecation, assignment, security
interest, assurance, document, deed, instrument, act or thing as
in the reasonable opinion of the Agent may be necessary or
desirable for perfecting the security contemplated or constituted
by the Security Documents.
13.05 The Security Documents are supplemental to this Agreement and, in the
event of any conflict, the provisions of this Agreement shall prevail.
14. ASSIGNMENT AND LENDING OFFICES
14.01 This Agreement shall be binding upon, and enure for the benefit of,
the Lenders, the Agent and the Borrower and their respective
successors.
14.02 The Borrower may not assign or transfer any of its rights or
obligations under this Agreement.
14.03 Each Lender (an "existing Lender") may assign or transfer all or any
part of its rights, benefits and/or obligations under this Agreement
and the Security Documents to any one or more banks or other financial
institutions (in the case of an assignment, an "Assignee" and in the
case of a transfer a "Transferee"). Written notice of any assignment
of all or part of any Lender's rights and/or benefits under the
Agreement and the Security Documents shall be given to the Borrower
and the Agent as soon as possible after the same has been effected.
Any transfer of all or part of any Lender's obligations under this
Agreement before the Delivery Date may only be effected with the prior
written consent of the Borrower, such consent not to be unreasonably
withheld and the request for which shall be promptly responded to,
unless the Transferee shall be an Affiliate company of such Lender or
another existing Lender (in which case no such consent shall be
required, the Borrower consenting to such transfer by its execution of
this Agreement provided that, in the case of a transfer to a
subsidiary, the proposed Transferee shall be of substantially similar
financial standing to the existing Lender or that Lender shall remain
responsible for the performance of the Transferee's obligations). Any
such transfer shall be effected upon five (5) Banking Days' prior
notice by delivery to the Agent of a duly executed and duly completed
Transfer Certificate in which event, on the transfer date specified in
such Transfer Certificate, to the extent that they are expressed to be
the subject of the novation established by the Transfer Certificate:
(a) the Borrower, the existing Lender and the other parties to this
Agreement shall be released from further obligations towards one
another under this Agreement and the Security Documents in
respect of such transferred rights, benefits and/or obligations
and their respective rights against one another under this
Agreement and the Security Documents in respect of such
transferred rights, benefits and/or obligations shall be
cancelled (such rights and obligations being referred to in this
Clause 14.03 as "discharged rights and obligations"); and
(b) the Borrower, the Transferee and the other parties to this
Agreement shall assume obligations towards one another and/or
acquire rights against one another which differ from such
discharged rights and obligations only insofar as they are
exercisable by or against the Transferee in place of the existing
Lender.
The Agent shall promptly notify the other parties thereof of the
receipt by it of any Transfer Certificate and shall promptly deliver a
copy of such Transfer Certificate to the Borrower and the other
Lenders.
14.04 The Agent and the Borrower shall be fully entitled to rely on any
Transfer Certificate delivered to the Agent in accordance with the
foregoing provisions of this Clause 14 which is complete and regular
on its face as regards its contents and purportedly signed on behalf
of the existing Lender and the Transferee and neither the Agent or the
Borrower shall have any liability or responsibility to any party as a
consequence of placing reliance on and acting in accordance with any
such Transfer Certificate if it proves to be the case that the same
was not authentic or duly authorised.
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14.05 The Borrower and each Lender irrevocably undertakes and agrees to
counter-sign each Transfer Certificate promptly upon request by the
Agent subject to the terms of this Agreement.
14.06 If any Lender assigns all or any part of its rights or benefits or
transfers all or any part of its rights, benefits and/or obligations
as provided in Clause 14.03 or 14.04 the Borrower undertakes,
immediately on being requesting to do so by such Lender and at the
cost of such Lender to enter into such documents as may be necessary
or desirable to assign to the Assignee or transfer to the Transferee
all or the relevant part of such Lender's interest in this Agreement
and the Security Documents and all relevant references in this
Agreement to such Lender shall thereafter be construed as a reference
to such Lender and/or its Assignee and/or its Transferee (as the case
may be) to the extent of their respective interests and, in the case
of a transfer of all or part of such Lender's obligations, the
Borrower shall thereafter look only to the Assignee and/or the
Transferee (as the case may be) in respect of that proportion of such
Lender's obligations under this Agreement as corresponds to the
obligations assumed by such Assignee and/or Transferee (as the case
may be).
14.07 Each Lender shall lend through its branch set opposite its name in
Schedule 1 or through any other office of such Lender selected from
time to time by it through which such Lender wishes to lend for the
purposes of this Agreement provided that such Lender may not change
its lending office if such change shall have the effect of increasing
the costs incurred by the Borrower under or pursuant to this
Agreement. If the office through which such Lender is lending is
changed pursuant to this Clause 14.07, such Lender shall notify the
Agent and the Borrower promptly of such change.
14.08 Each Lender may grant or sell one or more participations in the whole
or any part of its rights in respect of its Contribution in such
manner and upon and subject to such terms and conditions as such
Lender, in its discretion, thinks fit, but so that any such
participation shall be on terms that the Borrower shall continue to
deal exclusively with such Lender, and not with the participant, with
whom the Borrower shall not have any contractual relationship, and
that such participant shall have rights and remedies only against such
Lender, and not against the Borrower.
14.09 Any Lender may, without the prior consent of the Borrower, disclose on
a confidential basis to a potential assignee or participant, or to any
other person who may propose entering into contractual relations with
such Lender in relation to this Agreement, such information about the
Borrower as such Lender shall consider appropriate.
14.10 The following additional provisions shall apply to each assignment of
rights and benefits, transfer of obligations (whether by way of
novation or otherwise) and change in lending office (as the case may
be) by a Lender made pursuant to this Clause 14:
(a) The Borrower's consent shall be obtained before any assignment or
transfer by any Lender where, under the relevant laws and
regulations in force at the time of the same, that Lender is
aware that the Borrower would be obliged to pay for the account
of the relevant Transferee or Assignee (as the case may be), any
greater amount than it would have been obliged to pay had no such
assignment or transfer been made by that Lender.
(b) For avoidance of doubt, and without prejudice to the generality
of Clause 14.03 it shall be reasonable before the Delivery Date
for the Borrower to withhold its consent to any proposed transfer
by a Lender to a Transferee if the proposed Transferee is not of
substantially similar financial standing to the existing Lender
Provided that the Borrower shall not withhold such consent if the
existing Lender remains responsible for the performance of the
Transferee's obligations.
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15. THE AGENT AND THE LENDERS
15.01 The Borrower acknowledges that each Lender has irrevocably appointed
the Agent as its agent for the purposes of this Agreement and each of
the Security Documents and authorised the Agent (whether or not by or
through employees or agents) to take such action on such Lender's
behalf and to exercise such rights, remedies, powers and discretions
as are specifically delegated to the Agent by the Security Sharing
Agreement and the Security Documents, together with such powers and
discretions as are reasonably incidental thereto.
15.02 Except with the prior written consent of all of the Lenders, the Agent
shall not have authority on behalf of the Lenders to agree with the
Borrower any amendment to this Agreement or take any action which
would (i) reduce the Margin and/or waive the payment of or vary the
basis of calculation of any of the fees or interest payable by the
Borrower, (ii) extend the due date or reduce the amount of any payment
of principal, interest or other amount payable under this Agreement,
(iii) change the currency in which any amount is payable under this
Agreement, (iv) increase any Lender's Commitment or the aggregate of
all the Commitments, (v) postpone the last day of the Drawdown Period,
(vi) change this Clause 15.02, (vii) amend the definition of Majority
Lenders, (viii) change the provisions of Clause 9 or waive any of the
documents and evidence specified in Schedule 3, or (ix) result in the
release of any of the Security Documents.
15.03 The Borrower may rely upon any notice, instruction or other
communication sent by the Agent and shall be under no obligation to
enquire further whether it has been approved by, or requires the
approval of, the requisite Lenders.
16. NOTICES AND OTHER MATTERS
16.01 Every notice, request, demand or other communication under this
Agreement or (unless otherwise provided therein) under any of the
Security Documents shall:
(a) be in writing delivered personally or by first class prepaid
letter (airmail if available), telex, facsimile or cable
(confirmed in the case of a telex, facsimile or cable by
first-class prepaid letter sent within twenty four (24) hours of
despatch, but so that the non-receipt of such confirmation shall
not affect in any way the validity of the telex, facsimile or
cable in question);
(b) be deemed to have been received, subject as otherwise provided in
this Agreement or the relevant Security Document, in the case of
a telex at the time of despatch with confirmed answerback of the
addressee appearing at the beginning and end of the communication
(provided that if the date of despatch is not a business day in
the country of the addressee it shall be deemed to have been
received at the opening of business on the next such business
day), in the case of a facsimile at the time of despatch with
electronic or other confirmation of receipt (provided that if the
date of despatch is not a business day in the country of the
addressee, it shall be deemed to have been received at the
opening of business on the next such business day), in the case
of a cable twenty-four (24) hours after despatch and in the case
of a letter when delivered personally or seven (7) days after it
has been put in to the post; and
(c) be sent:
(1) if to be sent to the Borrower, to it care of:
Gotaas-Larsen Ltd.
Southside, 105 Victoria Street
London SW1E 6QJ
Telex: 917497 GOLAR G
Facsimile: 44 171 834 2259
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(2) if to be sent to the Agent, to it at:
45th Floor, One Exchange Square
8 Connaught Place
Central
Hong Kong
Telex: 85090 ISA HX Facsimile: (852) 2868 1448
(3) if to be sent to the Lenders or any of them, to them at
their respective addresses, telex or facsimile numbers set
forth in Schedule 1;
or to such other address, telex or facsimile number as is notified
by one party to the other parties under this Agreement.
16.02 No failure or delay on the part of the Lenders or the Agent to
exercise any power, right or remedy under this Agreement and/or any of
the Security Documents shall operate as a waiver thereof, nor shall
any single or partial exercise by the Lenders or the Agent of any
power, right or remedy preclude any other or further exercise thereof
or the exercise of any other power, right or remedy. The remedies
provided in this Agreement and in the Security Documents are
cumulative and are not exclusive of any remedies provided by law.
16.03 All certificates, instruments and other documents to be delivered
under or supplied in connection with this Agreement or any of the
Security Documents shall be in the English language or shall be
accompanied by a certified English translation upon which the Lenders
and the Agent shall be entitled to rely.
16.04 Time shall be of the essence in the performance of the Borrower's
obligations under this Agreement and the Security Documents.
16.05 This Agreement may be executed in any number of counterparts and by
the different parties hereto on separate counterparts, each of which
so executed and delivered shall be an original, but all the
counterparts shall together constitute one and the same instrument.
16.06 Any provision of this Agreement prohibited by or becomes unlawful or
unenforceable under any applicable law actually applied by any court
of competent jurisdiction shall, to the extent required by such law,
be severed from this Agreement and rendered ineffective so far as is
possible without modifying the remaining provisions of this Agreement.
Where however the provisions of any such applicable law may be waived,
they are hereby waived by the parties hereto to the full extent
permitted by such law to the end that this Agreement shall be a valid
and binding agreement enforceable in accordance with its terms.
17. LAW AND JURISDICTION
17.01 This Agreement is governed by and shall be construed in accordance
with English law.
17.02 For the benefit of the Lenders and the Agent, the parties hereto
irrevocably agree that any legal action or proceedings in connection
with this Agreement against the Borrower or any of its assets may be
brought in the English courts which shall have jurisdiction to settle
any disputes arising out of or in connection with this Agreement. The
Borrower hereby irrevocably and unconditionally submits to the
jurisdiction of such courts and the Borrower irrevocably designates,
appoints and empowers HFW Nominees Limited (presently of Marlow House,
Lloyds Avenue, London, EC3N 3AL) at its registered office for the time
being in England to receive for it and on its behalf, service of
process issued out of the English courts in any legal action or
proceedings arising out of or in connection with this Agreement and
the Security Documents. Nothing in this Clause 17.02 shall affect the
right of the Lenders and the Agent to serve process in any other
manner permitted by law but if the said process agent ceases to exist
or have an office in the relevant jurisdiction where process may be
served, the Borrower shall forthwith appoint another process agent
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with an office in that jurisdiction where process may be served and
shall forthwith notify the Agent thereof. The submission to such
jurisdiction shall not (and shall not be construed so as to) limit the
right of the Lenders and/or the Agent to take proceedings against the
Borrower in any other court of competent jurisdiction nor shall the
taking of proceedings in any one or more jurisdictions preclude the
taking of proceedings in any other jurisdiction, whether concurrently
or not.
17.03 The Borrower waives any objection it may now or hereafter have to the
laying of venue of any legal action or proceeding arising out of or in
connection with this Agreement or any of the Security Documents in any
court and any claim it may now or hereafter have that any such legal
action or proceeding has been brought in an inconvenient forum.
17.04 The Borrower waives any rights of sovereign immunity which it or any
of its properties may enjoy in any jurisdiction and subjects itself to
civil and commercial law with respect to its obligations under this
Agreement and the Security Documents.
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IN WITNESS whereof the parties hereto have caused this Agreement to be duly executed the day and year first above written.
SIGNED by )
)
for and on behalf of FARAWAY )
)
MARITIME SHIPPING COMPANY )
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SIGNED by )
)
for and on behalf of )
)
THE BANK OF TAIWAN )
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SIGNED by )
)
for and on behalf of )
)
CREDIT AGRICOLE INDOSUEZ )
SIGNED by )
)
for and on behalf of )
)
THE FUJI BANK, LIMITED )
)
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SIGNED by )
)
for and on behalf of )
)
THE INDUSTRIAL BANK OF )
JAPAN, LIMITED )
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SIGNED by )
)
for and on behalf of )
)
CREDIT LYONNAIS, OFFSHORE ))
)
BANKING UNIT, TAIPEI )
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SIGNED by )
)
for and on behalf of )
)
BANK OF TAIWAN )
SIGNED by )
)
for and on behalf of )
)
CREDIT AGRICOLE INDOSUEZ )
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SIGNED by )
)
for and on behalf of )
)
THE FUJI BANK, LIMITED )
)
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SIGNED by )
)
for and on behalf of )
)
THE INDUSTRIAL BANK OF )
JAPAN, LIMITED )
SIGNED by )
)
for and on behalf of )
)
CREDIT LYONNAIS, OFFSHORE )
)
BANKING UNIT, TAIPEI )
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)
by for and on behalf of INDOSUEZ)
)
ASIA SHIPFINANCE SERVICES )
)
LIMITED in the presence of: )
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SCHEDULE 1
The Lenders
Lenders Commitment
------- ----------
THE BANK OF TAIWAN $60,000,000
Singapore Branch
80 Raffles Place #28-20
UOB Plaza 2
Singapore 0104
Telex: 24835 BOTSIN
Facsimile: (65) 536 8203
CREDIT AGRICOLE INDOSUEZ $46,500,000
9, Quai du President Paul Doumer
92400 COURBEVOIE
France
Telex: 650409 INSU X
Facsimile: (33 1) 41 89 29 87
THE FUJI BANK, LIMITED $46,500,000
Singapore Branch
1 Raffles Place #20-00, OUB Centre
Singapore 048616
Republic of Singapore
Telex: RS24610 FUJIGIN
Facsimile: 65 438 5997
THE INDUSTRIAL BANK OF JAPAN, LIMITED $46,500,000
3-3, Marunouchi 1-chome
Chiyoda-ku, Tokyo 100
Japan
Telex: J22325: Answerback KOGIN J
Facsimile: 81-3-3215-0342
Atten: Corporate Banking Department No.5
CREDIT LYONNAIS, $15,000,000
OFFSHORE BANKING UNIT, TAIPEI
16th Floor, Hung Kuo Building
167, Tun Hwa North Road
Taipei
Taiwan
Telex: 10304 CREDTPE
Facsimile: (8862) 718 8292
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SCHEDULE 2
Form of Drawdown Notice
To: Indosuez Asia Shipfinance Services Limited 45th Floor, One Exchange Square 8 Connaught Place Hong Kong
Date: 199
US$[214,500,000] Loan Facility Agreement dated 1997
We refer to the above Agreement and hereby give you notice that we wish to drawdown an Advance in the sum of Dollars [ ] on ............ 19 . The funds should be credited to [name and number of account] with [ ] for the purpose of [paying the [ ] instalment of the Contract Price to the Builder.]
We confirm that:
(i) no event or circumstance has occurred and is continuing which constitutes a Default;
(ii) the representations and warranties contained in Clause 7.01 of the above Agreement are on the date hereof or, to the extent they are not, will be on the Drawdown Date [or, in the case of the Advance to be made on the Delivery Date, to the extent that they are not, will be on the Delivery Date], true and correct;
(iii)the acceptance of the Commitment [and the borrowing of the Advance] will be within our corporate powers, has been validly authorised by appropriate corporate action and will not cause any limit on our borrowings (whether imposed by statute, regulation, agreement or otherwise) to be exceeded.
Words and expressions defined in the Agreement shall have the same meanings when used herein.
For and on behalf of
FARAWAY MARITIME SHIPPING COMPANY
Title:
SCHEDULE 3
List of Documents and evidence
Part 1
(a) a copy, certified as a true and complete copy by an officer of the Borrower of the Articles of Incorporation and By-laws of the Borrower and an up-to-date list of the directors and officers of the Borrower;
(b) a copy, certified as a true and complete copy by a director, the secretary or the assistant secretary of each of the Chargors and the Manager, of the constitutional documents of such Chargor and the Manager and an up-to-date list of the directors and officers of such Chargor and the Manager;
(c) a certificate of resolutions of the Board of Directors of the Borrower approving the acceptance of this facility and the borrowing of the Loan and approving and authorising a person or persons to execute this Agreement, the Collateral Agreement, the Contract Assignment, the Charter Assignment, the Guarantee and Swap Receipts Assignment, the General Assignment, the Management Contracts Assignment, the Mortgage and each of the other Relevant Documents to which it is a party;
(d) a certificate of resolutions of the Board of Directors of each Chargor approving and authorising a person or persons to execute the Deed of Charge and each of the other Relevant Documents to which it is a party;
(e) a certificate of resolutions of the Board of Directors of each of the Manager and the Sub-manager approving and authorising a person or person to execute the Management Contracts Assignment (in the case of the Manager) and each of the other Relevant Documents to which it is a party;
(f) a certificate of resolutions of Board of Directors of each issuer of the Letters of Undertaking (other than PT Graha Centermine) and a copy, certified as a true and complete copy by a director, the secretary or the assistant secretary of each issuer of the Letters of Undertaking, of the constitutional documents of the issuer and an up-to-date list of the directors and officers of each issuer;
(g) a copy, certified as a true and complete copy by an officer of the Borrower of all consents, authorisations, licences and approvals required by the Borrower, the Chargors and any other party thereto other than the Lenders and the Agent (or, in the absence of such copies, a legal opinion establishing that such consents, authorisations, licences and approvals have been obtained or alternatively that there are no consents necessary), in connection with the execution, delivery, validity and enforceability of this Agreement and the Relevant Documents (other than the Sales Contract and the Trustee and Paying Agent Agreement), and the performance by the Borrower, the Chargors and such other parties of, their respective obligations hereunder and thereunder, for the Borrower to borrow the Loan, and for the Borrower to pay the principal of and interest on the Loan and all other sums payable under this Agreement;
(h) copies, certified as a true and complete copies by an officer of the Borrower of the Contract, the Shareholders' Agreement, the Management Agreement, the Sub-management Agreement and the Charter, and copies of the Sales Contract and the Trustee and Paying Agent Agreement;
(i) the original Performance Bond and the Refund Guarantee in respect of the first instalment of the Contract Price;
(j) the Security Sharing Agreement, Contract Assignment, the Management Contracts Assignment and the Guarantee and Swap Receipts Assignment all duly executed, together with the consents and acknowledgements annexed thereto duly executed by the Builder, the Manager, the Sub-manager and the Bank Guarantors in respect of the Contract, the Management Agreement, the Sub-management Agreement, the Performance Bond and the first Refund Guarantee respectively;
(k) the Deed of Charge, duly executed by the Chargors and all the relevant documents pursuant thereto;
(l) the Charter Assignment, duly executed by the Borrower, together with the Charterer's Consent duly executed by the Charterer;
(m) the Collateral Agreement, duly executed by the Borrower and the Trustee;
(n) the Letters of Undertaking and the Good Management Undertaking, each duly executed;
(o) the Fee Letter, duly executed by the Borrower and the Agent and the Trustee Fee Letter duly executed by the Trustee and the Borrower;
(p) a copy, certified as a true copy by an officer of the Borrower of a letter from HFW Nominees Limited accepting its appointment as agent for receipt of service of proceedings under Clause 17.02 and under each of the Security Documents in which it is or is to be appointed as the agent of the Borrower and any other parties to the Security Documents;
(q) such satisfactory legal opinions of legal advisers as the Lenders and the Agent shall require, which legal opinions shall extend (without limitation) to the Borrower, the Chargors, the issuers of the Letters of Undertaking, the Charterer and any other parties considered by the Agent to be relevant;
(r) a copy, certified as a true copy by an officer of the Borrower of the receipt for payment of the first (1st) instalment of the Contract Price specified under Section 8.2(a) of the Contract;
(s) (save in respect of an Advance made available pursuant to Clause 2.01(b)) evidence, satisfactory to the Agent in all aspects, that the Chargors shall have maintained or, if necessary, contributed further equity to the Borrower so that, after the first Advance, the Debt/Equity ratio of the Borrower shall be not more than 78:22;
(t) the Swap Agreement, Schedule thereto and each Confirmation (as defined
therein), duly executed by the Borrower and each Counterparty thereto
or, if the Borrower chooses not to enter into sufficient Swap
Agreements with Counterparties to hedge the Borrower's exposure to
interest rate fluctuations hereunder, evidence satisfactory to the
Agent that the Borrower has entered into Additional Swap Agreements
(i) with banks or financial institutions acceptable to the Arrangers,
(ii) with a term of at least six (6) years and six (6) months from the
Delivery Date, (iii) on terms with dates and amounts matching the
Borrower's interest payment obligations under this Agreement, and (iv)
with an applicable interest rate of not more than eight point five per
centum per annum (8.5% p.a.);
(u) the certificates and documentation set out in Part 3 of Schedule 1 to the Swap Agreement;
(v) a certified copy of the Deed of Guarantee issued by Osprey Maritime Limited to the Charterer under the Charter;
(w) an opinion satisfactory to the Agent from BANKASSURE Insurance Services Limited confirming that the requirements set out in the Security Documents relating to the Insurances (as defined in the General Assignment) are appropriate (taking into account both market practice and the method of financing the Vessel);
(x) the notice specified in Clause 6.02 of the Collateral Agreement, duly executed by the Borrower, the Charterer and Bank of America National Trust and Savings Association, New York Branch; and
(y) a financial statement, certified by the Borrower to be true and correct and prepared in accordance with generally accepted accounting principles and practices in the United States of America consistently applied, reflecting variation between (i) actual expenditure to the date of such financial statement by the Borrower in relation to Total Project Cost and (ii) budgeted expenditure in relation to Total Project Cost, such budgeted expenditure as approved by the Agent before drawdown of the first Advance under this Agreement.
Part 2
(a) (i) Certified true copies of the Contractor's invoice under Section 8.2 of the Contract evidencing that the instalment of the Contract Price specified in the relevant Drawdown Notice is due and each of the other documents to be produced by the Builder in respect thereof; and
(ii) the original Refund Guarantee in respect of such instalment of the Contract Price and the Bank Guarantor's consent and agreement to the assignment thereof under and in accordance with the terms of the Guarantee and Swap Receipts Assignment; or
(b) Evidence, satisfactory to the Agent in all respects, of the purpose for which the Advance is being made and that the payment to which it relates is due;
(c) Evidence, satisfactory to the Agent in all respects, that the Chargors shall have contributed further equity to the Borrower so that, after the relevant Advance, the Debt/Equity ratio of the Borrower shall be not more than 78:22; and
(d) a financial statement, certified by the Borrower to be true and correct and prepared in accordance with generally accepted accounting principles and practises in the United States of America consistently applied, reflecting variation between (i) actual expenditure by the Borrower to the date of such financial statement in relation to Total Project Cost and (ii) budgeted expenditure in relation to Total Project Cost, such budgeted expenditure as approved by the Agent before drawdown of the first Advance under this Agreement.
Part 3
(a) copies, certified to be true copies by a director of the Borrower, of all documents which the Agent may reasonably require evidencing that all necessary action, approvals, consents or authorisations with respect to or in connection with the registration of the Vessel under the laws and flag of the Republic of Liberia have been taken or obtained;
(b) certified true copies of the Contractor's invoice under Section 8.2(e) of the Contract evidencing that the final instalment is due under the Contract;
(c) documentary evidence:
(i) that (if applicable) the Government of Japan has granted an export licence in respect of the sale of the Vessel to the Borrower and that such export licence is in full force and effect as of such date;
(ii) that there is no lien, charge or encumbrance of any kind whatsoever on the Vessel, her earnings or insurance, (save and except for the Contractor's and the Builder's right to retain the Vessel until paid for in accordance with the Contract), it being understood that the declaration referred to in Section 17.3(a)(v) of the Contract will be sufficient documentary evidence;
(iii)that the Vessel has been duly completed and will be accepted by the Borrower on the Delivery Date as being in all respects in accordance with the Contract;
(d) a financial statement, certified by the Borrower to be true and correct and prepared in accordance with generally accepted accounting principles and practises in the United States of America consistently applied, reflecting variation between (i) actual expenditure to the date of such financial statement in relation to Total Project Cost by the Borrower and (ii) budgeted expenditure in relation to Total Project Cost, such budgeted expenditure as approved by the Agent before drawdown of the first Advance under this Agreement;
(e) a certificate from the Secretary of the Borrower confirming that each of the resolutions referred to in the certificate described in paragraph (c) of Part 1 of this Schedule remain in full force and effect and have not (except as consented to by the Agent) been amended, modified or revoked in any respect;
(f) an opinion satisfactory to the Agent from BANKASSURE Insurance Services Limited confirming that the Insurances actually obtained by the Borrower conform with the requirements of this Agreement and the Security Documents; and
(g) evidence, satisfactory to the Agent in all respects, that the total of all Advances made or to be made under this Agreement will not exceed seventy eight per centum (78%) of Total Project Cost, save as expressly envisaged by Clause 2.01(b).
Part 4
(a) evidence that the Vessel:
(i) has been completed, delivered to and accepted by the Borrower under the Contract;
(ii) is registered in the name of the Borrower under the laws and flag of the Republic of Liberia free of Encumbrances other than Permitted Encumbrances;
(iii) is classed in accordance with Clause 7.01(k) of this Agreement;
(iv) is insured in accordance with the provisions of the Mortgage and the General Assignment and all requirements of the Mortgage and the General Assignment in respect of such insurance have been complied with; and
(v) that the Vessel has been accepted by the Charterer under the Charter;
(b) the Mortgage and the General Assignment and all documents to be delivered pursuant thereto, each duly executed by the Borrower and the executed notices pursuant to the General Assignment;
(c) evidence that the Mortgage has been registered against the Vessel through the Office of the Deputy Commissioner of Maritime Affairs of the Republic of Liberia;
(d) the Bank Guarantee, duly executed by the relevant Bank Guarantor, and the consent and agreement of such Bank Guarantor to the assignment of the Bank Guarantee under and in accordance with the terms of the Guarantee and Swap Receipts Assignment;
(e) a notice from the Borrower specifying the Total Project Cost, such notice to be supported by documentation (including invoices, receipts and other evidence reasonably requested by the Agent) in form and substance acceptable to the Agent;
(f) a financial statement, certified by the Borrower to be true and correct and prepared in accordance with generally accepted accounting principles and practices in the United States of America consistently applied, reflecting variation between actual expenditure by the Borrower in relation to Total Project Cost and budgeted expenditure, such budgeted expenditure as approved by the Agent before drawdown of the first Advance under this Agreement.
SCHEDULE 4
No. of Date of Principal
payment payment Repayment
------- ------- ---------
1 28-Jun-01 $4,979,515
2 28-Dec-01 $5,191,145
3 28-Jun-02 $5,411,768
4 28-Dec-02 $5,641,768
5 28-Jun-03 $5,881,544
6 28-Dec-03 $6,131,509
7 28-Jun-04 $6,392,098
8 28-Dec-04 $6,663,763
9 28-Jun-05 $6,946,972
10 28-Dec-05 $7,242,219
11 28-Jun-06 $7,550,013
12 28-Dec-06 $7,870,889
13 28-Jun-07 $8,205,401
14 28-Dec-07 $8,554,131
15 28-Jun-08 $8,917,682
16 28-Dec-08 $9,296,683
17 28-Jun-09 $9,691,792
18 28-Dec-09 $10,103,693
19 28-Jun-10 $10,533,100
20 28-Dec-10 $10,980,757
21 28-Jun-11 $11,447,439
22 28-Dec-11 $11,933,955
23 28-Jun-12 $12,441,148
24 28-Dec-12 $12,969,897
25 28-Jun-13 $13,521,119
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SCHEDULE 5
Form of Transfer Certificate
(referred to in Clause 14.03)
To: [ ]
From: Indosuez Asia Shipfinance Services Limited (the "Agent") and [Name of
Transferee]
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US$214,500,000 Financial Agreement dated [ ] (the "Agreement")
Loan Transfer Certificate
1. [ ] (the "existing Lender") (a) confirms the accuracy of the summary of its participation in the Loan under the Agreement set out in the Schedule below; and (b) requests [Name of transferee] (the "Transferee") to accept and procure the novation of the portion of such participation specified in the Schedule below by counter-signing and delivering this Transfer Certificate to the Agent at its address for the services of notices specified in the Agreement.
2. The Transferee hereby requests the Agent (on behalf of itself and the Lenders) and the Borrower to accept this Transfer Certificate as being delivered to the Agent:
(a) pursuant to and for the purposes of Clause 14.03 of the Agreement so as to take effect as a novation of the rights and obligations of the existing Lender to the extent of the portion of the existing Lender's participation referred to in paragraph 1 above in accordance with the terms of such Clause 14.03 on *[date of transfer] (the "Transfer Date"); and
(b) pursuant to and for the purposes of Clause 11.01 of the Security Sharing Agreement (as defined in the Financial Agreement) so as to take effect as a novation of the rights and obligations of the existing Lender to the extent of the portion of the existing Lender's participation referred to in paragraph 1 above in accordance with the terms of such Clause 11.01 on the Transfer Date.
*Note- To be not earlier than five (5) Banking Days after the date of delivery of this Transfer Certificate to the Agent.
3. The Transferee confirms that:
(a) it has received a copy of the Agreement, the Security Sharing Agreement and all other documentation and information required by it in connection with the transactions contemplated by this Transfer Certificate;
(b) it has not relied on any statement, opinion, forecast or other representation made by the Agent to induce it to execute this Transfer Certificate and has made, without reliance on the Agent and based on such documents as it considers appropriate, its own appraisal of the creditworthiness of the Borrower and its own independent investigation of the financial condition and affairs of the Borrower in connection with the assumption by the Transferee of its obligations arising under or by virtue of this Transfer Certificate.
4. The existing Lender makes no representation or warranty and assumes no responsibility with respect to the legality, validity, effectiveness, adequacy or enforceability of the Agreement, the Security Sharing Agreement, any of the Security Documents or any document relating thereto and assumes no responsibility for the financial condition of the Borrower or any other party to the Agreement or for the performance and observance by the Borrower or any other such party of any of its obligations under the Agreement, the Security Sharing Agreement, any of the other Security Documents, or any document relating thereto and any and all such conditions and warranties, whether express or implied by law or otherwise, are hereby excluded.
5. This Transfer Certificate and the rights and obligations of the parties hereunder are governed by and shall be construed in accordance with English law.
SCHEDULE
1. The existing Lender's participation in the Loan
(a) The existing Lender's Loan
Commitment/Percentage $ ....... %.......
(b) The existing Lender's Contribution $ .......
to the Loan
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2. The portion of the amounts in 1 above to be novated
(a) $ ....... % .......
(b) $ .......
Administrative Details of Transferee
The Transferor The Transferee
[ ] [Name of Transferee]
By: By:
Date: Date:
------------------------- --------------------------
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The remaining Lenders
By: By:
Date: Date:
------------------------- --------------------------
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The Agent
Indosuez Asia Shipfinance Services Limited
By: By:
Date: Date:
------------------------- --------------------------
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The Borrower
Faraway Maritime Shipping Company
By: By:
Date: Date:
------------------------- --------------------------
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EXHIBIT 4.4
PURCHASE AGREEMENT
This Purchase Agreement ("AGREEMENT") is entered into this 21st day of May, 2001, by and between Osprey Maritime Limited, a Singapore company ("SELLER"), and Golar LNG Ltd., a Bermuda company ("PURCHASER"). (Seller and Purchaser hereinafter jointly referred to as the "PARTIES" and individually as a "PARTY").
WHEREAS, Purchaser is a wholly owned subsidiary of Seller, and
WHEREAS, Purchaser desires to purchase by way of a purchase of the applicable holding companies, owning companies, management company and the Seller's various claims against these entities and assignment of one newbuilding contract all of the LNG vessels as described in Schedule 1.01 hereto (the "VESSELS"), and related assets, joint venture interests, newbuilding commitments and operations of Seller (together, "LNG OPERATIONS"), and
WHEREAS, the Parties agreed the terms and conditions in principle for such a sale on 16 May, 2001,
WHEREAS, Seller desires to sell its LNG Operations to Purchaser.
NOW, THEREFORE, in consideration of the foregoing recitals and the agreements, representations, warranties and covenants herein set forth, the parties hereto agree as follows:
I. PURCHASE AND SALE OF LNG OPERATIONS
1.01 PURCHASE. Seller shall sell, transfer, convey, assign and deliver to Purchaser, and Purchaser shall purchase, acquire and accept from Seller, the shares of the companies listed in Schedule 1.01, representing directly or indirectly all of Seller's LNG Operations (the "LNG COMPANIES") and all of the Seller's claims for money against the LNG Companies as of 31 May 2001, free and clear of all covenants, conditions, restrictions, voting trust arrangements, liens, charges, encumbrances, options and adverse claims or rights whatsoever (together, "LIENS"). Where a holding company owns other companies included within Seller's LNG Operations, the seller shall sell, and the Purchaser shall buy the shares of the holding Company. In addition, Seller shall assign, and Purchaser shall assume, either directly or by way of a subsidiary, the newbuilding contract specified on Schedule 1.01 (the "NEWBUILDING CONTRACT").
With effect from the Closing or as soon as reasonably practicable thereafter, Purchaser shall procure the discharge of Seller from all obligations and liabilities (whether actual or contingent) in connection with the LNG Operations (including, without limitation, obligations and liabilities of Seller under or in connection with the Newbuilding Contract or any guarantees, indemnities or securities made by Seller for the benefit of the LNG Operations.
Purchaser, either directly or through a subsidiary, further undertakes to provide Seller with an interest free loan in the amount of approximately USD 32,000,000 for
the purpose of financing the first instalment due under the Newbuilding Contract provided the due date therefor occurs prior to the Closing set forth in Section 1.03.
1.02 PURCHASE PRICE. The purchase price to be paid by Purchaser for the LNG Operations (the "PURCHASE PRICE"), shall be the sum of:
(i) USD 635,000,000 less the outstanding principal of the loan secured against M/V "Golar Mazo" as of 31 May 2001 plus USD 2,500,000;
plus
(ii) the book value of the equity in each of the LNG Companies as of May 31, 2001 exclusive of the book value of the Vessels and their financing but adjusted for the market value of Osprey Maritime (Europe) Ltd.'s lease contract for office space in London);
plus
(iii) the amount paid as the first instalment under the Newbuilding Contract prior to Closing (as defined in Clause 1.03).
The Purchase Price shall be paid seven business days after the Closing set forth in Section 1.03.
The Seller shall, no later than 3 business days prior to the Closing, provide Purchaser with a calculation of the Purchase Price. Such calculation shall be made on the basis of the value of the shares in the LNG Companies and the Seller's claims against the LNG Companies as of May 31, 2001 and shall, in reasonable detail, set forth in relation to such shares:
(i) the name of the Company:
(ii) the net equity value of the applicable LNG Company as of 31 May, 2001 (exclusive of the value of the relevant Vessels and the financing);
and in relation to claims:
(i) the amount and currency of the claim;
(ii) the debtor LNG Company;
(iii) the applicable interest rate;
(iv) accrued interest as of 31 May 2001.
Purchaser agrees and accepts that Seller shall use USD 125,000,000 of its claim for the Purchase Price as a set-off against Seller's obligation to pay an equal amount in consideration for the subscription of shares in the Purchaser as per the terms of a certain subscription agreement between the Parties.
1.03. CLOSING. The closing (the "Closing") of the sale of the LNG Operation to Purchaser shall take place on 31 May 2001 or such subsequent business day in Singapore, Oslo and New York prior to 15 June 2001 as Purchaser shall nominate to Seller.
1.04 DELIVERY AT CLOSING. At the Closing, Seller shall deliver (i) certificates evidencing the shares of the relevant holding companies comprising the LNG Operations, duly endorsed for transfer, (ii) notices of assignment of the claims on the LNG Companies to be included in the purchase and (iii) an instrument of assignment of the Newbuilding Contract, to the Purchaser. The Parties will determine mutually which other documents or instruments each should deliver at the Closing.
II. REPRESENTATIONS AND WARRANTIES OF PURCHASER
2.01 Purchaser represents and warrants to Seller that Purchaser is duly organized, validly existing and in good standing under the laws of Bermuda, and has all requisite corporate power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. Purchaser also represents that the execution and delivery by it of this Agreement has been duly authorized, and that this Agreement constitutes its legal, valid and binding obligation, enforceable by Seller in accordance with its terms. In addition, Purchaser's execution and delivery of this Agreement, and its consummation of its purchase of the LNG Operations will not breach any other agreement to which Purchaser is bound, nor will it violate its bye-laws or applicable law.
III. REPRESENTATIONS AND WARRANTIES OF SELLER
3.01 Seller represents and warrants to Purchaser that Seller is duly organized and validly existing and in good standing under the laws of Singapore, and has all requisite corporate power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. Seller also represents that the execution and delivery by it of this Agreement has been duly authorized, and that this Agreement constitutes its legal, valid and binding obligation, enforceable by Purchaser in accordance with its terms. In addition, Seller's execution and delivery of this Agreement, and, following receipt of appropriate waivers and consents, Seller's consummation of its sale to Purchaser of the LNG Operations will not breach any other agreement to which Seller or any of the LNG Companies or their assets is bound, nor will it violate its or their respective charter documents or any law, regulation or judicial order applicable to it or to them. Seller (or the relevant holding company) has good and marketable title to all of the issued and outstanding shares of the LNG Companies, which constitute all of the LNG Operations, and will deliver those shares to Purchase at the Closing, free and clear of any and all Liens.
3.02 With respect to the LNG Companies, Seller represents and warrants to Purchaser that each of them is duly organized and validly existing and in good standing under the laws of its jurisdiction and foreign jurisdictions, where required, and that it is legally and contractually able to conduct its portion of the LNG Operations and that Seller has no assets or operations related to liquid natural gas outside of the LNG Companies and the Newbuilding Contract, which is in full force and effect. Seller also represents that each of the issued and outstanding shares of the LNG Companies is duly issued, fully paid and nonassessable and held by the shareholder listed in Schedule 1.01 and that neither Seller nor any of the LNG Companies has any agreements or commitments to issue additional securities. Purchaser has
disclosed to Seller the details of its ownership of joint ventures comprising part of its LNG Operations, and has disclosed to Purchaser the charters, management agreements, loan agreements, indebtedness and guarantees, warranting that there are no material liabilities other than such agreements, indebtedness and guarantees, and other arrangements relating to the vessels that are part of the LNG Operations, as set forth in Schedule 1.01, which disclosure Purchaser warrants to be true. Seller will provide to Purchaser such audited historical financial statements as Purchaser may reasonably request and which are in the possession of Seller, such financial statements to be in accordance with the books and records of the LNG Companies and the LNG Operations and to present fairly in all material respects the consolidated financial position of the LNG Companies as of the respective dates and the results of operations and cash flow for the respective periods indicated, with Seller understanding that Purchaser will require audited historical financial information as well. As soon as practicable, Seller will deliver to Purchaser true and complete copies of all of the corporate records of the LNG Companies and all Vessel records. The LNG Companies have operated in compliance with all relevant law, paid all taxes, are subject to no environmental liabilities, face no litigation, pension or employment liability that would result in a material adverse effect on the LNG Operations or their value. Seller makes the following representations concerning the Vessels.
(i) All the debt to banks and financial institutions secured by the Vessels (other than a loan in the outstanding principal amount of approximately USD 128,700,000 secured by a mortgage over M/V "Golar Mazo") shall have been repaid as of Closing and the Vessels (other than M/V "Golar Mazo") shall be free and clear of all Liens as of Closing.
(ii) All facts relating to the Vessels which could materially and
adversely affect the value of the Vessels or their operations and which would be
likely to affect the decision of a prospective buyer of the Vessels have been
disclosed to Purchaser, (ii) the vessels were built and or rebuilt of first
class design material and workmanship; (iii) each of the Vessels complies with
the specifications and operating criteria previously delivered to Purchaser;
(iv) each of the Vessels is properly documented, has an up to date ITF blue
certificate, has been constructed, operated and equipped in accordance with and
continues to comply with all applicable laws, regulations and conventions; (v)
the Vessels are in good seaworthy state of repair and each is fit for its
intended purpose; (vii) the Vessels fully comply with all the requirements of
their present class (which has been disclosed to Purchaser) with all continuous
or progressive survey cycles up to date; all class certificates and all national
and international certificates of the Vessels are clean and valid and free of
recommendations and notations; (vii) the existing program of maintenance, repair
and renewal will be continued up to the Closing; (ix) the Vessels are being
operated and managed in accordance with custom and practice and good seamanship
in effect in the area of operations and the country of registry; (x) all
insurances have been disclosed to Purchaser and are in effect.
3.03 None of the LNG Companies, except Osprey Maritime (Europe), Ltd. ("OMEL"), owns, leases or operates any real estate, and Seller has delivered to Purchaser the lease for OMEL's premises, which is in full force and effect. Seller will, as soon as practicable, deliver to Purchaser a true and correct list of each contract or agreement material to the maintenance and operation of the LNG Operations. Seller warrants that no representation or warranty of the Seller in this Agreement contains or will contain any untrue statement of a material fact nor shall such representations and warranties taken as a whole omit any statement necessary in order to make any material statement contained herein not
misleading. To the knowledge of Seller, there is no fact that has not been disclosed to Purchaser that might reasonably be expected to have or result in a material adverse effect on or with respect to the LNG Companies or the LNG Operations.
IV. CERTAIN UNDERSTANDINGS AND AGREEMENTS
4.01 Prior to Closing, the Seller shall obtain all necessary consents and waivers to its sale of the LNG Companies to Purchaser and shall cause the LNG Companies to conduct their business in the ordinary course, to maintain all insurances, and to comply with all laws. Purchaser shall also cause each of the LNG Companies to give to authorized representatives of Purchaser full access to their books, records, and physical facilities.
4.02 At the request of either Party, Purchaser and Seller shall negotiate and conclude a superseding purchase agreement containing more detailed representations, warranties and covenants. Nevertheless, until the execution and delivery of such superseding purchase agreement, this Agreement shall be fully valid and binding.
V. CONDITIONS TO OBLIGATIONS OF EACH PARTY
5.01 The obligation of each Party to effect the transactions contemplated hereby shall be subject to the fulfillment, at or prior to the Closing, of the conditions that (i) any required governmental approvals or waivers shall have been obtained, (ii) no claim, action, suit, investigation or other proceeding shall be pending or threatened before any court or governmental agency relating to this Agreement.
5.02 The obligation of Purchaser to purchase the LNG Operations shall be subject to the conditions that all of Seller's representations and warranties shall be true as if made of the Closing, and that Seller shall have complied with all of its covenants set forth therein, and that Seller shall have provided to Purchaser resignations of the officers and directors of the LNG Companies to the extent requested by Purchaser.
5.03 The obligations of Seller to sell the LNG Operations to Purchaser shall be subject to the conditions that all of Seller's representations and warranties shall be true as if made as of the Closing, and that Seller shall have complied with all of its covenants set forth herein.
VI. MISCELLANEOUS
6.01 The Parties shall indemnify and hold each other harmless for their respective breaches of their respective representations and warranties.
6.02 This Agreement may not be assigned by either of the Parties. This Agreement shall inure to the benefit of and be binding upon the Parties and their respective successors.
6.03 This Agreement shall be governed by Norwegian law, and the parties agree to submit to the non-exclusive jurisdiction of the courts of Norway in connection with any dispute arising in connections with it.
6.04 Either Party may terminate this Agreement if the Closing has not taken place by June 15, 2001.
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be signed as of the date first above written.
SELLER: PURCHASER
OSPREY MARITIME LIMITED GOLAR LNG. LTD.
By: /s/ Torn Haugard Evensen By: /s/ Tor Orlav Troim
----------------------------- ------------------------
Name: Torn Haugard Evensen Name: Tor Orlav Troim
Title: Director Title: Director
6
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SCHEDULE 1.01
Action required to acquire
Name Shareholder company
---- ----------- --------------------------
HOLDING CO
Gotass-Larsen Shipping Corporation 100% owned by OML TRANSFER SHARES
(GLSC)
Golar Gas Holding Company Inc. 100% owned by GLSC Will be acquired through purchase
(GGHC) [LNG Vessels] of GLSC
Golar Maritime (Asia) Inc. (GMA) 100% owned by GGHC Will be acquired through purchase
[Golar Mazo] of GLSC
Oxbow Holding Inc. (OH) [Golar Mazo] 100% owned by OML TRANSFER SHARES
SHIPHOLDING COMPANIES
Golar Freeze Inc. 100% owned by GGHC Will be acquired through purchase
of GLSC
Golar Gimi Inc. 100% owned by GGHC Will be acquired through purchase
of GLSC
Golar Hilli Inc. 100% owned by GGHC Will be acquired through purchase
of GLSC
Golar Khannur Inc. 100% owned by GGHC Will be acquired through purchase
of GLSC
Faraway Maritime Shipping Company 20% owned by GMA, 40% owned by GMA's participation will be
[Vessel: Golar Mazo] [60%] OH, 40% owned by third party acquired through purchase of GLSC.
Golar Gas Cryogenios Inc. [Vessel: 50% owned by GGHC, a wholly owned GGHC's interest will be acquired
Golar Spirit] subsidiary of GLSC; 50% owned by through the purchase of GLSC.
OML directly
MANAGEMENT COMPANIES TRANSFER SHARES
Osprey Maritime Management Limited 100% owned by OML
(OMML)
Aurora Management Inc. (AM) 80% owned by GMA, 10% owned by OH Will be acquired through the
[10% owned by third party] purchase of OH and GLSC.
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Osprey Maritime (Europe) Limited 100% owned by OMML Will be acquired through
acquisition of OMML
Gotass-Larsen International Limited 100% owned by OMML Will be acquired through
acquisition of OMML
Golar International Limited 100% owned by OMML Will be acquired through
acquisition of OMML
NEWBUILDING CONTRACT
Newbuilding contract in the name of Assign contract to Purchaser or
OML (or its assignee) related to its designee
Hull 2215 (the "Newbuilding
Contract") with Daewoo Shipbuilding
and Engineering Corporation Ltd.
for the construction of one 138
cbm3 LNG carrier with an option to
contract another vessel
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LIST OF VESSELS AND CHARTERS
CHARTER CHARTER
NAME CAPACITY(CBM) YEAR BUILT TYPE CHARTERER EXPIRATION
--------------- --------------- -------------- --------------- --------------- ---------------
Golar Mazo 138,000 2000 Time Pertamina/ December 2017
KOGAS
Golar Spirit 129,013 1981 Time Pertamina/ December 2006
KOGAS
Golar Freeze(1) 125,862 1977 Time BG Methane December 2002
Svcs.
Hilli 124,890 1975 Time BG Methane January 2011
Svcs.
Khannur 125,003 1977 Time BG Methane June 2009
Svcs.
Gimi 124,872 1976 Time BG Methane December 2009
Svcs.
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02089.016#246435
EXHIBIT 4.5
SALES AND PURCHASE AGREEMENT
This Agreement is made on this 21st day of May 2001, by and between:-
SEATANKERS MANAGEMENT CO. LTD., a company incorporated and validly existing according to the laws of the Republic of Cyprus, having its registered office at Deana Beach Apts., Block 1, Flat 411, Promachon Eleftherias Str., Ayios Athanasios, CY-3103, Limassol, Republic of Cyprus (the "SELLER")
-and-
GOLAR LNG LTD., a company incorporated and existing according to the laws of Bermuda, having its registered office at Mercury House, 101 Front Street, Hamilton HM GX, Bermuda (the "BUYER").
WHEREAS:-
A. (1) The Seller has contracted with Hyundai Heavy Industries Co., Ltd. and
Hyundai Corporation of Korea (together "HYUNDAI") pursuant to the terms of
a Shipbuilding Contract dated the 10th May 2001 whereby the Builder has
undertaken to construct and deliver to the Seller one LNG gas carrier of
137,000 cubic metres with Builder's Hull No. 1444 (the "HYUNDAI VESSEL")
upon the terms and conditions set out therein (the "HYUNDAI AGREEMENT") and
(2) the Seller holds an option for the construction and purchase of a
second LNG gas carrier of 138,100 cubic metres upon the terms and
conditions of an option agreement dated 10th May 2001 (the "HYUNDAI OPTION
AGREEMENT");
B. The Seller has entered into a Letter of Agreement dated 11th May 2001 with Samsung Heavy Industries ("SAMSUNG") (the "SAMSUNG AGREEMENT") pursuant to which (1) the Seller has the option, exercisable until 30th May 2001, to conclude a binding agreement with Samsung for the construction and delivery to the Seller of one LNG gas carrier of 138,000 cubic metres (the "SAMSUNG VESSEL") and (2) the Seller holds the option to purchase a second LNG gas carrier of 138,000 cubic metres (the "SAMSUNG OPTION AGREEMENT"), each upon the terms and conditions set out therein;
C. Pursuant to the terms of the Hyundai Agreement the Seller is obliged to pay to Hyundai the sum of USD 32,518,000 representing the first instalment due thereunder within 3 banking days of receipt by the Seller of a Refund Guarantee to be provided by the Export - Import Bank of Korea (the "HYUNDAI PAYMENT"), such payment falling due before the end of May 2001;
D. The Seller wishes to sell and the Buyer wishes to purchase all right,
title, interest, liabilities and obligations, if any, of the Seller under
(a) the Hyundai Agreement, (b) the Hyundai Option Agreement, (c) the
Samsung Agreement and (d) the Samsung Option Agreement (together the
"BENEFITS"), on the terms and conditions hereinafter contained and for
which Hyundai and Samsung have indicated their consent to the respective
terms thereof.
NOW THEREFORE, it is hereby agreed as follows:-
1. Subject to the terms and conditions hereof, the Seller hereby sells and the Buyer hereby purchases the Seller's Benefits of whatsoever nature attached to (a) the Hyundai Agreement, (b) the Hyundai Option Agreement, (c) the Samsung Agreement and (d) the Samsung Option Agreement.
2. The purchase price for the Benefits shall be USD 32,518,000 (being the monies to be paid by the Seller to Hyundai), together with interest, and USD 2,500,000 by way of consideration, the receipt and sufficiency of which is hereby acknowledged by the Seller.
Payment of the purchase price shall be made by the Buyer no later than seven business days after the Closing Date (as defined below).
3. The transfer of the Benefits shall be effected on 31 May, 2001 or such subsequent business day in Singapore, Oslo, London and New York prior to 15 June, 2001 as the Buyer shall nominate to the Seller (the "CLOSING DATE").
4. Subject to the approval of the Buyer, the Seller shall exercise the option for the construction of the Samsung Vessel pursuant to the Samsung Agreement prior to its expiry.
5. The seller hereby warrants and represents to the Buyer and/or its successors and/or assigns that, except as otherwise disclosed in writing prior to the date of completion of this present Agreement that:
a. The Seller is the sole beneficiary of the Benefits and, save as embodied in the terms of this Agreement, the Benefits are free from any option, lien or encumbrance other than warranted by the Seller and/or in this Agreement. No options, or similar rights or obligations to subscribe for or otherwise acquire the Benefits are outstanding, save as embodied in the terms of this Agreement;
b. The Seller warrants that there has been no default by it under either
(a) the Hyundai Agreement or (b) the Samsung Agreement (or their
respective options) and that both agreements remain in full force and
effect;
c. The Seller is registered as properly established and existing under the laws of the Republic of Cyprus and is entitled to carry on such business as is conducted now;
d. No court proceedings are pending and there are no facts or circumstances known to the Seller to date which could lead to court proceedings or which may materially affect the value of the Benefits or impose upon the Buyer any obligation in excess of that contemplated by this Agreement.
6. Completion of the sale and purchase of the Benefits shall take place with effect from the Closing Date when the following business will be transacted:
a. The Buyer shall procure that the Seller is unconditionally released (or is otherwise counter-indemnified to the satisfaction of the Seller) from and against all or any liability which the Seller may have in respect of (a) the Hyundai Agreement and
(b) the Samsung Agreement and their respective options, including but not to be limited to any guarantee given by or on behalf of the Seller to guarantee, INTER ALIA, the contractual obligations of the Seller under either (a) the Hyundai Agreement or (b) the Samsung Agreement or their respective options, after which the Buyer shall be entitled to receive the Benefits thereafter accruing to the Seller.
b. The seller shall deliver or cause to be delivered to the Buyer:
- duly executed Hyundai Agreement, as may have been amended from time to time;
- duly executed Samsung Agreement, as may have been amended from time to time;
- if required, a Novation Agreement to be entered into between the Seller, Hyundai and the Buyer or its nominee evidencing the acceptance by the Builder of the novation of the Hyundai Agreement and the Hyundai Option Agreement from the Seller to the Buyer;
- if required, a Novation Agreement to be entered into between the Seller, Samsung and the Buyer or its nominee evidencing the acceptance by the Builder of the novation of the Samsung Agreement and the Samsung Option Agreement from the Seller to the Buyer;
- sufficient evidence that the Seller is in good standing with the Cypriot authorities;
- such corporate authorities as reasonably required to give legal effect to this Agreement.
7. Any and all notices given or required to be given in connection with this Agreement shall be made to:
THE SELLER:
c/o Seatankers Management Co. Ltd.
P.O.Box 53562
CY-3399 Limassol
Cyprus
Tel: +357 5 32 61 11
Fax: +357 5 32 37 70
THE BUYER:
c/o Frontline Management AS
Bryggegata 3
N-0250 Oslo
Norway
Tel: +47 23 11 40 00
Fax: +47 23 11 40 40
This Agreement shall be governed by and construed in accordance with the laws of England. Any dispute or difference arising hereunder shall be referred to arbitration in London pursuant to the Arbitration Act 1996.
SIGNED in 2 original counterparts on the date shown above.
SEATANKERS MANAGEMENT CO. LTD.
GOLAR LNG LTD.
/s/ Tor Olav Trolm ----------------------------- By: Tor Olav Trolm Title: Director |
EXHIBIT 4.6
THE RULES
OF
GOLAR LNG LIMITED
BERMUDA EMPLOYEE SHARE OPTION SCHEME
GOLAR LNG LIMITED
RULES OF THE
BERMUDA EMPLOYEE SHARE OPTION SCHEME
1. DEFINITIONS
1.1 In this Scheme where the context so permits the following words and expressions shall have the following meanings:
"ADOPTION DATE" means the date on which the Scheme is approved by the board of directors of the Company;
"AUDITORS" means the Auditors of the Company (acting as experts and not as arbitrators) from time to time;
"ANNOUNCEMENT DATE" means the date on which the quarterly results of the Company are announced;
"BOARD" means the board of directors of the Company or the directors present at a duly convened meeting of the Board of directors or of a duly constituted committee of the board of directors at which a quorum is present;
"COMPANY" means Golar LNG Limited, registered in Bermuda;
"DATE OF GRANT" means the date on which an Option is granted by the Board pursuant to Clause 2 hereof;
"ELIGIBLE EMPLOYEE" means an employee who is, or who becomes, contracted to work at least 20 hours per week in the service of one or more Participating Companies or a director of one or more such companies;
"GROUP" means the Company and the Subsidiaries;
"INDEPENDENT EXPERT" means either a firm of independent public accountants of recognised standing who may be the regular auditors of the Company or an internationally recognised investment bank to be selected by the Board;
"MARKET VALUE" means on any day the average of the middle market quotations of the Option Share as derived from the Oslo Stock Exchange (or any stock exchange on which the Company's shares are traded) for the three immediately preceding dealing days on that Exchange;
"OPTION" means a right (but not an obligation) to subscribe for Shares granted or to be granted in accordance with the Scheme;
"OPTION CERTIFICATE" means a certificate issued by the Company to the Option Holder evidencing the title of the Option Holder to the Option;
"OPTION HOLDER" means an Eligible Employee or a former Eligible Employee who is the holder of an Option which has neither been fully exercised nor ceased to be exercisable nor lapsed and, where the context so permits, a person entitled to rights under any such Option in consequence of the death of the original Option Holder;
"OPTION PERIOD" means in relation to an Option, a maximum period of nine years commencing on the first anniversary of the Date of Grant;
"OPTION SHARES" means Shares in respect of which an Option has been granted;
"OTHER SCHEME" means any scheme (other than the Scheme) which provides for the grant of options to acquire Shares by employees and/or directors of the Company and/or the Subsidiaries and which is established by the Company;
"PARTICIPATING COMPANY" means the Company, Golar Management Limited or any other Subsidiary to which the Scheme for the time being extends as provided in Clause 2.1 hereof;
"RULES" means these rules as varied from time to time in accordance with Clause 8 hereof;
"SCHEME" means this employee share option scheme;
"SHARES" means fully paid ordinary shares of US$1.00 each in the capital of the Company;
"SHARE CAPITAL" means fully paid issued share capital of the Company;
"SUBSCRIPTION COST" means in relation to the exercise of an Option, the product of the number of Option Shares in respect of which the Option is exercised and the Subscription Price of such Option Shares;
"SUBSCRIPTION PRICE" means the higher of:
(i) such price as the Board shall from time to time at its discretion resolve; provided that such price is not lower than the Market Value, and
(ii) the nominal value of a Share;
"SUBSIDIARY" means a company which for the time being is a subsidiary of the Company within the definition contained in Section 86 of the Companies Act 1981 of Bermuda;
"SUBSISTING OPTION" means an Option which has neither lapsed nor been exercised.
1.2 In this Scheme except in so far as the context otherwise requires:
a. words denoting the singular number shall include the plural number and words denoting the masculine gender shall include the feminine gender;
b. any reference herein to any enactment or statutory provision shall be construed as a reference to that Bermudian enactment or provision as from time to time amended extended or re-enacted; and
c. references to the exercise of an Option shall include the exercise of an Option in part.
2. GRANT OF OPTION
2.1 The Board may, from time to time, at its discretion, resolve that, in addition to the Eligible Employees of the Company and Golar Management Limited, the Scheme shall extend to Eligible Employees of one or more Subsidiaries which company or companies shall thereby fall within the definition of Participating Company in Clause 1 hereof and may from time to time, at its discretion, resolve that the Scheme shall cease so to extend.
2.2 At any time or times within a period of 40 days after an Announcement Date or the Adoption Date, and in any case not earlier than the Adoption Date nor later than the tenth anniversary thereof, the Board may in its absolute discretion resolve to grant an Option or Options to an Eligible Employee or to Eligible Employees on terms and conditions set out in the Rules.
2.3 Not later than seven days following the Date of Grant the Board shall notify the relevant Eligible Employees that they have been granted Options.
2.4 The notice given by the Board pursuant to Clause 2.3 shall be in such form, not inconsistent with these Rules, as the Board may determine and shall specify the number of Shares comprised in the Option, the Date of Grant and the Subscription Price.
2.5 Not later than twelve weeks following the Date of Grant the Option Holder may, by a notice given in writing, renounce his rights to any Option granted pursuant to Clause 2.2 in which event such Option shall be deemed for all purposes never to have been granted.
2.6 As soon as possible after the expiry of the twelve week notice period referred to in Clause 2.5, the Board shall issue an Option Certificate in respect of each Option in such form, not inconsistent with these Rules, as the Board may determine.
3. LIMITATIONS
3.1 No Option shall be granted after the tenth anniversary of the Adoption Date.
3.2 No Options shall be granted if such grant would result in the aggregate in any ten year period of:
(i) the number of Shares over which Subsisting Options have been granted under this Scheme, and
(ii) the number of Shares which have been issued on the exercise of Options granted under this Scheme, and
(iii) the number of Shares over which Subsisting Options have been granted under any Other Scheme, and
(iv) the number of Shares which have been issued pursuant to any Other Scheme
exceeding seven percent of the number of Shares then in issue.
3.3 No Option shall be granted to any person unless he is, at the Date of Grant, an Eligible Employee.
4. MAIN TERMS
4.1 No consideration shall be payable to the Company for the grant of an Option.
4.2 The Option shall entitle the Option Holder to subscribe for Shares at a price per Share equal to the Subscription Price.
4.3 Any Option which has not lapsed may be exercised in whole or in part at any time provided the earliest of the following events has occurred:
a. the first anniversary of the Date of Grant;
b. the death of the Option Holder;
c. the Option Holder ceasing to be an Eligible Employee.
4.4 An Option shall lapse on the earliest of the following events:
a. such date as the Board in its discretion may prescribe from time to time, provided that such date cannot be later than the tenth anniversary of the Date of Grant;
b. the first anniversary of the Option Holder's death;
c. the first anniversary of the Option Holder's retirement;
d. three months following the Option Holder's ceasing to be an Eligible Employee, other than by reason of his death or retirement;
e. six months after the Option has become exercisable in accordance with Clause 7.1;
f. the Option Holder being adjudicated bankrupt.
5. EXERCISE OF OPTIONS
5.1 Exercise of an Option shall be effected by the Option Holder giving
notice in writing to the company specifying the number of Option Shares
(not being less than 500 Shares, and being a multiple of 100 Shares)
except in the case of final exercise of all outstanding rights under the
Option) in respect of which the Option is being exercised on that
occasion and accompanied by the relevant Option Certificate and payment
in full of the Subscription Cost and otherwise in such form and manner as
the Board in its discretion may prescribe from time to time, provided
that such notice shall be deemed to
have been exercised and to take effect on the date on which the notice by the Option Holder and payment of the Subscription Price are received by the Company.
5.2 Subject to any necessary consents under regulations or enactments for the time being in force and subject to compliance by the Option Holder with all the Rules, the Company shall, not later than thirty days after receipt of the notice referred to in Clause 5.1 above, allot and issue to the Option Holder the number of Shares specified in the notice. If the number of Shares over which the Option is exercised is less than that specified in the relevant Option Certificate then the Company will issue a balance Option Certificate in respect of the remainder of such Shares over which the Option is still capable of exercise.
5.3 Shares allotted under the Scheme in pursuance of the exercise of an Option shall rank pari passu in all respects with the Shares for the time being in issue save as regards any rights attaching by reference to a record date prior to the date on which the Option is exercised.
6. ADJUSTMENTS TO OPTION RIGHTS
6.1 In the event of any capitalization issue or rights issue or any sub-division, consolidation or reduction of the capital of the Company, the Board may make such adjustment as it considers appropriate with regard to:
a. the maximum number of Shares under the Scheme as provided in Clause 3.2; or
b. the aggregate number of Shares subject to any Option;
c. the Subscription Price of any Shares subject to any Option; or
d. the terms of any Option.
PROVIDED THAT:
e. any such adjustment has been confirmed in writing by an Independent Expert to be in their opinion fair and reasonable; and
f. the aggregate Subscription Cost payable by an Option Holder on the exercise of all his Options is not increased; and
g. the amount payable to subscribe for any Share subject to any Option shall not be reduced below its nominal value.
6.2 The Board shall give notice in writing to each Option Holder affected thereby of any adjustment made pursuant to this Clause 6 and may at its discretion deliver to him a revised Option Certificate in respect of his Option.
7. WINDING-UP
7.1 If notice is given by the Board to the holders of Shares in the Company of a members resolution for the voluntary winding-up of the Company, notice of the same shall forthwith be given by the Board to the Option Holders. Each of the Option Holders shall be entitled within six months following such notice, to give notice in writing to the Company (such notice being accompanied by payment of the Subscription Cost)
electing to the treated as if all or any of his Options had been exercised immediately before the commencement of the winding-up in which event such Option Holder will be entitled to participate in the assets available in the winding-up pari passu with the holders of Shares in the Company as if he were the holder of the Shares to which he would have been entitled had his Options been so exercised. Subject thereto all Options shall lapse on the commencement of the winding-up.
7.2 Option rights shall lapse immediately in the event of the Company being wound-up otherwise than in the event of a voluntary winding-up.
8. VARIATION OF THE SCHEME
8.1 Subject to Clause 9.2 the Board may at any time alter or add to the Rules in any respect, provided that:
a. the Board may not cancel an Option except where (i) the Option Holder has breached the provisions of Clause 9.6 or (ii) the Option Holder has previously agreed; and
b. (subject as herein provided) the Board may not modify the terms of an Option already granted otherwise than with the consent of the Option Holder.
8.2 Notwithstanding the provisions of Clause 8.1, no amendment may be made which would make the terms on which Options may be or have been granted materially more generous without the prior approval of the Company in general meeting.
8.3 The Board shall give notice in writing to each Option Holder of any alteration or addition made pursuant to this Clause 8 and may, at its discretion, deliver to each Option Holder a revised Option Certificate in respect of his Option.
9. GENERAL PROVISIONS
9.1 The Company shall at all times keep available sufficient authorized but unissued Shares to satisfy the exercise in full of all Options for the time being capable of being exercised.
9.2 The Board may from time to time make and vary such regulations and establish such procedures for the administration and implementation of the Scheme as it thinks fit. In the event of any dispute or disagreement as to the interpretation of the Rules or as to the question of rights arising from or related to the Scheme, the decision of the Board shall (except as regards any matter required to be determined by the Auditors hereunder) be final and binding upon all persons.
9.3 The cost of the administration and implementation of the Scheme shall be borne by the Company.
9.4 Copies of documents sent to all the holders of Shares shall be sent also to all Option Holders who are not otherwise entitled to receive the same.
9.5 The rights and obligations of an Eligible Employee under the terms on which the Eligible Employee holds his office or employment with a Participating Company shall not be affected by his participation in the Scheme or by any right he may have to
participate therein, and the Scheme shall afford an Eligible Employee no rights to compensation or damages in connection with the termination of such office or employment for any reason whatsoever.
9.6 The rights and obligations of an Option Holder shall be personal to the Option Holder and no Option nor the benefit thereof may be transferred, assigned, charged or otherwise alienated save that nothing in this sub-clause shall prohibit the transmission of an Option or the benefit thereof by operation of law.
9.7 For so long as the Shares are listed on the Oslo Stock Exchange or any other stock exchange, the Company shall apply to the appropriate authorities of such stock exchanges for all shares allotted under the Scheme to be admitted to the official stock exchange list.
9.8 Any notice or other document to be served by the Company under the Scheme on an Eligible Employee or Option Holder may be served personally or by fax or by sending it through the post in a prepaid letter addressed to him at his address as last known to the Company.
Any notice or other document to be served under the Scheme on the Company may be served by an Eligible Employee or Option Holder by leaving it at the registered office for the time being of the Company or by fax or by sending it through the post in a prepaid letter addressed to such registered office.
Where any notice or other document is served or sent by first class post it shall be deemed to have been received at the expiration of seven days (excluding Saturdays, Sundays or public holidays in Bermuda or the United Kingdom) after the time when cover containing the same was put in the post properly addressed and stamped. Any notice or document sent by fax shall be deemed to have been received at the time of transmission to the party to which it is addressed.
9.9 The Insider Regulations of the Company are applicable to the Shares received as a consequence of the exercise of Options.
10. TERMINATION OF THE SCHEME
10.1 The Scheme shall terminate on the earlier of the following dates:
a. the date (if any) determined by the Board to be the date of
termination of the Scheme; and
b. the tenth anniversary of the Adoption Date.
10.2 Following termination of the Scheme pursuant to Clause 10.1 above, no
further Options shall be granted but the subsisting rights and
obligations of existing Option Holders will continue in force as if the
Scheme had not terminated.
|
EXHIBIT 4.7
CONFIDENTIAL
Dear Mr. G. K. McDonald
SERVICE AGREEMENT
The purpose of this letter is to record the terms agreed between us on which you will act as General Manager Fleet Management of Osprey Maritime (Europe) Ltd. (the "Company"):-
1. Your duties extend to Company and all of its subsidiaries, associates and affiliates from time to time, (the "Group"). During the continuance of your employment you will devote all your time, attention and skill during working hours to the affairs of the Group, use your best endeavours to promote the interests of the Group, at all time obey the reasonable and lawful instructions of the Chief Operating Officer Fleet Management and keep the respective COO. F. M. fully informed of your conduct of the affairs of the Group. The various offices of the Group have official working hours, however, and you will from time to time be expected without any further remuneration to work outside those hours as and when the occasion demands or as otherwise required by the COO. F. M. For reference at commencement of employment with the Company your normal working hours will be 40 per weeks.
2. Your employment will commence no later than May 1998.
3. Except with the prior approval of the Chief Executive Officer you will not during the continuance of your employment with the Group be directly or indirectly interested or engaged in any other business. However, this will not preclude you from holding investments in any company listed on a stock exchange provided that you do not hold more than 3% of the issued shares or other securities of any class of any one company.
4. Neither during nor at any time after the termination of your employment shall you divulge or communicate to any person or persons (except those persons in the Group whose province it is to know the same) nor use for you're your own benefit any confidential information you may receive or obtain in relation to the affairs of any Company in the Group or any of its clients and for a period of one year following the termination of your employment you will not directly or indirectly solicit or entice away any client or employee of any company in the Group.
5. You will receive a salary at the rate of L7,500 (Pound Sterling Seven Thousand Five Hundred) per calendar month [monthly in arrears]. The Group will cooperate in arrangements to enable payment to be made in a tax efficient manner, bearing in mind the location of your employment from time to time, so as to avoid unnecessary tax. Your salary will be reviewed each year on 1st July.
6. You will initially be located in London. The Group reserves the right, upon giving reasonable notice, to post you in the future to Singapore or other locations as the needs of the business may require. In such event due consideration will be given to any substantive change in your cost of living and tax circumstances resulting from such new location and, subject to mutual agreement, the terms of this agreement may be altered accordingly.
Where the employee has children of school age, the company will ensure a reasonable standard of education which does not adversely affect the continuity of schooling during service abroad. Where this involves costs which the employee would not otherwise have borne whether it be at a U.K. boarding school or at a school in Singapore or other location as the case may be, the company will bear the cost. Only children in primary and secondary phases of education (i.e. aged 5 - 18) are normally eligible for consideration.
In the event that no agreement on such posting can be reached then Clause 18, as it relates to termination, shall apply.
7. In the event of relocation to Singapore or other location the Company will pay the cost of transporting your personal effects to the extent of freight and packing of one 40 foot container ex London and shall pay the cost of a one way Business Class airfare from London for you and your family. Upon termination of this Service Agreement for reasons other than as set out in paragraph 17(b) the Company shall pay the cost of freight and packing for your personal effects
to your chosen place of re-location in an amount not exceeding one 40 foot container, to U.K., and a one way Business Class air fare not exceeding the cost of travel to U.K. for you and your family.
While on overseas assignment the Company will provided one round trip economy air ticket per year to the U.K. for yourself and family.
8. You will be entitled to receive an annual bonus at the discretion of the Board of Directors of the Company based upon overall Group performance, the relative performance of any individual Business Unit to which you may be assigned, and upon personal merit. The Board will make its decision on additional bonus after the finalization of the annual audit accounts for the financial year in respect of which bonuses are assessed and such bonus shall be payable prior to 31st March following the financial year to which it relates.
9. As advised, the Company is establishing a share option scheme for employees within the parameters set down by the Stock Exchange of Singapore. You will be entitled to participate within the terms and subject to the conditions of the scheme.
10. You have the alternative of being covered for pension either under the Company's UK Pension Scheme, a non-contributory plan which is contracted into the State Pension Scheme and which provides additional benefits to those provided by the State, including the State Earnings Related Pension Scheme (SERPS), or of taking out a Private Pension Plan.
Before taking this decision, it is important that you are aware of all the facts pertaining to your personal and individual position. You should contact the Personnel Department in this respect, who will then put you in touch with an Independent Financial Advisor in order that you receive "best advice".
In the absence of your decision to opt for a Private Pension Plan, you will be covered for pension purposes under the terms and conditions of the "Gotaas-Larsen UK Pension Scheme".
11. You will be provided with the use of a Company motor car or car allowance appropriate to your position. The car allowance is currently L550 per month and is payable through the monthly
payroll. A petrol allowance of L110 per month is presently in force with the use of a company credit card.
12. The Company shall reimburse to you all reasonable out-of-pocket expenses incurred by you on Group business (including reasonable to expenses of entertaining and travelling) which expenses shall be evidenced in such manner as the Company may from time to time require. You should note that it is Company policy to cover the cost of business class travel of flights of more than 3 hours duration but economy class travel only on flights of less than 3 hours.
13. You will be entitled (in addition to normal public holidays in the location of your employment) to 25 working days paid holiday in each year of your employment to be taken at such time or times as may be agreed by the COO. F. M.
14. The Company will pay the premiums in respects of life, health and personal injury insurance as agreed with you from time to time advised in writing.
15. The Company shall provide membership of a health care scheme for you and your family whereby the Company shall bear all medical expenses incurred by you including the cost of specialist consultations and hospital treatment, and dental costs (excluding cosmetic work). You are entitled to a medical check-up every two years at the company expense.
16. Notwithstanding illness or other incapacity you will remain entitled to receive salary, benefits and accommodation allowances hereunder up to a maximum of 26 weeks in any period of 12 months. If and where required, you will supply the Company with medical certificates covering any period of illness or other incapacity and at the Company's expense undergo a medical examination by a doctor appointed by the Company.
17. Your appointment will be subject to summary termination by the Company by notice in writing if:-
(a) You are unable satisfactorily to perform your duties hereunder through mental or physical ill health for a period or periods totally 270 days in any 12 month period; or
(b) You have committed any serious breach or repeated or continued after warning any material breach of your duties or shall be guilty of conduct bringing yourself or any
Group company into disrepute or shall have become bankrupt or compounded with your creditors generally.
18. Subject to the provisions relating to summary termination contained in paragraph 17 it is agreed that the duration of this Service Agreement shall be for a minimum period of eighteen months from commencement of employment and thereafter shall continue indefinitely or until terminated by written notice given by the Company to you or by you to the Company of not less than 6 months duration. The whole or part of this notice may be waived by mutual consent.
The offer is conditional subject to a satisfactory medical report. If you agree to the terms of this letter, please sign and return the enclosed copy.
Yours sincerely,
For an on behalf of
OSPREY MARITIME LIMITED
/s/ R. T. Watson ---------------- CAPTAIN R. T. WATSON CHIEF OPERATING OFFICER FLEET MANAGEMENT |
PROMISSORY NOTE
For value received, the undersigned promises to pay to the order of Osprey Maritime (Europe) Ltd, a Bermudan corporation (the "Company"), the principal sum of
L20,900
to be repaid in MONTHLY instalments of
L317.55
commencing with May 1998's salary payment.
This loan carries a 3 (three) per cent per annum interest charge, which will be calculated annually on the balance outstanding at the calculation point.
If for any reason whatsoever my employment is terminated with the Company, I agree that on such date the entire outstanding balance of said note, including any unpaid interest charges, shall be due and payable.
The Company shall also have the right to off-set the balance outstanding on the loan together with interest due against the amount due from my Group Insurance Policy in the event of my death and is authorised to deduct the monthly repayments and interest from my monthly salary payments.
At any time during the 72 month period the maker may, at his discretion, pay back all or part of the loan amount.
In the event the maker shall default on any payment provided for herein (i) the full amount then remaining shall, at the option of the holder, immediately become due and payable, and (ii) the maker shall pay all reasonable costs of collection incurred by the Company, including, but not limited to reasonable attorneys fees and disbursements.
This note shall be construed, enforced and interpreted under the laws of England.
Date 21/4/98
Maker /s/ [ILLEGIBLE]
--------------------
Witness /s/ R.J. Stewart
------------------
|
[OSPREY MARITIME LIMITED LETTERHEAD]
BY FAX / COURIER
GRAEME MCDONALD, ESQ 22nd September 1999 Osprey Maritime (Europe) Limited 43-45 Portman Square London ENGLAND PRIVATE & CONFIDENTIAL |
Dear Graeme,
I am pleased to formally confirm your promotion as discussed last week.
In addition to your current responsibilities as General Manager Fleet Management for the Osprey Group with effect from 1st September 1999 you are appointed as General Manager of the London Office responsible for administrative oversight of that office. Functional reporting lines for staff in London will be to the various different departmental heads.
In recognition of these additional responsibilities and the excellent work you have done in Fleet Management your salary is increased to L135,000 per annum effective from 1st September 1999.
I also confirm that a two year notice period will apply in the event that the Company decides to terminate your employment with the Company. This will not apply in the event of termination resulting from gross negligence, dishonesty on your part or other just cause or in the event that you decide to resign from your position at your own volition.
Your reporting line is to the CEO however, I wish to reinforce the conclusions of recent discussions held with both you and your colleagues regarding the current reorganization process which recognized the need for cooperation and constructive dialogue with our colleagues to ensure that the Company's activities develop in a coordinated and structured manner and I seek your full support to encourage such an open culture.
You have my full support in your new role and I look forward to working closely with you in our mutual efforts to place the Company on a firm footing.
[OSPREY MARITIME LIMITED LOGO]
OSPREY MARITIME LIMITED
PRIVATE AND CONFIDENTIAL
GRAEME MCDONALD - 22ND SEPTEMBER 1999
Please confirm your acceptance of the foregoing by signing and returning the attached - copy of this letter.
Yours sincerely, Signed in token of acceptance /s/ T.S.C. Cottew T.S.C. COTTEW GRAEME MCDONALD Chairman and CEO Date |
Exhibit 4.8
MANAGEMENT AGREEMENT
Dated February 21, 2002
between
GOLAR LNG LIMITED
and
FRONTLINE MANAGEMENT (BERMUDA) LIMITED
I N D E X
1. APPOINTMENT.........................................................4 2. THE COMPANY'S MANAGEMENT FUNCTIONS..................................4 3. SUBSIDIARIES........................................................4 4. SERVICES............................................................4 5. GENERAL CONDITIONS..................................................9 6. COMPENSATION.......................................................10 7. AUTHORITY..........................................................11 8. INDEMNITY..........................................................11 9. CONFIDENTIALITY....................................................12 10.TERMINATION........................................................13 11.DEFAULT............................................................14 12.FORCE MAJEURE......................................................14 13.NOTICES............................................................14 14.MISCELLANEOUS......................................................15 15.GOVERNING LAW......................................................15 APPENDIX I - FEE SCHEDULE |
THIS MANAGEMENT AGREEMENT (the "Agreement") is made on February 21, 2002
BETWEEN :
(1) GOLAR LNG LIMITED, Par-la-Ville Place, 14 Par-la-Ville Road, Hamilton HM 08 Bermuda (the "Company")
on the one part; and
(2) FRONTLINE MANAGEMENT (BERMUDA) LIMITED, Par-la-Ville Place, 14 Par-la-Ville Road, Hamilton HM 08 Bermuda ("FrontManBer");
on the other part.
FrontManBer is hereinafter referred to as the "Manager" ", while the Company and the Manager are referred to collectively as the "Parties" or, separately, as a "Party"). The Company and its subsidiaries and associated companies are referred to collectively as the "Group".
WHEREAS :
(A) The Company is a limited company organised under the laws of Bermuda, having its registered office at the address stated above.
(B) The Company's shares are currently listed on the Oslo Stock Exchange and the Company is in the process of being listed on the Nasdaq National Market.
(C) The Company is, through direct and indirect subsidiaries established in various jurisdictions, the owner and/or operator of a substantial number of LNG vessels and other assets.
(D) It is the Company's policy to outsource certain of its administrative needs to other corporate entities, either owned or controlled by itself, by related parties or by third parties.
NOW THEREFORE, the Parties have agreed as follows:
1. APPOINTMENT
1.1 The Company hereby confirms the appointment of the Manager on the terms and conditions set forth below
1.2 The Parties agree that the terms set forth herein shall regulate the management services provided to the Group by the Manager with effect from June 1, 2001 and that all other agreements, whether oral or in writing, relevant thereto shall terminate with effect from the same date.
2. THE COMPANY'S MANAGEMENT FUNCTIONS
2.1 Ultimate responsibility for the administration of the Group lies with the Company's board of directors (the "Board").
2.2 The Board has appointed its vice chairman as the Company's Chief Executive Officer and the managing director of FrontManBer as the Company's chief accounting officer and Company Secretary. (All of the above hereinafter jointly referred to as the "Officers" or, individually, as an "Officer").
3. SUBSIDIARIES
3.1 The Group's assets are, generally, held by partly or wholly owned subsidiaries of the Company (the "Subsidiaries"). The Group, in addition, provides ship management services to third parties.
4. SERVICES
4.1 The Manager shall, throughout the terms of this Agreement, make such assistance and such services in relation to the management of the Group and the Subsidiaries available to the Group as the Company and the Officers from time to time may specify.
Without prejudice to the generality of the foregoing, the Manager shall provide the following services to the Group:
4.1.1 Corporate Governance Services
a. The Manager shall assist the Company Secretary in preparing material for and convening the meetings of the Board and the follow-up and implementation of the resolutions passed by the Board from time to time.
b. The Manager shall assist the Company Secretary in preparing material for and convening the meetings of the Company's shareholders and the follow-up and implementation of the resolutions passed therein.
c. The Manager shall assist the Company Secretary in preparing and implementing all aspects of the Company's employee share option plan from time to time.
d. The Manager shall be responsible for the operation of the Company's shareholder register and any and all sub-registers thereof.
4.1.2 The Manager shall be responsible for all corporate secretarial functions of the Company's Subsidiaries, joint venture interests and equity investments as appropriate, such responsibilities to include assisting the Company Secretary in preparing material for and convening the meetings of the boards and shareholders and the follow up and implementation of the resolutions passed by the boards and shareholders from time to time.
4.1.3 Investor relations
a. The Manager shall assist the Board and the Officers in all aspects relevant to investor relations, including, but not limited to:
- distribution of annual and quarterly reports and such other information as the Board from time to time shall decide to the Company's shareholders and others;
- presentations of the Company to investors and financial analysts;
- communication with media and the public in general in respect of the Company's performance.
b. The Manager shall provide the Company with such information and analysis as the Company shall require on the trading of its securities in the markets where they are regularly traded.
4.1.4 Accounting
a. The Manager shall be responsible for the supervision of the Group's accounting functions and shall, in this respect, report to the Company's chief accounting officer and the Board.
b. The Group's accounting shall be based on US GAAP and such accounting principles as the Board from time to time shall have approved.
4.1.5 Auditing
a. The Manager shall assist the Company's auditors in the continuous and annual audit of the Group's accounts.
4.1.6 Company Records
a. The Manager shall be responsible for the safekeeping and professional filing of all original corporate documents, such archive being physically located in Bermuda.
4.1.7 Stock Exchanges
a. The Manager shall, on the instructions of the Company, negotiate all listing and similar agreements relevant to the listing of the Company's securities on stock exchanges in such jurisdictions as the Board, from time to time, shall decide.
b. The Manager shall ensure compliance by the Company with all contractual and legal obligations of the Company in relation to such stock exchanges and similar trading systems as the Company's securities from time to time are listed on.
c. The Manager shall, in particular, ensure that all the Company's obligations to inform stock exchanges of the Company's activities and results are complied with and shall enter into such agreements or other arrangements as shall be required by relevant stock exchanges for this purpose.
d. The Manager shall develop and implement rules in relation to the possible trading by their employees of securities issued by the Company ensuring that such rules comply with applicable laws in relevant jurisdictions.
4.1.8 Government Relations - Taxes
a. The Manager shall ensure compliance by the Company with all laws, regulations and provisions applicable to the Company in Bermuda and such other jurisdictions as the Group from time to time shall operate in.
b. The Manager shall monitor the tax position of the Group and propose transactions and asset allocations to the Board with a view to minimising its overall tax exposure.
4.1.9 Corporate Finance
a. The Manager shall when requested assist the Officers and the Company in all matters relevant to the financing of the Group's activities.
b. The Manager shall, in accordance with specific instructions from the Board, assist the Board and the Officers in relation to the issue and/or repurchase of the Company's securities.
4.1.10 Treasury Functions
a. The Manager shall be authorised to open and operate the Group's bank accounts in accordance with such principles therefore as the Board from time to time shall approve. The Manager shall, in this respect, be authorised to enter into account agreements and all such other contracts or agreements as shall be required by the banks and others for this purpose.
4.1.11 Technical Supervision Services
a. The Manager shall participate in restructuring and arranging of the Group technical management function and monitor and follow up the efficiency and quality of Group ship management.
b. The Manager shall participate in developing company-wide standards for the technical operation of the vessels controlled by the Group (including vessels managed under contract) and a policy in this respect. Such policy document shall be submitted to the Board for approval and shall, thereafter, be reviewed regularly by the Managers with a view to improvements.
c. The Manager shall, on a regular basis, provide audits of technical management and crewing arrangements, such audits to include physical inspections of vessels.
d. The Manager shall participate in the negotiation of terms and arrangements for drydocking of the vessels controlled by the Group, both in line with the regular schedule therefore and where circumstances otherwise require and shall be physically present at the drydocking.
e. The Manager shall continuously endeavour to improve the operational standard and cost effectiveness of the fleet of vessels controlled by the Group and shall be responsible for the continuous improvement thereof.
f. The Manager shall extend the benefit of its bulk purchasing agreements and arrangements to the vessels controlled by the Group.
g. The Manager shall keep regular contact with charterers of the Group's vessels and participate in the marketing of the vessels to charterers.
4.1.12 Mergers and Acquisitions
a. The Manager shall, in accordance with specific instructions from the Board or the Officers, assist the Company in all matters relevant to corporate mergers and/or acquisitions of other companies. Such assistance shall include, but shall not be limited to arranging the financing of any acquisition, renegotiating existing financing and other contractual arrangement required by the acquisition/merger and the general completion of the transaction in question.
b. The Manager shall always report on their activities in matters related to mergers and acquisitions to the Officers and keep the Officers continuously updated on the same.
c. The Manager shall, in accordance with specific instructions from the Board or the Officers, assist the Company in the sale of Subsidiaries.
4.1.13 Subsidiaries
a. The Manager shall prepare general guidelines for the establishment of Subsidiaries to the Board for its approval and ensure implementation thereof thereafter.
b. The Manager shall endeavour to make its senior employees available to the Subsidiaries as directors and/or officers.
c. The Manager shall be responsible for maintaining the number of Subsidiaries from time to time at a level coherent with the Board's policy and ensure that dormant Subsidiaries are liquidated in accordance with such policy.
4.1.14 Sale and Purchase of Assets
a. The Manager shall, if requested and in accordance with specific instructions from the Board and the Subsidiary in question, supervise the sale and purchase of vessels or other assets including the completion of such transaction.
b. A sale or purchase of a vessel shall always be finally approved by the Board and the board of the relevant Subsidiary.
c. The Manager shall, if requested, assist the Officers and the Board in following the market for the sale and purchase of vessels and other assets and provide the Board with recommendations in this respect.
4.1.15 Newbuildings
a. The Manager, shall, if requested, assist the Officers and the Board in following the market for newbuildings and, in this respect, continuously liaise with relevant yards, brokers and analysts.
b. The Manager shall, if requested and always in accordance with specific instructions from the Officers and the Board, assist the Group in negotiating newbuilding contracts. Any such contract shall always be subject to the final approval of the Board and the board of the subsidiary ordering the said newbuilding.
4.1.16 General Purchasing Authority
a. The Manager shall be generally authorised to conclude purchases of goods and services on the Group's behalf within such limits as are set forth in each year's budget.
5. General Conditions
5.1 The Manager shall, in performing their duties hereunder, effectively and faithfully serve the Group. In exercising the powers and authorities hereby conferred on them, the Manager shall:
(i) always use its best endeavours to protect and promote the Group's interests;
(ii) observe all applicable laws and regulations relevant to the Group's activities; and
(iii)always act in accordance with good and professional management practice.
5.2 The Manager shall have the right to sub-contract parts of the Services to related companies or to third parties on commercial terms. Any such sub-contracting arrangements with third parties shall be made in writing. The Company shall be provided with copies of such agreements.
5.3 The Manager shall be entitled to provide management services to other companies or entities.
Such entities can either be other companies or groups of companies under the ultimate control of the Company, related parties or genuine third party entities.
The Manager shall not afford preference to any vessel or company under their management but shall, so far as practicable, ensure a fair distribution of service to all vessels and companies under management from time to time.
The Manager shall, in the performance of the Services, be entitled to have regard to their overall responsibility in relation to all matters as may from time to time be entrusted to their management and in particular, but without prejudice to the generality of the foregoing, be entitled to allocate available supplies, manpower and services between their management assignments in such manner as in the prevailing circumstances the Manager considers to be fair and reasonable.
5.4 All discounts, commissions and other benefits received by the Manager and/or their employees from third parties as a consequence of the services to be provided to the Group hereunder shall be disclosed to the Company and, unless otherwise agreed, placed at the Company's disposal.
5.5 The Company shall, at all times, be allowed full access to the accounts and records of the Manager which are relevant to the performance of their obligations vis-a-vis the Group hereunder.
Such access shall be granted to the Officers and Directors and such other persons as shall be specifically authorised by the Company. Representatives of the Company's auditor shall, in relation to the audit of the Group's accounts, always be considered as authorised.
5.6 The Manager shall, upon request, provide the Company with copies of all documents relevant to the Group in their possession and otherwise compile such facts and records on the basis of such documents as shall, from time to time be requested by the Company.
5.7 In order to facilitate the provision of Services the Directors and Officers shall communicate all instructions and requests in respect of the Services to the Manager and their employees through the Manager.
5.8 FrontManBer shall be primary responsible for the following functions of the Services:
a. all governmental relations in Bermuda;
b. all filings to governmental authorities and the stock exchange in the United States;
c. all services related to the meetings of the Board, shareholder meetings and other corporate governance issues relevant to Bermuda law;
d. maintaining the Company's official records as required by Bermuda law;
e. assisting the Company in relation to specific corporate transactions as per instructions from the Board from time to time.
FrontManBer shall, in the matters referred to in (a) to (e) above, report to the Board.
The principle set forth above shall not apply in respect of the duties and obligations of FrontManBer's managing director in relation to the functions undertaken by such person in his capacity as the Company's chief accounting officer and company secretary. In discharging these functions, FrontManBer's managing director shall report to the other Officers and the Board.
6. COMPENSATION
6.1 The Manager shall receive a fee as set out in Appendix 1 hereto for the Services as set out below.
6.2a. Provision of corporate secretarial services for Group companies.
6.3b. Provision of directors and officers services for Group companies.
6.4c. Provision of corporate secretarial services for dormant Group companies.
6.5d. Provision of directors and officers services for dormant Group companies.
6.6e. Provision of technical supervision services.
6.7f. Provision of all other services provided for herein.
6.2 The budgeted annual fee due to the Manager shall be quoted by the Manager to the Board no later than 15 December each year. The fee shall be market compatible.
6.3 The preliminary fees approved by the Board shall be paid to the Manager in advance on a quarterly basis in 4 equal amounts throughout the year.
6.4 In the event the Group increases or reduces its activities materially during a year, each of the Parties shall have the right to require that the preliminary fees are adjusted. Such adjustment shall always take place if any of the Manager, as a consequence of such increase or decrease in the scope of the Services will have to increase its cost base.
6.5 Any adjustment shall be effective as from the month following agreement between the Parties on the revision.
6.6 The Manager's out-of-pocket expenses for providing the services shall be paid by the Company in addition to the above fees. Out-of-pocket expenses include travelling expenses incurred in the Manager's performance of the services and any payments to third parties directly attributable to the services.
7. AUTHORITY
7.1 The Manager is authorised and (subject to Bermudan law and their compliance with the provisions hereof) obligates the Company by its signature in all transactions connected with the day-to-day operation of the Group's activities.
All matters of an irregular nature or special importance, and all matters which, according to the Company's by-laws, applicable Bermudan law and/or this Agreement, require a decision by the Board, shall be submitted to the Board and the Officers and shall not be actioned upon by the Manager without the prior written consent of the Company having been obtained.
7.2 The Company hereby ratifies and confirms and undertakes, at all times, to allow, ratify and confirm all the Manager shall lawfully do or cause to be done in the bona fide performance of their duties hereunder.
8. INDEMNITY
8.1 The Manager shall be under no responsibility or liability for loss or damage, whether as a loss of profits or otherwise, to the Group arising out of any act or omission involving any error of judgment or any negligence on the part of the Manager or any of them or any of their officers or employees or in connection with the performance of their duties under this Agreement, unless acts or omissions are caused by gross negligence or wilful misconduct.
In any event, the manager shall not be liable under any circumstances to compensate the Group in an amount exceeding the aggregate of the annual fee.
8.2 The Company covenants to indemnify and keep indemnified the Manager and their employees against any and all liabilities, costs, claims, demands, proceedings, charges, actions, suits or expenses of whatsoever kind or character that may be incurred or suffered by any of them howsoever arising (other than by reason of fraud or dishonesty on their part) in connection with the provisions of the Services or the performance of this Agreement.
8.3 The Manager shall not be required to take any legal action on behalf of the Group, the Directors or the Officers unless being fully indemnified (to its or their reasonable satisfaction) for all costs and liabilities likely to be incurred or suffered by them. If the Company requires the Manager or either of them in any capacity, to take any action which, in the opinion of the Manager, might make the Manager as agents liable for the payment of money or liable in any other way, the Manager shall be kept indemnified by the Company in any reasonable amount and form satisfactory to them as a prerequisite to take such action.
8.4 The indemnities provided by the Company hereunder shall cover all reasonable costs and expenses payable by the Manager in connection with any claims.
8.5 To the extent that the Manager is entitled to claim in indemnity in respect of amounts paid or discharged by the Manager pursuant to this Agreement, these indemnities shall take effect as an obligation of the Company to reimburse the Manager making such payment or effecting such discharge.
8.6 The indemnification provided by this clause shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under any statute, agreement, the by-laws of the Company or otherwise, and shall continue after the termination of this Agreement.
8.7 The Manager shall be included as co-assured on insurance policies for the Vessels.
9. CONFIDENTIALITY
9.1 All confidential information furnished to the Manager or any of them or any of their respective employees, directors or sub-contractors pursuant to this Agreement and any accounts, accounting and financial records of the Group created or maintained by the Manager or any of them or any of their respective employees, directors or sub-contractors as contemplated by this Agreement shall be and remain the property of the Group and shall be kept confidential by the Manager.
The Manager hereby agree for themselves and their employees and agents to keep the same confidential and not to disclose the same to any third party other than as expressly contemplated hereby or as expressly authorised in writing by the Company and not to use such information for any purpose other than the purpose contemplated hereby provided that the provisions of this clause 9.1 shall not apply to any such confidential information which is:
(i) required to be disclosed by law or court order;
(ii) or becomes public knowledge otherwise than as a result of the conduct of the Manager or any of them.
For the purpose of this clause "Confidential Information" shall mean:
a. confidential information (including without limitation trade secrets and confidential know-how) relating to the business of the Group;
b. all other confidential information and know-how of which the Manager become aware (both before or after the commencement date) or generates in the course of or in connection with the performance of their obligations hereunder;
c. all information treated by the Manager in relation to their activities as confidential other than information that is public knowledge (otherwise than as a result of a breach of confidentiality pursuant to this Agreement).
9.2 The Manager shall, if so required by any of the stock exchanges on which the Company's shares are listed, ensure that each of their respective employees having access to confidential information shall execute a specific confidentiality undertaking in favour of the Company.
10. TERMINATION
10.1 The Company may terminate this Agreement with 12 months' prior written notice to the Manager.
10.2 Termination shall be without prejudice to any rights or liabilities of either Party hereto arising prior to or in respect of any act or omission occurring prior to termination.
10.3 In the event of termination, the management fee shall be pro-rated to the date of termination (after taking into account such additional amounts, if any, as the time spent and the responsibility undertaken by the Manager during the relevant period immediately prior to termination justify).
10.4 In the event of termination, the Company and the Manager shall procure that all such acts are done as may be necessary to give effect to such termination and the Company shall secure and the Manager shall, subject to payment of all amounts due to them hereunder, co-operate in the appointment of a substitute Manager as circumstances may require.
10.5 Upon the termination of this Agreement, the Manager shall hand over to the Company all books of account, correspondence and records relating to the affairs of the Company which are the property of the Company and which are in their possession.
11. DEFAULT
11.1 If the Manager, by any act or omission, shall be in breach of any material obligation under this Agreement and such breach shall continue for a period of fourteen (14) days after written notice thereof has been given by the Company to the Manager, the Company shall have the right to terminate this Agreement with immediate effect by notice to the Manager.
11.2 The right to terminate this Agreement shall be in additional to and without prejudice to any other rights which the Company may have against the Manager under this Agreement.
11.3 In the event that either:
a. any payment in respect of the remuneration paid to the Manager or any other monies due to the Manager is not paid by the Company;
or
b. the Company shall, by any act or omission, be in breach of any material obligation under this Agreement and such breach shall continue for a period of fourteen (14) days after written notice thereof has been given by the Manager to the Company;
the Manager shall have the right to terminate this Agreement with immediate effect by notice to the Company, any such termination being without prejudice to any claim the Manager may have on the Company under this Agreement, and taking effect either forthwith or at such other time as may be specified in the notice.
11.4 Either Party may forthwith by notice in writing terminate this Agreement if an order be made or a resolution be passed for the winding up of the other or if a receiver be appointed of the business or property of the other, or if the other shall cease to carry on business or make special arrangement or composition with its creditors or if any event analogous with any of the foregoing occurs under any applicable law.
12. FORCE MAJEURE
The Manager shall be under no liability of any kind or nature whatsoever in the event that they should fail to perform any services hereunder if such failure is directly or indirectly caused by war, war-like activities, government order, riot, civil commotion, strike or lock-out or similar actions, or Act of God or peril of the sea or any other similar cause beyond the Manager's control.
13. NOTICES
13.1 All correspondence or notices required or permitted to be given under this Agreement shall be given in English and sent by first class mail, air mail or telefax (and in case of telefaxes confirmed by airmail letter) or delivered by hand addressed as follows:
Par-la-Ville Place
14 Par-la-Ville Road
Hamilton HM GX
Bermuda
Att.: Chief Executive Officer
Telefax: 1 441 295-3494
Telephone: 1 441 295-4705
Par-la-Ville Place
14 Par-la-Ville Road
Hamilton HM GX
Bermuda
Att.: Managing Director
Telefax: 1 441 295-3494
Telephone: 1 441 295-6935
or such other address as either Party may designate to the other party in writing.
14. MISCELLANEOUS
14.1 No Party shall be entitled to assign its rights and/or obligations under this Agreement without the prior written consent of the other Parties hereto.
14.2 Nothing in this Agreement shall be deemed to constitute a partnership between the Parties.
14.3 No term of this Agreement is enforceable by a person who is not a party to it.
14.4 This Agreement shall not be amended, supplemented or modified save by written agreement signed by or on behalf of the Parties.
15. GOVERNING LAW AND ARBITRATION
15.1 This Agreement shall be governed by Bermuda Law.
The Company: The Manager: For and on behalf of For and on behalf of GOLAR LNG LIMITED FRONTLINE MANAGEMENT (BERMUDA) LIMITED --------- --------- Signature Signature SVEINUNG STOHLE KATE BLANKENSHIP ---------------- ---------------- Name with block letters Name with block letters |
APPENDIX I
FEE SCHEDULE
Service Fee
Provision of corporate secretarial $2,500 per company per annum
services for Group companies.
15.2 Provision of directors and officers $2,500 per company per annum
services for Group cmpanies.
15.3 Provision of corporate secretarial $1,000 per company per annum
services for dormant Group companies.
15.4 Provision of directors and officers $1,000 per company per annum
services for dormant Group companies.
15.5 Provision of technical supervision $36,000 per vessel per annum for
services. Golar Freeze, Hilli, Gimi and
Khannur. $15,600 per vessel per
annum for Golar Mazo and vessels
managed for third parties
Newbuidings: $24,000 per vessel
per annum until delivery
(pro-rated as necessary for part
of a year) and $15,600 per
vessel per annum thereafter.
Provision of all other services provided $1,000 per day
for in this agreement.
|
Exhibit 4.9
Second Priority
Credit Facility
for an amount not exceeding
USD 60,000,000
dated 11 October 2002
Golar Gas Holding Company, Inc.
as Borrower
The Financial Institutions
listed in Schedule 1
as Banks
Nordea Bank Norge ASA
as Agent
Nordea Bank Norge ASA, Den norske Bank ASA
and Fortis Bank (Nederland) N.V.
as Arrangers
VOGT & WIIG AS
INDEX
1 Interpretation.................................................4 2 Commitment....................................................13 3 Purpose and utilisation.......................................13 4 Conditions precedent..........................................13 5 Facility .....................................................14 6 Security .....................................................14 7 Interest .....................................................15 8 Interest periods..............................................15 9 Substitute basis..............................................16 10 Repayment.....................................................17 11 Prepayment....................................................18 13 Payments .....................................................19 14 Increased costs...............................................20 15 Illegality....................................................21 16 Representations and Warranties................................22 17 Undertakings..................................................28 18 Default ......................................................34 19 The Agent.....................................................37 20 Fees and Commission...........................................41 21 Expenses .....................................................42 22 Indemnities...................................................42 23 Amendments....................................................43 24 Assignment....................................................43 25 Sharing of payments...........................................44 26 Tax Lease Option..............................................45 27 Severability..................................................46 28 Notices ......................................................46 29 Conflicting provisions........................................47 30 Jurisdiction..................................................47 31 Governing law.................................................47 32 Service of process............................................47 |
Schedule 1 Banks and commitments....................................48 Schedule 2 Conditions precedent documents...........................49 Schedule 3 Form of Drawdown Notice..................................52 Schedule 4 Form of Renewal Notice...................................53 Schedule 5 Form of Deed of Assignment ..............................54 Schedule 6 Form of Pledge of Accounts...............................69 Schedule 7 Form of Pledge of Borrower Shares........................76 Schedule 8 Form of Subsidiary Pledge................................84 Schedule 9 Form of Compliance Certificate...........................93 Schedule 10A Form of Guarantee........................................94 Schedule 10B Form of Guarantee.......................................101 Schedule 11 Form of Mortgage........................................108 Schedule 12 List of Charters and Management Agreements..............124 Schedule 13 Form of Co-ordination Agreement.........................128 |
THIS AGREEMENT (the "Agreement") dated 11 October 2002 is made between:
(1) GOLAR GAS HOLDING COMPANY, INC., a company incorporated in the Republic of Liberia, having its registered office at 80 Broad Street, Monrovia, Liberia, as borrower (the "Borrower");
(2) THE FINANCIAL INSTITUTIONS LISTED IN SCHEDULE 1 as banks (the
"Banks");
(3) NORDEA BANK NORGE ASA, P.O.Box 1166 Sentrum, Middelthunsgt. 17, 0368 Oslo, Norway, as agent (the "Agent"); and
(4) NORDEA BANK NORGE ASA, P.O.Box 1166 Sentrum, Middelthunsgt. 17, 0368 Oslo, Norway, DEN NORSKE BANK ASA, Stranden 21, 0021 Oslo, Norway and FORTIS BANK (NEDERLAND) N.V., Blaak 555, 3011 GB Rotterdam, The Netherlands acting through its Oslo Branch office, Munkedamsveien 53B, 0250 Oslo, Norway, as arrangers (the "Arrangers").
WHEREAS
The Banks have agreed to grant the Borrower a second priority credit facility for an amount not exceeding USD 60,000,000, subject to the terms and conditions of this Agreement.
NOW IT IS HEREBY AGREED as follows:
1 Interpretation
1.1 Definitions
In this Agreement and the preambles hereof;
"Annualised EBITDA" means, at any relevant time, the EBITDA for the three month period ending on such date multiplied by four (4).
"Borrowed Money" means Indebtedness incurred in respect of (i) money
borrowed or raised and debit balances at banks, (ii) any bond, note,
loan stock, debenture or similar debt instrument, (iii) acceptance or
documentary credit facilities, (iv) receivables sold or discounted
(otherwise than on a non recourse basis), (v) deferred payments for
assets or services acquired (other than assets or services acquired on
normal commercial terms in the ordinary course of business where payment
is deferred by no more than 180 days), (vi) Capitalised Lease
Obligations, (vii) any other transaction (including without limitation
forward sale or purchase agreements) having the commercial effect of a
borrowing or raising of money, (viii) guarantees in respect of
Indebtedness of any person falling within any of (i) to (vii) above and
(ix) preference share capital in the Borrower or any member of the Golar
Gas Group which is or may be redeemable prior to the Maturity Date
and/or the full and final discharge of all Indebtedness and liabilities
of the Borrower under this Agreement.
"Business Day" means a day upon which banks and foreign exchange markets are open for business of the nature required by this Agreement in Oslo, Amsterdam, London and New York.
"Capitalised Lease Obligation" of any person means the obligation to pay rent or other payment amounts under a lease of (or other Borrowed Money arrangements conveying the right to use) real or personal property which is required to be classified and accounted for as a capitalised lease or a liability on the face of a balance sheet of such person in accordance with GAAP.
"Charter" means, in relation to a Vessel as at the date hereof, the charterparty in respect of such Vessel (if any), details of which are specified in Schedule 12 and any future charters of any of the Vessels.
"Charterer" means, in relation to a Vessel, the person or company or entity who is the charterer or employer of such Vessel.
"Charter Guarantee" means, in relation to a Vessel:
(a) as at the date hereof, any guarantee in respect of the current Charter of the Vessel which is specified in Schedule 12; and
(b) any other guarantee, letter of credit, Encumbrance or other security given by any person to the relevant Owning Company in respect of the obligations of the Charterer under the Charter of that Vessel.
"Charter Guarantor" means, in relation to a Vessel, any person who has given a Charter Guarantee to the Owning Company of that Vessel.
"Commitment" means, in relation to a Bank, the principal amount set opposite its name in Schedule 1, constituting the total commitment of such Bank in relation to the Facility, to the extent not cancelled, reduced or transferred under this Agreement.
"Commitment Period" means the period from the date of this Agreement until the date 12 months prior to the Maturity Date.
"Compliance Certificate" means a certificate in the form set out in Schedule 9.
"Co-ordination Agreement" means the agreement dated 11 October 2002 entered into between the Security Agent, the Borrower and the Agent (on behalf of the Banks), substantially in the form set out in Schedule 13.
"Current Assets" mean, on a consolidated basis, the current assets (as determined in accordance with GAAP) of the Golar Gas Group (excluding for this purpose, Oxbow, Golar Maritime, Faraway and Aurora Management Inc.).
"Current Liabilities" mean, on a consolidated basis, the current liabilities (as determined in accordance with GAAP) of the Golar Gas Group (excluding for this purpose, Oxbow, Golar Maritime, Faraway and Aurora Management Inc.).
"Deeds of Assignment" means each of the general assignments in favour of the Agent (on behalf of the Banks) on second priority (subject always to the First Deeds of Assignment) of (i) the Charters of the Vessels, (ii) the Earnings and any of the Owning Companies' present and future interest therein, (iii) the Charter Guarantees, (iv) the insurance proceeds in respect of all insurances of any of the Vessels and (v) any other moneys payable to any of the Owning Companies in relation to any of the Vessels or otherwise, as security for the Borrower's obligations under this Agreement, substantially in the form as set out in Schedule 5.
"Default" means each Event of Default and each event that, with the giving of notice, lapse of time, or fulfilment or non-fulfilment (as the case may be) of any other applicable condition (or any combination of the foregoing), would become such an Event of Default.
"Drawdown Date" means the date of an advance of a Drawing as specified by the Borrower in a Drawdown Notice.
"Drawdown Notice" means a request made by the Borrower for the drawdown and advance of a Drawing, substantially in the form set out in Schedule 3.
"Drawing" means the advance in the minimum amount of USD 10,000,000 and in integral multiples of USD 5,000,000, to be made in accordance with Clause 5.
"Earnings" means, in relation to any Vessel, all moneys whatsoever from time to time due and payable to the relevant Owning Company during the Security Period arising out of the use or operation of such Vessel including (but without limiting the generality of the foregoing) all freight, hire and passage moneys, income arising out of pooling arrangements, compensation payable to the relevant Owning Company in the event of requisition of such Vessel for hire, remuneration for salvage or towage services, demurrage and detention moneys and damages for breach (or any payments for variation or termination) of any charterparty or other contract for the employment of such Vessel and any sums recoverable under any loss of earnings insurance.
"EBITDA" means, for any period, the earnings before interest, taxes, depreciation and amortisation (calculated as income from operations plus any depreciation and amortisation, Interest Expense and Taxes on Overall Net Income deducted in calculating income from operations in respect of such period) of the Golar Gas Group (excluding for this purpose Oxbow, Golar Maritime, Faraway and Aurora Management Inc.) determined in accordance with GAAP on a consolidated basis.
"Encumbrance" means any mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, security deposit arrangement, trust arrangement or security interest or other encumbrance of any kind securing any obligation of any person or any type of preferential arrangement (including without limitation, conditional sale or title transfer and/or retention arrangements having a similar effect).
"Environmental Approval" means any consent, authorisation, licence or approval of any governmental or public body or authorities or courts, applicable to any vessel or its operation required under any Environmental Law.
"Environmental Claim" means any and all enforcement, clean-up, removal or other governmental or regulatory actions or orders instituted or completed pursuant to any Environmental Law or any Environmental Approval together with claims made by any third party relating to damage, contribution, loss or injury, resulting from any actual or threatened emission, spill, release or discharge of a Pollutant from any vessel.
"Environmental Laws" mean all national, international and state laws, rules, regulations, treaties and conventions applicable to any vessel, pertaining to the pollution or protection of human health or the environment including, without limitation, the carriage of Pollutants and actual or threatened emissions, spills, releases or discharges of Pollutants.
"Event of Default" means any of the events specified as such in Clause
18.1 (Events of Default).
"Facility" means the credit facility available to the Borrower under Clause 5.1 of this Agreement.
"Facility Amount" means an amount not exceeding USD 60,000,000.
"Faraway" means Faraway Maritime Shipping Company Limited, a company incorporated in the Republic of Liberia whose registered office is at 80 Broad Street, Monrovia, Liberia.
"Faraway Documents" mean (i) the Faraway Shareholders Agreement being
the shareholders agreement dated 14 June 1997 between Oxbow, Chinese
Petroleum Corporation and Golar Maritime, (ii) the Golar Mazo Management
Agreement being the management agreement dated 28 October 1997 in
respect of Golar Mazo between Faraway and Aurora Management Inc. and
(iii) the Faraway Loan Agreement.
"Faraway Loan Agreement" means a loan agreement dated 26 November 1997 for a secured loan facility of up to USD 214,500,000 made between i.a. Bank of Taiwan (lead arranger), the banks and financial institutions referred to therein as lenders, Indosuez Asia Shipfinance Services Limited (agent) and Faraway (borrower).
"First Deeds of Assignment" means the general assignments on first priority of i.a. the Earnings, the Charters and the Insurances of each Vessel executed by each of the Owning Companies under the USD 325 mill. Facility Agreement.
"First Mortgages" means the first priority mortgage over each of the Vessels executed by each of the Owning Companies and the Security Agent under the USD 325 mill. Facility Agreement.
"First Pledge of Accounts" means the first priority pledges and assignments of the Borrower's accounts executed by the Borrower and the Security Agent under the USD 325 mill. Facility Agreement.
"First Security Documents" means the security documents in favour of the Security Agent under the USD 325 mill. Facility Agreement.
"First Subsidiary Pledge" means, in relation to each of the Owning Companies, Oxbow and Golar Maritime, the pledge of all of the issued shares of such companies, on first priority entered into by the Borrower in favour of the Security Agent as security for the Borrower's obligations under the USD 325 mill. Facility Agreement.
"Free Available Cash" means, at any relevant time, the amount of the cash balances (being at any relevant time, an amount equal to the aggregate amount which is, at such time, credited to and/or invested in the accounts of the Borrower and the Owning Companies), freely available for use by the Borrower and/or any of the Owning Companies which may, notwithstanding any Encumbrance, right of set-off or agreement with any other party, be withdrawn and/or encashed and used by it for any lawful purposes without restriction (save for any pledge of accounts pursuant to the Security Documents and the First Security Document).
"GAAP" means generally accepted accounting principles in the United States, consistently applied.
"Golar Gas Group" means the Borrower and its Subsidiaries.
"Golar LNG Group" means the Ultimate Owner and its Subsidiaries.
"Golar Mazo" means M/V "GOLAR MAZO" registered under Liberian flag in the ownership of Faraway under Official Number 11170.
"Golar Mazo Charter" means the time charterparty relative to M/V Golar Mazo dated 2 July 1997 made between Faraway (as owner) and Pertamina (as charterer), which is scheduled to expire on 31 December 2017.
"Golar Maritime" means Golar Maritime (Asia) Inc., a company incorporated in the Republic of Liberia whose registered office is at 80 Broad Street, Monrovia, Liberia.
"Guarantees" means the on demand guarantees issued or (as the context may require) to be issued by (i) the Ultimate Owner and (ii) the Subsidiary Guarantors (acting jointly and severally), respectively, in favour of the Agent (on behalf of the Banks) as security for the Borrower's obligations under this Agreement substantially in the form set out in Schedule 10A (to be issued by the Subsidiary Guarantors) and Schedule 10B (to be issued by the Ultimate Owner) and a "Guarantee" means any one of them.
"Guarantors" mean the Ultimate Owner, and the Subsidiary Guarantors and a "Guarantor" means any of them.
"Indebtedness" means any payment obligations or commitments of any nature for the payment or repayment of money, whether as principal or as surety and whether present or future, actual or contingent, hereunder any payment obligation incurred in respect of or resulting from any Borrowed Money, including but not limited to, subordinated debt and other equity contributions as accepted by the Agent (on behalf of the Banks).
"Insurances" mean, in relation to any Vessel, all policies and contracts of insurance (which expression includes all entries of such Vessel in a protection and indemnity or war risk association) which are from time to time during the Security Period in place or taken out or entered into by or for the benefit of the relevant Owning Company (whether in the sole name of such Owning Company or in the joint names of such Owning Company and any other person) in respect of such Vessel or otherwise howsoever in connection with such Vessel and all benefits thereof (including claims of whatsoever nature and return of premiums).
"Interest Expense" means, for any period, interest charges and related expenses for such period of the Golar Gas Group determined (excluding for this purpose Oxbow, Golar Maritime, Faraway and Aurora Management Inc.) in accordance with GAAP.
"Interest Payment Date" means the last day of each Interest Period, and in respect of Interest Periods exceeding three months, also the date falling three months after the commencement thereof, and each date falling at three-monthly intervals thereafter.
"Interest Period" means each period ascertained in accordance with Clause 8 (Interest Periods) of this Agreement.
"ISM Code" means the International Safety Management Code for the Safe Operation of Ships and for Pollution Prevention constituted pursuant to Resolution A.741 (18) of the International Maritime Organisation and incorporated into the Safety of Life on Sea Convention and includes any amendments or extensions of it and any regulation issued pursuant to it.
"LIBOR" means for any Interest Period:
(a) the rate per annum equal to the offered quotation for deposits in USD ascertained by the Agent to be the rate established by the British Bankers' Association and appearing on the Reuter page LIBOR, published or reported by Reuter through its monitor service or any equivalent successor to such service at or about 11:00 hours a.m. (London time) on the applicable Quotation Date; or
(b) if no such rate is available, the rate per annum at which the Agent is able to acquire the relevant currency for the relevant Interest Period in the London Interbank Euro-currency Market at about 11:00 hours a.m. (London time) on the applicable Quotation Date, as conclusively certified by the Agent to the Borrower.
"Loan" means the principal amount from time to time outstanding under the Facility.
"Loss Payable Clauses" mean the provisions regulating the manner payment of sums receivable under the Insurances of a Vessel which are to be incorporated in the relevant insurance documents, such Loss Payable Clauses to be in the form as set out in Appendix 2A to the Deeds of Assignment or in such other form as may from time to time be agreed in writing by the Agent.
"Management Agreement" means, in relation to a Vessel; (a) the management agreement between the relevant Owning Company and the Manager thereof, providing (inter alia) for the Manager to provide technical management of (inter alia) such Vessel and (b) any future management agreement relative (inter alia) to that Vessel entered into by the relevant Owning Company with a Manager on terms previously approved by the Agent (such approval not to be unreasonably withheld) or in relation to Golar Mazo, the management agreement between Faraway and Aurora Management Inc. and the "Management Agreements" means all of such agreements.
"Manager" means, in relation to a Vessel: (a) such manager as set out in Schedule 12, being approved by the Agent (on behalf of the Banks) (including, but not limited to, any other manager or sub-manager to whom such manager may delegate its management of such Vessel on terms, inter alia, that such manager remains wholly responsible as principal to the relevant Owning Company for the due performance of the relevant management obligations; or (b)any other entity appointed with the prior written consent of the Agent as manager of such Vessel, and in relation to Golar Mazo, Aurora Management Inc.
"Margin" means 2.0% (two point zero per cent) per annum, increasing by 0.25% (zero point twenty five per cent) per annum on 30 November 2004 and 30 November 2005.
"Market Value" means the fair market value of each of the Vessels and Golar Mazo in USD determined as the arithmetic average of independent valuations of the Vessels and Golar Mazo obtained (at the cost of the Borrower) from two independent and well reputed shipbrokers experienced in the valuation of this kind of vessels, one nominated by the Agent and the other nominated by the Borrower from a list of independent firms of shipbrokers from time to time approved in writing by the Agent or, failing such nomination (within 7 days of a request from the Agent to nominate a firm) or approval, appointed by the Agent in its sole discretion. Such valuations to be made on the basis of a sale for prompt delivery for cash at arms length on commercial terms as between a willing buyer and willing seller taking into account the benefit of any Charter or the Golar Mazo Charter or any other charterparty or other engagement concerning each vessel and, if the Agent requires, such valuation to be made after physical inspection, with such physical inspection having been carried out. Unless one such valuations is for an amount which is 110% or more of the other, the mean of such valuations shall constitute the value of the relevant Vessel. If one such valuation is for such amount, the Agent shall appoint (as the cost of the Borrower) a third independent firm of shipbrokers to value such Vessel on the same basis and in the same manner and the mean of all three such valuations shall constitute the value of the relevant Vessel.
"Master Agreement" means the master agreement dated 12 August 1999 as amended by addendum no 1 thereto dated 5 January 2000 between Golar Khannur Inc., Golar Freeze Inc., Golar Gimi Inc., Golar Hilli Inc., Osprey Maritime and Methane Services Limited.
"Maturity Date" means 31 May 2007.
"Mortgage" means a second priority mortgage of each of the Vessels in the principal amount of USD 60,000,000 plus interest (including default interests) and costs, executed or (as the context may require) to be executed by the relevant Owning Company in favour of the Agent (on behalf of the Banks) as security for the Borrower's obligations under this Agreement, substantially in the form set out in Schedule 11 hereto, and being registered against each of the Vessels in the Liberian Ship Registry and "Mortgages" mean all of such mortgages.
"Net Debt" means, on a consolidated basis, an amount equal to the aggregate of all Borrowed Money of the Golar Gas Group (excluding for this purpose Oxbow, Golar Maritime, Faraway and Aurora Management Inc.) other than subordinated debt less Free Available Cash.
"Omnibus Agreement" means the agreement dated 25 October 2001 entered into between Methane Services Ltd., BG International Ltd., BG Asia Pacific Pte. Ltd., Osprey Maritime Ltd., Golar Management Ltd., the Utlimate Owner, Golar Kahnnur Inc., Golar Freeze Inc., Golar Gimi Inc., Golar Hilli Inc., Golar LNG 2215 Corporation and Poten & Partners Inc.
"Owning Company" means each of (i) Golar Gas Cryogenics Inc. a company incorporated in the Republic of Liberia having its registered office at 80 Broad Street, Monrovia, Liberia being the owner of M/V "GOLAR SPIRIT", (ii) Golar Hilli Inc. a company incorporated in the Republic of Liberia having its registered office at 80 Broad Street, Monrovia, Liberia being the owner of M/V "HILLI", (iii) Golar Gimi Inc. a company incorporated in the Republic of Liberia having its registered office at 80 Broad Street, Monrovia, Liberia being the owner of M/V "GIMI", (iv) Golar Khannur Inc. a company incorporated in the Republic of Liberia having its registered office at 80 Broad Street, Monrovia, Liberia being the owner of M/V "KHANNUR" and (v) Golar Freeze Inc. a company incorporated in the Republic of Liberia having its registered office at 80 Broad Street, Monrovia, Liberia being the owner of M/V "GOLAR FREEZE" and "Owning Companies" mean all of such companies.
"Oxbow" means Oxbow Holdings Inc., a company incorporated in the British Virgin Islands whose registered address is at P.O. Box 3321, Road Town, Tortola, British Virgin Islands.
"Parent" means Gotaas-Larsen Shipping Corporation., a company incorporated in the Republic of Liberia whose registered address is at 80 Broad Street, Monrovia, Liberia.
"Party" means a party to this Agreement.
"Permitted Encumbrances" means (i) any Encumbrance created pursuant to the First Security Documents and (ii) any Encumbrance created pursuant to the Security Documents.
"Pertamina" means Perusahaan Pertambangan Minyak Dan Gas Bumi Negara of Patra Jasa Building, 2nd Floor, Jl. Jend. Gatot Soebroto Kav. 32-34, Jakarta 12950, Indonesia.
"Pledge of Accounts" means a second priority pledge of the Borrower's account no. 6018.04.41444 with the Agent and such other account or accounts which may later be agreed between the Borrower and the Agent to be executed by the Borrower and the Agent (on behalf of the Banks) and the Account Bank (as defined therein) as security for the Borrower's obligations under this Agreement, substantially in the form set out in Schedule 6.
"Pledge of Borrower Shares" means, in relation to the Borrower, the pledge of all of the issued shares of such company, on first priority to be entered into between the Parent and the Agent (on behalf of the Banks), as security for the Borrower's obligations under this Agreement, substantially in the form set out in Schedule 7.
"Pollutant" means and includes pollutants, contaminants, toxic substances, oil as defined in the United States Oil Pollutant Act of 1990 and all hazardous substances as defined in the United States Comprehensive Environmental Response, Compensation and Liability Act 1980.
"Quotation Date" means the second Business Day before the first day of an Interest Period.
"Renewal Notice" means a request made by the Borrower for renewal of the Loan, substantially in the form set out in Schedule 4.
"Security Agent" means Den norske Bank ASA in its capacity as security agent under the USD 325 mill. Facility Agreement.
"Security Documents" means the Mortgages, the Deeds of Assignment, the Pledge of Accounts, the Pledge of Borrower Shares, the Subsidiary Pledges and the Guarantees.
"Security Interest" means any mortgage, pledge, lien, charge (whether fixed or floating), assignment by way of security, finance lease, sale-and-repurchase or sale-and-leaseback arrangement, sale of receivables on a recourse basis or security interest or any other agreement or arrangement having the effect of conferring security, except for liens arising solely by operation of law and/or in the ordinary course of business securing amounts not more than 30 days overdue.
"Security Period" means the period commencing on the date of this Agreement and so long as any moneys are owning, actually or contingently under the Security Documents and while all or any part of the Loan or Commitments remain outstanding.
"Subsidiary Guarantors" means the Owning Companies, Oxbow and Golar Maritime.
"Subsidiary" of a person means any company or entity directly or indirectly controlled by such person and any sub-subsidiaries thereof.
"Subsidiary Pledge" means, in relation to each of the Owning Company, Oxbow and Golar Maritime, the pledge of all of the issued sharers of such companies, with second priority after the First Subsidiary Pledge, to be entered into between the Borrower and the Agent (on behalf of the Banks) as security for the Borrower's obligations under this Agreement, substantially in the form set out in Schedule 8 and "Subsidiary Pledges" means all of such pledges.
"Taxes" includes any present or future taxes, levies, duties, imposts, withholdings, deductions, fees or charges of any nature, together with interest thereon and penalties in respect thereof, and "tax" and "taxation" shall be construed accordingly.
"Tax Lease Option" means the option referred to in Clause 26.
"Tax on Overall Net Income" of a Bank shall be construed as a reference to tax imposed on that Bank by the jurisdiction under the laws of which it has been incorporated or in which it is located on (i) the net income, profits or gains of that Bank world wide or (ii) such of the net income, profits or gains of that Bank as are considered to arise in or to relate to or are taxable in that jurisdiction.
"Total Loss" means any event which will entitle any of the Owning Companies to claim payment of the insured value under any of the Insurances pursuant to Clause 17.14 (Insurances), which shall include actual, constructive, compromised or arranged total loss or compulsory acquisition of any of the Vessels.
"Transaction Documents" means this Agreement, the Security Documents, the Co-ordination Agreement, the Faraway Documents, the Charters, the Omnibus Agreement, the Charter Guarantees, the Master Agreement, the Golar Mazo Charter, the USD 325 mill. Facility Agreement, the First Security Documents, the Management Agreements and the agreements or documents contemplated herein or therein.
"Ultimate Owner" means Golar LNG Ltd., a company incorporated in Bermuda whose registered address is Par-la Ville Place, 4th Floor, 14 Par-la Ville Road, Hamilton HM08, Bermuda, being the owner of the Parent.
"USD" means the lawful currency for the time being of the United States of America.
"USD 325 mill. Facility" means the term loan facility granted to the Borrower under the USD 325 mill. Facility Agreement.
"USD 325 mill. Facility Agreement" means the USD 325 mill. term loan
facility dated 31 May 2001 entered into between (i) the Borrower (as
borrower), (ii) the banks and financial institutions listed therein,
(iii) Christiania Bank og Kreditkasse ASA (now Nordea Bank Norge ASA),
Den norske Bank ASA, Citibank N.A. and Fortis Bank (Nederland) N.V. as
lead arrangers, (iv) Den norske Bank ASA and Christiania Bank og
Kreditkasse ASA as swap banks, (v) Christiania Bank og Kreditkasse ASA
as administrative agent and (vi) Den norske Bank ASA as security agent.
"Vessels" means each of M/V "GOLAR SPIRIT", M/V "HILLI", M/V "GIMI", M/V "KHANNUR" and M/V "GOLAR FREEZE" owned by the relevant Owning Company and a "Vessel" means any of the Vessels.
1.2 Construction
In this Agreement, unless the context or any express provisions of this Agreement otherwise requires:
(a) words importing the singular shall include the plural and vice versa;
(b) the index to and the headings in this Agreement are for convenience only and shall be ignored in construing this Agreement;
(c) reference to any Party shall, subject to Clause 24, be deemed to be a reference to or include, as appropriate, such Party's permitted successors and assignees or transferees;
(d) references to Clauses and sub-Clauses and the Schedules are references to, respectively, the Clauses and sub-Clauses of, and the Schedules to, this Agreement;
(e) all references to statutes and other legislation include all modifications, re-enactments and amendments thereof; and
(f) a reference to this Agreement, the Transaction Documents or to another agreement or document shall be construed as including a reference to all permitted amendments or variations thereof or supplements thereto from time to time in force, but without prejudice to the Borrower's obligations to obtain necessary consent in respect of such amendment or supplement.
2 Commitment
2.1 Facility
Subject to the terms of this Agreement, each Bank agrees to make available to the Borrower the Facility in an aggregate principal amount not exceeding its Commitment.
2.2 Obligations several
The obligations of the Banks under this Agreement are several, to the effect that;
(a) failure of a Bank to carry out its obligations under this Agreement shall not relieve any other party hereto of any of its obligations under this Agreement; and
(b) no Bank shall be responsible for the obligations of any other Bank hereunder.
3 Purpose and utilisation
3.1 Facility
The purpose of the Facility is to provide the Borrower with funds for the purpose of financing the payment of dividends to the Parent and, subsequently to the Ultimate Owner and/or the provision of a loan to the Ultimate Owner which the Ultimate Owner will use to finance its newbuilding program.
3.2 No inquiry
Without prejudice to the foregoing and to the remaining provisions of this Agreement, neither the Agent nor any Bank shall be bound to inquire as to, nor shall any of them be responsible for, the application by the Borrower of the Facility Amount.
4 Conditions precedent
4.1 Initial conditions
The obligations of the Agent and each Bank hereunder are subject to the condition that the Agent (on behalf of the Banks) has received all the documents set out in Schedule 2 in a form and substance satisfactory to it no less than five Business Days prior to the first Drawdown Date hereunder.
If the documents set out in Schedule 2 are not submitted as originals, photocopies of the original documents must be certified by a lawyer before submittal to the Agent.
4.2 Specific conditions
The obligations of the Agent and each Bank hereunder in respect of the Facility are further subject to the specific conditions that for any Drawing, on both the date of the Drawdown Notice and the Drawdown Date:
(a) the representations and warranties in Clause 16 (Representations and Warranties) deemed to be repeated on those dates are true, correct and not misleading and will be true, correct and not misleading immediately after advance of the Drawing under this Agreement with reference to the facts and circumstances then prevailing, unless otherwise informed to the Agent in writing and, if not permitted under this Agreement, waived by the Banks prior to such dates; and
(b) no Default has occurred or is threatening or would result from the advance of the Drawing.
5 Facility
Subject to the terms of this Agreement, the Facility Amount will be made available to the Borrower to be drawn in the Commitment Period in up to three Drawings.
5.1.1 Drawdown Notice
The Borrower shall, not later than 10:00 a.m. (London time) five Business Days prior to the requested Drawdown Date, or on such earlier or later date as may be agreed with the Agent by the Banks, serve to the Agent the Drawdown Notice which, once received by the Agent, shall be irrevocable.
5.1.2 Effect
The giving of each Drawdown Notice by the Borrower shall be deemed to constitute a representation and warranty by the Borrower that all the representations and warranties set forth in Clause 16 (Representations and Warranties) are true, correct and not misleading as of such date as if made on such date, that the conditions specified in Clause 4 have been or will upon each Drawdown Date be fully performed, and that no Event of Default or any event which, with the giving of notice or lapse of time or both, would constitute an Event of Default, has occurred or is threatening.
5.1.3 Participation
The Banks shall upon confirmation from the Agent that the Agent has received a duly completed Drawdown Notice and subject to the terms and conditions of this Agreement, and provided that no Event of Default has occurred or is threatening, make their Commitments in respect of the relevant Drawing available to the Borrower in one disbursement on the requested Drawdown Date.
5.1.4 Availability
Each Drawing shall be made available to the Borrower by the Agent who shall promptly transfer all amounts received by it from the Banks to the Borrower to the account specified in the Drawdown Notice in the same funds as they have been received by the Agent.
6 Security
6.1 Security
The Borrower's obligations towards the Banks and the Agent under or in connection with this Agreement and the Facility, including without limitation the obligation to repay the Loan together with all unpaid interest, default interest, commissions, charges, fees and expenses, or any liability whatsoever derived therefrom, shall be secured by the Security Documents.
6.2 Set-off
In the event of non-payment of any amount hereunder when due, the Agent (acting on its own behalf and on behalf of the Banks) and each of the Banks individually (acting on its own behalf and on behalf of the Agent and the other Banks) shall, to the extent permitted by applicable law and always subject to the Co-ordination Agreement, have a separate right of set-off in respect of any credit balance, in any currency, on any account the Borrower might have with either the Agent or any of the Banks (branches included), from time to time towards satisfaction of any sum due to the Agent or any of the Banks hereunder.
7 Interest
7.1 Rate
The rate of interest applicable to the Loan for each Interest Period shall be the rate per annum determined by the Agent to be the aggregate of:
(a) the Margin; and
(b) LIBOR for the relevant Interest Period.
7.2 Payment
Except as otherwise provided herein, accrued interest in relation to the Loan for each Interest Period is payable by the Borrower on each Interest Payment Date, and in relation to any amount prepaid, on the date of such prepayment as set out in Clause 11.4.
7.3 Accrual
Interest shall accrue from day to day and on the basis of a year of 360 days and for the actual number of days elapsed and shall be paid in USD.
7.4 Default interest
In the event of any payments hereunder not being received on the due date therefore, interest is payable by the Borrower from the due date until such payment is received, at a rate to be determined by the Agent to be the aggregate sum of 2.0 per cent per annum, the Margin and the costs the Banks will incur in financing the Loan for such periods as the Banks shall determine (each such period referred to as a "Designated Interest Period"), such interest being payable by the Borrower upon the Agent's written demand.
7.5 Notification
The Agent shall without undue delay notify each relevant Party of the determination of a rate of interest under this Agreement.
7.6 Effective Annual Interest Rate
The Borrower has acknowledged and agreed to the calculation of effective annual interest payable by the Borrower under the Facility as set out in a letter from the Agent (on behalf of the Banks) to the Borrower of even date herewith.
8 Interest periods
8.1 Selection
(a) The Borrower shall select the first Interest Period for the first Drawing in the Drawdown Notice such Interest Period commencing on the Drawdown Date, and each subsequent Interest Period will commence forthwith upon expiry of the immediately preceding Interest Period;
(b) each subsequent Drawing shall be consolidated with previous Drawings;
(c) the Borrower shall, by serving the Renewal Notice to the Agent not later than 10:00 hours a.m. (London time) two Business Days before the beginning of each Interest Period, specify the duration of that Interest Period. The Renewal Notice shall constitute a representation and warranty to the effect that, on the date of that notice, the representations and warranties in Clause 16 (Representations and Warranties) remain true, correct and not misleading and that no Event of Default has occurred or is threatening.
8.2 Duration
Subject to the provisions of this Clause 8, each Interest Period is to be for a period of one, three or six months, subject always to availability to all the Banks, and provided that the number of one month Interest Periods in one calendar year never shall exceed three.
8.3 Deemed Selection
If the Borrower fails to select an Interest Period in accordance with the preceding provisions, or if the Agent after consultation with the Banks shall certify to the Borrower that the funds requested are not available for an Interest Period of the length requested by the Borrower, there shall be deemed to have been selected an Interest Period of three months.
8.4 Non-Business Days
If an Interest Period would otherwise end on a day which is not a Business Day, that Interest Period shall be extended to the next Business Day in that calendar month, or if the next Business Day would fall in the next calendar month, the Interest Period shall be shortened to the preceding Business Day.
8.5 Notification
The Agent shall notify the Banks of the duration of each Interest Period promptly after ascertaining the same.
9 Substitute basis
9.1 Suspension
If, on or prior to a Quotation Date:
(a) the Agent reasonably determines that adequate and fair means do not exist for ascertaining LIBOR; or
(b) prior to 2:00 p.m. (London time) on the Quotation Date the Agent receives notification from any Bank (the "Affected Bank") that:
(i) matching deposits are not available to them in the London interbank market in sufficient amounts to fund their participation in the relevant Drawing for the relevant Interest Period; or
(ii) the cost to them of obtaining matching deposits in the London interbank market to fund their respective participation in the relevant Drawing would be in excess of LIBOR for the relevant Interest Period,
the Agent shall immediately give written notice (the "Suspension Notice") of such determination or notification to the Borrower and the Banks.
9.2 Before utilisation
If a Suspension Notice relates to a Drawing before it has been advanced then the Banks shall not be obliged to advance the Drawing and each Affected Bank shall not be obliged to participate in the Drawing until written notice to the contrary is given by the Banks or such Affected Bank to the Borrower. In such case, during the period of 30 days from such Suspension Notice, each Bank or Affected Bank and the Agent shall negotiate in good faith with the Borrower with a view to agreeing to an alternative basis for the borrowing of the Drawing or of such Affected Bank's participation in the Drawing. If such alternative basis is agreed between the Borrower and the Banks or such Affected Bank, it shall apply in accordance with its terms.
9.3 Following utilisation
If a Suspension Notice relates to a Drawing or the Loan after it has been advanced, the Banks or such Affected Bank shall, during the period of 30 days from such Suspension Notice, in consultation with the Agent and the Borrower, certify to the Agent and the Borrower such alternative basis as the Banks or such Affected Bank in their sole and absolute discretion shall determine (in this Agreement referred to as their "Substitute Basis") for maintaining the participation of the Banks or such Affected Bank in the Drawing or the Loan. Without limitation, such Substitute Basis may be retroactive to the beginning of such Interest Period (being the Interest Period commencing at or around the date of the Suspension Notice), and may include an alternative method of fixing the interest rate (which shall reflect the cost to the Banks or such Affected Bank of funding its participation in the Drawing or the Loan from other sources plus the Margin and alternative Interest Periods). Each Substitute Basis so certified shall be binding upon the Borrower and the Banks or Affected Bank and shall be treated as part of this Agreement.
9.4 Consultation
So long as any Substitute Basis is in force the Agent (in consultation with the Borrower and each Bank certifying a Substitute Basis) shall from time to time, but not less often than monthly, review whether or not the circumstances referred to in Clause 9.1 still prevail with a view to returning to the normal provisions of this Agreement.
10 Repayment
The Borrower shall repay the Loan in quarterly consecutive instalments of USD 4,000,000, the first instalment being payable on 30 November 2003. The Loan shall be repaid in full on the Maturity Date.
11 Prepayment
11.1 Voluntary prepayment
The Borrower may (subject to the payment of applicable breakage costs)
upon fifteen Business Days' written notice to the Agent (on behalf of
the Banks), on the last Business Day of an Interest Period, prepay the
Loan by minimum amounts of USD 5,000,000 and integral multiples of USD
1,000,000.
11.2 Mandatory prepayment
To the extent that the Borrower is obliged to make a mandatory
prepayment pursuant to Clause 4 of the USD 325 mill. Facility Agreement,
the balance between the proceeds received by the Borrower and the
prepayment made under the 325 mill. Facility Agreement shall be used as
prepayment hereunder.
11.3 Effect of prepayment
Any amount prepaid pursuant to this Clause 11 shall be applied against
the remaining instalments in inverse order of maturity and may not be
drawn again.
11.4 Additional right of prepayment
If:
(a) the Borrower is required to pay to a Bank any additional amounts
under Clause 13.6 (Taxes); or
(b) the Borrower is required to pay to a Bank any amount under
Clause 14 (Increased costs);
then, without prejudice to the obligations of the Borrower under those
Clauses, the Borrower may, subject to Clause 11.5 (Conditions), whilst
the circumstances continue, serve a notice of prepayment on that Bank
through the Agent. On the date falling five Business Days after the date
of service of the notice:
(i) the Borrower shall prepay that Bank's participation in
the Loan; and
(ii) any undrawn part of that Bank's Commitment in respect of
the Facility Amount shall be cancelled.
11.5 Conditions
(a) Any notice of prepayment under this Agreement is irrevocable and
shall specify the date on which the prepayment is to become
effective and the amount is to be prepaid. The Agent shall
notify the Banks promptly of receipt and contents of any such
notice.
(b) All prepayments under this Agreement shall be made together with
accrued interest on the amount prepaid and any amounts due in
respect of such prepayment under Clause 22 (Indemnities).
12 Cancellation
The Borrower may, upon ten Business Days' written notice to the Banks
which shall be irrevocable, cancel the Facility Amount (in whole or in
part) in multiples of minimum USD 10,000,000 and in integral multiples
of USD 5,000,000 without premium of penalty. Any amount so cancelled,
will not be reinstated.
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13 Payments
13.1 Place
All payments by the Borrower or a Bank under this Agreement shall be
made to the Agent to its account at such office or bank as the Agent may
from time to time designate.
13.2 Funds
Payments under this Agreement to the Agent shall be made for value on
the due date at such times and in such amounts as the Agent may specify
to the Party concerned as being customary at the time for the settlement
of transactions in the relevant currency in the place for payment.
13.3 Distribution
Each payment received by the Agent under this Agreement for another
Party shall be made available by the Agent to that Party by payment (on
the date and in the currency and funds of receipt) to its account with
such office or bank in the principal financial centre of the country of
the relevant currency as it may notify to the Agent for this purpose by
not less than five Business Days prior written notice.
13.4 Currency
(a) Any amount payable under this Agreement is, except as otherwise
provided for herein, payable in USD.
(b) Amounts payable in respect of costs, expenses, taxes and the
like are payable in the currency in which they are incurred.
13.5 Set-off and counterclaims
All payments made by the Borrower under this Agreement shall be made
without set-off or counterclaim.
13.6 Taxes
All payments by the Borrower under this Agreement shall be made free and
clear of and without deduction for or on account of any Taxes, except to
the extent that the Borrower is required by law to make payment subject
to any Taxes. If by requirement of law any Tax or amounts in respect of
Tax must be deducted or withheld from any amounts payable or paid by the
Borrower, or paid or payable by the Agent to a Bank, under this
Agreement, the Borrower (or the Agent, if required) shall pay such Tax
to the relevant authority and the Borrower shall pay such additional
amounts as may be necessary to ensure that the relevant Bank receives
(free from any liability in respect of any such deduction or
withholding) a net amount equal to the full amount which it would have
received had payment not been made subject to Tax or other deduction.
The Borrower shall promptly deliver to the Agent any receipts,
certificates or other proof evidencing the amounts paid or payable in
respect of any deduction or withholding as aforesaid.
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13.7 Non-Business Days
If a payment under this Agreement is due on a day which is not a
Business Day, the due date for that payment shall be extended to the
next Business Day in the same calendar month provided that if the next
Business Day would fall in the next calendar month, the due date for
that payment shall instead be the preceding Business Day.
13.8 Partial payments
If the Agent receives a payment insufficient to discharge all the
amounts then due and payable by the Borrower under this Agreement and
the Security Documents, the Agent shall apply that payment towards the
discharge of the obligations of the Borrower under this Agreement in the
following order:
(a) firstly, in or towards payment pro rata of any unpaid costs and
expenses of the Agent and the Banks;
(b) secondly, in or towards payment pro rata of any accrued fees due
but unpaid under Clause 20 (Fees);
(c) thirdly, in or towards payment pro rata of any accrued interest
unpaid;
(d) fourthly, in or towards payment pro rata of any principal due
from the Borrower but unpaid; and
(e) fifthly, in or towards payment pro rata of any other sum due but
unpaid.
14 Increased costs
14.1 Recovery
(a) Subject to Clause 14.2 (Exceptions) and the relevant Bank
notifying the Borrower of any event referred to below promptly
upon becoming aware thereof, the Borrower shall, promptly after
demand by a Bank, pay to that Bank the amount of any increased
cost relating to this Agreement incurred by it as a result of:
(i) any change in, or any change in the interpretation or
application by any competent authority of, any relevant
law or regulation after the date of this Agreement; or
(ii) compliance with any regulation made by a competent
authority of the jurisdiction in which it is
incorporated and/or in which its principal office is
located after the date of this Agreement,
Page 20
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including any law or regulation relating to taxation, or reserve asset,
special deposit, cash ratio, liquidity or capital adequacy requirements
or any other form of banking or monetary control.
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(b) In this Agreement "increased cost" means:
(i) a reduction in any amount payable to a Bank or the effective return to a Bank on its capital which would not have occurred had that Bank not entered into this Agreement; or
(ii) the amount of any payment made by a Bank, or the amount of any interest or other return foregone by a Bank, calculated by reference to any amounts received or receivable by that Bank from the Agent or the Borrower under this Agreement,
all as certified by the relevant Bank, such certificate to set out in reasonable detail the circumstances giving rise to the claim for payment of increased costs and the calculations of the amount claimed and shall be conclusive evidence, save for manifest error, of the amount due from the Borrower.
14.2 Exceptions
Clause 14.1 (Increased costs) does not apply to any increased cost:
(a) provided for by the operation of Clause 13.6 (Taxes); or
(b) attributable to any change in the rate of Tax on Overall Net Income of a Bank.
15 Illegality
If any change in or introduction of any law, regulation, treaty, official directive or official request, or any change in the interpretation or application thereof, makes it unlawful (or contrary to such directive or request) hereunder or in any jurisdiction applicable to a Bank for any Bank to make available or fund or maintain the Facility or to give effect to its obligations as contemplated hereby, such Bank may, by written notice thereof to the Borrower through the Agent, declare that such Bank's obligations shall be terminated forthwith whereupon the Borrower will prepay that Bank's participation in the Facility through the Agent within ten Business Days thereafter without penalty.
16 Representations and Warranties
16.1 Initial warranties
The Borrower represents and warrants to the Agent and each Bank that:
16.1.1 Status The Borrower is a limited liability company duly incorporated in the Republic of Liberia, validly existing and registered under the laws of the Republic of Liberia, with an authorised share capital of 1.000 shares of no par value each of which 500 shares have been issued and fully paid and is outstanding in registered form and the legal title and beneficial ownership of all such shares is held by the Parent, and has the power to own its assets and carry on its business as presently being conducted.
The Parent is a limited company duly incorporated in the Republic of Liberia, validly existing and registered under the laws of the Republic of Liberia, with an authorised share capital of 44,000,000 shares of USD 1.00 par value each of which 1 share has been issued and fully paid and is outstanding in registered form and the legal title and beneficial ownership of all such shares is held by the Ultimate Owner, and has the power to own its assets and carry on its business as presently being conducted.
Each of Golar Maritime, Golar Gimi Inc., Golar Hilli Inc. and Golar Khannur Inc. is a limited company duly incorporated in the Republic of Liberia, validly existing and registered under the laws of the Republic of Liberia, with an authorised share capital of 1.000 shares of no par value each of which 1.000 Class A share have been issued and fully paid and is outstanding in registered form and the legal title and beneficial ownership of all such shares is held by the Borrower, and has the power to own its assets and carry on its business as presently being conducted.
Golar Freeze Inc. is a limited company duly incorporated in the Republic of Liberia, validly existing and registered under the laws of the Republic of Liberia, with an authorised share capital of 1.000 shares of no par value each of which 500 Class A shares have been issued and fully paid and is outstanding in registered form and the legal title and beneficial ownership of all such shares is held by the Borrower, and has the power to own its assets and carry on its business as presently being conducted.
Golar Gas Cryogenics Inc. is a limited company duly incorporated in the Republic of Liberia, validly existing and registered under the laws of the Republic of Liberia, with an authorised share capital of 1.000 shares of no par value each of which 1.000 Class A shares have been issued and fully paid and is outstanding in registered form and the legal title and beneficial ownership of all such shares is held by the Borrower, and has the power to own its assets and carry on its business as presently being conducted.
Oxbow is a limited company duly incorporated in the British Virgin Islands, validly existing and registered under the laws of the British Virgin Islands, with an authorised share capital of 50.000 shares of USD 1.00 par value each of which 100 shares have been issued and fully paid and is outstanding in registered form and the legal title and beneficial ownership of all such shares is held by the Borrower, and has the power to own its assets and carry on its business as presently being conducted.
The Ultimate Owner is a limited company duly incorporated in Bermuda, validly existing and registered under the laws of Bermuda, with a share capital divided into 56,012,000 shares of USD 1.00 of which approximately 50% of all such shares are ultimately owned by Greenwich Holdings Ltd., and has the power to own its assets and carry on its business as presently being conducted.
16.1.2 Powers and Authority
Each of the Borrower, the Parent and the Guarantors has the power to enter into and perform, and has taken all necessary corporate actions to authorise the entry into, performance and delivery of, this Agreement and/or the Transaction Documents to which it is a party, and the transactions contemplated herein and therein and no limitation on the powers of any of the Guarantors to borrow will be exceeded as a result of the obligations of the Guarantors under the Security Documents.
16.1.3 Legal Validity and Enforceability
This Agreement and each of the Transaction Documents will when executed by the respective parties thereto (and, in the case of the Security Documents which require registration, when duly registered) constitute a legal, valid and binding obligation of the respective party, enforceable in accordance with its terms and no registration, filing, payment of tax or fees or other formalities are necessary or desirable to render this Agreement and/or any of the Transaction Documents enforceable against the parties thereto, and for the Security Documents to constitute valid and enforceable security documents and Security Interest with the priority as contemplated therein or herein.
16.1.4 Non-conflict with laws etc.
The entry into and performance by each of the Borrower, the Parent and the Guarantors of this Agreement and the Transaction Documents to which they are a party, and the transactions contemplated herein and therein, do not and will not conflict with:
(a) any present law or regulation or judicial or official order (including the Directive 91/308/EEC of the Council of the European Communities implemented to combat "money laundering");
(b) any provisions of the Memorandum and Articles of Association, by-laws or similar corporate documents of the Borrower or any of the Guarantors or the Parent; or
(c) any document or agreement which is binding upon the Borrower, the Parent or any of the Guarantors or any of their assets.
16.1.5 No Default
(a) No Default has occurred or is threatening or might result from the utilisation of the Facility by the Borrower; and
(b) no other event has occurred which (with the giving of notice, lapse of time, determination of materiality or the fulfilment of any other applicable condition, or any combination of the foregoing), might constitute an event of default under any document which is binding on the Borrower, the Parent or any of the Guarantors or any member of the Golar LNG Group or any of their assets, and which may result in a material effect on the business or condition of the Borrower, the Parent or any of the Guarantors or any member of the Golar LNG Group or a material effect on the Borrower's, the Parent's or any of the Guarantors' or any member of the Golar LNG Group's ability to perform their respective obligations under this Agreement or the Security Documents (as the case may be) or any agreement relating to Indebtedness to which it is a party or by which it may be bound; and
(c) no amendments or waivers have been made under any of the Transaction Documents, and no event of default has occurred or is threatening thereunder.
16.1.6 Authorisations/consents
All authorisations, approvals, consents and other matters required in connection with the entry into, performance, validity and enforceability of, and the transactions contemplated by, this Agreement and each of the Transaction Documents have been obtained or effected and are in full force and effect and there are no circumstances which indicate that any of the same are likely to be revoked in whole or in part.
16.1.7 Financial Information
(a) The audited accounts of the Borrower, the Parent and the Guarantors most recently delivered to the Agent:
(i) represent a true and fair view of the financial position of the Borrower, the Parent and the Guarantors at the date of such accounts; and
(ii) have (save as stated therein) been prepared in accordance with GAAP consistently applied; and there has been no material adverse change in the financial condition of any of the Borrower, the Parent or the Guarantors since the date of such accounts, which might be expected to have a material adverse effect on the ability of any of the Borrower, the Parent or the Guarantors to perform their respective obligations under this Agreement and the Transaction Documents to which they are a party.
(b) All financial documents and information relating to the Borrower, the Parent or the Guarantors or otherwise relevant to the matters contemplated by this Agreement which have been supplied to the Agent or the Banks (as the case may be) are complete and correct in all material respects, and none of the Borrower, the Parent or the Guarantors have omitted to disclose to the Agent or the Banks (as the case may be) any information, documents or agreements which, if disclosed, could reasonably be expected to affect the decision of the Banks to enter into this Agreement.
16.1.8 Litigation
No litigation, arbitration or administrative proceedings are current, pending or threatened against any of the Borrower or the Guarantors or any other member of the Golar LNG Group which might, if adversely determined, be reasonably expected to have a material adverse effect on the ability of any of the Borrower, the Parent or the Guarantors to perform their respective obligations under this Agreement or any of the Transaction Documents.
16.1.9 Compliance with Environmental Laws and Approvals
Except as may already have been disclosed by the Borrower prior to the date of this Agreement in writing to, and acknowledged in writing by, the Agent:
(a) to the best of the Borrower's knowledge and belief after due enquiry, all members of the Golar LNG Group have complied in all respects with the provisions of all applicable Environmental Laws;
(b) to the best of the Borrower's knowledge and belief after due enquiry, all members of the Golar LNG Group have obtained all Environmental Approvals and are in compliance in all respects with all such applicable Environmental Approvals; and
(c) no member of the Golar LNG Group has received any notice of any Environmental Claim pending or, to the best of the Borrower's knowledge and belief after due enquiry, threatened against any member of the Golar LNG Group, Faraway, any Vessel or Golar Mazo.
16.1.10 No Environmental Claims
Except as may already have been disclosed by the Borrower prior to the date of this Agreement in writing to and acknowledged by the Agent, to the best of the Borrower's knowledge and belief after due enquiry, there is no Environmental Claim pending or, to the best of the Borrower's knowledge and belief after due enquiry, threatened against any member of the Golar LNG Group, Faraway, any Vessel or Golar Mazo.
16.1.11 No Environmental incidents
Except as may already have been disclosed by the Borrower prior to the date of this Agreement in writing to, and acknowledged by, the Agent, to the best of the Borrower's knowledge and belief after due enquiry, there has been no emission, spill, release or discharge of a Pollutant from any Vessel or Golar Mazo.
16.1.12 No Environmental problems
Except as may already have been disclosed by the Borrower prior to the date of this Agreement in writing to, and acknowledged by, the Agent, to the best of the knowledge and belief of the Borrower and its directors and officers (having made due enquiry), there are no circumstances arising from any breach of Environmental Laws or which may give rise to an Environmental Claim which constitutes, or may give rise to, an Event of Default.
16.1.13 Compliance with ISM Code
Each of the Owning Company and the Managers has complied at all times in all respects with the ISM Code.
16.1.14 No Taxes
No Taxes are imposed by withholding or otherwise on any payment to be made by the Borrower under the Agreement or any of the Security Documents or by any of the Guarantors or the Parent under the Security Documents or are imposed on or by virtue of the execution or delivery by the Borrower under the Agreement or any of the Security Documents or any of the Guarantors or the Parent under the Security Documents or any other document or instrument to be executed or delivered under the Agreement or any of the Security Documents.
16.1.15 Tax compliance
All tax returns required to be filed in all jurisdictions in which the Borrower or any other member of the Golar LNG Group are situated or carry on business or are otherwise subject to taxation, have been filed and all Taxes shown to be due and payable on such returns or any assessments made against such company has been paid (other than those being contested in good faith where such payment may be lawfully withheld) and adequate reserves have been made for such payments should it be found to be payable.
16.1.16 No material adverse change
There has been no material adverse change in the consolidated financial position of the Golar LNG Group from that set out in the financial statements referred to in Clause 16.1.7.
16.1.17 The Vessels
Each Vessel is, and will on a Drawdown Date be:
(i) in the sole, legal and beneficial ownership of the relevant Owning Company free and clear of all Encumbrances other than crew wages and the relevant First Mortgages;
(ii) registered in the name of the relevant Owning Company in the Liberian Ship Registry as a ship under the laws and flag of the Republic of Liberia;
(iii) operationally seaworthy and in every way fit for service;
(iv) classed with the relevant classification free of all overdue requirements and recommendations of the relevant classification company;
(v) managed by the relevant Manager under the relevant Management Agreement; and
(vi) continuing in the service of the relevant Charterer under its Charter (if any).
16.1.18 Golar Mazo
Golar Mazo is, and will on a Drawdown Date be:
(i) in the sole, legal and beneficial ownership of Faraway ;
(ii) registered in the name of Faraway in the Liberian Ship Registry as a ship under the laws and flag of the Republic of Liberia;
(iii) operationally seaworthy and in every way fit for service;
(iv) classed with the classification +100A1, Liquified Gas Carrier, free of all overdue requirements and recommendations of Lloyd's Register of Shipping;
(v) managed by the relevant Manager under the relevant Management Agreement; and
(vi) continuing in the service of Pertamina under the Golar Mazo Charter.
16.1.19 Faraway ownership and Faraway Borrowed Money
40% of the issued share capital of Faraway is legally and beneficially owned by Oxbow and 20% is legally and beneficially owned by Golar Maritime and the remaining 40% of such share capital is legally and beneficially owned by Chinese Petroleum Corporation.
Faraway is not liable for, and has not incurred, any Borrowed Money except pursuant to the Faraway Loan Agreement.
16.2 Repetition
The representations and warranties in Clause 16.1 (Representations and
Warranties) are made by the Borrower on the date of this Agreement and
shall be deemed to be repeated by the Borrower at the date of each
Drawdown Notice, Drawdown Date and Renewal Notice as well as the first
day in each Interest Period, with reference to the facts and
circumstances then existing, unless otherwise notified to the Agent in
writing, and if not permitted under this Agreement, waived by the Banks
prior to such dates.
17 Undertakings
17.1 Duration and extent
The undertakings in this Clause 17 remain in force from the date of this
Agreement and for so long as any amount is outstanding under this
Agreement.
17.2 Notification
The Borrower shall immediately notify and procure that each of the
Owning Companies and Faraway immediately notifies the Agent of:
(i) any Default (and the steps, if any, being taken to
remedy it) upon its occurrence;
(ii) any accident to any of the Vessels or Golar Mazo
involving repairs the cost of which is likely to exceed
USD 500,000;
(iii) any requirement or recommendation made in relation to
any of the Vessels or Golar Mazo by any insurer or its
classification society or by any competent authority
which is not complied with in accordance with its terms;
(iv) any Total Loss relevant to any of the Vessels or Golar
Mazo;
(v) any arrest or detention of any of the Vessels or Golar
Mazo or the accounts pledged under the Deeds of
Assignment and the Pledge of Accounts or the exercise or
purported exercise of any lien on any of the Vessels or
Golar Mazo or any of the accounts pledged under the
Deeds of Assignment and the Pledge of Accounts; or
(vi) the occurrence of any material Environmental Claim
against an Owning Company or Faraway, any Vessel or
Golar Mazo or any member of the Golar LNG Group or any
other vessel from time to time owned, technically
managed or crewed by, or bareboat chartered to, any
member of the Golar LNG Group or any incident, event or
circumstances which may give rise to any such
Environmental Claim or Event of Default specified in
Clause 17.18.
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17.3 Financial information
The Borrower shall supply to the Agent, in a form satisfactory to the Agent:
(a) as soon as reasonably practicable after the same are available (and in any event within 120 days of the end of each of its
financial years) the audited accounts (prepared in accordance
with GAAP consistently applied) of the Borrower and the Golar
LNG Group; and
(b) as soon as reasonably practicable after the same are available
(and in any event within 60 days of the end of each quarter),
the unaudited accounts and any other financial reports of the
Borrower and the Golar LNG Group for such three months.
17.4 Financial covenants
The Borrower undertakes that its and the Owning Companies' financial
condition (on a consolidated basis) throughout the Security Period shall
be such that:
(a) Free Available Cash: at all times shall be not less than USD
25,000,000;
(b) Working Capital: as at the end of each quarterly period during
and at the end of each financial year of the Borrower, the ratio
of Current Assets to Current Liabilities (excluding the current
portion of long term debt) shall not be less than 1.50:1.00; and
(c) Leverage: as at 31 December 2002 and as at the end of each
subsequent quarterly period and during and at the end of each
financial year of the Borrower, the ratio of Net Debt as at the
end of such period to Annualised EBITDA calculated by reference
to such quarter shall not exceed: : (i) 6,5 to 1 for quarterly
periods ending during or at the end of 2002 and 2003, (ii) 6,0
to 1 for quarterly periods ending during or at the end of 2004
and (iii) 5,0 to 1 for all subsequent quarterly periods to the
Maturity Date.
The financial covenants set out in this Clause 17.4 are subject to
evaluation each quarter upon presentation of the quarterly results of
the Borrower and as set out in the relevant Compliance Certificate.
17.5 Compliance Certificate
The Borrower undertakes to provide the Agent (on behalf of the Banks)
with a Compliance Certificate in the form set out in Schedule 9 as soon
as possible and in any event within five Business Days after the
presentation of the Borrower's quarterly financial results, first time
at 31 December 2002, enabling the Agent to observe the compliance with
the financial covenants set out in Clause 17.4.
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17.6 Information - Miscellaneous
The Borrower shall supply to the Agent:
(a) promptly, such specific financial or other information regarding
the financial condition and operations of the Borrower, the
Parent or the Guarantors or such other information as the Agent
may reasonably request;
(b) promptly upon becoming aware of them, relevant details of any
material litigation, arbitration or administrative proceedings
which are current or, to its knowledge, threatened or pending
against the Borrower, the Parent or any of the Guarantors and
which might, if adversely determined, be reasonably expected to
have a material adverse effect on the ability of the Borrower,
the Parent or any of the Guarantors to perform their respective
obligations under the Transaction Documents (as the case may
be), and further details of any such matters previously
disclosed to the Agent, if the likelihood of an adverse
determination has increased, as the Agent may reasonably
request; and
(c) promptly upon becoming aware of the same, relevant details of
any Event of Default.
17.7 Transaction Documents
The Borrower shall not make or agree and shall procure that none of the
Guarantors, the Parent or Faraway makes or agrees to any changes to any
of the Transaction Documents or waive any of the terms thereof or
release any other party from any of its material obligations under the
Transaction Documents.
17.8 Negative Pledge and no further borrowings or investments
Except as contemplated by this Agreement and the Transaction Documents,
the Borrower shall not and shall procure that none of the Guarantors,
the Parent or (in respect of Golar Mazo) Faraway does not:
(a) create, incur or assume any Security Interest on any of the
Vessels or Golar Mazo or any of their other assets (including
the shares in the Guarantors, the shares in the Parent, the
shares in the Borrower, the shares in Faraway and the Borrower's
accounts with the Agent, but for the sake of clarity, excluding
the assets of any Subsidiary of the Parent which is not
mentioned in this Clause 17.8), and not make any assignment of
right to receive any earnings or monies in relation to any of
the Vessels or Golar Mazo or any of their other assets, except
for the Permitted Encumbrances; or
(b) make any investment of any nature except as required by the
relevant class society or any other relevant authorities in
respect of the operation of any of the Vessels or Golar Mazo or
capital expenditure in upgrading a Vessel or Golar Mazo to meet
the requirements of a third party charterer or on upgrading or
improving any Vessel or Golar Mazo for other operational
purposes provided that such expenditure on any Vessel or Golar
Mazo does not in any period of 30 consecutive months exceed USD
5,000,000; or
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(c) incur any Indebtedness of any nature or incur any other debt or
obligations; or
(d) incur or permit to exist any Borrowed Money of any member of the
Golar Gas Group except for Borrowed Money pursuant to the
Security Documents, Borrowed Money owing by the Borrower or a
wholly owned subsidiary of the Borrower to the Borrower or
another wholly owned subsidiary of the Borrower (other than
Oxbow and Golar Maritime) and subordinated debt.
without the prior written consent of the Banks.
17.9 Dividends/distributions
The Borrower undertakes not to pay any dividends or any other
distributions (including group contributions and cash pooling
arrangements) or make any loans to its shareholder(s) or guarantee or
otherwise secure any indebtedness thereof or reduce its equity in order
to make any distributions thereof to its shareholder(s), and the
Borrower shall procure that no dividends are paid by the Parent until
the Loan has been repaid in full without the prior written consent of
the Banks.
Regardless of the above, dividends or other distributions received from
Faraway in respect of Golar Mazo may be distributed freely by the
Borrower as dividends or otherwise, subject to the compliance by the
Borrower with all of the terms of this Agreement and the USD 325 mill.
Facility Agreement.
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17.10 Shareholders
The Borrower shall not and shall procure that the Parent does not agree to any transfer of shares, the granting of options of ownership, issuance of further shares or change in ultimate ownership of the Borrower, without the prior written consent of the Agent (on behalf of the Banks).
17.11 Ownership, class or flag
The Borrower shall procure that each of the Vessels are registered in the Liberian Ship Registry, and that no change of flag, class or ship registry of any of the Vessels take place without the prior written consent of the Agent (on behalf of the Banks).
17.12 Operation of the Vessels etc.
(a) Unless otherwise agreed with the Agent (on behalf of the Banks), the Vessels shall be employed under the relevant Charter and Golar Mazo shall be employed under the Golar Mazo Charter.
(b) The Borrower shall procure that no amendment or supplement is made to, or any waiver of any of the terms of the Charters, the Management Agreements or the Golar Mazo Charter are made or agreed to, save for immaterial amendments, supplements and waivers considered to be necessary for the ordinary operation of the Vessels or Golar Mazo and which will have no negative impact of the earnings attributable to any of the Vessels under the relevant Charters or of Golar Mazo under the Golar Mazo Charter.
(c) The Borrower shall procure that no change of Manager takes place without the prior written approval of the Agent.
(d) The Borrower undertakes that no other agreement related to the chartering and operation of any of the Vessels or Golar Mazo exceeding twelve months or any pooling arrangement related to the Earnings of any of the Vessels or Golar Mazo are entered into without the prior written consent of the Agent (on behalf of the Banks). The Borrower shall procure that such agreements are entered into and such notifications given as may be required to perfect the assignment of such contracts of employment to the Agent (on behalf of the Banks).
(e) The Borrower undertakes not to charter in any tonnage from any person and shall procure that none of the Owning Companies or (in respect of Golar Mazo) Faraway charters in any additional tonnage from any person save for the Vessels or Golar Mazo (as the case may be).
17.13 Accounts
The Borrower shall maintain all its bank accounts with the Agent.
17.14 Insurances
(a) The Borrower shall procure that each of the Owning Companies keep each of the Vessels fully insured against such risks (including, but not limited to, Hull and Machinery, Hull Interest, Protection & Indemnity (including a maximum cover for Excess Oil Pollution and Pollution & Indemnity term cover as amended effective from 20 February 2000), War Risk and Offhire), in all cases in such amount, on such terms (always applying Norwegian law or such other law as the Agent may approve in writing and including terms of the Norwegian Marine Insurance Plan of 1996 or equivalent terms in relation to losses payable thereunder) and with such insurance brokers and with such insurers as the Agent may approve with the agreement of the Security Agent.
(b) The insurance value against Total Loss of the Vessels shall at all times be equal to or higher than the higher of the total Market Value of the Vessels and 120% of the aggregate outstanding amount at any time under the USD 325 mill. Facility Agreement and this Agreement. The Offhire insurance of the Vessels shall furthermore, at all times cover up to 180 days per claim less a 14 day deductible period at rates at least as high as due under the Charters (as appropriate).
(c) Not later than two Business Days prior to the first Drawdown Date hereunder, the Borrower shall deliver to the Agent a certificate from an insurance broker acceptable to the Agent evidencing that all the insurances required under this Clause 17.14 have been effected as set out herein and are in full force and effect.
(d) Not later than fourteen days prior to the expiry date of the relevant insurances, the Borrower shall deliver to the Agent a certificate from the insurance broker(s) through whom the insurances relevant to each of the Vessels have been placed, evidencing that all insurances referred to under (a) and (b) above have been renewed and taken out in respect of each of the Vessels with insurance values as required under (a) and (b) above, that such insurances are in full force and effect and that the Agent's and the Banks' interest therein (as second loss payees) have been noted by the relevant insurers.
(e) The Borrower shall procure that each of the Vessels always is employed in conformity with the terms of the instruments of insurances (including any warranties expressed or implied therein) and complies with such requirements as to extra premium or otherwise as the insurers may prescribe.
(f) The Borrower shall make no change to the insurances as described under (a) and (b) above without the prior written consent of the Agent (on behalf of the Banks).
(g) If any of the insurances referred to above form part of a fleet cover, the Borrower shall procure that the insurance broker(s) shall (if required by the Agent) undertake to the Agent that they shall neither set off against any claims in respect of any Vessel any premiums due in respect of other vessels under such fleet cover or any premiums due for other insurances, nor cancel the insurance for reason of non-payment of premiums for the other vessels under such fleet cover or of premiums for such other insurances, and shall undertake to issue a separate policy in respect of each Vessel is and when so requested by the Agent.
17.15 Total Loss
In the event that any of the Vessels shall suffer a Total Loss, the Borrower shall, and procure that each of the Owning Companies within a period of 90 days after the Total Loss, obtain and present to the Agent, a written confirmation from the relevant insurers that the claim relating to the Total Loss has been accepted in full, and the insurance proceeds shall as soon as they have been released be paid to the Agent (on behalf of the Banks) and subject to the First Deeds of Assignment.
17.16 Tax filings and payment of Taxes
The Borrower undertakes to file or cause to be filed all tax returns required to be filed in all jurisdictions in which it and any other member of the Golar LNG Group are situated or carry on business or are otherwise subject to taxation and pay all Taxes shown to be due and payable on such returns or any assessments made against it (other than those being contested in good faith where such payment may be lawfully withheld) and adequate reserves have been made for such payments should it be found to be payable.
17.17 No merger etc.
The Borrower will not enter into, and procure that none of the Owing Companies enters into any form of amalgamation, merger, de-merger, split-up, consolidate with any other person or company or any form of reconstruction or reorganisation without the prior written consent of the Banks and it will not enter into any sales or sale / and leaseback arrangements without the prior written approval of the Banks.
17.18 Compliance with Environmental Laws
The Borrower shall procure the compliance by the companies in the Golar LNG Group in all material respects with all Environmental Laws applicable to such company or any of the Vessels or Golar Mazo, including without limitation, requirements relating to manning and establishment of financial responsibility and to obtain and comply with all Environmental Approvals applicable to such company and/or any of the Vessels or Golar Mazo.
17.19 Laws and regulations
The Borrower shall procure that the business of the companies in the Golar Gas Group shall at all times be conducted in a manner consistent with then applicable statutory and regulatory requirements, including without limitation any Environmental Laws.
17.20 No prepayments under the USD 325 mill. Facility Agreement
The Borrower undertakes that it will not make any prepayments under the USD 325 mill. Facility Agreement other than mandatory prepayments in accordance with the terms of the USD 325 mill. Facility Agreement.
17.21 Interest Rate Hedging
The Borrower shall, at any time upon the written request of the Agent (on behalf of the Banks), enter into such interest rate hedging instruments in respect of the Loan at such terms and conditions as are satisfactory to the Banks.
17.22 Business of the Borrower and the Owning Companies, transactions with affiliates
The Borrower and each of the Owning Companies shall maintain their business as carried out at the date hereof and shall not undertake any other business.
Further, the Borrower shall ensure that any transactions with any affiliated party is carried out on commercial terms and subject to arms length principles.
17.23 Undertakings concerning Faraway and Golar Mazo
The Borrower undertakes that it will, throughout the Security Period, use its best efforts to cause Faraway to ensure the following, which best efforts shall include, without limitation, giving instructions to directors of Faraway elected or appointed by Oxbow or Golar Maritime and otherwise voting its Faraway shares in order to ensure that:
(a) Faraway does not create, incur, assume or suffer to exist or directly or indirectly guarantee or in any other manner become directly or indirectly liable for the payment of any Borrowed Money secured by an Encumbrance over Golar Mazo other than Borrowed Money under the Faraway Loan Agreement and any refinancing as contemplated under (d);
(b) Faraway does not create, incur, assume or suffer to exist any Encumbrance of any kind upon the Golar Mazo, her Earnings, Insurances or requisition compensation or the Golar Mazo Charter (other than Permitted Encumbrances);
(c) Faraway does not merge or consolidate with any other person save with the prior written consent of the Banks (not to be unreasonably withheld if such merger or consolidation will have no material adverse effect on the overall value of the security constituted by the Security Documents at such time); and
(e) not refinance the existing Indebtedness under the Faraway Loan Agreement in respect of Golar Mazo without the prior written consent of the Banks (not to be unreasonably withheld) provided that it shall be reasonable for the Banks to refuse their consent if such refinancing will have a material adverse effect on the overall value of the security constituted by the Security Documents at such time.
17.24 Disposals
The Borrower shall not and shall procure that none of the Guarantors,
the Parent or Faraway does not, sell, transfer, lease or otherwise
dispose of all or a substantial part of the assets of the Borrower or of
the Golar Gas Group taken as a whole (whether by one transaction or a
series of transactions and whether related or not) without the prior
written consent of the Agent.
18 Default
18.1 Events of Default
Each of the events set out below is an Event of Default (whether or not
caused by any reason whatsoever outside the control of the Borrower or
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any other person):
18.1.1 Non-payment
The Borrower does not pay on the due date an amount payable by it under this Agreement at the place at, and in the currency in which it is expressed to be payable, provided that if such failure to pay has arisen as a consequence of an administrative or technical error only then such event shall not be an Event of Default unless such failure continues for a period in excess of five Business Days.
18.1.2 Breach of other obligations
The Borrower does not comply with (i) any provision of this Agreement
(other than Clause 18.1.1) or (ii) any of the provisions of the USD 325
mill. Facility Agreement (or under any of the First Security Documents)
provided that such default has been declared under the USD 325 mill.
Facility or any of the First Security Documents, - and such
non-compliance is considered by the Majority Banks (as defined in Clause
19.15) to be material and provided that if such non-compliance is, in
the opinion of the Majority Banks, capable of remedy:
(i) the Agent notifies the Borrower of such non-compliance; and
(ii) such non-compliance remains unremedied for a period of fifteen Business Days after such notice of non-compliance has been sent.
18.1.3 Misrepresentation
A representation, warranty or statement made or repeated in or in connection with this Agreement or in any document delivered by or on behalf of the Borrower in connection with this Agreement was incorrect or misleading in any respect when made or deemed to be made or repeated, unless such misrepresentation is remedied within seven days after notice from the Agent.
18.1.4 Cross-default
An event of default howsoever described (or any event which with the giving of notice, lapse of time, determination of materiality or fulfilment of any other applicable condition or any combination of the foregoing would constitute such an event of default) occurs under any of the Transaction Documents, or under any other agreement related to the Indebtedness of the Borrower and/or the Parent and/or the Guarantors and/or Faraway.
18.1.5 Liens
A maritime or other lien, arrest, distress or similar charge is levied upon, or against, any of the Vessels, the earnings or any other part of the assets of the Borrower, the Parent or any of the Guarantors and is not discharged and satisfactory security for the release of such lien, arrest, distress or charge is not given within ten Business Days after the Borrower, the Parent or any of the Guarantors became aware of the same.
18.1.6 Insolvency
An order of a competent court or an event analogous thereto shall be made or any effective resolution passed with a view to the bankruptcy, commencement of composition proceedings, debt negotiations, liquidation, winding-up or similar event of the Borrower, the Parent or any of the Guarantors.
18.1.7 Admittance of non-payment
The Borrower is unable or admits in writing its inability to pay its lawful debts as they fall due.
18.1.8 Termination of business
The Borrower, the Parent or any of the Guarantors ceases or threatens to cease to carry on its business, engages in any business other than i.a. the ownership, operation, chartering or other use of the Vessels and activities related thereto (as the case may be), including the ownership of stock companies involved in the shipping business or effectuate any mergers, splits or de-mergers without the prior written consent of the Agent (on behalf of the Banks).
18.1.9 Permits
Any licence, consent, permission or approval required in order to enforce, complete or perform the Agreement and/or the Transaction Documents is revoked, terminated or modified in a manner unacceptable to the Agent, and is not remedied within fourteen days after notice from the Agent.
18.1.10 Impossibility or illegality
It becomes impossible or unlawful for the Borrower to fulfil any of the terms of the Transaction Documents to which it is a party, for the Agent to exercise any right or power vested in the Agent under the Security Documents, or the security created by any of the Security Documents is imperilled, or for any reason whatsoever ceases to be valid and enforceable with its intended priority, and is not remedied within fourteen days after notice from the Agent.
18.1.11 Transaction Documents
Any of the Transaction Documents are materially amended or terminated without the prior written consent of the Agent (on behalf of the Banks), or any waivers of any material terms thereof are agreed thereunder.
18.1.12 Material adverse change
Any event or series of events occurs which, in the opinion of the Agent (on behalf of the Banks), may have a material adverse effect on the ability of any of the Borrower and/or the Parent and/or the Guarantors and/or Faraway to comply with their respective obligations under any of the Transaction Documents unless such adverse effect is remedied within fourteen days after notice from the Agent.
18.1.13 Ownership
(a) The existing ultimate shareholder of the Ultimate Owner, Greenwich Holdings Ltd., not maintaining a minimum 25% shareholding and corresponding voting rights in the Ultimate Owner.
(b) Any change in control of the ownership of any of the Borrower, the Parent or the Subsidiary Guarantors.
(c) the Ultimate Owner is not maintaining its status as a listed company at the Oslo Stock Exchange, Nasdaq and/or the New York Stock Exchange.
18.1.14 Technical condition of the Vessels
Any class recommendation for any of the Vessels or Golar Mazo is not complied with when due and the same has not been remedied within fourteen days from the date the Borrower, any of the Owning Companies or Faraway was notified or otherwise aware of such non-compliance.
18.1.15 Breach or cancellation of any Charter etc.
Any Charter of any Vessel or the Golar Mazo Charter is cancelled or
terminated by the relevant Charterer by reason of the Owning Companies'
or Faraway's breach.
18.2 Remedies
On and at any time after the occurrence of an Event of Default and
whilst such Event of Default is continuing unremedied and unwaived, the
Agent may, and shall if so directed by the Majority Banks (as defined in
Clause 19.15), by notice to the Borrower:
(a) cancel the Facility if the Facility Amount is not drawn.
(b) demand that all or part of the Loan, together with accrued
interest, and all other amounts accrued under this Agreement be
immediately due and payable, whereupon they shall become
immediately due and payable.
(c) without prejudice to any of the Banks' other rights, with or
without notice to the Borrower, take such other action as is
available to the Banks under the Agreement and the Security
Documents.
19 The Agent
19.1 Authorisation
Each Bank irrevocably authorises the Agent on its behalf to perform such
duties and to exercise such rights, powers and discretion that are
specifically delegated to the Agent by the terms of this Agreement and
the Security Documents, together with such rights, powers and discretion
that are incidental hereto. The Agent shall have only those duties that
are expressly specified in this Agreement and the Security Documents.
Without prejudice to the binding nature of such duties, they are solely
of a mechanical and administrative nature.
19.2 Relationship
The relationship between the Agent and the Banks is that of agent and
principal only. Except as regards it holding title to the Mortgages as
security trustee for the Banks; nothing in this Agreement constitutes
the Agent as trustee or fiduciary for any other Party or any other
person and the Agent need not hold in trust any moneys paid to it for a
Party or be liable to account for interest on those moneys. With respect
to the Mortgages each of the Banks hereby appoints the Agent as its
security trustee/mortgage holder with full power to receive, hold,
administer and enforce the Mortgage for the benefit of the Banks.
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19.3 Directions
The Agent will be fully protected if it acts in accordance with the
instructions of the Banks in connection with the exercise of any right,
power or discretion or any matter not expressly provided for in this
Agreement. Any such instructions given by the Banks will be binding on
all of the Banks. In the absence of such instructions, the Agent may act
in relation thereto as it considers being in the best interests of all
of the Banks. The Agent may not commence legal proceedings in a Bank's
name without such Bank's consent.
19.4 Responsibility
Neither the Agent, nor any of their officers, employees or agents is
responsible to any other Party for:
(a) the execution, genuineness, validity, enforceability or
sufficiency of this Agreement or the Security Documents or any
other document;
(b) the collectability of amounts payable under this Agreement; or
(c) the accuracy of any statements (whether written or oral) made in
or in connection with this Agreement.
19.5 Default
(a) The Agent shall not be required to ascertain or inquire as to
the performance of the Borrower of the terms of this Agreement
or whether or not a Default has occurred. The Agent shall not be
deemed to have knowledge of the occurrence of a Default unless
the Agent has received a written notice from a Party, describing
such Default and stating that the event is a Default. The Agent
shall refrain from taking such action with respect to such
Default as shall be reasonably directed by the Banks.
Until the Agent shall have received such directions, the Agent
may (but shall not be obliged to) take or refrain from such
action with respect to such Default as it shall see fit.
(b) The Agent may require the receipt of security satisfactory to it
from any Bank, whether by way of payment in advance or
otherwise, against any liability or loss which it will or may
incur in taking any proceedings or action arising out of or in
connection with this Agreement before it commences those
proceedings or takes that action.
19.6 Liability
Neither the Agent nor any of its employees or agents shall be liable to
any Bank for any action taken or omitted under or in connection with
this Agreement, unless caused by gross negligence or wilful misconduct.
19.7 Reliance
The Agent may:
(a) rely on any notice or document believed by it to be genuine and
correct and to have been signed by, or with the authority of,
the proper person;
(b) rely on any statement made by a director or employee of any
person regarding any matters which may reasonably be assumed to
be within his knowledge or within his power to verify; and
(c) engage, pay for and rely on legal or other professional advisers
selected by it (including those in the Agent's employment and
those representing a Party other than the Agent).
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19.8 Independent Evaluation
Without affecting the responsibility of the Borrower for information
supplied by it or on its behalf in connection with this Agreement, each
Bank severally represents and warrants to the Agent that:
(a) it has made its own independent evaluation of the financial
condition and affairs of the Borrower and its related entities
in connection with its participation in this Agreement and has
not relied exclusively on any information provided to it by the
Agent in connection herewith; and
(b) it shall continue to make its own independent appraisal of the
creditworthiness of the Borrower and its related entities while
any amount is or may be outstanding under this Agreement or its
Commitment is in force.
19.9 Notices and information
(a) The Agent shall without undue delay forward to the individual
concerned the original or a copy of any document which is
delivered to the Agent by a Party for that individual.
(b) The Agent shall supply each Bank with a copy of each document
received by the Agent under Clause 4 (Conditions precedent).
(c) Except where this Agreement specifically provides otherwise, the
Agent is not obliged to review or check the accuracy or
completeness of any document it forwards to another Party.
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19.10 No Accounting
The Agent shall, for as long as it is a Bank, have the same rights and powers under this Agreement as any other Bank and may exercise those rights and powers as though it were not, as the case may be, the Agent. The Agent may carry on any business with the Borrower or its related entities, act as agent or trustee for, or in relation to any financing involving, the Borrower or its related entities and retain any profits or remuneration in connection with their activities under this Agreement or in relation to any of the foregoing.
19.11 Indemnity
(a) Without limiting the liability of the Borrower under this Agreement, the Banks agree to indemnify the Agent on demand for their proportion of any and all liabilities or losses incurred by or asserted against the Agent in any way relating to or arising out of its acting as Agent, except to the extent that the liabilities or losses have arisen from the Agent's gross negligence or wilful misconduct.
(b) A Bank's proportion of the liabilities or losses set out in paragraph (a) above will be the proportion which its participation in the Facility bears on the date of the demand. If, however, there is no part of the Facility outstanding on the date of demand, then the proportion will be the proportion which its Commitment bears to the Commitments of all the Banks at the date of demand or, if the Commitment has then been cancelled, bore to the Commitments immediately before being cancelled.
(c) The Borrower shall forthwith on demand reimburse each Bank for any payment made by it under paragraph (a) above provided that the Borrower shall not thereby be liable for any additional costs for which it would not otherwise be liable.
(d) Without prejudice to the liability of the Borrower, each Bank shall reimburse the Agent the amount of such Bank's pro rata share of charges and expenses covered under, but not reimbursed by the Borrower under, Clause 21 (Expenses) below.
19.12 Compliance
(a) The Agent may refrain from doing anything which would or might, in its opinion, constitute a breach of any law or regulation or be otherwise actionable at the suit of any person, and may do anything which, in its opinion, is necessary or desirable to comply with any law or regulation of any jurisdiction.
(b) Without limiting paragraph (a) above, the Agent does not need to disclose any information relating to the Borrower or any of its related entities if the disclosure might, in the reasonable opinion of the Agent, constitute a breach of any law or regulation or any duty of secrecy or confidentiality or be otherwise actionable at the suit of any person.
19.13 Resignation
(a) If the Banks so direct, due to a default by the Agent hereunder, or due to a conflict of interest between the Agent's duties hereunder and other interests the Agent may have which involve the Borrower, the Agent shall resign by giving notice to the Banks and the Borrower, in which case the Banks may, with the Borrower's prior written approval, such approval not to be unreasonably withheld, appoint a successor Agent.
(b) The Agent may, with the consent of the Borrower (not to be unreasonably withheld or delayed), resign by giving notice thereof to the Banks and the Borrower. In that event, the Banks may, with the consent of the Borrower (not to be unreasonably withheld or delayed), appoint a successor Agent. If the Banks have not, within sixty days after such notice of resignation, appointed a successor Agent which shall have accepted such appointment, the retiring Agent shall have the right to appoint a successor Agent. The resignation of the retiring Agent and the appointment of any successor Agent shall both become effective upon the successor Agent, subject as provided below, notifying all the parties hereto in writing that it accepts such appointment, whereupon the successor Agent shall succeed to the position of the retiring Agent and the term Agent herein shall mean the successor Agent. This Clause shall continue to benefit a retiring Agent in respect of any action taken or omitted by it hereunder while it was Agent.
19.14 Banks
The Agent may treat each Bank as a Bank, entitled to payments under this Agreement until it has received not less than five Business Days' prior notice from that Bank to the contrary. The Agent shall maintain a list of the Banks and their respective addresses for notices, and shall, promptly upon request from any Party from time to time, supply a copy of that list to that Party.
19.15 Votes
Any decision proposed to be made by and between the Banks is adopted if Banks representing 66,66% or more of the Loan (the "Majority Banks") or
(to the extent not drawn) the Facility Amount have voted in favour of
such decision, always provided that a decision to make any amendment,
variation or waiver in respect of the following requires unanimous
agreement by and between all Banks:
(a) the dates, or the amount of, payment of principal, interest,
fees or other sums payable hereunder;
(b) the currency in which any payment hereunder is to be made;
(c) the definition of the Margin;
(d) a change to a Bank's participation in accordance with Schedule
1;
(e) where this Agreement expressly provides for the consent of all
Banks;
(f) any change to or release of any Security Document; and
(g) any change to this Clause 19.15.
20 Fees and Commission
20.1 Arrangement fee
The Borrower shall pay to the Agent a non-refundable arrangement fee of
(i) 1% of the Facility Amount, payable at the day of the signing of this
Agreement and (ii) 0.25% of the available Facility Amount payable on 30
November 2004.
20.2 Agency fee
The Borrower shall pay to the Agent an annual non-refundable agency fee
of USD 22,000, being payable at the first Drawdown Date and thereafter
in advance on each anniversary of this Agreement.
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20.3 Commitment fee
The Borrower shall pay to the Agent (for distribution among the Banks as
separately agreed) a commitment fee of 1.0% per annum of the undrawn
Facility Amount accruing from 19 September 2002 and increasing to 1.25%
per annum from 30 November 2004 and until the expiry of the Commitment
Period, being payable quarterly in arrears by reference to successive
periods each ending at successive three-monthly intervals.
21 Expenses
21.1 Initial Expenses
The Borrower shall forthwith upon demand reimburse the Agent for the
charges and expenses (including internal and external legal fees)
incurred by it in connection with:
(a) the negotiation, preparation, printing and execution of this
Agreement and any other documents referred to in this Agreement;
(b) the execution and registration of the Security Documents;
(c) any amendment, waiver, consent or suspension of rights (or any
proposal for any of the foregoing) requested (or, in the case of
a proposal, made) by or on behalf of the Borrower and relating
to this Agreement or a document referred to in this Agreement;
and
(d) any other matter, not of an ordinary administrative nature,
arising out of or in connection with this Agreement.
21.2 Enforcement Expenses
The Borrower shall forthwith upon demand reimburse the Agent and/or a
Bank (as the case may be) for the charges and expenses (including
internal and external legal fees) incurred by it in connection with the
enforcement of, or the preservation of any rights under, this Agreement
and the Security Documents.
22 Indemnities
22.1 General Indemnity
The Borrower shall forthwith upon demand indemnify the Agent and each
Bank against any loss or expenses (including funding breakage costs)
which the Agent or that Bank properly incurs and which the Agent or the
Bank certifies (in a certificate containing reasonable detail) that it
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has incurred as a consequence of:
(a) the occurrence of any Event of Default;
(b) the operation of Clause 18.2 (Remedies);
(c) any repayment or prepayment of principal or payment of an overdue amount being made otherwise than on the last day of a relevant Interest Period or Designated Interest Period (as defined in Clause 7.4 (Default interest)) relative to the amount so repaid, prepaid or paid; and
(d) a Drawing not being advanced after the Borrower has delivered a Drawdown Notice or the Loan (or part of the Loan) not being prepaid in accordance with a notice of prepayment.
The liability of the Borrower in each case includes any loss of margin or other loss or expense on account of funds borrowed, contracted for or utilised to fund any amount payable under this Agreement, but the Borrower's liability shall in no circumstances extend to any loss or expense to the extent that it arises as a consequence of any gross negligence or wilful default of a Bank.
22.2 Currency Indemnity
If:
(a) any amount payable by the Borrower hereunder in connection
herewith is received by the Agent or any Bank in a currency (the
"Payment Currency") other than that agreed to be payable
hereunder (the "Agreed Currency"), whether as a result of any
judgement or order or the enforcement thereof, the liquidation
of the Borrower or otherwise howsoever; and
(b) the amount procured by converting the Payment Currency so
received into the Agreed Currency is less than the relevant
amount of the Agreed Currency,
then, the Borrower shall indemnify the Agent and each Bank for the
deficiency and in respect of any loss sustained as a result. For this
purpose, such conversion shall be made at such rate of exchange, on such
date and in such market as is determined by the Agent as being most
appropriate for such conversion. The Borrower shall in addition pay the
costs of such conversion.
23 Amendments
23.1 Procedure
(a) Any term of this Agreement and the Security Documents may only
be amended or waived with the written agreement of the Borrower
and, if authorised by the Banks and the Agent, the Agent shall
effect, on behalf of the Banks, any amendment or waiver to which
they have agreed.
(b) The Agent shall promptly notify the other Parties of any
amendment or waiver effected under paragraph (a) above and any
such amendment or waiver shall be binding on all the Parties.
All communication related to amendments and/or waivers hereunder
shall be made between the Borrower and the Agent (on behalf of
the Banks).
23.2 Waivers and remedies cumulative
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The rights of each Bank under this Agreement:
(a) may be exercised as often as necessary;
(b) are cumulative and not exclusive of its rights under the general
law; and
(c) may be waived only in writing and specifically.
Delay in exercising or non-exercise of any such right is not a waiver of
that right.
24 Assignment
24.1 Assignment by the Borrower
The Borrower may not assign, transfer, novate or dispose of any of, or
any interest in, its rights and obligations under this Agreement.
24.2 Assignment by the Banks
Any Bank (the "Assignor") may at any time at its own expense (and
provided that there shall be no additional or increased costs to the
Borrower) assign, transfer or novate any of its rights and obligations
in respect of an amount of at least USD 500,000 (or, if less, its
Commitment in full or its proportional part of the Loan) under this
Agreement to any of its or its holding company's subsidiaries, or with
the prior written consent of the Agent, such consent not to be
unreasonably withheld, and in consultation with the Borrower, to another
bank or financial institution (such subsidiary or bank or institution
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being the "Assignee"), provided however that:
(a) transfer of obligations will be effective only if the Assignee confirms to the Agent and the Borrower that it undertakes to be bound by the terms of this Agreement as a Bank in form and substance satisfactory to the Agent. On the transfer becoming effective in this manner the Assignor shall be relieved of its obligations under this Agreement to the extent that they are transferred to the Assignee.
(b) The Assignor is not responsible to the Assignee for;
(i) the execution, genuineness, validity, enforceability or sufficiency of this Agreement or any other document;
(ii) the collectability of amounts payable under this Agreement; or
(iii) the accuracy of any statements (whether written or oral) made in or in connection with this Agreement.
(c) The Assignee shall confirm to the Assignor and the other Banks that it;
(i) has made its own independent investigation and assessment of the financial condition and affairs of the Borrower and its related entities in connection with its participation in this Agreement and has not relied exclusively on any information provided to it by the Assignor in connection with this Agreement; and
(ii) will continue to make its own independent appraisal of
the creditworthiness of the Borrower and its related
entities while any amount is or may be outstanding under
this Agreement or any Commitment is in force.
(d) Any reference in this Agreement to a Bank includes the Assignee
but excludes a Bank if no amount is or may be owed to or by it
under this Agreement and its Commitment has been cancelled or
reduced to nil.
(e) The Borrower shall not incur any costs in connection with the
transfer by Banks under this Clause 24.2.
25 Sharing of payments
25.1 Redistribution
If any amount owing by the Borrower under this Agreement to a Bank (the
"recovering Bank") is discharged by payment, set-off or any other manner
other than through the Agent in accordance with Clause 13 (Payments) (a
"recovery"), then;
(a) the recovering Bank shall, within three Business Days, notify
details of the recovery to the Agent;
(b) the Agent shall determine whether the recovery is in excess of
the amount which the recovering Bank would have received had the
recovery been received by the Agent and distributed in
accordance with Clause 13 (Payments);
(c) subject to Clause 14.2 (Exceptions), the recovering Bank shall,
within three Business Days of demand by the Agent, pay to the
Agent an amount (the "redistribution") equal to the excess;
(d) the Agent shall treat the redistribution as if it were a payment
by the Borrower under Clause 13 (Payments) and shall pay the
redistribution to the Banks (other than the recovering Bank) in
accordance with Clause 13.8 (Partial payments); and
(e) after payment of the full redistribution, the recovering Bank
will be subrogated to the relevant portion of the claims paid
under paragraph (d) above and the Borrower will owe the
recovering Bank a debt which is equal to the redistribution and
of the type originally discharged.
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25.2 Reversal of redistribution
If under Clause 25.1 (Redistribution):
(a) A recovering Bank must subsequently return a recovery, or an
amount measured by reference to a recovery, to the Borrower; and
(b) the recovering Bank has paid a redistribution in relation to
that recovery,
each Bank shall, within three Business Days of demand by the recovering
Bank through the Agent, reimburse the recovering Bank all or the
appropriate portion of the redistribution paid to that Bank. Thereupon,
the subrogation in Clause 25.1(e) will operate in reverse to the extent
of the reimbursement.
25.3 Exception
(a) A recovering Bank need not pay a redistribution to the extent
that it would not, after the payment, have a valid claim against
the Borrower in the amount of the redistribution pursuant to
Clause 25.1(e).
(b) A Bank is not entitled to participate in a redistribution if the
redistribution results from the proceeds of a judicial
enforcement order obtained by the recovering Bank and the other
Bank had adequate notice of and opportunity to participate in
the proceedings concerned or bring its own proceedings but did
not do so.
26 Tax Lease Option
If the Borrower or an Owning Company wishes to incur Borrowed Money by
means of a Capitalised Lease Obligation in respect of a Vessel, the
Banks shall, if so requested in writing by the Borrower, discuss in good
faith for a period of up to 60 days the possible restructuring of the
security arrangements contemplated by this Agreement so as to permit
such incurrence of Borrower Money but such restructuring may only be
implemented if all of the Banks approve it in writing (such approval not
to be unreasonably withheld) and such supplemental documentation entered
into and conditions precedent fulfilled as the Banks may in their
absolute discretion require. It is acknowledged by all parties that, as
set out in the telefax from the Banks to the Borrower dated 28 August
2002, the restructuring of the security may include the granting of
security to secure the relevant Capitalised Lease Obligation and
postponement and/or replacement of the Mortgages with alternative
security acceptable to the Banks to be agreed at the relevant time.
If such restructuring is approved in principle by the Banks, the Banks
shall co-operate in good faith with the Borrower in the implementation
of such restructuring within such period as may be agreed at the
relevant time.
If in the course of seeking the approval of the Banks to the Tax Lease
Option, the Majority Banks agree to the restructuring proposal (the
"consenting banks") then the consenting banks shall if requested to do
so by the Borrower, co-operate with the Borrower to try to arrange for
the Commitment of the Banks who do not agree to the restructuring
proposal (the "dissenting banks") to be transferred to a substitute or
replacement bank ("a substitute bank") provided that if no substitute
bank can be found within such reasonable period as may be agreed by the
Agent at the relevant time to assume the Commitment of the dissenting
bank or banks, the Borrower agrees that the approval of all the Banks to
the Tax Lease Option shall be deemed to be required.
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27 Severability
If a provision of this Agreement is or becomes illegal, invalid or
unenforceable in any competent jurisdiction, that shall not affect the
validity or enforceability in that jurisdiction of any other provision
of this Agreement or the validity or enforceability in other
jurisdictions of that or any other provision of this Agreement.
28 Notices
28.1 Giving of notices
All notices or other communications under or in connection with this
Agreement shall be given or made in writing, by letter, telefax or
e-mail. Any such notice or communication will be deemed to be given or
made as follows;
(i) if by letter, when delivered at the address of the
relevant Party;
(ii) if by telefax or e-mail, when received.
However, a notice given in accordance with the above but received on a
day which is not a Business Day or after 4:00 p.m. in the place of
receipt will only be deemed to be given at 9:00 a.m. on the next
Business Day in that place.
28.2 Addresses for notices
(a) The address, the telefax number and e-mail address of each Party
(other than the Agent and the Borrower) for all notices or other
communications under or in connection with this Agreement are
those notified by that Party for this purpose to the Agent on or
before the date it becomes a Party; or any other notified by
that Party for this purpose to the Agent by not less than five
Business Days' notice.
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(b) The address, the telefax number and the e-mail address:
(i) of the Agent is:
NORDEA BANK NORGE ASA
P.O.Box 1166 Sentrum
Middelthunsgt. 17
0368 Oslo
Norway
Telephone: 00 47 22 48 50 00
Telefax: 00 47 22 48 66 68
E-mail: soosd@nordea.com
(ii) of the Borrower is:
GOLAR GAS HOLDING COMPANY, INC.
c/o Golar Management Limited
30 Marsh Wall
London E14 9TP
United Kingdom
Telephone: 00 44 20 7517 8600
Telefax: 00 44 20 7517 8601
E-mail: london.reception@golar.com
or such other address, telefax number and/or e-mail address and/or marked for such other attention as the Agent or the Borrower may notify to the other Parties by not less than five Business Days' prior notice.
(c) All notices from or to the Borrower related to this Agreement shall be sent through the Agent.
(d) The Agent shall, promptly upon request from any Party, give to that Party the address, the telefax number and/or e-mail address of any other Party applicable at the time for the purposes of this Clause.
29 Conflicting provisions
In case of conflict between this Agreement and the terms of any of the Security Documents, the terms and conditions of this Agreement shall prevail.
30 Jurisdiction
For the benefit of the Agent and each Bank, the Borrower agrees that only the courts of Norway shall have jurisdiction to settle any disputes in connection with this Agreement and accordingly submits to the non-exclusive jurisdiction of Oslo tingrett. Nothing in this Clause 30 shall limit the right of the Agent or any Bank to start proceedings against the Borrower in any other court of competent jurisdiction.
31 Governing law
This Agreement is governed by Norwegian law.
32 Service of process
Without prejudice to any other mode of service, the Borrower:
a) irrevocably appoints Frontline Management AS as its agents for service of process relating to any proceedings before the Norwegian courts in connection with this Agreement;
b) agrees that failure by its process agent to notify it of the process will not invalidate the proceedings concerned; and
c) consents to the service of process to any such proceedings before the Norwegian courts by posting of a copy of the process to Frontline Management AS, Bryggegt. 3, P.O. Box 1327 Vika, 0112 Oslo, Norway.
Schedule 1 Banks and commitments
Banks Commitments
----- -----------
DEN NORSKE BANK ASA USD 20,000,000
Stranden 21
0021 Oslo
Norway
NORDEA BANK NORGE ASA USD 20,000,000
P.O. Box 1166 Sentrum
Middelthunsgt. 17
0368 Oslo
Norway
FORTIS BANK (NEDERLAND) N.V. USD 20,000,000
Oslo Branch Office
Munkedamsveien 53B
0250 Oslo
Norway ______________
USD 60,000,000
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Schedule 2 Conditions precedent documents
1. In respect of the Borrower, the Parent and each of the Guarantors:
(a) the Memorandum and Articles of Association;
(b) Company Certificate;
(c) Updated Good Standing Certificate;
(d) A resolution of the Board of Directors (and resolution by the shareholders, if required), authorising the execution of the Transaction Documents to which it is a party;
(e) Power of Attorney to its representatives for the execution and, if applicable, registration of the Transaction Documents to which it is a party;
(f) Secretary's Certificate; and
(g) Evidence of capital structure.
2. The Agreement.
3. The Co-ordination Agreement.
4. The USD 325 mill. Facility Agreement.
5. The Management Agreements.
6. The Charters with addenda.
7. The Charter Guarantees.
8. The Golar Mazo Charter.
9. Acceptance Letter by the lenders under the USD 325 mill. Facility Agreement.
10. The Faraway Documents.
11. Omnibus Agreement.
12. The Master Agreement.
13. In respect of the Security Documents:
(a) the Deeds of Assignment;
(b) the notices of assignment to and acknowledgement and consent from the relevant parties as required under the Deeds of Assignment;
(c) the Pledge of Accounts;
(d) the Pledge of Borrower Shares with the share certificates in respect of the pledged shares and any other additional document in relation thereto;
(e) the Subsidiary Pledges (with the share certificates in respect of the pledged shares) and any other additional document in relation thereto; and
(f) the Guarantees.
13. In respect of each of the Vessels:
(a) evidence that the Vessel is registered in the name of the relevant Owning Company in the Liberian Ship Registry, the Mortgage has been executed and recorded with second priority and that no other encumbrances or liens are recorded against the Vessel (save for the First Mortgages);
(b) Memorandum of Particulars;
(c) Consent letter from the Security Agent as First Preferred Mortgagee under the First Mortgages;
(d) updated class certificate related to the Vessel from the relevant classification society, confirming that the Vessel is in class, without extensions or recommendations at the Drawdown Date; and
(e) copies of insurance policies/cover notes documenting that insurance cover has been taken out in respect of the Vessel in accordance with Clause 17.14 (Insurance), and evidencing that the Agent on behalf of the Banks' security interest in the insurance policies have been noted in accordance with the relevant notices and acknowledgements as required under the Deeds of Assignment at the Drawdown Date.
14. Evidence that all fees, costs and expenses (including internal and external legal fees and expenses) and other compensation contemplated thereby, payable to the Banks and the Agent to the extent due, have been paid.
15. All approvals, authorizations and consents required by any government or other authorities in order for the Borrower, the Parent or any of the Guarantors to enter into and perform its obligations under this Agreement and any of the Transaction Documents to which they are a party.
16. Letters of Quiet Enjoyment issued by the Agent (on behalf of the Banks) in respect of the BG Vessels, or in respect of M/V Golar Spirit, the notice of financing issued by the relevant owner.
17. Acknowledgements duly signed by BG/Pertamina in respect of the Letters of Quiet Enjoyment.
18. Appointment of Frontline Management AS and the acceptance by Frontline Management AS as the Borrower's process agent in Norway under the Agreement, the Pledge of Accounts, the Co-ordination Agreement and the Subsidiary Pledges.
19. Appointment of Frontline Management AS and the acceptance by Frontline Management AS as the Owning Companies' process agent in Norway under the Guarantee.
20. Appointment of Frontline Management AS and the acceptance by Frontline Management AS as Oxbow's process agent in Norway under the Guarantee.
21. Appointment of Frontline Management AS and the acceptance by Frontline Management AS as Golar Maritime's process agent in Norway under the Guarantee.
22. Appointment of Frontline Management AS and the acceptance by Frontline Management AS as the Parent's process agent in Norway under the Pledge of Borrower Shares.
23. Appointment of Frontline Management AS and the acceptance by Frontline Management AS as the Ultimate Owner's process agent in Norway under the Guarantee.
24. Appointment of Golar Management Limited and the acceptance by Golar Management Ltd. as the Owning Companies' process agent in the UK under the Deeds of Assignment.
25. Favourable legal opinions in form and substance satisfactory to the Agent from lawyers appointed by the Agent on matters concerning all relevant jurisdictions.
Schedule 3
Form of
Drawdown Notice
To: NORDEA BANK NORGE ASA as Agent
Date: [ ] 2002
USD 60,000,000 Second Priority Credit Facility dated 11 October 2002 (the "Agreement")
We refer to Clause 5 of the Agreement.
Terms defined in the Agreement shall have the same meaning in this Drawdown Notice.
l. We wish to draw as follows:
(a) Amount: .................................................
(b) Drawdown Date: ..........................................
(c) Interest Period: ........................................
(d) Instructions for payment: ...............................
2. We confirm that each condition specified in Clause 4.2 (specific conditions) is satisfied on the date of this Drawdown Notice.
By:
GOLAR GAS HOLDING COMPANY, INC.
Authorised Signatory
Schedule 4
Form of
Renewal Notice
To: NORDEA BANK NORGE ASA as Agent
Date: [ ]
USD 60,000,000 Second Priority Credit Facility dated 11 October 2002 (the "Agreement")
We refer to Clause 8.1 (c) in the Agreement. Terms defined in the Agreement shall have the same meaning in this Renewal Notice.
We hereby:
1. request an Interest Period in respect of the Loan of [ ] months from the next Interest Payment Date; and
2. confirm that:
(i) no event or circumstance has occurred or is threatening, which constitutes, or which with the giving of notice or lapse of time or both, would constitute an Event of Default under the Agreement; and that
(ii) the representations and warranties contained in Clause 16 (Representations and Warranties) of the Agreement are true, correct and not misleading at the date hereof as if made with respect to the facts and circumstances existing at such date.
By:
GOLAR GAS HOLDING COMPANY, INC.
Authorised signatory
Schedule 5
Form of
Deed of Assignment
between
[ ]
as Assignor
and
Nordea Bank Norge ASA
as Agent
VOGT & WIIG AS
THIS DEED OF ASSIGNMENT (the "Deed") dated this [ ] October 2002 is made between:
(1) [ ] a company incorporated in the Republic of Liberia whose registered office is at 80 Broad Street, Monrovia, Liberia, as assignor (the "Assignor"); and
(2) NORDEA BANK NORGE ASA, Middelthunsgt. 17, 0368 Oslo, Norway, as agent under the Agreement (as defined below) (the "Agent").
WHEREAS
(A) Golar Gas Holding Company, Inc. as borrower (the "Borrower") has been granted a credit facility for an amount not exceeding USD 60,000,000 (the "Facility") in accordance with an agreement dated 11 October 2002 (as the same hereafter from time to time may be amended referred to as the "Agreement") entered into among the Borrower, the Financial Institutions listed in Schedule 1 of the Agreement, the Agent (in its capacity as agent for the Banks, arranger and bank), Den norske Bank ASA as arranger and bank and Fortis Bank (Nederland) N.V. as arranger and bank;
(B) by a time charter dated [__________] as amended by Addendum no. [___] dated [__________] expiry on or about [__________] and made between the Assignor and [__________] (the "Charterer") the Assignor agreed to let and the Charterer agreed to take on time charter for the period and upon the terms and conditions therein mentioned the vessel [_______] documented in the name of the Assignor under the laws and flag of the Republic of Liberia under Official Number [___] (the "Vessel");
(C) pursuant to a guarantee dated [__________] (the "Guarantee") executed by
i.a. the Assignor as Guarantor (as defined in the Agreement) in favour
of the Agent, the Assignor jointly and severally with the other
Guarantors guaranteed to the Agent, for the account and benefit of the
Banks, the payment by the Borrower of all amounts owning under or in
connection with the Agreement;
(D) pursuant to the Agreement and the Guarantee there has been or will be executed by the Assignor in favour of the Agent a second preferred ship mortgage (the "Mortgage") on the Vessel and the Mortgage has been or will be registered under the provisions of Chapter 3 of title 21 of the Liberian Code of Laws of 1956 Revised as security for the repayment by the Assignor of the Secured Indebtedness (as defined below);
(E) the Assignor has agreed to enter into this Deed in favour of the Agent (on behalf of the Banks) in respect of the Assigned Property (as defined below) as security for the Secured Indebtedness (as defined below);
(F) it is a condition for the utilisation of the Facility that the Assignor enters into this Deed and grants the securities set out herein in favour of the Agent;
(G) this Deed is supplemental to the Guarantee and (when executed) the Mortgage and to the security thereby created but shall nonetheless continue in full force and effect notwithstanding any discharge of the Mortgage; and
(H) the Borrower has entered into the USD 325 mill. Facility Agreement (as defined in the Agreement) pursuant to which the Assignor has entered into the First Deed of Assignment (as defined in the Agreement) and the securities constituted herein and in the Mortgage are in all respects subject to and subordinate to the rights of the Security Agent (as defined in the Agreement) under the First Mortgage and the First Deed of Assignment.
NOW THEREFORE THE PARTIES HERETO HAVE AGREED AS FOLLOWS:
1 Interpretation
1.1 Defined expressions
In this Deed (unless the context otherwise requires) any term or expression defined in the preamble shall have the meaning ascribed to it herein. In addition, terms and expressions not defined herein but whose meanings are defined in the Agreement, shall have the meanings set out therein.
1.2 Definitions
In this Deed, unless the context otherwise
"Assigned Property" means:
(a) the Charter Earnings; (b) the other Charter Rights; (c) the Earnings of the Vessel; (d) her Insurances; (e) the Charter Guarantee(s); and (f) any Requisition Compensation for the Vessel.
"Charter" means the charter referred to in Recital (B) hereto and any future charters of the Vessel.
"Charter Documents" means the Charter and any other document in which a Charter Right has been created.
"Charterer" includes the successor in title and assignees of the Charterer.
"Charter Earnings" means all money whatsoever payable by the Charterer to the Assignor under or pursuant to the Charter and/or any guarantee, security or other assurance given to the Assignor at any time in respect of the Charterer's obligations under or pursuant to the Charter including (but without prejudice or to the generality of the foregoing) all claims for damages in respect of any breach by the Charterer of the Charter).
"Charter Rights" means all of the rights of the Assignor under or pursuant to the Charter and any guarantee, security or other assurance given to the Assignor at any time in respect of the Charterer's obligations under or pursuant to the Charter including (without limitation) the right to receive the Charter Earnings.
"Requisition Compensation" means in relation to the Vessel, all sums of money or other compensation from time to time payable during the Security Period by reason of the compulsory acquisition (being the requisition for title or other compulsory acquisition, requisition, appropriation, expropriation, deprivation, forfeiture or confiscation for any reason of the Vessel by an governmental entity or other competent authority, whether de jure or de facto, but shall exclude requisition for use or hire not involving requisition of title) of the Vessel.
"Secured Indebtedness" means the aggregate of the Facility and interest thereon, default interest, expenses, fees, and all other sums of any kind at any time which may become owing by the Assignor to the Agent or any of the Banks under the Guarantee, the Mortgage and this Deed.
1.3 Construction
(a) Clause headings are inserted for convenience of reference only and shall be ignored in the construction of this Deed:
(b) references to Clauses or Appendices are to be construed as references to clauses or appendices of this Deed unless otherwise stated;
(c) references to (or to any specified provision of) this Deed or any other document shall be construed as references to this Deed, that provision or that document as from time to time amended; and
(d) words importing the plural shall include the singular and vice versa.
2 Assignment of Assigned Property
2.1 Assignment
In order to secure payment and discharge of the Borrower's obligations under the Agreement and the payment of all sums which from time to time may become due thereunder and to secure the performance and observance with all of the covenants, terms and conditions in the Agreement, and by way of security for payment of the Secured Indebtedness, the Assignor, with full title guarantee hereby assigns and agrees to assign to the Agent (on behalf of the Banks) with second priority (subject always to the rights of the Security Agent under the First Deed of Assignment) all its rights, title and interest in and to the Assigned Property and all its benefits and interests present and future therein.
2.2 Payments and application
2.2.1 Payment
All Assigned Property payable to the Assignor are, subject to the
Security Agent's rights under the First Deed of Assignment, to be paid
to account no. [ ] with [ ] or any replacement thereof, which is pledged
(i) on first priority to the Security Agent as security for the
Borrower's obligations under the USD 325 mill. Facility Agreement and
(ii) on second priority to the Agent (on behalf of the Banks) as
security for the Borrower's obligations under the Agreement.
2.2.2 Application
All moneys received by the Agent in respect of:
(a) recovery under the Vessel's Insurances (other than under any loss of earnings insurance and any such sum or sums as may have been received by the Agent in accordance with the relevant loss payable Clause in respect of a major casualty as therein defined and paid to the Assignor as provided in Clause 2.2.1);
(b) the Vessel's Requisition Compensation;
(c) the Charter Guarantee(s); and
(d) the Vessel's Earnings (including the Charter Earnings),
shall, subject to the Security Agent's rights under the First Deed of Assignment, be held by it upon trust in the first place to pay and make good the expenses and the balance shall:
(i) in the case of moneys received in respect of sale of the Vessel or recovery under the insurances in relation to a Total Loss of the Vessel or her Requisition Compensation:
(A) if no Default has occurred and is continuing, be applied in accordance with Clause 17.15 of the Agreement; or
(B) if a Default has occurred and is continuing but no Event of Default has occurred be retained by the Agent until such time as no Default has occurred and is continuing (whereupon such moneys shall be applied in accordance with Clause 17.15 of the Agreement or paragraph (ii) below, moneys so retained shall be applied by the Agent in or towards satisfaction of any sums from time to time accruing due and payable by the Assignor under the Security Documents or any of them by virtue of payment demanded thereunder; or
(ii) on any other case, if an Event of Default has occurred, be applied by the Security Agent in the manner specified under (i) (B) above.
2.3 Assumption of the Charter
In the event that, in the opinion of the Agent, (i) an Event of Default has occurred, (ii) the Assignor fails to observe and perform its obligations under the Charter or this Deed, the Agent may (but shall not be obliged to), subject to the Co-ordination Agreement, serve upon the Charterer and the Assignor a notice whereupon the Agent shall exercise the rights of the Assignor under the Charter and be at liberty (but not obliged) to performed the Assignor's obligations thereunder.
2.4 Notice and acknowledgement
The Assignor undertakes and covenants with the Agent to give notice of this Deed to the Charterer, the Charter Guarantor and the insurer or any other third parties from which any Charter Earnings or other Earnings, Insurances or other amounts are or may become payable in the form set out in Appendices 1 to 3 hereto (as the case may be) or such other form as the Agent may require, and procure that any recipient of such notice acknowledge receipt of such notices in the forms attached to such Appendices.
2.5 Release
When all of the obligations under the Agreement have been satisfied and discharged in full, the Agent will at the request and cost of the Assignor (and subject to the First Deed of Assignment) reassign to the Assignor all of the Agent's right, title and interest in the Assigned Property; provided always that any settlement or discharge under this Deed between the Assignor and the Agent shall be subject to the condition that any payment by the Borrower, the Assignor or any other person will not be avoided or set aside or ordered to be repaid (in full or in part) under any enactment or provision relating to insolvency, administration, liquidation or bankruptcy for the time being in force and in the event that at any time the Agent has to repay (in full or in part) such amount then the Agent shall have the right (subject to the rights of the Security Agent under the First Deed of Assignment) to recover an equivalent amount from the Assignor and to enforce the security created by this Deed as if such payment had not been made.
3 Perfection
The Assignor agrees that at any time and from time to time upon the written request of the Agent, it will promptly and duly execute and deliver to the Agent any and all such further instruments and documents as the Agent may reasonably deem necessary or desirable to register this Deed in any applicable registry, and to maintain and/or perfect the security created by this Deed and the rights and powers herein granted.
4 No variations and the Assignor's obligations under the Charter and the Charter Guarantee(s)
The Assignor may not make any variations to the Charter or the Charter Guarantee(s) or release any party of their obligations thereunder or waive any breach of the Charterer's obligations thereunder or consent to any such act of omission of the Charterer as would constitute such breach or terminate the Charter, without the prior written consent of the Agent (on behalf of the Banks).
The Assignor shall remain liable to perform all of its obligations under the Assigned Property and the Agent (on behalf of the Banks) shall be under no obligation of any kind whatsoever in respect thereof.
5 Assignment
The Agent may assign or transfer its rights hereunder to any person whom it is entitled to assign its rights to under the Agreement.
6 No further Assignment or Pledge
The Assignor shall not, unless prior written consent has been obtained from the Agent, be entitled to further assign or pledge any of the Assigned Property.
7 Additional and continuing security
The security contemplated by this Deed shall be in addition to any other security granted in accordance with the Agreement, and shall be a continuing security in full force and effect as long as any obligations are outstanding thereunder.
8 Notices
Any notice, demand or other communication to be made or delivered by any party pursuant to this Deed shall (unless the addressee has by fifteen days' written notice to that party specified another address) be made or delivered:
(a) if to the Assignor:
[ ]
c/o Golar Management Limited
30 Marsh Wall
London E14 9TP
United Kingdom
Telefax no: +44 20 7517 8601
(b) if to the Agent:
NORDEA BANK NORGE ASA
Middelthunsgt. 17
0368 Oslo
Norway
Telefax no: +47 22 48 66 68
9 Jurisdiction
For the benefit of the Agent and each Bank, the Assignor agrees that only the courts of England shall have jurisdiction to settle any disputes in connection with this Deed and accordingly submits to the non-exclusive jurisdiction of the English courts. Nothing in this Clause 9 shall limit the right of the Agent or any Bank to start proceedings against the Assignor in any other court of competent jurisdiction.
10 Governing law
This Deed is governed by English law.
11 Service of process
Without prejudice to any other mode of service, the Assignor:
a) irrevocably appoints Golar Management Limited as its agents for service of process relating to any proceedings before the English courts in connection with this Deed;
b) agrees that failure by its process agent to notify it of the process will not invalidate the proceedings concerned; and
c) consents to the service of process to any such proceedings before the English courts by posting of a copy of the process to Golar Management Limited, 30 Marsh Wall, London E14 9TP, United Kingdom.
IN WITNESS whereof this Deed has been duly executed as a deed on the day and year first above written
SIGNED, SEALED and DELIVERED ) as a DEED ) by ) it duly authorised Attorney-in-Fact ) for and on behalf of ) [ ] ) in the presence of: ) .................. Witness Name: Address: Occupation: SIGNED, SEALED and DELIVERED ) as a DEED ) by ) it duly authorised Attorney-in-Fact ) for and on behalf of ) NORDEA BANK NORGE ASA ) in the presence of: ) .................. Witness Name: Address: |
Occupation:
Form of
Notice of Assignment
(Charter)
To: [ ]
We refer to the charterparty dated [ ] (the "Charter") made between us and you, whereby we agreed to let and you agreed to take on [time]charter for the period and upon terms and conditions therein mentioned the M/V [ ] (the "Vessel"). We hereby give you notice that:
1. By a Deed of Assignment dated [ ] October 2002 (the "Deed") made between us and Nordea Bank Norge ASA, as "Agent", acting on behalf of itself and certain other banks as "Banks", we have with full title guarantee assigned on second priority (subject to the rights of Den norske Bank ASA as security agent (the "Security Agent") pursuant to a deed of assignment dated 31 May 2001 between us and the Security Agent (the "First Deed of Assignment")) absolutely to and in favour of the Agent (on behalf of the Banks) all our rights, title and interest, present and future, to and in all charterhire and other monies payable by you under the Charter.
2. You are hereby irrevocably authorised and instructed to continue the performance of your obligations under the Charter towards us and receive instructions from us, PROVIDED HOWEVER, that all payments are to be made to our account with the Security Agent, account no. [ ] (free of any set-off or other deduction) which is pledged on first priority in favour of the Security Agent, until such time as the Agent shall direct to the contrary whereupon all instructions or demands for actions shall be made by the Agent and all amounts payable to us shall be paid to the Agent or as it may direct.
3. The Deed includes provisions that no variations shall be made to the Charter (nor shall you be released from your obligations thereunder) without the previous written consent of the Agent (on behalf of the Banks) and that we shall remain liable to perform all our obligations under the Charter and that the Agent (on behalf of the Banks) shall be under no obligation of any kind whatsoever in respect thereof.
Please acknowledge receipt of this letter and confirm your consent to its terms by signing the form of acknowledgement enclosed hereto and return the same to the address as set out therein.
The authority and instructions herein contained cannot be revoked or varied by us without the consent of the Agent (on behalf of the Banks). The provisions of this notice and its acknowledgement shall be governed by the laws of England.
Dated [ ] 2002
Signed by
Appendix 1 B
Form of
Acknowledgement
To:
Nordea Bank Norge ASA
Middelthunsgt. 17
0368 Oslo
Norway
Telefax: +47 22 48 66 68
We acknowledge receipt of the Notice of Assignment dated [ ] 2002. Terms used herein shall have the same meaning as defined therein. We agree to the assignment of the earnings under the Charter and agree and undertake to be bound by the terms of the Notice of Assignment. We confirm that we have received no notice of any previous assignment or pledge of all or any part of the earnings under the Charter, save for under the First Deed of Assignment.
We further confirm that all written statements containing instructions or demanding actions or payments under the Charter may until further notice from the Agent to the contrary be made by the Assignor and after such notice these instructions shall be given or demands shall be made by the Agent.
Dated: [ ]
For and on behalf of:
[ ]
By:
Name:
Title:
Form of
Notice of Assignment
(Charter Guarantee(s))
To: [ ]
We refer to the charter guarantee dated [__________] (the "Charter Guarantee")
issued by yourselves as guarantor as security for the obligations of
[__________] (the "Charterer") under the charterparty dated [__________] entered
into between the Charterer and ourselves as owner. We hereby give notice that by
a Deed of Assignment dated [__________] October 2002 (the "Deed") made between
us and Nordea Bank Norge ASA as "Agent", acting on behalf of itself and certain
other banks as "Banks", we have with full title guarantee, assigned on second
priority (subject to the rights of Den norske bank ASA as security agent (the
"Security Agent") pursuant to a deed of assignment dated 31 May 2001 between us
and the Security Agent (the "First Deed of Assignment")) absolutely to and in
favour of the Agent (on behalf of the Banks) all our rights, title and interest,
present and future, to and in the Charter Guarantee.
Please acknowledge receipt of this letter and confirm your consent to its terms by signing the form of acknowledgement enclosed hereto and return the same to the Agent at the address set out above.
The authority and instructions contained herein cannot be revoked or varied by us without the prior written consent of the Agent (on behalf of the Banks). The provisions of this notice and its acknowledgement shall be governed by the laws of England.
Dated [ ] 2002
Signed by
Appendix 2B
Form of
Acknowledgement
To:
Nordea Bank Norge ASA
Middelthunsgt. 17
0368 Oslo
Norway
Telefax: +47 22 48 66 68
We acknowledge receipt of the Notice of Assignment dated [ ] October 2002. Terms used herein shall have the same meaning as defined therein. We agree to the assignment of the Charter Guarantee(s) as set out therein and agree and undertake to be bound by the terms of the Notice of Assignment. We confirm that we have received no notice of any assignment of any part of the Charter Guarantee, save for under the First Deed of Assignment.
Dated: ..................
For and on behalf of:
[ ]
By:
Name:
Title:
Appendix 3A
Form of
Notice of Assignment
(Insurances)
To: The Insurers
[ ] as owner (the "Shipowner") of [" "], (the "Vessel") hereby gives notice that all payments due to us from you in respect of the Vessel have been (by way of security) assigned, with second priority (subject to the rights of Den norske Bank ASA as security agent (the "Security Agent") under a deed of assignment dated 31 May 2001 entered into between us and the Security Agent (the "First Deed of Assignment")) to Nordea Bank Norge ASA, Norway, as agent for certain other banks (the "Mortgagee") according to a Deed of Assignment dated [ ] October 2002 and that all payments due to us under our policy(-ies) with yourselves must be made in accordance with the instruction, from time to time, of the Mortgagee.
Please note that all claims relating to the insurances in respect of an actual or constructive or agreed or arranged or compromised total loss or requisition for title or other compulsory acquisition of the Vessel and claims payable in respect of a major casualty, that is to say any claims or the aggregate of the claims exceeds USD 5,000,000 (United States Dollars five million) shall (subject to the rights of the Security Agent under the First Deed of Assignment) be payable to the Mortgagee. Subject thereto all other claims, unless and until the insurers have received notice from the Mortgagee of a default under the Mortgage in which event all claims shall (subject to the rights of the Security Agent under the First Deed of Assignment) be payable directly to the Mortgagee up to its mortgage interest, shall be released directly for the repair, salvage or other charges involved or to the Shipowner as reimbursement if it has fully repaired the damage and paid all of the salvage or other charges or otherwise in respect of the Shipowner's actual costs in connection therewith. Any payments directly to the Shipowner shall be paid to account no. [ ] with the Security Agent.
Please note that this instruction may not be varied except with the prior written consent of the Mortgagee.
Please confirm your acknowledgement of the terms of this notice by completing the Acknowledgement attached hereto. Please return the signed and dated Acknowledgement to the Mortgagee at the address set out therein
[ ] 2002
Appendix 3B
To:
Nordea Bank Norge ASA
Middelthunsgt. 17
0368 Oslo
Norway
Telefax: +47 22 48 66 68
Form of Acknowledgement
We acknowledge receipt of the Notice of Assignment dated [ ] from [ ] (the "Shipowner") relating to the insurances for the vessel [""] (the "Vessel").
We have duly noted and do accept that our payments due to the Shipowner, under the insurance policies taken out for the Vessel as an Owners' Entry pursuant to our rules, shall be made in accordance with the instructions set out in the Notice of Assignment, including the Loss Payable Clause therein, and payment due to the Agent will be made to such account as from time to time instructed by Nordea Bank Norge ASA, Middelthunsgt. 17, 0368 Oslo, Norway, which bank has been duly noted by ourselves as the Second Priority Mortgagee of the Vessel.
Dated:
For and on behalf of:
[ ]
By:
Name:
Title:
Schedule 6
Form of
Pledge of Accounts
between
Golar Gas Holding Company, Inc.
as Borrower
and
Nordea Bank Norge ASA
as Agent
and
Nordea Bank Norge ASA
as Account Bank
VOGT & WIIG AS
THIS PLEDGE OF ACCOUNTS (the "Pledge") is made on [ ] October 2002 between:
1. GOLAR GAS HOLDING COMPANY, INC., a company incorporated in the Republic of Liberia, having its registered office at 80 Broad Street, Monrovia, Liberia, as borrower (the "Borrower");
2. NORDEA BANK NORGE ASA, Middelthunsgt. 17, 0368 Oslo, Norway as account bank (the "Account Bank"); and
3. NORDEA BANK NORGE ASA, Middelthunsgt. 17, 0368 Oslo, Norway as agent (the "Agent").
WHEREAS:
(A) The Borrower has been granted a credit facility for an amount not exceeding USD 60,000,000 (the "Facility") in accordance with an agreement dated 11 October 2002 (as the same hereafter from time to time may be amended referred to as the "Agreement") entered into among the Borrower, the Financial Institutions listed in Schedule 1 of the Agreement, the Agent (in its capacity as agent for the Banks, arranger and bank), Den norske Bank ASA as arranger and bank and Fortis Bank (Nederland) N.V. as arranger and bank;
(B) The Borrower has agreed to enter into this Pledge in favour of the Agent (on behalf of the Banks) in respect its bank accounts as security for its obligations towards the Banks under the Agreement;
(C) The execution by the Borrower of this Pledge is a condition precedent to the Banks to make the Facility available to the Borrower;
(D) The Borrower has entered into the USD 325 mill. Facility Agreement (as defined in the Agreement) pursuant to which the Assignor has entered into the First Pledge of Accounts (as defined in the Agreement) and the securities constituted herein are subject to and subordinate to the rights of the Security Agent (as defined in the Agreement) under the First Pledge of Accounts.
IT IS AGREED AS FOLLOWS:
1 Definitions
In this Pledge (unless the context otherwise requires) any term or expression defined herein or in the preamble shall have the meaning ascribed to it therein. In addition, terms and expressions not defined herein but whose meanings are defined in the Agreement shall have the meaning set out therein.
2 Representations and warranties
The Borrower hereby represents and warrants to the Agent (on behalf of the Banks) that:
(a) it is entitled to pledge the Pledged Accounts (as defined below) to the Agent (on behalf of the Banks);
(b) save for the First Pledge of Accounts, it has not assigned, charged, pledged or otherwise encumbered the Pledged Account (as defined below).
3. Pledge
3.1 Pledge
By way of security for the payment of its obligations under the Agreement, the Borrower hereby pledges in favour of the Agent (on behalf of the Banks) on second priority (subject always to the First Pledge of Accounts) any and all claims it may at any time and from time to time have against the Account Bank resulting from or in respect of any balance at any time standing to its credit on its bank account no. 6018.04.41444 or any replacement thereof (the "Pledged Accounts").
3.2 Withdrawals
The Borrower may withdraw funds from the Pledged Accounts (always subject to the First Pledge of Accounts) for the purposes as set out in clause 14.1 (b) of the USD 325 mill. Facility Agreement and matters related thereto as long as no Event of Default has been declared by the Agent or the Banks under the Agreement. Withdrawals from the Pledged Accounts for any other purpose, or other payments permitted under the Agreement, shall require the prior written consent of the Agent (on behalf of the Banks).
3.3 Blocking
The Pledged Accounts shall following an Event of Default which is unremedied be blocked in favour of the Agent (on behalf of the Banks), and any subsequent payments made to the Pledged Accounts or paid directly to the Agent or any of the Banks shall, subject to the rights of the Security Agent under the First Pledge of Accounts, be applied towards the Borrower's obligations to the Agent and the Banks under the Agreement.
3.4 Acknowledgement
The Account Bank hereby acknowledges this Pledge by the Borrower to the Agent (on behalf of the Banks), and waives any right to set-off or other rights it may have to the credit of the Pledged Accounts, and confirms to the Agent (on behalf of the Banks) that the Pledged Accounts will, subject to the rights of the Security Agent under the First Pledge of Accounts, be blocked in favour of the Agent (on behalf of the Banks) following the Account Bank's receipt of a notice from the Agent that a Default has occurred under the Agreement and/or the Security Documents.
3.5 Set-Off
In the event of non-payment of any amount hereunder when due, the Agent (acting on behalf of the Banks) shall, subject to the rights of the Security Agent under the First Pledge of Accounts and to the extent permitted by applicable law, have a separate right of set-off in respect of any credit balance, in any currency, on any account the Borrower might have with either the Agent or any of the Banks (branches included) from time to time, including the Pledged Accounts, toward satisfaction of any sum due to the Agent or any of the Banks hereunder.
4 Perfection
The Borrower agrees that it at any time and from time to time upon the written request of the Agent, will promptly and duly execute and deliver to the Agent any and all such further instruments and documents as the Agent may reasonably deem necessary or desirable, and to maintain and/or perfect the security created by this Pledge and the rights and powers herein granted.
5 Continuing security
The Borrower hereby agrees and undertakes that:
(a) the security created by this Pledge shall be held by the Agent (on behalf of the banks) as a continuing security for the obligations under the Agreement and the security so created shall not be satisfied by any intermediate payment or satisfaction of any part of the obligations under the Agreement;
(b) the security so created shall be in addition to and shall not in any way be prejudiced or affected by any of the other Security Documents;
(c) subject to the Co-ordination Agreement, the Agent shall not be bound to enforce any of the other Security Documents before enforcing the security created by this Pledge;
(d) no delay or omission on the part of the Agent in exercising any right, power or remedy under this Pledge shall impair such right, power or remedy or be construed as a waiver thereof nor shall any single or partial exercise of any such right, power or remedy preclude any further exercise thereof or the exercise of any other right, power or remedy;
(e) the rights, powers and remedies provided in this Pledge are cumulative and not exclusive of any rights, powers and remedies provided by law and may be exercised from time to time and as often as the Agent may deem expedient; and
(f) any waiver by the Agent of any terms of this Pledge or any consent given by the Agent under this Pledge shall only be effective if given in writing and then only for the purpose and upon the terms which it is given.
6 Agent's powers
6.1 Protecting and maintaining of security
The Agent shall, subject to the rights of the Security Agent under the First Pledge of Accounts, without prejudice to its other rights and powers under this Pledge and the other Security Documents, be entitled (but not bound) at any time and as often as may be necessary to take any such action as it may in its reasonable opinion think fit for the purpose of protecting or maintaining the security created by this Pledge.
6.2 Powers
After the occurrence of an Event of Default (irrespective of whether or not the Agent shall have taken steps to enforce any of the powers specified or referred to in the Agreement), and as long as such Event of Default is in existence, the Agent shall, subject to the Co-ordination Agreement and applicable mandatory laws, become forthwith entitled, as and when it may see fit, to put into force and exercise all or any of the powers possessed by its as pledgee of the Pledged Accounts and in particular the Agent shall be entitled then or at any later time or times:
(a) to enforce its right as a pledgee of the Pledged Accounts in accordance with the statutory procedure of enforcement laid down in the Norwegian enforcement Act of 26 June 1992;
(b) to take over, institute, defend, settle or abandon (if necessary using the name of the Borrower) all such legal or arbitration proceedings in connection with the Pledged Accounts as the Agent in its sole and absolute discretion thinks fit;
(c) generally, to recover from the Borrower on demand all expenses incurred by the Agent in or about or incidental to the exercise by it of any of the powers aforesaid; and
(d) generally, to enter into any transaction or arrangement of any kind and to do anything in relation to the Pledged Accounts which the Agent may think fit.
7 Assignment
The Agent may assign or transfer its rights hereunder to any person to whom the rights and obligations as Agent and Bank may be assigned to under the Agreement in accordance with the terms set out therein.
The Borrower shall not be entitled to further assign or pledge the Pledged Accounts.
8 Notices
Any notice, demand or other communication to be made or delivered by any party pursuant to this Pledge shall (unless the addressee has by fifteen days' written notice to that party specified another address) be made or delivered as set out in Clause 28 of the Agreement.
9 Jurisdiction
For the benefit of the Agent and each Bank, the Borrower agrees that only the courts of Norway shall have jurisdiction to settle any disputes in connection with this Pledge and accordingly submits to the non-exclusive jurisdiction of Oslo tingrett. Nothing in this Clause 9 shall limit the right of the Agent or any Bank to start proceedings against the Borrower in any other court of competent jurisdiction.
10 Governing law
This Pledge is governed by Norwegian law.
11 Service of process
Without prejudice to any other mode of service, the Borrower:
a) irrevocably appoints Frontline Management AS as its agents for service of process relating to any proceedings before the Norwegian courts in connection with this Pledge;
b) agrees that failure by its process agent to notify it of the process will not invalidate the proceedings concerned; and
c) consents to the service of process to any such proceedings before the Norwegian courts by posting of a copy of the process to Frontline Management AS, Bryggegt. 3, P.O. Box 1327 Vika, 0112 Oslo, Norway.
By:
Name:
Title:
By:
Name:
Title:
By:
Name:
Title:
Schedule 7
Form of
Pledge of Borrower Shares
between
Gotaas-Larsen Shipping Corporation
as Pledgor
and
Nordea Bank Norge ASA
as Agent
VOGT & WIIG AS
THIS PLEDGE OF SHARES (the "Pledge of Shares") dated this [ ] October 2002 is made between:
(1) GOTAAS-LARSEN SHIPPING CORPORATION, 80 broad Street, Monrovia, Liberia(the "Pledgor"); and
(2) NORDEA BANK NORGE ASA, Middelthunsgt. 17, 0368 Oslo, Norway, as agent under the Agreement (as defined below) (the "Agent").
WHEREAS
(A) Golar Gas Holding Company, Inc. as borrower (the "Borrower") has been granted a credit facility for an amount not exceeding USD 60,000,000 (the "Facility") in accordance with an agreement dated 11 October 2002 (as the same hereafter from time to time may be amended referred to as the "Agreement") entered into among the Borrower, the Financial Institutions listed in Schedule 1 of the Agreement, the Agent (in its capacity as agent for the Banks, arranger and bank), Den norske Bank ASA as arranger and bank and Fortis Bank (Nederland) N.V. as arranger and Bank;
(B) The Pledgor has agreed to enter into this Pledge of Shares in favour of the Agent (on behalf of the Banks) in respect of its [number of shares] shares of the capital stock of the Borrower represented by share certificate no. [ ] (the "Shares"), being all of the issued and outstanding shares of the Borrower, as security for the Borrower's obligations towards the Banks under the Agreement; and
(C) The execution by the Pledgor of this Pledge of Shares is a condition precedent to the Banks to make the Facility available to the Borrower.
IT IS AGREED AS FOLLOWS:
1 Definitions
In this Pledge of Shares including the preamble hereto (unless the context otherwise requires), terms and expressions not defined herein but whose meanings are defined in the Agreement, shall have the meanings set out therein.
2 Representations and warranties
The Pledgor hereby represents and warrants to the Agent (on behalf of the Banks) that:
(a) it is entitled to pledge its right, title and interest in the Shares to the Agent (on behalf of the Banks); and
(b) it has not assigned, charged, pledged, sold or otherwise encumbered the Shares (other than by this Pledge of Shares); and
(c) it is the sole, legal and beneficial owner of the Shared, which are fully paid up and non-assessable.
3 Pledge
3.1 Pledge
By way of security for the payment of all amounts that are or may become due to the Agent and/or the Banks under the Agreement, the Pledgor hereby pledges assigns, charges, transfers and delivers, on first priority, all of its right, title and interest in the Shares to and in favour of the Agent (on behalf of the Banks), including dividends, interest and other moneys paid or payable on the Shares.
3.2 Share certificates, etc.
Upon execution of this Pledge of Shares, the Pledgor shall deposit in escrow with the Agent the following documents:
(a) the share certificates for the Shares; (b) signed but undated instruments of transfer in blank; (c) a signed by undated letter of resignation of each of the directors and officers of the Borrower; (d) a letter of authority signed by each of the directors and officers of the Borrower in favour of the Agent to complete and date the letters of resignation; (e) a letter of undertaking from each of the directors not to appoint any further directors or officers; (f) an irrevocable proxy from the Pledgor empowering the Agent to cast votes attributable to the Shares; (g) a draft undated set of board resolutions approving the resignations; and (h) the stock register, all unissued stock certificates and a duplicate corporate seal
3.3 Release
As soon as any and all of the obligations under the Agreement have been unconditionally and irrevocably paid and discharged in full, the Agent will release the security created by this Pledge of Shares and return the share certificates for the Shares to the Pledgor.
4 Covenants
The Pledgor hereby undertakes with the Agent that:
(a) if any further shares are issued to the Pledgor, the Pledgor shall pledge its respective right, title and interest in all such additional shares to the Agent, and deliver the share certificate(s) to the Agent; and
(b) it will not assign, charge, pledge or otherwise encumber the Shares except as contemplated in the Agreement and/or this Pledge of Shares or otherwise permitted in writing by the Agent on behalf of the Banks.
5 Continuing security
The Pledgor hereby agrees and undertakes that:
(a) the security created by this Pledge of Shares shall be held by the Agent on behalf of the Banks as a continuing security for the payment of all amounts that are or may become due to the Agent and/or the Banks under the Agreement and the security so created shall not be satisfied by any intermediate payment or satisfaction of any part of such obligations under the Agreement;
(b) the security so created shall be in addition to and shall not in any way be prejudiced or affected by any of the other Security Documents;
(c) the Agent shall not be bound to enforce any of the other Security Documents before enforcing the security created by this Pledge of Shares;
(d) no delay or omission on the part of the Agent in exercising any right, power or remedy under this Pledge of Shares shall impair such right, power or remedy or be construed as a waiver thereof nor shall any single or partial exercise of any such right, power or remedy preclude any further exercise thereof or the exercise of any other right, power or remedy;
(e) the rights, powers and remedies provided in this Pledge of Shares are cumulative and not exclusive of any rights, powers and remedies provided by law and may be exercised from time to time and as often as the Agent may deem expedient; and
(f) any waiver by the Agent of any terms of this Pledge of Shares or any consent given by the Agent under this Pledge of Shares shall only be effective if given in writing and then only for the purpose and upon the terms for which it is given.
6 Agent's powers
6.1 Protecting and maintaining of security
The Agent shall, without prejudice to its other rights and powers under this Pledge of Shares and the other Security Documents, and subject to the Co-ordination Agreement, be entitled (but not bound) at any time and as often as may be necessary to take any such action as it may in its reasonable opinion think fit for the purpose of protecting or maintaining the security created by this Pledge of Shares.
6.2 Powers
After the occurrence of an Event of Default (irrespective of whether or not the Agent shall have taken steps to enforce any of the powers specified or referred to in the Agreement) and as long as such Event of Default is in existence, the Agent shall, subject to the Co-ordination Agreement and applicable mandatory law, become forthwith entitled, as and when it may see fit, to put into force and exercise all or any of the powers possessed by it as pledgee of the Shares and in particular the Agent shall be entitled then or at any later time or times:
(a) subject to the Co-ordination Agreement, to enforce its rights as pledgee of the Shares in accordance with the statutory procedures of enforcement laid down in the Norwegian Enforcement Act of 26 June 1992;
(b) to take over, institute, defend, settle or abandon (if necessary using the name of the Pledgor) all such legal or arbitration proceedings in connection with the Shares as the Agent in its sole and absolute discretion thinks fit;
(c) generally, to recover from the Pledgor on demand all expenses incurred by the Agent in or about or incidental to the exercise by it of any of the powers aforesaid; and
(d) generally, to enter into any transaction or arrangement of any kind and to do anything in relation to the Shares which the Agent may think fit.
6.3 Liability of the Agent
Neither the Agent nor its agents, managers, officers, employees, delegates and advisers shall be liable for any expense, claim, liability, loss, cost, damage or expense incurred or arising in connection with the exercise or purported exercise of any rights, powers and discretions under this Pledge of Shares in the absence of gross negligence or wilful misconduct.
7 Indemnity
The Pledgor will indemnify and hold harmless the Agent and each agent or attorney appointed under or pursuant to this Pledge of Shares from and against any and all expenses, claims, liabilities, losses, tax (other than tax on the overall net income of the Agent), costs, duties, fees and charges suffered, incurred or made by the Agent or such agent or attorney:
(a) in the exercise or purported exercise of any rights, powers or discretions vested in them pursuant to this Pledge of Shares; or
(b) in the preservation or enforcement of the Agent's rights under this Pledge of Shares; or
(c) on the release of any part of the Shares from the security created by this Pledge of Shares,
and the Agent or each such agent or attorney may retain and pay all sums in respect of the same amount of money received under the powers conferred by this Pledge of Shares. All such amounts recoverable by the Agent or each such agent or attorney shall be recoverable on a full indemnity basis.
8 Further assurances
The Pledgor hereby further undertake to execute and do all such assurances, acts and things as the Agent in its sole and absolute discretion may require for:
(a) perfecting or protecting the security created (or intended to be created) by this Pledge of Shares; or
(b) preserving or protecting any of the rights of the Agent under this Pledge of Shares; or
(c) ensuring that the security constituted by this Pledge of Shares and the covenants and obligations of the Borrower under this Pledge of Shares shall enure to the benefit of any such assignee of the Agent as is referred to in Clause 10; or
(d) facilitating the appropriation or realisation of the Shares or any part thereof in the manner contemplated by this Pledge of Shares; or
(e) the exercise of any power, authority or discretion vested in the Agent under this Pledge of Shares,
in any such case, forthwith upon demand by the Agent and at the expense of the Pledgor.
9 Notices
Any notice, demand or other communication to be made or delivered by any party pursuant to this Pledge of Shares shall (unless the addressee has by fifteen days' written notice to that party specified another address) be made or delivered: -
(a) if to the Pledgor:
Gotaas-Larsen Shipping Corporation
c/o Golar Management Limited
30 Marsh Wall
London E14 9TP
United Kingdom
Telefax no: +44 20 7517 8601
(b) if to the Agent:
Nordea Bank Norge ASA
P.O. Box 1166 Sentrum
Middelthunsg. 17
0368 Oslo
Norway
Telefax: +47 22 48 66 68
10 Successors and assigns
10.1 Successors and assigns
This Pledge of Shares shall be binding upon and shall enure to the
benefit of the Agent on behalf of the Banks and their respective
successors and permitted assigns and references in this Pledge of Shares
to any of them shall be construed accordingly.
10.2 Prior consent
The Pledgor shall not assign or transfer any of its rights and/or
obligations under this Pledge of Shares without the prior written
consent of the Agent. The Agent may assign and/or transfer part or all
of its rights and/or obligations hereunder to any financial institution
in accordance with the terms of the Agreement. In such case, the Pledgor
will execute such documentation as considered necessary by the Agent to
effectuate such assignment and/or transfer at the Agent's cost.
10.3 Disclosure of information
The Agent may disclose to a potential assignee, transferee or
sub-participant, such information about the Pledgor as the Agent
considers appropriate.
11 Jurisdiction
For the benefit of the Agent and each Bank, the Pledgor agrees that only
the courts of Norway shall have jurisdiction to settle any disputes in
connection with this Pledge of Shares and accordingly submits to the
non-exclusive jurisdiction of Oslo tingrett. Nothing in this Clause 11
shall limit the right of the Agent or any Bank to start proceedings
against the Borrower in any other court of competent jurisdiction.
12 Governing law
This Pledge of Shares is governed by Norwegian law.
13 Service of process
Without prejudice to any other mode of service, the Pledgor:
a) irrevocably appoints Frontline Management AS as its agents for
service of process relating to any proceedings before the
Norwegian courts in connection with this Pledge of Shares;
|
b) agrees that failure by its process agent to notify it of the process will not invalidate the proceedings concerned; and
c) consents to the service of process to any such proceedings before the Norwegian courts by posting of a copy of the process to Frontline Management AS, Bryggegt. 3, P.O. Box 1327 Vika, 0112 Oslo, Norway.
Signed by:
GOTAAS-LARSEN SHIPPING CORPORATION
By:
Name:
Title:
NORDEA BANK NORGE ASA
By:
Name:
Title:
Schedule 8
Form of
Subsidiary Pledge
between
Golar Gas Holding Company, Inc.
as Pledgor
and
Nordea Bank Norge ASA
as Agent
in respect of [ ]
VOGT & WIIG AS
THIS PLEDGE OF SHARES (the "Pledge of Shares") dated this [ ] October 2002 is made between:
(1) Golar GAS HOLDING COMPANY, INC., 80 Broad Street, Monrovia, Liberia (the "Pledgor"); and
(2) NORDEA BANK NORGE ASA, Middelthunsgt. 17, 0368 Oslo, Norway, as agent under the Agreement (as defined below) (the "Agent").
WHEREAS
(A) The Pledgor as borrower has been granted a credit facility for an amount not exceeding USD 60,000,000 (the "Facility") in accordance with an agreement dated 11 October 2002 (as the same hereafter from time to time may be amended referred to as the "Agreement") entered into among the Pledgor, the Financial Institutions listed in Schedule 1 of the Agreement, the Agent (in its capacity as agent for the Banks, arranger and bank), Den norske Bank ASA as arranger and bank and Fortis Bank (Nederland) N.V. as arranger and Bank;
(B) The Pledgor has agreed to enter into this Pledge of Shares in favour of
the Agent (on behalf of the Banks) in respect of its [number of shares]
shares of the capital stock of [ ] represented by share certificate no.
[ ] (the "Shares"), being all of the issued and outstanding shares of [
] as security for its obligations towards the Banks under the Agreement;
(C) The execution by the Pledgor of this Pledge of Shares is a condition precedent to the Banks to make the Facility available to the Pledgor; and
(D) The Borrower has entered into the USD 325 mill. Facility Agreement (as defined in the Agreement) pursuant to which the Pledgor has entered into the First Subsidiary Pledge (as defined in the Agreement) and the securities constituted herein are subject to and subordinate to the rights of the Security Agent (as defined in the Agreement) under the First Subsidiary Pledge.
IT IS AGREED AS FOLLOWS:
1 Definitions
In this Pledge of Shares including the preamble hereto (unless the context otherwise requires), terms and expressions not defined herein but whose meanings are defined in the Agreement, shall have the meanings set out therein.
2 Representations and warranties
The Pledgor hereby represents and warrants to the Agent (on behalf of the Banks) that:
(a) it is entitled to pledge its right, title and interest in the Shares to the Agent (on behalf of the Banks); and
(b) save for the First Subsidiary Pledge it has not assigned, charged, pledged, sold or otherwise encumbered the Shares (other than by this Pledge of Shares); and
(c) it is the sole, legal and beneficial owner of the Shares, which are fully paid up and non-assessable.
3 Pledge
3.1 Pledge
By way of security for the payment of all amounts that are or may become due to the Agent and/or the Banks under the Agreement, the Pledgor hereby pledges, assigns charges, transfers and delivers on second priority (subject always to the rights under the First Subsidiary Pledge), all of its right, title and interest in the Shares to and in favour of the Agent (on behalf of the Banks), including dividends, interest and other moneys paid or payable on the Shares.
3.2 Documents
Upon execution of this Pledge of Shares, the Pledgor shall deposit in escrow with the Agent the following documents:
(a) share certificates for the Shares (and the Pledgor shall procure that the Security Agent shall agree that, so long as the Shares are subject to the First Subsidiary Pledge, the Security Agent shall hold the Shares for the Agent and shall, upon release from the First Subsidiary Pledge, deliver the Share to the Agent; (b) signed but undated instruments of transfer in blank; (c) a signed by undated letter of resignation of each of the directors and officers of [ ]; (d) a letter of authority signed by each of the directors and officers of [ ] in favour of the Agent to complete and date the letters of resignation; (e) a letter of undertaking from each of the directors not to appoint any further directors or officers; (f) an irrevocable proxy from the Pledgor empowering the Agent to cast votes attributable to the Shares; (g) a draft undated set of board resolutions approving the resignations; and (h) all unissued share certificates, the stock register and a duplicate corporate seal.
3.3 Release
As soon as any and all of the obligations under the Agreement have been unconditionally and irrevocably paid and discharged in full, the Agent will release the security created by this Pledge of Shares.
4 Covenants
The Pledgor hereby undertakes with the Agent that:
(a) if any further shares are issued to the Pledgor, the Pledgor shall pledge its respective right, title and interest in all such additional shares to the Agent, and (subject to the First Subsidiary Pledge) deliver the share certificate(s) to the Agent; and
(b) it will not assign, charge, pledge or otherwise encumber the Shares except as contemplated in the Agreement and/or this Pledge of Shares and/or the First Subsidiary Pledge or otherwise permitted in writing by the Agent on behalf of the Banks.
5 Continuing security
The Pledgor hereby agrees and undertakes that:
(a) the security created by this Pledge of Shares shall be held by the Agent on behalf of the Banks as a continuing security for the payment of all amounts that are or may become due to the Agent and/or the Banks under the Agreement and the security so created shall not be satisfied by any intermediate payment or satisfaction of any part of such obligations under the Agreement;
(b) the security so created shall be in addition to and shall not in any way be prejudiced or affected by any of the other Security Documents;
(c) subject to the Co-ordination Agreement, the Agent shall not be bound to enforce any of the other Security Documents before enforcing the security created by this Pledge of Shares;
(d) no delay or omission on the part of the Agent in exercising any right, power or remedy under this Pledge of Shares shall impair such right, power or remedy or be construed as a waiver thereof nor shall any single or partial exercise of any such right, power or remedy preclude any further exercise thereof or the exercise of any other right, power or remedy;
(e) the rights, powers and remedies provided in this Pledge of Shares are cumulative and not exclusive of any rights, powers and remedies provided by law and may be exercised from time to time and as often as the Agent may deem expedient; and
(f) any waiver by the Agent of any terms of this Pledge of Shares or any consent given by the Agent under this Pledge of Shares shall only be effective if given in writing and then only for the purpose and upon the terms for which it is given.
6 Agent's powers
6.1 Protecting and maintaining of security
The Agent shall, without prejudice to its other rights and powers under this Pledge of Shares and the other Security Documents, and subject to the rights of the Security Agent under the First Subsidiary Pledge, be entitled (but not bound) at any time and as often as may be necessary to take any such action as it may in its reasonable opinion think fit for the purpose of protecting or maintaining the security created by this Pledge of Shares.
6.2 Powers
After the occurrence of an Event of Default (irrespective of whether or not the Agent shall have taken steps to enforce any of the powers specified or referred to in the Agreement) and as long as such Event of Default is in existence, the Agent shall, subject to the Co-ordination Agreement and applicable mandatory law, become forthwith entitled, as and when it may see fit, to put into force and exercise all or any of the powers possessed by it as pledgee of the Shares and in particular the Agent shall be entitled then or at any later time or times:
(a) subject to the Co-ordination Agreement, to enforce its rights as pledgee of the Shares in accordance with the statutory procedures of enforcement laid down in the Norwegian Enforcement Act of 26 June 1992;
(b) to take over, institute, defend, settle or abandon (if necessary using the name of the Pledgor) all such legal or arbitration proceedings in connection with the Shares as the Agent in its sole and absolute discretion thinks fit;
(c) generally, to recover from the Pledgor on demand all expenses incurred by the Agent in or about or incidental to the exercise by it of any of the powers aforesaid; and
(d) generally, to enter into any transaction or arrangement of any kind and to do anything in relation to the Shares which the Agent may think fit.
6.3 Liability of the Agent
Neither the Agent nor its agents, managers, officers, employees, delegates and advisers shall be liable for any expense, claim, liability, loss, cost, damage or expense incurred or arising in connection with the exercise or purported exercise of any rights, powers and discretions under this Pledge of Shares in the absence of gross negligence or wilful misconduct.
7 Indemnity
The Pledgor will indemnify and hold harmless the Agent and each agent or attorney appointed under or pursuant to this Pledge of Shares from and against any and all expenses, claims, liabilities, losses, tax (other than tax on the overall net income of the Agent), costs, duties, fees and charges suffered, incurred or made by the Agent or such agent or attorney:
(a) in the exercise or purported exercise of any rights, powers or discretions vested in them pursuant to this Pledge of Shares; or
(b) in the preservation or enforcement of the Agent's rights under this Pledge of Shares; or
(c) on the release of any part of the Shares from the security created by this Pledge of Shares,
and the Agent or each such agent or attorney may retain and pay all sums in respect of the same amount of money received under the powers conferred by this Pledge of Shares. All such amounts recoverable by the Agent or each such agent or attorney shall be recoverable on a full indemnity basis.
8 Further assurances
The Pledgor hereby further undertake to execute and do all such assurances, acts and things as the Agent in its sole and absolute discretion may require for:
(a) perfecting or protecting the security created (or intended to be created) by this Pledge of Shares; or
(b) preserving or protecting any of the rights of the Agent under this Pledge of Shares; or
(c) ensuring that the security constituted by this Pledge of Shares and the covenants and obligations of the Borrower under this Pledge of Shares shall enure to the benefit of any such assignee of the Agent as is referred to in Clause 10; or
(d) facilitating the appropriation or realisation of the Shares or any part thereof in the manner contemplated by this Pledge of Shares; or
(e) the exercise of any power, authority or discretion vested in the Agent under this Pledge of Shares,
in any such case, forthwith upon demand by the Agent and at the expense of the Pledgor.
9 Notices
Any notice, demand or other communication to be made or delivered by any party pursuant to this Pledge of Shares shall (unless the addressee has by fifteen days' written notice to that party specified another address) be made or delivered: -
(a) if to the Pledgor:
Golar Gas Holding Company, Inc.
c/o Golar Management Limited
30 Marsh Wall
London E14 pTP
United Kingdom
Telefax no: +44 20 7517 8601
(b) if to the Agent:
Nordea Bank Norge ASA
P.O. Box 1166 Sentrum
Middelthunsg. 17
0368 Oslo
Norway
Telefax: +47 22 48 66 68
10 Successors and assigns
10.1 Successors and assigns
This Pledge of Shares shall be binding upon and shall enure to the
benefit of the Agent on behalf of the Banks and their respective
successors and permitted assigns and references in this Pledge of Shares
to any of them shall be construed accordingly.
10.2 Prior consent
The Pledgor shall not assign or transfer any of its rights and/or
obligations under this Pledge of Shares without the prior written
consent of the Agent. The Agent may assign and/or transfer part or all
of its rights and/or obligations hereunder to any financial institution
in accordance with the terms of the Agreement. In such case, the Pledgor
will execute such documentation as considered necessary by the Agent to
effectuate such assignment and/or transfer at the Agent's cost.
|
10.3 Disclosure of information
The Agent may disclose to a potential assignee, transferee or
sub-participant, such information about the Pledgor as the Agent
considers appropriate.
11 Jurisdiction
For the benefit of the Agent and each Bank, the Pledgor agrees that only
the courts of Norway shall have jurisdiction to settle any disputes in
connection with this Pledge of Shares and accordingly submits to the
non-exclusive jurisdiction of Oslo tingrett. Nothing in this Clause 11
shall limit the right of the Agent or any Bank to start proceedings
against the Borrower in any other court of competent jurisdiction.
12 Governing law
This Pledge of Shares is governed by Norwegian law.
13 Service of process
Without prejudice to any other mode of service, the Pledgor:
a) irrevocably appoints Frontline Management AS as its agents for
service of process relating to any proceedings before the
Norwegian courts in connection with this Pledge of Shares;
b) agrees that failure by its process agent to notify it of the
process will not invalidate the proceedings concerned; and
c) consents to the service of process to any such proceedings
before the Norwegian courts by posting of a copy of the process
to Frontline Management AS, Bryggegt. 3, P.O. Box 1327 Vika,
0112 Oslo, Norway.
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Signed by:
GOLAR GAS HOLDING COMPANY, INC.
By:
Name:
Title:
NORDEA BANK NORGE ASA
By:
Name:
Title:
Schedule 9 Form of Compliance Certificate
To: NORDEA BANK NORGE ASA as Agent under the Agreement as defined below
We refer to the Agreement dated 11 October 2002. We give this Compliance Certificate as required under Clause 17.5 of the Agreement. Terms used in this Compliance Certificate have the meanings given to them in the Agreement [and are on a consolidated basis].
The covenant calculations below are made as of, and in respect of three month period ending on [ ] 20[ ].
Agreement Clause Covenant determination/Calculation compliance Compliance
+ Cash and bank deposits according to the accounts
- restricted funds/deposits
17.4 (a) Free Available Cash: ___________________________ _______
+ Current Assets according to the accounts
- Current Liabilities according to the accounts
17.4 (b) Working Capital: _______________________________ _______
+ all Borrowed Money according to the accounts
- Borrowed Money in Oxbow, Golar Maritime,
Faraway and Aurora Management Inc.
- Free Available Cash
= Net Debt (1)
EBITDA last quarter
4 x EBITDA last quarter (2)
(1) divided by (2)
17.4 (c) = Leverage: ____________________________________ _______
|
It is hereby certified, by the undersigned, that there are no known, pending or threatened Events of Default as of this date. Furthermore, it is hereby certified that the above representations and undertakings contained in the Agreement are true and correct and fulfilled at the time hereof with reference to the facts now subsiding.
Best regards,
Enclosure: Financial Statement as per [ ]
Schedule 10A Form of Guarantee
issued by
[ ]
and
[ ] as Guarantors
in favour of
Nordea Bank Norge ASA as Agent
VOGT & WIIG AS
ADVOKATFIRMA
THIS GUARANTEE ("selvskyldnergaranti") is made on the [ ] October 2002
by:
[ ], [ ]; and
[ ], [ ]
(together the "Guarantors")
WHEREAS
(A) Golar Gas Holding Company, Inc. as borrower (the "Borrower") has been granted a credit facility for an amount not exceeding USD 60,000,000 (the "Facility") in accordance with an agreement dated 11 October 2002 (as the same hereafter from time to time may be amended referred to as the "Agreement") entered into among the Borrower, the Financial Institutions listed in Schedule 1 of the Agreement, the Agent (in its capacity as agent for the Banks, arranger and bank), Den norske Bank ASA as arranger and bank and Fortis Bank (Nederland) N.V. as arranger and Bank;
(B) It is a condition precedent to the drawdown under the Facility that the Guarantors execute and deliver this Guarantee, and in consideration thereof the Guarantors have agreed to execute and deliver this Guarantee to and in favour of the Agent (on behalf of the Banks) as security for all of the Borrower's obligations and liabilities to the Banks under the Agreement and all security documents issued or to be issued pursuant thereto (the "Security Documents") (such obligations hereinafter referred to as the "Guaranteed Obligations").
NOW, THEREFORE, each of the Guarantors hereby undertakes and agrees as follows:
1 Interpretation
1.1 Definitions
In this Guarantee including the preamble hereto (unless the context otherwise requires) any term or expression defined in the preamble shall have the meanings ascribed to it therein. In addition, terms and expressions not defined herein but whose meanings are defined in the Agreement shall have the meanings set out therein.
1.2 Construction
(a) Clause headings are inserted for convenience of reference only and shall be ignored in the construction of this Guarantee;
(b) references to Clauses are to be construed as references to clauses of this Guarantee unless otherwise stated;
(c) references to (or to any specified provision of) this Guarantee or any other document shall be construed as references to this Guarantee, that provision or that document as from time to time amended; and
(d) words importing the plural shall include the singular and vice versa.
2 Guarantee
The Guarantors hereby unconditionally and irrevocably, jointly and severally guarantee in favour of the Agent (on behalf of the Banks) as primary obligor as and for its own debt (som selvskyldner) and not merely as surety, to pay to the Agent on demand all monies and to discharge all Guaranteed Obligations or any part thereof of the Borrower when the same become due for payment or discharge, provided however, that each of the Guarantors' liability never shall exceed USD 80,000,000.
This Guarantee shall be in addition to and not in substitution of any other security held by the Agent (on behalf of the Banks) from time to time in respect of the Guaranteed Obligations.
For the purpose of the Norwegian Financial Contracts Act 1999 No. 46 (the "FA"), we hereby declare and confirm:
(a) that the principal amount secured under hereunder is USD 80,000,000 in accordance with the terms of the Agreement; in each case plus all unpaid interest, default interest, fees, costs and expenses;
(b) that we have received a copy of the Agreement, and we have thereby been informed of the security which is to be granted in respect of the amounts outstanding under the Agreement;
(c) that we have been informed by the Borrower that no event of which would be an Event of Default under the Agreement has occurred as per today; and
(d) that we are aware of the cross default provisions relating to ourselves contained in the Agreement.
3 Continuing security
This Guarantee is a continuing security for the whole of the Guaranteed Obligations from time to time and shall remain in full force and effect until all of the Guaranteed Obligations have been finally settled and fulfilled, and notwithstanding the liquidation of the Borrower or any change in the constitution of the Borrower or of the Agent or the absorption of or amalgamation by the Agent in or with any other entity or the acquisition of all or any part of the assets or undertaking of the Agent by any other entity.
4 Payment and performance
The Guarantors expressly undertake to make payment of any amount due to the Agent and the Banks as a consequence of the Borrower not having fulfilled its obligations under the Agreement and the Security Documents, within five Business Days after receipt of notice for payment from the Agent. Any payments under this Guarantee shall be made in full without any deductions of counterclaims whatsoever.
5 Preservation of Guarantors' liability
The Agent may without the prior written consent of any of the Guarantors and without notice to any of the Guarantors:
(a) materially amend, novate, supplement or replace the Agreement;
(b) agree with the Borrower to increase or reduce the amount of the Facility, or vary the terms and conditions for its repayment (including, without limitation, the rate and/or method of calculation of interest payable on the Facility);
(c) allow to the Borrower or to any other person any time or other indulgence;
(d) renew, vary, release or refrain from enforcing the Agreement or any security, guarantee or indemnity which the Agent may now or in the future hold from the Borrower or from any other person;
(e) compound with the Borrower or any other person;
(f) enter into, renew, vary or terminate any other agreement or arrangement with the Borrower or any other person; or
(g) make any concession to the Borrower or do or omit or neglect to do anything which might, but for this provision, operate to release or reduce the liability of the Guarantors under this Guarantee.
The liability of the Guarantors under this Guarantee shall not be affected by:
(a) the absence of, or any defective, excessive or irregular exercise of, any of the powers of the Borrower;
(b) any security given or payment made to the Agent or the Banks by the Borrower or any other person being avoided or reduced under any law (whether Norwegian or foreign) relating to bankruptcy or insolvency or analogous circumstance in force from time to time;
(c) the liquidation, administration, receivership or insolvency of any of the Guarantors;
(d) the Agreement and/or any of the Security Documents and/or any other security, guarantee or indemnity now or in the future held by the Bank being defective, void or unenforceable, or the failure of the Bank to take any security, guarantee or indemnity;
(e) the novation of any of the Guaranteed Obligations; or
(f) anything which would not have released or reduced the liability of the Guarantors to the Agent or the Banks had the liability of the Guarantors under Clause 2 been as a principal debtor of the Agent or the Banks and not as a guarantor.
6 Waivers of the Guarantors
Each of the Guarantors hereby waives:
(a) any requirement that the Agent and/or the Banks make demand upon or seek to enforce remedies against the Borrower for any payments or other performance of the Guaranteed Obligations before demanding payment or performance under this Guarantee,
(b) notice of the occurrence of any event of default under the Agreement or any of the Security Documents,
(c) its right of subrogation into the position of the Agent and/or the Banks under the Agreement or any of the Security Documents until and unless the Guaranteed Obligations shall have been finally settled and fulfilled; and
(d) any right to limit the liability under this Guarantee resulting from any failure to comply with section 62 to 74 of the FA. In addition, section 67 of the FA shall not apply to this Guarantee.
7 Undertakings
Each of the Guarantors undertakes to the Agent (on behalf of the Banks) that as long as any monies are being owed or may become owing or any other performance may become due under this Guarantee, the Guarantors shall:
(a) procure the compliance with all of the financial covenants and other undertakings as set out in the Agreement, of the terms of which it has full knowledge, and by this reference all such financial covenants and other undertakings are deemed to constitute an integral part of this Guarantee as if they were expressly incorporated herein;
(b) not make any distributions or dividends to its shareholders;
(c) not agree to any transfer of its shares, granting of options of ownership or change in its ultimate ownership;
(d) following receipt by any of the Guarantors of a notice from the Agent of the occurrence of any Event of Default under the Agreement, none of the Guarantors will make demand for or claim payment of any moneys due to any of the Guarantors from the Borrower, or exercise any other right or remedy to which any of the Guarantors is entitled in respect of such moneys unless and until all of the Guaranteed Obligations have been paid in full;
(e) not, if the Borrower shall become the subject of an insolvency proceeding or shall be wound up or liquidated make any claim in such insolvency, winding-up or liquidation until the Guaranteed Obligations have been paid in full (unless so instructed by the Agent and then only on condition that the Guarantors hold the benefit of any claim in such insolvency or liquidation and pay any amounts recovered thereunder to the Agent (on behalf of the Banks));
(f) if it, in breach of paragraph (d) and (e) above, receives or recovers any money pursuant to any such exercise, claim or proof as therein referred to, hold such money for the Agent to apply the same as if they were moneys received or recovered by the Agent (on behalf of the Banks) under this Guarantee; and
(g) not take from the Borrower any security whatsoever for the moneys hereby guaranteed.
8 Assignment
The Agent may assign or transfer its rights hereunder to any person to whom the rights and obligations as Agent and Bank may be assigned to under the Agreement.
None of the Guarantors may assign nor transfer any of its rights pursuant to the Guarantee without the prior written consent of the Agent (on behalf of the Banks).
9 Reinstatement
Notwithstanding any payment received by the Agent and/or the Banks under the Agreement or any of the Security Documents or any other document referred to therein, this Guarantee will be reinstated if such payment is required by bankruptcy law or any other legal provision to be returned by the Agent and/or the Banks to the party or parties having made such payment.
10 Jurisdiction
For the benefit of the Agent and each Bank, each of the Guarantors agrees that only the courts of Norway shall have jurisdiction to settle any disputes in connection with this Guarantee and accordingly submits to the non-exclusive jurisdiction of Oslo tingrett. Nothing in this Clause 10 shall limit the right of the Agent or any Bank to start proceedings against any of the Guarantors in any other court of competent jurisdiction.
11 Governing law
This Guarantee shall be governed by Norwegian law.
12 Service of process
Without prejudice to any other mode of service, each of the Guarantors:
(a) irrevocably appoints Frontline Management AS as its agent for service of process relating to any proceedings before Norwegian courts in connection with this Guarantee;
(b) agrees that failure by its process agent to notify it of the process will not invalidate the proceeding concerned; and
(c) consents to the service of process to any such proceedings before the Norwegian courts by posting of a copy of the process to Frontline Management AS, Bryggegt. 3, P.O. Box 1327 Vika, 0112 Oslo, Norway.
For and on behalf of
[ ]
By:
Name:
Title:
For and on behalf of
[ ]
By:
Name:
Title:
For and on behalf of
[ ]
By:
Name:
Title:
Schedule 10B Form of Guarantee
issued by
Golar LNG Ltd.
as Guarantor
in favour of
Nordea Bank Norge ASA
as Agent
VOGT & WIIG AS
ADVOKATFIRMA
THIS GUARANTEE ("selvskyldnergaranti") is made on the [ ] October 2002
WHEREAS
(A) Golar Gas Holding Company, Inc. as borrower (the "Borrower") has been granted a credit facility for an amount not exceeding USD 60,000,000 (the "Facility") in accordance with an agreement dated 11 October 2002 (as the same hereafter from time to time may be amended referred to as the "Agreement") entered into among the Borrower, the Financial Institutions listed in Schedule 1 of the Agreement, the Agent (in its capacity as agent for the Banks, arranger and bank), Den norske Bank ASA as arranger and bank and Fortis Bank (Nederland) N.V. as arranger and Bank;
(B) It is a condition precedent to the drawdown under the Facility that the Guarantor executes and delivers this Guarantee, and in consideration thereof the Guarantor has agreed to execute and deliver this Guarantee to and in favour of the Agent (on behalf of the Banks) as security for all of the Borrower's obligations and liabilities to the Banks under the Agreement and all security documents issued or to be issued pursuant thereto (the "Security Documents") (such obligations hereinafter referred to as the "Guaranteed Obligations").
NOW, THEREFORE, the Guarantor hereby undertakes and agrees as follows:
1 Interpretation
1.1 Definitions
In this Guarantee including the preamble hereto (unless the context otherwise requires) any term or expression defined in the preamble shall have the meanings ascribed to it therein. In addition, terms and expressions not defined herein but whose meanings are defined in the Agreement shall have the meanings set out therein.
1.2 Construction
(a) Clause headings are inserted for convenience of reference only and shall be ignored in the construction of this Guarantee;
(b) references to Clauses are to be construed as references to clauses of this Guarantee unless otherwise stated;
(c) references to (or to any specified provision of) this Guarantee or any other document shall be construed as references to this Guarantee, that provision or that document as from time to time amended; and
(d) words importing the plural shall include the singular and vice versa.
2 Guarantee
The Guarantor hereby unconditionally and irrevocably guarantees in favour of the Agent (on behalf of the Banks) as primary obligor as and for its own debt (som selvskyldner) and not merely as surety, to pay to the Agent on demand all monies and to discharge all Guaranteed Obligations or any part thereof of the Borrower when the same become due for payment or discharge, provided however, that the Guarantor's liability never shall exceed USD 80,000,000.
This Guarantee shall be in addition to and not in substitution of any other security held by the Agent (on behalf of the Banks) from time to time in respect of the Guaranteed Obligations.
For the purpose of the Norwegian Financial Contracts Act 1999 No. 46 (the "FA"), we hereby declare and confirm:
(a) that the principal amount secured under hereunder is USD 80,000,000 in accordance with the terms of the Agreement; in each case plus all unpaid interest, default interest, fees, costs and expenses;
(b) that we have received a copy of the Agreement, and we have thereby been informed of the security which is to be granted in respect of the amounts outstanding under the Agreement;
(c) that we have been informed by the Borrower that no event of which would be an Event of Default under the Agreement has occurred as per today; and
(d) that we are aware of the cross default provisions relating to ourselves contained in the Agreement.
3 Continuing security
This Guarantee is a continuing security for the whole of the Guaranteed Obligations from time to time and shall remain in full force and effect until all of the Guaranteed Obligations have been finally settled and fulfilled, and notwithstanding the liquidation of the Borrower or any change in the constitution of the Borrower or of the Agent or the absorption of or amalgamation by the Agent in or with any other entity or the acquisition of all or any part of the assets or undertaking of the Agent by any other entity.
4 Payment and performance
The Guarantor expressly undertakes to make payment of any amount due to the Agent and the Banks as a consequence of the Borrower not having fulfilled its obligations under the Agreement and the Security Documents, within five Business Days after receipt of notice for payment from the Agent. Any payments under this Guarantee shall be made in full without any deductions of counterclaims whatsoever.
5 Preservation of Guarantor's liability
The Agent may without the prior written consent of the Guarantor and without notice to the Guarantor:
(a) materially amend, novate, supplement or replace the Agreement;
(b) agree with the Borrower to increase or reduce the amount of the Facility, or vary the terms and conditions for its repayment (including, without limitation, the rate and/or method of calculation of interest payable on the Facility);
(c) allow to the Borrower or to any other person any time or other indulgence;
(d) renew, vary, release or refrain from enforcing the Agreement or any security, guarantee or indemnity which the Agent may now or in the future hold from the Borrower or from any other person;
(e) compound with the Borrower or any other person;
(f) enter into, renew, vary or terminate any other agreement or arrangement with the Borrower or any other person; or
(g) make any concession to the Borrower or do or omit or neglect to do anything which might, but for this provision, operate to release or reduce the liability of the Guarantor under this Guarantee.
The liability of the Guarantor under this Guarantee shall not be affected by:
(i) the absence of, or any defective, excessive or irregular exercise of, any of the powers of the Borrower;
(ii) any security given or payment made to the Agent or the Banks by the Borrower or any other person being avoided or reduced under any law (whether Norwegian or foreign) relating to bankruptcy or insolvency or analogous circumstance in force from time to time;
(iii) the liquidation, administration, receivership or insolvency of the Guarantor;
(iv) the Agreement and/or any of the Security Documents and/or any other security, guarantee or indemnity now or in the future held by the Bank being defective, void or unenforceable, or the failure of the Bank to take any security, guarantee or indemnity;
(v) the novation of any of the Guaranteed Obligations; or
(vi) anything which would not have released or reduced the liability of the Guarantor to the Agent or the Banks had the liability of the Guarantor under Clause 2 been as a principal debtor of the Agent or the Banks and not as a guarantor.
6 Waivers of the Guarantor
The Guarantor hereby waives:
(a) any requirement that the Agent and/or the Banks make demand upon or seek to enforce remedies against the Borrower for any payments or other performance of the Guaranteed Obligations before demanding payment or performance under this Guarantee,
(b) notice of the occurrence of any event of default under the Agreement or any of the Security Documents,
(c) its right of subrogation into the position of the Agent and/or the Banks under the Agreement or any of the Security Documents until and unless the Guaranteed Obligations shall have been finally settled and fulfilled; and
(d) any right to limit the liability under this Guarantee resulting from any failure to comply with section 62 to 74 of the FA. In addition, section 67 of the FA shall not apply to this Guarantee.
7 Undertakings
The Guarantor undertakes to the Agent (on behalf of the Banks) that as long as any monies are being owed or may become owing or any other performance may become due under this Guarantee, the Guarantor shall:
(a) procure the compliance with all of the financial covenants and other undertakings as set out in the Agreement, of the terms of which it has full knowledge, and by this reference all such financial covenants and other undertakings are deemed to constitute an integral part of this Guarantee as if they were expressly incorporated herein;
(b) not make any distributions or dividends to its shareholders;
(c) not agree to any transfer of its shares, granting of options of ownership or change in its ultimate ownership;
(d) following receipt by the Guarantor of a notice from the Agent of the occurrence of any Event of Default under the Agreement, the Guarantor will make demand for or claim payment of any moneys due to the Guarantor from the Borrower, or exercise any other right or remedy to which the Guarantor is entitled in respect of such moneys unless and until all of the Guaranteed Obligations have been paid in full;
(e) not, if the Borrower shall become the subject of an insolvency proceeding or shall be wound up or liquidated make any claim in such insolvency, winding-up or liquidation until the Guaranteed Obligations have been paid in full (unless so instructed by the Agent and then only on condition that the Guarantor holds the benefit of any claim in such insolvency or liquidation and pay any amounts recovered thereunder to the Agent (on behalf of the Banks));
(f) if it, in breach of paragraph (d) and (e) above, receives or recovers any money pursuant to any such exercise, claim or proof as therein referred to, hold such money for the Agent to apply the same as if they were moneys received or recovered by the Agent (on behalf of the Banks) under this Guarantee; and
(g) not take from the Borrower any security whatsoever for the moneys hereby guaranteed.
8 Assignment
The Agent may assign or transfer its rights hereunder to any person to whom the rights and obligations as Agent and Bank may be assigned to under the Agreement.
The Guarantor may not assign nor transfer any of its rights pursuant to the Guarantee without the prior written consent of the Agent (on behalf of the Banks).
9 Reinstatement
Notwithstanding any payment received by the Agent and/or the Banks under the Agreement or any of the Security Documents or any other document referred to therein, this Guarantee will be reinstated if such payment is required by bankruptcy law or any other legal provision to be returned by the Agent and/or the Banks to the party or parties having made such payment.
10 Jurisdiction
For the benefit of the Agent and each Bank, the Guarantor agrees that only the courts of Norway shall have jurisdiction to settle any disputes in connection with this Guarantee and accordingly submits to the non-exclusive jurisdiction of Oslo tingrett. Nothing in this Clause 10 shall limit the right of the Agent or any Bank to start proceedings against the Guarantor in any other court of competent jurisdiction.
11 Governing law
This Guarantee shall be governed by Norwegian law.
12 Service of process
Without prejudice to any other mode of service, the Guarantor:
(a) irrevocably appoints Frontline Management AS as its agent for service of process relating to any proceedings before Norwegian courts in connection with this Guarantee;
(b) agrees that failure by its process agent to notify it of the process will not invalidate the proceeding concerned; and
(c) consents to the service of process to any such proceedings before the Norwegian courts by posting of a copy of the process to Frontline Management AS, Bryggegt. 3, P.O. Box 1327 Vika, 0112 Oslo, Norway.
For and on behalf of
GOLAR LNG LTD.
By:
Name:
Title:
Schedule 11
Form of Mortgage
Dated: [ ] October 2002
SECOND PREFERRED MORTGAGE
by
[ ]
as Owner
to
NORDEA BANK NORGE ASA
as Second Mortgagee
in respect of
m/v "[ ]"
of Monrovia, Liberia
Official No. [ ]
I N D EX
Recitals 3
Article I Definitions 4
Article II Granting Clause 5
Article III Covenants of Owner
Section 1. Payment of Indebtedness 5
Section 2. Insurance and Maintenance 7
Section 3. Mortgage Recording 7
Section 4. Prohibition of Liens 7
Section 5. Notice of Mortgage 8
Section 6 No Sales, Transfers or other
Preferred Mortgages 8
Section 7. Authority of the Mortgagee 8
Article IV Events of Default and Remedies
Section 1. Events of Default; Remedies 9
Section 2. Power of Attorney - Sale 10
Section 3. Power of Attorney - Collection 10
Section 4. Delivery of Vessel 10
Section 5. Mortgagee to Discharge Liens 10
Section 6. Remedies Cumulative 11
Section 7. Cure of Default 11
Section 8. Discontinuance of Proceedings 11
Section 9. Application of Proceeds 11
Section 10. Requisition Compensation 11
Section 11. Severability of Provisions 12
Article V Sundry Provisions
Section 1. Successors and Assigns 12
Section 2. Power of Substitution 12
Section 3. Preferred Status 12
Section 4. Notices 12
Section 5. Recording and Total Amount 12
Section 6 Discharge 13
Appendices
Appendix 1. Second Loan Agreement dated 11 October 2002
Appendix 2. Guarantee dated [ ] October 2002
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THIS SECOND PREFERRED MORTGAGE (the "Second Mortgage") is made this [ ] day of
[__________] October 2002 by
(1) [_____________________], a Liberian corporation having an address at 80 Broad Street, Monrovia, Liberia (the "Owner"); in favor of
(2) NORDEA BANK NORGE ASA, a Norwegian banking corporation acting through its offices at Middelthunsgt. 17, 0368 Oslo, Norway, (the "Second Mortgagee") as security trustee.
WHEREAS
(A) The Owner is the sole and absolute legal and beneficial owner of the
whole of the Liberian flag motor vessel "[__________]", of [__________]
gross tons and [ ] net tons, or thereabouts, built in [__________] at
[__________] and duly documented in the name of the Owner under the laws
of the Republic of Liberia with her home port at Monrovia, Liberia and
with official number [__________] (the "Vessel").
(B) Pursuant to that certain Loan Agreement dated 31 May 2001, (the "First Loan Agreement") made among i.e. Golar Gas Holding Company, Inc, a corporate incorporated under the laws of the Republic of Liberia (the "Borrower"), the banks and financial institutions specified in the First Loan Agreement, as lenders (the "First Banks") and Den norske Bank ASA (as security agent for the lenders) as first mortgagee (the "First Mortgagee"), the First Banks have made available to the Borrower a term loan facility in the aggregate principal amount of United States Dollars Three Hundred and Twenty Five Million (USD325,000,000) (the "First Loan").
(C) Pursuant to the First Loan Agreement, the Owner has executed and delivered a certain first preferred mortgage in favour of the First Mortgagee dated 31 May 2001 and recorded against the Vessel in the Office of Deputy Commissioner of Maritime Affairs of the Republic of Liberia in New York at [time] on [__________] in Book PM [__________] at Page [__________] as security for the Borrower's obligations under the First Loan Agreement (the "First Mortgage").
(D) Pursuant to that certain Loan Agreement dated 11 October 2002 (the "Second Loan Agreement"), a copy of the form of which is attached hereto as Appendix 1 and shall be read together herewith) made among the Borrower, the financial institutions listed in Schedule 1 to the Second Loan Agreement, as lenders (the "Second Banks") and the Second Mortgagee, as agent and arranger, the Second Banks have agreed to made available to the Borrower a credit loan facility in the aggregate principal amount of United States Dollars Sixty Million (USD60,000,000) (the "Second Loan").
(E) The principal of the Second Loan shall be repaid as provided in Clause 3 of the Second Loan Agreement, and interest on the Second Loan at the rate of LIBOR plus the Margin for the relevant Interest Period (each as defined in the Second Loan Agreement) shall be paid as provided in Clause 7 of the Second Loan Agreement.
(F) Pursuant to the Second Loan Agreement, the Owner has executed and delivered to the Second Mortgagee a guarantee dated [__________] October 2002 (the "Guarantee"), of the Second Loan and interest thereon and all other sums payable or to become payable under the Second Loan Agreement, A copy of the Guarantee is annexed hereto as Appendix 2 and shall be read together herewith.
(G) It is a condition to advance of the Second Loan under the Second Loan Agreement that the Owner executes and delivers this Second Preferred Mortgage to the Second Mortgagee as security for the Owner's obligations under the Guarantee.
(H) Pursuant to the Second Loan Agreement, the Banks have appointed the Second Morgagee their security trustee/mortgage holder with full power to receive, hold, administer and enforce this Second Mortgage for the benefit of the Banks.
(I) In order to secure the payment to the Second Mortgagee of the Secured Indebtedness (as hereinafter defined), and to secure the performance and observance of and compliance with all of the agreements, covenants, terms and conditions of the Guarantee and this Second Mortgage contained, the Owner has duly authorized the execution and delivery of this Second Preferred Mortgage under and pursuant to Chapter 3 of Title 21 of the Liberian Code of Laws Revised, as amended.
NOW THEREFORE THIS MORTGAGE WITNESSETH:
ARTICLE I
Definitions
In this Second Mortgage, unless the context otherwise requires:
(i) "Environmental Affiliate" means any agent or employee of the Owner or any person in a contractual relationship with the Owner relating to the Vessel or her operation, whose acts or omissions would have a material adverse effect on the Owner's ability to meet its obligations to the Second Mortgagee with respect to the Secured Indebtedness or on the security provided to the Second Mortgagee with respect to the Secured Indebtedness;
(ii) "Environmental Approvals" means any and all consents, permits, licenses, approvals, rulings, variances, exemptions or other authorisations by any governmental or public body or authorities or courts, required under applicable Environmental Laws;
(iii) "Environmental Claims" means (i) any claim by, or directive from, or enforcement, clean-up, removal or any other governmental or regulatory actions initiated by, any applicable governmental, judicial, or other regulatory authority alleging breach of, or non-compliance with, any Environmental Laws or Environmental Approvals or otherwise howsoever relating to or arising out of an Environmental Release, or (ii) any claim by any other third party howsoever relating to or arising out of an Environmental Release (and in each such case "claim" shall include a claim for damages, clean-up costs, contribution, compliance, remedial action or otherwise);
(iv) "Environmental Laws" mean all national, international and state laws, rules, regulations, treaties, conventions and agreements whatsoever relating to pollution or protection of the environment (including, without limitation, the United States Oil Pollution Act of 1990, as amended, and any comparable laws of the individual States of the United States of America);
(v) "Environmental Release" means any release of an Environmentally Sensitive Material from the Vessel or as a result of her operation or navigation, for which the Owner has any liability under any applicable Environmental Laws or any Environmental Claim;
(vi) "Environmentally Sensitive Material" means and includes oil, oil products and any other substance which is polluting, toxic, contaminant or hazardous or any substance the release of which is regulated, prohibited or penalised by or pursuant to any Environmental Law;
(vii) "ISM Code" means the International Safety Management Code (including the guidelines on its implementation), adopted by the International Maritime Organisation Assembly as Resolutions A.741(18) and A.788(19), as the same may be amended or supplemented from time to time. The terms "safety management system", "Safety Management Certificate", "Document of Compliance" and "major non-conformity" shall have the same meanings as are given to them in the ISM Code.
(viii) "Secured Indebtedness" means the aggregate of the Second Loan and interest thereon, default interest, expenses, fees, and all other sums of any kind at any time which may become owing by the Owner to the Second Mortgagee under the Guarantee and this Second Mortgage;
(ix) "Security Period" means the period commencing on the date hereof and terminating upon discharge of the security created by this Second Mortgage by payment in full of the Secured Indebtedness;
(x) "Vessel" means the whole of the vessel described in Recital A hereof and includes her engines, machinery, boats, boilers, masts, rigging, anchors, chains, cables, apparel, tackle, outfit, spare gear, fuel, consumable and other stores, freight, belongings and appurtenances, whether on board or ashore, whether now owned or hereafter acquired, and all additions, improvements and replacements hereafter made in or to the said vessel, or any part thereof, or in or to the stores, belongings and appurtenances aforesaid; and
(xi) Terms and expressions used herein and not otherwise defined herein, shall bear the meanings ascribed to them in the Second Loan Agreement.
ARTICLE II
Grant of Second Mortgage
NOW THEREFORE, in consideration of the premises and of other good and valuable consideration, the adequacy and receipt whereof are hereby acknowledged, and in order to secure the payment of the Secured Indebtedness and to secure the performance and observance of and compliance with the covenants, terms and conditions in the Guarantee and this Second Mortgage contained, the Owner has granted, conveyed and mortgaged and does by these presents grant, convey and mortgage, to and in favor of the Second Mortgagee, its successors and assigns (subject to the prior rights of the First Mortgagee pursuant to the First Mortgage), the whole of the Vessel TO HAVE AND TO HOLD the same unto the Second Mortgagee, its successors and assigns, forever, upon the terms set forth in this Second Mortgage for the enforcement of the payment of the Secured Indebtedness and to secure the performance and observance of and compliance with the covenants, terms and conditions in the Guarantee and this Second Mortgage contained SUBJECT AND SUBORDINATE, however, in all respects to the First Mortgage and all the terms, provisions and conditions thereof;
PROVIDED, ONLY, and the condition of these presents are such that, if the Owner and/or its successors or assigns shall pay or cause to be paid to the Second Mortgagee, its successors and assigns, the Secured Indebtedness as and when the same shall become due and payable in accordance with the terms of the Guarantee and this Second Mortgage, and the Owner shall perform, observe and comply with all and singular of the covenants, terms and conditions in the Guarantee and this Second Mortgage contained, expressed or implied, to be performed, observed or complied with by and on the part of the Owner or its successors or assigns, all without delay or fraud and according to the true intent and meaning hereof and thereof, then these presents and the rights of the Second Mortgagee under this Second Mortgage shall cease and determine and, in such event, the Second Mortgagee agrees by accepting this Second Mortgage, at the expense of the Owner, to execute all such documents as the Owner may reasonably require to discharge this Second Mortgage under the laws of the Republic of Liberia; otherwise to be and remain in full force and effect.
ARTICLE III
Covenants of the Owner
The Owner covenants and agrees with the Second Mortgagee as follows:
The Owner will pay the Secured Indebtedness as and when the same shall become due and payable and will observe, perform and comply with the covenants, terms and conditions herein and in the Guarantee, expressed or implied, on its part to be observed, performed or complied with.
The Owner undertakes at all times throughout the Security Period to:
(a) insure and keep the Vessel insured in accordance with the provisions of Clause 17.14 of the Second Loan Agreement;
(b) keep and cause the Vessel to be kept in a good and efficient state of repair, maintain the highest class available for vessels of her type with a classification society acceptable to the Second Mortgagee, comply with the provisions of all laws, regulations and requirements (statutory or otherwise) from time to time applicable to vessels registered under the flag of the Republic of Liberia, procure that all repairs to or replacements of any damaged, worn or lost parts or equipment be effected in such manner (both as regards workmanship and quality of materials) as not to diminish the value of the Vessel, and permit the Second Mortgagee by surveyors or other persons appointed by them in that behalf to board the Vessel for the purpose of inspecting her condition or for the purpose of satisfying themselves in regard to proposed or executed repairs and to afford all proper facilities for such inspections;
(c) submit or to cause the Vessel to be submitted to such periodic or other surveys as may be required for classification purposes and, if requested by the Second Mortgagee, to supply or to cause to be supplied to the Second Mortgagee copies of all survey reports and confirmations of class issued in respect thereof and to furnish to the Second Mortgagee a certificate by [ ] or such other classification society acceptable to the Second Mortgagee that the Vessel's aforesaid classification is maintained;
(d) pay and discharge or to cause to be paid and discharged all debts, damages and liabilities whatsoever which have given or may give rise to maritime or possessory liens on or claims enforceable against the Vessel except to the extent permitted by Article III, Sections 2(i) and 4 hereof and in event of arrest of the Vessel pursuant to legal process or in event of her detention in exercise or purported exercise of any such lien as aforesaid, procure the release of the Vessel from such arrest or detention within ten (10) days of the occurrence of such event;
(e) not cause or permit the Vessel to be operated in any manner contrary to law, and not employ the Vessel or suffer her employment in any trade or business which is forbidden by the laws of the Republic of Liberia or is otherwise illicit or in carrying illicit or prohibited goods or in any manner whatsoever which may expose the Vessel to penalty, forfeiture or capture or render her liable to condemnation or to destruction, seizure or confiscation and in event of hostilities in any part of the world (whether war be declared or not) not to employ the Vessel or suffer her employment in carrying any contraband goods or to enter or trade to any zone which is declared a war zone by the Vessel's war risks Insurers unless there shall have been effected by the Owner at its expense special insurance coverage to extend to such voyage;
(f) comply with all applicable Environmental Laws and obtain and comply with all required Environmental Approvals relating to the Vessel, her operation or management and the business of the Owner, including, without limitation, requirements relating to the establishment of financial responsibility (and shall require that all Environmental Affiliates of the Owner comply with all applicable Environmental Laws and obtain and comply with all required Environmental Approvals relating to the Vessel);
(g) upon the request of the Second Mortgagee, conduct and complete all reasonably necessary investigations, studies, sampling, audits and testings required by any known (or threatened) Environmental Release;
(h) promptly upon the occurrence of any of the following events, provide to the Second Mortgagee a certificate of an officer of the Owner specifying in detail the nature of such event and the proposed response of the Owner or its Environmental Affiliate;
(i) the receipt by the Owner or any Environmental Affiliate (where the Owner has knowledge of such receipt) of any Environmental Claim; or
(ii) any (or any threatened) Environmental Release;
and upon the written request by the Second Mortgagee, the Owner shall submit to the Second Mortgagee, at reasonable intervals, a report updating the status of any occurrence of an Environmental Claim or an Environmental Release,
(i) except for the First Mortgage and this Second Mortgage keep and cause the Vessel to be kept free and clear of all liens, charges, mortgages and encumbrances except where the Owner has received prior written consent of the First Mortgagee and the Second Mortgagee to the creation of any such liens, charges, mortgages and/or encumbrances;
(j) (i) to comply, at all times, and be responsible for compliance by itself and by the Vessel, with the ISM Code;
(ii) at all times to ensure that:
(a) the Vessel has a valid Safety Management Certificate;
(b) the Vessel is subject to a safety management system which complies with the ISM Code; and
(c) to have a valid Document of Compliance for the Vessel, and to hold it on board the Vessel,
and to deliver to the Second Mortgagee on request a copy of a valid Safety Management Certificate and a valid Document of Compliance in respect of its Vessel in each case duly certified by an officer of the Owner;
(iii) to promptly notify the Second Mortgagee of any actual or threatened withdrawal of an applicable Safety Management Certificate or Document of Compliance;
(iv) to promptly notify the Second Mortgagee of the identity of the person ashore designated for the purposes of paragraph 4 of the ISM Code and of any change in the identity of that person; and
(v) to promptly notify the Second Mortgagee of the occurrence of any accident or major non-conformity requiring action under the ISM Code.
The Owner will cause this Second Mortgage to be duly recorded in accordance with the provisions of Chapter 3 of Title 21 of the Liberian Code of Laws Revised, as amended, (hereinafter called the "Liberian Maritime Law") and will otherwise comply with and satisfy all of the provisions of the Liberian Maritime Law in order to establish and maintain this Second Mortgage as a second preferred mortgage on the Vessel.
Neither the Owner, any charterer, the Master of the Vessel nor any other person has or shall have any right, power or authority to create incur or permit to be placed or imposed or continued upon the Vessel, its freights, profits or hire any lien whatsoever other than the lien created under the First Mortgage and this Second Mortgage, other liens in favour of the Second Mortgagee and liens for crew's wages and salvage.
The Owner will place, and at all times and places will retain, a properly certified copy of the Second Mortgage on board the Vessel with her papers and certificates and cause this Second Mortgage to be exhibited to all persons having business with the Vessel which might give rise to a maritime lien thereon, and will place and keep prominently displayed in the chart room and in the Master's cabin of the Vessel a framed printed notice in plain type reading as follows:
"NOTICE OF MORTGAGE
This Vessel is owned by [ ] and is covered by a Second Preferred Mortgage in favor of NORDEA BANK NORGE ASA, Middelthunsgt. 17, 0368 Oslo, Norway, as Second Mortgagee, under the authority of the Liberian Code of Laws Revised, as amended, and as the same may be or may have been further amended, modified and/or re-codified. Under the terms of said Second Mortgage, neither the Owner, any charterer, the Master of this Vessel nor any other person has any right, power or authority to create, incur or permit to be imposed upon this Vessel, its freights, profits or hire, any other lien whatsoever except liens for crew's wages and salvage."
The Owner will not sell, mortgage, transfer or change the management (technical or commercial) of the Vessel, without the prior written consent of the Second Mortgagee, and any such written consent to any one sale, mortgage, transfer, or change of management shall not be construed to be a waiver of this provision with respect to any subsequent proposed sale, mortgage, transfer or change of management. Any such sale, mortgage, transfer or change in management of the Vessel shall be subject to the provisions of this Second Mortgage.
Without prejudice to any other rights of the Second Mortgagee hereunder:
(i) in the event that the provisions of Article III Section 2.(a) hereof shall not be complied with, the Second Mortgagee shall be at liberty to effect and thereafter replace, maintain and renew all such insurances upon the Vessel as in their sole discretion they may think fit;
(ii) in the event that the provisions of Article III Section 2.(b) and/or (c) hereof shall not be complied with, the Second Mortgagee shall be at liberty to arrange for the carrying out of such repairs and/ or surveys as they deem expedient or necessary; and
(iii) any and all expenses incurred by the Second Mortgagee (including fees of counsel) in respect of their performances under the foregoing sub-sections (i) and (ii) shall be paid by the Owner on demand, with interest thereon at the rate provided for in sub-clause 7.4 of the Second Loan Agreement from the date when such expenses were incurred by the Second Mortgagee.
ARTICLE IV
Events of Default and Remedies
In case of any one or more of the following events, herein termed "events of default", shall happen:
(a) an event of default stipulated in Clause 18 of the Loan Agreement shall occur; or
(b) a default in the due and punctual observance and performance of any of the covenants or provisions of the Second Loan Agreement or this Second Mortgage shall have occurred and be continuing; or
(c) any notice shall have been issued by the government or any bureau, department, officer, board or agency thereof of the country of registry of the Vessel to the effect that the Vessel is subject to cancellation from such registry or the certificate of registry of the Vessel is subject to revocation or cancellation for any reason whatsoever;
then:
The Second Mortgagee shall have the right to (subject to the rights of the First Mortgagee under the First Mortgage):
(i) declare all the then unpaid Secured Indebtedness to be immediately due and payable, and upon such declaration, the same, shall become and be due and payable;
(ii) exercise all of the enforcement rights and remedies in foreclosure and otherwise given to the Second Mortgagee by the provisions of the law of the country of registry of the Vessel or of any other jurisdiction where the Vessel may be at the relevant time or any other relevant jurisdiction;
(iii) bring suit at law, in equity or in admiralty, as they may be advised, to obtain judgement (if required by the laws of the relevant jurisdiction) against the Owner for the payment of the Secured Indebtedness, and collect the same out of any and all property of the Owner covered by this Second Mortgage;
(iv) take and enter into possession of the Vessel, at any time, wherever the same may be, without prior legal proceedings (if permitted by the laws of the relevant jurisdiction) and, without being responsible for possible loss or damage to the Owner, the Owner or other person in possession of the Vessel shall forthwith upon demand of the Second Mortgagee surrender possession of the Vessel to the Second Mortgagee;
(v) hold, lay up, lease, charter, operate or otherwise use the Vessel (without being responsible for possible loss or damage) for such time and upon such terms as it may deem to be for its best advantage, and demand, collect and retain all hire, freights, earnings, revenues, income, profits, return premiums, sale or insurance proceeds, salvage awards or recoveries, recoveries in general average, and all other sums due or to become due in respect of the Vessel;
(vi) sell the Vessel by public auction or private contract (without being
responsible for possible loss and damage) on such terms and conditions
as the Second Mortgagee shall deem to be for its best advantage free
from any claim of or by the Owner, by mailing notice of such sale,
whether public or private, to the Owner at its last known address as set
forth in this Second Mortgage, seven calendar days prior to the date
fixed for entering into the contract of sale and, in the event of public
auction, by first publishing notice of any such public sale for ten (10)
consecutive days in a newspaper of general circulation published in the
City of New York, State of New York. In the event that the Vessel shall
be offered for sale by private sale, reasonable notice must be given to
the Owner but need not to be more than seven days before the private
sale and no newspaper publication shall be required nor notice of the
adjournment of sale. Sale may be held at such place and at such time as
the Second Mortgagee by notice may have specified and any sale may be
conducted without bringing the Vessel to the place designated for such
sale and any sale may be conducted in such manner as the Second
Mortgagee may deem to be for their best advantage, and the Second
Mortgagee may become the purchaser at any sale. The Owner agrees that
any sale of the Vessel made in compliance with the provisions of this
Section 1 shall be deemed made in a commercially reasonable manner as
far as it is concerned.
Anything in this Section to the contrary notwithstanding, this Second Mortgage is subject to the First Mortgage and the rights and powers granted to the Second Mortgagee herein are subject and subordinate (except for the rights to repayment of the Secured Indebtedness) to the corresponding rights and powers granted to the First Mortgagee under the First Mortgage and may not be exercised in such a manner as to impair such rights and powers under the First Mortgage.
The Owner hereby irrevocably appoints the Second Mortgagee as its attorney-in-fact to execute and deliver to any purchaser aforesaid, and is hereby vested with full power and authority to execute, in the name and on behalf of the Owner, a bill of sale or other form of good conveyance of title to the Vessel so sold (subject to the rights of the First Mortgagee under the First Mortgage).
The Second Mortgagee is hereby appointed attorney-in-fact of the Owner, with full power, upon the happening of any event of default, in the name of the Owner (and subject to the rights of the First Mortgagee under the First Mortgage) to demand, collect, receive, compromise and sue for, so far as may be permitted by law, all freight, hire, earnings, revenues, income, profits and sale proceeds of the Vessel and all amounts due from underwriters under any insurance thereon as payment of losses or as a return of premia or otherwise, salvage awards and recoveries, recoveries in general average or otherwise, and all other sums due or to become due at the time of the happening of any event of default as defined in Section 1 of Article IV hereof in respect of the Vessel, or in respect of any insurance thereon, from any person whomsoever, and to make, give and execute in the name of the Owner acquittances, receipts, releases or other discharges for the same, and to endorse and accept in the name of the Owner all checks, notes, drafts, warrants, agreements and other instruments in writing with respect to the foregoing.
Whenever any right to enter and take possession of the Vessel accrues to the Second Mortgagee pursuant to this Second Mortgage, it may require the Owner to deliver, and the Owner shall on demand, at its own cost and expense, deliver to the Second Mortgagee the Vessel as demanded. If any legal proceedings shall be taken to enforce any right under this Second Mortgage, the Second Mortgagee shall be entitled as a matter of right to the appointment of a receiver of the Vessel and of the freights, hire, earnings, revenues, income and profits due or to become due and arising from the operation thereof.
The Owner authorizes and empowers the Second Mortgagee or its appointees to appear in the name of the Owner, its successors and assigns, in any court of any country or nation of the world where a suit is pending against the Vessel because of or on account of any alleged lien against the Vessel from which the Vessel has not been released and to take such proceedings as to them may seem proper towards the defence of such suit and purchase or discharge of such lien, and all expenditures made or incurred by them for the purpose of such defence or purchase or discharge shall be a debt due from the Owner, its successors and assigns, to the Second Mortgagee, and shall be secured by the lien of this Second Mortgage in like manner and extent as if the amount and description thereof were written herein.
Each and every power and remedy herein given to the Second Mortgagee shall be cumulative and shall be in addition to every other power and remedy herein given or now or hereafter existing at law, in equity, in admiralty or by statute, and each and every power and remedy whether herein given or otherwise existing may be exercised from time to time and as often and in such order as may be deemed expedient by the Second Mortgagee, and the exercise or the beginning of the exercise of any power or remedy shall not be construed to be a waiver of the right to exercise at the same time or thereafter any other power of remedy. No delay or omission by the Second Mortgagee in the exercise of any right or power or in the pursuance of any remedy accruing upon any default as above defined shall impair any such right, power or remedy or be construed to be a waiver of any such event or default.
If at any time after an event of default and prior to the actual sale of the Vessel by the Second Mortgagee or prior to any enforcement or foreclosure proceedings the Owner offers completely to cure all events of default and to pay all expenses, advances and damages to the Second Mortgagee consequent on such events of default, with interest at the interest rate set forth in sub-clause 7.4 of the Second Loan Agreement, then the Second Mortgagee may, but shall not be obligated to do so, accept such offer and payment and restore the Owner to its former position, but such action, if taken, shall not affect any subsequent event of default or impair any rights consequent thereon.
In case the Second Mortgagee shall have proceeded to enforce any right, power or remedy under this Second Mortgage by foreclosure or otherwise, and such proceedings shall have been discontinued and abandoned for any reason or shall have been determined adversely to the Second Mortgagee, then and in every such case the Owner and the Second Mortgagee shall be restored to their former position and rights hereunder with respect to the property subject or intended to be subject to this Mortgage, and all rights, remedies and powers of the Mortgagee shall continue as if no such proceedings had been taken.
The proceeds of any sale of the Vessel and any and all other moneys received by the Second Mortgagee pursuant to or under the terms of this Second Mortgage or in any proceedings hereunder the application of which has not elsewhere herein been specifically provided for, shall (subject to the rights of the First Mortgagee under the First Mortgage) be applied as follows:
First: So much of such amounts as shall be required to pay all taxes, assessments or liens in respect of the Vessel having priority over liens or security interests in favour of the Second Mortgagee, shall be applied to the payment of such taxes, assessments or liens;
Second: So much of such amounts as shall be required to pay in full the Secured Indebtedness shall be applied to the payment of the Secured Indebtedness.
Third: Any surplus thereafter remaining, to the Owner or Owner's successors in interest and assigns, or to whomever may be lawfully entitled to receive the same.
Subject to the rights of the First Mortgagee under the First Mortgage and the First Deed of Assignment, in the event that the title or ownership of the Vessel shall be requisitioned, purchased or taken by any government of any country or any department, agency or representative thereof, pursuant to any present or future law, proclamation, decree, order or otherwise, the lien of this Second Mortgage shall be deemed to attach to the claim for compensation therefore, and the compensation is hereby agreed to be payable to the Second Mortgagee, who shall be entitled to receive the same and shall apply it as provided in Section 9 of this Article III. In the event of any such requisition, purchase or taking, the Owner shall promptly execute and deliver to the Second Mortgagee such documents, if any, as in the opinion of the Second Mortgagee may be necessary or useful to facilitate or expedite the collection by the Second Mortgagee of such compensation, purchase price, reimbursement or award as is payable to them hereunder.
In the event that any provision or provisions of this Second Mortgage shall be declared invalid, void or otherwise inoperative by any present or future court of competent jurisdiction in any country, the Owner will, without prejudice to any other right or remedy of the Second Mortgagee under the Second Loan Agreement or the Guarantee or this Second Mortgage, execute and deliver such other and further instruments and do such things as in the opinion of the Second Mortgagee and its counsel will be necessary or advisable to carry out the time intent and spirit of this Second Mortgage. In any event, any such declaration of partial invalidity shall not affect the validity of any other provision or provisions of this Second Mortgage, or the validity of this Second Mortgage as a whole.
ARTICLE V
Sundry Provisions
No assignment shall be made in respect of this Second Mortgage except in accordance with the terms of Clause 24 of the Second Loan Agreement.
Wherever and whenever herein any right, power or authority is granted or given to the Second Mortgagee, such right, power or authority may be exercised in all cases by the Second Mortgagee or such agent or agents the Second Mortgagee may appoint, and the act or costs of such agent or agents when taken shall constitute the act or costs of the Second Mortgagee hereunder.
Anything herein to the contrary not withstanding, it is intended that nothing herein shall waive the preferred status of this Second Mortgage and that, if any provision or portion thereof herein shall be construed to waive the preferred status of this Second Mortgage, then such provision to such extent shall be void and of no effect.
Any notice or other communication to be given pursuant hereto shall be transmitted and addressed as set forth in this Second Mortgage.
For the purpose of recording this Second Preferred Mortgage as required by Chapter 3 of Title 21 of the Liberian Code of Laws Revised, as amended, the total amount of this Second Mortgage is Sixty Million United States Dollars (USD 60,000,000) and interest thereon, default interest, costs, expenses, and performance of Second Mortgage covenants. The date of maturity is on demand.
It is not intended that this Second Mortgage shall include property other than the Vessel as the term "vessel" is used in subdivision (2) of Section 106 of Chapter 3 of Title 21 of the Liberian Code of Laws Revised, as amended. Notwithstanding the foregoing, for property other than the Vessel, if any should be determined to be covered by this Second Mortgage, the discharge amount is zero point zero one per centum (0.01%) of the total amount of this Second Mortgage.
The Second Mortgagee shall, when the Secured Indebtedness has been paid to the Second Mortgagee in full, at the cost and expense of the Owner, provide for discharge and release of this Second Mortgage.
IN WITNESS WHEREOF, the Owner has caused this Second Mortgage to be duly executed the day and year first above written.
ACKNOWLEDGEMENT
STATE OF NORWAY )
: ss.:
CITY OF OSLO )
On this _____ day of [ ], 2002, before me personally appeared [ _________________________ ], to me known, who being by me duly sworn, did depose and say that he/she resides at _______________________________________, that he/she is the Attorney-in-Fact of [ ], the corporation described in and which executed the foregoing instrument, and that he/she signed his/her name thereto pursuant to authority granted to him/her by the board of directors of said corporation.
Schedule 12
List of Charters and Management Agreements
M/V GOLAR SPIRIT
Charter
Time charter dated 9 September 1983 between Pertamina and Golar Gas Cryogenics Inc. as amended by Addendum No. 1 dated 2 July 1986 and Addendum No. 2 dated 20 February 1990 expiry on or about 1 December 2006 subject to charterer's option to extend.
Charter Guarantee
None.
Management Agreement
Management Agreement dated 1 January 1999 between Golar Gas Cryogenics Inc. and Osprey Maritime Management Limited.
M/V HILLI
Charter
Short term pre-emption charter dated 7 September 2000 between Golar Hilli Inc. and Methane Services Limited entered into pursuant to the Master Agreement covering period until delivery under long term charter.
Long term charter dated 25 October 2001 between Golar Hilli Inc. and Methane Services Limited.
Omnibus agreement dated 25 October 2001 between Methane Services Ltd., BG International Ltd., BG Asia Pacific PTE. Ltd., Osprey Maritime Ltd., Golar Management Ltd., Golar LNG Ltd., Golar Khannur Inc., Golar Freeze Inc., Golar Gimi Inc., Golar Hilli Inc., Golar LNG 2215 Corporation and Poten & Partners Inc.
Charter Guarantee
(a) Guarantee dated 7 September 2000 from BG International Limited in favour of Golar Hilli Inc. (in respect of pre-emption charter).
(b) Guarantee dated 8 May 2001 from BG International Limited in favour of Golar Hilli Inc. (in respect of long term charter).
Management Agreement
Management Agreement dated 1 January 1999 between Golar Hilli Inc. and Osprey Maritime Management Limited.
M/V GIMI
Charter
Short term pre-emption charter to be entered into between Golar Gimi Inc. and Methane Services Limited Pursuant to the Master Agreement covering period until delivery under long term charter.
Long term charter dated 25 October 2001 between Golar Gimi Inc. and Methane Services Limited.
Omnibus agreement dated 25 October 2001 between Methane Services Ltd., BG International Ltd., BG Asia Pacific PTE. Ltd., Osprey Maritime Ltd., Golar Management Ltd., Golar LNG Ltd., Golar Khannur Inc., Golar Freeze Inc., Golar Gimi Inc., Golar Hilli Inc., Golar LNG 2215 Corporation and Poten & Partners Inc.
Charter Guarantee
Guarantee dated 2 March 2000 from BG International Limited in favour of Golar Gimi Inc. (in respect of long term charter)
Management Agreement
Management Agreement dated 1 January 1999 between Golar Gimi Inc. and Osprey Maritime Management Limited.
M/V KHANNUR
Charter
Short term pre-emption charter dated 30 November 2000 between Golar Khannur Inc. and Methane Services Limited entered into pursuant to the Master Agreement covering period until delivery under long term charter.
Long term charter dated 25 October 2001 between Golar Khannur Inc. and Methane Services Limited.
Omnibus agreement dated 25 October 2001 between Methane Services Ltd., BG International Ltd., BG Asia Pacific PTE. Ltd., Osprey Maritime Ltd., Golar Management Ltd., Golar LNG Ltd., Golar Khannur Inc., Golar Freeze Inc., Golar Gimi Inc., Golar Hilli Inc., Golar LNG 2215 Corporation and Poten & Partners Inc.
Charter Guarantee
Guarantee dated 30 November 2000 from BG International Limited in favour of Golar Khannur Inc. (in respect of long term charter).
Management Agreement
Management Agreement dated 1 January 1999 between Golar Khannur Inc. and Osprey Maritime Management Limited.
M/V GOLAR FREEZE
Charter
Short term pre-emption charter dated 7 September 2000 between Golar Freeze Inc. and Methane Services Limited entered into pursuant to the Master Agreement, such charter to expire on 31 December 2009 subject to charterer's option to extend or enter into a long term charter in accordance with the terms of the Master Agreement as amended by Addendum No. 1 dated 25 October 2001.
Long term charter dated 25 September 2002 between Golar Freeze Inc. and Methane Services Limited.
Omnibus agreement dated 25 October 2001 between Methane Services Ltd., BG International Ltd., BG Asia Pacific PTE. Ltd., Osprey Maritime Ltd., Golar Management Ltd., Golar LNG Ltd., Golar Khannur Inc., Golar Freeze Inc., Golar Gimi Inc., Golar Hilli Inc., Golar LNG 2215 Corporation and Poten & Partners Inc.
Charter Guarantee
Guarantee dated 7 September 2000 from BG International Limited and in favour of Golar Freeze Inc. (in respect of the short term charter).
Management Agreement
Management Agreement dated 1 January 1999 between Golar Freeze Inc. and Osprey Maritime Management Limited.
In this Schedule 12 "Master Agreement" means the master agreement dated 12 August 1999 as amended by addendum no. 1 thereto dated 5 January 2000 between Golar Khannur Inc., Golar Freeze Inc., Golar Gimi Inc., Golar Hilli Inc., Osprey Maritime and Methane Services Limited.
Schedule 13
Form of
Co-ordination Agreement
between
Den norske Bank ASA
as First Mortgagee
and
Golar Gas Holding Company, Inc.
as Borrower
and
Nordea Bank Norge ASA
as Second Mortgagee
VOGT & WIIG AS
THIS CO-ORDINATION AGREEMENT (the "Agreement") dated [ ] October 2002 is made between:
1. GOLAR GAS HOLDING COMPANY, INC., a company incorporated in the Republic of Liberia, having its registered office is at 80 Broad Street, Monrovia. Liberia (the "Borrower");
2. DEN NORSKE BANK ASA, Stranden 21, 0021 Oslo, Norway (hereinafter called the "First Mortgagee", which expression includes its respective successors and assignees); and
3. NORDEA BANK NORGE ASA, P.O.Box 1166 Sentrum, Middelthunsgt. 17, 0368 Oslo, Norway (hereinafter called the "Second Mortgagee", which expression includes its respective successors and assignees).
WHEREAS:
(A) Golar Gas Cryogenics Inc., Golar Hilli Inc., Golar Gimi Inc., Golar Khannur Inc. and Golar Freeze Inc., all being companies incorporated and existing under the laws of the Republic of Liberia, (the "Owning Companies") are the owners of the following vessels; M/V "GOLAR SPIRIT", M/V "HILLI", M/V "GIMI", M/V "KHANNUR" and M/V "GOLAR FREEZE" (together referred to as the "Vessels") all registered in the Liberian Ship Registry.
(B) Pursuant to, and subject to the terms and conditions of a term loan facility agreement dated 31 May 2001 (as the same may have been and may hereafter from time to time be amended referred to as the "First Agreement") entered into by and between among others the Borrower and the First Mortgagee as security agent on behalf of a syndicate of banks (the "First Banks"), the First Banks have made available to the Borrower a loan in the amount of USD 325,000,000 (the "First Facility") for the purpose of enabling the Borrower to refinance certain existing indebtedness in respect of the Vessels, and provide liquidity support and working capital.
As security for the First Facility and all other sums owing to the First Banks under the First Agreement and the First Securities (as defined below) (together the "First Indebtedness"), i.a. the following documents have been executed:
(i) first priority Liberian mortgages (hereinafter called the "First Mortgages"), in favour of the First Mortgagee (on behalf of the First Banks) registered against each of the Vessels;
(ii) first priority deeds of assignment dated 31 May 2001 between each of the Owning Companies and the First Mortgagee (on behalf of the First Banks) (the "First Deeds of Assignment") in respect of i.a. each of the Owning Companies' present and future interest under:
(a) the earnings of the relevant Vessel payable to the relevant Owning Company,
(b) the insurance proceeds in respect of all insurances for the relevant Vessel and all other amounts payable to the relevant Owning Company in relation to the relevant Vessel;
(c) the charters of the Vessels from time to time; and
(d) requisition compensation as defined in the First Agreement,
(iii) a first priority bank account pledges and assignments dated 31 May 2001 between the Borrower and the First Mortgagee (on behalf of the First Banks) (the "First Pledge of Accounts");
(iv) first priority share pledges dated 31 May 2001between the Borrower and the First Mortgagee (on behalf of the First Banks) under which the Borrower has pledged all of its shares in each of the Owning Companies, Oxbow and Golar Maritime (the "First Pledge of Shares"); and
(v) a guarantee issued by the Owning Companies, Oxbow and Golar Maritime dated 31 May 2001 in favour of the First Mortgagee as security for the Borrower's obligations under the First Agreement (the "First Guarantee").
The First Mortgages, the First Deeds of Assignment, the First Pledge of Accounts, the First Guarantee and the First Pledge of Shares are hereinafter called the "First Securities" as the same may have been and may hereafter from time to time be amended.
(C) Pursuant to, and subject to a second priority credit agreement dated 11 October 2002 (the "Second Agreement") entered into by and between among others the Borrower and the Second Mortgagee as agent on behalf of a syndicate of banks (the "Second Banks"), the Second Banks have agreed to make available to the Borrower a second priority loan of up to USD 60,000,000 (the "Second Facility").
As security for the Second Facility and all other sums owing to the Second Banks under the Second Agreement and the Second Securities (as defined below) (together the "Second Indebtedness"), i.a. the following documents will be executed:
(i) second priority Liberian mortgages (hereinafter called the "Second Mortgages"), in favour of the Second Mortgagee (on behalf of the Second Banks) registered against each of the Vessels;
(ii) second priority deeds of assignment dated [ ] between each of
the Owning Companies and the Second Mortgagee (on behalf of the
Second Banks) (the "Second Deeds of Assignment") in respect of
i.a. each of the Owning Companies' present and future interest
under:
(a) the earnings of the relevant Vessel payable to the relevant Owning Company,
(b) the insurance proceeds in respect of all insurances for the relevant Vessel and all other amounts payable to the relevant Owning Company in relation to the relevant Vessel;
(c) the charters of the Vessels from time to time; and
(d) requisition compensation as defined in the Second Deeds of Assignment,
(iii) a second priority bank account pledge dated [ ] between the Borrower and the Second Mortgagee (on behalf of the Second Banks) (the "Second Pledge of Accounts");
(iv) second priority share pledges dated [ ] October 2002 between the Borrower and the Second Mortgagee (on behalf of the Second Banks) under which the Borrower has pledged all of its shares in each of the Owning Companies, Oxbow and Golar Maritime (the "Second Pledge of Shares");
(v) a guarantee issued by the Owning Companies, Oxbow and Golar Maritime dated [ ] October 2002 in favour of the Second Mortgagee as security for the Borrower's obligations under the Second Agreement (the "Second Guarantee"); and
(vi) first priority share pledge dated [ ] October 2002 between the Parent and the Second Mortgagee (on behalf of the Second Banks) under which the Parent has pledged all of its shares in the Borrower (the "Pledge of Borrower Shares").
The Second Mortgages, the Second Deeds of Assignment, the Second Pledge of Accounts, the Second Pledge of Shares, the Pledge of Borrower Shares and the Second Guarantee are hereinafter called the "Second Securities" as the same may have been and may hereafter from time to time be amended.
(D) This Agreement sets out (inter alia) the terms and conditions upon and subject to which the First Mortgagee consents to the Borrower granting in favour of the Second Mortgagee the Second Securities.
NOW IT IS HEREBY AGREED AS FOLLOWS:
1 Consent of the First Mortgagee
Subject to the terms and conditions of this Agreement, the First Mortgagee (on behalf of the First Banks) hereby consents to the execution and registration (where relevant) of the Second Securities.
The First Mortgagee agrees on behalf of itself and the First Banks that nothing contained in this Agreement, the First Agreement or the Second Agreement shall oblige the Second Mortgagee to monitor or otherwise be responsible for the Borrower's performance of its obligations under the First Agreement and the First Securities.
The First Mortgagee agrees that so long as the First Pledge of Shares shall remain in full force and effect, the First Mortgagee shall, subject to the rights of the First Banks, hold the share certificates for the Second Mortgagee, as security agent for the Second Banks under the Second Pledge of Shares, and that upon release from the First Pledge of Shares, the First Mortgagee shall deliver the share certificates to the Second Mortgagee.
The First Mortgagee (as security agent for the First Banks) upon the
request of the Borrower and in consideration of the Second Mortgagee
agreeing and undertaking in the manner hereinafter contained hereby
consents to the granting by the Borrower in favour of the Second
Mortgagee and the execution and registration (as the case may be) of the
Second Securities.
2 The First Mortgagee's undertakings
The First Mortgagee (on behalf of the First Banks) hereby agrees and
undertakes with the Second Mortgagee that it will notify the Second
Mortgagee as soon as practicable if it intends to enforce any of its
rights or powers under the First Securities (other than its right to
demand payment of any monies secured thereby) whereupon the Second
Mortgagee shall have the option (to be exercised within 15 Norwegian
banking days from receipt of such notification during which period the
First Mortgagee will not complete enforcement of any of its said rights
and powers, unless, in the case of emergency, the Second Mortgagee
agrees to any such enforcement, such consent not to be unreasonably
withheld) of paying to the First Mortgagee within the said period of 15
Norwegian banking days all monies then secured by the First Securities
against an assignment and transfer of the First Securities that may be
transferable to and at the expense of the Second Mortgagee such transfer
to the Second Mortgagee to be by way of transfer certificates issued
pursuant to clause 15 of the First Agreement in respect of all of the
rights and obligations of the First Banks under the First Agreement in
their capacity as First Banks and any related documents (including the
First Agreement, the First Securities and this Agreement) evidencing or
regulating or securing any moneys so due by way of documentation in a
form and substance reasonably satisfactory to the Second Mortgagee but
on a non-recourse basis and without any express or implied warranty or
representation by the First Banks as to the validity or enforceability
of the First Agreement and/or the First Securities and/or such related
documents or as to the recoverability of any moneys thereunder). The
First Mortgagee shall not be liable to the Second Mortgagee for any
failure or delay in giving notice of its intention to enforce and shall
not be liable to the Second Mortgagee in respect of any loss, damage or
liability incurred by the Second Mortgagee arising out of or in
connection with the First Mortgagee's failure or delay in giving such
notice.
Without prejudice to this Clause 2, nothing herein shall preclude the
right of the First Mortgagee to demand payment of any money secured by
the First Securities or preclude the First Mortgagee from taking any
action whatsoever in accordance with the First Securities.
The First Mortgagee is not responsible for the due performance by the
other First Banks of the obligations undertaken on their behalf in this
Agreement and no First Bank shall be liable to the Second Mortgagee for
any failure on the part of another First Bank to perform the said
obligations.
3 The Second Mortgagee's undertakings
In consideration of the agreement herein contained, the Second Mortgagee
(on behalf of the Second Banks) hereby agrees and undertakes that:
a) the security constituted or to be constituted by the Second
Securities shall in all respects be subordinated to and rank in
priority subsequent to the security constituted or to be
constituted by the First Securities;
b) the Second Securities shall not be applied as security for
loans, facilities or contracts other than the Second Facility,
and shall never exceed USD 60,000,000, plus interest and cost
and expenses as provided for in the Second Agreement;
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c) at the same time as giving any formal notice to the Borrower that an Event of Default (as defined in the Second Agreement) has occurred, notify the First Mortgagee thereof;
d) in the event that the First Mortgagee declares an event of default under the First Agreement and following receipt by the Second Mortgagee of notice from the First Mortgagee pursuant to Clause 2, any monies received thereafter by the Second Mortgagee under the Second Securities, shall forthwith be paid to the First Mortgagee until all sums due under the First Facilities and/or the First Securities have been fully paid;
e) it will not make or allow to be made any material variation, amendment or supplement to any of the Second Securities or agree to or make any accelerations in the repayment schedule under the Second Agreement unless the funds used for such accelerated repayment derive from funds generated outside the Borrower and Subsidiaries (including Oxbow and Golar Maritime), without the previous written consent of the First Mortgagee;
f) it shall not assign, transfer or otherwise dispose of its rights or obligations under any of the Second Securities to any other party whatsoever unless such party has first entered into an agreement with the First Mortgagee in form and substance satisfactory to the First Mortgagee;
g) it will not take any action to enforce any claim or seek to exercise any of its rights under the Second Securities or give any notice of redirection to the Charterers (as defined in the Second Deeds of Assignment) or Insurers (as defined in the Second Agreement) under the notices of assignment pursuant to the Second Deeds of Assignment, unless either (1) all monies due or to become due to the First Mortgagee and the First Banks (including all accrued interest and other monies) under the terms of the First Agreement and/or the First Securities, have been paid in full to the First Mortgagee or (2) the First Mortgagee shall have given its prior written consent thereto (which consent the First Mortgagee (acting on the instructions of the First Banks) shall have full liberty to withhold);
h) without prejudice to its obligations under Clause 2, the First Mortgagee may enforce and make any claims or exercise any rights granted to it under the First Securities or exercise any rights which it has or may have at law or otherwise against the Borrower, the Owning Companies or any of the Vessels or any part thereof without prior consultations with the Second Mortgagee;
i) in the event that the First Mortgagee shall exercise the rights and powers granted to it pursuant to the First Agreement and/or the First Securities and hereunder decide to sell any of the Vessels, whether by forced auction, or private treaty in its capacity as mortgagee thereof or as attorney in-fact for the Borrower, then the First Mortgagee shall notify the Second Mortgagee under the terms of Clause 2 whereupon the option referred to in Clause 2 shall apply. If said option is not exercised by the Second Mortgagee, the Second Mortgagee shall take all such actions as may be deemed necessary to consent to and ratify and confirm such sale and, whether or not the proceeds of such sale shall or will be sufficient after application thereof by the First Mortgagee in discharge of the First Indebtedness to discharge all sums owing to the Second Mortgagee, the Second Mortgagee shall co-operate fully with the First Mortgagee for the purpose of effecting such sale and, in particular, but without limitation, the Second Mortgagee shall forthwith upon each request of the First Mortgagee execute such discharges and/or reassignments as may be necessary to complete the sale of any of the Vessels free of any mortgage, charge, assignment or other encumbrances created by or pursuant to the Second Securities, provided that the First Mortgagee shall use its best endeavours to ensure that such discharges are effected in such manner as shall preserve the Second Mortgagee's right to recover any remaining proceeds of such sale following payment to the First Mortgagee of the sums secured by the First Securities; and
j) it has not entered into and will not during the subsistence of the security constituted under the First Securities knowingly enter into any arrangement in respect of the Second Securities or any transactions related thereto or contemplated thereby with the Borrower and/or the Owning Companies and/or Oxbow and/or Golar Maritime whereby the First Mortgagee and its security is or will be prejudiced and, without prejudice to the generality of the foregoing, the Second Mortgagee will not serve, or permit there to be served, any notice of assignment contained in any of the Second Securities unless the form of such notice states that such assignment is subject and subordinate to the prior assignments contained in the First Securities.
PROVIDED HOWEVER that nothing herein shall preclude the rights of the Second Mortgagee to demand and/or receive payment of any monies secured by the Second Securities or performance of other obligations set out therein or in the Second Agreement or take necessary action with a view to substantiating, preserving or protecting the Second Mortgagee's interest, always as long as such action does not interfere with the explicit rights of the First Mortgagee.
4 Borrower's undertakings
The Borrower hereby acknowledges that the First Mortgagee has entered into this Agreement at the request of the Borrower and the Second Mortgagee and accordingly the Borrower consents to all of the terms hereof and their implementation and undertakes to the First Mortgagee to do all such things and execute all such documents whatsoever as the First Mortgagee may reasonably require from time to time in order to implement such terms.
5 Variations to the First Agreement and/or First Securities
The First Banks may at any time and from time to time agree with the Borrower or any other party variations, amendments or supplements to the First Agreement and/or any of the First Securities without prior consultation with the Second Mortgagee, save for any increase in the amount of the First Facility which shall be subject to the prior written approval of the Second Mortgagee. Any and all documents executed pursuant to, or to implement, such variations, amendments or supplements shall from and after execution be deemed for the purpose of this Agreement to be an integral part of the First Securities and shall rank in priority to the relevant Second Securities and the Second Mortgagee shall enter into such documents with the First Mortgagee and/or the First Banks as the First Mortgagee may require to maintain or confer such priority.
6 Application of monies
a) On completion of sale, either by forced auction or private treaty, the sale proceeds of any of the Vessels shall be applied as follows and in the order mentioned:
(i) First: in respect of all costs and expenses whatsoever incurred in or about and incidental to the said sale.
(ii) Second: in or towards satisfaction of all prior claims (being any claims, liabilities or debts owed and taking priority in respect of such proceeds over the security constituted by the First Securities and the Second Securities) secured on the relevant Vessel.
(iii) Third: in or towards payment of all sums secured by the First Securities.
(iv) Fourth: in or towards payment of all sums secured by the Second Securities.
(v) Fifth: the balance, if any, shall be paid to the Borrower and/or to whomsoever shall be entitled thereto.
b) Any amount received by the First Mortgagee under any of the First Securities shall be applied against any amounts outstanding under any obligations secured by the First Securities in accordance with the provisions of the First Securities.
Subject to the Borrower being in default under the Second Agreement, the balance, if any, shall be paid to the Second Mortgagee and be applied against the amount outstanding under the Second Facility at the time of default.
The balance, if any, shall be paid to the Borrower, and/or to whomsoever shall be entitled hereto.
7 Notices
All notices or other communications under the Agreement shall be in writing and shall be deemed to be duly given or made and received when delivered (in the case of personal delivery or letter) and when despatched (in the case of facsimile or other electronic communication) to such party addressed to it at the address appearing below (or at such address as such party may hereafter notify to the other) -
a) To the Borrower: c/o Golar Management Limited, 30 Marsh Wall, London E14 9TP, United Kingdom, telefax number + 44 20 7517 8601
b) To the First Mortgagee: Den norske Bank ASA, Stranden 21, 0021 Oslo, Norway, telefax number + 47 22 48 28 94
c) To the Second Mortgagee: Nordea Bank Norge ASA, P.O. Box 1166 Sentrum, 0107 Oslo, Norway, telefax number + 47 22 49 66 68
A written notice includes a notice by facsimile, or other means of communication in permanent written form. A notice or other communication received on a non-working day or after business hours in the place of receipt shall be deemed to be served and received on the next following working day in such place.
8 Costs and expenses
The Borrower hereby agrees to pay to each of the First Mortgagee or the Second Mortgagee (a "Mortgagee") on demand all costs and expenses (including legal and out-of- pocket expenses) from time to time incurred by either Mortgagee (or the First Banks or the Second Banks) in connection with negotiation, preparation, execution, completion, enforcement, attempted enforcement and performance of, or preservation of any rights under this Agreement, together with interest at the default rate referred to in clause 3.4 of the First Agreement or clause 7.4 of the Second Agreement (as the case may be) from the date on which such expenses were incurred to the date of payment (as well after as before judgment).
9 Effect of this Agreement
9.1 Preservation of security
Nothing contained in this Agreement shall as between the Borrower and the First Mortgagee and the Borrower and the Second Mortgagee affect or prejudice any rights, power or remedies of the First Banks or the Second Banks respectively under their First and Second Securities which shall remain in full force and effect according to their tenor as effective securities for all money obligations and liabilities therein mentioned without limit subject to the ranking of the securities as herein provided.
9.2 No enquiry
No purchaser dealing with a Mortgagee or any receiver appointed by any Mortgagee shall be concerned in any way with the provisions of this Agreement but may assume that such Mortgagee or any such receiver as the case may be is acting in accordance with the provisions of this Agreement.
9.3 Waivers, etc.
Each Mortgagee shall be entitled without reference to another Mortgagee to grant time or indulgence and to release compound or otherwise deal with or receive moneys from any person liable or to deal with exchange release modify or abstain from perfecting or enforcing any of the rights which it may now or hereafter have against the Borrower or otherwise without prejudicing its rights under this Agreement.
9.4 Duration
This Agreement shall remain in full force and effect until either full and irrevocable payment and discharge of both the First Indebtedness and the Second Indebtedness or final discharge and release and reassignment of the security constituted by the Second Securities.
10 Counterparts
This Agreement may be entered into in the form of two or more counterparts, each executed by one or more of the parties and, provided all the parties shall so execute this Agreement, each of the executed counterparts when duly exchanged or delivered, shall be deemed to be an original but, taken together, they shall constitute one instrument.
11 Severability of provisions
Each of the provisions in this Agreement are severable and distinct from the others, and if at any time one or more of such provisions is or becomes invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions of this Agreement shall not in any way be affected or impaired thereby.
12 Jurisdiction
For the benefit of the Second Mortgagee and each Second Bank, the Borrower and the First Mortgagee agree that only the courts of Norway shall have jurisdiction to settle any disputes in connection with this Agreement and accordingly submits to the non-exclusive jurisdiction of Oslo tingrett. Nothing in this Clause 12 shall limit the right of the Second Mortgagee or any Second Bank to start proceedings against the Borrower or the First Mortgagee in any other court of competent jurisdiction.
13 Governing law
This Agreement shall be governed by Norwegian law.
14 Service of process
Without prejudice to any other mode of service, the Borrower:
a) irrevocably appoints Frontline Management AS as its agents for service of process relating to any proceedings before the Norwegian courts in connection with this Agreement;
b) agrees that failure by its process agent to notify them of the process will not invalidate the proceedings concerned; and
c) consents to the service of process to any such proceedings before the Norwegian courts by posting of a copy of the process to Frontline Management AS, Bryggegt. 3, P.O. Box 1327 Vika. 0112 Oslo, Norway.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be duly executed and delivered the day and the year first above written.
The Borrower:
GOLAR GAS HOLDING COMPANY, INC.
By:
Name:
Title:
DEN NORSKE BANK ASA
By:
Name:
Title:
NORDEA BANK NORGE ASA
By:
Name:
Title:
SIGNATORIES
GOLAR GAS HOLDING COMPANY, INC.
By:
Name:
Title:
NORDEA BANK NORGE ASA
By:
Name:
Title:
NORDEA BANK NORGE ASA
By:
Name:
Title:
DEN NORSKE BANK ASA
By:
Name:
Title:
FORTIS BANK (NEDERLAND) N.V.
By:
Name:
Title:
NORDEA BANK NORGE ASA
By:
Name:
Title:
DEN NORSKE BANK ASA
By:
Name:
Title:
FORTIS BANK (NEDERLAND) N.V.
C
By:
Name:
Title:
EXHIBIT 8.1
SUBSIDIARIES
NAME OF SUBSIDIARY
AS SPECIFIED IN CHARTER AND JURISDICTION OF
d/b/a INCORPORATION
-------------------------------------------------------------- -----------------------------
Gotaas-Larsen Shipping Corporation............................ Liberia
Golar Maritime Limited........................................ Bermuda
Golar Management Limited...................................... Bermuda
Gotaas-Larsen International Limited........................... Liberia
Golar International Limited................................... Liberia
Golar Gas Holding Company Inc................................. Liberia
Golar Gas Cryogenics Inc...................................... Liberia
Golar Freeze Inc.............................................. Liberia
Golar Hilli Inc............................................... Liberia
Golar Khannur Inc............................................. Liberia
Golar Gimi Inc................................................ Liberia
Golar Maritime (Asia) Inc..................................... Liberia
Faraway Maritime Shipping Inc................................. Liberia
Aurora Management Inc......................................... Liberia
Oxbow Holdings Inc............................................ British Virgin Islands
Faraway Maritime Shipping Inc................................. Liberia
Aurora Management Inc......................................... Liberia
Golar LNG 1444 Corporation.................................... Liberia
Golar LNG 2215 Corporation.................................... Liberia
Golar LNG 1460 Corporation.................................... Liberia
Golar LNG 2220 Corporation.................................... Liberia
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EXHIBIT 10.1
[FEARNLEYS A/S LOGO]
Fearnleys A/S Tel.: +47 22 93 61 21
Grev Wedels Plass 9, Oslo, Norway, Telefax: +47 22 93 61 10/50
P.O. Box 1158 Sentrum, N-0107 Oslo e-mail: fconsultants@fearnleys.no
================================================================================
To: Golar LNG Ltd
------------------------------------------------------------------
Attn: Tor Tiller
------------------------------------------------------------------
Telefax no:
------------------------------------------------------------------
From: Fearnleys A/S
------------------------------------------------------------------
Date: 10.04.02
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Subject Golar LNG Ltd. Prospectus
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No of Pages: 1 incl. this coversheet
--------------------------
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To Whom it may Concern
This is to confirm that Fearnleys permit the usage of our Data in the prospectus for Golar LNG Ltd. With proper references to source.
While information and data is given in good faith, Fearnleys AS cannot accept liability for any errors of fact or opinion.
/s/ Sverre B. Svenning ---------------------- Sverre B. Svenning |
Fearnleys A/S
IMPORTANT NOTICE:
This communication contains confidential information intended for the exclusive use of the individual or entity named above. If the recipient of this communication is not the addressee or a person responsible for delivering the message to the addressee, you are hereby put on notice that you are strictly prohibited from reading, using, retaining, disseminating, distributing, or copying this communication. If you have received this communication in error, please immediately notify us by telephone and destroy this entire communication. Thank you.
EXHIBIT 10.2
[PETROLEUM ECONOMIST LETTERHEAD ]
Mr Christian Fett
Fearnleys
By Fax
04-04-02
Dear Mr Fett
This is to confirm that you have permission to source Petroleum Economist - Fundamentals of the Global LNG Industry in the prospectus for Golar LNG.
Yours sincerely
Derek Bamber
/s/ Derek Bamber Managing editor |
EXHIBIT 10.3
[LETTERHEAD]
L E T T E R O F A G R E E M E N T
IEA/OLC(02)042 Paris, 9 April 2002
Per-Christian Fett
Fearnleys A/S
P.O. Box 1158 Sentrum
N-0107 Oslo
Norway
Dear Mr. Fett,
Further to your request to Mieke Reece of the Energy Statistics Division of the IEA, dated 4 April 2002, I am pleased to inform you that the OECD/IEA hereby authorizes you to refer, in your prospectus relating to the introduction to listing of the shares of Golar LNG Limited in the US market, to page 1.7 of the IEA publication "Natural Gas Information (2001 edition)", using the following language:
"Natural gas has been over the last two decades, and is expected to be, one of the world's fastest growing energy sources over the next 20 years. Already responsible for 25% of the world's energy supply, the International Energy Agency, or IEA, projects that demand for natural gas will rise by 2.7% per annum over the next two decades. According to the IEA, new power plants are expected to provide the majority of this incremental demand."
This authorization is subject to the following conditions.
- that the OECD/IEA receive 1 free copy of your prospectus including the hereabovementioned reference;
- that you give full acknowledgement to the OECD/IEA as being the source of the material reproduced and, in conformity with the Universal Copyright Convention, that there be in your magazine a copyright notice in the following form:
(C) OECD/IEA, 2001;
The OECD/IEA makes no express or implied warranties concerning the publication or the authorization granted, particularly no warranty of accuracy or fitness for a particular purpose or use and no warranty against infringement of the proprietary or other rights of third parties.
The OECD/IEA shall not be liable for any damages or losses whatsoever in connection with or arising out of the use or publication of the hereabovementioned reference, and Fearnleys A/S would indemnify and hold the OECD/IEA harmless against all actions, claims, damages and costs occasioned to the OECD/IEA and arising out of any claim.
This agreement will become effective upon our receipt of one copy thereof bearing your signature.
I look forward to receiving confirmation of your approval of the agreement.
Yours sincerely,
/s/ Sylvie Decaen
Sylvie Decaen
IEA Deputy Legal Counsel
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We agree ...
Mr. Per-Christian Fett
for Fearnleys A/S
Date ...