Exhibit 2.1
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KRAMER LEVIN NAFTALIS & FRANKEL LLP
Kenneth H. Eckstein
Adam C. Rogoff
Douglas H. Mannal
Stephen D. Zide
1177 Avenue of the Americas
New York, New York 10036
Telephone: (212) 715-9100
Facsimile: (212) 715-8000
Counsel for the Debtors
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
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x
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In re:
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Chapter 11
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GENERAL MARITIME CORPORATION,
et
al.,
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Case No. 11-15285 (MG)
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Debtors.
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Jointly Administered
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x
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SECOND AMENDED JOINT PLAN OF REORGANIZATION OF
THE DEBTORS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Dated:
April 19, 2012
New York, New York
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TABLE OF CONTENTS
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Page
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INTRODUCTION
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1
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Article I.
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DEFINITIONS AND CONSTRUCTION OF TERMS
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1
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A.
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Definitions
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1
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B.
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Interpretation, Application of Definitions and Rules of Construction
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18
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Article II.
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ADMINISTRATIVE AND PRIORITY CLAIMS
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18
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A.
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Administrative Claims
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18
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B.
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Fee Claims
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19
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C.
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Priority Tax Claims
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19
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D.
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DIP Facility Claims
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20
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E.
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Statutory Fees
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20
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Article III.
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CLASSIFICATION AND TREATMENT OF CLAIMS AND EQUITY INTERESTS
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20
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A.
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Class Identification and Status
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20
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B.
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Treatment of Classified Claims and Equity Interests
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22
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Article IV.
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MEANS FOR IMPLEMENTATION OF THE PLAN
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26
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A.
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Consolidation of the Guarantor Debtors for Distribution and Voting Purposes
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26
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B.
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General Settlement of Claims and Interests
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27
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C.
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New Equity Investment
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28
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D.
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New Senior Facilities
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28
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E.
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Voting of Claims
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29
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F.
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Nonconsensual Confirmation
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29
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G.
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Issuance of New GMR Common Stock, the Commitment Fee GMR Common Stock and New GMR Warrants and Entry Into the Registration Rights Agreement and the Shareholders Agreement
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29
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H.
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The New GMR Common Stock
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31
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I.
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The New GMR Warrants
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32
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J.
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Continued Corporate Existence and Effectuation of Restructuring Transactions
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33
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K.
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Fee Claims Escrow Account
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34
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L.
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OCM Marine Holdings TP, L.P. Partnership Interests
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34
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Article V.
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PROVISIONS REGARDING CORPORATE GOVERNANCE OF THE REORGANIZED DEBTORS
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34
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A.
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Amendments to Certificates of Incorporation
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34
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B.
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Appointment of Officers and Directors
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35
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C.
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Powers of Officers
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35
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D.
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New Management Agreements, Existing Benefits Agreements and Retiree Benefits
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35
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E.
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Equity Incentive Program
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36
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F.
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Indemnification of Directors, Officers and Employees
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36
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Article VI.
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CONFIRMATION OF THE PLAN
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36
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A.
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Conditions to Confirmation
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36
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B.
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Waiver of Conditions Precedent to Confirmation
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37
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C.
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Dissolution of Creditors’ Committee and Formation of Post-Confirmation Committee
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38
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D.
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Discharge of the Debtors
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38
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E.
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Injunction
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39
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F.
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Preservation of Causes of Action
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40
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G.
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Votes Solicited in Good Faith
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41
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H.
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Cancellation of Existing Securities
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41
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I.
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Claims Incurred After the Effective Date
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42
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J.
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Releases, Exculpations and Injunctions of Released Parties
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42
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K.
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Preservation of Insurance
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44
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L.
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Indemnification of the Oaktree Plan Sponsors
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45
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Article VII.
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DISTRIBUTIONS UNDER THE PLAN
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45
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A.
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Allowed Claims
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45
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B.
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Unsecured Creditor Distribution Escrow Account
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47
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C.
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Resolution of Disputed Claims
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49
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D.
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Allocation of Consideration
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50
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E.
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Estimation
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50
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F.
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Insured Claims
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50
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Article VIII.
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RETENTION OF JURISDICTION
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50
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Article IX.
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EXECUTORY CONTRACTS AND UNEXPIRED LEASES
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52
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A.
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Assumption and Rejection of Executory Contracts and Unexpired Leases
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B.
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Cure and Notice of Assumption or Rejection
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52
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C.
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Reservation of Rights
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54
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D.
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Rejection Damage Claims
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E.
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Assignment
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55
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F.
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No Change in Control
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56
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G.
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Collective Bargaining Agreements
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H.
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Insurance Policies
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56
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Article X.
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EFFECTIVENESS OF THE PLAN
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56
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A.
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Conditions Precedent to Effectiveness
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B.
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Waiver of Conditions Precedent to Effectiveness
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58
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C.
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Effect of Failure of Conditions
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58
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D.
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Vacatur of Confirmation Order
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58
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E.
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Modification of the Plan
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F.
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Revocation, Withdrawal, or Non-Consummation
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59
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Article XI.
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MISCELLANEOUS PROVISIONS
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A.
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Governing Law
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B.
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Filing or Execution of Additional Documents
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C.
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Information
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D.
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Withholding and Reporting Requirements
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60
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E.
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Compensation of Senior Notes Indenture Trustee Fees and Expenses
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60
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F.
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Exemption From Transfer Taxes
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61
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G.
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Waiver of Federal Rule of Civil Procedure 62(a)
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61
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H.
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Plan Supplement
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I.
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Notices
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J.
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Conflicts
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iii
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INTRODUCTION
General Maritime Corporation and its direct and indirect subsidiaries in the above-referenced chapter 11 cases, as debtors and debtors-in-possession, propose the following joint plan of reorganization under section 1121(a) of chapter 11 of title 11 of the United States Code. Capitalized terms used in the Plan and not otherwise defined shall have the meaning ascribed to such terms in Article I.
The Chapter 11 Cases are being jointly administered pursuant to an order of the Court entered on November 18, 2011 [Docket No. 22]. Claims against, and Equity Interests in, the Debtors will be treated as set forth herein. Reference is made to the Disclosure Statement accompanying the Plan, including the exhibits thereto, for a discussion of the Debtors’ history, business, properties, results of operations, and projections for future operations and risk factors, together with a summary and analysis of the Plan. All holders of Claims entitled to vote on the Plan are encouraged to consult the Disclosure Statement, the Notice of Plan Modifications and to read the Plan carefully before voting to accept or reject the Plan.
NO SOLICITATION MATERIALS, OTHER THAN THE DISCLOSURE STATEMENT, THE NOTICE OF PLAN MODIFICATIONS AND RELATED MATERIALS TRANSMITTED THEREWITH AS APPROVED BY THE COURT PURSUANT TO THE DISCLOSURE STATEMENT ORDER, HAVE BEEN AUTHORIZED BY THE COURT FOR USE IN SOLICITING ACCEPTANCES OR REJECTIONS OF THIS PLAN.
ARTICLE I.
DEFINITIONS AND CONSTRUCTION OF TERMS
A.
Definitions
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Unless otherwise defined herein the following terms shall have the respective meanings set forth below:
1.
Accredited Investor
: means an “accredited investor” as that term is defined in Rule 501 of Regulation D promulgated under the Securities Act.
2.
Accrued Professional Compensation
: means, at any given time, and regardless of whether such amounts are billed or unbilled, all accrued, contingent and/or unpaid fees and expenses (including success fees) for legal, financial advisory, accounting and other services and reimbursement of expenses by any Professional, or that are awardable and allowable under section 503 of the Bankruptcy Code, that the Bankruptcy Court has not, as of the Effective Date, denied by Final Order (i) all to the extent that any such fees and expenses have not been previously paid (regardless of whether a fee application has been filed for any such amount) and (ii) after applying any retainer that has been provided by the Debtors to such Professional. To the extent the Court denies or reduces by a Final Order any amount of a Professional’s fees or expenses, then those reduced or denied amounts shall no longer constitute Accrued Professional Compensation.
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3.
Administrative Claim
: means any right to payment constituting a cost or expense of administration of the Chapter 11 Cases of a kind specified under section 503(b) of the Bankruptcy Code and entitled to priority under section 507(a)(2), 507(b) or 1114(e)(2) of the Bankruptcy Code, including (i) any actual and necessary costs and expenses of preserving the Estates, (ii) any actual and necessary costs and expenses of operating the Debtors’ businesses, (iii) any indebtedness or obligations assumed by the Debtors in connection with the conduct of their businesses, (iv) all compensation and reimbursement of expenses to the extent awarded by the Court under sections 330, 331 or 503 of the Bankruptcy Code, (v) any fees or charges assessed against the Estates under section 1930 of title 28 of the United States Code, (vi) any Claim for goods delivered to the Debtors within twenty (20) days of the Petition Date and entitled to administrative priority pursuant to section 503(b)(9) of the Bankruptcy Code, (vii) any DIP Facility Claims and (viii) any outstanding fees and expenses of the Oaktree Plan Sponsors as set forth in the Equity Purchase Agreement and as approved by the Equity Purchase Agreement Order.
4.
Allowed
: means, with reference to any Claim, (i) any Claim against any of the Debtors that has been listed by the Debtors in the Schedules, as such Schedules may be amended by the Debtors from time to time in accordance with Bankruptcy Rule 1009, as liquidated in amount and not disputed or contingent, and with respect to which no contrary Proof of Claim has been filed, (ii) any Claim specifically allowed under the Plan, (iii) any Claim which is not Disputed and which becomes allowed after the Claims Objection Deadline because no objection was interposed against the Claim by the Claims Objection Deadline, or (iv) any Claim the amount or existence of which, if Disputed, has been allowed by a Final Order;
provided, however
, that any Claims allowed solely for the purpose of voting to accept or reject the Plan pursuant to an order of the Court will not be considered “Allowed Claims” under the Plan. If a Claim is Allowed only in part, references to Allowed Claims include and are limited to the Allowed portion of such Claim.
5.
Assumption Schedule
: means the schedule of Executory Contracts (other than Existing Benefits Agreements) and Unexpired Leases to be assumed pursuant to the Plan and related Cure Claims to be paid on the Effective Date in connection with such assumption, which will be included in the Plan Supplement.
6.
Ballots
: means each of the ballot forms approved pursuant to the Disclosure Statement Order or in connection with the Order Authorizing Plan Modifications and distributed with the Disclosure Statement to each holder of an Impaired Claim that is entitled to vote to accept or reject the Plan upon which is to be indicated, among other things, acceptance or rejection of the Plan.
7.
Bankruptcy Code
: means title 11 of the United States Code, 11 U.S.C. §§ 101-1532, as in effect on the date hereof.
8.
Bankruptcy Rules
: means the Federal Rules of Bankruptcy Procedure as promulgated by the United States Supreme Court under section 2075 of title 28 of the United States Code, and local rules of the Court, as the context may require.
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9.
Bar Date Order
: means the
Order Establishing Deadline for Filing Proofs of Claim and Approving the Form and Manner of Notice Thereof
, dated January 13, 2012 [Docket No. 200].
10.
Business Day
: means any day on which commercial banks are open for business, and not authorized to close, in New York, New York, except any day designated as a legal holiday by Bankruptcy Rule 9006(a).
11.
Cash
: means legal tender of the United States of America.
12.
Causes of Action
: means any and all claims, causes of actions, cross-claims, counterclaims, third-party claims, indemnity claims, contribution claims, defenses, demands, rights, actions, debts, damages, judgments, remedies, Liens, indemnities, guaranties, suits, obligations, liabilities, accounts, offsets, recoupments, powers, privileges, licenses, and franchises of any kind or character whatsoever, known or unknown, contingent or non-contingent, matured or unmatured, suspected or unsuspected, disputed or undisputed, foreseen or unforeseen, direct or indirect, choate or inchoate, whether arising before, on or after the Petition Date, including through the Effective Date, in contract or in tort, in law or in equity, or pursuant to any other theory of law. For the avoidance of doubt, the term “Causes of Action” shall include: (i) all rights of setoff, counterclaim, or recoupment and claims on contracts or for breaches of duties imposed by law or in equity; (ii) the right to object to Claims; (iii) all claims pursuant to sections 362, 510, 542, 543, 544 through 550, 552 or 553 of the Bankruptcy Code; (iv) such claims and defenses as fraud, mistake, duress, and usury and any other defenses set forth in section 558 of the Bankruptcy Code; and (v) any state law fraudulent transfer claims.
13.
Chapter 11 Cases
: means the chapter 11 cases commenced by the Debtors on November 17, 2011 and jointly administered for procedural purposes under case number 11-15285 (MG).
14.
Claim
: means a claim, as such term is defined in section 101(5) of the Bankruptcy Code.
15.
Claims Agent
: means GCG, Inc., retained as the Debtors’ notice and claims agent pursuant to an order of the Court dated November 17, 2011 [Docket No. 5], or any successor thereto.
16.
Claims Objection Deadline
: means the first Business Day that is the later of (i) one hundred eighty (180) days after the Effective Date, (ii) ninety (90) days from the date by which a holder of a Claim is required to file a Proof of Claim pursuant to an order of the Court (including the Bar Date Order) or (iii) such other later date the Court may establish upon a motion by the Debtors or the Reorganized Debtors, which motion may be approved without a hearing and without notice to any party.
17.
Class
: means a group of Claims or Equity Interests classified under the Plan.
18.
Collateral
: means any property or interest in property of the Estates subject to a Lien to secure the payment or performance of a Claim, which Lien has not been
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avoided or is not subject to avoidance under the Bankruptcy Code or is otherwise invalid under the Bankruptcy Code or applicable state law.
19.
Collective Bargaining Agreement
: means the collective bargaining agreements among the Debtors and unions representing the Debtors’ employees, including the collective bargaining agreement between General Maritime Management LLC and the Associated Marine Officers’ and Seamen’s Union of the Philippines.
20.
Commitment Fee GMR Common Stock
: means 300,017 shares of New GMR Common Stock, issued in accordance with the Equity Purchase Agreement as a commitment fee, which amount shall be 3% of the New GMR Common Stock issued on the Effective Date (subject to dilution from the exercise of the New GMR Warrants and New GMR Common Stock issuable under the Equity Incentive Program).
21.
Confirmation
: means the entry of the Confirmation Order on the docket of the Chapter 11 Cases.
22.
Confirmation Date
: means the date of Confirmation.
23.
Confirmation Hearing
: means the hearing required by section 1128 of the Bankruptcy Code to consider confirmation of the Plan in accordance with section 1129 of the Bankruptcy Code, as such hearing may be adjourned or continued from time to time.
24.
Confirmation Order
: means the order entered by the Court confirming the Plan pursuant to section 1129 of the Bankruptcy Code.
25.
Court
: means (i) the United States Bankruptcy Court for the Southern District of New York, having jurisdiction over the Chapter 11 Cases, (ii) to the extent there is no reference pursuant to section 157 of title 28 of the United States Code, the United States District Court for the Southern District of New York and (iii) any other court having jurisdiction over the Chapter 11 Cases or proceedings arising therein.
26.
Creditors’ Committee
: means the Official Committee of Unsecured Creditors appointed by the United States Trustee in the Chapter 11 Cases, as constituted from time to time.
27.
Cure Claim
: means a Claim in an amount equal to all unpaid monetary obligations under an Executory Contract or Unexpired Lease assumed by a Debtor pursuant to section 365 of the Bankruptcy Code, to the extent such obligations are enforceable under the Bankruptcy Code and applicable non-bankruptcy law.
28.
Cure Claim Bar Date
: means the deadline for filing requests for payment of a Cure Claim in an amount different from the amount listed in the Assumption Schedule and/or a Cure Notice, which deadline will be seven (7) days before the Confirmation Hearing, unless otherwise ordered by the Court or agreed to by the Debtors and the counterparty to the applicable Executory Contract or Unexpired Lease (with the consent of the Oaktree Plan Sponsors, which consent will not be unreasonably withheld).
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29.
Cure Notice
: means a notice of a proposed amount to be paid on account of a Cure Claim in connection with an Executory Contract or Unexpired Lease to be assumed under the Plan pursuant to section 365 of the Bankruptcy Code, which notice shall include (i) the procedures for objection to proposed assumption of Executory Contracts and Unexpired Leases, (ii) Cure Claims to be paid in connection therewith (including any cure amount listed on the Assumption Schedule) and (iii) procedures for resolution by the Court of any related disputes. The form of Cure Notice shall be approved pursuant to the Disclosure Statement Order.
30.
Debtors
: means, collectively, GMR and the Debtor Subsidiaries, and individually, any of the Debtors.
31.
Debtor Subsidiaries
: means Arlington Tankers Ltd., Arlington Tankers, LLC, Companion Ltd., Compatriot Ltd., Concept Ltd., Concord Ltd., Consul Ltd., Contest Ltd., GMR Administration Corp., General Maritime Investments LLC, General Maritime Management LLC, General Maritime Subsidiary Corporation, General Maritime Subsidiary II Corporation, General Maritime Subsidiary NSF Corporation, General Product Carriers Corporation, GMR Agamemnon LLC, GMR Ajax LLC, GMR Alexandra LLC, GMR Argus LLC, GMR Atlas LLC, GMR Chartering LLC, GMR Concept LLC, GMR Concord LLC, GMR Constantine LLC, GMR Contest LLC, GMR Daphne LLC, GMR Defiance LLC, GMR Elektra LLC, GMR George T LLC, GMR GP LLC, GMR Gulf LLC, GMR Harriet G LLC, GMR Hercules LLC, GMR Hope LLC, GMR Horn LLC, GMR Kara G LLC, GMR Limited LLC, GMR Maniate LLC, GMR Minotaur LLC, GMR Orion LLC, GMR Phoenix LLC, GMR Poseidon LLC, GMR Princess LLC, GMR Progress LLC, GMR Revenge LLC, GMR Spartiate LLC, GMR Spyridon LLC, GMR St. Nikolas LLC, GMR Star LLC, GMR Strength LLC, GMR Trader LLC, GMR Trust LLC, GMR Ulysses LLC, GMR Zeus LLC, Victory Ltd. and Vision Ltd.
32.
DIP Agent
: means Nordea Bank Finland Plc, New York Branch, in its capacity as the administrative agent and collateral agent under the DIP Credit Agreement.
33.
DIP Credit Agreement
: means that certain senior secured superpriority debtor-in-possession credit agreement, dated as of November 17, 2011, attached as an exhibit to the DIP Financing Order, as may be amended, modified or supplemented from time to time.
34.
DIP Facility
: means that certain senior secured superpriority debtor-in-possession credit facility under the DIP Credit Agreement in the aggregate principal amount of $75,000,000.
35.
DIP Facility Claims
: means any Claim arising pursuant to the DIP Loan Documents (as defined in the DIP Financing Order), including all “DIP Obligations” as such term is defined in the DIP Financing Order.
36.
DIP Financing Order
: means the
Final Order Pursuant to §§ 361, 362, 363 and 364 of the Bankruptcy Code and Rule 4001 of the Federal Rules of Bankruptcy Procedure Authorizing the Debtors to (I) Use Cash Collateral of the Prepetition Secured Parties, (II) Obtain Secured Superpriority Post-Petition Financing and (III) Provide Adequate Protection
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to the Prepetition Secured Parties
[Docket No. 141], entered on December 15, 2011, and as may be amended, modified or supplemented from time to time in accordance with the terms thereof.
37.
DIP Lenders
: means the lenders under the DIP Credit Agreement.
38.
Disclosure Statement
: means the
First Amended Disclosure Statement for the First Amended Joint Plan of Reorganization of the Debtors Under Chapter 11 of the Bankruptcy Code
, dated February 29, 2012, as approved by the Court pursuant to the Disclosure Statement Order.
39.
Disclosure Statement Order
: means the
Order Approving the First Amended Disclosure Statement for the First Amended Joint Plan of Reorganization of the Debtors Under Chapter 11 of the Bankruptcy Code
, dated February 29, 2012 [Docket No. 341] pursuant to section 1125 of the Bankruptcy Code and the Bankruptcy Rules.
40.
Disputed
: means, with reference to any Claim, (i) a Claim that is Scheduled as either disputed, contingent or unliquidated, (ii) a Claim that is Scheduled as other than disputed, contingent or unliquidated, but the nature or amount of the Claim as asserted in a Proof of Claim by the holder varies from the nature or amount of such Claim as it is listed on the Schedules,
provided, that
, in the event the amount of the Claim asserted in a Proof of Claim exceeds the amount of such Claim as it is listed on the Schedules, only such excess amount shall be Disputed, (iii) a Claim as to which the applicable Debtor or Reorganized Debtor, or, before the Effective Date, any other party-in-interest, has filed an objection with the Court and such objection has not been withdrawn or denied by a Final Order and (iv) a Claim that is required to be filed by a date specified in the Plan or a separate order of the Court (including any date specified in the Bar Date Order, the Cure Claim Bar Date, the Claims Objection Deadline and the dates specified in Article II.A) and no such Claim or request for payment has been timely filed.
41.
DTC
: means the Depository Trust Company.
42.
Effective Date
: means the date selected by the Debtors and the Oaktree Plan Sponsors that is a Business Day after the Confirmation Date on which (a) all of the conditions to the occurrence of the Effective Date specified in Article X.A have been satisfied or waived in accordance with Article X.B and (b) no stay of the Confirmation Order is in effect. Unless otherwise expressly set forth in the Plan, anything required to be completed by the Debtors or the Reorganized Debtors, as applicable, pursuant to the Plan on the Effective Date shall be done on the Effective Date.
43.
Equity Incentive Program
: means the equity-based incentive program described in Article V.E.
44.
Equity Interest
: means any equity security as such term is defined in section 101(16) of the Bankruptcy Code, or any other instrument evidencing an ownership interest in any of the Debtors, whether or not transferable, and any option, warrant, or right, contractual or otherwise, to acquire, sell or subscribe for any such interest.
45.
Equity Purchase Agreement
: means the agreement attached as
Annex 1
to the Equity Purchase Agreement Order among the Debtors and the Oaktree Plan Sponsors, dated
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as of December 15, 2011, governing the terms of the New Equity Investment, as may be amended, modified or supplemented from time to time in accordance with its terms, including the amendment thereto dated March 26, 2012.
46.
Equity Purchase Agreement Order
: means the
Order Pursuant to Section 363 of the Bankruptcy Code Authorizing the Debtors to Enter into an Equity Commitment Agreement and to Pay Certain Fees in Connection Therewith
, dated December 15, 2011 [Docket No. 140].
47.
Estates
: means the estates of the Debtors, individually or collectively, as is appropriate in the context, created in the Chapter 11 Cases pursuant to section 541 of the Bankruptcy Code.
48.
Estimated Maximum Unsecured Claims Amount
: means the estimated total amount of General Unsecured Claims against the Guarantor Debtors (other than Allowed Rejection Damage Claims and OCM Facility Deficiency Claims) established pursuant to the Unsecured Claims Reserve Order in the amount of $327.50 million (or such higher amount as may be set by the Bankruptcy Court pursuant to the Unsecured Claims Reserve Order).
49.
Exchange Act
: means the Securities Exchange Act of 1934, as amended.
50.
Executory Contract
: means a contract to which one or more of the Debtors is a party that is subject to assumption or rejection under section 365 of the Bankruptcy Code.
51.
Existing Benefits Agreement
: means any employment, retirement, severance, indemnification and similar or related agreements or arrangement with the members of the Debtors’ management team or directors as of the Petition Date.
52.
Fee Claim
: means a Claim for Accrued Professional Compensation.
53.
Fee Claims Escrow Account
: means the account established on the Effective Date pursuant to Article IV.K.
54.
Final Order
: means an order or judgment of the Court, or other court of competent jurisdiction, as entered on the docket in the Chapter 11 Cases or the docket of any other court of competent jurisdiction, that has not been reversed, stayed, modified or amended, and as to which the time to appeal or petition for certiorari or move for a new trial, reargument or rehearing has expired, and as to which no appeal or petition for certiorari or other proceeding for a new trial, reargument or rehearing that has been timely taken is pending, or as to which any appeal that has been taken or any petition for certiorari that has been timely filed has been withdrawn or resolved by the highest court to which the order or judgment was appealed or from which certiorari was sought or the new trial, reargument or rehearing shall have been denied or resulted in no modification of such order.
55.
General Unsecured Claim
: means any Unsecured Claim that is not an Intercompany Claim.
56.
GMR
: means General Maritime Corporation.
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57.
Governmental Unit
: has the meaning set forth in section 101(27) of the Bankruptcy Code.
58.
Guarantor Debtors
: means the following Debtors which guarantee or are borrowers under, as applicable, the Prepetition 2010 Facility, the Prepetition 2011 Facility, the OCM Facility or the Senior Notes: Arlington Tankers Ltd., Companion Ltd., Compatriot Ltd., Consul Ltd., GMR, General Maritime Management LLC, General Maritime Subsidiary Corporation, General Maritime Subsidiary II Corporation, GMR Agamemnon LLC, GMR Ajax LLC, GMR Alexandra LLC, GMR Argus LLC, GMR Atlas LLC, GMR Chartering LLC, GMR Daphne LLC, GMR Defiance LLC, GMR Elektra LLC, GMR George T LLC, GMR Harriet G LLC, GMR Hercules LLC, GMR Hope LLC, GMR Horn LLC, GMR Kara G LLC, GMR Maniate LLC, GMR Minotaur LLC, GMR Orion LLC, GMR Phoenix LLC, GMR Poseidon LLC, GMR Revenge LLC, GMR Spartiate LLC, GMR Spyridon LLC, GMR St. Nikolas LLC, GMR Strength LLC, GMR Ulysses LLC, GMR Zeus LLC, Victory Ltd. and Vision Ltd. For the avoidance of doubt, GMR Revenge LLC is not a guarantor under the Senior Notes.
59.
Impaired
: means, when used with reference to a Class of Claims or Equity Interests, Claims or Equity Interests that are impaired within the meaning of section 1124 of the Bankruptcy Code.
60.
Initial Distribution
: means the initial distribution of the Unsecured Creditor Distribution made on or as soon as reasonably practicable after the Effective Date (or, if the Unsecured Claims Reserve Order is entered after the Effective Date, as soon as reasonably practicable after the entry of the Unsecured Claims Reserve Order) to holders of Allowed General Unsecured Claims against the Guarantor Debtors (other than holders of Rejection Damage Claims and/or OCM Facility Deficiency Claims).
61.
Insured Claim
: means any Claim or portion of a Claim that is or may be insured under the Debtors’ insurance policies.
62.
Intercompany Claims
: means any Claim held by a Debtor against another Debtor and any Claim held by a Non-Debtor Subsidiary against a Debtor.
63.
Letter of Credit Claim
: means any Claim under the Prepetition Senior Credit Agreements on account of a letter of credit to the extent such letter of credit has not been drawn as of the Effective Date.
64.
Lien
: has the meaning set forth in section 101(37) of the Bankruptcy Code.
65.
Losses
: means any and all demands, claims, debts, actions, assessments, judgments, settlements, sanctions, liabilities, monetary damages, fines, penalties, interest obligations, deficiencies, and expenses (including amounts paid in settlement, interest, court costs, costs of investigation, reasonable fees and expenses of attorneys, accountants, financial advisors and other experts, and other reasonable expenses of litigation). The term “Losses” shall not include any special, consequential, incidental or punitive damages on account of any lost profits, diminution of the value of investments or securities except to the extent that such special, consequential, incidental or punitive damages on account of any lost profits, diminution of the
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value of investments or securities are awarded by or pursuant to a court or other body of competent jurisdiction against an indemnified person in respect of a third-party claim.
66.
New Board
: means the board of directors of Reorganized GMR to be constituted as of the Effective Date pursuant to Article V.B.
67.
New Equity Investment
: means the Oaktree Plan Sponsors’ and the Non-Oaktree Plan Sponsors’, as applicable, purchase of the New Equity Investment Shares on the Effective Date for $175,000,000 in Cash on the terms and conditions set forth in the Equity Purchase Agreement and in accordance with Article IV.G.
68.
New Equity Investment Shares
: means 4,750,272 shares of New GMR Common Stock, issued in accordance with the Equity Purchase Agreement, which amount will be 47.5% of the New GMR Common Stock issued on the Effective Date on account of the New Equity Investment. The New Equity Investment Shares shall be subject to dilution from the New GMR Warrants and the New GMR Common Stock issuable under the Equity Incentive Program.
69.
New GMR By-Laws
: means the form of the by-laws of Reorganized GMR, the form of which shall be included as an exhibit to the Plan Supplement.
70.
New GMR Charter
: means the form of the certificate of incorporation of Reorganized GMR, the form of which shall be included as an exhibit to the Plan Supplement.
71.
New GMR Common Stock
: means the shares of common stock of Reorganized GMR authorized and issued pursuant to the Plan and the New GMR Charter, including upon exercise of the New GMR Warrants and the shares issuable under the Equity Incentive Program.
72.
New GMR Warrants
: means the warrants to purchase 309,296 shares of New GMR Common Stock, exercisable at a cash-less strike price of $42.50 reflecting a total implied equity value of $425 million for the Reorganized Debtors at any time for a period of five (5) years from the Effective Date, representing an aggregate total of 3% of the New GMR Common Stock issuable in accordance with the Plan (subject to dilution from the New GMR Common Stock issuable under the Equity Incentive Program), which warrants will be issued by Reorganized GMR under the terms of the Plan under the New GMR Warrant Agreement.
73.
New GMR Warrant Agreement
: means the New GMR Warrant Agreement that will govern the terms of the New GMR Warrants, dated as of the Effective Date, the form of which shall be included as an exhibit to the Plan Supplement.
74.
New Intercreditor Agreements
: means the intercreditor agreements, dated as of the Effective Date that will govern the New Senior 2010 Facility and the New Senior 2011 Facility, the forms of which shall be included as exhibits to the Plan Supplement.
75.
New Management Agreements
: means the employment agreements, if any, between Reorganized GMR and certain members of the Debtors’ management team, the form of which shall be included as an exhibit to the Plan Supplement and in accordance with Article V.D.
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76.
New Senior 2010 Facility
: means the senior financing facility in the aggregate principal amount of $273,802,583.31 (after giving effect to the Paydown, and excluding any default interest accrued on account of the Prepetition 2010 Facility Claims through and including the Effective Date) on the terms set forth in the New Senior 2010 Facility Credit Agreement.
77.
New Senior 2010 Facility Credit Agreement
: means the loan agreement, to be dated as of the Effective Date that will govern the New Senior 2010 Facility, the form of which shall be included as an exhibit to the Plan Supplement.
78.
New Senior 2011 Facility
: means the senior financing facility in the aggregate principal amount of $508,963,260.95 (after giving effect to the Paydown and including to the extent terminated before the Effective Date, amounts owed under the Prepetition Swap Agreements relating to the Prepetition 2011 Facility, and excluding any default interest accrued on account of the Prepetition 2011 Facility Claims through and including the Effective Date) on the terms set forth in the New Senior 2011 Facility Credit Agreement.
79.
New Senior 2011 Facility Credit Agreement
: the loan agreement, to be dated as of the Effective Date that will govern the New Senior 2011 Facility, the form of which shall be included as an exhibit to the Plan Supplement.
80.
New Senior Facilities
: means, together, the New Senior 2010 Facility and the New Senior 2011 Facility.
81.
Non-Debtor Guarantor Subsidiaries
: means the following: (i) General Maritime Crewing Pte. Ltd., (ii) General Maritime Management (Portugal) Lda., (iii) General Maritime Management (Portugal) LLC and (iv) Limited “General Maritime Crewing.”
82.
Non-Debtor Subsidiaries
: means the following: (i) General Maritime Crewing Pte. Ltd., (ii) General Maritime Management (Portugal) Lda., (iii) General Maritime Management (Hellas) Ltd., (iv) General Maritime Management (UK) LLC, (v) General Maritime Management (Portugal) LLC and (vi) Limited “General Maritime Crewing.”
83.
Non-Guarantor Debtors
: means the following Debtors which do not guarantee the Prepetition 2010 Facility, the Prepetition 2011 Facility, the OCM Facility or the Senior Notes: Arlington Tankers, LLC, Concept Ltd., Concord Ltd., Contest Ltd., General Maritime Investments LLC, General Maritime Subsidiary NSF Corporation, General Product Carriers Corporation, GMR Administration Corp., GMR Concept LLC, GMR Concord LLC, GMR Constantine LLC, GMR Contest LLC, GMR GP LLC, GMR Gulf LLC, GMR Limited LLC, GMR Princess LLC, GMR Progress LLC, GMR Star LLC, GMR Trader LLC and GMR Trust LLC.
84.
Non-Oaktree Plan Sponsor
: means an “Equity Investment Participant,” if any, as defined in the Equity Purchase Agreement.
85.
Notice of Plan Modifications
: means the
Notice of Plan Modifications
, as approved by the Court pursuant to the Order Authorizing Plan Modifications.
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86.
Oaktree Plan Sponsors
: means, collectively, Oaktree Principal Fund V, L.P., Oaktree Principal Fund V (Parallel), L.P., Oaktree FF Investment Fund, L.P. - Class A, and OCM Asia Principal Opportunities Fund, L.P.
87.
OCM
: means OCM Marine Investments CTB, Ltd.
88.
OCM Conversion Shares
: means 4,750,271 shares of New GMR Common Stock, issued in exchange of the OCM Facility Secured Claims, which amount will be 47.5% of the New GMR Common Stock issued on the Effective Date on account of the OCM Facility Secured Claims. The OCM Conversion Shares shall be subject to dilution from the New GMR Warrants and the New GMR Common Stock issuable under the Equity Incentive Program.
89.
OCM Credit Agreement
: means the Amended and Restated Credit Agreement, dated as of May 6, 2011 (as amended, modified or supplemented from time to time) for a secured term loan in the principal amount of $200 million among General Maritime Subsidiary Corporation and General Maritime Subsidiary II Corporation, as borrower, GMR and Arlington Tanker, Ltd. as guarantors, OCM, as initial lender, and the OCM Facility Agent, as administrative agent and collateral agent.
90.
OCM Facility
: means the $200 million principal amount secured term loan facility under the OCM Credit Agreement, plus any and all accrued and unpaid interest, premiums, fees and other obligations outstanding thereunder.
91.
OCM Facility Agent
: means OCM Administrative Agent, LLC as administrative agent and collateral agent under the OCM Credit Agreement.
92.
OCM Facility Lenders
: means the lenders under the OCM Credit Agreement, including OCM.
93.
OCM Facility Deficiency Claims
: means that portion of the Claims under or evidenced by the OCM Facility that are not Secured.
94.
OCM Facility Secured Claims
: means that portion of the Claims under or evidenced by the OCM Facility that are Secured, which Claims shall be deemed Allowed in an amount of $175,000,000.
95.
OCM Marine Holdings TP, L.P. Partnership Interests
: means the 490 Class B Units representing Class B limited partnership interests in OCM Marine Holdings TP, L.P. held by GMR.
96.
Order Authorizing Plan Modifications
: means the
Order Authorizing Plan Modifications
, dated April 2, 2012 [Docket No. 420] pursuant to section 1127 of the Bankruptcy Code and the Bankruptcy Rules.
97.
Other Priority Claim
: means a Claim entitled to priority pursuant to section 507(a) of the Bankruptcy Code, other than (i) an Administrative Claim or (ii) a Priority Tax Claim.
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98.
Other Secured Claim
: means any Claim that is Secured, other than (i) a Prepetition 2010 Facility Claim, (ii) a Prepetition 2011 Facility Claim, (iii) an OCM Facility Secured Claim or (iv) a Letter of Credit Claim.
99.
Paydown
: means (i) with respect to the holders of the Prepetition 2010 Facility Claims, $39,649,220 and (ii) with respect to the holders of the Prepetition 2011 Facility Claims, $35,350,780.
100.
Person
: means any individual, corporation, partnership, limited liability company, association, indenture trustee, organization, joint stock company, joint venture, estate, trust, governmental unit or any political subdivision thereof, or any other entity (as such term is defined in the Bankruptcy Code).
101.
Petition Date
: means November 17, 2011, the date on which each of the Debtors commenced the Chapter 11 Cases.
102.
Plan
: means this
Second Amended Joint Plan of Reorganization of the Debtors Under Chapter 11 of the Bankruptcy Code
, together with all addenda, exhibits, schedules or other attachments, if any, including the Plan Supplement, each of which is incorporated herein by reference, and as may be amended, modified, or supplemented from time to time in accordance with the terms of and/or the Equity Purchase Agreement and the Restructuring Support Agreement, as applicable.
103.
Plan Supplement
: means the compilation of documents and forms of documents, schedules and exhibits to the Plan to be filed with the Court on notice to parties-in-interest, and additional documents filed before the Effective Date as supplements or amendments to the Plan Supplement, including the following: (i) the Rejection Schedule; (ii) the Assumption Schedule; (iii) the New Senior 2010 Facility Credit Agreement; (iv) the New Senior 2011 Facility Credit Agreement; (v) the New GMR Charter; (vi) the New GMR By-Laws; (vii) the New GMR Warrant Agreement; (viii) the identity of the officers and members of the New Board and each of the other Reorganized Debtors; (ix) the summary of any Restructuring Transactions to occur on or after the Effective Date in accordance with Article IV.J.2, if any; (x) a list of retained Causes of Action; (xi) to the extent agreed to in accordance with Article V.E, a summary of the material terms of the Equity Incentive Program; (xii) the New Management Agreements; (xiii) the Registration Rights Agreement; (xiv) the Shareholders Agreement; (xv) to the extent consented to by the Oaktree Plan Sponsors in accordance with Article V.D, the Existing Benefits Agreements to be assumed under the Plan; (xvi) the New Intercreditor Agreements; and (xvii) the elected treatment of Intercompany Claims and Subsidiary Equity Interests. The Debtors shall file the Assumption Schedule and the Rejection Schedule no later than twenty-one (21) days before the commencement of the Confirmation Hearing, and the remainder of the substantially complete versions of the materials comprising the Plan Supplement no later than five (5) Business Days before the deadline to object to the Plan, as set forth in the Order Authorizing Plan Modifications.
104.
Plan Support Agreement
: means the agreement, effective as of March 26, 2012, among the Debtors and (i) the Creditors’ Committee, (ii) the PSA Supporting Noteholders, and (iii) holders of the OCM Facility Deficiency Claims and the OCM Facility Secured Claims,
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as may be amended, modified or supplemented by the parties thereto in accordance with the terms of such agreement.
105.
Post-Confirmation Creditors’ Committee
: means the post-confirmation creditors’ committee established on the Effective Date pursuant to Article VI.C.2.
106.
Prepetition 2010 Credit Agreement
: means the Amended and Restated Credit Agreement, dated as of May 6, 2011 (as amended, modified or supplemented from time to time), with respect to the Prepetition 2010 Facility among GMR, as parent, Arlington Tankers, Ltd. and General Maritime Subsidiary Corporation, as guarantor, General Maritime Subsidiary II Corporation, as borrower, the Prepetition 2010 Facility Lenders and the Prepetition Agent.
107.
Prepetition 2010 Facility
: means the term loan in an aggregate principal amount of $278.2 million and revolving credit facility in an aggregate principal amount of $50 million under the Prepetition 2010 Credit Agreement.
108.
Prepetition 2010 Facility Claims
: means the Claims under or evidenced by the Prepetition 2010 Facility (but excluding default interest accrued through the Effective Date).
109.
Prepetition 2010 Facility Lenders
: means the lenders under the Prepetition 2010 Credit Agreement.
110.
Prepetition 2011 Credit Agreement
: means the Second Amended and Restated Credit Agreement, dated as of May 6, 2011 (as amended, modified or supplemented from time to time), with respect to the Prepetition 2011 Facility among GMR, as parent, Arlington Tankers, Ltd. and General Maritime Subsidiary II Corporation, as guarantors, General Maritime Subsidiary Corporation, as borrower, the Prepetition 2011 Facility Lenders, and the Prepetition Agent.
111.
Prepetition 2011 Facility
: means the revolving credit facility under the Prepetition 2011 Credit Agreement in an aggregate principal amount of $550 million.
112.
Prepetition 2011 Facility Claims
: means the Claims under or evidenced by the Prepetition 2011 Facility and, to the extent terminated before the Effective Date, the Prepetition Swap Agreements relating to the Prepetition 2011 Facility, and any related Letter of Credit Claims (but excluding default interest accrued through the Effective Date).
113.
Prepetition 2011 Facility Lenders
: means the lenders under the Prepetition 2011 Credit Agreement.
114.
Prepetition Agent
: means, collectively, Nordea Bank Finland Plc, New York Branch as the administrative and collateral agent under each of the Prepetition 2010 Facility and the Prepetition 2011 Facility, and Nordea Bank Finland Plc, New York Branch, HSH Norbank AG and DNB Bank Asa as Joint Leader Arrangers under the Prepetition 2011 Facility, and Nordea Bank Finland Plc, New York Branch and DNB Bank Asa as Joint Leader Arrangers under the Prepetition 2010 Facility and Nordea Bank Finland Plc, New York Branch
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and DNB Bank Asa as Joint Book Runners under each of the Prepetition 2010 Facility and the Prepetition 2011 Facility.
115.
Prepetition Senior Credit Agreements
: means, together, the Prepetition 2010 Credit Agreement and the Prepetition 2011 Credit Agreement.
116.
Prepetition Swap Agreements
: means, collectively, (i) the ISDA Master Agreement between GMR and Nordea (f/k/a Christiania Bank OG Kreditkasse ASA, New York Branch), dated September 24, 2001, (ii) the interest rate swap between GMR and Nordea (f/k/a Christiania Bank OG Kreditkasse ASA, New York Branch) dated November 26, 2008, (iii) the ISDA Master Agreement between GMR and Citibank, N.A., dated September 21, 2007, (iv) the interest rate swap between GMR and Citibank, N.A., dated January 29, 2008, (v) the ISDA Master Agreement between GMR and DNB Norbank ASA, dated May 2, 2008 and (vi) the interest rate swap between GMR and DNB Norbank ASA, dated February 1, 2008.
117.
Priority Tax Claim
: means any Claim that is entitled to a priority in right of payment under sections 502(i) and 507(a)(8) of the Bankruptcy Code.
118.
Professional
: means (i) any professional employed in the Chapter 11 Cases pursuant to sections 327 or 328 of the Bankruptcy Code and (ii) any professional or other entity seeking compensation or reimbursement of expenses in connection with the Chapter 11 Cases pursuant to section 503(b)(4) of the Bankruptcy Code or otherwise.
119.
Proof of Claim
: means a written proof of Claim filed against any of the Debtors in the Chapter 11 Cases.
120.
Pro Rata
: means, with respect to any Claim, at any time, the proportion that the amount of a Claim in a particular Class or group of Classes bears to the aggregate amount of all Claims (including Disputed Claims) in such Class or group of Classes, unless in each case the Plan provides otherwise.
121.
PSA Supporting Noteholders
: means those holders of Senior Notes who are a party to the Plan Support Agreement.
122.
QIB
: means a “qualified institutional buyer,” as that term is defined in Rule 144A, promulgated under the Securities Act.
123.
Record Date
: means (i) for purposes of making distributions under the Plan on account of Allowed Claims, the Confirmation Date, and (ii) for purposes of casting Ballots, the date established for such purpose as set forth in the Disclosure Statement Order.
124.
Registration Rights Agreement
: means the Registration Rights Agreement among the parties identified in, and having the terms set forth in, Article IV.G.2, the form of which shall be included as an exhibit to the Plan Supplement.
125.
Rejection Damage Claims
: means Claims for damages arising from the rejection of Executory Contracts or Unexpired Leases.
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126.
Rejection Notice
: means a notice of an Executory Contract or Unexpired Lease to be rejected under the Plan pursuant to section 365 of the Bankruptcy Code which notice shall include (i) the procedures for objection to proposed rejection of Executory Contracts and Unexpired Leases and (ii) procedures for resolution by the Court of any related disputes. The form of Rejection Notice shall be approved pursuant to the Disclosure Statement Order.
127.
Rejection Schedule
: means the schedule of Executory Contracts (other than Existing Benefits Agreements) and Unexpired Leases to be rejected pursuant to the Plan and the effective date of rejection, which shall be included as an exhibit to the Plan Supplement.
128.
Released Parties
: means each of: (a) the Debtors and Reorganized Debtors; (b) the Prepetition Agent; (c) the Prepetition 2010 Facility Lenders (including, for the avoidance of doubt, those lenders party to the Prepetition Swap Agreements that were terminated before the Effective Date); (d) the Prepetition 2011 Facility Lenders (including, for the avoidance of doubt, those lenders party to the Prepetition Swap Agreements that were terminated before the Effective Date); (e) the OCM Facility Lenders; (f) the OCM Facility Agent; (g) the DIP Financing Agent; (h) the DIP Lenders; (i) the Oaktree Plan Sponsors; (j) the Non-Oaktree Plan Sponsors (if any); (k) the Creditors’ Committee and each of its members; (l) the PSA Supporting Noteholders; (m) the Senior Notes Indenture Trustee, in its capacity as indenture trustee under the Senior Notes Indenture; and (n) with respect to each of the foregoing in clauses (a) through (k), such entities’ predecessors, Professionals, successors and assigns, subsidiaries, funds, portfolio companies, affiliates, and each of their respective current and former officers, directors, employees, managers, attorneys, financial advisors, accountants, investment bankers, consultants, management companies or other professionals or representatives.
129.
Reorganized GMR
: means GMR or any successor thereto by merger, consolidation or otherwise, on and after the Effective Date.
130.
Reorganized Debtors
: means the Debtors, or any successors thereto by merger, consolidation, or otherwise, on and after the Effective Date.
131.
Reorganized Debtor Subsidiaries
: means the Debtor Subsidiaries, or any successors thereto by merger, consolidation, or otherwise, on and after the Effective Date.
132.
Requisite Supporting Creditors
: means, with respect to the holder of a Claim other than an OCM Facility Deficiency Claim or an OCM Facility Secured Claim, the meaning ascribed to such term in the Restructuring Support Agreement.
133.
Requisite Supporting Noteholders
: has the meaning ascribed to such term in the Plan Support Agreement.
134.
Restructuring Support Agreement
: means the agreement, effective as of November 16, 2011, among the Debtors and (i) certain holders of the Prepetition 2010 Facility Claims, (ii) certain holders of the Prepetition 2011 Facility Claims and (iii) certain holders of the OCM Facility Deficiency Claims and the OCM Facility Secured Claims, as may be amended, modified or supplemented by the parties thereto in accordance with the terms of such agreement.
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135.
Restructuring Transaction
: means the execution and delivery of appropriate agreements or other documents of merger, consolidation, restructuring, conversion, disposition, transfer, dissolution or liquidation containing terms as are summarized in the Plan Supplement and consistent with the Plan (and, to the extent applicable, the Equity Purchase Agreement) and that satisfy the applicable requirements of applicable law and any other terms to which the applicable Persons agree.
136.
Securities Act
: means the Securities Act of 1933, as amended.
137.
Scheduled
: means, with respect to any Claim or Equity Interest, the status and amount, if any, of such Claim or Equity Interest as set forth in the Schedules.
138.
Schedules
: means the schedules of assets and liabilities, statements of financial affairs, and lists of holders of Claims and Equity Interests filed with the Court by each of the Debtors, including any amendments or supplements thereto.
139.
Secured
: means when referring to a Claim: (a) secured by a Lien on property in which the applicable Estate has an interest, which Lien is valid, perfected, and enforceable pursuant to applicable law or by reason of a Court order, or that is subject to setoff pursuant to section 553 of the Bankruptcy Code, to the extent of the value of the creditor’s interest in such Estate’s interest in such property or to the extent of the amount subject to setoff, as applicable, as determined pursuant to section 506(a) of the Bankruptcy Code or (b) otherwise Allowed pursuant to the Plan as a Claim that is Secured.
140.
Senior Note Claims
: means the Claims under or evidenced by the Senior Notes, which Claims shall be deemed Allowed in an amount of $318,212,000.
141.
Senior Notes
: means the 12% Senior Notes due 2017 issued pursuant to the Senior Notes Indenture in the original principal amount of $300,000,000.
142.
Senior Notes Indenture
: means that certain Indenture, dated as of November 12, 2009 (as amended, modified or supplemented from time to time), between GMR, the subsidiary guarantors party thereto and the Senior Notes Indenture Trustee, pursuant to which the Senior Notes were issued.
143.
Senior Notes Indenture Trustee
: means Bank of New York Mellon, as indenture trustee under the Senior Notes Indenture.
144.
Shareholders Agreement
: means the Shareholders Agreement among the parties identified in Article IV.G.3 and having the terms set forth in Article IV.H, the form of which shall be included as an exhibit to the Plan Supplement.
145.
Specified Sale
: means a transfer, sale or other disposition in one or a series of related transactions of (i) at least 85% on a cumulative basis of the aggregate New GMR Common Stock (determined on a fully diluted basis) owned by OCM and the Oaktree Plan Sponsors (or each of their respective designees or affiliates) or (ii) at least 85% on a cumulative basis of the assets of Reorganized GMR and Subsidiaries, on a consolidated basis.
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146.
Subsidiaries
: means the Debtor Subsidiaries and the Non-Debtor Subsidiaries.
147.
Subsidiary Equity Interests
: means Equity Interests in the Debtor Subsidiaries.
148.
Unexpired Lease
: means a lease to which one or more of the Debtors is a party that is subject to assumption or rejection under section 365 of the Bankruptcy Code.
149.
Unimpaired
: means any Class of Claims or Equity Interests that is not designated as Impaired under the Plan.
150.
Unsecured Claim
: means any Claim that is not Secured or entitled to priority under the Bankruptcy Code or an order of the Court, including any Claim arising from the rejection of an Executory Contract or Unexpired Lease under section 365 of the Bankruptcy Code. With respect to the Guarantor Debtors only, Unsecured Claims include (i) Senior Note Claims, (ii) OCM Facility Deficiency Claims and (iii) General Unsecured Claims.
151.
Unsecured Claims Reserve
: means the amount of the Unsecured Creditor Distribution funded into the Unsecured Creditor Distribution Escrow Account on the Effective Date in accordance with Article VII.B.1.
152.
Unsecured Claims Reserve Order
: means the order entered by the Bankruptcy Court establishing the Estimated Maximum Unsecured Claims Amount.
153.
Unsecured Creditor Distribution
: means, collectively, the Unsecured Creditor Cash Distribution, the Unsecured Creditor Equity Distribution and the New GMR Warrants, to be issued to holders of Allowed General Unsecured Claims Against the Guarantor Debtors under the terms hereof.
154.
Unsecured Creditor Distribution Escrow Account
: means the escrow account separate and apart from the Debtors’ general operating funds established on the Effective Date in accordance with Article VII.B to be maintained in trust for the holders of Allowed General Unsecured Claims against the Guarantor Debtors and funded with the Unsecured Creditor Distribution.
155.
Unsecured Creditor Equity Distribution
: means 200,011 shares of New GMR Common Stock issued to holders of Allowed Unsecured Claims against the Guarantor Debtors in accordance with the terms hereof, which amount will be 2% of the New GMR Common Stock issued on the Effective Date as part of the Unsecured Creditor Distribution. The Unsecured Creditor Equity Distribution shall be subject to dilution from the New GMR Warrants and the New GMR Common Stock issuable under the Equity Incentive Program.
156.
Unsecured Creditor Cash Distribution
: means $6,000,000 in Cash.
157.
U.S. Trustee
: means the United States Trustee for the Southern District of New York.
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B.
Interpretation, Application of Definitions and Rules of Construction
.
Capitalized terms in the Plan shall have the meaning assigned to them in Article I.A. Capitalized terms that are not defined herein shall have the same meanings assigned to such terms by the Bankruptcy Code or Bankruptcy Rules, as the case may be. Meanings of capitalized terms shall be equally applicable to both the singular and plural forms of such terms. The words “herein,” “hereof,” and “hereunder” and other words of similar import refer to the Plan as a whole (and, for the avoidance of doubt, the Plan Supplement) and not to any particular section or subsection in the Plan unless expressly provided otherwise. The words “includes” and “including” are not limiting and mean that the things specifically identified are set forth for purposes of illustration, clarity or specificity and do not in any respect qualify, characterize or limit the generality of the class within which such things are included. Captions and headings to articles, sections and exhibits are inserted for convenience of reference only, are not a part of this Plan, and shall not be used to interpret this Plan. The rules of construction set forth in section 102 of the Bankruptcy Code shall apply to this Plan. In computing any period of time prescribed or allowed by this Plan, the provisions of Bankruptcy Rule 9006(a) shall apply.
ARTICLE II.
ADMINISTRATIVE AND PRIORITY CLAIMS
In accordance with section 1123(a)(1) of the Bankruptcy Code, Administrative Claims, Priority Tax Claims, and Fee Claims, as described below, have not been classified and thus are excluded from the classes of Claims and Equity Interests set forth in Article III.
A.
Administrative Claims
.
1.
Treatment of Administrative Claims Other than Fee Claims
.
Each holder of an Allowed Administrative Claim (other than an Administrative Claim that is a Fee Claim) as of the Effective Date shall receive from the Debtors (i) Cash in an amount equal to the amount of such Allowed Administrative Claim as soon as practicable after the later of (a) on the Effective Date if such Administrative Claim is Allowed as of the Effective Date, (b) thirty (30) days after the date such Administrative Claim becomes an Allowed Administrative Claim if such Administrative Claim is Disputed as of or following the Effective Date, (c) the date such Allowed Administrative Claim becomes due and payable by its terms, or as soon thereafter as is practicable or (ii) such other treatment as the Debtors (with the consent of the Oaktree Plan Sponsors, which consent shall not be unreasonably withheld) and such holder shall have agreed upon in writing;
provided, however
, that Allowed Administrative Claims other than Fee Claims that arise in the ordinary course of the Debtors’ business shall be paid in the ordinary course of business in accordance with the terms and subject to the conditions of any agreements governing, instruments evidencing or other documents relating to such transactions. Notwithstanding anything to the contrary contained herein, except to the extent that a holder of a DIP Facility Claim agrees in writing to lesser treatment, each holder of a DIP Facility Claim shall receive payment in an amount equal to such DIP Facility Claim in full, in Cash on the Effective Date as set forth in Article II.D of the Plan.
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2.
Administrative Claims Bar Date
.
Except as otherwise provided in this Article II, and except with respect to requests for payment of Claims arising under section 503(b)(9) of the Bankruptcy Code, which Claims are subject to the Bar Date Order, requests for payment of Administrative Claims must be filed and served on the Reorganized Debtors pursuant to the procedures specified in the Confirmation Order and the notice of entry of the Confirmation Order no later than thirty (30) days after entry of the Confirmation Order. Holders of Administrative Claims that are required to, but do not, file and serve a request for payment of such Administrative Claims by such date shall be forever barred, estopped and enjoined from asserting such Administrative Claims against the Debtors or their property and such Administrative Claims shall be deemed discharged as of the Effective Date. Objections to such requests, if any, must be filed and served on the Reorganized Debtors and the requesting party no later than sixty (60) days after the Effective Date.
B.
Fee Claims
.
All requests for compensation or reimbursement of Fee Claims shall be filed and served on the Reorganized Debtors, counsel to the Reorganized Debtors, the U.S. Trustee, counsel to the Creditors’ Committee, and counsel to the New Senior Lenders and such other entities who are designated by the Bankruptcy Rules, the Confirmation Order or other order of the Court, no later than forty-five (45) days after the Effective Date. Holders of Fee Claims that are required to file and serve applications for final allowance of their Fee Claims and that do not file and serve such applications by the required deadline shall be forever barred from asserting such Claims against the Debtors, Reorganized Debtors or their respective properties, and such Fee Claims shall be deemed discharged as of the Effective Date. Objections to any Fee Claims must be filed and served on the Reorganized Debtors, counsel for the Reorganized Debtors, and the requesting party no later than seventy-five (75) days after the Effective Date (unless otherwise agreed by the party requesting compensation of a Fee Claim).
C.
Priority Tax Claims
.
Each holder of an Allowed Priority Tax Claim due and payable on or before the Effective Date shall receive, at the option of the Reorganized Debtors (with the consent of the Oaktree Plan Sponsors, which consent shall not be unreasonably withheld), in full satisfaction, settlement, release, and discharge, of and in exchange for such Priority Tax Claim one of the following treatments: (i) payment in full in Cash as soon as practicable after the Effective Date in amount equal to the amount of such Allowed Priority Tax Claim, plus statutory interest on any outstanding balance from the Effective Date, calculated at the prevailing rate under applicable nonbankruptcy law for each taxing authority and to the extent provided for by section 511 of the Bankruptcy Code, and in a manner not less favorable than the most favored nonpriority Unsecured Claim provided for by the Plan (other than cash payments made to a class of creditors pursuant to section 1122(b) of the Bankruptcy Code); (ii) payment in full in Cash payable in equal Cash installments made on a quarterly basis in accordance with section 1129(a)(9)(C) of the Bankruptcy Code, over a period not to exceed 5 years following the Petition Date, plus statutory interest on any outstanding balance from the Effective Date, calculated at the prevailing rate under applicable nonbankruptcy law for each taxing authority and to the extent provided for by section 511 of the Bankruptcy Code, and in a manner not less favorable than the most favored
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nonpriority Unsecured Claim provided for by the Plan (other than cash payments made to a class of creditors pursuant to section 1122(b) of the Bankruptcy Code); or (iii) such other treatment as may be agreed upon by such holder and the Debtors (with the consent of the Plan Sponsors, which consent shall not be unreasonably withheld) or otherwise determined upon a Final Order of the Court.
D.
DIP Facility Claims
.
The DIP Facility Claims shall be deemed Allowed superpriority Administrative Claims in the full amount due and owing under the DIP Facility as of the Effective Date. Except to the extent that a holder of a DIP Facility Claim agrees in writing to lesser treatment, in full satisfaction of and in exchange for each DIP Facility Claim, each holder of a DIP Facility Claim shall receive payment in an amount equal to such DIP Facility Claim in full, in Cash on the Effective Date.
E.
Statutory Fees
.
Notwithstanding anything to the contrary contained herein, on the Effective Date, the Debtors shall pay, in full, in Cash, any fees due and owing to the U.S. Trustee at the time of Confirmation. On and after the Effective Date, the Reorganized Debtors shall be responsible for filing required post-confirmation reports and paying quarterly fees due to the U.S. Trustee for each of the Reorganized Debtors until the entry of a final decree in each such Debtor’s Chapter 11 Case or until each such Chapter 11 Case is converted or dismissed.
ARTICLE III.
CLASSIFICATION AND TREATMENT OF
CLAIMS AND EQUITY INTERESTS
All Claims against the Debtors (other than those Claims specified in Article II) and Equity Interests in the Debtors are placed in the Classes set forth below. A Claim or Equity Interest is placed in a particular Class only to the extent that the Claim or Equity Interest falls within the description of that Class, and is classified in other Classes to the extent that any portion of the Claim or Equity Interest falls within the description of such other Classes. A Claim is also placed in a particular Class for the purpose of receiving distributions pursuant to the Plan only to the extent that such Claim is an Allowed Claim in that Class and such Claim has not been paid, released, or otherwise settled before the Effective Date.
A.
Class Identification and Status
.
The Plan constitutes a separate chapter 11 plan of reorganization for each Non-Guarantor Debtor and a consolidated chapter 11 plan of reorganization for each Guarantor Debtor for voting and distribution purposes as set forth in Article IV with respect to Classes 1 through 5 and Class 7. The classification set forth in the Classes below shall be deemed to apply to each Debtor, except as follows:
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1.
The Guarantor Debtors’ Plans do not contain a Class 6.
2.
The Non-Guarantor Debtors’ Plans do not contain a Class 3, Class 4, Class 5, Class 7 or Class 10.
In addition, certain of the Guarantor Debtors and the Non-Guarantor Debtors may not have creditors in certain other Classes. If a particular Debtor does not have creditors in one or more Classes, then such Class will not apply to that Debtor.
Section 1129(a)(10) of the Bankruptcy Code shall be satisfied for the purposes of Confirmation by acceptance of the Plan by an Impaired Class of Claims;
provided
,
however
, that in the event no holder of a Claim with respect to a specific Class for a particular Debtor timely submits a Ballot that complies with the Disclosure Statement Order and/or Order Authorizing Plan Modifications indicating acceptance or rejection of the Plan, such Class will be deemed to have accepted the Plan. The Debtors shall seek Confirmation of the Plan pursuant to section 1129(b) of the Bankruptcy Code with respect to any rejecting Class of Claims or Interests. The Debtors (with the consent of the Oaktree Plan Sponsors) reserve the right to modify the Plan in accordance with Article X.F hereof, including the right to withdraw the Plan as to an individual Debtor at any time before the Effective Date. Below is a chart identifying each separate Class for each Debtor (as applicable), a description of whether the Class is Impaired and the Class’s voting rights:
|
Class
|
|
Claim or Equity Interest
|
|
Status
|
|
Voting Rights
|
|
1
|
|
Other Priority Claims
|
|
Unimpaired
|
|
Deemed to Accept
|
|
2
|
|
Other Secured Claims
|
|
Unimpaired
|
|
Deemed to Accept
|
|
3
|
|
Prepetition 2010 Facility Claims
|
|
Impaired
|
|
Entitled to Vote
|
|
4
|
|
Prepetition 2011 Facility Claims
|
|
Impaired
|
|
Entitled to Vote
|
|
5
|
|
OCM Facility Secured Claims
|
|
Impaired
|
|
Entitled to Vote
|
|
6
|
|
General Unsecured Claims Against the Non-Guarantor Debtors
|
|
Impaired
|
|
Entitled to Vote
|
|
7
|
|
General Unsecured Claims Against the Guarantor Debtors
|
|
Impaired
|
|
Entitled to Vote
|
|
8
|
|
Intercompany Claims
|
|
Impaired/ Unimpaired
|
|
Deemed to Accept/ Deemed to Reject
|
|
9
|
|
Subsidiary Equity Interests
|
|
Impaired/ Unimpaired
|
|
Deemed to Accept/ Deemed to Reject
|
|
10
|
|
Equity Interests in GMR
|
|
Impaired
|
|
Deemed to Reject
|
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B.
Treatment of Classified Claims and Equity Interests
.
1.
Class 1 — Other Priority Claims
.
(a)
Classification
: Class 1 consists of Other Priority Claims.
(b)
Treatment
: Except to the extent that a holder of an Allowed Other Priority Claim agrees in writing to less favorable treatment, in full and final satisfaction, settlement, release and discharge and in exchange for each Allowed Other Priority Claim, each holder of an Allowed Other Priority Claim shall receive payment in an amount equal to such Allowed Other Priority Claim in full in Cash as soon as practicable after the later of (i) the Effective Date and (ii) thirty days after the date when such Other Priority Claim becomes an Allowed Other Priority Claim.
(c)
Voting
: Class 1 is Unimpaired by the Plan, and each holder of a Class 1 Other Priority Claim is conclusively presumed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code. Therefore, holders of Class 1 Other Priority Claims are not entitled to vote to accept or reject the Plan.
2.
Class 2 — Other Secured Claims
.
(a)
Classification
: Class 2 consists of Other Secured Claims.
(b)
Treatment
: Except to the extent that a holder of an Allowed Other Secured Claim agrees in writing to less favorable treatment, at the option of the Debtors (with the consent of the Oaktree Plan Sponsors, which consent shall not be unreasonably withheld), in full and final satisfaction, settlement, release and discharge of and in exchange for each Allowed Other Secured Claim, (i) each Allowed Other Secured Claim shall be reinstated and rendered unimpaired in accordance with section 1124(2) of the Bankruptcy Code, notwithstanding any contractual provision or applicable nonbankruptcy law that entitles the holder of an Allowed Other Secured Claim to demand or receive payment of such Allowed Other Secured Claim before the stated maturity of such Allowed Other Secured Claim from and after the occurrence of a default, (ii) each holder of an Allowed Other Secured Claim shall receive Cash in an amount equal to such Allowed Other Secured Claim, including any interest on such Allowed Other Secured Claim, if such interest is required to be paid pursuant to sections 506(b) and/or 1129(a)(9) of the Bankruptcy Code, as soon as practicable after the later of (a) the Effective Date, and (b) thirty days after the date such Other Secured Claim becomes an Allowed Other Secured Claim, or (iii) each holder of an Allowed Other Secured Claim shall receive the Collateral securing its Allowed Other Secured Claim in full and complete satisfaction of such Allowed Other Secured Claim as soon as practicable after the later of (a) the Effective Date and (b) thirty days after the date such Other Secured Claim becomes an Allowed Other Secured Claim.
Notwithstanding the foregoing, to the extent an Allowed Other Secured Claim arises on account of property taxes, any liens imposed on account of such Allowed Other Secured Claim shall remain unimpaired until such Allowed Other Secured Claim is paid in full, and such Allowed Other Secured Claim shall be treated as an Allowed Priority Tax Claim,
provided
,
however
, that such Allowed Other Secured Claim shall be satisfied in full if the holder
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of such Allowed Other Secured Claim receives on account of such Allowed Other Secured Claim, Cash equal to the principal amount of such Allowed Other Secured Claim, plus statutory interest on any outstanding balance accruing from the Petition Date rather than the Effective Date.
(c)
Voting
: Class 2 is Unimpaired by the Plan, and each holder of a Class 2 Other Secured Claim is conclusively presumed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code. Therefore, holders of Class 2 Other Secured Claims are not entitled to vote to accept or reject the Plan.
3.
Class 3 — Prepetition 2010 Facility Claims
.
(a)
Classification
: Class 3 consists of Prepetition 2010 Facility Claims.
(b)
Allowance
: Prepetition 2010 Facility Claims shall be Allowed and deemed to be Allowed in the full amount outstanding under the Prepetition 2010 Credit Agreement as of the Effective Date;
provided
,
however
, that such Allowed amount shall exclude default interest accrued through the Effective Date.
(c)
Treatment
: In full and final satisfaction, settlement, release and discharge of and in exchange for each Allowed Prepetition 2010 Facility Claim, each holder of an Allowed Prepetition 2010 Facility Claim shall receive (i) a Pro Rata share of the Paydown with respect to the Prepetition 2010 Facility Claims and (ii) a Pro Rata share of the New 2010 Senior Facility. The consideration provided under this Article shall be the sole source of recovery for the Allowed Class 3 Claims and holders of Class 3 Claims shall have no recourse against any Non-Debtor Guarantor Subsidiaries and shall have been deemed to waive any and all Claims against any Non-Debtor Guarantor Subsidiaries.
(d)
Voting
: Class 3 is Impaired. Therefore, holders of Class 3 Prepetition 2010 Facility Claims are entitled to vote to accept or reject the Plan.
4.
Class 4 — Prepetition 2011 Facility Claims
.
(a)
Classification
: Class 4 consists of Prepetition 2011 Facility Claims.
(b)
Allowance
: Prepetition 2011 Facility Claims shall be Allowed and deemed to be Allowed in the full amount outstanding under the Prepetition 2011 Credit Agreement as of the Effective Date;
provided
,
however
, that such Allowed amount shall exclude default interest accrued through the Effective Date;
provided
,
further
, that to the extent that Prepetition Swap Agreements are terminated before the Effective Date, the amount of the Allowed Prepetition 2011 Facility Claims shall include the amounts associated with such termination.
(c)
Treatment
: In full and final satisfaction, settlement, release and discharge of and in exchange for each Allowed Prepetition 2011 Facility Claim, each holder of an Allowed Prepetition 2011 Facility Claim shall receive (i) a Pro Rata share of the Paydown
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with respect to the Prepetition 2011 Facility Claims and (ii) a Pro Rata share of the New 2011 Senior Facility. Any Letter of Credit Claim shall be satisfied with the issuance of one or more replacement letters of credit as part of the New 2011 Senior Facility or another facility, unless cash collateralized on the Effective Date. The consideration provided under this Article shall be the sole source of recovery for the Allowed Class 4 Claims and holders of Class 4 Claims shall have no recourse against any Non-Debtor Guarantor Subsidiaries and shall have been deemed to waive any and all Claims against any Non-Debtor Guarantor Subsidiaries.
(d)
Voting
: Class 4 is Impaired. Therefore, holders of Class 4 Prepetition 2011 Facility Claims are entitled to vote to accept or reject the Plan.
5.
Class 5 — OCM Facility Secured Claims
.
(a)
Classification
: Class 5 consists of OCM Facility Secured Claims.
(b)
Allowance
: OCM Facility Secured Claims shall be Allowed and deemed to be Allowed in an amount of no less than $175,000,000.
(c)
Treatment
: In full and final satisfaction, settlement, release and discharge of and in exchange for each Allowed OCM Facility Secured Claim, each holder of an OCM Facility Claim shall receive a Pro Rata share of the OCM Conversion Shares. The consideration provided under this Article shall be the sole source of recovery for the Allowed Class 5 Claims and holders of Class 5 Claims shall have no recourse against any Non-Debtor Guarantor Subsidiaries and shall have been deemed to waive any and all Claims against any Non-Debtor Guarantor Subsidiaries.
(d)
Voting
: Class 5 is Impaired. Therefore, holders of Class 5 OCM Facility Secured Claims are entitled to vote to accept or reject the Plan.
6.
Class 6 — General Unsecured Claims Against the Non-Guarantor Debtors
.
(a)
Classification
: Class 6 consists of General Unsecured Claims against the Non-Guarantor Debtors.
(b)
Treatment
: On or as soon as practicable after the Effective Date, each holder of an Allowed General Unsecured Claim against the Non-Guarantor Debtors shall receive its Pro Rata share (determined with respect to all Allowed General Unsecured Claims with respect to a particular Non-Guarantor Debtor) of Cash in an amount that is equal to the value, if any, of assets that exceed the amount of Allowed Claims senior in right of payment to such Allowed General Unsecured Claim against the applicable Non-Guarantor Debtor.
(c)
Voting
: Class is Impaired. Therefore, holders of Class 6 General Unsecured Claims against the Non-Guarantor Debtors are entitled to vote to accept or reject the Plan.
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7.
Class 7 — General Unsecured Claims Against the Guarantor Debtors
.
(a)
Classification
: Class 7 consists of General Unsecured Claims against the Guarantor Debtors.
(b)
Treatment
: Each holder of an Allowed Class 7 Claim (other than a holder of an OCM Facility Deficiency Claim) shall receive its Pro Rata share of the Unsecured Creditor Distribution, distributable from the Unsecured Creditor Distribution Escrow Account in accordance with the terms hereof. Solely for purposes of determining Pro Rata share in this paragraph, a duplicative or identical General Unsecured Claim held against more than one Guarantor Debtor (including a guaranty Claim) shall be counted against a single Guarantor Debtor. All such Allowed Class 7 Claims against the Guarantor Debtors shall be discharged and expunged as of the Effective Date. With respect to holders of Allowed Rejection Damage Claims against the Guarantor Debtors, each such holder may be entitled to receive a recovery from the Reorganized Debtors after the Effective Date on the terms and conditions set forth in Article IX.D.2.
The consideration provided under this Article shall be the sole source of recovery for the Allowed Class Senior Note Claims and the OCM Facility Deficiency Claims, and holders of Allowed Senior Note Claims and the OCM Facility Deficiency Claims shall have no recourse against any Non-Debtor Guarantor Subsidiaries and shall have been deemed to waive any and all Claims against any Non-Debtor Guarantor Subsidiaries.
(c)
Voting
: Class 7 is Impaired. Therefore, holders of Class 7 Claims are entitled to vote to accept or reject the Plan.
8.
Class 8 — Intercompany Claims
.
(a)
Classification
: Class 8 consists of Intercompany Claims.
(b)
Treatment
: On the Effective Date, Intercompany Claims will be paid, adjusted, reinstated in full or cancelled in full, in each case, to the extent determined appropriate by the Reorganized Debtors, with the consent of the Oaktree Plan Sponsors (which consent shall not be unreasonably withheld). On and after the Effective Date, the Debtors and the Reorganized Debtors will, with the consent of the Oaktree Plan Sponsors, be permitted to transfer funds between and among themselves as they determine to be necessary or appropriate to enable the Reorganized Debtors to satisfy their obligations under the Plan. Except as set forth herein, any changes to intercompany account balances resulting from such transfers will be accounted for and settled in accordance with the Debtors’ historical intercompany account settlement practices.
(c)
Voting
: Class 8 is Impaired or Unimpaired, depending on the treatment specified above. Holders of Class 8 Intercompany Claims are conclusively presumed to have accepted or rejected the Plan pursuant to sections 1126(f) or 1126(g) of the Bankruptcy Code, as applicable. Therefore, holders of Class 8 Intercompany Claims are not entitled to vote to accept or reject the Plan.
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9.
Class 9 — Subsidiary Equity Interests
.
(a)
Classification
: Class 9 consists of Subsidiary Equity Interests.
(b)
Treatment
: Subsidiary Equity Interests shall not receive any distribution on account of such Equity Interests. On the Effective Date, Subsidiary Equity Interests shall be reinstated or cancelled, as agreed to among the Debtors and the Oaktree Plan Sponsors on terms consistent with those set forth in the Plan Supplement.
(c)
Voting
: Class 9 is Impaired or Unimpaired, depending on the treatment specified above. Holders of Class 9 Subsidiary Equity Interests are conclusively presumed to have accepted or rejected the Plan pursuant to sections 1126(f) or 1126(g) of the Bankruptcy Code, as applicable. Therefore, holders of Class 9 Subsidiary Equity Interests are not entitled to vote to accept or reject the Plan.
10.
Class 10 — Equity Interests in GMR
.
(a)
Classification
: Class 10 consists of Equity Interests in GMR.
(b)
Treatment
: Holders of Equity Interests in GMR shall not receive any distribution on account of such Equity Interests. On the Effective Date, Equity Interests in GMR shall be cancelled and discharged and shall be of no further force and effect, whether surrendered for cancellation or otherwise.
(c)
Voting
: Class 10 is Impaired. Holders of Class 10 Equity Interests in GMR are conclusively presumed to have rejected the Plan pursuant to section 1126(g) of the Bankruptcy Code. Therefore, holders of Class 10 Equity Interests in GMR are not entitled to vote to accept or reject the Plan.
ARTICLE IV.
MEANS FOR IMPLEMENTATION OF THE PLAN
A.
Consolidation of the Guarantor Debtors for Distribution and Voting Purposes
.
The Guarantor Debtors’ Estates are being consolidated for voting and distribution purposes only. Such consolidation applies to the Claims classified in Classes 1 through 5 and Class 7. The Debtors propose consolidation to avoid the inefficiency of proposing and voting in respect of entity-specific Claims for which there would be no impact on distributions. Holders of Allowed Claims in each Class of Guarantor Debtors shall be entitled to their share of assets available for distribution to such Class without regard to which Guarantor Debtor was originally liable for such Claim. The Debtors believe that no creditor of the Guarantor Debtors will receive a recovery inferior to that which it would receive if they proposed a plan that was completely separate as to each Guarantor Debtor. Intercompany Claims shall be treated as provided in Class 8 of this Plan.
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Pursuant to the Confirmation Order (i) all assets and liabilities of the consolidated Guarantor Debtors will be deemed to be merged solely for purposes of this Plan, voting and distributions to be made hereunder, (ii) the obligations of each Guarantor Debtor will be deemed to be the obligation of the consolidated Guarantor Debtors solely for purposes of this Plan, voting and distributions hereunder, (iii) any Claims filed or to be filed in connection with any such obligations will be deemed Claims against the consolidated Guarantor Debtors, (iv) each Claim filed in the Chapter 11 Case of any Guarantor Debtor will be deemed filed against the Guarantor Debtors in the consolidated Chapter 11 Cases in accordance with the consolidation of the assets and liabilities of the Debtors, (v) all transfers, disbursements and distributions made by any Guarantor Debtor hereunder will be deemed to be made by the consolidated Guarantor Debtors, and (vi) all guarantees of the Guarantor Debtors of the obligations of any other Guarantor Debtors shall be deemed eliminated so that any Claim against any Guarantor Debtor and any guarantee thereof executed by any other Guarantor Debtor and any joint or several liability of any of the Guarantor Debtors shall be deemed to be one obligation of the consolidated Guarantor Debtors.
Notwithstanding the foregoing, such consolidation shall not affect: (i) the legal and corporate structure of the Reorganized Debtors; (ii) guarantees that are required to be maintained post-Effective Date (a) in connection with executory contracts or unexpired leases that were entered into during the Chapter 11 Cases or that have been, or will hereunder be, assumed, (b) pursuant to the express terms of the Plan, or (c) in connection with the New Senior Facilities; or (iii) each Guarantor Debtor’s obligation to file the necessary operating reports and pay any required fees pursuant to 28 U.S.C. § 1930(a)(6) (such obligations shall continue until an order is entered closing, dismissing or converting each such Debtor’s Chapter 11 Case).
The Plan shall serve as, and shall be deemed to be, a motion for entry of an order consolidating the Estates of the Guarantor Debtors as set forth in this Plan. If no objection to consolidation under this Plan is timely filed and served, then the holders of Claims against the Guarantor Debtors will be deemed to have consented to consolidation for the purpose of this Plan only and the Court may approve consolidation of the Debtors’ Estates of the Guarantor Debtors in the Confirmation Order. If such objection to the consolidation provided for in this Plan is timely filed and served, a hearing with respect to the consolidation of the Estates of the Guarantor Debtors and the objections thereto shall be scheduled by the Court, which hearing may coincide with the Confirmation Hearing. If a party-in-interest challenges the proposed consolidation, the Debtors reserve the right to establish at the confirmation hearing the ability to confirm that Plan on an entity-by-entity basis.
B.
General Settlement of Claims and Interests
.
As discussed in detail in the Disclosure Statement and as otherwise provided herein, one element of, and in consideration for, an overall negotiated settlement of numerous disputed Claims and issues embodied in the Plan, pursuant to Bankruptcy Rule 9019 and section 1123 of the Bankruptcy Code and in consideration for the distributions, releases and other benefits provided under the Plan, the provisions of the Plan shall upon Consummation constitute a good faith compromise and settlement between the Debtors, OCM, the Oaktree Plan Sponsors, PSA Supporting Noteholders and the Creditors’ Committee arising from or related to (i) the amount of the OCM Facility Secured Claim for allocation purposes under the Plan, (ii) the
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total enterprise value of the Debtors’ estates and the Reorganized Debtors for allocation purposes under the Plan, (iii) the amount of the Unsecured Creditor Distribution and (iv) OCM’s agreement not to receive a distribution on account of the OCM Facility Deficiency Claims,
provided
,
however
, that the Debtors, OCM, the Oaktree Plan Sponsors, the PSA Supporting Noteholders and the Creditors’ Committee reserve all of their respective rights in respect of the Plan in the event that, for any reason, the Confirmation Order is not entered or the Effective Date does not occur. In addition, the Plan shall upon consummation constitute a good faith compromise and settlement between the Debtors, OCM, the holders of the Prepetition 2010 Facility Claims and the holders of Prepetition 2011 Facility Claims that are party to the Restructuring Support Agreement arising from or related to the Prepetition 2010 Facility Claims and the Prepetition 2011 Facility Claims. The entry of the Confirmation Order shall constitute the Bankruptcy Court’s approval of each of the foregoing compromises or settlements and all other compromises and settlements provided for in the Plan, and the Bankruptcy Court’s findings shall constitute its determination that such compromises and settlements are in the best interests of the Debtors, their estates, creditors, and other parties-in-interest, and are fair, equitable, and within the range of reasonableness.
C.
New Equity Investment
.
On December 15, 2011, the Debtors entered into the Equity Purchase Agreement with the Oaktree Plan Sponsors. Unless otherwise provided in the Plan or the Equity Purchase Agreement, the Debtors and the Reorganized Debtors, as applicable, shall use the proceeds received from the New Equity Investment (i) to satisfy the DIP Facility Claims; (ii) to make the Paydown; (iii) to issue other cash distributions required by the Plan; (iv) to pay expenses of the Chapter 11 Cases, to the extent so ordered by the Court; and (v) for general corporate purposes, following the Effective Date.
D.
New Senior Facilities
.
On or before the Effective Date, the Debtors shall enter into the New Senior 2010 Facility Credit Agreement and the New Senior 2011 Facility Credit Agreement.
1.
The New 2010 Senior Facility
. The New 2010 Senior Facility shall be used to satisfy the Prepetition 2010 Facility Claims in accordance with Article III.B.3.
2.
The New 2011 Senior Facility
. The New 2011 Senior Facility shall be used to satisfy the Prepetition 2011 Facility Claims in accordance with Article III.B.4.
3.
Continuation of Liens
. Notwithstanding anything to the contrary herein, including Article VI.H., in order to effectuate entry into and perfection of the Liens securing the New Senior Facilities, the Liens granted under the Prepetition 2010 Facility and the Prepetition 2011 Facility, to the extent those Liens are granted on the same Collateral securing the New Senior Facilities, shall remain in place and continue on and after the Effective Date as Liens on Collateral securing the New Senior Facilities.
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E.
Voting of Claims
.
Each holder of an Allowed Claim in Classes 3 through 7 shall be entitled to vote to accept or reject the Plan as provided in the Disclosure Statement Order.
F.
Nonconsensual Confirmation
.
If less than all Impaired Classes accept the Plan, but at least one Class of Claims that is Impaired under the Plan has accepted the Plan (and which Class’s acceptance is determined without inclusion of any vote submitted by the holder of a Claim that is an “insider,” as such term is defined in section 101(31) of the Bankruptcy Code), the Debtors may seek to have the Court confirm the Plan under section 1129(b) of the Bankruptcy Code. The Debtors request confirmation of the Plan under section 1129(b) of the Bankruptcy Code with respect to any impaired Class that has not accepted or is deemed not to have accepted the Plan pursuant to section 1126 of the Bankruptcy Code.
G.
Issuance of New GMR Common Stock, the Commitment Fee GMR Common Stock and New GMR Warrants and Entry Into the Registration Rights
Agreement and the Shareholders Agreement
.
1.
Issuance of the New GMR Common Stock
. On the Effective Date, Reorganized GMR shall issue and distribute the New GMR Common Stock issuable on the Effective Date (subject to dilution from the New GMR Warrants and the New GMR Common Stock issuable under the Equity Incentive Program), to OCM, the Oaktree Plan Sponsors and/or the Non-Oaktree Plan Sponsor, with OCM (or a designated affiliate thereof) receiving the OCM Conversion Shares and the Oaktree Plan Sponsors and/or the Non-Oaktree Plan Sponsor (or a designated affiliate thereof) receiving the New Equity Investment Shares. Additionally, on the Effective Date, Reorganized GMR shall issue and distribute the Unsecured Creditor Equity Distribution to the Unsecured Creditor Distribution Escrow Account. The issuance of the New GMR Common Stock by Reorganized GMR is authorized without the need for any further corporate action and without any further action by any holder of a Claim or Equity Interest. 15,000,000 shares of New GMR Common Stock shall be authorized under the New GMR Charter, 10,000,571 shares of which will be issued on the Effective Date pursuant to the terms hereof.
2.
Entry into the Registration Rights Agreement
. As of the Effective Date, OCM, the Oaktree Plan Sponsors and/or the Non-Oaktree Plan Sponsors (or their designees and affiliates who hold New GMR Common Stock as of the Effective Date) will execute the Registration Rights Agreement. In addition, each holder of an Allowed General Unsecured Claim against a Guarantor Debtor that receives (or will receive in the future) New GMR Common Stock under the terms of the Plan equal to an aggregate amount of at least 0.15% of all New GMR Common Stock on a fully diluted basis (calculated as a percentage of the New GMR Common Stock held by such holder, assuming the exercise of all outstanding New GMR Warrants) shall be deemed to have entered into the Registration Rights Agreement as of the Effective Date, it being understood that such holders may be requested to provide actual signatures to the Registration Rights Agreement after the Effective Date.
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The Registration Rights Agreement shall provide that OCM, the Oaktree Plan Sponsors and the Non-Oaktree Plan Sponsors (or their designees and affiliates who hold New GMR Common Stock as of the Effective Date) shall have demand and piggyback registration rights. The Registration Rights Agreement shall also provide that each holder of an Allowed General Unsecured Claim against a Guarantor Debtor that owns an aggregate amount of at least 0.15% of all New GMR Common Stock on a fully diluted basis (calculated as a percentage of the New GMR Common Stock held by such holder, assuming the exercise of all outstanding New GMR Warrants) shall have piggyback registration rights based on the actual number of shares of New GMR Common Stock owned.
3.
Entry into the Shareholders Agreement
. As of the Effective Date, OCM, the Oaktree Plan Sponsors and/or the Non-Oaktree Plan Sponsors (or their designees and affiliates who hold New GMR Common Stock as of the Effective Date) will execute the Shareholders Agreement. In addition, each holder of an Allowed General Unsecured Claim against a Guarantor Debtor that receives (or will receive in the future) New GMR Common Stock under the terms of the Plan equal to an aggregate amount of at least 0.15% of all New GMR Common Stock on a fully diluted basis (calculated as a percentage of the New GMR Common Stock held by such holder, assuming the exercise of all outstanding New GMR Warrants) shall be deemed to have entered into the Shareholders Agreement as of the Effective Date, it being understood that certain holders may be requested to provide actual signatures to the Shareholders Agreement after the Effective Date. The Shareholders Agreement shall provide for the tag-along, drag-along rights, preemptive rights and transfer restrictions described in Article IV.H.2.
4.
Exemption from Registration
. The offering, issuance, and distribution of the New GMR Common Stock, the New GMR Common Stock underlying the Equity Incentive Program, and the New GMR Common Stock underlying the New GMR Warrants, shall be exempt from the registration requirements of section 5 of the Securities Act and any other applicable law requiring registration prior to the offering, issuance, distribution, or sale of the New GMR Common Stock, the New GMR Common Stock underlying the Equity Incentive Program, and the New GMR Common Stock underlying the New GMR Warrants under section 1145 of the Bankruptcy Code, Section 4(2) of the Securities Act and/or Regulation D thereunder or other available exemption from registration under the Securities Act and other applicable law.
5.
Authorization
. The issuance of the New GMR Common Stock and the New GMR Warrants by Reorganized GMR are authorized without the need for any further corporate action or without any further action by the Debtors or Reorganized GMR, as applicable. Pursuant to the Plan, the New GMR Charter shall authorize the issuance and distribution on or after the Effective Date of the New GMR Common Stock in accordance with the Plan and the New GMR Warrants (as well as any New GMR Common Stock to be issued on account of the Equity Incentive Program). All of the New GMR Common Stock and the New GMR Warrants shall be duly authorized, validly issued, fully paid, and non-assessable.
6.
Listing of New GMR Common Stock and New GMR Warrants
. On the Effective Date, Reorganized GMR will not list the New GMR Common Stock or the New GMR Warrants on a national securities exchange. Reorganized GMR may, in its sole discretion, file periodic reports with the SEC after the Effective Date.
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H.
The New GMR Common Stock
.
1.
Form
. All New GMR Common Stock distributed under the Plan to holders of Class 7 Claims will be issued in book-entry form, and DTC or its nominee will be the holder of record of New GMR Common Stock. One or more global certificates representing such New GMR Common Stock will be registered with an agent for the New GMR Common Stock, in the name of, and will be deposited with, DTC or its nominee. The ownership interest of each holder of such New GMR Common Stock, and transfers of ownership interests therein, will be recorded on the records of the direct and indirect participants in DTC. To receive distributions of New GMR Common Stock, holders of Class 7 Claims will be required to designate a direct or indirect participant in DTC with whom such holder has an account into which such New GMR Common Stock may be deposited. The New GMR Common Stock issued under the Plan to OCM, the Oaktree Plan Sponsors, the Non-Oaktree Plan Sponsors and each of their respective affiliates and designees that own the New GMR Common Stock will be in the form of registered stock certificates and will bear a legend indicating that transfer may be restricted under federal and state securities laws.
2.
Rights and Transfer Restrictions in Respect of the New GMR Common Stock
. The New GMR Common Stock issued under the Plan (whether acquired on the Effective Date or upon exercise of the New GMR Warrants) will have the following rights and transfer restrictions (which terms may be set forth in the Shareholders Agreement and/or the New GMR Charter):
(a)
Tag Rights
. Upon any transfer of New GMR Common Stock by OCM, the Oaktree Plan Sponsors, or each of their respective affiliates or designees who own the New GMR Common Stock, each other holder of New GMR Common Stock that owns an aggregate amount of at least 0.15% of all New GMR Common Stock on a fully diluted basis (calculated as a percentage of the New GMR Common Stock held by such holder, assuming the exercise of all outstanding New GMR Warrants) shall have customary tag-along rights based on the actual number of shares of New GMR Common Stock owned. Upon a transfer of the New GMR Common Stock by OCM, the Oaktree Plan Sponsors, and each of their respective affiliates or designees who own the New GMR Common Stock of all or substantially all of their owned New GMR Common Stock on an aggregate basis, each other holder of the New GMR Common Stock who holds such shares on account of an Allowed Class 7 General Unsecured Claim against the Guarantor Debtors shall have customary tag-along rights based on the actual number of shares owned by such holder.
(b)
Drag Rights
. OCM, the Oaktree Plan Sponsors and the Non-Oaktree Plan Sponsors and each of their respective affiliates or designees who own the New GMR Common Stock shall have customary drag-along rights (unless such rights are not permitted by the procedures or rules of the DTC or if such transfer would otherwise render the New GMR Common Stock ineligible for participation in the DTC).
(c)
Preemptive Right
. The Shareholders Agreement shall provide for preemptive rights (based on the actual number of owned shares of New GMR Common Stock) in the event Reorganized GMR issues equity to OCM, the Oaktree Plan Sponsors, or any of their respective affiliates at a discount to the price of a single share of the New GMR Stock implied by
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the Plan on the Effective Date. Such preemptive rights shall be provided to each holder of an Allowed General Unsecured Claim against a Guarantor Debtor that (1) is a QIB or an Accredited Investor and (2) owns an aggregate amount of at least 0.15% of all New GMR Common Stock on a fully diluted basis (calculated as a percentage of the New GMR Common Stock held by such holder, assuming the exercise of all outstanding New GMR Warrants). Any shares or other securities issued to holders of Allowed General Unsecured Claims against a Guarantor Debtor pursuant to the exercise of such preemptive rights shall bear the same terms as all other shares or securities issued by Reorganized GMR to OCM, the Oaktree Plan Sponsors, or any of their respective affiliates (as applicable) under this paragraph.
(d)
Transfer Restrictions
. No stockholder (other than OCM, the Oaktree Plan Sponsors, the Non-Oaktree Plan Sponsors, or each their respective designees or affiliates) may sell, exchange, assign, pledge, encumber or otherwise transfer such shares of New GMR Common Stock if such transfer would result in the New GMR Common Stock being held of record by more than 200 Persons as determined pursuant to Section 12(g) of the Securities Exchange Act of 1934, as amended, unless such transfer is expressly approved by the New Board prior to such transfer or unless, without accounting for such transfer, Reorganized GMR is at the time otherwise subject, or with the passage of time will be subject, to the reporting requirements of Section 13(a) or Section 15(d) of the Exchange Act. Additionally, the New GMR Charter shall prohibit each holder of an Allowed General Unsecured Claim against a Guarantor Debtor from transferring any shares of New GMR Common Stock during the 180-day period after an initial public offering. The New GMR Charter shall provide that, if requested by the New Board, each holder of an Allowed General Unsecured Claim against a Guarantor Debtor shall be required to sign a lock-up agreement with the underwriter(s) associated with such initial public offering. Additionally, all holders of the New GMR Common Stock party to the Shareholders Agreement and the Registration Rights Agreement shall be prohibited from transferring any shares of New GMR Common Stock during the 90-day period after each underwritten public offering following an initial public offering. The New GMR Charter may provide that, if requested by the New Board, all holders of the New GMR Common Stock who are party to the Shareholders Agreement and the Registration Rights Agreement shall enter into lock-up agreements with the underwriter(s) associated with such subsequent underwritten public offering. Any transfer of New GMR Common Stock made in violation of these provisions will be void.
I.
The New GMR Warrants
.
1.
Issuance
. The New GMR Warrants will be issued pursuant to the terms of the New GMR Warrant Agreement.
2.
Exercise Price and Other Terms
. Each New GMR Warrant will have a 5-year term (commencing on the Effective Date) and will be exercisable for one share of New GMR Common Stock reflecting a total implied equity value of $425 million for the Reorganized Debtors. The New GMR Warrant Agreement shall provide holders with a cashless exercise option.
3.
Redemption Rights
. The New GMR Warrant Agreement shall provide that upon consummation of a Specified Sale before the expiration of the 5-year term of the New
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GMR Warrants at an aggregate value that is less than the applicable warrant strike price, Reorganized GMR shall redeem the outstanding New GMR Warrants at a valuation calculated based on the Black Scholes formula (assuming a 30% volatility rate).
4.
Anti-Dilution Protection
. The New GMR Warrant Agreement shall provide the New GMR Warrants with anti-dilution protection in the event of any stock split, reverse stock split, stock dividend or reclassification.
5.
Form
. All New GMR Warrants distributed under the Plan to holders of Class 7 Claims will be issued in book-entry form and DTC or its nominee will be the holder of record of New GMR Warrants. One or more global warrant certificates representing such New GMR Warrants will be registered with a warrant agent for the New GMR Warrants, in the name of, and will be deposited with, DTC or its nominee. The ownership interest of each holder of such New GMR Warrants, and transfers of ownership interests therein, will be recorded on the records of the direct and indirect participants in DTC. To receive distributions of New GMR Warrants, holders of Class 7 Claims who will not be affiliates of Reorganized GMR will be required to designate a direct or indirect participant in DTC with whom such holder has an account into which such New GMR Warrants may be deposited.
Beneficial owners of such New GMR Warrants will be required to follow such procedures as DTC or its direct or indirect participants may establish for exercising their rights in respect of the New GMR Warrants, including exercise and transfer thereof. New GMR Common Stock issuable upon exercise of such New GMR Warrants will be issued in book-entry form and held through DTC.
6.
Transfer Restrictions
. The New GMR Warrant Agreement will provide that no holder may sell, exchange, assign, pledge, encumber or otherwise transfer all or any portion of a New GMR Warrant if such transfer would result in the New GMR Warrants being held of record by more than 200 Persons as determined pursuant to Section 12(g) of the Securities Exchange Act of 1934, as amended, unless such transfer is expressly approved by the New Board prior to such transfer or unless, without accounting for such transfer, Reorganized GMR is at the time otherwise subject, or with the passage of time will be subject, to the reporting requirements of Section 13(a) or Section 15(d) of the Exchange Act. Any transfer of a New GMR Warrant in violation of these provisions will be void. These transfer restrictions may also be set forth in the New GMR Charter.
J.
Continued Corporate Existence and Effectuation of Restructuring Transactions
.
1.
Continued Corporate Existence and Vesting of Assets
. Except as otherwise required to effectuate a Restructuring Transaction as set forth in this Plan or otherwise provided herein: (i) each Debtor will, as a Reorganized Debtor, continue to exist after the Effective Date as a separate legal entity, with all of the powers of such a legal entity under applicable law and without prejudice to any right to alter or terminate such existence (whether by merger, dissolution or otherwise) under applicable law; and (ii) on the Effective Date, all property of the Estate of a Debtor, and any property acquired by a Debtor or Reorganized Debtor under the Plan, will vest, in such Reorganized Debtor free and clear of all Claims, Liens,
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charges, other encumbrances, Equity Interests and other interests (subject to Liens and Claims established on the Effective Date under the Plan, including in respect of the New Senior 2010 Facility and the New Senior 2011 Facility). On and after the Effective Date, each Reorganized Debtor may operate its business and may use, acquire and dispose of property and compromise or settle any claims without supervision or approval by the Court and free of any restrictions of the Bankruptcy Code or Bankruptcy Rules, subject only to those restrictions expressly imposed by the Plan or the Confirmation Order as well as the documents and instruments executed and delivered in connection therewith, including the documents, exhibits, instruments and other materials comprising the Plan Supplement. Without limiting the foregoing, each Reorganized Debtor may pay the charges that it incurs from and after the Effective Date for Fee Claims, disbursements, expenses or related support services (including fees relating to the preparation of Professional fee applications) without application to, or the approval of, the Court.
2.
Restructuring Transactions
.
On the Effective Date or as soon as reasonably practicable thereafter, the Reorganized Debtors may take all actions as may be necessary or appropriate to effect any Restructuring Transaction described in, approved by, contemplated or necessary to effectuate the Plan (including any action specified in the Plan Supplement), including the filing of a certificate of dissolution in the appropriate jurisdiction. Subsidiary Equity Interests that are cancelled under the Plan shall be transferred to Reorganized GMR and provided for as set forth in the Plan Supplement.
K.
Fee Claims Escrow Account
.
On the Effective Date, subject to any alternative agreement between the Debtors and any holder of a Fee Claim entered into with the consent of the Oaktree Plan Sponsors, the Debtors shall establish the Fee Claim Escrow Account in an amount equal to all Fee Claims outstanding as of the Effective Date (including, for the avoidance of doubt, any estimates for unbilled amounts payable by the Debtors). Amounts held in the Fee Claims Escrow Account shall not constitute property of the Reorganized Debtors. The Fee Claims Escrow Account may be an interest-bearing account. In the event there is a remaining balance in the Fee Claims Escrow Account following payment to all holders of Fee Claims under the Plan any such amounts shall be returned to the Reorganized Debtors.
L.
OCM Marine Holdings TP, L.P. Partnership Interests
.
On the Effective Date, the OCM Marine Holdings TP, L.P. Partnership Interests shall be terminated, and on the Effective Date, the Debtors and OCM Marine Holdings TP, L.P. shall enter into a termination agreement with respect to such interests.
ARTICLE V.
PROVISIONS REGARDING CORPORATE GOVERNANCE
OF THE REORGANIZED DEBTORS
A.
Amendments to Certificates of Incorporation
.
1.
Reorganized GMR
. On the Effective Date, the New GMR Charter shall prohibit the issuance of nonvoting equity securities only so long as, and to the extent that, the issuance of nonvoting equity securities is prohibited by the Bankruptcy Code. Additionally, the
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New GMR Charter shall provide for restrictions on trading New GMR Common Stock, to the extent provided in Article IV.H, and the respective agreements governing the New GMR Warrants shall provide for restrictions on trading the New GMR Warrants to the extent provided in Article IV.I.6. The New GMR Charter will be filed on or immediately before the Effective Date with the applicable authority in the jurisdiction of incorporation in accordance with the corporate laws of its jurisdiction of incorporation.
2.
The Debtor Subsidiaries
. Except as otherwise required to effectuate a Restructuring Transaction as set forth in Article IV.J.2, after the Effective Date, the certificate of incorporation of each Debtor Subsidiary shall be amended (to the extent such provision is not already included in the applicable certificate of incorporation) to prohibit the issuance of nonvoting equity securities only so long as, and to the extent that, the issuance of nonvoting equity securities is prohibited by the Bankruptcy Code. The amended certificates of incorporation of the Reorganized Debtor Subsidiaries will be filed with the applicable authorities in their respective jurisdictions of incorporation in accordance with the corporate laws of the respective jurisdictions of incorporation.
B.
Appointment of Officers and Directors
.
As of the Effective Date, the term of the officers and current members of the board of directors of GMR and the other Debtors shall expire without further action by any Person, and the initial boards of directors, including the New Board, and the officers and members of the board of directors of each of the Reorganized Debtors shall consist of the individuals identified on an exhibit to the Plan Supplement and commence on the Effective Date. The New Board shall be comprised of five directors appointed by the Oaktree Plan Sponsors, and the identities and affiliations of the initial members of the New Board will be disclosed in an exhibit to the Plan Supplement. The initial boards of directors of the other Reorganized Debtors shall be as set forth in an exhibit to the Plan Supplement. Any successors to Reorganized GMR’s or the Reorganized Debtors’ initial boards will be appointed in compliance with Reorganized GMR’s or the applicable Reorganized Debtor’s bylaws, certificates of incorporation or other applicable corporate formation and governance documents. Each such director and officer (including the members of the New Board) shall serve from and after the Effective Date pursuant to the terms of the new certificates of incorporation, by-laws, and other constituent documents of the Reorganized Debtors in effect on and from the Effective Date.
C.
Powers of Officers
.
The officers of the Debtors or the Reorganized Debtors, as the case may be, shall have the power to enter into or execute any documents or agreements that they deem reasonable and appropriate to effectuate the terms of the Plan.
D.
New Management Agreements, Existing Benefits Agreements and Retiree Benefits
.
From and after the Effective Date, the Reorganized Debtors’ officers shall be employed and serve the Reorganized Debtors in accordance with the New Management Agreements. Except to the extent agreed to by the Oaktree Plan Sponsors and included in the
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Plan Supplement (or otherwise terminated with consent of the Oaktree Plan Sponsors), all Existing Benefits Agreements shall be deemed rejected as of the Effective Date. Notwithstanding anything to the contrary contained herein, pursuant to section 1129(a)(13) of the Bankruptcy Code, on and after the Effective Date, all retiree benefits (as that term is defined in section 1114 of the Bankruptcy Code), if any, shall continue to be paid in accordance with applicable law.
E.
Equity Incentive Program
.
Subject to the terms of the Equity Incentive Program, 10% of the shares of the New GMR Common Stock, or such other amount as agreed to between the Debtors and the Oaktree Plan Sponsors, on a fully-diluted basis will be available for award to eligible employees, directors or officers of the Reorganized Debtors. The form of award, amount, allocation and vesting schedule of such New GMR Common Stock pursuant to such Equity Incentive Program will be (i) mutually agreed upon in writing by the Oaktree Plan Sponsors and GMR and set forth in the Plan Supplement or (ii) to the extent not mutually determined in accordance with the preceding sub-clause (i) as of the date the Plan Supplement is first filed with the Court, as determined by the New Board after the Effective Date.
F.
Indemnification of Directors, Officers and Employees
.
Upon the Effective Date with respect to Reorganized GMR, and after the Effective Date with respect to each other Reorganized Debtor, the charter and by-laws of the Reorganized Debtors shall contain provisions that, to the fullest extent permitted by applicable law in the jurisdiction where such Reorganized Debtor is organized: (i) eliminate the personal liability of the Reorganized Debtor’s directors and officers in place from or after the Effective Date for any and all monetary damages arising from breaches of their fiduciary duties; and (ii) require the Reorganized Debtor to indemnify its directors, officers, and employees serving on or after the Effective Date with respect to any and all claims and actions, irrespective of whether such claims or actions are based on service as a director, officer, or employee of a Reorganized Debtor after the Effective Date or on service as a director, officer, or employee of a Debtor before the Effective Date;
provided
,
that
, any indemnification based on service as a director, officer or employee of a Debtor before the Effective Date will be limited to legal fees and expenses.
ARTICLE VI.
CONFIRMATION OF THE PLAN
A.
Conditions to Confirmation
.
The following conditions are conditions to the entry of the Confirmation Order unless such conditions, or any of them, have been satisfied or duly waived in accordance with Article VI.B:
1. The Court shall have approved the Disclosure Statement in form and substance reasonably acceptable to the Debtors, the New Senior Lenders and the Oaktree Plan
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Sponsors, as containing adequate information with respect to the Plan within the meaning of section 1125 of the Bankruptcy Code.
2.
The Confirmation Order shall be reasonably acceptable in form and substance to the Debtors, the Creditors’ Committee, the Requisite Supporting Creditors, and the Oaktree Plan Sponsors.
3.
The Plan (which, for purposes of this Article VI.A.3 shall exclude the Plan Supplement), shall be reasonably satisfactory in form and substance to the Debtors, the Creditors’ Committee, the Requisite Supporting Noteholders, the Requisite Supporting Creditors, and the Oaktree Plan Sponsors.
4.
All documents to be provided in the Plan Supplement shall be in form and substance reasonably satisfactory to the Debtors, the Requisite Supporting Creditors, and the Oaktree Plan Sponsors.
5.
The Definitive Documents (as defined in the Plan Support Agreement) shall be materially consistent with the Term Sheet attached to the Plan Support Agreement, and in a form and substance reasonably satisfactory to the Debtors, the Requisite Supporting Creditors, the Creditors’ Committee, and the Oaktree Plan Sponsors.
6.
Any modification of, amendment, supplement or change to the Plan that alters in any way the distributions under the Plan or the parties to whom it shall be made available shall not have been made without the consent of the Creditors’ Committee, the Requisite Supporting Creditors, the Requisite Supporting Noteholders, and the Oaktree Plan Sponsors.
7.
The Equity Purchase Agreement shall be in full force and effect as of such date.
B.
Waiver of Conditions Precedent to Confirmation
.
The Debtors may waive the conditions set forth in Article VI.A above at any time with the written consent of the Requisite Supporting Creditors and the Oaktree Plan Sponsors, which consent shall not be unreasonably withheld, and without leave of or order of the Court and without any formal action,
provided
,
however,
that Debtors also obtain the written consent of the Creditors’ Committee, which consent shall not be unreasonably withheld, to waive the conditions set forth in Article VI.A.2, Article VI.A.3, Article VI.A.5, and Article VI.A.6 above,
provided
,
further
,
however
, that Debtors also obtain the written consent of the Requisite Supporting Noteholders, which consent shall not be unreasonably withheld, to waive the conditions set forth in Article VI.A.3 and Article VI.A.6 above. Notwithstanding the foregoing, the Oaktree Plan Sponsors shall be entitled to refuse such consent for any reason if such refusal is permitted in the terms of the Equity Purchase Agreement, and nothing herein shall provide the Requisite Supporting Creditors, the Creditors’ Committee or the Requisite Supporting Noteholders with any consent rights that are not otherwise provided in the Restructuring Support Agreement or the Equity Purchase Agreement.
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C.
Dissolution of Creditors’ Committee and Formation of Post-Confirmation
Committee
.
1.
Dissolution of Creditors’ Committee
. The Creditors’ Committee shall continue in existence until the Effective Date to exercise those powers and perform those duties specified in section 1103 of the Bankruptcy Code. On the Effective Date, the Creditors’ Committee shall be dissolved and its members shall be deemed released of all their duties, responsibilities and obligations in connection with the Chapter 11 Cases or this Plan and its implementation, and the retention or employment of the Creditors’ Committee’s attorneys, financial advisors, and other agents shall terminate as of the Effective Date;
provided
,
however
, such attorneys and financial advisors shall be entitled to pursue their own Fee Claims and represent the Creditors’ Committee in connection with the review of and the right to be heard in connection with all Fee Claims. Notwithstanding the foregoing or any provision in the Plan providing for the dissolution of the Creditors’ Committee, the Creditors’ Committee shall remain in existence following the Effective Date to the extent necessary for the prosecution of any appeal of the Confirmation Order,
provided
,
however
, that nothing in the Plan or Confirmation Order shall obligate the Debtors, the Reorganized Debtors, the Oaktree Plan Sponsors, the Non-Oaktree Plan Sponsors (if any) or any other party in interest to pay any legal fees or expenses incurred by the Creditors’ Committee after the Effective Date in connection with prosecution of such appeal.
2.
Post-Confirmation Committee
.
The Creditors’ Committee, in consultation with the Reorganized Debtors, shall appoint members of the Post-Confirmation Creditors’ Committee. The members of the Post-Confirmation Creditors’ Committee shall consist of the individuals identified on a notice to be filed within two (2) business days after the filing of the Plan Supplement. The Post-Confirmation Creditors’ Committee shall be established for the sole purpose of reviewing and consulting with the Debtors regarding objections to General Unsecured Claims against the Guarantor Debtors and overseeing distributions to all holders of General Unsecured Claims against the Guarantor Debtors. All reasonable and documented fees, expenses and costs of the Post-Confirmation Committee and its counsel shall be paid by GMR, up to an aggregate amount not to exceed $50,000, without application or submission to the Bankruptcy Court (it being understood that the Bankruptcy Court shall retain jurisdiction with respect to any disputes that may arise with respect to the Post-Confirmation Committee’s formation and/or performance of duties discussed hereunder). The Post-Confirmation Committee shall be dissolved without further action or order upon the closing of the Debtors’ chapter 11 cases.
D.
Discharge of the Debtors
.
Pursuant to section 1141(d) of the Bankruptcy Code, and except as otherwise specifically provided in the Plan or in any contract, instrument or other agreement or document created pursuant to the Plan, the distributions, rights and treatment that are provided in the Plan shall be in complete satisfaction, discharge and release, effective as of the Effective Date, of Claims (including any Intercompany Claims resolved or compromised after the Effective Date by the Reorganized Debtors), Equity Interests and Causes of Action of any nature whatsoever, including any interest accrued on Claims or Equity Interests from and after the Petition Date, whether known or unknown, against, liabilities of, Liens on, obligations of, rights against and Equity Interests in, the Debtors or any of their assets or properties, regardless of whether any
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property shall have been distributed or retained pursuant to the Plan on account of such Claims and Equity Interests, including demands, liabilities and Causes of Action that arose before the Effective Date, any liability (including withdrawal liability) to the extent such Claims or Equity Interests relate to services performed by employees of the Debtors before the Effective Date and that arise from a termination of employment, any contingent or non-contingent liability on account of representations or warranties issued on or before the Effective Date, and all debts of the kind specified in sections 502(g), 502(h) or 502(i) of the Bankruptcy Code, in each case whether or not: (i) a Proof of Claim based upon such debt, right or Equity Interest is Filed or deemed Filed pursuant to section 501 of the Bankruptcy Code; (ii) a Claim or Equity Interest based upon such debt, right or Equity Interest is Allowed; or (iii) the Holder of such a Claim or Equity Interest has accepted the Plan or is entitled to receive a distribution hereunder. Any default by the Debtors or their affiliates with respect to any Claim or Equity Interest that existed immediately before or on account of the filing of the Chapter 11 Cases shall be deemed cured on the Effective Date. The Confirmation Order shall be a judicial determination of the discharge of all Claims and Equity Interests subject to the Effective Date occurring.
E.
Injunction
.
FROM AND AFTER THE EFFECTIVE DATE, ALL PERSONS ARE PERMANENTLY ENJOINED FROM COMMENCING OR CONTINUING IN ANY MANNER, ANY CAUSE OF ACTION RELEASED OR TO BE RELEASED PURSUANT TO THE PLAN OR THE CONFIRMATION ORDER.
FROM AND AFTER THE EFFECTIVE DATE, TO THE EXTENT OF THE RELEASES AND EXCULPATION GRANTED IN THIS ARTICLE VI, THE RELEASING PERSONS SHALL BE PERMANENTLY ENJOINED FROM COMMENCING OR CONTINUING IN ANY MANNER AGAINST THE RELEASED PARTIES AND THEIR ASSETS AND PROPERTIES, AS THE CASE MAY BE, ANY SUIT, CAUSE OF ACTION OR OTHER PROCEEDING, ON ACCOUNT OF OR RESPECTING ANY CLAIM, DEMAND, LIABILITY, OBLIGATION, DEBT, RIGHT, CAUSE OF ACTION, EQUITY INTEREST OR REMEDY RELEASED OR TO BE RELEASED PURSUANT TO THIS ARTICLE VI OR THE CONFIRMATION ORDER.
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THE PLAN, THE PLAN SUPPLEMENT OR RELATED DOCUMENTS, OR FOR OBLIGATIONS ISSUED PURSUANT TO THE PLAN, ALL PERSONS WHO HAVE HELD, HOLD OR MAY HOLD CLAIMS OR EQUITY INTERESTS THAT HAVE BEEN RELEASED PURSUANT TO ARTICLE VI.J.1 AND ARTICLE VI.J.2, OR DISCHARGED PURSUANT TO ARTICLE VI.D OR ARE SUBJECT TO EXCULPATION PURSUANT TO ARTICLE VI.J.3 ARE PERMANENTLY ENJOINED, FROM AND AFTER THE EFFECTIVE DATE, FROM TAKING ANY OF THE FOLLOWING ACTIONS: (1) COMMENCING OR CONTINUING IN ANY MANNER ANY ACTION OR OTHER PROCEEDING OF ANY KIND ON ACCOUNT OF OR IN CONNECTION WITH OR WITH RESPECT TO ANY SUCH CLAIMS OR EQUITY INTERESTS; (2) ENFORCING, ATTACHING, COLLECTING OR RECOVERING BY ANY MANNER OR MEANS ANY JUDGMENT, AWARD, DECREE OR ORDER AGAINST SUCH RELEASED PARTIES ON ACCOUNT OF OR IN CONNECTION WITH OR WITH RESPECT TO ANY SUCH CLAIMS OR EQUITY INTERESTS;
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(3) CREATING, PERFECTING OR ENFORCING ANY ENCUMBRANCE OF ANY KIND AGAINST SUCH RELEASED PARTIES OR THE PROPERTY OR ESTATE OF SUCH RELEASED PARTIES ON ACCOUNT OF OR IN CONNECTION WITH OR WITH RESPECT TO ANY SUCH CLAIMS OR EQUITY INTERESTS; (4) ASSERTING ANY RIGHT OF SETOFF OR SUBROGATION OF ANY KIND AGAINST ANY OBLIGATIONS DUE FROM THE DEBTORS OR THE REORGANIZED DEBTORS OR AGAINST THE PROPERTY OR INTERESTS IN PROPERTY OF THE DEBTORS ON ACCOUNT OF ANY SUCH CLAIM; AND (5) COMMENCING OR CONTINUING IN ANY MANNER ANY ACTION OR OTHER PROCEEDING OF ANY KIND ON ACCOUNT OF OR IN CONNECTION WITH OR WITH RESPECT TO ANY SUCH CLAIMS OR EQUITY INTERESTS RELEASED, SETTLED OR DISCHARGED PURSUANT TO THE PLAN.
THE RIGHTS AFFORDED IN THE PLAN AND THE TREATMENT OF ALL CLAIMS AND EQUITY INTERESTS HEREIN SHALL BE IN EXCHANGE FOR AND IN COMPLETE SATISFACTION OF ALL CLAIMS AND EQUITY INTERESTS OF ANY NATURE WHATSOEVER, INCLUDING ANY INTEREST ACCRUED ON CLAIMS FROM AND AFTER THE PETITION DATE, AGAINST THE DEBTORS OR ANY OF THEIR ASSETS, PROPERTY OR ESTATES. ON THE EFFECTIVE DATE, ALL SUCH CLAIMS AGAINST THE DEBTORS SHALL BE FULLY RELEASED AND DISCHARGED, AND THE EQUITY INTERESTS SHALL BE CANCELLED.
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED FOR HEREIN OR IN OBLIGATIONS ISSUED PURSUANT HERETO FROM AND AFTER THE EFFECTIVE DATE, ALL CLAIMS AGAINST THE DEBTORS SHALL BE FULLY RELEASED AND DISCHARGED, AND ALL EQUITY INTERESTS SHALL BE CANCELLED, AND THE DEBTORS’ LIABILITY WITH RESPECT THERETO SHALL BE EXTINGUISHED COMPLETELY, INCLUDING ANY LIABILITY OF THE KIND SPECIFIED UNDER SECTION 502(G) OF THE BANKRUPTCY CODE.
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THE PLAN, THE PLAN SUPPLEMENT OR RELATED DOCUMENTS, OR FOR OBLIGATIONS ISSUED PURSUANT TO THE PLAN, ALL PERSONS SHALL BE PRECLUDED FROM ASSERTING AGAINST THE DEBTORS, THE DEBTORS’ ESTATES, THE REORGANIZED DEBTORS, EACH OF THEIR RESPECTIVE SUCCESSORS AND ASSIGNS, AND EACH OF THEIR ASSETS AND PROPERTIES, AND EACH OF THE RELEASED PARTIES, ANY OTHER CLAIMS OR EQUITY INTERESTS BASED UPON ANY DOCUMENTS, INSTRUMENTS OR ANY ACT OR OMISSION, TRANSACTION OR OTHER ACTIVITY OF ANY KIND OR NATURE THAT OCCURRED BEFORE THE EFFECTIVE DATE.
F.
Preservation of Causes of Action
.
In accordance with section 1123(b) of the Bankruptcy Code, and except as expressly provided herein (including Article VI.J.1) and in paragraph G(vi) and (vii) of the DIP Financing Order, the Reorganized Debtors shall retain all Causes of Action, including those Causes of Action listed as retained Causes of Action on an exhibit to the Plan Supplement. Nothing contained in this Plan, the Plan Supplement or the Confirmation Order shall be deemed a waiver or relinquishment of any claim, Cause of Action, right of setoff, or other legal or
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equitable defense of the Debtors that is not specifically waived or relinquished by this Plan. The Reorganized Debtors shall have, retain, reserve and be entitled to assert all such claims, Causes of Action, rights of setoff and other legal or equitable defenses that the Debtors had immediately before the Petition Date as fully as if the Chapter 11 Cases had not been commenced, and all of the Reorganized Debtors’ legal and equitable rights respecting any claim that is not specifically waived or relinquished by this Plan may be asserted after the Effective Date to the same extent as if the Chapter 11 Cases had not been commenced. No Person may rely on the absence of a specific reference in the Plan or the Disclosure Statement to any Cause of Action against them as any indication that the Debtors or Reorganized Debtors, as applicable, will not pursue any and all available Causes of Action against such Person. The Debtors or Reorganized Debtors, as applicable, expressly reserve all rights to prosecute any and all Causes of Action against any Person, in accordance with the Plan. From and after the Effective Date, the Debtors or Reorganized Debtors, as applicable, shall have the exclusive right, authority and discretion to determine and to initiate, file, prosecute, enforce, abandon, settle, compromise, release, withdraw or litigate to judgment any Cause of Action and to decline to do any of the foregoing without further notice to or action, order or approval of the Court.
G.
Votes Solicited in Good Faith
.
The Debtors have, and upon entry of the Confirmation Order shall be deemed to have, solicited acceptances of the Plan in good faith and in compliance with the applicable provisions of the Bankruptcy Code. The Debtors (and each of their respective affiliates, agents, directors, officers, members, employees and Professionals) have participated in good faith and in compliance with the applicable provisions of the Bankruptcy Code in the offer and issuance of the securities offered and sold under the Plan and therefore have not been, and on account of such offer and issuance will not be, liable at any time for the violation of any applicable law, rule, or regulation governing the solicitation of acceptances or rejections of the Plan or the offer or issuance of the securities offered and distributed under the Plan.
H.
Cancellation of Existing Securities
.
On the Effective Date, except as otherwise specifically provided for in the Plan: (i) the obligations of the Debtors under the Prepetition Senior Credit Agreements, the OCM Credit Agreement and the Senior Notes Indenture, and any other certificate, share, note, bond, indenture, purchase right, option, warrant or other instrument or document directly or indirectly evidencing or creating any indebtedness or obligation of or ownership interest in the Debtors giving rise to any Claim or Equity Interest (except such certificates, notes or other instruments or documents evidencing indebtedness or obligations of the Debtors that are specifically reinstated pursuant to the Plan), shall be cancelled as to the Debtors, and the Reorganized Debtors shall not have any continuing obligations thereunder; and (ii) the obligations of the Debtors pursuant, relating or pertaining to any agreements, indentures, certificates of designation, bylaws or certificate or articles of incorporation or similar documents governing the shares, certificates, notes, bonds, purchase rights, options, warrants or other instruments or documents evidencing or creating any indebtedness or obligation of the Debtors (except such agreements, certificates, notes or other instruments evidencing indebtedness or obligations of the Debtors that are specifically reinstated pursuant to the Plan or assumed by the Debtors) shall be released and discharged;
provided
,
however
, notwithstanding the occurrence of the Confirmation Date or the
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Effective Date, that any such indenture or agreement that governs the rights of the holder of a Claim shall continue in effect solely for purposes of (a) allowing holders of such Claims to receive distributions under the Plan as provided herein, (b) allowing the Prepetition Agent and/or the Senior Notes Indenture Trustee to make distributions under the Plan as provided herein, and deduct therefrom such reasonable compensation, fees, and expenses due thereunder or incurred in making such distributions, to the extent not paid by the Debtors and authorized under such indenture or agreement, (c) allowing the Prepetition Agent and/or the Senior Notes Indenture Trustee to seek compensation and/or reimbursement of fees and expenses in accordance with the terms of the Plan, (d) allowing the Senior Notes Indenture Trustee to exercise any charging liens it may have under the Senior Notes Indenture against any such distributions and (e) preserving any charging lien or indemnification rights of the Senior Notes Indenture Trustee under the Senior Notes Indenture against the holders of the Senior Notes. For the avoidance of doubt, nothing in this section shall affect the discharge of or result in any obligation, liability or expense of the Debtors or Reorganized Debtors or affect the discharge of Claims or Equity Interests pursuant to the Bankruptcy Code, the Confirmation Order or the Plan, or result in any additional obligation, expense or liability of the Debtors or Reorganized Debtors. On and after the Effective Date, all duties and responsibilities of the Prepetition Agent and the Senior Notes Indenture Trustee shall be discharged except to the extent required to effectuate the Plan.
I.
Claims Incurred After the Effective Date
.
Claims incurred by the Debtors after the Effective Date, including Claims for Professionals’ fees and expenses incurred after such date, may be paid by the Reorganized Debtors in the ordinary course of business and without application for or Court approval, subject to any agreements with such holders of a Claim.
J.
Releases, Exculpations and Injunctions of Released Parties
.
1.
Releases by the Debtors
.
On the Effective Date, and notwithstanding any other provisions of the Plan, the Debtors and the Reorganized Debtors, on behalf of themselves and their estates, and the Non-Debtor Guarantor Subsidiaries shall be deemed to release unconditionally the Released Parties from any and all claims, obligations, suits, judgments, damages, rights, Causes of Action and liabilities whatsoever, whether known or unknown, foreseen or unforeseen, existing or hereafter arising, in law, equity or otherwise, assertable on behalf of or derivative from the Debtors, based in whole or in part upon actions taken solely in their respective capacities described herein or any omission, transaction, agreement, event, or other occurrence taking place on or before the Effective Date in any way relating to the Debtors, the Disclosure Statement, the Chapter 11 Cases, or the Plan,
provided
,
however
, that (a) no individual shall be released from any act or omission that constitutes gross negligence or willful misconduct as determined by a Final Order, (b) the Reorganized Debtors shall not relinquish or waive the right to assert any of the foregoing as a legal or equitable defense or right of set-off or recoupment against any Claims of any such persons asserted against the Debtors, (c) the foregoing release shall not apply to any obligations that remain outstanding in respect of loans or advances made to individuals by the Debtors or to any obligations under the New 2010 Facility Credit Agreement or the New 2011 Facility Credit Agreement outstanding as of the Effective Date,
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and (d) the foregoing release applies to the Released Parties solely in their respective capacities described herein.
2.
Releases by Holders of Claims
.
On the Effective Date, and notwithstanding any other provisions of the Plan, each Person who directly or indirectly, has held, holds, or may hold Claims who submits a Ballot but does not elect to opt out of the releases contained in this paragraph will be deemed, by virtue of their receipt of distributions and/or other treatment contemplated under the Plan, to have forever released and covenanted with the Released Parties not to (i) sue or otherwise seek recovery from any Released Party on account of any Claim, including any Claim or Cause of Action based upon tort, breach of contract, violations of federal or state securities laws or otherwise, based upon any act, occurrence, or failure to act from the beginning of time through the Effective Date in any way related to the Debtors or their business and affairs or (ii) assert against any Released Party any Claim, obligation, right, Cause of Action or liability that any holder of a Claim may be entitled to assert, whether known or unknown, foreseen or unforeseen, existing or hereafter arising, based in whole or in part on any act or omission, transaction, or occurrence from the beginning of time through the Effective Date in any way relating to the Debtors, the Chapter 11 Cases, or the Plan,
provided
,
however
, the foregoing release will not (i) apply to obligations arising under the Plan, (ii) apply to obligations arising under the New Senior Facilities, (iii) be construed to prohibit a party in interest from seeking to enforce the terms of the Plan, (iv) apply to any act or omission that constitutes gross negligence or willful misconduct as determined by a Final Order and (v) release the Senior Notes Indenture Trustee, in its capacity as indenture trustee under the Senior Notes Indenture. The foregoing releases apply to the Released Parties solely in their respective capacities described herein.
3.
Exculpation and Injunction
.
The Debtors, the Reorganized Debtors, and the other Released Parties (i) shall have no liability whatsoever to any holder or purported holder of an Administrative Claim, Claim, or Equity Interest for any act or omission that occurred during and in connection with the Chapter 11 Cases or in connection with, or arising out of the preparation and filing of the Chapter 11 Cases, the Plan, the Disclosure Statement, the negotiation of the Plan, the negotiation of the documents included in the Plan Supplement, the pursuit of approval of the Disclosure Statement or the solicitation of votes for confirmation of the Plan, the Chapter 11 Cases, the consummation of the Plan, the administration of the Plan or the property to be distributed under the Plan, or any transaction contemplated by the Plan or Disclosure Statement or in furtherance thereof except for any act or omission that constitutes willful misconduct or gross negligence as determined by a Final Order, and (ii) in all respects, shall be entitled to rely upon the advice of counsel with respect to their duties and responsibilities under the Plan. This exculpation shall be in addition to, and not in limitation of, all other releases, indemnities, exculpations and any other applicable law or rules protecting such Released Parties from liability. Pursuant to section 105 of the Bankruptcy Code, no holder or purported holder of an Administrative Claim, Claim or Equity Interest shall be permitted to commence or continue any Cause of Action, employment of process, or any act to collect, offset, or recover any Claim against a Released Party that accrued on or before the Effective Date and that has been released or waived pursuant to this Plan.
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All injunctions or stays provided for in the Chapter 11 Cases under sections 105 or 362 of the Bankruptcy Code, or otherwise, and in existence on the Confirmation Date, shall remain in full force and effect until the Effective Date.
4.
Liabilities to, and Rights of, Governmental Units
.
As to the United States of America, its agencies, departments, or agents (collectively, the “United States”), nothing in the Plan or Confirmation Order shall limit or expand the scope of discharge, release or injunction to which the Debtors or Reorganized Debtors are entitled to under the Bankruptcy Code. The discharge, release and injunction provisions contained in the Plan and Confirmation Order are not intended and shall not be construed to bar the United States from, subsequent to the Confirmation Order, pursuing any police or regulatory action, except to the extent those discharge and injunctive provisions bar a Governmental Unit from pursuing Claims.
Notwithstanding anything contained in the Plan or Confirmation Order to the contrary, nothing in the Plan or Confirmation Order shall discharge, release, impair or otherwise preclude: (1) any liability to a Governmental Unit that is not a Claim; (2) any Claim of a Governmental Unit arising on or after the Confirmation Date; (3) any valid right of setoff or recoupment of the United States against any of the Debtors; or (4) any liability of the Debtors or Reorganized Debtors under environmental law to any Governmental Unit as the owner or operator of property that such entity owns or operates after the Confirmation Date, except those obligations to reimburse costs expended or paid by a Governmental Unit before the Petition Date or to pay penalties owing to a Governmental Unit for violations of environmental laws or regulations that occurred before the Petition Date. Nor shall anything in the Plan or Confirmation Order: (i) enjoin or otherwise bar the United States or any Governmental Unit from asserting or enforcing, outside the Bankruptcy Court, any liability described in the preceding sentence; or (ii) divest any court of jurisdiction to determine whether any liabilities asserted by the United States or any Governmental Unit are discharged or otherwise barred by the Plan, Confirmation Order, or the Bankruptcy Code.
Moreover, nothing in the Plan or Confirmation Order shall release or exculpate any non-debtor, including any Released Parties, from any liability to the United States, including but not limited to any liabilities arising under the Internal Revenue Code, the environmental laws, or the criminal laws against the Released Parties, nor shall anything in the Plan or Confirmation Order enjoin the United States from bringing any claim, suit, action or other proceeding against the Released Parties for any liability whatsoever;
provided
,
however
, that the foregoing sentence shall not limit the scope of discharge granted to the Debtors under sections 524 and 1141 of the Bankruptcy Code
.
K.
Preservation of Insurance
.
The Debtors’ discharge and release from all Claims as provided herein shall not, except as necessary to be consistent with this Plan, diminish or impair the enforceability of any insurance policy that may provide coverage for Claims against the Debtors, the Reorganized Debtors, their current and former directors and officers, or any other Person. Prior to the
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Effective Date, the Debtors shall obtain directors’ and officers’ liability insurance tail coverage for all of their current and former directors and officers, which coverage shall extend for a period of not less than six (6) years after the Effective Date and contain terms no less favorable to such directors and officers as the terms of the existing directors’ and officers’ liability insurance policies issued to the Debtors.
L.
Indemnification of the Oaktree Plan Sponsors
.
The Debtors and the Reorganized Debtors shall indemnify and hold harmless the Oaktree Plan Sponsors and each of their respective predecessors, Professionals, successors and assigns, subsidiaries, funds, portfolio companies, affiliates, holders of Equity Interests, partners, and agents, and each of their respective current and former officers, directors, employees, managers, attorneys, financial advisors, accountants, investment bankers, consultants, management companies or other professionals or representatives for any Losses incurred solely in their capacity as Oaktree Plan Sponsors, except to the extent such Losses were the result of any such Person’s gross negligence or willful misconduct, as determined by Final Order.
ARTICLE VII.
DISTRIBUTIONS UNDER THE PLAN
A.
Allowed Claims
.
1.
Delivery of Distributions
.
Distributions under the Plan shall be made by the Reorganized Debtors (or their agent or designee) to the holders of Allowed Claims in all Classes for which a distribution is provided in this Plan at the addresses set forth on the Schedules, unless such addresses are superseded by Proofs of Claim or transfers of Claim filed pursuant to Bankruptcy Rule 3001 by the Record Date (or at the last known addresses of such holders if the Debtors or the Reorganized Debtors have been notified in writing of a change of address).
2.
Distribution of Cash
.
Any payment of Cash by the Reorganized Debtors pursuant to the Plan shall be made at the option and in the sole discretion of the Reorganized Debtors by (i) a check drawn on, or (ii) wire transfer from, a domestic bank selected by the Reorganized Debtors.
3.
Unclaimed Distributions of Cash
.
Any distribution of Cash under the Plan that is unclaimed after six months after it has been delivered (or attempted to be delivered) shall, pursuant to section 347(b) of the Bankruptcy Code, become the property of the Reorganized Debtor against which such Claim was Allowed notwithstanding any state or other escheat or similar laws to the contrary, and the entitlement by the holder of such unclaimed Allowed Claim to such distribution or any subsequent distribution on account of such Allowed Claim shall be extinguished and forever barred.
4.
Distributions of New GMR Common Stock to the Oaktree Plan Sponsors and OCM
.
On the Effective Date, the Reorganized Debtors (or their agent or designee) shall distribute the New Equity Investment Shares and the Commitment Fee GMR Common Stock to the Oaktree Plan Sponsors and the Non-Oaktree Plan Sponsors, if any, (or their designees), and
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shall distribute the OCM Conversion Shares to the holders of the OCM Secured Claim (or their designees).
5.
Distributions of the Unsecured Creditor Distribution
.
On or as soon as is reasonably practicable after the Effective Date or, if the Unsecured Claims Reserve Order is entered after the Effective Date, as soon as reasonably practicable after entry of the Unsecured Claims Reserve Order, and from time to time thereafter, the Reorganized Debtors (or their agent or designee) shall make distributions in accordance with Article VII. Notwithstanding anything to the contrary set forth herein, all distributions payable under the Plan to holders of Senior Notes shall be paid by Reorganized GMR to the Senior Notes Indenture Trustee, which shall distribute such distributions (net of any fees, costs and expenses of the Senior Notes Indenture Trustee payable from such distributions under the Indenture or applicable law), or cause such distributions (net of any such fees, costs and expenses) to be distributed, to the holders of the Senior Notes in accordance with the terms of the Senior Notes Indenture. Distributions of the Unsecured Creditor Distribution may be made by means of book-entry exchange through the facilities of DTC in accordance with the customary practices of DTC, as and to the extent practicable. In connection with such book-entry exchange, the Senior Notes Indenture Trustee may deliver instructions to DTC directing DTC to effect such distributions as provided under the Plan.
6.
Unclaimed Distributions of New GMR Common Stock and New GMR Warrants
.
Any distribution of New GMR Common Stock and New GMR Warrants under the Plan that is unclaimed after six months after it has been delivered (or attempted to be delivered) shall be held by the Reorganized Debtors, notwithstanding any state or other escheat or similar laws to the contrary, the entitlement by the holder of such Allowed Claim to such distribution or any subsequent distribution on account of such Allowed Claim shall be extinguished and forever barred.
7.
Saturdays, Sundays, or Legal Holidays
.
If any payment, distribution or act under the Plan is required to be made or performed on a date that is not a Business Day, then the making of such payment or the performance of such act may be completed on the next succeeding Business Day, and shall be deemed to have been completed as of the required date.
8.
Fractional New GMR Common Stock and New GMR Warrants and De Minimis Distributions
.
Notwithstanding any other provision in the Plan to the contrary, no fractional shares of New GMR Common Stock or New GMR Warrants shall be issued or distributed pursuant to the Plan. Whenever any payment of a fraction of a share of New GMR Common Stock or a New GMR Warrant would otherwise be required under the Plan, the actual distribution made shall reflect a rounding of such fraction to the nearest whole share (up or down), with half shares or less being rounded down and fractions in excess of a half of a share being rounded up. If two or more holders are entitled to equal fractional entitlements and the number of holders so entitled exceeds the number of whole shares, as the case may be, that remain to be allocated, the Reorganized Debtors shall allocate the remaining whole shares to such holders by random lot or such other impartial method as the Reorganized Debtors deem fair, in their sole discretion. Upon the allocation of all of the whole New GMR Common Stock and New GMR Warrants authorized under the Plan, all remaining fractional portions of the entitlements shall be canceled and shall be of no further force and effect. The Reorganized
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Debtors shall not be required to, but may in their sole and absolute discretion, make any payment on account of any Claim in the event that the costs of making such payment exceeds the amount of such payment.
9.
Distributions for Claims Allowed as of the Effective Date (other than Claims against the Guarantor Debtors
).
Except with respect to General Unsecured Claims against the Guarantor Debtors, on or as soon as reasonably practicable after the Effective Date, or as otherwise expressly set forth in the Plan, the Reorganized Debtors (or their agent or designee) shall distribute Cash, New GMR Common Stock, the New GMR Warrants, or Collateral, as the case may be, to the holders of Allowed Claims as contemplated herein. Distributions to General Unsecured Claims against the Guarantor Debtors shall be set forth in Article VII.B.
10.
Distributions for Claims Allowed after the Effective Date (other than Claims against the Guarantor Debtors
).
Each holder of a Claim (other than with respect to a General Unsecured Claim against a Guarantor Debtor) that becomes an Allowed Claim subsequent to the Effective Date shall receive the distribution to which such holder of an Allowed Claim is entitled as set forth in Article III. Each holder of a General Unsecured Claim against a Non-Guarantor Debtor that becomes an Allowed Claim subsequent to the Effective Date shall receive the distribution to which such holder of an Allowed General Unsecured Claim is entitled at such time that the Reorganized Debtors determine, in their discretion, to make subsequent distributions to a holder of an Allowed General Unsecured Claim against a Non-Guarantor Debtor following the Effective Date, provided that the Reorganized Debtors shall make such distributions at least annually after the Effective Date. Nothing set forth herein is intended to, nor shall it, prohibit the Reorganized Debtors, in their discretion, from making a distribution on account of any Claim at any time after such Claim becomes an Allowed Claim. Distributions to General Unsecured Claims against the Guarantor Debtors shall be set forth in Article VII.B.
11.
The Record Date
.
As of the close of business on the Record Date, the claims register (for Claims) and transfer ledger (for Equity Interests) shall be closed, and there shall be no further changes in the record holders of any Claims or Equity Interests. The Reorganized Debtors shall have no obligation to, but may in their discretion, recognize any transfer of any Claims or Equity Interests occurring after the Record Date. The Reorganized Debtors shall instead be entitled to recognize and deal for purposes under the Plan with only those record holders stated on the claims register (for Claims) and transfer ledgers (for Equity Interests) as of the close of business on the Record Date.
12.
Interest on Claims
.
Except as specifically provided for in the Plan, no Claims, Allowed or otherwise (including Administrative Claims), shall be entitled, under any circumstances, to receive any interest on a Claim.
B.
Unsecured Creditor Distribution Escrow Account
.
1.
Establishment of Unsecured Creditor Distribution Escrow Account
. On the Effective Date, the Debtors shall establish and fund the Unsecured Creditor Distribution Escrow Account with the Unsecured Creditor Distribution. Consideration held in the Unsecured Creditor Distribution Escrow Account shall not constitute property of the Debtors or the
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Reorganized Debtors. The Unsecured Creditor Distribution Escrow Account may be in an interest-bearing account.
2.
Motion to Establish the Unsecured Claims Reserve
. Notwithstanding anything to the contrary in Article VII.E hereof and in accordance with the terms and conditions and timing set forth in the Plan Support Agreement, the Debtors shall file a motion with the Bankruptcy Court seeking entry of the Unsecured Claims Reserve Order.
3.
Distributions from the Unsecured Creditor Distribution Escrow Account
. On or as soon as reasonably practicable after the Effective Date or, if the Unsecured Claims Reserve Order is entered after the Effective Date, as soon as reasonably practicable after entry of the Unsecured Claims Reserve Order, the Reorganized Debtors (or their agent or designee) shall make the Initial Distribution. With respect to General Unsecured Claims against the Guarantor Debtors that are not Allowed as of the Effective Date other than Rejection Damage Claims, the Reorganized Debtors (or a designated agent thereof) may make periodic distributions from the Unsecured Claims Reserve to such Claims following their allowance,
provided
,
however
, that the amounts to be distributed to any holder of such Claim shall be such holder’s Pro Rata share of the Unsecured Claims Reserve based on the lesser of (a) the distribution that would have been paid on account of such Claim if it had been Allowed as of the Effective Date, and (b) the Allowed amount of such holder’s Claim as a percentage of the total of the Unsecured Claims Reserve as remains on the date the Reorganized Debtors make a distribution on account of such Allowed Claim. The Reorganized Debtors (or a designated agent thereof) may not make any distributions on account of Rejection Damage Claims until and unless (i) all Rejection Damage Claims against the Guarantor Debtors and other General Unsecured Claims against the Guarantor Debtors (other than OCM Facility Deficiency Claims) have been liquidated or otherwise resolved, and (ii) the Reorganized Debtors provide the True-Up for Rejection Damage Claims, if any, pursuant to Article IX.D.
The Reorganized Debtors may determine, in their discretion, the timing for such distributions following the Initial Distribution,
provided
,
that
, the Reorganized Debtors shall make such distributions at least annually after the Effective Date. Nothing set forth herein is intended to, nor shall it, prohibit the Reorganized Debtors, in their discretion, from making a distribution on account of any Claim at any time after such Claim becomes an Allowed Claim.
4.
Remaining Balance and
De Minimis
Distributions
.
In the event there is a remaining balance in the Unsecured Creditor Distribution Escrow Account following payment to all holders of Allowed General Unsecured Claims against the Guarantor Debtors in accordance with the Plan, such remaining amounts, if any, shall be distributed Pro Rata to holders of Allowed Class 7 Claims,
provided
,
however
, that if such remaining amounts are
de minimis
, such that the distribution would be administratively prohibitive, such remaining amounts shall be redistributed to Reorganized GMR.
5.
New GMR Common Stock and New GMR Warrants Held in Unsecured Creditor Distribution Escrow Account
. New GMR Common Stock and New GMR Warrants in the Unsecured Creditor Distribution Escrow Account shall be held in an account with a direct or indirect participant of DTC in the name of Reorganized GMR or its nominee, and distributed to the holders of Allowed General Unsecured Claims in accordance with the Plan. New GMR
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Common Stock held in the Unsecured Creditor Distribution Escrow Account will not be deemed outstanding, and shall not have any voting rights, unless and until such shares are distributed in accordance with the terms hereof.
6.
Dividend and Interest Payments to the Unsecured Creditor Distribution Escrow Account
. The Reorganized Debtors shall hold in the Unsecured Creditor Distribution Escrow Account any dividends, payments, or other distributions made on account of, as well as any obligations arising from, the New GMR Common Stock held in the Unsecured Creditor Distribution Escrow Account, at the time such distributions are made or such obligations arise, and such dividends, payments, or other distributions shall be held for the benefit of holders of Disputed General Unsecured Claims against the Guarantor Debtor whose Claims, if Allowed, are entitled to distributions under the Plan. The Reorganized Debtors shall pay, or cause to be paid, out of any dividends paid on account of New GMR Common Stock or New GMR Warrants held in the Unsecured Creditor Distribution Escrow Account, any tax imposed on the Unsecured Creditor Distribution Escrow Account by any Governmental Unit with respect to income generated by New GMR Common Stock and New GMR Warrants held in the Unsecured Claims Reserve and any costs associated with maintaining the Unsecured Claims Reserve.
7.
Tax Treatment of the Unsecured Creditor Distribution Escrow Account
. The Reorganized Debtors may make an election pursuant to U.S. Treasury Regulations Section 1.468B-9(c) to treat the Unsecured Creditor Distribution Escrow Account as a “disputed ownership fund” (the “
DOF
”). In the event that the Reorganized Debtors make such an election, the DOF would be treated for United States federal income tax purposes as a taxable entity separate from the holders of Unsecured Claims. The DOF, and not the holders of General Unsecured Claims against the Guarantor Debtors, would be treated as the owner of the assets in the DOF, including the New GMR Common Stock, New GMR Warrants and Cash from the Unsecured Creditor Distribution Escrow Account reserved for Allowed Unsecured Claims against the Guarantor Debtors. The DOF would be responsible for the payment of any taxes (including by way of withholding) resulting from the transfer or holding of assets in the DOF.
C.
Resolution of Disputed Claims
.
From and after the Effective Date, the Reorganized Debtors shall have the right to file, settle, compromise, withdraw or litigate objections to any Claim,
provided
,
that
, such Claim is not Allowed as of the Effective Date,
provided
,
further
, that any settlement of a General Unsecured Claim against the Guarantor Debtors in an Allowed amount greater than $200,000 shall require consultation with, and the consent of, the Post-Confirmation Creditors’ Committee, which consent shall not be unreasonably withheld. Unless otherwise ordered by the Court, objections to, or other proceedings concerning the allowance of, Claims shall be filed and served upon the holders of the Claims as to which the objection is made, or otherwise commenced, as the case may be, as soon as practicable, but in no event later than the Claims Objection Deadline or such other deadline specified with respect to a particular Claim herein.
In the event a Claim is filed after the expiration of the relevant Claims Objection Deadline, the Reorganized Debtors shall have ninety (90) days from the date such Claim is filed to object to such Claim, which deadline may be extended by the Court on motion of the Reorganized Debtors without a hearing or notice. The Reorganized Debtors may settle,
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compromise, or withdraw any objections or proceedings without Court approval or may seek Court approval without notice to any Person.
D.
Allocation of Consideration
.
The aggregate consideration to be distributed to the holders of Allowed Claims in each Class under the Plan shall be treated as first, satisfying an amount equal to the stated principal amount of the Allowed Claim for such holders, and any remaining consideration as satisfying accrued, but unpaid, interest and costs, if any, and attorneys’ fees, as applicable.
E.
Estimation
.
The Reorganized Debtors may, at any time, request that the Court estimate any Disputed Claim pursuant to section 502(c) of the Bankruptcy Code regardless of whether the Debtors or the Reorganized Debtors have previously objected to such Claim. The Court will retain jurisdiction to estimate any Claim at any time, including during proceedings concerning any objection to such Claim. In the event that the Court estimates any Disputed Claim, such estimated amount may constitute either (i) the Allowed amount of such Claim, (ii) the amount on which a reserve is to be calculated for purposes of any reserve requirement under the Plan or (iii) a maximum limitation on such Claim, as determined by the Court. If the estimated amount constitutes a maximum limitation on such Claim, the Debtors or the Reorganized Debtors, as the case may be, or the Creditors’ Committee (before the Effective Date) may elect to object to ultimate payment of such Claim. All of the aforementioned Claims objection, estimation and resolution procedures are cumulative and not necessarily exclusive of one another.
F.
Insured Claims
.
If any portion of an Allowed Claim is an Insured Claim, no distributions under the Plan shall be made on account of such Allowed Claim until the holder of such Allowed Claim has exhausted all remedies with respect to any applicable insurance policies. To the extent that one or more of the Debtors’ insurers agrees to satisfy a Claim in whole or in part, then immediately upon such agreement, the portion of such Claim so satisfied may be expunged without an objection to such Claim having to be filed and without any further notice to or action, order or approval of the Court.
ARTICLE VIII.
RETENTION OF JURISDICTION
Notwithstanding the entry of the Confirmation Order and the occurrence of the Effective Date, on and after the Effective Date, the Court shall retain exclusive jurisdiction over all matters arising out of, or related to, the Chapter 11 Cases and the Plan pursuant to sections 105(a) and 1142 of the Bankruptcy Code, including jurisdiction:
(i)
to resolve any matters related to (a) the assumption, assumption and assignment, or rejection of any Executory Contract or Unexpired Lease to which a Debtor or Reorganized Debtor is party or with respect to which a Debtor or Reorganized Debtor may be liable and to hear, determine, and, if necessary, liquidate, any Claims arising therefrom,
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including Cure Claims pursuant to section 365 of the Bankruptcy Code; (b) the Reorganized Debtors amending, modifying, or supplementing, after the Effective Date, pursuant to Article IX, any Executory Contracts or Unexpired Leases to the Assumption Schedule or the Rejection Schedule or otherwise; and (c) any dispute regarding whether a contract or lease is or was executory or expired;
(ii)
to determine, adjudicate, or decide any other applications, adversary proceedings, contested matters, and any other matters pending on the Effective Date;
(iii)
to ensure that distributions to holders of Allowed Claims are accomplished as provided herein;
(iv)
to resolve disputes as to the ownership of any Claim or Equity Interest;
(v)
to allow, disallow, determine, liquidate, classify, estimate, or establish the priority, secured or unsecured status, or amount of any Claim or Equity Interest, including the resolution of any request for payment of any Administrative Claim and the resolution of any and all objections to the secured or unsecured status, priority, amount, or allowance of Claims or Equity Interests;
(vi)
to enter and implement such orders as may be appropriate in the event the Confirmation Order is for any reason stayed, revoked, reversed, modified or vacated;
(vii)
to issue such orders in aid of execution of the Plan, to the extent authorized by section 1142 of the Bankruptcy Code;
(viii)
to consider any modifications of the Plan, to cure any defect or omission, or to reconcile any inconsistency in any order of the Court, including the Confirmation Order;
(ix)
to hear and determine all applications for compensation and reimbursement of expenses of Professionals under sections 330, 331 and 503(b) of the Bankruptcy Code;
(x)
to hear and determine disputes arising in connection with the interpretation, implementation, consummation, or enforcement of the Plan;
(xi)
to hear and determine any issue for which the Plan requires a Final Order of the Court;
(xii)
to hear and determine matters concerning state, local, and federal taxes in accordance with sections 346, 505 and 1146 of the Bankruptcy Code;
(xiii)
to hear and determine disputes arising in connection with compensation and reimbursement of expenses of professionals for services rendered during the period commencing on the Petition Date through and including the Effective Date;
(xiv)
to hear and determine any Causes of Action preserved under the Plan;
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(xv)
to hear and determine any matter regarding the existence, nature and scope of the Debtors’ discharge;
(xvi)
to hear and determine any matter regarding the existence, nature, and scope of the releases and exculpation provided under the Plan;
(xvii)
to enter a final decree closing any of the Chapter 11 Cases;
(xviii)
to issue injunctions, enter and implement other orders, or take such other actions as may be necessary or appropriate to restrain interference by any entity with consummation or enforcement of the Plan;
(xix)
to adjudicate any and all disputes arising from or relating to distributions under the Plan; and
(xx)
to hear any other matter not inconsistent with the Bankruptcy Code.
ARTICLE IX.
EXECUTORY CONTRACTS AND UNEXPIRED LEASES
A.
Assumption and Rejection of Executory Contracts and Unexpired Leases
.
Except as otherwise provided herein, each Executory Contract and Unexpired Lease not previously assumed shall be deemed automatically rejected pursuant to sections 365 and 1123 of the Bankruptcy Code as of the Effective Date, unless any such executory contract or unexpired lease: (i) is expressly identified on the Assumption Schedule; (ii) has been previously assumed by the Debtors by Final Order or has been assumed by the Debtors by order of the Court as of the Effective Date, which order becomes a Final Order after the Effective Date; (iii) is the subject of a motion to assume pending as of the Effective Date; or (iv) is otherwise assumed pursuant to the terms herein.
Further, the Rejection Schedule shall include all Executory Contracts and Unexpired Leases to be rejected under the Plan;
provided
,
however
, that any Executory Contract and Unexpired Lease not previously assumed, assumed and assigned, or rejected by an order of the Court, not assumed pursuant to this Plan and not listed in the Rejection Schedule will be deemed to be rejected on the Effective Date, notwithstanding its exclusion from such list.
The Confirmation Order will constitute an order of the Court approving such rejections pursuant to sections 365 and 1123 of the Bankruptcy Code as of the Effective Date or as otherwise set forth in the Plan Supplement.
B.
Cure and Notice of Assumption or Rejection
.
Except as otherwise agreed by the Debtors and the applicable counterparty to an Executory Contract or Unexpired Lease (with the consent of the Oaktree Plan Sponsors, which consent shall not be unreasonably withheld), the applicable Reorganized Debtor will, on the Effective Date, cure any and all undisputed defaults under any Executory Contract or Unexpired Lease that is assumed by such Reorganized Debtor pursuant to the Plan in accordance with
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section 365 of the Bankruptcy Code. The Cure Claim for each Executory Contract and Unexpired Lease to be assumed pursuant to the plan shall be listed in the Assumption Schedule.
The Debtors will file the Assumption Schedule and Rejection Schedule with the Court at least twenty-one (21) days before the commencement of the Confirmation Hearing. The Assumption Schedule and Rejection Schedule will include (a) the name of the non-Debtor counterparty, (b) the legal description of the contract or lease to be assumed or rejected, (c) in the case of assumption, the proposed amount to be paid on account of an associated Cure Claim, if any, and (d) in the case of rejection, the proposed effective date of rejection. On or as soon as practicable thereafter, the Debtors will serve a Cure Notice or Rejection Notice, as applicable, as well as notice of filing of the Assumption Schedule and the Rejection Schedule upon each non-Debtor counterparty listed thereon that will describe the procedures by which such parties may object to the proposed assumption or rejection of their respective Executory Contract or Unexpired Lease and explain how such disputes will be resolved by the Court if the parties are not able to resolve a dispute consensually.
Objections, if any, to the proposed assumption and/or Cure Claim or rejection by the Debtors of any Executory Contract or Unexpired Lease listed on the Assumption Schedule and Rejection Schedule, must be filed with the Court and served so as to be actually received by the Debtors no later than the Cure Claims Bar Date.
Except with respect to Executory Contracts and Unexpired Leases in which the Debtors and the applicable counterparties have stipulated in writing to the amount of the Cure Claim, all requests for payment of a Cure Claim that differ from the amounts proposed by the Debtors in the Assumption Schedule must be filed with the Court and served on the Debtors on or before the Cure Claim Bar Date. Any request for payment of a Cure Claim that is not timely filed and served shall be disallowed automatically, forever barred and not be enforceable against any Reorganized Debtor, without the need for an objection by the Reorganized Debtors or order of the Court.
The Reorganized Debtors may settle any dispute on the amount of a Cure Claim without further notice to or approval of the Court. If the Reorganized Debtors object to any request for payment of a Cure Claim, the Court shall determine the Allowed amount of such Cure Claim and any related issues. Unless the parties to the contract or lease agree otherwise, all disputed defaults that are required to be cured shall be cured by the later to occur of (i) ten days after entry of a Final Order determining the amount, if any, of the Reorganized Debtors’ liability with respect thereto and (ii) the Effective Date. The Reorganized Debtors reserve the right either to reject or nullify the assumption of any executory contract or unexpired lease no later than thirty days after a Final Order determining a Cure Claim greater than that proposed by the Debtors.
If an objection to Cure is sustained by the Court, the Reorganized Debtors in their sole option, may elect to reject such Executory Contract or Unexpired Lease in lieu of assuming it on proper notice to the non-Debtor counterparty thereto, which non-Debtor counterparties shall then be entitled to file Proofs of Claim asserting Claims arising from the rejection thereof, if applicable, in accordance with the terms of the Plan and the Bar Date Order.
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ASSUMPTION OF ANY EXECUTORY CONTRACT OR UNEXPIRED LEASE PURSUANT TO THE PLAN OR OTHERWISE SHALL RESULT IN THE FULL RELEASE AND SATISFACTION OF ANY CLAIMS OR DEFAULTS, WHETHER MONETARY OR NONMONETARY, INCLUDING DEFAULTS OF PROVISIONS RESTRICTING THE CHANGE IN CONTROL OR OWNERSHIP INTEREST COMPOSITION OR OTHER BANKRUPTCY-RELATED DEFAULTS, ARISING UNDER ANY ASSUMED EXECUTORY CONTRACT OR UNEXPIRED LEASE AT ANY TIME BEFORE THE DATE OF THE DEBTORS OR REORGANIZED DEBTORS ASSUME SUCH EXECUTORY CONTRACT OR UNEXPIRED LEASE. ANY PROOFS OF CLAIM FILED WITH RESPECT TO AN EXECUTORY CONTRACT OR UNEXPIRED LEASE THAT HAS BEEN ASSUMED SHALL BE DEEMED DISALLOWED AND EXPUNGED, WITHOUT FURTHER NOTICE TO OR ACTION, ORDER OR APPROVAL OF THE BANKRUPTCY COURT
.
Neither the exclusion nor inclusion of any Executory Contract or Unexpired Lease on the Assumption Schedule, nor anything contained in the Plan or each Debtor’s schedule of assets and liabilities, shall constitute an admission by the Debtors that any such contract or lease is or is not in fact an Executory Contract or Unexpired Lease capable of assumption, that any Reorganized Debtor(s) has any liability thereunder or that such Executory Contract or Unexpired Lease is necessarily a binding and enforceable agreement. Further, the Debtors expressly reserve the right to (a) remove any Executory Contract or Unexpired Lease from the Assumption Schedule or Rejection Schedule and reject an Executory Contract or Unexpired Lease pursuant to the terms of the Plan with the consent of the Oaktree Plan Sponsors (which consent shall not be unreasonably withheld), up until the Effective Date and (b) contest any Claim (or cure amount) asserted in connection with assumption of any Executory Contract or Unexpired Lease.
Obligations arising under insurance policies assumed by the Debtors before the Effective Date shall be adequately protected in accordance with any order authorizing such assumption.
C.
Reservation of Rights
.
Neither the exclusion nor inclusion of any contract or lease in the Plan Supplement, as applicable, nor anything contained in the Plan, shall constitute an admission by the Debtors that any such contract or lease is in fact an Executory Contract or Unexpired Lease or that any Reorganized Debtor has any liability thereunder. In the event a written objection is filed with the Court as to whether a contract or lease is executory or unexpired, the right of the Debtors or Reorganized Debtors, with the consent of the Oaktree Plan Sponsors (which consent shall not be unreasonably withheld), to move to assume or reject such contract or lease shall be extended until the date that is thirty (30) days after the entry of a Final Order by the Court determining that the contract or lease is executory or unexpired, in which case the deemed assumptions and rejections provided for in the Plan shall not apply to such contract or lease.
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D.
Rejection Damage Claims
.
1.
Generally
. All Rejection Damage Claims must be filed with the Court in accordance with the terms of the Bar Date Order. For the avoidance of doubt, all Allowed Rejection Damage shall be treated as Unsecured Claims.
2.
True-Up for Rejection Damage Claims
. In the event that total Allowed Rejection Damage Claims cause the total amount of Allowed General Unsecured Claims against the Guarantor Debtors to exceed the Estimated Maximum Unsecured Claims Amount as established by the Unsecured Claims Reserve Order, after resolution of all other General Unsecured Claims against the Guarantor Debtors by Final Order(s) of the Bankruptcy Court, Reorganized GMR will, within a reasonable time after all such Claims have been resolved by Final Order(s) of the Bankruptcy Court, make a one-time transfer into the Unsecured Claims Reserve of consideration (which may be made in a combination of Cash, New GMR Common Stock or warrants as determined by GMR) in an amount sufficient to provide such holders of Allowed Rejection Damage Claims with a recovery percentage equal to: (a) the value as of the Effective Date of the Unsecured Creditor Distribution (which shall be set at $17,716,998)
divided by
(b) the greater of (i) the amount of the Unsecured Claims Reserve as established by the Unsecured Claims Reserve Order and (ii) all Allowed General Unsecured Claims against the Guarantor Debtors (other than Allowed Rejection Damage Claims and OCM Facility Deficiency Claims).
3.
REQUIREMENT TO FILE A PROOF OF CLAIM FOR REJECTION DAMAGE CLAIMS
. ANY REJECTION DAMAGE CLAIMS THAT ARE NOT TIMELY FILED SHALL BE DISALLOWED AUTOMATICALLY, FOREVER BARRED FROM ASSERTION, AND SHALL NOT BE ENFORCEABLE AGAINST ANY REORGANIZED DEBTOR WITHOUT THE NEED FOR ANY OBJECTION BY THE REORGANIZED DEBTORS OR FURTHER NOTICE TO OR ACTION, ORDER, OR APPROVAL OF THE COURT, AND ANY REJECTION DAMAGE CLAIM SHALL BE DEEMED FULLY SATISFIED, RELEASED AND DISCHARGED, NOTWITHSTANDING ANYTHING IN THE SCHEDULES OR A PROOF OF CLAIM TO THE CONTRARY.
E.
Assignment
.
Any Executory Contract or Unexpired Lease to be held by any Debtor or Reorganized Debtor and assumed hereunder or otherwise in the Chapter 11 Cases, if not expressly assigned to a third party previously in the Chapter 11 Cases, will be deemed assigned to that Reorganized Debtor pursuant to section 365 of the Bankruptcy Code. If an objection to a proposed assumption, assumption and assignment or Cure Claim is not resolved in favor of the Debtors or the Reorganized Debtors before the Effective Date, the applicable Executory Contract or Unexpired Lease may be designated by the Debtors or the Reorganized Debtors (with the consent of the Oaktree Plan Sponsors, which consent shall not be unreasonably withheld) for rejection within five (5) Business Days of the entry of the order of the Court resolving the matter against the Debtors. Such rejection shall be deemed effective as of the Effective Date.
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F.
No Change in Control
.
The consummation of the Plan or the assumption or assumption and assignment of any Executory Contract or Unexpired Lease to another Reorganized Debtor is not intended to, and shall not, constitute a change in ownership or change in control under any employee benefit plan or program, financial instrument, loan or financing agreement, executory contract or unexpired lease or contract, lease or agreement in existence on the Effective Date to which a Debtor is a party.
G.
Collective Bargaining Agreements
.
Notwithstanding anything in this Plan to the contrary, the Collective Bargaining Agreements shall be deemed assumed as of the Effective Date. The Collective Bargaining Agreements shall vest in and be fully enforceable by the applicable Reorganized Debtor in accordance with its terms, except as modified by the provisions of this Plan or any order of the Court previously entered with respect to the Collective Bargaining Agreements.
H.
Insurance Policies
.
Notwithstanding anything in this Plan to the contrary, all of the Debtors’ insurance policies and any agreements, documents or instruments relating thereto, are treated as and deemed to be Executory Contracts under the Plan. On the Effective Date, the Debtors shall be deemed to have assumed all insurance policies and any agreements, documents and instruments related thereto.
ARTICLE X.
EFFECTIVENESS OF THE PLAN
A.
Conditions Precedent to Effectiveness
.
The Plan shall not become effective unless and until the Confirmation Date has occurred and the following conditions have been satisfied in full or waived in accordance with Article X.B:
1.
the Confirmation Order entered by the Court shall be in form and substance reasonably acceptable to the Debtors, the Creditors’ Committee, the Oaktree Plan Sponsors and the Requisite Supporting Creditors;
2.
the Confirmation Order shall have become a Final Order;
3.
the Definitive Documents (as defined in the Plan Support Agreement) shall have been filed with the Court in a form and substance consistent with the Term Sheet attached to the Plan Support Agreement, and reasonably satisfactory to the Debtors, the Requisite Supporting Creditors, the Creditors’ Committee and the Oaktree Plan Sponsors;
4.
the final version of the exhibits in the Plan Supplement and all schedules, documents, and exhibits contained therein shall have been filed with the Court in form and
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substance reasonably acceptable to the Debtors, the Oaktree Plan Sponsors and the Requisite Supporting Creditors;
5.
all actions, documents, certificates and agreements necessary to implement the Plan shall have been effected or executed and delivered to the required parties and, to the extent required, filed with the applicable Governmental Units in accordance with applicable laws;
6.
all authorizations, consents and regulatory approvals required (if any) for the Plan’s effectiveness shall have been obtained;
7.
the New GMR Charter shall contain the terms provided in Article V.A;
8.
the terms of the New GMR Common Stock and the New GMR Warrants shall be consistent with the Plan;
9.
the Reorganized Debtors shall have consummated each of the New 2010 Senior Facility Credit Agreement and the New 2011 Senior Facility Credit Agreement;
10.
the full amount of the Expense Reimbursement (as defined in the Equity Purchase Agreement) shall have been paid in accordance with the terms of the Equity Purchase Agreement;
11.
the Fee Claims Escrow Account shall be established on terms reasonably satisfactory to the Debtors, the Creditors’ Committee, and the Oaktree Plan Sponsors and shall have been funded in full, in Cash in accordance with, and in the amounts required by, the Plan;
12.
the Unsecured Creditor Distribution Escrow Account shall be established in accordance with the Plan;
13.
all Cure Claims to be paid on the Effective Date shall have been paid on terms reasonably satisfactory to the Oaktree Plan Sponsors;
14.
the Equity Purchase Agreement shall be in full force and effect and all conditions to the effectiveness and closing of the New Equity Investment as specified in the Equity Purchase Agreement shall have been satisfied or waived in accordance with the terms thereof;
15.
the Debtors shall have executed the New Management Agreements;
16.
(a) the aggregate amount of Administrative Claims (excluding Fee Claims, any DIP Facility Claims and any outstanding fees and expenses of the Oaktree Plan Sponsors) shall not exceed $20 million, (b) the aggregate amount of Priority Tax Claims shall not exceed $1.5 million, (c) the aggregate amount of Other Priority Claims shall not exceed $5 million and (d) the aggregate amount of Other Secured Claims shall not exceed $8 million;
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17.
the New Equity Investment shall have been made in accordance with the Plan and the Equity Purchase Agreement; and
18.
the Paydown shall have been made in accordance with the Plan.
B.
Waiver of Conditions Precedent to Effectiveness
.
The Debtors may waive conditions set forth in Article X.A above at any time with the written consent of the Requisite Supporting Creditors and the Oaktree Plan Sponsors, which consent shall not be unreasonably withheld, and without leave of or order of the Court and without any formal action;
provided, however
, that the Debtors also obtain the written consent of the Creditors’ Committee, which consent shall not be unreasonably withheld, to waive the conditions set forth in Article X.A.1, Article X.A.3 and Article X.A.11 above. Notwithstanding the foregoing, the Oaktree Plan Sponsors shall be entitled to refuse such consent for any reason if doing so is consistent with the terms of the Equity Purchase Agreement, and nothing herein shall provide the Requisite Supporting Creditors with any consent rights that are not otherwise provided in the Restructuring Support Agreement or the Equity Purchase Agreement.
C.
Effect of Failure of Conditions
.
In the event that the Effective Date does not occur on or before one hundred and twenty (120) days after the Confirmation Date, upon notification submitted by the Debtors to the Court: (i) the Confirmation Order shall be vacated; (ii) no distributions under the Plan shall be made; (iii) the Debtors and all holders of Claims and Equity Interests shall be restored to the
status quo ante
as of the day immediately preceding the Confirmation Date as though the Confirmation Date had never occurred; and (iv) the Debtors’ obligations with respect to the Claims and Equity Interests shall remain unchanged and nothing contained in the Plan shall constitute or be deemed a waiver, release, or discharge of any Claims or Equity Interests by or against the Debtors or any other person or to prejudice in any manner the rights of the Debtors or any person in any further proceedings involving the Debtors unless extended by Court order.
D.
Vacatur of Confirmation Order
.
If a Final Order denying confirmation of the Plan is entered, or if the Confirmation Order is vacated, then the Plan shall be null and void in all respects, and nothing contained in the Plan shall: (i) constitute a waiver, release or discharge of any Claims against or Equity Interests in the Debtors; (ii) prejudice in any manner the rights of the holder of any Claim against, or Equity Interest in, the Debtors; (iii) prejudice in any manner any right, remedy or claim of the Debtors; or (iv) be deemed an admission against interest by the Debtors or the Oaktree Plan Sponsors.
E.
Modification of the Plan
.
Subject to the limitations contained in the Plan, and subject to the approval of the Creditors’ Committee, the Oaktree Plan Sponsors and the Requisite Supporting Creditors as set forth herein, in the Restructuring Support Agreement or in the Equity Purchase Agreement, as applicable: (i) the Debtors reserve the right, in accordance with the Bankruptcy Code and the Bankruptcy Rules, to amend or modify the Plan prior to the entry of the Confirmation Order,
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including amendments or modifications to satisfy section 1129(b) of the Bankruptcy Code; and (ii) after entry of the Confirmation Order, the Debtors or the Reorganized Debtors, as the case may be, may, upon order of the Court, amend or modify the Plan, in accordance with section 1127(b) of the Bankruptcy Code.
F.
Revocation, Withdrawal, or Non-Consummation
.
1.
Right to Revoke or Withdraw
. The Debtors reserve the right to revoke or withdraw the Plan with respect to any or all Debtors at any time before the Effective Date;
provided, however
, that such action shall not modify or otherwise alter the rights of the non-Debtor parties to the Restructuring Support Agreement or the Equity Purchase Agreement.
2.
Effect of Withdrawal, Revocation, or Non-Consummation
. If the Debtors revoke or withdraw the Plan prior to the Effective Date, or if the Confirmation Date or the Effective Date does not occur, the Plan, any settlement or compromise embodied in the Plan (including the fixing or limiting to an amount certain any Claim or Equity Interest or Class of Claims or Equity Interests), the assumption or rejection of Executory Contracts, Unexpired Leases or benefit plans effected by the Plan, any release, exculpation or indemnification provided for in the Plan, and any document or agreement executed pursuant to the Plan shall be null and void. In such event, nothing contained herein, and no acts taken in preparation for consummation of the Plan shall be deemed to constitute a waiver or release of any Claims by or against or Equity Interests in the Debtors or any other Person, to prejudice in any manner the rights of the Debtors or any Person in any further proceedings involving the Debtors, or to constitute an admission of any sort by the Debtors or any other Person.
ARTICLE XI.
MISCELLANEOUS PROVISIONS
A.
Governing Law
.
Unless a rule of law or procedure is supplied by federal law (including the Bankruptcy Code and Bankruptcy Rules), the laws of the State of New York (without reference to the conflicts of laws provisions thereof) shall govern the construction and implementation of the Plan and any agreements, documents, and instruments executed in connection with the Plan, unless otherwise specified.
B.
Filing or Execution of Additional Documents
.
On or before the Effective Date, the Debtors or the Reorganized Debtors shall (on terms materially consistent with the Plan and subject to the consent rights afforded the Oaktree Plan Sponsors and the Requisite Supporting Creditors pursuant to the terms hereof, the terms of the Equity Purchase Agreement and the terms of the Restructuring Support Agreement) file with the Court or execute, as appropriate, such agreements and other documents as may be necessary or appropriate to effectuate and further evidence the terms and conditions of the Plan.
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C.
Information
.
For so long as Reorganized GMR does not publicly file financial information with the SEC, Reorganized GMR will furnish or make available to the holders of the New GMR Common Stock that sign a confidentiality agreement in form and substance satisfactory to Reorganized GMR: (i) on a quarterly basis within 45 days of each quarter end for the first three fiscal quarters, consolidated unaudited financial statements of Reorganized GMR, including the balance sheet, income statement, and statement of cash flow detailing the quarter-to-date and year-to-date results, together with the footnotes thereto,
provided, that
, such information will be provided on a confidential basis through a secure database; and (ii), on an annual basis within 120 days of each year end, audited consolidated financial statements of Reorganized GMR including the balance sheet, income statement, and cash flow detailing year-to-date results, together with the footnotes thereto, in each case in reasonable detail and prepared in accordance with GAAP, except as otherwise noted therein,
provided, that
, such information will be provided on a confidential basis through a secure database.
D.
Withholding and Reporting Requirements
.
In connection with the Plan and all instruments issued in connection therewith and distributions thereon, the Reorganized Debtors shall comply with all withholding and reporting requirements imposed by any federal, state, local or foreign taxing authority and all distributions hereunder shall be subject to any such withholding and reporting requirements.
E.
Compensation of Senior Notes Indenture Trustee Fees and Expenses
.
The Reorganized Debtors shall pay (in a single payment that will be made to an account identified by counsel to the Creditors’ Committee) the reasonable and documented fees and expenses for the Senior Notes Indenture Trustee (including for the avoidance of doubt legal fees and expenses) in an amount not to exceed $200,000 in Cash in respect of invoices submitted by the Senior Notes Indenture Trustee in accordance with the Plan Support Agreement and without the need for the Senior Notes Indenture Trustee to file an application for allowance with the Bankruptcy Court;
provided, however
, that to receive payment pursuant to this Article XI.E, the Senior Notes Indenture Trustee shall provide reasonable and customary detail or invoices in support of such fees and expenses to counsel to the Reorganized Debtors after the Effective Date, and the Reorganized Debtors shall have the right to file objections to such fees and expenses based on a “reasonableness” standard within ten (10) Business Days after receipt of supporting documentation. Any disputed amount of such fees and expenses shall be subject to the jurisdiction of, and resolution by, the Bankruptcy Court. Upon payment of such fees and expenses of the Senior Notes Indenture Trustee, the Senior Notes Indenture Trustee will be deemed to have released its lien and priority rights for such fees and expenses under the respective Senior Notes Indenture solely to the extent of such fees and expenses. Distributions under the Plan to holders of Claims on account of the Senior Notes will not be reduced by the amount of Claims paid by the Debtors pursuant to this Article, but may be reduced by charging liens and other rights that the Senior Notes Indenture Trustee may assert solely against the holders of Senior Notes for (i) any amount under the Senior Notes Indenture not required to be paid by the Reorganized Debtors to the Senior Notes Indenture Trustee under this Section as determined by the Bankruptcy Court or (ii) additional amounts, if any and only to the extent
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reasonable, incurred by the Senior Notes Indenture Trustee in litigating its rights to payment of any and all amounts due by the Reorganized Debtors under this Section (which amounts due by the Reorganized Debtors, for the avoidance of doubt, shall be capped at $200,000 as set forth in this Section).
F.
Exemption From Transfer Taxes
.
Pursuant to section 1146(a) of the Bankruptcy Code, all transfers of property pursuant hereto, including (i) the issuance, transfer or exchange under the Plan of New GMR Common Stock, the New GMR Warrants and the security interests in favor of the lenders under the New 2010 Senior Credit Facility Agreement and the New 2011 Senior Facility Credit Agreement, (ii) the making or assignment of any lease or sublease, or (iii) the making or delivery of any other instrument whatsoever, in furtherance of or in connection with the Plan shall not be subject to any stamp, conveyance, mortgage, real estate transfer, recording or other similar tax, or governmental assessment.
G.
Waiver of Federal Rule of Civil Procedure 62(a)
.
The Plan shall constitute a request by the Debtors that the Confirmation Order include (i) a finding that Fed. R. Civ. P. 62(a) shall not apply to the Confirmation Order and (ii) shall authorize Debtors to consummate the Plan immediately after entry of the Confirmation Order.
H.
Plan Supplement
.
All exhibits and documents included in the Plan Supplement are incorporated into and are a part of the Plan as if set forth in full in the Plan.
The documents contained in the Plan Supplement may be inspected in the office of the Clerk of the Court during normal court hours and shall be available online at www.pacer.gov and www.GMRRestructuring.com. Holders of Claims or Equity Interests may obtain a copy of the Plan Supplement upon written request to counsel to the Debtors. The Debtors reserve the right, in accordance with the terms hereof, to modify, amend, supplement, restate or withdraw any of the Plan Supplement after they are filed and shall promptly make such changes available online at www.pacer.gov and www.GMRRestructuring.com.
I.
Notices
.
All notices, requests, and demands hereunder to be effective shall be in writing and unless otherwise expressly provided herein, shall be deemed to have been duly given or made when actually delivered or, in the case of notice by facsimile transmission, when received and telephonically confirmed, addressed as follows:
1.
To the Debtors
: General Maritime Corporation, 299 Park Avenue, New York, NY 10171, attention: Jeffrey D. Pribor, Tel.: (212) 763-5600, Fax: (212) 763-5603, with a copy to Kramer Levin Naftalis & Frankel LLC, 1177 Avenue of the Americas, New York, NY 10036, attention: Kenneth Eckstein, Douglas Mannal and Adam Rogoff, Tel.: (212) 715-9100, Fax: (212) 715-8000.
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(Plan of Reorganization) Pg 67 of 70
2.
To the Creditors’ Committee
: Jones Day, 222 East 41
st
Street, New York, NY 10017, attention: Paul D. Leake and Pedro A. Jimenez, Tel.: (212) 326-3939, Fax: (212) 755-7306.
3.
To the Prepetition Agent
: White & Case LLP, 1155 Avenue of the Americas, New York, NY 10036, attention: Thomas E Lauria and Scott Greissman, Tel.: (212) 819-8200, Fax: (212) 354-8113.
4.
To the New Senior Lenders
: White & Case LLP, 1155 Avenue of the Americas, New York, NY 10036, attention: Thomas E Lauria and Scott Greissman, Tel.: (212) 819-8200, Fax: (212) 354-8113.
5.
To the Oaktree Plan Sponsors
: Kirkland & Ellis, LLP, 601 Lexington Avenue, New York, NY 10022, attention: Edward O. Sassower and Brian E. Schartz, Tel.: (212) 446-4800, Fax: (212) 446-4900.
6.
To the U.S. Trustee
: 33 Whitehall Street, 21
st
Floor, New York, New York 10004, attention: Paul K. Schwartzberg, Tel.: (212) 510-0500, Fax: (212) 668-2255.
J.
Conflicts
.
The terms of the Plan shall govern in the event of any inconsistency with the summaries of the Plan set forth in the Disclosure Statement. In the event of any inconsistency with the Plan and the Confirmation Order, the applicable provision(s) of the Confirmation Order shall govern with respect to such inconsistency.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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Dated: April 19, 2012
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GENERAL MARITIME CORPORATION
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By:
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/s/ John C. Georgiopoulos
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Name:
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John C. Georgiopoulos
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Title:
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Executive Vice President, Treasurer & Secretary
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GENERAL MARITIME SUBSIDIARY CORPORATION
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GENERAL MARITIME SUBSIDIARY II CORPORATION
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GENERAL PRODUCT CARRIERS CORPORATION
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GENERAL MARITIME SUBSIDIARY NSF CORPORATION
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By:
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/s/ John C. Georgiopoulos
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Name:
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John C. Georgiopoulos
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Title:
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Treasurer
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GENERAL MARITIME MANAGEMENT
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By:
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/s/ Milton H. Gonzales, Jr.
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Name:
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Milton H. Gonzales, Jr.
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Title:
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Manager & Technical Director
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GENERAL ADMINISTRATION CORP.
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By:
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/s/ John C. Georgiopoulos
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Name:
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John C. Georgiopoulos
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Title:
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Vice President, Treasurer and Secretary
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GMR AGAMEMNON LLC
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GMR AJAX LLC
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GMR ALEXANDRA LLC
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GMR ARGUS LLC
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GMR ATLAS LLC
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GMR CHARTERING LLC
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GMR CONCEPT LLC
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GMR CONCORD LLC
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GMR CONTEST LLC
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GMR CONSTANTINE LLC
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GMR DAPHNE LLC
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GMR DEFIANCE LLC
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GMR ELEKTRA LLC
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GMR GEORGE T LLC
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GMR GP LLC
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GMR GULF LLC
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GMR HARRIET G LLC
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GMR HERCULES LLC
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GMR HOPE LLC
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GMR HORN LLC
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GMR KARA G LLC
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GMR LIMITED LLC
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GMR MANIATE LLC
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GMR MINOTAUR LLC
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GMR ORION LLC
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GMR PHOENIX LLC
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GMR POSEIDON LLC
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GMR PRINCESS LLC
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GMR PROGRESS LLC
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GMR REVENGE LLC
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GMR SPARTIATE LLC
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GMR SPYRIDON LLC
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GMR ST. NIKOLAS LLC
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GMR STAR LLC
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GMR STRENGTH LLC
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GMR TRADER LLC
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GMR TRUST LLC
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GMR ULYSSES LLC
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GMR ZEUS LLC
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GENERAL MARITIME INVESTMENTS LLC
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By:
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/s/ John C. Georgiopoulos
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Name:
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John C. Georgiopoulos
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Title:
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Vice President, Treasurer and Secretary
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ARLINGTON TANKERS LTD.
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COMPANION LTD.
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COMPATRIOT LTD.
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CONCEPT LTD.
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CONCORD LTD.
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CONSUL LTD.
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CONTEST LTD.
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VICTORY LTD.
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VISION LTD.
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By:
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/s/ John C. Georgiopoulos
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Name:
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John C. Georgiopoulos
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Title:
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Director
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(Plan of Reorganization) Pg 70 of 70
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ARLINGTON TANKERS, LLC
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By:
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/s/ John C. Georgiopoulos
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Name:
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John C. Georgiopoulos
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Title:
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Vice President, Treasurer and Secretary
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Exhibit 2.2
EXECUTION VERSION
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
GENERAL MARITIME CORPORATION,
GENER8 MARITIME ACQUISITION, INC.,
NAVIG8 CRUDE TANKERS, INC.,
AND
EACH OF THE EQUITYHOLDERS’ REPRESENTATIVES NAMED HEREIN
Dated as of February 24, 2015
TABLE OF CONTENTS
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Page
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TABLE OF CONTENTS
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i
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ARTICLE I CERTAIN DEFINITIONS
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2
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1.1
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Definitions
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2
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ARTICLE II THE MERGER
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22
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2.1
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The Merger
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22
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2.2
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Closing
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22
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2.3
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Effective Time
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23
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2.4
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Effects of the Merger
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23
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2.5
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Articles of Incorporation and Bylaws; Name of Surviving Corporation
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23
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2.6
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Directors and Officers of Surviving Corporation
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23
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2.7
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Name of Parent; Directors of Parent
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23
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2.8
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Tax Consequences
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23
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ARTICLE III EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS
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24
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3.1
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Effects of the Merger on Capital Stock
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24
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3.2
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Merger Consideration
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26
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3.3
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Withholding Taxes
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29
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3.4
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Appointment of Representatives
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29
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY
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30
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4.1
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Organization and Qualification of the Company
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31
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4.2
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Capitalization
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31
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4.3
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Subsidiaries
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33
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4.4
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Authority
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34
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4.5
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No Conflicts; Consents
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35
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4.6
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Company Financial Statements; Information Provided
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36
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4.7
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No Undisclosed Liabilities
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37
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4.8
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Absence of Certain Changes, Events and Conditions
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37
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4.9
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Taxes
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39
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4.10
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Material Contracts
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42
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4.11
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Legal Proceedings; Orders
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45
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4.12
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Environmental Matters
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45
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4.13
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Employee Benefit Matters
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46
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4.14
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Compliance With Laws
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49
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4.15
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Permits
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49
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4.16
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Employment Matters
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49
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4.17
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Insurance
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50
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i
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4.18
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Vessels
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51
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4.19
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No Existing Discussions
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52
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4.20
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Brokers
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52
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4.21
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Controls and Procedures, Certifications and Other Matters
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52
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4.22
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Real Property
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53
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4.23
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Personal Property
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53
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4.24
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Intellectual Property
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54
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4.25
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Certain Business Practices
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54
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4.26
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Fairness Opinion
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55
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ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
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55
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5.1
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Organization and Qualification of Parent and Merger Sub
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56
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5.2
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Capitalization
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56
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5.3
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Subsidiaries
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58
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5.4
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Authority
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59
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5.5
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No Conflicts; Consents
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61
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5.6
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Parent Financial Statements; Information Provided
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62
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5.7
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No Undisclosed Liabilities
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63
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5.8
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Absence of Certain Changes, Events and Conditions
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63
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5.9
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Taxes
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65
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5.10
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Material Contracts
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68
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5.11
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Legal Proceedings; Orders
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70
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5.12
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Environmental Matters
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71
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5.13
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Employee Benefit Matters
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72
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5.14
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Compliance With Laws
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74
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5.15
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Permits
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75
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5.16
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Employment Matters
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75
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5.17
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Insurance
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76
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5.18
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Vessels
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76
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5.19
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No Existing Discussions
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77
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5.20
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Brokers
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77
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5.21
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Controls and Procedures, Certifications and Other Matters
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77
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5.22
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Real Property
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78
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5.23
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Personal Property
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79
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5.24
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Intellectual Property
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79
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5.25
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Certain Business Practices
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80
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5.26
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Fairness Opinion
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80
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ARTICLE VI COVENANTS
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81
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6.1
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Access to Information
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81
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6.2
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Conduct of the Respective Businesses Pending the Closing
|
82
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6.3
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Conditions
|
87
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6.4
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Consents
|
87
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6.5
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Regulatory Approvals
|
88
|
ii
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6.6
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Director and Officer Indemnification, Exculpation and Insurance
|
89
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6.7
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Preservation of Records
|
92
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6.8
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Publicity; Confidentiality
|
92
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6.9
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Consulting Agreements; Employment Agreement
|
93
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6.10
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Company Exclusivity
|
93
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6.11
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Parent Exclusivity
|
96
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6.12
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Amended Articles of Incorporation and Bylaws
|
99
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6.13
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Information Statements; Shareholder Meetings
|
99
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6.14
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Resignation of Company Directors
|
101
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6.15
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Closing Agreements
|
101
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6.16
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Shareholder Agreements
|
101
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6.17
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Parent Public Offering
|
101
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6.18
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Tax Treatment
|
102
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6.19
|
Audited Financial Statements
|
102
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6.20
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Exempt Investors
|
102
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6.21
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Certain Agreements
|
102
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6.22
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Management Arrangements
|
102
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ARTICLE VII CONDITIONS TO CLOSING
|
103
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7.1
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Conditions Precedent to Obligations of the Company, Parent and Merger Sub
|
103
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7.2
|
Conditions Precedent to Obligations of Parent and Merger Sub
|
104
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7.3
|
Conditions Precedent to Obligations of the Company
|
105
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|
|
ARTICLE VIII TERMINATION
|
106
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|
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8.1
|
Termination of Agreement
|
106
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8.2
|
Procedure Upon Termination
|
108
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8.3
|
Effect of Termination
|
108
|
|
|
|
|
|
ARTICLE IX INDEMNIFICATION
|
110
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|
|
9.1
|
Survival
|
110
|
|
9.2
|
Indemnification of Holders of Parent Common Stock
|
110
|
|
9.3
|
Indemnification of Holders of Company Common Stock
|
111
|
|
9.4
|
Certain Limitations
|
112
|
|
9.5
|
Indemnification Procedures
|
113
|
|
9.6
|
Payments
|
115
|
|
9.7
|
Tax Treatment of Indemnification Payments
|
115
|
|
9.8
|
Exclusive Remedies
|
115
|
|
9.9
|
No Other Representations
|
116
|
|
|
|
|
|
ARTICLE X MISCELLANEOUS
|
117
|
|
|
|
|
|
10.1
|
Remedies
|
117
|
|
10.2
|
Payment of Transfer Taxes
|
118
|
|
10.3
|
Expenses
|
118
|
|
10.4
|
Entire Agreement; Amendments and Waivers
|
118
|
iii
|
10.5
|
Governing Law; Jurisdiction
|
119
|
|
10.6
|
Waiver of Jury Trial
|
120
|
|
10.7
|
Notices
|
120
|
|
10.8
|
Severability
|
121
|
|
10.9
|
Binding Effect; Assignment
|
121
|
|
10.10
|
Counterparts
|
122
|
EXHIBITS
|
Exhibit A:
|
Amended and Restated Warrant Agreement
|
|
Exhibit B:
|
Company Newbuilding Contracts
|
|
Exhibit C:
|
Equity Purchase Agreement
|
|
Exhibit D:
|
Parent Newbuilding Contracts
|
|
Exhibit E:
|
Registration Rights Agreement
|
|
Exhibit F:
|
Shareholder Agreement
|
|
Exhibit G:
|
Parent Board Members
|
|
Exhibit H:
|
Parent Amended and Restated Articles of Incorporation
|
|
Exhibit I:
|
Parent Amended and Restated Bylaws
|
iv
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of February 24, 2015 (this “
Agreement
”), by and among General Maritime Corporation, a corporation incorporated under the laws of the Republic of the Marshall Islands (“
Parent
”), Gener8 Maritime Acquisition, Inc., a corporation incorporated under the laws of the Republic of the Marshall Islands and a wholly owned subsidiary of Parent (“
Merger Sub
,”), Navig8 Crude Tankers, Inc., a corporation incorporated under the laws of the Republic of the Marshall Islands (the “
Company
”), Shareholder Representative Services LLC, a Colorado limited liability company solely in its capacity as agent and attorney-in-fact for the Company Common Shareholders in connection with the Merger (as defined below) (in such capacity, the “
Navig8 Representative
”) and OCM Marine Holdings TP, L.P. a Cayman Islands exempted limited partnership in its capacity as representative of the holders of Parent Common Stock immediately before the Effective Time in connection with the Merger (as defined below) (in such capacity, the “
GenMar Representative
” and collectively with Parent, Merger Sub, the Company and the Navig8 Representative the “
parties
”).
WITNESSETH:
WHEREAS, Parent desires to acquire, directly or indirectly, 100% of the issued and outstanding capital stock of the Company in a reverse subsidiary merger transaction on the terms and subject to the conditions set forth herein;
WHEREAS, (i) the board of directors of Parent, (ii) the board of directors of Merger Sub and (iii) the board of directors of the Company has approved and declared advisable this Agreement and the merger of Merger Sub with and into the Company (the “
Merger
”), upon the terms and subject to the conditions set forth in this Agreement and the Business Corporations Act, as amended, of the Marshall Islands (the “
BCA
”);
WHEREAS, Parent, Merger Sub and the Company intend that the Merger constitute a reorganization within the meaning of Section 368(a) of the Code and intend, by approving resolutions authorizing this Agreement, to adopt this Agreement as a plan of reorganization within the meaning of Sections 354 and 361 of the Code and the Treasury Regulations thereunder and that the transactions (including any issuance of stock to the Company Shareholder Indemnitees under
Article IX
) contemplated by this Agreement be undertaken pursuant to such plan;
WHEREAS, upon consummation of the Merger, the Surviving Corporation will be a wholly owned Subsidiary of Parent;
WHEREAS, concurrently with the execution of this Agreement, (i) the holders of a majority of the outstanding shares of Parent Common Stock will each execute and deliver to the Company support and voting agreements, dated as of the date of this Agreement (the “
Parent Shareholder Support Agreement
”), pursuant to which each such shareholder has agreed, among other things and subject to the terms and conditions set forth therein, to vote all Parent Common Stock held by him, her or it in favor of the amendment of the Parent’s articles of incorporation and bylaws as contemplated by
Section 6.12
and (ii) the holders of a majority of the outstanding
shares of Company Common Stock will execute and deliver to the Parent, support and voting agreements, dated as of the date of this Agreement (the “
Company Shareholder Support Agreement
” and together with the Parent Shareholder Support Agreement, the “
Support Agreements
”), pursuant to which each such shareholder has agreed, among other things and subject to the terms and conditions set forth therein, to vote all Company Common Stock held by him, her or it in favor of the Merger and the adoption of this Agreement;
WHEREAS, Parent has agreed, upon obtaining the Parent Shareholder Approval, to amend and restate its articles of incorporation and bylaws in accordance with
Section 6.12
; and
WHEREAS, Parent, Merger Sub and the Company desire to make certain representations, warranties, covenants and agreements in connection with the Merger and also to prescribe various conditions thereto.
NOW, THEREFORE, in consideration of the representations, warranties, covenants and agreements contained in this Agreement, the parties hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.1
Definitions
.
(a) For purposes of this Agreement, the following terms shall have the meanings specified in this
Section 1.1
:
“
5% Holder
” means any Person that beneficially owns 5% of the issued and outstanding Parent Common Stock after giving effect to the Merger. As used in this Agreement, “
beneficial ownership
” means beneficial ownership as determined pursuant to Rule 13d-3 and 13d-5 of the Exchange Act.
“
A&R Governing Documents
” has the meaning specified in
Section 6.12
.
“
Accredited Investor
” has the meaning specified in Rule 501(a) of Regulation D as promulgated under the Securities Act.
“
Action
” means any claim, action, cause of action, demand, lawsuit, arbitration, inquiry, audit, notice of violation, proceeding, litigation, citation, summons, subpoena or investigation of any nature, civil, criminal, administrative, regulatory or otherwise, whether at law or in equity.
“
Affiliate
” of a Person means any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person. The term “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.
2
“
Aggregate Cash Consideration
” means the total amount of cash consideration paid by Parent pursuant to
Section 3.1(a)(iv)
.
“
Aggregate Stock Consideration
” means the number of shares of Parent Common Stock as calculated by multiplying the number of shares of Company Common Stock outstanding immediately prior to the Effective Time to be converted pursuant to
Section 3.1(a)(iii)
(other than Specified Company Shares) by the Exchange Ratio.
“
Agreement
” has the meaning specified in Preamble.
“
Amended and Restated Warrant Agreement
” means the amended and restated warrant agreement attached hereto as
Exhibit A
.
“
Ancillary Documents
” means the Support Agreements, the Equity Purchase Agreement, the Shareholder Agreement, the Exchange and Paying Agent Agreement, the Registration Rights Agreement and the Amended and Restated Warrant Agreement.
“
Approval
” means any approval, authorization, consent, qualification or registration, or any extension, modification, amendment or waiver of any of the foregoing, required to be obtained from, or any notice, statement or other communication required to be filed with or delivered to, any Governmental Authority.
“
Articles of Merger
” has the meaning specified in
Section 2.3
.
“
Bankruptcy and Equity Exception
” means the extent to which the enforceability of a Contract may be limited by (a) bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and (b) general principles of equity.
“
BCA
” has the meaning specified in the Recitals.
“
Book-Entry Shares
” means shares of Company Common Stock represented by book-entry.
“
Business Day
” means any day of the year on which national banking institutions in New York, New York are open to the public for conducting business and are not required or authorized to be closed.
“
Cap
” has the meaning specified in
Section 9.4(a)
.
“
Cashed Out Company Common Shareholders
” means any Company Common Shareholders who receive cash in lieu of shares of Parent Common Stock as Per Share Merger Consideration pursuant to
Section 3.1(a)(iv)
.
“
Certificate
” means each certificate which, immediately prior to the Effective Time, represented shares of Company Common Stock.
3
“
Charter Contract
” means a Contract for the hire of a vessel on a bareboat charter basis, or on time charter basis for a period in excess of 24 months, under which Parent or Company, as applicable, pays the shipowner or head charterer hire for the use of a vessel.
“
Claim
” has the meaning specified in
Section 9.5
.
“
Classification Society
” means, with respect to each Company Vessel and each Parent Vessel, a classification society that is a member of the International Association of Classification Societies as set out in the Company Disclosure Schedule or the Parent Disclosure Schedule (as the case may be).
“
Closing
” has the meaning specified in
Section 2.2
.
“
Closing Date
” has the meaning specified in
Section 2.2
.
“
Code
” means the Internal Revenue Code of 1986, as amended.
“
Collective Bargaining Agreement
” means any and all written agreements, memoranda of understanding, contracts, letters, side letters and contractual obligations of any kind, nature and description, that have been entered into between, or that involve or apply to, any employer and any employees’ labor organization, works council, workers’ committee, union representatives or any other type of employees’ representatives appointed for collective bargaining purposes.
“
Company
” has the meaning specified in
Preamble
.
“
Company Acquisition Proposal
” means, any offer, proposal, inquiry or indication of interest, or any public announcement of intention to enter into any agreement or of (or intention to make) any offer, proposal, inquiry or indication of interest, by a Third Party relating to any transaction or series of transactions involving (i) any sale, lease, exchange, mortgage, transfer, license or other disposition, direct or indirect, of (A) 15% or more of the consolidated assets of the Company and its Subsidiaries or assets of the Company and/or any of its Subsidiaries that represented, individually or in the aggregate, 15% or more of the consolidated revenues of the Company for the then most recently completed four quarter period, or (B) 15% or more of the total outstanding equity or voting securities of the Company, in each case of clauses (A) and (B) including by way of tender offer (including a self-tender offer) or exchange offer, (ii) a merger, consolidation, spin-off, share exchange (including a split-off), business combination, sale of substantially all the assets, recapitalization, liquidation, extraordinary dividend, dissolution or other similar transaction involving the Company or any of its Subsidiaries representing (A) 15% or more of the consolidated assets of the Company and its Subsidiaries or assets of the Company and/or any of its Subsidiaries that represented, individually or in the aggregate, 15% or more of the consolidated revenues of the Company for the then most recently completed four quarter period or (B) 15% or more of the total outstanding equity or voting securities of the Company, (iii) any sale, lease, exchange, mortgage, lien, transfer, license or other disposition, direct or indirect, of any Company Newbuilding Contract or any interest, right or benefit therein,
provided
, that a proposal related to any of the transactions set forth in this subsection
(iii)
shall not be deemed a Company Acquisition Proposal if the Company obtains the prior written consent of Parent to engage in any action otherwise prohibited
4
pursuant to
Section 6.10(a)
, such consent not to be unreasonably withheld or (iv) any other transaction or series of transactions having a similar effect to those described in clauses (i), (ii) and (iii);
provided
, that any offer, proposal, inquiry or indication of interest, or any public announcement of intention to enter into any agreement or of (or intention to make) any offer, proposal, inquiry or indication of interest by a Third Party relating to any transaction or series of transactions relating to the Company’s Charter Contracts in effect as of the date hereof shall not be deemed to constitute a Company Acquisition Proposal solely by reason of the fact that such offer, proposal, inquiry or indication of interest, or public announcement relates to such Charter Contracts that generated 15% or more of the consolidated revenues of the Company.
“
Company Adverse Recommendation Change
” has the meaning specified in
Section 6.10(a)
.
“
Company Audited Financial Statements
” has the meaning specified in
Section 4.6(a)
.
“
Company Balance Sheet
” has the meaning specified in
Section 4.6(a)
.
“
Company Balance Sheet Date
” has the meaning specified in
Section 4.6(a)
.
“
Company Board
” means the board of directors of the Company.
“
Company Board Recommendation
” has the meaning specified in
Section 4.4(a)
.
“
Company Charter Documents
” has the meaning specified in
Section 4.5(a)
.
“
Company Common Shareholders
” means those Persons holding outstanding shares of Company Common Stock immediately prior to the Effective Time.
“
Company Common Stock
” means common stock of the Company common stock, $0.01 par value per share.
“
Company Disclosure Schedules
” mean in the disclosure schedules delivered by the Company to the Parent on the date of this Agreement.
“
Company Employee Plans
” has the meaning specified in
Section 4.13(a)
.
“
Company Fairness Opinion
” has the meaning specified in
Section 4.26
.
“
Company Financial Statements
” has the meaning specified in
Section 4.6(a)
.
“
Company Inception Date
” has the meaning specified in
Section 4.1(a)
.
“
Company Information Statement
” has the meaning specified in
Section 6.13(a)
.
“
Company Insurance Policies
” has the meaning specified in
Section 4.17(a)
.
“
Company-Leased Real Property
” has the meaning specified in
Section 4.22(b)
.
5
“
Company Material Adverse Effect
” means any change, event, effect, circumstance or occurrence that, individually or in the aggregate with all such other changes, events, effects, circumstances, occurrences, has had, or would reasonably be expected to have, a material adverse effect on (i) the business, assets (including Company Vessels and Company Newbuilding Contracts), financial condition or results of operations of Company and its Subsidiaries, taken as a whole, or (ii) the ability of Company to consummate the transactions contemplated by this Agreement or materially delay the ability of the Company to consummate the transactions contemplated hereby, including the Merger;
provided
, that the following shall not be deemed to constitute a “Company Material Adverse Effect”: any change, event, effect, circumstance or occurrence to the extent caused by or resulting from (A) changes, events or circumstances in prevailing economic, regulatory, political or market conditions in the United States or any other jurisdiction in which Company and its Subsidiaries, taken as a whole, have substantial business operations, (B) changes, events or circumstances occurring after the date hereof, affecting the industries in which the Parent and Company operate generally, (C) changes announced or effective after the date hereof in GAAP applicable to Company and its Subsidiaries, (D) changes announced or effective after the date hereof, in applicable Laws, (E) the announcement and pendency of this Agreement and the transactions contemplated hereby, (F) any outbreak of major hostilities in which the United States is involved or any act of terrorism within the United States or directed against its facilities or citizens wherever located, (G) any other acts of war, sabotage, terrorism or natural disasters, (H) changes in the global financial or securities markets or general global economic or political conditions or (I) any changes, events, effects, circumstances or occurrences related to the Company’s operations of chartered-in vessels, solely to the extent that such changes, events, effects, circumstances or occurrences cause a reduction in the Company’s revenues;
provided
, that, with respect to a matter described in any of the foregoing clauses (A) through (D), and (F) through (H), the effect of any such matter shall only be excluded to the extent that such matter does not have, or would not reasonably be expected to have, a disproportionate effect on the Company or its Subsidiaries, taken as a whole, relative to other Persons operating in the industry in which the Company and its Subsidiaries operate. For the avoidance of doubt, the parties agree that the terms “material,” “materially” or “materiality” as used in this Agreement with an initial lower case “m” shall have their respective customary and ordinary meanings, without regard to the meanings ascribed to Company Material Adverse Effect in the prior sentence of this paragraph.
“
Company Material Contracts
” has the meaning specified in
Section 4.10(a)
.
“
Company Meeting
” has the meaning specified in
Section 6.13(b)
.
“
Company Newbuilding Contract
” means each of the Contracts on
Exhibit B
.
“
Company Notice Period
” has the meaning specified in
Section 6.10(b)(ii)
.
“
Company Personal Property
” has the meaning specified in
Section 4.23
.
“
Company Real Property Lease
” has the meaning specified in
Section 4.22(b)
.
6
“
Company Shareholder Agreement
” means the amended and restated shareholders agreement dated as of April 22, 2014 by and among the Company and certain Company Shareholders.
“
Company Shareholder Approval
” has the meaning specified in
Section 4.4(a)
.
“
Company Shareholder Indemnitees
” has the meaning specified in
Section 9.3
.
“
Company Shareholder Pro Rata Share
” means 47.45%.
“
Company Shareholder Support Agreement
” has the meaning specified in the Recitals.
“
Company Shareholders
” mean the holders of the shares of the Company Common Stock.
“
Company Specified Termination
” has the meaning specified in
Section 8.3(b)
.
“
Company Stock Option
” has the meaning specified in
Section 3.1(b)
.
“
Company Termination Fee
” has the meaning specified in
Section 8.3(c)
.
“
Company Vessels
” means a vessel owned by the Company or any Subsidiary of the Company, excluding any Newbuildings.
“
Company Voting Proposal
” has the meaning specified in
Section 6.13(b)
.
“
Company Warrant
” means a warrant of the Company exercisable into shares of Company Common Stock.
“
Competition Laws
” means the HSR Act (and any similar Law enforced by any Governmental Antitrust Entity regarding preacquisition notifications for the purpose of competition reviews), the Sherman Act, as amended, the Clayton Act, as amended, the Federal Trade Commission Act, as amended, and all other federal, state, non-U.S., multinational or supranational antitrust, competition or trade regulation statutes, rules, regulations, orders, decrees, administrative and judicial doctrines and other Laws that are designed or intended to prohibit, restrict or regulate actions or transactions having the purpose or effect of monopolization or restraint of trade or lessening of competition through merger or acquisition or effectuating non-U.S. investment.
“
Confidentiality Agreement
” has the meaning specified in
Section 6.1(b)
.
“
Consultants
” means Gary Brocklesby and Nicolas Busch.
“
Consulting Agreements
” has the meaning specified in
Section 6.9
.
“
Contracts
” means all contracts, leases, deeds, mortgages, licenses, instruments, notes, commitments, undertakings, indentures, joint ventures and all other agreements, commitments and legally binding arrangements, whether written or oral.
7
“
Current Parent Shareholder Agreement
” means the amended and restated shareholders agreement dated as of December 12, 2013 by and among Parent and Parent Shareholders.
“
D&O Indemnitees
” has the meaning specified in
Section 6.6(a)
.
“
Direct Claim
” has the meaning specified in
Section 9.5(c)
.
“
Disinterested Holders
” means the holders of the shares of Company Common Stock as of the date hereof other than Navig8 Ltd. and BlueMountain Capital Management, LLC and their Affiliates.
“
Dissenting Shares
” has the meaning specified in
Section 3.1(c)
.
“
Effective Time
” has the meaning specified in
Section 2.3
.
“
Employee Benefit Plan
” means any domestic or non-U.S. pension, benefit, retirement, compensation, employment, consulting, profit-sharing, deferred compensation, incentive, bonus, performance award, phantom equity, stock or stock-based, change in control, retention, severance, vacation, paid time off, welfare, fringe-benefit and other similar agreement, plan, policy, program or arrangement (and any amendments thereto), in each case whether or not reduced to writing and whether funded or unfunded, including each “employee benefit plan” within the meaning of Section 3(3) of ERISA, whether or not tax-qualified and whether or not subject to ERISA, which is or has been maintained, sponsored, contributed to, or required to be contributed to by the Company for the benefit of any current or former employee, officer, director, retiree, independent contractor or consultant of the Company or any spouse or dependent of such individual, or under which the Company or any of its ERISA Affiliates would reasonably be expected to have any Liability, contingent or otherwise (each, a “Company Employee Plan”) or which is or has been maintained, sponsored, contributed to, or required to be contributed to by Parent for the benefit of any current or former employee, officer, director, retiree, independent contractor or consultant of Parent or any spouse or dependent of any such individual, or with respect to which Parent or any of its ERISA Affiliates would reasonably be expected to have any Liability, contingent or otherwise (each, a “Parent Employee Plan”).
“
Environmental Claim
” means any Action, Order, lien, fine, penalty, or, as to each, any settlement or judgment arising therefrom, by or from any Person alleging liability of whatever kind or nature (including liability or responsibility for the costs of enforcement proceedings, investigations, cleanup, governmental response, removal or remediation, natural resources damages, property damages, personal injuries, medical monitoring, penalties, contribution, indemnification and injunctive relief) arising out of, based on or resulting from: (a) the presence, Release of, or exposure to, any Hazardous Materials; or (b) any actual or alleged non-compliance with any Environmental Law or term or condition of any Environmental Permit.
“
Environmental Laws
” means all applicable federal, state, local, international and non-U.S. laws (including common law), statutes, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, treaties, conventions, agreements (including any agreement with any Governmental Authority and Maritime Guidelines) or Parent’s Permits (with respect to Parent and its Subsidiaries) or the Company’s Permits (with respect to the Company and its
8
Subsidiaries), as applicable, issued, promulgated or entered into by or with any Governmental Authority relating in any way to the environment, preservation or reclamation of natural resources, the presence, management, Release or threat of Release of, or exposure to, Hazardous Materials, otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, or to human health and safety, including the Comprehensive Environmental Response, Compensation and Liability Act of 1980, and the Oil Pollution Act of 1990. The term “Environmental Law” includes, without limitation, the following (including their implementing regulations and any state analogs): the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. §§ 9601 et seq.; the Oil Pollution Act of 1990, as amended, 33 U.S.C. §§ 2201 et seq.; the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976, as amended by the Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. §§ 6901 et seq.; the Federal Water Pollution Control Act of 1972, as amended by the Clean Water Act of 1977, 33 U.S.C. §§ 1251 et seq.; the Toxic Substances Control Act of 1976, as amended, 15 U.S.C. §§ 2601 et seq.; the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. §§ 11001 et seq.; the Clean Air Act of 1966, as amended by the Clean Air Act Amendments of 1990, 42 U.S.C. §§ 7401 et seq.; and the Occupational Safety and Health Act of 1970, as amended, 29 U.S.C. §§ 651 et seq.
“
Environmental Notice
” means any written directive, notice of violation or infraction, or notice respecting any Environmental Claim relating to actual or alleged non-compliance with any Environmental Law or any term or condition of any Environmental Permit.
“
Environmental Permit
” means any Permit, letter, clearance, consent, waiver, closure, exemption, decision or other action required under or issued, granted, given, authorized by or made pursuant to Environmental Law.
“
Equity Interests
” means, with respect to any Person, any capital stock of, or other ownership, membership, partnership, joint venture or equity interest in, such Person or any Indebtedness, securities, options, warrants, commitments, calls, subscriptions or other rights of, or granted by, such Person or any of its Affiliates that are convertible into, or are exercisable or exchangeable for, or giving any Person any right to acquire any such capital stock or other ownership, membership, partnership, joint venture or equity interest, in all cases, whether vested or unvested.
“
Equity Purchase Agreement
” means the equity purchase agreement in the form attached hereto as
Exhibit C
.
“
Equityholders’ Representative
” means each of the GenMar Representative and the Navig8 Representative.
“
ERISA
” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder.
“
ERISA Affiliate
” means, with respect to the Company, all employers (whether or not incorporated) that would be treated together with the Company or any of its Affiliates as a
9
“single employer” within the meaning of Section 414 of the Code and, with respect to Parent, all employers (whether or not incorporated) that would be treated together with Parent or any of its Affiliates as a “single employer” within the meaning of Section 414 of the Code.
“
Exchange Act
” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“
Exchange and Paying Agent
” means Computershare Shareowner Services LLC or such other exchange and paying agent as shall be reasonably acceptable to Parent and the Company.
“
Exchange and Paying Agent Agreement
” has the meaning specified in
Section 6.15(a)
.
“
Exchange and Paying Agent Fund
” has the meaning specified in
Section 3.2(a)(iv)
“
Exchange Ratio
” has the meaning specified in the definition of Per Share Merger Consideration.
“
Exempt Investor Certification
” means information provided by or on behalf of each Company Common Shareholder receiving Parent Common Stock pursuant to this Agreement, including but not limited to, the information referenced in Rule 506(c)(2)(ii) of Regulation D under the Securities Act, sufficient for Parent to determine, in its reasonable discretion and in consultation with the Company, that the offer and delivery of Parent Common Stock to such Company Common Shareholder pursuant to
Section 3.1(a)(iii)
complies with applicable Law.
“
Existing Policy
” has the meaning specified in
Section 6.6(e)
.
“
Expense Fund
” has the meaning specified in
Section 3.4(d)
.
“
Fair Market Value
” means, with respect to shares of Parent Common Stock, (a) if such shares are publicly traded, the average closing price of such shares on the five (5) trading days immediately preceding the date of determination of Fair Market Value and (b) if such shares are not publicly traded, the fair market value of such shares as determined in good faith by the Post-Closing Committee.
“
FCPA”
has the meaning specified in
Section 4.25
.
“
Financial Advisor
” means, with respect to the Company, Jefferies LLC, and, with respect to Parent, Evercore Partners, and, in the event of termination of the engagement of Jefferies LLC or Evercore Partners, as the case may be, a financial advisor of nationally recognized reputation.
“
Financing Agreements
” means the (i) the Parent Senior Secured Credit Facilities and (ii) the Note and Guarantee Agreement, dated as of March 28, 2014, among Parent, as issuer,
10
VLCC Acquisition I Corporation, as guarantor, and the purchasers from time to time party thereto.
“
Flag State
” means, with respect to each Company Vessel and each Parent Vessel, the relevant place of registration of that Company Vessel or Parent Vessel (including any place of primary or bareboat registration) as set out in the Company Disclosure Schedule or the Parent Disclosure Schedule (as the case may be).
“
Fundamental Company Representations
” means the representations and warranties set forth in
Section 4.1(a)
(Organization and Qualification of the Company),
Section 4.4
(Authority),
Section 4.8(b)
(Absence of Certain Changes, Events and Conditions) and
Section 4.20
(Brokers).
“
Fundamental Parent Representations
” means the representations and warranties set forth in
Section 5.1(a)
(Organization and Qualification of Parent and Merger Sub),
Section 5.4
(Authority),
Section 5.8(b)
(Absence of Certain Changes, Events and Conditions) and
Section 5.20
(Brokers).
“
GAAP
” means generally accepted accounting principles in the United States, consistently applied.
“
GenMar Representative
” means OCM Marine Holdings TP, L.P., a Cayman Islands exempted limited partnership,
provided
that, in the event such representative provides written notice of its intention to no longer serve as the GenMar Representative, such representative shall, upon the prior written consent of Parent, such consent not to be unreasonably withheld, be entitled to designate a successor GenMar Representative, which shall be effective upon such successor’s agreement to be bound by the terms of this Agreement.
“
Governmental Authority
” means any multinational, international, U.S., state, local or non-U.S. government or political subdivision thereof, or any agency or instrumentality of such government or political subdivision, or any self-regulated organization or other non-governmental regulatory authority or quasi-governmental authority (to the extent that the rules, regulations or orders of such organization or authority have the force of Law), or any arbitrator, court or tribunal of competent jurisdiction.
“
Hazardous Materials
” means any chemical, material, substance, waste, pollutant or contaminant that is prohibited, limited or regulated by or pursuant to any Environmental Law, Classification Society or Flag State to which liabilities, restrictions, remediation or standards of conduct are imposed pursuant to any Environmental Laws and the rules of any Classification Society or Flag State applicable to the Parent Vessels or the Company Vessels (as the case may be).
“
HSR Act
” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.
“
Immediate Family
” means, with respect to any individual, (i) each spouse, child (by blood or adoption) or grandchild of such individual or child (by blood or adoption) or grandchild of such individual’s spouse, (ii) each trust created solely for the benefit of one or
11
more of such individual and the Persons listed in clause (i) above, (iii) each custodian or guardian of any property of one or more of the Persons listed in clause (i) above, in his or her capacity as such custodian or guardian and (iv) each limited partnership or limited liability company controlled by such individual or one or more of the Persons listed in clause (i) above for the benefit of one or more of such Persons.
“
Indebtedness
” of any Person means, without duplication, (i) the principal, accreted value, accrued and unpaid interest, prepayment and redemption premiums or penalties or other payments (if any), unpaid fees or expenses, breakage costs and other monetary obligations in respect of (A) indebtedness of such Person for money borrowed and (B) indebtedness evidenced by notes, debentures, mortgages, bonds or other similar instruments or securities for the payment of which such Person is responsible or liable; (ii) all obligations of such Person issued or assumed as the deferred purchase price of property or services, all conditional sale obligations of such Person and all obligations of such Person under any title retention agreement (but excluding trade accounts payable and other accrued current liabilities arising in the Ordinary Course of Business (other than the current liability portion of any indebtedness for borrowed money)); (iii) all obligations of such Person issued or assumed to pay a specified purchase price for goods or services, whether or not delivered or accepted, i.e., take-or-pay and similar obligations; (iv) all obligations of such Person under leases required to be capitalized in accordance with GAAP; (v) all obligations of such Person for the reimbursement of any obligor on any letter of credit, banker’s acceptance or similar credit transaction; (vi) all obligations of such Person under interest rate or currency swap transactions, collars, caps or similar hedging obligations (valued at the termination value thereof); (vii) the liquidation value, accrued and unpaid dividends, prepayment or redemption premiums and penalties (if any), unpaid fees or expenses and other monetary obligations in respect of any redeemable preferred stock of such Person; (viii) all obligations of the type referred to in clauses (i) through (vii) of any Persons for the payment of which such Person is responsible or liable, directly or indirectly, as obligor, guarantor, surety or otherwise, including guarantees of such obligations; and (ix) all obligations of the type referred to in clauses (i) through (viii) of other Persons secured by (or for which the holder of such obligations has an existing right, contingent or otherwise, to be secured by) any Lien on any property or asset of such Person (whether or not such obligation is assumed by such Person).
“
Indemnified Party
” has the meaning specified in
Section 9.5
.
“
Indemnifying Party
” has the meaning specified in
Section 9.5
.
“
Insurance Cap
” has the meaning specified in
Section 6.6(e).
“
Intellectual Property Rights
” means all rights in to and under patents, trademarks, inventions, computer software and programs, trade secrets, know-how, confidential information, trade names, service marks, logos, designs, copyrights, social media identifiers, internet domain names, web sites, URLs, and other proprietary intellectual property rights, in each case, whether registered or unregistered, and goodwill associated with any of the foregoing.
“
Knowledge
” means (i) in the case of the Company, the actual knowledge of Gary Brocklesby, Nicolas Busch, Daniel Chu, Jason Klopfer and Geir Karlsen, in each case, without
12
obligation of inquiry, and (ii) in the case of Parent, the actual knowledge of Leo Vrondissis, Peter Georgiopoulos, John Tavlarios and Milt Gonzalez, in each case, without obligation of inquiry.
“
Law
” means any state, local, U.S. or non-U.S. law (including common law, foreign law and supranational law), statute, ordinance, constitution, convention, code, treaty, rule, regulation, decree and Order or other similar requirement of any Governmental Authority or any rule, protocol, guideline or regulation of a Classification Society or Flag State which has a binding effect in relation to a Company Vessel or a Parent Vessel, as applicable.
“
Letter of Transmittal
” has the meaning specified in
Section 3.2(a)(v)
.
“
Liability
” has the meaning specified in
Section 4.7
.
“
Lien
” means any charge, claim, community property interest, pledge, condition, equitable interest, lien (statutory or other), option, security interest, mortgage, hypothecation, deed of trust, lease, option, easement, encroachment, servitude, any conditional sale or other title retention agreement, preference, priority, assignment, right of first refusal, or encumbrance or restriction of any kind, including any restriction on use, voting, transfer, receipt of income or exercise of any other attribute of ownership, whether incurred voluntarily or arising under any applicable Law.
“
Loss
” means any and all losses, claims, assessments, demands, damages, liabilities, deficiencies, Actions, judgments, charges, amounts paid in settlement, interest, awards, obligations, penalties, fees, fines, costs or expenses of whatever kind, and reasonable attorneys’ and accounting fees and the cost of enforcing any right to indemnification hereunder and the cost of pursuing any insurance providers;
provided
, that “Losses” shall not include (i) any punitive, special or exemplary damages, (ii) lost profits, consequential or incidental damages except, in each case, to the extent reasonable foreseeable or (iii) damages that are otherwise remote, speculative or not reasonably foreseeable (except, in the case of clauses (i) through (iii), to the extent such damages are paid, payable, awarded or incurred in connection with a Third Party Claim);
provided
,
further
, that once a Loss is either agreed to by an Indemnifying Party or finally determined to be payable pursuant to
Article IX
, Parent shall pay the reasonable out of pocket expenses of the Indemnified Party.
“
Maritime Guidelines
” means any United States, international or non-United States (including the Marshall Islands) rule, code of practice, convention, protocol, guideline or similar requirement or restriction concerning or relating to a Company Vessel or Parent Vessel, as applicable, and to which a Company Vessel or Parent Vessel, as applicable, is subject and required to comply with, imposed, published or promulgated by any relevant Governmental Authority, the International Maritime Organization, such Company Vessel’s or Parent Vessel’s, as applicable, Classification Society or the insurer(s) of such Company Vessel or Parent Vessel, as applicable.
“
Merger
” has the meaning specified in
Recitals
.
“
Merger Sub
” has the meaning specified in
Preamble
.
13
“
Minimum Loss Amount
” has the meaning specified in
Section 9.4(b)
.
“
Navig8 Representative
” means Shareholder Representative Services LLC,
provided
that, in the event such representative provides written notice to Parent and the Company Common Shareholders of its intention to no longer serve as the Navig8 Representative, the holders of a majority of the shares of Company Common Stock immediately prior to the Effective Time, excluding any Shareholders that exercised dissenters rights as set forth in
Section 3.1(c)
, shall, upon the prior written consent of Parent, such consent not to be unreasonably withheld, be entitled to designate by written notice a successor Navig8 Representative, which shall be effective upon such successor’s agreement to be bound by the terms of this Agreement.
“
New Parent Employee Plan
” means the General Maritime Corporation 2015 Stock Incentive Plan.
“
Newbuilding Contract
” means each Company Newbuilding Contract and each Parent Newbuilding Contract.
“
Newbuildings
” means vessels contracted to be constructed, under construction or newly constructed for, but not yet delivered to, (a) the Company or its Subsidiaries or (b) Parent or any of its Subsidiaries, as applicable, pursuant to a Newbuilding Contract.
“
NOTC
” means the Norwegian Over the Counter Market.
“
OCM Bunker Contracts
” mean those certain contracts and invoices, originally entered by Parent and/or certain of its Subsidiaries with certain Persons which were assigned (or the rights under which were assigned) by those Persons to Oaktree Principal Bunker Holdings Ltd., during the period between August 2013 and December 2013.
“
Option Agreement
” has the meaning specified in
Section 3.1(b)
.
“
Order
” means any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority.
“
Ordinary Course of Business
” means ordinary course of business consistent with past practice.
“
Outside Date
” has the meaning specified in
Section 8.1(a)
.
“
Parent
” has the meaning specified in
Preamble
.
“
Parent Acquisition Proposal
” means, any offer, proposal, inquiry or indication of interest, or any public announcement of intention to enter into any agreement or of (or intention to make) any offer, proposal, inquiry or indication of interest, by a Third Party relating to any transaction or series of transactions involving (i) any sale, lease, exchange, mortgage, transfer, license or other disposition, direct or indirect, of (A) 15% or more of the consolidated assets of Parent and its Subsidiaries or assets of Parent and/or any of its Subsidiaries that represented, individually or in the aggregate, 15% or more of the consolidated revenues of the Parent for the
14
then most recently completed four quarter period, or (B) 15% or more of the total outstanding equity or voting securities of Parent, in each case of clauses (A) and (B) including by way of tender offer (including a self-tender offer) or exchange offer, (ii) a merger, consolidation, spin-off, share exchange (including a split-off), business combination, sale of substantially all the assets, reorganization, recapitalization, liquidation, extraordinary dividend, dissolution or other similar transaction involving Parent or any of its Subsidiaries representing (A) 15% or more of the consolidated assets of Parent and its Subsidiaries or assets of Parent and/or any of its Subsidiaries that represented, individually or in the aggregate, 15% or more of the consolidated revenues of Parent for the then most recently completed four quarter period or (B) 15% or more of the total outstanding equity or voting securities of Parent, (iii) any sale, lease, exchange, mortgage, lien, transfer, license or other disposition, direct or indirect, of any Newbuilding Contract or any interest, right or benefit therein,
provided
, that a proposal related to any of the transactions set forth in this subsection
(iii)
shall not be deemed a Parent Acquisition Proposal if Parent obtains the prior written consent of the Company to engage in any action otherwise prohibited pursuant to
Section 6.11(a)
, such consent not to be unreasonably withheld or (iv) any other transaction or series of transactions having a similar effect to those described in clauses (i), (ii) and (iii);
provided however
, that any sale, in an underwritten public offering registered under the Securities Act, of the Parent Common Stock (to the extent contemplated by and in compliance with
Section 6.17
) shall not be deemed to be a “Parent Acquisition Proposal.”
“
Parent Adverse Recommendation Change
” has the meaning specified in
Section 6.11(a)
.
“
Parent Audited Financial Statements
” has the meaning specified in
Section 5.6(a)
.
“
Parent Balance Sheet
” has the meaning specified in
Section 5.6(a)
.
“
Parent Balance Sheet Date
” has the meaning specified in
Section 5.6(a)
.
“
Parent Board
” means the board of directors of Parent.
“
Parent Board Recommendation
” has the meaning specified in
Section 5.4(a)
.
“
Parent Charter Documents
” has the meaning specified in
Section 5.5(a)
.
“
Parent Class A Common Stock
” has the meaning specified in
Section 5.2(a)
.
“
Parent Class B Common Stock
” has the meaning specified in
Section 5.2(a)
.
“
Parent Common Stock
” has the meaning specified in
Section 5.2(a)
.
“
Parent Disclosure Schedules
” mean in the disclosure schedules delivered by Parent to the Company on the date of this Agreement.
“
Parent Emergence Date
” has the meaning specified in
Section 5.2(h)
.
“
Parent Employee Plans
” has the meaning specified in
Section 5.13(a)
.
15
“
Parent Fairness Opinion
” has the meaning specified in
Section 5.26
.
“
Parent Financial Statements
” has the meaning specified in
Section 5.6(a)
.
“
Parent Information Statement
” has the meaning specified in
Section 6.13(a)
.
“
Parent Insurance Policies
” has the meaning specified in
Section 5.17(a)
.
“
Parent Interim Financial Statements
” has the meaning specified in
Section 5.6(a)
.
“
Parent-Leased Real Property
” has the meaning specified in
Section 5.22(b)
.
“
Parent Material Adverse Effect
” means any change, event, effect, circumstance, or occurrence that, individually or in the aggregate with all such other changes, events, effects, circumstances, occurrences, has had, or would reasonably be expected to have, a material adverse effect on (i) the business, assets (including Parent Vessels and Parent Newbuilding Contracts), financial condition or results of operations of Parent and its Subsidiaries, taken as a whole, or (ii) the ability of Parent to consummate the transactions contemplated by this Agreement or materially delay the ability of the Parent to consummate the transactions contemplated hereby, including the Merger;
provided
, that the following shall not be deemed to constitute a “Parent Material Adverse Effect”: any change, event, effect, circumstance or occurrence to the extent caused by or resulting from (A) changes, events or circumstances in prevailing economic, regulatory, political or market conditions in the United States or any other jurisdiction in which Parent and its Subsidiaries, taken as a whole, have substantial business operations, (B) changes, events or circumstances occurring after the date hereof, affecting the industries in which the Company and Parent operate generally, (C) changes announced or effective after the date hereof in GAAP applicable to Parent and its Subsidiaries, (D) changes announced or effective after the date hereof, in applicable Laws, (E) the announcement and pendency of this Agreement and the transactions contemplated hereby, (F) any outbreak of major hostilities in which the United States is involved or any act of terrorism within the United States or directed against its facilities or citizens wherever located; (G) any other acts of war, sabotage, terrorism or natural disasters, or (H) changes in the global financial or securities markets or general global economic or political conditions;
provided
, that, with respect to a matter described in any of the foregoing clauses (A) through (D), and (F) through (H), the effect of any such matter shall only be excluded to the extent that such matter does not have, or would not reasonably be expected to have, a disproportionate effect on the Parent or its Subsidiaries, taken as a whole, relative to other Persons operating in the industry in which the Parent and its Subsidiaries operate. For the avoidance of doubt, the parties agree that the terms “material,” “materially” or “materiality” as used in this Agreement with an initial lower case “m” shall have their respective customary and ordinary meanings, without regard to the meanings ascribed to Parent Material Adverse Effect in the prior sentence of this paragraph.
“
Parent Material Contracts
” has the meaning specified in
Section 5.10(a)
.
“
Parent Meeting
” has the meaning specified in
Section 6.13(c)
.
“
Parent Newbuilding Contract
” means each of the Contracts on
Exhibit D
.
16
“
Parent Notice Period
” has the meaning specified in
Section 6.11(b)(ii)
.
“
Parent Personal Property
” has the meaning specified in
Section 5.23
.
“
Parent Preferred Stock
” has the meaning specified in
Section 5.2(a)
.
“
Parent Real Property Leases
” has the meaning specified in
Section 5.22(b)
.
“
Parent S-1
” means the registration statement on Form S-1 submitted by Parent to the SEC on a confidential basis on November 12, 2014 and all amendments thereto submitted by Parent to the SEC on a confidential basis.
“
Parent Senior Secured Credit Facilities
” means the Indebtedness of Parent incurred pursuant to (i) that certain Third Amended and Restated Credit Agreement, dated as of May 17, 2012, (as amended, modified and/or supplemented) by and among Parent, General Maritime Subsidiary II Corporation, General Maritime Subsidiary Corporation as borrower, Arlington Tankers Ltd., each Subsidiary Guarantor (as defined therein), the Lenders (as defined therein) and Nordea Bank Finland Plc. as Administrative Agent and (ii) that certain Second Amended and Restated Credit Agreement, dated as of May 17, 2012, (as amended, modified and/or supplemented) by and among Parent, General Maritime Subsidiary Corporation, General Maritime Subsidiary II Corporation, as borrower, Arlington Tankers Ltd., each Subsidiary Guarantor (as defined therein), the Lenders (as defined therein) and Nordea Bank Finland Plc. as Administrative Agent.
“
Parent Share Conversion Amount
” means $14.348.
“
Parent Shareholder Approval
” has the meaning specified in
Section 5.4(a)
.
“
Parent Shareholder Indemnitees
” has the meaning specified in
Section 9.2
.
“
Parent Shareholder Pro Rata Share
” means 52.55%.
“
Parent Shareholder Support Agreement
” has the meaning specified in the Recitals.
“
Parent Shareholders
” mean the holders of the shares of Parent Common Stock.
“
Parent Specified Termination
” has the meaning specified in
Section 8.3(c)
.
“
Parent Stock Options
” means each outstanding option to purchase Parent Common Stock.
“
Parent Stock Plans
” has the meaning specified in
Section 5.2(b)
.
“
Parent Termination Fee
” has the meaning specified in
Section 8.3(b)
.
“
Parent Vessels
” means a vessel owned by Parent or any Subsidiary of Parent.
“
Parent Voting Proposal
” has the meaning specified in
Section 6.13(c)
.
17
“
Parent Warrant
” means a warrant of Parent exercisable into shares of Parent Common Stock.
“
Per Share Merger Consideration
” means 0.8947 shares of Parent Common Stock for each share of Company Common Stock (the “
Exchange Ratio
”) issued by Parent as consideration for such share of Company Common Stock,
provided
, that with respect to any Cashed Out Company Common Shareholder, the Per Share Merger Consideration for each share of Company Common Stock held by such Cashed Out Company Common Shareholder shall be the Parent Share Conversion Amount
multiplied
by the Exchange Ratio.
“
Permits
” means all permits, licenses, franchises, approvals, authorizations, consents, registrations, certificates and similar rights, and any extension, modification, amendment or waiver of the foregoing, obtained, or required to be obtained, from Governmental Authorities.
“
Permitted Liens
” means: (a) Liens for Taxes and other governmental assessments, or similar charges, not yet due and payable or the amount or validity of which is being contested in good faith by appropriate proceedings (
provided
, that any such contested amounts have been reserved against on the Company Financial Statements or Parent Financial Statements, as applicable, in accordance with GAAP), (b) mechanics’, materialmen’s, carriers’, workers’, repairers’ and statutory liens arising or incurred in the Ordinary Course of Business that, other than in connection with the Newbuilding Contracts, are not material to the business, operations and financial condition of the Company, or Parent, as applicable, that do not result from a breach, default or violation by the Company, Parent or any of their Subsidiaries, as applicable, and which are not yet due and payable, (c) zoning, entitlement and other land use and environmental regulations by Governmental Authorities;
provided
, that such regulations have not been violated, (d) such easements, covenants, conditions, restrictions, agreements, states of fact, rights of way and other matters or encumbrances disclosed in policies of title insurance which have been made available to the Company or Parent, as applicable, and which do not, individually or in the aggregate, impair the use or value of the property, (e) purchase money Liens and Liens securing rental payments under capital lease arrangements, (f) Liens that will be released and discharged at or prior to the Closing, (g) maritime Liens over a Company Vessel or Parent Vessel, as applicable, arising in the Ordinary Course of Business that, individually or in the aggregate, do not and would not reasonably be expected to materially detract from the present value, or materially impair or interfere with the present use, or result in the forfeiture or sale, of the relevant Company Vessel or Parent Vessel, as applicable, (h) Liens arising or incurred pursuant to or in connection with the Parent Senior Secured Credit Facilities, (i) Liens permitted to be incurred pursuant to the Parent Senior Secured Credit Facilities, (j) Liens that have been reserved against on the Company Financial Statements or Parent Financial Statements, as applicable, in accordance with GAAP, (k) Liens that, individually or in the aggregate, do not and would not reasonably be expected to materially detract from the present value, or materially impair or interfere with the present use, or result in the forfeiture or sale, of the property or asset subject thereto or affected thereby and (l) restrictions on transfer of securities under applicable securities Laws or under the Support Agreement or the Shareholder Agreement;
provided
,
however
, that, with respect to the Company and its Subsidiaries, no Liens over the Company Newbuilding Contracts, the vessels related thereto, or the Equity Interests of direct or indirect buyers thereof shall be deemed to be “Permitted Liens.”
18
“
Person
” means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization, Governmental Authority or other entity.
“
Post-Closing Committee
” means a committee of the Parent Board consisting of one individual who was a member of the Company Board prior to the Closing, one individual who was a member of the Parent Board prior to the Closing, and one representative from BlueMountain Capital Management, LLC,
provided
, that in the event that any of the foregoing directors resigns, fails to be re-elected as a director or is otherwise removed as a director, the remaining members of such committee shall appoint a replacement member of such committee from the members of the Company Board prior to the Closing, members of the Parent Board prior to the Closing, or a designee of BlueMountain Capital Management, LLC, as the case may be.
“
Registration Rights Agreement
” means the registration rights agreement to be entered into at Closing by Parent and certain shareholders of Parent in substantially the form attached hereto as
Exhibit E
with such changes thereto as are agreed to by Parent and the Company.
“
Registration Statement
” means any registration statement on Form S-1 that may be filed by Parent pursuant to which any shares of Parent Common Stock are issued.
“
Release
” means any actual or threatened release, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, abandonment, disposing or allowing to escape or migrate into or through the environment (including, without limitation, ambient air (indoor or outdoor), surface water, groundwater, land surface or subsurface strata or within any building, structure, facility or fixture).
“
Representative
” means, with respect to any Person, any officer, director, principal, partner, manager, member, attorney, accountant, agent, employee, consultant, financial advisor or other authorized representative of such Person.
“
Representative Losses
” has the meaning specified in
Section 3.4(c)
.
“
SEC
” means the United States Securities and Exchange Commission.
“
Securities Act
” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“
Shareholder Agreement
” means the shareholder agreement to be entered into at Closing by Parent and certain shareholders of Parent in substantially the form attached hereto as
Exhibit F
, with such changes thereto as are agreed to by Parent and the Company.
“
Specified Company Shares
” means any (i) shares of Company Common Stock to be cancelled in accordance with
Section 3.1(a)(ii)
and (ii) Dissenting Shares.
“
Specified Termination
” means a Company Specified Termination or a Parent Specified Termination.
19
“
Subsidiary
” with respect to any party, any corporation, partnership, trust, limited liability company or other entity or business enterprise in which such party (or another Subsidiary of such party) holds, directly or indirectly, stock or other ownership interests representing (a) more than 50% of the voting power of all outstanding stock or other ownership interests of such entity or (b) the right to receive more than 50% of the net assets of such entity available for distribution to the holders of outstanding stock or ownership interests upon a liquidation or dissolution of such entity.
“
Superior Proposal
” means a bona fide, unsolicited written Company Acquisition Proposal or a bona fide, unsolicited written Parent Acquisition Proposal, as applicable (
provided
, that, for the purposes of this definition, references to “15%” in each definition of Company Acquisition Proposal and Parent Acquisition Proposal shall be deemed replaced with references to “50%”) that is not preceded by a breach by the Company or Parent of
Section 6.10
or
Section 6.11
, respectively, and is not otherwise received in violation of
Section 6.10
or
Section 6.11
, respectively, and that, in each case, (i) is not subject to any financing condition and for which financing has been fully committed or is on hand, (ii) the Company Board or a committee thereof, in the case of a Company Acquisition Proposal, or Parent Board or a committee thereof, in the case of a Parent Acquisition Proposal, has determined in good faith, after considering the advice of its outside counsel and its Financial Advisor, is reasonably expected to be consummated in accordance with its terms, taking into account all legal, financial, regulatory, timing and other aspects of the proposal and the identity of the Person making the Company Acquisition Proposal or Parent Acquisition Proposal, as applicable, and (iii) the Company Board or such committee thereof, in the case of a Company Acquisition Proposal, or Parent Board or such committee thereof, in the case of a Parent Acquisition Proposal, has determined in good faith, after considering the advice of its outside legal counsel and its Financial Advisor, would result in a transaction more favorable, after taking into consideration, among other things, all of the terms, conditions, impacts and all legal, financial, regulatory, timing, fiduciary and other aspects of such Company Acquisition Proposal or Parent Acquisition Proposal, as applicable, and this Agreement, including financing, regulatory approvals, shareholder litigation, termination fees (including the Company Termination Fee or Parent Termination Fee, as the case may be), expense reimbursement provisions and the expected timing and risk and likelihood of consummation and other events or circumstances beyond the control of the party invoking the condition, to the Company’s shareholders (other than the Parent and its Affiliates), in the case of a Company Acquisition Proposal, or to the Parent’s shareholders (other than the Company and its Affiliates), in the case of a Parent Acquisition Proposal, than the Merger provided hereunder (after taking into account and giving effect to any adjustments or amendment to this Agreement proposed by Parent or the Company, as the case may be). For the avoidance of doubt, in no event shall an actual or potential underwritten public offering by either of the Company or Parent be deemed a Superior Proposal.
“
Support Agreement
” has the meaning specified in the Recitals.
“
Surviving Corporation
” has the meaning specified in
Section 2.1
.
“
Tax Return
” means any return, report, claim for refund, information return or statement or other similar document required to be filed with any Governmental Authority with
20
respect to Taxes, including any schedule or attachment thereto, and including any amendment thereof.
“
Taxes
” means all federal, state, local or non-U.S. taxes or customs, duties, tariffs and similar charges imposed by a Governmental Authority, including all income, gross receipts, capital, sales, use, ad valorem, value added, transfer, franchise, profits, inventory, capital stock, license, withholding, payroll, employment, social security, unemployment, excise, severance, stamp, occupation, property and estimated taxes, all interest, penalties, fines, and additions to tax imposed by any Governmental Authority in connection with any of the foregoing and all Liabilities for any of the foregoing amounts under applicable Law (including Treasury Regulation Section 1.1502-6 and similar provisions of state, local or non-U.S. Law), as a transferee or successor, by Contract or otherwise.
“
Third Party
” means any Person, other than (a) Parent or its Subsidiaries or (b) the Company or its Subsidiaries.
“
Third Party Claim
” has the meaning specified in
Section 9.5(a)
.
“
Threshold Amount
” has the meaning specified in
Section 9.4(b)
.
“
Voting Debt
” means Indebtedness (i) having the right to vote on any matters on which shareholders or equityholders of the Company or any of its Subsidiaries may vote (or which is convertible into, or exchangeable for, securities having such right), or (ii) the value of which is directly based upon or derived from the Equity Interests of the Company or any of its Subsidiaries, are issued or outstanding.
“
Willful Breach
” means a material breach of any material representation, warranty or covenant or other agreement set forth in this Agreement that is a consequence of an act or failure to act by the other party with the actual knowledge that the taking of such act or failure to take such act would cause a breach of this Agreement.
(b)
Other Definitional and Interpretive Matters
. Unless otherwise expressly provided herein, for purposes of this Agreement, the following rules of interpretation shall apply:
(i)
Calculation of Time Period
. When calculating the period of time
before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the starting reference date in calculating such period shall be excluded, but the ending date in calculating such period shall be included.
(ii)
Dollars
. Any reference in this Agreement to Dollars or $ shall
mean U.S. dollars.
(iii)
Exhibits/Schedules
. The Exhibits to this Agreement, the Company Disclosure Schedules and the Parent Disclosure Schedules are hereby incorporated and made a part hereof and are an integral part of this Agreement. The Company or Parent may have, at its option, included in the Company Disclosure Schedules or in the Parent Disclosure Schedule, as applicable, items that are not material in order to avoid any misunderstanding, and such
21
inclusion, or any references to dollar amounts, shall not be deemed to be an acknowledgement or representation that such items are material, to establish any standard of materiality or to define further the meaning of such terms for purposes of this Agreement or otherwise. Any capitalized terms used in any Exhibit, Company Disclosure Schedules or Parent Disclosure Schedules but not otherwise defined therein shall be defined as set forth in this Agreement.
(iv)
Gender and Number
. Any reference in this Agreement to gender shall include all genders, and words imparting the singular number only shall include the plural and vice versa.
(v)
Headings
. The provision of a Table of Contents, the division of
this Agreement into Articles, Sections and other subdivisions and the insertion of headings are for convenience of reference only and shall not affect or be utilized in construing or interpreting this Agreement. All references in this Agreement to any “Section” are to the corresponding Section of this Agreement unless otherwise specified.
(vi)
Herein
. The words such as “herein,” “hereinafter,” “hereof,” and “hereunder” refer to this Agreement as a whole and not merely to a subdivision in which such words appear unless the context otherwise requires.
(vii)
Including
. The word “including” or any variation thereof means “including, without limitation” and shall not be construed to limit any general statement that it follows to the specific or similar items or matters immediately following it.
(viii)
Or
. The word “or” is not exclusive, unless the context otherwise requires.
(c)
The parties hereto have participated jointly in the negotiation and drafting of this Agreement and, in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as jointly drafted by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement.
ARTICLE II
THE MERGER
2.1
The Merger
. Upon the terms and subject to the conditions set forth in this Agreement and in accordance with the BCA, Merger Sub shall be merged with and into the Company at the Effective Time. Following the Effective Time, the separate corporate existence of Merger Sub shall cease, and the Company shall continue as the surviving corporation in the Merger (the “
Surviving Corporation
”) and shall succeed to and assume all the rights and obligations of Merger Sub in accordance with the BCA.
2.2
Closing
. Subject to the satisfaction of the conditions set forth in
Article VII
(or, in accordance with
Article VII
, the written waiver thereof by the party entitled to waive any such condition), the closing of the Merger (the “
Closing
”) will take place at 9:00 a.m. (New York City time) at the offices of Kramer Levin Naftalis & Frankel LLP, 1177 Avenue of the Americas, New York, New York 10036 on a date to be specified by Parent and the Company, which shall
22
be no later than the fifth Business Day after satisfaction or waiver of each condition to the Closing set forth in
Article VII
(other than those conditions that by their terms are to be satisfied at the Closing, but subject to the satisfaction or waiver of those conditions) unless another time, date and/or place is agreed to in writing by the parties hereto. The date on which the Closing occurs is referred to in this Agreement as the “
Closing Date
.”
2.3
Effective Time
. Subject to the provisions of this Agreement, the parties shall cause the Merger to be consummated by filing with the Registrar of Corporations of the Republic of the Marshall Islands, articles of merger (the “
Articles of Merger
”) executed in accordance with the relevant provisions of the BCA, and, at the Closing, shall make all other filings or recordings required under the BCA with respect to the Merger. The Merger shall become effective at such time as the Articles of Merger is duly filed with the Registrar of Corporations of the Republic of the Marshall Islands, or at such other time as Parent and the Company shall agree and shall specify in the Articles of Merger (the time the Merger becomes effective being, the “
Effective Time
”).
2.4
Effects of the Merger
. At the Effective Time, the effects of the Merger shall be as provided in this Agreement, the BCA and the Articles of Merger.
2.5
Articles of Incorporation and Bylaws; Name of Surviving Corporation
. Effective upon the Effective Time, subject to
Section 6.6(b)
, the articles of incorporation and bylaws of Merger Sub, as in effect immediately prior to the Effective Time, shall be the articles of incorporation and the bylaws of the Surviving Corporation until amended in accordance with applicable Law. The name of the Surviving Corporation upon the Merger shall be “Gener8 Maritime Subsidiary Inc.”. Effective upon the Effective Time, subject to
Section 6.6(b)
, the A&R Governing Documents shall be the articles of incorporation and bylaws of Parent.
2.6
Directors and Officers of Surviving Corporation
. The directors and officers of Merger Sub as of immediately prior to the Effective Time shall be the initial directors and officers, respectively, of the Surviving Corporation and shall hold office in accordance with the articles of incorporation and bylaws of the Surviving Corporation until their successors are duly elected or appointed and qualified or until their earlier death, resignation or removal.
2.7
Name of Parent; Directors of Parent
. At the Closing, Parent shall cause the name of Parent to be changed to “Gener8 Maritime, Inc.” and shall cause Parent’s articles of incorporation and bylaws to be amended to effectuate such name change. Parent shall cause the Parent Board to consist of seven (7) members who shall initially be the individuals set forth on
Exhibit G
(or if any such individual is unable or unwilling to serve at the time of Closing, a replacement individual selected by the Person or Persons listed next to such individual under the column titled “Designating Person or Persons”), and to effectuate the other terms of the Shareholder Agreement required to be implemented by the Company in accordance with the terms and conditions thereof.
2.8
Tax Consequences
. It is intended by the parties hereto that the Merger shall constitute a “reorganization” within the meaning of Section 368(a) of the Code. The parties hereto hereby adopt this Agreement as a “plan of reorganization” within the meaning of Sections 354 and 361 of the Code and Sections 1.368-2(g) and 1.368-3(a) of the Treasury Regulations and
23
intend that any issuance of stock to the Company Shareholder Indemnitees under
Article IX
be pursuant to the plan of reorganization and part of the merger consideration paid to Company Common Shareholders.
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS
3.1
Effects of the Merger on Capital Stock
(a)
(a)
Effect on Capital Stock
. At the Effective Time, by virtue of the Merger and without any action on the part of any Company Shareholder or any holder of shares of capital stock of Merger Sub:
(i)
Capital Stock of Merger Sub
. Each issued and outstanding share of common stock, par value $0.01 per share, of Merger Sub shall automatically be converted into and become one (1) validly issued, fully paid and nonassessable share of common stock, par value $0.01 per share, of the Surviving Corporation.
(ii)
Cancellation and Conversion of Certain Company Common Stock
. Each share of Company Common Stock that is owned by (A) the Company or its Subsidiaries or (B) Parent, Merger Sub or their respective Subsidiaries shall, automatically be canceled and retired and shall cease to exist, and no consideration shall be delivered in exchange therefor.
(iii)
Conversion of Company Common Stock
. Each issued and outstanding share of Company Common Stock (other than (A) the Specified Company Shares and (B) those shares of Company Common Stock purchased for cash pursuant to
Section 3.1(a)(iv)
) shall be converted into and shall thereafter represent the right of the holder thereof to receive the Per Share Merger Consideration, plus any amounts payable to such holder in accordance with
Article IX
. At the Effective Time, all shares of Company Common Stock issued and outstanding immediately prior to the Effective Time shall no longer be outstanding and shall automatically be canceled and retired and shall cease to exist, and each Company Common Shareholder shall cease to have any rights with respect to such Company Common Stock except the right to receive the Per Share Merger Consideration and any amounts payable to such holder in accordance with
Article IX
.
(iv)
The offer and issuance of shares of Parent Common Stock shall be conducted pursuant to an exemption from registration under the Securities Act, including, without limitation, pursuant to Section 4(a)(2) of the Securities Act, Regulation D under the Securities Act, Rule 506(c) promulgated thereunder and Regulation S under the Securities Act or other available exemption from registration pursuant to the Securities Act;
provided
, that notwithstanding anything to the contrary in this Agreement, if the offer and issuance of shares of Parent Common Stock to any Company Common Shareholder cannot be effected in compliance with an applicable exemption under the Securities Act, then Merger Sub shall purchase all shares held by such Company Common Shareholder for an amount of cash determined by multiplying the number of shares of Parent Common Stock that would have been issued to such Company
24
Common Shareholder pursuant to
Section 3.1(a)(iii)
(but for the effect of this
Section 3.1(a)(iv)
) by the Parent Share Conversion Amount. Whether the offer and issuance of shares of Parent Common Stock can be conducted in accordance with any exemption from registration under the Securities Act, including pursuant to Section 4(a)(2) of or Regulation D and Regulation S under the Securities Act, shall be determined based upon the Exempt Investor Certification in the reasonable discretion of Parent in consultation with the Company.
(b)
Treatment of Company Warrants and Company Stock Options
. Contemporaneously with the execution of this Agreement, Parent, the Company and the holders of the Company Warrants have entered into that certain Amended and Restated Warrant Agreement, pursuant to which the Company Warrants shall, effective as of the Closing, be converted into warrants to purchase shares of Parent Common Stock under the terms, and subject to the conditions, set forth therein. Each option to acquire Company Common Stock (each, a “
Company Stock Option
”) that is outstanding immediately prior to the Effective Time (whether vested or unvested) shall, as of the Effective Time, cease to represent an option to acquire Company Common Stock and shall be converted, at the Effective Time, into an option to acquire that number of shares of Parent Common Stock equal to the product obtained by multiplying (i) the number of shares of Company Common Stock subject to such Company Stock Option immediately prior to the Effective Time by (ii) the Exchange Ratio, at an exercise price per share equal to the quotient obtained by dividing (A) the per share exercise price specified in such Company Stock Option immediately prior to the Effective Time by (B) the Exchange Ratio;
provided
, however, that the exercise price and the number of shares of shares of Parent Common Stock purchasable pursuant to such Company Stock Option will be determined in a manner consistent with the requirements of Section 409A of the Code. The parties intend to treat any Company Stock Options issued pursuant to that certain option agreement by and between the Company and L. Spencer Wells (the “
Option Agreement
”) as exercisable through July 8, 2017, notwithstanding any term of the Option Agreement to the contrary, and hereby agree to take any and all actions necessary to effectuate such treatment, including, but not limited to, amending the Option Agreement or by resolution of the Company Board and Parent Board with respect to such treatment. Except as specifically provided above, following the Effective Time, each Company Stock Option shall continue to be governed by the same terms and conditions (including vesting and exercisability terms) as were applicable to such Company Stock Option immediately prior to the Effective Time.
(c)
Dissenters Rights
. Notwithstanding anything in this Agreement to the contrary, shares (the “
Dissenting Shares
”) of Company Common Stock issued and outstanding immediately prior to the Effective Time that are held by any holder who is entitled to object and properly objects to the proposed corporate action and a demand for payment of such shares in accordance with Sections 100 and 101 of the BCA shall not be converted into the right to receive the consideration provided in
Section 3.1(a)(iii)
, but instead such holder shall be entitled to such rights as are granted by the BCA to a holder of Dissenting Shares. At the Effective Time, all Dissenting Shares shall no longer be outstanding and shall automatically be canceled and shall cease to exist, and each holder of Dissenting Shares shall cease to have any rights with respect thereto, except such rights as are granted by the BCA to a holder of Dissenting Shares. Notwithstanding the foregoing, if any such holder shall fail to perfect or otherwise shall effectively waive, withdraw or lose the
25
right to payment as a holder of Dissenting Shares under the BCA with respect to such shares or a court of competent jurisdiction shall determine that such holder is not entitled to the relief provided by the BCA, then the right of such holder to be paid under the BCA shall cease and each such Dissenting Share shall be deemed to have been converted at the Effective Time into, and shall have become, the right to receive the consideration provided in
Section 3.1(a)(iii)
. The Company shall deliver prompt notice to Parent of any demands for payment or appraisal of any shares of Company Common Stock, any withdrawal of any such demand and any other demand, notice or instrument delivered to the Company prior to the Effective Time pursuant to the BCA that relate to such demand and Parent shall have the right to participate in all negotiations and proceedings with respect to such demands. Prior to the Effective Time, the Company shall not, without the prior written consent of Parent, make any payment with respect to, or settle or offer to settle, any such demands, or agree to do any of the foregoing.
3.2
Merger Consideration
.
(a)
Exchange and Payment of Merger Consideration
.
(i)
Exchange and Paying Agent; Exchange and Paying Agent Fund
. At the Effective Time, Parent shall deposit, or shall cause to be deposited, with the Exchange and Paying Agent, in trust for the benefit of Company Common Shareholders (x) the Aggregate Stock Consideration plus (y) the Aggregate Cash Consideration. For the purpose of calculating the Aggregate Stock Consideration and the Aggregate Cash Consideration to be deposited at the Effective Time pursuant to this
Section 3.2(a)(i)
, Parent shall assume that Cashed Out Company Common Shareholders are the beneficial owners of one percent (1%) of the shares of Company Common Stock.
(ii)
In the event that, after the Effective Time, Parent determines that Cashed Out Company Common Shareholders were the beneficial owners of more than one percent (1%) of the shares of Company Common Stock at the Effective Time, (A) Parent shall promptly deposit to the Exchange and Paying Agent Fund an additional amount of cash in lieu of Parent Common Stock such that the total amount of cash deposited by Parent pursuant to
Section 3.2(a)(i)
and this
Section 3.2(a)(ii)
is sufficient to pay the amounts due to each Cashed Out Company Common Shareholder pursuant to
Section 3.1(a)(iv)
, and (B) the Exchange and Paying Agent shall deliver to Parent a number of shares of Parent Common Stock that equal to the additional amount of cash deposited to the Exchange and Paying Agent Fund pursuant to
Section 3.2(a)(ii)(A)
divided by the Parent Share Conversion Amount.
(iii)
In the event that, after the Effective Time, Parent determines that Cashed Out Company Common Shareholders were the beneficial owners of less than one percent (1%) of the shares of Company Common Stock at the Effective Time, (A) Parent shall promptly deposit to the Exchange and Paying Agent Fund an additional number of shares of Parent Common Stock such that the total number of shares of Parent Common Stock deposited by Parent pursuant to
Section 3.2(a)(i)
and this
Section 3.2(a)(iii)
is sufficient to pay the Per Share Merger Consideration due to each Company Common Shareholder pursuant to
Section 3.1(a)(iii)
, and (B) the Exchange and Paying Agent shall deliver to Parent cash in an amount equal to the number of additional shares of Parent Common Stock delivered to the Exchange and
26
Paying Agent Fund pursuant to this
Section 3.2(a)(iii)
multiplied by the Parent Share Conversion Amount.
(iv)
Any Parent Common Stock and cash deposited with the Exchange and Paying Agent, together with any interest or other earnings thereon shall be referred to as the “
Exchange and Paying Agent Fund
.”
(v)
Exchange Procedures
. As promptly as practicable after the Effective Time (but in any event, no later than forty-eight (48) hours thereafter), Parent shall instruct the Exchange and Paying Agent to mail or otherwise deliver, to each Company Common Shareholder a (i) letter of transmittal, (the “
Letter of Transmittal
”), which shall include the obligation of each Company Common Shareholder to agree to
Section 3.4
, and
Article IX
of this Agreement, solicit the Exempt Investor Certification, and shall specify that in respect of any Certificate, risk of loss and title shall pass only upon receipt thereof by the Exchange and Paying Agent, (ii) any notice required pursuant to the BCA and (iii) instructions for use in effecting the surrender of the Certificates or transfer of the Book-Entry Shares, as applicable, held by such Company Common Shareholder. In the event a Company Common Shareholder does not deliver to the Exchange and Paying Agent a duly executed and completed Letter of Transmittal, Exempt Investor Certification and does not deliver the Certificate(s) or surrender the Book-Entry Shares, held by such Company Common Shareholder such Company Common Shareholder shall not be entitled to receive the Per Share Merger Consideration unless and until such Person delivers a duly executed and completed Letter of Transmittal, Exempt Investor Certification and Certificate(s), Book-Entry Shares (or an affidavit in accordance with
Section 3.2(a)(vii)
), as applicable, to the Exchange and Paying Agent. Until surrendered as contemplated by this
Section 3.2(a)(v)
, each Certificate or Book-Entry Share shall be deemed at any time after the Effective Time to represent only the right to receive upon such surrender the Per Share Merger Consideration pursuant to
Section 3.1(a)(iii)-(iv)
. No interest will be paid or will accrue on any portion of the cash due to any Cashed Out Company Common Shareholder.
(vi)
Merger Consideration
. Upon the Exchange and Paying Agent’s receipt of a duly executed and completed Letter of Transmittal, the Exempt Investor Certification and the surrender of the Certificates or transfer of the Book-Entry Shares held by any Company Common Shareholder, Parent shall instruct the Exchange and Paying Agent to issue, in accordance with
Section 3.1(a)(iii)
and
Section 3.1(a)(iv)
, to such Company Common Shareholder an aggregate number of such shares of Parent Common Stock or cash, as the case may be, equal to the sum of such Company Common Shareholder’s Per Share Merger Consideration for each share of Company Common Stock held by such Company Common Shareholder. Any payment by the Exchange and Paying Agent of cash in lieu of shares of Parent Common Stock as Per Share Merger Consideration, or of cash in lieu of fractional shares shall be made by wire transfer or other form of immediately available funds to the account of such Company Common Shareholder identified in the Letter of Transmittal for such Company Common Shareholder. Any shares of Parent Common Stock to be issued pursuant to this
Section 3.2(a)(vi)
shall bear appropriate legends or be subject to appropriate stop orders or other transfer restrictions that may be required under applicable Law.
(vii)
Lost Certificates
. If any Certificate shall have been lost, stolen or destroyed, upon delivery of an affidavit of that fact by the Person claiming such Certificate to be
27
lost, stolen or destroyed and, if required by Parent, the posting by such Person of a bond in such reasonable amount as Parent may direct as indemnity against any claim that may be made against it with respect to such Certificate, Parent shall cause the Exchange and Paying Agent to issue in exchange for such lost, stolen or destroyed Certificate the shares of Parent Common Stock or cash, as applicable, deliverable in respect of such lost, stolen or destroyed Certificate pursuant to this Agreement.
(b)
Fractional Shares
. No fractional shares of Parent Common Stock will be issued in connection with the Merger, but in lieu thereof, any Person who would otherwise be entitled to a fraction of a share of Parent Common Stock (after aggregating for each particular Certificate or Book-Entry Share all fractional shares of Parent Common Stock to be received by such Person) shall receive from Parent an amount in cash (rounded down to the nearest whole cent) equal to the product of (i) such fraction and (ii) the Parent Share Conversion Amount.
(c)
No Further Ownership Rights in Company Common Stock
. The Per Share Merger Consideration paid or payable and issued or issuable upon the surrender of Company Common Stock in accordance with the terms of this
Article III
shall be paid or payable and issued or issuable in full satisfaction of all rights pertaining to the shares of Company Common Stock. From and after the Effective Time, the transfer books of the Company shall be closed and there shall be no further registration of transfers on the transfer books of the Surviving Corporation of the Company Common Stock that was outstanding immediately prior to the Effective Time.
(d)
No Liability
. None of Parent, Merger Sub, the Company, the Surviving Corporation, the Exchange and Paying Agent or any other Person shall be liable to any Person in respect of any cash delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law.
(e)
Termination of the Exchange and Paying Agent Fund
. Any portion of the Exchange and Paying Agent Fund which remains undistributed to the Company Common Shareholders for twelve (12) months after the Effective Time shall be delivered to Parent, and any Company Common Shareholders, to the extent such Person has not theretofore complied with
Section 3.2(a)(v)
shall thereafter look only to Parent for, and Parent shall remain liable for the Per Share Merger Consideration to which such Company Common Shareholders are entitled pursuant to this Agreement. Any such portion of the Exchange and Paying Agent Fund remaining unclaimed by the Company Common Shareholders five (5) years after the Effective Time (or such earlier date immediately prior to such time as such amounts would otherwise escheat to or become property of any Governmental Authority) shall, to the extent permitted by Law, become the property of Parent free and clear of any claims or interest of any Person previously entitled thereto.
(f)
Disputes
. Prior to the Closing Date, any disputes regarding this
Section 3.2
shall be addressed and resolved jointly by the Company and Parent, and any amendments to or waivers of any provision of this
Section 3.2
shall be made jointly by the Company and Parent. After the Closing, any such disputes shall be addressed and resolved by the Parent
28
Board, and any amendments to or waivers of this
Section 3.2
shall be made in the sole discretion of the Parent Board.
3.3
Withholding Taxes
. Notwithstanding anything to the contrary contained in this Agreement, the Company, Parent and the Surviving Corporation shall be entitled to deduct and withhold from any payment payable pursuant to this Agreement such amounts as may be required to be deducted and withheld with respect to the making of such payment under the Code, or under any provision of state, local or non-U.S. Tax Law;
provided
, that, at least ten (10) days prior to making any such deduction or withholding with respect to any such payment, the applicable withholding entity shall provide written notice of the amounts subject to withholding and a reasonable opportunity for such recipient to provide forms or other evidence that would exempt such amounts from, or minimize such amounts subject to, withholding tax;
provided
, that notwithstanding the foregoing, no such notice or opportunity shall be required to be provided with respect to backup withholding or any payment hereunder that is for applicable Tax purposes compensation for services performed by an employee for his or her employer. The withheld amounts shall be paid over to the appropriate Taxing authority and treated for all purposes of this Agreement as having been paid to the Person in respect of which such deduction and withholding was made.
3.4
Appointment of Representatives
.
(a)
At the Effective Time and without further act of the Company or any Company Common Shareholder, the Navig8 Representative shall be appointed as agent, representative and true and lawful attorney in fact for each Company Common Shareholder, for and on behalf of the Company Common Shareholders, to give and receive notices and communications and to take any and all actions and make any and all decisions required or permitted to be taken or made by the Navig8 Representative and/or on behalf of the Company Common Shareholders pursuant to this Agreement. The power of attorney granted in this
Section 3.4(a)
: (i) is coupled with an interest, and (ii) shall survive the death or incapacity of each Company Shareholder Indemnitee. The Navig8 Representative hereby accepts its appointment as the Navig8 Representative.
(b)
At the Effective Time and without further act of Parent, Merger Sub or any Parent Shareholder, the GenMar Representative shall be appointed as agent, representative and true and lawful attorney in fact for each Parent Shareholder Indemnitee, for and on behalf of the Parent Shareholder Indemnitees, to give and receive notices and communications and to take any and all actions and make any and all decisions required or permitted to be taken or made by the GenMar Representative and/or on behalf of the Parent Shareholder Indemnitees pursuant to this Agreement. The power of attorney granted in this Section 3.4(b): (i) is coupled with an interest, and (ii) shall survive the death or incapacity of each Parent Shareholder Indemnitee. The GenMar Representative hereby accepts its appointment as the GenMar Representative.
(c)
No Equityholders’ Representative nor any of its Affiliates, partners, members, officers directors, employees, agents or Representatives shall be liable to any party hereto, the Parent Shareholders or the Company Common Shareholders for any act done or omitted or decision made hereunder as or by such Equityholders’ Representative except for
29
any act or omission constituting gross negligence, bad faith or willful misconduct as may be determined by a final, non-appealable order of a court of competent jurisdiction. If any Equityholders’ Representative shall incur any losses, liabilities, damages, claims, penalties, fines, forfeitures, actions, fees, costs and expenses (including the fees and expenses of counsel and experts and their staff and all expense of document location, duplication and shipment) (collectively, the “
Representative Losses
”) in connection with acting as such, or in connection with the acceptance or administration of its duties hereunder, Parent will, on the written request of such Equityholders’ Representative, reimburse such Equityholders’ Representative in an amount equal to the full amount of such Representative Loss, provided that in the event that any such Representative Loss is finally adjudicated to have been caused by the gross negligence, bad faith or willful misconduct of such Equityholders’ Representative, such Equityholders’ Representative will reimburse Parent the amount of such indemnified Representative Loss to the extent attributable to such Equityholders’ Representative’s gross negligence, bad faith or willful misconduct.
(d)
In no event will the Equityholders’ Representatives be required to advance their own funds on behalf of Parent, the Company Common Shareholders, the Parent Shareholders or otherwise. Each of Parent, Company Common Shareholders and Parent Shareholders acknowledge and agree that the foregoing indemnities will survive the resignation or removal of the Equityholders’ Representative or the termination of this Agreement. Upon the Closing, Parent will wire to each of the GenMar Representative and the Navig8 Representative an aggregate amount in cash of US$50,000 (each fund, the “
Expense Fund
”), which will be used for the purposes of paying directly, or reimbursing the GenMar Representative or the Navig8 Representative for any third party expenses incurred by the GenMar Representative or the Navig8 Representative, as the case may be, pursuant to this Agreement. None of Parent, Parent Shareholders or the Company Common Shareholders will receive any interest or earnings on the Expense Fund and irrevocably transfer and assign to the Equityholders’ Representatives any ownership right that they may otherwise have had in any such interest or earnings. Neither the Navig8 Representative nor the GenMar Representative will be liable for any loss of principal of their respective Expense Fund, other than as a result of the gross negligence or willful misconduct of the Navig8 Representative or the GenMar Representative, as the case may be. The Equityholders’ Representatives will hold their respective Expense Fund separate from their corporate funds, will not use their respective Expense Fund for their operating expenses or any other corporate purposes and will not voluntarily make their respective Expense Fund available to their creditors in the event of bankruptcy. Contemporaneous with or as soon as practicable following the completion of the Equityholders’ Representative’s responsibilities hereunder, each of the GenMar Representative and the Navig8 Representative will deliver (i) the balance of their respective Expense Fund to Parent and (ii) a document setting forth in reasonable detail the itemized expenses incurred by such Equityholders’ Representative.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Company Disclosure Schedules, the Company represents and warrants to each of Parent and Merger Sub that the statements contained in this
Article IV
are true and correct as of the date hereof. The Company Disclosure Schedules shall be arranged in
30
sections corresponding to the numbered and lettered sections contained in this
Article IV
and the disclosure in any section shall qualify (1) the corresponding section in this
Article IV
, (2) the other sections in this
Article IV
, but only to the extent that it is reasonably apparent from a reading of such disclosure that it also qualifies or applies to such other sections in this
Article IV,
and (3) other sections in this
Article IV
to which such disclosure is referenced or cross-referenced.
4.1
Organization and Qualification of the Company
.
(a)
The Company (i) is a corporation duly organized, validly existing and in good standing or has equivalent status under the Laws of the Republic of the Marshall Islands, and has all requisite corporate power and authority to own, lease and operate its properties and assets and to carry on its business as it is now being conducted and as it is proposed to be conducted, and (ii) is duly qualified or licensed to do business and is in good standing or has equivalent status in each jurisdiction in which the character of the properties it owns, operates or leases or the nature of its business or activities makes such qualification necessary, except, in the case of this clause (ii), for such failures to be so qualified, licensed or in good standing as have not had, and would not reasonably be expected to have, individually or in the aggregate a Company Material Adverse Effect. The Company was duly incorporated on November 21, 2013 (the “
Company Inception Date
”) and has not assumed the obligations of any other entity by merger, combination or otherwise.
(b)
Section 4.1(b)
of the Company Disclosure Schedules sets forth each jurisdiction in which the Company is licensed or qualified to do business. True and complete copies of the Company Articles of Incorporation and Company Bylaws, as in effect as of the date of this Agreement, have previously been made available to Parent by the Company.
4.2
Capitalization
.
(a)
The authorized capital stock of the Company consists of 500,000,000 shares of Company Common Stock. As of the close of business on the date of this Agreement, (i) 35,261,716 Company Common Stock are issued and outstanding and (ii) no shares of Company Common Stock are held in the treasury of the Company or by Subsidiaries of the Company.
(b)
Section 4.2(b)
of the Company Disclosure Schedules sets forth a list, as of the date hereof, all issued and outstanding shares of Company Common Stock that are subject to a repurchase or redemption right or right of first refusal in favor of the Company, indicating the name of the applicable shareholder, the number of shares such shareholder has been granted and the number of unvested shares.
(c)
Section 4.2(c)
of the Company Disclosure Schedules sets forth, as of the date hereof, (i) the name of each Person that is the registered owner of issued and outstanding Company Common Stock and the number of shares owned by such Person, and (ii) a list of all holders of outstanding Company Warrants. The Company has heretofore provided or made available to Parent (or Parent’s Representatives) true and complete copies of each Company Warrant.
31
(d)
Except as set forth (i) in this
Section 4.2
or (ii) in
Section 4.2(d)
of the Company Disclosure Schedules, (A) there are no voting or equity securities of any class of capital stock of the Company, or any security exchangeable into or exercisable for such securities issued, reserved for issuance or outstanding, or any other ownership interests, profits interests or any other type of equity interests in the Company issued by the Company or reserved for issuance by the Company, (B) there is no subscription, warrant, option, convertible or exchangeable security, or other right (contingent or otherwise) to purchase or otherwise acquire equity securities of the Company that is authorized or outstanding, and (C) there is no commitment by the Company to issue shares, subscriptions, options, warrants convertible or exchangeable securities, calls or other such rights or to distribute to holders of any of its equity securities any evidence of Indebtedness or assets, to repurchase or redeem any securities of the Company or to grant, extend, accelerate the vesting of, change the price of, or otherwise amend any warrant, option, convertible or exchangeable security or other such right, or to purchase the equity securities of any third party entity. There are no outstanding or authorized stock appreciation, dividend equivalent, phantom stock, profit participation, performance-based rights, subscriptions, puts, calls, exchange rights or other similar rights with respect to the Company or any of its securities. Except (x) for the Company Shareholder Support Agreement and the Company Shareholder Agreement or (y) as set forth in
Section 4.2(d)
of the Company Disclosure Schedules, neither the Company nor any of its Subsidiaries is a party to or is bound by any, and to the Knowledge of the Company, there are no, agreements or other understandings with respect to the voting (including voting trusts, shareholder agreements and proxies) or sale or transfer (including agreements imposing transfer restriction) of any shares of capital stock or equity interests of the Company. There is no rights agreement, “poison pill” anti-takeover plan or other agreement of similar effect to which the Company or any of its Subsidiaries is a party or by which it or they are bound with respect to any equity security of any class of the Company. Except as set forth in
Section 4.2(d)
of the Company Disclosure Schedules, there are no registration rights, in each case with respect to any equity security of any class of the Company. There is no Indebtedness of the Company having the right to vote or convertible into, or exchangeable for, securities having the right to vote.
(e)
Except as set forth on
Section 4.2(e)
of the Company Disclosure Schedules, all issued and outstanding shares of Company Common Stock are, and all shares which may be issued pursuant to the exercise of the Company Warrants, when issued in accordance with the applicable security, will be (i) duly authorized, validly issued, fully paid and non-assessable; (ii) not subject to or issued in violation of any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right under any provision of the BCA, the Company Charter Documents or any agreement to which the Company is a party or is otherwise bound or subject; and (iii) free of any Liens created by the Company in respect thereof. There are no obligations, contingent or otherwise, of the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any shares of Company Common Stock. All issued and outstanding shares of Company Common Stock and Company Warrants were issued in compliance with applicable Law.
(f)
Since the Company Inception Date, all distributions, dividends, repurchases and redemptions of the capital stock (or other equity interests) of the Company were undertaken in compliance with the Company Charter Documents then in effect, any
32
agreement to which the Company then was a party and in compliance with applicable Law. There are no declared or accrued unpaid dividends with respect to any shares of Company Common Stock.
(g)
No consent of the holders of Company Warrants is required in connection with the actions contemplated by
Section 3.1(b)
that has not been obtained by the date hereof.
4.3
Subsidiaries
.
(a)
Section 4.3(a)
of the Company Disclosure Schedules lists (i) the name of each of the direct and indirect Subsidiaries of the Company and (ii) its jurisdiction of organization.
(b)
Each Subsidiary of the Company (i) is duly organized, validly existing and in good standing (to the extent such concept is applicable) under the Laws of its jurisdiction of organization, (ii) has all requisite limited liability company, partnership, or corporate (as applicable) power and authority, directly or indirectly, to own, lease and operate its properties and assets and to carry on its business as now being conducted and as proposed to be conducted, and (iii) is duly licensed or qualified to do business and is in good standing or has equivalent status in each jurisdiction where the character of its properties owned, operated or leased or the nature of its business or activities makes such qualification necessary, except, in the case of this clause (iii), for such failures to be so licensed or qualified or in good standing as have not had, and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.
Section 4.3(b)
of the Company Disclosure Schedules sets forth each jurisdiction in which each Subsidiary of the Company is licensed or qualified to conduct business.
(c)
All of the outstanding Equity Interests of each Subsidiary of Company are duly authorized, validly issued, fully paid, non-assessable and free of preemptive rights and all such Equity Interests are owned, of record and beneficially, by the Company or another of its Subsidiaries free and clear of all Liens. The shares of stock or other equity interests of each Subsidiary of Company are owned as set forth on
Section 4.3(c)
of the Company Disclosure Schedules. There are no outstanding or authorized options, warrants, convertible securities, calls or other rights, agreements, arrangements or commitments of any character relating to the Equity Interests of the Subsidiaries or obligating the Company or any of its Subsidiaries to issue or sell any Equity Interest of any Subsidiary of the Company. There are no outstanding or authorized stock appreciation, dividend equivalent, phantom stock, profit participation, performance-based rights or other similar rights with respect to the Subsidiaries of the Company or any of their securities. Except as set forth in
Section 4.3(c)
of the Company Disclosure Schedules, there are no voting trusts, shareholder agreements, proxies or other agreements or understandings in effect with respect to the voting or transfer of any of the Equity Interest of any Subsidiary of the Company.
(d)
The Company does not control directly or indirectly or have any direct or indirect equity participation or similar interest in any corporation, partnership, limited liability company, joint venture, trust or other business association or entity that is not a
33
Subsidiary of the Company; and there are no obligations, contingent or otherwise, of the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital stock or other equity interest of any Subsidiary of the Company or to provide funds to or make any material investment (in the form of a loan, capital contribution or otherwise) in any Subsidiary of the Company or any other entity, other than guarantees of bank obligations of Subsidiaries of Company entered into in the Ordinary Course of Business.
(e)
True and complete copies of the articles of incorporation, by-laws or other organizational documents of each Subsidiary of the Company, as in effect as of the date of this Agreement, have previously been made available to Parent by the Company.
4.4
Authority
.
(a)
The Company has full corporate power and authority to enter into and perform its obligations under this Agreement and the Ancillary Documents to which it is a party and, subject only to, in the case of the consummation of the Merger, the approval of this Agreement by the affirmative vote of the Company Shareholders representing a majority of the outstanding Company Common Stock under the BCA (“
Company Shareholder Approval
”), to consummate the transactions contemplated hereby and thereby. The Company Board, by resolutions duly adopted by unanimous vote at a meeting of all directors of the Company duly called and held, and, as of the date hereof, not subsequently rescinded or modified in any way, has (i) determined that this Agreement and the transactions contemplated hereby, including the Merger, are fair to, and in the best interests of, the Company and the Company Shareholders, (ii) approved this Agreement and the transactions contemplated by this Agreement, including the Merger, and the Ancillary Documents and the transactions contemplated thereby, each in accordance with the BCA, (iii) directed that this Agreement be submitted to the Company Shareholders for approval, (iv) resolved to recommend that the Company Shareholders approve of this Agreement (collectively, the “
Company Board Recommendation
”) and directed that such matter be submitted for consideration of the Company Shareholders at the Company Meeting.
(b)
No Competition Laws of the Republic of the Marshall Islands apply or purport to apply to the Company with respect to the transactions contemplated by this Agreement, including the Company Shareholder Support Agreement.
(c)
The execution, delivery and performance by the Company of this Agreement and each Ancillary Document to which it is a party and the consummation by the Company of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of the Company (including the approval of the Company Board), and no other corporate action on the part of the Company is necessary to authorize the execution, delivery and performance of this Agreement or to consummate the Merger and the other transactions contemplated hereby and thereby, in each case subject only, in the case of consummation of the Merger, to the receipt of the
Company Shareholder Approval. This Agreement has been duly executed and delivered by the Company, and (assuming due authorization, execution and delivery by each other party hereto) this Agreement constitutes a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, subject to the Bankruptcy and Equity
34
Exception. Each Ancillary Document to which the Company is a party as of the date hereof has been duly executed and delivered by the Company (assuming due authorization, execution and delivery by each other party thereto), such Ancillary Document constitutes a legal and binding obligation of the Company enforceable against it in accordance with its terms, subject to the Bankruptcy and Equity Exception. When each Ancillary Document to which the Company will be a party has been duly executed and delivered by the Company in accordance with this Agreement (assuming due authorization, execution and delivery by each other party thereto), such Ancillary Document will constitute upon execution a legal and binding obligation of the Company enforceable against it in accordance with its terms, subject to the Bankruptcy and Equity Exception. There is no Voting Debt issued by the Company or any of its Subsidiaries.
(d)
The Company Shareholder Approval is the only vote or consent of the holders of any class or series of the Company’s capital stock required to approve this Agreement and consummate the Merger and the other transactions contemplated hereby.
4.5
No Conflicts; Consents
(a)
Except as set forth in
Section 4.5(a)
of the Company Disclosure Schedules, the execution, delivery and performance by the Company of this Agreement and the Ancillary Documents to which it is a party, and the consummation of the transactions contemplated hereby and thereby, including the Merger, do not and will, with or without the giving of notice or the lapse of time or both, not: (i) conflict with, or result in any violation or breach of, or default under (whether upon lapse of time or the occurrence of any act or event or otherwise), any provision of the Articles of Incorporation or Bylaws of the Company (together, “
Company Charter Documents
”) or of the charter, bylaws or other organizational documents of any Subsidiary of the Company; (ii) conflict with, or result in any violation or breach of, or constitute (whether upon lapse of time or the occurrence of any act or event or otherwise) a default (or result or give rise to a right of termination, modification, cancellation or acceleration of any obligation or loss of any material benefit) under, require the payment of a penalty under, constitute a change in control under, or require a consent, notice, waiver or other action by any Person under the terms conditions or provisions of any Contract to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound or to which any of their respective properties and assets are subject (including any Company Material Contract and the Company Newbuilding Contracts) or any Permit affecting the properties, assets (including the Company Vessels) or business of the Company or its Subsidiaries; (iii) subject to, in the case of the Merger, obtaining the Company Shareholder Approval and compliance with the filing and notice requirements set forth in clauses (i) through (iv) of
Section 4.5(b)
, conflict with or result in a violation or breach of any provision of any Law or Order applicable to the Company or any of its Subsidiaries or any of its or their property or assets; or (iv) result in the creation or imposition of any Lien on any properties or assets of the Company or its Subsidiaries, except, in the case of the foregoing clause (ii) and clause (iv) for any violations, breaches, defaults, terminations, cancellations, accelerations or losses that are not, and would not reasonably be expected to be, individually or in the aggregate, material to the Company and its Subsidiaries, taken as a whole.
35
(b)
No consent, Approval, Permit, Order, declaration or filing with, or notice to, any Governmental Authority or any stock market or stock exchange on which shares of Company Common Stock are admitted for trading is required by or with respect to the Company in connection with the execution, delivery and performance of this Agreement and the Ancillary Documents and the consummation of the transactions contemplated hereby and thereby, except (i) for such filings as may be required under applicable Competition Laws, (ii) the filing and the recordation of appropriate merger or other documents as required by the BCA and by the relevant authorities of other jurisdictions in which the Company is qualified to do business (including the Articles of Mergers), (iii) as set forth in
Section 4.5(b)
of the Company Disclosure Schedules, (iv) for such consents, approvals, orders, authorizations, registrations, declarations and filings as may be required under applicable federal and state securities laws and the securities laws of any non-U.S. country, and (v) for such other consents, Approvals, Permits, Orders, declarations, filings or notices for which the failure to obtain or make which are not and would not reasonably be expected to be, individually or in the aggregate, material to the Company and its Subsidiaries, taken as a whole, except with respect to a delay in the consummation of the transactions contemplated hereby.
4.6
Company Financial Statements; Information Provided
.
(a)
The Company has delivered to Parent complete copies of the Company’s audited financial statements consisting of the balance sheet of the Company as of December 31, 2012, 2013 and 2014, and including the related statements of income and retained earnings, shareholders’ equity and cash flow for the period from the Company Inception Date through December 31, 2012, 2013 and 2014 (the “
Company Audited Financial Statements
”). The Company Financial Statements have been prepared in accordance with GAAP applied on a consistent basis throughout the period involved. The Company Financial Statements were prepared based on the books and records of the Company, and fairly present in all material respects the financial condition of the Company as of the respective dates they were prepared and the results of the operations and the cash flow of the Company for the periods indicated. The balance sheet of the Company as of December 31, 2014 is referred to herein as the “
Company
Balance Sheet
” and the date thereof as the “
Company
Balance Sheet Date
”. The Company maintains a standard system of accounting established and administered in accordance with GAAP.
(b)
The Company and its Subsidiaries have no Indebtedness other than pursuant to the Company Newbuilding Contracts.
(c)
The information to be supplied by or on behalf of the Company for inclusion or incorporation by reference in the Parent Information Statement to be sent to the Parent Shareholders in connection with the Parent Meeting shall not, on the date the Parent Information Statement is first mailed to the Parent Shareholders, or at the time of the Parent Meeting or at the Effective Time, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made in the Parent Information Statement, in the light of the circumstances under which they were made, not misleading; or omit to state any material fact necessary to correct
36
any statement in any earlier communication with respect to the solicitation of proxies for the Parent Meeting which has become false or misleading.
(d)
The information supplied by or on behalf of the Company for inclusion or incorporation by reference in any Registration Statement, shall not at the time the Registration Statement is filed with the SEC, at any time it is amended or supplemented, or at the time the Registration Statement is declared effective by the Securities and Exchange Commission, as applicable, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading.
4.7
No Undisclosed Liabilities
. The Company and its Subsidiaries have not incurred any liabilities, obligations or commitments of any nature whatsoever, asserted or unasserted, known or unknown, absolute or contingent, accrued or unaccrued, matured or unmatured or otherwise (“
Liabilities
”), except (i) such Liabilities that are fully and specifically reflected or reserved against, in accordance with GAAP, in the Company Balance Sheet (or the notes thereto) as of the Company Balance Sheet Date, (ii) such Liabilities, individually or in the aggregate, that have been incurred in the Ordinary Course of Business since the Company Balance Sheet Date and (iii) such Liabilities as expressly permitted or contemplated by this Agreement for liabilities. Neither the Company nor any of its Subsidiaries is a party to, or has any commitment to become a party to, any joint venture, off balance sheet partnership or any similar Contract (including any Contract or arrangement relating to any transaction or relationship between or among the Company and any of its Subsidiaries, on the one hand, and any unconsolidated Affiliate, including any structured finance, special purpose or limited purpose entity or person, on the other hand, or any “off balance sheet arrangements” (as defined in Item 303(a) of Regulation S-K under the Securities Exchange Act of 1934, as amended)).
4.8
Absence of Certain Changes, Events and Conditions
.
(a)
Except (x) as set forth in the Company Financial Statements as of the Company Balance Sheet Date (including the notes thereto) (y) as set forth in
Section 4.8
of the Company Disclosure Schedules or (z) as arising in the Ordinary Course of Business, from the Company Balance Sheet Date until the date of this Agreement, there has not been, with respect to the Company and each of its Subsidiaries, any:
(i)
amendment of the charter, by-laws or other organizational documents of the Company;
(ii)
declaration, setting aside, or payment of any dividends or distributions on or in respect of any of its capital stock or any direct or indirect redemption, purchase or acquisition of its capital stock;
(iii)
split, combination or reclassification of any shares of its capital stock;
(iv)
issuance, sale or other disposition of any of its capital stock or grant of any options, warrants or other rights to purchase or obtain (including upon conversion, exchange or exercise) any of its capital stock;
37
(v)
incurrence, assumption, prepayment, amendment or guarantee of any Indebtedness or any loan to any Person;
(vi)
change in any method of financial or Tax accounting or accounting practice of the Company or any of its Subsidiaries, except as required by GAAP or as disclosed in the notes to the Company Financial Statements;
(vii)
action by the Company or any of its Subsidiaries to (i) make, change or rescind any material Tax election, (ii) amend any Tax Return with respect to material Taxes or (iii) take any position on any Tax Return, take any action, omit to take any action or enter into any other transaction inconsistent with prior practice, in each case, with respect to Taxes and that would have the effect of materially increasing the Tax liability or materially reducing any Tax asset of the Company or any of its Subsidiaries;
(viii)
adoption, modification or termination of any: (i) employment, severance, retention or other agreement with any current or former employee, officer, director, independent contractor or consultant, (ii) Employee Benefit Plan or (iii) collective bargaining or other agreement with a labor union, in each case whether written or oral;
(ix)
(i) grant of any bonuses, whether monetary or otherwise, or increase in any wages, salary, severance, pension or other compensation or benefits in respect of its current or former employees, officers, directors, independent contractors or consultants, other than (x) as provided for in any written agreements in existence on the date of this agreement, (y) in the Ordinary Course of Business or (z) as required by change in applicable Law, (ii) change in the terms of employment for any employee or any termination of any employees, or (iii) action to accelerate the vesting or payment of any compensation or benefit for any current or former employee, officer, director, independent contractor or consultant;
(x)
hiring or promoting any person as or to (as the case may be) an officer;
(xi)
purchase, lease or other acquisition of the right to own, use or lease any property or assets for an amount in excess of $100,000, individually (in the case of a lease, per annum) or $500,000 in the aggregate (in the case of a lease, for the entire term of the lease, not including any option term), except for purchases of inventory or supplies in the Ordinary Course of Business;
(xii)
acquisition by merger or consolidation with, or by purchase of a substantial portion of the assets or stock of, or by any other manner, any business or any Person or any division thereof;
(xiii)
any capital investment in, or any loan to, any Third Party;
(xiv)
transfer, assignment, sale, abandonment or other disposition of any of the assets shown or reflected in the Company Balance Sheet or cancellation of any debts or entitlements;
38
(xv)
imposition of any Lien upon any of the Company properties, capital stock or assets, tangible or intangible;
(xvi)
acceleration, termination, cancellation of or material modification to any Company Material Contract, or entry into any Contract that would constitute a Company Material Contract (including entry into any Charter Contracts or pooling arrangement);
(xvii)
any loan to (or forgiveness of any loan to), advance or entry into any other transaction with, any of its shareholders or current or former directors, officers and employees;
(xviii)
except for the Merger, adoption of any plan of merger, consolidation, reorganization, liquidation or dissolution or filing of a petition in bankruptcy under any provisions of federal or state bankruptcy Law or consent to the filing of any bankruptcy petition against it under any similar Law;
(xix)
commence or settle any material action or waive or modify any claims or rights of substantial value;
(xx)
entry into any settlement, conciliation or similar agreement with any Governmental Authority;
(xxi)
material damage, destruction or loss (whether or not covered by insurance) to its property (including the Company Vessels);
(xxii)
cancellation or termination of any of the Company’s or its Subsidiary’s material insurance policies or allowance of any material coverage thereunder to lapse (unless at substantially the same time as such termination, cancellation or lapse, replacement policies providing coverage substantially equal to or greater than the coverage under such canceled, terminated or lapsed insurance policies are in full force and effect);
(xxiii)
any material capital expenditures;
(xxiv)
entry into a new line of business or abandonment or discontinuance of existing lines of business; and
(xxv)
any Contract to do any of the foregoing, or any action or omission that would result in any of the foregoing.
(b)
Since the Company Balance Sheet Date, there has not been, with respect to the Company and each of its Subsidiaries, any event, occurrence or development that has had, or would reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.
4.9
Taxes
.
(a)
Each of the Company and its Subsidiaries has accurately prepared and properly filed on a timely basis (taking in account extensions) all material Tax Returns that it
39
was required to file with the appropriate Governmental Authority in all jurisdictions in which such Tax Returns are required to be filed since the Company Inception Date, and all such Tax Returns were true, correct and complete in all material respects. Each of the Company and its Subsidiaries has in all material respects paid on a timely basis all Taxes that were due and payable (whether or not shown on any Tax Return) since the Company Inception Date except those Taxes being contested in good faith, which have been properly reserved in accordance with GAAP. The amount of the liability for unpaid Taxes of the Company and each of its Subsidiaries for all Tax periods (or portions thereof) ending on or before the Company Balance Sheet Date does not, in the aggregate, exceed in any material respect the accruals and reserves for Taxes (excluding accruals and reserves for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the Company Balance Sheet. The amount of the liability of the Company and each of its Subsidiaries for all unpaid Taxes does not, in the aggregate, exceed the amount of accruals and reserves for Taxes (excluding accruals and reserves for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the Company Balance Sheet as adjusted for the passage of time in accordance with the past custom and practice of the Company (and which accruals and reserves shall not exceed comparable amounts incurred in similar periods in prior years). Neither the Company nor any of its Subsidiaries (i) has any Liability for Taxes of any Person other than the Company and its Subsidiaries under Treasury Regulations Section 1.1502-6 (or any corresponding provision of state, local or non-U.S. Law), as transferee or successor, by contract or otherwise (other than any contract entered into in the Ordinary Course of Business and not primarily regarding Taxes) or (ii) is a party to, or bound by, any Tax indemnity, Tax sharing, Tax allocation or similar agreement with a Person other than the Company and its Subsidiaries (other than any contract entered into in the Ordinary Course of Business and not primarily regarding Taxes). All material Taxes that the Company or any of its Subsidiaries was required by law to withhold or collect have been duly withheld or collected and, to the extent required, have been properly paid to the appropriate Governmental Authority. All material deficiencies asserted, or assessments made, against the Company or any of its Subsidiaries with respect to the Company or its Subsidiaries or the business of the Company and its Subsidiaries, as applicable, as a result of any examinations by any Taxing authority have been fully paid, settled or paid.
(b)
The Company has delivered or made available to Parent (i) copies of all federal, state, local and non-U.S. income, franchise and similar Tax Returns of the Company and its Subsidiaries relating to Taxes for all taxable periods since the Company Inception Date, and (ii) copies of all private letter rulings, revenue agent reports, information document requests, notices of proposed deficiencies, deficiency notices, examination reports, protests, petitions, closing agreements, settlement agreements, pending ruling requests and any similar documents assessed against, submitted by, received by, or agreed to by or on behalf of the Company or any of its Subsidiaries relating to Taxes for all taxable periods for which the statute of limitations has not yet expired. No examination or audit of any Tax Return of the Company or any of its Subsidiaries by any Governmental Authority has been made since the Company Inception Date, is currently in progress or, to the Knowledge of the Company, threatened or contemplated. None of the Company or its Subsidiaries is a party to any Action by any Taxing authority, nor, to the Knowledge of the Company, are there any pending or threatened Actions with respect to the Company or its Subsidiaries by any Taxing authority. Since the Company Inception Date, neither the Company nor any of its
40
Subsidiaries has been informed in writing by any jurisdiction that the jurisdiction believes that the Company or any of its Subsidiaries was required to file any Tax Return that was not filed or is subject by that jurisdiction to Tax for which a Tax Return was not filed. Neither the Company nor any of its Subsidiaries has since the Company Inception Date (i) waived any statute of limitations with respect to Taxes or agreed to extend the period for assessment or collection of any Taxes other than waivers or extensions that are no longer in effect or as a result of any extension of time permitted by applicable Law for filing a Tax Return, (ii) requested any extension of time (other than any extension of time not requiring the consent of a Taxing authority) within which to file any Tax Return, which Tax Return has not yet been filed, or (iii) executed or filed any power of attorney with any Taxing authority.
(c)
Section 4.9(c)
of the Company Disclosure Schedules sets forth each jurisdiction in which the Company or any of its Subsidiaries files, is required to file or has been required to file a material Tax Return or is or has been liable for any material Taxes on a “nexus” basis since the Company Inception Date.
(d)
Section 4.9(d)
of the Company Disclosure Schedules sets forth: the taxable years of the Company as to which the applicable statutes of limitations on the assessment and collection of Taxes have not expired; those years for which examinations by the Taxing authorities have been completed since the Company Inception Date; and those Taxable years for which examinations by Taxing authorities are presently being conducted.
(e)
The Company is classified as a corporation for U.S. federal income tax purposes and each of the Subsidiaries of the Company has elected to be, and is, disregarded as a separate entity for United States federal income tax purposes in accordance with Section 7701 of the Code.
(f)
There are no Liens for Taxes upon any of the assets or properties of the Company or any of its Subsidiaries, other than with respect to Taxes not yet due and payable or being contested in good faith.
(g)
Neither the Company nor any of its Subsidiaries has engaged in any “reportable transaction” within the meaning of Treasury Regulations Section 1.6011-4(b).
(h)
The Company has not been a “distributing corporation” or a “controlled corporation” in connection with a distribution described in Section 355 of the Code within the past two years.
(i)
The Company and its Subsidiaries are in compliance, in all material respects, with all transfer pricing requirements in all jurisdictions in which the Company and its Subsidiaries do business.
(j)
There are no outstanding powers of attorney enabling any party to represent the Company or any of its subsidiaries with respect to Taxes.
(k)
Neither the Company nor any of its Subsidiaries (i) is treated under Section 7874(b) of the Code as a “domestic corporation,” (ii) is an “expatriated entity” within the meaning of Section 7874(a)(2)(A) of the Code or a “surrogate foreign corporation”
41
within the meaning of Section 7874(a)(2)(B) of the Code or (iii) was created or organized both in the United States and in a non-U.S. jurisdiction.
4.10
Material Contracts
.
(a)
Section 4.10(a)
of the Company Disclosure Schedules lists each of the following Contracts (such Contracts, being “
Company
Material Contracts
”) to which the Company or its Subsidiaries is a party or is bound to:
(i)
each Contract involving payment or other obligations due to be paid by or to the Company or any of its Subsidiaries aggregating more than $250,000 in any calendar year per Contract or series of related Contracts;
(ii)
all Contracts that provide for capital expenditures or the acquisition or construction of fixed assets for the benefit and use of the Company or any of its Subsidiaries, the performance of which involves unpaid commitments or liabilities in excess of $250,000;
(iii)
all ship-sales, memoranda of agreement, Charter Contracts or other vessel acquisition, sale or disposition Contracts for Newbuildings and secondhand vessels contracted for the Company or any of its Subsidiaries, and any other Contracts with respect to such vessels and the financing thereof, including performance guarantees, counter guarantees, refund guarantees, future charters, material supervision agreements and material plan verification services agreements;
(iv)
all Contracts with any Person pursuant to which such Person is engaged or has any form of option or other right (including exclusive or preferred provider rights) to buy or sell or otherwise provide any vessel or vessels;
(v)
all Contracts pursuant to which a Company Vessel is leased or chartered by the Company to a Third Party or any of the Company’s Subsidiaries, including all Contracts with respect to the Company Vessels or any vessel operated or commercially or technically managed by the Company or any of its Subsidiaries under a Charter Contract;
(vi)
all operating agreements, management agreements, including, without limitation, commercial management agreements and technical management agreements, crewing agreements, Contracts for affreightment or financial lease (including sale/leaseback or similar arrangements) with respect to any Company Vessel;
(vii)
all Contracts that require the Company to purchase its total requirements of any product or service from a third party or that contain “take or pay” or other minimum commitment provisions;
(viii)
all Contracts that provide for the indemnification by the Company or its Subsidiaries of any Person or the assumption of any Tax, environmental or other Liability of any Person;
42
(ix)
all Contracts that relate to the acquisition, lease or disposition (whether by merger, sale of stock, sale of assets or otherwise) of any business, a material amount of stock or assets, including any vessel, of the Company or its Subsidiaries or any other Person, or any real property;
(x)
all broker, distributor, dealer, franchise, agency, sales promotion, market research, marketing consulting and advertising Contracts to which the Company or its Subsidiaries is a party;
(xi)
all employment, independent contractor, severance, retention, bonus, profit sharing, incentive plan, consulting, services or similar Contracts with any employee, consultant or independent contractor of the Company or any of its Subsidiaries;
(xii)
except for Contracts relating to trade receivables, all Contracts relating to the creation, incurrence, guarantee, or assumption of Indebtedness (including, without limitation, guarantees) of the Company or its Subsidiaries or relating to any Indebtedness owed by any Person to the Company or its Subsidiaries;
(xiii)
all Contracts with any Governmental Authority;
(xiv)
all Contracts containing provisions or covenants that limit or purport to limit the ability of the Company or its Subsidiaries to compete in any line of business or with any Person or in any geographic area or during any period of time;
(xv)
any Contracts that provide for any joint venture, partnership, limited liability company, strategic alliance, profit sharing or similar arrangements;
(xvi)
all collective bargaining agreements or Contracts with any labor union; and
(xvii)
each Contract to which any Company or any of its Subsidiaries is a party or otherwise bound that contains a so-called “most favored nations” provision or similar provisions requiring the Company or any of its Subsidiaries (and, after the Closing, Parent or any of its Subsidiaries) to offer to a Person any terms or conditions that are at least as favorable as those offered to one or more other Persons ;
(xviii)
any interest rate, currency or other hedging Contracts;
(xix)
real property or personal property leases, other than pursuant to Charter Contracts, which provide for aggregate annual payments by the Company or any of its Subsidiaries of $50,000 or more per year per lease or series of related leases;
(xx)
each Contract involving a standstill or similar obligation of the Company or any of its Subsidiaries;
(xxi)
all Contracts containing an “earn-out,” contingent or deferred purchase price or similar contingent payment obligation;
43
(xxii)
all Contracts in settlement of an Action; and
(xxiii)
any other Contract that is material to the Company and its Subsidiaries, taken as a whole, and not previously disclosed pursuant to this
Section 4.10
.
(b)
Each Company Material Contract (other than a Company Newbuilding Contract) is valid, binding and enforceable and in full force and effect with respect to the Company, each Subsidiary party thereto and, to the Knowledge of the Company, the other parties thereto, in accordance with its terms, subject to the Bankruptcy and Equity Exception. Except as set forth in
Section 4.10(b)
of the Company Disclosure Schedules, none of the Company, any of its Subsidiaries or, to the Company’s Knowledge, any other party to any Company Material Contract (other than a Company Newbuilding Contract) is in breach or violation of or in default under (or is alleged to be in breach or violation of or default under) in any material respect, or has provided or received any notice of any intention to terminate, any Company Material Contract (other than a Company Newbuilding Contract). No event or circumstance has occurred that, with notice or lapse of time or both, would constitute a breach or default under any Company Material Contract (other than a Company Newbuilding Contract) or result in any right of cancelation, termination or consent thereunder or would cause or permit the acceleration or other changes of any right or obligation or the loss of any benefit thereunder. Complete and correct copies of each Company Material Contract (including all modifications, amendments and supplements thereto and waivers thereunder) (other than a Company Newbuilding Contract) have been made available to Parent. Neither the Company nor its Subsidiaries has received written notice of termination of any Company Material Contract (other than a Company Newbuilding Contract).
(c)
Except as set forth in
Section 4.21(c)
of the Company Disclosure Schedules, there are no agreements to which the Company or any of its Subsidiaries is a party or bound with any Affiliate of the Company (other than any Subsidiary which is a direct or indirect wholly owned Subsidiary of the Company or agreements with directors or officers of the Company or its Subsidiaries that have been previously made available to Parent).
(d)
There is no non-competition or other similar agreement, judgment, injunction or order to which the Company or any of its Subsidiaries is a party or is subject that has, or would reasonably be expected to have, the effect of prohibiting, restricting or impairing in any material respect the conduct of the business of the Company or any of its Subsidiaries or, following the Effective Time, Parent or any of its Subsidiaries as currently conducted and as currently proposed to be conducted.
(e)
Each Company Newbuilding Contract is valid, binding and enforceable and in full force and effect with respect to the Company, each Subsidiary party thereto and, to the Knowledge of the Company, the other parties thereto, in accordance with its terms, subject to the Bankruptcy and Equity Exception. Except as set forth in
Section 4.10(e)
of the Company Disclosure Schedules, none of the Company, any of its Subsidiaries or, to the Company’s Knowledge, any other party to any Company Newbuilding Contract is in breach or violation of or in default under (or is alleged to be in breach or violation of or default under), or has provided or received any notice of any intention to terminate, any
44
Company Newbuilding Contract. No event or circumstance has occurred that, with notice or lapse of time or both, would constitute a breach or default under any Company Newbuilding Contract or result in any right of cancelation, termination or consent thereunder or would cause or permit the acceleration or other changes of any right or obligation or the loss of any benefit thereunder. Complete and correct copies of each Company Newbuilding Contract (including all modifications, amendments and supplements thereto and waivers thereunder) have been made available to Parent. Neither the Company nor its Subsidiaries has received written notice of termination of any Company Newbuilding Contract.
4.11
Legal Proceedings; Orders
. Except as set forth in
Section 4.11
of the Company Disclosure Schedules, (i) there are no, and there have not been since the Company Inception Date, Actions pending or, to the Company’s Knowledge, threatened, against or by the Company, any of its Subsidiaries, any of their respective properties or assets, or against any director, officer or employee of the Company or any of its Subsidiaries in matters relating to the Company or any of its Subsidiaries or their operations; (ii) there are no unsatisfied judgments, penalties or awards against or affecting the Company, its Subsidiaries or any of the Company’s or its Subsidiaries’ properties or assets; and (iii) since the Company Inception Date, there have been no settlement agreements with respect to any material Action or Order.
Section 4.11
of the Company Disclosure Schedules sets forth each outstanding Order to which the Company, any of its Subsidiaries, or any of their respective properties or asset is subject, and the Company and its Subsidiaries, as the case may be, are in compliance with the terms of each such Order. No event has occurred or circumstances exist that would reasonably be expected to constitute or result in (with or without notice or lapse of time) a violation of any such outstanding Order.
4.12
Environmental Matters
.
(a)
Except as set forth in
Section 4.12(a)
of the Company Disclosure Schedules: (i) each of the Company and its Subsidiaries and each vessel currently operated or commercially or technically managed by the Company or a Subsidiary under a Charter Contract and each Company Vessel is currently and, since the Company Inception Date, has been in compliance in all material respect with all applicable Environmental Laws; (ii) each of the Company and its Subsidiaries has obtained and is in material compliance with all Environmental Permits (each of which is disclosed in
Section 4.12(a)
of the Company Disclosure Schedules) required to own, lease, operate or use its properties or other assets (including Company Vessels) and to carry on its business and operations as currently conducted; (iii) all such Environmental Permits are in full force and effect; (iv) since the Company Inception Date, there has been no Release of any Hazardous Materials from any Company Vessel or any vessel operated or commercially or technically managed by the Company or a Subsidiary under a Charter Contract in violation of any Environmental Law resulting (or that would reasonably be expected to result) in any material liability to the Company or any of its Subsidiaries from any of its current or former operations, and neither the Company nor any of its Subsidiaries has treated, stored, disposed of, arranged for or permitted the disposal of, or transported, or handled any Hazardous Materials in violation in any material respect of any Environmental Laws; (v) there are no pending or, to the Knowledge of the Company, threatened, and since the Company Inception Date there have not been, Environmental Claims against or affecting the Company or any of its Subsidiaries, and neither the Company nor any of its Subsidiaries has received an Environmental Notice;
45
and (vi) neither the Company nor any of its Subsidiaries has retained or assumed, by contract or operation of Law or otherwise, any obligation, liability, order, settlement, judgment, injunction or decree relating to or arising under Environmental Law.
(b)
To the Knowledge of the Company, the Company Financial Statements as of the Company Balance Sheet Date contain an adequate reserve as determined in accordance with GAAP for liabilities and obligations under Environmental Laws and with respect to Hazardous Materials. The Company has made available to Parent (i) all written environmental reports since the Company Inception Date with respect to the business or assets of the Company or any currently or formerly owned, managed or leased properties, including the Company Vessels, or operations and (ii) any and all material documents since the Company Inception Date concerning planned or anticipated capital expenditures required to reduce, offset, limit or otherwise control pollution and/or emissions, manage waste or otherwise ensure compliance with current or future Environmental Laws (including, without limitation, costs of remediation, pollution control equipment and operational changes). The only representations and warranties of the Company in this Agreement relating to any environmental matters or any other obligation or liability with respect to Hazardous Materials or arising under Environmental Laws are those set forth in this
Section 4.12
. The Company is not aware of, and does not reasonably anticipate, as of the Closing Date, any condition, event or circumstance concerning the Release or regulation of Hazardous Materials that might, after the Closing Date, prevent, impede or materially increase the costs associated with the ownership, lease, operation, performance or use of the business or assets of the Company as currently conducted.
4.13
Employee Benefit Matters
.
(a)
Section 4.13(a)
of the Company Disclosure Schedules contains a complete and accurate list of all material Company Employee Plans.
Section 4.13(a)
of the Company Disclosure Schedules identifies, with respect to each Company Employee Plan, the jurisdiction whose Laws govern such Company Employee Plan.
(b)
With respect to each Company Employee Plan, the Company has furnished or made available to Parent, a complete and accurate copy of: (i) such plan (or a written summary of any unwritten plan); (ii) in the case of any Company Employee Plan for which a Form 5500 is required to be filed, a copy of the two most recently filed Form 5500, with schedules and financial statements attached; (iii) where applicable, copies of any trust agreements or other funding arrangements, custodial agreements, insurance policies and contracts, administration agreements and similar agreements, and investment management or investment advisory agreements, now in effect or required in the future as a result of the transactions contemplated by this Agreement or otherwise; (iv) the most recent financial statements for each Company Employee Plan that is funded; (v) all personnel, payroll and employment manuals and policies; (vi) all employee handbooks; (vii) the most recent reports regarding the satisfaction of any applicable nondiscrimination requirements under the Code in respect of the Company Employee Plan; (viii) in the case of any Company Employee Plan that is intended to be qualified under Section 401(a) of the Code, a copy of the most recent determination, opinion or advisory letter from the Internal Revenue Service; (ix) actuarial valuations and reports related to any Company Employee Plans with respect to the two most
46
recently completed plan years; and (x) copies of material notices, letters or other correspondence from the Internal Revenue Service, Department of Labor, Pension Benefit Guaranty Corporation or other Governmental Authority relating to the Company Employee Plans.
(c)
Except as would not be expected to be material to the Company, (i) each Company Employee Plan and any related trust has been established, administered and maintained in accordance with its terms and in compliance with all applicable Laws (including ERISA, the Code and any applicable local Laws), (ii) each of the Company, its Subsidiaries and their ERISA Affiliates has met its obligations with respect to such Company Employee Plan and has made all required contributions thereto (or reserved such contributions on the Company Balance Sheet in accordance with GAAP), in accordance with the terms of such Company Employee Plan and all applicable Laws and accounting principles, and (iii) the Company, its Subsidiaries, each of their respective ERISA Affiliates and each Company Employee Plan are in compliance with all Laws applicable to benefit plans. With respect to the Company Employee Plans, no event has occurred and there exists no condition or set of circumstances in connection with which the Company or any of its Subsidiaries could be subject to any liability that would be expected to be material to the Company under ERISA, the Code or any other applicable Law. With respect to any Company Employee Plan that is intended to be tax-qualified, no event has occurred, and to the Knowledge of the Company there exists no condition or set of circumstances, that, individually or in the aggregate, could reasonably be expected to result in the loss of such tax-qualified status.
(d)
Neither the Company, any of its Subsidiaries nor any of their ERISA Affiliates has (i) ever maintained or contributed to, or been obligated to contribute to, an Employee Benefit Plan which was ever subject to Section 412 of the Code or Section 302 or Title IV of ERISA or (ii) ever contributed to, or been obligated to contribute to a “multiemployer plan” (as defined in Section 4001(a)(3) of ERISA). No Company Employee Plan is funded by, associated with or related to a “voluntary employee’s beneficiary association” within the meaning of Section 501(c)(9) of the Code. No Company Employee Plan holds securities issued by the Company, any of its Subsidiaries or any of their ERISA Affiliates.
(e)
Each Company Employee Plan can be amended, terminated or otherwise discontinued after the Closing in accordance with its terms, without material liabilities to Parent, the Company or any of their Affiliates other than ordinary administrative expenses typically incurred in a termination event. None of the Company or any of its Subsidiaries has any commitment or obligation or has made any representations to any employee, officer, director, independent contractor or consultant, whether or not legally binding, to adopt, amend, modify or terminate any Company Employee Plan or any collective bargaining agreement, in connection with the consummation of the transactions contemplated by this Agreement or otherwise.
(f)
Except as set forth in
Section 4.13(f)
of the Company Disclosure Schedules, neither the execution of this Agreement nor any of the transactions contemplated by this Agreement will (either alone or upon the occurrence of any additional or subsequent
47
events): (i) entitle any current or former director, officer, employee, independent contractor or consultant of the Company or any of its Subsidiaries or any of their dependents, spouses or beneficiaries to severance pay or any other payment; (ii) accelerate or otherwise enhance the time of payment, funding or vesting, or increase the amount of compensation due to any such individual; (iii) limit or restrict the right of the Company to merge, amend or terminate any Employee Benefit Plan; or (iv) result in any payments being characterized as an “excess parachute payment” (as defined in Section 280G of the Code, without regard to Section 280G(b)(4), or similar Law of another jurisdiction). Neither the Company nor any of its Subsidiaries has any obligation to “gross-up” or indemnify any individual with respect to any Tax imposed by Section 4999 of the Code or similar Law of another jurisdiction.
(g)
None of the Company Employee Plans promises or provides post-termination or retiree medical or other post-termination or retiree welfare
benefits
to any person, except as required by Section 4980B of the Code or similar applicable Law of another jurisdiction, and neither the Company nor any of its ERISA Affiliates has any Liability to provide post-termination or retiree welfare benefits to any individual or ever represented, promised or contracted to any individual that such individual would be provided with post-termination or retiree welfare benefits.
(h)
Except as set forth in
Section 4.13(h)
of the Company Disclosure Schedules, there is no pending or, to the Company’s Knowledge, threatened Action relating to an Employee Benefit Plan (other than routine claims for benefits), and no Employee Benefit Plan has within the two years prior to the date hereof been the subject of an examination or audit by a Governmental Authority or the subject of an application or filing under or is a participant in, an amnesty, voluntary compliance, self-correction or similar program sponsored by any Governmental Authority.
(i)
There has been no amendment to, announcement by the Company or any of its Affiliates relating to, or change in employee participation or coverage under, any Employee Benefit Plan or collective bargaining agreement that would increase the annual expense of the Company or any of its Subsidiaries maintaining such plan above the level of the expense incurred for the most recently completed fiscal year with respect to any director, officer, employee, independent contractor or consultant of the Company or any of its Subsidiaries, as applicable. Neither the Company nor any of its Affiliates has any commitment or obligation or has made any representations to any director, officer, employee, independent contractor or consultant of the Company or any of its Subsidiaries, whether or not legally binding, to adopt, amend, modify or terminate any Employee Benefit Plan or any collective bargaining agreement.
(j)
Each Employee Benefit Plan that is subject to Section 409A and/or Section 457A of the Code has been administered in compliance with its terms and the operational and documentary requirements of Section 409A and/or Section 457A of the Code and all applicable regulatory guidance (including notices, rulings and proposed and final regulations) thereunder. The Company does not have any obligation to gross up, indemnify or otherwise reimburse any individual for any excise taxes, interest or penalties incurred pursuant to Section 409A and/or Section 457A of the Code.
48
(k)
Each individual who is classified by the Company as an independent contractor has been properly classified for purposes of participation and benefit accrual under each Employee Benefit Plan.
(l)
With respect to each Company Employee Plan that is maintained outside the jurisdiction of the United States or primarily covers employees residing or working outside the United States, (i)
the
Company Employee Plan has been established, maintained and administered in all material respects in compliance with its terms and all
applicable
Laws; (ii) all contributions and expenses that are required to be made have been made or properly accrued; and (iii) with respect to any such Company Employee Plan that is intended to be eligible to receive favorable tax treatment under the Laws applying to such Company Employee Plan, all requirements necessary to obtain such favorable tax treatment have been satisfied.
4.14
Compliance With Laws
. Except with respect to Taxes, Environmental Laws and ERISA, which are the subjects of
Section 4.9
,
Section 4.12
and
Section 4.13
, each of the Company and its Subsidiaries has materially complied with since the Company Inception Date, and is now complying with, and has not received any written notice alleging any violation with respect to, all Laws, Orders and Maritime Guidelines applicable to it or its business, properties or assets (including the Company Vessels). To the Company’s knowledge, neither the Company nor any of its Subsidiaries is under investigation with respect to the material violation of any Laws.
4.15
Permits
. Each of the Company and its Subsidiaries has obtained all material Permits required for it to own, lease or operate its properties (including the Company Vessels and any vessel operated or commercially or technically managed by the Company or a Subsidiary under a Charter Contract) and conduct its business. Each such material Permit is valid and in full force and effect. All fees and charges with respect to such material Permits have been paid in full.
Section 4.15
of the Company Disclosure Schedules lists all current material Permits issued to the Company or its Subsidiaries, including the names of the Permits and their respective dates of issuance and expiration. Neither the Company nor any of its Subsidiaries is in material default or material violation, and no event has occurred that, with or without notice or lapse of time or both, would reasonably be expected to constitute a material default or material violation, of any term, condition or provision of any material Permit of the Company or any of its Subsidiaries.
4.16
Employment Matters
.
Section 4.16
of the Company Disclosure Schedules sets forth an accurate list of all employees of and other service providers to the Company and its Subsidiaries, including, with respect to each individual, such individual’s status as an employee, independent contractor, or other position, annual rate of compensation, including bonuses and other incentive compensation, work location and the jurisdiction whose Laws govern such individual’s employment or service. Neither Company nor any of its Subsidiaries (a) is or has been a party to or otherwise bound by any collective bargaining agreement with a labor union, works counsel or labor organization, (b) has or has had any obligation to consult with any collective bargaining representative for any of its employees, (c) is or has been, to the Company’s Knowledge, the subject of a union organizing effort, (d) has received a grievance pursuant to a collective bargaining agreement with respect to any matter, or (e) has received a demand for arbitration or has been a party to an arbitration proceeding pursuant to a collective
49
bargaining agreement. There are no, and there have not been since the Company Inception Date,
except as would not be expected to be material to the Company,
Actions against the Company pending, or to the Company’s Knowledge, threatened to be brought or filed, asserting that the Company or any of its Subsidiaries has committed unfair labor practices, employment discrimination, harassment, retaliation or violation of any law relating to equal pay, safety, wage and hours or concerning any other employment-related matter arising under applicable Laws or that is seeking to compel it to bargain with any labor union, works counsel or labor organization, nor is there pending or, to the Knowledge of Company, threatened, and there have not been since the Company Inception Date, any labor strike, dispute, walkout, work stoppage, slow-down or lockout concerted refusal to work overtime or other similar labor disruption or dispute affecting the Company or any of its Subsidiaries. The Company is and, since the Company Inception Date, has been in compliance in all material respects with (i) all applicable Laws pertaining to employment and employment practices to the extent they relate to employees of the Company, including all Laws relating to labor relations, equal employment opportunities, fair employment practices, employment discrimination, harassment, retaliation, reasonable accommodation, disability rights or benefits, immigration, wages, hours, overtime compensation, child labor, hiring, promotion and termination of employees, working conditions, meal and break periods, privacy, health and safety, workers’ compensation, leaves of absence and unemployment insurance, and (ii) obligations of the Company and its Subsidiaries under any employment agreement, severance agreement or any similar employment or labor-related agreement or understanding. All individuals characterized and treated by the Company as independent contractors or consultants are properly treated as independent contractors under all applicable Laws. All employees of the Company classified as exempt under the Fair Labor Standards Act and state and local wage and hour laws are properly classified in all material respects.
4.17
Insurance
.
(a)
Section 4.17(a)
of the Company Disclosure Schedules lists all policies or binders, as in effect on the date hereof, of property, fire and casualty, product liability, general liability, real and personal property, workers’ compensation, directors’ and officers’ liability, fiduciary liability, pollution legal liability or other similar policies providing coverage for personal injuries, damages, cleanup or natural resource damages, marine risks including hull and machinery, protection and indemnity and war risks (including acts of terrorism, acts of piracy or armed conflicts), and other forms of insurance (including club entries) covering the Company and its Subsidiaries and its and their the assets (including the Company Vessels and any vessel operated or commercially or technically managed by the Company or a Subsidiary under a Charter Contract), business, operations, employees, officers and directors of the Company (collectively, the “
Company Insurance Policies
”) (including the names of the carriers of such policies, the names insured, the policy number, the limited and the expiration date thereof) and with the insurance companies or protection and indemnity clubs and associations set forth therein. True and complete copies of such Company Insurance Policies have been made available to Parent.
(b)
All Company Insurance Policies are valid and in full force and effect and shall remain in full force and effect following the consummation of the transactions contemplated by this Agreement. The Company has not received any notice of cancellation of, premium increase with respect to, lapse of coverage under, or alteration of coverage
50
under, any of such Company Insurance Policies and, to the Company’s Knowledge, no insurer under any Company Insurance Policy has threatened to cancel or unilaterally reduce or limit the stated coverages contained in such Company Insurance Policy. The Company and its Subsidiaries have paid all premiums and calls currently due in respect of such Company Insurance Policies and neither the Company nor any of its Subsidiaries is otherwise in breach or default under any Company Insurance Policy.
Section 4.17(b)
of the Company Disclosure Schedules sets forth any pending policy claims in excess of $100,000. There are no claims related to the business of the Company pending under any Company Insurance Policies as to which coverage has been questioned, denied or disputed or in respect of which there is an outstanding reservation of rights. To the Company’s Knowledge, no facts or circumstances exist that would reasonably be expected to relieve the insurer under any Company Insurance Policy of its obligations to satisfy, to the fullest extent provided by such Company Insurance Policy, any claim which such Company Insurance Policy is intended to cover. To the Company’s Knowledge, the Company Insurance Policies are sufficient for compliance in all material respects with all requirements of Law and all Material Contracts. Except as noted on
Section 4.17(b)
of the Company Disclosure Schedules, the Company Insurance Policies will provide continued coverage to the Company and/or its Subsidiaries, as applicable, following the Closing.
4.18
Vessels
.
Section 4.18
of the Company Disclosure Schedules sets forth a description of each Company Vessel (categorized by type), including its name, owner, capacity (gt or dwt, as specified therein), year built, its Classification Society, Flag State, charterer (and whether such charterer is currently operating in the spot or time charter market), and pooling arrangement and manager (commercial or technical). The Company or its Subsidiaries do not own, lease, operate, commercially or technically manage, use or charter any vessels other than those set forth on
Section 4.18(a)
of the Company Disclosure Schedule. Each Company Vessel (i) is duly registered in the name of the Subsidiary that owns it under the Laws and the flag of such Company Vessel’s Flag State (as set forth on
Section 4.18(a)
of the Company Disclosure Schedules), and no other action is necessary to establish and perfect such Subsidiary’s title to and interest in the applicable Company Vessel as against any charterer or third party, (ii) is seaworthy and in good operating condition, and has been properly and efficiently maintained in accordance with internationally accepted standards for good ship maintenance, (iii) has all national and international operating and trading certificates and endorsements, each valid and un-extended, that are required for the operation of such Company Vessel in the trades and geographic areas in which it is operated, and (iv) has been classed by a Classification Society, and is fully in class with no outstanding material recommendations or notations, and (v) is operated in compliance in all material respects with all Maritime Guidelines and Laws. To the Knowledge of the Company (A) no event has occurred and no condition exists that would reasonably be expected to cause any Company Vessel’s class to be suspended or withdrawn, (B) all events and conditions that are required to be reported as to class have been disclosed and reported to such Company Vessel’s Classification Society and (C) each Company Vessel is and, following its delivery under the relevant Company Newbuilding Contract, each Newbuilding shall be free of average damage affecting its class. As of the date of this Agreement, either the Company or one of its Subsidiaries, as applicable, is the sole owner of each Company Vessel and has good and marketable title to such Company Vessel, free and clear of all Liens. Prior to the date of this Agreement, Company has delivered or made available to Parent accurate, complete and correct copies of all SIRE and vetting inspection reports relating to each Company Vessels
51
since the Company Inception Date. The Company and each of its Subsidiaries are qualified in all material respects to own and operate the Company Vessels under applicable Laws, including the Laws of each Company Vessel’s Flag State.
4.19
No Existing Discussions
. Neither the Company nor any of its Subsidiaries is engaged, directly or indirectly, in any discussions or negotiations with any other party other than Parent with respect to a Company Acquisition Proposal.
4.20
Brokers
. Except for Jefferies Group LLC, no broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement or any Ancillary Document based upon arrangements made by or on behalf of the Company.
4.21
Controls and Procedures, Certifications and Other Matters
.
(a)
The Company and each of its Subsidiaries has established and maintains accurate books and records reflecting its assets and liabilities and has established and maintains a system of internal controls over financial reporting covering the Company and each of its Subsidiaries that is sufficient to provide reasonable assurance (i) regarding the reliability of the preparation of Company Financial Statements in accordance with GAAP, including that transactions are recorded as necessary to permit preparation of Company Financial Statements in accordance with GAAP and to maintain accountability for assets, (ii) that transactions of the Company and its Subsidiaries are being made only in accordance with authorizations of management and the Company Board, and (iii) regarding prevention or timely detection of the unauthorized acquisition, use or disposition of the Company’s and its Subsidiaries’ assets. Neither the Company nor its Subsidiaries (including, to the Company’s Knowledge, its personnel who have a role in the preparation of Company Financial Statements or the internal accounting controls utilized by the Company) nor, to the Company’s Knowledge, the Company’s independent accountants has identified or been made aware of (x) any significant deficiency or material weakness in the system of internal accounting controls utilized by the Company and its Subsidiaries or (y) any fraud, whether or not material, that involves the management of the Company and its Subsidiaries or any of their personnel who have a significant role in the internal accounting controls of the Company and its Subsidiaries, or, to the Company’s Knowledge, any material fraud of their other personnel, or (z) any claim or allegation regarding the foregoing.
(b)
The minute books and stock record books of the Company, all of which have been made available to Parent, are complete and correct and have been maintained in accordance with sound business practices. The minute books of the Company contain accurate and complete records of all meetings, and actions taken by written consent of, the Company Shareholders, the Company Board and any committees of the Company Board, and no meeting, or action taken by written consent of any of the Company Shareholders, Company Board or committee has been held for which minutes have not been prepared and are not contained in such minute books. At the Closing, all of those books and records will be in the possession of the Company.
52
(c)
Except as set forth on
Section 4.10(a)
of the Company Disclosure Schedules, no employee, officer, director, shareholder, partner or member of the Company or any of its Subsidiaries, any member of his or her Immediate Family or any of their respective Affiliates, other than in connection with any Ordinary Course of Business employment arrangements and in connection with holding shares of Company Common Stock, or Company Warrants, (i) owes any material amount to the Company or any of its Subsidiaries, and none of the Company or any of its Subsidiaries owes any material amount to, or has committed to make any loan or extend or guarantee credit to or for the benefit of, such Person, (ii) is involved in any material business arrangement or other relationship with the Company or any of its Subsidiaries (whether written or oral), (iii) owns any material property or right, tangible or intangible, that is used by the Company or any of its Subsidiaries, or (iv) has any material claim or cause of action against the Company or any of its Subsidiaries (other than remuneration for services performed on behalf of the Company or any of its Subsidiaries).
4.22
Real Property
.
(a)
Neither the Company nor any of its Subsidiaries owns, or since the Company Inception Date, has owned, any real property.
(b)
Section 4.22(b)
of the Company Disclosure Schedules lists (i) all leases and subleases of real property (the “
Company Real Property Leases
”) under which the Company or any of its Subsidiaries is either lessor or lessee (the “
Company-Leased Real Property
”), (ii) the street address of each parcel of Company-Leased Real Property; (iii) the landlord under the lease or sublease, the base rental amount currently being paid, and the expiration of the term of such lease or sublease for each leased or subleased property; and (iv) the current use of such property. The Company has heretofore made available to Parent true and complete copies of each Company Real Property Lease. Each Company Real Property Lease is in all material respects a valid and binding contract of the Company or the applicable Subsidiary of the Company, and, to the Knowledge of the Company, is in all material respects in full force and effect (except for each that has terminated, or will terminate, by its own terms). Neither the Company nor any of its Subsidiaries, nor, to the Knowledge of the Company, any other party thereto, is in violation or breach of or default (which breach of default has continued after the giving of the applicable notice and expiration of the applicable cure period) under the terms of any such Company Real Property Lease, in each case, except where such default has not had, and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. The Company and its Subsidiaries have not subleased, licensed or otherwise granted any entity or individual the right to use or occupy any Company-Leased Real Property or any portion thereof. The use and operation of the Company-Leased Real Property in the conduct of the Company’s business do not violate in any material respect any Law, covenant, condition, restriction, easement, license, Permit or agreement.
4.23
Personal Property
. The Company and its Subsidiaries have good and valid title to, or a valid interest in, all tangible assets and properties (including the Company Vessels) that (i) are reflected on the Company Financial Statements as of the Company Balance Sheet Date or (ii) were acquired since the Company Balance Sheet Date in the Ordinary Course of Business (the “
Company Personal Property
”), except in each case for assets and property disposed of since the
53
Company Balance Sheet Date in the Ordinary Course of Business, in each case, free and clear of all Liens other than Permitted Liens. All Company Personal Property has been maintained in the Ordinary Course of Business. The Company Personal Property, together with all other properties and assets of the Company and its Subsidiaries, are sufficient for the continued conduct of the Company’s business after the Closing in substantially the same manner as conducted prior to the Closing and constitute all of the rights, property and assets necessary to conduct the business of the Company as currently conducted.
4.24
Intellectual Property
.
(a)
The Company and its Subsidiaries own, or are validly licensed or otherwise have the right to use, all Intellectual Property Rights which are material to the conduct of the business of the Company and its Subsidiaries.
Section 4.24
of the Company Disclosure Schedules lists all registered Intellectual Property Rights owned by the Company or any of its Subsidiaries; material Intellectual Property Rights licensed to any of the Company or any of its Subsidiaries by any Person (excluding any license implied by the sale of a product and any non-customized generally commercially available, off-the-shelf software programs); and material Intellectual Property Rights licensed by any of the Company or any of its Subsidiaries to any Person. Each item of material owned Intellectual Property Rights is and at all times has been in compliance with all applicable Laws, and all filings, payments, and other actions required to be taken to maintain such Intellectual Property Rights in full force and effect have been taken by the applicable deadline. The Company and its Subsidiaries are not, nor will they be as a result of the Company’s execution and delivery of this Agreement or the performance of its obligations hereunder, in violation in any material respect of any licenses, sublicenses or other agreements as to which any of them is a party and pursuant to which any of them is authorized to use any third-party Intellectual Property Rights.
(b)
To the Knowledge of the Company, neither the Company nor any of its Subsidiaries has infringed, misappropriated or otherwise violated any Intellectual Property Rights of any Person. Neither the Company nor any of its Subsidiaries has received any written charge, complaint, claim, demand or notice alleging any such infringement, misappropriation or other violation (including any claim that the Company or any such Subsidiary must license or refrain from using any Intellectual Property Rights or other proprietary information of any Person). To the Knowledge of the Company, no Person has infringed, misappropriated or otherwise violated any material Intellectual Property Rights of the Company or any of its Subsidiaries.
4.25
Certain Business Practices
.
(a)
Neither the Company nor any of its Subsidiaries nor (to the Knowledge of the Company) any director, officer, agent, employee, representative, consultant or other persons associated with or acting for or on behalf of the Company or any of its Subsidiaries has, directly or indirectly, in connection with their respective businesses (i) used any funds for unlawful contributions, gifts, entertainment or other expenses relating to political activity or for the business of the Company or any of its Subsidiaries, (ii) made any unlawful payment or offered anything of value to non-U.S. or domestic government officials or employees or to non-U.S. or domestic political parties or campaigns, (iii) offered, paid,
54
given, promised to pay or give, or authorized the payment or gift of anything of value, directly or indirectly, to any public official, for purposes of (A) influencing any act or decision of any public official in his or her official capacity; (B) inducing such public official to do or omit to do any act in violation of his or her lawful duty; or (C) securing any improper advantage, (iv) made any other unlawful payment, or (v) violated any applicable export control, money laundering or anti-terrorism or anti-bribery Law or regulation, nor have any of them otherwise taken any action which would cause the Company or any of its Subsidiaries to be in violation of any provision of the Foreign Corrupt Practices Act of 1977, (the “
FCPA
”) or any applicable Law of similar effect. To the Company’s Knowledge, there are no pending issues with respect to violation of any applicable anticorruption Law, including the FCPA, relating to the Company or any of its Subsidiaries.
(b)
None of the Company or its Subsidiaries or, nor to the Knowledge of the Company, their respective directors, officers, employees or agents (i) is a person with whom transactions are prohibited or limited under any economic sanctions Laws, including those administered by the Office of Foreign Assets Control of the United States Department of the Treasury, the European Union, the United Kingdom or the United Nations Security Council; or (ii) since the Company Inception Date has done business in or with Cuba, Iran, Sudan, or Syria, or any Person that is the target of U.S. sanctions.
4.26
Fairness Opinion
.
The Company Board has received the written opinion, dated as of the date of this Agreement (the “
Company Fairness Opinion
”), of Jefferies LLC, to the effect that, as of such date and based on and subject to the assumptions, qualifications and limitations contained therein, the Per Share Merger Consideration to be received by the Company Common Shareholders pursuant to the Merger is fair to the Company Common Shareholders from a financial point of view. The Company has received the approval of Jefferies LLC to permit the inclusion of a copy of the Company Fairness Opinion in its entirety in the Company Information Statement, subject to Jefferies LLC’s review of the Company Information Statement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as set forth in the Parent Disclosure Schedules, Parent and Merger Sub represent and warrant to the Company that the statements contained in this
Article V
are true and correct as of the date hereof. The Parent Disclosure Schedules shall be arranged in sections corresponding to the numbered and lettered sections contained in this
Article V
and the disclosure in any section shall qualify (1) the corresponding section in this
Article V
, (2) the other sections in this
Article V
, but only to the extent that it is reasonably apparent from a reading of such disclosure that it also qualifies or applies to such other sections in this
Article V
, and (3) other sections in this
Article V
to which such disclosure is referenced or cross-referenced.
55
5.1
Organization and Qualification of Parent and Merger Sub
.
(a)
Each of Parent and Merger Sub (i) is a corporation duly organized, validly existing and in good standing or has equivalent status under the Laws of the Republic of the Marshall Islands, and has all requisite corporate power and authority to own, lease and operate its properties and assets and to carry on its business as it is now being conducted and as it is proposed to be conducted, and (ii) is duly qualified or licensed to do business and is in good standing or has equivalent status in each jurisdiction in which the character of the properties it owns, operates or leases or the nature of its business or activities makes such qualification necessary, except, in the case of this clause (ii), for such failures to be so qualified, licensed or in good standing as have not had, and would not reasonably be expected to have, individually or in the aggregate a Parent Material Adverse Effect.
(b)
Section 5.1(b)
of the Parent Disclosure Schedules sets forth each jurisdiction in which Parent is licensed or qualified to do business. True and complete copies of the Parent Article of Incorporation and Parent Bylaws, as in effect as of the date of this Agreement, have previously been made available to the Company by Parent.
5.2
Capitalization
.
(a)
The authorized capital stock of Parent consists of 50,000,000 shares of Class A common stock, $0.01 par value per share (“
Parent Class A Common Stock
”), 30,000,000 shares of Class B common stock, $0.01 par value per share (“
Parent Class B Common Stock
,” together with the Parent Class A Common Stock, the “
Parent Common Stock
”), and 5,000,000 shares of preferred stock, $0.01 par value per share (“
Parent Preferred Stock
”), in each case as of the date hereof. As of the close of business on the date of this Agreement, (i) 11,270,196 Parent Class A Common Stock are issued and outstanding, (ii) 22,002,998 Parent Class B Common Stock are issued and outstanding, (iii) no shares of Parent Common Stock are held in the treasury of Parent or by Subsidiaries of the Parent, and (iv) no shares of Parent Preferred Stock are issued and outstanding. The rights and privileges of each class of Parent’s capital stock are as set forth in Parent’s Articles of Incorporation. Merger Sub has 100 shares of common stock, no par value per share, issued and outstanding. The shares of stock of Merger Sub were duly authorized and validly issued, are fully paid and nonassessable and are owned by Parent. All of the shares of stock of Merger Sub have been issued in compliance in all material respects with applicable Laws and the organizational documents of Merger Sub.
(b)
Section 5.2(b)
of the Parent Disclosure Schedules sets forth a list, as of the date hereof, of all issued and outstanding shares of Parent Common Stock that are subject to a repurchase or redemption right or right of first refusal in favor of Parent, including all such shares under the General Maritime Corporation 2012 Equity Incentive Plan (the “
Parent Stock Plan
”), indicating the name of the applicable shareholder, the number of shares such shareholder has been granted and the number of unvested shares.
(c)
Section 5.2(c)
of the Parent Disclosure Schedules sets forth a list, as of the date hereof, of: (i) the name of each Person that is the registered owner of issued and outstanding Parent Common Stock and the number of shares owned by such Person; (ii) the number of shares of Parent Common Stock issued to date under the Parent Stock Plan, the number of shares of Parent Common Stock subject to outstanding options under the Parent Stock Plan and the number of shares of Parent Common Stock reserved for future issuance under the Parent Stock Plan; (iii) all outstanding Parent Stock Options, indicating with
56
respect to each such Parent Stock Option the name of the holder thereof, the Parent Stock Plan under which it was granted, the number of shares of Parent Common Stock subject to such Parent Stock Option that are vested and unvested, the exercise price, the date of grant, and the expiration date; and (iv) a list of all holders of outstanding Parent Warrants, including the number of shares of Parent Common Stock subject to each such Parent Warrant, the exercise price, if any, for such Parent Warrant, the extent to which such Parent Warrant is exercisable and the date on which such Parent Warrant expires. Parent has made available to the Company copies of (x) the Parent Stock Plan, (y) all forms of stock option agreements evidencing outstanding Parent Stock Options and (z) the Parent Warrants.
(d)
Except (x) as set forth in this
Section 5.2
, (y) as reserved for future grants under Parent Stock Plan, and (z) as set forth in
Section 5.2(d)
of the Parent Disclosure Schedules, (i) there are no voting or equity securities of any class of capital stock of Parent, or any security exchangeable into or exercisable for such securities issued, reserved for issuance or outstanding, or any other ownership interests, profits interests or any other type of equity interests in Parent issued by Parent or reserved for issuance by Parent, (ii) there is no subscription, warrant, option, convertible or exchangeable security, or other such right (contingent or otherwise) to purchase or otherwise acquire equity securities of Parent that is authorized or outstanding, and (iii) there is no commitment by Parent to issue shares, subscriptions, options, warrants convertible or exchangeable securities, calls or other such rights or to distribute to holders of any of its equity securities any evidence of Indebtedness or assets, to repurchase or redeem any securities of Parent or to grant, extend, accelerate the vesting of, change the price of, or otherwise amend any warrant, option, convertible or exchangeable security or other such right, or to purchase the equity securities of any third party entity, other than the Company and its Subsidiaries.
(e)
There are no outstanding or authorized stock appreciation, dividend equivalent, phantom stock, profit participation, performance-based rights, subscriptions, puts, calls, exchange rights or other similar rights with respect to Parent or any of its securities. Except (i) for the Parent Shareholder Support Agreement, the Current Parent Shareholder Agreement, the Equity Purchase Agreement the Shareholder Agreement and the Registration Rights Agreement and (ii) as set forth in
Section 5.2(e)
of the Parent Disclosure Schedules, neither Parent nor any of its Subsidiaries is a party to or is bound by any, and to the Knowledge of Parent, there are no agreements or other understandings with respect to the voting (including voting trusts, shareholder agreements and proxies) or sale or transfer (including agreements imposing transfer restriction) of any shares of capital stock or equity interests of Parent. There is no rights agreement, “poison pill” anti-takeover plan or other agreement of similar effect to which Parent or any of its Subsidiaries is a party or by which it or they are bound with respect to any equity security of any class of Parent. Except as (A) contemplated by the Registration Rights Agreement and (B) set forth in
Section 5.2(e)
of the Parent Disclosure Schedules, there are no registration rights, in each case with respect to any equity security of any class of Parent. There is no Indebtedness of Parent having the right to vote or convertible into, or exchangeable for, securities having the right to vote.
(f)
Except as set forth in
Section 5.2(g)
of the Parent Disclosure Schedules
,
all issued and outstanding shares of Parent Common Stock are, and all shares which may be issued pursuant to the exercise of the Parent Warrants and the Parent Stock Options, when issued in accordance with the applicable security, will be (i) duly authorized,
57
validly issued, fully paid and non-assessable; (ii) not subject to or issued in violation of any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right under any provision of the BCA, the Parent Charter Documents or any agreement to which Parent is a party or is otherwise bound or subject; and (iii) free of any Liens created by Parent in respect thereof. Except as set forth in
Section 5.2(g)
of the Parent Disclosure Schedules, there are no obligations, contingent or otherwise, of Parent or any of its Subsidiaries to repurchase, redeem or otherwise acquire any shares of Parent Common Stock.
(g)
All issued and outstanding shares of each of Parent Common Stock, Parent Stock Options and Parent Warrants were issued in compliance with applicable Law. No outstanding Parent Common Stock is subject to vesting or forfeiture rights or repurchase by the Parent.
(h)
Each Parent Stock Option was granted in compliance with all applicable Laws and all of the terms and conditions of the Parent Stock Plan pursuant to which it was issued. Each Parent Stock Option was granted with an exercise price per share equal to or greater than the fair market value of the underlying shares on the date of grant and has a grant date identical to the date on which the Parent Board or compensation committee actually awarded the Parent Stock Option. Each Parent Stock Option qualifies for the tax and accounting treatment afforded to such Parent Stock Option in the Parent’s tax returns and the Parent’s financial statements, respectively, and does not trigger any liability for the holder of such Parent Stock Option under Section 409A or Section 457A of the Code.
(i)
Since May 17, 2012 (the “
Parent Emergence Date
”), all distributions, dividends, repurchases and redemptions of the capital stock (or other equity interests) of Parent were undertaken in compliance with the Parent Charter Documents then in effect, any agreement to which Parent then was a party and in compliance with applicable Law. There are no declared or accrued unpaid dividends with respect to any shares of Parent Common Stock.
5.3
Subsidiaries
.
(a)
Section 5.3(a)
of the Parent Disclosure Schedules lists (i) the name of each of the direct and indirect Subsidiaries of Parent and (ii) its jurisdiction of organization.
(b)
Each Subsidiary of Parent (i) is duly organized, validly existing and in good standing (to the extent such concept is applicable) under the Laws of its jurisdiction of organization, (ii) has all requisite limited liability company, partnership, or corporate (as applicable) power and authority, directly or indirectly, to own, lease and operate its properties and assets and to carry on its business as now being conducted and as proposed to be conducted, and (iii) is duly licensed or qualified to do business and is in good standing or has equivalent status in each jurisdiction where the character of its properties owned, operated or leased or the nature of its business or activities makes such qualification necessary, except, in the case of this clause (iii), for such failures to be so licensed or qualified or in good standing as have not had, and would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect.
Section 5.3(b)
of the Parent Disclosure Schedules sets forth each jurisdiction in which each Subsidiary of Parent is licensed or qualified to conduct business.
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(c)
Except as set forth in
Section 5.3(c)
of the Parent Disclosure Schedules, all of the outstanding Equity Interests of each Subsidiary of Parent, including Merger Sub, are duly authorized, validly issued, fully paid, non-assessable and free of preemptive rights and all such Equity Interests are owned, of record and beneficially, by Parent or another of its Subsidiaries free and clear of all Liens. The shares of stock or other equity interests of each Subsidiary of Parent are owned as set forth on
Section 5.3(c)
of the Parent Disclosure Schedules. Except as set forth in
Section 5.3(c)
of the Parent Disclosure Schedules, there are no outstanding or authorized options, warrants, convertible securities, calls or other rights, agreements, arrangements or commitments of any character relating to the Equity Interests of the Subsidiaries or obligating Parent or any of its Subsidiaries to issue or sell any Equity Interest of any Subsidiary of Parent. There are no outstanding or authorized stock appreciation, dividend equivalent, phantom stock, profit participation, performance-based rights or other similar rights with respect to the Subsidiaries of Parent or any of their securities. Except as set forth in
Section 5.3(c)
of the Parent Disclosure Schedules, there are no voting trusts, shareholder agreements, proxies or other agreements or understandings in effect with respect to the voting or transfer of any of the Equity Interest of any Subsidiary of Parent.
(d)
Parent does not control directly or indirectly or have any direct or indirect equity participation or similar interest in any corporation, partnership, limited liability company, joint venture, trust or other business association or entity that is not a Subsidiary of Parent; and except as set forth in
Section 5.3(d)
of the Parent Disclosure Schedules, there are no obligations, contingent or otherwise, of Parent or any of its Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital stock or other equity interest of any Subsidiary of Parent or to provide funds to or make any material investment (in the form of a loan, capital contribution or otherwise) in any Subsidiary of Parent or any other entity, other than guarantees of bank obligations of Subsidiaries of Parent entered into in the Ordinary Course of Business.
(e)
True and complete copies of the articles of incorporation, by-laws or other organizational documents of each Subsidiary of Parent, as in effect as of the date of this Agreement, have previously been made available to the Company by Parent.
5.4
Authority
.
(a)
Each of Parent and Merger Sub has full corporate power and authority to enter into and perform its obligations under this Agreement and the Ancillary Documents to which it is a party and, subject only to the approval of the A&R Governing Documents by the affirmative vote of the Parent Shareholders required for such approval under
Parent Charter Documents and the BCA such that the A&R Governing Documents will be effective with respect to all holders of Parent Common Stock (“
Parent Shareholder Approval
”), to consummate the transactions contemplated hereby and thereby. Parent Board, by resolutions duly adopted by vote of all directors other than the abstaining director appointed by BlueMountain Capital Management, LLC at a meeting of all directors of Parent duly called and held, and, as of the date hereof, not subsequently rescinded or modified in any way, has (i) determined that this Agreement and the transactions contemplated hereby, including the Merger, are fair to, and in the best interests of, Parent and the Parent Shareholders, (ii) approved this Agreement and the transactions contemplated by this Agreement, including the
59
Merger, and the Ancillary Documents and the transactions contemplated thereby, each in accordance with the BCA, (iii) directed that the A&R Governing Documents be submitted to the Parent Shareholders for approval, and (iv) resolved to recommend that the Parent Shareholders approve the A&R Governing Documents (collectively, the “
Parent Board Recommendation
”) and directed that such matter be submitted for consideration of the Parent Shareholders at the Parent Meeting.
(b)
No Competition Laws of the Republic of the Marshall Islands apply or purport to apply to Parent or Merger Sub with respect to the transactions contemplated by this Agreement, including the Parent Shareholder Support Agreements.
(c)
The execution, delivery and performance by each of Parent and Merger Sub of this Agreement and each Ancillary Document to which it is a party and the consummation by each of Parent and Merger Sub of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of Parent (including the approval of the Parent Board), and no other corporate action on the part of either Parent or Merger Sub is necessary to authorize the execution, delivery and performance of this Agreement or to consummate the Merger and the other transactions contemplated hereby and thereby, in each case subject only to the receipt of the
Parent Shareholder Approval and as set forth in
Section 5.4(c)
of the Parent Disclosure Schedules This Agreement has been duly executed and delivered by each of Parent and Merger Sub, and (assuming due authorization, execution and delivery by each other party hereto) this Agreement constitutes a legal, valid and binding obligation of each of Parent and Merger Sub enforceable against each of Parent and Merger Sub, as the case may be, in accordance with its terms, subject to the Bankruptcy and Equity Exception. Each Ancillary Document to which either Parent or Merger Sub is a party as of the date hereof has been duly executed and delivered by Parent and Merger Sub, as the case may be (assuming due authorization, execution and delivery by each other party thereto), such Ancillary Document constitutes a legal and binding obligation of each of Parent and Merger Sub, as the case may be, enforceable against it in accordance with its terms, subject to the Bankruptcy and Equity Exception. When Ancillary Document to which either Parent or Merger Sub is a party has been duly executed and delivered by Parent and Merger Sub, as the case may be, in accordance with this Agreement (assuming due authorization, execution and delivery by each other party thereto), such Ancillary Document will constitute upon execution a legal and binding obligation of each of Parent and Merger Sub, as the case may be, enforceable against it in accordance with its terms, subject to the Bankruptcy and Equity Exception. There is no Voting Debt issued by the Parent or any of its Subsidiaries.
(d)
The Parent Common Stock included in the Aggregate Stock Consideration, when issued by Parent in accordance with this Agreement, will be duly issued, fully paid, non-assessable and free and clear of any Liens (other than any restrictions under the Shareholder Agreement, as set forth in
Section 5.3(d)
of the Parent Disclosure Schedules, arising under applicable securities Laws or created or imposed by the recipient of such Parent Common Stock), subject only to the receipt of the
Parent Shareholder Approval and except as set forth in
Section 5.3(d)
of the Parent Disclosure Schedules.
(e)
Parent has sufficient cash on hand or other sources of immediately available funds to enable it to make payment of the Aggregate Cash Consideration and consummate the transactions contemplated by this Agreement. Assuming the accuracy of the
60
Company’s representations and warranties set forth in
Article IV
, immediately after giving effect to the transactions contemplated by this Agreement, Parent and its Subsidiaries (other than the Company and any of its Subsidiaries) will (i) will own property which has a fair salable value greater than the amount required to pay its probable Liability on its existing debts as they mature, (ii) have adequate capital with which to engage in their business and (iii) have the ability to pay their debts as they become due.
(f)
Merger Sub was formed solely for the purpose of effecting the Merger and has not engaged in any business activities or conducted any operations other than in connection with the transactions contemplated hereby.
(g)
Except for as set forth in the Current Parent Shareholder Agreement and the Parent Shareholder Approval, neither the vote nor consent of the holders of any class or series of Parent’s capital stock is required to approve this Agreement and consummate the Merger and the other transactions contemplated hereby.
5.5
No Conflicts; Consents
.
(a)
The execution, delivery and performance by Parent of this Agreement and the Ancillary Documents to which it is a party, and the consummation of the transactions contemplated hereby and thereby, including the Merger, do not and will, with or without the giving of notice or the lapse of time or both, not: (i) conflict with, or result in any violation or breach of, or default under (whether upon lapse of time or the occurrence of any act or event or otherwise), any provision of the Articles of Incorporation or Bylaws of Parent (together, “
Parent Charter Documents
”), subject only to the receipt of the
Parent Shareholder Approval, or of the charter, bylaws or other organizational documents of any Subsidiary of Parent; (ii) except as set forth in
Section 5.5(a)
of the Parent Disclosure Schedules, conflict with, or result in any violation or breach of, or constitute (whether upon lapse of time or the occurrence of any act or event or otherwise) a default (or result or give rise to a right of termination, modification, cancellation or acceleration of any obligation or loss of any material benefit) under, require the payment of a penalty under, constitute a change in control under, or require a consent, notice, waiver or other action by any Person under the terms conditions or provisions of any Contract to which Parent or any of its Subsidiaries is a party or by which Parent or any of its Subsidiaries is bound or to which any of their respective properties and assets are subject (including any Parent Material Contract) or any Permit affecting the properties, assets (including the Parent Vessels) or business of Parent or its Subsidiaries; (iii) subject to, in the case of the issuance of the Aggregate Stock Consideration, obtaining Parent Shareholder Approval and compliance with the filing and notice requirements set forth in clauses (i) through (iv) of
Section 5.5(b)
, conflict with or result in a violation or breach of any provision of any Law or Order applicable to Parent or any of its Subsidiaries or any of its or their property or assets; or (iv) result in the creation or imposition of any Lien on any properties or assets of Parent or its Subsidiaries, except, in the case of the foregoing clause (ii) and clause (iv) for any violations, breaches, defaults, terminations, cancellations, accelerations or losses that are not, and would not reasonably be expected to be, individually or in the aggregate, material to Parent and its Subsidiaries, taken as a whole.
(b)
No consent, Approval, Permit, Order, declaration or filing with, or notice to, any Governmental Authority or any stock market or stock exchange on which
61
shares of Parent’s capital stock are admitted for trading is required by or with respect to Parent in connection with the execution, delivery and performance of this Agreement and the Ancillary Documents and the consummation of the transactions contemplated hereby and thereby, except (i) for such filings as may be required under applicable Competition Laws, (ii) for the filing and the recordation of the A&R Governing Documents, appropriate merger or other documents as required by the BCA and by the relevant authorities of other jurisdictions in which Parent is qualified to do business (including the Articles of Mergers), (iii) as set forth in
Section 5.5(b)
of the Parent Disclosure Schedules, (iv) for such consents, approvals, orders, authorizations, registrations, declarations and filings as may be required under applicable federal and state securities laws and the securities laws of any non-U.S. country, and (v) for such other consents, Approvals, Permits, Orders, declarations, filings or notices for which the failure to obtain or make which are not and would not reasonably be expected to be, individually or in the aggregate, material to Parent and its Subsidiaries, taken as a whole, except with respect to a delay in the consummation of the transactions contemplated hereby.
5.6
Parent Financial Statements; Information Provided
.
(a)
Parent has delivered to the Company complete copies of Parent’s audited financial statements consisting of the balance sheet of Parent as of December 31 in each of the years 2012 and 2013, and the related statements of income and retained earnings, shareholders’ equity and cash flow for the period from Parent Emergence Date through December 31, 2012 and the 2013 year then ended (the “
Parent
Audited Financial Statements
”), and unaudited financial statements consisting of the balance sheet of Parent as at September 30, 2014 and the related statements of income and retained earnings, shareholders’ equity and cash flow for the nine-month period then ended (the “
Parent
Interim Financial Statements
” and together with the Audited Financial Statements, the “
Parent
Financial Statements
”). The Parent Financial Statements have been prepared in accordance with GAAP applied on a consistent basis since the Parent Emergence Date, subject, in the case of the Parent Interim Financial Statements, to normal and recurring year-end adjustments (the effect of which will not expected to be, individually or in the aggregate, material) and the absence of notes (that, if presented, would not differ materially in amount or significance from those presented in the Parent Audited Financial Statements). The Parent Financial Statements were prepared based on the books and records of Parent, and fairly present in all material respects the financial condition of Parent as of the respective dates they were prepared and the results of the operations and the cash flow of Parent for the periods indicated. The balance sheet of Parent as of September 30, 2014 is referred to herein as the “
Parent
Balance Sheet
” and the date thereof as the “
Parent
Balance Sheet Date
”. Parent maintains a standard system of accounting established and administered in accordance with GAAP.
(b)
The information to be supplied by or on behalf of Parent for inclusion or incorporation by reference in the Company Information Statement to be sent to the Company Shareholders in connection with the Company Meeting shall not, on the date the Company Information Statement is first mailed to Company Shareholders, or at the time of the Company Meeting or at the Effective Time, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made in the Company Information Statement, in the light of the
62
circumstances under which they were made, not misleading; or omit to state any material fact necessary to correct any statement in any earlier communication with respect to the solicitation of proxies for the Company Meeting which has become false or misleading.
(c)
The information supplied by or on behalf of Parent for inclusion or incorporation by reference in the Parent S-1, shall not at the time the Parent S-1 is filed with the SEC, at any time it is amended or supplemented, or at the time the Parent S-1 is declared effective by the Securities and Exchange Commission, as applicable, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading.
(d)
Parent has made available to the Company a true and complete copy of the Parent S-1. Parent has made available to the Company copies of all comment letters received by Parent or any of its Affiliates or advisors from the SEC prior to the date hereof relating to the Parent S-1, together with all written responses thereto from Parent or any of its Affiliates or advisors.
5.7
No Undisclosed Liabilities
. Parent and its Subsidiaries have not incurred any Liabilities, except (i) such Liabilities that are fully and specifically reflected or reserved against, in accordance with GAAP, in the Parent Balance Sheet (or the notes thereto) as of the Parent Balance Sheet Date, (ii) such Liabilities, individually or in the aggregate, that have been incurred in the Ordinary Course of Business since the Parent Balance Sheet Date and (iii) such Liabilities as expressly permitted or contemplated by this Agreement. Neither Parent nor any of its Subsidiaries is a party to, or has any commitment to become a party to, any joint venture, off balance sheet partnership or any similar Contract (including any Contract or arrangement relating to any transaction or relationship between or among Parent and any of its Subsidiaries, on the one hand, and any unconsolidated Affiliate, including any structured finance, special purpose or limited purpose entity or person, on the other hand, or any “off balance sheet arrangements” (as defined in Item 303(a) of Regulation S-K under the Securities Exchange Act of 1934, as amended)).
5.8
Absence of Certain Changes, Events and Conditions
.
(a)
Except (x) as set forth in the Parent Financial Statements as of the Parent Balance Sheet Date (including the notes thereto), (y) as set forth in
Section 5.8
of the Parent Disclosure Schedules or (z) as arising in the Ordinary Course of Business from the Parent Balance Sheet Date until the date of this Agreement, there has not been, with respect to Parent and each of its Subsidiaries, any:
(i)
amendment of the charter, by-laws or other organizational documents of Parent;
(ii)
declaration, setting aside, or payment of any dividends or distributions on or in respect of any of its capital stock or any direct or indirect redemption, purchase or acquisition of its capital stock;
(iii)
split, combination or reclassification of any shares of its capital stock;
63
(iv)
issuance, sale or other disposition of any of its capital stock or grant of any options, warrants or other rights to purchase or obtain (including upon conversion, exchange or exercise) any of its capital stock;
(v)
incurrence, assumption, prepayment, amendment or guarantee of any Indebtedness except unsecured current obligations and Liabilities incurred in the Ordinary Course of Business in an amount that does not exceed $10,000,000, or any loan to any Person,
provided
, that Parent may pay any amounts due under the OCM Bunker Contracts;
(vi)
change in any method of financial or Tax accounting or accounting practice of Parent or any of its Subsidiaries, except as required by GAAP or as disclosed in the notes to the Parent Financial Statements;
(vii)
action by Parent or any of its Subsidiaries to (i) make, change or rescind any material Tax election, (ii) amend any Tax Return with respect to material Taxes or (iii) take any position on any Tax Return, take any action, omit to take any action or enter into any other transaction inconsistent with prior practice, in each case, with respect to Taxes and that would have the effect of materially increasing the Tax liability or materially reducing any Tax asset of Parent, or any of its Subsidiaries;
(viii)
adoption, modification or termination of any: (i) employment, severance, retention or other agreement with any current or former employee, officer, director, independent contractor or consultant, (ii) Employee Benefit Plan or (iii) collective bargaining or other agreement with a labor union, in each case whether written or oral;
(ix)
(i) grant of any bonuses, whether monetary or otherwise, or increase in any wages, salary, severance, pension or other compensation or benefits in respect of its current or former employees, officers, directors, independent contractors or consultants, other than (w) the taking of any necessary steps (including seeking shareholder approval) to implement the New Parent Employee Plan and Parent’s performance of its obligations pursuant to any grants thereunder, (x) as provided for in any written agreements in existence on the date of this Agreement, (y) in the Ordinary Course of Business or (z) as required by change in applicable Law, (ii) change in the terms of employment for any employee or any termination of any employees for which the aggregate costs and expenses exceed $3,000,000 or (iii) action to accelerate the vesting or payment of any compensation or benefit for any current or former employee, officer, director, independent contractor or consultant;
(x)
hiring or promoting any person as or to (as the case may be) an officer;
(xi)
purchase, lease or other acquisition of the right to own, use or lease any property or assets for an amount in excess of $100,000, individually (in the case of a lease, per annum) or $500,000 in the aggregate (in the case of a lease, for the entire term of the lease, not including any option term), except for purchases of inventory or supplies in the Ordinary Course of Business;
(xii)
acquisition by merger or consolidation with, or by purchase of a substantial portion of the assets or stock of, or by any other manner, any business or any Person or any division thereof;
(xiii)
any capital investment in, or any loan to, any Third Party;
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(xiv)
transfer, assignment, sale, abandonment or other disposition of any of the assets shown or reflected in the Parent Balance Sheet or cancellation of any debts or entitlements;
(xv)
imposition of any Lien upon any of Parent’s properties, capital stock or assets, tangible or intangible;
(xvi)
acceleration, termination, cancellation of or material modification to any Parent Material Contract, or entry into any Contract that would constitute a Parent Material Contract (including entry into any Charter Contracts or pooling arrangement);
(xvii)
any loan to (or forgiveness of any loan to), advance or entry into any other transaction with, any of its shareholders or current or former directors, officers and employees;
(xviii)
except for the Merger, adoption of any plan of merger, consolidation, reorganization, liquidation or dissolution or filing of a petition in bankruptcy under any provisions of federal or state bankruptcy Law or consent to the filing of any bankruptcy petition against it under any similar Law;
(xix)
commence or settle any material action or waive or modify any claims or rights of substantial value;
(xx)
entry into any settlement, conciliation or similar agreement with any Governmental Authority;
(xxi)
material damage, destruction or loss (whether or not covered by insurance) to its property (including the Parent Vessels);
(xxii)
cancellation or termination of any of the Company’s or its Subsidiary’s material insurance policies or allowance of any material coverage thereunder to lapse (unless at substantially the same time as such termination, cancellation or lapse, replacement policies providing coverage substantially equal to or greater than the coverage under such canceled, terminated or lapsed insurance policies are in full force and effect);
(xxiii)
any material capital expenditures;
(xxiv)
entry into a new line of business or abandonment or discontinuance of existing lines of business; and
(xxv)
any Contract to do any of the foregoing, or any action or omission that would result in any of the foregoing.
(b)
Since the Parent Balance Sheet Date, there has not been, with respect to Parent and each of its Subsidiaries, any event, occurrence or development that has had, or would reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect.
5.9
Taxes
.
(a)
Each of Parent and its Subsidiaries has accurately prepared and properly filed on a timely basis (taking in account extensions) all material Tax Returns that it was required to file with the appropriate Governmental Authority in all jurisdictions in which such Tax Returns are required to be filed since the Parent Emergence Date, and all such Tax
65
Returns were true, correct and complete in all material respects. Each of Parent and its Subsidiaries has in all material respects paid on a timely basis all Taxes that were due and payable (whether or not shown on any Tax Return) since the Parent Emergence Date except those Taxes being contested in good faith, which have been properly reserved in accordance with GAAP. The amount of the liability for unpaid Taxes of Parent and each of its Subsidiaries for all Tax periods (or portions thereof) ending on or before the Parent Balance Sheet Date does not, in the aggregate, exceed in any material respect the accruals and reserves for Taxes (excluding accruals and reserves for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the Parent Balance Sheet. The amount of the liability of Parent and each of its Subsidiaries for all unpaid Taxes does not, in the aggregate, exceed the amount of accruals and reserves for Taxes (excluding accruals and reserves for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the Parent Balance Sheet as adjusted for the passage of time in accordance with the past custom and practice of Parent (and which accruals and reserves shall not exceed comparable amounts incurred in similar periods in prior years). Neither Parent nor any of its Subsidiaries (i) has any Liability for Taxes of any Person other than Parent and its Subsidiaries under Treasury Regulations Section 1.1502-6 (or any corresponding provision of state, local or non-U.S. Law), as transferee or successor, by contract or otherwise (other than any contract entered into in the Ordinary Course of Business and not primarily regarding Taxes) or (ii) is a party to, or bound by, any Tax indemnity, Tax sharing, Tax allocation or similar agreement with a Person other than Parent and its Subsidiaries (other than any contract entered into in the Ordinary Course of Business and not primarily regarding Taxes). All material Taxes that Parent or any of its Subsidiaries was required by law to withhold or collect have been duly withheld or collected and, to the extent required, have been properly paid to the appropriate Governmental Authority. All material deficiencies asserted, or assessments made, against Parent or any of its Subsidiaries with respect to Parent or its Subsidiaries or the business of Parent and its Subsidiaries, as applicable, as a result of any examinations by any Taxing authority have been fully paid, settled or paid.
(b)
Parent has delivered or made available to the Company (i) copies of all federal, state, local and non-U.S. income, franchise and similar Tax Returns of Parent and its Subsidiaries relating to Taxes for all taxable periods since the Parent Emergence Date, and (ii) copies of all private letter rulings, revenue agent reports, information document requests, notices of proposed deficiencies, deficiency notices, examination reports, protests, petitions, closing agreements, settlement agreements, pending ruling requests and any similar documents assessed against, submitted by, received by, or agreed to by or on behalf of Parent or any of its Subsidiaries relating to Taxes for all taxable periods for which the statute of limitations has not yet expired. No examination or audit of any Tax Return of Parent or any of its Subsidiaries by any Governmental Authority has been made since the Parent Emergence Date, is currently in progress or, to the Knowledge of Parent, threatened or contemplated. None of Parent or its Subsidiaries is a party to any Action by any Taxing authority, nor, to the Knowledge of Parent, are there any pending or threatened Actions with respect to Parent or its Subsidiaries by any Taxing authority. Since the Parent Emergence Date, neither Parent nor any of its Subsidiaries has been informed in writing by any jurisdiction that the jurisdiction believes that Parent or any of its Subsidiaries was required to file any Tax Return that was not filed or is subject by that jurisdiction to Tax for which a Tax
66
Return was not filed. Neither Parent nor any of its Subsidiaries has since the Parent Emergence Date (i) waived any statute of limitations with respect to Taxes or agreed to extend the period for assessment or collection of any Taxes other than waivers or extensions that are no longer in effect or as a result of any extension of time permitted by applicable Law for filing a Tax Return, (ii) requested any extension of time (other than any extension of time not requiring the consent of a Taxing authority) within which to file any Tax Return, which Tax Return has not yet been filed, or (iii) executed or filed any power of attorney with any Taxing authority.
(c)
Section 5.9(c)
of the Parent Disclosure Schedules sets forth each jurisdiction in which Parent or any of its Subsidiaries files, is required to file or has been required to file a material Tax Return or is or has been liable for any material Taxes on a “nexus” basis since the Parent Emergence Date.
(d)
Section 5.9(d)
of the Parent Disclosure Schedules sets forth: the taxable years of Parent as to which the applicable statutes of limitations on the assessment and collection of Taxes have not expired; those years for which examinations by the Taxing authorities have been completed since the Parent Emergence Date; and those Taxable years for which examinations by Taxing authorities are presently being conducted.
(e)
Parent is classified as a corporation for U.S. federal income tax purposes and each of the Subsidiaries of Parent has elected to be, and is, disregarded as a separate entity for United States federal income tax purposes in accordance with Section 7701 of the Code.
(f)
There are no Liens for Taxes upon any of the assets or properties of Parent or any of its Subsidiaries, other than with respect to Taxes not yet due and payable or being contested in good faith.
(g)
Neither Parent nor any of its Subsidiaries has engaged in any “reportable transaction” within the meaning of Treasury Regulations Section 1.6011-4(b).
(h)
Parent has not been a “distributing corporation” or a “controlled corporation” in connection with a distribution described in Section 355 of the Code within the past two years.
(i)
Parent and its Subsidiaries are in compliance, in all material respects, with all transfer pricing requirements in all jurisdictions in which the Parent and its Subsidiaries do business.
(j)
There are no outstanding powers of attorney enabling any party to represent the Parent or any of its subsidiaries with respect to Taxes.
(k)
Neither Parent nor any of its Subsidiaries (i) is treated under Section 7874(b) of the Code as a “domestic corporation,” (ii) is an “expatriated entity” within the meaning of Section 7874(a)(2)(A) of the Code or a “surrogate foreign corporation” within the meaning of Section 7874(a)(2)(B) of the Code or (iii) was created or organized both in the United States and in a non-U.S. jurisdiction.
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5.10
Material Contracts
.
(a)
Section 5.10(a)
of the Parent Disclosure Schedules lists each of the following Contracts (such Contracts, being “
Parent
Material Contracts
”) to which Parent or its Subsidiaries is a party or is bound to:
(i)
each Contract involving payment or other obligations due to be paid by or to Parent or any of its Subsidiaries aggregating more than $250,000 in any calendar year per Contract or series of related Contracts;
(ii)
all Contracts that provide for capital expenditures or the acquisition or construction of fixed assets for the benefit and use of Parent or any of its Subsidiaries, the performance of which involves unpaid commitments or liabilities in excess of $250,000;
(iii)
all ship-sales, memoranda of agreement, Charter Contracts or other vessel acquisition, sale or disposition Contracts for Newbuildings and secondhand vessels contracted for Parent or any of its Subsidiaries, and any other Contracts with respect to such vessels and the financing thereof, including performance guarantees, counter guarantees, refund guarantees, future charters, material supervision agreements and material plan verification services agreements;
(iv)
all Contracts with any Person pursuant to which such Person is engaged or has any form of option or other right (including exclusive or preferred provider rights) to buy or sell or otherwise provide any vessel or vessels;
(v)
all Contracts pursuant to which a Parent Vessel is leased or chartered by the Parent to a Third Party or any of Parent’s Subsidiaries, including all Contracts with respect to the Parent Vessels or any vessel operated or commercially or technically managed by the Parent or any of its Subsidiaries under a Charter Contract;
(vi)
all operating agreements, management agreements, including, without limitation, commercial management agreements and technical management agreements, crewing agreements, Contracts for affreightment or financial lease (including sale/leaseback or similar arrangements) with respect to any Parent Vessel;
(vii)
all Contracts that require Parent to purchase its total requirements of any product or service from a third party or that contain “take or pay” or other minimum commitment provisions;
(viii)
all Contracts that provide for the indemnification by Parent or its Subsidiaries of any Person or the assumption of any Tax, environmental or other Liability of any Person;
(ix)
all Contracts that relate to the acquisition, lease or disposition (whether by merger, sale of stock, sale of assets or otherwise) of any business, a material amount of stock or assets, including any vessel, of Parent or its Subsidiaries or any other Person, or any real property;
(x)
all broker, distributor, dealer, franchise, agency, sales promotion, market research, marketing consulting and advertising Contracts to which Parent or its Subsidiaries is a party;
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(xi)
all employment, independent contractor, severance, retention, bonus, profit sharing, incentive plan, consulting, services or similar Contracts with any employee, consultant or independent contractor of Parent or any of its Subsidiaries;
(xii)
except for Contracts relating to trade receivables, all Contracts relating to the creation, incurrence, guarantee, or assumption of Indebtedness (including, without limitation, guarantees) of Parent or its Subsidiaries or relating to any Indebtedness owed by any Person to Parent or its Subsidiaries;
(xiii)
all Contracts with any Governmental Authority;
(xiv)
all Contracts containing provisions or covenants that limit or purport to limit the ability of Parent or its Subsidiaries to compete in any line of business or with any Person or in any geographic area or during any period of time;
(xv)
any Contracts that provide for any joint venture, partnership, limited liability company, strategic alliance, profit sharing or similar arrangements;
(xvi)
all collective bargaining agreements or Contracts with any labor union; and
(xvii)
each Contract to which Parent or any of its Subsidiaries is a party or otherwise bound that contains a so-called “most favored nations” provision or similar provisions requiring Parent or any of its Subsidiaries to offer to a Person any terms or conditions that are at least as favorable as those offered to one or more other Persons ;
(xviii)
any interest rate, currency or other hedging Contracts;
(xix)
real property or personal property leases, other than pursuant to Charter Contracts, which provide for aggregate annual payments by Parent or any of its Subsidiaries of $100,000 or more per year per lease or series of related leases;
(xx)
each Contract involving a standstill or similar obligation of Parent or any of its Subsidiaries;
(xxi)
all Contracts containing an “earn-out,” contingent or deferred purchase price or similar contingent payment obligation;
(xxii)
all Contracts in settlement of an Action; and
(xxiii)
any other Contract that is material to Parent and its Subsidiaries, taken as a whole, and not previously disclosed pursuant to this
Section 5.10(a)
.
(b)
Each Parent Material Contract (other than a Parent Newbuilding Contract) is valid, binding and enforceable and in full force and effect with respect to Parent, each Subsidiary party thereto and, to the Knowledge of Parent, the other parties thereto, in accordance with its terms, subject to the Bankruptcy and Equity Exception. Except as set forth in
Section 5.10(b)
of the Parent Disclosure Schedules, none of Parent, any of its Subsidiaries or, to the Parent’s Knowledge, any other party to any Parent Material Contract (other than a Parent Newbuilding Contract) is in breach or violation of or in default under (or is alleged to be in breach or violation of or default under) in any material respect, or has provided or received any notice of any intention to terminate, any Parent Material Contract (other than a Parent Newbuilding Contract). Except as set forth in
Section 5.10(b)
of the
69
Parent Disclosure Schedules, no event or circumstance has occurred that, with notice or lapse of time or both, would constitute a breach or default under any Parent Material Contract (other than a Parent Newbuilding Contract) or result in any right of cancelation, termination or consent thereunder or would cause or permit the acceleration or other changes of any right or obligation or the loss of any benefit thereunder. Complete and correct copies of each Parent Material Contract (including all modifications, amendments and supplements thereto and waivers thereunder) (other than a Parent Newbuilding Contract) have been made available to the Company or its Representatives. Neither Parent nor its Subsidiaries has received written notice of termination of any Parent Material Contract (other than a Parent Newbuilding Contract).
(c)
Except as set forth in
Section 5.10(c)
of the Company Disclosure Schedules, there are no agreements to which Parent or any of its Subsidiaries is a party or bound with any Affiliate of Parent (other than any Subsidiary which is a direct or indirect wholly owned Subsidiary of Parent or agreements with directors or officers of Parent or its Subsidiaries that have been previously made available to the Company).
(d)
There is no non-competition or other similar agreement, judgment, injunction or order to which Parent or any of its Subsidiaries is a party or is subject that has, or would reasonably be expected to have, the effect of prohibiting, restricting or impairing in any material respect the conduct of the business of Parent or any of its Subsidiaries or, following the Effective Time, Parent or any of its Subsidiaries as currently conducted and as currently proposed to be conducted, except as set forth in
Section 5.10(d)
of the Parent Disclosure Schedules.
(e)
Each Parent Newbuilding Contract is valid, binding and enforceable and in full force and effect with respect to Parent, each Subsidiary party thereto and, to the Knowledge of Parent, the other parties thereto, in accordance with its terms, subject to the Bankruptcy and Equity Exception. Except as set forth in
Section 5.10(e)
of the Parent Disclosure Schedules, none of Parent, any of its Subsidiaries or, to Parent’s Knowledge, any other party to any Parent Newbuilding Contract is in breach or violation of or in default under (or is alleged to be in breach or violation of or default under), or has provided or received any notice of any intention to terminate, any Parent Newbuilding Contract. No event or circumstance has occurred that, with notice or lapse of time or both, would constitute a breach or default under any Parent Newbuilding Contract or result in any right of cancelation, termination or consent thereunder or would cause or permit the acceleration or other changes of any right or obligation or the loss of any benefit thereunder. Complete and correct copies of each Parent Newbuilding Contract (including all modifications, amendments and supplements thereto and waivers thereunder) have been made available to the Company. Neither Parent nor its Subsidiaries has received written notice of termination of any Parent Newbuilding Contract.
5.11
Legal Proceedings; Orders
. Except as set forth in
Section 5.11
of the Parent Disclosure Schedules, (i) there are no, and there have not been since the Parent Emergence Date, Actions pending or, to the Parent’s Knowledge, threatened, against or by Parent, any of its Subsidiaries, any of their respective properties or assets, or against any director, officer or employee of Parent or any of its Subsidiaries in matters relating to Parent or any of its Subsidiaries or their operations, (ii) there are no unsatisfied judgments, penalties or awards
70
against or affecting Parent, its Subsidiaries or any of Parent’s or its Subsidiaries’ properties or assets, and (iii) since the Parent Emergence Date, there have been no settlement agreements with respect to any material Action or Order.
Section 5.11
of the Parent Disclosure Schedules sets forth each outstanding Order to which the Parent, any of its Subsidiaries, or any of their respective properties or asset is subject, and the Parent and its Subsidiaries, as the case may be, are in compliance with the terms of each such Order. No event has occurred or circumstances exist that would reasonably be expected to constitute or result in (with or without notice or lapse of time) a violation of any such outstanding Order.
5.12
Environmental Matters
.
(a)
Except as set forth in
Section 5.12(a)
of the Parent Disclosure Schedules: (A) each of Parent and its Subsidiaries and each vessel currently, operated or commercially or technically managed by the Parent or a Subsidiary under a Charter Contract and each Parent Vessel is currently and, since the Parent Emergence Date, has been in compliance in all material respects with all applicable Environmental Laws; (B) each of Parent and its Subsidiaries has obtained and is in material compliance with all Environmental Permits (each of which is disclosed in
Section 5.12(a)
of the Parent Disclosure Schedules) required to own, lease, operate or use its properties or other assets (including Parent Vessels) and to carry on its business and operations as currently conducted; (C) all such Environmental Permits are in full force and effect; (D) since the Parent Emergence Date, there has been no Release of any Hazardous Materials from any Parent Vessel or any vessel operated or commercially or technically managed by the Parent or a Subsidiary under a Charter Contract in violation of any Environmental Law resulting (or that would reasonably be expected to result) in any material liability to Parent or any of its Subsidiaries from any of its current or former operations, and neither Parent nor any of its Subsidiaries has treated, stored, disposed of, arranged for or permitted the disposal of, or transported, or handled any Hazardous Materials in violation in any material respect of any Environmental Laws; (E) there are no pending or, to the Knowledge of Parent, threatened and since the Parent Emergence Date there have not been, Environmental Claims against or affecting Parent or any of its Subsidiaries, and neither Parent nor any of its Subsidiaries has received an Environmental Notice; and (F) neither Parent nor any of its Subsidiaries has retained or assumed, by contract or operation of Law or otherwise, any obligation, liability, order, settlement, judgment, injunction or decree relating to or arising under Environmental Law.
(b)
To the Knowledge of Parent, the Parent Financial Statements as of the Parent Balance Sheet Date contain an adequate reserve as determined in accordance with GAAP for liabilities and obligations under Environmental Laws and with respect to Hazardous Materials. Parent has made available to the Company (i) all written environmental reports since the Parent Emergence Date with respect to the business or assets of Parent or any currently or formerly owned or leased properties, including the Parent Vessels, or operations and (ii) any and all material documents since the Parent Emergence Date concerning planned or anticipated capital expenditures required to reduce, offset, limit or otherwise control pollution and/or emissions, manage waste or otherwise ensure compliance with current or future Environmental Laws (including, without limitation, costs of remediation, pollution control equipment and operational changes). The only representations and warranties of Parent in this Agreement relating to any environmental matters or any other
71
obligation or liability with respect to Hazardous Materials or arising under Environmental Laws are those set forth in this
Section 5.12
. Parent is not aware of, and does not reasonably anticipate, as of the Closing Date, any condition, event or circumstance concerning the Release or regulation of Hazardous Materials that might, after the Closing Date, prevent, impede or materially increase the costs associated with the ownership, lease, operation, performance or use of the business or assets of Parent as currently conducted.
5.13
Employee Benefit Matters
.
(a)
Section 5.13(a)
of the Parent Disclosure Schedules contains a complete and accurate list of all material Parent Employee Plans.
Section 5.13(a)
of the Parent Disclosure Schedules identifies, with respect to each Parent Employee Plan, the jurisdiction whose Laws govern such Parent Employee Plan.
(b)
With respect to each Parent Employee Plan, Parent has furnished or made available to the Company, a complete and accurate copy of: (i) such plan (or a written summary of any unwritten plan); (ii) in the case of any Parent Employee Plan for which a Form 5500 is required to be filed, a copy of the two most recently filed Form 5500, with schedules and financial statements attached; (iii) where applicable, copies of any trust agreements or other funding arrangements, custodial agreements, insurance policies and contracts, administration agreements and similar agreements, and investment management or investment advisory agreements, now in effect or required in the future as a result of the transactions contemplated by this Agreement or otherwise; (iv) the most recent financial statements for each Parent Employee Plan that is funded; (v) all personnel, payroll and employment manuals and policies; (vi) all employee handbooks; (vii) the most recent reports regarding the satisfaction of any applicable nondiscrimination requirements under the Code in respect of the Parent Employee Plan; (viii) in the case of any Parent Employee Plan that is intended to be qualified under Section 401(a) of the Code, a copy of the most recent determination, opinion or advisory letter from the Internal Revenue Service; (ix) actuarial valuations and reports related to any Parent Employee Plans with respect to the two most recently completed plan years; and (x) copies of material notices, letters or other correspondence from the Internal Revenue Service, Department of Labor, Pension Benefit Guaranty Corporation or other Governmental Authority relating to the Parent Employee Plans.
(c)
Except as would not be expected to be material to Parent, (i) each Parent Employee Plan and any related trust has been established, administered and maintained in accordance with its terms and in compliance with all applicable Laws (including ERISA, the Code and any applicable local Laws), (ii) each of Parent, its Subsidiaries and their ERISA Affiliates has met its obligations with respect to such Parent Employee Plan and has made all required contributions thereto (or reserved such contributions on the Parent Balance Sheet in accordance with GAAP), in accordance with the terms of such Parent Employee Plan and all applicable Laws and accounting principles, and (iii) Parent, its Subsidiaries, each of their respective ERISA Affiliates and each Parent Employee Plan are in compliance with all Laws applicable to benefit plans. With respect to the Parent Employee Plans, no event has occurred and there exists no condition or set of circumstances in connection with which Parent or any of its Subsidiaries could be subject to
72
any liability that would be expected to be material to Parent under ERISA, the Code or any other applicable Law. With respect to any Parent Employee Plan that is intended to be tax-qualified, no event has occurred, and to the Knowledge of Parent there exists no condition or set of circumstances, that, individually or in the aggregate, could reasonably be expected to result in the loss of such tax-qualified status..
(d)
Neither Parent, any of its Subsidiaries nor any of their ERISA Affiliates has (i) ever maintained or contributed to, or been obligated to contribute to, an Employee Benefit Plan which was ever subject to Section 412 of the Code or Section 302 or Title IV of ERISA or (ii) ever contributed to, or been obligated to contribute to a “multiemployer plan” (as defined in Section 4001(a)(3) of ERISA). No Parent Employee Plan is funded by, associated with or related to a “voluntary employee’s beneficiary association” within the meaning of Section 501(c)(9) of the Code. No Parent Employee Plan holds securities issued by Parent, any of its Subsidiaries or any of their ERISA Affiliates.
(e)
Each Parent Employee Plan can be amended, terminated or otherwise discontinued after the Closing in accordance with its terms, without material liabilities to Parent or any of its Affiliates other than ordinary administrative expenses typically incurred in a termination event. None of Parent or any of its Subsidiaries has any commitment or obligation or has made any representations to any employee, officer, director, independent contractor or consultant, whether or not legally binding, to adopt, amend, modify or terminate any Parent Employee Plan or any collective bargaining agreement, in connection with the consummation of the transactions contemplated by this Agreement or otherwise.
(f)
Except as set forth in
Section 5.13(f)
of the Parent Disclosure Schedules, neither the execution of this Agreement nor any of the transactions contemplated by this Agreement will (either alone or upon the occurrence of any additional or subsequent events): (i) entitle any current or former director, officer, employee, independent contractor or consultant of Parent or any of its Subsidiaries or any of their dependents, spouses or beneficiaries to severance pay or any other payment; (ii) accelerate or otherwise enhance the time of payment, funding or vesting, or increase the amount of compensation due to any such individual; (iii) limit or restrict the right of Parent to merge, amend or terminate any Employee Benefit Plan; or (iv) result in any payments being characterized as an “excess parachute payment” (as defined in Section 280G of the Code, without regard to Section 280G(b)(4), or similar Law of another jurisdiction). Neither Parent nor any of its Subsidiaries has any obligation to “gross-up” or indemnify any individual with respect to any Tax imposed by Section 4999 of the Code or similar Law of another jurisdiction.
(g)
None of the Parent Employee Plans promises or provides post-termination or retiree medical or other post-termination or retiree welfare
benefits
to any person, except as required by Section 4980B of the Code or similar applicable Law of another jurisdiction, and neither Parent nor any of its ERISA Affiliates has any Liability to provide post-termination or retiree welfare benefits to any individual or ever represented, promised or contracted to any individual that such individual would be provided with post-termination or retiree welfare benefits.
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(h)
Except as set forth in
Section 5.13(h)
of the Parent Disclosure Schedules, there is no pending or, to Parent’s Knowledge, threatened Action relating to an Employee Benefit Plan (other than routine claims for benefits), and no Employee Benefit Plan has within the two years prior to the date hereof been the subject of an examination or audit by a Governmental Authority or the subject of an application or filing under or is a participant in, an amnesty, voluntary compliance, self-correction or similar program sponsored by any Governmental Authority.
(i)
There has been no amendment to, announcement by Parent or any of its Affiliates relating to, or change in employee participation or coverage under, any Employee Benefit Plan or collective bargaining agreement that would increase the annual expense of Parent or any of its Subsidiaries maintaining such plan above the level of the expense incurred for the most recently completed fiscal year with respect to any director, officer, employee, independent contractor or consultant of Parent or any of its Subsidiaries, as applicable. Neither Parent nor any of its Affiliates has any commitment or obligation or has made any representations to any director, officer, employee, independent contractor or consultant of Parent or any of its Subsidiaries, whether or not legally binding, to adopt, amend, modify or terminate any Employee Benefit Plan or any collective bargaining agreement.
(j)
Each Employee Benefit Plan that is subject to Section 409A and/or Section 457A of the Code has been administered in compliance with its terms and the operational and documentary requirements of Section 409A and/or Section 457A of the Code and all applicable regulatory guidance (including notices, rulings and proposed and final regulations) thereunder. Parent does not have any obligation to gross up, indemnify or otherwise reimburse any individual for any excise taxes, interest or penalties incurred pursuant to Section 409A and/or Section 457A of the Code.
(k)
Each individual who is classified by Parent as an independent contractor has been properly classified for purposes of participation and benefit accrual under each Employee Benefit Plan.
(l)
With respect to each Parent Employee Plan that is maintained outside the jurisdiction of the United
States
or primarily covers employees residing or working outside the United States, (i) the Parent Employee Plan has been established, maintained and administered in all material respects in compliance with its terms and all
applicable
Laws; (ii) all contributions and expenses that are required to be made have been made or properly accrued; and (iii) with respect to any such Parent Employee Plan that is intended to be eligible to receive favorable tax treatment under the Laws applying to such Parent Employee Plan, all requirements necessary to obtain such favorable tax treatment have been satisfied.
5.14
Compliance With Laws
. Except with respect to Taxes, Environmental Laws and ERISA, which are the subjects of
Section 5.9
,
Section 5.12
and
Section 5.13
, each of Parent and its Subsidiaries has materially complied with since the Parent Emergence Date, and is now complying with, and has not received any written notice alleging any violation with respect to, all Laws, Orders and Maritime Guidelines applicable to it or its business, properties or assets
74
(including the Parent Vessels). To Parent’s knowledge, neither Parent nor any of its Subsidiaries is under investigation with respect to the material violation of any Laws.
5.15
Permits
. Each of Parent and its Subsidiaries has obtained all material Permits required for it to own, lease or operate its properties (including the Parent Vessels and any vessel operated or commercially or technically managed by the Parent or a Subsidiary under a Charter Contract) and conduct its business. Each such material Permit is valid and in full force and effect. All fees and charges with respect to such material Permits have been paid in full.
Section 5.15
of the Parent Disclosure Schedules lists all current material Permits issued to Parent or its Subsidiaries, including the names of the Permits and their respective dates of issuance and expiration. Neither Parent nor any of its Subsidiaries is in material default or material violation, and no event has occurred that, with or without notice or lapse of time or both, would reasonably be expected to constitute a material default or material violation, of any term, condition or provision of any material Permit of Parent or any of its Subsidiaries.
5.16
Employment Matters
.
Section 5.16
of the Parent Disclosure Schedules sets forth an accurate list of all employees of and other service providers to Parent and its Subsidiaries, including, with respect to each individual, such individual’s status as an employee, independent contractor, or other position, annual rate of compensation, including bonuses and other incentive compensation, work location and the jurisdiction whose Laws govern such individual’s employment or service. Neither Parent nor any of its Subsidiaries (a) is or has been a party to or otherwise bound by any collective bargaining agreement with a labor union, works counsel or labor organization, (b) has or has had any obligation to consult with any collective bargaining representative for any of its employees, (c) is or has been, to the Company’s Knowledge, the subject of a union organizing effort, (d) has received a grievance pursuant to a collective bargaining agreement with respect to any matter, or (e) has received a demand for arbitration or has been a party to an arbitration proceeding pursuant to a collective bargaining agreement. There are no, and there have not been since the Parent Emergence Date, except as would not be expected to be material to Parent, Actions against Parent pending, or to Parent’s Knowledge, threatened to be brought or filed, asserting that Parent or any of its Subsidiaries has committed unfair labor practices, employment discrimination, harassment, retaliation, or violation of any law related to equal pay, safety wage and hours or concerning any other employment-related matter arising under applicable Laws or that is seeking to compel it to bargain with any labor union, works counsel or labor organization, nor is there pending or, to the Knowledge of Parent, threatened, and there have not been since the Parent Emergence Date, any labor strike, dispute, walkout, work stoppage, slow-down or lockout concerted refusal to work overtime or other similar labor disruption or dispute affecting Parent or any of its Subsidiaries. Parent is and, since the Parent Emergence Date, has been in compliance in all material respects with (i) all applicable Laws pertaining to employment and employment practices to the extent they relate to employees of Parent, including all Laws relating to labor relations, equal employment opportunities, fair employment practices, employment discrimination, harassment, retaliation, reasonable accommodation, disability rights or benefits, immigration, wages, hours, overtime compensation, child labor, hiring, promotion and termination of employees, working conditions, meal and break periods, privacy, health and safety, workers’ compensation, leaves of absence and unemployment insurance, and (ii) obligations of Parent and its Subsidiaries under any employment agreement, severance agreement or any similar employment or labor-related agreement or understanding. All individuals characterized and treated by Parent as independent
75
contractors or consultants are properly treated as independent contractors under all applicable Laws. All employees of Parent classified as exempt under the Fair Labor Standards Act and state and local wage and hour laws are properly classified in all material respects.
5.17
Insurance
.
(a)
Section 5.17(a)
of the Parent Disclosure Schedules lists all policies or binders, as in effect on the date hereof, of property, fire and casualty, product liability, general liability, real and personal property, workers’ compensation, directors’ and officers’ liability, fiduciary liability, pollution legal liability or other similar policies providing coverage for personal injuries, damages, cleanup or natural resource damages, marine risks including hull and machinery, protection and indemnity and war risks (including acts of terrorism, acts of piracy or armed conflicts), and other forms of insurance (including club entries) covering Parent and its Subsidiaries and its and their the assets (including the Parent Vessels), business, operations, employees, officers and directors of Parent (collectively, the “
Parent Insurance Policies
”) (including the names of the carriers of such policies, the names insured, the policy number, the limited and the expiration date thereof) and with the insurance companies or protection and indemnity clubs and associations set forth therein. True and complete copies of such Parent Insurance Policies have been made available to the Company.
(b)
All Parent Insurance Policies are valid and in full force and effect and shall remain in full force and effect following the consummation of the transactions contemplated by this Agreement. Parent has not received any notice of cancellation of, premium increase with respect to, lapse of coverage under, or alteration of coverage under, any of such Parent Insurance Policies and, to Parent’s Knowledge, no insurer under any Parent Insurance Policy has threatened to cancel or unilaterally reduce or limit the stated coverages contained in such Parent Insurance Policy. Parent and its Subsidiaries have paid all premiums and calls currently due in respect of such Parent Insurance Policies and Parent nor any of its Subsidiaries is otherwise in breach or default under any Parent Insurance Policy.
Section 5.17(b)
of the Parent Disclosure Schedules sets forth any pending policy claims in excess of $100,000. There are no claims related to the business of Parent pending under any Parent Insurance Policies as to which coverage has been questioned, denied or disputed or in respect of which there is an outstanding reservation of rights. To Parent’s Knowledge, no facts or circumstances exist that would reasonably be expected to relieve the insurer under any Parent Insurance Policy of its obligations to satisfy, to the fullest extent provided by such Parent Insurance Policy, any claim which such Parent Insurance Policy is intended to cover. To Parent’s Knowledge, the Parent Insurance Policies are sufficient for compliance in all material respects with all requirements of Law and all Material Contracts. Except as noted on Section 5.17(b) of the Parent Disclosure Schedules, the Parent Insurance Policies will provide continued coverage to Parent and/or its Subsidiaries, as applicable, following the Closing.
5.18
Vessels
.
Section 5.18
of the Parent Disclosure Schedules sets forth a description of each Parent Vessel (categorized by type), including its name, owner, capacity (gt or dwt, as specified therein), year built, its Classification Society, Flag State, charterer (and whether such charterer is currently operating in the spot or time charter market), and pooling arrangement and
76
manager (commercial or technical). The Parent or its Subsidiaries do not own, lease, operate, commercially or technically manage, use or charter any vessels other than those set forth on
Section 5.18
of the Parent Disclosure Schedules. Each Parent Vessel (i) is duly registered in the name of the Subsidiary that owns it under the Laws and the flag of such Parent Vessel’s Flag State (as set forth on
Section 5.18
of the Parent Disclosure Schedules), and no other action is necessary to establish and perfect such Subsidiary’s title to and interest in the applicable Parent Vessel as against any charterer or third party, (ii) is seaworthy and in good operating condition, and has been properly and efficiently maintained in accordance with internationally accepted standards for good ship maintenance, (iii) has all national and international operating and trading certificates and endorsements, each valid and un-extended, that are required for the operation of such Parent Vessel in the trades and geographic areas in which it is operated, and (iv) has been classed by a Classification Society that is a member of the International Association of Classification Societies, and is fully in class with no outstanding material recommendations or notations, and (v) is operated in compliance in all material respects with all Maritime Guidelines and Laws. Except (y) as set forth on
Section 5.18
of the Parent Disclosure Schedules or (z) to the Knowledge of the Parent, (A) no event has occurred and no condition exists that would reasonably be expected to cause any Parent Vessel’s class to be suspended or withdrawn, (B) all events and conditions that are required to be reported as to class have been disclosed and reported to such Parent Vessel’s Classification Society and (C) each Parent Vessel is and, following its delivery under the relevant Parent Newbuilding Contract, each Newbuilding shall be free of average damage affecting its class. As of the date of this Agreement, either Parent or one of its Subsidiaries, as applicable, is the sole owner of each Parent Vessel and has good and marketable title to such Parent Vessel, free and clear of all Liens, except as set forth in
Section 5.18
of the Parent Disclosure Schedules. Prior to the date of this Agreement, Parent has delivered or made available to the Company accurate, complete and correct copies of all SIRE and vetting inspection reports relating to each Parent Vessels since the Parent Emergence Date. Parent and each of its Subsidiaries are qualified in all material respects to own and operate the Parent Vessels under applicable Laws, including the Laws of each Parent Vessel’s Flag State.
5.19
No Existing Discussions
. Neither Parent nor any of its Subsidiaries is engaged, directly or indirectly, in any discussions or negotiations with any other party other than the Company with respect to a Parent Acquisition Proposal.
5.20
Brokers
. Except for Evercore Group, L.L.C., no broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement or any Ancillary Document based upon arrangements made by or on behalf of Parent.
5.21
Controls and Procedures, Certifications and Other Matters
.
(a)
Parent and each of its Subsidiaries has established and maintains accurate books and records reflecting its assets and liabilities and has established and maintains a system of internal controls over financial reporting covering Parent and each of its Subsidiaries that is sufficient to provide reasonable assurance (i) regarding the reliability of the preparation of the Parent Financial Statements in accordance with GAAP, including that transactions are recorded as necessary to permit preparation of Parent Financial Statements in accordance with GAAP and to maintain accountability for assets, (ii) that
77
transactions of Parent and its Subsidiaries are being made only in accordance with authorizations of management and the Parent Board, and (iii) regarding prevention or timely detection of the unauthorized acquisition, use or disposition of Parent’s and its Subsidiaries’ assets. Neither Parent nor its Subsidiaries (including, to Parent’s Knowledge, its personnel who have a role in the preparation of Parent Financial Statements. or the internal accounting controls utilized by Parent) nor, to Parent’s Knowledge, the Parent’s independent accountants has identified or been made aware of (x) any significant deficiency or material weakness in the system of internal accounting controls utilized by Parent and its Subsidiaries, (y) any fraud, whether or not material, that involves the management of Parent and its Subsidiaries or any of their personnel who have a significant role in the internal accounting controls of Parent and its Subsidiaries, or, to Parent’s Knowledge, any material fraud of their other personnel or (z) any claim or allegation regarding the foregoing.
(b)
The minute books and stock record books of Parent, all of which have been made available to the Company (except as set forth in
Schedule 5.21(b)
of the Parent Disclosure Schedules), are complete and correct and have been maintained in accordance with sound business practices. The minute books of Parent contain accurate and complete records of all meetings, and actions taken by written consent of, the Parent Shareholders, the Parent Board and any committees of the Parent Board, and no meeting, or action taken by written consent of any of the Parent Shareholders, Parent Board or committee has been held for which minutes have not been prepared and are not contained in such minute books. At the Closing, all of those books and records will be in the possession of Parent.
(c)
Except as set forth on
Section 5.21(c)
of the Parent Disclosure Schedules, no employee, officer, director, shareholder, partner or member of the Company or any of its Subsidiaries, any member of his or her Immediate Family or any of their respective Affiliates, other than in connection with any Ordinary Course of Business employment arrangements and in connection with holding shares of Parent Common Stock or Parent Warrants, (i) owes any material amount to Parent or any of its Subsidiaries, and none of Parent or any of its Subsidiaries owes any material amount to, or has committed to make any loan or extend or guarantee credit to or for the benefit of, any such Person, (ii) is involved in any material business arrangement or other relationship with Parent or any of its Subsidiaries (whether written or oral), (iii) owns any material property or right, tangible or intangible, that is used by Parent or any of its Subsidiaries, or (iv) has any material claim or cause of action against Parent or any of its Subsidiaries (other than remuneration for services performed on behalf of Parent or any of its Subsidiaries).
5.22
Real Property
.
(a)
Neither Parent nor any of its Subsidiaries owns, or since the Parent Emergence Date, has owned, any real property.
(b)
Section 5.22(b)
of the Parent Disclosure Schedules lists (i) all leases and subleases of real property (the “
Parent Real Property Leases
”) under which Parent or any of its Subsidiaries is either lessor or lessee (the “
Parent-Leased Real Property
”), (ii) the street address of each parcel of Parent-Leased Real Property; (iii) the landlord under the lease or sublease, the base rental amount currently being paid, and the expiration of the term of such
78
lease or sublease for each leased or subleased property; and (iv) the current use of such property. Parent has heretofore made available to the Company true and complete copies of each Parent Real Property Lease. Each Parent Real Property Lease is in all material respects a valid and binding contract of Parent or the applicable Subsidiary of Parent, and, to the Knowledge of the Parent, is in all material respects in full force and effect (except for each that has terminated, or will terminate, by its own terms). Neither Parent nor any of its Subsidiaries, nor, to the Knowledge of Parent, any other party thereto, is in violation or breach of or default (which breach or default has continued after the giving of the applicable notice and expiration of the applicable cure period) under the terms of any such Parent Real Property Lease, in each case, except (A) as set forth in
Section 5.22(b)
of the Parent Disclosure Schedules or (B) where such default has not had, and would not reasonably be expected to have, individually or in the aggregate, A Parent Material Adverse Effect. Parent and its Subsidiaries have not subleased, licensed or otherwise granted any entity or individual the right to use or occupy any Parent-Leased Real Property or any portion thereof. The use and operation of the Parent-Leased Real Property in the conduct of Parent’s business do not violate in any material respect any Law, covenant, condition, restriction, easement, license, Permit or agreement.
5.23
Personal Property
. Parent and its Subsidiaries have good and valid title to, or a valid interest in, all tangible assets and properties (including the Parent Vessels) that (i) are reflected on the Parent Financial Statements as of the Parent Balance Sheet Date or (ii) were acquired since the Parent Balance Sheet Date in the Ordinary Course of Business (the “
Parent Personal Property
”), except in each case for assets and property disposed of since the Parent Balance Sheet Date in the Ordinary Course of Business, in each case, free and clear of all Liens other than Permitted Liens. All Parent Personal Property has been maintained in the Ordinary Course of Business. The Parent Personal Property, together with all other properties and assets of Parent and its Subsidiaries, are sufficient for the continued conduct of Parent’s business after the Closing in substantially the same manner as conducted prior to the Closing and constitute all of the rights, property and assets necessary to conduct the business of Parent as currently conducted.
5.24
Intellectual Property
.
(a)
Parent and its Subsidiaries own, or are validly licensed or otherwise have the right to use, all Intellectual Property Rights which are material to the conduct of the business of Parent and its Subsidiaries.
Section 5.24
of the Parent Disclosure Schedules lists all registered Intellectual Property Rights owned by Parent or any of its Subsidiaries; material Intellectual Property Rights licensed to any of Parent or any of its Subsidiaries by any Person (excluding any license implied by the sale of a product and any non-customized, generally commercially available, off-the-shelf software programs); and material Intellectual Property Rights licensed by any of Parent or any of its Subsidiaries to any Person. Each item of material owned Intellectual Property Rights is and at all times has been in compliance with all applicable Laws, and all filings, payments, and other actions required to be taken to maintain such Intellectual Property Rights in full force and effect have been taken by the applicable deadline. Parent and its Subsidiaries are not, nor will they be as a result of Parent’s execution and delivery of this Agreement or the performance of its obligations hereunder, in violation in any material respect of any licenses, sublicenses or other agreements as to which
79
any of them is a party and pursuant to which any of them is authorized to use any third-party Intellectual Property Rights.
(b)
To the Knowledge of Parent, neither Parent nor any of its Subsidiaries has infringed, misappropriated or otherwise violated any Intellectual Property Rights of any Person. Neither Parent nor any of its Subsidiaries has received any written charge, complaint, claim, demand or notice alleging any such infringement, misappropriation or other violation (including any claim that Parent or any such Subsidiary must license or refrain from using any Intellectual Property Rights or other proprietary information of any Person). To the Knowledge of Parent, no Person has infringed, misappropriated or otherwise violated any material Intellectual Property Rights of Parent or any of its Subsidiaries.
5.25
Certain Business Practices
.
(a)
Neither Parent nor any of its Subsidiaries nor (to the Knowledge of Parent) any director, officer, agent, employee, representative, consultant or other persons associated with or acting for or on behalf of Parent or any of its Subsidiaries has, directly or indirectly, in connection with their respective businesses (i) used any funds for unlawful contributions, gifts, entertainment or other expenses relating to political activity or for the business of Parent or any of its Subsidiaries, (ii) made any unlawful payment or offered anything of value to non-U.S. or domestic government officials or employees or to non-U.S. or domestic political parties or campaigns, (iii) offered, paid, given, promised to pay or give, or authorized the payment or gift of anything of value, directly or indirectly, to any public official, for purposes of (A) influencing any act or decision of any public official in his or her official capacity; (B) inducing such public official to do or omit to do any act in violation of his or her lawful duty; or (C) securing any improper advantage, (iv) made any other unlawful payment, or (v) violated any applicable export control, money laundering or anti-terrorism or anti-bribery Law or regulation, nor have any of them otherwise taken any action which would cause Parent or any of its Subsidiaries to be in violation of any provision of the FCPA, or any applicable Law of similar effect. To Parent’s Knowledge, there are no pending issues with respect to violation of any applicable anticorruption Law, including the FCPA, relating to Parent or any of its Subsidiaries.
(b)
None of Parent or its Subsidiaries or, nor to the Knowledge of Parent, their respective directors, officers, employees or agents (i) is a person with whom transactions are prohibited or limited under any economic sanctions Laws, including those administered by the Office of Foreign Assets Control of the United States Department of the Treasury, the European Union, the United Kingdom or the United Nations Security Council; or (ii) since the Parent Emergence Date has done business in or with Cuba, Iran, Sudan, or Syria, or any Person that is the target of U.S. sanctions.
5.26
Fairness Opinion
.
The Parent Board has received the written opinion, dated as of the date of this Agreement (the “
Parent Fairness Opinion
”), of Evercore Group L.L.C., to the effect that, as of such date and based on and subject to the assumptions, qualifications and limitations contained therein, the Per Share Merger Consideration to be paid to the Company Common Shareholders
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pursuant to the Merger is fair to Parent from a financial point of view. Parent has received the approval of Evercore Group L.L.C., to permit the inclusion of a copy of the Parent Fairness Opinion in its entirety in the Parent Information Statement, subject to Evercore Group L.L.C.’s, review of the Parent Information Statement.
ARTICLE VI
COVENANTS
6.1
Access to Information
.
(a)
From and after the date hereof until the earlier of the Closing Date and the termination of this Agreement in accordance with its terms, and subject to applicable Laws and
Section 6.8
, each of Parent, on the one hand, and the Company, on the other hand, shall be entitled, through its officers, employees and representatives (including its legal advisors, consultants and accountants), to have such access to the properties, businesses and operations of the other party and its Subsidiaries and such examination of the books and records of the other party and its Subsidiaries, including, without limitation, financial and operating data and any other information relating to the businesses of the parties and their respective Subsidiaries, as it reasonably requests in connection with the parties’ efforts to consummate the transactions contemplated by this Agreement. Any such access and examination shall be conducted on reasonable advance written notice, during regular business hours and under reasonable circumstances and shall be subject to restrictions under applicable Law. Each party shall use its commercially reasonable efforts to cause its officers, employees, consultants, agents, accountants, attorneys and other Representatives and the officers, employees, consultants, agents, accountants, attorneys and other Representatives of its Subsidiaries to reasonably cooperate with the other party and such other party’s Representatives in connection with such access and examination, and each party seeking access pursuant to this
Section 6.1(a)
shall reasonably cooperate with each other party and its Subsidiaries and their respective officers, employees, consultants, agents, accountants, attorneys and other Representatives and shall use their commercially reasonable efforts to minimize any disruption to the business of such other party. Notwithstanding anything herein to the contrary, no such access or examination shall be permitted to the extent that it would (i) unreasonably disrupt the operations of any party or any of its Subsidiaries or (ii) would reasonably be expected to cause any party or any of the parties’ Subsidiaries to lose the benefit of attorney-client privilege or conflict with any confidentiality obligations to which such party or any of such party’s Subsidiaries is bound, in each case with respect to information to be disclosed;
provided
,
however
, that each party shall request, but shall not be required to obtain, a waiver of any such confidentiality obligations upon each other party’s reasonable prior written request; and
provided
,
further
, that each party shall use commercially reasonable efforts to seek alternative means to disclose such information as nearly as possible without affecting attorney-client privilege or conflicting with such confidentiality obligations (it being understood that such commercially reasonable efforts shall not require any party or any of its Subsidiaries to pay any consideration or amend or modify any Contract). Notwithstanding anything to the contrary contained herein, prior to the Closing, each party shall not, and shall cause its officers, employees, legal advisors, consultants, agents, accountants and other Representatives not to, contact any supplier, customer, independent contractor, landlord, lessor, bank, any person with whom each other
81
party or any of such other party’s Subsidiaries have or have had a business relationship or other lender or Representative of or to such other party or such other party’s Subsidiaries with respect to such other party or such other party’s Subsidiaries or the transactions contemplated by this Agreement, without the prior written consent of such other party. Parent and the Company do not make any representation or warranty as to the accuracy of any information (if any) provided pursuant to this
Section 6.1
and none of the Company, Parent nor Merger Sub may rely on the accuracy of any such information, in each case other than as expressly set forth in the Company’s representations and warranties contained in
Article IV
, or Parent’s and Merger Sub’s representations and warranties contained in
Article V
, as applicable. No investigation pursuant to this
Section 6.1
, or otherwise by the Company, Parent, Merger Sub or their Representatives shall be deemed to modify any of the Company’s representations and warranties contained in
Article IV
or Parent’s and Merger Sub’s representations and warranties contained in
Article V
.
(b)
Each of the Company, Parent and Merger Sub acknowledges that the information provided to the Company, Parent and Merger Sub, as applicable, in connection with this Agreement and the transactions contemplated hereby is subject to the terms of the confidentiality agreement between Parent and the Company, dated as of March 19, 2014 (as amended from time to time, the “
Confidentiality Agreement
”), the terms of which are incorporated herein by reference.
6.2
Conduct of the Respective Businesses Pending the Closing
.
(a)
Except as expressly contemplated by this Agreement, as set forth on
Section 6.2(a)
or
Section 6.2(b)
of the Company Disclosure Schedules or the Parent Disclosure Schedules, as applicable, as required by applicable Law or with the prior written consent of Parent (with respect to the conduct of the Company) or the Company (with respect to the conduct of Parent), which consent shall not be unreasonably withheld, conditioned or delayed, during the period from the date of this Agreement until the earlier of the Effective Time and the termination of this Agreement in accordance with
Article VIII
, the Company and Parent shall conduct their respective businesses, and shall cause their respective Subsidiaries to conduct their respective businesses, in the Ordinary Course of Business in all material respects and the Company and Parent shall, and shall cause their respective Subsidiaries to, use commercially reasonable efforts to (A) preserve intact their present business organizations, (B) preserve their present relationships with their clients, insurance carriers, customers, suppliers, shipbuilders, owners of vessels chartered by the Company or Parent, as the case may be, and other Persons with whom they have business relations, (C) keep available the services of the executive officers of the Company or Parent, as the case may be and (D) continue to perform all of their obligations (including for the avoidance of doubt the payment of any installments which are due and payable thereunder) pursuant to the Newbuilding Contracts.
(b)
Except as expressly contemplated by this Agreement, as set forth on
Section 6.2(a)
or
Section 6.2(b)
of the Company Disclosure Schedules or the Parent Disclosure Schedules, as applicable, as required by applicable Law or with the prior written consent of Parent, (with respect to the conduct of the Company) or the Company (with respect to the conduct of Parent), which consent shall not be unreasonably withheld,
82
conditioned or delayed, during the period from the date of this Agreement until the earlier of the Effective Time and the termination of this Agreement in accordance with
Article VIII
, each of Parent and the Company shall not, and shall cause their respective Subsidiaries not to:
(i)
(A) authorize for issuance, issue, sell, grant or subject to any Lien any shares of its capital stock or other ownership interests, or any securities or rights convertible into, exchangeable or exercisable for, or evidencing the right to subscribe for any shares of their respective capital stock or other ownership interests, or any rights, warrants or options to purchase any shares of their respective capital stock or other ownership interests, or (B) redeem, purchase or otherwise acquire any of their respective outstanding shares of capital stock, or any rights, warrants or options to acquire any shares of its capital stock, except in the case of Parent in connection with acquisitions in connection with the vesting or forfeiture of equity awards, or acquisitions in connection with the net exercise of options, in each case, outstanding on the date hereof in accordance with the terms of the Parent Employee Plan in effect on the date hereof, or (C) except to the extent directly resulting from the amendment to the Parent’s Amended and Restated Articles of Incorporation contemplated by this Agreement and the transactions contemplated hereby, amend any right of any holder of any outstanding capital stock or other equity interests;
(ii)
split, combine, subdivide or reclassify any shares of their respective capital stock or other ownership interests;
(iii)
adopt a plan or agreement of complete or partial liquidation or dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of Parent or any of its Subsidiaries with respect to Parent, and, the Company or any of its Subsidiaries with respect to the Company;
(iv)
incur, issue, assume, guarantee, prepay or otherwise become liable for any Indebtedness (excluding any letters of credit issued in the Ordinary Course of Business) or any debt securities, other than intercompany Indebtedness;
provided
, that Parent or the Company, as the case may be, and their respective Subsidiaries may incur Indebtedness in connection with the delivery of any Newbuilding to Parent or the Company, as applicable, or their respective Subsidiaries if such delivery is contemplated under the applicable party’s business plan provided to the other party prior to the date of this Agreement and the party taking delivery of such Newbuilding was contractually obligated to take delivery of such Newbuilding as of the date of this Agreement;
(v)
with respect to the Company, amend the articles of incorporation or bylaws of the Company or the organizational documents of the Company’s Subsidiaries, and, with respect to Parent, amend the articles of incorporation or bylaws of Parent or the organizational documents of Parent’s Subsidiaries, except as expressly contemplated by this Agreement;
(vi)
sell, lease, license, mortgage or otherwise subject to any Lien (other than Permitted Liens) or otherwise dispose of or abandon any of its properties, rights or assets (including the capital stock of Subsidiaries) except (A) sales and licenses of products,
83
services and assets in the Ordinary Course of Business of Parent and its Subsidiaries, with respect to Parent, or the Company and its Subsidiaries, with respect to the Company, (B) pursuant to Company Material Contracts (with respect to the Company) or Parent Material Contracts (with respect to the Parent), in each case, to the extent that such are in full force and effect on the date of this Agreement, (C) dispositions of obsolete or immaterial assets or (D) transfers among (i) Parent and its wholly owned Subsidiaries and (ii) the Company and its wholly owned Subsidiaries;
(vii)
make any loan, advance or capital contribution to or investment in any Person (other than (A) loans, advances or capital contributions to or investments by Parent in a wholly owned Subsidiary of Parent or by the Company in a wholly owned Subsidiary of the Company and (B) advances to employees for expenses not to exceed $750,000 in the aggregate in the Ordinary Course of Business);
(viii)
sell, transfer, assign, license, pledge, encumber, abandon, dedicate to the public, permit to lapse, fail to maintain or to renew otherwise dispose of any material Intellectual Property Rights (except in the Ordinary Course of Business);
(ix)
(A) authorize, set aside, or pay any dividends or make any distribution with respect to their respective outstanding shares of capital stock (whether in cash, assets, stock or other securities of Parent and its Subsidiaries, with respect to Parent, or the Company and its Subsidiaries, with respect to the Company) except dividends and distributions paid or made by (i) Parent’s wholly-owned Subsidiaries to Parent and (ii) the Company’s wholly-owned Subsidiaries to the Company, or (B) directly or indirectly redeem, purchase or otherwise acquire any capital stock or other equity interests of the Company (by the Company) or of the Parent (by the Parent).
(x)
make or agree to make any acquisitions of (including by merger, consolidation or acquisition of stock or assets or any other business combination) any corporation, partnership, other business organization or any division thereof or equity interests therein or a substantial portion of the assets thereof;
(xi)
pay, discharge, settle or compromise any pending or threatened suit, action or claim which (A) requires payment (exclusive of attorney’s fees) in excess of $50,000 in any single instance or in excess of $250,000 in the aggregate to or by Parent and its Subsidiaries, with respect to Parent, or to or by the Company and its Subsidiaries, with respect to the Company or (B) imposes any obligations (other than for the payment of money, a release of claims, confidentiality and other obligations customarily included in monetary settlements) or restrictions on the operations of Parent and its subsidiaries, with respect to Parent, or the Company and its Subsidiaries, with respect to the Company or (C) does not include a full release of claims against Parent and its Subsidiaries, or the Company and its Subsidiaries, as the case may be,
provided
, that Parent may pay, discharge, settle or compromise any pending or threatened suit, action or claim set forth under the sub-heading “Permitted Settlement Matters” on
Section 6.2(b)(xi)
of the Parent Disclosure Schedules so long as the aggregate amount of payment or payments by Parent does not exceed $500,000 and so long as a full release of claims against Parent and its Subsidiaries is obtained;
84
(xii)
(A) increase the compensation of any of their respective current or former directors, officers, employees or consultants other than (1) as required pursuant to change in applicable Law or the terms of any Employee Benefit Plan in effect on the date of this Agreement, (2) increases in salaries and wages of employees and executive officers of Parent and its subsidiaries, with respect to Parent, or the Company and its Subsidiaries, with respect to the Company, as part of annual merit increases, or, solely with respect to employees other than executive officers, other increases, in each case, made in the Ordinary Course of Business, (3) payment of accrued or earned but unpaid bonuses or commissions in the Ordinary Course of Business, or (4) bonus payments for services provided during the fiscal year ended December 31, 2014 determined in a manner that is consistent with Parent’s or the Company’s past practice, as applicable, and made in the Ordinary Course of Business,
provided
, that Parent may take all necessary steps to implement (including seeking shareholder approval) the New Parent Employee Plan or perform its obligations pursuant to any grants thereunder in effect as of the date of this Agreement, (B) grant any severance, change of control, or termination pay to any current or former employee, officer, director or consultant of Parent and its Subsidiaries or the Company and its Subsidiaries, as applicable, other than as required pursuant to the terms of any Employee Benefit Plans in effect on the date of the Agreement or (C) establish, adopt, enter into, materially amend or terminate any (1) Employee Benefit Plan, any plan, agreement, program, policy, trust, fund or other arrangement that would be an Employee Benefit Plan if it were in existence as of the date of this Agreement or (2) employment, independent contractor, severance, retention, consulting, services, change of control or similar Contracts with any employee, consultant or independent contractor (other than (x) as permitted by clause (A) above, (y) to replace or amend any Employee Benefit Plan if the cost of providing benefits thereunder is not materially increased, or (z) to conduct Parent’s or the Company’s annual renewal and reenrollment of its health and welfare plans in the Ordinary Course of Business);
(xiii)
make any material changes in financial or Tax accounting methods, principles, practices or procedures (or change an annual accounting period), except as may be required under GAAP or by applicable Law, or delay or postpose the payment of accounts or other amounts payable or other obligations or Liabilities or accelerate the collection or other amounts receivable;
(xiv)
make or change any material Tax election, file any amendment to any Tax Return with respect to any material Taxes, settle or compromise any material Tax Liability, audit or other Action, agree to any extension or waiver of the statute of limitations with respect to the assessment or determination of a material amount of Taxes (other than as a result of any extension of time permitted by applicable Law for filing a Tax Return), file any material voluntary Tax disclosure, amnesty or similar filing, enter into any closing agreement with respect to a material amount of Tax or take any action to surrender any right to claim a material Tax refund;
(xv)
modify, amend, terminate (either partial or complete), cancel, or waive (or grant consent or release in respect of) in any material respect any rights under any Company Material Contract, other than a Newbuilding Contract, (other than in the Ordinary Course of Business) or enter into any new Contract that would be a Company Material Contract if entered into prior to the date hereof (other than in the Ordinary Course of Business) or cause or suffer any acceleration of any material terms under any Company Material Contract;
85
(xvi)
modify, amend, terminate or waive in any material respect any rights under any Company Newbuilding Contract (in the case of the Company) or any Parent Newbuilding Contract (in the case of Parent);
(xvii)
modify, amend, terminate (either partial or complete), cancel, or waive (or grant consent or release in respect of) in any material respect any rights under any Parent Material Contract (other than in the Ordinary Course of Business) or enter into any new Contract that would be a Parent Material Contract if entered into prior to the date hereof (other than in the Ordinary Course of Business) or cause or suffer any acceleration of any material terms under any Parent Material Contract;
(xviii)
enter into any commitment for capital expenditures of Parent and its Subsidiaries, with respect to Parent, or the Company and its Subsidiaries, with respect to the Company (except as contemplated by Parent’s or the Company’s 2015 budget, as applicable, each of which has been provided to the other party prior to the date hereof) other than capital expenditures relating to the maintenance of the Parent Vessels and the Company Vessels,
provided
, that, for the avoidance of doubt, the Company and its Subsidiaries (with respect to the Company) or Parent and its Subsidiaries (with respect to Parent) shall continue to make all payments related to Newbuildings pursuant to agreements entered into prior to the execution of this Agreement;
(xix)
enter into or modify any Contract with any Company Shareholder (with respect to the Company) or Parent Shareholder (with respect to Parent) or Affiliates thereof (other than a Subsidiary of Parent or the Company, as applicable), other than any action with respect to changes in compensation and benefits permitted pursuant to subsection (xii) of this
Section 6.2(b)
;
(xx)
enter into any new line of business that is material (taken as a whole) to Parent and its Subsidiaries, with respect to Parent, or Company and its Subsidiaries, with respect to the Company, other than, with respect to Parent, as contemplated by Parent’s business plan provided to the Company prior to the date hereof and, with respect to the Company, the Company’s business plan provided to Parent prior to the date hereof;
(xxi)
enter into or modify any Collective Bargaining Agreement or other binding commitment with any labor organization;
(xxii)
other than in the Ordinary Course of Business, enter into or modify a Charter Contract;
(xxiii)
consummate a sale, in an underwritten public offering registered under the Securities Act, of equity securities;
(xxiv)
hire any new employee, other than employees hired in the Ordinary Course of Business whose base salary would be less than $350,000 or terminate any employee, other than employees whose base salary is less than $200,000;
(xxv)
take or omit to take any action that would reasonably be expected to result in a Company Material Adverse Effect or a Parent Material Adverse Effect; or
86
(xxvi)
agree in writing or otherwise to take any of the foregoing actions prohibited by this
Section 6.2(b)
.
(c)
Parent and Merger Sub acknowledge and agree that: (i) nothing contained in this Agreement shall give Parent or Merger Sub, directly or indirectly, the right to control or direct the operations of the Company or any of the its Subsidiaries prior to the Effective Time, (ii) prior to the Effective Time, the Company and the Company’s Subsidiaries shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over their respective operations, and (iii) notwithstanding anything to the contrary set forth in this Agreement, no consent of Parent or Merger Sub shall be required with respect to any matter set forth in this
Section 6.2
or elsewhere in this Agreement to the extent the requirement of such consent would violate any Law.
(d)
The Company acknowledges and agrees that: (i) nothing contained in this Agreement shall give the Company, directly or indirectly, the right to control or direct the operations of Parent, Merger Sub or any Parent’s Subsidiaries prior to the Effective Time, (ii) prior to the Effective Time, Parent, Merger Sub and Parent’s Subsidiaries shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over their respective operations, and (iii) notwithstanding anything to the contrary set forth in this Agreement, no consent of the Company shall be required with respect to any matter set forth in this
Section 6.2
or elsewhere in this Agreement to the extent the requirement of such consent would violate any Law.
(e)
Each of Parent and the Company agree to use commercially reasonable efforts upon instituting any material suit, action, claim, arbitration, investigation or other proceeding to promptly, to the extent permitted by Law, notify the other party of such occurrence.
6.3
Conditions
. Without limiting any other covenant in this Agreement (including the obligations of the Company, Parent and Merger Sub set forth in
Sections 6.5
, which obligations shall control to the extent of any conflict with the succeeding provisions of this
Section 6.3
), each of the Company, on the one hand, and Parent and Merger Sub, on the other hand, hereby agrees to use its respective commercially reasonable efforts to take, or cause to be taken, all action, and to do, or cause to be done as promptly as practicable, all things necessary, proper and advisable under applicable Laws to (i) consummate and make effective as promptly as practicable the transactions contemplated by this Agreement and (ii) cause the fulfillment at the earliest practicable date of all of the conditions to their respective obligations to consummate the transactions contemplated by this Agreement. Subject to the Confidentiality Agreement each of the Company, on the one hand, and Parent and Merger Sub, on the other hand, shall furnish to the other such necessary information and reasonable assistance as such other party may reasonably request in connection with the foregoing.
6.4
Consents
.
(a)
Each of Parent and the Company shall give (or shall cause their respective Subsidiaries to give) any notices to third parties, and use, and cause their respective Subsidiaries to use, their commercially reasonable efforts to obtain any third party
87
consents related to or required in connection with the transactions contemplated hereby or that are required to consummate the transactions contemplated hereby. Each of Parent and the Company shall, upon request by the other party, keep such other party reasonably informed as to the status of obtaining such third party consents.
6.5
Regulatory Approvals
.
(a)
Subject to the terms hereof, including
Section 6.5(b)
, each of the Company, on the one hand, and Parent and Merger Sub, on the other hand, shall use its commercially reasonable efforts to (i) as promptly as practicable, obtain from any Governmental Authority or any other third party any consents, licenses, permits, waivers, approvals, authorizations, or orders required to be obtained or made by the Company or Parent or any of their Subsidiaries in connection with the authorization, execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, and Parent and the Company shall reasonably cooperate (including with respect to the sharing of their respective confidential information), and cause their respective Subsidiaries to reasonably cooperate, to give such notices and obtain such consents. (ii) defend any lawsuits or other legal proceedings, whether judicial or administrative, challenging this Agreement or the consummation of the transactions contemplated hereby, including seeking to have any stay or temporary restraining order entered by any court or other Governmental Authority vacating or reversed, (iii) as promptly as practicable, make all necessary filings, and thereafter make any other required submissions, with respect to this Agreement and the transactions contemplated by this Agreement required under (A) the Securities Act and the Exchange Act, and any other applicable federal or state securities Laws and (B) any other applicable Law and (iv) execute and deliver any additional instruments necessary to consummate the transactions contemplated by, and to fully carry out the purposes of, this Agreement. The Company and Parent shall cooperate with each other in connection with the making of all such filings, including providing copies of all such documents to the non-filing party and its advisors prior to filing and, if requested, accepting all reasonable additions, deletions or changes suggested in connection therewith. The Company and Parent shall use their respective commercially reasonable efforts to furnish to each other all information required for any application or other filing to be made pursuant to the rules and regulations of any applicable Law in connection with the transactions contemplated by this Agreement. In connection with and without limiting the foregoing, the Company and Parent shall use commercially reasonable efforts to (x) take all action necessary to ensure that no domestic or non-U.S. Competition Law is or becomes applicable to this Agreement or the transactions contemplated hereby and (y) if any such Competition Law becomes applicable to this Agreement or the transactions contemplated hereby, take all action necessary to ensure that the transactions contemplated by this Agreement may be consummated as promptly as practicable on the terms contemplated by this Agreement. For the avoidance of doubt, the Company and Parent agree that nothing contained in this
Section 6.5(a)
shall modify or affect their respective rights and responsibilities under
Section 6.5(b)
. Notwithstanding anything to the contrary, no party shall be required to furnish any document or information to any other party if furnishing such document or information (i) would reasonably be expected to cause any party or any of the parties’ Subsidiaries to lose the benefit of attorney-client privilege, (ii) conflicts with such party’s confidentiality obligations or (iii) is prohibited by applicable Law.
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(b)
Subject to the terms hereof, the Company and Parent agree, and shall cause each of their respective Subsidiaries, to cooperate and to use their respective commercially reasonable efforts to obtain any government clearances or approvals required for Closing under any Competition Law, to respond to any government requests for information under any Competition Law, and to contest and resist any action, including any legislative, administrative or judicial action, and to have vacated, lifted, reversed or overturned any decree, judgment, injunction or other order (whether temporary, preliminary or permanent) that restricts, prevents or prohibits the consummation of the transactions contemplated by this Agreement under any Competition Law. The parties hereto will consult and cooperate with one another, and consider in good faith the views of one another, in connection with any analyses, appearances, presentations, memoranda, briefs, arguments, opinions and proposals made or submitted by or on behalf of any party hereto in connection with proceedings under or relating to any Competition Law. Parent and the Company agree to provide the other party and its counsel the opportunity, on reasonable advance notice, to participate in any substantive meetings or discussions, either in person or by telephone, between Parent or the Company or any of their Affiliates, agents or advisors, on the one hand, and any Governmental Authority, on the other hand, concerning or in connection with the transactions contemplated hereby.
(c)
Notwithstanding anything in this Agreement to the contrary, nothing contained in this Agreement (including under this
Section 6.5
) shall require the Company or Parent (or any of their respective Subsidiaries) to hold separate (including by trust or otherwise) or to divest any of their respective businesses, Subsidiaries, Affiliates, vessels or other material assets, or to take or agree to take any action with respect to, or agree to any prohibition or limitation on, or other requirement which would prohibit or materially limit the ownership or operation of, all or any portion of the business or assets of the Company, Parent, the Surviving Corporation or any of their respective Subsidiaries or Affiliates. Neither the Company nor Parent, nor any of their respective Subsidiaries shall, without the other party’s prior written consent, agree to hold separate (including by trust or otherwise) or to divest any of their respective businesses, Subsidiaries, Affiliates, vessels or other material assets, or to take or agree to take any action with respect to, or agree to any prohibition or limitation on, or other requirement which would prohibit or materially limit the ownership or operation of, any portion of the business or assets of Parent, Merger Sub, the Company, the Surviving Corporation, or any of their respective Subsidiaries or Affiliates.
6.6
Director and Officer Indemnification, Exculpation and Insurance
.
(a)
From and after the Closing Date, Parent shall, or shall cause the Surviving Corporation and its Subsidiaries to, indemnify, defend, and exculpate and hold harmless, to the fullest extent permitted under applicable Law, the individuals who on or prior to the Closing Date were directors or officers of the Company or any of the Company’s Subsidiaries (collectively, the “
D&O Indemnitees
”) with respect to all acts or omissions by them in their capacities as such or taken at the request of the Company or any of the Company’s Subsidiaries at any time on or prior to the Closing Date as provided in the articles of incorporation or bylaws (or comparable organizational documents) of the Company and any of the Company’s Subsidiaries, in each case, as in effect on the date of this Agreement. Parent agrees that all rights of the D&O Indemnitees to advancement of expenses,
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indemnification and exculpation from liabilities for acts or omissions occurring on or prior to the Closing Date as provided in the articles of incorporation or bylaws (or comparable organizational documents) of the Company and any of the Company’s Subsidiaries, in each case, as in effect on the date of this Agreement, and any indemnification agreements of the Company or any of the Company’s Subsidiaries shall survive the Closing Date and shall continue in full force and effect in accordance with their terms for a period of the greater of six (6) years after the Closing Date and the applicable statute of limitations for any claim against any such D&O Indemnitee. Such rights shall not be amended or otherwise modified in any manner that would adversely affect the rights of any of the D&O Indemnitees, unless such modification is required by Law or approved by each such D&O Indemnitee. In addition, Parent shall, or shall cause the Surviving Corporation and its Subsidiaries, as the case may be, to advance, pay and/or reimburse any expenses of any D&O Indemnitee under this
Section 6.6
as incurred to the fullest extent permitted under applicable Law;
provided
, that the person to whom expenses are advanced provides an undertaking to repay such advances to the extent required by applicable Law and
provided
,
further
that in the event Parent causes Surviving Corporation or any of its Subsidiaries to indemnify, defend and hold harmless any D&O Indemnitee and the Surviving Corporation or its Subsidiaries are unable to do so, Parent shall be required to indemnify, defend and hold harmless such D&O Indemnitee and shall assume in full any and all obligations of Surviving Corporation or its Subsidiaries.
(b)
Parent, from and after the Closing Date, except as required by applicable Law, shall cause (i) the articles of incorporation and bylaws or comparable organizational documents of the Surviving Corporation to contain provisions no less favorable to the D&O Indemnitees with respect to limitation of liabilities, advancement of expenses and indemnification than are set forth as of the date of this Agreement in the articles of incorporation and bylaws of the Company and (ii) the articles of incorporation and bylaws (or comparable organizational documents) of each Subsidiary of the Surviving Corporation to contain provisions no less favorable with respect to limitation of liability, advancement of expenses and indemnification of partners, members, directors, officers, employees and agents, than are set forth in such document as of the date of this Agreement.
(c)
Each of Parent and the Surviving Corporation shall cooperate, and cause their respective Affiliates to cooperate, in the defense of any claim that is subject to the limitation of liability, advancement of expenses and/or indemnification as contemplated by this
Section 6.6
and shall provide access to properties and individuals as reasonably requested and furnish or cause to be furnished records, information and testimony, and attend such conferences, discovery proceedings, hearings, trials or appeals, as may be reasonably requested in connection therewith. Notwithstanding anything to the contrary, neither Parent nor the Surviving Corporation shall be required to take any action pursuant to this
Section 6.6(c)
if such action (i) would reasonably be expected to cause Parent or the Surviving Corporation to lose the benefit of attorney-client privilege, (ii) conflict with Parent or Surviving Company’s confidentiality obligations or (iii) is prohibited by applicable Law.
(d)
Notwithstanding any other provision of this Agreement, no D&O Indemnitee shall settle, compromise or consent to the entry of any judgment in any actual or threatened Action in respect of which indemnification has been or could be sought by such
90
D&O Indemnitee hereunder unless such settlement, compromise, or judgment includes an unconditional release of Parent and the Surviving Corporation from all liability arising out of such Action without admission or finding of wrongdoing, unless Parent and the Surviving Corporation otherwise consents thereto. Any counsel selected by any D&O Indemnitee shall be reasonably acceptable to Parent and the Surviving Corporation.
(e)
The Surviving Corporation shall, and shall cause its Subsidiaries to, provide or maintain in effect for six (6) years from and after the Effective Time, through the purchase of “run-off” coverage or otherwise, directors’ and officers’ and corporate liability insurance covering those individuals who are covered by the directors’ and officers’ and corporate liability insurance policy or policies provided for directors and officers of the Company and the Company’s Subsidiaries as of the date hereof (the “
Existing Policy
”) on terms comparable in all respects to the Existing Policy and such coverage shall contain minimum aggregate limits of liability for directors’ and officers’ and corporate liability insurance coverage for directors and officers of the Company and its Subsidiaries with the amount of coverage at least equal to that of the Existing Policies and deductibles no larger than those of the Existing Policy;
provided
,
however
, that if such “run-off” or other coverage is not available at a cost not greater than three hundred percent (300%) of the annual premiums paid as of the date hereof under the Existing Policy (the “
Insurance Cap
”) (which premiums are set forth in
Section 6.6(d)
of the Company Disclosure Schedules), then the Surviving Corporation and its Subsidiaries shall be required to obtain as much coverage as is possible under substantially similar policies for such annual premiums as do not exceed the Insurance Cap,
provided
, that Parent and the Surviving Corporation shall use commercially reasonable efforts to cause such similar policies to be no less advantageous to beneficiaries thereof and that the substitution of policies does not result in gaps or lapses in coverage.
(f)
The obligations of Parent and the Surviving Corporation under this
Section 6.6
shall survive the consummation of the transactions contemplated by this Agreement and shall not be terminated or modified in such a manner as to adversely affect any D&O Indemnitee to whom this
Section 6.6
applies without the consent of each affected D&O Indemnitee (it being expressly agreed that the D&O Indemnitees to whom this
Section 6.6
applies shall be third party beneficiaries of this
Section 6.6)
. The provisions of this
Section 6.6
(i) are intended to be for the benefit of, and shall be enforceable by, each D&O Indemnitee, his, her or its heirs and his or her representatives and (ii) are in addition to, and not in substitution for, any other rights to indemnification or contribution that any such Person may have by Law, Contract or otherwise.
(g)
In the event that the Surviving Corporation or any of its successors or assigns (i) consolidates or merges with or into any other Person and is not the continuing or surviving entity of such consolidation or merger or (ii) transfers or conveys all or substantially all of its properties and assets to any Person, then, and in each such case, proper provision shall be made by Parent and the Surviving Corporation so that the successors and assigns of the Surviving Corporation shall assume all of the obligations thereof set forth in this
Section 6.6
.
(h)
Nothing in this Agreement is intended to, shall be construed to or shall release, waive or impair any rights to directors’ and officers’ insurance claims under any
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policy that is or has been in existence with respect to the Company or any of the Company’s Subsidiaries or any of their respective directors or officers, it being understood and agreed that the indemnification provided for in this
Section 6.6
is not prior to or in substitution for any such claims under such policies.
6.7
Preservation of Records
. Parent shall, and shall cause the Surviving Corporation and their respective Subsidiaries to, preserve and keep all books, records and other documents held by them relating to the respective businesses of the Company and the Company’s Subsidiaries for a period of seven (7) years from and after the Closing Date and, for Tax records, until the expiration of the applicable statute of limitations or other limitation period (taking into account any applicable extension of which Parent has received a written notice) (and longer if required by applicable Law) and shall make such books, records and other documents (or copies) and officers, management, employees, advisors and Representatives available, at reasonable times and upon reasonable advance notice, to each Equityholders’ Representative as may be reasonably required by each Equityholders’ Representative, as applicable, solely to the extent relating to and solely for the use in connection with any insurance claims, Actions or Tax audits, governmental investigations, compliance with legal requirements, or the preparation of financial statements, and/or otherwise in connection with any other matter relating to or resulting from this Agreement;
provided
, that from and after the Closing Date, each Equityholders’ Representative, shall, and shall cause its Affiliates and Representatives to, keep all such information confidential and not otherwise use or disclose any such records for any other reason or to any other Person (except where such disclosure, (a) upon the advice of counsel, is required by applicable Law and only to the extent required by such Law and (b) to the (x) employees, advisors and consultants of the Equityholders’ Representatives, (y) Company Common Shareholders and (z) Parent Shareholders as of immediately prior to the Effective Time, in each case, who agree to keep such information confidential) and
provided
,
further
that the records relating to the respective business of Parent, the Company, Merger Sub, and each of their Subsidiaries shall be made available upon the reasonable request of each Equityholders’ Representative to such Equityholders’ Representative for a period of two (2) years with respect to any claim made pursuant to
Article IX
.
6.8
Publicity; Confidentiality
.
(a)
Prior to the Effective Time, none of the Company, on the one hand, or Parent and Merger Sub, on the other hand, shall issue any press release or public announcement or comment concerning this Agreement or the transactions contemplated hereby without obtaining the prior written approval of Parent or the Company (which approval will not be unreasonably withheld, conditioned or delayed), except (i) to the extent, in the judgment of such party upon the advice of its outside counsel, disclosure is required by applicable Law (including the periodic reporting requirements under the Exchange Act) or under the rules of any securities exchange on which the securities of such party or any of its Affiliates are listed, including any obligation in respect of the Company’s listing arrangements on the NOTC, or (ii) in connection with a public offering of Parent Common Stock;
provided
, that to the extent so required by applicable Law, the party intending to make such release shall use its commercially reasonable efforts consistent with applicable Law to consult with the other parties in advance of such release with respect to the text thereof and to provide a copy of such release to the other parties in advance of the issuance thereof. In
92
advance of the Effective Time, the Parent and the Company agree to consult with one another and seek one another’s approval with respect to any press release or public announcement or comment concerning this Agreement or the transactions contemplated hereby that will be issued at or following the Effective Time. Each party may make internal announcements to its respective employees that are not inconsistent in any material respects with the parties’ prior public disclosures regarding the transactions contemplated by this Agreement. Notwithstanding the foregoing, the disclosure of this Agreement or the transactions contemplated hereby by any party to their respective equityholders, prospective investors, or advisors (as long as such recipients of such information are subject to confidentiality obligations that are at least as restrictive as those set forth in this
Section 6.8
), shall not be considered a public disclosure in violation of this
Section 6.8
or the Confidentiality Agreement.
(b)
Each of Parent, Merger Sub and the Company agrees that this Agreement and the terms and conditions set forth herein shall be kept confidential and shall not be disclosed or otherwise made available to any other Person and that copies of this Agreement shall not be publicly filed or otherwise made available to the public, except (i) where such disclosure, availability or filing, upon the advice of outside counsel, is required by applicable Law (including the periodic reporting requirements under the Exchange Act) and only to the extent required by such Law or under the rules of any securities exchange on which the securities of Parent or the Company are listed, including any obligation in respect of the Company’s listing arrangements on the NOTC, (ii) in connection with a public offering of Parent Common Stock, (iii) in connection with the enforcement by a party of its rights or remedies under this Agreement, and (iv) as otherwise agreed by each of Parent and the Company. In the event that any such disclosure, availability or filing is required by applicable Law (other than any filing required by the Exchange Act or the Securities Act), each of Parent, Merger Sub and the Company agrees to use its commercially reasonable efforts to obtain “confidential treatment” or similar treatment of this Agreement and to redact such terms of this Agreement that either the Company, in the case of Parent and Merger Sub, or Parent, in the case of the Company, shall reasonably request.
6.9
Consulting Agreements; Employment Agreement
. Parent and the Company shall cooperate in good faith to enter into consulting agreement packages (the “
Consulting Agreements
”) with the Consultants and a Chief Executive Officer employment agreement package with Peter Georgiopoulos on or prior to the Closing Date. Except as set forth in the immediately preceding sentence, Parent shall have no obligation to retain any employee or consultant of the Company or its Subsidiaries in any capacity. The Consulting Agreements shall include, subject to agreement by the applicable parties, provisions providing for the non-competition with Parent by the Consultants and their respective Affiliates during the term of the applicable agreements.
6.10
Company Exclusivity.
(a)
Prohibitions
. Except as expressly permitted pursuant to
Section 6.10(b)
, from and after the date hereof and prior to the earlier of (y) the termination of this Agreement in accordance with
Section 8.1
and (z) the Effective Time, the Company shall not (and the Company shall (i) cause its Subsidiaries not to and (ii) not authorize or permit and
93
shall cause its and any of its or its Subsidiaries’ Representatives not to), directly or indirectly, (A) solicit, initiate or knowingly take any action to facilitate or encourage or assist any inquiries or the making of any proposal or offer that constitutes or may reasonably be expected to lead to the submission of any Company Acquisition Proposal, (B) enter into or participate in any discussions or negotiations with, or furnish any information relating to the Company or any of its Subsidiaries or afford access to the business, properties, assets, personnel, books or records of the Company or any of its Subsidiaries to any Third Party with respect to inquiries regarding, or the making of, a Company Acquisition Proposal, (C) fail to make, qualify, withdraw, or modify or amend in a manner adverse to Parent or Merger Sub the Company Board Recommendation (or recommend a Company Acquisition Proposal) (any of the foregoing in this clause (C), a “
Company Adverse Recommendation Change
”), or publicly propose to do any of the foregoing, (D) approve, endorse, recommend or enter into (or agree or publicly propose to do any of the foregoing) any agreement in principle, letter of intent, term sheet, merger agreement, acquisition agreement, option agreement or other similar instrument relating to a Company Acquisition Proposal or (E) grant any waiver, amendment or release under any standstill or similar agreement or any Competition Laws or similar provision contained in the Company’s articles of incorporation, bylaws or other governing documents. The Company shall (and the Company shall cause its Subsidiaries and any of its or its Subsidiaries’ Representatives to) cease immediately and cause to be terminated any and all existing activities, solicitations, encouragements, discussions or negotiations, if any, with any Third Party and its Representatives and its financing sources conducted prior to the date hereof with respect to any Company Acquisition Proposal or efforts to obtain a Company Acquisition Proposal, and shall also request such Third Party to promptly return or destroy all confidential information concerning the Company and its Subsidiaries prior to the date hereof. The Company hereby confirms that it is not currently in negotiations or discussions with any Third Party which would reasonably be expected to lead to the making of a Company Acquisition Proposal.
(b)
Exceptions
.
(i)
Prior to (but not at any time from or after) obtaining the Company Shareholder Approval, if the Company receives a bona fide, written Company Acquisition Proposal from a Third Party after the date hereof (that has not been withdrawn) that did not result from a breach or violation of the provisions of
Section 6.10(a)
and, prior to taking any action described in clauses (A) and (B) below, (x) the Company Board or a committee thereof determines in good faith, after consultation with outside legal counsel that (1) based on the information then available and after consultation with its Financial Advisor, such Company Acquisition Proposal constitutes or would reasonably be expected to lead to a Superior Proposal and (2) the failure to take such action would reasonably expected to result in a breach of its fiduciary duties to its shareholders under the BCA and (y) the Company shall have complied with
Section 6.10(c)
with respect to such Company Acquisition Proposal, then the Company may, in response to such Company Acquisition Proposal, directly or indirectly through its Representatives, (A) engage in negotiations or discussions with such Third Party and its Representatives with respect to such Company Acquisition Proposal and (B) furnish to such Third Party or its Representatives non-public information relating to the Company or any of its Subsidiaries pursuant to a confidentiality agreement (a copy of which shall be promptly (and in any event within twenty-four (24) hours) provided for informational purposes only to Parent)
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with such Third Party with terms no less favorable in the aggregate to the Company than those contained in the Confidentiality Agreement and containing additional provisions that expressly permit the Company to comply with the terms of this
Section 6.10
;
provided
, that all such information (whether oral or written) provided or made available to such Third Party (to the extent that such information has not been previously provided or made available to Parent) is provided or made available to Parent, as the case may be, prior to or substantially concurrently with the time it is provided or made available to such Third Party.
(ii)
Prior to (but not at any time from or after) obtaining the Company Shareholder Approval, the Company Board or a committee thereof may, following receipt of and on account of a Superior Proposal, make a Company Adverse Recommendation Change in connection with such Superior Proposal, if such Superior Proposal did not result from a breach or violation of the provisions of
Section 6.10
and the Company Board or such committee thereof determines in good faith, after consultation with outside legal counsel and its Financial Advisor, that in light of such Superior Proposal, the failure of the Company Board or such committee thereof to take such action would result in a breach of its fiduciary duties to its shareholders under the BCA;
provided
,
however
, the Company Board and any committee thereof shall not be entitled to effect a Company Adverse Recommendation Change in connection with a Superior Proposal unless (A) the Company Board or such committee thereof promptly notifies Parent in writing at least five (5) Business Days (the “
Company Notice Period
”) before making a Company Adverse Recommendation Change, of its intention to take such action with respect to such Superior Proposal, which notice shall state expressly that the Company has received a Company Acquisition Proposal that the Company Board or such committee thereof has determined to be a Superior Proposal and that the Company Board or such committee thereof intends to make a Company Adverse Recommendation Change; (B) the Company Board or such committee thereof attaches to such notice the most current version of the proposed transaction agreements, the identity of the Third Party making such Superior Proposal, and a copy of any financing commitments related thereto; (C) during the Company Notice Period, if requested (orally or in writing) by Parent, the Company Board or such committee thereof has engaged, and has directed its Representatives to engage in negotiations with Parent in good faith to amend this Agreement or any Ancillary Document in such a manner that such Superior Proposal ceases to constitute a Superior Proposal; and (D) following the Company Notice Period, the Company Board or such committee thereof shall have considered in good faith any proposed amendments to this Agreement and any Ancillary Document and determined in good faith, after consultation with its outside legal counsel and its Financial Advisor, taking into account any changes to this Agreement or any Ancillary Document made or proposed in writing by Parent, that such Superior Proposal continues to constitute a Superior Proposal;
provided
,
however
, that with respect to any applicable Superior Proposal, any amendment to the financial terms or any other material amendment to a term of such Superior Proposal shall require a new written notice by the Company Board or such committee thereof and a new Company Notice Period, and no such Company Adverse Recommendation Change in connection with such Superior Proposal may be made during any Company Notice Period;
provided, further
that notwithstanding anything to the contrary herein, neither the Company nor any and of its Subsidiaries shall enter into any Company Acquisition Proposal unless and until this Agreement has been terminated in accordance with its terms.
95
(c)
Required Notices
. The Company, the Company Board or any committee thereof shall not take any of the actions referred to in
Section 6.10(b)
unless the Company shall have first complied with the applicable requirements of this
Section 6.10(c)
. The Company shall notify (orally and in writing) the Parent promptly (but in no event later than 24 hours) after receipt by the Company (or any of its Representatives) of any Company Acquisition Proposal or of any inquiries or other communication regarding the making of a Company Acquisition Proposal, including the material terms and conditions thereof and providing a copy, if applicable, of any written requests, proposals or offers, including proposed agreements, and the identity of the Person making (or inquiry or communications about) such Company Acquisition Proposal and its proposed financing sources, and shall keep Parent reasonably informed on a prompt basis (but in any event no later than 24 hours) as to the status (including changes or proposed changes to the material terms) of such Company Acquisition Proposal (whether made before or after the date hereof). The Company shall also notify the Parent promptly (but in no event later than 24 hours) after receipt by the Company of any request for non-public information relating to the Company or any of its Subsidiaries or for access to the business, properties, assets, personnel, books or records of the Company or any of its Subsidiaries by any Third Party that has informed the Company that it is considering making, or has made, a Company Acquisition Proposal. The Company shall also notify the Parent promptly of the Company’s intention to take the actions set forth in clauses (A) or (B) of
Section 6.10(b)(i)
. The Company agrees that it and its Subsidiaries will not enter into any confidentiality agreement with any Third Party subsequent to the date hereof which prohibits Company from providing any information to Parent in accordance with this
Section 6.10(c)
.
6.11
Parent Exclusivity
.
(a)
Prohibitions
. Except as expressly permitted pursuant to
Section 6.11(b)
, from and after the date hereof and prior to the earlier of (y) the termination of this Agreement in accordance with
Section 8.1
and (z) the Effective Time, Parent shall not (and Parent shall cause its Subsidiaries not to and (ii) not authorize or permit and shall cause its and any of its or its Subsidiaries’ Representatives not to), directly or indirectly, (A) solicit, initiate or knowingly take any action to facilitate or encourage or assist any inquiries or the making of any proposal or offer that constitutes or may reasonably be expected to lead to the submission of any Parent Acquisition Proposal, (B) enter into or participate in any discussions or negotiations with, or furnish any information relating to Parent or any of its Subsidiaries or afford access to the business, properties, assets, personnel, books or records of Parent or any of its Subsidiaries to any Third Party with respect to inquiries regarding, or the making of, a Parent Acquisition Proposal, (C) fail to make, qualify, withdraw, or modify or amend in a manner adverse to the Company the Parent Board Recommendation (or recommend a Parent Acquisition Proposal) (any of the foregoing in this clause (C), an “
Parent Adverse Recommendation Change
”), or publicly propose to do any of the foregoing, (D) approve, endorse, recommend or enter into (or agree or publicly propose to do any of the foregoing) any agreement in principle, letter of intent, term sheet, merger agreement, acquisition agreement, option agreement or other similar instrument relating to a Parent Acquisition Proposal or (E) grant any waiver, amendment or release under any standstill or similar agreement or any Competition Laws or similar provision contained in Parent’s articles of incorporation, bylaws or other governing documents. Parent shall (and Parent shall
96
cause its Subsidiaries and any of its Subsidiaries’ Representatives to) cease immediately and cause to be terminated any and all existing activities, solicitations, encouragements, discussions or negotiations, if any, with any Third Party and its Representatives and its financing sources conducted prior to the date hereof with respect to any Parent Acquisition Proposal or efforts to obtain a Parent Acquisition Proposal, and shall also request such Third Party to promptly return or destroy all confidential information concerning Parent and its Subsidiaries prior to the date hereof. Parent hereby confirms that it is not currently in negotiations or discussions with any Third Party which would reasonably be expected to lead to the making of a Parent Acquisition Proposal.
(b)
Exceptions.
(i)
Prior to (but not at any time from or after) obtaining the Parent Shareholder Approval, if Parent receives a bona fide, written Parent Acquisition Proposal from a Third Party after the date hereof (that has not been withdrawn) that did not result from a breach or violation of the provisions of
Section 6.11(a)
and, prior to taking any action described in clauses (A) and (B) below, (x) the Parent Board or a committee thereof determines in good faith, after consultation with outside legal counsel that (1) based on the information then available and after consultation with its Financial Advisors, such Parent Acquisition Proposal constitutes or would reasonably be expected to lead to a Superior Proposal and (2) the failure to take such action would reasonably expected to result in a breach of its fiduciary duties to its shareholders under the BCA and (y) Parent shall have complied with
Section 6.11(c)
with respect to such Parent Acquisition Proposal, then Parent may, in response to such Parent Acquisition Proposal, directly or indirectly through its Representatives, (A) engage in negotiations or discussions with such Third Party and its Representatives with respect to such Parent Acquisition Proposal and (B) furnish to such Third Party or its Representatives non-public information relating to the Parent or any of its Subsidiaries pursuant to a confidentiality agreement (a copy of which shall be promptly (and in any event within twenty-four (24) hours) provided for informational purposes only to the Company) with such Third Party with terms no less favorable in the aggregate to Parent than those contained in the Confidentiality Agreement and containing additional provisions that expressly permit Parent to comply with the terms of this
Section 6.11
;
provided
, that all such information (whether oral or written) provided or made available to such Third Party (to the extent that such information has not been previously provided or made available to the Company) is provided or made available to the Company, as the case may be, prior to or substantially concurrently with the time it is provided or made available to such Third Party.
(ii)
Prior to (but not at any time from or after) obtaining the Parent Shareholder Approval, the Parent Board or a committee thereof may, following receipt of and on account of a Superior Proposal, make a Parent Adverse Recommendation Change in connection with such Superior Proposal, if such Superior Proposal did not result from a breach or violation of the provisions of
Section 6.11
and the Parent Board or such committee thereof determines in good faith, after consultation with outside legal counsel and its Financial Advisor, that in light of such Superior Proposal, the failure of the Parent Board or such committee thereof to take such action would result in a breach of its fiduciary duties to its shareholders under the BCA;
provided
,
however
, the Parent Board and any committee thereof shall not be entitled to effect a Parent Adverse Recommendation Change in connection with a Superior Proposal unless (A) the Parent Board or such committee thereof promptly notifies the Company in writing at least five
97
(5) Business Days (the “
Parent Notice Period
”) before making a before making a Parent Adverse Recommendation Change, of its intention to take such action with respect to such Superior Proposal, which notice shall state expressly that Parent has received a Parent Acquisition Proposal that the Parent Board or such committee thereof has determined to be a Superior Proposal and that the Parent Board or such committee thereof intends to make a Parent Adverse Recommendation Change; (B) the Parent Board or such committee thereof attaches to such notice the most current version of the proposed transaction agreements, the identity of the Third Party making such Superior Proposal, and a copy of any financing commitments related thereto; (C) during the Parent Notice Period, if requested (orally or in writing) by the Company, the Parent Board or such committee thereof has engaged and has directed its Representatives to engage in negotiations with the Company in good faith to amend this Agreement or any Ancillary Document in such a manner that such Superior Proposal ceases to constitute a Superior Proposal; and (D) following the Parent Notice Period, the Parent Board or such committee thereof shall have considered in good faith any proposed amendments to this Agreement and any Ancillary Document and determined in good faith, after consultation with its outside legal counsel and its Financial Advisor, taking into account any changes to this Agreement or any Ancillary Document made or proposed in writing by the Company, that such Superior Proposal continues to constitute a Superior Proposal;
provided
,
however
, that with respect to any applicable Superior Proposal, any amendment to the financial terms or any other material amendment to a term of such Superior Proposal shall require a new written notice by the Parent Board or such committee thereof and a new Parent Notice Period, and no such Parent Adverse Recommendation Change in connection with such Superior Proposal may be made during any Parent Notice Period;
provided
,
further
, that notwithstanding anything to the contrary herein, neither Parent nor any and of its Subsidiaries shall enter into any Parent Acquisition Proposal unless and until this Agreement has been terminated in accordance with its terms.
(c)
Required Notices
. Parent, the Parent Board or any committee thereof shall not take any of the actions referred to in
Section 6.11(b)
unless Parent shall have first complied with the applicable requirements of this
Section 6.11(c)
. Parent shall notify (orally and in writing) the Company promptly (but in no event later than 24 hours) after receipt by Parent (or any of its Representatives) of any Parent Acquisition Proposal or of any inquiries or other communication regarding the making of a Parent Acquisition Proposal, including the material terms and conditions thereof and providing a copy, if applicable, of any written requests, proposals or offers, including proposed agreements, and the identity of the Person making (or inquiry or communications about) such Parent Acquisition Proposal and its proposed financing sources, and shall keep the Company reasonably informed on a prompt basis (but in any event no later than 24 hours) as to the status (including changes or proposed changes to the material terms) of such Parent Acquisition Proposal (whether made before or after the date hereof). Parent shall also notify the Company promptly (but in no event later than 24 hours) after receipt by Parent of any request for non-public information relating to Parent or any of its Subsidiaries or for access to the business, properties, assets, personnel, books or records of Parent or any of its Subsidiaries by any Third Party that has informed Parent that it is considering making, or has made, a Parent Acquisition Proposal. Parent shall also notify the Company promptly of Parent’s intention to take the actions set forth in clauses (A) or (B) of
Section 6.11(b)(i)
. Parent agrees that it and its Subsidiaries will not enter into any confidentiality agreement with any Third Party subsequent to the date hereof which
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prohibits Parent from providing any information to the Company in accordance with this
Section 6.11(c)
.
6.12
Amended Articles of Incorporation and Bylaws
. Upon obtaining Parent Shareholder Approval, and at or prior to the Closing, Parent shall amend and restate its articles of incorporation and bylaws, effective as of the Effective Time in the forms attached hereto as
Exhibit H
and
Exhibit I
, respectively (the “
A&R Governing Documents
”) and shall take all necessary steps to effect the A&R Governing Documents.
6.13
Information Statements; Shareholder Meetings
.
(a)
Information Statements
. Promptly (and in any event within twenty (20) Business Days) following the execution of this Agreement, (a) the Company shall prepare an information statement of the type required under applicable Law to obtain the
Company Shareholder Approval (the “
Company Information Statement
”), and (b) Parent shall prepare an information statement of the type required under applicable Law to obtain the Parent Shareholder Approval (the “
Parent Information Statement
”). Each of the Company and Parent shall use commercially reasonable efforts to (i) cooperate with the other in preparing the Company Information Statement or Parent Information Statement, as applicable, (ii) furnish to the other all information concerning itself, its Affiliates, and the holders of its shares and provide such other assistance as may be reasonably requested in connection with the preparation and distribution of the Company Information Statement or Parent Information Statement, as applicable, (iii) cooperate with the other to ensure that the offer and issuance of Parent Common Stock pursuant to
Section 3.1(a)(iv)
is conducted pursuant to pursuant to Section 4(a)(2) of the Securities Act, Regulation D under the Securities Act, Rule 506(c) promulgated thereunder and Regulation S under the Securities Act or other available exemption from registration pursuant to the Securities Act and (iv) provide the other a reasonable opportunity to review and comment on such Company Information Statement or Parent Information Statement, as applicable, including the proposed final version of the Company Information Statement or Parent Information Statement, as applicable.
(b)
The Company shall take all actions necessary in accordance with applicable Law and its Articles of Incorporation and Bylaws to, as promptly as practicable following the date hereof, establish a record date for, duly call, give notice of, convene and hold, as promptly as practicable after the mailing of the Company Information Statement, a special meeting of the Company’s shareholders (the “
Company Meeting
”) for the purpose of considering and voting upon the proposal set forth in the Company Information Statement necessary to obtain the Company Shareholder Approval (the “
Company Voting Proposal
”)
provided
, that in no event shall such Company Meeting be held fewer than twenty (20) calendar days following the date the Company Information Statement is mailed to the Company Shareholders. Subject to
Section 6.10(b)(ii)
, to the fullest extent permitted by applicable law, (i) the Company Board shall recommend approval of the Company Voting Proposal by Company Shareholders and include such recommendation in the Company Information Statement, (ii) neither the Company Board nor any committee thereof shall withdraw or modify, or propose or resolve to withdraw or modify in a manner adverse to Parent, the recommendation of the Company Board that the Company’s shareholders vote in favor of the Company Voting Proposal and (iii) the Company shall take all action necessary
99
or advisable to secure the vote or consent of the Company Shareholders required by the BCA to obtain such approvals. Notwithstanding anything to the contrary contained in this Agreement, after consultation with Parent, the Company may adjourn or postpone the Company Meeting to the extent necessary to ensure that any required supplement or amendment to the Company Information Statement is provided to the Company Shareholders or, if as of the time for which the Company Meeting is originally scheduled (as set forth in the Company Information Statement), there are insufficient shares of Company Common Stock represented (either in person or by proxy) to constitute a quorum necessary to conduct the business of the Company Meeting.
(c)
Parent shall take all actions necessary in accordance with applicable Law and its Amended and Restated Articles of Incorporation and Bylaws to, as promptly as practicable following the date hereof, establish a record date for, duly call, give notice of, convene and hold, as promptly as practicable after the mailing of the Parent Information Statement, a special meeting of Parent’s shareholders (the “
Parent Meeting
”) for the purpose of considering and voting upon the proposals set forth in the Parent Information Statement necessary to obtain the Parent Shareholder Approval (the “
Parent Voting Proposal
”)
provided
, that in no event shall such Parent Meeting be held fewer than twenty (20) calendar days following the date the Parent Information Statement is mailed to the Parent Shareholders. Subject to
Section 6.11(b)(ii)
, to the fullest extent permitted by applicable law, (i) the Parent Board shall recommend approval of the Parent Voting Proposal by the Parent Shareholders and include such recommendation in the Parent Information Statement, (ii) neither the Parent Board nor any committee thereof shall withdraw or modify, or propose or resolve to withdraw or modify in a manner adverse to the Company, the recommendation of the Parent Board that Parent’s shareholders vote in favor of the Parent Voting Proposal and (iii) Parent shall take all action necessary or advisable to secure the vote or consent of the Parent Shareholders required by the BCA to obtain such approvals. Notwithstanding anything to the contrary contained in this Agreement, after consultation with the Company, Parent may adjourn or postpone the Parent Meeting to the extent necessary to ensure that any required supplement or amendment to the Parent Information Statement is provided to the Parent Shareholders or, if as of the time for which the Parent Meeting is originally scheduled (as set forth in the Parent Information Statement), there are insufficient shares of Parent Common Stock represented (either in person or by proxy) to constitute a quorum necessary to conduct the business of the Parent Meeting.
(d)
The Company shall call, give notice of, convene and hold the Company Meeting, in accordance with
Section 6.13(b)
, and shall submit the Company Voting Proposal and to its shareholders for the purpose of acting upon such proposal whether or not (i) the Company Board at any time subsequent to the date hereof determines that this Agreement is no longer advisable or recommends that the Company Shareholders reject such proposal, (ii) a Company Adverse Recommendation Change occurs, (iii) any actual, potential or purported Company Acquisition Proposal or Superior Proposal has been commenced, disclosed, announced or submitted to the Company.
(e)
Parent shall call, give notice of, convene and hold the Parent Meeting, in accordance with
Section 6.13(c)
, and shall submit the Parent Voting Proposal and to its shareholders for the purpose of acting upon such proposal whether or not (i) the Parent Board
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at any time subsequent to the date hereof determines that the issuance of Parent Common Stock to consummate the Merger is no longer advisable or recommends that the Parent Shareholders reject such proposal, (ii) a Parent Adverse Recommendation Change occurs or (iii) any actual, potential or purported Parent Acquisition Proposal or Superior Proposal has been commenced, disclosed, announced or submitted to Parent.
6.14
Resignation of Company Directors
. To the extent requested in writing by Parent no less than ten (10) Business Days prior to the Closing Date, the Company shall cause to be delivered to Parent prior to the Closing written resignations of each director of the Company, which resignations shall be effective as of, and subject to the occurrence of, the Effective Time.
6.15
Closing Agreements
.
(a)
Exchange and Paying Agent Agreement
. At the Closing, each of Parent and the Company shall duly execute and deliver to the other, and cause the Exchange and Paying Agent to duly execute and deliver to Parent and the Company, an exchange and paying agent agreement customary for transactions of this type as mutually agreed to by Parent, the Company and the Exchange and Paying Agent (the “
Exchange and Paying Agent Agreement
”).
(b)
Shareholder Agreement and Registration Rights Agreement
. (i) Parent shall use commercially reasonable efforts to cause each 5% Holder that is a Parent Shareholder immediately prior to the Effective Time, to execute and deliver to Parent the Shareholder Agreement and the Registration Rights Agreement and (ii) the Company shall use commercially reasonable efforts to cause each 5% Holder that is a Company Common Shareholder immediately prior to the Effective Time, in each case to execute and deliver to Parent the Shareholder Agreement and the Registration Rights Agreement.
6.16
Shareholder Agreements
. On or prior to the Effective Time, the Company shall use commercially reasonable efforts to cause the other necessary parties to the Company Shareholder Agreement to take such actions to terminate the Company Shareholder Agreement in its entirety as of the Effective Time. On or prior to the Effective Time, Parent shall use commercially reasonable efforts to cause the other necessary parties to the Current Parent Shareholder Agreement to take such actions to terminate the Current Parent Shareholder Agreement in its entirety as of the Effective Time, and Parent shall enter into the Shareholder Agreement at or immediately prior to the Effective Time.
6.17
Parent Public Offering
. The Company acknowledges that Parent is in the process of registering a public offering of shares of the Parent Common Stock under the Securities Act. Each of the Company and Parent acknowledge and agree that, from and after the date of this Agreement, the Company and Parent shall use commercially reasonable efforts to work together on drafting and submitting any filings, correspondence, memoranda, notices or similar documents to the SEC or any other Governmental Authority relating to such public offering and cooperate and consult with one another regarding any such filings, correspondence, memoranda, notices or similar documents to be submitted to the SEC or any other Governmental Authority relating to such public offering. Parent shall provide the Company a reasonable opportunity to review and comment on any filings, correspondence, memoranda, notices or similar documents
101
to be filed with the SEC or any other Governmental Authority relating to such public offering, including the proposed final version of the Form S-1. Parent shall provide representatives of holders of Company Common Stock with periodic communications regarding the status and timing of the Form S-1 filing and the process of such public offering. Parent acknowledges and agrees that, from and after the date of this Agreement, representatives of the holders of Company Common Stock, shall be entitled to (i) reasonably participate in the preparation and drafting of the Form S-1 and related documents and (ii) receive communications from the SEC regarding the Form S-1 and the process of registering a public offering of shares of the Parent Common Stock under the Securities Act;
provided
, that nothing in this
Section 6.17
shall require Parent to allow such representative’s participation if such participation (i) would reasonably be expected to cause Parent to lose the benefit of attorney-client privilege (
provided
, that, Parent shall use commercially reasonable efforts to permit such participation to the extent such privilege may be preserved) (ii) conflicts with Parent’s confidentiality obligations to third parties or (iii) is prohibited by applicable Law. For the avoidance of doubt, the Company acknowledges that its receipt of any information relating to such public offering shall be subject to the Confidentiality Agreement.
6.18
Tax Treatment
. Each of Parent, Merger Sub and the Company shall use its reasonable efforts to cause the Merger to qualify, and will not (both before and after the Closing Date) take any actions, or fail to take any action, which action or failure could reasonably be expected to prevent the Merger from qualifying as a reorganization under the provisions of Section 368(a) of the Code. Each of Parent, Merger Sub and the Company shall treat any issuance of stock to the Company Shareholder Indemnitees under
Article IX
as pursuant to the plan of reorganization and as part of the merger consideration paid to Company Common Shareholders.
6.19
Audited Financial Statements
. Parent shall deliver to the Company complete copies of Parent’s audited financial statements consisting of the balance sheet of Parent as of December 31, 2014 and the related statements of income and retained earnings, shareholders’ equity and cash flow for the period from the Parent Emergence Date through 2014 no later than March 31, 2015.
6.20
Exempt Investors
. Prior to the Closing, the Company agrees to use commercially reasonable efforts to ascertain, to the extent possible, the percentage of Exempt Investors holding Company Common Stock and shall keep Parent apprised of the status of such efforts as Parent may reasonably request from time to time.
6.21
Certain Agreements
. Prior to the Closing, each of Parent and the Company agrees to use commercially reasonable efforts to negotiate and enter into, amend, terminate or modify such agreements as may be mutually determined by the parties, to the extent necessary to optimize the commercial, technical, administrative and financial management of the combined businesses of Parent and the Company from and after the Closing.
6.22
Management Arrangements
. Notwithstanding anything else to the contrary contained in this Agreement, Parent and the Company agree that Parent shall be permitted, in consultation with the Company, to implement a management incentive plan consistent with the economic terms set forth in
Section 6.22
of the Parent Disclosure Schedules (including by
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implementation of the New Parent Employee Plan, any amendment of the Parent Stock Plan to increase the authorized shares thereunder and any grants or awards thereunder). Parent shall be permitted to implement, in consultation with the Company, any non-economic or other terms in connection therewith as determined by the Parent, including but not limited to, the allocation of grants pursuant to such management incentive plan to members of the Parent’s management team, to the extent consistent with the economic terms set forth in
Section 6.22
of the Parent Disclosure Schedules. For the avoidance of doubt, in no event shall the aggregate shares granted pursuant to any management incentive plan exceed the amounts set forth in
Section 6.22
of the Parent Disclosure Schedules.
ARTICLE VII
CONDITIONS TO CLOSING
7.1
Conditions Precedent to Obligations of the Company, Parent and Merger Sub
. The obligations of the Company, Parent and Merger Sub to consummate the Merger are subject to the fulfillment, on or prior to the Closing Date, of each of the following conditions (any or all of which may be waived by the party to whose benefit such condition exists, in whole or in part, to the extent permitted by applicable Law):
(a)
there shall not be in effect any Law or Order of a Governmental Authority having competent jurisdiction over the business of the Company and its Subsidiaries or the business of Parent, Merger Sub or each of their Subsidiaries, prohibiting or enjoining the consummation of the Merger and no Action shall be pending or threatened seeking the foregoing;
(b)
the waiting period or required approval applicable to the transactions contemplated by this Agreement under any Competition Law shall have expired (or early termination shall have been granted) or been received;
(c)
the Company Voting Proposal shall have been approved at the Company Meeting, at which a quorum is present, by (i) the requisite vote of the Company Shareholders under applicable Law and the Company’s Articles of Incorporation and Bylaws, and (ii) the affirmative vote of the Disinterested Holders holding a majority of the shares of Company Common Stock voted by the Disinterested Holders;
(d)
the Parent Voting Proposal shall have been approved at the Parent Meeting, at which a quorum is present, by the requisite vote of the Parent Shareholders under applicable Law and Parent’s Amended and Restated Articles of Incorporation and Bylaws;
(e)
consents of the parties to each of the Financing Agreements consenting to the Merger and transactions contemplated by this Agreement shall have been obtained;
(f)
Company Common Shareholders holding in the aggregate no more than 10% of the outstanding shares of Company Common Stock have filed with the Company, before the Company Meeting, an objection to the Merger and a demand for payment for their Company Common Stock if the Merger is effected; and
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(g)
Parent Shareholders holding in the aggregate no more than 10% of the outstanding shares of Parent Class B Common Stock have filed with the Parent, before the Parent Meeting, an objection to the approval of the A&R Governing Documents and a demand for payment for their Parent Class B Common Stock if Parent Shareholder Approval is obtained.
7.2
Conditions Precedent to Obligations of Parent and Merger Sub
. In addition, the obligations of Parent and Merger Sub to consummate the Merger are subject to the fulfillment, on or prior to the Closing Date, of each of the following conditions (any or all of which may be waived by Parent, in whole or in part, to the extent permitted by applicable Law):
(a)
(i) (A) the representations and warranties of the Company set forth in
Article IV
of this Agreement (other than (x) Fundamental Company Representations, (y) the representations and warranties set forth in
Section 4.2
, and (z) those other representations and warranties that address matters as of a specified date) shall be true and correct as of the Closing Date as though then made at and as of the Closing Date in all respects (without giving effect to materiality, Company Material Adverse Effect, or similar phrases in the representations and warranties) and (B) the representations and warranties of the Company set forth in
Article IV
of this Agreement that address matters as of a specified date (other than the Fundamental Company Representations and the representations and warranties set forth in
Section 4.2
) shall be true and correct as of such specified date in all respects (without giving effect to materiality, Company Material Adverse Effect, or similar phrases in the representations and warranties), in each case, except to the extent that the failure of such representations and warranties to be true and correct has not had and would not reasonably be to have, individually or in the aggregate a Company Material Adverse Effect, (ii) the Fundamental Company Representations shall be true and correct in all respects as of the Closing Date as though made at and as of the Closing Date (except for Fundamental Company Representations which address matters only as of a specified date, which representations and warranties shall continue as of the Closing Date to be true and correct as of such specified date in all respects), and (iii) the representations and warranties set forth in
Section 4.2
shall be true and correct in all respects except for any de minimis inaccuracy as of the Closing Date as though made at and as of the Closing Date (except for those representations and warranties which address matters only as of a specified date, which representations and warranties shall continue as of the Closing Date to be true and correct in all respects except for any de minimis inaccuracy as of such specified date in all respects);
(b)
the Company shall have performed and complied in all material respects with all obligations required by this Agreement to be performed or complied with by it on or prior to the Closing Date;
(c)
the Equity Purchase Agreement (i) has been executed and delivered by the holders of Company Common Stock with aggregate commitments to purchase Parent Common Stock in the amount of $62,500,000 in accordance with the terms of the Equity Purchase Agreement and (ii) the holders of Company Common Stock shall remain committed to purchase Parent Common Stock in the amount of $62,500,000 as of the Closing Date in accordance with the terms of the Equity Purchase Agreement;
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(d)
Parent shall have received a certificate signed by an officer of the Company, dated the Closing Date, to the effect that the conditions specified in
Sections 7.2(a)
,
7.2(b)
and
7.2(c)
are satisfied;
(e)
the Company Shareholder Agreement shall have been terminated; and
(f)
the consents set forth on
Section 7.2(f)
of the Company Disclosure Schedules shall have been obtained; and
(g)
the Shareholder Agreement shall have been executed and delivered by each 5% Holder that is a Company Common Shareholder immediately prior to the Effective Time to Parent.
7.3
Conditions Precedent to Obligations of the Company
. In addition, the obligations of the Company to consummate the Merger are subject to the fulfillment, on or prior to the Closing Date, of each of the following conditions (any or all of which may be waived by the Company, in whole or in part, to the extent permitted by applicable Law):
(a)
(i) (A) the representations and warranties of Parent and Merger Sub set forth in
Article V
of this Agreement (other than (x) Fundamental Parent Representations, (y) the representations and warranties set forth in
Section 5.2
, and (z) those other representations and warranties that address matters as of a specified date) shall be true and correct as of the Closing Date in all respects as though then made at and as of the Closing Date (without giving effect to materiality, Parent Material Adverse Effect, or similar phrases in the representations and warranties) and (B) the representations and warranties of Parent and Merger Sub set forth in
Article V
of this Agreement that address matters as of a specified date (other than the Fundamental Parent Representations and the representations and warranties set forth in
Section 5.2
) shall be true and correct in all respects as of such specified date (without giving effect to materiality, Parent Material Adverse Effect, or similar phrases in the representations and warranties), in each case, except to the extent that the failure of such representations and warranties to be true and correct has not had and would not reasonably be to have, individually or in the aggregate a Parent Material Adverse Effect, (ii) the Fundamental Parent Representations shall be true and correct in all respects as of the Closing Date as though made at and as of the Closing Date (except for Fundamental Parent Representations which address matters only as of a specified date, which representations and warranties shall continue as of the Closing Date to be true and correct as of such specified date in all respects), and (iii) the representations and warranties set forth in
Section 5.2
shall be true and correct in all respects except for any de minimis inaccuracy as of the Closing Date as though made at and as of the Closing Date (except for those representations and warranties which address matters only as of a specified date, which representations and warranties shall continue as of the Closing Date to be true and correct in all respects except for any de minimis inaccuracy as of such specified date in all respects);
(b)
each of Parent and Merger Sub shall have performed and complied in all material respects with all obligations required by this Agreement to be performed or complied with by it on or prior to the Closing Date;
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(c)
the Equity Purchase Agreement (i) has been executed and delivered by the holders of Parent Common Stock with aggregate commitments to purchase Parent Common Stock in the amount of $62,500,000 in accordance with the terms of the Equity Purchase Agreement and (ii) the holders of Parent Common Stock shall remain committed to purchase Parent Common Stock in the amount of $62,500,000 as of the Closing Date in accordance with the terms of the Equity Purchase Agreement;
(d)
the Company shall have received a certificate signed by an officer of each of Parent and Merger Sub, dated the Closing Date, to the effect that the conditions specified in
Sections 7.3(a)
,
7.3(a)
and
7.3(c)
are satisfied;
(e)
the consents set forth on
Section 7.3(e)
of the Parent Disclosure Schedules shall have been obtained;
(f)
Parent shall have taken all necessary steps to effect the A&R Governing Documents;
(g)
the Current Parent Shareholder Agreement shall have been terminated; and
(h)
the Shareholder Agreement shall have been executed and delivered by each 5% Holder that is a Parent Shareholder immediately prior to the Effective Time to Parent.
ARTICLE VIII
TERMINATION
8.1
Termination of Agreement
. Subject to
Section 10.1
, this Agreement may be terminated at any time prior to the Effective Time as follows:
(a)
at the election of the Company or Parent on or after October 8, 2015 (the “
Outside Date
”), if the Merger shall not have occurred by 5:00 p.m. New York City time on such date;
provided
, that neither the Company nor Parent may terminate this Agreement pursuant to this
Section 8.1(a)
if it (or, in the case of Parent, Merger Sub) is in material breach of any of its obligations hereunder and such material breach causes, or results in, either (A) the failure to satisfy the conditions to the obligations of the terminating party to consummate the Merger set forth in
Article VIII
prior to the Outside Date, or (B) the failure of the Effective Time to have occurred prior to the Outside Date;
provided
,
further
that (1) Parent shall not have the right to terminate this Agreement pursuant to this
Section 8.1(a)
in the event that on the Outside Date the Company has the right to terminate this Agreement pursuant to
Sections 8.1(e)
and (2) the Company shall not have the right to terminate this Agreement pursuant to this
Section 8.1(a)
in the event that on the Outside Date Parent has the right to terminate this Agreement pursuant to
Section 8.1(d)
.
(b)
by mutual written consent of the Company and Parent;
(c)
by the Company or Parent if there shall be in effect a final, nonappealable Order of a Governmental Authority having competent jurisdiction over the business of the Company and its Subsidiaries or over Parent, Merger Sub or any of their
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Subsidiaries, prohibiting the consummation of the Merger, it being agreed that, without limiting the parties’ other obligations hereunder, the Company, Parent and Merger Sub shall use their commercially reasonable efforts to promptly appeal any adverse determination that is appealable and diligently pursue such appeal;
provided
, that the right to terminate this Agreement pursuant to this
Section 8.1(c)
shall not be available to any party seeking to terminate whose failure to fulfill any obligation under this Agreement has been the cause of, or resulted in, the failure of the Closing to occur on or prior to the date of such termination;
(d)
by Parent if (i) neither Parent nor Merger Sub are in material breach of any of their respective obligations hereunder and (ii) the Company is in material breach of any of its representations, warranties or obligations hereunder that renders or would render the conditions set forth in
Sections 7.2(a)
or
7.2(b)
incapable of being satisfied on the Outside Date, and such breach is either (A) not capable of being cured prior to the Outside Date or (B) if curable, is not cured within the earlier of (x) twenty (20) Business Days after the giving of written notice by Parent to the Company and (y) two (2) Business Days prior to the Outside Date;
(e)
by the Company if (i) the Company is not in material breach of any of its obligations hereunder and (ii) either Parent or Merger Sub are in material breach of any of their respective representations, warranties or obligations hereunder that renders or would render the conditions set forth in
Sections 7.3(a)
or
7.3(b)
incapable of being satisfied on the Outside Date, and such breach is either (A) not capable of being cured prior to the Outside Date or (B) if curable, is not cured within the earlier of (x) twenty (20) Business Days after the giving of written notice by the Company to Parent and (y) two (2) Business Days prior to the Outside Date;
(f)
by Parent or the Company if at the Company Meeting (including any adjournment or postponement permitted by this Agreement), at which a vote on the Company Voting Proposal is taken, the requisite vote of the Company Shareholders in favor of the Company Voting Proposal or the affirmative vote in favor of the Company Voting Proposal of the Disinterested Holders holding a majority of the shares of Company Common Stock voted by the Disinterested Holders shall not have been obtained (
provided
, that the right to terminate this Agreement under this
Section 8.1(f)
shall not be available to any party seeking termination if at such time such party is in material breach of its obligations under this Agreement);
(g)
by Parent or the Company if at the Parent Meeting (including any adjournment or postponement permitted by this Agreement), at which a vote on the Parent Voting Proposal is taken, the requisite vote of the holders of shares of Parent Common Stock in favor of the Parent Voting Proposal shall not have been obtained (
provided
, that the right to terminate this Agreement under this
Section 8.1(g)
shall not be available to any party seeking termination if at such time such party is in material breach of its obligations under this Agreement);
(h)
by Parent, if: (i) the Company Board or any committee thereof shall have withdrawn or modified, in a manner materially adverse to Parent, or shall have proposed publicly to withdraw or modify, in a manner materially adverse to Parent, its
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approval or recommendation of the Company Voting Proposal; (ii) the Company Board shall have failed to give its recommendation to the approval of the Company Voting Proposal in the Company Information Statement or shall have withdrawn or modified in a manner materially adverse to Parent its recommendation of the Company Voting Proposal; (iii) the Company Board (or any committee thereof) shall have approved or recommended, or shall have proposed publicly to approve or recommend, to the shareholders of the Company a Company Acquisition Proposal; (iv) a tender offer or exchange offer for outstanding shares of Company Common Stock is commenced (other than by Parent or a Subsidiary of Parent), and the Company Board (or any committee thereof) shall have recommended that the shareholders of the Company tender their shares in such tender or exchange offer or, within ten (10) Business Days after the commencement of such tender offer or exchange offer, the Company Board fails to recommend against acceptance of such offer or (v) the Company shall be in material breach of its obligations under
Sections 6.10
,
6.13(b)
or
6.13(d)
of this Agreement and such material breach, if able to be cured, is not cured by the Company by the fifth (5th) Business Day after the delivery of notice thereof to the Company by Parent; or
(i)
by the Company, if: (i) the Parent Board or any committee thereof shall have withdrawn or modified, in a manner materially adverse to the Company, or shall have proposed publicly to withdraw or modify, in a manner materially adverse to the Company, its approval or recommendation of the Parent Voting Proposal; (ii) the Parent Board shall have failed to give its recommendation to the approval of the Parent Voting Proposal in the Parent Information Statement or shall have withdrawn or modified in a manner materially adverse to the Company its recommendation of the Parent Voting Proposal; (iii) the Parent Board (or any committee thereof) shall have approved or recommended, or shall have proposed publicly to approve or recommend, to the shareholders of Parent a Parent Acquisition Proposal; (iv) a tender offer or exchange offer for outstanding shares of Parent Common Stock is commenced (other than by the Company or a Subsidiary of the Company), and the Parent Board (or any committee thereof) shall have recommended that the shareholders of Parent tender their shares in such tender or exchange offer or, within ten (10) Business Days after the commencement of such tender offer or exchange offer, the Parent Board fails to recommend against acceptance of such offer or (v) Parent shall be in material breach of its obligations under
Sections 6.11
,
6.13(c)
or
6.13(e)
of this Agreement and such material breach, if able to be cured, is not cured by the Company by the fifth (5th) Business Day after the giving of notice thereof to the Company by Parent.
8.2
Procedure Upon Termination
. In the event of termination and abandonment by Parent or the Company, or both, pursuant to
Section 8.1
hereof, written notice thereof shall forthwith be given to the other parties, and this Agreement shall terminate, and the Merger shall be abandoned, without further action by Parent or the Company.
8.3
Effect of Termination
.
(a)
In the event that this Agreement is validly terminated in accordance with
Section 8.1
, then each of the parties hereto shall be relieved of its obligations arising under this Agreement after the date of such termination and such termination shall be without liability to any of the parties;
provided
,
however
, that, subject to the terms, conditions and limitations of this
Section 8.3
, (i) no such termination shall relieve any party from liability
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for any Willful Breach by that party (or in the case of Parent, Willful Breach by Merger Sub) of this Agreement or relieve any party from liability in connection with any Specified Termination of the Company Termination Fee or the Parent Termination Fee, as applicable and (ii) the provisions of this
Section 8.3
,
Section 6.1(b)
(Access to Information),
Section 6.8
(Publicity; Confidentiality), and
Article X
(Miscellaneous) shall remain in full force and effect and survive any termination of this Agreement in accordance with its terms.
(b)
Parent shall pay the Company (or its designee(s)) a termination fee in an amount equal to fifteen million dollars ($15,000,000) (the “
Parent Termination Fee
”) in the event of the termination of this Agreement (each of the following, a “
Company Specified Termination
”):
(i)
by Parent or the Company pursuant to
Section 8.1(g)
as a result of the failure to receive the requisite vote for approval of the Parent Voting Proposal by the shareholders of Parent at the Parent Meeting and the Parent Board has made a Parent Adverse Recommendation Change;
(ii)
by the Company pursuant to
Section 8.1(i)
; or
(iii)
(x) by either Parent or the Company pursuant to
Section 8.1(a)
, by Parent or the Company pursuant to
Section 8.1(g)
as a result of the failure to receive the requisite vote for approval of the Parent Voting Proposal by the shareholders of Parent at the Parent Meeting, or by the Company pursuant to
Section 8.1(e)
on the basis of a breach of a covenant or agreement contained in this Agreement, (y) prior to such termination, a Person shall have made a Parent Acquisition Proposal that has not been publicly withdrawn prior to such termination of this Agreement pursuant to
Section 8.1(e)
or
Section 8.1(a)
, or at least three (3) Business Days prior to the date of the Parent Meeting in the case of termination of this Agreement pursuant to
Section 8.1(g)
, and (z) Parent enters into a definitive agreement with respect to any Parent Acquisition Proposal, in each case, within twelve (12) months of such termination;
(c)
Company shall pay Parent (or its designee(s)) a termination fee in an amount equal to fifteen million dollars ($15,000,000) (the “
Company Termination Fee
”) in the event of the termination of this Agreement (each of the following, a “
Parent Specified Termination
”):
(i)
by Company or the Parent pursuant to
Section 8.1(f)
as a result of the failure to receive the requisite vote for approval of the Company Voting Proposal by the shareholders of the Company at the Company Meeting and the Company Board has made a Company Adverse Recommendation Change;
(ii)
by Parent pursuant to
Section 8.1(h)
; or
(iii)
(x) by either Parent or the Company pursuant to
Section 8.1(a)
, by Parent or the Company pursuant to
Section 8.1(f)
as a result of the failure to receive the requisite vote for approval of the Company Voting Proposal by the shareholders of the Company at the Company Meeting, or by Parent pursuant to
Section 8.1(d)
on the basis of a breach of a covenant or agreement contained in this Agreement, (y) prior to such termination, a Person shall have made a Company Acquisition Proposal that has not been publicly withdrawn prior to such
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termination of this Agreement pursuant to
Section 8.1(e)
or
Section 8.1(a)
, or at least three (3) Business Days prior to the date of the Company Meeting in the case of termination of this Agreement pursuant to
Section 8.1(g)
, and (z) Company enters into a definitive agreement with respect to any Company Acquisition Proposal, in each case, within twelve (12) months of such termination;
(d)
Payment of any fee pursuant to this
Section 8.3
shall be made by wire transfer of same-day funds within one (1) Business Day after demand therefor following the first to occur of the events giving rise to the Company Termination Fee or Parent Termination Fee, as applicable,
provided
, that in no event shall any party be required to pay any fee pursuant to this
Section 8.3
the other party, if, immediately prior to the termination of this Agreement, the party to receive such fee was in material breach of its obligations under this Agreement.
(e)
Payment of the Company Termination Fee or the Parent Termination Fee, as applicable, shall not be in lieu of damages incurred in the event of a Willful Breach of this Agreement as described in
Section 8.3(a)
.
(f)
Each of the parties hereto acknowledges and agrees that the agreements contained in
Sections 8.3(b)
and
8.3(c)
are an integral part of the transactions contemplated hereby, and that without these agreements, the other parties would not enter into this Agreement. Accordingly, if Parent or the Company fails to promptly pay the Company Termination Fee or Parent Termination Fee, as applicable, in full when due and, in order to obtain such payment, the Company or Parent, as applicable, commences a suit that results in a judgment against Parent for the Company Termination Fee or any portion thereof or the Company for the Parent Termination Fee or any portion thereof, the party against whom judgment was entered shall pay to the party in whose favor the judgment was entered (i) the costs and expenses (including attorneys’ fees) in connection with such suit and (ii) interest on the amount of such Company Termination Fee, Parent Termination Fee or portion thereof through the date of payment at the rate of 8% per annum, compounded quarterly.
ARTICLE IX
INDEMNIFICATION
9.1
Survival
. Subject to the limitations and other provisions of this Agreement, the representations and warranties contained in this Agreement shall survive and shall remain in full force and effect until the date that is twenty four (24) months following the anniversary of the Closing Date and then shall terminate (the “
Survival Period
”). The obligations of the parties contained in this Agreement, and any claims in respect thereof, shall survive for the Survival Period. Notwithstanding the foregoing, any claims asserted in good faith in writing by notice from the non-breaching party to the breaching party prior to the expiration date of the Survival Period shall not thereafter be barred by the expiration of the relevant representation, warranty or obligation and such claims shall survive until finally resolved.
9.2
Indemnification of Holders of Parent Common Stock
. Subject to the other terms and conditions of this
Article IX
, from and after the Closing until the expiration of the Survival Period, Parent shall indemnify and defend each of the holders of Parent Common Stock
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immediately prior to the Effective Time (collectively, the “
Parent Shareholder Indemnitees
”) against, and shall hold each of them harmless from and against, and shall pay and reimburse each of them for, any and all Losses incurred or sustained by, or imposed upon, the Parent Shareholder Indemnitees based upon, arising out of or by reason of:
(a)
any inaccuracy in or breach of any of the representations and warranties of the Company or any failure of such representations and warranties of the Company to be true and correct as if it was made on the Closing Date (except to the extent expressly made as of an earlier date, in which case as of such earlier date);
(b)
any breach by the Company prior to the Closing of any of its obligations under this Agreement.
For the purposes of this
Article IX
, the Parent Shareholder Pro Rata Share of all Losses incurred or sustained by, or imposed upon Parent as a result of clauses (a) or (b) of this
Section 9.2
shall be deemed to be Losses in the aggregate of the Parent Shareholder Indemnitees for the purposes this
Article IX
. In furtherance and not in limitation of the foregoing, if Parent incurs a Loss and a representation and warranty attesting to the absence of the underlying cause of such Loss has been made by the Company hereunder, or a covenant by the Company not to take an action has been breached and such breach results in such Loss, then the aggregate amount of such Loss multiplied by the Parent Shareholder Pro Rata Share shall be deemed a Loss incurred by the Parent Shareholder Indemnitees for all purposes hereunder. For illustrative purposes only, if a Third Party Claim for which indemnification is required under this Agreement results in Parent sustaining Losses in the aggregate of $10,000,000 in the form of defense costs, settlement payments or other Losses, then the Parent Shareholder Indemnitees shall be deemed to have suffered approximately $5,255,000 of Losses relating to that Third Party Claim for purposes of this Agreement.
9.3
Indemnification of Holders of Company Common Stock
. Subject to the other terms and conditions of this
Article IX
, from and after the Closing until the expiration of the Survival Period, Parent shall indemnify and defend each of the holders of Company Common Stock immediately prior to the Effective Time that received shares of Parent Common Stock as consideration pursuant to
Section 3.1(a)(iii)
(collectively, the “
Company Shareholder Indemnitees
”) against, and shall hold each of them harmless from and against, and shall pay and reimburse each of them for, any and all Losses incurred or sustained by, or imposed upon, the Company Shareholder Indemnitees based upon, arising out of or by reason of:
(a)
any inaccuracy in or breach of any of the representations and warranties of each of Parent and Merger Sub or any failure of such representations and warranties of each of Parent and Merger Sub to be true and correct as if it was made on the Closing Date (except to the extent expressly made as of an earlier date, in which case as of such earlier date); and
(b)
any breach or non-fulfillment of any obligation to be performed by Parent pursuant to this Agreement (other than Losses attributable to breaches following the Closing of the obligations set forth in
Section 6.6
,
Section 6.7
or
Section 6.8
).
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For the purposes of this
Article IX
, the Company Shareholder Pro Rata Share of all Losses incurred or sustained by, or imposed upon Parent as a result of clauses (a) or (b) of this
Section 9.3
shall be deemed to be Losses in the aggregate of the Company Shareholder Indemnitees for the purposes this
Article IX
. In furtherance and not in limitation of the foregoing, if Parent incurs a Loss and a representation and warranty attesting to the absence of the underlying cause of such Loss has been made by Parent hereunder, or a covenant by Parent not to take an action has been breached and such breach results in such Loss, then the aggregate amount of such Loss multiplied by the Company Shareholder Pro Rata Share shall be deemed a Loss incurred by the Company Shareholder Indemnitees for all purposes hereunder. For illustrative purposes only, if a Third Party Claim for which indemnification is required under this Agreement results in Parent sustaining Losses in the aggregate of $10,000,000 in the form of defense costs, settlement payments or other Losses, then the Company Shareholder Indemnitees shall be deemed to have suffered approximately $4,745,000 of Losses relating to that Third Party Claim for purposes of this Agreement.
9.4
Certain Limitations
. The indemnification provided for in
Sections 9.2
and
9.3
shall be subject to the following limitations:
(a)
The aggregate amount of all Losses for which the Parent Shareholder Indemnitees shall be indemnified pursuant to
Section 9.2
shall not exceed an amount equal to seventy-five million dollars $75,000,000 (the “
Cap
”).
(b)
Notwithstanding any other provision of this Agreement, Parent shall not have any obligation to indemnify any Parent Shareholder Indemnitee pursuant to
Section 9.2
, unless and until the aggregate amount of all such individual Losses incurred or sustained by all Parent Shareholder Indemnitees with respect to which the Parent Shareholder Indemnitees would otherwise be entitled to indemnification under
Section 9.2
exceeds five million dollars $5,000,000 (the “
Threshold Amount
”), and then only to the extent such Losses exceed the Threshold Amount. Only Losses that exceed an amount equal to one hundred thousand dollars $100,000 (the “
Minimum Loss Amount
”) shall be counted towards satisfaction of the Threshold Amount.
(c)
The aggregate amount of all Losses for which the Company Shareholder Indemnitees shall be indemnified pursuant to
Section 9.3
shall not exceed an amount equal to the Cap.
(d)
Notwithstanding any other provision of this Agreement, Parent shall not have any obligation to indemnify any Company Shareholder Indemnitee pursuant to
Section 9.3
unless and until the aggregate amount of all such individual Losses incurred or sustained by all Company Shareholder Indemnitees with respect to which the Company Shareholder Indemnitees would otherwise be entitled to indemnification under
Section 9.3
exceeds the Threshold Amount, and then only to the extent such Losses exceed the Threshold Amount.
(e)
For purposes of determining the amount of any Losses that are the subject matter of a claim for indemnification hereunder, each representation and warranty in this Agreement shall be read without regard and without giving effect to the terms
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“material”, “Material Adverse Effect” or any similar qualifier, as if such words and surrounding related words were deleted from such representation and warranty.
9.5
Indemnification Procedures
. The party making a claim under this
Article IX
is referred to as the “Indemnified Party,” and the party against whom such claims are asserted under this
Article IX
is referred to as the “Indemnifying Party”. In the case of any indemnification for Losses pursuant to
Section 9.2
, any Action by an Indemnified Party on account of a Loss (a “
Claim
”) may only be asserted by the GenMar Representative. In the case of any indemnification for Losses pursuant to
Section 9.3
, any Claim may only be asserted by the Navig8 Representative.
(a)
Third Party Claims
. If any Indemnified Party receives notice of the assertion or commencement of any Action made or brought by any Person who is not a party to this Agreement or a Subsidiary of a party to this Agreement (a “
Third Party Claim
”), against such Indemnified Party with respect to which the Indemnifying Party is obligated to provide indemnification under this Agreement, the Indemnified Party shall, prior to the expiration of the Survival Period, give the Indemnifying Party reasonably prompt written notice thereof, but in any event not later than thirty (30) calendar days after receipt of such notice of such Third Party Claim. The failure to give such prompt written notice shall not, however, relieve the Indemnifying Party of its indemnification obligations, except to the extent that the Indemnifying Party is prejudiced thereby. If Parent receives notice of a Third Party Claim against Parent with respect to which Parent is obligated to provide indemnification under this Agreement, Parent shall give the Equityholders’ Representatives reasonably prompt written notice thereof, but in any event not later than thirty (30) calendar days after receipt of such notice of such Third Party Claim. Such notice by the Indemnified Party or Parent shall describe the Third Party Claim in reasonable detail, shall include copies of all material written evidence thereof and shall indicate the estimated amount, if reasonably practicable, of the Loss that has been or may be sustained by the Indemnified Party or Parent. In the event Parent is the Indemnifying Party, the Indemnifying Party shall have the right to participate in, or by giving written notice to the Indemnified Party, to assume the defense of any Third Party Claim at the Indemnifying Party’s expense and by the Indemnifying Party’s own counsel, and the Indemnified Party shall cooperate in good faith in such defense;
provided
, such Indemnifying Party shall not have the right to defend or direct the defense of any such Third Party Claim that (i) the Indemnified Party reasonably believes that it would bear a larger portion of the Losses relating to the claim than the Indemnifying Party due to the Cap, (ii) seeks an injunction or other equitable relief against the Indemnified Party, or (iii) relates to or arises in connection with any criminal or quasi-criminal proceeding, action, indictment, allegation or investigation,
provided
further
that if in the reasonable opinion of counsel to the Indemnified Party there exists a conflict of interest between the Indemnifying Party and the Indemnified Party that cannot be waived, the Indemnifying Party shall not have the right to participate in or assume such defense. In the event that the Indemnifying Party assumes the defense of any Third Party Claim, subject to this
Section 9.5(a)
, it shall have the right to take such action as it deems necessary to avoid, dispute, defend, appeal or make counterclaims pertaining to any such Third Party Claim in the name and on behalf of the Indemnified Party;
provided
, that the Indemnifying Party acknowledges that notwithstanding its assumption of the defense of such Third Party Claim, the Indemnified Party shall be the party entitled to the indemnification rights. The Equityholders’ Representatives shall have the
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right to participate in the defense of any Third Party Claim with counsel reasonably selected by it subject to the right of Parent as Indemnifying Party to control the defense thereof. The fees and disbursements of such counsel shall be at the expense of the respective Equityholders’ Representative;
provided
, that if in the reasonable opinion of counsel to the Indemnified Party there are legal defenses available to an Indemnified Party that are different from or additional to those available to the Indemnifying Party, then the Indemnifying Party shall be liable for the reasonable fees and expenses of one counsel to such Indemnified Party for which the conflict of interest exists;
provided further
, that the Indemnifying Party shall not, in connection with any one such action or proceeding or separate but substantially similar actions or proceedings arising out of the same general allegations, be liable for the reasonable fees and expenses of more than one separate firm of attorneys at any time for all Indemnified Parties, except to the extent that local counsel, in addition to its regular counsel, is required in order to effectively defend against such action or proceeding.
(b)
Settlement of Third Party Claims
. Notwithstanding any other provision of this Agreement, the Indemnifying Party shall not enter into settlement of any Third Party Claim without the prior written consent of the GenMar Representative or the Navig8 Representative, as applicable, except as provided in this
Section 9.5(b)
;
provided
that if a firm offer is made to settle a Third Party Claim without leading to liability or the creation of a financial or other obligation on the part of the Indemnified Party and provides, in customary form, for the unconditional release of each Indemnified Party from all liabilities and obligations in connection with such Third Party Claim, the Indemnifying Party shall have the right to settle such Third Party Claim in its reasonable discretion. If the Indemnified Party has assumed the defense pursuant to
Section 9.5(a)
, it shall not agree to any settlement without the written consent of the Indemnifying Party, which shall not be unreasonably withheld, delayed or conditioned.
(c)
Direct Claims
. Any Action by an Indemnified Party on account of a Loss which does not result from a Third Party Claim (a “
Direct Claim
”) may, prior the expiration of the Survival Period, be asserted by the GenMar Representative or the Navig8 Representative, as applicable, giving the Indemnifying Party written notice thereof. An Indemnified Party shall give the Equityholders’ Representatives reasonably prompt written notice of a Direct Claim, but in any event not later than thirty (30) calendar days after it becomes aware of any such matter. The failure to give such written notice shall not, however, relieve the Indemnifying Party of its indemnification obligations, except to the extent that the Indemnifying Party is prejudiced thereby. Such notice by the GenMar Representative or the Navig8 Representative, as applicable, shall describe the Direct Claim in reasonable detail, shall include copies of all material written evidence thereof and shall indicate the estimated amount, if reasonably practicable, of the Loss that has been or may be sustained by the Indemnified Party. The Indemnifying Party shall have thirty (30) days after its receipt of such notice to respond in writing to such Direct Claim. The Indemnified Party shall allow the Indemnifying Party and its professional advisors to investigate the matter or circumstance alleged to give rise to the Direct Claim, and whether and to what extent any amount is payable in respect of the Direct Claim and the Indemnified Party shall assist the Indemnifying Party’s investigation by giving such information and assistance (including access to the Company’s premises and personnel and the right to examine and copy any accounts, documents or records) as the Indemnifying Party or any of its professional advisors
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may reasonably request,
provided
, that none of the Indemnified Party, the GenMar Representative or the Navig8 Representative, as applicable, shall be required to provide any information that (i) would reasonably be expected to cause the Indemnified Party to lose the benefit of attorney-client privilege, (ii) conflicts with the Indemnified Party’s confidentiality obligations or (iii) is prohibited by applicable Law. If the Indemnifying Party does not so respond within such thirty (30) day period, the Indemnifying Party shall be deemed to have rejected such claim, in which case the Indemnified Party shall be free to pursue such remedies as may be available to the Indemnified Party on the terms and subject to the provisions of this Agreement.
9.6
Payments
.
(a)
Once a Loss is agreed to by the Indemnifying Party or finally determined to be payable pursuant to this
Article X
, Parent shall satisfy its obligations within ten (10) Business Days of such final, non-appealable determination by issuing shares of Parent Common Stock with a Fair Market Value equal to the amount of the Loss incurred by such Indemnified Party as directed by the GenMar Representative or the Navig8 Representative, as applicable. Notwithstanding the foregoing, Parent shall only be obligated to make a payment in accordance with this
Section 9.6
to a shareholder who can, within one (1) year that a Loss is agreed to by the Indemnifying Party or finally determined to be payable pursuant to this
Article IX
, provide reasonable evidence sufficient to Parent that such shareholder held shares of Parent Common Stock or Company Common Stock, as applicable, immediately prior to the Effective Time.
(b)
Any issuance of shares pursuant to this
Article IX
shall be made in compliance with all applicable U.S. securities laws. In the event Parent determines, in its sole discretion, that the issuance of shares of Parent Common Stock to any Parent Shareholder Indemnitee pursuant to this
Article IX
would violate U.S. securities laws or would require the filing of a registration statement pursuant to the Securities Act, Parent may, (i) elect to satisfy its obligations by remitting to the GenMar Representative cash in an amount equal to the Loss incurred by such Parent Shareholder Indemnitee, or (ii) if no violation of applicable U.S. securities laws would occur upon the issuance of shares of Parent Common Stock pursuant to the registration of such shares of Parent Common Stock, elect to register such shares of Parent Common Stock to be issued pursuant to a registration statement filed with the SEC.
9.7
Tax Treatment of Indemnification Payments
. All indemnification payments to the Company Common Shareholders made under this Agreement shall be treated by the parties as an adjustment to the merger consideration for Tax purposes, unless otherwise required by Law.
9.8
Exclusive Remedies
. Subject to
Section 10.1
and except for breaches of payment obligations by one party to the other party pursuant to this Agreement, the parties acknowledge and agree that, following the Closing, none of any party, any holder of Parent Common Stock or any holder of Company Common Stock shall have any rights or remedies with respect to any and all claims for any breach of any representation, warranty or obligation set forth herein or otherwise relating to the subject matter of this Agreement, except as expressly provided for in
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this
Article IX
. Nothing in this
Section 9.8
shall limit any Person’s right to seek and obtain any equitable relief to which any Person shall be entitled.
9.9
No Other Representations
. EACH OF THE COMPANY, PARENT AND MERGER SUB SPECIFICALLY ACKNOWLEDGES AND AGREES THAT EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN
ARTICLE IV
(AS MODIFIED BY THE COMPANY DISCLOSURE SCHEDULES) AND
ARTICLE V
(AS MODIFIED BY THE PARENT DISCLOSURE SCHEDULES), NEITHER THE COMPANY, PARENT, MERGER SUB NOR ANY OTHER PERSON MAKES, OR HAS MADE, ANY OTHER EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY WITH RESPECT TO THE COMPANY, PARENT MERGER SUB OR THEIR RESPECTIVE SUBSIDIARIES OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH OF THE COMPANY ON ONE HAND AND PARENT AND MERGER SUB ON THE OTHER HAND SPECIFICALLY ACKNOWLEDGES AND AGREES TO THE OTHER PARTIES’ EXPRESS DISAVOWAL AND DISCLAIMER OF ANY SUCH OTHER REPRESENTATIONS OR WARRANTIES, WHETHER MADE BY THE COMPANY, PARENT, MERGER SUB OR ANY OF THEIR AFFILIATES, OR THEIR RESPECTIVE PARTNERS, MEMBERS, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES, AND OF ALL LIABILITY AND RESPONSIBILITY FOR ANY SUCH OTHER REPRESENTATION OR WARRANTY OR ANY PROJECTION, FORECAST, STATEMENT, OR INFORMATION OTHERWISE MADE, COMMUNICATED, OR FURNISHED (ORALLY OR IN WRITING) TO ANY OF THE COMPANY, PARENT, MERGER SUB OR THEIR RESPECTIVE AFFILIATES OR REPRESENTATIVES (INCLUDING ANY SUCH OPINION, INFORMATION, PROJECTION, OR ADVICE THAT MAY HAVE BEEN OR MAY BE PROVIDED TO ANY OF THE COMPANY, PARENT, MERGER SUB OR THEIR RESPECTIVE AFFILIATES OR REPRESENTATIVES BY ANY PARTNER, MEMBER, DIRECTOR, OFFICER, EMPLOYEE, AGENT, CONSULTANT, OR REPRESENTATIVE OF ANY PARTY TO THIS AGREEMENT OR ANY OF THEIR RESPECTIVE AFFILIATES OR REPRESENTATIVES). EACH OF THE COMPANY, PARENT AND MERGER SUB ACKNOWLEDGES THAT IT HAS CONDUCTED TO ITS SATISFACTION ITS OWN INDEPENDENT INVESTIGATION OF THE CONDITION, OPERATIONS AND BUSINESS OF THE COMPANY, PARENT, MERGER SUB AND THEIR SUBSIDIARIES AND, IN MAKING ITS DETERMINATION TO PROCEED WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, EACH OF THE COMPANY, PARENT AND MERGER SUB HAS RELIED ON THE RESULTS OF ITS OWN INDEPENDENT INVESTIGATION AND THE REPRESENTATIONS AND WARRANTIES CONTAINED IN
ARTICLE IV
(AS MODIFIED BY THE COMPANY DISCLOSURE SCHEDULES) AND
ARTICLE V
(AS MODIFIED BY THE PARENT DISCLOSURE SCHEDULES), AS APPLICABLE, AND EACH OF THE COMPANY, PARENT AND MERGER SUB HAS NOT RELIED ON ANY INFORMATION NOT CONTAINED IN
ARTICLE IV
(AS MODIFIED BY THE COMPANY DISCLOSURE SCHEDULES) AND
ARTICLE V
(AS MODIFIED BY THE PARENT DISCLOSURE SCHEDULES). IN FURTHERANCE OF THE FOREGOING, AND NOT IN LIMITATION THEREOF, EACH OF THE COMPANY, PARENT AND MERGER SUB SPECIFICALLY ACKNOWLEDGES AND AGREES THAT, (X) EACH PARTY TO THIS AGREEMENT DOES NOT MAKE, NOR HAS MADE, ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO ANY FINANCIAL PROJECTION OR FORECAST DELIVERED TO ANY OF THE COMPANY,
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PARENT, MERGER SUB OR THEIR RESPECTIVE AFFILIATES OR REPRESENTATIVES WITH RESPECT TO THE PERFORMANCE OF THE COMPANY, PARENT, MERGER SUB OR THEIR SUBSIDIARIES WHETHER BEFORE, ON OR AFTER THE CLOSING DATE, AND (Y) EACH PARTY TO THIS AGREEMENT DOES NOT MAKE, NOR HAS MADE (NOR HAS AUTHORIZED ANY OTHER PERSON TO MAKE ON ITS BEHALF), ANY REPRESENTATIONS OR WARRANTIES TO ANY OTHER PARTY TO THIS AGREEMENT REGARDING THE PROBABLE SUCCESS OR PROFITABILITY OF PARENT, MERGER SUB, THE COMPANY OR THEIR SUBSIDIARIES. PARENT AND MERGER SUB SHALL ACQUIRE THE COMPANY AND ITS SUBSIDIARIES (I) WITHOUT ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE QUALITY, MERCHANTABILITY, FITNESS FOR ANY PARTICULAR PURPOSE, CONFORMITY TO SAMPLES, OR CONDITION OF THE COMPANY, THE COMPANY’S SUBSIDIARIES, ANY ASSETS OR ANY PART THEREOF AND (II) IN AN “AS IS” CONDITION AND ON A “WHERE IS” BASIS, EXCEPT, IN EACH CASE, FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN
ARTICLE IV
(AS MODIFIED BY THE COMPANY DISCLOSURE SCHEDULES AND SUBJECT TO
ARTICLE IX
HEREOF). NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN THIS AGREEMENT, IN NO EVENT SHALL THIS
SECTION 9.9
BE DEEMED TO LIMIT THE RIGHT TO BRING A CLAIM IN RESPECT OF ACTUAL OR INTENTIONAL FRAUD SOLELY WITH RESPECT TO THE REPRESENTATIONS AND WARRANTIES SET FORTH IN
ARTICLE IV
AND
ARTICLE V
OF THIS AGREEMENT.
ARTICLE X
MISCELLANEOUS
10.1
Remedies
.
(a)
The parties agree that irreparable damage would occur and that the parties would not have any adequate remedy at law in the event that any provision of this Agreement were not performed in accordance with its specific terms or were otherwise breached, and that money damages or other legal remedies would not be an adequate remedy for any such failure to perform or breach. Accordingly, the parties hereto acknowledge and hereby agree that, subject to the limitations of this
Section 10.1
, in the event of any breach or threatened breach by the Company, on the one hand, or Parent and/or Merger Sub, on the other hand, of any of their respective obligations set forth in this Agreement, Parent and/or Merger Sub, on the one hand, and the Company, on the other hand, shall, subject to the terms hereof, be entitled to an injunction or injunctions to prevent or restrain breaches or threatened breaches of this Agreement by the other (as applicable), and to specifically enforce the terms and provisions of this Agreement to prevent breaches or threatened breaches of, or to enforce compliance with, the obligations of the other (as applicable) under this Agreement, without proof of actual damages or inadequacy of legal remedy and without bond or other security being required. The pursuit of an injunction or specific enforcement by any party hereto will not be deemed an election of remedies or waiver of the right to pursue any other right or remedy (whether at law or in equity) to which such party may be entitled at any time.
(b)
Any and all remedies herein expressly conferred upon a party will be deemed cumulative with and not exclusive of any other remedy conferred hereby, or by law
117
or equity upon such party, and the exercise by a party of any one remedy will not preclude the exercise at any time of any other remedy, except to the extent expressly limited hereby, including as expressly limited by
Section 9.8
. For the avoidance of doubt, while any party may pursue both a grant of specific performance of the other party’s or parties’ obligations to consummate the Merger as, and only to the extent, expressly permitted by
Section 10.1(a)
, and the payment of the Company Termination Fee or Parent Termination Fee, as applicable, and the related costs, expenses and interest as provided by
Section 8.3(d)
, under no circumstances shall any party be permitted or entitled to receive both such grant of specific performance and payment of the Company Termination Fee or Parent Termination Fee, as applicable.
(c)
Each of the Company, on the one hand, and Parent and Merger Sub, on the other hand, hereby agrees not to raise any objections to the availability of the equitable remedy of specific performance to prevent or restrain breaches or threatened breaches of this Agreement by the Company, or Parent or Merger Sub, as applicable, and to specifically enforce the terms and provisions of this Agreement to prevent breaches or threatened breaches of, or to enforce compliance with, the obligations of the Company, or Parent and Merger Sub, as applicable, under this Agreement. The parties hereto further agree that (i) by seeking the remedies provided for in this
Section 10.1
, a party shall not in any respect waive its right to seek at any time any other form of relief that may be available to a party under this Agreement (including, subject to the terms of
Article IX
, monetary damages) in the event that this Agreement has been terminated or in the event that the remedies provided for in this
Section 10.1
are not available or otherwise are not granted, and (ii) nothing set forth in this
Section 10.1
shall require any party hereto to institute any proceeding for (or limit any party’s right to institute any proceeding for) specific performance under this
Section 10.1
prior or as a condition to exercising any termination right under
Article IX
(and pursuing monetary damages after such termination, subject to the terms of
Article IX
), nor shall, subject to the limitations set forth in the last sentence of
Section 10.1(c)
, the commencement of any legal proceeding pursuant to this
Section 10.1
or anything set forth in this
Section 10.1
restrict or limit any party’s right to terminate this Agreement in accordance with the terms of
Article IX
and seek payment of the Company Termination Fee or the Parent Termination Fee and the costs, expenses and interest referred to in the last sentence of
Section 8.3(d)
in the event of a Specified Termination and payment of such fees, costs and expenses as provided in
Section 6.5(b)
.
10.2
Payment of Transfer Taxes
. All sales, use, transfer, recordation, documentary stamp or similar Taxes resulting from the consummation of the transactions contemplated by this Agreement shall be borne by the Surviving Corporation.
10.3
Expenses
. Except as otherwise provided in this Agreement, each of the Company, Parent and Merger Sub shall bear its own expenses incurred in connection with the negotiation and execution of this Agreement and each other agreement, document and instrument contemplated by this Agreement and the consummation of the transactions contemplated hereby and thereby.
10.4
Entire Agreement; Amendments and Waivers
. This Agreement (including the Exhibits hereto, the Company Disclosure Schedules and the Parent Disclosure Schedules), the
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Ancillary Documents and the Confidentiality Agreement represent the entire understanding and agreement between the parties hereto with respect to the subject matter hereof. This Agreement may only be amended, supplemented or changed by a written instrument signed by each of the parties hereto. Notwithstanding the foregoing, after the Effective Time,
Article IX
shall only be amended by written consent of Parent, the Company and each Equityholders’ Representative. Each provision in this Agreement may only be waived by written instrument making specific reference to this Agreement signed by the party against whom enforcement of any such provision so waived is sought. No action taken pursuant to this Agreement, including any investigation by or on behalf of any party, shall be deemed to constitute a waiver by the party taking such action of compliance with any representation, warranty, covenant or agreement contained herein. The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as a further or continuing waiver of such breach or as a waiver of any other or subsequent breach. No failure on the part of any party to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of such right, power or remedy by such party preclude any other or further exercise thereof or the exercise of any other right, power or remedy.
10.5
Governing Law; Jurisdiction
.
(a)
This Agreement, and all claims or causes of action (whether in contract, tort or otherwise) that may be based upon, arise out of or relate to this Agreement or the negotiation, execution or performance of this Agreement (including any claim or cause of action based upon, arising out of or related to any representation or warranty made in or in connection with this Agreement) shall be governed by and construed in accordance with the law of the State of New York, regardless of the laws that might otherwise govern under applicable principles of conflicts of laws, except to the extent that the law of the Republic of the Marshall Islands is mandatorily applicable to the Merger. Each of the parties hereto hereby irrevocably and unconditionally (a) submits, for itself and its property, to the exclusive jurisdiction of any state or federal court sitting in the Borough of Manhattan, City of New York, New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or the negotiation, execution or performance of this Agreement (including any claim or cause of action based upon, arising out of or related to any representation or warranty made in or in connection with this Agreement), or for recognition or enforcement of any judgment, and agrees that all claims in respect of any such action or proceeding shall be heard and determined in such state or federal court sitting in the Borough of Manhattan, City of New York, New York, (b) waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or the negotiation, execution or performance of this Agreement (including any claim or cause of action based upon, arising out of or related to any representation or warranty made in or in connection with this Agreement) in any state or federal court sitting in the Borough of Manhattan, City of New York, New York, (c) waives, to the fullest extent permitted by Law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court and (d) agrees that a final judgment in any such suit, action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law. Each of the parties hereto agrees that service of process, summons, notice or document by registered
119
mail addressed to it at the applicable address set forth in
Section 10.7
below shall be effective service of process for any suit, action or proceeding brought in any such court.
10.6
Waiver of Jury Trial
. THE PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THE ACTIONS OF THE PARTIES IN THE NEGOTIATION, EXECUTION, PERFORMANCE AND ENFORCEMENT OF THIS AGREEMENT, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. THE PARTIES AGREE THAT ANY OF THEM MAY FILE A COPY OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED FOR AGREEMENT AMONG THE PARTIES IRREVOCABLY TO WAIVE TRIAL BY JURY AND THAT ANY ACTION OR PROCEEDING WHATSOEVER BETWEEN THEM RELATING TO THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY SHALL INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
10.7
Notices
. All notices and other communications under this Agreement shall be in writing and shall be deemed given (a) when delivered personally by hand (with written confirmation of receipt by other than automatic means, whether electronic or otherwise), (b) when sent by facsimile or e-mail (with written confirmation of transmission) or (c) one (1) Business Day following the day sent by an internationally recognized overnight courier (with written confirmation of receipt), in each case, at the following addresses and facsimile numbers (or to such other address or facsimile number as a party may have specified by notice given to the other party pursuant to this provision):
If to the Company, to:
Navig8 Crude Tankers, Inc.
2nd Floor, Kinnaird House,
1 Pall Mall East, London
SW1Y 5AU
Facsimile: +44 (0)20 7467 5867
E-mail: nicolas@navig8group.com
Attention: Nicolas Busch
with copies (which shall not constitute actual or constructive notice) to:
Latham & Watkins LLP
885 Third Avenue
New York, NY 10011
Facsimile: (212) 751-4864
E-mail: Raymond.Lin@lw.com; Stephen.Amdur@lw.com
Attention: Raymond Y. Lin, Esq.; Stephen B. Amdur, Esq.
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If to Parent or Merger Sub, to:
General Maritime Corporation
299 Park Avenue
New York, New York 10171
Facsimile: (212) 763-5607
E-mail: lvrondissis@generalmaritimecorp.com
Attention: Leonard J. Vrondissis, CFO
with a copy (which shall not constitute actual or constructive notice) to:
Kramer Levin Naftalis & Frankel LLP
1177 Avenue of the Americas
New York, NY 10036
Fax: 212-715-8000
E-mail: tmolner@kramerlevin.com, tshen@kramerlevin.com
Attn: Thomas E. Molner, Esq., Terrence L. Shen, Esq.
If to Navig8 Representative, to:
Shareholder Representative Services LLC
1614 15th Street, Suite 200
Denver, CO 80202
Attention: Managing Director
Email: deals@srsacquiom.com
Facsimile No.: (303) 623-0294
Telephone No.: (303) 648-4085
10.8
Severability
. If any condition, term or other provision of this Agreement is invalid, illegal, or incapable of being enforced by any Law or public policy, all other conditions, terms or provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal, or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.
10.9
Binding Effect
;
Assignment
.
(a)
This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns. Nothing in this Agreement shall create or be deemed to create any third party beneficiary rights in any Person not a party to this Agreement except (i)
Section 6.6
shall be for the benefit of, and enforceable by, the D&O Indemnitees, (ii)
Article IX
shall be for the benefit of, and enforceable by, the GenMar Representative on behalf of the Parent Shareholder Indemnitees and the Navig8 Representative on behalf of the Company Shareholder Indemnitees and (iii) from and after the Effective Time, the rights of the Company Common Shareholders to receive the Per
121
Share Merger Consideration as set forth in
Article III
, shall be for the benefit of, and enforceable by, the Company Common Shareholders.
(b)
No assignment of this Agreement or of any rights or obligations hereunder may be made, directly or indirectly (by operation of law or otherwise), by (i) the Company, without the prior written consent of Parent, or (ii) any of Parent or Merger Sub, without the prior written consent of the Company. Any attempted assignment without obtaining such required consent shall be null and void.
10.10
Counterparts
. This Agreement may be executed in any number of counterparts (including by means of facsimile or e-mail in .pdf format), each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement.
[Remainder of page intentionally left blank]
122
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first written above.
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PARENT:
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GENERAL MARITIME CORPORATION
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By:
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/s/ Leonard J. Vrondissis
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Name:
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Leonard J. Vrondissis
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Title:
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Chief Financial Officer and
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Executive Vice President
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MERGER SUB:
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Gener8 Maritime Acquisition, Inc.
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By:
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/s/ Leonard J. Vrondissis
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Name:
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Leonard J. Vrondissis
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Title:
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President
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[Signature Page to Agreement and Plan of Merger]
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NAVIG8 CRUDE TANKERS INC.
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By:
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/s/ Nicolas Busch
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Name: Nicolas Busch
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Title: Director and Chief Executive Officer
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[Signature Page to Agreement and Plan of Merger]
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GENMAR REPRESENTATIVE:
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OCM MARINE HOLDINGS TP, L.P.
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in its capacity as representative of holders of Parent Common Stock
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By:
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OCM Marine GP CTB, Ltd.
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Its:
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General Partner
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By:
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Oaktree Capital Management, L.P.
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Its:
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Director
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By:
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/s/ Jim Ford
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Title:
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Portfolio Manager/Managing Director
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By:
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/s/ Adam Pierce
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Name: Adam Pierce
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Title: Managing Director
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[Signature Page to Agreement and Plan of Merger]
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Navig8 REPRESENTATIVE:
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Shareholder Representative Services LLC,
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solely in its capacity as agent and attorney-in-fact for the Company Common Shareholders
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By:
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/s/ Sam Riffe
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Name: Sam Riffe
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Title: Executive Director
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[Signature Page to Agreement and Plan of Merger]
Exhibit 4.2
EXECUTION COPY
WARRANT AGREEMENT
THIS WARRANT AGREEMENT (this “
Agreement
”) is made as of the 17th day of May, 2012 between General Maritime Corporation, a Marshall Islands corporation (the “
Company
”), and Computershare Shareowner Services LLC, a New Jersey limited liability company (the “
Warrant Agent
”).
WHEREAS,
on November 17, 2011, the Company and its debtor affiliates (collectively, the “
Debtors
”) each filed a voluntary petition for relief under chapter 11 of title 11 of the United States Code in the United States Bankruptcy Court for the Southern District of New York (the “
Bankruptcy Court
”) under the lead case 11-15285-MG (the “
Chapter 11 Cases
”);
WHEREAS,
on March 26, 2012, the Debtors filed the
Second Amended Joint Plan of Reorganization of the Debtors Under Chapter 11 of the Bankruptcy Code
(the “
Plan of Reorganization
”);
WHEREAS,
on May 7, 2012, the Bankruptcy Court entered an order confirming the Plan of Reorganization, and the Company emerged from its chapter 11 bankruptcy proceedings on May 17, 2012 (the “
Plan Effective Date
”);
WHEREAS
, the Company proposes to issue, at the Effective Date, warrants (the “
New GMR Warrants
”) to purchase, in the aggregate, 309,296 shares of New GMR Common Stock, at an exercise price of $42.50, to all holders of Allowed General Unsecured Claims against the Guarantor Debtors (other than a holder of an OCM Facility Deficiency Claim), on a Pro Rata basis;
WHEREAS
, the Company desires to provide for the form and provisions of the New GMR Warrants, the terms upon which they shall be issued and exercised, and the respective rights, limitation of rights, and immunities of the Company, the Warrant Agent, and the holders of the New GMR Warrants; and
WHEREAS
, the Company desires the Warrant Agent to act on behalf of the Company, and the Warrant Agent is willing to so act, in connection with the issuance, registration, transfer, exchange, call, exercise and cancellation of the New GMR Warrants; and
WHEREAS
, all acts and things have been done and performed which are necessary to make the New GMR Warrants, when executed on behalf of the Company and countersigned by or on behalf of the Warrant Agent, as provided herein, the valid, binding and legal obligations of the Company, and to authorize the execution and delivery of this Agreement.
NOW, THEREFORE
, in consideration of the mutual agreements herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1
Definition of Terms
. As used in this Agreement, the following capitalized terms shall have the following respective meanings:
(a)
“
Affiliate
” has the meaning set forth in Rule 12b-2 of the Exchange Act.
(b)
“
Business Day
” shall mean any day on which commercial banks are not authorized or permitted to close in New York, New York or in the State of New Jersey.
(c)
“
Beneficial Holder
” means any person or entity that holds beneficial interests in a Global Warrant Certificate.
(d)
“
Exchange Act
” means the Securities Exchange Act of 1934, as amended.
(e)
“
Governmental Authority
” means any (i) government, (ii) governmental or quasi- governmental authority of any nature (including any governmental agency, branch, department, official or entity and any court or other tribunal) or (iii) body exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power of any nature, in each case, whether federal, state, local, municipal, foreign, supranational or of any other jurisdiction.
(f)
“
Law
” means all laws, statutes, rules, regulations, codes, injunctions, decrees, orders, ordinances, registration requirements, disclosure requirements and other pronouncements having the effect of law of the United States, the Republic of the Marshall Islands, any foreign country or any domestic or foreign state, county, city or other political subdivision or of any Governmental Authority.
(g)
“
Market Price
” means as to any security the average of the closing prices of such security’s sales on all U.S. securities exchanges on which such security may at the time be listed, or, if there have been no sales on any such exchange on any day, the average of the highest bid and lowest asked prices on all such exchanges at the end of such day, or, if on any day such security is not so listed, the average of the highest bid and lowest asked prices on such day in the U.S. over-the-counter market as reported by Pink OTC Markets, Inc., or any similar successor organization, in each such case averaged over a period of twenty-one (21) days consisting of the day as of which “Market Price” is being determined and the twenty (20) consecutive Business Days prior to such day; provided that, if such security is listed on any U.S. securities exchange or quoted in a U.S. over-the-counter market (the term “Business Day” as used in this sentence means Business Days on which such exchange or market, as applicable, is open for trading). If at any time such security is not listed on any U.S. securities exchange or quoted in the U.S. over-the-counter market, the “Market Price” shall be the fair value thereof reasonably determined in good faith by the Board of Directors of the Company. If the Registered Holder disagrees with the determination of the market value of any securities of the Company determined by the Board of Directors of the Company in accordance with this provision, the fair market value of such securities shall be determined by an independent appraiser acceptable to the Company and the Registered Holder (or, if they cannot agree on such
2
an appraiser, by an independent appraiser selected by lot by two independent appraisers, one of which is appointed by each of them). The cost of the appraisal shall be shared equally between the Company and the Registered Holder.
(h)
“
Organic Change
” means any recapitalization, reorganization, reclassification, consolidation, merger, sale of a majority of the Company’s assets or other transaction, in each case which is effected in such a way that the holders of New GMR Common Stock are entitled to receive (either directly or upon subsequent liquidation) cash, stock, securities or other assets or property with respect to or in exchange for New GMR Common Stock; provided that a Specified Sale shall not be considered an Organic Change.
(i)
“
Person
” means any individual, firm, corporation, partnership, limited partnership, limited liability company, association, indenture trustee, organization, joint stock company, joint venture, estate, trust, governmental unit or any political subdivision thereof, or any other entity (as such term is defined in the Bankruptcy Code).
(j)
“
Plan of Reorganization
” means the plan of reorganization of the Company as finally approved by the bankruptcy court before which the Company’s case under Chapter 11 of the United States Bankruptcy Code is or was pending.
(k)
“
Requisite Holders
” means Registered Holders of New GMR Warrants representing a majority of the New GMR Common Stock obtainable upon exercise of all New GMR Warrants then outstanding.
(l)
“
SEC
” means the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act or the Exchange Act.
(m)
“
Securities Act
” means the Securities Act of 1933, as amended.
(n)
“
Specified Sale
” means a transfer, sale or other disposition (i) by Oaktree and its Affiliates (as such terms are defined in the Shareholders’ Agreement, by and among the Company and shareholders thereof, as amended from time to time), in one or a series of related transactions, of eighty-five percent (85%) or more on a cumulative basis of the Equity Securities held by such Persons, or (ii) of eighty-five percent (85%) or more on a cumulative basis of the assets of the Company and its Subsidiaries, on a consolidated basis.
(o)
“
Subsidiary
” means, with respect to any Person, any corporation, partnership, limited liability company, association or other business entity of which (i) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (ii) if a partnership, limited liability company or other business entity, a majority of the partnership, limited liability company or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof. For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a partnership, limited liability company or other business entity if such Person or Persons shall be allocated a majority of partnership, limited liability company or other business entity gains or
3
losses or shall be or control the managing member or general partner of such partnership, limited liability company or other business entity.
(p)
“
Warrant Exercise Shares
” means the shares of New GMR Common Stock issued upon the applicable exercise of a New GMR Warrant.
(q)
“
Warrant Agent
” has the meaning set forth in the preamble and shall include any successor to the Warrant Agent pursuant to Section 9.1 hereof.
Each capitalized term used but not defined herein shall have the meaning ascribed to it in the Plan of Reorganization.
ARTICLE II
APPOINTMENT OF WARRANT AGENT
Section 2.1
Appointment
. The Company hereby appoints the Warrant Agent to act as agent for the Company for the New GMR Warrants in accordance with the express terms and subject to the conditions set forth in this Agreement (and no implied terms or conditions), and the Warrant Agent hereby accepts such appointment and agrees to perform the same in accordance with the express terms and conditions set forth in this Agreement.
ARTICLE III
WARRANTS
Section 3.1
Issuance of New GMR Warrants
. On the terms and subject to the conditions of this Agreement and in accordance with the terms of the Plan of Reorganization, on the Effective Date (such date, the “
Date of Issuance
”), the Company will issue and distribute the New GMR Warrants to purchase the New GMR Common Stock to the holders of Allowed General Unsecured Claims against the Guarantor Debtors (other than a holder of an OCM Facility Deficiency Claim) on a Pro Rata basis as part of the Initial Distribution, if any, and issue the balance of the New GMR Warrants following the Initial Distribution to the Unsecured Creditor Distribution Escrow Account. The Company shall provide the Warrant Agent with a written list of all initial Registered Holders of New GMR Warrants, including the number of New GMR Warrants issued to each such initial Registered Holder, and the Warrant Agent may rely conclusively on such written list. On or promptly after such date, the Company will deliver, or cause to be delivered to The Depository Trust Company (the “
Depositary
”), one or more Global Warrant Certificates (as defined below), duly executed on behalf of the Company and countersigned by the Warrant Agent, evidencing a portion of the New GMR Warrants, in the manner set forth in
Section 3.2(b)
below. The remainder of the New GMR Warrants shall be issued by book-entry registration on the books of the Warrant Agent (“
Book-Entry Warrants
”) and shall be evidenced by statements issued by the Warrant Agent from time to time to the Registered Holders (as defined below) of Book-Entry Warrants reflecting such book-entry position (the “
Warrant Statements
”). The maximum number of shares of New GMR Common Stock issuable pursuant to the New GMR Warrants shall be 309,296 shares, as such amount may be adjusted from time to time pursuant to this Agreement. No warrant will be deemed issued
4
and/or outstanding until issued through the facilities of the Depositary, unless the Company otherwise consents in writing.
Section 3.2
Form of Warrant
.
(a)
Subject to
Section 7.1
of this Agreement, (i) the New GMR Warrants issued pursuant to the terms of the Plan of Reorganization on the Date of Issuance shall be, and other warrants to purchase capital stock of the Company that may be issued form time to time may be, issued in the form of one or more global certificates (the “
Global Warrant Certificates
”), with the forms of election to exercise and of assignment printed on the reverse thereof, in substantially the form set forth in
Exhibit A-1
attached hereto, and/or (i) other warrants to purchase stock of the Company that may be issued from time to time may be issued via book-entry registration on the books and records of the Warrant Agent and evidenced by the Warrant Statements, in substantially the form set forth in
Exhibit A-2
attached hereto. The Warrant Statements and Global Warrant Certificates may bear such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Agreement, and may have such letters, numbers or other marks of identification or designation and such legends, summaries, or endorsements placed thereon as may be required by the Depositary or to comply with any Law or with any rules or regulations made pursuant thereto or with any rules of any securities exchange or as may, consistently herewith, or, be determined by (i) in the case of Global Warrant Certificates, the Chairman of the Board of Directors, Chief Executive Officer, President, any Senior Vice President or Treasurer of the Company (each, an “
Appropriate Officer
”) executing such Global Warrant Certificates, as evidenced by their execution of the Global Warrant Certificates, or (ii) in the case of a Warrant Statement, any Appropriate Officer, and all of which shall be reasonably acceptable to the Warrant Agent.
(b)
The Global Warrant Certificates shall be deposited on or after Date of Issuance with the Warrant Agent and registered in the name of Cede & Co., as the nominee of the Depositary. Each Global Warrant Certificate shall represent such number of the outstanding New GMR Warrants as specified therein, and each shall provide that it shall represent the aggregate amount of outstanding New GMR Warrants from time to time endorsed thereon and that the aggregate amount of outstanding New GMR Warrants represented thereby may from time to time be reduced or increased, as appropriate, in accordance with the terms of this Agreement.
Section 3.3
Execution of Global Warrant Certificates
.
(a)
The Global Warrant Certificates shall be signed on behalf of the Company by an Appropriate Officer. Each such signature upon the Global Warrant Certificates may be in the form of a facsimile signature of any such Appropriate Officer and may be imprinted or otherwise reproduced on the Global Warrant Certificates and for that purpose the Company may adopt and use the facsimile signature of any Appropriate Officer.
(b)
If any Appropriate Officer who shall have signed any of the Global Warrant Certificates shall cease to be such Appropriate Officer before the Global Warrant Certificates so signed shall have been countersigned by the Warrant Agent or delivered or disposed of by or on behalf of the Company, such Global Warrant Certificates nevertheless may
5
be countersigned and delivered or disposed of with the same force and effect as though such Appropriate Officer had not ceased to be such Appropriate Officer of the Company; and any Global Warrant Certificate may be signed on behalf of the Company by any person who, at the actual date of the execution of such Global Warrant Certificate, shall be a proper Appropriate Officer of the Company to sign such Global Warrant Certificate, although at the date of the execution of this Agreement any such person was not such Appropriate Officer.
Section 3.4
Registration and Countersignature
.
(a)
Upon receipt of a written order of the Company signed by an Appropriate Officer instructing the Warrant Agent to do so, the Warrant Agent shall (i) register in the Warrant Register the Book-Entry Warrants in the names of the initial Registered Holders thereof, (ii) upon receipt of the Global Warrant Certificates duly executed on behalf of the Company, countersign, either by manual or facsimile signature, such Global Warrant Certificates evidencing New GMR Warrants and (iii) deliver such Global Warrant Certificates to the Depositary, or pursuant to the Depositary’s instructions, hold such Global Warrant Certificates as custodian for the Depositary. Such written order of the Company shall specifically state the number of New GMR Warrants that are to be issued as Book-Entry Warrants and the number of New GMR Warrants that are to be issued as Global Warrant Certificates. A Global Warrant Certificate shall be, and shall remain, subject to the provisions of this Agreement until such time as all of the New GMR Warrants evidenced thereby shall have been duly exercised or shall have expired or been canceled in accordance with the terms hereof.
(b)
No Global Warrant Certificate shall be valid for any purpose, and no New GMR Warrant evidenced thereby shall be exercisable, until such Global Warrant Certificate has been countersigned by the manual or facsimile signature of the Warrant Agent. Such signature by the Warrant Agent upon any Global Warrant Certificate executed by the Company shall be conclusive evidence that such Global Warrant Certificate so countersigned has been duly issued hereunder.
(c)
The Warrant Agent shall keep or cause to be kept, at an office designated for such purpose, books (the “
Warrant Register
”) in which, subject to such reasonable regulations as it may prescribe, it shall register the Book-Entry Warrants as well as any Global Warrant Certificates and exchanges, cancellations and transfers of outstanding New GMR Warrants in accordance with the procedures set forth in
Section 7.1
of this Agreement, all in a form satisfactory to the Company and the Warrant Agent. No service charge shall be made for any exchange or registration of transfer of the New GMR Warrants, but the Company may require payment of a sum sufficient to cover any stamp or other tax or other charge that may be imposed on any Registered Holder in connection with any such exchange or registration of transfer. The Warrant Agent shall have no obligation to effect an exchange or register a transfer unless and until it is satisfied that any payments required by the immediately preceding sentence have been made.
(d)
Prior to due presentment for registration of transfer or exchange of any New GMR Warrant in accordance with the procedures set forth in this Agreement, the Company and the Warrant Agent may deem and treat the person in whose name any New GMR Warrant is registered upon the Warrant Register (the “
Registered Holder”
of such New GMR Warrant) as
6
the absolute owner of such New GMR Warrant (notwithstanding any notation of ownership or other writing on a Global Warrant Certificate made by anyone other than the Company or the Warrant Agent), for the purpose of any exercise thereof, any distribution to the holder thereof and for all other purposes, and neither the Warrant Agent nor the Company shall be affected by notice to the contrary. Neither the Company nor the Warrant Agent will be liable or responsible for any registration or transfer of any New GMR Warrants that are registered or to be registered in the name of a fiduciary or the nominee of a fiduciary.
ARTICLE IV
TERMS AND EXERCISE OF NEW GMR WARRANTS
Section 4.1
Exercise Price
. On the Date of Issuance, each Warrant shall entitle (i) in the case of the Book-Entry Warrants, the Registered Holder thereof and (ii) in the case of New GMR Warrants held through the book-entry facilities of the Depositary or by or through persons that are direct participants in the Depositary, the Beneficial Holder thereof ((i) and (ii) collectively, the “
Holder
”), subject to the provisions of such New GMR Warrant and of this Agreement, the right to purchase from the Company the number of shares of New GMR Common Stock, at the price of $42.50 per share (as the same may be hereafter adjusted in accordance herewith, the “
Exercise Price
”), specified in such New GMR Warrant.
Section 4.2
Exercise Period
. New GMR Warrants may be exercised by the Holder thereof, in whole or in part (but not as to a fractional share of New GMR Common Stock), at any time and from time to time after the Date of Issuance and prior to
5:30 P.M., New York time on
the fifth (5th) anniversary thereof (the “
Exercise Period
”). Each New GMR Warrant or portion thereof that is not exercised prior to the expiration of the Exercise Period shall be automatically cancelled with no action by any Person, and with no further rights thereunder, upon such expiration.
Section 4.3
Method of Exercise
.
(a)
Subject to the provisions of the New GMR Warrants and this Agreement, the Holder of a New GMR Warrant may exercise such Holder’s right to purchase shares of the New GMR Common Stock, in whole or in part, by: (x) in the case of persons who hold Book-Entry Warrants, providing an exercise form for the election to exercise such New GMR Warrant (“
Exercise Form
”) substantially in the form of
Exhibit B-1
hereto, properly completed and duly executed by the Registered Holder thereof, to the Warrant Agent, and (y) in the case of New GMR Warrants held through the book-entry facilities of the Depositary or by or through persons that are direct participants in the Depositary, providing an Exercise Form (as provided by such Holder’s broker) to its broker, properly completed and executed by the Beneficial Holder thereof.
(b)
Any exercise of a New GMR Warrant pursuant to the terms of this Agreement shall be irrevocable and shall constitute a binding agreement between the Holder and the Company, enforceable in accordance with its terms.
7
(c)
Upon receipt of an Exercise Form pursuant to Section 4.3(a), the Warrant Agent shall:
(i)
examine all Exercise Forms and all other documents delivered to it by or on behalf of Holders as contemplated hereunder to ascertain whether or not, on their face, such Exercise Forms and any such other documents have been executed and completed in accordance with their terms and the terms hereof;
(ii)
if an Exercise Form or other document appears, on its face, to have been improperly completed or executed or some other irregularity in connection with the exercise of the New GMR Warrants exists, endeavor to inform the appropriate parties (including the person submitting such instrument) of the need for fulfillment of all requirements, specifying those requirements which appear to be unfulfilled;
(iii)
inform the Company of and cooperate with and assist the Company in resolving any reconciliation problems between the information provided on any Exercise Forms received and the information on the Warrant Register;
(iv)
advise the Company no later than three (3) Business Days after receipt of an Exercise Form, of (A) the receipt of such Exercise Form and the number of New GMR Warrants requested to be exercised in accordance with the terms and conditions of this Agreement, (B) the instructions with respect to delivery of the New GMR Common Stock deliverable upon such exercise, subject to timely receipt of the such information by the Warrant Agent, and (C) such other information as the Company shall reasonably request; and
(v)
subject to New GMR Common Stock being made available to the Warrant Agent by or on behalf of the Company for delivery to the Depositary, and written instructions from the Company, liaise with the Depositary and endeavor to effect such delivery to the relevant accounts at the Depositary in accordance with its customary requirements.
(d)
The Company reserves the right to reasonably reject any and all Exercise Forms not in proper form or for which any corresponding agreement by the Company to exchange would, in the opinion of the Company, be unlawful. Such determination by the Company shall be final and binding on the Holders of the New GMR Warrants, absent manifest error. Moreover, the Company reserves the absolute right to waive any of the conditions to the exercise of New GMR Warrants or defects in Exercise Forms with regard to any particular exercise of New GMR Warrants. The Company shall provide prompt written notice to the Warrant Agent of the exercise of any New GMR Warrant. The Warrant Agent shall not have any obligations with respect to the exercise of any New GMR Warrant, except for canceling the Global Warrant Certificate surrendered to the Company for such exercise in accordance with written instructions received from the Company. Neither the Company nor the Warrant Agent shall be under any duty to give notice to the Holders of the New GMR Warrants of any irregularities in any exercise of New GMR Warrants, nor shall it incur any liability for the failure to give such notice.
8
Section 4.4
Issuance of New GMR Common Stock
.
(a)
Upon exercise of any New GMR Warrants pursuant to
Section 4.3
and clearance of the funds in payment of the Exercise Price, the Company shall promptly at its expense, and in no event later than five (5) Business Days thereafter, cause to be issued to the Holder of such New GMR Warrants the total number of whole New GMR Common Stock for which such New GMR Warrants are being exercised (as the same may be hereafter adjusted pursuant to
Article V
) in such denominations as are requested by the Holder as set forth below:
(i)
in the case of a Beneficial Holder who holds the New GMR Warrants being exercised through the Depositary’s book-entry transfer facilities, by same-day or next-day credit to the Depositary for the account of such Beneficial Holder or for the account of a participant in the Depositary the number of New GMR Common Stock to which such person is entitled, in each case registered in such name and delivered to such account as directed in the Exercise Form by such Beneficial Holder or by the direct participant in the Depositary through which such Beneficial Holder is acting, or
(ii)
in the case of a Registered Holder who holds the New GMR Warrants being exercised in the form of Book-Entry Warrants, a book-entry interest in the New GMR Common Stock registered on the books of the Company’s transfer agent.
(b)
Notwithstanding the five (5) Business Day period described in
Section 4.4(a)
, the Warrant Exercise Shares shall be deemed to have been issued to the Holder at the time at which all of the conditions to such exercise have been fulfilled, and the Holder shall be deemed for all purposes to have become the record holder of such Warrant Exercise Shares at such time.
(c)
If less than all of the New GMR Warrants evidenced by a Global Warrant Certificate surrendered upon the exercise of New GMR Warrants are exercised at any time prior to the Expiration Date, a new Global Warrant Certificate or Global Warrant Certificates shall be issued for the remaining number of New GMR Warrants evidenced by the Global Warrant Certificate so surrendered, and the Warrant Agent is hereby authorized to countersign the required new Global Warrant Certificate or Certificates pursuant to the provisions of
Section 3.4
and this
Section 4.4
.
Section 4.5
Exercise of New GMR Warrants
. A Holder of a New GMR Warrant may exchange all or part of the purchase rights represented by the New GMR Warrant by surrendering the New GMR Warrant to the Warrant Agent, together with a written notice to the Warrant Agent that such holder is exchanging the New GMR Warrant (or a portion thereof) for an aggregate number of shares of New GMR Common Stock specified in the notice, from which the Company shall withhold and not issue to such holder a number of shares of New GMR Common Stock with an aggregate Market Price equal to the aggregate Exercise Price of the shares of New GMR Common Stock specified in such notice (and such withheld shares shall no longer be issuable under the New GMR Warrant).
Section 4.6
Reservation of Shares.
The Company shall at all times reserve and keep available out of its authorized but unissued shares of New GMR Common Stock solely for the
9
purpose of issuance upon the exercise of the New GMR Warrants, such number of shares of New GMR Common Stock issuable upon the exercise of all outstanding New GMR Warrants. The Company shall take all such actions as may be necessary to assure that all such shares of New GMR Common Stock may be so issued without violating the Company’s governing documents, any applicable Law or any requirements of any U.S. securities exchange upon which shares of New GMR Common Stock may be listed. The Company shall not take any action which would cause the number of authorized but unissued shares of New GMR Common Stock to be less than the number of such shares required to be reserved hereunder for issuance upon exercise of the New GMR Warrants.
Section 4.7
Fractional Shares
. Notwithstanding any provision to the contrary contained in this Agreement, the Company shall not be required to issue any fraction of a share of its capital stock in connection with the exercise of New GMR Warrants, and in any case where the Registered Holder would, except for the provisions of this
Section 4.7
, be entitled under the terms of New GMR Warrants to receive a fraction of a share upon the exercise of such New GMR Warrants, the Company shall, upon the exercise of such Holder’s New GMR Warrants, issue or cause to be issued only the largest whole number of New GMR Common Stock issuable on such exercise (and such fraction of a share will be disregarded); provided, that if more than one New GMR Warrant is presented for exercise at the same time by the same Holder, the number of whole New GMR Common Stock which shall be issuable upon the exercise thereof shall be computed on the basis of the aggregate number of New GMR Common Stock issuable upon exercise of all such New GMR Warrants.
Section 4.8
Public Offering
. Notwithstanding any other provision hereof, if an exercise of any portion of a New GMR Warrant is to be made in connection with a registered public offering or the sale of the Company, the exercise of any portion of such New GMR Warrant may, at the election of the holder thereof, be conditioned upon the consummation of such registered public offering or sale of the Company, in which case such exercise shall be deemed to be effective concurrently with the consummation of such transaction.
Section 4.9
Close of Books; Par Value
. The Company shall not close its books against the transfer of any New GMR Warrant or any Warrant Exercise Shares in any manner which interferes with the timely exercise of such New GMR Warrant. The Company shall from time to time take all such action as may be necessary to assure that the par value per share of the unissued New GMR Common Stock acquirable upon exercise of each New GMR Warrant is at all times equal to or less than the Exercise Price then in effect.
Section 4.10
Investment Representations
. Upon any exercise of a New GMR Warrant, the Company may require customary investment representations from the Holder (other than any Holder who acquired a New GMR Warrant pursuant to the terms of the Plan of Reorganization) to the extent necessary to assure that the issuance of the New GMR Common Stock thereunder shall not require registration or qualification under the Securities Act, or the rules and regulations promulgated thereunder, or any other applicable securities Laws.
10
ARTICLE V
ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF
WARRANT EXERCISE SHARES
In order to prevent dilution of the rights granted under each New GMR Warrant, the Exercise Price shall be subject to adjustment from time to time as provided in this
Article V
, and the number of shares of New GMR Common Stock obtainable upon exercise of each New GMR Warrant shall be subject to adjustment from time to time as provided in this
Article V
.
Section 5.1
Adjustments
.
(a)
Subdivision or Combination of New GMR Common Stock
. If the Company at any time prior to the expiration of the Exercise Period subdivides (by any stock split, stock dividend or reclassification) one or more classes of its New GMR Common Stock into a greater number of shares, the Exercise Price in effect immediately prior to such subdivision shall be proportionately reduced and the number of shares of New GMR Common Stock obtainable upon exercise of each New GMR Warrant shall be proportionately increased. If the Company at any time prior to the expiration of the Exercise Period combines (by reverse stock split, or reclassification) one or more classes of its New GMR Common Stock into a smaller number of shares, the Exercise Price in effect immediately prior to such subdivision shall be proportionately increased and the number of shares of New GMR Common Stock obtainable upon exercise of each New GMR Warrant shall be proportionately decreased.
(b)
Reorganization, Reclassification, Consolidation, Merger or Sale
. In connection with any Organic Change prior to the expiration of the Exercise Period, the Company shall make appropriate provision to ensure that each holder of the New GMR Warrants shall have the right to acquire and receive in such Organic Change, in lieu of or addition to (as the case may be) the shares of New GMR Common Stock immediately theretofore acquirable and receivable upon the exercise of such holder’s New GMR Warrant, such cash, stock, securities or other assets or property as would have been issued or payable in such Organic Change (if the holder had exercised such New GMR Warrant immediately prior to such Organic Change) with respect to or in exchange for the number of shares of New GMR Common Stock immediately theretofore acquirable and receivable upon exercise of such holder’s New GMR Warrant, less the applicable Exercise Price.
Section 5.2
Notices
. Whenever the number and/or kind of Warrant Exercise Shares or the Exercise Price is adjusted as herein provided, the Company shall (i) prepare and deliver, or cause to be prepared and delivered, forthwith to the Warrant Agent a written statement setting forth the adjusted number and/or kind of shares purchasable upon the exercise of New GMR Warrants and the Exercise Price of such shares after such adjustment, the facts requiring such adjustment and the computation by which adjustment was made, and (ii) cause the Warrant Agent to give written notice to each Holder in the manner provided in
Section 10.2
below, of the record date or the effective date of the event. Failure to give such notice, or any defect therein, shall not affect the legality or validity of such event.
The Warrant Agent shall be fully protected in relying upon any such written notice delivered in accordance with this
Section 5.2
, and on any adjustment therein contained, and shall not be deemed to have knowledge of any such
11
adjustment unless and until it shall have received such written notice. Notwithstanding anything to the contrary contained herein, the Warrant Agent shall have no duty or obligation to investigate or confirm whether the information contained in any such written notice complies with the terms of this Agreement or any other document, including the Warrant Certificates. The Warrant Agent shall have no duty to determine when an adjustment under this
Article V
should be made, how any such adjustment should be calculated, or the amount of any such adjustment.
The Company shall also, at least ten (10) days prior to (x) the date on which the Company closes its books or takes a record (1) with respect to any dividend or distribution upon the New GMR Common Stock, (2) with respect to any
pro rata
subscription offer to holders of New GMR Common Stock or (3) for determining rights to vote with respect to any Organic Change, dissolution or liquidation, or (y) the date on which any Organic Change, dissolution or liquidation shall take place, issue a press release or give written notice thereof to the Warrant Agent and cause the Warrant Agent to give written notice to each Holder in the manner provided in
Section 10.2
below.
Section 5.3
Form of Warrant After Adjustments
. The form of the Global Warrant Certificate need not be changed because of any adjustments in the Exercise Price or the number or kind of the New GMR Common Stock, and New GMR Warrants theretofore or thereafter issued may continue to express the same price and number and kind of shares as are stated in New GMR Warrants, as initially issued. The Company, however, may at any time in its sole discretion make any change in the form of Global Warrant Certificate that it may deem appropriate to give effect to such adjustments and that does not affect the substance of the Global Warrant Certificate (including the rights, duties, liabilities or obligations of the Warrant Agent), and any Global Warrant Certificate thereafter issued, whether in exchange or substitution for an outstanding Global Warrant Certificate, may be in the form so changed.
ARTICLE VI
SPECIFIED SALE
Upon the consummation of a Specified Sale during the Exercise Period at an aggregate value on a per share basis of New GMR Common Stock less than the then applicable Exercise Price (for the purposes of this Article VI, in the event the Specified Sale is a sale of assets, the aggregate value on a per share basis of New GMR Common Stock shall refer to such value that would be received if the consideration in respect of such assets of the Company would be distributed to the shareholders of the Company in a liquidating distribution, after satisfaction of all liabilities and obligations of the Company), each New GMR Warrant shall be automatically cancelled and deemed surrendered to the Company and the Company shall pay in exchange therefor consideration (at the Company’s election, either (x) in cash or (y) in the same proportion of cash and non-cash consideration as is paid in respect of the shares of New GMR Common Stock in the Specified Sale) in an amount equal to the fair market value of such New GMR Warrant. For such purpose, the fair market value of such New GMR Warrant shall be calculated by the Board of Directors of the Company in good faith using the Black-Scholes warrant valuation formula with the following assumptions: (i) New GMR Common Stock price equal to the consideration per share of New GMR Common Stock (including the fair market value of any such consideration to the extent it is not cash, as reasonably determined by the Board of Directors of the Company in good faith) paid in such transaction or series of related transactions,
12
(ii) the prevailing normalized dividend rate of the Company on the date of determination, (iii) 30% equity volatility rate, (iv) the risk free rate on the date of determination equal to the yield on an equivalent-duration U.S. Treasury bond, (v) time until expiration equal to the amount of time remaining in the Exercise Period (assuming the New GMR Warrant remained exercisable until the fifth (5th) anniversary of the Date of Issuance and was not earlier terminated) on the date of determination, and (vi) Exercise Price on the date of determination (as adjusted pursuant to Article V, if applicable). The Company shall provide the Warrant Agent with written notice of the occurrence of a Specified Sale, and until such written notice is received by the Warrant Agent, the Warrant Agent may presume conclusively for all purposes that no Specified Sale has occurred. Notwithstanding the foregoing, the Warrant Agent shall have no duties or obligations upon the occurrence of a Specified Sale, except pursuant to any written instructions from the Company issued in accordance with the express terms of this Agreement. If the Requisite Holders disagree with the determination of the fair market value of any non-cash consideration as determined by the Board of Directors of the Company in accordance with and for the purposes of this Article VI, the fair market value of such securities shall be determined by an independent appraiser acceptable to the Company and the Requisite Holders (or, if they cannot agree on such an appraiser, by an independent appraiser selected by lot by two independent appraisers, one of which is appointed by the Company, on the one hand, and the Requisite Holders, on the other hand). The cost of the appraisal shall be shared equally between the Company, on the one hand, and the Requisite Holders, on the other hand.
ARTICLE VII
TRANSFER AND EXCHANGE
OF NEW GMR WARRANTS
Section 7.1
Registration of Transfers and Exchanges
.
(a)
Transfer and Exchange of Global Warrant Certificates or Beneficial Interests Therein
. The transfer and exchange of Global Warrant Certificates or beneficial interests therein shall be effected through the Depositary, in accordance with this Agreement and the procedures of the Depositary therefor.
(b)
Exchange of a Beneficial Interest in a Global Warrant Certificate for a Book-Entry Warrant
.
(i)
Any Holder of a beneficial interest in a Global Warrant Certificate may, upon request, exchange such beneficial interest for a Book-Entry Warrant. Upon receipt by the Warrant Agent (i) from the Depositary or its nominee of written instructions or such other form of instructions as is customary for the Depositary on behalf of any person having a beneficial interest in a Global Warrant Certificate and (ii) of a written order of the Company signed by an Appropriate Officer authorizing such exchange, the Warrant Agent shall, in accordance with such instructions, cause, or direct the Depositary to cause, the number of New GMR Warrants represented by the Global Warrant Certificate to be reduced by the number of New GMR Warrants to be represented by the Book-Entry Warrants to be issued in exchange for the beneficial interest of such person in the Global Warrant Certificate and, following such
13
reduction, the Warrant Agent shall register in the name of the Holder a Book-Entry Warrant and deliver to said Holder a Warrant Statement.
(ii)
Book-Entry Warrants issued in exchange for a beneficial interest in a Global Warrant Certificate pursuant to this
Section 7.1(b)
shall be registered in such names as the Depositary, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Warrant Agent. The Warrant Agent shall deliver such Warrant Statements to the persons in whose names such New GMR Warrants are so registered.
(c)
Transfer and Exchange of Book-Entry Warrants
. When Book-Entry Warrants are presented to the Warrant Agent with a written request:
(i)
to register the transfer of the Book-Entry Warrants; or
(ii)
to exchange such Book-Entry Warrants for an equal number of Book-Entry Warrants of other authorized denominations, the Warrant Agent shall register the transfer or make the exchange as requested if its customary requirements for such transactions are met;
provided
,
however
, that the Warrant Agent has received a written instruction of transfer in form satisfactory to the Warrant Agent, duly executed by the Registered Holder thereof or by his attorney, duly authorized in writing; and a written order of the Company signed by an Appropriate Officer authorizing such exchange.
(d)
Restrictions on Exchange or Transfer of a Book-Entry Warrant for a Beneficial Interest in a Global Warrant Certificate
. A Book-Entry Warrant may not be exchanged for a beneficial interest in a Global Warrant Certificate except upon satisfaction of the requirements set forth below. Upon receipt by the Warrant Agent of appropriate written instruments of transfer with respect to a Book-Entry Warrant, in form satisfactory to the Warrant Agent, together with written instructions directing the Warrant Agent to make, or to direct the Depositary to make, an endorsement on the Global Warrant Certificate to reflect an increase in the number of New GMR Warrants represented by the Global Warrant Certificate equal to the number of New GMR Warrants represented by such Book-Entry Warrant, then the Warrant Agent shall cancel such Book-Entry Warrant on the Warrant Register and cause, or direct the Depositary to cause, in accordance with the standing instructions and procedures existing between the Depositary and the Warrant Agent, the number of New GMR Warrants represented by the Global Warrant Certificate to be increased accordingly. If no Global Warrant Certificates are then outstanding, the Company shall issue and the Warrant Agent shall countersign a new Global Warrant Certificate representing the appropriate number of New GMR Warrants. Any such transfer shall be subject to the Company’s prior written approval.
(e)
Restrictions on Transfer and Exchange of Global Warrant Certificates
. Notwithstanding any other provisions of this Agreement (other than the provisions set forth in
Section 7.1(f)
), unless and until it is exchanged in whole for a Book-Entry Warrant, a Global Warrant Certificate may not be transferred as a whole except by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary.
14
(f)
Book-Entry Warrants
. If at any time:
(i)
the Depositary for the Global Warrant Certificates notifies the Company that the Depositary is unwilling or unable to continue as Depositary for the Global Warrant Certificates and a successor Depositary for the Global Warrant Certificates is not appointed by the Company within 90 days after delivery of such notice; or
(ii)
the Company, in its sole discretion, notifies the Warrant Agent in writing that it elects to exclusively cause the issuance of Book-Entry Warrants under this Agreement, then the Warrant Agent, upon written instructions signed by an Appropriate Officer of the Company, shall register Book-Entry Warrants, in an aggregate number equal to the number of New GMR Warrants represented by the Global Warrant Certificates, in exchange for such Global Warrant Certificates.
(g)
Restrictions on Transfer
. No New GMR Warrants or Warrant Exercise Shares shall be sold, exchanged or otherwise transferred in violation of the Securities Act or state securities Laws.
(h)
Cancellation of Global Warrant Certificate
. At such time as all beneficial interests in Global Warrant Certificates have either been exchanged for Book-Entry Warrants, redeemed, repurchased or cancelled, all Global Warrant Certificates shall be returned to, or retained and cancelled pursuant to applicable Law by, the Warrant Agent, upon written instructions from the Company satisfactory to the Warrant Agent.
Section 7.2
Obligations with Respect to Transfers and Exchanges of New GMR Warrants
.
(i)
To permit registrations of transfers and exchanges, the Company shall execute Global Warrant Certificates, if applicable, and the Warrant Agent is hereby authorized, in accordance with the provisions of
Section 3.4
and this
Article VII
, to countersign such Global Warrant Certificates, if applicable, or register Book-Entry Warrants, if applicable, as required pursuant to the provisions of this
Article VII
and for the purpose of any distribution of new Global Warrant Certificates contemplated by
Section 8.2
or additional Global Warrant Certificates contemplated by
Article V
.
(ii)
All Book-Entry Warrants and Global Warrant Certificates issued upon any registration of transfer or exchange of Book-Entry Warrants or Global Warrant Certificates shall be the valid obligations of the Company, entitled to the same benefits under this Agreement as the Book-Entry Warrants or Global Warrant Certificates surrendered upon such registration of transfer or exchange.
(iii)
No service charge shall be made to a Holder for any registration, transfer or exchange but the Company or the Warrant Agent may require payment of a sum sufficient to cover any stamp or other tax or other charge that may be imposed on the Holder in connection with any such exchange or registration of transfer. The Warrant Agent shall forward any such sum collected by it to the Company or to such persons as the Company shall specify by written notice. The Warrant Agent shall have no obligation to effect an exchange or register a transfer unless and until it is satisfied that all such taxes and/or charges have been paid.
15
(iv)
So long as the Depositary, or its nominee, is the registered owner of a Global Warrant Certificate, the Depositary or such nominee, as the case may be, will be considered by the Company, the Warrant Agent, and any agent of the Company or the Warrant Agent as the sole owner or holder of the New GMR Warrants represented by such Global Warrant Certificate for all purposes under this Agreement. Except as provided in
Sections 7.1(b)
and
(f)
upon the exchange of a beneficial interest in a Global Warrant Certificate for Book-Entry Warrants, Beneficial Holders will not be entitled to have any New GMR Warrants registered in their names, and will under no circumstances be entitled to receive physical delivery of any such New GMR Warrants and will not be considered the Registered Holder thereof under the New GMR Warrants or this Agreement. Neither the Company nor the Warrant Agent, in its capacity as registrar for such New GMR Warrants, will have any responsibility or liability for any aspect of the records relating to beneficial interests in a Global Warrant Certificate or for maintaining, supervising or reviewing any records relating to such beneficial interests. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Warrant Agent, or any agent of the Company or the Warrant Agent from giving effect to any written certification, proxy, or other authorization furnished by the Depository or impair the operation of customary practices of the Depository governing the exercise of the rights of a holder of a beneficial interest in a Global Warrant Certificate.
(v)
Subject to
Sections 7.1(b)
,
(c)
and
(d)
, and this
Section 7.2
, the Warrant Agent shall, upon receipt of all information required to be delivered hereunder, from time to time to register the transfer of any outstanding New GMR Warrants in the Warrant Register, upon surrender of Global Warrant Certificates, if applicable, representing such New GMR Warrants at the Warrant Agent’s office as set forth in
Section 10.2
, duly endorsed, and accompanied by a completed form of assignment substantially in the form of
Exhibit C
hereto (or with respect to a Book-Entry Warrant, only such completed form of assignment substantially in the form of
Exhibit C
hereto), properly completed and duly executed by the Registered Holder thereof or by the duly appointed legal representative thereof or by a duly authorized attorney, such signature to be guaranteed by a participant in a Medallion Signature Guarantee Program at a guarantee level acceptable to the Warrant Agent. Upon any such registration of transfer, a new Global Warrant Certificate or a Warrant Statement, as the case may be, shall be issued to the transferee.
(vi)
Notwithstanding anything to the contrary herein, no holder may sell, exchange, assign, pledge, encumber or otherwise transfer all or any portion of any New GMR Warrant if such transfer would result in warrants to purchase common stock of the Company being held of record by more than 200 Persons as determined pursuant to Section 12(g) of the Exchange Act, unless such transfer is expressly approved by the Board of Directors of the Company or unless the Company is at the time otherwise subject, or with the passage of time will be subject, to the reporting requirements of Section 13(a) or Section 15(d) of the Exchange Act. Any transfer of any New GMR Warrant in violation of these provisions will be void
ab initio
.
Section 7.3
Fractional Warrants
. The Warrant Agent shall not be required to effect any registration of transfer or exchange which will result in the issuance of a warrant certificate for a fraction of a New GMR Warrant.
16
ARTICLE VIII
OTHER PROVISIONS RELATING TO RIGHTS OF HOLDERS OF NEW GMR WARRANTS
Section 8.1
No Rights or Liability as Stockholder; Notice to Registered Holders
. Nothing contained in the New GMR Warrants shall be construed as conferring upon the Holder or his, her or its transferees the right to vote or to receive dividends or to consent or to receive notice as a stockholder in respect of any meeting of stockholders for the election of directors of the Company or of any other matter, or any rights whatsoever as stockholders of the Company. No provision thereof and no mere enumeration therein of the rights or privileges of the Holder shall give rise to any liability of such holder for the Exercise Price hereunder or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company. To the extent not covered by any statement delivered pursuant to
Section 5.2
, the Company shall give notice to Registered Holders by regular mail or press release if at any time prior to the expiration or exercise in full of the New GMR Warrants, any of the following events shall occur:
(a)
the Company shall authorize the payment of any dividend payable in any securities upon shares of New GMR Common Stock or authorize the making of any distribution (other than a regular quarterly cash dividend) to all holders of New GMR Common Stock;
(b)
the Company shall authorize the issuance to all holders of New GMR Common Stock of any additional shares of New GMR Common Stock or New GMR Common Stock Equivalents or of rights, options or warrants to subscribe for or purchase New GMR Common Stock or New GMR Common Stock Equivalents or of any other subscription rights, options or warrants;
(c)
a dissolution, liquidation or winding up of the Company shall be proposed; or
(d)
a capital reorganization or reclassification of the New GMR Common Stock (other than a subdivision or combination of the outstanding New GMR Common Stock and other than a change in the par value of the New GMR Common Stock) or any consolidation or merger of the Company with or into another corporation (other than a consolidation or merger in which the Company is the continuing corporation and that does not result in any reclassification or change of New GMR Common Stock outstanding) or in the case of any sale or conveyance to another corporation or other entity of the property of the Company as an entirety or substantially as an entirety.
Such giving of notice shall be initiated at least ten (10) days prior to the date fixed as a record date or effective date or the date of closing of the Company’s stock transfer books for the determination of the stockholders entitled to such dividend, distribution or subscription rights, or for the determination of the stockholders entitled to vote on such proposed merger, consolidation, sale, conveyance, dissolution, liquidation or winding up. Such notice shall specify such record date or the date of closing the stock transfer books, as the case may be. Failure to provide such notice shall not affect the validity of any action taken in connection with such
17
dividend, distribution or subscription rights, or proposed merger, consolidation, sale, conveyance, dissolution, liquidation or winding up. For the avoidance of doubt, no such notice shall supersede or limit any adjustment called for by Section 5.1 by reason of any event as to which notice is required by this Section.
Section 8.2
Lost, Stolen, Mutilated or Destroyed Global Warrant Certificates.
If any Global Warrant Certificate is lost, stolen, mutilated or destroyed, the Company shall issue, and the Warrant Agent shall countersign and, if provided with all necessary information and documents, deliver, in exchange and substitution for and upon cancellation of the mutilated Global Warrant Certificate, or in lieu of and substitution for the Global Warrant Certificate lost, stolen or destroyed, a new Global Warrant Certificate of like tenor and representing an equivalent number of New GMR Warrants, but only upon receipt of evidence and an affidavit reasonably satisfactory to the Company and the Warrant Agent of the loss, theft or destruction of such Global Warrant Certificate, and, if requested by either the Company or the Warrant Agent, a bond sufficient to indemnify the Company and the Warrant Agent against any claim that may be made against the Company or the Warrant Agent on account of the loss, theft, mutilation or destruction of any such Global Warrant Certificate or the issuance of such new certificate. Applicants for such substitute Global Warrant Certificates shall also comply with such other reasonable regulations and pay such other reasonable charges as the Company or the Warrant Agent may prescribe and as required by Section 8-405 of the Uniform Commercial Code as in effect in the State of New York.
Section 8.3
No Restrictive Legends
. No legend shall be stamped or imprinted on any stock certificate for New GMR Common Stock issued upon the exercise of any New GMR Warrant and or stock certificate issued upon the direct or indirect transfer of any such New GMR Common Stock.
Section 8.4
Cancellation of New GMR Warrants
. If the Company shall purchase or otherwise acquire New GMR Warrants, the Global Warrant Certificates and the Book-Entry Warrants representing such purchased or acquired New GMR Warrants shall thereupon be delivered to the Warrant Agent, if applicable, to be cancelled by it and retired. The Warrant Agent shall cancel all Global Warrant Certificates surrendered, and accepted, for exchange, substitution, transfer or exercise in whole or in part. Such cancelled Global Warrant Certificates shall thereafter be disposed of in a manner satisfactory to the Company provided in writing to the Warrant Agent.
ARTICLE IX
CONCERNING THE WARRANT AGENT AND OTHER MATTERS
Section 9.1
Resignation, Consolidation or Merger of Warrant Agent.
(a)
Appointment of Successor Warrant Agent
. The Warrant Agent, or any successor to it hereafter appointed, may resign its duties and be discharged from all further duties and liabilities hereunder after giving sixty (60) days’ notice in writing to the Company. If the office of the Warrant Agent becomes vacant by resignation or incapacity to act or otherwise, the Company shall appoint in writing a successor Warrant Agent in place of the Warrant Agent. If
18
the Company shall fail to make such appointment within a period of sixty (60) days after it has been notified in writing of such resignation or incapacity by the Warrant Agent or by the Registered Holder of a New GMR Warrant (who shall, with such notice, submit his New GMR Warrant for inspection by the Company), then the Registered Holder of any New GMR Warrant may apply to the Supreme Court of the State of New York for the County of New York for the appointment of a successor Warrant Agent at the Company’s cost. Any successor Warrant Agent, whether appointed by the Company or by such court, shall be a Person organized and existing under the Laws of the United States of America, or any state thereunder, in good standing. After appointment, any successor Warrant Agent shall be vested with all the authority, powers, rights, immunities, duties and obligations of its predecessor Warrant Agent with like effect as if originally named as Warrant Agent hereunder, without any further act or deed; but if for any reason it becomes necessary or appropriate, the predecessor Warrant Agent shall execute and deliver, at the expense of the Company, an instrument transferring to such successor Warrant Agent all the authority, powers, rights, immunities, duties and obligations of such predecessor Warrant Agent hereunder; and upon request of any successor Warrant Agent, the Company shall make, execute, acknowledge and deliver any and all instruments in writing for more fully and effectually vesting in and confirming to such successor Warrant Agent all such authority, powers, rights, immunities, duties and obligations.
(b)
Notice of Successor Warrant Agent
. In the event a successor Warrant Agent shall be appointed, the Company shall (i) give notice thereof to the predecessor Warrant Agent and the transfer agent for the New GMR Common Stock not later than the effective date of any such appointment, and (ii) cause written notice thereof to be delivered to each Registered Holder at such holder’s address appearing on the Warrant Register. Failure to give any notice provided for in this
Section 9.1(b)
or any defect therein shall not affect the legality or validity of the removal of the Warrant Agent or the appointment of a successor Warrant Agent, as the case may be.
(c)
Merger, Consolidation or Name Change of Warrant Agent
.
(i)
Any Person into which the Warrant Agent may be merged or with which it may be consolidated or any Person resulting from any merger or consolidation to which the Warrant Agent shall be a party shall be the successor Warrant Agent under this Agreement, without any further act or deed, if such person would be eligible for appointment as a successor Warrant Agent under the provisions of
Section 9.1(a)
. If any of the Global Warrant Certificates have been countersigned but not delivered at the time such successor to the Warrant Agent succeeds under this Agreement, any such successor to the Warrant Agent may adopt the countersignature of any previous Warrant Agent; and if at that time any of the Global Warrant Certificates shall not have been countersigned, any successor to the Warrant Agent may countersign such Global Warrant Certificates either in the name of the predecessor Warrant Agent or in the name of the successor Warrant Agent; and in all such cases such Global Warrant Certificates shall have the full force provided in the Global Warrant Certificates and in this Agreement.
(ii)
If at any time the name of the Warrant Agent is changed and at such time any of the Global Warrant Certificates have been countersigned but not delivered, the Warrant Agent whose name has changed may adopt the countersignature under its prior name;
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and if at that time any of the Global Warrant Certificates have not been countersigned, the Warrant Agent may countersign such Global Warrant Certificates either in its prior name or in its changed name; and in all such cases such Global Warrant Certificates shall have the full force provided in the Global Warrant Certificates and in this Agreement.
Section 9.2
Fees and Expenses of Warrant Agent.
(a)
Remuneration
. The Company agrees to pay the Warrant Agent reasonable remuneration for its services as Warrant Agent hereunder in accordance with
Schedule A
attached hereto and will reimburse the Warrant Agent upon demand for all reasonable and documented out-of-pocket expenses (including reasonable counsel fees and expenses), taxes and governmental charges and other charges of any kind and nature incurred by the Warrant Agent in connection with the negotiation, preparation, delivery, administration, execution, modification, waiver, delivery, enforcement or amendment of this of this Agreement and the exercise and performance of its duties hereunder.
(b)
Further Assurances
. The Company agrees to perform, execute, acknowledge and deliver or cause to be performed, executed, acknowledged and delivered all such further and other acts, instruments, and assurances as may reasonably be required by the Warrant Agent for the carrying out or performing of the provisions of this Agreement.
Section 9.3
Duties of Warrant Agent
.
(a)
Liability
.
(i)
References to the Warrant Agent in this
Section 9.3
shall include the Warrant Agent and its affiliates, principles, directors, officers, employees, agents, representatives, attorneys, accountants, advisors and other professionals. The Warrant Agent shall not be liable for or by reason of any of the statements of fact or recitals contained in this Agreement, the Warrant Statements or in the Global Warrant Certificates (except, in each case, its countersignature thereof) or be required to verify the same, but all such statements and recitals are and shall be deemed to have been made by the Company only. The Warrant Agent shall not be under any responsibility in respect of the validity or sufficiency of this Agreement or the execution and delivery hereof or in respect of the validity or execution of any Global Warrant Certificate (except, in each case, its countersignature thereof); nor shall the Warrant Agent be responsible for any breach by the Company of any covenant or condition contained in this Agreement or in any Global Warrant Certificate to be complied with by the Company; nor shall the Warrant Agent be responsible for the making of any adjustment in the Exercise Price or the number of shares issuable upon the exercise of a New GMR Warrants required under the provisions of
Article V
or be responsible for the manner, method or amount of any such change or the ascertaining of the existence of facts that would require any such change; nor shall the Warrant Agent by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any Warrant Exercise Shares to be issued pursuant to this Agreement or any New GMR Warrant or as to whether any Warrant Exercise Shares will, when issued, be validly issued and fully paid and non-assessable. The Warrant Agent shall not be accountable or under any duty or responsibility for the use by the Company of any Global Warrant Certificate authenticated by the Warrant Agent and delivered by it to the Company
20
pursuant to this Agreement or for the application by the Company of the proceeds of the issue and sale, or exercise, of the New GMR Warrants.
(ii)
The Warrant Agent shall have no liability under, and no duty to inquire as to, the provisions of any agreement, instrument or document other than this Agreement, including any Global Warrant Certificate.
(iii)
The Warrant Agent may rely on and shall incur no liability or responsibility to the Company, any Holder, or any other Person for any action taken, suffered or omitted to be taken by it upon any notice, instruction, request, resolution, waiver, consent, order, certificate, affidavit, statement, or other paper, document or instrument furnished to the Warrant Agent hereunder and believed by it to be genuine and to have been signed, sent or presented by the proper party or parties. The Warrant Agent shall be under no duty to inquire into or investigate the validity, accuracy or content of any such notice, instruction, request, resolution, waiver, consent, order, certificate, affidavit, statement, or other paper, document or instrument. The Warrant Agent shall not take any instructions or directions except those given in accordance with this Agreement.
(iv)
The Warrant Agent shall act hereunder solely as agent for the Company and in a ministerial capacity and does not assume any obligation or relationship of agency or trust with any of the owners or holders of the New GMR Warrants, and its duties shall be determined solely by the provisions hereof. The Warrant Agent shall not be liable for any action taken, suffered or omitted to be taken in connection with this Agreement except to the extent that a court of competent jurisdiction determines that its own gross negligence, willful misconduct or bad faith (as each is determined by a final, nonappealable judgment) was the primary cause of any loss.
(v)
Anything in this Agreement to the contrary notwithstanding, in no event shall the Warrant Agent be liable for any special, incidental, punitive, indirect or consequential loss or damage of any kind whatsoever (including but not limited to lost profits), even if the Warrant Agent has been advised of the likelihood of such loss or damage. Any liability of the Warrant Agent under this Agreement shall be limited to the amount of annual fees paid by the Company to the Warrant Agent hereunder.
(vi)
All rights and obligations contained in this
Section 9.3
shall survive the termination of this Agreement and the resignation, replacement, incapacity or removal of the Warrant Agent. All fees and expenses incurred by the Warrant Agent prior to the resignation, replacement, incapacity or removal of the Warrant Agent shall be paid by the Company in accordance with this
Section 9.3
of this Agreement notwithstanding such resignation, replacement, incapacity or removal of the Warrant Agent.
(vii)
The Warrant Agent shall not be under any liability for interest on any monies at any time received by it pursuant to the provisions of this Agreement.
(viii)
In no event shall the Warrant Agent be responsible or liable for any failure or delay in the performance of its obligations under this Agreement arising out of or caused by, directly or indirectly, forces beyond its reasonable control, including without
21
limitation strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software or hardware) services.
(ix)
In the event the Warrant Agent believes any ambiguity or uncertainty exists hereunder or in any notice, instruction, direction, request or other communication, paper or document received by the Warrant Agent hereunder, Warrant Agent, may, in its sole discretion, refrain from taking any action, and shall be fully protected and shall not be liable in any way to the Company or any Holder or other person or entity for refraining from taking such action, unless the Warrant Agent receives written instructions signed by the Company which eliminates such ambiguity or uncertainty to the satisfaction of Warrant Agent.
(b)
Reliance on Company Statement
. Whenever in the performance of its duties under this Agreement, the Warrant Agent shall deem it necessary or desirable that any fact or matter be proved or established by the Company prior to taking or suffering any action hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a statement signed by the Chief Executive Officer or Chairman of the Board of Directors of the Company and delivered to the Warrant Agent. The Warrant Agent may rely upon such statement for any action taken or suffered by it pursuant to the provisions of this Agreement. The Company will perform, execute, acknowledge and deliver or cause to be performed, executed, acknowledged and delivered all such further and other acts, instruments and assurances as may reasonably be required by the Warrant Agent for the carrying out or performing by the Warrant Agent of the provisions of this Agreement.
(c)
Indemnity
. The Company agrees to indemnify, defend, protect and save the Warrant Agent and hold it harmless from and against any and all losses, damages, claims, liabilities, penalties, judgments, settlements, actions, suits, proceedings, litigation, investigations, costs or expenses, including without limitation reasonable fees and disbursements of counsel, that may be imposed on, incurred by, or asserted against such Person, at any time, and in any way relating to or arising out of or in connection with, directly or indirectly, the execution, delivery or performance of this Agreement, the enforcement of any rights or remedies under or in connection with this Agreement, or as may arise by reason of any act, omission or error of such Person; provided, however, that no such Person shall be entitled to be so indemnified, defended, protected, saved and kept harmless to the extent such loss was caused by its own gross negligence, bad faith or willful misconduct, as determined by a final judgment of a court of competent jurisdiction. Notwithstanding the foregoing, the Company shall not be responsible for any settlement made without its written consent, which written consent shall not be unreasonably conditioned, withheld or delayed.
(d)
Exclusions
. The Warrant Agent shall have no responsibility with respect to the validity of this Agreement or with respect to the validity or execution of any New GMR Warrant (except, in each case, its countersignature thereof); nor shall it be responsible for any breach by the Company of any covenant or condition contained in this Agreement or in any New GMR Warrant; nor shall it be responsible to make any adjustments required under the provisions of
Article V
hereof or responsible for the manner, method or amount of any such adjustment or the ascertaining of the existence of facts that would require any such adjustment; nor shall it by
22
any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any New GMR Common Stock to be issued pursuant to this Agreement or any New GMR Warrant or as to whether any New GMR Common Stock will, when issued, be valid and fully paid and nonassessable. The Warrant Agent will not be under any duty or responsibility to ensure compliance with any applicable federal or state securities laws in connection with the issuance, transfer or exchange of New GMR Warrants.
(e)
The Warrant Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself or by or through its attorneys, agents or employees, and the Warrant Agent shall not be answerable or accountable for any act, default, neglect or misconduct of any such attorneys, agents or employees or for any loss to the Company resulting from such neglect or misconduct, provided that the Warrant Agent acts without gross negligence, willful misconduct or bad faith (each as determined by a final judgment of a court of competent jurisdiction) in connection with the selection of such attorneys, agents or employees.
(f)
The Warrant Agent may consult at any time with legal counsel satisfactory to it (who may be legal counsel for the Company) and the advice of such counsel shall be full and complete authorization and protection to the Warrant Agent as to any action taken or omitted by such parties in accordance with such advice.
(g)
The Warrant Agent may buy, sell, or deal in any of the New GMR Warrants or other securities of the Company freely as though it was not Warrant Agent under this Agreement. Nothing contained herein shall preclude the Warrant Agent from acting in any other capacity for the Company or for any other Person.
(h)
The Warrant Agent shall not be required to use or risk its own funds in the performance of any of its obligations or duties or the exercise of any of its rights or powers, and shall not be required to take any action which, in the Warrant Agent’s sole and absolute judgment, could involve it in expense or liability unless furnished with security and indemnity satisfactory to it.
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.1
Binding Effects; Benefits
. This Agreement shall inure to the benefit of and shall be binding upon the Company, the Warrant Agent and the Holders and their respective heirs, legal representatives, successors and assigns. Nothing in this Agreement, expressed or implied, is intended to or shall confer on any person other than the Company, the Warrant Agent and the Holders, or their respective heirs, legal representatives, successors or assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement.
Section 10.2
Notices
. Unless a provision herein permits notice by way of a press release, Any notice or other communication required or which may be given hereunder shall be in writing and shall be sent by certified or regular mail, by private national courier service (return receipt requested, postage prepaid), by personal delivery or by facsimile transmission. Such
23
notice or communication shall be deemed given (a) if mailed, two days after the date of mailing, (b) if sent by national courier service, one Business Day after being sent, (c) if delivered personally, when so delivered, or (d) if sent by facsimile transmission, on the Business Day after such facsimile is transmitted, in each case as follows:
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if to the Warrant Agent, to:
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Computershare Shareowner Services LLC
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480 Washington Boulevard, 29th Floor
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Jersey City, New Jersey 07310
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Facsimile: (201) 680-4606
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Attention: Eliesee Guardiola
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with copies (which shall not constitute notice) to:
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|
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Computershare Shareowner Services LLC
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480 Washington Boulevard, 29th Floor
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Jersey City, New Jersey 07310
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Facsimile: (201) 680-4610
|
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Attention: Legal Department
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if to the Company, to:
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General Maritime Corporation
|
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299 Park Avenue
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New York, New York 10171
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Facsimile: (212) 763-5603
|
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Attention: Jeffrey D. Pribor
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with copies (which shall not constitute notice) to:
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Oaktree Capital Management, L.P.
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333 South Grand Ave., 28th Floor
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Los Angeles, California 90071
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Facsimile: (213) 830-6300
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Attention:
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B. James Ford
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Adam Pierce
|
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and
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24
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Kirkland & Ellis LLP
|
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333 South Hope Street
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Los Angeles, California 90071
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Facsimile: (213) 680-8500
|
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Attention:
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Damon R. Fisher
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and
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Kramer Levin Naftalis & Frankel LLP
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1177 Avenue of the Americas
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New York, New York 10036
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Facsimile: (212) 715-8100
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Attention:
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Thomas E. Molner
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if to Registered Holders, at their addresses as they appear in the Warrant Register or in the records of the transfer agent or registrar for the New GMR Common Stock.
Section 10.3
Persons Having Rights under this Agreement
. Nothing in this Agreement expressed and nothing that may be implied from any of the provisions hereof is intended, or shall be construed, to confer upon, or give to, any person or corporation other than the parties hereto and the Holders, any right, remedy, or claim under or by reason of this Agreement or of any covenant, condition, stipulation, promise, or agreement hereof. All covenants, conditions, stipulations, promises, and agreements contained in this Agreement shall be for the sole and exclusive benefit of the parties hereto, their successors and assigns and the Holders.
Section 10.4
Examination of this Agreement
. A copy of this Agreement shall be available at all reasonable times at an office designated for such purpose by the Warrant Agent, for examination by the Holder of any New GMR Warrant. Prior to such examination, the Warrant Agent may require any such holder to submit his New GMR Warrant for inspection by it.
Section 10.5
Counterparts
. This Agreement may be executed in any number of original or facsimile or electronic PDF counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.
Section 10.6
Effect of Headings
. The section headings herein are for convenience only and are not part of this Agreement and shall not affect the interpretation hereof.
Section 10.7
Amendments
.
(a)
Subject to
Section 10.7(b)
below, this agreement may not be amended except in writing signed by both parties hereto.
(b)
The Company and the Warrant Agent may from time to time supplement or amend this Agreement or the New GMR Warrants (a) without the approval of any Holders in order to cure any ambiguity, manifest error or other mistake in this Agreement or the New GMR
25
Warrants, or to correct or supplement any provision contained herein or in the New GMR Warrants that may be defective or inconsistent with any other provision herein or in the New GMR Warrants, or to make any other provisions in regard to matters or questions arising hereunder that the Company may deem necessary or desirable and that shall not adversely affect, alter or change the interests of the Holders or (b) with the prior written consent of holders of the New GMR Warrants exercisable for a majority of the New GMR Common Stock then issuable upon exercise of the New GMR Warrants then outstanding. Notwithstanding anything to the contrary herein, upon the delivery of a certificate from an Appropriate Officer which states that the proposed supplement or amendment is in compliance with the terms of this
Section 10.7
, the Warrant Agent shall execute such supplement or amendment; provided, that the Warrant Agent may, but shall not be obligated to, execute any amendment or supplement that affects Warrant Agent’s rights, duties, immunities, liabilities or obligations hereunder. Any amendment, modification or waiver effected pursuant to and in accordance with the provisions of this
Section 10.7
will be binding upon all Holders and upon each future Holder, the Company and the Warrant Agent. In the event of any amendment, modification or waiver, the Company will give prompt notice thereof to all Registered Holders and, if appropriate, notation thereof will be made on all Global Warrant Certificates thereafter surrendered for registration of transfer or exchange.
Section 10.8
No Inconsistent Agreements; No Impairment
. The Company will not, on or after the date hereof, enter into any agreement with respect to its securities which conflicts with the rights granted to the Holders in the New GMR Warrants or the provisions hereof. The Company represents and warrants to the Holders that the rights granted hereunder do not in any way conflict with the rights granted to holders of the Company’s securities under any other agreements. The Company will not, by amendment of its Articles of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of the New GMR Warrants and in the taking of all such action as may be necessary in order to preserve the exercise rights of the Holders against impairment.
Section 10.9
Integration/Entire Agreement
. This Agreement (and solely with respect to the Company and the Holders, the New GMR Warrants), is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the Company, the Warrant Agent and the Holders in respect of the subject matter contained herein. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein, with respect to the New GMR Warrants. This Agreement and the New GMR Warrants supersede all prior agreements and understandings between the parties with respect to such subject matter.
Section 10.10
Governing Law, Etc
. This Agreement and each New GMR Warrant issued hereunder shall be deemed to be a contract made under the Laws of the State of New York and for all purposes shall be governed by and construed in accordance with the Laws of such State. Each party hereto consents and submits to the jurisdiction of the courts of the State of New York and of the federal courts of the Southern District of New York in connection with any action or proceeding brought against it that arises out of or in connection with, that is based upon, or that relates to this Agreement or the transactions contemplated hereby. In connection
26
with any such action or proceeding in any such court, each party hereto hereby waives personal service of any summons, complaint or other process and hereby agrees that service thereof may be made in accordance with the procedures for giving notice set forth in
Section 10.2
hereof. Each party hereto hereby waives any objection to jurisdiction or venue in any such court in any such action or proceeding and agrees not to assert any defense based on forum
non conveniens
or lack of jurisdiction or venue in any such court in any such action or proceeding.
Section 10.11
Termination
. This Agreement will terminate on the earlier of (i) such date when all New GMR Warrants have been exercised, or (ii) the expiration of the Exercise Period. The provisions of
Section 9.3
and this
Article X
shall survive such termination and the resignation, replacement or removal of the Warrant Agent.
Section 10.12
Waiver of Trial by Jury
. Each party hereto hereby irrevocably and unconditionally waives the right to a trial by jury in any action, suit, counterclaim or other proceeding (whether based on contract, tort or otherwise) arising out of, connected with or relating to this Agreement and the transactions contemplated hereby.
Section 10.13
Remedies
. The Company hereby agrees that, in the event that the Company violates any provisions of a New GMR Warrant (including the obligation to deliver shares of New GMR Common Stock upon the exercise thereof), the remedies at law available to the holder of such Warrant may be inadequate. In such event, the Requisite Holders and, with the prior written consent of the Requisite Holders, the holder of such New GMR Warrant, shall have the right, in addition to all other rights and remedies any of them may have, to specific performance and/or injunctive or other equitable relief to enforce or prevent any violations by the Company of such New GMR Warrant and/or any other New GMR Warrants.
Section 10.14
Severability
. In the event that any one or more of the provisions contained herein or in the New GMR Warrants, or the application thereof in any circumstances, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provisions in every other respect and of the remaining provisions contained herein and therein shall not be affected or impaired thereby; provided, however, that if any such excluded provision shall adversely affect the rights, immunities, duties or obligations of the Warrant Agent, the Warrant Agent shall be entitled to immediately resign.
27
Section 10.15
Customer Identification Program
. The Company acknowledges that the Warrant Agent is subject to the customer identification program (“
Customer Identification Program
”) requirements under the USA PATRIOT Act and its implementing regulations, and that the Warrant Agent must obtain, verify and record information that allows the Warrant Agent to identify the Company. Accordingly, prior to accepting an appointment hereunder, the Warrant Agent may request information from the Company that will help the Warrant Agent to identify the Company, including without limitation the Company’s physical address, tax identification number, organizational documents, certificate of good standing, license to do business, or any other information that the Warrant Agent deems necessary. The Company agrees that the Warrant Agent cannot accept an appointment hereunder unless and until the Warrant Agent verifies the Company’s identity in accordance with the Customer Identification Program requirements.
[
Signature Page Follows
]
28
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto as of the day and year first above written.
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GENERAL MARITIME CORPORATION
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By:
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/s/ Jeffrey D. Pribor
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Name: Jeffrey D. Pribor
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Title: Executive Vice President and Chief Financial
Officer
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COMPUTERSHARE SHAREOWNER SERVICES LLC, as Warrant Agent
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By:
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/s/ Eliesee Guardiola
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Name: Eliesee Guardiola
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Title: Senior Associate
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29
EXHIBIT A-1
FACE OF GLOBAL WARRANT CERTIFICATE
VOID AFTER 5:00 P.M., NEW YORK CITY TIME, ON May 17, 2017
This Global Warrant Certificate is held by The Depository Trust Company (the “
Depositary
”) or its nominee in custody for the benefit of the beneficial owners hereof, and is not transferable to any person under any circumstances except that (i) this Global Warrant Certificate may be exchanged in whole but not in part pursuant to Section 7.1(a) of the Warrant Agreement, (ii) this Global Warrant Certificate may be delivered to the Warrant Agent for cancellation pursuant to Section 7.1(h) of the Warrant Agreement and (iii) this Global Warrant Certificate may be transferred to a successor Depositary with the prior written consent of the Company.
Unless this Global Warrant Certificate is presented by an authorized representative of the Depositary to the Company or the Warrant Agent for registration of transfer, exchange or payment and any certificate issued is registered in the name of Cede & Co. or such other entity as is requested by an authorized representative of the Depositary (and any payment hereon is made to Cede & Co. or to such other entity as is requested by an authorized representative of the Depositary), any transfer, pledge or other use hereof for value or otherwise by or to any person is wrongful because the registered owner hereof, Cede & Co., has an interest herein.
Transfers of this Global Warrant Certificate shall be limited to transfers in whole, but not in part, to nominees of the Depositary or to a successor thereof or such successor’s nominee, and transfers of portions of this Global Warrant Certificate shall be limited to transfers made in accordance with the restrictions set forth in Section 7 of the Warrant Agreement.
No registration or transfer of the securities issuable pursuant to the Warrant will be recorded on the books of the Company until such provisions have been complied with.
THE SECURITIES REPRESENTED BY THIS WARRANT CERTIFICATE (INCLUDING THE SECURITIES ISSUABLE UPON EXERCISE OF THE NEW GMR WARRANT) ARE SUBJECT TO ADDITIONAL AGREEMENTS SET FORTH IN THE WARRANT AGREEMENT DATED AS OF MAY 17, 2012, BY AND BETWEEN THE COMPANY AND THE WARRANT AGENT (THE “
WARRANT AGREEMENT
”).
THIS NEW GMR WARRANT WILL BE VOID IF NOT EXERCISED PRIOR TO
5:00 P.M., NEW YORK CITY TIME, ON MAY 17, 2017
WARRANT TO PURCHASE
309,296 SHARES OF NEW GMR COMMON STOCK OF
GENERAL MARITIME CORPORATION.
CUSIP # Y2693R 127
ISSUE DATE: MAY 17, 2012
No. W-1
This certifies that, for value received, Cede & Co. and its registered assigns (collectively, the “Registered Holder”), is entitled to purchase from General Maritime Corporation, a Marshall Islands corporation (the “Company”), subject to the terms and conditions hereof, at any time before 5:00 p.m., New York time, on May 17, 2017, the number of fully paid and non-assessable shares of New GMR Common Stock of the Company set forth above at the Exercise Price (as defined in the Warrant Agreement). The Exercise Price and the number and kind of shares purchasable hereunder are subject to adjustment from time to time as provided in Article V of the Warrant Agreement. The initial Exercise Price shall be $42.50.
This Warrant Certificate shall not be valid unless countersigned by the Warrant Agent.
IN WITNESS WHEREOF, this Warrant has been duly executed by the Company under its corporate seal as of the 17th day of May, 2012.
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GENERAL MARITIME CORPORATION
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By:
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Print Name:
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Title:
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Attest:
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Secretary
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Computershare Shareowner Services LLC,
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as Warrant Agent
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By:
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Name:
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Title:
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Address of Registered Holder for Notices (until changed in accordance with this New GMR Warrant):
Cede & Co.
55 Water Street
New York, New York 10041
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS WARRANT CERTIFICATE SET FORTH ON THE REVERSE HEREOF. SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS THOUGH FULLY SET FORTH AT THIS PLACE.
FORM OF REVERSE OF WARRANT
The New GMR Warrant evidenced by this Warrant Certificate is a part of a duly authorized issue of New GMR Warrants to purchase 309,296 shares of New GMR Common Stock issued pursuant to that the Warrant Agreement, a copy of which may be inspected at the office of the Warrant Agent designated for such purpose. The Warrant Agreement hereby is incorporated by reference in and made a part of this instrument and is hereby referred to for a description of the rights, limitation of rights, obligations, duties and immunities thereunder of the Warrant Agent, the Company and the Registered Holders of the New GMR Warrants. All capitalized terms used on the face of this New GMR Warrant herein but not defined that are defined in the Warrant Agreement shall have the meanings assigned to them therein.
Upon due presentment for registration of transfer of the New GMR Warrant at the office of the Warrant Agent designated for such purpose, a new Warrant Certificate or Warrant Certificates of like tenor and evidencing in the aggregate a like number of New GMR Warrants shall be issued to the transferee in exchange for this Warrant Certificate, subject to the limitations provided in the Warrant Agreement, without charge except for any applicable tax or other governmental charge.
The Company shall not be required to issue fractions of New GMR Common Stock or any certificates that evidence fractional New GMR Common Stock.
No New GMR Warrants may be sold, exchanged or otherwise transferred in violation of the Securities Act or state securities laws.
This New GMR Warrant does not entitle the Registered Holder to any of the rights of a stockholder of the Company.
The Company and Warrant Agent may deem and treat the Registered Holder hereof as the absolute owner of this Warrant Certificate (notwithstanding any notation of ownership or other writing hereon made by anyone) for the purpose of any exercise hereof and for all other purposes, and neither the Company nor the Warrant Agent shall be affected by any notice to the contrary.
EXHIBIT A-2
FORM OF WARRANT STATEMENT
See attached.
EXERCISE FORM FOR REGISTERED HOLDERS
HOLDING BOOK-ENTRY WARRANTS
(To be executed upon exercise of New GMR Warrant)
The undersigned hereby irrevocably elects to exercise the right, represented by the Book-Entry Warrants, to purchase New GMR Common Stock and (check one):
o
herewith tenders this New GMR Warrant for New GMR Common Stock pursuant to the net issuance exercise provisions of Section 4.5 of the Warrant Agreement. This exercise and election shall
o
be immediately effective or
o
shall be effective as of 5:00 pm. Eastern Time, on
[
insert date
]
.
The undersigned requests that [a statement representing] the New GMR Common Stock be delivered as follows:
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Name
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Address
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Delivery Address (if different)
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If said number of shares shall not be all the shares purchasable under the within Warrant Certificate, the undersigned requests that a new Book-Entry Warrant representing the balance of such New GMR Warrants shall be registered, with the appropriate Warrant Statement delivered as follows:
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Name
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Address
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Delivery Address (if different)
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Signature
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Social Security or Other Taxpayer
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Identification Number of Holder
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Note: If the statement representing the New GMR Common Stock or any Book-Entry Warrants representing New GMR Warrants not exercised is to be registered in a name other than that in which the Book-Entry Warrants are registered, the signature of the holder hereof must be guaranteed.
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SIGNATURE GUARANTEED BY:
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Signatures must be guaranteed by a participant in a Medallion Signature Guarantee Program at a guarantee level acceptable to the Company’s Warrant Agent.
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Countersigned:
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Dated: [ ], 2012
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Computershare Shareowner Services LLC,
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as Warrant Agent
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Signature
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Authorized Signatory
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EXHIBIT B-2
EXERCISE FORM FOR BENEFICIAL HOLDERS
HOLDING NEW GMR WARRANTS THROUGH THE DEPOSITORY TRUST COMPANY
TO BE COMPLETED BY DIRECT PARTICIPANT
IN THE DEPOSITORY TRUST COMPANY
(To be executed upon exercise of New GMR Warrant)
The undersigned hereby irrevocably elects to exercise the right, represented by New GMR Warrants held for its benefit through the book-entry facilities of The Depository Trust Company (the “
Depositary
”), to purchase New GMR Common Stock and (check one):
o
herewith tenders this New GMR Warrant for New GMR Common Stock pursuant to the net issuance exercise provisions of Section 4.5 of the Warrant Agreement. This exercise and election shall
o
be immediately effective or
o
shall be effective as of 5:00 pm., Eastern Time, on
[
insert date
]
.
The undersigned requests that the New GMR Common Stock issuable upon exercise of the New GMR Warrants be in registered form in the authorized denominations, registered in such names and delivered, all as specified in accordance with the instructions set forth below; provided, that if the New GMR Common Stock are evidenced by global securities, the New GMR Common Stock shall be registered in the name of the Depositary or its nominee.
Dated:
NOTE: THIS EXERCISE NOTICE MUST BE DELIVERED TO THE WARRANT AGENT, PRIOR TO 5:00 P.M., EASTERN TIME, ON THE EXPIRATION DATE. THE WARRANT AGENT SHALL NOTIFY YOU (THROUGH THE CLEARING SYSTEM) OF (1) THE WARRANT AGENT’S ACCOUNT AT THE DEPOSITARY TO WHICH YOU MUST DELIVER YOUR NEW GMR WARRANTS ON THE EXERCISE DATE AND (2) THE ADDRESS, PHONE NUMBER AND FACSIMILE NUMBER WHERE YOU CAN CONTACT THE WARRANT AGENT AND TO WHICH WARRANT EXERCISE NOTICES ARE TO BE SUBMITTED. NAME OF DIRECT PARTICIPANT IN THE DEPOSITARY:
(PLEASE PRINT)
ADDRESS:
CONTACT NAME:
ADDRESS:
TELEPHONE (INCLUDING INTERNATIONAL CODE):
FAX (INCLUDING INTERNATIONAL CODE):
SOCIAL SECURITY OR OTHER TAXPAYER IDENTIFICATION NUMBER (IF APPLICABLE):
ACCOUNT FROM WHICH NEW GMR WARRANTS ARE BEING DELIVERED:
DEPOSITARY ACCOUNT NO.
WARRANT EXERCISE NOTICES WILL ONLY BE VALID IF DELIVERED IN ACCORDANCE WITH THE INSTRUCTIONS SET FORTH IN THIS NOTIFICATION (OR AS OTHERWISE DIRECTED), MARKED TO THE ATTENTION OF “WARRANT EXERCISE”. WARRANT HOLDER DELIVERING NEW GMR
WARRANTS, IF OTHER THAN THE DIRECT DEPOSITARY PARTICIPANT DELIVERING THIS WARRANT EXERCISE NOTICE:
CONTACT NAME:
TELEPHONE (INCLUDING INTERNATIONAL CODE):
FAX (INCLUDING INTERNATIONAL CODE):
SOCIAL SECURITY OR OTHER TAXPAYER IDENTIFICATION NUMBER (IF APPLICABLE):
ACCOUNT TO WHICH THE SHARES OF NEW GMR COMMON STOCK ARE TO BE CREDITED:
DEPOSITARY ACCOUNT NO.
FILL IN FOR DELIVERY OF THE NEW GMR COMMON STOCK, IF OTHER THAN TO THE PERSON DELIVERING THIS WARRANT EXERCISE NOTICE:
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ADDRESS:
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CONTACT NAME:
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TELEPHONE (INCLUDING INTERNATIONAL CODE):
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FAX (INCLUDING INTERNATIONAL CODE):
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SOCIAL SECURITY OR OTHER TAXPAYER IDENTIFICATION NUMBER (IF APPLICABLE):
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NUMBER OF NEW GMR WARRANTS BEING EXERCISED:
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(ONLY ONE EXERCISE PER NEW GMR WARRANT EXERCISE NOTICE)
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Signature:
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Name:
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Capacity in which Signing:
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SIGNATURE GUARANTEED BY:
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Signatures must be guaranteed by a participant in a Medallion Signature Guarantee Program at a guarantee level acceptable to the Company’s Warrant Agent.
EXHIBIT C
FORM OF ASSIGNMENT
(To be executed only upon assignment of New GMR Warrant)
For value received, hereby sells, assigns and transfers unto the Assignee(s) named below the rights represented by such New GMR Warrant to purchase number of New GMR Common Stock listed opposite the respective name(s) of the Assignee(s) named below and all other rights of the Registered Holder under the within New GMR Warrant, and does hereby irrevocably constitute and appoint attorney, to transfer said New GMR Warrant on the books of the within-named Company with respect to the number of New GMR Common Stock set forth below, with full power of substitution in the premises:
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Name(s) of
Assignee(s)
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Address
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No. of New GMR Common Stock
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And if said number of New GMR Common Stock shall not be all the New GMR Common Stock represented by the New GMR Warrant, a new New GMR Warrant is to be issued in the name of said undersigned for the balance remaining of the New GMR Common Stock registered by said New GMR Warrant.
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Dated: , 20
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Signature
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Note: The above signature should correspond exactly with the name on the face of this New GMR Warrant
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Exhibit 10.10
CONFORMED COPY
EQUITY PURCHASE AGREEMENT
BY AND BETWEEN
GENERAL MARITIME CORP.,
NAVIG8 CRUDE TANKERS, INC.,
AND
EACH OF THE COMMITMENT PARTIES PARTY HERETO
Dated as of February 24, 2015
AS AMENDED BY THAT CERTAIN AMENDMENT
D
ated as of March 19, 2015
TABLE OF CONTENTS
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Page
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Article I
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DEFINITIONS
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2
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Section 1.1
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Definitions
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2
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Section 1.2
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Additional Defined Terms
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9
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Section 1.3
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Construction
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10
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Article II
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THE PURCHASE COMMITMENTS
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11
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Section 2.1
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Subscription Offering
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11
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Section 2.2
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The Purchase Commitment
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14
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Section 2.3
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Purchase Commitment Term
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15
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Section 2.4
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Purchase Premium
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15
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Section 2.5
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Payment of Purchase Premium
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16
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Section 2.6
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IPO Rights of the Commitment Parties
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16
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Section 2.7
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Certain Adjustments
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17
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Section 2.8
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Commitment Party Default
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19
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Article III
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REPRESENTATIONS AND WARRANTIES OF NAVIG8 AND GENMAR
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20
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Section 3.1
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Organization
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20
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Section 3.2
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Corporate Power and Authority
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20
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Section 3.3
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Execution and Delivery; Enforceability
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21
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Section 3.4
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Authorized and Issued Capital Stock
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21
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Section 3.5
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Issuance
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22
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Section 3.6
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Arm’s Length
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22
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Section 3.7
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Financial Statements
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22
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Section 3.8
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No Violation; Compliance with Laws
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22
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Section 3.9
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No Unlawful Payments
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23
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Section 3.10
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Compliance with Sanctions Laws
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23
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Section 3.11
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No Broker’s Fees
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23
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Section 3.12
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No Registration Rights
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23
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Section 3.13
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Investment Company Act
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23
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Article IV
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REPRESENTATIONS AND WARRANTIES OF EACH COMMITMENT PARTY
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23
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Section 4.1
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Organization
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Section 4.2
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Power and Authority
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23
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Section 4.3
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Execution and Delivery
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24
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Section 4.4
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No Conflict
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24
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Section 4.5
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No Registration
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24
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Section 4.6
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No Public Market
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25
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Section 4.7
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Legends
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25
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Section 4.8
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Purchasing Intent
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26
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Section 4.9
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Arm’s Length
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26
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Section 4.10
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No Broker’s Fees
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26
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Section 4.11
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Sufficient Funds
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26
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Article V
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ADDITIONAL COVENANTS
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26
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Section 5.1
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Commercially Reasonable Efforts
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26
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Section 5.2
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Registration Rights Agreement
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27
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Article VI
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CONDITIONS TO THE OBLIGATIONS OF EACH PARTY
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27
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Section 6.1
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Conditions to the Obligation of each Commitment Party
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27
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Section 6.2
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Waiver of Conditions to Obligation of Commitment Parties
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28
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Section 6.3
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Conditions to the Obligation of Gener8
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28
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Article VII
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INDEMNIFICATION AND CONTRIBUTION
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29
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Section 7.1
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Indemnification Obligations
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29
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Section 7.2
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Indemnification Procedure
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30
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Section 7.3
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Settlement of Indemnified Claims
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30
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Section 7.4
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Contribution
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31
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Section 7.5
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Treatment of Indemnification Payments
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31
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Article VIII
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TERMINATION
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31
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Section 8.1
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Termination Rights
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31
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Section 8.2
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Automatic Termination
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32
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Section 8.3
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Effect of Termination
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32
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Article IX
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GENERAL PROVISIONS
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33
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Section 9.1
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Notices
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33
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Section 9.2
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Assignment; Third Party Beneficiaries
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34
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Section 9.3
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Prior Negotiations; Entire Agreement
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34
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Section 9.4
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Governing Law; Venue
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34
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Section 9.5
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Waiver of Jury Trial
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35
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Section 9.6
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Counterparts
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35
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Section 9.7
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Amendments; Waivers; Certain Actions; Rights Cumulative
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35
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Section 9.8
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Headings
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35
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Section 9.9
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Specific Performance
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35
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Section 9.10
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Damages
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35
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Section 9.11
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No Reliance
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35
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Schedules
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Schedule 1
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Commitment Parties and Purchase Information
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ii
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Schedule 2
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Notice Addresses
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Schedule 3.3
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Conflicts
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Schedule 3.4(b)
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Authorized and Issued Capital Stock
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Schedule 3.5
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Issuance
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Schedule 3-A
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Avenue
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Schedule 3-B
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Blue Mountain
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Schedule 3-C
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Monarch
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Schedule 3-D
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Oaktree
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Schedule 3-E
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BlackRock
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Schedule 3-F
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Bamboula-Shun Lee
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Exhibits
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Exhibit A
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Form of Registration Rights Agreement
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Exhibit B
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Form of Pathfinder Letter
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Exhibit C
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Form of Shareholders Agreement
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Exhibit D
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Form of Joinder to the Equity Commitment Letter
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Appendices
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Appendix 1
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Subsidiaries of GenMar and Navig8
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iii
EQUITY PURCHASE AGREEMENT
THIS EQUITY PURCHASE AGREEMENT (this “
Agreement
”), dated as of February 24, 2015, is made by and among General Maritime Corporation, a Marshall Islands corporation (“
GenMar
”), Navig8 Crude Tankers, Inc., a Marshall Islands corporation (“
Navig8
”), on the one hand, and each Commitment Party set forth on
Schedule 1
hereto (such Commitment Parties as of the date hereof, and such Commitment Parties who become party to this Agreement in accordance with
Section 2.1
, each referred to herein, individually, as a “
Commitment Party
” and, collectively, as the “
Commitment Parties
”), on the other hand. GenMar, Navig8, and each Commitment Party is referred to herein, individually, as a “
Party
” and, collectively, as the “
Parties
.”
RECITALS
WHEREAS, simultaneously with the execution of this Agreement, GenMar, Gener8 Maritime Acquisition, Inc. (“
Merger Sub
”) and Navig8 are entering into that certain agreement and plan of merger (the “
Merger Agreement
”), pursuant to which Merger Sub will merge with and into Navig8, with Navig8 as the surviving corporation (the “
Merger
”);
WHEREAS, concurrently with and pursuant to the Merger, GenMar will be renamed Gener8 Maritime, Inc. (GenMar from and after the Closing, “
Gener8
”);
WHEREAS, the Parties believe it to be in the best interests of GenMar and Navig8, from and after the consummation of the Merger, to provide for the availability of additional capital under certain circumstances;
WHEREAS, the Commitment Parties desire to commit to purchase an aggregate of $125 million of Common Stock (as defined below) from Gener8 under the terms, and subject to the conditions, set forth in this Agreement;
WHEREAS, Gener8 may, in its sole discretion, sell an aggregate of up to $125 million of Common Stock (as defined below) to the Commitment Parties under the terms, and subject to the conditions, set forth in this Agreement;
WHEREAS, it is a condition to the obligations hereto of the Commitment Parties that the Merger be consummated; and
WHEREAS, contemporaneously with the consummation of the Merger, the Parties shall enter into a Registration Rights Agreement in the form attached hereto as
Exhibit A
(the “
Registration Rights Agreement
”), which Registration Rights Agreement shall apply to the Common Stock acquired pursuant to this Agreement;
NOW, THEREFORE, in consideration of the mutual promises, agreements, representations, warranties and covenants contained herein, each of the Parties hereby agrees as follows:
1
ARTICLE I
DEFINITIONS
Section 1.1
Definitions
. Except as otherwise expressly provided in this Agreement, or unless the context otherwise requires, whenever used in this Agreement (including any Exhibits and Schedules hereto), the following terms shall have the respective meanings specified therefor below:
“
5% Holder
” means any Person that beneficially owns 5% of the issued and outstanding Common Stock after giving effect to the Merger. As used in this Agreement, “
beneficial ownership
” means beneficial ownership as determined pursuant to Rule 13d-3 and 13d-5 of the Exchange Act.
“
Affiliate
” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, such Person as of the date on which, or at any time during the period for which, the determination of affiliation is being made;
provided
that no Commitment Party shall be deemed an Affiliate of GenMar or any of its Subsidiaries prior to the Closing, solely by virtue of its Purchase Commitment. For purposes of this definition, the term “control” (including the correlative meanings of the terms “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management policies of such Person, based on equity ownership or by contract.
“
Available Securities
” means the Purchase Shares that any Commitment Party fails to purchase as a result of a Commitment Party Default by such Commitment Party.
“
Avenue
” means the entities set forth on Schedule 3-A and any of their Affiliates that receive Common Stock of the Company pursuant to a Transfer from any such shareholder.
“
Bamboula-Shun Lee
” means the entities set forth on Schedule 3-F and any of their Affiliates that receive Common Stock of the Company pursuant to a Transfer from any such shareholder.
“
Bankruptcy and Equity Exception
” means the extent to which the enforceability of a contract may be limited by (a) bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and (b) general principles of equity.
“
BlackRock
” means the entities set forth on Schedule 3-E and any of their Affiliates that receive Common Stock of the Company pursuant to a Transfer from any such shareholder.
“
Blue Mountain
” means the entities set forth on Schedule 3-B and any of their Affiliates that receive Common Stock of the Company pursuant to a Transfer from any such shareholder.
“
Board
” means the board of directors of Gener8 from and after the Closing, as determined pursuant to the Shareholders Agreement.
2
“
Business Day
” means any day, other than a Saturday, Sunday or legal holiday on which banks are permitted to close in New York, New York.
“
Bylaws
” means the amended and restated by-laws of Gener8 as of the Closing Date.
“
Closing
” means the closing of the Merger.
“
Closing Date
” means the date that the Closing occurs.
“
Code
” means the Internal Revenue Code of 1986, as amended, and the regulations promulgated and the rulings issued thereunder.
“
Commencement Date
” means the date on which the Board offers the Purchase Offer, and duly distributes the Offer Participation Package.
“
Commitment Party Default
” means, with respect to any Commitment Party the failure by such Commitment Party to satisfy in full its Purchase Commitment in accordance with the terms of, and subject to the conditions set forth in, this Agreement.
“Commitment Percentage
” means, with respect to any Commitment Party, the commitment percentage appearing next to such Commitment Party’s name on
Schedule 1
hereto, as revised pursuant to
Section 2.1(h)
.
“
Common Stock”
means the common stock, par value $0.01 per share, of Gener8 and any equity securities issued or issuable in exchange for or with respect to such Common Stock by way of dividend, split, subdivision or combination of shares, or in connection with a reclassification, recapitalization, merger, consolidation or other reorganization.
“
Contract
” means any agreement, contract or instrument, including any loan, note, bond, mortgage, indenture, guarantee, deed of trust, license, franchise, commitment, lease, franchise agreement, letter of intent, memorandum of understanding or other obligation, and any amendments thereto, whether written or oral.
“
Convertible Securities
” shall mean any bonds, debentures, notes or other evidences of indebtedness, and any warrants, shares or any other securities convertible into, exercisable for, or exchangeable for Common Stock.
“
Cover Transaction
” means a circumstance in which Gener8 funds all or a portion of a Deficiency Amount through available cash and/or Gener8 arranges for the sale of any remaining Available Securities, Convertible Securities, or capital stock to any Person or through the incurrence of indebtedness.
“
Defaulting Commitment Party
” means, with respect to any Commitment Party Default, at any time, the Commitment Party that caused such Commitment Party Default that is continuing at such time.
3
“
Deficiency Amount
” means, an amount, calculated as of the first (1st) Business Day following the expiration of the Commitment Party Replacement Period (after giving effect to a Commitment Party Replacement), equal to the difference between (x) the aggregate Exercised Purchase Shares to be issued pursuant to a given Notice of Exercise
multiplied
by the Exercise Price and (y) the Satisfied Purchase Commitment Amount funded pursuant to such Notice of Exercise.
“
Eligible GenMar Equity Interestholder
” means a GenMar Equity Interestholder, except any Initial GenMar Interestholder, who acknowledges and confirms that it is an “accredited investor” as defined in Rule 501 under the Securities Act or a “qualified institutional buyer” as defined in Rule 144A under the Securities Act by duly returning a Pathfinder Letter to GenMar in accordance with
Section 2.1(a)
and information, including but not limited to the information referenced in Rule 506(c)(2)(ii) of Regulation D under the Securities Act, sufficient for GenMar to determine in its reasonable discretion that the delivery of the Purchase Shares, the Purchase Premium and any Additional Purchase Premium to such Eligible GenMar Equity Interestholder pursuant to this Agreement complies with applicable Law.
“
Eligible Navig8 Equity Interestholder
” means a Navig8 Equity Interestholder, except any Initial Navig8 Interestholder, who acknowledges and confirms that it is an “accredited investor” as defined in Rule 501 under the Securities Act or a “qualified institutional buyer” as defined in Rule 144A under the Securities Act by duly returning a Pathfinder Letter to GenMar in accordance with
Section 2.1(a)
and information, including but not limited to the information referenced in Rule 506(c)(2)(ii) of Regulation D under the Securities Act, sufficient for GenMar to determine in its reasonable discretion that the delivery of the Purchase Shares, the Purchase Premium and any Additional Purchase Premium to such Eligible Navig8 Equity Interestholder pursuant to this Agreement complies with applicable Law.
“
ERISA
” means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder.
“
ERISA Affiliate
” means a trade or business (whether or not incorporated) which is under common control with GenMar within the meaning of Section 414(b), (c), (m) or (o) of the Code.
“
Event
” means any event, development, occurrence, circumstance or change.
“
Exchange Act
” means the Securities Exchange Act of 1934, as amended, and the rules and regulation of the SEC thereunder.
“
Exercise Price
” means $12.914 per Purchase Share, as adjusted pursuant to
Section 2.7(a)
or
Section 2.7(c)
.
“
GenMar Available Oversubscription Amount
” means an amount equal to the GenMar Purchase Commitment Amount
minus
the aggregate Purchase Commitments of all Eligible GenMar Equity Interestholders up to and including such Eligible GenMar Equity Interestholders’ Pro Rata Commitment Amount,
plus
the aggregate Threshold Amounts of the Initial GenMar Commitment Parties
plus
the aggregate amount of additional reductions to an amount less than
4
any Initial GenMar Commitment Party’s Threshold Amount pursuant to
Section 2.1(g)
,
provided
, that the GenMar Available Oversubscription Amount shall not be less than zero.
“
GenMar Purchase Commitment Amount
” means $62.5 million.
“
GenMar Equity Interestholder
” means a Person who holds an Old GenMar Equity Interest on the Record Date.
“
GenMar Senior Secured Credit Facilities
” means (i) that certain Third Amended and Restated Credit Agreement, dated as of May 17, 2012, (as amended, modified and/or supplemented) by and among GenMar, General Maritime Subsidiary II Corporation, General Maritime Subsidiary Corporation as borrower, Arlington Tankers Ltd., each Subsidiary Guarantor (as defined therein), the Lenders (as defined therein) and Nordea Bank Finland Plc. as Administrative Agent and (ii) that certain Second Amended and Restated Credit Agreement, dated as of May 17, 2012, (as amended, modified and/or supplemented) by and among GenMar, General Maritime Subsidiary Corporation, General Maritime Subsidiary II Corporation, as borrower, Arlington Tankers Ltd., each Subsidiary Guarantor (as defined therein), the Lenders (as defined therein) and Nordea Bank Finland Plc. as Administrative Agent.
“
Governmental Entity
” means any U.S. or non-U.S., international, regional, federal, state, municipal or local governmental, judicial, administrative, legislative or regulatory authority, entity, instrumentality, agency, department, commission, court, or tribunal of competent jurisdiction (including any branch, department or official thereof).
“
Initial Purchase Commitment
” means, with respect to any Initial Commitment Party, the initial purchase commitment next to such Commitment Party’s name on
Schedule 1
hereto as of the date hereof.
“
Initial Commitment Parties
” means, collectively, the Initial GenMar Commitment Parties and the Initial Navig8 Commitment Parties.
“
Initial Commitment Percentage
” means, (i) with respect to any Initial GenMar Commitment Party, the initial commitment percentage appearing next to such Initial GenMar Commitment Party’s name on
Schedule 1-A
hereto and (ii) with respect to any Initial Navig8 Commitment Party, the initial commitment percentage appearing next to such Initial Navig8 Commitment Party’s name on
Schedule 1-B
hereto.
“
Initial GenMar Commitment Parties
” means Oaktree, Blue Mountain (as a GenMar Initial Commitment Party and as indicated on
Schedule 1-A
), BlackRock, Bamboula-Shun Lee and Twin Haven Special Opportunities Fund IV, L.P.
“
Initial Navig8 Commitment Parties
” means Avenue, Monarch and Blue Mountain (as a Navig8 Initial Commitment Party and as indicated on
Schedule 1-B
).
“
Knowledge of GenMar
” means the actual knowledge of Leo Vrondissis, Peter Georgiopoulos, John Tavlarios and Milt Gonzalez, in each case, without obligation of inquiry.
5
“
Knowledge of Navig8
” means the actual knowledge of Gary Brocklesby, Nicolas Busch, Daniel Chu, Jason Klopfer and Geir Karlsen, in each case, without obligation of inquiry.
“
Law
” means any law (statutory or common), statute, regulation, rule, convention, code or ordinance enacted, adopted, issued or promulgated by any Governmental Entity.
“
Legal Proceeding
” means any legal action, suit or proceeding.
“
Lien
” means any lease, lien, adverse claim, charge, option, right of first refusal, servitude, security interest, mortgage, pledge, deed of trust, easement, encumbrance, restriction on transfer, conditional sale or other title retention agreement, defect in title or other restrictions of a similar kind.
“
Material Adverse Effect
” means any change, event, effect, circumstance or occurrence that, individually or in the aggregate with all such other changes, events, effects, circumstances or occurrences, has had, or would reasonably be expected to have, a material adverse effect on (i) the business, assets, financial condition or results of operations of Gener8, taken as a whole, or (ii) the ability of Gener8 to consummate the transactions contemplated by this Agreement or materially delay the ability of Gener8 to consummate the transactions contemplated hereby; provided that the following shall not be deemed to constitute a “Material Adverse Effect”: any change, event, effect, circumstance or occurrence to the extent caused by or resulting from (A) changes, events or circumstances in prevailing economic, regulatory, political or market conditions in the United States or any other jurisdiction in which Gener8 has substantial business operations, (B) changes, events or circumstances occurring after the date hereof, affecting the industries in which Gener8 operates generally, (C) changes announced or effective after the date hereof in generally accepted accounting principles applicable to Gener8, (D) changes announced or effective after the date hereof, in applicable Laws, (E) the announcement and pendency of this Agreement and the transactions contemplated hereby, (F) any outbreak of major hostilities in which the United States is involved or any act of terrorism within the United States or directed against its facilities or citizens wherever located, (G) any other acts of war, sabotage, terrorism or natural disasters or (H) changes in the global financial or securities markets or general global economic or political conditions;
provided
, that, with respect to a matter described in any of the foregoing clauses (A) through (D), and (F) through (H), the effect of any such matter shall only be excluded to the extent that such matter does not have, or would not reasonably be expected to have, a disproportionate effect on Gener8 relative to other Persons operating in the industry in which the Gener8 operates. For the avoidance of doubt, the parties agree that the terms “material,” “materially” or “materiality” as used in this Agreement with an initial lower case “m” shall have their respective customary and ordinary meanings, without regard to the meanings ascribed to Material Adverse Effect in the prior sentence of this paragraph.
“
Material Operating Subsidiaries
” means, the Subsidiaries of GenMar and Navig8 set forth on Appendix 1.
“
Monarch
” means the entities set forth on Schedule 3-C and any of their Affiliates that receive Common Stock of the Company pursuant to a Transfer from any such shareholder.
6
“
Navig8 Available Oversubscription Amount
” means an amount equal to the Navig8 Purchase Commitment Amount
minus
the aggregate Purchase Commitments of all Eligible Navig8 Equity Interestholders up to and including such Eligible Navig8 Equity Interestholders’ Pro Rata Commitment Amount,
plus
the aggregate Threshold Amounts of the Initial Navig8 Commitment Parties
plus
the aggregate amount of additional reductions to an amount less than any Initial Navig8 Commitment Party’s Threshold Amount pursuant to
Section 2.1(g)
,
provided
, that the Navig8 Available Oversubscription Amount shall not be less than zero.
“
Navig8 Purchase Commitment Amount
” means $62.5 million.
“
Navig8 Equity Interestholder
” means a Person who holds an Old Navig8 Equity Interest on the Record Date.
“
Oaktree
” means the entities set forth on Schedule 3-D and any of their Affiliates that receive Common Stock of the Company pursuant to a Transfer from any such shareholder.
“
Offer Participation Package
” means the documents delivered by GenMar to all Eligible GenMar Equity Interestholders and Eligible Navig8 Equity Interestholders pursuant to which Eligible GenMar Equity Interestholders and Eligible Navig8 Equity Interestholders may elect to participate in the Purchase Offer which shall include documents eliciting information, including but not limited to the information referenced in Rule 506(c)(2)(ii) of Regulation D under the Securities Act, sufficient for GenMar to determine in its reasonable discretion that the delivery of the Purchase Shares, the Purchase Premium and any Additional Purchase Premium to such Eligible GenMar Equity Interestholders and Eligible Navig8 Equity Interestholders pursuant to this Agreement complies with applicable Law.
“
Old GenMar Equity Interests
” means any shares of GenMar’s common stock, par value $0.01 per share, issued and outstanding as of the Record Date.
“
Old Navig8 Equity Interests
” means any shares of Navig8’s common stock, par value $0.01 per share, issued and outstanding as of the Record Date.
“
Order
” means any judgment, order, award, injunction, writ, permit, license or decree of any Governmental Entity or arbitrator.
“
Oversubscription Allocation
” means: (i) in respect of any Eligible GenMar Equity Interestholder that is a Participating Interestholder, an amount equal to such Person’s Oversubscription Amount multiplied by a fraction, the numerator of which is the GenMar Available Oversubscription Amount and the denominator of which is the aggregate Oversubscription Amounts of all Eligible GenMar Equity Interestholders,
provided
that the fraction shall not exceed one and (ii) in respect of any Eligible Navig8 Equity Interestholder that is a Participating Interestholder, an amount equal to such Person’s Oversubscription Amount multiplied by a fraction, the numerator of which is the Navig8 Available Oversubscription Amount and the denominator of which is the aggregate Oversubscription Amounts of all Eligible Navig8 Equity Interestholders,
provided
that the fraction shall not exceed one.
“
Pathfinder Letter
” means a letter substantially in the form of
Exhibit B
hereto.
7
“
Person
” means an individual, firm, corporation (including any non-profit corporation), partnership, limited liability company, joint venture, associate, trust, Governmental Entity or other entity or organization.
“
Pro Rata Ownership Interest
” means, (i) with respect to any Initial GenMar Commitment Party or Eligible GenMar Equity Interestholder, such Person’s share of the pro rata equity ownership in GenMar at 5:00 P.M. (New York City Time) on the Record Date and (ii) with respect to any Initial Navig8 Commitment Party or Eligible Navig8 Equity Interestholder, such Person’s share of the pro rata equity ownership in Navig8 at 5:00 P.M. (New York City Time) on the Record Date.
“
Pro Rata Commitment Amount
” means, (i) with respect to any Initial GenMar Commitment Party or Eligible GenMar Equity Interestholder, an amount equal to the GenMar Purchase Commitment Amount multiplied by such Person’s Pro Rata Ownership Interest and (ii) with respect to any Initial Navig8 Commitment Party or Eligible Navig8 Equity Interestholder, an amount equal to the Navig8 Purchase Commitment Amount multiplied by such Person’s Pro Rata Ownership Interest.
“
Purchase Commitment Extension Notice
” means written notice delivered by the Board to each Commitment Party informing the Commitment Parties of the Board’s intention to exercise the Purchase Commitment Term Extension.
“
Purchase Payment Date
” means the date designated by the Board in a Purchase Notice of Exercise on which Purchase Shares are to be sold and issued by Gener8 and purchased by the Commitment Parties.
“
Qualified IPO
” means a firm commitment underwritten public offering pursuant to an effective registration statement filed under the Securities Act, covering the offer and sale of Common Stock for the account of Gener8 in which the aggregate public offering price (before deduction of underwriters’ discounts and commissions) equals or exceeds $200,000,000;
provided
that such threshold amount shall be reduced dollar for dollar by the dollar value of any issuances of common stock or any other equity securities , including any capital stock that meets the definition of “Qualified Preferred Stock” in the GenMar Senior Secured Credit Facilities in effect as of the date hereof or any similar definition in future credit facilities of GenMar, issued by Gener8 following the date hereof.
“
Related Party
” means, with respect to any Person, any former, current or future director, officer, agent, Affiliate, employee, general or limited partner, member, manager or stockholder of such Person.
“
Representatives
” means, with respect to any Person, such Person’s directors, officers, employees, investment bankers, attorneys, accountants, advisors and other representatives.
“
Requisite Initial Commitment Parties
” means two-thirds (2/3) of the Initial Commitment Parties, including (x) at least one of Avenue and Monarch and (y) at least one of Oaktree and BlackRock.
8
“
Satisfied Purchase Commitment Amount
” means an amount equal to the number of Purchase Shares actually issued and sold by the Board and paid for by the Commitment Parties
multiplied
by the Exercise Price.
“
SEC
” means the U.S. Securities and Exchange Commission.
“
Securities Act
” means the Securities Act of 1933, as amended, and the rules and regulations of the SEC thereunder.
“
Shareholders Agreement
” means that certain Shareholders Agreement, to be effective as of the Closing Date, by and among Gener8 and the Initial Commitment Parties listed on Schedule A thereto, in the form attached hereto as
Exhibit C
.
“
Subsidiary
” means, with respect to any Person, any corporation, partnership, joint venture or other legal entity as to which such Person (either alone or through or together with any other subsidiary), (i) owns, directly or indirectly, more than fifty percent (50%) of the stock or other equity interests, (ii) has the power to elect a majority of the board of directors or similar governing body or (iii) has the power to direct the business and policies.
“
Takeover Statute
” means any restrictions contained in any “fair price,” “moratorium,” “control share acquisition,” “business combination” or other similar anti-takeover statute or regulation.
“
Threshold Amount
” means, in respect of any Initial GenMar Commitment Party of Initial Navig8 Commitment Party the lesser of such Person’s (x) Pro Rata Ownership Interest and (y) Initial Commitment Percentage.
“
Transfer
” means to sell, transfer, assign, pledge, hypothecate, participate, donate or otherwise encumber or dispose of. The terms “
Transferee
,” “
Transferred
,” and other forms of the word “
Transfer
” shall have correlative meanings.
“
Vessel
” means any vessel owned by GenMar, Navig8 or their respective Material Operating Subsidiaries.
Section 1.2
Additional Defined Terms
. In addition to the terms defined in Section 1.1, additional defined terms used herein shall have the respective meanings assigned thereto in the Sections indicated in the table below.
|
Additional Purchase Premium
|
|
Section 2.4
|
|
Calculated Securities
|
|
Section 2.7(b)
|
|
Commitment Party
|
|
Recitals
|
|
Commitment Party Replacement
|
|
Section 2.6(a)
|
|
Commitment Party Replacement Period
|
|
Section 2.6(a)
|
|
Cover Transaction Period
|
|
Section 2.8(c)
|
|
Exercised Purchase Shares
|
|
Section 2.2(b)
|
|
Participating Interestholder
|
|
Section 2.1(b)
|
|
HSR Act
|
|
Section 5.1(a)
|
|
Indemnified Claim
|
|
Section 7.2
|
9
|
Indemnified Person
|
|
Section 7.1
|
|
Indemnifying Parties
|
|
Section 7.1
|
|
Indemnifying Party
|
|
Section 7.1
|
|
Initial Commitment Party Oversubscription
|
|
Section 2.1(f)
|
|
IPO
|
|
Section 2.6
|
|
IRS
|
|
Section 6.1(m)
|
|
Losses
|
|
Section 7.1
|
|
Maximum Reduction Amount
|
|
Section 2.1(f)
|
|
Merger
|
|
Recitals
|
|
Minimum Commitment
|
|
Section 2.1(g)
|
|
Minimum Commitment Deadline Date
|
|
Section 2.1(g)
|
|
Minimum Notice
|
|
Section 2.1(g)
|
|
Notice of Exercise
|
|
Section 2.2
|
|
Offering Period
|
|
Section 2.1(b)
|
|
Outside Date
|
|
Section 8.2(b)
|
|
Oversubscription Amount
|
|
Section 2.1(f)
|
|
Oversubscription Notice
|
|
Section 2.1(g)
|
|
Public Price
|
|
Section 2.6
|
|
Purchase Commitment
|
|
Section 2.2(a)
|
|
Purchase Commitment Term
|
|
Section 2.3
|
|
Purchase Commitment Term Extension
|
|
Section 2.3
|
|
Purchase Offer
|
|
Section 2.2
|
|
Purchase Premium
|
|
Section 2.4
|
|
Purchase Shares
|
|
Section 2.2(a)
|
|
Registration Rights Agreement
|
|
Recitals
|
|
Replacing Commitment Parties
|
|
Section 2.6(a)
|
|
Rights Expiration Time
|
|
Section 2.1(b)
|
|
Threshold Amount
|
|
Section 2.1(g)
|
Section 1.3
Construction
. In this Agreement, unless the context otherwise requires:
(a)
references to Articles, Sections, Exhibits and Schedules are references to the articles and sections or subsections of, and the exhibits and schedules attached to, this Agreement;
(b)
the descriptive headings of the Articles and Sections of this Agreement are inserted for convenience only, do not constitute a part of this Agreement and shall not affect in any way the meaning or interpretation of this Agreement;
(c)
references in this Agreement to “writing” or comparable expressions include a reference to a written document transmitted by means of electronic mail in portable document format (pdf), facsimile transmission or comparable means of communication;
(d)
words expressed in the singular number shall include the plural and vice versa; words expressed in the masculine shall include the feminine and neuter gender and vice versa;
10
(e)
the words “hereof”, “herein”, “hereto” and “hereunder”, and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole, including all Exhibits and Schedules attached to this Agreement, and not to any provision of this Agreement;
(f)
the term this “Agreement” shall be construed as a reference to this Agreement as the same may have been, or may from time to time be, amended, modified, varied, novated or supplemented;
(g)
“include”, “includes” and “including” are deemed to be followed by “without limitation” whether or not they are in fact followed by such words;
(h)
references to “day” or “days” are to calendar days;
(i)
references to “the date hereof” means as of the date of this Agreement;
(j)
unless otherwise specified, references to a statute means such statute as amended from time to time and includes any successor legislation thereto and any regulations promulgated thereunder in effect on the date of this Agreement;
(k)
references to “dollars” or “$” are to United States of America dollars;
(l)
references to “GenMar” are to General Maritime Corporation prior to the Closing Date, and to Gener8 Maritime, Inc. on and after the Closing Date; and
(m)
references to “Gener8” are to General Maritime Corporation prior to the Closing Date, and to Gener8 Maritime, Inc. on and after the Closing Date.
ARTICLE II
THE PURCHASE COMMITMENTS
Section 2.1
Subscription Offering
(a)
Promptly following the execution of this Agreement, GenMar and Navig8 shall distribute the Pathfinder Letter to their respective shareholders as of February 26, 2015 (the “
Record Date
”) (other than the Initial Commitment Parties). Any such shareholder who returns its Pathfinder Letter to GenMar by 12:00 p.m. (New York City time) on the thirteenth Business Day following the date the Pathfinder Letters are mailed, or such other date as GenMar and Navig8 shall agree in writing, shall be deemed eligible to receive a Purchase Offer as further provided in this Section 2.1.
(b)
On the Commencement Date, which shall occur not more than fifteen (15) Business Days following the mailing of the Pathfinder Letter, GenMar shall deliver to each Eligible GenMar Equity Interestholder and each Eligible Navig8 Equity Interestholder an Offer Participation Package offering each Eligible GenMar Equity Interestholder and each Eligible Navig8 Equity Interestholder the opportunity to subscribe for a Purchase Commitment (the “
Purchase Offer
”). The Purchase Offer may not be assigned or Transferred by any Eligible GenMar Equity Interestholder or Eligible Navig8 Equity Interestholder.
11
(c)
The Offer Participation Package shall include, and any Eligible GenMar Equity Interestholder or Eligible Navig8 Equity Interestholder that elects to accept and participate in the Purchase Offer (each, a “
Participating Interestholder
”) shall execute and return to GenMar a joinder to this Agreement substantially in the form attached hereto as
Exhibit D
which shall include the number of shares of Common Stock such Participating Interestholder desires to purchase. Each Participating Interestholder that is a 5% Holder shall execute and return to GenMar:
(i)
a signature page to the Registration Rights Agreement pursuant to which such Participating Interestholder shall become a party thereto; and
(ii)
a signature page to the Shareholders Agreement pursuant to which such Participating Interestholder shall become a party thereto.
(d)
Each Eligible GenMar Equity Interestholder or Eligible Navig8 Equity Interestholder may only elect to participate in the Purchase Offer during the period (the “
Offering Period
”) beginning on the Commencement Date and ending on the time and date (the “
Offering Expiration Time
”) that is the later of:
(i)
(i) 5:00 P.M. (New York City time) on the date that is the earlier of (x) eight (8) Business Days after the Commencement Date and (y) two (2) Business Days prior to the Closing Date; and
(ii)
such other time and date as may be determined by GenMar, on the one hand, and the Requisite Initial Commitment Parties, on the other hand,
by returning to GenMar before the Offering Expiration Time a duly executed Offer Participation Package electing to participate in the Purchase Offer.
(e)
Once an Eligible GenMar Equity Interestholder or Eligible Navig8 Equity Interestholder validly elects to participate in the Purchase Offer by returning the Offer Participation Package in accordance with
Section 2.1(c)-(d)
, such participating Eligible GenMar Equity Interestholder or Eligible Navig8 Equity Interestholder shall be deemed a Commitment Party under this Agreement, and such election may not be revoked.
(f)
The Purchase Offer shall provide that each Participating Interestholder that is an Eligible GenMar Equity Interestholder may commit to fund a Purchase Commitment in an amount less than or equal to such Participating Interestholder’s Pro Rata Commitment Amount by indicating such amount on the executed form of joinder to this Agreement. Each Participating Interestholder may indicate on its executed form of joinder to this Agreement a desire to fund a Purchase Commitment in excess of such Participating Interestholder’s Pro Rata Commitment Amount (such excess, the “
Oversubscription Amount
”). Each Participating Interestholder whose duly executed joinder indicates a commitment to fund a Purchase Commitment in an amount less than or equal to such Participating Interestholder’s Pro Rata Commitment Amount shall be obligated to purchase a number of shares of Common Stock equal to the amount of such commitment divided by the Exercise Price. Each Participating Interestholder whose duly executed joinder indicates a commitment to fund an Oversubscription Amount shall be obligated to purchase a number of shares of Common Stock equal to (i) such Participating Interestholder’s Pro Rata
12
Commitment Amount plus such Participating Interestholder’s Oversubscription Allocation divided by (ii) the Exercise Price
provided
that any Participating Interestholder’s Oversubscription Allocation shall be subject to the consent of each of GenMar and Navig8, which consents (i) may take into account such Participating Interestholder’s creditworthiness and (ii) shall not be unreasonably withheld, delayed or conditioned.
(g)
The Purchase Commitment of each Initial Commitment Party whose Initial Commitment Percentage is greater than such Initial Commitment Party’s Pro Rata Ownership Interest (such amount, an “
Initial Commitment Party Oversubscription
”) shall be reduced as follows (but, for the avoidance of doubt, in no event shall any Initial Commitment Party’s Initial Purchase Commitment be reduced below zero):
(i)
the Purchase Commitment of each Initial GenMar Commitment Party whose Initial Commitment Percentage is greater than such Initial GenMar Commitment Party’s Pro Rata Ownership Interest shall be reduced by an amount equal to (x) the aggregate Purchase Commitments of the participating Eligible GenMar Equity Interestholders
multiplied
by (y) a fraction, the numerator of which is such Initial Commitment Party’s Oversubscription and the denominator of which is the aggregate amount of Initial Commitment Party Oversubscriptions of all Initial GenMar Commitment Parties; and
(ii)
the Purchase Commitment of each Initial Navig8 Commitment Party whose Initial Commitment Percentage is greater than such Initial Navig8 Commitment Party’s Pro Rata Ownership Interest shall be reduced by an amount equal to (x) the aggregate Purchase Commitments of the participating Eligible Navig8 Equity Interestholders
multiplied
by (y) a fraction, the numerator of which is such Initial Commitment Party’s Oversubscription and the denominator of which is the aggregate amount of Initial Commitment Party Oversubscriptions of all Initial Navig8 Commitment Parties,
provided
, that if, after calculating the reductions described in subsections (i) and (ii) above, the Oversubscription Amount of any Eligible GenMar Equity Interestholder or any Eligible Navig8 Equity Interestholder is unsatisfied, Gener8 shall promptly deliver a written notice (an “
Oversubscription Notice
”) to all Initial GenMar Commitment Parties or Initial Navig8 Commitment Parties (as applicable) of the aggregate amount of such unsatisfied Commitment Amounts and offer the Initial GenMar Commitment Parties or the Initial Navig8 Commitment Parties (as applicable) the option to further reduce their respective Purchase Commitments. Each Initial Commitment Party so notified shall, no later than five (5) Business Days after delivery of the Oversubscription Notice (“
Minimum Commitment Deadline Date
”), deliver a notice to GenMar or Gener8, as applicable, (“
Minimum Commitment Notice
”) indicating (i) whether such Initial Commitment Party agrees to reduce its Purchase Commitment and (ii) if such Initial Commitment Party agrees to such further reduction, the maximum reduction in the amount of its Purchase Commitment to which it so agrees (the “
Maximum Reduction Amount
”). The amount of any Initial Commitment Party’s Purchase Commitment to which such Initial Commitment Party does not agree to further reduce is referred to as the “
Minimum Commitment.
” Upon receipt by GenMar of a Minimum Commitment Notice from an Initial Commitment Party agreeing to further reduce its Purchase Commitment, such Initial Commitment Party’s Purchase Commitment shall
13
be reduced by an amount equal to (i) if such Initial Commitment Party is an Initial GenMar Commitment Party the aggregate Oversubscription Amount of all Eligible GenMar Equity Interestholders multiplied by a fraction the numerator of which is such Initial GenMar Commitment Party’s Maximum Reduction Amount and the denominator of which is the aggregate Maximum Reduction Amounts of all Initial GenMar Commitment Parties and (ii) if such Initial Commitment Party is an Initial Navig8 Commitment Party the aggregate Oversubscription Amount of all Eligible Navig8 Equity Interestholders multiplied by a fraction the numerator of which is such Initial Navig8 Commitment Party’s Maximum Reduction Amount and the denominator of which is the aggregate Maximum Reduction Amounts of all Initial Navig8 Commitment Parties, but in no event shall any Initial Commitment Party’s Purchase Commitment be reduced to an amount less than its Minimum Commitment. In the event GenMar does not receive a Minimum Commitment Notice from an Initial Commitment Party prior to the Minimum Commitment Deadline Date, or an Initial Commitment Party’s Minimum Notice indicates that such Initial Commitment Party elects not to agree to reduce its Purchase Commitment, such Initial Commitment Party’s Purchase Commitment shall be its Threshold Amount.
(h)
GenMar shall revise
Schedule 1
and
Schedule 2
hereto promptly after the Offering Expiration Time or the Minimum Commitment Deadline Date (if applicable) as necessary to reflect the participation of any Participating Interestholders and any change to any Initial Commitment Party’s information, including in accordance with clauses (f) or (g) above, and such revised
Schedule 1
and
Schedule 2
shall be deemed definitive and binding upon the Parties absent manifest error.
(i)
GenMar shall promptly after the Offering Expiration Time or the Minimum Commitment Deadline Date (if applicable) notify each Commitment Party of its Purchase Commitment and Commitment Percentage.
Section 2.2
The Purchase Commitment
.
(a)
On the basis of the representations and warranties set forth herein, and subject to the satisfaction of the conditions set forth in
Article VI
hereof, the Board may request in writing on fifteen (15) Business Days’ notice (a “
Notice of Exercise
”) that each Commitment Party, severally and not jointly, subscribe for and purchase a number of shares of Common Stock less than or equal to, for each Commitment Party (a) the number of shares of each Commitment Party’s outstanding Purchase Commitment, as set forth on
Schedule 1
,
divided
by (b) the Exercise Price (the aggregate number of shares in all Notices of Exercise with respect to each Commitment Party, its “
Purchase Shares
” and such obligation, its “
Purchase Commitment
”). For the avoidance of doubt, the Purchase Commitment of each Commitment Party shall be determined by the Board by reference to each Commitment Party’s Commitment Percentage. The Notice of Exercise shall include a certification from Gener8 as to the satisfaction of the conditions set forth in
Article VI
. The Board may deliver a Notice of Exercise at any time prior to the expiration of the Purchase Commitment Term or the Purchase Commitment Term Extension for the subscription and purchase of shares of Common Stock after the expiration of the Purchase Commitment Term or the Purchase Commitment Term Extension, as applicable, and the obligations of the Commitment Parties shall not expire or terminate until the later of (i) the expiration of the Purchase Commitment Term or the Purchase Commitment Term Extension and (ii) the consummation of the purchase and sale of shares of Common Stock pursuant to this
Section 2.2(a)
.
14
(b)
The Board, in its sole discretion, may, from time to time, request each Commitment Party to purchase its respective Purchase Shares in one, two or three tranches, which election shall be made and indicated by the Board in each Notice of Exercise requesting such purchase (such number of shares to be purchased with respect to each Commitment Party, its “
Exercised Purchase Shares
”).
(c)
Gener8 agrees to sell and issue to each Commitment Party such Exercised Purchase Shares and each Commitment Party agrees, severally and not jointly, to subscribe for and purchase such Exercised Purchase Shares on the Purchase Payment Date designated in the corresponding Notice of Exercise.
(d)
On any Purchase Payment Date:
(i)
each Commitment Party shall deposit an amount of cash equal to (x) its Exercised Purchase Shares multiplied by (y) the Exercise Price, into an account to be designated by the Board in the corresponding Notice of Exercise; and, promptly following receipt of such cash payment;
(ii)
Gener8 shall deliver to each Commitment Party its Exercised Purchase Shares in the form of newly-issued shares of fully paid and non-assessable Common Stock (which shall be subject to the restrictions set forth herein).
Section 2.3
Purchase Commitment Term
. Each Purchase Commitment shall commence on the Closing Date and terminate on the date that is six (6) months from the Closing Date (the “
Purchase Commitment Term
”) or the date of a Qualified IPO, whichever is earlier. The Board shall have the option of extending the Purchase Commitment Term for one (1) additional 6-month period (such additional 6-month period, the “
Purchase Commitment Term Extension
”) by delivering a Purchase Commitment Extension Notice to each Commitment Party no later than fifteen (15) days prior to the expiration of the Purchase Commitment Term, subject to the payment of the Additional Purchase Premium. Upon payment of the Additional Purchase Premium, the Board shall promptly give written notice of such Purchase Commitment Term Extension to each Commitment Party.
Section 2.4
Purchase Premium
. Subject to
Section 2.5
hereof, as consideration for the right to sell the Purchase Shares to the Commitment Parties and the other agreements of the Commitment Parties in this Agreement as of the date hereof, Gener8 shall, subject to
Section 2.8(b)
, at the Closing pay or cause to be paid to each Commitment Party or its designee (provided that any such designee demonstrates, and Gener8, in its sole discretion, has verified that it is “accredited investor” as defined in Rule 501 under the Securities Act or a “qualified institutional buyer” as defined in Rule 144A under the Securities Act) a nonrefundable aggregate put premium equal to 5% of the shares of Common Stock such Commitment Party is obligated to purchase pursuant to
Section 2.1
in the form of shares of fully paid, non-assessable Common Stock (the “
Purchase Premium
”). In the event of a Purchase Commitment Term Extension, Gener8 shall, subject to
Section 2.8(d)
, within fifteen (15) days of delivery of the Purchase Commitment Extension Notice pay or cause to be paid to each Commitment Party or its designee (provided that any such designee demonstrates , and Gener8, in its sole discretion, has verified that it is “accredited investor” as defined in Rule 501 under the Securities Act or a “qualified institutional
15
buyer” as defined in Rule 144A under the Securities Act) a nonrefundable put premium equal to 7.5% of the shares of Common Stock such Commitment Party remains obligated to purchase as of the date of the delivery of such shares of Common Stock payable in the form of shares of fully paid, non-assessable Common Stock (the “
Additional Purchase Premium
”). The provisions for the payment of the Purchase Premium are an integral part of the transactions contemplated by this Agreement and without these provisions each Commitment Party would not have entered into this Agreement.
Section 2.5
Payment of Purchase Premium
. The Purchase Premium and the Additional Purchase Premium, if applicable, shall be paid by Gener8 to each Commitment Party as set forth in
Section 2.4
. Gener8 shall retain a security interest in the Common Stock issued in payment of the Purchase Premium and any Additional Purchase Premium until the termination of the corresponding Purchase Commitment as provided in
Article VIII
, and Gener8 may cancel any such Common Stock issued to a Commitment Party that becomes a Defaulting Commitment Party, as further described in
Section 2.8(b)
. The Common Stock issued in payment of the Purchase Premium and any Additional Purchase Premium may not be Transferred, in whole or in part, prior to the full exercise or termination of a Commitment Party’s Purchase Commitment in accordance with this Agreement. The Purchase Premium and any Additional Purchase Premium shall not be paid to any Commitment Party, and none of the Commitment Parties shall have any obligation to fund its respective Purchase Commitment, in the event that the Closing does not occur.
Section 2.6
IPO Rights of the Commitment Parties
. If, prior to the expiration of the Purchase Commitment Term or, in the event Gener8 has elected to extend the Purchase Commitment Term pursuant to Section 2.3, the Purchase Commitment Term Extension, the Purchase Commitment of any Commitment Party has not been exercised in full at the time of the first underwritten public offering of shares of Common Stock of Gener8 (the “
IPO
”), and the price per share to the public in the IPO (the “
Public Price
”) is less than the Exercise Price, each Commitment Party shall be entitled to purchase shares of Common Stock directly from Gener8 in a private placement transaction at a price per share equal to the Public Price as promptly as practicable after the pricing of the IPO in such amount as will result in an aggregate purchase price equal to the amount of its then remaining unexercised Purchase Commitment;
provided
that such Commitment Party confirms to Gener8 that the information provided in its Pathfinder Letter and Offer Participation Package in respect of its status as an “accredited investor” or “qualified institutional buyer” remains true and correct as of the time of such purchase and it is able to make customary private placement representations and covenants at the time of purchase,
provided further
that upon Gener8’s request such Commitment Party shall provide information, including but not limited to the information referenced in Rule 506(c)(2)(ii) of Regulation D under the Securities Act, sufficient for Gener8 to determine in its reasonable discretion that the delivery of shares of Common Stock to such Commitment Party pursuant to this Section 2.6 complies with applicable Law. For the avoidance of doubt, no underwriter fee shall be paid by any Commitment Party on purchases of Common Stock pursuant to this Section 2.6. Gener8 and the Requisite Initial Commitment Parties shall mutually determine the procedures pursuant to which the rights of the Commitment Parties may be exercised in accordance with this Section 2.6. The Requisite Initial Commitment Parties will have the sole and exclusive right to act on behalf of the Commitment Parties with respect to the amendment, waiver or cancellation of any rights granted to the Commitment Parties pursuant to this Section 2.6, and their determinations will be binding upon all Commitment Parties;
provided
, that no Commitment Party will be treated in a materially
16
adverse and disproportionate manner from any other Commitment Party (except as required by law).
Section 2.7
Certain Adjustments
.
(a)
In the event of any stock or unit split, spin-off, share or unit combination, reclassification, change of the legal form, recapitalization, liquidation, dissolution, reorganization, merger (other than the Merger), payment of a dividend or distribution (other than a cash dividend or distribution paid as part of a regular dividend or distribution program) or other similar transaction or occurrence which affects the equity securities of Gener8 or any of its Material Operating Subsidiaries or the value thereof, the Board shall in good faith adjust the number and kind of equity interests subject to the Purchase Commitments and/or the Exercise Price, as it deems reasonably necessary to address, on an equitable basis and subject to applicable Law and the effect of the applicable event on the Purchase Commitment,
provided
that (i) the aggregate amount of the unexercised Purchase Commitments of all Commitment Parties remains the same and (ii) notwithstanding anything contained herein to the contrary, no adjustments set forth in this
Section 2.7
shall apply to adjust the number and kind of equity interests subject to the Purchase Commitments and/or the Exercise Price with respect to any Common Stock issued prior to the event giving rise to such adjustment.
(b)
In the event that Gener8 issues any (i) common stock or (ii) any capital stock that meets the definition of “Qualified Preferred Stock” in the GenMar Senior Secured Credit Facilities in effect as of the date hereof or any similar definition in future credit facilities of GenMar (other than in a Qualified IPO), any gross proceeds received from any such issuances of common stock or capital stock exceeding, individually or in the aggregate with all prior such issuances, seventy-five million dollars ($75,000,000) will reduce the aggregate outstanding unexercised Purchase Commitments dollar for dollar allocated pro rata among each Purchase Commitment,
provided
that no Purchase Commitment shall be reduced below zero.
(c)
After the date hereof, if GenMar or Gener8 shall issue or sell any shares of Common Stock (as actually issued or, pursuant to
Section 2.7(e)
below, deemed to be issued) for a consideration per share less than the Exercise Price, then immediately upon such issue or sale the Exercise Price shall be reduced to a price (calculated to the nearest cent) determined by multiplying such prior Exercise Price by a fraction, the numerator of which shall be the number of shares of “Calculated Securities” (defined below) outstanding immediately prior to such issue or sale plus the number of shares of Common Stock which the aggregate consideration received by GenMar or Gener8 for the total number of shares of Common Stock so issued or sold would purchase at such prior Exercise Price, and the denominator of which shall be the number of shares of Calculated Securities outstanding immediately prior to such issue or sale plus the number of shares of Common Stock so issued or sold,
provided
that no adjustment to the Exercise Price with respect to any particular issuance of Common Stock shall be made pursuant to this
Section 2.7(c)
to the extent an adjustment to the Exercise Price has been made pursuant to
Section 2.7(a)
with respect to such issuance of Common Stock. “
Calculated Securities
” means (i) all shares of Common Stock actually outstanding; and (ii) all shares of Common Stock issuable upon exercise of the then unexercised Purchase Commitments (without giving effect to any adjustments to the Exercise Price of any Purchase Commitment as a result of such issuance).
17
(d)
For the purposes of
Section 2.7(c)
above, none of the following issuances shall be considered the issuance or sale of Common Stock:
(i)
the issuance of Common Stock upon the conversion of any then-outstanding Convertible Securities;
(ii)
the issuance of shares of Common Stock (or options to purchase shares of Common Stock) to employees, directors or consultants of Gener8 under any stock plan set forth on Section 5.2(b) of the Parent Disclosure Schedules or any stock plan approved by the Board following the Closing (not including the reissuance of shares repurchased by Gener8 from employees or consultants of Gener8);
(iii)
the issuance of shares of Common Stock or Convertible Securities to lenders, financial institutions, equipment lessors, or real estate lessors to Gener8 in connection with a bona fide borrowing or leasing transaction approved by the Board; and
(iv)
the issuance of shares of Common Stock upon the conversion of any securities described in
Section 2.7(b)
.
(e)
For the purposes of
Section 2.7(c)
above, the following subclauses (i) through (iii), inclusive, shall also be applicable:
(i)
In case at any time GenMar or Gener8 shall grant any rights to subscribe for, or any rights or options to purchase, Convertible Securities, whether or not such rights or options or the right to convert, exercise or exchange any such Convertible Securities are immediately exercisable, and the price per share for which Common Stock is issuable upon the exercise of such rights or options and upon conversion, exercise or exchange of such Convertible Securities (determined by dividing (x) the total amount, if any, received or receivable by GenMar or Gener8 as consideration for the granting of such rights or options, plus the minimum aggregate amount of additional consideration payable to GenMar or Gener8 upon the exercise of such rights or options, plus the minimum aggregate amount of additional consideration, if any, payable upon the issue or sale of such Convertible Securities and upon the conversion, exercise or exchange thereof, by (y) the total maximum number of shares of Common Stock issuable upon the exercise of such rights or options or upon the conversion or exchange of all such Convertible Securities issuable upon the exercise of such rights or options) shall be less than the Exercise Price in effect immediately prior to the time of the granting of such rights or options, then the total maximum number of shares of Common Stock issuable upon the exercise of such rights or options or upon conversion or exchange of the total maximum amount of such Convertible Securities issuable upon the exercise of such rights or options shall (as of the date of granting of such rights or options) be deemed to be outstanding and to have been issued for such price per share.
(ii)
In case at any time GenMar or Gener8 shall issue or sell any Convertible Securities, whether or not the rights to exchange or convert thereunder are immediately exercisable, and the price per share for which Common Stock is issuable upon such
18
conversion or exchange (determined by dividing (x) the total amount received or receivable by GenMar or Gener8 as consideration for the issue or sale of such Convertible Securities, plus the minimum aggregate amount of additional consideration, if any, payable to GenMar or Gener8 upon the conversion or exchange thereof, by (y) the total maximum number of shares of Common Stock issuable upon the conversion, exercise or exchange of all such Convertible Securities) shall be less than the Exercise Price in effect immediately prior to the time of such issue or sale, then the total maximum number of shares of Common Stock issuable upon conversion or exchange of such Convertible Securities shall (as of the date of the issue or sale of such Convertible Securities) be deemed to be outstanding and to have been issued for such price per share, provided that if any such issue or sale of such Convertible Securities is made upon exercise of any rights to subscribe for or rights or options to purchase or any option to purchase any such Convertible Securities for which adjustments of the Exercise Price have been or are to be made pursuant to other provisions of this
Section 2.7(e)
, no further adjustment of the Exercise Price shall be made by reason of such issue or sale.
(iii)
In case at any time any shares of Common Stock or Convertible Securities or any rights or options to purchase any such Common Stock, or Convertible Securities shall be issued or sold for cash, the consideration received therefor shall be deemed to be the amount actually received by GenMar or Gener8 therefor. In case any shares of Common Stock or Convertible Securities or any rights or options to purchase any such Common Stock or Convertible Securities shall be issued or sold for a consideration other than cash, the amount of the consideration other than cash received by GenMar or Gener8 shall be deemed to be the fair value of such consideration actually received by GenMar or Gener8 in connection therewith as determined by the board of directors.
Section 2.8
Commitment Party Default
.
(a)
Upon the occurrence of a Commitment Party Default, each Commitment Party (other than any Defaulting Commitment Party) shall have the right, but shall not be obligated to, within five (5) Business Days after receipt of written notice from Gener8 to each other Commitment Party of such Commitment Party Default (which notice shall be given promptly following the occurrence of such Commitment Party Default) (such five Business Day period, the “
Commitment Party Replacement Period
”) to make arrangements to purchase all or any portion of the Available Securities (such purchase, a “
Commitment Party Replacement
”) on the terms and subject to the conditions set forth in this Agreement and in such amounts based upon the applicable Pro Rata Ownership Interest of any such Commitment Parties interested in purchasing Available Securities, or as may otherwise be agreed upon by all of the Commitment Parties electing to purchase all or any portion of the Available Securities (such electing Commitment Parties, each a “
Replacing Commitment Party
” and together, the “
Replacing Commitment Parties
”). Any such Available Securities purchased by a Commitment Party Replacement shall be included in the determination of the Purchase Commitment and Commitment Percentage of such Commitment Party Replacement for all purposes hereunder. If a Commitment Party Default occurs, the Purchase Payment Date shall be extended to the extent necessary to allow for (A) the Commitment Party Replacement to be completed within the
19
Commitment Party Replacement Period or (B) the consummation of a Cover Transaction within the Cover Transaction Period.
(b)
If a Commitment Party is or becomes a Defaulting Commitment Party it shall not be entitled to receive any Purchase Premium or Additional Purchase Premium payable hereunder and any Common Stock previously issued to such Defaulting Commitment Party in payment of any Purchase Premium or Additional Purchase Premium may be cancelled in whole or in part at the sole discretion of the Board.
(c)
Notwithstanding the foregoing, if the non-defaulting Commitment Parties do not elect to subscribe for all of the Available Securities pursuant to
Section 2.8(a)
prior to the expiration of the Commitment Party Replacement Period, Gener8 shall have an additional fifteen (15) Business Days following the expiration of the Commitment Party Replacement Period (such period, the “
Cover Transaction Period
”) to consummate a Cover Transaction.
(d)
Notwithstanding anything to the contrary contained herein, if the Commitment Party Replacement has not been consummated upon expiration of the Commitment Party Replacement Period and a Cover Transaction has not been consummated prior to the expiration of the Cover Transaction Period, this Agreement may be terminated by (i) Gener8 by written notice to each Commitment Party or (ii) Commitment Parties (other than any Defaulting Commitment Parties) representing more than three-quarters (3/4) of the aggregate Commitment Percentages represented by all of the Commitment Parties (other than any Defaulting Commitment Parties) by written notice to Gener8.
(e)
For the avoidance of doubt, notwithstanding anything to the contrary set forth in
Section 8.2
, but subject to
Section 9.10
, no provision of this Agreement shall relieve any Defaulting Commitment Party from liability hereunder in connection with such Defaulting Commitment Party’s Commitment Party Default, and Gener8 shall have available to it all rights and remedies under law or equity, including specific performance.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF NAVIG8 AND GENMAR
Each of GenMar and Navig8 hereby represent and warrant to the Commitment Parties as set forth below.
Section 3.1
Organization
. Each of GenMar and Navig8, is a corporation duly organized, validly existing and in good standing or has equivalent status under the Laws of the Republic of the Marshall Islands, and has all requisite corporate power and authority to own, lease and operate its properties and assets and to carry on its business as it is now being conducted and as it is proposed to be conducted.
Section 3.2
Corporate Power and Authority
. Each of GenMar and Navig8 has full corporate power and authority to enter into and perform its obligations under this Agreement. This Agreement has been duly executed and delivered by each of GenMar and Navig8, and (assuming due authorization, execution and delivery by each other party hereto) this Agreement constitutes a legal, valid and binding obligation of each of GenMar and Navig8 enforceable against each of
20
GenMar and Navig8, as the case may be, in accordance with its terms subject to the Bankruptcy and Equity Exception.
Section 3.3
Execution and Delivery; Enforceability
. The execution, delivery and performance by GenMar of this Agreement, and the consummation of the transactions contemplated hereby, do not and will, with or without the giving of notice or the lapse of time or both, not: (i) subject to (w) such consents, approvals, orders, authorizations, registrations, declarations and filings as may be required under applicable federal and state securities laws and the securities laws of any non-U.S. country, (x) such filings as may be required under the HSR Act or other applicable Takeover Statutes, (y) as set forth in
Schedule 3.3
or (z) such other consents, approvals, orders, authorizations, registrations, declarations, filings or notices for which the failure to obtain or make which are not and would not reasonably be expected to be, individually or in the aggregate, material to GenMar, Navig8 or their respective Material Operating Subsidiaries taken as a whole, except with respect to the a delay in the consummation of the transactions contemplated hereby, conflict with, or result in any violation or breach of, or default under (whether upon lapse of time or the occurrence of any act or event or otherwise), any provision of the articles of incorporation or bylaws of GenMar or Navig8, or of the charter, bylaws or other organizational documents of any of their respective Material Operating Subsidiaries, (ii) conflict with or result in a violation or breach of any provision of any Law or Order applicable to GenMar, Navig8 or any of their respective Material Operating Subsidiaries or any of its or their property or assets or (iii) conflict with, or result in any violation or breach of, or constitute (whether upon lapse of time or the occurrence of any act or event or otherwise) a default (or result or give rise to a right of termination, modification, cancellation or acceleration of any obligation or loss of any material benefit) under, require the payment of a penalty under, constitute a change in control under, or require a consent, notice, waiver or other action by any Person under the terms conditions or provisions of any Contract to which GenMar, Navig8 or any of their respective Material Operating Subsidiaries is a party or by which GenMar, Navig8 or any of their respective Material Operating Subsidiaries is bound or to which any of their respective properties and assets are subject. Assuming the accuracy of the representations made by each Commitment Party in connection with the transactions contemplated in this Agreement, except as set forth in subsection (i) of this
Section 3.3
, neither GenMar nor Navig8 is required to give any notice to, make any filing with or obtain any authorization, consent or approval of any Governmental Entity in order for the Parties to consummate the transactions contemplated hereby.
Section 3.4
Authorized and Issued Capital Stock
. The authorized capital stock of GenMar consists of 50,000,000 shares of Class A common stock, $0.01 par value per share (“
GenMar Class A Common Stock
”), 30,000,000 shares of Class B common stock, $0.01 par value per share (“GenMar Class B Common Stock,” together with the GenMar Class A Common Stock, the “
GenMar Common Stock
”), and 5,000,000 shares of preferred stock, $0.01 par value per share (“
GenMar Preferred Stock
”), in each case as of the date hereof. As of the close of business on the date of this Agreement, (i) 11,270,196 GenMar Class A Common Stock are issued and outstanding, (ii) 22,002,998 GenMar Class B Common Stock are issued and outstanding, (iii) no shares of GenMar Common Stock are held in the treasury of GenMar or by subsidiaries of GenMar, and (iv) no shares of GenMar Preferred Stock are issued and outstanding. The rights and privileges of each class of GenMar’s capital stock are as set forth in GenMar’s articles of incorporation. Except as set forth in this
Section 3.4
and on
Schedule 3.4(b)
, as of the date hereof (i) there are no voting or equity securities of any class of capital stock of GenMar, or any security
21
exchangeable into or exercisable for such securities, issued, reserved for issuance or outstanding, (ii) there is no subscription, warrant, option, convertible or exchangeable security, or other right (contingent or otherwise) to purchase or otherwise acquire equity securities of GenMar that is authorized or outstanding, and (iii) there is no commitment by GenMar to issue shares, subscriptions, options, warrants convertible or exchangeable securities, calls or other such rights or to distribute to holders of any of its equity securities any evidence of Indebtedness or assets, to repurchase or redeem any securities of GenMar or to grant, extend, accelerate the vesting of, change the price of, or otherwise amend any warrant, option, convertible or exchangeable security or other such right.
Section 3.5
Issuance
. The shares of Common Stock, when issued by GenMar or Gener8, as applicable, to each Commitment Party in accordance with this Agreement, including in connection with the Purchase Premium or any Additional Purchase Premium, will be duly issued, fully paid, non-assessable and free and clear of any Liens other than (v) Liens created or imposed by such Commitment Party, (w) transfer restrictions imposed hereunder, (x) any restrictions under the Shareholders Agreement, (y) as set forth in
Schedule 3.5(a)
or (z) arising under applicable securities Laws.
Section 3.6
Arm’s Length
. Each of Navig8 and GenMar acknowledges and agrees that (a) each Commitment Party is acting solely in the capacity of an arm’s-length contractual counterparty to each of Navig8 and GenMar with respect to the transactions contemplated hereby and not as a financial advisor or a fiduciary to, or an agent of, Navig8, GenMar or any of their Material Operating Subsidiaries and (b) no Commitment Party is advising Navig8 or GenMar or any of their Material Operating Subsidiaries as to any legal, tax, investment, accounting or regulatory matters in any jurisdiction.
Section 3.7
Financial Statements
. The audited balance sheet, consolidated statements of income and retained earnings and cash flows for the year ended December 31, 2013 as provided by each of Navig8 and GenMar, and the unaudited pro-forma balance sheet, statements of income and retained earnings and cash flows for the period ended September 30, 2014 as provided by Navig8 and GenMar, were prepared based on the books and records of Navig8 and GenMar, as applicable, and fairly present, in all material respects, the consolidated financial condition of each of Navig8 and GenMar and their respective Material Operating Subsidiaries as at such date and the consolidated results of the operations of each of Navig8 and GenMar and their respective Material Operating Subsidiaries for the period ended on such date, all in accordance with U.S. generally accepted accounting principles consistently applied subject, in the case of the unaudited pro-forma balance sheet, statements of income and retained earnings and cash flows, to normal and recurring year-end adjustments (the effect of which will not expected to be, individually or in the aggregate, material) and the absence of notes (that, if presented, would not differ materially in amount or significance from those presented in the audited balance sheet, consolidated statements of income and retained earnings and cash flows).
Section 3.8
No Violation; Compliance with Laws
. Each of Navig8, GenMar and their Material Operating Subsidiaries is (i) not in violation of its charter or bylaws, and (ii) in compliance with all applicable Laws, except where any failure to comply with any such applicable Laws would not, alone or in the aggregate, reasonably be expected to result in a Material Adverse Effect.
22
Section 3.9
No Unlawful Payments
. Neither Navig8, GenMar nor any of their Material Operating Subsidiaries nor (to the Knowledge of Navig8 or GenMar, as applicable) any director, officer, agent, employee, representative, consultant or other persons associated with or acting for or on behalf of Navig8, GenMar and their Material Operating Subsidiaries has, directly or indirectly, in connection with their respective businesses (i) used any funds for unlawful contributions, gifts, entertainment or other expenses relating to political activity or for the business of Navig8, GenMar and their Material Operating Subsidiaries, (ii) made any unlawful payment or offered anything of value to non-U.S. or domestic government officials or employees or to non-U.S. or domestic political parties or campaigns, (iii) made any other unlawful payment, or (iv) violated any applicable export control, money laundering or anti-terrorism Law or regulation, nor have any of them otherwise taken any action which would cause Navig8, GenMar or any of their Material Operating Subsidiaries to be in violation of any provision of the Foreign Corrupt Practices Act of 1977, as amended, or any applicable Law of similar effect.
Section 3.10
Compliance with Sanctions Laws
. None of Navig8, GenMar nor any of their Material Operating Subsidiaries nor (to the Knowledge of Navig8 or GenMar, as applicable) any of their directors, officers, employees or agents is a person with whom transactions are prohibited or limited under any economic sanctions Laws, including those administered by the Office of Foreign Assets Control of the United States Department of the Treasury, the European Union, the United Kingdom or the United Nations Security Council.
Section 3.11
No Broker’s Fees
. Neither Navig8 nor GenMar nor any of their Material Operating Subsidiaries is a party to any Contract with any Person (other than this Agreement) that would give rise to a valid claim for a brokerage commission, finder’s fee or like payment in connection with the Purchase Commitments or the sale of the Purchase Shares.
Section 3.12
No Registration Rights
. Except as contemplated by the Registration Rights Agreement, as of the Closing Date, there will be no registration rights with respect to any equity security of any class of GenMar.
Section 3.13
Investment Company Act
. Neither the entry into this Agreement, nor the application of the proceeds nor the consummation of the transactions contemplated hereby, will require Navig8 or GenMar to register as an “investment company” under the Investment Company Act of 1940, as amended.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF EACH COMMITMENT PARTY
Each Commitment Party represents and warrants, severally and not jointly as set forth below.
Section 4.1
Organization
. Such Commitment Party is a legal entity duly organized, incorporated or formed, as applicable, and is validly existing and in good standing (or the equivalent thereof) under the laws of its jurisdiction of organization, incorporation or formation.
Section 4.2
Power and Authority
. If such Commitment Party is an individual, such Commitment Party has the full legal capacity under the laws of his or her jurisdiction of domicile
23
to enter into, execute and deliver this Agreement and to perform his or her obligations hereunder. If such Commitment Party is not an individual, such Commitment Party has the requisite corporate, limited partnership or limited liability company power and authority to enter into, execute and deliver this Agreement and to perform its obligations hereunder and has taken all necessary corporate, limited partnership or limited liability company action required for the due authorization, execution, delivery and performance by it of this Agreement.
Section 4.3
Execution and Delivery
. This Agreement (a) has been duly and validly executed and delivered by such Commitment Party and (b) when executed and delivered, will constitute the valid and binding obligation of such Commitment Party, enforceable against such Commitment Party in accordance with its terms, subject to the Bankruptcy and Equity Exception.
Section 4.4
No Conflict
. The execution, delivery and performance by such Commitment Party and the consummation of the transactions contemplated hereby, do not and will, with or without the giving of notice or the lapse of time or both, not: (i) subject such consents, approvals, orders, authorizations, registrations, declarations, filings or notices for which the failure to obtain or make which are not and would not reasonably be expected to be, individually or in the aggregate, material to such Commitment Party, except with respect to the a delay in the consummation of the transactions contemplated hereby, conflict with, or result in any violation or breach of, or default under (whether upon lapse of time or the occurrence of any act or event or otherwise), any provision of the articles of incorporation or bylaws of such Commitment Party, (ii) conflict with or result in a violation or breach of any provision of any Law or Order applicable to such Commitment Party or any of its or their property or assets or (iii) conflict with, or result in any violation or breach of, or constitute (whether upon lapse of time or the occurrence of any act or event or otherwise) a default (or result or give rise to a right of termination, modification, cancellation or acceleration of any obligation or loss of any material benefit) under, require the payment of a penalty under, constitute a change in control under, or require a consent, notice, waiver or other action by any Person under the terms conditions or provisions of any Contract to which such Commitment Party is a party or by which it is bound or to which any of their respective properties and assets are subject. Except as set forth in subsection (i) of this
Section 4.4
, such Commitment Party is not required to give any notice to, make any filing with or obtain any authorization, consent or approval of any Governmental Entity in order for the Parties to consummate the transactions contemplated hereby.
Section 4.5
No Registration
. Each Commitment Party represents and warrants that it is an “accredited investor” as defined in Rule 501 of Regulation D promulgated under the Securities Act or a “qualified institutional buyer” as defined in Rule 144A under the Securities Act. Such Commitment Party understands that the Purchase Shares, Purchase Premium and any Additional Purchase Premium have not been registered under the Securities Act by reason of a specific exemption from the registration provisions of the Securities Act, the availability of which depends on, among other things, the bona fide nature of the investment intent and the accuracy of such Commitment Party’s representations as expressed herein. Such Commitment Party understands that the Purchase Shares, Purchase Premium and any Additional Purchase Premium are “restricted securities” under applicable U.S. federal and state securities laws and that, pursuant to these laws, such Commitment Party must hold the Purchase Shares, Purchase Premium and any Additional Purchase Premium indefinitely unless they are registered with the SEC and qualified by state authorities, or an exemption from such registration and qualification requirements is available.
24
Such Commitment Party acknowledges that Gener8 has no obligation to register or qualify the Purchase Shares, Purchase Premium and any Additional Purchase Premium for resale except as set forth in the Registration Rights Agreement. Such Commitment Party further acknowledges that if an exemption from registration or qualification is available, it may be conditioned on various requirements including, but not limited to, the time and manner of sale, the holding period for the Purchase Shares, Purchase Premium and any Additional Purchase Premium and on requirements relating to Gener8 which are outside of such Commitment Party’s control, and which Gener8 is under no obligation and may not be able to satisfy.
Section 4.6
No Public Market
. Such Commitment Party understands that no public market now exists for the Purchase Shares, Purchase Premium and any Additional Purchase Premium, and that GenMar has made no assurances that a public market will ever exist for the Purchase Shares, Purchase Premium and any Additional Purchase Premium.
Section 4.7
Legends
. Such Purchaser understands that the Purchase Shares, Purchase Premium and any Additional Purchase Premium, as applicable, may bear one or all of the following legends:
(a)
“THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED ON , HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR APPLICABLE STATE SECURITIES LAWS (“STATE ACTS”) AND MAY NOT BE SOLD, ASSIGNED, PLEDGED OR TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR STATE ACTS OR AN EXEMPTION FROM REGISTRATION THEREUNDER. THE TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE (I) RESTRICTIONS PURSUANT TO ARTICLE TWELVE OF THE AMENDED AND RESTATED ARTICLES OF INCORPORATION OF THE ISSUER (THE “COMPANY”), AND (II) CONDITIONS SPECIFIED IN THE SHAREHOLDERS’ AGREEMENT, DATED AS OF [ ], 2015, AS AMENDED OR MODIFIED FROM TIME TO TIME, GOVERNING THE COMPANY AND BY AND AMONG CERTAIN SHAREHOLDERS, AND (III) CONDITIONS SPECIFIED IN THE REGISTRATION RIGHTS AGREEMENT, DATED AS OF [ ],
2015
, AS AMENDED OR MODIFIED FROM TIME TO TIME, AND (IV) TERMS AND CONDITIONS SPECIFIED IN THE EQUITY PURCHASE AGREEMENT, DATED AS OF FEBRUARY 24, 2015, AS AMENDED OR MODIFIED FROM TIME TO TIME. A COPY OF ANY OF SUCH AMENDED AND RESTATED ARTICLES OF INCORPORATION, SHAREHOLDERS’ AGREEMENT OR REGISTRATION RIGHTS AGREEMENT SHALL BE FURNISHED BY THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST AND WITHOUT CHARGE.”
(b)
Any legend set forth in, or required by this Agreement.
(c)
Any legend required by the securities laws of any state or jurisdiction to the extent such laws are applicable to the Purchase Shares, Purchase Premium and any Additional Purchase Premium, as applicable, represented by the certificate so legended.
25
Section 4.8
Purchasing Intent
. Such Commitment Party is acquiring the Purchase Shares, Purchase Premium and any Additional Purchase Premium for investment for its own account, not as a nominee or agent, and not with the view to, or for resale in connection with, any distribution of any part thereof not in compliance with applicable securities laws, and such Commitment Party has no present intention of selling, granting any participation in, or otherwise distributing the same. By executing this Agreement, such Commitment Party further represents that such Commitment Party does not presently have any contract, undertaking, agreement or arrangement with any Person to sell, transfer or grant participations to such Person or to any third Person, with respect to any of the Purchase Shares, Purchase Premium and any Additional Purchase Premium, as applicable.
Section 4.9
Arm’s Length
. Such Commitment Party acknowledges and agrees that (a) each of Navig8 and GenMar is acting solely in the capacity of an arm’s-length contractual counterparty to such Commitment Party with respect to the transactions contemplated hereby and not as a financial advisor or a fiduciary to, or an agent of, such Commitment Party and (b) neither Navig8 nor GenMar is advising such Commitment Party as to any legal, tax, investment, accounting or regulatory matters in any jurisdiction.
Section 4.10
No Broker’s Fees
. Such Commitment Party has not entered and will not enter into any Contract with any Person (other than this Agreement) that would give rise to a valid claim against GenMar, Navig8 or Gener8 for a brokerage commission, finder’s fee or like payment in connection with the sale of the Purchase Shares, Purchase Premium or any Additional Purchase Premium.
Section 4.11
Sufficient Funds
. Such Commitment Party has or has unconditional access, including from its Affiliates (free from any conditions, consents or approvals, other than conditions, consents or approvals related to such Commitment Party’s compliance procedures or ministerial processes), to as of the date of this Agreement, and immediately prior to each Purchase Payment Date will have, sufficient funds to satisfy (i) all of its payment obligations hereunder, including the payments required by such Commitment Party pursuant to Article II and (ii) all fees and expenses payable by such Commitment Party in connection the transactions contemplated by this Agreement.
ARTICLE V
ADDITIONAL COVENANTS
Section 5.1
Commercially Reasonable Efforts
.
(a)
Without in any way limiting any other respective obligation of Navig8, GenMar, Gener8 or any Commitment Party in this Agreement, Navig8, GenMar and Gener8 shall use (and shall cause its Subsidiaries to use), and each Commitment Party shall use, commercially reasonable efforts to take or cause to be taken all actions, and do or cause to be done all things, reasonably necessary, proper or advisable in order to consummate and make effective the transactions contemplated by this Agreement, including using commercially reasonable efforts in timely preparing and filing all documentation reasonably necessary to effect all necessary notices, reports and other filings of such Party and to obtain as promptly as practicable all consents, registrations, approvals, permits and authorizations necessary or advisable to be obtained from any third party
26
or Governmental Entity, including in respect of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (“
HSR Act
”), if applicable.
(b)
Navig8, GenMar and Gener8 shall use (and shall cause its Subsidiaries to use), and each of the Commitment Parties shall use, commercially reasonable efforts to take or cause to be taken all actions, and do or cause to be done all things, reasonably necessary, proper or advisable in order to defend any Legal Proceedings challenging this Agreement or the consummation of the transactions contemplated hereby and thereby, including to seek to have any stay or temporary restraining order entered by any Governmental Entity vacated or reversed.
(c)
Navig8 and GenMar shall use commercially reasonable efforts to take or cause to be taken all actions, and do or cause to be done all things, reasonably necessary, proper or advisable in order to effect the offering of Common Stock issued in accordance with this Agreement pursuant to the exemption from registration set forth in Rule 506(c) of Regulation D under the Securities Act.
Section 5.2
Registration Rights Agreement
. On or prior to the Closing Date, each Initial Commitment Party, each Commitment Party that is a 5% Holder and Gener8 shall execute the Registration Rights Agreement.
ARTICLE VI
CONDITIONS TO THE OBLIGATIONS OF EACH PARTY
Section 6.1
Conditions to the Obligation of each Commitment Party
. The obligations of each Commitment Party to consummate its obligations to purchase its Purchase Shares on any Purchase Payment Date in accordance with
Section 2.2
shall be subject to (unless waived in accordance with
Section 6.2
) the satisfaction or waiver of the following conditions:
(a)
Purchase Premium
. Gener8 shall have paid in full the Purchase Premium and the Additional Purchase Premium, if applicable, in accordance with
Sections 2.3
and
2.4
.
(b)
No Legal Impediment to Issuance
. No Law or Order shall have been enacted, adopted or issued by any Governmental Entity of (i) the United States (including any state or subdivision thereof), (ii) the jurisdiction of incorporation or formation of Gener8 or (iii) any jurisdiction where any vessel of Gener8 or its Subsidiaries is flagged, in each case that prohibits the transactions contemplated by this Agreement.
(c)
Expiration of Waiting Period
. The waiting period or required approval applicable to the transactions contemplated by this Agreement under the HSR Act, if applicable, and any other applicable Takeover Statute shall have expired.
(d)
Representations and Warranties
. The representations and warranties of Navig8 and GenMar contained in (i)
Article III
, other than the representations and warranties set forth in Sections 3.1, 3.2, 3.4 and 3.11, shall be true and correct (disregarding all materiality or, subject to this clause
(d)(i)
, Material Adverse Effect qualifiers) at and as of the date hereof and any Purchase Payment Date with the same effect as if made on and as of such Purchase Payment Date (except for such representations and warranties made as of a specified date, which shall be true and correct
27
only as of the specified date), except where the failure to be so true and correct does not constitute a Material Adverse Effect, (ii) Sections 3.1, 3.2 and 3.11 shall be true and correct in all respects at and as of the date hereof and any Purchase Payment Date with the same effect as if made on and as of such Purchase Payment Date (except for such representations and warranties made as of a specified date, which shall be true and correct only as of the specified date) and (iii) Section 3.4 shall be true and correct in all material respects at and as of the date hereof and any Purchase Payment Date with the same effect as if made on and as of such Purchase Payment Date (except for such representations and warranties made as of a specified date, which shall be true and correct in all material respects only as of the specified date);
provided
, however, any breach of Navig8’s representations and warranties as set forth in the Merger Agreement shall be disregarded for the purposes of determining whether the conditions set forth in clauses (ii) or (iii) have been satisfied.
(e)
Covenants
. Gener8, Navig8 and GenMar shall have performed and complied, in all material respects, with all of their respective covenants and agreements contained in this Agreement.
(f)
Material Adverse Effect
. From the Closing Date to such Purchase Payment Date, there shall not have occurred, and there shall not exist, any Event that constitutes, individually or in the aggregate with all Events occurring since the execution of the Merger Agreement, a Material Adverse Effect.
(g)
Registration Rights Agreement and Shareholders Agreement
. The Registration Rights Agreement and Shareholders Agreement are in full force and effect.
(h)
Merger
. The Closing of the Merger shall have occurred.
(i)
Officer’s Certificate
. The Commitment Parties shall have received on and as of the applicable Purchase Payment Date a certificate of the chief executive officer or chief financial officer of Gener8 confirming that the conditions set forth in Sections 6.1(d), (e), (f) and (g) have been satisfied.
Section 6.2
Waiver of Conditions to Obligation of Commitment Parties
. All or any of the conditions set forth in Section 6.1, except Section 6.1(c), may only be waived in whole or in part with respect to any Commitment Party by a written instrument executed by such Commitment Party in its sole discretion and if so waived, each such Commitment Party and Gener8 shall be bound by such waiver.
Section 6.3
Conditions to the Obligation of Gener8
. The obligation of Gener8 to consummate the transactions contemplated hereby with any Commitment Party is subject to (unless waived by Gener8) the satisfaction of each of the following conditions:
(a)
No Legal Impediment to Issuance
. No Law or Order shall have been enacted, adopted or issued by any Governmental Entity of (i) the United States (including any state or subdivision thereof) or (ii) any jurisdiction where any vessel of Gener8 or its Subsidiaries is flagged, in each case that prohibits the implementation of the Agreement or the transactions contemplated by this Agreement.
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(c)
Expiration of Waiting Period
. The waiting period or required approval applicable to the transactions contemplated by this Agreement under the HSR Act, if applicable, and any other applicable Takeover Statute shall have expired.
(d)
Representations and Warranties
. The representation and warranty of each Commitment Party contained in
Article IV
herein shall be true and correct (disregarding all materiality qualifiers) at and as of the date hereof and any Purchase Payment Date with the same effect as if made on and as of such Purchase Payment Date (except for such representations and warranties made as of a specified date, which shall be true and correct only as of the specified date), except where the failure to be so true and correct does not constitute a material adverse effect on such Commitment Party’s ability to consummate the transactions contemplated hereby.
(e)
Covenants
. Each Commitment Party shall have performed and complied, in all material respects, with all of its covenants and agreements contained in this Agreement.
(f)
Merger
. The Closing of the Merger shall have occurred.
ARTICLE VII
INDEMNIFICATION AND CONTRIBUTION
Section 7.1
Indemnification Obligations
. Navig8 and GenMar (the “Indemnifying Parties” and each an “
Indemnifying Party
”) shall, jointly and severally, indemnify and hold harmless each Commitment Party, its Affiliates, shareholders, members, partners and other equity holders, general partners, managers and its and their respective Representatives, agents, advisors and controlling persons (each, an “
Indemnified Person
”) from and against any and all losses, claims, damages, liabilities and costs and expenses (collectively, “
Losses
”) that any such Indemnified Person may incur or to which any such Indemnified Person may become subject arising out of or in connection with this Agreement and the transactions contemplated hereby and thereby, including the Purchase Commitments, the payment of the Purchase Premium or the use of the proceeds of the Purchase Commitments, or any breach by Navig8 and GenMar of this Agreement, or any claim, challenge, litigation, investigation or proceeding relating to any of the foregoing, regardless of whether any Indemnified Person is a party thereto, whether or not such proceedings are brought by the Navig8 and GenMar, their respective equity holders, Affiliates, creditors or any other Person, and reimburse each Indemnified Person upon demand for reasonable and documented (subject to redaction to preserve attorney client and work product privileges) legal or other third-party expenses incurred in connection with investigating, preparing to defend or defending, or providing evidence in or preparing to serve or serving as a witness with respect to, any lawsuit, investigation, claim or other proceeding relating to any of the foregoing (including in connection with the enforcement of the indemnification obligations set forth herein), irrespective of whether or not the transactions contemplated by this Agreement are consummated or whether or not this Agreement is terminated;
provided
that the foregoing indemnity will not, as to any Indemnified Person, apply to Losses (a) as to a Defaulting Commitment Party and its Related Parties, caused by a Commitment Party Default by such Commitment Party, or (b) to the extent they are found by a final, non-appealable judgment of a court of competent jurisdiction to arise from the bad faith, willful misconduct or gross negligence of such Indemnified Person.
29
Section 7.2
Indemnification Procedure
. Promptly after receipt by an Indemnified Person of notice of the commencement of any claim, challenge, litigation, investigation or proceeding (an “
Indemnified Claim
”), such Indemnified Person will, if a claim is to be made hereunder against the Indemnifying Party in respect thereof, notify the Indemnifying Parties in writing of the commencement thereof;
provided
that (i) the omission to so notify the Indemnifying Parties will not relieve the Indemnifying Parties from any liability that it may have hereunder except to the extent it has been materially prejudiced by such omission and (ii) the omission to so notify the Indemnifying Parties will not relieve the Indemnifying Parties from any liability that it may have to such Indemnified Person otherwise than on account of this
Article VII
. In case any such Indemnified Claims are brought against any Indemnified Person and it notifies the Indemnifying Parties of the commencement thereof, the Indemnifying Parties will be entitled to participate therein, and, to the extent that it may elect by written notice delivered to such Indemnified Person, to assume the defense thereof, with counsel reasonably acceptable to such Indemnified Person;
provided
that if the parties (including any impleaded parties) to any such Indemnified Claims include both such Indemnified Person and the Indemnifying Parties and based on advice of such Indemnified Person’s counsel there are legal defenses available to such Indemnified Person that are different from or additional to those available to the Indemnifying Parties, such Indemnified Person shall have the right to select separate counsel to assert such legal defenses and to otherwise participate in the defense of such Indemnified Claims. Upon receipt of notice from the Indemnifying Parties to such Indemnified Person of its election to so assume the defense of such Indemnified Claims with counsel reasonably acceptable to the Indemnified Person, the Indemnifying Parties shall not be liable to such Indemnified Person for expenses incurred by such Indemnified Person in connection with the defense thereof (other than reasonable costs of investigation) unless (A) such Indemnified Person shall have employed separate counsel (in addition to any local counsel) in connection with the assertion of legal defenses in accordance with the proviso to the immediately preceding sentence (it being understood, however, that the Indemnifying Parties shall not be liable for the expenses of more than one separate counsel representing the Indemnified Persons who are parties to such Indemnified Claims (in addition to one local counsel in each jurisdiction in which local counsel is required) and that all such expenses shall be reimbursed as they occur), (B) the Indemnifying Parties shall not have employed counsel reasonably acceptable to such Indemnified Person to represent such Indemnified Person within a reasonable time after notice of commencement of the Indemnified Claims, (C) the Indemnifying Parties shall have failed or is failing to defend such claim, and is provided written notice of such failure by the Indemnified Person and such failure is not cured within fifteen (15) Business Days of receipt of such notice, or (D) the Indemnifying Parties shall have authorized in writing the employment of counsel for such Indemnified Person.
Section 7.3
Settlement of Indemnified Claims
. The Indemnifying Parties shall not be liable for any settlement of any Indemnified Claims effected without their written consent (which consent shall not be unreasonably withheld, conditioned or delayed). If any settlement of any Indemnified Claims is consummated with the written consent of the Indemnifying Parties or if there is a final judgment for the plaintiff in any such Indemnified Claims, each of the Indemnifying Parties agrees to indemnify and hold harmless each Indemnified Person from and against any and all Losses by reason of such settlement or judgment to the extent such Losses are otherwise subject to indemnification by such Indemnifying Party hereunder in accordance with, and subject to the limitations of, the provisions of this
Article VII
. The Indemnifying Party shall not, without the
30
prior written consent of an Indemnified Person (which consent shall be granted or withheld in the Indemnified Person’s sole discretion), effect any settlement of any pending or threatened Indemnified Claims in respect of which indemnity or contribution has been sought hereunder by such Indemnified Person unless (A) such settlement includes an unconditional release of such Indemnified Person in form and substance satisfactory to such Indemnified Person from all liability on the claims that are the subject matter of such Indemnified Claims and (B) such settlement does not include any statement as to or any admission of fault, culpability or a failure to act by or on behalf of any Indemnified Person.
Section 7.4
Contribution
. If for any reason the foregoing indemnification is unavailable to any Indemnified Person or insufficient to hold it harmless from Losses that are subject to indemnification pursuant to
Section 7.1
, then the Indemnifying Parties shall contribute to the amount paid or payable by such Indemnified Person as a result of such Loss in such proportion as is appropriate to reflect not only the relative benefits received by the Indemnifying Parties, on the one hand, and such Indemnified Person, on the other hand, but also the relative fault of the Indemnifying Parties, on the one hand, and such Indemnified Person, on the other hand, as well as any relevant equitable considerations.
Section 7.5
Treatment of Indemnification Payments
. All amounts paid by the Indemnifying Party to an Indemnified Person under this
Article VII
shall, to the extent permitted by applicable Law, be treated as adjustments to the aggregate purchase price paid between such parties for all tax purposes.
ARTICLE VIII
TERMINATION
Section 8.1
Termination Rights
. Each and every Purchase Commitment may be terminated and the transactions contemplated hereby may be abandoned:
(a)
at any time prior to the Closing Date by GenMar and the Initial Commitment Parties (other than any Defaulting Commitment Parties) responsible for more than three-quarters (3/4) of the aggregate Initial Purchase Commitment (other than any Defaulting Commitment Parties) by written notice to GenMar from such Initial Commitment Parties and written notice of GenMar’s consent to such termination from GenMar to such Initial Commitment Parties;
(b)
at any time by Gener8 by written notice to each Commitment Party or by written notice to Gener8 from each Commitment Party if any Law or Order shall have been enacted, adopted or issued by any Governmental Entity of (i) the United States (including any state or subdivision thereof) or (ii) any jurisdiction where any vessel of Gener8 or its subsidiaries is flagged, in each case that prohibits the transactions contemplated by this Agreement;
(c)
at any time after the Closing Date by Commitment Parties (other than any Defaulting Commitment Parties) responsible for more than three quarters (3/4) of the aggregate Purchase Commitment (other than any Defaulting Commitment Parties) by written notice to Gener8 if:
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(i)
Gener8 shall have breached any representation, warranty, covenant or other agreement made by Gener8 in this Agreement or any such representation and warranty shall have become inaccurate after the date of this Agreement that, in each case, would result in the failure of any condition set forth in
Section 6.1
(
provided
,
however
, that solely for the purposes of this
Section 8.1(c)(i)
the condition set forth in clause (ii) of
Section 6.1(d)
shall be deemed to reference accuracy of
Sections 3.1
,
3.2
and
3.11
in all material respects as of the dates referenced in such clause (ii)) being satisfied, and such breach or inaccuracy, if able to be cured, is not cured by Gener8 by the earlier of (A) the tenth (10th) Business Day after the giving of notice thereof to Gener8 by any Commitment Party and (B) the third (3rd) Business Day prior to the Outside Date;
provided
that the Commitment Parties shall not have the right to terminate this Agreement pursuant to this
Section 8.1(c)(i)
if they are then in breach of any representation, warranty, covenant or other agreement hereunder that would result in the failure of any condition set forth in
Section 6.3
being satisfied; and
(ii)
since the Closing Date, there shall have occurred, or there shall exist, an Event that constitutes, individually or in the aggregate with all Events occurring since the execution of the Merger Agreement, a Material Adverse Effect.
Any Common Stock previously issued as a Purchase Premium or Additional Purchase Premium in connection with a Purchase Commitment terminated pursuant to this
Section 8.1
shall remain the property of the Commitment Party in possession of such Common Stock, and will no longer be subject to the restriction on Transfer set forth in
Section 2.5
,
provided
, in each case, that such Commitment Party is not a Defaulting Commitment Party at the time of such termination.
Section 8.2
Automatic Termination
. This Agreement shall be terminated automatically and without any further action by GenMar, Navig8 or the Commitment Parties if:
(a)
the Merger has not occurred by 11:59 p.m. (New York City time) on October 8, 2015 (the “
Outside Date
”), subject to any extension as may be mutually agreed in writing by GenMar and each Commitment Party;
(b)
the Merger Agreement terminates in accordance with its terms;
(c)
the aggregate Purchase Commitment is reduced to zero pursuant to Section 2.7(b); or
(c)
the consummation of a Qualified IPO occurs.
Any Common Stock previously issued as a Purchase Premium or Additional Purchase Premium in connection with a Purchase Commitment terminated pursuant to this
Section 8.2
shall remain the property of the Commitment Party in possession of such Common Stock, and will no longer be subject to the restriction on Transfer set forth in
Section 2.5
,
provided
, in each case, that such Commitment Party is not a Defaulting Commitment Party at the time of such termination.
Section 8.3
Effect of Termination
. Upon termination pursuant to this
Article VIII
, the Purchase Commitments so terminated shall forthwith become void and there shall be no further
32
obligations or liabilities on the part of such Commitment Party;
provided
that (i) the provisions set forth in
Article IX
shall survive the termination of this Agreement in accordance with their terms and (ii) subject to
Section 9.10
, nothing in this
Section 8.3
shall relieve any Party from liability for any breach of this Agreement prior to such termination.
ARTICLE IX
GENERAL PROVISIONS
Section 9.1
Notices
. All notices and other communications in connection with this Agreement shall be in writing and shall be deemed given if delivered personally, sent via electronic facsimile (with confirmation), mailed by registered or certified mail (return receipt requested) or delivered by an express courier (with confirmation) to the Parties at the following addresses (or at such other address for a Party as will be specified by like notice):
(a)
If to GenMar or Gener8:
General Maritime Corporation / Gener8, Inc.
299 Park Avenue
New York, New York 10171
Facsimile: (212) 763-5603
Attention:
Leonard J. Vrondissis, CFO
with a copy (which shall not constitute notice) to:
Kramer Levin Naftalis & Frankel LLP
1177 Avenue of the Americas
New York, New York 10036
Facsimile: (212) 715-8100
E-mail: tmolner@kramerlevin.com,
tshen@kramerlevin.com
Attn: Thomas E. Molner, Esq., Terrence L. Shen, Esq.
(b)
If to Navig8:
Navig8 Crude Tankers, Inc.
2nd Floor, Kinnaird House,
1 Pall Mall East, London
SW1Y 5AU
Facsimile: +44 (0)20 7467 5867
E-mail: nicolas@navig8group.com
Attention: Nicolas Busch
with copies (which shall not constitute actual or constructive notice) to:
Latham & Watkins LLP
885 Third Avenue
New York, NY 10011
33
Facsimile: (212) 751-4864
E-mail: Raymond.Lin@lw.com; Stephen.Amdur@lw.com
Attention:
Raymond Y. Lin, Esq.; Stephen B. Amdur, Esq.
If to a Commitment Party, to the address set forth opposite such Commitment Party’s name on
Schedule 2
.
Section 9.2
Assignment; Third Party Beneficiaries
. Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned by any Party (whether by operation of Law or otherwise) without the prior written consent of GenMar and the Commitment Parties and any purported assignment in violation of this
Section 9.2
shall be void
ab initio
. Except as provided in
Article VII
with respect to the Indemnified Persons, this Agreement (including the documents and instruments referred to in this Agreement) is not intended to and does not confer upon any Person other than the Parties any rights or remedies under this Agreement.
Section 9.3
Prior Negotiations; Entire Agreement
. This Agreement (including the agreements attached as Exhibits to, and the documents and instruments referred to in, this Agreement) constitutes the entire agreement of the Parties and supersedes all prior agreements, arrangements or understandings, whether written or oral, among the Parties with respect to the subject matter of this Agreement, except that the Parties hereto acknowledge that any confidentiality agreements heretofore executed among the Parties will continue in full force and effect.
Section 9.4
Governing Law; Venue
. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. THE PARTIES CONSENT AND AGREE THAT ANY ACTION TO ENFORCE THIS AGREEMENT OR ANY DISPUTE, WHETHER SUCH DISPUTES ARISE IN LAW OR EQUITY, ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE AGREEMENTS, INSTRUMENTS AND DOCUMENTS CONTEMPLATED HEREBY SHALL BE BROUGHT EXCLUSIVELY IN
ANY FEDERAL OR STATE COURT LOCATED IN THE STATE OF NEW YORK IN NEW YORK COUNTY AND EACH OF THE PARTIES SUBMITS TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS FOR THE PURPOSE OF ANY SUCH
ACTION OR DISPUTE
. EACH PARTY IRREVOCABLY AND UNCONDITIONALLY AGREES NOT TO ASSERT (A) ANY OBJECTION WHICH IT MAY EVER HAVE TO THE LAYING OF VENUE OF ANY SUCH ACTION OR DISPUTE IN ANY FEDERAL OR STATE COURT LOCATED IN THE STATE OF NEW YORK IN NEW YORK COUNTY, (B) ANY CLAIM THAT ANY SUCH ACTION OR DISPUTE BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM AND (C) ANY CLAIM THAT SUCH COURT DOES NOT HAVE JURISDICTION WITH RESPECT TO SUCH ACTION OR DISPUTE
. THE PARTIES HEREBY AGREE THAT MAILING OF PROCESS OR OTHER PAPERS IN CONNECTION WITH ANY SUCH ACTION OR PROCEEDING TO AN ADDRESS PROVIDED IN WRITING BY THE RECIPIENT OF SUCH MAILING, OR IN SUCH OTHER MANNER AS MAY BE PERMITTED BY LAW, SHALL BE VALID AND SUFFICIENT SERVICE THEREOF AND HEREBY WAIVE ANY OBJECTIONS TO SERVICE ACCOMPLISHED IN THE MANNER HEREIN PROVIDED.
34
Section 9.5
Waiver of Jury Trial
. EACH PARTY HEREBY WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY JURISDICTION IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE AMONG THE PARTIES UNDER THIS AGREEMENT, WHETHER IN CONTRACT, TORT OR OTHERWISE.
Section 9.6
Counterparts
. This Agreement may be executed in any number of counterparts, all of which will be considered one and the same agreement and will become effective when counterparts have been signed by each of the Parties and delivered to each other Party (including via facsimile or other electronic transmission), it being understood that each Party need not sign the same counterpart.
Section 9.7
Amendments; Waivers; Certain Actions; Rights Cumulative
. This Agreement may be amended, restated, modified, or changed only by a written instrument signed by the Parties, except as otherwise expressly provided herein,
provided
that GenMar may, in its sole discretion and subject to the approval of Opps Marine Holdings TP, L.P. and BlackRock, as applicable, amend Schedule 1-A to reallocate up to $1,500,000 of the Initial Purchase Commitment from OCM Marine Holdings TP, L.P. to either or both of, Opps Marine Holdings TP, L.P. and BlackRock.
Section 9.8
Headings
. The headings in this Agreement are for reference purposes only and will not in any way affect the meaning or interpretation of this Agreement.
Section 9.9
Specific Performance
. The Parties agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the Parties shall be entitled to an injunction or injunctions or order for specific performance of a Purchase Commitment without the necessity of posting a bond to prevent breaches of this Agreement or to enforce specifically the performance of the terms and provisions hereof, in addition to any other remedy to which they are entitled at law or in equity. Unless otherwise expressly stated in this Agreement, no right or remedy described or provided in this Agreement is intended to be exclusive or to preclude a Party from pursuing other rights and remedies to the extent available under this Agreement, at law or in equity.
Section 9.10
Damages
. Notwithstanding anything to the contrary in this Agreement, none of the Parties will be liable for, and none of the Parties shall claim or seek to recover, any punitive, special, indirect or consequential damages or damages for lost profits.
Section 9.11
No Reliance
. No Commitment Party or any of its Related Parties shall have any duties or obligations to the other Commitment Parties in respect of this Agreement or the transactions contemplated hereby or thereby, except those expressly set forth herein.
Without limiting the generality of the foregoing, (a) no Commitment Party or any of its Related Parties shall be subject to any fiduciary or other implied duties to the other Commitment Parties, (b) no Commitment Party or any of its Related Parties shall have any duty to take any discretionary action or exercise any discretionary powers on behalf of any other Commitment Party, (c) (i) no Commitment Party or any of its Related Parties shall have any duty to the other Commitment Parties to obtain, through the exercise of diligence or otherwise, to investigate, confirm, or disclose to the other Commitment Parties any information relating to GenMar, Navig8
35
or any of their Subsidiaries that may have been communicated to or obtained by such Commitment Party or any of its Affiliates in any capacity and (ii) no Commitment Party may rely, and confirms that it has not relied, on any due diligence investigation that any other Commitment Party or any Person acting on behalf of such other Commitment Party may have conducted with respect to GenMar, Navig8 or any of their Affiliates or any of their respective securities and (d) each Commitment Party acknowledges that no other Commitment Party is acting as a placement agent, initial purchaser, underwriter, broker or finder with respect to its Purchase Shares, Purchase Premium or any Additional Purchase Premium.
[Signature Pages Follow]
36
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered, all as of the date first set forth above.
|
GENERAL MARITIME CORP.
|
|
|
|
|
|
|
|
|
By:
|
/s/ Leonard J. Vrondissis
|
|
|
Name:
|
Leonard J. Vrondissis
|
|
|
Title:
|
Chief Financial Officer and Executive Vice President
|
|
[Signature Page to Equity Purchase Agreement]
|
NAVIG8 CRUDE TANKERS, INC.
|
|
|
|
|
|
|
|
|
By:
|
/s/ Nicolas Busch
|
|
|
Name:
|
Nicolas Busch
|
|
|
Title:
|
Director and Chief Executive Officer
|
|
[Signature Page to Equity Purchase Agreement]
|
AVENUE-SLP EUROPE OPPORTUNITIES FUND, L.P.
|
|
|
By: Avenue-SLP Europe Opportunities Fund GenPar, LLC,
as its General Partner
|
|
|
|
|
|
|
|
|
By:
|
/s/ Sonia Gardner
|
|
|
|
Name:
|
Sonia Gardner
|
|
|
|
Title:
|
Member
|
|
|
|
|
|
|
|
|
|
|
Avenue Europe Opportunities Master Fund, L.P.
|
|
|
By: Avenue Europe Opportunities Fund GenPar, LLC, its General Partner
|
|
|
|
|
|
By:
|
/s/ Sonia Gardner
|
|
|
|
Name:
|
Sonia Gardner
|
|
|
|
Title:
|
Member
|
|
|
|
|
|
Avenue Europe Special Situations Fund II (Euro), L.P.
|
|
|
By: Avenue Europe Capital Partners II, LLC, its General Partner
|
|
|
By: GL Europe Partners II, LLC, its Managing Member
|
|
|
|
|
|
By:
|
/s/ Sonia Gardner
|
|
|
|
Name:
|
Sonia Gardner
|
|
|
|
Title:
|
Member
|
|
|
|
|
|
Avenue Europe Special Situations Fund II (U.S.), L.P.
|
|
|
By: Avenue Europe Capital Partners II, LLC, its General Partner
|
|
|
By: GL Europe Partners II, LLC, its Managing Member
|
|
|
|
|
|
By:
|
/s/ Sonia Gardner
|
|
|
|
Name:
|
Sonia Gardner
|
|
|
|
Title:
|
Member
|
|
|
|
|
|
|
|
|
AVENUE COPPERS OPPORTUNITIES FUND, L.P.
|
|
|
By:
|
Avenue COPPERS Opportunities Fund GenPar, LLC,
|
|
|
|
its General Partner
|
|
|
|
|
|
|
|
|
By:
|
/s/ Sonia Gardner
|
|
|
|
Name:
|
Sonia Gardner
|
|
|
|
Title:
|
Member
|
|
[Signature Page to Equity Purchase Agreement]
|
MANAGED ACCOUNTS MASTER FUND SERVICES - MAP10,
a Sub Trust of Managed Accounts Master Fund Services
|
|
|
By: Avenue Capital Management II, L.P.,
its Investment Manager
|
|
|
By: Avenue Capital Management II GenPar, LLC,
its General Partner
|
|
|
|
|
|
|
|
|
By:
|
/s/ Sonia Gardner
|
|
|
Name: Sonia Gardner
|
|
|
Title: Member
|
|
|
|
|
|
|
|
|
AVENUE INVESTMENTS, L.P.
|
|
|
By: Avenue Partners, LLC
, Its General Partner
|
|
|
|
|
|
|
|
|
By:
|
/s/ Sonia Gardner
|
|
|
Name: Sonia Gardner
|
|
|
Title: Member
|
|
|
|
|
|
|
|
|
AVENUE INTERNATIONAL MASTER, L.P.
|
|
|
By: Avenue International Master GenPar, Ltd.,
Its General Partner
|
|
|
|
|
|
|
|
|
By:
|
/s/ Sonia Gardner
|
|
|
Name: Sonia Gardner
|
|
|
Title: Director
|
|
|
|
|
|
|
|
|
AVENUE SPECIAL SITUATIONS FUND VI (MASTER), L.P.
|
|
|
By: Avenue Capital Partners VI, LLC,
Its General Partner
|
|
|
|
|
|
By: GL Partners VI, LLC
|
|
|
Its Managing Member
|
|
|
|
|
|
By:
|
/s/ Sonia Gardner
|
|
|
Name: Sonia Gardner
|
|
|
Title: Member
|
|
[Signature Page to Equity Purchase Agreement]
|
BLUEMOUNTAIN GUADALUPE PEAK FUND L.P.
|
|
|
By: BlueMountain Capital Management, LLC, its investment manager
|
|
|
|
|
|
|
|
|
By:
|
/s/ David M. O’Mara
|
|
|
|
Name: David M. O’Mara
|
|
|
|
Title: Assistant General Counsel & Vice President
|
|
|
|
|
|
|
|
|
BLUEMOUNTAIN MONTENVERS MASTER FUND SCA SICAV-SIF
|
|
|
By: BlueMountain Capital Management, LLC, its investment manager
|
|
|
|
|
|
|
|
|
By:
|
/s/ David M. O’Mara
|
|
|
|
Name: David M. O’Mara
|
|
|
|
Title: Assistant General Counsel & Vice President
|
|
|
|
|
|
|
|
|
|
BLUEMOUNTAIN KICKING HORSE FUND L.P.
|
|
|
By: BlueMountain Capital Management, LLC, its investment manager
|
|
|
|
|
|
|
|
|
By:
|
/s/ David M. O’Mara
|
|
|
|
Name: David M. O’Mara
|
|
|
|
Title: Assistant General Counsel & Vice President
|
|
[Signature Page to Equity Purchase Agreement]
|
BLUEMOUNTAIN TIMBERLINE LTD.
|
|
|
By: BlueMountain Capital Management, LLC, its investment manager
|
|
|
|
|
|
|
|
|
By:
|
/s/ David M. O’Mara
|
|
|
|
Name: David M. O’Mara
|
|
|
|
Title: Assistant General Counsel & Vice President
|
|
|
|
|
|
|
|
|
BLUE MOUNTAIN CREDIT ALTERNATIVES MASTER FUND L.P.
|
|
|
By: BlueMountain Capital Management, LLC, its investment manager
|
|
|
|
|
|
|
|
|
By:
|
/s/ David M. O’Mara
|
|
|
|
Name: David M. O’Mara
|
|
|
|
Title: Assistant General Counsel & Vice President
|
|
[Signature Page to Equity Purchase Agreement]
|
Monarch Alternative Solutions Master Fund Ltd
|
|
|
By: Monarch Alternative Capital LP, as investment manager
|
|
|
|
|
|
|
|
|
By:
|
/s/ Christopher Santana
|
|
|
|
Name: Christopher Santana
|
|
|
|
Title: Managing Principal
|
|
|
|
|
|
|
|
|
Monarch Capital Master Partners II LP
|
|
|
By: Monarch Alternative Capital LP, as investment manager
|
|
|
|
|
|
|
|
|
By:
|
/s/ Christopher Santana
|
|
|
|
Name: Christopher Santana
|
|
|
|
Title: Managing Principal
|
|
|
|
|
|
|
|
|
MCP Holdings Master LP
|
|
|
By: Monarch Alternative Capital LP, as investment manager
|
|
|
|
|
|
|
|
|
By:
|
/s/ Christopher Santana
|
|
|
|
Name: Christopher Santana
|
|
|
|
Title: Managing Principal
|
|
|
|
|
|
|
|
|
Monarch Debt Recovery Master Fund Ltd
|
|
|
By: Monarch Alternative Capital LP, as investment manager
|
|
|
|
|
|
|
|
|
By:
|
/s/ Christopher Santana
|
|
|
|
Name: Christopher Santana
|
|
|
|
Title: Managing Principal
|
|
[Signature Page to Equity Purchase Agreement]
|
Monarch Opportunities Master Fund Ltd
|
|
|
By: Monarch Alternative Capital LP, as investment manager
|
|
|
|
|
|
|
|
|
By:
|
/s/ Christopher Santana
|
|
|
|
Name: Christopher Santana
|
|
|
|
Title: Managing Principal
|
|
|
|
|
|
|
|
|
P Monarch Recovery Ltd
|
|
|
By: Monarch Alternative Capital LP, as investment manager
|
|
|
|
|
|
|
|
|
By:
|
/s/ Christopher Santana
|
|
|
|
Name: Christopher Santana
|
|
|
|
Title: Managing Principal
|
|
[Signature Page to Equity Purchase Agreement]
Schedule 1-A
Schedule 1-A: GenMar Commitment Parties
|
Commitment Party
|
|
Initial Purchase
Commitment
|
|
Initial
Commitment
Percentage
|
|
Purchase
Commitment
|
|
Commitment
Percentage
|
|
|
BlackRock
|
|
$
|
18,000,000
|
|
28.8
|
%
|
$
|
17,071,133.61
|
|
27.31
|
%
|
|
BlueMountain
|
|
$
|
12,500,000
|
|
20.0
|
%
|
$
|
11,882,322.18
|
|
19.01
|
%
|
|
OCM Marine Holdings TP, L.P.
|
|
$
|
13,500,000
|
|
21.6
|
%
|
$
|
13,500,000
|
|
21.6
|
%
|
|
Twin Haven
|
|
$
|
7,500,000
|
|
12.0
|
%
|
$
|
7,163,910.13
|
|
11.46
|
%
|
|
Bamboula-Shun Lee
|
|
$
|
8,000,000
|
|
12.8
|
%
|
$
|
7,362,074.08
|
|
11.77
|
%
|
|
Opps Marine Holdings TP, L.P.
|
|
$
|
3,000,000
|
|
4.8
|
%
|
$
|
3,000,000
|
|
4.8
|
%
|
|
The Anschutz Foundation
|
|
N/A
|
|
N/A
|
|
$
|
2,000,000
|
|
3.2
|
%
|
|
Houlihan Lokey Capital, Inc.
|
|
N/A
|
|
N/A
|
|
$
|
516,560
|
|
0.82
|
%
|
|
Robert Slusser
|
|
N/A
|
|
N/A
|
|
$
|
4,000
|
|
0.0064
|
%
|
|
Total
|
|
$
|
62.5 million
|
|
100.0
|
%
|
$
|
62.5 million
|
|
100.0
|
%(1)
|
Schedule 1-B
Schedule 1-B: Navig8 Commitment Parties
|
Commitment Party
|
|
Initial Purchase
Commitment
|
|
Initial
Commitment
Percentage
|
|
Purchase
Commitment
|
|
Commitment
Percentage
|
|
|
Avenue
|
|
$
|
25,000,000
|
|
40.0
|
%
|
$
|
15,973,815.13
|
|
25.56
|
%
|
|
Monarch
|
|
$
|
25,000,000
|
|
40.0
|
%
|
$
|
12,856,178.35
|
|
20.57
|
%
|
|
Blue Mountain
|
|
$
|
12,500,000
|
|
20.0
|
%
|
$
|
8,648,720.45
|
|
13.84
|
%
|
|
Sankaty(2)
|
|
N/A
|
|
N/A
|
|
$
|
14,999,994.54
|
|
24.00
|
%
|
|
Navig8 Limited
|
|
N/A
|
|
N/A
|
|
$
|
5,466,163.71
|
|
8.75
|
%
|
|
Knighthead(3)
|
|
N/A
|
|
N/A
|
|
$
|
3,388,679.60
|
|
5.42
|
%
|
|
Archview
(4)
|
|
N/A
|
|
N/A
|
|
$
|
590,819.59
|
|
0.95
|
%
|
|
Farmstead
(5)
|
|
N/A
|
|
N/A
|
|
$
|
575,628.63
|
|
0.92
|
%
|
|
Total
|
|
$
|
62.5 million
|
|
100.0
|
%
|
$
|
62.5 million
|
|
100.0
|
%
|
(1) Rounded up from 99.97.
(2) “
Sankaty
” consists of the following entities: Sankaty Credit Opportunities V-A, L.P., Sankaty Credit Opportunities V-A2 (Master), L.P. and Sankaty Credit Opportunities V-B, L.P.
(3) “
Knighthead
” consists of the following entities: Knighthead Master Fund, LP, Knighthead (NY) Fund, LP, Knighthead Annuity & Life Assurance Company and LMA SPC for and on behalf of MAP84 Segregated Portfolio
(4) “
Archview
” consists of the following entities: Archview Master Fund Ltd. and Archview Fund L.P.
(5) “
Farmstead
” consists of the following entities: Farmstead Master Fund , Ltd. and OC 530 Offshore Fund, Ltd.
SCHEDULE 2
Shareholders
|
Avenue - COPPERS Opportunities Fund, L.P.
|
|
399 Park Avenue,
6th Floor
New York, NY 10022
|
|
|
|
|
|
Avenue Europe Opportunities Master Fund, L.P.
|
|
399 Park Avenue,
6th Floor
New York, NY 10022
|
|
|
|
|
|
Avenue-SLP European Opportunities Fund, L.P.
|
|
399 Park Avenue,
6th Floor
New York, NY 10022
|
|
|
|
|
|
Avenue Europe Special Situations Fund II (Euro), L.P.
|
|
399 Park Avenue,
6th Floor
New York, NY 10022
|
|
|
|
|
|
Avenue Europe Special Situations Fund II (U.S.), L.P.
|
|
399 Park Avenue,
6th Floor
New York, NY 10022
|
|
|
|
|
|
Avenue Investments, LP
|
|
399 Park Avenue,
6th Floor
New York, NY 10022
|
|
|
|
|
|
Avenue International Master, LP
|
|
399 Park Avenue,
6th Floor
New York, NY 10022
|
|
|
|
|
|
Managed Accounts Master Fund Services - MAP10
|
|
399 Park Avenue,
6th Floor
New York, NY 10022
|
|
|
|
|
|
Avenue Special Situations Fund VI (Master), LP
|
|
399 Park Avenue,
6th Floor
New York, NY 10022
|
|
|
|
|
|
BlueMountain Guadalupe Peak Fund L.P.
|
|
c/o BlueMountain Capital Management, LLC
280 Park Ave., 12
th
Floor
New York, NY 10017
Facsimile: (212) 905-3901
Email: pfriedman@bluemountaincapital.com
Attention: Paul Friedman
Email: legalnotices@bmcm.com
Attention: General Counsel
With a copy (which shall not constitute notice) to:
Morgan Lewis Bockius LLP
502 Carnegie Center
Princeton, New Jersey 08540
Facsimile: (609) 919-6701
Email: scohen@morganlewis.com
Attention: Steven M. Cohen
|
|
|
|
|
|
BlueMountain Montenvers Master Fund SCA SICAV-SIF
|
|
c/o BlueMountain Capital Management, LLC
280 Park Ave., 12
th
Floor
New York, NY 10017
Facsimile: (212) 905-3901
Email: pfriedman@bluemountaincapital.com
Attention: Paul Friedman
Email: legalnotices@bmcm.com
|
|
|
|
Attention: General Counsel
With a copy (which shall not constitute notice) to:
Morgan Lewis Bockius LLP
502 Carnegie Center
Princeton, New Jersey 08540
Facsimile: (609) 919-6701
Email: scohen@morganlewis.com
Attention: Steven M. Cohen
|
|
|
|
|
|
BlueMountain Kicking Horse Fund L.P.
|
|
c/o BlueMountain Capital Management, LLC
280 Park Ave., 12
th
Floor
New York, NY 10017
Facsimile: (212) 905-3901
Email: pfriedman@bluemountaincapital.com
Attention: Paul Friedman
Email: legalnotices@bmcm.com
Attention: General Counsel
With a copy (which shall not constitute notice) to:
Morgan Lewis Bockius LLP
502 Carnegie Center
Princeton, New Jersey 08540
Facsimile: (609) 919-6701
Email: scohen@morganlewis.com
Attention: Steven M. Cohen
|
|
|
|
|
|
BlueMountain Timberline Ltd.
|
|
c/o BlueMountain Capital Management, LLC
280 Park Ave., 12
th
Floor
New York, NY 10017
Facsimile: (212) 905-3901
Email: pfriedman@bluemountaincapital.com
Attention: Paul Friedman
Email: legalnotices@bmcm.com
Attention: General Counsel
With a copy (which shall not constitute notice) to:
Morgan Lewis Bockius LLP
502 Carnegie Center
Princeton, New Jersey 08540
Facsimile: (609) 919-6701
Email: scohen@morganlewis.com
Attention: Steven M. Cohen
|
|
|
|
|
|
Blue Mountain Credit Alternatives Master Fund L.P.
|
|
c/o BlueMountain Capital Management, LLC
280 Park Ave., 12
th
Floor
New York, NY 10017
Facsimile: (212) 905-3901
Email: pfriedman@bluemountaincapital.com
Attention: Paul Friedman
Email: legalnotices@bmcm.com
Attention: General Counsel
With a copy (which shall not constitute notice) to:
Morgan Lewis Bockius LLP
502 Carnegie Center
Princeton, New Jersey 08540
Facsimile: (609) 919-6701
|
|
|
|
Email: scohen@morganlewis.com
Attention: Steven M. Cohen
|
|
|
|
|
|
BlueMountain Credit Opportunities Master Fund I L.P.
|
|
c/o BlueMountain Capital Management, LLC
280 Park Ave., 12
th
Floor
New York, NY 10017
Facsimile: (212) 905-3901
Email: pfriedman@bluemountaincapital.com
Attention: Paul Friedman
With a copy (which shall not constitute notice) to:
Morgan Lewis Bockius LLP
502 Carnegie Center
Princeton, New Jersey 08540
Facsimile: (609) 919-6701
Email: scohen@morganlewis.com
Attention: Steven M. Cohen
|
|
|
|
|
|
BlueMountain Long/Short Credit and Distressed Reflection Fund, a sub-fund of AAI BlueMountain Fund PLC
|
|
c/o BlueMountain Capital Management, LLC
280 Park Ave., 12
th
Floor
New York, NY 10017
Facsimile: (212) 905-3901
Email: pfriedman@bluemountaincapital.com
Attention: Paul Friedman
With a copy (which shall not constitute notice) to:
Morgan Lewis Bockius LLP
502 Carnegie Center
Princeton, New Jersey 08540
Facsimile: (609) 919-6701
Email: scohen@morganlewis.com
Attention: Steven M. Cohen
|
|
|
|
|
|
BlueMountain Long Short Credit and Distressed Reflection Fund PLC
|
|
c/o BlueMountain Capital Management, LLC
280 Park Ave., 12
th
Floor
New York, NY 10017
Facsimile: (212) 905-3901
Email: pfriedman@bluemountaincapital.com
Attention: Paul Friedman
With a copy (which shall not constitute notice) to:
Morgan Lewis Bockius LLP
502 Carnegie Center
Princeton, New Jersey 08540
Facsimile: (609) 919-6701
Email: scohen@morganlewis.com
Attention: Steven M. Cohen
|
|
|
|
|
|
BlueMountain Montenvers Master Fund
|
|
c/o BlueMountain Capital Management, LLC
280 Park Ave., 12
th
Floor
New York, NY 10017
Facsimile: (212) 905-3901
Email: pfriedman@bluemountaincapital.com
Attention: Paul Friedman
With a copy (which shall not constitute notice) to:
Morgan Lewis Bockius LLP
502 Carnegie Center
Princeton, New Jersey 08540
|
|
|
|
Facsimile: (609) 919-6701
Email: scohen@morganlewis.com
Attention: Steven M. Cohen
|
|
|
|
|
|
BlueMountain Distressed Master Fund L.P.
|
|
c/o BlueMountain Capital Management, LLC
280 Park Ave., 12
th
Floor
New York, NY 10017
Facsimile: (212) 905-3901
Email: pfriedman@bluemountaincapital.com
Attention: Paul Friedman
With a copy (which shall not constitute notice) to:
Morgan Lewis Bockius LLP
502 Carnegie Center
Princeton, New Jersey 08540
Facsimile: (609) 919-6701
Email: scohen@morganlewis.com
Attention: Steven M. Cohen
|
|
|
|
|
|
BlueMountain Long Short Credit Master Fund L.P.
|
|
c/o BlueMountain Capital Management, LLC
280 Park Ave., 12
th
Floor
New York, NY 10017
Facsimile: (212) 905-3901
Email: pfriedman@bluemountaincapital.com
Attention: Paul Friedman
With a copy (which shall not constitute notice) to:
Morgan Lewis Bockius LLP
502 Carnegie Center
Princeton, New Jersey 08540
Facsimile: (609) 919-6701
Email: scohen@morganlewis.com
Attention: Steven M. Cohen
|
|
|
|
|
|
BlueMountain Strategic Credit Master Fund L.P.
|
|
c/o BlueMountain Capital Management, LLC
280 Park Ave., 12
th
Floor
New York, NY 10017
Facsimile: (212) 905-3901
Email: pfriedman@bluemountaincapital.com
Attention: Paul Friedman
With a copy (which shall not constitute notice) to:
Morgan Lewis Bockius LLP
502 Carnegie Center
Princeton, New Jersey 08540
Facsimile: (609) 919-6701
Email: scohen@morganlewis.com
Attention: Steven M. Cohen
|
|
|
|
|
|
Monarch Alternative Solutions Master Fund Ltd
|
|
c/o Monarch Alternative Capital LP,
535 Madison Avenue,
New York, NY 10022
|
|
|
|
|
|
Monarch Capital Master Partners II LP
|
|
c/o Monarch Alternative Capital LP,
535 Madison Avenue,
New York, NY 10022
|
|
|
|
|
|
MCP Holdings Master LP
|
|
c/o Monarch Alternative Capital LP,
535 Madison Avenue,
New York, NY 10022
|
|
|
|
|
|
Monarch Debt Recovery Master Fund Ltd
|
|
c/o Monarch Alternative Capital LP,
|
|
|
|
535 Madison Avenue,
New York, NY 10022
|
|
|
|
|
|
Monarch Opportunities Master Fund Ltd
|
|
c/o Monarch Alternative Capital LP,
535 Madison Avenue,
New York, NY 10022
|
|
|
|
|
|
P Monarch Recovery Ltd
|
|
c/o Monarch Alternative Capital LP,
535 Madison Avenue,
New York, NY 10022
|
|
|
|
|
|
OCM Marine Holdings TP, L.P.
|
|
c/o Oaktree Capital Management LP,
|
|
|
|
333 South Grand Avenue, 28th Floor
|
|
|
|
Los Angeles, CA 90071
|
|
|
|
Facsimile:
|
(213) 830-6300
|
|
|
|
Email:
|
jford@oaktreecapital.com
|
|
|
|
|
apierce@oaktreecapital.com
|
|
|
|
Attention:
|
B. James Ford
|
|
|
|
|
Adam Pierce
|
|
|
|
|
|
|
|
With a copy (which shall not constitute notice) to:
|
|
|
|
Kirkland & Ellis LLP
|
|
|
|
333 South Hope Street
|
|
|
|
Los Angeles, CA 90071
|
|
|
|
Facsimile:
|
(312) 862-2200
|
|
|
|
Email:
|
christopher.greeno@kirkland.com
|
|
|
|
|
hamed.meshki@kirkland.com
|
|
|
|
Attention:
|
Christopher J. Greeno, P.C.
|
|
|
|
|
Hamed Meshki
|
|
|
|
|
|
Opps Marine Holdings TP, L.P.
|
|
c/o Oaktree Capital Management LP,
|
|
|
|
333 South Grand Avenue, 28th Floor
|
|
|
|
Los Angeles, CA 90071
|
|
|
|
Facsimile:
|
(213) 830-6499
|
|
|
|
Attention:
|
Mahesh Balakrishnan,
|
|
|
|
|
Jennifer Box
|
|
|
|
|
|
Bamboula Partners LP
|
|
3555 Timmons Lane, Suite 800
Houston, Texas 77027
Attention: Whitney Neighbors
Facsimile: (713) 623-2317
Email: Investments@1922investments.com
With a copy to:
1922 Investment Company LLC
3555 Timmons Lane, Suite 800
Houston, Texas 77027
Attention: Lynn-Anne M. Schow
Facsimile: (978) 463-1766
Email: Investments@1922investments.com
|
|
|
|
|
|
Shun Lee Dynasty Holdings LP
|
|
3555 Timmons Lane, Suite 800
Houston, Texas 77027
Attention: Whitney Neighbors
Facsimile: (713) 623-2317
Email: Investments@1922investments.com
With a copy to:
1922 Investment Company LLC
3555 Timmons Lane, Suite 800
Houston, Texas 77027
|
|
|
|
Attention: Lynn-Anne M. Schow
Facsimile: (978) 463-1766
Email: Investments@1922investments.com
|
|
|
|
|
|
BlackRock Funds II, BlackRock High Yield Bond
Portfolio
|
|
c/o BlackRock Financial Management, Inc.
Leveraged Finance Group
55 East 52nd Street
New York, New York 10055
Email: alexander.defelice@blackrock.com
Attention: Alex DeFelice
With a copy (which shall not constitute notice) to:
c/o BlackRock, Inc.
Office of the General Counsel
40 East 52nd Street
New York, New York 10022
Email: legaltransactions@blackrock.com
Attention: David Maryles and Vincent Taurassi
|
|
|
|
|
|
BlackRock Corporate High Yield Fund VI, Inc.
|
|
c/o BlackRock Financial Management, Inc.
Leveraged Finance Group
55 East 52nd Street
New York, New York 10055
Email: alexander.defelice@blackrock.com
Attention: Alex DeFelice
With a copy (which shall not constitute notice) to:
c/o BlackRock, Inc.
Office of the General Counsel
40 East 52nd Street
New York, New York 10022
Email: legaltransactions@blackrock.com
Attention: David Maryles and Vincent Taurassi
|
|
|
|
|
|
MET Investors Series Trust — BlackRock High Yield Portfolio
|
|
c/o BlackRock Financial Management, Inc.
Leveraged Finance Group
55 East 52nd Street
New York, New York 10055
Email: alexander.defelice@blackrock.com
Attention: Alex DeFelice
With a copy (which shall not constitute notice) to:
c/o BlackRock, Inc.
Office of the General Counsel
40 East 52nd Street
New York, New York 10022
Email: legaltransactions@blackrock.com
Attention: David Maryles and Vincent Taurassi
|
|
|
|
|
|
Twin Haven Special Opportunities Fund IV, L.P.
|
|
c/o Twin Haven Capital Partners, LLC
11111 Santa Monica Blvd.
Suite 525
Los Angeles, CA 90025
With a copy (which shall not constitute notice) to:
Willkie Farr & Gallagher LLP
787 Seventh Avenue
New York, New York 10019
Facsimile: (212) 728-9129
|
|
|
|
Email: aturteltaub@willkie.com
Attention: Adam M. Turteltaub
|
SCHEDULE 3.3
Consents
None.
SCHEDULE 3.4(b)
Authorized and Issued Capital Stock
Second Amended and Restated Articles of Incorporation of General Maritime Corporation, dated as of December 11, 2013
Amended and Restated Shareholders’ Agreement, dated as of December 12, 2013, by and among General Maritime Corporation and the shareholders from time to time party thereto Warrant Agreement, dated as of May 17, 2012, between General Maritime Corporation and Computershare Shareowner Services LLC
The 2012 Equity Incentive Plan Documents listed under the heading titled the same of Schedule 5.2(b) shall by incorporated by reference into this Schedule 5.2(d)
Amended and Restated Letter Agreement, dated as of December 12, 2013, by and among General Maritime Corporation, OCM Marine Holdings TP, L.P., ARF II Maritime Holdings LLC and Aurora Resurgence Fund II, LP
Letter Agreement, dated as of December 12, 2013, by and among General Maritime Corporation, OCM Marine Holdings TP, L.P., BlackRock Funds II, BlackRock High Yield Bond Portfolio, BlackRock Corporate High Yield Fund VI, Inc. and MET Investors Series Trust — BlackRock High Yield Portfolio
Letter Agreement, dated as of December 12, 2013, by and among General Maritime Corporation, OCM Marine Holdings TP, L.P. and Twin Haven Special Opportunities Fund IV, L.P.
Following Closing, Amended and Restated Warrant Agreement
New Parent Employee Plan following its effectiveness
SCHEDULE 3.5
Restrictions on Issuance
Agreements Creating Liens
A&R Governing Documents
Equity Purchase Agreement
Registration Rights Agreement
Shareholder Agreement
Required Consents and Approvals
Consents required of certain shareholders of the Parent pursuant to the terms and conditions of the Amended and Restated Shareholders’ Agreement, dated as of December 12, 2013, by and among General Maritime Corporation and the shareholders from time to time party thereto
Consents required of certain shareholders of the Parent pursuant to the terms and conditions of the Second Amended and Restated Articles of Incorporation of General Maritime Corporation, dated as of December 11, 2013
Parent Shareholder Approval
SCHEDULE 3-A
Avenue
Avenue - COPPERS Opportunities Fund, L.P.
Avenue Europe Opportunities Master Fund, L.P.
Avenue-SLP European Opportunities Fund, L.P.
Avenue Europe Special Situations Fund II (Euro), L.P.
Avenue Europe Special Situations Fund II (U.S.), L.P.
Avenue Investments, LP
Avenue International Master, LP
Managed Accounts Master Fund Services - MAP10
Avenue Special Situations Fund VI (Master), LP
SCHEDULE 3-B
Blue Mountain
BlueMountain Guadalupe Peak Fund L.P.
BlueMountain Montenvers Master Fund SCA SICAV-SIF
BlueMountain Kicking Horse Fund L.P.
BlueMountain Timberline Ltd.
Blue Mountain Credit Alternatives Master Fund L.P.
BlueMountain Credit Opportunities Master Fund I L.P.
BlueMountain Long/Short Credit and Distressed Reflection Fund, a sub-fund of AAI BlueMountain Fund PLC
BlueMountain Long Short Credit and Distressed Reflection Fund PLC
BlueMountain Montenvers Master Fund
BlueMountain Distressed Master Fund L.P.
BlueMountain Long Short Credit Master Fund L.P.
BlueMountain Strategic Credit Master Fund L.P.
SCHEDULE 3-C
Monarch
Monarch Alternative Solutions Master Fund Ltd
Monarch Capital Master Partners II LP
MCP Holdings Master LP
Monarch Debt Recovery Master Fund Ltd
Monarch Opportunities Master Fund Ltd
P Monarch Recovery Ltd
SCHEDULE 3-D
Oaktree
OCM Marine Holdings TP, L.P.
Opps Marine Holdings TP, L.P.
SCHEDULE 3-E
BlackRock
BlackRock Funds II, BlackRock High Yield Bond Portfolio
BlackRock Corporate High Yield Fund VI, Inc.
MET Investors Series Trust — BlackRock High Yield Portfolio
SCHEDULE 3-F
Bamboula-Shun Lee
Bamboula Partners LP
Shun Lee Dynasty Holdings LP
APPENDIX 1
Subsidiaries of GenMar
|
Entity Name
|
|
Owner
|
|
Jurisdiction of
Incorporation
|
|
Arlington Tankers Ltd.
|
|
General Maritime Corporation
|
|
Bermuda
|
|
Arlington Tankers, LLC
|
|
Arlington Tankers Ltd.
|
|
Delaware
|
|
Companion Ltd.
|
|
Arlington Tankers Ltd.
|
|
Bermuda
|
|
Compatriot Ltd.
|
|
Arlington Tankers Ltd.
|
|
Bermuda
|
|
Concept Ltd.
|
|
Arlington Tankers Ltd.
|
|
Bermuda
|
|
Concord Ltd.
|
|
Arlington Tankers Ltd.
|
|
Bermuda
|
|
Consul Ltd.
|
|
Arlington Tankers Ltd.
|
|
Bermuda
|
|
Contest Ltd.
|
|
Arlington Tankers Ltd.
|
|
Bermuda
|
|
General Maritime Crewing (Singapore) Pte. Ltd.
|
|
General Maritime Management (Portugal) LLC
|
|
Singapore
|
|
General Maritime Crewing Pte. Ltd.
|
|
General Maritime Crewing (Singapore) Pte. Ltd.
|
|
Russia
|
|
General Maritime Management (Portugal) LLC
|
|
General Maritime Management LLC
|
|
Marshall Islands
|
|
General Maritime Management (Portugal), LDA
|
|
General Maritime Management (Portugal) LLC
|
|
Portugal
|
|
General Maritime Management LLC
|
|
General Maritime Subsidiary Corporation
|
|
Marshall Islands
|
|
General Maritime Subsidiary Corporation
|
|
General Maritime Corporation
|
|
Marshall Islands
|
|
General Maritime Subsidiary II Corporation
|
|
General Maritime Corporation
|
|
Marshall Islands
|
|
General Maritime Subsidiary NSF Corporation
|
|
General Maritime Corporation
|
|
Marshall Islands
|
|
GMR Administration Corp.
|
|
General Maritime Subsidiary Corporation
|
|
Marshall Islands
|
|
Gener8 Maritime Acquisition, Inc.
|
|
General Maritime Corporation
|
|
Marshall Islands
|
|
GMR Agamemnon LLC
|
|
General Maritime Subsidiary Corporation
|
|
Liberia
|
|
GMR Argus LLC
|
|
General Maritime Subsidiary Corporation
|
|
Marshall Islands
|
|
GMR Atlas LLC
|
|
General Maritime Subsidiary II Corporation
|
|
Marshall Islands
|
|
GMR Chartering LLC
|
|
General Maritime Subsidiary Corporation
|
|
New York
|
|
GMR Daphne LLC
|
|
General Maritime Subsidiary Corporation
|
|
Marshall Islands
|
|
GMR Elektra LLC
|
|
General Maritime Subsidiary Corporation
|
|
Marshall Islands
|
|
GMR George T LLC
|
|
General Maritime Subsidiary Corporation
|
|
Marshall Islands
|
|
GMR Harriet G LLC
|
|
General Maritime Subsidiary Corporation
|
|
Liberia
|
|
GMR Hercules LLC
|
|
General Maritime Subsidiary II Corporation
|
|
Marshall Islands
|
|
GMR Hope LLC
|
|
General Maritime Subsidiary Corporation
|
|
Marshall Islands
|
|
GMR Horn LLC
|
|
General Maritime Subsidiary Corporation
|
|
Marshall Islands
|
|
GMR Kara G LLC
|
|
General Maritime Subsidiary Corporation
|
|
Liberia
|
|
GMR Maniate LLC
|
|
General Maritime Subsidiary II Corporation
|
|
Marshall Islands
|
|
GMR Minotaur LLC
|
|
General Maritime Subsidiary Corporation
|
|
Liberia
|
|
GMR Orion LLC
|
|
General Maritime Subsidiary Corporation
|
|
Marshall Islands
|
|
GMR Defiance LLC
|
|
General Maritime Subsidiary Corporation
|
|
Liberia
|
|
GMR Phoenix LLC
|
|
General Maritime Subsidiary Corporation
|
|
Marshall Islands
|
|
GMR Poseidon LLC
|
|
General Maritime Subsidiary II Corporation
|
|
Marshall Islands
|
|
GMR Spartiate LLC
|
|
General Maritime Subsidiary II Corporation
|
|
Marshall Islands
|
|
GMR Spyridon LLC
|
|
General Maritime Subsidiary Corporation
|
|
Marshall Islands
|
|
GMR St. Nikolas LLC
|
|
General Maritime Subsidiary Corporation
|
|
Marshall Islands
|
|
GMR Star LLC
|
|
General Maritime Subsidiary Corporation
|
|
Liberia
|
|
GMR Strength LLC
|
|
General Maritime Subsidiary Corporation
|
|
Liberia
|
|
GMR Ulysses LLC
|
|
General Maritime Subsidiary II Corporation
|
|
Marshall Islands
|
|
GMR Zeus LLC
|
|
General Maritime Subsidiary II Corporation
|
|
Marshall Islands
|
|
STI Cavaliere Shipping Company Limited
|
|
VLCC Acquisition I Corporation
|
|
Marshall Islands
|
|
STI Dundee Shipping Company Limited
|
|
VLCC Acquisition I Corporation
|
|
Marshall Islands
|
|
STI Edinburgh Shipping Company Limited
|
|
VLCC Acquisition I Corporation
|
|
Marshall Islands
|
|
STI Esles Shipping Company Limited
|
|
VLCC Acquisition I Corporation
|
|
Marshall Islands
|
|
STI Glasgow Shipping Company Limited
|
|
VLCC Acquisition I Corporation
|
|
Marshall Islands
|
|
STI Newcastle Shipping Company Limited
|
|
VLCC Acquisition I Corporation
|
|
Marshall Islands
|
|
STI Perth Shipping Company Limited
|
|
VLCC Acquisition I Corporation
|
|
Marshall Islands
|
|
Unique Tankers LLC
|
|
General Maritime Management LLC
|
|
Marshall Islands
|
|
Victory Ltd.
|
|
Arlington Tankers Ltd.
|
|
Bermuda
|
|
Vision Ltd.
|
|
Arlington Tankers Ltd.
|
|
Bermuda
|
|
VLCC Acquisition I Corporation
|
|
General Maritime Corporation
|
|
Marshall Islands
|
Subsidiaries of Navig8
|
Entity Name
|
|
Owner
|
|
Jurisdiction of Incorporation
|
|
Navig8 Crude Tankers 1 Inc
|
|
Navig8 Crude Tankers, Inc.
|
|
Marshall Islands
|
|
Navig8 Crude Tankers 2 Inc
|
|
Navig8 Crude Tankers, Inc.
|
|
Marshall Islands
|
|
Navig8 Crude Tankers 3 Inc
|
|
Navig8 Crude Tankers, Inc.
|
|
Marshall Islands
|
|
Navig8 Crude Tankers 4 Inc
|
|
Navig8 Crude Tankers, Inc.
|
|
Marshall Islands
|
|
Navig8 Crude Tankers 5 Inc
|
|
Navig8 Crude Tankers, Inc.
|
|
Marshall Islands
|
|
Navig8 Crude Tankers 6 Inc
|
|
Navig8 Crude Tankers, Inc.
|
|
Marshall Islands
|
|
Navig8 Crude Tankers 7 Inc
|
|
Navig8 Crude Tankers, Inc.
|
|
Marshall Islands
|
|
Navig8 Crude Tankers 8 Inc
|
|
Navig8 Crude Tankers, Inc.
|
|
Marshall Islands
|
|
Navig8 Crude Tankers 9 Inc
|
|
Navig8 Crude Tankers, Inc.
|
|
Marshall Islands
|
|
Navig8 Crude Tankers 10 Inc
|
|
Navig8 Crude Tankers, Inc.
|
|
Marshall Islands
|
|
Navig8 Crude Tankers 11 Inc
|
|
Navig8 Crude Tankers, Inc.
|
|
Marshall Islands
|
|
Navig8 Crude Tankers 12 Inc
|
|
Navig8 Crude Tankers, Inc.
|
|
Marshall Islands
|
|
Navig8 Crude Tankers 13 Inc
|
|
Navig8 Crude Tankers, Inc.
|
|
Marshall Islands
|
|
Navig8 Crude Tankers 14 Inc
|
|
Navig8 Crude Tankers, Inc.
|
|
Marshall Islands
|
Exhibit 10.12
EXECUTION COPY
(1)
$508,977,536.95
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
among
GENERAL MARITIME CORPORATION,
as Parent,
GENERAL MARITIME SUBSIDIARY II CORPORATION,
and
ARLINGTON TANKERS LTD.
as Guarantors,
GENERAL MARITIME SUBSIDIARY CORPORATION,
as Borrower,
VARIOUS LENDERS
and
NORDEA BANK FINLAND PLC, NEW YORK BRANCH,
as Administrative Agent and Collateral Agent
and
NORDEA BANK FINLAND PLC, NEW YORK BRANCH
and
DNB BANK ASA
as Joint Book Runners
Dated as of May 17, 2012
(1) Conformed through that certain Sixth Amendment, dated as of April 2, 2015.
TABLE OF CONTENTS
|
|
Page
|
|
|
|
|
SECTION 1. Definitions and Accounting Terms
|
2
|
|
|
|
|
1.01 Defined Terms
|
2
|
|
|
|
|
SECTION 2. Amount and Terms of Credit Facility
|
40
|
|
|
|
|
2.01 The Loans
|
40
|
|
2.02 [Intentionally Omitted]
|
41
|
|
2.03 [Intentionally Omitted]
|
41
|
|
2.04 [Intentionally Omitted]
|
41
|
|
2.05 Notes
|
41
|
|
2.06 Pro Rata Borrowings
|
42
|
|
2.07 Interest
|
42
|
|
2.08 Interest Periods
|
43
|
|
2.09 Increased Costs, Illegality, Market Disruption Event, etc.
|
44
|
|
2.10 Compensation
|
46
|
|
2.11 Change of Lending Office
|
46
|
|
2.12 Replacement of Lenders
|
47
|
|
2.13 Defaulting Lenders
|
47
|
|
|
|
|
SECTION 3. Existing Letters of Credit
|
48
|
|
|
|
|
3.01 Existing Letters of Credit
|
48
|
|
3.02 Existing Letter of Credit Participations
|
48
|
|
3.03 Agreement to Repay Existing Letter of Credit Drawings
|
51
|
|
3.04 Increased Costs
|
52
|
|
|
|
|
SECTION 4. Fees
|
52
|
|
|
|
|
4.01 Fees
|
52
|
|
|
|
|
SECTION 5. Prepayments; Payments; Taxes
|
53
|
|
|
|
|
5.01 Voluntary Prepayments
|
53
|
|
5.02 Mandatory Repayments
|
54
|
|
5.03 Method and Place of Payment
|
57
|
|
5.04 Net Payments; Taxes
|
57
|
|
|
|
|
SECTION 6. [Intentionally Omitted]
|
58
|
|
|
|
|
SECTION 7. Representations, Warranties and Agreements
|
58
|
|
|
|
|
7.01 Corporate/Limited Liability Company/Limited Partnership Status
|
58
|
|
7.02 Corporate Power and Authority
|
59
|
|
7.03 No Violation
|
59
|
|
7.04 Governmental Approvals
|
59
|
|
7.05 Financial Statements; Financial Condition; Undisclosed Liabilities
|
59
|
ii
|
7.06 Litigation
|
60
|
|
7.07 True and Complete Disclosure
|
60
|
|
7.08 Use of Proceeds; Margin Regulations
|
61
|
|
7.09 Tax Returns and Payments
|
61
|
|
7.10 Compliance with ERISA
|
62
|
|
7.11 The Security Documents
|
63
|
|
7.12 Capitalization
|
63
|
|
7.13 Subsidiaries
|
64
|
|
7.14 Compliance with Statutes, etc.
|
64
|
|
7.15 Investment Company Act
|
64
|
|
7.16 Money Laundering
|
64
|
|
7.17 Pollution and Other Regulations
|
65
|
|
7.18 Labor Relations
|
66
|
|
7.19 Patents, Licenses, Franchises and Formulas
|
66
|
|
7.20 Indebtedness
|
66
|
|
7.21 Insurance
|
66
|
|
7.22 Concerning the Collateral Vessels
|
66
|
|
7.23 Citizenship
|
67
|
|
7.24 Collateral Vessel Classification; Flag
|
67
|
|
7.25 No Immunity
|
67
|
|
7.26 Fees and Enforcement
|
67
|
|
7.27 Form of Documentation
|
67
|
|
7.28 Solvency
|
68
|
|
7.29 Patriot Act
|
68
|
|
7.30 Certain Business Practices
|
68
|
|
|
|
|
SECTION 8. Affirmative Covenants
|
68
|
|
|
|
|
8.01 Information Covenants
|
68
|
|
8.02 Books, Records and Inspections
|
72
|
|
8.03 Maintenance of Property; Insurance
|
73
|
|
8.04 Corporate Franchises
|
73
|
|
8.05 Compliance with Statutes, etc.
|
73
|
|
8.06 Compliance with Environmental Laws
|
73
|
|
8.07 ERISA
|
74
|
|
8.08 End of Fiscal Years; Fiscal Quarters
|
76
|
|
8.09 Performance of Obligations
|
76
|
|
8.10 Payment of Taxes
|
76
|
|
8.11 Further Assurances
|
76
|
|
8.12 Deposit of Earnings
|
77
|
|
8.13 Ownership of Subsidiaries
|
77
|
|
8.14 Flag of Collateral Vessels; Citizenship; Collateral Vessel Classifications
|
77
|
|
8.15 Use of Proceeds
|
78
|
|
8.16 Sale Vessels Disposal
|
78
|
|
|
|
|
SECTION 9. Negative Covenants
|
78
|
|
|
|
|
9.01 Liens
|
78
|
iii
|
9.02 Consolidation, Merger, Sale of Assets, etc.
|
81
|
|
9.03 Dividends
|
84
|
|
9.04 Indebtedness
|
85
|
|
9.05 Advances, Investments and Loans
|
86
|
|
9.06 Transactions with Affiliates
|
87
|
|
9.07 Capital Expenditures
|
88
|
|
9.08 Minimum Cash Balance
|
89
|
|
9.09 Collateral Maintenance
|
89
|
|
9.10 Interest Expense Coverage Ratio
|
90
|
|
9.11 Limitation on Modifications of Certificate of Incorporation, By-Laws and Certain Other Agreements; etc.
|
90
|
|
9.12 Limitation on Certain Restrictions on Subsidiaries
|
91
|
|
9.13 Limitation on Issuance of Equity Interests
|
91
|
|
9.14 Business
|
92
|
|
9.15 Jurisdiction of Employment; Chartering In Contracts
|
92
|
|
9.16 Bank Accounts
|
92
|
|
9.17 Indebtedness of Non-Recourse Subsidiaries
|
93
|
|
9.18 Prepayments, Etc. of Wells Fargo Indebtedness
|
93
|
|
9.19 Special Provisions Relating to the 2014 Newbuilding Acquisition and Related Transactions
|
93
|
|
9.20 Chartering Arrangements
|
95
|
|
9.21 Special Provisions Relating to Merger Sub and its Subsidiaries
|
95
|
|
|
|
|
SECTION 10. Events of Default
|
96
|
|
|
|
|
10.01 Payments
|
96
|
|
10.02 Representations, etc.
|
96
|
|
10.03 Covenants
|
96
|
|
10.04 Default Under Other Agreements
|
96
|
|
10.05 Bankruptcy, etc.
|
96
|
|
10.06 ERISA
|
97
|
|
10.07 Security Documents
|
98
|
|
10.08 Guaranties
|
98
|
|
10.09 Judgments
|
98
|
|
10.10 Change of Control
|
98
|
|
10.11 Default Under Non-Recourse Subsidiary Agreements
|
98
|
|
|
|
|
SECTION 11. Agency and Security Trustee Provisions Appointment
|
99
|
|
|
|
|
11.01 Nature of Duties
|
100
|
|
11.02 Lack of Reliance on the Agents
|
100
|
|
11.03 Certain Rights of the Agents
|
100
|
|
11.04 Reliance
|
101
|
|
11.05 Indemnification
|
101
|
|
11.06 The Administrative Agent in its Individual Capacity
|
101
|
|
11.07 Holders
|
101
|
|
11.08 Resignation by the Administrative Agent
|
101
|
|
11.09 Collateral Matters
|
102
|
iv
|
11.10 Delivery of Information
|
103
|
|
|
|
|
SECTION 12. Miscellaneous Payment of Expenses, etc.
|
103
|
|
|
|
|
12.01 Right of Setoff
|
104
|
|
12.02 Notices
|
105
|
|
12.03 Benefit of Agreement
|
105
|
|
12.04 No Waiver; Remedies Cumulative
|
108
|
|
12.05 Payments Pro Rata
|
108
|
|
12.06 Calculations; Computations
|
109
|
|
12.07
GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL
|
109
|
|
12.08 Counterparts
|
110
|
|
12.09 Restatement Effective Date
|
111
|
|
12.10 Headings Descriptive
|
114
|
|
12.11 Amendment or Waiver; etc.
|
114
|
|
12.12 Survival
|
116
|
|
12.13 Domicile of Loans
|
116
|
|
12.14 Confidentiality
|
116
|
|
12.15 Register
|
117
|
|
12.16 Judgment Currency
|
117
|
|
12.17 Language
|
118
|
|
12.18 Waiver of Immunity
|
118
|
|
12.19 USA PATRIOT Act Notice
|
118
|
|
12.20 Release of Secondary Collateral and Subsidiary Guarantors
|
119
|
|
|
|
|
SECTION 13. Holdings Guaranty
|
119
|
|
|
|
|
13.01 Guaranty
|
119
|
|
13.02 Bankruptcy
|
120
|
|
13.03
Nature of Liability
|
120
|
|
13.04
Independent Obligation
|
120
|
|
13.05
Authorization
|
120
|
|
13.06
Reliance
|
121
|
|
13.07
Subordination
|
121
|
|
13.08
Waiver
|
122
|
|
13.09 Judgment Shortfall
|
123
|
|
SCHEDULE I
|
—
|
Loans
|
|
SCHEDULE II
|
—
|
Lender Addresses
|
|
SCHEDULE III
|
—
|
Collateral Vessels
|
|
SCHEDULE IV
|
—
|
Existing Liens
|
|
SCHEDULE V
|
—
|
Existing Indebtedness
|
|
SCHEDULE VI
|
—
|
Required Insurance
|
|
SCHEDULE VII
|
—
|
ERISA
|
|
SCHEDULE VIII
|
—
|
Subsidiaries
|
v
|
SCHEDULE IX
|
—
|
Capitalization
|
|
SCHEDULE X
|
—
|
Approved Classification Societies
|
|
SCHEDULE XI
|
—
|
Existing Investments
|
|
SCHEDULE XII
|
—
|
Existing Letters of Credit
|
|
SCHEDULE XIII
|
—
|
Transactions with Affiliates
|
|
SCHEDULE XIV
|
—
|
Subsidiary Guarantors
|
|
SCHEDULE XV
|
—
|
Litigation
|
|
SCHEDULE XVI
|
—
|
Non-Recourse Subsidiaries
|
|
|
|
|
|
EXHIBIT A
|
—
|
Form of Notice of Interest Period Election
|
|
EXHIBIT B
|
—
|
Form of Term Note
|
|
EXHIBIT C-1
|
—
|
Form of Opinion of Kirkland & Ellis LLP, New York counsel to the Credit Parties
|
|
EXHIBIT C-2
|
—
|
Form of Opinion of Constantine P. Georgiopoulos, New York maritime counsel to the Credit Parties
|
|
EXHIBIT C-3
|
—
|
Form of Opinion of Dennis J. Reeder, Esq., Marshall Islands counsel to the Credit Parties
|
|
EXHIBIT C-4
|
—
|
Form of Opinion of George E. Henries, Esq., Liberian counsel to the Credit Parties
|
|
EXHIBIT C-5
|
—
|
Form of Opinion of Conyers, Dill & Pearman Ltd., Bermuda counsel to the Credit Parties
|
|
EXHIBIT D
|
—
|
Form of Officer’s Certificate
|
|
EXHIBIT E
|
—
|
Form of Amended and Restated Subsidiaries Guaranty
|
|
EXHIBIT F-1
|
—
|
Form of Second Amended and Restated Pledge Agreement
|
|
EXHIBIT F-2
|
—
|
Form of Amended and Restated Secondary Pledge Agreement
|
|
EXHIBIT F-3
|
—
|
Form of Pari Passu Pledge Agreement
|
|
EXHIBIT G-1
|
—
|
Form of Assignment of Earnings
|
|
EXHIBIT G-2
|
—
|
Form of Secondary Assignment of Earnings
|
|
EXHIBIT H-1
|
—
|
Form of Assignment of Insurances
|
|
EXHIBIT H-2
|
—
|
Form of Secondary Assignment of Insurances
|
|
EXHIBIT I-1
|
—
|
Form of Marshall Islands Collateral Vessel Mortgage
|
|
EXHIBIT I-2
|
—
|
Form of Marshall Islands Secondary Collateral Vessel Mortgage
|
|
EXHIBIT I-3
|
—
|
Form of Liberian Collateral Vessel Mortgage
|
|
EXHIBIT I-4
|
—
|
Form of Bermuda Collateral Vessel Mortgage
|
|
EXHIBIT J
|
—
|
Form of Excess Liquidity Certificate
|
|
EXHIBIT K
|
—
|
Form of Solvency Certificate
|
|
EXHIBIT L
|
—
|
Form of Assignment and Assumption Agreement
|
|
EXHIBIT M
|
—
|
Form of Amended and Restated Compliance Certificate
|
|
EXHIBIT N
|
—
|
Subordination Provisions
|
|
EXHIBIT O
|
—
|
Form of Parent Officer’s Certificate
|
|
EXHIBIT P-1
|
—
|
Form of Primary Intercreditor Agreement
|
|
EXHIBIT P-2
|
—
|
Form of Secondary Intercreditor Agreement
|
|
EXHIBIT Q
|
—
|
Form of Joinder Agreement
|
vi
THIS THIRD AMENDED AND RESTATED CREDIT AGREEMENT, dated as of May 17, 2012, among GENERAL MARITIME CORPORATION, a Marshall Islands corporation (the “
Parent
”), GENERAL MARITIME SUBSIDIARY CORPORATION, a Marshall Islands corporation (the “
Borrower
”), GENERAL MARITIME SUBSIDIARY II CORPORATION, a Marshall Islands corporation (“
GMSCII
”), in its capacity as a Guarantor, ARLINGTON TANKERS LTD., a Bermuda corporation, as a Guarantor (“
Arlington
”), the Lenders party hereto from time to time, and NORDEA BANK FINLAND PLC, NEW YORK BRANCH (“
Nordea
”), as Administrative Agent (in such capacity, the “
Administrative Agent
”) and as Collateral Agent under the Security Documents (in such capacity, the “
Collateral Agent
”). All capitalized terms used herein and defined in Section 1 are used herein as therein defined.
W I T N E S S E T H
:
WHEREAS, the Borrower, the Parent, GMSCII, Arlington, the lenders party thereto and Nordea, as administrative agent and collateral agent, are party to a Second Amended and Restated Credit Agreement, dated as of May 6, 2011 (as amended, modified and/or supplemented from time to time to, but not including, the Restatement Effective Date, the “
Original Credit Agreement
”);
WHEREAS, the Borrower, GMSCII and the Parent and certain of their subsidiaries commenced voluntary bankruptcy proceedings (the “
Chapter 11 Proceedings
”) on November 17, 2011 under Chapter 11 of title 11 of the United States Code (the “
Bankruptcy Code
”) in the United States Bankruptcy Court for the Southern District of New York (the “
Bankruptcy Court
”);
WHEREAS, in connection with the Chapter 11 Proceedings, the Bankruptcy Court confirmed a plan of reorganization (as such plan may be modified from time to time, in accordance with its terms, the “
Plan of Reorganization
”) under Chapter 11 of the Bankruptcy Code pursuant to a confirmation order dated May 7, 2012;
WHEREAS, pursuant to the Plan of Reorganization, on the Restatement Effective Date (x) each of the Lenders holding outstanding Revolving Loans immediately prior to the Restatement Effective Date will convert such Revolving Loans into Tranche A Loans under this Agreement after giving effect to the paydown of $35,350,780 as part of the Plan of Reorganization, (y) the unutilized Revolving Commitments (as defined in the Original Credit Agreement) of the Lenders, if any, under the Original Credit Agreement will be terminated and (z) the termination value of and interest in accordance with the Final DIP/Cash Collateral Order on the Indebtedness under the Specified Swap shall be exchanged on a dollar for dollar basis for a Tranche B Loan under this Agreement;
WHEREAS, pursuant to the Plan of Reorganization, GMSCII intends to amend and restate its existing $372,000,000 Amended and Restated Credit Agreement, dated as of May 6, 2011 (as amended, modified and/or supplemented from time to time to, but not including, the Restatement Effective Date, the “
Original Other Credit Agreement
”), among GMSCII, as borrower, the Parent, Arlington and the Borrower, as guarantors, the lenders party thereto and Nordea, as administrative agent, with a term loan credit facility providing for the continuation of
the outstanding term loans and conversion of revolving commitments under the Original Other Credit Agreement into term loans to GMSCII (such $273,802,583.31 Second Amended and Restated Credit Agreement (as amended, modified and/or supplemented in accordance with the terms thereof and of the Intercreditor Agreements), among GMSCII, as borrower, the Parent, the Borrower and Arlington, as guarantors, the lenders from time to time party thereto and Nordea, as administrative agent and collateral agent (in such capacities, the “
Other Agent
”), the “
Other Credit Agreement
”);
WHEREAS, subject to certain conditions, including the confirmation of the Plan of Reorganization pursuant to section 1129 of the Bankruptcy Code and the effectiveness of the Plan of Reorganization, pursuant to the Plan of Reorganization, the Lenders under the Original Credit Agreement shall be deemed a party to this Agreement without further action of the Administrative Agent or of the Lenders, and this Agreement, as set forth herein, will replace the Original Credit Agreement, which will have no remaining force and effect;
WHEREAS, pursuant to the terms of the Plan of Reorganization and in consideration for the Lenders under the Original Credit Agreement consenting to the conversion and continuation of Indebtedness under the Other Credit Agreement (including the guarantees thereof) and the continuation of the second priority liens on the collateral securing such Indebtedness, (x) the Guarantors under and as defined in the Other Credit Agreement will guarantee the Obligations under this Agreement and (y) the Obligations of the Credit Parties under this Agreement will continue to be secured by a second priority Lien on the Secondary Collateral; and
WHEREAS, the parties wish to amend and restate the Original Credit Agreement in order to permit the transactions described above and to amend certain other provisions of the Original Credit Agreement.
NOW, THEREFORE, the parties hereto agree that, effective as of the Restatement Effective Date, the Original Credit Agreement shall be, and hereby is, amended and restated in its entirety as follows:
SECTION 1.
Definitions and Accounting Terms
.
1.01
Defined Terms
. As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):
“
2013 Equity Investment
” shall have the meaning provided in the Third Amendment.
“
2014 Newbuilding Acquisition
” shall mean the acquisition of the 2014 Newbuilding Vessels, such acquisition to be implemented by (i) the acquisition of the 2014 Newbuilding Subsidiaries pursuant to the 2014 Newbuilding Master Agreement (the “Initial Phase of the 2014 Newbuilding Acquisition”) and (ii) the acquisition of the 2014 Newbuilding Vessels pursuant to the terms of the 2014 Newbuilding Contracts; provided that such acquisition consideration shall be funded solely as provided in Section 9.19(i).
2
“
2014 Newbuilding Contract
” shall mean shipbuilding contracts to which the 2014 Newbuilding Subsidiaries are party on the Fourth Amendment Effective Date which contracts are listed on Schedule XVIII to this Agreement, each as amended from time to time in accordance with the terms hereof and thereof including pursuant to the 2014 Newbuilding Contract Novation.
“
2014 Newbuilding Contract Novation
” shall mean the novation of the 2014 Newbuilding Contract to the 2014 Newbuilding Subsidiaries described in clause (b) of the definition thereof.
“
2014 Newbuilding Holdco
” shall mean VLCC Acquisition I Corporation, a Marshall Islands corporation, a wholly-owned direct Subsidiary of the Parent formed for the purpose of implementing the 2014 Newbuilding Acquisition, the assets of which shall consist primarily of the Capital Stock of the 2014 Newbuilding Subsidiaries.
“
2014 Newbuilding Master Agreement
” shall mean the Master Agreement, dated as of March 18, 2014 by and among 2014 Newbuilding Holdco, the 2014 Newbuilding Subsidiaries and Scorpio Tankers Inc., as such agreement may be amended or modified in accordance with the terms hereof and thereof.
“
2014 Newbuilding Subsidiaries
” shall mean (a) prior to the 2014 Newbuilding Contract Novation, the Persons acquired by the 2014 Newbuilding Holdco pursuant to the 2014 Newbuilding Master Agreement and (b) upon and after the 2014 Newbuilding Contract Novation, the Subsidiaries of 2014 Newbuilding Holdco who have succeeded to the Persons described in clause (a) each of which is party to a 2014 Newbuilding Contract.
“
2014 Newbuilding Vessel
” shall mean the seven VLCCs to be acquired by the 2014 Newbuilding Subsidiaries pursuant to the 2014 Newbuilding Contract.
“
273 Blocked Account
” shall mean the “273 Blocked Account” as defined in the Other Credit Agreement.
“
273 Blocked Amount
” shall mean the “273 Blocked Amount” as defined in the Other Credit Agreement.
“
508 Blocked Account
” shall mean a non-interest bearing blocked account with Nordea or Nordea Bank Finland plc, Cayman Islands Branch, as depository bank, with respect to which the Parent shall have duly executed and delivered a control agreement granting a first priority security interest to the Pledgee (as defined in the Pari Passu Pledge Agreement) (reasonably satisfactory in all respects to such Pledgee).
“
508 Blocked Amount
” shall have the meaning provided in Section 9.09(b).
“
Acceptable Flag Jurisdiction
” shall have the meaning provided in Section 8.14.
“
Administrative Agent
” shall have the meaning provided in the first paragraph of this Agreement, and shall include any successor thereto.
3
“
Affiliate
” shall mean, with respect to any Person, any other Person (including, for purposes of Section 9.06 only, all directors, officers and partners of such Person) directly or indirectly controlling, controlled by, or under direct or indirect common control with, such Person;
provided
,
however
, that for purposes of Section 9.06, an Affiliate of the Parent shall include any Person that directly or indirectly owns more than 5% of any class of the capital stock of the Parent and any officer or director of the Parent or any of its Subsidiaries. A Person shall be deemed to control another Person if such Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of such other Person, whether through the ownership of voting securities, by contract or otherwise. Notwithstanding anything to the contrary contained above, for purposes of Section 9.06, none of the Administrative Agent, the Collateral Agent or any Lender (or any of their respective affiliates) shall be deemed to constitute an Affiliate of the Parent or its Subsidiaries in connection with the Credit Documents or its dealings or arrangements relating thereto.
“
Affiliated Lender
” shall have the meaning provided in Section 12.04(d).
“
Agamemnon
” shall mean the Liberian flag vessel GENMAR AGAMEMNON, Official Number 10257.
“
Agents
” shall mean, collectively, the Administrative Agent, the Collateral Agent, each Joint Book Runner and each Issuing Lender.
“
Aggregate Collateral Vessel Value
” shall have the meaning provided in Section 9.09(a).
“
Aggregate Credit Agreement Exposure
” shall mean, at any time, the aggregate outstanding principal amount of the Loans under this Agreement at such time and the outstanding principal amount of the loans under the Other Credit Agreement at such time.
“
Aggregate Primary Collateral Vessel Value
” shall have the meaning provided in Section 9.09(a).
“
Agreement
” shall mean this Third Amended and Restated Credit Agreement, as modified, supplemented, amended or restated from time to time.
“
Amendment Prepayment
” shall have the meaning provided in the Third Amendment.
“
Applicable Margin
” shall mean a percentage per annum equal to 4.00%.
“
Applicable Property
” shall have the meaning provided in Section 9.01.
“
Approved Appraiser
” shall mean (i) at any time that the Parent and its Subsidiaries have a Loan to Value Ratio equal to or greater than 0.80 to 1.00, H. Clarksons & Company Limited, R.S. Platou Shipbrokers a.s., or Pareto Shipbrokers A/S, and (ii) at any other time, H. Clarksons & Company Limited, Fearnleys Ltd., R.S. Platou Shipbrokers a.s., Lorentzen
4
& Stemoco or Simpson Spence & Young Ltd.; provided, that, at any time any other independent appraisal firm that is acceptable to the Administrative Agent at such time shall be deemed to constitute an Approved Appraiser.
“
Arlington
” shall have the meaning provided in the first paragraph of this Agreement.
“
Assignment and Assumption Agreement
” shall mean the Assignment and Assumption Agreement substantially in the form of Exhibit L (appropriately completed).
“
Assignment of Charters
” shall have the meaning provided in the definition of “Collateral and Guaranty Requirements.”
“
Assignment of Earnings
” shall have the meaning provided in the definition of “Collateral and Guaranty Requirements.”
“
Assignment of Insurances
” shall have the meaning provided in the definition of “Collateral and Guaranty Requirements.”
“
Bankruptcy Code
” shall have the meaning provided in Section 10.05.
“
Bankruptcy Court
” shall have the meaning provided in the Recitals.
“
Base Rate
” shall mean, for any day, a rate per annum equal to the highest of (i) the Prime Rate in effect on such day, (ii) the sum of the Federal Funds Rate for such day plus ½ of 1% per annum and (iii) the Eurodollar Rate for a Eurodollar Loan denominated in Dollars with a one-month interest period commencing on such day
plus
1.00%. For purposes of this definition, the Eurodollar Rate shall be determined using the Eurodollar Rate as otherwise determined by the Administrative Agent in accordance with the definition of Eurodollar Rate, except that (x) if a given day is a Business Day, such determination shall be made on such day (rather than two Business Days prior to the commencement of an Interest Period) or (y) if a given day is not a Business Day, the Eurodollar Rate for such day shall be the rate determined by the Administrative Agent pursuant to preceding clause (x) for the most recent Business Day preceding such day. Any change in the Base Rate due to a change in the Prime Rate, the Federal Funds Rate or such Eurodollar Rate shall be effective as of the opening of business on the day of such change in the Prime Rate, the Federal Funds Rate or such Eurodollar Rate, respectively.
“
Blocked Accounts
” shall mean the 508 Blocked Account and the 273 Blocked Account.
“
BlueMountain Parent Indebtedness
” shall mean Indebtedness incurred by the Parent from, among others, BlueMountain Capital and its affiliates in an aggregate principal amount not to exceed $131,600,000 plus the amount of interest accrued after the incurrence thereof and capitalized or paid in kind in accordance with the terms thereof and other amounts payable in connection therewith; provided that (i) such Indebtedness shall mature no earlier than the first anniversary of the Maturity Date and shall not require any scheduled amortization, mandatory redemption or prepayment prior to the final maturity thereof (other than any prepayment required (a) from the net cash proceeds from the disposition of any Equity Interests
5
of 2014 Newbuilding Holdco, or any assets of 2014 Newbuilding Holdco and/or the 2014 Newbuilding Subsidiaries and/or (b) upon a change of control (as defined in the documentation governing such Indebtedness) or acceleration of such Indebtedness following an event of default thereunder), (ii) such Indebtedness shall not be secured or guaranteed by any Subsidiary of the Parent other than 2014 Newbuilding Holdco and the 2014 Newbuilding Subsidiaries and (iii) such Indebtedness shall permit the Parent at its option to make all interest payments thereunder in kind or in cash.
“
Borrower
” shall have the meaning provided in the first paragraph of this Agreement.
“
Borrowing
” shall mean the borrowing of Tranche A Loans from all the Lenders (other than Defaulting Lenders) on a given date having the same Interest Period.
“
Business Day
” shall mean any day except Saturday, Sunday and any day which shall be in New York City, Hamburg or London a legal holiday or a day on which banking institutions are authorized or required by law or other government action to close.
“
Capital Expenditures
” shall mean, with respect to any Person, all expenditures by such Person which should be capitalized in accordance with GAAP and, without duplication, the amount of Capitalized Lease Obligations incurred by such Person.
“
Capitalized Lease Obligations
” of any Person shall mean all rental obligations which, under GAAP, are or will be required to be capitalized on the books of such Person, in each case taken at the amount thereof accounted for as indebtedness in accordance with such principles.
“
Cash Equivalents
” shall mean (i) securities issued or directly and fully guaranteed or insured by the United States or any agency or instrumentality thereof (
provided
that the full faith and credit of the United States is pledged in support thereof) having maturities of not more than one year from the date of acquisition, (ii) time deposits and certificates of deposit of any commercial bank having, or which is the principal banking subsidiary of a bank holding company having, capital, (x) surplus and undivided profits aggregating in excess of $200,000,000 and (y) a long-term unsecured debt rating of at least “A” or the equivalent thereof from S&P or “A2” or the equivalent thereof from Moody’s with maturities of not more than one year from the date of acquisition by such Person, (iii) repurchase obligations with a term of not more than 90 days for underlying securities of the types described in clause (i) above entered into with any bank meeting the qualifications specified in clause (ii) above, (iv) commercial paper issued by any Person incorporated in the United States rated at least A-1 or the equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody’s and in each case maturing not more than one year after the date of acquisition by such Person, and (v) investments in money market funds substantially all of whose assets are comprised of securities of the types described in clauses (i) through (iv) above.
“
Cash Flow Projections
” shall have the meaning provided in Section 8.01(l).
6
“
CERCLA
” shall mean the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as the same may be amended from time to time, 42 U.S.C. § 9601
et
seq.
“
Change of Control
” shall mean (i) the Parent shall at any time and for any reason fail to own or control, directly or indirectly, 100% of the Equity Interests of the Borrower and each Subsidiary Guarantor which owns a Collateral Vessel, except in the case of a non-U.S. Subsidiary Guarantor, any such other ownership as required by applicable law, (ii) the sale, lease or transfer of all or substantially all of the Parent’s assets to any Person or group (as such term is used in Section 13(d)(3) of the Exchange Act), (iii) the liquidation or dissolution of the Parent or the Borrower, (iv) at any time prior to the consummation of a Qualifying IPO, (1) the Permitted Holders shall at any time cease to own, directly or indirectly, beneficially or of record, shares representing more than 15% of the outstanding voting or economic Equity Interests of the Parent or (2) any Person or Persons constituting a “group” (as such term is used in Section 13(d) and 14(d) of the Exchange Act, but excluding any benefit plan of such Person or Persons and its or their Subsidiaries, and any Person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan and excluding the shareholders of Navig8 to the extent such shareholders constitute a “group” in connection with the transactions contemplated by the Merger Agreement), other than a Permitted Holder, becomes the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or indirectly, of Stock representing more than the percentage of outstanding voting Equity Interests of the Parent beneficially owned, directly or indirectly, in the aggregate by the Permitted Holders, (v) at any time upon or after the consummation of a Qualifying IPO, (x) any Person or Persons constituting a “group” (as such term is used in Section 13(d) and 14(d) of the Exchange Act, but excluding any benefit plan of such Person or Persons and its or their Subsidiaries, and any Person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan), other than a Permitted Holder, becomes the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or indirectly, of Stock representing more than 35% of the outstanding voting Equity Interests of the Parent and (y) the percentage of outstanding voting Equity Interests of the Parent so held by such Person or Persons is greater than the percentage of outstanding voting Equity Interests of the Parent beneficially owned, directly or indirectly, in the aggregate by the Permitted Holders, (vi) the replacement of a majority of the directors on the board of directors of the Parent over a two-year period from the directors who constituted the board of directors of the Parent at the beginning of such period, and such replacement shall not have been approved by a vote of at least a majority of the board of directors of the Parent then still in office who either were members of such board of directors at the beginning of such period or whose election as a member of such Board of Directors was previously so approved or (vii ) a “change of control” or similar event shall occur as provided in any outstanding Indebtedness (excluding Indebtedness with an aggregate principal amount of less than $20,000,000) of Parent or any of its Subsidiaries (or the documentation governing the same).
“
Chapter 11 Proceedings
” shall have the meaning provided in the Recitals.
“
Code
” shall mean the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated and rulings issued thereunder. Section references to the Code are to the Code, as in effect at the date of this Agreement and any subsequent provisions of the Code amendatory thereof, supplemental thereto or substituted therefor.
7
“
Collateral
” shall mean all Primary Collateral and Secondary Collateral.
“
Collateral Agent
” shall mean the Administrative Agent acting as mortgagee, security trustee or collateral agent for the Secured Creditors pursuant to the Security Documents.
“
Collateral and Guaranty Requirements
” shall mean with respect to each Collateral Vessel or each Credit Party, as the case may be, the requirement that:
(i)
each Subsidiary defined as a Subsidiary Guarantor shall have duly authorized, executed and delivered to the Administrative Agent a reaffirmation of the Subsidiaries Guaranty, substantially in the form of Exhibit E (as modified, supplemented or amended from time to time, together with any Joinder Agreement, the “
Subsidiaries Guaranty
”), or a joinder thereto substantially in the form of Exhibit Q (as modified, supplemented or amended from time to time, the “
Joinder Agreement
”), and the Subsidiaries Guaranty shall be in full force and effect;
(ii)
the Parent, the Borrower, Arlington and each Subsidiary Guarantor described in clause (x) of the definition thereof shall have (x) duly authorized, executed and delivered the Second Amended and Restated Pledge Agreement substantially in the form of Exhibit F-1 (as modified, supplemented or amended from time to time, the “
Pledge Agreement
”) or a joinder thereto, and shall have (A) delivered to the Collateral Agent, as pledgee, all the Pledged Securities referred to therein, together with executed and undated transfer powers, including, without limitation and to the extent applicable (within ten days after the Effective Date), a charge over shares of any Bermuda registered Subsidiary Guarantor taken by way of a Bermuda-law governed charge over shares, and (B) otherwise complied with all of the requirements set forth in the Pledge Agreement, and (y) duly authorized, executed and delivered any other related documentation necessary or advisable to perfect the Lien on the Pledge Agreement Collateral in the respective jurisdictions of formation of the respective Subsidiary Guarantor, Arlington, the Parent or the Borrower, as the case may be;
(iii)
the Parent, GMSCII and each Subsidiary Guarantor described in clause (y) of the definition thereof shall have (x) duly authorized, executed and delivered the Amended and Restated Secondary Pledge Agreement substantially in the form of Exhibit F-2 (as modified, supplemented or amended from time to time, the “
Secondary Pledge Agreement
”) or a joinder thereto, and shall have (A) delivered to the Other Agent, as pledgee and bailee on behalf of the Secured Creditors in accordance with the Secondary Intercreditor Agreement, all the Pledged Securities referred to therein, together with executed and undated transfer powers, including, without limitation and to the extent applicable (within ten days after the Effective Date), a charge over shares of any Bermuda registered Subsidiary Guarantor taken by way of a Bermuda-law governed charge over shares, and (B) otherwise complied with all of the requirements set forth in the Secondary Pledge Agreement and (y) duly authorized, executed and delivered to the Other Agent any other related documentation necessary or advisable to perfect the Lien on the Secondary Pledge Agreement Collateral in the respective jurisdictions of formation of the Parent, the respective Subsidiary Guarantor or GMSCII, as the case may be;
(iv)
the Parent, the Borrower, Arlington, GMSCII and any other Person that becomes a Credit Party at any time (other than a Credit Party that is a Subsidiary Guarantor)
8
shall have (x) duly authorized, executed and delivered the Pari Passu Pledge Agreement substantially in the form of Exhibit F-3 (as modified, supplemented or amended from time to time, the “
Pari Passu Pledge Agreement
”) or a joinder thereto, and shall have complied with all of the requirements set forth in the Pari Passu Pledge Agreement, and (y) duly authorized, executed and delivered any other related documentation necessary or advisable to perfect the Lien on the applicable Pledge Agreement Collateral in the respective jurisdictions of formation of Arlington, the Parent, the Borrower, GMSCII or such other Credit Party, as the case may be;
(v)
the Parent, GMSCII, Arlington, the Borrower, each Subsidiary Guarantor that owns a Collateral Vessel, the Collateral Agent and Nordea (or such other deposit account bank as the Administrative Agent may agree in its sole discretion), as depositary bank, shall have duly executed and delivered a control agreement substantially in the form attached to the Pledge Agreement, the Secondary Pledge Agreement and/or the Pari Passu Pledge Agreement, as the case may be (or, in each case, such other form as may be reasonably acceptable to the Administrative Agent), with respect to any Concentration Account owned by the Parent, GMSCII, Arlington, the Borrower or such Subsidiary Guarantor (or, if a control agreement with respect to any such Concentration Account shall have been executed and delivered by the Parent, GMSCII, Arlington, the Borrower or any such Subsidiary Guarantor prior to the Restatement Effective Date, a reaffirmation of such control agreement);
provided
that, prior to the Discharge of the First-Priority Obligations (as defined in the Secondary Intercreditor Agreement) in full, no Subsidiary Guarantor that owns a Secondary Collateral Vessel shall be required to execute and deliver a control agreement to the Collateral Agent with respect to a Concentration Account as defined in the Secondary Pledge Agreement;
(vi)
each Subsidiary Guarantor that owns a Primary Collateral Vessel shall (A) have duly authorized, executed and delivered reaffirmations of such Subsidiary Guarantor’s (x) Assignment of Earnings substantially in the form of Exhibit G-1 (as modified, supplemented or amended from time to time, the “
Assignment of Earnings
”) and (y) Assignment of Insurances substantially in the form of Exhibit H-1 (as modified, supplemented or amended from time to time, the “
Assignment of Insurances
”), together covering all of such Subsidiary Guarantor’s present and future Earnings and Insurance Collateral on such Primary Collateral Vessels, and (B) use its commercially reasonably efforts to obtain an Assignment of Charters substantially in the form of Exhibit B to the Assignment of Earnings (as modified, supplemented or amended from time to time, the “
Assignment of Charters
”) for any charter or similar contract that has as of the execution date of such charter or similar contract a remaining term of 12 months or greater (including any renewal or extension option) (or, if an Assignment of Charters with respect to any such Primary Collateral Vessel shall have been executed and delivered by any such Subsidiary Guarantor prior to the Restatement Effective Date, a reaffirmation of such Assignment of Charters), and shall use commercially reasonable efforts to provide appropriate notices and consents related thereto, together covering all of such Subsidiary Guarantor’s present and future Earnings and Insurance Collateral on such Primary Collateral Vessels, in each case together with:
(a)
proper Financing Statements (Form UCC-1) or amendments thereto, as requested by the Administrative Agent, in form for filing under the UCC or in other appropriate filing offices of each jurisdiction as may be necessary to perfect the security interests purported to be created by the Pledge
9
Agreement, the Pari Passu Pledge Agreement, the Assignment of Earnings, Assignment of Charters and the Assignment of Insurances; and
(b)
certified copies of Requests for Information or Copies (Form UCC-11), or equivalent reports, listing all effective financing statements that name any Credit Party as debtor and that are filed in Washington, D.C. and any other relevant jurisdiction, together with copies of such other financing statements (none of which shall cover the Collateral, other than as set forth in the Intercreditor Agreements, unless the Collateral Agent shall have received Form UCC-3 Termination Statements (or such other termination statements as shall be required by local law) fully executed for filing if required by applicable laws in respect thereof);
(vii)
each Subsidiary Guarantor that owns a Secondary Collateral Vessel shall (A) have duly authorized, executed and delivered reaffirmations of such Subsidiary Guarantor’s (x) Assignment of Earnings substantially in the form of Exhibit G-2 (as modified, supplemented or amended from time to time, the “
Secondary Assignment of Earnings
”) and (y) Assignment of Insurances substantially in the form of Exhibit H-2 (as modified, supplemented or amended from time to time, the “
Secondary Assignment of Insurances
”), together covering all of such Subsidiary Guarantor’s present and future Secondary Earnings and Insurance Collateral on such Secondary Collateral Vessels, and (B) use its commercially reasonably efforts to obtain an Assignment of Charters substantially in the form of Exhibit B to the Secondary Assignment of Earnings (as modified, supplemented or amended from time to time, the “
Secondary Assignment of Charters
”) for any charter or similar contract that has as of the execution date of such charter or similar contract a remaining term of twelve months or greater (including any renewal or extension option) (or, if an Assignment of Charters with respect to any such Secondary Collateral Vessel shall have been executed and delivered by any such Subsidiary Guarantor prior to the Restatement Effective Date, a reaffirmation of such Assignment of Charters), and shall use commercially reasonable efforts to provide appropriate notices and consents related thereto, together covering all of such Subsidiary Guarantor’s present and future Secondary Earnings and Insurance Collateral on such Secondary Collateral Vessels, in each case together with:
(a)
proper Financing Statements (Form UCC-1) or amendments thereto, as requested by the Administrative Agent, in form for filing under the UCC or in other appropriate filing offices of each jurisdiction as may be necessary to perfect the security interests purported to be created by the Secondary Pledge Agreement, the Secondary Assignment of Earnings, the Secondary Assignment of Charters and the Secondary Assignment of Insurances; and
(b)
certified copies of Requests for Information or Copies (Form UCC-11), or equivalent reports, listing all effective financing statements that name any Credit Party as debtor and that are filed in Washington, D.C. and any other relevant jurisdiction, together with copies of such other financing statements (none of which shall cover the Collateral, other than as set forth in the Intercreditor Agreements, unless the Collateral Agent shall have received Form UCC-3 Termination Statements (or such other termination statements as shall be
10
required by local law) fully executed for filing if required by applicable laws in respect thereof);
(viii)
each Subsidiary Guarantor that owns a Collateral Vessel shall have duly authorized, executed and delivered, and caused to be recorded in the appropriate Vessel registry (x) in the case of each Primary Collateral Vessel, a Collateral Vessel Mortgage (together with any amendments thereto as may be requested by the Collateral Agent on or prior to the Restatement Effective Date in form and substance satisfactory to the Collateral Agent and the Subsidiary Guarantor that owns such Primary Collateral Vessel) with respect to such Primary Collateral Vessel and such Collateral Vessel Mortgage shall be effective to create in favor of the Collateral Agent and/or the Lenders a legal, valid and enforceable first priority security interest, in and lien upon such Primary Collateral Vessel and (y) in the case of each Secondary Collateral Vessel, a Secondary Collateral Vessel Mortgage (together with any amendments thereto as may be requested by the Collateral Agent on or prior to the Restatement Effective Date in form and substance satisfactory to the Collateral Agent and the Subsidiary Guarantor that owns the relevant Secondary Collateral Vessel) with respect to such Secondary Collateral Vessel and such Secondary Collateral Vessel Mortgage shall be effective to create in favor of the Collateral Agent and/or the Lenders a legal, valid and enforceable second priority security interest, in and lien upon such Secondary Collateral Vessel, in each case subject only to Permitted Liens;
(ix)
all filings, deliveries of instruments and other actions necessary or desirable in the reasonable opinion of the Collateral Agent to perfect and preserve the security interests described in clauses (ii) through and including (vii) above shall have been duly effected and the Collateral Agent shall have received evidence thereof in form and substance reasonably satisfactory to the Collateral Agent;
(x)
the Administrative Agent shall have received each of the following:
(a)
certificates of ownership from appropriate authorities showing (or confirmation updating previously reviewed certificates and indicating) the registered ownership of such Collateral Vessel by the relevant Subsidiary Guarantor;
(b)
the results of maritime registry searches with respect to such Collateral Vessel, indicating no record liens other than Liens in favor of the Collateral Agent and/or the Lenders and Permitted Liens;
(c)
class certificates from a classification society listed on
Schedule X
or another classification society reasonably acceptable to the Administrative Agent, indicating that such Collateral Vessel meets the criteria specified in Section 7.24;
(d)
certified copies of all agreements related to the technical and commercial management of each Collateral Vessel;
(e)
certified copies of all ISM and ISPS Code documentation for each Collateral Vessel; and
11
(f)
a report, in form and scope reasonably satisfactory to the Administrative Agent, from a firm of independent marine insurance brokers reasonably acceptable to the Administrative Agent (it being understood that Leeds and Leeds, AON and Marsh are acceptable) with respect to the insurance maintained by the Credit Parties in respect of such Collateral Vessel, together with a certificate from such broker certifying that such insurances (i) are placed with such insurance companies and/or underwriters and/or clubs, in such amounts, against such risks, and in such form, as are customarily insured against by similarly situated insureds for the protection of the Administrative Agent, the Collateral Agent and/or the Lenders as mortgagee, (ii) otherwise conform with the insurance requirements of each respective Collateral Vessel Mortgage or Secondary Collateral Vessel Mortgage, as applicable and (iii) comply with the Required Insurance;
(xi)
the Administrative Agent shall have received from (a) special New York counsel to each of the Credit Parties (which shall be Kirkland & Ellis LLP or other counsel to each of the Credit Parties qualified in such jurisdiction and reasonably satisfactory to the Administrative Agent), an opinion addressed to the Administrative Agent and each of the Lenders and dated as of the Restatement Effective Date covering the matters set forth in Exhibit C-1, (b) special New York maritime counsel to each of the Credit Parties (which shall be Constantine P. Georgiopoulos or other counsel to each of the Credit Parties qualified in such jurisdiction and reasonably satisfactory to the Administrative Agent), an opinion addressed to the Administrative Agent and each of the Lenders and dated as of the Restatement Effective Date covering the matters set forth in Exhibit C-2, (c) special Marshall Islands counsel to each of the Credit Parties (which shall be Dennis J. Reeder, Esq. or other counsel to each of the Credit Parties qualified in such jurisdiction and reasonably satisfactory to the Administrative Agent), an opinion addressed to the Administrative Agent and each of the Lenders and dated as of the Restatement Effective Date covering the matters set forth in Exhibit C-3, (d) special Liberian counsel to each of the Credit Parties (which shall be George E. Henries, Esq. or other counsel to each of the Credit Parties qualified in such jurisdiction and reasonably satisfactory to the Administrative Agent), an opinion addressed to the Administrative Agent and each of the Lenders and dated as of the Restatement Effective Date covering the matters set forth in Exhibit C-4, (e) special Bermuda counsel to each of the Credit Parties (which shall be Conyers, Dill & Pearman Limited or other counsel to each of the Credit Parties qualified in such jurisdiction and reasonably satisfactory to the Administrative Agent), an opinion addressed to the Administrative Agent and each of the Lenders and dated as of the Restatement Effective Date covering the matters set forth in Exhibit C-5 and (f) counsel to each of the Credit Parties in the jurisdiction of the flag of the Collateral Vessel, an opinion addressed to the Administrative Agent and each of the Lenders and dated as of the Restatement Effective Date covering such matters as shall be reasonably required by the Administrative Agent, in each case which shall (x) be in form and substance reasonably acceptable to the Administrative Agent and (y) cover the matters set forth in the relevant Exhibit, including the perfection of the security interests (other than those to be covered by opinions delivered pursuant to the other opinions above) granted pursuant to the Security Documents, and such other matters incidental to the transactions contemplated herein as the Administrative Agent may reasonably request;
12
(xii)
(a) the Administrative Agent shall have received a certificate, dated the Restatement Effective Date and reasonably acceptable to the Administrative Agent, signed by the Chairman of the Board, Chief Executive Officer, the President, any Vice President, the Treasurer or an authorized manager, member or general partner of each Credit Party (other than any Credit Party that delivered such a certificate pursuant to the Original Credit Agreement), and attested to by the Secretary or any Assistant Secretary (or, to the extent such Credit Party does not have a Secretary or Assistant Secretary, the analogous Person within such Credit Party) of such Credit Party, as the case may be, substantially in the form of Exhibit D, with appropriate insertions, together with copies of the Certificate of Incorporation and By-Laws (or equivalent organizational documents) of such Credit Party and the resolutions of such Credit Party referred to in such certificate authorizing the consummation of the Transaction;
provided
that such documents shall not be required to be delivered so long as such Credit Party certifies that there have been no changes made in the organizational documents delivered in connection with the Original Credit Agreement; and (b) the Administrative Agent shall have received copies of governmental approvals, good standing certificates and bring-down telegrams or facsimiles, if any, which the Administrative Agent may have reasonably requested in connection therewith, such documents and papers, where appropriate, to be certified by proper corporate or governmental authorities; and
(xiii)
the Parent shall have (x) duly authorized, executed and delivered to the Collateral Agent, as secured party on behalf of the Secured Creditors, a legal, valid and enforceable first priority security interest, in and Lien upon all its assets (to the extent not already subject to a security interest pursuant to any of clauses (ii) through (v) above and other than (1) its Equity Interests in 2014 Newbuilding Holdco, (2) its Equity Interests in Unique Tankers, (3) any assets owned by General Maritime Management related to the Unique Tankers Pool and (4) its Equity Interests in any Non-Recourse Subsidiary), in each case pursuant to documentation in form and substance reasonably satisfactory to the Administrative Agent and (y) effected all filings, deliveries of instruments and other actions necessary or advisable in the reasonable opinion of the Administrative Agent to perfect and preserve each security interest described in this clause (xiii) in each relevant jurisdiction, as the case may be (including, without limitation, the delivery of customary lien searches, proper Financing Statements (Form UCC-1) in form for filing under the UCC or in other appropriate filing offices of each jurisdiction, Certificated Securities (as such term is defined in Section 8-102(A)(4) of the UCC), executed and undated transfer powers, legal opinions, board resolutions and officer’s certificates), in each case which shall be in form and substance reasonably satisfactory to the Administrative Agent.
“
Collateral Disposition
” shall mean (i) the sale, lease, transfer or other disposition of Collateral by the Parent or any of its Subsidiaries to any Person other than the Parent or any Subsidiary of the Parent or (ii) any Event of Loss of any Collateral Vessel;
provided
,
however
, that the charter of any Collateral Vessel shall not be considered a Collateral Disposition.
“
Collateral Vessel
” shall mean each Primary Collateral Vessel and each Secondary Collateral Vessel; it being understood and agreed that any Vessel acquired in a Permitted New Vessel Acquisition shall not constitute a Collateral Vessel.
“
Collateral Vessel Mortgage
” shall mean, with respect to the Primary Collateral Vessels, a first priority statutory mortgage and deed of covenants supplemental thereto or a first
13
preferred mortgage in substantially the form of Exhibit I-1, Exhibit I-3 or Exhibit I-4, as applicable, or such other form as may be reasonably satisfactory to the Administrative Agent, as such first priority statutory mortgage and deed of covenants supplemental thereto or a first preferred mortgage may be amended, modified or supplemented from time to time in accordance with the terms hereof and thereof.
“
Concentration Account
” shall have the meaning provided in the Pledge Agreement, the Secondary Pledge Agreement and/or the Pari Passu Pledge Agreement, as applicable.
“
Consolidated Cash Interest Expense
” shall mean, for any period, (i) the total consolidated interest expense paid or payable in cash of the Parent and its Subsidiaries (including, without limitation, to the extent included under GAAP, all commission, discounts and other commitment fees and charges (
e.g.
, fees with respect to letters of credit, Interest Rate Protection Agreements and Other Hedging Agreements) for such period (calculated without regard to any limitations on payment thereof), adjusted to exclude (to the extent same would otherwise be included in the calculation above in this clause (i)), the amortization of any deferred financing costs for such period and any interest expense actually “paid in kind” or accreted during such period,
plus
(ii) without duplication, that portion of Capitalized Lease Obligations of the Parent and its Subsidiaries on a consolidated basis representing the interest factor for such period,
minus
(iii) cash interest income.
“
Consolidated EBITDA
” shall mean, for any period, Consolidated Net Income for such period adjusted by (A) adding thereto the following to the extent deducted in calculating such Consolidated Net Income: (i) consolidated interest expense and amortization of debt discount and commissions and other fees and charges associated with Indebtedness for such period, (ii) consolidated income tax expense for such period, (iii) all amounts attributable to depreciation and amortization for such period, (iv) any extraordinary losses, expenses or charges for such period, (v) any non-cash management retention or incentive program payments for such period, (vi) non-cash restricted stock compensation, (vii) any non-cash charges or losses, including, without limitation, non-cash compensation expenses for such period,
less
any extraordinary gains for such period, (viii) any losses from the sales of any Vessels for such period, (ix) all costs and expenses incurred (a) prior to or within 180 days following the Restatement Effective Date and, in no event, later than December 31, 2012, in connection with the Transaction (including, without limitation, any payments of interest, fees and expenses made pursuant to, or in connection with, the DIP Credit Agreement and the Plan of Reorganization (in each case, including, but not limited to, fees to advisors, professionals, attorneys, the Administrative Agent, Lenders and Oaktree Capital Management L.P. and its Affiliates)) and (b) in connection with any equity issuances permitted hereunder so long as, notwithstanding anything set forth herein to the contrary, the Net Cash Proceeds of such equity issuances are applied to the prepayment of the Loans and such prepayments are applied to reduce the Scheduled Repayment due on the Maturity Date, (x) non-recurring costs, charges and expenses for severance and restructuring (including, without limitation, fees and expenses incurred in connection with the winding up of all of the Parent and its Subsidiaries’ activities and operations in Portugal and any one-time cash charges in connection with the closing of an office for such period), (xi) all non-recurring fees, costs and expenses related to any litigation or settlements, (xii) the amount of cost savings and expenses projected by the Borrower to be realized (including
14
synergies) as a result of, or as a result of actions taken, committed to be taken or planned to be taken within one year, pursuant to a binding written contract with a tangible and quantifiable cost savings (calculated on a pro forma basis as though such items had been realized on the first day of the period provided that all such adjustments pursuant to this clause (xii) shall not exceed (a) $10,000,000 in the aggregate in any four-quarter period and (b) $25,000,000 in the aggregate from the Restatement Effective Date to and including the Maturity Date, and (xiii) any fees, expenses or charges related to any equity offering, Investment or Indebtedness or amendments thereto permitted by this Agreement, whether or not consummated and (B) subtracting therefrom the following to the extent added in calculating such Consolidated Net Income: (i) any extraordinary gains for such period and (ii) any gains from the sales of any Vessels for such period. Unless otherwise agreed to by the Administrative Agent, for purposes of this definition of “Consolidated EBITDA,” “non-recurring” means any expense, loss or gain as of any date that (i) did not occur in the ordinary course of the Parent or its Subsidiaries’ business and (ii) is of a nature and type that has not occurred in the prior two years and is not reasonably expected to recur in the future.
“
Consolidated Net Income
” shall mean, for any period, the consolidated net after tax income of the Parent and its Subsidiaries determined in accordance with GAAP.
“
Consolidated Net Indebtedness
” shall mean, with respect to any Person, as at any relevant date, (x) the aggregate outstanding principal amount of the Loans under this Agreement and the loans under the Other Credit Agreement,
plus
(y) the aggregate outstanding principal amount of any other Indebtedness of the Parent or any of its Subsidiaries permitted pursuant to Sections 9.04(v) and 9.04(vi),
less
(z) an amount equal to the Unrestricted Cash and Cash Equivalents of the Parent and its Subsidiaries as at such date.
“
Contingent Obligation
” shall mean, as to any Person, any obligation of such Person guaranteeing or intended to guarantee any Indebtedness (“
primary obligations
”) of any other Person (the “
primary obligor
”) in any manner, whether directly or indirectly, including, without limitation, any obligation of such Person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (x) for the purchase or payment of any such primary obligation or (y) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the holder of such primary obligation against loss in respect thereof;
provided
,
however
, that the term Contingent Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business and any products warranties extended in the ordinary course of business. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which such Contingent Obligation is made (or, if the less, the maximum amount of such primary obligation for which such Person may be liable pursuant to the terms of the instrument evidencing such Contingent Obligation) or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such Person is required to perform thereunder) as determined by such Person in good faith.
15
“
Credit Document Obligations
” shall have the meaning provided in the definition of “Obligations”.
“
Credit Documents
” shall mean this Agreement, each Note, each Security Document, the Subsidiaries Guaranty, each Intercreditor Agreement, each Joinder Agreement and, after the execution and delivery thereof, each additional guaranty or additional security document executed pursuant to Section 8.11.
“
Credit Party
” shall mean the Parent, the Borrower, GMSCII, Arlington, each Subsidiary Guarantor, and any other Subsidiary of the Parent which at any time executes and delivers any Credit Document (other than solely an acknowledgment of a pledge of such Person’s equity).
“
Default
” shall mean any event, act or condition which with notice or lapse of time, or both, would constitute an Event of Default.
“
Defaulting Lender
” shall mean any Lender with respect to which a Lender Default is in effect.
“
Deferred Amortization Amount
” shall mean $123,803,428.86.
“
DIP Credit Agreement
” shall mean the Senior Secured Superpriority Debtor-in-Possession Credit Agreement, dated as of November 17, 2011 (as amended, modified and/or supplemented from time to time to, but not including the Restatement Effective Date), among the Borrower and GMSCII, as co-borrowers, the Parent, certain Subsidiaries of the Parent and the Borrowers party thereto as guarantors, the lenders party thereto and Nordea, as administrative agent and collateral agent.
“
Dividend
” shall mean, with respect to any Person, a dividend, distribution or return of any equity capital to its stockholders, partners or members, any other distribution, payment or delivery of property or cash to its stockholders, partners or members in their capacity as such (other than common stock, Qualified Preferred Stock and the right to purchase any of such stock of such Person), the redemption, retirement, purchase or acquisition, directly or indirectly, for a consideration of any shares of any class of its capital stock or any other Equity Interests outstanding on or after the Restatement Effective Date (or any options or warrants issued by such Person with respect to its capital stock or other Equity Interests), or the setting aside of any funds for any of the foregoing purposes, or the granting of permission to any of its Subsidiaries to purchase or otherwise acquire for a consideration (other than common stock, Qualified Preferred Stock and the right to purchase any of such stock of such Person) any shares of any class of the capital stock or any other Equity Interests of such Person outstanding on or after the Restatement Effective Date (or any options or warrants issued by such Person with respect to its capital stock or other Equity Interests) except for share repurchases resulting from the unwinding of any share sale requiring the repayment of any advances in connection with such sale as a result of any default on payment on the part of the ultimate purchaser of such shares. Without limiting the foregoing, “Dividends” with respect to any Person shall also include all payments made or required to be made by such Person with respect to any stock appreciation rights, equity incentive or achievement plans or any similar plans or setting aside of
16
any funds for the foregoing purposes. For the avoidance of doubt, any non-cash anti-dilution adjustments under the warrants listed on
Schedule XIII
shall not constitute a Dividend.
“
Documents
” shall mean the Credit Documents.
“
Dollars
” and the sign “
$
” shall each mean lawful money of the United States.
“
Drawing
” has the meaning provided in Section 3.03(b).
“
Earnings and Insurance Collateral
” shall mean all “Earnings Collateral” and “Insurance Collateral”, as the case may be, as defined in the respective Assignment of Earnings and the respective Assignment of Insurances.
“
Effective Yield
” shall mean, as to any Loans, or other loans of any tranche, the effective yield on such loans as determined by the Administrative Agent, taking into account the applicable interest rate margins, any interest rate floors or similar devices and all fees, including recurring, upfront or similar fees or original issue discount (amortized over the shorter of (x) the life of such loans and (y) the four years following the date of incurrence thereof) payable generally to Lenders making such loans, but excluding any arrangement, structuring or other fees payable in connection therewith that are not generally shared with the relevant Lenders and customary consent fees paid generally to consenting Lenders. All such determinations made by the Administrative Agent shall, absent manifest error, be final, conclusive and binding on the Borrower and the Lenders and the Administrative Agent shall have no liability to any Person with respect to such determination absent gross negligence or willful misconduct.
“
Eligible Transferee
” shall mean and include a commercial bank, insurance company, financial institution, fund or other Person which regularly purchases interests in loans or extensions of credit of the types made pursuant to this Agreement, any other Person which would constitute a “qualified institutional buyer” within the meaning of Rule 144A under the Securities Act as in effect on the Restatement Effective Date or other “accredited investor” (as defined in Regulation D of the Securities Act);
provided
that none of the Borrower, the Guarantors nor any of their respective Affiliates shall be an Eligible Transferee at any time, except as provided for in Section 12.04(d).
“
Environmental Claims
” shall mean any and all administrative, regulatory or judicial actions, suits, demands, demand letters, directives, claims, liens, notices of noncompliance or violation, investigations or proceedings relating in any way to any Environmental Law or any permit issued, or any approval given, under any such Environmental Law (hereafter, “
Claims
”), including, without limitation, (a) any and all Claims by governmental or regulatory authorities for enforcement, cleanup, removal, response, remedial or other actions or damages pursuant to any applicable Environmental Law, and (b) any and all Claims by any third party seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief in connection with alleged injury or threat of injury to health, safety or the environment due to the presence of Hazardous Materials.
“
Environmental Law
” shall mean any applicable federal, state, foreign, international or local statute, law, treaty, protocol, rule, regulation, ordinance, code, or rule of common law, now or hereafter in effect and in each case as amended, and any judicial or
17
administrative interpretation thereof, including any judicial or administrative order, consent decree or judgment, to the extent binding on the Parent or any of its Subsidiaries, relating to the environment or to Hazardous Materials, including, without limitation, CERCLA; OPA; the Federal Water Pollution Control Act, 33 U.S.C. § 1251
et
seq.
; the Hazardous Material Transportation Act, 49 U.S.C. § 1801
et
seq.
; the Occupational Safety and Health Act, 29 U.S.C. § 651
et
seq.
(to the extent it regulates occupational exposure to Hazardous Materials); any applicable state, foreign, international or local counterparts or equivalents thereof, in each case as amended from time to time; and any applicable rules, regulations or requirements of a classification society in respect of any Collateral Vessel.
“
Environmental Release
” shall mean any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, disposing or migration into the environment.
“
EPA Commitment Parties
” shall have the meaning given to that term in the definition of Navig8 Equity Purchase Agreement.
“
Equity Contribution Agreement
” shall mean the Equity Purchase Agreement, dated as of December 15, 2011 (as amended, restated, supplemented or otherwise modified from time to time through, but not including, the Restatement Effective Date), by and among the Parent, Oaktree Principal Fund V, L.P., Oaktree Principal Fund V (Parallel), L.P., Oaktree FF Investment Fund, L.P. - Class A, and OCM Asia Principal Opportunities Fund, L.P., which Equity Contribution Agreement (i) shall contain a minimum liquidity requirement with respect to the Parent and its Subsidiaries that is reasonably satisfactory to the Administrative Agent and (ii) shall not have been amended, restated, supplemented or otherwise modified in such a manner as is adverse to the interests of the Lenders.
“
Equity Conversion
” shall mean the conversion of all outstanding secured obligations under the Amended and Restated Credit Agreement, dated as of May 6, 2011, by and among the Borrower and GMSCII, as co-borrowers, the Parent and certain of their respective Subsidiaries, OCM Marine Investments CTB, Ltd., as initial lender, and OCM Administrative Agent, LLC, as administrative agent and collateral agent, into equity of the Parent pursuant to the Equity Contribution Agreement on the terms and in the amounts set forth in the Plan of Reorganization.
“
Equity Interests
” shall mean (i) in the case of a corporation, corporate stock, (ii) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents of corporate stock and (iii) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited).
“
Equity Investment
” shall mean that certain cash Investment in the Parent of not less than $175,000,000 from the issuance of Equity Interests by the Parent to (x) an existing or newly-formed entity capitalized by funds managed by Oaktree Capital Management L.P. or one or more of its affiliates and (y) any other third party identified by the Permitted Holders to the Administrative Agent, including, but not limited to, any noteholders that previously held any Senior Unsecured Notes prior to the Restatement Effective Date on the terms and conditions specified in the Equity Contribution Agreement, (i) $35,350,780 of which shall have been
18
contributed by the Parent to the Borrower to partially repay then outstanding Loans under and as defined in the Original Credit Agreement and (ii) $39,649,220 of which shall have been contributed by the Parent to GMSCII to partially repay then outstanding loans under the Original Other Credit Agreement, in each case on terms set forth in the Plan of Reorganization.
“
Equity Proceeds Amount
” shall mean, on any date, the amount of Net Cash Proceeds received by the Parent from the issuance of Equity Interests of the Parent after the Third Amendment Effective Date (which shall, for the avoidance of doubt, include the amount of the Navig8 Equity Purchase Agreement Proceeds and exclude the Equity Investment and the 2013 Equity Investment)
less
the cash amount expended by the Parent and its Subsidiaries to (i) make Investments pursuant to Section 9.05(vi), (ii) make any Capital Expenditures (other than maintenance Capital Expenditures), (iii) make any other cash expenditures not in the ordinary course of business (for the avoidance of doubt, funding operating losses, working capital and repayment of Indebtedness will be deemed to be expenditures in the ordinary course of business for this purpose), in each case without duplication and after the Third Amendment Effective Date, (iv) repay, prepay, redeem, purchase, defease or otherwise satisfy the Wells Fargo Indebtedness pursuant to Section 9.18(ii), (v) fund the purchase price corresponding to a Permitted New Vessel Acquisition pursuant to subclause (V) of the proviso to Section 9.07, (vi) prepay, redeem, purchase, defease or otherwise satisfy, or to pay cash interest in respect of the BlueMountain Parent Indebtedness pursuant to Section 9.19(iii), (vii) fund the 2014 Newbuilding Acquisition pursuant to Section 9.19(i), (viii) make any cash payments in connection with the Merger pursuant to Section 9.21(i) not funded by cash or Cash Equivalents of Navig8 and its Subsidiaries, (ix) fund deposits in connection with the acquisition of Vessels pursuant to Section 9.01(xxii), (x) make Investments in 2014 Newbuilding Holdco or any of its Subsidiaries pursuant to Section 9.19(v) and (xi) make Investments in the Merger Sub or any of its Subsidiaries pursuant to Section 9.21(ii).
“
ERISA
” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder. Section references to ERISA are to ERISA, as in effect at the date of this Agreement and any subsequent provisions of ERISA, amendatory thereof, supplemental thereto or substituted therefor.
“
ERISA Affiliate
” shall mean each person (as defined in Section 3(9) of ERISA) which together with the Parent or a Subsidiary of the Parent would be deemed to be a “single employer” within the meaning of Section 414(b), (c), (m) or (o) of the Code.
“
Eurodollar Rate
” shall mean with respect to each Interest Period for a Loan, (a) the offered rate (rounded upward to the nearest 1/16 of one percent) for deposits of Dollars for a period equivalent to such period at or about 11:00 A.M. (London time) on the second Business Day before the first day of such period as is displayed on Reuters LIBOR 01 Page (or such other service as may be nominated by the ICE Benchmark Administration as the information vendor for displaying the London Interbank Offered Rates of major banks in the London interbank Eurodollar market) (the “
Screen Rate
”);
provided
that if on such date no such rate is so displayed or, in the case of the initial Interest Period in respect of a Loan, if less than three Business Days’ prior notice of such Loan shall have been delivered to the Administrative Agent, the Eurodollar Rate for such period shall be the arithmetic average (rounded upward to
19
the nearest 1/16 of 1%) of the rate quoted to the Administrative Agent by the Reference Banks for deposits of Dollars in an amount approximately equal to the amount in relation to which the Eurodollar Rate is to be determined for a period equivalent to such applicable Interest Period by prime banks in the London interbank Eurodollar market at or about 11:00 A.M. (London time) on the second Business Day before the first day of such period, in each case divided (and rounded upward to the nearest 1/16 of 1%) by (b) a percentage equal to 100% minus the then stated maximum rate of all reserve requirements (including, without limitation, any marginal, emergency, supplemental, special or other reserves required by applicable law) applicable to any member bank of the Federal Reserve System in respect of Eurocurrency funding or liabilities as defined in Regulation D (or any successor category of liabilities under Regulation D);
provided
,
further
, that if any such rate is below zero, the Eurodollar Rate for such period will be deemed to be zero.
“
Event of Default
” shall have the meaning provided in Section 10.
“
Event of Loss
” shall mean any of the following events: (x) the actual or constructive total loss of a Collateral Vessel or the agreed or compromised total loss of a Collateral Vessel; or (y) the capture, condemnation, confiscation, requisition, purchase, seizure or forfeiture of, or any taking of title to, a Collateral Vessel. An Event of Loss shall be deemed to have occurred: (i) in the event of an actual loss of a Collateral Vessel, at the time and on the date of such loss or if that is not known at noon Greenwich Mean Time on the date which such Collateral Vessel was last heard from; (ii) in the event of damage which results in a constructive or compromised or arranged total loss of a Collateral Vessel, at the time and on the date of the event giving rise to such damage; or (iii) in the case of an event referred to in clause (y) above, at the time and on the date on which such event is expressed to take effect by the Person making the same. Notwithstanding the foregoing, if such Collateral Vessel shall have been returned to the Borrower or any Subsidiary Guarantor following any event referred to in clause (y) above prior to the date upon which payment is required to be made under Section 5.02(c) hereof, no Event of Loss shall be deemed to have occurred by reason of such event.
“
Excess Liquidity
” shall mean, for each Payment Date, the amount by which (a) the daily average for the 30 consecutive day period ending on such Payment Date of the amount by which the Unrestricted Cash and Cash Equivalents of the Parent and its Subsidiaries, other than Navig8 and its Subsidiaries (including any remaining Net Cash Proceeds from the 2013 Equity Investment not used on the Third Amendment Effective Date to make the Amendment Prepayment and the Other Credit Agreement Amendment Prepayment) exceeds (b) the sum of (x) the aggregate amount of (i) any Scheduled Repayment and any interest payment to be made under this Agreement and/or (ii) any scheduled amortization payment and any interest payment to be made under the Other Credit Agreement, in each case within three Business Days of such Payment Date, (y) the Equity Proceeds Amount, if any, and (z) $125,000,000.
“
Exchange Act
” shall mean the Securities Exchange Act of 1934, as amended.
“
Excluded Taxes
” shall mean (i)
any tax imposed on or measured by the net income, net profits or any franchise tax based on net income, net profits or net worth, of a Lender pursuant to the laws of the jurisdiction in which it is organized or the jurisdiction in which the principal office or applicable lending office of such Lender is located or any subdivision thereof
20
or therein, (ii) any branch profits taxes imposed by any jurisdiction in which the recipient Lender is organized or the jurisdiction in which the principal office or applicable lending office of such Lender is located or any subdivision thereof or therein, (iii) in the case of any Lender, any withholding tax that is imposed by the Marshall Islands on amounts payable to such Lender at the time such Lender becomes a party to this Agreement or designates a new lending office (except to the extent that, pursuant to Section 5.04, amounts with respect to such taxes were payable to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office) or is attributable to such Lender’s failure to comply with Section 5.04(b), and (iv) taxes imposed on any “withholdable payment” payable to a recipient Lender as a result of the failure of such recipient to satisfy the applicable requirements as set forth in FATCA).
“
Existing Indebtedness
” shall have the meaning provided in Section 7.20.
“
Existing Letter of Credit
” shall have the meaning provided in Section 3.01.
“
Existing Letter of Credit Back-Stop Arrangements
” shall have the meaning provided in Section 2.13(a)(i).
“
Existing Letter of Credit Exposure
” shall mean, at any time, the aggregate amount of all Existing Letter of Credit Outstandings at such time in respect of Existing Letters of Credit. The Existing Letter of Credit Exposure of any Lender at any time shall be its Percentage of the aggregate Existing Letter of Credit Exposure at such time.
“
Existing Letter of Credit Fee
” shall have the meaning provided in Section 4.01(b).
“
Existing Letter of Credit Outstandings
” shall mean, at any time, the sum of (i) the aggregate Stated Amount of all outstanding Existing Letters of Credit and (ii) the amount of all Unpaid Drawings.
“
Facing Fee
” shall have the meaning provided in Section 4.01(c).
“
Fair Market Value
” of any Collateral Vessel at any time shall mean the average of the fair market value of such Collateral Vessel on the basis of an individual charter-free arm’s-length transaction between a willing and able buyer and seller not under duress as set forth in the appraisals of at least two Approved Appraisers most recently delivered to, or obtained by, the Administrative Agent prior to such time pursuant to Section 8.01(d).
“
FATCA
” shall mean Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with) and any current or future regulations or official interpretations thereof.
“
Federal Funds Rate
” shall mean, for any day, an interest rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published for such day (or, if such day is not a Business Day, for the immediately preceding Business Day) by the
21
Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations at approximately 11:00 A.M. (New York time) on such day on such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by the Administrative Agent in its sole discretion.
“
Final DIP/Cash Collateral Order
” shall mean that certain Final Order, which was entered by the Bankruptcy Court on December 15, 2011 in respect of the Chapter 11 Proceeding pursuant to Section 361, 363 and 364 of the Bankruptcy Code and Rule 4001 of the Federal Rules of Bankruptcy Procedure authorizing the debtors named therein to (I) use cash collateral of the Prepetition Secured Parties (as defined therein), (II) obtain secured superpriority post-petition financing and (III) provide adequate protection to the Prepetition Secured Parties.
“
Financed Purchase Price
” shall have the meaning provided in Section 9.07.
“
Financial Covenants
” shall mean the covenants set forth in Sections 9.08 through 9.10, inclusive.
“
First Amendment
” shall mean the Omnibus First Amendment, dated as of December 21, 2012.
“
First Amendment Effective Date
” shall have the meaning provided in the First Amendment.
“
Flag Jurisdiction Transfer
” shall mean the transfer of the registration and flag of a Collateral Vessel from one Acceptable Flag Jurisdiction to another Acceptable Flag Jurisdiction, provided that the following conditions are satisfied with respect to such transfer:
(i)
On each Flag Jurisdiction Transfer Date, the Credit Party which is consummating a Flag Jurisdiction Transfer on such date shall have duly authorized, executed and delivered, and caused to be recorded in the appropriate Collateral Vessel registry a Collateral Vessel Mortgage or Secondary Collateral Vessel Mortgage, as applicable, substantially in the form of Exhibit I (with such modifications as are required by or appropriate for the applicable Acceptable Flag Jurisdiction of the Collateral Vessel), with respect to the Collateral Vessel being transferred (the “
Transferred Vessel
”) and (x) in the case of the Primary Collateral Vessels, the Collateral Vessel Mortgage shall be effective to create in favor of the Collateral Agent and/or the Lenders a legal, valid and enforceable first priority security interest, in and lien upon such Transferred Vessel, and (y) in the case of the Secondary Collateral Vessels, the Secondary Collateral Vessel Mortgage shall be effective to create in favor of the Collateral Agent and/or the Lenders a legal, valid and enforceable second priority security interest in, and lien upon, such Transferred Vessel, in each case subject only to Permitted Liens. All filings, deliveries of instruments and other actions necessary or desirable in the reasonable opinion of the Collateral Agent to perfect and preserve such security interests shall have been duly effected and the Collateral Agent shall have received evidence thereof in form and substance reasonably satisfactory to the Collateral Agent.
(ii)
On each Flag Jurisdiction Transfer Date, the Administrative Agent shall have received from (A) Constantine P. Georgiopoulos, special New York maritime
22
counsel to the Credit Parties (or other counsel to such Credit Parties reasonably satisfactory to the Administrative Agent), an opinion addressed to the Administrative Agent and each of the Lenders and dated such Flag Jurisdiction Transfer Date, which shall (x) be in form and substance reasonably acceptable to the Administrative Agent and (y) cover the recordation of the security interests granted pursuant to the Collateral Vessel Mortgage(s) or the Secondary Collateral Vessel Mortgage(s), as applicable, to be delivered on such date and such other matters incident thereto as the Administrative Agent may reasonably request and (B) local counsel to the Credit Parties consummating the relevant Flag Jurisdiction Transfer reasonably satisfactory to the Administrative Agent practicing in those jurisdictions in which the Transferred Vessel is registered and/or the Credit Party owning such Transferred Vessel is organized, which opinions shall be addressed to the Administrative Agent and each of the Lenders and dated such Flag Jurisdiction Transfer Date, which shall (x) be in form and substance reasonably acceptable to the Administrative Agent and (y) cover the perfection of the security interests granted pursuant to the Collateral Vessel Mortgage(s) or the Secondary Collateral Vessel Mortgage(s), as applicable, and such other matters incident thereto as the Administrative Agent may reasonably request.
(iii)
On each Flag Jurisdiction Transfer Date:
(A)
The Administrative Agent shall have received (x) certificates of ownership from appropriate authorities showing (or confirmation updating previously reviewed certificates and indicating) the registered ownership of the Transferred Vessel transferred on such date by the relevant Subsidiary Guarantor and (y) the results of maritime registry searches with respect to the Transferred Vessel transferred on such date, indicating no record liens other than Liens in favor of the Collateral Agent and/or the Lenders and Permitted Liens.
(B)
The Administrative Agent shall have received a report, in form and scope reasonably satisfactory to the Administrative Agent, from a firm of independent marine insurance brokers reasonably acceptable to the Administrative Agent with respect to the insurance maintained by the Credit Party in respect of the Transferred Vessel transferred on such date, together with a certificate from such broker certifying that such insurances (i) are placed with such insurance companies and/or underwriters and/or clubs, in such amounts, against such risks, and in such form, as are customarily insured against by similarly situated insureds for the protection of the Administrative Agent and/or the Lenders as mortgagee and (ii) conform with the insurance requirements of the respective Collateral Vessel Mortgage or Secondary Collateral Vessel Mortgage, as applicable.
(iv)
On or prior to each Flag Jurisdiction Transfer Date, the Administrative Agent shall have received a certificate, dated the Flag Jurisdiction Transfer Date, signed by the Chairman of the Board, Chief Executive Officer, the President, any Vice President, the Treasurer or an authorized manager, member or general partner of the Credit Party commencing such Flag Jurisdiction Transfer, certifying that (A) all necessary governmental (domestic and foreign) and third party approvals and/or consents
23
in connection with the Flag Jurisdiction Transfer being consummated on such date and otherwise referred to herein shall have been obtained and remain in effect, (B) there exists no judgment, order, injunction or other restraint prohibiting or imposing materially adverse conditions upon such Flag Jurisdiction Transfer or the other transactions contemplated by this Agreement and (C) copies of resolutions approving the Flag Jurisdiction Transfer of such Credit Party and any other matters the Administrative Agent may reasonably request.
“
Flag Jurisdiction Transfer Date
” shall mean the date on which a Flag Jurisdiction Transfer occurs.
“
Foreign Pension Plan
” shall mean any plan, fund (including, without limitation, any superannuation fund) or other similar program established or maintained outside the United States of America by the Parent or any one or more of its Subsidiaries primarily for the benefit of employees of the Parent or such Subsidiaries residing outside the United States of America, which plan, fund or other similar program provides, or results in, retirement income, a deferral of income in contemplation of retirement or payments to be made upon termination of employment, and which plan is not subject to ERISA or the Code.
“
Fourth Amendment
” shall mean the Fourth Amendment, dated as of May 7, 2014.
“
Fourth Amendment Effective Date
” shall have the meaning provided in the Fourth Amendment.
“
GAAP
” shall have the meaning provided in Section 12.07(a).
“
General Maritime Management
” shall mean General Maritime Management, LLC, a Marshall Islands limited liability company, a wholly-owned direct Subsidiary of the Parent.
“
GMSCII
” shall have the meaning provided in the first paragraph of this Agreement.
“
Guaranteed Creditors
” shall mean and include each of the Lender Creditors and each of the Swap Creditors.
“
Guarantors
” shall mean the Parent, GMSCII, Arlington and each Subsidiary Guarantor.
“
Guaranty
” shall mean, collectively, the Holdings Guaranty and the Subsidiaries Guaranty.
“
Hazardous Materials
” shall mean: (a) any petroleum or petroleum products, radioactive materials, asbestos in any form that is or could become friable, urea formaldehyde foam insulation, transformers or other equipment that contain dielectric fluid containing levels of polychlorinated biphenyls, and radon gas; (b) any chemicals, materials or substances defined as or included in the definition of “hazardous substances,” “hazardous waste,” “hazardous
24
materials,” “extremely hazardous substances,” “restricted hazardous waste,” “toxic substances,” “toxic pollutants,” “contaminants,” or “pollutants,” or words of similar import, under any applicable Environmental Law; and (c) any other chemical, material or substance, exposure to which is prohibited, limited or regulated by any governmental authority under Environmental Laws because of its dangerous or deleterious properties or characteristics.
“
Holdings Guaranty
” shall mean the guaranty of the Parent, Arlington and GMSCII pursuant to Section 13.
“
Indebtedness
” shall mean, as to any Person, without duplication, (i) all indebtedness (including principal, interest, fees and charges) of such Person for borrowed money or for the deferred purchase price of property or services, (ii) the maximum amount available to be drawn under all letters of credit issued for the account of such Person and all unpaid drawings in respect of such letters of credit, (iii) all Indebtedness of the types described in clause (i), (ii), (iv), (v), (vi), (vii) or (viii) of this definition secured by any Lien on any property owned by such Person, whether or not such Indebtedness has been assumed by such Person (to the extent of the value of the respective property), (iv) the aggregate amount required to be capitalized under leases under which such Person is the lessee, (v) all obligations of such person to pay a specified purchase price for goods or services, whether or not delivered or accepted,
i.e.
, take-or-pay and similar obligations, (vi) all Contingent Obligations of such Person, (vii) all obligations under any Interest Rate Protection Agreement or Other Hedging Agreement or under any similar type of agreement and (viii) the maximum amount available to be drawn under all Existing Letters of Credit issued for the account of such Person and all Unpaid Drawings in respect of such Existing Letters of Credit;
provided
that Indebtedness shall in any event not include trade payables and expenses accrued in the ordinary course of business.
“
Individual Exposure
” of any Lender shall mean, at any time, the sum of (a) the aggregate principal amount of all Loans made by such Lender and then outstanding and (b) such Lender’s Percentage in the aggregate amount of all Existing Letter of Credit Outstandings at such time.
“
Initial Phase of the 2014 Newbuilding Acquisition
” shall have the meaning provided in the definition of 2014 Newbuilding Acquisition.
“
Intercreditor Agreements
” shall mean the Primary Intercreditor Agreement and the Secondary Intercreditor Agreement.
“
Interest Determination Date
” shall mean, with respect to any Loan, the second Business Day prior to the commencement of any Interest Period relating to such Loan.
“
Interest Expense Coverage Ratio
” shall mean, for any period, the ratio of (a) Consolidated EBITDA for such period to (b) Consolidated Cash Interest Expense for such period.
“
Interest Period
” shall have the meaning provided in Section 2.08.
25
“
Interest Rate Protection Agreement
” shall mean any interest rate swap agreement, interest rate cap agreement, interest collar agreement, interest rate hedging agreement, interest rate floor agreement or other similar agreement or arrangement.
“
Investments
” shall have the meaning provided in Section 9.05.
“
Issuing Lender
” shall have the meaning provided in Section 3.01.
“
Joinder Agreement
” shall have the meaning provided in the definition of “Collateral and Guaranty Requirements”.
“
Joint Book Runners
” shall mean Nordea and DNB Bank ASA.
“
Judgment Currency
” shall have the meaning provided in Section 13.09(a).
“
Judgment Currency Conversion Date
” shall have the meaning provided in Section 13.09(a).
“
Leaseholds
” of any Person shall mean all the right, title and interest of such Person as lessee or licensee in, to and under leases or licenses of land, improvements and/or fixtures.
“
Lender
” shall mean each financial institution listed on
Schedule I
, as well as any Person which becomes a “
Lender
” hereunder pursuant to 12.04(b).
“
Lender Creditors
” shall mean the Lenders, the Issuing Lender, the Collateral Agent and the Administrative Agent.
“
Lender Default
” shall mean, as to any Lender, (i) the wrongful refusal (which has not been retracted) of such Lender or the failure of such Lender (which has not been cured) to make available its portion of any Borrowing or to fund its portion of any unreimbursed payment with respect to an Existing Letter of Credit, (ii) such Lender having been deemed insolvent or having become the subject of a bankruptcy or insolvency proceeding or a takeover by a regulatory authority, or (iii) such Lender having notified the Administrative Agent, any Issuing Lender and/or any Credit Party (x) that it does not intend to comply with its obligations under Sections 2.01 or Section 3, as the case may be, in circumstances where such non-compliance would constitute a breach of such Lender’s obligations under the respective Section or (y) of the events described in preceding clause (ii);
provided
that, for purposes of (and only for purposes of) Sections 2.12 (with respect to clause (i) below) and 2.13 and any documentation entered into pursuant to the Existing Letter of Credit Back-Stop Arrangements (and the term “Defaulting Lender” as used therein), the term “Lender Default” shall also include, as to any Lender, (i) any Affiliate of such Lender that has “control” (within the meaning provided in the definition of “Affiliate”) of such Lender having been deemed insolvent or having become the subject of a bankruptcy or insolvency proceeding or a takeover by a regulatory authority, (ii) any previously cured “Lender Default” of such Lender under this Agreement, unless such Lender Default has ceased to exist for a period of at least 90 consecutive days, (iii) any default by such Lender with respect to its funding obligations under any other credit facility to which it is a party and which any Issuing Lender or the Administrative Agent reasonably believes in good faith has
26
occurred and is continuing, and (iv) the failure of such Lender to make available its portion of any Borrowing or to fund its portion of any unreimbursed payment with respect to an Existing Letter of Credit pursuant to Section 3.02(c) within one (1) Business Day of the date (x) the Administrative Agent (in its capacity as a Lender) or (y) Lenders constituting the Required Lenders with Loans has or have, as applicable, funded its or their portion thereof.
“
Lien
” shall mean any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), preference, priority or other security agreement of any kind or nature whatsoever (including, without limitation, any conditional sale or other title retention agreement, any financing or similar statement or notice filed under the UCC or any other similar recording or notice statute, and any lease having substantially the same effect as any of the foregoing).
“
Loan
” shall mean each Tranche A Loan and each Tranche B Loan.
“
Loan to Value Ratio
” shall mean, at any date of determination, the ratio of Consolidated Net Indebtedness of the Parent and its Subsidiaries under this Agreement and the Other Credit Agreement on such date to the aggregate Fair Market Value of all Collateral Vessels owned by the Credit Parties on such date.
“
March 2014 Equity Issuance
” shall mean the issuance by the Parent of its Equity Interests in March 21, 2014 pursuant to which the Parent received net cash proceeds of $166,500,011.55.
“
Margin Regulations
” shall mean the provisions of Regulations T, U and X of the Board of Governors of the Federal Reserve System.
“
Margin Stock
” shall have the meaning provided in Regulation U.
“
Market Disruption Event
” shall mean with respect to any Loans:
(i)
if, at or about noon on the Interest Determination Date for the relevant Interest Period, the Screen Rate is not available and none or only one of the Reference Banks supplies a rate to the Administrative Agent to determine the Eurodollar Rate for the relevant Interest Period; or
(ii)
before close of business in New York on the Interest Determination Date for the relevant Interest Period, the Administrative Agent receives notice from a Lender or Lenders the sum of whose outstanding Loans in the aggregate exceed 50% of the Loans that (i) the cost to such Lenders of obtaining matching deposits in the London interbank Eurodollar market for the relevant Interest Period would be in excess of the Eurodollar Rate for such Interest Period or (ii) such Lenders are unable to obtain funding in the London interbank Eurodollar market.
“
Material Adverse Effect
” shall mean a material adverse effect on (i) the business, property, assets, liabilities, condition (financial or otherwise) of (x) the Collateral Vessels taken as a whole, (y) the Borrower, GMSCII, Arlington and the Subsidiary Guarantors taken as a
27
whole, or (z) the Parent and its Subsidiaries taken as a whole, (ii) the rights and remedies of the Lenders or the Administrative Agent or (iii) the ability of the Borrower or the Borrower and its Subsidiaries, taken as a whole, to perform its or their Obligations.
“
Maturity Date
” shall mean May 17, 2017.
“
Merger
” shall mean the merger of Merger Sub with and into Navig8 pursuant to and in accordance with the terms of the Merger Agreement.
“
Merger Agreement
” shall mean the Agreement and Plan of Merger, dated as of February 24, 2015 by and among the Parent, Merger Sub, Navig8 and Shareholder Representative Services LLC and OCM Marine Holdings TP, L.P., as the Equityholders’ Representatives relating to the Merger and annexed as Exhibit A hereto (as in effect on the Sixth Amendment Effective Date, without giving effect to any amendment, modification or waiver therefrom).
“
Merger Effective Time
” shall have the meaning given to the term “Effective Time” in the Merger Agreement.
“
Merger Sub
” shall mean Gener8 Maritime Acquisition, Inc.
“
Minimum Borrowing Amount
” shall mean $1,000,000.
“
Minotaur
” shall mean the Liberian flag vessel GENMAR MINOTAUR, Official Number 9083316.
“
Moody’s
” shall mean Moody’s Investors Service, Inc. and its successors.
“
Multiemployer Plan
” shall mean a Plan which is defined in Section 3(37) of ERISA.
“
Navig8
” shall mean Navig8 Crude Tankers, Inc., a corporation incorporated under the laws of the Marshall Islands.
“
Navig8 Equity Purchase Agreement
” shall mean the equity purchase agreement dated as of February 24, 2015 by and between the Parent, Navig8 and each of the parties set forth in Schedule 1 thereto as commitment parties (the “
EPA Commitment Parties
”) pursuant to which the EPA Commitment Parties have committed to purchase common Equity Interests of the Parent in an aggregate amount up to $125,000,000 (as in effect on the Sixth Amendment Effective Date, without giving effect to any amendment, modification or waiver therefrom other than any amendment or modification reflecting a change in the identity of the EPA Commitment Parties and the amount of their commitments so long as the aggregate amount of all commitments is no less than $125,000,000).
“
Navig8 Equity Purchase Agreement Proceeds
” shall mean the Net Cash Proceeds received by the Parent from the sale of common Equity Interests of the Parent to the EPA Commitment Parties pursuant to and in accordance with the terms of the Navig8 Equity Purchase Agreement.
28
“
Navig8 Group
” shall mean Navig8 Ltd. and its affiliates.
“
Net Cash Proceeds
” shall mean, (x) with respect to any Collateral Disposition, the aggregate cash payments (including any cash received by way of deferred payment pursuant to a note receivable issued in connection with such Collateral Disposition, other than the portion of such deferred payment constituting interest, but only as and when received) received by the Parent or the Borrower or any of their respective Subsidiaries from such Collateral Disposition net of (i) reasonable transaction costs (including, without limitation, reasonable attorney’s fees) and sales commissions and (ii) the estimated marginal increase in income taxes and any stamp tax payable by the Parent, the Borrower or any of its Subsidiaries as a result of such Collateral Disposition and (y) with respect to the issuance of any Equity Interests, the aggregate cash proceeds received by the Parent from such equity issuance net of reasonable transaction costs related thereto (including, without limitation, reasonable attorney’s fees).
“
Non-Defaulting Lender
” shall mean and include each Lender other than a Defaulting Lender.
“
Non-Recourse Indebtedness
” shall mean any Indebtedness of a Non-Recourse Subsidiary that is non-recourse to any Credit Party and for which no Credit Party provides any credit support;
provided
such Indebtedness may be full recourse to the Non-Recourse Subsidiary.
“
Non-Recourse Subsidiary
” shall mean (x) any Subsidiary listed on
Schedule XVI
hereto and (y) any Subsidiary that is not a Credit Party and is identified by the Parent in writing to the Administrative Agent after the Restatement Effective Date to be a “Non-Recourse Subsidiary”;
provided
that (i) neither the Parent nor any Subsidiary of the Parent (other than a Non-Recourse Subsidiary) shall have any liability or recourse with respect to any Non-Recourse Indebtedness of such Non-Recourse Subsidiary, (ii) any such designation of a Subsidiary as a “Non-Recourse Subsidiary” shall be deemed to be a permanent “Investment” in such Subsidiary in an amount (proportionate to the Parent’s Equity Interest (directly or through a Subsidiary thereof) in such Subsidiary) equal to the fair market value of the net assets of such Subsidiary at the time such Subsidiary is designated a Non-Recourse Subsidiary and (iii) for the avoidance of doubt, Investments in Non-Recourse Subsidiaries may only be made pursuant to Section 9.05(vi).
“
Note
” shall have the meaning provided in Section 2.05(a).
“
Notice of Interest Period Election
” shall have the meaning provided in Section 2.08(a).
“
Notice Office
” shall mean the office of the Administrative Agent located at 437 Madison Avenue, 21
st
Floor, New York, NY 10022, or such other office as the Administrative Agent may hereafter designate in writing as such to the other parties hereto.
“
Obligation Currency
” shall have the meaning provided in Section 13.09(a).
“
Obligations
” shall mean (i) the full and prompt payment when due (whether at the stated maturity, by acceleration or otherwise) of (x) the principal of, premium, if any, and interest on the Notes issued by, and the Tranche A Loans made to, the Borrower under this
29
Agreement, (y) the principal of, premium, if any, and interest on the Notes issued by (if any), and the Tranche B Loans made to, the Borrower under this Agreement, and (z) all other obligations (including obligations which, but for the automatic stay under Section 362(a) of the Bankruptcy Code, would become due), liabilities and indebtedness owing by the Borrower to the Lender Creditors (in the capacities referred to in the definition of Lender Creditors) under this Agreement and each other Credit Document to which the Borrower is a party (including, without limitation, indemnities, fees and interest thereon (including any interest accruing after the commencement of any bankruptcy, insolvency, receivership or similar proceeding at the rate provided for in this Agreement, whether or not such interest is an allowed claim in any such proceeding)), whether now existing or hereafter incurred under, arising out of or in connection with this Agreement and any such other Credit Document and the due performance and compliance by the Borrower with all of the terms, conditions and agreements contained in all such Credit Documents (all such principal, premium, interest, liabilities, indebtedness and obligations being herein collectively called the “
Credit Document Obligations
”) and (ii) the full and prompt payment when due (whether at the stated maturity, by acceleration or otherwise) of all other obligations (including obligations which, but for the automatic stay under Section 362(a) of the Bankruptcy Code, would become due), liabilities and indebtedness (including any interest accruing after the commencement of any bankruptcy, insolvency, receivership or similar proceeding at the rate provided for in the respective Interest Rate Protection Agreements or Other Hedging Agreements, whether or not such interest is an allowed claim in any such proceeding) owing by the Borrower to any Swap Creditor under any Interest Rate Protection Agreement set forth on
Schedule V
or any Other Hedging Agreement set forth on
Schedule V
in respect of the Borrower’s obligations with respect to the Loans (as defined in the Original Credit Agreement) of such Swap Creditor entered into prior to the Restatement Effective Date and secured by the Collateral (as defined in the Original Credit Agreement), whether now in existence or hereafter arising, and the due performance and compliance by the Borrower with all of the terms, conditions and agreements contained in each such Interest Rate Protection Agreement and Other Hedging Agreement to which it is a party (all such obligations, liabilities and indebtedness described in this clause (ii) being herein collectively called the “
Swap Obligations
”).
“
OPA
” shall mean the Oil Pollution Act of 1990, as amended, 33 U.S.C. § 2701
et
seq.
“
Original Credit Agreement
” shall have the meaning provided in the Recitals.
“
Original Effective Date
” shall mean October 20, 2008.
“
Original Other Credit Agreement
” shall have the meaning provided in the Recitals.
“
Other Agent
” shall have the meaning provided in the Recitals hereto.
“
Other Credit Agreement
” shall have the meaning provided in the Recitals hereto.
“
Other Credit Agreement Amendment Prepayment
” shall have the meaning provided in the Third Amendment.
30
“
Other Credit Documents
” shall mean the “Credit Documents” under and as defined in the Other Credit Agreement.
“
Other Hedging Agreement
” shall mean any foreign exchange contracts, currency swap agreements, commodity agreements or other similar agreements or arrangements designed to protect against the fluctuations in currency or commodity values.
“
Parent
” shall mean (a) at any time prior to the Merger Effective Time, General Maritime Corporation and (b) at any time after the Merger Effective Time, Gener8 Maritime, Inc. (it being understood and agreed that Gener8 Maritime, Inc. is a successor-by-name-change to General Maritime Corporation).
“
Pari Passu Pledge Agreement
” shall have the meaning provided in the definition of “Collateral and Guaranty Requirements.”
“
Participant
” shall have the meaning provided in Section 3.02(a).
“
Participant Register
” shall have the meaning provided in Section 12.16.
“
PATRIOT Act
” shall have the meaning provided in Section 12.20.
“
Payment Date
” shall mean the last Business Day of each March, June, September and December.
“
Payment Office
” shall mean the office of the Administrative Agent located at 437 Madison Avenue, 21
st
Floor, New York, NY 10022, or such other office as the Administrative Agent may hereafter designate in writing as such to the other parties hereto.
“
PBGC
” shall mean the Pension Benefit Guaranty Corporation established pursuant to Section 4002 of ERISA, or any successor thereto.
“
Percentage
” of any Lender at any time shall mean a fraction (expressed as a percentage) the numerator of which is the outstanding Tranche A Loans of such Lender at such time and the denominator of which is the aggregate amount of outstanding Tranche A Loans of all Lenders at such time.
“
Permitted 2014 Newbuilding Indebtedness
” shall mean Indebtedness of the Parent, the 2014 Newbuilding Holdco, and the 2014 Newbuilding Subsidiaries incurred to finance the payments due under the 2014 Newbuilding Contracts on or after the respective delivery date for the relevant 2014 Newbuilding Vessel; provided that:
(v) the aggregate principal amount of such Indebtedness does not exceed at any time:
(i) the greater of (A) $52,500,000 and (B) 60% of the Fair Market Value of the 2014 Newbuilding Vessels which have been delivered to the 2014 Newbuilding Subsidiaries at that time, and
31
(ii) when added to the then outstanding principal amount of the BlueMountain Parent Indebtedness other than the amount of any interest accrued after the incurrence thereof and capitalized or paid in kind in accordance with the terms thereof, 75% of the lesser of (A) the pro forma acquisition price of the 2014 Newbuilding Vessels which have been delivered to the 2014 Newbuilding Subsidiaries at that time and (B) the Fair Market Value of the 2014 Newbuilding Vessels which have been delivered to the 2014 Newbuilding Subsidiaries at that time;
(w) such Indebtedness is secured only by the assets of the 2014 Newbuilding Holdco and the 2014 Newbuilding Subsidiaries and is not guaranteed by any Subsidiary of the Parent other than the 2014 Newbuilding Holdco and the 2014 Newbuilding Subsidiaries;
(x) the amortization of such Indebtedness shall be no greater than a straight line amortization reducing such Indebtedness to $0 upon the corresponding Vessel becoming 15 years old,;
(y) such Indebtedness shall have no scheduled amortization (other than that permitted under clause (x) above), mandatory redemption or prepayment prior to the final maturity thereof (other than any prepayment required (i) from the net cash proceeds from the sale, disposition or event of loss of any Equity Interests of 2014 Newbuilding Holdco, or any assets of 2014 Newbuilding Holdco and/or the 2014 Newbuilding Subsidiaries and/or (ii) upon a change of control (as defined in the documentation governing such Indebtedness) or acceleration of such Indebtedness following an event of default thereunder); and
(z) such Indebtedness shall have a final maturity date of no earlier than May 17, 2018.
“
Permitted Encumbrance
” shall mean easements, rights-of-way, restrictions, encroachments, exceptions to title and other similar charges or encumbrances on any Collateral Vessel or any other property of the Parent or any of its Subsidiaries arising in the ordinary course of business which do not materially detract from the value of such Collateral Vessel or the property subject thereto.
“
Permitted Holders
” shall mean funds or segregated accounts managed by Oaktree Capital Management, L.P. and any corporation or other entity directly or indirectly controlled or managed by Oaktree Capital Management, L.P. or its managed funds.
“
Permitted Liens
” shall have the meaning provided in Section 9.01.
“
Permitted New Vessel Acquisition
” shall have the meaning provided in Section 9.07.
“
Permitted Sale
” shall mean the sale of the Agamemnon;
provided
that (i) 100% of the consideration in respect of such sale shall consist of cash in an amount resulting in Net Cash Proceeds of not less than $$7,275,000 and (ii) such Net Cash Proceeds shall be delivered to
32
the Administrative Agent on or before October 31, 2013 and applied in accordance with Section 5.02(c) of this Agreement.
“
Person
” shall mean any individual, partnership, joint venture, firm, corporation, association, trust or other enterprise or any government or political subdivision or any agency, department or instrumentality thereof.
“
Plan
” shall mean any pension plan as defined in Section 3(2) of ERISA, which is maintained or contributed to by (or to which there is an obligation to contribute of) the Parent or a Subsidiary of the Parent or any ERISA Affiliate, and each such plan for the five-year period immediately following the latest date on which the Parent, or a Subsidiary of the Parent or any ERISA Affiliate maintained, contributed to or had an obligation to contribute to such plan.
“
Plan of Reorganization
” shall have the meaning provided in the Recitals.
“
Pledge Agreement
” shall have the meaning provided in the definition of “Collateral and Guaranty Requirements.”
“
Pledge Agreement Collateral
” shall mean all “Collateral” as defined in the Pledge Agreement.
“
Pledged Securities
” shall mean “Securities” as defined in the Pledge Agreement and/or the Secondary Pledge Agreement, as the case may be, pledged (or required to be pledged) pursuant thereto.
“
Primary Collateral
” shall mean all property (whether real or personal) with respect to which any security interests have been granted (or purported to be granted) pursuant to any Primary Security Document, including, without limitation, all Pledge Agreement Collateral, all Earnings and Insurance Collateral, all Primary Collateral Vessels and all cash and Cash Equivalents at any time delivered as collateral thereunder or hereunder.
“
Primary Collateral Vessel
” shall mean, at any time, each of the Vessels listed in rows 8 through and including 30 on
Schedule III
, which is subject to a Collateral Vessel Mortgage at such time and with respect to which the other Collateral and Guaranty Requirements are satisfied at such time.
“
Primary Intercreditor Agreement
” shall mean the Amended and Restated Intercreditor Agreement, dated as of May 17, 2012, by and among the Parent, Arlington, the Borrower, as borrower under this Agreement, GMSCII, as borrower under the Other Credit Agreement, the Administrative Agent (for and on behalf of the Secured Creditors), each Subsidiary Guarantor, the Collateral Agent, and the Other Agent (for and on behalf of the Secured Creditors under and as defined in the Other Credit Agreement), which Primary Intercreditor Agreement (i) shall be substantially in the form of Exhibit P-1 (as amended, modified and/or otherwise supplemented from time to time) and (ii) shall set forth the priority of the security interests in the Primary Collateral.
“
Primary Security Documents
” shall mean the Pledge Agreement, the Pari Passu Pledge Agreement, each Assignment of Charter, each Assignment of Earnings, each Assignment
33
of Insurances, each Collateral Vessel Mortgage and, after the execution and delivery thereof, each additional first-lien security document executed pursuant to Section 7.11;
provided
that cash collateral or other agreements entered into pursuant to the Existing Letter of Credit Back-Stop Arrangements shall constitute “Security Documents” solely for purposes of (x) Sections 9.01(v) and 11 and (y) the term “Credit Documents” as used in Sections 9.04(i) and 11.
“
Prime Rate
” shall mean the rate which the Administrative Agent announces from time to time as its prime lending rate, the Prime Rate to change when and as such prime lending rate changes. The Prime Rate is a reference rate and does not necessarily represent the lowest or best rate actually charged to any customer. The Administrative Agent may make commercial loans or other loans at rates of interest at, above or below the Prime Rate.
“
Projections
” shall mean the Parent’s forecasted consolidated and consolidating: (a) balance sheets; (b) profit and loss statements; (c) cash flow statements and (d) capitalization statements, all prepared on a Subsidiary by Subsidiary basis and based upon good faith estimates and assumptions believed by the Parent to be reasonable at the time made, together with appropriate supporting details and a statement of underlying assumptions.
“
Qualified Preferred Stock
” shall mean any preferred stock so long as the terms of any such preferred stock (i) do not contain any mandatory put, redemption, repayment, sinking fund or other similar provision occurring prior to one year after the Maturity Date, (ii) do not require the cash payment of dividends and (iii) any other preferred stock that satisfies (i) of this definition of Qualified Preferred Stock and that is otherwise issuable or may be distributed pursuant to a shareholders’ rights plan of the Parent;
provided
,
however
, any Dividend or similar feature of such Qualified Preferred Stock shall only be declared and paid in accordance with Section 9.03.
“
Qualifying IPO
” shall mean the issuance by the Parent or any direct or indirect parent of the Parent of its Equity Interests in an underwritten primary public offering (other than a public offering pursuant to a registration statement on Form S-8) after the Restatement Effective Date pursuant to an effective registration statement filed with the U.S. Securities and Exchange Commission in accordance with the Securities Act (whether alone or in connection with a secondary public offering) and such issuance results in Net Cash Proceeds received by the Parent of at least $75,000,000.
“
Real Property
” of any Person shall mean all the right, title and interest of such Person in and to land, improvements and fixtures, including Leaseholds.
“
Reference Banks
” shall mean, at any time, (i) if there are less than two Lenders at such time, each Lender and (ii) if there are three or more Lenders at such time, the Administrative Agent and two other Lenders as shall be determined by the Administrative Agent.
“
Refinanced Loans
” shall have the meaning provided in Section 12.12(c).
“
Register
” shall have the meaning provided in Section 12.16.
34
“
Regulation D
” shall mean Regulation D of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or a portion thereof establishing reserve requirements.
“
Regulation T
” shall mean Regulation T of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or a portion thereof.
“
Regulation U
” shall mean Regulation U of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or a portion thereof.
“
Regulation X
” shall mean Regulation X of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or a portion thereof.
“
Replaced Lender
” shall have the meaning provided in Section 2.12(a).
“
Replacement Lender
” shall have the meaning provided in Section 2.12(a).
“
Replacement Loan
” shall have the meaning provided in Section 12.12(c).
“
Reportable Event
” shall mean an event described in Section 4043(c) of ERISA with respect to a Plan that is subject to Title IV of ERISA other than those events as to which the 30-day notice period is waived under subsection .22, .23, .25, .27 or .28 of PBGC Regulation Section 4043.
“
Required Insurance
” shall have the meaning provided in Section 7.21.
“
Required Lenders
” shall mean, at any time, (x) prior to the repayment in full of the Tranche A Loans, Non-Defaulting Lenders the sum of whose outstanding Tranche A Loans at such time represents an amount greater than 66-2/3% of the sum of (i) all outstanding Tranche A Loans of Non-Defaulting Lenders and (ii) the Existing Letter of Credit Outstandings of Non-Defaulting Lenders, in each case at such time and (y) thereafter, Non-Defaulting Lenders the sum of whose outstanding Tranche B Loans at such time represents an amount greater than 66-2/3% of the sum of all outstanding Tranche B Loans of Non-Defaulting Lenders.
“
Restatement Effective Date
” shall have the meaning provided in Section 12.10.
“
Returns
” shall have the meaning provided in Section 7.09.
“
Revolving Loans
” shall mean the “Revolving Loans” as defined in the Original Credit Agreement.
“
S&P
” shall mean Standard & Poor’s Financial Services LLC, and its successors.
“
Sale Vessels
” shall mean the Genmar Minotaur and the Genmar Hope.
“
Scheduled Repayment
” shall have the meaning provided in Section 5.02(b).
35
“
Screen Rate
” shall have the meaning provided in the definition of Eurodollar Rate.
“
Second Amendment
” shall mean the Second Amendment to Third Amended and Restated Credit Agreement, dated as of October 2, 2013.
“
Second Amendment Effective Date
” shall have the meaning provided in the Second Amendment.
“
Secondary Assignment of Charters
” shall have the meaning provided in the definition of “Collateral and Guaranty Requirements”.
“
Secondary Assignment of Earnings
” shall have the meaning provided in the definition of “Collateral and Guaranty Requirements”.
“
Secondary Assignment of Insurances
” shall have the meaning provided in the definition of “Collateral and Guaranty Requirements”.
“
Secondary Collateral
” shall mean all property (whether real or personal) with respect to which any security interests have been granted (or purported to be granted) pursuant to any Secondary Security Document, including, without limitation, all Secondary Pledge Agreement Collateral, all Secondary Earnings and Insurance Collateral, all Secondary Collateral Vessels and all cash and Cash Equivalents at any time delivered as collateral thereunder or under the Other Credit Agreement.
“
Secondary Collateral Vessel
” shall mean, at any time, each of the Vessels listed in rows 1 through and including 7 on
Schedule III
, which is subject to a Secondary Collateral Vessel Mortgage at such time and with respect to which the other Collateral and Guaranty Requirements are satisfied at such time.
“
Secondary Collateral Vessel Mortgage
” shall mean, with respect to the Secondary Collateral Vessels, a second preferred mortgage in substantially the form of Exhibit I-2 or such other form as may be reasonably satisfactory to the Administrative Agent, as such second preferred mortgage may be amended, modified or supplemented from time to time in accordance with the terms hereof and thereof.
“
Secondary Earnings and Insurance Collateral
” shall mean all “Earnings Collateral” and “Insurance Collateral”, as the case may be, as defined in the respective Secondary Assignment of Earnings and the respective Secondary Assignment of Insurances.
“
Secondary Intercreditor Agreement
” shall mean the Amended and Restated Intercreditor Agreement, dated as of May 17, 2012, by and among the Parent, Arlington, the Borrower, as borrower under this Agreement, GMSCII, as borrower under the Other Credit Agreement, the Administrative Agent (for and on behalf of the Secured Creditors), each Subsidiary Guarantor, the Collateral Agent, and the Other Agent (for and on behalf of the Secured Creditors under and as defined in the Other Credit Agreement), which Secondary Intercreditor Agreement (i) shall be substantially in the form of Exhibit P-2 (as amended,
36
modified and/or otherwise supplemented from time to time) and (ii) shall set forth the priority of the security interests in the Secondary Collateral.
“
Secondary Pledge Agreement
” shall have the meaning provided in the definition of “Collateral and Guaranty Requirements.”
“
Secondary Pledge Agreement Collateral
” shall mean all “Collateral” as defined in the Secondary Pledge Agreement.
“
Secondary Security Documents
” shall mean the Secondary Pledge Agreement, each Secondary Assignment of Charter, each Secondary Assignment of Earnings, each Secondary Assignment of Insurances, each Secondary Collateral Vessel Mortgage and, after the execution and delivery thereof, each additional Secondary Security Document executed pursuant to Section 7.11.
“
Secured Creditors
” shall mean the “Secured Creditors” as defined in the Security Documents.
“
Securities Act
” shall mean the Securities Act of 1933, as amended.
“
Security Documents
” shall mean each Primary Security Document and each Secondary Security Document.
“
Senior Unsecured Notes
” shall mean the 12% senior unsecured notes of the Parent issued pursuant to that certain indenture, dated as of November 12, 2009, entered into by the Parent, certain of its Subsidiaries and The Bank of New York Mellon, as trustee.
“
Sixth Amendment
” shall mean the Sixth Amendment, dated as of April 2, 2015.
“
Sixth Amendment Effective Date
” shall have the meaning provided in the Sixth Amendment.
“
Specified Swap
” shall mean the swap identified as a “Specified Swap” on
Schedule V
.
“
Stated Amount
” of each Existing Letter of Credit shall, at any time, mean the maximum amount available to be drawn thereunder (in each case determined without regard to whether any conditions to drawing could then be met).
“
Subsidiaries Guaranty
” shall have the meaning provided in the definition of “Collateral and Guaranty Requirements.”
“
Subsidiary
” shall mean, as to any Person, (i) any corporation more than 50% of whose stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of such corporation (irrespective of whether or not at the time stock of any class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time owned by such Person and/or one or more Subsidiaries of such Person and (ii) any partnership, limited liability company, association, joint
37
venture or other entity in which such Person and/or one or more Subsidiaries of such Person has more than a 50% equity interest at the time;
provided
that, for all purposes under this Credit Agreement or any other Credit Document, Non-Recourse Subsidiaries shall not be considered Subsidiaries hereunder or thereunder other than as set forth herein or therein.
“
Subsidiary Guarantor
” shall mean, at any time, (x) each direct and indirect Subsidiary of the Parent (other than GMSCII, Arlington and the Borrower) which owns a Primary Collateral Vessel or which owns, directly or indirectly, any of the Equity Interests of any such direct or indirect Subsidiary at such time, (y) each direct and indirect Subsidiary of the Parent (other than GMSCII, Arlington and the Borrower) which owns a Secondary Collateral Vessel or which owns, directly or indirectly, any of the Equity Interests of any such direct or indirect Subsidiary at such time and (z) each other Subsidiary of the Parent (other than GMSCII, Arlington and the Borrower) that guarantees the obligations under the Other Credit Agreement at any time. The Subsidiary Guarantors as of the Restatement Effective Date are listed on
Schedule XIV
.
“
Swap Creditors
” shall mean each lender under the Original Credit Agreement or Affiliate thereof that has entered into any Interest Rate Protection Agreement set forth on
Schedule V
or any Other Hedging Agreement set forth on
Schedule V
with the Borrower with respect to the Loans (as defined in the Original Credit Agreement) of such lender under the Original Credit Agreement, even if such lender subsequently ceases to be a Lender under this Agreement for any reason, together with such lender’s or Affiliate’s successors and assigns, to the extent such party constitutes a Secured Creditor under the Security Documents.
“
Swap Obligations
” shall have the meaning provided in the definition of “Obligations”.
“
Tax Benefit
” shall have the meaning provided in Section 5.04(c).
“
Taxes
” shall have the meaning provided in Section 5.04(a).
“
Test Period
” shall mean each period of four consecutive fiscal quarters then last ended, in each case taken as one accounting period.
“
Third Amendment
” shall mean the Third Amendment, dated as of November 29, 2013.
“
Third Amendment Effective Date
” shall have the meaning provided in the Third Amendment.
“
Tranche
” shall mean the respective facility and commitments utilized in making Loans hereunder, with there being two separate Tranches,
i.e.
, Tranche A Loans and Tranche B Loans.
“
Tranche A Loan
” shall have the meaning provided in Section 2.01.
“
Tranche B Loan
” shall mean an amount equal to the termination value arising from the termination of the Specified Swap held by Citibank, N.A. prior to the Restatement
38
Effective Date
plus
any interest on the Specified Swap that has accrued since the termination date thereof and is unpaid on the Restatement Effective Date pursuant to the Final DIP/Cash Collateral Order.
“
Transaction
” shall mean, collectively, (i) the entering into of this Agreement and the other Credit Documents, as applicable, on the Restatement Effective Date and the conversion of Loans hereunder, (ii) the entering into of the Other Credit Agreement and the other Other Credit Documents, as applicable, on the Restatement Effective Date and the continuation and conversion of loans thereunder, (iii) the Equity Conversion, (iv) the Equity Investment, including the partial repayment of Tranche A Loans with the proceeds of the Equity Investment in a principal amount of no less than $35,350,780 on the Restatement Effective Date, and the partial repayment of Tranche A Loans under and as defined in the Other Credit Agreement with the proceeds of the Equity Investment in a principal amount of no less than $39,649,220 on the Restatement Effective Date, (v) the confirmation and effectiveness of the Plan of Reorganization and (vi) the payment of all fees and expenses in connection with the foregoing.
“
Transferred Vessel
” shall have the meaning provided in the definition of “Flag Jurisdiction Transfer” in this Section 1.
“
Trigger Date
” shall mean the date on which (x) the aggregate principal payments of Loans under this Agreement after the Third Amendment Effective Date (other than any such prepayment pursuant to Section 5.02(c)) equals the Deferred Amortization Amount and (y) the aggregate principal payments of loans under the Other Credit Agreement after the Third Amendment Effective Date (other than any such prepayment pursuant to Section 4.02(b) of the Other Credit Agreement) equals the Deferred Amortization Amount (under and as defined in the Other Credit Agreement).
“
UCC
” shall mean the Uniform Commercial Code as from time to time in effect in the relevant jurisdiction.
“
Unfunded Current Liability
” of any Plan shall mean the amount, if any, by which the value of the accumulated plan benefits under the Plan determined on a plan termination basis in accordance with actuarial assumptions at such time consistent with those prescribed by the PBGC for purposes of Section 4044 of ERISA, exceeds the fair market value of all plan assets allocable to such liabilities under Title IV of ERISA (excluding any accrued but unpaid contributions).
“
Unique Tankers
” shall mean Unique Tankers, LLC, a Marshall Islands limited liability company, a wholly-owned direct Subsidiary of General Maritime Management formed for the purpose of forming and operating the Unique Tankers Pool.
“
Unique Tankers Pool
” shall mean the pool, operated by Unique Tankers, of crude oil tankers under time charters.
“
United States
” and “
U.S.
” shall each mean the United States of America.
“
Unpaid Drawing
” shall have the meaning provided in Section 3.03(a).
39
“
Unrestricted Cash and Cash Equivalents
” shall mean, when referring to cash or Cash Equivalents of the Parent or any of its Subsidiaries, that such cash or Cash Equivalents (i) does not appear (or would not be required to appear) as “restricted” on a consolidated balance sheet of the Parent or of any such Subsidiary, (ii) are not subject to any Lien in favor of any Person other than the Collateral Agent for the benefit of the Secured Creditors and the Other Agent for the benefit of the Secured Creditors under and as defined in the Other Credit Agreement, (iii) are otherwise generally available for use by the Parent or such Subsidiary or (iv) are not subject to Liens permitted under Section 9.01(xvii) or 9.01(xviii).
“
Vessel
” shall mean, collectively, all sea going vessels and tankers at any time owned by the Parent and its Subsidiaries, and, individually, any of such vessels.
“
Vessel SPV
” shall have the meaning provided in Section 9.05(vii).
“
Weighted Average Life to Maturity
” shall mean, when applied to any Indebtedness at any date, the number of years obtained by dividing: (i) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by (ii) the then outstanding principal amount of such Indebtedness.
“
Wells Fargo Indebtedness
” means (a) the Indebtedness under the credit agreement between the Parent and Wells Fargo Bank, National Association dated as of June 11, 2013 and (b) any refinancing of the Indebtedness referred to in clause (a), to the extent such refinancing is permitted pursuant to Section 9.18(i).
“
Wholly-Owned Subsidiary
” shall mean, as to any Person, (i) any corporation 100% of whose capital stock (other than director’s qualifying shares) is at the time owned by such Person and/or one or more Wholly-Owned Subsidiaries of such Person and (ii) any partnership, limited liability company, association, joint venture or other entity in which such Person and/or one or more Wholly-Owned Subsidiaries of such Person has a 100% equity interest at such time.
SECTION 2.
Amount and Terms of Credit Facility
.
2.01
The Loans
. (a) On the Restatement Effective Date, the loans (a “
Tranche A Loan
” and, collectively, the “
Tranche A Loans
”) of each Lender shall consist of the Revolving Loans of each such Lender which are outstanding under the Original Credit Agreement immediately prior to the Restatement Effective Date and shall be converted into Tranche A Loans under this Agreement on the Restatement Effective Date,
less
each such Lender’s
pro
rata
percentage of $35,350,780, which is paid to such Lenders on the Restatement Effective Date as part of the Plan of Reorganization. The amount of each Lender’s outstanding Tranche A Loans immediately after giving effect to the Transactions on the Restatement Effective Date is set forth on
Schedule I
.
(b)
On the Restatement Effective Date, the amount due in respect of the termination of the Specified Swap,
plus
any interest that has accrued but has not been paid on the
40
Specified Swap since the termination of the Specified Swap pursuant to the Final DIP/Cash Collateral Order, shall be exchanged for the Tranche B Loan under this Agreement and shall be held by Citibank, N.A. The amount of Citibank, N.A.’s outstanding Tranche B Loan immediately after giving effect to the Transactions on the Restatement Effective Date is set forth on
Schedule I
.
2.02
[Intentionally Omitted]
.
2.03
[Intentionally Omitted]
.
2.04
[Intentionally Omitted]
.
2.05
Notes
. (a) The Borrower’s obligation to pay the principal of, and interest on, the Loans made by each Lender shall be evidenced in the Register maintained by the Administrative Agent pursuant to Section 12.16 and shall, if requested by such Lender, also be evidenced by a promissory note duly executed and delivered by the Borrower substantially in the form of Exhibit B, with blanks appropriately completed in conformity herewith (each, a “
Note
” and, collectively, the “
Notes
”).
(b)
Each Note shall (i) be executed by the Borrower, (ii) be payable to such Lender or its registered assigns and be dated the Restatement Effective Date, (iii) be in a stated principal amount equal to the outstanding Tranche A Loans or Tranche B Loans of such Lender and be payable in the outstanding principal amount of Loans evidenced thereby, (iv) mature on the Maturity Date, (v) bear interest as provided in Section 2.07 in respect of the Loans evidenced thereby, (vi) be subject to voluntary prepayment as provided in Section 5.01, and mandatory repayment as provided in Section 5.02, and (vii) be entitled to the benefits of this Agreement and the other Credit Documents.
(c)
Each Lender will note on its internal records the amount of each Loan made by it and each payment in respect thereof and will, prior to any transfer of any of its Notes, endorse on the reverse side thereof the outstanding principal amount of Loans evidenced thereby. Failure to make any such notation or any error in any such notation or endorsement shall not affect the Borrower’s obligations in respect of such Loans.
(d)
Notwithstanding anything to the contrary contained above in this Section 2.05 or elsewhere in this Agreement, Notes shall be delivered only to Lenders that at any time specifically request the delivery of such Notes. No failure of any Lender to request or obtain a Note evidencing its Loans to the Borrower shall affect or in any manner impair the obligations of the Borrower to pay the Loans (and all related Obligations) incurred by the Borrower that would otherwise be evidenced thereby in accordance with the requirements of this Agreement, and shall not in any way affect the security or guaranties therefor provided pursuant to the Credit Documents. Any Lender that does not have a Note evidencing its outstanding Loans shall in no event be required to make the notations otherwise described in preceding clause (c). At any time (including, without limitation, to replace any Note that has been destroyed or lost) when any Lender requests the delivery of a Note to evidence any of its Loans, the Borrower shall promptly execute and deliver to such Lender the requested Note in the appropriate amount or amounts to evidence such Loans provided that, in the case of a substitute or replacement Note, the Borrower
41
shall have received from such requesting Lender (i) an affidavit of loss or destruction and (ii) a customary lost/destroyed Note indemnity, in each case in form and substance reasonably acceptable to the Borrower and such requesting Lender, and duly executed by such requesting Lender.
2.06
Pro Rata Borrowings
. All Borrowings of Tranche A Loans under this Agreement have been incurred from the Lenders
pro
rata
.
2.07
Interest
. (a) The Borrower agrees to pay interest in respect of the unpaid principal amount of each Loan from the date the proceeds thereof are made available to the Borrower until the maturity (whether by acceleration or otherwise) of such Loan at a rate per annum which shall, during each Interest Period applicable thereto, be equal to the sum of the Applicable Margin and the Eurodollar Rate for such Interest Period.
(b)
If the Borrower fails to pay any amount payable by it under a Credit Document on its due date, interest shall accrue on the overdue amount (in the case of overdue interest to the extent permitted by law) from the due date up to the date of actual payment (both before and after judgment) at a rate which is, subject to paragraph (c) below, 2%
plus
the rate which would have been payable if the overdue amount had, during the period of non payment, constituted a Loan for successive Interest Periods, each of a duration selected by the Administrative Agent. Any interest accruing under this Section 2.07(b) shall be immediately payable by the Borrower on demand by the Administrative Agent.
(c)
If any overdue amount consists of all or part of a Loan which became due on a day which was not the last day of an Interest Period relating to such Loan:
(i)
the first Interest Period for that overdue amount shall have a duration equal to the unexpired portion of the current Interest Period relating to that Loan; and
(ii)
the rate of interest applying to the overdue amount during that first Interest Period shall be 2%
plus
the rate which would have applied if the overdue amount had not become due.
Default interest (if unpaid) arising on the overdue amount will be compounded with the overdue amount at the end of each Interest Period applicable to that overdue amount but will remain immediately due and payable.
(d)
Accrued and unpaid interest shall be payable in respect of each Loan, on the last day of each Interest Period applicable thereto and, in the case of an Interest Period in excess of three months, on each date occurring at three month intervals after the first day of such Interest Period, on any repayment or prepayment (on the amount repaid or prepaid), at maturity (whether by acceleration or otherwise) and, after such maturity, on demand.
(e)
Upon each Interest Determination Date, the Administrative Agent shall determine the Eurodollar Rate for each Interest Period applicable to the Loans made or to be made pursuant to the applicable Borrowing and shall promptly notify the Borrower and the respective Lenders thereof. Each such determination shall, absent manifest error, be final and conclusive and binding on all parties hereto.
42
2.08
Interest Periods
. (a) The Borrower shall give the Administrative Agent at its Notice Office written notice at least three Business Days’ prior to (x) the Restatement Effective Date (in the case of the initial Interest Period applicable to any Loans) and (y) the expiration of an Interest Period applicable to such Loans (in the case of any subsequent Interest Period), which notice shall be deemed to have been given on a certain day only if given before 11:00 A.M. (New York time), electing the interest period (each an “
Interest Period
”) applicable to such Loan. Each such written notice (each a “
Notice of Interest Period Election
”), except as otherwise expressly provided in Section 2.09, shall be irrevocable and shall be given by the Borrower in the form of Exhibit A, appropriately completed to specify (i) the aggregate principal amount of the Loans to be included in the Borrowing (if applicable), (ii) the commencement date of the applicable Interest Period (which shall be a Business Day) and (iii) at the option of the Borrower, whether the applicable Interest Period will be a one, three or six month period (or such other period as all the Lenders may agree);
provided
that:
(i)
there shall be no more than six different Interest Periods at any time, each of which shall be comprised of Loans in an amount of not less than the Minimum Borrowing Amount (or, if less, the aggregate principal amount of the Loans outstanding hereunder);
(ii)
the initial Interest Period for each Loan shall commence on the Restatement Effective Date of such Loan and each Interest Period occurring thereafter in respect of such Loan shall commence on the day on which the immediately preceding Interest Period applicable thereto expires;
(iii)
if any Interest Period relating to a Loan begins on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period, such Interest Period shall end on the last Business Day of such calendar month;
(iv)
if any Interest Period would otherwise expire on a day which is not a Business Day, such Interest Period shall expire on the first succeeding Business Day;
provided
,
however
, that if any Interest Period for a Loan would otherwise expire on a day which is not a Business Day but is a day of the month after which no further Business Day occurs in such month, such Interest Period shall expire on the immediately preceding Business Day;
(v)
no Interest Period longer than one month may be selected at any time when an Event of Default (or, if the Administrative Agent or the Required Lenders have determined that such an election at such time would be disadvantageous to the Lenders, a Default) has occurred and is continuing; and
(vi)
no Interest Period in respect of any Borrowing of any Loans shall be selected which extends beyond the Maturity Date.
The Administrative Agent shall promptly give each Lender whose Loans are being converted on the Restatement Effective Date or continued at the end of any Interest Period, notice of the proposed Borrowing, of such Lender’s proportionate share thereof and of the other matters required by the immediately preceding sentence to be specified in the Notice of Interest Period
43
Election. If on the Restatement Effective Date or upon the expiration of any Interest Period applicable to Loans, the Borrower has failed to deliver a Notice of Interest Period Election in respect of such Loans as provided above, the Borrower shall be deemed to have elected a one month Interest Period to be applicable to such Loans effective as of the Restatement Effective Date or expiration date of such current Interest Period, as applicable.
(b)
Without in any way limiting the obligation of the Borrower to deliver a written Notice of Interest Period Election in accordance with Section 2.08(a), the Administrative Agent may act without liability upon the basis of telephonic notice of such Interest Period election, believed by the Administrative Agent in good faith to be from the President or the Treasurer of the Borrower (or any other officer of the Borrower designated in writing to the Administrative Agent by the President or Treasurer of the Borrower as being authorized to give such notices under this Agreement) prior to receipt of Notice of Interest Period Election. In each such case, the Borrower hereby waives the right to dispute the Administrative Agent’s record of the terms of such telephonic notice of such Interest Period election of Loans, absent manifest error.
2.09
Increased Costs, Illegality, Market Disruption Event, etc
. (a) In the event that any Lender shall have determined in good faith (which determination shall, absent manifest error, be final and conclusive and binding upon all parties hereto):
(i)
at any time, that such Lender shall incur increased costs or reductions in the amounts received or receivable hereunder with respect to any Loan because of, without duplication, any change since the Restatement Effective Date in any applicable law or governmental rule, regulation, order, guideline or request (whether or not having the force of law) or in the interpretation or administration thereof and including the introduction of any new law or governmental rule, regulation, order, guideline or request, such as, for example, but not limited to: (A) a change with respect to taxes (other than Excluded Taxes) imposed on any recipient Lender’s loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto, but without duplication of any amounts payable in respect of Taxes pursuant to Section 5.04, or (B) any change in official reserve requirements but, in all events, excluding reserves required under Regulation D to the extent included in the computation of the Eurodollar Rate; or
(ii)
at any time, that the making or continuance of any Loan has been made unlawful by any law or governmental rule, regulation or order;
then, and in any such event, such Lender shall promptly give notice (by telephone confirmed in writing) to the Borrower and, except in the case of clause (i) above, to the Administrative Agent of such determination (which notice the Administrative Agent shall promptly transmit to each of the Lenders). Thereafter (x) in the case of clause (i) above, the Borrower agrees, subject to the provisions of Section 2.11 (to the extent applicable), to pay to such Lender, upon its written demand therefor, such additional amounts as shall be required to compensate such Lender or such other corporation for the increased costs or reductions to such Lender or such other corporation and (y) in the case of clause (ii) above, the Borrower shall take one of the actions specified in Section 2.09(b) as promptly as possible and, in any event, within the time period
44
required by law. In determining such additional amounts, each Lender will act reasonably and in good faith and will use averaging and attribution methods which are reasonable, provided that such Lender’s determination of compensation owing under this Section 2.09(a) shall, absent manifest error be final and conclusive and binding on all the parties hereto. Each Lender, upon determining that any additional amounts will be payable pursuant to this Section 2.09(a), will give prompt written notice thereof to the Borrower, which notice shall show in reasonable detail the basis for the calculation of such additional amounts;
provided
that the failure to give such notice shall not relieve the Borrower from its Obligations hereunder.
(b)
At any time that any Loan is affected by the circumstances described in Section 2.09(a)(i) or (ii), the Borrower may (and in the case of a Loan affected by the circumstances described in Section 2.09(a)(ii) shall) either (x) if the affected Loan is then being made initially, cancel the respective Borrowing by giving the Administrative Agent telephonic notice (confirmed in writing) on the same date or the next Business Day that such Borrower was notified by the affected Lender or the Administrative Agent pursuant to Section 2.09(a)(i) or (ii) or (y) if the affected Loan is then outstanding, upon at least three Business Days’ written notice to the Administrative Agent, in the case of any Loan, repay all outstanding Borrowings (within the time period required by the applicable law or governmental rule, governmental regulation or governmental order) which include such affected Loans in full in accordance with the applicable requirements of Section 5.02;
provided
that if more than one Lender is affected at any time, then all affected Lenders must be treated the same pursuant to this Section 2.09(b).
(c)
If any Lender in good faith determines that after the Restatement Effective Date the introduction of or effectiveness of or any change in any applicable law or governmental rule, regulation, order, guideline, directive or request (whether or not having the force of law) concerning capital adequacy, or any change in interpretation or administration thereof by any governmental authority, central bank or comparable agency will have the effect of increasing the amount of capital required or requested to be maintained by such Lender, or any corporation controlling such Lender, based on the existence of such Lender’s Loans hereunder or its obligations hereunder, then the Borrower agrees (to the extent applicable), to pay to such Lender, upon its written demand therefor, such additional amounts as shall be required to compensate such Lender or such other corporation for the increased cost to such Lender or such other corporation or the reduction in the rate of return to such Lender or such other corporation as a result of such increase of capital. In determining such additional amounts, each Lender will act reasonably and in good faith and will use averaging and attribution methods which are reasonable, provided that such Lender’s determination of compensation owing under this Section 2.09(c) shall, absent manifest error be final and conclusive and binding on all the parties hereto. Each Lender, upon determining that any additional amounts will be payable pursuant to this Section 2.09(c), will give prompt written notice thereof to the Borrower, which notice shall show in reasonable detail the basis for calculation of such additional amounts;
provided
that the failure to give such notice shall not relieve the Borrower from its Obligations hereunder.
(d)
If a Market Disruption Event occurs in relation to a Tranche A Loan for any Interest Period, then the rate of interest on each Lender’s share of such Tranche A Loan for the relevant Interest Period shall be the rate per annum which is the sum of:
(i)
the Applicable Margin; and
45
(ii)
the rate determined by each Lender and notified to the Administrative Agent, which expresses the actual cost to each such Lender of funding its participation in that Tranche A Loan for a period equivalent to such Interest Period from whatever source it may reasonably select.
(e)
If a Market Disruption Event occurs and the Administrative Agent or the Borrower so require, the Administrative Agent and the Borrower shall enter into negotiations (for a period of not more than thirty days) with a view to agreeing a substitute basis for determining the rate of interest. Any alternative basis agreed pursuant to the immediately preceding sentence shall, with the prior consent of all the Lenders and the Borrower, be binding on all parties. If no agreement is reached pursuant to this clause (e), the rate provided for in clause (d) above shall apply for the entire Interest Period.
(f)
Notwithstanding anything in this Agreement to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a change after the Restatement Effective Date in a requirement of law or governmental rule, regulation or order, regardless of the date enacted, adopted, issued or implemented for all purposes under or in connection with this Agreement (including this Section 2.09).
2.10
Compensation
. The Borrower agrees to compensate each Lender, upon its written request (which request shall set forth in reasonable detail the basis for requesting and the calculation of such compensation), for all reasonable losses, expenses and liabilities (including, without limitation, any such loss, expense or liability incurred by reason of the liquidation or reemployment of deposits or other funds required by such Lender to fund its Loans but excluding any loss of anticipated profits) which such Lender may sustain in respect of Loans made to the Borrower: (i) if any prepayment or repayment (including any prepayment or repayment made pursuant to Section 2.09(a), Section 5.01 or Section 5.02 or as a result of an acceleration of the Loans pursuant to Section 10) of any of its Loans, or assignment of its Loans pursuant to Section 2.12, occurs on a date which is not the last day of an Interest Period with respect thereto; (ii) if any prepayment of any of its Loans is not made on any date specified in a notice of prepayment given by the Borrower; or (iii) as a consequence of any other Default or Event of Default arising as a result of the Borrower’s failure to repay Loans or make payment on any Note held by such Lender when required by the terms of this Agreement.
2.11
Change of Lending Office
. Each Lender agrees that on the occurrence of any event giving rise to the operation of Section 2.09(a)(ii), Section 2.09(b) or Section 5.04 with respect to such Lender, it will, if requested by the Borrower, use reasonable good faith efforts (subject to overall policy considerations of such Lender) to designate another lending office for any Loans or Existing Letters of Credit affected by such event,
provided
that such designation is made on such terms that such Lender and its lending office suffer no economic, legal or regulatory disadvantage, with the object of avoiding the consequence of the event giving rise to the operation of such Section. Nothing in this Section 2.11 shall affect or postpone any of the obligations of the Borrower or the rights of any Lender provided in Section 2.09 or Section 5.04.
46
2.12
Replacement of Lenders
. (a) (x) If any Lender becomes a Defaulting Lender or otherwise defaults in its obligations to make Loans, (y) upon the occurrence of any event giving rise to the operation of Section 2.09(a)(i) or (ii), Section 2.09(b) or Section 5.04 with respect to any Lender which results in such Lender charging to the Borrower material increased costs in excess of those being generally charged by the other Lenders, or (z) as provided in Section 12.12(b) in the case of certain refusals by a Lender to consent to certain proposed changes, waivers, discharges or terminations with respect to this Agreement which have been approved by the Required Lenders, the Borrower shall have the right, if no Default or Event of Default will exist immediately after giving effect to the respective replacement, to replace such Lender (the “
Replaced Lender
”) with one or more other Eligible Transferee or Eligible Transferees, none of whom shall constitute a Defaulting Lender at the time of such replacement (collectively, the “
Replacement Lender
”) reasonably acceptable to the Administrative Agent;
provided
that:
(i)
at the time of any replacement pursuant to this Section 2.12, the Replacement Lender shall enter into one or more Assignment and Assumption Agreements pursuant to Section 12.04(b) (and with all fees payable pursuant to said Section 12.04(b) to be paid by the Replacement Lender) pursuant to which the Replacement Lender shall acquire all of the outstanding Loans of the Replaced Lender and such Replaced Lender’s Individual Exposure and, in connection therewith, shall pay to the Replaced Lender in respect thereof an amount equal to the sum (without duplication) of an amount equal to the principal of, and all accrued interest on, all outstanding Loans of the Replaced Lender; and
(ii)
all obligations of the Borrower due and owing to the Replaced Lender at such time (other than those specifically described in clause (i) above) in respect of which the assignment purchase price has been, or is concurrently being, paid shall be paid in full to such Replaced Lender concurrently with such replacement.
(b)
Upon the execution of the respective Assignment and Assumption Agreement, the payment of amounts referred to in clauses (i) and (ii) above and, if so requested by the Replacement Lender, delivery to (i) the Replacement Lender of the appropriate Note or Notes executed by the Borrower, the Replacement Lender shall become a Lender hereunder and the Replaced Lender shall cease to constitute a Lender hereunder, except with respect to indemnification provisions under this Agreement (including, without limitation, Sections 2.09, 2.10, 3.04, 5.04, 12.01 and 12.06), which shall survive as to such Replaced Lender and (ii) if so requested by the Borrower, the Replaced Lender shall deliver all Notes in its possession to the Borrower.
2.13
Defaulting Lenders
. Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the following provisions shall apply for so long as such Lender is a Defaulting Lender:
(a)
if any Existing Letter of Credit Exposure exists at the time a Lender becomes a Defaulting Lender then:
47
(i)
the Borrower shall, within one Business Day following notice by the Administrative Agent, cash collateralize in a manner reasonably satisfactory to the applicable Issuing Lender such Defaulting Lender’s Existing Letter of Credit Exposure in an aggregate amount equal to 100% of such Defaulting Lender’s Existing Letter of Credit Exposure for so long as such Existing Letter of Credit Exposure is outstanding (the “
Existing Letter of Credit Back-Stop Arrangements
”);
(ii)
the Borrower shall not be required to pay any fees to such Defaulting Lender pursuant to Section 4.01(a) with respect to such Defaulting Lender’s Existing Letter of Credit Exposure; and
(iii)
if any Defaulting Lender’s Existing Letter of Credit Exposure is not cash collateralized pursuant to this Section 2.13(a), then, without prejudice to any rights or remedies of any Issuing Lender or any Lender hereunder, all Existing Letter of Credit Fees payable under Section 4.01(a) with respect to such Defaulting Lender’s Existing Letter of Credit Exposure shall be payable to each Issuing Lender until such Existing Letter of Credit Exposure is cash collateralized and/or reallocated; and
(b)
notwithstanding anything to the contrary contained in Section 2.01 or Section 3, so long as any Lender is a Defaulting Lender, no Issuing Lender shall be required to amend or renew any Existing Letter of Credit.
In the event that the Administrative Agent, the Borrower and each Issuing Lender each agrees that a Defaulting Lender has adequately remedied all matters that caused such Lender to be a Defaulting Lender, then so long as no Event of Default then exists, all funds held as cash collateral pursuant to the Existing Letter of Credit Back-Stop Arrangements shall thereafter be promptly returned to the Borrower. If the Loans and all other Obligations have been paid in full and no Existing Letters of Credit are outstanding, then all funds held as cash collateral pursuant to the Existing Letter of Credit Back-Stop Arrangements shall thereafter be returned to the Borrower as promptly as practicable.
SECTION 3.
Existing Letters of Credit
3.01
Existing Letters of Credit
.
Schedule XII
contains a description of the standby letters of credit that were issued pursuant to the Original Credit Agreement for the account of the Borrower prior to the Restatement Effective Date and which remain outstanding on the Restatement Effective Date (and setting forth, with respect to each such letter of credit, (i) the name of the issuing lender (the “
Issuing Lender
”), (ii) the letter of credit number, (iii) the name of the account party, (iv) the stated amount (which shall be in Dollars), (v) the name of the beneficiary and (vi) the expiry date). Each such letter of credit (each, as amended from time to time in accordance with the terms thereof and hereof, an “
Existing Letter of Credit
”) shall constitute a letter of credit issued by the relevant Issuing Lender hereunder for all purposes of this Agreement and shall be deemed issued on the Restatement Effective Date. At no time after the Restatement Effective Date will any Existing Letter of Credit be extended or renewed.
3.02
Existing Letter of Credit Participations
. (a) On the Restatement Effective Date, the Issuing Lender shall be deemed to have sold and transferred to each Lender with
48
outstanding Tranche A Loans, other than such Issuing Lender (each such Lender, in its capacity under this Section 3.02, a “
Participant
”), and each such Participant shall be deemed irrevocably and unconditionally to have purchased and received from such Issuing Lender, without recourse or warranty, an undivided interest and participation, to the extent of such Participant’s Percentage, in such Existing Letter of Credit, each drawing made thereunder and the obligations of the Borrower under this Agreement with respect thereto, and any security therefor or guaranty pertaining thereto. Upon any change in the outstanding Tranche A Loans or Percentages of the Lenders pursuant to Sections 2.12 or 12.04, it is hereby agreed that, with respect to all outstanding Existing Letters of Credit and Unpaid Drawings, there shall be an automatic adjustment to the participations pursuant to this Section 3.02 to reflect the new Percentages of the assignor and assignee Lender or of all Lenders with outstanding Tranche A Loans, as the case may be.
(b)
In determining whether to pay under any Existing Letter of Credit, such Issuing Lender shall have no obligation relative to the other Lenders other than to confirm that any documents required to be delivered under such Existing Letter of Credit appear to have been delivered and that they appear to substantially comply on their face with the requirements of such Existing Letter of Credit. Subject to the provisions of the immediately preceding sentence, any action taken or omitted to be taken by any Issuing Lender under or in connection with any Existing Letter of Credit if taken or omitted in the absence of gross negligence or willful misconduct, as determined by a court of competent jurisdiction, shall not create for such Issuing Lender any resulting liability to any Credit Party or any Lender.
(c)
In the event that any Issuing Lender makes any payment under any Existing Letter of Credit issued by it and the Borrower shall not have reimbursed such amount in full to such Issuing Lender pursuant to Section 3.03(a), such Issuing Lender shall promptly notify the Administrative Agent, which shall promptly notify each Participant, of such failure, and each Participant shall promptly and unconditionally pay to the Administrative Agent for the account of such Issuing Lender the amount of such Participant’s Percentage (as relates to the respective Existing Letter of Credit) of such unreimbursed payment in Dollars and in same day funds. If the Administrative Agent so notifies, prior to 11:00 A.M. (New York time) on any Business Day, any Participant required to fund a payment under an Existing Letter of Credit, such Participant shall make available to the Administrative Agent at the Payment Office for the account of such Issuing Lender in Dollars such Participant’s Percentage (as relates to the respective Existing Letter of Credit) of the amount of such payment on such Business Day in same day funds. If and to the extent such Participant shall not have so made its Percentage of the amount of such payment available to the Administrative Agent for the account of such Issuing Lender, such Participant agrees to pay to the Administrative Agent for the account of such Issuing Lender, forthwith on demand such amount, together with interest thereon, for each day from such date until the date such amount is paid to the Administrative Agent for the account of such Issuing Lender at the overnight Federal Funds Rate. The failure of any Participant to make available to the Administrative Agent for the account of such Issuing Lender its Percentage of any payment under any Existing Letter of Credit issued by it shall not relieve any other Participant of its obligation hereunder to make available to the Administrative Agent for the account of such Issuing Lender its Percentage of any such Existing Letter of Credit on the date required, as specified above, but no Participant shall be responsible for the failure of any other
49
Participant to make available to the Administrative Agent for the account of such Issuing Lender such other Participant’s Percentage of any such payment.
(d)
Whenever any Issuing Lender receives a payment of a reimbursement obligation as to which the Administrative Agent has received (for the account of any such Issuing Lender) any payments from the Participants pursuant to clause (c) above, such Issuing Lender shall forward such payment to the Administrative Agent, which in turn shall distribute to each Participant which has paid its Percentage thereof, in same day funds, an amount equal to such Participant’s share (based upon the proportionate aggregate amount originally funded by such Participant to the aggregate amount funded by all Participants) of the principal amount of such reimbursement obligation and interest thereon accruing after the purchase of the respective participations.
(e)
Each Issuing Lender shall, promptly after the amendment to an Existing Letter of Credit give the Administrative Agent and the Borrower written notice of such amendment and such notice shall be accompanied by a copy of such amendment. Upon receipt of such notice, the Administrative Agent shall promptly notify each Participant, in writing, of such amendment and in the event a Participant shall so request, the Administrative Agent shall furnish such Participant with a copy of such amendment.
(f)
Upon request, the Administrative Agent shall, within 10 days after the last Business Day of each calendar month, deliver to each Participant a report setting forth for such preceding calendar month the aggregate daily Stated Amount available to be drawn under all outstanding Existing Letters of Credit during such calendar month.
(g)
The obligations of the Participants to make payments to the Administrative Agent for the account of the respective Issuing Lender with respect to Existing Letters of Credit issued by it shall be irrevocable and not subject to any qualification or exception whatsoever and shall be made in accordance with the terms and conditions of this Agreement under all circumstances, including, without limitation, any of the following circumstances:
(i)
any lack of validity or enforceability of this Agreement or any of the other Credit Documents;
(ii)
the existence of any claim, setoff, defense or other right which the Borrower or any of its Subsidiaries may have at any time against a beneficiary named in an Existing Letter of Credit, any transferee of any Existing Letter of Credit (or any Person for whom any such transferee may be acting), the Administrative Agent, any Lender, any Issuing Lender, any Participant, or any other Person, whether in connection with this Agreement, any Existing Letter of Credit, the transactions contemplated herein or any unrelated transactions (including any underlying transaction between the Borrower or any of its Subsidiaries and the beneficiary named in any such Existing Letter of Credit);
50
(iii)
any draft, certificate or any other document presented under any Existing Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect;
(iv)
the surrender or impairment of any security for the performance or observance of any of the terms of any of the Credit Documents; or
(v)
the occurrence of any Default or Event of Default.
3.03
Agreement to Repay Existing Letter of Credit Drawings
. (a) The Borrower hereby agrees to reimburse each Issuing Lender, by making payment to the Administrative Agent in immediately available funds at the Payment Office, for any payment or disbursement made by such Issuing Lender under any Existing Letter of Credit issued by it (each such amount, so paid until reimbursed, an “
Unpaid Drawing
”), not later than four Business Days following receipt by the Borrower of notice of such payment or disbursement (
provided
that no such notice shall be required to be given if an Event of Default under Section 10.05 shall have occurred and be continuing, in which case the Unpaid Drawing shall be due and payable immediately without presentment, demand, protest or notice of any kind (all of which are hereby waived by the Borrower)), with interest on the amount so paid or disbursed by such Issuing Lender, to the extent not reimbursed prior to 12:00 Noon (New York time) on the date of such payment or disbursement, from and including the date paid or disbursed to but excluding the date such Issuing Lender was reimbursed by the Borrower therefor at a rate per annum equal to the Base Rate, as in effect from time to time,
plus
2%;
provided
,
however
, to the extent such amounts are not reimbursed prior to 12:00 Noon (New York time) on the fourth Business Day following the receipt by the Borrower of notice of such payment or disbursement or following the occurrence of an Event of Default under Section 10.05, interest shall thereafter accrue on the amounts so paid or disbursed by such Issuing Lender (and until reimbursed by the Borrower) at a rate per annum equal to the Base Rate, in effect from time to time,
plus
2%, with such interest to be payable on demand. Each Issuing Lender shall give the Borrower prompt written notice of each Drawing under any Existing Letter of Credit issued by it,
provided
that the failure to give any such notice shall in no way affect, impair or diminish the Borrower’s obligations hereunder.
(b)
The obligations of the Borrower under this Section 3.03 to reimburse the respective Issuing Lender with respect to drawings on Existing Letters of Credit (each, a “
Drawing
”) (including, in each case, interest thereon) shall be absolute and unconditional under any and all circumstances and irrespective of any setoff, counterclaim or defense to payment which the Borrower may have or have had against any Lender (including in its capacity as Issuing Lender or Participant or as Participant), or any non-application or misapplication by the beneficiary of the proceeds of such Drawing, the respective Issuing Lender’s only obligation to the Borrower being to confirm that any documents required to be delivered under such Existing Letter of Credit appear to have been delivered and that they appear to comply on their face with the requirements of such Existing Letter of Credit. Subject to the provisions of the immediately preceding sentence, any action taken or omitted to be taken by any Issuing Lender under or in connection with any Existing Letter of Credit if taken or omitted in the absence of gross negligence or willful misconduct as determined by a court of competent jurisdiction, shall not create for such Issuing Lender any resulting liability to the Borrower or any other Credit Party.
51
3.04
Increased Costs
. If at any time after the Restatement Effective Date, any Issuing Lender or any Participant determines that the introduction of or any change in any applicable law, rule, regulation, order, guideline or request or in the interpretation or administration thereof by any governmental authority charged with the interpretation or administration thereof, or compliance by any Issuing Lender or any Participant with any request or directive by any such authority (excluding any changes in law related to Excluded Taxes) (whether or not having the force of law), shall either (a) impose, modify or make applicable any reserve, deposit, capital adequacy or similar requirement against Existing Letters of Credit issued by any Issuing Lender or participated in by any Participant, or (b) impose on any Issuing Lender or any Participant any other conditions relating, directly or indirectly, to this Agreement or any Existing Letter of Credit; and the result of any of the foregoing is to increase the cost to any Issuing Lender or any Participant of issuing, maintaining or participating in any Existing Letter of Credit, or reduce the amount of any sum received or receivable by any Issuing Lender or any Participant hereunder or reduce the rate of return on its capital with respect to Existing Letters of Credit, then, upon demand to the Borrower by such Issuing Lender or any Participant (a copy of which demand shall be sent by such Issuing Lender or such Participant to the Administrative Agent), the Borrower agrees to pay to such Issuing Lender or such Participant such additional amount or amounts as will compensate such Lender for such increased cost or reduction in the amount receivable or reduction on the rate of return on its capital. Any Issuing Lender or any Participant, upon determining that any additional amounts will be payable pursuant to this Section 3.04, will give prompt written notice thereof to the Borrower, which notice shall include a certificate submitted to such Borrower by such Issuing Lender or such Participant (a copy of which certificate shall be sent by such Issuing Lender or such Participant to the Administrative Agent), setting forth in reasonable detail the basis for and the calculation of such additional amount or amounts necessary to compensate such Issuing Lender or such Participant, although the failure to give any such notice shall not release or diminish the Borrower’s obligations to pay additional amounts pursuant to this Section 3.04. The certificate required to be delivered pursuant to this Section 3.04 shall, if delivered in good faith and absent manifest error, be final and conclusive and binding on the Borrower.
SECTION 4.
Fees
.
4.01
Fees
. (a) The Borrower shall pay to the Administrative Agent, for the Administrative Agent’s own account, such other fees as have been agreed to in writing by the Borrower and the Administrative Agent.
(b)
The Borrower agrees to pay to the Administrative Agent for distribution to each Lender (based on each such Lender’s respective Percentage), a fee in respect of each Existing Letter of Credit (the “
Existing Letter of Credit Fee
”) for the period from and including the date of issuance of such Existing Letter of Credit to and including the date of termination or expiration of such Existing Letter of Credit, computed at a rate per annum equal to the Applicable Margin then in effect from time to time on the daily Stated Amount of each such Existing Letter of Credit. Accrued Existing Letter of Credit Fees shall be due and payable quarterly in arrears on each Payment Date and on the Maturity Date (or such earlier date upon which the Loans and all other Credit Document Obligations have been paid in full).
52
(c)
The Borrower agrees to pay directly to each Issuing Lender, for its own account, a facing fee in respect of each Existing Letter of Credit issued by it (the “
Facing Fee
”) for the period from and including the date of issuance of such Existing Letter of Credit to and including the date of termination or expiration of such Existing Letter of Credit, computed at a rate per annum equal to 1/8 of 1% on the daily Stated Amount of such Existing Letter of Credit,
provided
that in any event the minimum amount of Facing Fees payable in any twelve-month period for each Existing Letter of Credit shall be not less than $500; it being agreed that, on the day of issuance of any Existing Letter of Credit and on each anniversary thereof prior to the termination or expiration of such Existing Letter of Credit, if $500 will exceed the amount of Facing Fees that will accrue with respect to such Existing Letter of Credit for the immediately succeeding twelve-month period, the full $500 shall be payable on the date of issuance of such Existing Letter of Credit and on each such anniversary thereof. Except as otherwise provided in the proviso to the immediately preceding sentence, accrued Facing Fees shall be due and payable quarterly in arrears on each Payment Date and upon the first day on or after the repayment of the Loans in full upon which no Existing Letters of Credit remain outstanding.
(d)
The Borrower agrees to pay, upon each payment (including any partial payment) under, or amendment to, any Existing Letter of Credit issued hereunder, such amount as shall at the time of such event be the administrative charge which the respective Issuing Lender is generally charging in connection with such occurrence with respect to letters of credit.
SECTION 5.
Prepayments; Payments; Taxes
.
5.01
Voluntary Prepayments
. The Borrower shall have the right to prepay, at any time, the Loans, in each case without premium or penalty except as provided by law and Section 2.10, in whole or in part at any time and from time to time on the following terms and conditions:
(i)
the Borrower shall give the Administrative Agent prior to 12:00 Noon (New York time) at its Notice Office at least three Business Days’ prior written notice (including e-mail notice or telephonic notice promptly confirmed in writing) of its intent to prepay such Loans, the amount of such prepayment and the specific Borrowing or Borrowings pursuant to which made, which notice the Administrative Agent shall promptly transmit to each of the Lenders;
(ii)
each prepayment shall be in an aggregate principal amount of at least $1,000,000 or such lesser amount of a Borrowing which is outstanding,
provided
that no partial prepayment of Loans made pursuant to any Borrowing shall reduce the outstanding Loans made pursuant to such Borrowing to an amount less than $1,000,000;
(iii)
at the time of any prepayment of Loans pursuant to this Section 5.01 on any date other than the last day of the Interest Period applicable thereto, the Borrower shall pay the amounts required pursuant to Section 2.10;
(iv)
in the event of certain refusals by a Lender as provided in Section 12.12(b) to consent to certain proposed changes, waivers, discharges or terminations with respect
53
to this Agreement which have been approved by the Required Lenders, the Borrower may, upon five Business Days’ written notice to the Administrative Agent at its Notice Office (which notice the Administrative Agent shall promptly transmit to each of the Lenders), prepay all Loans, together with accrued and unpaid interest and other amounts owing to such Lender (or owing to such Lender with respect to each Loan which gave rise to the need to obtain such Lender’s individual consent) in accordance with said Section 12.12(b) so long as (A) such Lender’s Individual Exposure (if any) is terminated concurrently with such prepayment and (B) the consents required by Section 12.12(b) in connection with the prepayment pursuant to this clause (iv) have been obtained;
(v)
except as expressly provided in the preceding clause (iv), each prepayment in respect of any Loans made pursuant to a Borrowing shall be applied
pro
rata
among the Loans comprising such Borrowing,
provided
that in connection with any prepayment of Loans pursuant to this Section 5.01, at the Borrower’s election, such prepayment shall not be applied to any Loan of a Defaulting Lender until all other Loans of Non-Defaulting Lenders have been repaid in full; and
(vi)
each prepayment of principal of Loans pursuant to this Section 5.01 shall be applied to reduce the then remaining Scheduled Repayments in accordance with Section 5.02(g).
5.02
Mandatory Repayments
. (a) [Intentionally Omitted].
(b)
In addition to any other mandatory repayments pursuant to this Section 5.02, on each Payment Date (including, for the avoidance of doubt, the Maturity Date) set forth below, the Borrower shall be required to repay Tranche A Loans to the extent then outstanding in the amount set forth opposite each such Payment Date in the table below (each such repayment, as the same may be reduced in accordance with Sections 5.01, 5.02(c), 5.02(d) and/or 5.02(e), a “
Scheduled Repayment
”):
|
Payment Date
|
|
Amount
|
|
|
|
|
|
|
|
March 31, 2016
|
|
$
|
12,707,111.92
|
|
|
|
|
|
|
|
June 30, 2016
|
|
$
|
16,033,034.20
|
|
|
|
|
|
|
|
September 30, 2016
|
|
$
|
16,033,034.20
|
|
|
|
|
|
|
|
December 31, 2016
|
|
$
|
16,033,034.20
|
|
|
|
|
|
|
|
Maturity Date
|
|
$
|
372,724,516.62
|
|
(c)
In addition to any other mandatory repayments pursuant to this Section 5.02, but without duplication, on (i) the date of any Collateral Disposition involving a Primary Collateral Vessel (other than a Collateral Disposition constituting an Event of Loss) and, after the repayment of the loans and the satisfaction in full of all obligations under the Other Credit Agreement, a Secondary Collateral Vessel and (ii) the earlier of (A) the date which is 180 days following any Collateral Disposition constituting an Event of Loss involving a Primary Collateral Vessel or, after the repayment of the loans and the satisfaction in full of all
54
obligations under the Other Credit Agreement, a Secondary Collateral Vessel and (B) the date of receipt by the Borrower, any of its Subsidiaries or the Administrative Agent of the insurance proceeds relating to such Event of Loss, the Borrower shall be required (subject to the first proviso below) to repay an aggregate principal amount of outstanding Loans in accordance with the requirements of Section 5.02(f) in an amount equal to (X) in the case of a Primary Collateral Vessel, the greater of (x) the Net Cash Proceeds of such Collateral Disposition (such amount under this clause (x) the “
Net Cash Proceeds Value
”) and (y) the sum of the then outstanding aggregate principal amount of Loans and the Existing Letter of Credit Exposure multiplied by a fraction (I) the numerator of which is equal to the appraised value (as determined in accordance with the most recent appraisal report delivered to the Administrative Agent (or obtained by the Administrative Agent) pursuant to Section 8.01(d)) of the Primary Collateral Vessel or Primary Collateral Vessels which is/are the subject of such Collateral Disposition and (II) the denominator of which is equal to the Aggregate Primary Collateral Vessel Value (as determined in accordance with the most recent appraisal report delivered to the Administrative Agent (or obtained by the Administrative Agent) pursuant to Section 8.01(d)) prior to such Collateral Disposition (such amount under this clause (y) the “
Appraisal Value
”) and (Y) after the repayment of the loans and the satisfaction in full of all obligations under the Other Credit Agreement, in the case of a Secondary Collateral Vessel, the Net Cash Proceeds Value of such Collateral Disposition;
provided
that (I) in the case of any Collateral Vessel which is older than 15 years at the time of such Collateral Disposition (including, for the avoidance of doubt, an Event of Loss) the Borrower shall only be required to repay an amount equal to the Net Cash Proceeds thereof; (II) after the Trigger Date, if the Net Cash Proceeds Value is greater than the Appraisal Value and the Parent and its Subsidiaries would have a Loan to Value Ratio of no greater than 0.60 to 1.00, on a pro forma basis after giving effect to the Collateral Disposition and any repayment with the proceeds thereof, then the Parent and its Subsidiaries may retain the proceeds of such Collateral Disposition in an amount equal to the difference between the Net Cash Proceeds Value and the Appraisal Value, which amount will not be subject to the mandatory repayment provisions of this Section 5.02(c); and (III) without limiting anything otherwise provided for in this Agreement, the Borrower hereby acknowledges that it is obliged to comply with Section 9.09 at all times (including, without limitation, after giving effect to any repayment contemplated by the foregoing Section 5.02(b)).
(d)
In addition to any other mandatory repayments pursuant to this Section 5.02, upon the occurrence of a default under Section 9.09, the Borrower shall be required to (x) in the case of Section 9.09(a), repay Loans in accordance with the requirements of Section 9.09(a) in an amount required to cure such default and (y) in the case of Section 9.09(b), repay Loans under this Agreement and loans under the Other Credit Agreement in accordance with the requirements of Section 9.09(b) in an amount required to cure such default;
provided
that it is understood and agreed that the requirement to repay Loans under this Section 5.02(d) shall not be deemed to be a waiver of any other right or remedy that any Lender may have as a result of an Event of Default under Section 9.09.
(e)
In addition to any other mandatory repayments pursuant to this Section 5.02, on the tenth day (or, if such day is not a Business Day, on the next succeeding Business Day) after each Payment Date, the Borrower shall repay the Loans under this Agreement and the loans under the Other Credit Agreement in an aggregate principal amount equal to the Excess Liquidity determined on such Payment Date, such repayment to be allocated between
55
the Loans under this Agreement and the loans under the Other Credit Agreement on a pro rata basis based on the outstanding principal amount of Loans under this Agreement at such time and the outstanding principal amount of loans under the Other Credit Agreement at such time;
provided
that the Borrower shall only be required to make a repayment pursuant to this Section 5.02(e) if on such Payment Date the Parent and its Subsidiaries have a Loan to Value Ratio of greater than 0.60 to 1.00. The mandatory repayment pursuant to this Section 5.02(e) shall be applied to reduce the Scheduled Repayments as follows: (i)
first
, 25% of such repayment to reduce the Scheduled Repayment following the applicable Payment Date, and, to the extent that such next Scheduled Repayment has been paid in full, to the next succeeding Scheduled Repayment until such Scheduled Repayment has been reduced to zero, after which the remaining portion (if any) of such 25% to reduce the then remaining Scheduled Repayments (excluding the Scheduled Repayment due on the Maturity Date)
pro
rata
based upon such remaining Scheduled Repayments (excluding the Scheduled Repayment due on the Maturity Date) after giving effect to all prior reductions thereto, (ii)
second
, 25% of such repayment to reduce the then remaining Scheduled Repayments (excluding the Scheduled Repayment due on the Maturity Date)
pro
rata
based upon such remaining Scheduled Repayments (excluding the Scheduled Repayment due on the Maturity Date) after giving effect to all prior reductions thereto, and (iii)
third
, 50% of such repayment to reduce the Scheduled Repayment due on the Maturity Date.
(f)
All repayments of the Loans pursuant to (i) Section 5.02(b) shall be applied to the repayment of the Tranche A Loans then outstanding on a
pro
rata
basis and (ii) Sections 5.01, 5.02(c), 5.02(d) and 5.02(e) shall be applied to the repayment of the outstanding Loans on a
pro
rata
basis and shall be further applied to the Loans within each Tranche on a
pro
rata
basis.
(g)
The amount of all repayments of Tranche A Loans pursuant to Sections 5.01, 5.02(c) and 5.02(d) shall be applied to reduce the then remaining Scheduled Repayments
pro
rata
based upon the then remaining Scheduled Repayments after giving effect to all prior reductions thereto.
(h)
With respect to each repayment of Loans under Section 5.01 or required by this Section 5.02, the Borrower may designate the specific Borrowing or Borrowings pursuant to which such Loans were made,
provided
that (i) all Loans with Interest Periods ending on such date of required repayment shall be paid in full prior to the payment of any other Loans and (ii) each repayment of any Loans comprising a Borrowing shall be applied
pro rata
among such Loans. In the absence of a designation by the Borrower as described in the preceding sentence, the Administrative Agent shall, subject to the preceding provisions of this clause (h), make such designation in its sole reasonable discretion with a view, but no obligation, to minimize breakage costs owing pursuant to Section 2.10.
(i)
Notwithstanding anything to the contrary contained elsewhere in this Agreement, all then outstanding Loans of each Tranche shall be repaid in full on the Maturity Date.
(j)
The Loans repaid pursuant to Section 5.01 and this Section 5.02 may not be reborrowed.
56
5.03
Method and Place of Payment
. Except as otherwise specifically provided herein, all payments under this Agreement or any Note shall be made to the Administrative Agent for the account of the Lender or Lenders entitled thereto not later than 12:00 Noon (New York time) on the date when due and shall be made in Dollars in immediately available funds at the Payment Office of the Administrative Agent or such other office in the State of New York as the Administrative Agent may hereafter designate in writing. Whenever any payment to be made hereunder or under any Note shall be stated to be due on a day which is not a Business Day, the due date thereof shall be extended to the next succeeding Business Day and, with respect to payments of principal, interest shall be payable at the applicable rate during such extension.
5.04
Net Payments; Taxes
. (a) All payments made by any Credit Party hereunder or under any Note will be made without setoff, counterclaim or other defense. Unless otherwise required by law, all such payments will be made free and clear of, and without deduction or withholding for, any present or future taxes, levies, imposts, duties, fees, assessments or other charges of whatever nature now or hereafter imposed by any jurisdiction or by any political subdivision or taxing authority thereof or therein with respect to such payments (but excluding any Excluded Taxes) and all interest, penalties or similar liabilities with respect to such non-excluded taxes, levies, imposts, duties, fees, assessments or other charges (all such non-excluded taxes, levies, imposts, duties, fees, assessments or other charges being referred to collectively as “
Taxes
”). If any Taxes are so levied or imposed, each of the Borrower, the Parent, GMSCII and Arlington agrees to pay the full amount of such Taxes, and such additional amounts as may be necessary so that every payment of all amounts due under this Agreement or under any Note, after withholding or deduction for or on account of any Taxes, will not be less than the amount provided for herein or in such Note. Each of the Borrower, the Parent, GMSCII, Arlington and the Subsidiary Guarantors will furnish to the Administrative Agent within 45 days after the date of payment of any Taxes is due pursuant to applicable law certified copies of tax receipts evidencing such payment. Each of the Borrower, the Parent, GMSCII, Arlington and the Subsidiary Guarantors agrees to jointly and severally indemnify and hold harmless each Lender, and reimburse such Lender upon its written request, for the amount of any Taxes so levied or imposed and paid by such Lender.
(b)
Each Lender agrees to use commerically reasonable efforts (consistent with legal and regulatory restrictions and subject to overall policy considerations of such Lender) to file any certificate or document or to furnish to the Borrower and the Administrative Agent any information as reasonably requested by the Borrower and the Administrative Agent that may be necessary to establish any available exemption from, or reduction in the amount of, any Taxes;
provided
,
however
, that nothing in this Section 5.04(b) shall require a Lender to disclose any confidential information (including, without limitation, its tax returns or its calculations). If a payment made to a Lender under any Credit Document would be subject to U.S. federal withholding tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall use commercially reasonable efforts to deliver to the Borrower and the Administrative Agent at the time or times prescribed by law such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to
57
comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment.
Each non-U.S. Lender hereby agrees, whenever a lapse in time or change in circumstances renders any of the forms, certificates or other evidence delivered pursuant to this Section 5.04(b) obsolete or inaccurate in any material respect, that such Lender shall use commercially reasonable efforts to promptly (1) update such form, certificate or other evidence delivered, or (2) notify the Administrative Agent and the Borrower of its inability to do so.
(c)
If the Borrower pays any additional amount under this Section 5.04 to a Lender and such Lender determines in its sole discretion exercised in good faith that it has actually received or realized in connection therewith any refund or any reduction of, or credit against, its Tax liabilities in or with respect to the taxable year in which the additional amount is paid (a “
Tax Benefit
”), such Lender shall pay to the Borrower an amount that such Lender shall, in its sole discretion exercised in good faith, determine is equal to the net benefit, after tax, which was obtained by such Lender in such year as a consequence of such Tax Benefit;
provided
,
however
, that (i) any Lender may determine, in its sole discretion exercised in good faith consistent with the policies of such Lender, whether to seek a Tax Benefit, (ii) any Taxes that are imposed on a Lender as a result of a disallowance or reduction (including through the expiration of any tax credit carryover or carryback of such Lender that otherwise would not have expired) of any Tax Benefit with respect to which such Lender has made a payment to the Borrower pursuant to this Section 5.04(c) shall be treated as a Tax for which the Borrower is obligated to indemnify such Lender pursuant to this Section 5.04 without any exclusions or defenses, (iii) nothing in this Section 5.04(c) shall require any Lender to disclose any confidential information to the Borrower (including, without limitation, its tax returns), and (iv) no Lender shall be required to pay any amounts pursuant to this Section 5.04(c) at any time during which a Default or Event of Default exists.
SECTION 6.
[Intentionally Omitted]
SECTION 7.
Representations, Warranties and Agreements
. In order to induce the Lenders to enter into this Agreement, to convert the Revolving Loans into the Tranche A Loans and to exchange the termination value of the Specified Swap for the Tranche B Loan, each of the Parent, GMSCII, Arlington and the Borrower makes the following representations, warranties and agreements, in each case on the Restatement Effective Date, all of which shall survive the execution and delivery of this Agreement and the Notes, the conversion of the Revolving Loans into the Tranche A Loans and the exchange of the termination value of the Specified Swap for the Tranche B Loan (it being understood and agreed that any representation or warranty which by its terms is made as of a specified date shall be required to be true and correct in all material respects only as of such specified date):
7.01
Corporate/Limited Liability Company/Limited Partnership Status
. Each Credit Party (i) is a duly organized and validly existing corporation, limited liability company or limited partnership, as the case may be, in good standing under the laws of the jurisdiction of its
58
incorporation or formation, (ii) has the corporate or other applicable power and authority to own its property and assets and to transact the business in which it is currently engaged and presently proposes to engage and (iii) is duly qualified and is authorized to do business and is in good standing in each jurisdiction where the conduct of its business as currently conducted requires such qualifications, except for failures to be so qualified which, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.
7.02
Corporate Power and Authority
. Each Credit Party has the corporate or other applicable power and authority to execute, deliver and perform the terms and provisions of each of the Documents to which it is party and has taken all necessary corporate or other applicable action to authorize the execution, delivery and performance by it of each of such Documents. Each Credit Party has duly executed and delivered each of the Documents to which it is party, and each of such Documents constitutes the legal, valid and binding obligation of such Credit Party enforceable against such Credit Party in accordance with its terms, except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws generally affecting creditors’ rights and by equitable principles (regardless of whether enforcement is sought in equity or at law).
7.03
No Violation
. Neither the execution, delivery or performance by any Credit Party of the Documents to which it is a party, nor compliance by it with the terms and provisions thereof, will (i) contravene any material provision of any applicable law, statute, rule or regulation or any applicable order, judgment, writ, injunction or decree of any court or governmental instrumentality, (ii) conflict with or result in any breach of any of the terms, covenants, conditions or provisions of, or constitute a default under, or result in the creation or imposition of (or the obligation to create or impose) any Lien (except pursuant to the Security Documents) upon any of the material properties or assets of the Parent or any of its Subsidiaries pursuant to the terms of any indenture, mortgage, deed of trust, credit agreement or loan agreement, or any other material agreement, contract or instrument, to which the Parent or any of its Subsidiaries is a party or by which it or any of its material property or assets is bound or to which it may be subject or (iii) violate any provision of the Certificate of Incorporation or By-Laws (or equivalent organizational documents) of the Parent or any of its Subsidiaries.
7.04
Governmental Approvals
. No order, consent, approval, license, authorization or validation of, or filing, recording or registration with (except as have been obtained or made or, in the case of any filings or recordings in respect of the Security Documents (other than the Collateral Vessel Mortgages and the Secondary Collateral Vessel Mortgages), will be made within 10 days of the date such Security Document is required to be executed pursuant hereto), or exemption by, any governmental or public body or authority, or any subdivision thereof, is required to authorize, or is required in connection with, (i) the execution, delivery and performance by any Credit Party of any Document to which it is a party or (ii) the legality, validity, binding effect or enforceability of any Document to which it is a party.
7.05
Financial Statements; Financial Condition; Undisclosed Liabilities
. (a) (i) The audited consolidated balance sheets of the Parent as at December 31, 2011 and the related consolidated statements of operations and of cash flows for the fiscal year ended on such date and (ii) to the extent available, the consolidated balance sheets of the Parent as at the end of each quarterly
59
accounting period in the 2012 fiscal year and the related consolidated statements of operations and cash flows, in each case for such quarterly accounting period, reported on by and accompanied by, in the case of the annual financial statements, an unqualified report from Deloitte & Touche LLP, present fairly the consolidated financial condition of the Parent as at such date, and the consolidated results of its operations and its consolidated cash flows for the respective fiscal years then ended. All such financial statements, including the related schedules and notes thereto, have been prepared in accordance with GAAP applied consistently throughout the periods involved (except as approved by the aforementioned firm of accountants and disclosed therein). Neither the Parent nor any of its Subsidiaries has any material guarantee obligations, contingent liabilities and liabilities for taxes, or any long-term leases or unusual forward or long-term commitments, including any interest rate or foreign currency swap or exchange transaction or other obligation in respect of derivatives, that are not reflected in the financial statements referred to in the preceding sentence (it being understood that with respect to guarantee obligations, the underlying debt is so reflected).
(b)
Except as fully disclosed in the financial statements and the notes related thereto delivered pursuant to Section 7.05(a), there were as of the Restatement Effective Date no liabilities or obligations with respect to the Parent or any of its Subsidiaries of any nature whatsoever (whether absolute, accrued, contingent or otherwise and whether or not due) which, either individually or in the aggregate, would be materially adverse to the Parent and its Subsidiaries taken as a whole. As of the Restatement Effective Date, none of the Credit Parties knows of any basis for the assertion against it of any liability or obligation of any nature that is not fairly disclosed (including, without limitation, as to the amount thereof) in the financial statements and the notes related thereto delivered pursuant to Section 7.05(a) which, either individually or in the aggregate, could reasonably be expected to be materially adverse to the Parent and its Subsidiaries taken as a whole.
(c)
The Projections delivered by the Parent to the Administrative Agent and the Lenders prior to the Restatement Effective Date have been prepared in good faith and are based on GAAP and reasonable assumptions, and there are no statements or conclusions in such Projections which are based upon or include information known to the Parent on the Restatement Effective Date to be misleading in any material respect or which fail to take into account material information known to the Parent on the Restatement Effective Date regarding the matters reported therein. On the Restatement Effective Date, the Parent believes that such Projections are reasonable and attainable, it being recognized by the Lenders, however, that projections as to future events are not to be viewed as facts and that the actual results during the period or periods covered by the Projections may differ from the projected results included in such Projections.
7.06
Litigation
. Except as set forth on
Schedule XV
, there are no actions, suits, investigations (conducted by any governmental or other regulatory body of competent jurisdiction) or proceedings pending or, to the knowledge of the Parent, GMSCII, Arlington or the Borrower, threatened against the Parent or any of its Subsidiaries that could reasonably be expected to have a Material Adverse Effect.
7.07
True and Complete Disclosure
. All factual information (taken individually or as a whole) furnished by or on behalf of the Parent, GMSCII, Arlington or the Borrower in writing to the Administrative Agent or any Lender (including, without limitation, all information
60
contained in the Documents and any financial statement referred to in Section 7.05(a)) for purposes of or in connection with this Agreement, the other Credit Documents or any transaction contemplated herein or therein is, and all other such factual information (taken individually or as a whole) hereafter furnished by or on behalf of the Parent, GMSCII, Arlington or the Borrower in writing to the Administrative Agent or any Lender will be, true and accurate in all material respects and not incomplete by omitting to state any fact necessary to make such information (taken as a whole) not misleading in any material respect at such time as such information was provided.
7.08
Use of Proceeds; Margin Regulations
. (a) All proceeds of the Loans (including the Loans which result from the conversion of Revolving Loans into Tranche A Loans and the exchange of Indebtedness of the Specified Swap for the Tranche B Loan) were used only for the following (i) to continue the Existing Letters of Credit and/or (ii) for working capital, Capital Expenditures and general corporate purposes.
(b)
No part of the proceeds of any Loan was used to purchase or carry any Margin Stock or to extend credit for the purpose of purchasing or carrying any Margin Stock except to purchase or carry or extend credit for the purpose of purchasing or carrying such Margin Stock as may be permitted to be purchased or carried pursuant to the terms of Sections 9.05(vi) and (vii). None of the conversion of the Revolving Loans into the Tranche A Loans, the exchange of Indebtedness of the Specified Swap for the Tranche B Loan, the use of the proceeds thereof or the occurrence of any other Borrowing will violate or be inconsistent with the Margin Regulations.
7.09
Tax Returns and Payments
. The Parent and each of its Subsidiaries has timely filed all U.S. federal income tax returns, statements, forms and reports for taxes and all other material U.S. and non-U.S. tax returns, statements, forms and reports for taxes required to be filed by or with respect to the income, properties or operations of the Parent and/or any of its Subsidiaries (the “
Returns
”). The Returns accurately reflect in all material respects all liability for taxes of the Parent and its Subsidiaries as a whole for the periods covered thereby. The Parent and each of its Subsidiaries have at all times paid, or have provided adequate reserves (in accordance with GAAP) for the payment of, all taxes shown as due on the Returns and all other material U.S. federal, state and non-U.S. taxes that have become due and payable. There is no material action, suit, proceeding, investigation, audit, or claim now pending or, to the knowledge of the Parent or any of its Subsidiaries, threatened by any authority regarding any taxes relating to the Parent or any of its Subsidiaries. As of the Restatement Effective Date, neither the Parent nor any of its Subsidiaries has entered into an agreement or waiver or been requested to enter into an agreement or waiver extending any statute of limitations relating to the payment or collection of taxes of the Parent or any of its Subsidiaries, or is aware of any circumstances that would cause the taxable years or other taxable periods of the Parent or any of its Subsidiaries not to be subject to the normally applicable statute of limitations. Neither the Parent nor any of its Subsidiaries (i) has engaged in any “listed transaction” within the meaning of Section 6011 of the Code or (ii) has any actual or potential liability for the taxes of any Person (other than the Parent or any of its present or former Subsidiaries) under the United States Treasury regulation Section 1.1502-6 (or any similar provision of state, local, foreign or provincial law).
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7.10
Compliance with ERISA
. (i)
Schedule VII
sets forth, as of the Restatement Effective Date, each Plan; with respect to each Plan, other than any Multiemployer Plan (and each related trust, insurance contract or fund), there has been no failure to be in substantial compliance with its terms and with all applicable laws, including without limitation ERISA and the Code, that could reasonably be expected to give rise to a Material Adverse Effect; each Plan, other than any Multiemployer Plan (and each related trust, if any), which is intended to be qualified under Section 401(a) of the Code has received a determination letter (or an opinion letter) from the United States Internal Revenue Service to the effect that it meets the requirements of Sections 401(a) and 501(a) of the Code; no Reportable Event has occurred; to the best knowledge of the Parent or any of its Subsidiaries or ERISA Affiliates no Plan which is a Multiemployer Plan is insolvent or in reorganization; no Plan has an Unfunded Current Liability in an amount material to Borrower’s operation; no Plan (other than a Multiemployer Plan) which is subject to Section 412 of the Code or Section 302 of ERISA has failed to satisfy minimum funding standards, or has applied for or received a waiver of the minimum funding standards or an extension of any amortization period, within the meaning of Section 412 or 430 of the Code or Section 302 or 303 of ERISA; with respect to each Plan (other than a Multiemployer Plan) its actuary has certified that such Plan is not an at-risk plan within the meaning of Section 430 of the Code or Section 303 of ERISA; all contributions required to be made with respect to a Plan have been or will be timely made (except as disclosed on
Schedule VII
); neither the Parent nor any of its Subsidiaries nor any ERISA Affiliate has incurred any material liability (including any indirect, contingent or secondary liability) to or on account of a Plan pursuant to Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section 436(f), 4971 or 4975 of the Code or expects to incur any such liability under any of the foregoing sections with respect to any Plan; no condition exists which presents a material risk to the Parent or any of its Subsidiaries or any ERISA Affiliate of incurring a liability to or on account of a Plan pursuant to the foregoing provisions of ERISA and the Code; no proceedings have been instituted by the PBGC to terminate or appoint a trustee to administer any Plan (in the case of a Multiemployer Plan, to the best knowledge of the Parent or any of its Subsidiaries or ERISA Affiliates) which is subject to Title IV of ERISA; no action, suit, proceeding, hearing, audit or investigation with respect to the administration, operation or the investment of assets of any Plan (other than routine claims for benefits) is pending, or, to the best knowledge of the Parent or any of its Subsidiaries, expected or threatened which could reasonably be expected to have a Material Adverse Effect; using actuarial assumptions and computation methods consistent with Part 1 of subtitle E of Title IV of ERISA, the Parent and its Subsidiaries and ERISA Affiliates would have no liabilities to any Plans which are Multiemployer Plans in the event of a complete withdrawal therefrom in an amount which could reasonably be expected to have a Material Adverse Effect; neither the Borrower nor any of its Subsidiaries nor any ERISA Affiliate has received any notice that a Plan which is a Multiemployer Plan is in endangered or critical status under Section 305 of ERISA; each group health plan (as defined in Section 607(1) of ERISA or Section 4980B(g)(2) of the Code) which covers or has covered employees or former employees of the Parent, any of its Subsidiaries, or any ERISA Affiliate has at all times been operated in material compliance with the provisions of Part 6 of subtitle B of Title I of ERISA and Section 4980B of the Code; no lien imposed under the Code or ERISA on the assets of the Parent or any of its Subsidiaries or any ERISA Affiliate exists nor has any event occurred which could reasonably be expected to give rise to any such lien on account of any Plan; and the Parent and its Subsidiaries do not maintain or contribute to
62
any employee welfare plan (as defined in Section 3(1) of ERISA) which provides benefits to retired employees or other former employees (other than as required by Section 601 of ERISA) or any Plan the obligations with respect to which could reasonably be expected to have a Material Adverse Effect.
(ii)
Each Foreign Pension Plan has been maintained in substantial compliance with its terms and with the requirements of any and all applicable laws, statutes, rules, regulations and orders and has been maintained, where required, in good standing with applicable regulatory authorities. All contributions required to be made with respect to a Foreign Pension Plan have been or will be timely made. Neither the Parent nor any of its Subsidiaries has incurred any obligation in connection with the termination of or withdrawal from any Foreign Pension Plan that could reasonably be expected to have a Material Adverse Effect. Neither the Parent nor any of its Subsidiaries maintains or contributes to any Foreign Pension Plan the obligations with respect to which could in the aggregate reasonably be expected to have a Material Adverse Effect.
7.11
The Security Documents
. After the execution and delivery thereof and upon the taking of the actions mentioned in the second immediately succeeding sentence, each of the Security Documents creates in favor of the Collateral Agent for the benefit of the Secured Creditors (x) in the case of the Collateral Vessel Mortgages, the Assignments of Earnings, the Assignments of Insurances, the Pledge Agreement and the Pari Passu Pledge Agreement, a legal, valid and enforceable fully perfected first priority security interest in and Lien on all right, title and interest of the Credit Parties party thereto in the Primary Collateral described therein and (y) in the case of the Secondary Collateral Vessel Mortgages, the Secondary Assignments of Earnings, the Secondary Assignments of Insurances and the Secondary Pledge Agreement, a legal, valid and enforceable fully perfected second priority security interest in and Lien on all right, title and interest of the Credit Parties party thereto in the Secondary Collateral described therein, in the case of each of (x) and (y) above, subject to no other Liens except for Permitted Liens. No filings or recordings are required in order to perfect the security interests created under any Security Document except for filings or recordings which shall have been made on or prior to the Restatement Effective Date and such other filings made on or prior to the tenth day after the Restatement Effective Date, subject in each case to Section 7.03.
7.12
Capitalization
. (a) On the Restatement Effective Date and after giving effect to the conditions precedent related thereto: (1) the authorized capital stock of the Borrower shall consist of 1,000 shares of common stock, $0.01 par value per share, 100 of which have been issued and 100% of which issued shares are outstanding and owned by the Parent; (2) all such outstanding shares shall have been duly and validly issued, fully paid and non-assessable and issued free of preemptive rights; and (3) the Borrower shall not have outstanding any securities convertible into or exchangeable for its capital stock or outstanding any rights to subscribe for or to purchase, or any options for the purchase of, or any agreement providing for the issuance (contingent or otherwise) of, or any calls, commitments or claims of any character relating to, its capital stock or any stock appreciation or similar rights.
(b)
Except as set forth in
Schedule IX
, as of the Restatement Effective Date and after giving effect to the conditions precedent related thereto, there are (i) no other shares of capital stock or other Equity Interests or voting securities of the Parent, (ii) no securities of the
63
Parent convertible into or exchangeable for capital stock or other Equity Interests or voting securities of the Parent, (iii) no options, warrants, purchase rights, subscription rights, conversion rights, exchange rights or other similar contracts or commitments that could require the Parent to issue, sell or otherwise cause to become outstanding any of its Equity Interests and (iv) no stock appreciation, phantom stock, profit participation or similar rights with respect to the Parent or any repurchase, redemption or other obligation to acquire for value any capital stock of the Parent.
(c)
As of the Restatement Effective Date, all outstanding shares of the Parent’s capital stock are duly authorized, validly issued, fully paid and nonassessable and, except as set forth in
Schedule IX
, not subject to or issued in violation of any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right under any provision of the Business Corporations Act of the Republic of the Marshall Islands 1990, the articles of incorporation of the Parent, the bylaws of the Parent or any agreement to which the Parent is a party or otherwise bound. None of the shares of the capital stock of the Parent have been issued in violation of any securities Laws. There are no accrued and unpaid dividends with respect to any outstanding shares of capital stock of the Parent.
7.13
Subsidiaries
. On the Restatement Effective Date, the Parent has no Subsidiaries other than those Subsidiaries listed on
Schedule VIII
(which Schedule identifies the correct legal name, direct owner, percentage ownership and jurisdiction of organization of each such Subsidiary on the date hereof). On the Restatement Effective Date, all outstanding capital stock, membership interests, partnership interests, units or other form of equity, of each class outstanding, of each of the Subsidiaries listed on
Schedule VIII
has been validly issued, is fully paid and non-assessable (to the extent applicable) and, except in the case of the Parent, is owned beneficially and of record by a Credit Party free and clear of all Liens other than the security interests created by the Credit Documents, the Other Credit Documents and Permitted Liens.
7.14
Compliance with Statutes, etc
. The Parent and each of its Subsidiaries is in compliance in all material respects with all applicable statutes, regulations and orders of, and all applicable restrictions imposed by, all governmental bodies, domestic or foreign, in respect of the conduct of its business and the ownership of its property, except such non-compliances that could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
7.15
Investment Company Act
. Neither the Parent, nor any of its Subsidiaries, is an “investment company” or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940, as amended.
7.16
Money Laundering
. (a) To the extent applicable, each Credit Party is in compliance, in all material respects, with the (i) Trading and Enemy Act, as amended, and each of the foreign assets control regulations of the United States Treasury Department (31 C.F.R., Subtitle B, Chapter V, as amended) and any other enabling legislation or executive order relating thereto, and (ii) the PATRIOT Act. No part of the proceeds of the Loans will be used, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in
64
order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.
(b)
None of the Credit Parties nor, to the best knowledge of the Parent, GMSCII, Arlington and the Borrower after due inquiry, any Affiliate of any Credit Party, is, or will be after consummation of the Transaction and application of the proceeds of the Loans, by reason of being a “national” of a “designated foreign country” or a “specially designated national” within the meaning of the Regulations of the Office of Foreign Assets Control, United States Treasury Department (31 C.F.R., Subtitle B, Chapter V), or for any other reason, in violation of, any United States Federal Statute or Presidential Executive Order concerning trade or other relations with any foreign country or any citizen or national thereof.
7.17
Pollution and Other Regulations
. (a) Each of the Parent and its Subsidiaries is in compliance with all applicable Environmental Laws governing its business, except for such failures to comply as are not reasonably likely to have a Material Adverse Effect, and neither the Parent nor any of its Subsidiaries is liable for any penalties, fines or forfeitures for failure to comply with any of the foregoing except for such penalties, fines or forfeitures as are not reasonably likely to have a Material Adverse Effect. All licenses, permits, registrations or approvals required for the business of the Parent and each of its Subsidiaries, as conducted as of the Restatement Effective Date, under any Environmental Law have been secured and the Parent and each of its Subsidiaries is in substantial compliance therewith, except for such failures to secure or comply as are not reasonably likely to have a Material Adverse Effect. Neither the Parent nor any of its Subsidiaries is in any respect in noncompliance with, breach of or default under any applicable writ, order, judgment, injunction, or decree to which the Parent or such Subsidiary is a party or which would affect the ability of the Parent or such Subsidiary to operate any Vessel, Real Property or other facility and no event has occurred and is continuing which, with the passage of time or the giving of notice or both, would constitute noncompliance, breach of or default thereunder, except in each such case, such noncompliance, breaches or defaults as are not likely to, individually or in the aggregate, have a Material Adverse Effect. There are, as of the Restatement Effective Date, no Environmental Claims pending or, to the knowledge of the Parent or the Borrower, threatened, against the Parent or any of its Subsidiaries in respect of which an unfavorable decision, ruling or finding would be reasonably likely to have a Material Adverse Effect. There are no facts, circumstances, conditions or occurrences on any Vessel, Real Property or other facility owned or operated by the Parent or any of its Subsidiaries that are reasonably likely (i) to form the basis of an Environmental Claim against the Parent, any of its Subsidiaries or any Vessel, Real Property or other facility owned by the Parent or any of its Subsidiaries, or (ii) to cause such Vessel, Real Property or other facility to be subject to any restrictions on its ownership, occupancy, use or transferability under any Environmental Law, except in each such case for clauses (i) and (ii) above, such Environmental Claims or restrictions that individually or in the aggregate are not reasonably likely to have a Material Adverse Effect.
(b)
Hazardous Materials have not at any time prior to the date of this Agreement or any subsequent Borrowing, been (i) generated, used, treated or stored on, or transported to or from, any Vessel, Real Property or other facility at any time owned or operated by the Parent or any of its Subsidiaries or (ii) released on or from any such Vessel, Real Property or other facility, except in each case for clauses (i) and (ii) above where such occurrence or
65
event, either individually or in the aggregate, is reasonably likely to have a Material Adverse Effect.
This Section 7.17 contains the sole and exclusive representations and warranties of the Credit Parties with respect to environmental, health and safety matters, including any relating to or arising under Environmental Laws, Environmental Claims or Hazardous Materials.
7.18
Labor Relations
. Neither the Parent nor any of its Subsidiaries is engaged in any unfair labor practice that could reasonably be expected to have a Material Adverse Effect and there is (i) no unfair labor practice complaint pending against the Parent or any of its Subsidiaries or, to the Parent’s knowledge, threatened against any of them before the National Labor Relations Board, and no material grievance or arbitration proceeding arising out of or under any collective bargaining agreement is so pending against the Parent or any of its Subsidiaries or, to the Parent’s knowledge, threatened against any of them, (ii) no strike, labor dispute, slowdown or stoppage pending against the Parent or any of its Subsidiaries or, to the Parent’s knowledge, threatened against the Parent or any of its Subsidiaries and (iii) no union representation proceeding pending with respect to the employees of the Parent or any of its Subsidiaries, except (with respect to the matters specified in clauses (i), (ii) and (iii) above) as could not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
7.19
Patents, Licenses, Franchises and Formulas
. The Parent and each of its Subsidiaries owns, or has the right to use, and has the right to enforce and prevent any third party from using, all material patents, trademarks, permits, service marks, trade names, copyrights, licenses, franchises and formulas, and has obtained assignments of all leases and other rights of whatever nature, necessary for the present conduct of its business, without any known conflict with the rights of others, except for such failures and conflicts which could not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.
7.20
Indebtedness
.
Schedule V
sets forth a true and complete list of all Indebtedness of the Parent and its Subsidiaries as of the Restatement Effective Date (other than Indebtedness under the Other Credit Documents) and which is to remain outstanding after giving effect to the Restatement Effective Date (the “
Existing Indebtedness
”), in each case showing the aggregate principal amount thereof and the name of the borrower and any other entity which directly or indirectly guarantees such debt.
7.21
Insurance
.
Schedule VI
sets forth a true and complete listing of all insurance maintained by each Credit Party as of the Restatement Effective Date, with the amounts insured (and any deductibles) set forth therein (the “
Required Insurance
”).
7.22
Concerning the Collateral Vessels
. The name, registered owner (which shall be a Subsidiary Guarantor), official number, and jurisdiction of registration and flag (which shall be in an Acceptable Flag Jurisdiction) of each Collateral Vessel is set forth on
Schedule III
. Each Collateral Vessel is and will be operated in compliance with all applicable law, rules and regulations, except such noncompliance as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
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7.23
Citizenship
. The Parent and each other Credit Party which owns or operates, or will own or operate, one or more Collateral Vessels is, or will be, qualified to own and operate such Collateral Vessels under the laws of the Republic of the Marshall Islands, the Republic of Liberia or Bermuda, as applicable, or such other jurisdiction in which any such Collateral Vessels are permitted, or will be permitted, to be flagged in accordance with the terms of the respective Collateral Vessel Mortgages and the respective Secondary Collateral Vessel Mortgages.
7.24
Collateral Vessel Classification; Flag
. Each Collateral Vessel is (i) or will be, classified in the highest class available for Vessels of its age and type with a classification society listed on
Schedule X
hereto or another internationally recognized classification society acceptable to the Collateral Agent, free of any conditions or recommendations, other than as permitted, or will be permitted, under the Collateral Vessel Mortgage or the Secondary Collateral Vessel Mortgage, as applicable, and (ii) flagged in an Acceptable Flag Jurisdiction.
7.25
No Immunity
. The Parent does not, nor does any other Credit Party or any of their respective properties, have any right of immunity on the grounds of sovereignty or otherwise from the jurisdiction of any court or from setoff or any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) under the laws of any jurisdiction. The execution and delivery of the Credit Documents by the Credit Parties and the performance by them of their respective obligations thereunder constitute commercial transactions.
7.26
Fees and Enforcement
. No fees or taxes, including, without limitation, stamp, transaction, registration or similar taxes, are required to be paid to ensure the legality, validity, or enforceability of this Agreement or any of the other Credit Documents other than recording taxes which have been, or will be, paid by the Parent or any of its Subsidiaries as and to the extent due. Under the laws of the Republic of the Marshall Islands, the United Kingdom, the Bahamas, Bermuda, the Republic of Malta, the United States or the Republic of Liberia (or any other Acceptable Flag Jurisdiction), as applicable, the choice of the laws of the State of New York as set forth in the Credit Documents which are stated to be governed by the laws of the State of New York is a valid choice of law, and the irrevocable submission by each Credit Party to jurisdiction and consent to service of process and, where necessary, appointment by such Credit Party of an agent for service of process, in each case as set forth in such Credit Documents, is legal, valid, binding and effective.
7.27
Form of Documentation
. Each of the Credit Documents is, or when executed will be, in proper legal form under the laws of the Republic of the Marshall Islands, the United Kingdom, the Bahamas, Bermuda, the Republic of Malta, the United States or the Republic of Liberia (or any other applicable Acceptable Flag Jurisdiction), as applicable, for the enforcement thereof under such laws, subject only to such matters which may affect enforceability arising under the law of the State of New York. To ensure the legality, validity, enforceability or admissibility in evidence of each such Credit Document in the Republic of the Marshall Islands, the United Kingdom, the Bahamas, Bermuda, the Republic of Malta, the United States or the Republic of Liberia (or any other applicable Acceptable Flag Jurisdiction), as applicable, it is not necessary that any Credit Document or any other document be filed or recorded with any court or other authority in the Republic of the Marshall Islands, the United
67
Kingdom, the Bahamas, Bermuda, the Republic of Malta, the United States or the Republic of Liberia (or any other applicable Acceptable Flag Jurisdiction), as applicable, or notarized or executed under seal, or physically executed in any such jurisdiction, except as have been made, or will be made, in accordance with Section 12.10.
7.28
Solvency
. After giving effect to (a) the Loans, (b) the consummation of the Transaction and (c) the payment and accrual of all transaction costs in connection with the foregoing, the Parent and its Subsidiaries, taken as a whole, and the Borrower, Arlington and their respective Subsidiaries, taken as a whole, are solvent.
7.29
Patriot Act
. No Credit Party (and, to the knowledge of each Credit Party, no joint venture or Subsidiary thereof) is in violation of any United States law relating to terrorism, sanctions or money laundering, including the United States Executive Order No. 13224 on Terrorist Financing and the Patriot Act.
7.30
Certain Business Practices
. To the knowledge of the Parent, neither the Parent nor any of its Subsidiaries (nor any of their respective officers, directors or employees) (a) has made or agreed to make any contribution, payment, gift or entertainment to, or accepted or received any contributions, payments, gifts or entertainment from, any government official, employee, political party or agent or any candidate for any federal, state, local or foreign public office, where either the contribution, payment or gift or the purpose thereof was illegal under the laws of any federal, state, local or foreign jurisdiction; or (b) has engaged in or otherwise participated in, assisted or facilitated any transaction that is prohibited by any applicable embargo or related trade restriction imposed by the United States Office of Foreign Assets Control or any other agency of the United States government.
SECTION 8.
Affirmative Covenants
. Each of the Parent, the Borrower, GMSCII and Arlington hereby covenants and agrees that on and after the Restatement Effective Date, and until all Existing Letters of Credit have terminated and the Loans, Notes and Unpaid Drawings, together with interest and all other Credit Document Obligations incurred hereunder and thereunder, are paid in full:
8.01
Information Covenants
. The Parent will make available to the Administrative Agent, with sufficient copies for each of the Lenders:
(a)
Quarterly Financial Statements
. Within 45 days after the close of the first three quarterly accounting periods in each fiscal year of the Parent (
provided
that for the first fiscal quarter following the Restatement Effective Date, such delivery shall be within 60 days after the end of such fiscal quarter), (i) the consolidated balance sheets of the Parent and its Subsidiaries as at the end of such quarterly accounting period and the related consolidated statements of operations and cash flows, in each case for such quarterly accounting period and for the elapsed portion of the fiscal year ended with the last day of such quarterly accounting period, and in each case, setting forth comparative figures for the related periods in the prior fiscal year, all of which shall be certified by the senior financial officer of the Parent, subject to normal year-end audit adjustments and (ii) management’s discussion and analysis of the important operational and financial developments during the fiscal quarter and year-to-date periods.
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(b)
Annual Financial Statements
. Within (a) 90 days after the close of each fiscal year of the Parent in which any of Parent’s securities are listed on a nationally recognized securities exchange and (b) 120 days after the close of each fiscal year of Parent (
provided
, that for the first fiscal year following the Restatement Effective Date, such delivery shall be within 150 days after the end of such fiscal year) in which none of Parent’s securities are listed on a nationally recognized securities exchange, (i) the consolidated balance sheets of the Parent and its Subsidiaries as at the end of such fiscal year and the related consolidated statements of operations and retained earnings and of cash flows for such fiscal year setting forth comparative figures for the preceding fiscal year and certified by Deloitte & Touche LLP or such other independent certified public accountants of recognized national standing reasonably acceptable to the Administrative Agent, together with a report of such accounting firm stating that in the course of its regular audit of the financial statements of the Parent and its Subsidiaries, which audit was conducted in accordance with generally accepted auditing standards, such accounting firm obtained no knowledge of any Default or Event of Default pursuant to the Financial Covenants, which has occurred and is continuing or, if in the opinion of such accounting firm such a Default or Event of Default has occurred and is continuing, a statement as to the nature thereof and (ii) management’s discussion and analysis of the important operational and financial developments during such fiscal year.
(c)
Monthly Financial Statements
. Within 30 days after the end of each of the first two calendar months of each fiscal quarter of the Parent occurring prior to the Trigger Date, the unaudited trial balance sheets of the Parent and its Subsidiaries as at the end of such month, and setting forth comparative figures for the prior calendar month, all of which shall be certified by the senior financial officer of the Parent, subject to normal year-end audit adjustments and including normal recurring adjustments;
provided
,
however
, that in no event will the Parent be required to deliver such unaudited trial balance sheets if, at the end of any such month, the Parent and its Subsidiaries have a Loan to Value Ratio of no greater than 0.60 to 1.00.
(d)
Appraisal Reports
. Together with delivery of the compliance certificates described in Section 8.01(f) required in connection with each fiscal quarter in each fiscal year of the Parent, and at any other time within 33 days of the written request of the Administrative Agent, appraisal reports dated no more than 30 days prior to the date of delivery of such compliance certificate or such request, as applicable, in form and substance reasonably satisfactory to the Administrative Agent and from two Approved Appraisers stating the then current Fair Market Value of each of the Collateral Vessels. All such appraisals shall be conducted by, and made at the expense of, the Borrower (it being understood that the Administrative Agent may and, at the request of the Required Lenders, shall, upon notice to the Borrower, obtain such appraisals and that the cost of all such appraisals will be for the account of the Borrower);
provided
that, unless an Event of Default shall then be continuing, in no event shall the Borrower be required to pay for more than four appraisal reports obtained pursuant to this Section 8.01(d) in any single fiscal year of the Borrower, with the cost of any such reports in excess thereof to be paid by the Lenders on a
pro
rata
basis.
(e)
Projections, Budget, etc.
(i) As soon as available but not less than 30 days prior to the commencement of each fiscal year of the Parent beginning with its fiscal year commencing on January 1, 2013, a preliminary budget of the Parent and its Subsidiaries in reasonable detail for each of the twelve months and four fiscal quarters of such fiscal year, and
69
(ii) as soon as available but not more than 45 days after the commencement of each fiscal year of the Parent beginning with its fiscal year commencing on January 1, 2013, (x) a budget of the Parent and its Subsidiaries in reasonable detail for each of the twelve months and four fiscal quarters of such fiscal year and (y) the Projections referred to in Section 7.05(c) in reasonable detail for the subsequent three fiscal years including the fiscal year in which such Projections are being delivered. It is recognized by each Lender and the Administrative Agent that such projections and determinations provided by the Parent, although reflecting the Parent’s good faith projections and determinations, are not to be viewed as facts and that actual results covered by any such determination may differ from the projected results.
(f)
Officer’s Compliance Certificates
. (i) At the time of the delivery of the financial statements provided for in Sections 8.01(a) and (b), a certificate of the senior financial officer of the Parent in the form of Exhibit M to the effect that, to the best of such officer’s knowledge, no Default or Event of Default has occurred and is continuing or, if any Default or Event of Default has occurred and is continuing, specifying the nature and extent thereof (in reasonable detail), which certificate shall, (x) set forth the calculations required to establish whether the Parent was in compliance with the Financial Covenants at the end of such fiscal quarter or year, as the case may be and (y) certify that there have been no changes to any of
Schedule VIII
and Annexes A through F of the Pledge Agreement or the Secondary Pledge Agreement, as the case may be, or, if later, since the date of the most recent certificate delivered pursuant to this Section 8.01(f)(i), or if there have been any such changes, a list in reasonable detail of such changes (but, in each case with respect to this clause (y), only to the extent that such changes are required to be reported to the Collateral Agent pursuant to the terms of such Security Documents) and whether the Parent and the other Credit Parties have otherwise taken all actions required to be taken by them pursuant to such Security Documents in connection with any such changes.
(ii)
At the time of a Collateral Disposition in respect of any Primary Collateral Vessel and/or Secondary Collateral Vessel, a certificate of a senior financial officer of the Parent which certificate shall (x) certify on behalf of the Parent the last appraisal reports received pursuant to Section 8.01(d) determining the Aggregate Primary Collateral Vessel Value and/or the Aggregate Collateral Vessel Value, as applicable, in each case after giving effect to such disposition(s) and/or showing the individual Fair Market Value of all Collateral Vessels owned by the Subsidiary Guarantors which have not been sold, transferred, lost or otherwise disposed of at such time, and (y) other than in connection with a Permitted Sale, set forth the calculations required to establish whether the Parent is in compliance with the provisions of Section 9.09 after giving effect to such disposition.
(g)
Notice of Default, Litigation or Event of Loss
. Promptly, and in any event within three Business Days after the Parent obtains knowledge thereof, notice of (i) the occurrence of any event which constitutes a Default or Event of Default which notice shall specify the nature thereof, the period of existence thereof and what action the Parent proposes to take with respect thereto, (ii) any litigation or governmental investigation or proceeding pending or threatened in writing against the Parent or any of its Subsidiaries which, if adversely determined, could reasonably be expected to have a Material Adverse Effect or any Document and (iii) any Event of Loss in respect of any Collateral Vessel.
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(h)
Other Reports and Filings
. Promptly, copies of all financial information, proxy materials and other information and reports, if any, which the Parent or any of its Subsidiaries shall file with the Securities and Exchange Commission (or any successor thereto) or deliver to holders of its Indebtedness pursuant to the terms of the documentation governing such Indebtedness (or any trustee, agent or other representative therefor).
(i)
Material Breach; Other Debt Documents
. Promptly upon, and in any event within five Business Days after, without duplication of any other reporting requirements herein, receipt of any notices of default, financial reporting and collateral reporting under the Other Credit Documents, and copies of all effectuated additions, amendments, restatements, supplements or other modifications in respect of the Other Credit Documents.
(j)
Environmental Matters
. Promptly upon, and in any event within fifteen Business Days after, the Parent obtains knowledge thereof, written notice of any of the following environmental matters occurring after the Restatement Effective Date, except to the extent that such environmental matters could not, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect:
(i)
any Environmental Claim pending or threatened in writing against the Parent or any of its Subsidiaries or any Collateral Vessel or property owned or operated or occupied by the Parent or any of its Subsidiaries;
(ii)
any condition or occurrence on or arising from any Collateral Vessel or property owned or operated or occupied by the Parent or any of its Subsidiaries that (a) results in noncompliance by the Parent or such Subsidiary with any applicable Environmental Law or (b) could reasonably be expected to form the basis of an Environmental Claim against the Parent or any of its Subsidiaries or any such Collateral Vessel or property;
(iii)
any condition or occurrence on any Collateral Vessel or property owned or operated or occupied by the Parent or any of its Subsidiaries that could reasonably be expected to cause such Collateral Vessel or property to be subject to any restrictions on the ownership, occupancy, use or transferability by the Parent or such Subsidiary of such Collateral Vessel or property under any Environmental Law; and
(iv)
the taking of any removal or remedial action in response to the actual or alleged presence of any Hazardous Material on any Collateral Vessel or property owned or operated or occupied by the Parent or any of its Subsidiaries as required by any Environmental Law or any governmental or other administrative agency;
provided
that in any event the Parent shall deliver to the Administrative Agent all material notices received by the Parent or any of its Subsidiaries from any government or governmental agency under, or pursuant to, CERCLA or OPA.
All such notices shall describe in reasonable detail the nature of the claim, investigation, condition, occurrence or removal or remedial action and the Parent’s or such Subsidiary’s response thereto. In addition, the Parent will provide the Administrative Agent with copies of all material communications with any government or governmental agency and all material
71
communications with any Person relating to any Environmental Claim of which notice is required to be given pursuant to this Section 8.01(j), and such detailed reports of any such Environmental Claim as may reasonably be requested by the Administrative Agent or the Required Lenders.
(k)
Management Letters
. Promptly after Parent’s or any of its Subsidiaries’ receipt thereof, a copy of any “management letter” received from its certified public accountants and management’s response thereto.
(l)
Cash Flow Projections
. On the Restatement Effective Date and monthly thereafter until the Trigger Date, cash flow projections for the Parent and its Subsidiaries (the “
Cash Flow Projections
”) for the 13-week period beginning on the Business Day on which such Cash Flow Projections are due, which Cash Flow Projections shall (i) be based on information available, and projections made, as of the last Business Day of the immediately preceding calendar month and (ii) include a variance report describing in reasonable detail the variance(s) in actual cash flow from projected cash flow for the month ended on such last Business Day;
provided
,
however
, that in no event will the Parent be required to deliver such Cash Flow Projections if, at the end of any such month, (a) no Default or Event of Default has occurred and is continuing and (b) the aggregate amount of Unrestricted Cash and Cash Equivalents of the Parent and its Subsidiaries (including any remaining Net Cash Proceeds from the 2013 Equity Investment not used on the Third Amendment Effective Date to make the Amendment Prepayment) at the end of any such month exceeds $75,000,000.
(m)
Excess Liquidity Calculations
. On or before the tenth day (or, if such day is not a Business Day, on the next succeeding Business Day) after each Payment Date, a certificate of the senior financial officer of the Parent substantially in the form of Exhibit J, which certificate shall set forth the calculations required to determine the Excess Liquidity, if any, for such Payment Date.
(n)
Non-Recourse Subsidiaries
. Promptly upon, and in any event within five Business Days after delivery thereof, without duplication of any other reporting requirements herein, any periodic financial reports provided to the lenders under any documents evidencing Non-Recourse Indebtedness or any notices of default provided thereunder.
(o)
Other Information
. From time to time, such other information or documents (financial or otherwise) with respect to the Parent, its Subsidiaries or its Non-Recourse Subsidiaries as the Administrative Agent or the Required Lenders may reasonably request in writing.
8.02
Books, Records and Inspections
. The Parent will, and will cause each of its Subsidiaries to, keep proper books of record and account in which full, true and correct entries, in conformity in all material respects with GAAP and all requirements of law, shall be made of all dealings and transactions in relation to its business. The Parent will, and will cause each of its Subsidiaries to, permit officers and designated representatives of the Administrative Agent and the Lenders as a group to visit and inspect, during regular business hours and under guidance of officers of the Parent or any of its Subsidiaries, any of the properties of the Parent or its Subsidiaries, and to examine the books of account of the Parent or such Subsidiaries and discuss
72
the affairs, finances and accounts of the Parent or such Subsidiaries with, and be advised as to the same by, its and their officers and, in the presence of the Parent, independent accountants, all upon reasonable advance notice and at such reasonable times and intervals and to such reasonable extent as the Administrative Agent or the Required Lenders may request;
provided
that, unless an Event of Default exists and is continuing at such time, the Administrative Agent and the Lenders shall not be entitled to request more than two such visitations and/or examinations in any fiscal year of the Parent.
8.03
Maintenance of Property; Insurance
. The Parent will, and will cause each of its Subsidiaries to, (i) keep all material property necessary in its business in good working order and condition (ordinary wear and tear and loss or damage by casualty or condemnation excepted), (ii) maintain insurance on the Collateral Vessels in at least such amounts and against at least such risks as are in accordance with (a) normal industry practice for similarly situated insureds and (b) the requirements set forth in Section 8.06, and (iii) furnish to the Administrative Agent, at the written request of the Administrative Agent or any Lender, a complete description of the material terms of insurance carried. In addition to the requirements of the immediately preceding sentence, the Parent will at all times cause the Required Insurance to (x) be maintained on the Collateral Vessels (with the same scope of coverage as that described in
Schedule VI
) at levels which are at least as great as the respective amount described on
Schedule VI
and (y) comply with the insurance requirements of the Collateral Vessel Mortgages and the Secondary Collateral Vessel Mortgages, as applicable.
8.04
Corporate Franchises
. The Parent will, and will cause each of its Subsidiaries, to do or cause to be done, all things necessary to preserve and keep in full force and effect its existence and its material rights, franchises, licenses and patents (if any) used in its business, except, in the case of any Subsidiary of the Parent that is not a Guarantor, which could not be reasonably expected to have a Material Adverse Effect;
provided
,
however
, that nothing in this Section 8.04 shall prevent (i) sales or other dispositions of assets, consolidations or mergers by or involving the Parent or any of its Subsidiaries which are permitted in accordance with Section 9.02, (ii) any Subsidiary Guarantor from changing the jurisdiction of its organization to the extent permitted by Section 9.11 or (iii) the abandonment by the Parent or any of its Subsidiaries of any rights, franchises, licenses and patents that could not be reasonably expected to have a Material Adverse Effect.
8.05
Compliance with Statutes, etc.
The Parent will, and will cause each of its Subsidiaries and each of its Non-Recourse Subsidiaries to, comply with all applicable statutes, regulations and orders of, and all applicable restrictions (including all laws and regulations relating to money laundering) imposed by, all governmental bodies, domestic or foreign, in respect of the conduct of its business and the ownership of its property, except such non-compliances as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
8.06
Compliance with Environmental Laws
. (a) The Parent will, and will cause each of its Subsidiaries and each of its Non-Recourse Subsidiaries to, comply in all material respects with all Environmental Laws applicable to the ownership or use of any Collateral Vessel or any other Vessel or property now or hereafter owned or operated by the Parent or any of its Subsidiaries or any of its Non-Recourse Subsidiaries, will within a reasonable time period pay or
73
cause to be paid all costs and expenses incurred in connection with such compliance (except to the extent being contested in good faith), and will keep or cause to be kept all such Collateral Vessels or Vessels or property free and clear of any Liens imposed pursuant to such Environmental Laws, in each of the foregoing cases, except to the extent any failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. None of the Parent, any of Subsidiaries of the Parent or any Non-Recourse Subsidiaries of the Parent will generate, use, treat, store, release or dispose of, or permit the generation, use, treatment, storage, release or disposal of, Hazardous Materials on any Collateral Vessel or Vessel or property now or hereafter owned or operated or occupied by the Parent, any of its Subsidiaries or any of its Non-Recourse Subsidiaries, or transport or permit the transportation of Hazardous Materials to or from any ports or property except in material compliance with all applicable Environmental Laws and as reasonably required by the trade in connection with the operation, use and maintenance of any such property or otherwise in connection with their businesses or except to the extent the same could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Parent will, and will cause each of its Subsidiaries and each of its Non-Recourse Subsidiaries to, maintain insurance on the Collateral Vessels and any other Vessel in at least such amounts as are in accordance with normal industry practice for similarly situated insureds, against losses from oil spills and other environmental pollution.
(b)
At the written request of the Administrative Agent or the Required Lenders, which request shall specify in reasonable detail the basis therefor, the Parent or the Borrower will provide, at the Parent or the Borrower’s sole cost and expense, an environmental assessment of any Primary Collateral Vessel by such Primary Collateral Vessel’s classification society (to the extent such classification society is listed on
Schedule X
) or another internationally recognized classification society reasonably acceptable to the Administrative Agent. If said classification society, in its assessment, indicates that such Primary Collateral Vessel is not in compliance with the Environmental Laws, said society shall set forth potential costs of the remediation of such non-compliance;
provided
that such request for an assessment may be made only if (i) there has occurred and is continuing an Event of Default, (ii) the Administrative Agent or the Required Lenders reasonably and in good faith believe that the Parent, any of its Subsidiaries or any such Primary Collateral Vessel is not in compliance with Environmental Law and such non-compliance could reasonably be expected to have a Material Adverse Effect, or (iii) the Administrative Agent or the Required Lenders reasonably and in good faith believe that circumstances exist that reasonably could be expected to form the basis of a material Environmental Claim against the Parent or any of its Subsidiaries or any such Primary Collateral Vessel. If the Parent or the Borrower fails to provide the same within 90 days after such request was made, the Administrative Agent may order the same and the Parent or the Borrower shall grant and hereby grants to the Administrative Agent and the Lenders and their agents reasonable access to such Primary Collateral Vessel and specifically grants the Administrative Agent and the Lenders an irrevocable non-exclusive license, subject to the rights of tenants, to undertake such an assessment, all at the Parent or the Borrower’s expense.
8.07
ERISA
. As soon as reasonably possible and, in any event, within ten (10) days after the Parent or any of its Subsidiaries or any ERISA Affiliate knows or has reason to know of the occurrence of any of the following, the Parent will deliver to the Administrative Agent, with sufficient copies for each of the Lenders, a certificate of the senior financial officer of the Parent setting forth the full details as to such occurrence and the action, if any, that the
74
Parent, such Subsidiary or such ERISA Affiliate is required or proposes to take, together with any notices required or proposed to be given to or filed with or by the Parent, the Subsidiary, the ERISA Affiliate, the PBGC, a Plan participant or the Plan administrator with respect thereto: that a Reportable Event has occurred (except to the extent that the Parent has previously delivered to the Administrative Agent a certificate and notices (if any) concerning such event pursuant to the next clause hereof); that a contributing sponsor (as defined in Section 4001(a)(13) of ERISA) of a Plan subject to Title IV of ERISA is subject to the advance reporting requirement of PBGC Regulation Section 4043.61 (without regard to subparagraph (b)(1) thereof), and an event described in subsection .62, .63, .64, .65, .66, .67 or .68 of PBGC Regulation Section 4043 is reasonably expected to occur with respect to such Plan within the following 30 days; that a failure to satisfy minimum funding requirements, within the meaning of Section 412 of the Code or Section 302 of ERISA, has occurred or an application may be or has been made for a waiver or modification of the minimum funding standard (including any required installment payments) or an extension of any amortization period under Section 412 or 430 of the Code or Section 302 or 303 of ERISA with respect to a Plan; that the actuary of a Plan (other than a Multiemployer Plan) has or will certify that the Plan is an at-risk plan within the meaning of Section 430 of the Code or Section 303 of ERISA; that a Plan which is a Multiemployer Plan is in endangered or critical status under Section 305 of ERISA; that any contribution required to be made with respect to a Plan or Foreign Pension Plan has not been timely made and such failure could result in a material liability for the Parent or any of its Subsidiaries; that a Plan has been or may be reasonably expected to be terminated, reorganized, partitioned or declared insolvent under Title IV of ERISA with a material amount of unfunded benefit liabilities; that a Plan (in the case of a Multiemployer Plan, to the best knowledge of the Parent or any of its Subsidiaries or ERISA Affiliates) has a material Unfunded Current Liability; that proceedings may be reasonably expected to be or have been instituted by the PBGC to terminate or appoint a trustee to administer a Plan which is subject to Title IV of ERISA; that a proceeding has been instituted pursuant to Section 515 of ERISA to collect a material delinquent contribution to a Plan; that the Parent, any of its Subsidiaries or any ERISA Affiliate will or may reasonably expect to incur any material liability (including any indirect, contingent, or secondary liability) to or on account of the termination of or withdrawal from a Plan under Section 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or with respect to a Plan under Section 436(f), 4971, 4975 or 4980 of the Code or Section 409 or 502(i) or 502(l) of ERISA or with respect to a group health plan (as defined in Section 607(1) of ERISA or Section 4980B(g)(2) of the Code) under Section 4980B of the Code; or that the Parent, or any of its Subsidiaries may incur any material liability pursuant to any employee welfare benefit plan (as defined in Section 3(1) of ERISA) that provides benefits to retired employees or other former employees (other than as required by Section 601 of ERISA) or any Plan or any Foreign Pension Plan. Upon request, the Parent will deliver to the Administrative Agent with sufficient copies to the Lenders (i) a complete copy of the annual report (on Internal Revenue Service Form 5500-series) of each Plan (including, to the extent required, the related financial and actuarial statements and opinions and other supporting statements, certifications, schedules and information) required to be filed with the Internal Revenue Service and (ii) copies of any records, documents or other information that must be furnished to the PBGC with respect to any Plan pursuant to Section 4010 of ERISA. In addition to any certificates or notices delivered to the Lenders pursuant to the first sentence hereof, copies of annual reports and any records, documents or other information required to be furnished to the PBGC, and any notices received by the Parent, any of its Subsidiaries or any ERISA Affiliate
75
with respect to any Plan or Foreign Pension Plan with respect to any circumstances or event that could reasonably be expected to result in a material liability shall be delivered to the Lenders no later than ten (10) days after the date such annual report has been filed with the Internal Revenue Service or such records, documents and/or information has been furnished to the PBGC or such notice has been received by the Parent, such Subsidiary or such ERISA Affiliate, as applicable.
8.08
End of Fiscal Years; Fiscal Quarters
. The Parent shall cause (i) each of its, and each of its Subsidiaries’, fiscal years to end on December 31 of each year and (ii) each of its and its Subsidiaries’ fiscal quarters to end on March 31, June 30, September 30 and December 31 of each year.
8.09
Performance of Obligations
. The Parent will, and will cause each of its Subsidiaries to, perform all of its obligations under the terms of each mortgage, indenture, security agreement and other debt instrument (including, without limitation, the Documents) by which it is bound, except to the extent waived by the parties thereto and except such non-performances as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
8.10
Payment of Taxes
. The Parent will pay and discharge, and will cause each of its Subsidiaries to pay and discharge, all material taxes, assessments and governmental charges or levies that become due and payable which are imposed upon it or upon its income or profits, or upon any properties belonging to it, prior to the date on which penalties attach thereto, and all lawful claims for sums that have become due and payable which, if unpaid, might become a Lien not otherwise permitted under Section 9.01(i),
provided
that neither the Parent nor any of its Subsidiaries shall be required to pay any such tax, assessment, charge, levy or claim which is being contested in good faith and by proper proceedings if it has maintained adequate reserves with respect thereto in accordance with GAAP.
8.11
Further Assurances
. (a) The Parent will, and will cause each of its Subsidiaries to, cause each Collateral and Guaranty Requirement to be satisfied at all times.
(b)
The Parent, on behalf of itself and each other Credit Party, agrees that at any time and from time to time, at the expense of the Parent or such other Credit Party, it will promptly execute and deliver all further instruments and documents, and take all further action that may be reasonably necessary, or that the Administrative Agent may reasonably require, to perfect and protect any Lien granted or purported to be granted hereby or by the other Credit Documents, or to enable the Collateral Agent to exercise and enforce its rights and remedies with respect to any Collateral. Without limiting the generality of the foregoing, the Parent will, and will cause each Credit Party to, execute (to the extent applicable) and file, or cause to be filed, such financing or continuation statements under the UCC (or any non-U.S. equivalent thereto), or amendments thereto, such amendments or supplements to the Collateral Vessel Mortgages and the Secondary Collateral Vessel Mortgages (including any amendments required to maintain Liens granted by such Collateral Vessel Mortgages and such Secondary Collateral Vessel Mortgages pursuant to the effectiveness of this Agreement), and such other instruments or notices, as may be reasonably necessary, or that the Administrative Agent may reasonably require, to protect and preserve the Liens granted or purported to be granted hereby and by the other Credit Documents.
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(c)
Each Credit Party hereby authorizes the Collateral Agent to file one or more financing or continuation statements under the UCC (or any non-U.S. equivalent thereto), and amendments thereto, relative to all or any part of the Collateral, where permitted by law. The Collateral Agent will promptly send each Credit Party a copy of any financing or continuation statements which it may file and the filing or recordation information with respect thereto.
(d)
If at any time any Subsidiary of the Parent owns a Collateral Vessel or owns, directly or indirectly, an interest in any Subsidiary which owns a Collateral Vessel and such Subsidiary has not otherwise satisfied the Collateral and Guaranty Requirements, the Parent will cause such Subsidiary (and any Subsidiary which directly or indirectly owns the Equity Interests of such Subsidiary to the extent not a Credit Party) to satisfy the Collateral and Guaranty Requirements with respect to each relevant Collateral Vessel as such Subsidiary would have been required to satisfy pursuant to Section 12.10 of this Agreement had such Subsidiary been a Credit Party on or prior to the Restatement Effective Date.
(e)
If, at any time, the Parent deposits the 508 Blocked Amount into the 508 Blocked Account pursuant to Section 9.09(b), the Parent will duly execute and deliver a control agreement with respect thereto granting a first priority security interest to the Pledgee (as such term is defined in the Pari Passu Pledge Agreement) (reasonably satisfactory in all respects to such Pledgee)”.
8.12
Deposit of Earnings
. Each Credit Party shall cause the earnings derived from each of the respective Collateral Vessels, to the extent constituting Earnings and Insurance Collateral or Secondary Earnings and Insurance Collateral, to be deposited by the respective account debtor in respect of such earnings into one or more of the Concentration Accounts maintained for such Credit Party from time to time. Without limiting any Credit Party’s obligations in respect of this Section 8.12, each Credit Party agrees that, in the event it receives any earnings constituting Earnings and Insurance Collateral or Secondary Earnings and Insurance Collateral, or any such earnings are deposited other than in one of the Concentration Accounts, it shall promptly deposit all such proceeds into one of the Concentration Accounts maintained for such Credit Party from time to time.
8.13
Ownership of Subsidiaries
. (a) Other than “director qualifying shares”, the Parent shall at all times directly or indirectly own 100% of the Equity Interests of GMSCII, Arlington, the Borrower and each of the Subsidiary Guarantors.
(b)
The Parent shall cause each Subsidiary Guarantor to at all times be directly owned by one or more Credit Parties.
(c)
The Parent will cause each Collateral Vessel to be owned at all times by a single Subsidiary Guarantor that owns no other Collateral Vessels.
8.14
Flag of Collateral Vessels; Citizenship; Collateral Vessel Classifications
. (a) The Parent shall, and shall cause each Credit Party that owns a Collateral Vessel to, cause each Collateral Vessel to be registered under the laws and flag of (t) the Bahamas, (u) the Republic of Malta, (v) the Republic of Liberia, (w) the Republic of the Marshall Islands, (x)
77
Bermuda, (y) the United Kingdom or (z) such other jurisdiction as is acceptable to the Required Lenders (each jurisdiction in clauses (t) through and including (z), an “
Acceptable Flag Jurisdiction
”). Notwithstanding the foregoing, any Credit Party may transfer a Collateral Vessel to another Acceptable Flag Jurisdiction pursuant to a Flag Jurisdiction Transfer.
(b)
The Parent will, and will cause each Subsidiary Guarantor which owns or operates a Collateral Vessel to, be qualified to own and operate such Collateral Vessel under the laws of the Bahamas, the Republic of Malta, the Republic of Liberia, the Republic of the Marshall Islands, Bermuda, the United Kingdom, or such other jurisdiction in which such Collateral Vessel is permitted to be flagged in accordance with the terms of the related Collateral Vessel Mortgage or Secondary Collateral Vessel Mortgage, as applicable.
(c)
The Parent will, and will cause each Subsidiary Guarantor which owns or operates a Collateral Vessel to, cause each Collateral Vessel to be classified in the highest class available for Vessels of its age and type with a classification society listed on
Schedule X
or another internationally recognized classification society acceptable to the Administrative Agent, free of any material conditions or recommendations.
8.15
Use of Proceeds
.
The Borrower will use the proceeds of the Loans only as provided in Section 7.08.
8.16
Sale Vessels Disposal
. Subject to compliance with Section 9.02(i), the Parent shall procure that the Credit Parties which own the Sale Vessels dispose of them on or before August 31, 2014;
provided,
that
, (x) to the extent such disposal is consummated, the Net Cash Proceeds of such disposals shall be applied as required by Section 5.02(f) to repay the Loans, and (y) notwithstanding anything to the contrary contained in Section 5.02(c), following such disposals and as a consequence thereof the Borrower shall not be required to repay an aggregate principal amount of outstanding Loans greater than (A) with respect to the disposition of the Genmar Minotaur, the Net Cash Proceeds corresponding to the Collateral Disposition of the Genmar Minotaur and (B) with respect to the disposition of the Genmar Hope, the Net Cash Proceeds corresponding to the Collateral Disposition of the Genmar Hope.
SECTION 9.
Negative Covenants
. Each of the Parent, the Borrower, GMSCII and Arlington hereby covenants and agrees that on and after the Restatement Effective Date, and until all Existing Letters of Credit have terminated and the Loans, Notes and Unpaid Drawings, together with interest and all other Credit Document Obligations incurred hereunder and thereunder, are paid in full:
9.01
Liens
. The Parent will not, and will not permit any of its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with respect to (I) prior to the Trigger Date and at any time that the Parent and its Subsidiaries have a Loan to Value Ratio of greater than 0.60 to 1.00, any property or assets (real or personal, tangible or intangible) of the Parent or any of its Subsidiaries and (II) on and after the Trigger Date and at any time that the Parent and its Subsidiaries have a Loan to Value Ratio of no greater than 0.60 to 1.00, any Collateral (the property and assets described in clause (I) or (II), as applicable, the “
Applicable Property
”),
78
whether now owned or hereafter acquired, or sell any such Applicable Property subject to an understanding or agreement, contingent or otherwise, to repurchase such Applicable Property (including sales of accounts receivable with recourse to the Parent or any of its Subsidiaries), or assign any right to receive income or permit the filing of any financing statement under the UCC or any other similar notice of Lien under any similar recording or notice statute;
provided
that the provisions of this Section 9.01 shall not prevent the creation, incurrence, assumption or existence of the following (Liens described below are herein referred to as “
Permitted Liens
”):
(i)
inchoate Liens for taxes, assessments or governmental charges or levies not yet due and payable or Liens for taxes, assessments or governmental charges or levies being contested in good faith and by appropriate proceedings for which adequate reserves have been established in accordance with GAAP;
(ii)
Liens in respect of the Applicable Property imposed by law, which were incurred in the ordinary course of business and do not secure Indebtedness for borrowed money, such as carriers’, warehousemen’s, materialmen’s and mechanics’ liens and other similar Liens arising in the ordinary course of business, and (x) which do not in the aggregate materially detract from the value of the Applicable Property do not materially impair the use thereof in the operation of the business of the Parent or such Subsidiary or (y) which are being contested in good faith by appropriate proceedings, which proceedings (or orders entered in connection with such proceedings) have the effect of preventing the forfeiture or sale of the Applicable Property subject to any such Lien;
(iii)
Liens in existence on the Restatement Effective Date which are listed, and the property subject thereto described, on
Schedule IV
, without giving effect to any renewals or extensions of such Liens,
provided
that the aggregate principal amount of the Indebtedness, if any, secured by such Liens does not increase from that amount outstanding on the Restatement Effective Date,
less
any repayments of principal thereof;
(iv)
Permitted Encumbrances;
(v)
Liens created pursuant to the Security Documents;
(vi)
Liens arising out of judgments, awards, decrees or attachments with respect to which the Parent or any of its Subsidiaries shall in good faith be prosecuting an appeal or proceedings for review,
provided
that the aggregate amount of all such judgments, awards, decrees or attachments shall not constitute an Event of Default under Section 10.09;
(vii)
Liens (other than any Lien imposed by ERISA) incurred or deposits made in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security, Liens to secure the performance of tenders, statutory obligations (other than excise taxes), surety, stay, customs and appeal bonds, statutory bonds, bids, leases, government contracts, trade contracts, performance and return of money bonds and other similar obligations in each case incurred in the ordinary course of business (exclusive of obligations for the payment of borrowed money) and Liens arising by virtue of deposits made in the ordinary course of business to secure liability for
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premiums to insurance carriers;
provided
that the aggregate value of all cash and property at any time encumbered pursuant to this clause (vii) shall not exceed $5,000,000;
(viii)
Liens in respect of seamen’s wages which are not past due and other maritime Liens for amounts not past due arising in the ordinary course of business and not yet required to be removed or discharged under the terms of the respective Collateral Vessel Mortgages;
(ix)
Liens on the Applicable Property securing the obligations under the Other Credit Agreement (and any interest rate protection agreement or other hedging agreement entered into in connection therewith),
provided
that such Liens are subject to the provisions of the Intercreditor Agreements;
(x)
Liens placed upon equipment or machinery acquired after the Restatement Effective Date and used in the ordinary course of business of the Borrower or any of its Subsidiaries and placed at the time of the acquisition thereof by the Borrower or such Subsidiary or within 90 days thereafter to secure Indebtedness incurred to pay all or a portion of the purchase price thereof or to secure Indebtedness incurred solely for the purpose of financing the acquisition of any such equipment or machinery or extensions, renewals or replacements of any of the foregoing for the same or a lesser amount,
provided
that (x) the Indebtedness secured by such Liens is permitted by Section 9.04 and (y) in all events, the Lien encumbering the equipment or machinery so acquired does not encumber any asset of the Parent or any other asset of the Borrower or such Subsidiary;
(xi)
easements, rights-of-way, restrictions, encroachments and other similar charges or encumbrances, and minor title deficiencies, in each case not securing Indebtedness and not materially interfering with the conduct of the business of
the Parent or any of its Subsidiaries;
(xii)
Liens arising from precautionary UCC financing statement filings regarding operating leases entered into in the ordinary course of business;
(xiii)
statutory and common law landlords’ liens under leases to which the Borrower or any of its Subsidiaries is a party;
(xiv)
Liens arising out of any conditional sale, title retention, consignment or other similar arrangements for the sale of goods entered into by the Borrower or any of its Subsidiaries in the ordinary course of business to the extent such Liens do not attach to any assets other than the goods subject to such arrangements;
(xv)
Liens (x) incurred in the ordinary course of business in connection with the purchase or shipping of goods or assets (or the related assets and proceeds thereof), which Liens are in favor of the seller or shipper of such goods or assets and only attach to such goods or assets, and (y) in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods;
(xvi)
bankers’ Liens, rights of setoff and other similar Liens existing solely with respect to cash and Cash Equivalents on deposit in one or more accounts maintained by
the
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Parent or any Subsidiary, in each case granted in the ordinary course of business in favor of the bank or banks with which such accounts are maintained, securing amounts owing to such bank or banks with respect to cash management and operating account arrangements;
(xvii)
to the extent required by Section 2.13(a)(i) or permitted by Section 9.04(v), Liens in respect of the cash collateralization of the Existing Letters of Credit;
(xviii)
Liens securing obligations in respect of Indebtedness permitted pursuant to Section 9.04(vi) (including any Liens on cash required to cash collateralize letters of credit permitted pursuant to Section 9.04(vi) in an aggregate amount not to exceed $5,000,000 at any time);
provided
that at no time will any Indebtedness incurred by the Parent or any of its Subsidiaries from Oaktree Capital Management L.P. or any of its Affiliates be permitted to be secured pursuant to this clause (xviii);
(xix)
Liens permitted at the time they were created;
(xx) Liens on (a) the Vessels acquired in a Permitted New Vessel Acquisition, (b) the related earnings and insurance of such Vessels and (c) the Equity Interests in the Vessel SPVs which own such Vessels, in each case to secure the Indebtedness permitted to be incurred under Section 9.17 in order to finance the corresponding Financed Purchase Price;
(xxi) Liens on (a) the 2014 Newbuilding Vessels, (b) the related earnings and insurance of such Vessels and (c) the Equity Interests in and other assets of the 2014 Newbuilding Holdco and the 2014 Newbuilding Vessel Subsidiaries, in each case to secure the Permitted 2014 Newbuilding Indebtedness and related interest rate hedge agreements; and
(xxii) deposits in connection with the acquisition of Vessels;
provided
that such deposits are funded solely from the Equity Proceeds Amount.
In connection with the granting of Liens described above in this Section 9.01 by the Parent or any of its Subsidiaries, the Administrative Agent and the Collateral Agent shall be authorized to take any actions deemed appropriate by it in connection therewith (including, without limitation, by executing appropriate lien subordination agreements in favor of the holder or holders of such Liens, in respect of the item or items of equipment or other assets subject to such Liens).
9.02
Consolidation, Merger, Sale of Assets, etc.
The Parent will not, and will not permit any of its Subsidiaries to wind up, liquidate or dissolve its affairs or enter into any transaction of merger, consolidation or amalgamation, or convey, sell, lease or otherwise dispose of (or agree to do any of the foregoing at any future time) all or substantially all of its assets (other than Margin Stock) or any of the Collateral, or enter into any sale-leaseback transactions involving any of the Collateral (or agree to do so at any future time), except that:
(i)
the Parent and each of its Subsidiaries may sell, lease or otherwise dispose of any Primary Collateral Vessels,
provided
that (I)(A) such sale is made at Fair Market Value (as determined in accordance with the appraisal report most recently delivered to the Administrative Agent (or obtained by the Administrative Agent) pursuant to Section 8.01(d) or delivered at the time of such sale to the Administrative Agent by the Parent),
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(B) 100% of the consideration in respect of such sale shall consist of cash or Cash Equivalents (unless the Primary Collateral Vessel is being sold to the Parent or a Subsidiary of the Parent, in which case the sale shall consist of cash only) received by the Borrower, or to the respective Subsidiary Guarantor which owned such Primary Collateral Vessel, on the date of consummation of such sale and (C) the Net Cash Proceeds of such sale, lease or other disposition shall be applied as required by Section 5.02 to repay the Loans and/or cash collateralize the Existing Letters of Credit; provided, further, that the Parent shall have delivered to the Administrative Agent an officer’s certificate, certified by the senior financial officer of the Parent, demonstrating pro forma compliance (giving effect to such Collateral Disposition and, in the case of calculations involving the appraised value of Collateral Vessels, using valuations consistent with the appraisal report most recently delivered to the Administrative Agent (or obtained by the Administrative Agent) pursuant to Section 8.01(d)) with each of the Financial Covenants (except compliance with the Financial Covenants set forth in Section 9.09 of this Agreement shall not be required to be evidenced, established or demonstrated by such certificate in the case of a Permitted Sale) for the most recently ended Test Period for which financial statements under Section 8.01(a) or (b) are due;
provided
that, with respect to any Test Period ending on December 31, the Parent shall deliver unaudited financial statements as at the end of such Test Period at the time of such sale but only if such sale occurs more than 45 days (and less than 90 days) after the end of such Test Period (or at the time of such sale, as applicable) setting forth the calculations required to make such determination in reasonable detail, and (II) at least five Business Days (or such other period as shall be agreed by the Borrower and the Administrative Agent) prior written notice of the proposed sale, lease or other disposition of a Primary Collateral Vessel shall have been given to the Collateral Agent, which notice shall set forth the expected closing date of such sale, lease or other disposition and the date of the corresponding repayment of Loans;
(ii)
subject to compliance with Section 5.02(c), the Parent and its Subsidiaries may sell, lease or otherwise dispose of any Secondary Collateral to the extent such sale, lease or disposition is permitted pursuant to the terms of the Other Credit Agreement and the Intercreditor Agreements;
provided
that (x) the consent of the Required Lenders shall be required if the Required Lenders (under and as defined in the Other Credit Agreement) were required to consent and have consented to the Net Cash Proceeds of such sale, lease or disposition not being applied to repay loans under the Other Credit Agreement and (y) notwithstanding anything to the contrary contained in this clause (ii), at no time may any Secondary Collateral be sold, leased or otherwise disposed of to the extent that a Default or an Event of Default under Section 9.09(b) would occur as a result thereof;
(iii)
the Parent and its Subsidiaries may sell or discount, in each case without recourse and in the ordinary course of business, overdue accounts receivable arising in the ordinary course of business, but only in connection with the compromise or collection thereof consistent with customary industry practice (and not as part of any bulk sale);
(iv)
(A) the Borrower, GMSCII, Arlington and any Subsidiary Guarantor may transfer assets or lease to or acquire or lease assets from the Borrower, GMSCII, Arlington or any other Subsidiary Guarantor, or any Subsidiary Guarantor may be
82
merged into the Borrower, GMSCII, Arlington or any other Subsidiary Guarantor;
provided
that the Borrower, GMSCII, Arlington or such Subsidiary Guarantor, as the case may be, will be a successor in interest to all rights, titles and interest of such merged Subsidiary Guarantor and, in each case so long as all actions necessary or desirable to preserve, protect and maintain the security interest and Lien of the Collateral Agent in any Collateral held by any Person involved in any such transaction are taken to the satisfaction of the Collateral Agent and (B) any Subsidiary of the Parent (other than the Borrower, GMSCII, Arlington, any Subsidiary Guarantor and 2014 Newbuilding Holdco and any Subsidiary thereof) may transfer assets or lease to or acquire or lease assets from any other Subsidiary of the Parent, or any other Subsidiary of the Parent (other than the Borrower, GMSCII, Arlington, any Subsidiary Guarantor and 2014 Newbuilding Holdco and any Subsidiary thereof) may be merged into any other Subsidiary of the Parent, in each case so long as all actions necessary or desirable to preserve, protect and maintain the security interest and Lien of the Collateral Agent in any Collateral held by any Person involved in any such transaction are taken to the satisfaction of the Collateral Agent;
(v)
following a Collateral Disposition permitted by this Agreement, the Subsidiary Guarantor which owned the Collateral Vessel that is the subject of such Collateral Disposition may dissolve,
provided
that (x) the Net Cash Proceeds from such Collateral Disposition shall be applied (i) in the case of a Primary Collateral Vessel, as required by Section 5.02 to repay the Loans and (ii) in the case of a Secondary Collateral Vessel, as required by the Other Credit Agreement to repay loans thereunder and hereunder to the extent required pursuant to Section 5.02, (y) all of the proceeds of such dissolution shall be paid only to a Credit Party and (z) no Default or Event of Default is continuing unremedied at the time of such dissolution;
(vi)
any Subsidiary which (x) is not a Subsidiary Guarantor and (y) has $5,000 or less in assets (including, without limitation, Equity Interests) may wind up, liquidate or dissolve;
(vii)
subject to compliance with Section 8.16, the Credit Parties which own the Sale Vessels may dispose of the Sale Vessels;
(viii) each of 2014 Newbuilding Holdco and any Subsidiary thereof may convey, sell, lease or otherwise dispose of any of its assets (including the disposal of the 2014 Newbuilding Subsidiaries or any Subsidiaries thereof, the disposition of any 2014 Newbuilding Contracts or any 2014 Newbuilding Vessels) and enter into any agreement of merger, consolidation or amalgamation; and the Parent may convey, sell or otherwise dispose of the Equity Interests of the 2014 Newbuilding Holdco;
provided
that, in each case, (1) either such transaction is between and among 2014 Newbuilding Holdco and its Subsidiaries or (2) in the event clause (1) does not apply, (x) no Event of Default then exists or would result therefrom, (y) such transaction shall be on an arm’s-length basis and for cash, Cash Equivalents or Equity Interests in such other Person at fair market value (as determined in good faith by the Parent at the time of the respective sale) and (z) after giving effect to such transaction, the ratio of the Permitted 2014 Newbuilding Indebtedness to the Fair Market Value of the 2014 Newbuilding Vessels owned by the 2014 Newbuilding Subsidiaries at that time shall not exceed such ratio as determined
83
immediately prior to giving effect to such transaction. In order to comply with clause (z) of this Section 9.02(viii), the Permitted 2014 Newbuilding Indebtedness may be reduced either through a cash repayment or through the assumption thereof by a Person other than the Parent or any Subsidiary thereof (in which event neither the Parent nor any Subsidiary thereof shall have any obligations with respect to such assigned Permitted 2014 Newbuilding Indebtedness);
(ix) General Maritime Management and Unique Tankers may convey, sell, lease or otherwise dispose of any of its assets related to the Unique Tankers Pool (including the disposal by General Maritime Management of its Equity Interests in Unique Tankers); and
(x) the Merger shall be permitted;
provided
that, (1) no Event of Default exists as of the Merger Effective Time or would result therefrom, (2) the Equity Purchase Agreement shall be in full force and effect as of the Merger Effective Time and no default shall have occurred thereunder, (3) any cash consideration for the Merger and any other cash payments made by the Parent in connection therewith (including, without limitation, advisory and/or consultancy fees, counsel fees and break-up fees) shall have been funded solely from the Equity Proceeds Amount, (4) the Collateral and Guarantee Requirements shall remain satisfied after giving effect thereto (including, without limitation, all filings and recordings necessary or desirable to maintain the perfection of the security interests in favor of the Collateral Agent after giving effect to the Merger and the name changes contemplated in connection therewith) and (5) each Lender shall have received, at least 10 Business Days prior to the consummation of the Merger, all documentation and other information in respect of the Parent and its Subsidiaries reasonably requested by it in order to comply with applicable “know your customer” and anti-money laundering rules and regulations, including, without limitation, the PATRIOT Act, after giving effect to the Merger.
To the extent the Required Lenders (or to the extent required pursuant to Section 12.12(a), all Lenders) waive the provisions of this Section 9.02 with respect to the sale of any Collateral, or any Collateral is sold as permitted by this Section 9.02, such Collateral (unless sold to the Parent or a Subsidiary of the Parent) shall be sold free and clear of the Liens created by the Security Documents, and the Administrative Agent and Collateral Agent shall be authorized to take any actions deemed appropriate in order to effect the foregoing. Notwithstanding anything to the contrary contained above, the foregoing covenant shall not be violated as a result of sales of Margin Stock for cash at fair market value (as determined in good faith by the Parent at the time of the respective sale).
9.03
Dividends
. The Parent will not, and will not permit any of its Subsidiaries to, authorize, declare or pay any Dividends with respect to the Parent or any of its Subsidiaries, except that:
(i)
(A) any Wholly-Owned Subsidiary of the Parent may pay Dividends to the Parent or any Wholly-Owned Subsidiary of the Parent, (B) any Subsidiary Guarantor may pay Dividends to the Borrower or any other Subsidiary Guarantor and (C) if the respective Subsidiary is not a Wholly-Owned Subsidiary of the Parent, such Subsidiary
84
may pay Dividends to its shareholders generally so long as the Parent and/or its respective Subsidiaries which own Equity Interests in the Subsidiary paying such Dividends receive at least their proportionate share thereof (based upon their relative holdings of the Equity Interests in the Subsidiary paying such cash Dividends and taking into account the relative preferences, if any, of the various classes of Equity Interests of such Subsidiary);
(ii)
so long as no Event of Default (both before and after giving effect to the payment thereof) has occurred and is continuing, the Parent may repurchase its outstanding Equity Interests (or options to purchase such equity) theretofore held by its or any of its Subsidiaries’ employees, officers or directors following the death, disability, retirement or termination of employment of employees, officers or directors of the Parent or any of its Subsidiaries,
provided
that the aggregate amount expended to so repurchase equity of the Parent shall not exceed $2,000,000 in any fiscal year of the Parent; and
(iii)
after the Merger Effective Time, so long as no cash, Indebtedness or other property of the Parent and its Subsidiaries is being paid by the Parent to such employees, former employees, directors or former directors in connection with such repurchase (A) the Parent may repurchase its outstanding Equity Interests held by its or any of its Subsidiary’s employees, former employees, directors and former directors pursuant to (i) that certain Stock Option Grant Agreement, dated as of July 8, 2014, by and between Navig8 and L. Spenser Wells, as amended, supplemented or modified from time to time, (ii) that certain General Maritime Corporation 2012 Equity Incentive Plan and (iii) any grants or awards issued under any future management incentive plan entered into by Parent or any of its Subsidiaries, in each case, in connection with any exercise by such employees, former employees, directors or former directors to purchase the Parent’s Equity Interest and (B) the Parent may repurchase its outstanding Equity Interests in an amount equal to the value of any withholding taxes in connection with the vesting of any Equity Interests granted to its employees and directors.
9.04
Indebtedness
. The Parent will not, and will not permit any of its Subsidiaries to, contract, create, incur, assume or suffer to exist any Indebtedness other than:
(i)
Indebtedness incurred pursuant to this Agreement and the other Credit Documents;
(ii)
Indebtedness of the Credit Parties incurred pursuant to the Other Credit Agreement in an aggregate principal amount not to exceed $273,802,583.31 at any time outstanding
less
any repayments thereof made after the Restatement Effective Date;
(iii)
Interest Rate Protection Agreements and Other Hedging Agreements in respect of currencies entered into in the ordinary course of business and consistent with past practices;
provided
that (x) in the case of Interest Rate Protection Agreements, the term thereof does not extend beyond the Maturity Date and (y) in the case of Other Hedging Agreements in respect of currencies, the term thereof does not exceed six months.
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(iv)
Intercompany indebtedness permitted pursuant to Sections 9.05(iii) and 9.05(viii);
(v)
Indebtedness evidenced by the Existing Letters of Credit, as such Existing Letters of Credit may be replaced from time to time;
(vi)
so long as no Event of Default then exists or would result therefrom, additional Indebtedness incurred by the Parent, the Borrower or any other Credit Party that does not own a Collateral Vessel at the time such Indebtedness is incurred in an aggregate principal amount not to exceed $10,000,000 (or, in the case of Indebtedness in respect of letters of credit, $5,000,000) at any one time outstanding;
(vii) Indebtedness of the Parent and the Subsidiaries of the Parent other than the Credit Parties incurred to finance the Financed Purchase Price of a Permitted New Vessel Acquisition;
provided
that the amortization of such Indebtedness shall be no greater than a straight line amortization reducing such Indebtedness to $0 upon the corresponding Vessel becoming 15 years old;
(viii) Indebtedness of the Parent under the BlueMountain Parent Indebtedness; and
(ix) Permitted 2014 Newbuilding Indebtedness.
9.05
Advances, Investments and Loans
. The Parent will not, and will not permit any of its Subsidiaries to, directly or indirectly, lend money or credit or make advances to any Person, or purchase or acquire any Margin Stock (or other Equity Interests), or make any capital contribution to any other Person (each of the foregoing an “
Investment
” and, collectively, “
Investments
”), except that:
(i)
the Parent and its Subsidiaries may acquire and hold accounts receivable owing to any of them and Cash Equivalents;
(ii)
so long as no Event of Default exists or would result therefrom, the Parent and its Subsidiaries may make loans and advances in the ordinary course of business to its employees, officers and directors other than officers and directors of Persons which own Equity Interests, directly or indirectly, of the Parent and constitute Affiliates of the Parent or persons employed by any such Affiliates (not including, for the avoidance of doubt, the operational managers of any Credit Party) so long as the aggregate principal amount thereof at any time outstanding which are made on or after the Original Effective Date (determined without regard to any write-downs or write-offs of such loans and advances) shall not exceed $2,000,000;
(iii)
the Credit Parties may make intercompany loans and advances among one another, and Subsidiaries of the Parent (other than the Credit Parties) may make intercompany loans and advances to the Parent or any other Subsidiary of the Parent (other than any Non-Recourse Subsidiary),
provided
that any such loans or advances to a Credit Party pursuant to this clause shall be unsecured and subordinated to the
86
Obligations of the respective Credit Party pursuant to written subordination provisions in the form of Exhibit N;
(iv)
the Parent and its Subsidiaries may sell or transfer assets to the extent permitted by Section 9.02;
(v)
the Parent may make Investments in GMSCII, Arlington and the Borrower, and GMSCII, Arlington and the Borrower may make equity Investments in the Subsidiary Guarantors;
(vi)
each of Parent, GMSCII, Arlington and the Borrower may make Investments in its respective Subsidiaries that are not Subsidiary Guarantors (including, for the avoidance of doubt, Unique Tankers) to the extent funded (and only to the extent funded) with the Equity Proceeds Amount;
provided
that for all Investments made pursuant to this clause (vi), no Event of Default has occurred and is continuing (or would arise after giving effect thereto) at the time any such Investment is made unless such Investment is funded with the Net Cash Proceeds of an Equity Investment made no earlier than six months prior to the date on which such Investment is made;
(vii)
Investments existing on the Restatement Effective Date and described on
Schedule XI
, without giving effect to any additions thereto or replacement thereof;
(viii)
the Parent may make loans, advances and Investments in other Subsidiaries of the Parent (other than (i) the Credit Parties and (ii) Non-Recourse Subsidiaries);
(ix)
the Parent and its Subsidiaries may make Investments in amounts required to fund charter costs and actual expenses relating to operating Vessels leased or chartered as of the date hereof by General Maritime NSF Corporation, GMR Concord LLC, GMR Contest LLC and GMR Concept LLC;
provided
that such Investments may only be made in good faith and only to the extent necessary to fund such costs and expenses after taking into account the cash and Cash Equivalents held by such Subsidiary;
(x)
the Parent and its Subsidiaries may make equity Investments in a special purpose entity (a “
Vessel SPV
”) which owns a Vessel or Vessels acquired in each case in Permitted New Vessel Acquisitions in accordance with the proviso of Section 9.07;
(xi)
the Parent and its Subsidiaries may acquire Investments in connection with any transaction permitted by Section 9.02(viii); and
(xii)
the Parent and its Subsidiaries may make Investments permitted or required by Sections 9.02(x), 9.19 and 9.21.
9.06
Transactions with Affiliates
. The Parent will not, and will not permit any of its Subsidiaries to, enter into any transaction or series of related transactions, whether or not in the ordinary course of business, with any Affiliate of such Person, other than on terms and conditions no less favorable to such Person as would be obtained by such Person at that time in a comparable arm’s-length transaction with a Person other than an Affiliate, except that:
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(i)
Dividends may be paid to the extent provided in Section 9.03;
(ii)
loans and Investments may be made and other transactions may be entered into between the Parent and its Subsidiaries to the extent permitted by Sections 9.04 and 9.05;
(iii)
as long as the Parent has an independent compensation committee, directors’ fees as determined by such independent compensation committee and, at any time the Parent does not have an independent compensation committee, the Parent may pay reasonable directors’ fees;
(iv)
the Parent and its Subsidiaries may enter into employment agreements or arrangements with their respective officers and employees in the ordinary course of business;
(v)
the Parent and its Subsidiaries may pay management fees to Wholly-Owned Subsidiaries of the Parent in the ordinary course of business;
(vi)
the transactions in existence on the Restatement Effective Date which are listed on
Schedule XIII
shall be permitted; and
(vii)
technical, administrative and commercial management agreements with Navig8 Group in the form disclosed to the Lenders prior to the Sixth Amendment Effective Date, as such agreements may be amended from time to time in a matter that is not adverse to the Parent and its Subsidiaries.
9.07
Capital Expenditures
. The Parent will not, and will not permit any of its Subsidiaries to, make any Capital Expenditures at any time prior to the Trigger Date and at any time that the Parent and its Subsidiaries have a Loan to Value Ratio of greater than 0.60 to 1.00, other than (i) maintenance Capital Expenditures incurred in the ordinary course of business or consistent with past practice, (ii) acquisitions of new Vessels and (iii) other Capital Expenditures not in the ordinary course of business, in the case of clauses (ii) and (iii) only to the extent funded (and only to the extent funded) with the Equity Proceeds Amount. At any time after the Trigger Date provided that the Parent and its Subsidiaries have a Loan to Value Ratio of less than or equal to 0.60 to 1.00 at such time, the Parent and its Subsidiaries may make any Capital Expenditures at such time;
provided
,
that
, notwithstanding anything to the contrary contained in this Section 9.07, the Parent and its Subsidiaries may acquire new Vessels, provided that (I) no Default or Event of Default has occurred and is continuing (or would arise after giving effect thereto) at the time any such acquisition is made, (II) the Parent and its Subsidiaries have a Loan to Value Ratio equal to or less than 0.60 to 1.00 at the time any such acquisition is made, (III) the Interest Expense Coverage Ratio (calculated on a pro forma basis after giving effect to such acquisition and the incurrence of any Indebtedness to finance such acquisition, for the most recently ended Test Period for which financial statements under Section 8.01(a) or (b) are due) is greater than 2.00:1.00, (IV) the aggregate principal amount of any Indebtedness incurred to finance such acquisition (the “
Financed Purchase Price
”) does not exceed 55% of the lesser of (x) the fair market value of such Vessel on the basis of an individual charter-free arm’s length transaction between a willing and able buyer and seller not under duress at set forth in the
88
appraisals of at least two Approved Appraisers and (y) the acquisition price of such Vessel and (V) the remaining portion of the purchase price for such acquisition not constituting Financed Purchase Price shall be funded with the Equity Proceeds Amount (any such acquisition, a “
Permitted New Vessel Acquisition
”);
provided
,
further
,
that
, notwithstanding anything to the contrary contained in this Section 9.07, the Parent and its Subsidiaries may consummate the 2014 Newbuilding Acquisition in accordance with the definition thereof.
9.08
Minimum Cash Balance
. The Parent will not permit the Unrestricted Cash and Cash Equivalents held by the Parent and its Subsidiaries (other than amounts on deposit in the Blocked Accounts, if any) to be less than (x) $10,000,000 at any time from the Third Amendment Effective Date to and including December 31, 2014, (y) $15,000,000 at any time from January 1, 2015 to and including December 31, 2015 and (z) $20,000,000 at any time after January 1, 2016.
9.09
Collateral Maintenance
. (a) The Parent will not permit the aggregate Fair Market Value of all Collateral Vessels owned by the Credit Parties which have not been sold, transferred, lost or otherwise disposed of at any time (such value, the “Aggregate Collateral Vessel Value”), as determined by the most recent appraisal delivered by the Borrower to the Administrative Agent or obtained by the Administrative Agent in accordance with Section 8.01(d), at any time to equal less than (I) from the Third Amendment to and including June 30, 2015, 110% of an amount equal to (x) the amount of the Aggregate Credit Agreement Exposure at such time minus (y) the sum of the 508 Blocked Amount and the 273 Blocked Amount at such time, (II) from July 1, 2015 to and including December 31, 2016, 115% of an amount equal to (x) the amount of the Aggregate Credit Agreement Exposure at such time minus (y) the sum of the 508 Blocked Amount and the 273 Blocked Amount at such time and (III) thereafter, 120% of an amount equal to (x) the Aggregate Credit Agreement Exposure at such time minus (y) the sum of the 508 Blocked Amount and the 273 Blocked Amount at such time; provided that, so long as any default in respect of this Section 9.09(a) is not caused by any voluntary Collateral Disposition, such default shall not constitute an Event of Default (but shall constitute a Default) so long as within 45 days of the occurrence of such default, the Borrower shall either (i) post additional collateral satisfactory to the Required Lenders, pursuant to security documentation reasonably satisfactory in form and substance to the Collateral Agent, sufficient to cure such default (and shall at all times during such period and prior to satisfactory completion thereof, be diligently carrying out such actions) (it being understood that (a) the Borrower may, in its sole discretion, decide whether the additional collateral posted to cure such default shall constitute Primary Collateral or Secondary Collateral and (b) cash denominated in US$ Dollars shall always be deemed to constitute collateral satisfactory to the Required Lenders and shall be valued at par) or (ii) make such repayment of Loans under this Agreement and loans under the Other Credit Agreement on a pro rata basis based on the outstanding principal amount of Loans under this Agreement at such time and the outstanding principal amount of loans under the Other Credit Agreement at such time, in each case in an amount sufficient to cure such default (it being understood that any action taken in respect of this proviso shall only be effective to cure such default pursuant to this Section 9.09(a) to the extent that no Default or Event of Default exists hereunder immediately after giving effect thereto).
(b)
In order to comply with clauses (I), (II) and (III) of Section 9.09(a) above, the Parent may, at any time, deposit into the 508 Blocked Account and the 273 Blocked
89
Account on a pro rata basis based on the outstanding principal amount of Loans under this Agreement at such time and the outstanding principal amount of loans under the Other Credit Agreement at such time (the amount of Unrestricted Cash and Cash Equivalents so deposited in the 508 Blocked Account being the “508 Blocked Amount”), an amount of Unrestricted Cash and Cash Equivalents held by the Parent and its Subsidiaries at such time such that, after giving effect to such deposit, the Parent would be in compliance with the provisions of Section 9.09(a) at such time; provided that, at such time, the Parent shall have furnished to the Administrative Agent a certificate of the senior financial officer of the Parent setting forth the calculations required to establish the amount of the Unrestricted Cash and Cash Equivalents that are required by the Parent in order to establish compliance with the provisions of this Section 9.09 at the time of such deposit. Amounts on deposit in the 508 Blocked Account may be released from the 508 Blocked Account at such time as the Parent shall have furnished to the Administrative Agent a certificate of the senior financial officer of the Parent setting forth the calculations required to establish compliance with the provisions of this Section 9.09 without the deduction of any such Unrestricted Cash and Cash Equivalents so long as no Default or Event of Default exists at such time or would result under Section 9.09 or otherwise from the withdrawal of from the 508 Blocked Account. The Collateral Agent may apply the amounts on deposit in the 508 Blocked Account in accordance with the Credit Documents at any time if an Event of Default exists at such time.
9.10
Interest Expense Coverage Ratio
. The Parent will not permit the Interest Expense Coverage Ratio for any Test Period ending on the last day of a fiscal quarter of the Parent set forth below to be less than the ratio set forth opposite such fiscal quarter below:
|
Fiscal Quarter Ending
|
|
Ratio
|
|
March 31, 2016
|
|
1.00:1.00
|
|
June 30, 2016
|
|
1.25:1.00
|
|
September 30, 2016
|
|
1.50:1.00
|
|
December 31, 2016
|
|
1.75:1.00
|
|
Maturity Date
|
|
2.00:1.00
|
9.11
Limitation on Modifications of Certificate of Incorporation, By-Laws and Certain Other Agreements; etc.
The Parent will not, and will not permit any Subsidiary Guarantor to, amend, modify or change its Certificate of Incorporation, Certificate of Formation (including, without limitation, by the filing or modification of any certificate of designation), By-Laws, limited liability company agreement, partnership agreement (or equivalent organizational documents) or any agreement entered into by it with respect to its Equity Interests (including any Shareholders’ Agreement), or enter into any new agreement with respect to its capital stock or membership interests (or equivalent interests), other than any amendments, modifications or changes or any such new agreements which are not in any way materially adverse to the interests of the Lenders. Notwithstanding the foregoing, upon not less than 30 days prior written notice to the Administrative Agent and so long as no Default or Event of Default exists and is continuing, any Subsidiary Guarantor may change its jurisdiction of organization to another jurisdiction
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reasonably satisfactory to the Administrative Agent,
provided
that any Subsidiary Guarantor that has entered into the Security Documents or the Secondary Security Documents hereunder shall promptly take all actions reasonably deemed necessary by the Collateral Agent to preserve, protect and maintain, without interruption, the security interest and Lien of the Collateral Agent in any Collateral owned by such Subsidiary Guarantor to the satisfaction of the Collateral Agent, and such Subsidiary Guarantor shall have provided to the Administrative Agent and the Lenders such opinions of counsel as may be reasonably requested by the Administrative Agent to assure itself that the conditions of this proviso have been satisfied.
9.12
Limitation on Certain Restrictions on Subsidiaries
. The Parent will not, and will not permit any of its Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction on the ability of any such Subsidiary to (a) pay dividends or make any other distributions on its capital stock or any other interest or participation in its profits owned by the Parent or any Subsidiary of the Parent, or pay any Indebtedness owed to the Parent or a Subsidiary of the Parent, (b) make loans or advances to the Parent or any of the Parent’s Subsidiaries or (c) transfer any of its properties or assets to the Parent or any of the Parent’s Subsidiaries, except for such encumbrances or restrictions existing under or by reason of (i) applicable law, (ii) this Agreement and the other Credit Documents, (iii) the Other Credit Agreement as in effect on the Restatement Effective Date, or any refinancing thereof or amendments thereto, and the other Other Credit Documents, (iv) customary provisions restricting subletting or assignment of any lease governing a leasehold interest of the Parent or a Subsidiary of the Parent, (v) customary provisions restricting assignment of any agreement entered into by the Parent or a Subsidiary of the Parent in the ordinary course of business, (vi) any holder of a Permitted Lien may restrict the transfer of the asset or assets subject thereto, (vii) restrictions which are not more restrictive than those contained in this Agreement contained in any documents governing any Indebtedness incurred after the Original Effective Date in accordance with the provisions of this Agreement, (viii) Non-Recourse Indebtedness, and (ix) with respect to the 2014 Newbuilding Holdco and the 2014 Newbuilding Vessel Subsidiaries, the BlueMountain Parent Indebtedness and the Permitted 2014 Newbuilding Indebtedness.
9.13
Limitation on Issuance of Equity Interests
. (a) The Parent will not issue, and will not permit any Subsidiary to issue, any preferred stock (or equivalent equity interests) other than Qualified Preferred Stock.
(b)
The Parent will not permit GMSCII, Arlington, the Borrower or any Subsidiary Guarantor described in clause (x) or (y) of the definition thereof to issue any capital stock (including by way of sales of treasury stock) or any options or warrants to purchase, or securities convertible into, capital stock, except (i) for transfers and replacements of then outstanding shares of capital stock, (ii) for stock splits, stock dividends and additional issuances which do not decrease the percentage ownership of the Parent or any of its Subsidiaries in any class of the capital stock of such Subsidiary, (iii) to qualify directors to the extent required by applicable law and (iv) to such Person’s shareholders or in connection with any Investment permitted under this Agreement. All capital stock of the Borrower, Arlington, GMSCII or any Subsidiary Guarantor described in clause (x) or (y) of the definition thereof issued in accordance with this Section 9.13(b) shall be delivered to the Collateral Agent pursuant to the Pledge Agreement or the Secondary Pledge Agreement, as applicable, subject to the Intercreditor Agreements.
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9.14
Business
. The Parent, its Subsidiaries and its Non-Recourse Subsidiaries will not engage in any business other than the businesses in which any of them is engaged in as of the Restatement Effective Date (or, in the case of any Subsidiary or any Non-Recourse Subsidiary that is formed or incorporated after the Restatement Effective Date, any business in which the Parent, any other Subsidiary or any other Non-Recourse Subsidiary is engaged as of the Restatement Effective Date) and activities directly related thereto, and similar or related maritime businesses. It being understood that no Subsidiary Guarantor which owns a Collateral Vessel will engage directly or indirectly in any business other than the business of owning and operating Collateral Vessels and businesses ancillary or complementary thereto, except that, to the extent that any Subsidiary that owns a Secondary Collateral Vessel is permitted under the Other Credit Agreement to engage in any business other than the business of owning and operating Collateral Vessels and businesses ancillary or complementary thereto, such change in the business of such Subsidiary Guarantor shall be permitted to do so hereunder automatically.
9.15
Jurisdiction of Employment; Chartering In Contracts
. (a) The Parent will not, and will not permit the Subsidiary Guarantors or any third party charterer of a Collateral Vessel to, employ or cause to be employed any Collateral Vessel in any country or jurisdiction in which (i) the Borrower, the Subsidiary Guarantors or such third party charterer of a Collateral Vessel is prohibited by law from doing business, (ii) the Lien created by the applicable Collateral Vessel Mortgage or Secondary Collateral Vessel Mortgage, as applicable, will be rendered unenforceable or (iii) the Collateral Agent’s foreclosure or enforcement rights will be materially impaired or hindered.
(b)
Prior to the Trigger Date and at any time that the Parent and its Subsidiaries have a Loan to Value Ratio of greater than 0.60 to 1.00, the Parent will not, and will not permit any Subsidiary to, enter into any contract to charter in or cause to be chartered in any Vessel for a period of 12 months or greater (including any renewal or extension option) as of the execution date of such contract unless the Administrative Agent consents in its sole discretion to such contract.
9.16
Bank Accounts
.
The Parent will not and will not permit any Subsidiary to maintain any deposit, savings, investment or other similar accounts other than (i) the Concentration Accounts, (ii) the 508 Blocked Account (if applicable), (iii) an account maintained at Deutsche Bank as of the Restatement Effective Date in the name of General Maritime Subsidiary Corporation, (iv) an account maintained at DNB Bank ASA as of the Restatement Effective Date in the name of General Maritime Subsidiary Corporation, (v) zero balance accounts in the name of the Parent or any Subsidiary thereof, (vi) any payroll account or accounts opened and maintained by the Parent or a Subsidiary thereof at any time
provided
that the aggregate amount of cash deposited by the Parent and its Subsidiaries in such payroll account(s) does not exceed, together with the amount deposited in the account referenced in clauses (iii) through and including (v), $5,000,000 at any time, (vii) any account or accounts opened and maintained by 2014 Newbuilding Holdco and/or the 2014 Newbuilding Subsidiaries, (viii) any account or accounts opened and maintained by Merger Sub and its Subsidiaries and (ix) an account maintained at the Administrative Agent for the Unique Tankers Pool. Each of the accounts described above (other than those referred to in clauses (iii) through (ix)) shall be subject to (1) a control agreement providing that such
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account shall be under the control of the Collateral Agent, as agent for the Secured Creditors, and (2) a first priority security interest in favor of the Collateral Agent, for the benefit of the Secured Creditors, to secure the Obligations.
9.17
Indebtedness of Non-Recourse Subsidiaries
. Non-Recourse Subsidiaries will not contract, create, incur, assume or suffer to exist any Indebtedness other than Indebtedness incurred to finance the acquisition of new Vessels or to finance any of the activities such Non-Recourse Subsidiaries are permitted to engage in pursuant to Section 9.14,
provided
that (I) if any such Vessel is being so acquired prior the Trigger Date, then (i) the aggregate principal amount of such Indebtedness shall not exceed 60% of the lesser of (x) the fair market value of such Vessel on the basis of an individual charter-free arm’s-length transaction between a willing and able buyer and seller not under duress as set forth in at least one appraisal and (y) the acquisition price of such Vessel, (ii) no amortization of such Indebtedness shall be permitted prior to June 30, 2014 and (iii) the Weighted Average Life to Maturity of such Indebtedness shall be at least one year longer than the Weighted Average Life to Maturity of the Loans at the time such Indebtedness is incurred, and (II) if any such Vessel is being so acquired on or after the Trigger Date, then the aggregate principal amount of such Indebtedness shall not exceed 70% of the lesser of (x) the fair market value of such Vessel on the basis of an individual charter-free arm’s-length transaction between a willing and able buyer and seller not under duress as set forth in the appraisals of at least two Approved Appraisers and (y) the acquisition price of such Vessel.
9.18
Prepayments, Etc. of Wells Fargo Indebtedness
. The Parent will not, and will not permit any Subsidiary to, repay, prepay, redeem, purchase, defease or otherwise satisfy in any manner the Wells Fargo Indebtedness, except (i) the refinancing thereof with any Indebtedness permitted under Section 9.04(vi) and (ii) to the extent such repayment, prepayment, redemption, purchase, defease or satisfaction is funded (and only to the extent funded) with the Equity Proceeds Amount.
9.19
Special Provisions Relating to the 2014 Newbuilding Acquisition and Related Transactions
.
Notwithstanding anything to the contrary set forth in this Agreement and any other Credit Documents. the Parent will not, and will not permit any Subsidiary to:
(i)
make any payments (x) under the 2014 Newbuilding Contracts and/or (y) related to any financing costs and expenses associated with the BlueMountain Parent Indebtedness and/or the Permitted 2014 Newbuilding Indebtedness unless, in each case, funded solely from the Equity Proceeds Amount, the March 2014 Equity Issuance, the BlueMountain Parent Indebtedness and the Permitted 2014 Newbuilding Indebtedness;
(ii)
amend or modify any provision of the 2014 Newbuilding Contracts (x) to increase the amount of any payments due thereunder by more than $10,000,000 in the aggregate per each 2014 Newbuilding Vessel or (y) change the type of any 2014 Newbuilding Vessel so that it does not constitute or cannot be characterized as a VLCC;
93
(iii)
amend, modify, prepay or redeem the BlueMountain Parent Indebtedness in a manner such that such BlueMountain Parent Indebtedness will not comply with the terms of the definition thereof, or pay any interest in respect thereof in cash other than, in each case, from the Equity Proceeds Amount and the amount of any cash dividends or distributions received by the Parent from 2014 Newbuilding Holdco;
(iv)
amend, modify, prepay or redeem the Permitted 2014 Newbuilding Indebtedness in a manner such that such Permitted 2014 Newbuilding Indebtedness will not comply with the terms of the definition thereof;
(v)
make any Investment in 2014 Newbuilding Holdco or any of its Subsidiaries other than:
(1) any such Investment funded from (A) the Equity Proceeds Amount including any such Investment required under Section 9.19(vi), (B) the net cash proceeds of the BlueMountain Parent Indebtedness and/or (C) net cash proceeds of the Permitted 2014 Newbuilding Indebtedness, and/or
(2) additional Investments in an amount not to exceed at any time outstanding the aggregate of (A) $5,000,000 plus (B) the amount of any cash dividends and cash distributions previously received by the Parent from 2014 Newbuilding Holdco or any of its Subsidiaries and not subsequently invested by the Parent in 2014 Newbuilding Holdco or any of its Subsidiaries or used to fund cash interest payments in respect of the BlueMountain Parent Indebtedness pursuant to clause (iii) above); provided that, in the case of this clause (2), at the time of such Investment and, after giving effect thereto
(x) no Default or Event of Default exists and is continuing and,
(y) the aggregate amount of cash and Cash Equivalents held by 2014 Newbuilding Holdco and its Subsidiaries shall not exceed $5,000,000 plus the amount of Investments which the Parent is permitted to make under clause (2)(B) above (it being understood that 2014 Newbuilding Holdco and its Subsidiaries are permitted to hold and shall not be required to dividend or distribute cash and Cash Equivalents in excess of $5,000,000);
(vi)
take delivery of any 2014 Newbuilding Vessel pursuant to a 2014 Newbuilding Contract unless prior thereto, the Parent shall have received net cash proceeds of at least $5,000,000 for such 2014 Newbuilding Vessel from the issuance of its Equity Interests after March 21, 2014, which net cash proceeds may be invested by the Parent and its Subsidiaries in 2014 Newbuilding Holdco or any of its Subsidiaries for use as working capital; and
(vii)
in the event that the documentation governing the BlueMountain Parent Indebtedness or the Permitted Newbuilding Indebtedness contains any financial maintenance
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covenant (other than a collateral maintenance test) applicable to the Parent that is more favorable to the lenders or providers thereunder than to the Lenders, this Agreement shall automatically be amended to include such more favorable financial maintenance covenant (including any definitions used therein) without any further action or consent of the Borrower and the Administrative Agent shall be permitted to amend this Agreement to reflect such financial maintenance covenant (it being understood and agreed that the Borrower shall be deemed to have consented to such amendment and authorized the Administrative Agent to effect such amendment on its behalf).
9.20
Chartering Arrangements
.
Notwithstanding anything to the contrary set forth in this Agreement and any other Credit Documents, with respect to any charter of a Collateral Vessel through the Unique Tankers Pool, such charter may only be entered into between the Subsidiary Guarantor which owns such Collateral Vessels and Unique Tankers and in no event shall the Parent or any Subsidiary thereof (other than the Subsidiary Guarantor owning such Collateral Vessel) have any obligations thereunder.
9.21
Special Provisions Relating to Merger Sub and its Subsidiaries
.
Notwithstanding anything to the contrary set forth in this Agreement and any other Credit Documents, the Parent will not, and will not permit any Subsidiary (other than Merger Sub and its Subsidiaries) to:
(i)
make any cash payments related to the Merger (including, without limitation, cash payments to shareholders, payments under consulting agreements with Gary Brocklesby and Nicolas Busch, and advisory fees) unless funded solely from cash and Cash Equivalents of Navig8 and its Subsidiaries;
provided
that an amount of up to $5,000,000 for cash payments to shareholders may be funded from cash and Cash Equivalents of 2014 Newbuilding Holdco and its Subsidiaries;
provided
that any amount so funded is reimbursed from the cash and Cash Equivalents of Navig8 and its Subsidiaries within 30 days of consummation of the Merger;
(ii)
make any Investment in or other payment to Merger Sub or any of its Subsidiaries unless funded solely from the Equity Proceeds Amount (but only to the extent resulting from the Net Cash Proceeds of Equity Interests received after the Sixth Amendment Effective Date);
(iii)
incur, assume, secure, guarantee or be or become liable for any Indebtedness or any obligations under any newbuild or vessel acquisition contract of Navig8 or any of its Subsidiaries;
(iv)
amend, modify or waive any provision of the Merger Agreement or the Navig8 Equity Purchase Agreement in a manner adverse to the interests of the Lenders; or
(v)
exercise its election to make any cash payments pursuant to Article IX (
Indemnification
) of the Merger Agreement except to the extent commercially reasonable in connection with complying with U.S. securities laws.
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SECTION 10.
Events of Default
. Upon the occurrence of any of the following specified events (each an “
Event of Default
”):
10.01
Payments
. The Borrower shall (i) default in the payment when due of any principal of any Loan or any Note or (ii) default, and such default shall continue unremedied for three or more Business Days, in the payment when due of any Unpaid Drawings or interest on any Loan or Note or any other amounts owing hereunder or thereunder; or
10.02
Representations, etc.
Any representation, warranty or statement made by any Credit Party herein or in any other Credit Document or in any certificate delivered pursuant hereto or thereto shall prove to be untrue in any material respect on the date as of which made or deemed made; or
10.03
Covenants
. Any Credit Party shall (i) default in the due performance or observance by it of any term, covenant or agreement contained in Section 8.01(f)(i), 8.08, 8.11(a), 8.13, 8.16 or Section 9 or (ii) default in the due performance or observance by it of any other term, covenant or agreement contained in this Agreement and, in the case of this clause (ii), such default shall continue unremedied for a period of 30 days after written notice to the Borrower by the Administrative Agent or any of the Lenders; or
10.04
Default Under Other Agreements
. (i) The Parent or any of its Subsidiaries shall default in any payment of any Indebtedness (other than the Obligations) beyond the period of grace, if any, provided in the instrument or agreement under which such Indebtedness was created or (ii) the Parent or any of its Subsidiaries shall default in the observance or performance of any agreement or condition relating to any Indebtedness (other than the Obligations) or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or holders of such Indebtedness (or a trustee or agent on behalf of such holder or holders) to cause (determined without regard to whether any notice is required), any such Indebtedness to become due prior to its stated maturity or (iii) any Indebtedness (other than the Obligations) of the Parent or any of its Subsidiaries shall be declared to be due and payable, or required to be prepaid, redeemed, defeased or repurchased other than by a regularly scheduled required prepayment, prior to the stated maturity thereof,
provided
that it shall not be a Default or Event of Default under this Section 10.04 unless the aggregate principal amount of all Indebtedness as described in preceding clauses (i) through (iii), inclusive, exceeds $10,000,000; or
10.05
Bankruptcy, etc.
The Parent, any of its Subsidiaries or any of its Non-Recourse Subsidiaries shall commence a voluntary case concerning itself under Title 11 of the United States Code entitled “Bankruptcy,” as now or hereafter in effect, or any successor thereto (the “
Bankruptcy Code
”); or an involuntary case is commenced against the Parent, any of its Subsidiaries or any of its Non-Recourse Subsidiaries and the petition is not controverted within 20 days after service of summons, or is not dismissed within 60 days, after commencement of the case; or a custodian (as defined in the Bankruptcy Code) is appointed for, or takes charge of, all or substantially all of the property of the Parent, any of its Subsidiaries or any of its Non-Recourse Subsidiaries or the Parent, any of its Subsidiaries or any of its Non-Recourse Subsidiaries commences any other proceeding under any reorganization, arrangement,
96
adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction whether now or hereafter in effect relating to the Parent, any of its Subsidiaries or any of its Non-Recourse Subsidiaries or there is commenced against the Parent, any of its Subsidiaries or any of its Non-Recourse Subsidiaries any such proceeding which remains undismissed for a period of 60 days, or the Parent, any of its Subsidiaries or any of its Non-Recourse Subsidiaries is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; or the Parent, any of its Subsidiaries or any of its Non-Recourse Subsidiaries suffers any appointment of any custodian or the like for it or any substantial part of its property to continue undischarged or unstayed for a period of 60 days; or the Parent, any of its Subsidiaries or any of its Non-Recourse Subsidiaries makes a general assignment for the benefit of creditors; or any corporate action is taken by the Parent, any of its Subsidiaries or any of its Non-Recourse Subsidiaries for the purpose of effecting any of the foregoing,
provided
that, in the case of any Non-Recourse Subsidiary, it shall not be a Default or Event of Default under this Section 10.05 unless the aggregate principal amount of all Indebtedness incurred by such Non-Recourse Subsidiary pursuant to Section 9.17 exceeds $15,000,000; or
10.06
ERISA
. (a) Any Plan shall fail to satisfy the minimum funding standard required for any plan year or part thereof under Section 412 of the Code or Section 302 of ERISA or a waiver of such standard or extension of any amortization period is sought or granted under Section 412 or 430 of the Code or Section 302 or 303 of ERISA, a Reportable Event shall have occurred, a contributing sponsor (as defined in Section 4001(a)(13) of ERISA) of a Plan subject to Title IV of ERISA shall be subject to the advance reporting requirement of PBGC Regulation Section 4043.61 (without regard to subparagraph (b)(1) thereof) and an event described in subsection .62, .63, .64, .65, .66, .67 or .68 of PBGC Regulation Section 4043 shall be reasonably expected to occur with respect to such Plan within the following 30 days, any Plan which is subject to Title IV of ERISA shall have had or is reasonably likely to have a trustee appointed to administer such Plan, any Plan which is subject to Title IV of ERISA is, shall have been or is reasonably likely to be terminated or to be the subject of termination proceedings under ERISA, any Plan shall have an Unfunded Current Liability, its actuary has certified that a determination has been made that a Plan (other than a Multiemployer Plan) is an at-risk plan within the meaning of Section 430 of the Code or Section 303 of ERISA, a Plan which is a Multiemployer Plan is in endangered or critical status under Section 305 of ERISA, a contribution required to be made with respect to a Plan or a Foreign Pension Plan is not timely made, the Parent or any of its Subsidiaries or any ERISA Affiliate has incurred or events have happened, or reasonably expected to happen, that will cause it to incur any liability to or on account of a Plan under Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section 436(f), 4971 or 4975 of the Code or on account of a group health plan (as defined in Section 607(1) of ERISA or Section 4980B(g)(2) of the Code) under Section 4980B of the Code, or the Parent, or any of its Subsidiaries, has incurred or is reasonably likely to incur liabilities pursuant to one or more employee welfare benefit plans (as defined in Section 3(1) of ERISA) that provide benefits to retired employees or other former employees (other than as required by Section 601 of ERISA) or Plans or Foreign Pension Plans; (b) there shall result from any such event or events the imposition of a lien, the granting of a security interest, or a liability or a material risk of incurring a liability; and (c) such lien, security interest or liability, individually, and/or in the aggregate, in the reasonable opinion of the Required Lenders, has had, or could reasonably be expected to have, a Material Adverse Effect; or
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10.07
Security Documents
. At any time after the execution and delivery thereof, any of the Security Documents shall cease to be in full force and effect, or shall cease in any material respect to give the Collateral Agent for the benefit of the Secured Creditors the Liens, rights, powers and privileges purported to be created thereby (including, without limitation, a perfected security interest in, and Lien on, all of the Collateral), in favor of the Collateral Agent, superior to and prior to the rights of all third Persons (except in connection with Permitted Liens), and subject to no other Liens (except Permitted Liens), or any Credit Party shall default in the due performance or observance of any term, covenant or agreement on its part to be performed or observed pursuant to any of the Security Documents and such default shall continue beyond any grace period (if any) specifically applicable thereto pursuant to the terms of such Security Document, or any “event of default” (as defined in any Collateral Vessel Mortgage or Secondary Collateral Vessel Mortgage) shall occur in respect of any Collateral Vessel Mortgage or Secondary Collateral Vessel Mortgage; or
10.08
Guaranties
. After the execution and delivery thereof, any Guaranty, or any provision thereof, shall cease to be in full force or effect as to any Guarantor (unless such Guarantor is no longer a Subsidiary of the Parent by virtue of a liquidation, sale, merger or consolidation permitted by Section 9.02) or any Guarantor (or Person acting by or on behalf of such Guarantor) shall deny or disaffirm such Guarantor’s obligations under the Guaranty to which it is a party or any Guarantor shall default in the due performance or observance of any term, covenant or agreement on its part to be performed or observed pursuant to the Guaranty to which it is a party beyond any grace period (if any) provided therefor; or
10.09
Judgments
. One or more judgments or decrees shall be entered against the Parent or any of its Subsidiaries involving in the aggregate for the Parent and its Subsidiaries a liability (not paid or fully covered by a reputable and solvent insurance company) and such judgments and decrees either shall be final and non-appealable or shall not be vacated, discharged or stayed or bonded pending appeal for any period of 60 consecutive days, and the aggregate amount of all such judgments, to the extent not covered by insurance, exceeds $10,000,000; or
10.10
Change of Control
. At any time after the Restatement Effective Date, a Change of Control shall occur; or
10.11
Default Under Non-Recourse Subsidiary Agreements
. (i) Any Non-Recourse Subsidiary shall default in any payment at maturity of any Indebtedness beyond the period of grace, if any, provided in the instrument or agreement under which such Indebtedness was created or (ii) any Non-Recourse Subsidiary shall default in the observance or performance of any agreement or condition relating to any Indebtedness or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause any such Indebtedness to become due prior to its stated maturity or (iii) any Indebtedness of any Non-Recourse Subsidiary shall be declared to be due and payable, or required to be prepaid, redeemed, defeased or repurchased other than by a regularly scheduled required prepayment, prior to the stated maturity thereof,
provided
that it shall not be a Default or Event of Default under this Section 10.11 unless the aggregate principal amount of all Indebtedness as described in preceding clauses (i) through (iii), inclusive, exceeds $15,000,000;
98
then, and in any such event, and at any time thereafter, if any Event of Default shall then be continuing, the Administrative Agent, upon the written request of the Required Lenders, shall by written notice to the Borrower, take any or all of the following actions, without prejudice to the rights of the Administrative Agent, any Lender or the holder of any Note to enforce its claims against any Credit Party (
provided
that, if an Event of Default specified in Section 10.05 shall occur, the result which would occur upon the giving of written notice by the Administrative Agent to the Borrower as specified in clauses (i) and (ii) below shall occur automatically without the giving of any such notice): (i) declare the principal of and any accrued interest in respect of all Loans and the Notes and all Credit Document Obligations owing hereunder and thereunder to be, whereupon the same shall become, forthwith due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by each Credit Party; (ii) terminate any Existing Letter of Credit that may be terminated in accordance with its terms; (iii) direct the Borrower to pay (and the Borrower agrees that upon receipt of such notice, or upon the occurrence and during the continuance of an Event of Default specified in Section 10.05, it will pay) to the Collateral Agent at the Payment Office such additional amount of cash, to be held as security by the Collateral Agent, as is equal to the aggregate Stated Amount of all Existing Letters of Credit issued for the Borrower and then outstanding and (iv) enforce, as Collateral Agent, all of the Liens and security interests created pursuant to the Security Documents.
SECTION 11.
Agency and Security Trustee Provisions Appointment
. (a) The Lenders hereby designate Nordea as Administrative Agent (for purposes of this Section 11, the term “
Administrative Agent
” shall include Nordea (and/or any of its affiliates) in its capacity as Collateral Agent pursuant to the Security Documents and in its capacity as security trustee pursuant to the Collateral Vessel Mortgages or Secondary Collateral Vessel Mortgages) to act as specified herein and in the other Credit Documents. Each Lender hereby irrevocably authorizes, and each holder of any Note by the acceptance of such Note shall be deemed irrevocably to authorize, the Agents to take such action on its behalf under the provisions of this Agreement, the other Credit Documents and any other instruments and agreements referred to herein or therein and to exercise such powers and to perform such duties hereunder and thereunder as are specifically delegated to or required of the Agents by the terms hereof and thereof and such other powers as are reasonably incidental thereto. Furthermore, each Lender hereby irrevocably authorizes the Administrative Agent and the Collateral Agent to enter into the Intercreditor Agreements on their behalf, and agrees to be bound by the provisions set forth therein. The Agents may perform any of its duties hereunder by or through its respective officers, directors, agents, employees or affiliates and, may assign from time to time any or all of its rights, duties and obligations hereunder and under the Security Documents to any of its banking affiliates.
(b)
The Lenders hereby irrevocably appoint Nordea as security trustee solely or the purpose of holding legal title to the Collateral Vessel Mortgages and the Secondary Collateral Vessel Mortgages on each of the flag Vessels of an Acceptable Flag Jurisdiction on behalf of the applicable Lenders, from time to time, with regard to the (i) security, powers, rights, titles, benefits and interests (both present and future) constituted by and conferred on the Lenders or any of them or for the benefit thereof under or pursuant to the Collateral Vessel Mortgages and the Secondary Collateral Vessel Mortgages (including, without limitation, the benefit of all covenants, undertakings, representations, warranties and obligations given, made or undertaken by any Lender in the Collateral Vessel Mortgages and the Secondary Collateral
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Vessel Mortgages), (ii) all money, property and other assets paid or transferred to or vested in any Lender or any agent of any Lender or received or recovered by any Lender or any agent of any Lender pursuant to, or in connection with the Collateral Vessel Mortgages and the Secondary Collateral Vessel Mortgages, whether from the Borrower or any Subsidiary Guarantor or any other person and (iii) all money, investments, property and other assets at any time representing or deriving from any of the foregoing, including all interest, income and other sums at any time received or receivable by any Lender or any agent of any Lender in respect of the same (or any part thereof). Nordea hereby accepts such appointment as security trustee.
11.01
Nature of Duties
. The Agents shall have no duties or responsibilities except those expressly set forth in this Agreement and the Security Documents. None of the Agents nor any of their respective officers, directors, agents, employees or affiliates shall be liable for any action taken or omitted by it or them hereunder or under any other Credit Document or in connection herewith or therewith, unless caused by such Person’s gross negligence or willful misconduct (any such liability limited to the applicable Agent to whom such Person relates). The duties of each of the Agents shall be mechanical and administrative in nature; none of the Agents shall have by reason of this Agreement or any other Credit Document any fiduciary relationship in respect of any Lender or the holder of any Note; and nothing in this Agreement or any other Credit Document, expressed or implied, is intended to or shall be so construed as to impose upon any Agents any obligations in respect of this Agreement or any other Credit Document except as expressly set forth herein or therein.
11.02
Lack of Reliance on the Agents
. Independently and without reliance upon the Agents, each Lender and the holder of each Note, to the extent it deems appropriate, has made and shall continue to make (i) its own independent investigation of the financial condition and affairs of the Parent and its Subsidiaries in connection with the making and the continuance of the Loans and the taking or not taking of any action in connection herewith and (ii) its own appraisal of the creditworthiness of the Parent and its Subsidiaries and, except as expressly provided in this Agreement, none of the Agents shall have any duty or responsibility, either initially or on a continuing basis, to provide any Lender or the holder of any Note with any credit or other information with respect thereto, whether coming into its possession before the making of the Loans or at any time or times thereafter. None of the Agents shall be responsible to any Lender or the holder of any Note for any recitals, statements, information, representations or warranties herein or in any document, certificate or other writing delivered in connection herewith or for the execution, effectiveness, genuineness, validity, enforceability, perfection, collectibility, priority or sufficiency of this Agreement or any other Credit Document or the financial condition of the Parent and its Subsidiaries or be required to make any inquiry concerning either the performance or observance of any of the terms, provisions or conditions of this Agreement or any other Credit Document, or the financial condition of the Parent and its Subsidiaries or the existence or possible existence of any Default or Event of Default.
11.03
Certain Rights of the Agents
. If any of the Agents shall request instructions from the Required Lenders with respect to any act or action (including failure to act) in connection with this Agreement or any other Credit Document, the Agents shall be entitled to refrain from such act or taking such action unless and until the Agents shall have received instructions from the Required Lenders; and the Agents shall not incur liability to any Person by reason of so refraining. Without limiting the foregoing, no Lender or the holder of any Note
100
shall have any right of action whatsoever against the Agents as a result of any of the Agents acting or refraining from acting hereunder or under any other Credit Document in accordance with the instructions of the Required Lenders.
11.04
Reliance
. Each of the Agents shall be entitled to rely, and shall be fully protected in relying, upon any note, writing, resolution, notice, statement, certificate, telex, teletype or telecopier message, cablegram, radiogram, order or other document or telephone message signed, sent or made by any Person that the applicable Agent believed to be the proper Person, and, with respect to all legal matters pertaining to this Agreement and any other Credit Document and its duties hereunder and thereunder, upon advice of counsel selected by the Administrative Agent.
11.05
Indemnification
. To the extent any of the Agents is not reimbursed and indemnified by the Borrower, the Lenders will reimburse and indemnify the applicable Agents, in proportion to their respective “percentages” as used in determining the Required Lenders (without regard to the existence of any Defaulting Lenders), for and against any and all liabilities, obligations, losses, damages, penalties, claims, actions, judgments, costs, expenses or disbursements of whatsoever kind or nature which may be imposed on, asserted against or incurred by such Agents in performing their respective duties hereunder or under any other Credit Document, in any way relating to or arising out of this Agreement or any other Credit Document;
provided
that no Lender shall be liable in respect to an Agent for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from such Agent’s gross negligence or willful misconduct.
11.06
The Administrative Agent in its Individual Capacity
. With respect to its obligation to make Loans under this Agreement, each of the Agents shall have the rights and powers specified herein for a “Lender” and may exercise the same rights and powers as though it were not performing the duties specified herein; and the term “Lenders,” “Secured Creditors”, “Required Lenders”, “holders of Notes” or any similar terms shall, unless the context clearly otherwise indicates, include each of the Agents in their respective individual capacity. Each of the Agents may accept deposits from, lend money to, and generally engage in any kind of banking, trust or other business with any Credit Party or any Affiliate of any Credit Party as if it were not performing the duties specified herein, and may accept fees and other consideration from the Borrower or any other Credit Party for services in connection with this Agreement and otherwise without having to account for the same to the Lenders.
11.07
Holders
. The Administrative Agent may deem and treat the payee of any Note as the owner thereof for all purposes hereof unless and until a written notice of the assignment, transfer or endorsement thereof, as the case may be, shall have been filed with the Administrative Agent. Any request, authority or consent of any Person who, at the time of making such request or giving such authority or consent, is the holder of any Note shall be conclusive and binding on any subsequent holder, transferee, assignee or endorsee, as the case may be, of such Note or of any Note or Notes issued in exchange therefor.
11.08
Resignation by the Administrative Agent
. (a) The Administrative Agent may resign from the performance of all its functions and duties hereunder and/or under the other Credit Documents at any time by giving 15 Business Days’ prior written notice to the Borrower
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and the Lenders. Such resignation shall take effect upon the appointment of a successor Administrative Agent pursuant to clauses (b) and (c) below or as otherwise provided below.
(b)
Upon any such notice of resignation by the Administrative Agent, the Required Lenders shall appoint a successor Administrative Agent hereunder or thereunder who shall be a commercial bank or trust company that is, unless an Event of Default has occurred and is continuing at such time, reasonably acceptable to the Borrower.
(c)
If a successor Administrative Agent shall not have been so appointed within such 15 Business Day period, the Administrative Agent, with the consent of the Borrower (which shall not be unreasonably withheld or delayed and shall not be required if an Event of Default has occurred and is continuing at such time), shall then appoint a commercial bank or trust company with capital and surplus of not less than $500,000,000 as successor Administrative Agent (which successor Administrative Agent shall be a Lender hereunder if any such Lender agrees to serve as Administrative Agent at such time) who shall serve as Administrative Agent hereunder until such time, if any, as the Lenders appoint a successor Administrative Agent as provided above.
(d)
If no successor Administrative Agent has been appointed pursuant to clause (b) or (c) above by the 25th Business Day after the date such notice of resignation was given by the Administrative Agent, the Administrative Agent’s resignation shall become effective and the Required Lenders shall thereafter perform all the duties of the Administrative Agent hereunder and/or under any other Credit Document until such time, if any, as the Required Lenders appoint a successor Administrative Agent as provided above.
11.09
Collateral Matters
. (a) Each Lender authorizes and directs the Collateral Agent to enter into the Security Documents for the benefit of the Lenders and the other Secured Creditors. Each Lender hereby agrees, and each holder of any Note by the acceptance thereof will be deemed to agree, that, except as otherwise set forth herein, any action taken by the Required Lenders in accordance with the provisions of this Agreement or the Security Documents, and the exercise by the Required Lenders of the powers set forth herein or therein, together with such other powers as are reasonably incidental thereto, shall be authorized and binding upon all of the Lenders. The Collateral Agent is hereby authorized on behalf of all of the Lenders, without the necessity of any notice to or further consent from any Lender, from time to time prior to an Event of Default, to take any action with respect to any Collateral or Security Documents which may be necessary to perfect and maintain perfected the security interest in and liens upon the Collateral granted pursuant to the Security Documents.
(b)
The Lenders hereby authorize the Collateral Agent, at its option and in its discretion, to release any Lien granted to or held by the Collateral Agent upon any Collateral (i) upon termination of the Existing Letter of Credit Exposure and payment and satisfaction of all of the Obligations (other than inchoate indemnification obligations) at any time arising under or in respect of this Agreement or the Credit Documents or the transactions contemplated hereby or thereby, (ii) constituting property being sold or otherwise disposed of (to Persons other than the Borrower and its Subsidiaries) upon the sale or other disposition thereof in compliance with Section 9.02, (iii) if approved, authorized or ratified in writing by the Required Lenders (or all of the Lenders hereunder, to the extent required by Section 12.12), (iv) as otherwise may be
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expressly provided in the relevant Security Documents or (v) as otherwise provided in Section 12.21 hereof. Upon request by the Administrative Agent at any time, the Lenders will confirm in writing the Collateral Agent’s authority to release particular types or items of Collateral pursuant to this Section 11.10.
(c)
The Collateral Agent shall have no obligation whatsoever to the Lenders or to any other Person to assure that the Collateral exists or is owned by any Credit Party or is cared for, protected or insured or that the Liens granted to the Collateral Agent herein or pursuant hereto have been properly or sufficiently or lawfully created, perfected, protected or enforced or are entitled to any particular priority, or to exercise or to continue exercising at all or in any manner or under any duty of care, disclosure or fidelity any of the rights, authorities and powers granted or available to the Collateral Agent in this Section 11.10 or in any of the Security Documents, it being understood and agreed that in respect of the Collateral, or any act, omission or event related thereto, the Collateral Agent may act in any manner it may deem appropriate, in its sole discretion, given the Collateral Agent’s own interest in the Collateral as one of the Lenders and that the Collateral Agent shall have no duty or liability whatsoever to the Lenders, except for its gross negligence or willful misconduct (as determined by a court of competent jurisdiction in a final and non-appealable decision).
11.10
Delivery of Information
. The Administrative Agent shall not be required to deliver to any Lender originals or copies of any documents, instruments, notices, communications or other information received by the Administrative Agent from any Credit Party, any Subsidiary, the Required Lenders, any Lender or any other Person under or in connection with this Agreement or any other Credit Document except (i) as specifically provided in this Agreement or any other Credit Document and (ii) as specifically requested from time to time in writing by any Lender with respect to a specific document, instrument, notice or other written communication received by and in the possession of the Administrative Agent at the time of receipt of such request and then only in accordance with such specific request.
SECTION 12.
Miscellaneous Payment of Expenses, etc.
The Borrower agrees that it shall: (i) whether or not the transactions herein contemplated are consummated, pay all reasonable out-of-pocket costs and expenses of each of the Agents (including, without limitation, the reasonable fees and disbursements of White & Case LLP, Watson, Farley & Williams, other counsel to the Administrative Agent and the Joint Book Runners and local counsel) in connection with the preparation, execution and delivery of this Agreement and the other Credit Documents and the documents and instruments referred to herein and therein and any amendment, waiver or consent relating hereto or thereto, of the Agents in connection with their respective syndication efforts with respect to this Agreement and of the Agents and each of the Lenders in connection with the enforcement of this Agreement and the other Credit Documents and the documents and instruments referred to herein and therein (including, without limitation, the reasonable fees and disbursements of counsel (including in-house counsel) for each of the Agents and for each of the Lenders); (ii) pay and hold each of the Lenders harmless from and against any and all present and future stamp, documentary, transfer, sales and use, value added, excise and other similar taxes with respect to the foregoing matters and save each of the Lenders harmless from and against any and all liabilities with respect to or resulting from any delay or omission (other than to the extent attributable to such Lender) to pay such taxes; and (iii) indemnify the Agents, the Collateral Agent and each Lender, and each of their respective
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officers, directors, trustees, employees, representatives and agents from and hold each of them harmless against any and all liabilities, obligations (including removal or remedial actions), losses, damages, penalties, claims, actions, judgments, suits, costs, expenses and disbursements (including reasonable attorneys’ and consultants’ fees and disbursements) incurred by, imposed on or assessed against any of them as a result of, or arising out of, or in any way related to, or by reason of, (a) any investigation, litigation or other proceeding (whether or not any of the Agents, the Collateral Agent or any Lender is a party thereto) related to the entering into and/or performance of this Agreement or any other Credit Document or the proceeds of any Loans hereunder or the consummation of any transactions contemplated herein, or in any other Credit Document or the exercise of any of their rights or remedies provided herein or in the other Credit Documents, or (b) the actual or alleged presence of Hazardous Materials on any Collateral Vessel or in the air, surface water or groundwater or on the surface or subsurface of any property at any time owned or operated by the Borrower or any of its Subsidiaries, the generation, storage, transportation, handling, disposal or Environmental Release of Hazardous Materials at any location, whether or not owned or operated by the Borrower or any of its Subsidiaries, the non-compliance of any Collateral Vessel or property with foreign, federal, state and local laws, regulations, and ordinances (including applicable permits thereunder) applicable to any Collateral Vessel or property, or any Environmental Claim asserted against the Borrower, any of its Subsidiaries or any Collateral Vessel or property at any time owned or operated by the Borrower or any of its Subsidiaries, including, in each case, without limitation, the reasonable fees and disbursements of counsel and other consultants incurred in connection with any such investigation, litigation or other proceeding (but excluding any losses, liabilities, claims, damages, penalties, actions, judgments, suits, costs, disbursements or expenses to the extent incurred by reason of the gross negligence or willful misconduct of the Person to be indemnified). To the extent that the undertaking to indemnify, pay or hold harmless each of the Agents or any Lender set forth in the preceding sentence may be unenforceable because it violates any law or public policy, the Borrower shall make the maximum contribution to the payment and satisfaction of each of the indemnified liabilities which is permissible under applicable law.
12.01
Right of Setoff
. In addition to any rights now or hereafter granted under applicable law or otherwise, and not by way of limitation of any such rights, upon the occurrence and during the continuance of an Event of Default, each Lender is hereby authorized at any time or from time to time, without presentment, demand, protest or other notice of any kind to any Credit Party or to any other Person, any such notice being hereby expressly waived, to set off and to appropriate and apply any and all deposits (general or special) and any other Indebtedness at any time held or owing by such Lender (including, without limitation, by branches and agencies of such Lender wherever located) to or for the credit or the account of any Credit Party but in any event excluding assets held in trust for any such Person against and on account of the Obligations and liabilities of such Credit Party, to such Lender under this Agreement or under any of the other Credit Documents, including, without limitation, all interests in Obligations purchased by such Lender pursuant to Section 12.06(b), and all other claims of any nature or description arising out of or connected with this Agreement or any other Credit Document, irrespective of whether or not such Lender shall have made any demand hereunder and although said Obligations, liabilities or claims, or any of them, shall be contingent or unmatured.
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12.02
Notices
. Except as otherwise expressly provided herein, all notices and other communications provided for hereunder shall be in writing (including telexed, telecopier or e-mail communication) and mailed, telexed, telecopied or delivered: if to any Credit Party, at the address specified under its signature below; if to any Lender, at its address specified opposite its name on
Schedule II
; and if to the Administrative Agent, at its Notice Office; or, as to any other Credit Party, at such other address as shall be designated by such party in a written notice to the other parties hereto and, as to each Lender, at such other address as shall be designated by such Lender in a written notice to the Borrower and the Administrative Agent. All such notices and communications shall, (i) when mailed, be effective three Business Days after being deposited in the mails, prepaid and properly addressed for delivery, (ii) when sent by overnight courier, be effective one Business Day after delivery to the overnight courier prepaid and properly addressed for delivery on such next Business Day, or (iii) when sent by telex, telecopier or e-mail, be effective when sent by telex, telecopier or e-mail except that notices and communications to the Administrative Agent shall not be effective until received by the Administrative Agent.
12.03
Benefit of Agreement
. (a) This Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective successors and assigns of the parties hereto;
provided
,
however
, that (i) no Credit Party may assign or transfer any of its rights, obligations or interest hereunder or under any other Credit Document without the prior written consent of the Lenders, (ii) although any Lender may transfer, assign or grant participations in its rights hereunder, such Lender shall remain a “Lender” for all purposes hereunder (and may not transfer or assign all or any portion of its Loans or Individual Exposure hereunder except as provided in Section 12.04(b)) and the transferee, assignee or participant, as the case may be, shall not constitute a “Lender” hereunder and (iii) no Lender shall transfer or grant any participation under which the participant shall have rights to approve any amendment to or waiver of this Agreement or any other Credit Document except to the extent such amendment or waiver would (x) extend the final scheduled maturity of any Loan or Note in which such participant is participating, or reduce the rate or extend the time of payment of interest thereon (except (m) in connection with a waiver of applicability of any post-default increase in interest rates and (n) that any amendment or modification to the financial definitions in this Agreement shall not constitute a reduction in the rate of interest for purposes of this clause (x)) or reduce the principal amount thereof, or increase the amount of the participant’s participation over the amount thereof then in effect (it being understood that a waiver of any Default or Event of Default shall not constitute a change in the terms of such participation, and that an increase in any Loan shall be permitted without the consent of any participant if the participant’s participation is not increased as a result thereof), (y) consent to the assignment or transfer by the Borrower of any of its rights and obligations under this Agreement or (z) release all or substantially all of the Collateral under all of the Security Documents (except as expressly provided in the Credit Documents) securing the Loans hereunder in which such participant is participating. In the case of any such participation, the participant shall not have any rights under this Agreement or any of the other Credit Documents (the participant’s rights against such Lender in respect of such participation to be those set forth in the agreement executed by such Lender in favor of the participant relating thereto) and all amounts payable by the Borrower hereunder shall be determined as if such Lender had not sold such participation.
(b)
Notwithstanding the foregoing, any Lender (or any Lender together with one or more other Lenders) may (x) assign all or a portion of its Individual Exposure to its (i) (A)
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parent company and/or any affiliate of such Lender which is at least 50% owned by such Lender or its parent company or (B) to one or more other Lenders or any Affiliate of any such other Lender which is at least 50% owned by such other Lender or its parent company (
provided
that any fund that invests in bank loans and is managed or advised by the same investment advisor of another fund which is a Lender (or by an Affiliate of such investment advisor) shall be treated as an Affiliate of such other Lender for the purposes of this sub-clause (x)(i)(B)),
provided
that no such assignment may be made to any such Person that is, or would at such time constitute, a Defaulting Lender, or (ii) in the case of any Lender that is a fund that invests in bank loans, any other fund that invests in bank loans and is managed or advised by the same investment advisor of such Lender or by an Affiliate of such investment advisor or (iii) to one or more Lenders or (y) assign with the consent of the Borrower (which consent shall not be unreasonably withheld or delayed and shall not be required if any Event of Default is then in existence,
provided
that the Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within five Business Days after having received notice thereof) all, or if less than all, a portion equal to at least $20,000,000 in the aggregate for the assigning Lender or assigning Lenders, of such Lender’s Individual Exposure to one or more Eligible Transferees (treating any fund that invests in bank loans and any other fund that invests in bank loans and is managed or advised by the same investment advisor of such fund or by an Affiliate of such investment advisor as a single Eligible Transferee), each of which assignees shall become a party to this Agreement as a Lender by execution of an Assignment and Assumption Agreement,
provided
that (i) at such time
Schedule I
shall be deemed modified to reflect the outstanding Loans of such new Lender and of the existing Lenders, (ii) new Notes will be issued, at the Borrower’s expense, to such new Lender and to the assigning Lender upon the request of such new Lender or assigning Lender, such new Notes to be in conformity with the requirements of Section 2.05 (with appropriate modifications) to the extent needed to reflect the revised outstanding Loans, (iii) the consent of the Administrative Agent shall be required in connection with any assignment pursuant to preceding clause (y) (which consent shall not be unreasonably withheld or delayed), and (iv) the Administrative Agent shall receive at the time of each such assignment, from the assigning or assignee Lender, the payment of a non-refundable assignment fee of $3,500. To the extent of any assignment pursuant to this Section 12.04(b), the assigning Lender shall be relieved of its obligations hereunder with respect to its assigned Loans (it being understood that the indemnification provisions under this Agreement (including, without limitation, Sections 2.09, 2.10, 3.04, 5.04, 12.01 and 12.06) shall survive as to such assigning Lender). To the extent that an assignment of all or any portion of a Lender’s Loans and related outstanding Credit Document Obligations pursuant to Section 2.12 or this Section 12.04(b) would, at the time of such assignment, result in increased costs under Section 2.09, 2.10, 3.04 or 5.04 from those being charged by the respective assigning Lender prior to such assignment, then the Borrower shall not be obligated to pay such increased costs (although the Borrower shall be obligated to pay any other increased costs of the type described above resulting from changes after the date of the respective assignment).
(c)
Nothing in this Agreement shall prevent or prohibit any Lender from pledging its Loans and Notes hereunder to a Federal Reserve Bank or any central bank having jurisdiction over such Lender in support of borrowings made by such Lender from such Federal Reserve Bank or central bank and, with the consent of the Administrative Agent, any Lender which is a fund may pledge all or any portion of its Notes or Loans to a trustee for the benefit of investors and in support of its obligation to such investors;
provided
,
however
, no such pledge
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shall release a Lender from any of its obligations hereunder or substitute any such pledge for such Lender as a party hereto.
(d)
Oaktree Capital Management, L.P. and any Affiliate thereof (each an “
Affiliated Lender
”) may purchase Loans hereunder, whether by assignment or participation, subject to the following requirements:
(i)
no Loans may be assigned, or participations sold, to
an Affiliated Lender if, after giving effect to such assignment, the Affiliated Lenders in the aggregate would own (as a Lender or through a participation) in excess of 30% of all Loans then outstanding under this Agreement;
(ii)
notwithstanding anything to the contrary in the definition of “Required Lenders”, or in Section 12.12, for purposes of determining whether the Required Lenders or all of the Lenders hereunder have or any affected Lender hereunder has (i) consented (or not consented) to any amendment, modification, waiver, consent or other action with respect to any of the terms of any Credit Document or any departure therefrom by the Credit Parties, (ii) otherwise acted on any matter related to any Credit Document or (iii) directed or required the Administrative Agent, the Collateral Agent or any Lender under the Credit Documents to undertake any action (or refrain from taking any action) with respect to or under any such Credit Document, the Loans held by any Affiliated Lender shall be deemed to be not outstanding for all purposes of calculating whether the Required Lenders, all of the Lenders have or any affected Lender has taken any action or voted on any matter (other than any vote that has a disproportionate effect on the Loans held by an Affiliated Lender relative to the Loans held by Lenders that are Affiliated Lenders);
(iii)
the Affiliated Lenders shall be prohibited from being appointed as, or succeeding to the rights and duties of, the Administrative Agent or the Collateral Agent under this Agreement and the other Credit Documents until such time (if any) as when all Credit Document Obligations (other than those held by any Affiliated Lender and other than contingent obligations not then due and owing) have been paid in full in cash;
(iv)
by acquiring a Loan, each Affiliated Lender, in its capacity as a Lender, shall be deemed to have (I) waived its right to receive information prepared by the Administrative Agent or any other Lender (or any advisor, agent or counsel thereof) under or in connection with the Credit Documents (to the extent not provided to the Credit Parties), attend any meeting or conference call (or any portion thereof) with the Administrative Agent or any Lender (to the extent that the Credit Parties are excluded from attending), (II) agreed that it is prohibited from making or bringing any claim, in its capacity as a Lender hereunder against the Administrative Agent or any Lender with respect to the duties and obligations of such Persons under the Credit Documents, except any claims that the Administrative Agent or such Lender is treating such Affiliated Lender, in its capacity as a Lender, in a disproportionate manner relative to the other Lenders, and (III) agreed, without limiting its rights as a Lender described in clause (ii) above, that it will have no right whatsoever to require the Administrative Agent or any Lender to undertake any action (or refrain from taking any action) with respect to this
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Agreement or any other Credit Document other than each Lender’s and Administrative Agent’s duties and obligations hereunder;
(v)
the applicable Affiliated Lender identifies itself as an Affiliated Lender prior to the assignment of Loans to it pursuant to the respective Assignment and Assumption Agreement; and
(vi)
in the case of this Agreement, the applicable Affiliated Lender enters into an escrow agreement or other similar arrangement reasonably satisfactory in form and substance to the Administrative Agent with respect to its obligations under this Agreement to participate in Existing Letters of Credit;
Additionally, the Credit Parties and each Affiliated Lender hereby agree that if a case under Title 11 of the United States Code is commenced against any Credit Party, such Credit Party shall seek (and each Affiliated Lender shall consent) to provide that the vote of any Affiliated Lender (in its capacity as a Lender) with respect to any plan of reorganization of such Credit Party shall not be counted except that such Affiliated Lender’s vote (in its capacity as a Lender) may be counted to the extent any such plan of reorganization proposes to treat the Credit Document Obligations held by such Affiliated Lender in a manner that is less favorable in any material respect to such Affiliated Lender than the proposed treatment of similar Credit Document Obligations held by Lenders that are not Affiliates of the Credit Parties.
12.04
No Waiver; Remedies Cumulative
. No failure or delay on the part of the Administrative Agent or any Lender or any holder of any Note in exercising any right, power or privilege hereunder or under any other Credit Document and no course of dealing between the Borrower or any other Credit Party and the Administrative Agent or any Lender or the holder of any Note shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder or under any other Credit Document preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder or thereunder. The rights, powers and remedies herein or in any other Credit Document expressly provided are cumulative and not exclusive of any rights, powers or remedies which the Administrative Agent or any Lender or the holder of any Note would otherwise have. No notice to or demand on any Credit Party in any case shall entitle any Credit Party to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of the Administrative Agent or any Lender or the holder of any Note to any other or further action in any circumstances without notice or demand.
12.05
Payments Pro Rata
. (a) Except as otherwise provided in this Agreement, the Administrative Agent agrees that promptly after its receipt of each payment from or on behalf of the Borrower in respect of any Credit Document Obligations hereunder, it shall distribute such payment to the Lenders (other than any Lender that has consented in writing to waive its
pro
rata
share of any such payment)
pro
rata
based upon their respective shares, if any, of the Credit Document Obligations with respect to which such payment was received.
(b)
Each of the Lenders agrees that, if it should receive any amount hereunder (whether by voluntary payment, by realization upon security, by the exercise of the right of setoff or banker’s lien, by counterclaim or cross action, by the enforcement of any right under the
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Credit Documents, or otherwise), which is applicable to the payment of the principal of, or interest on, the Loans, of a sum which with respect to the related sum or sums received by other Lenders is in a greater proportion than the total of such Credit Document Obligation then owed and due to such Lender bears to the total of such Credit Document Obligation then owed and due to all of the Lenders immediately prior to such receipt, then such Lender receiving such excess payment shall purchase for cash without recourse or warranty from the other Lenders an interest in the Credit Document Obligations of the respective Credit Party to such Lenders in such amount as shall result in a proportional participation by all the Lenders in such amount;
provided
that if all or any portion of such excess amount is thereafter recovered from such Lender, such purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest.
(c)
Notwithstanding anything to the contrary contained herein, the provisions of the preceding Sections 12.06(a) and (b) shall be subject to the express provisions of this Agreement which require, or permit, differing payments to be made to Non-Defaulting Lenders as opposed to Defaulting Lenders.
12.06
Calculations; Computations
.. (a) The financial statements to be furnished to the Lenders pursuant hereto shall be made and prepared in accordance with generally accepted accounting principles in the United States consistently applied throughout the periods involved (except as set forth in the notes thereto or as otherwise disclosed in writing by the Borrower to the Lenders). In addition, all determinations of compliance with this Agreement or any other Credit Document shall utilize accounting principles and policies in conformity with those used to prepare the historical financial statements delivered to the Lenders for the first fiscal year of the Borrower ended December 31, 2010 (with the foregoing generally accepted accounting principles, subject to the preceding proviso, herein called “
GAAP
”). Unless otherwise noted, all references in this Agreement to GAAP shall mean generally accepted accounting principles as in effect in the United States.
(b)
All computations of interest for Loans and fees hereunder shall be made on the basis of a year of 360 days for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest or fees are payable.
12.07
GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL
. (a) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL, EXCEPT AS OTHERWISE PROVIDED IN CERTAIN OF THE COLLATERAL VESSEL MORTGAGES AND THE SECONDARY COLLATERAL VESSEL MORTGAGES, BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT MAY, IN THE CASE OF ANY SECURED CREDITOR, AND SHALL, IN THE CASE OF ANY CREDIT PARTY, BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK LOCATED IN NEW YORK COUNTY IN THE CITY OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARENT, THE BORROWER,
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GMSCII AND ARLINGTON HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH OF THE PARENT, THE BORROWER, GMSCII AND ARLINGTON FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED MAIL, POSTAGE PREPAID, TO THE PARENT, THE BORROWER, GMSCII AND/OR ARLINGTON, AS THE CASE MAY BE, AT ITS ADDRESS SET FORTH OPPOSITE ITS SIGNATURE BELOW, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT UNDER THIS AGREEMENT, ANY LENDER OR THE HOLDER OF ANY NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY CREDIT PARTY IN ANY OTHER JURISDICTION. IF AT ANY TIME DURING WHICH THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT REMAINS IN EFFECT, THE BORROWER DOES NOT MAINTAIN A REGULARLY FUNCTIONING OFFICE IN NEW YORK CITY, IT WILL DULY APPOINT, AND AT ALL TIMES MAINTAIN, AN AGENT IN NEW YORK CITY FOR THE SERVICE OF PROCESS OR SUMMONS, AND WILL PROVIDE TO THE ADMINISTRATIVE AGENT AND THE LENDERS WRITTEN NOTICE OF THE IDENTITY AND ADDRESS OF SUCH AGENT FOR SERVICE OF PROCESS OR SUMMONS;
PROVIDED
THAT ANY FAILURE ON THE PART OF THE BORROWER TO COMPLY WITH THE FOREGOING PROVISIONS OF THIS SENTENCE SHALL NOT IN ANY WAY PREJUDICE OR LIMIT THE SERVICE OF PROCESS OR SUMMONS IN ANY OTHER MANNER DESCRIBED ABOVE IN THIS SECTION 12.08 OR OTHERWISE PERMITTED BY LAW.
(b)
THE BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (a) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(c)
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
12.08
Counterparts
. This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the
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same instrument. A set of counterparts executed by all the parties hereto shall be lodged with the Borrower and the Administrative Agent.
12.09
Restatement Effective Date
. This Agreement shall become effective on the date (the “
Restatement Effective Date
”) on which the following conditions shall have been satisfied on or prior to such date (which date shall be substantially concurrent with the “Effective Date,” as defined in the Plan of Reorganization):
(i)
the Parent, GMSCII, Arlington, the Borrower, the Administrative Agent and the Lenders constituting the Required Lenders shall have signed a counterpart hereof (whether the same or different counterparts) and the Subsidiary Guarantors described in clause (x) of the definition thereof shall have signed an acknowledgment hereof (whether the same or different counterparts) and shall have delivered the same to the Administrative Agent or, in the case of the Lenders, shall have given to the Administrative Agent telephonic (confirmed in writing), written or facsimile notice (actually received) at such office that the same has been signed and mailed to it;
(ii)
the Borrower shall have paid to the Administrative Agent and the Lenders all costs, fees and expenses (including, without limitation, the reasonable and documented legal fees and expenses of White & Case LLP and maritime counsel and other counsel to the Administrative Agent reasonably acceptable to the Borrower) and other compensation contemplated in connection with this Agreement and the Final DIP/Cash Collateral Order payable to the Administrative Agent and the Lenders in respect of the transactions contemplated by this Agreement to the extent then due and invoiced at least two Business Days prior to the Restatement Effective Date;
(iii)
the Borrower shall have paid to the Lenders any interest that has accrued but has not been paid on the Revolving Loans pursuant to the Final DIP/Cash Collateral Order;
(iv)
the Plan of Reorganization shall have been confirmed by the Bankruptcy Court and the conditions to effectiveness of the Plan of Reorganization shall have been satisfied or waived in accordance with the terms thereof;
(v)
the Administrative Agent shall have received a copy of the duly authorized and executed Other Credit Agreement, which Other Credit Agreement shall be in form and substance reasonably satisfactory to the Administrative Agent and shall be in full force and effect in accordance with its terms;
(vi)
(a) the Equity Investment shall have been received by the Parent and certain of its Subsidiaries, (b) the Equity Conversion shall have occurred, (c) the Tranche A Loans under this Agreement shall have been partially repaid in the amount of $35,350,780 with the proceeds of the Equity Investment and (d) all letters of credit issued under the Original Credit Agreement shall continue as Existing Letters of Credit under this Agreement pursuant to Section 3.01(a).
(vii)
all Indebtedness of the Borrower, GMSCII, the Parent and its other Subsidiaries under the DIP Credit Agreement, shall have been repaid in full with proceeds of the Equity Investment, together with all fees and other amounts owing thereon, all commitments
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thereunder shall have been terminated, and all security documentation relating thereto shall have been terminated and released or reassigned, and the Administrative Agent shall have received all such releases and reassignments as may have been requested by the Administrative Agent, which releases and reassignments shall be in form and substance reasonably satisfactory to the Administrative Agent;
(viii)
the Collateral and Guaranty Requirements with respect to each Collateral Vessel shall have been satisfied (including any amendments to the Security Documents set forth in the definition of Collateral and Guaranty Requirements as are necessary or desirable in the sole discretion of the Administrative Agent);
(ix)
the Administrative Agent shall have received a copy of the duly authorized and executed Primary Intercreditor Agreement, which Primary Intercreditor Agreement shall be in form and substance reasonably satisfactory to the Administrative Agent and shall be in full force and effect in accordance with its terms;
(x)
the Administrative Agent shall have received a copy of the duly authorized and executed Secondary Intercreditor Agreement, which Secondary Intercreditor Agreement shall be in form and substance reasonably satisfactory to the Administrative Agent and shall be in full force and effect in accordance with its terms;
(xi)
(i) there shall exist no Default or Event of Default and (ii) all representations and warranties contained herein or in any other Credit Document shall be true and correct in all material respects both before and after giving effect to the Transaction (it being understood and agreed that any representation or warranty which by its terms is made as of a specified date shall be required to be true and correct in all material respects only as of such specified date);
(xii)
all Loans converted or continued pursuant to this Agreement shall be in full compliance with all applicable requirements (including without limitation the collateral valuation requirements) of law, including, without limitation, the Margin Regulations and the collateral valuation requirements thereunder, and each Lender in good faith shall be able to complete the relevant forms establishing compliance with the Margin Regulations;
(xiii)
after giving effect to the Transaction, there shall be no conflict with, or default under, any material agreement or contractual or other restrictions which is binding for the Borrower or any of its Subsidiaries;
(xiv)
the Borrower shall cause to be delivered to the Administrative Agent a solvency certificate from the senior financial officer of the Parent, in the form of Exhibit K, which shall be addressed to the Administrative Agent and each of the Lenders and dated the Restatement Effective Date, setting forth the conclusion that, after giving effect to the incurrence of all the financings contemplated hereby, the Parent and its Subsidiaries, taken as a whole, and the Borrower, Arlington and their respective Subsidiaries, taken as a whole, are not insolvent and will not be rendered insolvent by the incurrence of such indebtedness, and will not be left with unreasonably small capital with which to engage in their respective businesses and will not have incurred debts beyond their ability to pay such debts as they mature;
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(xv)
the Administrative Agent shall have received copies of (i) the financial statements referred to in Sections 7.05(a), which financial statements shall be in form and substance reasonably satisfactory to the Administrative Agent and (ii) Cash Flow Projections for the 13-week period beginning on the Restatement Effective Date in form and substance reasonably satisfactory to the Lenders;
(xvi)
on the Restatement Effective Date, nothing shall have occurred since February 28, 2012 (and neither the Administrative Agent nor the Required Lenders shall have become aware of any facts or conditions not previously known to the Administrative Agent or the Required Lenders) which the Administrative Agent or the Required Lenders shall determine is reasonably likely to have a Material Adverse Effect (other than events publicly disclosed prior to the commencement of the Chapter 11 Proceedings, the commencement and continuation of the Chapter 11 Proceeding and the consequences that would reasonably be expected to result therefrom);
(xvii)
other than the Chapter 11 Proceedings, there shall be no actions, suits or proceedings pending or threatened (i) against the Credit Parties that challenges, enjoins or prevents this Agreement or any other Credit Document or (ii) which the Administrative Agent shall determine has had, or could reasonably be expected to have, a Material Adverse Effect (other than events publicly disclosed prior to the commencement of the Chapter 11 Proceedings, the commencement and continuation of the Chapter 11 Proceeding and the consequences that would reasonably be expected to result therefrom);
(xviii)
the Credit Parties shall have provided, or procured the supply of, the “know your customer” information required pursuant to the PATRIOT Act, in each case as reasonably requested by any Lender or the Administrative Agent at least three Business Days prior to the Restatement Effective Date in connection with its internal compliance regulations thereunder or other information reasonably requested by the Lender or the Administrative Agent to satisfy related checks under all applicable laws and regulations pursuant to the transactions contemplated hereby;
(xix)
all necessary governmental (domestic and foreign) and third party approvals and/or consents in connection with the Loans, the other transactions contemplated hereby and the granting of Liens under the Credit Documents shall have been obtained and remain in effect, and all applicable waiting periods with respect thereto shall have expired without any action being taken by any competent authority which restrains, prevents or imposes materially adverse conditions upon the consummation of this Agreement or the other transactions contemplated by the Credit Documents or otherwise referred to herein or therein; and
(xx)
there shall not exist any judgment, order, injunction or other restraint issued or filed or a hearing seeking injunctive relief or other restraint pending or notified prohibiting or imposing materially adverse conditions upon this Agreement or the other transactions contemplated by the Credit Documents or otherwise referred to herein or therein.
The Administrative Agent will give the Borrower and each Lender prompt written notice of the occurrence of the Restatement Effective Date.
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12.10
Headings Descriptive
. The headings of the several sections and subsections of this Agreement are inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Agreement.
12.11
Amendment or Waiver; etc.
(a) Neither this Agreement nor any other Credit Document nor any terms hereof or thereof may be changed, waived, discharged or terminated unless such change, waiver, discharge or termination is in writing signed by the respective Credit Parties party thereto and the Required Lenders,
provided
that no such change, waiver, discharge or termination shall, without the consent of each Lender (other than a Defaulting Lender) (with Credit Document Obligations being directly affected in the case of following clause (i)) and, in the case of the following clause (vi), to the extent that any such Lender would be required to make a Loan in excess of its
pro
rata
portion provided for in this Agreement or would receive a payment or prepayment of Loans that (in any case) is less than its
pro
rata
portion provided for in this Agreement, in each case, as a result of any such amendment, modification or waiver referred to in the following clause (vi)), (i) extend the final scheduled maturity of any Loan or Note, extend the timing for or reduce the principal amount of any Scheduled Repayment, or reduce the rate or extend the time of payment of fees or interest on any Loan or Note (except (x) in connection with the waiver of applicability of any post-default increase in interest rates and (y) any amendment or modification to the financial definitions in this Agreement shall not constitute a reduction in the rate of interest for purposes of this clause (i)), or reduce the principal amount thereof (except to the extent repaid in cash), (ii) release all or substantially all of the Collateral (except as expressly provided in the Credit Documents) under the Security Documents, (iii) amend, modify or waive any provision of this Section 12.12, (iv) reduce the percentage specified in the definition of Required Lenders or otherwise amend or modify the definition of Required Lenders (it being understood that, with the consent of the Required Lenders, additional extensions of credit pursuant to this Agreement may be included in the determination of the Required Lenders on substantially the same basis as the extensions of Loans and the issuance or reinstatement of Existing Letters of Credit are included on the Restatement Effective Date), (v) consent to the assignment or transfer by the Borrower or any Subsidiary Guarantor of any of its respective rights and obligations under this Agreement, (vi) amend, modify or waive Section 2.06 or amend, modify or waive any other provision in this Agreement to the extent providing for payments or prepayments of Loans to be applied
pro
rata
among the Lenders entitled to such payments or prepayments of Loans (it being understood that the provision of additional extensions of credit pursuant to this Agreement, or the waiver of any mandatory prepayment of Loans by the Required Lenders shall not constitute an amendment, modification or waiver for purposes of this clause (vi)), or (vii) release any Subsidiary Guarantor from the Subsidiaries Guaranty to the extent same owns a Collateral Vessel (other than as provided in the Subsidiaries Guaranty);
provided
,
further
, that no such change, waiver, discharge or termination shall (s) without the consent of each Issuing Lender, amend, modify or waive any provision of Section 5 or alter its rights or obligations with respect to Existing Letters of Credit, (t) without the consent of each Agent, amend, modify or waive any provision of Section 11 as same applies to such Agent or any other provision as same relates to the rights or obligations of such Agent, (u) without the consent of the Collateral Agent, amend, modify or waive any provision relating to the rights or obligations of the Collateral Agent, (v) without the consent of at least a majority of the holders of outstanding Swap Obligations at all times after the time on which all Credit Document Obligations have been paid in full, amend, modify or waive any provision set forth in Section 13, or (w) without the consent of at least a majority of the Lenders
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with outstanding Tranche B Loans, amend, modify or waive any provision relating to the rights or obligations of such Lenders in respect of such outstanding Tranche B Loans in a manner which adversely affects such Lenders only.
(b)
If, in connection with any proposed change, waiver, discharge or termination to any of the provisions of this Agreement as contemplated by clauses (i) through (vii), inclusive, of the first proviso to Section 12.12(a), the consent of the Required Lenders is obtained but the consent of one or more of such other Lenders whose consent is required is not obtained, then the Borrower shall have the right, so long as all non-consenting Lenders whose individual consent is required are treated as described in either clauses (A) or (B) below, to either (A) replace each such non-consenting Lender or Lenders (or, at the option of the Borrower if the respective Lender’s consent is required with respect to less than all Loans and outstanding Existing Letters of Credit, to replace only the respective Individual Exposure of the respective non-consenting Lender which gave rise to the need to obtain such Lender’s individual consent) with one or more Replacement Lenders pursuant to Section 2.12 so long as at the time of such replacement, each such Replacement Lender consents to the proposed change, waiver, discharge or termination or (B) terminate such non-consenting Lender’s Individual Exposure (if such Lender’s consent is required as a result of its Individual Exposure), and/or repay outstanding Loans of such Lender which gave rise to the need to obtain such Lender’s consent, in accordance with Sections 5.01(iv),
provided
that, unless the Individual Exposure being terminated and the Loans being repaid pursuant to preceding clause (B) are immediately replaced in full at such time through the addition of new Lenders or the increase of the Existing Letter of Credit Exposure and/or outstanding Loans of existing Lenders (who in each case must specifically consent thereto), then in the case of any action pursuant to preceding clause (B) the Required Lenders (determined before giving effect to the proposed action) shall specifically consent thereto,
provided
,
further
, that in any event the Borrower shall not have the right to replace a Lender, terminate its Individual Exposure or repay its Loans solely as a result of the exercise of such Lender’s rights (and the withholding of any required consent by such Lender) pursuant to the second proviso to Section 12.12(a).
(c)
In addition, notwithstanding anything set forth herein to the contrary, this Agreement may be amended or amended and restated with the written consent of the Credit Parties, the Administrative Agent and the Lenders providing the relevant Replacement Loans or to permit the refinancing of all outstanding Loans (the “
Refinanced Loans
”), with a replacement Loan tranche denominated in Dollars (the “
Replacement Loans
”), respectively, hereunder;
provided
that (i) the aggregate principal amount of such Replacement Loans shall not exceed the aggregate principal amount of,
plus
an amount equal to accrued interest, fees and expenses with respect to, such Refinanced Loans, (ii) the Effective Yield with respect to such Replacement Loans shall not be higher than the Effective Yield with respect to such Refinanced Loans, (iii) the Weighted Average Life to Maturity of such Replacement Loans shall not be shorter than the Weighted Average Life to Maturity of such Refinanced Loans, at the time of such refinancing (except to the extent of nominal amortization for periods where amortization has been eliminated as a result of prepayment of the applicable Loans), (iv) such Replacement Loans shall not receive in excess of such Replacement Loans’
pro
rata
share of any such payment (such
pro
rata
share to be calculated at any time on the basis of the principal amount of such Replacement Loans over the total aggregate principal amount of Loans and Replacement Loans at such time), (v) the credit parties to such Replacement Loans secured by the Collateral will become party to the
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Intercreditor Agreements in accordance with the terms thereof, and (vi) all other terms applicable to such Replacement Loans shall be substantially identical to, or less favorable to the Lenders providing such Replacement Loans than, those applicable to such Refinanced Loans (including, without limitation, the guarantors, obligors and security applicable thereto), except to the extent necessary to provide for covenants and other terms applicable to any period after the latest final maturity of the Loans in effect immediately prior to such refinancing.
12.12
Survival
.. All indemnities set forth herein including, without limitation, in Sections 2.09, 2.10, 3.04, 5.04, 12.01 and 12.06 shall survive the execution, delivery and termination of this Agreement and the Notes and the making and repayment of the Loans.
12.13
Domicile of Loans
. Each Lender may transfer and carry its Loans at, to or for the account of any office, Subsidiary or Affiliate of such Lender. Notwithstanding anything to the contrary contained herein, to the extent that a transfer of Loans pursuant to this Section 12.14 would, at the time of such transfer, result in increased costs under Section 2.09, 2.10, 3.04 or 5.04 from those being charged by the respective Lender prior to such transfer, then the Borrower shall not be obligated to pay such increased costs (although the Borrower shall be obligated to pay any other increased costs of the type described above resulting from changes after the date of the respective transfer).
12.14
Confidentiality
. (a) Subject to the provisions of clauses (b) and (c) of this Section 12.15, each Lender agrees that it will use its best efforts not to disclose without the prior consent of the Borrower (other than to its employees, auditors, advisors or counsel or to another Lender if the Lender or such Lender’s holding or parent company or board of trustees in its sole discretion determines that any such party should have access to such information, provided such Persons shall be subject to the provisions of this Section 12.15 to the same extent as such Lender) any information with respect to the Borrower or any of its Subsidiaries which is now or in the future furnished pursuant to this Agreement or any other Credit Document,
provided
that any Lender may disclose any such information (a) as has become generally available to the public other than by virtue of a breach of this Section 12.15(a) by the respective Lender, (b) as may be required in any report, statement or testimony submitted to any municipal, state or Federal regulatory body having or claiming to have jurisdiction over such Lender or to the Federal Reserve Board or the Federal Deposit Insurance Corporation or similar organizations (whether in the United States or elsewhere) or their successors, (c) as may be required in respect to any summons or subpoena or in connection with any litigation, (d) in order to comply with any law, order, regulation or ruling applicable to such Lender, (e) to the Administrative Agent or the Collateral Agent, (f) to any prospective or actual transferee or participant in connection with any contemplated transfer or participation of any of the Notes or Existing Letter of Credit Exposure or any interest therein by such Lender, (g) any credit insurance provider related to the Borrower and its Obligations and (h) any direct, indirect, actual or prospective counterparty (and its advisors) to any swap, derivative or securitization transaction related to the Obligations,
provided
that such prospective transferee expressly agrees to be bound by the confidentiality provisions contained in this Section 12.15.
(b)
The Borrower hereby acknowledges and agrees that each Lender may share with any of its affiliates any information related to the Borrower or any of its Subsidiaries (including, without limitation, any nonpublic customer information regarding the creditworthiness
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of the Borrower or its Subsidiaries), provided such Persons shall be subject to the provisions of this Section 12.15 to the same extent as such Lender.
12.15
Register
. The Borrower hereby designates the Administrative Agent to serve as the Borrower’s agent, solely for purposes of this Section 12.16, to maintain a register (the “
Register
”) on which it will record the Individual Exposure from time to time of each of the Lenders, the Loans made by each of the Lenders and each repayment and prepayment in respect of the principal amount (and stated interest) of the Loans of each Lender. Failure to make any such recordation, or any error in such recordation shall not affect the Borrower’s obligations in respect of such Loans. With respect to any Lender, the transfer of the Individual Exposure of such Lender and the rights to reimbursement for any Unpaid Drawing under any Existing Letter of Credit shall not be effective until such transfer is recorded on the Register maintained by the Administrative Agent with respect to ownership of such Existing Letter of Credit Exposure and Loans and prior to such recordation all amounts owing to the transferor with respect to such Existing Letter of Credit Exposure and Loans shall remain owing to the transferor. The registration of assignment or transfer of all or part of any Existing Letter of Credit Exposure and Loans shall be recorded by the Administrative Agent on the Register only upon the acceptance by the Administrative Agent of a properly executed and delivered Assignment and Assumption Agreement pursuant to Section 12.04(b). Coincident with the delivery of such an Assignment and Assumption Agreement to the Administrative Agent for acceptance and registration of assignment or transfer of all or part of a Loan, or as soon thereafter as practicable, the assigning or transferor Lender shall surrender the Note evidencing such Loan, and thereupon one or more new Notes in the same aggregate principal amount shall be issued to the assigning or transferor Lender and/or the new Lender. The Borrower agrees to indemnify the Administrative Agent from and against any and all losses, claims, damages and liabilities of whatsoever nature which may be imposed on, asserted against or incurred by the Administrative Agent in performing its duties under this Section 12.16, except to the extent caused by the Administrative Agent’s own gross negligence or willful misconduct.
Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each participant and the principal and interest amounts of each participant’s interest in the Loans and the obligations thereunder (the “
Participant Register
”);
provided
that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any participant or any information relating to a participant’s interest in any commitments, loans, letters of credit or its other obligations under any Credit Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.
12.16
Judgment Currency
. If for the purposes of obtaining judgment in any court it is necessary to convert a sum due from the Borrower hereunder or under any of the Notes in the currency expressed to be payable herein or under the Notes (the “
specified currency
”) into another currency, the parties hereto agree, to the fullest extent that they may effectively do so, that the rate of exchange used shall be that at which in accordance with normal banking
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procedures the Administrative Agent could purchase the specified currency with such other currency at the Administrative Agent’s New York office on the Business Day preceding that on which final judgment is given. The obligations of the Borrower in respect of any sum due to any Lender or the Administrative Agent hereunder or under any Note shall, notwithstanding any judgment in a currency other than the specified currency, be discharged only to the extent that on the Business Day following receipt by such Lender or the Administrative Agent (as the case may be) of any sum adjudged to be so due in such other currency such Lender or the Administrative Agent (as the case may be) may in accordance with normal banking procedures purchase the specified currency with such other currency; if the amount of the specified currency so purchased is less than the sum originally due to such Lender or the Administrative Agent, as the case may be, in the specified currency, the Borrower agrees, to the fullest extent that it may effectively do so, as a separate obligation and notwithstanding any such judgment, to indemnify such Lender or the Administrative Agent, as the case may be, against such loss, and if the amount of the specified currency so purchased exceeds the sum originally due to any Lender or the Administrative Agent, as the case may be, in the specified currency, such Lender or the Administrative Agent, as the case may be, agrees to remit such excess to the Borrower.
12.17
Language
. All correspondence, including, without limitation, all notices, reports and/or certificates, delivered by any Credit Party to the Administrative Agent, the Collateral Agent or any Lender shall, unless otherwise agreed by the respective recipients thereof, be submitted in the English language or, to the extent the original of such document is not in the English language, such document shall be delivered with a certified English translation thereof.
12.18
Waiver of Immunity
. The Borrower, in respect of itself, each other Credit Party, its and their process agents, and its and their properties and revenues, hereby irrevocably agrees that, to the extent that the Borrower, any other Credit Party or any of its or their properties has or may hereafter acquire any right of immunity from any legal proceedings, whether in the Republic of the Marshall Islands, the United Kingdom, the Bahamas, Bermuda, the Republic of Malta, the United States or the Republic of Liberia or any other Acceptable Flag Jurisdiction or elsewhere, to enforce or collect upon the Obligations of the Borrower or any other Credit Party related to or arising from the transactions contemplated by any of the Credit Documents, including, without limitation, immunity from service of process, immunity from jurisdiction or judgment of any court or tribunal, immunity from execution of a judgment, and immunity of any of its property from attachment prior to any entry of judgment, or from attachment in aid of execution upon a judgment, the Borrower, for itself and on behalf of the other Credit Parties, hereby expressly waives, to the fullest extent permissible under applicable law, any such immunity, and agrees not to assert any such right or claim in any such proceeding, whether in the Republic of the Marshall Islands, the United Kingdom, the Bahamas, Bermuda, the Republic of Malta, the United States or the Republic of Liberia or elsewhere.
12.19
USA PATRIOT Act Notice
. Each Lender hereby notifies each Credit Party that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub.: 107-56 (signed into law October 26, 2001)) (the “
PATRIOT Act
”), it is required to obtain, verify, and record information that identifies each Credit Party, which information includes the name of each Credit Party and other information that will allow such Lender to identify each Credit Party in
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accordance with the PATRIOT Act, and each Credit Party agrees to provide such information from time to time to any Lender.
12.20
Release of Secondary Collateral and Subsidiary Guarantors
. At any time that (i) the Other Agent agrees to release a Secondary Collateral Vessel (and the various guarantees and security documents related thereto) in accordance with the terms of the Other Credit Documents in accordance with the terms of the Secondary Intercreditor Agreement, other than in contemplation of the repayment of the Indebtedness thereunder in full, and (ii) no Default or Event of Default exists or would result from the release of such Secondary Collateral Vessel (including, without limitation, under Section 9.09), the Collateral Agent shall, at the request of the Borrower, (x) release and discharge the Security Documents related to such Secondary Collateral Vessel, (y) release the Credit Party which owns such Secondary Collateral Vessel from the Subsidiaries Guaranty and (z) release the Secondary Pledge Agreement Collateral of the Subsidiary Guarantor which owned such Secondary Collateral Vessel,
provided
that, in each case, the relevant Credit Party shall pay all documented out of pocket costs and expenses reasonably incurred by the Collateral Agent in connection with provision of such release and discharge.
SECTION 13.
Holdings Guaranty
.
13.01
Guaranty
.
In order to induce the Administrative Agent, the Collateral Agent, the Issuing Lenders and the Lenders to enter into this Agreement and to extend credit hereunder, and induce the other Guaranteed Creditors to enter into Interest Rate Protection Agreements and Other Hedging Agreements and in recognition of the direct benefits to be received by the Parent, Arlington and GMSCII from the conversion of the Loans, the deemed issuance of the Existing Letters of Credit hereunder and the entering into of such Interest Rate Protection Agreements and Other Hedging Agreements, each of the Parent, Arlington and GMSCII hereby agrees with the Guaranteed Creditors as follows: Each of the Parent, Arlington and GMSCII hereby unconditionally and irrevocably guarantees as primary obligor and not merely as surety, the full and prompt payment when due, whether upon maturity, acceleration or otherwise, of any and all of the Obligations of the Borrower to the Guaranteed Creditors. If any or all of the Obligations of the Borrower to the Guaranteed Creditors becomes due and payable hereunder, each of the Parent, Arlington and GMSCII, unconditionally and irrevocably, promises to pay such indebtedness to the Administrative Agent and/or the other Guaranteed Creditors, or order, on demand, together with any and all reasonable documented out-of-pocket expenses which may be incurred by the Administrative Agent and the other Guaranteed Creditors in collecting any of the Obligations. If a claim is ever made upon any Guaranteed Creditor for repayment or recovery of any amount or amounts received in payment or on account of any of the Obligations and any of the aforesaid payees repays all or part of said amount by reason of (i) any judgment, decree or order of any court or administrative body having jurisdiction over such payee or any of its property or (ii) any settlement or compromise of any such claim effected by such payee with any such claimant (including the Borrower), then and in such event, each of the Parent, Arlington and GMSCII agrees that any such judgment, decree, order, settlement or compromise shall be binding upon the Parent, Arlington or GMSCII, as the case may be, notwithstanding any revocation of this Holdings Guaranty or other instrument evidencing any liability of the Borrower, and the Parent, Arlington or GMSCII, as the case may be, shall both be
119
and remain liable to the aforesaid payees hereunder for the amount so repaid or recovered to the same extent as if such amount had never originally been received by any such payee.
13.02
Bankruptcy
.
Additionally, each of the Parent, Arlington and GMSCII unconditionally and irrevocably guarantees the payment of any and all of the Obligations to the Guaranteed Creditors whether or not due or payable by the Borrower upon the occurrence of any of the events specified in Section 10.05, and irrevocably, unconditionally and jointly and severally promises to pay such indebtedness to the Guaranteed Creditors, or order, on demand, in lawful money of the United States.
13.03
Nature of Liability
. The liability of each of the Parent, Arlington and GMSCII hereunder is primary, absolute and unconditional, exclusive and independent of any security for or other guaranty of the Obligations, whether executed by the Parent, Arlington, GMSCII, any other guarantor or by any other party, and the liability of each of the Parent, Arlington and GMSCII hereunder shall not be affected or impaired by (a) any direction as to application of payment by the Borrower or by any other party, or (b) any other continuing or other guaranty, undertaking or maximum liability of a guarantor or of any other party as to the Obligations, or (c) any payment on or in reduction of any such other guaranty or undertaking, or (d) any dissolution, termination or increase, decrease or change in personnel by the Borrower, or (e) any payment made to any Guaranteed Creditor on the Obligations which any such Guaranteed Creditor repays to the Borrower or any other Credit Party pursuant to court order in any bankruptcy, reorganization, arrangement, moratorium or other debtor relief proceeding, and the Borrower waives any right to the deferral or modification of its obligations hereunder by reason of any such proceeding, (f) any action or inaction by the Guaranteed Creditors as contemplated in Section 13.05, or (g) any invalidity, irregularity or enforceability of all or any part of the Obligations or of any security therefor.
13.04
Independent Obligation
. The obligations of each of the Parent, Arlington and GMSCII hereunder are several and are independent of the obligations of any other guarantor, any other party or the Borrower, and a separate action or actions may be brought and prosecuted against the Parent, Arlington or GMSCII whether or not action is brought against any other guarantor, any other party or the Borrower and whether or not any other guarantor, any other party or the Borrower be joined in any such action or actions. Each of the Parent, Arlington and GMSCII waives, to the fullest extent permitted by law, the benefit of any statute of limitations affecting its liability hereunder or the enforcement thereof. Any payment by the Borrower or other circumstance which operates to toll any statute of limitations as to the Borrower shall operate to toll the statute of limitations as to each of the Parent, Arlington and GMSCII.
13.05
Authorization
. Each of the Parent, Arlington and GMSCII authorizes the Guaranteed Creditors without notice or demand (except as shall be required by applicable statute or this Agreement and cannot be waived), and without affecting or impairing its liability hereunder, from time to time to:
(a)
in accordance with the terms and provisions of this Agreement and the other Credit Documents, change the manner, place or terms of payment of, and/or change or extend the time of payment of, renew, increase, accelerate or alter, any of the Obligations (including any increase or decrease in the principal amount thereof or the rate
120
of interest or fees thereon), any security therefor, or any liability incurred directly or indirectly in respect thereof, and this Holdings Guaranty shall apply to the Obligations as so changed, extended, renewed or altered;
(b)
take and hold security for the payment of the Obligations and sell, exchange, release, impair, surrender, realize upon or otherwise deal with in any manner and in any order any property by whomsoever at any time pledged or mortgaged to secure, or howsoever securing, the Obligations or any liabilities (including any of those hereunder) incurred directly or indirectly in respect thereof or hereof, and/or any offset thereagainst;
(c)
exercise or refrain from exercising any rights against the Borrower, any other Credit Party or others or otherwise act or refrain from acting;
(d)
release or substitute any one or more endorsers, guarantors, the Borrower, other Credit Parties or other obligors;
(e)
settle or compromise any of the Obligations, any security therefor or any liability (including any of those hereunder) incurred directly or indirectly in respect thereof or hereof, and may subordinate the payment of all or any part thereof to the payment of any liability (whether due or not) of the Borrower to its creditors other than the Guaranteed Creditors;
(f)
apply any sums by whomsoever paid or howsoever realized to any liability or liabilities of the Borrower to the Guaranteed Creditors regardless of what liability or liabilities of the Borrower remain unpaid;
(g)
consent to or waive any breach of, or any act, omission or default under, this Agreement, any other Credit Document, any Interest Rate Protection Agreement or any Other Hedging Agreement or any of the instruments or agreements referred to herein or therein, or, pursuant to the terms of the Credit Documents, otherwise amend, modify or supplement this Agreement, any other Credit Document, any Interest Rate Protection Agreement or any Other Hedging Agreement or any of such other instruments or agreements; and/or
(h)
take any other action which would, under otherwise applicable principles of common law, give rise to a legal or equitable discharge of the Parent
, Arlington or GMSCII from its liabilities under this Holdings Guaranty.
13.06
Reliance
. It is not necessary for any Guaranteed Creditor to inquire into the capacity or powers of each of the Parent, Arlington or GMSCII or any of their respective Subsidiaries or the officers, directors, partners or agents acting or purporting to act on their behalf, and any Obligations made or created in reliance upon the professed exercise of such powers shall be guaranteed hereunder.
13.07
Subordination
. Any indebtedness of the Borrower now or hereafter owing to each of the Parent, Arlington and GMSCII, as the case may be, is hereby subordinated to the Obligations of the Borrower owing to the Guaranteed Creditors; and if the Administrative Agent
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so requests at a time when an Event of Default exists, all such indebtedness of the Borrower to each of the Parent, Arlington and GMSCII shall be collected, enforced and received by the Parent, Arlington or GMSCII, as the case may be, for the benefit of the Guaranteed Creditors and be paid over to the Administrative Agent on behalf of the Guaranteed Creditors on account of the Obligations to the Guaranteed Creditors, but without affecting or impairing in any manner the liability of the Parent, Arlington or GMSCII under the other provisions of this Holdings Guaranty. Prior to the transfer by the Parent, Arlington or GMSCII of any note or negotiable instrument evidencing any such indebtedness of the Borrower to the Parent, Arlington or GMSCII, as the case may be, the Parent, Arlington or GMSCII, as the case may be, shall mark such note or negotiable instrument with a legend that the same is subject to this subordination. Without limiting the generality of the foregoing, each of the Parent, Arlington and GMSCII hereby agrees with the Guaranteed Creditors that they will not exercise any right of subrogation which they may at any time otherwise have as a result of this Holdings Guaranty (whether contractual, under Section 509 of the Bankruptcy Code or otherwise) until all Obligations have been irrevocably paid in full in cash. If and to the extent required in order for the Obligations of each of the Parent, Arlington and GMSCII to be enforceable under applicable federal, state and other laws relating to the insolvency of debtors, the maximum liability of the Parent, Arlington and GMSCII, as the case may be, hereunder shall be limited to the greatest amount which can lawfully be guaranteed by the Parent, Arlington and GMSCII, as the case may be, under such laws, after giving effect to any rights of contribution, reimbursement and subrogation arising under this Section 13.07.
13.08
Waiver
. (a) Each of the Parent, Arlington and GMSCII waives any right (except as shall be required by applicable law and cannot be waived) to require any Guaranteed Creditor to (i) proceed against the Borrower, any other guarantor or any other party, (ii) proceed against or exhaust any security held from the Borrower, any other guarantor or any other party or (iii) pursue any other remedy in any Guaranteed Creditor’s power whatsoever. Each of the Parent, Arlington and GMSCII hereby irrevocably waives any defenses it may now or hereafter have in any way relating to any and all of the following: (a) based on or arising out of any defense of the Borrower, any other guarantor or any other party, other than payment in full in cash of the Obligations, based on or arising out of the disability of the Borrower, any other guarantor or any other party, or the validity, legality or unenforceability of the Obligations or any part thereof from any cause, or the cessation from any cause of the liability of the Borrower other than payment in full in cash of the Obligations; (b) any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to departure from any Credit Document; (c) any taking, exchange, release or nonperfection of any Collateral, or any taking, release or amendment or waiver of or consent to departure from the Holdings Guaranty or any other guaranty, for all or any of the Obligations; (d) any law or regulation of any foreign jurisdiction or any other event affecting any term of a Obligation; and (e) any other circumstance (including, without limitation, any statute of limitations or any existence of or reliance on any representation by the Administrative Agent or any other Secured Party) that might otherwise constitute a defense available to, or a discharge of, such Guarantor, any other Credit Party or any other guarantor or surety other than payment in full in cash of the Obligations. The Guaranteed Creditors may, at their election, foreclose on any security held by the Administrative Agent, the Collateral Agent or any other Guaranteed Creditor by one or more judicial or nonjudicial sales, whether or not every aspect of any such sale is commercially reasonable (to the extent such sale is permitted by applicable law), or exercise any
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other right or remedy the Guaranteed Creditors may have against the Borrower, or any other party, or any security, without affecting or impairing in any way the liability of either the Parent, Arlington or GMSCII hereunder except to the extent the Obligations have been paid in cash. Each of the Parent, Arlington and GMSCII waives any defense arising out of any such election by the Guaranteed Creditors, even though such election operates to impair or extinguish any right of reimbursement or subrogation or other right or remedy of the Parent, Arlington or GMSCII against the Borrower or any other party or any security.
(b)
Each of the Parent, Arlington and GMSCII waives all presentments, demands for performance, protests and notices, including, without limitation, notices of nonperformance, notices of protest, notices of dishonor, notices of acceptance of this Holdings Guaranty, and notices of the existence, creation or incurring of new or additional Obligations. Each of the Parent, Arlington and GMSCII assumes all responsibility for being and keeping itself informed of the Borrower’s financial condition and assets, and of all other circumstances bearing upon the risk of nonpayment of the Obligations and the nature, scope and extent of the risks which each of the Parent, Arlington and GMSCII assumes and incurs hereunder, and agrees that neither the Administrative Agent nor any of the other Guaranteed Creditors shall have any duty to advise either the Parent, Arlington or GMSCII of information known to them regarding such circumstances or risks.
13.09
Judgment Shortfall
. (a) The obligations of the Parent, Arlington and GMSCII under the Holdings Guaranty to make payments in the respective currency or currencies in which the respective Obligations are required to be paid (such currency being herein called the “
Obligation Currency
”) shall not be discharged or satisfied by any tender or recovery pursuant to any judgment expressed in or converted into any currency other than the Obligation Currency, except to the extent that such tender or recovery results in the effective receipt by the Administrative Agent, the Collateral Agent or the respective other Secured Creditor of the full amount of the Obligation Currency expressed to be payable to the Administrative Agent, the Collateral Agent or such other Secured Creditor under this Holdings Guaranty or the other Credit Documents or any Interest Rate Protection Agreements or any Other Hedging Agreements, as applicable. If for the purpose of obtaining or enforcing judgment against the Parent, Arlington or GMSCII in any court or in any jurisdiction, it becomes necessary to convert into or from any currency other than the Obligation Currency (such other currency being hereinafter referred to as the “
Judgment Currency
”) an amount due in the Obligation Currency, the conversion shall be made, at the rate of exchange (quoted by the Administrative Agent, determined, in each case, as of the date immediately preceding the day on which the judgment is given (such Business Day being hereinafter referred to as the “
Judgment Currency Conversion Date
”).
(b) If there is a change in the rate of exchange prevailing between the Judgment Currency Conversion Date and the date of actual payment of the amount due, the Parent, Arlington and GMSCII jointly and severally covenant and agree to pay, or cause to be paid, such additional amounts, if any (but in any event not a lesser amount), as may be necessary to ensure that the amount paid in the Judgment Currency, when converted at the rate of exchange prevailing on the date of payment, will produce the amount of the Obligation Currency which could have been purchased with the amount of Judgment Currency stipulated in the judgment or judicial award at the rate or exchange prevailing on the Judgment Currency Conversion Date.
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IN WITNESS WHEREOF, the parties hereto have caused their duly authorized officers to execute and deliver this Agreement as of the date first above written.
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GENERAL MARITIME CORPORATION,
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as Parent
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By:
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/s/ Jeffrey D. Pribor
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Name:
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Jeffrey D. Pribor
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Title:
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Executive Vice President & Chief Financial Officer
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Address: 299 Park Avenue, New York, NY 10171
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Telephone:
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(212) 763-5600
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Facsimile:
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(212) 763-5608
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GENERAL MARITIME SUBSIDIARY CORPORATION,
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as Borrower
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By:
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/s/ Jeffrey D. Pribor
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Name:
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Jeffrey D. Pribor
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Title:
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President
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Address: 299 Park Avenue, New York, NY 10171
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Telephone:
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(212) 763-5600
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Facsimile:
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(212) 763-5608
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GENERAL MARITIME SUBSIDIARY II CORPORATION,
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as a Guarantor
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By:
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/s/ Jeffrey D. Pribor
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Name:
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Jeffrey D. Pribor
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Title:
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President
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Address: 299 Park Avenue, New York, NY 10171
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Telephone:
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(212) 763-5600
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Facsimile:
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(212) 763-5608
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General Maritime Subsidiary Corporation Third Amended & Restated Credit Agreement
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ARLINGTON TANKERS LTD.,
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as a Guarantor
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By:
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/s/ Jeffrey D. Pribor
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Name:
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Jeffrey D. Pribor
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Title:
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Director
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Address: 299 Park Avenue, New York, NY 10171
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Telephone:
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(212) 763-5600
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Facsimile:
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(212) 763-5608
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With a copy to:
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Kramer Levin Naftalis & Frankel LLP
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1177 Avenue of the Americas
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New York, NY 10022
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Attention: Kenneth Chin, Esq.
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Telephone: (212) 715-9100
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Facsimile: (212) 715-8000
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and
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Kirkland & Ellis LLP
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555 California Street
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San Francisco, CA 94104
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Attention: Samantha Good
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Telephone: (415) 439-1914
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Facsimile: (415) 439-1500
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General Maritime Subsidiary Corporation Third Amended & Restated Credit Agreement
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NORDEA BANK FINLAND PLC, NEW YORK BRANCH, Individually, as Administrative Agent and as Joint Book Runner
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By:
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/s/ Martin Lunder
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Name: Martin Lunder
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Title: Senior Vice President
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By:
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/s/ Christian David Christensen
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Name: Christian David Christensen
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Title: Assistant Vice President
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General Maritime Subsidiary Corporation Third Amended & Restated Credit Agreement
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DNB BANK ASA, Individually and as Joint Book Runner
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By:
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/s/ Sanjiv Nayar
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Name: Sanjiv Nayar
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Title: Senior Vice President
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By:
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/s/ Kjell Tore Egge
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Name:
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Title:
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General Maritime Subsidiary Corporation Third Amended & Restated Credit Agreement
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SIGNATURE PAGE TO THE THIRD AMENDED AND RESTATED CREDIT AGREEMENT, DATED AS OF THE DATE FIRST REFERENCED ABOVE, AMONG GENERAL MARITIME CORPORATION, GENERAL MARITIME SUBSIDIARY II CORPORATION, GENERAL MARITIME SUBSIDIARY CORPORATION, ARLINGTON TANKERS LTD., THE LENDERS PARTY THERETO, AND NORDEA BANK FINLAND PLC, NEW YORK BRANCH, AS ADMINISTRATIVE AGENT
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NAME OF INSTITUTION:
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HSH Nordbank AG
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By
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/s/ Jörn Ohlsen
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Name: Jorn Ohlsen
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Title:
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By
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/s/ Johanna Gotter
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Name: Johanna Gotter
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Title:
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General Maritime Subsidiary Corporation Third Amended & Restated Credit Agreement
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SIGNATURE PAGE TO THE THIRD AMENDED AND RESTATED CREDIT AGREEMENT, DATED AS OF THE DATE FIRST REFERENCED ABOVE, AMONG GENERAL MARITIME CORPORATION, GENERAL MARITIME SUBSIDIARY II CORPORATION, GENERAL MARITIME SUBSIDIARY CORPORATION, ARLINGTON TANKERS LTD., THE LENDERS PARTY THERETO, AND NORDEA BANK FINLAND PLC, NEW YORK BRANCH, AS ADMINISTRATIVE AGENT
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NAME OF INSTITUTION:
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BANK OF SCOTLAND PLC
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By
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/s/
N
ick
H
unter
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Name:
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N
ick
H
unter
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Title:
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D
irector
, S
pecialist
F
inance
BSU
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General Maritime Subsidiary Corporation Third Amended and Restated Credit Agreement
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SIGNATURE PAGE TO THE THIRD AMENDED AND RESTATED CREDIT AGREEMENT, DATED AS OF THE DATE FIRST REFERENCED ABOVE, AMONG GENERAL MARITIME CORPORATION, GENERAL MARITIME SUBSIDIARY II CORPORATION, GENERAL MARITIME SUBSIDIARY CORPORATION, ARLINGTON TANKERS LTD., THE LENDERS PARTY THERETO, AND NORDEA BANK FINLAND PLC, NEW YORK BRANCH, AS ADMINISTRATIVE AGENT
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NAME OF INSTITUTION:
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Skandinaviska Enskilda Banken AB (publ)
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By
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/s/ Ame Juell-Skielse
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Name:
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Ame Juell-Skielse
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Title:
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General Maritime Subsidiary Corporation Third Amended and Restated Credit Agreement
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SIGNATURE PAGE TO THE THIRD AMENDED AND RESTATED CREDIT AGREEMENT, DATED AS OF THE DATE FIRST REFERENCED ABOVE, AMONG GENERAL MARITIME CORPORATION, GENERAL MARITIME SUBSIDIARY II CORPORATION, GENERAL MARITIME SUBSIDIARY CORPORATION, ARLINGTON TANKERS LTD., THE LENDERS PARTY THERETO, AND NORDEA BANK FINLAND PLC, NEW YORK BRANCH, AS ADMINISTRATIVE AGENT
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NAME OF INSTITUTION:
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C
itiBank, N.A.
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By
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/s/ Peter T. Baumann
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Name:
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Peter T. Baumann
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Title:
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Managing Director
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General Maritime Subsidiary Corporation Third Amended and Restated Credit Agreement
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SIGNATURE PAGE TO THE THIRD AMENDED AND RESTATED CREDIT AGREEMENT, DATED AS OF THE DATE FIRST REFERENCED ABOVE, AMONG GENERAL MARITIME CORPORATION, GENERAL MARITIME SUBSIDIARY II CORPORATION, GENERAL MARITIME SUBSIDIARY CORPORATION, ARLINGTON TANKERS LTD., THE LENDERS PARTY THERETO, AND NORDEA BANK FINLAND PLC, NEW YORK BRANCH, AS ADMINISTRATIVE AGENT
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NAME OF INSTITUTION:
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Citigroup Financial Products Inc.
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By
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/s/ Scott R. Evan
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Name:
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Scott R. Evan
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Title:
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Authorized Signatory
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General Maritime Subsidiary Corporation Third Amended and Restated Credit Agreement
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SIGNATURE PAGE TO THE THIRD AMENDED AND RESTATED CREDIT AGREEMENT, DATED AS OF THE DATE FIRST REFERENCED ABOVE, AMONG GENERAL MARITIME CORPORATION, GENERAL MARITIME SUBSIDIARY II CORPORATION, GENERAL MARITIME SUBSIDIARY CORPORATION, ARLINGTON TANKERS LTD., THE LENDERS PARTY THERETO, AND NORDEA BANK FINLAND PLC, NEW YORK BRANCH, AS ADMINISTRATIVE AGENT
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THE ROYAL BANK OF SCOTLAND PLC:
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By
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/s/ Neil J. Bivona
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Name:
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Neil J. Bivona
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Title:
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Managing Director
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General Maritime Subsidiary Corporation Third Amended and Restated Credit Agreement
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SIGNATURE PAGE TO THE THIRD AMENDED AND RESTATED CREDIT AGREEMENT, DATED AS OF THE DATE FIRST REFERENCED ABOVE, AMONG GENERAL MARITIME CORPORATION, GENERAL MARITIME SUBSIDIARY II CORPORATION, GENERAL MARITIME SUBSIDIARY CORPORATION, ARLINGTON TANKERS LTD., THE LENDERS PARTY THERETO, AND NORDEA BANK FINLAND PLC, NEW YORK BRANCH, AS ADMINISTRATIVE AGENT
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NAME OF INSTITUTION:
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SANTANDER UK PLC
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/s/ Mark McCarthy
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By:
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Mark McCarthy
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Title:
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Head of Shipping
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General Maritime Subsidiary Corporation Third Amended and Restated Credit Agreement
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SIGNATURE PAGE TO THE THIRD AMENDED AND RESTATED CREDIT AGREEMENT, DATED AS OF THE DATE FIRST REFERENCED ABOVE, AMONG GENERAL MARITIME CORPORATION, GENERAL MARITIME SUBSIDIARY II CORPORATION, GENERAL MARITIME SUBSIDIARY CORPORATION, ARLINGTON TANKERS LTD., THE LENDERS PARTY THERETO, AND NORDEA BANK FINLAND PLC, NEW YORK BRANCH, AS ADMINISTRATIVE AGENT
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SUMITOMO MITSUI BANKING CORPORATION
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By
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/s/ Ryo Suzuki
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Name:
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Ryo Suzuki
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Title:
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Managing Director
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General Maritime Subsidiary Corporation Third Amended and Restated Credit Agreement
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SIGNATURE PAGE TO THE THIRD AMENDED AND RESTATED CREDIT AGREEMENT, DATED AS OF THE DATE FIRST REFERENCED ABOVE, AMONG GENERAL MARITIME CORPORATION, GENERAL MARITIME SUBSIDIARY II CORPORATION, GENERAL MARITIME SUBSIDIARY CORPORATION, ARLINGTON TANKERS LTD., THE LENDERS PARTY THERETO, AND NORDEA BANK FINLAND PLC, NEW YORK BRANCH, AS ADMINISTRATIVE AGENT
|
|
|
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|
|
|
NAME OF INSTITUTION: Allied Irish Banks, p.l.c.
|
|
|
|
|
|
|
|
|
|
|
|
By
|
/s/ M.P. Toolan
|
|
|
|
|
Name:
|
Matt Toolan
|
|
|
|
|
Title:
|
Head of Infrastructure
|
General Maritime Subsidiary Corporation Third Amended and Restated Credit Agreement
|
|
SIGNATURE PAGE TO THE THIRD AMENDED AND RESTATED CREDIT AGREEMENT, DATED AS OF THE DATE FIRST REFERENCED ABOVE, AMONG GENERAL MARITIME CORPORATION, GENERAL MARITIME SUBSIDIARY II CORPORATION, GENERAL MARITIME SUBSIDIARY CORPORATION, ARLINGTON TANKERS LTD., THE LENDERS PARTY THERETO, AND NORDEA BANK FINLAND PLC, NEW YORK BRANCH, AS ADMINISTRATIVE AGENT
|
|
|
|
|
|
|
NAME OF INSTITUTION:
|
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|
|
BNP Paribas
|
|
|
|
|
|
|
|
|
|
|
|
By
|
/s/ Vikram Hiranandani
|
|
|
|
|
Name:
|
Vikram Hiranandani
|
|
|
|
|
Title:
|
Vice President
|
|
|
|
|
|
|
|
|
|
|
|
By
|
/s/ Sriram Chandrasekaran
|
|
|
|
|
Name:
|
Sriram Chandrasekaran
|
|
|
|
|
Title:
|
Vice President
|
General Maritime Subsidiary Corporation Third Amended and Restated Credit Agreement
|
|
SIGNATURE PAGE TO THE THIRD AMENDED AND RESTATED CREDIT AGREEMENT, DATED AS OF THE DATE FIRST REFERENCED ABOVE, AMONG GENERAL MARITIME CORPORATION, GENERAL MARITIME SUBSIDIARY II CORPORATION, GENERAL MARITIME SUBSIDIARY CORPORATION, ARLINGTON TANKERS LTD., THE LENDERS PARTY THERETO, AND NORDEA BANK FINLAND PLC, NEW YORK BRANCH, AS ADMINISTRATIVE AGENT
|
|
|
|
|
|
|
Monarch Master Funding Ltd
|
|
|
|
By: Monarch Alternative Capital LP
|
|
|
|
Its: Advisor
|
|
|
|
|
|
|
|
|
|
|
|
By
|
/s/ Andrew J. Herenstein
|
|
|
|
|
Name:
|
Andrew J. Herenstein
|
|
|
|
|
Title:
|
Managing Principal
|
General Maritime Subsidiary Corporation Third Amended & Restated Credit Agreement
|
|
SIGNATURE PAGE TO THE THIRD AMENDED AND RESTATED CREDIT AGREEMENT, DATED AS OF THE DATE FIRST REFERENCED ABOVE, AMONG GENERAL MARITIME CORPORATION, GENERAL MARITIME SUBSIDIARY II CORPORATION, GENERAL MARITIME SUBSIDIARY CORPORATION, ARLINGTON TANKERS LTD., THE LENDERS PARTY THERETO, AND NORDEA BANK FINLAND PLC, NEW YORK BRANCH, AS ADMINISTRATIVE AGENT
|
|
|
|
|
|
|
NAME OF INSTITUTION:
|
|
|
|
|
|
|
|
CREDIT INDUSTRIEL ET COMMERCIAL
|
|
|
|
|
|
|
|
|
|
|
|
By
|
/s/ Andrew McKuin
|
|
|
|
|
Name:
|
Andrew McKuin
|
|
|
|
|
Title:
|
Vice President
|
|
|
|
|
|
|
|
|
|
|
|
By
|
/s/ Alex Aupoix
|
|
|
|
|
Name:
|
Alex Aupoix
|
|
|
|
|
Title:
|
Managing Director
|
General Maritime Subsidiary Corporation Third Amended and Restated Credit Agreement
By executing and delivering a copy hereof, each Subsidiary Guarantor listed below hereby acknowledges and agrees that all Obligations of each such Subsidiary Guarantor shall be fully guaranteed pursuant to the Subsidiaries Guaranty and shall be fully secured pursuant to the Security Documents, in each case in accordance with the respective terms and provisions thereof. Each of the undersigned, each being a Subsidiary Guarantor under, and as defined in, the Original Credit Agreement referenced in the foregoing Credit Agreement, hereby consents to the entering into of the Credit Agreement by the Borrower and agrees to the provisions thereof.
|
|
Acknowledged and Agreed by the following Subsidiary Guarantors:
|
|
|
|
|
|
GMR POSEIDON LLC
|
|
|
GMR ULYSSES LLC
|
|
|
GMR HERCULES LLC
|
|
|
GMR ATLAS LLC
|
|
|
GMR ZEUS LLC
|
|
|
GMR MANIATE LLC
|
|
|
GMR SPARTIATE LLC
|
|
|
GMR ARGUS LLC
|
|
|
GMR DAPHNE LLC
|
|
|
GMR DEFIANCE LLC
|
|
|
GMR ELEKTRA LLC
|
|
|
GMR GEORGE T LLC
|
|
|
GMR HOPE LLC
|
|
|
GMR HORN LLC
|
|
|
GMR ORION LLC
|
|
|
GMR PHOENIX LLC
|
|
|
GMR ST. NIKOLAS LLC
|
|
|
GMR SPYRIDON LLC
|
|
|
|
|
|
|
|
|
By:
|
/s/ Brian Kerr
|
|
|
|
Name:
|
Brian Kerr
|
|
|
|
Title:
|
Manager
|
General Maritime Subsidiary Corporation Third Amended & Restated Credit Agreement
|
|
VISION LTD.
|
|
|
VICTORY LTD.
|
|
|
COMPANION LTD.
|
|
|
COMPATRIOT LTD.
|
|
|
CONSUL LTD.
|
|
|
|
|
|
|
|
|
By:
|
/s/ Dean Scaglione
|
|
|
|
Name:
|
Dean Scaglione
|
|
|
|
Title:
|
Director
|
|
|
|
|
|
|
|
|
GMR AGAMEMNON LLC
|
|
|
GMR AJAX LLC
|
|
|
GMR DEFIANCE LLC
|
|
|
GMR HARRIET G LLC
|
|
|
GMR KARA G LLC
|
|
|
GMR MINOTAUR LLC
|
|
|
GMR STRENGTH LLC
|
|
|
|
|
|
|
|
|
By:
|
/s/ Dean Scaglione
|
|
|
|
Name:
|
Dean Scaglione
|
|
|
|
Title:
|
Manager
|
General Maritime Subsidiary Corporation Third Amended & Restated Credit Agreement
SCHEDULE I
I.
TRANCHE A LOANS
|
INSTITUTIONS
|
|
LOANS
|
|
|
|
|
|
|
|
NORDEA BANK FINLAND PLC, NEW YORK BRANCH
|
|
$
|
103,452,578.45
|
|
|
|
|
|
|
|
DNB BANK ASA
|
|
$
|
103,452,578.39
|
|
|
|
|
|
|
|
HSH NORDBANK AG
|
|
$
|
72,881,821.58
|
|
|
|
|
|
|
|
BANK OF SCOTLAND PLC
|
|
$
|
36,809,000.80
|
|
|
|
|
|
|
|
SKANDINAVISKA ENSKILDA BANKEN AB
(PUBL)
|
|
$
|
27,606,750.59
|
|
|
|
|
|
|
|
CITIBANK, N.A.
|
|
$
|
23,005,625.50
|
|
|
|
|
|
|
|
CITIGROUP FINANCIAL PRODUCTS INC.
|
|
$
|
23,005,625.50
|
|
|
|
|
|
|
|
NATIXIS, NEW YORK BRANCH
|
|
$
|
23,005,625.50
|
|
|
|
|
|
|
|
ROYAL BANK OF SCOTLAND
|
|
$
|
21,820,904.66
|
|
|
|
|
|
|
|
SANTANDER UK PLC
|
|
$
|
16,861,608.15
|
|
|
|
|
|
|
|
SUMITOMO MITSUI BANKING CORP., NEW YORK
|
|
$
|
9,918,593.03
|
|
|
|
|
|
|
|
DANISH SHIP FINANCE A/S (DANMARKS SKIBSKREDIT A/S)
|
|
$
|
9,918,593.03
|
|
|
|
|
|
|
|
ALLIED IRISH BANK
, P.L.C.
|
|
$
|
8,816,527.13
|
|
|
|
|
|
|
|
BNP PARIBAS
|
|
$
|
8,816,527.13
|
|
|
|
|
|
|
|
MONARCH MASTER FUNDING LTD.
|
|
$
|
8,816,527.13
|
|
|
|
|
|
|
|
CREDIT INDUSTRIEL ET COMMERCIAL, NEW YORK BRANCH
|
|
$
|
7,934,874.42
|
|
|
|
|
|
|
|
Total:
|
|
$
|
506,123,760.95
|
|
II.
TRANCHE B LOANS
|
INSTITUTIONS
|
|
LOANS
|
|
|
|
|
|
|
|
|
CITIBANK, N.A.
|
|
$
|
2,853,776.00
|
|
SCHEDULE II
LENDER ADDRESSES
|
INSTITUTIONS
|
|
ADDRESSES
|
|
|
|
|
|
NORDEA BANK FINLAND PLC, NEW YORK BRANCH
|
|
437 Madison Avenue, 21
st
Floor
New York, NY 10022
|
|
|
|
Attn: Shipping Offshore and Oil Services
|
|
|
|
Telephone:
|
212-318-9636
|
|
|
|
Facsimile:
|
212-421-4420
|
|
|
|
E-mail: john.boesen@nordea.com
|
|
|
|
|
|
DNB BANK ASA
|
|
200 Park Avenue, 31
st
Floor
|
|
|
|
New York, NY 10166
|
|
|
|
Attn: Sanjiv Nayar/Hugues Calmet
|
|
|
|
Telephone:
|
212-681-3862/3876
|
|
|
|
Facsimile:
|
212-681-3900
|
|
|
|
E-mail: sanjiv.nayar@dnb.no
|
|
|
|
hugues.calmet@dnb.no
|
|
|
|
|
|
HSH NORDBANK AG
|
|
Gerhart-Hauptmann-Platz 50
|
|
|
|
D-20095 Hamburg, Germany
|
|
|
|
Attn: Jörn Ohlsen
|
|
|
|
Telephone:
|
+49 40 3333 13532
|
|
|
|
Facsimile:
|
+49 40 3333 613532
|
|
|
|
E-mail: joern.ohlsen@hsh-nordbank.com
|
|
|
|
|
|
SKANDINAVISKA ENSKILDA BANKEN AB (PUBL)
|
|
Kungsträdgårdsgatan 8
|
|
|
|
S-106 40 Stockholm, Sweden
|
|
|
|
Attn: Arne Juell-Skielse
|
|
|
|
Telephone: (46) 87 63 8638
|
|
|
|
E-mail: arne.juell-skielse@seb.se
|
|
|
|
|
|
CITIBANK, N.A.
|
|
388 Greenwich Street, 23rd Floor
|
|
|
|
New York, NY 10013
|
|
|
|
Attn: Peter Baumann
|
|
|
|
Telephone: 212-559-5200
|
|
|
|
E-mail: peter.t.baumann@citi.com
|
|
|
|
|
|
CITIGROUP FINANCIAL PRODUCTS INC.
|
|
1615 Brett Road
|
|
|
|
New Castle, DE 19720
|
|
|
|
Attn: Ryan Gallagher / Brian Broyles
|
|
|
|
Telephone:
|
302-894-6021/6175
|
|
|
|
Facsimile:
|
212-994-1591/1592
|
|
|
|
E-mail:
|
glcorporateaction@citigroup.com
|
|
|
|
|
brian.broyles@citi.com
|
|
|
|
|
|
NATIXIS, NEW YORK BRANCH
|
|
1251 Avenue of the Americas
|
|
|
|
34
th
Floor
|
|
|
|
New York, NY 10020
|
|
|
|
|
|
|
|
|
|
Attn: Roslyn Adams
|
|
|
|
Telephone:
|
212-872-5177
|
|
|
|
Facsimile:
|
347-710-1559
|
|
|
|
E-mail: roslyn.adams@us.natixis.com
|
|
|
|
|
|
BANK OF SCOTLAND PLC
|
|
c/o Lloyds Bank Corporate Markets
|
|
|
|
2nd Floor, New Uberior House
|
|
|
|
11 Earl Grey Street, Edinburgh EH3 9BN
|
|
|
|
Attn: Douglas Newton
|
|
|
|
Telephone: (44) 131 659 1194
|
|
|
|
E-mail: douglas.newton1@lloydsbanking.com
|
|
|
|
|
|
ROYAL BANK OF SCOTLAND
|
|
5-10 Great Tower Street
|
|
|
|
London, England EC3P 3HX
|
|
|
|
Attn: Colin Manchester
|
|
|
|
Telephone: (44) 20 7085 7039
|
|
|
|
E-mail: colin.manchester@rbs.co.uk
|
|
|
|
|
|
SANTANDER UK PLC
|
|
2 Triton Square, Regents Place,
|
|
|
|
London, England, NW1 3AN
|
|
|
|
Attn: Mark McCarthy
|
|
|
|
Telephone: (44) 207 756 4803
|
|
|
|
E-mail: mark.mccarthy@santander.co.uk
|
|
|
|
|
|
SUMITOMO MITSUI BANKING CORP., NEW YORK
|
|
277 Park Avenue
|
|
|
|
New York, NY 10172
|
|
|
|
Attn: George Neuman
|
|
|
|
Telephone: (212) 224-4186
|
|
|
|
E-mail: gneuman@smbclf.com
|
|
|
|
|
|
DANISH SHIP FINANCE A/S (DANMARKS SKIBSKREDIT A/S)
|
|
Sankt Annæ Plads 3
DK-1250 Copenhagen K Denmark
|
|
|
|
Attn: Ole Stærgaard
|
|
|
|
Telephone: (45) 33 74 1027
|
|
|
|
E-mail: ols@shipfinance.dk
|
|
|
|
|
|
ALLIED IRISH BANKS, P.L.C.
|
|
St Helen’s, 1 Undershaft
|
|
|
|
London, England EC3A 8AB
|
|
|
|
Attn: Matt Toolan
|
|
|
|
Telephone: (0) 20 7090 7156
|
|
|
|
E-mail: matt.p.toolan@aib.ie
|
|
|
|
|
|
BNP PARIBAS
|
|
520 Madison Avenue
|
|
|
|
New York NY 10022
|
|
|
|
Attn: Vikram Hiranandani
|
|
|
|
Telephone: (212) 340-5367
|
|
|
|
E-mail: vikram.hiranandani@us.bnpparibas.com
|
|
|
|
|
|
MONARCH MASTER FUNDING LTD.
|
|
c/o Monarch Alternative Capital LP
|
|
|
|
535 Madison Avenue, 26th Floor
|
|
|
|
New York, New York 10022
|
2
|
|
|
Attn: Michael Gillin
|
|
|
|
Telephone: (212)-554-1743
|
|
|
|
E-mail: michael.gillin@monarchlp.com;
|
|
|
|
fundops@monarchlp.com
|
|
|
|
|
|
|
|
cc copy to:
|
|
|
|
Nirmala Matai
|
|
|
|
Fax: (212)-339-0945
|
|
|
|
Email: monarch@imsi.com
|
|
|
|
|
|
CREDIT INDUSTRIEL ET COMMERCIAL, NEW YORK BRANCH
|
|
520 Madison Avenue
New York, NY 10022
|
|
|
|
Attn: Andrew McKuin
|
|
|
|
Telephone: (212) 715-4430
|
|
|
|
E-mail: amckuin@cicny.com
|
3
SCHEDULE III
COLLATERAL VESSELS
|
#
|
|
Collateral
Vessels
|
|
Type
|
|
Size
(dwt)
|
|
Built
|
|
Registry
|
|
Official Number
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Secondary Collateral Vessels
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Genmar Poseidon
|
|
VLCC
|
|
305,795
|
|
2002
|
|
Republic of the Marshall Islands
|
|
2187
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2
|
|
Genmar Ulysses
|
|
VLCC
|
|
318,695
|
|
2003
|
|
Republic of the Marshall Islands
|
|
2092
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3
|
|
Genmar Hercules
|
|
VLCC
|
|
306,543
|
|
2007
|
|
Republic of the Marshall Islands
|
|
2001
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4
|
|
Genmar Atlas
|
|
VLCC
|
|
306,005
|
|
2007
|
|
Republic of the Marshall Islands
|
|
2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5
|
|
Genmar Zeus
|
|
VLCC
|
|
318,325
|
|
2010
|
|
Republic of the Marshall Islands
|
|
2295
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6
|
|
Genmar Maniate
|
|
Suezmax
|
|
165,000
|
|
2010
|
|
Republic of the Marshall Islands
|
|
2247
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7
|
|
Genmar Spartiate
|
|
Suezmax
|
|
165,000
|
|
2011
|
|
Republic of the Marshall Islands
|
|
2262
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Primary Collateral Vessels
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8
|
|
Genmar Agamemnon
|
|
Aframax
|
|
96,214
|
|
1995
|
|
Republic of Liberia
|
|
10257
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9
|
|
Genmar Ajax
|
|
Aframax
|
|
96,183
|
|
1996
|
|
Republic of Liberia
|
|
10259
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10
|
|
Genmar Daphne
|
|
Aframax
|
|
106,560
|
|
2002
|
|
Republic of the Marshall Islands
|
|
2501
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11
|
|
Genmar Defiance
|
|
Aframax
|
|
105,538
|
|
2002
|
|
Republic of Liberia
|
|
11678
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12
|
|
Genmar Elektra
|
|
Aframax
|
|
106,548
|
|
2002
|
|
Republic of the Marshall Islands
|
|
2945
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13
|
|
Genmar Strength
|
|
Aframax
|
|
105,674
|
|
2003
|
|
Republic of Liberia
|
|
11846
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14
|
|
Genmar Minotaur
|
|
Aframax
|
|
96,226
|
|
1995
|
|
Republic of Liberia
|
|
10948
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15
|
|
Genmar Consul
|
|
Handymax
|
|
47,400
|
|
2004
|
|
Islands of Bermuda
|
|
733745
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16
|
|
Genmar Companion
|
|
Panamax
|
|
72,750
|
|
2004
|
|
Islands of Bermuda
|
|
733743
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17
|
|
Genmar Compatriot
|
|
Panamax
|
|
72,750
|
|
2004
|
|
Islands of Bermuda
|
|
733750
|
|
#
|
|
Collateral
Vessels
|
|
Type
|
|
Size
(dwt)
|
|
Built
|
|
Registry
|
|
Official Number
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18
|
|
Genmar Argus
|
|
Suezmax
|
|
164,097
|
|
2000
|
|
Republic of the Marshall Islands
|
|
1826
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19
|
|
Genmar George T
|
|
Suezmax
|
|
149,847
|
|
2007
|
|
Republic of the Marshall Islands
|
|
2935
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20
|
|
Genmar Harriet G
|
|
Suezmax
|
|
150,205
|
|
2006
|
|
Republic of Liberia
|
|
12884
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21
|
|
Genmar Hope
|
|
Suezmax
|
|
153,919
|
|
1999
|
|
Republic of the Marshall Islands
|
|
1343
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22
|
|
Genmar Horn
|
|
Suezmax
|
|
159,475
|
|
1999
|
|
Republic of the Marshall Islands
|
|
1225
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23
|
|
Genmar Kara G
|
|
Suezmax
|
|
150,296
|
|
2007
|
|
Republic of Liberia
|
|
13098
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24
|
|
Genmar Orion
|
|
Suezmax
|
|
159,992
|
|
2002
|
|
Republic of the Marshall Islands
|
|
1641
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25
|
|
Genmar Phoenix
|
|
Suezmax
|
|
149,999
|
|
1999
|
|
Republic of the Marshall Islands
|
|
1882
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26
|
|
Genmar
Spyridon
|
|
Suezmax
|
|
153,972
|
|
2000
|
|
Republic of the Marshall Islands
|
|
1404
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27
|
|
Genmar St. Nikolas
|
|
Suezmax
|
|
149,876
|
|
2008
|
|
Republic of the Marshall Islands
|
|
3046
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28
|
|
Genmar
Victory
|
|
VLCC
|
|
314,000
|
|
2001
|
|
Islands of Bermuda
|
|
733717
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29
|
|
Genmar Vision
|
|
VLCC
|
|
314,000
|
|
2001
|
|
Islands of Bermuda
|
|
733716
|
2
SCHEDULE IV
EXISTING LIENS
None.
SCHEDULE V
EXISTING INDEBTEDNESS
|
Borrower(s)
|
|
Lender(s)/
Buyer(s)
|
|
Governing
Agreement
|
|
Aggregate
Principal
Amount
|
|
Guarantor(s)
|
|
General Maritime Corporation
|
|
DNB Bank ASA (f/k/a DnB NOR Bank)
|
|
Interest Rate Swap Agreement
|
|
$
|
75,000,000
|
|
None
|
|
General Maritime Corporation
|
|
Nordea Bank Finland plc
|
|
Interest Rate Swap Agreement
|
|
$
|
75,000,000
|
|
None
|
SPECIFIED SWAP
|
Borrower(s)
|
|
Lender(s)/
Buyer(s)
|
|
Governing
Agreement
|
|
Guarantor(s)
|
|
General Maritime Corporation
|
|
Citigroup
|
|
Interest Rate Swap Agreement
|
|
None
|
SCHEDULE VI
REQUIRED INSURANCE
Insurance to be maintained on each Collateral Vessel:
(a) The Parent shall, and shall cause its Subsidiaries to, at the Parent’s expense, keep each Collateral Vessel insured with insurers and protection and indemnity clubs or associations of internationally recognized responsibility, and placed in such markets, on such terms and conditions, and through brokers, in each case reasonably acceptable to the Collateral Agent (it being understood that Leeds and Leeds, AON and Marsh are acceptable) and under forms of policies approved by the Collateral Agent against the risks indicated below and such other risks as the Collateral Agent may specify from time to time:
(i)
Marine and war risk, including terrorism, confiscation, piracy, London Blocking and Trapping Addendum and Lost Vessel Clause, hull and machinery insurance, hull interest insurance and freight interest insurance, together in an amount in U.S. dollars at all times equal to, except as otherwise approved or required in writing by the Collateral Agent, the greater of (x) the then Fair Market Value of the Collateral Vessel and (y) an amount which, when aggregated with such insured value of the other Collateral Vessels (if the other Collateral Vessels are then subject to a Collateral Vessel Mortgage or a Secondary Collateral Vessel Mortgage in favor of the Collateral Agent under the Credit Agreement, and have not suffered an Event of Loss) is equal to 120% of the sum of (A) the aggregate principal amount of outstanding Loans at such time and (B) the Existing Letter of Credit Exposure at such time. The insured values for hull and machinery required under this clause (i) for each Collateral Vessel shall at all times be in an amount equal to the greater of (x) eighty per cent (80%) of the Fair Market Value of the Collateral Vessel and (y) an amount which, when aggregated with such hull and machinery insured value of the other Collateral Vessels (if the other Collateral Vessels are then subject to a Collateral Vessel Mortgage or a Secondary Collateral Vessel Mortgage in favor of the Collateral Agent and have not suffered an Event of Loss), is equal to the sum of (A) the aggregate principal amount of outstanding Loans at such time and (B) the Existing Letter of Credit Exposure at such time, and the remaining machinery and war risk insurance required by this clause (i) may be taken out as hull and freight interest insurance.
(ii)
Marine and war risk protection and indemnity insurance or equivalent insurance (including coverage against liability for crew, fines and penalties arising out of the operation of the Collateral Vessel, insurance against liability arising out of pollution, spillage or leakage, and workmen’s compensation or longshoremen’s and harbor workers’ insurance as shall be required by applicable law) in such amounts approved by the Collateral Agent;
provided
,
however
, that insurance against liability under law or international convention arising out of pollution, spillage or leakage shall be in an amount not less than the greater of:
(y)
the maximum amount available, as that amount may from time to time change, from the International Group of Protection and Indemnity
Associations (the “
International Group
”) or alternatively such sources of pollution, spillage or leakage coverage as are commercially available in any absence of such coverage by the International Group as shall be carried by prudent shipowners for similar vessels engaged in similar trades
plus
amounts available from customary excess insurers of such risks as excess amounts shall be carried by prudent shipowners for similar vessels engaged in similar trades; and
(z)
the amounts required by the laws or regulations of the United States of America or any applicable jurisdiction in which the Collateral Vessel may be trading from time to time.
(iii)
While the Collateral Vessel is idle or laid up, at the option of the Parent and in lieu of the above-mentioned marine and war risk hull insurance, port risk insurance insuring the Collateral Vessel against the usual risks encountered by like vessels under similar circumstances.
(b)
The Collateral Agent shall, at the Parent’s expense, keep each Collateral Vessel insured with mortgagee’s interest insurance (including extended mortgagee’s interest-additional perils-pollution) on such conditions as the Collateral Agent may reasonably require and mortgagee’s interest insurance for pollution risks as from time to time agreed, in each case satisfactory to the Collateral Agent and in an amount in U.S. dollars which, when aggregated with such insured value of the other Collateral Vessels (if the other Collateral Vessels are then subject to a Collateral Vessel Mortgage or a Secondary Collateral Vessel Mortgage in favor of the Collateral Agent under the Credit Agreement, and have not suffered an Event of Loss), is not less than 120% of the sum of (A) the aggregate principal amount of outstanding Loans at such time and (B) the Existing Letter of Credit Exposure at such time; all such Collateral Agent’s interest insurance cover shall in the Collateral Agent’s discretion be obtained directly by the Collateral Agent and the Parent shall on demand pay all costs of such cover; premium costs shall be reimbursed by the Parent to the Collateral Agent.
(c)
The marine and commercial war-risk insurance required in this
Schedule VI
for each Collateral Vessel shall have deductibles no higher than the following: (i) Hull and Machinery - U.S. $500,000 (or such other amount as may be agreed to by the Required Lenders) for all hull and machinery claims and each accident or occurrence and (ii) Protection and Indemnity — U.S. $100,000 for collision liabilities, U.S. $50,000 for cargo claims, U.S. $35,000 for crew claims, U.S. $20,000 passenger claims and U.S. $20,000 all other claims, in each case each accident or occurrence.
All insurance maintained hereunder shall be primary insurance without right of contribution against any other insurance maintained by the Collateral Agent. Each policy of marine and war risk hull and machinery insurance with respect to each Collateral Vessel shall provide that the Collateral Agent shall be a named insured in its capacity as Mortgagee and as a loss payee. Each entry in a marine and war risk protection indemnity club with respect to each Collateral Vessel shall note the interest of the Collateral Agent. The Administrative Agent, the Collateral Agent and each of their respective successors and assigns shall not be responsible for
2
any premiums, club calls, assessments or any other obligations or for the representations and warranties made therein by the Parent, any of the Parent’s Subsidiaries or any other person.
(d)
The Collateral Agent shall from time to time, and in any event at least annually, obtain a detailed report signed by a firm of marine insurance brokers acceptable to the Collateral Agent with respect to P & I entry, the hull and machinery and war risk insurance carried and maintained on each Collateral Vessel, together with their opinion as to the adequacy thereof and its compliance with the provisions of this
Schedule VI
. At the Parent’s expense the Parent will cause its insurance broker (which, for the avoidance of doubt shall be a different insurance broker from the firm of marine insurance brokers referred to in the immediately preceding sentence) and the P & I club or association providing P & I insurance referred to in part (a)(ii) of this
Schedule VI
, to agree to advise the Collateral Agent by telecopier or electronic mail confirmed by letter of any expiration, termination, alteration or cancellation of any policy, any default in the payment of any premium and of any other act or omission on the part of the Parent or any of its Subsidiaries of which the Parent has knowledge and which might invalidate or render unenforceable, in whole or in part, any insurance on any Collateral Vessel, and to provide an opportunity of paying any such unpaid premium or call, such right being exercisable by the Collateral Agent on a Collateral Vessel on an individual basis and not on a fleet basis. In addition, the Parent shall promptly provide the Collateral Agent with any information which the Collateral Agent reasonably requests for the purpose of obtaining or preparing any report from the Collateral Agent’s independent marine insurance consultant as to the adequacy of the insurances effected or proposed to be effected in accordance with this
Schedule VI
as of the date hereof or in connection with any renewal thereof, and the Parent shall upon demand indemnify the Collateral Agent in respect of all reasonable fees and other expenses incurred by or for the account of the Collateral Agent in connection with any such report,
provided
that the Collateral Agent shall be entitled to such indemnity only for one such report during a period of twelve months.
The underwriters or brokers shall furnish the Collateral Agent with a letter or letters of undertaking to the effect that:
(i)
they will hold the instruments of insurance, and the benefit of the insurances thereunder, to the order of the Collateral Agent in accordance with the terms of the loss payable clause referred to in the relevant Assignment of Insurances or Secondary Assignment of Insurances for each Collateral Vessel, as applicable;
(ii)
they will have endorsed on each and every policy as and when the same is issued the loss payable clause and the notice of assignment referred to in the relevant Assignment of Insurances or Secondary Assignment of Insurances for each Collateral Vessel, as applicable; and
(iii)
they will not set off against any sum recoverable in respect of a claim against any Collateral Vessel under the said underwriters or brokers or any other Person in respect of any other vessel nor cancel the said insurances by reason of non-payment of such premiums or other amounts.
3
All policies of insurance required hereby shall provide for not less than 14 days prior written notice to be received by the Collateral Agent of the termination or cancellation of the insurance evidenced thereby. All policies of insurance maintained pursuant to this
Schedule VI
for risks covered by insurance other than that provided by a P & I Club shall contain provisions waiving underwriters’ rights of subrogation thereunder against any assured named in such policy and any assignee of said assured. The Parent shall, and shall cause its Subsidiaries to, assign to the Collateral Agent its full rights under any policies of insurance in respect of each Collateral Vessel. The Parent agrees that it shall, and shall cause each of its Subsidiaries to, deliver, unless the insurances by their terms provide that they cannot cease (by reason of nonrenewal or otherwise) without the Collateral Agent being informed and having the right to continue the insurance by paying any premiums not paid by the Parent, receipts showing payment of premiums for Required Insurance and also of demands from the Collateral Vessel’s P & I underwriters to the Collateral Agent at least two (2) days before the risk in question commences.
(e)
Unless the Collateral Agent shall otherwise agree, all amounts of whatsoever nature payable under any insurance must be payable to the Collateral Agent for distribution first to itself and thereafter to the Parent or others as their interests may appear,
provided
that, notwithstanding anything to the contrary herein, until otherwise required by the Collateral Agent by notice to the underwriters upon the occurrence and continuance of a Default or an Event of Default hereunder, (i) amounts payable under any insurance on each Collateral Vessel with respect to protection and indemnity risks may be paid directly to (x) the Parent to reimburse it for any loss, damage or expense incurred by it and covered by such insurance or (y) the Person to whom any liability covered by such insurance has been incurred provided that the underwriter shall have first received evidence that the liability insured against has been discharged, and (ii) amounts payable under any insurance with respect to each Collateral Vessel involving any damage to each Collateral Vessel not constituting an Event of Loss, may be paid by underwriters directly for the repair, salvage or other charges involved or, if the Parent shall have first fully repaired the damage or paid all of the salvage or other charges, may be paid to the Parent as reimbursement therefor;
provided
,
however
, that if such amounts (including any deductible) are in excess of U.S. $2,000,000, the underwriters shall not make such payment without first obtaining the written consent thereto of the Collateral Agent.
(f)
All amounts paid to the Collateral Agent in respect of any insurance on the Collateral Vessels shall be disposed of as follows (after deduction of the expenses of the Collateral Agent in collecting such amounts):
(i)
any amount which might have been paid at the time, in accordance with the provisions of paragraph (d) above, directly to the Parent or others shall be paid by the Collateral Agent to, or as directed by, the Parent;
(ii)
all amounts paid to the Collateral Agent in respect of an Event of Loss of the Collateral Vessel shall be applied by the Collateral Agent to the payment of the Indebtedness hereby secured pursuant to Section 5.02(c) of the Credit Agreement and subject to the Intercreditor Agreements;
4
(iii)
all other amounts paid to the Collateral Agent in respect of any insurance on the Collateral Vessel may, in the Collateral Agent’s sole discretion, be held and applied to the prepayment of the Obligations or to making of needed repairs or other work on the Collateral Vessel, or to the payment of other claims incurred by the Parent or any of its Subsidiaries relating to the Collateral Vessel, or may be paid to the Parent or whosoever may be entitled thereto.
(g)
In the event that any claim or lien is asserted against any Collateral Vessel for loss, damage or expense which is covered by insurance required hereunder and it is necessary for the Parent to obtain a bond or supply other security to prevent arrest of such Collateral Vessel or to release the Collateral Vessels from arrest on account of such claim or lien, the Collateral Agent, on request of the Parent, may, in the sole discretion of the Collateral Agent, assign to any Person, firm or corporation executing a surety or guarantee bond or other agreement to save or release the Collateral Vessel from such arrest, all right, title and interest of the Collateral Agent in and to said insurance covering said loss, damage or expense, as collateral security to indemnify against liability under said bond or other agreement.
(h)
The Parent shall deliver to the Collateral Agent certified copies and, whenever so requested by the Collateral Agent, the originals of all certificates of entry, cover notes, binders, evidences of insurance and policies and all endorsements and riders amendatory thereof in respect of insurance maintained pursuant to Section 8.03 of the Credit Agreement and this
Schedule VI
for the purpose of inspection or safekeeping, or, alternatively, satisfactory letters of undertaking from the broker holding the same. The Collateral Agent shall be under no duty or obligation to verify the adequacy or existence of any such insurance or any such policies, endorsement or riders.
(i)
The Parent will not, and will not permit any of its Subsidiaries to, execute or permit or willingly allow to be done any act by which any insurance may be suspended, impaired or cancelled, and that it will not permit or allow the Collateral Vessels to undertake any voyage or run any risk or transport any cargo which may not be permitted by the policies in force, without having previously notified the Collateral Agent in writing and insured the Collateral Vessels by additional coverage to extend to such voyages, risks, passengers or cargoes.
(j)
In case any underwriter proposes to pay less on any claim than the amount thereof, the Parent shall forthwith inform the Collateral Agent, and if a Default, an Event of Default or an Event of Loss has occurred and is continuing, the Collateral Agent shall have the exclusive right to negotiate and agree to any compromise.
(k)
The Parent will, and will cause each of its Subsidiaries to, comply with and satisfy all of the provisions of any applicable law, convention, regulation, proclamation or order concerning financial responsibility for liabilities imposed on the Parent, its Subsidiaries or the Collateral Vessels with respect to pollution by any state or nation or political subdivision thereof and will maintain all certificates or other evidence of financial responsibility as may be required by any such law, convention, regulation, proclamation or order with respect to the trade in which the Collateral Vessels are from time to time engaged and the cargo carried by it.
5
SCHEDULE VII
ERISA
General Maritime Corporation 401(k) Profit Sharing Plan and Trust
SCHEDULE VIII
SUBSIDIARIES
|
Name of Subsidiary
|
|
Direct Owner(s)
|
|
Percent (%)
Ownership
|
|
Jurisdiction of
Organization
|
|
General Maritime Subsidiary Corporation
|
|
General Maritime Corporation
|
|
100%
|
|
Republic of the Marshall Islands
|
|
General Maritime Management LLC
|
|
General Maritime Subsidiary Corporation
|
|
100%
|
|
Republic of the Marshall Islands
|
|
General Maritime Management (UK) LLC
|
|
General Maritime Management LLC
|
|
100%
|
|
Republic of the Marshall Islands
|
|
General Maritime Management (Hellas) LLC
|
|
General Maritime Management LLC
|
|
100%
|
|
Republic of Liberia
|
|
General Maritime Management (Portugal) LLC
|
|
General Maritime Management LLC
|
|
100%
|
|
Republic of the Marshall Islands
|
|
General Maritime Management (Portugal) LDA
|
|
General Maritime Management (Portugal) LLC
|
|
100%
|
|
Republic of Portugal
|
|
General Maritime Crewing Pte. Ltd.
|
|
General Maritime Management (Portugal) LLC
|
|
100%
|
|
Singapore
|
|
General Maritime Crewing Private Limited (India Division Office)
|
|
General Maritime Crewing Pte. Ltd.
|
|
100%
|
|
India
|
|
General Maritime Crewing Limited
|
|
General Maritime Crewing Pte. Ltd.
|
|
100%
|
|
Russia
|
|
GMR Chartering LLC
|
|
General Maritime Subsidiary Corporation
|
|
100%
|
|
New York
|
|
GMR Administration Corp.
|
|
General Maritime Subsidiary Corporation
|
|
100%
|
|
Republic of the Marshall Islands
|
|
GMR Agamemnon LLC
|
|
General Maritime Subsidiary Corporation
|
|
100%
|
|
Republic of Liberia
|
|
GMR Ajax LLC
|
|
General Maritime Subsidiary Corporation
|
|
100%
|
|
Republic of Liberia
|
|
GMR Alexandra LLC
|
|
General Maritime Subsidiary Corporation
|
|
100%
|
|
Republic of the Marshall Islands
|
|
GMR Argus LLC
|
|
General Maritime Subsidiary Corporation
|
|
100%
|
|
Republic of the Marshall Islands
|
|
GMR Constantine LLC
|
|
General Maritime Subsidiary Corporation
|
|
100%
|
|
Republic of Liberia
|
|
GMR Daphne LLC
|
|
General Maritime Subsidiary
|
|
100%
|
|
Republic of the
|
|
Name of Subsidiary
|
|
Direct Owner(s)
|
|
Percent (%)
Ownership
|
|
Jurisdiction of
Organization
|
|
|
|
Corporation
|
|
|
|
Marshall Islands
|
|
GMR Defiance LLC
|
|
General Maritime Subsidiary Corporation
|
|
100%
|
|
Republic of Liberia
|
|
GMR Elektra LLC
|
|
General Maritime Subsidiary Corporation
|
|
100%
|
|
Republic of the Marshall Islands
|
|
GMR George T LLC
|
|
General Maritime Subsidiary Corporation
|
|
100%
|
|
Republic of the Marshall Islands
|
|
GMR GP LLC
|
|
General Maritime Subsidiary Corporation
|
|
100%
|
|
Republic of the Marshall Islands
|
|
GMR Gulf LLC
|
|
General Maritime Subsidiary Corporation
|
|
100%
|
|
Republic of the Marshall Islands
|
|
GMR Harriet G LLC
|
|
General Maritime Subsidiary Corporation
|
|
100%
|
|
Republic of Liberia
|
|
GMR Hope LLC
|
|
General Maritime Subsidiary Corporation
|
|
100%
|
|
Republic of the Marshall Islands
|
|
GMR Horn LLC
|
|
General Maritime Subsidiary Corporation
|
|
100%
|
|
Republic of the Marshall Islands
|
|
GMR Kara G LLC
|
|
General Maritime Subsidiary Corporation
|
|
100%
|
|
Republic of Liberia
|
|
GMR Limited LLC
|
|
General Maritime Subsidiary Corporation
|
|
100%
|
|
Republic of the Marshall Islands
|
|
GMR Minotaur LLC
|
|
General Maritime Subsidiary Corporation
|
|
100%
|
|
Republic of Liberia
|
|
GMR Orion LLC
|
|
General Maritime Subsidiary Corporation
|
|
100%
|
|
Republic of the Marshall Islands
|
|
GMR Phoenix LLC
|
|
General Maritime Subsidiary Corporation
|
|
100%
|
|
Republic of the Marshall Islands
|
|
GMR Princess LLC
|
|
General Maritime Subsidiary Corporation
|
|
100%
|
|
Republic of Liberia
|
|
GMR Progress LLC
|
|
General Maritime Subsidiary Corporation
|
|
100%
|
|
Republic of Liberia
|
|
GMR Revenge LLC
|
|
General Maritime Subsidiary Corporation
|
|
100%
|
|
Republic of Liberia
|
2
|
Name of Subsidiary
|
|
Direct Owner(s)
|
|
Percent (%)
Ownership
|
|
Jurisdiction of
Organization
|
|
GMR St. Nikolas LLC
|
|
General Maritime Subsidiary Corporation
|
|
100%
|
|
Republic of the Marshall Islands
|
|
GMR Spyridon LLC
|
|
General Maritime Subsidiary Corporation
|
|
100%
|
|
Republic of the Marshall Islands
|
|
GMR Star LLC
|
|
General Maritime Subsidiary Corporation
|
|
100%
|
|
Republic of Liberia
|
|
GMR Strength LLC
|
|
General Maritime Subsidiary Corporation
|
|
100%
|
|
Republic of Liberia
|
|
GMR Trader LLC
|
|
General Maritime Subsidiary Corporation
|
|
100%
|
|
Republic of Liberia
|
|
GMR Trust LLC
|
|
General Maritime Subsidiary Corporation
|
|
100%
|
|
Republic of Liberia
|
|
Arlington Tankers Ltd.
|
|
General Maritime Corporation
|
|
100%
|
|
Bermuda
|
|
Companion Ltd.
|
|
Arlington Tankers Ltd.
|
|
100%
|
|
Bermuda
|
|
Compatriot Ltd.
|
|
Arlington Tankers Ltd.
|
|
100%
|
|
Bermuda
|
|
Consul Ltd.
|
|
Arlington Tankers Ltd.
|
|
100%
|
|
Bermuda
|
|
Victory Ltd.
|
|
Arlington Tankers Ltd.
|
|
100%
|
|
Bermuda
|
|
Vision Ltd.
|
|
Arlington Tankers Ltd.
|
|
100%
|
|
Bermuda
|
|
Arlington Tankers, LLC
|
|
Arlington Tankers Ltd.
|
|
100%
|
|
Delaware
|
|
General Maritime Subsidiary II Corporation
|
|
General Maritime Corporation
|
|
100%
|
|
Republic of the Marshall Islands
|
|
GMR Poseidon LLC
|
|
General Maritime Subsidiary II Corporation
|
|
100%
|
|
Republic of the Marshall Islands
|
|
GMR Ulysses LLC
|
|
General Maritime Subsidiary II Corporation
|
|
100%
|
|
Republic of the Marshall Islands
|
|
GMR Hercules LLC
|
|
General Maritime Subsidiary II Corporation
|
|
100%
|
|
Republic of the Marshall Islands
|
|
GMR Atlas LLC
|
|
General Maritime Subsidiary II Corporation
|
|
100%
|
|
Republic of the Marshall Islands
|
|
GMR Zeus LLC
|
|
General Maritime Subsidiary II
|
|
100%
|
|
Republic of the
|
3
|
Name of Subsidiary
|
|
Direct Owner(s)
|
|
Percent (%)
Ownership
|
|
Jurisdiction of
Organization
|
|
|
|
Corporation
|
|
|
|
Marshall Islands
|
|
GMR Maniate LLC
|
|
General Maritime Subsidiary II Corporation
|
|
100%
|
|
Republic of the Marshall Islands
|
|
GMR Spartiate LLC
|
|
General Maritime Subsidiary II Corporation
|
|
100%
|
|
Republic of the Marshall Islands
|
|
General Maritime Investments LLC
|
|
General Maritime Corporation
|
|
100%
|
|
Republic of the Marshall Islands
|
|
General Product Carriers Corporation
|
|
General Maritime Investments LLC
|
|
100%
|
|
Republic of the Marshall Islands
|
|
General Maritime Subsidiary NSF Corporation
|
|
General Maritime Corporation
|
|
100%
|
|
Republic of the Marshall Islands
|
|
Concept Ltd.
|
|
General Maritime Subsidiary NSF Corporation
|
|
100%
|
|
Bermuda
|
|
Concord Ltd.
|
|
General Maritime Subsidiary NSF Corporation
|
|
100%
|
|
Bermuda
|
|
Contest Ltd.
|
|
General Maritime Subsidiary NSF Corporation
|
|
100%
|
|
Bermuda
|
|
GMR Concord LLC
|
|
General Maritime Subsidiary NSF Corporation
|
|
100%
|
|
Republic of the Marshall Islands
|
|
GMR Contest LLC
|
|
General Maritime Subsidiary NSF Corporation
|
|
100%
|
|
Republic of the Marshall Islands
|
|
GMR Concord LLC
|
|
General Maritime Subsidiary NSF Corporation
|
|
100%
|
|
Republic of the Marshall Islands
|
4
SCHEDULE IX
CAPITALIZATION
All defined terms used in this
Schedule IX
and not defined in the Agreement shall have the meaning assigned thereto in the Plan of Reorganization.
|
New Equity Investment Shares
|
|
Oaktree Plan Sponsors
|
|
4,750,272
|
|
|
|
|
|
|
|
|
|
Commitment Fee GMR Common Stock
|
|
Oaktree Plan Sponsors
|
|
300,017
|
|
|
|
|
|
|
|
|
|
OCM Conversion Shares
|
|
OCM
|
|
4,750,271
|
|
|
|
|
|
|
|
|
|
Unsecured Creditor Equity Distribution
|
|
Unsecured Creditor Distribution Escrow Account
|
|
200,011
|
|
|
|
|
|
|
|
|
|
New GMR Warrants
|
|
Unsecured Creditor Distribution Escrow Account
|
|
309,296
|
|
Subject to dilution for New GMR Common Stock issuable under the Equity Incentive Program (each as defined in the Plan of Reorganization).
Note: Subject to True-Up for Rejection Claim Damage Claims pursuant to Article IX.D of the Plan of Reorganization.
SCHEDULE X
APPROVED CLASSIFICATION SOCIETIES
American Bureau of Shipping
Nippon Kaiji Kyokai
Germanischer Lloyd
Lloyd’s Register of Shipping
Bureau Veritas
Det Norske Veritas
SCHEDULE XI
EXISTING INVESTMENTS
None.
SCHEDULE XII
EXISTING LETTERS OF CREDIT
|
Issuing
Lender
|
|
Letter of
Credit
Number
|
|
Account
Party
|
|
Stated Amount
|
|
Beneficiary
|
|
Expiry
Date
|
|
Nordea Bank
Norge ASA
|
|
SBY52517
|
|
General Maritime Corporation
|
|
$
|
658,344.00
|
|
Fisher Park Lane Owner LLC
|
|
12/10/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SCHEDULE XIII
TRANSACTIONS WITH AFFILIATES
None.
SCHEDULE XIV
SUBSIDIARY GUARANTORS
|
Name of Subsidiary
|
|
Direct Owner(s)
|
|
GMR Agamemnon LLC
|
|
General Maritime Subsidiary Corporation
|
|
GMR Ajax LLC
|
|
General Maritime Subsidiary Corporation
|
|
GMR Argus LLC
|
|
General Maritime Subsidiary Corporation
|
|
GMR Daphne LLC
|
|
General Maritime Subsidiary Corporation
|
|
GMR Defiance LLC
|
|
General Maritime Subsidiary Corporation
|
|
GMR Elektra LLC
|
|
General Maritime Subsidiary Corporation
|
|
GMR George T LLC
|
|
General Maritime Subsidiary Corporation
|
|
GMR Harriet G LLC
|
|
General Maritime Subsidiary Corporation
|
|
GMR Hope LLC
|
|
General Maritime Subsidiary Corporation
|
|
GMR Horn LLC
|
|
General Maritime Subsidiary Corporation
|
|
GMR Kara G LLC
|
|
General Maritime Subsidiary Corporation
|
|
GMR Minotaur LLC
|
|
General Maritime Subsidiary Corporation
|
|
GMR Orion LLC
|
|
General Maritime Subsidiary Corporation
|
|
GMR Phoenix LLC
|
|
General Maritime Subsidiary Corporation
|
|
GMR St. Nikolas LLC
|
|
General Maritime Subsidiary Corporation
|
|
GMR Spyridon LLC
|
|
General Maritime Subsidiary Corporation
|
|
GMR Strength LLC
|
|
General Maritime Subsidiary Corporation
|
|
Companion Ltd.
|
|
Arlington Tankers Ltd.
|
|
Compatriot Ltd.
|
|
Arlington Tankers Ltd.
|
|
Consul Ltd.
|
|
Arlington Tankers Ltd.
|
|
Victory Ltd.
|
|
Arlington Tankers Ltd.
|
|
Vision Ltd.
|
|
Arlington Tankers Ltd.
|
|
GMR Poseidon LLC
|
|
General Maritime Subsidiary II Corporation
|
|
Name of Subsidiary
|
|
Direct Owner(s)
|
|
GMR Ulysses LLC
|
|
General Maritime Subsidiary II Corporation
|
|
GMR Hercules LLC
|
|
General Maritime Subsidiary II Corporation
|
|
GMR Atlas LLC
|
|
General Maritime Subsidiary II Corporation
|
|
GMR Zeus LLC
|
|
General Maritime Subsidiary II Corporation
|
|
GMR Maniate LLC
|
|
General Maritime Subsidiary II Corporation
|
|
GMR Spartiate LLC
|
|
General Maritime Subsidiary II Corporation
|
2
SCHEDULE XV
LITIGATION
·
On or about August 29, 2007, an oil sheen was discovered by shipboard personnel of the
Genmar Progress
in Guayanilla Bay, Puerto Rico in the vicinity of the vessel. The vessel crew took prompt action pursuant to the vessel response plan. The Parent’s subsidiary which operates the vessel promptly reported this incident to the U.S. Coast Guard and subsequently accepted responsibility under the U.S. Oil Pollution Act of 1990 for any damage or loss resulting from the accidental discharge of bunker fuel determined to have been discharged from the vessel. The Parent understands the federal and Puerto Rico authorities are conducting civil investigations into an oil pollution incident which occurred during this time period on the southwest coast of Puerto Rico including Guayanilla Bay. The extent to which oil discharged from the
Genmar Progress
is responsible for this incident is currently the subject of investigation. The U.S. Coast Guard has designated the
Genmar Progress
as a potential source of discharged oil. Under the U.S. Oil Pollution Act of 1990, the source of the discharge is liable, regardless of fault, for damages and oil spill remediation as a result of the discharge. On January 13, 2009, the Parent received a demand from the U.S. National Pollution Fund for approximately $5.8 million for the U.S. Coast Guard’s response costs and certain costs of the Departamento de Recursos Naturales y Ambientales of Puerto Rico in connection with the alleged damage to the environment caused by the spill. In April 2010, the U.S. National Pollution Fund made an additional natural resource damage assessment claim against the Parent of approximately $0.5 million. In October 2010, the Parent entered into a settlement agreement with the U.S. National Pollution Fund in which the Parent agreed to pay approximately $6.3 million in full satisfaction of the oil spill response costs of the U.S. Coast Guard and natural damage assessment costs of the U.S. National Pollution Fund through the date of the settlement agreement. Pursuant to the settlement agreement, the U.S. National Pollution Fund will waive its claims to any additional civil penalties under the U.S. Clean Water Act as well as for accrued interest. The settlement has been paid in full by the vessel’s protection and indemnity underwriters. Notwithstanding the settlement agreement, the Parent may be subject to any further potential claims by the U.S. National Pollution Fund or the U.S. Coast Guard arising from the ongoing natural resource damage assessment.
·
On November 25, 2008, a jury in the Southern District of Texas found General Maritime Management (Portugal) L.D.A., a subsidiary of GMR (“GMM Portugal”), and two vessel officers of the
Genmar Defiance
guilty of violating the Act to Prevent Pollution from Ships and 18 USC 1001. The conviction resulted from charges based on alleged incidents occurring on board the
Genmar Defiance
arising from potential failures by shipboard staff to properly record discharges of bilge waste during the period of November 24, 2007 through November 26, 2007. Pursuant to the sentence imposed by the Court on March 13, 2009, GMM Portugal paid a $1 million fine in April 2009 and is subject to a probationary period of five years. During this period, a court-appointed monitor will monitor and audit GMM Portugal’s compliance with its environmental compliance plan, and GMM Portugal is required to designate a responsible corporate officer to submit monthly reports to, and respond to inquiries from, the court’s probation department. The court stated that, should GMM Portugal engage in future conduct in violation of its probation, it may, under appropriate circumstances, ban certain of the Parent’s vessels from calling on U.S. ports. Any violations of probation may also result in additional penalties, costs or sanctions being imposed on the Parent.
SCHEDULE XVI
NON-RECOURSE SUBSIDIARIES
None.
Exhibit 10.26
EXECUTION COPY
(1)
$273,802,583.31
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
among
GENERAL MARITIME CORPORATION,
as Parent,
GENERAL MARITIME SUBSIDIARY CORPORATION,
and
ARLINGTON TANKERS LTD.
as Guarantors,
GENERAL MARITIME SUBSIDIARY II CORPORATION,
as Borrower,
VARIOUS LENDERS
and
NORDEA BANK FINLAND PLC, NEW YORK BRANCH,
as Administrative Agent and Collateral Agent
Dated as of May 17, 2012
NORDEA BANK FINLAND PLC, NEW YORK BRANCH,
and
DNB BANK ASA
as Joint Lead Arrangers and Joint Book Runners
(1) Conformed through that certain Sixth Amendment, dated as of April 2, 2015
TABLE OF CONTENTS
|
|
Page
|
|
|
|
|
SECTION 1. Definitions and Accounting Terms
|
2
|
|
|
|
|
1.01 Defined Terms
|
2
|
|
|
|
|
SECTION 2. Amount and Terms of Credit Facility
|
39
|
|
|
|
|
2.01 The Loans
|
39
|
|
2.02 [Intentionally Omitted]
|
39
|
|
2.03 [Intentionally Omitted]
|
39
|
|
2.04 [Intentionally Omitted]
|
39
|
|
2.05 Notes
|
40
|
|
2.06 Pro Rata Borrowings
|
40
|
|
2.07 Interest
|
40
|
|
2.08 Interest Periods
|
41
|
|
2.09 Increased Costs, Illegality, Market Disruption Event, etc.
|
43
|
|
2.10 Compensation
|
45
|
|
2.11 Change of Lending Office
|
45
|
|
2.12 Replacement of Lenders
|
45
|
|
|
|
|
SECTION 3. Fees
|
46
|
|
|
|
|
3.01 Fees
|
46
|
|
|
|
|
SECTION 4. Prepayments; Payments; Taxes
|
46
|
|
|
|
|
4.01 Voluntary Prepayments
|
46
|
|
4.02 Mandatory Repayments
|
47
|
|
4.03 Method and Place of Payment
|
50
|
|
4.04 Net Payments; Taxes
|
50
|
|
|
|
|
SECTION 5. [Intentionally Omitted]
|
51
|
|
|
|
|
SECTION 6. [Intentionally Omitted]
|
51
|
|
|
|
|
SECTION 7. Representations, Warranties and Agreements
|
51
|
|
|
|
|
7.01 Corporate/Limited Liability Company/Limited Partnership Status
|
52
|
|
7.02 Corporate Power and Authority
|
52
|
|
7.03 No Violation
|
52
|
|
7.04 Governmental Approvals
|
52
|
|
7.05 Financial Statements; Financial Condition; Undisclosed Liabilities
|
53
|
|
7.06 Litigation
|
54
|
|
7.07 True and Complete Disclosure
|
54
|
|
7.08 Use of Proceeds; Margin Regulations
|
54
|
|
7.09 Tax Returns and Payments
|
54
|
|
7.10 Compliance with ERISA
|
55
|
ii
|
7.11 The Security Documents
|
56
|
|
7.12 Capitalization
|
56
|
|
7.13 Subsidiaries
|
57
|
|
7.14 Compliance with Statutes, etc.
|
57
|
|
7.15 Investment Company Act
|
57
|
|
7.16 Money Laundering
|
57
|
|
7.17 Pollution and Other Regulations
|
58
|
|
7.18 Labor Relations
|
59
|
|
7.19 Patents, Licenses, Franchises and Formulas
|
59
|
|
7.20 Indebtedness
|
59
|
|
7.21 Insurance
|
59
|
|
7.22 Concerning the Collateral Vessels
|
59
|
|
7.23 Citizenship
|
60
|
|
7.24 Collateral Vessel Classification; Flag
|
60
|
|
7.25 No Immunity
|
60
|
|
7.26 Fees and Enforcement
|
60
|
|
7.27 Form of Documentation
|
60
|
|
7.28 Solvency
|
61
|
|
7.29 Patriot Act
|
61
|
|
7.30 Certain Business Practices
|
61
|
|
|
|
|
SECTION 8. Affirmative Covenants
|
61
|
|
|
|
|
8.01 Information Covenants
|
61
|
|
8.02 Books, Records and Inspections
|
66
|
|
8.03 Maintenance of Property; Insurance
|
66
|
|
8.04 Corporate Franchises
|
66
|
|
8.05 Compliance with Statutes, etc.
|
66
|
|
8.06 Compliance with Environmental Laws
|
67
|
|
8.07 ERISA
|
68
|
|
8.08 End of Fiscal Years; Fiscal Quarters
|
69
|
|
8.09 Performance of Obligations
|
69
|
|
8.10 Payment of Taxes
|
69
|
|
8.11 Further Assurances
|
69
|
|
8.12 Deposit of Earnings
|
70
|
|
8.13 Ownership of Subsidiaries
|
70
|
|
8.14 Flag of Collateral Vessels; Citizenship; Collateral Vessel Classifications
|
71
|
|
8.15 Use of Proceeds
|
71
|
|
8.16 Sale Vessels Disposal
|
71
|
|
|
|
|
SECTION 9. Negative Covenants
|
71
|
|
|
|
|
9.01 Liens
|
72
|
|
9.02 Consolidation, Merger, Sale of Assets, etc.
|
74
|
|
9.03 Dividends
|
78
|
|
9.04 Indebtedness
|
78
|
|
9.05 Advances, Investments and Loans
|
79
|
|
9.06 Transactions with Affiliates
|
81
|
iii
|
9.07 Capital Expenditures
|
81
|
|
9.08 Minimum Cash Balance
|
82
|
|
9.09 Collateral Maintenance
|
82
|
|
9.10 Interest Expense Coverage Ratio
|
83
|
|
9.11 Limitation on Modifications of Certificate of Incorporation, By-Laws and Certain Other Agreements; etc.
|
83
|
|
9.12 Limitation on Certain Restrictions on Subsidiaries
|
84
|
|
9.13 Limitation on Issuance of Equity Interests
|
84
|
|
9.14 Business
|
85
|
|
9.15 Jurisdiction of Employment; Chartering In Contracts
|
85
|
|
9.16 Bank Accounts
|
85
|
|
9.17 Indebtedness of Non-Recourse Subsidiaries
|
86
|
|
9.18 Prepayments, Etc. of Wells Fargo Indebtedness
|
86
|
|
9.19 Special Provisions Relating to the 2014 Newbuilding Acquisition and related Transactions
|
86
|
|
9.20 Chartering Arrangements
|
88
|
|
9.21 Special Provisions Relating to Merger Sub and its Subsidiaries
|
88
|
|
|
|
|
SECTION 10. Events of Default
|
89
|
|
|
|
|
10.01 Payments
|
89
|
|
10.02 Representations, etc.
|
89
|
|
10.03 Covenants
|
89
|
|
10.04 Default Under Other Agreements
|
89
|
|
10.05 Bankruptcy, etc.
|
89
|
|
10.06 ERISA
|
90
|
|
10.07 Security Documents
|
91
|
|
10.08 Guaranties
|
91
|
|
10.09 Judgments
|
91
|
|
10.10 Change of Control
|
91
|
|
10.11 Default Under Non-Recourse Subsidiary Agreements
|
91
|
|
|
|
|
SECTION 11. Agency and Security Trustee Provisions
|
92
|
|
|
|
|
11.01 Appointment
|
92
|
|
11.02 Nature of Duties
|
93
|
|
11.03 Lack of Reliance on the Agents
|
93
|
|
11.04 Certain Rights of the Agents
|
94
|
|
11.05 Reliance
|
94
|
|
11.06 Indemnification
|
94
|
|
11.07 The Administrative Agent in its Individual Capacity
|
94
|
|
11.08 Holders
|
94
|
|
11.09 Resignation by the Administrative Agent
|
95
|
|
11.10 The Joint Lead Arrangers
|
95
|
|
11.11 Collateral Matters
|
95
|
|
11.12 Delivery of Information
|
96
|
iv
|
SECTION 12. Miscellaneous
|
97
|
|
|
|
|
12.01 Payment of Expenses, etc.
|
97
|
|
12.02 Right of Setoff
|
98
|
|
12.03 Notices
|
98
|
|
12.04 Benefit of Agreement
|
98
|
|
12.05 No Waiver; Remedies Cumulative
|
101
|
|
12.06 Payments Pro Rata
|
102
|
|
12.07 Calculations; Computations
|
102
|
|
12.08
GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL
|
103
|
|
12.09 Counterparts
|
104
|
|
12.10 Restatement Effective Date
|
104
|
|
12.11 Headings Descriptive
|
107
|
|
12.12 Amendment or Waiver; etc.
|
107
|
|
12.13 Survival
|
109
|
|
12.14 Domicile of Loans
|
109
|
|
12.15 Confidentiality
|
109
|
|
12.16 Register
|
110
|
|
12.17 Judgment Currency
|
110
|
|
12.18 Language
|
111
|
|
12.19 Waiver of Immunity
|
111
|
|
12.20 USA PATRIOT Act Notice
|
111
|
|
12.21 Release of Secondary Collateral and Subsidiary Guarantors
|
111
|
|
|
|
|
SECTION 13. Holdings Guaranty
|
112
|
|
|
|
|
13.01 Guaranty
|
112
|
|
13.02 Bankruptcy
|
112
|
|
13.03
Nature of Liability
|
113
|
|
13.04
Independent Obligation
|
113
|
|
13.05
Authorization
|
113
|
|
13.06
Reliance
|
114
|
|
13.07
Subordination
|
114
|
|
13.08
Waiver
|
115
|
|
13.09 Judgment Shortfall
|
116
|
|
SCHEDULE I
|
-
|
Loans
|
|
SCHEDULE II
|
-
|
Lender Addresses
|
|
SCHEDULE III
|
-
|
Collateral Vessels
|
|
SCHEDULE IV
|
-
|
Existing Liens
|
|
SCHEDULE V
|
-
|
Existing Indebtedness
|
|
SCHEDULE VI
|
-
|
Required Insurance
|
|
SCHEDULE VII
|
-
|
ERISA
|
|
SCHEDULE VIII
|
-
|
Subsidiaries
|
|
SCHEDULE IX
|
-
|
Capitalization
|
|
SCHEDULE X
|
-
|
Approved Classification Societies
|
|
SCHEDULE XI
|
-
|
Existing Investments
|
v
|
SCHEDULE XII
|
-
|
Transactions with Affiliates
|
|
SCHEDULE XIII
|
-
|
Subsidiary Guarantors
|
|
SCHEDULE XIV
|
-
|
Litigation
|
|
SCHEDULE XV
|
-
|
Non-Recourse Subsidiaries
|
|
|
|
|
|
EXHIBIT A
|
-
|
Form of Notice of Interest Period Election
|
|
EXHIBIT B
|
-
|
Form of Note
|
|
EXHIBIT C-1
|
-
|
Form of Opinion of Kirkland & Ellis LLP, New York counsel to the Credit Parties
|
|
EXHIBIT C-2
|
-
|
Form of Opinion of Constantine P. Georgiopoulos, New York maritime counsel to the Credit Parties
|
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EXHIBIT C-3
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-
|
Form of Opinion of Dennis J. Reeder, Esq., Marshall Islands counsel to the Credit Parties
|
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EXHIBIT C-4
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-
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Form of Opinion of George E. Henries, Esq., Liberian counsel to the Credit Parties
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EXHIBIT C-5
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-
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Form of Opinion of Conyers, Dill & Pearman Limited, Bermuda counsel to the Credit Parties
|
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EXHIBIT D
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-
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Form of Officer’s Certificate
|
|
EXHIBIT E
|
-
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Form of Amended and Restated Subsidiaries Guaranty
|
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EXHIBIT F-1
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-
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Form of Amended and Restated Pledge Agreement
|
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EXHIBIT F-2
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-
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Form of Amended and Restated Parent Pledge Agreement
|
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EXHIBIT F-3
|
-
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Form of Amended and Restated Secondary Pledge Agreement
|
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EXHIBIT F-4
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-
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Form of Pari Passu Pledge Agreement
|
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EXHIBIT G-1
|
-
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Form of Assignment of Earnings
|
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EXHIBIT G-2
|
-
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Form of Secondary Assignment of Earnings
|
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EXHIBIT H-1
|
-
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Form of Assignment of Insurances
|
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EXHIBIT H-2
|
-
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Form of Secondary Assignment of Insurances
|
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EXHIBIT I-1
|
-
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Form of Marshall Islands Collateral Vessel Mortgage
|
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EXHIBIT I-2
|
-
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Form of Marshall Islands Secondary Collateral Vessel Mortgage
|
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EXHIBIT I-3
|
-
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Form of Liberian Secondary Collateral Vessel Mortgage
|
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EXHIBIT I-4
|
-
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Form of Bermuda Secondary Collateral Vessel Mortgage
|
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EXHIBIT J
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-
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Form of Solvency Certificate
|
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EXHIBIT K
|
-
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Form of Assignment and Assumption Agreement
|
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EXHIBIT L
|
-
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Form of Amended and Restated Compliance Certificate
|
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EXHIBIT M
|
-
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Amended and Restated Subordination Provisions
|
|
EXHIBIT N
|
-
|
Form of Parent Officer’s Certificate
|
|
EXHIBIT O-1
|
-
|
Form of Primary Intercreditor Agreement
|
|
EXHIBIT O-2
|
-
|
Form of Secondary Intercreditor Agreement
|
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EXHIBIT P
|
-
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Form of Joinder Agreement
|
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EXHIBIT Q
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-
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Form of Excess Liquidity Certificate
|
vi
THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT, dated as of May 17, 2012, among GENERAL MARITIME CORPORATION, a Marshall Islands corporation (the “
Parent
”), GENERAL MARITIME SUBSIDIARY CORPORATION, a Marshall Islands corporation (“
GMSC
”), in its capacity as a Guarantor, ARLINGTON TANKERS LTD., a Bermuda corporation, as a Guarantor (“
Arlington
”), GENERAL MARITIME SUBSIDIARY II CORPORATION, a Marshall Islands corporation (the “
Borrower
”), the Lenders party hereto from time to time, and NORDEA BANK FINLAND PLC, NEW YORK BRANCH (“
Nordea
”), as Administrative Agent (in such capacity, the “
Administrative Agent
”) and as Collateral Agent under the Security Documents (in such capacity, the “
Collateral Agent
”). All capitalized terms used herein and defined in Section 1 are used herein as therein defined.
W I T N E S S E T H
:
WHEREAS, the Borrower, the Parent, GMSC, Arlington, the lenders party thereto and Nordea, as administrative agent and collateral agent, are party to an Amended and Restated Credit Agreement, dated as of May 6, 2011 (as amended, modified and/or supplemented from time to time to, but not including, the Restatement Effective Date, the “
Original Credit Agreement
”);
WHEREAS, the Borrower, GMSC and the Parent and certain of their subsidiaries commenced voluntary bankruptcy proceedings (the “
Chapter 11 Proceedings
”) on November 17, 2011 under Chapter 11 of title 11 of the United States Code (the “
Bankruptcy Code
”) in the United States Bankruptcy Court for the Southern District of New York (the “
Bankruptcy Court
”);
WHEREAS, in connection with the Chapter 11 Proceedings, the Bankruptcy Court confirmed a plan of reorganization (as such plan may be modified from time to time, in accordance with its terms, the “
Plan of Reorganization
”) under Chapter 11 of the Bankruptcy Code pursuant to a confirmation order dated May 7, 2012;
WHEREAS, pursuant to the Plan of Reorganization, on the Restatement Effective Date (x) each of the Lenders holding outstanding Term Loans will continue such Term Loans as Loans pursuant to the terms of this Agreement after giving effect to the paydown of $39,649,220 as part of the Plan of Reorganization, (y) each of the Lenders holding outstanding Revolving Loans immediately prior to the Restatement Effective Date will convert such Revolving Loans into Loans under this Agreement and (z) the unutilized Revolving Commitments (as defined in the Original Credit Agreement) of the Lenders, if any, under the Original Credit Agreement will be terminated;
WHEREAS, pursuant to the Plan of Reorganization, GMSC intends to amend and restate its existing $550,000,000 Second Amended and Restated Credit Agreement, dated as of May 6, 2011 (as amended, modified and/or supplemented from time to time to, but not including, the Restatement Effective Date, the “
Original Other Credit Agreement
”), among GMSC, as borrower, the Parent, Arlington and the Borrower, as guarantors, the lenders party thereto and Nordea, as administrative agent, with a term loan credit facility providing for the conversion of
the outstanding revolving commitments under the Original Other Credit Agreement into term loans to GMSC and the exchange of the termination value of and interest on the Specified Swap (as defined in the Other Credit Agreement) for a term loan (such $508,977,536.95 Third Amended and Restated Credit Agreement (as amended, modified and/or supplemented in accordance with the terms thereof and of the Intercreditor Agreements), among GMSC, as borrower, the Parent, the Borrower and Arlington, as guarantors, the lenders from time to time party thereto and Nordea, as administrative agent and collateral agent (in such capacities, the “
Other Agent
”), the “
Other Credit Agreement
”);
WHEREAS, subject to certain conditions, including the confirmation of the Plan of Reorganization pursuant to section 1129 of the Bankruptcy Code and the effectiveness of the Plan of Reorganization, pursuant to the Plan of Reorganization, the Lenders under the Original Credit Agreement shall be deemed a party to this Agreement without further action of the Administrative Agent or of the Lenders, and this Agreement, as set forth herein, will replace the Original Credit Agreement, which will have no remaining force and effect;
WHEREAS, pursuant to the terms of the Plan of Reorganization and in consideration for the Lenders under the Original Credit Agreement consenting to the conversion of Indebtedness under the Other Credit Agreement (including the guarantees thereof) and the continuation of the second priority liens on the collateral securing such Indebtedness, (x) the Guarantors under and as defined in the Other Credit Agreement will guarantee the Obligations under this Agreement and (y) the Obligations of the Credit Parties under this Agreement will continue to be secured by a second priority Lien on the Secondary Collateral; and
WHEREAS, the parties wish to amend and restate the Original Credit Agreement in order to permit the transactions described above and to amend certain other provisions of the Original Credit Agreement.
NOW, THEREFORE, the parties hereto agree that, effective as of the Restatement Effective Date, the Original Credit Agreement shall be, and hereby is, amended and restated in its entirety as follows:
SECTION 1.
Definitions and Accounting Terms
.
1.01
Defined Terms
. As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):
“
2013 Equity Investment
” shall have the meaning provided in the Third Amendment.
“
2014 Newbuilding Acquisition
” shall mean the acquisition of the 2014 Newbuilding Vessels, such acquisition to be implemented by (i) the acquisition of the 2014 Newbuilding Subsidiaries pursuant to the 2014 Newbuilding Master Agreement (the “Initial Phase of the 2014 Newbuilding Acquisition”) and (ii) the acquisition of the 2014 Newbuilding Vessels pursuant to the terms of the 2014 Newbuilding Contracts; provided that such acquisition consideration shall be funded solely as provided in Section 9.19(i).
2
“
2014 Newbuilding Contract
” shall mean shipbuilding contracts to which the 2014 Newbuilding Subsidiaries are party on the Fourth Amendment Effective Date which contracts are listed on Schedule XVIII to this Agreement, each as amended from time to time in accordance with the terms hereof and thereof including pursuant to the 2014 Newbuilding Contract Novation.
“
2014 Newbuilding Contract Novation
” shall mean the novation of the 2014 Newbuilding Contract to the 2014 Newbuilding Subsidiaries described in clause (b) of the definition thereof.
“
2014 Newbuilding Holdco
” shall mean VLCC Acquisition I Corporation, a Marshall Islands corporation, a wholly-owned direct Subsidiary of the Parent formed for the purpose of implementing the 2014 Newbuilding Acquisition, the assets of which shall consist primarily of the Capital Stock of the 2014 Newbuilding Subsidiaries.
“
2014 Newbuilding Master Agreement
” shall mean the Master Agreement, dated as of March 18, 2014 by and among 2014 Newbuilding Holdco, the 2014 Newbuilding Subsidiaries and Scorpio Tankers Inc., as such agreement may be amended or modified in accordance with the terms hereof and thereof.
“
2014 Newbuilding Subsidiaries
” shall mean (a) prior to the 2014 Newbuilding Contract Novation, the Persons acquired by the 2014 Newbuilding Holdco pursuant to the 2014 Newbuilding Master Agreement and (b) upon and after the 2014 Newbuilding Contract Novation, the Subsidiaries of 2014 Newbuilding Holdco who have succeeded to the Persons described in clause (a) each of which is party to a 2014 Newbuilding Contract.
“
2014 Newbuilding Vessel
” shall mean the seven VLCCs to be acquired by the 2014 Newbuilding Subsidiaries pursuant to the 2014 Newbuilding Contract.
“
273 Blocked Account
” shall mean a non-interest bearing blocked account with Nordea or Nordea Bank Finland plc, Cayman Islands Branch, as depository bank, with respect to which the Parent shall have duly executed and delivered a control agreement granting a first priority security interest to the Pledgee (as defined in the Pari Passu Pledge Agreement) (reasonably satisfactory in all respects to such Pledgee).
“
273 Blocked Amount
” shall have the meaning provided in Section 9.09(b).
“
508 Blocked Account
” shall mean the “508 Blocked Account” as defined in the Other Credit Agreement.
“
508 Blocked Amount
” shall mean the “508 Blocked Amount” as defined in the Other Credit Agreement.
“
Acceptable Flag Jurisdiction
” shall have the meaning provided in Section 8.14.
“
Acceptable Replacement Vessel
” shall mean, with respect to a Primary Collateral Vessel, any Vessel with an equal or greater Fair Market Value than such Primary Collateral Vessel (as determined in accordance with the appraisal reports most recently delivered
3
to the Administrative Agent (or obtained by the Administrative Agent) pursuant to Section 8.01(c) or delivered pursuant to a Vessel Exchange to the Administrative Agent by the Borrower); provided that (I) the Administrative Agent shall have the right to inspect such Vessel and (II) such Vessel must (i) constitute a double hull Vessel, (ii) be of at least 80,000 dwt, (iii) have been built after the Primary Collateral Vessel it replaces and, in any event, have been built no more than seven years prior to the date of the Vessel Exchange, (iv) have a class certificate reasonably acceptable to the Administrative Agent and (v) be registered and flagged in an Acceptable Flag Jurisdiction.
“
Administrative Agent
” shall have the meaning provided in the first paragraph of this Agreement, and shall include any successor thereto.
“
Affiliate
” shall mean, with respect to any Person, any other Person (including, for purposes of Section 9.06 only, all directors, officers and partners of such Person) directly or indirectly controlling, controlled by, or under direct or indirect common control with, such Person;
provided
,
however
, that for purposes of Section 9.06, an Affiliate of the Parent shall include any Person that directly or indirectly owns more than 5% of any class of the capital stock of the Parent and any officer or director of the Parent or any of its Subsidiaries. A Person shall be deemed to control another Person if such Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of such other Person, whether through the ownership of voting securities, by contract or otherwise. Notwithstanding anything to the contrary contained above, for purposes of Section 9.06, neither the Administrative Agent, nor the Collateral Agent, nor the Joint Lead Arrangers nor any Lender (or any of their respective affiliates) shall be deemed to constitute an Affiliate of the Parent or its Subsidiaries in connection with the Credit Documents or its dealings or arrangements relating thereto.
“
Affiliated Lender
” shall have the meaning provided in Section 12.04(d).
“
Agamemnon
” shall mean the Liberian flag vessel GENMAR AGAMEMNON, Official Number 10257.
“
Agents
” shall mean, collectively, the Administrative Agent, the Collateral Agent and each Joint Lead Arranger.
“
Aggregate Collateral Vessel Value
” shall have the meaning provided in Section 9.09(a).
“
Aggregate Credit Agreement Exposure
” shall mean, at any time, the aggregate outstanding principal amount of the Loans under this Agreement at such time and the outstanding principal amount of the loans under the Other Credit Agreement at such time.
“
Aggregate Primary Collateral Vessel Value
” shall have the meaning provided in Section 9.09(a).
“
Agreement
” shall mean this Second Amended and Restated Credit Agreement, as modified, supplemented, amended or restated from time to time.
4
“
Amendment Prepayment
” shall have the meaning provided in the Third Amendment.
“
Applicable Margin
” shall mean a percentage per annum equal to 4.00%.
“
Applicable Property
” shall have the meaning provided in Section 9.01.
“
Approved Appraiser
” shall mean (i) at any time that the Parent and its Subsidiaries have a Loan to Value Ratio equal to or greater than 0.80 to 1.00, H. Clarksons & Company Limited, R.S. Platou Shipbrokers a.s., or Pareto Shipbrokers A/S, and (ii) at any other time, H. Clarksons & Company Limited, Fearnleys Ltd., R.S. Platou Shipbrokers a.s., Lorentzen & Stemoco or Simpson Spence & Young Ltd.; provided, that, at any time any other independent appraisal firm that is acceptable to the Administrative Agent at such time shall be deemed to constitute an Approved Appraiser.
“
Arlington
” shall have the meaning provided in the first paragraph of this Agreement.
“
Assignment and Assumption Agreement
” shall mean the Assignment and Assumption Agreement substantially in the form of Exhibit K (appropriately completed).
“
Assignment of Charters
” shall have the meaning provided in the definition of “Collateral and Guaranty Requirements.”
“
Assignment of Earnings
” shall have the meaning provided in the definition of “Collateral and Guaranty Requirements.”
“
Assignment of Insurances
” shall have the meaning provided in the definition of “Collateral and Guaranty Requirements.”
“
Bankruptcy Code
” shall have the meaning provided in Section 10.05.
“
Bankruptcy Court
” shall have the meaning provided in the Recitals.
“
Blocked Accounts
” shall mean the 508 Blocked Account and the 273 Blocked Account.
“
BlueMountain Parent Indebtedness
” shall mean Indebtedness incurred by the Parent from, among others, BlueMountain Capital and its affiliates in an aggregate principal amount not to exceed $131,600,000 plus the amount of interest accrued after the incurrence thereof and capitalized or paid in kind in accordance with the terms thereof and other amounts payable in connection therewith; provided that (i) such Indebtedness shall mature no earlier than the first anniversary of the Maturity Date and shall not require any scheduled amortization, mandatory redemption or prepayment prior to the final maturity thereof (other than any prepayment required (a) from the net cash proceeds from the disposition of any Equity Interests of 2014 Newbuilding Holdco, or any assets of 2014 Newbuilding Holdco and/or the 2014 Newbuilding Subsidiaries and/or (b) upon a change of control (as defined in the documentation governing such Indebtedness) or acceleration of such Indebtedness following an event of default
5
thereunder), (ii) such Indebtedness shall not be secured or guaranteed by any Subsidiary of the Parent other than 2014 Newbuilding Holdco and the 2014 Newbuilding Subsidiaries and (iii) such Indebtedness shall permit the Parent at its option to make all interest payments thereunder in kind or in cash.
“
Blocked Amount
” shall have the meaning provided in Section 9.09(b).
“
Borrower
” shall have the meaning provided in the first paragraph of this Agreement.
“
Borrowing
” shall mean the borrowing of Loans from all the Lenders (other than Defaulting Lenders) on a given date having the same Interest Period.
“
Business Day
” shall mean any day except Saturday, Sunday and any day which shall be in New York City, Hamburg or London a legal holiday or a day on which banking institutions are authorized or required by law or other government action to close.
“
Capital Expenditures
” shall mean, with respect to any Person, all expenditures by such Person which should be capitalized in accordance with GAAP and, without duplication, the amount of Capitalized Lease Obligations incurred by such Person.
“
Capitalized Lease Obligations
” of any Person shall mean all rental obligations which, under GAAP, are or will be required to be capitalized on the books of such Person, in each case taken at the amount thereof accounted for as indebtedness in accordance with such principles.
“
Cash Equivalents
” shall mean (i) securities issued or directly and fully guaranteed or insured by the United States or any agency or instrumentality thereof (
provided
that the full faith and credit of the United States is pledged in support thereof) having maturities of not more than one year from the date of acquisition, (ii) time deposits and certificates of deposit of any commercial bank having, or which is the principal banking subsidiary of a bank holding company having, capital, (x) surplus and undivided profits aggregating in excess of $200,000,000 and (y) a long-term unsecured debt rating of at least “A” or the equivalent thereof from S&P or “A2” or the equivalent thereof from Moody’s with maturities of not more than one year from the date of acquisition by such Person, (iii) repurchase obligations with a term of not more than 90 days for underlying securities of the types described in clause (i) above entered into with any bank meeting the qualifications specified in clause (ii) above, (iv) commercial paper issued by any Person incorporated in the United States rated at least A-1 or the equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody’s and in each case maturing not more than one year after the date of acquisition by such Person, and (v) investments in money market funds substantially all of whose assets are comprised of securities of the types described in clauses (i) through (iv) above.
“
Cash Flow Projections
” shall have the meaning provided in Section 8.01(l).
“
CERCLA
” shall mean the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as the same may be amended from time to time, 42 U.S.C. § 9601
et seq.
6
“
Change of Control
” shall mean (i) the Parent shall at any time and for any reason fail to own or control, directly or indirectly, 100% of the Equity Interests of the Borrower and each Subsidiary Guarantor which owns a Collateral Vessel, except in the case of a non-U.S. Subsidiary Guarantor, any such other ownership as required by applicable law, (ii) the sale, lease or transfer of all or substantially all of the Parent’s assets to any Person or group (as such term is used in Section 13(d)(3) of the Exchange Act), (iii) the liquidation or dissolution of the Parent or the Borrower, (iv) at any time prior to the consummation of a Qualifying IPO, (1) the Permitted Holders shall at any time cease to own, directly or indirectly, beneficially or of record, shares representing more than 15% of the outstanding voting or economic Equity Interests of the Parent or (2) any Person or Persons constituting a “group” (as such term is used in Section 13(d) and 14(d) of the Exchange Act, but excluding any benefit plan of such Person or Persons and its or their Subsidiaries, and any Person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan and excluding the shareholders of Navig8 to the extent such shareholders constitute a “group” in connection with the transactions contemplated by the Merger Agreement), other than a Permitted Holder, becomes the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or indirectly, of Stock representing more than the percentage of outstanding voting Equity Interests of the Parent beneficially owned, directly or indirectly, in the aggregate by the Permitted Holders, (v) at any time upon or after the consummation of a Qualifying IPO, (x) any Person or Persons constituting a “group” (as such term is used in Section 13(d) and 14(d) of the Exchange Act, but excluding any benefit plan of such Person or Persons and its or their Subsidiaries, and any Person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan), other than a Permitted Holder, becomes the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or indirectly, of Stock representing more than 35% of the outstanding voting Equity Interests of the Parent and (y) the percentage of outstanding voting Equity Interests of the Parent so held by such Person or Persons is greater than the percentage of outstanding voting Equity Interests of the Parent beneficially owned, directly or indirectly, in the aggregate by the Permitted Holders, (vi) the replacement of a majority of the directors on the board of directors of the Parent over a two-year period from the directors who constituted the board of directors of the Parent at the beginning of such period, and such replacement shall not have been approved by a vote of at least a majority of the board of directors of the Parent then still in office who either were members of such board of directors at the beginning of such period or whose election as a member of such Board of Directors was previously so approved or (vii ) a “change of control” or similar event shall occur as provided in any outstanding Indebtedness (excluding Indebtedness with an aggregate principal amount of less than $20,000,000) of Parent or any of its Subsidiaries (or the documentation governing the same).
“
Chapter 11 Proceedings
” shall have the meaning provided in the Recitals.
“
Code
” shall mean the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated and rulings issued thereunder. Section references to the Code are to the Code, as in effect at the date of this Agreement and any subsequent provisions of the Code amendatory thereof, supplemental thereto or substituted therefor.
“
Collateral
” shall mean all Primary Collateral and Secondary Collateral.
7
“
Collateral Agent
” shall mean the Administrative Agent acting as mortgagee, security trustee or collateral agent for the Secured Creditors pursuant to the Security Documents.
“
Collateral and Guaranty Requirements
” shall mean with respect to each Collateral Vessel or each Credit Party, as the case may be, the requirement that:
(i)
each Subsidiary defined as a Subsidiary Guarantor shall have duly authorized, executed and delivered to the Administrative Agent an Amended and Restated Subsidiaries Guaranty, substantially in the form of Exhibit E (as modified, supplemented or amended from time to time, together with any Joinder Agreement, the “
Subsidiaries Guaranty
”), or a joinder thereto substantially in the form of Exhibit P (as modified, supplemented or amended from time to time, the “
Joinder Agreement
”), and the Subsidiaries Guaranty shall be in full force and effect;
(ii)
the Borrower and each Subsidiary Guarantor described in clause (x) of the definition thereof shall have (x) duly authorized, executed and delivered the Amended and Restated Pledge Agreement substantially in the form of Exhibit F-1 (as modified, supplemented or amended from time to time, the “
Pledge Agreement
”) or a joinder thereto, and shall have (A) delivered to the Collateral Agent, as pledgee, all the Pledged Securities referred to therein, and (B) otherwise complied with all of the requirements set forth in the Pledge Agreement, and (y) duly authorized, executed and delivered any other related documentation necessary or advisable to perfect the Lien on the Pledge Agreement Collateral in the respective jurisdictions of formation of the respective Subsidiary Guarantor or the Borrower, as the case may be;
(iii)
the Parent shall have (x) duly authorized, executed and delivered the Amended and Restated Parent Pledge and Security Agreement in the form of Exhibit F-2 (as modified, supplemented or amended from time to time, the “
Parent Pledge Agreement
”) and shall have (A) delivered to the Collateral Agent, as pledgee, all the Pledged Securities referred to therein, together with executed and undated transfer powers, including, without limitation and to the extent applicable (within ten days after the Effective Date), a charge over shares of any Bermuda registered Subsidiary Guarantor taken by way of a Bermuda-law governed charge over shares, and (B) otherwise complied with all of the requirements set forth in the Parent Pledge Agreement and (y) duly authorized, executed and delivered any other related documentation necessary or advisable to perfect the Lien on the applicable Pledge Agreement Collateral in the Parent’s jurisdiction of formation;
(iv)
the Parent, GMSC, Arlington and each Subsidiary Guarantor described in clause (y) of the definition thereof shall have (x) duly authorized, executed and delivered the Amended and Restated Secondary Pledge Agreement substantially in the form of Exhibit F-3 (as modified, supplemented or amended from time to time, the “
Secondary Pledge Agreement
”) or a joinder thereto, and shall have (A) delivered to the Other Agent, as pledgee and bailee on behalf of the Secured Creditors in accordance with the Secondary Intercreditor Agreement, all the Pledged Securities referred to therein, together with executed and undated transfer powers, including, without limitation and to the extent applicable (within ten days after the Effective Date), a charge over shares of any Bermuda registered Subsidiary Guarantor taken by way of a Bermuda-law governed charge over shares, and (B) otherwise complied with all of the requirements set forth in the Secondary Pledge Agreement, (y) duly authorized, executed and
8
delivered to the Other Agent any other related documentation necessary or advisable to perfect the Lien on the Secondary Pledge Agreement Collateral in the respective jurisdictions of formation of the Parent, the respective Subsidiary Guarantor, Arlington or GMSC, as the case may be, and (z) received the consent of the Bermuda Monetary Authority for the grant of a charge over shares of any Bermuda registered Subsidiary Guarantor;
(v)
the Parent, the Borrower, Arlington, GMSC and any other Person that becomes a Credit Party at any time (other than a Credit Party that is a Subsidiary Guarantor) shall have (x) duly authorized, executed and delivered the Pari Passu Pledge Agreement substantially in the form of Exhibit F-4 (as modified, supplemented or amended from time to time, the “
Pari Passu Pledge Agreement
”) or a joinder thereto, and shall have complied with all of the requirements set forth in the Pari Passu Pledge Agreement, and (y) duly authorized, executed and delivered any other related documentation necessary or advisable to perfect the Lien on the applicable Pledge Agreement Collateral in the respective jurisdictions of formation of Arlington, the Parent, the Borrower, GMSC or such other Credit Party, as the case may be;
(vi)
the Parent, GMSC, Arlington, the Borrower, each Subsidiary Guarantor that owns a Collateral Vessel, the Collateral Agent and Nordea (or such other deposit account bank as the Administrative Agent may agree in its sole discretion), as depositary bank, shall have duly executed and delivered a control agreement substantially in the form attached to the Pledge Agreement, the Secondary Pledge Agreement and/or the Pari Passu Pledge Agreement, as the case may be (or, in each case, such other form as may be reasonably acceptable to the Administrative Agent), with respect to any Concentration Account owned by the Parent, GMSC, Arlington, the Borrower or such Subsidiary Guarantor (or, if a control agreement with respect to any such Concentration Account shall have been executed and delivered by the Parent, GMSC, Arlington, the Borrower or any such Subsidiary Guarantor prior to the Restatement Effective Date, a reaffirmation of such control agreement);
provided
that, prior to the Discharge of the First-Priority Obligations (as defined in the Secondary Intercreditor Agreement) in full, no Subsidiary Guarantor that owns a Secondary Collateral Vessel shall be required to execute and deliver a control agreement to the Collateral Agent with respect to a Concentration Account as defined in the Secondary Pledge Agreement;
(vii)
each Subsidiary Guarantor that owns a Primary Collateral Vessel shall (A) have duly authorized, executed and delivered reaffirmations of such Subsidiary Guarantor’s (x) Assignment of Earnings substantially in the form of Exhibit G-1 (as modified, supplemented or amended from time to time, the “
Assignment of Earnings
”) and (y) Assignment of Insurances substantially in the form of Exhibit H-1 (as modified, supplemented or amended from time to time, the “
Assignment of Insurances
”), together covering all of such Subsidiary Guarantor’s present and future Earnings and Insurance Collateral on such Primary Collateral Vessels, and (B) use its commercially reasonably efforts to obtain an Assignment of Charters substantially in the form of Exhibit B to the Assignment of Earnings (as modified, supplemented or amended from time to time, the “
Assignment of Charters
”) for any charter or similar contract that has as of the execution date of such charter or similar contract a remaining term of 12 months or greater (including any renewal or extension option) (or, if an Assignment of Charters with respect to any such Primary Collateral Vessel shall have been executed and delivered by any such Subsidiary Guarantor prior to the Restatement Effective Date, a reaffirmation of such Assignment of Charters), and shall use commercially reasonable efforts to provide appropriate notices and
9
consents related thereto, together covering all of such Subsidiary Guarantor’s present and future Earnings and Insurance Collateral on such Primary Collateral Vessels, in each case together with:
(a)
proper Financing Statements (Form UCC-1) or amendments thereto, as requested by the Administrative Agent, in form for filing under the UCC or in other appropriate filing offices of each jurisdiction as may be necessary to perfect the security interests purported to be created by the Pledge Agreement, the Parent Pledge Agreement, the Pari Passu Pledge Agreement, the Assignment of Earnings, Assignment of Charters and the Assignment of Insurances; and
(b)
certified copies of Requests for Information or Copies (Form UCC-11), or equivalent reports, listing all effective financing statements that name any Credit Party as debtor and that are filed in Washington, D.C. and any other relevant jurisdiction, together with copies of such other financing statements (none of which shall cover the Collateral, other than as set forth in the Intercreditor Agreements, unless the Collateral Agent shall have received Form UCC-3 Termination Statements (or such other termination statements as shall be required by local law) fully executed for filing if required by applicable laws in respect thereof);
(viii)
each Subsidiary Guarantor that owns a Secondary Collateral Vessel shall (A) have duly authorized, executed and delivered reaffirmations of such Subsidiary Guarantor’s (x) Assignment of Earnings substantially in the form of Exhibit G-2 (as modified, supplemented or amended from time to time, the “
Secondary Assignment of Earnings
”) and (y) Assignment of Insurances substantially in the form of Exhibit H-2 (as modified, supplemented or amended from time to time, the “
Secondary Assignment of Insurances
”), together covering all of such Subsidiary Guarantor’s present and future Secondary Earnings and Insurance Collateral on such Secondary Collateral Vessels, and (B) use its commercially reasonably efforts to obtain an Assignment of Charters substantially in the form of Exhibit B to the Secondary Assignment of Earnings (as modified, supplemented or amended from time to time, the “
Secondary Assignment of Charters
”) for any charter or similar contract that has as of the execution date of such charter or similar contract a remaining term of twelve months or greater (including any renewal or extension option) (or, if an Assignment of Charters with respect to any such Secondary Collateral Vessel shall have been executed and delivered by any such Subsidiary Guarantor prior to the Restatement Effective Date, a reaffirmation of such Assignment of Charters), and shall use commercially reasonable efforts to provide appropriate notices and consents related thereto, together covering all of such Subsidiary Guarantor’s present and future Secondary Earnings and Insurance Collateral on such Secondary Collateral Vessels, in each case together with:
(a)
proper Financing Statements (Form UCC-1) or amendments thereto, as requested by the Administrative Agent, in form for filing under the UCC or in other appropriate filing offices of each jurisdiction as may be necessary to perfect the security interests purported to be created by the Secondary Pledge Agreement, the Secondary Assignment of Earnings, the
10
Secondary Assignment of Charters and the Secondary Assignment of Insurances; and
(b)
certified copies of Requests for Information or Copies (Form UCC-11), or equivalent reports, listing all effective financing statements that name any Credit Party as debtor and that are filed in Washington, D.C. and any other relevant jurisdiction, together with copies of such other financing statements (none of which shall cover the Collateral, other than as set forth in the Intercreditor Agreements, unless the Collateral Agent shall have received Form UCC-3 Termination Statements (or such other termination statements as shall be required by local law) fully executed for filing if required by applicable laws in respect thereof);
(ix)
each Subsidiary Guarantor that owns a Collateral Vessel shall have duly authorized, executed and delivered, and caused to be recorded in the appropriate Vessel registry (x) in the case of each Primary Collateral Vessel, a Collateral Vessel Mortgage (together with any amendments thereto as may be requested by the Collateral Agent on or prior to the Restatement Effective Date in form and substance satisfactory to the Collateral Agent and the Subsidiary Guarantor that owns such Primary Collateral Vessel) with respect to such Primary Collateral Vessel and such Collateral Vessel Mortgage shall be effective to create in favor of the Collateral Agent and/or the Lenders a legal, valid and enforceable first priority security interest, in and lien upon such Primary Collateral Vessel and (y) in the case of each Secondary Collateral Vessel, a Secondary Collateral Vessel Mortgage (together with any amendments thereto as may be requested by the Collateral Agent on or prior to the Restatement Effective Date in form and substance satisfactory to the Collateral Agent and the Subsidiary Guarantor that owns the relevant Secondary Collateral Vessel) with respect to such Secondary Collateral Vessel and such Secondary Collateral Vessel Mortgage shall be effective to create in favor of the Collateral Agent and/or the Lenders a legal, valid and enforceable second priority security interest, in and lien upon such Secondary Collateral Vessel, in each case subject only to Permitted Liens;
(x)
all filings, deliveries of instruments and other actions necessary or desirable in the reasonable opinion of the Collateral Agent to perfect and preserve the security interests described in clauses (ii) through and including (viii) above shall have been duly effected and the Collateral Agent shall have received evidence thereof in form and substance reasonably satisfactory to the Collateral Agent;
(xi)
the Administrative Agent shall have received each of the following:
(a)
certificates of ownership from appropriate authorities showing (or confirmation updating previously reviewed certificates and indicating) the registered ownership of such Collateral Vessel by the relevant Subsidiary Guarantor;
(b)
the results of maritime registry searches with respect to such Collateral Vessel, indicating no record liens other than Liens in favor of the Collateral Agent and/or the Lenders and Permitted Liens;
11
(c)
class certificates from a classification society listed on
Schedule X
or another classification society reasonably acceptable to the Administrative Agent, indicating that such Collateral Vessel meets the criteria specified in Section 7.24;
(d)
certified copies of all agreements related to the technical and commercial management of each Collateral Vessel;
(e)
certified copies of all ISM and ISPS Code documentation for each Collateral Vessel; and
(f)
a report, in form and scope reasonably satisfactory to the Administrative Agent, from a firm of independent marine insurance brokers reasonably acceptable to the Administrative Agent (it being understood that Leeds and Leeds, AON and Marsh are acceptable) with respect to the insurance maintained by the Credit Parties in respect of such Collateral Vessel, together with a certificate from such broker certifying that such insurances (i) are placed with such insurance companies and/or underwriters and/or clubs, in such amounts, against such risks, and in such form, as are customarily insured against by similarly situated insureds for the protection of the Administrative Agent, the Collateral Agent and/or the Lenders as mortgagee, (ii) otherwise conform with the insurance requirements of each respective Collateral Vessel Mortgage or Secondary Collateral Vessel Mortgage, as applicable and (iii) comply with the Required Insurance;
(xii)
the Administrative Agent shall have received from (a) special New York counsel to each of the Credit Parties (which shall be Kirkland & Ellis LLP or other counsel to each of the Credit Parties qualified in such jurisdiction and reasonably satisfactory to the Administrative Agent), an opinion addressed to the Administrative Agent and each of the Lenders and dated as of the Restatement Effective Date covering the matters set forth in Exhibit C-1, (b) special New York maritime counsel to each of the Credit Parties (which shall be Constantine P. Georgiopoulos or other counsel to each of the Credit Parties qualified in such jurisdiction and reasonably satisfactory to the Administrative Agent), an opinion addressed to the Administrative Agent and each of the Lenders and dated as of the Restatement Effective Date covering the matters set forth in Exhibit C-2, (c) special Marshall Islands counsel to each of the Credit Parties (which shall be Dennis J. Reeder, Esq. or other counsel to each of the Credit Parties qualified in such jurisdiction and reasonably satisfactory to the Administrative Agent), an opinion addressed to the Administrative Agent and each of the Lenders and dated as of the Restatement Effective Date covering the matters set forth in Exhibit C-3, (d) special Liberian counsel to each of the Credit Parties (which shall be George E. Henries, Esq. or other counsel to each of the Credit Parties qualified in such jurisdiction and reasonably satisfactory to the Administrative Agent), an opinion addressed to the Administrative Agent and each of the Lenders and dated as of the Restatement Effective Date covering the matters set forth in Exhibit C-4, (e) special Bermuda counsel to each of the Credit Parties (which shall be Conyers, Dill & Pearman Limited or other counsel to each of the Credit Parties qualified in such jurisdiction and reasonably satisfactory to the Administrative Agent), an opinion addressed to the Administrative Agent and each of the Lenders and dated as of the Restatement Effective Date covering the
12
matters set forth in Exhibit C-5 and (f) counsel to each of the Credit Parties in the jurisdiction of the flag of the Collateral Vessel, an opinion addressed to the Administrative Agent and each of the Lenders and dated as of the Restatement Effective Date covering such matters as shall be reasonably required by the Administrative Agent, in each case which shall (x) be in form and substance reasonably acceptable to the Administrative Agent and (y) cover the matters set forth in the relevant Exhibit, including the perfection of the security interests (other than those to be covered by opinions delivered pursuant to the other opinions above) granted pursuant to the Security Documents, and such other matters incidental to the transactions contemplated herein as the Administrative Agent may reasonably request; and
(xiii)
(a) the Administrative Agent shall have received a certificate, dated the Restatement Effective Date and reasonably acceptable to the Administrative Agent, signed by the Chairman of the Board, the Chief Executive Officer, the President, any Vice President, the Treasurer or an authorized manager, member or general partner of each Credit Party (other than any Credit Party that delivered such a certificate pursuant to the Original Credit Agreement), and attested to by the Secretary or any Assistant Secretary (or, to the extent such Credit Party does not have a Secretary or Assistant Secretary, the analogous Person within such Credit Party) of such Credit Party, as the case may be, substantially in the form of Exhibit D, with appropriate insertions, together with copies of the Certificate of Incorporation and By-Laws (or equivalent organizational documents) of such Credit Party and the resolutions of such Credit Party referred to in such certificate authorizing the consummation of the Transaction;
provided
that such documents shall not be required to be delivered so long as such Credit Party certifies that there have been no changes made in the organizational documents delivered in connection with the Original Credit Agreement; and (b) the Administrative Agent shall have received copies of governmental approvals, good standing certificates and bring-down telegrams or facsimiles, if any, which the Administrative Agent may have reasonably requested in connection therewith, such documents and papers, where appropriate, to be certified by proper corporate or governmental authorities.
“
Collateral Disposition
” shall mean (i) the sale, lease, transfer or other disposition of Collateral by the Parent or any of its Subsidiaries to any Person other than the Parent or any Subsidiary of the Parent or (ii) any Event of Loss of any Collateral Vessel;
provided
,
however
, that (a) the charter of any Collateral Vessel shall not be considered a Collateral Disposition and (b) a Vessel Exchange in accordance with the provisions of this Agreement shall not constitute a Collateral Disposition for purposes of Section 4.02 of this Agreement.
“
Collateral Vessel
” shall mean each Primary Collateral Vessel and each Secondary Collateral Vessel; it being understood and agreed that any Vessel acquired in a Permitted New Vessel Acquisition shall not constitute a Collateral Vessel.
“
Collateral Vessel Mortgage
” shall mean, with respect to the Primary Collateral Vessels, a first preferred mortgage in substantially the form of Exhibit I-1, or such other form as may be reasonably satisfactory to the Administrative Agent, as such first preferred mortgage may be amended, modified or supplemented from time to time in accordance with the terms hereof and thereof.
13
“
Concentration Account
” shall have the meaning provided in the Pledge Agreement, the Secondary Pledge Agreement and/or the Pari Passu Pledge Agreement, as applicable.
“
Consolidated Cash Interest Expense
” shall mean, for any period, (i) the total consolidated interest expense paid or payable in cash of the Parent and its Subsidiaries (including, without limitation, to the extent included under GAAP, all commission, discounts and other commitment fees and charges (
e.g.
, fees with respect to letters of credit, Interest Rate Protection Agreements and Other Hedging Agreements) for such period (calculated without regard to any limitations on payment thereof), adjusted to exclude (to the extent same would otherwise be included in the calculation above in this clause (i)), the amortization of any deferred financing costs for such period and any interest expense actually “paid in kind” or accreted during such period,
plus
(ii) without duplication, that portion of Capitalized Lease Obligations of the Parent and its Subsidiaries on a consolidated basis representing the interest factor for such period,
minus
(iii) cash interest income.
“
Consolidated EBITDA
” shall mean, for any period, Consolidated Net Income for such period adjusted by (A) adding thereto the following to the extent deducted in calculating such Consolidated Net Income: (i) consolidated interest expense and amortization of debt discount and commissions and other fees and charges associated with Indebtedness for such period, (ii) consolidated income tax expense for such period, (iii) all amounts attributable to depreciation and amortization for such period, (iv) any extraordinary losses, expenses or charges for such period, (v) any non-cash management retention or incentive program payments for such period, (vi) non-cash restricted stock compensation, (vii) any non-cash charges or losses, including, without limitation, non-cash compensation expenses for such period,
less
any extraordinary gains for such period, (viii) any losses from the sales of any Vessels for such period, (ix) all costs and expenses incurred (a) prior to or within 180 days following the Restatement Effective Date and, in no event, later than December 31, 2012, in connection with the Transaction (including, without limitation, any payments of interest, fees and expenses made pursuant to, or in connection with, the DIP Credit Agreement and the Plan of Reorganization (in each case, including, but not limited to, fees to advisors, professionals, attorneys, the Administrative Agent, Lenders and Oaktree Capital Management L.P. and its Affiliates)) and (b) in connection with any equity issuances permitted hereunder so long as, notwithstanding anything set forth herein to the contrary, the Net Cash Proceeds of such equity issuances are applied to the prepayment of the Loans and such prepayments are applied to reduce the Scheduled Repayment due on the Maturity Date, (x) non-recurring costs, charges and expenses for severance and restructuring (including, without limitation, fees and expenses incurred in connection with the winding up of all of the Parent and its Subsidiaries’ activities and operations in Portugal and any one-time cash charges in connection with the closing of an office for such period), (xi) all non-recurring fees, costs and expenses related to any litigation or settlements, (xii) the amount of cost savings and expenses projected by the Borrower to be realized (including synergies) as a result of, or as a result of actions taken, committed to be taken or planned to be taken within one year, pursuant to a binding written contract with a tangible and quantifiable cost savings (calculated on a pro forma basis as though such items had been realized on the first day of the period provided that all such adjustments pursuant to this clause (xii) shall not exceed (a) $10,000,000 in the aggregate in any four-quarter period and (b) $25,000,000 in the aggregate from the Restatement Effective Date to and including the Maturity Date, and (xiii) any fees,
14
expenses or charges related to any equity offering, Investment or Indebtedness or amendments thereto permitted by this Agreement, whether or not consummated and (B) subtracting therefrom the following to the extent added in calculating such Consolidated Net Income: (i) any extraordinary gains for such period and (ii) any gains from the sales of any Vessels for such period. Unless otherwise agreed to by the Administrative Agent, for purposes of this definition of “Consolidated EBITDA,” “non-recurring” means any expense, loss or gain as of any date that (i) did not occur in the ordinary course of the Parent or its Subsidiaries’ business and (ii) is of a nature and type that has not occurred in the prior two years and is not reasonably expected to recur in the future.
“
Consolidated Net Income
” shall mean, for any period, the consolidated net after tax income of the Parent and its Subsidiaries determined in accordance with GAAP.
“
Consolidated Net Indebtedness
” shall mean, with respect to any Person, as at any relevant date, (x) the aggregate outstanding principal amount of the Loans under this Agreement and the loans under the Other Credit Agreement,
plus
(y) the aggregate outstanding principal amount of any other Indebtedness of the Parent or any of its Subsidiaries permitted pursuant to Section 9.04(v) and 9.04(vi),
less
(z) an amount equal to the Unrestricted Cash and Cash Equivalents of the Parent and its Subsidiaries as at such date.
“
Contingent Obligation
” shall mean, as to any Person, any obligation of such Person guaranteeing or intended to guarantee any Indebtedness (“
primary obligations
”) of any other Person (the “
primary obligor
”) in any manner, whether directly or indirectly, including, without limitation, any obligation of such Person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (x) for the purchase or payment of any such primary obligation or (y) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the holder of such primary obligation against loss in respect thereof;
provided
,
however
, that the term Contingent Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business and any products warranties extended in the ordinary course of business. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which such Contingent Obligation is made (or, if the less, the maximum amount of such primary obligation for which such Person may be liable pursuant to the terms of the instrument evidencing such Contingent Obligation) or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such Person is required to perform thereunder) as determined by such Person in good faith.
“
Credit Documents
” shall mean this Agreement, each Note, each Security Document, the Subsidiaries Guaranty, each Intercreditor Agreement, each Joinder Agreement and, after the execution and delivery thereof, each additional guaranty or additional security document executed pursuant to Section 8.11.
15
“
Credit Party
” shall mean the Parent, the Borrower, GMSC, Arlington, each Subsidiary Guarantor, and any other Subsidiary of the Parent which at any time executes and delivers any Credit Document (other than solely an acknowledgment of a pledge of such Person’s equity).
“
Default
” shall mean any event, act or condition which with notice or lapse of time, or both, would constitute an Event of Default.
“
Defaulting Lender
” shall mean any Lender with respect to which a Lender Default is in effect.
“
Deferred Amortization Amount
” shall mean $106,274,489.14.
“
DIP Credit Agreement
” shall mean the Senior Secured Superpriority Debtor-in-Possession Credit Agreement, dated as of November 17, 2011 (as amended, modified and/or supplemented from time to time to, but not including the Restatement Effective Date), among the Borrower and GMSC as co-borrowers, the Parent, certain Subsidiaries of the Parent and the Borrowers party thereto as guarantors, the lenders party thereto and Nordea, as administrative agent and collateral agent.
“
Dividend
” shall mean, with respect to any Person, a dividend, distribution or return of any equity capital to its stockholders, partners or members, any other distribution, payment or delivery of property or cash to its stockholders, partners or members in their capacity as such (other than common stock, Qualified Preferred Stock and the right to purchase any of such stock of such Person), the redemption, retirement, purchase or acquisition, directly or indirectly, for a consideration of any shares of any class of its capital stock or any other Equity Interests outstanding on or after the Restatement Effective Date (or any options or warrants issued by such Person with respect to its capital stock or other Equity Interests), or the setting aside of any funds for any of the foregoing purposes, or the granting of permission to any of its Subsidiaries to purchase or otherwise acquire for a consideration (other than common stock, Qualified Preferred Stock and the right to purchase any of such stock of such Person) any shares of any class of the capital stock or any other Equity Interests of such Person outstanding on or after the Restatement Effective Date (or any options or warrants issued by such Person with respect to its capital stock or other Equity Interests) except for share repurchases resulting from the unwinding of any share sale requiring the repayment of any advances in connection with such sale as a result of any default on payment on the part of the ultimate purchaser of such shares. Without limiting the foregoing, “Dividends” with respect to any Person shall also include all payments made or required to be made by such Person with respect to any stock appreciation rights, equity incentive or achievement plans or any similar plans or setting aside of any funds for the foregoing purposes. For the avoidance of doubt, any non-cash anti-dilution adjustments under the warrants listed on
Schedule XII
shall not constitute a Dividend.
“
Documents
” shall mean the Credit Documents.
“
Dollars
” and the sign “
$
” shall each mean lawful money of the United States.
16
“
Earnings and Insurance Collateral
” shall mean all “Earnings Collateral” and “Insurance Collateral”, as the case may be, as defined in the respective Assignment of Earnings and the respective Assignment of Insurances.
“
Effective Yield
” shall mean, as to any Loans, or other loans of any tranche, the effective yield on such loans as determined by the Administrative Agent, taking into account the applicable interest rate margins, any interest rate floors or similar devices and all fees, including recurring, upfront or similar fees or original issue discount (amortized over the shorter of (x) the life of such loans and (y) the four years following the date of incurrence thereof) payable generally to Lenders making such loans, but excluding any arrangement, structuring or other fees payable in connection therewith that are not generally shared with the relevant Lenders and customary consent fees paid generally to consenting Lenders. All such determinations made by the Administrative Agent shall, absent manifest error, be final, conclusive and binding on the Borrower and the Lenders and the Administrative Agent shall have no liability to any Person with respect to such determination absent gross negligence or willful misconduct.
“
Eligible Transferee
” shall mean and include a commercial bank, insurance company, financial institution, fund or other Person which regularly purchases interests in loans or extensions of credit of the types made pursuant to this Agreement, any other Person which would constitute a “qualified institutional buyer” within the meaning of Rule 144A under the Securities Act as in effect on the Restatement Effective Date or other “accredited investor” (as defined in Regulation D of the Securities Act);
provided
that none of the Borrower, the Guarantors nor any of their respective Affiliates shall be an Eligible Transferee at any time, except as provided for in Section 12.04(d).
“
Environmental Claims
” shall mean any and all administrative, regulatory or judicial actions, suits, demands, demand letters, directives, claims, liens, notices of noncompliance or violation, investigations or proceedings relating in any way to any Environmental Law or any permit issued, or any approval given, under any such Environmental Law (hereafter, “
Claims
”), including, without limitation, (a) any and all Claims by governmental or regulatory authorities for enforcement, cleanup, removal, response, remedial or other actions or damages pursuant to any applicable Environmental Law, and (b) any and all Claims by any third party seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief in connection with alleged injury or threat of injury to health, safety or the environment due to the presence of Hazardous Materials.
“
Environmental Law
” shall mean any applicable federal, state, foreign, international or local statute, law, treaty, protocol, rule, regulation, ordinance, code, or rule of common law, now or hereafter in effect and in each case as amended, and any judicial or administrative interpretation thereof, including any judicial or administrative order, consent decree or judgment, to the extent binding on the Parent or any of its Subsidiaries, relating to the environment or to Hazardous Materials, including, without limitation, CERCLA; OPA; the Federal Water Pollution Control Act, 33 U.S.C. § 1251
et seq.
; the Hazardous Material Transportation Act, 49 U.S.C. § 1801
et seq.
; the Occupational Safety and Health Act, 29 U.S.C. § 651
et seq.
(to the extent it regulates occupational exposure to Hazardous Materials); any applicable state, foreign, international or local counterparts or equivalents thereof, in each case as
17
amended from time to time; and any applicable rules, regulations or requirements of a classification society in respect of any Collateral Vessel.
“
Environmental Release
” shall mean any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, disposing or migration into the environment.
“
EPA Commitment Parties
” shall have the meaning given to that term in the definition of Navig8 Equity Purchase Agreement.
“
Equity Contribution Agreement
” shall mean the Equity Purchase Agreement, dated as of December 15, 2011 (as amended, restated, supplemented or otherwise modified from time to time through, but not including, the Restatement Effective Date), by and among the Parent, Oaktree Principal Fund V, L.P., Oaktree Principal Fund V (Parallel), L.P., Oaktree FF Investment Fund, L.P. - Class A, and OCM Asia Principal Opportunities Fund, L.P., which Equity Contribution Agreement (i) shall contain a minimum liquidity requirement with respect to the Parent and its Subsidiaries that is reasonably satisfactory to the Administrative Agent and (ii) shall not have been amended, restated, supplemented or otherwise modified in such a manner as is adverse to the interests of the Lenders.
“
Equity Conversion
” shall mean the conversion of all outstanding secured obligations under the Amended and Restated Credit Agreement, dated as of May 6, 2011, by and among the Borrower and GMSC as co-borrowers, the Parent and certain of their respective Subsidiaries, OCM Marine Investments CTB, Ltd., as initial lender, and OCM Administrative Agent, LLC, as administrative agent and collateral agent, into equity of the Parent pursuant to the Equity Contribution Agreement on the terms and in the amounts set forth in the Plan of Reorganization.
“
Equity Interests
” shall mean (i) in the case of a corporation, corporate stock, (ii) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents of corporate stock and (iii) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited).
“
Equity Investment
” shall mean that certain cash Investment in the Parent of not less than $175,000,000 from the issuance of Equity Interests by the Parent to (x) an existing or newly-formed entity capitalized by funds managed by Oaktree Capital Management L.P. or one or more of its affiliates and (y) any other third party identified by the Permitted Holders to the Administrative Agent, including, but not limited to, any noteholders that previously held any Senior Unsecured Notes prior to the Restatement Effective Date on the terms and conditions specified in the Equity Contribution Agreement, (i) $39,649,220 of which shall have been contributed by the Parent to the Borrower to partially repay then outstanding Loans under and as defined in the Original Credit Agreement and (ii) $35,350,780 of which shall have been contributed by the Parent to GMSC to partially repay then outstanding loans under the Original Other Credit Agreement, in each case on terms set forth in the Plan of Reorganization.
“
Equity Proceeds Amount
” shall mean, on any date, the amount of Net Cash Proceeds received by the Parent from the issuance of Equity Interests of the Parent after the
18
Third Amendment Effective Date (which shall, for the avoidance of doubt, include the amount of the Navig8 Equity Purchase Agreement Proceeds and exclude the Equity Investment and the 2013 Equity Investment)
less
the cash amount expended by the Parent and its Subsidiaries to (i) make Investments pursuant to Section 9.05(vi), (ii) make any Capital Expenditures (other than maintenance Capital Expenditures), (iii) make any other cash expenditures not in the ordinary course of business (for the avoidance of doubt, funding operating losses, working capital and repayment of Indebtedness will be deemed to be expenditures in the ordinary course of business for this purpose), in each case without duplication and after the Third Amendment Effective Date, (iv) repay, prepay, redeem, purchase, defease or otherwise satisfy the Wells Fargo Indebtedness pursuant to Section 9.18(ii), (v) fund the purchase price corresponding to a Permitted New Vessel Acquisition pursuant to subclause (V) of the proviso to Section 9.07, (vi) prepay, redeem, purchase, defease or otherwise satisfy, or to pay cash interest in respect of the BlueMountain Parent Indebtedness pursuant to Section 9.19(iii), (vii) fund the 2014 Newbuilding Acquisition pursuant to Section 9.19(i), (viii) make any cash payments in connection with the Merger pursuant to Section 9.21(i) not funded by cash or Cash Equivalents of Navig8 and its Subsidiaries, (ix) fund deposits in connection with the acquisition of Vessels pursuant to Section 9.01(xxii), (x) make Investments in 2014 Newbuilding Holdco or any of its Subsidiaries pursuant to Section 9.19(v) and (xi) make Investments in the Merger Sub or any of its Subsidiaries pursuant to Section 9.21(ii).
“
ERISA
” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder. Section references to ERISA are to ERISA, as in effect at the date of this Agreement and any subsequent provisions of ERISA, amendatory thereof, supplemental thereto or substituted therefor.
“
ERISA Affiliate
” shall mean each person (as defined in Section 3(9) of ERISA) which together with the Parent or a Subsidiary of the Parent would be deemed to be a “single employer” within the meaning of Section 414(b), (c), (m) or (o) of the Code.
“
Eurodollar Rate
” shall mean with respect to each Interest Period for a Loan, (a) the offered rate (rounded upward to the nearest 1/16 of one percent) for deposits of Dollars for a period equivalent to such period at or about 11:00 A.M. (London time) on the second Business Day before the first day of such period as is displayed on Reuters LIBOR 01 Page (or such other service as may be nominated by the ICE Benchmark Administration as the information vendor for displaying the London Interbank Offered Rates of major banks in the London interbank Eurodollar market) (the “
Screen Rate
”);
provided
that if on such date no such rate is so displayed or, in the case of the initial Interest Period in respect of a Loan, if less than three Business Days’ prior notice of such Loan shall have been delivered to the Administrative Agent, the Eurodollar Rate for such period shall be the arithmetic average (rounded upward to the nearest 1/16 of 1%) of the rate quoted to the Administrative Agent by the Reference Banks for deposits of Dollars in an amount approximately equal to the amount in relation to which the Eurodollar Rate is to be determined for a period equivalent to such applicable Interest Period by prime banks in the London interbank Eurodollar market at or about 11:00 A.M. (London time) on the second Business Day before the first day of such period, in each case divided (and rounded upward to the nearest 1/16 of 1%) by (b) a percentage equal to 100% minus the then stated maximum rate of all reserve requirements (including, without limitation, any marginal,
19
emergency, supplemental, special or other reserves required by applicable law) applicable to any member bank of the Federal Reserve System in respect of Eurocurrency funding or liabilities as defined in Regulation D (or any successor category of liabilities under Regulation D);
provided
,
further
, that if any such rate is below zero, the Eurodollar Rate for such period will be deemed to be zero.
“
Event of Default
” shall have the meaning provided in Section 10.
“
Event of Loss
” shall mean any of the following events: (x) the actual or constructive total loss of a Collateral Vessel or the agreed or compromised total loss of a Collateral Vessel; or (y) the capture, condemnation, confiscation, requisition, purchase, seizure or forfeiture of, or any taking of title to, a Collateral Vessel. An Event of Loss shall be deemed to have occurred: (i) in the event of an actual loss of a Collateral Vessel, at the time and on the date of such loss or if that is not known at noon Greenwich Mean Time on the date which such Collateral Vessel was last heard from; (ii) in the event of damage which results in a constructive or compromised or arranged total loss of a Collateral Vessel, at the time and on the date of the event giving rise to such damage; or (iii) in the case of an event referred to in clause (y) above, at the time and on the date on which such event is expressed to take effect by the Person making the same. Notwithstanding the foregoing, if such Collateral Vessel shall have been returned to the Borrower or any Subsidiary Guarantor following any event referred to in clause (y) above prior to the date upon which payment is required to be made under Section 4.02(b) hereof, no Event of Loss shall be deemed to have occurred by reason of such event.
“
Excess Liquidity
” shall mean, for each Payment Date, the amount by which (a) the daily average for the 30 consecutive day period ending on such Payment Date of the amount by which the Unrestricted Cash and Cash Equivalents of the Parent and its Subsidiaries, other than Navig8 and its Subsidiaries (including any remaining Net Cash Proceeds from the 2013 Equity Investment not used on the Third Amendment Effective Date to make the Amendment Prepayment and the Other Credit Agreement Amendment Prepayment) exceeds (b) the sum of (x) the aggregate amount of (i) any Scheduled Repayment and any interest payment to be made under this Agreement and/or (ii) any scheduled amortization payment and any interest payment to be made under the Other Credit Agreement, in each case within three Business Days of such Payment Date, (y) the Equity Proceeds Amount, if any, and (z) $125,000,000.
“
Exchange Act
” shall mean the Securities Exchange Act of 1934, as amended.
“
Excluded Taxes
” shall mean (i)
any tax imposed on or measured by the net income, net profits or any franchise tax based on net income, net profits or net worth, of a Lender pursuant to the laws of the jurisdiction in which it is organized or the jurisdiction in which the principal office or applicable lending office of such Lender is located or any subdivision thereof or therein, (ii) any branch profits taxes imposed by any jurisdiction in which the recipient Lender is organized or the jurisdiction in which the principal office or applicable lending office of such Lender is located or any subdivision thereof or therein, (iii) in the case of any Lender, any withholding tax that is imposed by the Marshall Islands on amounts payable to such Lender at the time such Lender becomes a party to this Agreement or designates a new lending office (except to the extent that, pursuant to Section 4.04, amounts with respect to such taxes were payable to such Lender’s assignor immediately before such Lender became a party hereto or to
20
such Lender immediately before it changed its lending office) or is attributable to such Lender’s failure to comply with Section 4.04(b), and (iv) taxes imposed on any “withholdable payment” payable to a recipient Lender as a result of the failure of such recipient to satisfy the applicable requirements as set forth in FATCA
).
“
Existing Indebtedness
” shall have the meaning provided in Section 7.20.
“
Fair Market Value
” of any Collateral Vessel at any time shall mean the average of the fair market value of such Collateral Vessel on the basis of an individual charter-free arm’s-length transaction between a willing and able buyer and seller not under duress as set forth in the appraisals of at least two Approved Appraisers most recently delivered to, or obtained by, the Administrative Agent prior to such time pursuant to Section 8.01(d).
“
FATCA
” shall mean Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with) and any current or future regulations or official interpretations thereof.
“
Federal Funds Rate
” shall mean, for any day, an interest rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published for such day (or, if such day is not a Business Day, for the immediately preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations at approximately 11:00 A.M. (New York time) on such day on such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by the Administrative Agent in its sole discretion.
“
Final DIP/Cash Collateral Order
” shall mean that certain Final Order, which was entered by the Bankruptcy Court on December 15, 2011 in respect of the Chapter 11 Proceeding pursuant to Section 361, 363 and 364 of the Bankruptcy Code and Rule 4001 of the Federal Rules of Bankruptcy Procedure authorizing the debtors named therein to (I) use cash collateral of the Prepetition Secured Parties (as defined therein), (II) obtain secured superpriority post-petition financing and (III) provide adequate protection to the Prepetition Secured Parties.
“
Financed Purchase Price
” shall have the meaning provided in Section 9.07.
“
Financial Covenants
” shall mean the covenants set forth in Sections 9.08 through 9.10, inclusive.
“
First Amendment
” shall mean the Omnibus First Amendment, dated as of December 21, 2012.
“
First Amendment Effective Date
” shall have the meaning provided in the First Amendment.
“
Flag Jurisdiction Transfer
” shall mean the transfer of the registration and flag of a Collateral Vessel from one Acceptable Flag Jurisdiction to another Acceptable Flag Jurisdiction, provided that the following conditions are satisfied with respect to such transfer:
21
(i)
On each Flag Jurisdiction Transfer Date, the Credit Party which is consummating a Flag Jurisdiction Transfer on such date shall have duly authorized, executed and delivered, and caused to be recorded in the appropriate Collateral Vessel registry a Collateral Vessel Mortgage or Secondary Collateral Vessel Mortgage, as applicable, substantially in the form of Exhibit I (with such modifications as are required by or appropriate for the applicable Acceptable Flag Jurisdiction of the Collateral Vessel), with respect to the Collateral Vessel being transferred (the “
Transferred Vessel
”) and (x) in the case of the Primary Collateral Vessels, the Collateral Vessel Mortgage shall be effective to create in favor of the Collateral Agent and/or the Lenders a legal, valid and enforceable first priority security interest, in and lien upon such Transferred Vessel, and (y) in the case of the Secondary Collateral Vessels, the Secondary Collateral Vessel Mortgage shall be effective to create in favor of the Collateral Agent and/or the Lenders a legal, valid and enforceable second priority security interest in, and lien upon, such Transferred Vessel, in each case subject only to Permitted Liens. All filings, deliveries of instruments and other actions necessary or desirable in the reasonable opinion of the Collateral Agent to perfect and preserve such security interests shall have been duly effected and the Collateral Agent shall have received evidence thereof in form and substance reasonably satisfactory to the Collateral Agent.
(ii)
On each Flag Jurisdiction Transfer Date, the Administrative Agent shall have received from (A) Constantine P. Georgiopoulos, special New York maritime counsel to the Credit Parties (or other counsel to such Credit Parties reasonably satisfactory to the Administrative Agent), an opinion addressed to the Administrative Agent and each of the Lenders and dated such Flag Jurisdiction Transfer Date, which shall (x) be in form and substance reasonably acceptable to the Administrative Agent and (y) cover the recordation of the security interests granted pursuant to the Collateral Vessel Mortgage(s) or the Secondary Collateral Vessel Mortgage(s), as applicable, to be delivered on such date and such other matters incident thereto as the Administrative Agent may reasonably request and (B) local counsel to the Credit Parties consummating the relevant Flag Jurisdiction Transfer reasonably satisfactory to the Administrative Agent practicing in those jurisdictions in which the Transferred Vessel is registered and/or the Credit Party owning such Transferred Vessel is organized, which opinions shall be addressed to the Administrative Agent and each of the Lenders and dated such Flag Jurisdiction Transfer Date, which shall (x) be in form and substance reasonably acceptable to the Administrative Agent and (y) cover the perfection of the security interests granted pursuant to the Collateral Vessel Mortgage(s) or the Secondary Collateral Vessel Mortgage(s), as applicable, and such other matters incident thereto as the Administrative Agent may reasonably request.
(iii)
On each Flag Jurisdiction Transfer Date:
(A)
The Administrative Agent shall have received (x) certificates of ownership from appropriate authorities showing (or confirmation updating previously reviewed certificates and indicating) the registered ownership of the Transferred Vessel transferred on such date by the relevant Subsidiary Guarantor and (y) the results of maritime registry searches with respect to the Transferred
22
Vessel transferred on such date, indicating no record liens other than Liens in favor of the Collateral Agent and/or the Lenders and Permitted Liens.
(B)
The Administrative Agent shall have received a report, in form and scope reasonably satisfactory to the Administrative Agent, from a firm of independent marine insurance brokers reasonably acceptable to the Administrative Agent with respect to the insurance maintained by the Credit Party in respect of the Transferred Vessel transferred on such date, together with a certificate from such broker certifying that such insurances (i) are placed with such insurance companies and/or underwriters and/or clubs, in such amounts, against such risks, and in such form, as are customarily insured against by similarly situated insureds for the protection of the Administrative Agent and/or the Lenders as mortgagee and (ii) conform with the insurance requirements of the respective Collateral Vessel Mortgage or Secondary Collateral Vessel Mortgage, as applicable.
(iv)
On or prior to each Flag Jurisdiction Transfer Date, the Administrative Agent shall have received a certificate, dated the Flag Jurisdiction Transfer Date, signed by the Chairman of the Board, the Chief Executive Officer, the President, any Vice President, the Treasurer or an authorized manager, member or general partner of the Credit Party commencing such Flag Jurisdiction Transfer, certifying that (A) all necessary governmental (domestic and foreign) and third party approvals and/or consents in connection with the Flag Jurisdiction Transfer being consummated on such date and otherwise referred to herein shall have been obtained and remain in effect, (B) there exists no judgment, order, injunction or other restraint prohibiting or imposing materially adverse conditions upon such Flag Jurisdiction Transfer or the other transactions contemplated by this Agreement and (C) copies of resolutions approving the Flag Jurisdiction Transfer of such Credit Party and any other matters the Administrative Agent may reasonably request.
“
Flag Jurisdiction Transfer Date
” shall mean the date on which a Flag Jurisdiction Transfer occurs.
“
Foreign Pension Plan
” shall mean any plan, fund (including, without limitation, any superannuation fund) or other similar program established or maintained outside the United States of America by the Parent or any one or more of its Subsidiaries primarily for the benefit of employees of the Parent or such Subsidiaries residing outside the United States of America, which plan, fund or other similar program provides, or results in, retirement income, a deferral of income in contemplation of retirement or payments to be made upon termination of employment, and which plan is not subject to ERISA or the Code.
“
Fourth Amendment
” shall mean the Fourth Amendment, dated as of May 7, 2014.
“
Fourth Amendment Effective Date
” shall have the meaning provided in the Fourth Amendment.
23
“
GAAP
” shall have the meaning provided in Section 12.07(a).
“
General Maritime Management
” shall mean General Maritime Management, LLC, a Marshall Islands limited liability company, a wholly-owned direct Subsidiary of the Parent.
“
GMSC
” shall have the meaning provided in the first paragraph of this Agreement.
“
Guaranteed Creditors
” shall mean and include each of the Administrative Agent, the Collateral Agent and the Lenders.
“
Guarantors
” shall mean the Parent, GMSC, Arlington and each Subsidiary Guarantor.
“
Guaranty
” shall mean, collectively, the Holdings Guaranty and the Subsidiaries Guaranty.
“
Hazardous Materials
” shall mean: (a) any petroleum or petroleum products, radioactive materials, asbestos in any form that is or could become friable, urea formaldehyde foam insulation, transformers or other equipment that contain dielectric fluid containing levels of polychlorinated biphenyls, and radon gas; (b) any chemicals, materials or substances defined as or included in the definition of “hazardous substances,” “hazardous waste,” “hazardous materials,” “extremely hazardous substances,” “restricted hazardous waste,” “toxic substances,” “toxic pollutants,” “contaminants,” or “pollutants,” or words of similar import, under any applicable Environmental Law; and (c) any other chemical, material or substance, exposure to which is prohibited, limited or regulated by any governmental authority under Environmental Laws because of its dangerous or deleterious properties or characteristics.
“
Holdings Guaranty
” shall mean the guaranty of the Parent, Arlington and GMSC pursuant to Section 13.
“
Indebtedness
” shall mean, as to any Person, without duplication, (i) all indebtedness (including principal, interest, fees and charges) of such Person for borrowed money or for the deferred purchase price of property or services, (ii) the maximum amount available to be drawn under all letters of credit issued for the account of such Person and all unpaid drawings in respect of such letters of credit, (iii) all Indebtedness of the types described in clause (i), (ii), (iv), (v), (vi) or (vii) of this definition secured by any Lien on any property owned by such Person, whether or not such Indebtedness has been assumed by such Person (to the extent of the value of the respective property), (iv) the aggregate amount required to be capitalized under leases under which such Person is the lessee, (v) all obligations of such person to pay a specified purchase price for goods or services, whether or not delivered or accepted,
i.e.
, take-or-pay and similar obligations, (vi) all Contingent Obligations of such Person, (vii) all obligations under any Interest Rate Protection Agreement or Other Hedging Agreement or under any similar type of agreement and (viii) the maximum amount available to be drawn under all Existing Letters of Credit (as defined in the Other Credit Agreement) issued for the account of such Person and all Unpaid Drawings (as defined in the Other Credit Agreement) in respect of such Existing Letters
24
of Credit;
provided
that Indebtedness shall in any event not include trade payables and expenses accrued in the ordinary course of business.
“
Initial Phase of the 2014 Newbuilding Acquisition
” shall have the meaning provided in the definition of 2014 Newbuilding Acquisition.
“
Intercreditor Agreements
” shall mean the Primary Intercreditor Agreement and the Secondary Intercreditor Agreement.
“
Interest Determination Date
” shall mean, with respect to any Loan, the second Business Day prior to the commencement of any Interest Period relating to such Loan.
“
Interest Expense Coverage Ratio
” shall mean, for any period, the ratio of (a) Consolidated EBITDA for such period to (b) Consolidated Cash Interest Expense for such period.
“
Interest Period
” shall have the meaning provided in Section 2.08.
“
Interest Rate Protection Agreement
” shall mean any interest rate swap agreement, interest rate cap agreement, interest collar agreement, interest rate hedging agreement, interest rate floor agreement or other similar agreement or arrangement.
“
Investments
” shall have the meaning provided in Section 9.05.
“
Joinder Agreement
” shall have the meaning provided in the definition of “Collateral and Guaranty Requirements”.
“
Joint Lead Arrangers
” shall mean Nordea and DNB Bank ASA in their capacity as joint lead arranger and joint bookrunners in respect of the credit facility provided for herein.
“
Judgment Currency
” shall have the meaning provided in Section 13.09(a).
“
Judgment Currency Conversion Date
” shall have the meaning provided in Section 13.09(a).
“
Leaseholds
” of any Person shall mean all the right, title and interest of such Person as lessee or licensee in, to and under leases or licenses of land, improvements and/or fixtures.
“
Lender
” shall mean each financial institution listed on
Schedule I
, as well as any Person which becomes a “
Lender
” hereunder pursuant to 12.04(b).
“
Lender Default
” shall mean, as to any Lender, (i) the wrongful refusal (which has not been retracted) of such Lender or the failure of such Lender (which has not been cured) to make available its portion of any Borrowing, (ii) such Lender having been deemed insolvent or having become the subject of a bankruptcy or insolvency proceeding or a takeover by a regulatory authority, or (iii) such Lender having notified the Administrative Agent and/or any Credit Party (x) that it does not intend to comply with its obligations under Sections 2.01 in
25
circumstances where such non-compliance would constitute a breach of such Lender’s obligations under such Section or (y) of the events described in preceding clause (ii);
provided
that, for purposes of (and only for purposes of) Section 2.12 (and the term “Defaulting Lender” as used therein), the term “Lender Default” shall also include, as to any Lender, any Affiliate of such Lender that has “control” (within the meaning provided in the definition of “Affiliate”) of such Lender having been deemed insolvent or having become the subject of a bankruptcy or insolvency proceeding or a takeover by a regulatory authority.
“
Lien
” shall mean any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), preference, priority or other security agreement of any kind or nature whatsoever (including, without limitation, any conditional sale or other title retention agreement, any financing or similar statement or notice filed under the UCC or any other similar recording or notice statute, and any lease having substantially the same effect as any of the foregoing).
“
Loan
” shall have the meaning provided in Section 2.01.
“
Loan to Value Ratio
” shall mean, at any date of determination, the ratio of Consolidated Net Indebtedness of the Parent and its Subsidiaries under this Agreement and the Other Credit Agreement on such date to the aggregate Fair Market Value of all Collateral Vessels owned by the Credit Parties on such date.
“
March 2014 Equity Issuance
” shall mean the issuance by the Parent of its Equity Interests in March 21, 2014 pursuant to which the Parent received net cash proceeds of $166,500,011.55.
“
Margin Regulations
” shall mean the provisions of Regulations T, U and X of the Board of Governors of the Federal Reserve System.
“
Margin Stock
” shall have the meaning provided in Regulation U.
“
Market Disruption Event
” shall mean with respect to any Loans:
(i)
if, at or about noon on the Interest Determination Date for the relevant Interest Period, the Screen Rate is not available and none or only one of the Reference Banks supplies a rate to the Administrative Agent to determine the Eurodollar Rate for the relevant Interest Period; or
(ii)
before close of business in New York on the Interest Determination Date for the relevant Interest Period, the Administrative Agent receives notice from a Lender or Lenders the sum of whose outstanding Loans in the aggregate exceed 50% of the Loans that (i) the cost to such Lenders of obtaining matching deposits in the London interbank Eurodollar market for the relevant Interest Period would be in excess of the Eurodollar Rate for such Interest Period or (ii) such Lenders are unable to obtain funding in the London interbank Eurodollar market.
26
“
Material Adverse Effect
” shall mean a material adverse effect on (i) the business, property, assets, liabilities, condition (financial or otherwise) of (x) the Collateral Vessels taken as a whole, (y) the Borrower, GMSC, Arlington and the Subsidiary Guarantors taken as a whole, or (z) the Parent and its Subsidiaries taken as a whole, (ii) the rights and remedies of the Lenders or the Administrative Agent or (iii) the ability of the Borrower or the Borrower and its Subsidiaries, taken as a whole, to perform its or their Obligations.
“
Maturity Date
” shall mean May 17, 2017.
“
Merger
” shall mean the merger of Merger Sub with and into Navig8 pursuant to and in accordance with the terms of the Merger Agreement.
“
Merger Agreement
” shall mean the Agreement and Plan of Merger, dated as of February 24, 2015 by and among the Parent, Merger Sub, Navig8 and Shareholder Representative Services LLC and OCM Marine Holdings TP, L.P., as the Equityholders’ Representatives relating to the Merger and annexed as Exhibit A hereto (as in effect on the Sixth Amendment Effective Date, without giving effect to any amendment, modification or waiver therefrom).
“
Merger Effective Time
” shall have the meaning given to the term “Effective Time” in the Merger Agreement.
“
Merger Sub
” shall mean Gener8 Maritime Acquisition, Inc.
“
Minimum Borrowing Amount
” shall mean $1,000,000.
“
Minotaur
” shall mean the Liberian flag vessel GENMAR MINOTAUR, Official Number 9083316.
“
Moody’s
” shall mean Moody’s Investors Service, Inc. and its successors.
“
Multiemployer Plan
” shall mean a Plan which is defined in Section 3(37) of ERISA.
“
Navig8
” shall mean Navig8 Crude Tankers, Inc., a corporation incorporated under the laws of the Marshall Islands.
“
Navig8 Equity Purchase Agreement
” shall mean the equity purchase agreement dated as of February 24, 2015 by and between the Parent, Navig8 and each of the parties set forth in Schedule 1 thereto as commitment parties (the “
EPA Commitment Parties
”) pursuant to which the EPA Commitment Parties have committed to purchase common Equity Interests of the Parent in an aggregate amount up to $125,000,000 (as in effect on the Sixth Amendment Effective Date, without giving effect to any amendment, modification or waiver therefrom other than any amendment or modification reflecting a change in the identity of the EPA Commitment Parties and the amount of their commitments so long as the aggregate amount of all commitments is no less than $125,000,000).
27
“
Navig8 Equity Purchase Agreement Proceeds
” shall mean the Net Cash Proceeds received by the Parent from the sale of common Equity Interests of the Parent to the EPA Commitment Parties pursuant to and in accordance with the terms of the Navig8 Equity Purchase Agreement.
“
Navig8 Group
” shall mean Navig8 Ltd. and its affiliates.
“
Net Cash Proceeds
” shall mean, (x) with respect to any Collateral Disposition, the aggregate cash payments (including any cash received by way of deferred payment pursuant to a note receivable issued in connection with such Collateral Disposition, other than the portion of such deferred payment constituting interest, but only as and when received) received by the Parent or the Borrower or any of their respective Subsidiaries from such Collateral Disposition net of (i) reasonable transaction costs (including, without limitation, reasonable attorney’s fees) and sales commissions and (ii) the estimated marginal increase in income taxes and any stamp tax payable by the Parent, the Borrower or any of its Subsidiaries as a result of such Collateral Disposition and (y) with respect to the issuance of any Equity Interests, the aggregate cash proceeds received by the Parent from such equity issuance net of reasonable transaction costs related thereto (including, without limitation, reasonable attorney’s fees).
“
Non-Defaulting Lender
” shall mean and include each Lender other than a Defaulting Lender.
“
Non-Recourse Indebtedness
” shall mean any Indebtedness of a Non-Recourse Subsidiary that is non-recourse to any Credit Party and for which no Credit Party provides any credit support;
provided
such Indebtedness may be full recourse to the Non-Recourse Subsidiary.
“
Non-Recourse Subsidiary
” shall mean (x) any Subsidiary listed on
Schedule XV
hereto and (y) any Subsidiary that is not a Credit Party and is identified by the Parent in writing to the Administrative Agent after the Restatement Effective Date to be a “Non-Recourse Subsidiary”;
provided
that (i) neither the Parent nor any Subsidiary of the Parent (other than a Non-Recourse Subsidiary) shall have any liability or recourse with respect to any Non-Recourse Indebtedness of such Non-Recourse Subsidiary, (ii) any such designation of a Subsidiary as a “Non-Recourse Subsidiary” shall be deemed to be a permanent “Investment” in such Subsidiary in an amount (proportionate to the Parent’s Equity Interest (directly or through a Subsidiary thereof) in such Subsidiary) equal to the fair market value of the net assets of such Subsidiary at the time such Subsidiary is designated a Non-Recourse Subsidiary and (iii) for the avoidance of doubt, Investments in Non-Recourse Subsidiaries may only be made pursuant to Section 9.05(vi).
“
Note
” shall have the meaning provided in Section 2.05(a).
“
Notice of Interest Period Election
” shall have the meaning provided in Section 2.08(a).
“
Notice Office
” shall mean the office of the Administrative Agent located at 437 Madison Avenue, 21
st
Floor, New York, NY 10022, or such other office as the Administrative Agent may hereafter designate in writing as such to the other parties hereto.
28
“
Obligation Currency
” shall have the meaning provided in Section 13.09(a).
“
Obligations
” shall mean the full and prompt payment when due (whether at the stated maturity, by acceleration or otherwise) of (x) the principal of, premium, if any, and interest on the Notes issued by, and the Loans made to, the Borrower under this Agreement, and (y) all other obligations (including obligations which, but for the automatic stay under Section 362(a) of the Bankruptcy Code, would become due), liabilities and indebtedness owing by the Borrower to the Guaranteed Creditors (in the capacities referred to in the definition of Guaranteed Creditors) under this Agreement and each other Credit Document to which the Borrower is a party (including, without limitation, indemnities, fees and interest thereon (including any interest accruing after the commencement of any bankruptcy, insolvency, receivership or similar proceeding at the rate provided for in this Agreement, whether or not such interest is an allowed claim in any such proceeding)), whether now existing or hereafter incurred under, arising out of or in connection with this Agreement and any such other Credit Document and the due performance and compliance by the Borrower with all of the terms, conditions and agreements contained in all such Credit Documents.
“
OPA
” shall mean the Oil Pollution Act of 1990, as amended, 33 U.S.C. § 2701
et seq.
“
Original Credit Agreement
” shall have the meaning provided in the Recitals.
“
Original Effective Date
” shall mean July 16, 2010.
“
Original Other Credit Agreement
” shall have the meaning provided in the Recitals.
“
Other Agent
” shall have the meaning provided in the Recitals hereto.
“
Other Credit Agreement
” shall have the meaning provided in the Recitals hereto.
“
Other Credit Agreement Amendment Prepayment
” shall have the meaning provided in the Third Amendment.
“
Other Credit Documents
” shall mean the “Credit Documents” under and as defined in the Other Credit Agreement.
“
Other Hedging Agreement
” shall mean any foreign exchange contracts, currency swap agreements, commodity agreements or other similar agreements or arrangements designed to protect against the fluctuations in currency or commodity values.
“
Parent
” shall mean (a) at any time prior to the Merger Effective Time, General Maritime Corporation and (b) at any time after the Merger Effective Time, Gener8 Maritime, Inc. (it being understood and agreed that Gener8 Maritime, Inc. is a successor-by-name-change to General Maritime Corporation).
“
Parent Pledge Agreement
” shall have the meaning provided in the definition of “Collateral and Guaranty Requirements.”
29
“
Pari Passu Pledge Agreement
” shall have the meaning provided in the definition of “Collateral and Guaranty Requirements.”
“
Participant Register
” shall have the meaning provided in Section 12.16.
“
PATRIOT Act
” shall have the meaning provided in Section 12.20.
“
Payment Date
” shall mean the last Business Day of each March, June, September and December.
“
Payment Office
” shall mean the office of the Administrative Agent located at 437 Madison Avenue, 21
st
Floor, New York, NY 10022, or such other office as the Administrative Agent may hereafter designate in writing as such to the other parties hereto.
“
PBGC
” shall mean the Pension Benefit Guaranty Corporation established pursuant to Section 4002 of ERISA, or any successor thereto.
“
Permitted 2014 Newbuilding Indebtedness
” shall mean Indebtedness of the Parent, the 2014 Newbuilding Holdco, and the 2014 Newbuilding Subsidiaries incurred to finance the payments due under the 2014 Newbuilding Contracts on or after the respective delivery date for the relevant 2014 Newbuilding Vessel; provided that:
(v) the aggregate principal amount of such Indebtedness does not exceed at any time:
(i) the greater of (A) $52,500,000 and (B) 60% of the Fair Market Value of the 2014 Newbuilding Vessels which have been delivered to the 2014 Newbuilding Subsidiaries at that time, and
(ii) when added to the then outstanding principal amount of the BlueMountain Parent Indebtedness other than the amount of any interest accrued after the incurrence thereof and capitalized or paid in kind in accordance with the terms thereof, 75% of the lesser of (A) the pro forma acquisition price of the 2014 Newbuilding Vessels which have been delivered to the 2014 Newbuilding Subsidiaries at that time and (B) the Fair Market Value of the 2014 Newbuilding Vessels which have been delivered to the 2014 Newbuilding Subsidiaries at that time;
(w) such Indebtedness is secured only by the assets of the 2014 Newbuilding Holdco and the 2014 Newbuilding Subsidiaries and is not guaranteed by any Subsidiary of the Parent other than the 2014 Newbuilding Holdco and the 2014 Newbuilding Subsidiaries;
(x) the amortization of such Indebtedness shall be no greater than a straight line amortization reducing such Indebtedness to $0 upon the corresponding Vessel becoming 15 years old,;
30
(y) such Indebtedness shall have no scheduled amortization (other than that permitted under clause (x) above), mandatory redemption or prepayment prior to the final maturity thereof (other than any prepayment required (i) from the net cash proceeds from the sale, disposition or event of loss of any Equity Interests of 2014 Newbuilding Holdco, or any assets of 2014 Newbuilding Holdco and/or the 2014 Newbuilding Subsidiaries and/or (ii) upon a change of control (as defined in the documentation governing such Indebtedness) or acceleration of such Indebtedness following an event of default thereunder); and
(z) such Indebtedness shall have a final maturity date of no earlier than May 17, 2018.
“
Permitted Encumbrance
” shall mean easements, rights-of-way, restrictions, encroachments, exceptions to title and other similar charges or encumbrances on any Collateral Vessel or any other property of the Parent or any of its Subsidiaries arising in the ordinary course of business which do not materially detract from the value of such Collateral Vessel or the property subject thereto.
“
Permitted Holders
” shall mean funds or segregated accounts managed by Oaktree Capital Management, L.P. and any corporation or other entity directly or indirectly controlled or managed by Oaktree Capital Management, L.P. or its managed funds.
“
Permitted Liens
” shall have the meaning provided in Section 9.01.
“
Permitted New Vessel Acquisition
” shall have the meaning provided in Section 9.07.
“
Permitted Sale
” shall mean the sale of the Agamemnon,
provided
that (i) 100% of the consideration in respect of such sale shall consist of cash in an amount resulting in Net Cash Proceeds of not less than $7,275,000 and (ii) such Net Cash Proceeds shall be delivered to the Administrative Agent on or before October 31, 2013 and applied in accordance with Section 5.02(c) of this Agreement.
“
Person
” shall mean any individual, partnership, joint venture, firm, corporation, association, trust or other enterprise or any government or political subdivision or any agency, department or instrumentality thereof.
“
Plan
” shall mean any pension plan as defined in Section 3(2) of ERISA, which is maintained or contributed to by (or to which there is an obligation to contribute of) the Parent or a Subsidiary of the Parent or any ERISA Affiliate, and each such plan for the five-year period immediately following the latest date on which the Parent, or a Subsidiary of the Parent or any ERISA Affiliate maintained, contributed to or had an obligation to contribute to such plan.
“
Plan of Reorganization
” shall have the meaning provided in the Recitals.
“
Pledge Agreement
” shall have the meaning provided in the definition of “Collateral and Guaranty Requirements.”
31
“
Pledge Agreement Collateral
” shall mean all “Collateral” as defined in the Pledge Agreement, the Parent Pledge Agreement and/or the Pari Passu Pledge Agreement, as applicable.
“
Pledged Securities
” shall mean “Securities” as defined in the Pledge Agreement, the Parent Pledge Agreement and/or the Secondary Pledge Agreement, as the case may be, pledged (or required to be pledged) pursuant thereto.
“
Primary Collateral
” shall mean all property (whether real or personal) with respect to which any security interests have been granted (or purported to be granted) pursuant to any Primary Security Document, including, without limitation, all Pledge Agreement Collateral, all Earnings and Insurance Collateral, all Primary Collateral Vessels and all cash and Cash Equivalents at any time delivered as collateral thereunder or hereunder.
“
Primary Collateral Vessel
” shall mean, at any time, each of the Vessels listed in rows 1 through and including 7 on
Schedule III
(and any Acceptable Replacement Vessel in respect thereof) which is subject to a Collateral Vessel Mortgage at such time and with respect to which the other Collateral and Guaranty Requirements are satisfied at such time.
“
Primary Intercreditor Agreement
” shall mean the Amended and Restated Intercreditor Agreement, dated as of May 17, 2012, by and among the Parent, Arlington, the Borrower, as borrower under this Agreement, GMSC, as borrower under the Other Credit Agreement, the Administrative Agent (for and on behalf of the Secured Creditors), each Subsidiary Guarantor, the Collateral Agent, and the Other Agent (for and on behalf of the Secured Creditors under and as defined in the Other Credit Agreement), which Primary Intercreditor Agreement (i) shall be substantially in the form of Exhibit O-1 (as amended, modified and/or otherwise supplemented from time to time) and (ii) shall set forth the priority of the security interests in the Primary Collateral.
“
Primary Security Documents
” shall mean the Pledge Agreement, the Parent Pledge Agreement, the Pari Passu Pledge Agreement, each Assignment of Charter, each Assignment of Earnings, each Assignment of Insurances, each Collateral Vessel Mortgage and, after the execution and delivery thereof, each additional first-lien security document executed pursuant to Section 7.11.
“
Projections
” shall mean the Parent’s forecasted consolidated and consolidating: (a) balance sheets; (b) profit and loss statements; (c) cash flow statements and (d) capitalization statements, all prepared on a Subsidiary by Subsidiary basis and based upon good faith estimates and assumptions believed by the Parent to be reasonable at the time made, together with appropriate supporting details and a statement of underlying assumptions.
“
Qualified Preferred Stock
” shall mean any preferred stock so long as the terms of any such preferred stock (i) do not contain any mandatory put, redemption, repayment, sinking fund or other similar provision occurring prior to one year after the Maturity Date, (ii) do not require the cash payment of dividends and (iii) any other preferred stock that satisfies (i) of this definition of Qualified Preferred Stock and that is otherwise issuable or may be distributed pursuant to a shareholders’ rights plan of the Parent;
provided
,
however
, any Dividend or similar
32
feature of such Qualified Preferred Stock shall only be declared and paid in accordance with Section 9.03.
“
Qualifying IPO
” shall mean the issuance by the Parent or any direct or indirect parent of the Parent of its Equity Interests in an underwritten primary public offering (other than a public offering pursuant to a registration statement on Form S-8) after the Restatement Effective Date pursuant to an effective registration statement filed with the U.S. Securities and Exchange Commission in accordance with the Securities Act (whether alone or in connection with a secondary public offering) and such issuance results in Net Cash Proceeds received by the Parent of at least $75,000,000.
“
Real Property
” of any Person shall mean all the right, title and interest of such Person in and to land, improvements and fixtures, including Leaseholds.
“
Reference Banks
” shall mean, at any time, (i) if there are less than two Lenders at such time, each Lender and (ii) if there are three or more Lenders at such time, each Joint Lead Arranger and one other Lender as shall be determined by the Administrative Agent.
“
Refinanced Loans
” shall have the meaning provided in Section 12.12(c).
“
Register
” shall have the meaning provided in Section 12.16.
“
Regulation D
” shall mean Regulation D of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or a portion thereof establishing reserve requirements.
“
Regulation T
” shall mean Regulation T of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or a portion thereof.
“
Regulation U
” shall mean Regulation U of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or a portion thereof.
“
Regulation X
” shall mean Regulation X of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or a portion thereof.
“
Replaced Lender
” shall have the meaning provided in Section 2.12(a).
“
Replacement Lender
” shall have the meaning provided in Section 2.12(a).
“
Replacement Loan
” shall have the meaning provided in Section 12.12(c).
“
Reportable Event
” shall mean an event described in Section 4043(c) of ERISA with respect to a Plan that is subject to Title IV of ERISA other than those events as to which the 30-day notice period is waived under subsection .22, .23, .25, .27 or .28 of PBGC Regulation Section 4043.
33
“
Required Insurance
” shall have the meaning provided in Section 7.21.
“
Required Lenders
” shall mean, at any time, prior to the repayment in full of the Loans, Non-Defaulting Lenders the sum of whose outstanding Loans at such time represents an amount greater than 66-2/3% of the sum of all outstanding Loans of Non-Defaulting Lenders.
“
Restatement Effective Date
” shall have the meaning provided in Section 12.10.
“
Returns
” shall have the meaning provided in Section 7.09.
“
Revolving Loans
” shall mean the “Revolving Loans” as defined in the Original Credit Agreement.
“
Sale Vessels
” shall mean the Genmar Minotaur and the Genmar Hope.
“
S&P
” shall mean Standard & Poor’s Financial Services LLC, and its successors.
“
Scheduled Repayment
” shall have the meaning provided in Section 4.02(a).
“
Screen Rate
” shall have the meaning provided in the definition of Eurodollar Rate.
“
Second Amendment
” shall mean the Second Amendment to Second Amended and Restated Credit Agreement, dated as of October 2, 2013.
“
Second Amendment Effective Date
” shall have the meaning provided in the Second Amendment.
“
Secondary Assignment of Charters
” shall have the meaning provided in the definition of “Collateral and Guaranty Requirements”.
“
Secondary Assignment of Earnings
” shall have the meaning provided in the definition of “Collateral and Guaranty Requirements”.
“
Secondary Assignment of Insurances
” shall have the meaning provided in the definition of “Collateral and Guaranty Requirements”.
“
Secondary Collateral
” shall mean all property (whether real or personal) with respect to which any security interests have been granted (or purported to be granted) pursuant to any Secondary Security Document, including, without limitation, all Secondary Pledge Agreement Collateral, all Secondary Earnings and Insurance Collateral, all Secondary Collateral Vessels and all cash and Cash Equivalents at any time delivered as collateral thereunder or under the Other Credit Agreement.
“
Secondary Collateral Vessel
” shall mean, at any time, each of the Vessels listed in rows 8 through and including 30 on
Schedule III
, which is subject to a Secondary Collateral Vessel Mortgage at such time and with respect to which the other Collateral and Guaranty Requirements are satisfied at such time.
34
“
Secondary Collateral Vessel Mortgage
” shall mean, with respect to the Secondary Collateral Vessels, a second priority statutory mortgage and deed of covenant supplemental thereto or a second preferred mortgage in substantially the form of Exhibit I-2, Exhibit I-3 or Exhibit I-4, as applicable, or such other form as may be reasonably satisfactory to the Administrative Agent, as such second priority statutory mortgage and deed of covenant supplemental thereto or second preferred mortgage may be amended, modified or supplemented from time to time in accordance with the terms hereof and thereof.
“
Secondary Earnings and Insurance Collateral
” shall mean all “Earnings Collateral” and “Insurance Collateral”, as the case may be, as defined in the respective Secondary Assignment of Earnings and the respective Secondary Assignment of Insurances.
“
Secondary Intercreditor Agreement
” shall mean the Amended and Restated Intercreditor Agreement, dated as of May 17, 2012, by and among the Parent, Arlington, the Borrower, as borrower under this Agreement, GMSC, as borrower under the Other Credit Agreement, the Administrative Agent (for and on behalf of the Secured Creditors), each Subsidiary Guarantor, the Collateral Agent, and the Other Agent (for and on behalf of the Secured Creditors under and as defined in the Other Credit Agreement), which Secondary Intercreditor Agreement (i) shall be substantially in the form of Exhibit O-2 (as amended, modified and/or otherwise supplemented from time to time) and (ii) shall set forth the priority of the security interests in the Secondary Collateral.
“
Secondary Pledge Agreement
” shall have the meaning provided in the definition of “Collateral and Guaranty Requirements.”
“
Secondary Pledge Agreement Collateral
” shall mean all “Collateral” as defined in the Secondary Pledge Agreement.
“
Secondary Security Documents
” shall mean the Secondary Pledge Agreement, each Secondary Assignment of Charter, each Secondary Assignment of Earnings, each Secondary Assignment of Insurances, each Secondary Collateral Vessel Mortgage and, after the execution and delivery thereof, each additional Secondary Security Document executed pursuant to Section 7.11.
“
Secured Creditors
” shall mean the “Secured Creditors” as defined in the Security Documents.
“
Securities Act
” shall mean the Securities Act of 1933, as amended.
“
Security Documents
” shall mean each Primary Security Document and each Secondary Security Document.
“
Senior Unsecured Notes
” shall mean the 12% senior unsecured notes of the Parent issued pursuant to that certain indenture, dated as of November 12, 2009, entered into by the Parent, certain of its Subsidiaries and The Bank of New York Mellon, as trustee.
“
Sixth Amendment
” shall mean the Sixth Amendment, dated as of April 2, 2015.
35
“
Sixth Amendment Effective Date
” shall have the meaning provided in the Sixth Amendment.
“
Subsidiaries Guaranty
” shall have the meaning provided in the definition of “Collateral and Guaranty Requirements.”
“
Subsidiary
” shall mean, as to any Person, (i) any corporation more than 50% of whose stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of such corporation (irrespective of whether or not at the time stock of any class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time owned by such Person and/or one or more Subsidiaries of such Person and (ii) any partnership, limited liability company, association, joint venture or other entity in which such Person and/or one or more Subsidiaries of such Person has more than a 50% equity interest at the time;
provided
that, for all purposes under this Credit Agreement or any other Credit Document, Non-Recourse Subsidiaries shall not be considered Subsidiaries hereunder or thereunder other than as set forth herein or therein.
“
Subsidiary Guarantor
” shall mean, at any time, (x) each direct and indirect Subsidiary of the Parent (other than GMSC, Arlington and the Borrower) which owns a Primary Collateral Vessel or which owns, directly or indirectly, any of the Equity Interests of any such direct or indirect Subsidiary at such time, (y) each direct and indirect Subsidiary of the Parent (other than GMSC, Arlington and the Borrower) which owns a Secondary Collateral Vessel or which owns, directly or indirectly, any of the Equity Interests of any such direct or indirect Subsidiary at such time and (z) each other Subsidiary of the Parent (other than GMSC, Arlington and the Borrower) that guarantees the obligations under the Other Credit Agreement at any time. The Subsidiary Guarantors as of the Restatement Effective Date are listed on
Schedule XIII
.
“
Tax Benefit
” shall have the meaning provided in Section 4.04(c).
“
Taxes
” shall have the meaning provided in Section 4.04(a).
“
Term Loans
” shall mean the “Term Loans” as defined in the Original Credit Agreement.
“
Test Period
” shall mean each period of four consecutive fiscal quarters then last ended, in each case taken as one accounting period.
“
Third Amendment
” shall mean the Third Amendment, dated as of November 29, 2013.
“
Third Amendment Effective Date
” shall have the meaning provided in the Third Amendment.
“
Transaction
” shall mean, collectively, (i) the entering into of this Agreement and the other Credit Documents, as applicable, on the Restatement Effective Date and the continuation and conversion of Loans hereunder, (ii) the entering into of the Other Credit Agreement and the other Other Credit Documents, as applicable, on the Restatement Effective Date and the conversion of loans thereunder, (iii) the Equity Conversion, (iv) the Equity
36
Investment, including the partial repayment of Loans with the proceeds of the Equity Investment in a principal amount of no less than $39,649,220 on the Restatement Effective Date, and the partial repayment of Loans under and as defined in the Other Credit Agreement with the proceeds of the Equity Investment in a principal amount of no less than $35,350,780 on the Restatement Effective Date, (v) the confirmation and effectiveness of the Plan of Reorganization and (vi) the payment of all fees and expenses in connection with the foregoing.
“
Transferred Vessel
” shall have the meaning provided in the definition of “Flag Jurisdiction Transfer” in this Section 1.
“
Trigger Date
” shall mean the date on which (x) the aggregate principal payments of Loans under this Agreement after the Restatement Effective Date (other than any such prepayment pursuant to Section 4.02(b)) equals the Deferred Amortization Amount and (y) the aggregate principal payments of loans under the Other Credit Agreement after the Third Amendment Effective Date (other than any such prepayment pursuant to Section 5.02(c) of the Other Credit Agreement) equals the Deferred Amortization Amount (under and as defined in the Other Credit Agreement).
“
UCC
” shall mean the Uniform Commercial Code as from time to time in effect in the relevant jurisdiction.
“
Unfunded Current Liability
” of any Plan shall mean the amount, if any, by which the value of the accumulated plan benefits under the Plan determined on a plan termination basis in accordance with actuarial assumptions at such time consistent with those prescribed by the PBGC for purposes of Section 4044 of ERISA, exceeds the fair market value of all plan assets allocable to such liabilities under Title IV of ERISA (excluding any accrued but unpaid contributions).
“
Unique Tankers
” shall mean Unique Tankers, LLC, a Marshall Islands limited liability company, a wholly-owned direct Subsidiary of General Maritime Management formed for the purpose of forming and operating the Unique Tankers Pool.
“
Unique Tankers Pool
” shall mean the pool, operated by Unique Tankers, of crude oil tankers under time charters.
“
United States
” and “
U.S.
” shall each mean the United States of America.
“
Unrestricted Cash and Cash Equivalents
” shall mean, when referring to cash or Cash Equivalents of the Parent or any of its Subsidiaries, that such cash or Cash Equivalents (i) does not appear (or would not be required to appear) as “restricted” on a consolidated balance sheet of the Parent or of any such Subsidiary, (ii) are not subject to any Lien in favor of any Person other than the Collateral Agent for the benefit of the Secured Creditors and the Other Agent for the benefit of the Secured Creditors under and as defined in the Other Credit Agreement, (iii) are otherwise generally available for use by the Parent or such Subsidiary or (iv) are not subject to Liens permitted under Section 9.01(xviii).
“
Vessel
” shall mean, collectively, all sea going vessels and tankers at any time owned by the Parent and its Subsidiaries, and, individually, any of such vessels.
37
“
Vessel Exchange
” shall mean the exchange of a Primary Collateral Vessel for a Vessel which Vessel shall constitute an Acceptable Replacement Vessel and provided that the following conditions are satisfied with respect to such exchange:
(i)
On the Vessel Exchange Date, if the Subsidiary owning the Acceptable Replacement Vessel is not a Credit Party, (A) such Subsidiary shall (1) grant to the Collateral Agent a first priority Lien (subject only to Permitted Liens) on all property of such Subsidiary by executing and delivering a counterpart of or joinder to the Pledge Agreement, taking all actions required pursuant to Section 25 of the Pledge Agreement to become a Pledgor thereunder, and taking any other action reasonably requested by the Administrative Agent and (2) execute and deliver a Joinder Agreement and (B) the Borrower shall pledge and deliver, or cause to be pledged and delivered, all of the Equity Interests of such Subsidiary owned by any Credit Party to the Collateral Agent;
(ii)
On the applicable Vessel Exchange Date, the Administrative Agent shall have received from (A) Constantine P. Georgiopoulos, special New York maritime counsel to the Credit Parties (or other counsel to the Credit Parties reasonably satisfactory to the Administrative Agent), an opinion addressed to the Administrative Agent and each of the Lenders and dated such Vessel Exchange Date, which shall (x) be in form and substance reasonably acceptable to the Administrative Agent and (y) cover the recordation of the security interests granted pursuant to the Collateral Vessel Mortgage(s) to be delivered on such date and such other matters incident thereto as the Administrative Agent may reasonably request and (B) local counsel to the Credit Parties consummating the relevant Vessel Exchange reasonably satisfactory to the Administrative Agent practicing in those jurisdictions in which the Acceptable Replacement Vessel is registered and/or the Credit Party owning such Acceptable Replacement Vessel is organized, which opinions shall be addressed to the Administrative Agent and each of the Lenders and dated such Vessel Exchange Date, which shall (x) be in form and substance reasonably acceptable to the Administrative Agent and (y) cover the perfection of the security interests granted pursuant to the Collateral Vessel Mortgage(s) and such other matters incident thereto as the Administrative Agent may reasonably request;
(iii)
On or prior to the Vessel Exchange Date, the Credit Party which is consummating a Vessel Exchange on such date shall have satisfied the Collateral and Guaranty Requirements with respect to such Vessel;
(iv)
On or prior to the Vessel Exchange Date,
Schedule III
shall be updated with the name, registered owner (which shall be a Subsidiary Guarantor), official number, and jurisdiction of registration and flag (which shall be in an Acceptable Flag Jurisdiction) of the Acceptable Replacement Vessel;
(v)
On the Vessel Exchange Date and immediately after giving effect to a Vessel Exchange, no Default or Event of Default shall have occurred and be continuing and all representations and warranties made by the Parent and its Subsidiaries pursuant to Section 7 of this Agreement shall be true and correct both before and after any such Vessel Exchange; and
(vi)
All filings, deliveries of instruments and other actions necessary or desirable in the reasonable opinion of the Collateral Agent to perfect and preserve such security
38
interests shall have been duly effected and the Collateral Agent shall have received evidence thereof in form and substance reasonably satisfactory to the Collateral Agent.
“
Vessel Exchange Date
” shall mean each date on which a Vessel Exchange occurs.
“
Vessel SPV
” shall have the meaning provided in Section 9.05(vii).
“
Weighted Average Life to Maturity
” shall mean, when applied to any Indebtedness at any date, the number of years obtained by dividing: (i) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by (ii) the then outstanding principal amount of such Indebtedness.
“
Wells Fargo Indebtedness
” means (a) the Indebtedness under the credit agreement between the Parent and Wells Fargo Bank, National Association dated as of June 11, 2013 and (b) any refinancing of the Indebtedness referred to in clause (a), to the extent such refinancing is permitted pursuant to Section 9.18(i).
“
Wholly-Owned Subsidiary
” shall mean, as to any Person, (i) any corporation 100% of whose capital stock (other than director’s qualifying shares) is at the time owned by such Person and/or one or more Wholly-Owned Subsidiaries of such Person and (ii) any partnership, limited liability company, association, joint venture or other entity in which such Person and/or one or more Wholly-Owned Subsidiaries of such Person has a 100% equity interest at such time.
SECTION 2.
Amount and Terms of Credit Facility
.
2.01
The Loans
. On the Restatement Effective Date, the loans (a “
Loan
” and, collectively, the “
Loans
”) of each Lender shall consist of (x) the term loan of each such Lender which is outstanding under the Original Credit Agreement immediately prior to the Restatement Effective Date and (y) the Revolving Loans of each such Lender which are outstanding under the Original Credit Agreement immediately prior to the Restatement Effective Date and shall be converted into Loans under this Agreement on the Restatement Effective Date,
less
each such Lender’s
pro rata
percentage of $39,649,220, which is paid to such Lenders on the Restatement Effective Date as part of the Plan of Reorganization. The amount of each Lender’s outstanding Loans immediately after giving effect to the Transactions on the Restatement Effective Date is set forth on
Schedule I
.
2.02 [
Intentionally Omitted
].
2.03 [
Intentionally Omitted
].
2.04 [
Intentionally Omitted
].
39
2.05
Notes
. (a) The Borrower’s obligation to pay the principal of, and interest on, the Loans made by each Lender shall be evidenced in the Register maintained by the Administrative Agent pursuant to Section 12.16 and shall, if requested by such Lender, also be evidenced by a promissory note duly executed and delivered by the Borrower substantially in the form of Exhibit B, with blanks appropriately completed in conformity herewith (each, a “
Note
” and, collectively, the “
Notes
”).
(b)
Each Note shall (i) be executed by the Borrower, (ii) be payable to such Lender or its registered assigns and be dated the Restatement Effective Date, (iii) be in a stated principal amount equal to the outstanding Loans of such Lender and be payable in the outstanding principal amount of Loans evidenced thereby, (iv) mature on the Maturity Date, (v) bear interest as provided in Section 2.07 in respect of the Loans evidenced thereby, (vi) be subject to voluntary prepayment as provided in Section 4.01, and mandatory repayment as provided in Section 4.02, and (vii) be entitled to the benefits of this Agreement and the other Credit Documents.
(c)
Each Lender will note on its internal records the amount of each Loan made by it and each payment in respect thereof and will, prior to any transfer of any of its Notes, endorse on the reverse side thereof the outstanding principal amount of Loans evidenced thereby. Failure to make any such notation or any error in any such notation or endorsement shall not affect the Borrower’s obligations in respect of such Loans.
(d)
Notwithstanding anything to the contrary contained above in this Section 2.05 or elsewhere in this Agreement, Notes shall be delivered only to Lenders that at any time specifically request the delivery of such Notes. No failure of any Lender to request or obtain a Note evidencing its Loans to the Borrower shall affect or in any manner impair the obligations of the Borrower to pay the Loans (and all related Obligations) incurred by the Borrower that would otherwise be evidenced thereby in accordance with the requirements of this Agreement, and shall not in any way affect the security or guaranties therefor provided pursuant to the Credit Documents. Any Lender that does not have a Note evidencing its outstanding Loans shall in no event be required to make the notations otherwise described in preceding clause (c). At any time (including, without limitation, to replace any Note that has been destroyed or lost) when any Lender requests the delivery of a Note to evidence any of its Loans, the Borrower shall promptly execute and deliver to such Lender the requested Note in the appropriate amount or amounts to evidence such Loans provided that, in the case of a substitute or replacement Note, the Borrower shall have received from such requesting Lender (i) an affidavit of loss or destruction and (ii) a customary lost/destroyed Note indemnity, in each case in form and substance reasonably acceptable to the Borrower and such requesting Lender, and duly executed by such requesting Lender.
2.06
Pro Rata Borrowings
. All Borrowings of Loans under this Agreement have been incurred from the Lenders
pro rata
.
2.07
Interest
. (a) The Borrower agrees to pay interest in respect of the unpaid principal amount of each Loan from the date the proceeds thereof are made available to the Borrower until the maturity (whether by acceleration or otherwise) of such Loan at a rate per
40
annum which shall, during each Interest Period applicable thereto, be equal to the sum of the Applicable Margin and the Eurodollar Rate for such Interest Period.
(b)
If the Borrower fails to pay any amount payable by it under a Credit Document on its due date, interest shall accrue on the overdue amount (in the case of overdue interest to the extent permitted by law) from the due date up to the date of actual payment (both before and after judgment) at a rate which is, subject to paragraph (c) below, 2%
plus
the rate which would have been payable if the overdue amount had, during the period of non payment, constituted a Loan for successive Interest Periods, each of a duration selected by the Administrative Agent. Any interest accruing under this Section 2.07(b) shall be immediately payable by the Borrower on demand by the Administrative Agent.
(c)
If any overdue amount consists of all or part of a Loan which became due on a day which was not the last day of an Interest Period relating to such Loan:
(i)
the first Interest Period for that overdue amount shall have a duration equal to the unexpired portion of the current Interest Period relating to that Loan; and
(ii)
the rate of interest applying to the overdue amount during that first Interest Period shall be 2%
plus
the rate which would have applied if the overdue amount had not become due.
Default interest (if unpaid) arising on the overdue amount will be compounded with the overdue amount at the end of each Interest Period applicable to that overdue amount but will remain immediately due and payable.
(d)
Accrued and unpaid interest shall be payable in respect of each Loan, on the last day of each Interest Period applicable thereto and, in the case of an Interest Period in excess of three months, on each date occurring at three month intervals after the first day of such Interest Period, on any repayment or prepayment (on the amount repaid or prepaid), at maturity (whether by acceleration or otherwise) and, after such maturity, on demand.
(e)
Upon each Interest Determination Date, the Administrative Agent shall determine the Eurodollar Rate for each Interest Period applicable to the Loans made or to be made pursuant to the applicable Borrowing and shall promptly notify the Borrower and the respective Lenders thereof. Each such determination shall, absent manifest error, be final and conclusive and binding on all parties hereto.
2.08
Interest Periods
. (a) The Borrower shall give the Administrative Agent at its Notice Office written notice at least three Business Days’ prior to (x) the Restatement Effective Date (in the case of the initial Interest Period applicable to any Loans) and (y) the expiration of an Interest Period applicable to such Loans (in the case of any subsequent Interest Period), which notice shall be deemed to have been given on a certain day only if given before 11:00 A.M. (New York time), electing the interest period (each an “
Interest Period
”) applicable to such Loan. Each such written notice (each a “
Notice of Interest Period Election
”), except as otherwise expressly provided in Section 2.09, shall be irrevocable and shall be given by the Borrower in the form of Exhibit A, appropriately completed to specify (i) the aggregate principal amount of the Loans to be included in the Borrowing (if applicable), (ii) the commencement date
41
of the applicable Interest Period (which shall be a Business Day) and (iii) at the option of the Borrower, whether the applicable Interest Period will be a one, three or six month period (or such other period as all the Lenders may agree);
provided
that:
(i)
there shall be no more than six different Interest Periods at any time, each of which shall be comprised of Loans in an amount of not less than the Minimum Borrowing Amount (or, if less, the aggregate principal amount of the Loans outstanding hereunder);
(ii)
the initial Interest Period for each Loan shall commence on the Restatement Effective Date of such Loan and each Interest Period occurring thereafter in respect of such Loan shall commence on the day on which the immediately preceding Interest Period applicable thereto expires;
(iii)
if any Interest Period relating to a Loan begins on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period, such Interest Period shall end on the last Business Day of such calendar month;
(iv)
if any Interest Period would otherwise expire on a day which is not a Business Day, such Interest Period shall expire on the first succeeding Business Day;
provided
,
however
, that if any Interest Period for a Loan would otherwise expire on a day which is not a Business Day but is a day of the month after which no further Business Day occurs in such month, such Interest Period shall expire on the immediately preceding Business Day;
(v)
no Interest Period longer than one month may be selected at any time when an Event of Default (or, if the Administrative Agent or the Required Lenders have determined that such an election at such time would be disadvantageous to the Lenders, a Default) has occurred and is continuing; and
(vi)
no Interest Period in respect of any Borrowing of any Loans shall be selected which extends beyond the Maturity Date.
The Administrative Agent shall promptly give each Lender whose Loans are being converted on the Restatement Effective Date or continued at the end of any Interest Period, notice of the proposed Borrowing, of such Lender’s proportionate share thereof and of the other matters required by the immediately preceding sentence to be specified in the Notice of Interest Period Election. If on the Restatement Effective Date or upon the expiration of any Interest Period applicable to Loans, the Borrower has failed to deliver a Notice of Interest Period Election in respect of such Loans as provided above, the Borrower shall be deemed to have elected a one month Interest Period to be applicable to such Loans effective as of the Restatement Effective Date or expiration date of such current Interest Period, as applicable.
(b)
Without in any way limiting the obligation of the Borrower to deliver a written Notice of Interest Period Election in accordance with Section 2.08(a), the Administrative Agent may act without liability upon the basis of telephonic notice of such Interest Period election, believed by the Administrative Agent in good faith to be from the President or the Treasurer of the Borrower (or any other officer of the Borrower designated in writing to the
42
Administrative Agent by the President or Treasurer of the Borrower as being authorized to give such notices under this Agreement) prior to receipt of Notice of Interest Period Election. In each such case, the Borrower hereby waives the right to dispute the Administrative Agent’s record of the terms of such telephonic notice of such Interest Period election of Loans, absent manifest error.
2.09
Increased Costs, Illegality, Market Disruption Event, etc.
(a) In the event that any Lender shall have determined in good faith (which determination shall, absent manifest error, be final and conclusive and binding upon all parties hereto):
(i)
at any time, that such Lender shall incur increased costs or reductions in the amounts received or receivable hereunder with respect to any Loan because of, without duplication, any change since the Restatement Effective Date in any applicable law or governmental rule, regulation, order, guideline or request (whether or not having the force of law) or in the interpretation or administration thereof and including the introduction of any new law or governmental rule, regulation, order, guideline or request, such as, for example, but not limited to: (A) a change with respect to taxes (other than Excluded Taxes) imposed on any recipient Lender’s loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto, but without duplication of any amounts payable in respect of Taxes pursuant to Section 4.04, or (B) any change in official reserve requirements but, in all events, excluding reserves required under Regulation D to the extent included in the computation of the Eurodollar Rate; or
(ii)
at any time, that the making or continuance of any Loan has been made unlawful by any law or governmental rule, regulation or order;
then, and in any such event, such Lender shall promptly give notice (by telephone confirmed in writing) to the Borrower and, except in the case of clause (i) above, to the Administrative Agent of such determination (which notice the Administrative Agent shall promptly transmit to each of the Lenders). Thereafter (x) in the case of clause (i) above, the Borrower agrees, subject to the provisions of Section 2.11 (to the extent applicable), to pay to such Lender, upon its written demand therefor, such additional amounts as shall be required to compensate such Lender or such other corporation for the increased costs or reductions to such Lender or such other corporation and (y) in the case of clause (ii) above, the Borrower shall take one of the actions specified in Section 2.09(b) as promptly as possible and, in any event, within the time period required by law. In determining such additional amounts, each Lender will act reasonably and in good faith and will use averaging and attribution methods which are reasonable, provided that such Lender’s determination of compensation owing under this Section 2.09(a) shall, absent manifest error be final and conclusive and binding on all the parties hereto. Each Lender, upon determining that any additional amounts will be payable pursuant to this Section 2.09(a), will give prompt written notice thereof to the Borrower, which notice shall show in reasonable detail the basis for the calculation of such additional amounts;
provided
that the failure to give such notice shall not relieve the Borrower from its Obligations hereunder.
(b)
At any time that any Loan is affected by the circumstances described in Section 2.09(a)(i) or (ii), the Borrower may (and in the case of a Loan affected by the
43
circumstances described in Section 2.09(a)(ii) shall) either (x) if the affected Loan is then being made initially, cancel the respective Borrowing by giving the Administrative Agent telephonic notice (confirmed in writing) on the same date or the next Business Day that such Borrower was notified by the affected Lender or the Administrative Agent pursuant to Section 2.09(a)(i) or (ii) or (y) if the affected Loan is then outstanding, upon at least three Business Days’ written notice to the Administrative Agent, in the case of any Loan, repay all outstanding Borrowings (within the time period required by the applicable law or governmental rule, governmental regulation or governmental order) which include such affected Loans in full in accordance with the applicable requirements of Section 4.02; provided that if more than one Lender is affected at any time, then all affected Lenders must be treated the same pursuant to this Section 2.09(b).
(c)
If any Lender in good faith determines that after the Restatement Effective Date the introduction of or effectiveness of or any change in any applicable law or governmental rule, regulation, order, guideline, directive or request (whether or not having the force of law) concerning capital adequacy, or any change in interpretation or administration thereof by any governmental authority, central bank or comparable agency will have the effect of increasing the amount of capital required or requested to be maintained by such Lender, or any corporation controlling such Lender, based on the existence of such Lender’s Loans hereunder or its obligations hereunder, then the Borrower agrees (to the extent applicable), to pay to such Lender, upon its written demand therefor, such additional amounts as shall be required to compensate such Lender or such other corporation for the increased cost to such Lender or such other corporation or the reduction in the rate of return to such Lender or such other corporation as a result of such increase of capital. In determining such additional amounts, each Lender will act reasonably and in good faith and will use averaging and attribution methods which are reasonable, provided that such Lender’s determination of compensation owing under this Section 2.09(c) shall, absent manifest error be final and conclusive and binding on all the parties hereto. Each Lender, upon determining that any additional amounts will be payable pursuant to this Section 2.09(c), will give prompt written notice thereof to the Borrower, which notice shall show in reasonable detail the basis for calculation of such additional amounts;
provided
that the failure to give such notice shall not relieve the Borrower from its Obligations hereunder.
(d)
If a Market Disruption Event occurs in relation to a Loan for any Interest Period, then the rate of interest on each Lender’s share of such Loan for the relevant Interest Period shall be the rate per annum which is the sum of:
(i)
the Applicable Margin; and
(ii)
the rate determined by each Lender and notified to the Administrative Agent, which expresses the actual cost to each such Lender of funding its participation in that Loan for a period equivalent to such Interest Period from whatever source it may reasonably select.
(e)
If a Market Disruption Event occurs and the Administrative Agent or the Borrower so require, the Administrative Agent and the Borrower shall enter into negotiations (for a period of not more than thirty days) with a view to agreeing a substitute basis for determining the rate of interest. Any alternative basis agreed pursuant to the immediately preceding sentence shall, with the prior consent of all the Lenders and the Borrower, be binding
44
on all parties. If no agreement is reached pursuant to this clause (e), the rate provided for in clause (d) above shall apply for the entire Interest Period.
(f)
Notwithstanding anything in this Agreement to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a change after the Restatement Effective Date in a requirement of law or governmental rule, regulation or order, regardless of the date enacted, adopted, issued or implemented for all purposes under or in connection with this Agreement (including this Section 2.09).
2.10
Compensation
. The Borrower agrees to compensate each Lender, upon its written request (which request shall set forth in reasonable detail the basis for requesting and the calculation of such compensation), for all reasonable losses, expenses and liabilities (including, without limitation, any such loss, expense or liability incurred by reason of the liquidation or reemployment of deposits or other funds required by such Lender to fund its Loans but excluding any loss of anticipated profits) which such Lender may sustain in respect of Loans made to the Borrower: (i) if any prepayment or repayment (including any prepayment or repayment made pursuant to Section 2.09(a), Section 4.01 or Section 4.02 or as a result of an acceleration of the Loans pursuant to Section 10) of any of its Loans, or assignment of its Loans pursuant to Section 2.12, occurs on a date which is not the last day of an Interest Period with respect thereto; (ii) if any prepayment of any of its Loans is not made on any date specified in a notice of prepayment given by the Borrower; or (iii) as a consequence of any other Default or Event of Default arising as a result of the Borrower’s failure to repay Loans or make payment on any Note held by such Lender when required by the terms of this Agreement.
2.11
Change of Lending Office
. Each Lender agrees that on the occurrence of any event giving rise to the operation of Section 2.09(a)(ii), Section 2.09(b) or Section 4.04 with respect to such Lender, it will, if requested by the Borrower, use reasonable good faith efforts (subject to overall policy considerations of such Lender) to designate another lending office for any Loans affected by such event,
provided
that such designation is made on such terms that such Lender and its lending office suffer no economic, legal or regulatory disadvantage, with the object of avoiding the consequence of the event giving rise to the operation of such Section. Nothing in this Section 2.11 shall affect or postpone any of the obligations of the Borrower or the rights of any Lender provided in Section 2.09 or Section 4.04.
2.12
Replacement of Lenders
. (a) (x) If any Lender becomes a Defaulting Lender or otherwise defaults in its obligations to make Loans, (y) upon the occurrence of any event giving rise to the operation of Section 2.09(a)(i) or (ii), Section 2.09(b) or Section 4.04 with respect to any Lender which results in such Lender charging to the Borrower material increased costs in excess of those being generally charged by the other Lenders, or (z) as provided in Section 12.12(b) in the case of certain refusals by a Lender to consent to certain proposed changes, waivers, discharges or terminations with respect to this Agreement which have been approved by the Required Lenders, the Borrower shall have the right, if no Default or Event of Default will exist immediately after giving effect to the respective replacement, to
45
replace such Lender (the “
Replaced Lender
”) with one or more other Eligible Transferee or Eligible Transferees, none of whom shall constitute a Defaulting Lender at the time of such replacement (collectively, the “
Replacement Lender
”) reasonably acceptable to the Administrative Agent;
provided
that:
(i)
at the time of any replacement pursuant to this Section 2.12, the Replacement Lender shall enter into one or more Assignment and Assumption Agreements pursuant to Section 12.04(b) (and with all fees payable pursuant to said Section 12.04(b) to be paid by the Replacement Lender) pursuant to which the Replacement Lender shall acquire all of the outstanding Loans of the Replaced Lender and, in connection therewith, shall pay to the Replaced Lender in respect thereof an amount equal to the sum (without duplication) of an amount equal to the principal of, and all accrued interest on, all outstanding Loans of the Replaced Lender; and
(ii)
all obligations of the Borrower due and owing to the Replaced Lender at such time (other than those specifically described in clause (i) above) in respect of which the assignment purchase price has been, or is concurrently being, paid shall be paid in full to such Replaced Lender concurrently with such replacement.
(b)
Upon the execution of the respective Assignment and Assumption Agreement, the payment of amounts referred to in clauses (i) and (ii) above and, if so requested by the Replacement Lender, delivery to (i) the Replacement Lender of the appropriate Note or Notes executed by the Borrower, the Replacement Lender shall become a Lender hereunder and the Replaced Lender shall cease to constitute a Lender hereunder, except with respect to indemnification provisions under this Agreement (including, without limitation, Sections 2.09, 2.10, 4.04, 12.01 and 12.06), which shall survive as to such Replaced Lender and (ii) if so requested by the Borrower, the Replaced Lender shall deliver all Notes in its possession to the Borrower.
SECTION 3.
Fees
.
3.01
Fees
. The Borrower shall pay to the Administrative Agent, for the Administrative Agent’s own account, such other fees as have been agreed to in writing by the Borrower and the Administrative Agent.
SECTION 4.
Prepayments; Payments; Taxes
.
4.01
Voluntary Prepayments
. The Borrower shall have the right to prepay, at any time, the Loans, in each case without premium or penalty except as provided by law and Section 2.10, in whole or in part at any time and from time to time on the following terms and conditions:
(i)
the Borrower shall give the Administrative Agent prior to 12:00 Noon (New York time) at its Notice Office at least three Business Days’ prior written notice (including e-mail notice or telephonic notice promptly confirmed in writing) of its intent to prepay such Loans, the amount of such prepayment and the specific Borrowing or Borrowings pursuant to which made, which notice the Administrative Agent shall promptly transmit to each of the Lenders;
46
(ii)
each prepayment shall be in an aggregate principal amount of at least $1,000,000 or such lesser amount of a Borrowing which is outstanding,
provided
that no partial prepayment of Loans made pursuant to any Borrowing shall reduce the outstanding Loans made pursuant to such Borrowing to an amount less than $1,000,000;
(iii)
at the time of any prepayment of Loans pursuant to this Section 4.01 on any date other than the last day of the Interest Period applicable thereto, the Borrower shall pay the amounts required pursuant to Section 2.10;
(iv)
in the event of certain refusals by a Lender as provided in Section 12.12(b) to consent to certain proposed changes, waivers, discharges or terminations with respect to this Agreement which have been approved by the Required Lenders, the Borrower may, upon five Business Days’ written notice to the Administrative Agent at its Notice Office (which notice the Administrative Agent shall promptly transmit to each of the Lenders), prepay all Loans, together with accrued and unpaid interest and other amounts owing to such Lender (or owing to such Lender with respect to each Loan which gave rise to the need to obtain such Lender’s individual consent) in accordance with said Section 12.12(b) so long as the consents required by Section 12.12(b) in connection with the prepayment pursuant to this clause (iv) have been obtained;
(v)
except as expressly provided in the preceding clause (iv), each prepayment in respect of any Loans made pursuant to a Borrowing shall be applied
pro rata
among the Loans comprising such Borrowing,
provided
that in connection with any prepayment of Loans pursuant to this Section 4.01, at the Borrower’s election, such prepayment shall not be applied to any Loan of a Defaulting Lender until all other Loans of Non-Defaulting Lenders have been repaid in full; and
(vi)
each prepayment of principal of Loans pursuant to this Section 4.01 shall be applied to reduce the then remaining Scheduled Repayments in accordance with Section 4.02(f).
4.02
Mandatory Repayments
. (a) In addition to any other mandatory repayments pursuant to this Section 4.02, on each Payment Date (including, for the avoidance of doubt, the Maturity Date) set forth below, the Borrower shall be required to repay Loans to the extent then outstanding in the amount set forth opposite each such Payment Date in the table below (each such repayment, as the same may be reduced in accordance with Sections 4.01, 4.02(b), 4.02(c) and/or 4.02(d), a “
Scheduled Repayment
”):
|
Payment Date
|
|
Amount
|
|
|
June 30, 2016
|
|
$
|
2,204,924.71
|
|
|
September 30, 2016
|
|
$
|
7,405,307.00
|
|
|
December 31, 2016
|
|
$
|
7,405,307.00
|
|
|
Maturity Date
|
|
$
|
224,565,625.45
|
|
(b)
In addition to any other mandatory repayments pursuant to this Section 4.02, but without duplication, on (i) the date of any Collateral Disposition involving a Primary Collateral Vessel (other than a Collateral Disposition constituting an Event of Loss) and, after
47
the repayment of the loans and the satisfaction in full of all obligations under the Other Credit Agreement, a Secondary Collateral Vessel and (ii) the earlier of (A) the date which is 180 days following any Collateral Disposition constituting an Event of Loss involving a Primary Collateral Vessel or, after the repayment of the loans and the satisfaction in full of all obligations under the Other Credit Agreement a Secondary Collateral Vessel and (B) the date of receipt by the Borrower, any of its Subsidiaries or the Administrative Agent of the insurance proceeds relating to such Event of Loss, the Borrower shall be required (subject to the first proviso below) to repay an aggregate principal amount of outstanding Loans in accordance with the requirements of Section 4.02(e) in an amount equal to (X) in the case of a Primary Collateral Vessel, the greater of (x) the Net Cash Proceeds of such Collateral Disposition (such amount under this clause (x) the “
Net Cash Proceeds Value
”) and (y) the sum of the then outstanding aggregate principal amount of Loans multiplied by a fraction (I) the numerator of which is equal to the appraised value (as determined in accordance with the most recent appraisal report delivered to the Administrative Agent (or obtained by the Administrative Agent) pursuant to Section 8.01(d)) of the Primary Collateral Vessel or Primary Collateral Vessels which is/are the subject of such Collateral Disposition and (II) the denominator of which is equal to the Aggregate Primary Collateral Vessel Value (as determined in accordance with the most recent appraisal report delivered to the Administrative Agent (or obtained by the Administrative Agent) pursuant to Section 8.01(d)) prior to such Collateral Disposition (such amount under this clause (y) the “
Appraisal Value
”) and (Y) after the repayment of the loans and the satisfaction in full of all obligations under the Other Credit Agreement, in the case of a Secondary Collateral Vessel, the Net Cash Proceeds Value of such Collateral Disposition;
provided
that (I) in the case of any Collateral Vessel which is older than 15 years at the time of such Collateral Disposition (including, for the avoidance of doubt, an Event of Loss) the Borrower shall only be required to repay an amount equal to the Net Cash Proceeds thereof; (II) after the Trigger Date, if the Net Cash Proceeds Value is greater than the Appraisal Value and the Parent and its Subsidiaries would have a Loan to Value Ratio of no greater than 0.60 to 1.00, on a pro forma basis after giving effect to the Collateral Disposition and any repayment with the proceeds thereof, then the Parent and its Subsidiaries may retain the proceeds of such Collateral Disposition in an amount equal to the difference between the Net Cash Proceeds Value and the Appraisal Value, which amount will not be subject to the mandatory repayment provisions of this Section 4.02(b); (III) without limiting anything otherwise provided for in this Agreement, the Borrower hereby acknowledges that it is obliged to comply with Section 9.09 at all times (including, without limitation, after giving effect to any repayment contemplated by the foregoing Section 4.02(a)); and (IV) so long as no Default or Event of Default exists, the Borrower, at its option, shall not be required to repay outstanding Loans upon a Collateral Disposition in respect of a Primary Collateral Vessel (other than a Collateral Disposition constituting an Event of Loss) so long as (I) to the extent required by Section 4.02(a), the Borrower repays any Loans and (II) no later than 365 days after the date of such Collateral Disposition, such Primary Collateral Vessel is replaced by an Acceptable Replacement Vessel pursuant to a Vessel Exchange,
provided
that, if such Vessel Exchange does not occur within 365 days of the date of such Collateral Disposition the Loans shall be repaid by an amount equal to the amount by which the Loans would have been required to be repaid as a result of the Collateral Disposition of such Primary Collateral Vessel.
(c)
In addition to any other mandatory repayments pursuant to this Section 4.02, upon the occurrence of a default under Section 9.09, the Borrower shall be required to (x) in the case of Section 9.09(a), repay Loans in accordance with the requirements of Section
48
9.09(a) in an amount required to cure such default and (y) in the case of Section 9.09(b), repay Loans under this Agreement and loans under the Other Credit Agreement in accordance with the requirements of Section 9.09(b) in an amount required to cure such default;
provided
that it is understood and agreed that the requirement to repay Loans under this Section 4.02(c) shall not be deemed to be a waiver of any other right or remedy that any Lender may have as a result of an Event of Default under Section 9.09.
(d)
In addition to any other mandatory repayments pursuant to this Section 4.02, on the tenth day (or, if such day is not a Business Day, on the next succeeding Business Day) after each Payment Date, the Borrower shall repay the Loans under this Agreement and the loans under the Other Credit Agreement in an aggregate principal amount equal to the Excess Liquidity determined on such Payment Date, such repayment to be allocated between the Loans under this Agreement and the loans under the Other Credit Agreement on a pro rata basis based on the outstanding principal amount of Loans under this Agreement at such time and the outstanding principal amount of loans under the Other Credit Agreement at such time; provided that the Borrower shall only be required to make a repayment pursuant to this Section 4.02(d) if on such Payment Date the Parent and its Subsidiaries have a Loan to Value Ratio of greater than 0.60 to 1.00.. The mandatory repayment pursuant to this Section 4.02(d) shall be applied to reduce the Scheduled Repayments as follows: (i)
first
, 25% of such repayment to reduce the Scheduled Repayment following the applicable Payment Date, and, to the extent that such next Scheduled Repayment has been paid in full, to the next succeeding Scheduled Repayment until such Scheduled Repayment has been reduced to zero, after which the remaining portion (if any) of such 25% to reduce the then remaining Scheduled Repayments (excluding the Scheduled Repayment due on the Maturity Date)
pro rata
based upon such remaining Scheduled Repayments (excluding the Scheduled Repayment due on the Maturity Date) after giving effect to all prior reductions thereto, (ii)
second
, 25% of such repayment to reduce the then remaining Scheduled Repayments (excluding the Scheduled Repayment due on the Maturity Date)
pro rata
based upon such remaining Scheduled Repayments (excluding the Scheduled Repayment due on the Maturity Date) after giving effect to all prior reductions thereto, and (iii)
third
, 50% of such repayment to reduce the Scheduled Repayment due on the Maturity Date.
(e)
All repayments of the Loans pursuant to (i) Section 4.02(a) shall be applied to the repayment of the Loans then outstanding on a
pro rata
basis and (ii) Sections 4.01, 4.02(b), 4.02(c) and 4.02(d) shall be applied to the repayment of the Loans then outstanding on a
pro rata
basis.
(f)
The amount of all repayments of Loans pursuant to Sections 4.01, 4.02(b) and 4.02(c) shall be applied to reduce the then remaining Scheduled Repayments
pro rata
based upon the then remaining Scheduled Repayments after giving effect to all prior reductions thereto.
(g)
With respect to each repayment of Loans under Section 4.01 or required by this Section 4.02, the Borrower may designate the specific Borrowing or Borrowings pursuant to which such Loans were made,
provided
that (i) all Loans with Interest Periods ending on such date of required repayment shall be paid in full prior to the payment of any other Loans and (ii) each repayment of any Loans comprising a Borrowing shall be applied
pro rata
among such Loans. In the absence of a designation by the Borrower as described in the preceding sentence, the Administrative Agent shall, subject to the preceding provisions of this clause (g), make such
49
designation in its sole reasonable discretion with a view, but no obligation, to minimize breakage costs owing pursuant to Section 2.10.
(h)
Notwithstanding anything to the contrary contained elsewhere in this Agreement, all then outstanding Loans shall be repaid in full on the Maturity Date.
(i)
The Loans repaid pursuant to Section 4.01 and this Section 4.02 may not be reborrowed.
4.03
Method and Place of Payment
. Except as otherwise specifically provided herein, all payments under this Agreement or any Note shall be made to the Administrative Agent for the account of the Lender or Lenders entitled thereto not later than 12:00 Noon (New York time) on the date when due and shall be made in Dollars in immediately available funds at the Payment Office of the Administrative Agent or such other office in the State of New York as the Administrative Agent may hereafter designate in writing. Whenever any payment to be made hereunder or under any Note shall be stated to be due on a day which is not a Business Day, the due date thereof shall be extended to the next succeeding Business Day and, with respect to payments of principal, interest shall be payable at the applicable rate during such extension.
4.04
Net Payments; Taxes
. (a) All payments made by any Credit Party hereunder or under any Note will be made without setoff, counterclaim or other defense. Unless otherwise required by law, all such payments will be made free and clear of, and without deduction or withholding for, any present or future taxes, levies, imposts, duties, fees, assessments or other charges of whatever nature now or hereafter imposed by any jurisdiction or by any political subdivision or taxing authority thereof or therein with respect to such payments (but excluding any Excluded Taxes) and all interest, penalties or similar liabilities with respect to such non-excluded taxes, levies, imposts, duties, fees, assessments or other charges (all such non-excluded taxes, levies, imposts, duties, fees, assessments or other charges being referred to collectively as “
Taxes
”). If any Taxes are so levied or imposed, each of the Borrower, the Parent, GMSC and Arlington agrees to pay the full amount of such Taxes, and such additional amounts as may be necessary so that every payment of all amounts due under this Agreement or under any Note, after withholding or deduction for or on account of any Taxes, will not be less than the amount provided for herein or in such Note. Each of the Borrower, the Parent, GMSC, Arlington and the Subsidiary Guarantors will furnish to the Administrative Agent within 45 days after the date of payment of any Taxes is due pursuant to applicable law certified copies of tax receipts evidencing such payment. Each of the Borrower, the Parent, GMSC, Arlington and the Subsidiary Guarantors agrees to jointly and severally indemnify and hold harmless each Lender, and reimburse such Lender upon its written request, for the amount of any Taxes so levied or imposed and paid by such Lender.
(b)
Each Lender agrees to use commercially reasonable efforts (consistent with legal and regulatory restrictions and subject to overall policy considerations of such Lender) to file any certificate or document or to furnish to the Borrower and the Administrative Agent any information as reasonably requested by the Borrower and the Administrative Agent that may be necessary to establish any available exemption from, or reduction in the amount of, any Taxes;
provided
,
however
, that nothing in this Section 4.04(b) shall require a Lender to disclose
50
any confidential information (including, without limitation, its tax returns or its calculations). If a payment made to a Lender under any Credit Document would be subject to U.S. federal withholding tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall use commercially reasonable efforts to deliver to the Borrower and the Administrative Agent at the time or times prescribed by law such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment.
Each non-U.S. Lender hereby agrees, whenever a lapse in time or change in circumstances renders any of the forms, certificates or other evidence delivered pursuant to this Section 4.04(b) obsolete or inaccurate in any material respect, that such Lender shall use commercially reasonable efforts to promptly (1) update such form, certificate or other evidence delivered, or (2) notify the Administrative Agent and the Borrower of its inability to do so.
(c)
If the Borrower pays any additional amount under this Section 4.04 to a Lender and such Lender determines in its sole discretion exercised in good faith that it has actually received or realized in connection therewith any refund or any reduction of, or credit against, its Tax liabilities in or with respect to the taxable year in which the additional amount is paid (a “
Tax Benefit
”), such Lender shall pay to the Borrower an amount that such Lender shall, in its sole discretion exercised in good faith, determine is equal to the net benefit, after tax, which was obtained by such Lender in such year as a consequence of such Tax Benefit;
provided
,
however
, that (i) any Lender may determine, in its sole discretion exercised in good faith consistent with the policies of such Lender, whether to seek a Tax Benefit, (ii) any Taxes that are imposed on a Lender as a result of a disallowance or reduction (including through the expiration of any tax credit carryover or carryback of such Lender that otherwise would not have expired) of any Tax Benefit with respect to which such Lender has made a payment to the Borrower pursuant to this Section 4.04(c) shall be treated as a Tax for which the Borrower is obligated to indemnify such Lender pursuant to this Section 4.04 without any exclusions or defenses, (iii) nothing in this Section 4.04(c) shall require any Lender to disclose any confidential information to the Borrower (including, without limitation, its tax returns), and (iv) no Lender shall be required to pay any amounts pursuant to this Section 4.04(c) at any time during which a Default or Event of Default exists.
SECTION 5. [
Intentionally Omitted
].
SECTION 6. [
Intentionally Omitted
].
SECTION 7.
Representations, Warranties and Agreements
.
In order to induce the Lenders to enter into this Agreement, to continue the Term Loans as Loans and convert the Revolving Loans into the Loans, each of the Parent, GMSC, Arlington and the Borrower makes the following representations, warranties and agreements, in
51
each case on the Restatement Effective Date, all of which shall survive the execution and delivery of this Agreement and the Notes, and the continuation of the Term Loans as Loans and the conversion of the Revolving Loans into the Loans (it being understood and agreed that any representation or warranty which by its terms is made as of a specified date shall be required to be true and correct in all material respects only as of such specified date):
7.01
Corporate/Limited Liability Company/Limited Partnership Status
. Each Credit Party (i) is a duly organized and validly existing corporation, limited liability company or limited partnership, as the case may be, in good standing under the laws of the jurisdiction of its incorporation or formation, (ii) has the corporate or other applicable power and authority to own its property and assets and to transact the business in which it is currently engaged and presently proposes to engage and (iii) is duly qualified and is authorized to do business and is in good standing in each jurisdiction where the conduct of its business as currently conducted requires such qualifications, except for failures to be so qualified which, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.
7.02
Corporate Power and Authority
. Each Credit Party has the corporate or other applicable power and authority to execute, deliver and perform the terms and provisions of each of the Documents to which it is party and has taken all necessary corporate or other applicable action to authorize the execution, delivery and performance by it of each of such Documents. Each Credit Party has duly executed and delivered each of the Documents to which it is party, and each of such Documents constitutes the legal, valid and binding obligation of such Credit Party enforceable against such Credit Party in accordance with its terms, except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws generally affecting creditors’ rights and by equitable principles (regardless of whether enforcement is sought in equity or at law).
7.03
No Violation
. Neither the execution, delivery or performance by any Credit Party of the Documents to which it is a party, nor compliance by it with the terms and provisions thereof, will (i) contravene any material provision of any applicable law, statute, rule or regulation or any applicable order, judgment, writ, injunction or decree of any court or governmental instrumentality, (ii) conflict with or result in any breach of any of the terms, covenants, conditions or provisions of, or constitute a default under, or result in the creation or imposition of (or the obligation to create or impose) any Lien (except pursuant to the Security Documents) upon any of the material properties or assets of the Parent or any of its Subsidiaries pursuant to the terms of any indenture, mortgage, deed of trust, credit agreement or loan agreement, or any other material agreement, contract or instrument, to which the Parent or any of its Subsidiaries is a party or by which it or any of its material property or assets is bound or to which it may be subject or (iii) violate any provision of the Certificate of Incorporation or By-Laws (or equivalent organizational documents) of the Parent or any of its Subsidiaries.
7.04
Governmental Approvals
. No order, consent, approval, license, authorization or validation of, or filing, recording or registration with (except as have been obtained or made or, in the case of any filings or recordings in respect of the Security Documents (other than the Collateral Vessel Mortgages and the Secondary Collateral Vessel Mortgages), will be made within 10 days of the date such Security Document is required to be executed
52
pursuant hereto), or exemption by, any governmental or public body or authority, or any subdivision thereof, is required to authorize, or is required in connection with, (i) the execution, delivery and performance by any Credit Party of any Document to which it is a party or (ii) the legality, validity, binding effect or enforceability of any Document to which it is a party.
7.05
Financial Statements; Financial Condition; Undisclosed Liabilities
. (a) (i) The audited consolidated balance sheets of the Parent as at December 31, 2011 and the related consolidated statements of operations and of cash flows for the fiscal year ended on such date and (ii) to the extent available, the consolidated balance sheets of the Parent as at the end of each quarterly accounting period in the 2012 fiscal year and the related consolidated statements of operations and cash flows, in each case for such quarterly accounting period, reported on by and accompanied by, in the case of the annual financial statements, an unqualified report from Deloitte & Touche LLP, present fairly the consolidated financial condition of the Parent as at such date, and the consolidated results of its operations and its consolidated cash flows for the respective fiscal years then ended. All such financial statements, including the related schedules and notes thereto, have been prepared in accordance with GAAP applied consistently throughout the periods involved (except as approved by the aforementioned firm of accountants and disclosed therein). Neither the Parent nor any of its Subsidiaries has any material guarantee obligations, contingent liabilities and liabilities for taxes, or any long-term leases or unusual forward or long-term commitments, including any interest rate or foreign currency swap or exchange transaction or other obligation in respect of derivatives, that are not reflected in the financial statements referred to in the preceding sentence (it being understood that with respect to guarantee obligations, the underlying debt is so reflected).
(b)
Except as fully disclosed in the financial statements and the notes related thereto delivered pursuant to Section 7.05(a), there were as of the Restatement Effective Date no liabilities or obligations with respect to the Parent or any of its Subsidiaries of any nature whatsoever (whether absolute, accrued, contingent or otherwise and whether or not due) which, either individually or in the aggregate, would be materially adverse to the Parent and its Subsidiaries taken as a whole. As of the Restatement Effective Date, none of the Credit Parties knows of any basis for the assertion against it of any liability or obligation of any nature that is not fairly disclosed (including, without limitation, as to the amount thereof) in the financial statements and the notes related thereto delivered pursuant to Section 7.05(a) which, either individually or in the aggregate, could reasonably be expected to be materially adverse to the Parent and its Subsidiaries taken as a whole.
(c)
The Projections delivered by the Parent to the Administrative Agent and the Lenders prior to the Restatement Effective Date have been prepared in good faith and are based on GAAP and reasonable assumptions, and there are no statements or conclusions in such Projections which are based upon or include information known to the Parent on the Restatement Effective Date to be misleading in any material respect or which fail to take into account material information known to the Parent on the Restatement Effective Date regarding the matters reported therein. On the Restatement Effective Date, the Parent believes that such Projections are reasonable and attainable, it being recognized by the Lenders, however, that projections as to future events are not to be viewed as facts and that the actual results during the period or periods covered by the Projections may differ from the projected results included in such Projections.
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7.06
Litigation
. Except as set forth on Schedule XIV, there are no actions, suits, investigations (conducted by any governmental or other regulatory body of competent jurisdiction) or proceedings pending or, to the knowledge of the Parent, GMSC, Arlington or the Borrower, threatened against the Parent or any of its Subsidiaries that could reasonably be expected to have a Material Adverse Effect.
7.07
True and Complete Disclosure
. All factual information (taken individually or as a whole) furnished by or on behalf of the Parent, GMSC, Arlington or the Borrower in writing to the Administrative Agent or any Lender (including, without limitation, all information contained in the Documents and any financial statement referred to in Section 7.05(a)) for purposes of or in connection with this Agreement, the other Credit Documents or any transaction contemplated herein or therein is, and all other such factual information (taken individually or as a whole) hereafter furnished by or on behalf of the Parent, GMSC, Arlington or the Borrower in writing to the Administrative Agent or any Lender will be, true and accurate in all material respects and not incomplete by omitting to state any fact necessary to make such information (taken as a whole) not misleading in any material respect at such time as such information was provided.
7.08
Use of Proceeds; Margin Regulations
. (a) All proceeds of the Loans (including the Loans which result from the conversion of Revolving Loans into Loans) were used for working capital, Capital Expenditures and general corporate purposes.
(b)
No part of the proceeds of any Loan was used to purchase or carry any Margin Stock or to extend credit for the purpose of purchasing or carrying any Margin Stock except to purchase or carry or extend credit for the purpose of purchasing or carrying such Margin Stock as may be permitted to be purchased or carried pursuant to the terms of Sections 9.05(vi) and (vii). Neither the continuation of the Term Loans as Loans, the conversion of the Revolving Loans into the Loans, the use of the proceeds thereof nor the occurrence of any other Borrowing will violate or be inconsistent with the Margin Regulations.
7.09
Tax Returns and Payments
. The Parent and each of its Subsidiaries has timely filed all U.S. federal income tax returns, statements, forms and reports for taxes and all other material U.S. and non-U.S. tax returns, statements, forms and reports for taxes required to be filed by or with respect to the income, properties or operations of the Parent and/or any of its Subsidiaries (the “
Returns
”). The Returns accurately reflect in all material respects all liability for taxes of the Parent and its Subsidiaries as a whole for the periods covered thereby. The Parent and each of its Subsidiaries have at all times paid, or have provided adequate reserves (in accordance with GAAP) for the payment of, all taxes shown as due on the Returns and all other material U.S. federal, state and non-U.S. taxes that have become due and payable. There is no material action, suit, proceeding, investigation, audit, or claim now pending or, to the knowledge of the Parent or any of its Subsidiaries, threatened by any authority regarding any taxes relating to the Parent or any of its Subsidiaries. As of the Restatement Effective Date, neither the Parent nor any of its Subsidiaries has entered into an agreement or waiver or been requested to enter into an agreement or waiver extending any statute of limitations relating to the payment or collection of taxes of the Parent or any of its Subsidiaries, or is aware of any circumstances that would cause the taxable years or other taxable periods of the Parent or any of its Subsidiaries not to be subject to the normally applicable statute of limitations. Neither the Parent nor any of its
54
Subsidiaries (i) has engaged in any “listed transaction” within the meaning of Section 6011 of the Code or (ii) has any actual or potential liability for the taxes of any Person (other than the Parent or any of its present or former Subsidiaries) under the United States Treasury regulation Section 1.1502-6 (or any similar provision of state, local, foreign or provincial law).
7.10
Compliance with ERISA
. (i)
Schedule VII
sets forth, as of the Restatement Effective Date, each Plan; with respect to each Plan, other than any Multiemployer Plan (and each related trust, insurance contract or fund), there has been no failure to be in substantial compliance with its terms and with all applicable laws, including without limitation ERISA and the Code, that could reasonably be expected to give rise to a Material Adverse Effect; each Plan, other than any Multiemployer Plan (and each related trust, if any), which is intended to be qualified under Section 401(a) of the Code has received a determination letter (or an opinion letter) from the United States Internal Revenue Service to the effect that it meets the requirements of Sections 401(a) and 501(a) of the Code; no Reportable Event has occurred; to the best knowledge of the Parent or any of its Subsidiaries or ERISA Affiliates no Plan which is a Multiemployer Plan is insolvent or in reorganization; no Plan has an Unfunded Current Liability in an amount material to Borrower’s operation; no Plan (other than a Multiemployer Plan) which is subject to Section 412 of the Code or Section 302 of ERISA has failed to satisfy minimum funding standards, or has applied for or received a waiver of the minimum funding standards or an extension of any amortization period, within the meaning of Section 412 or 430 of the Code or Section 302 or 303 of ERISA; with respect to each Plan (other than a Multiemployer Plan) its actuary has certified that such Plan is not an at-risk plan within the meaning of Section 430 of the Code or Section 303 of ERISA; all contributions required to be made with respect to a Plan have been or will be timely made (except as disclosed on
Schedule VII
); neither the Parent nor any of its Subsidiaries nor any ERISA Affiliate has incurred any material liability (including any indirect, contingent or secondary liability) to or on account of a Plan pursuant to Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section 436(f), 4971 or 4975 of the Code or expects to incur any such liability under any of the foregoing sections with respect to any Plan; no condition exists which presents a material risk to the Parent or any of its Subsidiaries or any ERISA Affiliate of incurring a liability to or on account of a Plan pursuant to the foregoing provisions of ERISA and the Code; no proceedings have been instituted by the PBGC to terminate or appoint a trustee to administer any Plan (in the case of a Multiemployer Plan, to the best knowledge of the Parent or any of its Subsidiaries or ERISA Affiliates) which is subject to Title IV of ERISA; no action, suit, proceeding, hearing, audit or investigation with respect to the administration, operation or the investment of assets of any Plan (other than routine claims for benefits) is pending, or, to the best knowledge of the Parent or any of its Subsidiaries, expected or threatened which could reasonably be expected to have a Material Adverse Effect; using actuarial assumptions and computation methods consistent with Part 1 of subtitle E of Title IV of ERISA, the Parent and its Subsidiaries and ERISA Affiliates would have no liabilities to any Plans which are Multiemployer Plans in the event of a complete withdrawal therefrom in an amount which could reasonably be expected to have a Material Adverse Effect; neither the Borrower nor any of its Subsidiaries nor any ERISA Affiliate has received any notice that a Plan which is a Multiemployer Plan is in endangered or critical status under Section 305 of ERISA; each group health plan (as defined in Section 607(1) of ERISA or Section 4980B(g)(2) of the Code) which covers or has covered employees or former employees of the Parent, any of its Subsidiaries, or any ERISA Affiliate has at all times been operated in material compliance with the provisions of
55
Part 6 of subtitle B of Title I of ERISA and Section 4980B of the Code; no lien imposed under the Code or ERISA on the assets of the Parent or any of its Subsidiaries or any ERISA Affiliate exists nor has any event occurred which could reasonably be expected to give rise to any such lien on account of any Plan; and the Parent and its Subsidiaries do not maintain or contribute to any employee welfare plan (as defined in Section 3(1) of ERISA) which provides benefits to retired employees or other former employees (other than as required by Section 601 of ERISA) or any Plan the obligations with respect to which could reasonably be expected to have a Material Adverse Effect.
(ii)
Each Foreign Pension Plan has been maintained in substantial compliance with its terms and with the requirements of any and all applicable laws, statutes, rules, regulations and orders and has been maintained, where required, in good standing with applicable regulatory authorities. All contributions required to be made with respect to a Foreign Pension Plan have been or will be timely made. Neither the Parent nor any of its Subsidiaries has incurred any obligation in connection with the termination of or withdrawal from any Foreign Pension Plan that could reasonably be expected to have a Material Adverse Effect. Neither the Parent nor any of its Subsidiaries maintains or contributes to any Foreign Pension Plan the obligations with respect to which could in the aggregate reasonably be expected to have a Material Adverse Effect.
7.11
The Security Documents
. After the execution and delivery thereof and upon the taking of the actions mentioned in the second immediately succeeding sentence, each of the Security Documents creates in favor of the Collateral Agent for the benefit of the Secured Creditors (x) in the case of the Collateral Vessel Mortgages, the Assignments of Earnings, the Assignments of Insurances, the Pledge Agreement, the Parent Pledge Agreement and the Pari Passu Pledge Agreement, a legal, valid and enforceable fully perfected first priority security interest in and Lien on all right, title and interest of the Credit Parties party thereto in the Primary Collateral described therein and (y) in the case of the Secondary Collateral Vessel Mortgages, the Secondary Assignments of Earnings, the Secondary Assignments of Insurances and the Secondary Pledge Agreement, a legal, valid and enforceable fully perfected second priority security interest in and Lien on all right, title and interest of the Credit Parties party thereto in the Secondary Collateral described therein, in the case of each of (x) and (y) above, subject to no other Liens except for Permitted Liens. No filings or recordings are required in order to perfect the security interests created under any Security Document except for filings or recordings which shall have been made on or prior to the Restatement Effective Date and such other filings made on or prior to the tenth day after the Restatement Effective Date, subject in each case to Section 7.03.
7.12
Capitalization
. (a) On the Restatement Effective Date and after giving effect to the conditions precedent related thereto: (1) the authorized capital stock of the Borrower shall consist of 500 shares of common stock, $0.01 par value per share, 100 of which have been issued and 100% of which issued shares are outstanding and owned by the Parent; (2) all such outstanding shares shall have been duly and validly issued, fully paid and non-assessable and issued free of preemptive rights; and (3) the Borrower shall not have outstanding any securities convertible into or exchangeable for its capital stock or outstanding any rights to subscribe for or to purchase, or any options for the purchase of, or any agreement providing for the issuance
56
(contingent or otherwise) of, or any calls, commitments or claims of any character relating to, its capital stock or any stock appreciation or similar rights.
(b)
Except as set forth in
Schedule IX
, as of the Restatement Effective Date and after giving effect to the conditions precedent related thereto, there are (i) no other shares of capital stock or other Equity Interests or voting securities of the Parent, (ii) no securities of the Parent convertible into or exchangeable for capital stock or other Equity Interests or voting securities of the Parent, (iii) no options, warrants, purchase rights, subscription rights, conversion rights, exchange rights or other similar contracts or commitments that could require the Parent to issue, sell or otherwise cause to become outstanding any of its Equity Interests and (iv) no stock appreciation, phantom stock, profit participation or similar rights with respect to the Parent or any repurchase, redemption or other obligation to acquire for value any capital stock of the Parent.
(c)
As of the Restatement Effective Date, all outstanding shares of the Parent’s capital stock are duly authorized, validly issued, fully paid and nonassessable and, except as set forth in
Schedule IX
, not subject to or issued in violation of any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right under any provision of the Business Corporations Act of the Republic of the Marshall Islands 1990, the articles of incorporation of the Parent, the bylaws of the Parent or any agreement to which the Parent is a party or otherwise bound. None of the shares of the capital stock of the Parent have been issued in violation of any securities Laws. There are no accrued and unpaid dividends with respect to any outstanding shares of capital stock of the Parent.
7.13
Subsidiaries
. On the Restatement Effective Date, the Parent has no Subsidiaries other than those Subsidiaries listed on
Schedule VIII
(which Schedule identifies the correct legal name, direct owner, percentage ownership and jurisdiction of organization of each such Subsidiary on the date hereof). On the Restatement Effective Date, all outstanding capital stock, membership interests, partnership interests, units or other form of equity, of each class outstanding, of each of the Subsidiaries listed on
Schedule VIII
has been validly issued, is fully paid and non-assessable (to the extent applicable) and, except in the case of the Parent, is owned beneficially and of record by a Credit Party free and clear of all Liens other than the security interests created by the Credit Documents, the Other Credit Documents and Permitted Liens.
7.14
Compliance with Statutes, etc.
The Parent and each of its Subsidiaries is in compliance in all material respects with all applicable statutes, regulations and orders of, and all applicable restrictions imposed by, all governmental bodies, domestic or foreign, in respect of the conduct of its business and the ownership of its property, except such non-compliances that could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
7.15
Investment Company Act
. Neither the Parent, nor any of its Subsidiaries, is an “investment company” or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940, as amended.
7.16
Money Laundering
. (a) To the extent applicable, each Credit Party is in compliance, in all material respects, with the (i) Trading and Enemy Act, as amended, and each
57
of the foreign assets control regulations of the United States Treasury Department (31 C.F.R., Subtitle B, Chapter V, as amended) and any other enabling legislation or executive order relating thereto, and (ii) the PATRIOT Act. No part of the proceeds of the Loans will be used, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.
(b)
None of the Credit Parties nor, to the best knowledge of the Parent, GMSC, Arlington and the Borrower after due inquiry, any Affiliate of any Credit Party, is, or will be after consummation of the Transaction and application of the proceeds of the Loans, by reason of being a “national” of a “designated foreign country” or a “specially designated national” within the meaning of the Regulations of the Office of Foreign Assets Control, United States Treasury Department (31 C.F.R., Subtitle B, Chapter V), or for any other reason, in violation of, any United States Federal Statute or Presidential Executive Order concerning trade or other relations with any foreign country or any citizen or national thereof.
7.17
Pollution and Other Regulations
. (a) Each of the Parent and its Subsidiaries is in compliance with all applicable Environmental Laws governing its business, except for such failures to comply as are not reasonably likely to have a Material Adverse Effect, and neither the Parent nor any of its Subsidiaries is liable for any penalties, fines or forfeitures for failure to comply with any of the foregoing except for such penalties, fines or forfeitures as are not reasonably likely to have a Material Adverse Effect. All licenses, permits, registrations or approvals required for the business of the Parent and each of its Subsidiaries, as conducted as of the Restatement Effective Date, under any Environmental Law have been secured and the Parent and each of its Subsidiaries is in substantial compliance therewith, except for such failures to secure or comply as are not reasonably likely to have a Material Adverse Effect. Neither the Parent nor any of its Subsidiaries is in any respect in noncompliance with, breach of or default under any applicable writ, order, judgment, injunction, or decree to which the Parent or such Subsidiary is a party or which would affect the ability of the Parent or such Subsidiary to operate any Vessel, Real Property or other facility and no event has occurred and is continuing which, with the passage of time or the giving of notice or both, would constitute noncompliance, breach of or default thereunder, except in each such case, such noncompliance, breaches or defaults as are not likely to, individually or in the aggregate, have a Material Adverse Effect. There are, as of the Restatement Effective Date, no Environmental Claims pending or, to the knowledge of the Parent or the Borrower, threatened, against the Parent or any of its Subsidiaries in respect of which an unfavorable decision, ruling or finding would be reasonably likely to have a Material Adverse Effect. There are no facts, circumstances, conditions or occurrences on any Vessel, Real Property or other facility owned or operated by the Parent or any of its Subsidiaries that are reasonably likely (i) to form the basis of an Environmental Claim against the Parent, any of its Subsidiaries or any Vessel, Real Property or other facility owned by the Parent or any of its Subsidiaries, or (ii) to cause such Vessel, Real Property or other facility to be subject to any restrictions on its ownership, occupancy, use or transferability under any Environmental Law, except in each such case for clauses (i) and (ii) above, such Environmental Claims or restrictions that individually or in the aggregate are not reasonably likely to have a Material Adverse Effect.
58
(b)
Hazardous Materials have not at any time prior to the date of this Agreement or any subsequent Borrowing, been (i) generated, used, treated or stored on, or transported to or from, any Vessel, Real Property or other facility at any time owned or operated by the Parent or any of its Subsidiaries or (ii) released on or from any such Vessel, Real Property or other facility, except in each case for clauses (i) and (ii) above where such occurrence or event, either individually or in the aggregate, is reasonably likely to have a Material Adverse Effect.
This Section 7.17 contains the sole and exclusive representations and warranties of the Credit Parties with respect to environmental, health and safety matters, including any relating to or arising under Environmental Laws, Environmental Claims or Hazardous Materials.
7.18
Labor Relations
. Neither the Parent nor any of its Subsidiaries is engaged in any unfair labor practice that could reasonably be expected to have a Material Adverse Effect and there is (i) no unfair labor practice complaint pending against the Parent or any of its Subsidiaries or, to the Parent’s knowledge, threatened against any of them before the National Labor Relations Board, and no material grievance or arbitration proceeding arising out of or under any collective bargaining agreement is so pending against the Parent or any of its Subsidiaries or, to the Parent’s knowledge, threatened against any of them, (ii) no strike, labor dispute, slowdown or stoppage pending against the Parent or any of its Subsidiaries or, to the Parent’s knowledge, threatened against the Parent or any of its Subsidiaries and (iii) no union representation proceeding pending with respect to the employees of the Parent or any of its Subsidiaries, except (with respect to the matters specified in clauses (i), (ii) and (iii) above) as could not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
7.19
Patents, Licenses, Franchises and Formulas
. The Parent and each of its Subsidiaries owns, or has the right to use, and has the right to enforce and prevent any third party from using, all material patents, trademarks, permits, service marks, trade names, copyrights, licenses, franchises and formulas, and has obtained assignments of all leases and other rights of whatever nature, necessary for the present conduct of its business, without any known conflict with the rights of others, except for such failures and conflicts which could not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.
7.20
Indebtedness
.
Schedule V
sets forth a true and complete list of all Indebtedness of the Parent and its Subsidiaries as of the Restatement Effective Date (other than Indebtedness under the Other Credit Documents) and which is to remain outstanding after giving effect to the Restatement Effective Date (the “
Existing Indebtedness
”), in each case showing the aggregate principal amount thereof and the name of the borrower and any other entity which directly or indirectly guarantees such debt.
7.21
Insurance
.
Schedule VI
sets forth a true and complete listing of all insurance maintained by each Credit Party as of the Restatement Effective Date, with the amounts insured (and any deductibles) set forth therein (the “
Required Insurance
”).
7.22
Concerning the Collateral Vessels
. The name, registered owner (which shall be a Subsidiary Guarantor), official number, and jurisdiction of registration and flag (which shall
59
be in an Acceptable Flag Jurisdiction) of each Collateral Vessel is set forth on
Schedule III
. Each Collateral Vessel is and will be operated in compliance with all applicable law, rules and regulations, except such noncompliance as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
7.23
Citizenship
. The Parent and each other Credit Party which owns or operates, or will own or operate, one or more Collateral Vessels is, or will be, qualified to own and operate such Collateral Vessels under the laws of the Republic of the Marshall Islands, the Republic of Liberia or Bermuda, as applicable, or such other jurisdiction in which any such Collateral Vessels are permitted, or will be permitted, to be flagged in accordance with the terms of the respective Collateral Vessel Mortgages and the respective Secondary Collateral Vessel Mortgages.
7.24
Collateral Vessel Classification; Flag
. Each Collateral Vessel is (i) or will be, classified in the highest class available for Vessels of its age and type with a classification society listed on
Schedule X
hereto or another internationally recognized classification society acceptable to the Collateral Agent, free of any conditions or recommendations, other than as permitted, or will be permitted, under the Collateral Vessel Mortgage or the Secondary Collateral Vessel Mortgage, as applicable, and (ii) flagged in an Acceptable Flag Jurisdiction.
7.25
No Immunity
. The Parent does not, nor does any other Credit Party or any of their respective properties, have any right of immunity on the grounds of sovereignty or otherwise from the jurisdiction of any court or from setoff or any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) under the laws of any jurisdiction. The execution and delivery of the Credit Documents by the Credit Parties and the performance by them of their respective obligations thereunder constitute commercial transactions.
7.26
Fees and Enforcement
. No fees or taxes, including, without limitation, stamp, transaction, registration or similar taxes, are required to be paid to ensure the legality, validity, or enforceability of this Agreement or any of the other Credit Documents other than recording taxes which have been, or will be, paid by the Parent or any of its Subsidiaries as and to the extent due. Under the laws of the Republic of the Marshall Islands, the United Kingdom, the Bahamas, Bermuda, the Republic of Malta, the United States or the Republic of Liberia (or any other Acceptable Flag Jurisdiction), as applicable, the choice of the laws of the State of New York as set forth in the Credit Documents which are stated to be governed by the laws of the State of New York is a valid choice of law, and the irrevocable submission by each Credit Party to jurisdiction and consent to service of process and, where necessary, appointment by such Credit Party of an agent for service of process, in each case as set forth in such Credit Documents, is legal, valid, binding and effective.
7.27
Form of Documentation
. Each of the Credit Documents is, or when executed will be, in proper legal form under the laws of the Republic of the Marshall Islands, the United Kingdom, the Bahamas, Bermuda, the Republic of Malta, the United States or the Republic of Liberia (or any other applicable Acceptable Flag Jurisdiction), as applicable, for the enforcement thereof under such laws, subject only to such matters which may affect enforceability arising under the law of the State of New York. To ensure the legality, validity,
60
enforceability or admissibility in evidence of each such Credit Document in the Republic of the Marshall Islands, the United Kingdom, the Bahamas, Bermuda, the Republic of Malta, the United States or the Republic of Liberia (or any other applicable Acceptable Flag Jurisdiction), as applicable, it is not necessary that any Credit Document or any other document be filed or recorded with any court or other authority in the Republic of the Marshall Islands, the United Kingdom, the Bahamas, Bermuda, the Republic of Malta, the United States or the Republic of Liberia (or any other applicable Acceptable Flag Jurisdiction), as applicable, or notarized or executed under seal, or physically executed in any such jurisdiction, except as have been made, or will be made, in accordance with Section 12.10.
7.28
Solvency
. After giving effect to (a) the Loans, (b) the consummation of the Transaction and (c) the payment and accrual of all transaction costs in connection with the foregoing, the Parent and its Subsidiaries, taken as a whole, and the Borrower and its Subsidiaries, taken as a whole, are solvent.
7.29
Patriot Act
. No Credit Party (and, to the knowledge of each Credit Party, no joint venture or Subsidiary thereof) is in violation of any United States law relating to terrorism, sanctions or money laundering, including the United States Executive Order No. 13224 on Terrorist Financing and the Patriot Act.
7.30
Certain Business Practices
. To the knowledge of the Parent, neither the Parent nor any of its Subsidiaries (nor any of their respective officers, directors or employees) (a) has made or agreed to make any contribution, payment, gift or entertainment to, or accepted or received any contributions, payments, gifts or entertainment from, any government official, employee, political party or agent or any candidate for any federal, state, local or foreign public office, where either the contribution, payment or gift or the purpose thereof was illegal under the laws of any federal, state, local or foreign jurisdiction; or (b) has engaged in or otherwise participated in, assisted or facilitated any transaction that is prohibited by any applicable embargo or related trade restriction imposed by the United States Office of Foreign Assets Control or any other agency of the United States government.
SECTION 8.
Affirmative Covenants
.
Each of the Parent, the Borrower, GMSC and Arlington hereby covenants and agrees that on and after the Restatement Effective Date, and until the Loans and Notes, together with interest and all other obligations incurred hereunder and thereunder, are paid in full:
8.01
Information Covenants
. The Parent will make available to the Administrative Agent, with sufficient copies for each of the Lenders:
(a)
Quarterly Financial Statements
. Within 45 days after the close of the first three quarterly accounting periods in each fiscal year of the Parent (
provided
that for the first fiscal quarter following the Restatement Effective Date, such delivery shall be within 60 days after the end of such fiscal quarter), (i) the consolidated balance sheets of the Parent and its Subsidiaries as at the end of such quarterly accounting period and the related consolidated statements of operations and cash flows, in each case for such quarterly accounting period and for the elapsed portion of the fiscal year ended with the last day of such quarterly accounting
61
period, and in each case, setting forth comparative figures for the related periods in the prior fiscal year, all of which shall be certified by the senior financial officer of the Parent, subject to normal year-end audit adjustments and (ii) management’s discussion and analysis of the important operational and financial developments during the fiscal quarter and year-to-date periods.
(b)
Annual Financial Statements
. Within (a) 90 days after the close of each fiscal year of the Parent in which any of Parent’s securities are listed on a nationally recognized securities exchange and (b) 120 days after the close of each fiscal year of Parent (
provided
, that for the first fiscal year following the Restatement Effective Date, such delivery shall be within 150 days after the end of such fiscal year) in which none of Parent’s securities are listed on a nationally recognized securities exchange, (i) the consolidated balance sheets of the Parent and its Subsidiaries as at the end of such fiscal year and the related consolidated statements of operations and retained earnings and of cash flows for such fiscal year setting forth comparative figures for the preceding fiscal year and certified by Deloitte & Touche LLP or such other independent certified public accountants of recognized national standing reasonably acceptable to the Administrative Agent, together with a report of such accounting firm stating that in the course of its regular audit of the financial statements of the Parent and its Subsidiaries, which audit was conducted in accordance with generally accepted auditing standards, such accounting firm obtained no knowledge of any Default or Event of Default pursuant to the Financial Covenants, which has occurred and is continuing or, if in the opinion of such accounting firm such a Default or Event of Default has occurred and is continuing, a statement as to the nature thereof and (ii) management’s discussion and analysis of the important operational and financial developments during such fiscal year.
(c)
Monthly Financial Statements
. Within 30 days after the end of each of the first two calendar months of each fiscal quarter of the Parent occurring prior to the Trigger Date, the unaudited trial balance sheets of the Parent and its Subsidiaries as at the end of such month, and setting forth comparative figures for the prior calendar month, all of which shall be certified by the senior financial officer of the Parent, subject to normal year-end audit adjustments and including normal recurring adjustments;
provided
,
however
, that in no event will the Parent be required to deliver such unaudited trial balance sheets if, at the end of any such month, the Parent and its Subsidiaries have a Loan to Value Ratio of no greater than 0.60 to 1.00.
(d)
Appraisal Reports
. Together with delivery of the compliance certificates described in Section 8.01(f) required in connection with each fiscal quarter in each fiscal year of the Parent, and at any other time within 33 days of the written request of the Administrative Agent, appraisal reports dated no more than 30 days prior to the date of delivery of such compliance certificate or such request, as applicable, in form and substance reasonably satisfactory to the Administrative Agent and from two Approved Appraisers stating the then current Fair Market Value of each of the Collateral Vessels. All such appraisals shall be conducted by, and made at the expense of, the Borrower (it being understood that the Administrative Agent may and, at the request of the Required Lenders, shall, upon notice to the Borrower, obtain such appraisals and that the cost of all such appraisals will be for the account of the Borrower);
provided
that, unless an Event of Default shall then be continuing, in no event shall the Borrower be required to pay for more than four appraisal reports obtained pursuant to
62
this Section 8.01(d) in any single fiscal year of the Borrower, with the cost of any such reports in excess thereof to be paid by the Lenders on a
pro rata
basis.
(e)
Projections, Budget, etc.
(i) As soon as available but not less than 30 days prior to the commencement of each fiscal year of the Parent beginning with its fiscal year commencing on January 1, 2013, a preliminary budget of the Parent and its Subsidiaries in reasonable detail for each of the twelve months and four fiscal quarters of such fiscal year, and (ii) as soon as available but not more than 45 days after the commencement of each fiscal year of the Parent beginning with its fiscal year commencing on January 1, 2013, (x) a budget of the Parent and its Subsidiaries in reasonable detail for each of the twelve months and four fiscal quarters of such fiscal year and (y) the Projections referred to in Section 7.05(c) in reasonable detail for the subsequent three fiscal years including the fiscal year in which such Projections are being delivered. It is recognized by each Lender and the Administrative Agent that such projections and determinations provided by the Parent, although reflecting the Parent’s good faith projections and determinations, are not to be viewed as facts and that actual results covered by any such determination may differ from the projected results.
(f)
Officer’s Compliance Certificates
. (i) At the time of the delivery of the financial statements provided for in Sections 8.01(a) and (b), a certificate of the senior financial officer of the Parent in the form of Exhibit L to the effect that, to the best of such officer’s knowledge, no Default or Event of Default has occurred and is continuing or, if any Default or Event of Default has occurred and is continuing, specifying the nature and extent thereof (in reasonable detail), which certificate shall, (x) set forth the calculations required to establish whether the Parent was in compliance with the Financial Covenants at the end of such fiscal quarter or year, as the case may be and (y) certify that there have been no changes to any of
Schedule VIII
and Annexes A through F of the Pledge Agreement, the Parent Pledge Agreement or the Secondary Pledge Agreement, as the case may be, or, if later, since the date of the most recent certificate delivered pursuant to this Section 8.01(f)(i), or if there have been any such changes, a list in reasonable detail of such changes (but, in each case with respect to this clause (y), only to the extent that such changes are required to be reported to the Collateral Agent pursuant to the terms of such Security Documents) and whether the Parent and the other Credit Parties have otherwise taken all actions required to be taken by them pursuant to such Security Documents in connection with any such changes.
(ii)
At the time of a Collateral Disposition in respect of any Primary Collateral Vessel and/or Secondary Collateral Vessel, a certificate of a senior financial officer of the Parent which certificate shall (x) certify on behalf of the Parent the last appraisal reports received pursuant to Section 8.01(d) determining the Aggregate Primary Collateral Vessel Value and/or the Aggregate Collateral Vessel Value, as applicable, in each case after giving effect to such disposition(s) and/or showing the individual Fair Market Value of all Collateral Vessels owned by the Subsidiary Guarantors which have not been sold, transferred, lost or otherwise disposed of at such time, and (y) other than in connection with a Permitted Sale, set forth the calculations required to establish whether the Parent is in compliance with the provisions of Section 9.09 after giving effect to such disposition.
(g)
Notice of Default, Litigation or Event of Loss
. Promptly, and in any event within three Business Days after the Parent obtains knowledge thereof, notice of (i) the
63
occurrence of any event which constitutes a Default or Event of Default which notice shall specify the nature thereof, the period of existence thereof and what action the Parent proposes to take with respect thereto, (ii) any litigation or governmental investigation or proceeding pending or threatened in writing against the Parent or any of its Subsidiaries which, if adversely determined, could reasonably be expected to have a Material Adverse Effect or any Document and (iii) any Event of Loss in respect of any Collateral Vessel.
(h)
Other Reports and Filings
. Promptly, copies of all financial information, proxy materials and other information and reports, if any, which the Parent or any of its Subsidiaries shall file with the Securities and Exchange Commission (or any successor thereto) or deliver to holders of its Indebtedness pursuant to the terms of the documentation governing such Indebtedness (or any trustee, agent or other representative therefor).
(i)
Material Breach; Other Debt Documents
. Promptly upon, and in any event within five Business Days after, without duplication of any other reporting requirements herein, receipt of any notices of default, financial reporting and collateral reporting under the Other Credit Documents, and copies of all effectuated additions, amendments, restatements, supplements or other modifications in respect of the Other Credit Documents.
(j)
Environmental Matters
. Promptly upon, and in any event within fifteen Business Days after, the Parent obtains knowledge thereof, written notice of any of the following environmental matters occurring after the Restatement Effective Date, except to the extent that such environmental matters could not, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect:
(i)
any Environmental Claim pending or threatened in writing against the Parent or any of its Subsidiaries or any Collateral Vessel or property owned or operated or occupied by the Parent or any of its Subsidiaries;
(ii)
any condition or occurrence on or arising from any Collateral Vessel or property owned or operated or occupied by the Parent or any of its Subsidiaries that (a) results in noncompliance by the Parent or such Subsidiary with any applicable Environmental Law or (b) could reasonably be expected to form the basis of an Environmental Claim against the Parent or any of its Subsidiaries or any such Collateral Vessel or property;
(iii)
any condition or occurrence on any Collateral Vessel or property owned or operated or occupied by the Parent or any of its Subsidiaries that could reasonably be expected to cause such Collateral Vessel or property to be subject to any restrictions on the ownership, occupancy, use or transferability by the Parent or such Subsidiary of such Collateral Vessel or property under any Environmental Law; and
(iv)
the taking of any removal or remedial action in response to the actual or alleged presence of any Hazardous Material on any Collateral Vessel or property owned or operated or occupied by the Parent or any of its Subsidiaries as required by any Environmental Law or any governmental or other administrative agency;
provided
that in any event the Parent shall deliver to the Administrative Agent all material notices
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received by the Parent or any of its Subsidiaries from any government or governmental agency under, or pursuant to, CERCLA or OPA.
All such notices shall describe in reasonable detail the nature of the claim, investigation, condition, occurrence or removal or remedial action and the Parent’s or such Subsidiary’s response thereto. In addition, the Parent will provide the Administrative Agent with copies of all material communications with any government or governmental agency and all material communications with any Person relating to any Environmental Claim of which notice is required to be given pursuant to this Section 8.01(j), and such detailed reports of any such Environmental Claim as may reasonably be requested by the Administrative Agent or the Required Lenders.
(k)
Management Letters
. Promptly after Parent’s or any of its Subsidiaries’ receipt thereof, a copy of any “management letter” received from its certified public accountants and management’s response thereto.
(l)
Cash Flow Projections
. On the Restatement Effective Date and monthly thereafter until the Trigger Date, cash flow projections for the Parent and its Subsidiaries (the “
Cash Flow Projections
”) for the 13-week period beginning on the Business Day on which such Cash Flow Projections are due, which Cash Flow Projections shall (i) be based on information available, and projections made, as of the last Business Day of the immediately preceding calendar month and (ii) include a variance report describing in reasonable detail the variance(s) in actual cash flow from projected cash flow for the month ended on such last Business Day;
provided
,
however
, that in no event will the Parent be required to deliver such Cash Flow Projections if, at the end of any such month, (a) no Default or Event of Default has occurred and is continuing and (b) the aggregate amount of Unrestricted Cash and Cash Equivalents of the Parent and its Subsidiaries (including any remaining Net Cash Proceeds from the 2013 Equity Investment not used on the Third Amendment Effective Date to make the Amendment Prepayment) at the end of any such month exceeds $75,000,000.
(m)
Excess Liquidity Calculations
. On or before the tenth day (or, if such day is not a Business Day, on the next succeeding Business Day) after each Payment Date, a certificate of the senior financial officer of the Parent substantially in the form of Exhibit Q, which certificate shall set forth the calculations required to determine the Excess Liquidity, if any, for such Payment Date.
(n)
Non-Recourse Subsidiaries
. Promptly upon, and in any event within five Business Days after delivery thereof, without duplication of any other reporting requirements herein, any periodic financial reports provided to the lenders under any documents evidencing Non-Recourse Indebtedness or any notices of default provided thereunder.
(o)
Other Information
. From time to time, such other information or documents (financial or otherwise) with respect to the Parent, its Subsidiaries or its Non-Recourse Subsidiaries as the Administrative Agent or the Required Lenders may reasonably request in writing.
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8.02
Books, Records and Inspections
. The Parent will, and will cause each of its Subsidiaries to, keep proper books of record and account in which full, true and correct entries, in conformity in all material respects with GAAP and all requirements of law, shall be made of all dealings and transactions in relation to its business. The Parent will, and will cause each of its Subsidiaries to, permit officers and designated representatives of the Administrative Agent and the Lenders as a group to visit and inspect, during regular business hours and under guidance of officers of the Parent or any of its Subsidiaries, any of the properties of the Parent or its Subsidiaries, and to examine the books of account of the Parent or such Subsidiaries and discuss the affairs, finances and accounts of the Parent or such Subsidiaries with, and be advised as to the same by, its and their officers and, in the presence of the Parent, independent accountants, all upon reasonable advance notice and at such reasonable times and intervals and to such reasonable extent as the Administrative Agent or the Required Lenders may request;
provided
that, unless an Event of Default exists and is continuing at such time, the Administrative Agent and the Lenders shall not be entitled to request more than two such visitations and/or examinations in any fiscal year of the Parent.
8.03
Maintenance of Property; Insurance
. The Parent will, and will cause each of its Subsidiaries to, (i) keep all material property necessary in its business in good working order and condition (ordinary wear and tear and loss or damage by casualty or condemnation excepted), (ii) maintain insurance on the Collateral Vessels in at least such amounts and against at least such risks as are in accordance with (a) normal industry practice for similarly situated insureds and (b) the requirements set forth in Section 8.06, and (iii) furnish to the Administrative Agent, at the written request of the Administrative Agent or any Lender, a complete description of the material terms of insurance carried. In addition to the requirements of the immediately preceding sentence, the Parent will at all times cause the Required Insurance to (x) be maintained on the Collateral Vessels (with the same scope of coverage as that described in
Schedule VI
) at levels which are at least as great as the respective amount described on
Schedule VI
and (y) comply with the insurance requirements of the Collateral Vessel Mortgages and the Secondary Collateral Vessel Mortgages, as applicable.
8.04
Corporate Franchises
. The Parent will, and will cause each of its Subsidiaries, to do or cause to be done, all things necessary to preserve and keep in full force and effect its existence and its material rights, franchises, licenses and patents (if any) used in its business, except, in the case of any Subsidiary of the Parent that is not a Guarantor, which could not be reasonably expected to have a Material Adverse Effect;
provided
,
however
, that nothing in this Section 8.04 shall prevent (i) sales or other dispositions of assets, consolidations or mergers by or involving the Parent or any of its Subsidiaries which are permitted in accordance with Section 9.02, (ii) any Subsidiary Guarantor from changing the jurisdiction of its organization to the extent permitted by Section 9.11 or (iii) the abandonment by the Parent or any of its Subsidiaries of any rights, franchises, licenses and patents that could not be reasonably expected to have a Material Adverse Effect.
8.05
Compliance with Statutes, etc.
The Parent will, and will cause each of its Subsidiaries and each of its Non-Recourse Subsidiaries to, comply with all applicable statutes, regulations and orders of, and all applicable restrictions (including all laws and regulations relating to money laundering) imposed by, all governmental bodies, domestic or foreign, in respect of the conduct of its business and the ownership of its property, except such non-
66
compliances as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
8.06
Compliance with Environmental Laws
. (a) The Parent will, and will cause each of its Subsidiaries and each of its Non-Recourse Subsidiaries to, comply in all material respects with all Environmental Laws applicable to the ownership or use of any Collateral Vessel or any other Vessel or property now or hereafter owned or operated by the Parent or any of its Subsidiaries or any of its Non-Recourse Subsidiaries, will within a reasonable time period pay or cause to be paid all costs and expenses incurred in connection with such compliance (except to the extent being contested in good faith), and will keep or cause to be kept all such Collateral Vessels or Vessels or property free and clear of any Liens imposed pursuant to such Environmental Laws, in each of the foregoing cases, except to the extent any failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. None of the Parent, any of Subsidiaries of the Parent or any Non-Recourse Subsidiaries of the Parent will generate, use, treat, store, release or dispose of, or permit the generation, use, treatment, storage, release or disposal of, Hazardous Materials on any Collateral Vessel or Vessel or property now or hereafter owned or operated or occupied by the Parent, any of its Subsidiaries or any of its Non-Recourse Subsidiaries, or transport or permit the transportation of Hazardous Materials to or from any ports or property except in material compliance with all applicable Environmental Laws and as reasonably required by the trade in connection with the operation, use and maintenance of any such property or otherwise in connection with their businesses or except to the extent the same could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Parent will, and will cause each of its Subsidiaries and each of its Non-Recourse Subsidiaries to, maintain insurance on the Collateral Vessels and any other Vessel in at least such amounts as are in accordance with normal industry practice for similarly situated insureds, against losses from oil spills and other environmental pollution.
(b)
At the written request of the Administrative Agent or the Required Lenders, which request shall specify in reasonable detail the basis therefor, the Parent or the Borrower will provide, at the Parent or the Borrower’s sole cost and expense, an environmental assessment of any Primary Collateral Vessel by such Primary Collateral Vessel’s classification society (to the extent such classification society is listed on
Schedule X
) or another internationally recognized classification society reasonably acceptable to the Administrative Agent. If said classification society, in its assessment, indicates that such Primary Collateral Vessel is not in compliance with the Environmental Laws, said society shall set forth potential costs of the remediation of such non-compliance;
provided
that such request for an assessment may be made only if (i) there has occurred and is continuing an Event of Default, (ii) the Administrative Agent or the Required Lenders reasonably and in good faith believe that the Parent, any of its Subsidiaries or any such Primary Collateral Vessel is not in compliance with Environmental Law and such non-compliance could reasonably be expected to have a Material Adverse Effect, or (iii) the Administrative Agent or the Required Lenders reasonably and in good faith believe that circumstances exist that reasonably could be expected to form the basis of a material Environmental Claim against the Parent or any of its Subsidiaries or any such Primary Collateral Vessel. If the Parent or the Borrower fails to provide the same within 90 days after such request was made, the Administrative Agent may order the same and the Parent or the Borrower shall grant and hereby grants to the Administrative Agent and the Lenders and their agents reasonable access to such Primary Collateral Vessel and specifically grants the
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Administrative Agent and the Lenders an irrevocable non-exclusive license, subject to the rights of tenants, to undertake such an assessment, all at the Parent or the Borrower’s expense.
8.07
ERISA
. As soon as reasonably possible and, in any event, within ten (10) days after the Parent or any of its Subsidiaries or any ERISA Affiliate knows or has reason to know of the occurrence of any of the following, the Parent will deliver to the Administrative Agent, with sufficient copies for each of the Lenders, a certificate of the senior financial officer of the Parent setting forth the full details as to such occurrence and the action, if any, that the Parent, such Subsidiary or such ERISA Affiliate is required or proposes to take, together with any notices required or proposed to be given to or filed with or by the Parent, the Subsidiary, the ERISA Affiliate, the PBGC, a Plan participant or the Plan administrator with respect thereto: that a Reportable Event has occurred (except to the extent that the Parent has previously delivered to the Administrative Agent a certificate and notices (if any) concerning such event pursuant to the next clause hereof); that a contributing sponsor (as defined in Section 4001(a)(13) of ERISA) of a Plan subject to Title IV of ERISA is subject to the advance reporting requirement of PBGC Regulation Section 4043.61 (without regard to subparagraph (b)(1) thereof), and an event described in subsection .62, .63, .64, .65, .66, .67 or .68 of PBGC Regulation Section 4043 is reasonably expected to occur with respect to such Plan within the following 30 days; that a failure to satisfy minimum funding requirements, within the meaning of Section 412 of the Code or Section 302 of ERISA, has occurred or an application may be or has been made for a waiver or modification of the minimum funding standard (including any required installment payments) or an extension of any amortization period under Section 412 or 430 of the Code or Section 302 or 303 of ERISA with respect to a Plan; that the actuary of a Plan (other than a Multiemployer Plan) has or will certify that the Plan is an at-risk plan within the meaning of Section 430 of the Code or Section 303 of ERISA; that a Plan which is a Multiemployer Plan is in endangered or critical status under Section 305 of ERISA; that any contribution required to be made with respect to a Plan or Foreign Pension Plan has not been timely made and such failure could result in a material liability for the Parent or any of its Subsidiaries; that a Plan has been or may be reasonably expected to be terminated, reorganized, partitioned or declared insolvent under Title IV of ERISA with a material amount of unfunded benefit liabilities; that a Plan (in the case of a Multiemployer Plan, to the best knowledge of the Parent or any of its Subsidiaries or ERISA Affiliates) has a material Unfunded Current Liability; that proceedings may be reasonably expected to be or have been instituted by the PBGC to terminate or appoint a trustee to administer a Plan which is subject to Title IV of ERISA; that a proceeding has been instituted pursuant to Section 515 of ERISA to collect a material delinquent contribution to a Plan; that the Parent, any of its Subsidiaries or any ERISA Affiliate will or may reasonably expect to incur any material liability (including any indirect, contingent, or secondary liability) to or on account of the termination of or withdrawal from a Plan under Section 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or with respect to a Plan under Section 436(f), 4971, 4975 or 4980 of the Code or Section 409 or 502(i) or 502(l) of ERISA or with respect to a group health plan (as defined in Section 607(1) of ERISA or Section 4980B(g)(2) of the Code) under Section 4980B of the Code; or that the Parent, or any of its Subsidiaries may incur any material liability pursuant to any employee welfare benefit plan (as defined in Section 3(1) of ERISA) that provides benefits to retired employees or other former employees (other than as required by Section 601 of ERISA) or any Plan or any Foreign Pension Plan. Upon request, the Parent will deliver to the Administrative Agent with sufficient copies to the Lenders (i) a complete copy of the annual report (on Internal Revenue Service Form 5500-series) of each Plan (including, to the extent
68
required, the related financial and actuarial statements and opinions and other supporting statements, certifications, schedules and information) required to be filed with the Internal Revenue Service and (ii) copies of any records, documents or other information that must be furnished to the PBGC with respect to any Plan pursuant to Section 4010 of ERISA. In addition to any certificates or notices delivered to the Lenders pursuant to the first sentence hereof, copies of annual reports and any records, documents or other information required to be furnished to the PBGC, and any notices received by the Parent, any of its Subsidiaries or any ERISA Affiliate with respect to any Plan or Foreign Pension Plan with respect to any circumstances or event that could reasonably be expected to result in a material liability shall be delivered to the Lenders no later than ten (10) days after the date such annual report has been filed with the Internal Revenue Service or such records, documents and/or information has been furnished to the PBGC or such notice has been received by the Parent, such Subsidiary or such ERISA Affiliate, as applicable.
8.08
End of Fiscal Years; Fiscal Quarters
.. The Parent shall cause (i) each of its, and each of its Subsidiaries’, fiscal years to end on December 31 of each year and (ii) each of its and its Subsidiaries’ fiscal quarters to end on March 31, June 30, September 30 and December 31 of each year.
8.09
Performance of Obligations
. The Parent will, and will cause each of its Subsidiaries to, perform all of its obligations under the terms of each mortgage, indenture, security agreement and other debt instrument (including, without limitation, the Documents) by which it is bound, except to the extent waived by the parties thereto and except such non-performances as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
8.10
Payment of Taxes
. The Parent will pay and discharge, and will cause each of its Subsidiaries to pay and discharge, all material taxes, assessments and governmental charges or levies that become due and payable which are imposed upon it or upon its income or profits, or upon any properties belonging to it, prior to the date on which penalties attach thereto, and all lawful claims for sums that have become due and payable which, if unpaid, might become a Lien not otherwise permitted under Section 9.01(i),
provided
that neither the Parent nor any of its Subsidiaries shall be required to pay any such tax, assessment, charge, levy or claim which is being contested in good faith and by proper proceedings if it has maintained adequate reserves with respect thereto in accordance with GAAP.
8.11
Further Assurances
. (a) The Parent will, and will cause each of its Subsidiaries to, cause each Collateral and Guaranty Requirement to be satisfied at all times.
(b)
The Parent, on behalf of itself and each other Credit Party, agrees that at any time and from time to time, at the expense of the Parent or such other Credit Party, it will promptly execute and deliver all further instruments and documents, and take all further action that may be reasonably necessary, or that the Administrative Agent may reasonably require, to perfect and protect any Lien granted or purported to be granted hereby or by the other Credit Documents, or to enable the Collateral Agent to exercise and enforce its rights and remedies with respect to any Collateral. Without limiting the generality of the foregoing, the Parent will, and will cause each Credit Party to, execute (to the extent applicable) and file, or cause to be filed, such financing or continuation statements under the UCC (or any non-U.S. equivalent thereto),
69
or amendments thereto, such amendments or supplements to the Collateral Vessel Mortgages and the Secondary Collateral Vessel Mortgages (including any amendments required to maintain Liens granted by such Collateral Vessel Mortgages and such Secondary Collateral Vessel Mortgages pursuant to the effectiveness of this Agreement), and such other instruments or notices, as may be reasonably necessary, or that the Administrative Agent may reasonably require, to protect and preserve the Liens granted or purported to be granted hereby and by the other Credit Documents.
(c)
Each Credit Party hereby authorizes the Collateral Agent to file one or more financing or continuation statements under the UCC (or any non-U.S. equivalent thereto), and amendments thereto, relative to all or any part of the Collateral, where permitted by law. The Collateral Agent will promptly send each Credit Party a copy of any financing or continuation statements which it may file and the filing or recordation information with respect thereto.
(d)
If at any time any Subsidiary of the Parent owns a Collateral Vessel or owns, directly or indirectly, an interest in any Subsidiary which owns a Collateral Vessel and such Subsidiary has not otherwise satisfied the Collateral and Guaranty Requirements, the Parent will cause such Subsidiary (and any Subsidiary which directly or indirectly owns the Equity Interests of such Subsidiary to the extent not a Credit Party) to satisfy the Collateral and Guaranty Requirements with respect to each relevant Collateral Vessel as such Subsidiary would have been required to satisfy pursuant to Section 12.10 of this Agreement had such Subsidiary been a Credit Party on or prior to the Restatement Effective Date.
(e)
If, at any time, the Parent deposits the 273 Blocked Amount into the 273 Blocked Account pursuant to Section 9.09(b), the Parent will duly execute and deliver a control agreement with respect thereto granting a first priority security interest to the Pledgee (as such term is defined in the Pari Passu Pledge Agreement) (reasonably satisfactory in all respects to such Pledgee).
8.12
Deposit of Earnings
. Each Credit Party shall cause the earnings derived from each of the respective Collateral Vessels, to the extent constituting Earnings and Insurance Collateral or Secondary Earnings and Insurance Collateral, to be deposited by the respective account debtor in respect of such earnings into one or more of the Concentration Accounts maintained for such Credit Party from time to time. Without limiting any Credit Party’s obligations in respect of this Section 8.12, each Credit Party agrees that, in the event it receives any earnings constituting Earnings and Insurance Collateral or Secondary Earnings and Insurance Collateral, or any such earnings are deposited other than in one of the Concentration Accounts, it shall promptly deposit all such proceeds into one of the Concentration Accounts maintained for such Credit Party from time to time.
8.13
Ownership of Subsidiaries
. (a) Other than “director qualifying shares”, the Parent shall at all times directly or indirectly own 100% of the Equity Interests of GMSC, Arlington, the Borrower and each of the Subsidiary Guarantors.
(b)
The Parent shall cause each Subsidiary Guarantor to at all times be directly owned by one or more Credit Parties.
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(c)
The Parent will cause each Collateral Vessel to be owned at all times by a single Subsidiary Guarantor that owns no other Collateral Vessels.
8.14
Flag of Collateral Vessels; Citizenship; Collateral Vessel Classifications
. (a) The Parent shall, and shall cause each Credit Party that owns a Collateral Vessel to, cause each Collateral Vessel to be registered under the laws and flag of (t) the Bahamas, (u) the Republic of Malta, (v) the Republic of Liberia, (w) the Republic of the Marshall Islands, (x) Bermuda, (y) the United Kingdom or (z) such other jurisdiction as is acceptable to the Required Lenders (each jurisdiction in clauses (t) through and including (z), an “
Acceptable Flag Jurisdiction
”). Notwithstanding the foregoing, any Credit Party may transfer a Collateral Vessel to another Acceptable Flag Jurisdiction pursuant to a Flag Jurisdiction Transfer.
(b)
The Parent will, and will cause each Subsidiary Guarantor which owns or operates a Collateral Vessel to, be qualified to own and operate such Collateral Vessel under the laws of the Bahamas, the Republic of Malta, the Republic of Liberia, the Republic of the Marshall Islands, Bermuda, the United Kingdom, or such other jurisdiction in which such Collateral Vessel is permitted to be flagged in accordance with the terms of the related Collateral Vessel Mortgage or Secondary Collateral Vessel Mortgage, as applicable.
(c)
The Parent will, and will cause each Subsidiary Guarantor which owns or operates a Collateral Vessel to, cause each Collateral Vessel to be classified in the highest class available for Vessels of its age and type with a classification society listed on
Schedule X
or another internationally recognized classification society acceptable to the Administrative Agent, free of any material conditions or recommendations.
8.15
Use of Proceeds
.
The Borrower will use the proceeds of the Loans only as provided in Section 7.08.
8.16
Sale Vessels Disposal
. Subject to compliance with Section 9.02(i), the Parent shall procure that the Credit Parties which own the Sale Vessels dispose of them on or before August 31, 2014; provided, that, (x) to the extent such disposal is consummated, the Net Cash Proceeds of such disposals shall be applied as required by Section 4.02(b) to repay the Loans and (y) notwithstanding anything to the contrary contained in Section 4.02(b), following such disposals and as a consequence thereof the Borrower shall not be required to repay an aggregate principal amount of outstanding Loans greater than (A) with respect to the disposition of the Genmar Minotaur, the Net Cash Proceeds corresponding to the Collateral Disposition of the Genmar Minotaur and (B) with respect to the disposition of the Genmar Hope, the Net Cash Proceeds corresponding to the Collateral Disposition of the Genmar Hope.
SECTION 9.
Negative Covenants
.
Each of the Parent, the Borrower, GMSC and Arlington hereby covenants and agrees that on and after the Restatement Effective Date, and until the Loans and Notes, together with interest and all other Obligations incurred hereunder and thereunder, are paid in full:
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9.01
Liens
. The Parent will not, and will not permit any of its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with respect to (I) prior to the Trigger Date and at any time that the Parent and its Subsidiaries have a Loan to Value Ratio of greater than 0.60 to 1.00, any property or assets (real or personal, tangible or intangible) of the Parent or any of its Subsidiaries and (II) on and after the Trigger Date and at any time that the Parent and its Subsidiaries have a Loan to Value Ratio of no greater than 0.60 to 1.00, any Collateral (the property and assets described in clause (I) or (II), as applicable, the “
Applicable Property
”), whether now owned or hereafter acquired, or sell any such Applicable Property subject to an understanding or agreement, contingent or otherwise, to repurchase such Applicable Property (including sales of accounts receivable with recourse to the Parent or any of its Subsidiaries), or assign any right to receive income or permit the filing of any financing statement under the UCC or any other similar notice of Lien under any similar recording or notice statute;
provided
that the provisions of this Section 9.01 shall not prevent the creation, incurrence, assumption or existence of the following (Liens described below are herein referred to as “
Permitted Liens
”):
(i)
inchoate Liens for taxes, assessments or governmental charges or levies not yet due and payable or Liens for taxes, assessments or governmental charges or levies being contested in good faith and by appropriate proceedings for which adequate reserves have been established in accordance with GAAP;
(ii)
Liens in respect of the Applicable Property imposed by law, which were incurred in the ordinary course of business and do not secure Indebtedness for borrowed money, such as carriers’, warehousemen’s, materialmen’s and mechanics’ liens and other similar Liens arising in the ordinary course of business, and (x) which do not in the aggregate materially detract from the value of the Applicable Property do not materially impair the use thereof in the operation of the business of the Parent or such Subsidiary or (y) which are being contested in good faith by appropriate proceedings, which proceedings (or orders entered in connection with such proceedings) have the effect of preventing the forfeiture or sale of the Applicable Property subject to any such Lien;
(iii)
Liens in existence on the Restatement Effective Date which are listed, and the property subject thereto described, on
Schedule IV
, without giving effect to any renewals or extensions of such Liens,
provided
that the aggregate principal amount of the Indebtedness, if any, secured by such Liens does not increase from that amount outstanding on the Restatement Effective Date,
less
any repayments of principal thereof;
(iv)
Permitted Encumbrances;
(v)
Liens created pursuant to the Security Documents;
(vi)
Liens arising out of judgments, awards, decrees or attachments with respect to which the Parent or any of its Subsidiaries shall in good faith be prosecuting an appeal or proceedings for review,
provided
that the aggregate amount of all such judgments, awards, decrees or attachments shall not constitute an Event of Default under Section 10.09;
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(vii)
Liens (other than any Lien imposed by ERISA) incurred or deposits made in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security, Liens to secure the performance of tenders, statutory obligations (other than excise taxes), surety, stay, customs and appeal bonds, statutory bonds, bids, leases, government contracts, trade contracts, performance and return of money bonds and other similar obligations in each case incurred in the ordinary course of business (exclusive of obligations for the payment of borrowed money) and Liens arising by virtue of deposits made in the ordinary course of business to secure liability for premiums to insurance carriers;
provided
that the aggregate value of all cash and property at any time encumbered pursuant to this clause (vii) shall not exceed $5,000,000;
(viii)
Liens in respect of seamen’s wages which are not past due and other maritime Liens for amounts not past due arising in the ordinary course of business and not yet required to be removed or discharged under the terms of the respective Collateral Vessel Mortgages;
(ix)
Liens on the Applicable Property securing the obligations under the Other Credit Agreement (and any interest rate protection agreement or other hedging agreement entered into in connection therewith),
provided
that such Liens are subject to the provisions of the Intercreditor Agreements;
(x)
Liens placed upon equipment or machinery acquired after the Restatement Effective Date and used in the ordinary course of business of the Borrower or any of its Subsidiaries and placed at the time of the acquisition thereof by the Borrower or such Subsidiary or within 90 days thereafter to secure Indebtedness incurred to pay all or a portion of the purchase price thereof or to secure Indebtedness incurred solely for the purpose of financing the acquisition of any such equipment or machinery or extensions, renewals or replacements of any of the foregoing for the same or a lesser amount,
provided
that (x) the Indebtedness secured by such Liens is permitted by Section 9.04 and (y) in all events, the Lien encumbering the equipment or machinery so acquired does not encumber any asset of the Parent or any other asset of the Borrower or such Subsidiary;
(xi)
easements, rights-of-way, restrictions, encroachments and other similar charges or encumbrances, and minor title deficiencies, in each case not securing Indebtedness and not materially interfering with the conduct of the business of
the Parent or any of its Subsidiaries;
(xii)
Liens arising from precautionary UCC financing statement filings regarding operating leases entered into in the ordinary course of business;
(xiii)
statutory and common law landlords’ liens under leases to which the Borrower or any of its Subsidiaries is a party;
(xiv)
Liens arising out of any conditional sale, title retention, consignment or other similar arrangements for the sale of goods entered into by the Borrower or any of its Subsidiaries in the ordinary course of business to the extent such Liens do not attach to any assets other than the goods subject to such arrangements;
73
(xv)
Liens (x) incurred in the ordinary course of business in connection with the purchase or shipping of goods or assets (or the related assets and proceeds thereof), which Liens are in favor of the seller or shipper of such goods or assets and only attach to such goods or assets, and (y) in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods; and
(xvi)
bankers’ Liens, rights of setoff and other similar Liens existing solely with respect to cash and Cash Equivalents on deposit in one or more accounts maintained by
the Parent or any Subsidiary, in each case granted in the ordinary course of business in favor of the bank or banks with which such accounts are maintained, securing amounts owing to such bank or banks with respect to cash management and operating account arrangements.
(xvii)
to the extent required by the Other Credit Agreement or permitted by Section 9.04(v), Liens in respect of the cash collateralization of the Existing Letters of Credit (as defined in the Other Credit Agreement);
(xviii)
Liens securing obligations in respect of Indebtedness permitted pursuant to Section 9.04(v) (including any Liens on cash required to cash collateralize letters of credit permitted pursuant to Section 9.04(v) in an aggregate amount not to exceed $5,000,000 at any time);
provided
that at no time will any Indebtedness incurred by the Parent or any of its Subsidiaries from Oaktree Capital Management L.P. or any of its Affiliates be permitted to be secured pursuant to this clause (xviii);
(xix)
Liens permitted at the time they were created;
(xx) Liens on (a) the Vessels acquired in a Permitted New Vessel Acquisition, (b) the related earnings and insurance of such Vessels and (c) the Equity Interests in the Vessel SPVs which own such Vessels, in each case to secure the Indebtedness permitted to be incurred under Section 9.17 in order to finance the corresponding Financed Purchase Price;
(xxi) Liens on (a) the 2014 Newbuilding Vessels, (b) the related earnings and insurance of such Vessels and (c) the Equity Interests in and other assets of the 2014 Newbuilding Holdco and the 2014 Newbuilding Vessel Subsidiaries, in each case to secure the Permitted 2014 Newbuilding Indebtedness and related interest rate hedge agreements; and
(xxii) deposits in connection with the acquisition of Vessels; provided that such deposits are funded solely from the Equity Proceeds Amount.
In connection with the granting of Liens described above in this Section 9.01 by the Parent or any of its Subsidiaries, the Administrative Agent and the Collateral Agent shall be authorized to take any actions deemed appropriate by it in connection therewith (including, without limitation, by executing appropriate lien subordination agreements in favor of the holder or holders of such Liens, in respect of the item or items of equipment or other assets subject to such Liens).
9.02
Consolidation, Merger, Sale of Assets, etc.
The Parent will not, and will not permit any of its Subsidiaries to wind up, liquidate or dissolve its affairs or enter into any transaction of merger, consolidation or amalgamation, or convey, sell, lease or otherwise dispose of (or agree to do any of the foregoing at any future time) all or substantially all of its assets
74
(other than Margin Stock) or any of the Collateral, or enter into any sale-leaseback transactions involving any of the Collateral (or agree to do so at any future time), except that:
(i) the Parent and each of its Subsidiaries may sell, lease or otherwise dispose of any Primary Collateral Vessels,
provided
that (I)(x)(A) such sale is made at Fair Market Value (as determined in accordance with the appraisal report most recently delivered to the Administrative Agent (or obtained by the Administrative Agent) pursuant to Section 8.01(d) or delivered at the time of such sale to the Administrative Agent by the Parent), (B) 100% of the consideration in respect of such sale shall consist of cash or Cash Equivalents (unless the Primary Collateral Vessel is being sold to the Parent or a Subsidiary of the Parent, in which case the sale shall consist of cash only) received by the Borrower, or to the respective Subsidiary Guarantor which owned such Primary Collateral Vessel, on the date of consummation of such sale and (C) the Net Cash Proceeds of such sale, lease or other disposition shall be applied as required by Section 4.02 to repay the Loans or (y) so long as no Default or Event of Default has occurred and is continuing (or would arise after giving effect thereto) and so long as all representations and warranties made by the Parent and its Subsidiaries pursuant to Section 7 of this Agreement are true and correct both before and after any such exchange, such Primary Collateral Vessel is exchanged for an Acceptable Replacement Vessel pursuant to a Vessel Exchange;
provided
,
further
, that in the case of both clauses (x) and (y) above, the Parent shall have delivered to the Administrative Agent an officer’s certificate, certified by the senior financial officer of the Parent, demonstrating
pro forma
compliance (giving effect to such Collateral Disposition and, in the case of calculations involving the appraised value of Collateral Vessels, using valuations consistent with the appraisal report most recently delivered to the Administrative Agent (or obtained by the Administrative Agent) pursuant to Section 8.01(d)) with each of the Financial Covenants for the most recently ended Test Period for which financial statements under Section 8.01(a) or (b) are due;
provided
that, with respect to any Test Period ending on December 31, the Parent shall deliver unaudited financial statements as at the end of such Test Period at the time of such sale but only if such sale occurs more than 45 days (and less than 90 days) after the end of such Test Period (or at the time of such sale, as applicable) setting forth the calculations required to make such determination in reasonable detail, and (II) at least five Business Days (or such other period as shall be agreed by the Borrower and the Administrative Agent) prior written notice of the proposed sale, lease or other disposition of a Primary Collateral Vessel shall have been given to the Collateral Agent, which notice shall set forth the expected closing date of such sale, lease or other disposition and the date of the corresponding repayment of Loans;
(ii) subject to compliance with Section 4.02(b) the Parent and its Subsidiaries may sell, lease or otherwise dispose of any Secondary Collateral to the extent such sale, lease or disposition is permitted pursuant to the terms of the Other Credit Agreement and the Intercreditor Agreements;
provided
that (x) the consent of the Required Lenders shall be required if the Required Lenders (under and as defined in the Other Credit Agreement) were required to consent and have consented to the Net Cash Proceeds of such sale, lease or disposition not being applied to repay loans under the Other Credit Agreement and (y) notwithstanding anything to the contrary contained in this clause (ii), at no time may any Secondary Collateral be sold, leased or otherwise disposed of to the extent that a Default
75
or an Event of Default under Section 9.09(b) would occur as a result thereof (it being understood that clause (y) of this proviso shall not apply in the case of a Permitted Sale);
(iii) the Parent and its Subsidiaries may sell or discount, in each case without recourse and in the ordinary course of business, overdue accounts receivable arising in the ordinary course of business, but only in connection with the compromise or collection thereof consistent with customary industry practice (and not as part of any bulk sale);
(iv) (A) the Borrower, GMSC, Arlington and any Subsidiary Guarantor may transfer assets or lease to or acquire or lease assets from the Borrower, GMSC, Arlington or any other Subsidiary Guarantor, or any Subsidiary Guarantor may be merged into the Borrower, GMSC, Arlington or any other Subsidiary Guarantor;
provided
that the Borrower, GMSC, Arlington or such Subsidiary Guarantor, as the case may be, will be a successor in interest to all rights, titles and interest of such merged Subsidiary Guarantor and, in each case so long as all actions necessary or desirable to preserve, protect and maintain the security interest and Lien of the Collateral Agent in any Collateral held by any Person involved in any such transaction are taken to the satisfaction of the Collateral Agent and (B) any Subsidiary of the Parent (other than the Borrower, GMSC, Arlington and any Subsidiary Guarantor) may transfer assets or lease to or acquire or lease assets from any other Subsidiary of the Parent, or any other Subsidiary of the Parent (other than the Borrower, GMSC, Arlington and any Subsidiary Guarantor) may be merged into any other Subsidiary of the Parent, in each case so long as all actions necessary or desirable to preserve, protect and maintain the security interest and Lien of the Collateral Agent in any Collateral held by any Person involved in any such transaction are taken to the satisfaction of the Collateral Agent;
(v) following a Collateral Disposition permitted by this Agreement, the Subsidiary Guarantor which owned the Collateral Vessel that is the subject of such Collateral Disposition may dissolve,
provided
that (x) the Net Cash Proceeds from such Collateral Disposition shall be applied (i) in the case of a Primary Collateral Vessel, as required by Section 4.02 to repay the Loans and (ii) in the case of a Secondary Collateral Vessel, as required by the Other Credit Agreement to repay loans thereunder and hereunder to the extent required pursuant to Section 4.02, (y) all of the proceeds of such dissolution shall be paid only to a Credit Party and (z) no Default or Event of Default is continuing unremedied at the time of such dissolution;
(vi) any Subsidiary which (x) is not a Subsidiary Guarantor and (y) has $5,000 or less in assets (including, without limitation, Equity Interests) may wind up, liquidate or dissolve; and
(vii) subject to compliance with Section 8.16, the Credit Parties which own the Sale Vessels may dispose of the Sale Vessels;
(viii) each of 2014 Newbuilding Holdco and any Subsidiary thereof may convey, sell, lease or otherwise dispose of any of its assets (including the disposal of the 2014 Newbuilding Subsidiaries or any Subsidiaries thereof, the disposition of any 2014 Newbuilding Contracts or any 2014 Newbuilding Vessels) and enter into any agreement
76
of merger, consolidation or amalgamation; and the Parent may convey, sell or otherwise dispose of the Equity Interests of the 2014 Newbuilding Holdco;
provided
that, in each case, (1) either such transaction is between and among 2014 Newbuilding Holdco and its Subsidiaries or (2) in the event clause (1) does not apply, (x) no Event of Default then exists or would result therefrom, (y) such transaction shall be on an arm’s-length basis and for cash, Cash Equivalents or Equity Interests in such other Person at fair market value (as determined in good faith by the Parent at the time of the respective sale) and (z) after giving effect to such transaction, the ratio of the Permitted 2014 Newbuilding Indebtedness to the Fair Market Value of the 2014 Newbuilding Vessels owned by the 2014 Newbuilding Subsidiaries at that time shall not exceed such ratio as determined immediately prior to giving effect to such transaction. In order to comply with clause (z) of this Section 9.02(viii), the Permitted 2014 Newbuilding Indebtedness may be reduced either through a cash repayment or through the assumption thereof by a Person other than the Parent or any Subsidiary thereof (in which event neither the Parent nor any Subsidiary thereof shall have any obligations with respect to such assigned Permitted 2014 Newbuilding Indebtedness);
(ix) General Maritime Management and Unique Tankers may convey, sell, lease or otherwise dispose of any of its assets related to the Unique Tankers Pool (including the disposal by General Maritime Management of its Equity Interests in Unique Tankers); and
(x) the Merger shall be permitted;
provided
that, (1) no Event of Default exists as of the Merger Effective Time or would result therefrom, (2) the Equity Purchase Agreement shall be in full force and effect as of the Merger Effective Time and no default shall have occurred thereunder, (3) any cash consideration for the Merger and any other cash payments made by the Parent in connection therewith (including, without limitation, advisory and/or consultancy fees, counsel fees and break-up fees) shall have been funded solely from the Equity Proceeds Amount, (4) the Collateral and Guarantee Requirements shall remain satisfied after giving effect thereto (including, without limitation, all filings and recordings necessary or desirable to maintain the perfection of the security interests in favor of the Collateral Agent after giving effect to the Merger and the name changes contemplated in connection therewith) and (5) each Lender shall have received, at least 10 Business Days prior to the consummation of the Merger, all documentation and other information in respect of the Parent and its Subsidiaries reasonably requested by it in order to comply with applicable “know your customer” and anti-money laundering rules and regulations, including, without limitation, the PATRIOT Act, after giving effect to the Merger
To the extent the Required Lenders (or to the extent required pursuant to Section 12.12(a), all Lenders) waive the provisions of this Section 9.02 with respect to the sale of any Collateral, or any Collateral is sold as permitted by this Section 9.02, such Collateral (unless sold to the Parent or a Subsidiary of the Parent) shall be sold free and clear of the Liens created by the Security Documents, and the Administrative Agent and Collateral Agent shall be authorized to take any actions deemed appropriate in order to effect the foregoing. Notwithstanding anything to the contrary contained above, the foregoing covenant shall not be violated as a result of sales of
77
Margin Stock for cash at fair market value (as determined in good faith by the Parent at the time of the respective sale).
9.03
Dividends
. The Parent will not, and will not permit any of its Subsidiaries to, authorize, declare or pay any Dividends with respect to the Parent or any of its Subsidiaries, except that:
(i) (A) any Wholly-Owned Subsidiary of the Parent may pay Dividends to the Parent or any Wholly-Owned Subsidiary of the Parent, (B) any Subsidiary Guarantor may pay Dividends to the Borrower or any other Subsidiary Guarantor and (C) if the respective Subsidiary is not a Wholly-Owned Subsidiary of the Parent, such Subsidiary may pay Dividends to its shareholders generally so long as the Parent and/or its respective Subsidiaries which own Equity Interests in the Subsidiary paying such Dividends receive at least their proportionate share thereof (based upon their relative holdings of the Equity Interests in the Subsidiary paying such cash Dividends and taking into account the relative preferences, if any, of the various classes of Equity Interests of such Subsidiary);
(ii) so long as no Event of Default (both before and after giving effect to the payment thereof) has occurred and is continuing, the Parent may repurchase its outstanding Equity Interests (or options to purchase such equity) theretofore held by its or any of its Subsidiaries’ employees, officers or directors following the death, disability, retirement or termination of employment of employees, officers or directors of the Parent or any of its Subsidiaries,
provided
that the aggregate amount expended to so repurchase equity of the Parent shall not exceed $2,000,000 in any fiscal year of the Parent; and
(iii) after the Merger Effective Time, so long as no cash, Indebtedness or other property of the Parent and its Subsidiaries is being paid by the Parent to such employees, former employees, directors or former directors in connection with such repurchase (A) the Parent may repurchase its outstanding Equity Interests held by its or any of its Subsidiary’s employees, former employees, directors and former directors pursuant to (i) that certain Stock Option Grant Agreement, dated as of July 8, 2014, by and between Navig8 and L. Spenser Wells, as amended, supplemented or modified from time to time, (ii) that certain General Maritime Corporation 2012 Equity Incentive Plan and (iii) any grants or awards issued under any future management incentive plan entered into by Parent or any of its Subsidiaries, in each case, in connection with any exercise by such employees, former employees, directors or former directors to purchase the Parent’s Equity Interest and (B) the Parent may repurchase its outstanding Equity Interests in an amount equal to the value of any withholding taxes in connection with the vesting of any Equity Interests granted to its employees and directors.
9.04
Indebtedness
. The Parent will not, and will not permit any of its Subsidiaries to, contract, create, incur, assume or suffer to exist any Indebtedness other than:
(i) Indebtedness incurred pursuant to this Agreement and the other Credit Documents;
78
(ii) Indebtedness of the Credit Parties incurred pursuant to the Other Credit Agreement in an aggregate principal amount not to exceed $508,977,536.95 at any time outstanding less any repayments thereof made after the Restatement Effective Date;
(iii) Interest Rate Protection Agreements and Other Hedging Agreements in respect of currencies entered into in the ordinary course of business and consistent with past practices;
provided
that (x) in the case of Interest Rate Protection Agreements, the term thereof does not extend beyond the Maturity Date and (y) in the case of Other Hedging Agreements in respect of currencies, the term thereof does not exceed six months;
(iv) Intercompany indebtedness permitted pursuant to Sections 9.05(iii) and 9.05(viii); and
(v) Indebtedness evidenced by the Existing Letters of Credit (as defined in the Other Credit Agreement), as such Existing Letters of Credit may be replaced from time to time;
(vi) so long as no Event of Default then exists or would result therefrom, additional Indebtedness incurred by the Parent, the Borrower or any other Credit Party that does not own a Collateral Vessel at the time such Indebtedness is incurred in an aggregate principal amount not to exceed $10,000,000 (or, in the case of Indebtedness in respect of letters of credit, $5,000,000) at any one time outstanding; and
(vii) Indebtedness of the Parent and the Subsidiaries of the Parent other than the Credit Parties incurred to finance the Financed Purchase Price of a Permitted New Vessel Acquisition;
provided
that the amortization of such Indebtedness shall be no greater than a straight line amortization reducing such Indebtedness to $0 upon the corresponding Vessel becoming 15 years old;
(viii) Indebtedness of the Parent under the BlueMountain Parent Indebtedness; and
(ix) Permitted 2014 Newbuilding Indebtedness.
9.05
Advances, Investments and Loans
. The Parent will not, and will not permit any of its Subsidiaries to, directly or indirectly, lend money or credit or make advances to any Person, or purchase or acquire any Margin Stock (or other Equity Interests), or make any capital contribution to any other Person (each of the foregoing an “
Investment
” and, collectively, “
Investments
”), except that:
(i) the Parent and its Subsidiaries may acquire and hold accounts receivable owing to any of them and Cash Equivalents;
(ii) so long as no Event of Default exists or would result therefrom, the Parent and its Subsidiaries may make loans and advances in the ordinary course of business to its employees, officers and directors other than officers and directors of Persons which own Equity Interests, directly or indirectly, of the Parent and constitute Affiliates of the
79
Parent or persons employed by any such Affiliates (not including, for the avoidance of doubt, the operational managers of any Credit Party) so long as the aggregate principal amount thereof at any time outstanding which are made on or after the Original Effective Date (determined without regard to any write-downs or write-offs of such loans and advances) shall not exceed $2,000,000;
(iii) the Credit Parties may make intercompany loans and advances among one another, and Subsidiaries of the Parent (other than the Credit Parties) may make intercompany loans and advances to the Parent or any other Subsidiary of the Parent (other than any Non-Recourse Subsidiary),
provided
that any such loans or advances to a Credit Party pursuant to this clause shall be unsecured and subordinated to the Obligations of the respective Credit Party pursuant to written subordination provisions in the form of Exhibit M;
(iv) the Parent and its Subsidiaries may sell or transfer assets to the extent permitted by Section 9.02;
(v) the Parent may make Investments in GMSC, Arlington and the Borrower, and GMSC, Arlington and the Borrower may make equity Investments in the Subsidiary Guarantors;
(vi) each of Parent, GMSCII, Arlington and the Borrower may make Investments in its respective Subsidiaries that are not Subsidiary Guarantors (including, for the avoidance of doubt, Unique Tankers) to the extent funded (and only to the extent funded) with the Equity Proceeds Amount; provided that for all Investments made pursuant to this clause (vi), no Event of Default has occurred and is continuing (or would arise after giving effect thereto) at the time any such Investment is made unless such Investment is funded with the Net Cash Proceeds of an Equity Investment made no earlier than six months prior to the date on which such Investment is made;
(vii) Investments existing on the Restatement Effective Date and described on
Schedule XI
, without giving effect to any additions thereto or replacement thereof; and
(viii) the Parent may make loans, advances and Investments in other Subsidiaries of the Parent (other than (i) the Credit Parties and (ii) Non-Recourse Subsidiaries);
(ix) the Parent and its Subsidiaries may make Investments in amounts required to fund charter costs and actual expenses relating to operating Vessels leased or chartered as of the date hereof by General Maritime NSF Corporation, GMR Concord LLC, GMR Contest LLC and GMR Concept LLC,
provided
that such Investments may only be made in good faith and only to the extent necessary to fund such costs and expenses after taking into account the cash and Cash Equivalents held by such Subsidiary; and
(x) the Parent and its Subsidiaries may make equity Investments in a special purpose entity (a “
Vessel SPV
”) which owns a Vessel or Vessels acquired in each case in Permitted New Vessel Acquisitions in accordance with the proviso of Section 9.07;
80
(xi) the Parent and its Subsidiaries may acquire Investments in connection with any transaction permitted by Section 9.02(viii); and
(xii) the Parent and its Subsidiaries may make Investments permitted or required by Sections 9.02(x), 9.19 and 9.21.
9.06
Transactions with Affiliates
. The Parent will not, and will not permit any of its Subsidiaries to, enter into any transaction or series of related transactions, whether or not in the ordinary course of business, with any Affiliate of such Person, other than on terms and conditions no less favorable to such Person as would be obtained by such Person at that time in a comparable arm’s-length transaction with a Person other than an Affiliate, except that:
(i) Dividends may be paid to the extent provided in Section 9.03;
(ii) loans and Investments may be made and other transactions may be entered into between the Parent and its Subsidiaries to the extent permitted by Sections 9.04 and 9.05;
(iii) as long as the Parent has an independent compensation committee, directors’ fees as determined by such independent compensation committee and, at any time the Parent does not have an independent compensation committee, the Parent may pay reasonable directors’ fees;
(iv) the Parent and its Subsidiaries may enter into employment agreements or arrangements with their respective officers and employees in the ordinary course of business;
(v) the Parent and its Subsidiaries may pay management fees to Wholly-Owned Subsidiaries of the Parent in the ordinary course of business;
(vi) the transactions in existence on the Restatement Effective Date which are listed on
Schedule XII
shall be permitted; and
(vii) technical, administrative and commercial management agreements with Navig8 Group in the form disclosed to the Lenders prior to the Sixth Amendment Effective Date, as such agreements may be amended from time to time in a matter that is not adverse to the Parent and its Subsidiaries
9.07
Capital Expenditures
. The Parent will not, and will not permit any of its Subsidiaries to, make any Capital Expenditures at any time prior to the Trigger Date and at any time that the Parent and its Subsidiaries have a Loan to Value Ratio of greater than 0.60 to 1.00, other than (i) maintenance Capital Expenditures incurred in the ordinary course of business or consistent with past practice, (ii) acquisitions of new Vessels and (iii) other Capital Expenditures not in the ordinary course of business, in the case of clauses (ii) and (iii) only to the extent funded (and only to the extent funded) with the Equity Proceeds Amount. At any time after the Trigger Date provided that the Parent and its Subsidiaries have a Loan to Value Ratio of less than or equal to 0.60 to 1.00 at such time, the Parent and its Subsidiaries may make any Capital Expenditures at such time; provided, that, notwithstanding anything to the contrary contained in
81
this Section 9.07, the Parent and its Subsidiaries may acquire new Vessels, provided that (I) no Default or Event of Default has occurred and is continuing (or would arise after giving effect thereto) at the time any such acquisition is made, (II) the Parent and its Subsidiaries have a Loan to Value Ratio equal to or less than 0.60 to 1.00 at the time any such acquisition is made, (III) the Interest Expense Coverage Ratio (calculated on a pro forma basis after giving effect to such acquisition and the incurrence of any Indebtedness to finance such acquisition, for the most recently ended Test Period for which financial statements under Section 8.01(a) or (b) are due) is greater than 2.00:1.00, (IV) the aggregate principal amount of any Indebtedness incurred to finance such acquisition (the “Financed Purchase Price”) does not exceed 55% of the lesser of (x) the fair market value of such Vessel on the basis of an individual charter-free arm’s length transaction between a willing and able buyer and seller not under duress at set forth in the appraisals of at least two Approved Appraisers and (y) the acquisition price of such Vessel and (V) the remaining portion of the purchase price for such acquisition not constituting Financed Purchase Price shall be funded with the Equity Proceeds Amount (any such acquisition, a “Permitted New Vessel Acquisition”).
9.08
Minimum Cash Balance
. The Parent will not permit the Unrestricted Cash and Cash Equivalents held by the Parent and its Subsidiaries (other than amounts on deposit in the Blocked Accounts, if any) to be less than (x) $10,000,000 at any time from the Third Amendment Effective Date to and including December 31, 2014, (y) $15,000,000 at any time from January 1, 2015 to and including December 31, 2015 and (z) $20,000,000 at any time after January 1, 2016..
9.09
Collateral Maintenance
. (a) The Parent will not permit the aggregate Fair Market Value of all Collateral Vessels owned by the Credit Parties which have not been sold, transferred, lost or otherwise disposed of at any time (such value, the “Aggregate Collateral Vessel Value”), as determined by the most recent appraisal delivered by the Borrower to the Administrative Agent or obtained by the Administrative Agent in accordance with Section 8.01(d), at any time to equal less than (I) from the Third Amendment to and including June 30, 2015, 110% of an amount equal to (x) the amount of the Aggregate Credit Agreement Exposure at such time minus (y) the sum of the 508 Blocked Amount and the 273 Blocked Amount at such time, (II) from July 1, 2015 to and including December 31, 2016, 115% of an amount equal to (x) the Aggregate Credit Agreement Exposure at such time minus (y) the sum of the 508 Blocked Amount and the 273 Blocked Amount at such time and (III) thereafter, 120% of an amount equal to (x) the Aggregate Credit Agreement Exposure at such time minus (y) the sum of the 508 Blocked Amount and the 273 Blocked Amount at such time; provided that, so long as any default in respect of this Section 9.09(a) is not caused by any voluntary Collateral Disposition, such default shall not constitute an Event of Default (but shall constitute a Default) so long as within 45 days of the occurrence of such default, the Borrower shall either (i) post additional collateral satisfactory to the Required Lenders, pursuant to security documentation reasonably satisfactory in form and substance to the Collateral Agent, sufficient to cure such default (and shall at all times during such period and prior to satisfactory completion thereof, be diligently carrying out such actions) (it being understood that (a) the Borrower may, in its sole discretion, decide whether the additional collateral posted to cure such default shall constitute Primary Collateral or Secondary Collateral and (b) cash denominated in US$ Dollars shall always be deemed to constitute collateral satisfactory to the Required Lenders and shall be valued at par) or (ii) make such repayment of Loans under this Agreement and loans under the Other Credit
82
Agreement on a pro rata basis based on the outstanding principal amount of Loans under this Agreement at such time and the outstanding principal amount of loans under the Other Credit Agreement at such time, in each case in an amount sufficient to cure such default (it being understood that any action taken in respect of this proviso shall only be effective to cure such default pursuant to this Section 9.09(a) to the extent that no Default or Event of Default exists hereunder immediately after giving effect thereto).
(b) In order to comply with clauses (I), (II) and (III) of Section 9.09(a) above, the Parent may, at any time, deposit into the 273 Blocked Account and the 508 Blocked Account on a pro rata basis based on the outstanding principal amount of Loans under this Agreement at such time and the outstanding principal amount of loans under the Other Credit Agreement at such time (the amount of Unrestricted Cash and Cash Equivalents so deposited in the 273 Blocked Account being the “273 Blocked Amount”), an amount of Unrestricted Cash and Cash Equivalents held by the Parent and its Subsidiaries at such time such that, after giving effect to such deposit, the Parent would be in compliance with the provisions of Section 9.09(a) at such time; provided that, at such time, the Parent shall have furnished to the Administrative Agent a certificate of the senior financial officer of the Parent setting forth the calculations required to establish the amount of the Unrestricted Cash and Cash Equivalents that are required by the Parent in order to establish compliance with the provisions of this Section 9.09 at the time of such deposit. Amounts on deposit in the 273 Blocked Account may be released from the 273 Blocked Account at such time as the Parent shall have furnished to the Administrative Agent a certificate of the senior financial officer of the Parent setting forth the calculations required to establish compliance with the provisions of this Section 9.09 without the deduction of any such Unrestricted Cash and Cash Equivalents so long as no Default or Event of Default exists at such time or would result under Section 9.09 or otherwise from the withdrawal of from the 273 Blocked Account. The Collateral Agent may apply the amounts on deposit in the 273 Blocked Account in accordance with the Credit Documents at any time if an Event of Default exists at such time.
9.10
Interest Expense Coverage Ratio
. The Parent will not permit the Interest Expense Coverage Ratio for any Test Period ending on the last day of a fiscal quarter of the Parent set forth below to be less than the ratio set forth opposite such fiscal quarter below:
|
Fiscal Quarter Ending
|
|
Ratio
|
|
March 31, 2016
|
|
1.00:1.00
|
|
June 30, 2016
|
|
1.25:1.00
|
|
September 30, 2016
|
|
1.50:1.00
|
|
December 31, 2016
|
|
1.75:1.00
|
|
Maturity Date
|
|
2.00:1.00
|
9.11
Limitation on Modifications of Certificate of Incorporation, By-Laws and Certain Other Agreements; etc.
The Parent will not, and will not permit any Subsidiary Guarantor to, amend, modify or change its Certificate of Incorporation, Certificate of Formation (including, without limitation, by the filing or modification of any certificate of designation), By-Laws, limited liability company agreement, partnership agreement (or equivalent organizational
83
documents) or any agreement entered into by it with respect to its Equity Interests (including any Shareholders’ Agreement), or enter into any new agreement with respect to its capital stock or membership interests (or equivalent interests), other than any amendments, modifications or changes or any such new agreements which are not in any way materially adverse to the interests of the Lenders. Notwithstanding the foregoing, upon not less than 30 days prior written notice to the Administrative Agent and so long as no Default or Event of Default exists and is continuing, any Subsidiary Guarantor may change its jurisdiction of organization to another jurisdiction reasonably satisfactory to the Administrative Agent,
provided
that any Subsidiary Guarantor that has entered into the Security Documents or the Secondary Security Documents hereunder shall promptly take all actions reasonably deemed necessary by the Collateral Agent to preserve, protect and maintain, without interruption, the security interest and Lien of the Collateral Agent in any Collateral owned by such Subsidiary Guarantor to the satisfaction of the Collateral Agent, and such Subsidiary Guarantor shall have provided to the Administrative Agent and the Lenders such opinions of counsel as may be reasonably requested by the Administrative Agent to assure itself that the conditions of this proviso have been satisfied.
9.12
Limitation on Certain Restrictions on Subsidiaries
. The Parent will not, and will not permit any of its Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction on the ability of any such Subsidiary to (a) pay dividends or make any other distributions on its capital stock or any other interest or participation in its profits owned by the Parent or any Subsidiary of the Parent, or pay any Indebtedness owed to the Parent or a Subsidiary of the Parent, (b) make loans or advances to the Parent or any of the Parent’s Subsidiaries or (c) transfer any of its properties or assets to the Parent or any of the Parent’s Subsidiaries, except for such encumbrances or restrictions existing under or by reason of (i) applicable law, (ii) this Agreement and the other Credit Documents, (iii) the Other Credit Agreement as in effect on the Restatement Effective Date, or any refinancing thereof or amendments thereto, and the other Other Credit Documents, (iv) customary provisions restricting subletting or assignment of any lease governing a leasehold interest of the Parent or a Subsidiary of the Parent, (v) customary provisions restricting assignment of any agreement entered into by the Parent or a Subsidiary of the Parent in the ordinary course of business, (vi) any holder of a Permitted Lien may restrict the transfer of the asset or assets subject thereto, (vii) restrictions which are not more restrictive than those contained in this Agreement contained in any documents governing any Indebtedness incurred after the Original Effective Date in accordance with the provisions of this Agreement, (viii) Non-Recourse Indebtedness; and (ix) with respect to the 2014 Newbuilding Holdco and the 2014 Newbuilding Vessel Subsidiaries, the BlueMountain Parent Indebtedness and the Permitted 2014 Newbuilding Indebtedness.
9.13
Limitation on Issuance of Equity Interests
. (a) The Parent will not issue, and will not permit any Subsidiary to issue, any preferred stock (or equivalent equity interests) other than Qualified Preferred Stock.
(b) The Parent will not permit GMSC, Arlington, the Borrower or any Subsidiary Guarantor described in clause (x) or (y) of the definition thereof to issue any capital stock (including by way of sales of treasury stock) or any options or warrants to purchase, or securities convertible into, capital stock, except (i) for transfers and replacements of then outstanding shares of capital stock, (ii) for stock splits, stock dividends and additional issuances which do not decrease the percentage ownership of the Parent or any of its Subsidiaries in any
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class of the capital stock of such Subsidiary, (iii) to qualify directors to the extent required by applicable law and (iv) to such Person’s shareholders or in connection with any Investment permitted under this Agreement. All capital stock of the Borrower, Arlington, GMSC or any Subsidiary Guarantor described in clause (x) or (y) of the definition thereof issued in accordance with this Section 9.13(b) shall be delivered to the Collateral Agent pursuant to the Pledge Agreement, the Parent Pledge Agreement or the Secondary Pledge Agreement, as applicable, subject to the Intercreditor Agreements.
9.14
Business
. The Parent, its Subsidiaries and its Non-Recourse Subsidiaries will not engage in any business other than the businesses in which any of them is engaged in as of the Restatement Effective Date (or, in the case of any Subsidiary or any Non-Recourse Subsidiary that is formed or incorporated after the Restatement Effective Date, any business in which the Parent, any other Subsidiary or any other Non-Recourse Subsidiary is engaged as of the Restatement Effective Date) and activities directly related thereto, and similar or related maritime businesses. It being understood that no Subsidiary Guarantor which owns a Collateral Vessel will engage directly or indirectly in any business other than the business of owning and operating Collateral Vessels and businesses ancillary or complementary thereto, except that, to the extent that any Subsidiary that owns a Secondary Collateral Vessel is permitted under the Other Credit Agreement to engage in any business other than the business of owning and operating Collateral Vessels and businesses ancillary or complementary thereto, such change in the business of such Subsidiary Guarantor shall be permitted to do so hereunder automatically.
9.15
Jurisdiction of Employment; Chartering In Contracts
. (a) The Parent will not, and will not permit the Subsidiary Guarantors or any third party charterer of a Collateral Vessel to, employ or cause to be employed any Collateral Vessel in any country or jurisdiction in which (i) the Borrower, the Subsidiary Guarantors or such third party charterer of a Collateral Vessel is prohibited by law from doing business, (ii) the Lien created by the applicable Collateral Vessel Mortgage or Secondary Collateral Vessel Mortgage, as applicable, will be rendered unenforceable or (iii) the Collateral Agent’s foreclosure or enforcement rights will be materially impaired or hindered.
(b)
Prior to the Trigger Date and at any time that the Parent and its Subsidiaries have a Loan to Value Ratio of greater than 0.60 to 1.00, the Parent will not, and will not permit any Subsidiary to, enter into any contract to charter in or cause to be chartered in any Vessel for a period of 12 months or greater (including any renewal or extension option) as of the execution date of such contract unless the Administrative Agent consents in its sole discretion to such contract.
9.16
Bank Accounts
.Bank Accounts. The Parent will not and will not permit any Subsidiary to maintain any deposit, savings, investment or other similar accounts other than (i) the Concentration Accounts, (ii) the 508 Blocked Account (if applicable), (iii) an account maintained at Deutsche Bank as of the Restatement Effective Date in the name of General Maritime Subsidiary Corporation, (iv) an account maintained at DNB Bank ASA as of the Restatement Effective Date in the name of General Maritime Subsidiary Corporation, (v) zero balance accounts in the name of the Parent or any Subsidiary thereof, (vi) any payroll account or accounts opened and maintained by the Parent or a Subsidiary thereof at any time
provided
that the aggregate amount of cash deposited by the Parent and its Subsidiaries in such payroll
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account(s) does not exceed, together with the amount deposited in the account referenced in clauses (iii) through and including (v), $5,000,000 at any time, (vii) any account or accounts opened and maintained by 2014 Newbuilding Holdco and/or the 2014 Newbuilding Subsidiaries, (viii) any account or accounts opened and maintained by Merger Sub and its Subsidiaries and (ix) an account maintained at the Administrative Agent for the Unique Tankers Pool. Each of the accounts described above (other than those referred to in clauses (iii) through (ix)) shall be subject to (1) a control agreement providing that such account shall be under the control of the Collateral Agent, as agent for the Secured Creditors, and (2) a first priority security interest in favor of the Collateral Agent, for the benefit of the Secured Creditors, to secure the Obligations.
9.17
Indebtedness of Non-Recourse Subsidiaries
.. Non-Recourse Subsidiaries will not contract, create, incur, assume or suffer to exist any Indebtedness other than Indebtedness incurred to finance the acquisition of new Vessels or to finance any of the activities such Non-Recourse Subsidiaries are permitted to engage in pursuant to Section 9.14,
provided
that (I) if any such Vessel is being so acquired prior the Trigger Date, then (i) the aggregate principal amount of such Indebtedness shall not exceed 60% of the lesser of (x) the fair market value of such Vessel on the basis of an individual charter-free arm’s-length transaction between a willing and able buyer and seller not under duress as set forth in at least one appraisal and (y) the acquisition price of such Vessel, (ii) no amortization of such Indebtedness shall be permitted prior to June 30, 2014 and (iii) the Weighted Average Life to Maturity of such Indebtedness shall be at least one year longer than the Weighted Average Life to Maturity of the Loans at the time such Indebtedness is incurred, and (II) if any such Vessel is being so acquired on or after the Trigger Date, then the aggregate principal amount of such Indebtedness shall not exceed 70% of the lesser of (x) the fair market value of such Vessel on the basis of an individual charter-free arm’s-length transaction between a willing and able buyer and seller not under duress as set forth in the appraisals of at least two Approved Appraisers and (y) the acquisition price of such Vessel.
9.18
Prepayments, Etc. of Wells Fargo Indebtedness
. The Parent will not, and will not permit any Subsidiary to, repay, prepay, redeem, purchase, defease or otherwise satisfy in any manner the Wells Fargo Indebtedness, except (i) the refinancing thereof with any Indebtedness permitted under Section 9.04(vi) and (ii) to the extent such repayment, prepayment, redemption, purchase, defease or satisfaction is funded (and only to the extent funded) with the Equity Proceeds Amount.
9.19
Special Provisions Relating to the 2014 Newbuilding Acquisition and related Transactions.
Notwithstanding anything to the contrary set forth in this Agreement and any other Credit Documents; the Parent will not, and will not permit any Subsidiary to:
(i)
make any payments (x) under the 2014 Newbuilding Contracts and/or (y) related to any financing costs and expenses associated with the BlueMountain Parent Indebtedness and/or the Permitted 2014 Newbuilding Indebtedness unless, in each case, funded solely from the Equity Proceeds Amount, the March 2014 Equity Issuance, the BlueMountain Parent Indebtedness and the Permitted 2014 Newbuilding Indebtedness;
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(ii)
amend or modify any provision of the 2014 Newbuilding Contracts (x) to increase the amount of any payments due thereunder by more than $10,000,000 in the aggregate per each 2014 Newbuilding Vessel or (y) change the type of any 2014 Newbuilding Vessel so that it does not constitute or cannot be characterized as a VLCC;
(iii)
amend, modify, prepay or redeem the BlueMountain Parent Indebtedness in a manner such that such BlueMountain Parent Indebtedness will not comply with the terms of the definition thereof, or pay any interest in respect thereof in cash other than, in each case, from the Equity Proceeds Amount and the amount of any cash dividends or distributions received by the Parent from 2014 Newbuilding Holdco;
(iv)
amend, modify, prepay or redeem the Permitted 2014 Newbuilding Indebtedness in a manner such that such Permitted 2014 Newbuilding Indebtedness will not comply with the terms of the definition thereof;
(v)
make any Investment in 2014 Newbuilding Holdco or any of its Subsidiaries other than:
(1) any such Investment funded from (A) the Equity Proceeds Amount including any such Investment required under Section 9.19(vi), (B) the net cash proceeds of the BlueMountain Parent Indebtedness and/or (C) net cash proceeds of the Permitted 2014 Newbuilding Indebtedness, and/or
(2) additional Investments in an amount not to exceed at any time outstanding the aggregate of (A) $5,000,000 plus (B) the amount of any cash dividends and cash distributions previously received by the Parent from 2014 Newbuilding Holdco or any of its Subsidiaries and not subsequently invested by the Parent in 2014 Newbuilding Holdco or any of its Subsidiaries or used to fund cash interest payments in respect of the BlueMountain Parent Indebtedness pursuant to clause (iii) above); provided that, in the case of this clause (2), at the time of such Investment and, after giving effect thereto:
(x) no Default or Event of Default exists and is continuing and,
(y) the aggregate amount of cash and Cash Equivalents held by 2014 Newbuilding Holdco and its Subsidiaries shall not exceed $5,000,000 plus the amount of Investments which the Parent is permitted to make under clause (2)(B) above (it being understood that 2014 Newbuilding Holdco and its Subsidiaries are permitted to hold and shall not be required to dividend or distribute cash and Cash Equivalents in excess of $5,000,000);
(vi)
take delivery of any 2014 Newbuilding Vessel pursuant to a 2014 Newbuilding Contract unless prior thereto, the Parent shall have received net cash proceeds of at
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least $5,000,000 for such 2014 Newbuilding Vessel from the issuance of its Equity Interests after March 21, 2014, which net cash proceeds may be invested by the Parent and its Subsidiaries in 2014 Newbuilding Holdco or any of its Subsidiaries for use as working capital; and
(vii)
in the event that the documentation governing the BlueMountain Parent Indebtedness or the Permitted Newbuilding Indebtedness contains any financial maintenance covenant (other than a collateral maintenance test) applicable to the Parent that is more favorable to the lenders or providers thereunder than to the Lenders, this Agreement shall automatically be amended to include such more favorable financial maintenance covenant (including any definitions used therein) without any further action or consent of the Borrower and the Administrative Agent shall be permitted to amend this Agreement to reflect such financial maintenance covenant (it being understood and agreed that the Borrower shall be deemed to have consented to such amendment and authorized the Administrative Agent to effect such amendment on its behalf).
9.20
Chartering Arrangements.
Notwithstanding anything to the contrary set forth in this Agreement and any other Credit Documents, with respect to any charter of a Collateral Vessel through the Unique Tankers Pool, such charter may only be entered into between the Subsidiary Guarantor which owns such Collateral Vessels and Unique Tankers and in no event shall the Parent or any Subsidiary thereof (other than the Subsidiary Guarantor owning such Collateral Vessel) have any obligations thereunder.
9.21
Special Provisions Relating to Merger Sub and its Subsidiaries
.
Notwithstanding anything to the contrary set forth in this Agreement and any other Credit Documents, the Parent will not, and will not permit any Subsidiary (other than Merger Sub and its Subsidiaries) to:
(i)
make any cash payments related to the Merger (including, without limitation, cash payments to shareholders, payments under consulting agreements with Gary Brocklesby and Nicolas Busch, and advisory fees) unless funded solely from cash and Cash Equivalents of Navig8 and its Subsidiaries;
provided
that an amount of up to $5,000,000 for cash payments to shareholders may be funded from cash and Cash Equivalents of 2014 Newbuilding Holdco and its Subsidiaries;
provided
that any amount so funded is reimbursed from the cash and Cash Equivalents of Navig8 and its Subsidiaries within 30 days of consummation of the Merger;
(ii)
make any Investment in or other payment to Merger Sub or any of its Subsidiaries unless funded solely from the Equity Proceeds Amount (but only to the extent resulting from the Net Cash Proceeds of Equity Interests received after the Sixth Amendment Effective Date);
(iii)
incur, assume, secure, guarantee or be or become liable for any Indebtedness or any obligations under any newbuild or vessel acquisition contract of Navig8 or any of its Subsidiaries;
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(iv)
amend, modify or waive any provision of the Merger Agreement or the Navig8 Equity Purchase Agreement in a manner adverse to the interests of the Lenders; or
(v)
exercise its election to make any cash payments pursuant to Article IX (
Indemnification
) of the Merger Agreement except to the extent commercially reasonable in connection with complying with U.S. securities laws.
SECTION 10.
Events of Default
.
Upon the occurrence of any of the following specified events (each an “
Event of Default
”):
10.01
Payments
. The Borrower shall (i) default in the payment when due of any principal of any Loan or any Note or (ii) default, and such default shall continue unremedied for three or more Business Days, in the payment when due of any interest on any Loan or Note, or any other amounts owing hereunder or thereunder; or
10.02
Representations, etc.
Any representation, warranty or statement made by any Credit Party herein or in any other Credit Document or in any certificate delivered pursuant hereto or thereto shall prove to be untrue in any material respect on the date as of which made or deemed made; or
10.03
Covenants
. Any Credit Party shall (i) default in the due performance or observance by it of any term, covenant or agreement contained in Section 8.01(f)(i), 8.08, 8.11(a), 8.13, 8.16 or Section 9 or (ii) default in the due performance or observance by it of any other term, covenant or agreement contained in this Agreement and, in the case of this clause (ii), such default shall continue unremedied for a period of 30 days after written notice to the Borrower by the Administrative Agent or any of the Lenders; or
10.04
Default Under Other Agreements
. (i) The Parent or any of its Subsidiaries shall default in any payment of any Indebtedness (other than the Obligations) beyond the period of grace, if any, provided in the instrument or agreement under which such Indebtedness was created or (ii) the Parent or any of its Subsidiaries shall default in the observance or performance of any agreement or condition relating to any Indebtedness (other than the Obligations) or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or holders of such Indebtedness (or a trustee or agent on behalf of such holder or holders) to cause (determined without regard to whether any notice is required), any such Indebtedness to become due prior to its stated maturity or (iii) any Indebtedness (other than the Obligations) of the Parent or any of its Subsidiaries shall be declared to be due and payable, or required to be prepaid, redeemed, defeased or repurchased other than by a regularly scheduled required prepayment, prior to the stated maturity thereof,
provided
that it shall not be a Default or Event of Default under this Section 10.04 unless the aggregate principal amount of all Indebtedness as described in preceding clauses (i) through (iii), inclusive, exceeds $10,000,000; or
10.05
Bankruptcy, etc.
The Parent, any of its Subsidiaries or any of its Non-Recourse Subsidiaries shall commence a voluntary case concerning itself under Title 11 of the
89
United States Code entitled “Bankruptcy,” as now or hereafter in effect, or any successor thereto (the “
Bankruptcy Code
”); or an involuntary case is commenced against the Parent, any of its Subsidiaries or any of its Non-Recourse Subsidiaries and the petition is not controverted within 20 days after service of summons, or is not dismissed within 60 days, after commencement of the case; or a custodian (as defined in the Bankruptcy Code) is appointed for, or takes charge of, all or substantially all of the property of the Parent, any of its Subsidiaries or any of its Non-Recourse Subsidiaries or the Parent, any of its Subsidiaries or any of its Non-Recourse Subsidiaries commences any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction whether now or hereafter in effect relating to the Parent, any of its Subsidiaries or any of its Non-Recourse Subsidiaries or there is commenced against the Parent, any of its Subsidiaries or any of its Non-Recourse Subsidiaries any such proceeding which remains undismissed for a period of 60 days, or the Parent, any of its Subsidiaries or any of its Non-Recourse Subsidiaries is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; or the Parent, any of its Subsidiaries or any of its Non-Recourse Subsidiaries suffers any appointment of any custodian or the like for it or any substantial part of its property to continue undischarged or unstayed for a period of 60 days; or the Parent, any of its Subsidiaries or any of its Non-Recourse Subsidiaries makes a general assignment for the benefit of creditors; or any corporate action is taken by the Parent, any of its Subsidiaries or any of its Non-Recourse Subsidiaries for the purpose of effecting any of the foregoing, provided that, in the case of any Non-Recourse Subsidiary, it shall not be a Default or Event of Default under this Section 10.05 unless the aggregate principal amount of all Indebtedness incurred by such Non-Recourse Subsidiary pursuant to Section 9.17 exceeds $15,000,000; or
10.06
ERISA
. (a) Any Plan shall fail to satisfy the minimum funding standard required for any plan year or part thereof under Section 412 of the Code or Section 302 of ERISA or a waiver of such standard or extension of any amortization period is sought or granted under Section 412 or 430 of the Code or Section 302 or 303 of ERISA, a Reportable Event shall have occurred, a contributing sponsor (as defined in Section 4001(a)(13) of ERISA) of a Plan subject to Title IV of ERISA shall be subject to the advance reporting requirement of PBGC Regulation Section 4043.61 (without regard to subparagraph (b)(1) thereof) and an event described in subsection .62, .63, .64, .65, .66, .67 or .68 of PBGC Regulation Section 4043 shall be reasonably expected to occur with respect to such Plan within the following 30 days, any Plan which is subject to Title IV of ERISA shall have had or is reasonably likely to have a trustee appointed to administer such Plan, any Plan which is subject to Title IV of ERISA is, shall have been or is reasonably likely to be terminated or to be the subject of termination proceedings under ERISA, any Plan shall have an Unfunded Current Liability, its actuary has certified that a determination has been made that a Plan (other than a Multiemployer Plan) is an at-risk plan within the meaning of Section 430 of the Code or Section 303 of ERISA, a Plan which is a Multiemployer Plan is in endangered or critical status under Section 305 of ERISA, a contribution required to be made with respect to a Plan or a Foreign Pension Plan is not timely made, the Parent or any of its Subsidiaries or any ERISA Affiliate has incurred or events have happened, or reasonably expected to happen, that will cause it to incur any liability to or on account of a Plan under Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section 436(f), 4971 or 4975 of the Code or on account of a group health plan (as defined in Section 607(1) of ERISA or Section 4980B(g)(2) of the Code) under Section
90
4980B of the Code, or the Parent, or any of its Subsidiaries, has incurred or is reasonably likely to incur liabilities pursuant to one or more employee welfare benefit plans (as defined in Section 3(1) of ERISA) that provide benefits to retired employees or other former employees (other than as required by Section 601 of ERISA) or Plans or Foreign Pension Plans; (b) there shall result from any such event or events the imposition of a lien, the granting of a security interest, or a liability or a material risk of incurring a liability; and (c) such lien, security interest or liability, individually, and/or in the aggregate, in the reasonable opinion of the Required Lenders, has had, or could reasonably be expected to have, a Material Adverse Effect; or
10.07
Security Documents
. At any time after the execution and delivery thereof, any of the Security Documents shall cease to be in full force and effect, or shall cease in any material respect to give the Collateral Agent for the benefit of the Secured Creditors the Liens, rights, powers and privileges purported to be created thereby (including, without limitation, a perfected security interest in, and Lien on, all of the Collateral), in favor of the Collateral Agent, superior to and prior to the rights of all third Persons (except in connection with Permitted Liens), and subject to no other Liens (except Permitted Liens), or any Credit Party shall default in the due performance or observance of any term, covenant or agreement on its part to be performed or observed pursuant to any of the Security Documents and such default shall continue beyond any grace period (if any) specifically applicable thereto pursuant to the terms of such Security Document, or any “event of default” (as defined in any Collateral Vessel Mortgage or Secondary Collateral Vessel Mortgage) shall occur in respect of any Collateral Vessel Mortgage or Secondary Collateral Vessel Mortgage; or
10.08
Guaranties
. After the execution and delivery thereof, any Guaranty, or any provision thereof, shall cease to be in full force or effect as to any Guarantor (unless such Guarantor is no longer a Subsidiary of the Parent by virtue of a liquidation, sale, merger or consolidation permitted by Section 9.02) or any Guarantor (or Person acting by or on behalf of such Guarantor) shall deny or disaffirm such Guarantor’s obligations under the Guaranty to which it is a party or any Guarantor shall default in the due performance or observance of any term, covenant or agreement on its part to be performed or observed pursuant to the Guaranty to which it is a party beyond any grace period (if any) provided therefor; or
10.09
Judgments
. One or more judgments or decrees shall be entered against the Parent or any of its Subsidiaries involving in the aggregate for the Parent and its Subsidiaries a liability (not paid or fully covered by a reputable and solvent insurance company) and such judgments and decrees either shall be final and non-appealable or shall not be vacated, discharged or stayed or bonded pending appeal for any period of 60 consecutive days, and the aggregate amount of all such judgments, to the extent not covered by insurance, exceeds $10,000,000; or
10.10
Change of Control
. At any time after the Restatement Effective Date, a Change of Control shall occur; or
10.11
Default Under Non-Recourse Subsidiary Agreements
. (i) Any Non-Recourse Subsidiary shall default in any payment at maturity of any Indebtedness beyond the period of grace, if any, provided in the instrument or agreement under which such Indebtedness was created or (ii) any Non-Recourse Subsidiary shall default in the observance or performance
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of any agreement or condition relating to any Indebtedness or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause any such Indebtedness to become due prior to its stated maturity or (iii) any Indebtedness of any Non-Recourse Subsidiary shall be declared to be due and payable, or required to be prepaid, redeemed, defeased or repurchased other than by a regularly scheduled required prepayment, prior to the stated maturity thereof,
provided
that it shall not be a Default or Event of Default under this Section 10.11 unless the aggregate principal amount of all Indebtedness as described in preceding clauses (i) through (iii), inclusive, exceeds $15,000,000;
then, and in any such event, and at any time thereafter, if any Event of Default shall then be continuing, the Administrative Agent, upon the written request of the Required Lenders, shall by written notice to the Borrower, take any or all of the following actions, without prejudice to the rights of the Administrative Agent, any Lender or the holder of any Note to enforce its claims against any Credit Party (
provided
that, if an Event of Default specified in Section 10.05 shall occur, the result which would occur upon the giving of written notice by the Administrative Agent to the Borrower as specified in clauses (i) and (ii) below shall occur automatically without the giving of any such notice): (i) declare the principal of and any accrued interest in respect of all Loans and the Notes and all Obligations owing hereunder and thereunder to be, whereupon the same shall become, forthwith due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by each Credit Party; and (ii) enforce, as Collateral Agent, all of the Liens and security interests created pursuant to the Security Documents.
SECTION 11.
Agency and Security Trustee Provisions
.
11.01
Appointment
. (a) The Lenders hereby designate Nordea as Administrative Agent (for purposes of this Section 11, the term “
Administrative Agent
” shall include Nordea (and/or any of its affiliates) in its capacity as Collateral Agent pursuant to the Security Documents and in its capacity as security trustee pursuant to the Collateral Vessel Mortgages or Secondary Collateral Vessel Mortgages) to act as specified herein and in the other Credit Documents. Each Lender hereby irrevocably authorizes, and each holder of any Note by the acceptance of such Note shall be deemed irrevocably to authorize, the Agents to take such action on its behalf under the provisions of this Agreement, the other Credit Documents and any other instruments and agreements referred to herein or therein and to exercise such powers and to perform such duties hereunder and thereunder as are specifically delegated to or required of the Agents by the terms hereof and thereof and such other powers as are reasonably incidental thereto. Furthermore, each Lender hereby irrevocably authorizes the Administrative Agent and the Collateral Agent to enter into the Intercreditor Agreements on their behalf, and agrees to be bound by the provisions set forth therein. The Agents may perform any of its duties hereunder by or through its respective officers, directors, agents, employees or affiliates and, may assign from time to time any or all of its rights, duties and obligations hereunder and under the Security Documents to any of its banking affiliates.
(b)
The Lenders hereby irrevocably appoint Nordea as security trustee solely or the purpose of holding legal title to the Collateral Vessel Mortgages and the Secondary Collateral Vessel Mortgages on each of the flag Vessels of an Acceptable Flag Jurisdiction on
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behalf of the applicable Lenders, from time to time, with regard to the (i) security, powers, rights, titles, benefits and interests (both present and future) constituted by and conferred on the Lenders or any of them or for the benefit thereof under or pursuant to the Collateral Vessel Mortgages and the Secondary Collateral Vessel Mortgages (including, without limitation, the benefit of all covenants, undertakings, representations, warranties and obligations given, made or undertaken by any Lender in the Collateral Vessel Mortgages and the Secondary Collateral Vessel Mortgages), (ii) all money, property and other assets paid or transferred to or vested in any Lender or any agent of any Lender or received or recovered by any Lender or any agent of any Lender pursuant to, or in connection with the Collateral Vessel Mortgages and the Secondary Collateral Vessel Mortgages, whether from the Borrower or any Subsidiary Guarantor or any other person and (iii) all money, investments, property and other assets at any time representing or deriving from any of the foregoing, including all interest, income and other sums at any time received or receivable by any Lender or any agent of any Lender in respect of the same (or any part thereof). Nordea hereby accepts such appointment as security trustee.
11.02
Nature of Duties
. The Agents shall have no duties or responsibilities except those expressly set forth in this Agreement and the Security Documents. None of the Agents nor any of their respective officers, directors, agents, employees or affiliates shall be liable for any action taken or omitted by it or them hereunder or under any other Credit Document or in connection herewith or therewith, unless caused by such Person’s gross negligence or willful misconduct (any such liability limited to the applicable Agent to whom such Person relates). The duties of each of the Agents shall be mechanical and administrative in nature; none of the Agents shall have by reason of this Agreement or any other Credit Document any fiduciary relationship in respect of any Lender or the holder of any Note; and nothing in this Agreement or any other Credit Document, expressed or implied, is intended to or shall be so construed as to impose upon any Agents any obligations in respect of this Agreement or any other Credit Document except as expressly set forth herein or therein.
11.03
Lack of Reliance on the Agents
. Independently and without reliance upon the Agents, each Lender and the holder of each Note, to the extent it deems appropriate, has made and shall continue to make (i) its own independent investigation of the financial condition and affairs of the Parent and its Subsidiaries in connection with the making and the continuance of the Loans and the taking or not taking of any action in connection herewith and (ii) its own appraisal of the creditworthiness of the Parent and its Subsidiaries and, except as expressly provided in this Agreement, none of the Agents shall have any duty or responsibility, either initially or on a continuing basis, to provide any Lender or the holder of any Note with any credit or other information with respect thereto, whether coming into its possession before the making of the Loans or at any time or times thereafter. None of the Agents shall be responsible to any Lender or the holder of any Note for any recitals, statements, information, representations or warranties herein or in any document, certificate or other writing delivered in connection herewith or for the execution, effectiveness, genuineness, validity, enforceability, perfection, collectibility, priority or sufficiency of this Agreement or any other Credit Document or the financial condition of the Parent and its Subsidiaries or be required to make any inquiry concerning either the performance or observance of any of the terms, provisions or conditions of this Agreement or any other Credit Document, or the financial condition of the Parent and its Subsidiaries or the existence or possible existence of any Default or Event of Default.
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11.04
Certain Rights of the Agents
. If any of the Agents shall request instructions from the Required Lenders with respect to any act or action (including failure to act) in connection with this Agreement or any other Credit Document, the Agents shall be entitled to refrain from such act or taking such action unless and until the Agents shall have received instructions from the Required Lenders; and the Agents shall not incur liability to any Person by reason of so refraining. Without limiting the foregoing, no Lender or the holder of any Note shall have any right of action whatsoever against the Agents as a result of any of the Agents acting or refraining from acting hereunder or under any other Credit Document in accordance with the instructions of the Required Lenders.
11.05
Reliance
. Each of the Agents shall be entitled to rely, and shall be fully protected in relying, upon any note, writing, resolution, notice, statement, certificate, telex, teletype or telecopier message, cablegram, radiogram, order or other document or telephone message signed, sent or made by any Person that the applicable Agent believed to be the proper Person, and, with respect to all legal matters pertaining to this Agreement and any other Credit Document and its duties hereunder and thereunder, upon advice of counsel selected by the Administrative Agent.
11.06
Indemnification
. To the extent any of the Agents is not reimbursed and indemnified by the Borrower, the Lenders will reimburse and indemnify the applicable Agents, in proportion to their respective “percentages” as used in determining the Required Lenders (without regard to the existence of any Defaulting Lenders), for and against any and all liabilities, obligations, losses, damages, penalties, claims, actions, judgments, costs, expenses or disbursements of whatsoever kind or nature which may be imposed on, asserted against or incurred by such Agents in performing their respective duties hereunder or under any other Credit Document, in any way relating to or arising out of this Agreement or any other Credit Document;
provided
that no Lender shall be liable in respect to an Agent for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from such Agent’s gross negligence or willful misconduct.
11.07
The Administrative Agent in its Individual Capacity
. With respect to its obligation to make Loans under this Agreement, each of the Agents shall have the rights and powers specified herein for a “Lender” and may exercise the same rights and powers as though it were not performing the duties specified herein; and the term “Lenders,” “Secured Creditors”, “Required Lenders”, “holders of Notes” or any similar terms shall, unless the context clearly otherwise indicates, include each of the Agents in their respective individual capacity. Each of the Agents may accept deposits from, lend money to, and generally engage in any kind of banking, trust or other business with any Credit Party or any Affiliate of any Credit Party as if it were not performing the duties specified herein, and may accept fees and other consideration from the Borrower or any other Credit Party for services in connection with this Agreement and otherwise without having to account for the same to the Lenders.
11.08
Holders
. The Administrative Agent may deem and treat the payee of any Note as the owner thereof for all purposes hereof unless and until a written notice of the assignment, transfer or endorsement thereof, as the case may be, shall have been filed with the Administrative Agent. Any request, authority or consent of any Person who, at the time of making such request or giving such authority or consent, is the holder of any Note shall be
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conclusive and binding on any subsequent holder, transferee, assignee or endorsee, as the case may be, of such Note or of any Note or Notes issued in exchange therefor.
11.09
Resignation by the Administrative Agent
. (a) The Administrative Agent may resign from the performance of all its functions and duties hereunder and/or under the other Credit Documents at any time by giving 15 Business Days’ prior written notice to the Borrower and the Lenders. Such resignation shall take effect upon the appointment of a successor Administrative Agent pursuant to clauses (b) and (c) below or as otherwise provided below.
(b)
Upon any such notice of resignation by the Administrative Agent, the Required Lenders shall appoint a successor Administrative Agent hereunder or thereunder who shall be a commercial bank or trust company that is, unless an Event of Default has occurred and is continuing at such time, reasonably acceptable to the Borrower.
(c)
If a successor Administrative Agent shall not have been so appointed within such 15 Business Day period, the Administrative Agent, with the consent of the Borrower (which shall not be unreasonably withheld or delayed and shall not be required if an Event of Default has occurred and is continuing at such time), shall then appoint a commercial bank or trust company with capital and surplus of not less than $500,000,000 as successor Administrative Agent (which successor Administrative Agent shall be a Lender hereunder if any such Lender agrees to serve as Administrative Agent at such time) who shall serve as Administrative Agent hereunder until such time, if any, as the Lenders appoint a successor Administrative Agent as provided above.
(d)
If no successor Administrative Agent has been appointed pursuant to clause (b) or (c) above by the 25th Business Day after the date such notice of resignation was given by the Administrative Agent, the Administrative Agent’s resignation shall become effective and the Required Lenders shall thereafter perform all the duties of the Administrative Agent hereunder and/or under any other Credit Document until such time, if any, as the Required Lenders appoint a successor Administrative Agent as provided above.
11.10
The Joint Lead Arrangers
. Notwithstanding any other provision of this Agreement or any provision of any other Credit Document, each of the Joint Lead Arrangers are named as such for recognition purposes only, and in their respective capacities as such shall have no powers, duties, responsibilities or liabilities with respect to this Agreement or the other Credit Documents or the transactions contemplated hereby and thereby; it being understood and agreed that the Joint Lead Arrangers shall be entitled to all indemnification and reimbursement rights in favor of any of the Agents as provided for under Sections 11.06 and 12.01. Without limitation of the foregoing, none of the Joint Lead Arrangers shall, solely by reason of this Agreement or any other Credit Documents, have any fiduciary relationship in respect of any Lender or any other Person.
11.11
Collateral Matters
. (a) Each Lender authorizes and directs the Collateral Agent to enter into the Security Documents for the benefit of the Lenders and the other Secured Creditors. Each Lender hereby agrees, and each holder of any Note by the acceptance thereof will be deemed to agree, that, except as otherwise set forth herein, any action taken by the Required Lenders in accordance with the provisions of this Agreement or the Security
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Documents, and the exercise by the Required Lenders of the powers set forth herein or therein, together with such other powers as are reasonably incidental thereto, shall be authorized and binding upon all of the Lenders. The Collateral Agent is hereby authorized on behalf of all of the Lenders, without the necessity of any notice to or further consent from any Lender, from time to time prior to an Event of Default, to take any action with respect to any Collateral or Security Documents which may be necessary to perfect and maintain perfected the security interest in and liens upon the Collateral granted pursuant to the Security Documents.
(b)
The Lenders hereby authorize the Collateral Agent, at its option and in its discretion, to release any Lien granted to or held by the Collateral Agent upon any Collateral (i) upon payment and satisfaction of all of the Obligations (other than inchoate indemnification obligations) at any time arising under or in respect of this Agreement or the Credit Documents or the transactions contemplated hereby or thereby, (ii) constituting property being sold or otherwise disposed of (to Persons other than the Borrower and its Subsidiaries) upon the sale or other disposition thereof in compliance with Section 9.02, (iii) if approved, authorized or ratified in writing by the Required Lenders (or all of the Lenders hereunder, to the extent required by Section 12.12), (iv) as otherwise may be expressly provided in the relevant Security Documents or (v) as otherwise provided in Section 12.21 hereof. Upon request by the Administrative Agent at any time, the Lenders will confirm in writing the Collateral Agent’s authority to release particular types or items of Collateral pursuant to this Section 11.11.
(c)
The Collateral Agent shall have no obligation whatsoever to the Lenders or to any other Person to assure that the Collateral exists or is owned by any Credit Party or is cared for, protected or insured or that the Liens granted to the Collateral Agent herein or pursuant hereto have been properly or sufficiently or lawfully created, perfected, protected or enforced or are entitled to any particular priority, or to exercise or to continue exercising at all or in any manner or under any duty of care, disclosure or fidelity any of the rights, authorities and powers granted or available to the Collateral Agent in this Section 11.11 or in any of the Security Documents, it being understood and agreed that in respect of the Collateral, or any act, omission or event related thereto, the Collateral Agent may act in any manner it may deem appropriate, in its sole discretion, given the Collateral Agent’s own interest in the Collateral as one of the Lenders and that the Collateral Agent shall have no duty or liability whatsoever to the Lenders, except for its gross negligence or willful misconduct (as determined by a court of competent jurisdiction in a final and non-appealable decision).
11.12
Delivery of Information
. The Administrative Agent shall not be required to deliver to any Lender originals or copies of any documents, instruments, notices, communications or other information received by the Administrative Agent from any Credit Party, any Subsidiary, the Required Lenders, any Lender or any other Person under or in connection with this Agreement or any other Credit Document except (i) as specifically provided in this Agreement or any other Credit Document and (ii) as specifically requested from time to time in writing by any Lender with respect to a specific document, instrument, notice or other written communication received by and in the possession of the Administrative Agent at the time of receipt of such request and then only in accordance with such specific request.
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SECTION 12.
Miscellaneous
.
12.01
Payment of Expenses, etc.
The Borrower agrees that it shall: (i) whether or not the transactions herein contemplated are consummated, pay all reasonable out-of-pocket costs and expenses of each of the Agents (including, without limitation, the reasonable fees and disbursements of White & Case LLP, Watson, Farley & Williams, other counsel to the Administrative Agent and the Joint Lead Arrangers and local counsel) in connection with the preparation, execution and delivery of this Agreement and the other Credit Documents and the documents and instruments referred to herein and therein and any amendment, waiver or consent relating hereto or thereto, of the Agents in connection with their respective syndication efforts with respect to this Agreement and of the Agents and each of the Lenders in connection with the enforcement of this Agreement and the other Credit Documents and the documents and instruments referred to herein and therein (including, without limitation, the reasonable fees and disbursements of counsel (including in-house counsel) for each of the Agents and for each of the Lenders); (ii) pay and hold each of the Lenders harmless from and against any and all present and future stamp, documentary, transfer, sales and use, value added, excise and other similar taxes with respect to the foregoing matters and save each of the Lenders harmless from and against any and all liabilities with respect to or resulting from any delay or omission (other than to the extent attributable to such Lender) to pay such taxes; and (iii) indemnify the Agents, the Collateral Agent and each Lender, and each of their respective officers, directors, trustees, employees, representatives and agents from and hold each of them harmless against any and all liabilities, obligations (including removal or remedial actions), losses, damages, penalties, claims, actions, judgments, suits, costs, expenses and disbursements (including reasonable attorneys’ and consultants’ fees and disbursements) incurred by, imposed on or assessed against any of them as a result of, or arising out of, or in any way related to, or by reason of, (a) any investigation, litigation or other proceeding (whether or not any of the Agents, the Collateral Agent or any Lender is a party thereto) related to the entering into and/or performance of this Agreement or any other Credit Document or the proceeds of any Loans hereunder or the consummation of any transactions contemplated herein, or in any other Credit Document or the exercise of any of their rights or remedies provided herein or in the other Credit Documents, or (b) the actual or alleged presence of Hazardous Materials on any Collateral Vessel or in the air, surface water or groundwater or on the surface or subsurface of any property at any time owned or operated by the Borrower or any of its Subsidiaries, the generation, storage, transportation, handling, disposal or Environmental Release of Hazardous Materials at any location, whether or not owned or operated by the Borrower or any of its Subsidiaries, the non-compliance of any Collateral Vessel or property with foreign, federal, state and local laws, regulations, and ordinances (including applicable permits thereunder) applicable to any Collateral Vessel or property, or any Environmental Claim asserted against the Borrower, any of its Subsidiaries or any Collateral Vessel or property at any time owned or operated by the Borrower or any of its Subsidiaries, including, in each case, without limitation, the reasonable fees and disbursements of counsel and other consultants incurred in connection with any such investigation, litigation or other proceeding (but excluding any losses, liabilities, claims, damages, penalties, actions, judgments, suits, costs, disbursements or expenses to the extent incurred by reason of the gross negligence or willful misconduct of the Person to be indemnified). To the extent that the undertaking to indemnify, pay or hold harmless each of the Agents or any Lender set forth in the preceding sentence may be unenforceable because it violates any law or public policy, the
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Borrower shall make the maximum contribution to the payment and satisfaction of each of the indemnified liabilities which is permissible under applicable law.
12.02
Right of Setoff
. In addition to any rights now or hereafter granted under applicable law or otherwise, and not by way of limitation of any such rights, upon the occurrence and during the continuance of an Event of Default, each Lender is hereby authorized at any time or from time to time, without presentment, demand, protest or other notice of any kind to any Credit Party or to any other Person, any such notice being hereby expressly waived, to set off and to appropriate and apply any and all deposits (general or special) and any other Indebtedness at any time held or owing by such Lender (including, without limitation, by branches and agencies of such Lender wherever located) to or for the credit or the account of any Credit Party but in any event excluding assets held in trust for any such Person against and on account of the Obligations and liabilities of such Credit Party, to such Lender under this Agreement or under any of the other Credit Documents, including, without limitation, all interests in Obligations purchased by such Lender pursuant to Section 12.06(b), and all other claims of any nature or description arising out of or connected with this Agreement or any other Credit Document, irrespective of whether or not such Lender shall have made any demand hereunder and although said Obligations, liabilities or claims, or any of them, shall be contingent or unmatured.
12.03
Notices
. Except as otherwise expressly provided herein, all notices and other communications provided for hereunder shall be in writing (including telexed, telecopier or e-mail communication) and mailed, telexed, telecopied or delivered: if to any Credit Party, at the address specified under its signature below; if to any Lender, at its address specified opposite its name on
Schedule II
; and if to the Administrative Agent, at its Notice Office; or, as to any other Credit Party, at such other address as shall be designated by such party in a written notice to the other parties hereto and, as to each Lender, at such other address as shall be designated by such Lender in a written notice to the Borrower and the Administrative Agent. All such notices and communications shall, (i) when mailed, be effective three Business Days after being deposited in the mails, prepaid and properly addressed for delivery, (ii) when sent by overnight courier, be effective one Business Day after delivery to the overnight courier prepaid and properly addressed for delivery on such next Business Day, or (iii) when sent by telex, telecopier or e-mail, be effective when sent by telex, telecopier or e-mail except that notices and communications to the Administrative Agent shall not be effective until received by the Administrative Agent.
12.04
Benefit of Agreement
. (a) This Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective successors and assigns of the parties hereto;
provided
,
however
, that (i) no Credit Party may assign or transfer any of its rights, obligations or interest hereunder or under any other Credit Document without the prior written consent of the Lenders, (ii) although any Lender may transfer, assign or grant participations in its rights hereunder, such Lender shall remain a “Lender” for all purposes hereunder (and may not transfer or assign all or any portion of its Loans hereunder except as provided in Section 12.04(b)) and the transferee, assignee or participant, as the case may be, shall not constitute a “Lender” hereunder and (iii) no Lender shall transfer or grant any participation under which the participant shall have rights to approve any amendment to or waiver of this Agreement or any other Credit Document except to the extent such amendment or waiver would (x) extend the final scheduled maturity of any Loan or Note in which such participant is participating, or reduce the rate or extend the time of payment of interest thereon (except (m) in connection with a waiver of
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applicability of any post-default increase in interest rates and (n) that any amendment or modification to the financial definitions in this Agreement shall not constitute a reduction in the rate of interest for purposes of this clause (x)) or reduce the principal amount thereof, or increase the amount of the participant’s participation over the amount thereof then in effect (it being understood that a waiver of any Default or Event of Default shall not constitute a change in the terms of such participation, and that an increase in any Loan shall be permitted without the consent of any participant if the participant’s participation is not increased as a result thereof), (y) consent to the assignment or transfer by the Borrower of any of its rights and obligations under this Agreement or (z) release all or substantially all of the Collateral under all of the Security Documents (except as expressly provided in the Credit Documents) securing the Loans hereunder in which such participant is participating. In the case of any such participation, the participant shall not have any rights under this Agreement or any of the other Credit Documents (the participant’s rights against such Lender in respect of such participation to be those set forth in the agreement executed by such Lender in favor of the participant relating thereto) and all amounts payable by the Borrower hereunder shall be determined as if such Lender had not sold such participation.
(b)
Notwithstanding the foregoing, any Lender (or any Lender together with one or more other Lenders) may (x) assign all or a portion of its outstanding Loans to its (i) (A) parent company and/or any affiliate of such Lender which is at least 50% owned by such Lender or its parent company or (B) to one or more other Lenders or any Affiliate of any such other Lender which is at least 50% owned by such other Lender or its parent company (
provided
that any fund that invests in bank loans and is managed or advised by the same investment advisor of another fund which is a Lender (or by an Affiliate of such investment advisor) shall be treated as an Affiliate of such other Lender for the purposes of this sub-clause (x)(i)(B)),
provided
that no such assignment may be made to any such Person that is, or would at such time constitute, a Defaulting Lender, or (ii) in the case of any Lender that is a fund that invests in bank loans, any other fund that invests in bank loans and is managed or advised by the same investment advisor of such Lender or by an Affiliate of such investment advisor or (iii) to one or more Lenders or (y) assign with the consent of the Borrower (which consent shall not be unreasonably withheld or delayed and shall not be required if any Event of Default is then in existence,
provided
that the Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within five Business Days after having received notice thereof) all, or if less than all, a portion equal to at least $20,000,000 in the aggregate for the assigning Lender or assigning Lenders, of such Lender’s outstanding principal amount of Loans hereunder to one or more Eligible Transferees (treating any fund that invests in bank loans and any other fund that invests in bank loans and is managed or advised by the same investment advisor of such fund or by an Affiliate of such investment advisor as a single Eligible Transferee), each of which assignees shall become a party to this Agreement as a Lender by execution of an Assignment and Assumption Agreement, provided that (i) at such time Schedule I shall be deemed modified to reflect the outstanding Loans of such new Lender and of the existing Lenders, (ii) new Notes will be issued, at the Borrower’s expense, to such new Lender and to the assigning Lender upon the request of such new Lender or assigning Lender, such new Notes to be in conformity with the requirements of Section 2.05 (with appropriate modifications) to the extent needed to reflect the revised outstanding Loans, (iii) the consent of the Administrative Agent shall be required in connection with any assignment pursuant to preceding clause (y) (which consent shall not be unreasonably withheld or delayed), and (iv) the
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Administrative Agent shall receive at the time of each such assignment, from the assigning or assignee Lender, the payment of a non-refundable assignment fee of $3,500. To the extent of any assignment pursuant to this Section 12.04(b), the assigning Lender shall be relieved of its obligations hereunder with respect to its assigned Loans (it being understood that the indemnification provisions under this Agreement (including, without limitation, Sections 2.09, 2.10, 4.04, 12.01 and 12.06) shall survive as to such assigning Lender). To the extent that an assignment of all or any portion of a Lender’s Loans and related outstanding Obligations pursuant to Section 2.12 or this Section 12.04(b) would, at the time of such assignment, result in increased costs under Section 2.09, 2.10 or 4.04 from those being charged by the respective assigning Lender prior to such assignment, then the Borrower shall not be obligated to pay such increased costs (although the Borrower shall be obligated to pay any other increased costs of the type described above resulting from changes after the date of the respective assignment).
(c)
Nothing in this Agreement shall prevent or prohibit any Lender from pledging its Loans and Notes hereunder to a Federal Reserve Bank or any central bank having jurisdiction over such Lender in support of borrowings made by such Lender from such Federal Reserve Bank or central bank and, with the consent of the Administrative Agent, any Lender which is a fund may pledge all or any portion of its Notes or Loans to a trustee for the benefit of investors and in support of its obligation to such investors;
provided
,
however
, no such pledge shall release a Lender from any of its obligations hereunder or substitute any such pledge for such Lender as a party hereto.
(d)
Oaktree Capital Management, L.P. and any Affiliate thereof (each an “
Affiliated Lender
”) may purchase Loans hereunder, whether by assignment or participation, subject to the following requirements:
(i)
no Loans may be assigned, or participations sold, to
an Affiliated Lender if, after giving effect to such assignment, the Affiliated Lenders in the aggregate would own (as a Lender or through a participation) in excess of 30% of all Loans then outstanding under this Agreement;
(ii)
notwithstanding anything to the contrary in the definition of “Required Lenders”, or in Section 12.12, for purposes of determining whether the Required Lenders or all of the Lenders hereunder have or any affected Lender hereunder has (i) consented (or not consented) to any amendment, modification, waiver, consent or other action with respect to any of the terms of any Credit Document or any departure therefrom by the Credit Parties, (ii) otherwise acted on any matter related to any Credit Document or (iii) directed or required the Administrative Agent, the Collateral Agent or any Lender under the Credit Documents to undertake any action (or refrain from taking any action) with respect to or under any such Credit Document, the Loans held by any Affiliated Lender shall be deemed to be not outstanding for all purposes of calculating whether the Required Lenders, all of the Lenders have or any affected Lender has taken any action or voted on any matter (other than any vote that has a disproportionate effect on the Loans held by an Affiliated Lender relative to the Loans held by Lenders that are Affiliated Lenders);
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(iii)
the Affiliated Lenders shall be prohibited from being appointed as, or succeeding to the rights and duties of, the Administrative Agent or the Collateral Agent under this Agreement and the other Credit Documents until such time (if any) as when all Obligations (other than those held by any Affiliated Lender and other than contingent obligations not then due and owing) have been paid in full in cash;
(iv)
by acquiring a Loan, each Affiliated Lender, in its capacity as a Lender, shall be deemed to have (I) waived its right to receive information prepared by the Administrative Agent or any other Lender (or any advisor, agent or counsel thereof) under or in connection with the Credit Documents (to the extent not provided to the Credit Parties), attend any meeting or conference call (or any portion thereof) with the Administrative Agent or any Lender(to the extent that the Credit Parties are excluded from attending), (II) agreed that it is prohibited from making or bringing any claim, in its capacity as a Lender hereunder against the Administrative Agent or any Lender with respect to the duties and obligations of such Persons under the Credit Documents, except any claims that the Administrative Agent or such Lender is treating such Affiliated Lender, in its capacity as a Lender, in a disproportionate manner relative to the other Lenders, and (III) agreed, without limiting its rights as a Lender described in clause (ii) above, that it will have no right whatsoever to require the Administrative Agent or any Lender to undertake any action (or refrain from taking any action) with respect to this Agreement or any other Credit Document other than each Lender’s and Administrative Agent’s duties and obligations hereunder; and
(v)
the applicable Affiliated Lender identifies itself as an Affiliated Lender prior to the assignment of Loans to it pursuant to the respective Assignment and Assumption Agreement;
Additionally, the Credit Parties and each Affiliated Lender hereby agree that if a case under Title 11 of the United States Code is commenced against any Credit Party, such Credit Party shall seek (and each Affiliated Lender shall consent) to provide that the vote of any Affiliated Lender (in its capacity as a Lender) with respect to any plan of reorganization of such Credit Party shall not be counted except that such Affiliated Lender’s vote (in its capacity as a Lender) may be counted to the extent any such plan of reorganization proposes to treat the Obligations held by such Affiliated Lender in a manner that is less favorable in any material respect to such Affiliated Lender than the proposed treatment of similar Obligations held by Lenders that are not Affiliates of the Credit Parties.
12.05
No Waiver; Remedies Cumulative
. No failure or delay on the part of the Administrative Agent or any Lender or any holder of any Note in exercising any right, power or privilege hereunder or under any other Credit Document and no course of dealing between the Borrower or any other Credit Party and the Administrative Agent or any Lender or the holder of any Note shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder or under any other Credit Document preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder or thereunder. The rights, powers and remedies herein or in any other Credit Document expressly provided are cumulative and not exclusive of any rights, powers or remedies which the Administrative Agent or any Lender or the holder of any Note would otherwise have. No notice to or demand on any
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Credit Party in any case shall entitle any Credit Party to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of the Administrative Agent or any Lender or the holder of any Note to any other or further action in any circumstances without notice or demand.
12.06
Payments Pro Rata
. (a) Except as otherwise provided in this Agreement, the Administrative Agent agrees that promptly after its receipt of each payment from or on behalf of the Borrower in respect of any Obligations hereunder, it shall distribute such payment to the Lenders (other than any Lender that has consented in writing to waive its
pro rata
share of any such payment)
pro rata
based upon their respective shares, if any, of the Obligations with respect to which such payment was received.
(b)
Each of the Lenders agrees that, if it should receive any amount hereunder (whether by voluntary payment, by realization upon security, by the exercise of the right of setoff or banker’s lien, by counterclaim or cross action, by the enforcement of any right under the Credit Documents, or otherwise), which is applicable to the payment of the principal of, or interest on, the Loans, of a sum which with respect to the related sum or sums received by other Lenders is in a greater proportion than the total of such Obligation then owed and due to such Lender bears to the total of such Obligation then owed and due to all of the Lenders immediately prior to such receipt, then such Lender receiving such excess payment shall purchase for cash without recourse or warranty from the other Lenders an interest in the Obligations of the respective Credit Party to such Lenders in such amount as shall result in a proportional participation by all the Lenders in such amount;
provided
that if all or any portion of such excess amount is thereafter recovered from such Lender, such purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest.
(c)
Notwithstanding anything to the contrary contained herein, the provisions of the preceding Sections 12.06(a) and (b) shall be subject to the express provisions of this Agreement which require, or permit, differing payments to be made to Non-Defaulting Lenders as opposed to Defaulting Lenders.
12.07
Calculations; Computations
. (a) The financial statements to be furnished to the Lenders pursuant hereto shall be made and prepared in accordance with generally accepted accounting principles in the United States consistently applied throughout the periods involved (except as set forth in the notes thereto or as otherwise disclosed in writing by the Borrower to the Lenders). In addition, all determinations of compliance with this Agreement or any other Credit Document shall utilize accounting principles and policies in conformity with those used to prepare the historical financial statements delivered to the Lenders for the first fiscal year of the Borrower ended December 31, 2010 (with the foregoing generally accepted accounting principles, subject to the preceding proviso, herein called “
GAAP
”). Unless otherwise noted, all references in this Agreement to GAAP shall mean generally accepted accounting principles as in effect in the United States.
(b)
All computations of interest for Loans and fees hereunder shall be made on the basis of a year of 360 days for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest or fees are payable.
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12.08
GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL
. (a) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL, EXCEPT AS OTHERWISE PROVIDED IN CERTAIN OF THE COLLATERAL VESSEL MORTGAGES AND THE SECONDARY COLLATERAL VESSEL MORTGAGES, BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT MAY, IN THE CASE OF ANY SECURED CREDITOR, AND SHALL, IN THE CASE OF ANY CREDIT PARTY, BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK LOCATED IN NEW YORK COUNTY IN THE CITY OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARENT, THE BORROWER, GMSC AND ARLINGTON HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH OF THE PARENT, THE BORROWER, GMSC AND ARLINGTON FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED MAIL, POSTAGE PREPAID, TO THE PARENT, THE BORROWER, GMSC AND/OR ARLINGTON, AS THE CASE MAY BE, AT ITS ADDRESS SET FORTH OPPOSITE ITS SIGNATURE BELOW, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT UNDER THIS AGREEMENT, ANY LENDER OR THE HOLDER OF ANY NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY CREDIT PARTY IN ANY OTHER JURISDICTION. IF AT ANY TIME DURING WHICH THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT REMAINS IN EFFECT, THE BORROWER DOES NOT MAINTAIN A REGULARLY FUNCTIONING OFFICE IN NEW YORK CITY, IT WILL DULY APPOINT, AND AT ALL TIMES MAINTAIN, AN AGENT IN NEW YORK CITY FOR THE SERVICE OF PROCESS OR SUMMONS, AND WILL PROVIDE TO THE ADMINISTRATIVE AGENT AND THE LENDERS WRITTEN NOTICE OF THE IDENTITY AND ADDRESS OF SUCH AGENT FOR SERVICE OF PROCESS OR SUMMONS;
PROVIDED
THAT ANY FAILURE ON THE PART OF THE BORROWER TO COMPLY WITH THE FOREGOING PROVISIONS OF THIS SENTENCE SHALL NOT IN ANY WAY PREJUDICE OR LIMIT THE SERVICE OF PROCESS OR SUMMONS IN ANY OTHER MANNER DESCRIBED ABOVE IN THIS SECTION 12.08 OR OTHERWISE PERMITTED BY LAW.
(b)
THE BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (a) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD
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OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(c)
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
12.09
Counterparts
. This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. A set of counterparts executed by all the parties hereto shall be lodged with the Borrower and the Administrative Agent.
12.10
Restatement Effective Date
. This Agreement shall become effective on the date (the “
Restatement Effective Date
”) on which the following conditions shall have been satisfied on or prior to such date (which date shall be substantially concurrent with the “Effective Date,” as defined in the Plan of Reorganization):
(i)
the Parent, GMSC, Arlington, the Borrower, the Administrative Agent and the Lenders constituting the Required Lenders shall have signed a counterpart hereof (whether the same or different counterparts) and the Subsidiary Guarantors described in clause (x) of the definition thereof shall have signed an acknowledgment hereof (whether the same or different counterparts) and shall have delivered the same to the Administrative Agent or, in the case of the Lenders, shall have given to the Administrative Agent telephonic (confirmed in writing), written or facsimile notice (actually received) at such office that the same has been signed and mailed to it;
(ii)
the Borrower shall have paid to the Administrative Agent and the Lenders all costs, fees and expenses (including, without limitation, the reasonable and documented legal fees and expenses of White & Case LLP and maritime counsel and other counsel to the Administrative Agent reasonably acceptable to the Borrower) and other compensation contemplated in connection with this Agreement and the Final DIP/Cash Collateral Order payable to the Administrative Agent and the Lenders in respect of the transactions contemplated by this Agreement to the extent then due and invoiced at least two Business Days prior to the Restatement Effective Date;
(iii)
the Borrower shall have paid to the Lenders any interest that has accrued but has not been paid on the Revolving Loans or the Term Loans pursuant to the Final DIP/Cash Collateral Order;
(iv)
the Plan of Reorganization shall have been confirmed by the Bankruptcy Court and the conditions to effectiveness of the Plan of Reorganization shall have been satisfied or waived in accordance with the terms thereof;
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(v)
the Administrative Agent shall have received a copy of the duly authorized and executed Other Credit Agreement, which Other Credit Agreement shall be in form and substance reasonably satisfactory to the Administrative Agent and shall be in full force and effect in accordance with its terms;
(vi)
(a) the Equity Investment shall have been received by the Parent and certain of its Subsidiaries, (b) the Equity Conversion shall have occurred and (c) the Loans under this Agreement shall have been partially repaid in the amount of $39,649,220 with the proceeds of the Equity Investment;
(vii)
all Indebtedness of the Borrower, GMSC, the Parent and its other Subsidiaries under the DIP Credit Agreement, shall have been repaid in full with proceeds of the Equity Investment, together with all fees and other amounts owing thereon, all commitments thereunder shall have been terminated, and all security documentation relating thereto shall have been terminated and released or reassigned, and the Administrative Agent shall have received all such releases and reassignments as may have been requested by the Administrative Agent, which releases and reassignments shall be in form and substance reasonably satisfactory to the Administrative Agent;
(viii)
the Collateral and Guaranty Requirements with respect to each Collateral Vessel shall have been satisfied (including any amendments to the Security Documents set forth in the definition of Collateral and Guaranty Requirements as are necessary or desirable in the sole discretion of the Administrative Agent);
(ix)
the Administrative Agent shall have received a copy of the duly authorized and executed Primary Intercreditor Agreement, which Primary Intercreditor Agreement shall be in form and substance reasonably satisfactory to the Administrative Agent and shall be in full force and effect in accordance with its terms;
(x)
the Administrative Agent shall have received a copy of the duly authorized and executed Secondary Intercreditor Agreement, which Secondary Intercreditor Agreement shall be in form and substance reasonably satisfactory to the Administrative Agent and shall be in full force and effect in accordance with its terms;
(xi)
(i) there shall exist no Default or Event of Default and (ii) all representations and warranties contained herein or in any other Credit Document shall be true and correct in all material respects both before and after giving effect to the Transaction (it being understood and agreed that any representation or warranty which by its terms is made as of a specified date shall be required to be true and correct in all material respects only as of such specified date);
(xii)
all Loans converted or continued pursuant to this Agreement shall be in full compliance with all applicable requirements (including without limitation the collateral valuation requirements) of law, including, without limitation, the Margin Regulations and the collateral valuation requirements thereunder, and each Lender in good faith shall be able to complete the relevant forms establishing compliance with the Margin Regulations;
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(xiii)
after giving effect to the Transaction, there shall be no conflict with, or default under, any material agreement or contractual or other restrictions which is binding for the Borrower or any of its Subsidiaries;
(xiv)
the Borrower shall cause to be delivered to the Administrative Agent a solvency certificate from the senior financial officer of the Parent, in the form of Exhibit J, which shall be addressed to the Administrative Agent and each of the Lenders and dated the Restatement Effective Date, setting forth the conclusion that, after giving effect to the incurrence of all the financings contemplated hereby, the Parent and its Subsidiaries, taken as a whole, and the Borrower and its Subsidiaries, taken as a whole, are not insolvent and will not be rendered insolvent by the incurrence of such indebtedness, and will not be left with unreasonably small capital with which to engage in their respective businesses and will not have incurred debts beyond their ability to pay such debts as they mature;
(xv)
the Administrative Agent shall have received copies of (i) the financial statements referred to in Sections 7.05(a), which financial statements shall be in form and substance reasonably satisfactory to the Administrative Agent and (ii) Cash Flow Projections for the 13-week period beginning on the Restatement Effective Date in form and substance reasonably satisfactory to the Lenders;
(xvi)
on the Restatement Effective Date, nothing shall have occurred since February 28, 2012 (and neither the Administrative Agent nor the Required Lenders shall have become aware of any facts or conditions not previously known to the Administrative Agent or the Required Lenders) which the Administrative Agent or the Required Lenders shall determine is reasonably likely to have a Material Adverse Effect (other than events publicly disclosed prior to the commencement of the Chapter 11 Proceedings, the commencement and continuation of the Chapter 11 Proceeding and the consequences that would reasonably be expected to result therefrom);
(xvii)
other than the Chapter 11 Proceedings, there shall be no actions, suits or proceedings pending or threatened (i) against the Credit Parties that challenges, enjoins or prevents this Agreement or any other Credit Document or (ii) which the Administrative Agent shall determine has had, or could reasonably be expected to have, a Material Adverse Effect (other than events publicly disclosed prior to the commencement of the Chapter 11 Proceedings, the commencement and continuation of the Chapter 11 Proceeding and the consequences that would reasonably be expected to result therefrom);
(xviii)
the Credit Parties shall have provided, or procured the supply of, the “know your customer” information required pursuant to the PATRIOT Act, in each case as reasonably requested by any Lender or the Administrative Agent at least three Business Days prior to the Restatement Effective Date in connection with its internal compliance regulations thereunder or other information reasonably requested by the Lender or the Administrative Agent to satisfy related checks under all applicable laws and regulations pursuant to the transactions contemplated hereby;
(xix)
all necessary governmental (domestic and foreign) and third party approvals and/or consents in connection with the Loans, the other transactions contemplated
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hereby and the granting of Liens under the Credit Documents shall have been obtained and remain in effect, and all applicable waiting periods with respect thereto shall have expired without any action being taken by any competent authority which restrains, prevents or imposes materially adverse conditions upon the consummation of this Agreement or the other transactions contemplated by the Credit Documents or otherwise referred to herein or therein; and
(xx)
there shall not exist any judgment, order, injunction or other restraint issued or filed or a hearing seeking injunctive relief or other restraint pending or notified prohibiting or imposing materially adverse conditions upon this Agreement or the other transactions contemplated by the Credit Documents or otherwise referred to herein or therein.
The Administrative Agent will give the Borrower and each Lender prompt written notice of the occurrence of the Restatement Effective Date.
12.11
Headings Descriptive
. The headings of the several sections and subsections of this Agreement are inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Agreement.
12.12
Amendment or Waiver; etc.
(a) Neither this Agreement nor any other Credit Document nor any terms hereof or thereof may be changed, waived, discharged or terminated unless such change, waiver, discharge or termination is in writing signed by the respective Credit Parties party thereto and the Required Lenders,
provided
that no such change, waiver, discharge or termination shall, without the consent of each Lender (other than a Defaulting Lender) (with Obligations being directly affected in the case of following clause (i)) and, in the case of the following clause (vi), to the extent that any such Lender would be required to make a Loan in excess of its
pro rata
portion provided for in this Agreement or would receive a payment or prepayment of Loans that (in any case) is less than its
pro rata
portion provided for in this Agreement, in each case, as a result of any such amendment, modification or waiver referred to in the following clause (vi)), (i) extend the final scheduled maturity of any Loan or Note, extend the timing for or reduce the principal amount of any Scheduled Repayment, or reduce the rate or extend the time of payment of fees or interest on any Loan or Note (except (x) in connection with the waiver of applicability of any post-default increase in interest rates and (y) any amendment or modification to the financial definitions in this Agreement shall not constitute a reduction in the rate of interest for purposes of this clause (i)), or reduce the principal amount thereof (except to the extent repaid in cash), (ii) release all or substantially all of the Collateral (except as expressly provided in the Credit Documents) under the Security Documents, (iii) amend, modify or waive any provision of this Section 12.12, (iv) reduce the percentage specified in the definition of Required Lenders or otherwise amend or modify the definition of Required Lenders (it being understood that, with the consent of the Required Lenders, additional extensions of credit pursuant to this Agreement may be included in the determination of the Required Lenders on substantially the same basis as the extensions of Loans are included on the Restatement Effective Date), (v) consent to the assignment or transfer by the Borrower or any Subsidiary Guarantor of any of its respective rights and obligations under this Agreement, (vi) amend, modify or waive Section 2.06 or amend, modify or waive any other provision in this Agreement to the extent providing for payments or prepayments of Loans to be applied
pro rata
among the Lenders entitled to such payments or prepayments of Loans (it being understood that the provision of additional extensions of credit pursuant to this Agreement, or
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the waiver of any mandatory prepayment of Loans by the Required Lenders shall not constitute an amendment, modification or waiver for purposes of this clause (vi)), or (vii) release any Subsidiary Guarantor from the Subsidiaries Guaranty to the extent same owns a Collateral Vessel (other than as provided in the Subsidiaries Guaranty);
provided
,
further
, that no such change, waiver, discharge or termination shall (u) without the consent of each Agent, amend, modify or waive any provision of Section 11 as same applies to such Agent or any other provision as same relates to the rights or obligations of such Agent, or (v) without the consent of the Collateral Agent, amend, modify or waive any provision relating to the rights or obligations of the Collateral Agent.
(b)
If, in connection with any proposed change, waiver, discharge or termination to any of the provisions of this Agreement as contemplated by clauses (i) through (vii), inclusive, of the first proviso to Section 12.12(a), the consent of the Required Lenders is obtained but the consent of one or more of such other Lenders whose consent is required is not obtained, then the Borrower shall have the right, so long as all non-consenting Lenders whose individual consent is required are treated as described in either clauses (A) or (B) below, to either (A) replace each such non-consenting Lender or Lenders (or, at the option of the Borrower if the respective Lender’s consent is required with respect to less than all Loans, to replace only the respective Loans of the respective non-consenting Lender which gave rise to the need to obtain such Lender’s individual consent) with one or more Replacement Lenders pursuant to Section 2.12 so long as at the time of such replacement, each such Replacement Lender consents to the proposed change, waiver, discharge or termination or (B) repay outstanding Loans of such Lender which gave rise to the need to obtain such Lender’s consent, in accordance with Sections 4.01(iv),
provided
that, unless the Loans being repaid pursuant to preceding clause (B) are immediately replaced in full at such time through the addition of new Lenders or the increase of outstanding Loans of existing Lenders (who in each case must specifically consent thereto), then in the case of any action pursuant to preceding clause (B) the Required Lenders (determined before giving effect to the proposed action) shall specifically consent thereto,
provided
,
further
, that in any event the Borrower shall not have the right to replace a Lender, repay its Loans solely as a result of the exercise of such Lender’s rights (and the withholding of any required consent by such Lender) pursuant to the second proviso to Section 12.12(a).
(c)
In addition, notwithstanding anything set forth herein to the contrary, this Agreement may be amended or amended and restated with the written consent of the Credit Parties, the Administrative Agent and the Lenders providing the relevant Replacement Loans or to permit the refinancing of all outstanding Loans (the “
Refinanced Loans
”), with a replacement Loan tranche denominated in Dollars (the “
Replacement Loans
”), respectively, hereunder;
provided
that (i) the aggregate principal amount of such Replacement Loans shall not exceed the aggregate principal amount of,
plus
an amount equal to accrued interest, fees and expenses with respect to, such Refinanced Loans, (ii) the Effective Yield with respect to such Replacement Loans shall not be higher than the Effective Yield with respect to such Refinanced Loans, (iii) the Weighted Average Life to Maturity of such Replacement Loans shall not be shorter than the Weighted Average Life to Maturity of such Refinanced Loans, at the time of such refinancing (except to the extent of nominal amortization for periods where amortization has been eliminated as a result of prepayment of the applicable Loans), (iv) such Replacement Loans shall not receive in excess of such Replacement Loans’
pro rata
share of any such payment (such
pro rata
share to be calculated at any time on the basis of the principal amount of such Replacement Loans over
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the total aggregate principal amount of Loans and Replacement Loans at such time), (v) the credit parties to such Replacement Loans secured by the Collateral will become party to the Intercreditor Agreements in accordance with the terms thereof, and (vi) all other terms applicable to such Replacement Loans shall be substantially identical to, or less favorable to the Lenders providing such Replacement Loans than, those applicable to such Refinanced Loans (including, without limitation, the guarantors, obligors and security applicable thereto), except to the extent necessary to provide for covenants and other terms applicable to any period after the latest final maturity of the Loans in effect immediately prior to such refinancing.
12.13
Survival
. All indemnities set forth herein including, without limitation, in Sections 2.09, 2.10, 4.04, 12.01 and 12.06 shall survive the execution, delivery and termination of this Agreement and the Notes and the making and repayment of the Loans.
12.14
Domicile of Loans
. Each Lender may transfer and carry its Loans at, to or for the account of any office, Subsidiary or Affiliate of such Lender. Notwithstanding anything to the contrary contained herein, to the extent that a transfer of Loans pursuant to this Section 12.14 would, at the time of such transfer, result in increased costs under Section 2.09, 2.10 or 4.04 from those being charged by the respective Lender prior to such transfer, then the Borrower shall not be obligated to pay such increased costs (although the Borrower shall be obligated to pay any other increased costs of the type described above resulting from changes after the date of the respective transfer).
12.15
Confidentiality
. (a) Subject to the provisions of clauses (b) and (c) of this Section 12.15, each Lender agrees that it will use its best efforts not to disclose without the prior consent of the Borrower (other than to its employees, auditors, advisors or counsel or to another Lender if the Lender or such Lender’s holding or parent company or board of trustees in its sole discretion determines that any such party should have access to such information, provided such Persons shall be subject to the provisions of this Section 12.15 to the same extent as such Lender) any information with respect to the Borrower or any of its Subsidiaries which is now or in the future furnished pursuant to this Agreement or any other Credit Document,
provided
that any Lender may disclose any such information (a) as has become generally available to the public other than by virtue of a breach of this Section 12.15(a) by the respective Lender, (b) as may be required in any report, statement or testimony submitted to any municipal, state or Federal regulatory body having or claiming to have jurisdiction over such Lender or to the Federal Reserve Board or the Federal Deposit Insurance Corporation or similar organizations (whether in the United States or elsewhere) or their successors, (c) as may be required in respect to any summons or subpoena or in connection with any litigation, (d) in order to comply with any law, order, regulation or ruling applicable to such Lender, (e) to the Administrative Agent or the Collateral Agent, (f) to any prospective or actual transferee or participant in connection with any contemplated transfer or participation of any of the Notes or any interest therein by such Lender, (g) any credit insurance provider related to the Borrower and its Obligations and (h) any direct, indirect, actual or prospective counterparty (and its advisors) to any swap, derivative or securitization transaction related to the Obligations,
provided
that such prospective transferee expressly agrees to be bound by the confidentiality provisions contained in this Section 12.15.
(b)
The Borrower hereby acknowledges and agrees that each Lender may share with any of its affiliates any information related to the Borrower or any of its Subsidiaries
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(including, without limitation, any nonpublic customer information regarding the creditworthiness of the Borrower or its Subsidiaries), provided such Persons shall be subject to the provisions of this Section 12.15 to the same extent as such Lender.
12.16
Register
. The Borrower hereby designates the Administrative Agent to serve as the Borrower’s agent, solely for purposes of this Section 12.16, to maintain a register (the “
Register
”) on which it will record the Loans made by each of the Lenders and each repayment and prepayment in respect of the principal amount (and stated interest) of the Loans of each Lender. Failure to make any such recordation, or any error in such recordation shall not affect the Borrower’s obligations in respect of such Loans. The registration of assignment or transfer of all or part of any Loans shall be recorded by the Administrative Agent on the Register only upon the acceptance by the Administrative Agent of a properly executed and delivered Assignment and Assumption Agreement pursuant to Section 12.04(b). Coincident with the delivery of such an Assignment and Assumption Agreement to the Administrative Agent for acceptance and registration of assignment or transfer of all or part of a Loan, or as soon thereafter as practicable, the assigning or transferor Lender shall surrender the Note evidencing such Loan, and thereupon one or more new Notes in the same aggregate principal amount shall be issued to the assigning or transferor Lender and/or the new Lender. The Borrower agrees to indemnify the Administrative Agent from and against any and all losses, claims, damages and liabilities of whatsoever nature which may be imposed on, asserted against or incurred by the Administrative Agent in performing its duties under this Section 12.16, except to the extent caused by the Administrative Agent’s own gross negligence or willful misconduct.
Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each participant and the principal and interest amounts of each participant’s interest in the Loans and the obligations thereunder (the “
Participant Register
”);
provided
that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any participant or any information relating to a participant’s interest in any commitments, loans, letters of credit or its other obligations under any Credit Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.
12.17
Judgment Currency
. If for the purposes of obtaining judgment in any court it is necessary to convert a sum due from the Borrower hereunder or under any of the Notes in the currency expressed to be payable herein or under the Notes (the “
specified currency
”) into another currency, the parties hereto agree, to the fullest extent that they may effectively do so, that the rate of exchange used shall be that at which in accordance with normal banking procedures the Administrative Agent could purchase the specified currency with such other currency at the Administrative Agent’s New York office on the Business Day preceding that on which final judgment is given. The obligations of the Borrower in respect of any sum due to any Lender or the Administrative Agent hereunder or under any Note shall, notwithstanding any judgment in a currency other than the specified currency, be discharged only to the extent that on the Business Day following receipt by such Lender or the Administrative Agent (as the case may
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be) of any sum adjudged to be so due in such other currency such Lender or the Administrative Agent (as the case may be) may in accordance with normal banking procedures purchase the specified currency with such other currency; if the amount of the specified currency so purchased is less than the sum originally due to such Lender or the Administrative Agent, as the case may be, in the specified currency, the Borrower agrees, to the fullest extent that it may effectively do so, as a separate obligation and notwithstanding any such judgment, to indemnify such Lender or the Administrative Agent, as the case may be, against such loss, and if the amount of the specified currency so purchased exceeds the sum originally due to any Lender or the Administrative Agent, as the case may be, in the specified currency, such Lender or the Administrative Agent, as the case may be, agrees to remit such excess to the Borrower.
12.18
Language
. All correspondence, including, without limitation, all notices, reports and/or certificates, delivered by any Credit Party to the Administrative Agent, the Collateral Agent or any Lender shall, unless otherwise agreed by the respective recipients thereof, be submitted in the English language or, to the extent the original of such document is not in the English language, such document shall be delivered with a certified English translation thereof.
12.19
Waiver of Immunity
. The Borrower, in respect of itself, each other Credit Party, its and their process agents, and its and their properties and revenues, hereby irrevocably agrees that, to the extent that the Borrower, any other Credit Party or any of its or their properties has or may hereafter acquire any right of immunity from any legal proceedings, whether in the Republic of the Marshall Islands, the United Kingdom, the Bahamas, Bermuda, the Republic of Malta, the United States or the Republic of Liberia or any other Acceptable Flag Jurisdiction or elsewhere, to enforce or collect upon the Obligations of the Borrower or any other Credit Party related to or arising from the transactions contemplated by any of the Credit Documents, including, without limitation, immunity from service of process, immunity from jurisdiction or judgment of any court or tribunal, immunity from execution of a judgment, and immunity of any of its property from attachment prior to any entry of judgment, or from attachment in aid of execution upon a judgment, the Borrower, for itself and on behalf of the other Credit Parties, hereby expressly waives, to the fullest extent permissible under applicable law, any such immunity, and agrees not to assert any such right or claim in any such proceeding, whether in the Republic of the Marshall Islands, the United Kingdom, the Bahamas, Bermuda, the Republic of Malta, the United States or the Republic of Liberia or elsewhere.
12.20
USA PATRIOT Act Notice
. Each Lender hereby notifies each Credit Party that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub.: 107-56 (signed into law October 26, 2001)) (the “
PATRIOT Act
”), it is required to obtain, verify, and record information that identifies each Credit Party, which information includes the name of each Credit Party and other information that will allow such Lender to identify each Credit Party in accordance with the PATRIOT Act, and each Credit Party agrees to provide such information from time to time to any Lender.
12.21
Release of Secondary Collateral and Subsidiary Guarantors
. At any time that (i) the Other Agent agrees to release a Secondary Collateral Vessel (and the various guarantees and security documents related thereto) in accordance with the terms of the Other Credit Documents in accordance with the terms of the Secondary Intercreditor Agreement, other
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than in contemplation of the repayment of the Indebtedness thereunder in full, and (ii) no Default or Event of Default exists or would result from the release of such Secondary Collateral Vessel (including, without limitation, under Section 9.09 (but excluding any existing Default or Event of Default under Sections 10.03(i) or 10.04(ii) in connection with a Permitted Sale)), the Collateral Agent shall, at the request of the Borrower, (x) release and discharge the Security Documents related to such Secondary Collateral Vessel, (y) release the Credit Party which owns such Secondary Collateral Vessel from the Subsidiaries Guaranty and (z) release the Secondary Pledge Agreement Collateral of the Subsidiary Guarantor which owned such Secondary Collateral Vessel,
provided
that, in each case, the relevant Credit Party shall pay all documented out of pocket costs and expenses reasonably incurred by the Collateral Agent in connection with provision of such release and discharge.
SECTION 13.
Holdings Guaranty
.
13.01
Guaranty
.
In order to induce the Administrative Agent, the Collateral Agent and the Lenders to enter into this Agreement and to extend credit hereunder, and induce the other Guaranteed Creditors to enter into Interest Rate Protection Agreements and Other Hedging Agreements and in recognition of the direct benefits to be received by the Parent, Arlington and GMSC from the continuation and conversion of the Loans and the entering into of such Interest Rate Protection Agreements and Other Hedging Agreements, each of the Parent, Arlington and GMSC hereby agrees with the Guaranteed Creditors as follows: Each of the Parent, Arlington and GMSC hereby unconditionally and irrevocably guarantees as primary obligor and not merely as surety, the full and prompt payment when due, whether upon maturity, acceleration or otherwise, of any and all of the Obligations of the Borrower to the Guaranteed Creditors. If any or all of the Obligations of the Borrower to the Guaranteed Creditors becomes due and payable hereunder, each of the Parent, Arlington and GMSC, unconditionally and irrevocably, promises to pay such indebtedness to the Administrative Agent and/or the other Guaranteed Creditors, or order, on demand, together with any and all reasonable documented out-of-pocket expenses which may be incurred by the Administrative Agent and the other Guaranteed Creditors in collecting any of the Obligations. If a claim is ever made upon any Guaranteed Creditor for repayment or recovery of any amount or amounts received in payment or on account of any of the Obligations and any of the aforesaid payees repays all or part of said amount by reason of (i) any judgment, decree or order of any court or administrative body having jurisdiction over such payee or any of its property or (ii) any settlement or compromise of any such claim effected by such payee with any such claimant (including the Borrower), then and in such event, each of the Parent, Arlington and GMSC agrees that any such judgment, decree, order, settlement or compromise shall be binding upon the Parent, Arlington or GMSC, as the case may be, notwithstanding any revocation of this Holdings Guaranty or other instrument evidencing any liability of the Borrower, and the Parent, Arlington or GMSC, as the case may be, shall both be and remain liable to the aforesaid payees hereunder for the amount so repaid or recovered to the same extent as if such amount had never originally been received by any such payee.
13.02
Bankruptcy
.
Additionally, each of the Parent, Arlington and GMSC unconditionally and irrevocably guarantees the payment of any and all of the Obligations to the Guaranteed Creditors whether or not due or payable by the Borrower upon the occurrence of any of the events specified in Section 10.05, and irrevocably, unconditionally and jointly and
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severally promises to pay such indebtedness to the Guaranteed Creditors, or order, on demand, in lawful money of the United States.
13.03
Nature of Liability
. The liability of each of the Parent, Arlington and GMSC hereunder is primary, absolute and unconditional, exclusive and independent of any security for or other guaranty of the Obligations, whether executed by the Parent, Arlington, GMSC, any other guarantor or by any other party, and the liability of each of the Parent, Arlington and GMSC hereunder shall not be affected or impaired by (a) any direction as to application of payment by the Borrower or by any other party, or (b) any other continuing or other guaranty, undertaking or maximum liability of a guarantor or of any other party as to the Obligations, or (c) any payment on or in reduction of any such other guaranty or undertaking, or (d) any dissolution, termination or increase, decrease or change in personnel by the Borrower, or (e) any payment made to any Guaranteed Creditor on the Obligations which any such Guaranteed Creditor repays to the Borrower or any other Credit Party pursuant to court order in any bankruptcy, reorganization, arrangement, moratorium or other debtor relief proceeding, and the Borrower waives any right to the deferral or modification of its obligations hereunder by reason of any such proceeding, (f) any action or inaction by the Guaranteed Creditors as contemplated in Section 13.05, or (g) any invalidity, irregularity or enforceability of all or any part of the Obligations or of any security therefor.
13.04
Independent Obligation
. The obligations of each of the Parent, Arlington and GMSC hereunder are several and are independent of the obligations of any other guarantor, any other party or the Borrower, and a separate action or actions may be brought and prosecuted against the Parent, Arlington or GMSC whether or not action is brought against any other guarantor, any other party or the Borrower and whether or not any other guarantor, any other party or the Borrower be joined in any such action or actions. Each of the Parent, Arlington and GMSC waives, to the fullest extent permitted by law, the benefit of any statute of limitations affecting its liability hereunder or the enforcement thereof. Any payment by the Borrower or other circumstance which operates to toll any statute of limitations as to the Borrower shall operate to toll the statute of limitations as to each of the Parent, Arlington and GMSC.
13.05
Authorization
. Each of the Parent, Arlington and GMSC authorizes the Guaranteed Creditors without notice or demand (except as shall be required by applicable statute or this Agreement and cannot be waived), and without affecting or impairing its liability hereunder, from time to time to:
(a)
in accordance with the terms and provisions of this Agreement and the other Credit Documents, change the manner, place or terms of payment of, and/or change or extend the time of payment of, renew, increase, accelerate or alter, any of the Obligations (including any increase or decrease in the principal amount thereof or the rate of interest or fees thereon), any security therefor, or any liability incurred directly or indirectly in respect thereof, and this Holdings Guaranty shall apply to the Obligations as so changed, extended, renewed or altered;
(b)
take and hold security for the payment of the Obligations and sell, exchange, release, impair, surrender, realize upon or otherwise deal with in any manner and in any order any property by whomsoever at any time pledged or mortgaged to
113
secure, or howsoever securing, the Obligations or any liabilities (including any of those hereunder) incurred directly or indirectly in respect thereof or hereof, and/or any offset thereagainst;
(c)
exercise or refrain from exercising any rights against the Borrower, any other Credit Party or others or otherwise act or refrain from acting;
(d)
release or substitute any one or more endorsers, guarantors, the Borrower, other Credit Parties or other obligors;
(e)
settle or compromise any of the Obligations, any security therefor or any liability (including any of those hereunder) incurred directly or indirectly in respect thereof or hereof, and may subordinate the payment of all or any part thereof to the payment of any liability (whether due or not) of the Borrower to its creditors other than the Guaranteed Creditors;
(f)
apply any sums by whomsoever paid or howsoever realized to any liability or liabilities of the Borrower to the Guaranteed Creditors regardless of what liability or liabilities of the Borrower remain unpaid;
(g)
consent to or waive any breach of, or any act, omission or default under, this Agreement, any other Credit Document, any Interest Rate Protection Agreement or any Other Hedging Agreement or any of the instruments or agreements referred to herein or therein, or, pursuant to the terms of the Credit Documents, otherwise amend, modify or supplement this Agreement, any other Credit Document, any Interest Rate Protection Agreement or any Other Hedging Agreement or any of such other instruments or agreements; and/or
(h)
take any other action which would, under otherwise applicable principles of common law, give rise to a legal or equitable discharge of the Parent
, Arlington or GMSC from its liabilities under this Holdings Guaranty.
13.06
Reliance
. It is not necessary for any Guaranteed Creditor to inquire into the capacity or powers of each of the Parent, Arlington or GMSC or any of their respective Subsidiaries or the officers, directors, partners or agents acting or purporting to act on their behalf, and any Obligations made or created in reliance upon the professed exercise of such powers shall be guaranteed hereunder.
13.07
Subordination
. Any indebtedness of the Borrower now or hereafter owing to each of the Parent, Arlington and GMSC, as the case may be, is hereby subordinated to the Obligations of the Borrower owing to the Guaranteed Creditors; and if the Administrative Agent so requests at a time when an Event of Default exists, all such indebtedness of the Borrower to each of the Parent, Arlington and GMSC shall be collected, enforced and received by the Parent, Arlington or GMSC, as the case may be, for the benefit of the Guaranteed Creditors and be paid over to the Administrative Agent on behalf of the Guaranteed Creditors on account of the Obligations to the Guaranteed Creditors, but without affecting or impairing in any manner the liability of the Parent, Arlington or GMSC under the other provisions of this Holdings Guaranty. Prior to the transfer by the Parent, Arlington or GMSC of any note or negotiable instrument
114
evidencing any such indebtedness of the Borrower to the Parent, Arlington or GMSC, as the case may be, the Parent, Arlington or GMSC, as the case may be, shall mark such note or negotiable instrument with a legend that the same is subject to this subordination. Without limiting the generality of the foregoing, each of the Parent, Arlington and GMSC hereby agrees with the Guaranteed Creditors that they will not exercise any right of subrogation which they may at any time otherwise have as a result of this Holdings Guaranty (whether contractual, under Section 509 of the Bankruptcy Code or otherwise) until all Obligations have been irrevocably paid in full in cash. If and to the extent required in order for the Obligations of each of the Parent, Arlington and GMSC to be enforceable under applicable federal, state and other laws relating to the insolvency of debtors, the maximum liability of the Parent, Arlington and GMSC, as the case may be, hereunder shall be limited to the greatest amount which can lawfully be guaranteed by the Parent, Arlington and GMSC, as the case may be, under such laws, after giving effect to any rights of contribution, reimbursement and subrogation arising under this Section 13.07.
13.08
Waiver
. (a) Each of the Parent, Arlington and GMSC waives any right (except as shall be required by applicable law and cannot be waived) to require any Guaranteed Creditor to (i) proceed against the Borrower, any other guarantor or any other party, (ii) proceed against or exhaust any security held from the Borrower, any other guarantor or any other party or (iii) pursue any other remedy in any Guaranteed Creditor’s power whatsoever. Each of the Parent, Arlington and GMSC hereby irrevocably waives any defenses it may now or hereafter have in any way relating to any and all of the following: (a) based on or arising out of any defense of the Borrower, any other guarantor or any other party, other than payment in full in cash of the Obligations, based on or arising out of the disability of the Borrower, any other guarantor or any other party, or the validity, legality or unenforceability of the Obligations or any part thereof from any cause, or the cessation from any cause of the liability of the Borrower other than payment in full in cash of the Obligations; (b) any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to departure from any Credit Document; (c) any taking, exchange, release or nonperfection of any Collateral, or any taking, release or amendment or waiver of or consent to departure from the Holdings Guaranty or any other guaranty, for all or any of the Obligations; (d) any law or regulation of any foreign jurisdiction or any other event affecting any term of a Obligation; and (e) any other circumstance (including, without limitation, any statute of limitations or any existence of or reliance on any representation by the Administrative Agent or any other Secured Party) that might otherwise constitute a defense available to, or a discharge of, such Guarantor, any other Credit Party or any other guarantor or surety other than payment in full in cash of the Obligations. The Guaranteed Creditors may, at their election, foreclose on any security held by the Administrative Agent, the Collateral Agent or any other Guaranteed Creditor by one or more judicial or nonjudicial sales, whether or not every aspect of any such sale is commercially reasonable (to the extent such sale is permitted by applicable law), or exercise any other right or remedy the Guaranteed Creditors may have against the Borrower, or any other party, or any security, without affecting or impairing in any way the liability of either the Parent, Arlington or GMSC hereunder except to the extent the Obligations have been paid in cash. Each of the Parent, Arlington and GMSC waives any defense arising out of any such election by the Guaranteed Creditors, even though such election operates to impair or extinguish any right of reimbursement or subrogation or other right or remedy of the Parent, Arlington or GMSC against the Borrower or any other party or any security.
115
(b)
Each of the Parent, Arlington and GMSC waives all presentments, demands for performance, protests and notices, including, without limitation, notices of nonperformance, notices of protest, notices of dishonor, notices of acceptance of this Holdings Guaranty, and notices of the existence, creation or incurring of new or additional Obligations. Each of the Parent, Arlington and GMSC assumes all responsibility for being and keeping itself informed of the Borrower’s financial condition and assets, and of all other circumstances bearing upon the risk of nonpayment of the Obligations and the nature, scope and extent of the risks which each of the Parent, Arlington and GMSC assumes and incurs hereunder, and agrees that neither the Administrative Agent nor any of the other Guaranteed Creditors shall have any duty to advise either the Parent, Arlington or GMSC of information known to them regarding such circumstances or risks.
13.09
Judgment Shortfall
. (a) The obligations of the Parent, Arlington and GMSC under the Holdings Guaranty to make payments in the respective currency or currencies in which the respective Obligations are required to be paid (such currency being herein called the “
Obligation Currency
”) shall not be discharged or satisfied by any tender or recovery pursuant to any judgment expressed in or converted into any currency other than the Obligation Currency, except to the extent that such tender or recovery results in the effective receipt by the Administrative Agent, the Collateral Agent or the respective other Secured Creditor of the full amount of the Obligation Currency expressed to be payable to the Administrative Agent, the Collateral Agent or such other Secured Creditor under this Holdings Guaranty or the other Credit Documents or any Interest Rate Protection Agreements or any Other Hedging Agreements, as applicable. If for the purpose of obtaining or enforcing judgment against the Parent, Arlington or GMSC in any court or in any jurisdiction, it becomes necessary to convert into or from any currency other than the Obligation Currency (such other currency being hereinafter referred to as the “
Judgment Currency
”) an amount due in the Obligation Currency, the conversion shall be made, at the rate of exchange (quoted by the Administrative Agent, determined, in each case, as of the date immediately preceding the day on which the judgment is given (such Business Day being hereinafter referred to as the “
Judgment Currency Conversion Date
”).
(b) If there is a change in the rate of exchange prevailing between the Judgment Currency Conversion Date and the date of actual payment of the amount due, the Parent, Arlington and GMSC jointly and severally covenant and agree to pay, or cause to be paid, such additional amounts, if any (but in any event not a lesser amount), as may be necessary to ensure that the amount paid in the Judgment Currency, when converted at the rate of exchange prevailing on the date of payment, will produce the amount of the Obligation Currency which could have been purchased with the amount of Judgment Currency stipulated in the judgment or judicial award at the rate or exchange prevailing on the Judgment Currency Conversion Date.
* * *
116
IN WITNESS WHEREOF, the parties hereto have caused their duly authorized officers to execute and deliver this Agreement as of the date first above written.
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GENERAL MARITIME CORPORATION,
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as Parent
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By:
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/s/ Jeffrey D. Pribor
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Name:
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Jeffrey D. Pribor
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Title:
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Executive Vice President & Chief Financial Officer
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Address: 299 Park Avenue, New York, NY 10171
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Telephone: (212) 763-5600
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Facsimile: (212) 763-5608
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GENERAL MARITIME SUBSIDIARY II CORPORATION,
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as Borrower
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By:
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/s/ Jeffrey D. Pribor
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Name:
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Jeffrey D. Pribor
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Title:
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President
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Address: 299 Park Avenue, New York, NY 10171
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Telephone: (212) 763-5600
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Facsimile: (212) 763-5608
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GENERAL MARITIME SUBSIDIARY CORPORATION,
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as a Guarantor
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By:
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/s/ Jeffrey D. Pribor
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Name:
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Jeffrey D. Pribor
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Title:
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President
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Address: 299 Park Avenue, New York, NY 10171
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Telephone: (212) 763-5600
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Facsimile: (212) 763-5608
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General Maritime Subsidiary II Corporation Second Amended & Restated Credit Agreement
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ARLINGTON TANKERS LTD.,
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as a Guarantor
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By:
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/s/ Jeffrey D. Pribor
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Name:
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Jeffrey D. Pribor
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Title:
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Director
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Address: 299 Park Avenue, New York, NY 10171
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Telephone: (212) 763-5600
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Facsimile: (212) 763-5608
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With a copy to:
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Kramer Levin Naftalis & Frankel LLP
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1177 Avenue of the Americas
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New York, NY 10022
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Attention: Kenneth Chin, Esq.
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Telephone: (212) 715-9100
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Facsimile: (212) 715-8000
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and
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Kirkland & Ellis LLP
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555 California Street
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San Francisco, CA 94104
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Attention: Samantha Good
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Telephone: (415) 439-1914
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Facsimile: (415) 439-1500
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General Maritime Subsidiary II Corporation Second Amended & Restated Credit Agreement
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NORDEA BANK FINLAND PLC, NEW YORK BRANCH, Individually, as Administrative Agent and as Joint Lead Arranger
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By:
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/s/ Martin Lunder
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Name: Martin Lunder
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Title: Senior Vice President
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By:
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/s/ Christian David Christensen
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Name: Christian David Christensen
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Title: Assistant Vice President
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General Maritime Subsidiary II Corporation Second Amended & Restated Credit Agreement
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DNB BANK ASA,
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Individually and as Joint Lead Arranger
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By:
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/s/ Sanjiv Nayar
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Name: Sanjiv Nayar
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Title: Senior Vice President
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By:
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/s/ Kjell Tore Egge
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Name: Kjell Tore Egge
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Title: Senior Vice President
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General Maritime Subsidiary II Corporation Second Amended & Restated Credit Agreement
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SIGNATURE PAGE TO THE SECOND AMENDED AND RESTATED CREDIT AGREEMENT, DATED AS OF THE DATE FIRST REFERENCED ABOVE, AMONG GENERAL MARITIME CORPORATION, GENERAL MARITIME SUBSIDIARY II CORPORATION, GENERAL MARITIME SUBSIDIARY CORPORATION, ARLINGTON TANKERS LTD., THE LENDERS PARTY THERETO, AND NORDEA BANK FINLAND PLC, NEW YORK BRANCH, AS ADMINISTRATIVE AGENT
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NAME OF INSTITUTION:
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Skandinaviska Enskilda Banken AB(publ)
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By
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/s/ Magnus Arve
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Name: Magnus Arve
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Title:
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By:
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/s/ Arne Juell-Skielse
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Name: Arne Juell Skielse
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General Maritime Subsidiary II Corporation Second Amended & Restated Credit Agreement
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SIGNATURE PAGE TO THE SECOND AMENDED AND RESTATED CREDIT AGREEMENT, DATED AS OF THE DATE FIRST REFERENCED ABOVE, AMONG GENERAL MARITIME CORPORATION, GENERAL MARITIME SUBSIDIARY II CORPORATION, GENERAL MARITIME SUBSIDIARY CORPORATION, ARLINGTON TANKERS LTD., THE LENDERS PARTY THERETO, AND NORDEA BANK FINLAND PLC, NEW YORK BRANCH, AS ADMINISTRATIVE AGENT
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NIBC Bank N.V.:
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By
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/s/ Robbert Jan Souge
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Name: Robbert Jan Souge
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Title:
Director
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By
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/s/ Maurice Wijmans
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Name: Maurice Wijmans
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Title:
Director
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General Maritime Subsidiary Corporation Second Amended and Restated Credit Agreement
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SIGNATURE PAGE TO THE SECOND AMENDED AND RESTATED CREDIT AGREEMENT, DATED AS OF THE DATE FIRST REFERENCED ABOVE, AMONG GENERAL MARITIME CORPORATION, GENERAL MARITIME SUBSIDIARY II CORPORATION, GENERAL MARITIME SUBSIDIARY CORPORATION, ARLINGTON TANKERS LTD., THE LENDERS PARTY THERETO, AND NORDEA BANK FINLAND PLC, NEW YORK BRANCH, AS ADMINISTRATIVE AGENT
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NAME OF INSTITUTION:
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ITF INTERNATIONAL TRANSPORT FINANCE SUISSE AG
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By
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/s/ Carsten Gutknecht-Stöhr
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/s/ Natalja Formuzala
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Name: Carsten Gutknecht-Stöhr
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Natalja Formuzala
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Title: Managing Director
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Vice President
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General Maritime Subsidiary Corporation Second Amended and Restated Credit Agreement
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SIGNATURE PAGE TO THE SECOND AMENDED AND RESTATED CREDIT AGREEMENT, DATED AS OF THE DATE FIRST REFERENCED ABOVE, AMONG GENERAL MARITIME CORPORATION, GENERAL MARITIME SUBSIDIARY II CORPORATION, GENERAL MARITIME SUBSIDIARY CORPORATION, ARLINGTON TANKERS LTD., THE LENDERS PARTY THERETO, AND NORDEA BANK FINLAND PLC, NEW YORK BRANCH, AS ADMINISTRATIVE AGENT
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NAME OF INSTITUTION: Citibank N.A.
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By
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/s/ Peter Baumann
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Name: Peter Baumann
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Title: Managing Director
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General Maritime Subsidiary Corporation Second Amended and Restated Credit Agreement
By executing and delivering a copy hereof, each Subsidiary Guarantor listed below hereby acknowledges and agrees that all Obligations of each such Subsidiary Guarantor shall be fully guaranteed pursuant to the Subsidiaries Guaranty and shall be fully secured pursuant to the Security Documents, in each case in accordance with the respective terms and provisions thereof. Each of the undersigned, each being a Subsidiary Guarantor under, and as defined in, the Original Credit Agreement referenced in the foregoing Credit Agreement, hereby consents to the entering into of the Credit Agreement by the Borrower and agrees to the provisions thereof.
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Acknowledged and Agreed by the following Subsidiary Guarantors:
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GMR POSEIDON LLC
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GMR ULYSSES LLC
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GMR HERCULES LLC
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GMR ATLAS LLC
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GMR ZEUS LLC
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GMR MANIATE LLC
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GMR SPARTIATE LLC
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GMR ARGUS LLC
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GMR DAPHNE LLC
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GMR DEFIANCE LLC
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GMR ELEKTRA LLC
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GMR GEORGE T LLC
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GMR HOPE LLC
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GMR HORN LLC
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GMR ORION LLC
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GMR PHOENIX LLC
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GMR ST. NIKOLAS LLC
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GMR SPYRIDON LLC
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By:
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/s/ Brian Kerr
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Name:
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Brian Kerr
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Title:
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Manager
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General Maritime Subsidiary II Corporation Second Amended & Restated Credit Agreement
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VISION LTD.
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VICTORY LTD.
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COMPANION LTD.
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COMPATRIOT LTD.
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CONSUL LTD.
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By:
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/s/ Dean Scaglione
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Name:
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Dean Scaglione
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Title:
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Director
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GMR AGAMEMNON LLC
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GMR AJAX LLC
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GMR DEFIANCE LLC
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GMR HARRIET G LLC
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GMR KARA G LLC
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GMR MINOTAUR LLC
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GMR STRENGTH LLC
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By:
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/s/ Dean Scaglione
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Name:
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Dean Scaglione
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Title:
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Manager
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General Maritime Subsidiary II Corporation Second Amended & Restated Credit Agreement
SCHEDULE I
LOANS
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INSTITUTIONS
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LOANS
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NORDEA BANK FINLAND PLC, NEW YORK BRANCH
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$
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72,130,788.07
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DNB BANK ASA
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$
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72,130,788.07
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SKANDINAVISKA ENSKILDA BANKEN AB
(PUBL)
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$
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36,801,422.50
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NIBC BANK N.V.
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$
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36,801,422.50
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ITF INTERNATIONAL TRANSPORT FINANCE SUISSE AG
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$
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33,857,308.69
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CITIBANK, N.A.
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$
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22,080,853.49
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Total:
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$
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273,802,583.31
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SCHEDULE II
LENDER ADDRESSES
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INSTITUTIONS
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ADDRESSES
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NORDEA BANK FINLAND PLC, NEW YORK BRANCH
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437 Madison Avenue, 21
st
Floor
New York, NY 10022
Attn: Shipping Offshore and Oil Services
Telephone: 212-318-9636
Facsimile: 212-421-4420
E-mail: john.boesen@nordea.com
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DNB BANK ASA
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200 Park Avenue, 31
st
Floor
New York, NY 10166
Attn: Sanjiv Nayar/Hugues Calmet
Telephone: 212-681-3862/3876
Facsimile: 212-681-3900
E-mail: sanjiv.nayar@dnb.no
hugues.calmet@dnb.no
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SKANDINAVISKA ENSKILDA BANKEN AB
(PUBL)
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Kungsträdgårdsgatan 8
S-106 40 Stockholm, Sweden
Attn: Arne Juell-Skielse
Telephone: (46) 87 63 8638
E-mail: arne.juell-skielse@seb.se
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NIBC BANK N.V.
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Carnegieplein 4
2517 KJ The Hague
Netherlands
Attn: Jan-Willem Schellingerhout
Telephone: (31) 70 342 54 06
Facsimile: (31) 70 342 55 77
E-mail: jan-willem.schellingerhout@nibc.com
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ITF INTERNATIONAL TRANSPORT FINANCE SUISSE AG
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Wasserwerkstrasse 12
8006 Zurich
Switzerland
Attn:
Mirko Ruelker
Telephone: (41) 44 3656 123
Facsimile: (41) 44 3656 299
E-mail: Mirko.Ruelker@itf-suisse.com
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CITIBANK, N.A.
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388 Greenwich Street, 23rd Floor
New York, NY 10013
Attn: Peter Baumann
Telephone: 212-559-5200
E-mail: peter.t.baumann@citi.com
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SCHEDULE III
COLLATERAL VESSELS
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#
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Collateral
Vessels
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Type
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Size (dwt)
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Built
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Registry
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Official
Number
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Primary Collateral Vessels
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1
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Genmar Poseidon
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VLCC
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305,795
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2002
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Republic of the Marshall Islands
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2187
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2
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Genmar Ulysses
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VLCC
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318,695
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2003
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Republic of the Marshall Islands
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2092
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3
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Genmar Hercules
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VLCC
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306,543
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2007
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Republic of the Marshall Islands
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2001
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4
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Genmar Atlas
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VLCC
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306,005
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2007
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Republic of the Marshall Islands
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2004
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5
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Genmar Zeus
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VLCC
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318,325
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2010
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Republic of the Marshall Islands
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2295
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6
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Genmar Maniate
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Suezmax
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165,000
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2010
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Republic of the Marshall Islands
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2247
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7
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Genmar Spartiate
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Suezmax
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165,000
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2011
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Republic of the Marshall Islands
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2262
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Secondary Collateral Vessels
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8
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Genmar Agamemnon
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Aframax
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96,214
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1995
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Republic of Liberia
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10257
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9
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Genmar Ajax
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Aframax
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96,183
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1996
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Republic of Liberia
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10259
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10
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Genmar Daphne
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Aframax
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106,560
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2002
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Republic of the Marshall Islands
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2501
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11
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Genmar Defiance
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Aframax
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105,538
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2002
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Republic of Liberia
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11678
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12
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Genmar Elektra
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Aframax
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106,548
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2002
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Republic of the Marshall Islands
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2945
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13
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Genmar Strength
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Aframax
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105,674
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2003
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Republic of Liberia
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11846
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14
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Genmar Minotaur
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Aframax
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96,226
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1995
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Republic of Liberia
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10948
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15
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Genmar Consul
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Handymax
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47,400
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2004
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Islands of Bermuda
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733745
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16
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Genmar Companion
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Panamax
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72,750
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2004
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Islands of Bermuda
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733743
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17
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Genmar Compatriot
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Panamax
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72,750
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2004
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Islands of Bermuda
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733750
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18
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Genmar Argus
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Suezmax
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164,097
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2000
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Republic of the Marshall Islands
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1826
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19
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Genmar George T
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Suezmax
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149,847
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2007
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Republic of the Marshall Islands
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2935
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#
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Collateral
Vessels
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Type
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Size (dwt)
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Built
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Registry
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Official
Number
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20
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Genmar Harriet G
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Suezmax
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150,205
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2006
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Republic of Liberia
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12884
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21
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Genmar Hope
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Suezmax
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153,919
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1999
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Republic of the Marshall Islands
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1343
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22
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Genmar Horn
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Suezmax
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159,475
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1999
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Republic of the Marshall Islands
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1225
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23
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Genmar Kara G
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Suezmax
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150,296
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2007
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Republic of Liberia
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13098
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24
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Genmar Orion
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Suezmax
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159,992
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2002
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Republic of the Marshall Islands
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1641
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25
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Genmar Phoenix
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Suezmax
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149,999
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1999
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Republic of the Marshall Islands
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1882
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26
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Genmar
Spyridon
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Suezmax
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153,972
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2000
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Republic of the Marshall Islands
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1404
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27
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Genmar St. Nikolas
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Suezmax
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149,876
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2008
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Republic of the Marshall Islands
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3046
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28
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Genmar
Victory
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VLCC
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314,000
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2001
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Islands of Bermuda
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733717
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29
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Genmar Vision
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VLCC
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314,000
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2001
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Islands of Bermuda
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733716
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2
SCHEDULE IV
EXISTING LIENS
None.
SCHEDULE V
EXISTING INDEBTEDNESS
None.
SCHEDULE VI
REQUIRED INSURANCE
Insurance to be maintained on each Collateral Vessel:
(a) The Parent shall, and shall cause its Subsidiaries to, at the Parent’s expense, keep each Collateral Vessel insured with insurers and protection and indemnity clubs or associations of internationally recognized responsibility, and placed in such markets, on such terms and conditions, and through brokers, in each case reasonably acceptable to the Collateral Agent (it being understood that Leeds and Leeds, AON and Marsh are acceptable) and under forms of policies approved by the Collateral Agent against the risks indicated below and such other risks as the Collateral Agent may specify from time to time:
(i)
Marine and war risk, including terrorism, confiscation, piracy, London Blocking and Trapping Addendum and Lost Vessel Clause, hull and machinery insurance, hull interest insurance and freight interest insurance, together in an amount in U.S. dollars at all times equal to, except as otherwise approved or required in writing by the Collateral Agent, the greater of (x) the then Fair Market Value of the Collateral Vessel and (y) an amount which, when aggregated with such insured value of the other Collateral Vessels (if the other Collateral Vessels are then subject to a Collateral Vessel Mortgage or a Secondary Collateral Vessel Mortgage in favor of the Collateral Agent under the Credit Agreement, and have not suffered an Event of Loss) is equal to 120% of the aggregate principal amount of outstanding Loans at such time. The insured values for hull and machinery required under this clause (i) for each Collateral Vessel shall at all times be in an amount equal to the greater of (x) eighty per cent (80%) of the Fair Market Value of the Collateral Vessel and (y) an amount which, when aggregated with such hull and machinery insured value of the other Collateral Vessels (if the other Collateral Vessels are then subject to a Collateral Vessel Mortgage or a Secondary Collateral Vessel Mortgage in favor of the Collateral Agent and have not suffered an Event of Loss), is equal to the aggregate principal amount of outstanding Loans at such time, and the remaining machinery and war risk insurance required by this clause (i) may be taken out as hull and freight interest insurance.
(ii)
Marine and war risk protection and indemnity insurance or equivalent insurance (including coverage against liability for crew, fines and penalties arising out of the operation of the Collateral Vessel, insurance against liability arising out of pollution, spillage or leakage, and workmen’s compensation or longshoremen’s and harbor workers’ insurance as shall be required by applicable law) in such amounts approved by the Collateral Agent;
provided
,
however
, that insurance against liability under law or international convention arising out of pollution, spillage or leakage shall be in an amount not less than the greater of:
(y)
the maximum amount available, as that amount may from time to time change, from the International Group of Protection and Indemnity Associations (the “
International Group
”) or alternatively such sources of pollution, spillage or leakage coverage as are commercially available in any
absence of such coverage by the International Group as shall be carried by prudent shipowners for similar vessels engaged in similar trades
plus
amounts available from customary excess insurers of such risks as excess amounts shall be carried by prudent shipowners for similar vessels engaged in similar trades; and
(z)
the amounts required by the laws or regulations of the United States of America or any applicable jurisdiction in which the Collateral Vessel may be trading from time to time.
(iii)
While the Collateral Vessel is idle or laid up, at the option of the Parent and in lieu of the above-mentioned marine and war risk hull insurance, port risk insurance insuring the Collateral Vessel against the usual risks encountered by like vessels under similar circumstances.
(b)
The Collateral Agent shall, at the Parent’s expense, keep each Collateral Vessel insured with mortgagee’s interest insurance (including extended mortgagee’s interest-additional perils-pollution) on such conditions as the Collateral Agent may reasonably require and mortgagee’s interest insurance for pollution risks as from time to time agreed, in each case satisfactory to the Collateral Agent and in an amount in U.S. dollars which, when aggregated with such insured value of the other Collateral Vessels (if the other Collateral Vessels are then subject to a Collateral Vessel Mortgage or a Secondary Collateral Vessel Mortgage in favor of the Collateral Agent under the Credit Agreement, and have not suffered an Event of Loss), is not less than 120% of the aggregate principal amount of outstanding Loans at such time; all such Collateral Agent’s interest insurance cover shall in the Collateral Agent’s discretion be obtained directly by the Collateral Agent and the Parent shall on demand pay all costs of such cover; premium costs shall be reimbursed by the Parent to the Collateral Agent.
(c)
The marine and commercial war-risk insurance required in this
Schedule VI
for each Collateral Vessel shall have deductibles no higher than the following: (i) Hull and Machinery - U.S. $500,000 (or such other amount as may be agreed to by the Required Lenders) for all hull and machinery claims and each accident or occurrence and (ii) Protection and Indemnity — U.S. $100,000 for collision liabilities, U.S. $50,000 for cargo claims, U.S. $35,000 for crew claims, U.S. $20,000 passenger claims and U.S. $20,000 all other claims, in each case each accident or occurrence.
All insurance maintained hereunder shall be primary insurance without right of contribution against any other insurance maintained by the Collateral Agent. Each policy of marine and war risk hull and machinery insurance with respect to each Collateral Vessel shall provide that the Collateral Agent shall be a named insured in its capacity as Mortgagee and as a loss payee. Each entry in a marine and war risk protection indemnity club with respect to each Collateral Vessel shall note the interest of the Collateral Agent. The Administrative Agent, the Collateral Agent and each of their respective successors and assigns shall not be responsible for any premiums, club calls, assessments or any other obligations or for the representations and warranties made therein by the Parent, any of the Parent’s Subsidiaries or any other person.
2
(d)
The Collateral Agent shall from time to time, and in any event at least annually, obtain a detailed report signed by a firm of marine insurance brokers acceptable to the Collateral Agent with respect to P & I entry, the hull and machinery and war risk insurance carried and maintained on each Collateral Vessel, together with their opinion as to the adequacy thereof and its compliance with the provisions of this
Schedule VI
. At the Parent’s expense the Parent will cause its insurance broker (which, for the avoidance of doubt shall be a different insurance broker from the firm of marine insurance brokers referred to in the immediately preceding sentence) and the P & I club or association providing P & I insurance referred to in part (a)(ii) of this
Schedule VI
, to agree to advise the Collateral Agent by telecopier or electronic mail confirmed by letter of any expiration, termination, alteration or cancellation of any policy, any default in the payment of any premium and of any other act or omission on the part of the Parent or any of its Subsidiaries of which the Parent has knowledge and which might invalidate or render unenforceable, in whole or in part, any insurance on any Collateral Vessel, and to provide an opportunity of paying any such unpaid premium or call, such right being exercisable by the Collateral Agent on a Collateral Vessel on an individual basis and not on a fleet basis. In addition, the Parent shall promptly provide the Collateral Agent with any information which the Collateral Agent reasonably requests for the purpose of obtaining or preparing any report from the Collateral Agent’s independent marine insurance consultant as to the adequacy of the insurances effected or proposed to be effected in accordance with this
Schedule VI
as of the date hereof or in connection with any renewal thereof, and the Parent shall upon demand indemnify the Collateral Agent in respect of all reasonable fees and other expenses incurred by or for the account of the Collateral Agent in connection with any such report,
provided
that the Collateral Agent shall be entitled to such indemnity only for one such report during a period of twelve months.
The underwriters or brokers shall furnish the Collateral Agent with a letter or letters of undertaking to the effect that:
(i)
they will hold the instruments of insurance, and the benefit of the insurances thereunder, to the order of the Collateral Agent in accordance with the terms of the loss payable clause referred to in the relevant Assignment of Insurances or Secondary Assignment of Insurances for each Collateral Vessel, as applicable;
(ii)
they will have endorsed on each and every policy as and when the same is issued the loss payable clause and the notice of assignment referred to in the relevant Assignment of Insurances or Secondary Assignment of Insurances for each Collateral Vessel, as applicable; and
(iii)
they will not set off against any sum recoverable in respect of a claim against any Collateral Vessel under the said underwriters or brokers or any other Person in respect of any other vessel nor cancel the said insurances by reason of non-payment of such premiums or other amounts.
All policies of insurance required hereby shall provide for not less than 14 days prior written notice to be received by the Collateral Agent of the termination or cancellation of the insurance evidenced thereby. All policies of insurance maintained pursuant to this
Schedule VI
3
for risks covered by insurance other than that provided by a P & I Club shall contain provisions waiving underwriters’ rights of subrogation thereunder against any assured named in such policy and any assignee of said assured. The Parent shall, and shall cause its Subsidiaries to, assign to the Collateral Agent its full rights under any policies of insurance in respect of each Collateral Vessel. The Parent agrees that it shall, and shall cause each of its Subsidiaries to, deliver, unless the insurances by their terms provide that they cannot cease (by reason of nonrenewal or otherwise) without the Collateral Agent being informed and having the right to continue the insurance by paying any premiums not paid by the Parent, receipts showing payment of premiums for Required Insurance and also of demands from the Collateral Vessel’s P & I underwriters to the Collateral Agent at least two (2) days before the risk in question commences.
(e)
Unless the Collateral Agent shall otherwise agree, all amounts of whatsoever nature payable under any insurance must be payable to the Collateral Agent for distribution first to itself and thereafter to the Parent or others as their interests may appear,
provided
that, notwithstanding anything to the contrary herein, until otherwise required by the Collateral Agent by notice to the underwriters upon the occurrence and continuance of a Default or an Event of Default hereunder, (i) amounts payable under any insurance on each Collateral Vessel with respect to protection and indemnity risks may be paid directly to (x) the Parent to reimburse it for any loss, damage or expense incurred by it and covered by such insurance or (y) the Person to whom any liability covered by such insurance has been incurred provided that the underwriter shall have first received evidence that the liability insured against has been discharged, and (ii) amounts payable under any insurance with respect to each Collateral Vessel involving any damage to each Collateral Vessel not constituting an Event of Loss, may be paid by underwriters directly for the repair, salvage or other charges involved or, if the Parent shall have first fully repaired the damage or paid all of the salvage or other charges, may be paid to the Parent as reimbursement therefor;
provided
,
however
, that if such amounts (including any deductible) are in excess of U.S. $2,000,000, the underwriters shall not make such payment without first obtaining the written consent thereto of the Collateral Agent.
(f)
All amounts paid to the Collateral Agent in respect of any insurance on the Collateral Vessels shall be disposed of as follows (after deduction of the expenses of the Collateral Agent in collecting such amounts):
(i)
any amount which might have been paid at the time, in accordance with the provisions of paragraph (d) above, directly to the Parent or others shall be paid by the Collateral Agent to, or as directed by, the Parent;
(ii)
all amounts paid to the Collateral Agent in respect of an Event of Loss of the Collateral Vessel shall be applied by the Collateral Agent to the payment of the Indebtedness hereby secured pursuant to Section 4.02(b) of the Credit Agreement and subject to the Intercreditor Agreements;
(iii)
all other amounts paid to the Collateral Agent in respect of any insurance on the Collateral Vessel may, in the Collateral Agent’s sole discretion, be held and applied to the prepayment of the Obligations or to making of needed repairs or other work on the Collateral Vessel, or to the payment of other claims incurred by the Parent or
4
any of its Subsidiaries relating to the Collateral Vessel, or may be paid to the Parent or whosoever may be entitled thereto.
(g)
In the event that any claim or lien is asserted against any Collateral Vessel for loss, damage or expense which is covered by insurance required hereunder and it is necessary for the Parent to obtain a bond or supply other security to prevent arrest of such Collateral Vessel or to release the Collateral Vessels from arrest on account of such claim or lien, the Collateral Agent, on request of the Parent, may, in the sole discretion of the Collateral Agent, assign to any Person, firm or corporation executing a surety or guarantee bond or other agreement to save or release the Collateral Vessel from such arrest, all right, title and interest of the Collateral Agent in and to said insurance covering said loss, damage or expense, as collateral security to indemnify against liability under said bond or other agreement.
(h)
The Parent shall deliver to the Collateral Agent certified copies and, whenever so requested by the Collateral Agent, the originals of all certificates of entry, cover notes, binders, evidences of insurance and policies and all endorsements and riders amendatory thereof in respect of insurance maintained pursuant to Section 8.03 of the Credit Agreement and this
Schedule VI
for the purpose of inspection or safekeeping, or, alternatively, satisfactory letters of undertaking from the broker holding the same. The Collateral Agent shall be under no duty or obligation to verify the adequacy or existence of any such insurance or any such policies, endorsement or riders.
(i)
The Parent will not, and will not permit any of its Subsidiaries to, execute or permit or willingly allow to be done any act by which any insurance may be suspended, impaired or cancelled, and that it will not permit or allow the Collateral Vessels to undertake any voyage or run any risk or transport any cargo which may not be permitted by the policies in force, without having previously notified the Collateral Agent in writing and insured the Collateral Vessels by additional coverage to extend to such voyages, risks, passengers or cargoes.
(j)
In case any underwriter proposes to pay less on any claim than the amount thereof, the Parent shall forthwith inform the Collateral Agent, and if a Default, an Event of Default or an Event of Loss has occurred and is continuing, the Collateral Agent shall have the exclusive right to negotiate and agree to any compromise.
(k)
The Parent will, and will cause each of its Subsidiaries to, comply with and satisfy all of the provisions of any applicable law, convention, regulation, proclamation or order concerning financial responsibility for liabilities imposed on the Parent, its Subsidiaries or the Collateral Vessels with respect to pollution by any state or nation or political subdivision thereof and will maintain all certificates or other evidence of financial responsibility as may be required by any such law, convention, regulation, proclamation or order with respect to the trade in which the Collateral Vessels are from time to time engaged and the cargo carried by it.
5
SCHEDULE VII
ERISA
General Maritime Corporation 401(k) Profit Sharing Plan and Trust
SCHEDULE VIII
SUBSIDIARIES
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Name of Subsidiary
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Direct Owner(s)
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Percent (%)
Ownership
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Jurisdiction of
Organization
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General Maritime Subsidiary Corporation
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General Maritime Corporation
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100
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%
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Republic of the Marshall Islands
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|
General Maritime Management LLC
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General Maritime Subsidiary Corporation
|
|
100
|
%
|
Republic of the Marshall Islands
|
|
General Maritime Management (UK) LLC
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General Maritime Management LLC
|
|
100
|
%
|
Republic of the Marshall Islands
|
|
General Maritime Management (Hellas) LLC
|
|
General Maritime Management LLC
|
|
100
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%
|
Republic of Liberia
|
|
General Maritime Management (Portugal) LLC
|
|
General Maritime Management LLC
|
|
100
|
%
|
Republic of the Marshall Islands
|
|
General Maritime Management (Portugal) LDA
|
|
General Maritime Management (Portugal) LLC
|
|
100
|
%
|
Republic of Portugal
|
|
General Maritime Crewing Pte. Ltd.
|
|
General Maritime Management (Portugal) LLC
|
|
100
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%
|
Singapore
|
|
General Maritime Crewing Private Limited (India Division Office)
|
|
General Maritime Crewing Pte. Ltd.
|
|
100
|
%
|
India
|
|
General Maritime Crewing Limited
|
|
General Maritime Crewing Pte. Ltd.
|
|
100
|
%
|
Russia
|
|
GMR Chartering LLC
|
|
General Maritime Subsidiary Corporation
|
|
100
|
%
|
New York
|
|
GMR Administration Corp.
|
|
General Maritime Subsidiary Corporation
|
|
100
|
%
|
Republic of the Marshall Islands
|
|
GMR Agamemnon LLC
|
|
General Maritime Subsidiary Corporation
|
|
100
|
%
|
Republic of Liberia
|
|
GMR Ajax LLC
|
|
General Maritime Subsidiary Corporation
|
|
100
|
%
|
Republic of Liberia
|
|
GMR Alexandra LLC
|
|
General Maritime Subsidiary Corporation
|
|
100
|
%
|
Republic of the Marshall Islands
|
|
GMR Argus LLC
|
|
General Maritime Subsidiary Corporation
|
|
100
|
%
|
Republic of the Marshall Islands
|
|
GMR Constantine LLC
|
|
General Maritime Subsidiary Corporation
|
|
100
|
%
|
Republic of Liberia
|
|
GMR Daphne LLC
|
|
General Maritime Subsidiary
|
|
100
|
%
|
Republic of the
|
|
Name of Subsidiary
|
|
Direct Owner(s)
|
|
Percent (%)
Ownership
|
|
Jurisdiction of
Organization
|
|
|
|
Corporation
|
|
|
|
Marshall Islands
|
|
GMR Defiance LLC
|
|
General Maritime Subsidiary Corporation
|
|
100
|
%
|
Republic of Liberia
|
|
GMR Elektra LLC
|
|
General Maritime Subsidiary Corporation
|
|
100
|
%
|
Republic of the Marshall Islands
|
|
GMR George T LLC
|
|
General Maritime Subsidiary Corporation
|
|
100
|
%
|
Republic of the Marshall Islands
|
|
GMR GP LLC
|
|
General Maritime Subsidiary Corporation
|
|
100
|
%
|
Republic of the Marshall Islands
|
|
GMR Gulf LLC
|
|
General Maritime Subsidiary Corporation
|
|
100
|
%
|
Republic of the Marshall Islands
|
|
GMR Harriet G LLC
|
|
General Maritime Subsidiary Corporation
|
|
100
|
%
|
Republic of Liberia
|
|
GMR Hope LLC
|
|
General Maritime Subsidiary Corporation
|
|
100
|
%
|
Republic of the Marshall Islands
|
|
GMR Horn LLC
|
|
General Maritime Subsidiary Corporation
|
|
100
|
%
|
Republic of the Marshall Islands
|
|
GMR Kara G LLC
|
|
General Maritime Subsidiary Corporation
|
|
100
|
%
|
Republic of Liberia
|
|
GMR Limited LLC
|
|
General Maritime Subsidiary Corporation
|
|
100
|
%
|
Republic of the Marshall Islands
|
|
GMR Minotaur LLC
|
|
General Maritime Subsidiary Corporation
|
|
100
|
%
|
Republic of Liberia
|
|
GMR Orion LLC
|
|
General Maritime Subsidiary Corporation
|
|
100
|
%
|
Republic of the Marshall Islands
|
|
GMR Phoenix LLC
|
|
General Maritime Subsidiary Corporation
|
|
100
|
%
|
Republic of the Marshall Islands
|
|
GMR Princess LLC
|
|
General Maritime Subsidiary Corporation
|
|
100
|
%
|
Republic of Liberia
|
|
GMR Progress LLC
|
|
General Maritime Subsidiary Corporation
|
|
100
|
%
|
Republic of Liberia
|
|
GMR Revenge LLC
|
|
General Maritime Subsidiary Corporation
|
|
100
|
%
|
Republic of Liberia
|
2
|
Name of Subsidiary
|
|
Direct Owner(s)
|
|
Percent (%)
Ownership
|
|
Jurisdiction of
Organization
|
|
GMR St. Nikolas LLC
|
|
General Maritime Subsidiary Corporation
|
|
100
|
%
|
Republic of the Marshall Islands
|
|
GMR Spyridon LLC
|
|
General Maritime Subsidiary Corporation
|
|
100
|
%
|
Republic of the Marshall Islands
|
|
GMR Star LLC
|
|
General Maritime Subsidiary Corporation
|
|
100
|
%
|
Republic of Liberia
|
|
GMR Strength LLC
|
|
General Maritime Subsidiary Corporation
|
|
100
|
%
|
Republic of Liberia
|
|
GMR Trader LLC
|
|
General Maritime Subsidiary Corporation
|
|
100
|
%
|
Republic of Liberia
|
|
GMR Trust LLC
|
|
General Maritime Subsidiary Corporation
|
|
100
|
%
|
Republic of Liberia
|
|
Arlington Tankers Ltd.
|
|
General Maritime Corporation
|
|
100
|
%
|
Bermuda
|
|
Companion Ltd.
|
|
Arlington Tankers Ltd.
|
|
100
|
%
|
Bermuda
|
|
Compatriot Ltd.
|
|
Arlington Tankers Ltd.
|
|
100
|
%
|
Bermuda
|
|
Consul Ltd.
|
|
Arlington Tankers Ltd.
|
|
100
|
%
|
Bermuda
|
|
Victory Ltd.
|
|
Arlington Tankers Ltd.
|
|
100
|
%
|
Bermuda
|
|
Vision Ltd.
|
|
Arlington Tankers Ltd.
|
|
100
|
%
|
Bermuda
|
|
Arlington Tankers, LLC
|
|
Arlington Tankers Ltd.
|
|
100
|
%
|
Delaware
|
|
General Maritime Subsidiary II Corporation
|
|
General Maritime Corporation
|
|
100
|
%
|
Republic of the Marshall Islands
|
|
GMR Poseidon LLC
|
|
General Maritime Subsidiary II Corporation
|
|
100
|
%
|
Republic of the Marshall Islands
|
|
GMR Ulysses LLC
|
|
General Maritime Subsidiary II Corporation
|
|
100
|
%
|
Republic of the Marshall Islands
|
|
GMR Hercules LLC
|
|
General Maritime Subsidiary II Corporation
|
|
100
|
%
|
Republic of the Marshall Islands
|
|
GMR Atlas LLC
|
|
General Maritime Subsidiary II Corporation
|
|
100
|
%
|
Republic of the Marshall Islands
|
|
GMR Zeus LLC
|
|
General Maritime Subsidiary II Corporation
|
|
100
|
%
|
Republic of the Marshall Islands
|
|
GMR Maniate LLC
|
|
General Maritime Subsidiary II Corporation
|
|
100
|
%
|
Republic of the Marshall Islands
|
3
|
Name of Subsidiary
|
|
Direct Owner(s)
|
|
Percent (%)
Ownership
|
|
Jurisdiction of
Organization
|
|
GMR Spartiate LLC
|
|
General Maritime Subsidiary II Corporation
|
|
100
|
%
|
Republic of the Marshall Islands
|
|
General Maritime Investments LLC
|
|
General Maritime Corporation
|
|
100
|
%
|
Republic of the Marshall Islands
|
|
General Product Carriers Corporation
|
|
General Maritime Investments LLC
|
|
100
|
%
|
Republic of the Marshall Islands
|
|
General Maritime Subsidiary NSF Corporation
|
|
General Maritime Corporation
|
|
100
|
%
|
Republic of the Marshall Islands
|
|
Concept Ltd.
|
|
General Maritime Subsidiary NSF Corporation
|
|
100
|
%
|
Bermuda
|
|
Concord Ltd.
|
|
General Maritime Subsidiary NSF Corporation
|
|
100
|
%
|
Bermuda
|
|
Contest Ltd.
|
|
General Maritime Subsidiary NSF Corporation
|
|
100
|
%
|
Bermuda
|
|
GMR Concord LLC
|
|
General Maritime Subsidiary NSF Corporation
|
|
100
|
%
|
Republic of the Marshall Islands
|
|
GMR Contest LLC
|
|
General Maritime Subsidiary NSF Corporation
|
|
100
|
%
|
Republic of the Marshall Islands
|
|
GMR Concord LLC
|
|
General Maritime Subsidiary NSF Corporation
|
|
100
|
%
|
Republic of the Marshall Islands
|
4
SCHEDULE IX
CAPITALIZATION
All defined terms used in this
Schedule IX
and not defined in the Agreement shall have the meaning assigned thereto in the Plan of Reorganization.
|
New Equity Investment Shares
|
|
Oaktree Plan Sponsors
|
|
4,750,272
|
|
|
Commitment Fee GMR Common Stock
|
|
Oaktree Plan Sponsors
|
|
300,017
|
|
|
OCM Conversion Shares
|
|
OCM
|
|
4,750,271
|
|
|
Unsecured Creditor Equity Distribution
|
|
Unsecured Creditor Distribution Escrow Account
|
|
200,011
|
|
|
New GMR Warrants
|
|
Unsecured Creditor Distribution Escrow Account
|
|
309,296
|
|
Subject to dilution for New GMR Common Stock issuable under the Equity Incentive Program (each as defined in the Plan of Reorganization).
Note: Subject to True-Up for Rejection Claim Damage Claims pursuant to Article IX.D of the Plan of Reorganization.
SCHEDULE X
APPROVED CLASSIFICATION SOCIETIES
American Bureau of Shipping
Nippon Kaiji Kyokai
Germanischer Lloyd
Lloyd’s Register of Shipping
Bureau Veritas
Det Norske Veritas
SCHEDULE XI
EXISTING INVESTMENTS
None.
SCHEDULE XII
TRANSACTIONS WITH AFFILIATES
None.
SCHEDULE XIII
SUBSIDIARY GUARANTORS
|
Name of Subsidiary
|
|
Direct Owner(s)
|
|
GMR Agamemnon LLC
|
|
General Maritime Subsidiary Corporation
|
|
GMR Ajax LLC
|
|
General Maritime Subsidiary Corporation
|
|
GMR Argus LLC
|
|
General Maritime Subsidiary Corporation
|
|
GMR Daphne LLC
|
|
General Maritime Subsidiary Corporation
|
|
GMR Defiance LLC
|
|
General Maritime Subsidiary Corporation
|
|
GMR Elektra LLC
|
|
General Maritime Subsidiary Corporation
|
|
GMR George T LLC
|
|
General Maritime Subsidiary Corporation
|
|
GMR Harriet G LLC
|
|
General Maritime Subsidiary Corporation
|
|
GMR Hope LLC
|
|
General Maritime Subsidiary Corporation
|
|
GMR Horn LLC
|
|
General Maritime Subsidiary Corporation
|
|
GMR Kara G LLC
|
|
General Maritime Subsidiary Corporation
|
|
GMR Minotaur LLC
|
|
General Maritime Subsidiary Corporation
|
|
GMR Orion LLC
|
|
General Maritime Subsidiary Corporation
|
|
GMR Phoenix LLC
|
|
General Maritime Subsidiary Corporation
|
|
GMR St. Nikolas LLC
|
|
General Maritime Subsidiary Corporation
|
|
GMR Spyridon LLC
|
|
General Maritime Subsidiary Corporation
|
|
GMR Strength LLC
|
|
General Maritime Subsidiary Corporation
|
|
Companion Ltd.
|
|
Arlington Tankers Ltd.
|
|
Compatriot Ltd.
|
|
Arlington Tankers Ltd.
|
|
Consul Ltd.
|
|
Arlington Tankers Ltd.
|
|
Victory Ltd.
|
|
Arlington Tankers Ltd.
|
|
Vision Ltd.
|
|
Arlington Tankers Ltd.
|
|
GMR Poseidon LLC
|
|
General Maritime Subsidiary II Corporation
|
|
Name of Subsidiary
|
|
Direct Owner(s)
|
|
GMR Ulysses LLC
|
|
General Maritime Subsidiary II Corporation
|
|
GMR Hercules LLC
|
|
General Maritime Subsidiary II Corporation
|
|
GMR Atlas LLC
|
|
General Maritime Subsidiary II Corporation
|
|
GMR Zeus LLC
|
|
General Maritime Subsidiary II Corporation
|
|
GMR Maniate LLC
|
|
General Maritime Subsidiary II Corporation
|
|
GMR Spartiate LLC
|
|
General Maritime Subsidiary II Corporation
|
2
SCHEDULE XIV
LITIGATION
·
On or about August 29, 2007, an oil sheen was discovered by shipboard personnel of the
Genmar Progress
in Guayanilla Bay, Puerto Rico in the vicinity of the vessel. The vessel crew took prompt action pursuant to the vessel response plan. The Parent’s subsidiary which operates the vessel promptly reported this incident to the U.S. Coast Guard and subsequently accepted responsibility under the U.S. Oil Pollution Act of 1990 for any damage or loss resulting from the accidental discharge of bunker fuel determined to have been discharged from the vessel. The Parent understands the federal and Puerto Rico authorities are conducting civil investigations into an oil pollution incident which occurred during this time period on the southwest coast of Puerto Rico including Guayanilla Bay. The extent to which oil discharged from the
Genmar Progress
is responsible for this incident is currently the subject of investigation. The U.S. Coast Guard has designated the
Genmar Progress
as a potential source of discharged oil. Under the U.S. Oil Pollution Act of 1990, the source of the discharge is liable, regardless of fault, for damages and oil spill remediation as a result of the discharge. On January 13, 2009, the Parent received a demand from the U.S. National Pollution Fund for approximately $5.8 million for the U.S. Coast Guard’s response costs and certain costs of the Departamento de Recursos Naturales y Ambientales of Puerto Rico in connection with the alleged damage to the environment caused by the spill. In April 2010, the U.S. National Pollution Fund made an additional natural resource damage assessment claim against the Parent of approximately $0.5 million. In October 2010, the Parent entered into a settlement agreement with the U.S. National Pollution Fund in which the Parent agreed to pay approximately $6.3 million in full satisfaction of the oil spill response costs of the U.S. Coast Guard and natural damage assessment costs of the U.S. National Pollution Fund through the date of the settlement agreement. Pursuant to the settlement agreement, the U.S. National Pollution Fund will waive its claims to any additional civil penalties under the U.S. Clean Water Act as well as for accrued interest. The settlement has been paid in full by the vessel’s protection and indemnity underwriters. Notwithstanding the settlement agreement, the Parent may be subject to any further potential claims by the U.S. National Pollution Fund or the U.S. Coast Guard arising from the ongoing natural resource damage assessment.
·
On November 25, 2008, a jury in the Southern District of Texas found General Maritime Management (Portugal) L.D.A., a subsidiary of GMR (“GMM Portugal”), and two vessel officers of the
Genmar Defiance
guilty of violating the Act to Prevent Pollution from Ships and 18 USC 1001. The conviction resulted from charges based on alleged incidents occurring on board the
Genmar Defiance
arising from potential failures by shipboard staff to properly record discharges of bilge waste during the period of November 24, 2007 through November 26, 2007. Pursuant to the sentence imposed by the Court on March 13, 2009, GMM Portugal paid a $1 million fine in April 2009 and is subject to a probationary period of five years. During this period, a court-appointed monitor will monitor and audit GMM Portugal’s compliance with its environmental compliance plan, and GMM Portugal is required to designate a responsible corporate officer to submit monthly reports to, and respond to inquiries from, the court’s probation department. The court stated that, should GMM Portugal engage in future conduct in violation of its probation, it may, under appropriate circumstances, ban certain of the Parent’s vessels from calling on U.S. ports. Any violations of probation may also result in additional penalties, costs or sanctions being imposed on the Parent.
SCHEDULE XV
NON-RECOURSE SUBSIDIARIES
None.
Exhibit 10.40
EXECUTION VERSION
GENERAL MARITIME CORPORATION
VLCC ACQUISITION I CORPORATION
$131,600,000
Senior Unsecured Notes due 2020
NOTE AND GUARANTEE AGREEMENT
Dated as of March 28, 2014
TABLE OF CONTENTS
|
Section
|
|
|
Page
|
|
|
|
|
|
1.
|
AUTHORIZATION OF NOTES
|
2
|
|
2.
|
SALE AND PURCHASE OF NOTES
|
2
|
|
3.
|
CLOSING
|
3
|
|
4.
|
CONDITIONS TO CLOSING
|
3
|
|
|
4.1.
|
Representations and Warranties
|
3
|
|
|
4.2.
|
Performance; No Default
|
4
|
|
|
4.3.
|
Compliance Certificates
|
4
|
|
|
4.4.
|
Opinions of Counsel
|
4
|
|
|
4.5.
|
Purchase Permitted By Applicable Law, etc.
|
5
|
|
|
4.6.
|
Sale of Other Notes
|
5
|
|
|
4.7.
|
Payment of Special Counsel Fees
|
5
|
|
|
4.8.
|
Changes in Corporate Structure
|
5
|
|
|
4.9.
|
[Reserved.]
|
5
|
|
|
4.10.
|
Funding Instructions; Notice of Designation
|
5
|
|
|
4.11.
|
Subsidiary Guarantee
|
6
|
|
|
4.12.
|
Equity Issuance
|
6
|
|
|
4.13.
|
Acquisition
|
6
|
|
|
4.14.
|
Proceedings and Documents
|
6
|
|
5.
|
REPRESENTATIONS, WARRANTIES AND AGREEMENTS
|
6
|
|
|
5.1.
|
Corporate/Limited Liability Company/Limited Partnership Status
|
6
|
|
|
5.2.
|
Corporate Power and Authority
|
7
|
|
|
5.3.
|
No Violation
|
7
|
|
|
5.4.
|
Governmental Approvals
|
7
|
|
|
5.5.
|
Financial Statements; Financial Condition; Undisclosed Liabilities
|
8
|
|
|
5.6.
|
Litigation
|
8
|
|
|
5.7.
|
True and Complete Disclosure
|
8
|
|
|
5.8.
|
Use of Proceeds; Margin Regulations
|
9
|
|
|
5.9.
|
Tax Returns and Payments
|
9
|
|
|
5.10.
|
Compliance with ERISA
|
9
|
|
|
5.11.
|
Capitalization
|
11
|
|
|
5.12.
|
Subsidiaries
|
11
|
|
|
5.13.
|
Compliance with Statutes, etc.
|
12
|
|
|
5.14.
|
Investment Company Act
|
12
|
|
|
5.15.
|
Money Laundering
|
12
|
|
|
5.16.
|
Pollution and Other Regulations
|
12
|
|
|
5.17.
|
Labor Relations
|
13
|
|
|
5.18.
|
Patents, Licenses, Franchises and Formulas
|
14
|
|
|
5.19.
|
Indebtedness
|
14
|
|
|
5.20.
|
Insurance
|
14
|
|
|
5.21.
|
No Immunity
|
14
|
|
|
5.22.
|
Solvency
|
14
|
|
|
5.23.
|
Patriot Act
|
15
|
|
|
5.24.
|
Certain Business Practices
|
15
|
|
|
5.25.
|
Private Offering by the Obligors
|
15
|
|
|
5.26.
|
Subsidiary Guarantees
|
15
|
|
|
|
|
|
|
i
|
6.
|
REPRESENTATIONS OF THE PURCHASERS
|
15
|
|
|
6.1.
|
Purchase for Investment
|
15
|
|
7.
|
INFORMATION AS TO THE OBLIGORS
|
16
|
|
|
7.1.
|
Financial and Business Information
|
16
|
|
|
7.2.
|
Officer’s Certificates
|
18
|
|
|
7.3.
|
Inspections
|
18
|
|
8.
|
PREPAYMENT OF THE NOTES
|
19
|
|
|
8.1.
|
Maturity; Accrual of Interest
|
19
|
|
|
8.2.
|
Optional Prepayments with Make-Whole Amount
|
20
|
|
|
8.3.
|
Prepayment in Connection with a Change of Control
|
21
|
|
|
8.4.
|
[Reserved.]
|
21
|
|
|
8.5.
|
Maturity; Surrender, etc.
|
21
|
|
|
8.6.
|
Purchase of Notes
|
21
|
|
|
8.7.
|
Make-Whole Amount
|
22
|
|
|
8.8.
|
Commitment Fee
|
23
|
|
9.
|
AFFIRMATIVE COVENANTS
|
23
|
|
|
9.1.
|
Books and Records
|
23
|
|
|
9.2.
|
Maintenance of Property; Insurance
|
24
|
|
|
9.3.
|
Corporate Franchises
|
24
|
|
|
9.4.
|
Compliance with Statutes, etc.
|
24
|
|
|
9.5.
|
Compliance with Environmental Laws
|
24
|
|
|
9.6.
|
ERISA
|
25
|
|
|
9.7.
|
End of Fiscal Years; Fiscal Quarters
|
26
|
|
|
9.8.
|
Performance of Obligations
|
26
|
|
|
9.9.
|
Payment of Taxes
|
27
|
|
|
9.10.
|
Ranking
|
27
|
|
|
9.11.
|
Subsidiary Guarantees; Release
|
27
|
|
|
9.12.
|
Restricted and Unrestricted Subsidiaries
|
27
|
|
|
9.13.
|
Use of Proceeds
|
28
|
|
|
9.14.
|
Scorpio Newbuilds
|
28
|
|
10.
|
NEGATIVE COVENANTS
|
28
|
|
|
10.1.
|
Liens
|
28
|
|
|
10.2.
|
Consolidation, Merger, Sale of Assets, etc.
|
30
|
|
|
10.3.
|
Restricted Payments
|
31
|
|
|
10.4.
|
Indebtedness
|
34
|
|
|
10.5.
|
Transactions with Affiliates
|
35
|
|
|
10.6.
|
Limitation on Certain Restrictions on Restricted Subsidiaries
|
36
|
|
|
10.7.
|
Business
|
37
|
|
11.
|
EVENTS OF DEFAULT
|
37
|
|
12.
|
REMEDIES ON DEFAULT, ETC.
|
39
|
|
|
12.1.
|
Acceleration
|
39
|
|
|
12.2.
|
[Reserved.]
|
40
|
|
|
12.3.
|
Rescission
|
40
|
|
|
12.4.
|
No Waivers or Election of Remedies, Expenses, etc.
|
40
|
|
13.
|
TAX INDEMNIFICATION; FATCA INFORMATION
|
41
|
|
|
13.1.
|
Tax Indemnification
|
41
|
|
|
13.2.
|
Survival of Obligations
|
42
|
|
14.
|
GUARANTEE, ETC.
|
42
|
|
|
14.1.
|
Guarantee
|
42
|
|
|
14.2.
|
Guarantee Obligations Unconditional
|
43
|
|
|
14.3.
|
Survival of Obligations
|
45
|
|
|
14.4.
|
Guarantees Endorsed on the Notes
|
45
|
ii
|
15.
|
REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES
|
46
|
|
|
15.1.
|
Registration of Notes
|
46
|
|
|
15.2.
|
Transfer and Exchange of Notes
|
46
|
|
|
15.3.
|
Replacement of Notes
|
46
|
|
16.
|
PAYMENTS ON NOTES
|
47
|
|
|
16.1.
|
Place of Payment
|
47
|
|
|
16.2.
|
Home Office Payment
|
47
|
|
17.
|
EXPENSES, ETC.
|
48
|
|
|
17.1.
|
Transaction Expenses
|
48
|
|
|
17.2.
|
Taxes
|
48
|
|
|
17.3.
|
Survival
|
48
|
|
18.
|
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT
|
49
|
|
19.
|
AMENDMENT AND WAIVER
|
49
|
|
|
19.1.
|
Requirements
|
49
|
|
|
19.2.
|
Solicitation of Holders of Notes
|
49
|
|
|
19.3.
|
Binding Effect, etc.
|
49
|
|
|
19.4.
|
Notes held by Obligors, etc.
|
50
|
|
20.
|
NOTICES
|
50
|
|
21.
|
REPRODUCTION OF DOCUMENTS
|
51
|
|
22.
|
CONFIDENTIAL INFORMATION
|
51
|
|
23.
|
SUBSTITUTION OF PURCHASER
|
52
|
|
24.
|
JURISDICTION AND PROCESS
|
53
|
|
25.
|
OBLIGATION TO MAKE PAYMENTS IN U.S. DOLLARS
|
53
|
|
26.
|
MISCELLANEOUS
|
54
|
|
|
26.1.
|
Successors and Assigns
|
54
|
|
|
26.2.
|
Payments Due on Non-Business Days
|
54
|
|
|
26.3.
|
Severability
|
54
|
|
|
26.4.
|
Construction
|
54
|
|
|
26.5.
|
Ratification
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54
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26.6.
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Counterparts
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55
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26.7.
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Governing Law
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55
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26.8.
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Accounting Matters
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55
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iii
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SCHEDULE A
|
—
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INFORMATION RELATING TO PURCHASERS
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SCHEDULE B
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—
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DEFINED TERMS
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SCHEDULE 5.5(b)
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—
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Obligations
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SCHEDULE 5.6
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—
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Litigation
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SCHEDULE 5.10
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—
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ERISA
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SCHEDULE 5.11(b)
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—
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Capitalization
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SCHEDULE 5.11(c)
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—
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Capitalization
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SCHEDULE 5.12
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—
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Subsidiaries: FinCo Issuer
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SCHEDULE 5.19
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—
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Indebtedness
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SCHEDULE 5.20
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—
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Insurance
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SCHEDULE 10.1(c)
|
—
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Existing Liens
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SCHEDULE 10.5
|
—
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Transactions with Affiliates
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EXHIBIT 1
|
—
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Form of Senior Note due 2020
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EXHIBIT 2
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Form of Guarantee
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EXHIBIT 3
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Form of Subsidiary Guarantee
|
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iv
GENERAL MARITIME CORPORATION
VLCC ACQUISITION I CORPORATION
299 Park Avenue
New York, NY 10171
Senior Unsecured Notes due 2020
As of March 28, 2014
TO THE PURCHASERS WHOSE NAMES
APPEAR IN THE ACCEPTANCE
FORM AT THE END HEREOF:
Ladies and Gentlemen:
GENERAL MARITIME CORPORATION, a company incorporated under the laws of the Marshall Islands (the “
GMC
”), is a party to that certain Binding Purchase Commitment for US$131,600,000 Million Senior Unsecured Notes due 2020 dated as of March 14, 2014 (the “
Commitment Letter
”), pursuant to which GMC shall exercise reasonable efforts to obtain and enter into amendments (the “
Existing Credit Amendments
”) to (i) that certain Third Amended and Restated Credit Agreement, dated as of May 17, 2012, as amended by that certain Omnibus First Amendment, dated as of December 21, 2012, that certain Second Amendment dated as of October 1, 2013 and that certain Third Amendment dated as of November 29, 2013, among GMC, General Maritime Subsidiary Corporation as borrower, Arlington Tankers Ltd. and General Maritime Subsidiary II Corporation, each subsidiary guarantor, each lender party thereto and Nordea Bank Finland PLC, New York Branch, as administrative agent and (ii) that certain Second Amended and Restated Credit Agreement, dated as of May 17, 2012, as amended by that certain Omnibus First Amendment, dated as of December 21, 2012, that certain Second Amendment dated as of October 1, 2013 and that certain Third Amendment dated as of November 29, 2013, among GMC, General Maritime Subsidiary Corporation, as borrower, General Maritime Subsidiary II Corporation and Arlington Tankers Ltd., each as a guarantor, each lender party thereto and Nordea as administrative agent (clauses (i) and (ii) together, the “
Existing Credit Agreements
”), which will approve and permit GMC to issue the Notes (the “
GMC Issuer
”) and to establish a subsidiary, VLCC Acquisition I Corporation, a company incorporated under the laws of the Marshall Islands (“
FinCo
”) to guarantee the Notes (the “
Guarantor/FinCo
”) pursuant to the terms and conditions of this Agreement;
provided
, that if the Existing Credit Amendments do not approve or permit GMC Issuer to issue the Notes hereunder, then GMC shall designate FinCo as the issuer of the Notes defined below (the “
FinCo Issuer
”, and either of FinCo Issuer or GMC Issuer as specified as the
“Issuer” in the Notice of Designation shall be the “
Issuer
”) and GMC shall guarantee the Notes (the “
Guarantor/GMC
”) pursuant to the terms and conditions of this Agreement;
provided
,
further
, that if FinCo Issuer shall issue the Notes hereunder and the Existing Credit Amendments do not approve or permit the Guarantor/GMC to guarantee the Notes hereunder, then the interest rate applicable to the Notes shall increase by 2.0% as set forth herein and (x) Guarantor/GMC shall not be required to guarantee the Notes and (y) all obligations of the Guarantor/GMC under the Agreement including under Sections 9, 10 and 17 shall be automatically released immediately prior to the Closing.
GMC and FinCo agree with each of the purchasers whose names appear in the acceptance form at the end hereof (each, a “
Purchaser
” and, collectively, the “
Purchasers
”) as follows:
1.
AUTHORIZATION OF NOTES.
The Issuer will authorize the issue and sale of $131,600,000 aggregate principal amount, as such principal amount may be increased as a result of the payment of any PIK Interest, of its Senior Unsecured Notes due 2020 (the “
Notes
”, such term to include any such notes issued in substitution therefor pursuant to Section 15). The Notes shall be substantially in the form set out in
Exhibits 1
with such changes therefrom, if any, as may be approved by each Purchaser and Issuer. Certain capitalized terms used in this Agreement are defined in
Schedule B
; references to a “Schedule” or an “Exhibit” are, unless otherwise specified, to a Schedule or an Exhibit attached to this Agreement.
Payment of the principal of, Make-Whole Amount (if any) and interest on the Notes and all other amounts owing (a)(i) by GMC Issuer hereunder shall be unconditionally and irrevocably guaranteed by the Guarantor/FinCo as provided in Section 14 and in the Subsidiary Guarantee or (ii) by the FinCo Issuer hereunder shall be unconditionally and irrevocably guaranteed by the Guarantor/GMC as provided in Section 14 (and each Note will have the Guarantee (each a “
Guarantee
”, and together, the “
Guarantees
”) of the applicable Guarantor endorsed thereon in the form set out in
Exhibit 2
) and (b) by the Subsidiary Guarantors as provided for in the Subsidiary Guarantees;
provided
that in the case of clause (a)(ii), consent and approval from the lenders under the Existing Credit Agreements is obtained by GMC, the Existing Credit Amendments are consummated by GMC and satisfactory evidence of such consummation is delivered to the Purchasers;
provided
,
further
, that in the case of clause (a)(ii), if the Existing Credit Amendments do not approve or permit the Guarantor/GMC to guarantee the Notes hereunder, then the interest rate applicable to the Notes shall increase by 2.0% as set forth in Section 8.1(f).
2.
SALE AND PURCHASE OF NOTES
.
Subject to the terms and conditions of this Agreement, the Issuer will issue and sell to each Purchaser and each Purchaser will purchase from the Issuer, at the Closing provided for in Section 3, Notes in the principal amount specified opposite such Purchaser’s name in
Schedule A
at the purchase price of 95.0% of the principal amount thereof. The Purchasers’ obligations hereunder are several and not joint obligations and no Purchaser shall have any
2
liability to any Person for the performance or non-performance of any obligation by any other Purchaser hereunder.
3.
CLOSING
.
The sale and purchase of the Notes to be purchased by each Purchaser shall occur at the offices of Milbank, Tweed, Hadley & McCloy LLP, One Chase Manhattan Plaza, New York, New York 10005, at 10:00 a.m., New York City time, at a closing (the “
Closing
”) on May 13, 2014 or on such other Business Day on or prior to May 13, 2014 as specified in written notice to the Purchasers no later than 10 Business Days prior to such date. At the Closing the Issuer will deliver to each Purchaser the Notes to be purchased by such Purchaser in the form of a single Note for each series to be so purchased (or such greater number of Notes (other than PIK Notes, which may be issued in minimum denominations of $1.00 and integral multiples thereof and any increase in the principal amount of the PIK Notes as a result of any PIK Interest may be made in multiples of $1.00) in denominations of at least $400,000 as such Purchaser may request) dated the date of the Closing and registered in such Purchaser’s name (or in the name of such Purchaser’s nominee), against delivery by such Purchaser to the Issuer or its order of immediately available funds in the amount of the purchase price therefor by wire transfer of immediately available funds for the account of the Issuer, as specified in the funding instruction letter provided by the Issuer pursuant to Section 4.10. If at the Closing the Issuer shall fail to tender such Notes to any Purchaser as provided above in this Section 3, or any of the conditions specified in Section 4 shall not have been fulfilled to such Purchaser’s satisfaction, such Purchaser shall, at such Purchaser’s election, be relieved of all further obligations under this Agreement, without thereby waiving any rights such Purchaser may have by reason of such failure or such nonfulfillment.
4.
CONDITIONS TO CLOSING
.
Each Purchaser’s obligation to purchase and pay for the Notes to be sold to such Purchaser at the Closing is subject to the fulfillment to such Purchaser’s satisfaction or waiver, prior to or at the Closing, of the following conditions:
4.1.
Representations and Warranties
.
(a)
Subject to Section 4.1(b), the representations and warranties of the Issuer and the Guarantor (together, the “
Obligors
”) in this Agreement shall be correct in all material respects as at the date of this agreement and at the time of the Closing, except for (i) the number of issued shares described in Section 5.11(a)(1), which shall be notified to the Purchasers no later than two Business Days prior to the Closing and (ii) any representation or warranty made as of a specific date, which representation and warranty shall remain correct as of such earlier date.
(b)
The Obligors shall:
(i) promptly upon the availability thereof, deliver to the Purchasers the final audited consolidated balance sheets of GMC as at December 31, 2013 and the related consolidated statements of operations and of cash flows for the fiscal year ended
3
on such date and to the extent available, the consolidated balance sheets of GMC as at the end of each quarterly accounting period in the 2013 fiscal year and the related consolidated statements of operations and cash flows, in each case for such quarterly accounting period;
(ii) confirm that the representations and warranties made in Section 5.5 remain correct at the time of Closing with respect to the final audited consolidated balance sheets described in clause (b)(i) above; and
(iii) confirm that the representations and warranties made in Section 5.9 remain correct at the time of Closing.
4.2.
Performance; No Default
.
Each Obligor shall have performed and complied with all agreements and conditions contained in this Agreement required to be performed or complied with by it prior to or at the Closing and after giving effect to the issue and sale of the Notes (and the application of the proceeds thereof as contemplated by Section 5.8) no Default or Event of Default shall have occurred and be continuing. No Obligor nor any Subsidiary shall have entered into any transaction since the date of the Commitment Letter that would have been prohibited by Section 10.1, 10.3 or 10.5 hereof had such Sections applied since such date.
4.3.
Compliance Certificates
.
(a)
Officer’s Certificate
. Each Obligor shall have delivered to such Purchaser an Officer’s Certificate, dated the date of the Closing, certifying that the conditions specified in Sections 4.1, 4.2 and 4.13 have been fulfilled.
(b)
Secretary’s Certificate
. Each Obligor and each Subsidiary Guarantor shall have delivered to such Purchaser a certificate, dated the date of the Closing, certifying as to the resolutions attached thereto and other corporate proceedings relating to the authorization, execution and delivery of this Agreement and the Notes (in the case of the Issuer), of this Agreement and the Guarantees (in the case of the Guarantor) and of its Subsidiary Guarantee (in the case of each Subsidiary Guarantor).
4.4.
Opinions of Counsel
.
Such Purchaser shall have received opinions in form and substance satisfactory to such Purchaser, dated the date of the Closing (a) from (i) Kramer Levin Naftalis & Frankel LLP, New York counsel for the Obligors and the Subsidiary Guarantors, and (ii) Reeder & Simpson P.C., Marshall Islands counsel for GMC, the Issuer and the Subsidiary Guarantors covering such matters incident to the transactions contemplated hereby as such Purchaser or the Purchasers’ counsel may reasonably request (and the Issuer hereby instructs its counsel to deliver such opinions to the Purchasers) and (b) from Milbank, Tweed, Hadley & McCloy LLP, the Purchasers’ special New York counsel in connection with such transactions covering such matters incident to such transactions as such Purchaser may reasonably request.
4
4.5.
Purchase Permitted By Applicable Law, etc
.
On the date of the Closing, such Purchaser’s purchase of Notes shall (i) be permitted by the laws and regulations of each jurisdiction to which such Purchaser is subject, without recourse to provisions (such as Section 1405(a)(8) of the New York Insurance Law) permitting limited investments by insurance companies without restriction as to the character of the particular investment, (ii) not violate any applicable law or regulation (including, without limitation, Regulation U, T or X of the Board of Governors of the Federal Reserve System) and (iii) not subject such Purchaser to any tax, penalty or liability under or pursuant to any applicable law or regulation, which law or regulation was not in effect on the date hereof.
4.6.
Sale of Other Notes
.
Contemporaneously with the Closing the Issuer shall sell to each Purchaser and each Purchaser shall purchase the Notes to be purchased by it at the Closing as specified in
Schedule A
.
4.7.
Payment of Special Counsel Fees
.
Without limiting the provisions of Section 17.1, the Obligors shall have paid on or before the Closing the reasonable fees, charges and disbursements of the Purchasers’ special counsel referred to in Section 4.4(b) to the extent reflected in a statement of such counsel rendered to the Obligors at least one Business Day prior to the Closing.
4.8.
Changes in Corporate Structure
.
No Obligor shall have changed its jurisdiction of incorporation or been a party to any merger or consolidation and shall not have succeeded to all or any substantial part of the liabilities of any other entity, at any time following the date of the most recent financial statements referred to in
Schedule 5.5
, except in connection with the Acquisition.
4.9.
[Reserved.]
4.10.
Funding Instructions; Notice of Designation
.
(a)
At least (i) three Business Days prior to the date of the Closing if such Closing occurs on May 13, 2014 or (ii) 10 Business Days prior to the date of the Closing if such Closing occurs on a Business Day prior to May 13, 2014, each Purchaser shall have received written instructions signed by a Responsible Officer on letterhead of the Guarantor confirming the information specified in Section 3 including (A) the name and address of the transferee bank, (B) such transferee bank’s ABA number and (C) the account name and number into which the purchase price for the Notes is to be deposited.
(b)
The earlier of (i) five Business Days after obtaining from the Existing Credit Agreement Lenders consent and approval and/or approval of the transactions
5
contemplated under this Agreement, if obtained, and (ii) either (A) at least three Business Days prior to the date of the Closing if such Closing occurs on May 13, 2014 or (B) at least 10 Business Days prior to the date of the Closing if such Closing occurs on a Business Day prior to May 13, 2014, each Purchaser shall have received written notice signed by a Responsible Officer on letterhead of GMC confirming the names of the Issuer and the Guarantor (the “
Notice of Designation
”).
4.11.
Subsidiary Guarantee
.
Such Purchaser shall have received a true and complete copy of the Subsidiary Guarantee duly executed and delivered by each Subsidiary Guarantor and, in either case, the Subsidiary Guarantee shall be in full force and effect.
4.12.
Equity Issuance.
Each Purchaser shall have received, in form and substance reasonably satisfactory to such Purchaser, evidence of the consummation of the Equity Issuance and receipt by GMC of the proceeds of such Equity Issuance.
4.13.
Acquisition.
Each Purchaser shall have received, in form and substance reasonably satisfactory to such Purchaser, evidence of the consummation of the Acquisition.
4.14.
Proceedings and Documents
.
All corporate and other proceedings in connection with the transactions contemplated by this Agreement, the Subsidiary Guarantee and all documents and instruments incident to such transactions shall be reasonably satisfactory to such Purchaser and the Purchasers’ special counsel, and such Purchaser and such special counsel shall have received all such counterpart originals or certified or other copies of such documents as such Purchaser or such special counsel may reasonably request.
5.
Representations, Warranties and Agreements
.
The Issuer and the Guarantor jointly and severally represent and warrant to each Purchaser that:
5.1.
Corporate/Limited Liability Company/Limited Partnership Status.
Each Obligor (i) is a duly organized and validly existing corporation, limited liability company or limited partnership, as the case may be, in good standing under the laws of the jurisdiction of its incorporation or formation, (ii) has the corporate or other applicable power and authority to own its property and assets and to transact the business in which it is currently engaged and presently proposes to engage and (iii) is duly qualified and is authorized to do business and is in good standing in each jurisdiction where the conduct of its business as currently conducted requires such qualifications, except for failures to be so qualified which,
6
individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.
5.2.
Corporate Power and Authority
.
Each Obligor has the corporate or other applicable power and authority to execute, deliver and perform the terms and provisions of this Agreement and the Notes (in the case of the Issuer) and this Agreement and the Guarantee (in the case of the Guarantor) and has taken all necessary corporate or other applicable action to authorize the execution, delivery and performance by it of this Agreement, the Notes and the Guarantee (as applicable). Each Obligor has duly executed and delivered this Agreement and the Notes (in the case of the Issuer) and this Agreement and the Guarantee (in the case of the Guarantor), and this Agreement and the Guarantee constitutes, and upon execution and delivery of the Note by the Issuer, the Note will constitute, the legal, valid and binding obligation of such Obligor enforceable against such Obligor in accordance with its terms, except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws generally affecting creditors’ rights and by equitable principles (regardless of whether enforcement is sought in equity or at law).
5.3.
No Violation
.
Neither the execution, delivery or performance by any Obligor of this Agreement, the Notes and the Guarantee, nor compliance by it with the terms and provisions thereof, will (i) contravene any material provision of any applicable law, statute, rule or regulation or any applicable order, judgment, writ, injunction or decree of any court or governmental instrumentality, (ii) conflict with or result in any breach of any of the terms, covenants, conditions or provisions of, or constitute a default under, or result in the creation or imposition of (or the obligation to create or impose) any Lien upon any of the material properties or assets of GMC, FinCo or any of their respective Restricted Subsidiaries pursuant to the terms of any indenture, mortgage, deed of trust, credit agreement or loan agreement, or any other material agreement, contract or instrument, to which GMC, FinCo or any of their respective Restricted Subsidiaries is a party or by which it or any of its material property or assets is bound or to which it may be subject, in each case, assuming the Existing Credit Amendments are effective, or (iii) violate any provision of the certificate of incorporation or by-laws (or equivalent organizational documents) of GMC, FinCo or any of their Restricted Subsidiaries.
5.4.
Governmental Approvals
.
No order, consent, approval, license, authorization or validation of, or filing, recording or registration with, or exemption by, any governmental or public body or authority, or any subdivision thereof, is required to authorize, or is required in connection with, (i) the execution, delivery and performance by any Obligor of this Agreement, the Notes or the Guarantee or (ii) the legality, validity, binding effect or enforceability of this Agreement, the Notes or the Guarantee.
7
5.5.
Financial Statements; Financial Condition; Undisclosed Liabilities.
(a) (i) The draft audited consolidated balance sheets of GMC as at December 31, 2013 and the related consolidated statements of operations and of cash flows for the fiscal year ended on such date and (ii) to the extent available, the consolidated balance sheets of GMC as at the end of each quarterly accounting period in the 2013 fiscal year and the related consolidated statements of operations and cash flows, in each case for such quarterly accounting period, present fairly the consolidated financial condition of GMC as at such date, and the consolidated results of its operations and its consolidated cash flows for the respective fiscal years then ended. All such financial statements, including the related schedules and notes thereto, have been prepared in accordance with GAAP applied consistently throughout the periods involved (except as approved by the aforementioned firm of accountants and disclosed therein). Neither GMC nor any of its Restricted Subsidiaries has any material guarantee obligations, contingent liabilities and liabilities for taxes, or any long-term leases or unusual forward or long-term commitments, including any interest rate or foreign currency swap or exchange transaction or other obligation in respect of derivatives, that are not reflected in the financial statements referred to in the preceding sentence (it being understood that with respect to guarantee obligations, the underlying debt is so reflected).
(b)
Except as fully disclosed in the financial statements and the notes related thereto delivered pursuant to Section 5.5(a) or as set forth on
Schedule 5.5(b)
, there are as of the date hereof no liabilities or obligations with respect to GMC or any of its Restricted Subsidiaries of any nature whatsoever (whether absolute, accrued, contingent or otherwise and whether or not due) which, either individually or in the aggregate, would be materially adverse to GMC and its Restricted Subsidiaries taken as a whole. As of the date hereof, none of the Obligors knows of any basis for the assertion against it of any liability or obligation of any nature that is not fairly disclosed (including, without limitation, as to the amount thereof) in the financial statements and the notes related thereto delivered pursuant to Section 5.5(a) which, either individually or in the aggregate, could reasonably be expected to be materially adverse to GMC and its Restricted Subsidiaries taken as a whole.
5.6.
Litigation
.
Except as set forth on
Schedule 5.6
, there are no actions, suits, investigations (conducted by any governmental or other regulatory body of competent jurisdiction) or proceedings pending or, to the knowledge of GMC or FinCo, threatened against GMC, FinCo or any of their respective Restricted Subsidiaries that could reasonably be expected to have a Material Adverse Effect.
5.7.
True and Complete Disclosure
.
All factual information (taken individually or as a whole) furnished by or on behalf of GMC or FinCo in any schedule or certificate delivered to any Purchaser (including, without limitation, all information contained in this Agreement, the Notes, the Guarantee and any financial statement referred to in Section 5.5(a)) for purposes of or in connection with this Agreement, the Notes, the Guarantee or any transaction contemplated herein or therein is, and all other such factual information (taken individually or as a whole) hereafter furnished by or on
8
behalf of GMC or FinCo in any schedule or certificate delivered to any Purchaser will be, true and accurate in all material respects and not incomplete by omitting to state any fact necessary to make such information (taken as a whole) not misleading in any material respect at such time as such information was provided in light of the circumstances under which such information was provided.
5.8.
Use of Proceeds; Margin Regulations
.
(a)
All proceeds of the Notes shall be used to pay transaction costs and expenses and the remaining consideration payable in connection with the Scorpio Newbuilds.
(b)
No part of the proceeds of any Note was used to purchase or carry any Margin Stock or to extend credit for the purpose of purchasing or carrying any Margin Stock.
5.9.
Tax Returns and Payments
.
Each Obligor and its respective Restricted Subsidiaries has timely filed all U.S. federal income tax returns, statements, forms and reports for taxes and all other material U.S. and non-U.S. tax returns, statements, forms and reports for taxes required to be filed by or with respect to the income, properties or operations of the Obligor and/or any of its Restricted Subsidiaries (the “
Returns
”). The Returns accurately reflect in all material respects all liability for taxes of each Obligor and its Restricted Subsidiaries as a whole for the periods covered thereby. Each Obligor and each of its Restricted Subsidiaries have at all times paid, or have provided adequate reserves (in accordance with GAAP) for the payment of, all taxes shown as due on the Returns and all other material U.S. federal, state and non-U.S. taxes that have become due and payable. There is no material action, suit, proceeding, investigation, audit, or claim now pending or, to the knowledge of each Obligor or any of its Restricted Subsidiaries, threatened by any authority regarding any taxes relating to each Obligor or any of its Restricted Subsidiaries. As of the date of this Agreement, neither the Obligors nor any of their respective Restricted Subsidiaries has entered into an agreement or waiver or been requested to enter into an agreement or waiver extending any statute of limitations relating to the payment or collection of taxes of such Obligor or any of its Restricted Subsidiaries, or is aware of any circumstances that would cause the taxable years or other taxable periods of such Obligor or any of its Restricted Subsidiaries not to be subject to the normally applicable statute of limitations. Neither the Obligors nor any of their respective Restricted Subsidiaries (i) has engaged in any “listed transaction” within the meaning of Section 6011 of the Code or (ii) has any actual or potential liability for the taxes of any Person (other than such Obligor or any of its present or former Restricted Subsidiaries) under the United States Treasury regulation Section 1.1502-6 (or any similar provision of state, local, foreign or provincial law) or a contractual liability for such taxes under any tax sharing agreement.
5.10.
Compliance with ERISA.
(a)
Schedule 5.10
sets forth, as of the date hereof, each Plan; with respect to each Plan, other than any Multiemployer Plan (and each related trust, insurance contract or fund), there has been no failure to be in substantial compliance with its terms and with all applicable laws, including without limitation ERISA and the Code, that could reasonably be
9
expected to give rise to a Material Adverse Effect; each Plan, other than any Multiemployer Plan (and each related trust, if any), which is intended to be qualified under Section 401(a) of the Code has received a determination letter (or an opinion letter) from the United States Internal Revenue Service to the effect that it meets the requirements of Sections 401(a) and 501(a) of the Code; no Reportable Event has occurred; to the best knowledge of the Obligors or any of their respective Restricted Subsidiaries or ERISA Affiliates no Plan which is a Multiemployer Plan is insolvent or in reorganization; no Plan has an Unfunded Current Liability in an amount material to the Issuer’s operation; no Plan (other than a Multiemployer Plan) which is subject to Section 412 of the Code or Section 302 of ERISA has failed to satisfy minimum funding standards, or has applied for or received a waiver of the minimum funding standards or an extension of any amortization period, within the meaning of Section 412 or 430 of the Code or Section 302 or 303 of ERISA; with respect to each Plan (other than a Multiemployer Plan) its actuary has certified that such Plan is not an at-risk plan within the meaning of Section 430 of the Code or Section 303 of ERISA; all contributions required to be made with respect to a Plan have been or will be timely made (except as disclosed on
Schedule 5.10
); neither the Obligors nor any of their respective Restricted Subsidiaries nor any ERISA Affiliate has incurred any material liability (including any indirect, contingent or secondary liability) to or on account of a Plan pursuant to Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section 436(f), 4971 or 4975 of the Code; no proceedings have been instituted by the PBGC to terminate or appoint a trustee to administer any Plan (in the case of a Multiemployer Plan, to the best knowledge of the Obligors or any of their respective Restricted Subsidiaries or ERISA Affiliates) which is subject to Title IV of ERISA; no action, suit, proceeding, hearing, audit or investigation with respect to the administration, operation or the investment of assets of any Plan (other than routine claims for benefits) is pending, or, to the best knowledge of the Obligors or any of their respective Restricted Subsidiaries, expected or threatened which could reasonably be expected to have a Material Adverse Effect; using actuarial assumptions and computation methods consistent with Part 1 of subtitle E of Title IV of ERISA, the Obligors and their respective Restricted Subsidiaries and ERISA Affiliates would have no liabilities to any Plans which are Multiemployer Plans in the event of a complete withdrawal therefrom in an amount which could reasonably be expected to have a Material Adverse Effect; neither the Issuer nor any of its Restricted Subsidiaries nor any ERISA Affiliate has received any notice that a Plan which is a Multiemployer Plan is in endangered or critical status under Section 305 of ERISA; no lien imposed under the Code or ERISA on the assets of the Obligors or any of their respective Restricted Subsidiaries or any ERISA Affiliate exists nor has any event occurred which could reasonably be expected to give rise to any such lien on account of any Plan; and the Obligors and their respective Restricted Subsidiaries do not maintain or contribute to any employee welfare plan (as defined in Section 3(1) of ERISA) which provides benefits to retired employees or other former employees (other than as required by Section 601 of ERISA) or any Plan the obligations with respect to which could reasonably be expected to have a Material Adverse Effect.
(b)
Each Foreign Pension Plan has been maintained in substantial compliance with its terms and with the requirements of any and all applicable laws, statutes, rules, regulations and orders and has been maintained, where required, in good standing with applicable regulatory authorities, except for such non-compliance that would not reasonably be expected to result in a Material Adverse Effect. All contributions required to be made with respect to a Foreign Pension Plan have been or will be timely made, except for such non-compliance that would not reasonably be expected to result in a Material Adverse Effect.
10
Neither the Obligors nor any of their respective Restricted Subsidiaries have incurred any obligation in connection with the termination of or withdrawal from any Foreign Pension Plan that could reasonably be expected to have a Material Adverse Effect. Neither the Obligors nor any of their respective Restricted Subsidiaries maintains or contributes to any Foreign Pension Plan the obligations with respect to which could in the aggregate reasonably be expected to have a Material Adverse Effect.
5.11.
Capitalization
.
(a) As of March 13, 2014: (1) the authorized capital stock of GMC shall consist of 50,000,000 authorized shares of Class A Common Stock, par value $0.01 per share, 30,000,000 authorized shares of Class B Common Stock, and 5,000,000 authorized shares of preferred stock, par value $0.01 per share, of which 11,270,196 shares of Class A Common Stock have been issued and 11,330,420 shares of Class B Common Stock have been issued; (2) all such outstanding shares shall have been duly and validly issued, fully paid and non-assessable and issued free of preemptive rights, other than as provided for in the Shareholders’ Agreement; and (3) except as set forth in
Schedule 5.11(b)
, GMC shall not have outstanding any securities convertible into or exchangeable for its capital stock or outstanding any rights to subscribe for or to purchase, or any options for the purchase of, or any agreement providing for the issuance (contingent or otherwise) of, or any calls, commitments or claims of any character relating to, its capital stock or any stock appreciation or similar rights.
(b)
Except as set forth in
Schedule 5.11(b)
, as of Closing and after giving effect to the conditions precedent related thereto, there are (i) no other shares of capital stock or other Equity Interests or voting securities of GMC, (ii) no securities of GMC convertible into or exchangeable for capital stock or other Equity Interests or voting securities of GMC, (iii) no options, warrants, purchase rights, subscription rights, conversion rights, exchange rights or other similar contracts or commitments that could require GMC to issue, sell or otherwise cause to become outstanding any of its Equity Interests and (iv) no stock appreciation, phantom stock, profit participation or similar rights with respect to GMC or any repurchase, redemption or other obligation to acquire for value any capital stock of GMC.
(c)
As of Closing, all outstanding shares of GMC’s capital stock are duly authorized, validly issued, fully paid and nonassessable and, except as set forth in
Schedule 5.11(c)
, not subject to or issued in violation of any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right under any provision of the Business Corporations Act of the Republic of the Marshall Islands 1990, the articles of incorporation of GMC, the bylaws of GMC or any agreement to which GMC is a party or otherwise bound. None of the shares of the capital stock of GMC have been issued in violation of any securities Laws. There are no accrued and unpaid dividends with respect to any outstanding shares of capital stock of GMC.
5.12.
Subsidiaries
.
As of the date of this Agreement and at Closing, FinCo has no Subsidiaries other than those Subsidiaries listed on
Schedule 5.12
(which Schedule identifies the correct legal
11
name, direct owner, percentage ownership and jurisdiction of organization of each such Subsidiary on the date hereof).
5.13.
Compliance with Statutes, etc
.
The Obligors and each of their respective Restricted Subsidiaries are in compliance in all material respects with all applicable statutes, regulations and orders of, and all applicable restrictions imposed by, all governmental bodies, domestic or foreign, in respect of the conduct of its business and the ownership of its property, except such non-compliances that could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
5.14.
Investment Company Act
.
Neither GMC nor FinCo nor any of their respective Restricted Subsidiaries, is an “investment company” or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940, as amended.
5.15.
Money Laundering
.
(a) To the extent applicable, each Obligor is in compliance, in all material respects, with the (i) Trading and Enemy Act, as amended, and each of the foreign assets control regulations of the United States Treasury Department (31 C.F.R., Subtitle B, Chapter V, as amended) and any other enabling legislation or executive order relating thereto, and (ii) the Patriot Act. No part of the proceeds of the Notes will be used, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.
(b)
None of the Obligors nor, to the best knowledge of GMC, after due inquiry, any Affiliate of any Obligor, is, or will be after consummation of the Transaction and application of the proceeds of the Loans, by reason of being a “national” of a “designated foreign country” or a “specially designated national” within the meaning of the Regulations of the Office of Foreign Assets Control, United States Treasury Department (31 C.F.R., Subtitle B, Chapter V), or for any other reason, in violation of, any United States Federal Statute or Presidential Executive Order concerning trade or other relations with any foreign country or any citizen or national thereof.
5.16.
Pollution and Other Regulations
.
(a)
Each of GMC and its Restricted Subsidiaries is in compliance with all applicable Environmental Laws governing its business, except for such failures to comply as are not reasonably likely to have a Material Adverse Effect, and neither GMC nor any of its Restricted Subsidiaries is liable for any penalties, fines or forfeitures for failure to comply with any of the foregoing except for such penalties, fines or forfeitures as are not reasonably likely to have a Material Adverse Effect. All licenses, permits, registrations or approvals required for the business of GMC and each of its Restricted Subsidiaries, as conducted as of the date hereof,
12
under any Environmental Law have been secured and GMC and each of its Restricted Subsidiaries is in substantial compliance therewith, except for such failures to secure or comply as are not reasonably likely to have a Material Adverse Effect. Neither GMC nor any of its Restricted Subsidiaries is in any respect in noncompliance with, breach of or default under any applicable writ, order, judgment, injunction, or decree to which GMC or such Restricted Subsidiary is a party or which would affect the ability of GMC or such Restricted Subsidiary to operate any Vessel, Real Property or other facility and no event has occurred and is continuing which, with the passage of time or the giving of notice or both, would constitute noncompliance, breach of or default thereunder, except in each such case, such noncompliance, breaches or defaults as are not likely to, individually or in the aggregate, have a Material Adverse Effect. There are, as of the date hereof, no Environmental Claims pending or, to the knowledge of GMC or the Issuer, threatened, against GMC or any of its Restricted Subsidiaries in respect of which an unfavorable decision, ruling or finding would be reasonably likely to have a Material Adverse Effect. There are no facts, circumstances, conditions or occurrences on any Vessel, Real Property or other facility owned or operated by GMC or any of its Restricted Subsidiaries that are reasonably likely (i) to form the basis of an Environmental Claim against GMC, any of its Restricted Subsidiaries or any Vessel, Real Property or other facility owned by GMC or any of its Restricted Subsidiaries, or (ii) to cause such Vessel, Real Property or other facility owned or operated by GMC or the Restricted Subsidiaries to be subject to any restrictions on its ownership, occupancy, use or transferability under any Environmental Law, except in each such case for clauses (i) and (ii) above, such Environmental Claims or restrictions that individually or in the aggregate are not reasonably likely to have a Material Adverse Effect.
(b)
Hazardous Materials have not at any time prior to the date of this Agreement, been (i) generated, used, treated or stored on, or transported to or from, any Vessel, Real Property or other facility at any time owned or operated by GMC or any of its Restricted Subsidiaries or (ii) released on or from any such Vessel, Real Property or other facility owned or operated by GMC or any of its Restricted Subsidiaries, except in each case for clauses (i) and (ii) above in compliance with Environmental Laws or where such occurrence or event, either individually or in the aggregate, is not reasonably likely to have a Material Adverse Effect.
This Section 5.16 contains the sole and exclusive representations and warranties of the Obligors with respect to environmental, health and safety matters, including any relating to or arising under Environmental Laws, Environmental Claims or Hazardous Materials.
5.17.
Labor Relations
.
Neither GMC nor any of its Restricted Subsidiaries is engaged in any unfair labor practice that could reasonably be expected to have a Material Adverse Effect and there is (i) no unfair labor practice complaint pending against GMC or any of its Restricted Subsidiaries or, to GMC’s knowledge, threatened against any of them before the National Labor Relations Board, and no material grievance or arbitration proceeding arising out of or under any collective bargaining agreement is so pending against GMC or any of its Restricted Subsidiaries or, to GMC’s knowledge, threatened against any of them, (ii) no strike, labor dispute, slowdown or stoppage pending against GMC or any of its Restricted Subsidiaries or, to GMC’s knowledge, threatened against GMC or any of its Restricted Subsidiaries and (iii) no union representation proceeding pending with respect to the employees of GMC or any of its Restricted Subsidiaries,
13
except (with respect to the matters specified in clauses (i), (ii) and (iii) above) as could not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
5.18.
Patents, Licenses, Franchises and Formulas.
GMC and each of its Restricted Subsidiaries owns, or has the right to use, and has the right to enforce and prevent any third party from using, all material patents, trademarks, permits, service marks, trade names, copyrights, licenses, franchises and formulas, and has obtained assignments of all leases and other rights of whatever nature, necessary for the present conduct of its business, without any known conflict with the rights of others, except for such failures and conflicts which could not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.
5.19.
Indebtedness
.
Schedule 5.19
sets forth a true and complete list of all Indebtedness of GMC, FinCo and their Restricted Subsidiaries as of the date hereof and which is to remain outstanding after giving effect to Closing (the “
Existing Indebtedness
”), in each case showing the aggregate principal amount thereof and the name of the borrower and any other entity which directly or indirectly guarantees such debt.
5.20.
Insurance
.
The properties of Obligors and each of their Restricted Subsidiaries are adequately insured with financially sound and reputable insurers and in such amounts, with such deductibles and covering such risks and otherwise on terms and conditions as are customarily carried or maintained by Persons of established reputation of similar size and engaged in similar businesses and such insurance complies with the requirements of Section 9.2.
5.21.
No Immunity
.
GMC does not, nor does any other Obligor or any of their respective properties, have any right of immunity on the grounds of sovereignty or otherwise from the jurisdiction of any court or from setoff or any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) under the laws of any jurisdiction. The execution and delivery of this Agreement, the Notes and/or the Guarantee by the Obligors and the performance by them of their respective obligations thereunder constitute commercial transactions.
5.22.
Solvency
.
After issuing the Notes, and giving effect to the transactions contemplated hereunder and the payment and accrual of all transaction costs in connection with the foregoing, the Obligors and their respective Restricted Subsidiaries, taken as a whole, are solvent.
14
5.23.
Patriot Act
.
No Obligor (and, to the knowledge of each Obligor, no joint venture or Restricted Subsidiary thereof) is in violation of any United States law relating to terrorism, sanctions or money laundering, including the United States Executive Order No. 13224 on Terrorist Financing and the Patriot Act.
5.24.
Certain Business Practices.
To the knowledge of GMC, none of GMC, FinCo or any of their respective Restricted Subsidiaries (nor any of their respective officers, directors or employees) (a) has made or agreed to make any contribution, payment, gift or entertainment to, or accepted or received any contributions, payments, gifts or entertainment from, any government official, employee, political party or agent or any candidate for any federal, state, local or foreign public office, where either the contribution, payment or gift or the purpose thereof was illegal under the laws of any federal, state, local or foreign jurisdiction; or (b) has engaged in or otherwise participated in, assisted or facilitated any transaction that is prohibited by any applicable embargo or related trade restriction imposed by the United States Office of Foreign Assets Control or any other agency of the United States government.
5.25.
Private Offering by the Obligors.
Neither of the Obligors nor anyone acting on their behalf has offered the Notes or any similar securities for sale to, or solicited any offer to buy any of the same from, or otherwise approached or negotiated in respect thereof with, any person other than the Purchasers and no more than five other Institutional Investors, each of which has been offered the Notes at a private sale for investment. Neither of the Obligors nor anyone acting on their behalf has taken, or will take, any action that would subject the issuance or sale of the Notes to the registration requirements of Section 5 of the Securities Act.
5.26.
Subsidiary Guarantees
.
The representations and warranties of each Subsidiary Guarantor contained in the Subsidiary Guarantee are true and correct as of the date they are made.
6.
REPRESENTATIONS OF THE PURCHASERS
.
6.1.
Purchase for Investment
.
(a)
Each Purchaser severally represents as of the date hereof and as of the Closing that it is purchasing the Notes for its own account or for one or more separate accounts maintained by such Purchaser or for the account of one or more pension or trust funds and not with a view to the distribution thereof;
provided
that the disposition of such Purchaser’s or their property shall at all times be within such Purchaser’s or their control.
(b)
Each Purchaser understands that the Notes have not been registered under the Securities Act and may be resold only if registered pursuant to the provisions of the Securities Act or if an exemption from registration is available, except under circumstances
15
where neither such registration nor such an exemption is required by law, and that neither Obligor is required to register the Notes.
(c)
Each Purchaser severally represents as of the date hereof and as of the Closing that it is an Accredited Investor acting for its own account or as a fiduciary or agent for another Accredited Investor.
(d)
Each Purchaser severally represents that such Purchaser has had the opportunity to ask questions of the Obligors concerning the Obligors and their respective Subsidiaries, their respective businesses and the terms and conditions of the Notes.
7.
INFORMATION AS TO THE OBLIGORS
.
7.1.
Financial and Business Information.
The Obligors will make available to each holder of the Notes:
(a)
Quarterly Financial Statements
. Within 45 days after the close of the first three quarterly accounting periods in each fiscal year of GMC (
provided
that for the first fiscal quarter following Closing, such delivery shall be within 60 days after the end of such fiscal quarter), (i) the consolidated balance sheets of GMC and its Subsidiaries as at the end of such quarterly accounting period and the related consolidated statements of operations and cash flows, in each case for such quarterly accounting period and for the elapsed portion of the fiscal year ended with the last day of such quarterly accounting period, and in each case, setting forth comparative figures for the related periods in the prior fiscal year, all of which shall be certified by the senior financial officer of GMC, subject to normal year-end audit adjustments and (ii) management’s discussion and analysis of the important operational and financial developments during the fiscal quarter and year-to-date periods.
(b)
Annual Financial Statements
. Within (a) 90 days after the close of each fiscal year of GMC in which any of GMC’s securities are listed on a nationally recognized securities exchange and (b) 120 days after the close of each fiscal year of GMC (
provided
, that for the first fiscal year following Closing, such delivery shall be within 150 days after the end of such fiscal year) in which none of GMC’s securities are listed on a nationally recognized securities exchange, (i) the consolidated balance sheets of GMC and its Subsidiaries as at the end of such fiscal year and the related consolidated statements of operations and retained earnings and of cash flows for such fiscal year setting forth comparative figures for the preceding fiscal year and certified by Deloitte & Touche LLP or such other independent certified public accountants of recognized national standing reasonably acceptable to the Purchasers and (ii) management’s discussion and analysis of the important operational and financial developments during such fiscal year.
(c)
Notice of Default or Litigation
. Promptly, and in any event within three Business Days after an Obligor obtains knowledge thereof, notice of (i) the occurrence of any event which constitutes a Default or Event of Default which notice shall specify the nature thereof, the period of existence thereof and what action such Obligor proposes to take with respect thereto and (ii) any litigation or governmental investigation or proceeding pending or
16
threatened in writing against any Obligor or any Restricted Subsidiaries which, if adversely determined, could reasonably be expected to have a Material Adverse Effect or any Document.
(d)
Other Reports and Filings
. Promptly, copies of all financial information, proxy materials and other information and reports, if any, which an Obligor or any Restricted Subsidiaries shall file with the Securities and Exchange Commission (or any successor thereto) or deliver to holders of its Indebtedness pursuant to the terms of the documentation governing such Indebtedness (or any trustee, agent or other representative therefor).
(e)
Material Breach; Other Debt Documents
. Promptly upon, and in any event within five Business Days after, without duplication of any other reporting requirements herein, receipt of any notices of default, financial reporting and collateral reporting in connection with the Existing Credit Agreements, and copies of all effectuated additions, amendments, restatements, supplements or other modifications in respect of the Existing Credit Agreements.
(f)
Environmental Matters
. Promptly upon, and in any event within 15 Business Days after, an Obligor obtains knowledge thereof, written notice of any of the following environmental matters occurring after Closing, except to the extent that such environmental matters could not, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect:
(i)
any Environmental Claim pending or threatened in writing against an Obligor or any Restricted Subsidiaries or property owned or operated or occupied by an Obligor or any Restricted Subsidiaries;
(ii)
any condition or occurrence on or arising from any property owned or operated or occupied by an Obligor or any Restricted Subsidiaries that (a) results in noncompliance by such Obligor or such Restricted Subsidiary with any applicable Environmental Law or (b) could reasonably be expected to form the basis of an Environmental Claim against an Obligor or any Restricted Subsidiaries or any such property;
(iii)
any condition or occurrence on any property owned or operated or occupied by an Obligor or any Restricted Subsidiaries that could reasonably be expected to cause such property to be subject to any restrictions on the ownership, occupancy, use or transferability by such Obligor or such Restricted Subsidiary of such property under any Environmental Law; and
(iv)
the taking of any removal or remedial action in response to the actual or alleged presence of any Hazardous Material on any property owned or operated or occupied by an Obligor or any Restricted Subsidiaries as required by any Environmental Law or any governmental or other administrative agency;
provided
that in any event the Obligors shall deliver to the holders of the Notes all material notices received by such Obligor or any Restricted Subsidiaries from any government or governmental agency under, or pursuant to, CERCLA or OPA.
All such notices shall describe in reasonable detail the nature of the claim, investigation, condition, occurrence or removal or remedial action and an Obligor’s or such Restricted
17
Subsidiary’s response thereto. In addition, the Obligors will provide the holders of the Notes with copies of all material communications with any government or governmental agency and all material communications with any Person relating to any Environmental Claim of which notice is required to be given pursuant to this Section 7.1(i), and such detailed reports of any such Environmental Claim as may reasonably be requested by the Required Holders.
(g)
Management Letters
. Promptly after an Obligor’s or any of its Restricted Subsidiaries’ receipt thereof, a copy of any “management letter” received from its certified public accountants and management’s response thereto.
(h)
Unrestricted Subsidiaries
. Promptly upon, and in any event within five Business Days after delivery thereof, without duplication of any other reporting requirements herein, any periodic financial reports provided to the lenders under any documents evidencing Nonrecourse Indebtedness or any notices of default provided thereunder.
(i)
Other Information
. From time to time, such other information or documents (financial or otherwise) with respect to the Obligors, the Restricted Subsidiaries or the Unrestricted Subsidiaries as the Required Holders may reasonably request in writing.
7.2.
Officer’s Certificates.
At the time of the delivery of the financial statements provided for in Sections 7.1(a) and (b), a certificate of the senior financial officer of GMC in form and substance reasonably satisfactory to the Purchasers to the effect that, to the best of such officer’s knowledge, no Default or Event of Default has occurred and is continuing or, if any Default or Event of Default has occurred and is continuing, specifying the nature and extent thereof (in reasonable detail), which certificate shall certify that there have been no changes to
Schedule 5.12
, or, if there have been any such changes, a list in reasonable detail of such changes.
7.3.
Inspections
.
The Obligors will, and will cause each of its Restricted Subsidiaries to, permit officers and designated representatives of the holders of the Notes as a group to visit and inspect, during regular business hours and under guidance of officers of the Obligors or any of the Restricted Subsidiaries, any of the properties of the Obligors or the Restricted Subsidiaries, and to examine the books of account of the Obligors or such Restricted Subsidiaries and discuss the affairs, finances and accounts of the Obligors or such Restricted Subsidiaries with, and be advised as to the same by, its and their officers and, in the presence of an Obligor, independent accountants, all upon reasonable advance notice and at such reasonable times and intervals and to such reasonable extent as the Purchasers or the Required Holders may request;
provided
that, unless an Event of Default exists and is continuing at such time, the holders of the Notes shall not be entitled to request more than two such visitations and/or examinations in any fiscal year of the Issuer.
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8.
PREPAYMENT OF THE NOTES
.
8.1.
Maturity; Accrual of Interest
.
(a)
As provided therein, the entire unpaid principal amount of the Notes shall be due and payable on the date that is the sixth anniversary of the date of the Closing.
(b)
Subject to Section 8.1(f), the Notes shall bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum equal to 11.0%;
provided
that if the Issuer irrevocably elects to pay interest in cash (as opposed to electing to retain the right to issue PIK Notes) until such time that all amounts due and payable under the Notes are paid in full, the Notes shall thereafter bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum equal to the rate of 10.0%.
(c)
Interest on each Note shall be due and payable in arrears on each Interest Payment Date and at such other times as may be specified herein.
(d)
For any Interest Period, the Issuer may, at its option, elect to pay interest on the Notes (i) in cash or (ii) by PIK Interest. The Issuer shall, for each Interest Period, notify holders of the Notes whether the following interest payment due on the next Interest Payment Date (and if the Issuer, so elects, on all remaining subsequent Interest Payment Dates until such time that all amounts due and payable under the Notes are paid in full) will be made in the form of cash interest or by PIK Interest by delivering a notice to the holders of the Notes not later than one Business Day prior to the relevant Interest Payment Date. As of the Closing, the Issuer hereby elects to pay by PIK Interest. If no election is made and no written notice is delivered, such interest payment shall be payable according to the method of payment elected with respect to the previous Interest Period. With respect to any PIK Interest, the Issuer shall authorize the issuance of and deliver to the holders of the Notes, new Notes in the amount of the PIK Interest (rounded up to the nearest whole dollar) (the “
PIK Notes
”).
(e)
Any payment of PIK Interest shall be deemed to be payment in full of any such interest due and payable with respect to the Notes to the same extent as if such interest were paid in cash. Each PIK Note so issued will be dated as of the applicable Interest Payment Date and will bear interest from and after such date. In accordance with Section 15.2, a holder of a Note may at any time or from time to time exchange any Note and/or PIK Note for a new Note reflecting the entire outstanding principal amount of the Notes so exchanged.
(f)
If (i) the Existing Credit Amendments are not consummated and/or such other consent or approval from the lenders under the Existing Credit Agreements is not obtained by GMC that would be necessary for Guarantor/GMC to be a Guarantor and (ii) the Guarantor/GMC is not permitted to be Guarantor, the rate of interest specified under Section 8.1(b) shall increase by 2.0%.
19
8.2.
Optional Prepayments with Make-Whole Amount
.
(a)
(i) At any time prior to the date that is two years after Closing, the Issuer may, at its option, prepay at any time all, or from time to time any part of, the Notes, in minimum increments of $1,000,000.00 (and $1.00 increments in excess thereof with respect to the PIK Notes) at 100% of the principal amount so prepaid, plus the applicable Make-Whole Amounts determined for the prepayment date with respect to such principal amount.
(ii)
On and after the second anniversary of the Closing, the Issuer may, at its option, prepay at any time, all, or from time to time any part of the Notes, in minimum increments of $1,000,000.00 (and $1.00 increments in excess thereof with respect to the PIK Notes) at 100% of the principal amount so prepaid plus the applicable premium set forth below:
(A)
At any time prior to the date that is three years after the Closing: 9.0%
(B)
At any time prior to the date that is four years after the Closing: 6.0%
(C)
At any time prior to the date that is five years after the Closing: 3.0%
Thereafter, the Issuer may, at its option, prepay the Notes at 100% of the principal amount so prepaid, with no premium.
(iii)
The Issuer may, at its option, prepay in a one-time optional redemption of Notes, in minimum increments of $1,000,000.00 (and $1.00 increments in excess thereof with respect to the PIK Notes), at a price equal to 110.5% of the aggregate principal amount of the Notes to be so redeemed, with proceeds of equity offerings by GMC and/or any of its Subsidiaries;
provided
that following such redemption, at least 65.0% of the initial principal amount of the Notes that are issued at Closing remain outstanding after giving effect to such a redemption.
(b)
The Issuer will give each holder of Notes written notice of each optional prepayment under this Section 8.2 not less than 10 days and not more than 30 days prior to the date fixed for such prepayment. Each such notice shall specify such date (which shall be a Business Day), the aggregate principal amount of the Notes to be prepaid on such date, the principal amount of each Note held by such holder to be prepaid, and the accrued and unpaid interest to be paid on the prepayment date (but not including such prepayment date) with respect to such principal amount being prepaid, and shall be accompanied by a certificate of a Senior Financial Officer as to the estimated Make-Whole Amount, if applicable, due in connection with such prepayment (calculated as if the date of such notice were the date of the prepayment), setting forth the details of such computation. Two Business Days prior to such prepayment, the Issuer shall deliver to each holder of Notes a certificate of a Senior Financial Officer specifying the calculation of such Make-Whole Amount as of the specified prepayment date.
20
8.3.
Prepayment in Connection with a Change of Control
.
If a Change of Control shall occur, the Issuer shall within 10 Business Days thereafter give written notice thereof (a “
Change of Control Prepayment Notice
”) to each holder of Notes, which notice shall (
i
) refer specifically to this Section 8.3 and describe in reasonable detail such Change of Control and (
ii
) offer to prepay on a Business Day not less than 30 days and not more than 120 days after the date of such Change of Control Prepayment Notice (the “
Change of Control Prepayment Date
”) the Notes of such holder, at 101.0% of the principal amount thereof, together with interest accrued thereon to the Change of Control Prepayment Date, and specify the Change of Control Response Date (as defined below). Each holder of a Note shall notify the Issuer of such holder’s acceptance or rejection of such offer by giving written notice of such acceptance or rejection to the Issuer on a date at least 10 Business Days prior to the Change of Control Prepayment Date (such date ten Business Days prior to the Change of Control Prepayment Date being the “
Change of Control Response Date
”). The Issuer shall prepay on the Change of Control Prepayment Date all of the Notes held by each holder that has accepted such offer in accordance with this Section 8.3 at a price in respect of each such Note held by such holder equal to 101.0% of the principal amount thereof, together with interest accrued thereon to the Change of Control Prepayment Date. The failure by a holder of any Note to respond to such offer in writing on or before the Change of Control Response Date shall be deemed to be a rejection of such offer.
8.4.
[Reserved
.]
8.5.
Maturity; Surrender, etc
.
In the case of each prepayment of Notes pursuant to this Section 8, the principal amount of each Note to be prepaid shall mature and become due and payable on the date fixed for such prepayment, together with interest on such principal amount accrued to such date (including any increase in the principal amount through the issuance of PIK Notes), and the applicable Make-Whole Amount, if any. From and after such date, unless the Issuer shall fail to pay such principal amount when so due and payable, together with the interest and Make-Whole Amount, if any, as aforesaid, interest on such principal amount shall cease to accrue. Any Note paid or prepaid in full shall be surrendered to the Issuer and canceled and shall not be reissued, and no Note shall be issued in lieu of any prepaid principal amount of any Note.
8.6.
Purchase of Notes
.
Obligor will not offer to purchase, redeem, prepay or otherwise acquire, directly or indirectly, any of the outstanding Notes except in accordance with the terms of this Agreement and the Notes on a pro rata basis to the holders of all Notes at the time outstanding and upon the same terms and conditions. Any such offer shall provide each holder of Notes with sufficient information to enable it to make an informed decision with respect to such offer, and shall remain open for at least 10 Business Days. If the holders of more than 50.0% of the principal amount of the Notes then outstanding accept such offer, the Issuer shall promptly notify the remaining holders of such fact and the expiration date for the acceptance by holders of the Notes of such offer shall be extended by
21
the number of days necessary to give each such remaining holder at least five Business Days from its receipt of such notice to accept such offer. The Obligors may purchase, redeem prepay or otherwise acquire any Notes accepting such offer. The Issuer will promptly cancel all Notes acquired by Obligor pursuant to any payment, prepayment or purchase of Notes pursuant to any provision of this Agreement and no Notes may be issued in substitution or exchange for any such Notes.
8.7.
Make-Whole Amount
.
The term “
Make-Whole Amount
” means, with respect to any Note, an amount equal to the excess, if any, of the Discounted Value of the Remaining Scheduled Payments with respect to the Called Principal of such Note over the amount of such Called Principal,
provided
that the Make-Whole Amount may in no event be less than zero. For the purposes of determining the Make-Whole Amount, the following terms have the following meanings:
“
Called Principal
” means, with respect to any Note, the principal of such Note that is to be prepaid pursuant to Section 8.2 or has become or is declared to be immediately due and payable pursuant to Section 12.1(a) (as qualified by 12.1(y)), as the context requires.
“
Discounted Value
” means, with respect to the Called Principal of any Note, the amount obtained by discounting all Remaining Scheduled Payments with respect to such Called Principal from their respective scheduled due dates to the Settlement Date with respect to such Called Principal, in accordance with accepted financial practice and at a discount factor (applied on the same periodic basis as that on which interest on the Notes is payable) equal to the Reinvestment Yield with respect to such Called Principal.
“
Reinvestment Yield
” means, with respect to the Called Principal of any Note, the sum of (x) 0.50% plus (y) the yield to maturity implied by (i) the yield(s) reported as of 10:00 A.M. (New York City time) on the second Business Day preceding the Settlement Date with respect to such Called Principal, on the display designated as “Page PX1” (or such other display as may replace Page PX1) on Bloomberg Financial Markets for the most recently issued, actively traded, on the run U.S. Treasury securities (“
Reported
”) having a maturity equal to the remaining term of such Note as of such Settlement Date. If there are no such U.S. Treasury securities Reported having a maturity equal to the remaining term of such Note, then such implied yield to maturity will be determined by (a) converting U.S. Treasury bill quotations to bond equivalent yields in accordance with accepted financial practice and (b) interpolating linearly between the yields Reported for the applicable most recently issued actively traded on-the-run U.S. Treasury securities with the maturities (1) closest to and greater than the remaining term of such Note and (2) closest to and less than the remaining term of such Note. The Reinvestment Yield shall be rounded to the number of decimal places as appears in the interest rate of the applicable Note.
If such yields are not Reported or the yields Reported as of such time are not ascertainable (including by way of interpolation), then “Reinvestment Yield” means, with
22
respect to the Called Principal of any Note, the sum of (x) the 0.50% plus (y) the yield to maturity implied by the U.S. Treasury constant maturity yields reported, for the latest day for which such yields have been so reported as of the second Business Day preceding the Settlement Date with respect to such Called Principal, in Federal Reserve Statistical Release H.15 (or any comparable successor publication) for the U.S. Treasury constant maturity having a term equal to the remaining term of such Note as of such Settlement Date. If there is no such U.S. Treasury constant maturity having a term equal to the remaining term of such Note, such implied yield to maturity will be determined by interpolating linearly between (1) the U.S. Treasury constant maturity so reported with the term closest to and greater than the remaining term of such Note and (2) the U.S. Treasury constant maturity so reported with the term closest to and less than the remaining term of such Note. The Reinvestment Yield shall be rounded to the number of decimal places as appears in the interest rate of the applicable Note.
“
Remaining Scheduled Payments
” means, with respect to the Called Principal of any Note, all payments of such Called Principal and interest thereon that would be due after the Settlement Date prior to the date on which the Notes are payable in full with respect to such Called Principal if no payment of such Called Principal were made prior to its scheduled due date;
provided
that if such Settlement Date is not a date on which interest payments are due to be made under the terms of the Notes, then the amount of the next succeeding scheduled interest payment will be reduced by the amount of interest accrued to such Settlement Date and required to be paid on such Settlement Date pursuant to Section 8.2 or 12.1(a).
“
Settlement Date
” means, with respect to the Called Principal of any Note, the date on which such Called Principal is to be prepaid pursuant to Section 8.2 or has become or is declared to be immediately due and payable pursuant to Section 12.1(a), as the context requires.
8.8.
Commitment Fee.
If consent and approval from the Existing Credit Agreement Lenders is not obtained by GMC, the Existing Credit Amendments are not consummated by GMC and neither GMC Issuer nor FinCo Issuer is permitted to be Issuer by May 13, 2014, GMC shall pay to Purchasers a Commitment Fee. Subject to Section 13, upon payment of the Commitment Fee, this Agreement shall automatically terminate.
9.
AFFIRMATIVE COVENANTS
.
The Issuer and the Guarantor jointly and severally covenant that so long as any of the Notes are outstanding:
9.1.
Books and Records
.
The Obligors will, and will cause each of its Restricted Subsidiaries to, keep proper books of record and account in which full, true and correct entries, in conformity in all
23
material respects with GAAP and all requirements of law, shall be made of all dealings and transactions in relation to its business.
9.2.
Maintenance of Property; Insurance
.
The Obligors will, and will cause each Restricted Subsidiary to, (i) keep all material property necessary in its business in good working order and condition (ordinary wear and tear and loss or damage by casualty or condemnation excepted) and (ii) maintain insurance with insurers that GMC reasonably believes to be financially sound and reputable, with respect to their respective properties and businesses against such casualties and contingencies, of such types, on such terms and in such amounts (including deductibles, co-insurance and self-insurance, if adequate reserves are maintained with respect thereto) as is customary in the case of entities of established reputations engaged in the same or a similar business and similarly situated.
9.3.
Corporate Franchises
.
The Obligors will, and will cause each Restricted Subsidiary, to do or cause to be done, all things necessary to preserve and keep in full force and effect its existence and its material rights, franchises, licenses and patents (if any) used in its business, except, in the case of any Restricted Subsidiary, which could not be reasonably expected to have a Material Adverse Effect;
provided
,
however
, that nothing in this Section 9.3 shall prevent (i) sales or other dispositions of assets, consolidations or mergers by or involving any Obligor or any of its Restricted Subsidiaries which are permitted in accordance with Section 10.6 or (ii) the abandonment by an Obligor or any of its Restricted Subsidiaries of any rights, franchises, licenses and patents that could not be reasonably expected to have a Material Adverse Effect.
9.4.
Compliance with Statutes, etc.
The Obligors will, and will cause each Restricted Subsidiary and each Unrestricted Subsidiary to, comply with all applicable statutes, regulations and orders of, and all applicable restrictions (including all laws and regulations relating to money laundering) imposed by, all governmental bodies, domestic or foreign, in respect of the conduct of its business and the ownership of its property, except such non-compliances as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
9.5.
Compliance with Environmental Laws
.
The Obligors will, and will cause each Restricted Subsidiary and each Unrestricted Subsidiary to, comply in all material respects with all Environmental Laws applicable to the ownership or use of any Vessel or property now or hereafter owned or operated by an Obligor or any of its Restricted Subsidiaries or any of its Unrestricted Subsidiaries, will within a reasonable time period pay or cause to be paid all costs and expenses incurred in connection with such compliance (except to the extent being contested in good faith), and will keep or cause to be kept all such Vessels or property free and clear of any Liens imposed pursuant to such Environmental Laws, in each of the foregoing cases, except to the extent any failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. None of the Obligors, any of Restricted Subsidiaries or any
24
Unrestricted Subsidiaries will generate, use, treat, store, release or dispose of, or permit the generation, use, treatment, storage, release or disposal of, Hazardous Materials on any Vessel or property now or hereafter owned or operated or occupied by an Obligor, any of its Restricted Subsidiaries or any of its Unrestricted Subsidiaries, or transport or permit the transportation of Hazardous Materials to or from any ports or property except in material compliance with all applicable Environmental Laws and as reasonably required by the trade in connection with the operation, use and maintenance of any such property or otherwise in connection with their businesses or except to the extent the same could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Obligors will, and will cause each Restricted Subsidiary and each Unrestricted Subsidiary to, maintain insurance on any Vessel in at least such amounts as are in accordance with normal industry practice for similarly situated insureds, against losses from oil spills and other environmental pollution.
9.6.
ERISA
.
As soon as reasonably possible and, in any event, within ten (10) days after an Obligor or any of its Restricted Subsidiaries or any ERISA Affiliate knows or has reason to know of the occurrence of any of the following, such Obligor will deliver to the holders of the Notes, a certificate of the senior financial officer of the Obligor setting forth the full details as to such occurrence and the action, if any, that the Obligor, such Restricted Subsidiary or such ERISA Affiliate is required or proposes to take, together with any notices required or proposed to be given to or filed with or by the Obligor, the Restricted Subsidiary, the ERISA Affiliate, the PBGC, a Plan participant or the Plan administrator with respect thereto: that a Reportable Event has occurred (except to the extent that the Obligor has previously delivered to the holders of the Notes a certificate and notices (if any) concerning such event pursuant to the next clause hereof); that a contributing sponsor (as defined in Section 4001(a)(13) of ERISA) of a Plan subject to Title IV of ERISA is subject to the advance reporting requirement of PBGC Regulation Section 4043.61 (without regard to subparagraph (b)(1) thereof), and an event described in subsection .62, .63, .64, .65, .66, .67 or .68 of PBGC Regulation Section 4043 is reasonably expected to occur with respect to such Plan within the following 30 days; that a failure to satisfy minimum funding requirements, within the meaning of Section 412 of the Code or Section 302 of ERISA, has occurred or an application may be or has been made for a waiver or modification of the minimum funding standard (including any required installment payments) or an extension of any amortization period under Section 412 or 430 of the Code or Section 302 or 303 of ERISA with respect to a Plan; that the actuary of a Plan (other than a Multiemployer Plan) has or will certify that the Plan is an at-risk plan within the meaning of Section 430 of the Code or Section 303 of ERISA; that a Plan which is a Multiemployer Plan is in endangered or critical status under Section 305 of ERISA; that any contribution required to be made with respect to a Plan or Foreign Pension Plan has not been timely made and such failure could result in a Material Adverse Effect for the Obligor or any of its Restricted Subsidiaries; that a Plan has been or may be reasonably expected to be terminated, reorganized, partitioned or declared insolvent under Title IV of ERISA with a material amount of unfunded benefit liabilities that reasonably could be expected to result in a Material Adverse Effect; that a Plan (in the case of a Multiemployer Plan, to the best knowledge of the Obligor or any of its Restricted Subsidiaries or ERISA Affiliates) has a material Unfunded Current Liability; that proceedings may be reasonably expected to be or have been instituted by the PBGC to terminate or appoint a trustee to administer a Plan which is subject to Title IV of ERISA; that a proceeding has been instituted
25
pursuant to Section 515 of ERISA to collect a material delinquent contribution to a Plan; that the Obligor, any of its Restricted Subsidiaries or any ERISA Affiliate will or may reasonably expect to incur any material liability (including any indirect, contingent, or secondary liability) to or on account of the termination of or withdrawal from a Plan under Section 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or with respect to a Plan under Section 436(f), 4971, 4975 or 4980 of the Code or Section 409 or 502(i) or 502(l) of ERISA or with respect to a group health plan (as defined in Section 607(1) of ERISA or Section 4980B(g)(2) of the Code) under Section 4980B of the Code that reasonably could be expected to result in a Material Adverse Effect; or that the Obligor, or any of its Restricted Subsidiaries may incur any material liability pursuant to any employee welfare benefit plan (as defined in Section 3(1) of ERISA) that provides benefits to retired employees or other former employees (other than as required by Section 601 of ERISA) or any Plan or any Foreign Pension Plan that reasonably could be expected to result in a Material Adverse Effect. Upon request, the Obligor will deliver to holders of the Notes (i) a complete copy of the annual report (on Internal Revenue Service Form 5500-series) of each Plan (including, to the extent required, the related financial and actuarial statements and opinions and other supporting statements, certifications, schedules and information) required to be filed with the Internal Revenue Service and (ii) copies of any records, documents or other information that must be furnished to the PBGC with respect to any Plan pursuant to Section 4010 of ERISA. In addition to any certificates or notices delivered pursuant to the first sentence hereof, copies of annual reports and any records, documents or other information required to be furnished to the PBGC, and any notices received by any Obligor, any of its Restricted Subsidiaries or any ERISA Affiliate with respect to any Plan or Foreign Pension Plan with respect to any circumstances or event that could reasonably be expected to result in a material liability shall be delivered to holders of the Notes no later than ten (10) days after the date such annual report has been filed with the Internal Revenue Service or such records, documents and/or information has been furnished to the PBGC or such notice has been received by such Obligor, such Restricted Subsidiary or such ERISA Affiliate, as applicable.
9.7.
End of Fiscal Years; Fiscal Quarters
.
The Obligors shall cause (i) each of its, and each of its Restricted Subsidiaries’, fiscal years to end on December 31 of each year and (ii) each of its and its Restricted Subsidiaries’ fiscal quarters to end on March 31, June 30, September 30 and December 31 of each year.
9.8.
Performance of Obligations
.
The Obligors will, and will cause each Restricted Subsidiary to, perform all of its obligations under the terms of each mortgage, indenture, security agreement and other debt instrument (including, without limitation, this Agreement, the Notes and the Guarantee to the extent such Restricted Subsidiary is a party) by which it is bound, except to the extent waived by the parties thereto and except such non-performances as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
26
9.9.
Payment of Taxes
.
The Obligors will pay and discharge, and will cause each Restricted Subsidiary to pay and discharge, all material taxes, assessments and governmental charges or levies that become due and payable which are imposed upon it or upon its income or profits, or upon any properties belonging to it, prior to the date on which penalties attach thereto, and all lawful claims for sums that have become due and payable which, if unpaid, might become a Lien not otherwise permitted under Section 10.01(a);
provided
that neither the Obligors nor any Restricted Subsidiary shall be required to pay any such tax, assessment, charge, levy or claim which is being contested in good faith and by proper proceedings if it has maintained adequate reserves with respect thereto in accordance with GAAP.
9.10.
Ranking.
Each Obligor will ensure that, at all times, all obligations of such Obligor under this Agreement and the Notes (in the case of the Issuer) and this Agreement and the Guarantees (in the case of the Guarantor) will rank in right of payment either pari passu or senior to all other Indebtedness of such Obligor except for Indebtedness which is preferred as a result of being secured (but then only to the extent of such security) or which is preferred by operation of bankruptcy, insolvency, liquidation, administration or similar laws of general application.
9.11.
Subsidiary Guarantees; Release.
(a)
The Obligors will cause each Subsidiary Guarantor to execute and deliver a Subsidiary Guarantee and provide the following to each holder of a Note:
(i)
evidence of the corporate proceedings relating to the authorization, execution and delivery of such Subsidiary Guarantee; and
(ii)
an opinion in form and substance reasonably satisfactory to the Required Holders from legal advisors to such Subsidiary Guarantor with respect to the authorization, execution and enforceability of such Subsidiary Guarantee.
(b)
Notwithstanding anything in this Agreement or in the Subsidiary Guarantee to the contrary, upon any Disposition permitted under Section 10.2(d) and notice by the Obligors to each holder of a Note (which notice shall contain a certification by the Obligors of such Disposition), any Subsidiary Guarantor specified in such notice shall cease to be a Subsidiary Guarantor and shall be automatically released from its obligations under the Subsidiary Guarantee (upon such Disposition without the need for the execution or delivery of any other document by any holder of a Note or any other Person).
9.12.
Restricted and Unrestricted Subsidiaries.
Each of GMC’s Subsidiaries shall be a Restricted Subsidiary unless such Subsidiary is designated as an Unrestricted Subsidiary in accordance with this Section 9.12;
provided
that no Subsidiary Guarantor may be so designated as an Unrestricted Subsidiary. GMC may, by notice to each holder of the Notes, designate any Restricted Subsidiary (other than a
27
Subsidiary Guarantor) or any newly created or acquired Subsidiary (other than a Subsidiary Guarantor) as an Unrestricted Subsidiary and designate any Unrestricted Subsidiary as a Restricted Subsidiary;
provided
that no such designation shall be effective unless immediately after giving effect thereto no Default or Event of Default shall have occurred and be continuing (either as of the actual date of such designation or, with respect to Section 10.7, assuming that such designation had occurred on the last day of the immediately preceding semi-annual or annual fiscal period of GMC). Any Unrestricted Subsidiary which is designated as a Restricted Subsidiary in accordance with this Section 9.12 shall be deemed to have incurred all of its outstanding Indebtedness on the date of such designation (other than any Indebtedness of such Subsidiary that was outstanding at the time such Subsidiary was acquired by either Obligor or any other Restricted Subsidiary, and any renewal, extension or replacement of such Indebtedness;
provided
that the principal amount of such Indebtedness was not increased or the maturity shortened at the time of such renewal, extension or replacement).
9.13.
Use of Proceeds.
The Borrower will use the proceeds of the Notes only as provided in Section 5.8.
9.14.
Scorpio Newbuilds.
FinCo and its Restricted Subsidiaries shall, at all times, own no less than a total of five Scorpio Newbuilds (from and after the Acquisition) and/or Vessels resulting from the Scorpio Newbuilds.
10.
NEGATIVE COVENANTS
.
The Guarantor and the Issuer jointly and severally covenant that so long as any of the Notes are outstanding:
10.1.
Liens.
The Obligors will not, and will not permit any Restricted Subsidiary to, create, assume, incur or suffer to exist any Lien upon or with respect to any property or assets, whether now owned or hereafter acquired, of either of the Obligors or any Restricted Subsidiary, unless the Notes are equally and ratably secured pursuant to documentation reasonably satisfactory to the Required Holders and the holders of the Notes receive an opinion of counsel, selected by GMC and reasonably satisfactory to such holders, to the effect that the Notes are so secured, excluding from the operation of this Section:
(a)
inchoate Liens for taxes, assessments or governmental charges or levies not yet due and payable or Liens for taxes, assessments or governmental charges or levies being contested in good faith and by appropriate proceedings for which adequate reserves have been established in accordance with GAAP;
(b)
statutory Liens of landlords, carriers, warehousemen, mechanics, materialmen, and other types of similar statutory Liens securing sums not yet due and payable and incurred in the ordinary course of business;
28
(c)
Liens in existence as of the date of this Agreement (including without limitation any Liens securing the obligations under the Existing Credit Agreements), which in the case of Liens other than Liens securing the obligations under the Existing Credit Agreements are listed, and the property subject thereto described, on
Schedule 10.1
, without giving effect to any renewals or extensions of such Liens;
provided
that the aggregate principal amount of the Indebtedness, if any, secured by such Liens does not increase from that amount outstanding as of the date of this Agreement,
less
any repayments of principal thereof;
(d)
Liens arising from leases or subleases granted to others, easements, zoning restrictions, rights-of-way and similar charges or encumbrances on real property imposed by law or arising in the ordinary course of business that are not incurred in connection with the incurrence of Indebtedness and that do not materially detract from the value of the affected property or materially interfere with the ordinary conduct of business of the either of the Obligors or any Restricted Subsidiary;
(e)
Liens arising out of judgments, awards, decrees or attachments with respect to which the Obligors or any of the Restricted Subsidiaries shall in good faith be prosecuting an appeal or proceedings for review,
provided
that the aggregate amount of all such judgments, awards, decrees or attachments shall not constitute an Event of Default under Section 11(j);
(f)
Liens (other than any Lien imposed by ERISA) incurred or deposits made in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security, Liens to secure the performance of tenders, statutory obligations (other than excise taxes), surety, stay, customs and appeal bonds, statutory bonds, bids, leases, government contracts, trade contracts, performance and return of money bonds and other similar obligations in each case incurred in the ordinary course of business (exclusive of obligations for the payment of borrowed money) and Liens arising by virtue of deposits made in the ordinary course of business to secure liability for premiums to insurance carriers;
provided
that the aggregate value of all cash and property at any time encumbered pursuant to this clause (f) shall not exceed $10,000,000;
(g)
Liens in respect of seamen’s wages which are not past due and other maritime Liens for amounts not past due arising in the ordinary course of business and not yet required to be removed or discharged under the terms of the respective Vessel Mortgages;
(h)
Liens placed upon equipment or machinery acquired after Closing and used in the ordinary course of business of the Obligors or any of the Restricted Subsidiaries and placed at the time of the acquisition thereof by such Obligor or such Restricted Subsidiary or within 90 days thereafter to secure Indebtedness incurred to pay all or a portion of the purchase price thereof or to secure Indebtedness incurred solely for the purpose of financing the acquisition of any such equipment or machinery or extensions, renewals or replacements of any of the foregoing for the same or a lesser amount,
provided
that (x) the Indebtedness secured by such Liens is permitted by Section 10.4 and (y) in all events, the Lien encumbering the equipment or machinery so acquired does not encumber any asset of an Obligor or any other asset of a Restricted Subsidiary;
29
(i)
easements, rights-of-way, restrictions, encroachments and other similar charges or encumbrances, and minor title deficiencies not materially interfering with the conduct of the business of the Obligors;
(j)
Liens arising from precautionary UCC financing statement filings regarding operating leases entered into in the ordinary course of business;
(k)
statutory and common law landlords’ liens under leases to which an Obligor or any of the Restricted Subsidiaries is a party;
(l)
Liens arising out of any conditional sale, title retention, consignment or other similar arrangements for the sale of goods entered into by an Obligor or any of its Restricted Subsidiaries in the ordinary course of business to the extent such Liens do not attach to any assets other than the goods subject to such arrangements;
(m)
Liens (x) incurred in the ordinary course of business in connection with the purchase or shipping of goods or assets (or the related assets and proceeds thereof), which Liens are in favor of the seller or shipper of such goods or assets and only attach to such goods or assets, and (y) in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods;
(n)
bankers’ Liens, rights of setoff and other similar Liens existing solely with respect to cash and cash equivalents on deposit in one or more accounts maintained by
any Obligor or any Restricted Subsidiary, in each case granted in the ordinary course of business in favor of the bank or banks with which such accounts are maintained, securing amounts owing to such bank or banks with respect to cash management and operating account arrangements;
(o)
Liens in respect of any equity interest in any Unrestricted Subsidiary;
(p)
to the extent not covered in clause (c) above, Liens securing the Global Refinancing and other Indebtedness permitted to be incurred under Section 10.4(g), (i), (j) and (k);
(q)
Liens permitted at the time they were created;
(r)
Liens securing obligations in respect of Indebtedness permitted pursuant to Section 10.4(j) (including any Liens on cash required to cash collateralize letters of credit permitted pursuant to Section 10.4(j) in an aggregate amount not to exceed $10,000,000 at any time); and
(s)
deposits in connection with the acquisition of Vessels.
10.2.
Consolidation, Merger, Sale of Assets, etc.
The Obligors will not, and will not permit any of the Restricted Subsidiaries to wind up, liquidate or dissolve its affairs or enter into any transaction of merger, consolidation or amalgamation, or convey, sell, lease or otherwise dispose of (or agree to do any of the foregoing at any future time) all or substantially all of its assets (other than Margin Stock), except for:
30
(a)
subject to Sections 9.14 and 10.2(d) below, a conveyance, sale, lease or other disposition of an Obligor’s or a Restricted Subsidiary’s properties or assets (collectively, a “
Disposition
”) in the ordinary course of business;
(b)
Dispositions of non-core property or assets that were acquired by an Obligor or a Restricted Subsidiary in connection with a Permitted Acquisition or other Permitted Investment;
(c)
Dispositions of worn out or obsolete properties or assets no longer required for the efficient operation of such Obligor’s or Restricted Subsidiary’s business;
(d)
the direct or indirect Disposition of the Scorpio Newbuilds for Fair Market Value;
provided
that no Default or Event of Default is continuing unremedied at the time of such Disposition and immediately after such Disposition, at least a total of five Scorpio Newbuilds and/or Vessels resulting from the Scorpio Newbuilds are retained by FinCo and its Restricted Subsidiaries;
(e)
mergers, consolidations or amalgamations of any Obligor or any of the Restricted Subsidiaries with any Obligor or any of the Restricted Subsidiaries;
(f)
subject to Sections 9.14 and 10.2(d) above, dispositions by any Obligor or any of the Restricted Subsidiaries to any Obligor or any of the Restricted Subsidiaries;
(g)
any Subsidiary which (x) is not a Subsidiary Guarantor and (y) has $5,000 or less in assets (including, without limitation, Equity Interests) may wind up, liquidate or dissolve; and
(h)
mergers, consolidations or amalgamations for the purpose of acquisitions, so long as the Obligors are in compliance with Section 10.4 after giving effect to any such merger, consolidation or amalgamation; and
provided
, that if such merger, consolidation or amalgamation results in a Change of Control, the Obligors shall comply with Section 8.3.
Notwithstanding anything to the contrary contained above, the foregoing covenant shall not be violated as a result of sales of Margin Stock for cash at fair market value (as determined in good faith by GMC at the time of the respective sale).
10.3.
Restricted Payments
.
(a)
The Issuer will not, and will not permit any of the Restricted Subsidiaries to, directly or indirectly:
(i)
authorize, declare or pay any dividend (or interest on any unpaid dividend), charge, fee or other distribution (whether in cash or in kind) on or in respect of Equity Interests with respect to GMC; and
(ii)
lend money or credit or make advances to any Person, or purchase or acquire any Margin Stock (or other Equity Interests), or make any capital contribution to
31
any other Person (each of the foregoing an “
Investment
” and, collectively, “
Investments
”);
provided
that, so long as no Default or Event of Default has occurred and be continuing or would result therefrom the Issuer may make Investments in any Unrestricted Subsidiary to the extent there are available funds pursuant to clause (4) below (regardless of whether such Restricted Payments satisfy the requirements of clauses (1) and (2) below);
(all such payments and other actions set forth in clauses (i) and (ii) above (other than any exceptions thereof) being, collectively, referred to as “
Restricted Payments
”), unless, at the time of such Restricted Payment:
(1)
in accordance with Section 8.1(d), the Issuer has irrevocably elected to pay interest in cash (as opposed to electing to retain the right to issue PIK Notes) until such time that all amounts due and payable under the Notes are paid in full the Issuer;
(2)
the Total Debt LTV Ratio would be lower than 60.0% on a pro forma basis immediately following the making of such Restricted Payment;
(3)
no Default shall have occurred and be continuing or would occur as a consequence of the making of the Restricted Payment; and
(4)
the aggregate amount of Restricted Payments does not exceed the sum, without duplication, of:
(I)
50.0% of Cumulative Consolidated Net Income accrued beginning on the first day of the fiscal quarter prior to the Closing (the “
Cumulative Consolidated Net Income Amount
”);
provided
,
however
, if the Total Debt LTV Ratio is less than 50.0%, such Cumulative Consolidated Net Income Amount will be increased by 100% of Cumulative Consolidated Net Income accrued beginning on the first day of the fiscal quarter prior to the Closing, plus
(II)
the Net Cash Proceeds of equity issuances, asset contributions and capital contributions (other than Disqualified Equity) received by the Issuer after the Closing, plus
(III)
the Net Cash Proceeds of Indebtedness and Disqualified Equity of the Issuer, in each case issued after the Closing, which have been exchanged or converted into qualified Equity Interests of the Issuer or the direct or indirect parent of the Issuer, plus
(IV) the Net Cash Proceeds of the Restricted Payments, plus
(V) returns, profits, distributions and similar amounts received in cash or cash equivalents on investments permitted under this Section 10.3, plus
(VI) the investments of the Issuer and the Restricted Subsidiaries in any Unrestricted Subsidiary that has been re-designated as a Restricted Subsidiary or that has been merged or consolidated into the Issuer or any of its Restricted
32
Subsidiaries or the fair market value of the assets of any Unrestricted Subsidiary that have been transferred to the Issuer or any of its Restricted Subsidiaries.
(b)
Notwithstanding anything herein to the contrary:
(i)
Shareholders of GMC may, and GMC may exercise its right to, convert or exchange Class B Common Stock to Class A Common Stock;
(ii)
the Obligors and its Subsidiaries may acquire and hold accounts receivable owing to any of them and cash equivalents;
(iii)
so long as no Event of Default exists or would result therefrom, the Obligors and its Subsidiaries may make loans and advances in the ordinary course of business to its employees, officers and directors other than officers and directors of Persons which own Equity Interests, directly or indirectly, of GMC and constitute Affiliates of GMC or persons employed by any such Affiliates (not including, for the avoidance of doubt, the operational managers of the Obligors or any of their Subsidiaries) so long as the aggregate principal amount thereof at any time outstanding which are made on or after the Closing (determined without regard to any write-downs or write-offs of such loans and advances) shall not exceed $2,000,000;
(iv)
the Obligors and their Subsidiaries may make intercompany loans and advances among one another, and Subsidiaries of GMC may make intercompany loans and advances to GMC or any other Subsidiary of GMC (other than any Unrestricted Subsidiary);
provided
that any such loans or advances to any Obligor or any Subsidiary Guarantor pursuant to this clause shall be unsecured and subordinated to the Obligations of the respective Obligor or Subsidiary Guarantor pursuant to written subordination provisions;
(v)
GMC and its Subsidiaries may sell or transfer assets to the extent permitted by Section 10.02;
(vi)
[Reserved];
(vii)
GMC may make loans, advances and Investments in Restricted Subsidiaries of GMC;
(viii)
GMC and its Subsidiaries may make Investments in amounts required to fund charter costs and actual expenses relating to operating Vessels leased or chartered as of the date hereof by General Maritime NSF Corporation, GMR Concord LLC, GMR Contest LLC and GMR Concept LLC;
provided
that such Investments may only be made in good faith and only to the extent necessary to fund such costs and expenses after taking into account the cash and cash equivalents held by such Subsidiary;
(ix)
GMC and its Subsidiaries may purchase or redeem Equity Interests from employees, officers, managers and directors in connection with their termination, death or disability;
33
(x)
GMC and its Subsidiaries may make equity Investments in a special purpose entity which owns a Vessel or Vessels;
(xi)
GMC and its Subsidiaries may make additional Investments in an aggregate amount net of distributions received not to exceed $10,000,000 at any time outstanding; and
(xii)
GMC Issuer may make Restricted Payments to any Unrestricted Subsidiary that would qualify as a “Non-Recourse Subsidiary” (as defined in the respective Existing Credit Agreements or any Refinancing Agreement) to the extent such Restricted Payment is required under the terms of the Existing Credit Agreements or any Refinancing Agreement.
Notwithstanding anything to the contrary above, the Issuer will not, and will not permit any of the Restricted Subsidiaries to, directly or indirectly authorize, declare or pay any dividend (or interest on any unpaid dividend), charge, fee or other distribution (whether in cash or in kind) on or in respect of Equity Interests of GMC until such time that the Issuer has permanently converted to cash interest payments (and will not make any remaining interest payments on the Notes in the form of PIK Interest).
10.4.
Indebtedness
.
The Obligors will not, and will not permit any of the Restricted Subsidiaries to, contract, create, incur, assume or suffer to exist any Indebtedness other than:
(a)
the incurrence and/or existence of unlimited Indebtedness in connection with acquisitions of property used or useful in the business of the Issuer if (i) the Total Debt LTV Ratio will be less than (A) 65.0% if such incurrence occurred on or after Closing and on or prior to the third anniversary of Closing or (B) 60.0% if such incurrence occurred on or after the third anniversary of Closing and (ii) the Total Secured Debt LTV Ratio will be less than 55.0% immediately, in each case on a pro forma basis after giving effect to such incurrence;
(b)
contractually or structurally subordinated Indebtedness or preferred equity (
provided
the same are non-cash pay);
(c)
Indebtedness under the Notes, including without limitation any PIK Notes;
(d)
intercompany indebtedness;
(e)
Indebtedness in existence as of the date of this Agreement (including without limitation the Existing Credit Agreements), which is listed on Schedule 5.19;
(f)
additional Indebtedness, if (i) the Total Debt LTV Ratio will be less than (A) 65.0% if such incurrence occurred on or after Closing and on or prior to the third anniversary of Closing or (B) 60.0% if such incurrence occurred on or after the third anniversary of Closing and (ii) the Total Secured Debt LTV Ratio will be less than 55.0% immediately, in each case on a pro forma basis after giving effect to such incurrence;
34
(g)
Refinancing Indebtedness with respect to Indebtedness incurred under clauses (a), (b), (d), (e), (f), (i), (j) and (k) hereof;
provided
that, if Indebtedness is incurred either (A) in connection with a Global Refinancing, the Total Secured Debt LTV Ratio will be less than 65.0% immediately after such Global Refinancing and the Total Secured Debt LTV Ratio with respect to FinCo will be less than 60.0% immediately after such Global Refinancing or (B) in connection with any amendment, restatement, modification or refinancing of the Existing Credit Agreements, the aggregate principal amounts of Indebtedness incurred by the Obligors to refinance the Existing Credit Agreements does not exceed the principal amount of the Existing Credit Agreements outstanding at the time of such refinancing,
plus
the amount of other Indebtedness permitted to be incurred hereunder;
provided
,
however
, that any Refinancing Indebtedness incurred pursuant to this clause (B) shall not include a guarantee by FinCo and not be secured by, or create any Lien upon or with respect to, the property and assets of FinCo (including, for the avoidance of doubt, the Scorpio Newbuilds);
(h)
purchase money indebtedness and hedging agreements to the extent permitted under the Existing Credit Agreements or any Refinancing Agreement;
(i)
upon or after delivery of each Vessel constituting the Scorpio Newbuilds, Indebtedness not to exceed the greater of (x) $52,500,000 million and (y) 60.0% of the appraised value per Vessel as determined by in accordance with an appraisal report, which report shall have been prepared within 90 days prior to such date of determination;
(j)
so long as no Event of Default then exists or would result therefrom, additional Indebtedness incurred by any Obligor or its Subsidiaries that does not directly own a Vessel subject of the Scorpio Newbuilds at the time such Indebtedness is incurred in an aggregate principal amount not to exceed $20,000,000 (or, in the case of Indebtedness in respect of letters of credit, $10,000,000) at any one time outstanding;
(k)
Indebtedness incurred in connection with the acquisition of additional Vessels (which may be effectuated by upsizing either of the Existing Credit Agreements or a new facility);
provided
that such additional or increased indebtedness does not exceed 60.0% of the appraised value of such additional Vessels as determined on the date of acquisition; and,
provided
,
further
, that such indebtedness exists at the date of such acquisition or is created within 180 days thereafter; and
(l)
Indebtedness incurred in connection with the repurchase for redemption of Equity Interests under Section 10.3(b)(ix).
10.5.
Transactions with Affiliates
.
The Obligors will not, and will not permit any of the Restricted Subsidiaries to, enter into any transaction or series of related transactions, whether or not in the ordinary course of business, with any Affiliate of such Person, other than on terms and conditions no less favorable to such Person as would be obtained by such Person at that time in a comparable arm’s-length transaction with a Person other than an Affiliate, except that:
35
(a)
Restricted Payments may be paid to the extent provided in Section 10.3;
(b)
loans may be made and other transactions may be entered into between the Obligors and their Subsidiaries to the extent permitted by Sections 10.4;
(c)
as long as GMC has an independent compensation committee, directors’ fees as determined by such independent compensation committee and, at any time GMC does not have an independent compensation committee, GMC may pay reasonable directors’ fees;
(d)
the Obligors and the Restricted Subsidiaries may enter into employment agreements or arrangements with their respective officers and employees in the ordinary course of business;
(e)
the Obligors and the Restricted Subsidiaries may pay management fees to Wholly-Owned Restricted Subsidiaries of GMC in the ordinary course of business;
(f)
transactions with shareholders to the extent such transactions are permitted or required under the GMC Charter, the Shareholders’ Agreement or the Registration Agreement resulting from the exercise of rights to cause GMC to consummate an initial public offering, tag-along rights, drag along rights, preemptive rights, registration rights or similar rights;
(g)
the transactions and agreements (including transactions contemplated therein) in existence as of the date of this Agreement which are listed on
Schedule 10.5
and other transactions and agreements (including transactions contemplated therein) listed on
Schedule 10.5
, and any related transactions, shall be permitted; and
(h)
any individual transaction, whether or not in the ordinary course of business, with any Affiliate of such Person if after giving effect to such transaction, the aggregate amount of all such transactions in any fiscal year does not exceed $1,000,000.
10.6.
Limitation on Certain Restrictions on Restricted Subsidiaries
.
The Obligors will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction on the ability of any such Restricted Subsidiary to (a) pay dividends or make any other distributions on its capital stock or any other interest or participation in its profits owned by any of the Obligors or any Restricted Subsidiary of an Obligor, or pay any Indebtedness owed to an Obligor or a Restricted Subsidiary of an Obligor, (b) make loans or advances to any Obligor or any of the Restricted Subsidiaries of an Obligor or (c) transfer any of its properties or assets to an Obligor or any of such Obligor’s Restricted Subsidiaries, except for such encumbrances or restrictions existing under or by reason of (i) applicable law, (ii) this Agreement, the Notes and the Guarantee, (iii) the Existing Credit Agreements as in effect at Closing, or any refinancing thereof, including any Global Refinancing or amendments thereto, and the other related agreements, instruments and documents, (iv) customary provisions restricting subletting or assignment of any lease governing a leasehold interest of an Obligor or a Restricted Subsidiary of an Obligor, (v) customary provisions restricting assignment of any
36
agreement entered into by an Obligor or a Restricted Subsidiary of an Obligor in the ordinary course of business, (vi) any holder of a Lien permitted by Section 10.1 may restrict the transfer of the asset or assets subject thereto, (vii) restrictions which are not more restrictive than those contained in this Agreement, the Notes and the Guarantees contained in any documents governing any Indebtedness incurred after the Closing in accordance with the provisions of this Agreement and the Notes, (viii) Nonrecourse Indebtedness and (ix) the Shareholders’ Agreement.
10.7.
Business
.
(a)
The Obligors, its Restricted Subsidiaries and its Unrestricted Subsidiaries will not engage in any business other than the businesses in which any of them is engaged in as of Closing (or, in the case of any Restricted Subsidiary or any Unrestricted Subsidiary that is formed or incorporated after Closing, any business in which any Obligor, any other Restricted Subsidiary or any other Unrestricted Subsidiary is engaged as of Closing) and activities directly related thereto, and similar or related maritime businesses.
(b)
If consent and approval from the Existing Credit Agreement Lenders is not obtained by GMC and the Existing Credit Amendments are not consummated by GMC, the FinCo Issuer will not, and will not permit any of its Restricted Subsidiaries to, engage in any other business other than the ownership and operation of the assets purchased in connection with the Acquisition and (ii) the FinCo Issuer will not own any Equity Interests in, or form or acquire any, Subsidiaries, unless such Subsidiaries become Subsidiary Guarantors pursuant to Section 9.11 and are formed or acquired in furtherance of the FinCo Issuer’s business.
11.
EVENTS OF DEFAULT
.
An “
Event of Default
” shall exist if any of the following conditions or events shall occur and be continuing:
(a)
the Issuer defaults in the payment of any principal or Make-Whole Amount, if any, on any Note when the same becomes due and payable, whether at maturity or at a date fixed for prepayment or by declaration or otherwise; or
(b)
the Issuer defaults in the payment of any interest on any Note or any amounts due pursuant to Section 13 for more than 10 Business Days after the same becomes due and payable; or
(c)
either of the Obligors defaults in the performance of or compliance with any term contained in Sections 10.1 through 10.7, inclusive and such default shall continue unremedied for 30 days; or
(d)
either of the Obligors defaults in the performance of or compliance with any term contained herein (other than those referred to in paragraphs (a), (b) and (c) of this Section 11) and such default is not remedied within 60 days after the earlier of (i) a Responsible Officer obtaining actual knowledge of such default and (ii) the Obligors
37
receiving written notice of such default from any holder of a Note (any such written notice to be identified as a “notice of default” and to refer specifically to this paragraph (d) of Section 11); or
(e)
any representation or warranty made in writing by or on behalf of either of the Obligors or any Subsidiary Guarantor or by any officer of either of the Obligors or any Subsidiary Guarantor in this Agreement or any Subsidiary Guarantee or in any writing furnished in connection with the transactions contemplated hereby proves to have been false or incorrect in any Material respect as of the date on which it was made; or
(f)
(i) either of the Obligors, any Significant Subsidiary or any Subsidiary Guarantor shall default in any payment of any Indebtedness (other than the obligations hereunder, under the Notes and under the Guarantees) beyond the period of grace, if any, provided in the instrument or agreement under which such Indebtedness was created or (ii) either of the Obligors, any Significant Subsidiary or any Subsidiary Guarantor shall default in the observance or performance of any agreement or condition relating to any Indebtedness (other than the other than the obligations hereunder, under the Notes and under the Guarantees) or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or holders of such Indebtedness (or a trustee or agent on behalf of such holder or holders) to cause (determined without regard to whether any notice is required), any such Indebtedness to become due prior to its stated maturity or (iii) any Indebtedness (other than the other than the obligations hereunder, under the Notes and under the Guarantees) of the either of the Obligors, any Significant Subsidiary or any Subsidiary Guarantor shall be declared to be due and payable, or required to be prepaid, redeemed, defeased or repurchased other than by a regularly scheduled required prepayment, prior to the stated maturity thereof;
provided
, that it shall not be a Default or Event of Default under this Section 11(g) unless (x) the aggregate outstanding principal amount of such Indebtedness as described in the preceding clauses (i) through (iii) exceeds $30,000,000 and (y) the Default or Event of Default shall continue unremedied for a period of six months, or if such Default or Event of Default is capable of being remedied and the Obligors, the Significant Subsidiaries and the Subsidiary Guarantors shall be actively and diligently proceeding to remedy such Default or Event of Default, such longer period of time, not to exceed one year; or
(g)
either of the Obligors, any Significant Subsidiary or any Subsidiary Guarantor (i) is generally not paying, or admits in writing its inability to pay, its debts as they become due, (ii) files, or consents by answer or otherwise to the filing against it of, a petition for relief or reorganization or arrangement or any other petition in bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency, reorganization, moratorium or other similar law of any jurisdiction, (iii) makes an assignment for the benefit of its creditors, (iv) consents to the appointment of a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, (v) is adjudicated as insolvent or to be liquidated, or (vi) takes corporate action for the purpose of any of the foregoing; or
38
(h)
a court or governmental authority of competent jurisdiction enters an order appointing, without consent by either of the Obligors, any Significant Subsidiary or any Subsidiary Guarantor, a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, or constituting an order for relief or approving a petition for relief or reorganization or any other petition in bankruptcy or for liquidation or to take advantage of any bankruptcy or insolvency law of any jurisdiction, or ordering the dissolution, winding-up or liquidation of either of the Obligors, any Significant Subsidiary or any Subsidiary Guarantor, or any such petition shall be filed against either of the Obligors, any Significant Subsidiary or any Subsidiary Guarantor and such petition shall not be dismissed within 60 days; or
(i)
(i) an administrator of either of the Obligors, any Significant Subsidiary or any Subsidiary Guarantor is appointed, (ii) an application or an order is made, proceedings are commenced, or an application to a court or other steps are taken for the winding up, liquidation, dissolution or administration of either of the Obligors, any Significant Subsidiary or any Subsidiary Guarantor (other than any applications, proceedings, notices or steps which are struck out, stayed, dismissed or withdrawn within 60 days of their institution, application or service), (iii) a receiver, receiver and manager, administrative receiver or similar officer is appointed to all or any of the assets and undertakings of the either of the Obligors, any Significant Subsidiary or any Subsidiary Guarantor or (iv) a Lien is enforced over all or any material portion of the assets of either of the Obligors, any Significant Subsidiary or any Subsidiary Guarantor; or
(j)
a final judgment, order or encumbrance for the payment of money aggregating in excess of $20,000,000 (or the equivalent thereof, as of any date of determination, in any other currency is not covered by insurance) is enforced, against all or a substantial part of the assets of one or more of the Obligors, any Significant Subsidiary and any Subsidiary Guarantor and such enforcement is not bonded, discharged or stayed within 90 days thereafter, or the subject of an appeal being contested in good faith by or on behalf of the relevant Obligor, Significant Subsidiary or Subsidiary Guarantor; or
(k)
any Guarantee or any Subsidiary Guarantee shall cease to be in full force and effect (other than in accordance with Section 9.11(b)) or the Guarantor or any Subsidiary Guarantor or any Person acting on behalf of the Guarantor or any Subsidiary Guarantor shall contest in any manner the validity, binding nature or enforceability of any Guarantee or any Subsidiary Guarantee.
12.
REMEDIES ON DEFAULT, ETC
.
12.1.
Acceleration
.
(a) If an Event of Default with respect to either Obligor described in paragraph (g), (h) or (i) of Section 11 (other than an Event of Default described in clause (i) of paragraph (g) or described in clause (vi) of paragraph (g) by virtue of the fact that such clause
39
encompasses clause (i) of paragraph (g)) has occurred, all the Notes then outstanding shall automatically become immediately due and payable.
(b) If any other Event of Default has occurred and is continuing, the Required Holders may at any time at their option, by notice or notices to the Obligors, declare all the Notes then outstanding to be immediately due and payable.
Upon any Notes becoming due and payable under this Section 12.1, whether automatically or by declaration, such Notes will forthwith mature and the entire unpaid principal amount of such Notes, plus (x) all accrued and unpaid interest thereon and (y) if such Notes become due and payable under Section 12.1(a) and any Indebtedness (other than the other than the obligations hereunder, under the Notes and under the Guarantees) of the either of the Obligors or any of their Restricted Subsidiaries shall be declared to be due and payable, or required to be prepaid, redeemed, defeased or repurchased other than by a regularly scheduled required prepayment, prior to the stated maturity thereof, the applicable Make-Whole Amounts determined in respect of such principal amount (to the full extent permitted by applicable law), shall all be immediately due and payable, in each and every case without presentment, demand, protest or further notice, all of which are hereby waived.
12.2.
[Reserved
.
]
12.3.
Rescission
.
At any time after any Notes have been declared due and payable pursuant to paragraph (b) or (c) of Section 12.1, the Required Holders, by written notice to the Obligors, may rescind and annul any such declaration and its consequences if (a) the Issuer has paid all overdue interest on the Notes, all principal of and Make-Whole Amount, if any, on any Notes that are due and payable and are unpaid other than by reason of such declaration, and all interest on such overdue principal and Make-Whole Amount, if any, and (to the extent permitted by applicable law) any overdue interest in respect of the Notes, at the Default Rate, (b) all Events of Default and Defaults, other than non-payment of amounts that have become due solely by reason of such declaration, have been cured or have been waived pursuant to Section 19, and (c) no judgment or decree has been entered for the payment of any monies due pursuant hereto or to the Notes. No rescission and annulment under this Section 12.3 will extend to or affect any subsequent Event of Default or Default or impair any right consequent thereon.
12.4.
No Waivers or Election of Remedies, Expenses, etc
.
No course of dealing and no delay on the part of any holder of any Note in exercising any right, power or remedy shall operate as a waiver thereof or otherwise prejudice such holder’s rights, powers or remedies. No right, power or remedy conferred by this Agreement or by any Note upon any holder thereof or by any Subsidiary Guarantee shall be exclusive of any other right, power or remedy referred to herein or therein or now or hereafter available at law, in equity, by statute or otherwise. Without limiting the obligations of the Obligors under Section 17, the Obligors will pay to the holder of each Note on demand such further amount as shall be sufficient to cover all reasonable out-of-pocket costs and expenses of
40
such holder incurred in any enforcement or collection under this Section 12, including, without limitation, reasonable attorneys’ fees, expenses and disbursements but only one law firm for all noteholders.
13.
TAX INDEMNIFICATION; FATCA INFORMATION
.
13.1.
Tax Indemnification
.
(a) Any and all payments under this Agreement, the Notes or the Guarantees to or for the account of any holder of a Note shall be made free and clear of, and without deduction or withholding for or on account of, any tax, except to the extent such deduction or withholding is required by law. If any tax is required by law to be deducted or withheld from any such payments by the Issuer under this Agreement or the Notes or by the Guarantor under this Agreement and the Guarantees, such Obligor will make such deductions or withholding and pay to the relevant taxing authority the full amount deducted or withheld before penalties attach thereto or interest accrues thereon. In the event of the imposition by or for the account of any Applicable Taxing Authority or of any Governmental Authority of any jurisdiction in which either Obligor resides for tax purposes, any other jurisdiction in which any Obligor is engaged in business (including having a permanent establishment therein) or any jurisdiction from or through which either Obligor is making any payment in respect of any Note or Guarantee, as the case may be, of any tax, other than any Excluded Tax, upon or with respect to any payments in respect of any Note or Guarantee, as the case may be, whether by withholding or otherwise, the Obligors hereby agree to pay forthwith from time to time in connection with each payment on the Notes or Guarantees, as the case may be, to each holder of a Note such amounts as shall be required so that every payment received by such holder in respect of the Notes or Guarantees, as the case may be, and every payment received by such holder under this Agreement will not, after such withholding or deduction or other payment for or on account of such tax and any interest or penalties relating thereto, be less than the amount due and payable to such holder in respect of such Note or Guarantee, as the case may be, or under this Agreement before the assessment of such tax;
provided
,
however
, that the Obligors shall not be obliged to pay such amounts to any holder of a Note in respect of taxes to the extent such taxes exceed the taxes that would have been payable:
(i)
had such holder not been a resident, domiciliary or national of, or been engaged in business in, or maintained a permanent establishment in, or otherwise had any connection with Marshall Islands other than the mere holding of a Note (or the receipt of any payments in respect thereof) or activities incidental thereto (including enforcement thereof); or
(ii)
but for the delay or failure by such holder (following a written request by either Obligor) in the filing with an appropriate Governmental Authority with an Obligor or otherwise of forms, certificates, documents, applications or other reasonably required evidence (collectively, “
Forms
”), that are required to be filed by such holder to avoid or reduce such taxes and that in the case of any of the foregoing would not result in any confidential (other than identifying information such as tax identification numbers) or proprietary income
41
tax return information being revealed, either directly or indirectly, to any Person and such delay or failure could have been lawfully avoided by such holder,
provided
that such holder shall be deemed to have satisfied the requirements of this clause (ii) upon the good faith completion and submission of such Forms as may be specified in a written request of either Obligor no later than 30 days after receipt by such holder of such written request (
provided
, that if such Forms are Forms required pursuant to the laws of any jurisdiction other than the United States of America or any political subdivision thereof, such written request shall be accompanied by such Forms with an English translation thereof, if applicable).
(b) Within 60 days after the date of any payment by either Obligor of any tax in respect of any payment under the Notes or Guarantees, as the case may be, or this Section 13, the relevant Obligor shall furnish to each holder of a Note the original tax receipt for the payment of such tax (or if such original tax receipt is not available, a duly certified copy of the original tax receipt), together with such other documentary evidence with respect to such payments as may be reasonably requested from time to time by any holder of a Note.
(c) If either of the Obligors has made a payment to or on account of any holder of a Note pursuant to clause (a) above and such holder is entitled to a refund of the tax to which such payment is attributable from the Governmental Authority to which the payment of the tax was made and such refund can be obtained by filing one or more Forms which would not result in any confidential (other than identifying information such as tax identification numbers) or proprietary income tax return information being revealed, then (i) such holder shall, as soon as practicable after receiving a written request therefor from such Obligor (which request shall include a copy of such Forms to be filed with an English translation, if applicable), use its reasonable efforts to promptly file such Forms and (ii) upon receipt of such refund, if any, promptly pay over such refund to such Obligor.
(d) The obligations of the Obligors under this Section 13 shall survive the transfer or payment of any Note.
13.2.
Survival of Obligations.
The obligations of the Obligors under this Section 13 will survive the payment or transfer of any Note, the enforcement, amendment or waiver of any provision of this Agreement, the Notes, the Guarantees or any Subsidiary Guarantee, and the termination of this Agreement.
14.
GUARANTEE, ETC
.
14.1.
Guarantee
.
The Guarantor hereby guarantees to each holder of any Note at any time outstanding (a) the prompt payment in full in Dollars when due (whether at stated maturity, by acceleration, by mandatory or optional prepayment or otherwise) of the principal of the Notes, the Make-Whole Amount, if any, and interest on the Notes (including, without limitation, any interest on any overdue principal or Make-Whole Amount, if any, interest accruing after the commencement of any
42
bankruptcy or similar proceeding and any additional interest that would accrue but for the commencement of such proceeding, and, to the extent permitted by applicable law, on any overdue interest and on payment of additional amounts described in Section 13) and all other amounts from time to time owing by the Issuer under this Agreement and under the Notes (including, without limitation, costs, expenses and taxes in accordance with the terms hereof), and (b) the prompt performance and observance by the Issuer of all covenants, agreements and conditions on its part to be performed and observed hereunder and under the Notes, in each case strictly in accordance with the terms thereof (such payments and other obligations being herein collectively called the “
Guaranteed Obligations
”). The Guarantor hereby further agrees that if the Issuer shall default in the payment or performance of any of the Guaranteed Obligations, the Guarantor will (x) promptly pay or perform the same, without any demand or notice whatsoever, and that in the case of any extension of time of payment or renewal of any of the Guaranteed Obligations, the same will be promptly paid in full when due (whether at extended maturity, by acceleration, by mandatory or optional prepayment or otherwise) in accordance with the terms of such extension or renewal and (y) pay to the holder of any Note such amounts, to the extent lawful, as shall be sufficient to pay the costs and expenses of collection or of otherwise enforcing any of such holder’s rights under this Agreement and under the Notes, including, without limitation, reasonable counsel fees.
14.2.
Guarantee Obligations Unconditional
(a)
The obligations of the Guarantor under Section 14.1 constitute a present and continuing guaranty of payment and not collectability and are absolute, unconditional and irrevocable, irrespective of the value, genuineness, validity, regularity or enforceability of the obligations of the Issuer under this Agreement, the Notes or any other agreement or instrument referred to herein or therein, or any substitution, release or exchange of any Guaranty of or security for any of the Guaranteed Obligations, and, to the fullest extent permitted by applicable law, irrespective of any other circumstance whatsoever which might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor, it being the intent of this Section 14.2 that the obligations of the Guarantor hereunder shall be absolute, unconditional and irrevocable under any and all circumstances. Without limiting the generality of the foregoing, it is agreed that the occurrence of any one or more of the following shall not alter or impair the liability of the Guarantor hereunder which shall remain absolute, unconditional and irrevocable as described above:
(1)
any amendment or modification of any provision of this Agreement (other than Section 14.1 or 14.2), any of the Notes or any Subsidiary Guarantee, or any assignment or transfer thereof, including without limitation the renewal or extension of the time of payment of any of the Notes or the granting of time in respect of such payment thereof, or of any furnishing or acceptance of security or any additional guarantee or any release of any security or guarantee so furnished or accepted for any of the Notes;
(2)
any waiver, consent, extension, granting of time, forbearance, indulgence or other action or inaction under or in respect of this Agreement, the Notes or any Subsidiary Guarantee, or any exercise or non-exercise of any right, remedy or power in respect hereof or thereof;
43
(3)
any bankruptcy, receivership, insolvency, reorganization, arrangement, readjustment, composition, liquidation or similar proceedings with respect to the Issuer, any Subsidiary Guarantor or any other Person or the properties or creditors of any of them;
(4)
the occurrence of any Default or Event of Default under, or any invalidity or any unenforceability of, or any misrepresentation, irregularity or other defect in, this Agreement, the Notes, any Subsidiary Guarantee or any other agreement;
(5)
any transfer of any assets to or from the Issuer, including without limitation any transfer or purported transfer to the Issuer from any Person, any invalidity, illegality of, or inability to enforce, any such transfer or purported transfer, any consolidation or merger of the Issuer with or into any Person, any change in the ownership of any shares of capital stock or other equity or ownership interests of the Issuer, or any change whatsoever in the objects, capital structure, constitution or business of the Issuer;
(6)
any default, failure or delay, willful or otherwise, on the part of the Issuer, any Subsidiary Guarantor or any other Person to perform or comply with, or the impossibility or illegality of performance by the Issuer, any Subsidiary Guarantor or any other Person of, any term of this Agreement, the Notes, any Subsidiary Guarantee or any other agreement;
(7)
any suit or other action brought by, or any judgment in favor of, any beneficiaries or creditors of, the Issuer, any Subsidiary Guarantor or any other Person for any reason whatsoever, including without limitation any suit or action in any way attacking or involving any issue, matter or thing in respect of this Agreement, any of the Notes, any Subsidiary Guarantee or any other agreement;
(8)
any lack or limitation of status or of power, incapacity or disability of the Issuer, any Subsidiary Guarantor or any other Person providing a Guaranty of, or security for, any of the Guaranteed Obligations; or
(9)
any other thing, event, happening, matter, circumstance or condition whatsoever, not in any way limited to the foregoing (other than the indefeasible payment in full of the Guaranteed Obligations).
(b)
The Guarantor hereby unconditionally waives diligence, presentment, demand of payment, protest and all notices whatsoever and any requirement that any holder of a Note exhaust any right, power or remedy against the Issuer under this Agreement or the Notes or any other agreement or instrument referred to herein or therein, or against any other Person under any other Guaranty of, or security for, any of the Guaranteed Obligations.
(c)
In the event that the Guarantor shall at any time pay any amount on account of the Guaranteed Obligations or take any other action in performance of its obligations hereunder, the Guarantor shall not exercise any subrogation or other rights hereunder or under the Notes and the Guarantor hereby waives all rights it may have to exercise any such subrogation or other rights, and all other remedies that it may have against the Issuer, in respect of any payment made hereunder
44
unless and until the Guaranteed Obligations shall have been indefeasibly paid in full. Prior to the payment in full of the Guaranteed Obligations, if any amount shall be paid to the Guarantor on account of any such subrogation rights or other remedy, notwithstanding the waiver thereof, such amount shall forthwith be paid to such holders to be credited and applied against the Guaranteed Obligations, whether matured or unmatured, in accordance with the terms hereof. The Guarantor agrees that its obligations under this Section 14 shall be automatically reinstated if and to the extent that for any reason any payment (including payment in full) by or on behalf of the Issuer is rescinded or must be otherwise restored by any holder of a Note, whether as a result of any proceedings in bankruptcy or reorganization or otherwise, all as though such amount had not been paid.
(d)
If an event permitting the acceleration of the maturity of the principal amount of the Notes shall at any time have occurred and be continuing and such acceleration (and the effect thereof on the Guaranteed Obligations) shall at such time be prevented by reason of the pendency against the Issuer or any other Person (other than the Guarantor as to itself) of a case or proceeding under a bankruptcy or insolvency law, the Guarantor agrees that, for purposes of the guarantee in this Section 14 and the Guarantor’s obligations under this Agreement and the Guarantees, the maturity of the principal amount of the Notes shall be deemed to have been accelerated (with a corresponding effect on the Guaranteed Obligations) with the same effect as if the holders of the Notes had accelerated the same in accordance with the terms of this Agreement, and the Guarantor shall forthwith pay such principal amount, any interest thereon, any Make-Whole Amounts and any other amounts guaranteed hereunder without further notice or demand.
(e)
The guarantee in Section 14.1 is a continuing guarantee and shall apply to the Guaranteed Obligations whenever arising. Each default in the payment or performance of any of the Guaranteed Obligations shall give rise to a separate claim and cause of action hereunder, and separate claims or suits may be made and brought, as the case may be, hereunder as each such default occurs.
(f)
No holder of Notes shall be under any obligation to (i) marshal any assets in favor of the Guarantor or in payment of any or all of the liabilities of the Guarantor under or in respect of this Agreement or the Guarantees or (ii) pursue any other remedy that the Guarantor may or may not be able to pursue itself and that may reduce amounts owing by the Guarantor under this Agreement or the Guarantees.
14.3.
Survival of Obligations
.
All obligations of the Guarantor under Sections 14.1 and 14.2 shall survive the transfer of any Note, and any obligations of the Guarantor under Sections 14.1 and 14.2 with respect to which the underlying obligation of the Issuer is expressly stated to survive the payment of any Note shall also survive payment of such Note.
14.4.
Guarantees Endorsed on the Notes
.
In the case of the Guarantee by Guarantor/GMC, each Note shall have endorsed thereon a Guarantee of the Guarantor/GMC in the form of
Exhibit 2
.
45
15.
REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES
.
15.1.
Registration of Notes
.
The Issuer shall keep at its principal executive office a register for the registration and registration of transfers of Notes. The name and address of each holder of one or more Notes, each transfer thereof and the name and address of each transferee of one or more Notes shall be registered in such register. Prior to due presentment for registration of transfer, the Person in whose name any Note shall be registered shall be deemed and treated as the owner and holder thereof for all purposes hereof, and the Issuer shall not be affected by any notice or knowledge to the contrary. The Issuer shall give to any holder of a Note promptly upon request therefor, a complete and correct copy of the names and addresses of all registered holders of Notes.
15.2.
Transfer and Exchange of Notes
.
Upon surrender of any Note at the principal executive office of the Issuer for registration of transfer or exchange (and in the case of a surrender for registration of transfer, duly endorsed or accompanied by a written instrument of transfer duly executed by the registered holder of such Note or his attorney duly authorized in writing and accompanied by the address for notices of each transferee of such Note or part thereof), the Issuer shall execute and deliver, at the Issuer’s expense (except as provided below), one or more new Notes of the same series (as requested by the holder thereof) in exchange therefor, in an aggregate principal amount equal to the unpaid principal amount of the surrendered Note. Each such new Note shall be payable to such Person as such holder may request and shall be substantially in the form of
Exhibit 1
, as applicable, and shall, if applicable, have the Guarantee of the Guarantor endorsed thereon. Each such new Note shall be dated and bear interest from the date to which interest shall have been paid on the surrendered Note or dated the date of the surrendered Note if no interest shall have been paid thereon. The Issuer may require payment of a sum sufficient to cover any stamp tax or governmental charge imposed in respect of any such transfer of Notes. Notes (other than PIK Notes, which may be issued in minimum denominations of $1.00 and integral multiples thereof and any increase in the principal amount of the PIK Notes as a result of any PIK Interest may be made in multiples of $1.00) shall not be transferred in denominations of less than $400,000;
provided
, that if necessary to enable the registration of transfer by a holder of its entire holding of Notes, one Note may be in a denomination of less than $400,000. Any transferee, by its acceptance of a Note registered in its name (or the name of its nominee) shall be deemed to have agreed to be bound by the provisions contained herein expressed to be, or that otherwise are, applicable to Purchasers and/or holders of Notes and to have made the representations set forth in Section 6.
15.3.
Replacement of Notes
.
Upon receipt by the Issuer of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of any Note (which evidence shall be,
46
in the case of an Institutional Investor, notice from such Institutional Investor of such ownership and such loss, theft, destruction or mutilation), and
(a)
in the case of loss, theft or destruction, of indemnity reasonably satisfactory to it (
provided
that if the holder of such Note is, or is a nominee for, an original Purchaser or another holder of a Note with a minimum net worth of at least $50,000,000 (or its equivalent in the relevant currency), such Person’s own unsecured agreement of indemnity shall be deemed to be satisfactory), or
(b)
in the case of mutilation, upon surrender and cancellation thereof,
the Issuer at its own expense shall execute and deliver, in lieu thereof, a new Note of the same series, dated and bearing interest from the date to which interest shall have been paid on such lost, stolen, destroyed or mutilated Note or dated the date of such lost, stolen, destroyed or mutilated Note if no interest shall have been paid thereon, and if applicable, having the Guarantee of the Guarantor/GMC endorsed thereon.
16.
PAYMENTS ON NOTES
.
16.1.
Place of Payment
.
Subject to Section 16.2, payments of principal, Make-Whole Amount, if any, and interest becoming due and payable on the Notes shall be made in New York, New York at Nordea Bank Finland Plc, New York Branch, 437 Madison Avenue, New York, NY 10022. The Issuer may at any time, by notice to each holder of a Note, change the place of payment of the Notes so long as such place of payment shall be either the principal office of the Issuer in such jurisdiction or the principal office of a bank or trust company in such jurisdiction or the designated paying office of a nominated paying agent in such jurisdiction.
16.2.
Home Office Payment
.
So long as any Purchaser or any nominee of such Purchaser shall be the holder of any Note, and notwithstanding anything contained in Section 16.1 or in such Note to the contrary, the Issuer will pay all sums becoming due on such Note for principal, Make-Whole Amount, if any, and interest by the method and at the address specified for such purpose below such Purchaser’s name in
Schedule A
, or by such other method or at such other address as such Purchaser shall have from time to time specified to the Obligors in writing for such purpose, without the presentation or surrender of such Note or the making of any notation thereon, except that upon written request of the Obligors made concurrently with or reasonably promptly after payment or prepayment in full of any Note, such Purchaser shall surrender such Note for cancellation, reasonably promptly after any such request, to the Issuer at its address as set forth in Section 20. Prior to any sale or other disposition of any Note held by any Purchaser or any nominee of such Purchaser, such Purchaser will, at its election, either endorse thereon the amount of principal paid thereon and the last date to which interest has been paid thereon or surrender such Note to the Issuer in exchange for a new Note or Notes pursuant to Section 15. The Issuer will afford the benefits of this Section 16.2 to any Institutional Investor that is the
47
direct or indirect transferee of any Note purchased by any Purchaser under this Agreement and that has made the same agreement relating to such Note as the Purchasers have made in this Section 16.2.
17.
EXPENSES, ETC
.
17.1.
Transaction Expenses
.
Whether or not the transactions contemplated hereby are consummated, GMC will pay all reasonable out-of-pocket costs and expenses (including reasonable attorneys’ fees of a special counsel and, if reasonably required, local or other counsel) incurred by the Purchasers in connection with such transactions. In connection with any amendments, waivers or consents under or in respect of this Agreement, the Notes, the Guarantees or any Subsidiary Guarantee (whether or not such amendment, waiver or consent becomes effective), the Obligors will pay all reasonable out-of-pocket costs and expenses incurred by the Purchasers and each other holder of a Note including, without limitation: (a) the reasonable out-of-pocket costs and expenses incurred in enforcing or defending (or determining whether or how to enforce or defend) any rights under this Agreement, the Notes, the Guarantees or any Subsidiary Guarantee or in responding to any subpoena or other legal process or informal investigative demand issued in connection with this Agreement, the Notes, the Guarantees or any Subsidiary Guarantee, or by reason of being a holder of any Note, and (b) the reasonable out-of-pocket costs and expenses, including financial advisors’ fees, incurred in connection with the insolvency or bankruptcy of either of the Obligors or any Subsidiary or in connection with any work-out or restructuring of the transactions contemplated hereby and by the Notes, by the Guarantees or by any Subsidiary Guarantee. The Obligors will pay, and will save each Purchaser and each other holder of a Note harmless from, all claims in respect of any fees, costs or expenses if any, of brokers and finders (other than those retained by such Purchaser or other holder).
17.2.
Taxes
.
The Obligors will pay all stamp, documentary or similar taxes which may be payable in respect of the execution and delivery of this Agreement, the Notes, the Guarantees or any Subsidiary Guarantee or of any amendment of, or waiver or consent under or with respect to, this Agreement, the Notes, the Guarantees or any Subsidiary Guarantee and will save each holder of a Note harmless against any loss or liability resulting from nonpayment or delay in payment of any such tax required to be paid by the Obligors hereunder.
17.3.
Survival
.
The obligations of the Obligors under this Section 17 will survive the payment or transfer of any Note, the enforcement, amendment or waiver of any provision of this Agreement, the Notes, the Guarantees or any Subsidiary Guarantee, and the termination of this Agreement.
48
18.
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT
.
All representations and warranties contained herein shall survive the execution and delivery of this Agreement and the Notes, the purchase or transfer by each Purchaser of any Note or portion thereof or interest therein and the payment of any Note, and may be relied upon by any subsequent holder of a Note, regardless of any investigation made at any time by or on behalf of any Purchaser or any other holder of a Note. All statements contained in any certificate or other instrument delivered by or on behalf of either of the Obligors pursuant to this Agreement shall be deemed representations and warranties of such Obligor under this Agreement. Subject to the preceding sentence, this Agreement, the Notes and the Guarantees embody the entire agreement and understanding between the Purchasers and the Obligors and supersede all prior agreements and understandings relating to the subject matter hereof.
19.
AMENDMENT AND WAIVER
.
19.1.
Requirements
.
This Agreement and the Notes may be amended, and the observance of any term hereof or of the Notes may be waived (either retroactively or prospectively), with (and only with) the written consent of the Obligors and the Required Holders, except that (a) no amendment or waiver of any of the provisions of Section 1, 2, 3, 4, 5, 6 or 23 hereof, or any defined term (as it is used therein), will be effective as to any Purchaser unless consented to by such Purchaser in writing, and (b) no such amendment or waiver may, without the written consent of the holder of each of the Notes at the time outstanding adversely affected thereby, (i) subject to the provisions of Section 12 relating to acceleration or rescission, change the amount or time of any prepayment or payment of principal of, or reduce the rate or change the time of payment or method of computation of interest or of the Make-Whole Amount on, the Notes held by such holder, (ii) change the percentage of the principal amount of the Notes the holders of which are required to consent to any such amendment or waiver, or (iii) amend any of Sections 8, 11(a), 11(b), 12, 13, 19, 22 or 25.
19.2.
Solicitation of Holders of Notes
.
The Obligors will not directly or indirectly pay or cause to be paid any remuneration, whether by way of supplemental or additional interest, fee or otherwise, or grant any security, to any holder of Notes as consideration for or as an inducement to the entering into by any holder of Notes or any waiver or amendment of any of the terms and provisions hereof or of any Note or any Subsidiary Guarantee unless such remuneration is concurrently offered on the same terms, ratably to each holder of Notes then outstanding.
19.3.
Binding Effect, etc
.
Any amendment or waiver consented to as provided in this Section 19 applies equally to all holders of Notes and is binding upon them and upon each future holder of any Note and upon the Obligors without regard to whether such Note has been marked to indicate such
49
amendment or waiver. No such amendment or waiver will extend to or affect any obligation, covenant, agreement, Default or Event of Default not expressly amended or waived or impair any right consequent thereon. No course of dealing between either of the Obligors and the holder of any Note nor any delay in exercising any rights hereunder or under any Note shall operate as a waiver of any rights of any holder of such Note. As used herein, the term “
this Agreement
” and references thereto shall mean this Agreement as it may from time to time be amended or supplemented.
19.4.
Notes held by Obligors, etc
.
Solely for the purpose of determining whether the holders of the requisite percentage of the aggregate principal amount of Notes then outstanding approved or consented to any amendment, waiver or consent to be given under this Agreement or the Notes or any Guarantee, or have directed the taking of any action provided herein or in the Notes to be taken upon the direction of the holders of a specified percentage of the aggregate principal amount of Notes then outstanding, Notes directly or indirectly owned by GMC or any of its Subsidiaries shall be deemed not to be outstanding.
20.
NOTICES
.
All notices and communications provided for hereunder shall be in writing and sent (a) by telecopy if the sender on the same day sends a confirming copy of such notice by a recognized international commercial delivery service (charges prepaid), or (b) by a recognized international commercial delivery service (with charges prepaid). Any such notice must be sent:
(i)
if to a Purchaser or its nominee, to such Purchaser or nominee at the address (whether email or physical) specified for such communications in
Schedule A
, or at such other address as such Purchaser or nominee shall have specified to the Obligors in writing;
(ii)
if to any other holder of any Note, to such holder at such address (whether email or physical) as such other holder shall have specified to the Obligors in writing;
(iii)
if to GMC, to General Maritime Corporation, 299 Park Avenue, New York, NY 10171, Attention: Chief Financial Officer, Telephone: (212) 763-5600, Facsimile: (212) 763-5608, Email: finance@generalmaritime.com, or at such other address as GMC shall have specified to the holder of each Note in writing; and
(iv)
if to FinCo, to GMC, to General Maritime Corporation, 299 Park Avenue, New York, NY 10171, Attention: Chief Financial Officer, Telephone: (212) 763-5600, Facsimile: (212) 763-5608, Email: finance@generalmaritime.com, or at such other address as FinCo shall have specified to the holder of each Note in writing, with a copy to:
Kramer Levin Naftalis & Frankel LLP
1177 Avenue of the Americas
New York, NY 10022
Attention: Kenneth Chin, Esq.
Telephone: (212) 715-9100
50
Facsimile: (212) 715-8000
Notices under this Section 20 will be deemed given only when actually received.
Each document, instrument, financial statement, report, notice or other communication delivered in connection with this Agreement shall be in English or accompanied by an English translation thereof.
21.
REPRODUCTION OF DOCUMENTS
.
This Agreement and all documents relating thereto, including, without limitation, (a) consents, waivers and modifications that may hereafter be executed, (b) documents received by any Purchaser at the Closing (except the Notes themselves), and (c) financial statements, certificates and other information previously or hereafter furnished to any Purchaser, may be reproduced by such Purchaser by any photographic, electronic, digital or other similar process and such Purchaser may destroy any original document so reproduced. The Obligors agree and stipulate that, to the extent permitted by applicable law, any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made by such Purchaser in the regular course of business) and any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence. This Section 21 shall not prohibit either of the Obligors or any other holder of Notes from contesting any such reproduction to the same extent that it could contest the original, or from introducing evidence to demonstrate the inaccuracy of any such reproduction.
22.
CONFIDENTIAL INFORMATION
.
For the purposes of this Section 22, “
Confidential Information
” means information delivered to any Purchaser by or on behalf of either of the Obligors or any Subsidiary in connection with the transactions contemplated by or otherwise pursuant to this Agreement that is proprietary in nature and that was clearly marked or labeled or otherwise adequately identified when received by such Purchaser as being confidential information of such Obligor or such Subsidiary,
provided
that such term does not include information that (a) was publicly known or otherwise known to such Purchaser prior to the time of such disclosure, (b) subsequently becomes publicly known through no act or omission by such Purchaser or any person acting on such Purchaser’s behalf, (c) otherwise becomes known to such Purchaser other than through disclosure by either of the Obligors or any Subsidiary or (d) constitutes financial statements delivered to such Purchaser under Section 7.1 that are otherwise publicly available. Each Purchaser will maintain the confidentiality of such Confidential Information in accordance with procedures adopted by such Purchaser in good faith to protect confidential information of third parties delivered to such Purchaser,
provided
that such Purchaser may deliver or disclose Confidential Information to (i) such Purchaser’s directors, officers, employees, agents, attorneys and affiliates (to the extent such disclosure reasonably relates to the administration of the investment represented by such Purchaser’s Notes), (ii) such Purchaser’s financial advisors and other professional advisors who agree to hold confidential the Confidential Information substantially in accordance with the terms of this Section 22, (iii) any other holder of any Note, (iv) any
51
Institutional Investor to which such Purchaser sells or offers to sell such Note or any part thereof or any participation therein (if such Person has agreed in writing prior to its receipt of such Confidential Information to be bound by the provisions of this Section 22), (v) any Person from which such Purchaser offers to purchase any security of either of the Obligors (if such Person has agreed in writing prior to its receipt of such Confidential Information to be bound by the provisions of this Section 22), (vi) any federal or state regulatory authority having jurisdiction over such Purchaser, (vii) the National Association of Insurance Commissioners or any similar organization, or any nationally recognized rating agency that requires access to information about such Purchaser’s investment portfolio, (viii) to effect compliance with any law, rule, regulation or order applicable to such Purchaser, (ix) in response to any subpoena or other legal process, (y) in connection with any litigation to which such Purchaser is a party or (z) if an Event of Default has occurred and is continuing, to the extent such Purchaser may reasonably determine such delivery and disclosure to be necessary or appropriate in the enforcement or for the protection of the rights and remedies under such Purchaser’s Notes or this Agreement. Each holder of a Note, by its acceptance of a Note, will be deemed to have agreed to be bound by and to be entitled to the benefits of this Section 22 as though it were a party to this Agreement. On reasonable request by either of the Obligors in connection with the delivery to any holder of a Note of information required to be delivered to such holder under this Agreement or requested by such holder (other than a holder that is a party to this Agreement or its nominee), such holder will enter into an agreement with the Obligors embodying the provisions of this Section 22.
In the event that as a condition to receiving access to information relating to either of the Obligors or any Subsidiary in connection with the transactions contemplated by or otherwise pursuant to this Agreement, any Purchaser is required to agree to a confidentiality undertaking (whether through IntraLinks, another secure website, a secured virtual workspace or otherwise) which is different from the terms of this Section 22, the terms of this Section 22 shall not be amended thereby and, as between such Purchaser and the Obligors, supersede the terms of any such other confidentiality undertaking;
provided
that all such information shall be deemed to be Confidential Information for purposes of this Section 22, notwithstanding whether such information was marked or labeled or otherwise identified as such.
23.
SUBSTITUTION OF PURCHASER
.
Each Purchaser shall have the right to substitute any one of such Purchaser’s Affiliates or such other Person reasonably acceptable to the Issuer as the purchaser of the Notes that such Purchaser has agreed to purchase hereunder, by written notice to the Obligors, which notice shall be signed by both such Purchaser and such Affiliate, shall contain such Affiliate’s agreement to be bound by this Agreement and shall contain a confirmation by such Affiliate of the accuracy with respect to it of the representations set forth in Section 6. Upon receipt of such notice, any reference to such Purchaser in this Agreement (other than in this Section 23) shall be deemed to refer to such Affiliate in lieu of such original Purchaser. In the event that such Affiliate is so substituted as a purchaser hereunder and such Affiliate thereafter transfers to such original Purchaser all of the Notes then held by such Affiliate, upon receipt by the Issuer of notice of such transfer, any reference to such Affiliate as a “Purchaser” in this Agreement (other than in this Section 23) shall no longer be deemed to refer to such Affiliate, but shall refer to
52
such original Purchaser, and such original Purchaser shall again have all the rights of an original holder of the Notes under this Agreement.
24.
JURISDICTION AND PROCESS
.
EACH OBLIGOR AGREES THAT ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTES, THE GUARANTEES OR ANY OTHER DOCUMENT EXECUTED IN CONNECTION HEREWITH, OR ANY LEGAL ACTION OR PROCEEDING TO EXECUTE OR OTHERWISE ENFORCE ANY JUDGMENT OBTAINED AGAINST SUCH OBLIGOR FOR BREACH HEREOF OR THEREOF, OR AGAINST ANY OF ITS PROPERTIES, MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK BY ANY PURCHASER OR ON ANY PURCHASER’S BEHALF OR BY OR ON BEHALF OF ANY HOLDER OF A NOTE, AS ANY PURCHASER OR SUCH HOLDER MAY ELECT, AND EACH OBLIGOR HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF SUCH COURTS FOR PURPOSES OF ANY SUCH LEGAL ACTION OR PROCEEDING. EACH OBLIGOR HEREBY AGREES THAT SERVICE OF PROCESS IN ANY SUCH PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO IT AT ITS ADDRESS SPECIFIED IN SECTION 20 OR AT SUCH OTHER ADDRESS OF WHICH EACH HOLDER OF A NOTE SHALL HAVE BEEN NOTIFIED PURSUANT THERETO. IN ADDITION, EACH OBLIGOR HEREBY IRREVOCABLY WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTES, THE GUARANTEES OR ANY OTHER DOCUMENT EXECUTED IN CONNECTION HEREWITH BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
25.
OBLIGATION TO MAKE PAYMENTS IN U
.
S
.
DOLLARS
.
All payments made by the Obligors under this Agreement, the Notes or the Guarantees, as the case may be, shall be in U.S. Dollars and the obligations of the Obligors to make payments in U.S. Dollars of any of its obligations under this Agreement, the Notes or the Guarantees, as the case may be, shall not be discharged or satisfied by any tender, or any recovery pursuant to any judgment, which is expressed in or converted into any currency other than U.S. Dollars, except to the extent such tender or recovery shall result in the actual receipt by the holder of any Note of the full amount of U.S. Dollars expressed to be payable in respect of any such obligations. The obligation of the Obligors to make payments in U.S. Dollars as aforesaid shall be enforceable as an alternative or additional cause of action for the purpose of recovery in U.S. Dollars of the amount, if any, by which such actual receipt shall fall short of the full amount of U.S. Dollars expressed to be payable in respect of any such obligations, and shall
53
not be affected by judgment being obtained for any other sums due under this Agreement, Notes or the Guarantees.
26.
MISCELLANEOUS
.
26.1.
Successors and Assigns
.
All covenants and other agreements contained in this Agreement by or on behalf of any of the parties hereto bind and inure to the benefit of their respective successors and assigns (including, without limitation, any subsequent holder of a Note) whether so expressed or not;
provided
no Purchaser shall transfer any of its rights and obligations under this Agreement prior to the purchase of Notes other than as set forth under Section 23.
26.2.
Payments Due on Non-Business Days
.
Anything in this Agreement or the Notes to the contrary notwithstanding, any payment of principal of or Make-Whole Amount or interest on any Note that is due on a date other than a Business Day shall be made on the next succeeding Business Day without including the additional days elapsed in the computation of the interest payable on such next succeeding Business Day;
provided
that if the maturity date of any Note is a date other than a Business Day, the payment otherwise due on such maturity date shall be made on the next succeeding Business Day and shall include the additional days elapsed in the computation of interest payable on such next succeeding Business Day.
26.3.
Severability
.
Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall (to the full extent permitted by law) not invalidate or render unenforceable such provision in any other jurisdiction.
26.4.
Construction
.
Each covenant contained herein shall be construed (absent express provision to the contrary) as being independent of each other covenant contained herein, so that compliance with any one covenant shall not (absent such an express contrary provision) be deemed to excuse compliance with any other covenant. Where any provision herein refers to action to be taken by any Person, or which such Person is prohibited from taking, such provision shall be applicable whether such action is taken directly or indirectly by such Person.
26.5.
Ratification
.
As a shareholder of any Subsidiary Guarantor, the Guarantor hereby ratifies and confirms the execution, delivery and performance by such Subsidiary Guarantor of any Subsidiary Guarantee to which such Subsidiary Guarantor is or becomes a party.
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26.6.
Counterparts
.
This Agreement may be executed in any number of counterparts, each of which shall be an original but all of which together shall constitute one instrument. Each counterpart may consist of a number of copies hereof, each signed by less than all, but together signed by all, of the parties hereto.
26.7.
Governing Law
.
This Agreement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the law of the State of New York excluding choice-of-law principles of the law of such State that would require the application of the laws of a jurisdiction other than such State.
26.8.
Accounting Matters
.
(a)
Change in Applicable GAAP
. If the Obligors notify the holders of Notes that, in the Guarantor’s reasonable opinion, or if the Required Holders notify the Obligors that, in the Required Holders’ reasonable opinion, as a result of changes in Applicable GAAP from time to time (“
Subsequent Changes
”), any of the covenants contained in Sections 10.4 through 10.7, inclusive, or any of the defined terms used in any of the foregoing covenants, no longer apply as intended such that such covenants are materially more or less restrictive to the Obligors than are such covenants immediately prior to giving effect to such Subsequent Changes, the Obligors and the holders of Notes shall negotiate in good faith to reset or amend such covenants or defined terms so as to negate such Subsequent Changes, or to establish alternative covenants or defined terms. Until the Obligors and the Required Holders so agree to reset, amend or establish alternative covenants or defined terms, the covenants contained in Sections 10.4 through 10.7, inclusive, together with the relevant defined terms, shall continue to apply and compliance therewith shall be determined assuming that the Subsequent Changes shall not have occurred (“
Static GAAP
”). During any period that compliance with any covenants shall be determined pursuant to Static GAAP, the Obligors shall include relevant reconciliations in reasonable detail between Applicable GAAP and Static GAAP with respect to the applicable covenant compliance calculations contained in each certificate of a Senior Financial Officer delivered pursuant to Section 7.2(b) during such period.
(b)
International Accounting Standard 39
. For purposes of determining compliance with the financial covenants contained in this Agreement, any election by either of the Obligors or any Restricted Subsidiary to measure an item of Indebtedness using fair value (as permitted by International Accounting Standard 39 or any similar accounting standard (the “
Relevant Accounting Standard
”)) shall be disregarded and such determination shall be made as if such election had not been made. The foregoing restriction shall not apply to any derivative financial instrument and shall not restrict in any way valuations related to hedge accounting under any Relevant Accounting Standard.
* * * * *
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If you are in agreement with the foregoing, please sign the form of agreement on the accompanying counterpart of this Agreement and return it to the Obligors, whereupon the foregoing shall become a binding agreement between you and the Obligors.
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Very truly yours,
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GENERAL MARITIME CORPORATION
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By
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/s/ Leonidas Vrondissis
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Name: L.J. Vrondissis
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Title: Executive Vice President and Chief Financial Officer
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VLCC ACQUISITION I CORPORATION
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By
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/s/ Leonidas Vrondissis
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Name: L.J. Vrondissis
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Title: President
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[Signature Page to Note and Guarantee Agreement]
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The foregoing is hereby agreed to as of the
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date thereof.
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BLUEMOUNTAIN CREDIT
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OPPORTUNITIES MASTER FUND I L.P.
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By: BlueMountain Capital Management, LLC,
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its investment manager
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By
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/s/ David M. O’Mara
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Name: David M. O’Mara
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Title: Assistant GC/VP
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[Signature Page to Note and Guarantee Agreement]
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The foregoing is hereby agreed to as of the
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date thereof.
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BLUEMOUNTAIN LONG/SHORT
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CREDIT AND DISTRESSED REFLECTION FUND,
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A SUB-FUND OF AAI BLUEMOUNTAIN FUND PLC
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By: BlueMountain Capital Management, LLC,
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its investment manager
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By
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/s/ David M. O’Mara
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Name: David M. O’Mara
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Title: Assistant GC/VP
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[Signature Page to Note and Guarantee Agreement]
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The foregoing is hereby agreed to as of the
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date thereof.
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BLUEMOUNTAIN KICKING
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HORSE FUND L.P.
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By: BlueMountain Capital Management, LLC,
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its investment manager
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By
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/s/ David M. O’Mara
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Name: David M. O’Mara
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Title: Assistant GC/VP
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[Signature Page to Note and Guarantee Agreement]
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The foregoing is hereby agreed to as of the
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date thereof.
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BLUEMOUNTAIN TIMBERLINE LTD.
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By: BlueMountain Capital Management, LLC,
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its investment manager
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By
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/s/ David M. O’Mara
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Name: David M. O’Mara
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Title: Assistant GC/VP
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[Signature Page to Note and Guarantee Agreement]
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The foregoing is hereby agreed to as of the
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date thereof.
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BLUEMOUNTAIN MONTENVERS
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MASTER FUND SCA SICA V-SIF
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By: BlueMountain Capital Management, LLC,
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its investment manager
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By
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/s/ David M. O’Mara
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Name: David M. O’Mara
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Title: Assistant GC/VP
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[Signature Page to Note and Guarantee Agreement]
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The foregoing is hereby agreed to as of the
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date thereof.
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BLUEMOUNTAIN GUADALUPE
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PEAK FUND L.P.
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By: BlueMountain Capital Management, LLC,
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its investment manager
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By
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/s/ David M. O’Mara
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Name: David M. O’Mara
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Title: Assistant GC/VP
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[Signature Page to Note and Guarantee Agreement]
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The foregoing is hereby agreed to as of the
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date thereof.
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BLUEMOUNTAIN STRATEGIC CREDIT
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MASTER FUND L.P.
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By: BlueMountain Capital Management, LLC,
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its investment manager
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By
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/s/ David M. O’Mara
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Name: David M. O’Mara
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Title: Assistant VP/GC
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[Signature Page to Note and Guarantee Agreement]
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
[To be attached.]
SCHEDULE B
DEFINED TERMS
As used herein, the following terms have the respective meanings set forth below or set forth in the Section hereof following such term:
“
Accredited Investor
” means an accredited investor as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act.
“
Acquisition
” means the direct or indirect acquisition by the Issuer of up to seven Scorpio Newbuilds prior to Closing.
“
Affiliate
”
means, at any time, and with respect to any Person, (a) any other Person that at such time directly or indirectly through one or more intermediaries Controls, or is Controlled by, or is under common Control with, such first Person and (b) any Person beneficially owning or holding, directly or indirectly, 20.0% or more of any class of voting or equity interests of either of the Obligors or any Subsidiary or any corporation of which either of the Obligors and their respective Subsidiaries beneficially own or hold, in the aggregate, directly or indirectly, 20.0% or more of any class of voting or equity interests. As used in this definition, “
Control
” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. Unless the context otherwise clearly requires, any reference to an “Affiliate” is a reference to an Affiliate of the Guarantor.
“
Anti-Corruption Laws
” is defined in Section 5.16(d)(1).
“
Anti-Money Laundering Laws
” is defined in Section 5.16(c).
“
Applicable GAAP
” means, with respect to (i) GMC and its Subsidiaries on a consolidated basis, generally accepted accounting principles, standards and practices as in effect from time to time in the United States, and (ii) with respect to any Person other than the Guarantor or its Subsidiaries on a consolidated basis, generally accepted accounting principles (including any applicable application of International Financial Reporting Standards) as in effect from time to time in the jurisdiction under which such Person prepares its books of account and financial records and statements.
“
Applicable Taxing Authority
”
means any Governmental Authority (a) of or in the United States or any political subdivision thereof or therein or (b) of or in any other jurisdiction or any political subdivision thereof or therein in which either of the Obligors may be organized as a result of effecting a Permitted Merger.
“
Blocked Person
” is defined in Section 5.16(a).
“
Business Day
”
means (a) for the purposes of Section 8.7 only, any day other than a Saturday, a Sunday or a day on which commercial banks in New York City are required or
authorized to be closed, and (b) for the purposes of any other provision of this Agreement, any day other than a Saturday, a Sunday or a day on which commercial banks in New York City are required or authorized to be closed.
“
Capital Lease
”
means, at any time, a lease with respect to which the lessee is required concurrently to recognize the acquisition of an asset and the incurrence of a liability in accordance with Applicable GAAP.
“
Change of Control
” means (a) the sale, lease or transfer, in one or a series of related transactions, of all or substantially all the assets of the Issuer and its subsidiaries, taken as a whole, to a person other than one or more “Permitted Holders” (as defined in the Existing Credit Agreements or any Refinancing Agreement); or (b) the Issuer becomes aware of the acquisition by any person or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision), including any group acting for the purpose of acquiring, holding or disposing of securities (within the meaning of Rule 13d-5(b)(1) under the Exchange Act), other than any of the “Permitted Holders”, in a single transaction or in a related series of transactions, by way of merger, consolidation or other business combination or purchase of equity interests or otherwise, of beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act, or any successor provision) of voting stock of the Issuer representing 50% or more of the total voting power of the voting stock of the Issuer.
“
Closing
”
is defined in Section 3.
“
Code
”
means the U.S. Internal Revenue Code of 1986, as amended from time to time, and the rules and regulations promulgated thereunder from time to time.
“
Commitment Fee
” means a fee, which at the election of GMC may be paid in (a) cash in an amount equal to $6,250,000 or (b) $6,250,000 in aggregate value of the same equity issued in the Equity Issuance, determined by the value ascribed to such equity in the Equity Issuance.
“
Commitment Letter
” is defined in the first paragraph hereof.
“
Confidential Information
”
is defined in Section 22.
“
Consolidated Secured Indebtedness
” means, as of any date of determination, the consolidated Indebtedness of GMC and its Restricted Subsidiaries (other than intercompany Indebtedness between or among the Obligors) outstanding as of that date (with outstanding letters of credit being deemed to have a principal amount equal to the maximum potential liability of GMC and its Restricted Subsidiaries thereunder) that is secured by a Lien on any assets of GMC or any Restricted Subsidiary.
“
Consolidated Total Indebtedness
” means, as of any date of determination, the total amount of Indebtedness for borrowed money, unreimbursed obligations under letters of credit, obligations in respect to Capitalized Leases (as defined in the Credit Facilities) and debt obligations evidenced by promissory notes or similar instruments of GMC and its Restricted
2
Subsidiaries outstanding on such date, minus the sum of all cash and cash equivalents of GMC and its Restricted Subsidiaries, in each case, on a consolidated basis.
“
Contingent Obligation
” means, as to any Person, any obligation of such Person guaranteeing or intended to guarantee any Indebtedness (“primary obligations”) of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, including, without limitation, any obligation of such Person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (x) for the purchase or payment of any such primary obligation or (y) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the holder of such primary obligation against loss in respect thereof;
provided
,
however
, that the term Contingent Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business and any products warranties extended in the ordinary course of business. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which such Contingent Obligation is made (or, if the less, the maximum amount of such primary obligation for which such Person may be liable pursuant to the terms of the instrument evidencing such Contingent Obligation) or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such Person is required to perform thereunder) as determined by such Person in good faith.
“
Control
” and “
Controlled
” means, with respect to any Person, the direct or indirect power to directly or indirectly (i) determine the outcome of decisions about the financial and operating policies of such Person or (ii) control the membership of the board of directors of such Person, whether or not the power has statutory, legal or equitable force or is based on statutory, legal or equitable rights and whether or not it arises by means of trusts, agreements, arrangements, understandings, practices, the ownership of any interest in shares or stock of the corporation or otherwise.
“
Cumulative Consolidated Net Income
” means shall mean, for any period, the cumulative consolidated net after tax income of GMC and its Subsidiaries determined in accordance with GAAP.
“
Cumulative Consolidated Net Income Amount
” is defined in Section 10.3.
“
Default
”
means an event or condition the occurrence or existence of which would, with the lapse of time or the giving of notice or both, become an Event of Default.
“
Default Rate
”
means, with respect to any Note, that rate of interest that is the greater of (i) 2.0% per annum above the rate of interest stated in clause (a) of the first paragraph of such Note or (ii) 2.0% over the rate of interest publicly announced by Citibank, N.A. in New York, New York as its “base” or “prime” rate.
3
“
Disposition
”
is defined in Section 10.2(a).
“
Disqualified Equity
” means, with respect to any Person, any Equity Interests of such Person which, by its terms, or by the terms of any security into which it is convertible or for which it is putable or exchangeable, or upon the happening of any event, matures or is mandatorily redeemable (other than solely as a result of a change of control or asset sale) pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof (other than solely as a result of a change of control or asset sale), in whole or in part, in each case prior to the date 91 calendar days after the maturity date of the Notes;
provided
,
however
, that if such Equity Interest is issued to any plan for the benefit of employees of the Obligors or the Restricted Subsidiaries or by any such plan to such employees, such Equity Interest shall not constitute Disqualified Equity solely because it may be required to be repurchased by such Obligor or its Restricted Subsidiaries in order to satisfy applicable statutory or regulatory obligations. The amount of any Disqualified Equity shall be the greater of the face amount and the maximum redemption or repurchase price thereof.
“
Dollar
”
or “
$
” means lawful money of the United States of America.
“
Environmental Laws
”
means any and all Federal, state, local, and foreign statutes, laws, regulations, ordinances, rules, judgments, written orders, decrees, permits, concessions, grants, franchises, licenses, or governmental restrictions relating to pollution and the protection of the environment or the release of any materials into the environment, including but not limited to those related to Hazardous Materials or wastes, air emissions and discharges to waste or public systems.
“
Equity Interests
” means (i) in the case of a corporation, corporate stock, (ii) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents of corporate stock and (iii) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited).
“
Equity Issuance
” means the issuance by GMC of $166,000,000 of common or non-cash pay preferred stock capital raise, including without limitation, the $50,000,005.50 of Class B Common Stock issued by GMC pursuant to that certain Subscription Agreement dated as of the date hereof, between GMC, Marine Holdings TP, L.P, and the purchasers party thereto.
“
ERISA
”
means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in effect.
“
ERISA Affiliate
”
means each person (as defined in Section 3(9) of ERISA) which together with the Obligors and the Restricted Subsidiaries that would be deemed to be a “single employer” within the meaning of Section 414(b), (c), (m) or (o) of the Code.
“
Event of Default
”
is defined in Section 11.
“
Exchange Act
” means Securities Exchange Act of 1934, as amended.
4
“
Excluded Tax
”
means, with respect to any holder of a Note, any tax imposed by any jurisdiction on the net income of such holder as a consequence of such holder being a resident of or organized or doing business in that jurisdiction (but not any tax which is imposed as a result of such holder being considered a resident of or organized or doing business in that jurisdiction solely as a result of such holder holding a Note or being a party to this Agreement or any transaction contemplated by this Agreement or enforcing its rights hereunder).
“
Existing Credit Agreements
”
is defined in the first paragraph of this Agreement.
“
Existing Credit Amendments
”
is defined in the first paragraph of this Agreement.
“
Fair Market Value
” being determined based on the fair market value of such vessel on the basis of an individual charter-free arm’s-length transaction as set forth in the most recently obtained appraisals from at least two Approved Appraisers (as defined in the Existing Credit Agreements or any Refinancing Agreement);
provided
,
however
, that the fair market value of the Vessels subject to Scorpio Newbuilds shall be the value set forth in the most recently obtained appraisals from at least two Approved Appraisers (as defined in the Existing Credit Agreements or any Refinancing Agreement) less all remaining payments under the Scorpio Newbuilds;
provided further
that any such appraisal report shall have been prepared within 90 days prior to such date of determination.
“
FATCA
” means (a) the United States Foreign Account Tax Compliance Act of 2009 (Sections 1471 through 1474 of the Code as of the date of this Agreement), together with any regulations thereunder and interpretations thereof and (b) any treaty, law, regulation or other official guidance enacted in any other jurisdiction or relating to any intergovernmental agreement between the United States and any other jurisdiction, which, in either case, facilitates the implementation of the withholding of United States taxes of the type set forth in clause (a) above.
“
FinCo Issuer
”
is defined in the first paragraph of this Agreement.
“
Foreign Pension Plan
” shall mean any plan, fund (including, without limitation, any superannuation fund) or other similar program established or maintained outside the United States of America by the Obligors or any one or more of its Restricted Subsidiaries primarily for the benefit of employees of the Obligors or such Restricted Subsidiaries residing outside the United States of America, which plan, fund or other similar program provides, or results in, retirement income, a deferral of income in contemplation of retirement or payments to be made upon termination of employment, and which plan is not subject to ERISA or the Code.
“
Global Refinancing
” means any amendment, restatement, modification or refinancing of the Existing Credit Agreements that is in connection with the financing of the Scorpio Newbuilds, the terms of which may include an amortization schedule of as little as 1.0% annually and a bullet maturity at a maturity date that is prior to the maturity date of the Notes.
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“
GMC Charter
” means the Second Amended and Restated Articles of Incorporation of GMC, amended from time to time in accordance with its terms and applicable law.
“
GMC Issuer
”
is defined in the first paragraph of this Agreement.
“
Governmental Authority
”
means
(a)
the government of
(i)
the United States of America or any State or other political subdivision of either thereof, or
(ii)
any other jurisdiction in which either of the Obligors or any Subsidiary conducts all or any part of its business, or which asserts jurisdiction over any properties of either of the Obligors or any Subsidiary, or
(b)
any entity exercising executive, legislative, judicial, regulatory or administrative functions of, or pertaining to, any such government.
“
Governmental Official
” means any governmental official or employee, employee of any government-owned or government-controlled entity, political party, any official of a political party, candidate for political office, official of any public international organization or anyone else acting in an official capacity.
“
Guarantee
” and “
Guarantee
s” are defined in Section 1.
“
Guaranteed Obligations
” is defined in Section 14.1.
“
Guarantor
” means the entity specified as the “Guarantor” in the Notice of Designation delivered pursuant to Section 4.10(b), which shall specify either (a) Guarantor/FinCo if GMC Issuer is specified or (b) Guarantor/GMC if (i) the FinCo Issuer is specified and (ii) consent and approval from the Existing Credit Agreement Lenders is obtained by GMC, the Existing Credit Amendments are consummated by GMC and satisfactory evidence of such consummation is delivered to the Purchasers, or any successor thereto that shall have become such in the manner prescribed in Section 10.2.
“
Guarantor/FinCo
” is defined in the first paragraph of this Agreement.
“
Guarantor/GMC
” is defined in the first paragraph of this Agreement.
“
Guaranty
”
means, with respect to any Person, any obligation (except the endorsement in the ordinary course of business of negotiable instruments for deposit or collection) of such Person guaranteeing or in effect guaranteeing any indebtedness, dividend or other obligation of any other Person in any manner, whether directly or indirectly, including
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(without limitation) obligations incurred through an agreement, contingent or otherwise, by such Person:
(a)
to purchase such indebtedness or obligation or any property constituting security therefor;
(b)
to advance or supply funds (i) for the purchase or payment of such indebtedness or obligation, or (ii) to maintain any working capital or other balance sheet condition or any income statement condition of any other Person or otherwise to advance or make available funds for the purchase or payment of such indebtedness or obligation;
(c)
to lease properties or to purchase properties or services primarily for the purpose of assuring the owner of such indebtedness or obligation of the ability of any other Person to make payment of the indebtedness or obligation; or
(d)
otherwise to assure the owner of such indebtedness or obligation against loss in respect thereof.
In any computation of the indebtedness or other liabilities of the obligor under any Guaranty, the indebtedness or other obligations that are the subject of such Guaranty shall be assumed to be direct obligations of such obligor.
“
Hazardous Material
”
means any and all pollutants, toxic or hazardous wastes or any other substances that might pose a hazard to health or safety, the removal of which may be required or the generation, manufacture, refining, production, processing, treatment, storage, handling, transportation, transfer, use, disposal, release, discharge, spillage, seepage, or filtration of which is or shall be restricted, prohibited or penalized by any applicable Environmental Law (including, without limitation, friable asbestos, urea formaldehyde foam insulation and polychlorinated biphenyls).
“
holder
”
means, with respect to any Note, the Person in whose name such Note is registered in the register maintained by the Issuer pursuant to Section 15.1.
“
Indebtedness
” means
, as to any Person, without duplication, (i) all indebtedness (including principal, interest, fees and charges) of such Person for borrowed money or for the deferred purchase price of property or services, (ii) the maximum amount available to be drawn under all letters of credit issued for the account of such Person and all unpaid drawings in respect of such letters of credit, (iii) all Indebtedness of the types described in clause (i), (ii), (iv), (v), (vi), (vii) or (viii) of this definition secured by any Lien on any property owned by such Person, whether or not such Indebtedness has been assumed by such Person (to the extent of the value of the respective property), (iv) the aggregate amount required to be capitalized under leases under which such Person is the lessee, (v) all obligations of such person to pay a specified purchase price for goods or services, whether or not delivered or accepted, i.e., take-or-pay and similar obligations, (vi) all Contingent Obligations of such Person, (vii) all obligations under any hedging agreement or under any similar type of agreement and (viii) the maximum amount available to be drawn under all letters of credit existing as of the date of this Agreement issued
7
for the account of such Person and all unpaid drawings in respect thereof;
provided
that Indebtedness shall in any event not include trade payables and expenses accrued in the ordinary course of business.
“
Institutional Investor
”
means (a) any original purchaser of a Note, (b) any holder of a Note (together with one or more of its affiliates) holding more than 5.0% of the aggregate principal amount of the Notes then outstanding, and (c) any bank, trust company, savings and loan association or other financial institution, any pension plan, any investment company, any insurance company, any broker or dealer, or any other similar financial institution or entity, regardless of legal form.
“
Interest Payment Date
” means each of May 15 and November 15 of each year, commencing November 15, 2014.
“
Interest Period
” means the period commencing on and including an Interest Payment Date and ending on and including the day immediately preceding the next succeeding Interest Payment Date, with the exception that the first Interest Period shall commence on and include
the date of the Closing and end on and exclude the first Interest Payment Date.
“
Issuer
”
is defined in the first paragraph.
“
Lien
”
means, with respect to any Person, any mortgage, lien, pledge, charge, security interest or other encumbrance, or any interest or title of any vendor, lessor, lender or other secured party to or of such Person under any conditional sale or other title retention agreement or Capital Lease, upon or with respect to any property or asset of such Person (including in the case of stock, stockholder agreements, voting trust agreements and all similar arrangements).
“
Make-Whole Amount
”
is defined in Section 8.7.
“
Material
”
means material in relation to the business, operations, financial condition, assets or properties, of GMC and its Restricted Subsidiaries taken as a whole.
“
Material Adverse Effect
” means a material adverse effect on (a) the business, operations, financial condition, assets or properties of GMC and its Restricted Subsidiaries taken as a whole, or (b) the ability of the (i) Guarantor to perform its obligations under this Agreement or its Guarantees or (ii) Issuer to perform its obligations under this Agreement or the Notes, or (c) the validity or enforceability of this Agreement or the Notes or the Guarantee or any Subsidiary Guarantee.
“
Multiemployer Plan
” shall mean a Plan which is defined in Section 3(37) of ERISA.
“
Net Cash Proceeds
” means, (x) with respect to any disposition of the Scorpio Newbuilds or the Vessels relating thereto, the aggregate cash payments (including any cash received by way of deferred payment pursuant to a note receivable issued in connection with
8
such disposition, other than the portion of such deferred payment constituting interest, but only as and when received) received by GMC or the Issuer or any of their respective Subsidiaries from such disposition net of (i) reasonable transaction costs (including, without limitation, reasonable attorney’s fees) and sales commissions and (ii) the estimated marginal increase in taxes and any stamp tax payable by GMC or the Issuer or any of its Subsidiaries as a result of such disposition and (y) with respect to the issuance of any Equity Interests, the aggregate cash proceeds received by GMC or the Issuer from such equity issuance net of reasonable transaction costs related thereto (including, without limitation, reasonable attorney’s fees).
“
Nonrecourse Indebtedness
”
means, shall mean any Indebtedness of an Unrestricted Subsidiary that is non-recourse to any Obligor and for which no Obligor provides any credit support;
provided
such Indebtedness may be full recourse to the Unrestricted Subsidiary at any time.
“
Notes
”
is defined in Section 1.
“
Notice of Designation
” is defined in Section 4.10(b).
“
Obligors
” is defined in Section 4.
“
Officer
’
s Certificate
”
means a certificate of a Senior Financial Officer or of any other officer of the Guarantor whose responsibilities extend to the subject matter of such certificate.
“
Patriot Act
” means United States Public Law 107-56, Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in effect.
“
PBGC
” shall mean the Pension Benefit Guaranty Corporation established pursuant to Section 4002 of ERISA, or any successor thereto.
“
Permitted Merger
”
means any merger or consolidation of either Obligor, or conveyance, transfer or lease of substantially all of the assets of either Obligor, consummated in accordance with the provisions of Section 10.2 (and the predominant purposes of which were business purposes of such Obligor and not the triggering of a prepayment right under Section 8.3).
“
Person
”
means an individual, partnership, corporation, limited liability company, association, trust, unincorporated organization, or a government or agency or political subdivision thereof.
“
PIK Interest
” means interest paid on the Notes in the form of an increase in the outstanding principal amount of the Notes.
9
“
PIK Notes
” means any additional Notes issued by the Issuer in a principal amount equal to the amount of PIK Interest for the applicable Interest Period (rounded down to the nearest whole dollar) to holders of Notes on the relevant record date.
“
Plan
” means any pension plan as defined in Section 3(2) of ERISA, which is maintained or contributed to by (or to which there is an obligation to contribute of) the Obligors or a Restricted Subsidiary of the Obligors or any ERISA Affiliate, and each such plan for the five year period immediately following the latest date on which the Obligors, or a Restricted Subsidiary of the Obligors or any ERISA Affiliate maintained, contributed to or had an obligation to contribute to such plan.
“
Preferred Stock
”
means any class of capital stock of a corporation that is preferred over any other class of capital stock of such corporation as to the payment of dividends or the payment of any amount upon liquidation or dissolution of such corporation.
“
property
”
or “
properties
” means, unless otherwise specifically limited, real or personal property of any kind, tangible or intangible, choate or inchoate.
“
Purchaser
”
is defined in the second paragraph of this Agreement.
“
Refinancing Agreement
” means any agreements which governs the Global Refinancing including any loan agreement, credit agreement, finance agreement, financing agreement, note purchase agreement, indenture, guaranty, security agreement, pledge agreement, mortgage, assignment or similar agreement or any amendment, restatement or other modification of the Existing Credit Agreements.
“
Refinancing Indebtedness
” means any Indebtedness incurred that (i) has a weighted average life to maturity that is not less than the weighted average life to maturity of the Indebtedness being refinanced (except in the case of the Global Refinancing), (ii) has a principal amount that does not exceed the amount of Indebtedness being refinanced (plus any underwriting discounts, fees, expenses and premiums incurred in connection therewith) plus additional principal Indebtedness to the extent otherwise permitted to be incurred, (iii) if Indebtedness being refinanced is subordinated, the Refinancing Indebtedness will also be subordinated to the same extent as the Indebtedness being refinanced and (iv) is incurred by an obligor of the Indebtedness that is being refinanced and qualifies for the same exception under Section 10.4(a), (b), (e), (f), (i), (j) and (k) at the time it is incurred.
“
Registration Agreement
” means the First Amended and Restated Registration Agreement, dated as of November 1, 2012, by and among GMC and certain shareholders thereof, as amended from time to time in accordance with the terms thereof.
“
Required Holders
”
means, (i) prior to the Closing, the holders of more than 50.0 in principal amount of the Notes to be purchased pursuant to Section 2 upon the satisfaction of the conditions to closing listed in Section 4 and (ii) on or after the Closing, the holders of more than 50.0% in principal amount of the Notes then outstanding (exclusive of Notes then owned by GMC or any of its Subsidiaries).
10
“
Responsible Officer
”
means any Senior Financial Officer and any other officer of GMC or of the Issuer, as the context requires, with responsibility for the administration of the relevant portion of this agreement.
“
Reportable Event
” shall mean an event described in Section 4043(c) of ERISA with respect to a Plan that is subject to Title IV of ERISA other than those events as to which the 30-day notice period is waived under subsection .22, .23, .25, .27 or .28 of PBGC Regulation Section 4043.
“
Restricted Subsidiary
”
means all the Subsidiaries of GMC other than any Subsidiary which has been designated as an Unrestricted Subsidiary pursuant to Section 9.12;
provided
that any Subsidiary Guarantor shall at all times during which it is a Subsidiary Guarantor be deemed to be a Restricted Subsidiary and the Issuer shall at all times be deemed to be a Restricted Subsidiary.
“
Scorpio Newbuilds
” means the VLCC newbuilding contracts from Scorpio Tankers Inc. acquired by FinCo prior to Closing for an aggregate acquisition cost of approximately $735,000,000,
plus
the costs of any change orders agreed to by GMC after the date hereof.
“
Securities Act
”
means the U.S. Securities Act of 1933, as amended from time to time.
“
Senior Financial Officer
”
means a Director, Issuer Secretary, the Chief Financial Officer, Financial Controller or Treasurer of the Guarantor or the Issuer, as the context requires.
“
Shareholders’ Agreement
” means the Amended and Restated Shareholders’ Agreement, dated as of December 12, 2013, by and among GMC and certain shareholders thereof, as amended from time to time in accordance with the terms thereof.
“
Significant Subsidiary
”
means, as of any date, any Restricted Subsidiary that (a) accounts for greater than 10.0% of the Consolidated Total Assets as of such date, determined in accordance with Applicable GAAP, or (b) accounted for greater than 10.0% of the consolidated revenues of GMC and its Restricted Subsidiaries for the immediately preceding financial year of GMC, determined in accordance with Applicable GAAP.
“
Standard & Poor
’
s
” means Standard & Poor’s Rating Services, a division of the McGraw-Hill Companies, Inc., together with any relevant local affiliates thereof and any successor to any of the foregoing.
“
Subsidiary
”
means, as to any Person, (i) any corporation more than 50.0% of whose stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of such corporation (irrespective of whether or not at the time stock of any class or classes of such corporation shall have or might have voting power by reason of the
11
happening of any contingency) is at the time owned by such Person and/or one or more Subsidiaries of such Person and (ii) any partnership, limited liability company, association, joint venture or other entity in which such Person and/or one or more Subsidiaries of such Person has more than a 50.0% equity interest at the time;
provided
that, for all purposes under this Agreement, the Notes and the Guarantees, Unrestricted Subsidiaries shall not be considered Subsidiaries hereunder or thereunder other than as set forth herein or therein.
“
Subsidiary Guarantee
”
means a guarantee of a Subsidiary Guarantor of the obligations of the Issuer under this Agreement and the Notes, substantially in the form of
Exhibit 3
.
“
Subsidiary Guarantor
”
means Guarantor/FinCo and its Subsidiaries (which as of the date of this Agreement are listed on
Schedule 5.12
) and each other Restricted Subsidiary party to a Scorpio Newbuild.
“
Total Debt LTV Ratio
” means the ratio of (a) Consolidated Total Indebtedness of GMC and its Restricted Subsidiaries to (b) the aggregate Fair Market Value of all Vessels (including without limitation the Scorpio Newbuilds) owned by GMC and its Restricted Subsidiaries.
“
Total Secured Debt LTV Ratio
” means the ratio of (a) Consolidated Secured Indebtedness of GMC and its Restricted Subsidiaries minus the sum of cash of GMC and its Restricted Subsidiaries to (b) the aggregate Fair Market Value of all Vessels (including without limitation the Scorpio Newbuilds) owned by GMC and its Restricted Subsidiaries.
“
UCC
” means the Uniform Commercial Code as from time to time in effect in the relevant jurisdiction.
“
Unrestricted Subsidiary
”
means any Subsidiary which has been designated by the Issuer as an Unrestricted Subsidiary pursuant to Section 9.12.
“
Vessel
” means, collectively, all sea going vessels and tankers at any time owned by GMC and its Subsidiaries, and, individually, any of such vessels.
“
Vessel Mortgages
” means the “Collateral Vessel Mortgages” as such term is defined in the Existing Credit Agreements or any Refinancing Agreement.
“
Wholly-Owned Restricted Subsidiary
”
means, at any time, any Restricted Subsidiary one hundred percent (100%) of all of the Equity Interests (except directors’ qualifying shares) and voting interests of which are owned by any one or more of Guarantor/FinCo and FinCo’s other Wholly-Owned Restricted Subsidiaries at such time.
12
SCHEDULE 5.5(b)
Obligations
·
The Master Agreement, dated March 18, 2014, entered into between (1) (i) STI Glasgow Shipping Company Limited; (ii) STI Edinburgh Shipping Company Limited, (iii) STI Perth Shipping Company Limited, (iv) STI Dundee Shipping Company Limited, (v) STI Newcastle Shipping Company Limited (vi) STI Cavaliere Shipping Company Limited and (vii) STI Esles Shipping Company Limited, each a company incorporated under the laws of the Marshall Islands and having their registered offices at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, 96960 (respectively “
SPV 1
”, “
SPV 2
”, “
SPV 3
”, “
SPV 4
”, “
SPV 5
”, “
SPV 6
”, and “
SPV 7
” and together, the “
SPVs
” and each a “
SPV
”), (2) VLCC Acquisition I Corporation and (3) Scorpio Tankers Inc.
·
(1) The Agreement for the Sale and Purchase of the Entire Authorized and Issued Share Capital of SPV 1, (2) the Agreement for the Sale and Purchase of the Entire Authorized and Issued Share Capital of SPV 2, (3) the Agreement for the Sale and Purchase of the Entire Authorized and Issued Share Capital of SPV 3, (4) the Agreement for the Sale and Purchase of the Entire Authorized and Issued Share Capital of SPV 4 (5) the Agreement for the Sale and Purchase of the Entire Authorized and Issued Share Capital of SPV 5, (6) the Agreement for the Sale and Purchase of the Entire Authorized and Issued Share Capital of SPV 6, (7) the Agreement for the Sale and Purchase of the Entire Authorized and Issued Share Capital of SPV 7, in each case, dated on or about March 21, 2014 and entered into between Scorpio Tankers Inc. and VLCC Acquisition I Corporation.
·
The Deed of Guarantee relating to Corporate Guarantees issued by Scorpio Tankers Inc., dated as of March 25, 2014, by and between VLCC Acquisition 1 Corporation and Scorpio Tankers Inc.
·
The Agreement for the Appointment of a Buyer’s representative, dated as of March 25, 2014, by and between SPV 1, SPV 2, SPV 3, SPV 4, SPV 5, SPV 6, SPV 7, and Scorpio Shipmanagement S.A.M.
·
The shipbuilding contracts respectively entered into individually between each of SPV 1, SPV 2, SPV 3, SPV 4 and SPV 5 with Daewoo Shipbuilding & Marine Engineering Co., Ltd. (“
DSME Builder
”), for the construction and purchase of an 300,000 TDW Crude Oil Tanker with, respectively, DSME Builder’s hull numbers 5404 (to be purchased by SPV 1), 5405 (to be purchased by SPV 2), 5406 (to be purchased by SPV 3), 5407 (to be purchased by SPV 4) and 5408 (to be purchased by SPV 5), dated December 13, 2013 (as the same have been amended, supplemented from time to time (including any side letters and addenda).
·
The shipbuilding contracts respectively entered into individually between each of SPV 6 and SPV 7 with Hyundai Samho Heavy Industries Co., Ltd. (“
HHI Builder
”) for the construction and purchase of an 300,000 DWT Crude Oil Carrier with respectively, HHI Builder’s hull numbers S777 (to be purchased by SPV 6) and S778 (to be purchased by SPV 7), dated December 20, 2013 (as the same have been amended, supplemented from time to time (including any side letters and addenda))
·
Common Stock Subscription Agreement, dated November 1, 2012, by and among the Company, OCM Marine Holdings TP, L.P., and the investors listed on Exhibit A attached thereto.
·
Amended and Restated Subscription Agreement, dated December 12, 2013, by and among OCM Marine Holdings TP, L.P., and the investors listed on Exhibit A attached thereto.
·
The subscription agreements entered into by the Company and OCM Marine Holdings TP, L.P. with various investors between March 21, 2014 and Closing relating to up to 12,162,163 shares of Class B Common Stock.
SCHEDULE 5.6
Litigation
·
Salvage Claim re Genmar Star, Istanbul Admiralty Court, Case No. 2009/584 E. (2006) — Claim arising from tug boat assistance rendered to Genmar Star after vessel became disabled.
·
Charterparty Arbitration
In this matter, the General Maritime Corporation claims declaratory relief as to the proper construction of a charterparty for a VLCC on an amended SHELLTIME 4 form with rider clauses (the “
Charterparty
”), between the Genmar SPV, as the owner of the Vessel (the “
Owners
”) and the charterers (“
Charterers
”).
The present dispute (which has been referred to London Maritime Arbitrator’s Association arbitration) concerns the proper construction of a clause in the Charterparty relating to oil major eligibility. Prior to re-delivery, Charterers had placed the Vessel off-hire for an alleged failure by Owners to comply with their obligations under clause 50 of the Charterparty. Charterers have also sought to claim damages in respect of those alleged failures.
A dispute has now arisen as to:
1.
Whether on the proper construction of clause 50, Charterers are entitled to claim damages for any alleged failure by Owners to comply with the requirements of clause 50 or whether Charterers’ only remedy under clause 50 was to place the Vessel off-hire or to cancel the Charterparty.
2.
Whether Charterers were only entitled to place the Vessel off-hire from the date of their notice or whether they could place the Vessel off-hire with retrospective effect (and if so from what date).
A hearing before the London arbitral tribunal to decide these preliminary issues was held on October 9, 2013. The tribunal’s award is pending.
Owners have provided security for the Charterers’ claims, plus interest and costs, in the sum of $3,497,750.85, pursuant to an escrow agreement.
·
Genmar Pool Agreements Arbitration
This matter concerns the entry of five Genmar vessels into a tanker vessel pool (the “
Pool
”).
Five individual references to London arbitration have been made pursuant to the terms of five sets of contracts, which comprise a pool agreement between the relevant Genmar SPV and the Pool operator and a time charterparty between the relevant Genmar SPV and the Pool agent. Pursuant to those agreements, each of the five subject Genmar vessels were included in and
operated as part of the Pool. The five arbitration references have subsequently been consolidated by consent.
Each Genmar SPV claims a balance of account due to it following the withdrawal of their respective vessels from the Pool, made up of (among other things) sums due by way of hire and sums due in respect of working capital invested in the Pool.
The respondents in the arbitrations (the Pool operator and Pool agent) advance a different position as to the sums owed to the Genmar SPVs from the Pool: the parties are approximately $123,000 apart in terms of the aggregate sum due to the Genmar SPV’s by way of hire and there is a dispute as to when the working capital sums (an aggregate of $2.5 million) are due to be returned pursuant to the terms of the pool agreements.
The respondents also counterclaim in each case for damages for breach of alleged collateral contracts to each of the respective pool agreements, which it is said extended the earliest date by which the Genmar SPVs were entitled to withdraw their vessels from the Pool. The respondents’ counterclaim for damages has not yet been quantified.
The next procedural step in this matter is for reply and defence to counterclaim submissions to be served by the Genmar SPVs on October 28, 2013.
SCHEDULE 5.10
ERISA
·
General Maritime Corporation 401(k) Profit Sharing Plan and Trust
SCHEDULE 5.11(b)
Capitalization
GMC Charter
Shareholders’ Agreement
Registration Agreement
The subscription agreements entered into by the Company and OCM Marine Holdings TP, L.P. with various investors between March 21, 2014 and Closing relating to up to 12,162,163 shares of Class B Common Stock:
Up to 12,162,163 shares of Class B Common Stock issued between March 21, 2014 and Closing at a price of $18.50 per share and any Subscription Agreements pursuant to which such shares are sold.
Capital Stock of GMC as of March 13, 2014:
1.
50,000,000 authorized shares of Class A Common Stock, par value $0.01 per share (“
Class A Common Stock
”), with 11,270,196 shares issued and outstanding;
2.
30,000,000 authorized shares of Class B Common Stock (“
Class B Common Stock
”), with 11,330,420 shares of Class B Common Stock are issued and outstanding; and
3.
5,000,000 authorized shares of preferred stock, par value $0.01 per share.
Warrants and Options with Respect to Capital Stock of GMC
1.
Outstanding warrants to purchase 309,296 shares of Class A Common Stock
2.
Outstanding options to purchase 343,662 shares of Class A Common Stock;
Additional 801,879 shares of Class A Common Stock reserved for issuance pursuant to awards under GMC’s 2012 Equity Incentive Plan.
SCHEDULE 5.11(c)
Capitalization
Any preemptive rights obligations under the Shareholders’ Agreement.
SCHEDULE 5.12(b)
Subsidiaries: FinCo Issuer
The subsidiaries of FinCo are:
1.
STI Glasgow Shipping Company Limited;
2.
STI Edinburgh Shipping Company Limited;
3.
STI Perth Shipping Company Limited;
4.
STI Dundee Shipping Company Limited;
5.
STI Newcastle Shipping Company Limited;
6.
STI Cavaliere Shipping Company Limited; and
7.
STI Esles Shipping Company Limited.
Each of the above listed entities is owned 100% by FinCo and is organized under the laws of the Republic of the Marshall Islands.
SCHEDULE 5.19
Indebtedness
|
Borrower(s)
|
|
Agent
|
|
Governing
Agreement
|
|
Original Aggregate
Principal Amount
|
|
Guarantor(s)
|
|
General Maritime Subsidiary Corporation
|
|
Nordea Bank Finland plc
|
|
Third Amended and Restated Credit Agreement
|
|
$
|
508,977,536.95
|
|
·
Vision Ltd.
·
Victory Ltd.
·
Companion Ltd.
·
Compatriot Ltd.
·
Consul Ltd.
·
GMR Daphne LLC
·
GMR Agamemnon LLC
·
GMR Alexandra LLC
·
GMR Argus LLC
·
GMR Constantine LLC
·
GMR Defiance LLC
·
GMR Elektra LLC
·
GMR George T. LLC
·
GMR Gulf LLC
·
GMR Harriet G. LLC
·
GMR Hope LLC
·
GMR Horn LLC
·
GMR Kara G. LLC
·
GMR Minotaur LLC
·
GMR Orion LLC
·
GMR Phoenix LLC
·
GMR Princess LLC
·
GMR Progress LLC
·
GMR Spyridon LLC
·
GMR St. Nikolas LLC
·
GMR Strength LLC
(the “
Credit Agreements Subsidiary Guarantors
”)
·
General Maritime Corporation
·
Arlington Tankers, Ltd.
·
General Maritime Subsidiary II Corporation
|
|
General Maritime Subsidiary Corporation
|
|
Nordea Bank Finland plc
|
|
Second Amended and Restated Credit Agreement
|
|
$
|
273,802,583.31
|
|
·
General Maritime Corporation
·
Arlington Tankers, Ltd.
·
General Maritime Subsidiary II Corporation
·
The Credit Agreements Subsidiary Guarantors
|
SCHEDULE 10.1(c)
Existing Liens
None.
SCHEDULE 10.5
Transactions with Affiliates
·
Shareholders’ Agreement.
·
Registration Agreement.
·
The GMC Charter.
·
The subscription agreements entered into by the GMC and OCM Marine Holdings TP, L.P., with various investors between March 21, 2014 and Closing relating to up to 12,162,163 shares of Class B Common Stock.
·
The letter agreements, dated as of December 12, 2013, between GMC, OCM Marine Holdings TP LP and certain investors in the company, each entered into in connection with that certain Amended and Restated Subscription Agreement, dated as of December 12, 2013.
·
Common Stock Subscription Agreement, dated November 1, 2012, by and among GMC,
OCM Marine Holdings TP, L.P., and the investors listed on Exhibit A attached thereto.
·
Amended and Restated Subscription Agreement, dated December 12, 2013, by and among GMC, OCM Marine Holdings TP, L.P., and the investors listed on Exhibit A attached thereto.
·
Purchase on or about October 10, 2012 by OCM Starfish Debtco S.àr.l, an affiliate of Holdings, of approximately $56 million principal amount under the Third Amended and Restated Credit Agreement, dated as of May 17, 2012, among the Company, General Maritime Subsidiary II Corporation, Arlington Tankers Ltd., General Maritime Subsidiary Corporation, the lenders party thereto, Nordea as administrative agent and collateral agent, and Nordea and DnB Bank ASA, as joint lead arrangers and joint book runners.
·
Current and future amounts due to Oaktree Principal Bunker Holdings Ltd. related to the assignment of certain supplier contracts. Oaktree Principal Bunker Holdings Ltd. is a wholly owned subsidiary of Oaktree Capital Management, L.P.
EXHIBIT 1
[FORM OF SENIOR UNSECURED NOTE]
THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY OTHER APPLICABLE SECURITIES LAW AND, ACCORDINGLY, THIS NOTE MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER, OR IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER, THE SECURITIES ACT AND IN ACCORDANCE WITH ANY SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS.
THIS NOTE MAY BE TRANSFERRED ONLY PURSUANT TO SECTION 15 OF THE NOTE AND GUARANTEE AGREEMENT REFERRED TO BELOW. A COMPLETE AND CORRECT CONFORMED COPY OF THE NOTE AND GUARANTEE AGREEMENT IS AVAILABLE FOR INSPECTION AT THE PRINCIPAL EXECUTIVE OFFICE OF THE ISSUER AND WILL BE FURNISHED TO THE REGISTERED HOLDER OF THIS NOTE UPON WRITTEN REQUEST AND WITHOUT CHARGE.
THIS NOTE HAS BEEN ISSUED WITH ORIGINAL ISSUE DISCOUNT (“OID”) FOR UNITED STATES FEDERAL INCOME TAX PURPOSES. THE ISSUE PRICE, AMOUNT OF OID, ISSUE DATE AND YIELD TO MATURITY OF THIS NOTE MAY BE OBTAINED BY WRITING TO THE ISSUER (AS DEFINED BELOW) AT 299 PARK AVENUE, NEW YORK, NY 10171.
[GENERAL MARITIME CORPORATION]
[VLCC ACQUISITION I CORPORATION]
SENIOR UNSECURED NOTE DUE 2020
FOR VALUE RECEIVED, the undersigned, [GENERAL MARITIME CORPORATION] [VLCC ACQUISITION I CORPORATION] (herein called the “
Issuer
”), a company incorporated under the laws of the Marshall Islands, hereby promises to pay to [ ], or its registered assigns, the principal sum of [ ] U.S. DOLLARS (or so much thereof as shall not have been prepaid) on March 28, 2020, with interest payable in cash or by PIK Interest (as defined in the Note and Guarantee Agreement) (a) on the unpaid principal balance hereof at the rate, and on the respective dates, set forth in the Note and Guarantee Agreement, from the date hereof until the principal amount hereof shall have been paid in full, and (b) to the extent permitted by law, on any overdue payment (including any overdue prepayment) of principal, any overdue payment of interest and any overdue payment of any Make-Whole Amount (as defined in the Note and Guarantee Agreement referred to below), payable
semiannually as aforesaid (or, at the option of the registered holder hereof, on demand), at a rate per annum from time to time equal to the greater of (i) 2.0% per annum above the rate of interest stated in clause (a) or (ii) 2.0% over the rate of interest publicly announced by Citibank, N.A. in New York, New York as its “base” or “prime” rate.
Payments of principal of, interest on and any Make-Whole Amount with respect to this Note are to be made in lawful money of the United States of America at Nordea Bank Finland Plc, New York Branch, 437 Madison Avenue New York, NY 10022 or at such other place as the Issuer shall have designated by written notice to the holder of this Note as provided in the Note and Guarantee Agreement.
This Note is one of a series of Senior Unsecured Notes or PIK Notes (herein called the “
Notes
”) issued pursuant to the Note and Guarantee Agreement dated as of March 28, 2014 (as from time to time amended, the “
Note and Guarantee Agreement
”), among the Issuer and the respective Purchasers named therein and is entitled to the benefits thereof. Each holder of this Note will be deemed, by its acceptance hereof, to have (i) agreed to be bound by the provisions of the Note and Guarantee Agreement expressed to be, or that otherwise are, applicable to Purchasers and/or holders of Notes and (ii) made the representations set forth in Section 6 of the Note and Guarantee Agreement. Capitalized terms used in this Note and not otherwise defined in this Note shall have the meanings assigned to them in the Note and Guarantee Agreement.
Payment of the principal of, interest on and any Make-Whole Amount with respect to this Note has been guaranteed by (i) the Guarantor in accordance with the terms of the Note and Guarantee Agreement and (ii) certain direct or indirect subsidiaries of GMC in accordance with the terms of the Subsidiary Guarantees (as defined in the Note and Guarantee Agreement).
This Note is a registered Note and, as provided in the Note and Guarantee Agreement, upon surrender of this Note for registration of transfer, duly endorsed, or accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder’s attorney duly authorized in writing, a new Note for a like principal amount will be issued to, and registered in the name of, the transferee. Prior to due presentment for registration of transfer, the Issuer may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Issuer will not be affected by any notice to the contrary.
This Note is subject to prepayment, in whole or from time to time in part, at the times and on the terms specified in the Note and Guarantee Agreement, but not otherwise.
If an Event of Default, as defined in the Note and Guarantee Agreement, occurs and is continuing, the principal of this Note may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Note and Guarantee Agreement.
2
This Note shall be construed and enforced in accordance with, and the rights of the Issuer and the holder of this Note shall be governed by, the law of the State of New York excluding choice-of-law principles of the law of such State that would require the application of the laws of a jurisdiction other than such State.
|
|
[GENERAL MARITIME CORPORATION]
|
|
|
[VLCC ACQUISITION I CORPORATION]
|
|
|
|
|
|
|
|
|
By
|
|
|
|
|
Name:
|
|
|
|
Title:
|
3
EXHIBIT 2
[FORM OF GUARANTEE]
GUARANTEE
For value received, the undersigned hereby absolutely, unconditionally and irrevocably guarantees to the holder of the foregoing Note the due and punctual payment of the principal of and Make-Whole Amount, if any, and interest on said Note and all other amounts from time to time owing by the Issuer to such holder under the Note and Guarantee Agreement referred to in said Note, as more fully provided in the Note and Guarantee Agreement referred to in said Note.
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[GENERAL MARITIME CORPORATION]
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[VLCC ACQUISITION I CORPORATION]
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By:
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Name:
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Title:
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EXHIBIT 3
[FORM OF SUBSIDIARY GUARANTEE]
SUBSIDIARY GUARANTEE
This SUBSIDIARY GUARANTEE, dated as of [ ], 20[ ] (as amended, modified, restated and/or supplemented from time to time, this “
Subsidiary Guarantee
”), made by each of the undersigned guarantors (each a “
Subsidiary Guarantor
” and, together with any other entity that becomes a guarantor hereunder pursuant to Section 25 hereof, the “
Subsidiary Guarantors
”) in favor of each holder of a Note (each a “
Holder
”). Except as otherwise defined herein, capitalized terms used herein and defined in the Note and Guarantee Agreement (as defined below) shall be used herein as therein defined.
W I T N E S S E T H
:
WHEREAS, General Maritime Corporation (“
GMC
”) and VLCC Acquisition I Corporation (“
FinCo
”), have entered into a Note and Guarantee Agreement dated as of March 28, 2014 (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “
Note and Guarantee Agreement
”) with the purchasers whose names appear on the signature pages thereto (the “
Purchasers
”) providing for the issuance and sale by the Issuer (the “
Issuer
”) of $131,600,000 aggregate principal amount, as such principal amount may be increased as a result of the payment of any PIK Interest (as defined in the Note and Guarantee Agreement) of its Senior Unsecured Notes due 2020 (the “
Notes
”);
WHEREAS, each Subsidiary Guarantor is a direct or indirect Subsidiary of GMC; and
WHEREAS, each Subsidiary Guarantor will obtain benefits from the continuation of issuance and sale of the Notes under the Note and Guarantee Agreement and, accordingly, desires to execute this Subsidiary Guarantee in order to satisfy the condition described in the preceding paragraph;
NOW, THEREFORE, in consideration of the foregoing and other benefits accruing to each Subsidiary Guarantor, the receipt and sufficiency of which are hereby acknowledged, each Subsidiary Guarantor hereby makes the following representations and warranties to the Holders and hereby covenants and agrees with each other Subsidiary Guarantor as follows:
1.
Each Subsidiary Guarantor, jointly and severally, irrevocably, absolutely and unconditionally guarantees to the Holders the full and prompt payment when due (whether at the stated maturity, by acceleration or otherwise) of (x) the principal of, premium, if any, and interest on the Notes issued by the Issuer under the Note and Guarantee Agreement, and (y) all other obligations (including obligations which, but for the automatic stay under Section 362(a) of
the Bankruptcy Code, would become due), liabilities and indebtedness owing by the Issuer to the Holders under the Note and Guarantee Agreement, the Note and the Guarantee (including, without limitation, indemnities, fees and interest thereon (including any interest accruing after the commencement of any bankruptcy, insolvency, receivership or similar proceeding at the rate provided for in the Note and Guarantee Agreement, whether or not such interest is an allowed claim in any such proceeding)), whether now existing or hereafter incurred under, arising out of or in connection with the Note and Guarantee Agreement, the Note and the Guarantee and the due performance and compliance by the Issuer with all of the terms, conditions and agreements contained in the Note and Guarantee Agreement, the Note and the Guarantee (all such principal, premium, interest, liabilities, indebtedness and obligations being herein collectively called the “
Guaranteed Obligations
”). As used herein, the term “
Guaranteed Party
” shall mean the Issuer, the Guarantor and each Restricted Subsidiary. Each Subsidiary Guarantor understands, agrees and confirms that the Holders may enforce this Subsidiary Guarantee up to the full amount of the Guaranteed Obligations against such Subsidiary Guarantor without proceeding against any other Subsidiary Guarantor, GMC, the Issuer or any other Guaranteed Party or under any other guaranty covering all or a portion of the Guaranteed Obligations.
2.
Additionally, each Subsidiary Guarantor, jointly and severally, unconditionally, absolutely and irrevocably, guarantees the payment of any and all Guaranteed Obligations whether or not due or payable by the Issuer or any other Guaranteed Party upon the occurrence in respect of the Issuer or any such other Guaranteed Party of any of the events specified in Section 11(g) of the Note and Guarantee Agreement, and unconditionally, absolutely and irrevocably, jointly and severally, promises to pay such Guaranteed Obligations to the Holders, or order, on demand. This Subsidiary Guarantee shall constitute a guaranty of payment, and not of collection.
3.
The liability of each Subsidiary Guarantor hereunder is primary, absolute, joint and several, and unconditional and is exclusive and independent of any security for or other guaranty of the indebtedness of the Issuer or any other Guaranteed Party whether executed by such Subsidiary Guarantor, any other Subsidiary Guarantor, any other guarantor or by any other party, and the liability of each Subsidiary Guarantor hereunder shall not be affected or impaired by any circumstance or occurrence whatsoever, including, without limitation: (a) any direction as to application of payment by the Issuer or any other Guaranteed Party or by any other party, (b) any other continuing or other guaranty, undertaking or maximum liability of a guarantor or of any other party as to the Guaranteed Obligations, (c) any payment on or in reduction of any such other guaranty or undertaking, (d) any dissolution, termination or increase, decrease or change in personnel by the Issuer or any other Guaranteed Party, (e) the failure of the Subsidiary Guarantor to receive any benefit from or as a result of its execution, delivery and performance of this Subsidiary Guarantee, (f) to the extent permitted by applicable law, any payment made to any Holder on the indebtedness which any Holder repays the Issuer or any other Guaranteed Party pursuant to court order in any bankruptcy, reorganization, arrangement, moratorium or other debtor relief proceeding, and each Subsidiary Guarantor waives any right to the deferral or modification of its obligations hereunder by reason of any such proceeding, (g) any action or inaction by the Holders as contemplated in Section 6 hereof or (h) any invalidity, rescission, irregularity or unenforceability of all or any part of the Guaranteed Obligations.
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4.
The obligations of each Subsidiary Guarantor hereunder are independent of the obligations of any other Subsidiary Guarantor, any other guarantor, the Issuer or any other Guaranteed Party, and a separate action or actions may be brought and prosecuted against each Subsidiary Guarantor whether or not action is brought against any other Subsidiary Guarantor, any other guarantor, the Issuer or any other Guaranteed Party and whether or not any other Subsidiary Guarantor, any other guarantor, the Issuer or any other Guaranteed Party be joined in any such action or actions. Each Subsidiary Guarantor waives, to the fullest extent permitted by law, the benefits of any statute of limitations affecting its liability hereunder or the enforcement thereof. Any payment by the Issuer or any other Guaranteed Party or other circumstance which operates to toll any statute of limitations as to the Issuer or any other Guaranteed Party shall operate to toll the statute of limitations as to each Subsidiary Guarantor.
5.
Any Holder may at any time and from time to time without the consent of, or notice to, any Subsidiary Guarantor, without incurring responsibility to such Subsidiary Guarantor, without impairing or releasing the obligations or liabilities of such Subsidiary Guarantor hereunder, upon or without any terms or conditions and in whole or in part:
(a) change the manner, place or terms of payment of, and/or change, increase or extend the time of payment of, renew, increase, accelerate or alter, any of the Guaranteed Obligations (including, without limitation, any increase or decrease in the rate of interest thereon or the principal amount thereof), or any liability incurred directly or indirectly in respect thereof, and the guaranty herein made shall apply to the Guaranteed Obligations as so changed, extended, increased, accelerated, renewed or altered;
(b) [Reserved.]
(c) exercise or refrain from exercising any rights against the Issuer, any other Guaranteed Party, any Restricted Subsidiary thereof or otherwise act or refrain from acting;
(d) release or substitute any one or more endorsers, Subsidiary Guarantors, other guarantors, the Issuer, any other Guaranteed Party, or other obligors;
(e) settle or compromise any of the Guaranteed Obligations, any liability (including any hereunder) incurred directly or indirectly in respect thereof or hereof, and may subordinate the payment of all or any part thereof to the payment of any liability (whether due or not) of the Issuer or any other Guaranteed Party to creditors of the Issuer or such other Guaranteed Party other than the Holders;
(f) apply any sums by whomsoever paid or howsoever realized to any liability or liabilities of the Issuer or any other Guaranteed Party to the Holders regardless of what liabilities of the Issuer or such other Guaranteed Party remain unpaid;
(g) consent to or waive any breach of, or any act, omission or default under, any of the Note and Guarantee Agreement, the Note and the Guarantee or any of the instruments or agreements referred to therein, or otherwise amend, modify or supplement (in accordance with their terms) any of the Note and Guarantee Agreement, the Note and the Guarantee or any of such other instruments or agreements;
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(h) act or fail to act in any manner which may deprive such Subsidiary Guarantor of its right to subrogation against the Issuer or any other Guaranteed Party to recover full indemnity for any payments made pursuant to this Subsidiary Guarantee; and/or
(i) take any other action or omit to take any other action which would, under otherwise applicable principles of common law, give rise to a legal or equitable discharge of such Subsidiary Guarantor from its liabilities under this Subsidiary Guarantee (including, without limitation, any action or omission whatsoever that might otherwise vary the risk of such Subsidiary Guarantor or constitute a legal or equitable defense to or discharge of the liabilities of a guarantor or surety or that might otherwise limit recourse against such Subsidiary Guarantor).
No invalidity, illegality, irregularity or unenforceability of all or any part of the Guaranteed Obligations or any other agreement or instrument relating to the Guaranteed Obligations or of any security or guarantee therefor shall affect, impair or be a defense to this Subsidiary Guarantee, and this Subsidiary Guarantee shall be primary, absolute and unconditional notwithstanding the occurrence of any event or the existence of any other circumstances which might constitute a legal or equitable discharge of a surety or guarantor except payment in full in cash of the Guaranteed Obligations or as otherwise provided under the terms of the Note and Guarantee Agreement.
6.
This Subsidiary Guarantee is a continuing one and all liabilities to which it applies or may apply under the terms hereof shall be conclusively presumed to have been created in reliance hereon. No failure or delay on the part of any Holder in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder. The rights and remedies herein expressly specified are cumulative and not exclusive of any rights or remedies which any Holder would otherwise have hereunder. No notice to or demand on any Subsidiary Guarantor in any case shall entitle such Subsidiary Guarantor to any other further notice or demand in similar or other circumstances or constitute a waiver of the rights of any Holder to any other or further action in any circumstances without notice or demand. It is not necessary for any Holder to inquire into the capacity or powers of the Issuer or any other Guaranteed Party or the officers, directors, partners or agents acting or purporting to act on its or their behalf, and any indebtedness made or created in reliance upon the professed exercise of such powers shall be guaranteed hereunder.
7.
Any indebtedness of the Issuer or any other Guaranteed Party now or hereafter held by any Subsidiary Guarantor is hereby subordinated to the indebtedness of the Issuer or such other Guaranteed Party to the Holders, and such indebtedness of the Issuer or such other Guaranteed Party to any Subsidiary Guarantor, if the Holders, after the occurrence and during the continuance of an Event of Default, so requests, shall be collected, enforced and received by such Subsidiary Guarantor as trustee for the Holders and be paid over to the Holders on account of the indebtedness of the Issuer or the other Guaranteed Parties to the Holders, but without affecting or impairing in any manner the liability of such Subsidiary Guarantor under the other provisions of this Subsidiary Guarantee. Without limiting the generality of the foregoing, each Subsidiary Guarantor hereby agrees with the Holders that it will not exercise any right of subrogation which it may at any time otherwise have as a result of this Subsidiary Guarantee
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(whether contractual, under Section 509 of the Bankruptcy Code or otherwise) until all Guaranteed Obligations have been irrevocably paid in full in cash;
provided
that if any amount shall be paid to such Subsidiary Guarantor on account of such subrogation rights at any time prior to the irrevocable payment in full in cash of all the Guaranteed Obligations, such amount shall be credited and applied upon the Guaranteed Obligations, whether matured or unmatured, in accordance with the terms of the Note and Guarantee Agreement, the Note and the Guarantee.
8.
(
·
Each Subsidiary Guarantor hereby waives (to the fullest extent permitted by applicable law) notice of acceptance of this Subsidiary Guarantee and notice of the existence, creation or incurrence of any new or additional liability to which it may apply, and waives promptness, diligence, presentment, demand of payment, demand for performance, protest, notice of dishonor or nonpayment of any such liabilities, suit or taking of other action by any Holder against, and any other notice to, any party liable thereon (including such Subsidiary Guarantor, any other Subsidiary Guarantor, any other guarantor, the Issuer or any other Guaranteed Party) and each Subsidiary Guarantor further hereby waives any and all notice of the creation, renewal, extension or accrual of any of the Guaranteed Obligations and notice or proof of reliance by any Holder upon this Subsidiary Guarantee, and the Guaranteed Obligations shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended, modified, supplemented or waived, in reliance upon this Subsidiary Guarantee. Each Subsidiary Guarantor hereby waives any defense it may now or hereafter assert in any way relating to any law, regulation, decree or order of any jurisdiction, or any other event, affecting any term of any Obligation or any Holder’s rights with respect thereto.
(b) Each Subsidiary Guarantor hereby waives any right (except as shall be required by applicable law and cannot be waived) to require the Holders to: (i) proceed against the Issuer, any other Guaranteed Party, any other Subsidiary Guarantor, any other guarantor of the Guaranteed Obligations or any other party; (ii) proceed against or exhaust any security held from the Issuer, any other Guaranteed Party, any other Subsidiary Guarantor, any other guarantor of the Guaranteed Obligations or any other party; or (iii) pursue any other remedy in the Holders’ power whatsoever. Each Subsidiary Guarantor waives any defense based on or arising out of any defense of the Issuer, any other Guaranteed Party, any other Subsidiary Guarantor, any other guarantor of the Guaranteed Obligations or any other party other than payment in full of the Guaranteed Obligations, including, without limitation, any defense based on or arising out of the disability of the Issuer, any other Guaranteed Party, any other Subsidiary Guarantor, any other guarantor of the Guaranteed Obligations or any other party, or the unenforceability of the Guaranteed Obligations or any part thereof from any cause, or the cessation from any cause of the liability of the Issuer or any other Guaranteed Party other than payment in full of the Guaranteed Obligations.
(c) Each Subsidiary Guarantor waives all presentments, promptness, diligence, demands for performance, protests and notices, including, without limitation, notices of nonperformance, notices of protest, notices of dishonor, notices of acceptance of this Subsidiary Guarantee, and notices of the existence, creation or incurring of new or additional indebtedness. Each Subsidiary Guarantor assumes all responsibility for being and keeping itself informed of the Issuer’s and each other Guaranteed Party’s financial condition and assets, and of all other circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations and the nature, scope and extent of the risks which such Subsidiary Guarantor assumes and incurs
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hereunder, and agrees that the Holders shall have no duty to advise any Subsidiary Guarantor of information known to them regarding such circumstances or risks.
Each Subsidiary Guarantor warrants and agrees that each of the waivers set forth above in this Section 8 is made with full knowledge of its significance and consequences and that if any of such waivers are determined to be contrary to any applicable law or public policy, such waivers shall be effective only to the maximum extent permitted by law.
9.
Notwithstanding anything to the contrary contained elsewhere in this Subsidiary Guarantee, the Holders agree (by their acceptance of the benefits of this Subsidiary Guarantee) that this Subsidiary Guarantee may be enforced only by the action of the Required Holders, and that no other Holder shall have any right individually to seek to enforce or to enforce this Subsidiary Guarantee, it being understood and agreed that such rights and remedies may be exercised by the Required Holders. The Holders further agree that this Subsidiary Guarantee may not be enforced against any director, officer, employee, partner, member or stockholder of any Subsidiary Guarantor (except to the extent such partner, member or stockholder is also a Subsidiary Guarantor hereunder). It is understood and agreed that the agreement in this Section 9 is among and solely for the benefit of the Holders and that, if the Required Holders so agree (without requiring the consent of any Subsidiary Guarantor), this Subsidiary Guarantee may be directly enforced by any Holder.
10.
In order to induce the Holders to purchase and hold the Notes pursuant to the Note and Guarantee Agreement, each Subsidiary Guarantor represents, warrants and covenants that as of the date hereof:
(a) Such Subsidiary Guarantor (i) is a duly organized and validly existing corporation, limited partnership or limited liability company, as the case may be, in good standing (or the equivalent) under the laws of the jurisdiction of its incorporation or formation, (ii) has the corporate or other applicable power and authority, as the case may be, to own its property and assets and to transact the business in which it is currently engaged and presently proposes to engage and (iii) is duly qualified and is authorized to do business and is in good standing in each jurisdiction where the conduct of its business as currently conducted requires such qualification, except for failures to be so qualified which, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.
(b) Such Subsidiary Guarantor has the corporate or other applicable power and authority to execute, deliver and perform the terms and provisions of this Subsidiary Guarantee and each other related agreement, instrument or document to which it is a party and has taken all necessary corporate or other applicable action to authorize the execution, delivery and performance by it of this Subsidiary Guarantee and each such other related agreement, instrument or document. Such Subsidiary Guarantor has duly executed and delivered this Subsidiary Guarantee and each other related agreement, instrument or document to which it is a party, and this Subsidiary Guarantee and each such other related agreement, instrument or document constitutes the legal, valid and binding obligation of such Subsidiary Guarantor enforceable against such Subsidiary Guarantor in accordance with its terms, except to the extent that the enforceability hereof or thereof may be limited by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws generally affecting
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creditors’ rights and by equitable principles (regardless of whether enforcement is sought in equity or at law).
(c) Neither the execution, delivery or performance by such Subsidiary Guarantor of this Subsidiary Guarantee or any other related agreement, instrument or document to which it is a party, nor compliance by it with the terms and provisions hereof and thereof, will (i) contravene any provision of any applicable law, statute, rule or regulation or any applicable order, writ, injunction or decree of any court or governmental instrumentality, (ii) conflict with or result in any breach of any of the terms, covenants, conditions or provisions of, or constitute a default under, or result in the creation or imposition of (or the obligation to create or impose) any Lien upon any of the material properties or assets of such Subsidiary Guarantor or any of its Subsidiaries pursuant to the terms of any indenture, mortgage, deed of trust, loan agreement or credit agreement, or any other material agreement, contract or instrument, to which such Subsidiary Guarantor or any of its Subsidiaries is a party or by which it or any of its material property or assets is bound or to which it may be subject or (iii) violate any provision of the certificate of incorporation or by-laws (or equivalent organizational documents), as the case may be, of such Subsidiary Guarantor or any of its Subsidiaries.
(d) No order, consent, approval, license, authorization or validation of, or filing, recording or registration with (except as have been obtained or made prior to the date when required and which remain in full force and effect), or exemption by, any governmental or public body or authority, or any subdivision thereof, is required to authorize, or is required in connection with, (i) the execution, delivery and performance of this Subsidiary Guarantee by such Subsidiary Guarantor or any other related agreement, instrument or document to which such Subsidiary Guarantor is a party or (ii) the legality, validity, binding effect or enforceability of this Subsidiary Guarantee or any other related agreement, instrument or document to which such Subsidiary Guarantor is a party.
(e) Other than as set forth on Schedule 5.6 of the Note and Guarantee Agreement, there are no actions, suits or proceedings pending or, to such Subsidiary Guarantor’s knowledge, threatened (i) with respect to this Subsidiary Guarantee or any other related agreement, instrument or document to which such Subsidiary Guarantor is a party or (ii) with respect to such Subsidiary Guarantor or any of its Subsidiaries that, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.
11.
Each Subsidiary Guarantor covenants and agrees that on and after the Closing and until the repayment in full of the Notes and until such time as no Notes remain outstanding and all Guaranteed Obligations have been paid in full, such Subsidiary Guarantor will comply, and will cause each of its Subsidiaries to comply, with all of the applicable provisions, covenants and agreements contained in Sections 8 and 9 of the Note and Guarantee Agreement, and will take, or will refrain from taking, as the case may be, all actions that are necessary to be taken or not taken so that it is not in violation of any provision, covenant or agreement contained in Section 9 or 10 of the Note and Guarantee Agreement, and so that no Default or Event of Default is caused by the actions of such Subsidiary Guarantor or any of its Subsidiaries.
12.
The Subsidiary Guarantors hereby jointly and severally agree to pay all reasonable out-of-pocket costs and expenses of each Holder in connection with the enforcement
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of this Subsidiary Guarantee (including, without limitation, the reasonable fees and disbursements of counsel).
13.
This Subsidiary Guarantee shall be binding upon each Subsidiary Guarantor and its successors and assigns and shall inure to the benefit of the Holders and their successors and assigns.
14.
Neither this Subsidiary Guarantee nor any provision hereof may be changed, waived, discharged or terminated except with the written consent of each Subsidiary Guarantor directly affected thereby and with the written consent of the Required Holders (or, to the extent required by Section 19 of the Note and Guarantee Agreement, with the written consent of all the Holders or all of the Holders adversely affected thereby, as applicable) at all times prior to the time on which all Guaranteed Obligations have been paid in full.
15.
Each Subsidiary Guarantor acknowledges that an executed (or conformed) copy of each of the Note and Guarantee Agreement, the Note and the Guarantee has been made available to a senior officer of such Subsidiary Guarantor and such officer is familiar with the contents thereof.
16.
In addition to any rights now or hereafter granted under applicable law (including, without limitation, Section 151 of the New York Debtor and Secured Creditor Law) and not by way of limitation of any such rights, upon the occurrence and during the continuance of an Event of Default (such term to mean and include any “Event of Default” as defined in the Note and Guarantee Agreement), each Holder is hereby authorized, at any time or from time to time, without notice to any Subsidiary Guarantor or to any other Person, any such notice being expressly waived, to set off and to appropriate and apply any and all deposits (general or special) and any other indebtedness at any time held or owing by such Holder to or for the credit or the account of such Subsidiary Guarantor, against and on account of the obligations and liabilities of such Subsidiary Guarantor to such Holder under this Subsidiary Guarantee, irrespective of whether or not such Holder shall have made any demand hereunder and although said obligations, liabilities, deposits or claims, or any of them, shall be contingent or unmatured.
17.
Except as otherwise expressly provided herein, all notices and other communications provided for hereunder shall be in writing (including email or facsimile communication) and mailed, emailed, faxed or delivered: if to any Subsidiary Guarantor, at c/o General Maritime Corporation, 299 Park Avenue, New York, New York, 10171-0002, with copies to Kramer Levin Naftalis & Frankel LLP, 1177 Avenue of the Americas, New York, New York 10036, Attention: Kenneth Chin, Esq., Telephone No.: (212) 715-9100, Facsimile No.: (212) 715-8000, Email: kchin@kramerlevin.com and Kirkland and Ellis LLP, 555 California Street, San Francisco, California 94104, Attention: Samantha Good, Telephone No.: (415) 439-1914. Facsimile No.: (415) 439-1500, Email: samantha.good@kirkland.com; if to any Holder, at its address specified on Schedule A to the Note and Guarantee Agreement; or, as to any other Obligor, at such other address as shall be designated by such party in a written notice to the other parties hereto and, as to each Holder, at such other address as shall be designated by such Holder in a written notice to the Issuer. All such notices and communications shall, (i) when mailed, be effective three Business Days after being deposited in the mails, prepaid and properly addressed for delivery, (ii) when sent by overnight courier, be effective one Business Day after delivery to
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the overnight courier prepaid and properly addressed for delivery on such next Business Day, or (iii) when sent by email or facsimile, be effective when sent by email or facsimile, except that notices and communications to any Subsidiary Guarantor shall not be effective until received by such Subsidiary Guarantor, as the case may be.
18.
If any claim is ever made upon any Holder for repayment or recovery of any amount or amounts received in payment or on account of any of the Guaranteed Obligations and any of the aforesaid payees repays all or part of said amount by reason of (i) any judgment, decree or order of any court or administrative body having jurisdiction over such payee or any of its property or (ii) any settlement or compromise of any such claim effected by such payee with any such claimant (including, without limitation, the Issuer or any other Guaranteed Party) then and in such event each Subsidiary Guarantor agrees that any such judgment, decree, order, settlement or compromise shall be binding upon such Subsidiary Guarantor, notwithstanding any revocation hereof or the cancellation of any Note or any other instrument evidencing any liability of the Issuer or any other Guaranteed Party, and such Subsidiary Guarantor shall be and remain liable to the aforesaid payees hereunder for the amount so repaid or recovered to the same extent as if such amount had never originally been received by any such payee.
19.
(a)
THIS SUBSIDIARY GUARANTEE AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE.
Any legal action or proceeding with respect to this Subsidiary Guarantee may, in the case of any Holder, and shall, in the case of any Subsidiary Guarantor, be brought in the courts of the State of New York or of the United States of America for the Southern District of New York in each case which are located in the City of New York, and, by execution and delivery of this Subsidiary Guarantee, each Subsidiary Guarantor hereby irrevocably and unconditionally submits to the non-exclusive jurisdiction of such courts for purposes of any such legal action or proceeding. Each Subsidiary Guarantor hereby agrees that service of process in any such proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to it at its address specified in Section 17 or at such other address of which each Holder shall have been notified pursuant thereto. In addition, each Subsidiary Guarantor hereby irrevocably waives to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this agreement, the notes, the guarantees or any other document executed in connection herewith brought in the courts of the State of New York or the United States District Court for the Southern District of New York, and any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. Each Subsidiary Guarantor hereby irrevocably waives (to the fullest extent permitted by applicable law) any objection to such service of process and further irrevocably waives and agrees not to plead or claim in any action or proceeding commenced hereunder that such service of process was in any way invalid or ineffective. Nothing herein shall affect the right of any of the Holders to serve process in any other manner permitted by law or to commence legal proceedings or otherwise proceed against each Subsidiary Guarantor in any other jurisdiction.
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(b) Each Subsidiary Guarantor hereby irrevocably waives (to the fullest extent permitted by applicable law) any objection which it may now or hereafter have to the laying of venue of any of the aforesaid actions or proceedings arising out of or in connection with this Subsidiary Guarantee brought in the courts referred to in clause (a) above and hereby further irrevocably waives (to the fullest extent permitted by applicable law) and agrees not to plead or claim in any such court that such action or proceeding brought in any such court has been brought in an inconvenient forum.
(c) EACH SUBSIDIARY GUARANTOR AND EACH HOLDER (BY ITS ACCEPTANCE OF THE BENEFITS OF THIS SUBSIDIARY GUARANTEE) HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS SUBSIDIARY GUARANTEE OR THE TRANSACTIONS CONTEMPLATED HEREBY.
20.
In the event that all of the capital stock or other equity interests of one or more Subsidiary Guarantors is sold or otherwise disposed of or liquidated in compliance with the requirements of Section 10.02 of the Note and Guarantee Agreement (or such sale, other disposition, or liquidation has been approved in writing by the Required Holders (or all the Holders if required by Section 19 of the Note and Guarantee Agreement)) and the proceeds of such sale, disposition or liquidation are applied in accordance with the provisions of the Note and Guarantee Agreement, to the extent applicable, such Subsidiary Guarantor shall upon consummation of such sale or other disposition (except to the extent that such sale or disposition is to GMC or any Subsidiary thereof) be released from this Subsidiary Guarantee automatically and without further action and this Subsidiary Guarantee shall, as to each such Subsidiary Guarantor or Subsidiary Guarantors, terminate, and have no further force or effect (it being understood and agreed that the sale of one or more Persons that own, directly or indirectly, all of the capital stock or other equity interests of any Subsidiary Guarantor shall be deemed to be a sale of such Subsidiary Guarantor for the purposes of this Section 20).
21.
At any time a payment in respect of the Guaranteed Obligations is made under this Subsidiary Guarantee, the right of contribution of each Subsidiary Guarantor against each other Subsidiary Guarantor shall be determined as provided in the immediately following sentence, with the right of contribution of each Subsidiary Guarantor to be revised and restated as of each date on which a payment (a “
Relevant Payment
”) is made on the Guaranteed Obligations under this Subsidiary Guarantee. At any time that a Relevant Payment is made by a Subsidiary Guarantor that results in the aggregate payments made by such Subsidiary Guarantor in respect of the Guaranteed Obligations to and including the date of the Relevant Payment exceeding such Subsidiary Guarantor’s Contribution Percentage (as defined below) of the aggregate payments made by all Subsidiary Guarantors in respect of the Guaranteed Obligations to and including the date of the Relevant Payment (such excess, the “
Aggregate Excess Amount
”), each such Subsidiary Guarantor shall have a right of contribution against each other Subsidiary Guarantor who has made payments in respect of the Guaranteed Obligations to and including the date of the Relevant Payment in an aggregate amount less than such other Subsidiary Guarantor’s Contribution Percentage of the aggregate payments made to and including the date of the Relevant Payment by all Subsidiary Guarantors in respect of the Guaranteed Obligations (the aggregate amount of such deficit, the “
Aggregate Deficit Amount
”) in an amount equal to (x) a fraction the numerator of which is the Aggregate Excess
10
Amount of such Subsidiary Guarantor and the denominator of which is the Aggregate Excess Amount of all Subsidiary Guarantors multiplied by (y) the Aggregate Deficit Amount of such other Subsidiary Guarantor. A Subsidiary Guarantor’s right of contribution pursuant to the preceding sentences shall arise at the time of each computation, subject to adjustment to the time of each computation;
provided
that no Subsidiary Guarantor may take any action to enforce such right until the Guaranteed Obligations have been irrevocably paid in full in cash, it being expressly recognized and agreed by all parties hereto that any Subsidiary Guarantor’s right of contribution arising pursuant to this Section 21 against any other Subsidiary Guarantor shall be expressly junior and subordinate to such other Subsidiary Guarantor’s obligations and liabilities in respect of the Guaranteed Obligations and any other obligations owing under this Subsidiary Guarantee. As used in this Section 21: (i) each Subsidiary Guarantor’s “
Contribution Percentage
” shall mean the percentage obtained by dividing (x) the Adjusted Net Worth (as defined below) of such Subsidiary Guarantor by (y) the aggregate Adjusted Net Worth of all Subsidiary Guarantors; (ii) the “
Adjusted Net Worth
” of each Subsidiary Guarantor shall mean the greater of (x) the Net Worth (as defined below) of such Subsidiary Guarantor and (y) zero; and (iii) the “
Net Worth
” of each Subsidiary Guarantor shall mean the amount by which the fair saleable value of such Subsidiary Guarantor’s assets on the date of any Relevant Payment exceeds its existing debts and other liabilities (including, without limitation, contingent liabilities, but without giving effect to any Guaranteed Obligations arising under this Subsidiary Guarantee or any guaranteed obligations arising under any guaranty of the Notes) on such date. Notwithstanding anything to the contrary contained above, any Subsidiary Guarantor that is released from this Subsidiary Guarantee pursuant to Section 20 hereof shall thereafter have no contribution obligations, or rights, pursuant to this Section 21. All parties hereto recognize and agree that, except for any right of contribution arising pursuant to this Section 21, each Subsidiary Guarantor who makes any payment in respect of the Guaranteed Obligations shall have no right of contribution or subrogation against any other Subsidiary Guarantor in respect of such payment until all of the Guaranteed Obligations have been irrevocably paid in full in cash. Each of the Subsidiary Guarantors recognizes and acknowledges that the rights to contribution arising hereunder shall constitute an asset in favor of the party entitled to such contribution. In this connection, each Subsidiary Guarantor has the right to waive its contribution right against any Subsidiary Guarantor to the extent that after giving effect to such waiver such Subsidiary Guarantor would remain solvent, in the determination of the Required Holders.
22.
Each Subsidiary Guarantor and each Holder (by its acceptance of the benefits of this Subsidiary Guarantee) hereby confirms that it is its intention that this Subsidiary Guarantee not constitute a fraudulent transfer or conveyance for purposes of the Bankruptcy Code, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar Federal or state law. To effectuate the foregoing intention, each Subsidiary Guarantor and each Holder (by its acceptance of the benefits of this Subsidiary Guarantee) hereby irrevocably agrees that the Guaranteed Obligations guaranteed by such Subsidiary Guarantor shall be limited to such amount as will, after giving effect to such maximum amount and all other (contingent or otherwise) liabilities of such Subsidiary Guarantor that are relevant under such laws and after giving effect to any rights to contribution pursuant to any agreement providing for an equitable contribution among such Subsidiary Guarantor and the other Subsidiary Guarantors, result in the Guaranteed Obligations of such Subsidiary Guarantor in respect of such maximum amount not constituting a fraudulent transfer or conveyance.
11
23.
This Subsidiary Guarantee may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which when so executed and delivered shall be an original (including if delivered by facsimile or electronic transmission), but all of which shall together constitute one and the same instrument.
* * *
12
IN WITNESS WHEREOF, each Subsidiary Guarantor has caused this Subsidiary Guarantee to be executed and delivered as of the date first above written.
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[SUBSIDIARY GUARANTOR],
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each as a Subsidiary Guarantor
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By:
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Name:
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Title:
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Exhibit 10.41
EXECUTION VERSION
AMENDMENT NO. 1 AND CONSENT
AMENDMENT NO. 1 AND CONSENT dated as of May 13, 2014 (the “
Amendment
”) among GENERAL MARITIME CORPORATION (the “
Issuer
”), VLCC ACQUISITION I CORPORATION (the “
Guarantor
”, and together with the Issuer, the “
Obligors
”) and the Purchasers executing this Amendment on the signature pages hereto under the Note and Guarantee Agreement referred to below.
The Obligors and the purchasers whose name appears on Schedule A thereto are parties to a Note and Guarantee Agreement dated as of March 28, 2014 (as amended, modified and supplemented and in effect from time to time, the “
Note and Guarantee Agreement
”), pursuant to which the Issuer will issue the Senior Unsecured Notes due 2020 (as amended, modified and supplemented and in effect from time to time, the “
Notes
”).
The Obligors and the Purchasers party hereto wish now to amend the Note and Guarantee Agreement in certain respects, and accordingly, the parties hereto hereby agree as follows:
Section 1.
Definitions
. Except as otherwise defined in this Amendment, terms defined in the Note and Guarantee Agreement are used herein as defined therein.
Section 2.
Amendments
. Subject to the satisfaction of the conditions precedent specified in Section 5 below, but effective as of the date hereof, the Note and Guarantee Agreement shall be amended as follows:
2.01.
References Generally
. References in the Note and Guarantee Agreement (including references to the Note and Guarantee Agreement as amended hereby) to “this Agreement” (and indirect references such as “hereunder”, “hereby”, “herein” and “hereof”) shall be deemed to be references to the Note and Guarantee Agreement as amended hereby.
2.02.
Amendments to the Note and Guarantee Agreement
. The Note and Guarantee Agreement is hereby amended to delete the bold, stricken text (indicated textually in the same manner as the following example:) and to add the bold,
double-underlined text
(indicated textually in the same manner as the following example: double-underlined text) as set forth in the pages of the Note and Guarantee Agreement attached as Exhibit A hereto.
Section 3.
Consent
. The parties hereto hereby consent and approve the amendments set forth in Section 2 hereof.
Section 4.
Representations and Warranties
. Each Obligor represents and warrants to the Purchasers, that (a) the representations and warranties set forth in Section 5 (as hereby amended) of the Note and Guarantee Agreement are true and complete on the date hereof as if made on and as of the date hereof (or, if any such representation or warranty is expressly stated to have been made as of a specific date, such representation or warranty shall be true and correct as of such specific date), and as if each reference in said Section 5 to “this Agreement” included reference to this Amendment (it being agreed that it shall be deemed to be an Event of Default under the Note and Guarantee Agreement if any of the foregoing representations and warranties shall prove to have been incorrect in any material respect when made), and (b) no Default or Event of Default has occurred and is continuing.
Section 5.
Conditions Precedent
. The amendments set forth in Section 2 hereof shall become effective, as of the date hereof, upon receipt by the Purchasers of counterparts of this Amendment executed by each of the Obligors.
Section 6.
Continuing Effectiveness
. As supplemented and modified by this Amendment, the Note and Guarantee Agreement is in all respects ratified and confirmed and the Note and Guarantee Agreement as so supplemented and modified shall be read, taken and construed as one and the same instrument, and all rights and remedies of the parties under the Note and Guarantee Agreement shall continue to be in full force and effect in accordance with the terms thereof, subject to the supplements and modifications made by this Amendment. Each reference to the “Note and Guarantee Agreement” herein or in any other document, instrument or agreement executed and/or delivered in connection therewith shall mean and be a reference to the Note and Guarantee Agreement, as supplemented and modified hereby.
Section 7.
Miscellaneous
. Except as herein provided, the Note and Guarantee Agreement shall remain unchanged and in full force and effect. This Amendment may be executed in any number of counterparts, all of which taken together shall constitute one and the same amendatory instrument and any of the parties hereto may execute this Amendment by signing any such counterpart. Delivery of a counterpart by electronic transmission shall be effective as delivery of a manually executed counterpart hereof. This Amendment and any right, remedy, obligation, claim, controversy, dispute or cause of action (whether in contract, tort or otherwise) based upon, arising out of or relating to this Amendment shall be governed by, and construed in accordance with, the law of the State of New York without regard to conflicts of law principles that would lead to the application of laws other than the law of the State of New York.
[
Signature Pages to Follow.
]
2
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered as of the day and year first above written.
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GENERAL MARITIME CORPORATION
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By:
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/s/ Christopher F. Allwin
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Name: Christopher F. Allwin
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Title: Assistant Vice President and Secretary
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VLCC ACQUISITION I CORPORATION
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By:
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/s/ Christopher F. Allwin
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Name: Christopher F. Allwin
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Title: Secretary
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Signature Page to Amendment and Consent
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BLUEMOUNTAIN CREDIT
OPPORTUNITIES MASTER FUND I L.P.
|
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By: BlueMountain Capital Management, LLC,
its investment manager
|
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By
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/s/ David M. O’Mara
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Name:
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David M. O’Mara
|
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Title:
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Assistant GC/VP
|
[Signature Page to Amendment and Consent]
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BLUEMOUNTAIN LONG/SHORT CREDIT AND
DISTRESSED REFLECTION FUND,A SUB-
FUND OF AAI BLUEMOUNTAIN FUND PLC
|
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By: BlueMountain Capital Management, LLC,
its investment manager
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By
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/s/ David M. O’Mara
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Name:
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David M. O’Mara
|
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Title:
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Assistant GC/VP
|
[Signature Page to Amendment and Consent]
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BLUEMOUNTAIN KICKING
HORSE FUND L.P.
|
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By: BlueMountain Capital Management, LLC,
its investment manager
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By
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/s/ David M. O’Mara
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Name:
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David M. O’Mara
|
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Title:
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Assistant GC/VP
|
[Signature Page to Amendment and Consent]
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BLUEMOUNTAIN TIMBERLINE LTD.
|
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By: BlueMountain Capital Management, LLC,
its investment manager
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By
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/s/ David M. O’Mara
|
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Name:
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David M. O’Mara
|
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Title:
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Assistant GC/VP
|
[Signature Page to Amendment and Consent]
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BLUEMOUNTAIN MONTENVERS
MASTER FUND SCA SICA V-SIF
|
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By: BlueMountain Capital Management, LLC,
its investment manager
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By
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/s/ David M. O’Mara
|
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Name:
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David M. O’Mara
|
|
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Title:
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Assistant GC/VP
|
[Signature Page to Amendment and Consent]
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BLUEMOUNTAIN GUADALUPE
PEAK FUND L.P.
|
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By: BlueMountain Capital Management, LLC,
its investment manager
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|
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By
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/s/ David M. O’Mara
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Name:
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David M. O’Mara
|
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Title:
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Assistant GC/VP
|
[Signature Page to Amendment and Consent]
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BLUEMOUNTAIN STRATEGIC CREDIT
MASTER FUND L.P.
|
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By: BlueMountain Capital Management, LLC,
its investment manager
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By
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/s/ David M. O’Mara
|
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Name:
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David M. O’Mara
|
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Title:
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Assistant GC/VP
|
[Signature Page to Amendment and Consent]
EXHIBIT A
Amendments to Note and Guarantee Agreement
[ATTACHED]
EXECUTION VERSION(1)
GENERAL MARITIME CORPORATION
VLCC ACQUISITION I CORPORATION
$131,600,000
Senior Unsecured Notes due 2020
NOTE AND GUARANTEE AGREEMENT
Dated as of March 28, 2014
(1) Incorporating Amendment No. 1 and Consent dated as of May 13, 2014.
TABLE OF CONTENTS
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Section
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Page
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1.
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AUTHORIZATION OF NOTES
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2
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2.
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SALE AND PURCHASE OF NOTES
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2
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3.
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CLOSING
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3
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4.
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CONDITIONS TO CLOSING
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3
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4.1.
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Representations and Warranties
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3
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4.2.
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Performance; No Default
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4
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4.3.
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Compliance Certificates
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4
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4.4.
|
Opinions of Counsel
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4
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4.5.
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Purchase Permitted By Applicable Law, etc.
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5
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4.6.
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Sale of Other Notes
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5
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4.7.
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Payment of Special Counsel Fees
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5
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4.8.
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Changes in Corporate Structure
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5
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4.9.
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[Reserved.]
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5
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4.10.
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Funding Instructions; Notice of Designation
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5
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4.11.
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Subsidiary Guarantee
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6
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4.12.
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Equity Issuance
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6
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4.13.
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Acquisition
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6
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4.14.
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Proceedings and Documents
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6
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5.
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REPRESENTATIONS, WARRANTIES AND AGREEMENTS
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6
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5.1.
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Corporate/Limited Liability Company/Limited Partnership Status
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6
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5.2.
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Corporate Power and Authority
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7
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5.3.
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No Violation
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7
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5.4.
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Governmental Approvals
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7
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5.5.
|
Financial Statements; Financial Condition; Undisclosed Liabilities
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8
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5.6.
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Litigation
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8
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5.7.
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True and Complete Disclosure
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8
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5.8.
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Use of Proceeds; Margin Regulations
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9
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5.9.
|
Tax Returns and Payments
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9
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5.10.
|
Compliance with ERISA
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10
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5.11.
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Capitalization
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11
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5.12.
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Subsidiaries
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12
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5.13.
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Compliance with Statutes, etc.
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12
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5.14.
|
Investment Company Act
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12
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5.15.
|
Money Laundering
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12
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5.16.
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Pollution and Other Regulations
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13
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5.17.
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Labor Relations
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14
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5.18.
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Patents, Licenses, Franchises and Formulas
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14
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5.19.
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Indebtedness
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14
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5.20.
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Insurance
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14
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5.21.
|
No Immunity
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14
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5.22.
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Solvency
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15
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5.23.
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Patriot Act
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15
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5.24.
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Certain Business Practices
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15
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5.25.
|
Private Offering by the Obligors
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15
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5.26.
|
Subsidiary Guarantees
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15
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i
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6.
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REPRESENTATIONS OF THE PURCHASERS
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16
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6.1.
|
Purchase for Investment
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16
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7.
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INFORMATION AS TO THE OBLIGORS
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16
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7.1.
|
Financial and Business Information
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16
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7.2.
|
Officer’s Certificates
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18
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7.3.
|
Inspections
|
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18
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8.
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PREPAYMENT OF THE NOTES
|
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19
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8.1.
|
Maturity; Accrual of Interest
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19
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8.2.
|
Optional Prepayments with Make-Whole Amount
|
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20
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8.3.
|
Prepayment in Connection with a Change of Control
|
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21
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8.4.
|
[Reserved.]
|
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21
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8.5.
|
Maturity; Surrender, etc.
|
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21
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8.6.
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Purchase of Notes
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21
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8.7.
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Make-Whole Amount
|
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22
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8.8.
|
Commitment Fee
|
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23
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9.
|
AFFIRMATIVE COVENANTS
|
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23
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9.1.
|
Books and Records
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24
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9.2.
|
Maintenance of Property; Insurance
|
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24
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9.3.
|
Corporate Franchises
|
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24
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9.4.
|
Compliance with Statutes, etc.
|
|
24
|
|
|
9.5.
|
Compliance with Environmental Laws
|
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24
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9.6.
|
ERISA
|
|
25
|
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9.7.
|
End of Fiscal Years; Fiscal Quarters
|
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26
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9.8.
|
Performance of Obligations
|
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26
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9.9.
|
Payment of Taxes
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26
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9.10.
|
Ranking
|
|
27
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9.11.
|
Subsidiary Guarantees; Release
|
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27
|
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9.12.
|
Restricted and Unrestricted Subsidiaries
|
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27
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9.13.
|
Use of Proceeds
|
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28
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9.14.
|
Scorpio Newbuilds
|
|
28
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10.
|
NEGATIVE COVENANTS
|
|
28
|
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10.1.
|
Liens
|
|
28
|
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10.2.
|
Consolidation, Merger, Sale of Assets, etc.
|
|
30
|
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|
10.3.
|
Restricted Payments
|
|
32
|
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10.4.
|
Indebtedness
|
|
34
|
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10.5.
|
Transactions with Affiliates
|
|
36
|
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|
10.6.
|
Limitation on Certain Restrictions on Restricted Subsidiaries
|
|
37
|
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10.7.
|
Business
|
|
37
|
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11.
|
EVENTS OF DEFAULT
|
|
38
|
|
12.
|
REMEDIES ON DEFAULT, ETC.
|
|
40
|
|
|
12.1.
|
Acceleration
|
|
40
|
|
|
12.2.
|
[Reserved.]
|
|
40
|
|
|
12.3.
|
Rescission
|
|
41
|
|
|
12.4.
|
No Waivers or Election of Remedies, Expenses, etc.
|
|
41
|
|
13.
|
TAX INDEMNIFICATION; FATCA INFORMATION
|
|
41
|
|
|
13.1.
|
Tax Indemnification
|
|
41
|
|
|
13.2.
|
Survival of Obligations
|
|
43
|
|
14.
|
GUARANTEE, ETC.
|
|
43
|
|
|
14.1.
|
Guarantee
|
|
43
|
|
|
14.2.
|
Guarantee Obligations Unconditional
|
|
44
|
|
|
14.3.
|
Survival of Obligations
|
|
46
|
|
|
14.4.
|
Guarantees Endorsed on the Notes
|
|
46
|
ii
|
15.
|
REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES
|
|
46
|
|
|
15.1
|
Registration of Notes
|
|
46
|
|
|
15.2
|
Transfer and Exchange of Notes
|
|
47
|
|
|
15.3
|
Replacement of Notes
|
|
47
|
|
16.
|
PAYMENTS ON NOTES
|
|
47
|
|
|
16.1
|
Place of Payment
|
|
47
|
|
|
16.2
|
Home Office Payment
|
|
47
|
|
17.
|
EXPENSES, ETC.
|
|
47
|
|
|
17.1
|
Transaction Expenses
|
|
47
|
|
|
17.2
|
Taxes
|
|
49
|
|
|
17.3
|
Survival
|
|
49
|
|
18.
|
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT
|
|
49
|
|
19.
|
AMENDMENT AND WAIVER
|
|
50
|
|
|
19.1
|
Requirements
|
|
50
|
|
|
19.2
|
Solicitation of Holders of Notes
|
|
50
|
|
|
19.3
|
Binding Effect, etc.
|
|
50
|
|
|
19.4
|
Notes held by Obligors, etc.
|
|
50
|
|
20.
|
NOTICES
|
|
51
|
|
21.
|
REPRODUCTION OF DOCUMENTS
|
|
52
|
|
22.
|
CONFIDENTIAL INFORMATION
|
|
52
|
|
23.
|
SUBSTITUTION OF PURCHASER
|
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53
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24.
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JURISDICTION AND PROCESS
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54
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25.
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OBLIGATION TO MAKE PAYMENTS IN U.S. DOLLARS
|
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54
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26.
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MISCELLANEOUS
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55
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26.1
|
Successors and Assigns
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55
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26.2
|
Payments Due on Non-Business Days
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55
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26.3
|
Severability
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55
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26.4
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Construction
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55
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26.5
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Ratification
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55
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26.6
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Counterparts
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56
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26.7
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Governing Law
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56
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26.8
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Accounting Matters
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56
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iii
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SCHEDULE A
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—
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INFORMATION RELATING TO PURCHASERS
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SCHEDULE B
|
—
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DEFINED TERMS
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SCHEDULE 5.5(b)
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—
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Obligations
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SCHEDULE 5.6
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—
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Litigation
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SCHEDULE 5.10
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—
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ERISA
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SCHEDULE 5.11(b)
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—
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Capitalization
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SCHEDULE 5.11(c)
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—
|
Capitalization
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SCHEDULE 5.12
|
—
|
Subsidiaries: FinCo Issuer
|
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SCHEDULE 5.19
|
—
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Indebtedness
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SCHEDULE 5.20
|
—
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Insurance
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SCHEDULE 10.1(c)
|
—
|
Existing Liens
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SCHEDULE 10.5
|
—
|
Transactions with Affiliates
|
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EXHIBIT 1
|
—
|
Form of Senior Note due 2020
|
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EXHIBIT 2
|
—
|
Form of Guarantee
|
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EXHIBIT 3
|
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Form of Subsidiary Guarantee
|
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GENERAL MARITIME CORPORATION
VLCC ACQUISITION I CORPORATION
299 Park Avenue
New York, NY 10171
Senior Unsecured Notes due 2020
As of March 28, 2014
TO THE PURCHASERS WHOSE NAMES
APPEAR IN THE ACCEPTANCE
FORM AT THE END HEREOF:
Ladies and Gentlemen:
GENERAL MARITIME CORPORATION, a company incorporated under the laws of the Marshall Islands (the “
GMC
”), is a party to that certain Binding Purchase Commitment for US$131,600,000 Million Senior Unsecured Notes due 2020 dated as of March 14, 2014 (the “
Commitment Letter
”), pursuant to which GMC shall exercise reasonable efforts to obtain and enter into amendments (the “
Existing Credit Amendments
”) to (i) that certain Third Amended and Restated Credit Agreement, dated as of May 17, 2012, as amended by that certain Omnibus First Amendment, dated as of December 21, 2012, that certain Second Amendment dated as of October 1, 2013 and that certain Third Amendment dated as of November 29, 2013, among GMC, General Maritime Subsidiary Corporation as borrower, Arlington Tankers Ltd. and General Maritime Subsidiary II Corporation, each subsidiary guarantor, each lender party thereto and Nordea Bank Finland PLC, New York Branch, as administrative agent and (ii) that certain Second Amended and Restated Credit Agreement, dated as of May 17, 2012, as amended by that certain Omnibus First Amendment, dated as of December 21, 2012, that certain Second Amendment dated as of October 1, 2013 and that certain Third Amendment dated as of November 29, 2013, among GMC, General Maritime Subsidiary Corporation, as borrower, General Maritime Subsidiary II Corporation and Arlington Tankers Ltd., each as a guarantor, each lender party thereto and Nordea as administrative agent (clauses (i) and (ii) together, the “
Existing Credit Agreements
”), which will approve and permit GMC to issue the Notes (the “
GMC Issuer
”) and to establish a subsidiary, VLCC Acquisition I Corporation, a company incorporated under the laws of the Marshall Islands (“
FinCo
”) to guarantee the Notes (the “
Guarantor/FinCo
”) pursuant to the terms and conditions of this Agreement;
provided
, that if the Existing Credit Amendments do not approve or permit GMC Issuer to issue the Notes hereunder, then GMC shall designate FinCo as the issuer of the Notes defined below (the “
FinCo Issuer
”, and either of FinCo
Issuer or GMC Issuer as specified as the “Issuer” in the Notice of Designation shall be the “
Issuer
”) and GMC shall guarantee the Notes (the “
Guarantor/GMC
”) pursuant to the terms and conditions of this Agreement;
provided
,
further
, that if FinCo Issuer shall issue the Notes hereunder and the Existing Credit Amendments do not approve or permit the Guarantor/GMC to guarantee the Notes hereunder, then the interest rate applicable to the Notes shall increase by 2.0% as set forth herein and (x) Guarantor/GMC shall not be required to guarantee the Notes and (y) all obligations of the Guarantor/GMC under the Agreement including under Sections 9, 10 and 17 shall be automatically released immediately prior to the Closing.
GMC and FinCo agree with each of the purchasers whose names appear in the acceptance form at the end hereof (each, a “
Purchaser
” and, collectively, the “
Purchasers
”) as follows:
1.
AUTHORIZATION OF NOTES.
The Issuer will authorize the issue and sale of $131,600,000 aggregate principal amount, as such principal amount may be increased as a result of the payment of any PIK Interest, of its Senior Unsecured Notes due 2020 (the “
Notes
”, such term to include any such notes issued in substitution therefor pursuant to Section 15). The Notes shall be substantially in the form set out in
Exhibits 1
with such changes therefrom, if any, as may be approved by each Purchaser and Issuer. Certain capitalized terms used in this Agreement are defined in
Schedule B
; references to a “Schedule” or an “Exhibit” are, unless otherwise specified, to a Schedule or an Exhibit attached to this Agreement.
Payment of the principal of, Make-Whole Amount (if any) and interest on the Notes and all other amounts owing (a)(i) by GMC Issuer hereunder shall be unconditionally and irrevocably guaranteed by the Guarantor/FinCo as provided in Section 14 and in the Subsidiary Guarantee or (ii) by the FinCo Issuer hereunder shall be unconditionally and irrevocably guaranteed by the Guarantor/GMC as provided in Section 14 (and each Note will have the Guarantee (each a “
Guarantee
”, and together, the “
Guarantees
”) of the applicable Guarantor endorsed thereon in the form set out in
Exhibit 2
) and (b) by the Subsidiary Guarantors as provided for in the Subsidiary Guarantees;
provided
that in the case of clause (a)(ii), consent and approval from the lenders under the Existing Credit Agreements is obtained by GMC, the Existing Credit Amendments are consummated by GMC and satisfactory evidence of such consummation is delivered to the Purchasers;
provided
,
further
, that in the case of clause (a)(ii), if the Existing Credit Amendments do not approve or permit the Guarantor/GMC to guarantee the Notes hereunder, then the interest rate applicable to the Notes shall increase by 2.0% as set forth in Section 8.1(f).
2.
SALE AND PURCHASE OF NOTES
.
Subject to the terms and conditions of this Agreement, the Issuer will issue and sell to each Purchaser and each Purchaser will purchase from the Issuer, at the Closing provided for in Section 3, Notes in the principal amount specified opposite such Purchaser’s name in
Schedule A
at the purchase price of 95.0% of the principal amount thereof. The Purchasers’ obligations hereunder are several and not joint obligations and no Purchaser shall
2
have any liability to any Person for the performance or non-performance of any obligation by any other Purchaser hereunder.
3.
CLOSING
.
The sale and purchase of the Notes to be purchased by each Purchaser shall occur at the offices of Milbank, Tweed, Hadley & McCloy LLP, One Chase Manhattan Plaza, New York, New York 10005, at 10:00 a.m., New York City time, at a closing (the “
Closing
”) on May 13, 2014 or on such other Business Day on or prior to May 13, 2014 as specified in written notice to the Purchasers no later than 10 Business Days prior to such date. At the Closing the Issuer will deliver to each Purchaser the Notes to be purchased by such Purchaser in the form of a single Note for each series to be so purchased (or such greater number of Notes (other than PIK Notes, which may be issued in minimum denominations of $1.00 and integral multiples thereof and any increase in the principal amount of the PIK Notes as a result of any PIK Interest may be made in multiples of $1.00) in denominations of at least $400,000 as such Purchaser may request) dated the date of the Closing and registered in such Purchaser’s name (or in the name of such Purchaser’s nominee), against delivery by such Purchaser to the Issuer or its order of immediately available funds in the amount of the purchase price therefor by wire transfer of immediately available funds for the account of the Issuer, as specified in the funding instruction letter provided by the Issuer pursuant to Section 4.10. If at the Closing the Issuer shall fail to tender such Notes to any Purchaser as provided above in this Section 3, or any of the conditions specified in Section 4 shall not have been fulfilled to such Purchaser’s satisfaction, such Purchaser shall, at such Purchaser’s election, be relieved of all further obligations under this Agreement, without thereby waiving any rights such Purchaser may have by reason of such failure or such nonfulfillment.
4.
CONDITIONS TO CLOSING
.
Each Purchaser’s obligation to purchase and pay for the Notes to be sold to such Purchaser at the Closing is subject to the fulfillment to such Purchaser’s satisfaction or waiver, prior to or at the Closing, of the following conditions:
4.1.
Representations and Warranties
.
(a)
Subject to Section 4.1(b), the representations and warranties of the Issuer and the Guarantor (together, the “
Obligors
”) in this Agreement shall be correct in all material respects as at the date of this agreement and at the time of the Closing, except for (i) the number of issued shares described in Section 5.11(a)(1), which shall be notified to the Purchasers no later than two Business Days prior to the Closing and (ii) any representation or warranty made as of a specific date, which representation and warranty shall remain correct as of such earlier date.
(b)
The Obligors shall:
(i)
promptly upon the availability thereof, deliver to the Purchasers the final audited consolidated balance sheets of GMC as at December 31, 2013 and the
3
related consolidated statements of operations and of cash flows for the fiscal year ended on such date and to the extent available, the consolidated balance sheets of GMC as at the end of each quarterly accounting period in the 2013 fiscal year and the related consolidated statements of operations and cash flows, in each case for such quarterly accounting period;
(ii)
confirm that the representations and warranties made in Section 5.5 remain correct at the time of Closing with respect to the final audited consolidated balance sheets described in clause (b)(i) above; and
(iii)
confirm that the representations and warranties made in Section 5.9 remain correct at the time of Closing.
4.2.
Performance; No Default
.
Each Obligor shall have performed and complied with all agreements and conditions contained in this Agreement required to be performed or complied with by it prior to or at the Closing and after giving effect to the issue and sale of the Notes (and the application of the proceeds thereof as contemplated by Section 5.8) no Default or Event of Default shall have occurred and be continuing. No Obligor nor any Subsidiary shall have entered into any transaction since the date of the Commitment Letter that would have been prohibited by Section 10.1, 10.3 or 10.5 hereof had such Sections applied since such date.
4.3.
Compliance Certificates
.
(a)
Officer’s Certificate
. Each Obligor shall have delivered to such Purchaser an Officer’s Certificate, dated the date of the Closing, certifying that the conditions specified in Sections 4.1, 4.2 and 4.13 have been fulfilled.
(b)
Secretary’s Certificate
. Each Obligor and each Subsidiary Guarantor shall have delivered to such Purchaser a certificate, dated the date of the Closing, certifying as to the resolutions attached thereto and other corporate proceedings relating to the authorization, execution and delivery of this Agreement and the Notes (in the case of the Issuer), of this Agreement and the Guarantees (in the case of the Guarantor) and of its Subsidiary Guarantee (in the case of each Subsidiary Guarantor).
4.4.
Opinions of Counsel
.
Such Purchaser shall have received opinions in form and substance satisfactory to such Purchaser, dated the date of the Closing (a) from (i) Kramer Levin Naftalis & Frankel LLP, New York counsel for the Obligors and the Subsidiary Guarantors, and (ii) Reeder & Simpson P.C., Marshall Islands counsel for GMC, the Issuer and the Subsidiary Guarantors covering such matters incident to the transactions contemplated hereby as such Purchaser or the Purchasers’ counsel may reasonably request (and the Issuer hereby instructs its counsel to deliver such opinions to the Purchasers) and (b) from Milbank, Tweed, Hadley & McCloy
4
LLP, the Purchasers’ special New York counsel in connection with such transactions covering such matters incident to such transactions as such Purchaser may reasonably request.
4.5.
Purchase Permitted By Applicable Law, etc
.
On the date of the Closing, such Purchaser’s purchase of Notes shall (i) be permitted by the laws and regulations of each jurisdiction to which such Purchaser is subject, without recourse to provisions (such as Section 1405(a)(8) of the New York Insurance Law) permitting limited investments by insurance companies without restriction as to the character of the particular investment, (ii) not violate any applicable law or regulation (including, without limitation, Regulation U, T or X of the Board of Governors of the Federal Reserve System) and (iii) not subject such Purchaser to any tax, penalty or liability under or pursuant to any applicable law or regulation, which law or regulation was not in effect on the date hereof.
4.6.
Sale of Other Notes
.
Contemporaneously with the Closing the Issuer shall sell to each Purchaser and each Purchaser shall purchase the Notes to be purchased by it at the Closing as specified in
Schedule A
.
4.7.
Payment of Special Counsel Fees
.
Without limiting the provisions of Section 17.1, the Obligors shall have paid on or before the Closing the reasonable fees, charges and disbursements of the Purchasers’ special counsel referred to in Section 4.4(b) to the extent reflected in a statement of such counsel rendered to the Obligors at least one Business Day prior to the Closing.
4.8.
Changes in Corporate Structure
.
No Obligor shall have changed its jurisdiction of incorporation or been a party to any merger or consolidation and shall not have succeeded to all or any substantial part of the liabilities of any other entity, at any time following the date of the most recent financial statements referred to in
Schedule 5.5
, except in connection with the Acquisition.
4.9.
[Reserved.]
4.10.
Funding Instructions; Notice of Designation
.
(a)
At least (i) three Business Days prior to the date of the Closing if such Closing occurs on May 13, 2014 or (ii) 10 Business Days prior to the date of the Closing if such Closing occurs on a Business Day prior to May 13, 2014, each Purchaser shall have received written instructions signed by a Responsible Officer on letterhead of the Guarantor confirming the information specified in Section 3 including (A) the name and address of the transferee bank, (B) such transferee bank’s ABA number and (C) the account name and number into which the purchase price for the Notes is to be deposited.
5
(b)
The earlier of (i) five Business Days after obtaining from the Existing Credit Agreement Lenders consent and approval and/or approval of the transactions contemplated under this Agreement, if obtained, and (ii) either (A) at least three Business Days prior to the date of the Closing if such Closing occurs on May 13, 2014 or (B) at least 10 Business Days prior to the date of the Closing if such Closing occurs on a Business Day prior to May 13, 2014, each Purchaser shall have received written notice signed by a Responsible Officer on letterhead of GMC confirming the names of the Issuer and the Guarantor (the “
Notice of Designation
”).
4.11.
Subsidiary Guarantee
.
Such Purchaser shall have received a true and complete copy of the Subsidiary Guarantee duly executed and delivered by each Subsidiary Guarantor and, in either case, the Subsidiary Guarantee shall be in full force and effect.
4.12.
Equity Issuance.
Each Purchaser shall have received, in form and substance reasonably satisfactory to such Purchaser, evidence of the consummation of the Equity Issuance and receipt by GMC of the proceeds of such Equity Issuance.
4.13.
Acquisition.
Each Purchaser shall have received, in form and substance reasonably satisfactory to such Purchaser, evidence of the consummation of the Acquisition.
4.14.
Proceedings and Documents
.
All corporate and other proceedings in connection with the transactions contemplated by this Agreement, the Subsidiary Guarantee and all documents and instruments incident to such transactions shall be reasonably satisfactory to such Purchaser and the Purchasers’ special counsel, and such Purchaser and such special counsel shall have received all such counterpart originals or certified or other copies of such documents as such Purchaser or such special counsel may reasonably request.
5.
Representations, Warranties and Agreements
.
The Issuer and the Guarantor jointly and severally represent and warrant to each Purchaser that:
5.1.
Corporate/Limited Liability Company/Limited Partnership Status.
Each Obligor (i) is a duly organized and validly existing corporation, limited liability company or limited partnership, as the case may be, in good standing under the laws of the jurisdiction of its incorporation or formation, (ii) has the corporate or other applicable power and authority to own its property and assets and to transact the business in which it is
6
currently engaged and presently proposes to engage and (iii) is duly qualified and is authorized to do business and is in good standing in each jurisdiction where the conduct of its business as currently conducted requires such qualifications, except for failures to be so qualified which, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.
5.2.
Corporate Power and Authority
.
Each Obligor has the corporate or other applicable power and authority to execute, deliver and perform the terms and provisions of this Agreement and the Notes (in the case of the Issuer) and this Agreement and the Guarantee (in the case of the Guarantor) and has taken all necessary corporate or other applicable action to authorize the execution, delivery and performance by it of this Agreement, the Notes and the Guarantee (as applicable). Each Obligor has duly executed and delivered this Agreement and the Notes (in the case of the Issuer) and this Agreement and the Guarantee (in the case of the Guarantor), and this Agreement and the Guarantee constitutes, and upon execution and delivery of the Note by the Issuer, the Note will constitute, the legal, valid and binding obligation of such Obligor enforceable against such Obligor in accordance with its terms, except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws generally affecting creditors’ rights and by equitable principles (regardless of whether enforcement is sought in equity or at law).
5.3.
No Violation
.
Neither the execution, delivery or performance by any Obligor of this Agreement, the Notes and the Guarantee, nor compliance by it with the terms and provisions thereof, will (i) contravene any material provision of any applicable law, statute, rule or regulation or any applicable order, judgment, writ, injunction or decree of any court or governmental instrumentality, (ii) conflict with or result in any breach of any of the terms, covenants, conditions or provisions of, or constitute a default under, or result in the creation or imposition of (or the obligation to create or impose) any Lien upon any of the material properties or assets of GMC, FinCo or any of their respective Restricted Subsidiaries pursuant to the terms of any indenture, mortgage, deed of trust, credit agreement or loan agreement, or any other material agreement, contract or instrument, to which GMC, FinCo or any of their respective Restricted Subsidiaries is a party or by which it or any of its material property or assets is bound or to which it may be subject, in each case, assuming the Existing Credit Amendments are effective, or (iii) violate any provision of the certificate of incorporation or by-laws (or equivalent organizational documents) of GMC, FinCo or any of their Restricted Subsidiaries.
5.4.
Governmental Approvals
.
No order, consent, approval, license, authorization or validation of, or filing, recording or registration with, or exemption by, any governmental or public body or authority, or any subdivision thereof, is required to authorize, or is required in connection with, (i) the execution, delivery and performance by any Obligor of this Agreement, the Notes or the
7
Guarantee or (ii) the legality, validity, binding effect or enforceability of this Agreement, the Notes or the Guarantee.
5.5.
Financial Statements; Financial Condition; Undisclosed Liabilities.
(a)
(i) The draft audited consolidated balance sheets of GMC as at December 31, 2013 and the related consolidated statements of operations and of cash flows for the fiscal year ended on such date and (ii) to the extent available, the consolidated balance sheets of GMC as at the end of each quarterly accounting period in the 2013 fiscal year and the related consolidated statements of operations and cash flows, in each case for such quarterly accounting period, present fairly the consolidated financial condition of GMC as at such date, and the consolidated results of its operations and its consolidated cash flows for the respective fiscal years then ended. All such financial statements, including the related schedules and notes thereto, have been prepared in accordance with GAAP applied consistently throughout the periods involved (except as approved by the aforementioned firm of accountants and disclosed therein). Neither GMC nor any of its Restricted Subsidiaries has any material guarantee obligations, contingent liabilities and liabilities for taxes, or any long-term leases or unusual forward or long-term commitments, including any interest rate or foreign currency swap or exchange transaction or other obligation in respect of derivatives, that are not reflected in the financial statements referred to in the preceding sentence (it being understood that with respect to guarantee obligations, the underlying debt is so reflected).
(b)
Except as fully disclosed in the financial statements and the notes related thereto delivered pursuant to Section 5.5(a) or as set forth on
Schedule 5.5(b)
, there are as of the date hereof no liabilities or obligations with respect to GMC or any of its Restricted Subsidiaries of any nature whatsoever (whether absolute, accrued, contingent or otherwise and whether or not due) which, either individually or in the aggregate, would be materially adverse to GMC and its Restricted Subsidiaries taken as a whole. As of the date hereof, none of the Obligors knows of any basis for the assertion against it of any liability or obligation of any nature that is not fairly disclosed (including, without limitation, as to the amount thereof) in the financial statements and the notes related thereto delivered pursuant to Section 5.5(a) which, either individually or in the aggregate, could reasonably be expected to be materially adverse to GMC and its Restricted Subsidiaries taken as a whole.
5.6.
Litigation
.
Except as set forth on
Schedule 5.6
, there are no actions, suits, investigations (conducted by any governmental or other regulatory body of competent jurisdiction) or proceedings pending or, to the knowledge of GMC or FinCo, threatened against GMC, FinCo or any of their respective Restricted Subsidiaries that could reasonably be expected to have a Material Adverse Effect.
5.7.
True and Complete Disclosure
.
All factual information (taken individually or as a whole) furnished by or on behalf of GMC or FinCo in any schedule or certificate delivered to any Purchaser (including, without limitation, all information contained in this Agreement, the Notes, the Guarantee and
8
any financial statement referred to in Section 5.5(a)) for purposes of or in connection with this Agreement, the Notes, the Guarantee or any transaction contemplated herein or therein is, and all other such factual information (taken individually or as a whole) hereafter furnished by or on behalf of GMC or FinCo in any schedule or certificate delivered to any Purchaser will be, true and accurate in all material respects and not incomplete by omitting to state any fact necessary to make such information (taken as a whole) not misleading in any material respect at such time as such information was provided in light of the circumstances under which such information was provided.
5.8.
Use of Proceeds; Margin Regulations
.
(a)
All proceeds of the Notes shall be used to pay transaction costs and expenses and the remaining consideration payable in connection with the Scorpio Newbuilds.
(b)
No part of the proceeds of any Note was used to purchase or carry any Margin Stock or to extend credit for the purpose of purchasing or carrying any Margin Stock.
5.9.
Tax Returns and Payments
.
Each Obligor and its respective Restricted Subsidiaries has timely filed all U.S. federal income tax returns, statements, forms and reports for taxes and all other material U.S. and non-U.S. tax returns, statements, forms and reports for taxes required to be filed by or with respect to the income, properties or operations of the Obligor and/or any of its Restricted Subsidiaries (the “
Returns
”). The Returns accurately reflect in all material respects all liability for taxes of each Obligor and its Restricted Subsidiaries as a whole for the periods covered thereby. Each Obligor and each of its Restricted Subsidiaries have at all times paid, or have provided adequate reserves (in accordance with GAAP) for the payment of, all taxes shown as due on the Returns and all other material U.S. federal, state and non-U.S. taxes that have become due and payable. There is no material action, suit, proceeding, investigation, audit, or claim now pending or, to the knowledge of each Obligor or any of its Restricted Subsidiaries, threatened by any authority regarding any taxes relating to each Obligor or any of its Restricted Subsidiaries. As of the date of this Agreement, neither the Obligors nor any of their respective Restricted Subsidiaries has entered into an agreement or waiver or been requested to enter into an agreement or waiver extending any statute of limitations relating to the payment or collection of taxes of such Obligor or any of its Restricted Subsidiaries, or is aware of any circumstances that would cause the taxable years or other taxable periods of such Obligor or any of its Restricted Subsidiaries not to be subject to the normally applicable statute of limitations. Neither the Obligors nor any of their respective Restricted Subsidiaries (i) has engaged in any “listed transaction” within the meaning of Section 6011 of the Code or (ii) has any actual or potential liability for the taxes of any Person (other than such Obligor or any of its present or former Restricted Subsidiaries) under the United States Treasury regulation Section 1.1502-6 (or any similar provision of state, local, foreign or provincial law) or a contractual liability for such taxes under any tax sharing agreement.
9
5.10.
Compliance with ERISA.
(a)
Schedule 5.10
sets forth, as of the date hereof, each Plan; with respect to each Plan, other than any Multiemployer Plan (and each related trust, insurance contract or fund), there has been no failure to be in substantial compliance with its terms and with all applicable laws, including without limitation ERISA and the Code, that could reasonably be expected to give rise to a Material Adverse Effect; each Plan, other than any Multiemployer Plan (and each related trust, if any), which is intended to be qualified under Section 401(a) of the Code has received a determination letter (or an opinion letter) from the United States Internal Revenue Service to the effect that it meets the requirements of Sections 401(a) and 501(a) of the Code; no Reportable Event has occurred; to the best knowledge of the Obligors or any of their respective Restricted Subsidiaries or ERISA Affiliates no Plan which is a Multiemployer Plan is insolvent or in reorganization; no Plan has an Unfunded Current Liability in an amount material to the Issuer’s operation; no Plan (other than a Multiemployer Plan) which is subject to Section 412 of the Code or Section 302 of ERISA has failed to satisfy minimum funding standards, or has applied for or received a waiver of the minimum funding standards or an extension of any amortization period, within the meaning of Section 412 or 430 of the Code or Section 302 or 303 of ERISA; with respect to each Plan (other than a Multiemployer Plan) its actuary has certified that such Plan is not an at-risk plan within the meaning of Section 430 of the Code or Section 303 of ERISA; all contributions required to be made with respect to a Plan have been or will be timely made (except as disclosed on
Schedule 5.10
); neither the Obligors nor any of their respective Restricted Subsidiaries nor any ERISA Affiliate has incurred any material liability (including any indirect, contingent or secondary liability) to or on account of a Plan pursuant to Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section 436(f), 4971 or 4975 of the Code; no proceedings have been instituted by the PBGC to terminate or appoint a trustee to administer any Plan (in the case of a Multiemployer Plan, to the best knowledge of the Obligors or any of their respective Restricted Subsidiaries or ERISA Affiliates) which is subject to Title IV of ERISA; no action, suit, proceeding, hearing, audit or investigation with respect to the administration, operation or the investment of assets of any Plan (other than routine claims for benefits) is pending, or, to the best knowledge of the Obligors or any of their respective Restricted Subsidiaries, expected or threatened which could reasonably be expected to have a Material Adverse Effect; using actuarial assumptions and computation methods consistent with Part 1 of subtitle E of Title IV of ERISA, the Obligors and their respective Restricted Subsidiaries and ERISA Affiliates would have no liabilities to any Plans which are Multiemployer Plans in the event of a complete withdrawal therefrom in an amount which could reasonably be expected to have a Material Adverse Effect; neither the Issuer nor any of its Restricted Subsidiaries nor any ERISA Affiliate has received any notice that a Plan which is a Multiemployer Plan is in endangered or critical status under Section 305 of ERISA; no lien imposed under the Code or ERISA on the assets of the Obligors or any of their respective Restricted Subsidiaries or any ERISA Affiliate exists nor has any event occurred which could reasonably be expected to give rise to any such lien on account of any Plan; and the Obligors and their respective Restricted Subsidiaries do not maintain or contribute to any employee welfare plan (as defined in Section 3(1) of ERISA) which provides benefits to retired employees or other former employees (other than as required by Section 601 of ERISA) or any Plan the obligations with respect to which could reasonably be expected to have a Material Adverse Effect.
10
(b)
Each Foreign Pension Plan has been maintained in substantial compliance with its terms and with the requirements of any and all applicable laws, statutes, rules, regulations and orders and has been maintained, where required, in good standing with applicable regulatory authorities, except for such non-compliance that would not reasonably be expected to result in a Material Adverse Effect. All contributions required to be made with respect to a Foreign Pension Plan have been or will be timely made, except for such non-compliance that would not reasonably be expected to result in a Material Adverse Effect. Neither the Obligors nor any of their respective Restricted Subsidiaries have incurred any obligation in connection with the termination of or withdrawal from any Foreign Pension Plan that could reasonably be expected to have a Material Adverse Effect. Neither the Obligors nor any of their respective Restricted Subsidiaries maintains or contributes to any Foreign Pension Plan the obligations with respect to which could in the aggregate reasonably be expected to have a Material Adverse Effect.
5.11.
Capitalization
.
(a)
As of March 13, 2014: (1) the authorized capital stock of GMC shall consist of 50,000,000 authorized shares of Class A Common Stock, par value $0.01 per share, 30,000,000 authorized shares of Class B Common Stock, and 5,000,000 authorized shares of preferred stock, par value $0.01 per share, of which 11,270,196 shares of Class A Common Stock have been issued and 11,330,420 shares of Class B Common Stock have been issued; (2) all such outstanding shares shall have been duly and validly issued, fully paid and non-assessable and issued free of preemptive rights, other than as provided for in the Shareholders’ Agreement; and (3) except as set forth in
Schedule 5.11(b)
, GMC shall not have outstanding any securities convertible into or exchangeable for its capital stock or outstanding any rights to subscribe for or to purchase, or any options for the purchase of, or any agreement providing for the issuance (contingent or otherwise) of, or any calls, commitments or claims of any character relating to, its capital stock or any stock appreciation or similar rights.
(b)
Except as set forth in
Schedule 5.11(b)
, as of Closing and after giving effect to the conditions precedent related thereto, there are (i) no other shares of capital stock or other Equity Interests or voting securities of GMC, (ii) no securities of GMC convertible into or exchangeable for capital stock or other Equity Interests or voting securities of GMC, (iii) no options, warrants, purchase rights, subscription rights, conversion rights, exchange rights or other similar contracts or commitments that could require GMC to issue, sell or otherwise cause to become outstanding any of its Equity Interests and (iv) no stock appreciation, phantom stock, profit participation or similar rights with respect to GMC or any repurchase, redemption or other obligation to acquire for value any capital stock of GMC.
(c)
As of Closing, all outstanding shares of GMC’s capital stock are duly authorized, validly issued, fully paid and nonassessable and, except as set forth in
Schedule 5.11(c)
, not subject to or issued in violation of any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right under any provision of the Business Corporations Act of the Republic of the Marshall Islands 1990, the articles of incorporation of GMC, the bylaws of GMC or any agreement to which GMC is a party or otherwise bound. None of the shares of the capital stock of GMC have been issued in
11
violation of any securities Laws. There are no accrued and unpaid dividends with respect to any outstanding shares of capital stock of GMC.
5.12.
Subsidiaries
.
As of the date of this Agreement and at Closing, FinCo has no Subsidiaries other than those Subsidiaries listed on
Schedule 5.12
(which Schedule identifies the correct legal name, direct owner, percentage ownership and jurisdiction of organization of each such Subsidiary on the date hereof).
5.13.
Compliance with Statutes, etc
.
The Obligors and each of their respective Restricted Subsidiaries are in compliance in all material respects with all applicable statutes, regulations and orders of, and all applicable restrictions imposed by, all governmental bodies, domestic or foreign, in respect of the conduct of its business and the ownership of its property, except such non-compliances that could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
5.14.
Investment Company Act
.
Neither GMC nor FinCo nor any of their respective Restricted Subsidiaries, is an “investment company” or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940, as amended.
5.15.
Money Laundering
.
(a)
To the extent applicable, each Obligor is in compliance, in all material respects, with the (i) Trading and Enemy Act, as amended, and each of the foreign assets control regulations of the United States Treasury Department (31 C.F.R., Subtitle B, Chapter V, as amended) and any other enabling legislation or executive order relating thereto, and (ii) the Patriot Act. No part of the proceeds of the Notes will be used, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.
(b)
None of the Obligors nor, to the best knowledge of GMC, after due inquiry, any Affiliate of any Obligor, is, or will be after consummation of the Transaction and application of the proceeds of the Loans, by reason of being a “national” of a “designated foreign country” or a “specially designated national” within the meaning of the Regulations of the Office of Foreign Assets Control, United States Treasury Department (31 C.F.R., Subtitle B, Chapter V), or for any other reason, in violation of, any United States Federal Statute or Presidential Executive Order concerning trade or other relations with any foreign country or any citizen or national thereof.
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5.16.
Pollution and Other Regulations
.
(a)
Each of GMC and its Restricted Subsidiaries is in compliance with all applicable Environmental Laws governing its business, except for such failures to comply as are not reasonably likely to have a Material Adverse Effect, and neither GMC nor any of its Restricted Subsidiaries is liable for any penalties, fines or forfeitures for failure to comply with any of the foregoing except for such penalties, fines or forfeitures as are not reasonably likely to have a Material Adverse Effect. All licenses, permits, registrations or approvals required for the business of GMC and each of its Restricted Subsidiaries, as conducted as of the date hereof, under any Environmental Law have been secured and GMC and each of its Restricted Subsidiaries is in substantial compliance therewith, except for such failures to secure or comply as are not reasonably likely to have a Material Adverse Effect. Neither GMC nor any of its Restricted Subsidiaries is in any respect in noncompliance with, breach of or default under any applicable writ, order, judgment, injunction, or decree to which GMC or such Restricted Subsidiary is a party or which would affect the ability of GMC or such Restricted Subsidiary to operate any Vessel, Real Property or other facility and no event has occurred and is continuing which, with the passage of time or the giving of notice or both, would constitute noncompliance, breach of or default thereunder, except in each such case, such noncompliance, breaches or defaults as are not likely to, individually or in the aggregate, have a Material Adverse Effect. There are, as of the date hereof, no Environmental Claims pending or, to the knowledge of GMC or the Issuer, threatened, against GMC or any of its Restricted Subsidiaries in respect of which an unfavorable decision, ruling or finding would be reasonably likely to have a Material Adverse Effect. There are no facts, circumstances, conditions or occurrences on any Vessel, Real Property or other facility owned or operated by GMC or any of its Restricted Subsidiaries that are reasonably likely (i) to form the basis of an Environmental Claim against GMC, any of its Restricted Subsidiaries or any Vessel, Real Property or other facility owned by GMC or any of its Restricted Subsidiaries, or (ii) to cause such Vessel, Real Property or other facility owned or operated by GMC or the Restricted Subsidiaries to be subject to any restrictions on its ownership, occupancy, use or transferability under any Environmental Law, except in each such case for clauses (i) and (ii) above, such Environmental Claims or restrictions that individually or in the aggregate are not reasonably likely to have a Material Adverse Effect.
(b)
Hazardous Materials have not at any time prior to the date of this Agreement, been (i) generated, used, treated or stored on, or transported to or from, any Vessel, Real Property or other facility at any time owned or operated by GMC or any of its Restricted Subsidiaries or (ii) released on or from any such Vessel, Real Property or other facility owned or operated by GMC or any of its Restricted Subsidiaries, except in each case for clauses (i) and (ii) above in compliance with Environmental Laws or where such occurrence or event, either individually or in the aggregate, is not reasonably likely to have a Material Adverse Effect.
This Section 5.16 contains the sole and exclusive representations and warranties of the Obligors with respect to environmental, health and safety matters, including any relating to or arising under Environmental Laws, Environmental Claims or Hazardous Materials.
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5.17.
Labor Relations
.
Neither GMC nor any of its Restricted Subsidiaries is engaged in any unfair labor practice that could reasonably be expected to have a Material Adverse Effect and there is (i) no unfair labor practice complaint pending against GMC or any of its Restricted Subsidiaries or, to GMC’s knowledge, threatened against any of them before the National Labor Relations Board, and no material grievance or arbitration proceeding arising out of or under any collective bargaining agreement is so pending against GMC or any of its Restricted Subsidiaries or, to GMC’s knowledge, threatened against any of them, (ii) no strike, labor dispute, slowdown or stoppage pending against GMC or any of its Restricted Subsidiaries or, to GMC’s knowledge, threatened against GMC or any of its Restricted Subsidiaries and (iii) no union representation proceeding pending with respect to the employees of GMC or any of its Restricted Subsidiaries, except (with respect to the matters specified in clauses (i), (ii) and (iii) above) as could not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
5.18.
Patents, Licenses, Franchises and Formulas.
GMC and each of its Restricted Subsidiaries owns, or has the right to use, and has the right to enforce and prevent any third party from using, all material patents, trademarks, permits, service marks, trade names, copyrights, licenses, franchises and formulas, and has obtained assignments of all leases and other rights of whatever nature, necessary for the present conduct of its business, without any known conflict with the rights of others, except for such failures and conflicts which could not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.
5.19.
Indebtedness
.
Schedule 5.19
sets forth a true and complete list of all Indebtedness of GMC, FinCo and their Restricted Subsidiaries as of the date hereof and which is to remain outstanding after giving effect to Closing (the “
Existing Indebtedness
”), in each case showing the aggregate principal amount thereof and the name of the borrower and any other entity which directly or indirectly guarantees such debt.
5.20.
Insurance
.
The properties of Obligors and each of their Restricted Subsidiaries are adequately insured with financially sound and reputable insurers and in such amounts, with such deductibles and covering such risks and otherwise on terms and conditions as are customarily carried or maintained by Persons of established reputation of similar size and engaged in similar businesses and such insurance complies with the requirements of Section 9.2.
5.21.
No Immunity
.
GMC does not, nor does any other Obligor or any of their respective properties, have any right of immunity on the grounds of sovereignty or otherwise from the jurisdiction of any court or from setoff or any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) under the laws of any jurisdiction. The execution and delivery of this Agreement, the Notes and/or the
14
Guarantee by the Obligors and the performance by them of their respective obligations thereunder constitute commercial transactions.
5.22.
Solvency
.
After issuing the Notes, and giving effect to the transactions contemplated hereunder and the payment and accrual of all transaction costs in connection with the foregoing, the Obligors and their respective Restricted Subsidiaries, taken as a whole, are solvent.
5.23.
Patriot Act
.
No Obligor (and, to the knowledge of each Obligor, no joint venture or Restricted Subsidiary thereof) is in violation of any United States law relating to terrorism, sanctions or money laundering, including the United States Executive Order No. 13224 on Terrorist Financing and the Patriot Act.
5.24.
Certain Business Practices.
To the knowledge of GMC, none of GMC, FinCo or any of their respective Restricted Subsidiaries (nor any of their respective officers, directors or employees) (a) has made or agreed to make any contribution, payment, gift or entertainment to, or accepted or received any contributions, payments, gifts or entertainment from, any government official, employee, political party or agent or any candidate for any federal, state, local or foreign public office, where either the contribution, payment or gift or the purpose thereof was illegal under the laws of any federal, state, local or foreign jurisdiction; or (b) has engaged in or otherwise participated in, assisted or facilitated any transaction that is prohibited by any applicable embargo or related trade restriction imposed by the United States Office of Foreign Assets Control or any other agency of the United States government.
5.25.
Private Offering by the Obligors.
Neither of the Obligors nor anyone acting on their behalf has offered the Notes or any similar securities for sale to, or solicited any offer to buy any of the same from, or otherwise approached or negotiated in respect thereof with, any person other than the Purchasers and no more than five other Institutional Investors, each of which has been offered the Notes at a private sale for investment. Neither of the Obligors nor anyone acting on their behalf has taken, or will take, any action that would subject the issuance or sale of the Notes to the registration requirements of Section 5 of the Securities Act.
5.26.
Subsidiary Guarantees
.
The representations and warranties of each Subsidiary Guarantor contained in the Subsidiary Guarantee are true and correct as of the date they are made.
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6.
REPRESENTATIONS OF THE PURCHASERS.
6.1.
Purchase for Investment
.
(a)
Each Purchaser severally represents as of the date hereof and as of the Closing that it is purchasing the Notes for its own account or for one or more separate accounts maintained by such Purchaser or for the account of one or more pension or trust funds and not with a view to the distribution thereof;
provided
that the disposition of such Purchaser’s or their property shall at all times be within such Purchaser’s or their control.
(b)
Each Purchaser understands that the Notes have not been registered under the Securities Act and may be resold only if registered pursuant to the provisions of the Securities Act or if an exemption from registration is available, except under circumstances where neither such registration nor such an exemption is required by law, and that neither Obligor is required to register the Notes.
(c)
Each Purchaser severally represents as of the date hereof and as of the Closing that it is an Accredited Investor acting for its own account or as a fiduciary or agent for another Accredited Investor.
(d)
Each Purchaser severally represents that such Purchaser has had the opportunity to ask questions of the Obligors concerning the Obligors and their respective Subsidiaries, their respective businesses and the terms and conditions of the Notes.
7.
INFORMATION AS TO THE OBLIGORS.
7.1.
Financial and Business Information.
The Obligors will make available to each holder of the Notes:
(a)
Quarterly Financial Statements
. Within 45 days after the close of the first three quarterly accounting periods in each fiscal year of GMC (
provided
that for the first fiscal quarter following Closing, such delivery shall be within 60 days after the end of such fiscal quarter), (i) the consolidated balance sheets of GMC and its Subsidiaries as at the end of such quarterly accounting period and the related consolidated statements of operations and cash flows, in each case for such quarterly accounting period and for the elapsed portion of the fiscal year ended with the last day of such quarterly accounting period, and in each case, setting forth comparative figures for the related periods in the prior fiscal year, all of which shall be certified by the senior financial officer of GMC, subject to normal year-end audit adjustments and (ii) management’s discussion and analysis of the important operational and financial developments during the fiscal quarter and year-to-date periods.
(b)
Annual Financial Statements
. Within (a) 90 days after the close of each fiscal year of GMC in which any of GMC’s securities are listed on a nationally recognized securities exchange and (b) 120 days after the close of each fiscal year of GMC (
provided
, that for the first fiscal year following Closing, such delivery shall be within 150 days after the end of such fiscal year) in which none of GMC’s securities are listed on a nationally recognized securities exchange, (i) the consolidated balance sheets of GMC and its Subsidiaries as at the end of such fiscal year and the related consolidated statements of
16
operations and retained earnings and of cash flows for such fiscal year setting forth comparative figures for the preceding fiscal year and certified by Deloitte & Touche LLP or such other independent certified public accountants of recognized national standing reasonably acceptable to the Purchasers and (ii) management’s discussion and analysis of the important operational and financial developments during such fiscal year.
(c)
Notice of Default or Litigation
. Promptly, and in any event within three Business Days after an Obligor obtains knowledge thereof, notice of (i) the occurrence of any event which constitutes a Default or Event of Default which notice shall specify the nature thereof, the period of existence thereof and what action such Obligor proposes to take with respect thereto and (ii) any litigation or governmental investigation or proceeding pending or threatened in writing against any Obligor or any Restricted Subsidiaries which, if adversely determined, could reasonably be expected to have a Material Adverse Effect or any Document.
(d)
Other Reports and Filings
. Promptly, copies of all financial information, proxy materials and other information and reports, if any, which an Obligor or any Restricted Subsidiaries shall file with the Securities and Exchange Commission (or any successor thereto) or deliver to holders of its Indebtedness pursuant to the terms of the documentation governing such Indebtedness (or any trustee, agent or other representative therefor).
(e)
Material Breach; Other Debt Documents
. Promptly upon, and in any event within five Business Days after, without duplication of any other reporting requirements herein, receipt of any notices of default, financial reporting and collateral reporting in connection with the Existing Credit Agreements, and copies of all effectuated additions, amendments, restatements, supplements or other modifications in respect of the Existing Credit Agreements.
(f)
Environmental Matters
. Promptly upon, and in any event within 15 Business Days after, an Obligor obtains knowledge thereof, written notice of any of the following environmental matters occurring after Closing, except to the extent that such environmental matters could not, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect:
(i)
any Environmental Claim pending or threatened in writing against an Obligor or any Restricted Subsidiaries or property owned or operated or occupied by an Obligor or any Restricted Subsidiaries;
(ii)
any condition or occurrence on or arising from any property owned or operated or occupied by an Obligor or any Restricted Subsidiaries that (a) results in noncompliance by such Obligor or such Restricted Subsidiary with any applicable Environmental Law or (b) could reasonably be expected to form the basis of an Environmental Claim against an Obligor or any Restricted Subsidiaries or any such property;
(iii)
any condition or occurrence on any property owned or operated or occupied by an Obligor or any Restricted Subsidiaries that could reasonably be expected to cause such property to be subject to any restrictions on the ownership,
17
occupancy, use or transferability by such Obligor or such Restricted Subsidiary of such property under any Environmental Law; and
(iv)
the taking of any removal or remedial action in response to the actual or alleged presence of any Hazardous Material on any property owned or operated or occupied by an Obligor or any Restricted Subsidiaries as required by any Environmental Law or any governmental or other administrative agency;
provided
that in any event the Obligors shall deliver to the holders of the Notes all material notices received by such Obligor or any Restricted Subsidiaries from any government or governmental agency under, or pursuant to, CERCLA or OPA.
All such notices shall describe in reasonable detail the nature of the claim, investigation, condition, occurrence or removal or remedial action and an Obligor’s or such Restricted Subsidiary’s response thereto. In addition, the Obligors will provide the holders of the Notes with copies of all material communications with any government or governmental agency and all material communications with any Person relating to any Environmental Claim of which notice is required to be given pursuant to this Section 7.1(i), and such detailed reports of any such Environmental Claim as may reasonably be requested by the Required Holders.
(g)
Management Letters
. Promptly after an Obligor’s or any of its Restricted Subsidiaries’ receipt thereof, a copy of any “management letter” received from its certified public accountants and management’s response thereto.
(h)
Unrestricted Subsidiaries
. Promptly upon, and in any event within five Business Days after delivery thereof, without duplication of any other reporting requirements herein, any periodic financial reports provided to the lenders under any documents evidencing Nonrecourse Indebtedness or any notices of default provided thereunder.
(i)
Other Information
. From time to time, such other information or documents (financial or otherwise) with respect to the Obligors, the Restricted Subsidiaries or the Unrestricted Subsidiaries as the Required Holders may reasonably request in writing.
7.2.
Officer’s Certificates.
At the time of the delivery of the financial statements provided for in Sections 7.1(a) and (b), a certificate of the senior financial officer of GMC in form and substance reasonably satisfactory to the Purchasers to the effect that, to the best of such officer’s knowledge, no Default or Event of Default has occurred and is continuing or, if any Default or Event of Default has occurred and is continuing, specifying the nature and extent thereof (in reasonable detail), which certificate shall certify that there have been no changes to
Schedule 5.12
, or, if there have been any such changes, a list in reasonable detail of such changes.
7.3.
Inspections
.
The Obligors will, and will cause each of its Restricted Subsidiaries to, permit officers and designated representatives of the holders of the Notes as a group to visit and inspect, during regular business hours and under guidance of officers of the Obligors or any of the Restricted Subsidiaries, any of the properties of the Obligors or the Restricted Subsidiaries,
18
and to examine the books of account of the Obligors or such Restricted Subsidiaries and discuss the affairs, finances and accounts of the Obligors or such Restricted Subsidiaries with, and be advised as to the same by, its and their officers and, in the presence of an Obligor, independent accountants, all upon reasonable advance notice and at such reasonable times and intervals and to such reasonable extent as the Purchasers or the Required Holders may request;
provided
that, unless an Event of Default exists and is continuing at such time, the holders of the Notes shall not be entitled to request more than two such visitations and/or examinations in any fiscal year of the Issuer.
8.
PREPAYMENT OF THE NOTES.
8.1.
Maturity; Accrual of Interest
.
(a)
As provided therein, the entire unpaid principal amount of the Notes shall be due and payable on the date that is the sixth anniversary of the date of the Closing.
(b)
Subject to Section 8.1(f), the Notes shall bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum equal to 11.0%;
provided
that if the Issuer irrevocably elects to pay interest in cash (as opposed to electing to retain the right to issue PIK Notes) until such time that all amounts due and payable under the Notes are paid in full, the Notes shall thereafter bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum equal to the rate of 10.0%.
(c)
Interest on each Note shall be due and payable in arrears on each Interest Payment Date and at such other times as may be specified herein.
(d)
For any Interest Period, the Issuer may, at its option, elect to pay interest on the Notes (i) in cash or (ii) by PIK Interest. The Issuer shall, for each Interest Period, notify holders of the Notes whether the following interest payment due on the next Interest Payment Date (and if the Issuer, so elects, on all remaining subsequent Interest Payment Dates until such time that all amounts due and payable under the Notes are paid in full) will be made in the form of cash interest or by PIK Interest by delivering a notice to the holders of the Notes not later than one Business Day prior to the relevant Interest Payment Date. As of the Closing, the Issuer hereby elects to pay by PIK Interest. If no election is made and no written notice is delivered, such interest payment shall be payable according to the method of payment elected with respect to the previous Interest Period. With respect to any PIK Interest, the Issuer shall authorize the issuance of and deliver to the holders of the Notes, new Notes in the amount of the PIK Interest (rounded up to the nearest whole dollar) (the “
PIK Notes
”).
(e)
Any payment of PIK Interest shall be deemed to be payment in full of any such interest due and payable with respect to the Notes to the same extent as if such interest were paid in cash. Each PIK Note so issued will be dated as of the applicable Interest Payment Date and will bear interest from and after such date. In accordance with Section 15.2, a holder of a Note may at any time or from time to time exchange any Note and/or PIK Note for a new Note reflecting the entire outstanding principal amount of the Notes so exchanged.
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(f)
If (i) the Existing Credit Amendments are not consummated and/or such other consent or approval from the lenders under the Existing Credit Agreements is not obtained by GMC that would be necessary for Guarantor/GMC to be a Guarantor and (ii) the Guarantor/GMC is not permitted to be Guarantor, the rate of interest specified under Section 8.1(b) shall increase by 2.0%.
8.2.
Optional Prepayments with Make-Whole Amount
.
(a)
(i) At any time prior to the date that is two years after Closing, the Issuer may, at its option, prepay at any time all, or from time to time any part of, the Notes, in minimum increments of $1,000,000.00 (and $1.00 increments in excess thereof with respect to the PIK Notes) at 100% of the principal amount so prepaid, plus the applicable Make-Whole Amounts determined for the prepayment date with respect to such principal amount.
(ii)
On and after the second anniversary of the Closing, the Issuer may, at its option, prepay at any time, all, or from time to time any part of the Notes, in minimum increments of $1,000,000.00 (and $1.00 increments in excess thereof with respect to the PIK Notes) at 100% of the principal amount so prepaid plus the applicable premium set forth below:
(A)
At any time prior to the date that is three years after the Closing: 9.0%
(B)
At any time prior to the date that is four years after the Closing: 6.0%
(C)
At any time prior to the date that is five years after the Closing: 3.0%
Thereafter, the Issuer may, at its option, prepay the Notes at 100% of the principal amount so prepaid, with no premium.
(iii)
The Issuer may, at its option, prepay in a one-time optional redemption of Notes, in minimum increments of $1,000,000.00 (and $1.00 increments in excess thereof with respect to the PIK Notes), at a price equal to 110.5% of the aggregate principal amount of the Notes to be so redeemed, with proceeds of equity offerings by GMC and/or any of its Subsidiaries;
provided
that following such redemption, at least 65.0% of the initial principal amount of the Notes that are issued at Closing remain outstanding after giving effect to such a redemption.
(b)
The Issuer will give each holder of Notes written notice of each optional prepayment under this Section 8.2 not less than 10 days and not more than 30 days prior to the date fixed for such prepayment. Each such notice shall specify such date (which shall be a Business Day), the aggregate principal amount of the Notes to be prepaid on such date, the principal amount of each Note held by such holder to be prepaid, and the accrued and unpaid interest to be paid on the prepayment date (but not including such prepayment date) with respect to such principal amount being prepaid, and shall be accompanied by a certificate of a Senior Financial Officer as to the estimated Make-Whole Amount, if applicable, due in connection with such prepayment (calculated as if the date of such notice were the date of the prepayment), setting forth the details of such computation. Two Business Days prior to such
20
prepayment, the Issuer shall deliver to each holder of Notes a certificate of a Senior Financial Officer specifying the calculation of such Make-Whole Amount as of the specified prepayment date.
8.3.
Prepayment in Connection with a Change of Control
.
If a Change of Control shall occur, the Issuer shall within 10 Business Days thereafter give written notice thereof (a “
Change of Control Prepayment Notice
”) to each holder of Notes, which notice shall (
i
) refer specifically to this Section 8.3 and describe in reasonable detail such Change of Control and (
ii
) offer to prepay on a Business Day not less than 30 days and not more than 120 days after the date of such Change of Control Prepayment Notice (the “
Change of Control Prepayment Date
”) the Notes of such holder, at 101.0% of the principal amount thereof, together with interest accrued thereon to the Change of Control Prepayment Date, and specify the Change of Control Response Date (as defined below). Each holder of a Note shall notify the Issuer of such holder’s acceptance or rejection of such offer by giving written notice of such acceptance or rejection to the Issuer on a date at least 10 Business Days prior to the Change of Control Prepayment Date (such date ten Business Days prior to the Change of Control Prepayment Date being the “
Change of Control Response Date
”). The Issuer shall prepay on the Change of Control Prepayment Date all of the Notes held by each holder that has accepted such offer in accordance with this Section 8.3 at a price in respect of each such Note held by such holder equal to 101.0% of the principal amount thereof, together with interest accrued thereon to the Change of Control Prepayment Date. The failure by a holder of any Note to respond to such offer in writing on or before the Change of Control Response Date shall be deemed to be a rejection of such offer.
8.4.
[Reserved
.]
8.5.
Maturity; Surrender, etc
.
In the case of each prepayment of Notes pursuant to this Section 8, the principal amount of each Note to be prepaid shall mature and become due and payable on the date fixed for such prepayment, together with interest on such principal amount accrued to such date (including any increase in the principal amount through the issuance of PIK Notes), and the applicable Make-Whole Amount, if any. From and after such date, unless the Issuer shall fail to pay such principal amount when so due and payable, together with the interest and Make-Whole Amount, if any, as aforesaid, interest on such principal amount shall cease to accrue. Any Note paid or prepaid in full shall be surrendered to the Issuer and canceled and shall not be reissued, and no Note shall be issued in lieu of any prepaid principal amount of any Note.
8.6.
Purchase of Notes
.
Obligor will not offer to purchase, redeem, prepay or otherwise acquire, directly or indirectly, any of the outstanding Notes except in accordance with the terms of this Agreement and the Notes on a pro rata basis to the holders of all Notes at the time outstanding and upon the same terms and conditions. Any such offer shall provide each holder of Notes
21
with sufficient information to enable it to make an informed decision with respect to such offer, and shall remain open for at least 10 Business Days. If the holders of more than 50.0% of the principal amount of the Notes then outstanding accept such offer, the Issuer shall promptly notify the remaining holders of such fact and the expiration date for the acceptance by holders of the Notes of such offer shall be extended by the number of days necessary to give each such remaining holder at least five Business Days from its receipt of such notice to accept such offer. The Obligors may purchase, redeem prepay or otherwise acquire any Notes accepting such offer. The Issuer will promptly cancel all Notes acquired by Obligor pursuant to any payment, prepayment or purchase of Notes pursuant to any provision of this Agreement and no Notes may be issued in substitution or exchange for any such Notes.
8.7.
Make-Whole Amount
.
The term “
Make-Whole Amount
” means, with respect to any Note, an amount equal to the excess, if any, of the Discounted Value of the Remaining Scheduled Payments with respect to the Called Principal of such Note over the amount of such Called Principal,
provided
that the Make-Whole Amount may in no event be less than zero. For the purposes of determining the Make-Whole Amount, the following terms have the following meanings:
“
Called Principal
” means, with respect to any Note, the principal of such Note that is to be prepaid pursuant to Section 8.2 or has become or is declared to be immediately due and payable pursuant to Section 12.1(a) (as qualified by 12.1(y)), as the context requires.
“
Discounted Value
” means, with respect to the Called Principal of any Note, the amount obtained by discounting all Remaining Scheduled Payments with respect to such Called Principal from their respective scheduled due dates to the Settlement Date with respect to such Called Principal, in accordance with accepted financial practice and at a discount factor (applied on the same periodic basis as that on which interest on the Notes is payable) equal to the Reinvestment Yield with respect to such Called Principal.
“
Reinvestment Yield
” means, with respect to the Called Principal of any Note, the sum of (x) 0.50% plus (y) the yield to maturity implied by (i) the yield(s) reported as of 10:00 A.M. (New York City time) on the second Business Day preceding the Settlement Date with respect to such Called Principal, on the display designated as “Page PX1” (or such other display as may replace Page PX1) on Bloomberg Financial Markets for the most recently issued, actively traded, on the run U.S. Treasury securities (“
Reported
”) having a maturity equal to the remaining term of such Note as of such Settlement Date. If there are no such U.S. Treasury securities Reported having a maturity equal to the remaining term of such Note, then such implied yield to maturity will be determined by (a) converting U.S. Treasury bill quotations to bond equivalent yields in accordance with accepted financial practice and (b) interpolating linearly between the yields Reported for the applicable most recently issued actively traded on-the-run U.S. Treasury securities with the maturities (1) closest to and greater than the remaining term of such Note and (2) closest to and less than the remaining
22
term of such Note. The Reinvestment Yield shall be rounded to the number of decimal places as appears in the interest rate of the applicable Note.
If such yields are not Reported or the yields Reported as of such time are not ascertainable (including by way of interpolation), then “Reinvestment Yield” means, with respect to the Called Principal of any Note, the sum of (x) the 0.50% plus (y) the yield to maturity implied by the U.S. Treasury constant maturity yields reported, for the latest day for which such yields have been so reported as of the second Business Day preceding the Settlement Date with respect to such Called Principal, in Federal Reserve Statistical Release H.15 (or any comparable successor publication) for the U.S. Treasury constant maturity having a term equal to the remaining term of such Note as of such Settlement Date. If there is no such U.S. Treasury constant maturity having a term equal to the remaining term of such Note, such implied yield to maturity will be determined by interpolating linearly between (1) the U.S. Treasury constant maturity so reported with the term closest to and greater than the remaining term of such Note and (2) the U.S. Treasury constant maturity so reported with the term closest to and less than the remaining term of such Note. The Reinvestment Yield shall be rounded to the number of decimal places as appears in the interest rate of the applicable Note.
“
Remaining Scheduled Payments
” means, with respect to the Called Principal of any Note, all payments of such Called Principal and interest thereon that would be due after the Settlement Date prior to the date on which the Notes are payable in full with respect to such Called Principal if no payment of such Called Principal were made prior to its scheduled due date;
provided
that if such Settlement Date is not a date on which interest payments are due to be made under the terms of the Notes, then the amount of the next succeeding scheduled interest payment will be reduced by the amount of interest accrued to such Settlement Date and required to be paid on such Settlement Date pursuant to Section 8.2 or 12.1(a).
“
Settlement Date
” means, with respect to the Called Principal of any Note, the date on which such Called Principal is to be prepaid pursuant to Section 8.2 or has become or is declared to be immediately due and payable pursuant to Section 12.1(a), as the context requires.
8.8.
Commitment Fee.
If consent and approval from the Existing Credit Agreement Lenders is not obtained by GMC, the Existing Credit Amendments are not consummated by GMC and neither GMC Issuer nor FinCo Issuer is permitted to be Issuer by May 13, 2014, GMC shall pay to Purchasers a Commitment Fee. Subject to Section 13, upon payment of the Commitment Fee, this Agreement shall automatically terminate.
9.
AFFIRMATIVE COVENANTS
.
The Issuer and the Guarantor jointly and severally covenant that so long as any of the Notes are outstanding:
23
9.1.
Books and Records
.
The Obligors will, and will cause each of its Restricted Subsidiaries to, keep proper books of record and account in which full, true and correct entries, in conformity in all material respects with GAAP and all requirements of law, shall be made of all dealings and transactions in relation to its business.
9.2.
Maintenance of Property; Insurance
.
The Obligors will, and will cause each Restricted Subsidiary to, (i) keep all material property necessary in its business in good working order and condition (ordinary wear and tear and loss or damage by casualty or condemnation excepted) and (ii) maintain insurance with insurers that GMC reasonably believes to be financially sound and reputable, with respect to their respective properties and businesses against such casualties and contingencies, of such types, on such terms and in such amounts (including deductibles, co-insurance and self-insurance, if adequate reserves are maintained with respect thereto) as is customary in the case of entities of established reputations engaged in the same or a similar business and similarly situated.
9.3.
Corporate Franchises
.
The Obligors will, and will cause each Restricted Subsidiary, to do or cause to be done, all things necessary to preserve and keep in full force and effect its existence and its material rights, franchises, licenses and patents (if any) used in its business, except, in the case of any Restricted Subsidiary, which could not be reasonably expected to have a Material Adverse Effect;
provided
,
however
, that nothing in this Section 9.3 shall prevent (i) sales or other dispositions of assets, consolidations or mergers by or involving any Obligor or any of its Restricted Subsidiaries which are permitted in accordance with Section 10.6 or (ii) the abandonment by an Obligor or any of its Restricted Subsidiaries of any rights, franchises, licenses and patents that could not be reasonably expected to have a Material Adverse Effect.
9.4.
Compliance with Statutes, etc.
The Obligors will, and will cause each Restricted Subsidiary and each Unrestricted Subsidiary to, comply with all applicable statutes, regulations and orders of, and all applicable restrictions (including all laws and regulations relating to money laundering) imposed by, all governmental bodies, domestic or foreign, in respect of the conduct of its business and the ownership of its property, except such non-compliances as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
9.5.
Compliance with Environmental Laws
.
The Obligors will, and will cause each Restricted Subsidiary and each Unrestricted Subsidiary to, comply in all material respects with all Environmental Laws applicable to the ownership or use of any Vessel or property now or hereafter owned or operated by an Obligor or any of its Restricted Subsidiaries or any of its Unrestricted Subsidiaries, will within a reasonable time period pay or cause to be paid all costs and expenses incurred in connection with such compliance (except to the extent being contested in good faith), and will keep or cause to be kept all such Vessels or property free and clear of any Liens imposed pursuant to such Environmental Laws, in each of the foregoing cases, except to the extent any failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. None of the Obligors, any of Restricted
24
Subsidiaries or any Unrestricted Subsidiaries will generate, use, treat, store, release or dispose of, or permit the generation, use, treatment, storage, release or disposal of, Hazardous Materials on any Vessel or property now or hereafter owned or operated or occupied by an Obligor, any of its Restricted Subsidiaries or any of its Unrestricted Subsidiaries, or transport or permit the transportation of Hazardous Materials to or from any ports or property except in material compliance with all applicable Environmental Laws and as reasonably required by the trade in connection with the operation, use and maintenance of any such property or otherwise in connection with their businesses or except to the extent the same could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Obligors will, and will cause each Restricted Subsidiary and each Unrestricted Subsidiary to, maintain insurance on any Vessel in at least such amounts as are in accordance with normal industry practice for similarly situated insureds, against losses from oil spills and other environmental pollution.
9.6.
ERISA
.
As soon as reasonably possible and, in any event, within ten (10) days after an Obligor or any of its Restricted Subsidiaries or any ERISA Affiliate knows or has reason to know of the occurrence of any of the following, such Obligor will deliver to the holders of the Notes, a certificate of the senior financial officer of the Obligor setting forth the full details as to such occurrence and the action, if any, that the Obligor, such Restricted Subsidiary or such ERISA Affiliate is required or proposes to take, together with any notices required or proposed to be given to or filed with or by the Obligor, the Restricted Subsidiary, the ERISA Affiliate, the PBGC, a Plan participant or the Plan administrator with respect thereto: that a Reportable Event has occurred (except to the extent that the Obligor has previously delivered to the holders of the Notes a certificate and notices (if any) concerning such event pursuant to the next clause hereof); that a contributing sponsor (as defined in Section 4001(a)(13) of ERISA) of a Plan subject to Title IV of ERISA is subject to the advance reporting requirement of PBGC Regulation Section 4043.61 (without regard to subparagraph (b)(1) thereof), and an event described in subsection .62, .63, .64, .65, .66, .67 or .68 of PBGC Regulation Section 4043 is reasonably expected to occur with respect to such Plan within the following 30 days; that a failure to satisfy minimum funding requirements, within the meaning of Section 412 of the Code or Section 302 of ERISA, has occurred or an application may be or has been made for a waiver or modification of the minimum funding standard (including any required installment payments) or an extension of any amortization period under Section 412 or 430 of the Code or Section 302 or 303 of ERISA with respect to a Plan; that the actuary of a Plan (other than a Multiemployer Plan) has or will certify that the Plan is an at-risk plan within the meaning of Section 430 of the Code or Section 303 of ERISA; that a Plan which is a Multiemployer Plan is in endangered or critical status under Section 305 of ERISA; that any contribution required to be made with respect to a Plan or Foreign Pension Plan has not been timely made and such failure could result in a Material Adverse Effect for the Obligor or any of its Restricted Subsidiaries; that a Plan has been or may be reasonably expected to be terminated, reorganized, partitioned or declared insolvent under Title IV of ERISA with a material amount of unfunded benefit liabilities that reasonably could be expected to result in a Material Adverse Effect; that a Plan (in the case of a Multiemployer Plan, to the best knowledge of the Obligor or any of its Restricted Subsidiaries or ERISA Affiliates) has a material Unfunded Current Liability; that proceedings may be reasonably expected to be or have been instituted by the PBGC to terminate or appoint a trustee to administer a Plan which
25
is subject to Title IV of ERISA; that a proceeding has been instituted pursuant to Section 515 of ERISA to collect a material delinquent contribution to a Plan; that the Obligor, any of its Restricted Subsidiaries or any ERISA Affiliate will or may reasonably expect to incur any material liability (including any indirect, contingent, or secondary liability) to or on account of the termination of or withdrawal from a Plan under Section 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or with respect to a Plan under Section 436(f), 4971, 4975 or 4980 of the Code or Section 409 or 502(i) or 502(l) of ERISA or with respect to a group health plan (as defined in Section 607(1) of ERISA or Section 4980B(g)(2) of the Code) under Section 4980B of the Code that reasonably could be expected to result in a Material Adverse Effect; or that the Obligor, or any of its Restricted Subsidiaries may incur any material liability pursuant to any employee welfare benefit plan (as defined in Section 3(1) of ERISA) that provides benefits to retired employees or other former employees (other than as required by Section 601 of ERISA) or any Plan or any Foreign Pension Plan that reasonably could be expected to result in a Material Adverse Effect. Upon request, the Obligor will deliver to holders of the Notes (i) a complete copy of the annual report (on Internal Revenue Service Form 5500-series) of each Plan (including, to the extent required, the related financial and actuarial statements and opinions and other supporting statements, certifications, schedules and information) required to be filed with the Internal Revenue Service and (ii) copies of any records, documents or other information that must be furnished to the PBGC with respect to any Plan pursuant to Section 4010 of ERISA. In addition to any certificates or notices delivered pursuant to the first sentence hereof, copies of annual reports and any records, documents or other information required to be furnished to the PBGC, and any notices received by any Obligor, any of its Restricted Subsidiaries or any ERISA Affiliate with respect to any Plan or Foreign Pension Plan with respect to any circumstances or event that could reasonably be expected to result in a material liability shall be delivered to holders of the Notes no later than ten (10) days after the date such annual report has been filed with the Internal Revenue Service or such records, documents and/or information has been furnished to the PBGC or such notice has been received by such Obligor, such Restricted Subsidiary or such ERISA Affiliate, as applicable.
9.7.
End of Fiscal Years; Fiscal Quarters
.
The Obligors shall cause (i) each of its, and each of its Restricted Subsidiaries’, fiscal years to end on December 31 of each year and (ii) each of its and its Restricted Subsidiaries’ fiscal quarters to end on March 31, June 30, September 30 and December 31 of each year.
9.8.
Performance of Obligations
.
The Obligors will, and will cause each Restricted Subsidiary to, perform all of its obligations under the terms of each mortgage, indenture, security agreement and other debt instrument (including, without limitation, this Agreement, the Notes and the Guarantee to the extent such Restricted Subsidiary is a party) by which it is bound, except to the extent waived by the parties thereto and except such non-performances as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
9.9.
Payment of Taxes
.
The Obligors will pay and discharge, and will cause each Restricted Subsidiary to pay and discharge, all material taxes, assessments and governmental charges or levies that
26
become due and payable which are imposed upon it or upon its income or profits, or upon any properties belonging to it, prior to the date on which penalties attach thereto, and all lawful claims for sums that have become due and payable which, if unpaid, might become a Lien not otherwise permitted under Section 10.01(a);
provided
that neither the Obligors nor any Restricted Subsidiary shall be required to pay any such tax, assessment, charge, levy or claim which is being contested in good faith and by proper proceedings if it has maintained adequate reserves with respect thereto in accordance with GAAP.
9.10.
Ranking.
Each Obligor will ensure that, at all times, all obligations of such Obligor under this Agreement and the Notes (in the case of the Issuer) and this Agreement and the Guarantees (in the case of the Guarantor) will rank in right of payment either pari passu or senior to all other Indebtedness of such Obligor except for Indebtedness which is preferred as a result of being secured (but then only to the extent of such security) or which is preferred by operation of bankruptcy, insolvency, liquidation, administration or similar laws of general application.
9.11.
Subsidiary Guarantees; Release.
(a)
The Obligors will cause each Subsidiary Guarantor to execute and deliver a Subsidiary Guarantee and provide the following to each holder of a Note:
(i)
evidence of the corporate proceedings relating to the authorization, execution and delivery of such Subsidiary Guarantee; and
(ii)
an opinion in form and substance reasonably satisfactory to the Required Holders from legal advisors to such Subsidiary Guarantor with respect to the authorization, execution and enforceability of such Subsidiary Guarantee.
(b)
Notwithstanding anything in this Agreement or in the Subsidiary Guarantee to the contrary, upon any Disposition permitted under Section 10.2(d) and notice by the Obligors to each holder of a Note (which notice shall contain a certification by the Obligors of such Disposition), any Subsidiary Guarantor specified in such notice shall cease to be a Subsidiary Guarantor and shall be automatically released from its obligations under the Subsidiary Guarantee (upon such Disposition without the need for the execution or delivery of any other document by any holder of a Note or any other Person).
9.12.
Restricted and Unrestricted Subsidiaries.
Each of GMC’s Subsidiaries shall be a Restricted Subsidiary unless such Subsidiary is designated as an Unrestricted Subsidiary in accordance with this Section 9.12;
provided
that no Subsidiary Guarantor may be so designated as an Unrestricted Subsidiary. GMC may, by notice to each holder of the Notes, designate any Restricted Subsidiary (other than a Subsidiary Guarantor) or any newly created or acquired Subsidiary (other than a Subsidiary Guarantor) as an Unrestricted Subsidiary and designate any Unrestricted Subsidiary as a Restricted Subsidiary;
provided
that no such designation shall be effective unless
27
immediately after giving effect thereto no Default or Event of Default shall have occurred and be continuing (either as of the actual date of such designation or, with respect to Section 10.7, assuming that such designation had occurred on the last day of the immediately preceding semi-annual or annual fiscal period of GMC). Any Unrestricted Subsidiary which is designated as a Restricted Subsidiary in accordance with this Section 9.12 shall be deemed to have incurred all of its outstanding Indebtedness on the date of such designation (other than any Indebtedness of such Subsidiary that was outstanding at the time such Subsidiary was acquired by either Obligor or any other Restricted Subsidiary, and any renewal, extension or replacement of such Indebtedness;
provided
that the principal amount of such Indebtedness was not increased or the maturity shortened at the time of such renewal, extension or replacement).
9.13.
Use of Proceeds.
The Borrower will use the proceeds of the Notes only as provided in Section 5.8.
9.14.
Scorpio Newbuilds.
FinCo and its Restricted Subsidiaries shall, at all times, own no less than a total of five Scorpio Newbuilds (from and after the Acquisition) and/or Vessels resulting from the Scorpio Newbuilds.
10.
NEGATIVE COVENANTS
.
The Guarantor and the Issuer jointly and severally covenant that so long as any of the Notes are outstanding:
10.1.
Liens.
The Obligors will not, and will not permit any Restricted Subsidiary to, create, assume, incur or suffer to exist any Lien upon or with respect to any property or assets, whether now owned or hereafter acquired, of either of the Obligors or any Restricted Subsidiary, unless the Notes are equally and ratably secured pursuant to documentation reasonably satisfactory to the Required Holders and the holders of the Notes receive an opinion of counsel, selected by GMC and reasonably satisfactory to such holders, to the effect that the Notes are so secured, excluding from the operation of this Section:
(a)
inchoate Liens for taxes, assessments or governmental charges or levies not yet due and payable or Liens for taxes, assessments or governmental charges or levies being contested in good faith and by appropriate proceedings for which adequate reserves have been established in accordance with GAAP;
(b)
statutory Liens of landlords, carriers, warehousemen, mechanics, materialmen, and other types of similar statutory Liens securing sums not yet due and payable and incurred in the ordinary course of business;
28
(c)
Liens in existence as of the date of this Agreement (including without limitation any Liens securing the obligations under the Existing Credit Agreements), which in the case of Liens other than Liens securing the obligations under the Existing Credit Agreements are listed, and the property subject thereto described, on
Schedule 10.1
, without giving effect to any renewals or extensions of such Liens;
provided
that the aggregate principal amount of the Indebtedness, if any, secured by such Liens does not increase from that amount outstanding as of the date of this Agreement,
less
any repayments of principal thereof;
(d)
Liens arising from leases or subleases granted to others, easements, zoning restrictions, rights-of-way and similar charges or encumbrances on real property imposed by law or arising in the ordinary course of business that are not incurred in connection with the incurrence of Indebtedness and that do not materially detract from the value of the affected property or materially interfere with the ordinary conduct of business of the either of the Obligors or any Restricted Subsidiary;
(e)
Liens arising out of judgments, awards, decrees or attachments with respect to which the Obligors or any of the Restricted Subsidiaries shall in good faith be prosecuting an appeal or proceedings for review,
provided
that the aggregate amount of all such judgments, awards, decrees or attachments shall not constitute an Event of Default under Section 11(j);
(f)
Liens (other than any Lien imposed by ERISA) incurred or deposits made in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security, Liens to secure the performance of tenders, statutory obligations (other than excise taxes), surety, stay, customs and appeal bonds, statutory bonds, bids, leases, government contracts, trade contracts, performance and return of money bonds and other similar obligations in each case incurred in the ordinary course of business (exclusive of obligations for the payment of borrowed money) and Liens arising by virtue of deposits made in the ordinary course of business to secure liability for premiums to insurance carriers;
provided
that the aggregate value of all cash and property at any time encumbered pursuant to this clause (f) shall not exceed $10,000,000;
(g)
Liens in respect of seamen’s wages which are not past due and other maritime Liens for amounts not past due arising in the ordinary course of business and not yet required to be removed or discharged under the terms of the respective Vessel Mortgages;
(h)
Liens placed upon equipment or machinery acquired after Closing and used in the ordinary course of business of the Obligors or any of the Restricted Subsidiaries and placed at the time of the acquisition thereof by such Obligor or such Restricted Subsidiary or within 90 days thereafter to secure Indebtedness incurred to pay all or a portion of the purchase price thereof or to secure Indebtedness incurred solely for the purpose of financing the acquisition of any such equipment or machinery or extensions, renewals or replacements of any of the foregoing for the same or a lesser amount,
provided
that (x) the Indebtedness secured by such Liens is permitted by Section 10.4 and (y) in all events, the Lien encumbering the
29
equipment or machinery so acquired does not encumber any asset of an Obligor or any other asset of a Restricted Subsidiary;
(i)
easements, rights-of-way, restrictions, encroachments and other similar charges or encumbrances, and minor title deficiencies not materially interfering with the conduct of the business of the Obligors;
(j)
Liens arising from precautionary UCC financing statement filings regarding operating leases entered into in the ordinary course of business;
(k)
statutory and common law landlords’ liens under leases to which an Obligor or any of the Restricted Subsidiaries is a party;
(l)
Liens arising out of any conditional sale, title retention, consignment or other similar arrangements for the sale of goods entered into by an Obligor or any of its Restricted Subsidiaries in the ordinary course of business to the extent such Liens do not attach to any assets other than the goods subject to such arrangements;
(m)
Liens (x) incurred in the ordinary course of business in connection with the purchase or shipping of goods or assets (or the related assets and proceeds thereof), which Liens are in favor of the seller or shipper of such goods or assets and only attach to such goods or assets, and (y) in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods;
(n)
bankers’ Liens, rights of setoff and other similar Liens existing solely with respect to cash and cash equivalents on deposit in one or more accounts maintained by any Obligor or any Restricted Subsidiary, in each case granted in the ordinary course of business in favor of the bank or banks with which such accounts are maintained, securing amounts owing to such bank or banks with respect to cash management and operating account arrangements;
(o)
Liens in respect of any equity interest in any Unrestricted Subsidiary;
(p)
to the extent not covered in clause (c) above, Liens securing the Global Refinancing and other Indebtedness permitted to be incurred under Section 10.4(g), (i), (j) and (k);
(q)
Liens permitted at the time they were created;
(r)
Liens securing obligations in respect of Indebtedness permitted pursuant to Section 10.4(j) (including any Liens on cash required to cash collateralize letters of credit permitted pursuant to Section 10.4(j) in an aggregate amount not to exceed $10,000,000 at any time); and
(s)
deposits in connection with the acquisition of Vessels.
10.2.
Consolidation, Merger, Sale of Assets, etc.
The Obligors will not, and will not permit any of the Restricted Subsidiaries to wind up, liquidate or dissolve its affairs or enter into any transaction of merger, consolidation
30
or amalgamation, or convey, sell, lease or otherwise dispose of (or agree to do any of the foregoing at any future time) all or substantially all of its assets (other than Margin Stock), except for:
(a)
subject to Sections 9.14 and 10.2(d) below, a conveyance, sale, lease or other disposition of an Obligor’s or a Restricted Subsidiary’s properties or assets (collectively, a “
Disposition
”) in the ordinary course of business;
(b)
Dispositions of non-core property or assets that were acquired by an Obligor or a Restricted Subsidiary in connection with a Permitted Acquisition or other Permitted Investment;
(c)
Dispositions of worn out or obsolete properties or assets no longer required for the efficient operation of such Obligor’s or Restricted Subsidiary’s business;
(d)
the direct or indirect Disposition of the Scorpio Newbuilds for Fair Market Value;
provided
that no Default or Event of Default is continuing unremedied at the time of such Disposition and immediately after such Disposition, at least a total of five Scorpio Newbuilds and/or Vessels resulting from the Scorpio Newbuilds are retained by FinCo and its Restricted Subsidiaries;
(e)
mergers, consolidations or amalgamations of any Obligor or any of the Restricted Subsidiaries with any Obligor or any of the Restricted Subsidiaries;
(f)
subject to Sections 9.14 and 10.2(d) above, dispositions by any Obligor or any of the Restricted Subsidiaries to any Obligor or any of the Restricted Subsidiaries;
(g)
any Subsidiary which (x) is not a Subsidiary Guarantor and (y) has $5,000 or less in assets (including, without limitation, Equity Interests) may wind up, liquidate or dissolve;
(h)
mergers, consolidations or amalgamations for the purpose of acquisitions, so long as the Obligors are in compliance with Section 10.4 after giving effect to any such merger, consolidation or amalgamation; and
provided
, that if such merger, consolidation or amalgamation results in a Change of Control, the Obligors shall comply with Section 8.3
; and
(i)
the Scorpio Newbuilds Novations.
Notwithstanding anything to the contrary contained above, the foregoing covenant shall not be violated as a result of sales of Margin Stock for cash at fair market value (as determined in good faith by GMC at the time of the respective sale).
31
10.3.
Restricted Payments
.
(a)
The Issuer will not, and will not permit any of the Restricted Subsidiaries to, directly or indirectly:
(i)
authorize, declare or pay any dividend (or interest on any unpaid dividend), charge, fee or other distribution (whether in cash or in kind) on or in respect of Equity Interests with respect to GMC; and
(ii)
lend money or credit or make advances to any Person, or purchase or acquire any Margin Stock (or other Equity Interests), or make any capital contribution to any other Person (each of the foregoing an “
Investment
” and, collectively, “
Investments
”);
provided
that, so long as no Default or Event of Default has occurred and be continuing or would result therefrom the Issuer may make Investments in any Unrestricted Subsidiary to the extent there are available funds pursuant to clause (4) below (regardless of whether such Restricted Payments satisfy the requirements of clauses (1) and (2) below);
(all such payments and other actions set forth in clauses (i) and (ii) above (other than any exceptions thereof) being, collectively, referred to as “
Restricted Payments
”), unless, at the time of such Restricted Payment:
(1)
in accordance with Section 8.1(d), the Issuer has irrevocably elected to pay interest in cash (as opposed to electing to retain the right to issue PIK Notes) until such time that all amounts due and payable under the Notes are paid in full the Issuer;
(2)
the Total Debt LTV Ratio would be lower than 60.0% on a pro forma basis immediately following the making of such Restricted Payment;
(3)
no Default shall have occurred and be continuing or would occur as a consequence of the making of the Restricted Payment; and
(4)
the aggregate amount of Restricted Payments does not exceed the sum, without duplication, of:
(I)
50.0% of Cumulative Consolidated Net Income accrued beginning on the first day of the fiscal quarter prior to the Closing (the “
Cumulative Consolidated Net Income Amount
”);
provided
,
however
, if the Total Debt LTV Ratio is less than 50.0%, such Cumulative Consolidated Net Income Amount will be increased by 100% of Cumulative Consolidated Net Income accrued beginning on the first day of the fiscal quarter prior to the Closing, plus
(II)
the Net Cash Proceeds of equity issuances, asset contributions and capital contributions (other than Disqualified Equity) received by the Issuer after the Closing, plus
(III)
the Net Cash Proceeds of Indebtedness and Disqualified Equity of the Issuer, in each case issued after the Closing, which have been exchanged
32
or converted into qualified Equity Interests of the Issuer or the direct or indirect parent of the Issuer, plus
(IV)
the Net Cash Proceeds of the Restricted Payments, plus
(V)
returns, profits, distributions and similar amounts received in cash or cash equivalents on investments permitted under this Section 10.3, plus
(VI)
the investments of the Issuer and the Restricted Subsidiaries in any Unrestricted Subsidiary that has been re-designated as a Restricted Subsidiary or that has been merged or consolidated into the Issuer or any of its Restricted Subsidiaries or the fair market value of the assets of any Unrestricted Subsidiary that have been transferred to the Issuer or any of its Restricted Subsidiaries.
(b)
Notwithstanding anything herein to the contrary:
(i)
Shareholders of GMC may, and GMC may exercise its right to, convert or exchange Class B Common Stock to Class A Common Stock;
(ii)
the Obligors and its Subsidiaries may acquire and hold accounts receivable owing to any of them and cash equivalents;
(iii)
so long as no Event of Default exists or would result therefrom, the Obligors and its Subsidiaries may make loans and advances in the ordinary course of business to its employees, officers and directors other than officers and directors of Persons which own Equity Interests, directly or indirectly, of GMC and constitute Affiliates of GMC or persons employed by any such Affiliates (not including, for the avoidance of doubt, the operational managers of the Obligors or any of their Subsidiaries) so long as the aggregate principal amount thereof at any time outstanding which are made on or after the Closing (determined without regard to any write-downs or write-offs of such loans and advances) shall not exceed $2,000,000;
(iv)
the Obligors and their Subsidiaries may make intercompany loans and advances among one another, and Subsidiaries of GMC may make intercompany loans and advances to GMC or any other Subsidiary of GMC (other than any Unrestricted Subsidiary);
provided
that any such loans or advances to any Obligor or any Subsidiary Guarantor pursuant to this clause shall be unsecured and subordinated to the Obligations of the respective Obligor or Subsidiary Guarantor pursuant to written subordination provisions;
(v)
GMC and its Subsidiaries may sell or transfer assets to the extent permitted by Section 10.02;
(vi)
FinCo may make loans, advances and Investments in Restricted Subsidiaries of FinCo
;
33
(vii)
GMC may make loans, advances and Investments in Restricted Subsidiaries of GMC;
(viii)
GMC and its Subsidiaries may make Investments in amounts required to fund charter costs and actual expenses relating to operating Vessels leased or chartered as of the date hereof by General Maritime NSF Corporation, GMR Concord LLC, GMR Contest LLC and GMR Concept LLC;
provided
that such Investments may only be made in good faith and only to the extent necessary to fund such costs and expenses after taking into account the cash and cash equivalents held by such Subsidiary;
(ix)
GMC and its Subsidiaries may purchase or redeem Equity Interests from employees, officers, managers and directors in connection with their termination, death or disability;
(x)
GMC and its Subsidiaries may make equity Investments in a special purpose entity which owns a Vessel or Vessels;
(xi)
GMC and its Subsidiaries may make additional Investments in an aggregate amount net of distributions received not to exceed $10,000,000 at any time outstanding; and
(xii)
GMC Issuer may make Restricted Payments to any Unrestricted Subsidiary that would qualify as a “Non-Recourse Subsidiary” (as defined in the respective Existing Credit Agreements or any Refinancing Agreement) to the extent such Restricted Payment is required under the terms of the Existing Credit Agreements or any Refinancing Agreement.
Notwithstanding anything to the contrary above, the Issuer will not, and will not permit any of the Restricted Subsidiaries to, directly or indirectly authorize, declare or pay any dividend (or interest on any unpaid dividend), charge, fee or other distribution (whether in cash or in kind) on or in respect of Equity Interests of GMC until such time that the Issuer has permanently converted to cash interest payments (and will not make any remaining interest payments on the Notes in the form of PIK Interest).
10.4.
Indebtedness
.
The Obligors will not, and will not permit any of the Restricted Subsidiaries to, contract, create, incur, assume or suffer to exist any Indebtedness other than:
(a)
the incurrence and/or existence of unlimited Indebtedness in connection with acquisitions of property used or useful in the business of the Issuer if (i) the Total Debt LTV Ratio will be less than (A) 65.0% if such incurrence occurred on or after Closing and on or prior to the third anniversary of Closing or (B) 60.0% if such incurrence occurred on or after the third anniversary of Closing and (ii) the Total Secured Debt LTV Ratio will be less than 55.0% immediately, in each case on a pro forma basis after giving effect to such incurrence;
34
(b)
contractually or structurally subordinated Indebtedness or preferred equity (
provided
the same are non-cash pay);
(c)
Indebtedness under the Notes, including without limitation any PIK Notes;
(d)
intercompany indebtedness;
(e)
Indebtedness in existence as of the date of this Agreement (including without limitation the Existing Credit Agreements), which is listed on Schedule 5.19;
(f)
additional Indebtedness, if (i) the Total Debt LTV Ratio will be less than (A) 65.0% if such incurrence occurred on or after Closing and on or prior to the third anniversary of Closing or (B) 60.0% if such incurrence occurred on or after the third anniversary of Closing and (ii) the Total Secured Debt LTV Ratio will be less than 55.0% immediately, in each case on a pro forma basis after giving effect to such incurrence;
(g)
Refinancing Indebtedness with respect to Indebtedness incurred under clauses (a), (b), (d), (e), (f), (i), (j) and (k) hereof;
provided
that, if Indebtedness is incurred either (A) in connection with a Global Refinancing, the Total Secured Debt LTV Ratio will be less than 65.0% immediately after such Global Refinancing and the Total Secured Debt LTV Ratio with respect to FinCo will be less than 60.0% immediately after such Global Refinancing or (B) in connection with any amendment, restatement, modification or refinancing of the Existing Credit Agreements, the aggregate principal amounts of Indebtedness incurred by the Obligors to refinance the Existing Credit Agreements does not exceed the principal amount of the Existing Credit Agreements outstanding at the time of such refinancing,
plus
the amount of other Indebtedness permitted to be incurred hereunder;
provided
,
however
, that any Refinancing Indebtedness incurred pursuant to this clause (B) shall not include a guarantee by FinCo and not be secured by, or create any Lien upon or with respect to, the property and assets of FinCo (including, for the avoidance of doubt, the Scorpio Newbuilds);
(h)
purchase money indebtedness and hedging agreements to the extent permitted under the Existing Credit Agreements or any Refinancing Agreement;
(i)
upon or after delivery of each Vessel constituting the Scorpio Newbuilds, Indebtedness not to exceed the greater of (x) $52,500,000 million and (y) 60.0% of the appraised value per Vessel as determined by in accordance with an appraisal report, which report shall have been prepared within 90 days prior to such date of determination;
(j)
so long as no Event of Default then exists or would result therefrom, additional Indebtedness incurred by any Obligor or its Subsidiaries that does not directly own a Vessel subject of the Scorpio Newbuilds at the time such Indebtedness is incurred in an aggregate principal amount not to exceed $20,000,000 (or, in the case of Indebtedness in respect of letters of credit, $10,000,000) at any one time outstanding;
35
(k)
Indebtedness incurred in connection with the acquisition of additional Vessels (which may be effectuated by upsizing either of the Existing Credit Agreements or a new facility);
provided
that such additional or increased indebtedness does not exceed 60.0% of the appraised value of such additional Vessels as determined on the date of acquisition; and,
provided
,
further
, that such indebtedness exists at the date of such acquisition or is created within 180 days thereafter; and
(l)
Indebtedness incurred in connection with the repurchase for redemption of Equity Interests under Section 10.3(b)(ix).
10.5.
Transactions with Affiliates
.
The Obligors will not, and will not permit any of the Restricted Subsidiaries to, enter into any transaction or series of related transactions, whether or not in the ordinary course of business, with any Affiliate of such Person, other than on terms and conditions no less favorable to such Person as would be obtained by such Person at that time in a comparable arm’s-length transaction with a Person other than an Affiliate, except that:
(a)
Restricted Payments may be paid to the extent provided in Section 10.3;
(b)
loans may be made and other transactions may be entered into between the Obligors and their Subsidiaries to the extent permitted by Sections 10.4;
(c)
as long as GMC has an independent compensation committee, directors’ fees as determined by such independent compensation committee and, at any time GMC does not have an independent compensation committee, GMC may pay reasonable directors’ fees;
(d)
the Obligors and the Restricted Subsidiaries may enter into employment agreements or arrangements with their respective officers and employees in the ordinary course of business;
(e)
the Obligors and the Restricted Subsidiaries may pay management fees to Wholly-Owned Restricted Subsidiaries of GMC in the ordinary course of business;
(f)
transactions with shareholders to the extent such transactions are permitted or required under the GMC Charter, the Shareholders’ Agreement or the Registration Agreement resulting from the exercise of rights to cause GMC to consummate an initial public offering, tag-along rights, drag along rights, preemptive rights, registration rights or similar rights;
(g)
the transactions and agreements (including transactions contemplated therein) in existence as of the date of this Agreement which are listed on
Schedule 10.5
and other transactions and agreements (including transactions contemplated therein) listed on
Schedule 10.5
, and any related transactions, shall be permitted;
(h)
any individual transaction, whether or not in the ordinary course of business, with any Affiliate of such Person if after giving effect to such transaction, the
36
aggregate amount of all such transactions in any fiscal year does not exceed $1,000,000
; and
(i)
the Scorpio Newbuilds Novations shall be permitted.
10.6.
Limitation on Certain Restrictions on Restricted Subsidiaries
.
The Obligors will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction on the ability of any such Restricted Subsidiary to (a) pay dividends or make any other distributions on its capital stock or any other interest or participation in its profits owned by any of the Obligors or any Restricted Subsidiary of an Obligor, or pay any Indebtedness owed to an Obligor or a Restricted Subsidiary of an Obligor, (b) make loans or advances to any Obligor or any of the Restricted Subsidiaries of an Obligor or (c) transfer any of its properties or assets to an Obligor or any of such Obligor’s Restricted Subsidiaries, except for such encumbrances or restrictions existing under or by reason of (i) applicable law, (ii) this Agreement, the Notes and the Guarantee, (iii) the Existing Credit Agreements as in effect at Closing, or any refinancing thereof, including any Global Refinancing or amendments thereto, and the other related agreements, instruments and documents, (iv) customary provisions restricting subletting or assignment of any lease governing a leasehold interest of an Obligor or a Restricted Subsidiary of an Obligor, (v) customary provisions restricting assignment of any agreement entered into by an Obligor or a Restricted Subsidiary of an Obligor in the ordinary course of business, (vi) any holder of a Lien permitted by Section 10.1 may restrict the transfer of the asset or assets subject thereto, (vii) restrictions which are not more restrictive than those contained in this Agreement, the Notes and the Guarantees contained in any documents governing any Indebtedness incurred after the Closing in accordance with the provisions of this Agreement and the Notes, (viii) Nonrecourse Indebtedness and (ix) the Shareholders’ Agreement.
10.7.
Business
.
(a)
The Obligors, its Restricted Subsidiaries and its Unrestricted Subsidiaries will not engage in any business other than the businesses in which any of them is engaged in as of Closing (or, in the case of any Restricted Subsidiary or any Unrestricted Subsidiary that is formed or incorporated after Closing, any business in which any Obligor, any other Restricted Subsidiary or any other Unrestricted Subsidiary is engaged as of Closing) and activities directly related thereto, and similar or related maritime businesses.
(b)
If consent and approval from the Existing Credit Agreement Lenders is not obtained by GMC and the Existing Credit Amendments are not consummated by GMC, the FinCo Issuer will not, and will not permit any of its Restricted Subsidiaries to, engage in any other business other than the ownership and operation of the assets purchased in connection with the Acquisition and (ii) the FinCo Issuer will not own any Equity Interests in, or form or acquire any, Subsidiaries, unless such Subsidiaries become Subsidiary Guarantors pursuant to Section 9.11 and are formed or acquired in furtherance of the FinCo Issuer’s business.
37
11.
EVENTS OF DEFAULT
.
An “
Event of Default
” shall exist if any of the following conditions or events shall occur and be continuing:
(a)
the Issuer defaults in the payment of any principal or Make-Whole Amount, if any, on any Note when the same becomes due and payable, whether at maturity or at a date fixed for prepayment or by declaration or otherwise; or
(b)
the Issuer defaults in the payment of any interest on any Note or any amounts due pursuant to Section 13 for more than 10 Business Days after the same becomes due and payable; or
(c)
either of the Obligors defaults in the performance of or compliance with any term contained in Sections 10.1 through 10.7, inclusive and such default shall continue unremedied for 30 days; or
(d)
either of the Obligors defaults in the performance of or compliance with any term contained herein (other than those referred to in paragraphs (a), (b) and (c) of this Section 11) and such default is not remedied within 60 days after the earlier of (i) a Responsible Officer obtaining actual knowledge of such default and (ii) the Obligors receiving written notice of such default from any holder of a Note (any such written notice to be identified as a “notice of default” and to refer specifically to this paragraph (d) of Section 11); or
(e)
any representation or warranty made in writing by or on behalf of either of the Obligors or any Subsidiary Guarantor or by any officer of either of the Obligors or any Subsidiary Guarantor in this Agreement or any Subsidiary Guarantee or in any writing furnished in connection with the transactions contemplated hereby proves to have been false or incorrect in any Material respect as of the date on which it was made; or
(f)
(i) either of the Obligors, any Significant Subsidiary or any Subsidiary Guarantor shall default in any payment of any Indebtedness (other than the obligations hereunder, under the Notes and under the Guarantees) beyond the period of grace, if any, provided in the instrument or agreement under which such Indebtedness was created or (ii) either of the Obligors, any Significant Subsidiary or any Subsidiary Guarantor shall default in the observance or performance of any agreement or condition relating to any Indebtedness (other than the other than the obligations hereunder, under the Notes and under the Guarantees) or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or holders of such Indebtedness (or a trustee or agent on behalf of such holder or holders) to cause (determined without regard to whether any notice is required), any such Indebtedness to become due prior to its stated maturity or (iii) any
38
Indebtedness (other than the other than the obligations hereunder, under the Notes and under the Guarantees) of the either of the Obligors, any Significant Subsidiary or any Subsidiary Guarantor shall be declared to be due and payable, or required to be prepaid, redeemed, defeased or repurchased other than by a regularly scheduled required prepayment, prior to the stated maturity thereof;
provided
, that it shall not be a Default or Event of Default under this Section 11(g) unless (x) the aggregate outstanding principal amount of such Indebtedness as described in the preceding clauses (i) through (iii) exceeds $30,000,000 and (y) the Default or Event of Default shall continue unremedied for a period of six months, or if such Default or Event of Default is capable of being remedied and the Obligors, the Significant Subsidiaries and the Subsidiary Guarantors shall be actively and diligently proceeding to remedy such Default or Event of Default, such longer period of time, not to exceed one year; or
(g)
either of the Obligors, any Significant Subsidiary or any Subsidiary Guarantor (i) is generally not paying, or admits in writing its inability to pay, its debts as they become due, (ii) files, or consents by answer or otherwise to the filing against it of, a petition for relief or reorganization or arrangement or any other petition in bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency, reorganization, moratorium or other similar law of any jurisdiction, (iii) makes an assignment for the benefit of its creditors, (iv) consents to the appointment of a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, (v) is adjudicated as insolvent or to be liquidated, or (vi) takes corporate action for the purpose of any of the foregoing; or
(h)
a court or governmental authority of competent jurisdiction enters an order appointing, without consent by either of the Obligors, any Significant Subsidiary or any Subsidiary Guarantor, a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, or constituting an order for relief or approving a petition for relief or reorganization or any other petition in bankruptcy or for liquidation or to take advantage of any bankruptcy or insolvency law of any jurisdiction, or ordering the dissolution, winding-up or liquidation of either of the Obligors, any Significant Subsidiary or any Subsidiary Guarantor, or any such petition shall be filed against either of the Obligors, any Significant Subsidiary or any Subsidiary Guarantor and such petition shall not be dismissed within 60 days; or
(i)
(i) an administrator of either of the Obligors, any Significant Subsidiary or any Subsidiary Guarantor is appointed, (ii) an application or an order is made, proceedings are commenced, or an application to a court or other steps are taken for the winding up, liquidation, dissolution or administration of either of the Obligors, any Significant Subsidiary or any Subsidiary Guarantor (other than any applications, proceedings, notices or steps which are struck out, stayed, dismissed or withdrawn within 60 days of their institution, application or service), (iii) a receiver, receiver and manager, administrative receiver or similar officer is appointed to all or any of the assets and undertakings of the either of the Obligors, any Significant Subsidiary or any Subsidiary
39
Guarantor or (iv) a Lien is enforced over all or any material portion of the assets of either of the Obligors, any Significant Subsidiary or any Subsidiary Guarantor; or
(j)
a final judgment, order or encumbrance for the payment of money aggregating in excess of $20,000,000 (or the equivalent thereof, as of any date of determination, in any other currency is not covered by insurance) is enforced, against all or a substantial part of the assets of one or more of the Obligors, any Significant Subsidiary and any Subsidiary Guarantor and such enforcement is not bonded, discharged or stayed within 90 days thereafter, or the subject of an appeal being contested in good faith by or on behalf of the relevant Obligor, Significant Subsidiary or Subsidiary Guarantor; or
(k)
any Guarantee or any Subsidiary Guarantee shall cease to be in full force and effect (other than in accordance with Section 9.11(b)) or the Guarantor or any Subsidiary Guarantor or any Person acting on behalf of the Guarantor or any Subsidiary Guarantor shall contest in any manner the validity, binding nature or enforceability of any Guarantee or any Subsidiary Guarantee.
12.
REMEDIES ON DEFAULT, ETC
.
12.1.
Acceleration
.
(a)
If an Event of Default with respect to either Obligor described in paragraph (g), (h) or (i) of Section 11 (other than an Event of Default described in clause (i) of paragraph (g) or described in clause (vi) of paragraph (g) by virtue of the fact that such clause encompasses clause (i) of paragraph (g)) has occurred, all the Notes then outstanding shall automatically become immediately due and payable.
(b)
If any other Event of Default has occurred and is continuing, the Required Holders may at any time at their option, by notice or notices to the Obligors, declare all the Notes then outstanding to be immediately due and payable.
Upon any Notes becoming due and payable under this Section 12.1, whether automatically or by declaration, such Notes will forthwith mature and the entire unpaid principal amount of such Notes, plus (x) all accrued and unpaid interest thereon and (y) if such Notes become due and payable under Section 12.1(a) and any Indebtedness (other than the other than the obligations hereunder, under the Notes and under the Guarantees) of the either of the Obligors or any of their Restricted Subsidiaries shall be declared to be due and payable, or required to be prepaid, redeemed, defeased or repurchased other than by a regularly scheduled required prepayment, prior to the stated maturity thereof, the applicable Make-Whole Amounts determined in respect of such principal amount (to the full extent permitted by applicable law), shall all be immediately due and payable, in each and every case without presentment, demand, protest or further notice, all of which are hereby waived.
12.2.
[Reserved.]
40
12.3. Rescission
.
At any time after any Notes have been declared due and payable pursuant to paragraph (b) or (c) of Section 12.1, the Required Holders, by written notice to the Obligors, may rescind and annul any such declaration and its consequences if (a) the Issuer has paid all overdue interest on the Notes, all principal of and Make-Whole Amount, if any, on any Notes that are due and payable and are unpaid other than by reason of such declaration, and all interest on such overdue principal and Make-Whole Amount, if any, and (to the extent permitted by applicable law) any overdue interest in respect of the Notes, at the Default Rate, (b) all Events of Default and Defaults, other than non-payment of amounts that have become due solely by reason of such declaration, have been cured or have been waived pursuant to Section 19, and (c) no judgment or decree has been entered for the payment of any monies due pursuant hereto or to the Notes. No rescission and annulment under this Section 12.3 will extend to or affect any subsequent Event of Default or Default or impair any right consequent thereon.
12.4. No Waivers or Election of Remedies, Expenses, etc
.
No course of dealing and no delay on the part of any holder of any Note in exercising any right, power or remedy shall operate as a waiver thereof or otherwise prejudice such holder’s rights, powers or remedies. No right, power or remedy conferred by this Agreement or by any Note upon any holder thereof or by any Subsidiary Guarantee shall be exclusive of any other right, power or remedy referred to herein or therein or now or hereafter available at law, in equity, by statute or otherwise. Without limiting the obligations of the Obligors under Section 17, the Obligors will pay to the holder of each Note on demand such further amount as shall be sufficient to cover all reasonable out-of-pocket costs and expenses of such holder incurred in any enforcement or collection under this Section 12, including, without limitation, reasonable attorneys’ fees, expenses and disbursements but only one law firm for all noteholders.
13. TAX INDEMNIFICATION; FATCA INFORMATION
.
13.1. Tax Indemnification
.
(a) Any and all payments under this Agreement, the Notes or the Guarantees to or for the account of any holder of a Note shall be made free and clear of, and without deduction or withholding for or on account of, any tax, except to the extent such deduction or withholding is required by law. If any tax is required by law to be deducted or withheld from any such payments by the Issuer under this Agreement or the Notes or by the Guarantor under this Agreement and the Guarantees, such Obligor will make such deductions or withholding and pay to the relevant taxing authority the full amount deducted or withheld before penalties attach thereto or interest accrues thereon. In the event of the imposition by or for the account of any Applicable Taxing Authority or of any Governmental Authority of any jurisdiction in which either Obligor resides for tax purposes, any other jurisdiction in which any Obligor is engaged in business (including having a permanent establishment therein) or any jurisdiction from or through which either Obligor is making any payment in respect of any Note or
41
Guarantee, as the case may be, of any tax, other than any Excluded Tax, upon or with respect to any payments in respect of any Note or Guarantee, as the case may be, whether by withholding or otherwise, the Obligors hereby agree to pay forthwith from time to time in connection with each payment on the Notes or Guarantees, as the case may be, to each holder of a Note such amounts as shall be required so that every payment received by such holder in respect of the Notes or Guarantees, as the case may be, and every payment received by such holder under this Agreement will not, after such withholding or deduction or other payment for or on account of such tax and any interest or penalties relating thereto, be less than the amount due and payable to such holder in respect of such Note or Guarantee, as the case may be, or under this Agreement before the assessment of such tax;
provided
,
however
, that the Obligors shall not be obliged to pay such amounts to any holder of a Note in respect of taxes to the extent such taxes exceed the taxes that would have been payable:
(i) had such holder not been a resident, domiciliary or national of, or been engaged in business in, or maintained a permanent establishment in, or otherwise had any connection with Marshall Islands other than the mere holding of a Note (or the receipt of any payments in respect thereof) or activities incidental thereto (including enforcement thereof); or
(ii) but for the delay or failure by such holder (following a written request by either Obligor) in the filing with an appropriate Governmental Authority with an Obligor or otherwise of forms, certificates, documents, applications or other reasonably required evidence (collectively, “
Forms
”), that are required to be filed by such holder to avoid or reduce such taxes and that in the case of any of the foregoing would not result in any confidential (other than identifying information such as tax identification numbers) or proprietary income tax return information being revealed, either directly or indirectly, to any Person and such delay or failure could have been lawfully avoided by such holder,
provided
that such holder shall be deemed to have satisfied the requirements of this clause (ii) upon the good faith completion and submission of such Forms as may be specified in a written request of either Obligor no later than 30 days after receipt by such holder of such written request (
provided
, that if such Forms are Forms required pursuant to the laws of any jurisdiction other than the United States of America or any political subdivision thereof, such written request shall be accompanied by such Forms with an English translation thereof, if applicable).
(b) Within 60 days after the date of any payment by either Obligor of any tax in respect of any payment under the Notes or Guarantees, as the case may be, or this Section 13, the relevant Obligor shall furnish to each holder of a Note the original tax receipt for the payment of such tax (or if such original tax receipt is not available, a duly certified copy of the original tax receipt), together with such other documentary evidence with respect to such payments as may be reasonably requested from time to time by any holder of a Note.
(c) If either of the Obligors has made a payment to or on account of any holder of a Note pursuant to clause (a) above and such holder is entitled to a refund of the tax to
42
which such payment is attributable from the Governmental Authority to which the payment of the tax was made and such refund can be obtained by filing one or more Forms which would not result in any confidential (other than identifying information such as tax identification numbers) or proprietary income tax return information being revealed, then (i) such holder shall, as soon as practicable after receiving a written request therefor from such Obligor (which request shall include a copy of such Forms to be filed with an English translation, if applicable), use its reasonable efforts to promptly file such Forms and (ii) upon receipt of such refund, if any, promptly pay over such refund to such Obligor.
(d) The obligations of the Obligors under this Section 13 shall survive the transfer or payment of any Note.
13.2. Survival of Obligations.
The obligations of the Obligors under this Section 13 will survive the payment or transfer of any Note, the enforcement, amendment or waiver of any provision of this Agreement, the Notes, the Guarantees or any Subsidiary Guarantee, and the termination of this Agreement.
14. GUARANTEE, ETC
.
14.1. Guarantee
.
The Guarantor hereby guarantees to each holder of any Note at any time outstanding (a) the prompt payment in full in Dollars when due (whether at stated maturity, by acceleration, by mandatory or optional prepayment or otherwise) of the principal of the Notes, the Make-Whole Amount, if any, and interest on the Notes (including, without limitation, any interest on any overdue principal or Make-Whole Amount, if any, interest accruing after the commencement of any bankruptcy or similar proceeding and any additional interest that would accrue but for the commencement of such proceeding, and, to the extent permitted by applicable law, on any overdue interest and on payment of additional amounts described in Section 13) and all other amounts from time to time owing by the Issuer under this Agreement and under the Notes (including, without limitation, costs, expenses and taxes in accordance with the terms hereof), and (b) the prompt performance and observance by the Issuer of all covenants, agreements and conditions on its part to be performed and observed hereunder and under the Notes, in each case strictly in accordance with the terms thereof (such payments and other obligations being herein collectively called the “
Guaranteed Obligations
”). The Guarantor hereby further agrees that if the Issuer shall default in the payment or performance of any of the Guaranteed Obligations, the Guarantor will (x) promptly pay or perform the same, without any demand or notice whatsoever, and that in the case of any extension of time of payment or renewal of any of the Guaranteed Obligations, the same will be promptly paid in full when due (whether at extended maturity, by acceleration, by mandatory or optional prepayment or otherwise) in accordance with the terms of such extension or renewal and (y) pay to the holder of any Note such amounts, to the extent lawful, as shall be sufficient to pay the costs and expenses of collection or of otherwise enforcing any of such holder’s rights under this Agreement and under the Notes, including, without limitation, reasonable counsel fees.
43
14.2. Guarantee Obligations Unconditional
(a) The obligations of the Guarantor under Section 14.1 constitute a present and continuing guaranty of payment and not collectability and are absolute, unconditional and irrevocable, irrespective of the value, genuineness, validity, regularity or enforceability of the obligations of the Issuer under this Agreement, the Notes or any other agreement or instrument referred to herein or therein, or any substitution, release or exchange of any Guaranty of or security for any of the Guaranteed Obligations, and, to the fullest extent permitted by applicable law, irrespective of any other circumstance whatsoever which might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor, it being the intent of this Section 14.2 that the obligations of the Guarantor hereunder shall be absolute, unconditional and irrevocable under any and all circumstances. Without limiting the generality of the foregoing, it is agreed that the occurrence of any one or more of the following shall not alter or impair the liability of the Guarantor hereunder which shall remain absolute, unconditional and irrevocable as described above:
(1) any amendment or modification of any provision of this Agreement (other than Section 14.1 or 14.2), any of the Notes or any Subsidiary Guarantee, or any assignment or transfer thereof, including without limitation the renewal or extension of the time of payment of any of the Notes or the granting of time in respect of such payment thereof, or of any furnishing or acceptance of security or any additional guarantee or any release of any security or guarantee so furnished or accepted for any of the Notes;
(2) any waiver, consent, extension, granting of time, forbearance, indulgence or other action or inaction under or in respect of this Agreement, the Notes or any Subsidiary Guarantee, or any exercise or non-exercise of any right, remedy or power in respect hereof or thereof;
(3) any bankruptcy, receivership, insolvency, reorganization, arrangement, readjustment, composition, liquidation or similar proceedings with respect to the Issuer, any Subsidiary Guarantor or any other Person or the properties or creditors of any of them;
(4) the occurrence of any Default or Event of Default under, or any invalidity or any unenforceability of, or any misrepresentation, irregularity or other defect in, this Agreement, the Notes, any Subsidiary Guarantee or any other agreement;
(5) any transfer of any assets to or from the Issuer, including without limitation any transfer or purported transfer to the Issuer from any Person, any invalidity, illegality of, or inability to enforce, any such transfer or purported transfer, any consolidation or merger of the Issuer with or into any Person, any change in the ownership of any shares of capital stock or other equity or ownership interests of the Issuer, or any change whatsoever in the objects, capital structure, constitution or business of the Issuer;
44
(6) any default, failure or delay, willful or otherwise, on the part of the Issuer, any Subsidiary Guarantor or any other Person to perform or comply with, or the impossibility or illegality of performance by the Issuer, any Subsidiary Guarantor or any other Person of, any term of this Agreement, the Notes, any Subsidiary Guarantee or any other agreement;
(7) any suit or other action brought by, or any judgment in favor of, any beneficiaries or creditors of, the Issuer, any Subsidiary Guarantor or any other Person for any reason whatsoever, including without limitation any suit or action in any way attacking or involving any issue, matter or thing in respect of this Agreement, any of the Notes, any Subsidiary Guarantee or any other agreement;
(8) any lack or limitation of status or of power, incapacity or disability of the Issuer, any Subsidiary Guarantor or any other Person providing a Guaranty of, or security for, any of the Guaranteed Obligations; or
(9) any other thing, event, happening, matter, circumstance or condition whatsoever, not in any way limited to the foregoing (other than the indefeasible payment in full of the Guaranteed Obligations).
(b) The Guarantor hereby unconditionally waives diligence, presentment, demand of payment, protest and all notices whatsoever and any requirement that any holder of a Note exhaust any right, power or remedy against the Issuer under this Agreement or the Notes or any other agreement or instrument referred to herein or therein, or against any other Person under any other Guaranty of, or security for, any of the Guaranteed Obligations.
(c) In the event that the Guarantor shall at any time pay any amount on account of the Guaranteed Obligations or take any other action in performance of its obligations hereunder, the Guarantor shall not exercise any subrogation or other rights hereunder or under the Notes and the Guarantor hereby waives all rights it may have to exercise any such subrogation or other rights, and all other remedies that it may have against the Issuer, in respect of any payment made hereunder unless and until the Guaranteed Obligations shall have been indefeasibly paid in full. Prior to the payment in full of the Guaranteed Obligations, if any amount shall be paid to the Guarantor on account of any such subrogation rights or other remedy, notwithstanding the waiver thereof, such amount shall forthwith be paid to such holders to be credited and applied against the Guaranteed Obligations, whether matured or unmatured, in accordance with the terms hereof. The Guarantor agrees that its obligations under this Section 14 shall be automatically reinstated if and to the extent that for any reason any payment (including payment in full) by or on behalf of the Issuer is rescinded or must be otherwise restored by any holder of a Note, whether as a result of any proceedings in bankruptcy or reorganization or otherwise, all as though such amount had not been paid.
(d) If an event permitting the acceleration of the maturity of the principal amount of the Notes shall at any time have occurred and be continuing and such acceleration (and the effect thereof on the Guaranteed Obligations) shall at such time be prevented by reason
45
of the pendency against the Issuer or any other Person (other than the Guarantor as to itself) of a case or proceeding under a bankruptcy or insolvency law, the Guarantor agrees that, for purposes of the guarantee in this Section 14 and the Guarantor’s obligations under this Agreement and the Guarantees, the maturity of the principal amount of the Notes shall be deemed to have been accelerated (with a corresponding effect on the Guaranteed Obligations) with the same effect as if the holders of the Notes had accelerated the same in accordance with the terms of this Agreement, and the Guarantor shall forthwith pay such principal amount, any interest thereon, any Make-Whole Amounts and any other amounts guaranteed hereunder without further notice or demand.
(e) The guarantee in Section 14.1 is a continuing guarantee and shall apply to the Guaranteed Obligations whenever arising. Each default in the payment or performance of any of the Guaranteed Obligations shall give rise to a separate claim and cause of action hereunder, and separate claims or suits may be made and brought, as the case may be, hereunder as each such default occurs.
(f) No holder of Notes shall be under any obligation to (i) marshal any assets in favor of the Guarantor or in payment of any or all of the liabilities of the Guarantor under or in respect of this Agreement or the Guarantees or (ii) pursue any other remedy that the Guarantor may or may not be able to pursue itself and that may reduce amounts owing by the Guarantor under this Agreement or the Guarantees.
14.3. Survival of Obligations
.
All obligations of the Guarantor under Sections 14.1 and 14.2 shall survive the transfer of any Note, and any obligations of the Guarantor under Sections 14.1 and 14.2 with respect to which the underlying obligation of the Issuer is expressly stated to survive the payment of any Note shall also survive payment of such Note.
14.4. Guarantees Endorsed on the Notes
.
In the case of the Guarantee by Guarantor/GMC, each Note shall have endorsed thereon a Guarantee of the Guarantor/GMC in the form of
Exhibit 2
.
15. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES
.
15.1. Registration of Notes
.
The Issuer shall keep at its principal executive office a register for the registration and registration of transfers of Notes. The name and address of each holder of one or more Notes, each transfer thereof and the name and address of each transferee of one or more Notes shall be registered in such register. Prior to due presentment for registration of transfer, the Person in whose name any Note shall be registered shall be deemed and treated as the owner and holder thereof for all purposes hereof, and the Issuer shall not be affected by any notice or knowledge to the contrary. The Issuer shall give to any holder of a Note
46
promptly upon request therefor, a complete and correct copy of the names and addresses of all registered holders of Notes.
15.2. Transfer and Exchange of Notes
.
Upon surrender of any Note at the principal executive office of the Issuer for registration of transfer or exchange (and in the case of a surrender for registration of transfer, duly endorsed or accompanied by a written instrument of transfer duly executed by the registered holder of such Note or his attorney duly authorized in writing and accompanied by the address for notices of each transferee of such Note or part thereof), the Issuer shall execute and deliver, at the Issuer’s expense (except as provided below), one or more new Notes of the same series (as requested by the holder thereof) in exchange therefor, in an aggregate principal amount equal to the unpaid principal amount of the surrendered Note. Each such new Note shall be payable to such Person as such holder may request and shall be substantially in the form of
Exhibit 1
, as applicable, and shall, if applicable, have the Guarantee of the Guarantor endorsed thereon. Each such new Note shall be dated and bear interest from the date to which interest shall have been paid on the surrendered Note or dated the date of the surrendered Note if no interest shall have been paid thereon. The Issuer may require payment of a sum sufficient to cover any stamp tax or governmental charge imposed in respect of any such transfer of Notes. Notes (other than PIK Notes, which may be issued in minimum denominations of $1.00 and integral multiples thereof and any increase in the principal amount of the PIK Notes as a result of any PIK Interest may be made in multiples of $1.00) shall not be transferred in denominations of less than $400,000;
provided
, that if necessary to enable the registration of transfer by a holder of its entire holding of Notes, one Note may be in a denomination of less than $400,000. Any transferee, by its acceptance of a Note registered in its name (or the name of its nominee) shall be deemed to have agreed to be bound by the provisions contained herein expressed to be, or that otherwise are, applicable to Purchasers and/or holders of Notes and to have made the representations set forth in Section 6.
15.3. Replacement of Notes
.
Upon receipt by the Issuer of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of any Note (which evidence shall be, in the case of an Institutional Investor, notice from such Institutional Investor of such ownership and such loss, theft, destruction or mutilation), and
(a) in the case of loss, theft or destruction, of indemnity reasonably satisfactory to it (
provided
that if the holder of such Note is, or is a nominee for, an original Purchaser or another holder of a Note with a minimum net worth of at least $50,000,000 (or its equivalent in the relevant currency), such Person’s own unsecured agreement of indemnity shall be deemed to be satisfactory), or
(b) in the case of mutilation, upon surrender and cancellation thereof,
the Issuer at its own expense shall execute and deliver, in lieu thereof, a new Note of the same series, dated and bearing interest from the date to which interest shall have been paid on
47
such lost, stolen, destroyed or mutilated Note or dated the date of such lost, stolen, destroyed or mutilated Note if no interest shall have been paid thereon, and if applicable, having the Guarantee of the Guarantor/GMC endorsed thereon.
16. PAYMENTS ON NOTES
.
16.1. Place of Payment
.
Subject to Section 16.2, payments of principal, Make-Whole Amount, if any, and interest becoming due and payable on the Notes shall be made in New York, New York at Nordea Bank Finland Plc, New York Branch, 437 Madison Avenue, New York, NY 10022. The Issuer may at any time, by notice to each holder of a Note, change the place of payment of the Notes so long as such place of payment shall be either the principal office of the Issuer in such jurisdiction or the principal office of a bank or trust company in such jurisdiction or the designated paying office of a nominated paying agent in such jurisdiction.
16.2. Home Office Payment
.
So long as any Purchaser or any nominee of such Purchaser shall be the holder of any Note, and notwithstanding anything contained in Section 16.1 or in such Note to the contrary, the Issuer will pay all sums becoming due on such Note for principal, Make-Whole Amount, if any, and interest by the method and at the address specified for such purpose below such Purchaser’s name in
Schedule A
, or by such other method or at such other address as such Purchaser shall have from time to time specified to the Obligors in writing for such purpose, without the presentation or surrender of such Note or the making of any notation thereon, except that upon written request of the Obligors made concurrently with or reasonably promptly after payment or prepayment in full of any Note, such Purchaser shall surrender such Note for cancellation, reasonably promptly after any such request, to the Issuer at its address as set forth in Section 20. Prior to any sale or other disposition of any Note held by any Purchaser or any nominee of such Purchaser, such Purchaser will, at its election, either endorse thereon the amount of principal paid thereon and the last date to which interest has been paid thereon or surrender such Note to the Issuer in exchange for a new Note or Notes pursuant to Section 15. The Issuer will afford the benefits of this Section 16.2 to any Institutional Investor that is the direct or indirect transferee of any Note purchased by any Purchaser under this Agreement and that has made the same agreement relating to such Note as the Purchasers have made in this Section 16.2.
17. EXPENSES, ETC
.
17.1. Transaction Expenses
.
Whether or not the transactions contemplated hereby are consummated, GMC will pay all reasonable out-of-pocket costs and expenses (including reasonable attorneys’ fees of a special counsel and, if reasonably required, local or other counsel) incurred by the Purchasers in connection with such transactions. In connection with any amendments, waivers or consents under or in respect of this Agreement, the Notes, the Guarantees or any Subsidiary
48
Guarantee (whether or not such amendment, waiver or consent becomes effective), the Obligors will pay all reasonable out-of-pocket costs and expenses incurred by the Purchasers and each other holder of a Note including, without limitation: (a) the reasonable out-of-pocket costs and expenses incurred in enforcing or defending (or determining whether or how to enforce or defend) any rights under this Agreement, the Notes, the Guarantees or any Subsidiary Guarantee or in responding to any subpoena or other legal process or informal investigative demand issued in connection with this Agreement, the Notes, the Guarantees or any Subsidiary Guarantee, or by reason of being a holder of any Note, and (b) the reasonable out-of-pocket costs and expenses, including financial advisors’ fees, incurred in connection with the insolvency or bankruptcy of either of the Obligors or any Subsidiary or in connection with any work-out or restructuring of the transactions contemplated hereby and by the Notes, by the Guarantees or by any Subsidiary Guarantee. The Obligors will pay, and will save each Purchaser and each other holder of a Note harmless from, all claims in respect of any fees, costs or expenses if any, of brokers and finders (other than those retained by such Purchaser or other holder).
17.2. Taxes
.
The Obligors will pay all stamp, documentary or similar taxes which may be payable in respect of the execution and delivery of this Agreement, the Notes, the Guarantees or any Subsidiary Guarantee or of any amendment of, or waiver or consent under or with respect to, this Agreement, the Notes, the Guarantees or any Subsidiary Guarantee and will save each holder of a Note harmless against any loss or liability resulting from nonpayment or delay in payment of any such tax required to be paid by the Obligors hereunder.
17.3. Survival
.
The obligations of the Obligors under this Section 17 will survive the payment or transfer of any Note, the enforcement, amendment or waiver of any provision of this Agreement, the Notes, the Guarantees or any Subsidiary Guarantee, and the termination of this Agreement.
18.
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT
.
All representations and warranties contained herein shall survive the execution and delivery of this Agreement and the Notes, the purchase or transfer by each Purchaser of any Note or portion thereof or interest therein and the payment of any Note, and may be relied upon by any subsequent holder of a Note, regardless of any investigation made at any time by or on behalf of any Purchaser or any other holder of a Note. All statements contained in any certificate or other instrument delivered by or on behalf of either of the Obligors pursuant to this Agreement shall be deemed representations and warranties of such Obligor under this Agreement. Subject to the preceding sentence, this Agreement, the Notes and the Guarantees embody the entire agreement and understanding between the Purchasers and the Obligors and supersede all prior agreements and understandings relating to the subject matter hereof.
49
19. AMENDMENT AND WAIVER
.
19.1. Requirements
.
This Agreement and the Notes may be amended, and the observance of any term hereof or of the Notes may be waived (either retroactively or prospectively), with (and only with) the written consent of the Obligors and the Required Holders, except that (a) no amendment or waiver of any of the provisions of Section 1, 2, 3, 4, 5, 6 or 23 hereof, or any defined term (as it is used therein), will be effective as to any Purchaser unless consented to by such Purchaser in writing, and (b) no such amendment or waiver may, without the written consent of the holder of each of the Notes at the time outstanding adversely affected thereby, (i) subject to the provisions of Section 12 relating to acceleration or rescission, change the amount or time of any prepayment or payment of principal of, or reduce the rate or change the time of payment or method of computation of interest or of the Make-Whole Amount on, the Notes held by such holder, (ii) change the percentage of the principal amount of the Notes the holders of which are required to consent to any such amendment or waiver, or (iii) amend any of Sections 8, 11(a), 11(b), 12, 13, 19, 22 or 25.
19.2. Solicitation of Holders of Notes
.
The Obligors will not directly or indirectly pay or cause to be paid any remuneration, whether by way of supplemental or additional interest, fee or otherwise, or grant any security, to any holder of Notes as consideration for or as an inducement to the entering into by any holder of Notes or any waiver or amendment of any of the terms and provisions hereof or of any Note or any Subsidiary Guarantee unless such remuneration is concurrently offered on the same terms, ratably to each holder of Notes then outstanding.
19.3. Binding Effect, etc
.
Any amendment or waiver consented to as provided in this Section 19 applies equally to all holders of Notes and is binding upon them and upon each future holder of any Note and upon the Obligors without regard to whether such Note has been marked to indicate such amendment or waiver. No such amendment or waiver will extend to or affect any obligation, covenant, agreement, Default or Event of Default not expressly amended or waived or impair any right consequent thereon. No course of dealing between either of the Obligors and the holder of any Note nor any delay in exercising any rights hereunder or under any Note shall operate as a waiver of any rights of any holder of such Note. As used herein, the term “
this Agreement
” and references thereto shall mean this Agreement as it may from time to time be amended or supplemented.
19.4. Notes held by Obligors, etc
.
Solely for the purpose of determining whether the holders of the requisite percentage of the aggregate principal amount of Notes then outstanding approved or consented to any amendment, waiver or consent to be given under this Agreement or the Notes or any Guarantee, or have directed the taking of any action provided herein or in the Notes to be
50
taken upon the direction of the holders of a specified percentage of the aggregate principal amount of Notes then outstanding, Notes directly or indirectly owned by GMC or any of its Subsidiaries shall be deemed not to be outstanding.
20. NOTICES
.
All notices and communications provided for hereunder shall be in writing and sent (a) by telecopy if the sender on the same day sends a confirming copy of such notice by a recognized international commercial delivery service (charges prepaid), or (b) by a recognized international commercial delivery service (with charges prepaid). Any such notice must be sent:
(i) if to a Purchaser or its nominee, to such Purchaser or nominee at the address (whether email or physical) specified for such communications in
Schedule A
, or at such other address as such Purchaser or nominee shall have specified to the Obligors in writing;
(ii) if to any other holder of any Note, to such holder at such address (whether email or physical) as such other holder shall have specified to the Obligors in writing;
(iii) if to GMC, to General Maritime Corporation, 299 Park Avenue, New York, NY 10171, Attention: Chief Financial Officer, Telephone: (212) 763-5600, Facsimile: (212) 763-5608, Email: finance@generalmaritime.com, or at such other address as GMC shall have specified to the holder of each Note in writing; and
(iv) if to FinCo, to GMC, to General Maritime Corporation, 299 Park Avenue, New York, NY 10171, Attention: Chief Financial Officer, Telephone: (212) 763-5600, Facsimile: (212) 763-5608, Email: finance@generalmaritime.com, or at such other address as FinCo shall have specified to the holder of each Note in writing, with a copy to:
Kramer Levin Naftalis & Frankel LLP
1177 Avenue of the Americas
New York, NY 10022
Attention: Kenneth Chin, Esq.
Telephone: (212) 715-9100
Facsimile: (212) 715-8000
Notices under this Section 20 will be deemed given only when actually received.
Each document, instrument, financial statement, report, notice or other communication delivered in connection with this Agreement shall be in English or accompanied by an English translation thereof.
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21. REPRODUCTION OF DOCUMENTS
.
This Agreement and all documents relating thereto, including, without limitation, (a) consents, waivers and modifications that may hereafter be executed, (b) documents received by any Purchaser at the Closing (except the Notes themselves), and (c) financial statements, certificates and other information previously or hereafter furnished to any Purchaser, may be reproduced by such Purchaser by any photographic, electronic, digital or other similar process and such Purchaser may destroy any original document so reproduced. The Obligors agree and stipulate that, to the extent permitted by applicable law, any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made by such Purchaser in the regular course of business) and any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence. This Section 21 shall not prohibit either of the Obligors or any other holder of Notes from contesting any such reproduction to the same extent that it could contest the original, or from introducing evidence to demonstrate the inaccuracy of any such reproduction.
22. CONFIDENTIAL INFORMATION
.
For the purposes of this Section 22, “
Confidential Information
” means information delivered to any Purchaser by or on behalf of either of the Obligors or any Subsidiary in connection with the transactions contemplated by or otherwise pursuant to this Agreement that is proprietary in nature and that was clearly marked or labeled or otherwise adequately identified when received by such Purchaser as being confidential information of such Obligor or such Subsidiary,
provided
that such term does not include information that (a) was publicly known or otherwise known to such Purchaser prior to the time of such disclosure, (b) subsequently becomes publicly known through no act or omission by such Purchaser or any person acting on such Purchaser’s behalf, (c) otherwise becomes known to such Purchaser other than through disclosure by either of the Obligors or any Subsidiary or (d) constitutes financial statements delivered to such Purchaser under Section 7.1 that are otherwise publicly available. Each Purchaser will maintain the confidentiality of such Confidential Information in accordance with procedures adopted by such Purchaser in good faith to protect confidential information of third parties delivered to such Purchaser,
provided
that such Purchaser may deliver or disclose Confidential Information to (i) such Purchaser’s directors, officers, employees, agents, attorneys and affiliates (to the extent such disclosure reasonably relates to the administration of the investment represented by such Purchaser’s Notes), (ii) such Purchaser’s financial advisors and other professional advisors who agree to hold confidential the Confidential Information substantially in accordance with the terms of this Section 22, (iii) any other holder of any Note, (iv) any Institutional Investor to which such Purchaser sells or offers to sell such Note or any part thereof or any participation therein (if such Person has agreed in writing prior to its receipt of such Confidential Information to be bound by the provisions of this Section 22), (v) any Person from which such Purchaser offers to purchase any security of either of the Obligors (if such Person has agreed in writing prior to its receipt of such Confidential Information to be bound by the provisions of this Section 22), (vi) any federal or state regulatory authority having jurisdiction over such Purchaser, (vii) the
52
National Association of Insurance Commissioners or any similar organization, or any nationally recognized rating agency that requires access to information about such Purchaser’s investment portfolio, (viii) to effect compliance with any law, rule, regulation or order applicable to such Purchaser, (ix) in response to any subpoena or other legal process, (y) in connection with any litigation to which such Purchaser is a party or (z) if an Event of Default has occurred and is continuing, to the extent such Purchaser may reasonably determine such delivery and disclosure to be necessary or appropriate in the enforcement or for the protection of the rights and remedies under such Purchaser’s Notes or this Agreement. Each holder of a Note, by its acceptance of a Note, will be deemed to have agreed to be bound by and to be entitled to the benefits of this Section 22 as though it were a party to this Agreement. On reasonable request by either of the Obligors in connection with the delivery to any holder of a Note of information required to be delivered to such holder under this Agreement or requested by such holder (other than a holder that is a party to this Agreement or its nominee), such holder will enter into an agreement with the Obligors embodying the provisions of this Section 22.
In the event that as a condition to receiving access to information relating to either of the Obligors or any Subsidiary in connection with the transactions contemplated by or otherwise pursuant to this Agreement, any Purchaser is required to agree to a confidentiality undertaking (whether through IntraLinks, another secure website, a secured virtual workspace or otherwise) which is different from the terms of this Section 22, the terms of this Section 22 shall not be amended thereby and, as between such Purchaser and the Obligors, supersede the terms of any such other confidentiality undertaking;
provided
that all such information shall be deemed to be Confidential Information for purposes of this Section 22, notwithstanding whether such information was marked or labeled or otherwise identified as such.
23. SUBSTITUTION OF PURCHASER
.
Each Purchaser shall have the right to substitute any one of such Purchaser’s Affiliates or such other Person reasonably acceptable to the Issuer as the purchaser of the Notes that such Purchaser has agreed to purchase hereunder, by written notice to the Obligors, which notice shall be signed by both such Purchaser and such Affiliate, shall contain such Affiliate’s agreement to be bound by this Agreement and shall contain a confirmation by such Affiliate of the accuracy with respect to it of the representations set forth in Section 6. Upon receipt of such notice, any reference to such Purchaser in this Agreement (other than in this Section 23) shall be deemed to refer to such Affiliate in lieu of such original Purchaser. In the event that such Affiliate is so substituted as a purchaser hereunder and such Affiliate thereafter transfers to such original Purchaser all of the Notes then held by such Affiliate, upon receipt by the Issuer of notice of such transfer, any reference to such Affiliate as a “Purchaser” in this Agreement (other than in this Section 23) shall no longer be deemed to refer to such Affiliate, but shall refer to such original Purchaser, and such original Purchaser shall again have all the rights of an original holder of the Notes under this Agreement.
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24. JURISDICTION AND PROCESS
.
EACH OBLIGOR AGREES THAT ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTES, THE GUARANTEES OR ANY OTHER DOCUMENT EXECUTED IN CONNECTION HEREWITH, OR ANY LEGAL ACTION OR PROCEEDING TO EXECUTE OR OTHERWISE ENFORCE ANY JUDGMENT OBTAINED AGAINST SUCH OBLIGOR FOR BREACH HEREOF OR THEREOF, OR AGAINST ANY OF ITS PROPERTIES, MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK BY ANY PURCHASER OR ON ANY PURCHASER’S BEHALF OR BY OR ON BEHALF OF ANY HOLDER OF A NOTE, AS ANY PURCHASER OR SUCH HOLDER MAY ELECT, AND EACH OBLIGOR HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF SUCH COURTS FOR PURPOSES OF ANY SUCH LEGAL ACTION OR PROCEEDING. EACH OBLIGOR HEREBY AGREES THAT SERVICE OF PROCESS IN ANY SUCH PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO IT AT ITS ADDRESS SPECIFIED IN SECTION 20 OR AT SUCH OTHER ADDRESS OF WHICH EACH HOLDER OF A NOTE SHALL HAVE BEEN NOTIFIED PURSUANT THERETO. IN ADDITION, EACH OBLIGOR HEREBY IRREVOCABLY WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTES, THE GUARANTEES OR ANY OTHER DOCUMENT EXECUTED IN CONNECTION HEREWITH BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
25. OBLIGATION TO MAKE PAYMENTS IN U.S. DOLLARS
.
All payments made by the Obligors under this Agreement, the Notes or the Guarantees, as the case may be, shall be in U.S. Dollars and the obligations of the Obligors to make payments in U.S. Dollars of any of its obligations under this Agreement, the Notes or the Guarantees, as the case may be, shall not be discharged or satisfied by any tender, or any recovery pursuant to any judgment, which is expressed in or converted into any currency other than U.S. Dollars, except to the extent such tender or recovery shall result in the actual receipt by the holder of any Note of the full amount of U.S. Dollars expressed to be payable in respect of any such obligations. The obligation of the Obligors to make payments in U.S. Dollars as aforesaid shall be enforceable as an alternative or additional cause of action for the purpose of recovery in U.S. Dollars of the amount, if any, by which such actual receipt shall fall short of the full amount of U.S. Dollars expressed to be payable in respect of any such obligations, and shall not be affected by judgment being obtained for any other sums due under this Agreement, Notes or the Guarantees.
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26. MISCELLANEOUS
.
26.1. Successors and Assigns
.
All covenants and other agreements contained in this Agreement by or on behalf of any of the parties hereto bind and inure to the benefit of their respective successors and assigns (including, without limitation, any subsequent holder of a Note) whether so expressed or not;
provided
no Purchaser shall transfer any of its rights and obligations under this Agreement prior to the purchase of Notes other than as set forth under Section 23.
26.2. Payments Due on Non-Business Days
.
Anything in this Agreement or the Notes to the contrary notwithstanding, any payment of principal of or Make-Whole Amount or interest on any Note that is due on a date other than a Business Day shall be made on the next succeeding Business Day without including the additional days elapsed in the computation of the interest payable on such next succeeding Business Day;
provided
that if the maturity date of any Note is a date other than a Business Day, the payment otherwise due on such maturity date shall be made on the next succeeding Business Day and shall include the additional days elapsed in the computation of interest payable on such next succeeding Business Day.
26.3. Severability
.
Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall (to the full extent permitted by law) not invalidate or render unenforceable such provision in any other jurisdiction.
26.4. Construction
.
Each covenant contained herein shall be construed (absent express provision to the contrary) as being independent of each other covenant contained herein, so that compliance with any one covenant shall not (absent such an express contrary provision) be deemed to excuse compliance with any other covenant. Where any provision herein refers to action to be taken by any Person, or which such Person is prohibited from taking, such provision shall be applicable whether such action is taken directly or indirectly by such Person.
26.5. Ratification
.
As a shareholder of any Subsidiary Guarantor, the Guarantor hereby ratifies and confirms the execution, delivery and performance by such Subsidiary Guarantor of any Subsidiary Guarantee to which such Subsidiary Guarantor is or becomes a party.
55
26.6. Counterparts
.
This Agreement may be executed in any number of counterparts, each of which shall be an original but all of which together shall constitute one instrument. Each counterpart may consist of a number of copies hereof, each signed by less than all, but together signed by all, of the parties hereto.
26.7. Governing Law
.
This Agreement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the law of the State of New York excluding choice-of-law principles of the law of such State that would require the application of the laws of a jurisdiction other than such State.
26.8. Accounting Matters
.
(a)
Change in Applicable GAAP
. If the Obligors notify the holders of Notes that, in the Guarantor’s reasonable opinion, or if the Required Holders notify the Obligors that, in the Required Holders’ reasonable opinion, as a result of changes in Applicable GAAP from time to time (“
Subsequent Changes
”), any of the covenants contained in Sections 10.4 through 10.7, inclusive, or any of the defined terms used in any of the foregoing covenants, no longer apply as intended such that such covenants are materially more or less restrictive to the Obligors than are such covenants immediately prior to giving effect to such Subsequent Changes, the Obligors and the holders of Notes shall negotiate in good faith to reset or amend such covenants or defined terms so as to negate such Subsequent Changes, or to establish alternative covenants or defined terms. Until the Obligors and the Required Holders so agree to reset, amend or establish alternative covenants or defined terms, the covenants contained in Sections 10.4 through 10.7, inclusive, together with the relevant defined terms, shall continue to apply and compliance therewith shall be determined assuming that the Subsequent Changes shall not have occurred (“
Static GAAP
”). During any period that compliance with any covenants shall be determined pursuant to Static GAAP, the Obligors shall include relevant reconciliations in reasonable detail between Applicable GAAP and Static GAAP with respect to the applicable covenant compliance calculations contained in each certificate of a Senior Financial Officer delivered pursuant to Section 7.2(b) during such period.
(b)
International Accounting Standard 39
. For purposes of determining compliance with the financial covenants contained in this Agreement, any election by either of the Obligors or any Restricted Subsidiary to measure an item of Indebtedness using fair value (as permitted by International Accounting Standard 39 or any similar accounting standard (the “
Relevant Accounting Standard
”)) shall be disregarded and such determination shall be made as if such election had not been made. The foregoing restriction shall not apply to any derivative financial instrument and shall not restrict in any way valuations related to hedge accounting under any Relevant Accounting Standard.
* * * * *
56
If you are in agreement with the foregoing, please sign the form of agreement on the accompanying counterpart of this Agreement and return it to the Obligors, whereupon the foregoing shall become a binding agreement between you and the Obligors.
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Very truly yours,
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GENERAL MARITIME CORPORATION
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By
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Name:
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Title:
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VLCC ACQUISITION I CORPORATION
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By
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Name:
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Title:
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[Signature Page to Note and Guarantee Agreement]
The foregoing is hereby agreed to as of the
date thereof.
BLUEMOUNTAIN CREDIT
OPPORTUNITIES MASTER FUND I L.P.
By: BlueMountain Capital Management, LLC,
its investment manager
[Signature Page to Note and Guarantee Agreement]
The foregoing is hereby agreed to as of the
date thereof.
BLUEMOUNTAIN LONG/SHORT
CREDIT AND DISTRESSED REFLECTION FUND,
A SUB-FUND OF AAI BLUEMOUNTAIN FUND PLC
By: BlueMountain Capital Management, LLC,
its investment manager
[Signature Page to Note and Guarantee Agreement]
The foregoing is hereby agreed to as of the
date thereof.
BLUEMOUNTAIN KICKING
HORSE FUND L.P.
By: BlueMountain Capital Management, LLC,
its investment manager
[Signature Page to Note and Guarantee Agreement]
The foregoing is hereby agreed to as of the
date thereof.
BLUEMOUNTAIN TIMBERLINE LTD.
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By: BlueMountain Capital Management, LLC,
its investment manager
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By
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Name:
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Title:
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[Signature Page to Note and Guarantee Agreement]
The foregoing is hereby agreed to as of the
date thereof.
BLUEMOUNTAIN MONTENVERS
MASTER FUND SCA SICA V-SIF
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By: BlueMountain Capital Management, LLC,
its investment manager
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By
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Name:
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Title:
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[Signature Page to Note and Guarantee Agreement]
The foregoing is hereby agreed to as of the
date thereof.
BLUEMOUNTAIN GUADALUPE
PEAK FUND L.P.
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By: BlueMountain Capital Management, LLC,
its investment manager
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By
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Name:
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Title:
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[Signature Page to Note and Guarantee Agreement]
The foregoing is hereby agreed to as of the
date thereof.
BLUEMOUNTAIN STRATEGIC CREDIT
MASTER FUND L.P.
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By: BlueMountain Capital Management, LLC,
its investment manager
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By
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Name:
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Title:
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[Signature Page to Note and Guarantee Agreement]
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
[To be attached.]
SCHEDULE B
DEFINED TERMS
As used herein, the following terms have the respective meanings set forth below or set forth in the Section hereof following such term:
“
Accredited Investor
” means an accredited investor as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act.
“
Acquisition
” means the direct or indirect acquisition by the Issuer of up to seven Scorpio Newbuilds prior to Closing.
“
Affiliate
” means, at any time, and with respect to any Person, (a) any other Person that at such time directly or indirectly through one or more intermediaries Controls, or is Controlled by, or is under common Control with, such first Person and (b) any Person beneficially owning or holding, directly or indirectly, 20.0% or more of any class of voting or equity interests of either of the Obligors or any Subsidiary or any corporation of which either of the Obligors and their respective Subsidiaries beneficially own or hold, in the aggregate, directly or indirectly, 20.0% or more of any class of voting or equity interests. As used in this definition, “
Control
” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. Unless the context otherwise clearly requires, any reference to an “Affiliate” is a reference to an Affiliate of the Guarantor.
“
Anti-Corruption Laws
” is defined in Section 5.16(d)(1).
“
Anti-Money Laundering Laws
” is defined in Section 5.16(c).
“
Applicable GAAP
” means, with respect to (i) GMC and its Subsidiaries on a consolidated basis, generally accepted accounting principles, standards and practices as in effect from time to time in the United States, and (ii) with respect to any Person other than the Guarantor or its Subsidiaries on a consolidated basis, generally accepted accounting principles (including any applicable application of International Financial Reporting Standards) as in effect from time to time in the jurisdiction under which such Person prepares its books of account and financial records and statements.
“
Applicable Taxing Authority
” means any Governmental Authority (a) of or in the United States or any political subdivision thereof or therein or (b) of or in any other jurisdiction or any political subdivision thereof or therein in which either of the Obligors may be organized as a result of effecting a Permitted Merger.
“
Blocked Person
” is defined in Section 5.16(a).
“
Business Day
” means (a) for the purposes of Section 8.7 only, any day other than a Saturday, a Sunday or a day on which commercial banks in New York City are
required or authorized to be closed, and (b) for the purposes of any other provision of this Agreement, any day other than a Saturday, a Sunday or a day on which commercial banks in New York City are required or authorized to be closed.
“
Capital Lease
” means, at any time, a lease with respect to which the lessee is required concurrently to recognize the acquisition of an asset and the incurrence of a liability in accordance with Applicable GAAP.
“
Change of Control
” means (a) the sale, lease or transfer, in one or a series of related transactions, of all or substantially all the assets of the Issuer and its subsidiaries, taken as a whole, to a person other than one or more “Permitted Holders” (as defined in the Existing Credit Agreements or any Refinancing Agreement); or (b) the Issuer becomes aware of the acquisition by any person or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision), including any group acting for the purpose of acquiring, holding or disposing of securities (within the meaning of Rule 13d-5(b)(1) under the Exchange Act), other than any of the “Permitted Holders”, in a single transaction or in a related series of transactions, by way of merger, consolidation or other business combination or purchase of equity interests or otherwise, of beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act, or any successor provision) of voting stock of the Issuer representing 50% or more of the total voting power of the voting stock of the Issuer.
“
Closing
” is defined in Section 3.
“
Code
” means the U.S. Internal Revenue Code of 1986, as amended from time to time, and the rules and regulations promulgated thereunder from time to time.
“
Commitment Fee
” means a fee, which at the election of GMC may be paid in (a) cash in an amount equal to $6,250,000 or (b) $6,250,000 in aggregate value of the same equity issued in the Equity Issuance, determined by the value ascribed to such equity in the Equity Issuance.
“
Commitment Letter
” is defined in the first paragraph hereof.
“
Confidential Information
” is defined in Section 22.
“
Consolidated Secured Indebtedness
” means, as of any date of determination, the consolidated Indebtedness of GMC and its Restricted Subsidiaries (other than intercompany Indebtedness between or among the Obligors) outstanding as of that date (with outstanding letters of credit being deemed to have a principal amount equal to the maximum potential liability of GMC and its Restricted Subsidiaries thereunder) that is secured by a Lien on any assets of GMC or any Restricted Subsidiary.
“
Consolidated Total Indebtedness
” means, as of any date of determination, the total amount of Indebtedness for borrowed money, unreimbursed obligations under letters of credit, obligations in respect to Capitalized Leases (as defined in the Credit Facilities) and
2
debt obligations evidenced by promissory notes or similar instruments of GMC and its Restricted Subsidiaries outstanding on such date, minus the sum of all cash and cash equivalents of GMC and its Restricted Subsidiaries, in each case, on a consolidated basis.
“
Contingent Obligation
” means, as to any Person, any obligation of such Person guaranteeing or intended to guarantee any Indebtedness (“primary obligations”) of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, including, without limitation, any obligation of such Person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (x) for the purchase or payment of any such primary obligation or (y) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the holder of such primary obligation against loss in respect thereof;
provided
,
however
, that the term Contingent Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business and any products warranties extended in the ordinary course of business. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which such Contingent Obligation is made (or, if the less, the maximum amount of such primary obligation for which such Person may be liable pursuant to the terms of the instrument evidencing such Contingent Obligation) or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such Person is required to perform thereunder) as determined by such Person in good faith.
“
Control
” and “
Controlled
” means, with respect to any Person, the direct or indirect power to directly or indirectly (i) determine the outcome of decisions about the financial and operating policies of such Person or (ii) control the membership of the board of directors of such Person, whether or not the power has statutory, legal or equitable force or is based on statutory, legal or equitable rights and whether or not it arises by means of trusts, agreements, arrangements, understandings, practices, the ownership of any interest in shares or stock of the corporation or otherwise.
“
Cumulative Consolidated Net Income
” means shall mean, for any period, the cumulative consolidated net after tax income of GMC and its Subsidiaries determined in accordance with GAAP.
“
Cumulative Consolidated Net Income Amount
” is defined in Section 10.3.
“
Default
” means an event or condition the occurrence or existence of which would, with the lapse of time or the giving of notice or both, become an Event of Default.
“
Default Rate
” means, with respect to any Note, that rate of interest that is the greater of (i) 2.0% per annum above the rate of interest stated in clause (a) of the first
3
paragraph of such Note or (ii) 2.0% over the rate of interest publicly announced by Citibank, N.A. in New York, New York as its “base” or “prime” rate.
“
Disposition
” is defined in Section 10.2(a).
“
Disqualified Equity
” means, with respect to any Person, any Equity Interests of such Person which, by its terms, or by the terms of any security into which it is convertible or for which it is putable or exchangeable, or upon the happening of any event, matures or is mandatorily redeemable (other than solely as a result of a change of control or asset sale) pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof (other than solely as a result of a change of control or asset sale), in whole or in part, in each case prior to the date 91 calendar days after the maturity date of the Notes;
provided
,
however
, that if such Equity Interest is issued to any plan for the benefit of employees of the Obligors or the Restricted Subsidiaries or by any such plan to such employees, such Equity Interest shall not constitute Disqualified Equity solely because it may be required to be repurchased by such Obligor or its Restricted Subsidiaries in order to satisfy applicable statutory or regulatory obligations. The amount of any Disqualified Equity shall be the greater of the face amount and the maximum redemption or repurchase price thereof.
“
Dollar
” or “
$
” means lawful money of the United States of America.
“
Environmental Laws
” means any and all Federal, state, local, and foreign statutes, laws, regulations, ordinances, rules, judgments, written orders, decrees, permits, concessions, grants, franchises, licenses, or governmental restrictions relating to pollution and the protection of the environment or the release of any materials into the environment, including but not limited to those related to Hazardous Materials or wastes, air emissions and discharges to waste or public systems.
“
Equity Interests
” means (i) in the case of a corporation, corporate stock, (ii) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents of corporate stock and (iii) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited).
“
Equity Issuance
” means the issuance by GMC of $166,000,000 of common or non-cash pay preferred stock capital raise, including without limitation, the $50,000,005.50 of Class B Common Stock issued by GMC pursuant to that certain Subscription Agreement dated as of the date hereof, between GMC, Marine Holdings TP, L.P, and the purchasers party thereto.
“
ERISA
” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in effect.
“
ERISA Affiliate
” means each person (as defined in Section 3(9) of ERISA) which together with the Obligors and the Restricted Subsidiaries that would be deemed to be a “single employer” within the meaning of Section 414(b), (c), (m) or (o) of the Code.
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“
Event of Default
” is defined in Section 11.
“
Exchange Act
” means Securities Exchange Act of 1934, as amended.
“
Excluded Tax
” means, with respect to any holder of a Note, any tax imposed by any jurisdiction on the net income of such holder as a consequence of such holder being a resident of or organized or doing business in that jurisdiction (but not any tax which is imposed as a result of such holder being considered a resident of or organized or doing business in that jurisdiction solely as a result of such holder holding a Note or being a party to this Agreement or any transaction contemplated by this Agreement or enforcing its rights hereunder).
“
Existing Credit Agreements
” is defined in the first paragraph of this Agreement.
“
Existing Credit Amendments
” is defined in the first paragraph of this Agreement.
“
Fair Market Value
” being determined based on the fair market value of such vessel on the basis of an individual charter-free arm’s-length transaction as set forth in the most recently obtained appraisals from at least two Approved Appraisers (as defined in the Existing Credit Agreements or any Refinancing Agreement);
provided
,
however
, that the fair market value of the Vessels subject to Scorpio Newbuilds shall be the value set forth in the most recently obtained appraisals from at least two Approved Appraisers (as defined in the Existing Credit Agreements or any Refinancing Agreement) less all remaining payments under the Scorpio Newbuilds;
provided further
that any such appraisal report shall have been prepared within 90 days prior to such date of determination.
“
FATCA
” means (a) the United States Foreign Account Tax Compliance Act of 2009 (Sections 1471 through 1474 of the Code as of the date of this Agreement), together with any regulations thereunder and interpretations thereof and (b) any treaty, law, regulation or other official guidance enacted in any other jurisdiction or relating to any intergovernmental agreement between the United States and any other jurisdiction, which, in either case, facilitates the implementation of the withholding of United States taxes of the type set forth in clause (a) above.
“
FinCo Issuer
” is defined in the first paragraph of this Agreement.
“
Foreign Pension Plan
” shall mean any plan, fund (including, without limitation, any superannuation fund) or other similar program established or maintained outside the United States of America by the Obligors or any one or more of its Restricted Subsidiaries primarily for the benefit of employees of the Obligors or such Restricted Subsidiaries residing outside the United States of America, which plan, fund or other similar program provides, or results in, retirement income, a deferral of income in contemplation of retirement or payments to be made upon termination of employment, and which plan is not subject to ERISA or the Code.
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“
Global Refinancing
” means any amendment, restatement, modification or refinancing of the Existing Credit Agreements that is in connection with the financing of the Scorpio Newbuilds, the terms of which may include an amortization schedule of as little as 1.0% annually and a bullet maturity at a maturity date that is prior to the maturity date of the Notes.
“
GMC Charter
” means the Second Amended and Restated Articles of Incorporation of GMC, amended from time to time in accordance with its terms and applicable law.
“
GMC Issuer
” is defined in the first paragraph of this Agreement.
“
Governmental Authority
” means
(a)
the government of
(i)
the United States of America or any State or other political subdivision of either thereof, or
(ii)
any other jurisdiction in which either of the Obligors or any Subsidiary conducts all or any part of its business, or which asserts jurisdiction over any properties of either of the Obligors or any Subsidiary, or
(b)
any entity exercising executive, legislative, judicial, regulatory or administrative functions of, or pertaining to, any such government.
“
Governmental Official
” means any governmental official or employee, employee of any government-owned or government-controlled entity, political party, any official of a political party, candidate for political office, official of any public international organization or anyone else acting in an official capacity.
“
Guarantee
” and “
Guarantee
s” are defined in Section 1.
“
Guaranteed Obligations
” is defined in Section 14.1.
“
Guarantor
” means the entity specified as the “Guarantor” in the Notice of Designation delivered pursuant to Section 4.10(b), which shall specify either (a) Guarantor/FinCo if GMC Issuer is specified or (b) Guarantor/GMC if (i) the FinCo Issuer is specified and (ii) consent and approval from the Existing Credit Agreement Lenders is obtained by GMC, the Existing Credit Amendments are consummated by GMC and satisfactory evidence of such consummation is delivered to the Purchasers, or any successor thereto that shall have become such in the manner prescribed in Section 10.2.
“
Guarantor/FinCo
” is defined in the first paragraph of this Agreement.
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“
Guarantor/GMC
” is defined in the first paragraph of this Agreement.
“
Guaranty
” means, with respect to any Person, any obligation (except the endorsement in the ordinary course of business of negotiable instruments for deposit or collection) of such Person guaranteeing or in effect guaranteeing any indebtedness, dividend or other obligation of any other Person in any manner, whether directly or indirectly, including (without limitation) obligations incurred through an agreement, contingent or otherwise, by such Person:
(a)
to purchase such indebtedness or obligation or any property constituting security therefor;
(b)
to advance or supply funds (i) for the purchase or payment of such indebtedness or obligation, or (ii) to maintain any working capital or other balance sheet condition or any income statement condition of any other Person or otherwise to advance or make available funds for the purchase or payment of such indebtedness or obligation;
(c)
to lease properties or to purchase properties or services primarily for the purpose of assuring the owner of such indebtedness or obligation of the ability of any other Person to make payment of the indebtedness or obligation; or
(d)
otherwise to assure the owner of such indebtedness or obligation against loss in respect thereof.
In any computation of the indebtedness or other liabilities of the obligor under any Guaranty, the indebtedness or other obligations that are the subject of such Guaranty shall be assumed to be direct obligations of such obligor.
“
Hazardous Material
” means any and all pollutants, toxic or hazardous wastes or any other substances that might pose a hazard to health or safety, the removal of which may be required or the generation, manufacture, refining, production, processing, treatment, storage, handling, transportation, transfer, use, disposal, release, discharge, spillage, seepage, or filtration of which is or shall be restricted, prohibited or penalized by any applicable Environmental Law (including, without limitation, friable asbestos, urea formaldehyde foam insulation and polychlorinated biphenyls).
“
holder
” means, with respect to any Note, the Person in whose name such Note is registered in the register maintained by the Issuer pursuant to Section 15.1.
“
Indebtedness
” means, as to any Person, without duplication, (i) all indebtedness (including principal, interest, fees and charges) of such Person for borrowed money or for the deferred purchase price of property or services, (ii) the maximum amount available to be drawn under all letters of credit issued for the account of such Person and all unpaid drawings in respect of such letters of credit, (iii) all Indebtedness of the types described in clause (i), (ii), (iv), (v), (vi), (vii) or (viii) of this definition secured by any Lien
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on any property owned by such Person, whether or not such Indebtedness has been assumed by such Person (to the extent of the value of the respective property), (iv) the aggregate amount required to be capitalized under leases under which such Person is the lessee, (v) all obligations of such person to pay a specified purchase price for goods or services, whether or not delivered or accepted, i.e., take-or-pay and similar obligations, (vi) all Contingent Obligations of such Person, (vii) all obligations under any hedging agreement or under any similar type of agreement and (viii) the maximum amount available to be drawn under all letters of credit existing as of the date of this Agreement issued for the account of such Person and all unpaid drawings in respect thereof;
provided
that Indebtedness shall in any event not include trade payables and expenses accrued in the ordinary course of business.
“
Institutional Investor
” means (a) any original purchaser of a Note, (b) any holder of a Note (together with one or more of its affiliates) holding more than 5.0% of the aggregate principal amount of the Notes then outstanding, and (c) any bank, trust company, savings and loan association or other financial institution, any pension plan, any investment company, any insurance company, any broker or dealer, or any other similar financial institution or entity, regardless of legal form.
“
Interest Payment Date
” means each of May 15 and November 15 of each year, commencing November 15, 2014.
“
Interest Period
” means the period commencing on and including an Interest Payment Date and ending on and including the day immediately preceding the next succeeding Interest Payment Date, with the exception that the first Interest Period shall commence on and include the date of the Closing and end on and exclude the first Interest Payment Date.
“
Issuer
” is defined in the first paragraph.
“
Lien
” means, with respect to any Person, any mortgage, lien, pledge, charge, security interest or other encumbrance, or any interest or title of any vendor, lessor, lender or other secured party to or of such Person under any conditional sale or other title retention agreement or Capital Lease, upon or with respect to any property or asset of such Person (including in the case of stock, stockholder agreements, voting trust agreements and all similar arrangements).
“
Make-Whole Amount
” is defined in Section 8.7.
“
Material
” means material in relation to the business, operations, financial condition, assets or properties, of GMC and its Restricted Subsidiaries taken as a whole.
“
Material Adverse Effect
” means a material adverse effect on (a) the business, operations, financial condition, assets or properties of GMC and its Restricted Subsidiaries taken as a whole, or (b) the ability of the (i) Guarantor to perform its obligations under this Agreement or its Guarantees or (ii) Issuer to perform its obligations under this Agreement or the Notes, or (c) the validity or enforceability of this Agreement or the Notes or the Guarantee or any Subsidiary Guarantee.
8
“
Multiemployer Plan
” shall mean a Plan which is defined in Section 3(37) of ERISA.
“
Net Cash Proceeds
” means, (x) with respect to any disposition of the Scorpio Newbuilds or the Vessels relating thereto, the aggregate cash payments (including any cash received by way of deferred payment pursuant to a note receivable issued in connection with such disposition, other than the portion of such deferred payment constituting interest, but only as and when received) received by GMC or the Issuer or any of their respective Subsidiaries from such disposition net of (i) reasonable transaction costs (including, without limitation, reasonable attorney’s fees) and sales commissions and (ii) the estimated marginal increase in taxes and any stamp tax payable by GMC or the Issuer or any of its Subsidiaries as a result of such disposition and (y) with respect to the issuance of any Equity Interests, the aggregate cash proceeds received by GMC or the Issuer from such equity issuance net of reasonable transaction costs related thereto (including, without limitation, reasonable attorney’s fees).
“
Nonrecourse Indebtedness
” means, shall mean any Indebtedness of an Unrestricted Subsidiary that is non-recourse to any Obligor and for which no Obligor provides any credit support;
provided
such Indebtedness may be full recourse to the Unrestricted Subsidiary at any time.
“
Notes
” is defined in Section 1.
“
Notice of Designation
” is defined in Section 4.10(b).
“
Obligors
” is defined in Section 4.
“
Officer
’
s Certificate
” means a certificate of a Senior Financial Officer or of any other officer of the Guarantor whose responsibilities extend to the subject matter of such certificate.
“
Patriot Act
” means United States Public Law 107-56, Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in effect.
“
PBGC
” shall mean the Pension Benefit Guaranty Corporation established pursuant to Section 4002 of ERISA, or any successor thereto.
“
Permitted Merger
” means any merger or consolidation of either Obligor, or conveyance, transfer or lease of substantially all of the assets of either Obligor, consummated in accordance with the provisions of Section 10.2 (and the predominant purposes of which were business purposes of such Obligor and not the triggering of a prepayment right under Section 8.3).
9
“
Person
” means an individual, partnership, corporation, limited liability company, association, trust, unincorporated organization, or a government or agency or political subdivision thereof.
“
PIK Interest
” means interest paid on the Notes in the form of an increase in the outstanding principal amount of the Notes.
“
PIK Notes
” means any additional Notes issued by the Issuer in a principal amount equal to the amount of PIK Interest for the applicable Interest Period (rounded down to the nearest whole dollar) to holders of Notes on the relevant record date.
“
Plan
” means any pension plan as defined in Section 3(2) of ERISA, which is maintained or contributed to by (or to which there is an obligation to contribute of) the Obligors or a Restricted Subsidiary of the Obligors or any ERISA Affiliate, and each such plan for the five year period immediately following the latest date on which the Obligors, or a Restricted Subsidiary of the Obligors or any ERISA Affiliate maintained, contributed to or had an obligation to contribute to such plan.
“
Preferred Stock
” means any class of capital stock of a corporation that is preferred over any other class of capital stock of such corporation as to the payment of dividends or the payment of any amount upon liquidation or dissolution of such corporation.
“
property
” or “
properties
” means, unless otherwise specifically limited, real or personal property of any kind, tangible or intangible, choate or inchoate.
“
Purchaser
” is defined in the second paragraph of this Agreement.
“
Refinancing Agreement
” means any agreements which governs the Global Refinancing including any loan agreement, credit agreement, finance agreement, financing agreement, note purchase agreement, indenture, guaranty, security agreement, pledge agreement, mortgage, assignment or similar agreement or any amendment, restatement or other modification of the Existing Credit Agreements.
“
Refinancing Indebtedness
” means any Indebtedness incurred that (i) has a weighted average life to maturity that is not less than the weighted average life to maturity of the Indebtedness being refinanced (except in the case of the Global Refinancing), (ii) has a principal amount that does not exceed the amount of Indebtedness being refinanced (plus any underwriting discounts, fees, expenses and premiums incurred in connection therewith) plus additional principal Indebtedness to the extent otherwise permitted to be incurred, (iii) if Indebtedness being refinanced is subordinated, the Refinancing Indebtedness will also be subordinated to the same extent as the Indebtedness being refinanced and (iv) is incurred by an obligor of the Indebtedness that is being refinanced and qualifies for the same exception under Section 10.4(a), (b), (e), (f), (i), (j) and (k) at the time it is incurred.
10
“
Registration Agreement
” means the First Amended and Restated Registration Agreement, dated as of November 1, 2012, by and among GMC and certain shareholders thereof, as amended from time to time in accordance with the terms thereof.
“
Required Holders
” means, (i) prior to the Closing, the holders of more than 50.0 in principal amount of the Notes to be purchased pursuant to Section 2 upon the satisfaction of the conditions to closing listed in Section 4 and (ii) on or after the Closing, the holders of more than 50.0% in principal amount of the Notes then outstanding (exclusive of Notes then owned by GMC or any of its Subsidiaries).
“
Responsible Officer
” means any Senior Financial Officer and any other officer of GMC or of the Issuer, as the context requires, with responsibility for the administration of the relevant portion of this agreement.
“
Reportable Event
” shall mean an event described in Section 4043(c) of ERISA with respect to a Plan that is subject to Title IV of ERISA other than those events as to which the 30-day notice period is waived under subsection .22, .23, .25, .27 or .28 of PBGC Regulation Section 4043.
“
Restricted Subsidiary
” means all the Subsidiaries of GMC other than any Subsidiary which has been designated as an Unrestricted Subsidiary pursuant to Section 9.12;
provided
that any Subsidiary Guarantor shall at all times during which it is a Subsidiary Guarantor be deemed to be a Restricted Subsidiary and the Issuer shall at all times be deemed to be a Restricted Subsidiary.
“
Scorpio Newbuilds
” means the VLCC newbuilding contracts from Scorpio Tankers Inc. acquired by FinCo prior to Closing
which provide for the acquisition of seven VLCC vessels
for an aggregate acquisition cost of approximately $735,000,000,
plus
the costs of any change orders agreed to by GMC after the date hereof.
“Scorpio Newbuilds Novations” means the novations of the Scorpio Newbuilds resulting in (a) the release of the Subsidiary Guarantors party to a Scorpio Newbuild at closing and (b) the substitution in place thereof, a Subsidiary Guarantor formed after the Closing and wholly-owned by FinCo.
“
Securities Act
” means the U.S. Securities Act of 1933, as amended from time to time.
“
Senior Financial Officer
” means a Director, Issuer Secretary, the Chief Financial Officer, Financial Controller or Treasurer of the Guarantor or the Issuer, as the context requires.
“
Shareholders’ Agreement
” means the Amended and Restated Shareholders’ Agreement, dated as of December 12, 2013, by and among GMC and certain shareholders thereof, as amended from time to time in accordance with the terms thereof.
11
“
Significant Subsidiary
” means, as of any date, any Restricted Subsidiary that (a) accounts for greater than 10.0% of the Consolidated Total Assets as of such date, determined in accordance with Applicable GAAP, or (b) accounted for greater than 10.0% of the consolidated revenues of GMC and its Restricted Subsidiaries for the immediately preceding financial year of GMC, determined in accordance with Applicable GAAP.
“
Standard & Poor
’
s
” means Standard & Poor’s Rating Services, a division of the McGraw-Hill Companies, Inc., together with any relevant local affiliates thereof and any successor to any of the foregoing.
“
Subsidiary
” means, as to any Person, (i) any corporation more than 50.0% of whose stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of such corporation (irrespective of whether or not at the time stock of any class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time owned by such Person and/or one or more Subsidiaries of such Person and (ii) any partnership, limited liability company, association, joint venture or other entity in which such Person and/or one or more Subsidiaries of such Person has more than a 50.0% equity interest at the time;
provided
that, for all purposes under this Agreement, the Notes and the Guarantees, Unrestricted Subsidiaries shall not be considered Subsidiaries hereunder or thereunder other than as set forth herein or therein.
“
Subsidiary Guarantee
” means a guarantee of a Subsidiary Guarantor of the obligations of the Issuer under this Agreement and the Notes, substantially in the form of
Exhibit 3
.
“
Subsidiary Guarantor
” means Guarantor/FinCo and its Subsidiaries
, any of which from time to time is
party to a Scorpio Newbuild
; all such Subsidiaries,
as of the date of this Agreement
,
are listed on
Schedule 5.12
.
“
Total Debt LTV Ratio
” means the ratio of (a) Consolidated Total Indebtedness of GMC and its Restricted Subsidiaries to (b) the aggregate Fair Market Value of all Vessels (including without limitation the Scorpio Newbuilds) owned by GMC and its Restricted Subsidiaries.
“
Total Secured Debt LTV Ratio
” means the ratio of (a) Consolidated Secured Indebtedness of GMC and its Restricted Subsidiaries minus the sum of cash of GMC and its Restricted Subsidiaries to (b) the aggregate Fair Market Value of all Vessels (including without limitation the Scorpio Newbuilds) owned by GMC and its Restricted Subsidiaries.
“
UCC
” means the Uniform Commercial Code as from time to time in effect in the relevant jurisdiction.
“
Unrestricted Subsidiary
” means any Subsidiary which has been designated by the Issuer as an Unrestricted Subsidiary pursuant to Section 9.12.
12
“
Vessel
” means, collectively, all sea going vessels and tankers at any time owned by GMC and its Subsidiaries, and, individually, any of such vessels.
“
Vessel Mortgages
” means the “Collateral Vessel Mortgages” as such term is defined in the Existing Credit Agreements or any Refinancing Agreement.
“
Wholly-Owned Restricted Subsidiary
” means, at any time, any Restricted Subsidiary one hundred percent (100%) of all of the Equity Interests (except directors’ qualifying shares) and voting interests of which are owned by any one or more of Guarantor/FinCo and FinCo’s other Wholly-Owned Restricted Subsidiaries at such time.
13
SCHEDULE 5.5(b)
Obligations
·
The Master Agreement, dated March 18, 2014, entered into between (1) (i) STI Glasgow Shipping Company Limited; (ii) STI Edinburgh Shipping Company Limited, (iii) STI Perth Shipping Company Limited, (iv) STI Dundee Shipping Company Limited, (v) STI Newcastle Shipping Company Limited (vi) STI Cavaliere Shipping Company Limited and (vii) STI Esles Shipping Company Limited, each a company incorporated under the laws of the Marshall Islands and having their registered offices at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, 96960 (respectively “
SPV 1
”, “
SPV 2
”, “
SPV 3
”, “
SPV 4
”, “
SPV 5
”, “
SPV 6
”, and “
SPV 7
” and together, the “
SPVs
” and each a “
SPV
”), (2) VLCC Acquisition I Corporation and (3) Scorpio Tankers Inc.
·
(1) The Agreement for the Sale and Purchase of the Entire Authorized and Issued Share Capital of SPV 1, (2) the Agreement for the Sale and Purchase of the Entire Authorized and Issued Share Capital of SPV 2, (3) the Agreement for the Sale and Purchase of the Entire Authorized and Issued Share Capital of SPV 3, (4) the Agreement for the Sale and Purchase of the Entire Authorized and Issued Share Capital of SPV 4 (5) the Agreement for the Sale and Purchase of the Entire Authorized and Issued Share Capital of SPV 5, (6) the Agreement for the Sale and Purchase of the Entire Authorized and Issued Share Capital of SPV 6, (7) the Agreement for the Sale and Purchase of the Entire Authorized and Issued Share Capital of SPV 7, in each case, dated on or about March 21, 2014 and entered into between Scorpio Tankers Inc. and VLCC Acquisition I Corporation.
·
The Deed of Guarantee relating to Corporate Guarantees issued by Scorpio Tankers Inc., dated as of March 25, 2014, by and between VLCC Acquisition 1 Corporation and Scorpio Tankers Inc.
·
The Agreement for the Appointment of a Buyer’s representative, dated as of March 25, 2014, by and between SPV 1, SPV 2, SPV 3, SPV 4, SPV 5, SPV 6, SPV 7, and Scorpio Shipmanagement S.A.M.
·
The shipbuilding contracts respectively entered into individually between each of SPV 1, SPV 2, SPV 3, SPV 4 and SPV 5 with Daewoo Shipbuilding & Marine Engineering Co., Ltd. (“
DSME Builder
”), for the construction and purchase of an 300,000 TDW Crude Oil Tanker with, respectively, DSME Builder’s hull numbers 5404 (to be purchased by SPV 1), 5405 (to be purchased by SPV 2), 5406 (to be purchased by SPV 3), 5407 (to be purchased by SPV 4) and 5408 (to be purchased by SPV 5), dated December 13, 2013 (as the same have been amended, supplemented from time to time (including any side letters and addenda).
·
The shipbuilding contracts respectively entered into individually between each of SPV 6 and SPV 7 with Hyundai Samho Heavy Industries Co., Ltd. (“
HHI Builder
”) for the construction and purchase of an 300,000 DWT Crude Oil Carrier with respectively, HHI Builder’s hull numbers S777 (to be purchased by SPV 6) and S778 (to be purchased by
SPV 7), dated December 20, 2013 (as the same have been amended, supplemented from time to time (including any side letters and addenda))
·
Common Stock Subscription Agreement, dated November 1, 2012, by and among the Company, OCM Marine Holdings TP, L.P., and the investors listed on Exhibit A attached thereto.
·
Amended and Restated Subscription Agreement, dated December 12, 2013, by and among OCM Marine Holdings TP, L.P., and the investors listed on Exhibit A attached thereto.
·
The subscription agreements entered into by the Company and OCM Marine Holdings TP, L.P. with various investors between March 21, 2014 and Closing relating to up to 12,162,163 shares of Class B Common Stock.
SCHEDULE 5.6
Litigation
·
Salvage Claim re Genmar Star, Istanbul Admiralty Court, Case No. 2009/584 E. (2006) — Claim arising from tug boat assistance rendered to Genmar Star after vessel became disabled.
·
Charterparty Arbitration
In this matter, the General Maritime Corporation claims declaratory relief as to the proper construction of a charterparty for a VLCC on an amended SHELLTIME 4 form with rider clauses (the “
Charterparty
”), between the Genmar SPV, as the owner of the Vessel (the “
Owners
”) and the charterers (“
Charterers
”).
The present dispute (which has been referred to London Maritime Arbitrator’s Association arbitration) concerns the proper construction of a clause in the Charterparty relating to oil major eligibility. Prior to re-delivery, Charterers had placed the Vessel off-hire for an alleged failure by Owners to comply with their obligations under clause 50 of the Charterparty. Charterers have also sought to claim damages in respect of those alleged failures.
A dispute has now arisen as to:
1.
Whether on the proper construction of clause 50, Charterers are entitled to claim damages for any alleged failure by Owners to comply with the requirements of clause 50 or whether Charterers’ only remedy under clause 50 was to place the Vessel off-hire or to cancel the Charterparty.
2.
Whether Charterers were only entitled to place the Vessel off-hire from the date of their notice or whether they could place the Vessel off-hire with retrospective effect (and if so from what date).
A hearing before the London arbitral tribunal to decide these preliminary issues was held on October 9, 2013. The tribunal’s award is pending.
Owners have provided security for the Charterers’ claims, plus interest and costs, in the sum of $3,497,750.85, pursuant to an escrow agreement.
·
Genmar Pool Agreements Arbitration
This matter concerns the entry of five Genmar vessels into a tanker vessel pool (the “
Pool
”).
Five individual references to London arbitration have been made pursuant to the terms of five sets of contracts, which comprise a pool agreement between the relevant Genmar SPV and the Pool operator and a time charterparty between the relevant Genmar SPV and the Pool agent. Pursuant to those agreements, each of the five subject Genmar vessels were included in and
operated as part of the Pool. The five arbitration references have subsequently been consolidated by consent.
Each Genmar SPV claims a balance of account due to it following the withdrawal of their respective vessels from the Pool, made up of (among other things) sums due by way of hire and sums due in respect of working capital invested in the Pool.
The respondents in the arbitrations (the Pool operator and Pool agent) advance a different position as to the sums owed to the Genmar SPVs from the Pool: the parties are approximately $123,000 apart in terms of the aggregate sum due to the Genmar SPV’s by way of hire and there is a dispute as to when the working capital sums (an aggregate of $2.5 million) are due to be returned pursuant to the terms of the pool agreements.
The respondents also counterclaim in each case for damages for breach of alleged collateral contracts to each of the respective pool agreements, which it is said extended the earliest date by which the Genmar SPVs were entitled to withdraw their vessels from the Pool. The respondents’ counterclaim for damages has not yet been quantified.
The next procedural step in this matter is for reply and defence to counterclaim submissions to be served by the Genmar SPVs on October 28, 2013.
SCHEDULE 5.10
ERISA
·
General Maritime Corporation 401(k) Profit Sharing Plan and Trust
SCHEDULE 5.11(b)
Capitalization
GMC Charter
Shareholders’ Agreement
Registration Agreement
The subscription agreements entered into by the Company and OCM Marine Holdings TP, L.P. with various investors between March 21, 2014 and Closing relating to up to 12,162,163 shares of Class B Common Stock:
Up to 12,162,163 shares of Class B Common Stock issued between March 21, 2014 and Closing at a price of $18.50 per share and any Subscription Agreements pursuant to which such shares are sold.
Capital Stock of GMC as of March 13, 2014:
1.
50,000,000 authorized shares of Class A Common Stock, par value $0.01 per share (“
Class A Common Stock
”), with 11,270,196 shares issued and outstanding;
2.
30,000,000 authorized shares of Class B Common Stock (“
Class B Common Stock
”), with 11,330,420 shares of Class B Common Stock are issued and outstanding; and
3.
5,000,000 authorized shares of preferred stock, par value $0.01 per share.
Warrants and Options with Respect to Capital Stock of GMC
1.
Outstanding warrants to purchase 309,296 shares of Class A Common Stock
2.
Outstanding options to purchase 343,662 shares of Class A Common Stock;
Additional 801,879 shares of Class A Common Stock reserved for issuance pursuant to awards under GMC’s 2012 Equity Incentive Plan.
SCHEDULE 5.11(c)
Capitalization
Any preemptive rights obligations under the Shareholders’ Agreement.
3.
SCHEDULE 5.12(b)
Subsidiaries: FinCo Issuer
The subsidiaries of FinCo are:
1.
STI Glasgow Shipping Company Limited;
2.
STI Edinburgh Shipping Company Limited;
3.
STI Perth Shipping Company Limited;
4.
STI Dundee Shipping Company Limited;
5.
STI Newcastle Shipping Company Limited;
6.
STI Cavaliere Shipping Company Limited; and
7.
STI Esles Shipping Company Limited.
Each of the above listed entities is owned 100% by FinCo and is organized under the laws of the Republic of the Marshall Islands.
SCHEDULE 5.19
Indebtedness
|
|
|
|
|
Governing
|
|
Original Aggregate
|
|
|
|
Borrower(s)
|
|
Agent
|
|
Agreement
|
|
Principal Amount
|
|
Guarantor(s)
|
|
General Maritime Subsidiary Corporation
|
|
Nordea Bank Finland plc
|
|
Third Amended and Restated Credit Agreement
|
|
$
|
508,977,536.95
|
|
·
Vision Ltd.
|
|
|
|
|
|
|
·
Victory Ltd.
|
|
|
|
|
|
|
·
Companion Ltd.
|
|
|
|
|
|
|
|
|
|
·
Compatriot Ltd.
|
|
|
|
|
|
|
|
|
|
·
Consul Ltd.
|
|
|
|
|
|
|
|
|
|
·
GMR Daphne LLC
|
|
|
|
|
|
|
|
|
|
·
GMR Agamemnon LLC
|
|
|
|
|
|
|
|
|
|
·
GMR Alexandra LLC
|
|
|
|
|
|
|
|
|
|
·
GMR Argus LLC
|
|
|
|
|
|
|
|
|
|
·
GMR Constantine LLC
|
|
|
|
|
|
|
|
|
|
·
GMR Defiance LLC
|
|
|
|
|
|
|
|
|
|
·
GMR Elektra LLC
|
|
|
|
|
|
|
|
|
|
·
GMR George T. LLC
|
|
|
|
|
|
|
|
|
|
·
GMR Gulf LLC
|
|
|
|
|
|
|
|
|
|
·
GMR Harriet G. LLC
|
|
|
|
|
|
|
|
|
|
·
GMR Hope LLC
|
|
|
|
|
|
|
|
|
|
·
GMR Horn LLC
|
|
|
|
|
|
|
|
|
|
·
GMR Kara G. LLC
|
|
|
|
|
|
|
|
|
|
·
GMR Minotaur LLC
|
|
|
|
|
|
|
|
|
|
·
GMR Orion LLC
|
|
|
|
|
|
|
|
|
|
·
GMR Phoenix LLC
|
|
|
|
|
|
|
|
|
|
·
GMR Princess LLC
|
|
|
|
|
|
|
|
|
|
·
GMR Progress LLC
|
|
|
|
|
|
|
|
|
|
·
GMR Spyridon LLC
|
|
|
|
|
|
|
|
|
|
·
GMR St. Nikolas LLC
|
|
|
|
|
|
|
|
|
|
·
GMR Strength LLC
|
|
|
|
|
|
|
|
|
|
(the “
Credit Agreements Subsidiary Guarantors
”)
|
|
|
|
|
|
|
|
|
|
·
General Maritime Corporation
|
|
|
|
|
|
|
|
|
|
·
Arlington Tankers, Ltd.
|
|
|
|
|
|
|
|
|
|
·
General Maritime Subsidiary II Corporation
|
|
|
|
|
|
|
|
|
|
|
|
General Maritime Subsidiary Corporation
|
|
Nordea Bank Finland plc
|
|
Second Amended and Restated Credit Agreement
|
|
$
|
273,802,583.31
|
|
·
General Maritime Corporation
|
|
|
|
|
|
|
·
Arlington Tankers, Ltd.
|
|
|
|
|
|
|
·
General Maritime Subsidiary II Corporation
|
|
|
|
|
|
|
|
|
|
·
The Credit Agreements Subsidiary Guarantors
|
SCHEDULE 10.1(c)
Existing Liens
None.
SCHEDULE 10.5
Transactions with Affiliates
·
Shareholders’ Agreement.
·
Registration Agreement.
·
The GMC Charter.
·
The subscription agreements entered into by the GMC and OCM Marine Holdings TP, L.P., with various investors between March 21, 2014 and Closing relating to up to 12,162,163 shares of Class B Common Stock.
·
The letter agreements, dated as of December 12, 2013, between GMC, OCM Marine Holdings TP LP and certain investors in the company, each entered into in connection with that certain Amended and Restated Subscription Agreement, dated as of December 12, 2013.
·
Common Stock Subscription Agreement, dated November 1, 2012, by and among GMC, OCM Marine Holdings TP, L.P., and the investors listed on Exhibit A attached thereto.
·
Amended and Restated Subscription Agreement, dated December 12, 2013, by and among GMC, OCM Marine Holdings TP, L.P., and the investors listed on Exhibit A attached thereto.
·
Purchase on or about October 10, 2012 by OCM Starfish Debtco S.àr.l, an affiliate of Holdings, of approximately $56 million principal amount under the Third Amended and Restated Credit Agreement, dated as of May 17, 2012, among the Company, General Maritime Subsidiary II Corporation, Arlington Tankers Ltd., General Maritime Subsidiary Corporation, the lenders party thereto, Nordea as administrative agent and collateral agent, and Nordea and DnB Bank ASA, as joint lead arrangers and joint book runners.
·
Current and future amounts due to Oaktree Principal Bunker Holdings Ltd. related to the assignment of certain supplier contracts. Oaktree Principal Bunker Holdings Ltd. is a wholly owned subsidiary of Oaktree Capital Management, L.P.
EXHIBIT 1
[FORM OF SENIOR UNSECURED NOTE]
THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY OTHER APPLICABLE SECURITIES LAW AND, ACCORDINGLY, THIS NOTE MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER, OR IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER, THE SECURITIES ACT AND IN ACCORDANCE WITH ANY SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS.
THIS NOTE MAY BE TRANSFERRED ONLY PURSUANT TO SECTION 15 OF THE NOTE AND GUARANTEE AGREEMENT REFERRED TO BELOW. A COMPLETE AND CORRECT CONFORMED COPY OF THE NOTE AND GUARANTEE AGREEMENT IS AVAILABLE FOR INSPECTION AT THE PRINCIPAL EXECUTIVE OFFICE OF THE ISSUER AND WILL BE FURNISHED TO THE REGISTERED HOLDER OF THIS NOTE UPON WRITTEN REQUEST AND WITHOUT CHARGE.
THIS NOTE HAS BEEN ISSUED WITH ORIGINAL ISSUE DISCOUNT (“OID”) FOR UNITED STATES FEDERAL INCOME TAX PURPOSES. THE ISSUE PRICE, AMOUNT OF OID, ISSUE DATE AND YIELD TO MATURITY OF THIS NOTE MAY BE OBTAINED BY WRITING TO THE ISSUER (AS DEFINED BELOW) AT 299 PARK AVENUE, NEW YORK, NY 10171.
[GENERAL MARITIME CORPORATION]
[VLCC ACQUISITION I CORPORATION]
SENIOR UNSECURED NOTE DUE 2020
FOR VALUE RECEIVED, the undersigned, [GENERAL MARITIME CORPORATION] [VLCC ACQUISITION I CORPORATION] (herein called the “
Issuer
”), a company incorporated under the laws of the Marshall Islands, hereby promises to pay to [ ], or its registered assigns, the principal sum of [ ] U.S. DOLLARS (or so much thereof as shall not have been prepaid) on March 28, 2020, with interest payable in cash or by PIK Interest (as defined in the Note and Guarantee Agreement) (a) on the unpaid principal balance hereof at the rate, and on the respective dates, set forth in the Note and Guarantee Agreement, from the date hereof until the principal amount hereof shall have been paid in full, and (b) to the extent permitted by law, on any overdue payment (including any overdue prepayment) of principal, any overdue payment of interest and any overdue payment of any Make-Whole Amount (as defined in the Note and Guarantee Agreement referred to below),
payable semiannually as aforesaid (or, at the option of the registered holder hereof, on demand), at a rate per annum from time to time equal to the greater of (i) 2.0% per annum above the rate of interest stated in clause (a) or (ii) 2.0% over the rate of interest publicly announced by Citibank, N.A. in New York, New York as its “base” or “prime” rate.
Payments of principal of, interest on and any Make-Whole Amount with respect to this Note are to be made in lawful money of the United States of America at Nordea Bank Finland Plc, New York Branch, 437 Madison Avenue New York, NY 10022 or at such other place as the Issuer shall have designated by written notice to the holder of this Note as provided in the Note and Guarantee Agreement.
This Note is one of a series of Senior Unsecured Notes or PIK Notes (herein called the “
Notes
”) issued pursuant to the Note and Guarantee Agreement dated as of March 28, 2014 (as from time to time amended, the “
Note and Guarantee Agreement
”), among the Issuer and the respective Purchasers named therein and is entitled to the benefits thereof. Each holder of this Note will be deemed, by its acceptance hereof, to have (i) agreed to be bound by the provisions of the Note and Guarantee Agreement expressed to be, or that otherwise are, applicable to Purchasers and/or holders of Notes and (ii) made the representations set forth in Section 6 of the Note and Guarantee Agreement. Capitalized terms used in this Note and not otherwise defined in this Note shall have the meanings assigned to them in the Note and Guarantee Agreement.
Payment of the principal of, interest on and any Make-Whole Amount with respect to this Note has been guaranteed by (i) the Guarantor in accordance with the terms of the Note and Guarantee Agreement and (ii) certain direct or indirect subsidiaries of GMC in accordance with the terms of the Subsidiary Guarantees (as defined in the Note and Guarantee Agreement).
This Note is a registered Note and, as provided in the Note and Guarantee Agreement, upon surrender of this Note for registration of transfer, duly endorsed, or accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder’s attorney duly authorized in writing, a new Note for a like principal amount will be issued to, and registered in the name of, the transferee. Prior to due presentment for registration of transfer, the Issuer may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Issuer will not be affected by any notice to the contrary.
This Note is subject to prepayment, in whole or from time to time in part, at the times and on the terms specified in the Note and Guarantee Agreement, but not otherwise.
If an Event of Default, as defined in the Note and Guarantee Agreement, occurs and is continuing, the principal of this Note may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Note and Guarantee Agreement.
2
This Note shall be construed and enforced in accordance with, and the rights of the Issuer and the holder of this Note shall be governed by, the law of the State of New York excluding choice-of-law principles of the law of such State that would require the application of the laws of a jurisdiction other than such State.
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[GENERAL MARITIME CORPORATION]
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[VLCC ACQUISITION I CORPORATION]
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EXHIBIT 2
[FORM OF GUARANTEE]
GUARANTEE
For value received, the undersigned hereby absolutely, unconditionally and irrevocably guarantees to the holder of the foregoing Note the due and punctual payment of the principal of and Make-Whole Amount, if any, and interest on said Note and all other amounts from time to time owing by the Issuer to such holder under the Note and Guarantee Agreement referred to in said Note, as more fully provided in the Note and Guarantee Agreement referred to in said Note.
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[GENERAL MARITIME CORPORATION]
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[VLCC ACQUISITION I CORPORATION]
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EXHIBIT 3
[FORM OF SUBSIDIARY GUARANTEE]
SUBSIDIARY GUARANTEE
This SUBSIDIARY GUARANTEE, dated as of [ ], 20[ ] (as amended, modified, restated and/or supplemented from time to time, this “
Subsidiary Guarantee
”), made by each of the undersigned guarantors (each a “
Subsidiary Guarantor
” and, together with any other entity that becomes a guarantor hereunder pursuant to Section 25 hereof, the “
Subsidiary Guarantors
”) in favor of each holder of a Note (each a “
Holder
”). Except as otherwise defined herein, capitalized terms used herein and defined in the Note and Guarantee Agreement (as defined below) shall be used herein as therein defined.
W
I
T
N
E
S
S
E
T
H
:
WHEREAS, General Maritime Corporation (“
GMC
”) and VLCC Acquisition I Corporation (“
FinCo
”), have entered into a Note and Guarantee Agreement dated as of March 28, 2014 (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “
Note and Guarantee Agreement
”) with the purchasers whose names appear on the signature pages thereto (the “
Purchasers
”) providing for the issuance and sale by the Issuer (the “
Issuer
”) of $131,600,000 aggregate principal amount, as such principal amount may be increased as a result of the payment of any PIK Interest (as defined in the Note and Guarantee Agreement) of its Senior Unsecured Notes due 2020 (the “
Notes
”);
WHEREAS, each Subsidiary Guarantor is a direct or indirect Subsidiary of GMC; and
WHEREAS, each Subsidiary Guarantor will obtain benefits from the continuation of issuance and sale of the Notes under the Note and Guarantee Agreement and, accordingly, desires to execute this Subsidiary Guarantee in order to satisfy the condition described in the preceding paragraph;
NOW, THEREFORE, in consideration of the foregoing and other benefits accruing to each Subsidiary Guarantor, the receipt and sufficiency of which are hereby acknowledged, each Subsidiary Guarantor hereby makes the following representations and warranties to the Holders and hereby covenants and agrees with each other Subsidiary Guarantor as follows:
1.
Each Subsidiary Guarantor, jointly and severally, irrevocably, absolutely and unconditionally guarantees to the Holders the full and prompt payment when due (whether at the stated maturity, by acceleration or otherwise) of (x) the principal of, premium, if any, and interest on the Notes issued by the Issuer under the Note and Guarantee Agreement, and (y) all other obligations (including obligations which, but for the automatic stay under Section
362(a) of the Bankruptcy Code, would become due), liabilities and indebtedness owing by the Issuer to the Holders under the Note and Guarantee Agreement, the Note and the Guarantee (including, without limitation, indemnities, fees and interest thereon (including any interest accruing after the commencement of any bankruptcy, insolvency, receivership or similar proceeding at the rate provided for in the Note and Guarantee Agreement, whether or not such interest is an allowed claim in any such proceeding)), whether now existing or hereafter incurred under, arising out of or in connection with the Note and Guarantee Agreement, the Note and the Guarantee and the due performance and compliance by the Issuer with all of the terms, conditions and agreements contained in the Note and Guarantee Agreement, the Note and the Guarantee (all such principal, premium, interest, liabilities, indebtedness and obligations being herein collectively called the “
Guaranteed Obligations
”). As used herein, the term “
Guaranteed Party
” shall mean the Issuer, the Guarantor and each Restricted Subsidiary. Each Subsidiary Guarantor understands, agrees and confirms that the Holders may enforce this Subsidiary Guarantee up to the full amount of the Guaranteed Obligations against such Subsidiary Guarantor without proceeding against any other Subsidiary Guarantor, GMC, the Issuer or any other Guaranteed Party or under any other guaranty covering all or a portion of the Guaranteed Obligations.
2.
Additionally, each Subsidiary Guarantor, jointly and severally, unconditionally, absolutely and irrevocably, guarantees the payment of any and all Guaranteed Obligations whether or not due or payable by the Issuer or any other Guaranteed Party upon the occurrence in respect of the Issuer or any such other Guaranteed Party of any of the events specified in Section 11(g) of the Note and Guarantee Agreement, and unconditionally, absolutely and irrevocably, jointly and severally, promises to pay such Guaranteed Obligations to the Holders, or order, on demand. This Subsidiary Guarantee shall constitute a guaranty of payment, and not of collection.
3.
The liability of each Subsidiary Guarantor hereunder is primary, absolute, joint and several, and unconditional and is exclusive and independent of any security for or other guaranty of the indebtedness of the Issuer or any other Guaranteed Party whether executed by such Subsidiary Guarantor, any other Subsidiary Guarantor, any other guarantor or by any other party, and the liability of each Subsidiary Guarantor hereunder shall not be affected or impaired by any circumstance or occurrence whatsoever, including, without limitation: (a) any direction as to application of payment by the Issuer or any other Guaranteed Party or by any other party, (b) any other continuing or other guaranty, undertaking or maximum liability of a guarantor or of any other party as to the Guaranteed Obligations, (c) any payment on or in reduction of any such other guaranty or undertaking, (d) any dissolution, termination or increase, decrease or change in personnel by the Issuer or any other Guaranteed Party, (e) the failure of the Subsidiary Guarantor to receive any benefit from or as a result of its execution, delivery and performance of this Subsidiary Guarantee, (f) to the extent permitted by applicable law, any payment made to any Holder on the indebtedness which any Holder repays the Issuer or any other Guaranteed Party pursuant to court order in any bankruptcy, reorganization, arrangement, moratorium or other debtor relief proceeding, and each Subsidiary Guarantor waives any right to the deferral or modification of its obligations hereunder by reason of any such proceeding, (g) any action or inaction by the
2
Holders as contemplated in Section 6 hereof or (h) any invalidity, rescission, irregularity or unenforceability of all or any part of the Guaranteed Obligations.
4.
The obligations of each Subsidiary Guarantor hereunder are independent of the obligations of any other Subsidiary Guarantor, any other guarantor, the Issuer or any other Guaranteed Party, and a separate action or actions may be brought and prosecuted against each Subsidiary Guarantor whether or not action is brought against any other Subsidiary Guarantor, any other guarantor, the Issuer or any other Guaranteed Party and whether or not any other Subsidiary Guarantor, any other guarantor, the Issuer or any other Guaranteed Party be joined in any such action or actions. Each Subsidiary Guarantor waives, to the fullest extent permitted by law, the benefits of any statute of limitations affecting its liability hereunder or the enforcement thereof. Any payment by the Issuer or any other Guaranteed Party or other circumstance which operates to toll any statute of limitations as to the Issuer or any other Guaranteed Party shall operate to toll the statute of limitations as to each Subsidiary Guarantor.
5.
Any Holder may at any time and from time to time without the consent of, or notice to, any Subsidiary Guarantor, without incurring responsibility to such Subsidiary Guarantor, without impairing or releasing the obligations or liabilities of such Subsidiary Guarantor hereunder, upon or without any terms or conditions and in whole or in part:
(a)
change the manner, place or terms of payment of, and/or change, increase or extend the time of payment of, renew, increase, accelerate or alter, any of the Guaranteed Obligations (including, without limitation, any increase or decrease in the rate of interest thereon or the principal amount thereof), or any liability incurred directly or indirectly in respect thereof, and the guaranty herein made shall apply to the Guaranteed Obligations as so changed, extended, increased, accelerated, renewed or altered;
(b)
[Reserved.]
(c)
exercise or refrain from exercising any rights against the Issuer, any other Guaranteed Party, any Restricted Subsidiary thereof or otherwise act or refrain from acting;
(d)
release or substitute any one or more endorsers, Subsidiary Guarantors, other guarantors, the Issuer, any other Guaranteed Party, or other obligors;
(e)
settle or compromise any of the Guaranteed Obligations, any liability (including any hereunder) incurred directly or indirectly in respect thereof or hereof, and may subordinate the payment of all or any part thereof to the payment of any liability (whether due or not) of the Issuer or any other Guaranteed Party to creditors of the Issuer or such other Guaranteed Party other than the Holders;
(f)
apply any sums by whomsoever paid or howsoever realized to any liability or liabilities of the Issuer or any other Guaranteed Party to the Holders regardless of what liabilities of the Issuer or such other Guaranteed Party remain unpaid;
(g)
consent to or waive any breach of, or any act, omission or default under, any of the Note and Guarantee Agreement, the Note and the Guarantee or any of the
3
instruments or agreements referred to therein, or otherwise amend, modify or supplement (in accordance with their terms) any of the Note and Guarantee Agreement, the Note and the Guarantee or any of such other instruments or agreements;
(h)
act or fail to act in any manner which may deprive such Subsidiary Guarantor of its right to subrogation against the Issuer or any other Guaranteed Party to recover full indemnity for any payments made pursuant to this Subsidiary Guarantee; and/or
(i)
take any other action or omit to take any other action which would, under otherwise applicable principles of common law, give rise to a legal or equitable discharge of such Subsidiary Guarantor from its liabilities under this Subsidiary Guarantee (including, without limitation, any action or omission whatsoever that might otherwise vary the risk of such Subsidiary Guarantor or constitute a legal or equitable defense to or discharge of the liabilities of a guarantor or surety or that might otherwise limit recourse against such Subsidiary Guarantor).
No invalidity, illegality, irregularity or unenforceability of all or any part of the Guaranteed Obligations or any other agreement or instrument relating to the Guaranteed Obligations or of any security or guarantee therefor shall affect, impair or be a defense to this Subsidiary Guarantee, and this Subsidiary Guarantee shall be primary, absolute and unconditional notwithstanding the occurrence of any event or the existence of any other circumstances which might constitute a legal or equitable discharge of a surety or guarantor except payment in full in cash of the Guaranteed Obligations or as otherwise provided under the terms of the Note and Guarantee Agreement.
6.
This Subsidiary Guarantee is a continuing one and all liabilities to which it applies or may apply under the terms hereof shall be conclusively presumed to have been created in reliance hereon. No failure or delay on the part of any Holder in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder. The rights and remedies herein expressly specified are cumulative and not exclusive of any rights or remedies which any Holder would otherwise have hereunder. No notice to or demand on any Subsidiary Guarantor in any case shall entitle such Subsidiary Guarantor to any other further notice or demand in similar or other circumstances or constitute a waiver of the rights of any Holder to any other or further action in any circumstances without notice or demand. It is not necessary for any Holder to inquire into the capacity or powers of the Issuer or any other Guaranteed Party or the officers, directors, partners or agents acting or purporting to act on its or their behalf, and any indebtedness made or created in reliance upon the professed exercise of such powers shall be guaranteed hereunder.
7.
Any indebtedness of the Issuer or any other Guaranteed Party now or hereafter held by any Subsidiary Guarantor is hereby subordinated to the indebtedness of the Issuer or such other Guaranteed Party to the Holders, and such indebtedness of the Issuer or such other Guaranteed Party to any Subsidiary Guarantor, if the Holders, after the occurrence and during the continuance of an Event of Default, so requests, shall be collected, enforced and received by such Subsidiary Guarantor as trustee for the Holders and be paid over to the
4
Holders on account of the indebtedness of the Issuer or the other Guaranteed Parties to the Holders, but without affecting or impairing in any manner the liability of such Subsidiary Guarantor under the other provisions of this Subsidiary Guarantee. Without limiting the generality of the foregoing, each Subsidiary Guarantor hereby agrees with the Holders that it will not exercise any right of subrogation which it may at any time otherwise have as a result of this Subsidiary Guarantee (whether contractual, under Section 509 of the Bankruptcy Code or otherwise) until all Guaranteed Obligations have been irrevocably paid in full in cash;
provided
that if any amount shall be paid to such Subsidiary Guarantor on account of such subrogation rights at any time prior to the irrevocable payment in full in cash of all the Guaranteed Obligations, such amount shall be credited and applied upon the Guaranteed Obligations, whether matured or unmatured, in accordance with the terms of the Note and Guarantee Agreement, the Note and the Guarantee.
8.
(
a)
Each Subsidiary Guarantor hereby waives (to the fullest extent permitted by applicable law) notice of acceptance of this Subsidiary Guarantee and notice of the existence, creation or incurrence of any new or additional liability to which it may apply, and waives promptness, diligence, presentment, demand of payment, demand for performance, protest, notice of dishonor or nonpayment of any such liabilities, suit or taking of other action by any Holder against, and any other notice to, any party liable thereon (including such Subsidiary Guarantor, any other Subsidiary Guarantor, any other guarantor, the Issuer or any other Guaranteed Party) and each Subsidiary Guarantor further hereby waives any and all notice of the creation, renewal, extension or accrual of any of the Guaranteed Obligations and notice or proof of reliance by any Holder upon this Subsidiary Guarantee, and the Guaranteed Obligations shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended, modified, supplemented or waived, in reliance upon this Subsidiary Guarantee. Each Subsidiary Guarantor hereby waives any defense it may now or hereafter assert in any way relating to any law, regulation, decree or order of any jurisdiction, or any other event, affecting any term of any Obligation or any Holder’s rights with respect thereto.
(b)
Each Subsidiary Guarantor hereby waives any right (except as shall be required by applicable law and cannot be waived) to require the Holders to: (i) proceed against the Issuer, any other Guaranteed Party, any other Subsidiary Guarantor, any other guarantor of the Guaranteed Obligations or any other party; (ii) proceed against or exhaust any security held from the Issuer, any other Guaranteed Party, any other Subsidiary Guarantor, any other guarantor of the Guaranteed Obligations or any other party; or (iii) pursue any other remedy in the Holders’ power whatsoever. Each Subsidiary Guarantor waives any defense based on or arising out of any defense of the Issuer, any other Guaranteed Party, any other Subsidiary Guarantor, any other guarantor of the Guaranteed Obligations or any other party other than payment in full of the Guaranteed Obligations, including, without limitation, any defense based on or arising out of the disability of the Issuer, any other Guaranteed Party, any other Subsidiary Guarantor, any other guarantor of the Guaranteed Obligations or any other party, or the unenforceability of the Guaranteed Obligations or any part thereof from any cause, or the cessation from any cause of the liability of the Issuer or any other Guaranteed Party other than payment in full of the Guaranteed Obligations.
5
(c)
Each Subsidiary Guarantor waives all presentments, promptness, diligence, demands for performance, protests and notices, including, without limitation, notices of nonperformance, notices of protest, notices of dishonor, notices of acceptance of this Subsidiary Guarantee, and notices of the existence, creation or incurring of new or additional indebtedness. Each Subsidiary Guarantor assumes all responsibility for being and keeping itself informed of the Issuer’s and each other Guaranteed Party’s financial condition and assets, and of all other circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations and the nature, scope and extent of the risks which such Subsidiary Guarantor assumes and incurs hereunder, and agrees that the Holders shall have no duty to advise any Subsidiary Guarantor of information known to them regarding such circumstances or risks.
Each Subsidiary Guarantor warrants and agrees that each of the waivers set forth above in this Section 8 is made with full knowledge of its significance and consequences and that if any of such waivers are determined to be contrary to any applicable law or public policy, such waivers shall be effective only to the maximum extent permitted by law.
9.
Notwithstanding anything to the contrary contained elsewhere in this Subsidiary Guarantee, the Holders agree (by their acceptance of the benefits of this Subsidiary Guarantee) that this Subsidiary Guarantee may be enforced only by the action of the Required Holders, and that no other Holder shall have any right individually to seek to enforce or to enforce this Subsidiary Guarantee, it being understood and agreed that such rights and remedies may be exercised by the Required Holders. The Holders further agree that this Subsidiary Guarantee may not be enforced against any director, officer, employee, partner, member or stockholder of any Subsidiary Guarantor (except to the extent such partner, member or stockholder is also a Subsidiary Guarantor hereunder). It is understood and agreed that the agreement in this Section 9 is among and solely for the benefit of the Holders and that, if the Required Holders so agree (without requiring the consent of any Subsidiary Guarantor), this Subsidiary Guarantee may be directly enforced by any Holder.
10.
In order to induce the Holders to purchase and hold the Notes pursuant to the Note and Guarantee Agreement, each Subsidiary Guarantor represents, warrants and covenants that as of the date hereof:
(a)
Such Subsidiary Guarantor (i) is a duly organized and validly existing corporation, limited partnership or limited liability company, as the case may be, in good standing (or the equivalent) under the laws of the jurisdiction of its incorporation or formation, (ii) has the corporate or other applicable power and authority, as the case may be, to own its property and assets and to transact the business in which it is currently engaged and presently proposes to engage and (iii) is duly qualified and is authorized to do business and is in good standing in each jurisdiction where the conduct of its business as currently conducted requires such qualification, except for failures to be so qualified which, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.
(b)
Such Subsidiary Guarantor has the corporate or other applicable power and authority to execute, deliver and perform the terms and provisions of this Subsidiary Guarantee and each other related agreement, instrument or document to which it is a party and has taken all necessary corporate or other applicable action to authorize the execution, delivery
6
and performance by it of this Subsidiary Guarantee and each such other related agreement, instrument or document. Such Subsidiary Guarantor has duly executed and delivered this Subsidiary Guarantee and each other related agreement, instrument or document to which it is a party, and this Subsidiary Guarantee and each such other related agreement, instrument or document constitutes the legal, valid and binding obligation of such Subsidiary Guarantor enforceable against such Subsidiary Guarantor in accordance with its terms, except to the extent that the enforceability hereof or thereof may be limited by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws generally affecting creditors’ rights and by equitable principles (regardless of whether enforcement is sought in equity or at law).
(c)
Neither the execution, delivery or performance by such Subsidiary Guarantor of this Subsidiary Guarantee or any other related agreement, instrument or document to which it is a party, nor compliance by it with the terms and provisions hereof and thereof, will (i) contravene any provision of any applicable law, statute, rule or regulation or any applicable order, writ, injunction or decree of any court or governmental instrumentality, (ii) conflict with or result in any breach of any of the terms, covenants, conditions or provisions of, or constitute a default under, or result in the creation or imposition of (or the obligation to create or impose) any Lien upon any of the material properties or assets of such Subsidiary Guarantor or any of its Subsidiaries pursuant to the terms of any indenture, mortgage, deed of trust, loan agreement or credit agreement, or any other material agreement, contract or instrument, to which such Subsidiary Guarantor or any of its Subsidiaries is a party or by which it or any of its material property or assets is bound or to which it may be subject or (iii) violate any provision of the certificate of incorporation or by-laws (or equivalent organizational documents), as the case may be, of such Subsidiary Guarantor or any of its Subsidiaries.
(d)
No order, consent, approval, license, authorization or validation of, or filing, recording or registration with (except as have been obtained or made prior to the date when required and which remain in full force and effect), or exemption by, any governmental or public body or authority, or any subdivision thereof, is required to authorize, or is required in connection with, (i) the execution, delivery and performance of this Subsidiary Guarantee by such Subsidiary Guarantor or any other related agreement, instrument or document to which such Subsidiary Guarantor is a party or (ii) the legality, validity, binding effect or enforceability of this Subsidiary Guarantee or any other related agreement, instrument or document to which such Subsidiary Guarantor is a party.
(e)
Other than as set forth on Schedule 5.6 of the Note and Guarantee Agreement, there are no actions, suits or proceedings pending or, to such Subsidiary Guarantor’s knowledge, threatened (i) with respect to this Subsidiary Guarantee or any other related agreement, instrument or document to which such Subsidiary Guarantor is a party or (ii) with respect to such Subsidiary Guarantor or any of its Subsidiaries that, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.
11.
Each Subsidiary Guarantor covenants and agrees that on and after the Closing and until the repayment in full of the Notes and until such time as no Notes remain
7
outstanding and all Guaranteed Obligations have been paid in full, such Subsidiary Guarantor will comply, and will cause each of its Subsidiaries to comply, with all of the applicable provisions, covenants and agreements contained in Sections 8 and 9 of the Note and Guarantee Agreement, and will take, or will refrain from taking, as the case may be, all actions that are necessary to be taken or not taken so that it is not in violation of any provision, covenant or agreement contained in Section 9 or 10 of the Note and Guarantee Agreement, and so that no Default or Event of Default is caused by the actions of such Subsidiary Guarantor or any of its Subsidiaries.
12.
The Subsidiary Guarantors hereby jointly and severally agree to pay all reasonable out-of-pocket costs and expenses of each Holder in connection with the enforcement of this Subsidiary Guarantee (including, without limitation, the reasonable fees and disbursements of counsel).
13.
This Subsidiary Guarantee shall be binding upon each Subsidiary Guarantor and its successors and assigns and shall inure to the benefit of the Holders and their successors and assigns.
14.
Neither this Subsidiary Guarantee nor any provision hereof may be changed, waived, discharged or terminated except with the written consent of each Subsidiary Guarantor directly affected thereby and with the written consent of the Required Holders (or, to the extent required by Section 19 of the Note and Guarantee Agreement, with the written consent of all the Holders or all of the Holders adversely affected thereby, as applicable) at all times prior to the time on which all Guaranteed Obligations have been paid in full.
15.
Each Subsidiary Guarantor acknowledges that an executed (or conformed) copy of each of the Note and Guarantee Agreement, the Note and the Guarantee has been made available to a senior officer of such Subsidiary Guarantor and such officer is familiar with the contents thereof.
16.
In addition to any rights now or hereafter granted under applicable law (including, without limitation, Section 151 of the New York Debtor and Secured Creditor Law) and not by way of limitation of any such rights, upon the occurrence and during the continuance of an Event of Default (such term to mean and include any “Event of Default” as defined in the Note and Guarantee Agreement), each Holder is hereby authorized, at any time or from time to time, without notice to any Subsidiary Guarantor or to any other Person, any such notice being expressly waived, to set off and to appropriate and apply any and all deposits (general or special) and any other indebtedness at any time held or owing by such Holder to or for the credit or the account of such Subsidiary Guarantor, against and on account of the obligations and liabilities of such Subsidiary Guarantor to such Holder under this Subsidiary Guarantee, irrespective of whether or not such Holder shall have made any demand hereunder and although said obligations, liabilities, deposits or claims, or any of them, shall be contingent or unmatured.
17.
Except as otherwise expressly provided herein, all notices and other communications provided for hereunder shall be in writing (including email or facsimile communication) and mailed, emailed, faxed or delivered: if to any Subsidiary Guarantor, at
8
c/o General Maritime Corporation, 299 Park Avenue, New York, New York, 10171-0002, with copies to Kramer Levin Naftalis & Frankel LLP, 1177 Avenue of the Americas, New York, New York 10036, Attention: Kenneth Chin, Esq., Telephone No.: (212) 715-9100, Facsimile No.: (212) 715-8000, Email: kchin@kramerlevin.com and Kirkland and Ellis LLP, 555 California Street, San Francisco, California 94104, Attention: Samantha Good, Telephone No.: (415) 439-1914. Facsimile No.: (415) 439-1500, Email: samantha.good@kirkland.com; if to any Holder, at its address specified on Schedule A to the Note and Guarantee Agreement; or, as to any other Obligor, at such other address as shall be designated by such party in a written notice to the other parties hereto and, as to each Holder, at such other address as shall be designated by such Holder in a written notice to the Issuer. All such notices and communications shall, (i) when mailed, be effective three Business Days after being deposited in the mails, prepaid and properly addressed for delivery, (ii) when sent by overnight courier, be effective one Business Day after delivery to the overnight courier prepaid and properly addressed for delivery on such next Business Day, or (iii) when sent by email or facsimile, be effective when sent by email or facsimile, except that notices and communications to any Subsidiary Guarantor shall not be effective until received by such Subsidiary Guarantor, as the case may be.
18.
If any claim is ever made upon any Holder for repayment or recovery of any amount or amounts received in payment or on account of any of the Guaranteed Obligations and any of the aforesaid payees repays all or part of said amount by reason of (i) any judgment, decree or order of any court or administrative body having jurisdiction over such payee or any of its property or (ii) any settlement or compromise of any such claim effected by such payee with any such claimant (including, without limitation, the Issuer or any other Guaranteed Party) then and in such event each Subsidiary Guarantor agrees that any such judgment, decree, order, settlement or compromise shall be binding upon such Subsidiary Guarantor, notwithstanding any revocation hereof or the cancellation of any Note or any other instrument evidencing any liability of the Issuer or any other Guaranteed Party, and such Subsidiary Guarantor shall be and remain liable to the aforesaid payees hereunder for the amount so repaid or recovered to the same extent as if such amount had never originally been received by any such payee.
19.
(a)
THIS SUBSIDIARY GUARANTEE AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE.
Any legal action or proceeding with respect to this Subsidiary Guarantee may, in the case of any Holder, and shall, in the case of any Subsidiary Guarantor, be brought in the courts of the State of New York or of the United States of America for the Southern District of New York in each case which are located in the City of New York, and, by execution and delivery of this Subsidiary Guarantee, each Subsidiary Guarantor hereby irrevocably and unconditionally submits to the non-exclusive jurisdiction of such courts for purposes of any such legal action or proceeding. Each Subsidiary Guarantor hereby agrees that service of process in any such proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to it at its address specified in Section 17 or at such other
9
address of which each Holder shall have been notified pursuant thereto. In addition, each Subsidiary Guarantor hereby irrevocably waives to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this agreement, the notes, the guarantees or any other document executed in connection herewith brought in the courts of the State of New York or the United States District Court for the Southern District of New York, and any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. Each Subsidiary Guarantor hereby irrevocably waives (to the fullest extent permitted by applicable law) any objection to such service of process and further irrevocably waives and agrees not to plead or claim in any action or proceeding commenced hereunder that such service of process was in any way invalid or ineffective. Nothing herein shall affect the right of any of the Holders to serve process in any other manner permitted by law or to commence legal proceedings or otherwise proceed against each Subsidiary Guarantor in any other jurisdiction.
(b)
Each Subsidiary Guarantor hereby irrevocably waives (to the fullest extent permitted by applicable law) any objection which it may now or hereafter have to the laying of venue of any of the aforesaid actions or proceedings arising out of or in connection with this Subsidiary Guarantee brought in the courts referred to in clause (a) above and hereby further irrevocably waives (to the fullest extent permitted by applicable law) and agrees not to plead or claim in any such court that such action or proceeding brought in any such court has been brought in an inconvenient forum.
(c)
EACH SUBSIDIARY GUARANTOR AND EACH HOLDER (BY ITS ACCEPTANCE OF THE BENEFITS OF THIS SUBSIDIARY GUARANTEE) HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS SUBSIDIARY GUARANTEE OR THE TRANSACTIONS CONTEMPLATED HEREBY.
20.
In the event that all of the capital stock or other equity interests of one or more Subsidiary Guarantors is sold or otherwise disposed of or liquidated in compliance with the requirements of Section 10.02 of the Note and Guarantee Agreement (or such sale, other disposition, or liquidation has been approved in writing by the Required Holders (or all the Holders if required by Section 19 of the Note and Guarantee Agreement)) and the proceeds of such sale, disposition or liquidation are applied in accordance with the provisions of the Note and Guarantee Agreement, to the extent applicable, such Subsidiary Guarantor shall upon consummation of such sale or other disposition (except to the extent that such sale or disposition is to GMC or any Subsidiary thereof) be released from this Subsidiary Guarantee automatically and without further action and this Subsidiary Guarantee shall, as to each such Subsidiary Guarantor or Subsidiary Guarantors, terminate, and have no further force or effect (it being understood and agreed that the sale of one or more Persons that own, directly or indirectly, all of the capital stock or other equity interests of any Subsidiary Guarantor shall be deemed to be a sale of such Subsidiary Guarantor for the purposes of this Section 20).
21.
At any time a payment in respect of the Guaranteed Obligations is made under this Subsidiary Guarantee, the right of contribution of each Subsidiary Guarantor against each other Subsidiary Guarantor shall be determined as provided in the immediately following
10
sentence, with the right of contribution of each Subsidiary Guarantor to be revised and restated as of each date on which a payment (a “
Relevant Payment
”) is made on the Guaranteed Obligations under this Subsidiary Guarantee. At any time that a Relevant Payment is made by a Subsidiary Guarantor that results in the aggregate payments made by such Subsidiary Guarantor in respect of the Guaranteed Obligations to and including the date of the Relevant Payment exceeding such Subsidiary Guarantor’s Contribution Percentage (as defined below) of the aggregate payments made by all Subsidiary Guarantors in respect of the Guaranteed Obligations to and including the date of the Relevant Payment (such excess, the “
Aggregate Excess Amount
”), each such Subsidiary Guarantor shall have a right of contribution against each other Subsidiary Guarantor who has made payments in respect of the Guaranteed Obligations to and including the date of the Relevant Payment in an aggregate amount less than such other Subsidiary Guarantor’s Contribution Percentage of the aggregate payments made to and including the date of the Relevant Payment by all Subsidiary Guarantors in respect of the Guaranteed Obligations (the aggregate amount of such deficit, the “
Aggregate Deficit Amount
”) in an amount equal to (x) a fraction the numerator of which is the Aggregate Excess Amount of such Subsidiary Guarantor and the denominator of which is the Aggregate Excess Amount of all Subsidiary Guarantors multiplied by (y) the Aggregate Deficit Amount of such other Subsidiary Guarantor. A Subsidiary Guarantor’s right of contribution pursuant to the preceding sentences shall arise at the time of each computation, subject to adjustment to the time of each computation;
provided
that no Subsidiary Guarantor may take any action to enforce such right until the Guaranteed Obligations have been irrevocably paid in full in cash, it being expressly recognized and agreed by all parties hereto that any Subsidiary Guarantor’s right of contribution arising pursuant to this Section 21 against any other Subsidiary Guarantor shall be expressly junior and subordinate to such other Subsidiary Guarantor’s obligations and liabilities in respect of the Guaranteed Obligations and any other obligations owing under this Subsidiary Guarantee. As used in this Section 21: (i) each Subsidiary Guarantor’s “
Contribution Percentage
” shall mean the percentage obtained by dividing (x) the Adjusted Net Worth (as defined below) of such Subsidiary Guarantor by (y) the aggregate Adjusted Net Worth of all Subsidiary Guarantors; (ii) the “
Adjusted Net Worth
” of each Subsidiary Guarantor shall mean the greater of (x) the Net Worth (as defined below) of such Subsidiary Guarantor and (y) zero; and (iii) the “
Net Worth
” of each Subsidiary Guarantor shall mean the amount by which the fair saleable value of such Subsidiary Guarantor’s assets on the date of any Relevant Payment exceeds its existing debts and other liabilities (including, without limitation, contingent liabilities, but without giving effect to any Guaranteed Obligations arising under this Subsidiary Guarantee or any guaranteed obligations arising under any guaranty of the Notes) on such date. Notwithstanding anything to the contrary contained above, any Subsidiary Guarantor that is released from this Subsidiary Guarantee pursuant to Section 20 hereof shall thereafter have no contribution obligations, or rights, pursuant to this Section 21. All parties hereto recognize and agree that, except for any right of contribution arising pursuant to this Section 21, each Subsidiary Guarantor who makes any payment in respect of the Guaranteed Obligations shall have no right of contribution or subrogation against any other Subsidiary Guarantor in respect of such payment until all of the Guaranteed Obligations have been irrevocably paid in full in cash. Each of the Subsidiary Guarantors recognizes and acknowledges that the rights to contribution arising hereunder shall constitute an asset in favor of the party entitled to such contribution. In this connection, each Subsidiary Guarantor has the right to waive its
11
contribution right against any Subsidiary Guarantor to the extent that after giving effect to such waiver such Subsidiary Guarantor would remain solvent, in the determination of the Required Holders.
22.
Each Subsidiary Guarantor and each Holder (by its acceptance of the benefits of this Subsidiary Guarantee) hereby confirms that it is its intention that this Subsidiary Guarantee not constitute a fraudulent transfer or conveyance for purposes of the Bankruptcy Code, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar Federal or state law. To effectuate the foregoing intention, each Subsidiary Guarantor and each Holder (by its acceptance of the benefits of this Subsidiary Guarantee) hereby irrevocably agrees that the Guaranteed Obligations guaranteed by such Subsidiary Guarantor shall be limited to such amount as will, after giving effect to such maximum amount and all other (contingent or otherwise) liabilities of such Subsidiary Guarantor that are relevant under such laws and after giving effect to any rights to contribution pursuant to any agreement providing for an equitable contribution among such Subsidiary Guarantor and the other Subsidiary Guarantors, result in the Guaranteed Obligations of such Subsidiary Guarantor in respect of such maximum amount not constituting a fraudulent transfer or conveyance.
23.
This Subsidiary Guarantee may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which when so executed and delivered shall be an original (including if delivered by facsimile or electronic transmission), but all of which shall together constitute one and the same instrument.
* * *
12
IN WITNESS WHEREOF, each Subsidiary Guarantor has caused this Subsidiary Guarantee to be executed and delivered as of the date first above written.
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[SUBSIDIARY GUARANTOR],
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each as a Subsidiary Guarantor
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By:
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Name:
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Title:
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Exhibit 10.75
SHIPBUILDING CONTRACT
FOR
THE CONSTRUCTION OF
300,000 DWT CLASS CRUDE OIL CARRIER
HULL NO. S768
BETWEEN
NAVIG8 CRUDE TANKERS INC
(AS BUYER)
AND
HYUNDAI SAMHO HEAVY INDUSTRIES CO., LTD.
(AS BUILDER)
I N D E X
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PAGE
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PREAMBLE
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3
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ARTICLE
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I
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DESCRIPTION AND CLASS
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4
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II
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CONTRACT PRICE
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8
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III
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ADJUSTMENT OF THE CONTRACT PRICE
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9
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IV
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INSPECTION AND APPROVAL
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1
2
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V
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MODIFICATIONS, CHANGES AND EXTRAS
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1
8
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VI
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TRIALS AND COMPLETION
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21
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VII
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DELIVERY
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2
5
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VIII
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:DELAYS
AND EXTENSIONS OF TIME (FORCE MAJEURE)
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29
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IX
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WARRANTY OF QUALITY
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32
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X
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PAYMENT
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3
5
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XI
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BUYER’S DEFAULT
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41
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XII
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BUYER’S SUPPLIES
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45
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XIII
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ARBITRATION
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4
8
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XIV
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SUCCESSORS AND ASSIGNS
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50
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XV
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TAXES AND DUTIES
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51
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XVI
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PATENTS, TRADEMARKS AND COPYRIGHTS
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52
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XVII
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: COMPLIANCE AND ANTI-BRIBERY
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53
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XVIII
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INTERPRETATION AND GOVERNING LAW
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54
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XIX
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NOTICE
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XX
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EFFECTIVENESS OF THIS CONTRACT
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56
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XXI
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EXCLUSIVENESS
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57
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EXHIBIT “A” LETTER OF GUARANTEE
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59
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2
THIS
CONTRACT
,
made on this
12th day
of
December
, 2013
by
and between
NAVIG8 CRUDE TANKERS INC, a
corporation incorporated and existing under the
laws
of
Marshall Islands
, having its registered office at
Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960
(hereinafter
called
the
“BUYER”
)
, the party of the first part and HYUNDAI
SAMHO HEAVY INDUSTRIES CO., LTD.
a company organized and existing under the
laws
of the Republic of Korea, having its principal office 93, Daebul-Ro, Samho-Eup, Yeongam-Gun, Jeollanam-Do, Korea (hereinafter called the “BUILDER”),
the
party of the second part,
W
I T N E S S E T H
:
In consideration of the mutual covenants c
o
ntained herein, the BUILDER
agrees
to design, build, launch, equip and complete one (1)
300,000
DWT
C
lass
Crude Oil Carrier as
described in Article I hereof (hereinafter called the “VESSEL”) at the
BUILDER’s
shipyard in Korea (hereinafter called the “SHIPYARD”) in accordance with
the BUILDER’s
shipbuilding practice for
Crude Oil Carrier
, as the B
UILDER
has been performing for its other clients and in accordance with
HSQS (Hyundai Samho Shipbuilding Quality Standard)
and to
deliver
and sell the VESSEL to the BUYER, and the BUYER agrees to accept
delivery
of and purchase from the BUILDER the VESSEL, according to the terms
and
conditions hereinafter set forth:
(End of Preamble)
3
ARTICLE I:
DESCRIPTION AND CLASS
1.
DESCRIPTION
The VESSEL shall have the BUILDER’s Hull No.
S768 and
shall be designed, constructed, equipped and completed in accordance with the specifications (No.
CONV300-FS-P1, dated 10th December 2013)
a
nd
the general arrangement plan (No.
1G7000201, dated 10th December 2013)
attached thereto (hereinafter called respectively the “SPECIFICATIONS” and the “PLAN”) signed by both parties, which shall constitute an integral part of this CONTRACT although not attached hereto.
The SPECIFICATIONS and the PLAN are intended to explain each other and anything shown on the PLAN and not stipulated in the SPECIFICATIONS or anything stipulated in the SPECIFICATIONS and not shown on the PLAN shall be deemed and considered as if included in both.
Should there be any inconsistencies or contradictions between the SPECIFICATIONS and the PLAN, the SPECIFICATIONS shall prevail. Should there be any inconsistencies or contradictions between this CONTRACT and the SPECIFICATIONS, this CONTRACT shall prevail.
2.
BASIC
DIMENSIONS AND PRINCIPAL PARTICULARS OF THE VESSEL
(a)
The basic dimensions and principal particulars of the VESSEL shall be:
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Length, overall
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abt.
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333
m
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Length, between perpendiculars
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abt.
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322
m
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Breadth, moulded
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abt.
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60
m
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Depth, moulded
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abt.
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29.4
m
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Design draught, moulded
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abt.
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20.5
m
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Scantling draught, moulded
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abt.
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21.6
m
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Main Engine
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HYUNDAI - B&W 7G80ME-C9.2
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Nominal Rating: 32,970 kW x 72 RPM
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MCR: 24,400 kW x 66 RPM
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NCR: 17,080 kW x 58.6 RPM
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Main engine to be part load optimized
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Deadweight, guaranteed :
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299,969 metric tons at the Scantling draught of 21.6 meters on even keel in sea water of specific gravity of 1.025.
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Speed, guaranteed
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14.8 knots at the design draught of 20.5 meters at the condition of clean bottom and in calm and deep sea with main engine output of 17,080 kW with 15% sea margin.
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Fuel Consumption, guaranteed
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161.7 grams/kW-hour using marine diesel oil having lower calorific value of 42,700 kj/kg at MCR measured at the shop trial with I.S.O reference conditions.
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The details of the aforementioned particulars as well as the definitions and method
of
measurements and calculations are as indicated in the SPECIFICATIONS.
(b)
The dimensions may be slightly modified by the BUILDER,
who also reserves the right to make changes to the SPECIFICATIONS and the PLAN if found necessary to suit the local conditions and facilities of the SHIPYARD, the availability of materials and equipment, the introduction of improved production methods or otherwise,
subject to the written approval of the BUYER which the BUYER shall not withhold unreasonably, and all subject to the other relevant provisions of this CONTRACT.
3.
CLASSIFICATION,
RULES AND REGULATIONS
(a)
The VESSEL, including its machinery, equipment and outfitting shall be designed, equipped and constructed in accordance with the BUILDER’s HSQS (Hyundai Samho Shipbuilding Quality Standard) and shipbuilding practices.
The VESSEL shall be built in compliance with the rules (editions and amendments thereto being in force at the date of signing this CONTRACT) of Korean Register of Shipping (hereinafter called the “CLASSIFICATION SOCIETY”), classed and registered with the symbol
of +KRS1-Oil Tanker (Double Hull) ‘ESP’, (FBC), (CSR), Crude, VEC-2, IGS, COW, IWS, IBWM, LI, +KRM1-UMA, STCM, PSPC, IAFS, IOPP, ISPP, IGPP, IAPP, IIHM, IEE, EQ-SPM, ERS, CHA.
The VESSEL shall be built in compliance with the standards provided in the
SPECIFICATIONS
and with the Rules and Regulations as mentioned in the
SPECIFICATIONS
which are in force at the date of signing the
SPECIFICATIONS (for reference, the published LR’s “Future IMO Legislation, Aug 2013” to be used).
EEDI verification to be performed by
the BUILDER
during sea trials
and confirmed by the CLASSIFICATION SOCIETY
.
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(b)
The BUILDER shall arrange with the CLASSIFICATION SOCIETY for the assignment by the CLASSIFICATION SOCIETY of representative(s) to the VESSEL during each stage of construction. All fees and charges incidental to classification of the VESSEL as well as in compliance with the above specified rules, regulations and requirements of this CONTRACT shall be for the account of the BUILDER.
All major plans, materials and workmanship used in the construction of the V
ESSEL
shall be subject to inspection and test by the CLASSIFICATION SOCIETY in accordance with the rules and regulations of the CLASSIFICATION SOCIETY
.
(c)
The decision of the CLASSIFICATION SOCIETY as to whether the
VESSEL
complies with the regulations of the CLASSIFICATION SOCIETY
shall
be final and binding upon the BUILDER and the BUYER, provided that in the case of dispute the decision shall be endorsed by Head Office of the CLASSIFICATION SOCIETY.
4.
SUBCONTRACTING
The BUILDER is authorised to sub-contract part of the work to third party sub-contractors who will carry out works in accordance with the quality standards and shipbuilding practices outlined above at Article I. 3. (a) of this CONTRACT, provided that the work is done in Korea and the BUILDER shall have first given notice in writing to the BUYER.
Without prejudice to the generality of the foregoing, the BUILDER shall remain fully liable for the due and complete performance of all the BUILDER’s obligation under this CONTRACT notwithstanding the entering into of any such sub-contract as aforesaid. However, the VESSEL shall always remain at the SHIPYARD unless the BUYER and the BUILDER agree otherwise.
No sub-contract shall bind or purport to bind the BUYER, and each sub-contract shall be the responsibility of the BUILDER and not contain any retention rights, liens or other such rights that may interfere at anytime with the transfer of unencumbered ownership and title of the VESSEL by the BUILDER to the BUYER.
All sub-contractors howsoever employed or engaged are hereby declared and agreed to be sub-contractors employed or engaged by the BUILDER and the BUILDER agrees that it is and shall remain fully responsible for and liable in respect of any sub-contractors and/or their acts or omissions and, without prejudice to the generality of the foregoing, the BUILDER shall ensure control over supervision and scheduling of the all work done by any subcontractor.
The BUILDER hereby agrees that if any of its employees, servants or agents or those of the sub-contractors appointed pursuant to this CONTRACT shall, in the reasonable opinion of the
6
BUYER, not be carrying out properly their duties and responsibilities under or pursuant to the terms of this CONTRACT, the BUYER shall be entitled (by giving written notice to the BUILDER) to draw the same to the attention of the BUILDER and, if the BUYER considers it necessary, to request the BUILDER to replace such person(s) if the same are its own employees, servants or agents, or to use its best endeavours to replace such person(s) if the same are the employees, servants or agents of a sub-contractor. The BUILDER shall investigate any such request, and, if found justified, take appropriate action. Any such replacement shall be within such a time scale so as to ensure that the BUILDER continues to carry out all of its duties and obligations under or pursuant to this CONTRACT.
The BUYER’s inspection and final assembly of any subcontracted work shall be at the BUILDER’s SHIPYARD. The BUILDER will arrange for the BUYER to execute pre-production inspection of sub-contractors premises by providing reasonable advanced notice to inspect the facility. The BUYER retains the right to inspect vetting records by BUILDER’s Quality Control Department confirming compliance with the BUILDER’s quality standards.
The BUYER’s rights hereunder shall not in any way be reduced in respect of such sub-contracted work and the BUYER shall not bear any additional costs in respect of such sub-contracted work.
5.
NATIONALITY
OF THE VESSEL
The VESSEL shall be registered by the BUYER at its own cost and expense under the laws of Marshall Islands
with
its home port
at
the time of its delivery and acceptance hereunder.
(End of Article)
7
ARTICLE II:
CONTRACT PRICE
The contract price of the VESSEL delivered to the BUYER at the SHIPYARD shall be United States Dollars Ninety Five Million Three Hundred Thousand (US$ 95,300,000.-) (hereinafter called the “CONTRACT PRICE”) which shall be paid plus any increases or less any decreases due to adjustment or modification, if any, as set forth in this CONTRACT. Subject to the above, the CONTRACT PRICE is fixed and is not subject to any fluctuations in or on account of wages, costs of equipment or materials or currencies or otherwise. The above CONTRACT PRICE shall include payment for services in the inspection, test, survey and classification of the VESSEL which will be rendered by the CLASSIFICATION SOCIETY and shall not include the cost of the BUYER’s supplies as stipulated in Article XII.
The CONTRACT PRICE also includes all costs and expenses for supplying all necessary drawings as stipulated in the SPECIFICATIONS except those to be furnished by the BUYER for the VESSEL in accordance with the SPECIFICATIONS. All other costs and expenses of the BUILDER as provided in the CONTRACT or the SPECIFICATIONS or otherwise incurred by the BUILDER are for the account of the BUILDER unless expressly specified as being for the account of the BUYER in the CONTRACT or otherwise in writing.
The BUILDER shall, however undertake to install in the VESSEL all of such BUYER’s supplies in accordance with the SPECIFICATIONS without extra cost to the BUYER, but the BUYER shall pay all charges and expenses, including, but not limited to, the customs clearance fee, for transporting such BUYER’s supplied articles to the SHIPYARD.
(End of Article)
8
ARTICLE III:
ADJUSTMENT OF THE CONTRACT PRICE
The CONTRACT PRICE of the VESSEL shall be adjusted as hereinafter set forth in the event of the following contingencies. It is hereby understood by both parties that any adjustment of the CONTRACT PRICE as provided for in this Article is by way of liquidated damages and not by way of penalty.
1.
DELAYED DELIVERY
(a)
No adjustment shall be made and the CONTRACT PRICE shall remain unchanged for the first thirty (30) days of the delay in delivery of the VESSEL [ending as of 12 o’clock midnight Korean Standard Time on the thirtieth (30th) day of delay] beyond the Delivery Date calculated as provided in Article VII.1. hereof.
(b)
If delivery of the VESSEL is delayed more than thirty (30) days beyond the date upon which the delivery is due from the BUILDER under the terms of this CONTRACT, then, beginning at midnight of the thirtieth (30th) day after such due date, the CONTRACT PRICE of the VESSEL shall be reduced by U.S. Dollars Twenty Three Thousand (US$ 23,000) for each full day of delay.
However, unless the parties agree otherwise, the total amount of deduction from the CONTRACT PRICE shall not exceed the amount due to cover the delay of one hundred and Eighty (180) days after thirty (30) days of the delay in delivery of the VESSEL at the rate of deduction as specified hereinabove.
(c)
But, if the delay in delivery of the VESSEL continues for a period of more than two hundred and ten (210) days beyond the date upon which the delivery is due from the BUILDER under the terms of this CONTRACT then, in such event, and after such period has expired, the BUYER may, at its option, cancel this CONTRACT by serving upon the BUILDER a notice of cancellation by e-mail or facsimile to be confirmed by a registered letter via airmail directed to the BUILDER at the address given in this CONTRACT. Such cancellation shall be effective as of the date the notice thereof is received by the BUILDER. If the BUYER has not served the notice of cancellation after the aforementioned two hundred and ten (210) days delay in delivery, the BUILDER may demand the BUYER to make an election in accordance with Article VIII.3 hereof.
(d)
For the purpose of this Article, the delivery of the VESSEL shall be deemed to be delayed when and if the VESSEL, after taking into full account extension of the Delivery Date or permissible delays as provided in ArticlesV.1 and V.3, VI.2, VIII, XI.1, XII.1 and XIII.7, is delivered beyond or before the date upon which delivery would then be due under the terms of this CONTRACT.
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2. INSUFFICIENT SPEED
(a)
The CONTRACT PRICE of the VESSEL shall not be affected or changed, if the actual speed, as determined by trial runs more fully described in Article VI hereof, is less than the guaranteed speed as defined in Article I paragraph 2 hereof, provided such deficiency in actual speed is not more than three tenths (3/10) of a knot below the guaranteed speed.
(b)
However, as for the deficiency of more than three tenths (3/10) of a knot in actual speed below the guaranteed speed, the CONTRACT PRICE shall be reduced by U.S. Dollars Eighty Thousand (US$80,000) for each full one-tenth (1/10) of a knot in excess of the said three tenths (3/10) of a knot of deficiency in speed (fractions of less than one-tenth (1/10) of a knot shall be regarded as a full one-tenth (1/10) of a knot). However, unless the parties agree otherwise, the total amount of reduction from the CONTRACT PRICE shall not exceed the amount due to cover the deficiency of one (1) full knot below the guaranteed speed at the rate of reduction as specified above.
(c)
If the deficiency in actual speed of the VESSEL is more than one (1) full knot below the guaranteed speed, then the BUYER, at its option, may, subject to the BUILDER’s right to effect alterations or corrections as provided in Article VI.5. hereof, cancel this CONTRACT or may accept the VESSEL at a reduction in the CONTRACT PRICE as above provided for one (1) full knot of deficiency only.
3.
EXCESSIVE FUEL CONSUMPTION
(a)
The CONTRACT PRICE of the VESSEL shall not be affected or changed by reason of the fuel consumption of the VESSEL’s main engine, as determined by the engine manufacturer’s shop trial as per the SPECIFICATIONS being more than the guaranteed fuel consumption of the VESSEL’s main engine as defined in Article I paragraph 2 hereof, if such excess is not more than five per cent (5%) over the guaranteed fuel consumption.
BUYER’s Representatives will be provided fourteen (14) days notice of engine trials in order to be present during aforementioned trials.
(b)
However, as for the excess of more than five percent (5%) in the actual fuel consumption over the guaranteed fuel consumption of the VESSEL’s main engine, the CONTRACT PRICE shall be reduced by U.S. Dollars Eighty Thousand (US$80,000) for each full one per cent (1%) increase in fuel consumption in excess of the said five per cent (5%) increase in fuel consumption (fraction of less than one per cent (1%) shall be regarded as a full one percent (1%)). However, unless the parties agree otherwise, the total amount of reduction from the CONTRACT PRICE shall not exceed the amount due to cover the excess of ten percent (10%) over the guaranteed fuel consumption of the VESSEL’s main
10
engine at the rate of reduction as specified above.
(c)
If such actual fuel consumption exceeds the guaranteed fuel consumption of the VESSEL’s main engine by more than ten percent (10%), the BUYER, at its option, may, subject to the BUILDER’s right to effect alterations or corrections as specified in Article VI. 5. hereof, cancel this CONTRACT or may accept the VESSEL at a reduction in the CONTRACT PRICE as above provided for the ten percent (10%) increase only.
4.
DEADWEIGHT BELOW CONTRACT REQUIREMENTS
(a)
The CONTRACT PRICE of the VESSEL shall not be affected or changed, if the actual deadweight determined as provided in this CONTRACT and the SPECIFICATIONS, is below the guaranteed deadweight as defined in Article I paragraph 2 hereof by one point five percent (1.5%) of the guaranteed deadweight or less.
(b)
However, should the deficiency in the actual deadweight of the VESSEL be more than XXXX of the guaranteed deadweight (disregarding fractions of less than one (1) metric ton), the CONTRACT PRICE shall be reduced by the sum of U.S. Dollars Seven Hundred (US$700) for each one (1) metric deficiency (disregarding fractions of less than one (1) metric ton) in excess of the said one point five percent (1.5%) of deficiency.
(c)
In the event of such deficiency in the deadweight of the VESSEL being more than three percent (3%) of the guaranteed deadweight, the BUYER, at its option, may, subject to the BUILDER’s right to effect alterations or corrections as specified in Article VI. 5. hereof, cancel this CONTRACT or accept the VESSEL at a reduction in the CONTRACT PRICE as above provided for three percent (3%) only.
5.
EFFECT OF CANCELLATION
(a)
The liquidated damages payable according to the provisions of each Paragraph under this ARTICLE are cumulative and not exclusive.
(b)
It is expressly understood and agreed by the parties hereto that in any case, if the BUYER cancels this CONTRACT under this Article, the BUYER, save for its rights and remedies set out in Article X.5 hereof, shall not be entitled to any liquidated damages.
(End of Article)
11
ARTICLE IV:
INSPECTION AND APPROVAL
1.
APPOINTMENT OF BUYER’S REPRESENTATIVE
The BUYER shall timely dispatch to and maintain at the SHIPYARD, at its own cost, expense and risk, one or more representatives (hereinafter called the “BUYER’S REPRESENTATIVE”), who shall be duly accredited in writing by the BUYER to supervise adequately the construction by the BUILDER of the VESSEL, her equipment and all accessories. Before the commencement of any item of work under this CONTRACT, the BUILDER shall, whenever reasonably required, previously exhibit, furnish to, and within the limits of the BUYER’S REPRESENTATIVE’s authority, secure the approval from the BUYER’S REPRESENTATIVE of any and all plans and drawings prepared in connection therewith. Upon appointment of the BUYER’S REPRESENTATIVE, the BUYER shall notify the BUILDER in writing of the name and the scope of the authority of the BUYER’S REPRESENTATIVE.
The BUYER shall have the right to replace or substitute any of its representatives upon prior notice to the BUILDER. One individual BUYER’S REPRESENTATIVE shall be nominated by the BUYER in writing from time to time as having authority to bind the BUYER on certain matters as provided in this Article and that nominated BUYER’S REPRESENTATIVE shall alone be so authorized in respect of such matters and no other BUYER’S REPRESENTATIVE shall be authorized to so bind the BUYER in respect of such matters.
However, in any case, the BUYER shall not appoint any employees of the BUILDER or the persons who had been employed by the BUILDER within one (1) year before the BUYER’s appointment of such ex-employee of the BUILDER as the BUYER’S REPRESENTATIVE or his assistants or employees of the BUYER without the BUILDER’s prior written consent.
2.
AUTHORITY OF THE BUYER’S REPRESENTATIVE
According to the BUYER’s written authorization, such BUYER’S REPRESENTATIVE shall, at all times during working hours of the construction until delivery of the VESSEL, have the right to inspect the VESSEL, her equipment and all accessories, and work in progress, or materials utilized in connection with the construction of the VESSEL, wherever such work is being done or such materials are stored, for the purpose of determining that the VESSEL, her equipment and accessories are being constructed in accordance with the terms of this CONTRACT and/or the SPECIFICATIONS and the PLAN.
The BUILDER will endeavor to arrange for the inspection by the BUYER’S REPRESENTATIVE during working hours of the BUILDER. However, such inspection may be arranged beyond the BUILDER’s normal working hours, including weekend and/or holiday if this is considered necessary by the BUILDER in order to meet the BUILDER’s construction
12
schedule, on the condition that the BUILDER will inform the BUYER’S REPRESENTATIVE at least Two (2) working days in advance of such inspection.
The BUYER’S REPRESENTATIVE shall, within the limits of the authority conferred upon him by the BUYER, make decisions or give advice to the BUILDER on behalf of the BUYER within reasonable time on all problems arising out of, or in connection with, the construction of the VESSEL and generally act in a reasonable manner with a view to cooperating to the utmost with the BUILDER in the construction process of the VESSEL.
The decision, approval or advice of the BUYER’S REPRESENTATIVE shall be deemed to have been given by the BUYER and once given shall not be withdrawn, revoked or modified except with consent of the BUILDER.
Provided that the BUYER’S REPRESENTATIVE or his assistants shall comply with the foregoing obligations, no act or omission of the BUYER’S REPRESENTATIVE or his assistants shall, in any way, diminish the liability of the BUILDER under Article IX (WARRANTY OF QUALITY). The BUYER’S REPRESENTATIVE shall notify the BUILDER within reasonable time in writing of his discovery of any construction or materials, which he believes do not or will not conform to the requirements of the CONTRACT and the SPECIFICATIONS or the PLAN and likewise advise and consult with the BUILDER on all matters pertaining to the construction of the VESSEL, as may be required by the BUILDER, or as he may deem necessary.
However, if the BUYER’S REPRESENTATIVE fails to submit to the BUILDER, within one (1) working day after any inspections or tests, or in the case of major inspection or test items, within two (2) working days, any such demand concerning alterations or changes with respect to the construction, arrangement or outfit of the VESSEL, which the BUYER’S REPRESENTATIVE has examined, inspected or attended at the test thereof under this CONTRACT or the SPECIFICATIONS, the BUYER’S REPRESENTATIVE shall be deemed to have approved the same and shall be precluded from making any demand for alterations, changes, or complaints with respect thereto at a later date. Such major inspection or test items shall be decided and agreed by the parties to this CONTRACT at the time of the BUYER’s approval of an inspection and test plan submitted by the BUILDER upon the BUYER’S REPRESENTATIVE’s work commencement or opening up of his office at the SHIPYARD, whichever is the earlier.
The BUILDER shall comply with any such demand which is not contradictory to this CONTRACT and the SPECIFICATIONS or the PLAN, provided that any and all such demands by the BUYER’S REPRESENTATIVE with regard to construction, arrangement and outfit of the VESSEL shall be submitted in writing to the authorized representative of the BUILDER. The BUILDER shall notify the BUYER’S REPRESENTATIVE of the names of
13
the persons who are from time to time authorized by the BUILDER for this purpose.
It is agreed upon between the BUYER and the BUILDER that the modifications, alterations or changes and other measures necessary to comply with such demand may be effected at a convenient time and place at the BUILDER’s reasonable discretion in view of the construction schedule of the VESSEL.
In the event that the BUYER’S REPRESENTATIVE shall advise the BUILDER that he has discovered or believes the construction or materials do not or will not conform to the requirements of this CONTRACT and the SPECIFICATIONS or the PLAN, and the BUILDER shall not agree with the views of the BUYER’S REPRESENTATIVE in such respect, either the BUYER or the BUILDER may, with the agreement of the other party, seek an opinion of the CLASSIFICATION SOCIETY or failing such agreement, request an arbitration in accordance with the provisions of Article XIII hereof. The CLASSIFICATION SOCIETY or the arbitration tribunal, as the case may be, shall determine whether or not a nonconformity with the provisions of this CONTRACT, the SPECIFICATIONS and the PLAN exists. If the CLASSIFICATION SOCIETY or the arbitration tribunal, as the case may be, enters a determination in favour of the BUYER, then in such case the BUILDER shall make the necessary alterations or changes, or if such alterations or changes cannot be made in time to meet the construction schedule for the VESSEL, the BUILDER may make a proposal for a fair and reasonable adjustment of the CONTRACT PRICE in lieu of such alterations and changes, such proposal to be subject to the mutual agreement of the BUILDER and BUYER. If the CLASSIFICATION SOCIETY or the arbitration tribunal, as the case may be, enters a determination in favour of the BUILDER, then the time for delivery of the VESSEL shall be extended for the period of delay in construction, if any, occasioned by such proceedings, and the BUYER shall compensate the BUILDER for the proven loss and damages incurred by the BUILDER as a result of the dispute herein referred to.
3.
APPROVAL OF DRAWINGS
All plans and drawings and instruction books to be in English.
(a)
The BUILDER shall submit to the BUYER three (3) copies of each of the plans and drawings to be submitted to the BUYER for its approval at its address as set forth in Article XVIII hereof. The BUYER shall, within twenty one (21) days including mailing time after receipt thereof, return to the BUILDER one (1) copy of such plans and drawings with the approval or comments, if any, of the BUYER. A list of the plans and drawings to be so submitted to the BUYER shall be mutually agreed upon between the parties hereto.
(b)
When and if the BUYER’S REPRESENTATIVE shall have been sent by the BUYER to the SHIPYARD in accordance with Paragraph 1 of this Article, the BUILDER may submit
14
the remainder, if any, of the plans and drawings in the agreed list, to the BUYER’S REPRESENTATIVE for his approval, unless otherwise agreed upon between the parties hereto.
The BUYER’S REPRESENTATIVE shall, within seven (7) days after receipt thereof, return to the BUILDER one (1) copy of such plans and drawing with his approval or comments written thereon, if any. Approval by the BUYER’S REPRESENTATIVE of the plans and drawings duly submitted to him shall be deemed to be the approval by the BUYER for all purposes of this CONTRACT.
(c)
In the event that the BUYER or the BUYER’S REPRESENTATIVE shall fail to return the plans and drawings to the BUILDER within the time limit as hereinabove provided, such plans and drawings shall be deemed to have been automatically approved without any comment. In the event the plans and drawings submitted by the BUILDER to the BUYER or the BUYER’S REPRESENTATIVE in accordance with this Article do not meet with the BUYER’s or the BUYER’S REPRESENTATIVE’s approval, the matter may be submitted by either party hereto for determination pursuant to Article XIII hereof. If the BUYER’s comments on the plans and drawings that are returned to the BUILDER by the BUYER within the said time limit are not clearly specified or detailed, the BUILDER shall seek clarification from the BUYER prior to implementing them which clarification must be provided in writing by the BUYER within five (5) days of such request from the BUILDER. If the BUYER shall fail to provide the BUILDER with such clarification within the said time limit, then the BUILDER shall be entitled to place its own interpretation on such comments in implementing them.
4.
SALARIES AND EXPENSES
All salaries and expenses of the BUYER’S REPRESENTATIVE or any other person or persons employed by the BUYER hereunder shall be for the BUYER’s account.
5.
RESPONSIBILITY OF THE BUILDER
(a)
The BUILDER shall provide the BUYER’S REPRESENTATIVE and his assistants free of charge with suitably furnished office space at, or in the immediate vicinity of, the SHIPYARD together with access to telephone, internet connection, printer/copier and facsimile facilities, air conditioning, toilets, and computer outlet to enable the BUYER’S REPRESENTATIVE and his assistants to carry out their work under this CONTRACT. However, the BUYER shall pay for the telephone high speed internet connection and facsimile facilities used by the BUYER’S REPRESENTATIVE or his assistants.
The BUILDER shall provide full assistance and advice how to obtain the necessary visas,
15
working permits and/or other document that may be necessary for the BUYER’S REPRESENTATIVE to enter and remain and work in Korea without delay provided that the BUYER’S REPRESENTATIVE meets the requirements and laws of Korea.
The BUILDER, its employees, agents and subcontractors, during its working hours until delivery of the VESSEL, shall arrange for them to have free and ready access to the VESSEL, her equipment and accessories, and to any other place (except the areas controlled for the purpose of national security) where work is being done, or materials are being processed or stored in connection with the construction of the VESSEL including the premises of sub-contractors.
The BUYER’S REPRESENTATIVE or his assistants or employees shall observe the work’s rules and regulations prevailing at the BUILDER’s and its sub-contractor’s premises. The BUILDER shall promptly provide to the BUYER’S REPRESENTATIVE and/or his assistants and shall ensure that its sub-contractors shall promptly provide all such information as he or they may reasonably request in connection with the construction of the VESSEL and her engines, equipment and machinery.
The BUILDER is responsible for ensuring at all times that a safe working environment and proper access is provided to the works and/or areas of inspection. Failure to provide proper, safe access at either the BUILDER or any appointed sub contractor may result in declining an inspection provided that justifiable grounds are presented to the BUILDER. Such time and impact to schedule are for the BUILDER’s account / responsibility.
(b)
The BUYER’S REPRESENTATIVE and his assistants shall at all times remain the employees of the BUYER, and not of the BUILDER. The BUILDER shall not be liable to the BUYER or the BUYER’S REPRESENTATIVE or to his assistants or to the BUYER’s employees or agents for personal injuries, including death, during the time they, or any of them, are on the VESSEL, or within the premises of either the BUILDER or its sub-contractors, or are otherwise engaged in and about the construction of the VESSEL, unless, however, such personal injuries, including death, are caused by the gross negligence or willful misconduct of the BUILDER, its sub-contractors, or its or their employees or agents. The BUILDER shall not be liable to the BUYER for damages to, or destruction of property of the BUYER or of the BUYER’S REPRESENTATIVE or his assistants or the BUYER’s employees or agents, unless such damages, loss or destruction is caused by the gross negligence or willful misconduct of the BUILDER, its sub-contractors, or its or their employees or agents.
6.
RESPONSIBILITY OF THE BUYER
The BUYER shall undertake and assure that the BUYER’S REPRESENTATIVE shall carry
16
out his duties hereunder in accordance with the normal shipbuilding practice and in such a way so as to avoid any unnecessary and unreasonable increase in building cost, delay in the construction of the VESSEL, and/or any disturbance in the construction schedule of the BUILDER.
The BUILDER has the right to request the BUYER to replace the BUYER’S REPRESENTATIVE who is deemed unsuitable and unsatisfactory for the proper progress of the VESSEL’s construction.
The BUYER shall investigate the situation by sending its representative (s) to the SHIPYARD, if necessary, and if the BUYER considers that such BUILDER’s request is justified, the BUYER shall effect such replacement as soon as conveniently arrangeable.
The BUILDER’s employees, agents, subcontractors and so forth shall at all times remain under the BUILDER’s responsibility. The BUYER shall not be liable to the BUILDER, or the BUILDER’s employees, agents, subcontractors and so forth for personal injuries, including death, during the time they, or any of them, are on the VESSEL, or within the premises of either the BUILDER or his subcontractors, or are otherwise engaged in and about the construction of the VESSEL, unless, however, such personal injuries, including death are caused by the gross negligence of the BUYER, its employees including the BUYER’S REPRESENTATIVE and his assistants or agents. The BUYER shall not be liable to the BUILDER, or the BUILDER’s employees, agents, subcontractors and so forth for damages to, or loss or destruction of property of the BUILDER, or the BUILDER’s employees, agent, subcontractors and so forth unless such damages, loss or destruction were caused by the gross negligence of the BUYER, or its employees or agents.
(End of Article)
17
ARTICLE V:
MODIFICATION, CHANGES AND EXTRAS
1.
HOW EFFECTED
Minor modifications or changes to the SPECIFICATIONS and the PLAN under which the VESSEL is to be constructed may be made at any time hereafter by written agreement of the parties hereto.
Any modification or change requested by the BUYER which does not affect the frame-work of the SPECIFICATIONS or the PLAN and also does not adversely affect the BUILDER’s planning or program in relation to the BUILDER’s other commitments which have been entered into at that time shall be agreed to by the BUILDER if the BUYER agrees to adjustment of the CONTRACT PRICE(if any), deadweight and/or cubic capacity, speed requirements, the Delivery Date and other terms and conditions of this CONTRACT reasonably required as a result of such modifications or change.
The BUILDER has the right to continue construction of the VESSEL on the basis of the SPECIFICATIONS and the PLAN until the BUYER
and BUILDER
has agreed to
the necessary
adjustments
to the Contract Price of the VESSEL, the time of delivery and any other alterations in this
CONTRACT
, or the
SPECIFICATIONS. The BUILDER shall be entitled to refuse to make any alteration, change or modification of the SPECIFICATIONS and/or the PLAN requested by the BUYER, if the BUYER and BUILDER do not agree to the aforesaid adjustments within seven (7) days of the BUILDER’s notification of its proposal for the same to the BUYER, or, if, in the BUILDER’s reasonable judgement, the compliance with such request of the BUYER would cause an unreasonable disruption of the normal working schedule of the SHIPYARD.
The BUILDER, however, agrees to exert its best efforts to accommodate such reasonable request by the BUYER so that the said change and modification shall be made at a reasonable cost and within the shortest period of time reasonably possible. The aforementioned agreement to modify and change the SPECIFICATIONS and the PLAN may be effected by exchange of letters, e-mail or facsimiles manifesting the agreement.
The letters, e-mail and facsimiles exchanged by the parties pursuant to the foregoing shall constitute an amendment to this CONTRACT and the SPECIFICATIONS or the PLAN under which the VESSEL shall be built. Upon consummation of such an agreement to modify and change the SPECIFICATIONS or the PLAN, the BUILDER shall alter the construction of the VESSEL in accordance therewith including any addition to, or deduction from, the work to be performed in connection with such construction.
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2.
SUBSTITUTION OF MATERIAL
If any materials, machinery or equipment required for the construction of the VESSEL by the SPECIFICATIONS and the PLAN or otherwise under this CONTRACT cannot be procured in time to meet the BUILDER’s construction schedule for the VESSEL, or are in short supply provided that they have been timely ordered, or are unreasonably high in price compared with the prevailing international market price on the date of signing this CONTRACT provided that they have been timely ordered, the BUILDER may supply, subject to the BUYER’s prior approval in writing, other materials, machinery or equipment of equal quality and effect capable of meeting the requirements of the CLASSIFICATION SOCIETY and the rules, regulations and requirements with which the construction of the VESSEL must comply.
Furthermore, it is expressly agreed that should the BUILDER have to use any steel plate made in China they will only use steel plate produced by major Chinese steel mills used by Hyundai Heavy Industries Group. No Brazilian steel will be used for any of the structural parts of the VESSEL without the BUYER’s prior approval in its absolute discretion. All steel for the structural parts of the VESSEL to be provided in accordance with the CLASSIFICATION SOCIETY’s standards and approvals.
3.
CHANGES IN RULES AND REGULATIONS
If any requirements as to CLASSIFICATION SOCIETY or as to the specified rules and regulations with which the construction of the VESSEL is required to comply in Article I. 3. (a) are altered or changed by the CLASSIFICATION SOCIETY or other regulatory bodies authorized to make such alterations or changes, either the BUYER or the BUILDER, upon receipt of due notice thereof, shall forthwith give notice thereof to the other party in writing. Thereupon, within ten (10) working days after giving the notice to the BUILDER or receiving the notice from the BUILDER, the BUYER shall advise the BUILDER as to the alterations and changes, if any, to be made on the VESSEL which the BUYER, in its sole discretion, shall decide.
The BUILDER shall comply promptly with the said request of the BUYER, provided that the BUILDER and the BUYER shall first agree to:
(a)
any increase or decrease in the CONTRACT PRICE of the VESSEL that is occasioned by such compliance;
(b)
any extension or advancement in the Delivery Date of the VESSEL that is occasioned by such compliance;
19
(c)
any increase or decrease in the deadweight and/or cubic capacity of the VESSEL, if such compliance results in any increase or reduction in the deadweight and/or cubic capacity ;
(d)
adjustment of the guaranteed speed if such compliance results in any increase or reduction in the speed; and
(e)
any other alterations in the terms of this CONTRACT or of the SPECIFICATIONS or the PLAN or both, if such compliance makes such alterations of the terms necessary.
Any delay in the construction of the VESSEL caused by the BUYER’s delay in making a decision or agreement as above shall constitute a permissible delay under this CONTRACT. Such agreement by the BUYER shall be effected in the same manner as provided above for modification and change of the SPECIFICATIONS and the PLAN.
(End of Article)
20
ARTICLE VI:
TRIALS AND COMPLETION
GENERAL
The BUILDER shall carry out and run the tests and trials on the VESSEL in the manner and to the extent as described in the SPECIFICATIONS (and the trials schedule) and otherwise as may be required by the CLASSIFICATION SOCIETY.
1.
NOTICE
When the VESSEL is substantially complete and in a safe and fit state to proceed to sea, with all appropriate safety and lifesaving equipment onboard for the expected number of persons to be present, the BUILDER shall notify the BUYER in writing or by e-mail or facsimile at least fourteen (14) days in advance of the time and place of the trial run of the VESSEL. Such notice shall specify the Korean port from which the VESSEL will commence her trial run and approximate date upon which the trial run is expected to take place. Such date shall be further confirmed by the BUILDER five (5) days in advance of the trial run by e-mail or facsimile.
The BUYER’S REPRESENTATIVE(s), who is/are to witness the performance of the VESSEL during such trial run, shall be present at such place on the date specified in such notice. Should the BUYER’S REPRESENTATIVE(s) fail to be present after the BUILDER’s due notice to the BUYER as provided above, the BUILDER shall be entitled to conduct such trial run with the presence of the representative(s) of the CLASSIFICATION SOCIETY only without the BUYER’S REPRESENTATIVE(s) being present. In such case, the BUYER shall be obliged to accept the VESSEL on the basis of a certificate issued by the BUILDER that the VESSEL, after the trial run, subject to alterations and corrections, if necessary, has been found to conform with the SPECIFICATIONS and this CONTRACT and is satisfactory in all respects, provided the BUILDER first makes such corrections and alterations promptly.
2.
WEATHER CONDITION
In the event of unfavourable weather on the date specified for the trial run, the trial run shall take place on the first available day that weather conditions permit. The parties hereto recognize that the weather conditions in Korean waters, in which the trial run is to take place, are such that great changes in weather may arise momentarily and without warning and therefore, it is agreed that if, during the trial run, the weather should become so unfavourable that the trial run cannot be continued, then the trial run shall be discontinued and postponed until the first favourable day next following, unless the BUYER shall assent to the acceptance of the VESSEL by notification in writing on the basis of such trial run so far made prior to such change in weather conditions. Any delay of the trial run caused by such unfavourable weather conditions shall also operate to extend the Delivery Date of the VESSEL for the
21
period of delay occasioned by such unfavourable weather conditions. For the purposes of this paragraph 2, unfavourable weather conditions shall be taken as Beaufort Scale Force 6 and above.
3.
HOW CONDUCTED
All expenses in connection with the trials of the VESSEL are to be for the account of the BUILDER, which, during the trials, is to provide at its own expense the necessary crew to comply with conditions of safe navigation. The trials shall be conducted in the manner prescribed in this CONTRACT and the SPECIFICATIONS, and shall prove fulfillment of the performance requirements for the trials as set forth in the SPECIFICATIONS.
The BUILDER shall be entitled to conduct preliminary sea trials, during which the propulsion plant and/or its appurtenance shall be adjusted according to the BUILDER’s judgement. The BUILDER shall have the right to repeat any trial whatsoever as it deems necessary.
4.
CONSUMABLE STORES
The BUILDER shall load the VESSEL with the required quantity of fuel oil, lubricating oil and greases, fresh water, and other stores necessary to conduct the trials as set forth in the SPECIFICATIONS. The necessary ballast (fuel oil, fresh water and such other ballast as may be required) to bring the VESSEL to the trial load draft, as specified in the SPECIFICATIONS, shall be supplied and paid for by the BUILDER whilst lubricating oil and greases shall be supplied and paid for by the BUYER within the time advised by the BUILDER for the conduct of sea trials as well as for use before the delivery of the VESSEL to the BUYER. The fuel oil as well as lubricating oil and greases shall be in accordance with the engine specifications and the BUYER shall decide and advise the BUILDER of the supplier’s name for lubricating oil and greases prior to the steel cutting of the VESSEL, provided that the supplier shall be acceptable to the BUILDER and/or the makers of all the machinery.
Any fuel oil, fresh water or other consumable stores furnished and paid for by the BUILDER for trial runs remaining on board the VESSEL, at the time of acceptance of the VESSEL by the BUYER, shall be bought by the BUYER from the BUILDER at the BUILDER’s purchase price for such supply in Korea (with supporting invoices and documents provided) and payment by the BUYER thereof shall be made at the time of delivery of the VESSEL. The BUILDER shall pay the BUYER at the time of delivery of the VESSEL for the consumed quantity of lubricating oil and greases which were furnished and paid for by the BUYER at the BUYER’s purchase price thereof (with supporting invoices and documents provided).
The consumed quantity of lubricating oils and greases shall be calculated on the basis of the difference between the remaining amount, including the same remaining in the main engine, other machinery and their pipes, stern tube and the like, and the supplied amount.
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5.
ACCEPTANCE OR REJECTION
(a)
Upon completion of sea trial, the BUILDER shall give the BUYER a notice in writing or by e-mail or telefax of the result of the sea trial, as and if the BUILDER considers that the result of sea trial indicates conformity of the VESSEL to this CONTRACT and the SPECIFICATIONS and PLAN.
(b)
The BUYER shall within four (4) working days after receipt of such notice notify the BUILDER in writing or by e-mail or telefax of its acceptance or rejection of the VESSEL, provided that in case of rejecting the VESSEL, the BUYER shall set out in its notice of rejection a detailed, clear explanation of all and any aspects of the VESSEL which it considers do not comply with this CONTRACT, the SPECIFICAITONS and/or the PLAN.
(c)
If the BUILDER is in agreement with the BUYER’s determinations as to non-conformity, the BUILDER shall make such alterations or changes as may be necessary to correct such non-conformity and shall prove the fulfillment of the CONTRACT and SPECIFICATIONS by such tests or trials as may be necessary. If the BUILDER is not in agreement with the BUYER’s determination as to non-conformity, each party shall be entitled to refer the disagreement for determination as per Article XIII.
(d)
The BUYER shall not be entitled to reject the VESSEL by reason of any minor or insubstantial items which do not in any way affect the safety or the operation of the Vessel judged from the point of view of the BUILDER’s shipbuilding practice for Crude Oil Carrier, as the BUILDER has been performing for its other clients and HSQS (Hyundai Samho Shipbuilding Quality Standard) as not being in conformity with the SPECIFICATIONS, but, in that case, the BUILDER shall not be released from the obligation to correct and/or remedy for its own account such minor or insubstantial items as soon as practicable after the delivery of the VESSEL. If inconvenient for the VESSEL to have such items corrected and/or remedied at the SHIPYARD, the BUILDER shall arrange to have such corrections or remedies carried out elsewhere, and may, if practicable, do such work while the VESSEL is sailing. The BUYER may in its absolute discretion accept a payment in lieu of such items being corrected and/or remedied. Any payment in lieu shall be agreed in writing between the BUILDER and the BUYER.
(e)
If during any sea trial any breakdowns occur entailing interruption or irregular performance which can be repaired on board, the sea trial shall be continued after such repairs and be valid in all respects. However, if during the sea trial it becomes apparent that the VESSEL or any part of her equipment requires alterations or correction, the BUILDER shall notify the BUYER promptly in writing or by e-mail or telefax to such effect and shall simultaneously advise the BUYER of the estimated additional time
23
required for the necessary alterations or corrections to be made. The BUYER shall, within five (5) days of receipt from the BUILDER of notice of completion of such alterations or corrections and after such further trials or tests as necessary, notify the BUILDER in writing or by e-mail or telefax of its acceptance or rejection of the VESSEL, all in accordance with the SPECIFICATIONS, PLAN and the CONTRACT, and shall not be entitled to reject the VESSEL on such grounds until such time.
(End of Article)
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ARTICLE VII:
DELIVERY
1.
TIME AND PLACE
The VESSEL shall be delivered by the BUILDER to the BUYER at the SHIPYARD, safely afloat at a quay on or before March 15, 2016 (hereinafter called the “DELIVERY DATE”) after completion of satisfactory trials and acceptance by the BUYER in accordance with the terms of Article VI, except that, in the event of delays in delivery of the VESSEL by the BUILDER due to causes which under the terms of this CONTRACT permit extensions of the time for delivery of the VESSEL, the aforementioned DELIVERY DATE shall be extended accordingly.
The BUILDER shall provide the BUYER in writing by e-mail or telefax thirty (30) days approximate notice of readiness and fourteen (14), seven (7) and three (3) days definite notice of readiness for delivery of the VESSEL.
2.
WHEN AND HOW EFFECTED
Provided that the BUYER shall concurrently with delivery of the VESSEL release to the BUILDER the fifth instalment as set forth in Article X.2.hereofand shall have fulfilled all of its obligations provided for in this CONTRACT (as it may have been amended from time to time) prior to the delivery of the VESSEL, delivery of the VESSEL shall be forthwith effected upon acceptance thereof by the BUYER, as hereinabove provided, by the concurrent delivery by each of the parties hereto to the other of a PROTOCOL OF DELIVERY AND ACCEPTANCE acknowledging delivery of the VESSEL by the BUILDER and acceptance thereof by the BUYER, which PROTOCOL shall be prepared induplicate and signed by each of the parties hereto.
3.
DOCUMENTS TO BE DELIVERED TO THE BUYER
Upon delivery and acceptance of the VESSEL, the BUILDER shall deliver to the BUYER the following documents, which shall accompany the aforementioned PROTOCOL OF DELIVERY AND ACCEPTANCE:
(a)
PROTOCOL OF TRIALS of the VESSEL made pursuant to this CONTRACT and the SPECIFICATIONS,
(b)
PROTOCOL OF INVENTORY of the equipment of the VESSEL, including spare parts, all as specified in the SPECIFICATIONS,
25
(c)
PROTOCOL OF STORES OF CONSUMABLE NATURE, such as all fuel oil and fresh water remaining in tanks if its cost is charged to the BUYER under Article VI. 4. hereof,
(d)
FINISHED DRAWINGS AND PLANS pertaining to the VESSEL as stipulated in the SPECIFICATIONS, which shall be furnished to the BUYER at no additional cost,
(e)
ALL CERTIFICATES required to be furnished upon delivery of the VESSEL pursuant to this CONTRACT, the SPECIFICATIONS and the customary shipbuilding practice, including
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(i)
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Classification Certificate
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(ii)
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Safety Construction Certificate
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(iii)
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Safety Equipment Certificate
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(iv)
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Safety Radiotelegraphy Certificate
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|
|
|
(v)
|
International Loadline Certificate
|
|
|
|
|
(vi)
|
International Tonnage Certificate
|
|
|
|
|
(vii)
|
BUILDER’s Certificate
(duly notarized and legalized)
|
|
|
|
|
(viii)
|
Ship Sanitation Control Exemption Certificate
|
|
|
|
|
(ix)
|
Classification Certificate for anchor, chains and mooring ropes, machinery and equipment
|
|
|
|
|
(x)
|
Certificate for life-boats and life saving equipments
|
|
|
|
|
(xi)
|
Certificates for navigation lights and special signal lights
|
|
|
|
|
(xii)
|
International Oil Pollution Prevention Certificate
|
|
|
|
|
(xiii)
|
Compass adjustment Certificate
|
|
|
|
|
(xiv)
|
Suez Canal Tonnage Certificate
|
|
|
|
|
(xv)
|
Deadweight Certificate
|
|
|
|
|
(xvi)
|
Certificate for Provision Crane, Hose Handling Crane and Engine Room Crane
|
|
|
|
|
(xvii)
|
International Air Pollution Prevention Certificate
|
|
|
|
|
(xviii)
|
Coating Technical File
|
|
|
|
|
(xix)
|
International Sewage Pollution Certificate
|
|
|
|
|
(xx)
|
Class approved Loading Manual
|
|
|
|
|
(xxi)
|
Certified Cargo oil tanks calibration
|
|
|
|
|
(xxii)
|
Ballast Management Certificate
|
|
|
|
|
(xxiii)
|
Emergency Towing System
|
|
|
|
|
(xxiv)
|
Engine Technical File (NOx)
|
|
|
|
|
(xxv)
|
Load Test certificates for all designated lifting lugs / points installed (more than 3.0 ton S.W.L) (issued by the BUILDER)
|
The above list of Certificates and Documents is indicative and may possibly not include all the Required Certificates and Documents for the VESSEL as she is specified in her CLASSIFICATION notation to conduct unrestricted trade. However it is agreed that all
26
the required CLASSIFICATION SOCIETY and Statutory Certificates and Documents should be furnished by the BUILDER to the BUYER.
All certificates or relevant documents which are to be duly notarized and legalized shall be agreed between the parties prior to delivery. All certificates to be delivered in one (1) original and two (2) copies to the BUYER.
If any Certificate, Drawing, Plan, Diagram or other documents referred to in this Article, through no fault on the part of BUILDER, cannot be provided upon delivery and if the absence thereof does not impede the navigation or management of the VESSEL and/or constitute a breach of the statutory requirements of the flag state, of the VESSEL or the requirements of the CLASSIFICATION SOCIETY, a provisional/interim certificate shall be acceptable by the BUYER provided the formal Certificate, Drawing, Plan, Diagram or other document be delivered as soon as practicable after delivery of the VESSEL.
(f)
DECLARATION OF WARRANTY of the BUILDER that the VESSEL is delivered to the BUYER free and clear of any liens, claims, mortgages, or other encumbrances upon the BUYER’s title thereto, and in particular, that the VESSEL is absolutely free of all burdens in the nature of imposts, taxes, or charges imposed by the prefecture or country of the port of delivery, as well as of all liabilities of the BUILDER to its sub-contractors and employees and of all liabilities arising from the operation of the VESSEL in trial runs, or otherwise, prior to delivery except as otherwise provided under this CONTRACT.
(g)
COMMERCIAL INVOICE made by the BUILDER.
(h)
BILL OF SALE made by the BUILDER.
4.
TENDER OF THE VESSEL
If the BUYER fails to take delivery of the VESSEL after completion thereof according to this CONTRACT and the SPECIFICATIONS, the BUILDER shall have the right to tender delivery of the VESSEL after compliance with all procedural requirements as provided above.
5.
TITLE AND RISK
Title to and risk of the VESSEL and her equipment (but excluding the BUYER’s supplies) shall pass to the BUYER upon Delivery and Acceptance of the VESSEL being effected as stated above and the BUILDER shall be free of all responsibility or liability whatsoever related with this CONTRACT except for the warranty of quality contained in Article IX and the obligation to correct and/or remedy, as provided in Article VI. 5(d), if any. It is expressly understood between the parties hereto that, until such Delivery and Acceptance is effected, the
27
VESSEL and equipment thereof are at the entire risk of the BUILDER including but not confined to, risks of war, insurrection and seizure by Governments or Authorities, whether Korean or foreign, and whether at war or at peace. The title to the BUYER’s supplies as provided in Article XII shall remain with the BUYER and the BUILDER’s responsibility for such BUYER’s supplies shall be as described in Article XII.2.
6.
REMOVAL OF THE VESSEL
The BUYER shall take possession of the VESSEL immediately upon Delivery and Acceptance thereof and shall remove the VESSEL from the SHIPYARD within three (3) working days after Delivery and Acceptance thereof is effected.
From the delivery of the VESSEL until the actual removal thereof from the SHIPYARD, the BUYER shall be responsible for the safety and preservation of the VESSEL in all respects, including without limitation, keeping the VESSEL insured at his own cost, and furthermore, the BUYER shall indemnify and hold the BUILDER free and harmless against any liability or claims including without limitation, the claims of his insurers arising out of any accident whatsoever , unless caused by the gross negligence or willful misconduct of the BUILDER, his employee or agent.
Port dues and other charges levied by the Korean Government Authorities after Delivery and Acceptance of the VESSEL and any other costs related to the removal of the VESSEL shall be borne by the BUYER.
(End of Article)
28
ARTICLE VIII:
DELAYS AND EXTENSIONS OF TIME (FORCE MAJEURE)
1.
CAUSES OF DELAY
If, at any time after signing this CONTRACT, either the construction or delivery of the VESSEL or any performance required hereunder as a prerequisite to the delivery thereof is delayed by any of the following events: namely war, acts of state or government, blockade, revolution, insurrections, mobilization, civil commotion, riots, strikes, sabotage, lockouts, Acts of God or the public enemy, plague or other epidemics, quarantines, shortage or prolonged failure of electric current, freight embargoes, or defects in major forgings or castings, delays or defects in the BUYER’s supplies as stipulated in Article XII, if any, or shortage of materials, machinery or equipment or inability to obtain delivery or delays in delivery of materials, machinery or equipment, provided that at the time of ordering the same could reasonably be expected by the BUILDER to be delivered in time or defects in materials, machinery or equipment which could not have been detected by the BUILDER using reasonable care or earthquakes, tidal waves, typhoons, hurricanes, prolonged or unusually severe weather conditions or destruction of the premises or works of the BUILDER or its sub-contractors, or of the VESSEL, or any part thereof, by fire, landslides, flood, lightning, explosion, or delays in the BUILDER’s other commitments resulting from any such causes as described in this Article which in turn directly delay the construction of the VESSEL or the BUILDER’s performance under the CONTRACT (the BUILDER treating this CONTRACT not less favorably than other commitments), or delays caused by the CLASSIFICATION SOCIETY or the BUYER’s faulty action or omission, or other causes beyond the control of the BUILDER, or its sub-contractors, as the case may be, then in the event of delays due to the happening of any of the aforementioned contingencies, the DELIVERY DATE of the VESSEL under this CONTRACT shall be extended for a period of time which shall not exceed the total accumulated time of all such delays provided however that:
(i)
the delay in respect of which the BUILDER is claiming relief was beyond its reasonable control or that of its employees, suppliers and subcontractors and was not caused or contributed to by any error, neglect, act or omission of the BUILDER or of its agents, employees or subcontractors, nor by any breach of this CONTRACT;
(ii)
the delay impacts upon the Vessel’s construction schedule and completion;
(iii)
the BUILDER has shown due diligence in choice of sub-contractor; and
(iv)
the BUILDER has taken all reasonable steps to mitigate its effect upon the construction of the VESSEL,
29
For the avoidance of doubt, where two delay events as described in this paragraph 1(a) occur simultaneously or overlap with each other, such delays caused by such events shall not be double-counted.
2.
NOTICE OF DELAYS
Within seven (7) days after commencement of any delay on account of which the BUILDER claims that it is entitled under this CONTRACT to an extension of the DELIVERY DATE of the VESSEL, excluding delays due to arbitration, the BUILDER shall advise the BUYER in writing or by e-mail or facsimile of the date such delay commenced, the reasons thereof and, if possible, its estimated duration of the probable delay in the delivery of the VESSEL, and shall supply the BUYER if reasonably available with evidence to justify the delay claimed. Within seven (7) days after such cause of delay ends, the BUILDER shall likewise advise the BUYER in writing or by e-mail or facsimile of the date that such cause of delay ended, and also, shall specify the period of time by which the BUILDER claims the DELIVERY DATE should be extended by reason of such delay. Failure of the BUYER to object to the BUILDER’s notification of any claim for extension of the date for delivery of the VESSEL within seven (7) days after receipt by the BUYER of such notification shall be deemed to be a waiver by the BUYER of its right to object to such extension of the DELIVERY DATE.
Failure of the BUILDER to give notice of any relevant delay event in accordance with this paragraph 2 shall be deemed a waiver of the BUILDER’s right to postpone the DELIVERY DATE under this Article VIII in respect of such relevant delay event.
3.
RIGHT TO CANCEL FOR EXCESSIVE DELAY
If the total accumulated time of all permissible and non-permissible delays, excluding delays due to (i) arbitration under Article XIII.7, (ii) the BUYER’s defaults under Article XI.1 and XI.2., (iii) modifications and changes under Article V.1 and V.3 or (iv) delays or defects in the BUYER’s supplies as stipulated in Article XII.1, aggregates two hundred and sixty (260) days or more (inclusive of the thirty (30) days grace period as per Article III.1.(a)), then, the BUYER may, at any time thereafter, cancel this CONTRACT by giving a written notice of cancellation to the BUILDER. Such cancellation shall be effective as of the date the notice thereof is received by the BUILDER and the BUILDER, upon receipt of such notice, and upon the BUYER’s demand, shall refund in accordance with the provisions of Article X.5 hereof all payments made to the BUILDER by the BUYER.
If the BUYER has not served the notice of cancellation as provided in the above or Article III.1 hereof, the BUILDER may, at any time after expiration of the accumulated time of the delay in delivery, either two hundred and sixty (260) days in case of the delays referred to in this Paragraph 3 or two hundred and ten (210) days in case of the delay in Article III.1, notify
30
the BUYER of the future date upon which the BUILDER estimates the VESSEL will be ready for delivery and demand in writing or by e-mail or facsimile that the BUYER make an election either to cancel this CONTRACT or to consent to the delivery of the VESSEL at such future date, in which case the BUYER shall, within seven (7) business days after receipt of such demand, make and notify the BUILDER of such election. If the BUYER elects to consent to the delivery of the VESSEL at such future date (or other future date as the parties may agree):
(a)
Such future date shall become the contractual delivery date for the purposes of this CONTRACT and shall be subject to extension by reason of permissible delays as herein provided, and
(b)
If the VESSEL is not delivered by such revised contractual delivery date (as extended by reason of permissible delays), the BUYER shall have the same right of cancellation upon the same terms as provided in the above and Article III. 1.
If the BUYER shall not make an election within seven (7) business days as provided hereinabove, the BUYER shall be deemed to have accepted such extension of the DELIVERY DATE to the future delivery date indicated by the BUILDER.
4.
DEFINITION OF PERMISSIBLE DELAYS
Delays on account of the foregoing causes specified in Paragraph 1 above shall be understood to be permissible delays, and are to be distinguished from non-permissible unauthorized delays on account of which the CONTRACT PRICE of the VESSEL is subject to adjustment as provided in Article III hereof.
(End of Article)
31
ARTICLE IX:
WARRANTY OF QUALITY
1.
GUARANTEEOF MATERIAL AND WORKMANSHIP
Subject to the provisions hereinafter set forth, the BUILDER undertakes to remedy, free of charge to the BUYER, any defective design, construction, material and/or workmanship
and/or negligent or other improper acts or omissions
(hereinafter called the “DEFECT(S)”) on the part of the BUILDER and/or its sub-contractors, provided that the defect is discovered within a period of twelve (12) months after the date of delivery of the VESSEL and a notice thereof is duly given to the BUILDER as hereinafter provided.
For the purpose of this Article the VESSEL shall include her hull, machinery and equipment, painting and coatings thereof but shall exclude any parts for the VESSEL which have been supplied by or on behalf of the BUYER under Article XII.
The BUILDER agrees that upon the expiry of this guarantee it shall assign (to the extent to which it may validly do so and such supplier guarantee extends beyond
twelve (
12
)
months after the date of delivery of the VESSEL) to the BUYER, all rights, title and interest that the BUILDER may have in and to all guarantees or warranties given by the supplier of any of the appurtenances and materials used in the construction and/or operation of the VESSEL, unless such assignment is against Korean law.
2.
NOTICE OF DEFECTS
The BUYER shall notify the BUILDER in writing or by e-mail or facsimile, of any DEFECTS for which claim is made under this guarantee as promptly as possible after discovery thereof. The BUYER’s written notice shall include full particulars to describe the nature and extent of the DEFECTS. The BUILDER shall have no obligation for any DEFECTS discovered prior to the expiry date of the said twelve (12) months period, unless notice of such DEFECTS is received by the BUILDER no later than seven (7) business days after such expiry date.
3.
REMEDY OF DEFECTS
(a)
The BUILDER shall remedy, at its expense, any DEFECT against which the VESSEL or any part of the machinery or equipment thereof is guaranteed under this Article IX, by making all necessary repairs or replacements at the SHIPYARD or elsewhere as provided for in (b) hereinbelow.
(b)
However, if it is impractical to bring the VESSEL to the SHIPYARD, the BUYER may cause the necessary repairs or replacements to be made elsewhere which is deemed
32
suitable for the purpose, provided that, in such event, the BUILDER may forward or supply replacement parts or materials to the VESSEL, unless forwarding or supplying thereof to the VESSEL would impair or delay the operation or working schedule of the VESSEL. In the event that the BUYER proposes to cause the necessary repairs or replacements to be made to the VESSEL at any other shipyard or works than the SHIPYARD, the BUYER shall first, but in all events as soon as possible, give the BUILDER notice in writing or by e-mail or facsimile of the time and place such repairs will be made, and if the VESSEL is not thereby delayed, or her operation or working schedule is not thereby impaired, the BUILDER shall have the right to verify by its own representative(s) the nature and extent of the DEFECTS complained of. The BUILDER shall in such case, promptly advise the BUYER in writing or by e-mail or facsimile, after such examination has been completed, of its acceptance or rejection of the DEFECTS as ones that are covered by the guarantee herein provided. Upon the BUILDER’s acceptance of the DEFECTS as justifying remedy under this Article IX, or upon the award of the arbitration tribunal so determining, or if the BUILDER neither accepts nor rejects the defects nor requests arbitration within sixty (60) days after its receipt of the BUYER’s notice of defects, the BUILDER shall pay to the BUYER for such repairs or replacements a sum equal to the actual direct cost of the repairs or replacements, as evidenced in United States Dollars by the final invoices of the relevant shipyard/repairer or supplier, however, the amount of the BUILDER’s payment to the BUYER for such repairs or replacements shall not exceed the average cost quoted by two reputable repair yards in Singapore.
(c)
In any case, the VESSEL shall be taken at the BUYER’s costs and responsibility to the place elected, ready in all respects for such repairs or replacements and in any event, the BUILDER shall not be responsible for towage, dockage, wharfage, port charges or any other cost or expenses whatsoever incurred by the BUYER in getting and keeping the VESSEL ready for such repairs or replacements.
(d)
In the event that it is necessary for the BUILDER to forward a replacement for a defective part under this guarantee, replacement parts shall be shipped to the BUYER under the terms of C.I.F. port designated by the BUYER.
(e)
The BUILDER reserves the option to retrieve, at the BUILDER’s cost, any of the replaced equipment/parts in case DEFECTS are remedied in accordance with the provisions in this Article IX.
(f)
Any dispute under this Article IX shall be referred to arbitration in accordance with the provisions of Article XIII hereof.
(g)
In case any amount, which the BUILDER should pay to the BUYER for a single claim in accordance with this Article, is over US$100,000, then the BUILDER shall immediately
33
pay to the BUYER such amount.
4.
EXTENT OF BUILDER’S RESPONSIBILITY
(a)
After delivery of the VESSEL the BUILDER shall have no responsibility for any other DEFECTS whatsoever in the VESSEL than the DEFECTS specified in paragraph 1 of this Article IX and Article VI. 5(d). The BUILDER shall have no liability whatsoever in any circumstances whatsoever to the BUYER or to any third party for anything except the cost of repairing the DEFECT itself. The BUILDER shall not in any circumstances be responsible or liable for any consequential or special losses, damages or expenses including, but not limited to, loss of time, loss of profit or earning or demurrage directly or indirectly occasioned to the BUYER or any third party by reason of the DEFECTS specified in paragraph 1 of this Article or due to repairs or other works done to the VESSEL to remedy such DEFECTS or any other consequential or special losses, damages or expenses related to any liability, cost or expense whatsoever or howsoever arising in connection with any damage to the VESSEL or to any cargo or to any other property owned by the BUYER or any third party caused as a result of the DEFECT and after delivery the BUYER shall hold the BUILDER harmless and indemnify the BUILDER against any such claim from the BUYER or any third party whatsoever in respect of any such matters and in respect of any other claims relating to the VESSEL for which the BUILDER does not expressly give an warranty to the BUYER under this Article.
(b)
T
he BUILDER shall not be responsible for any DEFECTS in any part of the VESSEL which may subsequent to delivery of the VESSEL have been replaced or in any way repaired by any persons other than the BUILDER and/or its nominated sub-contractors, or for any DEFECTS which have been caused or aggravated by omission or improper use and maintenance of the VESSEL on the part of the BUYER, its servants or agents or by ordinary wear and tear or by any other circumstances beyond the control of the BUILDER.
(c)
The guarantee contained as hereinabove in this Article replaces and excludes any other liability, guarantee, warranty and/or condition whether expressly set out in this CONTRACT or imposed or implied by the law, customary, statutory or otherwise, by reason of the construction and sale of the VESSEL by the BUILDER for and to the BUYER.
Any major parts or materials (including painting or coating) replaced during the Guarantee Period under Paragraph 1 of this Article shall be guaranteed for a further twelve (12) months, but not more than eighteen (18) months from delivery of the VESSEL.
(End of Article)
34
ARTICLE X:
PAYMENT
1.
CURRENCY
All payments under this CONTRACT shall be made in United States Dollars.
2.
TERMS OF PAYMENT
The payments of the CONTRACT PRICE shall be made as follows.
(a)
First Instalment
Twenty percent (20%) of the CONTRACT PRICE amounting to U.S.Dollars Nineteen Million Sixty Thousand (US$ 19,060,000) shall be paid within three (3) business days after the BUYER’s receipt of the Letter of Guarantee via SWIFT, duly issued in accordance with Paragraph 8 of this Article, but in any event not earlier than 20
th
, December 2013.
Under this CONTRACT, in counting the business days, only Saturdays and Sundays are excepted. When a due date falls on a day when banks are not open for business in any of New York, London, Singapore or Seoul, such due date shall fall due upon the first business day next following.
(b)
Second Instalment
Ten per cent (10%) of the CONTRACT PRICE amounting to U.S.Dollars Nine Million Five Hundred Thirty Thousand (US$9,530,000) shall be paid on the date falling six (6) months from the date of signing this CONTRACT.
(c)
Third Instalment
Ten per cent (10%) of the CONTRACT PRICE amounting to U.S.Dollars Nine Million Five Hundred Thirty Thousand (US$9,530,000) shall be paid within three (3) business days of receipt by the BUYER of a facsimiled or emailed advice from the BUILDER that first steel cutting of the VESSEL has been commenced and confirmed in writing by the CLASSIFICATION SOCIETY. Such steel cutting to take place not more than twelve (12) months prior to the DELIVERY DATE.
(d)
Fourth Instalment
Ten per cent (10%) of the CONTRACT PRICE amounting to U.S.Dollars Nine Million Five Hundred Thirty Thousand (US$9,530,000) shall be paid within three (3) business
35
days of receipt by the BUYER of a facsimiled or emailed advice from the BUILDER that the first block of the keel has been laid and confirmed in writing by the CLASSIFICATION SOCIETY. Such keel laying to take place not more than eight (8) months prior to the DELIVERY DATE.
(e)
Fifth Instalment
Fifty
per cent (
50
%) of the CONTRACT PRICE amounting to U.S.Dollars
Forty Seven Million Six Hundred Fifty Thousand
(US$
47,650,000
) plus or minus any increase or decrease due to modifications and/or adjustment, if any, arising prior to delivery of the VESSEL of the CONTRACT PRICE under Articles III and V of this CONTRACT shall be paid to the BUILDER concurrently with the delivery and acceptance of the VESSEL, as evidenced by the execution by the parties of the Protocol of Delivery and Acceptance referred to in Article VII of the C
ONTRACT
. The BUILDER shall send to the BUYER a commercial invoice as demand for payment of this instalment.
(The date stipulated for payment of each of the five instalments mentioned above is hereinafter in this Article and in Article XI referred to as the “DUE DATE” of that instalment).
It is understood and agreed upon by the BUILDER and the BUYER that all payments under the provisions of this Article shall not be delayed or withheld by the BUYER due to any dispute or disagreement of whatsoever nature arising between the BUILDER and the BUYER. Should there be any dispute in this connection, the matter shall be dealt with in accordance with the provisions of arbitration in Article XIII hereof.
3.
DEMAND FOR PAYMENT
At least fourteen(14) days prior to the date of each event provided in Paragraph 2 of this Article X on which any payment shall fall due hereunder, with the exception of the payment of the first instalment, the BUILDER shall notify the BUYER by e-mail or facsimile of the date such payment shall become due.
The BUYER shall immediately acknowledge receipt of such notification by e-mail or facsimile to the BUILDER, and make payment as set forth in this Article. If the BUILDER fails to receive the BUYER’s said acknowledgement within three (3) days after sending the aforementioned notification, the BUILDER shall promptly e-mail or facsimile to the BUYER a second notification of similar import. The BUYER shall immediately acknowledge by e-mail or facsimile receipt of the foregoing second notification regardless of whether or not the first notification was acknowledged as aforesaid.
36
4.
METHOD OF PAYMENT
(a)
All the pre-delivery payments and the payment due on delivery in settlement of the CONTRACT PRICE as provided for in Paragraph 2 of this Article shall be made in U.S. Dollars on or before the DUE DATE thereof by telegraphic transfer as follows:
(i)
The payment of the first, second, third, and fourth instalments shall be made to the account of
Nong Hyup Bank of Korea, Head Office, Seoul, Korea (hereinafter called “NH Bank”), Account No. 001-1-544582 at JP Morgan Chase Bank,
1 Chase Manhattan Plaza 10th FL
,
New York, NY 10081, USA
(hereinafter called “JPMCB, N.Y.”) in favour of
Hyundai
Samho Heavy Industries Co., Ltd.
(hereinafter called the “
HSHI
”)
under advice by telefax or telex, including swift, to NH BANK by the remitting Bank. If the BUILDER should wish to nominate an alternative bank, the designation, the account number, identity of account holder and name of such account bank shall be notified by the BUILDER to the BUYER at least five (5) business days prior to the DUE DATE.
(ii)
Upon the cost adjustment to the C
ONTRACT PRICE
in accordance with the provisions of the C
ONTRACT
, the fifth
)
instalment as provided for in Paragraph 2.(e) of this Article shall be deposited at the account of NH BANK
, Account No. 001-1-544582 at JPMCB, N.Y., or any other bank, Seoul, Korea as designated by the BUILDER, by the BUYER in favour of HSHI
at least
three (3)
business days prior to the scheduled delivery date of the VESSEL notified by the BUILDER, with instructions valid for a period of twelve (12) business days that the
said instalment is
payable to the
HSHI
against presentation by the BUILDER to NH BANK
, or any other bank, Seoul, Korea as the case may be,
of a copy of the original PROTOCOL OF DELIVERY AND ACCEPTANCE of the VESSEL signed by the BUILDER and the BUYER, together with an invoice for the amount due under this instalment.
(iii)
If the BUILDER fails to present a copy of the PROTOCOL OF DELIVERY AND ACCEPTANCE to the Bank within the said period of twelve (12)
business
days or unless the validity of the instruction is further extended by the BUYER based on mutual agreement in writing reached with the BUILDER within the said twelve (12)
business
days validity period, the BUILDER’s bank shall remit the said amount of the fifth instalment to the BUYER’s bank account immediately upon expiry of the initial twelve (12)
business
days validity period of the instruction. Interest, if any, accrued by such deposit shall be for BUYER’s account.
In the event of the fifth instalment having been so returned by the Bank to the BUYER, the BUYER shall remit the fifth instalment again to the Bank as laid down in this paragraph upon receipt of a further notice from the Builder for readiness of
37
the Vessel for delivery.
(b)
Simultaneously with each of such payments, the BUYER shall advise the BUILDER of the details of the payments by e-mail or facsimile and at the same time, the BUYER shall cause the BUYER’s remitting Bank to advise NH BANK
, or any other bank, Seoul, Korea as the case may be,
of the details of such payments by authenticated SWIFT
,
bank cable or telex.
5.
REFUND
BY THE BUILDER
(a)
The payments made by the BUYER to the BUILDER prior to delivery of the VESSEL shall constitute advances to the BUILDER. If the VESSEL is rejected by the BUYER in accordance with the terms of this CONTRACT or, except in the case of rescission or cancellation of this CONTRACT by the BUILDER under the provisions of Article XI.1 hereof, if the BUYER terminates, cancels or rescinds this CONTRACT pursuant to any of the provisions of this CONTRACT specifically permitting the BUYER to do so, the BUILDER shall forthwith refund to the BUYER, in U.S. Dollars, the full amount of total sums paid by the BUYER to the BUILDER in advance of delivery together with interest thereon as herein provided without deduction, set-off or withholding in US dollars.
(b)
The transfer and other bank charges of such refund shall be for the BUILDER’s account. The interest rate of the refund, as above provided, shall be
Six
per cent (
6
%) per annum from the date following the date of receipt by the BUILDER of the pre-delivery instalment(s) to the date of remittance by telegraphic transfer of such refund, provided, however, that if the cancellation of this CONTRACT by the BUYER is based upon delays due to Force Majeure or other causes beyond the control of the BUILDER as provided for in Article VIII.1 hereof, then in such event, the interest rate of refund shall be reduced to Four per cent (4%) per annum for the periods affected by such delays.
(c)
It is hereby understood by both parties that payment of any interest provided herein is by way of liquidated damages due to cancellation of this CONTRACT and not by way of compensation for use of money.
(d)
If, the BUILDER is required to refund to the BUYER the instalments paid by the BUYER to the BUILDER as provided in this Paragraph 5, the BUILDER shall return to the BUYER all of the BUYER’s supplies as stipulated in Article XII which were not incorporated into the VESSEL and pay to the BUYER an amount equal to the cost to the BUYER of those supplies incorporated into the VESSEL.
38
6.
TOTAL
LOSS
If there is a total loss or a constructive total loss of the VESSEL prior to delivery thereof, the BUILDER shall proceed according to the mutual agreement of the parties hereto either:
(a)
to build another vessel in place of the VESSEL so lost and deliver it under this CONTRACT to the BUYER, provided that the parties hereto shall have agreed in writing to a reasonable cost and time for the construction of such vessel in place of the lost VESSEL; or
(b)
to refund to the BUYER the full amount of the total sums paid by the BUYER to the BUILDER under the provisions of Paragraph 2 of this Article together with interest thereon at the rate of Four per cent (4%) per annum from the date following the date of receipt by the BUILDER of such pre-delivery instalment(s) to the date of payment by the BUILDER to the BUYER of the refund.
(c)
If the parties hereto fail to reach such agreement within two (2) months after the VESSEL is determined to be a total loss or constructive total loss, the provisions of (b) hereinabove shall be applied.
7.
DISCHARGE
OF OBLIGATIONS
Such refund as provided in the foregoing Paragraphs 5 and 6 by the BUILDER to the BUYER shall forthwith discharge all the obligations, duties and liabilities of each of the parties hereto to the other
(other than any obligations of the BUYER in respect of facilities afforded to the BUYER’s REPRESENTATIVE)
under this CONTRACT. Any and all refunds or payments due to the BUYER under this CONTRACT shall be made by telegraphic transfer to the account specified by the BUYER.
8.
REFUND
GUARANTEE
The BUILDER shall, within thirty (30) days following the execution of this CONTRACT, furnish the BUYER (and prior to the payment of the first instalment) with an assignable letter of guarantee issued by
NH BANK via SWIFT
for the assurance of and as security for the refund of the pre-delivery instalments under or pursuant to Paragraph 5 and/or Paragraph 6 above plus interest accrued thereon in accordance with this CONTRACT in the form and substance as annexed hereto as Exhibit “A”.
All expenses in issuing and maintaining the letter of guarantee described in this Paragraph shall be borne by the BUILDER.
If the BUILDER fails to provide the Refund Guarantee within thirty (30) days after the date of this CONTRACT, the BUYER shall be entitled to terminate this Contract with immediate
39
effect by written notice to the BUILDER.
(End of Article)
40
ARTICLE XI:
BUYER’S DEFAULT
1.
DEFINITION
OF DEFAULT
The BUYER shall be deemed to be in default under this CONTRACT in the following cases:
(a)
If the first, second, third or fourth instalment is not paid to the BUILDER within the respective DUE DATE of such instalments; or
(b)
If the fifth instalment is not deposited in accordance with Article X.4.(a)(ii) hereof or if the said fifth instalment deposit is not released to the BUILDER against presentation by the BUILDER of a copy of the original PROTOCOL OF DELIVERY AND ACCEPTANCE; or
(c)
If the BUYER fails to take delivery of the VESSEL when the VESSEL is duly tendered for delivery by the BUILDER under the provisions of Article VII hereof; or
(d)
If an order or an effective resolution shall be passed for winding up of the BUYER (except for the purpose of reorganization, merger or amalgamation); or
In case the BUYER is in default as set out in Paragraph 1 above, the BUILDER is entitled to and shall have the following rights, powers and remedies in addition to such other rights, powers and remedies as the BUILDER may have elsewhere in this CONTRACT and/or at law, at equity or otherwise.
2.
EFFECT
OF THE BUYER’S DEFAULT ON OR BEFORE THE DELIVERY OF
THE
VESSEL
If the BUYER shall be in default
of its obligations under this CONTRACT
as provided in Paragraph 1 above, then;
(a)
The DELIVERY DATE of the VESSEL shall be extended automatically for the actual period of such default and the BUILDER shall not be obliged to pay any liquidated damages for the delay in delivery of the VESSEL caused thereby.
(b)
The BUYER shall pay to the BUILDER interest at the rate of
Six
percent (
6
%) per annum in respect of the instalment(s) in default from the respective DUE DATE to the date of actual receipt by the BUILDER of the full amount of such instalment(s).
(c)
If the BUYER is in default in payment of any of the instalment(s) due and payable prior to or simultaneously with the delivery of the VESSEL, the BUILDER shall, in writing or by
41
e-mail or facsimile, notify the BUYER to that effect, and the BUYER shall, upon receipt of such notification, forthwith acknowledge in writing or by facsimile to the BUILDER that such notification has been received.
(d)
If any of the BUYER’s default continues for a period o
f fourteen
(
14
) days after the BUILDER’s notification to the BUYER of such default, the BUILDER may, at its option, rescind this CONTRACT by serving upon the BUYER a written notice or e-mail or facsimile notice of rescission confirmed in writing.
(e)
In the event of such cancellation by the BUILDER of this CONTRACT due to the BUYER’s default as provided for in paragraph 1 above, the BUILDER shall
be entitled to retain and apply the instalments already paid by the BUYER to the recovery of the BUILDER’s proven loss and damage including reasonable estimated profit (in relation to this CONTRACT) due to the BUYER’s default and the cancellation of this CONTRACT and at the same time the BUILDER shall
have the full right and power either to complete or not to complete the VESSEL which is the sole property of the BUILDER as it deems fit, and to sell the VESSEL at a public or private sale on such terms and conditions as the BUILDER thinks fit
without being answerable for any loss and damage. However
the BUILDER shall exercise normal commercial diligence to secure the market price obtainable for a sale in such circumstances; and
(f)
The proceeds received by the BUILDER from the sale shall be applied in addition to the instalment(s) retained by the BUILDER as mentioned hereinabove as follows :
First, in payment of all reasonable costs and expenses of the sale of the VESSEL, including interest thereon at
Six
per cent (
6
%) per annum from the respective date of payment of such costs and expenses aforesaid to the date of sale on account of the BUYER’s default.
Second, if the VESSEL has been completed, in or towards satisfaction of the unpaid balance of the CONTRACT PRICE, to which shall be added the cost of all additional work and extras agreed by the BUYER including interest thereon at
Six
per cent (
6
%) per annum from the respective DUE DATE of the instalment in default to the date of sale, or if the VESSEL has not been completed, in or towards satisfaction of the unpaid amount of the cost incurred by the BUILDER prior to the date of sale on account of construction of the VESSEL, including work, labour, materials and reasonably estimated profit which the BUILDER would have been entitled to receive if the VESSEL had been completed and delivered plus interest thereon at
Six
per cent (
6
%) per annum from the respective DUE DATE of the instalment in default to the date of sale.
Third, the balance of the proceeds, if any, shall belong to the BUYER, and shall forthwith
42
be paid over to the BUYER by the BUILDER.
In the event of the proceeds from the sale together with instalment(s) retained by the BUILDER being insufficient to pay the BUILDER, the BUYER shall be liable for the deficiency and shall pay the same to the BUILDER upon its demand.
3.
DEFINITION OF BUILDER’S DEFAULT
The BUILDER shall be deemed to be in default of its obligations under this CONTRACT in the event of:
(i)
The filing of a petition or the making of an order or the passing of an effective resolution for the winding up of the BUILDER (other than for the purpose of reconstruction or amalgamation which has been previously approved in writing by the BUYER), or the appointment of a receiver, administrator, compulsory manager, trustee, liquidator or other similar officer has been made against the BUILDER or any of its assets under the laws of any jurisdiction or the appointment of a receiver of the undertaking or property of the BUILDER, or the insolvency of or a suspension of payments by the BUILDER, or the cessation of the carrying on of business by the BUILDER at any of its shipyards, or the making by the BUILDER of any special arrangement or composition with the creditors of the BUILDER; or any like or similar circumstance occurring under the laws of the Republic of Korea; or
(ii)
The occurrence of any of the events set out in (i) with respect to the bank issuing the Letter of Guarantee referred to in Article X.5, and the failure by the BUILDER within sixty (60) days thereof to replace such bank with an alternative guarantor reasonably acceptable to the BUYER and its bank; or
(iii)
Where the BUILDER:
(a)
remains in default of performance of any obligation or provision of the CONTRACT fourteen (14) days after receiving written notice from the BUYER that the BUILDER is in default; or
(b)
fails, neglects, refuses or is unable during the course of the construction of the VESSEL to provide materials, equipment, services or labour to perform the construction in accordance with the SPECIFICATIONS, the PLAN, and this CONTRACT prior to the date on which the BUYER shall be entitled to cancel this CONTRACT for delay.
43
4.
EFFECT OF BUILDER’S DEFAULT
If any such default as referred to in Paragraph3 above occurs, then the BUYER may terminate this CONTRACT by promptly notifying the BUILDER in writing but not later than two (2) weeks from the date of the BUILDER’s default takes place or after the period to remedy it has expired. Such cancellation is to be effective as of the date when such notice of cancellation is received by the BUILDER and the provisions of Article X. 5 shall apply in respect of such termination. In any event the BUYER shall be entitled to pursue such claims and remedies as it may elect subject to the applicable law.
(End of Article)
44
ARTICLE
XII:
BUYER’S SUPPLIES
1.
RESPONSIBILITY
OF THE BUYER
(a)
The BUYER shall, at its cost and expense, supply all the BUYER’s supplies mentioned in the SPECIFICATIONS, if any, (hereinafter called the “BUYER’S SUPPLIES”), to the BUILDER at the SHIPYARD in perfect condition ready for installation and in accordance with the time schedule to be furnished by the BUILDER to meet the building schedule of the VESSEL.
Such schedule to be advised by the BUILDER within six (6) months after this CONTRACT becomes effective according to Article XX.
(b)
In order to facilitate the installation of the BUYER’S SUPPLIES by the BUILDER in or on the VESSEL, the BUYER shall furnish the BUILDER with the necessary plans, instruction books, test report and all test certificates reasonably required by the BUILDER and shall cause the representative(s) of the makers of the BUYER’S SUPPLIES to give the BUILDER any advice, instructions or assistance which the BUILDER may reasonably require in the installation or adjustment thereof at the SHIPYARD, all without cost or expense to the BUILDER.
(c)
The BUYER shall be liable for any expense incurred by the BUILDER for repair of the BUYER’S SUPPLIES due to defective design or materials, poor workmanship or performance or due to damage in transit and the DELIVERY DATE of the VESSEL shall be extended for the period of such repair if such repair shall affect the delivery of the VESSEL.
(d)
Commissioning into good order of the BUYER’S SUPPLIES during and after installation on board shall be made at the BUYER’s expense by the representative of respective maker or the person designated by the BUYER in accordance with the BUILDER’s building schedule.
(e)
Should the BUYER fail to deliver to the BUILDER the BUYER’S SUPPLIES and the necessary document or advice for such supplies within the time specified by the BUILDER, the DELIVERY DATE of the VESSEL shall automatically be extended for the period of such delay if such delay in delivery shall affect the delivery of the VESSEL. In such event, the BUYER shall pay to the BUILDER all losses and damages sustained by the BUILDER due to such delay in the delivery of the BUYER’S SUPPLIES and such payment shall be made upon delivery of the VESSEL, provided, however, that the BUILDER shall have :
45
(i)
furnished the BUYER with the time schedule referred to above, two (2) months prior to installation of the BUYER’S SUPPLIES and
(ii)
given the BUYER written notice of any delay in delivery of the BUYER’S SUPPLIES and the necessary document or advice for such supplies as soon as the delay occurs which might give rise to a claim by the BUILDER under this Paragraph.
Furthermore, if the delay in delivery of the BUYER’S SUPPLIES and the necessary document or advice for such supplies should exceed
ten (10) working
days from the date specified by the BUILDER, the BUILDER shall be entitled to proceed with construction of the VESSEL without installation of such items (regardless of their nature or importance to the BUYER or the VESSEL) in or on the VESSEL without prejudice to the BUILDER’s right hereinabove provided, and the BUYER shall accept the VESSEL so completed.
2.
RESPONSIBILITY
OF THE BUILDER
The BUILDER shall be responsible for storing, safekeeping and handling the BUYER’S SUPPLIES
which has appropriate proof against weather, dust and theft and,
which the BUILDER is required to install on board the VESSEL under the SPECFICATIONS after delivery of such supplies to the SHIPYARD and shall procure that at all times the
BUYER’S SUPPLIES
are clearly marked as being the property of the BUYER. The BUILDER shall install such supplies on board the VESSEL at the BUILDER’s expense.
The BUILDER shall not be responsible for the quality, performance or efficiency of any equipment included in the BUYER’S SUPPLIES and is under no obligation with respect to the guarantee of such equipment against any defects caused by poor quality, performance or efficiency of the BUYER’S SUPPLIES.
If any of the
BUYER’S SUPPLIES
are lost or damaged while in the custody of the BUILDER, the BUILDER shall, if the loss or damage is due breach of its obligations under this Paragraph 2, default, negligence or omission on its part, be responsible for such loss or damage.
Upon delivery of the
BUYER’S SUPPLIES
at the SHIPYARD, the BUILDER and the BUYER shall carry out a joint unpacking inspection of the
BUYER’S SUPPLIES
so that the condition at the time of delivery can be confirmed.
3.
RETURN OF THE BUYER’S SUPPLIES
If pursuant to the provisions of this CONTRACT the BUILDER is required to refund to the BUYER the instalments paid by the BUYER to the BUILDER, the BUILDER shall either (i)
46
return to the BUYER all of the
BUYER’S SUPPLIES
not incorporated into the VESSEL and pay to the BUYER an amount equal to the actual cost of those supplies incorporated into the VESSEL, or (ii) pay to the BUYER an amount equal to the actual cost of all supplies provided to the BUILDER and paid for by the BUYER irrespectively of whether or not the same have been incorporated into the VESSEL by mutual agreement.
(End of Article)
47
ARTICLE XIII:
ARBITRATION
1.
DECISION BY THE CLASSIFICATION SOCIETY
If any dispute arises between the parties hereto in regard to the design and/or construction of the VESSEL, its machinery and equipment, and/or in respect of the materials and/or workmanship thereof and/or thereon, and/or in respect of interpretations of the SPECIFICATIONS, the parties may by mutual agreement refer the dispute to the CLASSIFICATION SOCIETY or to such other expert as may be mutually agreed between the parties hereto, and whose decision shall be final, conclusive and binding upon the parties hereto.
2.
LAWS
APPLICABLE
Any arbitration arising hereunder shall be governed by and conducted in accordance with the London Maritime Arbitrators’ Association Terms or any statutory modification or re-enactments thereof for the time being in force.
The award of the arbitrator shall be final, conclusive and binding upon parties hereto.
3.
PROCEEDINGS OF ARBITRATION
In the event that the parties hereto do not agree to settle a dispute according to Paragraph 1 of this Article and/or in the event of any other dispute of any kind whatsoever between the parties and relating to this CONTRACT or its rescission or any stipulation herein, such dispute shall be submitted to arbitration in London. The parties shall try to agree a single arbitrator to conduct the arbitration.
If the parties cannot agree upon the appointment of the single arbitrator within two (2) weeks after one of the parties has given notice to the other party notifying that the other party refer the dispute to arbitration, the dispute shall be settled by three arbitrators, each party appointing one arbitrator, the third being appointed by the two arbitrators so appointed. In the further event that the two arbitrators appointed respectively by the parties hereto as aforesaid should be unable to reach agreement on the appointment of the third arbitrator within twenty (20) days from the date on which the second arbitrator is appointed, either party of the said two arbitrators may apply to the President for the time being of the London Maritime Arbitrators Association to appoint the third arbitrator. If either of the appointed arbitrators refuses or is incapable of acting, the party who appointed him shall appoint a new arbitrator in his place.
If one party fails to appoint an arbitrator - either originally or by way of substitution - for two (2) weeks after the other party having appointed its arbitrator, has served the defaulting party notice of default for failure to make the appointment, the President of the London Maritime
48
Arbitrators Association shall, after application from the party having appointed its arbitrator, also appoint an arbitrator on behalf of the party in default. The award of the arbitration made by the sole arbitrator or by the majority of the three arbitrators as the case may be shall be final, conclusive and binding upon the parties hereto.
4.
NOTICE OF AWARD
The award shall immediately be given to the BUYER and the BUILDER by telefax or e-mail.
5.
EXPENSES
The Arbitrator or the Arbitration Board shall determine which party shall bear the expenses of the arbitration or the portion of such expenses which each party shall bear.
6.
ENTRY IN COURT
In case of failure by either party to respect the award of the arbitration, the judgement may be entered in any proper court having jurisdiction thereof.
7.
ALTERATION OF DELIVERY DATE
In the event of reference to arbitration of any dispute arising out of matters occurring prior to delivery of the VESSEL, the award may include any postponement of the DELIVERY DATE which the Arbitrator or the Arbitration Board may deem appropriate. To the maximum extent possible and provided the arbitration proceedings or the subject matter of the dispute do not affect the construction of the VESSEL, work under this CONTRACT shall continue during the arbitration of any dispute.
(End of Article)
49
ARTICLE
XIV:
SUCCESSORS AND ASSIGNS
1.
TRANSFER OR ASSIGNMENT BY THE BUYER
The
BUILDER agrees that, prior to delivery of the VESSEL, this CONTRACT may,
with
the prior written approval of the BUILDER, which the BUILDER shall not
unreasonably
withhold or delay, be transferred by novation to or assigned to another company and the title thereof may be taken by
another
company. In the event of any transfer or assignment pursuant to the terms of this
CONTRACT,
the transferee or assignee, its successors and assigns shall succeed to all the
rights
and obligations of the BUYER under this CONTRACT including but not limited to post-construction warranties of quality and the benefit of the Refund Guarantee. However, the
BUYER
shall remain responsible for performance by the assignee, its successors
and
assigns of all the BUYER’s obligations, liabilities and responsibilities under
this
CONTRACT. It is understood that any expenses or charges incurred due to
the
transfer or assignment of this CONTRACT by the BUYER shall be for the account of the BUYER.
The
BUILDER shall have the right to transfer or assign this CONTRACT at any time after
the
effective date hereof, provided that prior written agreement is obtained from
the
BUYER.
2.
TRANSFER BY THE BUILDER
The BUILDER shall not have the right to assign or transfer this CONTRACT at any time after the Effective Date (as defined in ARTICLE XIX) hereof, unless prior written approval is obtained from the BUYER.
(End of Article)
50
ARTICLE
XV:
TAXES AND DUTIES
1.
TAXES
Unless otherwise expressly provided for in this CONTRACT, all costs and taxes including stamp duties, if any, incurred in or levied by any country except Korea in connection with this CONTRACT shall be borne by the BUYER and corresponding costs and taxes in Korea
, before delivery of the VESSEL, if any,
shall be borne by the BUILDER.
2.
DUTIES
The BUILDER shall hold the BUYER harmless from any payment of duty imposed in Korea upon materials or supplies which, under the terms of this CONTRACT, or amendments thereto, may be supplied by the BUYER from abroad for the construction of the VESSEL.
The BUILDER shall likewise hold the BUYER harmless from any payment of duty imposed in Korea in connection with materials or supplies for operation of the VESSEL, including running stores, provisions and supplies necessary to stock the VESSEL for its operation and also from the payment of export duties
incurred by the BUILDER in Korea
, if any, to be imposed upon the VESSEL as a whole or upon any of its parts or equipment. This indemnity does not, however, extend to any items purchased by the BUYER for use in connection with the VESSEL which are not absolutely required for the construction or operation of the VESSEL.
3.
KOREAN BUNKER SALES TAX
The price of the delivery bunkers remaining on board the VESSEL on the DELIVERY DATE which is to be paid by the BUYER to the BUILDER shall be net of any sales tax payable to the Korean Government
.
(End of Article)
51
ARTICLE
XVI:
PATENTS, TRADEMARKS AND COPYRIGHTS
1.
PATENTS,
TRADEMARKS AND COPYRIGHTS
Machinery and equipment of the VESSEL, whether made or furnished by the BUILDER under this CONTRACT, may bear the patent numbers, trademarks, or trade names of the manufacturers. The BUILDER shall defend and hold harmless the BUYER from all liabilities or claims for or on account of the use of any patents, copyrights or design of any nature or kind, or for the infringement thereof including any unpatented invention made or used in the performance of this CONTRACT and also for any costs and expenses of litigation, if any in connection therewith. No such liability or responsibility shall be with the BUILDER with regard to components and/or equipment and/or design supplied by the BUYER.
Nothing contained herein shall be construed as transferring any patent or trademark rights or copyrights in equipment covered by this CONTRACT, and all such rights are hereby expressly reserved to the true and lawful owners thereof.
2.
RIGHTS
TO THE SPECIFICATIONS, PLANS AND ETC.
The BUILDER retains all rights with respect to the SPECIFICATIONS, plans and working drawings, technical descriptions, calculations, test results and other data, information and documents concerning the design and construction of the VESSEL and the BUYER undertakes therefore not to disclose the same or divulge any information contained therein to any third parties, without the prior written consent of the BUILDER, excepting where it is necessary for usual marketing
,
operation, repair and maintenance of the VESSEL or registration, classification, insurance or sale of the VESSEL.
In case the BUYER requests the prior written consent of the BUILDER as set out in the above paragraph, the BUYER shall provide the BUILDER with a written undertaking from the recipient stating that (1) he acknowledges and shall observe the foregoing terms concerning the BUILDER’s right to confidential information and (2) any confidential information furnished in tangible form shall not be duplicated by recipient except for the purpose of the job specifically assigned to him. (3) Upon the completion of his job requiring reference to the confidential information, recipient shall return to the BUYER at his option or otherwise destroy all the confidential information received in written or tangible form including copies or reproductions or other media containing such confidential information. (4) Any documents or other media developed by the recipient containing confidential information shall be destroyed by the recipient.
(End of Article)
52
ARTICLE XVII :
COMPLIANCE AND ANTI-BRIBERY
1.
REPRESENTATIONS OF THE PARTIES
During the Term of this CONTRACT and for the duration of any services provided hereunder, each party certifies and represents as follows:
(a)
It will comply with the laws of any jurisdiction applicable to such party as it relates to this CONTRACT, including but not limited to any applicable anti-corruption and anti-bribery laws, also including, without limitation, the United States Foreign Corrupt Practices Act (“US FCPA”), the UK Bribery Act 2010 (“UK Bribery Act”) and the anti-bribery or anti-corruption laws of South Korea as such laws may be amended from time to time.
(b)
In connection with this CONTRACT, it has not and will not make any payments or gifts or provide other advantages, or any offers or promises of payments or gifts or other advantages of any kind, directly or indirectly, to:
a.
any person or entity with the intention of obtaining or retaining a business advantage for itself or the other party to this CONTRACT;
b.
any official or member of any government or any agency or instrumentality thereof; any official or member of any public international organisation or any agency or instrumentality thereof; any or official of a political party or any candidate for political office (herein ‘public official’); or any person while knowing or reasonably suspecting that all or a portion of such money or thing of value will be offered, given or promised, directly or indirectly, to any public official, in violation of the UK Bribery Act, the US FCPA or the laws of South Korea.
(c)
In connection with this CONTRACT, it has not and will not request, agree to accept or accept from any person or entity any payments or gifts or other advantages, or any offers or promises of payments or gifts or other advantages of any kind, directly or indirectly, as a reward or inducement to perform its obligations under this CONTRACT in any way improperly.
2.
INDEMNIFICATION
Each party agrees that it will fully indemnify, defend and hold harmless the other party from any claims, liabilities, damages, expenses, penalties, judgments and losses (including reasonable attorneys’ fees) assessed or resulting by reason of a breach of the representations and undertakings contained in this Article XVII to the extent permitted by law.
(End of Article)
53
ARTICLE
XVII
I
:
INTERPRETATION AND GOVERNING LAW
This
CONTRACT has been prepared in English and shall be executed in duplicate
and
in such number of additional copies as may be required by either party
respectively.
The parties hereto agree that the validity and interpretation of this
CONTRACT
and of each Article and part thereof shall be governed by the laws of
England.
(End of Article)
54
ARTICLE
X
IX
:
NOTICE
Any
and all notices, requests, demands, instructions, advices and communications
in
connection with this CONTRACT shall be written in English, sent by registered
air
mail or facsimile or by hand or email and shall be deemed to be given when first
received
whether by registered mail or facsimile, by hand or email. They shall be
addressed
as follows, unless and until otherwise advised:
|
To the BUILDER
|
|
:
|
HYUNDAI
SAMHO HEAVY INDUSTRIES CO., LTD.
|
|
|
|
|
93, Daebul-Ro, Samho-Eup, Yeongam-Gun, Jeollanam-Do
,
Korea
|
|
|
|
|
|
|
Attention:
|
|
|
Mr. S. W. Chun
/ Contract Management Dep’t.
|
|
|
|
|
Tel : +82 61 460 2649
|
|
|
|
|
Facsimile:
+ 82 61 460 3707
|
|
|
|
|
E-mail: swc@hshi.co.kr
|
|
|
|
|
|
|
To the BUYER
|
|
:
|
NAVIG8 CRUDE TANKERS INC
|
|
|
|
|
c/o Navig8 Asia Pte Ltd
|
|
|
|
|
3 Temasek Avenue, #25-01 Centennial Tower, Singapore 039190
|
|
|
|
|
|
|
Attention:
|
|
|
Mr. Daniel Chu
|
|
|
|
|
Facsimile: +44 207 467 5867
|
|
|
|
|
Tel: +44 207 467 5888
|
|
|
|
|
E-mail: legal@navig8group.com
|
The
said notices shall become effective upon receipt of the letter, e-mail or
facsimile
communication by the receiver thereof. Where a notice by e-mail or facsimile is concerned which is required to be confirmed by letter, then, unless
the
CONTRACT or the relevant Article thereof otherwise requires, the notice shall
become
effective upon receipt of the e-mail or facsimile.
(End of Article)
55
ARTICLE
XX:
EFFECTIVENESS OF THIS CONTRACT
This CONTRACT shall become effective upon signing by the parties hereto.
(End of Article)
56
ARTICLE
XX
I
:
EXCLUSIVENESS
This
CONTRACT shall constitute the only and entire agreement between the
parties
hereto, and unless otherwise expressly provided for in this CONTRACT, all
other
agreements, oral or written, made and entered into between the parties prior
to
the execution of this CONTRACT shall be null and void
and
shall be superseded by this CONTRACT.
(End of Article)
57
IN WITNESS WHEREOF, the parties hereto have caused this CONTRACT to
be
duly executed in duplicate on the date and year first above written.
|
|
|
|
BUYER
|
BUILDER
|
|
|
|
|
|
|
|
For
and on behalf of
|
For and on behalf of
|
|
NAVIG8 CRUDE TANKERS INC
|
HYUNDAI SAMHO
|
|
|
HEAVY INDUSTRIES CO., LTD.
|
|
|
|
|
|
|
|
|
|
|
By
|
/s/
Daniel Chu
|
|
By
|
/s/
Sam H. Ka
|
|
Name:
Daniel Chu
|
Name:
Sam H. Ka
|
|
Title:
Attorney-in-Fact
|
Title:
Attorney-in-Fact
|
|
|
|
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|
WITNESS
|
WITNESS
|
|
|
|
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|
|
|
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|
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By
|
/s/
Siduarth Nair
|
|
By
|
/s/
Y.D. Park
|
|
Name:
Siduarth Nair
|
Name:
Y.D. Park
|
|
Title:
|
Title: SVP
|
58
EXHIBIT “A”
DEED OF GUARANTEE
Date :[ ], 2013
Gentlemen:
We hereby open our irrevocable letter of guarantee number [ ] (this “Guarantee”) in favour of
NAVIG8 CRUDE TANKERS INC
, a corporation organized and existing under the laws of
Marshall Islands
and having its principal office at
Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960
(hereinafter called the “BUYER”) for account of HYUNDAI SAMHO HEAVY INDUSTRIES CO., LTD.,
Samho
, Korea (hereinafter called the “BUILDER”) as follows in connection with the shipbuilding contract dated [ ], 2013 (hereinafter called “CONTRACT”) made by and between the BUYER and the BUILDER for the construction of 300,000 DWT Class Crude Oil Carrier having the BUILDER’s Hull No.
(hereinafter called the “VESSEL”).
If, in connection with the terms of the CONTRACT, the BUYER shall become entitled to a refund of the advance payment made to the BUILDER prior to the delivery of the VESSEL, we hereby irrevocably, unconditionally and absolutely guarantee, as primary obligor and not merely as surety, to you, your successors and assignees, the repayment of the same to the BUYER within thirty (30) days after demand not exceeding US$ [ ] (Say U.S. Dollars [ ] only)together with interest thereon at the rate of
six per cent (6%)
per annum from the date following the date of receipt by the BUILDER to the date of remittance by telegraphic transfer of such refund.
The amount of this Guarantee will be automatically increased upon the BUILDER’s receipt of the respective instalment, not more than three (3) times, each time by the amount of such instalment plus interest thereon as provided in the CONTRACT, but in any eventuality the amount of this Guarantee shall not exceed the total sum of US$ [ ] (Say U.S. Dollars [ ] only) plus interest thereon at the rate of
six
per cent (
6
%) per annum from the date following the date of the BUILDER’s receipt of each instalment to the date of remittance by telegraphic transfer of the refund. However, in the event of cancellation of the CONTRACT being based on delays due to Force Majeur
e
as provided under Article VIII of the CONTRACT, the interest rate of refund shall be reduced to four per cent (4%) per annum as provided in Article X.5of the CONTRACT for the periods affected by such delays.
The payment by us under this Guarantee shall be made(subject to the third paragraph hereof) against the BUYER’s first written demand and signed statement certifying that the BUYER’s demand for refund has been made in conformity with Article X of the CONTRACT and the BUILDER has failed to make the refund within
thirty (30)
days after the BUYER’s demand. Refund shall be made to the BUYER by telegraphic transfer in United States Dollars. All
payments under this Guarantee shall be made without any set-off or counterclaim and without any
59
deduction or withholding for or on account of any taxes, duties or charges whatsoever unless we are compelled by law to deduct or withhold the same, in which case we shall make the minimum deduction or withholding permitted and will pay to you such additional amounts as may be necessary in order that the net amount received by you after such deduction or withholding shall be equal to the amount which would have been received had no such deduction or withholding been made.
In case any refund is made to the BUYER by the BUILDER or by us under this Guarantee, our liability hereunder shall be automatically reduced by the amount of such refund.
Notwithstanding the provisions hereinabove, in the event that within
thirty (30)
days from the date of your claim to the BUILDER referred to above, we receive notification from you or the BUILDER accompanied by written confirmation to the effect that your claim to cancel the CONTRACT or your claim for refundment thereunder has been disputed and referred to arbitration in accordance with the provisions of the CONTRACT, we shall under this Guarantee, refund to you the sum adjudged to be due to you by the BUILDER pursuant to the award made under such arbitration, or, if applicable, pursuant
to
a final court judgment issued in relation thereto, immediately upon receipt from you of a demand for the sums so adjudged and a copy of the award or court judgment, as the case may be.
The validity of this Guarantee and our liability under or in connection therewith shall not be discharged, impaired, reduced or in any way affected by any extension of time or other amendment, variation, modification or supplement whatsoever of or to the CONTRACT nor by the giving of any time or any concession granted by you to the BUILDER or any indulgence, waiver or consent on your part in respect of time or any other terms of the CONTRACT, nor by any delay or failure by you in enforcing your rights under or in connection with the CONTRACT, nor by the liquidation, insolvency, bankruptcy, reorganization, amalgamation, reconstruction or analogous proceedings or other financial failure of the BUILDER or any other person, nor by the illegality, invalidity or unenforceability or any defect in the CONTRACT or any provisions thereof, or any repudiation, termination or rescission thereof or any other matter or circumstance which would (but for the provisions of this paragraph) discharge, impair, affect or reduce our liability under or in connection with this Guarantee.
This Guarantee shall become null and void upon receipt by the BUYER of the sum guaranteed hereby together with interest thereon or upon acceptance by the BUYER of the delivery of the VESSEL in accordance with the terms of the CONTRACT and, in either case, this Guarantee shall be returned to us.
This Guarantee is valid and effective from the date of this Guarantee until such time as the VESSEL is delivered by the BUILDER to the BUYER in accordance with the provisions of the
CONTRACT. However in the event that a dispute in respect of a refund is being resolved by
60
arbitration in accordance with Article XIII of the CONTRACT, then this Guarantee shall continue to remain in force until 30 business days after such arbitration proceedings are concluded and a final arbitration award has been issued.
We agree that you may assign without our prior written consent the benefit of this Guarantee to any lawful assignee of the benefit of the CONTRACT.
This Guarantee and any non-contractual obligations arising out of or in connection with it shall be governed by, interpreted and construed in accordance with the laws of England. The undersigned hereby submits to the exclusive jurisdiction of the courts of England for the settlement of any disputes which may arise out of or in connection with this Guarantee and any non-contractual obligations arising out of or in connection with it. We hereby irrevocably appoint [ ] to act as our agent to receive and accept on our behalf any process or other document relating to any proceedings in the English courts which are connected with this Guarantee.
Very truly yours,
This Guarantee has been executed and delivered as a Deed on the day and year written above.
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Signed as a Deed on behalf of [ ],a company incorporated in [ ]
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by:
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a
nd
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being persons who, in accordance with the laws of that territory, are acting under the authority of the company
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In the presence of:
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Witness’s signature:
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Name (print):
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Occupation:
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Address:
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61
Exhibit 10.76
SHIPBUILDING CONTRACT
FOR
THE CONSTRUCTION OF
300,000 DWT CLASS CRUDE OIL CARRIER
HULL NO. S769
BETWEEN
NAVIG8 CRUDE TANKERS INC
(AS BUYER)
AND
HYUNDAI SAMHO HEAVY INDUSTRIES CO., LTD.
(AS BUILDER)
I N D E X
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PAGE
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PREAMBLE
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3
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ARTICLE
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I
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DESCRIPTION AND CLASS
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4
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II
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CONTRACT PRICE
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8
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III
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ADJUSTMENT OF THE CONTRACT PRICE
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9
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IV
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INSPECTION AND APPROVAL
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1
2
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V
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MODIFICATIONS, CHANGES AND EXTRAS
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1
8
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VI
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TRIALS AND COMPLETION
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21
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VII
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DELIVERY
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2
5
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VIII
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:DELAYS
AND EXTENSIONS OF TIME (FORCE MAJEURE)
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29
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IX
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WARRANTY OF QUALITY
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32
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X
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PAYMENT
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3
5
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XI
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BUYER’S DEFAULT
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41
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XII
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BUYER’S SUPPLIES
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45
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XIII
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ARBITRATION
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4
8
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XIV
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SUCCESSORS AND ASSIGNS
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50
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XV
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TAXES AND DUTIES
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51
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XVI
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PATENTS, TRADEMARKS AND COPYRIGHTS
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52
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XVII
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: COMPLIANCE AND ANTI-BRIBERY
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XVIII
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INTERPRETATION AND GOVERNING LAW
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54
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XIX
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NOTICE
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XX
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EFFECTIVENESS OF THIS CONTRACT
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56
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XXI
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EXCLUSIVENESS
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EXHIBIT “A” LETTER OF GUARANTEE
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59
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2
THIS
CONTRACT
,
made on this
12th day
of
December
, 2013
by
and between
NAVIG8 CRUDE TANKERS INC, a
corporation incorporated and existing under the
laws
of
Marshall Islands
, having its registered office at
Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960
(hereinafter
called
the
“BUYER”
)
, the party of the first part and HYUNDAI
SAMHO HEAVY INDUSTRIES CO., LTD.
a company organized and existing under the
laws
of the Republic of Korea, having its principal office 93, Daebul-Ro, Samho-Eup, Yeongam-Gun, Jeollanam-Do, Korea (hereinafter called the “BUILDER”),
the
party of the second part,
W
I T N E S S E T H
:
In consideration of the mutual covenants c
o
ntained herein, the BUILDER
agrees
to design, build, launch, equip and complete one (1)
300,000
DWT
C
lass
Crude Oil Carrier as
described in Article I hereof (hereinafter called the “VESSEL”) at the
BUILDER’s
shipyard in Korea (hereinafter called the “SHIPYARD”) in accordance with
the BUILDER’s
shipbuilding practice for
Crude Oil Carrier
, as the B
UILDER
has been performing for its other clients and in accordance with
HSQS (Hyundai Samho Shipbuilding Quality Standard)
and to
deliver
and sell the VESSEL to the BUYER, and the BUYER agrees to accept
delivery
of and purchase from the BUILDER the VESSEL, according to the terms
and
conditions hereinafter set forth:
(End of Preamble)
3
ARTICLE I:
DESCRIPTION AND CLASS
1.
DESCRIPTION
The VESSEL shall have the BUILDER’s Hull No.
S769 and
shall be designed, constructed, equipped and completed in accordance with the specifications (No.
CONV300-FS-P1, dated 10th December 2013)
a
nd
the general arrangement plan (No.
1G7000201, dated 10th December 2013)
attached thereto (hereinafter called respectively the “SPECIFICATIONS” and the “PLAN”) signed by both parties, which shall constitute an integral part of this CONTRACT although not attached hereto.
The SPECIFICATIONS and the PLAN are intended to explain each other and anything shown on the PLAN and not stipulated in the SPECIFICATIONS or anything stipulated in the SPECIFICATIONS and not shown on the PLAN shall be deemed and considered as if included in both.
Should there be any inconsistencies or contradictions between the SPECIFICATIONS and the PLAN, the SPECIFICATIONS shall prevail. Should there be any inconsistencies or contradictions between this CONTRACT and the SPECIFICATIONS, this CONTRACT shall prevail.
2.
BASIC
DIMENSIONS AND PRINCIPAL PARTICULARS OF THE VESSEL
(a)
The basic dimensions and principal particulars of the VESSEL shall be:
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Length, overall
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abt.
333
m
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Length, between perpendiculars
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abt.
322
m
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Breadth, moulded
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abt.
60
m
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Depth, moulded
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abt.
29.4
m
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Design draught, moulded
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abt.
20.5
m
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Scantling draught, moulded
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abt.
21.6
m
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Main Engine :
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HYUNDAI - B&W 7G80ME-C9.2
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Nominal Rating: 32,970 kW x 72 RPM
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MCR: 24,400 kW x 66 RPM
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NCR: 17,080 kW x 58.6 RPM
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Main engine to be part load optimized
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Deadweight, guaranteed :
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299,969 metric tons at the Scantling draught of 21.6 meters on even keel in sea water of specific gravity of 1.025.
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Speed, guaranteed :
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14.8 knots at the design draught of 20.5 meters at the condition of clean bottom and in calm and deep sea with main engine output of 17,080 kW with 15% sea margin.
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Fuel Consumption, guaranteed :
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161.7 grams/kW-hour using marine diesel oil having lower calorific value of 42,700 kj/kg at MCR measured at the shop trial with I.S.O reference conditions.
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The details of the aforementioned particulars as well as the definitions and method
of
measurements and calculations are as indicated in the SPECIFICATIONS.
(b)
The dimensions may be slightly modified by the BUILDER,
who also reserves the right to make changes to the SPECIFICATIONS and the PLAN if found necessary to suit the local conditions and facilities of the SHIPYARD, the availability of materials and equipment, the introduction of improved production methods or otherwise,
subject to the written approval of the BUYER which the BUYER shall not withhold unreasonably, and all subject to the other relevant provisions of this CONTRACT.
3.
CLASSIFICATION,
RULES AND REGULATIONS
(a)
The VESSEL, including its machinery, equipment and outfitting shall be designed, equipped and constructed in accordance with the BUILDER’s HSQS (Hyundai Samho Shipbuilding Quality Standard) and shipbuilding practices.
The VESSEL shall be built in compliance with the rules (editions and amendments thereto being in force at the date of signing this CONTRACT) of Korean Register of Shipping (hereinafter called the “CLASSIFICATION SOCIETY”), classed and registered with the symbol
of +KRS1-Oil Tanker (Double Hull) ‘ESP’, (FBC), (CSR), Crude, VEC-2, IGS, COW, IWS, IBWM, LI, +KRM1-UMA, STCM, PSPC, IAFS, IOPP, ISPP, IGPP, IAPP, IIHM, IEE, EQ-SPM, ERS, CHA.
The VESSEL shall be built in compliance with the standards provided in the
SPECIFICATIONS
and with the Rules and Regulations as mentioned in the
SPECIFICATIONS
which are in force at the date of signing the
SPECIFICATIONS (for reference, the published LR’s “Future IMO Legislation, Aug 2013” to be used).
EEDI verification to be performed by
the BUILDER
during sea trials
and confirmed by the CLASSIFICATION SOCIETY
.
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(b)
The BUILDER shall arrange with the CLASSIFICATION SOCIETY for the assignment by the CLASSIFICATION SOCIETY of representative(s) to the VESSEL during each stage of construction. All fees and charges incidental to classification of the VESSEL as well as in compliance with the above specified rules, regulations and requirements of this CONTRACT shall be for the account of the BUILDER.
All major plans, materials and workmanship used in the construction of the V
ESSEL
shall be subject to inspection and test by the CLASSIFICATION SOCIETY in accordance with the rules and regulations of the CLASSIFICATION SOCIETY
.
(c)
The decision of the CLASSIFICATION SOCIETY as to whether the
VESSEL
complies with the regulations of the CLASSIFICATION SOCIETY
shall
be final and binding upon the BUILDER and the BUYER, provided that in the case of dispute the decision shall be endorsed by Head Office of the CLASSIFICATION SOCIETY.
4.
SUBCONTRACTING
The BUILDER is authorised to sub-contract part of the work to third party sub-contractors who will carry out works in accordance with the quality standards and shipbuilding practices outlined above at Article I. 3. (a) of this CONTRACT, provided that the work is done in Korea and the BUILDER shall have first given notice in writing to the BUYER.
Without prejudice to the generality of the foregoing, the BUILDER shall remain fully liable for the due and complete performance of all the BUILDER’s obligation under this CONTRACT notwithstanding the entering into of any such sub-contract as aforesaid. However, the VESSEL shall always remain at the SHIPYARD unless the BUYER and the BUILDER agree otherwise.
No sub-contract shall bind or purport to bind the BUYER, and each sub-contract shall be the responsibility of the BUILDER and not contain any retention rights, liens or other such rights that may interfere at anytime with the transfer of unencumbered ownership and title of the VESSEL by the BUILDER to the BUYER.
All sub-contractors howsoever employed or engaged are hereby declared and agreed to be sub-contractors employed or engaged by the BUILDER and the BUILDER agrees that it is and shall remain fully responsible for and liable in respect of any sub-contractors and/or their acts or omissions and, without prejudice to the generality of the foregoing, the BUILDER shall ensure control over supervision and scheduling of the all work done by any subcontractor.
The BUILDER hereby agrees that if any of its employees, servants or agents or those of the sub-contractors appointed pursuant to this CONTRACT shall, in the reasonable opinion of the
6
BUYER, not be carrying out properly their duties and responsibilities under or pursuant to the terms of this CONTRACT, the BUYER shall be entitled (by giving written notice to the BUILDER) to draw the same to the attention of the BUILDER and, if the BUYER considers it necessary, to request the BUILDER to replace such person(s) if the same are its own employees, servants or agents, or to use its best endeavours to replace such person(s) if the same are the employees, servants or agents of a sub-contractor. The BUILDER shall investigate any such request, and, if found justified, take appropriate action. Any such replacement shall be within such a time scale so as to ensure that the BUILDER continues to carry out all of its duties and obligations under or pursuant to this CONTRACT.
The BUYER’s inspection and final assembly of any subcontracted work shall be at the BUILDER’s SHIPYARD. The BUILDER will arrange for the BUYER to execute pre-production inspection of sub-contractors premises by providing reasonable advanced notice to inspect the facility. The BUYER retains the right to inspect vetting records by BUILDER’s Quality Control Department confirming compliance with the BUILDER’s quality standards.
The BUYER’s rights hereunder shall not in any way be reduced in respect of such sub-contracted work and the BUYER shall not bear any additional costs in respect of such sub-contracted work.
5.
NATIONALITY
OF THE VESSEL
The VESSEL shall be registered by the BUYER at its own cost and expense under the laws of Marshall Islands
with
its home port
at
the time of its delivery and acceptance hereunder.
(End of Article)
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ARTICLE II:
CONTRACT PRICE
The contract price of the VESSEL delivered to the BUYER at the SHIPYARD shall be United States Dollars Ninety Five Million Three Hundred Thousand (US$ 95,300,000.-) (hereinafter called the “CONTRACT PRICE”) which shall be paid plus any increases or less any decreases due to adjustment or modification, if any, as set forth in this CONTRACT. Subject to the above, the CONTRACT PRICE is fixed and is not subject to any fluctuations in or on account of wages, costs of equipment or materials or currencies or otherwise. The above CONTRACT PRICE shall include payment for services in the inspection, test, survey and classification of the VESSEL which will be rendered by the CLASSIFICATION SOCIETY and shall not include the cost of the BUYER’s supplies as stipulated in Article XII.
The CONTRACT PRICE also includes all costs and expenses for supplying all necessary drawings as stipulated in the SPECIFICATIONS except those to be furnished by the BUYER for the VESSEL in accordance with the SPECIFICATIONS. All other costs and expenses of the BUILDER as provided in the CONTRACT or the SPECIFICATIONS or otherwise incurred by the BUILDER are for the account of the BUILDER unless expressly specified as being for the account of the BUYER in the CONTRACT or otherwise in writing.
The BUILDER shall, however undertake to install in the VESSEL all of such BUYER’s supplies in accordance with the SPECIFICATIONS without extra cost to the BUYER, but the BUYER shall pay all charges and expenses, including, but not limited to, the customs clearance fee, for transporting such BUYER’s supplied articles to the SHIPYARD.
(End of Article)
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ARTICLE III:
ADJUSTMENT OF THE CONTRACT PRICE
The CONTRACT PRICE of the VESSEL shall be adjusted as hereinafter set forth in the event of the following contingencies. It is hereby understood by both parties that any adjustment of the CONTRACT PRICE as provided for in this Article is by way of liquidated damages and not by way of penalty.
1.
DELAYED DELIVERY
(a)
No adjustment shall be made and the CONTRACT PRICE shall remain unchanged for the first thirty (30) days of the delay in delivery of the VESSEL [ending as of 12 o’clock midnight Korean Standard Time on the thirtieth (30th) day of delay] beyond the Delivery Date calculated as provided in Article VII.1. hereof.
(b)
If delivery of the VESSEL is delayed more than thirty (30) days beyond the date upon which the delivery is due from the BUILDER under the terms of this CONTRACT, then, beginning at midnight of the thirtieth (30th) day after such due date, the CONTRACT PRICE of the VESSEL shall be reduced by U.S. Dollars Twenty Three Thousand (US$ 23,000) for each full day of delay.
However, unless the parties agree otherwise, the total amount of deduction from the CONTRACT PRICE shall not exceed the amount due to cover the delay of one hundred and Eighty (180) days after thirty (30) days of the delay in delivery of the VESSEL at the rate of deduction as specified hereinabove.
(c)
But, if the delay in delivery of the VESSEL continues for a period of more than two hundred and ten (210) days beyond the date upon which the delivery is due from the BUILDER under the terms of this CONTRACT then, in such event, and after such period has expired, the BUYER may, at its option, cancel this CONTRACT by serving upon the BUILDER a notice of cancellation by e-mail or facsimile to be confirmed by a registered letter via airmail directed to the BUILDER at the address given in this CONTRACT. Such cancellation shall be effective as of the date the notice thereof is received by the BUILDER. If the BUYER has not served the notice of cancellation after the aforementioned two hundred and ten (210) days delay in delivery, the BUILDER may demand the BUYER to make an election in accordance with Article VIII.3 hereof.
(d)
For the purpose of this Article, the delivery of the VESSEL shall be deemed to be delayed when and if the VESSEL, after taking into full account extension of the Delivery Date or permissible delays as provided in ArticlesV.1 and V.3, VI.2, VIII, XI.1, XII.1 and XIII.7, is delivered beyond or before the date upon which delivery would then be due under the terms of this CONTRACT.
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2.
INSUFFICIENT SPEED
(a)
The CONTRACT PRICE of the VESSEL shall not be affected or changed, if the actual speed, as determined by trial runs more fully described in Article VI hereof, is less than the guaranteed speed as defined in Article I paragraph 2 hereof, provided such deficiency in actual speed is not more than three tenths (3/10) of a knot below the guaranteed speed.
(b)
However, as for the deficiency of more than three tenths (3/10) of a knot in actual speed below the guaranteed speed, the CONTRACT PRICE shall be reduced by U.S. Dollars Eighty Thousand (US$80,000) for each full one-tenth (1/10) of a knot in excess of the said three tenths (3/10) of a knot of deficiency in speed (fractions of less than one-tenth (1/10) of a knot shall be regarded as a full one-tenth (1/10) of a knot). However, unless the parties agree otherwise, the total amount of reduction from the CONTRACT PRICE shall not exceed the amount due to cover the deficiency of one (1) full knot below the guaranteed speed at the rate of reduction as specified above.
(c)
If the deficiency in actual speed of the VESSEL is more than one (1) full knot below the guaranteed speed, then the BUYER, at its option, may, subject to the BUILDER’s right to effect alterations or corrections as provided in Article VI.5. hereof, cancel this CONTRACT or may accept the VESSEL at a reduction in the CONTRACT PRICE as above provided for one (1) full knot of deficiency only.
3.
EXCESSIVE FUEL CONSUMPTION
(a)
The CONTRACT PRICE of the VESSEL shall not be affected or changed by reason of the fuel consumption of the VESSEL’s main engine, as determined by the engine manufacturer’s shop trial as per the SPECIFICATIONS being more than the guaranteed fuel consumption of the VESSEL’s main engine as defined in Article I paragraph 2 hereof, if such excess is not more than five per cent (5%) over the guaranteed fuel consumption.
BUYER’s Representatives will be provided fourteen (14) days notice of engine trials in order to be present during aforementioned trials.
(b)
However, as for the excess of more than five percent (5%) in the actual fuel consumption over the guaranteed fuel consumption of the VESSEL’s main engine, the CONTRACT PRICE shall be reduced by U.S. Dollars Eighty Thousand (US$80,000) for each full one per cent (1%) increase in fuel consumption in excess of the said five per cent (5%) increase in fuel consumption (fraction of less than one per cent (1%) shall be regarded as a full one percent (1%)). However, unless the parties agree otherwise, the total amount of reduction from the CONTRACT PRICE shall not exceed the amount due to cover the excess of ten percent (10%) over the guaranteed fuel consumption of the VESSEL’s main
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engine at the rate of reduction as specified above.
(c)
If such actual fuel consumption exceeds the guaranteed fuel consumption of the VESSEL’s main engine by more than ten percent (10%), the BUYER, at its option, may, subject to the BUILDER’s right to effect alterations or corrections as specified in Article VI. 5. hereof, cancel this CONTRACT or may accept the VESSEL at a reduction in the CONTRACT PRICE as above provided for the ten percent (10%) increase only.
4.
DEADWEIGHT BELOW CONTRACT REQUIREMENTS
(a)
The CONTRACT PRICE of the VESSEL shall not be affected or changed, if the actual deadweight determined as provided in this CONTRACT and the SPECIFICATIONS, is below the guaranteed deadweight as defined in Article I paragraph 2 hereof by one point five percent (1.5%) of the guaranteed deadweight or less.
(b)
However, should the deficiency in the actual deadweight of the VESSEL be more than XXXX of the guaranteed deadweight (disregarding fractions of less than one (1) metric ton), the CONTRACT PRICE shall be reduced by the sum of U.S. Dollars Seven Hundred (US$700) for each one (1) metric deficiency (disregarding fractions of less than one (1) metric ton) in excess of the said one point five percent (1.5%) of deficiency.
(c)
In the event of such deficiency in the deadweight of the VESSEL being more than three percent (3%) of the guaranteed deadweight, the BUYER, at its option, may, subject to the BUILDER’s right to effect alterations or corrections as specified in Article VI. 5. hereof, cancel this CONTRACT or accept the VESSEL at a reduction in the CONTRACT PRICE as above provided for three percent (3%) only.
5.
EFFECT OF CANCELLATION
(a)
The liquidated damages payable according to the provisions of each Paragraph under this ARTICLE are cumulative and not exclusive.
(b)
It is expressly understood and agreed by the parties hereto that in any case, if the BUYER cancels this CONTRACT under this Article, the BUYER, save for its rights and remedies set out in Article X.5 hereof, shall not be entitled to any liquidated damages.
(End of Article)
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ARTICLE IV:
INSPECTION AND APPROVAL
1.
APPOINTMENT OF BUYER’S REPRESENTATIVE
The BUYER shall timely dispatch to and maintain at the SHIPYARD, at its own cost, expense and risk, one or more representatives (hereinafter called the “BUYER’S REPRESENTATIVE”), who shall be duly accredited in writing by the BUYER to supervise adequately the construction by the BUILDER of the VESSEL, her equipment and all accessories. Before the commencement of any item of work under this CONTRACT, the BUILDER shall, whenever reasonably required, previously exhibit, furnish to, and within the limits of the BUYER’S REPRESENTATIVE’s authority, secure the approval from the BUYER’S REPRESENTATIVE of any and all plans and drawings prepared in connection therewith. Upon appointment of the BUYER’S REPRESENTATIVE, the BUYER shall notify the BUILDER in writing of the name and the scope of the authority of the BUYER’S REPRESENTATIVE.
The BUYER shall have the right to replace or substitute any of its representatives upon prior notice to the BUILDER. One individual BUYER’S REPRESENTATIVE shall be nominated by the BUYER in writing from time to time as having authority to bind the BUYER on certain matters as provided in this Article and that nominated BUYER’S REPRESENTATIVE shall alone be so authorized in respect of such matters and no other BUYER’S REPRESENTATIVE shall be authorized to so bind the BUYER in respect of such matters.
However, in any case, the BUYER shall not appoint any employees of the BUILDER or the persons who had been employed by the BUILDER within one (1) year before the BUYER’s appointment of such ex-employee of the BUILDER as the BUYER’S REPRESENTATIVE or his assistants or employees of the BUYER without the BUILDER’s prior written consent.
2.
AUTHORITY OF THE BUYER’S REPRESENTATIVE
According to the BUYER’s written authorization, such BUYER’S REPRESENTATIVE shall, at all times during working hours of the construction until delivery of the VESSEL, have the right to inspect the VESSEL, her equipment and all accessories, and work in progress, or materials utilized in connection with the construction of the VESSEL, wherever such work is being done or such materials are stored, for the purpose of determining that the VESSEL, her equipment and accessories are being constructed in accordance with the terms of this CONTRACT and/or the SPECIFICATIONS and the PLAN.
The BUILDER will endeavor to arrange for the inspection by the BUYER’S REPRESENTATIVE during working hours of the BUILDER. However, such inspection may be arranged beyond the BUILDER’s normal working hours, including weekend and/or holiday if this is considered necessary by the BUILDER in order to meet the BUILDER’s construction
12
schedule, on the condition that the BUILDER will inform the BUYER’S REPRESENTATIVE at least Two (2) working days in advance of such inspection.
The BUYER’S REPRESENTATIVE shall, within the limits of the authority conferred upon him by the BUYER, make decisions or give advice to the BUILDER on behalf of the BUYER within reasonable time on all problems arising out of, or in connection with, the construction of the VESSEL and generally act in a reasonable manner with a view to cooperating to the utmost with the BUILDER in the construction process of the VESSEL.
The decision, approval or advice of the BUYER’S REPRESENTATIVE shall be deemed to have been given by the BUYER and once given shall not be withdrawn, revoked or modified except with consent of the BUILDER.
Provided that the BUYER’S REPRESENTATIVE or his assistants shall comply with the foregoing obligations, no act or omission of the BUYER’S REPRESENTATIVE or his assistants shall, in any way, diminish the liability of the BUILDER under Article IX (WARRANTY OF QUALITY). The BUYER’S REPRESENTATIVE shall notify the BUILDER within reasonable time in writing of his discovery of any construction or materials, which he believes do not or will not conform to the requirements of the CONTRACT and the SPECIFICATIONS or the PLAN and likewise advise and consult with the BUILDER on all matters pertaining to the construction of the VESSEL, as may be required by the BUILDER, or as he may deem necessary.
However, if the BUYER’S REPRESENTATIVE fails to submit to the BUILDER, within one (1) working day after any inspections or tests, or in the case of major inspection or test items, within two (2) working days, any such demand concerning alterations or changes with respect to the construction, arrangement or outfit of the VESSEL, which the BUYER’S REPRESENTATIVE has examined, inspected or attended at the test thereof under this CONTRACT or the SPECIFICATIONS, the BUYER’S REPRESENTATIVE shall be deemed to have approved the same and shall be precluded from making any demand for alterations, changes, or complaints with respect thereto at a later date. Such major inspection or test items shall be decided and agreed by the parties to this CONTRACT at the time of the BUYER’s approval of an inspection and test plan submitted by the BUILDER upon the BUYER’S REPRESENTATIVE’s work commencement or opening up of his office at the SHIPYARD, whichever is the earlier.
The BUILDER shall comply with any such demand which is not contradictory to this CONTRACT and the SPECIFICATIONS or the PLAN, provided that any and all such demands by the BUYER’S REPRESENTATIVE with regard to construction, arrangement and outfit of the VESSEL shall be submitted in writing to the authorized representative of the BUILDER. The BUILDER shall notify the BUYER’S REPRESENTATIVE of the names of
13
the persons who are from time to time authorized by the BUILDER for this purpose.
It is agreed upon between the BUYER and the BUILDER that the modifications, alterations or changes and other measures necessary to comply with such demand may be effected at a convenient time and place at the BUILDER’s reasonable discretion in view of the construction schedule of the VESSEL.
In the event that the BUYER’S REPRESENTATIVE shall advise the BUILDER that he has discovered or believes the construction or materials do not or will not conform to the requirements of this CONTRACT and the SPECIFICATIONS or the PLAN, and the BUILDER shall not agree with the views of the BUYER’S REPRESENTATIVE in such respect, either the BUYER or the BUILDER may, with the agreement of the other party, seek an opinion of the CLASSIFICATION SOCIETY or failing such agreement, request an arbitration in accordance with the provisions of Article XIII hereof. The CLASSIFICATION SOCIETY or the arbitration tribunal, as the case may be, shall determine whether or not a nonconformity with the provisions of this CONTRACT, the SPECIFICATIONS and the PLAN exists. If the CLASSIFICATION SOCIETY or the arbitration tribunal, as the case may be, enters a determination in favour of the BUYER, then in such case the BUILDER shall make the necessary alterations or changes, or if such alterations or changes cannot be made in time to meet the construction schedule for the VESSEL, the BUILDER may make a proposal for a fair and reasonable adjustment of the CONTRACT PRICE in lieu of such alterations and changes, such proposal to be subject to the mutual agreement of the BUILDER and BUYER. If the CLASSIFICATION SOCIETY or the arbitration tribunal, as the case may be, enters a determination in favour of the BUILDER, then the time for delivery of the VESSEL shall be extended for the period of delay in construction, if any, occasioned by such proceedings, and the BUYER shall compensate the BUILDER for the proven loss and damages incurred by the BUILDER as a result of the dispute herein referred to.
3.
APPROVAL OF DRAWINGS
All plans and drawings and instruction books to be in English.
(a)
The BUILDER shall submit to the BUYER three (3) copies of each of the plans and drawings to be submitted to the BUYER for its approval at its address as set forth in Article XVIII hereof. The BUYER shall, within twenty one (21) days including mailing time after receipt thereof, return to the BUILDER one (1) copy of such plans and drawings with the approval or comments, if any, of the BUYER. A list of the plans and drawings to be so submitted to the BUYER shall be mutually agreed upon between the parties hereto.
(b)
When and if the BUYER’S REPRESENTATIVE shall have been sent by the BUYER to the SHIPYARD in accordance with Paragraph 1 of this Article, the BUILDER may submit
14
the remainder, if any, of the plans and drawings in the agreed list, to the BUYER’S REPRESENTATIVE for his approval, unless otherwise agreed upon between the parties hereto.
The BUYER’S REPRESENTATIVE shall, within seven (7) days after receipt thereof, return to the BUILDER one (1) copy of such plans and drawing with his approval or comments written thereon, if any. Approval by the BUYER’S REPRESENTATIVE of the plans and drawings duly submitted to him shall be deemed to be the approval by the BUYER for all purposes of this CONTRACT.
(c)
In the event that the BUYER or the BUYER’S REPRESENTATIVE shall fail to return the plans and drawings to the BUILDER within the time limit as hereinabove provided, such plans and drawings shall be deemed to have been automatically approved without any comment. In the event the plans and drawings submitted by the BUILDER to the BUYER or the BUYER’S REPRESENTATIVE in accordance with this Article do not meet with the BUYER’s or the BUYER’S REPRESENTATIVE’s approval, the matter may be submitted by either party hereto for determination pursuant to Article XIII hereof. If the BUYER’s comments on the plans and drawings that are returned to the BUILDER by the BUYER within the said time limit are not clearly specified or detailed, the BUILDER shall seek clarification from the BUYER prior to implementing them which clarification must be provided in writing by the BUYER within five (5) days of such request from the BUILDER. If the BUYER shall fail to provide the BUILDER with such clarification within the said time limit, then the BUILDER shall be entitled to place its own interpretation on such comments in implementing them.
4.
SALARIES AND EXPENSES
All salaries and expenses of the BUYER’S REPRESENTATIVE or any other person or persons employed by the BUYER hereunder shall be for the BUYER’s account.
5.
RESPONSIBILITY OF THE BUILDER
(a)
The BUILDER shall provide the BUYER’S REPRESENTATIVE and his assistants free of charge with suitably furnished office space at, or in the immediate vicinity of, the SHIPYARD together with access to telephone, internet connection, printer/copier and facsimile facilities, air conditioning, toilets, and computer outlet to enable the BUYER’S REPRESENTATIVE and his assistants to carry out their work under this CONTRACT. However, the BUYER shall pay for the telephone high speed internet connection and facsimile facilities used by the BUYER’S REPRESENTATIVE or his assistants.
The BUILDER shall provide full assistance and advice how to obtain the necessary visas,
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working permits and/or other document that may be necessary for the BUYER’S REPRESENTATIVE to enter and remain and work in Korea without delay provided that the BUYER’S REPRESENTATIVE meets the requirements and laws of Korea.
The BUILDER, its employees, agents and subcontractors, during its working hours until delivery of the VESSEL, shall arrange for them to have free and ready access to the VESSEL, her equipment and accessories, and to any other place (except the areas controlled for the purpose of national security) where work is being done, or materials are being processed or stored in connection with the construction of the VESSEL including the premises of sub-contractors.
The BUYER’S REPRESENTATIVE or his assistants or employees shall observe the work’s rules and regulations prevailing at the BUILDER’s and its sub-contractor’s premises. The BUILDER shall promptly provide to the BUYER’S REPRESENTATIVE and/or his assistants and shall ensure that its sub-contractors shall promptly provide all such information as he or they may reasonably request in connection with the construction of the VESSEL and her engines, equipment and machinery.
The BUILDER is responsible for ensuring at all times that a safe working environment and proper access is provided to the works and/or areas of inspection. Failure to provide proper, safe access at either the BUILDER or any appointed sub contractor may result in declining an inspection provided that justifiable grounds are presented to the BUILDER. Such time and impact to schedule are for the BUILDER’s account / responsibility.
(b)
The BUYER’S REPRESENTATIVE and his assistants shall at all times remain the employees of the BUYER, and not of the BUILDER. The BUILDER shall not be liable to the BUYER or the BUYER’S REPRESENTATIVE or to his assistants or to the BUYER’s employees or agents for personal injuries, including death, during the time they, or any of them, are on the VESSEL, or within the premises of either the BUILDER or its sub-contractors, or are otherwise engaged in and about the construction of the VESSEL, unless, however, such personal injuries, including death, are caused by the gross negligence or willful misconduct of the BUILDER, its sub-contractors, or its or their employees or agents. The BUILDER shall not be liable to the BUYER for damages to, or destruction of property of the BUYER or of the BUYER’S REPRESENTATIVE or his assistants or the BUYER’s employees or agents, unless such damages, loss or destruction is caused by the gross negligence or willful misconduct of the BUILDER, its sub-contractors, or its or their employees or agents.
6.
RESPONSIBILITY OF THE BUYER
The BUYER shall undertake and assure that the BUYER’S REPRESENTATIVE shall carry
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out his duties hereunder in accordance with the normal shipbuilding practice and in such a way so as to avoid any unnecessary and unreasonable increase in building cost, delay in the construction of the VESSEL, and/or any disturbance in the construction schedule of the BUILDER.
The BUILDER has the right to request the BUYER to replace the BUYER’S REPRESENTATIVE who is deemed unsuitable and unsatisfactory for the proper progress of the VESSEL’s construction.
The BUYER shall investigate the situation by sending its representative (s) to the SHIPYARD, if necessary, and if the BUYER considers that such BUILDER’s request is justified, the BUYER shall effect such replacement as soon as conveniently arrangeable.
The BUILDER’s employees, agents, subcontractors and so forth shall at all times remain under the BUILDER’s responsibility. The BUYER shall not be liable to the BUILDER, or the BUILDER’s employees, agents, subcontractors and so forth for personal injuries, including death, during the time they, or any of them, are on the VESSEL, or within the premises of either the BUILDER or his subcontractors, or are otherwise engaged in and about the construction of the VESSEL, unless, however, such personal injuries, including death are caused by the gross negligence of the BUYER, its employees including the BUYER’S REPRESENTATIVE and his assistants or agents. The BUYER shall not be liable to the BUILDER, or the BUILDER’s employees, agents, subcontractors and so forth for damages to, or loss or destruction of property of the BUILDER, or the BUILDER’s employees, agent, subcontractors and so forth unless such damages, loss or destruction were caused by the gross negligence of the BUYER, or its employees or agents.
(End of Article)
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ARTICLE V:
MODIFICATION, CHANGES AND EXTRAS
1.
HOW EFFECTED
Minor modifications or changes to the SPECIFICATIONS and the PLAN under which the VESSEL is to be constructed may be made at any time hereafter by written agreement of the parties hereto.
Any modification or change requested by the BUYER which does not affect the frame-work of the SPECIFICATIONS or the PLAN and also does not adversely affect the BUILDER’s planning or program in relation to the BUILDER’s other commitments which have been entered into at that time shall be agreed to by the BUILDER if the BUYER agrees to adjustment of the CONTRACT PRICE(if any), deadweight and/or cubic capacity, speed requirements, the Delivery Date and other terms and conditions of this CONTRACT reasonably required as a result of such modifications or change.
The BUILDER has the right to continue construction of the VESSEL on the basis of the SPECIFICATIONS and the PLAN until the BUYER
and BUILDER
has agreed to
the necessary
adjustments
to the Contract Price of the VESSEL, the time of delivery and any other alterations in this
CONTRACT
, or the
SPECIFICATIONS. The BUILDER shall be entitled to refuse to make any alteration, change or modification of the SPECIFICATIONS and/or the PLAN requested by the BUYER, if the BUYER and BUILDER do not agree to the aforesaid adjustments within seven (7) days of the BUILDER’s notification of its proposal for the same to the BUYER, or, if, in the BUILDER’s reasonable judgement, the compliance with such request of the BUYER would cause an unreasonable disruption of the normal working schedule of the SHIPYARD.
The BUILDER, however, agrees to exert its best efforts to accommodate such reasonable request by the BUYER so that the said change and modification shall be made at a reasonable cost and within the shortest period of time reasonably possible. The aforementioned agreement to modify and change the SPECIFICATIONS and the PLAN may be effected by exchange of letters, e-mail or facsimiles manifesting the agreement.
The letters, e-mail and facsimiles exchanged by the parties pursuant to the foregoing shall constitute an amendment to this CONTRACT and the SPECIFICATIONS or the PLAN under which the VESSEL shall be built. Upon consummation of such an agreement to modify and change the SPECIFICATIONS or the PLAN, the BUILDER shall alter the construction of the VESSEL in accordance therewith including any addition to, or deduction from, the work to be performed in connection with such construction.
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2.
SUBSTITUTION OF MATERIAL
If any materials, machinery or equipment required for the construction of the VESSEL by the SPECIFICATIONS and the PLAN or otherwise under this CONTRACT cannot be procured in time to meet the BUILDER’s construction schedule for the VESSEL, or are in short supply provided that they have been timely ordered, or are unreasonably high in price compared with the prevailing international market price on the date of signing this CONTRACT provided that they have been timely ordered, the BUILDER may supply, subject to the BUYER’s prior approval in writing, other materials, machinery or equipment of equal quality and effect capable of meeting the requirements of the CLASSIFICATION SOCIETY and the rules, regulations and requirements with which the construction of the VESSEL must comply.
Furthermore, it is expressly agreed that should the BUILDER have to use any steel plate made in China they will only use steel plate produced by major Chinese steel mills used by Hyundai Heavy Industries Group. No Brazilian steel will be used for any of the structural parts of the VESSEL without the BUYER’s prior approval in its absolute discretion. All steel for the structural parts of the VESSEL to be provided in accordance with the CLASSIFICATION SOCIETY’s standards and approvals.
3.
CHANGES IN RULES AND REGULATIONS
If any requirements as to CLASSIFICATION SOCIETY or as to the specified rules and regulations with which the construction of the VESSEL is required to comply in Article I. 3. (a) are altered or changed by the CLASSIFICATION SOCIETY or other regulatory bodies authorized to make such alterations or changes, either the BUYER or the BUILDER, upon receipt of due notice thereof, shall forthwith give notice thereof to the other party in writing. Thereupon, within ten (10) working days after giving the notice to the BUILDER or receiving the notice from the BUILDER, the BUYER shall advise the BUILDER as to the alterations and changes, if any, to be made on the VESSEL which the BUYER, in its sole discretion, shall decide.
The BUILDER shall comply promptly with the said request of the BUYER, provided that the BUILDER and the BUYER shall first agree to:
(a)
any increase or decrease in the CONTRACT PRICE of the VESSEL that is occasioned by such compliance;
(b)
any extension or advancement in the Delivery Date of the VESSEL that is occasioned by such compliance;
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(c)
any increase or decrease in the deadweight and/or cubic capacity of the VESSEL, if such compliance results in any increase or reduction in the deadweight and/or cubic capacity ;
(d)
adjustment of the guaranteed speed if such compliance results in any increase or reduction in the speed; and
(e)
any other alterations in the terms of this CONTRACT or of the SPECIFICATIONS or the PLAN or both, if such compliance makes such alterations of the terms necessary.
Any delay in the construction of the VESSEL caused by the BUYER’s delay in making a decision or agreement as above shall constitute a permissible delay under this CONTRACT. Such agreement by the BUYER shall be effected in the same manner as provided above for modification and change of the SPECIFICATIONS and the PLAN.
(End of Article)
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ARTICLE VI:
TRIALS AND COMPLETION
GENERAL
The BUILDER shall carry out and run the tests and trials on the VESSEL in the manner and to the extent as described in the SPECIFICATIONS (and the trials schedule) and otherwise as may be required by the CLASSIFICATION SOCIETY.
1.
NOTICE
When the VESSEL is substantially complete and in a safe and fit state to proceed to sea, with all appropriate safety and lifesaving equipment onboard for the expected number of persons to be present, the BUILDER shall notify the BUYER in writing or by e-mail or facsimile at least fourteen (14) days in advance of the time and place of the trial run of the VESSEL. Such notice shall specify the Korean port from which the VESSEL will commence her trial run and approximate date upon which the trial run is expected to take place. Such date shall be further confirmed by the BUILDER five (5) days in advance of the trial run by e-mail or facsimile.
The BUYER’S REPRESENTATIVE(s), who is/are to witness the performance of the VESSEL during such trial run, shall be present at such place on the date specified in such notice. Should the BUYER’S REPRESENTATIVE(s) fail to be present after the BUILDER’s due notice to the BUYER as provided above, the BUILDER shall be entitled to conduct such trial run with the presence of the representative(s) of the CLASSIFICATION SOCIETY only without the BUYER’S REPRESENTATIVE(s) being present. In such case, the BUYER shall be obliged to accept the VESSEL on the basis of a certificate issued by the BUILDER that the VESSEL, after the trial run, subject to alterations and corrections, if necessary, has been found to conform with the SPECIFICATIONS and this CONTRACT and is satisfactory in all respects, provided the BUILDER first makes such corrections and alterations promptly.
2.
WEATHER CONDITION
In the event of unfavourable weather on the date specified for the trial run, the trial run shall take place on the first available day that weather conditions permit. The parties hereto recognize that the weather conditions in Korean waters, in which the trial run is to take place, are such that great changes in weather may arise momentarily and without warning and therefore, it is agreed that if, during the trial run, the weather should become so unfavourable that the trial run cannot be continued, then the trial run shall be discontinued and postponed until the first favourable day next following, unless the BUYER shall assent to the acceptance of the VESSEL by notification in writing on the basis of such trial run so far made prior to such change in weather conditions. Any delay of the trial run caused by such unfavourable weather conditions shall also operate to extend the Delivery Date of the VESSEL for the
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period of delay occasioned by such unfavourable weather conditions. For the purposes of this paragraph 2, unfavourable weather conditions shall be taken as Beaufort Scale Force 6 and above.
3.
HOW CONDUCTED
All expenses in connection with the trials of the VESSEL are to be for the account of the BUILDER, which, during the trials, is to provide at its own expense the necessary crew to comply with conditions of safe navigation. The trials shall be conducted in the manner prescribed in this CONTRACT and the SPECIFICATIONS, and shall prove fulfillment of the performance requirements for the trials as set forth in the SPECIFICATIONS.
The BUILDER shall be entitled to conduct preliminary sea trials, during which the propulsion plant and/or its appurtenance shall be adjusted according to the BUILDER’s judgement. The BUILDER shall have the right to repeat any trial whatsoever as it deems necessary.
4.
CONSUMABLE STORES
The BUILDER shall load the VESSEL with the required quantity of fuel oil, lubricating oil and greases, fresh water, and other stores necessary to conduct the trials as set forth in the SPECIFICATIONS. The necessary ballast (fuel oil, fresh water and such other ballast as may be required) to bring the VESSEL to the trial load draft, as specified in the SPECIFICATIONS, shall be supplied and paid for by the BUILDER whilst lubricating oil and greases shall be supplied and paid for by the BUYER within the time advised by the BUILDER for the conduct of sea trials as well as for use before the delivery of the VESSEL to the BUYER. The fuel oil as well as lubricating oil and greases shall be in accordance with the engine specifications and the BUYER shall decide and advise the BUILDER of the supplier’s name for lubricating oil and greases prior to the steel cutting of the VESSEL, provided that the supplier shall be acceptable to the BUILDER and/or the makers of all the machinery.
Any fuel oil, fresh water or other consumable stores furnished and paid for by the BUILDER for trial runs remaining on board the VESSEL, at the time of acceptance of the VESSEL by the BUYER, shall be bought by the BUYER from the BUILDER at the BUILDER’s purchase price for such supply in Korea (with supporting invoices and documents provided) and payment by the BUYER thereof shall be made at the time of delivery of the VESSEL. The BUILDER shall pay the BUYER at the time of delivery of the VESSEL for the consumed quantity of lubricating oil and greases which were furnished and paid for by the BUYER at the BUYER’s purchase price thereof (with supporting invoices and documents provided).
The consumed quantity of lubricating oils and greases shall be calculated on the basis of the difference between the remaining amount, including the same remaining in the main engine, other machinery and their pipes, stern tube and the like, and the supplied amount.
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5.
ACCEPTANCE OR REJECTION
(a)
Upon completion of sea trial, the BUILDER shall give the BUYER a notice in writing or by e-mail or telefax of the result of the sea trial, as and if the BUILDER considers that the result of sea trial indicates conformity of the VESSEL to this CONTRACT and the SPECIFICATIONS and PLAN.
(b)
The BUYER shall within four (4) working days after receipt of such notice notify the BUILDER in writing or by e-mail or telefax of its acceptance or rejection of the VESSEL, provided that in case of rejecting the VESSEL, the BUYER shall set out in its notice of rejection a detailed, clear explanation of all and any aspects of the VESSEL which it considers do not comply with this CONTRACT, the SPECIFICAITONS and/or the PLAN.
(c)
If the BUILDER is in agreement with the BUYER’s determinations as to non-conformity, the BUILDER shall make such alterations or changes as may be necessary to correct such non-conformity and shall prove the fulfillment of the CONTRACT and SPECIFICATIONS by such tests or trials as may be necessary. If the BUILDER is not in agreement with the BUYER’s determination as to non-conformity, each party shall be entitled to refer the disagreement for determination as per Article XIII.
(d)
The BUYER shall not be entitled to reject the VESSEL by reason of any minor or insubstantial items which do not in any way affect the safety or the operation of the Vessel judged from the point of view of the BUILDER’s shipbuilding practice for Crude Oil Carrier, as the BUILDER has been performing for its other clients and HSQS (Hyundai Samho Shipbuilding Quality Standard) as not being in conformity with the SPECIFICATIONS, but, in that case, the BUILDER shall not be released from the obligation to correct and/or remedy for its own account such minor or insubstantial items as soon as practicable after the delivery of the VESSEL. If inconvenient for the VESSEL to have such items corrected and/or remedied at the SHIPYARD, the BUILDER shall arrange to have such corrections or remedies carried out elsewhere, and may, if practicable, do such work while the VESSEL is sailing. The BUYER may in its absolute discretion accept a payment in lieu of such items being corrected and/or remedied. Any payment in lieu shall be agreed in writing between the BUILDER and the BUYER.
(e)
If during any sea trial any breakdowns occur entailing interruption or irregular performance which can be repaired on board, the sea trial shall be continued after such repairs and be valid in all respects. However, if during the sea trial it becomes apparent that the VESSEL or any part of her equipment requires alterations or correction, the BUILDER shall notify the BUYER promptly in writing or by e-mail or telefax to such effect and shall simultaneously advise the BUYER of the estimated additional time
23
required for the necessary alterations or corrections to be made. The BUYER shall, within five (5) days of receipt from the BUILDER of notice of completion of such alterations or corrections and after such further trials or tests as necessary, notify the BUILDER in writing or by e-mail or telefax of its acceptance or rejection of the VESSEL, all in accordance with the SPECIFICATIONS, PLAN and the CONTRACT, and shall not be entitled to reject the VESSEL on such grounds until such time.
(End of Article)
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ARTICLE VII:
DELIVERY
1.
TIME AND PLACE
The VESSEL shall be delivered by the BUILDER to the BUYER at the SHIPYARD, safely afloat at a quay on or before July 25, 2016 (hereinafter called the “DELIVERY DATE”) after completion of satisfactory trials and acceptance by the BUYER in accordance with the terms of Article VI, except that, in the event of delays in delivery of the VESSEL by the BUILDER due to causes which under the terms of this CONTRACT permit extensions of the time for delivery of the VESSEL, the aforementioned DELIVERY DATE shall be extended accordingly.
The BUILDER shall provide the BUYER in writing by e-mail or telefax thirty (30) days approximate notice of readiness and fourteen (14), seven (7) and three (3) days definite notice of readiness for delivery of the VESSEL.
2.
WHEN AND HOW EFFECTED
Provided that the BUYER shall concurrently with delivery of the VESSEL release to the BUILDER the fifth instalment as set forth in Article X.2.hereofand shall have fulfilled all of its obligations provided for in this CONTRACT (as it may have been amended from time to time) prior to the delivery of the VESSEL, delivery of the VESSEL shall be forthwith effected upon acceptance thereof by the BUYER, as hereinabove provided, by the concurrent delivery by each of the parties hereto to the other of a PROTOCOL OF DELIVERY AND ACCEPTANCE acknowledging delivery of the VESSEL by the BUILDER and acceptance thereof by the BUYER, which PROTOCOL shall be prepared induplicate and signed by each of the parties hereto.
3.
DOCUMENTS TO BE DELIVERED TO THE BUYER
Upon delivery and acceptance of the VESSEL, the BUILDER shall deliver to the BUYER the following documents, which shall accompany the aforementioned PROTOCOL OF DELIVERY AND ACCEPTANCE:
(a)
PROTOCOL OF TRIALS of the VESSEL made pursuant to this CONTRACT and the SPECIFICATIONS,
(b)
PROTOCOL OF INVENTORY of the equipment of the VESSEL, including spare parts, all as specified in the SPECIFICATIONS,
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(c)
PROTOCOL OF STORES OF CONSUMABLE NATURE, such as all fuel oil and fresh water remaining in tanks if its cost is charged to the BUYER under Article VI. 4. hereof,
(d)
FINISHED DRAWINGS AND PLANS pertaining to the VESSEL as stipulated in the SPECIFICATIONS, which shall be furnished to the BUYER at no additional cost,
(e)
ALL CERTIFICATES required to be furnished upon delivery of the VESSEL pursuant to this CONTRACT, the SPECIFICATIONS and the customary shipbuilding practice, including
(i)
Classification Certificate
(ii)
Safety Construction Certificate
(iii)
Safety Equipment Certificate
(iv)
Safety Radiotelegraphy Certificate
(v)
International Loadline Certificate
(vi)
International Tonnage Certificate
(vii)
BUILDER’s Certificate
(duly notarized and legalized)
(viii)
Ship Sanitation Control Exemption Certificate
(ix)
Classification Certificate for anchor, chains and mooring ropes, machinery and equipment
(x)
Certificate for life-boats and life saving equipments
(xi)
Certificates for navigation lights and special signal lights
(xii)
International Oil Pollution Prevention Certificate
(xiii)
Compass adjustment Certificate
(xiv)
Suez Canal Tonnage Certificate
(xv)
Deadweight Certificate
(xvi)
Certificate for Provision Crane, Hose Handling Crane and Engine Room Crane
(xvii)
International Air Pollution Prevention Certificate
(xviii)
Coating Technical File
(xix)
International Sewage Pollution Certificate
(xx)
Class approved Loading Manual
(xxi)
Certified Cargo oil tanks calibration
(xxii)
Ballast Management Certificate
(xxiii)
Emergency Towing System
(xxiv)
Engine Technical File (NOx)
(xxv)
Load Test certificates for all designated lifting lugs / points installed (more than 3.0 ton S.W.L) (issued by the BUILDER)
The above list of Certificates and Documents is indicative and may possibly not include all the Required Certificates and Documents for the VESSEL as she is specified in her CLASSIFICATION notation to conduct unrestricted trade. However it is agreed that all
26
the required CLASSIFICATION SOCIETY and Statutory Certificates and Documents should be furnished by the BUILDER to the BUYER.
All certificates or relevant documents which are to be duly notarized and legalized shall be agreed between the parties prior to delivery. All certificates to be delivered in one (1) original and two (2) copies to the BUYER.
If any Certificate, Drawing, Plan, Diagram or other documents referred to in this Article, through no fault on the part of BUILDER, cannot be provided upon delivery and if the absence thereof does not impede the navigation or management of the VESSEL and/or constitute a breach of the statutory requirements of the flag state, of the VESSEL or the requirements of the CLASSIFICATION SOCIETY, a provisional/interim certificate shall be acceptable by the BUYER provided the formal Certificate, Drawing, Plan, Diagram or other document be delivered as soon as practicable after delivery of the VESSEL.
(f)
DECLARATION OF WARRANTY of the BUILDER that the VESSEL is delivered to the BUYER free and clear of any liens, claims, mortgages, or other encumbrances upon the BUYER’s title thereto, and in particular, that the VESSEL is absolutely free of all burdens in the nature of imposts, taxes, or charges imposed by the prefecture or country of the port of delivery, as well as of all liabilities of the BUILDER to its sub-contractors and employees and of all liabilities arising from the operation of the VESSEL in trial runs, or otherwise, prior to delivery except as otherwise provided under this CONTRACT.
(g)
COMMERCIAL INVOICE made by the BUILDER.
(h)
BILL OF SALE made by the BUILDER.
4.
TENDER OF THE VESSEL
If the BUYER fails to take delivery of the VESSEL after completion thereof according to this CONTRACT and the SPECIFICATIONS, the BUILDER shall have the right to tender delivery of the VESSEL after compliance with all procedural requirements as provided above.
5.
TITLE AND RISK
Title to and risk of the VESSEL and her equipment (but excluding the BUYER’s supplies) shall pass to the BUYER upon Delivery and Acceptance of the VESSEL being effected as stated above and the BUILDER shall be free of all responsibility or liability whatsoever related with this CONTRACT except for the warranty of quality contained in Article IX and the obligation to correct and/or remedy, as provided in Article VI. 5(d), if any. It is expressly understood between the parties hereto that, until such Delivery and Acceptance is effected, the
27
VESSEL and equipment thereof are at the entire risk of the BUILDER including but not confined to, risks of war, insurrection and seizure by Governments or Authorities, whether Korean or foreign, and whether at war or at peace. The title to the BUYER’s supplies as provided in Article XII shall remain with the BUYER and the BUILDER’s responsibility for such BUYER’s supplies shall be as described in Article XII.2.
6.
REMOVAL OF THE VESSEL
The BUYER shall take possession of the VESSEL immediately upon Delivery and Acceptance thereof and shall remove the VESSEL from the SHIPYARD within three (3) working days after Delivery and Acceptance thereof is effected.
From the delivery of the VESSEL until the actual removal thereof from the SHIPYARD, the BUYER shall be responsible for the safety and preservation of the VESSEL in all respects, including without limitation, keeping the VESSEL insured at his own cost, and furthermore, the BUYER shall indemnify and hold the BUILDER free and harmless against any liability or claims including without limitation, the claims of his insurers arising out of any accident whatsoever , unless caused by the gross negligence or willful misconduct of the BUILDER, his employee or agent.
Port dues and other charges levied by the Korean Government Authorities after Delivery and Acceptance of the VESSEL and any other costs related to the removal of the VESSEL shall be borne by the BUYER.
(End of Article)
28
ARTICLE VIII:
DELAYS AND EXTENSIONS OF TIME (FORCE MAJEURE)
1.
CAUSES OF DELAY
If, at any time after signing this CONTRACT, either the construction or delivery of the VESSEL or any performance required hereunder as a prerequisite to the delivery thereof is delayed by any of the following events: namely war, acts of state or government, blockade, revolution, insurrections, mobilization, civil commotion, riots, strikes, sabotage, lockouts, Acts of God or the public enemy, plague or other epidemics, quarantines, shortage or prolonged failure of electric current, freight embargoes, or defects in major forgings or castings, delays or defects in the BUYER’s supplies as stipulated in Article XII, if any, or shortage of materials, machinery or equipment or inability to obtain delivery or delays in delivery of materials, machinery or equipment, provided that at the time of ordering the same could reasonably be expected by the BUILDER to be delivered in time or defects in materials, machinery or equipment which could not have been detected by the BUILDER using reasonable care or earthquakes, tidal waves, typhoons, hurricanes, prolonged or unusually severe weather conditions or destruction of the premises or works of the BUILDER or its sub-contractors, or of the VESSEL, or any part thereof, by fire, landslides, flood, lightning, explosion, or delays in the BUILDER’s other commitments resulting from any such causes as described in this Article which in turn directly delay the construction of the VESSEL or the BUILDER’s performance under the CONTRACT (the BUILDER treating this CONTRACT not less favorably than other commitments), or delays caused by the CLASSIFICATION SOCIETY or the BUYER’s faulty action or omission, or other causes beyond the control of the BUILDER, or its sub-contractors, as the case may be, then in the event of delays due to the happening of any of the aforementioned contingencies, the DELIVERY DATE of the VESSEL under this CONTRACT shall be extended for a period of time which shall not exceed the total accumulated time of all such delays provided however that:
(i)
the delay in respect of which the BUILDER is claiming relief was beyond its reasonable control or that of its employees, suppliers and subcontractors and was not caused or contributed to by any error, neglect, act or omission of the BUILDER or of its agents, employees or subcontractors, nor by any breach of this CONTRACT;
(ii)
the delay impacts upon the Vessel’s construction schedule and completion;
(iii)
the BUILDER has shown due diligence in choice of sub-contractor; and
(iv)
the BUILDER has taken all reasonable steps to mitigate its effect upon the construction of the VESSEL,
29
For the avoidance of doubt, where two delay events as described in this paragraph 1(a) occur simultaneously or overlap with each other, such delays caused by such events shall not be double-counted.
2.
NOTICE OF DELAYS
Within seven (7) days after commencement of any delay on account of which the BUILDER claims that it is entitled under this CONTRACT to an extension of the DELIVERY DATE of the VESSEL, excluding delays due to arbitration, the BUILDER shall advise the BUYER in writing or by e-mail or facsimile of the date such delay commenced, the reasons thereof and, if possible, its estimated duration of the probable delay in the delivery of the VESSEL, and shall supply the BUYER if reasonably available with evidence to justify the delay claimed. Within seven (7) days after such cause of delay ends, the BUILDER shall likewise advise the BUYER in writing or by e-mail or facsimile of the date that such cause of delay ended, and also, shall specify the period of time by which the BUILDER claims the DELIVERY DATE should be extended by reason of such delay. Failure of the BUYER to object to the BUILDER’s notification of any claim for extension of the date for delivery of the VESSEL within seven (7) days after receipt by the BUYER of such notification shall be deemed to be a waiver by the BUYER of its right to object to such extension of the DELIVERY DATE.
Failure of the BUILDER to give notice of any relevant delay event in accordance with this paragraph 2 shall be deemed a waiver of the BUILDER’s right to postpone the DELIVERY DATE under this Article VIII in respect of such relevant delay event.
3.
RIGHT TO CANCEL FOR EXCESSIVE DELAY
If the total accumulated time of all permissible and non-permissible delays, excluding delays due to (i) arbitration under Article XIII.7, (ii) the BUYER’s defaults under Article XI.1 and XI.2., (iii) modifications and changes under Article V.1 and V.3 or (iv) delays or defects in the BUYER’s supplies as stipulated in Article XII.1, aggregates two hundred and sixty (260) days or more (inclusive of the thirty (30) days grace period as per Article III.1.(a)), then, the BUYER may, at any time thereafter, cancel this CONTRACT by giving a written notice of cancellation to the BUILDER. Such cancellation shall be effective as of the date the notice thereof is received by the BUILDER and the BUILDER, upon receipt of such notice, and upon the BUYER’s demand, shall refund in accordance with the provisions of Article X.5 hereof all payments made to the BUILDER by the BUYER.
If the BUYER has not served the notice of cancellation as provided in the above or Article III.1 hereof, the BUILDER may, at any time after expiration of the accumulated time of the delay in delivery, either two hundred and sixty (260) days in case of the delays referred to in this Paragraph 3 or two hundred and ten (210) days in case of the delay in Article III.1, notify
30
the BUYER of the future date upon which the BUILDER estimates the VESSEL will be ready for delivery and demand in writing or by e-mail or facsimile that the BUYER make an election either to cancel this CONTRACT or to consent to the delivery of the VESSEL at such future date, in which case the BUYER shall, within seven (7) business days after receipt of such demand, make and notify the BUILDER of such election. If the BUYER elects to consent to the delivery of the VESSEL at such future date (or other future date as the parties may agree):
(a)
Such future date shall become the contractual delivery date for the purposes of this CONTRACT and shall be subject to extension by reason of permissible delays as herein provided, and
(b)
If the VESSEL is not delivered by such revised contractual delivery date (as extended by reason of permissible delays), the BUYER shall have the same right of cancellation upon the same terms as provided in the above and Article III. 1.
If the BUYER shall not make an election within seven (7) business days as provided hereinabove, the BUYER shall be deemed to have accepted such extension of the DELIVERY DATE to the future delivery date indicated by the BUILDER.
4.
DEFINITION OF PERMISSIBLE DELAYS
Delays on account of the foregoing causes specified in Paragraph 1 above shall be understood to be permissible delays, and are to be distinguished from non-permissible unauthorized delays on account of which the CONTRACT PRICE of the VESSEL is subject to adjustment as provided in Article III hereof.
(End of Article)
31
ARTICLE IX:
WARRANTY OF QUALITY
1.
GUARANTEEOF MATERIAL AND WORKMANSHIP
Subject to the provisions hereinafter set forth, the BUILDER undertakes to remedy, free of charge to the BUYER, any defective design, construction, material and/or workmanship
and/or negligent or other improper acts or omissions
(hereinafter called the “DEFECT(S)”) on the part of the BUILDER and/or its sub-contractors, provided that the defect is discovered within a period of twelve (12) months after the date of delivery of the VESSEL and a notice thereof is duly given to the BUILDER as hereinafter provided.
For the purpose of this Article the VESSEL shall include her hull, machinery and equipment, painting and coatings thereof but shall exclude any parts for the VESSEL which have been supplied by or on behalf of the BUYER under Article XII.
The BUILDER agrees that upon the expiry of this guarantee it shall assign (to the extent to which it may validly do so and such supplier guarantee extends beyond
twelve (
12
)
months after the date of delivery of the VESSEL) to the BUYER, all rights, title and interest that the BUILDER may have in and to all guarantees or warranties given by the supplier of any of the appurtenances and materials used in the construction and/or operation of the VESSEL, unless such assignment is against Korean law.
2.
NOTICE OF DEFECTS
The BUYER shall notify the BUILDER in writing or by e-mail or facsimile, of any DEFECTS for which claim is made under this guarantee as promptly as possible after discovery thereof. The BUYER’s written notice shall include full particulars to describe the nature and extent of the DEFECTS. The BUILDER shall have no obligation for any DEFECTS discovered prior to the expiry date of the said twelve (12) months period, unless notice of such DEFECTS is received by the BUILDER no later than seven (7) business days after such expiry date.
3.
REMEDY OF DEFECTS
(a)
The BUILDER shall remedy, at its expense, any DEFECT against which the VESSEL or any part of the machinery or equipment thereof is guaranteed under this Article IX, by making all necessary repairs or replacements at the SHIPYARD or elsewhere as provided for in (b) hereinbelow.
(b)
However, if it is impractical to bring the VESSEL to the SHIPYARD, the BUYER may cause the necessary repairs or replacements to be made elsewhere which is deemed
32
suitable for the purpose, provided that, in such event, the BUILDER may forward or supply replacement parts or materials to the VESSEL, unless forwarding or supplying thereof to the VESSEL would impair or delay the operation or working schedule of the VESSEL. In the event that the BUYER proposes to cause the necessary repairs or replacements to be made to the VESSEL at any other shipyard or works than the SHIPYARD, the BUYER shall first, but in all events as soon as possible, give the BUILDER notice in writing or by e-mail or facsimile of the time and place such repairs will be made, and if the VESSEL is not thereby delayed, or her operation or working schedule is not thereby impaired, the BUILDER shall have the right to verify by its own representative(s) the nature and extent of the DEFECTS complained of. The BUILDER shall in such case, promptly advise the BUYER in writing or by e-mail or facsimile, after such examination has been completed, of its acceptance or rejection of the DEFECTS as ones that are covered by the guarantee herein provided. Upon the BUILDER’s acceptance of the DEFECTS as justifying remedy under this Article IX, or upon the award of the arbitration tribunal so determining, or if the BUILDER neither accepts nor rejects the defects nor requests arbitration within sixty (60) days after its receipt of the BUYER’s notice of defects, the BUILDER shall pay to the BUYER for such repairs or replacements a sum equal to the actual direct cost of the repairs or replacements, as evidenced in United States Dollars by the final invoices of the relevant shipyard/repairer or supplier, however, the amount of the BUILDER’s payment to the BUYER for such repairs or replacements shall not exceed the average cost quoted by two reputable repair yards in Singapore.
(c)
In any case, the VESSEL shall be taken at the BUYER’s costs and responsibility to the place elected, ready in all respects for such repairs or replacements and in any event, the BUILDER shall not be responsible for towage, dockage, wharfage, port charges or any other cost or expenses whatsoever incurred by the BUYER in getting and keeping the VESSEL ready for such repairs or replacements.
(d)
In the event that it is necessary for the BUILDER to forward a replacement for a defective part under this guarantee, replacement parts shall be shipped to the BUYER under the terms of C.I.F. port designated by the BUYER.
(e)
The BUILDER reserves the option to retrieve, at the BUILDER’s cost, any of the replaced equipment/parts in case DEFECTS are remedied in accordance with the provisions in this Article IX.
(f)
Any dispute under this Article IX shall be referred to arbitration in accordance with the provisions of Article XIII hereof.
(g)
In case any amount, which the BUILDER should pay to the BUYER for a single claim in accordance with this Article, is over US$100,000, then the BUILDER shall immediately
33
pay to the BUYER such amount.
4.
EXTENT OF BUILDER’S RESPONSIBILITY
(a)
After delivery of the VESSEL the BUILDER shall have no responsibility for any other DEFECTS whatsoever in the VESSEL than the DEFECTS specified in paragraph 1 of this Article IX and Article VI. 5(d). The BUILDER shall have no liability whatsoever in any circumstances whatsoever to the BUYER or to any third party for anything except the cost of repairing the DEFECT itself. The BUILDER shall not in any circumstances be responsible or liable for any consequential or special losses, damages or expenses including, but not limited to, loss of time, loss of profit or earning or demurrage directly or indirectly occasioned to the BUYER or any third party by reason of the DEFECTS specified in paragraph 1 of this Article or due to repairs or other works done to the VESSEL to remedy such DEFECTS or any other consequential or special losses, damages or expenses related to any liability, cost or expense whatsoever or howsoever arising in connection with any damage to the VESSEL or to any cargo or to any other property owned by the BUYER or any third party caused as a result of the DEFECT and after delivery the BUYER shall hold the BUILDER harmless and indemnify the BUILDER against any such claim from the BUYER or any third party whatsoever in respect of any such matters and in respect of any other claims relating to the VESSEL for which the BUILDER does not expressly give an warranty to the BUYER under this Article.
(b)
The BUILDER shall not be responsible for any DEFECTS in any part of the VESSEL which may subsequent to delivery of the VESSEL have been replaced or in any way repaired by any persons other than the BUILDER and/or its nominated sub-contractors, or for any DEFECTS which have been caused or aggravated by omission or improper use and maintenance of the VESSEL on the part of the BUYER, its servants or agents or by ordinary wear and tear or by any other circumstances beyond the control of the BUILDER.
(c)
The guarantee contained as hereinabove in this Article replaces and excludes any other liability, guarantee, warranty and/or condition whether expressly set out in this CONTRACT or imposed or implied by the law, customary, statutory or otherwise, by reason of the construction and sale of the VESSEL by the BUILDER for and to the BUYER.
Any major parts or materials (including painting or coating) replaced during the Guarantee Period under Paragraph 1 of this Article shall be guaranteed for a further twelve (12) months, but not more than eighteen (18) months from delivery of the VESSEL.
(End of Article)
34
ARTICLE X:
PAYMENT
1.
CURRENCY
All payments under this CONTRACT shall be made in United States Dollars.
2.
TERMS OF PAYMENT
The payments of the CONTRACT PRICE shall be made as follows.
(a)
First Instalment
Twenty percent (20%) of the CONTRACT PRICE amounting to U.S.Dollars Nineteen Million Sixty Thousand (US$ 19,060,000) shall be paid within three (3) business days after the BUYER’s receipt of the Letter of Guarantee via SWIFT, duly issued in accordance with Paragraph 8 of this Article, but in any event not earlier than 20
th
, December 2013.
Under this CONTRACT, in counting the business days, only Saturdays and Sundays are excepted. When a due date falls on a day when banks are not open for business in any of New York, London, Singapore or Seoul, such due date shall fall due upon the first business day next following.
(b)
Second Instalment
Ten per cent (10%) of the CONTRACT PRICE amounting to U.S.Dollars Nine Million Five Hundred Thirty Thousand (US$9,530,000) shall be paid on the date falling six (6) months from the date of signing this CONTRACT.
(c)
Third Instalment
Ten per cent (10%) of the CONTRACT PRICE amounting to U.S.Dollars Nine Million Five Hundred Thirty Thousand (US$9,530,000) shall be paid within three (3) business days of receipt by the BUYER of a facsimiled or emailed advice from the BUILDER that first steel cutting of the VESSEL has been commenced and confirmed in writing by the CLASSIFICATION SOCIETY. Such steel cutting to take place not more than twelve (12) months prior to the DELIVERY DATE.
(d)
Fourth Instalment
Ten per cent (10%) of the CONTRACT PRICE amounting to U.S.Dollars Nine Million Five Hundred Thirty Thousand (US$9,530,000) shall be paid within three (3) business
35
days of receipt by the BUYER of a facsimiled or emailed advice from the BUILDER that the first block of the keel has been laid and confirmed in writing by the CLASSIFICATION SOCIETY. Such keel laying to take place not more than eight (8) months prior to the DELIVERY DATE.
(e)
Fifth Instalment
Fifty
per cent (
50
%) of the CONTRACT PRICE amounting to U.S.Dollars
Forty Seven Million Six Hundred Fifty Thousand
(US$
47,650,000
) plus or minus any increase or decrease due to modifications and/or adjustment, if any, arising prior to delivery of the VESSEL of the CONTRACT PRICE under Articles III and V of this CONTRACT shall be paid to the BUILDER concurrently with the delivery and acceptance of the VESSEL, as evidenced by the execution by the parties of the Protocol of Delivery and Acceptance referred to in Article VII of the C
ONTRACT
. The BUILDER shall send to the BUYER a commercial invoice as demand for payment of this instalment.
(The date stipulated for payment of each of the five instalments mentioned above is hereinafter in this Article and in Article XI referred to as the “DUE DATE” of that instalment).
It is understood and agreed upon by the BUILDER and the BUYER that all payments under the provisions of this Article shall not be delayed or withheld by the BUYER due to any dispute or disagreement of whatsoever nature arising between the BUILDER and the BUYER. Should there be any dispute in this connection, the matter shall be dealt with in accordance with the provisions of arbitration in Article XIII hereof.
3.
DEMAND FOR PAYMENT
At least fourteen(14) days prior to the date of each event provided in Paragraph 2 of this Article X on which any payment shall fall due hereunder, with the exception of the payment of the first instalment, the BUILDER shall notify the BUYER by e-mail or facsimile of the date such payment shall become due.
The BUYER shall immediately acknowledge receipt of such notification by e-mail or facsimile to the BUILDER, and make payment as set forth in this Article. If the BUILDER fails to receive the BUYER’s said acknowledgement within three (3) days after sending the aforementioned notification, the BUILDER shall promptly e-mail or facsimile to the BUYER a second notification of similar import. The BUYER shall immediately acknowledge by e-mail or facsimile receipt of the foregoing second notification regardless of whether or not the first notification was acknowledged as aforesaid.
36
4.
METHOD OF PAYMENT
(a)
All the pre-delivery payments and the payment due on delivery in settlement of the CONTRACT PRICE as provided for in Paragraph 2 of this Article shall be made in U.S. Dollars on or before the DUE DATE thereof by telegraphic transfer as follows:
(i)
The payment of the first, second, third, and fourth instalments shall be made to the account of
Nong Hyup Bank of Korea, Head Office, Seoul, Korea (hereinafter called “NH Bank”), Account No. 001-1-544582 at JP Morgan Chase Bank,
1 Chase Manhattan Plaza 10th FL
,
New York, NY 10081, USA
(hereinafter called “JPMCB, N.Y.”) in favour of
Hyundai
Samho Heavy Industries Co., Ltd.
(hereinafter called the “
HSHI
”)
under advice by telefax or telex, including swift, to NH BANK by the remitting Bank. If the BUILDER should wish to nominate an alternative bank, the designation, the account number, identity of account holder and name of such account bank shall be notified by the BUILDER to the BUYER at least five (5) business days prior to the DUE DATE.
(ii)
Upon the cost adjustment to the C
ONTRACT PRICE
in accordance with the provisions of the C
ONTRACT
, the fifth
)
instalment as provided for in Paragraph 2.(e) of this Article shall be deposited at the account of NH BANK
, Account No. 001-1-544582 at JPMCB, N.Y., or any other bank, Seoul, Korea as designated by the BUILDER, by the BUYER in favour of HSHI
at least
three (3)
business days prior to the scheduled delivery date of the VESSEL notified by the BUILDER, with instructions valid for a period of twelve (12) business days that the
said instalment is
payable to the
HSHI
against presentation by the BUILDER to NH BANK
, or any other bank, Seoul, Korea as the case may be,
of a copy of the original PROTOCOL OF DELIVERY AND ACCEPTANCE of the VESSEL signed by the BUILDER and the BUYER, together with an invoice for the amount due under this instalment.
(iii)
If the BUILDER fails to present a copy of the PROTOCOL OF DELIVERY AND ACCEPTANCE to the Bank within the said period of twelve (12)
business
days or unless the validity of the instruction is further extended by the BUYER based on mutual agreement in writing reached with the BUILDER within the said twelve (12)
business
days validity period, the BUILDER’s bank shall remit the said amount of the fifth instalment to the BUYER’s bank account immediately upon expiry of the initial twelve (12)
business
days validity period of the instruction. Interest, if any, accrued by such deposit shall be for BUYER’s account.
In the event of the fifth instalment having been so returned by the Bank to the BUYER, the BUYER shall remit the fifth instalment again to the Bank as laid down in this paragraph upon receipt of a further notice from the Builder for readiness of
37
the Vessel for delivery.
(b)
Simultaneously with each of such payments, the BUYER shall advise the BUILDER of the details of the payments by e-mail or facsimile and at the same time, the BUYER shall cause the BUYER’s remitting Bank to advise NH BANK
, or any other bank, Seoul, Korea as the case may be,
of the details of such payments by authenticated SWIFT
,
bank cable or telex.
5.
REFUND
BY THE BUILDER
(a)
The payments made by the BUYER to the BUILDER prior to delivery of the VESSEL shall constitute advances to the BUILDER. If the VESSEL is rejected by the BUYER in accordance with the terms of this CONTRACT or, except in the case of rescission or cancellation of this CONTRACT by the BUILDER under the provisions of Article XI.1 hereof, if the BUYER terminates, cancels or rescinds this CONTRACT pursuant to any of the provisions of this CONTRACT specifically permitting the BUYER to do so, the BUILDER shall forthwith refund to the BUYER, in U.S. Dollars, the full amount of total sums paid by the BUYER to the BUILDER in advance of delivery together with interest thereon as herein provided without deduction, set-off or withholding in US dollars.
(b)
The transfer and other bank charges of such refund shall be for the BUILDER’s account. The interest rate of the refund, as above provided, shall be
Six
per cent (
6
%) per annum from the date following the date of receipt by the BUILDER of the pre-delivery instalment(s) to the date of remittance by telegraphic transfer of such refund, provided, however, that if the cancellation of this CONTRACT by the BUYER is based upon delays due to Force Majeure or other causes beyond the control of the BUILDER as provided for in Article VIII.1 hereof, then in such event, the interest rate of refund shall be reduced to Four per cent (4%) per annum for the periods affected by such delays.
(c)
It is hereby understood by both parties that payment of any interest provided herein is by way of liquidated damages due to cancellation of this CONTRACT and not by way of compensation for use of money.
(d)
If, the BUILDER is required to refund to the BUYER the instalments paid by the BUYER to the BUILDER as provided in this Paragraph 5, the BUILDER shall return to the BUYER all of the BUYER’s supplies as stipulated in Article XII which were not incorporated into the VESSEL and pay to the BUYER an amount equal to the cost to the BUYER of those supplies incorporated into the VESSEL.
38
6.
TOTAL
LOSS
If there is a total loss or a constructive total loss of the VESSEL prior to delivery thereof, the BUILDER shall proceed according to the mutual agreement of the parties hereto either:
(a)
to build another vessel in place of the VESSEL so lost and deliver it under this CONTRACT to the BUYER, provided that the parties hereto shall have agreed in writing to a reasonable cost and time for the construction of such vessel in place of the lost VESSEL; or
(b)
to refund to the BUYER the full amount of the total sums paid by the BUYER to the BUILDER under the provisions of Paragraph 2 of this Article together with interest thereon at the rate of Four per cent (4%) per annum from the date following the date of receipt by the BUILDER of such pre-delivery instalment(s) to the date of payment by the BUILDER to the BUYER of the refund.
(c)
If the parties hereto fail to reach such agreement within two (2) months after the VESSEL is determined to be a total loss or constructive total loss, the provisions of (b) hereinabove shall be applied.
7.
DISCHARGE
OF OBLIGATIONS
Such refund as provided in the foregoing Paragraphs 5 and 6 by the BUILDER to the BUYER shall forthwith discharge all the obligations, duties and liabilities of each of the parties hereto to the other
(other than any obligations of the BUYER in respect of facilities afforded to the BUYER’s REPRESENTATIVE)
under this CONTRACT. Any and all refunds or payments due to the BUYER under this CONTRACT shall be made by telegraphic transfer to the account specified by the BUYER.
8.
REFUND
GUARANTEE
The BUILDER shall, within thirty (30) days following the execution of this CONTRACT, furnish the BUYER (and prior to the payment of the first instalment) with an assignable letter of guarantee issued by
NH BANK via SWIFT
for the assurance of and as security for the refund of the pre-delivery instalments under or pursuant to Paragraph 5 and/or Paragraph 6 above plus interest accrued thereon in accordance with this CONTRACT in the form and substance as annexed hereto as Exhibit “A”.
All expenses in issuing and maintaining the letter of guarantee described in this Paragraph shall be borne by the BUILDER.
If the BUILDER fails to provide the Refund Guarantee within thirty (30) days after the date of this CONTRACT, the BUYER shall be entitled to terminate this Contract with immediate
39
effect by written notice to the BUILDER.
(End of Article)
40
ARTICLE XI:
BUYER’S DEFAULT
1.
DEFINITION
OF DEFAULT
The BUYER shall be deemed to be in default under this CONTRACT in the following cases:
(a)
If the first, second, third or fourth instalment is not paid to the BUILDER within the respective DUE DATE of such instalments; or
(b)
If the fifth instalment is not deposited in accordance with Article X.4.(a)(ii) hereof or if the said fifth instalment deposit is not released to the BUILDER against presentation by the BUILDER of a copy of the original PROTOCOL OF DELIVERY AND ACCEPTANCE; or
(c)
If the BUYER fails to take delivery of the VESSEL when the VESSEL is duly tendered for delivery by the BUILDER under the provisions of Article VII hereof; or
(d)
If an order or an effective resolution shall be passed for winding up of the BUYER (except for the purpose of reorganization, merger or amalgamation); or
In case the BUYER is in default as set out in Paragraph 1 above, the BUILDER is entitled to and shall have the following rights, powers and remedies in addition to such other rights, powers and remedies as the BUILDER may have elsewhere in this CONTRACT and/or at law, at equity or otherwise.
2.
EFFECT
OF THE BUYER’S DEFAULT ON OR BEFORE THE DELIVERY OF
THE
VESSEL
If the BUYER shall be in default
of its obligations under this CONTRACT
as provided in Paragraph 1 above, then;
(a)
The DELIVERY DATE of the VESSEL shall be extended automatically for the actual period of such default and the BUILDER shall not be obliged to pay any liquidated damages for the delay in delivery of the VESSEL caused thereby.
(b)
The BUYER shall pay to the BUILDER interest at the rate of
Six
percent (
6
%) per annum in respect of the instalment(s) in default from the respective DUE DATE to the date of actual receipt by the BUILDER of the full amount of such instalment(s).
(c)
If the BUYER is in default in payment of any of the instalment(s) due and payable prior to or simultaneously with the delivery of the VESSEL, the BUILDER shall, in writing or by
41
e-mail or facsimile, notify the BUYER to that effect, and the BUYER shall, upon receipt of such notification, forthwith acknowledge in writing or by facsimile to the BUILDER that such notification has been received.
(d)
If any of the BUYER’s default continues for a period o
f fourteen
(
14
) days after the BUILDER’s notification to the BUYER of such default, the BUILDER may, at its option, rescind this CONTRACT by serving upon the BUYER a written notice or e-mail or facsimile notice of rescission confirmed in writing.
(e)
In the event of such cancellation by the BUILDER of this CONTRACT due to the BUYER’s default as provided for in paragraph 1 above, the BUILDER shall
be entitled to retain and apply the instalments already paid by the BUYER to the recovery of the BUILDER’s proven loss and damage including reasonable estimated profit (in relation to this CONTRACT) due to the BUYER’s default and the cancellation of this CONTRACT and at the same time the BUILDER shall
have the full right and power either to complete or not to complete the VESSEL which is the sole property of the BUILDER as it deems fit, and to sell the VESSEL at a public or private sale on such terms and conditions as the BUILDER thinks fit
without being answerable for any loss and damage. However
the BUILDER shall exercise normal commercial diligence to secure the market price obtainable for a sale in such circumstances; and
(f)
The proceeds received by the BUILDER from the sale shall be applied in addition to the instalment(s) retained by the BUILDER as mentioned hereinabove as follows :
First, in payment of all reasonable costs and expenses of the sale of the VESSEL, including interest thereon at
Six
per cent (
6
%) per annum from the respective date of payment of such costs and expenses aforesaid to the date of sale on account of the BUYER’s default.
Second, if the VESSEL has been completed, in or towards satisfaction of the unpaid balance of the CONTRACT PRICE, to which shall be added the cost of all additional work and extras agreed by the BUYER including interest thereon at
Six
per cent (
6
%) per annum from the respective DUE DATE of the instalment in default to the date of sale, or if the VESSEL has not been completed, in or towards satisfaction of the unpaid amount of the cost incurred by the BUILDER prior to the date of sale on account of construction of the VESSEL, including work, labour, materials and reasonably estimated profit which the BUILDER would have been entitled to receive if the VESSEL had been completed and delivered plus interest thereon at
Six
per cent (
6
%) per annum from the respective DUE DATE of the instalment in default to the date of sale.
Third, the balance of the proceeds, if any, shall belong to the BUYER, and shall forthwith
42
be paid over to the BUYER by the BUILDER.
In the event of the proceeds from the sale together with instalment(s) retained by the BUILDER being insufficient to pay the BUILDER, the BUYER shall be liable for the deficiency and shall pay the same to the BUILDER upon its demand.
3.
DEFINITION OF BUILDER’S DEFAULT
The BUILDER shall be deemed to be in default of its obligations under this CONTRACT in the event of:
(i)
The filing of a petition or the making of an order or the passing of an effective resolution for the winding up of the BUILDER (other than for the purpose of reconstruction or amalgamation which has been previously approved in writing by the BUYER), or the appointment of a receiver, administrator, compulsory manager, trustee, liquidator or other similar officer has been made against the BUILDER or any of its assets under the laws of any jurisdiction or the appointment of a receiver of the undertaking or property of the BUILDER, or the insolvency of or a suspension of payments by the BUILDER, or the cessation of the carrying on of business by the BUILDER at any of its shipyards, or the making by the BUILDER of any special arrangement or composition with the creditors of the BUILDER; or any like or similar circumstance occurring under the laws of the Republic of Korea; or
(ii)
The occurrence of any of the events set out in (i) with respect to the bank issuing the Letter of Guarantee referred to in Article X.5, and the failure by the BUILDER within sixty (60) days thereof to replace such bank with an alternative guarantor reasonably acceptable to the BUYER and its bank; or
(iii)
Where the BUILDER:
(a)
remains in default of performance of any obligation or provision of the CONTRACT fourteen (14) days after receiving written notice from the BUYER that the BUILDER is in default; or
(b)
fails, neglects, refuses or is unable during the course of the construction of the VESSEL to provide materials, equipment, services or labour to perform the construction in accordance with the SPECIFICATIONS, the PLAN, and this CONTRACT prior to the date on which the BUYER shall be entitled to cancel this CONTRACT for delay.
43
4.
EFFECT OF BUILDER’S DEFAULT
If any such default as referred to in Paragraph3 above occurs, then the BUYER may terminate this CONTRACT by promptly notifying the BUILDER in writing but not later than two (2) weeks from the date of the BUILDER’s default takes place or after the period to remedy it has expired. Such cancellation is to be effective as of the date when such notice of cancellation is received by the BUILDER and the provisions of Article X. 5 shall apply in respect of such termination. In any event the BUYER shall be entitled to pursue such claims and remedies as it may elect subject to the applicable law.
(End of Article)
44
ARTICLE
XII:
BUYER’S SUPPLIES
1.
RESPONSIBILITY
OF THE BUYER
(a)
The BUYER shall, at its cost and expense, supply all the BUYER’s supplies mentioned in the SPECIFICATIONS, if any, (hereinafter called the “BUYER’S SUPPLIES”), to the BUILDER at the SHIPYARD in perfect condition ready for installation and in accordance with the time schedule to be furnished by the BUILDER to meet the building schedule of the VESSEL.
Such schedule to be advised by the BUILDER within six (6) months after this CONTRACT becomes effective according to Article XX.
(b)
In order to facilitate the installation of the BUYER’S SUPPLIES by the BUILDER in or on the VESSEL, the BUYER shall furnish the BUILDER with the necessary plans, instruction books, test report and all test certificates reasonably required by the BUILDER and shall cause the representative(s) of the makers of the BUYER’S SUPPLIES to give the BUILDER any advice, instructions or assistance which the BUILDER may reasonably require in the installation or adjustment thereof at the SHIPYARD, all without cost or expense to the BUILDER.
(c)
The BUYER shall be liable for any expense incurred by the BUILDER for repair of the BUYER’S SUPPLIES due to defective design or materials, poor workmanship or performance or due to damage in transit and the DELIVERY DATE of the VESSEL shall be extended for the period of such repair if such repair shall affect the delivery of the VESSEL.
(d)
Commissioning into good order of the BUYER’S SUPPLIES during and after installation on board shall be made at the BUYER’s expense by the representative of respective maker or the person designated by the BUYER in accordance with the BUILDER’s building schedule.
(e)
Should the BUYER fail to deliver to the BUILDER the BUYER’S SUPPLIES and the necessary document or advice for such supplies within the time specified by the BUILDER, the DELIVERY DATE of the VESSEL shall automatically be extended for the period of such delay if such delay in delivery shall affect the delivery of the VESSEL. In such event, the BUYER shall pay to the BUILDER all losses and damages sustained by the BUILDER due to such delay in the delivery of the BUYER’S SUPPLIES and such payment shall be made upon delivery of the VESSEL, provided, however, that the BUILDER shall have :
45
(i)
furnished the BUYER with the time schedule referred to above, two (2) months prior to installation of the BUYER’S SUPPLIES and
(ii)
given the BUYER written notice of any delay in delivery of the BUYER’S SUPPLIES and the necessary document or advice for such supplies as soon as the delay occurs which might give rise to a claim by the BUILDER under this Paragraph.
Furthermore, if the delay in delivery of the BUYER’S SUPPLIES and the necessary document or advice for such supplies should exceed
ten (10) working
days from the date specified by the BUILDER, the BUILDER shall be entitled to proceed with construction of the VESSEL without installation of such items (regardless of their nature or importance to the BUYER or the VESSEL) in or on the VESSEL without prejudice to the BUILDER’s right hereinabove provided, and the BUYER shall accept the VESSEL so completed.
2.
RESPONSIBILITY
OF THE BUILDER
The BUILDER shall be responsible for storing, safekeeping and handling the BUYER’S SUPPLIES
which has appropriate proof against weather, dust and theft and,
which the BUILDER is required to install on board the VESSEL under the SPECFICATIONS after delivery of such supplies to the SHIPYARD and shall procure that at all times the
BUYER’S SUPPLIES
are clearly marked as being the property of the BUYER. The BUILDER shall install such supplies on board the VESSEL at the BUILDER’s expense.
The BUILDER shall not be responsible for the quality, performance or efficiency of any equipment included in the BUYER’S SUPPLIES and is under no obligation with respect to the guarantee of such equipment against any defects caused by poor quality, performance or efficiency of the BUYER’S SUPPLIES.
If any of the
BUYER’S SUPPLIES
are lost or damaged while in the custody of the BUILDER, the BUILDER shall, if the loss or damage is due breach of its obligations under this Paragraph 2, default, negligence or omission on its part, be responsible for such loss or damage.
Upon delivery of the
BUYER’S SUPPLIES
at the SHIPYARD, the BUILDER and the BUYER shall carry out a joint unpacking inspection of the
BUYER’S SUPPLIES
so that the condition at the time of delivery can be confirmed.
3.
RETURN OF THE BUYER’S SUPPLIES
If pursuant to the provisions of this CONTRACT the BUILDER is required to refund to the BUYER the instalments paid by the BUYER to the BUILDER, the BUILDER shall either (i)
46
return to the BUYER all of the
BUYER’S SUPPLIES
not incorporated into the VESSEL and pay to the BUYER an amount equal to the actual cost of those supplies incorporated into the VESSEL, or (ii) pay to the BUYER an amount equal to the actual cost of all supplies provided to the BUILDER and paid for by the BUYER irrespectively of whether or not the same have been incorporated into the VESSEL by mutual agreement.
(End of Article)
47
ARTICLE XIII:
ARBITRATION
1.
DECISION BY THE CLASSIFICATION SOCIETY
If any dispute arises between the parties hereto in regard to the design and/or construction of the VESSEL, its machinery and equipment, and/or in respect of the materials and/or workmanship thereof and/or thereon, and/or in respect of interpretations of the SPECIFICATIONS, the parties may by mutual agreement refer the dispute to the CLASSIFICATION SOCIETY or to such other expert as may be mutually agreed between the parties hereto, and whose decision shall be final, conclusive and binding upon the parties hereto.
2.
LAWS
APPLICABLE
Any arbitration arising hereunder shall be governed by and conducted in accordance with the London Maritime Arbitrators’ Association Terms or any statutory modification or re-enactments thereof for the time being in force.
The award of the arbitrator shall be final, conclusive and binding upon parties hereto.
3.
PROCEEDINGS OF ARBITRATION
In the event that the parties hereto do not agree to settle a dispute according to Paragraph 1 of this Article and/or in the event of any other dispute of any kind whatsoever between the parties and relating to this CONTRACT or its rescission or any stipulation herein, such dispute shall be submitted to arbitration in London. The parties shall try to agree a single arbitrator to conduct the arbitration.
If the parties cannot agree upon the appointment of the single arbitrator within two (2) weeks after one of the parties has given notice to the other party notifying that the other party refer the dispute to arbitration, the dispute shall be settled by three arbitrators, each party appointing one arbitrator, the third being appointed by the two arbitrators so appointed. In the further event that the two arbitrators appointed respectively by the parties hereto as aforesaid should be unable to reach agreement on the appointment of the third arbitrator within twenty (20) days from the date on which the second arbitrator is appointed, either party of the said two arbitrators may apply to the President for the time being of the London Maritime Arbitrators Association to appoint the third arbitrator. If either of the appointed arbitrators refuses or is incapable of acting, the party who appointed him shall appoint a new arbitrator in his place.
If one party fails to appoint an arbitrator - either originally or by way of substitution - for two (2) weeks after the other party having appointed its arbitrator, has served the defaulting party notice of default for failure to make the appointment, the President of the London Maritime
48
Arbitrators Association shall, after application from the party having appointed its arbitrator, also appoint an arbitrator on behalf of the party in default. The award of the arbitration made by the sole arbitrator or by the majority of the three arbitrators as the case may be shall be final, conclusive and binding upon the parties hereto.
4.
NOTICE OF AWARD
The award shall immediately be given to the BUYER and the BUILDER by telefax or e-mail.
5.
EXPENSES
The Arbitrator or the Arbitration Board shall determine which party shall bear the expenses of the arbitration or the portion of such expenses which each party shall bear.
6.
ENTRY IN COURT
In case of failure by either party to respect the award of the arbitration, the judgement may be entered in any proper court having jurisdiction thereof.
7.
ALTERATION OF DELIVERY DATE
In the event of reference to arbitration of any dispute arising out of matters occurring prior to delivery of the VESSEL, the award may include any postponement of the DELIVERY DATE which the Arbitrator or the Arbitration Board may deem appropriate. To the maximum extent possible and provided the arbitration proceedings or the subject matter of the dispute do not affect the construction of the VESSEL, work under this CONTRACT shall continue during the arbitration of any dispute.
(End of Article)
49
ARTICLE
XIV:
SUCCESSORS AND ASSIGNS
1.
TRANSFER OR ASSIGNMENT BY THE BUYER
The
BUILDER agrees that, prior to delivery of the VESSEL, this CONTRACT may,
with
the prior written approval of the BUILDER, which the BUILDER shall not
unreasonably
withhold or delay, be transferred by novation to or assigned to another company and the title thereof may be taken by
another
company. In the event of any transfer or assignment pursuant to the terms of this
CONTRACT,
the transferee or assignee, its successors and assigns shall succeed to all the
rights
and obligations of the BUYER under this CONTRACT including but not limited to post-construction warranties of quality and the benefit of the Refund Guarantee. However, the
BUYER
shall remain responsible for performance by the assignee, its successors
and
assigns of all the BUYER’s obligations, liabilities and responsibilities under
this
CONTRACT. It is understood that any expenses or charges incurred due to
the
transfer or assignment of this CONTRACT by the BUYER shall be for the account of the BUYER.
The
BUILDER shall have the right to transfer or assign this CONTRACT at any time after
the
effective date hereof, provided that prior written agreement is obtained from
the
BUYER.
2.
TRANSFER BY THE BUILDER
The BUILDER shall not have the right to assign or transfer this CONTRACT at any time after the Effective Date (as defined in ARTICLE XIX) hereof, unless prior written approval is obtained from the BUYER.
(End of Article)
50
ARTICLE
XV:
TAXES AND DUTIES
1.
TAXES
Unless otherwise expressly provided for in this CONTRACT, all costs and taxes including stamp duties, if any, incurred in or levied by any country except Korea in connection with this CONTRACT shall be borne by the BUYER and corresponding costs and taxes in Korea
, before delivery of the VESSEL, if any,
shall be borne by the BUILDER.
2.
DUTIES
The BUILDER shall hold the BUYER harmless from any payment of duty imposed in Korea upon materials or supplies which, under the terms of this CONTRACT, or amendments thereto, may be supplied by the BUYER from abroad for the construction of the VESSEL.
The BUILDER shall likewise hold the BUYER harmless from any payment of duty imposed in Korea in connection with materials or supplies for operation of the VESSEL, including running stores, provisions and supplies necessary to stock the VESSEL for its operation and also from the payment of export duties
incurred by the BUILDER in Korea
, if any, to be imposed upon the VESSEL as a whole or upon any of its parts or equipment. This indemnity does not, however, extend to any items purchased by the BUYER for use in connection with the VESSEL which are not absolutely required for the construction or operation of the VESSEL.
3.
KOREAN BUNKER SALES TAX
The price of the delivery bunkers remaining on board the VESSEL on the DELIVERY DATE which is to be paid by the BUYER to the BUILDER shall be net of any sales tax payable to the Korean Government
.
(End of Article)
51
ARTICLE
XVI:
PATENTS, TRADEMARKS AND COPYRIGHTS
1.
PATENTS,
TRADEMARKS AND COPYRIGHTS
Machinery and equipment of the VESSEL, whether made or furnished by the BUILDER under this CONTRACT, may bear the patent numbers, trademarks, or trade names of the manufacturers. The BUILDER shall defend and hold harmless the BUYER from all liabilities or claims for or on account of the use of any patents, copyrights or design of any nature or kind, or for the infringement thereof including any unpatented invention made or used in the performance of this CONTRACT and also for any costs and expenses of litigation, if any in connection therewith. No such liability or responsibility shall be with the BUILDER with regard to components and/or equipment and/or design supplied by the BUYER.
Nothing contained herein shall be construed as transferring any patent or trademark rights or copyrights in equipment covered by this CONTRACT, and all such rights are hereby expressly reserved to the true and lawful owners thereof.
2.
RIGHTS
TO THE SPECIFICATIONS, PLANS AND ETC.
The BUILDER retains all rights with respect to the SPECIFICATIONS, plans and working drawings, technical descriptions, calculations, test results and other data, information and documents concerning the design and construction of the VESSEL and the BUYER undertakes therefore not to disclose the same or divulge any information contained therein to any third parties, without the prior written consent of the BUILDER, excepting where it is necessary for usual marketing
,
operation, repair and maintenance of the VESSEL or registration, classification, insurance or sale of the VESSEL.
In case the BUYER requests the prior written consent of the BUILDER as set out in the above paragraph, the BUYER shall provide the BUILDER with a written undertaking from the recipient stating that (1) he acknowledges and shall observe the foregoing terms concerning the BUILDER’s right to confidential information and (2) any confidential information furnished in tangible form shall not be duplicated by recipient except for the purpose of the job specifically assigned to him. (3) Upon the completion of his job requiring reference to the confidential information, recipient shall return to the BUYER at his option or otherwise destroy all the confidential information received in written or tangible form including copies or reproductions or other media containing such confidential information. (4) Any documents or other media developed by the recipient containing confidential information shall be destroyed by the recipient.
(End of Article)
52
ARTICLE XVII :
COMPLIANCE AND ANTI-BRIBERY
1.
REPRESENTATIONS OF THE PARTIES
During the Term of this CONTRACT and for the duration of any services provided hereunder, each party certifies and represents as follows:
(a)
It will comply with the laws of any jurisdiction applicable to such party as it relates to this CONTRACT, including but not limited to any applicable anti-corruption and anti-bribery laws, also including, without limitation, the United States Foreign Corrupt Practices Act (“US FCPA”), the UK Bribery Act 2010 (“UK Bribery Act”) and the anti-bribery or anti-corruption laws of South Korea as such laws may be amended from time to time.
(b)
In connection with this CONTRACT, it has not and will not make any payments or gifts or provide other advantages, or any offers or promises of payments or gifts or other advantages of any kind, directly or indirectly, to:
a.
any person or entity with the intention of obtaining or retaining a business advantage for itself or the other party to this CONTRACT;
b.
any official or member of any government or any agency or instrumentality thereof; any official or member of any public international organisation or any agency or instrumentality thereof; any or official of a political party or any candidate for political office (herein ‘public official’); or any person while knowing or reasonably suspecting that all or a portion of such money or thing of value will be offered, given or promised, directly or indirectly, to any public official, in violation of the UK Bribery Act, the US FCPA or the laws of South Korea.
(c) In connection with this CONTRACT, it has not and will not request, agree to accept or accept from any person or entity any payments or gifts or other advantages, or any offers or promises of payments or gifts or other advantages of any kind, directly or indirectly, as a reward or inducement to perform its obligations under this CONTRACT in any way improperly.
2.
INDEMNIFICATION
Each party agrees that it will fully indemnify, defend and hold harmless the other party from any claims, liabilities, damages, expenses, penalties, judgments and losses (including reasonable attorneys’ fees) assessed or resulting by reason of a breach of the representations and undertakings contained in this Article XVII to the extent permitted by law.
(End of Article)
53
ARTICLE
XVII
I
:
INTERPRETATION AND GOVERNING LAW
This
CONTRACT has been prepared in English and shall be executed in duplicate
and
in such number of additional copies as may be required by either party
respectively.
The parties hereto agree that the validity and interpretation of this
CONTRACT
and of each Article and part thereof shall be governed by the laws of
England.
(End of Article)
54
ARTICLE
X
IX
:
NOTICE
Any
and all notices, requests, demands, instructions, advices and communications
in
connection with this CONTRACT shall be written in English, sent by registered
air
mail or facsimile or by hand or email and shall be deemed to be given when first
received
whether by registered mail or facsimile, by hand or email. They shall be
addressed
as follows, unless and until otherwise advised:
|
To the BUILDER
|
:
|
HYUNDAI
SAMHO HEAVY INDUSTRIES CO., LTD.
|
|
|
|
93, Daebul-Ro, Samho-Eup, Yeongam-Gun, Jeollanam-Do
,
Korea
|
|
|
|
|
|
Attention:
|
|
Mr. S. W. Chun
/ Contract Management Dep’t.
|
|
|
|
Tel : +82 61 460 2649
|
|
|
|
Facsimile:
+ 82 61 460 3707
|
|
|
|
E-mail: swc@hshi.co.kr
|
|
|
|
|
|
To the BUYER
|
:
|
NAVIG8 CRUDE TANKERS INC
|
|
|
|
c/o Navig8 Asia Pte Ltd
|
|
|
|
3 Temasek Avenue, #25-01 Centennial Tower, Singapore 039190
|
|
|
|
|
|
Attention:
|
|
Mr. Daniel Chu
|
|
|
|
Facsimile: +44 207 467 5867
|
|
|
|
Tel: +44 207 467 5888
|
|
|
|
E-mail: legal@navig8group.com
|
The
said notices shall become effective upon receipt of the letter, e-mail or
facsimile
communication by the receiver thereof. Where a notice by e-mail or facsimile is concerned which is required to be confirmed by letter, then, unless
the
CONTRACT or the relevant Article thereof otherwise requires, the notice shall
become
effective upon receipt of the e-mail or facsimile.
(End of Article)
55
ARTICLE
XX:
EFFECTIVENESS OF THIS CONTRACT
This CONTRACT shall become effective upon signing by the parties hereto.
(End of Article)
56
ARTICLE
XX
I
:
EXCLUSIVENESS
This
CONTRACT shall constitute the only and entire agreement between the
parties
hereto, and unless otherwise expressly provided for in this CONTRACT, all
other
agreements, oral or written, made and entered into between the parties prior
to
the execution of this CONTRACT shall be null and void
and
shall be superseded by this CONTRACT.
(End of Article)
57
IN WITNESS WHEREOF, the parties hereto have caused this CONTRACT to
be
duly executed in duplicate on the date and year first above written.
|
BUYER
|
|
BUILDER
|
|
|
|
|
|
|
|
|
|
For
and on behalf of
|
|
For and on behalf of
|
|
NAVIG8 CRUDE TANKERS INC
|
|
HYUNDAI SAMHO
|
|
|
|
HEAVY INDUSTRIES CO., LTD.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By
|
/s/ Daniel Chu
|
|
By
|
/s/ Sam H. Ka
|
|
Name: Daniel Chu
|
|
Name:
Sam H. Ka
|
|
Title:
Attorney-in-Fact
|
|
Title:
Attorney-in-Fact
|
|
|
|
|
|
|
|
|
|
WITNESS
|
|
WITNESS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By
|
/s/ Siduarth Nair
|
|
By
|
/s/ Y.D. Park
|
|
Name: Siduarth Nair
|
|
Name:
Y.D. Park
|
|
Title:
|
|
Title: SVP
|
58
EXHIBIT “A”
DEED OF GUARANTEE
Date :[ ], 2013
Gentlemen:
We hereby open our irrevocable letter of guarantee number [ ] (this “Guarantee”) in favour of
NAVIG8 CRUDE TANKERS INC
, a corporation organized and existing under the laws of
Marshall Islands
and having its principal office at
Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960
(hereinafter called the “BUYER”) for account of HYUNDAI SAMHO HEAVY INDUSTRIES CO., LTD.,
Samho
, Korea (hereinafter called the “BUILDER”) as follows in connection with the shipbuilding contract dated [ ], 2013 (hereinafter called “CONTRACT”) made by and between the BUYER and the BUILDER for the construction of 300,000 DWT Class Crude Oil Carrier having the BUILDER’s Hull No.
(hereinafter called the “VESSEL”).
If, in connection with the terms of the CONTRACT, the BUYER shall become entitled to a refund of the advance payment made to the BUILDER prior to the delivery of the VESSEL, we hereby irrevocably, unconditionally and absolutely guarantee, as primary obligor and not merely as surety, to you, your successors and assignees, the repayment of the same to the BUYER within thirty (30) days after demand not exceeding US$ [ ] (Say U.S. Dollars [ ] only)together with interest thereon at the rate of
six per cent (6%)
per annum from the date following the date of receipt by the BUILDER to the date of remittance by telegraphic transfer of such refund.
The amount of this Guarantee will be automatically increased upon the BUILDER’s receipt of the respective instalment, not more than three (3) times, each time by the amount of such instalment plus interest thereon as provided in the CONTRACT, but in any eventuality the amount of this Guarantee shall not exceed the total sum of US$ [ ] (Say U.S. Dollars [ ] only) plus interest thereon at the rate of
six
per cent (
6
%) per annum from the date following the date of the BUILDER’s receipt of each instalment to the date of remittance by telegraphic transfer of the refund. However, in the event of cancellation of the CONTRACT being based on delays due to Force Majeur
e
as provided under Article VIII of the CONTRACT, the interest rate of refund shall be reduced to four per cent (4%) per annum as provided in Article X.5of the CONTRACT for the periods affected by such delays.
The payment by us under this Guarantee shall be made(subject to the third paragraph hereof) against the BUYER’s first written demand and signed statement certifying that the BUYER’s demand for refund has been made in conformity with Article X of the CONTRACT and the BUILDER has failed to make the refund within
thirty (30)
days after the BUYER’s demand. Refund shall be made to the BUYER by telegraphic transfer in United States Dollars. All payments under this Guarantee shall be made without any set-off or counterclaim and without any
59
deduction or withholding for or on account of any taxes, duties or charges whatsoever unless we are compelled by law to deduct or withhold the same, in which case we shall make the minimum deduction or withholding permitted and will pay to you such additional amounts as may be necessary in order that the net amount received by you after such deduction or withholding shall be equal to the amount which would have been received had no such deduction or withholding been made.
In case any refund is made to the BUYER by the BUILDER or by us under this Guarantee, our liability hereunder shall be automatically reduced by the amount of such refund.
Notwithstanding the provisions hereinabove, in the event that within
thirty (30)
days from the date of your claim to the BUILDER referred to above, we receive notification from you or the BUILDER accompanied by written confirmation to the effect that your claim to cancel the CONTRACT or your claim for refundment thereunder has been disputed and referred to arbitration in accordance with the provisions of the CONTRACT, we shall under this Guarantee, refund to you the sum adjudged to be due to you by the BUILDER pursuant to the award made under such arbitration, or, if applicable, pursuant
to
a final court judgment issued in relation thereto, immediately upon receipt from you of a demand for the sums so adjudged and a copy of the award or court judgment, as the case may be.
The validity of this Guarantee and our liability under or in connection therewith shall not be discharged, impaired, reduced or in any way affected by any extension of time or other amendment, variation, modification or supplement whatsoever of or to the CONTRACT nor by the giving of any time or any concession granted by you to the BUILDER or any indulgence, waiver or consent on your part in respect of time or any other terms of the CONTRACT, nor by any delay or failure by you in enforcing your rights under or in connection with the CONTRACT, nor by the liquidation, insolvency, bankruptcy, reorganization, amalgamation, reconstruction or analogous proceedings or other financial failure of the BUILDER or any other person, nor by the illegality, invalidity or unenforceability or any defect in the CONTRACT or any provisions thereof, or any repudiation, termination or rescission thereof or any other matter or circumstance which would (but for the provisions of this paragraph) discharge, impair, affect or reduce our liability under or in connection with this Guarantee.
This Guarantee shall become null and void upon receipt by the BUYER of the sum guaranteed hereby together with interest thereon or upon acceptance by the BUYER of the delivery of the VESSEL in accordance with the terms of the CONTRACT and, in either case, this Guarantee shall be returned to us.
This Guarantee is valid and effective from the date of this Guarantee until such time as the VESSEL is delivered by the BUILDER to the BUYER in accordance with the provisions of the CONTRACT. However in the event that a dispute in respect of a refund is being resolved by
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arbitration in accordance with Article XIII of the CONTRACT, then this Guarantee shall continue to remain in force until 30 business days after such arbitration proceedings are concluded and a final arbitration award has been issued.
We agree that you may assign without our prior written consent the benefit of this Guarantee to any lawful assignee of the benefit of the CONTRACT.
This Guarantee and any non-contractual obligations arising out of or in connection with it shall be governed by, interpreted and construed in accordance with the laws of England. The undersigned hereby submits to the exclusive jurisdiction of the courts of England for the settlement of any disputes which may arise out of or in connection with this Guarantee and any non-contractual obligations arising out of or in connection with it. We hereby irrevocably appoint [ ] to act as our agent to receive and accept on our behalf any process or other document relating to any proceedings in the English courts which are connected with this Guarantee.
Very truly yours,
This Guarantee has been executed and delivered as a Deed on the day and year written above.
Signed as a Deed on behalf of [ ],a company incorporated in [ ]
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by:
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a
nd
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being persons who, in accordance with
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the laws of that territory, are acting under
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the authority of the company
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In the presence of:
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Witness’s signature:
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Name (print):
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Occupation:
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Address:
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61
Exhibit 10.77
SHIPBUILDING CONTRACT
FOR
THE CONSTRUCTION OF
300,000 DWT CLASS CRUDE OIL CARRIER
HULL NO. S770
BETWEEN
NAVIG8 CRUDE TANKERS INC
(AS BUYER)
AND
HYUNDAI SAMHO HEAVY INDUSTRIES CO., LTD.
(AS BUILDER)
I N D E X
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PAGE
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PREAMBLE
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3
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ARTICLE
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I
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DESCRIPTION AND CLASS
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4
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II
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CONTRACT PRICE
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8
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III
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ADJUSTMENT OF THE CONTRACT PRICE
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9
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IV
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INSPECTION AND APPROVAL
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1
2
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V
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MODIFICATIONS, CHANGES AND EXTRAS
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1
8
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VI
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TRIALS AND COMPLETION
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21
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VII
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DELIVERY
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2
5
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VIII
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:DELAYS
AND EXTENSIONS OF TIME (FORCE MAJEURE)
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IX
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WARRANTY OF QUALITY
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X
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PAYMENT
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3
5
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XI
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BUYER’S DEFAULT
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XII
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BUYER’S SUPPLIES
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XIII
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ARBITRATION
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8
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XIV
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SUCCESSORS AND ASSIGNS
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XV
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TAXES AND DUTIES
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51
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XVI
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PATENTS, TRADEMARKS AND COPYRIGHTS
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XVII
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: COMPLIANCE AND ANTI-BRIBERY
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XVIII
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INTERPRETATION AND GOVERNING LAW
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XIX
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NOTICE
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XX
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EFFECTIVENESS OF THIS CONTRACT
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XXI
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EXCLUSIVENESS
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EXHIBIT “A” LETTER OF GUARANTEE
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59
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2
THIS
CONTRACT
,
made on this
12th day
of
December
, 2013
by
and between
NAVIG8 CRUDE TANKERS INC, a
corporation incorporated and existing under the
laws
of
Marshall Islands
, having its registered office at
Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960
(hereinafter
called
the
“BUYER”
)
, the party of the first part and HYUNDAI
SAMHO HEAVY INDUSTRIES CO., LTD.
a company organized and existing under the
laws
of the Republic of Korea, having its principal office 93, Daebul-Ro, Samho-Eup, Yeongam-Gun, Jeollanam-Do, Korea (hereinafter called the “BUILDER”),
the
party of the second part,
W
I T N E S S E T H
:
In consideration of the mutual covenants c
o
ntained herein, the BUILDER
agrees
to design, build, launch, equip and complete one (1)
300,000
DWT
C
lass
Crude Oil Carrier as
described in Article I hereof (hereinafter called the “VESSEL”) at the
BUILDER’s
shipyard in Korea (hereinafter called the “SHIPYARD”) in accordance with
the BUILDER’s
shipbuilding practice for
Crude Oil Carrier
, as the B
UILDER
has been performing for its other clients and in accordance with
HSQS (Hyundai Samho Shipbuilding Quality Standard)
and to
deliver
and sell the VESSEL to the BUYER, and the BUYER agrees to accept
delivery
of and purchase from the BUILDER the VESSEL, according to the terms
and
conditions hereinafter set forth:
(End of Preamble)
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ARTICLE I:
DESCRIPTION AND CLASS
1.
DESCRIPTION
The VESSEL shall have the BUILDER’s Hull No.
S770 and
shall be designed, constructed, equipped and completed in accordance with the specifications (No.
CONV300-FS-P1, dated 10th December 2013)
a
nd
the general arrangement plan (No.
1G7000201, dated 10th December 2013)
attached thereto (hereinafter called respectively the “SPECIFICATIONS” and the “PLAN”) signed by both parties, which shall constitute an integral part of this CONTRACT although not attached hereto.
The SPECIFICATIONS and the PLAN are intended to explain each other and anything shown on the PLAN and not stipulated in the SPECIFICATIONS or anything stipulated in the SPECIFICATIONS and not shown on the PLAN shall be deemed and considered as if included in both.
Should there be any inconsistencies or contradictions between the SPECIFICATIONS and the PLAN, the SPECIFICATIONS shall prevail. Should there be any inconsistencies or contradictions between this CONTRACT and the SPECIFICATIONS, this CONTRACT shall prevail.
2.
BASIC
DIMENSIONS AND PRINCIPAL PARTICULARS OF THE VESSEL
(a)
The basic dimensions and principal particulars of the VESSEL shall be:
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Length, overall
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abt.
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333
m
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Length, between perpendiculars
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abt.
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322
m
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Breadth, moulded
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abt.
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60
m
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Depth, moulded
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abt.
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29.4
m
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Design draught, moulded
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abt.
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20.5
m
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Scantling draught, moulded
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abt.
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21.6
m
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Main Engine
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HYUNDAI - B&W 7G80ME-C9.2
Nominal Rating: 32,970 kW x 72 RPM
MCR: 24,400 kW x 66 RPM
NCR: 17,080 kW x 58.6 RPM
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Main engine to be part load optimized
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Deadweight, guaranteed:
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299,969 metric tons at the Scantling draught of 21.6 meters on even keel in sea water of specific gravity of 1.025.
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Speed, guaranteed
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:
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14.8 knots at the design draught of 20.5 meters at the condition of clean bottom and in calm and deep sea with main engine output of 17,080 kW with 15% sea margin.
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Fuel Consumption, guaranteed
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161.7 grams/kW-hour using marine diesel oil having lower calorific value of 42,700 kj/kg at MCR measured at the shop trial with I.S.O reference conditions.
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The details of the aforementioned particulars as well as the definitions and method
of
measurements and calculations are as indicated in the SPECIFICATIONS.
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(b)
The dimensions may be slightly modified by the BUILDER,
who also reserves the right to make changes to the SPECIFICATIONS and the PLAN if found necessary to suit the local conditions and facilities of the SHIPYARD, the availability of materials and equipment, the introduction of improved production methods or otherwise,
subject to the written approval of the BUYER which the BUYER shall not withhold unreasonably, and all subject to the other relevant provisions of this CONTRACT.
3.
CLASSIFICATION,
RULES AND REGULATIONS
(a)
The VESSEL, including its machinery, equipment and outfitting shall be designed, equipped and constructed in accordance with the BUILDER’s HSQS (Hyundai Samho Shipbuilding Quality Standard) and shipbuilding practices.
The VESSEL shall be built in compliance with the rules (editions and amendments thereto being in force at the date of signing this CONTRACT) of Korean Register of Shipping (hereinafter called the “CLASSIFICATION SOCIETY”), classed and registered with the symbol
of +KRS1-Oil Tanker (Double Hull) ‘ESP’, (FBC), (CSR), Crude, VEC-2, IGS, COW, IWS, IBWM, LI, +KRM1-UMA, STCM, PSPC, IAFS, IOPP, ISPP, IGPP, IAPP, IIHM, IEE, EQ-SPM, ERS, CHA.
The VESSEL shall be built in compliance with the standards provided in the
SPECIFICATIONS
and with the Rules and Regulations as mentioned in the
SPECIFICATIONS
which are in force at the date of signing the
SPECIFICATIONS (for reference, the published LR’s “Future IMO Legislation, Aug 2013” to be used).
EEDI verification to be performed by
the BUILDER
during sea trials
and confirmed by the CLASSIFICATION SOCIETY
.
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(b)
The BUILDER shall arrange with the CLASSIFICATION SOCIETY for the assignment by the CLASSIFICATION SOCIETY of representative(s) to the VESSEL during each stage of construction. All fees and charges incidental to classification of the VESSEL as well as in compliance with the above specified rules, regulations and requirements of this CONTRACT shall be for the account of the BUILDER.
All major plans, materials and workmanship used in the construction of the V
ESSEL
shall be subject to inspection and test by the CLASSIFICATION SOCIETY in accordance with the rules and regulations of the CLASSIFICATION SOCIETY
.
(c)
The decision of the CLASSIFICATION SOCIETY as to whether the
VESSEL
complies with the regulations of the CLASSIFICATION SOCIETY
shall
be final and binding upon the BUILDER and the BUYER, provided that in the case of dispute the decision shall be endorsed by Head Office of the CLASSIFICATION SOCIETY.
4.
SUBCONTRACTING
The BUILDER is authorised to sub-contract part of the work to third party sub-contractors who will carry out works in accordance with the quality standards and shipbuilding practices outlined above at Article I. 3. (a) of this CONTRACT, provided that the work is done in Korea and the BUILDER shall have first given notice in writing to the BUYER.
Without prejudice to the generality of the foregoing, the BUILDER shall remain fully liable for the due and complete performance of all the BUILDER’s obligation under this CONTRACT notwithstanding the entering into of any such sub-contract as aforesaid. However, the VESSEL shall always remain at the SHIPYARD unless the BUYER and the BUILDER agree otherwise.
No sub-contract shall bind or purport to bind the BUYER, and each sub-contract shall be the responsibility of the BUILDER and not contain any retention rights, liens or other such rights that may interfere at anytime with the transfer of unencumbered ownership and title of the VESSEL by the BUILDER to the BUYER.
All sub-contractors howsoever employed or engaged are hereby declared and agreed to be sub-contractors employed or engaged by the BUILDER and the BUILDER agrees that it is and shall remain fully responsible for and liable in respect of any sub-contractors and/or their acts or omissions and, without prejudice to the generality of the foregoing, the BUILDER shall ensure control over supervision and scheduling of the all work done by any subcontractor.
The BUILDER hereby agrees that if any of its employees, servants or agents or those of the sub-contractors appointed pursuant to this CONTRACT shall, in the reasonable opinion of the
6
BUYER, not be carrying out properly their duties and responsibilities under or pursuant to the terms of this CONTRACT, the BUYER shall be entitled (by giving written notice to the BUILDER) to draw the same to the attention of the BUILDER and, if the BUYER considers it necessary, to request the BUILDER to replace such person(s) if the same are its own employees, servants or agents, or to use its best endeavours to replace such person(s) if the same are the employees, servants or agents of a sub-contractor. The BUILDER shall investigate any such request, and, if found justified, take appropriate action. Any such replacement shall be within such a time scale so as to ensure that the BUILDER continues to carry out all of its duties and obligations under or pursuant to this CONTRACT.
The BUYER’s inspection and final assembly of any subcontracted work shall be at the BUILDER’s SHIPYARD. The BUILDER will arrange for the BUYER to execute pre-production inspection of sub-contractors premises by providing reasonable advanced notice to inspect the facility. The BUYER retains the right to inspect vetting records by BUILDER’s Quality Control Department confirming compliance with the BUILDER’s quality standards.
The BUYER’s rights hereunder shall not in any way be reduced in respect of such sub-contracted work and the BUYER shall not bear any additional costs in respect of such sub-contracted work.
5.
NATIONALITY
OF THE VESSEL
The VESSEL shall be registered by the BUYER at its own cost and expense under the laws of Marshall Islands
with
its home port
at
the time of its delivery and acceptance hereunder.
(End of Article)
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ARTICLE II:
CONTRACT PRICE
The contract price of the VESSEL delivered to the BUYER at the SHIPYARD shall be United States Dollars Ninety Five Million Three Hundred Thousand (US$ 95,300,000.-) (hereinafter called the “CONTRACT PRICE”) which shall be paid plus any increases or less any decreases due to adjustment or modification, if any, as set forth in this CONTRACT. Subject to the above, the CONTRACT PRICE is fixed and is not subject to any fluctuations in or on account of wages, costs of equipment or materials or currencies or otherwise. The above CONTRACT PRICE shall include payment for services in the inspection, test, survey and classification of the VESSEL which will be rendered by the CLASSIFICATION SOCIETY and shall not include the cost of the BUYER’s supplies as stipulated in Article XII.
The CONTRACT PRICE also includes all costs and expenses for supplying all necessary drawings as stipulated in the SPECIFICATIONS except those to be furnished by the BUYER for the VESSEL in accordance with the SPECIFICATIONS. All other costs and expenses of the BUILDER as provided in the CONTRACT or the SPECIFICATIONS or otherwise incurred by the BUILDER are for the account of the BUILDER unless expressly specified as being for the account of the BUYER in the CONTRACT or otherwise in writing.
The BUILDER shall, however undertake to install in the VESSEL all of such BUYER’s supplies in accordance with the SPECIFICATIONS without extra cost to the BUYER, but the BUYER shall pay all charges and expenses, including, but not limited to, the customs clearance fee, for transporting such BUYER’s supplied articles to the SHIPYARD.
(End of Article)
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ARTICLE III:
ADJUSTMENT OF THE CONTRACT PRICE
The CONTRACT PRICE of the VESSEL shall be adjusted as hereinafter set forth in the event of the following contingencies. It is hereby understood by both parties that any adjustment of the CONTRACT PRICE as provided for in this Article is by way of liquidated damages and not by way of penalty.
1.
DELAYED DELIVERY
(a)
No adjustment shall be made and the CONTRACT PRICE shall remain unchanged for the first thirty (30) days of the delay in delivery of the VESSEL [ending as of 12 o’clock midnight Korean Standard Time on the thirtieth (30th) day of delay] beyond the Delivery Date calculated as provided in Article VII.1. hereof.
(b)
If delivery of the VESSEL is delayed more than thirty (30) days beyond the date upon which the delivery is due from the BUILDER under the terms of this CONTRACT, then, beginning at midnight of the thirtieth (30th) day after such due date, the CONTRACT PRICE of the VESSEL shall be reduced by U.S. Dollars Twenty Three Thousand (US$ 23,000) for each full day of delay.
However, unless the parties agree otherwise, the total amount of deduction from the CONTRACT PRICE shall not exceed the amount due to cover the delay of one hundred and Eighty (180) days after thirty (30) days of the delay in delivery of the VESSEL at the rate of deduction as specified hereinabove.
(c)
But, if the delay in delivery of the VESSEL continues for a period of more than two hundred and ten (210) days beyond the date upon which the delivery is due from the BUILDER under the terms of this CONTRACT then, in such event, and after such period has expired, the BUYER may, at its option, cancel this CONTRACT by serving upon the BUILDER a notice of cancellation by e-mail or facsimile to be confirmed by a registered letter via airmail directed to the BUILDER at the address given in this CONTRACT. Such cancellation shall be effective as of the date the notice thereof is received by the BUILDER. If the BUYER has not served the notice of cancellation after the aforementioned two hundred and ten (210) days delay in delivery, the BUILDER may demand the BUYER to make an election in accordance with Article VIII.3 hereof.
(d)
For the purpose of this Article, the delivery of the VESSEL shall be deemed to be delayed when and if the VESSEL, after taking into full account extension of the Delivery Date or permissible delays as provided in ArticlesV.1 and V.3, VI.2, VIII, XI.1, XII.1 and XIII.7, is delivered beyond or before the date upon which delivery would then be due under the terms of this CONTRACT.
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2.
INSUFFICIENT SPEED
(a)
The CONTRACT PRICE of the VESSEL shall not be affected or changed, if the actual speed, as determined by trial runs more fully described in Article VI hereof, is less than the guaranteed speed as defined in Article I paragraph 2 hereof, provided such deficiency in actual speed is not more than three tenths (3/10) of a knot below the guaranteed speed.
(b)
However, as for the deficiency of more than three tenths (3/10) of a knot in actual speed below the guaranteed speed, the CONTRACT PRICE shall be reduced by U.S. Dollars Eighty Thousand (US$80,000) for each full one-tenth (1/10) of a knot in excess of the said three tenths (3/10) of a knot of deficiency in speed (fractions of less than one-tenth (1/10) of a knot shall be regarded as a full one-tenth (1/10) of a knot). However, unless the parties agree otherwise, the total amount of reduction from the CONTRACT PRICE shall not exceed the amount due to cover the deficiency of one (1) full knot below the guaranteed speed at the rate of reduction as specified above.
(c)
If the deficiency in actual speed of the VESSEL is more than one (1) full knot below the guaranteed speed, then the BUYER, at its option, may, subject to the BUILDER’s right to effect alterations or corrections as provided in Article VI.5. hereof, cancel this CONTRACT or may accept the VESSEL at a reduction in the CONTRACT PRICE as above provided for one (1) full knot of deficiency only.
3.
EXCESSIVE FUEL CONSUMPTION
(a)
The CONTRACT PRICE of the VESSEL shall not be affected or changed by reason of the fuel consumption of the VESSEL’s main engine, as determined by the engine manufacturer’s shop trial as per the SPECIFICATIONS being more than the guaranteed fuel consumption of the VESSEL’s main engine as defined in Article I paragraph 2 hereof, if such excess is not more than five per cent (5%) over the guaranteed fuel consumption.
BUYER’s Representatives will be provided fourteen (14) days notice of engine trials in order to be present during aforementioned trials.
(b)
However, as for the excess of more than five percent (5%) in the actual fuel consumption over the guaranteed fuel consumption of the VESSEL’s main engine, the CONTRACT PRICE shall be reduced by U.S. Dollars Eighty Thousand (US$80,000) for each full one per cent (1%) increase in fuel consumption in excess of the said five per cent (5%) increase in fuel consumption (fraction of less than one per cent (1%) shall be regarded as a full one percent (1%)). However, unless the parties agree otherwise, the total amount of reduction from the CONTRACT PRICE shall not exceed the amount due to cover the excess of ten percent (10%) over the guaranteed fuel consumption of the VESSEL’s main
10
engine at the rate of reduction as specified above.
(c)
If such actual fuel consumption exceeds the guaranteed fuel consumption of the VESSEL’s main engine by more than ten percent (10%), the BUYER, at its option, may, subject to the BUILDER’s right to effect alterations or corrections as specified in Article VI. 5. hereof, cancel this CONTRACT or may accept the VESSEL at a reduction in the CONTRACT PRICE as above provided for the ten percent (10%) increase only.
4.
DEADWEIGHT BELOW CONTRACT REQUIREMENTS
(a)
The CONTRACT PRICE of the VESSEL shall not be affected or changed, if the actual deadweight determined as provided in this CONTRACT and the SPECIFICATIONS, is below the guaranteed deadweight as defined in Article I paragraph 2 hereof by one point five percent (1.5%) of the guaranteed deadweight or less.
(b)
However, should the deficiency in the actual deadweight of the VESSEL be more than XXXX of the guaranteed deadweight (disregarding fractions of less than one (1) metric ton), the CONTRACT PRICE shall be reduced by the sum of U.S. Dollars Seven Hundred (US$700) for each one (1) metric deficiency (disregarding fractions of less than one (1) metric ton) in excess of the said one point five percent (1.5%) of deficiency.
(c)
In the event of such deficiency in the deadweight of the VESSEL being more than three percent (3%) of the guaranteed deadweight, the BUYER, at its option, may, subject to the BUILDER’s right to effect alterations or corrections as specified in Article VI. 5. hereof, cancel this CONTRACT or accept the VESSEL at a reduction in the CONTRACT PRICE as above provided for three percent (3%) only.
5.
EFFECT OF CANCELLATION
(a)
The liquidated damages payable according to the provisions of each Paragraph under this ARTICLE are cumulative and not exclusive.
(b)
It is expressly understood and agreed by the parties hereto that in any case, if the BUYER cancels this CONTRACT under this Article, the BUYER, save for its rights and remedies set out in Article X.5 hereof, shall not be entitled to any liquidated damages.
(End of Article)
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ARTICLE IV:
INSPECTION AND APPROVAL
1.
APPOINTMENT OF BUYER’S REPRESENTATIVE
The BUYER shall timely dispatch to and maintain at the SHIPYARD, at its own cost, expense and risk, one or more representatives (hereinafter called the “BUYER’S REPRESENTATIVE”), who shall be duly accredited in writing by the BUYER to supervise adequately the construction by the BUILDER of the VESSEL, her equipment and all accessories. Before the commencement of any item of work under this CONTRACT, the BUILDER shall, whenever reasonably required, previously exhibit, furnish to, and within the limits of the BUYER’S REPRESENTATIVE’s authority, secure the approval from the BUYER’S REPRESENTATIVE of any and all plans and drawings prepared in connection therewith. Upon appointment of the BUYER’S REPRESENTATIVE, the BUYER shall notify the BUILDER in writing of the name and the scope of the authority of the BUYER’S REPRESENTATIVE.
The BUYER shall have the right to replace or substitute any of its representatives upon prior notice to the BUILDER. One individual BUYER’S REPRESENTATIVE shall be nominated by the BUYER in writing from time to time as having authority to bind the BUYER on certain matters as provided in this Article and that nominated BUYER’S REPRESENTATIVE shall alone be so authorized in respect of such matters and no other BUYER’S REPRESENTATIVE shall be authorized to so bind the BUYER in respect of such matters.
However, in any case, the BUYER shall not appoint any employees of the BUILDER or the persons who had been employed by the BUILDER within one (1) year before the BUYER’s appointment of such ex-employee of the BUILDER as the BUYER’S REPRESENTATIVE or his assistants or employees of the BUYER without the BUILDER’s prior written consent.
2.
AUTHORITY OF THE BUYER’S REPRESENTATIVE
According to the BUYER’s written authorization, such BUYER’S REPRESENTATIVE shall, at all times during working hours of the construction until delivery of the VESSEL, have the right to inspect the VESSEL, her equipment and all accessories, and work in progress, or materials utilized in connection with the construction of the VESSEL, wherever such work is being done or such materials are stored, for the purpose of determining that the VESSEL, her equipment and accessories are being constructed in accordance with the terms of this CONTRACT and/or the SPECIFICATIONS and the PLAN.
The BUILDER will endeavor to arrange for the inspection by the BUYER’S REPRESENTATIVE during working hours of the BUILDER. However, such inspection may be arranged beyond the BUILDER’s normal working hours, including weekend and/or holiday if this is considered necessary by the BUILDER in order to meet the BUILDER’s construction
12
schedule, on the condition that the BUILDER will inform the BUYER’S REPRESENTATIVE at least Two (2) working days in advance of such inspection.
The BUYER’S REPRESENTATIVE shall, within the limits of the authority conferred upon him by the BUYER, make decisions or give advice to the BUILDER on behalf of the BUYER within reasonable time on all problems arising out of, or in connection with, the construction of the VESSEL and generally act in a reasonable manner with a view to cooperating to the utmost with the BUILDER in the construction process of the VESSEL.
The decision, approval or advice of the BUYER’S REPRESENTATIVE shall be deemed to have been given by the BUYER and once given shall not be withdrawn, revoked or modified except with consent of the BUILDER.
Provided that the BUYER’S REPRESENTATIVE or his assistants shall comply with the foregoing obligations, no act or omission of the BUYER’S REPRESENTATIVE or his assistants shall, in any way, diminish the liability of the BUILDER under Article IX (WARRANTY OF QUALITY). The BUYER’S REPRESENTATIVE shall notify the BUILDER within reasonable time in writing of his discovery of any construction or materials, which he believes do not or will not conform to the requirements of the CONTRACT and the SPECIFICATIONS or the PLAN and likewise advise and consult with the BUILDER on all matters pertaining to the construction of the VESSEL, as may be required by the BUILDER, or as he may deem necessary.
However, if the BUYER’S REPRESENTATIVE fails to submit to the BUILDER, within one (1) working day after any inspections or tests, or in the case of major inspection or test items, within two (2) working days, any such demand concerning alterations or changes with respect to the construction, arrangement or outfit of the VESSEL, which the BUYER’S REPRESENTATIVE has examined, inspected or attended at the test thereof under this CONTRACT or the SPECIFICATIONS, the BUYER’S REPRESENTATIVE shall be deemed to have approved the same and shall be precluded from making any demand for alterations, changes, or complaints with respect thereto at a later date. Such major inspection or test items shall be decided and agreed by the parties to this CONTRACT at the time of the BUYER’s approval of an inspection and test plan submitted by the BUILDER upon the BUYER’S REPRESENTATIVE’s work commencement or opening up of his office at the SHIPYARD, whichever is the earlier.
The BUILDER shall comply with any such demand which is not contradictory to this CONTRACT and the SPECIFICATIONS or the PLAN, provided that any and all such demands by the BUYER’S REPRESENTATIVE with regard to construction, arrangement and outfit of the VESSEL shall be submitted in writing to the authorized representative of the BUILDER. The BUILDER shall notify the BUYER’S REPRESENTATIVE of the names of
13
the persons who are from time to time authorized by the BUILDER for this purpose.
It is agreed upon between the BUYER and the BUILDER that the modifications, alterations or changes and other measures necessary to comply with such demand may be effected at a convenient time and place at the BUILDER’s reasonable discretion in view of the construction schedule of the VESSEL.
In the event that the BUYER’S REPRESENTATIVE shall advise the BUILDER that he has discovered or believes the construction or materials do not or will not conform to the requirements of this CONTRACT and the SPECIFICATIONS or the PLAN, and the BUILDER shall not agree with the views of the BUYER’S REPRESENTATIVE in such respect, either the BUYER or the BUILDER may, with the agreement of the other party, seek an opinion of the CLASSIFICATION SOCIETY or failing such agreement, request an arbitration in accordance with the provisions of Article XIII hereof. The CLASSIFICATION SOCIETY or the arbitration tribunal, as the case may be, shall determine whether or not a nonconformity with the provisions of this CONTRACT, the SPECIFICATIONS and the PLAN exists. If the CLASSIFICATION SOCIETY or the arbitration tribunal, as the case may be, enters a determination in favour of the BUYER, then in such case the BUILDER shall make the necessary alterations or changes, or if such alterations or changes cannot be made in time to meet the construction schedule for the VESSEL, the BUILDER may make a proposal for a fair and reasonable adjustment of the CONTRACT PRICE in lieu of such alterations and changes, such proposal to be subject to the mutual agreement of the BUILDER and BUYER. If the CLASSIFICATION SOCIETY or the arbitration tribunal, as the case may be, enters a determination in favour of the BUILDER, then the time for delivery of the VESSEL shall be extended for the period of delay in construction, if any, occasioned by such proceedings, and the BUYER shall compensate the BUILDER for the proven loss and damages incurred by the BUILDER as a result of the dispute herein referred to.
3.
APPROVAL OF DRAWINGS
All plans and drawings and instruction books to be in English.
(a)
The BUILDER shall submit to the BUYER three (3) copies of each of the plans and drawings to be submitted to the BUYER for its approval at its address as set forth in Article XVIII hereof. The BUYER shall, within twenty one (21) days including mailing time after receipt thereof, return to the BUILDER one (1) copy of such plans and drawings with the approval or comments, if any, of the BUYER. A list of the plans and drawings to be so submitted to the BUYER shall be mutually agreed upon between the parties hereto.
(b)
When and if the BUYER’S REPRESENTATIVE shall have been sent by the BUYER to the SHIPYARD in accordance with Paragraph 1 of this Article, the BUILDER may submit
14
the remainder, if any, of the plans and drawings in the agreed list, to the BUYER’S REPRESENTATIVE for his approval, unless otherwise agreed upon between the parties hereto.
The BUYER’S REPRESENTATIVE shall, within seven (7) days after receipt thereof, return to the BUILDER one (1) copy of such plans and drawing with his approval or comments written thereon, if any. Approval by the BUYER’S REPRESENTATIVE of the plans and drawings duly submitted to him shall be deemed to be the approval by the BUYER for all purposes of this CONTRACT.
(c)
In the event that the BUYER or the BUYER’S REPRESENTATIVE shall fail to return the plans and drawings to the BUILDER within the time limit as hereinabove provided, such plans and drawings shall be deemed to have been automatically approved without any comment. In the event the plans and drawings submitted by the BUILDER to the BUYER or the BUYER’S REPRESENTATIVE in accordance with this Article do not meet with the BUYER’s or the BUYER’S REPRESENTATIVE’s approval, the matter may be submitted by either party hereto for determination pursuant to Article XIII hereof. If the BUYER’s comments on the plans and drawings that are returned to the BUILDER by the BUYER within the said time limit are not clearly specified or detailed, the BUILDER shall seek clarification from the BUYER prior to implementing them which clarification must be provided in writing by the BUYER within five (5) days of such request from the BUILDER. If the BUYER shall fail to provide the BUILDER with such clarification within the said time limit, then the BUILDER shall be entitled to place its own interpretation on such comments in implementing them.
4.
SALARIES AND EXPENSES
All salaries and expenses of the BUYER’S REPRESENTATIVE or any other person or persons employed by the BUYER hereunder shall be for the BUYER’s account.
5.
RESPONSIBILITY OF THE BUILDER
(a)
The BUILDER shall provide the BUYER’S REPRESENTATIVE and his assistants free of charge with suitably furnished office space at, or in the immediate vicinity of, the SHIPYARD together with access to telephone, internet connection, printer/copier and facsimile facilities, air conditioning, toilets, and computer outlet to enable the BUYER’S REPRESENTATIVE and his assistants to carry out their work under this CONTRACT. However, the BUYER shall pay for the telephone high speed internet connection and facsimile facilities used by the BUYER’S REPRESENTATIVE or his assistants.
The BUILDER shall provide full assistance and advice how to obtain the necessary visas,
15
working permits and/or other document that may be necessary for the BUYER’S REPRESENTATIVE to enter and remain and work in Korea without delay provided that the BUYER’S REPRESENTATIVE meets the requirements and laws of Korea.
The BUILDER, its employees, agents and subcontractors, during its working hours until delivery of the VESSEL, shall arrange for them to have free and ready access to the VESSEL, her equipment and accessories, and to any other place (except the areas controlled for the purpose of national security) where work is being done, or materials are being processed or stored in connection with the construction of the VESSEL including the premises of sub-contractors.
The BUYER’S REPRESENTATIVE or his assistants or employees shall observe the work’s rules and regulations prevailing at the BUILDER’s and its sub-contractor’s premises. The BUILDER shall promptly provide to the BUYER’S REPRESENTATIVE and/or his assistants and shall ensure that its sub-contractors shall promptly provide all such information as he or they may reasonably request in connection with the construction of the VESSEL and her engines, equipment and machinery.
The BUILDER is responsible for ensuring at all times that a safe working environment and proper access is provided to the works and/or areas of inspection. Failure to provide proper, safe access at either the BUILDER or any appointed sub contractor may result in declining an inspection provided that justifiable grounds are presented to the BUILDER. Such time and impact to schedule are for the BUILDER’s account / responsibility.
(b)
The BUYER’S REPRESENTATIVE and his assistants shall at all times remain the employees of the BUYER, and not of the BUILDER. The BUILDER shall not be liable to the BUYER or the BUYER’S REPRESENTATIVE or to his assistants or to the BUYER’s employees or agents for personal injuries, including death, during the time they, or any of them, are on the VESSEL, or within the premises of either the BUILDER or its sub-contractors, or are otherwise engaged in and about the construction of the VESSEL, unless, however, such personal injuries, including death, are caused by the gross negligence or willful misconduct of the BUILDER, its sub-contractors, or its or their employees or agents. The BUILDER shall not be liable to the BUYER for damages to, or destruction of property of the BUYER or of the BUYER’S REPRESENTATIVE or his assistants or the BUYER’s employees or agents, unless such damages, loss or destruction is caused by the gross negligence or willful misconduct of the BUILDER, its sub-contractors, or its or their employees or agents.
6.
RESPONSIBILITY OF THE BUYER
The BUYER shall undertake and assure that the BUYER’S REPRESENTATIVE shall carry
16
out his duties hereunder in accordance with the normal shipbuilding practice and in such a way so as to avoid any unnecessary and unreasonable increase in building cost, delay in the construction of the VESSEL, and/or any disturbance in the construction schedule of the BUILDER.
The BUILDER has the right to request the BUYER to replace the BUYER’S REPRESENTATIVE who is deemed unsuitable and unsatisfactory for the proper progress of the VESSEL’s construction.
The BUYER shall investigate the situation by sending its representative (s) to the SHIPYARD, if necessary, and if the BUYER considers that such BUILDER’s request is justified, the BUYER shall effect such replacement as soon as conveniently arrangeable.
The BUILDER’s employees, agents, subcontractors and so forth shall at all times remain under the BUILDER’s responsibility. The BUYER shall not be liable to the BUILDER, or the BUILDER’s employees, agents, subcontractors and so forth for personal injuries, including death, during the time they, or any of them, are on the VESSEL, or within the premises of either the BUILDER or his subcontractors, or are otherwise engaged in and about the construction of the VESSEL, unless, however, such personal injuries, including death are caused by the gross negligence of the BUYER, its employees including the BUYER’S REPRESENTATIVE and his assistants or agents. The BUYER shall not be liable to the BUILDER, or the BUILDER’s employees, agents, subcontractors and so forth for damages to, or loss or destruction of property of the BUILDER, or the BUILDER’s employees, agent, subcontractors and so forth unless such damages, loss or destruction were caused by the gross negligence of the BUYER, or its employees or agents.
(End of Article)
17
ARTICLE V:
MODIFICATION, CHANGES AND EXTRAS
1.
HOW EFFECTED
Minor modifications or changes to the SPECIFICATIONS and the PLAN under which the VESSEL is to be constructed may be made at any time hereafter by written agreement of the parties hereto.
Any modification or change requested by the BUYER which does not affect the frame-work of the SPECIFICATIONS or the PLAN and also does not adversely affect the BUILDER’s planning or program in relation to the BUILDER’s other commitments which have been entered into at that time shall be agreed to by the BUILDER if the BUYER agrees to adjustment of the CONTRACT PRICE(if any), deadweight and/or cubic capacity, speed requirements, the Delivery Date and other terms and conditions of this CONTRACT reasonably required as a result of such modifications or change.
The BUILDER has the right to continue construction of the VESSEL on the basis of the SPECIFICATIONS and the PLAN until the BUYER
and BUILDER
has agreed to
the necessary
adjustments
to the Contract Price of the VESSEL, the time of delivery and any other alterations in this
CONTRACT
, or the
SPECIFICATIONS. The BUILDER shall be entitled to refuse to make any alteration, change or modification of the SPECIFICATIONS and/or the PLAN requested by the BUYER, if the BUYER and BUILDER do not agree to the aforesaid adjustments within seven (7) days of the BUILDER’s notification of its proposal for the same to the BUYER, or, if, in the BUILDER’s reasonable judgement, the compliance with such request of the BUYER would cause an unreasonable disruption of the normal working schedule of the SHIPYARD.
The BUILDER, however, agrees to exert its best efforts to accommodate such reasonable request by the BUYER so that the said change and modification shall be made at a reasonable cost and within the shortest period of time reasonably possible. The aforementioned agreement to modify and change the SPECIFICATIONS and the PLAN may be effected by exchange of letters, e-mail or facsimiles manifesting the agreement.
The letters, e-mail and facsimiles exchanged by the parties pursuant to the foregoing shall constitute an amendment to this CONTRACT and the SPECIFICATIONS or the PLAN under which the VESSEL shall be built. Upon consummation of such an agreement to modify and change the SPECIFICATIONS or the PLAN, the BUILDER shall alter the construction of the VESSEL in accordance therewith including any addition to, or deduction from, the work to be performed in connection with such construction.
18
2.
SUBSTITUTION OF MATERIAL
If any materials, machinery or equipment required for the construction of the VESSEL by the SPECIFICATIONS and the PLAN or otherwise under this CONTRACT cannot be procured in time to meet the BUILDER’s construction schedule for the VESSEL, or are in short supply provided that they have been timely ordered, or are unreasonably high in price compared with the prevailing international market price on the date of signing this CONTRACT provided that they have been timely ordered, the BUILDER may supply, subject to the BUYER’s prior approval in writing, other materials, machinery or equipment of equal quality and effect capable of meeting the requirements of the CLASSIFICATION SOCIETY and the rules, regulations and requirements with which the construction of the VESSEL must comply.
Furthermore, it is expressly agreed that should the BUILDER have to use any steel plate made in China they will only use steel plate produced by major Chinese steel mills used by Hyundai Heavy Industries Group. No Brazilian steel will be used for any of the structural parts of the VESSEL without the BUYER’s prior approval in its absolute discretion. All steel for the structural parts of the VESSEL to be provided in accordance with the CLASSIFICATION SOCIETY’s standards and approvals.
3.
CHANGES IN RULES AND REGULATIONS
If any requirements as to CLASSIFICATION SOCIETY or as to the specified rules and regulations with which the construction of the VESSEL is required to comply in Article I. 3. (a) are altered or changed by the CLASSIFICATION SOCIETY or other regulatory bodies authorized to make such alterations or changes, either the BUYER or the BUILDER, upon receipt of due notice thereof, shall forthwith give notice thereof to the other party in writing. Thereupon, within ten (10) working days after giving the notice to the BUILDER or receiving the notice from the BUILDER, the BUYER shall advise the BUILDER as to the alterations and changes, if any, to be made on the VESSEL which the BUYER, in its sole discretion, shall decide.
The BUILDER shall comply promptly with the said request of the BUYER, provided that the BUILDER and the BUYER shall first agree to:
(a)
any increase or decrease in the CONTRACT PRICE of the VESSEL that is occasioned by such compliance;
(b)
any extension or advancement in the Delivery Date of the VESSEL that is occasioned by such compliance;
19
(c)
any increase or decrease in the deadweight and/or cubic capacity of the VESSEL, if such compliance results in any increase or reduction in the deadweight and/or cubic capacity ;
(d)
adjustment of the guaranteed speed if such compliance results in any increase or reduction in the speed; and
(e)
any other alterations in the terms of this CONTRACT or of the SPECIFICATIONS or the PLAN or both, if such compliance makes such alterations of the terms necessary.
Any delay in the construction of the VESSEL caused by the BUYER’s delay in making a decision or agreement as above shall constitute a permissible delay under this CONTRACT. Such agreement by the BUYER shall be effected in the same manner as provided above for modification and change of the SPECIFICATIONS and the PLAN.
(End of Article)
20
ARTICLE VI:
TRIALS AND COMPLETION
GENERAL
The BUILDER shall carry out and run the tests and trials on the VESSEL in the manner and to the extent as described in the SPECIFICATIONS (and the trials schedule) and otherwise as may be required by the CLASSIFICATION SOCIETY.
1.
NOTICE
When the VESSEL is substantially complete and in a safe and fit state to proceed to sea, with all appropriate safety and lifesaving equipment onboard for the expected number of persons to be present, the BUILDER shall notify the BUYER in writing or by e-mail or facsimile at least fourteen (14) days in advance of the time and place of the trial run of the VESSEL. Such notice shall specify the Korean port from which the VESSEL will commence her trial run and approximate date upon which the trial run is expected to take place. Such date shall be further confirmed by the BUILDER five (5) days in advance of the trial run by e-mail or facsimile.
The BUYER’S REPRESENTATIVE(s), who is/are to witness the performance of the VESSEL during such trial run, shall be present at such place on the date specified in such notice. Should the BUYER’S REPRESENTATIVE(s) fail to be present after the BUILDER’s due notice to the BUYER as provided above, the BUILDER shall be entitled to conduct such trial run with the presence of the representative(s) of the CLASSIFICATION SOCIETY only without the BUYER’S REPRESENTATIVE(s) being present. In such case, the BUYER shall be obliged to accept the VESSEL on the basis of a certificate issued by the BUILDER that the VESSEL, after the trial run, subject to alterations and corrections, if necessary, has been found to conform with the SPECIFICATIONS and this CONTRACT and is satisfactory in all respects, provided the BUILDER first makes such corrections and alterations promptly.
2.
WEATHER CONDITION
In the event of unfavourable weather on the date specified for the trial run, the trial run shall take place on the first available day that weather conditions permit. The parties hereto recognize that the weather conditions in Korean waters, in which the trial run is to take place, are such that great changes in weather may arise momentarily and without warning and therefore, it is agreed that if, during the trial run, the weather should become so unfavourable that the trial run cannot be continued, then the trial run shall be discontinued and postponed until the first favourable day next following, unless the BUYER shall assent to the acceptance of the VESSEL by notification in writing on the basis of such trial run so far made prior to such change in weather conditions. Any delay of the trial run caused by such unfavourable weather conditions shall also operate to extend the Delivery Date of the VESSEL for the
21
period of delay occasioned by such unfavourable weather conditions. For the purposes of this paragraph 2, unfavourable weather conditions shall be taken as Beaufort Scale Force 6 and above.
3.
HOW CONDUCTED
All expenses in connection with the trials of the VESSEL are to be for the account of the BUILDER, which, during the trials, is to provide at its own expense the necessary crew to comply with conditions of safe navigation. The trials shall be conducted in the manner prescribed in this CONTRACT and the SPECIFICATIONS, and shall prove fulfillment of the performance requirements for the trials as set forth in the SPECIFICATIONS.
The BUILDER shall be entitled to conduct preliminary sea trials, during which the propulsion plant and/or its appurtenance shall be adjusted according to the BUILDER’s judgement. The BUILDER shall have the right to repeat any trial whatsoever as it deems necessary.
4.
CONSUMABLE STORES
The BUILDER shall load the VESSEL with the required quantity of fuel oil, lubricating oil and greases, fresh water, and other stores necessary to conduct the trials as set forth in the SPECIFICATIONS. The necessary ballast (fuel oil, fresh water and such other ballast as may be required) to bring the VESSEL to the trial load draft, as specified in the SPECIFICATIONS, shall be supplied and paid for by the BUILDER whilst lubricating oil and greases shall be supplied and paid for by the BUYER within the time advised by the BUILDER for the conduct of sea trials as well as for use before the delivery of the VESSEL to the BUYER. The fuel oil as well as lubricating oil and greases shall be in accordance with the engine specifications and the BUYER shall decide and advise the BUILDER of the supplier’s name for lubricating oil and greases prior to the steel cutting of the VESSEL, provided that the supplier shall be acceptable to the BUILDER and/or the makers of all the machinery.
Any fuel oil, fresh water or other consumable stores furnished and paid for by the BUILDER for trial runs remaining on board the VESSEL, at the time of acceptance of the VESSEL by the BUYER, shall be bought by the BUYER from the BUILDER at the BUILDER’s purchase price for such supply in Korea (with supporting invoices and documents provided) and payment by the BUYER thereof shall be made at the time of delivery of the VESSEL. The BUILDER shall pay the BUYER at the time of delivery of the VESSEL for the consumed quantity of lubricating oil and greases which were furnished and paid for by the BUYER at the BUYER’s purchase price thereof (with supporting invoices and documents provided).
The consumed quantity of lubricating oils and greases shall be calculated on the basis of the difference between the remaining amount, including the same remaining in the main engine, other machinery and their pipes, stern tube and the like, and the supplied amount.
22
5.
ACCEPTANCE OR REJECTION
(a)
Upon completion of sea trial, the BUILDER shall give the BUYER a notice in writing or by e-mail or telefax of the result of the sea trial, as and if the BUILDER considers that the result of sea trial indicates conformity of the VESSEL to this CONTRACT and the SPECIFICATIONS and PLAN.
(b)
The BUYER shall within four (4) working days after receipt of such notice notify the BUILDER in writing or by e-mail or telefax of its acceptance or rejection of the VESSEL, provided that in case of rejecting the VESSEL, the BUYER shall set out in its notice of rejection a detailed, clear explanation of all and any aspects of the VESSEL which it considers do not comply with this CONTRACT, the SPECIFICAITONS and/or the PLAN.
(c)
If the BUILDER is in agreement with the BUYER’s determinations as to non-conformity, the BUILDER shall make such alterations or changes as may be necessary to correct such non-conformity and shall prove the fulfillment of the CONTRACT and SPECIFICATIONS by such tests or trials as may be necessary. If the BUILDER is not in agreement with the BUYER’s determination as to non-conformity, each party shall be entitled to refer the disagreement for determination as per Article XIII.
(d)
The BUYER shall not be entitled to reject the VESSEL by reason of any minor or insubstantial items which do not in any way affect the safety or the operation of the Vessel judged from the point of view of the BUILDER’s shipbuilding practice for Crude Oil Carrier, as the BUILDER has been performing for its other clients and HSQS (Hyundai Samho Shipbuilding Quality Standard) as not being in conformity with the SPECIFICATIONS, but, in that case, the BUILDER shall not be released from the obligation to correct and/or remedy for its own account such minor or insubstantial items as soon as practicable after the delivery of the VESSEL. If inconvenient for the VESSEL to have such items corrected and/or remedied at the SHIPYARD, the BUILDER shall arrange to have such corrections or remedies carried out elsewhere, and may, if practicable, do such work while the VESSEL is sailing. The BUYER may in its absolute discretion accept a payment in lieu of such items being corrected and/or remedied. Any payment in lieu shall be agreed in writing between the BUILDER and the BUYER.
(e)
If during any sea trial any breakdowns occur entailing interruption or irregular performance which can be repaired on board, the sea trial shall be continued after such repairs and be valid in all respects. However, if during the sea trial it becomes apparent that the VESSEL or any part of her equipment requires alterations or correction, the BUILDER shall notify the BUYER promptly in writing or by e-mail or telefax to such effect and shall simultaneously advise the BUYER of the estimated additional time
23
required for the necessary alterations or corrections to be made. The BUYER shall, within five (5) days of receipt from the BUILDER of notice of completion of such alterations or corrections and after such further trials or tests as necessary, notify the BUILDER in writing or by e-mail or telefax of its acceptance or rejection of the VESSEL, all in accordance with the SPECIFICATIONS, PLAN and the CONTRACT, and shall not be entitled to reject the VESSEL on such grounds until such time.
(End of Article)
24
ARTICLE VII:
DELIVERY
1.
TIME AND PLACE
The VESSEL shall be delivered by the BUILDER to the BUYER at the SHIPYARD, safely afloat at a quay on or before October 20, 2016 (hereinafter called the “DELIVERY DATE”) after completion of satisfactory trials and acceptance by the BUYER in accordance with the terms of Article VI, except that, in the event of delays in delivery of the VESSEL by the BUILDER due to causes which under the terms of this CONTRACT permit extensions of the time for delivery of the VESSEL, the aforementioned DELIVERY DATE shall be extended accordingly.
The BUILDER shall provide the BUYER in writing by e-mail or telefax thirty (30) days approximate notice of readiness and fourteen (14), seven (7) and three (3) days definite notice of readiness for delivery of the VESSEL.
2.
WHEN AND HOW EFFECTED
Provided that the BUYER shall concurrently with delivery of the VESSEL release to the BUILDER the fifth instalment as set forth in Article X.2.hereofand shall have fulfilled all of its obligations provided for in this CONTRACT (as it may have been amended from time to time) prior to the delivery of the VESSEL, delivery of the VESSEL shall be forthwith effected upon acceptance thereof by the BUYER, as hereinabove provided, by the concurrent delivery by each of the parties hereto to the other of a PROTOCOL OF DELIVERY AND ACCEPTANCE acknowledging delivery of the VESSEL by the BUILDER and acceptance thereof by the BUYER, which PROTOCOL shall be prepared induplicate and signed by each of the parties hereto.
3.
DOCUMENTS TO BE DELIVERED TO THE BUYER
Upon delivery and acceptance of the VESSEL, the BUILDER shall deliver to the BUYER the following documents, which shall accompany the aforementioned PROTOCOL OF DELIVERY AND ACCEPTANCE:
(a)
PROTOCOL OF TRIALS of the VESSEL made pursuant to this CONTRACT and the SPECIFICATIONS,
(b)
PROTOCOL OF INVENTORY of the equipment of the VESSEL, including spare parts, all as specified in the SPECIFICATIONS,
25
(c)
PROTOCOL OF STORES OF CONSUMABLE NATURE, such as all fuel oil and fresh water remaining in tanks if its cost is charged to the BUYER under Article VI. 4. hereof,
(d)
FINISHED DRAWINGS AND PLANS pertaining to the VESSEL as stipulated in the SPECIFICATIONS, which shall be furnished to the BUYER at no additional cost,
(e)
ALL CERTIFICATES required to be furnished upon delivery of the VESSEL pursuant to this CONTRACT, the SPECIFICATIONS and the customary shipbuilding practice, including
|
(i)
|
Classification Certificate
|
|
(ii)
|
Safety Construction Certificate
|
|
(iii)
|
Safety Equipment Certificate
|
|
(iv)
|
Safety Radiotelegraphy Certificate
|
|
(v)
|
International Loadline Certificate
|
|
(vi)
|
International Tonnage Certificate
|
|
(vii)
|
BUILDER’s Certificate
(duly notarized and legalized)
|
|
(viii)
|
Ship Sanitation Control Exemption Certificate
|
|
(ix)
|
Classification Certificate for anchor, chains and mooring ropes, machinery and equipment
|
|
(x)
|
Certificate for life-boats and life saving equipments
|
|
(xi)
|
Certificates for navigation lights and special signal lights
|
|
(xii)
|
International Oil Pollution Prevention Certificate
|
|
(xiii)
|
Compass adjustment Certificate
|
|
(xiv)
|
Suez Canal Tonnage Certificate
|
|
(xv)
|
Deadweight Certificate
|
|
(xvi)
|
Certificate for Provision Crane, Hose Handling Crane and Engine Room Crane
|
|
(xvii)
|
International Air Pollution Prevention Certificate
|
|
(xviii)
|
Coating Technical File
|
|
(xix)
|
International Sewage Pollution Certificate
|
|
(xx)
|
Class approved Loading Manual
|
|
(xxi)
|
Certified Cargo oil tanks calibration
|
|
(xxii)
|
Ballast Management Certificate
|
|
(xxiii)
|
Emergency Towing System
|
|
(xxiv)
|
Engine Technical File (NOx)
|
|
(xxv)
|
Load Test certificates for all designated lifting lugs / points installed (more than 3.0 ton S.W.L) (issued by the BUILDER)
|
The above list of Certificates and Documents is indicative and may possibly not include all the Required Certificates and Documents for the VESSEL as she is specified in her CLASSIFICATION notation to conduct unrestricted trade. However it is agreed that all
26
the required CLASSIFICATION SOCIETY and Statutory Certificates and Documents should be furnished by the BUILDER to the BUYER.
All certificates or relevant documents which are to be duly notarized and legalized shall be agreed between the parties prior to delivery. All certificates to be delivered in one (1) original and two (2) copies to the BUYER.
If any Certificate, Drawing, Plan, Diagram or other documents referred to in this Article, through no fault on the part of BUILDER, cannot be provided upon delivery and if the absence thereof does not impede the navigation or management of the VESSEL and/or constitute a breach of the statutory requirements of the flag state, of the VESSEL or the requirements of the CLASSIFICATION SOCIETY, a provisional/interim certificate shall be acceptable by the BUYER provided the formal Certificate, Drawing, Plan, Diagram or other document be delivered as soon as practicable after delivery of the VESSEL.
(f)
DECLARATION OF WARRANTY of the BUILDER that the VESSEL is delivered to the BUYER free and clear of any liens, claims, mortgages, or other encumbrances upon the BUYER’s title thereto, and in particular, that the VESSEL is absolutely free of all burdens in the nature of imposts, taxes, or charges imposed by the prefecture or country of the port of delivery, as well as of all liabilities of the BUILDER to its sub-contractors and employees and of all liabilities arising from the operation of the VESSEL in trial runs, or otherwise, prior to delivery except as otherwise provided under this CONTRACT.
(g)
COMMERCIAL INVOICE made by the BUILDER.
(h)
BILL OF SALE made by the BUILDER.
4.
TENDER OF THE VESSEL
If the BUYER fails to take delivery of the VESSEL after completion thereof according to this CONTRACT and the SPECIFICATIONS, the BUILDER shall have the right to tender delivery of the VESSEL after compliance with all procedural requirements as provided above.
5.
TITLE AND RISK
Title to and risk of the VESSEL and her equipment (but excluding the BUYER’s supplies) shall pass to the BUYER upon Delivery and Acceptance of the VESSEL being effected as stated above and the BUILDER shall be free of all responsibility or liability whatsoever related with this CONTRACT except for the warranty of quality contained in Article IX and the obligation to correct and/or remedy, as provided in Article VI. 5(d), if any. It is expressly understood between the parties hereto that, until such Delivery and Acceptance is effected, the
27
VESSEL and equipment thereof are at the entire risk of the BUILDER including but not confined to, risks of war, insurrection and seizure by Governments or Authorities, whether Korean or foreign, and whether at war or at peace. The title to the BUYER’s supplies as provided in Article XII shall remain with the BUYER and the BUILDER’s responsibility for such BUYER’s supplies shall be as described in Article XII.2.
6.
REMOVAL OF THE VESSEL
The BUYER shall take possession of the VESSEL immediately upon Delivery and Acceptance thereof and shall remove the VESSEL from the SHIPYARD within three (3) working days after Delivery and Acceptance thereof is effected.
From the delivery of the VESSEL until the actual removal thereof from the SHIPYARD, the BUYER shall be responsible for the safety and preservation of the VESSEL in all respects, including without limitation, keeping the VESSEL insured at his own cost, and furthermore, the BUYER shall indemnify and hold the BUILDER free and harmless against any liability or claims including without limitation, the claims of his insurers arising out of any accident whatsoever , unless caused by the gross negligence or willful misconduct of the BUILDER, his employee or agent.
Port dues and other charges levied by the Korean Government Authorities after Delivery and Acceptance of the VESSEL and any other costs related to the removal of the VESSEL shall be borne by the BUYER.
(End of Article)
28
ARTICLE VIII:
DELAYS AND EXTENSIONS OF TIME (FORCE MAJEURE)
1.
CAUSES OF DELAY
If, at any time after signing this CONTRACT, either the construction or delivery of the VESSEL or any performance required hereunder as a prerequisite to the delivery thereof is delayed by any of the following events: namely war, acts of state or government, blockade, revolution, insurrections, mobilization, civil commotion, riots, strikes, sabotage, lockouts, Acts of God or the public enemy, plague or other epidemics, quarantines, shortage or prolonged failure of electric current, freight embargoes, or defects in major forgings or castings, delays or defects in the BUYER’s supplies as stipulated in Article XII, if any, or shortage of materials, machinery or equipment or inability to obtain delivery or delays in delivery of materials, machinery or equipment, provided that at the time of ordering the same could reasonably be expected by the BUILDER to be delivered in time or defects in materials, machinery or equipment which could not have been detected by the BUILDER using reasonable care or earthquakes, tidal waves, typhoons, hurricanes, prolonged or unusually severe weather conditions or destruction of the premises or works of the BUILDER or its sub-contractors, or of the VESSEL, or any part thereof, by fire, landslides, flood, lightning, explosion, or delays in the BUILDER’s other commitments resulting from any such causes as described in this Article which in turn directly delay the construction of the VESSEL or the BUILDER’s performance under the CONTRACT (the BUILDER treating this CONTRACT not less favorably than other commitments), or delays caused by the CLASSIFICATION SOCIETY or the BUYER’s faulty action or omission, or other causes beyond the control of the BUILDER, or its sub-contractors, as the case may be, then in the event of delays due to the happening of any of the aforementioned contingencies, the DELIVERY DATE of the VESSEL under this CONTRACT shall be extended for a period of time which shall not exceed the total accumulated time of all such delays provided however that:
(i)
the delay in respect of which the BUILDER is claiming relief was beyond its reasonable control or that of its employees, suppliers and subcontractors and was not caused or contributed to by any error, neglect, act or omission of the BUILDER or of its agents, employees or subcontractors, nor by any breach of this CONTRACT;
(ii)
the delay impacts upon the Vessel’s construction schedule and completion;
(iii)
the BUILDER has shown due diligence in choice of sub-contractor; and
(iv)
the BUILDER has taken all reasonable steps to mitigate its effect upon the construction of the VESSEL,
29
For the avoidance of doubt, where two delay events as described in this paragraph 1(a) occur simultaneously or overlap with each other, such delays caused by such events shall not be double-counted.
2.
NOTICE OF DELAYS
Within seven (7) days after commencement of any delay on account of which the BUILDER claims that it is entitled under this CONTRACT to an extension of the DELIVERY DATE of the VESSEL, excluding delays due to arbitration, the BUILDER shall advise the BUYER in writing or by e-mail or facsimile of the date such delay commenced, the reasons thereof and, if possible, its estimated duration of the probable delay in the delivery of the VESSEL, and shall supply the BUYER if reasonably available with evidence to justify the delay claimed. Within seven (7) days after such cause of delay ends, the BUILDER shall likewise advise the BUYER in writing or by e-mail or facsimile of the date that such cause of delay ended, and also, shall specify the period of time by which the BUILDER claims the DELIVERY DATE should be extended by reason of such delay. Failure of the BUYER to object to the BUILDER’s notification of any claim for extension of the date for delivery of the VESSEL within seven (7) days after receipt by the BUYER of such notification shall be deemed to be a waiver by the BUYER of its right to object to such extension of the DELIVERY DATE.
Failure of the BUILDER to give notice of any relevant delay event in accordance with this paragraph 2 shall be deemed a waiver of the BUILDER’s right to postpone the DELIVERY DATE under this Article VIII in respect of such relevant delay event.
3.
RIGHT TO CANCEL FOR EXCESSIVE DELAY
If the total accumulated time of all permissible and non-permissible delays, excluding delays due to (i) arbitration under Article XIII.7, (ii) the BUYER’s defaults under Article XI.1 and XI.2., (iii) modifications and changes under Article V.1 and V.3 or (iv) delays or defects in the BUYER’s supplies as stipulated in Article XII.1, aggregates two hundred and sixty (260) days or more (inclusive of the thirty (30) days grace period as per Article III.1.(a)), then, the BUYER may, at any time thereafter, cancel this CONTRACT by giving a written notice of cancellation to the BUILDER. Such cancellation shall be effective as of the date the notice thereof is received by the BUILDER and the BUILDER, upon receipt of such notice, and upon the BUYER’s demand, shall refund in accordance with the provisions of Article X.5 hereof all payments made to the BUILDER by the BUYER.
If the BUYER has not served the notice of cancellation as provided in the above or Article III.1 hereof, the BUILDER may, at any time after expiration of the accumulated time of the delay in delivery, either two hundred and sixty (260) days in case of the delays referred to in this Paragraph 3 or two hundred and ten (210) days in case of the delay in Article III.1, notify
30
the BUYER of the future date upon which the BUILDER estimates the VESSEL will be ready for delivery and demand in writing or by e-mail or facsimile that the BUYER make an election either to cancel this CONTRACT or to consent to the delivery of the VESSEL at such future date, in which case the BUYER shall, within seven (7) business days after receipt of such demand, make and notify the BUILDER of such election. If the BUYER elects to consent to the delivery of the VESSEL at such future date (or other future date as the parties may agree):
(a)
Such future date shall become the contractual delivery date for the purposes of this CONTRACT and shall be subject to extension by reason of permissible delays as herein provided, and
(b)
If the VESSEL is not delivered by such revised contractual delivery date (as extended by reason of permissible delays), the BUYER shall have the same right of cancellation upon the same terms as provided in the above and Article III. 1.
If the BUYER shall not make an election within seven (7) business days as provided hereinabove, the BUYER shall be deemed to have accepted such extension of the DELIVERY DATE to the future delivery date indicated by the BUILDER.
4.
DEFINITION OF PERMISSIBLE DELAYS
Delays on account of the foregoing causes specified in Paragraph 1 above shall be understood to be permissible delays, and are to be distinguished from non-permissible unauthorized delays on account of which the CONTRACT PRICE of the VESSEL is subject to adjustment as provided in Article III hereof.
(End of Article)
31
ARTICLE IX:
WARRANTY OF QUALITY
1.
GUARANTEEOF MATERIAL AND WORKMANSHIP
Subject to the provisions hereinafter set forth, the BUILDER undertakes to remedy, free of charge to the BUYER, any defective design, construction, material and/or workmanship
and/or negligent or other improper acts or omissions
(hereinafter called the “DEFECT(S)”) on the part of the BUILDER and/or its sub-contractors, provided that the defect is discovered within a period of twelve (12) months after the date of delivery of the VESSEL and a notice thereof is duly given to the BUILDER as hereinafter provided.
For the purpose of this Article the VESSEL shall include her hull, machinery and equipment, painting and coatings thereof but shall exclude any parts for the VESSEL which have been supplied by or on behalf of the BUYER under Article XII.
The BUILDER agrees that upon the expiry of this guarantee it shall assign (to the extent to which it may validly do so and such supplier guarantee extends beyond
twelve (
12
)
months after the date of delivery of the VESSEL) to the BUYER, all rights, title and interest that the BUILDER may have in and to all guarantees or warranties given by the supplier of any of the appurtenances and materials used in the construction and/or operation of the VESSEL, unless such assignment is against Korean law.
2.
NOTICE OF DEFECTS
The BUYER shall notify the BUILDER in writing or by e-mail or facsimile, of any DEFECTS for which claim is made under this guarantee as promptly as possible after discovery thereof. The BUYER’s written notice shall include full particulars to describe the nature and extent of the DEFECTS. The BUILDER shall have no obligation for any DEFECTS discovered prior to the expiry date of the said twelve (12) months period, unless notice of such DEFECTS is received by the BUILDER no later than seven (7) business days after such expiry date.
3.
REMEDY OF DEFECTS
(a)
The BUILDER shall remedy, at its expense, any DEFECT against which the VESSEL or any part of the machinery or equipment thereof is guaranteed under this Article IX, by making all necessary repairs or replacements at the SHIPYARD or elsewhere as provided for in (b) hereinbelow.
(b)
However, if it is impractical to bring the VESSEL to the SHIPYARD, the BUYER may cause the necessary repairs or replacements to be made elsewhere which is deemed
32
suitable for the purpose, provided that, in such event, the BUILDER may forward or supply replacement parts or materials to the VESSEL, unless forwarding or supplying thereof to the VESSEL would impair or delay the operation or working schedule of the VESSEL. In the event that the BUYER proposes to cause the necessary repairs or replacements to be made to the VESSEL at any other shipyard or works than the SHIPYARD, the BUYER shall first, but in all events as soon as possible, give the BUILDER notice in writing or by e-mail or facsimile of the time and place such repairs will be made, and if the VESSEL is not thereby delayed, or her operation or working schedule is not thereby impaired, the BUILDER shall have the right to verify by its own representative(s) the nature and extent of the DEFECTS complained of. The BUILDER shall in such case, promptly advise the BUYER in writing or by e-mail or facsimile, after such examination has been completed, of its acceptance or rejection of the DEFECTS as ones that are covered by the guarantee herein provided. Upon the BUILDER’s acceptance of the DEFECTS as justifying remedy under this Article IX, or upon the award of the arbitration tribunal so determining, or if the BUILDER neither accepts nor rejects the defects nor requests arbitration within sixty (60) days after its receipt of the BUYER’s notice of defects, the BUILDER shall pay to the BUYER for such repairs or replacements a sum equal to the actual direct cost of the repairs or replacements, as evidenced in United States Dollars by the final invoices of the relevant shipyard/repairer or supplier, however, the amount of the BUILDER’s payment to the BUYER for such repairs or replacements shall not exceed the average cost quoted by two reputable repair yards in Singapore.
(c)
In any case, the VESSEL shall be taken at the BUYER’s costs and responsibility to the place elected, ready in all respects for such repairs or replacements and in any event, the BUILDER shall not be responsible for towage, dockage, wharfage, port charges or any other cost or expenses whatsoever incurred by the BUYER in getting and keeping the VESSEL ready for such repairs or replacements.
(d)
In the event that it is necessary for the BUILDER to forward a replacement for a defective part under this guarantee, replacement parts shall be shipped to the BUYER under the terms of C.I.F. port designated by the BUYER.
(e)
The BUILDER reserves the option to retrieve, at the BUILDER’s cost, any of the replaced equipment/parts in case DEFECTS are remedied in accordance with the provisions in this Article IX.
(f)
Any dispute under this Article IX shall be referred to arbitration in accordance with the provisions of Article XIII hereof.
(g)
In case any amount, which the BUILDER should pay to the BUYER for a single claim in accordance with this Article, is over US$100,000, then the BUILDER shall immediately
33
pay to the BUYER such amount.
4.
EXTENT OF BUILDER’S RESPONSIBILITY
(a)
After delivery of the VESSEL the BUILDER shall have no responsibility for any other DEFECTS whatsoever in the VESSEL than the DEFECTS specified in paragraph 1 of this Article IX and Article VI. 5(d). The BUILDER shall have no liability whatsoever in any circumstances whatsoever to the BUYER or to any third party for anything except the cost of repairing the DEFECT itself. The BUILDER shall not in any circumstances be responsible or liable for any consequential or special losses, damages or expenses including, but not limited to, loss of time, loss of profit or earning or demurrage directly or indirectly occasioned to the BUYER or any third party by reason of the DEFECTS specified in paragraph 1 of this Article or due to repairs or other works done to the VESSEL to remedy such DEFECTS or any other consequential or special losses, damages or expenses related to any liability, cost or expense whatsoever or howsoever arising in connection with any damage to the VESSEL or to any cargo or to any other property owned by the BUYER or any third party caused as a result of the DEFECT and after delivery the BUYER shall hold the BUILDER harmless and indemnify the BUILDER against any such claim from the BUYER or any third party whatsoever in respect of any such matters and in respect of any other claims relating to the VESSEL for which the BUILDER does not expressly give an warranty to the BUYER under this Article.
(b)
The BUILDER shall not be responsible for any DEFECTS in any part of the VESSEL which may subsequent to delivery of the VESSEL have been replaced or in any way repaired by any persons other than the BUILDER and/or its nominated sub-contractors, or for any DEFECTS which have been caused or aggravated by omission or improper use and maintenance of the VESSEL on the part of the BUYER, its servants or agents or by ordinary wear and tear or by any other circumstances beyond the control of the BUILDER.
(c)
The guarantee contained as hereinabove in this Article replaces and excludes any other liability, guarantee, warranty and/or condition whether expressly set out in this CONTRACT or imposed or implied by the law, customary, statutory or otherwise, by reason of the construction and sale of the VESSEL by the BUILDER for and to the BUYER.
Any major parts or materials (including painting or coating) replaced during the Guarantee Period under Paragraph 1 of this Article shall be guaranteed for a further twelve (12) months, but not more than eighteen (18) months from delivery of the VESSEL.
(End of Article)
34
ARTICLE X:
PAYMENT
1.
CURRENCY
All payments under this CONTRACT shall be made in United States Dollars.
2.
TERMS OF PAYMENT
The payments of the CONTRACT PRICE shall be made as follows.
(a)
First Instalment
Twenty percent (20%) of the CONTRACT PRICE amounting to U.S.Dollars Nineteen Million Sixty Thousand (US$ 19,060,000) shall be paid within three (3) business days after the BUYER’s receipt of the Letter of Guarantee via SWIFT, duly issued in accordance with Paragraph 8 of this Article, but in any event not earlier than 20
th
, December 2013.
Under this CONTRACT, in counting the business days, only Saturdays and Sundays are excepted. When a due date falls on a day when banks are not open for business in any of New York, London, Singapore or Seoul, such due date shall fall due upon the first business day next following.
(b)
Second Instalment
Ten per cent (10%) of the CONTRACT PRICE amounting to U.S.Dollars Nine Million Five Hundred Thirty Thousand (US$9,530,000) shall be paid on the date falling six (6) months from the date of signing this CONTRACT.
(c)
Third Instalment
Ten per cent (10%) of the CONTRACT PRICE amounting to U.S.Dollars Nine Million Five Hundred Thirty Thousand (US$9,530,000) shall be paid within three (3) business days of receipt by the BUYER of a facsimiled or emailed advice from the BUILDER that first steel cutting of the VESSEL has been commenced and confirmed in writing by the CLASSIFICATION SOCIETY. Such steel cutting to take place not more than twelve (12) months prior to the DELIVERY DATE.
(d)
Fourth Instalment
Ten per cent (10%) of the CONTRACT PRICE amounting to U.S.Dollars Nine Million Five Hundred Thirty Thousand (US$9,530,000) shall be paid within three (3) business
35
days of receipt by the BUYER of a facsimiled or emailed advice from the BUILDER that the first block of the keel has been laid and confirmed in writing by the CLASSIFICATION SOCIETY. Such keel laying to take place not more than eight (8) months prior to the DELIVERY DATE.
(e)
Fifth Instalment
Fifty
per cent (
50
%) of the CONTRACT PRICE amounting to U.S.Dollars
Forty Seven Million Six Hundred Fifty Thousand
(US$
47,650,000
) plus or minus any increase or decrease due to modifications and/or adjustment, if any, arising prior to delivery of the VESSEL of the CONTRACT PRICE under Articles III and V of this CONTRACT shall be paid to the BUILDER concurrently with the delivery and acceptance of the VESSEL, as evidenced by the execution by the parties of the Protocol of Delivery and Acceptance referred to in Article VII of the C
ONTRACT
. The BUILDER shall send to the BUYER a commercial invoice as demand for payment of this instalment.
(The date stipulated for payment of each of the five instalments mentioned above is hereinafter in this Article and in Article XI referred to as the “DUE DATE” of that instalment).
It is understood and agreed upon by the BUILDER and the BUYER that all payments under the provisions of this Article shall not be delayed or withheld by the BUYER due to any dispute or disagreement of whatsoever nature arising between the BUILDER and the BUYER. Should there be any dispute in this connection, the matter shall be dealt with in accordance with the provisions of arbitration in Article XIII hereof.
3.
DEMAND FOR PAYMENT
At least fourteen(14) days prior to the date of each event provided in Paragraph 2 of this Article X on which any payment shall fall due hereunder, with the exception of the payment of the first instalment, the BUILDER shall notify the BUYER by e-mail or facsimile of the date such payment shall become due.
The BUYER shall immediately acknowledge receipt of such notification by e-mail or facsimile to the BUILDER, and make payment as set forth in this Article. If the BUILDER fails to receive the BUYER’s said acknowledgement within three (3) days after sending the aforementioned notification, the BUILDER shall promptly e-mail or facsimile to the BUYER a second notification of similar import. The BUYER shall immediately acknowledge by e-mail or facsimile receipt of the foregoing second notification regardless of whether or not the first notification was acknowledged as aforesaid.
36
4.
METHOD OF PAYMENT
(a)
All the pre-delivery payments and the payment due on delivery in settlement of the CONTRACT PRICE as provided for in Paragraph 2 of this Article shall be made in U.S. Dollars on or before the DUE DATE thereof by telegraphic transfer as follows:
(i)
The payment of the first, second, third, and fourth instalments shall be made to the account of
Nong Hyup Bank of Korea, Head Office, Seoul, Korea (hereinafter called “NH Bank”), Account No. 001-1-544582 at JP Morgan Chase Bank,
1 Chase Manhattan Plaza 10th FL
,
New York, NY 10081, USA
(hereinafter called “JPMCB, N.Y.”) in favour of
Hyundai
Samho Heavy Industries Co., Ltd.
(hereinafter called the “
HSHI
”)
under advice by telefax or telex, including swift, to NH BANK by the remitting Bank. If the BUILDER should wish to nominate an alternative bank, the designation, the account number, identity of account holder and name of such account bank shall be notified by the BUILDER to the BUYER at least five (5) business days prior to the DUE DATE.
(ii)
Upon the cost adjustment to the C
ONTRACT PRICE
in accordance with the provisions of the C
ONTRACT
, the fifth
)
instalment as provided for in Paragraph 2.(e) of this Article shall be deposited at the account of NH BANK
, Account No. 001-1-544582 at JPMCB, N.Y., or any other bank, Seoul, Korea as designated by the BUILDER, by the BUYER in favour of HSHI
at least
three (3)
business days prior to the scheduled delivery date of the VESSEL notified by the BUILDER, with instructions valid for a period of twelve (12) business days that the
said instalment is
payable to the
HSHI
against presentation by the BUILDER to NH BANK
, or any other bank, Seoul, Korea as the case may be,
of a copy of the original PROTOCOL OF DELIVERY AND ACCEPTANCE of the VESSEL signed by the BUILDER and the BUYER, together with an invoice for the amount due under this instalment.
(iii)
If the BUILDER fails to present a copy of the PROTOCOL OF DELIVERY AND ACCEPTANCE to the Bank within the said period of twelve (12)
business
days or unless the validity of the instruction is further extended by the BUYER based on mutual agreement in writing reached with the BUILDER within the said twelve (12)
business
days validity period, the BUILDER’s bank shall remit the said amount of the fifth instalment to the BUYER’s bank account immediately upon expiry of the initial twelve (12)
business
days validity period of the instruction. Interest, if any, accrued by such deposit shall be for BUYER’s account.
In the event of the fifth instalment having been so returned by the Bank to the BUYER, the BUYER shall remit the fifth instalment again to the Bank as laid down in this paragraph upon receipt of a further notice from the Builder for readiness of
37
the Vessel for delivery.
(b)
Simultaneously with each of such payments, the BUYER shall advise the BUILDER of the details of the payments by e-mail or facsimile and at the same time, the BUYER shall cause the BUYER’s remitting Bank to advise NH BANK
, or any other bank, Seoul, Korea as the case may be,
of the details of such payments by authenticated SWIFT
,
bank cable or telex.
5.
REFUND
BY THE BUILDER
(a)
The payments made by the BUYER to the BUILDER prior to delivery of the VESSEL shall constitute advances to the BUILDER. If the VESSEL is rejected by the BUYER in accordance with the terms of this CONTRACT or, except in the case of rescission or cancellation of this CONTRACT by the BUILDER under the provisions of Article XI.1 hereof, if the BUYER terminates, cancels or rescinds this CONTRACT pursuant to any of the provisions of this CONTRACT specifically permitting the BUYER to do so, the BUILDER shall forthwith refund to the BUYER, in U.S. Dollars, the full amount of total sums paid by the BUYER to the BUILDER in advance of delivery together with interest thereon as herein provided without deduction, set-off or withholding in US dollars.
(b)
The transfer and other bank charges of such refund shall be for the BUILDER’s account. The interest rate of the refund, as above provided, shall be
Six
per cent (
6
%) per annum from the date following the date of receipt by the BUILDER of the pre-delivery instalment(s) to the date of remittance by telegraphic transfer of such refund, provided, however, that if the cancellation of this CONTRACT by the BUYER is based upon delays due to Force Majeure or other causes beyond the control of the BUILDER as provided for in Article VIII.1 hereof, then in such event, the interest rate of refund shall be reduced to Four per cent (4%) per annum for the periods affected by such delays.
(c)
It is hereby understood by both parties that payment of any interest provided herein is by way of liquidated damages due to cancellation of this CONTRACT and not by way of compensation for use of money.
(d)
If, the BUILDER is required to refund to the BUYER the instalments paid by the BUYER to the BUILDER as provided in this Paragraph 5, the BUILDER shall return to the BUYER all of the BUYER’s supplies as stipulated in Article XII which were not incorporated into the VESSEL and pay to the BUYER an amount equal to the cost to the BUYER of those supplies incorporated into the VESSEL.
38
6.
TOTAL
LOSS
If there is a total loss or a constructive total loss of the VESSEL prior to delivery thereof, the BUILDER shall proceed according to the mutual agreement of the parties hereto either:
(a)
to build another vessel in place of the VESSEL so lost and deliver it under this CONTRACT to the BUYER, provided that the parties hereto shall have agreed in writing to a reasonable cost and time for the construction of such vessel in place of the lost VESSEL; or
(b)
to refund to the BUYER the full amount of the total sums paid by the BUYER to the BUILDER under the provisions of Paragraph 2 of this Article together with interest thereon at the rate of Four per cent (4%) per annum from the date following the date of receipt by the BUILDER of such pre-delivery instalment(s) to the date of payment by the BUILDER to the BUYER of the refund.
(c)
If the parties hereto fail to reach such agreement within two (2) months after the VESSEL is determined to be a total loss or constructive total loss, the provisions of (b) hereinabove shall be applied.
7.
DISCHARGE
OF OBLIGATIONS
Such refund as provided in the foregoing Paragraphs 5 and 6 by the BUILDER to the BUYER shall forthwith discharge all the obligations, duties and liabilities of each of the parties hereto to the other
(other than any obligations of the BUYER in respect of facilities afforded to the BUYER’s REPRESENTATIVE)
under this CONTRACT. Any and all refunds or payments due to the BUYER under this CONTRACT shall be made by telegraphic transfer to the account specified by the BUYER.
8.
REFUND
GUARANTEE
The BUILDER shall, within thirty (30) days following the execution of this CONTRACT, furnish the BUYER (and prior to the payment of the first instalment) with an assignable letter of guarantee issued by
NH BANK via SWIFT
for the assurance of and as security for the refund of the pre-delivery instalments under or pursuant to Paragraph 5 and/or Paragraph 6 above plus interest accrued thereon in accordance with this CONTRACT in the form and substance as annexed hereto as Exhibit “A”.
All expenses in issuing and maintaining the letter of guarantee described in this Paragraph shall be borne by the BUILDER.
If the BUILDER fails to provide the Refund Guarantee within thirty (30) days after the date of this CONTRACT, the BUYER shall be entitled to terminate this Contract with immediate
39
effect by written notice to the BUILDER.
(End of Article)
40
ARTICLE XI:
BUYER’S DEFAULT
1.
DEFINITION
OF DEFAULT
The BUYER shall be deemed to be in default under this CONTRACT in the following cases:
(a)
If the first, second, third or fourth instalment is not paid to the BUILDER within the respective DUE DATE of such instalments; or
(b)
If the fifth instalment is not deposited in accordance with Article X.4.(a)(ii) hereof or if the said fifth instalment deposit is not released to the BUILDER against presentation by the BUILDER of a copy of the original PROTOCOL OF DELIVERY AND ACCEPTANCE; or
(c)
If the BUYER fails to take delivery of the VESSEL when the VESSEL is duly tendered for delivery by the BUILDER under the provisions of Article VII hereof; or
(d)
If an order or an effective resolution shall be passed for winding up of the BUYER (except for the purpose of reorganization, merger or amalgamation); or
In case the BUYER is in default as set out in Paragraph 1 above, the BUILDER is entitled to and shall have the following rights, powers and remedies in addition to such other rights, powers and remedies as the BUILDER may have elsewhere in this CONTRACT and/or at law, at equity or otherwise.
2.
EFFECT
OF THE BUYER’S DEFAULT ON OR BEFORE THE DELIVERY OF
THE
VESSEL
If the BUYER shall be in default
of its obligations under this CONTRACT
as provided in Paragraph 1 above, then;
(a)
The DELIVERY DATE of the VESSEL shall be extended automatically for the actual period of such default and the BUILDER shall not be obliged to pay any liquidated damages for the delay in delivery of the VESSEL caused thereby.
(b)
The BUYER shall pay to the BUILDER interest at the rate of
Six
percent (
6
%) per annum in respect of the instalment(s) in default from the respective DUE DATE to the date of actual receipt by the BUILDER of the full amount of such instalment(s).
(c)
If the BUYER is in default in payment of any of the instalment(s) due and payable prior to or simultaneously with the delivery of the VESSEL, the BUILDER shall, in writing or by
41
e-mail or facsimile, notify the BUYER to that effect, and the BUYER shall, upon receipt of such notification, forthwith acknowledge in writing or by facsimile to the BUILDER that such notification has been received.
(d)
If any of the BUYER’s default continues for a period o
f fourteen
(
14
) days after the BUILDER’s notification to the BUYER of such default, the BUILDER may, at its option, rescind this CONTRACT by serving upon the BUYER a written notice or e-mail or facsimile notice of rescission confirmed in writing.
(e)
In the event of such cancellation by the BUILDER of this CONTRACT due to the BUYER’s default as provided for in paragraph 1 above, the BUILDER shall
be entitled to retain and apply the instalments already paid by the BUYER to the recovery of the BUILDER’s proven loss and damage including reasonable estimated profit (in relation to this CONTRACT) due to the BUYER’s default and the cancellation of this CONTRACT and at the same time the BUILDER shall
have the full right and power either to complete or not to complete the VESSEL which is the sole property of the BUILDER as it deems fit, and to sell the VESSEL at a public or private sale on such terms and conditions as the BUILDER thinks fit
without being answerable for any loss and damage. However
the BUILDER shall exercise normal commercial diligence to secure the market price obtainable for a sale in such circumstances; and
(f)
The proceeds received by the BUILDER from the sale shall be applied in addition to the instalment(s) retained by the BUILDER as mentioned hereinabove as follows :
First, in payment of all reasonable costs and expenses of the sale of the VESSEL, including interest thereon at
Six
per cent (
6
%) per annum from the respective date of payment of such costs and expenses aforesaid to the date of sale on account of the BUYER’s default.
Second, if the VESSEL has been completed, in or towards satisfaction of the unpaid balance of the CONTRACT PRICE, to which shall be added the cost of all additional work and extras agreed by the BUYER including interest thereon at
Six
per cent (
6
%) per annum from the respective DUE DATE of the instalment in default to the date of sale, or if the VESSEL has not been completed, in or towards satisfaction of the unpaid amount of the cost incurred by the BUILDER prior to the date of sale on account of construction of the VESSEL, including work, labour, materials and reasonably estimated profit which the BUILDER would have been entitled to receive if the VESSEL had been completed and delivered plus interest thereon at
Six
per cent (
6
%) per annum from the respective DUE DATE of the instalment in default to the date of sale.
Third, the balance of the proceeds, if any, shall belong to the BUYER, and shall forthwith
42
be paid over to the BUYER by the BUILDER.
In the event of the proceeds from the sale together with instalment(s) retained by the BUILDER being insufficient to pay the BUILDER, the BUYER shall be liable for the deficiency and shall pay the same to the BUILDER upon its demand.
3.
DEFINITION OF BUILDER’S DEFAULT
The BUILDER shall be deemed to be in default of its obligations under this CONTRACT in the event of:
(i)
The filing of a petition or the making of an order or the passing of an effective resolution for the winding up of the BUILDER (other than for the purpose of reconstruction or amalgamation which has been previously approved in writing by the BUYER), or the appointment of a receiver, administrator, compulsory manager, trustee, liquidator or other similar officer has been made against the BUILDER or any of its assets under the laws of any jurisdiction or the appointment of a receiver of the undertaking or property of the BUILDER, or the insolvency of or a suspension of payments by the BUILDER, or the cessation of the carrying on of business by the BUILDER at any of its shipyards, or the making by the BUILDER of any special arrangement or composition with the creditors of the BUILDER; or any like or similar circumstance occurring under the laws of the Republic of Korea; or
(ii)
The occurrence of any of the events set out in (i) with respect to the bank issuing the Letter of Guarantee referred to in Article X.5, and the failure by the BUILDER within sixty (60) days thereof to replace such bank with an alternative guarantor reasonably acceptable to the BUYER and its bank; or
(iii)
Where the BUILDER:
(a)
remains in default of performance of any obligation or provision of the CONTRACT fourteen (14) days after receiving written notice from the BUYER that the BUILDER is in default; or
(b)
fails, neglects, refuses or is unable during the course of the construction of the VESSEL to provide materials, equipment, services or labour to perform the construction in accordance with the SPECIFICATIONS, the PLAN, and this CONTRACT prior to the date on which the BUYER shall be entitled to cancel this CONTRACT for delay.
43
4.
EFFECT OF BUILDER’S DEFAULT
If any such default as referred to in Paragraph3 above occurs, then the BUYER may terminate this CONTRACT by promptly notifying the BUILDER in writing but not later than two (2) weeks from the date of the BUILDER’s default takes place or after the period to remedy it has expired. Such cancellation is to be effective as of the date when such notice of cancellation is received by the BUILDER and the provisions of Article X. 5 shall apply in respect of such termination. In any event the BUYER shall be entitled to pursue such claims and remedies as it may elect subject to the applicable law.
(End of Article)
44
ARTICLE
XII:
BUYER’S SUPPLIES
1.
RESPONSIBILITY
OF THE BUYER
(a)
The BUYER shall, at its cost and expense, supply all the BUYER’s supplies mentioned in the SPECIFICATIONS, if any, (hereinafter called the “BUYER’S SUPPLIES”), to the BUILDER at the SHIPYARD in perfect condition ready for installation and in accordance with the time schedule to be furnished by the BUILDER to meet the building schedule of the VESSEL.
Such schedule to be advised by the BUILDER within six (6) months after this CONTRACT becomes effective according to Article XX.
(b)
In order to facilitate the installation of the BUYER’S SUPPLIES by the BUILDER in or on the VESSEL, the BUYER shall furnish the BUILDER with the necessary plans, instruction books, test report and all test certificates reasonably required by the BUILDER and shall cause the representative(s) of the makers of the BUYER’S SUPPLIES to give the BUILDER any advice, instructions or assistance which the BUILDER may reasonably require in the installation or adjustment thereof at the SHIPYARD, all without cost or expense to the BUILDER.
(c)
The BUYER shall be liable for any expense incurred by the BUILDER for repair of the BUYER’S SUPPLIES due to defective design or materials, poor workmanship or performance or due to damage in transit and the DELIVERY DATE of the VESSEL shall be extended for the period of such repair if such repair shall affect the delivery of the VESSEL.
(d)
Commissioning into good order of the BUYER’S SUPPLIES during and after installation on board shall be made at the BUYER’s expense by the representative of respective maker or the person designated by the BUYER in accordance with the BUILDER’s building schedule.
(e)
Should the BUYER fail to deliver to the BUILDER the BUYER’S SUPPLIES and the necessary document or advice for such supplies within the time specified by the BUILDER, the DELIVERY DATE of the VESSEL shall automatically be extended for the period of such delay if such delay in delivery shall affect the delivery of the VESSEL. In such event, the BUYER shall pay to the BUILDER all losses and damages sustained by the BUILDER due to such delay in the delivery of the BUYER’S SUPPLIES and such payment shall be made upon delivery of the VESSEL, provided, however, that the BUILDER shall have :
45
(i)
furnished the BUYER with the time schedule referred to above, two (2) months prior to installation of the BUYER’S SUPPLIES and
(ii)
given the BUYER written notice of any delay in delivery of the BUYER’S SUPPLIES and the necessary document or advice for such supplies as soon as the delay occurs which might give rise to a claim by the BUILDER under this Paragraph.
Furthermore, if the delay in delivery of the BUYER’S SUPPLIES and the necessary document or advice for such supplies should exceed
ten (10) working
days from the date specified by the BUILDER, the BUILDER shall be entitled to proceed with construction of the VESSEL without installation of such items (regardless of their nature or importance to the BUYER or the VESSEL) in or on the VESSEL without prejudice to the BUILDER’s right hereinabove provided, and the BUYER shall accept the VESSEL so completed.
2.
RESPONSIBILITY
OF THE BUILDER
The BUILDER shall be responsible for storing, safekeeping and handling the BUYER’S SUPPLIES
which has appropriate proof against weather, dust and theft and,
which the BUILDER is required to install on board the VESSEL under the SPECFICATIONS after delivery of such supplies to the SHIPYARD and shall procure that at all times the
BUYER’S SUPPLIES
are clearly marked as being the property of the BUYER. The BUILDER shall install such supplies on board the VESSEL at the BUILDER’s expense.
The BUILDER shall not be responsible for the quality, performance or efficiency of any equipment included in the BUYER’S SUPPLIES and is under no obligation with respect to the guarantee of such equipment against any defects caused by poor quality, performance or efficiency of the BUYER’S SUPPLIES.
If any of the
BUYER’S SUPPLIES
are lost or damaged while in the custody of the BUILDER, the BUILDER shall, if the loss or damage is due breach of its obligations under this Paragraph 2, default, negligence or omission on its part, be responsible for such loss or damage.
Upon delivery of the
BUYER’S SUPPLIES
at the SHIPYARD, the BUILDER and the BUYER shall carry out a joint unpacking inspection of the
BUYER’S SUPPLIES
so that the condition at the time of delivery can be confirmed.
3.
RETURN OF THE BUYER’S SUPPLIES
If pursuant to the provisions of this CONTRACT the BUILDER is required to refund to the BUYER the instalments paid by the BUYER to the BUILDER, the BUILDER shall either (i)
46
return to the BUYER all of the
BUYER’S SUPPLIES
not incorporated into the VESSEL and pay to the BUYER an amount equal to the actual cost of those supplies incorporated into the VESSEL, or (ii) pay to the BUYER an amount equal to the actual cost of all supplies provided to the BUILDER and paid for by the BUYER irrespectively of whether or not the same have been incorporated into the VESSEL by mutual agreement.
(End of Article)
47
ARTICLE XIII:
ARBITRATION
1.
DECISION BY THE CLASSIFICATION SOCIETY
If any dispute arises between the parties hereto in regard to the design and/or construction of the VESSEL, its machinery and equipment, and/or in respect of the materials and/or workmanship thereof and/or thereon, and/or in respect of interpretations of the SPECIFICATIONS, the parties may by mutual agreement refer the dispute to the CLASSIFICATION SOCIETY or to such other expert as may be mutually agreed between the parties hereto, and whose decision shall be final, conclusive and binding upon the parties hereto.
2.
LAWS
APPLICABLE
Any arbitration arising hereunder shall be governed by and conducted in accordance with the London Maritime Arbitrators’ Association Terms or any statutory modification or re-enactments thereof for the time being in force.
The award of the arbitrator shall be final, conclusive and binding upon parties hereto.
3.
PROCEEDINGS OF ARBITRATION
In the event that the parties hereto do not agree to settle a dispute according to Paragraph 1 of this Article and/or in the event of any other dispute of any kind whatsoever between the parties and relating to this CONTRACT or its rescission or any stipulation herein, such dispute shall be submitted to arbitration in London. The parties shall try to agree a single arbitrator to conduct the arbitration.
If the parties cannot agree upon the appointment of the single arbitrator within two (2) weeks after one of the parties has given notice to the other party notifying that the other party refer the dispute to arbitration, the dispute shall be settled by three arbitrators, each party appointing one arbitrator, the third being appointed by the two arbitrators so appointed. In the further event that the two arbitrators appointed respectively by the parties hereto as aforesaid should be unable to reach agreement on the appointment of the third arbitrator within twenty (20) days from the date on which the second arbitrator is appointed, either party of the said two arbitrators may apply to the President for the time being of the London Maritime Arbitrators Association to appoint the third arbitrator. If either of the appointed arbitrators refuses or is incapable of acting, the party who appointed him shall appoint a new arbitrator in his place.
If one party fails to appoint an arbitrator - either originally or by way of substitution - for two (2) weeks after the other party having appointed its arbitrator, has served the defaulting party notice of default for failure to make the appointment, the President of the London Maritime
48
Arbitrators Association shall, after application from the party having appointed its arbitrator, also appoint an arbitrator on behalf of the party in default. The award of the arbitration made by the sole arbitrator or by the majority of the three arbitrators as the case may be shall be final, conclusive and binding upon the parties hereto.
4.
NOTICE OF AWARD
The award shall immediately be given to the BUYER and the BUILDER by telefax or e-mail.
5.
EXPENSES
The Arbitrator or the Arbitration Board shall determine which party shall bear the expenses of the arbitration or the portion of such expenses which each party shall bear.
6.
ENTRY IN COURT
In case of failure by either party to respect the award of the arbitration, the judgement may be entered in any proper court having jurisdiction thereof.
7.
ALTERATION OF DELIVERY DATE
In the event of reference to arbitration of any dispute arising out of matters occurring prior to delivery of the VESSEL, the award may include any postponement of the DELIVERY DATE which the Arbitrator or the Arbitration Board may deem appropriate. To the maximum extent possible and provided the arbitration proceedings or the subject matter of the dispute do not affect the construction of the VESSEL, work under this CONTRACT shall continue during the arbitration of any dispute.
(End of Article)
49
ARTICLE
XIV:
SUCCESSORS AND ASSIGNS
1.
TRANSFER OR ASSIGNMENT BY THE BUYER
The
BUILDER agrees that, prior to delivery of the VESSEL, this CONTRACT may,
with
the prior written approval of the BUILDER, which the BUILDER shall not
unreasonably
withhold or delay, be transferred by novation to or assigned to another company and the title thereof may be taken by
another
company. In the event of any transfer or assignment pursuant to the terms of this
CONTRACT,
the transferee or assignee, its successors and assigns shall succeed to all the
rights
and obligations of the BUYER under this CONTRACT including but not limited to post-construction warranties of quality and the benefit of the Refund Guarantee. However, the
BUYER
shall remain responsible for performance by the assignee, its successors
and
assigns of all the BUYER’s obligations, liabilities and responsibilities under
this
CONTRACT. It is understood that any expenses or charges incurred due to
the
transfer or assignment of this CONTRACT by the BUYER shall be for the account of the BUYER.
The
BUILDER shall have the right to transfer or assign this CONTRACT at any time after
the
effective date hereof, provided that prior written agreement is obtained from
the
BUYER.
2.
TRANSFER BY THE BUILDER
The BUILDER shall not have the right to assign or transfer this CONTRACT at any time after the Effective Date (as defined in ARTICLE XIX) hereof, unless prior written approval is obtained from the BUYER.
(End of Article)
50
ARTICLE
XV:
TAXES AND DUTIES
1. TAXES
Unless otherwise expressly provided for in this CONTRACT, all costs and taxes including stamp duties, if any, incurred in or levied by any country except Korea in connection with this CONTRACT shall be borne by the BUYER and corresponding costs and taxes in Korea
, before delivery of the VESSEL, if any,
shall be borne by the BUILDER.
2. DUTIES
The BUILDER shall hold the BUYER harmless from any payment of duty imposed in Korea upon materials or supplies which, under the terms of this CONTRACT, or amendments thereto, may be supplied by the BUYER from abroad for the construction of the VESSEL.
The BUILDER shall likewise hold the BUYER harmless from any payment of duty imposed in Korea in connection with materials or supplies for operation of the VESSEL, including running stores, provisions and supplies necessary to stock the VESSEL for its operation and also from the payment of export duties
incurred by the BUILDER in Korea
, if any, to be imposed upon the VESSEL as a whole or upon any of its parts or equipment. This indemnity does not, however, extend to any items purchased by the BUYER for use in connection with the VESSEL which are not absolutely required for the construction or operation of the VESSEL.
3.
KOREAN BUNKER SALES TAX
The price of the delivery bunkers remaining on board the VESSEL on the DELIVERY DATE which is to be paid by the BUYER to the BUILDER shall be net of any sales tax payable to the Korean Government
.
(End of Article)
51
ARTICLE
XVI:
PATENTS, TRADEMARKS AND COPYRIGHTS
1. PATENTS,
TRADEMARKS AND COPYRIGHTS
Machinery and equipment of the VESSEL, whether made or furnished by the BUILDER under this CONTRACT, may bear the patent numbers, trademarks, or trade names of the manufacturers. The BUILDER shall defend and hold harmless the BUYER from all liabilities or claims for or on account of the use of any patents, copyrights or design of any nature or kind, or for the infringement thereof including any unpatented invention made or used in the performance of this CONTRACT and also for any costs and expenses of litigation, if any in connection therewith. No such liability or responsibility shall be with the BUILDER with regard to components and/or equipment and/or design supplied by the BUYER.
Nothing contained herein shall be construed as transferring any patent or trademark rights or copyrights in equipment covered by this CONTRACT, and all such rights are hereby expressly reserved to the true and lawful owners thereof.
2. RIGHTS
TO THE SPECIFICATIONS, PLANS AND ETC.
The BUILDER retains all rights with respect to the SPECIFICATIONS, plans and working drawings, technical descriptions, calculations, test results and other data, information and documents concerning the design and construction of the VESSEL and the BUYER undertakes therefore not to disclose the same or divulge any information contained therein to any third parties, without the prior written consent of the BUILDER, excepting where it is necessary for usual marketing
,
operation, repair and maintenance of the VESSEL or registration, classification, insurance or sale of the VESSEL.
In case the BUYER requests the prior written consent of the BUILDER as set out in the above paragraph, the BUYER shall provide the BUILDER with a written undertaking from the recipient stating that (1) he acknowledges and shall observe the foregoing terms concerning the BUILDER’s right to confidential information and (2) any confidential information furnished in tangible form shall not be duplicated by recipient except for the purpose of the job specifically assigned to him. (3) Upon the completion of his job requiring reference to the confidential information, recipient shall return to the BUYER at his option or otherwise destroy all the confidential information received in written or tangible form including copies or reproductions or other media containing such confidential information. (4) Any documents or other media developed by the recipient containing confidential information shall be destroyed by the recipient.
(End of Article)
52
ARTICLE XVII :
COMPLIANCE AND ANTI-BRIBERY
1. REPRESENTATIONS OF THE PARTIES
During the Term of this CONTRACT and for the duration of any services provided hereunder, each party certifies and represents as follows:
(a)
It will comply with the laws of any jurisdiction applicable to such party as it relates to this CONTRACT, including but not limited to any applicable anti-corruption and anti-bribery laws, also including, without limitation, the United States Foreign Corrupt Practices Act (“US FCPA”), the UK Bribery Act 2010 (“UK Bribery Act”) and the anti-bribery or anti-corruption laws of South Korea as such laws may be amended from time to time.
(b)
In connection with this CONTRACT, it has not and will not make any payments or gifts or provide other advantages, or any offers or promises of payments or gifts or other advantages of any kind, directly or indirectly, to:
a.
any person or entity with the intention of obtaining or retaining a business advantage for itself or the other party to this CONTRACT;
b.
any official or member of any government or any agency or instrumentality thereof; any official or member of any public international organisation or any agency or instrumentality thereof; any or official of a political party or any candidate for political office (herein ‘public official’); or any person while knowing or reasonably suspecting that all or a portion of such money or thing of value will be offered, given or promised, directly or indirectly, to any public official, in violation of the UK Bribery Act, the US FCPA or the laws of South Korea.
(c)
In connection with this CONTRACT, it has not and will not request, agree to accept or accept from any person or entity any payments or gifts or other advantages, or any offers or promises of payments or gifts or other advantages of any kind, directly or indirectly, as a reward or inducement to perform its obligations under this CONTRACT in any way improperly.
2.
INDEMNIFICATION
Each party agrees that it will fully indemnify, defend and hold harmless the other party from any claims, liabilities, damages, expenses, penalties, judgments and losses (including reasonable attorneys’ fees) assessed or resulting by reason of a breach of the representations and undertakings contained in this Article XVII to the extent permitted by law.
(End of Article)
53
ARTICLE
XVII
I
:
INTERPRETATION AND GOVERNING LAW
This
CONTRACT has been prepared in English and shall be executed in duplicate
and
in such number of additional copies as may be required by either party
respectively.
The parties hereto agree that the validity and interpretation of this
CONTRACT
and of each Article and part thereof shall be governed by the laws of
England.
(End of Article)
54
ARTICLE
X
IX
:
NOTICE
Any
and all notices, requests, demands, instructions, advices and communications
in
connection with this CONTRACT shall be written in English, sent by registered
air
mail or facsimile or by hand or email and shall be deemed to be given when first
received
whether by registered mail or facsimile, by hand or email. They shall be
addressed
as follows, unless and until otherwise advised:
|
To the BUILDER
|
:
|
HYUNDAI
SAMHO HEAVY INDUSTRIES CO., LTD.
|
|
|
|
93, Daebul-Ro, Samho-Eup, Yeongam-Gun, Jeollanam-Do
,
Korea
|
|
|
|
|
|
Attention:
|
|
Mr. S. W. Chun
/ Contract Management Dep’t.
|
|
|
|
Tel : +82 61 460 2649
|
|
|
|
Facsimile:
+ 82 61 460 3707
|
|
|
|
E-mail: swc@hshi.co.kr
|
|
|
|
|
|
To the BUYER
|
:
|
NAVIG8 CRUDE TANKERS INC
|
|
|
|
c/o Navig8 Asia Pte Ltd
|
|
|
|
3 Temasek Avenue, #25-01 Centennial Tower, Singapore 039190
|
|
|
|
|
|
Attention:
|
|
Mr. Daniel Chu
|
|
|
|
Facsimile: +44 207 467 5867
|
|
|
|
Tel: +44 207 467 5888
|
|
|
|
E-mail: legal@navig8group.com
|
The
said notices shall become effective upon receipt of the letter, e-mail or
facsimile
communication by the receiver thereof. Where a notice by e-mail or facsimile is concerned which is required to be confirmed by letter, then, unless
the
CONTRACT or the relevant Article thereof otherwise requires, the notice shall
become
effective upon receipt of the e-mail or facsimile.
(End of Article)
55
ARTICLE
XX:
EFFECTIVENESS OF THIS CONTRACT
This CONTRACT shall become effective upon signing by the parties hereto.
(End of Article)
56
ARTICLE
XX
I
:
EXCLUSIVENESS
This
CONTRACT shall constitute the only and entire agreement between the
parties
hereto, and unless otherwise expressly provided for in this CONTRACT, all
other
agreements, oral or written, made and entered into between the parties prior
to
the execution of this CONTRACT shall be null and void
and
shall be superseded by this CONTRACT.
(End of Article)
57
IN WITNESS WHEREOF, the parties hereto have caused this CONTRACT to
be
duly executed in duplicate on the date and year first above written.
|
BUYER
|
|
BUILDER
|
|
|
|
|
|
For
and on behalf of
|
|
For and on behalf of
|
|
NAVIG8 CRUDE TANKERS INC
|
|
HYUNDAI SAMHO
|
|
|
|
HEAVY INDUSTRIES CO., LTD.
|
|
|
|
|
|
|
|
|
|
|
|
By
|
/s/ Daniel Chu
|
|
By
|
/s/ Sam H. Ka
|
|
Name:
|
Daniel Chu
|
|
Name:
|
Sam H. Ka
|
|
Title:
|
Attorney-in-Fact
|
|
Title:
|
Attorney-in-Fact
|
|
|
|
|
|
|
|
|
|
|
|
WITNESS
|
|
WITNESS
|
|
|
|
|
|
|
|
|
|
|
|
By
|
/s/ Siduarth Nair
|
|
By
|
/s/ Y.D. Park
|
|
Name:
|
Siduarth Nair
|
|
Name:
|
Y.D. Park
|
|
Title:
|
|
|
Title:
|
SVP
|
58
EXHIBIT “A”
DEED OF GUARANTEE
Date :[ ], 2013
Gentlemen:
We hereby open our irrevocable letter of guarantee number [ ] (this “Guarantee”) in favour of
NAVIG8 CRUDE TANKERS INC
, a corporation organized and existing under the laws of
Marshall Islands
and having its principal office at
Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960
(hereinafter called the “BUYER”) for account of HYUNDAI SAMHO HEAVY INDUSTRIES CO., LTD.,
Samho
, Korea (hereinafter called the “BUILDER”) as follows in connection with the shipbuilding contract dated [ ], 2013 (hereinafter called “CONTRACT”) made by and between the BUYER and the BUILDER for the construction of 300,000 DWT Class Crude Oil Carrier having the BUILDER’s Hull No.
(hereinafter called the “VESSEL”).
If, in connection with the terms of the CONTRACT, the BUYER shall become entitled to a refund of the advance payment made to the BUILDER prior to the delivery of the VESSEL, we hereby irrevocably, unconditionally and absolutely guarantee, as primary obligor and not merely as surety, to you, your successors and assignees, the repayment of the same to the BUYER within thirty (30) days after demand not exceeding US$ [ ] (Say U.S. Dollars [ ] only)together with interest thereon at the rate of
six per cent (6%)
per annum from the date following the date of receipt by the BUILDER to the date of remittance by telegraphic transfer of such refund.
The amount of this Guarantee will be automatically increased upon the BUILDER’s receipt of the respective instalment, not more than three (3) times, each time by the amount of such instalment plus interest thereon as provided in the CONTRACT, but in any eventuality the amount of this Guarantee shall not exceed the total sum of US$ [ ] (Say U.S. Dollars [ ] only) plus interest thereon at the rate of
six
per cent (
6
%) per annum from the date following the date of the BUILDER’s receipt of each instalment to the date of remittance by telegraphic transfer of the refund. However, in the event of cancellation of the CONTRACT being based on delays due to Force Majeur
e
as provided under Article VIII of the CONTRACT, the interest rate of refund shall be reduced to four per cent (4%) per annum as provided in Article X.5of the CONTRACT for the periods affected by such delays.
The payment by us under this Guarantee shall be made(subject to the third paragraph hereof) against the BUYER’s first written demand and signed statement certifying that the BUYER’s demand for refund has been made in conformity with Article X of the CONTRACT and the BUILDER has failed to make the refund within
thirty (30)
days after the BUYER’s demand. Refund shall be made to the BUYER by telegraphic transfer in United States Dollars. All payments under this Guarantee shall be made without any set-off or counterclaim and without any
59
deduction or withholding for or on account of any taxes, duties or charges whatsoever unless we are compelled by law to deduct or withhold the same, in which case we shall make the minimum deduction or withholding permitted and will pay to you such additional amounts as may be necessary in order that the net amount received by you after such deduction or withholding shall be equal to the amount which would have been received had no such deduction or withholding been made.
In case any refund is made to the BUYER by the BUILDER or by us under this Guarantee, our liability hereunder shall be automatically reduced by the amount of such refund.
Notwithstanding the provisions hereinabove, in the event that within
thirty (30)
days from the date of your claim to the BUILDER referred to above, we receive notification from you or the BUILDER accompanied by written confirmation to the effect that your claim to cancel the CONTRACT or your claim for refundment thereunder has been disputed and referred to arbitration in accordance with the provisions of the CONTRACT, we shall under this Guarantee, refund to you the sum adjudged to be due to you by the BUILDER pursuant to the award made under such arbitration, or, if applicable, pursuant
to
a final court judgment issued in relation thereto, immediately upon receipt from you of a demand for the sums so adjudged and a copy of the award or court judgment, as the case may be.
The validity of this Guarantee and our liability under or in connection therewith shall not be discharged, impaired, reduced or in any way affected by any extension of time or other amendment, variation, modification or supplement whatsoever of or to the CONTRACT nor by the giving of any time or any concession granted by you to the BUILDER or any indulgence, waiver or consent on your part in respect of time or any other terms of the CONTRACT, nor by any delay or failure by you in enforcing your rights under or in connection with the CONTRACT, nor by the liquidation, insolvency, bankruptcy, reorganization, amalgamation, reconstruction or analogous proceedings or other financial failure of the BUILDER or any other person, nor by the illegality, invalidity or unenforceability or any defect in the CONTRACT or any provisions thereof, or any repudiation, termination or rescission thereof or any other matter or circumstance which would (but for the provisions of this paragraph) discharge, impair, affect or reduce our liability under or in connection with this Guarantee.
This Guarantee shall become null and void upon receipt by the BUYER of the sum guaranteed hereby together with interest thereon or upon acceptance by the BUYER of the delivery of the VESSEL in accordance with the terms of the CONTRACT and, in either case, this Guarantee shall be returned to us.
This Guarantee is valid and effective from the date of this Guarantee until such time as the VESSEL is delivered by the BUILDER to the BUYER in accordance with the provisions of the CONTRACT. However in the event that a dispute in respect of a refund is being resolved by
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arbitration in accordance with Article XIII of the CONTRACT, then this Guarantee shall continue to remain in force until 30 business days after such arbitration proceedings are concluded and a final arbitration award has been issued.
We agree that you may assign without our prior written consent the benefit of this Guarantee to any lawful assignee of the benefit of the CONTRACT.
This Guarantee and any non-contractual obligations arising out of or in connection with it shall be governed by, interpreted and construed in accordance with the laws of England. The undersigned hereby submits to the exclusive jurisdiction of the courts of England for the settlement of any disputes which may arise out of or in connection with this Guarantee and any non-contractual obligations arising out of or in connection with it. We hereby irrevocably appoint [ ] to act as our agent to receive and accept on our behalf any process or other document relating to any proceedings in the English courts which are connected with this Guarantee.
Very truly yours,
This Guarantee has been executed and delivered as a Deed on the day and year written above.
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Signed as a Deed on behalf of [ ],a company incorporated in [ ]
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by:
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a
nd
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being persons who, in accordance with
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the laws of that territory, are acting under
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the authority of the company
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In the presence of:
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Witness’s signature:
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Name (print):
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Occupation:
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Address:
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61
Exhibit 10.78
SHIPBUILDING CONTRACT
FOR
THE CONSTRUCTION OF
300,000 DWT CLASS CRUDE OIL CARRIER
HULL NO. S771
BETWEEN
NAVIG8 CRUDE TANKERS INC
(AS BUYER)
AND
HYUNDAI SAMHO HEAVY INDUSTRIES CO., LTD.
(AS BUILDER)
I N D E X
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PAGE
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PREAMBLE
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3
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ARTICLE
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I
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DESCRIPTION AND CLASS
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4
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II
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CONTRACT PRICE
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8
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III
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ADJUSTMENT OF THE CONTRACT PRICE
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9
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IV
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INSPECTION AND APPROVAL
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1
2
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V
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MODIFICATIONS, CHANGES AND EXTRAS
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1
8
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VI
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TRIALS AND COMPLETION
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21
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VII
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DELIVERY
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2
5
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VIII
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:DELAYS
AND EXTENSIONS OF TIME (FORCE MAJEURE)
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29
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IX
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WARRANTY OF QUALITY
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32
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X
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PAYMENT
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3
5
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XI
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BUYER’S DEFAULT
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41
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XII
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BUYER’S SUPPLIES
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45
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XIII
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ARBITRATION
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4
8
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XIV
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SUCCESSORS AND ASSIGNS
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50
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XV
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TAXES AND DUTIES
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51
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XVI
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PATENTS, TRADEMARKS AND COPYRIGHTS
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52
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XVII
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: COMPLIANCE AND ANTI-BRIBERY
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XVIII
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INTERPRETATION AND GOVERNING LAW
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54
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XIX
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NOTICE
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XX
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EFFECTIVENESS OF THIS CONTRACT
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XXI
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EXCLUSIVENESS
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EXHIBIT “A”
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LETTER OF GUARANTEE
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59
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2
THIS
CONTRACT
,
made on this
12th day
of
December
, 2013
by
and between
NAVIG8 CRUDE TANKERS INC, a
corporation incorporated and existing under the
laws
of
Marshall Islands
, having its registered office at
Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960
(hereinafter
called
the
“BUYER”
)
, the party of the first part and HYUNDAI
SAMHO HEAVY INDUSTRIES CO., LTD.
a company organized and existing under the
laws
of the Republic of Korea, having its principal office 93, Daebul-Ro, Samho-Eup, Yeongam-Gun, Jeollanam-Do, Korea (hereinafter called the “BUILDER”),
the
party of the second part,
W
I T N E S S E T H
:
In consideration of the mutual covenants c
o
ntained herein, the BUILDER
agrees
to design, build, launch, equip and complete one (1)
300,000
DWT
C
lass
Crude Oil Carrier as
described in Article I hereof (hereinafter called the “VESSEL”) at the
BUILDER’s
shipyard in Korea (hereinafter called the “SHIPYARD”) in accordance with
the BUILDER’s
shipbuilding practice for
Crude Oil Carrier
, as the B
UILDER
has been performing for its other clients and in accordance with
HSQS (Hyundai Samho Shipbuilding Quality Standard)
and to
deliver
and sell the VESSEL to the BUYER, and the BUYER agrees to accept
delivery
of and purchase from the BUILDER the VESSEL, according to the terms
and
conditions hereinafter set forth:
(End of Preamble)
3
ARTICLE I:
DESCRIPTION AND CLASS
1. DESCRIPTION
The VESSEL shall have the BUILDER’s Hull No.
S771 and
shall be designed, constructed, equipped and completed in accordance with the specifications (No.
CONV300-FS-P1, dated 10th December 2013)
a
nd
the general arrangement plan (No.
1G7000201, dated 10th December 2013)
attached thereto (hereinafter called respectively the “SPECIFICATIONS” and the “PLAN”) signed by both parties, which shall constitute an integral part of this CONTRACT although not attached hereto.
The SPECIFICATIONS and the PLAN are intended to explain each other and anything shown on the PLAN and not stipulated in the SPECIFICATIONS or anything stipulated in the SPECIFICATIONS and not shown on the PLAN shall be deemed and considered as if included in both.
Should there be any inconsistencies or contradictions between the SPECIFICATIONS and the PLAN, the SPECIFICATIONS shall prevail. Should there be any inconsistencies or contradictions between this CONTRACT and the SPECIFICATIONS, this CONTRACT shall prevail.
2. BASIC
DIMENSIONS AND PRINCIPAL PARTICULARS OF THE VESSEL
(a)
The basic dimensions and principal particulars of the VESSEL shall be:
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Length, overall
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abt.
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333
m
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Length, between perpendiculars
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abt.
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322
m
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Breadth, moulded
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abt.
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60
m
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Depth, moulded
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abt.
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29.4
m
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Design draught, moulded
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abt.
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20.5
m
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Scantling draught, moulded
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abt.
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21.6
m
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Main Engine
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HYUNDAI - B&W 7G80ME-C9.2
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Nominal Rating: 32,970 kW x 72 RPM
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MCR: 24,400 kW x 66 RPM
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NCR: 17,080 kW x 58.6 RPM
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Main engine to be part load optimized
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Deadweight, guaranteed:
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299,969 metric tons at the Scantling draught of 21.6 meters on even keel in sea water of specific gravity of 1.025.
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4
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Speed, guaranteed
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:
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14.8 knots at the design draught of 20.5 meters at the condition of clean bottom and in calm and deep sea with main engine output of 17,080 kW with 15% sea margin.
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Fuel Consumption, guaranteed
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161.7 grams/kW-hour using marine diesel oil having lower calorific value of 42,700 kj/kg at MCR measured at the shop trial with I.S.O reference conditions.
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The details of the aforementioned particulars as well as the definitions and method
of
measurements and calculations are as indicated in the SPECIFICATIONS.
(b)
The dimensions may be slightly modified by the BUILDER,
who also reserves the right to make changes to the SPECIFICATIONS and the PLAN if found necessary to suit the local conditions and facilities of the SHIPYARD, the availability of materials and equipment, the introduction of improved production methods or otherwise,
subject to the written approval of the BUYER which the BUYER shall not withhold unreasonably, and all subject to the other relevant provisions of this CONTRACT.
3. CLASSIFICATION,
RULES AND REGULATIONS
(a)
The VESSEL, including its machinery, equipment and outfitting shall be designed, equipped and constructed in accordance with the BUILDER’s HSQS (Hyundai Samho Shipbuilding Quality Standard) and shipbuilding practices.
The VESSEL shall be built in compliance with the rules (editions and amendments thereto being in force at the date of signing this CONTRACT) of Korean Register of Shipping (hereinafter called the “CLASSIFICATION SOCIETY”), classed and registered with the symbol
of +KRS1-Oil Tanker (Double Hull) ‘ESP’, (FBC), (CSR), Crude, VEC-2, IGS, COW, IWS, IBWM, LI, +KRM1-UMA, STCM, PSPC, IAFS, IOPP, ISPP, IGPP, IAPP, IIHM, IEE, EQ-SPM, ERS, CHA.
The VESSEL shall be built in compliance with the standards provided in the
SPECIFICATIONS
and with the Rules and Regulations as mentioned in the
SPECIFICATIONS
which are in force at the date of signing the
SPECIFICATIONS (for reference, the published LR’s “Future IMO Legislation, Aug 2013” to be used).
EEDI verification to be performed by
the BUILDER
during sea trials
and confirmed by the CLASSIFICATION SOCIETY
.
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(b)
The BUILDER shall arrange with the CLASSIFICATION SOCIETY for the assignment by the CLASSIFICATION SOCIETY of representative(s) to the VESSEL during each stage of construction. All fees and charges incidental to classification of the VESSEL as well as in compliance with the above specified rules, regulations and requirements of this CONTRACT shall be for the account of the BUILDER.
All major plans, materials and workmanship used in the construction of the V
ESSEL
shall be subject to inspection and test by the CLASSIFICATION SOCIETY in accordance with the rules and regulations of the CLASSIFICATION SOCIETY
.
(c)
The decision of the CLASSIFICATION SOCIETY as to whether the
VESSEL
complies with the regulations of the CLASSIFICATION SOCIETY
shall
be final and binding upon the BUILDER and the BUYER, provided that in the case of dispute the decision shall be endorsed by Head Office of the CLASSIFICATION SOCIETY.
4.
SUBCONTRACTING
The BUILDER is authorised to sub-contract part of the work to third party sub-contractors who will carry out works in accordance with the quality standards and shipbuilding practices outlined above at Article I. 3. (a) of this CONTRACT, provided that the work is done in Korea and the BUILDER shall have first given notice in writing to the BUYER.
Without prejudice to the generality of the foregoing, the BUILDER shall remain fully liable for the due and complete performance of all the BUILDER’s obligation under this CONTRACT notwithstanding the entering into of any such sub-contract as aforesaid. However, the VESSEL shall always remain at the SHIPYARD unless the BUYER and the BUILDER agree otherwise.
No sub-contract shall bind or purport to bind the BUYER, and each sub-contract shall be the responsibility of the BUILDER and not contain any retention rights, liens or other such rights that may interfere at anytime with the transfer of unencumbered ownership and title of the VESSEL by the BUILDER to the BUYER.
All sub-contractors howsoever employed or engaged are hereby declared and agreed to be sub-contractors employed or engaged by the BUILDER and the BUILDER agrees that it is and shall remain fully responsible for and liable in respect of any sub-contractors and/or their acts or omissions and, without prejudice to the generality of the foregoing, the BUILDER shall ensure control over supervision and scheduling of the all work done by any subcontractor.
The BUILDER hereby agrees that if any of its employees, servants or agents or those of the sub-contractors appointed pursuant to this CONTRACT shall, in the reasonable opinion of the
6
BUYER, not be carrying out properly their duties and responsibilities under or pursuant to the terms of this CONTRACT, the BUYER shall be entitled (by giving written notice to the BUILDER) to draw the same to the attention of the BUILDER and, if the BUYER considers it necessary, to request the BUILDER to replace such person(s) if the same are its own employees, servants or agents, or to use its best endeavours to replace such person(s) if the same are the employees, servants or agents of a sub-contractor. The BUILDER shall investigate any such request, and, if found justified, take appropriate action. Any such replacement shall be within such a time scale so as to ensure that the BUILDER continues to carry out all of its duties and obligations under or pursuant to this CONTRACT.
The BUYER’s inspection and final assembly of any subcontracted work shall be at the BUILDER’s SHIPYARD. The BUILDER will arrange for the BUYER to execute pre-production inspection of sub-contractors premises by providing reasonable advanced notice to inspect the facility. The BUYER retains the right to inspect vetting records by BUILDER’s Quality Control Department confirming compliance with the BUILDER’s quality standards.
The BUYER’s rights hereunder shall not in any way be reduced in respect of such sub-contracted work and the BUYER shall not bear any additional costs in respect of such sub-contracted work.
5. NATIONALITY
OF THE VESSEL
The VESSEL shall be registered by the BUYER at its own cost and expense under the laws of Marshall Islands
with
its home port
at
the time of its delivery and acceptance hereunder.
(End of Article)
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ARTICLE II:
CONTRACT PRICE
The contract price of the VESSEL delivered to the BUYER at the SHIPYARD shall be United States Dollars Ninety Five Million Three Hundred Thousand (US$ 95,300,000.-) (hereinafter called the “CONTRACT PRICE”) which shall be paid plus any increases or less any decreases due to adjustment or modification, if any, as set forth in this CONTRACT. Subject to the above, the CONTRACT PRICE is fixed and is not subject to any fluctuations in or on account of wages, costs of equipment or materials or currencies or otherwise. The above CONTRACT PRICE shall include payment for services in the inspection, test, survey and classification of the VESSEL which will be rendered by the CLASSIFICATION SOCIETY and shall not include the cost of the BUYER’s supplies as stipulated in Article XII.
The CONTRACT PRICE also includes all costs and expenses for supplying all necessary drawings as stipulated in the SPECIFICATIONS except those to be furnished by the BUYER for the VESSEL in accordance with the SPECIFICATIONS. All other costs and expenses of the BUILDER as provided in the CONTRACT or the SPECIFICATIONS or otherwise incurred by the BUILDER are for the account of the BUILDER unless expressly specified as being for the account of the BUYER in the CONTRACT or otherwise in writing.
The BUILDER shall, however undertake to install in the VESSEL all of such BUYER’s supplies in accordance with the SPECIFICATIONS without extra cost to the BUYER, but the BUYER shall pay all charges and expenses, including, but not limited to, the customs clearance fee, for transporting such BUYER’s supplied articles to the SHIPYARD.
(End of Article)
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ARTICLE III:
ADJUSTMENT OF THE CONTRACT PRICE
The CONTRACT PRICE of the VESSEL shall be adjusted as hereinafter set forth in the event of the following contingencies. It is hereby understood by both parties that any adjustment of the CONTRACT PRICE as provided for in this Article is by way of liquidated damages and not by way of penalty.
1. DELAYED DELIVERY
(a)
No adjustment shall be made and the CONTRACT PRICE shall remain unchanged for the first thirty (30) days of the delay in delivery of the VESSEL [ending as of 12 o’clock midnight Korean Standard Time on the thirtieth (30th) day of delay] beyond the Delivery Date calculated as provided in Article VII.1. hereof.
(b)
If delivery of the VESSEL is delayed more than thirty (30) days beyond the date upon which the delivery is due from the BUILDER under the terms of this CONTRACT, then, beginning at midnight of the thirtieth (30th) day after such due date, the CONTRACT PRICE of the VESSEL shall be reduced by U.S. Dollars Twenty Three Thousand (US$ 23,000) for each full day of delay.
However, unless the parties agree otherwise, the total amount of deduction from the CONTRACT PRICE shall not exceed the amount due to cover the delay of one hundred and Eighty (180) days after thirty (30) days of the delay in delivery of the VESSEL at the rate of deduction as specified hereinabove.
(c)
But, if the delay in delivery of the VESSEL continues for a period of more than two hundred and ten (210) days beyond the date upon which the delivery is due from the BUILDER under the terms of this CONTRACT then, in such event, and after such period has expired, the BUYER may, at its option, cancel this CONTRACT by serving upon the BUILDER a notice of cancellation by e-mail or facsimile to be confirmed by a registered letter via airmail directed to the BUILDER at the address given in this CONTRACT. Such cancellation shall be effective as of the date the notice thereof is received by the BUILDER. If the BUYER has not served the notice of cancellation after the aforementioned two hundred and ten (210) days delay in delivery, the BUILDER may demand the BUYER to make an election in accordance with Article VIII.3 hereof.
(d)
For the purpose of this Article, the delivery of the VESSEL shall be deemed to be delayed when and if the VESSEL, after taking into full account extension of the Delivery Date or permissible delays as provided in ArticlesV.1 and V.3, VI.2, VIII, XI.1, XII.1 and XIII.7, is delivered beyond or before the date upon which delivery would then be due under the terms of this CONTRACT.
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2. INSUFFICIENT SPEED
(a)
The CONTRACT PRICE of the VESSEL shall not be affected or changed, if the actual speed, as determined by trial runs more fully described in Article VI hereof, is less than the guaranteed speed as defined in Article I paragraph 2 hereof, provided such deficiency in actual speed is not more than three tenths (3/10) of a knot below the guaranteed speed.
(b)
However, as for the deficiency of more than three tenths (3/10) of a knot in actual speed below the guaranteed speed, the CONTRACT PRICE shall be reduced by U.S. Dollars Eighty Thousand (US$80,000) for each full one-tenth (1/10) of a knot in excess of the said three tenths (3/10) of a knot of deficiency in speed (fractions of less than one-tenth (1/10) of a knot shall be regarded as a full one-tenth (1/10) of a knot). However, unless the parties agree otherwise, the total amount of reduction from the CONTRACT PRICE shall not exceed the amount due to cover the deficiency of one (1) full knot below the guaranteed speed at the rate of reduction as specified above.
(c)
If the deficiency in actual speed of the VESSEL is more than one (1) full knot below the guaranteed speed, then the BUYER, at its option, may, subject to the BUILDER’s right to effect alterations or corrections as provided in Article VI.5. hereof, cancel this CONTRACT or may accept the VESSEL at a reduction in the CONTRACT PRICE as above provided for one (1) full knot of deficiency only.
3. EXCESSIVE FUEL CONSUMPTION
(a)
The CONTRACT PRICE of the VESSEL shall not be affected or changed by reason of the fuel consumption of the VESSEL’s main engine, as determined by the engine manufacturer’s shop trial as per the SPECIFICATIONS being more than the guaranteed fuel consumption of the VESSEL’s main engine as defined in Article I paragraph 2 hereof, if such excess is not more than five per cent (5%) over the guaranteed fuel consumption.
BUYER’s Representatives will be provided fourteen (14) days notice of engine trials in order to be present during aforementioned trials.
(b)
However, as for the excess of more than five percent (5%) in the actual fuel consumption over the guaranteed fuel consumption of the VESSEL’s main engine, the CONTRACT PRICE shall be reduced by U.S. Dollars Eighty Thousand (US$80,000) for each full one per cent (1%) increase in fuel consumption in excess of the said five per cent (5%) increase in fuel consumption (fraction of less than one per cent (1%) shall be regarded as a full one percent (1%)). However, unless the parties agree otherwise, the total amount of reduction from the CONTRACT PRICE shall not exceed the amount due to cover the excess of ten percent (10%) over the guaranteed fuel consumption of the VESSEL’s main
10
engine at the rate of reduction as specified above.
(c)
If such actual fuel consumption exceeds the guaranteed fuel consumption of the VESSEL’s main engine by more than ten percent (10%), the BUYER, at its option, may, subject to the BUILDER’s right to effect alterations or corrections as specified in Article VI. 5. hereof, cancel this CONTRACT or may accept the VESSEL at a reduction in the CONTRACT PRICE as above provided for the ten percent (10%) increase only.
4. DEADWEIGHT BELOW CONTRACT REQUIREMENTS
(a)
The CONTRACT PRICE of the VESSEL shall not be affected or changed, if the actual deadweight determined as provided in this CONTRACT and the SPECIFICATIONS, is below the guaranteed deadweight as defined in Article I paragraph 2 hereof by one point five percent (1.5%) of the guaranteed deadweight or less.
(b)
However, should the deficiency in the actual deadweight of the VESSEL be more than XXXX of the guaranteed deadweight (disregarding fractions of less than one (1) metric ton), the CONTRACT PRICE shall be reduced by the sum of U.S. Dollars Seven Hundred (US$700) for each one (1) metric deficiency (disregarding fractions of less than one (1) metric ton) in excess of the said one point five percent (1.5%) of deficiency.
(c)
In the event of such deficiency in the deadweight of the VESSEL being more than three percent (3%) of the guaranteed deadweight, the BUYER, at its option, may, subject to the BUILDER’s right to effect alterations or corrections as specified in Article VI. 5. hereof, cancel this CONTRACT or accept the VESSEL at a reduction in the CONTRACT PRICE as above provided for three percent (3%) only.
5. EFFECT OF CANCELLATION
(a)
The liquidated damages payable according to the provisions of each Paragraph under this ARTICLE are cumulative and not exclusive.
(b)
It is expressly understood and agreed by the parties hereto that in any case, if the BUYER cancels this CONTRACT under this Article, the BUYER, save for its rights and remedies set out in Article X.5 hereof, shall not be entitled to any liquidated damages.
(End of Article)
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ARTICLE IV:
INSPECTION AND APPROVAL
1. APPOINTMENT OF BUYER’S REPRESENTATIVE
The BUYER shall timely dispatch to and maintain at the SHIPYARD, at its own cost, expense and risk, one or more representatives (hereinafter called the “BUYER’S REPRESENTATIVE”), who shall be duly accredited in writing by the BUYER to supervise adequately the construction by the BUILDER of the VESSEL, her equipment and all accessories. Before the commencement of any item of work under this CONTRACT, the BUILDER shall, whenever reasonably required, previously exhibit, furnish to, and within the limits of the BUYER’S REPRESENTATIVE’s authority, secure the approval from the BUYER’S REPRESENTATIVE of any and all plans and drawings prepared in connection therewith. Upon appointment of the BUYER’S REPRESENTATIVE, the BUYER shall notify the BUILDER in writing of the name and the scope of the authority of the BUYER’S REPRESENTATIVE.
The BUYER shall have the right to replace or substitute any of its representatives upon prior notice to the BUILDER. One individual BUYER’S REPRESENTATIVE shall be nominated by the BUYER in writing from time to time as having authority to bind the BUYER on certain matters as provided in this Article and that nominated BUYER’S REPRESENTATIVE shall alone be so authorized in respect of such matters and no other BUYER’S REPRESENTATIVE shall be authorized to so bind the BUYER in respect of such matters.
However, in any case, the BUYER shall not appoint any employees of the BUILDER or the persons who had been employed by the BUILDER within one (1) year before the BUYER’s appointment of such ex-employee of the BUILDER as the BUYER’S REPRESENTATIVE or his assistants or employees of the BUYER without the BUILDER’s prior written consent.
2. AUTHORITY OF THE BUYER’S REPRESENTATIVE
According to the BUYER’s written authorization, such BUYER’S REPRESENTATIVE shall, at all times during working hours of the construction until delivery of the VESSEL, have the right to inspect the VESSEL, her equipment and all accessories, and work in progress, or materials utilized in connection with the construction of the VESSEL, wherever such work is being done or such materials are stored, for the purpose of determining that the VESSEL, her equipment and accessories are being constructed in accordance with the terms of this CONTRACT and/or the SPECIFICATIONS and the PLAN.
The BUILDER will endeavor to arrange for the inspection by the BUYER’S REPRESENTATIVE during working hours of the BUILDER. However, such inspection may be arranged beyond the BUILDER’s normal working hours, including weekend and/or holiday if this is considered necessary by the BUILDER in order to meet the BUILDER’s construction
12
schedule, on the condition that the BUILDER will inform the BUYER’S REPRESENTATIVE at least Two (2) working days in advance of such inspection.
The BUYER’S REPRESENTATIVE shall, within the limits of the authority conferred upon him by the BUYER, make decisions or give advice to the BUILDER on behalf of the BUYER within reasonable time on all problems arising out of, or in connection with, the construction of the VESSEL and generally act in a reasonable manner with a view to cooperating to the utmost with the BUILDER in the construction process of the VESSEL.
The decision, approval or advice of the BUYER’S REPRESENTATIVE shall be deemed to have been given by the BUYER and once given shall not be withdrawn, revoked or modified except with consent of the BUILDER.
Provided that the BUYER’S REPRESENTATIVE or his assistants shall comply with the foregoing obligations, no act or omission of the BUYER’S REPRESENTATIVE or his assistants shall, in any way, diminish the liability of the BUILDER under Article IX (WARRANTY OF QUALITY). The BUYER’S REPRESENTATIVE shall notify the BUILDER within reasonable time in writing of his discovery of any construction or materials, which he believes do not or will not conform to the requirements of the CONTRACT and the SPECIFICATIONS or the PLAN and likewise advise and consult with the BUILDER on all matters pertaining to the construction of the VESSEL, as may be required by the BUILDER, or as he may deem necessary.
However, if the BUYER’S REPRESENTATIVE fails to submit to the BUILDER, within one (1) working day after any inspections or tests, or in the case of major inspection or test items, within two (2) working days, any such demand concerning alterations or changes with respect to the construction, arrangement or outfit of the VESSEL, which the BUYER’S REPRESENTATIVE has examined, inspected or attended at the test thereof under this CONTRACT or the SPECIFICATIONS, the BUYER’S REPRESENTATIVE shall be deemed to have approved the same and shall be precluded from making any demand for alterations, changes, or complaints with respect thereto at a later date. Such major inspection or test items shall be decided and agreed by the parties to this CONTRACT at the time of the BUYER’s approval of an inspection and test plan submitted by the BUILDER upon the BUYER’S REPRESENTATIVE’s work commencement or opening up of his office at the SHIPYARD, whichever is the earlier.
The BUILDER shall comply with any such demand which is not contradictory to this CONTRACT and the SPECIFICATIONS or the PLAN, provided that any and all such demands by the BUYER’S REPRESENTATIVE with regard to construction, arrangement and outfit of the VESSEL shall be submitted in writing to the authorized representative of the BUILDER. The BUILDER shall notify the BUYER’S REPRESENTATIVE of the names of
13
the persons who are from time to time authorized by the BUILDER for this purpose.
It is agreed upon between the BUYER and the BUILDER that the modifications, alterations or changes and other measures necessary to comply with such demand may be effected at a convenient time and place at the BUILDER’s reasonable discretion in view of the construction schedule of the VESSEL.
In the event that the BUYER’S REPRESENTATIVE shall advise the BUILDER that he has discovered or believes the construction or materials do not or will not conform to the requirements of this CONTRACT and the SPECIFICATIONS or the PLAN, and the BUILDER shall not agree with the views of the BUYER’S REPRESENTATIVE in such respect, either the BUYER or the BUILDER may, with the agreement of the other party, seek an opinion of the CLASSIFICATION SOCIETY or failing such agreement, request an arbitration in accordance with the provisions of Article XIII hereof. The CLASSIFICATION SOCIETY or the arbitration tribunal, as the case may be, shall determine whether or not a nonconformity with the provisions of this CONTRACT, the SPECIFICATIONS and the PLAN exists. If the CLASSIFICATION SOCIETY or the arbitration tribunal, as the case may be, enters a determination in favour of the BUYER, then in such case the BUILDER shall make the necessary alterations or changes, or if such alterations or changes cannot be made in time to meet the construction schedule for the VESSEL, the BUILDER may make a proposal for a fair and reasonable adjustment of the CONTRACT PRICE in lieu of such alterations and changes, such proposal to be subject to the mutual agreement of the BUILDER and BUYER. If the CLASSIFICATION SOCIETY or the arbitration tribunal, as the case may be, enters a determination in favour of the BUILDER, then the time for delivery of the VESSEL shall be extended for the period of delay in construction, if any, occasioned by such proceedings, and the BUYER shall compensate the BUILDER for the proven loss and damages incurred by the BUILDER as a result of the dispute herein referred to.
3. APPROVAL OF DRAWINGS
All plans and drawings and instruction books to be in English.
(a)
The BUILDER shall submit to the BUYER three (3) copies of each of the plans and drawings to be submitted to the BUYER for its approval at its address as set forth in Article XVIII hereof. The BUYER shall, within twenty one (21) days including mailing time after receipt thereof, return to the BUILDER one (1) copy of such plans and drawings with the approval or comments, if any, of the BUYER. A list of the plans and drawings to be so submitted to the BUYER shall be mutually agreed upon between the parties hereto.
(b)
When and if the BUYER’S REPRESENTATIVE shall have been sent by the BUYER to the SHIPYARD in accordance with Paragraph 1 of this Article, the BUILDER may submit
14
the remainder, if any, of the plans and drawings in the agreed list, to the BUYER’S REPRESENTATIVE for his approval, unless otherwise agreed upon between the parties hereto.
The BUYER’S REPRESENTATIVE shall, within seven (7) days after receipt thereof, return to the BUILDER one (1) copy of such plans and drawing with his approval or comments written thereon, if any. Approval by the BUYER’S REPRESENTATIVE of the plans and drawings duly submitted to him shall be deemed to be the approval by the BUYER for all purposes of this CONTRACT.
(c)
In the event that the BUYER or the BUYER’S REPRESENTATIVE shall fail to return the plans and drawings to the BUILDER within the time limit as hereinabove provided, such plans and drawings shall be deemed to have been automatically approved without any comment. In the event the plans and drawings submitted by the BUILDER to the BUYER or the BUYER’S REPRESENTATIVE in accordance with this Article do not meet with the BUYER’s or the BUYER’S REPRESENTATIVE’s approval, the matter may be submitted by either party hereto for determination pursuant to Article XIII hereof. If the BUYER’s comments on the plans and drawings that are returned to the BUILDER by the BUYER within the said time limit are not clearly specified or detailed, the BUILDER shall seek clarification from the BUYER prior to implementing them which clarification must be provided in writing by the BUYER within five (5) days of such request from the BUILDER. If the BUYER shall fail to provide the BUILDER with such clarification within the said time limit, then the BUILDER shall be entitled to place its own interpretation on such comments in implementing them.
4. SALARIES AND EXPENSES
All salaries and expenses of the BUYER’S REPRESENTATIVE or any other person or persons employed by the BUYER hereunder shall be for the BUYER’s account.
5. RESPONSIBILITY OF THE BUILDER
(a)
The BUILDER shall provide the BUYER’S REPRESENTATIVE and his assistants free of charge with suitably furnished office space at, or in the immediate vicinity of, the SHIPYARD together with access to telephone, internet connection, printer/copier and facsimile facilities, air conditioning, toilets, and computer outlet to enable the BUYER’S REPRESENTATIVE and his assistants to carry out their work under this CONTRACT. However, the BUYER shall pay for the telephone high speed internet connection and facsimile facilities used by the BUYER’S REPRESENTATIVE or his assistants.
The BUILDER shall provide full assistance and advice how to obtain the necessary visas,
15
working permits and/or other document that may be necessary for the BUYER’S REPRESENTATIVE to enter and remain and work in Korea without delay provided that the BUYER’S REPRESENTATIVE meets the requirements and laws of Korea.
The BUILDER, its employees, agents and subcontractors, during its working hours until delivery of the VESSEL, shall arrange for them to have free and ready access to the VESSEL, her equipment and accessories, and to any other place (except the areas controlled for the purpose of national security) where work is being done, or materials are being processed or stored in connection with the construction of the VESSEL including the premises of sub-contractors.
The BUYER’S REPRESENTATIVE or his assistants or employees shall observe the work’s rules and regulations prevailing at the BUILDER’s and its sub-contractor’s premises. The BUILDER shall promptly provide to the BUYER’S REPRESENTATIVE and/or his assistants and shall ensure that its sub-contractors shall promptly provide all such information as he or they may reasonably request in connection with the construction of the VESSEL and her engines, equipment and machinery.
The BUILDER is responsible for ensuring at all times that a safe working environment and proper access is provided to the works and/or areas of inspection. Failure to provide proper, safe access at either the BUILDER or any appointed sub contractor may result in declining an inspection provided that justifiable grounds are presented to the BUILDER. Such time and impact to schedule are for the BUILDER’s account / responsibility.
(b)
The BUYER’S REPRESENTATIVE and his assistants shall at all times remain the employees of the BUYER, and not of the BUILDER. The BUILDER shall not be liable to the BUYER or the BUYER’S REPRESENTATIVE or to his assistants or to the BUYER’s employees or agents for personal injuries, including death, during the time they, or any of them, are on the VESSEL, or within the premises of either the BUILDER or its sub-contractors, or are otherwise engaged in and about the construction of the VESSEL, unless, however, such personal injuries, including death, are caused by the gross negligence or willful misconduct of the BUILDER, its sub-contractors, or its or their employees or agents. The BUILDER shall not be liable to the BUYER for damages to, or destruction of property of the BUYER or of the BUYER’S REPRESENTATIVE or his assistants or the BUYER’s employees or agents, unless such damages, loss or destruction is caused by the gross negligence or willful misconduct of the BUILDER, its sub-contractors, or its or their employees or agents.
6. RESPONSIBILITY OF THE BUYER
The BUYER shall undertake and assure that the BUYER’S REPRESENTATIVE shall carry
16
out his duties hereunder in accordance with the normal shipbuilding practice and in such a way so as to avoid any unnecessary and unreasonable increase in building cost, delay in the construction of the VESSEL, and/or any disturbance in the construction schedule of the BUILDER.
The BUILDER has the right to request the BUYER to replace the BUYER’S REPRESENTATIVE who is deemed unsuitable and unsatisfactory for the proper progress of the VESSEL’s construction.
The BUYER shall investigate the situation by sending its representative (s) to the SHIPYARD, if necessary, and if the BUYER considers that such BUILDER’s request is justified, the BUYER shall effect such replacement as soon as conveniently arrangeable.
The BUILDER’s employees, agents, subcontractors and so forth shall at all times remain under the BUILDER’s responsibility. The BUYER shall not be liable to the BUILDER, or the BUILDER’s employees, agents, subcontractors and so forth for personal injuries, including death, during the time they, or any of them, are on the VESSEL, or within the premises of either the BUILDER or his subcontractors, or are otherwise engaged in and about the construction of the VESSEL, unless, however, such personal injuries, including death are caused by the gross negligence of the BUYER, its employees including the BUYER’S REPRESENTATIVE and his assistants or agents. The BUYER shall not be liable to the BUILDER, or the BUILDER’s employees, agents, subcontractors and so forth for damages to, or loss or destruction of property of the BUILDER, or the BUILDER’s employees, agent, subcontractors and so forth unless such damages, loss or destruction were caused by the gross negligence of the BUYER, or its employees or agents.
(End of Article)
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ARTICLE V:
MODIFICATION, CHANGES AND EXTRAS
1. HOW EFFECTED
Minor modifications or changes to the SPECIFICATIONS and the PLAN under which the VESSEL is to be constructed may be made at any time hereafter by written agreement of the parties hereto.
Any modification or change requested by the BUYER which does not affect the frame-work of the SPECIFICATIONS or the PLAN and also does not adversely affect the BUILDER’s planning or program in relation to the BUILDER’s other commitments which have been entered into at that time shall be agreed to by the BUILDER if the BUYER agrees to adjustment of the CONTRACT PRICE(if any), deadweight and/or cubic capacity, speed requirements, the Delivery Date and other terms and conditions of this CONTRACT reasonably required as a result of such modifications or change.
The BUILDER has the right to continue construction of the VESSEL on the basis of the SPECIFICATIONS and the PLAN until the BUYER
and BUILDER
has agreed to
the necessary
adjustments
to the Contract Price of the VESSEL, the time of delivery and any other alterations in this
CONTRACT
, or the
SPECIFICATIONS. The BUILDER shall be entitled to refuse to make any alteration, change or modification of the SPECIFICATIONS and/or the PLAN requested by the BUYER, if the BUYER and BUILDER do not agree to the aforesaid adjustments within seven (7) days of the BUILDER’s notification of its proposal for the same to the BUYER, or, if, in the BUILDER’s reasonable judgement, the compliance with such request of the BUYER would cause an unreasonable disruption of the normal working schedule of the SHIPYARD.
The BUILDER, however, agrees to exert its best efforts to accommodate such reasonable request by the BUYER so that the said change and modification shall be made at a reasonable cost and within the shortest period of time reasonably possible. The aforementioned agreement to modify and change the SPECIFICATIONS and the PLAN may be effected by exchange of letters, e-mail or facsimiles manifesting the agreement.
The letters, e-mail and facsimiles exchanged by the parties pursuant to the foregoing shall constitute an amendment to this CONTRACT and the SPECIFICATIONS or the PLAN under which the VESSEL shall be built. Upon consummation of such an agreement to modify and change the SPECIFICATIONS or the PLAN, the BUILDER shall alter the construction of the VESSEL in accordance therewith including any addition to, or deduction from, the work to be performed in connection with such construction.
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2. SUBSTITUTION OF MATERIAL
If any materials, machinery or equipment required for the construction of the VESSEL by the SPECIFICATIONS and the PLAN or otherwise under this CONTRACT cannot be procured in time to meet the BUILDER’s construction schedule for the VESSEL, or are in short supply provided that they have been timely ordered, or are unreasonably high in price compared with the prevailing international market price on the date of signing this CONTRACT provided that they have been timely ordered, the BUILDER may supply, subject to the BUYER’s prior approval in writing, other materials, machinery or equipment of equal quality and effect capable of meeting the requirements of the CLASSIFICATION SOCIETY and the rules, regulations and requirements with which the construction of the VESSEL must comply.
Furthermore, it is expressly agreed that should the BUILDER have to use any steel plate made in China they will only use steel plate produced by major Chinese steel mills used by Hyundai Heavy Industries Group. No Brazilian steel will be used for any of the structural parts of the VESSEL without the BUYER’s prior approval in its absolute discretion. All steel for the structural parts of the VESSEL to be provided in accordance with the CLASSIFICATION SOCIETY’s standards and approvals.
3. CHANGES IN RULES AND REGULATIONS
If any requirements as to CLASSIFICATION SOCIETY or as to the specified rules and regulations with which the construction of the VESSEL is required to comply in Article I. 3. (a) are altered or changed by the CLASSIFICATION SOCIETY or other regulatory bodies authorized to make such alterations or changes, either the BUYER or the BUILDER, upon receipt of due notice thereof, shall forthwith give notice thereof to the other party in writing. Thereupon, within ten (10) working days after giving the notice to the BUILDER or receiving the notice from the BUILDER, the BUYER shall advise the BUILDER as to the alterations and changes, if any, to be made on the VESSEL which the BUYER, in its sole discretion, shall decide.
The BUILDER shall comply promptly with the said request of the BUYER, provided that the BUILDER and the BUYER shall first agree to:
(a) any increase or decrease in the CONTRACT PRICE of the VESSEL that is occasioned by such compliance;
(b) any extension or advancement in the Delivery Date of the VESSEL that is occasioned by such compliance;
19
(c) any increase or decrease in the deadweight and/or cubic capacity of the VESSEL, if such compliance results in any increase or reduction in the deadweight and/or cubic capacity ;
(d) adjustment of the guaranteed speed if such compliance results in any increase or reduction in the speed; and
(e) any other alterations in the terms of this CONTRACT or of the SPECIFICATIONS or the PLAN or both, if such compliance makes such alterations of the terms necessary.
Any delay in the construction of the VESSEL caused by the BUYER’s delay in making a decision or agreement as above shall constitute a permissible delay under this CONTRACT. Such agreement by the BUYER shall be effected in the same manner as provided above for modification and change of the SPECIFICATIONS and the PLAN.
(End of Article)
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ARTICLE VI:
TRIALS AND COMPLETION
GENERAL
The BUILDER shall carry out and run the tests and trials on the VESSEL in the manner and to the extent as described in the SPECIFICATIONS (and the trials schedule) and otherwise as may be required by the CLASSIFICATION SOCIETY.
1. NOTICE
When the VESSEL is substantially complete and in a safe and fit state to proceed to sea, with all appropriate safety and lifesaving equipment onboard for the expected number of persons to be present, the BUILDER shall notify the BUYER in writing or by e-mail or facsimile at least fourteen (14) days in advance of the time and place of the trial run of the VESSEL. Such notice shall specify the Korean port from which the VESSEL will commence her trial run and approximate date upon which the trial run is expected to take place. Such date shall be further confirmed by the BUILDER five (5) days in advance of the trial run by e-mail or facsimile.
The BUYER’S REPRESENTATIVE(s), who is/are to witness the performance of the VESSEL during such trial run, shall be present at such place on the date specified in such notice. Should the BUYER’S REPRESENTATIVE(s) fail to be present after the BUILDER’s due notice to the BUYER as provided above, the BUILDER shall be entitled to conduct such trial run with the presence of the representative(s) of the CLASSIFICATION SOCIETY only without the BUYER’S REPRESENTATIVE(s) being present. In such case, the BUYER shall be obliged to accept the VESSEL on the basis of a certificate issued by the BUILDER that the VESSEL, after the trial run, subject to alterations and corrections, if necessary, has been found to conform with the SPECIFICATIONS and this CONTRACT and is satisfactory in all respects, provided the BUILDER first makes such corrections and alterations promptly.
2. WEATHER CONDITION
In the event of unfavourable weather on the date specified for the trial run, the trial run shall take place on the first available day that weather conditions permit. The parties hereto recognize that the weather conditions in Korean waters, in which the trial run is to take place, are such that great changes in weather may arise momentarily and without warning and therefore, it is agreed that if, during the trial run, the weather should become so unfavourable that the trial run cannot be continued, then the trial run shall be discontinued and postponed until the first favourable day next following, unless the BUYER shall assent to the acceptance of the VESSEL by notification in writing on the basis of such trial run so far made prior to such change in weather conditions. Any delay of the trial run caused by such unfavourable
weather conditions shall also operate to extend the Delivery Date of the VESSEL for the
21
period of delay occasioned by such unfavourable weather conditions. For the purposes of this paragraph 2, unfavourable weather conditions shall be taken as Beaufort Scale Force 6 and above.
3. HOW CONDUCTED
All expenses in connection with the trials of the VESSEL are to be for the account of the BUILDER, which, during the trials, is to provide at its own expense the necessary crew to comply with conditions of safe navigation. The trials shall be conducted in the manner prescribed in this CONTRACT and the SPECIFICATIONS, and shall prove fulfillment of the performance requirements for the trials as set forth in the SPECIFICATIONS.
The BUILDER shall be entitled to conduct preliminary sea trials, during which the propulsion plant and/or its appurtenance shall be adjusted according to the BUILDER’s judgement. The BUILDER shall have the right to repeat any trial whatsoever as it deems necessary.
4. CONSUMABLE STORES
The BUILDER shall load the VESSEL with the required quantity of fuel oil, lubricating oil and greases, fresh water, and other stores necessary to conduct the trials as set forth in the SPECIFICATIONS. The necessary ballast (fuel oil, fresh water and such other ballast as may be required) to bring the VESSEL to the trial load draft, as specified in the SPECIFICATIONS, shall be supplied and paid for by the BUILDER whilst lubricating oil and greases shall be supplied and paid for by the BUYER within the time advised by the BUILDER for the conduct of sea trials as well as for use before the delivery of the VESSEL to the BUYER. The fuel oil as well as lubricating oil and greases shall be in accordance with the engine specifications and the BUYER shall decide and advise the BUILDER of the supplier’s name for lubricating oil and greases prior to the steel cutting of the VESSEL, provided that the supplier shall be acceptable to the BUILDER and/or the makers of all the machinery.
Any fuel oil, fresh water or other consumable stores furnished and paid for by the BUILDER for trial runs remaining on board the VESSEL, at the time of acceptance of the VESSEL by the BUYER, shall be bought by the BUYER from the BUILDER at the BUILDER’s purchase price for such supply in Korea (with supporting invoices and documents provided) and payment by the BUYER thereof shall be made at the time of delivery of the VESSEL. The BUILDER shall pay the BUYER at the time of delivery of the VESSEL for the consumed quantity of lubricating oil and greases which were furnished and paid for by the BUYER at the BUYER’s purchase price thereof (with supporting invoices and documents provided).
The consumed quantity of lubricating oils and greases shall be calculated on the basis of the difference between the remaining amount, including the same remaining in the main engine,
other machinery and their pipes, stern tube and the like, and the supplied amount.
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5. ACCEPTANCE OR REJECTION
(a)
Upon completion of sea trial, the BUILDER shall give the BUYER a notice in writing or by e-mail or telefax of the result of the sea trial, as and if the BUILDER considers that the result of sea trial indicates conformity of the VESSEL to this CONTRACT and the SPECIFICATIONS and PLAN.
(b)
The BUYER shall within four (4) working days after receipt of such notice notify the BUILDER in writing or by e-mail or telefax of its acceptance or rejection of the VESSEL, provided that in case of rejecting the VESSEL, the BUYER shall set out in its notice of rejection a detailed, clear explanation of all and any aspects of the VESSEL which it considers do not comply with this CONTRACT, the SPECIFICAITONS and/or the PLAN.
(c)
If the BUILDER is in agreement with the BUYER’s determinations as to non-conformity, the BUILDER shall make such alterations or changes as may be necessary to correct such non-conformity and shall prove the fulfillment of the CONTRACT and SPECIFICATIONS by such tests or trials as may be necessary. If the BUILDER is not in agreement with the BUYER’s determination as to non-conformity, each party shall be entitled to refer the disagreement for determination as per Article XIII.
(d)
The BUYER shall not be entitled to reject the VESSEL by reason of any minor or insubstantial items which do not in any way affect the safety or the operation of the Vessel judged from the point of view of the BUILDER’s shipbuilding practice for Crude Oil Carrier, as the BUILDER has been performing for its other clients and HSQS (Hyundai Samho Shipbuilding Quality Standard) as not being in conformity with the SPECIFICATIONS, but, in that case, the BUILDER shall not be released from the obligation to correct and/or remedy for its own account such minor or insubstantial items as soon as practicable after the delivery of the VESSEL. If inconvenient for the VESSEL to have such items corrected and/or remedied at the SHIPYARD, the BUILDER shall arrange to have such corrections or remedies carried out elsewhere, and may, if practicable, do such work while the VESSEL is sailing. The BUYER may in its absolute discretion accept a payment in lieu of such items being corrected and/or remedied. Any payment in lieu shall be agreed in writing between the BUILDER and the BUYER.
(e)
If during any sea trial any breakdowns occur entailing interruption or irregular performance which can be repaired on board, the sea trial shall be continued after such repairs and be valid in all respects. However, if during the sea trial it becomes apparent that the VESSEL or any part of her equipment requires alterations or correction, the
BUILDER shall notify the BUYER promptly in writing or by e-mail or telefax to such effect and shall simultaneously advise the BUYER of the estimated additional time
23
required for the necessary alterations or corrections to be made. The BUYER shall, within five (5) days of receipt from the BUILDER of notice of completion of such alterations or corrections and after such further trials or tests as necessary, notify the BUILDER in writing or by e-mail or telefax of its acceptance or rejection of the VESSEL, all in accordance with the SPECIFICATIONS, PLAN and the CONTRACT, and shall not be entitled to reject the VESSEL on such grounds until such time.
(End of Article)
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ARTICLE VII:
DELIVERY
1. TIME AND PLACE
The VESSEL shall be delivered by the BUILDER to the BUYER at the SHIPYARD, safely afloat at a quay on or before February 20, 2017 (hereinafter called the “DELIVERY DATE”) after completion of satisfactory trials and acceptance by the BUYER in accordance with the terms of Article VI, except that, in the event of delays in delivery of the VESSEL by the BUILDER due to causes which under the terms of this CONTRACT permit extensions of the time for delivery of the VESSEL, the aforementioned DELIVERY DATE shall be extended accordingly.
The BUILDER shall provide the BUYER in writing by e-mail or telefax thirty (30) days approximate notice of readiness and fourteen (14), seven (7) and three (3) days definite notice of readiness for delivery of the VESSEL.
2. WHEN AND HOW EFFECTED
Provided that the BUYER shall concurrently with delivery of the VESSEL release to the BUILDER the fifth instalment as set forth in Article X.2.hereofand shall have fulfilled all of its obligations provided for in this CONTRACT (as it may have been amended from time to time) prior to the delivery of the VESSEL, delivery of the VESSEL shall be forthwith effected upon acceptance thereof by the BUYER, as hereinabove provided, by the concurrent delivery by each of the parties hereto to the other of a PROTOCOL OF DELIVERY AND ACCEPTANCE acknowledging delivery of the VESSEL by the BUILDER and acceptance thereof by the BUYER, which PROTOCOL shall be prepared induplicate and signed by each of the parties hereto.
3. DOCUMENTS TO BE DELIVERED TO THE BUYER
Upon delivery and acceptance of the VESSEL, the BUILDER shall deliver to the BUYER the following documents, which shall accompany the aforementioned PROTOCOL OF DELIVERY AND ACCEPTANCE:
(a)
PROTOCOL OF TRIALS of the VESSEL made pursuant to this CONTRACT and the SPECIFICATIONS,
(b)
PROTOCOL OF INVENTORY of the equipment of the VESSEL, including spare parts, all as specified in the SPECIFICATIONS,
25
(c)
PROTOCOL OF STORES OF CONSUMABLE NATURE, such as all fuel oil and fresh water remaining in tanks if its cost is charged to the BUYER under Article VI. 4. hereof,
(d)
FINISHED DRAWINGS AND PLANS pertaining to the VESSEL as stipulated in the SPECIFICATIONS, which shall be furnished to the BUYER at no additional cost,
(e)
ALL CERTIFICATES required to be furnished upon delivery of the VESSEL pursuant to this CONTRACT, the SPECIFICATIONS and the customary shipbuilding practice, including
(i)
Classification Certificate
(ii)
Safety Construction Certificate
(iii)
Safety Equipment Certificate
(iv)
Safety Radiotelegraphy Certificate
(v)
International Loadline Certificate
(vi)
International Tonnage Certificate
(vii)
BUILDER’s Certificate
(duly notarized and legalized)
(viii)
Ship Sanitation Control Exemption Certificate
(ix)
Classification Certificate for anchor, chains and mooring ropes, machinery and equipment
(x)
Certificate for life-boats and life saving equipments
(xi)
Certificates for navigation lights and special signal lights
(xii)
International Oil Pollution Prevention Certificate
(xiii)
Compass adjustment Certificate
(xiv)
Suez Canal Tonnage Certificate
(xv)
Deadweight Certificate
(xvi)
Certificate for Provision Crane, Hose Handling Crane and Engine Room Crane
(xvii)
International Air Pollution Prevention Certificate
(xviii)
Coating Technical File
(xix)
International Sewage Pollution Certificate
(xx)
Class approved Loading Manual
(xxi)
Certified Cargo oil tanks calibration
(xxii)
Ballast Management Certificate
(xxiii)
Emergency Towing System
(xxiv)
Engine Technical File (NOx)
(xxv)
Load Test certificates for all designated lifting lugs / points installed (more than 3.0 ton S.W.L) (issued by the BUILDER)
The above list of Certificates and Documents is indicative and may possibly not include all the Required Certificates and Documents for the VESSEL as she is specified in her CLASSIFICATION notation to conduct unrestricted trade. However it is agreed that all
26
the required CLASSIFICATION SOCIETY and Statutory Certificates and Documents should be furnished by the BUILDER to the BUYER.
All certificates or relevant documents which are to be duly notarized and legalized shall be agreed between the parties prior to delivery. All certificates to be delivered in one (1) original and two (2) copies to the BUYER.
If any Certificate, Drawing, Plan, Diagram or other documents referred to in this Article, through no fault on the part of BUILDER, cannot be provided upon delivery and if the absence thereof does not impede the navigation or management of the VESSEL and/or constitute a breach of the statutory requirements of the flag state, of the VESSEL or the requirements of the CLASSIFICATION SOCIETY, a provisional/interim certificate shall be acceptable by the BUYER provided the formal Certificate, Drawing, Plan, Diagram or other document be delivered as soon as practicable after delivery of the VESSEL.
(f)
DECLARATION OF WARRANTY of the BUILDER that the VESSEL is delivered to the BUYER free and clear of any liens, claims, mortgages, or other encumbrances upon the BUYER’s title thereto, and in particular, that the VESSEL is absolutely free of all burdens in the nature of imposts, taxes, or charges imposed by the prefecture or country of the port of delivery, as well as of all liabilities of the BUILDER to its sub-contractors and employees and of all liabilities arising from the operation of the VESSEL in trial runs, or otherwise, prior to delivery except as otherwise provided under this CONTRACT.
(g)
COMMERCIAL INVOICE made by the BUILDER.
(h)
BILL OF SALE made by the BUILDER.
4. TENDER OF THE VESSEL
If the BUYER fails to take delivery of the VESSEL after completion thereof according to this CONTRACT and the SPECIFICATIONS, the BUILDER shall have the right to tender delivery of the VESSEL after compliance with all procedural requirements as provided above.
5. TITLE AND RISK
Title to and risk of the VESSEL and her equipment (but excluding the BUYER’s supplies) shall pass to the BUYER upon Delivery and Acceptance of the VESSEL being effected as stated above and the BUILDER shall be free of all responsibility or liability whatsoever related with this CONTRACT except for the warranty of quality contained in Article IX and the obligation to correct and/or remedy, as provided in Article VI. 5(d), if any. It is expressly understood between the parties hereto that, until such Delivery and Acceptance is effected, the
27
VESSEL and equipment thereof are at the entire risk of the BUILDER including but not confined to, risks of war, insurrection and seizure by Governments or Authorities, whether Korean or foreign, and whether at war or at peace. The title to the BUYER’s supplies as provided in Article XII shall remain with the BUYER and the BUILDER’s responsibility for such BUYER’s supplies shall be as described in Article XII.2.
6. REMOVAL OF THE VESSEL
The BUYER shall take possession of the VESSEL immediately upon Delivery and Acceptance thereof and shall remove the VESSEL from the SHIPYARD within three (3) working days after Delivery and Acceptance thereof is effected.
From the delivery of the VESSEL until the actual removal thereof from the SHIPYARD, the BUYER shall be responsible for the safety and preservation of the VESSEL in all respects, including without limitation, keeping the VESSEL insured at his own cost, and furthermore, the BUYER shall indemnify and hold the BUILDER free and harmless against any liability or claims including without limitation, the claims of his insurers arising out of any accident whatsoever , unless caused by the gross negligence or willful misconduct of the BUILDER, his employee or agent.
Port dues and other charges levied by the Korean Government Authorities after Delivery and Acceptance of the VESSEL and any other costs related to the removal of the VESSEL shall be borne by the BUYER.
(End of Article)
28
ARTICLE VIII:
DELAYS AND EXTENSIONS OF TIME (FORCE MAJEURE)
1. CAUSES OF DELAY
If, at any time after signing this CONTRACT, either the construction or delivery of the VESSEL or any performance required hereunder as a prerequisite to the delivery thereof is delayed by any of the following events: namely war, acts of state or government, blockade, revolution, insurrections, mobilization, civil commotion, riots, strikes, sabotage, lockouts, Acts of God or the public enemy, plague or other epidemics, quarantines, shortage or prolonged failure of electric current, freight embargoes, or defects in major forgings or castings, delays or defects in the BUYER’s supplies as stipulated in Article XII, if any, or shortage of materials, machinery or equipment or inability to obtain delivery or delays in delivery of materials, machinery or equipment, provided that at the time of ordering the same could reasonably be expected by the BUILDER to be delivered in time or defects in materials, machinery or equipment which could not have been detected by the BUILDER using reasonable care or earthquakes, tidal waves, typhoons, hurricanes, prolonged or unusually severe weather conditions or destruction of the premises or works of the BUILDER or its sub-contractors, or of the VESSEL, or any part thereof, by fire, landslides, flood, lightning, explosion, or delays in the BUILDER’s other commitments resulting from any such causes as described in this Article which in turn directly delay the construction of the VESSEL or the BUILDER’s performance under the CONTRACT (the BUILDER treating this CONTRACT not less favorably than other commitments), or delays caused by the CLASSIFICATION SOCIETY or the BUYER’s faulty action or omission, or other causes beyond the control of the BUILDER, or its sub-contractors, as the case may be, then in the event of delays due to the happening of any of the aforementioned contingencies, the DELIVERY DATE of the VESSEL under this CONTRACT shall be extended for a period of time which shall not exceed the total accumulated time of all such delays provided however that:
(i)
the delay in respect of which the BUILDER is claiming relief was beyond its reasonable control or that of its employees, suppliers and subcontractors and was not caused or contributed to by any error, neglect, act or omission of the BUILDER or of its agents, employees or subcontractors, nor by any breach of this CONTRACT;
(ii)
the delay impacts upon the Vessel’s construction schedule and completion;
(iii)
the BUILDER has shown due diligence in choice of sub-contractor; and
(iv)
the BUILDER has taken all reasonable steps to mitigate its effect upon the construction of the VESSEL,
29
For the avoidance of doubt, where two delay events as described in this paragraph 1(a) occur simultaneously or overlap with each other, such delays caused by such events shall not be double-counted.
2. NOTICE OF DELAYS
Within seven (7) days after commencement of any delay on account of which the BUILDER claims that it is entitled under this CONTRACT to an extension of the DELIVERY DATE of the VESSEL, excluding delays due to arbitration, the BUILDER shall advise the BUYER in writing or by e-mail or facsimile of the date such delay commenced, the reasons thereof and, if possible, its estimated duration of the probable delay in the delivery of the VESSEL, and shall supply the BUYER if reasonably available with evidence to justify the delay claimed. Within seven (7) days after such cause of delay ends, the BUILDER shall likewise advise the BUYER in writing or by e-mail or facsimile of the date that such cause of delay ended, and also, shall specify the period of time by which the BUILDER claims the DELIVERY DATE should be extended by reason of such delay. Failure of the BUYER to object to the BUILDER’s notification of any claim for extension of the date for delivery of the VESSEL within seven (7) days after receipt by the BUYER of such notification shall be deemed to be a waiver by the BUYER of its right to object to such extension of the DELIVERY DATE.
Failure of the BUILDER to give notice of any relevant delay event in accordance with this paragraph 2 shall be deemed a waiver of the BUILDER’s right to postpone the DELIVERY DATE under this Article VIII in respect of such relevant delay event.
3. RIGHT TO CANCEL FOR EXCESSIVE DELAY
If the total accumulated time of all permissible and non-permissible delays, excluding delays due to (i) arbitration under Article XIII.7, (ii) the BUYER’s defaults under Article XI.1 and XI.2., (iii) modifications and changes under Article V.1 and V.3 or (iv) delays or defects in the BUYER’s supplies as stipulated in Article XII.1, aggregates two hundred and sixty (260) days or more (inclusive of the thirty (30) days grace period as per Article III.1.(a)), then, the BUYER may, at any time thereafter, cancel this CONTRACT by giving a written notice of cancellation to the BUILDER. Such cancellation shall be effective as of the date the notice thereof is received by the BUILDER and the BUILDER, upon receipt of such notice, and upon the BUYER’s demand, shall refund in accordance with the provisions of Article X.5 hereof all payments made to the BUILDER by the BUYER.
If the BUYER has not served the notice of cancellation as provided in the above or Article III.1 hereof, the BUILDER may, at any time after expiration of the accumulated time of the delay in delivery, either two hundred and sixty (260) days in case of the delays referred to in this Paragraph 3 or two hundred and ten (210) days in case of the delay in Article III.1, notify
30
the BUYER of the future date upon which the BUILDER estimates the VESSEL will be ready for delivery and demand in writing or by e-mail or facsimile that the BUYER make an election either to cancel this CONTRACT or to consent to the delivery of the VESSEL at such future date, in which case the BUYER shall, within seven (7) business days after receipt of such demand, make and notify the BUILDER of such election. If the BUYER elects to consent to the delivery of the VESSEL at such future date (or other future date as the parties may agree):
(a)
Such future date shall become the contractual delivery date for the purposes of this CONTRACT and shall be subject to extension by reason of permissible delays as herein provided, and
(b)
If the VESSEL is not delivered by such revised contractual delivery date (as extended by reason of permissible delays), the BUYER shall have the same right of cancellation upon the same terms as provided in the above and Article III. 1.
If the BUYER shall not make an election within seven (7) business days as provided hereinabove, the BUYER shall be deemed to have accepted such extension of the DELIVERY DATE to the future delivery date indicated by the BUILDER.
4. DEFINITION OF PERMISSIBLE DELAYS
Delays on account of the foregoing causes specified in Paragraph 1 above shall be understood to be permissible delays, and are to be distinguished from non-permissible unauthorized delays on account of which the CONTRACT PRICE of the VESSEL is subject to adjustment as provided in Article III hereof.
(End of Article)
31
ARTICLE IX:
WARRANTY OF QUALITY
1. GUARANTEEOF MATERIAL AND WORKMANSHIP
Subject to the provisions hereinafter set forth, the BUILDER undertakes to remedy, free of charge to the BUYER, any defective design, construction, material and/or workmanship
and/or negligent or other improper acts or omissions
(hereinafter called the “DEFECT(S)”) on the part of the BUILDER and/or its sub-contractors, provided that the defect is discovered within a period of twelve (12) months after the date of delivery of the VESSEL and a notice thereof is duly given to the BUILDER as hereinafter provided.
For the purpose of this Article the VESSEL shall include her hull, machinery and equipment, painting and coatings thereof but shall exclude any parts for the VESSEL which have been supplied by or on behalf of the BUYER under Article XII.
The BUILDER agrees that upon the expiry of this guarantee it shall assign (to the extent to which it may validly do so and such supplier guarantee extends beyond
twelve (
12
)
months after the date of delivery of the VESSEL) to the BUYER, all rights, title and interest that the BUILDER may have in and to all guarantees or warranties given by the supplier of any of the appurtenances and materials used in the construction and/or operation of the VESSEL, unless such assignment is against Korean law.
2. NOTICE OF DEFECTS
The BUYER shall notify the BUILDER in writing or by e-mail or facsimile, of any DEFECTS for which claim is made under this guarantee as promptly as possible after discovery thereof. The BUYER’s written notice shall include full particulars to describe the nature and extent of the DEFECTS. The BUILDER shall have no obligation for any DEFECTS discovered prior to the expiry date of the said twelve (12) months period, unless notice of such DEFECTS is received by the BUILDER no later than seven (7) business days after such expiry date.
3. REMEDY OF DEFECTS
(a)
The BUILDER shall remedy, at its expense, any DEFECT against which the VESSEL or any part of the machinery or equipment thereof is guaranteed under this Article IX, by making all necessary repairs or replacements at the SHIPYARD or elsewhere as provided for in (b) hereinbelow.
(b)
However, if it is impractical to bring the VESSEL to the SHIPYARD, the BUYER may cause the necessary repairs or replacements to be made elsewhere which is deemed
32
suitable for the purpose, provided that, in such event, the BUILDER may forward or supply replacement parts or materials to the VESSEL, unless forwarding or supplying thereof to the VESSEL would impair or delay the operation or working schedule of the VESSEL. In the event that the BUYER proposes to cause the necessary repairs or replacements to be made to the VESSEL at any other shipyard or works than the SHIPYARD, the BUYER shall first, but in all events as soon as possible, give the BUILDER notice in writing or by e-mail or facsimile of the time and place such repairs will be made, and if the VESSEL is not thereby delayed, or her operation or working schedule is not thereby impaired, the BUILDER shall have the right to verify by its own representative(s) the nature and extent of the DEFECTS complained of. The BUILDER shall in such case, promptly advise the BUYER in writing or by e-mail or facsimile, after such examination has been completed, of its acceptance or rejection of the DEFECTS as ones that are covered by the guarantee herein provided. Upon the BUILDER’s acceptance of the DEFECTS as justifying remedy under this Article IX, or upon the award of the arbitration tribunal so determining, or if the BUILDER neither accepts nor rejects the defects nor requests arbitration within sixty (60) days after its receipt of the BUYER’s notice of defects, the BUILDER shall pay to the BUYER for such repairs or replacements a sum equal to the actual direct cost of the repairs or replacements, as evidenced in United States Dollars by the final invoices of the relevant shipyard/repairer or supplier, however, the amount of the BUILDER’s payment to the BUYER for such repairs or replacements shall not exceed the average cost quoted by two reputable repair yards in Singapore.
(c)
In any case, the VESSEL shall be taken at the BUYER’s costs and responsibility to the place elected, ready in all respects for such repairs or replacements and in any event, the BUILDER shall not be responsible for towage, dockage, wharfage, port charges or any other cost or expenses whatsoever incurred by the BUYER in getting and keeping the VESSEL ready for such repairs or replacements.
(d)
In the event that it is necessary for the BUILDER to forward a replacement for a defective part under this guarantee, replacement parts shall be shipped to the BUYER under the terms of C.I.F. port designated by the BUYER.
(e)
The BUILDER reserves the option to retrieve, at the BUILDER’s cost, any of the replaced equipment/parts in case DEFECTS are remedied in accordance with the provisions in this Article IX.
(f)
Any dispute under this Article IX shall be referred to arbitration in accordance with the provisions of Article XIII hereof.
(g)
In case any amount, which the BUILDER should pay to the BUYER for a single claim in accordance with this Article, is over US$100,000, then the BUILDER shall immediately
33
pay to the BUYER such amount.
4. EXTENT OF BUILDER’S RESPONSIBILITY
(a)
After delivery of the VESSEL the BUILDER shall have no responsibility for any other DEFECTS whatsoever in the VESSEL than the DEFECTS specified in paragraph 1 of this Article IX and Article VI. 5(d). The BUILDER shall have no liability whatsoever in any circumstances whatsoever to the BUYER or to any third party for anything except the cost of repairing the DEFECT itself. The BUILDER shall not in any circumstances be responsible or liable for any consequential or special losses, damages or expenses including, but not limited to, loss of time, loss of profit or earning or demurrage directly or indirectly occasioned to the BUYER or any third party by reason of the DEFECTS specified in paragraph 1 of this Article or due to repairs or other works done to the VESSEL to remedy such DEFECTS or any other consequential or special losses, damages or expenses related to any liability, cost or expense whatsoever or howsoever arising in connection with any damage to the VESSEL or to any cargo or to any other property owned by the BUYER or any third party caused as a result of the DEFECT and after delivery the BUYER shall hold the BUILDER harmless and indemnify the BUILDER against any such claim from the BUYER or any third party whatsoever in respect of any such matters and in respect of any other claims relating to the VESSEL for which the BUILDER does not expressly give an warranty to the BUYER under this Article.
(b)
The BUILDER shall not be responsible for any DEFECTS in any part of the VESSEL which may subsequent to delivery of the VESSEL have been replaced or in any way repaired by any persons other than the BUILDER and/or its nominated sub-contractors, or for any DEFECTS which have been caused or aggravated by omission or improper use and maintenance of the VESSEL on the part of the BUYER, its servants or agents or by ordinary wear and tear or by any other circumstances beyond the control of the BUILDER.
(c)
The guarantee contained as hereinabove in this Article replaces and excludes any other liability, guarantee, warranty and/or condition whether expressly set out in this CONTRACT or imposed or implied by the law, customary, statutory or otherwise, by reason of the construction and sale of the VESSEL by the BUILDER for and to the BUYER.
Any major parts or materials (including painting or coating) replaced during the Guarantee Period under Paragraph 1 of this Article shall be guaranteed for a further twelve (12) months, but not more than eighteen (18) months from delivery of the VESSEL.
(End of Article)
34
ARTICLE X:
PAYMENT
1. CURRENCY
All payments under this CONTRACT shall be made in United States Dollars.
2. TERMS OF PAYMENT
The payments of the CONTRACT PRICE shall be made as follows.
(a) First Instalment
Twenty percent (20%) of the CONTRACT PRICE amounting to U.S.Dollars Nineteen Million Sixty Thousand (US$ 19,060,000) shall be paid within three (3) business days after the BUYER’s receipt of the Letter of Guarantee via SWIFT, duly issued in accordance with Paragraph 8 of this Article, but in any event not earlier than 20
th
, December 2013.
Under this CONTRACT, in counting the business days, only Saturdays and Sundays are excepted. When a due date falls on a day when banks are not open for business in any of New York, London, Singapore or Seoul, such due date shall fall due upon the first business day next following.
(b) Second Instalment
Ten per cent (10%) of the CONTRACT PRICE amounting to U.S.Dollars Nine Million Five Hundred Thirty Thousand (US$9,530,000) shall be paid on the date falling six (6) months from the date of signing this CONTRACT.
(c) Third Instalment
Ten per cent (10%) of the CONTRACT PRICE amounting to U.S.Dollars Nine Million Five Hundred Thirty Thousand (US$9,530,000) shall be paid within three (3) business days of receipt by the BUYER of a facsimiled or emailed advice from the BUILDER that first steel cutting of the VESSEL has been commenced and confirmed in writing by the CLASSIFICATION SOCIETY. Such steel cutting to take place not more than twelve (12) months prior to the DELIVERY DATE.
(d) Fourth Instalment
Ten per cent (10%) of the CONTRACT PRICE amounting to U.S.Dollars Nine Million Five Hundred Thirty Thousand (US$9,530,000) shall be paid within three (3) business
35
days of receipt by the BUYER of a facsimiled or emailed advice from the BUILDER that the first block of the keel has been laid and confirmed in writing by the CLASSIFICATION SOCIETY. Such keel laying to take place not more than eight (8) months prior to the DELIVERY DATE.
(e) Fifth Instalment
Fifty
per cent (
50
%) of the CONTRACT PRICE amounting to U.S.Dollars
Forty Seven Million Six Hundred Fifty Thousand
(US$
47,650,000
) plus or minus any increase or decrease due to modifications and/or adjustment, if any, arising prior to delivery of the VESSEL of the CONTRACT PRICE under Articles III and V of this CONTRACT shall be paid to the BUILDER concurrently with the delivery and acceptance of the VESSEL, as evidenced by the execution by the parties of the Protocol of Delivery and Acceptance referred to in Article VII of the C
ONTRACT
. The BUILDER shall send to the BUYER a commercial invoice as demand for payment of this instalment.
(The date stipulated for payment of each of the five instalments mentioned above is hereinafter in this Article and in Article XI referred to as the “DUE DATE” of that instalment).
It is understood and agreed upon by the BUILDER and the BUYER that all payments under the provisions of this Article shall not be delayed or withheld by the BUYER due to any dispute or disagreement of whatsoever nature arising between the BUILDER and the BUYER. Should there be any dispute in this connection, the matter shall be dealt with in accordance with the provisions of arbitration in Article XIII hereof.
3. DEMAND FOR PAYMENT
At least fourteen(14) days prior to the date of each event provided in Paragraph 2 of this Article X on which any payment shall fall due hereunder, with the exception of the payment of the first instalment, the BUILDER shall notify the BUYER by e-mail or facsimile of the date such payment shall become due.
The BUYER shall immediately acknowledge receipt of such notification by e-mail or facsimile to the BUILDER, and make payment as set forth in this Article. If the BUILDER fails to receive the BUYER’s said acknowledgement within three (3) days after sending the aforementioned notification, the BUILDER shall promptly e-mail or facsimile to the BUYER a second notification of similar import. The BUYER shall immediately acknowledge by e-mail or facsimile receipt of the foregoing second notification regardless of whether or not the first notification was acknowledged as aforesaid.
36
4. METHOD OF PAYMENT
(a)
All the pre-delivery payments and the payment due on delivery in settlement of the CONTRACT PRICE as provided for in Paragraph 2 of this Article shall be made in U.S. Dollars on or before the DUE DATE thereof by telegraphic transfer as follows:
(i)
The payment of the first, second, third, and fourth instalments shall be made to the account of
Nong Hyup Bank of Korea, Head Office, Seoul, Korea (hereinafter called “NH Bank”), Account No. 001-1-544582 at JP Morgan Chase Bank,
1 Chase Manhattan Plaza 10th FL
,
New York, NY 10081, USA
(hereinafter called “JPMCB, N.Y.”) in favour of
Hyundai
Samho Heavy Industries Co., Ltd.
(hereinafter called the “
HSHI
”)
under advice by telefax or telex, including swift, to NH BANK by the remitting Bank. If the BUILDER should wish to nominate an alternative bank, the designation, the account number, identity of account holder and name of such account bank shall be notified by the BUILDER to the BUYER at least five (5) business days prior to the DUE DATE.
(ii)
Upon the cost adjustment to the C
ONTRACT PRICE
in accordance with the provisions of the C
ONTRACT
, the fifth
)
instalment as provided for in Paragraph 2.(e) of this Article shall be deposited at the account of NH BANK
, Account No. 001-1-544582 at JPMCB, N.Y., or any other bank, Seoul, Korea as designated by the BUILDER, by the BUYER in favour of HSHI
at least
three (3)
business days prior to the scheduled delivery date of the VESSEL notified by the BUILDER, with instructions valid for a period of twelve (12) business days that the
said instalment is
payable to the
HSHI
against presentation by the BUILDER to NH BANK
, or any other bank, Seoul, Korea as the case may be,
of a copy of the original PROTOCOL OF DELIVERY AND ACCEPTANCE of the VESSEL signed by the BUILDER and the BUYER, together with an invoice for the amount due under this instalment.
(iii)
If the BUILDER fails to present a copy of the PROTOCOL OF DELIVERY AND ACCEPTANCE to the Bank within the said period of twelve (12)
business
days or unless the validity of the instruction is further extended by the BUYER based on mutual agreement in writing reached with the BUILDER within the said twelve (12)
business
days validity period, the BUILDER’s bank shall remit the said amount of the fifth instalment to the BUYER’s bank account immediately upon expiry of the initial twelve (12)
business
days validity period of the instruction. Interest, if any, accrued by such deposit shall be for BUYER’s account.
In the event of the fifth instalment having been so returned by the Bank to the BUYER, the BUYER shall remit the fifth instalment again to the Bank as laid down in this paragraph upon receipt of a further notice from the Builder for readiness of
37
the Vessel for delivery.
(b)
Simultaneously with each of such payments, the BUYER shall advise the BUILDER of the details of the payments by e-mail or facsimile and at the same time, the BUYER shall cause the BUYER’s remitting Bank to advise NH BANK
, or any other bank, Seoul, Korea as the case may be,
of the details of such payments by authenticated SWIFT
,
bank cable or telex.
5. REFUND
BY THE BUILDER
(a)
The payments made by the BUYER to the BUILDER prior to delivery of the VESSEL shall constitute advances to the BUILDER. If the VESSEL is rejected by the BUYER in accordance with the terms of this CONTRACT or, except in the case of rescission or cancellation of this CONTRACT by the BUILDER under the provisions of Article XI.1 hereof, if the BUYER terminates, cancels or rescinds this CONTRACT pursuant to any of the provisions of this CONTRACT specifically permitting the BUYER to do so, the BUILDER shall forthwith refund to the BUYER, in U.S. Dollars, the full amount of total sums paid by the BUYER to the BUILDER in advance of delivery together with interest thereon as herein provided without deduction, set-off or withholding in US dollars.
(b)
The transfer and other bank charges of such refund shall be for the BUILDER’s account. The interest rate of the refund, as above provided, shall be
Six
per cent (
6
%) per annum from the date following the date of receipt by the BUILDER of the pre-delivery instalment(s) to the date of remittance by telegraphic transfer of such refund, provided, however, that if the cancellation of this CONTRACT by the BUYER is based upon delays due to Force Majeure or other causes beyond the control of the BUILDER as provided for in Article VIII.1 hereof, then in such event, the interest rate of refund shall be reduced to Four per cent (4%) per annum for the periods affected by such delays.
(c)
It is hereby understood by both parties that payment of any interest provided herein is by way of liquidated damages due to cancellation of this CONTRACT and not by way of compensation for use of money.
(d)
If, the BUILDER is required to refund to the BUYER the instalments paid by the BUYER to the BUILDER as provided in this Paragraph 5, the BUILDER shall return to the BUYER all of the BUYER’s supplies as stipulated in Article XII which were not incorporated into the VESSEL and pay to the BUYER an amount equal to the cost to the BUYER of those supplies incorporated into the VESSEL.
38
6. TOTAL
LOSS
If there is a total loss or a constructive total loss of the VESSEL prior to delivery thereof, the BUILDER shall proceed according to the mutual agreement of the parties hereto either:
(a)
to build another vessel in place of the VESSEL so lost and deliver it under this CONTRACT to the BUYER, provided that the parties hereto shall have agreed in writing to a reasonable cost and time for the construction of such vessel in place of the lost VESSEL; or
(b)
to refund to the BUYER the full amount of the total sums paid by the BUYER to the BUILDER under the provisions of Paragraph 2 of this Article together with interest thereon at the rate of Four per cent (4%) per annum from the date following the date of receipt by the BUILDER of such pre-delivery instalment(s) to the date of payment by the BUILDER to the BUYER of the refund.
(c)
If the parties hereto fail to reach such agreement within two (2) months after the VESSEL is determined to be a total loss or constructive total loss, the provisions of (b) hereinabove shall be applied.
7. DISCHARGE
OF OBLIGATIONS
Such refund as provided in the foregoing Paragraphs 5 and 6 by the BUILDER to the BUYER shall forthwith discharge all the obligations, duties and liabilities of each of the parties hereto to the other
(other than any obligations of the BUYER in respect of facilities afforded to the BUYER’s REPRESENTATIVE)
under this CONTRACT. Any and all refunds or payments due to the BUYER under this CONTRACT shall be made by telegraphic transfer to the account specified by the BUYER.
8.
REFUND
GUARANTEE
The BUILDER shall, within thirty (30) days following the execution of this CONTRACT, furnish the BUYER (and prior to the payment of the first instalment) with an assignable letter of guarantee issued by
NH BANK via SWIFT
for the assurance of and as security for the refund of the pre-delivery instalments under or pursuant to Paragraph 5 and/or Paragraph 6 above plus interest accrued thereon in accordance with this CONTRACT in the form and substance as annexed hereto as Exhibit “A”.
All expenses in issuing and maintaining the letter of guarantee described in this Paragraph shall be borne by the BUILDER.
If the BUILDER fails to provide the Refund Guarantee within thirty (30) days after the date of this CONTRACT, the BUYER shall be entitled to terminate this Contract with immediate
39
effect by written notice to the BUILDER.
(End of Article)
40
ARTICLE XI:
BUYER’S DEFAULT
1. DEFINITION
OF DEFAULT
The BUYER shall be deemed to be in default under this CONTRACT in the following cases:
(a)
If the first, second, third or fourth instalment is not paid to the BUILDER within the respective DUE DATE of such instalments; or
(b)
If the fifth instalment is not deposited in accordance with Article X.4.(a)(ii) hereof or if the said fifth instalment deposit is not released to the BUILDER against presentation by the BUILDER of a copy of the original PROTOCOL OF DELIVERY AND ACCEPTANCE; or
(c)
If the BUYER fails to take delivery of the VESSEL when the VESSEL is duly tendered for delivery by the BUILDER under the provisions of Article VII hereof; or
(d)
If an order or an effective resolution shall be passed for winding up of the BUYER (except for the purpose of reorganization, merger or amalgamation); or
In case the BUYER is in default as set out in Paragraph 1 above, the BUILDER is entitled to and shall have the following rights, powers and remedies in addition to such other rights, powers and remedies as the BUILDER may have elsewhere in this CONTRACT and/or at law, at equity or otherwise.
2. EFFECT
OF THE BUYER’S DEFAULT ON OR BEFORE THE DELIVERY OF
THE
VESSEL
If the BUYER shall be in default
of its obligations under this CONTRACT
as provided in Paragraph 1 above, then;
(a)
The DELIVERY DATE of the VESSEL shall be extended automatically for the actual period of such default and the BUILDER shall not be obliged to pay any liquidated damages for the delay in delivery of the VESSEL caused thereby.
(b)
The BUYER shall pay to the BUILDER interest at the rate of
Six
percent (
6
%) per annum in respect of the instalment(s) in default from the respective DUE DATE to the date of actual receipt by the BUILDER of the full amount of such instalment(s).
(c)
If the BUYER is in default in payment of any of the instalment(s) due and payable prior to or simultaneously with the delivery of the VESSEL, the BUILDER shall, in writing or by
41
e-mail or facsimile, notify the BUYER to that effect, and the BUYER shall, upon receipt of such notification, forthwith acknowledge in writing or by facsimile to the BUILDER that such notification has been received.
(d)
If any of the BUYER’s default continues for a period o
f fourteen
(
14
) days after the BUILDER’s notification to the BUYER of such default, the BUILDER may, at its option, rescind this CONTRACT by serving upon the BUYER a written notice or e-mail or facsimile notice of rescission confirmed in writing.
(e)
In the event of such cancellation by the BUILDER of this CONTRACT due to the BUYER’s default as provided for in paragraph 1 above, the BUILDER shall
be entitled to retain and apply the instalments already paid by the BUYER to the recovery of the BUILDER’s proven loss and damage including reasonable estimated profit (in relation to this CONTRACT) due to the BUYER’s default and the cancellation of this CONTRACT and at the same time the BUILDER shall
have the full right and power either to complete or not to complete the VESSEL which is the sole property of the BUILDER as it deems fit, and to sell the VESSEL at a public or private sale on such terms and conditions as the BUILDER thinks fit
without being answerable for any loss and damage. However
the BUILDER shall exercise normal commercial diligence to secure the market price obtainable for a sale in such circumstances; and
(f)
The proceeds received by the BUILDER from the sale shall be applied in addition to the instalment(s) retained by the BUILDER as mentioned hereinabove as follows :
First, in payment of all reasonable costs and expenses of the sale of the VESSEL, including interest thereon at
Six
per cent (
6
%) per annum from the respective date of payment of such costs and expenses aforesaid to the date of sale on account of the BUYER’s default.
Second, if the VESSEL has been completed, in or towards satisfaction of the unpaid balance of the CONTRACT PRICE, to which shall be added the cost of all additional work and extras agreed by the BUYER including interest thereon at
Six
per cent (
6
%) per annum from the respective DUE DATE of the instalment in default to the date of sale, or if the VESSEL has not been completed, in or towards satisfaction of the unpaid amount of the cost incurred by the BUILDER prior to the date of sale on account of construction of the VESSEL, including work, labour, materials and reasonably estimated profit which the BUILDER would have been entitled to receive if the VESSEL had been completed and delivered plus interest thereon at
Six
per cent (
6
%) per annum from the respective DUE DATE of the instalment in default to the date of sale.
Third, the balance of the proceeds, if any, shall belong to the BUYER, and shall forthwith
42
be paid over to the BUYER by the BUILDER.
In the event of the proceeds from the sale together with instalment(s) retained by the BUILDER being insufficient to pay the BUILDER, the BUYER shall be liable for the deficiency and shall pay the same to the BUILDER upon its demand.
3. DEFINITION OF BUILDER’S DEFAULT
The BUILDER shall be deemed to be in default of its obligations under this CONTRACT in the event of:
(i)
The filing of a petition or the making of an order or the passing of an effective resolution for the winding up of the BUILDER (other than for the purpose of reconstruction or amalgamation which has been previously approved in writing by the BUYER), or the appointment of a receiver, administrator, compulsory manager, trustee, liquidator or other similar officer has been made against the BUILDER or any of its assets under the laws of any jurisdiction or the appointment of a receiver of the undertaking or property of the BUILDER, or the insolvency of or a suspension of payments by the BUILDER, or the cessation of the carrying on of business by the BUILDER at any of its shipyards, or the making by the BUILDER of any special arrangement or composition with the creditors of the BUILDER; or any like or similar circumstance occurring under the laws of the Republic of Korea; or
(ii)
The occurrence of any of the events set out in (i) with respect to the bank issuing the Letter of Guarantee referred to in Article X.5, and the failure by the BUILDER within sixty (60) days thereof to replace such bank with an alternative guarantor reasonably acceptable to the BUYER and its bank; or
(iii)
Where the BUILDER:
(a)
remains in default of performance of any obligation or provision of the CONTRACT fourteen (14) days after receiving written notice from the BUYER that the BUILDER is in default; or
(b)
fails, neglects, refuses or is unable during the course of the construction of the VESSEL to provide materials, equipment, services or labour to perform the construction in accordance with the SPECIFICATIONS, the PLAN, and this CONTRACT prior to the date on which the BUYER shall be entitled to cancel this CONTRACT for delay.
43
4. EFFECT OF BUILDER’S DEFAULT
If any such default as referred to in Paragraph3 above occurs, then the BUYER may terminate this CONTRACT by promptly notifying the BUILDER in writing but not later than two (2) weeks from the date of the BUILDER’s default takes place or after the period to remedy it has expired. Such cancellation is to be effective as of the date when such notice of cancellation is received by the BUILDER and the provisions of Article X. 5 shall apply in respect of such termination. In any event the BUYER shall be entitled to pursue such claims and remedies as it may elect subject to the applicable law.
(End of Article)
44
ARTICLE
XII:
BUYER’S SUPPLIES
1. RESPONSIBILITY
OF THE BUYER
(a)
The BUYER shall, at its cost and expense, supply all the BUYER’s supplies mentioned in the SPECIFICATIONS, if any, (hereinafter called the “BUYER’S SUPPLIES”), to the BUILDER at the SHIPYARD in perfect condition ready for installation and in accordance with the time schedule to be furnished by the BUILDER to meet the building schedule of the VESSEL.
Such schedule to be advised by the BUILDER within six (6) months after this CONTRACT becomes effective according to Article XX.
(b)
In order to facilitate the installation of the BUYER’S SUPPLIES by the BUILDER in or on the VESSEL, the BUYER shall furnish the BUILDER with the necessary plans, instruction books, test report and all test certificates reasonably required by the BUILDER and shall cause the representative(s) of the makers of the BUYER’S SUPPLIES to give the BUILDER any advice, instructions or assistance which the BUILDER may reasonably require in the installation or adjustment thereof at the SHIPYARD, all without cost or expense to the BUILDER.
(c)
The BUYER shall be liable for any expense incurred by the BUILDER for repair of the BUYER’S SUPPLIES due to defective design or materials, poor workmanship or performance or due to damage in transit and the DELIVERY DATE of the VESSEL shall be extended for the period of such repair if such repair shall affect the delivery of the VESSEL.
(d)
Commissioning into good order of the BUYER’S SUPPLIES during and after installation on board shall be made at the BUYER’s expense by the representative of respective maker or the person designated by the BUYER in accordance with the BUILDER’s building schedule.
(e)
Should the BUYER fail to deliver to the BUILDER the BUYER’S SUPPLIES and the necessary document or advice for such supplies within the time specified by the BUILDER, the DELIVERY DATE of the VESSEL shall automatically be extended for the period of such delay if such delay in delivery shall affect the delivery of the VESSEL. In such event, the BUYER shall pay to the BUILDER all losses and damages sustained by the BUILDER due to such delay in the delivery of the BUYER’S SUPPLIES and such payment shall be made upon delivery of the VESSEL, provided, however, that the BUILDER shall have :
45
(i)
furnished the BUYER with the time schedule referred to above, two (2) months prior to installation of the BUYER’S SUPPLIES and
(ii)
given the BUYER written notice of any delay in delivery of the BUYER’S SUPPLIES and the necessary document or advice for such supplies as soon as the delay occurs which might give rise to a claim by the BUILDER under this Paragraph.
Furthermore, if the delay in delivery of the BUYER’S SUPPLIES and the necessary document or advice for such supplies should exceed
ten (10) working
days from the date specified by the BUILDER, the BUILDER shall be entitled to proceed with construction of the VESSEL without installation of such items (regardless of their nature or importance to the BUYER or the VESSEL) in or on the VESSEL without prejudice to the BUILDER’s right hereinabove provided, and the BUYER shall accept the VESSEL so completed.
2. RESPONSIBILITY
OF THE BUILDER
The BUILDER shall be responsible for storing, safekeeping and handling the BUYER’S SUPPLIES
which has appropriate proof against weather, dust and theft and,
which the BUILDER is required to install on board the VESSEL under the SPECFICATIONS after delivery of such supplies to the SHIPYARD and shall procure that at all times the
BUYER’S SUPPLIES
are clearly marked as being the property of the BUYER. The BUILDER shall install such supplies on board the VESSEL at the BUILDER’s expense.
The BUILDER shall not be responsible for the quality, performance or efficiency of any equipment included in the BUYER’S SUPPLIES and is under no obligation with respect to the guarantee of such equipment against any defects caused by poor quality, performance or efficiency of the BUYER’S SUPPLIES.
If any of the
BUYER’S SUPPLIES
are lost or damaged while in the custody of the BUILDER, the BUILDER shall, if the loss or damage is due breach of its obligations under this Paragraph 2, default, negligence or omission on its part, be responsible for such loss or damage.
Upon delivery of the
BUYER’S SUPPLIES
at the SHIPYARD, the BUILDER and the BUYER shall carry out a joint unpacking inspection of the
BUYER’S SUPPLIES
so that the condition at the time of delivery can be confirmed.
3. RETURN OF THE BUYER’S SUPPLIES
If pursuant to the provisions of this CONTRACT the BUILDER is required to refund to the BUYER the instalments paid by the BUYER to the BUILDER, the BUILDER shall either (i)
46
return to the BUYER all of the
BUYER’S SUPPLIES
not incorporated into the VESSEL and pay to the BUYER an amount equal to the actual cost of those supplies incorporated into the VESSEL, or (ii) pay to the BUYER an amount equal to the actual cost of all supplies provided to the BUILDER and paid for by the BUYER irrespectively of whether or not the same have been incorporated into the VESSEL by mutual agreement.
(End of Article)
47
ARTICLE XIII:
ARBITRATION
1. DECISION BY THE CLASSIFICATION SOCIETY
If any dispute arises between the parties hereto in regard to the design and/or construction of the VESSEL, its machinery and equipment, and/or in respect of the materials and/or workmanship thereof and/or thereon, and/or in respect of interpretations of the SPECIFICATIONS, the parties may by mutual agreement refer the dispute to the CLASSIFICATION SOCIETY or to such other expert as may be mutually agreed between the parties hereto, and whose decision shall be final, conclusive and binding upon the parties hereto.
2. LAWS
APPLICABLE
Any arbitration arising hereunder shall be governed by and conducted in accordance with the London Maritime Arbitrators’ Association Terms or any statutory modification or re-enactments thereof for the time being in force.
The award of the arbitrator shall be final, conclusive and binding upon parties hereto.
3. PROCEEDINGS OF ARBITRATION
In the event that the parties hereto do not agree to settle a dispute according to Paragraph 1 of this Article and/or in the event of any other dispute of any kind whatsoever between the parties and relating to this CONTRACT or its rescission or any stipulation herein, such dispute shall be submitted to arbitration in London. The parties shall try to agree a single arbitrator to conduct the arbitration.
If the parties cannot agree upon the appointment of the single arbitrator within two (2) weeks after one of the parties has given notice to the other party notifying that the other party refer the dispute to arbitration, the dispute shall be settled by three arbitrators, each party appointing one arbitrator, the third being appointed by the two arbitrators so appointed. In the further event that the two arbitrators appointed respectively by the parties hereto as aforesaid should be unable to reach agreement on the appointment of the third arbitrator within twenty (20) days from the date on which the second arbitrator is appointed, either party of the said two arbitrators may apply to the President for the time being of the London Maritime Arbitrators Association to appoint the third arbitrator. If either of the appointed arbitrators refuses or is incapable of acting, the party who appointed him shall appoint a new arbitrator in his place.
If one party fails to appoint an arbitrator - either originally or by way of substitution - for two (2) weeks after the other party having appointed its arbitrator, has served the defaulting party notice of default for failure to make the appointment, the President of the London Maritime
48
Arbitrators Association shall, after application from the party having appointed its arbitrator, also appoint an arbitrator on behalf of the party in default. The award of the arbitration made by the sole arbitrator or by the majority of the three arbitrators as the case may be shall be final, conclusive and binding upon the parties hereto.
4.
NOTICE OF AWARD
The award shall immediately be given to the BUYER and the BUILDER by telefax or e-mail.
5. EXPENSES
The Arbitrator or the Arbitration Board shall determine which party shall bear the expenses of the arbitration or the portion of such expenses which each party shall bear.
6. ENTRY IN COURT
In case of failure by either party to respect the award of the arbitration, the judgement may be entered in any proper court having jurisdiction thereof.
7. ALTERATION OF DELIVERY DATE
In the event of reference to arbitration of any dispute arising out of matters occurring prior to delivery of the VESSEL, the award may include any postponement of the DELIVERY DATE which the Arbitrator or the Arbitration Board may deem appropriate. To the maximum extent possible and provided the arbitration proceedings or the subject matter of the dispute do not affect the construction of the VESSEL, work under this CONTRACT shall continue during the arbitration of any dispute.
(End of Article)
49
ARTICLE
XIV:
SUCCESSORS AND ASSIGNS
1. TRANSFER OR ASSIGNMENT BY THE BUYER
The
BUILDER agrees that, prior to delivery of the VESSEL, this CONTRACT may,
with
the prior written approval of the BUILDER, which the BUILDER shall not
unreasonably
withhold or delay, be transferred by novation to or assigned to another company and the title thereof may be taken by
another
company. In the event of any transfer or assignment pursuant to the terms of this
CONTRACT,
the transferee or assignee, its successors and assigns shall succeed to all the
rights
and obligations of the BUYER under this CONTRACT including but not limited to post-construction warranties of quality and the benefit of the Refund Guarantee. However, the
BUYER
shall remain responsible for performance by the assignee, its successors
and
assigns of all the BUYER’s obligations, liabilities and responsibilities under
this
CONTRACT. It is understood that any expenses or charges incurred due to
the
transfer or assignment of this CONTRACT by the BUYER shall be for the account of the BUYER.
The
BUILDER shall have the right to transfer or assign this CONTRACT at any time after
the
effective date hereof, provided that prior written agreement is obtained from
the
BUYER.
2. TRANSFER BY THE BUILDER
The BUILDER shall not have the right to assign or transfer this CONTRACT at any time after the Effective Date (as defined in ARTICLE XIX) hereof, unless prior written approval is obtained from the BUYER.
(End of Article)
50
ARTICLE
XV:
TAXES AND DUTIES
1. TAXES
Unless otherwise expressly provided for in this CONTRACT, all costs and taxes including stamp duties, if any, incurred in or levied by any country except Korea in connection with this CONTRACT shall be borne by the BUYER and corresponding costs and taxes in Korea
, before delivery of the VESSEL, if any,
shall be borne by the BUILDER.
2. DUTIES
The BUILDER shall hold the BUYER harmless from any payment of duty imposed in Korea upon materials or supplies which, under the terms of this CONTRACT, or amendments thereto, may be supplied by the BUYER from abroad for the construction of the VESSEL.
The BUILDER shall likewise hold the BUYER harmless from any payment of duty imposed in Korea in connection with materials or supplies for operation of the VESSEL, including running stores, provisions and supplies necessary to stock the VESSEL for its operation and also from the payment of export duties
incurred by the BUILDER in Korea
, if any, to be imposed upon the VESSEL as a whole or upon any of its parts or equipment. This indemnity does not, however, extend to any items purchased by the BUYER for use in connection with the VESSEL which are not absolutely required for the construction or operation of the VESSEL.
3. KOREAN BUNKER SALES TAX
The price of the delivery bunkers remaining on board the VESSEL on the DELIVERY DATE which is to be paid by the BUYER to the BUILDER shall be net of any sales tax payable to the Korean Government
.
(End of Article)
51
ARTICLE
XVI:
PATENTS, TRADEMARKS AND COPYRIGHTS
1. PATENTS,
TRADEMARKS AND COPYRIGHTS
Machinery and equipment of the VESSEL, whether made or furnished by the BUILDER under this CONTRACT, may bear the patent numbers, trademarks, or trade names of the manufacturers. The BUILDER shall defend and hold harmless the BUYER from all liabilities or claims for or on account of the use of any patents, copyrights or design of any nature or kind, or for the infringement thereof including any unpatented invention made or used in the performance of this CONTRACT and also for any costs and expenses of litigation, if any in connection therewith. No such liability or responsibility shall be with the BUILDER with regard to components and/or equipment and/or design supplied by the BUYER.
Nothing contained herein shall be construed as transferring any patent or trademark rights or copyrights in equipment covered by this CONTRACT, and all such rights are hereby expressly reserved to the true and lawful owners thereof.
2. RIGHTS
TO THE SPECIFICATIONS, PLANS AND ETC.
The BUILDER retains all rights with respect to the SPECIFICATIONS, plans and working drawings, technical descriptions, calculations, test results and other data, information and documents concerning the design and construction of the VESSEL and the BUYER undertakes therefore not to disclose the same or divulge any information contained therein to any third parties, without the prior written consent of the BUILDER, excepting where it is necessary for usual marketing
,
operation, repair and maintenance of the VESSEL or registration, classification, insurance or sale of the VESSEL.
In case the BUYER requests the prior written consent of the BUILDER as set out in the above paragraph, the BUYER shall provide the BUILDER with a written undertaking from the recipient stating that (1) he acknowledges and shall observe the foregoing terms concerning the BUILDER’s right to confidential information and (2) any confidential information furnished in tangible form shall not be duplicated by recipient except for the purpose of the job specifically assigned to him. (3) Upon the completion of his job requiring reference to the confidential information, recipient shall return to the BUYER at his option or otherwise destroy all the confidential information received in written or tangible form including copies or reproductions or other media containing such confidential information. (4) Any documents or other media developed by the recipient containing confidential information shall be destroyed by the recipient.
(End of Article)
52
ARTICLE XVII :
COMPLIANCE AND ANTI-BRIBERY
1. REPRESENTATIONS OF THE PARTIES
During the Term of this CONTRACT and for the duration of any services provided hereunder, each party certifies and represents as follows:
(a)
It will comply with the laws of any jurisdiction applicable to such party as it relates to this CONTRACT, including but not limited to any applicable anti-corruption and anti-bribery laws, also including, without limitation, the United States Foreign Corrupt Practices Act (“US FCPA”), the UK Bribery Act 2010 (“UK Bribery Act”) and the anti-bribery or anti-corruption laws of South Korea as such laws may be amended from time to time.
(b)
In connection with this CONTRACT, it has not and will not make any payments or gifts or provide other advantages, or any offers or promises of payments or gifts or other advantages of any kind, directly or indirectly, to:
a. any person or entity with the intention of obtaining or retaining a business advantage for itself or the other party to this CONTRACT;
b. any official or member of any government or any agency or instrumentality thereof; any official or member of any public international organisation or any agency or instrumentality thereof; any or official of a political party or any candidate for political office (herein ‘public official’); or any person while knowing or reasonably suspecting that all or a portion of such money or thing of value will be offered, given or promised, directly or indirectly, to any public official, in violation of the UK Bribery Act, the US FCPA or the laws of South Korea.
(c)
In connection with this CONTRACT, it has not and will not request, agree to accept or accept from any person or entity any payments or gifts or other advantages, or any offers or promises of payments or gifts or other advantages of any kind, directly or indirectly, as a reward or inducement to perform its obligations under this CONTRACT in any way improperly.
2. INDEMNIFICATION
Each party agrees that it will fully indemnify, defend and hold harmless the other party from any claims, liabilities, damages, expenses, penalties, judgments and losses (including reasonable attorneys’ fees) assessed or resulting by reason of a breach of the representations and undertakings contained in this Article XVII to the extent permitted by law.
(End of Article)
53
ARTICLE
XVII
I
:
INTERPRETATION AND GOVERNING LAW
This
CONTRACT has been prepared in English and shall be executed in duplicate
and
in such number of additional copies as may be required by either party
respectively.
The parties hereto agree that the validity and interpretation of this
CONTRACT
and of each Article and part thereof shall be governed by the laws of
England.
(End of Article)
54
ARTICLE
X
IX
:
NOTICE
Any
and all notices, requests, demands, instructions, advices and communications
in
connection with this CONTRACT shall be written in English, sent by registered
air
mail or facsimile or by hand or email and shall be deemed to be given when first
received
whether by registered mail or facsimile, by hand or email. They shall be
addressed
as follows, unless and until otherwise advised:
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To the BUILDER
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:
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HYUNDAI
SAMHO HEAVY INDUSTRIES CO., LTD.
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93, Daebul-Ro, Samho-Eup, Yeongam-Gun, Jeollanam-Do
,
Korea
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Attention:
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Mr. S. W. Chun
/ Contract Management Dep’t.
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Tel : +82 61 460 2649
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Facsimile:
+ 82 61 460 3707
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E-mail: swc@hshi.co.kr
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To the BUYER
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:
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NAVIG8 CRUDE TANKERS INC
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c/o Navig8 Asia Pte Ltd
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3 Temasek Avenue, #25-01 Centennial Tower, Singapore 039190
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Attention:
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Mr. Daniel Chu
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Facsimile: +44 207 467 5867
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Tel: +44 207 467 5888
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E-mail: legal@navig8group.com
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The
said notices shall become effective upon receipt of the letter, e-mail or
facsimile
communication by the receiver thereof. Where a notice by e-mail or facsimile is concerned which is required to be confirmed by letter, then, unless
the
CONTRACT or the relevant Article thereof otherwise requires, the notice shall
become
effective upon receipt of the e-mail or facsimile.
(End of Article)
55
ARTICLE
XX:
EFFECTIVENESS OF THIS CONTRACT
This CONTRACT shall become effective upon signing by the parties hereto.
(End of Article)
56
ARTICLE
XX
I
:
EXCLUSIVENESS
This
CONTRACT shall constitute the only and entire agreement between the
parties
hereto, and unless otherwise expressly provided for in this CONTRACT, all
other
agreements, oral or written, made and entered into between the parties prior
to
the execution of this CONTRACT shall be null and void
and
shall be superseded by this CONTRACT.
(End of Article)
57
IN WITNESS WHEREOF, the parties hereto have caused this CONTRACT to
be
duly executed in duplicate on the date and year first above written.
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BUYER
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BUILDER
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For
and on behalf of
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For and on behalf of
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NAVIG8 CRUDE TANKERS INC
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HYUNDAI SAMHO
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HEAVY INDUSTRIES CO., LTD.
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By
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/s/ Daniel Chu
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By
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/s/ Sam H. Ka
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Name: Daniel Chu
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Name:
Sam H. Ka
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Title:
Attorney-in-Fact
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Title:
Attorney-in-Fact
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WITNESS
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WITNESS
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By
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/s/ Siduarth Nair
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By
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/s/ Y. D. Park
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Name: Siduarth Nair
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Name:
Y. D. Park
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Title:
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Title: SVP
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58
EXHIBIT “A”
DEED OF GUARANTEE
Date :[ ], 2013
Gentlemen:
We hereby open our irrevocable letter of guarantee number [ ] (this “Guarantee”) in favour of
NAVIG8 CRUDE TANKERS INC
, a corporation organized and existing under the laws of
Marshall Islands
and having its principal office at
Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960
(hereinafter called the “BUYER”) for account of HYUNDAI SAMHO HEAVY INDUSTRIES CO., LTD.,
Samho
, Korea (hereinafter called the “BUILDER”) as follows in connection with the shipbuilding contract dated [ ], 2013 (hereinafter called “CONTRACT”) made by and between the BUYER and the BUILDER for the construction of 300,000 DWT Class Crude Oil Carrier having the BUILDER’s Hull No.
(hereinafter called the “VESSEL”).
If, in connection with the terms of the CONTRACT, the BUYER shall become entitled to a refund of the advance payment made to the BUILDER prior to the delivery of the VESSEL, we hereby irrevocably, unconditionally and absolutely guarantee, as primary obligor and not merely as surety, to you, your successors and assignees, the repayment of the same to the BUYER within thirty (30) days after demand not exceeding US$ [ ] (Say U.S. Dollars [ ] only)together with interest thereon at the rate of
six per cent (6%)
per annum from the date following the date of receipt by the BUILDER to the date of remittance by telegraphic transfer of such refund.
The amount of this Guarantee will be automatically increased upon the BUILDER’s receipt of the respective instalment, not more than three (3) times, each time by the amount of such instalment plus interest thereon as provided in the CONTRACT, but in any eventuality the amount of this Guarantee shall not exceed the total sum of US$ [ ] (Say U.S. Dollars [ ] only) plus interest thereon at the rate of
six
per cent (
6
%) per annum from the date following the date of the BUILDER’s receipt of each instalment to the date of remittance by telegraphic transfer of the refund. However, in the event of cancellation of the CONTRACT being based on delays due to Force Majeur
e
as provided under Article VIII of the CONTRACT, the interest rate of refund shall be reduced to four per cent (4%) per annum as provided in Article X.5of the CONTRACT for the periods affected by such delays.
The payment by us under this Guarantee shall be made(subject to the third paragraph hereof) against the BUYER’s first written demand and signed statement certifying that the BUYER’s demand for refund has been made in conformity with Article X of the CONTRACT and the BUILDER has failed to make the refund within
thirty (30)
days after the BUYER’s demand. Refund shall be made to the BUYER by telegraphic transfer in United States Dollars. All
payments under this Guarantee shall be made without any set-off or counterclaim and without any
59
deduction or withholding for or on account of any taxes, duties or charges whatsoever unless we are compelled by law to deduct or withhold the same, in which case we shall make the minimum deduction or withholding permitted and will pay to you such additional amounts as may be necessary in order that the net amount received by you after such deduction or withholding shall be equal to the amount which would have been received had no such deduction or withholding been made.
In case any refund is made to the BUYER by the BUILDER or by us under this Guarantee, our liability hereunder shall be automatically reduced by the amount of such refund.
Notwithstanding the provisions hereinabove, in the event that within
thirty (30)
days from the date of your claim to the BUILDER referred to above, we receive notification from you or the BUILDER accompanied by written confirmation to the effect that your claim to cancel the CONTRACT or your claim for refundment thereunder has been disputed and referred to arbitration in accordance with the provisions of the CONTRACT, we shall under this Guarantee, refund to you the sum adjudged to be due to you by the BUILDER pursuant to the award made under such arbitration, or, if applicable, pursuant
to
a final court judgment issued in relation thereto, immediately upon receipt from you of a demand for the sums so adjudged and a copy of the award or court judgment, as the case may be.
The validity of this Guarantee and our liability under or in connection therewith shall not be discharged, impaired, reduced or in any way affected by any extension of time or other amendment, variation, modification or supplement whatsoever of or to the CONTRACT nor by the giving of any time or any concession granted by you to the BUILDER or any indulgence, waiver or consent on your part in respect of time or any other terms of the CONTRACT, nor by any delay or failure by you in enforcing your rights under or in connection with the CONTRACT, nor by the liquidation, insolvency, bankruptcy, reorganization, amalgamation, reconstruction or analogous proceedings or other financial failure of the BUILDER or any other person, nor by the illegality, invalidity or unenforceability or any defect in the CONTRACT or any provisions thereof, or any repudiation, termination or rescission thereof or any other matter or circumstance which would (but for the provisions of this paragraph) discharge, impair, affect or reduce our liability under or in connection with this Guarantee.
This Guarantee shall become null and void upon receipt by the BUYER of the sum guaranteed hereby together with interest thereon or upon acceptance by the BUYER of the delivery of the VESSEL in accordance with the terms of the CONTRACT and, in either case, this Guarantee shall be returned to us.
This Guarantee is valid and effective from the date of this Guarantee until such time as the VESSEL is delivered by the BUILDER to the BUYER in accordance with the provisions of the
CONTRACT. However in the event that a dispute in respect of a refund is being resolved by
60
arbitration in accordance with Article XIII of the CONTRACT, then this Guarantee shall continue to remain in force until 30 business days after such arbitration proceedings are concluded and a final arbitration award has been issued.
We agree that you may assign without our prior written consent the benefit of this Guarantee to any lawful assignee of the benefit of the CONTRACT.
This Guarantee and any non-contractual obligations arising out of or in connection with it shall be governed by, interpreted and construed in accordance with the laws of England. The undersigned hereby submits to the exclusive jurisdiction of the courts of England for the settlement of any disputes which may arise out of or in connection with this Guarantee and any non-contractual obligations arising out of or in connection with it. We hereby irrevocably appoint [ ] to act as our agent to receive and accept on our behalf any process or other document relating to any proceedings in the English courts which are connected with this Guarantee.
Very truly yours,
This Guarantee has been executed and delivered as a Deed on the day and year written above.
Signed as a Deed on behalf of [ ],a company incorporated in [ ]
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by:
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a
nd
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being persons who, in accordance with
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the laws of that territory, are acting under
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the authority of the company
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In the presence of:
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Witness’s signature:
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Name (print):
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Occupation:
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Address:
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61
Exhibit 10.79
SHIPBUILDING CONTRACT
FOR
CONSTRUCTION OF ONE 300,000 DWT CRUDE OIL TANKER
(HULL NO. H1355)
BETWEEN
NAVIG8 CRUDE TANKERS INC. or its Nominee
as BUYER
and
CHINA SHIPBUILDING TRADING COMPANY, LIMITED
and
SHANGHAI WAIGAOQIAO SHIPBUILDING CO., LTD.
Collectively as SELLER
CONTENTS
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ARTICLE
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PAGE NO.
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ARTICLE I DESCRIPTION AND CLASS
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2
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1. DESCRIPTION:
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2
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2. CLASS AND RULES
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2
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3. PRINCIPAL PARTICULARS AND DIMENSIONS OF THE VESSEL
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3
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4. GUARANTEED SPEED
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3
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5. GUARANTEED FUEL CONSUMPTION
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3
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6. GUARANTEED DEADWEIGHT
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4
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7. SUBCONTRACTING:
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4
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8. REGISTRATION:
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4
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ARTICLE II CONTRACT PRICE & TERMS OF PAYMENT
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5
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1. CONTRACT PRICE:
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5
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2. CURRENCY:
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5
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3. TERMS OF PAYMENT:
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5
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4. METHOD OF PAYMENT:
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6
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5. PREPAYMENT:
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8
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6. SECURITY FOR PAYMENT OF INSTALMENTS BEFORE DELIVERY:
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8
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7. REFUNDS
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8
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ARTICLE III ADJUSTMENT OF THE CONTRACT PRICE
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10
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1. DELIVERY
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10
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2. INSUFFICIENT SPEED
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11
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3. EXCESSIVE FUEL CONSUMPTION
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13
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4. DEADWEIGHT
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13
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5. EFFECT OF RESCISSION OR CANCELLATION
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13
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ARTICLE IV SUPERVISION AND INSPECTION
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14
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1. APPOINTMENT OF THE BUYER’S REPRESENTATIVES
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14
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2. COMMENTS TO PLANS AND DRAWINGS
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14
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3. SUPERVISION AND INSPECTION BY THE BUYER’S REPRESENTATIVES
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15
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4. LIABILITY OF THE SELLER
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17
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5. SALARIES AND EXPENSES
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17
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6. REPLACEMENT OF BUYER’S REPRESENTATIVES
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17
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ARTICLE V MODIFICATION,CHANGES AND EXTRAS
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18
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1. HOW EFFECTED
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18
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2. CHANGES IN RULES AND REGULATIONS, ETC.
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19
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3. SUBSTITUTION OF MATERIALS AND/OR EQUIPMENT
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20
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4. BUYER’S SUPPLIED ITEMS
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20
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ARTICLE VI TRIALS
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22
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I
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1. NOTICE
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22
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2. HOW CONDUCTED
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23
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3. TRIAL LOAD DRAFT
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23
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4. METHOD OF ACCEPTANCE OR REJECTION
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24
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5. DISPOSITION OF SURPLUS CONSUMABLE STORES
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24
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6. EFFECT OF ACCEPTANCE
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25
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ARTICLE VII DELIVERY
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26
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1. TIME AND PLACE
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26
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2. WHEN AND HOW EFFECTED
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26
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3. DOCUMENTS TO BE DELIVERED TO THE BUYER
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26
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4. TITLE AND RISK
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27
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5. REMOVAL OF VESSEL
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28
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6. TENDER OF THE VESSEL
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28
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ARTICLE VIII DELAYS & EXTENSION OF TIME FOR DELIVERY
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29
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1. CAUSE OF DELAY
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29
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2. NOTICE OF DELAY
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30
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3. RIGHT TO CANCEL FOR EXCESSIVE DELAY
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30
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4. DEFINITION OF PERMISSIBLE DELAY
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31
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ARTICLE IX WARRANTY OF QUALITY
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32
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1. GUARANTEE OF MATERIAL AND WORKMANSHIP
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32
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2. NOTICE OF DEFECTS
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32
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3. REMEDY OF DEFECTS
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32
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4. EXTENT OF THE SELLER’S LIABILITY
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33
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ARTICLE X CANCELLATION, REJECTION AND RESCISSION BY THE BUYER
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35
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ARTICLE XI BUYER’S DEFAULT
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37
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1. DEFINITION OF DEFAULT
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37
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2. NOTICE OF DEFAULT
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37
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3. INTEREST AND CHARGE
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37
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4. DEFAULT BEFORE DELIVERY OF THE VESSEL
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38
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5. SALE OF THE VESSEL
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39
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ARTICLE XII INSURANCE
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40
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1. EXTENT OF INSURANCE COVERAGE
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40
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2. APPLICATION OF RECOVERED AMOUNT
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40
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3. TERMINATION OF THE SELLER’S OBLIGATION TO INSURE
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41
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ARTICLE XIII DISPUTES AND ARBITRATION
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42
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1. PROCEEDINGS
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42
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2. ALTERNATIVE ARBITRATION BY AGREEMENT
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42
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3. NOTICE OF AWARD
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43
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4. EXPENSES
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43
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5. AWARD OF ARBITRATION
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43
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II
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6. ENTRY IN COURT
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43
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7. ALTERATION OF DELIVERY TIME
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43
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ARTICLE XIV RIGHT OF ASSIGNMENT
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44
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ARTICLE XV TAXES AND DUTIES
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45
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1. TAXES
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45
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2. DUTIES
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45
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ARTICLE XVI PATENTS, TRADEMARKS AND COPYRIGHTS
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46
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ARTICLE XVII NOTICE
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47
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ARTICLE XVIII EFFECTIVE DATE OF CONTRACT
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49
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ARTICLE XIX INTERPRETATION
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50
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1. LAW APPLICABLE
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50
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2. DISCREPANCIES
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50
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3. DEFINITION
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50
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4. ENTIRE AGREEMENT
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50
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EXHIBIT “A” : IRREVOCABLE LETTER OF GUARANTEE NO.
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52
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EXHIBIT “B” IRREVOCABLE LETTER OF GUARANTEE
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55
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FOR THE 2ND, 3RD, AND 4TH INSTALLMENTS
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55
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III
SHIPBUILDING CONTRACT FOR
CONSTRUCTION OF ONE
DIESEL
DRIVEN 300,000 DWT CRUDE OIL TANKER
(HULL NO.
H1355
)
This CONTRACT, entered into this 17th day of December 2013 by and between NAVIG8 CRUDE TANKERS INC. or its Nominee, a corporation organized and existing under the Laws of Marshall Islands, having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960 (hereinafter called the “BUYER”) on one part; and CHINA SHIPBUILDING TRADING COMPANY, LIMITED, a corporation organized and existing under the Laws of the People’s Republic of China, having its registered office at 56(Yi), Zhongguancun Nandajie, Beijing 100044, the People’s Republic of China (hereinafter called “CSTC”), and SHANGHAI WAIGAOQIAO SHIPBUILDING CO., LTD. a corporation organized and existing under the Laws of the People’s Republic of China, having its registered office at
3001 Zhouhai Road, Pudong New District, Shanghai 200137
, the People’s Republic of China (hereinafter called the “BUILDER”) on the other part. CSTC and the BUILDER are hereinafter collectively called the “SELLER”
WITNESSETH
in consideration of the mutual covenants contained herein, the SELLER agrees to design, build, launch, equip and complete at the BUILDER’s own premises or at Shanghai Jiangnan Changxing Heavy Industry Co., Ltd. at Changxing Island, Shanghai (hereinafter called the BUILDER’s shipyard) and to sell and deliver to the BUYER after completion and successful trial one (1) 300,000 Metric Tons Deadweight Crude Oil Tanker as more fully described in Article I hereof, to be registered under the flag of Marshall Islands and the BUYER agrees to purchase and take delivery of the aforesaid VESSEL from the SELLER and to pay for the same in accordance with the terms and conditions hereinafter set forth.
1
ARTICLE I DESCRIPTION AND CLASS
1. DESCRIPTION:
The VESSEL is a 300,000 metric tons deadweight crude oil tanker, at scantling draft moulded of 21.3 meters (hereinafter called the “VESSEL”) of the class described below. The VESSEL shall have the BUILDER’s Hull No. H1355 and shall be designed, constructed, equipped and completed in accordance with the following “Specifications”:
(1) Specification (Drawing No. 300TK-13202-CS-R1)
(2) General Arrangement (Drawing No. 300TK-13202-GA-R1)
(3) Midship Section (Drawing No. 300TK-13202-MS-R1)
(4) Makers list (Drawing No. 300TK-13202-ML-R1)
(5) Technical Memorandum on the 300,000 DWT Crude Oil Tanker Specification dated December 17
th
, 2013
attached hereto and signed by each of the parties to this Contract (hereinafter collectively called the “Specifications”), making an integral part hereof.
2. CLASS AND RULES
The VESSEL, including its machinery and equipment, shall be designed, equipped and constructed in accordance with the rules and regulations issued and having become effective and compulsorily applicable to the VESSEL up to and on the date of signing this Contract of American Bureau of Shipping (ABS) (hereinafter called the “Classification Society”) and shall be distinguished in the record by the symbol of:
+A1 Oil Carrier, (E), CSR, AB-CM, +AMS, +ACCU, TCM, UWILD, SPMA, PMA, ESP, CPS, VEC-L, RW, GP, CPP, POT, CRC, BWT, HIMP, RES, RRDA
and shall also comply with the rules and regulations as fully described in the Specifications.
The requirements of the authorities as fully described in the Specifications including that of the Classification Society are to include additional rules or circulars thereof issued and become effective as at the date of signing this Contract.
The SELLER shall arrange with the Classification Society to assign a representative or representatives (hereinafter called the “Classification Surveyor”) to the BUILDER’s Shipyard for supervision of the construction of the VESSEL.
2
All fees and charges incidental to Classification and to comply with the rules, regulations and requirements of this Contract as described in the Specifications issued up to the date of signing this Contract as well as royalties, if any, payable on account of the construction of the VESSEL shall be for the account of the SELLER, except as otherwise provided and agreed herein. The key plans, materials and workmanship entering into the construction of the VESSEL shall at all times be subject to inspections and tests in accordance with the rules and regulations of the Classification Society.
Decisions of the Classification Society as to compliance or noncompliance with Classification rules and regulations shall be final and binding upon the parties hereto.
3. PRINCIPAL PARTICULARS AND DIMENSIONS OF THE VESSEL
(a) Hull:
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Length overall
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abt. 333.00m
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Length between perpendiculars
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324.00m
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Breadth moulded
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60.00m
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Depth moulded
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29.50m
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Design Draft moulded
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20.50m
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(b) Propelling Machinery:
The VESSEL shall be equipped, in accordance with the Specifications, with one (1) set of MAN 7G80ME-C 9.2 type main engine.
4. GUARANTEED SPEED
The SELLER guarantees that the trial speed, after correction, is to be not less than 15.5nautical miles per hour on the trial condition stipulated in the Specification.
The trial speed shall be corrected for wind speed and shallow water effect. The correction method of the speed shall be as specified in the Specifications.
5. GUARANTEED FUEL CONSUMPTION
The SELLER guarantees that the fuel oil consumption of the Main Engine is not to exceed 158.8+5% grams/brake horse power/hour at normal continuous output at shop trial based on diesel fuel oil having a lower calorific value of 10,200 kilocalories per kilogram.
3
6. GUARANTEED DEADWEIGHT
The SELLER guarantees that the VESSEL is to have a deadweight of not less than 300,000 metric tons at the scantling draft moulded of 21.3 meters in sea water of 1.025 specific gravity.
The term, “Deadweight”, as used in this Contract, shall be as defined in the Specifications.
The actual deadweight of the VESSEL expressed in metric tons shall be based on calculations made by the BUILDER and checked by the BUYER, and all measurements necessary for such calculations shall be performed in the presence of the BUYER’s REPRESENTATIVE(S) or the party authorized by the BUYER.
Should there be any dispute between the BUILDER and the BUYER in such calculations and/or measurements, the decision of the Classification Society shall be final.
7. SUBCONTRACTING:
The SELLER may, at its sole discretion and responsibility, subcontract any portion of the construction work of the VESSEL to experienced subcontractors, but delivery and final assembly into the VESSEL of any such work subcontracted shall be at the BUILDER’s Shipyard. The SELLER shall remain responsible for such subcontracted work.
The performance of the works by the Shanghai Jiangnan Changxing Heavy Industry Co., Ltd. or wholly controlled subsidiaries of the BUILDER does not constitute subcontracting for the purposes of this clause. Without prejudice to the generality of the foregoing the SELLER shall remain fully liable for the due and complete performance of all the SELLER’s obligations under this Contract notwithstanding the entering into of any such sub-contract as aforesaid. However, the Vessel shall always remain at the BUILDER’s shipyard or Shanghai Jiangnan Changxing Heavy Industry Co., Ltd. unless the Buyer and the SELLER agree otherwise.
8. REGISTRATION:
The VESSEL shall be registered by the BUYER at its own cost and expenses under the laws of Marshall Islands at the time of delivery and acceptance thereof.
4
ARTICLE II CONTRACT PRICE & TERMS OF PAYMENT
1. CONTRACT PRICE:
The purchase price of the VESSEL is United States Dollars Ninety Two Million Five Hundred and Seventy Five Thousand Three Hundred and Fifty Only (US$ 92,575,350.00), net receivable by the SELLER (hereinafter called the “Contract Price”), which is exclusive of the cost for the BUYER’s Supplies as provided in Article V hereof, and shall be subject to upward or downward adjustment, if any, as hereinafter set forth in this Contract.
2. CURRENCY:
Any and all payments by the BUYER to the SELLER under this Contract shall be made in United States Dollars.
3. TERMS OF PAYMENT:
The Contract Price shall be paid by the BUYER to the SELLER in instalments as follows:
(a) 1st Instalment:
The sum of United States Dollars Nine Million Two Hundred and Fifty Seven Thousand Five Hundred and Thirty Five Only (US$ 9,257,535.00), representing ten percent (10%) of the Contract Price, shall become due and payable and be paid by the BUYER within three (3) Singapore and New York business days after its receipt of the Refund Guarantee substantially in the form agreed in Exhibit
“
A
”
to this Contract. SELLER shall send a copy of invoice as demand for the same.
(b) 2nd Instalment:
The sum of United States Dollars Nine Million Two Hundred and Fifty Seven Thousand Five Hundred and Thirty Five Only (US$ 9,257,535.00), representing ten percent (10%) of the Contract Price, shall become due and payable and be paid within three (3) Singapore and New York business days after the cutting of the first steel plate of the VESSEL in the BUILDER’s workshop, such to be confirmed in writing by the Classification Society, or a date not earlier than sixteen (16) months prior to the Delivery Date, whichever is later. The SELLER shall notify with a telefax or email notice to the BUYER stating that the 1st steel plate has been cut in its workshop and submit a copy of the invoice as demand for payment of this 2
nd
instalment.
5
(c) 3rd Instalment:
The sum of United States Dollars Nine Million Two Hundred and Fifty Seven Thousand Five Hundred and Thirty Five Only (US$ 9,257,535.00), representing ten percent (10%) of the Contract Price, shall become due and payable and be paid within three (3) Singapore and New York business days after keel-laying of the first section of the VESSEL. The keel-laying shall be notified by the SELLER with a telefax or email notice to the BUYER stating that the said keel-laying has been carried out, such to be confirmed in writing by the Classification Society, or a date not earlier than eleven (11) months prior to the Delivery Date, whichever is later. The SELLER shall send to the BUYER a telefax or email stating that keel-laying has been carried out and submit a copy of the invoice as demand for payment of this 3
rd
installment.
(d) 4th Instalment:
The sum of United States Dollars Nine Million Two Hundred and Fifty Seven Thousand Five Hundred and Thirty Five Only (US$ 9,257,535.00), representing ten percent (10%) of the Contract Price, shall become due and payable and be paid within three (3) Singapore and New York business days after launching of the VESSEL, such to be confirmed in writing by the Classification Society. The launching of the VESSEL shall be notified by the SELLER with a telefax or email notice to the BUYER stating that the launching of the VESSEL has been carried out. The SELLER shall send to the BUYER a telefax or email stating that launching has taken place and submit a copy of the invoice as demand for payment of this 4
th
installment.
(e) 5th Installment (Payment upon Delivery of the VESSEL):
The sum of United States Dollars Fifty Five Million Five Hundred and Forty Five Thousand Two Hundred and Ten Only (US$ 55,545,210.00), representing sixty percent (60%) of the Contract Price, plus any increase or minus any decrease due to modifications and/or adjustments of the Contract Price in accordance with provisions of the relevant Articles hereof, shall become due and payable and be paid by the BUYER to the SELLER concurrently with delivery of the VESSEL. The SELLER shall send to the BUYER a telefax or e-mail demand for this installment ten (10) days prior to the scheduled date of delivery of the VESSEL.
4. METHOD OF PAYMENT:
(a)
1st Instalment:
The BUYER shall remit the amount of this installment in accordance with Article II, Paragraph 3 (a) by telegraphic transfer to Bank of China, New York Branch, 410 Madison Avenue, New York, N.Y. 10017, U.S.A. as receiving bank nominated by the SELLER,
6
for credit to the account of CSTC with Bank of China, Head Office, Banking Department, Beijing, the People’s Republic of China with SWIFT advice from Bank of China, New York Branch to Bank of China, Head Office.
(b) 2nd Instalment:
The BUYER shall remit the amount of this installment in accordance with Article II, Paragraph 3(b) by telegraphic transfer to Bank of China, New York Branch, 410 Madison Avenue, New York, N.Y. 10017, U.S.A. as receiving bank nominated by the SELLER, for credit to the account of CSTC with Bank of China, Head Office, Banking Department, Beijing, the People’s Republic of China with SWIFT advice from Bank of China, New York Branch to Bank of China, Head Office, or through other receiving bank to be nominated by the SELLER from time to time and such nomination shall be notified to the BUYER at least 10 days prior to the due date for payment.
(c) 3rd Installment:
The BUYER shall remit the amount of this installment in accordance with Article II, Paragraph 3(c) by telegraphic transfer to Bank of China, New York Branch, 410 Madison Avenue, New York, N.Y. 10017, U.S.A. as receiving bank nominated by the SELLER, for credit to the account of CSTC with Bank of China, Head Office, Banking Department, Beijing, the People’s Republic of China with SWIFT advice from Bank of China, New York Branch to Bank of China, Head Office, or through other receiving bank to be nominated by the SELLER from time to time and such nomination shall be notified to the BUYER at least 10 days prior to the due date for payment.
(d) 4th Installment:
The BUYER shall remit the amount of this installment in accordance with Article II, Paragraph 3(d) by telegraphic transfer to Bank of China, New York Branch, 410 Madison Avenue, New York, N.Y. 10017, U.S.A. as receiving bank nominated by the SELLER, for credit to the account of CSTC with Bank of China, Head Office, Banking Department, Beijing, the People’s Republic of China with SWIFT advice from Bank of China, New York Branch to Bank of China, Head Office, or through other receiving bank to be nominated by the SELLER from time to time and such nomination shall be notified to the BUYER at least 10 days prior to the due date for payment.
(e) 5th Installment (Payable upon delivery of the VESSEL):
The BUYER shall, at least three (3) Singapore and New York business days prior to the scheduled date of delivery of the VESSEL, make an irrevocable cash deposit in the name of the BUYER with Bank of China, Head Office, Banking Department, Beijing, the People’s
7
Republic of China, for a period of fifteen (15) days and covering the amount of this installment (as adjusted in accordance with the provisions of this Contract), with an irrevocable instruction that the said amount shall be released to the SELLER against presentation by the SELLER to the said Bank of China, Head Office, Banking Department, Beijing, the People’s Republic of China, of a copy of the Protocol of Delivery and Acceptance signed by the BUYER’s authorized representative and the SELLER. Interest, if any, accrued from such deposit, shall be for the benefit of the BUYER.
If the delivery of the VESSEL is not effected and the SELLER fails to present a copy of the fully signed Protocol of Delivery and Acceptance to said Bank of China, Head Office, Banking Department, Beijing, the People’s Republic of China on or before the expiry of the aforesaid fifteen (15) days deposit period, the BUYER shall have the right to withdraw the said deposit plus accrued interest upon the expiry of the said fifteen (15) days deposit period. However when the newly scheduled delivery date is notified to the BUYER by the SELLER, the BUYER shall make the cash deposit in accordance with the same terms and conditions as set out above.
5. PREPAYMENT:
The BUYER shall have the right to make prepayment of any and all instalments before delivery of the VESSEL, by giving to the SELLER at least thirty (30) days prior written notice, without any price adjustment of the VESSEL for such prepayment.
6. SECURITY FOR PAYMENT OF INSTALMENTS BEFORE DELIVERY:
The BUYER shall, within three (3) Business Days after the BUYER’s receipt of the Refund Guarantee, deliver to the SELLER an irrevocable and unconditional Letter of Guarantee in the form annexed hereto as Exhibit “B” (hereinafter called the “Payment Guarantee”) in favour of the SELLER issued by NAVIG8 CRUDE TANKERS INC. (hereinafter called the “Payment Guarantor”) acceptable to the SELLER. This guarantee shall secure the BUYER’s obligation for the payment of the 2nd, 3rd and 4th installments of the Contract Price.
7. REFUNDS
All payments made by the BUYER prior to delivery of the VESSEL shall be in the nature of advance to the SELLER, and in the event this Contract is rescinded or canceled by the BUYER, all in accordance with the specific terms of this Contract permitting such rescission or cancellation, the SELLER shall refund to the BUYER in United States Dollars the full amount of all sums already paid by the BUYER to the SELLER under this Contract, together with interest (at the rate set out in respective provision thereof) from the respective payment
8
date(s) to the date of remittance by telegraphic transfer of such refund to the account specified by the BUYER without deduction, set off or withholding in US dollars from the SELLER’s bank or jurisdiction.
As security to the BUYER, the SELLER shall deliver to the BUYER, within Thirty (30) days following the execution of this Contract, a Refund Guarantee to be issued by either Bank of China or China CITIC Bank, or Industrial and Commercial Bank of China or The Export-Import Bank of China, at SELLER’s sole direction, (hereinafter called the “Refund Guarantor”) in the form as per Exhibit “A” annexed hereto.
However, in the event of any dispute between the SELLER and the BUYER with regard to the SELLER’s obligation to repay the installment or installments paid by the BUYER and to the BUYER’S right to demand payment from the Refund Guarantor, under its guarantee, and such dispute is submitted either by the SELLER or by the BUYER for arbitration in accordance with Article XIII hereof, the Refund Guarantor shall withhold and defer payment until the final arbitration award between the SELLER and the BUYER is published. The Refund Guarantor shall not be obligated to make any payment unless the final arbitration award orders the SELLER to make repayment. If the SELLER fails to honour the award within 45 days, then the Refund Guarantor shall refund to the extent the final arbitration award orders.
9
ARTICLE III ADJUSTMENT OF THE CONTRACT PRICE
The Contract Price of the VESSEL shall be subject to adjustments as hereinafter set forth. It is hereby understood by both parties that any reduction of the Contract Price is by way of liquidated damages and not by way of penalty.
1. DELIVERY
(a)
No adjustment shall be made, and the Contract Price shall remain unchanged for the thirty (30) days of delay in delivery of the VESSEL beyond the Delivery Date as defined in Article VII hereof ending as of twelve o’clock midnight (Beijing time) of the thirtieth (30
th
) day of delay.
(b)
If the delivery of the VESSEL is delayed more than thirty (30) days after the date as defined in Article VII hereof, then, in such event, beginning at twelve o’clock midnight (Beijing time) of the thirtieth (30
th
) day after the date on which delivery is required under this Contract, the Contract Price of the VESSEL shall be reduced by deducting therefrom the sum of United States Dollars Sixteen Thousand Only (US$ 16,000.00) per day.
Unless the parties hereto agree otherwise, the total reduction in the Contract Price shall be deducted from the fifth instalment of the Contract Price and in any event (including the event that the BUYER consents to take the VESSEL at the later delivery date after the expiration of Two Hundred and ten (210) days delay of delivery as described in Paragraph 1(c) of this Article or Paragraph3 of Article VIII) shall not be more than One Hundred and Eighty (180) days at the above specified rate of reduction after the thirty (30) days allowance, that is United States Dollars Two Million Eight Hundred and Eighty Thousand Only (U.S.$ 2,880,000.00) being the maximum.
(c)
If the delay in the delivery of the VESSEL continues beyond the period of Two Hundred and Ten (210) days (being the total non-permissible delays and Thirty (30) days allowance) after the Delivery Date (as defined in Article VII), then in such event, the BUYER may, at its option, rescind or cancel this Contract in accordance with the provisions of Article X of this Contract. The SELLER may at any time after the expiration of the aforementioned Two Hundred and ten (210) days, if the BUYER has not served notice of cancellation pursuant to Article X, notify the BUYER of the date upon which the SELLER estimates the VESSEL will be ready for delivery and demand in writing that the BUYER make an election, in which case the BUYER shall, within thirty (30) days after such demand is received by the BUYER, either notify the SELLER of its decision to cancel this Contract, or consent to take delivery of the VESSEL at an agreed future date, it being understood and agreed by the parties hereto that, if the VESSEL is not delivered by such future date, the BUYER shall have the same right of cancellation upon the same terms, as hereinabove provided.
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In the case the BUYER, within Thirty (30) days after such demand is received by the BUYER, fails to notify the SELLER of its decision to cancel this Contract, or consent to take delivery of the VESSEL at an agreed future date, it shall be deemed that the BUYER has consented to take delivery of the VESSEL at SELLER’s estimated date.
(d)
For the purpose of this Article III only, the delivery of the VESSEL shall not be deemed delayed and the Contract Price shall not be reduced when and if the Delivery Date of the VESSEL is extended by reason of causes and provisions of Articles V, VI.1, XI, XII.2, XIII.7 hereof. The Contract Price shall not be adjusted or reduced if the delivery of the VESSEL is delayed by reason of permissible delays as defined in Article VIII hereof.
2. INSUFFICIENT SPEED
(a)
The Contract Price of the VESSEL shall not be affected nor changed by reason of the actual speed (as determined by the Trial Run after correction according to the Specifications) being less than three tenths (3/10) of one knot below the guaranteed speed as specified in Paragraph 4 of Article I of this Contract.
(b)
However, commencing with and including a deficiency of three tenths (3/10) of one knot in actual speed (as determined by the Trial Run after correction according to the Specifications) below the guaranteed speed as specified in Paragraph 4, Article I of this Contract, the Contract Price shall be reduced as follows:
In case of deficiency
at or above 0.30 but below 0.40 knot US$ 150,000.00
at or above 0.40 but below 0.50 knot US$ 300,000.00
at or above 0.50 but below 0.60 knot US$ 450,000.00
at or above 0.60 but below 0.70 knot US$ 600,000.00
at or above 0.70 but below 0.80 knot US$ 750,000.00
(c)
If the deficiency in actual speed (as determined by the Trial Run after correction according to the Specifications) of the VESSEL upon the Trial Run, is more than 0.80 knot below the guaranteed speed of 15.5 knots, then the BUYER may at its option reject the VESSEL and rescind or cancel this Contract in accordance with provisions of Article X of this Contract, or may accept the VESSEL at a reduction in the Contract Price as above provided, by United States Dollars Seven Hundred and Fifty Thousand only (US$750,000.00) being the maximum.
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3. EXCESSIVE FUEL CONSUMPTION
(a)
The Contract Price of the VESSEL shall not be affected nor changed if the actual fuel consumption of the Main Engine, as determined by shop trial in manufacturer’s works, as per the Specifications, is greater than the guaranteed fuel consumption as specified and required under the provisions of this Contract and the Specifications if such actual excess is equal to or less than Five percent (5%) (such threshold being 166.74 grams/brake horse power/hour, being 5% above 158.8 grams/brake horse power/hour).
(b)
However, if the actual fuel consumption as determined by shop trial is greater than Five percent (5%) above the guaranteed fuel consumption then, the Contract Price shall be reduced by the sum of United States Dollars One Hundred and Thirty Five Thousand Only (US$135,000.00) for each full one percent (1%) increase in fuel consumption in excess of the above said Five percent (5%) (fractions of one percent to be prorated).
(c)
If as determined by shop trial such actual fuel consumption of the Main Engine is more than ten percent (10%) in excess of the guaranteed fuel consumption, i.e. the fuel consumption exceeds 174.68 grams/brake horse power/hour (being 10% above 158.8 grams/brake horse power/hour), the BUYER may, subject to the BUILDER’s right to effect alterations of corrections as specified in the following sub-paragraph of Article III 3 (c) hereof at its option, rescind or cancel this Contract, in accordance with the provisions of Article X of this Contract or may accept the VESSEL at a reduction in the Contract Price by United States Dollars Six Hundred and Seventy Five Thousand Only (US$675,000.00) being the maximum.
If as determined by shop trial such actual fuel consumption of the Main Engine is more than ten percent (10%) in excess of the guaranteed fuel consumption, i.e. the fuel consumption exceeds 174.68 grams/brake horse power/hour, the BUILDER may investigate the cause of the non-conformity and the proper steps may promptly be taken to remedy the same and to make whatever corrections and alterations and / or re-shop trial test or tests as may be necessary to correct such non-conformity without extra cost to the BUYER. Upon completion of such alterations or corrections of such nonconformity, the BUILDER shall promptly perform such further shop trials or any other tests, as may be deemed necessary to prove the fuel consumption of the Main Engine’s conformity with the requirement of this Contract and the Specifications and if found to be satisfactory, give the BUYER notice by telefax and/or e-mail of such correction and as appropriate, successful completion accompanied by copies of such results, and the BUYER shall, within six (6) Business Days after receipt of such notice, notify the BUILDER by telefax and/or e-mail of its acceptance or reject the re-shop trial together with the reasons therefor. If the BUYER fails to notify the BUILDER by telefax and/or e-mail of its acceptance or rejection of the re-shop trial together with the reasons therefor within six (6) Business Days period as provided herein, the BUYER shall be deemed to have accepted the shop trial.
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4. DEADWEIGHT
(a)
In the event that there is a deficiency in the actual deadweight of the VESSEL determined as provided in the Specifications, the Contract Price shall not be decreased if such deficiency is Three Thousand (3,000) metric tons or less below the guaranteed deadweight of 300,000 metric tons at assigned designed draft.
(b)
However, the Contract Price shall be decreased by the sum of United States Dollars Seven Hundred Only (US$700.00) for each full metric ton of such deficiency being more than Three Thousand and One Hundred (3,100) metric tons.
(c)
In the event that there should be a deficiency in the VESSEL’s actual deadweight which exceeds Six thousand and One Hundred (6,100) metric tons below the guaranteed deadweight, the BUYER may, at its option, reject the VESSEL and rescind or cancel this Contract in accordance with the provisions of Article X of this Contract, or may accept the VESSEL with reduction in the Contract Price in the maximum amount of United States Dollars Two Million One Hundred Thousand only (US$2,100,000.00).
5. EFFECT OF RESCISSION OR CANCELLATION
It is expressly understood and agreed by the parties hereto that in any case as stated herein, if the BUYER rescinds or cancels this Contract pursuant to any provision under this Article, the BUYER, save for its rights and remedy set out in Article X hereof, shall not be entitled to any liquidated damages or compensation whether described above or otherwise.
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ARTICLE IV SUPERVISION AND INSPECTION
1. APPOINTMENT OF THE BUYER’S REPRESENTATIVES
The BUYER shall send in good time to and maintain at the BUILDER’s Shipyard, at the BUYER’s own cost and expense, one or more representative(s) who shall be duly accredited and authorized in writing by the BUYER (such representative(s) being hereinafter collectively and individually called the “BUYER’S REPRESENTATIVES”) to supervise and survey the construction by the BUILDER of the VESSEL, her engines and accessories. The SELLER hereby warrants that, the necessary invitation letter for the BUYER’S REPRESENTATIVES to enter China will be issued in order on demand and without delay provided that the BUYER’S REPRESENTATIVES meets with the rules, regulations and laws of the People’s Republic of China. The BUYER undertakes to give the SELLER adequate notice for the application of invitation letter.
2. COMMENTS TO PLANS AND DRAWINGS
The parties hereto shall, within Thirty (30) days after signing of this Contract, mutually agree a list of all the plans and drawings, which are to be sent to the BUYER (hereinafter called “the LIST”) along with a schedule of anticipated dates when these will be dispatched as per BUILDER’s estimation, which may be subject to change by the BUILDER. Before arrival of the BUYER’S REPRESENTATIVES at the BUILDER’s Shipyard, the plans and drawings specified in the LIST shall be sent to the BUYER, and the BUYER shall, within Fourteen (14) working days after receipt thereof (excluding mailing time), return such plans and drawings submitted by the SELLER with comments, if any. Notwithstanding the above, the BUYER shall nevertheless waive its right to comment on the plans and drawings if such plans and drawings have been previously applied to build other vessels with the same specification as that of the VESSEL.
When and if the BUYER’S REPRESENTATIVES shall have been sent by the BUYER to the BUILDER in accordance with paragraph 1 of this Article, the BUYER’S REPRESENTATIVES shall approve the plans and drawings submitted to him by the SELLER according to the List of plans and drawings agreed upon by both parties unless otherwise agreed upon between the parties hereto. The BUYER’S REPRESENTATIVES shall within three (3) Business Days after receipt hereof, return to the BUILDER two (2) copies of such plans and drawings with approval or comments, if any, written thereon.
If the comments made by the BUYER or the BUYER’S REPRESENTATIVES are not clearly specified or detailed, the BUILDER shall seek the BUYER’s clarification in writing. Should the BUYER or the BUYER’S REPRESENTATIVES not answer such request within reasonable time (minimum being three working days) of the request then the
14
BUILDER should be entitled to place its own reasonable interpretation on the comments of the BUYER in implementing same.
In the event that the BUYER or the BUYER’S REPRESENTATIVES shall fail to give comments or return the plans and drawings to the BUILDER within the time limit as herein provided, such plans and drawings shall be deemed have been automatically approved or confirmed without any comment.
3. SUPERVISION AND INSPECTION BY THE BUYER’S REPRESENTATIVES
The necessary inspection of the VESSEL, its machinery, equipment and outfittings shall be carried out by the Classification Society, and/or inspection team of the BUILDER throughout the entire period of construction in order to ensure that the construction of the VESSEL is duly performed in accordance with the Contract and Specifications.
The BUYER’S REPRESENTATIVES shall have, at all times until delivery of the VESSEL, the right to attend tests according to the mutually agreed test list and inspect the VESSEL, her engines, accessories and materials at the BUILDER’s Shipyard, its subcontractors or any other place where work is done or materials stored in connection with the VESSEL. In the event that the BUYER’S REPRESENTATIVES discovers any construction or material or workmanship which does not or will not conform to the requirements of this Contract and the Specifications, the BUYER’S REPRESENTATIVES shall promptly give the BUILDER a notice in writing as to such nonconformity, upon receipt of which the BUILDER shall correct such nonconformity if the BUILDER agrees with the BUYER. In any circumstances, the SELLER shall be entitled to proceed with the construction of the VESSEL even if there exists discrepancy in the opinion between the BUYER and the SELLER, without however prejudice to the BUYER’s right for submitting the issue for determination by the Classification Society or arbitration in accordance with the provisions hereof. However the BUYER undertakes and assures the SELLER that the BUYER’S REPRESENTATIVES shall carry out his inspections and supervision in accordance with the agreed inspection procedure, SELLER’s working schedule and usual shipbuilding practice and in a way as to minimize any increase in building costs and delays in the construction of the VESSEL. Once an inspection and/or test has been witnessed and approved by the BUYER’S REPRESENTATIVES, the same inspection and/or test should not have to be repeated, provided it has been carried out in compliance with the requirements of the Classification Society and Specifications.
The BUILDER agrees to furnish free of charge the BUYER’S REPRESENTATIVES with office space, and other reasonable facilities including air conditioning, internet connection
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and public toilets according to BUILDER’s practice at the Shipyard. But the fees for the communication like telephone, telefax and internet, etc. shall be borne by the BUYER. At all times, during the construction of the VESSEL until delivery thereof, the BUYER’S REPRESENTATIVES shall be given free and ready access to the VESSEL, her engines and accessories, and to any other place where the work is being done, or the materials are being processed or stored, in connection with the construction of the VESSEL, including the yards, workshops, stores of the BUILDER, and the premises of subcontractors of the BUILDER, who are doing work, or storing materials in connection with the VESSEL’s construction. The travel expenses for the said access to SELLER’s subcontractors outside of Shanghai shall be at BUYER’s account. The transportation within Shanghai for BUYER’S REPRESENTATIVES to get access to the inspection and/or test shall be provided to the BUYER’S REPRESENTATIVES by the SELLER.
The BUYER undertakes to maintain sufficient number of the BUYER’S REPRESENTATIVES at the BUILDER’s yard throughout the period of construction of the VESSEL so as to meet the BUILDER’s requirements for inspection, survey and/or attendances of tests and/or trials. The BUYER will use best endeavours to ensure that BUYER’S REPRESENTATIVES perform any inspections, surveys and attendances at tests and/or trials in all circumstances, including where such inspections, surveys and test/trial attendances are required during the weekend (Saturday and Sunday) or any public holiday.
Should the BUYER’S REPRESENTATIVES fail to conduct any inspection or attend any test (after reasonably advance and written notice by the BUILDER of the same, except in the case of re-inspection where oral notice shall be sufficient) due to whatever reason, the BUILDER shall be entitled to carry out the construction and/or test without inspection and/or attendance of BUYER’S REPRESENTATIVES and such work so carried out shall be treated as approved by the BUYER’S REPRESENTATIVES.
The BUILDER is responsible for providing that a safe working environment and proper access is provided to the works and/or areas of inspection.
The decision, approval or advice of the BUYER’S REPRESENTATIVES shall be deemed to have been given by the BUYER and once given shall not be withdrawn, revoked or modified except with consent of the BUILDER. However, if the BUYER’S REPRESENTATIVES fail to submit to the BUILDER without delay any demand concerning alterations or changes with respect to the building, arrangement or outfit of the VESSEL, her engines or accessories, or any other items or matters in connection herewith, which the BUYER’S REPRESENTATIVES have examined or inspected or attended at the tests thereof under this Contract or the Specifications, the BUYER’S REPRESENTATIVES shall be deemed to have approved the same and shall be precluded from making any demand for alterations, changes or other complaints with respect thereto at a later date.
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4. LIABILITY OF THE SELLER
The BUYER’S REPRESENTATIVES engaged by the BUYER under this Contract shall at all times be deemed to be in the employ of the BUYER. The SELLER shall be under no liability whatsoever to the BUYER, or to the BUYER’S REPRESENTATIVES or the BUYER’s employees or agents for personal injuries, including death, during the time when they, or any of them, are on the VESSEL, or within the premises of either the SELLER or its subcontractors, or are otherwise engaged in and about the construction of the VESSEL, unless, however, such personal injuries, including death, were caused by gross negligence of the SELLER, or of any of the SELLER’s employees or agents or subcontractors of the SELLER. Nor shall the SELLER be under any liability whatsoever to the BUYER for damage to, or loss or destruction of property in China of the BUYER or of the BUYER’S REPRESENTATIVES or of the BUYER’s employees or agents, unless such damage, loss or destruction was caused by gross negligence of the SELLER, or of any of the employees, or agents or subcontractors of the SELLER. The BUYER’S REPRESENTATIVES or his assistants or employees shall observe the work’s rules and regulations prevailing at the BUILDER’s and its subcontractor’s premises.
5. SALARIES AND EXPENSES
All salaries and expenses of the BUYER’S REPRESENTATIVES, or any other employees employed by the BUYER under this Article, shall be for the BUYER’s account.
6. REPLACEMENT OF BUYER’S REPRESENTATIVES
The SELLER has the right to request the BUYER in writing to replace any of the BUYER’S REPRESENTATIVES who is deemed unsuitable and unsatisfactory for the proper progress of the VESSEL’s construction together with reasons. The BUYER shall investigate the situation by sending its representative to the Builder’s yard, if necessary, and if the BUYER considers that such SELLER’s request is justified and reasonable, the BUYER shall effect the replacement as soon as conveniently arrangeable.
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ARTICLE V MODIFICATION,CHANGES AND EXTRAS
1. HOW EFFECTED
The Specifications and Plans in accordance with which the VESSEL is constructed, may be modified and/or changed at any time hereafter by written agreement of the parties hereto, provided that such modifications and/or changes or an accumulation thereof will not, in the BUILDER’s reasonable judgment, adversely affect the BUILDER’s other commitments and provided further that the BUYER shall assent to adjustment of the Contract Price, time of delivery of the VESSEL and other terms of this Contract, if any, as hereinafter provided. Subject to the above, the SELLER hereby agree to exert their best efforts to accommodate such reasonable requests by the BUYER so that the said changes and/or modifications may be made at a reasonable cost and within the shortest period of time which is reasonable and possible. Any such agreement for modifications and/or changes shall include an agreement as to the increase or decrease, if any, in the Contract Price of the VESSEL together with an agreement as to any extension or reduction in the time of delivery, providing to the SELLER additional securities satisfactory to the SELLER (and an increased guarantee from Navig8 Crude Tankers Inc shall be deemed satisfactory security), or any other alterations in this Contract, or the Specifications occasioned by such modifications and/or changes. The aforementioned agreement to modify and/or to change the Specifications may be effected by an exchange of duly authenticated letters, or telefax, or e-mail, manifesting such agreement. The letters, telefaxes and emails exchanged by the parties hereto pursuant to the foregoing shall constitute an amendment of the Specifications under which the VESSEL shall be built, and such letters, emails and telefaxes shall be deemed to be incorporated into this Contract and the Specifications by reference and made a part hereof. Upon consummation of the agreement to modify and/or to change the Specifications, the SELLER shall alter the construction of the VESSEL in accordance therewith, including any additions to, or deductions from, the work to be performed in connection with such construction. If due to whatever reasons, the parties hereto shall fail to agree on the adjustment of the Contract Price or extension of time of delivery or providing additional security to the SELLER or modification of any terms of this Contract which are necessitated by such modifications and/or changes, then the SELLER shall have no obligation to comply with the BUYER’s request for any modification and/or changes.
The BUILDER may make minor changes to the Specifications, if found necessary for introduction of improved production methods or otherwise, provided that the BUILDER shall first obtain the BUYER’s written approval which shall not be unreasonably withheld. Any costs associated with such minor changes shall not affect the Contract Price nor the Delivery Date unless mutually agreed.
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2. CHANGES IN RULES AND REGULATIONS, ETC.
(1)
If, after the date of signing of this Contract, any requirements as to the rules and regulations as specified in this Contract and the Specifications to which the construction of the VESSEL is required to conform, are altered or changed by the Classification Society or the other regulatory bodies authorized to make such alterations or changes, the SELLER and/or the BUYER, upon receipt of the notice thereof, shall transmit such information in full to each other in writing, whereupon within twenty- one (21) days after receipt of the said notice by the BUYER from the SELLER or vice versa, the BUYER shall instruct the SELLER in writing as to the alterations or changes, if any, to be made in the VESSEL which the BUYER, in its sole discretion, shall decide. The SELLER shall promptly comply with such alterations or changes, if any in the construction of the VESSEL, provided that the BUYER shall first agree:
(a)
As to any increase or decrease in the Contract Price of the VESSEL that is occasioned by the cost for such compliance; and/or
(b)
As to any extension in the time for delivery of the VESSEL that is necessary due to such compliance; and/or
(c)
As to any increase or decrease in the guaranteed deadweight and speed of the VESSEL, if such compliance results in increased or reduced deadweight and speed; and/or
(d)
As to any other alterations in the terms of this Contract or of Specifications or both, if such compliance makes such alterations of the terms necessary.
(e)
If the price is to be increased, then, in addition, as to providing to the SELLER additional securities satisfactory to the SELLER and which shall be satisfied by the provision of an increased guarantee from Navig8 Crude Tankers Inc.
Agreement as to such alterations or changes under this Paragraph shall be made in the same manner as provided above for modifications and/or changes of the Specifications and/or Plans.
(2)
If, due to whatever reasons, the parties shall fail to agree on the adjustment of the Contract Price or extension of the time for delivery or increase or decrease of the guaranteed speed and deadweight or providing additional security to the SELLER or any alternation of the terms of this Contract, if any, then, the SELLER shall be entitled to proceed with the construction of the VESSEL in accordance with, and the BUYER shall continue to be bound by, the terms of this Contract and Specifications without making any such alterations or changes.
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If the alterations or changes are compulsorily required to be made by Class or IMO rules, then, notwithstanding any dispute between the parties relating to the adjustment of the Contract Price or extension of the time for delivery or decrease of the guaranteed speed and deadweight or increase fuel oil consumption or any other respect, the SELLER shall promptly comply with such alterations or changes first. The BUYER shall, in any event, bear the costs and expenses for such alterations or changes (with, in the absence of mutual agreement, the amount thereof and/or any other discrepancy such as but not limited to the extension of Delivery Date, etc. to be determined by arbitration in accordance with Article XIII of this Contract).
3. SUBSTITUTION OF MATERIALS AND/OR EQUIPMENT
In the event any of the materials and/or equipment required by the Specifications or otherwise under this Contract for the construction of the VESSEL cannot be procured in time to effect delivery of the VESSEL, the SELLER may, provided the SELLER shall provide adequate evidence and the BUYER so agrees in writing, supply other materials and/or equipment of the equivalent quality, capable of meeting the requirements of the Classification Society and of the rules, regulations, requirements and recommendations with which the construction of the VESSEL must comply.
4. BUYER’S SUPPLIED ITEMS
The BUYER shall deliver to the SELLER at its shipyard the items as specified in the Specifications which the BUYER shall supply on BUYER’S account (the “BUYER’s Supplied Items”) by the time designated by the SELLER. SELLER will give reasonable advance notice to BUYER in order to allow BUYER to get these items in the shipyard for the time they are required.
Should the BUYER fail to deliver to the BUILDER such BUYER’s Supplied Items within the time specified, the delivery of the VESSEL shall automatically be extended for a period of such delay, provided such delay in delivery of the BUYER’s Supplied Items shall affect the delivery of the VESSEL. In such event, the BUYER shall pay to the SELLER all losses and damages sustained by the SELLER due to such delay in the delivery of the BUYER’s Supplied Items and such payment shall be made upon delivery of the VESSEL.
Furthermore, if the delay in delivery of the BUYER’s Supplied Items should exceed twenty (20) days, the SELLER shall be entitled to proceed with construction of the VESSEL without installation of such items in or onto the VESSEL, without prejudice to the SELLER’s right hereinabove provided, and the BUYER shall accept the VESSEL so completed.
The BUILDER shall be responsible for proper storage and handling with
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reasonable care of the BUYER’s Supplied Items as specified in the Specifications after delivery to the BUILDER and shall procure that at all times the BUYER’s supplies are identified as being the property of the BUYER. The BUILDER shall install BUYER’s Supplied Items on board the VESSEL at the BUILDER’s expenses. In order to facilitate installation by the BUILDER of the BUYER’S Supplied Items in or on the VESSEL, the BUYER shall furnish the BUILDER with the necessary specifications, plans, drawings, instruction books, manuals, test reports and certificates required by the rules and regulations of the Specifications. If so requested by the BUILDER, the BUYER shall, without any charge to the BUILDER, cause the representatives of the manufacturers of the BUYER’s Supplied Items to assist the BUILDER in installation thereof in or on the VESSEL and/or to carry out installation thereof by themselves or to make necessary adjustments at the BUILDER’s Shipyard.
Upon arrival of such shipment of the BUYER’s Supplied Items, both parties shall undertake a joint unpacking inspection. If any damages are found to be not suitable for installation, the BUILDER shall be entitled to refuse to accept such BUYER’s Supplied Items.
The SELLER shall not be responsible for the quality, performance or efficiency of any equipment supplied by the BUYER and is under no obligation with respect to the guarantee of such equipment against any defects caused by poor quality, performance or efficiency thereof.
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ARTICLE VI TRIALS
1. NOTICE
(a)
The SELLER shall give NOTICE to the BUYER and BUYER’s Representative in writing at least fifteen (15) days’ notice in advance and seven (7) days definite notice in advance in writing or by telefax or e-mail, of the time and place of the VESSEL’s sea trial as described in the Specifications (hereinafter referred to as “the Trial Run”) and the BUYER and the BUYER’S REPRESENTATIVES shall promptly acknowledge receipt of such notice. The BUYER’S REPRESENTATIVES shall be on board the VESSEL to witness such Trial Run, and to check upon the performance of the VESSEL during the same. Failure to attend the trial run of the VESSEL by the BUYER’S REPRESENTATIVES shall have the effect to extend the date for delivery of the VESSEL by the period of delay caused by such failure to be present. However, if the Trial Run is delayed more than seven (7) days by reason of the failure of the BUYER’s representatives to be present after receipt of due notice as provided above, then in such event the non-attendance shall be deemed to be a waiver by the BUYER of its right to have its representative on board the VESSEL at the trial run, and the BUILDER may conduct such Trial Run without the BUYER’S REPRESENTATIVES being present, and in such case the BUYER shall be obliged to accept the VESSEL on the basis of a certificate jointly signed by the BUILDER and the Classification Society certifying that the VESSEL, after Trial Run subject to minor alterations and corrections as provided in this Article, if any, is found to conform to the Contract and Specifications. The SELLER hereby warrants that the necessary invitation letter for the BUYER’S REPRESENTATIVES to enter China will be issued in order on demand and without delay otherwise the Trial Run shall be postponed until after the BUYER’S REPRESENTATIVES have arrived at the BUILDER’s Shipyard and any delays as a result thereof shall not count as a permissible delay under Article VIII thereof. However, should the nationalities and other personal particulars of the BUYER’S REPRESENTATIVES be not acceptable to the SELLER in accordance with its best understanding of the relevant rules, regulations and/or Laws of the People’s Republic of China then prevailing, then the BUYER shall, on the SELLER’s telefax or e-mail demand, effect replacement of all or any of them immediately. Otherwise the Delivery Date as stipulated in Article VII hereof shall be extended by the delays so caused by the BUYER.
(b)
In the event of unfavorable weather on the date specified for the Trial Run, the same shall take place on the first available day thereafter that the weather conditions permit. The parties hereto recognize that the weather conditions in Chinese waters in which the Trial Run is to take place are such that great changes in weather may arise momentarily and without warning and, therefore, it is agreed that if during the Trial Run of the VESSEL, the weather should suddenly become unfavorable, as would have precluded
22
the continuance of the Trial Run, the Trial Run of the VESSEL shall be discontinued and postponed until the first favorable day next following, unless the BUYER shall assent by telefax or e-mail and confirm in writing of its acceptance of the VESSEL on the basis of the Trial Run made prior to such sudden change in weather conditions. In the event that the Trial Run is postponed because of unfavorable weather conditions, such delay shall be regarded as a permissible delay, as specified in Article VIII hereof. For the purposes of this paragraph 1(b), unfavorable weather conditions shall be taken as (i) Beaufort Scale Force 6 and above or (ii) when the MSA (Maritime Safety Administration) does not permit the sea trial to proceed.
2. HOW CONDUCTED
(a)
All expenses in connection with Trial Run of the VESSEL are to be for the account of the BUILDER, who, during the Trial Run and when subjecting the VESSEL to Trial Run, is to provide, at its own expense, the necessary crew to comply with conditions of safe navigation. The Trial Run shall be conducted in the manner prescribed in the Specifications.
The course of Trial Run shall be determined by the BUILDER and shall be conducted within the trial basin equipped with speed measuring facilities.
(b)
The BUILDER shall provide the VESSEL with the required quantities of water and fuel oil with exception of lubrication oil, greases and hydraulic oil which shall be supplied by the BUYER for the conduct of the Trial Run or Trial Runs as prescribed in the Specifications. The fuel oil supplied by the SELLER, and lubricating oil, greases and hydraulic oil supplied by the BUYER shall be in accordance with the applicable engine specifications, and the cost of the quantities of water, fuel oil, lubricating oil, hydraulic oil and greases consumed during the Trial Run or Trial Runs shall be for the account of the BUILDER.
3. TRIAL LOAD DRAFT
In addition to the supplies provided by the BUYER in accordance with sub-paragraph (b) of the preceding Paragraph 2 hereof, the BUILDER shall provide the VESSEL with the required quantity of fresh water and other stores necessary for the conduct of the Trial Run. The necessary ballast (fresh and sea water and such other ballast as may be required) to bring the VESSEL to the trial load draft as specified in the Specifications, shall be for the BUILDER’s account.
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4. METHOD OF ACCEPTANCE OR REJECTION
(a)
Upon notification of the BUILDER of the completion of the Trial Run of the VESSEL, the BUYER or the BUYER’S REPRESENTATIVES shall within six (6) days thereafter, notify the BUILDER by telefax or e-mail of its acceptance of the VESSEL or of its rejection of the VESSEL together with the reasons therefor.
(b)
However, should the result of the Trial Run indicate that the VESSEL or any part thereof including its equipment does not conform to the requirements of this Contract and Specifications, then the BUILDER shall investigate with the BUYER’S REPRESENTATIVES the cause of failure and the proper steps shall be taken to remedy the same and shall make whatever corrections and alterations and/or re-Trial Run or Runs as may be necessary without extra cost to the BUYER, and upon notification by the BUILDER of completion of such alterations or corrections and/or re-trial or re-trials, the BUYER shall, within six (6) days thereafter, notify the SELLER by telefax or e-mail of its acceptance of its VESSEL or of the rejection of the VESSEL together with the reason therefor on the basis of the alterations and corrections and/or re-trial or re-trials by the BUILDER.
(c)
In the event that the BUYER fails to notify the SELLER by telefax or e-mail of its acceptance or rejection of the VESSEL together with the reason therefor within six (6) Business Days period as provided for in the above sub- paragraphs (a) and (b), the BUYER shall be deemed to have accepted the VESSEL.
(d)
Any dispute arising among the parties hereto as to the result of any Trial Run or further tests or trials, as the case may be, of the VESSEL shall be solved by reference to arbitration as provided in Article XIII hereof.
(e)
Nothing herein shall preclude the BUYER from accepting the VESSEL with its qualifications and/or remarks following the Trial Run and/or further tests or trials as aforesaid.
5. DISPOSITION OF SURPLUS CONSUMABLE STORES
Should any amount of fuel oil, fresh water, or other unbroached consumable stores furnished by the BUILDER for the Trial Run or Trial Runs remain on board the VESSEL at the time of acceptance thereof by the BUYER, the BUYER agrees to buy the same from the SELLER at the actual invoiced price, and payment by the BUYER shall be effected as provided in Article II 3 (e) and 4 (e) of this Contract.
The BUYER shall supply lubricating oil, greases and hydraulic oil for the purpose of Trial Runs at its own expenses and the SELLER will reimburse for the amount of lubricating oil and hydraulic oil actually consumed for the said Trial Run or Trial Runs at the original price incurred by the BUYER and payment by the SELLER shall be effected as provided in
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Article II 3(e) and 4(e) of this Contract.
6. EFFECT OF ACCEPTANCE
The BUYER’s acceptance of the VESSEL by written or telefax, or e-mail notification sent to the SELLER, in accordance with the provisions set out above, shall be final and binding so far as conformity of the VESSEL to this Contract and the Specifications is concerned, and shall preclude the BUYER from refusing formal delivery by the SELLER of the VESSEL, as hereinafter provided, if the SELLER complies with all other procedural requirements for delivery as hereinafter set forth.
The BUYER shall not be entitled to reject the VESSEL (at the time of delivery) by reason of any minor or insubstantial non-conformity, or deficiencies of minor importance, which do not in any way affect the safety or the operation of the VESSEL, its crew, passengers or cargo, provided that:
i)
The SELLER shall for its own account remedy the deficiency and fulfill the requirements as soon as possible.
ii)
A list of such defect and non-conformities will be prepared by the parties immediately prior to the delivery of the VESSEL.
iii)
The SELLER shall pay BUYER upon delivery, the direct actual cost of rectification of minor deficiencies which in all events not exceeding the costs of a leading Chinese shipyard performing similar rectification of such deficiencies, if the rectification of such deficiencies affects the delivery schedule of the vessel. For the avoidance of doubt, the SELLER shall not be liable to the BUYER for the consequential and indirect costs (i.e. loss of time & loss of profit etc.).
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ARTICLE VII DELIVERY
1. TIME AND PLACE
The VESSEL shall be delivered safely afloat by the SELLER to the BUYER at the BUILDER’s Shipyard, in accordance with the Specifications and with all Classification and Statutory Certificates and after completion of Trial Run (or, as the case may be, re-Trial or re-Trials) and acceptance by the BUYER in accordance with the provisions of Article VI hereof on or before March 31
st
, 2016 provided that, in the event of delays in the construction of the VESSEL or any performance required under this Contract due to causes which under the terms of the Contract permit extension or postponement of the time for delivery, the aforementioned time for delivery of the VESSEL shall be extended accordingly.
The aforementioned date or such later date to which delivery is extended pursuant to the terms of this Contract is hereinafter called the “Delivery Date”.
2. WHEN AND HOW EFFECTED
Provided that the BUYER and the SELLER shall each have fulfilled all of their respective obligations as stipulated in this Contract, delivery of the VESSEL shall be effected forthwith by the concurrent delivery by each of the parties hereto, one to the other, of the Protocol of Delivery and Acceptance, acknowledging delivery of the VESSEL by the SELLER and acceptance thereof by the BUYER, which Protocol shall be prepared in quadruplicate and executed by each of the parties hereto.
3. DOCUMENTS TO BE DELIVERED TO THE BUYER
Upon acceptance of the VESSEL by the BUYER, the SELLER shall deliver to the BUYER the following documents (subject to the provision contained in Article VII hereof) which shall accompany the aforementioned Protocol of Delivery and Acceptance:
(a)
PROTOCOL OF TRIALS of the VESSEL made by the BUILDER pursuant to the Specifications.
(b)
PROTOCOL OF INVENTORY of the equipment of the VESSEL including spare part and the like, all as specified in the Specifications, made by the BUILDER.
(c)
PROTOCOL OF STORES OF CONSUMABLE NATURE made by the BUILDER referred to under Paragraph 5 of Article VI hereof.
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(d)
FINISHED DRAWINGS AND PLANS pertaining to the VESSEL as stipulated in the Specifications, made by the BUILDER.
(e)
PROTOCOL OF DEADWEIGHT AND INCLINING EXPERIMENT, made by the BUILDER
(f)
ALL CERTIFICATES required to be furnished upon delivery of the VESSEL pursuant to the Specifications.
Certificates shall be issued by relevant Authorities or Classification Society. The VESSEL shall comply with the above rules and regulations which are in force at the time of signing this Contract. All the certificates shall be delivered in one (1) original to the VESSEL and two (2) copies to the BUYER.
If the full term certificate or certificates are unable to be issued at the time of delivery by the Classification Society or any third party other than the BUILDER, then the provisional certificate or certificates as issued by The Classification Society or the third party other than the BUILDER with the full term certificates to be furnished by the BUILDER after delivery of the VESSEL and in any event before the expiry of the provisional certificates shall be acceptable to the BUYER.
(g)
DECLARATION OF WARRANTY issued by the SELLER that the VESSEL is delivered to the BUYER free and clear of any liens, charges, claims, mortgages, or other encumbrances upon the BUYER’s title thereto, and in particular, that the VESSEL is absolutely free of all burdens in the nature of imposts, taxes or charges imposed by the province or country of the port of delivery, as well as of all liabilities of the SELLER to its sub-contractors, employees and crews and/or all liabilities arising from the operation of the VESSEL in Trial Run or Trial Runs, or otherwise, prior to delivery.
(h)
COMMERCIAL INVOICE made by the SELLER.
(i)
BILL OF SALE made by the SELLER.
(j) BUILDER’S Certificate made by the BUILDER.
4. TITLE AND RISK
Title to and risk of the VESSEL and her equipment (but excluding the BUYER’s supplies) shall pass to the BUYER only upon delivery and acceptance thereof. As stated above, it being expressly understood that, until such delivery and acceptance is effected, title to the VESSEL, and her equipment, shall remain at all times with the SELLER and are at the entire risk of the SELLER.
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5. REMOVAL OF VESSEL
The BUYER shall take possession of the VESSEL immediately upon delivery and acceptance thereof, and shall remove the VESSEL from the premises of the BUILDER within seven (7) days after delivery and acceptance thereof is effected. If the BUYER shall not remove the VESSEL from the premises of the BUILDER within the aforesaid seven (7) days, then, in such event, without prejudice to the SELLER’s right to require the BUYER to remove the VESSEL immediately at any time thereafter, the BUYER shall pay to the SELLER the reasonable mooring charge of the VESSEL.
6. TENDER OF THE VESSEL
If the BUYER fails to take delivery of the VESSEL after completion thereof according to this Contract and the Specifications without justified reason, the SELLER shall have the right to tender the VESSEL for delivery after compliance with all procedural requirements as above provided.
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ARTICLE VIII DELAYS & EXTENSION OF TIME FOR DELIVERY
1. CAUSE OF DELAY
If, at any time before actual delivery, either the construction of the VESSEL, or any performance required hereunder as a prerequisite of delivery of the VESSEL, is delayed due to war, blockade, revolution, insurrection, mobilization, civil commotions, riots, strikes, sabotage, lockouts, local temperature higher than Thirty Five (35) degree centigrade (but each day above 35 degree shall be counted as one half day each), Acts of God or the public enemy, terrorism, plague or other epidemics, quarantines, prolonged failure or restriction of electric current from an outside source, freight embargoes, if any, earthquakes, tidal waves, typhoons, hurricanes, storms or other causes beyond the control of the BUILDER or of its sub-contractors or its key equipment suppliers (i.e. being the suppliers of the main engine, propeller and gearbox etc), as the case may be, or by force majeure of any description, whether of the nature indicated by the forgoing or not, or by destruction of the premises of the BUILDER or works of the BUILDER or its sub-contractors or its key equipment suppliers (i.e. being the suppliers of the main engine, propeller and gearbox etc) or of the VESSEL or any part thereof, by fire, flood, or other causes beyond the control of the SELLER or its sub-contractors or its key equipment suppliers (i.e. main engine, propeller, gearbox etc) as the case may be, or due to the bankruptcy of the equipment and/or material supplier or suppliers (i.e. main engine, propeller, gearbox etc), or due to the delay caused by acts of God causing significant shortage in the supply of parts essential to the construction of the VESSEL, then, in the event of delay due to the happening of any of the aforementioned contingencies, the SELLER shall not be liable for such delay and the time for delivery of the VESSEL under this Contract shall be extended without any reduction in the Contract Price for a period of time which shall not exceed the total accumulated time of all such delays, subject nevertheless to the BUYER’s right of cancellation under Paragraph 3 of this Article and subject however to all relevant provisions of this Contract which authorize and permit extension of the time of delivery of the VESSEL, provided however that:
(i) the delay in respect of which the BUILDER is claiming relief under this Article VIII.1 was not caused or contributed to by any intended act of the BUILDER;
(ii) the delay event impacts upon the Vessel’s construction schedule and completion; and
(iii) the BUILDER has taken reasonable steps to mitigate its effect upon the construction of the Vessel,
For the avoidance of doubt, where two delay events as described in this paragraph 1 occur simultaneously or overlap with each other, such delays caused by such events shall not be double-counted.
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2. NOTICE OF DELAY
Within twenty (20) days from the date of the SELLER becomes aware of the commencement of any delay on account of which the SELLER claims that it is entitled under this Contract to an extension of the time for delivery of the VESSEL, the SELLER shall advise the BUYER by telefax or e-mail, of the date such delay commenced, and the reasons therefor and, if possible, its estimated duration of the probable delay in the delivery of the VESSEL, and shall supply the BUYER with evidence to support the delay claimed.
Likewise within twenty (20) days after such delay ends, the SELLER shall advise the BUYER in writing or by telefax or e-mail, of the date such delay ended, and also shall specify the maximum period of the time by which the SELLER claims the date for delivery of the VESSEL should be extended by reason of such delay. Failure of the BUYER to acknowledge the SELLER’s notification of any claim for extension of the Delivery Date within ten (10) days after receipt by the BUYER of such notification, shall be deemed to be a waiver by the BUYER of its right to object to such extension.
Failure of the SELLER to give notice of any relevant delay event in excess of fifteen (15) days in accordance with this paragraph 2 shall be deemed a waiver of the SELLER’s right to postpone the DELIVERY DATE under this Article VIII in respect of such relevant delay event.
3. RIGHT TO CANCEL FOR EXCESSIVE DELAY
If (a) the total accumulated time of all delays on account of the causes specified in Paragraph 1 of this Article aggregate to two hundred and twenty-five (225) days or more, or (b) if the total accumulated time of all delays on account of the causes specified in Paragraph 1 of the Article and non-permissible delays as described in Paragraph 1 of Article III aggregate to two hundred and fifty-five (255) days or more, in any circumstances, excluding delays due to arbitration as provided for in Article XIII.7 hereof or due to default in performance by the BUYER, or due to delays in delivery of the BUYER’s Supplied Items, and excluding delays due to causes which, under Article V, VI.1, XI and XII.2(b) hereof, permit extension or postponement of the time for delivery of the VESSEL , then in such event, the BUYER may in accordance with the provisions set out herein rescind or cancel this Contract by serving upon the SELLER telefaxed or e-mailed notice of cancellation which shall be confirmed in writing and the provisions of Article X of this Contract shall apply. The SELLER may, at any time, after the accumulated time of the aforementioned delays justifying cancellation by the BUYER as above provided for, demand in writing that the BUYER shall make an election, in which case the BUYER shall, within thirty (30) days after such demand is received by the BUYER either notify the SELLER of its intention to cancel, or consent to an extension of the time for delivery to an agreed future date, it being understood and agreed by the parties hereto that, if any further delay occurs on account of causes justifying cancellation as specified in
30
this Contract, the BUYER shall have the same right of cancellation upon the same terms as hereinabove provided but in respect of the new agreed delivery date.
4. DEFINITION OF PERMISSIBLE DELAY
Delays on account of such causes as provided for in Paragraph 1 of this Article excluding any other extensions of a nature which under the terms of this Contract permit postponement of the Delivery Date, shall be understood to be (and are herein referred to as) permissible delays, and are to be distinguished from non-permissible delays on account of which the Contract Price of the VESSEL is subject to adjustment as provided for in Article III hereof. Notwithstanding any other stipulations of this Contract, the Parties hereby agree that a default in performance of BUYER or any breach of this Contract by BUYER or reasons attributable to the BUYER or the events described under Article V, VI.1, XI and XII.2(b) of this Contract shall entitle the SELLER to extend the Delivery Date. Such extension of the Delivery Date shall be regarded as mutually agreed change of Delivery Date and shall be distinguished from Permissible Delay and non-permissible delays.
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ARTICLE IX WARRANTY OF QUALITY
1. GUARANTEE OF MATERIAL AND WORKMANSHIP
The SELLER, for a period of twelve (12) months following delivery to the BUYER of the VESSEL, guarantees the VESSEL, her hull and machinery, her engine, and all parts and equipment thereof that are manufactured, furnished, supplied, or installed by the SELLER and/or its sub-contractors under this Contract including material, equipment (however excluding any parts for the VESSEL which have been supplied by the BUYER) against all defects which are due to defective materials, and/or poor workmanship.
Provided no additional cost occurs to the SELLER, the SELLER agrees that upon the expiry of this guarantee and upon request of the BUYER, it shall assign (to the extent to which it may validly do so) to the BUYER, all rights, title and interest that the SELLER may have in and to all guarantees or warranties given by the supplier (excluding the supplier of BUYER’s supplied item) of any of the appurtenances and materials used in the construction and/or operation of the VESSEL. The SELLER agrees to render to the BUYER reasonable assistance in making any claim or taking any action against any such supplier, which claim or action shall be made and/or taken at the BUYER’s sole expense. The BUYER shall meet all reasonable expenses incurred by the SELLER in rendering any assistance requested by the BUYER pursuant to this paragraph.
2. NOTICE OF DEFECTS
The BUYER shall notify the SELLER in writing, or by telefax or e-mail, as promptly as possible, after discovery of any defect or deviations for which a claim is made under this guarantee. The BUYER’s written notice shall describe the nature of the defect and the extent of the damage caused thereby. The SELLER shall have no obligation under this guarantee for any defects discovered prior to the expiry date of the guarantee, unless notice of such defects, is received by the SELLER not later than thirty (30) days after such expiry date. Telefaxed or e-mailed advice with brief details explaining the nature of such defect and extent of damage within thirty (30) days after such expiry date and that a claim is forthcoming will be sufficient compliance with the requirements as to time.
3. REMEDY OF DEFECTS
The SELLER shall remedy at its expense any defects, against which the VESSEL or any part of the equipment thereof is guaranteed under this Article by making all necessary repairs and/or replacement. Such repairs and/or replacement will be made by the SELLER. All parts
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and/or materials so repaired shall be guaranteed for a further period of six (6) months, but the total warranty period shall not exceed eighteen (18) months after delivery and acceptance of the VESSEL by the BUYER. In any case, the VESSEL shall be taken, at the BUYER’S cost and responsibility, to place elected, ready in all respects for such repairs or replacement.
However, if it is impractical to make the repair by the SELLER, and if forwarding by the SELLER of replacement parts, and materials cannot be accomplished without impairing or delaying the operation or working of the VESSEL, then, in any such event, the BUYER shall, cause the necessary repairs or replacements to be made elsewhere at the discretion of the BUYER provided that the BUYER shall first and in all events, will, as soon as possible, give the SELLER notice in writing, or by telefax or e-mail of the time and place such repairs will be made and, if the VESSEL is not thereby delayed, or her operation or working is not thereby delayed, or her operation or working is not thereby impaired, the SELLER shall have the right to verify by its own representative(s) or that of Classification Society the nature and extent of the defects complained of. The SELLER shall, in such cases, promptly advise the BUYER, by telefax or e-mail, after such examination has been completed, of its acceptance or rejection of the defects as ones that are subject to the guarantee herein provided.
In any circumstances as set out below, the SELLER shall immediately pay to the BUYER in United States Dollars by telegraphic transfer the actual cost for such repairs or replacements including forwarding charges, or, at the average cost for making similar repairs or replacements including forwarding charges as quoted by a leading shipyard each in China, South Korea and Singapore whichever is lower:
(a)
Upon the SELLER’s acceptance of the defects as justifying remedy under this Article, or
(b)
If the SELLER neither accepts nor rejects the defects as above provided, nor request arbitration within thirty (30) days after its receipt of the BUYER’s notice of defects.
Any dispute shall be referred to arbitration in accordance with the provisions of Article XIII hereof.
4. EXTENT OF THE SELLER’S LIABILITY
The SELLER shall have no obligation and/or liabilities with respect to defects discovered after the expiration of the period of guarantee as specified in Paragraph 1 of this Article.
The SELLER shall be liable to the BUYER for defects and damages caused by any of the defects specified in Paragraph 1 of this Article provided that such liability of the SELLER shall be limited to damage occasioned within the guarantee period specified in Paragraph 1 above. The SELLER shall not be obligated to repair, or to be liable for, damages to the VESSEL, or to any part of the equipment thereof, due to ordinary wear and tear or caused by the defects other than those specified in Paragraph 1 above, nor shall there be any SELLER’s
33
liability hereunder for defects in the VESSEL, or any part of the equipment thereof, caused by fire or accidents at sea or elsewhere, or mismanagement, accidents, negligence, or willful neglect, on the part of the BUYER, its employees or agents including the VESSEL’s officers, crew and passengers, or any persons on or doing work on the VESSEL other than the SELLER, its employees, agents or sub-contractors. Likewise, the SELLER shall not be liable for defects in the VESSEL, or the equipment or any part thereof, due to repairs or replacement which were made by those other than the SELLER and/or their sub-contractors or which have not been carried out in accordance with the procedures set out in this Article.
Upon delivery of the VESSEL to the BUYER, in accordance with the terms of the Contract, the SELLER shall thereby and thereupon be released of all responsibility and liability whatsoever and howsoever arising under or by virtue of this Contract (save in respect of those obligations to the BUYER expressly provided for in this Article IX) including without limitation, any responsibility or liability for defective workmanship, materials or equipment, design or in respect of any other defects whatsoever and any loss or damage resulting from any act, omission or default of the SELLER. The SELLER shall, in no circumstances, be liable for any consequential loss or special loss, or expenses arising from any cause whatsoever including, without limitation, loss of time, loss of profit or earnings or demurrage directly from any commitments of the BUYER in connection with the VESSEL.
The Guarantee provided in this Article and the obligations and the liabilities of the SELLER hereunder are exclusive and in lieu of and the BUYER hereby waives all other remedies, warranties, guarantees or liabilities, express or implied, arising by Law or otherwise (including without limitation any obligations of the SELLER with respect to fitness, merchantability and consequential damages) or whether or not occasioned by the SELLER’s negligence. This Guarantee shall not be extended, altered or varied except by a written instrument signed by the duly authorized representatives of the SELLER, and the BUYER.
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ARTICLE X CANCELLATION, REJECTION AND RESCISSION BY THE BUYER
1.
All payments made by the BUYER prior to the delivery of the VESSEL shall be in the nature of advance to the SELLER. In the event the BUYER shall exercise its right of cancellation and/or rescission of this Contract under and pursuant to any of the provisions of this Contract specifically permitting the BUYER to do so, then the BUYER shall notify the SELLER in writing or by telefax or e-mail, and such cancellation and/or rescission shall be effective as of the date the notice thereof is received by the SELLER.
For the avoidance of doubt, the events and/or occurrences which entitle the BUYER to rescind and cancel the Contract shall be limited to those occurrences or events specified in this Contract which specifically permits the BUYER to do so. No other event or circumstance shall give rise to any right to the BUYER for rescission or cancellation of the Contract whether under this Contract or under any applicable laws.
2.
Thereupon the SELLER shall refund in United States dollars immediately to the BUYER the full amount of all sums paid by the BUYER to the SELLER on account of the VESSEL, unless the SELLER disputes the BUYER’s cancellation and/or rescission by instituting arbitration in accordance with Article XIII. If the BUYER’s cancellation or rescission of this Contract is disputed by the SELLER by instituting arbitration as aforesaid, then no refund shall be made by the SELLER, and the BUYER shall not be entitled to demand repayment from the Refund Guarantor under its guarantee, until the arbitration award between the BUYER and the SELLER, which shall be in favour of the BUYER, declaring the BUYER’s cancellation and/or rescission justified, is made and delivered to the SELLER by the arbitration tribunal. In the event that the SELLER is obligated to make refundment, the SELLER shall pay the BUYER interest in United States Dollars at the rate of six percent (6%) per annum, if the cancellation or rescission of the Contract is exercised by the BUYER in accordance with the provision of Article III 1(c), 2(c), 3(c) or 4(c) hereof, on the amount required herein to be refunded to the BUYER computed from the respective dates when such sums were received by Bank of China, New York Branch or any such other bank account as nominated by the SELLER pursuant to Article II 4(a), 4(b), 4(c) or 4(d) from the BUYER to the date of remittance by telegraphic transfer of such refund to the BUYER by the SELLER, provided, however, that if the said rescission by the BUYER is made by reason of Paragraph 1 of Article VIII or Paragraph 2 (b) of Article XII, then in such event the SELLER shall not be required to pay any interest.
It is hereby understood by both parties that payment of any interest provided herein is by way of liquidated damages due to cancellation of this CONTRACT.
If the SELLER is obligated by the terms of the Contract to refund to the BUYER the instalments paid by the BUYER to the SELLER as provided in this Paragraph, the BUYER’s supplied items shall be at BUYER’s disposal.
35
3.
Upon such refund by the SELLER to the BUYER, all obligations, duties and liabilities of each of the parties hereto to the other under this Contract shall be forthwith completely discharged.
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ARTICLE XI BUYER’S DEFAULT
1. DEFINITION OF DEFAULT
The BUYER shall be deemed in default of its obligation under the Contract if any of the following events occurs:
(a)
The BUYER fails to pay the First or Second or Third or Fourth installment to the SELLER when any such installment becomes due and payable under the provisions of Article II hereof and provided the BUYER shall have received the SELLER’s demand for payment in accordance with Article II hereof; or
(b)
The BUYER fails to deliver to the SELLER an irrevocable and unconditional Letter of Guarantee under the provisions of Article II hereof; or
(c)
The BUYER fails to pay the fifth installment to the SELLER in accordance with Paragraph 3(e) and 4(e) of Article II hereof provided the BUYER shall have received the SELLER’s demand for payment in accordance with Article II hereof; or
(d)
The BUYER fails to take delivery of the VESSEL, when the VESSEL is duly tendered for delivery by the SELLER under the provisions of Article VII hereof.
2. NOTICE OF DEFAULT
If the BUYER is in default of payment or in performance of its obligations as provided hereinabove, the SELLER shall notify the BUYER to that effect by telefax or e-mail after the date of occurrence of the default as per Paragraph 1 of this Article and the BUYER shall forthwith acknowledge by telefax or E-mail to the SELLER that such notification has been received. In case the BUYER does not give the aforesaid telefax or E-mail acknowledgment to the SELLER within three (3) calendar days it shall be deemed that such notification has been duly received by the BUYER.
3. INTEREST AND CHARGE
(a)
If the BUYER is in default of payment as to any installment as provided in Paragraph 1 (a) and/or 1 (c) of this Article, the BUYER shall pay interest on such installment at the rate of six percent (6%) per annum until the date of the payment of the full amount, including all aforesaid interest. In case the BUYER shall fail to take delivery of the VESSEL when required to as provided in Paragraph 1 (d) of this Article, the BUYER shall be deemed in default of payment of the fifth installment and shall pay interest thereon at the same rate as aforesaid from and including the day on which the
37
VESSEL is tendered for delivery by the SELLER, as provided in Article VII hereof.
(b)
In any event of default by the BUYER under 1 (a) or 1 (b) or 1 (c) or 1 (d) above, the BUYER shall also pay all costs, charges and expenses incurred by the SELLER in consequence of such default.
4. DEFAULT BEFORE DELIVERY OF THE VESSEL
(a)
If any default by the BUYER occurs as defined in Paragraph 1 (a) or 1 (b) or 1 (c) or 1 (d) of this Article, the Delivery Date shall be automatically postponed for a period of continuance of such default by the BUYER. In any event of default by the BUYER, the BUYER shall also pay all charges and expenses incurred by the BUILDER in consequence of such default.
(b)
If any such default as defined in Paragraph 1 (a) or 1 (b) or 1 (c) or 1 (d) of this Article committed by the BUYER continues for a period of fifteen (15) days, then, the SELLER shall have all following rights and remedies:
(i)
The SELLER may, at its option, cancel or rescind this Contract, provided the SELLER has notified the BUYER of such default pursuant to Paragraph 2 of this Article, by giving notice of such effect to the BUYER by telefax or e-mail. Upon receipt by the BUYER of such telefax or e-mail notice of cancellation or rescission, all of the BUYER’s Supplies shall forthwith become the sole property of the SELLER, and the VESSEL and all its equipment and machinery shall be at the sole disposal of the SELLER for sale or otherwise; and
(ii)
In the event of such cancellation or rescission of this Contract, the SELLER shall be entitled to retain any instalment or instalments of the Contract Price paid by the BUYER to the SELLER on account of this Contract; and
(iii)
(Applicable to any BUYER’s default defined in 1(a) of this Article) The SELLER shall, without prejudice to the SELLER’s right to recover from the BUYER the 5th instalment, interest, costs and/or expenses by applying the proceeds to be obtained by sale of the VESSEL in accordance with the provisions set out in this Contract, have the right to declare all unpaid 1st, 2nd, 3rd and 4th instalments to be forthwith due and payable, and upon such declaration, the SELLER shall have the right to immediately demand the payment of the aggregate amount of all unpaid 1st, 2nd, 3rd, and 4th instalments from the Payment Guarantor in accordance with the terms and conditions of the Payment Guarantee issued by the Payment Guarantor.
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5. SALE OF THE VESSEL
(a)
In the event of cancellation or rescission of this Contract as above provided, the SELLER shall have full right and power either to complete or not to complete the VESSEL as it deems fit, and to sell the VESSEL at a public or private sale on such terms and conditions as the SELLER thinks fit without being answerable for any loss or damage occasioned to the BUYER thereby.
In the case of sale of the VESSEL, the SELLER shall give telefax, or E-mail, or written notice to the BUYER.
(b)
In the event of the sale of the VESSEL in its completed state, the proceeds of sale received by the SELLER shall be applied firstly to payment of all expenses attending such sale and otherwise incurred by the SELLER as a result of the BUYER’s default, and then to payment of all unpaid installments and/or unpaid balance of the Contract Price and interest on such installment at the interest rate as specified in the relevant provisions set out above from the respective due dates thereof to the date of application.
(c)
In the event of the sale of the VESSEL in its incomplete state, the proceeds of sale received by the SELLER shall be applied firstly to all expenses attending such sale and otherwise incurred by the SELLER as a result of the BUYER’s default, and then to payment of all costs of construction of the VESSEL (such costs of construction, as herein mentioned, shall include but are not limited to all costs of labour and/or prices paid or to be paid by CSTC and/or the BUILDER for the equipment and/or technical design and/or materials purchased or to be purchased, installed and/or to be installed on the VESSEL) and/or any fees, charges, expenses and/or royalties incurred and/or to be incurred for the VESSEL less the installments so retained by the SELLER, and compensation to the SELLER for a reasonable sum of loss of profit due to the cancellation or rescission of this Contract.
(d)
In either of the above events of sale, if the proceed of sale exceeds the total of the amounts to which such proceeds are to be applied as aforesaid, the SELLER shall promptly pay the excesses to the BUYER without interest, provided, however that the amount of each payment to the BUYER shall in no event exceed the total amount of installments already paid by the BUYER and the cost of the BUYER’s Supplied Items, if any.
(e)
If the proceed of sale are insufficient to pay such total amounts payable as aforesaid, the BUYER shall promptly pay the deficiency to the SELLER upon request.
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ARTICLE XII INSURANCE
1. EXTENT OF INSURANCE COVERAGE
From the time of keel-laying of the first section of the VESSEL until the same is completed, delivered to and accepted by the BUYER, the SELLER shall, at its own cost and expense, keep the VESSEL and all machinery, materials, equipment, appurtenances and outfit, delivered to the BUILDER for the VESSEL or built into, or installed in or upon the VESSEL, including the BUYER’s Supplied Items, fully insured with first class Chinese insurance companies for BUILDER’s RISK.
The amount of such insurance coverage shall, up to the date of delivery of the VESSEL, be in an amount at least equal to, but not limited to, the aggregate of the payments made by the BUYER to the SELLER including the value of maximum amount of US$ 200,000.00 of the BUYER’s Supplied Items. The policy referred to hereinabove shall be taken out in the name of the SELLER and all losses under such policy shall be payable to the SELLER.
2. APPLICATION OF RECOVERED AMOUNT
(a) Partial Loss:
In the event the VESSEL shall be damaged by any insured cause whatsoever prior to acceptance and delivery thereof by the BUYER and in the further event that such damage shall not constitute an actual or a constructive total loss of the VESSEL, the SELLER shall apply the amount recovered under the insurance policy referred to in Paragraph 1 of this Article to the repair of such damage satisfactory to the Classification Society and other institutions or authorities as described in the Specifications without additional expenses to the BUYER, and the BUYER shall accept the VESSEL under this Contract if completed in accordance with this Contract and Specifications and not make any claim for any consequential loss or depreciation.
(b) Total Loss:
However, in the event that the VESSEL is determined to be an actual or constructive total loss, the SELLER shall either:
(i)
By the mutual agreement between the parties hereto, proceed in accordance with terms of this Contract, in which case the amount recovered under said insurance policy shall be applied to the reconstruction and/or repair of the VESSEL’s damage and/or reinstallation of BUYER’s Supplied Items, provided the parties hereto shall have first agreed in writing as to such reasonable extension of the Delivery Date
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and adjustment of other terms of this Contract including the Contract Price as may be necessary for the completion of such reconstruction; or
(ii)
If due to whatever reasons the parties fail to agree on the above, then the SELLER shall refund immediately to the BUYER the amount of all installments paid to the SELLER under this Contract without interest, whereupon this Contract shall be deemed to be canceled and all rights, duties, liabilities and obligations of each of the parties to the other shall terminate forthwith.
Within thirty (30) days after receiving telefax or e-mail notice of any damage to the VESSEL constituting an actual or a constructive total loss, the BUYER shall notify the SELLER in writing or by telefax or e-mail of its agreement or disagreement under this sub-paragraph. In the event the BUYER fails to so notify the SELLER, then such failure shall be construed as a disagreement on the part of the BUYER. This Contract shall be deemed as rescinded and canceled and Paragraph 2 (b) (ii) of this Article shall apply.
3. TERMINATION OF THE SELLER’S OBLIGATION TO INSURE
The SELLER’s obligation to insure the VESSEL hereunder shall cease and terminate forthwith upon delivery thereof to and acceptance by the BUYER.
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ARTICLE XIII DISPUTES AND ARBITRATION
1. PROCEEDINGS
In the event of any dispute between the parties hereto as to any matter arising out of or relating to this Contract or any stipulation herein or with respect thereto which cannot be settled by the parties themselves, such dispute shall be resolved by arbitration in London England in accordance with the Laws of England. Any arbitration of disputes under this Contract shall be conducted in accordance with the London Maritime Arbitrators’ Association Terms. Either party may demand arbitration of any such disputes by giving written notice to the other party. Any demand for arbitration by either party hereto shall state the name of the arbitrator appointed by such party and shall also state specifically the question or questions as to which such party is demanding arbitration. Within twenty (20) days after receipt of notice of such demand for arbitration, the other party shall in turn appoint a second arbitrator. The two arbitrators thus appointed shall thereupon select a third arbitrator, and the three arbitrators so named shall constitute the board of arbitration (hereinafter called the “Arbitration Board”) for the settlement of such dispute.
In the event however, that said other party should fail to appoint a second arbitrator as aforesaid within twenty (20) days following receipt of notice of demand of arbitration, it is agreed that such party shall thereby be deemed to have accepted and appointed as its own arbitrator the one already appointed by the party demanding arbitration, and the arbitration shall proceed forthwith before this sole arbitrator, who alone, in such event, shall constitute the Arbitration Board. And in the further event that the two arbitrators appointed respectively by the parties hereto as aforesaid should be unable to reach agreement on the appointment of the third arbitrator within twenty (20) days from the date on which the second arbitrator is appointed, either party of the said two arbitrators may apply to the President for the time being of the London Maritime Arbitrators Association to appoint the third arbitrator. The award of the arbitration, made by the sole arbitrator or by the majority of the three arbitrators as the case may be, shall be final, conclusive and binding upon the parties hereto.
2. ALTERNATIVE ARBITRATION BY AGREEMENT
Notwithstanding the preceding provisions of this Article, it is recognized that in the event of any dispute or difference of opinion arising in regard to the construction of the VESSEL, her machinery and equipment, or concerning the quality of materials or workmanship thereof or thereon, such dispute may be referred to the Classification Society upon mutual agreement of the parties hereto. In such case, the opinion of the Classification Society shall be final and binding on the parties hereto.
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3. NOTICE OF AWARD
Notice of any award shall immediately be given in writing or by telefax or e-mail to the SELLER and the BUYER.
4. EXPENSES
The Arbitration Board shall determine which party shall bear the expenses of the arbitration or the proportion of such expenses which each party shall bear.
5. AWARD OF ARBITRATION
Award of arbitration, shall be final and binding upon the parties concerned.
6. ENTRY IN COURT
Judgment on any award may be entered in any court of competent jurisdiction.
7. ALTERATION OF DELIVERY DATE
In the event of reference to arbitration of any dispute arising out of matters occurring prior to delivery of the VESSEL, the SELLER shall not be entitled to extend the Delivery Date as defined in Article VII hereof and the BUYER shall not be entitled to postpone its acceptance of the VESSEL on the Delivery Date or on such newly planned time of delivery of the VESSEL as declared by the SELLER. However, if the construction of the VESSEL is affected by any arbitration, the SELLER shall then be permitted to extend the Delivery Date as defined in Article VII and the decision or the award shall include a finding as to what extent the SELLER shall be permitted to extend the Delivery Date.
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ARTICLE XIV RIGHT OF ASSIGNMENT
1. ASSIGNMENT AND TRANSFER BY THE BUYER
The SELLER agrees that prior to delivery of the VESSEL, the Contract may, with the prior written approval/consent of the SELLER, which the SELLER shall not unreasonably withhold, be assigned or transferred to BUYER’s bank for financing purpose or to a 100% subsidiary of the BUYER.
For the avoidance of doubt, the BUYER’s rights to transfer or assign under this Paragraph 1 shall apply equally to any transferee or assignee of the BUYER’s rights and obligations under this Contract as defined in the above paragraph, but always subject to SELLER’s prior consent, which the SELLER shall not unreasonably withhold.
2.
ASSIGNMENT BY THE SELLER
SELLER shall have the right to assign this Contract to SELLER’s bank for financing purpose at any time after the effective date hereof, provided that prior written agreement is obtained from the BUYER, which the BUYER shall not unreasonably withhold.
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ARTICLE XV TAXES AND DUTIES
1. TAXES
The SELLER shall bear and pay all taxes, duties, stamps, dues levies and fees of whatsoever nature incurred or imposed in China in connection with the execution and/or performance of this Contract by the SELLER. Any taxes and/or duties imposed upon those items or services procured by the SELLER in the People’s Republic of China or elsewhere for the construction of the VESSEL shall be borne by the SELLER.
The BUYER shall be responsible for the personal income tax for any person it employs, including BUYER’S REPRESENTATIVES or other BUYER’s staff, agent and representatives who work at SELLER’s shipyard and premise.
2. DUTIES
The BUYER shall bear and pay all taxes, duties, stamps and fees incurred outside China in connection with execution and/or performance of this Contract by the BUYER, except for taxes, duties, stamps, dues, levies and fees imposed upon those items which are to be procured by the SELLER for the construction of the VESSEL in accordance with the terms of this Contract and the Specifications..
Any tax or duty other than those described hereinabove, if any, shall be borne by the BUYER.
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ARTICLE XVI PATENTS, TRADEMARKS AND COPYRIGHTS
The machinery and equipment of the VESSEL may bear the patent number, trademarks or trade names of the manufacturers. The SELLER shall defend and hold harmless the BUYER from patent liability or claims of patent infringement of any nature or kind, including costs and expenses for, or on account of any patented or patentable invention made or used in the performance of this Contract and also including cost and expense of litigation, if any.
Nothing contained herein shall be construed as transferring any patent or trademark rights or copyright in equipment covered by this Contract, and all such rights are hereby expressly reserved to the true and lawful owners thereof. Notwithstanding any provisions contained herein to the contrary, the SELLER’s obligation under this Article should not be terminated by the passage of any specified period of time.
The SELLER’s indemnity hereunder does not extend to equipment or parts supplied by the BUYER to the BUILDER if any.
The SELLER retains all rights with respect to the Specification, and plans and working drawings, technical descriptions, calculations, test results and other data, information and documents concerning the design and construction of the VESSEL and the BUYER undertakes therefore not to disclose the same or divulge any information contained therein to any third parties, without the prior written consent of the SELLER, excepting where it is necessary for usual operation, repair and maintenance, sale or charter of the VESSEL or registration, classification insurance or sale of the VESSEL.
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ARTICLE XVII NOTICE
Any and all notices and communications in connection with this Contract shall be addressed as follows:
To the BUYER :
NAVIG8 CRUDE TANKERS INC.
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Address :
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c/o Navig8 Asia Pte Ltd
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3 Temasek Avenue
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#25-01 Centennial Tower
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Singapore 039190
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Telefax No. :
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+44 207 467 5867
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E-mail :
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legal@navig8group.com
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To CSTC :
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China Shipbuilding Trading Company, Limited
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Address :
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c/o Marine Tower,
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No.1 Pudong Dadao,
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Shanghai 200120
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the People’s Republic of China
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Telefax No. :
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(021) 68860801
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E-mail :
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shipexport@mail.chinaships.com
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To the BUILDER : Shanghai Waigaoqiao Shipbuilding Co., Ltd.
Address : 3001 Zhouhai Road, Pudong New District, Shanghai 200137, the People’s Republic of China
Telex No. : (021) 58480446
E-mail : swsbiz@chinasws.com
Any notices and communications sent by CSTC or the BUILDER alone to the BUYER shall be deemed as having being sent by both CSTC and the BUILDER.
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Any change of address shall be communicated in writing by registered mail or by e-mail by the party making such change to the other party and in the event of failure to give such notice of change, communications addressed to the party at their last known address shall be deemed sufficient.
Any and all notices, requests, demands, instructions, advice and communications in connection with this Contract shall be deemed to be given at, and shall become effective from, the time when the same is delivered to the address of the party to be served, provided, however, that registered airmail shall be deemed to be delivered ten (10) days after the date of dispatch, express courier service shall be deemed to be delivered five (5) days after the date of dispatch, and telefax or e-mail acknowledged by the answerbacks shall be deemed to be delivered upon dispatch. E-mail transmissions shall be deemed as delivered upon the subject email has been removed to the “Sent” box on the sending computer.
Any and all notices, communications, Specifications and drawings in connection with this Contract shall be written in the English language and each party hereto shall have no obligation to translate them into any other language.
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ARTICLE XVIII EFFECTIVE DATE OF CONTRACT
This Contract shall become effective upon signing of this Contract
Upon signing of this Contract, both parties hereto shall do as follows:
(1)
Receipt by the BUYER of a Refund Guarantee in the form annexed hereto as Exhibit A issued by Refund Guarantor in accordance with Article II Paragraph 7 hereof.
(2)
Receipt by the SELLER of the first instalment in accordance with Paragraph 3(a) and 4(a) of Article II of this Contract; and
(3)
Receipt by the SELLER of a Letter of Guarantee in the form annexed hereto as Exhibit B issued by the Refund Guarantor in accordance with Article II Paragraph 6 hereof.]
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ARTICLE XIX INTERPRETATION
1. LAW APPLICABLE
The parties hereto agree that the validity and interpretation of this Contract and of each Article and part hereof be governed by and interpreted in accordance with the laws of England.
2. DISCREPANCIES
All general language or requirements embodied in the Specifications are intended to amplify, explain and implement the requirements of this Contract. However, in the event that any language or requirements so embodied in the Specifications permit an interpretation inconsistent with any provision of this Contract, then in each and every such event the applicable provisions of this Contract shall govern. The Specifications and plans are also intended to explain each other, and anything shown on the plans and not stipulated in the Specifications or stipulated in the Specifications and not shown on the plans, shall be deemed and considered as if embodied in both. In the event of conflict between the Specifications and plans, the Specifications shall govern.
However, with regard to such inconsistency or contradiction between this Contract and the Specifications as may later occur by any change or changes in the Specifications agreed upon by and among the parties hereto after execution of this Contract, then such change or changes shall govern.
3. DEFINITION
“Banking Day(s)” are days on which banks are open in Singapore, New York, U.S.A.
“Business Day(s)” are days on which banks are open in Singapore and P. R. China.
In absence of stipulation of “banking day(s)” or “Business Day(s)”, the “day” or “days” shall be taken as “calendar day” or “calendar days”.
4. ENTIRE AGREEMENT
This Contract sets forth the entire understanding of the Parties with respect to the subject matter discussed herein. It supersedes all prior discussions, negotiations and agreements, (including but not limited to the Letter of Intent / Option Agreement) whether oral or written, expressed or implied.
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In WITNESS WHEREOF, the parties hereto have caused this Contract to be duly executed on the day and year first above written.
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THE BUYER :
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NAVIG8 CRUDE TANKERS INC.
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By :
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/s/ Rasmus Bach Nielsen
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Name :
Rasmus Bach Nielsen
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Title : Attorney-in-Fact
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THE SELLER:
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CSTC : China Shipbuilding Trading Company, Limited
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By :
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/s/ HZ Fang
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Name :
HZ Fang
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Title : Attorney-in-Fact
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THE BUILDER: Shanghai Waigaoqiao Shipbuilding Co., Ltd.
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By :
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/s/ Huang Yicheng
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Name :
Huang Yicheng
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Title : Attorney-in-Fact
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Exhibit “A”: IRREVOCABLE LETTER OF GUARANTEE NO.
To:
Date:
Dear Sirs,
Irrevocable Letter of Guarantee No.
At the request of China Shipbuilding Trading Company, Limited and in consideration of your agreeing to pay China Shipbuilding Trading Company, Limited and Shanghai Waigaoqiao Shipbuilding Co., Ltd. (hereinafter collectively called “the SELLER”) the instalments before delivery of the VESSEL under the Contract concluded by and amongst you, and the SELLER dated 17
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December, 2013 for the construction of one (1) 300,000 Metric Tons Deadweight Crude Oil Tanker to be designated as Hull No. H1355 (hereinafter called “the Contract”), we, the undersigned, do hereby guarantee irrevocably, as primary obligor, repayment to you by the SELLER of an amount up to but not exceeding a total amount of United States Dollars Thirty Seven Million Thirty Thousand One Hundred and Forty Only (US$ 37,030,140.00) (plus the interest described below) representing the first instalment of the Contract Price of the VESSEL, United States Dollars Nine Million Two Hundred and Fifty Seven Thousand Five Hundred and Thirty Five Only (US$ 9,257,535.00), the second instalment of the Contract Price of the VESSEL, United States Dollars Nine Million Two Hundred and Fifty Seven Thousand Five Hundred and Thirty Five Only (US$ 9,257,535.00), the third instalment of the Contract Price of the VESSEL, United States Dollars Nine Million Two Hundred and Fifty Seven Thousand Five Hundred and Thirty Five Only (US$ 9,257,535.00) and the fourth instalment of the Contract Price of the VESSEL, United States Dollars Nine Million Two Hundred and Fifty Seven Thousand Five Hundred and Thirty Five Only (US$ 9,257,535.00), as you may have paid to the SELLER under the Contract prior to the delivery of the VESSEL, if and when the same or any part thereof becomes repayable to you from the SELLER in accordance with the terms (Article X or Article XII 2(b)) of the Contract. Should the SELLER fail to make such repayment, we shall pay you the amount the SELLER ought to pay with an interest at the rate of six percent (6%) per annum if the cancellation of the Contract is exercised by you in accordance with the provisions of Article III 1(c), 2(c), 3(c) or 4(c) of the Contract or at the rate of zero percent (0%) per annum if cancellation of the Contract is exercised by you by reason of paragraph 1 of Article VIII or paragraph 2(b) of Article XII, in both cases calculated from the date the installments were received by the SELLER to the date of remittance of such refund within thirty (30) Business Days after our receipt of the relevant written demand from you for repayment. Any written demand to us shall be accepted by us as conclusive evidence that the amount claimed is due under this guarantee, provided that such demand: (1) is signed by authorized representative of you and accompanied by a power of attorney granted by you providing the relevant authorized representative with authority to make the demand; (2) states that the principal amount and interest thereon if any demanded by you has been demanded by you from the SELLER and was not paid by the SELLER within forty-five (45) days after that demand upon the SELLER; and (3) is accompanied by a copy of your said demand upon the SELLER.
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It is hereby understood that payment of any interest provided herein is by way of liquidated damages due to cancellation of the CONTRACT.
However, in the event of any dispute between you and the SELLER in relation to:
(1) whether the SELLER shall be liable to repay the instalment or instalments paid by you and
(2) consequently whether you shall have the right to demand payment from us,
and such dispute is submitted either by the SELLER or by you for arbitration in accordance with Article XIII of the Contract, we shall be entitled to withhold and defer payment until the arbitration award is published. We shall not be obligated to make any payment to you unless the arbitration award orders the SELLER to make repayment. If the SELLER fails to honour the award within 45 days of the final award being issued then we shall refund to you against your further written demand accompanied with a certified copy of the arbitration award which orders the SELLER to make repayment, to the extent the arbitration award orders but not exceeding the aggregate amount of this guarantee plus the interest described above.
The undersigned hereby certifies, represents and warrants that all acts, conditions and things required to be done and performed and to have occurred prior to the creation and issuance of this guarantee, and to ensure that this guarantee constitutes valid and legally binding obligations of the undersigned enforceable in accordance with its terms have been done and performed and have occurred in due and strict compliance with applicable laws.
The said repayment shall be made by us in United States Dollars. This Letter of Guarantee shall become effective from the time of the actual receipt of the first instalment by the SELLER from you and the amounts effective under this Letter of Guarantee shall correspond to the total payment actually received by the SELLER from time to time under the Contract prior to the delivery of the VESSEL. However, the available amount under this Letter of Guarantee shall in no event exceed above mentioned amount actually received by the SELLER, together with interest calculated, as described above at six percent (6%) or, zero percent (0%) per annum, as the case may be for the period commencing with the date of receipt by the SELLER of the respective instalment to the date of repayments thereof.
This Letter of Guarantee shall remain in force until the VESSEL has been delivered to and accepted by you or refund has been made by the SELLER or ourselves, or until February 9th, 2017, whichever occurs earlier, after which you are to return it to us by airmail for cancellation. Upon its expiration, this guarantee shall become null and void, any action of maintaining the original of this guarantee and its amendment(s) shall give no right to you for lodging any more claim hereunder.
However in the event that a dispute in respect of a refund is being referred to arbitration in accordance with Article XIII of the Contract, then this Letter of Guarantee shall continue to
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remain in force until 60 days after such arbitration proceedings are concluded and a final arbitration award has been issued.
Any claim under this guarantee must be received by us before its expiration.
It is agreed that this Letter of Guarantee may, with our prior written approval and such approval shall not be unreasonably withheld, be assigned by you (excluding, in respect of a first class international bank, the right of demanding payment which shall in all respect remain with yourself) to a first class international bank that is financing the whole or part of your purchase of the VESSEL or one of your 100% subsidiaries or affiliates.
This Letter of Guarantee shall be construed, interpreted and governed by the Laws of England and any dispute arising out of or in connection with this Letter of Guarantee shall be submitted to the exclusive jurisdiction of the courts of England.
For the Refund Guarantor
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Exhibit “B” IRREVOCABLE LETTER OF GUARANTEE
FOR THE 2ND, 3RD, AND 4TH INSTALLMENTS
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To:
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China Shipbuilding Trading Co., Ltd.
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56(Yi), Zhongguancun Nandajie,
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Beijing 100044, P. R. China
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Dear Sirs,
(1)
In consideration of your entering into a shipbuilding contract dated 17
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December 2013 (“the Shipbuilding Contract”) with NAVIG8 CRUDE TANKERS INC. or its Nominee as the buyer (“the BUYER”) for the construction of one (1) 300,000 Metric Tons Deadweight Crude Oil Tanker known as Shanghai Waigaoqiao Shipbuilding Co., Ltd.’s Hull No. H1355 (“the VESSEL”), we, NAVIG8 CRUDE TANKERS INC., hereby IRREVOCABLY, ABSOLUTELY and UNCONDITIONALLY guarantee, as the primary obligor and not merely as the surety, the due and punctual payment by the BUYER of each and all of the 2nd, 3rd, and 4th installments of the Contract Price amounting to a total sum of United States Dollars Twenty Seven Million Seven Hundred and Seventy Two Thousand Six Hundred and Five only (US$ 27,772,605.00) as specified in (2) below.
(2)
The instalments guaranteed hereunder, pursuant to the terms of the Shipbuilding Contract, comprise the 2nd installment in the amount of U.S. Dollars Nine Million Two Hundred and Fifty Seven Thousand Five Hundred and Thirty Five Only (US$ 9,257,535.00) payable by the BUYER within three (3) Singapore and New York business days after cutting of the first steel plate in your BUILDER’s workshop, the third installment in the amount of U.S. Dollars Nine Million Two Hundred and Fifty Seven Thousand Five Hundred and Thirty Five Only (US$ 9,257,535.00) payable by the BUYER within three (3) Singapore and New York business days after keel-laying of the first section of the VESSEL, and the 4th installment in the amount U.S. Dollars Nine Million Two Hundred and Fifty Seven Thousand Five Hundred and Thirty Five Only (US$ 9,257,535.00) payable by the BUYER within three (3) Singapore and New York business days after launching of the VESSEL.
(3)
We also IRREVOCABLY, ABSOLUTELY and UNCONDITIONALLY guarantee, as primary obligor and not merely as surety, the due and punctual payment by the BUYER of interest on each Instalment guaranteed hereunder at the rate of six percent (6%) per annum from and including the first day after the date of instalment in default until the date of full
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payment by us of such amount guaranteed hereunder.
(4)
In the event that the BUYER fails to punctually pay any Instalment guaranteed hereunder or the BUYER fails to pay any interest thereon, and any such default continues for a period of fifteen (15) days, then, upon receipt by us of your first written demand, we shall immediately pay to you or your assignee all unpaid 2nd, 3rd and 4th instalments, together with the interest as specified in paragraph (3) hereof, without requesting you to take any or further action, procedure or step against the BUYER or with respect to any other security which you may hold.
(5)
We hereby agree that at your option this Guarantee and the undertaking hereunder shall be assignable to and if so assigned shall inure to the benefit of any 3rd party designated by you or Bank of China, Head Office, Banking Department, Beijing, the People’s Republic of China as your assignee as if any such third party or Bank of China, Head Office, Banking Department, Beijing, the People’s Republic of China were originally named herein.
(6)
Any payment by us under this Guarantee shall be made in the Unites States Dollars by telegraphic transfer to Bank of China, New York Branch, 415 Madison Avenue, New York, N. Y. 10017 U.S.A., as receiving bank nominated by you for credit to the account of you with Bank of China, Head Office, Banking Department, Beijing, the People’s Republic of China or through other receiving bank to be nominated by you from time to time, in favour of you or your assignee.
(7)
Our obligations under this guarantee shall not be affected or prejudiced by any dispute between you as the SELLER and the BUYER under the Shipbuilding Contract or by the BUILDER’s delay in the construction and/or delivery of the VESSEL due to whatever causes or by any variation or extension of their terms thereof or by any security or other indemnity now or hereafter held by you in respect thereof, or by any time or indulgence granted by you or any other person in connection therewith, or by any invalidity or unenforceability of the terms thereof, or by any act, omission, fact or circumstances whatsoever, which could or might, but for the foregoing, diminish in any way our obligations under this Guarantee.
(8)
Any claim or demand shall be in writing signed by one of your officers and may be served on us either by hand or by post and if sent by post to (or such other address as we may notify to you in writing), or by email (email: ) via Bank of China, with confirmation in writing.
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(9)
This Letter of Guarantee shall come into full force and effect upon delivery to you of this Guarantee and shall continue in force and effect until the VESSEL is delivered to and accepted by the BUYER and the BUYER shall have performed all its obligations for taking delivery thereof or until the full payment of all 2nd, 3rd, and 4th Instalments together with the aforesaid interests by the BUYER or us, whichever first occurs.
(10)
The maximum amount, however, that we are obliged to pay to you under this Guarantee shall not exceed the aggregate amount of U.S. Dollars Twenty Eight Million Forty Six Thousand Five Hundred and Twenty Six only (US$28,046,526.00) being an amount equal to the sum of:-
(a)
All the 2nd, 3rd and 4th instalments guaranteed hereunder in the total amount of United States Dollars Twenty Seven Million Seven Hundred and Seventy Two Thousand Six Hundred and Five only (US$ 27,772,605.00) ; and
(b)
Interest at the rate of six percent (6%) per annum on the Instalment for a period of sixty (60) days in the amount of United States Dollars Two Hundred Seventy Three Thousand Nine Hundred and Twenty One only (US$ 273,921.00).
(11)
All payments by us under this Guarantee shall be made without any set-off or counterclaim and without deduction or withholding for or on account of any taxes, duties, or charges whatsoever unless we are compelled by law to deduct or withhold the same. In the latter event we shall make the minimum deduction or withholding permitted and will pay such additional amounts as may be necessary in order that the net amount received by you after such deductions or withholdings shall equal the amount which would have been received had no such deduction or withholding been required to be made.
(12)
This Letter of Guarantee shall be construed in accordance with and governed by the Laws of England. We hereby submit to the non-exclusive jurisdiction of the English courts for the purposes of any legal action or proceedings in connection herewith in England.
(13)
When this Letter of Guarantee shall have expired as aforesaid, you will return the same to us without any request or demand from us.
IN WITNESS WHEREOF, we have caused this Letter of Guarantee to be executed and delivered by our duly authorized representative the day and year above written.
57
Very Truly Yours
By: NAVIG8 CRUDE TANKERS INC.
58
Exhibit 10.80
SHIPBUILDING CONTRACT
FOR
CONSTRUCTION OF ONE 300,000 DWT CRUDE OIL TANKER
(HULL NO. H1356)
BETWEEN
NAVIG8 CRUDE TANKERS INC. or its Nominee
as BUYER
and
CHINA SHIPBUILDING TRADING COMPANY, LIMITED
and
SHANGHAI WAIGAOQIAO SHIPBUILDING CO., LTD.
Collectively as SELLER
CONTENTS
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ARTICLE
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PAGE NO.
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ARTICLE I DESCRIPTION AND CLASS
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2
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1. DESCRIPTION:
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2
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2. CLASS AND RULES
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2
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3. PRINCIPAL PARTICULARS AND DIMENSIONS OF THE VESSEL
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3
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4. GUARANTEED SPEED
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3
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5. GUARANTEED FUEL CONSUMPTION
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3
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6. GUARANTEED DEADWEIGHT
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4
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7. SUBCONTRACTING:
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4
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8. REGISTRATION:
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4
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ARTICLE II CONTRACT PRICE & TERMS OF PAYMENT
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5
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1. CONTRACT PRICE:
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5
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2. CURRENCY:
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5
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3. TERMS OF PAYMENT:
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5
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4. METHOD OF PAYMENT:
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6
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5. PREPAYMENT:
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8
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6. SECURITY FOR PAYMENT OF INSTALMENTS BEFORE DELIVERY:
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8
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7. REFUNDS
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8
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ARTICLE III ADJUSTMENT OF THE CONTRACT PRICE
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10
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1. DELIVERY
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10
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2. INSUFFICIENT SPEED
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11
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3. EXCESSIVE FUEL CONSUMPTION
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12
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4. DEADWEIGHT
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13
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5. EFFECT OF RESCISSION OR CANCELLATION
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13
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ARTICLE IV SUPERVISION AND INSPECTION
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14
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1. APPOINTMENT OF THE BUYER’S REPRESENTATIVES
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14
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2. COMMENTS TO PLANS AND DRAWINGS
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14
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3. SUPERVISION AND INSPECTION BY THE BUYER’S REPRESENTATIVES
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15
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4. LIABILITY OF THE SELLER
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17
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5. SALARIES AND EXPENSES
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17
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6. REPLACEMENT OF BUYER’S REPRESENTATIVES
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17
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ARTICLE V MODIFICATION,CHANGES AND EXTRAS
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18
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1. HOW EFFECTED
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18
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2. CHANGES IN RULES AND REGULATIONS, ETC.
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19
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3. SUBSTITUTION OF MATERIALS AND/OR EQUIPMENT
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20
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4. BUYER’S SUPPLIED ITEMS
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20
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ARTICLE VI TRIALS
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22
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I
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1. NOTICE
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22
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2. HOW CONDUCTED
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23
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3. TRIAL LOAD DRAFT
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23
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4. METHOD OF ACCEPTANCE OR REJECTION
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24
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5. DISPOSITION OF SURPLUS CONSUMABLE STORES
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24
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6. EFFECT OF ACCEPTANCE
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25
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ARTICLE VII DELIVERY
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26
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1. TIME AND PLACE
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26
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2. WHEN AND HOW EFFECTED
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26
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3. DOCUMENTS TO BE DELIVERED TO THE BUYER
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26
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4. TITLE AND RISK
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27
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5. REMOVAL OF VESSEL
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28
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6. TENDER OF THE VESSEL
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28
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ARTICLE VIII DELAYS & EXTENSION OF TIME FOR DELIVERY
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29
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1. CAUSE OF DELAY
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29
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2. NOTICE OF DELAY
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30
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3. RIGHT TO CANCEL FOR EXCESSIVE DELAY
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30
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4. DEFINITION OF PERMISSIBLE DELAY
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31
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ARTICLE IX WARRANTY OF QUALITY
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32
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1. GUARANTEE OF MATERIAL AND WORKMANSHIP
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32
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2. NOTICE OF DEFECTS
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32
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3. REMEDY OF DEFECTS
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32
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4. EXTENT OF THE SELLER’S LIABILITY
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33
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ARTICLE X CANCELLATION, REJECTION AND RESCISSION BY THE BUYER
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35
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ARTICLE XI BUYER’S DEFAULT
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37
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1. DEFINITION OF DEFAULT
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37
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2. NOTICE OF DEFAULT
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37
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3. INTEREST AND CHARGE
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37
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4. DEFAULT BEFORE DELIVERY OF THE VESSEL
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38
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5. SALE OF THE VESSEL
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39
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ARTICLE XII INSURANCE
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40
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1. EXTENT OF INSURANCE COVERAGE
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40
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2. APPLICATION OF RECOVERED AMOUNT
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40
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3. TERMINATION OF THE SELLER’S OBLIGATION TO INSURE
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41
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ARTICLE XIII DISPUTES AND ARBITRATION
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42
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1. PROCEEDINGS
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42
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2. ALTERNATIVE ARBITRATION BY AGREEMENT
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42
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3. NOTICE OF AWARD
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43
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4. EXPENSES
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43
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5. AWARD OF ARBITRATION
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43
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II
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6. ENTRY IN COURT
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43
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7. ALTERATION OF DELIVERY TIME
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43
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ARTICLE XIV RIGHT OF ASSIGNMENT
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44
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ARTICLE XV TAXES AND DUTIES
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45
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1. TAXES
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45
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2. DUTIES
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45
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ARTICLE XVI PATENTS, TRADEMARKS AND COPYRIGHTS
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46
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ARTICLE XVII NOTICE
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47
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ARTICLE XVIII EFFECTIVE DATE OF CONTRACT
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49
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ARTICLE XIX INTERPRETATION
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50
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1. LAW APPLICABLE
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50
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2. DISCREPANCIES
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50
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3. DEFINITION
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50
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4. ENTIRE AGREEMENT
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50
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EXHIBIT “A” : IRREVOCABLE LETTER OF GUARANTEE NO.
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52
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EXHIBIT “B” IRREVOCABLE LETTER OF GUARANTEE
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55
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FOR THE 2ND, 3RD, AND 4TH INSTALLMENTS
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55
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III
SHIPBUILDING CONTRACT FOR
CONSTRUCTION OF ONE
DIESEL
DRIVEN 300,000 DWT CRUDE OIL TANKER
(HULL NO.
H1356
)
This CONTRACT, entered into this 17th day of December 2013 by and between NAVIG8 CRUDE TANKERS INC. or its Nominee, a corporation organized and existing under the Laws of Marshall Islands, having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960 (hereinafter called the “BUYER”) on one part; and CHINA SHIPBUILDING TRADING COMPANY, LIMITED, a corporation organized and existing under the Laws of the People’s Republic of China, having its registered office at 56(Yi), Zhongguancun Nandajie, Beijing 100044, the People’s Republic of China (hereinafter called “CSTC”), and SHANGHAI WAIGAOQIAO SHIPBUILDING CO., LTD. a corporation organized and existing under the Laws of the People’s Republic of China, having its registered office at
3001 Zhouhai Road, Pudong New District, Shanghai 200137
, the People’s Republic of China (hereinafter called the “BUILDER”) on the other part. CSTC and the BUILDER are hereinafter collectively called the “SELLER”
WITNESSETH
in consideration of the mutual covenants contained herein, the SELLER agrees to design, build, launch, equip and complete at the BUILDER’s own premises or at Shanghai Jiangnan Changxing Heavy Industry Co., Ltd. at Changxing Island, Shanghai (hereinafter called the BUILDER’s shipyard) and to sell and deliver to the BUYER after completion and successful trial one (1) 300,000 Metric Tons Deadweight Crude Oil Tanker as more fully described in Article I hereof, to be registered under the flag of Marshall Islands and the BUYER agrees to purchase and take delivery of the aforesaid VESSEL from the SELLER and to pay for the same in accordance with the terms and conditions hereinafter set forth.
1
ARTICLE I DESCRIPTION AND CLASS
1. DESCRIPTION:
The VESSEL is a 300,000 metric tons deadweight crude oil tanker, at scantling draft moulded of 21.3 meters (hereinafter called the “VESSEL”) of the class described below. The VESSEL shall have the BUILDER’s Hull No. H1356 and shall be designed, constructed, equipped and completed in accordance with the following “Specifications”:
(1) Specification (Drawing No. 300TK-13202-CS-R1)
(2) General Arrangement (Drawing No. 300TK-13202-GA-R1)
(3) Midship Section (Drawing No. 300TK-13202-MS-R1)
(4) Makers list (Drawing No. 300TK-13202-ML-R1)
(5) Technical Memorandum on the 300,000 DWT Crude Oil Tanker Specification dated December 17
th
, 2013
attached hereto and signed by each of the parties to this Contract (hereinafter collectively called the “Specifications”), making an integral part hereof.
2. CLASS AND RULES
The VESSEL, including its machinery and equipment, shall be designed, equipped and constructed in accordance with the rules and regulations issued and having become effective and compulsorily applicable to the VESSEL up to and on the date of signing this Contract of American Bureau of Shipping (ABS) (hereinafter called the “Classification Society”) and shall be distinguished in the record by the symbol of:
+A1 Oil Carrier, (E), CSR, AB-CM, +AMS, +ACCU, TCM, UWILD, SPMA, PMA, ESP, CPS, VEC-L, RW, GP, CPP, POT, CRC, BWT, HIMP, RES, RRDA
and shall also comply with the rules and regulations as fully described in the Specifications.
The requirements of the authorities as fully described in the Specifications including that of the Classification Society are to include additional rules or circulars thereof issued and become effective as at the date of signing this Contract.
The SELLER shall arrange with the Classification Society to assign a representative or representatives (hereinafter called the “Classification Surveyor”) to the BUILDER’s Shipyard for supervision of the construction of the VESSEL.
2
All fees and charges incidental to Classification and to comply with the rules, regulations and requirements of this Contract as described in the Specifications issued up to the date of signing this Contract as well as royalties, if any, payable on account of the construction of the VESSEL shall be for the account of the SELLER, except as otherwise provided and agreed herein. The key plans, materials and workmanship entering into the construction of the VESSEL shall at all times be subject to inspections and tests in accordance with the rules and regulations of the Classification Society.
Decisions of the Classification Society as to compliance or noncompliance with Classification rules and regulations shall be final and binding upon the parties hereto.
3. PRINCIPAL PARTICULARS AND DIMENSIONS OF THE VESSEL
(a) Hull:
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Length overall
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abt. 333.00m
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Length between perpendiculars
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324.00m
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Breadth moulded
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60.00m
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Depth moulded
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29.50m
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Design Draft moulded
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20.50m
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(b) Propelling Machinery:
The VESSEL shall be equipped, in accordance with the Specifications, with one (1) set of MAN 7G80ME-C 9.2 type main engine.
4. GUARANTEED SPEED
The SELLER guarantees that the trial speed, after correction, is to be not less than 15.5nautical miles per hour on the trial condition stipulated in the Specification.
The trial speed shall be corrected for wind speed and shallow water effect. The correction method of the speed shall be as specified in the Specifications.
5. GUARANTEED FUEL CONSUMPTION
The SELLER guarantees that the fuel oil consumption of the Main Engine is not to exceed 158.8+5% grams/brake horse power/hour at normal continuous output at shop trial based on diesel fuel oil having a lower calorific value of 10,200 kilocalories per kilogram.
3
6. GUARANTEED DEADWEIGHT
The SELLER guarantees that the VESSEL is to have a deadweight of not less than 300,000 metric tons at the scantling draft moulded of 21.3 meters in sea water of 1.025 specific gravity.
The term, “Deadweight”, as used in this Contract, shall be as defined in the Specifications.
The actual deadweight of the VESSEL expressed in metric tons shall be based on calculations made by the BUILDER and checked by the BUYER, and all measurements necessary for such calculations shall be performed in the presence of the BUYER’s REPRESENTATIVE(S) or the party authorized by the BUYER.
Should there be any dispute between the BUILDER and the BUYER in such calculations and/or measurements, the decision of the Classification Society shall be final.
7. SUBCONTRACTING:
The SELLER may, at its sole discretion and responsibility, subcontract any portion of the construction work of the VESSEL to experienced subcontractors, but delivery and final assembly into the VESSEL of any such work subcontracted shall be at the BUILDER’s Shipyard. The SELLER shall remain responsible for such subcontracted work.
The performance of the works by the Shanghai Jiangnan Changxing Heavy Industry Co., Ltd. or wholly controlled subsidiaries of the BUILDER does not constitute subcontracting for the purposes of this clause. Without prejudice to the generality of the foregoing the SELLER shall remain fully liable for the due and complete performance of all the SELLER’s obligations under this Contract notwithstanding the entering into of any such sub-contract as aforesaid. However, the Vessel shall always remain at the BUILDER’s shipyard or Shanghai Jiangnan Changxing Heavy Industry Co., Ltd. unless the Buyer and the SELLER agree otherwise.
8. REGISTRATION:
The VESSEL shall be registered by the BUYER at its own cost and expenses under the laws of Marshall Islands at the time of delivery and acceptance thereof.
4
ARTICLE II CONTRACT PRICE & TERMS OF PAYMENT
1. CONTRACT PRICE:
The purchase price of the VESSEL is United States Dollars Ninety Two Million Five Hundred and Seventy Five Thousand Three Hundred and Fifty Only (US$ 92,575,350.00), net receivable by the SELLER (hereinafter called the “Contract Price”), which is exclusive of the cost for the BUYER’s Supplies as provided in Article V hereof, and shall be subject to upward or downward adjustment, if any, as hereinafter set forth in this Contract.
2. CURRENCY:
Any and all payments by the BUYER to the SELLER under this Contract shall be made in United States Dollars.
3. TERMS OF PAYMENT:
The Contract Price shall be paid by the BUYER to the SELLER in instalments as follows:
(a) 1st Instalment:
The sum of United States Dollars Nine Million Two Hundred and Fifty Seven Thousand Five Hundred and Thirty Five Only (US$ 9,257,535.00), representing ten percent (10%) of the Contract Price, shall become due and payable and be paid by the BUYER within three (3) Singapore and New York business days after its receipt of the Refund Guarantee substantially in the form agreed in Exhibit
“
A
”
to this Contract. SELLER shall send a copy of invoice as demand for the same.
(b) 2nd Instalment:
The sum of United States Dollars Nine Million Two Hundred and Fifty Seven Thousand Five Hundred and Thirty Five Only (US$ 9,257,535.00), representing ten percent (10%) of the Contract Price, shall become due and payable and be paid within three (3) Singapore and New York business days after the cutting of the first steel plate of the VESSEL in the BUILDER’s workshop, such to be confirmed in writing by the Classification Society, or a date not earlier than sixteen (16) months prior to the Delivery Date, whichever is later. The SELLER shall notify with a telefax or email notice to the BUYER stating that the 1st steel plate has been cut in its workshop and submit a copy of the invoice as demand for payment of this 2
nd
instalment.
5
(c) 3rd Instalment:
The sum of United States Dollars Nine Million Two Hundred and Fifty Seven Thousand Five Hundred and Thirty Five Only (US$ 9,257,535.00), representing ten percent (10%) of the Contract Price, shall become due and payable and be paid within three (3) Singapore and New York business days after keel-laying of the first section of the VESSEL. The keel-laying shall be notified by the SELLER with a telefax or email notice to the BUYER stating that the said keel-laying has been carried out, such to be confirmed in writing by the Classification Society, or a date not earlier than eleven (11) months prior to the Delivery Date, whichever is later. The SELLER shall send to the BUYER a telefax or email stating that keel-laying has been carried out and submit a copy of the invoice as demand for payment of this 3
rd
installment.
(d) 4th Instalment:
The sum of United States Dollars Nine Million Two Hundred and Fifty Seven Thousand Five Hundred and Thirty Five Only (US$ 9,257,535.00), representing ten percent (10%) of the Contract Price, shall become due and payable and be paid within three (3) Singapore and New York business days after launching of the VESSEL, such to be confirmed in writing by the Classification Society. The launching of the VESSEL shall be notified by the SELLER with a telefax or email notice to the BUYER stating that the launching of the VESSEL has been carried out. The SELLER shall send to the BUYER a telefax or email stating that launching has taken place and submit a copy of the invoice as demand for payment of this 4
th
installment.
(e) 5th Installment (Payment upon Delivery of the VESSEL):
The sum of United States Dollars Fifty Five Million Five Hundred and Forty Five Thousand Two Hundred and Ten Only (US$ 55,545,210.00), representing sixty percent (60%) of the Contract Price, plus any increase or minus any decrease due to modifications and/or adjustments of the Contract Price in accordance with provisions of the relevant Articles hereof, shall become due and payable and be paid by the BUYER to the SELLER concurrently with delivery of the VESSEL. The SELLER shall send to the BUYER a telefax or e-mail demand for this installment ten (10) days prior to the scheduled date of delivery of the VESSEL.
4. METHOD OF PAYMENT:
(a) 1st Instalment:
The BUYER shall remit the amount of this installment in accordance with Article II, Paragraph 3 (a) by telegraphic transfer to Bank of China, New York Branch, 410 Madison Avenue, New York, N.Y. 10017, U.S.A. as receiving bank nominated by the SELLER,
6
for credit to the account of CSTC with Bank of China, Head Office, Banking Department, Beijing, the People’s Republic of China with SWIFT advice from Bank of China, New York Branch to Bank of China, Head Office.
(b) 2nd Instalment:
The BUYER shall remit the amount of this installment in accordance with Article II, Paragraph 3(b) by telegraphic transfer to Bank of China, New York Branch, 410 Madison Avenue, New York, N.Y. 10017, U.S.A. as receiving bank nominated by the SELLER, for credit to the account of CSTC with Bank of China, Head Office, Banking Department, Beijing, the People’s Republic of China with SWIFT advice from Bank of China, New York Branch to Bank of China, Head Office, or through other receiving bank to be nominated by the SELLER from time to time and such nomination shall be notified to the BUYER at least 10 days prior to the due date for payment.
(c) 3rd Installment:
The BUYER shall remit the amount of this installment in accordance with Article II, Paragraph 3(c) by telegraphic transfer to Bank of China, New York Branch, 410 Madison Avenue, New York, N.Y. 10017, U.S.A. as receiving bank nominated by the SELLER, for credit to the account of CSTC with Bank of China, Head Office, Banking Department, Beijing, the People’s Republic of China with SWIFT advice from Bank of China, New York Branch to Bank of China, Head Office, or through other receiving bank to be nominated by the SELLER from time to time and such nomination shall be notified to the BUYER at least 10 days prior to the due date for payment.
(d) 4th Installment:
The BUYER shall remit the amount of this installment in accordance with Article II, Paragraph 3(d) by telegraphic transfer to Bank of China, New York Branch, 410 Madison Avenue, New York, N.Y. 10017, U.S.A. as receiving bank nominated by the SELLER, for credit to the account of CSTC with Bank of China, Head Office, Banking Department, Beijing, the People’s Republic of China with SWIFT advice from Bank of China, New York Branch to Bank of China, Head Office, or through other receiving bank to be nominated by the SELLER from time to time and such nomination shall be notified to the BUYER at least 10 days prior to the due date for payment.
(e) 5th Installment (Payable upon delivery of the VESSEL):
The BUYER shall, at least three (3) Singapore and New York business days prior to the scheduled date of delivery of the VESSEL, make an irrevocable cash deposit in the name of the BUYER with Bank of China, Head Office, Banking Department, Beijing, the People’s
7
Republic of China, for a period of fifteen (15) days and covering the amount of this installment (as adjusted in accordance with the provisions of this Contract), with an irrevocable instruction that the said amount shall be released to the SELLER against presentation by the SELLER to the said Bank of China, Head Office, Banking Department, Beijing, the People’s Republic of China, of a copy of the Protocol of Delivery and Acceptance signed by the BUYER’s authorized representative and the SELLER. Interest, if any, accrued from such deposit, shall be for the benefit of the BUYER.
If the delivery of the VESSEL is not effected and the SELLER fails to present a copy of the fully signed Protocol of Delivery and Acceptance to said Bank of China, Head Office, Banking Department, Beijing, the People’s Republic of China on or before the expiry of the aforesaid fifteen (15) days deposit period, the BUYER shall have the right to withdraw the said deposit plus accrued interest upon the expiry of the said fifteen (15) days deposit period. However when the newly scheduled delivery date is notified to the BUYER by the SELLER, the BUYER shall make the cash deposit in accordance with the same terms and conditions as set out above.
5. PREPAYMENT:
The BUYER shall have the right to make prepayment of any and all instalments before delivery of the VESSEL, by giving to the SELLER at least thirty (30) days prior written notice, without any price adjustment of the VESSEL for such prepayment.
6. SECURITY FOR PAYMENT OF INSTALMENTS BEFORE DELIVERY:
The BUYER shall, within three (3) Business Days after the BUYER’s receipt of the Refund Guarantee, deliver to the SELLER an irrevocable and unconditional Letter of Guarantee in the form annexed hereto as Exhibit “B” (hereinafter called the “Payment Guarantee”) in favour of the SELLER issued by NAVIG8 CRUDE TANKERS INC. (hereinafter called the “Payment Guarantor”) acceptable to the SELLER. This guarantee shall secure the BUYER’s obligation for the payment of the 2nd, 3rd and 4th installments of the Contract Price.
7. REFUNDS
All payments made by the BUYER prior to delivery of the VESSEL shall be in the nature of advance to the SELLER, and in the event this Contract is rescinded or canceled by the BUYER, all in accordance with the specific terms of this Contract permitting such rescission or cancellation, the SELLER shall refund to the BUYER in United States Dollars the full amount of all sums already paid by the BUYER to the SELLER under this Contract, together with interest (at the rate set out in respective provision thereof) from the respective payment
8
date(s) to the date of remittance by telegraphic transfer of such refund to the account specified by the BUYER without deduction, set off or withholding in US dollars from the SELLER’s bank or jurisdiction.
As security to the BUYER, the SELLER shall deliver to the BUYER, within Thirty (30) days following the execution of this Contract, a Refund Guarantee to be issued by either Bank of China or China CITIC Bank, or Industrial and Commercial Bank of China or The Export-Import Bank of China, at SELLER’s sole direction, (hereinafter called the “Refund Guarantor”) in the form as per Exhibit “A” annexed hereto.
However, in the event of any dispute between the SELLER and the BUYER with regard to the SELLER’s obligation to repay the installment or installments paid by the BUYER and to the BUYER’S right to demand payment from the Refund Guarantor, under its guarantee, and such dispute is submitted either by the SELLER or by the BUYER for arbitration in accordance with Article XIII hereof, the Refund Guarantor shall withhold and defer payment until the final arbitration award between the SELLER and the BUYER is published. The Refund Guarantor shall not be obligated to make any payment unless the final arbitration award orders the SELLER to make repayment. If the SELLER fails to honour the award within 45 days, then the Refund Guarantor shall refund to the extent the final arbitration award orders.
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ARTICLE III ADJUSTMENT OF THE CONTRACT PRICE
The Contract Price of the VESSEL shall be subject to adjustments as hereinafter set forth. It is hereby understood by both parties that any reduction of the Contract Price is by way of liquidated damages and not by way of penalty.
1. DELIVERY
(a)
No adjustment shall be made, and the Contract Price shall remain unchanged for the thirty (30) days of delay in delivery of the VESSEL beyond the Delivery Date as defined in Article VII hereof ending as of twelve o’clock midnight (Beijing time) of the thirtieth (30
th
) day of delay.
(b)
If the delivery of the VESSEL is delayed more than thirty (30) days after the date as defined in Article VII hereof, then, in such event, beginning at twelve o’clock midnight (Beijing time) of the thirtieth (30
th
) day after the date on which delivery is required under this Contract, the Contract Price of the VESSEL shall be reduced by deducting therefrom the sum of United States Dollars Sixteen Thousand Only (US$ 16,000.00) per day.
Unless the parties hereto agree otherwise, the total reduction in the Contract Price shall be deducted from the fifth instalment of the Contract Price and in any event (including the event that the BUYER consents to take the VESSEL at the later delivery date after the expiration of Two Hundred and ten (210) days delay of delivery as described in Paragraph 1(c) of this Article or Paragraph3 of Article VIII) shall not be more than One Hundred and Eighty (180) days at the above specified rate of reduction after the thirty (30) days allowance, that is United States Dollars Two Million Eight Hundred and Eighty Thousand Only (U.S.$ 2,880,000.00) being the maximum.
(c)
If the delay in the delivery of the VESSEL continues beyond the period of Two Hundred and Ten (210) days (being the total non-permissible delays and Thirty (30) days allowance) after the Delivery Date (as defined in Article VII), then in such event, the BUYER may, at its option, rescind or cancel this Contract in accordance with the provisions of Article X of this Contract. The SELLER may at any time after the expiration of the aforementioned Two Hundred and ten (210) days, if the BUYER has not served notice of cancellation pursuant to Article X, notify the BUYER of the date upon which the SELLER estimates the VESSEL will be ready for delivery and demand in writing that the BUYER make an election, in which case the BUYER shall, within thirty (30) days after such demand is received by the BUYER, either notify the SELLER of its decision to cancel this Contract, or consent to take delivery of the VESSEL at an agreed future date, it being understood and agreed by the parties hereto that, if the VESSEL is not delivered by such future date, the BUYER shall have the same right of cancellation upon the same terms, as hereinabove provided.
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In the case the BUYER, within Thirty (30) days after such demand is received by the BUYER, fails to notify the SELLER of its decision to cancel this Contract, or consent to take delivery of the VESSEL at an agreed future date, it shall be deemed that the BUYER has consented to take delivery of the VESSEL at SELLER’s estimated date.
(d)
For the purpose of this Article III only, the delivery of the VESSEL shall not be deemed delayed and the Contract Price shall not be reduced when and if the Delivery Date of the VESSEL is extended by reason of causes and provisions of Articles V, VI.1, XI, XII.2, XIII.7 hereof. The Contract Price shall not be adjusted or reduced if the delivery of the VESSEL is delayed by reason of permissible delays as defined in Article VIII hereof.
2. INSUFFICIENT SPEED
(a)
The Contract Price of the VESSEL shall not be affected nor changed by reason of the actual speed (as determined by the Trial Run after correction according to the Specifications) being less than three tenths (3/10) of one knot below the guaranteed speed as specified in Paragraph 4 of Article I of this Contract.
(b)
However, commencing with and including a deficiency of three tenths (3/10) of one knot in actual speed (as determined by the Trial Run after correction according to the Specifications) below the guaranteed speed as specified in Paragraph 4, Article I of this Contract, the Contract Price shall be reduced as follows:
In case of deficiency
at or above 0.30 but below 0.40 knot US$ 150,000.00
at or above 0.40 but below 0.50 knot US$ 300,000.00
at or above 0.50 but below 0.60 knot US$ 450,000.00
at or above 0.60 but below 0.70 knot US$ 600,000.00
at or above 0.70 but below 0.80 knot US$ 750,000.00
(c) If the deficiency in actual speed (as determined by the Trial Run after correction according to the Specifications) of the VESSEL upon the Trial Run, is more than 0.80 knot below the guaranteed speed of 15.5 knots, then the BUYER may at its option reject the VESSEL and rescind or cancel this Contract in accordance with provisions of Article X of this Contract, or may accept the VESSEL at a reduction in the Contract Price as above provided, by United States Dollars Seven Hundred and Fifty Thousand only (US$750,000.00) being the maximum.
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3. EXCESSIVE FUEL CONSUMPTION
(a)
The Contract Price of the VESSEL shall not be affected nor changed if the actual fuel consumption of the Main Engine, as determined by shop trial in manufacturer’s works, as per the Specifications, is greater than the guaranteed fuel consumption as specified and required under the provisions of this Contract and the Specifications if such actual excess is equal to or less than Five percent (5%) (such threshold being 166.74 grams/brake horse power/hour, being 5% above 158.8 grams/brake horse power/hour).
(b)
However, if the actual fuel consumption as determined by shop trial is greater than Five percent (5%) above the guaranteed fuel consumption then, the Contract Price shall be reduced by the sum of United States Dollars One Hundred and Thirty Five Thousand Only (US$135,000.00) for each full one percent (1%) increase in fuel consumption in excess of the above said Five percent (5%) (fractions of one percent to be prorated).
(c)
If as determined by shop trial such actual fuel consumption of the Main Engine is more than ten percent (10%) in excess of the guaranteed fuel consumption, i.e. the fuel consumption exceeds 174.68 grams/brake horse power/hour (being 10% above 158.8 grams/brake horse power/hour), the BUYER may, subject to the BUILDER’s right to effect alterations of corrections as specified in the following sub-paragraph of Article III 3 (c) hereof at its option, rescind or cancel this Contract, in accordance with the provisions of Article X of this Contract or may accept the VESSEL at a reduction in the Contract Price by United States Dollars Six Hundred and Seventy Five Thousand Only (US$675,000.00) being the maximum.
If as determined by shop trial such actual fuel consumption of the Main Engine is more than ten percent (10%) in excess of the guaranteed fuel consumption, i.e. the fuel consumption exceeds 174.68 grams/brake horse power/hour, the BUILDER may investigate the cause of the non-conformity and the proper steps may promptly be taken to remedy the same and to make whatever corrections and alterations and / or re-shop trial test or tests as may be necessary to correct such non-conformity without extra cost to the BUYER. Upon completion of such alterations or corrections of such nonconformity, the BUILDER shall promptly perform such further shop trials or any other tests, as may be deemed necessary to prove the fuel consumption of the Main Engine’s conformity with the requirement of this Contract and the Specifications and if found to be satisfactory, give the BUYER notice by telefax and/or e-mail of such correction and as appropriate, successful completion accompanied by copies of such results, and the BUYER shall, within six (6) Business Days after receipt of such notice, notify the BUILDER by telefax and/or e-mail of its acceptance or reject the re-shop trial together with the reasons therefor. If the BUYER fails to notify the BUILDER by telefax and/or e-mail of its acceptance or rejection of the re-shop trial together with the reasons therefor within six (6) Business Days period as provided herein, the BUYER shall be deemed to have accepted the shop trial.
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4. DEADWEIGHT
(a)
In the event that there is a deficiency in the actual deadweight of the VESSEL determined as provided in the Specifications, the Contract Price shall not be decreased if such deficiency is Three Thousand (3,000) metric tons or less below the guaranteed deadweight of 300,000 metric tons at assigned designed draft.
(b)
However, the Contract Price shall be decreased by the sum of United States Dollars Seven Hundred Only (US$700.00) for each full metric ton of such deficiency being more than Three Thousand and One Hundred (3,100) metric tons.
(c)
In the event that there should be a deficiency in the VESSEL’s actual deadweight which exceeds Six thousand and One Hundred (6,100) metric tons below the guaranteed deadweight, the BUYER may, at its option, reject the VESSEL and rescind or cancel this Contract in accordance with the provisions of Article X of this Contract, or may accept the VESSEL with reduction in the Contract Price in the maximum amount of United States Dollars Two Million One Hundred Thousand only (US$2,100,000.00).
5. EFFECT OF RESCISSION OR CANCELLATION
It is expressly understood and agreed by the parties hereto that in any case as stated herein, if the BUYER rescinds or cancels this Contract pursuant to any provision under this Article, the BUYER, save for its rights and remedy set out in Article X hereof, shall not be entitled to any liquidated damages or compensation whether described above or otherwise.
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ARTICLE IV SUPERVISION AND INSPECTION
1. APPOINTMENT OF THE BUYER’S REPRESENTATIVES
The BUYER shall send in good time to and maintain at the BUILDER’s Shipyard, at the BUYER’s own cost and expense, one or more representative(s) who shall be duly accredited and authorized in writing by the BUYER (such representative(s) being hereinafter collectively and individually called the “BUYER’S REPRESENTATIVES”) to supervise and survey the construction by the BUILDER of the VESSEL, her engines and accessories. The SELLER hereby warrants that, the necessary invitation letter for the BUYER’S REPRESENTATIVES to enter China will be issued in order on demand and without delay provided that the BUYER’S REPRESENTATIVES meets with the rules, regulations and laws of the People’s Republic of China. The BUYER undertakes to give the SELLER adequate notice for the application of invitation letter.
2. COMMENTS TO PLANS AND DRAWINGS
The parties hereto shall, within Thirty (30) days after signing of this Contract, mutually agree a list of all the plans and drawings, which are to be sent to the BUYER (hereinafter called “the LIST”) along with a schedule of anticipated dates when these will be dispatched as per BUILDER’s estimation, which may be subject to change by the BUILDER. Before arrival of the BUYER’S REPRESENTATIVES at the BUILDER’s Shipyard, the plans and drawings specified in the LIST shall be sent to the BUYER, and the BUYER shall, within Fourteen (14) working days after receipt thereof (excluding mailing time), return such plans and drawings submitted by the SELLER with comments, if any. Notwithstanding the above, the BUYER shall nevertheless waive its right to comment on the plans and drawings if such plans and drawings have been previously applied to build other vessels with the same specification as that of the VESSEL.
When and if the BUYER’S REPRESENTATIVES shall have been sent by the BUYER to the BUILDER in accordance with paragraph 1 of this Article, the BUYER’S REPRESENTATIVES shall approve the plans and drawings submitted to him by the SELLER according to the List of plans and drawings agreed upon by both parties unless otherwise agreed upon between the parties hereto. The BUYER’S REPRESENTATIVES shall within three (3) Business Days after receipt hereof, return to the BUILDER two (2) copies of such plans and drawings with approval or comments, if any, written thereon.
If the comments made by the BUYER or the BUYER’S REPRESENTATIVES are not clearly specified or detailed, the BUILDER shall seek the BUYER’s clarification in writing. Should the BUYER or the BUYER’S REPRESENTATIVES not answer such request within reasonable time (minimum being three working days) of the request then the
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BUILDER should be entitled to place its own reasonable interpretation on the comments of the BUYER in implementing same.
In the event that the BUYER or the BUYER’S REPRESENTATIVES shall fail to give comments or return the plans and drawings to the BUILDER within the time limit as herein provided, such plans and drawings shall be deemed have been automatically approved or confirmed without any comment.
3. SUPERVISION AND INSPECTION BY THE BUYER’S REPRESENTATIVES
The necessary inspection of the VESSEL, its machinery, equipment and outfittings shall be carried out by the Classification Society, and/or inspection team of the BUILDER throughout the entire period of construction in order to ensure that the construction of the VESSEL is duly performed in accordance with the Contract and Specifications.
The BUYER’S REPRESENTATIVES shall have, at all times until delivery of the VESSEL, the right to attend tests according to the mutually agreed test list and inspect the VESSEL, her engines, accessories and materials at the BUILDER’s Shipyard, its subcontractors or any other place where work is done or materials stored in connection with the VESSEL. In the event that the BUYER’S REPRESENTATIVES discovers any construction or material or workmanship which does not or will not conform to the requirements of this Contract and the Specifications, the BUYER’S REPRESENTATIVES shall promptly give the BUILDER a notice in writing as to such nonconformity, upon receipt of which the BUILDER shall correct such nonconformity if the BUILDER agrees with the BUYER. In any circumstances, the SELLER shall be entitled to proceed with the construction of the VESSEL even if there exists discrepancy in the opinion between the BUYER and the SELLER, without however prejudice to the BUYER’s right for submitting the issue for determination by the Classification Society or arbitration in accordance with the provisions hereof. However the BUYER undertakes and assures the SELLER that the BUYER’S REPRESENTATIVES shall carry out his inspections and supervision in accordance with the agreed inspection procedure, SELLER’s working schedule and usual shipbuilding practice and in a way as to minimize any increase in building costs and delays in the construction of the VESSEL. Once an inspection and/or test has been witnessed and approved by the BUYER’S REPRESENTATIVES, the same inspection and/or test should not have to be repeated, provided it has been carried out in compliance with the requirements of the Classification Society and Specifications.
The BUILDER agrees to furnish free of charge the BUYER’S REPRESENTATIVES with office space, and other reasonable facilities including air conditioning, internet connection
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and public toilets according to BUILDER’s practice at the Shipyard. But the fees for the communication like telephone, telefax and internet, etc. shall be borne by the BUYER. At all times, during the construction of the VESSEL until delivery thereof, the BUYER’S REPRESENTATIVES shall be given free and ready access to the VESSEL, her engines and accessories, and to any other place where the work is being done, or the materials are being processed or stored, in connection with the construction of the VESSEL, including the yards, workshops, stores of the BUILDER, and the premises of subcontractors of the BUILDER, who are doing work, or storing materials in connection with the VESSEL’s construction. The travel expenses for the said access to SELLER’s subcontractors outside of Shanghai shall be at BUYER’s account. The transportation within Shanghai for BUYER’S REPRESENTATIVES to get access to the inspection and/or test shall be provided to the BUYER’S REPRESENTATIVES by the SELLER.
The BUYER undertakes to maintain sufficient number of the BUYER’S REPRESENTATIVES at the BUILDER’s yard throughout the period of construction of the VESSEL so as to meet the BUILDER’s requirements for inspection, survey and/or attendances of tests and/or trials. The BUYER will use best endeavours to ensure that BUYER’S REPRESENTATIVES perform any inspections, surveys and attendances at tests and/or trials in all circumstances, including where such inspections, surveys and test/trial attendances are required during the weekend (Saturday and Sunday) or any public holiday.
Should the BUYER’S REPRESENTATIVES fail to conduct any inspection or attend any test (after reasonably advance and written notice by the BUILDER of the same, except in the case of re-inspection where oral notice shall be sufficient) due to whatever reason, the BUILDER shall be entitled to carry out the construction and/or test without inspection and/or attendance of BUYER’S REPRESENTATIVES and such work so carried out shall be treated as approved by the BUYER’S REPRESENTATIVES.
The BUILDER is responsible for providing that a safe working environment and proper access is provided to the works and/or areas of inspection.
The decision, approval or advice of the BUYER’S REPRESENTATIVES shall be deemed to have been given by the BUYER and once given shall not be withdrawn, revoked or modified except with consent of the BUILDER. However, if the BUYER’S REPRESENTATIVES fail to submit to the BUILDER without delay any demand concerning alterations or changes with respect to the building, arrangement or outfit of the VESSEL, her engines or accessories, or any other items or matters in connection herewith, which the BUYER’S REPRESENTATIVES have examined or inspected or attended at the tests thereof under this Contract or the Specifications, the BUYER’S REPRESENTATIVES shall be deemed to have approved the same and shall be precluded from making any demand for alterations, changes or other complaints with respect thereto at a later date.
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4. LIABILITY OF THE SELLER
The BUYER’S REPRESENTATIVES engaged by the BUYER under this Contract shall at all times be deemed to be in the employ of the BUYER. The SELLER shall be under no liability whatsoever to the BUYER, or to the BUYER’S REPRESENTATIVES or the BUYER’s employees or agents for personal injuries, including death, during the time when they, or any of them, are on the VESSEL, or within the premises of either the SELLER or its subcontractors, or are otherwise engaged in and about the construction of the VESSEL, unless, however, such personal injuries, including death, were caused by gross negligence of the SELLER, or of any of the SELLER’s employees or agents or subcontractors of the SELLER. Nor shall the SELLER be under any liability whatsoever to the BUYER for damage to, or loss or destruction of property in China of the BUYER or of the BUYER’S REPRESENTATIVES or of the BUYER’s employees or agents, unless such damage, loss or destruction was caused by gross negligence of the SELLER, or of any of the employees, or agents or subcontractors of the SELLER. The BUYER’S REPRESENTATIVES or his assistants or employees shall observe the work’s rules and regulations prevailing at the BUILDER’s and its subcontractor’s premises.
5. SALARIES AND EXPENSES
All salaries and expenses of the BUYER’S REPRESENTATIVES, or any other employees employed by the BUYER under this Article, shall be for the BUYER’s account.
6. REPLACEMENT OF BUYER’S REPRESENTATIVES
The SELLER has the right to request the BUYER in writing to replace any of the BUYER’S REPRESENTATIVES who is deemed unsuitable and unsatisfactory for the proper progress of the VESSEL’s construction together with reasons. The BUYER shall investigate the situation by sending its representative to the Builder’s yard, if necessary, and if the BUYER considers that such SELLER’s request is justified and reasonable, the BUYER shall effect the replacement as soon as conveniently arrangeable.
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ARTICLE V MODIFICATION,CHANGES AND EXTRAS
1. HOW EFFECTED
The Specifications and Plans in accordance with which the VESSEL is constructed, may be modified and/or changed at any time hereafter by written agreement of the parties hereto, provided that such modifications and/or changes or an accumulation thereof will not, in the BUILDER’s reasonable judgment, adversely affect the BUILDER’s other commitments and provided further that the BUYER shall assent to adjustment of the Contract Price, time of delivery of the VESSEL and other terms of this Contract, if any, as hereinafter provided. Subject to the above, the SELLER hereby agree to exert their best efforts to accommodate such reasonable requests by the BUYER so that the said changes and/or modifications may be made at a reasonable cost and within the shortest period of time which is reasonable and possible. Any such agreement for modifications and/or changes shall include an agreement as to the increase or decrease, if any, in the Contract Price of the VESSEL together with an agreement as to any extension or reduction in the time of delivery, providing to the SELLER additional securities satisfactory to the SELLER (and an increased guarantee from Navig8 Crude Tankers Inc shall be deemed satisfactory security), or any other alterations in this Contract, or the Specifications occasioned by such modifications and/or changes. The aforementioned agreement to modify and/or to change the Specifications may be effected by an exchange of duly authenticated letters, or telefax, or e-mail, manifesting such agreement. The letters, telefaxes and emails exchanged by the parties hereto pursuant to the foregoing shall constitute an amendment of the Specifications under which the VESSEL shall be built, and such letters, emails and telefaxes shall be deemed to be incorporated into this Contract and the Specifications by reference and made a part hereof. Upon consummation of the agreement to modify and/or to change the Specifications, the SELLER shall alter the construction of the VESSEL in accordance therewith, including any additions to, or deductions from, the work to be performed in connection with such construction. If due to whatever reasons, the parties hereto shall fail to agree on the adjustment of the Contract Price or extension of time of delivery or providing additional security to the SELLER or modification of any terms of this Contract which are necessitated by such modifications and/or changes, then the SELLER shall have no obligation to comply with the BUYER’s request for any modification and/or changes.
The BUILDER may make minor changes to the Specifications, if found necessary for introduction of improved production methods or otherwise, provided that the BUILDER shall first obtain the BUYER’s written approval which shall not be unreasonably withheld. Any costs associated with such minor changes shall not affect the Contract Price nor the Delivery Date unless mutually agreed.
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2. CHANGES IN RULES AND REGULATIONS, ETC.
(1)
If, after the date of signing of this Contract, any requirements as to the rules and regulations as specified in this Contract and the Specifications to which the construction of the VESSEL is required to conform, are altered or changed by the Classification Society or the other regulatory bodies authorized to make such alterations or changes, the SELLER and/or the BUYER, upon receipt of the notice thereof, shall transmit such information in full to each other in writing, whereupon within twenty- one (21) days after receipt of the said notice by the BUYER from the SELLER or vice versa, the BUYER shall instruct the SELLER in writing as to the alterations or changes, if any, to be made in the VESSEL which the BUYER, in its sole discretion, shall decide. The SELLER shall promptly comply with such alterations or changes, if any in the construction of the VESSEL, provided that the BUYER shall first agree:
(a)
As to any increase or decrease in the Contract Price of the VESSEL that is occasioned by the cost for such compliance; and/or
(b)
As to any extension in the time for delivery of the VESSEL that is necessary due to such compliance; and/or
(c)
As to any increase or decrease in the guaranteed deadweight and speed of the VESSEL, if such compliance results in increased or reduced deadweight and speed; and/or
(d)
As to any other alterations in the terms of this Contract or of Specifications or both, if such compliance makes such alterations of the terms necessary.
(e)
If the price is to be increased, then, in addition, as to providing to the SELLER additional securities satisfactory to the SELLER and which shall be satisfied by the provision of an increased guarantee from Navig8 Crude Tankers Inc.
Agreement as to such alterations or changes under this Paragraph shall be made in the same manner as provided above for modifications and/or changes of the Specifications and/or Plans.
(2)
If, due to whatever reasons, the parties shall fail to agree on the adjustment of the Contract Price or extension of the time for delivery or increase or decrease of the guaranteed speed and deadweight or providing additional security to the SELLER or any alternation of the terms of this Contract, if any, then, the SELLER shall be entitled to proceed with the construction of the VESSEL in accordance with, and the BUYER shall continue to be bound by, the terms of this Contract and Specifications without making any such alterations or changes.
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If the alterations or changes are compulsorily required to be made by Class or IMO rules, then, notwithstanding any dispute between the parties relating to the adjustment of the Contract Price or extension of the time for delivery or decrease of the guaranteed speed and deadweight or increase fuel oil consumption or any other respect, the SELLER shall promptly comply with such alterations or changes first. The BUYER shall, in any event, bear the costs and expenses for such alterations or changes (with, in the absence of mutual agreement, the amount thereof and/or any other discrepancy such as but not limited to the extension of Delivery Date, etc. to be determined by arbitration in accordance with Article XIII of this Contract).
3. SUBSTITUTION OF MATERIALS AND/OR EQUIPMENT
In the event any of the materials and/or equipment required by the Specifications or otherwise under this Contract for the construction of the VESSEL cannot be procured in time to effect delivery of the VESSEL, the SELLER may, provided the SELLER shall provide adequate evidence and the BUYER so agrees in writing, supply other materials and/or equipment of the equivalent quality, capable of meeting the requirements of the Classification Society and of the rules, regulations, requirements and recommendations with which the construction of the VESSEL must comply.
4. BUYER’S SUPPLIED ITEMS
The BUYER shall deliver to the SELLER at its shipyard the items as specified in the Specifications which the BUYER shall supply on BUYER’S account (the “BUYER’s Supplied Items”) by the time designated by the SELLER. SELLER will give reasonable advance notice to BUYER in order to allow BUYER to get these items in the shipyard for the time they are required.
Should the BUYER fail to deliver to the BUILDER such BUYER’s Supplied Items within the time specified, the delivery of the VESSEL shall automatically be extended for a period of such delay, provided such delay in delivery of the BUYER’s Supplied Items shall affect the delivery of the VESSEL. In such event, the BUYER shall pay to the SELLER all losses and damages sustained by the SELLER due to such delay in the delivery of the BUYER’s Supplied Items and such payment shall be made upon delivery of the VESSEL.
Furthermore, if the delay in delivery of the BUYER’s Supplied Items should exceed twenty (20) days, the SELLER shall be entitled to proceed with construction of the VESSEL without installation of such items in or onto the VESSEL, without prejudice to the SELLER’s right hereinabove provided, and the BUYER shall accept the VESSEL so completed.
The BUILDER shall be responsible for proper storage and handling with
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reasonable care of the BUYER’s Supplied Items as specified in the Specifications after delivery to the BUILDER and shall procure that at all times the BUYER’s supplies are identified as being the property of the BUYER. The BUILDER shall install BUYER’s Supplied Items on board the VESSEL at the BUILDER’s expenses. In order to facilitate installation by the BUILDER of the BUYER’S Supplied Items in or on the VESSEL, the BUYER shall furnish the BUILDER with the necessary specifications, plans, drawings, instruction books, manuals, test reports and certificates required by the rules and regulations of the Specifications. If so requested by the BUILDER, the BUYER shall, without any charge to the BUILDER, cause the representatives of the manufacturers of the BUYER’s Supplied Items to assist the BUILDER in installation thereof in or on the VESSEL and/or to carry out installation thereof by themselves or to make necessary adjustments at the BUILDER’s Shipyard.
Upon arrival of such shipment of the BUYER’s Supplied Items, both parties shall undertake a joint unpacking inspection. If any damages are found to be not suitable for installation, the BUILDER shall be entitled to refuse to accept such BUYER’s Supplied Items.
The SELLER shall not be responsible for the quality, performance or efficiency of any equipment supplied by the BUYER and is under no obligation with respect to the guarantee of such equipment against any defects caused by poor quality, performance or efficiency thereof.
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ARTICLE VI TRIALS
1. NOTICE
(a)
The SELLER shall give NOTICE to the BUYER and BUYER’s Representative in writing at least fifteen (15) days’ notice in advance and seven (7) days definite notice in advance in writing or by telefax or e-mail, of the time and place of the VESSEL’s sea trial as described in the Specifications (hereinafter referred to as “the Trial Run”) and the BUYER and the BUYER’S REPRESENTATIVES shall promptly acknowledge receipt of such notice. The BUYER’S REPRESENTATIVES shall be on board the VESSEL to witness such Trial Run, and to check upon the performance of the VESSEL during the same. Failure to attend the trial run of the VESSEL by the BUYER’S REPRESENTATIVES shall have the effect to extend the date for delivery of the VESSEL by the period of delay caused by such failure to be present. However, if the Trial Run is delayed more than seven (7) days by reason of the failure of the BUYER’s representatives to be present after receipt of due notice as provided above, then in such event the non-attendance shall be deemed to be a waiver by the BUYER of its right to have its representative on board the VESSEL at the trial run, and the BUILDER may conduct such Trial Run without the BUYER’S REPRESENTATIVES being present, and in such case the BUYER shall be obliged to accept the VESSEL on the basis of a certificate jointly signed by the BUILDER and the Classification Society certifying that the VESSEL, after Trial Run subject to minor alterations and corrections as provided in this Article, if any, is found to conform to the Contract and Specifications. The SELLER hereby warrants that the necessary invitation letter for the BUYER’S REPRESENTATIVES to enter China will be issued in order on demand and without delay otherwise the Trial Run shall be postponed until after the BUYER’S REPRESENTATIVES have arrived at the BUILDER’s Shipyard and any delays as a result thereof shall not count as a permissible delay under Article VIII thereof. However, should the nationalities and other personal particulars of the BUYER’S REPRESENTATIVES be not acceptable to the SELLER in accordance with its best understanding of the relevant rules, regulations and/or Laws of the People’s Republic of China then prevailing, then the BUYER shall, on the SELLER’s telefax or e-mail demand, effect replacement of all or any of them immediately. Otherwise the Delivery Date as stipulated in Article VII hereof shall be extended by the delays so caused by the BUYER.
(b)
In the event of unfavorable weather on the date specified for the Trial Run, the same shall take place on the first available day thereafter that the weather conditions permit. The parties hereto recognize that the weather conditions in Chinese waters in which the Trial Run is to take place are such that great changes in weather may arise momentarily and without warning and, therefore, it is agreed that if during the Trial Run of the VESSEL, the weather should suddenly become unfavorable, as would have precluded
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the continuance of the Trial Run, the Trial Run of the VESSEL shall be discontinued and postponed until the first favorable day next following, unless the BUYER shall assent by telefax or e-mail and confirm in writing of its acceptance of the VESSEL on the basis of the Trial Run made prior to such sudden change in weather conditions. In the event that the Trial Run is postponed because of unfavorable weather conditions, such delay shall be regarded as a permissible delay, as specified in Article VIII hereof. For the purposes of this paragraph 1(b), unfavorable weather conditions shall be taken as (i) Beaufort Scale Force 6 and above or (ii) when the MSA (Maritime Safety Administration) does not permit the sea trial to proceed.
2. HOW CONDUCTED
(a)
All expenses in connection with Trial Run of the VESSEL are to be for the account of the BUILDER, who, during the Trial Run and when subjecting the VESSEL to Trial Run, is to provide, at its own expense, the necessary crew to comply with conditions of safe navigation. The Trial Run shall be conducted in the manner prescribed in the Specifications.
The course of Trial Run shall be determined by the BUILDER and shall be conducted within the trial basin equipped with speed measuring facilities.
(b)
The BUILDER shall provide the VESSEL with the required quantities of water and fuel oil with exception of lubrication oil, greases and hydraulic oil which shall be supplied by the BUYER for the conduct of the Trial Run or Trial Runs as prescribed in the Specifications. The fuel oil supplied by the SELLER, and lubricating oil, greases and hydraulic oil supplied by the BUYER shall be in accordance with the applicable engine specifications, and the cost of the quantities of water, fuel oil, lubricating oil, hydraulic oil and greases consumed during the Trial Run or Trial Runs shall be for the account of the BUILDER.
3. TRIAL LOAD DRAFT
In addition to the supplies provided by the BUYER in accordance with sub-paragraph (b) of the preceding Paragraph 2 hereof, the BUILDER shall provide the VESSEL with the required quantity of fresh water and other stores necessary for the conduct of the Trial Run. The necessary ballast (fresh and sea water and such other ballast as may be required) to bring the VESSEL to the trial load draft as specified in the Specifications, shall be for the BUILDER’s account.
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4. METHOD OF ACCEPTANCE OR REJECTION
(a)
Upon notification of the BUILDER of the completion of the Trial Run of the VESSEL, the BUYER or the BUYER’S REPRESENTATIVES shall within six (6) days thereafter, notify the BUILDER by telefax or e-mail of its acceptance of the VESSEL or of its rejection of the VESSEL together with the reasons therefor.
(b)
However, should the result of the Trial Run indicate that the VESSEL or any part thereof including its equipment does not conform to the requirements of this Contract and Specifications, then the BUILDER shall investigate with the BUYER’S REPRESENTATIVES the cause of failure and the proper steps shall be taken to remedy the same and shall make whatever corrections and alterations and/or re-Trial Run or Runs as may be necessary without extra cost to the BUYER, and upon notification by the BUILDER of completion of such alterations or corrections and/or re-trial or re-trials, the BUYER shall, within six (6) days thereafter, notify the SELLER by telefax or e-mail of its acceptance of its VESSEL or of the rejection of the VESSEL together with the reason therefor on the basis of the alterations and corrections and/or re-trial or re-trials by the BUILDER.
(c)
In the event that the BUYER fails to notify the SELLER by telefax or e-mail of its acceptance or rejection of the VESSEL together with the reason therefor within six (6) Business Days period as provided for in the above sub- paragraphs (a) and (b), the BUYER shall be deemed to have accepted the VESSEL.
(d)
Any dispute arising among the parties hereto as to the result of any Trial Run or further tests or trials, as the case may be, of the VESSEL shall be solved by reference to arbitration as provided in Article XIII hereof.
(e)
Nothing herein shall preclude the BUYER from accepting the VESSEL with its qualifications and/or remarks following the Trial Run and/or further tests or trials as aforesaid.
5. DISPOSITION OF SURPLUS CONSUMABLE STORES
Should any amount of fuel oil, fresh water, or other unbroached consumable stores furnished by the BUILDER for the Trial Run or Trial Runs remain on board the VESSEL at the time of acceptance thereof by the BUYER, the BUYER agrees to buy the same from the SELLER at the actual invoiced price, and payment by the BUYER shall be effected as provided in Article II 3 (e) and 4 (e) of this Contract.
The BUYER shall supply lubricating oil, greases and hydraulic oil for the purpose of Trial Runs at its own expenses and the SELLER will reimburse for the amount of lubricating oil and hydraulic oil actually consumed for the said Trial Run or Trial Runs at the original price incurred by the BUYER and payment by the SELLER shall be effected as provided in
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Article II 3(e) and 4(e) of this Contract.
6. EFFECT OF ACCEPTANCE
The BUYER’s acceptance of the VESSEL by written or telefax, or e-mail notification sent to the SELLER, in accordance with the provisions set out above, shall be final and binding so far as conformity of the VESSEL to this Contract and the Specifications is concerned, and shall preclude the BUYER from refusing formal delivery by the SELLER of the VESSEL, as hereinafter provided, if the SELLER complies with all other procedural requirements for delivery as hereinafter set forth.
The BUYER shall not be entitled to reject the VESSEL (at the time of delivery) by reason of any minor or insubstantial non-conformity, or deficiencies of minor importance, which do not in any way affect the safety or the operation of the VESSEL, its crew, passengers or cargo, provided that:
i)
The SELLER shall for its own account remedy the deficiency and fulfill the requirements as soon as possible.
ii)
A list of such defect and non-conformities will be prepared by the parties immediately prior to the delivery of the VESSEL.
iii)
The SELLER shall pay BUYER upon delivery, the direct actual cost of rectification of minor deficiencies which in all events not exceeding the costs of a leading Chinese shipyard performing similar rectification of such deficiencies, if the rectification of such deficiencies affects the delivery schedule of the vessel. For the avoidance of doubt, the SELLER shall not be liable to the BUYER for the consequential and indirect costs (i.e. loss of time & loss of profit etc.).
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ARTICLE VII DELIVERY
1. TIME AND PLACE
The VESSEL shall be delivered safely afloat by the SELLER to the BUYER at the BUILDER’s Shipyard, in accordance with the Specifications and with all Classification and Statutory Certificates and after completion of Trial Run (or, as the case may be, re-Trial or re-Trials) and acceptance by the BUYER in accordance with the provisions of Article VI hereof on or before June 30
th
, 2016 provided that, in the event of delays in the construction of the VESSEL or any performance required under this Contract due to causes which under the terms of the Contract permit extension or postponement of the time for delivery, the aforementioned time for delivery of the VESSEL shall be extended accordingly.
The aforementioned date or such later date to which delivery is extended pursuant to the terms of this Contract is hereinafter called the “Delivery Date”.
2. WHEN AND HOW EFFECTED
Provided that the BUYER and the SELLER shall each have fulfilled all of their respective obligations as stipulated in this Contract, delivery of the VESSEL shall be effected forthwith by the concurrent delivery by each of the parties hereto, one to the other, of the Protocol of Delivery and Acceptance, acknowledging delivery of the VESSEL by the SELLER and acceptance thereof by the BUYER, which Protocol shall be prepared in quadruplicate and executed by each of the parties hereto.
3. DOCUMENTS TO BE DELIVERED TO THE BUYER
Upon acceptance of the VESSEL by the BUYER, the SELLER shall deliver to the BUYER the following documents (subject to the provision contained in Article VII hereof) which shall accompany the aforementioned Protocol of Delivery and Acceptance:
(a)
PROTOCOL OF TRIALS of the VESSEL made by the BUILDER pursuant to the Specifications.
(b)
PROTOCOL OF INVENTORY of the equipment of the VESSEL including spare part and the like, all as specified in the Specifications, made by the BUILDER.
(c)
PROTOCOL OF STORES OF CONSUMABLE NATURE made by the BUILDER referred to under Paragraph 5 of Article VI hereof.
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(d)
FINISHED DRAWINGS AND PLANS pertaining to the VESSEL as stipulated in the Specifications, made by the BUILDER.
(e)
PROTOCOL OF DEADWEIGHT AND INCLINING EXPERIMENT, made by the BUILDER
(f)
ALL CERTIFICATES required to be furnished upon delivery of the VESSEL pursuant to the Specifications.
Certificates shall be issued by relevant Authorities or Classification Society. The VESSEL shall comply with the above rules and regulations which are in force at the time of signing this Contract. All the certificates shall be delivered in one (1) original to the VESSEL and two (2) copies to the BUYER.
If the full term certificate or certificates are unable to be issued at the time of delivery by the Classification Society or any third party other than the BUILDER, then the provisional certificate or certificates as issued by The Classification Society or the third party other than the BUILDER with the full term certificates to be furnished by the BUILDER after delivery of the VESSEL and in any event before the expiry of the provisional certificates shall be acceptable to the BUYER.
(g)
DECLARATION OF WARRANTY issued by the SELLER that the VESSEL is delivered to the BUYER free and clear of any liens, charges, claims, mortgages, or other encumbrances upon the BUYER’s title thereto, and in particular, that the VESSEL is absolutely free of all burdens in the nature of imposts, taxes or charges imposed by the province or country of the port of delivery, as well as of all liabilities of the SELLER to its sub-contractors, employees and crews and/or all liabilities arising from the operation of the VESSEL in Trial Run or Trial Runs, or otherwise, prior to delivery.
(h)
COMMERCIAL INVOICE made by the SELLER.
(i)
BILL OF SALE made by the SELLER.
(j)
BUILDER’S Certificate made by the BUILDER.
4. TITLE AND RISK
Title to and risk of the VESSEL and her equipment (but excluding the BUYER’s supplies) shall pass to the BUYER only upon delivery and acceptance thereof. As stated above, it being expressly understood that, until such delivery and acceptance is effected, title to the VESSEL, and her equipment, shall remain at all times with the SELLER and are at the entire risk of the SELLER.
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5. REMOVAL OF VESSEL
The BUYER shall take possession of the VESSEL immediately upon delivery and acceptance thereof, and shall remove the VESSEL from the premises of the BUILDER within seven (7) days after delivery and acceptance thereof is effected. If the BUYER shall not remove the VESSEL from the premises of the BUILDER within the aforesaid seven (7) days, then, in such event, without prejudice to the SELLER’s right to require the BUYER to remove the VESSEL immediately at any time thereafter, the BUYER shall pay to the SELLER the reasonable mooring charge of the VESSEL.
6. TENDER OF THE VESSEL
If the BUYER fails to take delivery of the VESSEL after completion thereof according to this Contract and the Specifications without justified reason, the SELLER shall have the right to tender the VESSEL for delivery after compliance with all procedural requirements as above provided.
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ARTICLE VIII DELAYS & EXTENSION OF TIME FOR DELIVERY
1. CAUSE OF DELAY
If, at any time before actual delivery, either the construction of the VESSEL, or any performance required hereunder as a prerequisite of delivery of the VESSEL, is delayed due to war, blockade, revolution, insurrection, mobilization, civil commotions, riots, strikes, sabotage, lockouts, local temperature higher than Thirty Five (35) degree centigrade (but each day above 35 degree shall be counted as one half day each), Acts of God or the public enemy, terrorism, plague or other epidemics, quarantines, prolonged failure or restriction of electric current from an outside source, freight embargoes, if any, earthquakes, tidal waves, typhoons, hurricanes, storms or other causes beyond the control of the BUILDER or of its sub-contractors or its key equipment suppliers (i.e. being the suppliers of the main engine, propeller and gearbox etc), as the case may be, or by force majeure of any description, whether of the nature indicated by the forgoing or not, or by destruction of the premises of the BUILDER or works of the BUILDER or its sub-contractors or its key equipment suppliers (i.e. being the suppliers of the main engine, propeller and gearbox etc) or of the VESSEL or any part thereof, by fire, flood, or other causes beyond the control of the SELLER or its sub-contractors or its key equipment suppliers (i.e. main engine, propeller, gearbox etc) as the case may be, or due to the bankruptcy of the equipment and/or material supplier or suppliers (i.e. main engine, propeller, gearbox etc), or due to the delay caused by acts of God causing significant shortage in the supply of parts essential to the construction of the VESSEL, then, in the event of delay due to the happening of any of the aforementioned contingencies, the SELLER shall not be liable for such delay and the time for delivery of the VESSEL under this Contract shall be extended without any reduction in the Contract Price for a period of time which shall not exceed the total accumulated time of all such delays, subject nevertheless to the BUYER’s right of cancellation under Paragraph 3 of this Article and subject however to all relevant provisions of this Contract which authorize and permit extension of the time of delivery of the VESSEL, provided however that:
(i) the delay in respect of which the BUILDER is claiming relief under this Article VIII.1 was not caused or contributed to by any intended act of the BUILDER;
(ii) the delay event impacts upon the Vessel’s construction schedule and completion; and
(iii) the BUILDER has taken reasonable steps to mitigate its effect upon the construction of the Vessel,
For the avoidance of doubt, where two delay events as described in this paragraph 1 occur simultaneously or overlap with each other, such delays caused by such events shall not be double-counted.
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2. NOTICE OF DELAY
Within twenty (20) days from the date of the SELLER becomes aware of the commencement of any delay on account of which the SELLER claims that it is entitled under this Contract to an extension of the time for delivery of the VESSEL, the SELLER shall advise the BUYER by telefax or e-mail, of the date such delay commenced, and the reasons therefor and, if possible, its estimated duration of the probable delay in the delivery of the VESSEL, and shall supply the BUYER with evidence to support the delay claimed.
Likewise within twenty (20) days after such delay ends, the SELLER shall advise the BUYER in writing or by telefax or e-mail, of the date such delay ended, and also shall specify the maximum period of the time by which the SELLER claims the date for delivery of the VESSEL should be extended by reason of such delay. Failure of the BUYER to acknowledge the SELLER’s notification of any claim for extension of the Delivery Date within ten (10) days after receipt by the BUYER of such notification, shall be deemed to be a waiver by the BUYER of its right to object to such extension.
Failure of the SELLER to give notice of any relevant delay event in excess of fifteen (15) days in accordance with this paragraph 2 shall be deemed a waiver of the SELLER’s right to postpone the DELIVERY DATE under this Article VIII in respect of such relevant delay event.
3. RIGHT TO CANCEL FOR EXCESSIVE DELAY
If (a) the total accumulated time of all delays on account of the causes specified in Paragraph 1 of this Article aggregate to two hundred and twenty-five (225) days or more, or (b) if the total accumulated time of all delays on account of the causes specified in Paragraph 1 of the Article and non-permissible delays as described in Paragraph 1 of Article III aggregate to two hundred and fifty-five (255) days or more, in any circumstances, excluding delays due to arbitration as provided for in Article XIII.7 hereof or due to default in performance by the BUYER, or due to delays in delivery of the BUYER’s Supplied Items, and excluding delays due to causes which, under Article V, VI.1, XI and XII.2(b) hereof, permit extension or postponement of the time for delivery of the VESSEL , then in such event, the BUYER may in accordance with the provisions set out herein rescind or cancel this Contract by serving upon the SELLER telefaxed or e-mailed notice of cancellation which shall be confirmed in writing and the provisions of Article X of this Contract shall apply. The SELLER may, at any time, after the accumulated time of the aforementioned delays justifying cancellation by the BUYER as above provided for, demand in writing that the BUYER shall make an election, in which case the BUYER shall, within thirty (30) days after such demand is received by the BUYER either notify the SELLER of its intention to cancel, or consent to an extension of the time for delivery to an agreed future date, it being understood and agreed by the parties hereto that, if any further delay occurs on account of causes justifying cancellation as specified in
30
this Contract, the BUYER shall have the same right of cancellation upon the same terms as hereinabove provided but in respect of the new agreed delivery date.
4. DEFINITION OF PERMISSIBLE DELAY
Delays on account of such causes as provided for in Paragraph 1 of this Article excluding any other extensions of a nature which under the terms of this Contract permit postponement of the Delivery Date, shall be understood to be (and are herein referred to as) permissible delays, and are to be distinguished from non-permissible delays on account of which the Contract Price of the VESSEL is subject to adjustment as provided for in Article III hereof. Notwithstanding any other stipulations of this Contract, the Parties hereby agree that a default in performance of BUYER or any breach of this Contract by BUYER or reasons attributable to the BUYER or the events described under Article V, VI.1, XI and XII.2(b) of this Contract shall entitle the SELLER to extend the Delivery Date. Such extension of the Delivery Date shall be regarded as mutually agreed change of Delivery Date and shall be distinguished from Permissible Delay and non-permissible delays.
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ARTICLE IX WARRANTY OF QUALITY
1. GUARANTEE OF MATERIAL AND WORKMANSHIP
The SELLER, for a period of twelve (12) months following delivery to the BUYER of the VESSEL, guarantees the VESSEL, her hull and machinery, her engine, and all parts and equipment thereof that are manufactured, furnished, supplied, or installed by the SELLER and/or its sub-contractors under this Contract including material, equipment (however excluding any parts for the VESSEL which have been supplied by the BUYER) against all defects which are due to defective materials, and/or poor workmanship.
Provided no additional cost occurs to the SELLER, the SELLER agrees that upon the expiry of this guarantee and upon request of the BUYER, it shall assign (to the extent to which it may validly do so) to the BUYER, all rights, title and interest that the SELLER may have in and to all guarantees or warranties given by the supplier (excluding the supplier of BUYER’s supplied item) of any of the appurtenances and materials used in the construction and/or operation of the VESSEL. The SELLER agrees to render to the BUYER reasonable assistance in making any claim or taking any action against any such supplier, which claim or action shall be made and/or taken at the BUYER’s sole expense. The BUYER shall meet all reasonable expenses incurred by the SELLER in rendering any assistance requested by the BUYER pursuant to this paragraph.
2. NOTICE OF DEFECTS
The BUYER shall notify the SELLER in writing, or by telefax or e-mail, as promptly as possible, after discovery of any defect or deviations for which a claim is made under this guarantee. The BUYER’s written notice shall describe the nature of the defect and the extent of the damage caused thereby. The SELLER shall have no obligation under this guarantee for any defects discovered prior to the expiry date of the guarantee, unless notice of such defects, is received by the SELLER not later than thirty (30) days after such expiry date. Telefaxed or e-mailed advice with brief details explaining the nature of such defect and extent of damage within thirty (30) days after such expiry date and that a claim is forthcoming will be sufficient compliance with the requirements as to time.
3. REMEDY OF DEFECTS
The SELLER shall remedy at its expense any defects, against which the VESSEL or any part of the equipment thereof is guaranteed under this Article by making all necessary repairs and/or replacement. Such repairs and/or replacement will be made by the SELLER. All parts
32
and/or materials so repaired shall be guaranteed for a further period of six (6) months, but the total warranty period shall not exceed eighteen (18) months after delivery and acceptance of the VESSEL by the BUYER. In any case, the VESSEL shall be taken, at the BUYER’S cost and responsibility, to place elected, ready in all respects for such repairs or replacement.
However, if it is impractical to make the repair by the SELLER, and if forwarding by the SELLER of replacement parts, and materials cannot be accomplished without impairing or delaying the operation or working of the VESSEL, then, in any such event, the BUYER shall, cause the necessary repairs or replacements to be made elsewhere at the discretion of the BUYER provided that the BUYER shall first and in all events, will, as soon as possible, give the SELLER notice in writing, or by telefax or e-mail of the time and place such repairs will be made and, if the VESSEL is not thereby delayed, or her operation or working is not thereby delayed, or her operation or working is not thereby impaired, the SELLER shall have the right to verify by its own representative(s) or that of Classification Society the nature and extent of the defects complained of. The SELLER shall, in such cases, promptly advise the BUYER, by telefax or e-mail, after such examination has been completed, of its acceptance or rejection of the defects as ones that are subject to the guarantee herein provided.
In any circumstances as set out below, the SELLER shall immediately pay to the BUYER in United States Dollars by telegraphic transfer the actual cost for such repairs or replacements including forwarding charges, or, at the average cost for making similar repairs or replacements including forwarding charges as quoted by a leading shipyard each in China, South Korea and Singapore whichever is lower:
(a)
Upon the SELLER’s acceptance of the defects as justifying remedy under this Article, or
(b)
If the SELLER neither accepts nor rejects the defects as above provided, nor request arbitration within thirty (30) days after its receipt of the BUYER’s notice of defects.
Any dispute shall be referred to arbitration in accordance with the provisions of Article XIII hereof.
4. EXTENT OF THE SELLER’S LIABILITY
The SELLER shall have no obligation and/or liabilities with respect to defects discovered after the expiration of the period of guarantee as specified in Paragraph 1 of this Article.
The SELLER shall be liable to the BUYER for defects and damages caused by any of the defects specified in Paragraph 1 of this Article provided that such liability of the SELLER shall be limited to damage occasioned within the guarantee period specified in Paragraph 1 above. The SELLER shall not be obligated to repair, or to be liable for, damages to the VESSEL, or to any part of the equipment thereof, due to ordinary wear and tear or caused by the defects other than those specified in Paragraph 1 above, nor shall there be any SELLER’s
33
liability hereunder for defects in the VESSEL, or any part of the equipment thereof, caused by fire or accidents at sea or elsewhere, or mismanagement, accidents, negligence, or willful neglect, on the part of the BUYER, its employees or agents including the VESSEL’s officers, crew and passengers, or any persons on or doing work on the VESSEL other than the SELLER, its employees, agents or sub-contractors. Likewise, the SELLER shall not be liable for defects in the VESSEL, or the equipment or any part thereof, due to repairs or replacement which were made by those other than the SELLER and/or their sub-contractors or which have not been carried out in accordance with the procedures set out in this Article.
Upon delivery of the VESSEL to the BUYER, in accordance with the terms of the Contract, the SELLER shall thereby and thereupon be released of all responsibility and liability whatsoever and howsoever arising under or by virtue of this Contract (save in respect of those obligations to the BUYER expressly provided for in this Article IX) including without limitation, any responsibility or liability for defective workmanship, materials or equipment, design or in respect of any other defects whatsoever and any loss or damage resulting from any act, omission or default of the SELLER. The SELLER shall, in no circumstances, be liable for any consequential loss or special loss, or expenses arising from any cause whatsoever including, without limitation, loss of time, loss of profit or earnings or demurrage directly from any commitments of the BUYER in connection with the VESSEL.
The Guarantee provided in this Article and the obligations and the liabilities of the SELLER hereunder are exclusive and in lieu of and the BUYER hereby waives all other remedies, warranties, guarantees or liabilities, express or implied, arising by Law or otherwise (including without limitation any obligations of the SELLER with respect to fitness, merchantability and consequential damages) or whether or not occasioned by the SELLER’s negligence. This Guarantee shall not be extended, altered or varied except by a written instrument signed by the duly authorized representatives of the SELLER, and the BUYER.
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ARTICLE X CANCELLATION, REJECTION AND RESCISSION BY THE BUYER
1.
All payments made by the BUYER prior to the delivery of the VESSEL shall be in the nature of advance to the SELLER. In the event the BUYER shall exercise its right of cancellation and/or rescission of this Contract under and pursuant to any of the provisions of this Contract specifically permitting the BUYER to do so, then the BUYER shall notify the SELLER in writing or by telefax or e-mail, and such cancellation and/or rescission shall be effective as of the date the notice thereof is received by the SELLER.
For the avoidance of doubt, the events and/or occurrences which entitle the BUYER to rescind and cancel the Contract shall be limited to those occurrences or events specified in this Contract which specifically permits the BUYER to do so. No other event or circumstance shall give rise to any right to the BUYER for rescission or cancellation of the Contract whether under this Contract or under any applicable laws.
2.
Thereupon the SELLER shall refund in United States dollars immediately to the BUYER the full amount of all sums paid by the BUYER to the SELLER on account of the VESSEL, unless the SELLER disputes the BUYER’s cancellation and/or rescission by instituting arbitration in accordance with Article XIII. If the BUYER’s cancellation or rescission of this Contract is disputed by the SELLER by instituting arbitration as aforesaid, then no refund shall be made by the SELLER, and the BUYER shall not be entitled to demand repayment from the Refund Guarantor under its guarantee, until the arbitration award between the BUYER and the SELLER, which shall be in favour of the BUYER, declaring the BUYER’s cancellation and/or rescission justified, is made and delivered to the SELLER by the arbitration tribunal. In the event that the SELLER is obligated to make refundment, the SELLER shall pay the BUYER interest in United States Dollars at the rate of six percent (6%) per annum, if the cancellation or rescission of the Contract is exercised by the BUYER in accordance with the provision of Article III 1(c), 2(c), 3(c) or 4(c) hereof, on the amount required herein to be refunded to the BUYER computed from the respective dates when such sums were received by Bank of China, New York Branch or any such other bank account as nominated by the SELLER pursuant to Article II 4(a), 4(b), 4(c) or 4(d) from the BUYER to the date of remittance by telegraphic transfer of such refund to the BUYER by the SELLER, provided, however, that if the said rescission by the BUYER is made by reason of Paragraph 1 of Article VIII or Paragraph 2 (b) of Article XII, then in such event the SELLER shall not be required to pay any interest.
It is hereby understood by both parties that payment of any interest provided herein is by way of liquidated damages due to cancellation of this CONTRACT.
If the SELLER is obligated by the terms of the Contract to refund to the BUYER the instalments paid by the BUYER to the SELLER as provided in this Paragraph, the BUYER’s supplied items shall be at BUYER’s disposal.
35
3.
Upon such refund by the SELLER to the BUYER, all obligations, duties and liabilities of each of the parties hereto to the other under this Contract shall be forthwith completely discharged.
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ARTICLE XI BUYER’S DEFAULT
1. DEFINITION OF DEFAULT
The BUYER shall be deemed in default of its obligation under the Contract if any of the following events occurs:
(a)
The BUYER fails to pay the First or Second or Third or Fourth installment to the SELLER when any such installment becomes due and payable under the provisions of Article II hereof and provided the BUYER shall have received the SELLER’s demand for payment in accordance with Article II hereof; or
(b)
The BUYER fails to deliver to the SELLER an irrevocable and unconditional Letter of Guarantee under the provisions of Article II hereof; or
(c)
The BUYER fails to pay the fifth installment to the SELLER in accordance with Paragraph 3(e) and 4(e) of Article II hereof provided the BUYER shall have received the SELLER’s demand for payment in accordance with Article II hereof; or
(d)
The BUYER fails to take delivery of the VESSEL, when the VESSEL is duly tendered for delivery by the SELLER under the provisions of Article VII hereof.
2. NOTICE OF DEFAULT
If the BUYER is in default of payment or in performance of its obligations as provided hereinabove, the SELLER shall notify the BUYER to that effect by telefax or e-mail after the date of occurrence of the default as per Paragraph 1 of this Article and the BUYER shall forthwith acknowledge by telefax or E-mail to the SELLER that such notification has been received. In case the BUYER does not give the aforesaid telefax or E-mail acknowledgment to the SELLER within three (3) calendar days it shall be deemed that such notification has been duly received by the BUYER.
3. INTEREST AND CHARGE
(a)
If the BUYER is in default of payment as to any installment as provided in Paragraph 1 (a) and/or 1 (c) of this Article, the BUYER shall pay interest on such installment at the rate of six percent (6%) per annum until the date of the payment of the full amount, including all aforesaid interest. In case the BUYER shall fail to take delivery of the VESSEL when required to as provided in Paragraph 1 (d) of this Article, the BUYER shall be deemed in default of payment of the fifth installment and shall pay interest thereon at the same rate as aforesaid from and including the day on which the
37
VESSEL is tendered for delivery by the SELLER, as provided in Article VII hereof.
(b)
In any event of default by the BUYER under 1 (a) or 1 (b) or 1 (c) or 1 (d) above, the BUYER shall also pay all costs, charges and expenses incurred by the SELLER in consequence of such default.
4. DEFAULT BEFORE DELIVERY OF THE VESSEL
(a)
If any default by the BUYER occurs as defined in Paragraph 1 (a) or 1 (b) or 1 (c) or 1 (d) of this Article, the Delivery Date shall be automatically postponed for a period of continuance of such default by the BUYER. In any event of default by the BUYER, the BUYER shall also pay all charges and expenses incurred by the BUILDER in consequence of such default.
(b)
If any such default as defined in Paragraph 1 (a) or 1 (b) or 1 (c) or 1 (d) of this Article committed by the BUYER continues for a period of fifteen (15) days, then, the SELLER shall have all following rights and remedies:
(i)
The SELLER may, at its option, cancel or rescind this Contract, provided the SELLER has notified the BUYER of such default pursuant to Paragraph 2 of this Article, by giving notice of such effect to the BUYER by telefax or e-mail. Upon receipt by the BUYER of such telefax or e-mail notice of cancellation or rescission, all of the BUYER’s Supplies shall forthwith become the sole property of the SELLER, and the VESSEL and all its equipment and machinery shall be at the sole disposal of the SELLER for sale or otherwise; and
(ii)
In the event of such cancellation or rescission of this Contract, the SELLER shall be entitled to retain any instalment or instalments of the Contract Price paid by the BUYER to the SELLER on account of this Contract; and
(iii)
(Applicable to any BUYER’s default defined in 1(a) of this Article) The SELLER shall, without prejudice to the SELLER’s right to recover from the BUYER the 5th instalment, interest, costs and/or expenses by applying the proceeds to be obtained by sale of the VESSEL in accordance with the provisions set out in this Contract, have the right to declare all unpaid 1st, 2nd, 3rd and 4th instalments to be forthwith due and payable, and upon such declaration, the SELLER shall have the right to immediately demand the payment of the aggregate amount of all unpaid 1st, 2nd, 3rd, and 4th instalments from the Payment Guarantor in accordance with the terms and conditions of the Payment Guarantee issued by the Payment Guarantor.
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5. SALE OF THE VESSEL
(a)
In the event of cancellation or rescission of this Contract as above provided, the SELLER shall have full right and power either to complete or not to complete the VESSEL as it deems fit, and to sell the VESSEL at a public or private sale on such terms and conditions as the SELLER thinks fit without being answerable for any loss or damage occasioned to the BUYER thereby.
In the case of sale of the VESSEL, the SELLER shall give telefax, or E-mail, or written notice to the BUYER.
(b)
In the event of the sale of the VESSEL in its completed state, the proceeds of sale received by the SELLER shall be applied firstly to payment of all expenses attending such sale and otherwise incurred by the SELLER as a result of the BUYER’s default, and then to payment of all unpaid installments and/or unpaid balance of the Contract Price and interest on such installment at the interest rate as specified in the relevant provisions set out above from the respective due dates thereof to the date of application.
(c)
In the event of the sale of the VESSEL in its incomplete state, the proceeds of sale received by the SELLER shall be applied firstly to all expenses attending such sale and otherwise incurred by the SELLER as a result of the BUYER’s default, and then to payment of all costs of construction of the VESSEL (such costs of construction, as herein mentioned, shall include but are not limited to all costs of labour and/or prices paid or to be paid by CSTC and/or the BUILDER for the equipment and/or technical design and/or materials purchased or to be purchased, installed and/or to be installed on the VESSEL) and/or any fees, charges, expenses and/or royalties incurred and/or to be incurred for the VESSEL less the installments so retained by the SELLER, and compensation to the SELLER for a reasonable sum of loss of profit due to the cancellation or rescission of this Contract.
(d)
In either of the above events of sale, if the proceed of sale exceeds the total of the amounts to which such proceeds are to be applied as aforesaid, the SELLER shall promptly pay the excesses to the BUYER without interest, provided, however that the amount of each payment to the BUYER shall in no event exceed the total amount of installments already paid by the BUYER and the cost of the BUYER’s Supplied Items, if any.
(e)
If the proceed of sale are insufficient to pay such total amounts payable as aforesaid, the BUYER shall promptly pay the deficiency to the SELLER upon request.
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ARTICLE XII INSURANCE
1. EXTENT OF INSURANCE COVERAGE
From the time of keel-laying of the first section of the VESSEL until the same is completed, delivered to and accepted by the BUYER, the SELLER shall, at its own cost and expense, keep the VESSEL and all machinery, materials, equipment, appurtenances and outfit, delivered to the BUILDER for the VESSEL or built into, or installed in or upon the VESSEL, including the BUYER’s Supplied Items, fully insured with first class Chinese insurance companies for BUILDER’s RISK.
The amount of such insurance coverage shall, up to the date of delivery of the VESSEL, be in an amount at least equal to, but not limited to, the aggregate of the payments made by the BUYER to the SELLER including the value of maximum amount of US$ 200,000.00 of the BUYER’s Supplied Items. The policy referred to hereinabove shall be taken out in the name of the SELLER and all losses under such policy shall be payable to the SELLER.
2. APPLICATION OF RECOVERED AMOUNT
(a) Partial Loss:
In the event the VESSEL shall be damaged by any insured cause whatsoever prior to acceptance and delivery thereof by the BUYER and in the further event that such damage shall not constitute an actual or a constructive total loss of the VESSEL, the SELLER shall apply the amount recovered under the insurance policy referred to in Paragraph 1 of this Article to the repair of such damage satisfactory to the Classification Society and other institutions or authorities as described in the Specifications without additional expenses to the BUYER, and the BUYER shall accept the VESSEL under this Contract if completed in accordance with this Contract and Specifications and not make any claim for any consequential loss or depreciation.
(b) Total Loss:
However, in the event that the VESSEL is determined to be an actual or constructive total loss, the SELLER shall either:
(i)
By the mutual agreement between the parties hereto, proceed in accordance with terms of this Contract, in which case the amount recovered under said insurance policy shall be applied to the reconstruction and/or repair of the VESSEL’s damage and/or reinstallation of BUYER’s Supplied Items, provided the parties hereto shall have first agreed in writing as to such reasonable extension of the Delivery Date
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and adjustment of other terms of this Contract including the Contract Price as may be necessary for the completion of such reconstruction; or
(ii)
If due to whatever reasons the parties fail to agree on the above, then the SELLER shall refund immediately to the BUYER the amount of all installments paid to the SELLER under this Contract without interest, whereupon this Contract shall be deemed to be canceled and all rights, duties, liabilities and obligations of each of the parties to the other shall terminate forthwith.
Within thirty (30) days after receiving telefax or e-mail notice of any damage to the VESSEL constituting an actual or a constructive total loss, the BUYER shall notify the SELLER in writing or by telefax or e-mail of its agreement or disagreement under this sub-paragraph. In the event the BUYER fails to so notify the SELLER, then such failure shall be construed as a disagreement on the part of the BUYER. This Contract shall be deemed as rescinded and canceled and Paragraph 2 (b) (ii) of this Article shall apply.
3. TERMINATION OF THE SELLER’S OBLIGATION TO INSURE
The SELLER’s obligation to insure the VESSEL hereunder shall cease and terminate forthwith upon delivery thereof to and acceptance by the BUYER.
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ARTICLE XIII DISPUTES AND ARBITRATION
1. PROCEEDINGS
In the event of any dispute between the parties hereto as to any matter arising out of or relating to this Contract or any stipulation herein or with respect thereto which cannot be settled by the parties themselves, such dispute shall be resolved by arbitration in London England in accordance with the Laws of England. Any arbitration of disputes under this Contract shall be conducted in accordance with the London Maritime Arbitrators’ Association Terms. Either party may demand arbitration of any such disputes by giving written notice to the other party. Any demand for arbitration by either party hereto shall state the name of the arbitrator appointed by such party and shall also state specifically the question or questions as to which such party is demanding arbitration. Within twenty (20) days after receipt of notice of such demand for arbitration, the other party shall in turn appoint a second arbitrator. The two arbitrators thus appointed shall thereupon select a third arbitrator, and the three arbitrators so named shall constitute the board of arbitration (hereinafter called the “Arbitration Board”) for the settlement of such dispute.
In the event however, that said other party should fail to appoint a second arbitrator as aforesaid within twenty (20) days following receipt of notice of demand of arbitration, it is agreed that such party shall thereby be deemed to have accepted and appointed as its own arbitrator the one already appointed by the party demanding arbitration, and the arbitration shall proceed forthwith before this sole arbitrator, who alone, in such event, shall constitute the Arbitration Board. And in the further event that the two arbitrators appointed respectively by the parties hereto as aforesaid should be unable to reach agreement on the appointment of the third arbitrator within twenty (20) days from the date on which the second arbitrator is appointed, either party of the said two arbitrators may apply to the President for the time being of the London Maritime Arbitrators Association to appoint the third arbitrator. The award of the arbitration, made by the sole arbitrator or by the majority of the three arbitrators as the case may be, shall be final, conclusive and binding upon the parties hereto.
2. ALTERNATIVE ARBITRATION BY AGREEMENT
Notwithstanding the preceding provisions of this Article, it is recognized that in the event of any dispute or difference of opinion arising in regard to the construction of the VESSEL, her machinery and equipment, or concerning the quality of materials or workmanship thereof or thereon, such dispute may be referred to the Classification Society upon mutual agreement of the parties hereto. In such case, the opinion of the Classification Society shall be final and binding on the parties hereto.
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3. NOTICE OF AWARD
Notice of any award shall immediately be given in writing or by telefax or e-mail to the SELLER and the BUYER.
4. EXPENSES
The Arbitration Board shall determine which party shall bear the expenses of the arbitration or the proportion of such expenses which each party shall bear.
5. AWARD OF ARBITRATION
Award of arbitration, shall be final and binding upon the parties concerned.
6. ENTRY IN COURT
Judgment on any award may be entered in any court of competent jurisdiction.
7. ALTERATION OF DELIVERY DATE
In the event of reference to arbitration of any dispute arising out of matters occurring prior to delivery of the VESSEL, the SELLER shall not be entitled to extend the Delivery Date as defined in Article VII hereof and the BUYER shall not be entitled to postpone its acceptance of the VESSEL on the Delivery Date or on such newly planned time of delivery of the VESSEL as declared by the SELLER. However, if the construction of the VESSEL is affected by any arbitration, the SELLER shall then be permitted to extend the Delivery Date as defined in Article VII and the decision or the award shall include a finding as to what extent the SELLER shall be permitted to extend the Delivery Date.
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ARTICLE XIV RIGHT OF ASSIGNMENT
1.
ASSIGNMENT AND TRANSFER BY THE BUYER
The SELLER agrees that prior to delivery of the VESSEL, the Contract may, with the prior written approval/consent of the SELLER, which the SELLER shall not unreasonably withhold, be assigned or transferred to BUYER’s bank for financing purpose or to a 100% subsidiary of the BUYER.
For the avoidance of doubt, the BUYER’s rights to transfer or assign under this Paragraph 1 shall apply equally to any transferee or assignee of the BUYER’s rights and obligations under this Contract as defined in the above paragraph, but always subject to SELLER’s prior consent, which the SELLER shall not unreasonably withhold.
2.
ASSIGNMENT BY THE
SELLER
SELLER shall have the right to assign this Contract to SELLER’s bank for financing purpose at any time after the effective date hereof, provided that prior written agreement is obtained from the BUYER, which the BUYER shall not unreasonably withhold.
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ARTICLE XV TAXES AND DUTIES
1. TAXES
The SELLER shall bear and pay all taxes, duties, stamps, dues levies and fees of whatsoever nature incurred or imposed in China in connection with the execution and/or performance of this Contract by the SELLER. Any taxes and/or duties imposed upon those items or services procured by the SELLER in the People’s Republic of China or elsewhere for the construction of the VESSEL shall be borne by the SELLER.
The BUYER shall be responsible for the personal income tax for any person it employs, including BUYER’S REPRESENTATIVES or other BUYER’s staff, agent and representatives who work at SELLER’s shipyard and premise.
2. DUTIES
The BUYER shall bear and pay all taxes, duties, stamps and fees incurred outside China in connection with execution and/or performance of this Contract by the BUYER, except for taxes, duties, stamps, dues, levies and fees imposed upon those items which are to be procured by the SELLER for the construction of the VESSEL in accordance with the terms of this Contract and the Specifications..
Any tax or duty other than those described hereinabove, if any, shall be borne by the BUYER.
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ARTICLE XVI PATENTS, TRADEMARKS AND COPYRIGHTS
The machinery and equipment of the VESSEL may bear the patent number, trademarks or trade names of the manufacturers. The SELLER shall defend and hold harmless the BUYER from patent liability or claims of patent infringement of any nature or kind, including costs and expenses for, or on account of any patented or patentable invention made or used in the performance of this Contract and also including cost and expense of litigation, if any.
Nothing contained herein shall be construed as transferring any patent or trademark rights or copyright in equipment covered by this Contract, and all such rights are hereby expressly reserved to the true and lawful owners thereof. Notwithstanding any provisions contained herein to the contrary, the SELLER’s obligation under this Article should not be terminated by the passage of any specified period of time.
The SELLER’s indemnity hereunder does not extend to equipment or parts supplied by the BUYER to the BUILDER if any.
The SELLER retains all rights with respect to the Specification, and plans and working drawings, technical descriptions, calculations, test results and other data, information and documents concerning the design and construction of the VESSEL and the BUYER undertakes therefore not to disclose the same or divulge any information contained therein to any third parties, without the prior written consent of the SELLER, excepting where it is necessary for usual operation, repair and maintenance, sale or charter of the VESSEL or registration, classification insurance or sale of the VESSEL.
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ARTICLE XVII NOTICE
Any and all notices and communications in connection with this Contract shall be addressed as follows:
To the BUYER :
NAVIG8 CRUDE TANKERS INC.
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Address :
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c/o Navig8 Asia Pte Ltd
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3 Temasek Avenue
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#25-01 Centennial Tower
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Singapore 039190
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Telefax No. :
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+44 207 467 5867
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E-mail :
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legal@navig8group.com
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To CSTC :
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China Shipbuilding Trading Company, Limited
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Address :
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c/o Marine Tower,
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No.1 Pudong Dadao,
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Shanghai 200120
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the People’s Republic of China
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Telefax No. :
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(021) 68860801
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E-mail :
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shipexport@mail.chinaships.com
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To the BUILDER : Shanghai Waigaoqiao Shipbuilding Co., Ltd.
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Address :
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3001 Zhouhai Road, Pudong New District, Shanghai 200137,
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the People’s Republic of China
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Telex No. : (021) 58480446
E-mail : swsbiz@chinasws.com
Any notices and communications sent by CSTC or the BUILDER alone to the BUYER shall be deemed as having being sent by both CSTC and the BUILDER.
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Any change of address shall be communicated in writing by registered mail or by e-mail by the party making such change to the other party and in the event of failure to give such notice of change, communications addressed to the party at their last known address shall be deemed sufficient.
Any and all notices, requests, demands, instructions, advice and communications in connection with this Contract shall be deemed to be given at, and shall become effective from, the time when the same is delivered to the address of the party to be served, provided, however, that registered airmail shall be deemed to be delivered ten (10) days after the date of dispatch, express courier service shall be deemed to be delivered five (5) days after the date of dispatch, and telefax or e-mail acknowledged by the answerbacks shall be deemed to be delivered upon dispatch. E-mail transmissions shall be deemed as delivered upon the subject email has been removed to the “Sent” box on the sending computer.
Any and all notices, communications, Specifications and drawings in connection with this Contract shall be written in the English language and each party hereto shall have no obligation to translate them into any other language.
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ARTICLE XVIII EFFECTIVE DATE OF CONTRACT
This Contract shall become effective upon signing of this Contract
Upon signing of this Contract, both parties hereto shall do as follows:
(1)
Receipt by the BUYER of a Refund Guarantee in the form annexed hereto as Exhibit A issued by Refund Guarantor in accordance with Article II Paragraph 7 hereof.
(2)
Receipt by the SELLER of the first instalment in accordance with Paragraph 3(a) and 4(a) of Article II of this Contract; and
(3)
Receipt by the SELLER of a Letter of Guarantee in the form annexed hereto as Exhibit B issued by the Refund Guarantor in accordance with Article II Paragraph 6 hereof.]
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ARTICLE XIX INTERPRETATION
1. LAW APPLICABLE
The parties hereto agree that the validity and interpretation of this Contract and of each Article and part hereof be governed by and interpreted in accordance with the laws of England.
2. DISCREPANCIES
All general language or requirements embodied in the Specifications are intended to amplify, explain and implement the requirements of this Contract. However, in the event that any language or requirements so embodied in the Specifications permit an interpretation inconsistent with any provision of this Contract, then in each and every such event the applicable provisions of this Contract shall govern. The Specifications and plans are also intended to explain each other, and anything shown on the plans and not stipulated in the Specifications or stipulated in the Specifications and not shown on the plans, shall be deemed and considered as if embodied in both. In the event of conflict between the Specifications and plans, the Specifications shall govern.
However, with regard to such inconsistency or contradiction between this Contract and the Specifications as may later occur by any change or changes in the Specifications agreed upon by and among the parties hereto after execution of this Contract, then such change or changes shall govern.
3. DEFINITION
“Banking Day(s)” are days on which banks are open in Singapore, New York, U.S.A.
“Business Day(s)” are days on which banks are open in Singapore and P. R. China.
In absence of stipulation of “banking day(s)” or “Business Day(s)”, the “day” or “days” shall be taken as “calendar day” or “calendar days”.
4. ENTIRE AGREEMENT
This Contract sets forth the entire understanding of the Parties with respect to the subject matter discussed herein. It supersedes all prior discussions, negotiations and agreements, (including but not limited to the Letter of Intent / Option Agreement) whether oral or written, expressed or implied.
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In WITNESS WHEREOF, the parties hereto have caused this Contract to be duly executed on the day and year first above written.
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THE BUYER :
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NAVIG8 CRUDE TANKERS INC.
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By :
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/s/ Rasmus Bach Nielsen
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Name :
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Rasmus Bach Nielsen
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Title :
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Attorney-in-Fact
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THE SELLER:
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CSTC : China Shipbuilding Trading Company, Limited
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By :
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/s/ HZ Fang
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Name :
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HZ Fang
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Title :
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Attorney-in-Fact
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THE BUILDER: Shanghai Waigaoqiao Shipbuilding Co., Ltd.
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By :
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/s/ Huang Yicheng
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Name :
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Huang Yicheng
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Title :
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Attorney-in-Fact
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Exhibit “A”: IRREVOCABLE LETTER OF GUARANTEE NO.
To:
Date:
Dear Sirs,
Irrevocable Letter of Guarantee No.
At the request of China Shipbuilding Trading Company, Limited and in consideration of your agreeing to pay China Shipbuilding Trading Company, Limited and Shanghai Waigaoqiao Shipbuilding Co., Ltd. (hereinafter collectively called “the SELLER”) the instalments before delivery of the VESSEL under the Contract concluded by and amongst you, and the SELLER dated 17
th
December, 2013 for the construction of one (1) 300,000 Metric Tons Deadweight Crude Oil Tanker to be designated as Hull No. H1356 (hereinafter called “the Contract”), we, the undersigned, do hereby guarantee irrevocably, as primary obligor, repayment to you by the SELLER of an amount up to but not exceeding a total amount of United States Dollars Thirty Seven Million Thirty Thousand One Hundred and Forty Only (US$ 37,030,140.00) (plus the interest described below) representing the first instalment of the Contract Price of the VESSEL, United States Dollars Nine Million Two Hundred and Fifty Seven Thousand Five Hundred and Thirty Five Only (US$ 9,257,535.00), the second instalment of the Contract Price of the VESSEL, United States Dollars Nine Million Two Hundred and Fifty Seven Thousand Five Hundred and Thirty Five Only (US$ 9,257,535.00), the third instalment of the Contract Price of the VESSEL, United States Dollars Nine Million Two Hundred and Fifty Seven Thousand Five Hundred and Thirty Five Only (US$ 9,257,535.00) and the fourth instalment of the Contract Price of the VESSEL, United States Dollars Nine Million Two Hundred and Fifty Seven Thousand Five Hundred and Thirty Five Only (US$ 9,257,535.00), as you may have paid to the SELLER under the Contract prior to the delivery of the VESSEL, if and when the same or any part thereof becomes repayable to you from the SELLER in accordance with the terms (Article X or Article XII 2(b)) of the Contract. Should the SELLER fail to make such repayment, we shall pay you the amount the SELLER ought to pay with an interest at the rate of six percent (6%) per annum if the cancellation of the Contract is exercised by you in accordance with the provisions of Article III 1(c), 2(c), 3(c) or 4(c) of the Contract or at the rate of zero percent (0%) per annum if cancellation of the Contract is exercised by you by reason of paragraph 1 of Article VIII or paragraph 2(b) of Article XII, in both cases calculated from the date the installments were received by the SELLER to the date of remittance of such refund within thirty (30) Business Days after our receipt of the relevant written demand from you for repayment. Any written demand to us shall be accepted by us as conclusive evidence that the amount claimed is due under this guarantee, provided that such demand: (1) is signed by authorized representative of you and accompanied by a power of attorney granted by you providing the relevant authorized representative with authority to make the demand; (2) states that the principal amount and interest thereon if any demanded by you has been demanded by you from the SELLER and was not paid by the SELLER within forty-five (45) days after that demand upon the SELLER; and (3) is accompanied by a copy of your said demand upon the SELLER.
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It is hereby understood that payment of any interest provided herein is by way of liquidated damages due to cancellation of the CONTRACT.
However, in the event of any dispute between you and the SELLER in relation to:
(1) whether the SELLER shall be liable to repay the instalment or instalments paid by you and
(2) consequently whether you shall have the right to demand payment from us,
and such dispute is submitted either by the SELLER or by you for arbitration in accordance with Article XIII of the Contract, we shall be entitled to withhold and defer payment until the arbitration award is published. We shall not be obligated to make any payment to you unless the arbitration award orders the SELLER to make repayment. If the SELLER fails to honour the award within 45 days of the final award being issued then we shall refund to you against your further written demand accompanied with a certified copy of the arbitration award which orders the SELLER to make repayment, to the extent the arbitration award orders but not exceeding the aggregate amount of this guarantee plus the interest described above.
The undersigned hereby certifies, represents and warrants that all acts, conditions and things required to be done and performed and to have occurred prior to the creation and issuance of this guarantee, and to ensure that this guarantee constitutes valid and legally binding obligations of the undersigned enforceable in accordance with its terms have been done and performed and have occurred in due and strict compliance with applicable laws.
The said repayment shall be made by us in United States Dollars. This Letter of Guarantee shall become effective from the time of the actual receipt of the first instalment by the SELLER from you and the amounts effective under this Letter of Guarantee shall correspond to the total payment actually received by the SELLER from time to time under the Contract prior to the delivery of the VESSEL. However, the available amount under this Letter of Guarantee shall in no event exceed above mentioned amount actually received by the SELLER, together with interest calculated, as described above at six percent (6%) or, zero percent (0%) per annum, as the case may be for the period commencing with the date of receipt by the SELLER of the respective instalment to the date of repayments thereof.
This Letter of Guarantee shall remain in force until the VESSEL has been delivered to and accepted by you or refund has been made by the SELLER or ourselves, or until May 11th, 2017, whichever occurs earlier, after which you are to return it to us by airmail for cancellation. Upon its expiration, this guarantee shall become null and void, any action of maintaining the original of this guarantee and its amendment(s) shall give no right to you for lodging any more claim hereunder.
However in the event that a dispute in respect of a refund is being referred to arbitration in accordance with Article XIII of the Contract, then this Letter of Guarantee shall continue to
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remain in force until 60 days after such arbitration proceedings are concluded and a final arbitration award has been issued.
Any claim under this guarantee must be received by us before its expiration.
It is agreed that this Letter of Guarantee may, with our prior written approval and such approval shall not be unreasonably withheld, be assigned by you (excluding, in respect of a first class international bank, the right of demanding payment which shall in all respect remain with yourself) to a first class international bank that is financing the whole or part of your purchase of the VESSEL or one of your 100% subsidiaries or affiliates.
This Letter of Guarantee shall be construed, interpreted and governed by the Laws of England and any dispute arising out of or in connection with this Letter of Guarantee shall be submitted to the exclusive jurisdiction of the courts of England.
For the Refund Guarantor
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Exhibit “B” IRREVOCABLE LETTER OF GUARANTEE
FOR THE 2ND, 3RD, AND 4TH INSTALLMENTS
Date:
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To:
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China Shipbuilding Trading Co., Ltd.
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56(Yi), Zhongguancun Nandajie,
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Beijing 100044, P. R. China
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Dear Sirs,
(1)
In consideration of your entering into a shipbuilding contract dated 17
th
December 2013 (“the Shipbuilding Contract”) with NAVIG8 CRUDE TANKERS INC. or its Nominee as the buyer (“the BUYER”) for the construction of one (1) 300,000 Metric Tons Deadweight Crude Oil Tanker known as Shanghai Waigaoqiao Shipbuilding Co., Ltd.’s Hull No. H1356 (“the VESSEL”), we, NAVIG8 CRUDE TANKERS INC., hereby IRREVOCABLY, ABSOLUTELY and UNCONDITIONALLY guarantee, as the primary obligor and not merely as the surety, the due and punctual payment by the BUYER of each and all of the 2nd, 3rd, and 4th installments of the Contract Price amounting to a total sum of United States Dollars Twenty Seven Million Seven Hundred and Seventy Two Thousand Six Hundred and Five only (US$ 27,772,605.00) as specified in (2) below.
(2)
The instalments guaranteed hereunder, pursuant to the terms of the Shipbuilding Contract, comprise the 2nd installment in the amount of U.S. Dollars Nine Million Two Hundred and Fifty Seven Thousand Five Hundred and Thirty Five Only (US$ 9,257,535.00) payable by the BUYER within three (3) Singapore and New York business days after cutting of the first steel plate in your BUILDER’s workshop, the third installment in the amount of U.S. Dollars Nine Million Two Hundred and Fifty Seven Thousand Five Hundred and Thirty Five Only (US$ 9,257,535.00) payable by the BUYER within three (3) Singapore and New York business days after keel-laying of the first section of the VESSEL, and the 4th installment in the amount U.S. Dollars Nine Million Two Hundred and Fifty Seven Thousand Five Hundred and Thirty Five Only (US$ 9,257,535.00) payable by the BUYER within three (3) Singapore and New York business days after launching of the VESSEL.
(3)
We also IRREVOCABLY, ABSOLUTELY and UNCONDITIONALLY guarantee, as primary obligor and not merely as surety, the due and punctual payment by the BUYER of interest on each Instalment guaranteed hereunder at the rate of six percent (6%) per annum from and including the first day after the date of instalment in default until the date of full
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payment by us of such amount guaranteed hereunder.
(4)
In the event that the BUYER fails to punctually pay any Instalment guaranteed hereunder or the BUYER fails to pay any interest thereon, and any such default continues for a period of fifteen (15) days, then, upon receipt by us of your first written demand, we shall immediately pay to you or your assignee all unpaid 2nd, 3rd and 4th instalments, together with the interest as specified in paragraph (3) hereof, without requesting you to take any or further action, procedure or step against the BUYER or with respect to any other security which you may hold.
(5)
We hereby agree that at your option this Guarantee and the undertaking hereunder shall be assignable to and if so assigned shall inure to the benefit of any 3rd party designated by you or Bank of China, Head Office, Banking Department, Beijing, the People’s Republic of China as your assignee as if any such third party or Bank of China, Head Office, Banking Department, Beijing, the People’s Republic of China were originally named herein.
(6)
Any payment by us under this Guarantee shall be made in the Unites States Dollars by telegraphic transfer to Bank of China, New York Branch, 415 Madison Avenue, New York, N. Y. 10017 U.S.A., as receiving bank nominated by you for credit to the account of you with Bank of China, Head Office, Banking Department, Beijing, the People’s Republic of China or through other receiving bank to be nominated by you from time to time, in favour of you or your assignee.
(7)
Our obligations under this guarantee shall not be affected or prejudiced by any dispute between you as the SELLER and the BUYER under the Shipbuilding Contract or by the BUILDER’s delay in the construction and/or delivery of the VESSEL due to whatever causes or by any variation or extension of their terms thereof or by any security or other indemnity now or hereafter held by you in respect thereof, or by any time or indulgence granted by you or any other person in connection therewith, or by any invalidity or unenforceability of the terms thereof, or by any act, omission, fact or circumstances whatsoever, which could or might, but for the foregoing, diminish in any way our obligations under this Guarantee.
(8)
Any claim or demand shall be in writing signed by one of your officers and may be served on us either by hand or by post and if sent by post to (or such other address as we may notify to you in writing), or by email (email: ) via Bank of China, with confirmation in writing.
56
(9)
This Letter of Guarantee shall come into full force and effect upon delivery to you of this Guarantee and shall continue in force and effect until the VESSEL is delivered to and accepted by the BUYER and the BUYER shall have performed all its obligations for taking delivery thereof or until the full payment of all 2nd, 3rd, and 4th Instalments together with the aforesaid interests by the BUYER or us, whichever first occurs.
(10)
The maximum amount, however, that we are obliged to pay to you under this Guarantee shall not exceed the aggregate amount of U.S. Dollars Twenty Eight Million Forty Six Thousand Five Hundred and Twenty Six only (US$28,046,526.00) being an amount equal to the sum of:-
(a)
All the 2nd, 3rd and 4th instalments guaranteed hereunder in the total amount of United States Dollars Twenty Seven Million Seven Hundred and Seventy Two Thousand Six Hundred and Five only (US$ 27,772,605.00) ; and
(b)
Interest at the rate of six percent (6%) per annum on the Instalment for a period of sixty (60) days in the amount of United States Dollars Two Hundred Seventy Three Thousand Nine Hundred and Twenty One only (US$ 273,921.00).
(11)
All payments by us under this Guarantee shall be made without any set-off or counterclaim and without deduction or withholding for or on account of any taxes, duties, or charges whatsoever unless we are compelled by law to deduct or withhold the same. In the latter event we shall make the minimum deduction or withholding permitted and will pay such additional amounts as may be necessary in order that the net amount received by you after such deductions or withholdings shall equal the amount which would have been received had no such deduction or withholding been required to be made.
(12)
This Letter of Guarantee shall be construed in accordance with and governed by the Laws of England. We hereby submit to the non-exclusive jurisdiction of the English courts for the purposes of any legal action or proceedings in connection herewith in England.
(13)
When this Letter of Guarantee shall have expired as aforesaid, you will return the same to us without any request or demand from us.
IN WITNESS WHEREOF, we have caused this Letter of Guarantee to be executed and delivered by our duly authorized representative the day and year above written.
57
Very Truly Yours
By: NAVIG8 CRUDE TANKERS INC.
58
Exhibit 10.81
SHIPBUILDING CONTRACT
FOR
CONSTRUCTION OF ONE 300,000 DWT CRUDE OIL TANKER
(HULL NO. H1357)
BETWEEN
NAVIG8 CRUDE TANKERS INC. or its Nominee
as BUYER
and
CHINA SHIPBUILDING TRADING COMPANY, LIMITED
and
SHANGHAI WAIGAOQIAO SHIPBUILDING CO., LTD.
Collectively as SELLER
CONTENTS
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ARTICLE
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PAGE NO.
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ARTICLE I DESCRIPTION AND CLASS
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2
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1. DESCRIPTION:
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2
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2. CLASS AND RULES
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2
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3. PRINCIPAL PARTICULARS AND DIMENSIONS OF THE VESSEL
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3
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4. GUARANTEED SPEED
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3
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5. GUARANTEED FUEL CONSUMPTION
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3
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6. GUARANTEED DEADWEIGHT
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4
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7. SUBCONTRACTING:
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4
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8. REGISTRATION:
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4
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ARTICLE II CONTRACT PRICE & TERMS OF PAYMENT
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5
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1. CONTRACT PRICE:
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5
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2. CURRENCY:
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5
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3. TERMS OF PAYMENT:
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5
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4. METHOD OF PAYMENT:
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6
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5. PREPAYMENT:
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8
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6. SECURITY FOR PAYMENT OF INSTALMENTS BEFORE DELIVERY:
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8
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7. REFUNDS
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8
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ARTICLE III ADJUSTMENT OF THE CONTRACT PRICE
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10
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1. DELIVERY
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10
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2. INSUFFICIENT SPEED
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11
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3. EXCESSIVE FUEL CONSUMPTION
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12
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4. DEADWEIGHT
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13
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5. EFFECT OF RESCISSION OR CANCELLATION
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13
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ARTICLE IV SUPERVISION AND INSPECTION
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14
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1. APPOINTMENT OF THE BUYER’S REPRESENTATIVES
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14
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2. COMMENTS TO PLANS AND DRAWINGS
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14
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3. SUPERVISION AND INSPECTION BY THE BUYER’S REPRESENTATIVES
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15
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4. LIABILITY OF THE SELLER
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17
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5. SALARIES AND EXPENSES
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17
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6. REPLACEMENT OF BUYER’S REPRESENTATIVES
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17
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ARTICLE V MODIFICATION,CHANGES AND EXTRAS
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18
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1. HOW EFFECTED
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18
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2. CHANGES IN RULES AND REGULATIONS, ETC.
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19
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3. SUBSTITUTION OF MATERIALS AND/OR EQUIPMENT
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20
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4. BUYER’S SUPPLIED ITEMS
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20
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ARTICLE VI TRIALS
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22
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I
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1. NOTICE
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22
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2. HOW CONDUCTED
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23
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3. TRIAL LOAD DRAFT
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23
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4. METHOD OF ACCEPTANCE OR REJECTION
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24
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5. DISPOSITION OF SURPLUS CONSUMABLE STORES
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24
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6. EFFECT OF ACCEPTANCE
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25
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ARTICLE VII DELIVERY
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26
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1. TIME AND PLACE
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26
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2. WHEN AND HOW EFFECTED
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26
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3. DOCUMENTS TO BE DELIVERED TO THE BUYER
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26
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4. TITLE AND RISK
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27
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5. REMOVAL OF VESSEL
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28
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6. TENDER OF THE VESSEL
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28
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ARTICLE VIII DELAYS & EXTENSION OF TIME FOR DELIVERY
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29
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1. CAUSE OF DELAY
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29
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2. NOTICE OF DELAY
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30
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3. RIGHT TO CANCEL FOR EXCESSIVE DELAY
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30
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4. DEFINITION OF PERMISSIBLE DELAY
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31
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ARTICLE IX WARRANTY OF QUALITY
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32
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1. GUARANTEE OF MATERIAL AND WORKMANSHIP
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32
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2. NOTICE OF DEFECTS
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32
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3. REMEDY OF DEFECTS
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32
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4. EXTENT OF THE SELLER’S LIABILITY
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33
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ARTICLE X CANCELLATION, REJECTION AND RESCISSION BY THE BUYER
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35
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ARTICLE XI BUYER’S DEFAULT
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37
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1. DEFINITION OF DEFAULT
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37
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2. NOTICE OF DEFAULT
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37
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3. INTEREST AND CHARGE
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37
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4. DEFAULT BEFORE DELIVERY OF THE VESSEL
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38
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5. SALE OF THE VESSEL
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39
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ARTICLE XII INSURANCE
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40
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1. EXTENT OF INSURANCE COVERAGE
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40
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2. APPLICATION OF RECOVERED AMOUNT
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40
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3. TERMINATION OF THE SELLER’S OBLIGATION TO INSURE
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41
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ARTICLE XIII DISPUTES AND ARBITRATION
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42
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1. PROCEEDINGS
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42
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2. ALTERNATIVE ARBITRATION BY AGREEMENT
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42
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3. NOTICE OF AWARD
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43
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4. EXPENSES
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43
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5. AWARD OF ARBITRATION
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43
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II
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6. ENTRY IN COURT
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43
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7. ALTERATION OF DELIVERY TIME
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43
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ARTICLE XIV RIGHT OF ASSIGNMENT
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44
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ARTICLE XV TAXES AND DUTIES
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45
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1. TAXES
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45
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2. DUTIES
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45
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ARTICLE XVI PATENTS, TRADEMARKS AND COPYRIGHTS
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46
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ARTICLE XVII NOTICE
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47
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ARTICLE XVIII EFFECTIVE DATE OF CONTRACT
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49
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ARTICLE XIX INTERPRETATION
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50
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1. LAW APPLICABLE
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50
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2. DISCREPANCIES
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50
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3. DEFINITION
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50
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4. ENTIRE AGREEMENT
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50
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EXHIBIT “A” : IRREVOCABLE LETTER OF GUARANTEE NO.
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52
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EXHIBIT “B” IRREVOCABLE LETTER OF GUARANTEE
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55
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FOR THE 2ND, 3RD, AND 4TH INSTALLMENTS
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55
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III
SHIPBUILDING CONTRACT FOR
CONSTRUCTION OF ONE
DIESEL
DRIVEN 300,000 DWT CRUDE OIL TANKER
(HULL NO.
H1357
)
This CONTRACT, entered into this 17th day of December 2013 by and between NAVIG8 CRUDE TANKERS INC. or its Nominee, a corporation organized and existing under the Laws of Marshall Islands, having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960 (hereinafter called the “BUYER”) on one part; and CHINA SHIPBUILDING TRADING COMPANY, LIMITED, a corporation organized and existing under the Laws of the People’s Republic of China, having its registered office at 56(Yi), Zhongguancun Nandajie, Beijing 100044, the People’s Republic of China (hereinafter called “CSTC”), and SHANGHAI WAIGAOQIAO SHIPBUILDING CO., LTD. a corporation organized and existing under the Laws of the People’s Republic of China, having its registered office at
3001 Zhouhai Road, Pudong New District, Shanghai 200137
, the People’s Republic of China (hereinafter called the “BUILDER”) on the other part. CSTC and the BUILDER are hereinafter collectively called the “SELLER”
WITNESSETH
in consideration of the mutual covenants contained herein, the SELLER agrees to design, build, launch, equip and complete at the BUILDER’s own premises or at Shanghai Jiangnan Changxing Heavy Industry Co., Ltd. at Changxing Island, Shanghai (hereinafter called the BUILDER’s shipyard) and to sell and deliver to the BUYER after completion and successful trial one (1) 300,000 Metric Tons Deadweight Crude Oil Tanker as more fully described in Article I hereof, to be registered under the flag of Marshall Islands and the BUYER agrees to purchase and take delivery of the aforesaid VESSEL from the SELLER and to pay for the same in accordance with the terms and conditions hereinafter set forth.
1
ARTICLE I DESCRIPTION AND CLASS
1. DESCRIPTION:
The VESSEL is a 300,000 metric tons deadweight crude oil tanker, at scantling draft moulded of 21.3 meters (hereinafter called the “VESSEL”) of the class described below. The VESSEL shall have the BUILDER’s Hull No. H1357 and shall be designed, constructed, equipped and completed in accordance with the following “Specifications”:
(1) Specification (Drawing No. 300TK-13202-CS-R1)
(2) General Arrangement (Drawing No. 300TK-13202-GA-R1)
(3) Midship Section (Drawing No. 300TK-13202-MS-R1)
(4) Makers list (Drawing No. 300TK-13202-ML-R1)
(5) Technical Memorandum on the 300,000 DWT Crude Oil Tanker Specification dated December 17
th
, 2013
attached hereto and signed by each of the parties to this Contract (hereinafter collectively called the “Specifications”), making an integral part hereof.
2. CLASS AND RULES
The VESSEL, including its machinery and equipment, shall be designed, equipped and constructed in accordance with the rules and regulations issued and having become effective and compulsorily applicable to the VESSEL up to and on the date of signing this Contract of American Bureau of Shipping (ABS) (hereinafter called the “Classification Society”) and shall be distinguished in the record by the symbol of:
+A1 Oil Carrier, (E), CSR, AB-CM, +AMS, +ACCU, TCM, UWILD, SPMA, PMA, ESP, CPS, VEC-L, RW, GP, CPP, POT, CRC, BWT, HIMP, RES, RRDA
and shall also comply with the rules and regulations as fully described in the Specifications.
The requirements of the authorities as fully described in the Specifications including that of the Classification Society are to include additional rules or circulars thereof issued and become effective as at the date of signing this Contract.
The SELLER shall arrange with the Classification Society to assign a representative or representatives (hereinafter called the “Classification Surveyor”) to the BUILDER’s Shipyard for supervision of the construction of the VESSEL.
2
All fees and charges incidental to Classification and to comply with the rules, regulations and requirements of this Contract as described in the Specifications issued up to the date of signing this Contract as well as royalties, if any, payable on account of the construction of the VESSEL shall be for the account of the SELLER, except as otherwise provided and agreed herein. The key plans, materials and workmanship entering into the construction of the VESSEL shall at all times be subject to inspections and tests in accordance with the rules and regulations of the Classification Society.
Decisions of the Classification Society as to compliance or noncompliance with Classification rules and regulations shall be final and binding upon the parties hereto.
3. PRINCIPAL PARTICULARS AND DIMENSIONS OF THE VESSEL
(a) Hull:
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Length overall
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abt.
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333.00m
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Length between perpendiculars
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324.00m
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Breadth moulded
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60.00m
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Depth moulded
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29.50m
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Design Draft moulded
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20.50m
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(b) Propelling Machinery:
The VESSEL shall be equipped, in accordance with the Specifications, with one (1) set of MAN 7G80ME-C 9.2 type main engine.
4. GUARANTEED SPEED
The SELLER guarantees that the trial speed, after correction, is to be not less than 15.5nautical miles per hour on the trial condition stipulated in the Specification.
The trial speed shall be corrected for wind speed and shallow water effect. The correction method of the speed shall be as specified in the Specifications.
5. GUARANTEED FUEL CONSUMPTION
The SELLER guarantees that the fuel oil consumption of the Main Engine is not to exceed 158.8+5% grams/brake horse power/hour at normal continuous output at shop trial based on diesel fuel oil having a lower calorific value of 10,200 kilocalories per kilogram.
3
6. GUARANTEED DEADWEIGHT
The SELLER guarantees that the VESSEL is to have a deadweight of not less than 300,000 metric tons at the scantling draft moulded of 21.3 meters in sea water of 1.025 specific gravity.
The term, “Deadweight”, as used in this Contract, shall be as defined in the Specifications.
The actual deadweight of the VESSEL expressed in metric tons shall be based on calculations made by the BUILDER and checked by the BUYER, and all measurements necessary for such calculations shall be performed in the presence of the BUYER’s REPRESENTATIVE(S) or the party authorized by the BUYER.
Should there be any dispute between the BUILDER and the BUYER in such calculations and/or measurements, the decision of the Classification Society shall be final.
7. SUBCONTRACTING:
The SELLER may, at its sole discretion and responsibility, subcontract any portion of the construction work of the VESSEL to experienced subcontractors, but delivery and final assembly into the VESSEL of any such work subcontracted shall be at the BUILDER’s Shipyard. The SELLER shall remain responsible for such subcontracted work.
The performance of the works by the Shanghai Jiangnan Changxing Heavy Industry Co., Ltd. or wholly controlled subsidiaries of the BUILDER does not constitute subcontracting for the purposes of this clause. Without prejudice to the generality of the foregoing the SELLER shall remain fully liable for the due and complete performance of all the SELLER’s obligations under this Contract notwithstanding the entering into of any such sub-contract as aforesaid. However, the Vessel shall always remain at the BUILDER’s shipyard or Shanghai Jiangnan Changxing Heavy Industry Co., Ltd. unless the Buyer and the SELLER agree otherwise.
8. REGISTRATION:
The VESSEL shall be registered by the BUYER at its own cost and expenses under the laws of Marshall Islands at the time of delivery and acceptance thereof.
4
ARTICLE II CONTRACT PRICE & TERMS OF PAYMENT
1. CONTRACT PRICE:
The purchase price of the VESSEL is United States Dollars Ninety Two Million Five Hundred and Seventy Five Thousand Three Hundred and Fifty Only (US$ 92,575,350.00), net receivable by the SELLER (hereinafter called the “Contract Price”), which is exclusive of the cost for the BUYER’s Supplies as provided in Article V hereof, and shall be subject to upward or downward adjustment, if any, as hereinafter set forth in this Contract.
2. CURRENCY:
Any and all payments by the BUYER to the SELLER under this Contract shall be made in United States Dollars.
3. TERMS OF PAYMENT:
The Contract Price shall be paid by the BUYER to the SELLER in instalments as follows:
(a) 1st Instalment:
The sum of United States Dollars Nine Million Two Hundred and Fifty Seven Thousand Five Hundred and Thirty Five Only (US$ 9,257,535.00), representing ten percent (10%) of the Contract Price, shall become due and payable and be paid by the BUYER within three (3) Singapore and New York business days after its receipt of the Refund Guarantee substantially in the form agreed in Exhibit “A”to this Contract. SELLER shall send a copy of invoice as demand for the same.
(b) 2nd Instalment:
The sum of United States Dollars Nine Million Two Hundred and Fifty Seven Thousand Five Hundred and Thirty Five Only (US$ 9,257,535.00), representing ten percent (10%) of the Contract Price, shall become due and payable and be paid within three (3) Singapore and New York business days after the cutting of the first steel plate of the VESSEL in the BUILDER’s workshop, such to be confirmed in writing by the Classification Society, or a date not earlier than sixteen (16) months prior to the Delivery Date, whichever is later. The SELLER shall notify with a telefax or email notice to the BUYER stating that the 1st steel plate has been cut in its workshop and submit a copy of the invoice as demand for payment of this 2
nd
instalment.
5
(c) 3rd Instalment:
The sum of United States Dollars Nine Million Two Hundred and Fifty Seven Thousand Five Hundred and Thirty Five Only (US$ 9,257,535.00), representing ten percent (10%) of the Contract Price, shall become due and payable and be paid within three (3) Singapore and New York business days after keel-laying of the first section of the VESSEL. The keel-laying shall be notified by the SELLER with a telefax or email notice to the BUYER stating that the said keel-laying has been carried out, such to be confirmed in writing by the Classification Society, or a date not earlier than eleven (11) months prior to the Delivery Date, whichever is later. The SELLER shall send to the BUYER a telefax or email stating that keel-laying has been carried out and submit a copy of the invoice as demand for payment of this 3
rd
installment.
(d) 4th Instalment:
The sum of United States Dollars Nine Million Two Hundred and Fifty Seven Thousand Five Hundred and Thirty Five Only (US$ 9,257,535.00), representing ten percent (10%) of the Contract Price, shall become due and payable and be paid within three (3) Singapore and New York business days after launching of the VESSEL, such to be confirmed in writing by the Classification Society. The launching of the VESSEL shall be notified by the SELLER with a telefax or email notice to the BUYER stating that the launching of the VESSEL has been carried out. The SELLER shall send to the BUYER a telefax or email stating that launching has taken place and submit a copy of the invoice as demand for payment of this 4
th
installment.
(e) 5th Installment (Payment upon Delivery of the VESSEL):
The sum of United States Dollars Fifty Five Million Five Hundred and Forty Five Thousand Two Hundred and Ten Only (US$ 55,545,210.00), representing sixty percent (60%) of the Contract Price, plus any increase or minus any decrease due to modifications and/or adjustments of the Contract Price in accordance with provisions of the relevant Articles hereof, shall become due and payable and be paid by the BUYER to the SELLER concurrently with delivery of the VESSEL. The SELLER shall send to the BUYER a telefax or e-mail demand for this installment ten (10) days prior to the scheduled date of delivery of the VESSEL.
4. METHOD OF PAYMENT:
(a) 1st Instalment:
The BUYER shall remit the amount of this installment in accordance with Article II, Paragraph 3 (a) by telegraphic transfer to Bank of China, New York Branch, 410 Madison Avenue, New York, N.Y. 10017, U.S.A. as receiving bank nominated by the SELLER,
6
for credit to the account of CSTC with Bank of China, Head Office, Banking Department, Beijing, the People’s Republic of China with SWIFT advice from Bank of China, New York Branch to Bank of China, Head Office.
(b) 2nd Instalment:
The BUYER shall remit the amount of this installment in accordance with Article II, Paragraph 3(b) by telegraphic transfer to Bank of China, New York Branch, 410 Madison Avenue, New York, N.Y. 10017, U.S.A. as receiving bank nominated by the SELLER, for credit to the account of CSTC with Bank of China, Head Office, Banking Department, Beijing, the People’s Republic of China with SWIFT advice from Bank of China, New York Branch to Bank of China, Head Office, or through other receiving bank to be nominated by the SELLER from time to time and such nomination shall be notified to the BUYER at least 10 days prior to the due date for payment.
(c) 3rd Installment:
The BUYER shall remit the amount of this installment in accordance with Article II, Paragraph 3(c) by telegraphic transfer to Bank of China, New York Branch, 410 Madison Avenue, New York, N.Y. 10017, U.S.A. as receiving bank nominated by the SELLER, for credit to the account of CSTC with Bank of China, Head Office, Banking Department, Beijing, the People’s Republic of China with SWIFT advice from Bank of China, New York Branch to Bank of China, Head Office, or through other receiving bank to be nominated by the SELLER from time to time and such nomination shall be notified to the BUYER at least 10 days prior to the due date for payment.
(d) 4th Installment:
The BUYER shall remit the amount of this installment in accordance with Article II, Paragraph 3(d) by telegraphic transfer to Bank of China, New York Branch, 410 Madison Avenue, New York, N.Y. 10017, U.S.A. as receiving bank nominated by the SELLER, for credit to the account of CSTC with Bank of China, Head Office, Banking Department, Beijing, the People’s Republic of China with SWIFT advice from Bank of China, New York Branch to Bank of China, Head Office, or through other receiving bank to be nominated by the SELLER from time to time and such nomination shall be notified to the BUYER at least 10 days prior to the due date for payment.
(e) 5th Installment (Payable upon delivery of the VESSEL):
The BUYER shall, at least three (3) Singapore and New York business days prior to the scheduled date of delivery of the VESSEL, make an irrevocable cash deposit in the name of the BUYER with Bank of China, Head Office, Banking Department, Beijing, the People’s
7
Republic of China, for a period of fifteen (15) days and covering the amount of this installment (as adjusted in accordance with the provisions of this Contract), with an irrevocable instruction that the said amount shall be released to the SELLER against presentation by the SELLER to the said Bank of China, Head Office, Banking Department, Beijing, the People’s Republic of China, of a copy of the Protocol of Delivery and Acceptance signed by the BUYER’s authorized representative and the SELLER. Interest, if any, accrued from such deposit, shall be for the benefit of the BUYER.
If the delivery of the VESSEL is not effected and the SELLER fails to present a copy of the fully signed Protocol of Delivery and Acceptance to said Bank of China, Head Office, Banking Department, Beijing, the People’s Republic of China on or before the expiry of the aforesaid fifteen (15) days deposit period, the BUYER shall have the right to withdraw the said deposit plus accrued interest upon the expiry of the said fifteen (15) days deposit period. However when the newly scheduled delivery date is notified to the BUYER by the SELLER, the BUYER shall make the cash deposit in accordance with the same terms and conditions as set out above.
5. PREPAYMENT:
The BUYER shall have the right to make prepayment of any and all instalments before delivery of the VESSEL, by giving to the SELLER at least thirty (30) days prior written notice, without any price adjustment of the VESSEL for such prepayment.
6. SECURITY FOR PAYMENT OF INSTALMENTS BEFORE DELIVERY:
The BUYER shall, within three (3) Business Days after the BUYER’s receipt of the Refund Guarantee, deliver to the SELLER an irrevocable and unconditional Letter of Guarantee in the form annexed hereto as Exhibit “B” (hereinafter called the “Payment Guarantee”) in favour of the SELLER issued by NAVIG8 CRUDE TANKERS INC. (hereinafter called the “Payment Guarantor”) acceptable to the SELLER. This guarantee shall secure the BUYER’s obligation for the payment of the 2nd, 3rd and 4th installments of the Contract Price.
7. REFUNDS
All payments made by the BUYER prior to delivery of the VESSEL shall be in the nature of advance to the SELLER, and in the event this Contract is rescinded or canceled by the BUYER, all in accordance with the specific terms of this Contract permitting such rescission or cancellation, the SELLER shall refund to the BUYER in United States Dollars the full amount of all sums already paid by the BUYER to the SELLER under this Contract, together with interest (at the rate set out in respective provision thereof) from the respective payment
8
date(s) to the date of remittance by telegraphic transfer of such refund to the account specified by the BUYER without deduction, set off or withholding in US dollars from the SELLER’s bank or jurisdiction.
As security to the BUYER, the SELLER shall deliver to the BUYER, within Thirty (30) days following the execution of this Contract, a Refund Guarantee to be issued by either Bank of China or China CITIC Bank, or Industrial and Commercial Bank of China or The Export-Import Bank of China, at SELLER’s sole direction, (hereinafter called the “Refund Guarantor”) in the form as per Exhibit “A” annexed hereto.
However, in the event of any dispute between the SELLER and the BUYER with regard to the SELLER’s obligation to repay the installment or installments paid by the BUYER and to the BUYER’S right to demand payment from the Refund Guarantor, under its guarantee, and such dispute is submitted either by the SELLER or by the BUYER for arbitration in accordance with Article XIII hereof, the Refund Guarantor shall withhold and defer payment until the final arbitration award between the SELLER and the BUYER is published. The Refund Guarantor shall not be obligated to make any payment unless the final arbitration award orders the SELLER to make repayment. If the SELLER fails to honour the award within 45 days, then the Refund Guarantor shall refund to the extent the final arbitration award orders.
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ARTICLE III ADJUSTMENT OF THE CONTRACT PRICE
The Contract Price of the VESSEL shall be subject to adjustments as hereinafter set forth. It is hereby understood by both parties that any reduction of the Contract Price is by way of liquidated damages and not by way of penalty.
1. DELIVERY
(a)
No adjustment shall be made, and the Contract Price shall remain unchanged for the thirty (30) days of delay in delivery of the VESSEL beyond the Delivery Date as defined in Article VII hereof ending as of twelve o’clock midnight (Beijing time) of the thirtieth (30
th
) day of delay.
(b)
If the delivery of the VESSEL is delayed more than thirty (30) days after the date as defined in Article VII hereof, then, in such event, beginning at twelve o’clock midnight (Beijing time) of the thirtieth (30
th
) day after the date on which delivery is required under this Contract, the Contract Price of the VESSEL shall be reduced by deducting therefrom the sum of United States Dollars Sixteen Thousand Only (US$ 16,000.00) per day.
Unless the parties hereto agree otherwise, the total reduction in the Contract Price shall be deducted from the fifth instalment of the Contract Price and in any event (including the event that the BUYER consents to take the VESSEL at the later delivery date after the expiration of Two Hundred and ten (210) days delay of delivery as described in Paragraph 1(c) of this Article or Paragraph3 of Article VIII) shall not be more than One Hundred and Eighty (180) days at the above specified rate of reduction after the thirty (30) days allowance, that is United States Dollars Two Million Eight Hundred and Eighty Thousand Only (U.S.$ 2,880,000.00) being the maximum.
(c)
If the delay in the delivery of the VESSEL continues beyond the period of Two Hundred and Ten (210) days (being the total non-permissible delays and Thirty (30) days allowance) after the Delivery Date (as defined in Article VII), then in such event, the BUYER may, at its option, rescind or cancel this Contract in accordance with the provisions of Article X of this Contract. The SELLER may at any time after the expiration of the aforementioned Two Hundred and ten (210) days, if the BUYER has not served notice of cancellation pursuant to Article X, notify the BUYER of the date upon which the SELLER estimates the VESSEL will be ready for delivery and demand in writing that the BUYER make an election, in which case the BUYER shall, within thirty (30) days after such demand is received by the BUYER, either notify the SELLER of its decision to cancel this Contract, or consent to take delivery of the VESSEL at an agreed future date, it being understood and agreed by the parties hereto that, if the VESSEL is not delivered by such future date, the BUYER shall have the same right of cancellation upon the same terms, as hereinabove provided.
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In the case the BUYER, within Thirty (30) days after such demand is received by the BUYER, fails to notify the SELLER of its decision to cancel this Contract, or consent to take delivery of the VESSEL at an agreed future date, it shall be deemed that the BUYER has consented to take delivery of the VESSEL at SELLER’s estimated date.
(d)
For the purpose of this Article III only, the delivery of the VESSEL shall not be deemed delayed and the Contract Price shall not be reduced when and if the Delivery Date of the VESSEL is extended by reason of causes and provisions of Articles V, VI.1, XI, XII.2, XIII.7 hereof. The Contract Price shall not be adjusted or reduced if the delivery of the VESSEL is delayed by reason of permissible delays as defined in Article VIII hereof.
2. INSUFFICIENT SPEED
(a)
The Contract Price of the VESSEL shall not be affected nor changed by reason of the actual speed (as determined by the Trial Run after correction according to the Specifications) being less than three tenths (3/10) of one knot below the guaranteed speed as specified in Paragraph 4 of Article I of this Contract.
(b)
However, commencing with and including a deficiency of three tenths (3/10) of one knot in actual speed (as determined by the Trial Run after correction according to the Specifications) below the guaranteed speed as specified in Paragraph 4, Article I of this Contract, the Contract Price shall be reduced as follows:
In case of deficiency
at or above 0.30 but below 0.40 knot US$ 150,000.00
at or above 0.40 but below 0.50 knot US$ 300,000.00
at or above 0.50 but below 0.60 knot US$ 450,000.00
at or above 0.60 but below 0.70 knot US$ 600,000.00
at or above 0.70 but below 0.80 knot US$ 750,000.00
(c)
If the deficiency in actual speed (as determined by the Trial Run after correction according to the Specifications) of the VESSEL upon the Trial Run, is more than 0.80 knot below the guaranteed speed of 15.5 knots, then the BUYER may at its option reject the VESSEL and rescind or cancel this Contract in accordance with provisions of Article X of this Contract, or may accept the VESSEL at a reduction in the Contract Price as above provided, by United States Dollars Seven Hundred and Fifty Thousand only (US$750,000.00) being the maximum.
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3. EXCESSIVE FUEL CONSUMPTION
(a)
The Contract Price of the VESSEL shall not be affected nor changed if the actual fuel consumption of the Main Engine, as determined by shop trial in manufacturer’s works, as per the Specifications, is greater than the guaranteed fuel consumption as specified and required under the provisions of this Contract and the Specifications if such actual excess is equal to or less than Five percent (5%) (such threshold being 166.74 grams/brake horse power/hour, being 5% above 158.8 grams/brake horse power/hour).
(b)
However, if the actual fuel consumption as determined by shop trial is greater than Five percent (5%) above the guaranteed fuel consumption then, the Contract Price shall be reduced by the sum of United States Dollars One Hundred and Thirty Five Thousand Only (US$135,000.00) for each full one percent (1%) increase in fuel consumption in excess of the above said Five percent (5%) (fractions of one percent to be prorated).
(c)
If as determined by shop trial such actual fuel consumption of the Main Engine is more than ten percent (10%) in excess of the guaranteed fuel consumption, i.e. the fuel consumption exceeds 174.68 grams/brake horse power/hour (being 10% above 158.8 grams/brake horse power/hour), the BUYER may, subject to the BUILDER’s right to effect alterations of corrections as specified in the following sub-paragraph of Article III 3 (c) hereof at its option, rescind or cancel this Contract, in accordance with the provisions of Article X of this Contract or may accept the VESSEL at a reduction in the Contract Price by United States Dollars Six Hundred and Seventy Five Thousand Only (US$675,000.00) being the maximum.
If as determined by shop trial such actual fuel consumption of the Main Engine is more than ten percent (10%) in excess of the guaranteed fuel consumption, i.e. the fuel consumption exceeds 174.68 grams/brake horse power/hour, the BUILDER may investigate the cause of the non-conformity and the proper steps may promptly be taken to remedy the same and to make whatever corrections and alterations and / or re-shop trial test or tests as may be necessary to correct such non-conformity without extra cost to the BUYER. Upon completion of such alterations or corrections of such nonconformity, the BUILDER shall promptly perform such further shop trials or any other tests, as may be deemed necessary to prove the fuel consumption of the Main Engine’s conformity with the requirement of this Contract and the Specifications and if found to be satisfactory, give the BUYER notice by telefax and/or e-mail of such correction and as appropriate, successful completion accompanied by copies of such results, and the BUYER shall, within six (6) Business Days after receipt of such notice, notify the BUILDER by telefax and/or e-mail of its acceptance or reject the re-shop trial together with the reasons therefor. If the BUYER fails to notify the BUILDER by telefax and/or e-mail of its acceptance or rejection of the re-shop trial together with the reasons therefor within six (6) Business Days period as provided herein, the BUYER shall be deemed to have accepted the shop trial.
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4. DEADWEIGHT
(a)
In the event that there is a deficiency in the actual deadweight of the VESSEL determined as provided in the Specifications, the Contract Price shall not be decreased if such deficiency is Three Thousand (3,000) metric tons or less below the guaranteed deadweight of 300,000 metric tons at assigned designed draft.
(b)
However, the Contract Price shall be decreased by the sum of United States Dollars Seven Hundred Only (US$700.00) for each full metric ton of such deficiency being more than Three Thousand and One Hundred (3,100) metric tons.
(c)
In the event that there should be a deficiency in the VESSEL’s actual deadweight which exceeds Six thousand and One Hundred (6,100) metric tons below the guaranteed deadweight, the BUYER may, at its option, reject the VESSEL and rescind or cancel this Contract in accordance with the provisions of Article X of this Contract, or may accept the VESSEL with reduction in the Contract Price in the maximum amount of United States Dollars Two Million One Hundred Thousand only (US$2,100,000.00).
5. EFFECT OF RESCISSION OR CANCELLATION
It is expressly understood and agreed by the parties hereto that in any case as stated herein, if the BUYER rescinds or cancels this Contract pursuant to any provision under this Article, the BUYER, save for its rights and remedy set out in Article X hereof, shall not be entitled to any liquidated damages or compensation whether described above or otherwise.
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ARTICLE IV SUPERVISION AND INSPECTION
1. APPOINTMENT OF THE BUYER’S REPRESENTATIVES
The BUYER shall send in good time to and maintain at the BUILDER’s Shipyard, at the BUYER’s own cost and expense, one or more representative(s) who shall be duly accredited and authorized in writing by the BUYER (such representative(s) being hereinafter collectively and individually called the “BUYER’S REPRESENTATIVES”) to supervise and survey the construction by the BUILDER of the VESSEL, her engines and accessories. The SELLER hereby warrants that, the necessary invitation letter for the BUYER’S REPRESENTATIVES to enter China will be issued in order on demand and without delay provided that the BUYER’S REPRESENTATIVES meets with the rules, regulations and laws of the People’s Republic of China. The BUYER undertakes to give the SELLER adequate notice for the application of invitation letter.
2. COMMENTS TO PLANS AND DRAWINGS
The parties hereto shall, within Thirty (30) days after signing of this Contract, mutually agree a list of all the plans and drawings, which are to be sent to the BUYER (hereinafter called “the LIST”) along with a schedule of anticipated dates when these will be dispatched as per BUILDER’s estimation, which may be subject to change by the BUILDER. Before arrival of the BUYER’S REPRESENTATIVES at the BUILDER’s Shipyard, the plans and drawings specified in the LIST shall be sent to the BUYER, and the BUYER shall, within Fourteen (14) working days after receipt thereof (excluding mailing time), return such plans and drawings submitted by the SELLER with comments, if any. Notwithstanding the above, the BUYER shall nevertheless waive its right to comment on the plans and drawings if such plans and drawings have been previously applied to build other vessels with the same specification as that of the VESSEL.
When and if the BUYER’S REPRESENTATIVES shall have been sent by the BUYER to the BUILDER in accordance with paragraph 1 of this Article, the BUYER’S REPRESENTATIVES shall approve the plans and drawings submitted to him by the SELLER according to the List of plans and drawings agreed upon by both parties unless otherwise agreed upon between the parties hereto. The BUYER’S REPRESENTATIVES shall within three (3) Business Days after receipt hereof, return to the BUILDER two (2) copies of such plans and drawings with approval or comments, if any, written thereon.
If the comments made by the BUYER or the BUYER’S REPRESENTATIVES are not clearly specified or detailed, the BUILDER shall seek the BUYER’s clarification in writing. Should the BUYER or the BUYER’S REPRESENTATIVES not answer such request within reasonable time (minimum being three working days) of the request then the
14
BUILDER should be entitled to place its own reasonable interpretation on the comments of the BUYER in implementing same.
In the event that the BUYER or the BUYER’S REPRESENTATIVES shall fail to give comments or return the plans and drawings to the BUILDER within the time limit as herein provided, such plans and drawings shall be deemed have been automatically approved or confirmed without any comment.
3. SUPERVISION AND INSPECTION BY THE BUYER’S REPRESENTATIVES
The necessary inspection of the VESSEL, its machinery, equipment and outfittings shall be carried out by the Classification Society, and/or inspection team of the BUILDER throughout the entire period of construction in order to ensure that the construction of the VESSEL is duly performed in accordance with the Contract and Specifications.
The BUYER’S REPRESENTATIVES shall have, at all times until delivery of the VESSEL, the right to attend tests according to the mutually agreed test list and inspect the VESSEL, her engines, accessories and materials at the BUILDER’s Shipyard, its subcontractors or any other place where work is done or materials stored in connection with the VESSEL. In the event that the BUYER’S REPRESENTATIVES discovers any construction or material or workmanship which does not or will not conform to the requirements of this Contract and the Specifications, the BUYER’S REPRESENTATIVES shall promptly give the BUILDER a notice in writing as to such nonconformity, upon receipt of which the BUILDER shall correct such nonconformity if the BUILDER agrees with the BUYER. In any circumstances, the SELLER shall be entitled to proceed with the construction of the VESSEL even if there exists discrepancy in the opinion between the BUYER and the SELLER, without however prejudice to the BUYER’s right for submitting the issue for determination by the Classification Society or arbitration in accordance with the provisions hereof. However the BUYER undertakes and assures the SELLER that the BUYER’S REPRESENTATIVES shall carry out his inspections and supervision in accordance with the agreed inspection procedure, SELLER’s working schedule and usual shipbuilding practice and in a way as to minimize any increase in building costs and delays in the construction of the VESSEL. Once an inspection and/or test has been witnessed and approved by the BUYER’S REPRESENTATIVES, the same inspection and/or test should not have to be repeated, provided it has been carried out in compliance with the requirements of the Classification Society and Specifications.
The BUILDER agrees to furnish free of charge the BUYER’S REPRESENTATIVES with office space, and other reasonable facilities including air conditioning, internet connection
15
and public toilets according to BUILDER’s practice at the Shipyard. But the fees for the communication like telephone, telefax and internet, etc. shall be borne by the BUYER. At all times, during the construction of the VESSEL until delivery thereof, the BUYER’S REPRESENTATIVES shall be given free and ready access to the VESSEL, her engines and accessories, and to any other place where the work is being done, or the materials are being processed or stored, in connection with the construction of the VESSEL, including the yards, workshops, stores of the BUILDER, and the premises of subcontractors of the BUILDER, who are doing work, or storing materials in connection with the VESSEL’s construction. The travel expenses for the said access to SELLER’s subcontractors outside of Shanghai shall be at BUYER’s account. The transportation within Shanghai for BUYER’S REPRESENTATIVES to get access to the inspection and/or test shall be provided to the BUYER’S REPRESENTATIVES by the SELLER.
The BUYER undertakes to maintain sufficient number of the BUYER’S REPRESENTATIVES at the BUILDER’s yard throughout the period of construction of the VESSEL so as to meet the BUILDER’s requirements for inspection, survey and/or attendances of tests and/or trials. The BUYER will use best endeavours to ensure that BUYER’S REPRESENTATIVES perform any inspections, surveys and attendances at tests and/or trials in all circumstances, including where such inspections, surveys and test/trial attendances are required during the weekend (Saturday and Sunday) or any public holiday.
Should the BUYER’S REPRESENTATIVES fail to conduct any inspection or attend any test (after reasonably advance and written notice by the BUILDER of the same, except in the case of re-inspection where oral notice shall be sufficient) due to whatever reason, the BUILDER shall be entitled to carry out the construction and/or test without inspection and/or attendance of BUYER’S REPRESENTATIVES and such work so carried out shall be treated as approved by the BUYER’S REPRESENTATIVES.
The BUILDER is responsible for providing that a safe working environment and proper access is provided to the works and/or areas of inspection.
The decision, approval or advice of the BUYER’S REPRESENTATIVES shall be deemed to have been given by the BUYER and once given shall not be withdrawn, revoked or modified except with consent of the BUILDER. However, if the BUYER’S REPRESENTATIVES fail to submit to the BUILDER without delay any demand concerning alterations or changes with respect to the building, arrangement or outfit of the VESSEL, her engines or accessories, or any other items or matters in connection herewith, which the BUYER’S REPRESENTATIVES have examined or inspected or attended at the tests thereof under this Contract or the Specifications, the BUYER’S REPRESENTATIVES shall be deemed to have approved the same and shall be precluded from making any demand for alterations, changes or other complaints with respect thereto at a later date.
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4. LIABILITY OF THE SELLER
The BUYER’S REPRESENTATIVES engaged by the BUYER under this Contract shall at all times be deemed to be in the employ of the BUYER. The SELLER shall be under no liability whatsoever to the BUYER, or to the BUYER’S REPRESENTATIVES or the BUYER’s employees or agents for personal injuries, including death, during the time when they, or any of them, are on the VESSEL, or within the premises of either the SELLER or its subcontractors, or are otherwise engaged in and about the construction of the VESSEL, unless, however, such personal injuries, including death, were caused by gross negligence of the SELLER, or of any of the SELLER’s employees or agents or subcontractors of the SELLER. Nor shall the SELLER be under any liability whatsoever to the BUYER for damage to, or loss or destruction of property in China of the BUYER or of the BUYER’S REPRESENTATIVES or of the BUYER’s employees or agents, unless such damage, loss or destruction was caused by gross negligence of the SELLER, or of any of the employees, or agents or subcontractors of the SELLER. The BUYER’S REPRESENTATIVES or his assistants or employees shall observe the work’s rules and regulations prevailing at the BUILDER’s and its subcontractor’s premises.
5. SALARIES AND EXPENSES
All salaries and expenses of the BUYER’S REPRESENTATIVES, or any other employees employed by the BUYER under this Article, shall be for the BUYER’s account.
6. REPLACEMENT OF BUYER’S REPRESENTATIVES
The SELLER has the right to request the BUYER in writing to replace any of the BUYER’S REPRESENTATIVES who is deemed unsuitable and unsatisfactory for the proper progress of the VESSEL’s construction together with reasons. The BUYER shall investigate the situation by sending its representative to the Builder’s yard, if necessary, and if the BUYER considers that such SELLER’s request is justified and reasonable, the BUYER shall effect the replacement as soon as conveniently arrangeable.
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ARTICLE V MODIFICATION,CHANGES AND EXTRAS
1. HOW EFFECTED
The Specifications and Plans in accordance with which the VESSEL is constructed, may be modified and/or changed at any time hereafter by written agreement of the parties hereto, provided that such modifications and/or changes or an accumulation thereof will not, in the BUILDER’s reasonable judgment, adversely affect the BUILDER’s other commitments and provided further that the BUYER shall assent to adjustment of the Contract Price, time of delivery of the VESSEL and other terms of this Contract, if any, as hereinafter provided. Subject to the above, the SELLER hereby agree to exert their best efforts to accommodate such reasonable requests by the BUYER so that the said changes and/or modifications may be made at a reasonable cost and within the shortest period of time which is reasonable and possible. Any such agreement for modifications and/or changes shall include an agreement as to the increase or decrease, if any, in the Contract Price of the VESSEL together with an agreement as to any extension or reduction in the time of delivery, providing to the SELLER additional securities satisfactory to the SELLER (and an increased guarantee from Navig8 Crude Tankers Inc shall be deemed satisfactory security), or any other alterations in this Contract, or the Specifications occasioned by such modifications and/or changes. The aforementioned agreement to modify and/or to change the Specifications may be effected by an exchange of duly authenticated letters, or telefax, or e-mail, manifesting such agreement. The letters, telefaxes and emails exchanged by the parties hereto pursuant to the foregoing shall constitute an amendment of the Specifications under which the VESSEL shall be built, and such letters, emails and telefaxes shall be deemed to be incorporated into this Contract and the Specifications by reference and made a part hereof. Upon consummation of the agreement to modify and/or to change the Specifications, the SELLER shall alter the construction of the VESSEL in accordance therewith, including any additions to, or deductions from, the work to be performed in connection with such construction. If due to whatever reasons, the parties hereto shall fail to agree on the adjustment of the Contract Price or extension of time of delivery or providing additional security to the SELLER or modification of any terms of this Contract which are necessitated by such modifications and/or changes, then the SELLER shall have no obligation to comply with the BUYER’s request for any modification and/or changes.
The BUILDER may make minor changes to the Specifications, if found necessary for introduction of improved production methods or otherwise, provided that the BUILDER shall first obtain the BUYER’s written approval which shall not be unreasonably withheld. Any costs associated with such minor changes shall not affect the Contract Price nor the Delivery Date unless mutually agreed.
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2. CHANGES IN RULES AND REGULATIONS, ETC.
(1)
If, after the date of signing of this Contract, any requirements as to the rules and regulations as specified in this Contract and the Specifications to which the construction of the VESSEL is required to conform, are altered or changed by the Classification Society or the other regulatory bodies authorized to make such alterations or changes, the SELLER and/or the BUYER, upon receipt of the notice thereof, shall transmit such information in full to each other in writing, whereupon within twenty- one (21) days after receipt of the said notice by the BUYER from the SELLER or vice versa, the BUYER shall instruct the SELLER in writing as to the alterations or changes, if any, to be made in the VESSEL which the BUYER, in its sole discretion, shall decide. The SELLER shall promptly comply with such alterations or changes, if any in the construction of the VESSEL, provided that the BUYER shall first agree:
(a) As to any increase or decrease in the Contract Price of the VESSEL that is occasioned by the cost for such compliance; and/or
(b) As to any extension in the time for delivery of the VESSEL that is necessary due to such compliance; and/or
(c) As to any increase or decrease in the guaranteed deadweight and speed of the VESSEL, if such compliance results in increased or reduced deadweight and speed; and/or
(d) As to any other alterations in the terms of this Contract or of Specifications or both, if such compliance makes such alterations of the terms necessary.
(e) If the price is to be increased, then, in addition, as to providing to the SELLER additional securities satisfactory to the SELLER and which shall be satisfied by the provision of an increased guarantee from Navig8 Crude Tankers Inc.
Agreement as to such alterations or changes under this Paragraph shall be made in the same manner as provided above for modifications and/or changes of the Specifications and/or Plans.
(2)
If, due to whatever reasons, the parties shall fail to agree on the adjustment of the Contract Price or extension of the time for delivery or increase or decrease of the guaranteed speed and deadweight or providing additional security to the SELLER or any alternation of the terms of this Contract, if any, then, the SELLER shall be entitled to proceed with the construction of the VESSEL in accordance with, and the BUYER shall continue to be bound by, the terms of this Contract and Specifications without making any such alterations or changes.
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If the alterations or changes are compulsorily required to be made by Class or IMO rules, then, notwithstanding any dispute between the parties relating to the adjustment of the Contract Price or extension of the time for delivery or decrease of the guaranteed speed and deadweight or increase fuel oil consumption or any other respect, the SELLER shall promptly comply with such alterations or changes first. The BUYER shall, in any event, bear the costs and expenses for such alterations or changes (with, in the absence of mutual agreement, the amount thereof and/or any other discrepancy such as but not limited to the extension of Delivery Date, etc. to be determined by arbitration in accordance with Article XIII of this Contract).
3. SUBSTITUTION OF MATERIALS AND/OR EQUIPMENT
In the event any of the materials and/or equipment required by the Specifications or otherwise under this Contract for the construction of the VESSEL cannot be procured in time to effect delivery of the VESSEL, the SELLER may, provided the SELLER shall provide adequate evidence and the BUYER so agrees in writing, supply other materials and/or equipment of the equivalent quality, capable of meeting the requirements of the Classification Society and of the rules, regulations, requirements and recommendations with which the construction of the VESSEL must comply.
4. BUYER’S SUPPLIED ITEMS
The BUYER shall deliver to the SELLER at its shipyard the items as specified in the Specifications which the BUYER shall supply on BUYER’S account (the “BUYER’s Supplied Items”) by the time designated by the SELLER. SELLER will give reasonable advance notice to BUYER in order to allow BUYER to get these items in the shipyard for the time they are required.
Should the BUYER fail to deliver to the BUILDER such BUYER’s Supplied Items within the time specified, the delivery of the VESSEL shall automatically be extended for a period of such delay, provided such delay in delivery of the BUYER’s Supplied Items shall affect the delivery of the VESSEL. In such event, the BUYER shall pay to the SELLER all losses and damages sustained by the SELLER due to such delay in the delivery of the BUYER’s Supplied Items and such payment shall be made upon delivery of the VESSEL.
Furthermore, if the delay in delivery of the BUYER’s Supplied Items should exceed twenty (20) days, the SELLER shall be entitled to proceed with construction of the VESSEL without installation of such items in or onto the VESSEL, without prejudice to the SELLER’s right hereinabove provided, and the BUYER shall accept the VESSEL so completed.
The BUILDER shall be responsible for proper storage and handling with
20
reasonable care of the BUYER’s Supplied Items as specified in the Specifications after delivery to the BUILDER and shall procure that at all times the BUYER’s supplies are identified as being the property of the BUYER. The BUILDER shall install BUYER’s Supplied Items on board the VESSEL at the BUILDER’s expenses. In order to facilitate installation by the BUILDER of the BUYER’S Supplied Items in or on the VESSEL, the BUYER shall furnish the BUILDER with the necessary specifications, plans, drawings, instruction books, manuals, test reports and certificates required by the rules and regulations of the Specifications. If so requested by the BUILDER, the BUYER shall, without any charge to the BUILDER, cause the representatives of the manufacturers of the BUYER’s Supplied Items to assist the BUILDER in installation thereof in or on the VESSEL and/or to carry out installation thereof by themselves or to make necessary adjustments at the BUILDER’s Shipyard.
Upon arrival of such shipment of the BUYER’s Supplied Items, both parties shall undertake a joint unpacking inspection. If any damages are found to be not suitable for installation, the BUILDER shall be entitled to refuse to accept such BUYER’s Supplied Items.
The SELLER shall not be responsible for the quality, performance or efficiency of any equipment supplied by the BUYER and is under no obligation with respect to the guarantee of such equipment against any defects caused by poor quality, performance or efficiency thereof.
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ARTICLE VI TRIALS
1. NOTICE
(a)
The SELLER shall give NOTICE to the BUYER and BUYER’s Representative in writing at least fifteen (15) days’ notice in advance and seven (7) days definite notice in advance in writing or by telefax or e-mail, of the time and place of the VESSEL’s sea trial as described in the Specifications (hereinafter referred to as “the Trial Run”) and the BUYER and the BUYER’S REPRESENTATIVES shall promptly acknowledge receipt of such notice. The BUYER’S REPRESENTATIVES shall be on board the VESSEL to witness such Trial Run, and to check upon the performance of the VESSEL during the same. Failure to attend the trial run of the VESSEL by the BUYER’S REPRESENTATIVES shall have the effect to extend the date for delivery of the VESSEL by the period of delay caused by such failure to be present. However, if the Trial Run is delayed more than seven (7) days by reason of the failure of the BUYER’s representatives to be present after receipt of due notice as provided above, then in such event the non-attendance shall be deemed to be a waiver by the BUYER of its right to have its representative on board the VESSEL at the trial run, and the BUILDER may conduct such Trial Run without the BUYER’S REPRESENTATIVES being present, and in such case the BUYER shall be obliged to accept the VESSEL on the basis of a certificate jointly signed by the BUILDER and the Classification Society certifying that the VESSEL, after Trial Run subject to minor alterations and corrections as provided in this Article, if any, is found to conform to the Contract and Specifications. The SELLER hereby warrants that the necessary invitation letter for the BUYER’S REPRESENTATIVES to enter China will be issued in order on demand and without delay otherwise the Trial Run shall be postponed until after the BUYER’S REPRESENTATIVES have arrived at the BUILDER’s Shipyard and any delays as a result thereof shall not count as a permissible delay under Article VIII thereof. However, should the nationalities and other personal particulars of the BUYER’S REPRESENTATIVES be not acceptable to the SELLER in accordance with its best understanding of the relevant rules, regulations and/or Laws of the People’s Republic of China then prevailing, then the BUYER shall, on the SELLER’s telefax or e-mail demand, effect replacement of all or any of them immediately. Otherwise the Delivery Date as stipulated in Article VII hereof shall be extended by the delays so caused by the BUYER.
(b)
In the event of unfavorable weather on the date specified for the Trial Run, the same shall take place on the first available day thereafter that the weather conditions permit. The parties hereto recognize that the weather conditions in Chinese waters in which the Trial Run is to take place are such that great changes in weather may arise momentarily and without warning and, therefore, it is agreed that if during the Trial Run of the VESSEL, the weather should suddenly become unfavorable, as would have precluded
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the continuance of the Trial Run, the Trial Run of the VESSEL shall be discontinued and postponed until the first favorable day next following, unless the BUYER shall assent by telefax or e-mail and confirm in writing of its acceptance of the VESSEL on the basis of the Trial Run made prior to such sudden change in weather conditions. In the event that the Trial Run is postponed because of unfavorable weather conditions, such delay shall be regarded as a permissible delay, as specified in Article VIII hereof. For the purposes of this paragraph 1(b), unfavorable weather conditions shall be taken as (i) Beaufort Scale Force 6 and above or (ii) when the MSA (Maritime Safety Administration) does not permit the sea trial to proceed.
2. HOW CONDUCTED
(a)
All expenses in connection with Trial Run of the VESSEL are to be for the account of the BUILDER, who, during the Trial Run and when subjecting the VESSEL to Trial Run, is to provide, at its own expense, the necessary crew to comply with conditions of safe navigation. The Trial Run shall be conducted in the manner prescribed in the Specifications.
The course of Trial Run shall be determined by the BUILDER and shall be conducted within the trial basin equipped with speed measuring facilities.
(b)
The BUILDER shall provide the VESSEL with the required quantities of water and fuel oil with exception of lubrication oil, greases and hydraulic oil which shall be supplied by the BUYER for the conduct of the Trial Run or Trial Runs as prescribed in the Specifications. The fuel oil supplied by the SELLER, and lubricating oil, greases and hydraulic oil supplied by the BUYER shall be in accordance with the applicable engine specifications, and the cost of the quantities of water, fuel oil, lubricating oil, hydraulic oil and greases consumed during the Trial Run or Trial Runs shall be for the account of the BUILDER.
3. TRIAL LOAD DRAFT
In addition to the supplies provided by the BUYER in accordance with sub-paragraph (b) of the preceding Paragraph 2 hereof, the BUILDER shall provide the VESSEL with the required quantity of fresh water and other stores necessary for the conduct of the Trial Run. The necessary ballast (fresh and sea water and such other ballast as may be required) to bring the VESSEL to the trial load draft as specified in the Specifications, shall be for the BUILDER’s account.
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4. METHOD OF ACCEPTANCE OR REJECTION
(a)
Upon notification of the BUILDER of the completion of the Trial Run of the VESSEL, the BUYER or the BUYER’S REPRESENTATIVES shall within six (6) days thereafter, notify the BUILDER by telefax or e-mail of its acceptance of the VESSEL or of its rejection of the VESSEL together with the reasons therefor.
(b)
However, should the result of the Trial Run indicate that the VESSEL or any part thereof including its equipment does not conform to the requirements of this Contract and Specifications, then the BUILDER shall investigate with the BUYER’S REPRESENTATIVES the cause of failure and the proper steps shall be taken to remedy the same and shall make whatever corrections and alterations and/or re-Trial Run or Runs as may be necessary without extra cost to the BUYER, and upon notification by the BUILDER of completion of such alterations or corrections and/or re-trial or re-trials, the BUYER shall, within six (6) days thereafter, notify the SELLER by telefax or e-mail of its acceptance of its VESSEL or of the rejection of the VESSEL together with the reason therefor on the basis of the alterations and corrections and/or re-trial or re-trials by the BUILDER.
(c)
In the event that the BUYER fails to notify the SELLER by telefax or e-mail of its acceptance or rejection of the VESSEL together with the reason therefor within six (6) Business Days period as provided for in the above sub- paragraphs (a) and (b), the BUYER shall be deemed to have accepted the VESSEL.
(d)
Any dispute arising among the parties hereto as to the result of any Trial Run or further tests or trials, as the case may be, of the VESSEL shall be solved by reference to arbitration as provided in Article XIII hereof.
(e)
Nothing herein shall preclude the BUYER from accepting the VESSEL with its qualifications and/or remarks following the Trial Run and/or further tests or trials as aforesaid.
5. DISPOSITION OF SURPLUS CONSUMABLE STORES
Should any amount of fuel oil, fresh water, or other unbroached consumable stores furnished by the BUILDER for the Trial Run or Trial Runs remain on board the VESSEL at the time of acceptance thereof by the BUYER, the BUYER agrees to buy the same from the SELLER at the actual invoiced price, and payment by the BUYER shall be effected as provided in Article II 3 (e) and 4 (e) of this Contract.
The BUYER shall supply lubricating oil, greases and hydraulic oil for the purpose of Trial Runs at its own expenses and the SELLER will reimburse for the amount of lubricating oil and hydraulic oil actually consumed for the said Trial Run or Trial Runs at the original price incurred by the BUYER and payment by the SELLER shall be effected as provided in
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Article II 3(e) and 4(e) of this Contract.
6. EFFECT OF ACCEPTANCE
The BUYER’s acceptance of the VESSEL by written or telefax, or e-mail notification sent to the SELLER, in accordance with the provisions set out above, shall be final and binding so far as conformity of the VESSEL to this Contract and the Specifications is concerned, and shall preclude the BUYER from refusing formal delivery by the SELLER of the VESSEL, as hereinafter provided, if the SELLER complies with all other procedural requirements for delivery as hereinafter set forth.
The BUYER shall not be entitled to reject the VESSEL (at the time of delivery) by reason of any minor or insubstantial non-conformity, or deficiencies of minor importance, which do not in any way affect the safety or the operation of the VESSEL, its crew, passengers or cargo, provided that:
i)
The SELLER shall for its own account remedy the deficiency and fulfill the requirements as soon as possible.
ii)
A list of such defect and non-conformities will be prepared by the parties immediately prior to the delivery of the VESSEL.
iii)
The SELLER shall pay BUYER upon delivery, the direct actual cost of rectification of minor deficiencies which in all events not exceeding the costs of a leading Chinese shipyard performing similar rectification of such deficiencies, if the rectification of such deficiencies affects the delivery schedule of the vessel. For the avoidance of doubt, the SELLER shall not be liable to the BUYER for the consequential and indirect costs (i.e. loss of time & loss of profit etc.).
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ARTICLE VII DELIVERY
1. TIME AND PLACE
The VESSEL shall be delivered safely afloat by the SELLER to the BUYER at the BUILDER’s Shipyard, in accordance with the Specifications and with all Classification and Statutory Certificates and after completion of Trial Run (or, as the case may be, re-Trial or re-Trials) and acceptance by the BUYER in accordance with the provisions of Article VI hereof on or before September 30
th
, 2016 provided that, in the event of delays in the construction of the VESSEL or any performance required under this Contract due to causes which under the terms of the Contract permit extension or postponement of the time for delivery, the aforementioned time for delivery of the VESSEL shall be extended accordingly.
The aforementioned date or such later date to which delivery is extended pursuant to the terms of this Contract is hereinafter called the “Delivery Date”.
2. WHEN AND HOW EFFECTED
Provided that the BUYER and the SELLER shall each have fulfilled all of their respective obligations as stipulated in this Contract, delivery of the VESSEL shall be effected forthwith by the concurrent delivery by each of the parties hereto, one to the other, of the Protocol of Delivery and Acceptance, acknowledging delivery of the VESSEL by the SELLER and acceptance thereof by the BUYER, which Protocol shall be prepared in quadruplicate and executed by each of the parties hereto.
3. DOCUMENTS TO BE DELIVERED TO THE BUYER
Upon acceptance of the VESSEL by the BUYER, the SELLER shall deliver to the BUYER the following documents (subject to the provision contained in Article VII hereof) which shall accompany the aforementioned Protocol of Delivery and Acceptance:
(a)
PROTOCOL OF TRIALS of the VESSEL made by the BUILDER pursuant to the Specifications.
(b)
PROTOCOL OF INVENTORY of the equipment of the VESSEL including spare part and the like, all as specified in the Specifications, made by the BUILDER.
(c)
PROTOCOL OF STORES OF CONSUMABLE NATURE made by the BUILDER referred to under Paragraph 5 of Article VI hereof.
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(d)
FINISHED DRAWINGS AND PLANS pertaining to the VESSEL as stipulated in the Specifications, made by the BUILDER.
(e)
PROTOCOL OF DEADWEIGHT AND INCLINING EXPERIMENT, made by the BUILDER
(f)
ALL CERTIFICATES required to be furnished upon delivery of the VESSEL pursuant to the Specifications.
Certificates shall be issued by relevant Authorities or Classification Society. The VESSEL shall comply with the above rules and regulations which are in force at the time of signing this Contract. All the certificates shall be delivered in one (1) original to the VESSEL and two (2) copies to the BUYER.
If the full term certificate or certificates are unable to be issued at the time of delivery by the Classification Society or any third party other than the BUILDER, then the provisional certificate or certificates as issued by The Classification Society or the third party other than the BUILDER with the full term certificates to be furnished by the BUILDER after delivery of the VESSEL and in any event before the expiry of the provisional certificates shall be acceptable to the BUYER.
(g)
DECLARATION OF WARRANTY issued by the SELLER that the VESSEL is delivered to the BUYER free and clear of any liens, charges, claims, mortgages, or other encumbrances upon the BUYER’s title thereto, and in particular, that the VESSEL is absolutely free of all burdens in the nature of imposts, taxes or charges imposed by the province or country of the port of delivery, as well as of all liabilities of the SELLER to its sub-contractors, employees and crews and/or all liabilities arising from the operation of the VESSEL in Trial Run or Trial Runs, or otherwise, prior to delivery.
(h)
COMMERCIAL INVOICE made by the SELLER.
(i)
BILL OF SALE made by the SELLER.
(j)
BUILDER’S Certificate made by the BUILDER.
4. TITLE AND RISK
Title to and risk of the VESSEL and her equipment (but excluding the BUYER’s supplies) shall pass to the BUYER only upon delivery and acceptance thereof. As stated above, it being expressly understood that, until such delivery and acceptance is effected, title to the VESSEL, and her equipment, shall remain at all times with the SELLER and are at the entire risk of the SELLER.
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5. REMOVAL OF VESSEL
The BUYER shall take possession of the VESSEL immediately upon delivery and acceptance thereof, and shall remove the VESSEL from the premises of the BUILDER within seven (7) days after delivery and acceptance thereof is effected. If the BUYER shall not remove the VESSEL from the premises of the BUILDER within the aforesaid seven (7) days, then, in such event, without prejudice to the SELLER’s right to require the BUYER to remove the VESSEL immediately at any time thereafter, the BUYER shall pay to the SELLER the reasonable mooring charge of the VESSEL.
6. TENDER OF THE VESSEL
If the BUYER fails to take delivery of the VESSEL after completion thereof according to this Contract and the Specifications without justified reason, the SELLER shall have the right to tender the VESSEL for delivery after compliance with all procedural requirements as above provided.
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ARTICLE VIII DELAYS & EXTENSION OF TIME FOR DELIVERY
1. CAUSE OF DELAY
If, at any time before actual delivery, either the construction of the VESSEL, or any performance required hereunder as a prerequisite of delivery of the VESSEL, is delayed due to war, blockade, revolution, insurrection, mobilization, civil commotions, riots, strikes, sabotage, lockouts, local temperature higher than Thirty Five (35) degree centigrade (but each day above 35 degree shall be counted as one half day each), Acts of God or the public enemy, terrorism, plague or other epidemics, quarantines, prolonged failure or restriction of electric current from an outside source, freight embargoes, if any, earthquakes, tidal waves, typhoons, hurricanes, storms or other causes beyond the control of the BUILDER or of its sub-contractors or its key equipment suppliers (i.e. being the suppliers of the main engine, propeller and gearbox etc), as the case may be, or by force majeure of any description, whether of the nature indicated by the forgoing or not, or by destruction of the premises of the BUILDER or works of the BUILDER or its sub-contractors or its key equipment suppliers (i.e. being the suppliers of the main engine, propeller and gearbox etc) or of the VESSEL or any part thereof, by fire, flood, or other causes beyond the control of the SELLER or its sub-contractors or its key equipment suppliers (i.e. main engine, propeller, gearbox etc) as the case may be, or due to the bankruptcy of the equipment and/or material supplier or suppliers (i.e. main engine, propeller, gearbox etc), or due to the delay caused by acts of God causing significant shortage in the supply of parts essential to the construction of the VESSEL, then, in the event of delay due to the happening of any of the aforementioned contingencies, the SELLER shall not be liable for such delay and the time for delivery of the VESSEL under this Contract shall be extended without any reduction in the Contract Price for a period of time which shall not exceed the total accumulated time of all such delays, subject nevertheless to the BUYER’s right of cancellation under Paragraph 3 of this Article and subject however to all relevant provisions of this Contract which authorize and permit extension of the time of delivery of the VESSEL, provided however that:
(i)
the delay in respect of which the BUILDER is claiming relief under this Article VIII.1 was not caused or contributed to by any intended act of the BUILDER;
(ii)
the delay event impacts upon the Vessel’s construction schedule and completion; and
(iii)
the BUILDER has taken reasonable steps to mitigate its effect upon the construction of the Vessel,
For the avoidance of doubt, where two delay events as described in this paragraph 1 occur simultaneously or overlap with each other, such delays caused by such events shall not be double-counted.
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2. NOTICE OF DELAY
Within twenty (20) days from the date of the SELLER becomes aware of the commencement of any delay on account of which the SELLER claims that it is entitled under this Contract to an extension of the time for delivery of the VESSEL, the SELLER shall advise the BUYER by telefax or e-mail, of the date such delay commenced, and the reasons therefor and, if possible, its estimated duration of the probable delay in the delivery of the VESSEL, and shall supply the BUYER with evidence to support the delay claimed.
Likewise within twenty (20) days after such delay ends, the SELLER shall advise the BUYER in writing or by telefax or e-mail, of the date such delay ended, and also shall specify the maximum period of the time by which the SELLER claims the date for delivery of the VESSEL should be extended by reason of such delay. Failure of the BUYER to acknowledge the SELLER’s notification of any claim for extension of the Delivery Date within ten (10) days after receipt by the BUYER of such notification, shall be deemed to be a waiver by the BUYER of its right to object to such extension.
Failure of the SELLER to give notice of any relevant delay event in excess of fifteen (15) days in accordance with this paragraph 2 shall be deemed a waiver of the SELLER’s right to postpone the DELIVERY DATE under this Article VIII in respect of such relevant delay event.
3. RIGHT TO CANCEL FOR EXCESSIVE DELAY
If (a) the total accumulated time of all delays on account of the causes specified in Paragraph 1 of this Article aggregate to two hundred and twenty-five (225) days or more, or (b) if the total accumulated time of all delays on account of the causes specified in Paragraph 1 of the Article and non-permissible delays as described in Paragraph 1 of Article III aggregate to two hundred and fifty-five (255) days or more, in any circumstances, excluding delays due to arbitration as provided for in Article XIII.7 hereof or due to default in performance by the BUYER, or due to delays in delivery of the BUYER’s Supplied Items, and excluding delays due to causes which, under Article V, VI.1, XI and XII.2(b) hereof, permit extension or postponement of the time for delivery of the VESSEL , then in such event, the BUYER may in accordance with the provisions set out herein rescind or cancel this Contract by serving upon the SELLER telefaxed or e-mailed notice of cancellation which shall be confirmed in writing and the provisions of Article X of this Contract shall apply. The SELLER may, at any time, after the accumulated time of the aforementioned delays justifying cancellation by the BUYER as above provided for, demand in writing that the BUYER shall make an election, in which case the BUYER shall, within thirty (30) days after such demand is received by the BUYER either notify the SELLER of its intention to cancel, or consent to an extension of the time for delivery to an agreed future date, it being understood and agreed by the parties hereto that, if any further delay occurs on account of causes justifying cancellation as specified in
30
this Contract, the BUYER shall have the same right of cancellation upon the same terms as hereinabove provided but in respect of the new agreed delivery date.
4. DEFINITION OF PERMISSIBLE DELAY
Delays on account of such causes as provided for in Paragraph 1 of this Article excluding any other extensions of a nature which under the terms of this Contract permit postponement of the Delivery Date, shall be understood to be (and are herein referred to as) permissible delays, and are to be distinguished from non-permissible delays on account of which the Contract Price of the VESSEL is subject to adjustment as provided for in Article III hereof. Notwithstanding any other stipulations of this Contract, the Parties hereby agree that a default in performance of BUYER or any breach of this Contract by BUYER or reasons attributable to the BUYER or the events described under Article V, VI.1, XI and XII.2(b) of this Contract shall entitle the SELLER to extend the Delivery Date. Such extension of the Delivery Date shall be regarded as mutually agreed change of Delivery Date and shall be distinguished from Permissible Delay and non-permissible delays.
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ARTICLE IX WARRANTY OF QUALITY
1. GUARANTEE OF MATERIAL AND WORKMANSHIP
The SELLER, for a period of twelve (12) months following delivery to the BUYER of the VESSEL, guarantees the VESSEL, her hull and machinery, her engine, and all parts and equipment thereof that are manufactured, furnished, supplied, or installed by the SELLER and/or its sub-contractors under this Contract including material, equipment (however excluding any parts for the VESSEL which have been supplied by the BUYER) against all defects which are due to defective materials, and/or poor workmanship.
Provided no additional cost occurs to the SELLER, the SELLER agrees that upon the expiry of this guarantee and upon request of the BUYER, it shall assign (to the extent to which it may validly do so) to the BUYER, all rights, title and interest that the SELLER may have in and to all guarantees or warranties given by the supplier (excluding the supplier of BUYER’s supplied item) of any of the appurtenances and materials used in the construction and/or operation of the VESSEL. The SELLER agrees to render to the BUYER reasonable assistance in making any claim or taking any action against any such supplier, which claim or action shall be made and/or taken at the BUYER’s sole expense. The BUYER shall meet all reasonable expenses incurred by the SELLER in rendering any assistance requested by the BUYER pursuant to this paragraph.
2. NOTICE OF DEFECTS
The BUYER shall notify the SELLER in writing, or by telefax or e-mail, as promptly as possible, after discovery of any defect or deviations for which a claim is made under this guarantee. The BUYER’s written notice shall describe the nature of the defect and the extent of the damage caused thereby. The SELLER shall have no obligation under this guarantee for any defects discovered prior to the expiry date of the guarantee, unless notice of such defects, is received by the SELLER not later than thirty (30) days after such expiry date. Telefaxed or e-mailed advice with brief details explaining the nature of such defect and extent of damage within thirty (30) days after such expiry date and that a claim is forthcoming will be sufficient compliance with the requirements as to time.
3. REMEDY OF DEFECTS
The SELLER shall remedy at its expense any defects, against which the VESSEL or any part of the equipment thereof is guaranteed under this Article by making all necessary repairs and/or replacement. Such repairs and/or replacement will be made by the SELLER. All parts
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and/or materials so repaired shall be guaranteed for a further period of six (6) months, but the total warranty period shall not exceed eighteen (18) months after delivery and acceptance of the VESSEL by the BUYER. In any case, the VESSEL shall be taken, at the BUYER’S cost and responsibility, to place elected, ready in all respects for such repairs or replacement.
However, if it is impractical to make the repair by the SELLER, and if forwarding by the SELLER of replacement parts, and materials cannot be accomplished without impairing or delaying the operation or working of the VESSEL, then, in any such event, the BUYER shall, cause the necessary repairs or replacements to be made elsewhere at the discretion of the BUYER provided that the BUYER shall first and in all events, will, as soon as possible, give the SELLER notice in writing, or by telefax or e-mail of the time and place such repairs will be made and, if the VESSEL is not thereby delayed, or her operation or working is not thereby delayed, or her operation or working is not thereby impaired, the SELLER shall have the right to verify by its own representative(s) or that of Classification Society the nature and extent of the defects complained of. The SELLER shall, in such cases, promptly advise the BUYER, by telefax or e-mail, after such examination has been completed, of its acceptance or rejection of the defects as ones that are subject to the guarantee herein provided.
In any circumstances as set out below, the SELLER shall immediately pay to the BUYER in United States Dollars by telegraphic transfer the actual cost for such repairs or replacements including forwarding charges, or, at the average cost for making similar repairs or replacements including forwarding charges as quoted by a leading shipyard each in China, South Korea and Singapore whichever is lower:
(a) Upon the SELLER’s acceptance of the defects as justifying remedy under this Article, or
(b) If the SELLER neither accepts nor rejects the defects as above provided, nor request arbitration within thirty (30) days after its receipt of the BUYER’s notice of defects.
Any dispute shall be referred to arbitration in accordance with the provisions of Article XIII hereof.
4. EXTENT OF THE SELLER’S LIABILITY
The SELLER shall have no obligation and/or liabilities with respect to defects discovered after the expiration of the period of guarantee as specified in Paragraph 1 of this Article.
The SELLER shall be liable to the BUYER for defects and damages caused by any of the defects specified in Paragraph 1 of this Article provided that such liability of the SELLER shall be limited to damage occasioned within the guarantee period specified in Paragraph 1 above. The SELLER shall not be obligated to repair, or to be liable for, damages to the VESSEL, or to any part of the equipment thereof, due to ordinary wear and tear or caused by the defects other than those specified in Paragraph 1 above, nor shall there be any SELLER’s
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liability hereunder for defects in the VESSEL, or any part of the equipment thereof, caused by fire or accidents at sea or elsewhere, or mismanagement, accidents, negligence, or willful neglect, on the part of the BUYER, its employees or agents including the VESSEL’s officers, crew and passengers, or any persons on or doing work on the VESSEL other than the SELLER, its employees, agents or sub-contractors. Likewise, the SELLER shall not be liable for defects in the VESSEL, or the equipment or any part thereof, due to repairs or replacement which were made by those other than the SELLER and/or their sub-contractors or which have not been carried out in accordance with the procedures set out in this Article.
Upon delivery of the VESSEL to the BUYER, in accordance with the terms of the Contract, the SELLER shall thereby and thereupon be released of all responsibility and liability whatsoever and howsoever arising under or by virtue of this Contract (save in respect of those obligations to the BUYER expressly provided for in this Article IX) including without limitation, any responsibility or liability for defective workmanship, materials or equipment, design or in respect of any other defects whatsoever and any loss or damage resulting from any act, omission or default of the SELLER. The SELLER shall, in no circumstances, be liable for any consequential loss or special loss, or expenses arising from any cause whatsoever including, without limitation, loss of time, loss of profit or earnings or demurrage directly from any commitments of the BUYER in connection with the VESSEL.
The Guarantee provided in this Article and the obligations and the liabilities of the SELLER hereunder are exclusive and in lieu of and the BUYER hereby waives all other remedies, warranties, guarantees or liabilities, express or implied, arising by Law or otherwise (including without limitation any obligations of the SELLER with respect to fitness, merchantability and consequential damages) or whether or not occasioned by the SELLER’s negligence. This Guarantee shall not be extended, altered or varied except by a written instrument signed by the duly authorized representatives of the SELLER, and the BUYER.
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ARTICLE X CANCELLATION, REJECTION AND RESCISSION BY THE BUYER
1.
All payments made by the BUYER prior to the delivery of the VESSEL shall be in the nature of advance to the SELLER. In the event the BUYER shall exercise its right of cancellation and/or rescission of this Contract under and pursuant to any of the provisions of this Contract specifically permitting the BUYER to do so, then the BUYER shall notify the SELLER in writing or by telefax or e-mail, and such cancellation and/or rescission shall be effective as of the date the notice thereof is received by the SELLER.
For the avoidance of doubt, the events and/or occurrences which entitle the BUYER to rescind and cancel the Contract shall be limited to those occurrences or events specified in this Contract which specifically permits the BUYER to do so. No other event or circumstance shall give rise to any right to the BUYER for rescission or cancellation of the Contract whether under this Contract or under any applicable laws.
2.
Thereupon the SELLER shall refund in United States dollars immediately to the BUYER the full amount of all sums paid by the BUYER to the SELLER on account of the VESSEL, unless the SELLER disputes the BUYER’s cancellation and/or rescission by instituting arbitration in accordance with Article XIII. If the BUYER’s cancellation or rescission of this Contract is disputed by the SELLER by instituting arbitration as aforesaid, then no refund shall be made by the SELLER, and the BUYER shall not be entitled to demand repayment from the Refund Guarantor under its guarantee, until the arbitration award between the BUYER and the SELLER, which shall be in favour of the BUYER, declaring the BUYER’s cancellation and/or rescission justified, is made and delivered to the SELLER by the arbitration tribunal. In the event that the SELLER is obligated to make refundment, the SELLER shall pay the BUYER interest in United States Dollars at the rate of six percent (6%) per annum, if the cancellation or rescission of the Contract is exercised by the BUYER in accordance with the provision of Article III 1(c), 2(c), 3(c) or 4(c) hereof, on the amount required herein to be refunded to the BUYER computed from the respective dates when such sums were received by Bank of China, New York Branch or any such other bank account as nominated by the SELLER pursuant to Article II 4(a), 4(b), 4(c) or 4(d) from the BUYER to the date of remittance by telegraphic transfer of such refund to the BUYER by the SELLER, provided, however, that if the said rescission by the BUYER is made by reason of Paragraph 1 of Article VIII or Paragraph 2 (b) of Article XII, then in such event the SELLER shall not be required to pay any interest.
It is hereby understood by both parties that payment of any interest provided herein is by way of liquidated damages due to cancellation of this CONTRACT.
If the SELLER is obligated by the terms of the Contract to refund to the BUYER the instalments paid by the BUYER to the SELLER as provided in this Paragraph, the BUYER’s supplied items shall be at BUYER’s disposal.
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3.
Upon such refund by the SELLER to the BUYER, all obligations, duties and liabilities of each of the parties hereto to the other under this Contract shall be forthwith completely discharged.
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ARTICLE XI BUYER’S DEFAULT
1. DEFINITION OF DEFAULT
The BUYER shall be deemed in default of its obligation under the Contract if any of the following events occurs:
(a)
The BUYER fails to pay the First or Second or Third or Fourth installment to the SELLER when any such installment becomes due and payable under the provisions of Article II hereof and provided the BUYER shall have received the SELLER’s demand for payment in accordance with Article II hereof; or
(b)
The BUYER fails to deliver to the SELLER an irrevocable and unconditional Letter of Guarantee under the provisions of Article II hereof; or
(c)
The BUYER fails to pay the fifth installment to the SELLER in accordance with Paragraph 3(e) and 4(e) of Article II hereof provided the BUYER shall have received the SELLER’s demand for payment in accordance with Article II hereof; or
(d)
The BUYER fails to take delivery of the VESSEL, when the VESSEL is duly tendered for delivery by the SELLER under the provisions of Article VII hereof.
2. NOTICE OF DEFAULT
If the BUYER is in default of payment or in performance of its obligations as provided hereinabove, the SELLER shall notify the BUYER to that effect by telefax or e-mail after the date of occurrence of the default as per Paragraph 1 of this Article and the BUYER shall forthwith acknowledge by telefax or E-mail to the SELLER that such notification has been received. In case the BUYER does not give the aforesaid telefax or E-mail acknowledgment to the SELLER within three (3) calendar days it shall be deemed that such notification has been duly received by the BUYER.
3. INTEREST AND CHARGE
(a)
If the BUYER is in default of payment as to any installment as provided in Paragraph 1 (a) and/or 1 (c) of this Article, the BUYER shall pay interest on such installment at the rate of six percent (6%) per annum until the date of the payment of the full amount, including all aforesaid interest. In case the BUYER shall fail to take delivery of the VESSEL when required to as provided in Paragraph 1 (d) of this Article, the BUYER shall be deemed in default of payment of the fifth installment and shall pay interest thereon at the same rate as aforesaid from and including the day on which the
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VESSEL is tendered for delivery by the SELLER, as provided in Article VII hereof.
(b)
In any event of default by the BUYER under 1 (a) or 1 (b) or 1 (c) or 1 (d) above, the BUYER shall also pay all costs, charges and expenses incurred by the SELLER in consequence of such default.
4. DEFAULT BEFORE DELIVERY OF THE VESSEL
(a)
If any default by the BUYER occurs as defined in Paragraph 1 (a) or 1 (b) or 1 (c) or 1 (d) of this Article, the Delivery Date shall be automatically postponed for a period of continuance of such default by the BUYER. In any event of default by the BUYER, the BUYER shall also pay all charges and expenses incurred by the BUILDER in consequence of such default.
(b)
If any such default as defined in Paragraph 1 (a) or 1 (b) or 1 (c) or 1 (d) of this Article committed by the BUYER continues for a period of fifteen (15) days, then, the SELLER shall have all following rights and remedies:
(i)
The SELLER may, at its option, cancel or rescind this Contract, provided the SELLER has notified the BUYER of such default pursuant to Paragraph 2 of this Article, by giving notice of such effect to the BUYER by telefax or e-mail. Upon receipt by the BUYER of such telefax or e-mail notice of cancellation or rescission, all of the BUYER’s Supplies shall forthwith become the sole property of the SELLER, and the VESSEL and all its equipment and machinery shall be at the sole disposal of the SELLER for sale or otherwise; and
(ii)
In the event of such cancellation or rescission of this Contract, the SELLER shall be entitled to retain any instalment or instalments of the Contract Price paid by the BUYER to the SELLER on account of this Contract; and
(iii)
(Applicable to any BUYER’s default defined in 1(a) of this Article) The SELLER shall, without prejudice to the SELLER’s right to recover from the BUYER the 5th instalment, interest, costs and/or expenses by applying the proceeds to be obtained by sale of the VESSEL in accordance with the provisions set out in this Contract, have the right to declare all unpaid 1st, 2nd, 3rd and 4th instalments to be forthwith due and payable, and upon such declaration, the SELLER shall have the right to immediately demand the payment of the aggregate amount of all unpaid 1st, 2nd, 3rd, and 4th instalments from the Payment Guarantor in accordance with the terms and conditions of the Payment Guarantee issued by the Payment Guarantor.
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5. SALE OF THE VESSEL
(a)
In the event of cancellation or rescission of this Contract as above provided, the SELLER shall have full right and power either to complete or not to complete the VESSEL as it deems fit, and to sell the VESSEL at a public or private sale on such terms and conditions as the SELLER thinks fit without being answerable for any loss or damage occasioned to the BUYER thereby.
In the case of sale of the VESSEL, the SELLER shall give telefax, or E-mail, or written notice to the BUYER.
(b)
In the event of the sale of the VESSEL in its completed state, the proceeds of sale received by the SELLER shall be applied firstly to payment of all expenses attending such sale and otherwise incurred by the SELLER as a result of the BUYER’s default, and then to payment of all unpaid installments and/or unpaid balance of the Contract Price and interest on such installment at the interest rate as specified in the relevant provisions set out above from the respective due dates thereof to the date of application.
(c)
In the event of the sale of the VESSEL in its incomplete state, the proceeds of sale received by the SELLER shall be applied firstly to all expenses attending such sale and otherwise incurred by the SELLER as a result of the BUYER’s default, and then to payment of all costs of construction of the VESSEL (such costs of construction, as herein mentioned, shall include but are not limited to all costs of labour and/or prices paid or to be paid by CSTC and/or the BUILDER for the equipment and/or technical design and/or materials purchased or to be purchased, installed and/or to be installed on the VESSEL) and/or any fees, charges, expenses and/or royalties incurred and/or to be incurred for the VESSEL less the installments so retained by the SELLER, and compensation to the SELLER for a reasonable sum of loss of profit due to the cancellation or rescission of this Contract.
(d)
In either of the above events of sale, if the proceed of sale exceeds the total of the amounts to which such proceeds are to be applied as aforesaid, the SELLER shall promptly pay the excesses to the BUYER without interest, provided, however that the amount of each payment to the BUYER shall in no event exceed the total amount of installments already paid by the BUYER and the cost of the BUYER’s Supplied Items, if any.
(e)
If the proceed of sale are insufficient to pay such total amounts payable as aforesaid, the BUYER shall promptly pay the deficiency to the SELLER upon request.
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ARTICLE XII INSURANCE
1. EXTENT OF INSURANCE COVERAGE
From the time of keel-laying of the first section of the VESSEL until the same is completed, delivered to and accepted by the BUYER, the SELLER shall, at its own cost and expense, keep the VESSEL and all machinery, materials, equipment, appurtenances and outfit, delivered to the BUILDER for the VESSEL or built into, or installed in or upon the VESSEL, including the BUYER’s Supplied Items, fully insured with first class Chinese insurance companies for BUILDER’s RISK.
The amount of such insurance coverage shall, up to the date of delivery of the VESSEL, be in an amount at least equal to, but not limited to, the aggregate of the payments made by the BUYER to the SELLER including the value of maximum amount of US$ 200,000.00 of the BUYER’s Supplied Items. The policy referred to hereinabove shall be taken out in the name of the SELLER and all losses under such policy shall be payable to the SELLER.
2. APPLICATION OF RECOVERED AMOUNT
(a) Partial Loss:
In the event the VESSEL shall be damaged by any insured cause whatsoever prior to acceptance and delivery thereof by the BUYER and in the further event that such damage shall not constitute an actual or a constructive total loss of the VESSEL, the SELLER shall apply the amount recovered under the insurance policy referred to in Paragraph 1 of this Article to the repair of such damage satisfactory to the Classification Society and other institutions or authorities as described in the Specifications without additional expenses to the BUYER, and the BUYER shall accept the VESSEL under this Contract if completed in accordance with this Contract and Specifications and not make any claim for any consequential loss or depreciation.
(b) Total Loss:
However, in the event that the VESSEL is determined to be an actual or constructive total loss, the SELLER shall either:
(i) By the mutual agreement between the parties hereto, proceed in accordance with terms of this Contract, in which case the amount recovered under said insurance policy shall be applied to the reconstruction and/or repair of the VESSEL’s damage and/or reinstallation of BUYER’s Supplied Items, provided the parties hereto shall have first agreed in writing as to such reasonable extension of the Delivery Date
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and adjustment of other terms of this Contract including the Contract Price as may be necessary for the completion of such reconstruction; or
(ii) If due to whatever reasons the parties fail to agree on the above, then the SELLER shall refund immediately to the BUYER the amount of all installments paid to the SELLER under this Contract without interest, whereupon this Contract shall be deemed to be canceled and all rights, duties, liabilities and obligations of each of the parties to the other shall terminate forthwith.
Within thirty (30) days after receiving telefax or e-mail notice of any damage to the VESSEL constituting an actual or a constructive total loss, the BUYER shall notify the SELLER in writing or by telefax or e-mail of its agreement or disagreement under this sub-paragraph. In the event the BUYER fails to so notify the SELLER, then such failure shall be construed as a disagreement on the part of the BUYER. This Contract shall be deemed as rescinded and canceled and Paragraph 2 (b) (ii) of this Article shall apply.
3. TERMINATION OF THE SELLER’S OBLIGATION TO INSURE
The SELLER’s obligation to insure the VESSEL hereunder shall cease and terminate forthwith upon delivery thereof to and acceptance by the BUYER.
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ARTICLE XIII DISPUTES AND ARBITRATION
1. PROCEEDINGS
In the event of any dispute between the parties hereto as to any matter arising out of or relating to this Contract or any stipulation herein or with respect thereto which cannot be settled by the parties themselves, such dispute shall be resolved by arbitration in London England in accordance with the Laws of England. Any arbitration of disputes under this Contract shall be conducted in accordance with the London Maritime Arbitrators’ Association Terms. Either party may demand arbitration of any such disputes by giving written notice to the other party. Any demand for arbitration by either party hereto shall state the name of the arbitrator appointed by such party and shall also state specifically the question or questions as to which such party is demanding arbitration. Within twenty (20) days after receipt of notice of such demand for arbitration, the other party shall in turn appoint a second arbitrator. The two arbitrators thus appointed shall thereupon select a third arbitrator, and the three arbitrators so named shall constitute the board of arbitration (hereinafter called the “Arbitration Board”) for the settlement of such dispute.
In the event however, that said other party should fail to appoint a second arbitrator as aforesaid within twenty (20) days following receipt of notice of demand of arbitration, it is agreed that such party shall thereby be deemed to have accepted and appointed as its own arbitrator the one already appointed by the party demanding arbitration, and the arbitration shall proceed forthwith before this sole arbitrator, who alone, in such event, shall constitute the Arbitration Board. And in the further event that the two arbitrators appointed respectively by the parties hereto as aforesaid should be unable to reach agreement on the appointment of the third arbitrator within twenty (20) days from the date on which the second arbitrator is appointed, either party of the said two arbitrators may apply to the President for the time being of the London Maritime Arbitrators Association to appoint the third arbitrator. The award of the arbitration, made by the sole arbitrator or by the majority of the three arbitrators as the case may be, shall be final, conclusive and binding upon the parties hereto.
2. ALTERNATIVE ARBITRATION BY AGREEMENT
Notwithstanding the preceding provisions of this Article, it is recognized that in the event of any dispute or difference of opinion arising in regard to the construction of the VESSEL, her machinery and equipment, or concerning the quality of materials or workmanship thereof or thereon, such dispute may be referred to the Classification Society upon mutual agreement of the parties hereto. In such case, the opinion of the Classification Society shall be final and binding on the parties hereto.
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3. NOTICE OF AWARD
Notice of any award shall immediately be given in writing or by telefax or e-mail to the SELLER and the BUYER.
4. EXPENSES
The Arbitration Board shall determine which party shall bear the expenses of the arbitration or the proportion of such expenses which each party shall bear.
5. AWARD OF ARBITRATION
Award of arbitration, shall be final and binding upon the parties concerned.
6. ENTRY IN COURT
Judgment on any award may be entered in any court of competent jurisdiction.
7. ALTERATION OF DELIVERY DATE
In the event of reference to arbitration of any dispute arising out of matters occurring prior to delivery of the VESSEL, the SELLER shall not be entitled to extend the Delivery Date as defined in Article VII hereof and the BUYER shall not be entitled to postpone its acceptance of the VESSEL on the Delivery Date or on such newly planned time of delivery of the VESSEL as declared by the SELLER. However, if the construction of the VESSEL is affected by any arbitration, the SELLER shall then be permitted to extend the Delivery Date as defined in Article VII and the decision or the award shall include a finding as to what extent the SELLER shall be permitted to extend the Delivery Date.
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ARTICLE XIV RIGHT OF ASSIGNMENT
1.
ASSIGNMENT AND TRANSFER BY THE BUYER
The SELLER agrees that prior to delivery of the VESSEL, the Contract may, with the prior written approval/consent of the SELLER, which the SELLER shall not unreasonably withhold, be assigned or transferred to BUYER’s bank for financing purpose or to a 100% subsidiary of the BUYER.
For the avoidance of doubt, the BUYER’s rights to transfer or assign under this Paragraph 1 shall apply equally to any transferee or assignee of the BUYER’s rights and obligations under this Contract as defined in the above paragraph, but always subject to SELLER’s prior consent, which the SELLER shall not unreasonably withhold.
2.
ASSIGNMENT BY THE
SELLER
SELLER shall have the right to assign this Contract to SELLER’s bank for financing purpose at any time after the effective date hereof, provided that prior written agreement is obtained from the BUYER, which the BUYER shall not unreasonably withhold.
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ARTICLE XV TAXES AND DUTIES
1. TAXES
The SELLER shall bear and pay all taxes, duties, stamps, dues levies and fees of whatsoever nature incurred or imposed in China in connection with the execution and/or performance of this Contract by the SELLER. Any taxes and/or duties imposed upon those items or services procured by the SELLER in the People’s Republic of China or elsewhere for the construction of the VESSEL shall be borne by the SELLER.
The BUYER shall be responsible for the personal income tax for any person it employs, including BUYER’S REPRESENTATIVES or other BUYER’s staff, agent and representatives who work at SELLER’s shipyard and premise.
2. DUTIES
The BUYER shall bear and pay all taxes, duties, stamps and fees incurred outside China in connection with execution and/or performance of this Contract by the BUYER, except for taxes, duties, stamps, dues, levies and fees imposed upon those items which are to be procured by the SELLER for the construction of the VESSEL in accordance with the terms of this Contract and the Specifications..
Any tax or duty other than those described hereinabove, if any, shall be borne by the BUYER.
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ARTICLE XVI PATENTS, TRADEMARKS AND COPYRIGHTS
The machinery and equipment of the VESSEL may bear the patent number, trademarks or trade names of the manufacturers. The SELLER shall defend and hold harmless the BUYER from patent liability or claims of patent infringement of any nature or kind, including costs and expenses for, or on account of any patented or patentable invention made or used in the performance of this Contract and also including cost and expense of litigation, if any.
Nothing contained herein shall be construed as transferring any patent or trademark rights or copyright in equipment covered by this Contract, and all such rights are hereby expressly reserved to the true and lawful owners thereof. Notwithstanding any provisions contained herein to the contrary, the SELLER’s obligation under this Article should not be terminated by the passage of any specified period of time.
The SELLER’s indemnity hereunder does not extend to equipment or parts supplied by the BUYER to the BUILDER if any.
The SELLER retains all rights with respect to the Specification, and plans and working drawings, technical descriptions, calculations, test results and other data, information and documents concerning the design and construction of the VESSEL and the BUYER undertakes therefore not to disclose the same or divulge any information contained therein to any third parties, without the prior written consent of the SELLER, excepting where it is necessary for usual operation, repair and maintenance, sale or charter of the VESSEL or registration, classification insurance or sale of the VESSEL.
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ARTICLE XVII NOTICE
Any and all notices and communications in connection with this Contract shall be addressed as follows:
To the BUYER :
NAVIG8 CRUDE TANKERS INC.
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Address :
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c/o Navig8 Asia Pte Ltd
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3 Temasek Avenue
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#25-01 Centennial Tower
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Singapore 039190
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Telefax No. :
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+44 207 467 5867
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E-mail :
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legal@navig8group.com
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To CSTC :
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China Shipbuilding Trading Company, Limited
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Address :
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c/o Marine Tower,
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No.1 Pudong Dadao,
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Shanghai 200120
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the People’s Republic of China
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Telefax No. :
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(021) 68860801
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E-mail :
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shipexport@mail.chinaships.com
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To the BUILDER : Shanghai Waigaoqiao Shipbuilding Co., Ltd.
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Address :
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3001 Zhouhai Road, Pudong New District, Shanghai 200137,
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the People’s Republic of China
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Telex No. :
(021) 58480446
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E-mail :
swsbiz@chinasws.com
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Any notices and communications sent by CSTC or the BUILDER alone to the BUYER shall be deemed as having being sent by both CSTC and the BUILDER.
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Any change of address shall be communicated in writing by registered mail or by e-mail by the party making such change to the other party and in the event of failure to give such notice of change, communications addressed to the party at their last known address shall be deemed sufficient.
Any and all notices, requests, demands, instructions, advice and communications in connection with this Contract shall be deemed to be given at, and shall become effective from, the time when the same is delivered to the address of the party to be served, provided, however, that registered airmail shall be deemed to be delivered ten (10) days after the date of dispatch, express courier service shall be deemed to be delivered five (5) days after the date of dispatch, and telefax or e-mail acknowledged by the answerbacks shall be deemed to be delivered upon dispatch. E-mail transmissions shall be deemed as delivered upon the subject email has been removed to the “Sent” box on the sending computer.
Any and all notices, communications, Specifications and drawings in connection with this Contract shall be written in the English language and each party hereto shall have no obligation to translate them into any other language.
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ARTICLE XVIII EFFECTIVE DATE OF CONTRACT
This Contract shall become effective upon signing of this Contract
Upon signing of this Contract, both parties hereto shall do as follows:
(1)
Receipt by the BUYER of a Refund Guarantee in the form annexed hereto as Exhibit A issued by Refund Guarantor in accordance with Article II Paragraph 7 hereof.
(2)
Receipt by the SELLER of the first instalment in accordance with Paragraph 3(a) and 4(a) of Article II of this Contract; and
(3)
Receipt by the SELLER of a Letter of Guarantee in the form annexed hereto as Exhibit B issued by the Refund Guarantor in accordance with Article II Paragraph 6 hereof.]
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ARTICLE XIX INTERPRETATION
1. LAW APPLICABLE
The parties hereto agree that the validity and interpretation of this Contract and of each Article and part hereof be governed by and interpreted in accordance with the laws of England.
2. DISCREPANCIES
All general language or requirements embodied in the Specifications are intended to amplify, explain and implement the requirements of this Contract. However, in the event that any language or requirements so embodied in the Specifications permit an interpretation inconsistent with any provision of this Contract, then in each and every such event the applicable provisions of this Contract shall govern. The Specifications and plans are also intended to explain each other, and anything shown on the plans and not stipulated in the Specifications or stipulated in the Specifications and not shown on the plans, shall be deemed and considered as if embodied in both. In the event of conflict between the Specifications and plans, the Specifications shall govern.
However, with regard to such inconsistency or contradiction between this Contract and the Specifications as may later occur by any change or changes in the Specifications agreed upon by and among the parties hereto after execution of this Contract, then such change or changes shall govern.
3. DEFINITION
“Banking Day(s)” are days on which banks are open in Singapore, New York, U.S.A.
“Business Day(s)” are days on which banks are open in Singapore and P. R. China.
In absence of stipulation of “banking day(s)” or “Business Day(s)”, the “day” or “days” shall be taken as “calendar day” or “calendar days”.
4. ENTIRE AGREEMENT
This Contract sets forth the entire understanding of the Parties with respect to the subject matter discussed herein. It supersedes all prior discussions, negotiations and agreements, (including but not limited to the Letter of Intent / Option Agreement) whether oral or written, expressed or implied.
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In WITNESS WHEREOF, the parties hereto have caused this Contract to be duly executed on the day and year first above written.
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THE BUYER :
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NAVIG8 CRUDE TANKERS INC.
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By :
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/s/ Rasmus Bach Nielsen
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Name :
Rasmus Bach Nielsen
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Title :
Attorney-in-Fact
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THE SELLER:
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CSTC : China Shipbuilding Trading Company, Limited
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By :
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/s/ HZ Fang
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Name :
HZ Fang
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Title :
Attorney-in-Fact
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THE BUILDER: Shanghai Waigaoqiao Shipbuilding Co., Ltd.
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By :
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/s/ Huang Yicheng
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Name :
Huang Yicheng
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Title :
Attorney-in-Fact
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Exhibit “A”: IRREVOCABLE LETTER OF GUARANTEE NO.
To:
Date:
Dear Sirs,
Irrevocable Letter of Guarantee No.
At the request of China Shipbuilding Trading Company, Limited and in consideration of your agreeing to pay China Shipbuilding Trading Company, Limited and Shanghai Waigaoqiao Shipbuilding Co., Ltd. (hereinafter collectively called “the SELLER”) the instalments before delivery of the VESSEL under the Contract concluded by and amongst you, and the SELLER dated 17
th
December, 2013 for the construction of one (1) 300,000 Metric Tons Deadweight Crude Oil Tanker to be designated as Hull No. H1357 (hereinafter called “the Contract”), we, the undersigned, do hereby guarantee irrevocably, as primary obligor, repayment to you by the SELLER of an amount up to but not exceeding a total amount of United States Dollars Thirty Seven Million Thirty Thousand One Hundred and Forty Only (US$ 37,030,140.00) (plus the interest described below) representing the first instalment of the Contract Price of the VESSEL, United States Dollars Nine Million Two Hundred and Fifty Seven Thousand Five Hundred and Thirty Five Only (US$ 9,257,535.00), the second instalment of the Contract Price of the VESSEL, United States Dollars Nine Million Two Hundred and Fifty Seven Thousand Five Hundred and Thirty Five Only (US$ 9,257,535.00), the third instalment of the Contract Price of the VESSEL, United States Dollars Nine Million Two Hundred and Fifty Seven Thousand Five Hundred and Thirty Five Only (US$ 9,257,535.00) and the fourth instalment of the Contract Price of the VESSEL, United States Dollars Nine Million Two Hundred and Fifty Seven Thousand Five Hundred and Thirty Five Only (US$ 9,257,535.00), as you may have paid to the SELLER under the Contract prior to the delivery of the VESSEL, if and when the same or any part thereof becomes repayable to you from the SELLER in accordance with the terms (Article X or Article XII 2(b)) of the Contract. Should the SELLER fail to make such repayment, we shall pay you the amount the SELLER ought to pay with an interest at the rate of six percent (6%) per annum if the cancellation of the Contract is exercised by you in accordance with the provisions of Article III 1(c), 2(c), 3(c) or 4(c) of the Contract or at the rate of zero percent (0%) per annum if cancellation of the Contract is exercised by you by reason of paragraph 1 of Article VIII or paragraph 2(b) of Article XII, in both cases calculated from the date the installments were received by the SELLER to the date of remittance of such refund within thirty (30) Business Days after our receipt of the relevant written demand from you for repayment. Any written demand to us shall be accepted by us as conclusive evidence that the amount claimed is due under this guarantee, provided that such demand: (1) is signed by authorized representative of you and accompanied by a power of attorney granted by you providing the relevant authorized representative with authority to make the demand; (2) states that the principal amount and interest thereon if any demanded by you has been demanded by you from the SELLER and was not paid by the SELLER within forty-five (45) days after that demand upon the SELLER; and (3) is accompanied by a copy of your said demand upon the SELLER.
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It is hereby understood that payment of any interest provided herein is by way of liquidated damages due to cancellation of the CONTRACT.
However, in the event of any dispute between you and the SELLER in relation to:
(1) whether the SELLER shall be liable to repay the instalment or instalments paid by you and
(2) consequently whether you shall have the right to demand payment from us,
and such dispute is submitted either by the SELLER or by you for arbitration in accordance with Article XIII of the Contract, we shall be entitled to withhold and defer payment until the arbitration award is published. We shall not be obligated to make any payment to you unless the arbitration award orders the SELLER to make repayment. If the SELLER fails to honour the award within 45 days of the final award being issued then we shall refund to you against your further written demand accompanied with a certified copy of the arbitration award which orders the SELLER to make repayment, to the extent the arbitration award orders but not exceeding the aggregate amount of this guarantee plus the interest described above.
The undersigned hereby certifies, represents and warrants that all acts, conditions and things required to be done and performed and to have occurred prior to the creation and issuance of this guarantee, and to ensure that this guarantee constitutes valid and legally binding obligations of the undersigned enforceable in accordance with its terms have been done and performed and have occurred in due and strict compliance with applicable laws.
The said repayment shall be made by us in United States Dollars. This Letter of Guarantee shall become effective from the time of the actual receipt of the first instalment by the SELLER from you and the amounts effective under this Letter of Guarantee shall correspond to the total payment actually received by the SELLER from time to time under the Contract prior to the delivery of the VESSEL. However, the available amount under this Letter of Guarantee shall in no event exceed above mentioned amount actually received by the SELLER, together with interest calculated, as described above at six percent (6%) or, zero percent (0%) per annum, as the case may be for the period commencing with the date of receipt by the SELLER of the respective instalment to the date of repayments thereof.
This Letter of Guarantee shall remain in force until the VESSEL has been delivered to and accepted by you or refund has been made by the SELLER or ourselves, or until August 11th, 2017, whichever occurs earlier, after which you are to return it to us by airmail for cancellation. Upon its expiration, this guarantee shall become null and void, any action of maintaining the original of this guarantee and its amendment(s) shall give no right to you for lodging any more claim hereunder.
However in the event that a dispute in respect of a refund is being referred to arbitration in accordance with Article XIII of the Contract, then this Letter of Guarantee shall continue to
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remain in force until 60 days after such arbitration proceedings are concluded and a final arbitration award has been issued.
Any claim under this guarantee must be received by us before its expiration.
It is agreed that this Letter of Guarantee may, with our prior written approval and such approval shall not be unreasonably withheld, be assigned by you (excluding, in respect of a first class international bank, the right of demanding payment which shall in all respect remain with yourself) to a first class international bank that is financing the whole or part of your purchase of the VESSEL or one of your 100% subsidiaries or affiliates.
This Letter of Guarantee shall be construed, interpreted and governed by the Laws of England and any dispute arising out of or in connection with this Letter of Guarantee shall be submitted to the exclusive jurisdiction of the courts of England.
For the Refund Guarantor
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Exhibit “B” IRREVOCABLE LETTER OF GUARANTEE
FOR THE 2ND, 3RD, AND 4TH INSTALLMENTS
Date:
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To:
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China Shipbuilding Trading Co., Ltd.
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56(Yi), Zhongguancun Nandajie,
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Beijing 100044, P. R. China
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Dear Sirs,
(1)
In consideration of your entering into a shipbuilding contract dated 17
th
December 2013 (“the Shipbuilding Contract”) with NAVIG8 CRUDE TANKERS INC. or its Nominee as the buyer (“the BUYER”) for the construction of one (1) 300,000 Metric Tons Deadweight Crude Oil Tanker known as Shanghai Waigaoqiao Shipbuilding Co., Ltd.’s Hull No. H1357 (“the VESSEL”), we, NAVIG8 CRUDE TANKERS INC., hereby IRREVOCABLY, ABSOLUTELY and UNCONDITIONALLY guarantee, as the primary obligor and not merely as the surety, the due and punctual payment by the BUYER of each and all of the 2nd, 3rd, and 4th installments of the Contract Price amounting to a total sum of United States Dollars Twenty Seven Million Seven Hundred and Seventy Two Thousand Six Hundred and Five only (US$ 27,772,605.00) as specified in (2) below.
(2)
The instalments guaranteed hereunder, pursuant to the terms of the Shipbuilding Contract, comprise the 2nd installment in the amount of U.S. Dollars Nine Million Two Hundred and Fifty Seven Thousand Five Hundred and Thirty Five Only (US$ 9,257,535.00) payable by the BUYER within three (3) Singapore and New York business days after cutting of the first steel plate in your BUILDER’s workshop, the third installment in the amount of U.S. Dollars Nine Million Two Hundred and Fifty Seven Thousand Five Hundred and Thirty Five Only (US$ 9,257,535.00) payable by the BUYER within three (3) Singapore and New York business days after keel-laying of the first section of the VESSEL, and the 4th installment in the amount U.S. Dollars Nine Million Two Hundred and Fifty Seven Thousand Five Hundred and Thirty Five Only (US$ 9,257,535.00) payable by the BUYER within three (3) Singapore and New York business days after launching of the VESSEL.
(3)
We also IRREVOCABLY, ABSOLUTELY and UNCONDITIONALLY guarantee, as primary obligor and not merely as surety, the due and punctual payment by the BUYER of interest on each Instalment guaranteed hereunder at the rate of six percent (6%) per annum from and including the first day after the date of instalment in default until the date of full
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payment by us of such amount guaranteed hereunder.
(4)
In the event that the BUYER fails to punctually pay any Instalment guaranteed hereunder or the BUYER fails to pay any interest thereon, and any such default continues for a period of fifteen (15) days, then, upon receipt by us of your first written demand, we shall immediately pay to you or your assignee all unpaid 2nd, 3rd and 4th instalments, together with the interest as specified in paragraph (3) hereof, without requesting you to take any or further action, procedure or step against the BUYER or with respect to any other security which you may hold.
(5)
We hereby agree that at your option this Guarantee and the undertaking hereunder shall be assignable to and if so assigned shall inure to the benefit of any 3rd party designated by you or Bank of China, Head Office, Banking Department, Beijing, the People’s Republic of China as your assignee as if any such third party or Bank of China, Head Office, Banking Department, Beijing, the People’s Republic of China were originally named herein.
(6)
Any payment by us under this Guarantee shall be made in the Unites States Dollars by telegraphic transfer to Bank of China, New York Branch, 415 Madison Avenue, New York, N. Y. 10017 U.S.A., as receiving bank nominated by you for credit to the account of you with Bank of China, Head Office, Banking Department, Beijing, the People’s Republic of China or through other receiving bank to be nominated by you from time to time, in favour of you or your assignee.
(7)
Our obligations under this guarantee shall not be affected or prejudiced by any dispute between you as the SELLER and the BUYER under the Shipbuilding Contract or by the BUILDER’s delay in the construction and/or delivery of the VESSEL due to whatever causes or by any variation or extension of their terms thereof or by any security or other indemnity now or hereafter held by you in respect thereof, or by any time or indulgence granted by you or any other person in connection therewith, or by any invalidity or unenforceability of the terms thereof, or by any act, omission, fact or circumstances whatsoever, which could or might, but for the foregoing, diminish in any way our obligations under this Guarantee.
(8)
Any claim or demand shall be in writing signed by one of your officers and may be served on us either by hand or by post and if sent by post to (or such other address as we may notify to you in writing), or by email (email: ) via Bank of China, with confirmation in writing.
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(9)
This Letter of Guarantee shall come into full force and effect upon delivery to you of this Guarantee and shall continue in force and effect until the VESSEL is delivered to and accepted by the BUYER and the BUYER shall have performed all its obligations for taking delivery thereof or until the full payment of all 2nd, 3rd, and 4th Instalments together with the aforesaid interests by the BUYER or us, whichever first occurs.
(10)
The maximum amount, however, that we are obliged to pay to you under this Guarantee shall not exceed the aggregate amount of U.S. Dollars Twenty Eight Million Forty Six Thousand Five Hundred and Twenty Six only (US$28,046,526.00) being an amount equal to the sum of:-
(a)
All the 2nd, 3rd and 4th instalments guaranteed hereunder in the total amount of United States Dollars Twenty Seven Million Seven Hundred and Seventy Two Thousand Six Hundred and Five only (US$ 27,772,605.00) ; and
(b)
Interest at the rate of six percent (6%) per annum on the Instalment for a period of sixty (60) days in the amount of United States Dollars Two Hundred Seventy Three Thousand Nine Hundred and Twenty One only (US$ 273,921.00).
(11)
All payments by us under this Guarantee shall be made without any set-off or counterclaim and without deduction or withholding for or on account of any taxes, duties, or charges whatsoever unless we are compelled by law to deduct or withhold the same. In the latter event we shall make the minimum deduction or withholding permitted and will pay such additional amounts as may be necessary in order that the net amount received by you after such deductions or withholdings shall equal the amount which would have been received had no such deduction or withholding been required to be made.
(12)
This Letter of Guarantee shall be construed in accordance with and governed by the Laws of England. We hereby submit to the non-exclusive jurisdiction of the English courts for the purposes of any legal action or proceedings in connection herewith in England.
(13)
When this Letter of Guarantee shall have expired as aforesaid, you will return the same to us without any request or demand from us.
IN WITNESS WHEREOF, we have caused this Letter of Guarantee to be executed and delivered by our duly authorized representative the day and year above written.
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Very Truly Yours
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By: NAVIG8 CRUDE TANKERS INC.
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58
Exhibit 10.82
SHIPBUILDING CONTRACT
FOR
CONSTRUCTION OF ONE 300,000 DWT CRUDE OIL TANKER
(HULL NO. H1358)
BETWEEN
NAVIG8 CRUDE TANKERS INC. or its Nominee
as BUYER
and
CHINA SHIPBUILDING TRADING COMPANY, LIMITED
and
SHANGHAI WAIGAOQIAO SHIPBUILDING CO., LTD.
Collectively as SELLER
CONTENTS
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ARTICLE
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PAGE NO.
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ARTICLE I DESCRIPTION AND CLASS
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2
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1. DESCRIPTION:
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2
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2. CLASS AND RULES
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2
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3. PRINCIPAL PARTICULARS AND DIMENSIONS OF THE VESSEL
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3
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4. GUARANTEED SPEED
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3
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5. GUARANTEED FUEL CONSUMPTION
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3
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6. GUARANTEED DEADWEIGHT
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4
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7. SUBCONTRACTING:
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4
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8. REGISTRATION:
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4
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ARTICLE II CONTRACT PRICE & TERMS OF PAYMENT
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5
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1. CONTRACT PRICE:
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5
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2. CURRENCY:
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5
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3. TERMS OF PAYMENT:
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5
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4. METHOD OF PAYMENT:
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6
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5. PREPAYMENT:
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8
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6. SECURITY FOR PAYMENT OF INSTALMENTS BEFORE DELIVERY:
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8
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7. REFUNDS
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8
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ARTICLE III ADJUSTMENT OF THE CONTRACT PRICE
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10
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1. DELIVERY
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10
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2. INSUFFICIENT SPEED
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11
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3. EXCESSIVE FUEL CONSUMPTION
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12
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4. DEADWEIGHT
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13
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5. EFFECT OF RESCISSION OR CANCELLATION
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13
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ARTICLE IV SUPERVISION AND INSPECTION
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14
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1. APPOINTMENT OF THE BUYER’S REPRESENTATIVES
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14
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2. COMMENTS TO PLANS AND DRAWINGS
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14
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3. SUPERVISION AND INSPECTION BY THE BUYER’S REPRESENTATIVES
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15
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4. LIABILITY OF THE SELLER
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17
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5. SALARIES AND EXPENSES
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17
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6. REPLACEMENT OF BUYER’S REPRESENTATIVES
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17
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ARTICLE V MODIFICATION,CHANGES AND EXTRAS
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18
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1. HOW EFFECTED
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18
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2. CHANGES IN RULES AND REGULATIONS, ETC.
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19
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3. SUBSTITUTION OF MATERIALS AND/OR EQUIPMENT
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20
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4. BUYER’S SUPPLIED ITEMS
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20
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I
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ARTICLE VI TRIALS
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22
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1. NOTICE
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22
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2. HOW CONDUCTED
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23
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3. TRIAL LOAD DRAFT
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23
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4. METHOD OF ACCEPTANCE OR REJECTION
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24
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5. DISPOSITION OF SURPLUS CONSUMABLE STORES
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24
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6. EFFECT OF ACCEPTANCE
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25
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ARTICLE VII DELIVERY
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26
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1. TIME AND PLACE
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26
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2. WHEN AND HOW EFFECTED
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26
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3. DOCUMENTS TO BE DELIVERED TO THE BUYER
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26
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4. TITLE AND RISK
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27
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5. REMOVAL OF VESSEL
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28
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6. TENDER OF THE VESSEL
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28
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ARTICLE VIII DELAYS & EXTENSION OF TIME FOR DELIVERY
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29
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1. CAUSE OF DELAY
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29
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2. NOTICE OF DELAY
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30
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3. RIGHT TO CANCEL FOR EXCESSIVE DELAY
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30
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4. DEFINITION OF PERMISSIBLE DELAY
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31
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ARTICLE IX WARRANTY OF QUALITY
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32
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1. GUARANTEE OF MATERIAL AND WORKMANSHIP
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32
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2. NOTICE OF DEFECTS
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32
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3. REMEDY OF DEFECTS
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32
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4. EXTENT OF THE SELLER’S LIABILITY
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33
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ARTICLE X CANCELLATION, REJECTION AND RESCISSION BY THE BUYER
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35
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ARTICLE XI BUYER’S DEFAULT
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37
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1. DEFINITION OF DEFAULT
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37
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2. NOTICE OF DEFAULT
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37
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3. INTEREST AND CHARGE
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37
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4. DEFAULT BEFORE DELIVERY OF THE VESSEL
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38
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5. SALE OF THE VESSEL
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39
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ARTICLE XII INSURANCE
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40
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1. EXTENT OF INSURANCE COVERAGE
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40
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2. APPLICATION OF RECOVERED AMOUNT
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40
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3. TERMINATION OF THE SELLER’S OBLIGATION TO INSURE
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41
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ARTICLE XIII DISPUTES AND ARBITRATION
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42
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1. PROCEEDINGS
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42
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2. ALTERNATIVE ARBITRATION BY AGREEMENT
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42
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3. NOTICE OF AWARD
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43
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4. EXPENSES
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43
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5. AWARD OF ARBITRATION
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43
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II
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6. ENTRY IN COURT
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43
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7. ALTERATION OF DELIVERY TIME
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43
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ARTICLE XIV RIGHT OF ASSIGNMENT
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44
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ARTICLE XV TAXES AND DUTIES
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45
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1. TAXES
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45
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2. DUTIES
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45
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ARTICLE XVI PATENTS, TRADEMARKS AND COPYRIGHTS
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46
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ARTICLE XVII NOTICE
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47
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ARTICLE XVIII EFFECTIVE DATE OF CONTRACT
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49
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ARTICLE XIX INTERPRETATION
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50
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1. LAW APPLICABLE
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50
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2. DISCREPANCIES
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50
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3. DEFINITION
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50
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4. ENTIRE AGREEMENT
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50
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EXHIBIT “A” : IRREVOCABLE LETTER OF GUARANTEE NO.
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52
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EXHIBIT “B” IRREVOCABLE LETTER OF GUARANTEE
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55
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FOR THE 2ND, 3RD, AND 4TH INSTALLMENTS
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55
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III
SHIPBUILDING CONTRACT FOR
CONSTRUCTION OF ONE
DIESEL
DRIVEN 300,000 DWT CRUDE OIL TANKER
(HULL NO.
H1358
)
This CONTRACT, entered into this 17th day of December 2013 by and between NAVIG8 CRUDE TANKERS INC. or its Nominee, a corporation organized and existing under the Laws of Marshall Islands, having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960 (hereinafter called the “BUYER”) on one part; and CHINA SHIPBUILDING TRADING COMPANY, LIMITED, a corporation organized and existing under the Laws of the People’s Republic of China, having its registered office at 56(Yi), Zhongguancun Nandajie, Beijing 100044, the People’s Republic of China (hereinafter called “CSTC”), and SHANGHAI WAIGAOQIAO SHIPBUILDING CO., LTD. a corporation organized and existing under the Laws of the People’s Republic of China, having its registered office at
3001 Zhouhai Road, Pudong New District, Shanghai 200137
, the People’s Republic of China (hereinafter called the “BUILDER”) on the other part. CSTC and the BUILDER are hereinafter collectively called the “SELLER”
WITNESSETH
in consideration of the mutual covenants contained herein, the SELLER agrees to design, build, launch, equip and complete at the BUILDER’s own premises or at Shanghai Jiangnan Changxing Heavy Industry Co., Ltd. at Changxing Island, Shanghai (hereinafter called the BUILDER’s shipyard) and to sell and deliver to the BUYER after completion and successful trial one (1) 300,000 Metric Tons Deadweight Crude Oil Tanker as more fully described in Article I hereof, to be registered under the flag of Marshall Islands and the BUYER agrees to purchase and take delivery of the aforesaid VESSEL from the SELLER and to pay for the same in accordance with the terms and conditions hereinafter set forth.
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ARTICLE I DESCRIPTION AND CLASS
1.
DESCRIPTION:
The VESSEL is a 300,000 metric tons deadweight crude oil tanker, at scantling draft moulded of 21.3 meters (hereinafter called the “VESSEL”) of the class described below. The VESSEL shall have the BUILDER’s Hull No. H1358 and shall be designed, constructed, equipped and completed in accordance with the following “Specifications”:
(1) Specification (Drawing No. 300TK-13202-CS-R1)
(2) General Arrangement (Drawing No. 300TK-13202-GA-R1)
(3) Midship Section (Drawing No. 300TK-13202-MS-R1)
(4) Makers list (Drawing No. 300TK-13202-ML-R1)
(5) Technical Memorandum on the 300,000 DWT Crude Oil Tanker Specification dated December 17
th
, 2013
attached hereto and signed by each of the parties to this Contract (hereinafter collectively called the “Specifications”), making an integral part hereof.
2.
CLASS AND RULES
The VESSEL, including its machinery and equipment, shall be designed, equipped and constructed in accordance with the rules and regulations issued and having become effective and compulsorily applicable to the VESSEL up to and on the date of signing this Contract of American Bureau of Shipping (ABS) (hereinafter called the “Classification Society”) and shall be distinguished in the record by the symbol of:
+A1 Oil Carrier, (E), CSR, AB-CM, +AMS, +ACCU, TCM, UWILD, SPMA, PMA, ESP, CPS, VEC-L, RW, GP, CPP, POT, CRC, BWT, HIMP, RES, RRDA
and shall also comply with the rules and regulations as fully described in the Specifications.
The requirements of the authorities as fully described in the Specifications including that of the Classification Society are to include additional rules or circulars thereof issued and become effective as at the date of signing this Contract.
The SELLER shall arrange with the Classification Society to assign a representative or representatives (hereinafter called the “Classification Surveyor”) to the BUILDER’s Shipyard for supervision of the construction of the VESSEL.
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All fees and charges incidental to Classification and to comply with the rules, regulations and requirements of this Contract as described in the Specifications issued up to the date of signing this Contract as well as royalties, if any, payable on account of the construction of the VESSEL shall be for the account of the SELLER, except as otherwise provided and agreed herein. The key plans, materials and workmanship entering into the construction of the VESSEL shall at all times be subject to inspections and tests in accordance with the rules and regulations of the Classification Society.
Decisions of the Classification Society as to compliance or noncompliance with Classification rules and regulations shall be final and binding upon the parties hereto.
3.
PRINCIPAL PARTICULARS AND DIMENSIONS OF THE VESSEL
(a) Hull:
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Length overall
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abt. 333.00m
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Length between perpendiculars
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324.00m
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Breadth moulded
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60.00m
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Depth moulded
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29.50m
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Design Draft moulded
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20.50m
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(b) Propelling Machinery:
The VESSEL shall be equipped, in accordance with the Specifications, with one (1) set of MAN 7G80ME-C 9.2 type main engine.
4.
GUARANTEED SPEED
The SELLER guarantees that the trial speed, after correction, is to be not less than 15.5nautical miles per hour on the trial condition stipulated in the Specification.
The trial speed shall be corrected for wind speed and shallow water effect. The correction method of the speed shall be as specified in the Specifications.
5.
GUARANTEED FUEL CONSUMPTION
The SELLER guarantees that the fuel oil consumption of the Main Engine is not to exceed 158.8+5% grams/brake horse power/hour at normal continuous output at shop trial based on diesel fuel oil having a lower calorific value of 10,200 kilocalories per kilogram.
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6.
GUARANTEED DEADWEIGHT
The SELLER guarantees that the VESSEL is to have a deadweight of not less than 300,000 metric tons at the scantling draft moulded of 21.3 meters in sea water of 1.025 specific gravity.
The term, “Deadweight”, as used in this Contract, shall be as defined in the Specifications.
The actual deadweight of the VESSEL expressed in metric tons shall be based on calculations made by the BUILDER and checked by the BUYER, and all measurements necessary for such calculations shall be performed in the presence of the BUYER’s REPRESENTATIVE(S) or the party authorized by the BUYER.
Should there be any dispute between the BUILDER and the BUYER in such calculations and/or measurements, the decision of the Classification Society shall be final.
7.
SUBCONTRACTING:
The SELLER may, at its sole discretion and responsibility, subcontract any portion of the construction work of the VESSEL to experienced subcontractors, but delivery and final assembly into the VESSEL of any such work subcontracted shall be at the BUILDER’s Shipyard. The SELLER shall remain responsible for such subcontracted work.
The performance of the works by the Shanghai Jiangnan Changxing Heavy Industry Co., Ltd. or wholly controlled subsidiaries of the BUILDER does not constitute subcontracting for the purposes of this clause. Without prejudice to the generality of the foregoing the SELLER shall remain fully liable for the due and complete performance of all the SELLER’s obligations under this Contract notwithstanding the entering into of any such sub-contract as aforesaid. However, the Vessel shall always remain at the BUILDER’s shipyard or Shanghai Jiangnan Changxing Heavy Industry Co., Ltd. unless the Buyer and the SELLER agree otherwise.
8.
REGISTRATION:
The VESSEL shall be registered by the BUYER at its own cost and expenses under the laws of Marshall Islands at the time of delivery and acceptance thereof.
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ARTICLE II CONTRACT PRICE & TERMS OF PAYMENT
1.
CONTRACT PRICE:
The purchase price of the VESSEL is United States Dollars Ninety Two Million Five Hundred and Seventy Five Thousand Three Hundred and Fifty Only (US$ 92,575,350.00), net receivable by the SELLER (hereinafter called the “Contract Price”), which is exclusive of the cost for the BUYER’s Supplies as provided in Article V hereof, and shall be subject to upward or downward adjustment, if any, as hereinafter set forth in this Contract.
2.
CURRENCY:
Any and all payments by the BUYER to the SELLER under this Contract shall be made in United States Dollars.
3.
TERMS OF PAYMENT:
The Contract Price shall be paid by the BUYER to the SELLER in instalments as follows:
(a) 1st Instalment:
The sum of United States Dollars Nine Million Two Hundred and Fifty Seven Thousand Five Hundred and Thirty Five Only (US$ 9,257,535.00), representing ten percent (10%) of the Contract Price, shall become due and payable and be paid by the BUYER within three (3) Singapore and New York business days after its receipt of the Refund Guarantee substantially in the form agreed in Exhibit
“
A
”
to this Contract. SELLER shall send a copy of invoice as demand for the same.
(b) 2nd Instalment:
The sum of United States Dollars Nine Million Two Hundred and Fifty Seven Thousand Five Hundred and Thirty Five Only (US$ 9,257,535.00), representing ten percent (10%) of the Contract Price, shall become due and payable and be paid within three (3) Singapore and New York business days after the cutting of the first steel plate of the VESSEL in the BUILDER’s workshop, such to be confirmed in writing by the Classification Society, or a date not earlier than sixteen (16) months prior to the Delivery Date, whichever is later. The SELLER shall notify with a telefax or email notice to the BUYER stating that the 1st steel plate has been cut in its workshop and submit a copy of the invoice as demand for payment of this 2
nd
instalment.
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(c) 3rd Instalment:
The sum of United States Dollars Nine Million Two Hundred and Fifty Seven Thousand Five Hundred and Thirty Five Only (US$ 9,257,535.00), representing ten percent (10%) of the Contract Price, shall become due and payable and be paid within three (3) Singapore and New York business days after keel-laying of the first section of the VESSEL. The keel-laying shall be notified by the SELLER with a telefax or email notice to the BUYER stating that the said keel-laying has been carried out, such to be confirmed in writing by the Classification Society, or a date not earlier than eleven (11) months prior to the Delivery Date, whichever is later. The SELLER shall send to the BUYER a telefax or email stating that keel-laying has been carried out and submit a copy of the invoice as demand for payment of this 3
rd
installment.
(d) 4th Instalment:
The sum of United States Dollars Nine Million Two Hundred and Fifty Seven Thousand Five Hundred and Thirty Five Only (US$ 9,257,535.00), representing ten percent (10%) of the Contract Price, shall become due and payable and be paid within three (3) Singapore and New York business days after launching of the VESSEL, such to be confirmed in writing by the Classification Society. The launching of the VESSEL shall be notified by the SELLER with a telefax or email notice to the BUYER stating that the launching of the VESSEL has been carried out. The SELLER shall send to the BUYER a telefax or email stating that launching has taken place and submit a copy of the invoice as demand for payment of this 4
th
installment.
(e) 5th Installment (Payment upon Delivery of the VESSEL):
The sum of United States Dollars Fifty Five Million Five Hundred and Forty Five Thousand Two Hundred and Ten Only (US$ 55,545,210.00), representing sixty percent (60%) of the Contract Price, plus any increase or minus any decrease due to modifications and/or adjustments of the Contract Price in accordance with provisions of the relevant Articles hereof, shall become due and payable and be paid by the BUYER to the SELLER concurrently with delivery of the VESSEL. The SELLER shall send to the BUYER a telefax or e-mail demand for this installment ten (10) days prior to the scheduled date of delivery of the VESSEL.
4.
METHOD OF PAYMENT:
(a) 1st Instalment:
The BUYER shall remit the amount of this installment in accordance with Article II, Paragraph 3 (a) by telegraphic transfer to Bank of China, New York Branch, 410 Madison Avenue, New York, N.Y. 10017, U.S.A. as receiving bank nominated by the SELLER,
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for credit to the account of CSTC with Bank of China, Head Office, Banking Department, Beijing, the People’s Republic of China with SWIFT advice from Bank of China, New York Branch to Bank of China, Head Office.
(b) 2nd Instalment:
The BUYER shall remit the amount of this installment in accordance with Article II, Paragraph 3(b) by telegraphic transfer to Bank of China, New York Branch, 410 Madison Avenue, New York, N.Y. 10017, U.S.A. as receiving bank nominated by the SELLER, for credit to the account of CSTC with Bank of China, Head Office, Banking Department, Beijing, the People’s Republic of China with SWIFT advice from Bank of China, New York Branch to Bank of China, Head Office, or through other receiving bank to be nominated by the SELLER from time to time and such nomination shall be notified to the BUYER at least 10 days prior to the due date for payment.
(c) 3rd Installment:
The BUYER shall remit the amount of this installment in accordance with Article II, Paragraph 3(c) by telegraphic transfer to Bank of China, New York Branch, 410 Madison Avenue, New York, N.Y. 10017, U.S.A. as receiving bank nominated by the SELLER, for credit to the account of CSTC with Bank of China, Head Office, Banking Department, Beijing, the People’s Republic of China with SWIFT advice from Bank of China, New York Branch to Bank of China, Head Office, or through other receiving bank to be nominated by the SELLER from time to time and such nomination shall be notified to the BUYER at least 10 days prior to the due date for payment.
(d) 4th Installment:
The BUYER shall remit the amount of this installment in accordance with Article II, Paragraph 3(d) by telegraphic transfer to Bank of China, New York Branch, 410 Madison Avenue, New York, N.Y. 10017, U.S.A. as receiving bank nominated by the SELLER, for credit to the account of CSTC with Bank of China, Head Office, Banking Department, Beijing, the People’s Republic of China with SWIFT advice from Bank of China, New York Branch to Bank of China, Head Office, or through other receiving bank to be nominated by the SELLER from time to time and such nomination shall be notified to the BUYER at least 10 days prior to the due date for payment.
(e) 5th Installment (Payable upon delivery of the VESSEL):
The BUYER shall, at least three (3) Singapore and New York business days prior to the scheduled date of delivery of the VESSEL, make an irrevocable cash deposit in the name of the BUYER with Bank of China, Head Office, Banking Department, Beijing, the People’s
7
Republic of China, for a period of fifteen (15) days and covering the amount of this installment (as adjusted in accordance with the provisions of this Contract), with an irrevocable instruction that the said amount shall be released to the SELLER against presentation by the SELLER to the said Bank of China, Head Office, Banking Department, Beijing, the People’s Republic of China, of a copy of the Protocol of Delivery and Acceptance signed by the BUYER’s authorized representative and the SELLER. Interest, if any, accrued from such deposit, shall be for the benefit of the BUYER.
If the delivery of the VESSEL is not effected and the SELLER fails to present a copy of the fully signed Protocol of Delivery and Acceptance to said Bank of China, Head Office, Banking Department, Beijing, the People’s Republic of China on or before the expiry of the aforesaid fifteen (15) days deposit period, the BUYER shall have the right to withdraw the said deposit plus accrued interest upon the expiry of the said fifteen (15) days deposit period. However when the newly scheduled delivery date is notified to the BUYER by the SELLER, the BUYER shall make the cash deposit in accordance with the same terms and conditions as set out above.
5.
PREPAYMENT:
The BUYER shall have the right to make prepayment of any and all instalments before delivery of the VESSEL, by giving to the SELLER at least thirty (30) days prior written notice, without any price adjustment of the VESSEL for such prepayment.
6.
SECURITY FOR PAYMENT OF INSTALMENTS BEFORE DELIVERY:
The BUYER shall, within three (3) Business Days after the BUYER’s receipt of the Refund Guarantee, deliver to the SELLER an irrevocable and unconditional Letter of Guarantee in the form annexed hereto as Exhibit “B” (hereinafter called the “Payment Guarantee”) in favour of the SELLER issued by NAVIG8 CRUDE TANKERS INC. (hereinafter called the “Payment Guarantor”) acceptable to the SELLER. This guarantee shall secure the BUYER’s obligation for the payment of the 2nd, 3rd and 4th installments of the Contract Price.
7.
REFUNDS
All payments made by the BUYER prior to delivery of the VESSEL shall be in the nature of advance to the SELLER, and in the event this Contract is rescinded or canceled by the BUYER, all in accordance with the specific terms of this Contract permitting such rescission or cancellation, the SELLER shall refund to the BUYER in United States Dollars the full amount of all sums already paid by the BUYER to the SELLER under this Contract, together with interest (at the rate set out in respective provision thereof) from the respective payment
8
date(s) to the date of remittance by telegraphic transfer of such refund to the account specified by the BUYER without deduction, set off or withholding in US dollars from the SELLER’s bank or jurisdiction.
As security to the BUYER, the SELLER shall deliver to the BUYER, within Thirty (30) days following the execution of this Contract, a Refund Guarantee to be issued by either Bank of China or China CITIC Bank, or Industrial and Commercial Bank of China or The Export-Import Bank of China, at SELLER’s sole direction, (hereinafter called the “Refund Guarantor”) in the form as per Exhibit “A” annexed hereto.
However, in the event of any dispute between the SELLER and the BUYER with regard to the SELLER’s obligation to repay the installment or installments paid by the BUYER and to the BUYER’S right to demand payment from the Refund Guarantor, under its guarantee, and such dispute is submitted either by the SELLER or by the BUYER for arbitration in accordance with Article XIII hereof, the Refund Guarantor shall withhold and defer payment until the final arbitration award between the SELLER and the BUYER is published. The Refund Guarantor shall not be obligated to make any payment unless the final arbitration award orders the SELLER to make repayment. If the SELLER fails to honour the award within 45 days, then the Refund Guarantor shall refund to the extent the final arbitration award orders.
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ARTICLE III ADJUSTMENT OF THE CONTRACT PRICE
The Contract Price of the VESSEL shall be subject to adjustments as hereinafter set forth. It is hereby understood by both parties that any reduction of the Contract Price is by way of liquidated damages and not by way of penalty.
1.
DELIVERY
(a)
No adjustment shall be made, and the Contract Price shall remain unchanged for the thirty (30) days of delay in delivery of the VESSEL beyond the Delivery Date as defined in Article VII hereof ending as of twelve o’clock midnight (Beijing time) of the thirtieth (30
th
) day of delay.
(b)
If the delivery of the VESSEL is delayed more than thirty (30) days after the date as defined in Article VII hereof, then, in such event, beginning at twelve o’clock midnight (Beijing time) of the thirtieth (30
th
) day after the date on which delivery is required under this Contract, the Contract Price of the VESSEL shall be reduced by deducting therefrom the sum of United States Dollars Sixteen Thousand Only (US$ 16,000.00) per day.
Unless the parties hereto agree otherwise, the total reduction in the Contract Price shall be deducted from the fifth instalment of the Contract Price and in any event (including the event that the BUYER consents to take the VESSEL at the later delivery date after the expiration of Two Hundred and ten (210) days delay of delivery as described in Paragraph 1(c) of this Article or Paragraph3 of Article VIII) shall not be more than One Hundred and Eighty (180) days at the above specified rate of reduction after the thirty (30) days allowance, that is United States Dollars Two Million Eight Hundred and Eighty Thousand Only (U.S.$ 2,880,000.00) being the maximum.
(c)
If the delay in the delivery of the VESSEL continues beyond the period of Two Hundred and Ten (210) days (being the total non-permissible delays and Thirty (30) days allowance) after the Delivery Date (as defined in Article VII), then in such event, the BUYER may, at its option, rescind or cancel this Contract in accordance with the provisions of Article X of this Contract. The SELLER may at any time after the expiration of the aforementioned Two Hundred and ten (210) days, if the BUYER has not served notice of cancellation pursuant to Article X, notify the BUYER of the date upon which the SELLER estimates the VESSEL will be ready for delivery and demand in writing that the BUYER make an election, in which case the BUYER shall, within thirty (30) days after such demand is received by the BUYER, either notify the SELLER of its decision to cancel this Contract, or consent to take delivery of the VESSEL at an agreed future date, it being understood and agreed by the parties hereto that, if the VESSEL is not delivered by such future date, the BUYER shall have the same right of cancellation upon the same terms, as hereinabove provided.
10
In the case the BUYER, within Thirty (30) days after such demand is received by the BUYER, fails to notify the SELLER of its decision to cancel this Contract, or consent to take delivery of the VESSEL at an agreed future date, it shall be deemed that the BUYER has consented to take delivery of the VESSEL at SELLER’s estimated date.
(d)
For the purpose of this Article III only, the delivery of the VESSEL shall not be deemed delayed and the Contract Price shall not be reduced when and if the Delivery Date of the VESSEL is extended by reason of causes and provisions of Articles V, VI.1, XI, XII.2, XIII.7 hereof. The Contract Price shall not be adjusted or reduced if the delivery of the VESSEL is delayed by reason of permissible delays as defined in Article VIII hereof.
2.
INSUFFICIENT SPEED
(a)
The Contract Price of the VESSEL shall not be affected nor changed by reason of the actual speed (as determined by the Trial Run after correction according to the Specifications) being less than three tenths (3/10) of one knot below the guaranteed speed as specified in Paragraph 4 of Article I of this Contract.
(b)
However, commencing with and including a deficiency of three tenths (3/10) of one knot in actual speed (as determined by the Trial Run after correction according to the Specifications) below the guaranteed speed as specified in Paragraph 4, Article I of this Contract, the Contract Price shall be reduced as follows:
In case of deficiency
at or above 0.30 but below 0.40 knot US$ 150,000.00
at or above 0.40 but below 0.50 knot US$ 300,000.00
at or above 0.50 but below 0.60 knot US$ 450,000.00
at or above 0.60 but below 0.70 knot US$ 600,000.00
at or above 0.70 but below 0.80 knot US$ 750,000.00
(c)
If the deficiency in actual speed (as determined by the Trial Run after correction according to the Specifications) of the VESSEL upon the Trial Run, is more than 0.80 knot below the guaranteed speed of 15.5 knots, then the BUYER may at its option reject the VESSEL and rescind or cancel this Contract in accordance with provisions of Article X of this Contract, or may accept the VESSEL at a reduction in the Contract Price as above provided, by United States Dollars Seven Hundred and Fifty Thousand only (US$750,000.00) being the maximum.
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3.
EXCESSIVE FUEL CONSUMPTION
(a)
The Contract Price of the VESSEL shall not be affected nor changed if the actual fuel consumption of the Main Engine, as determined by shop trial in manufacturer’s works, as per the Specifications, is greater than the guaranteed fuel consumption as specified and required under the provisions of this Contract and the Specifications if such actual excess is equal to or less than Five percent (5%) (such threshold being 166.74 grams/brake horse power/hour, being 5% above 158.8 grams/brake horse power/hour).
(b)
However, if the actual fuel consumption as determined by shop trial is greater than Five percent (5%) above the guaranteed fuel consumption then, the Contract Price shall be reduced by the sum of United States Dollars One Hundred and Thirty Five Thousand Only (US$135,000.00) for each full one percent (1%) increase in fuel consumption in excess of the above said Five percent (5%) (fractions of one percent to be prorated).
(c)
If as determined by shop trial such actual fuel consumption of the Main Engine is more than ten percent (10%) in excess of the guaranteed fuel consumption, i.e. the fuel consumption exceeds 174.68 grams/brake horse power/hour (being 10% above 158.8 grams/brake horse power/hour), the BUYER may, subject to the BUILDER’s right to effect alterations of corrections as specified in the following sub-paragraph of Article III 3 (c) hereof at its option, rescind or cancel this Contract, in accordance with the provisions of Article X of this Contract or may accept the VESSEL at a reduction in the Contract Price by United States Dollars Six Hundred and Seventy Five Thousand Only (US$675,000.00) being the maximum.
If as determined by shop trial such actual fuel consumption of the Main Engine is more than ten percent (10%) in excess of the guaranteed fuel consumption, i.e. the fuel consumption exceeds 174.68 grams/brake horse power/hour, the BUILDER may investigate the cause of the non-conformity and the proper steps may promptly be taken to remedy the same and to make whatever corrections and alterations and / or re-shop trial test or tests as may be necessary to correct such non-conformity without extra cost to the BUYER. Upon completion of such alterations or corrections of such nonconformity, the BUILDER shall promptly perform such further shop trials or any other tests, as may be deemed necessary to prove the fuel consumption of the Main Engine’s conformity with the requirement of this Contract and the Specifications and if found to be satisfactory, give the BUYER notice by telefax and/or e-mail of such correction and as appropriate, successful completion accompanied by copies of such results, and the BUYER shall, within six (6) Business Days after receipt of such notice, notify the BUILDER by telefax and/or e-mail of its acceptance or reject the re-shop trial together with the reasons therefor. If the BUYER fails to notify the BUILDER by telefax and/or e-mail of its acceptance or rejection of the re-shop trial together with the reasons therefor within six (6) Business Days period as provided herein, the BUYER shall be deemed to have accepted the shop trial.
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4.
DEADWEIGHT
(a)
In the event that there is a deficiency in the actual deadweight of the VESSEL determined as provided in the Specifications, the Contract Price shall not be decreased if such deficiency is Three Thousand (3,000) metric tons or less below the guaranteed deadweight of 300,000 metric tons at assigned designed draft.
(b)
However, the Contract Price shall be decreased by the sum of United States Dollars Seven Hundred Only (US$700.00) for each full metric ton of such deficiency being more than Three Thousand and One Hundred (3,100) metric tons.
(c)
In the event that there should be a deficiency in the VESSEL’s actual deadweight which exceeds Six thousand and One Hundred (6,100) metric tons below the guaranteed deadweight, the BUYER may, at its option, reject the VESSEL and rescind or cancel this Contract in accordance with the provisions of Article X of this Contract, or may accept the VESSEL with reduction in the Contract Price in the maximum amount of United States Dollars Two Million One Hundred Thousand only (US$2,100,000.00).
5.
EFFECT OF RESCISSION OR CANCELLATION
It is expressly understood and agreed by the parties hereto that in any case as stated herein, if the BUYER rescinds or cancels this Contract pursuant to any provision under this Article, the BUYER, save for its rights and remedy set out in Article X hereof, shall not be entitled to any liquidated damages or compensation whether described above or otherwise.
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ARTICLE IV SUPERVISION AND INSPECTION
1.
APPOINTMENT OF THE BUYER’S REPRESENTATIVES
The BUYER shall send in good time to and maintain at the BUILDER’s Shipyard, at the BUYER’s own cost and expense, one or more representative(s) who shall be duly accredited and authorized in writing by the BUYER (such representative(s) being hereinafter collectively and individually called the “BUYER’S REPRESENTATIVES”) to supervise and survey the construction by the BUILDER of the VESSEL, her engines and accessories. The SELLER hereby warrants that, the necessary invitation letter for the BUYER’S REPRESENTATIVES to enter China will be issued in order on demand and without delay provided that the BUYER’S REPRESENTATIVES meets with the rules, regulations and laws of the People’s Republic of China. The BUYER undertakes to give the SELLER adequate notice for the application of invitation letter.
2.
COMMENTS TO PLANS AND DRAWINGS
The parties hereto shall, within Thirty (30) days after signing of this Contract, mutually agree a list of all the plans and drawings, which are to be sent to the BUYER (hereinafter called “the LIST”) along with a schedule of anticipated dates when these will be dispatched as per BUILDER’s estimation, which may be subject to change by the BUILDER. Before arrival of the BUYER’S REPRESENTATIVES at the BUILDER’s Shipyard, the plans and drawings specified in the LIST shall be sent to the BUYER, and the BUYER shall, within Fourteen (14) working days after receipt thereof (excluding mailing time), return such plans and drawings submitted by the SELLER with comments, if any. Notwithstanding the above, the BUYER shall nevertheless waive its right to comment on the plans and drawings if such plans and drawings have been previously applied to build other vessels with the same specification as that of the VESSEL.
When and if the BUYER’S REPRESENTATIVES shall have been sent by the BUYER to the BUILDER in accordance with paragraph 1 of this Article, the BUYER’S REPRESENTATIVES shall approve the plans and drawings submitted to him by the SELLER according to the List of plans and drawings agreed upon by both parties unless otherwise agreed upon between the parties hereto. The BUYER’S REPRESENTATIVES shall within three (3) Business Days after receipt hereof, return to the BUILDER two (2) copies of such plans and drawings with approval or comments, if any, written thereon.
If the comments made by the BUYER or the BUYER’S REPRESENTATIVES are not clearly specified or detailed, the BUILDER shall seek the BUYER’s clarification in writing. Should the BUYER or the BUYER’S REPRESENTATIVES not answer such request within reasonable time (minimum being three working days) of the request then the
14
BUILDER should be entitled to place its own reasonable interpretation on the comments of the BUYER in implementing same.
In the event that the BUYER or the BUYER’S REPRESENTATIVES shall fail to give comments or return the plans and drawings to the BUILDER within the time limit as herein provided, such plans and drawings shall be deemed have been automatically approved or confirmed without any comment.
3.
SUPERVISION AND INSPECTION BY THE BUYER’S REPRESENTATIVES
The necessary inspection of the VESSEL, its machinery, equipment and outfittings shall be carried out by the Classification Society, and/or inspection team of the BUILDER throughout the entire period of construction in order to ensure that the construction of the VESSEL is duly performed in accordance with the Contract and Specifications.
The BUYER’S REPRESENTATIVES shall have, at all times until delivery of the VESSEL, the right to attend tests according to the mutually agreed test list and inspect the VESSEL, her engines, accessories and materials at the BUILDER’s Shipyard, its subcontractors or any other place where work is done or materials stored in connection with the VESSEL. In the event that the BUYER’S REPRESENTATIVES discovers any construction or material or workmanship which does not or will not conform to the requirements of this Contract and the Specifications, the BUYER’S REPRESENTATIVES shall promptly give the BUILDER a notice in writing as to such nonconformity, upon receipt of which the BUILDER shall correct such nonconformity if the BUILDER agrees with the BUYER. In any circumstances, the SELLER shall be entitled to proceed with the construction of the VESSEL even if there exists discrepancy in the opinion between the BUYER and the SELLER, without however prejudice to the BUYER’s right for submitting the issue for determination by the Classification Society or arbitration in accordance with the provisions hereof. However the BUYER undertakes and assures the SELLER that the BUYER’S REPRESENTATIVES shall carry out his inspections and supervision in accordance with the agreed inspection procedure, SELLER’s working schedule and usual shipbuilding practice and in a way as to minimize any increase in building costs and delays in the construction of the VESSEL. Once an inspection and/or test has been witnessed and approved by the BUYER’S REPRESENTATIVES, the same inspection and/or test should not have to be repeated, provided it has been carried out in compliance with the requirements of the Classification Society and Specifications.
The BUILDER agrees to furnish free of charge the BUYER’S REPRESENTATIVES with office space, and other reasonable facilities including air conditioning, internet connection
15
and public toilets according to BUILDER’s practice at the Shipyard. But the fees for the communication like telephone, telefax and internet, etc. shall be borne by the BUYER. At all times, during the construction of the VESSEL until delivery thereof, the BUYER’S REPRESENTATIVES shall be given free and ready access to the VESSEL, her engines and accessories, and to any other place where the work is being done, or the materials are being processed or stored, in connection with the construction of the VESSEL, including the yards, workshops, stores of the BUILDER, and the premises of subcontractors of the BUILDER, who are doing work, or storing materials in connection with the VESSEL’s construction. The travel expenses for the said access to SELLER’s subcontractors outside of Shanghai shall be at BUYER’s account. The transportation within Shanghai for BUYER’S REPRESENTATIVES to get access to the inspection and/or test shall be provided to the BUYER’S REPRESENTATIVES by the SELLER.
The BUYER undertakes to maintain sufficient number of the BUYER’S REPRESENTATIVES at the BUILDER’s yard throughout the period of construction of the VESSEL so as to meet the BUILDER’s requirements for inspection, survey and/or attendances of tests and/or trials. The BUYER will use best endeavours to ensure that BUYER’S REPRESENTATIVES perform any inspections, surveys and attendances at tests and/or trials in all circumstances, including where such inspections, surveys and test/trial attendances are required during the weekend (Saturday and Sunday) or any public holiday.
Should the BUYER’S REPRESENTATIVES fail to conduct any inspection or attend any test (after reasonably advance and written notice by the BUILDER of the same, except in the case of re-inspection where oral notice shall be sufficient) due to whatever reason, the BUILDER shall be entitled to carry out the construction and/or test without inspection and/or attendance of BUYER’S REPRESENTATIVES and such work so carried out shall be treated as approved by the BUYER’S REPRESENTATIVES.
The BUILDER is responsible for providing that a safe working environment and proper access is provided to the works and/or areas of inspection.
The decision, approval or advice of the BUYER’S REPRESENTATIVES shall be deemed to have been given by the BUYER and once given shall not be withdrawn, revoked or modified except with consent of the BUILDER. However, if the BUYER’S REPRESENTATIVES fail to submit to the BUILDER without delay any demand concerning alterations or changes with respect to the building, arrangement or outfit of the VESSEL, her engines or accessories, or any other items or matters in connection herewith, which the BUYER’S REPRESENTATIVES have examined or inspected or attended at the tests thereof under this Contract or the Specifications, the BUYER’S REPRESENTATIVES shall be deemed to have approved the same and shall be precluded from making any demand for alterations, changes or other complaints with respect thereto at a later date.
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4.
LIABILITY OF THE SELLER
The BUYER’S REPRESENTATIVES engaged by the BUYER under this Contract shall at all times be deemed to be in the employ of the BUYER. The SELLER shall be under no liability whatsoever to the BUYER, or to the BUYER’S REPRESENTATIVES or the BUYER’s employees or agents for personal injuries, including death, during the time when they, or any of them, are on the VESSEL, or within the premises of either the SELLER or its subcontractors, or are otherwise engaged in and about the construction of the VESSEL, unless, however, such personal injuries, including death, were caused by gross negligence of the SELLER, or of any of the SELLER’s employees or agents or subcontractors of the SELLER. Nor shall the SELLER be under any liability whatsoever to the BUYER for damage to, or loss or destruction of property in China of the BUYER or of the BUYER’S REPRESENTATIVES or of the BUYER’s employees or agents, unless such damage, loss or destruction was caused by gross negligence of the SELLER, or of any of the employees, or agents or subcontractors of the SELLER. The BUYER’S REPRESENTATIVES or his assistants or employees shall observe the work’s rules and regulations prevailing at the BUILDER’s and its subcontractor’s premises.
5.
SALARIES AND EXPENSES
All salaries and expenses of the BUYER’S REPRESENTATIVES, or any other employees employed by the BUYER under this Article, shall be for the BUYER’s account.
6.
REPLACEMENT OF BUYER’S REPRESENTATIVES
The SELLER has the right to request the BUYER in writing to replace any of the BUYER’S REPRESENTATIVES who is deemed unsuitable and unsatisfactory for the proper progress of the VESSEL’s construction together with reasons. The BUYER shall investigate the situation by sending its representative to the Builder’s yard, if necessary, and if the BUYER considers that such SELLER’s request is justified and reasonable, the BUYER shall effect the replacement as soon as conveniently arrangeable.
17
ARTICLE V MODIFICATION,CHANGES AND EXTRAS
1.
HOW EFFECTED
The Specifications and Plans in accordance with which the VESSEL is constructed, may be modified and/or changed at any time hereafter by written agreement of the parties hereto, provided that such modifications and/or changes or an accumulation thereof will not, in the BUILDER’s reasonable judgment, adversely affect the BUILDER’s other commitments and provided further that the BUYER shall assent to adjustment of the Contract Price, time of delivery of the VESSEL and other terms of this Contract, if any, as hereinafter provided. Subject to the above, the SELLER hereby agree to exert their best efforts to accommodate such reasonable requests by the BUYER so that the said changes and/or modifications may be made at a reasonable cost and within the shortest period of time which is reasonable and possible. Any such agreement for modifications and/or changes shall include an agreement as to the increase or decrease, if any, in the Contract Price of the VESSEL together with an agreement as to any extension or reduction in the time of delivery, providing to the SELLER additional securities satisfactory to the SELLER (and an increased guarantee from Navig8 Crude Tankers Inc shall be deemed satisfactory security), or any other alterations in this Contract, or the Specifications occasioned by such modifications and/or changes. The aforementioned agreement to modify and/or to change the Specifications may be effected by an exchange of duly authenticated letters, or telefax, or e-mail, manifesting such agreement. The letters, telefaxes and emails exchanged by the parties hereto pursuant to the foregoing shall constitute an amendment of the Specifications under which the VESSEL shall be built, and such letters, emails and telefaxes shall be deemed to be incorporated into this Contract and the Specifications by reference and made a part hereof. Upon consummation of the agreement to modify and/or to change the Specifications, the SELLER shall alter the construction of the VESSEL in accordance therewith, including any additions to, or deductions from, the work to be performed in connection with such construction. If due to whatever reasons, the parties hereto shall fail to agree on the adjustment of the Contract Price or extension of time of delivery or providing additional security to the SELLER or modification of any terms of this Contract which are necessitated by such modifications and/or changes, then the SELLER shall have no obligation to comply with the BUYER’s request for any modification and/or changes.
The BUILDER may make minor changes to the Specifications, if found necessary for introduction of improved production methods or otherwise, provided that the BUILDER shall first obtain the BUYER’s written approval which shall not be unreasonably withheld. Any costs associated with such minor changes shall not affect the Contract Price nor the Delivery Date unless mutually agreed.
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2.
CHANGES IN RULES AND REGULATIONS, ETC.
(1)
If, after the date of signing of this Contract, any requirements as to the rules and regulations as specified in this Contract and the Specifications to which the construction of the VESSEL is required to conform, are altered or changed by the Classification Society or the other regulatory bodies authorized to make such alterations or changes, the SELLER and/or the BUYER, upon receipt of the notice thereof, shall transmit such information in full to each other in writing, whereupon within twenty- one (21) days after receipt of the said notice by the BUYER from the SELLER or vice versa, the BUYER shall instruct the SELLER in writing as to the alterations or changes, if any, to be made in the VESSEL which the BUYER, in its sole discretion, shall decide. The SELLER shall promptly comply with such alterations or changes, if any in the construction of the VESSEL, provided that the BUYER shall first agree:
(a)
As to any increase or decrease in the Contract Price of the VESSEL that is occasioned by the cost for such compliance; and/or
(b)
As to any extension in the time for delivery of the VESSEL that is necessary due to such compliance; and/or
(c)
As to any increase or decrease in the guaranteed deadweight and speed of the VESSEL, if such compliance results in increased or reduced deadweight and speed; and/or
(d)
As to any other alterations in the terms of this Contract or of Specifications or both, if such compliance makes such alterations of the terms necessary.
(e)
If the price is to be increased, then, in addition, as to providing to the SELLER additional securities satisfactory to the SELLER and which shall be satisfied by the provision of an increased guarantee from Navig8 Crude Tankers Inc.
Agreement as to such alterations or changes under this Paragraph shall be made in the same manner as provided above for modifications and/or changes of the Specifications and/or Plans.
(2)
If, due to whatever reasons, the parties shall fail to agree on the adjustment of the Contract Price or extension of the time for delivery or increase or decrease of the guaranteed speed and deadweight or providing additional security to the SELLER or any alternation of the terms of this Contract, if any, then, the SELLER shall be entitled to proceed with the construction of the VESSEL in accordance with, and the BUYER shall continue to be bound by, the terms of this Contract and Specifications without making any such alterations or changes.
19
If the alterations or changes are compulsorily required to be made by Class or IMO rules, then, notwithstanding any dispute between the parties relating to the adjustment of the Contract Price or extension of the time for delivery or decrease of the guaranteed speed and deadweight or increase fuel oil consumption or any other respect, the SELLER shall promptly comply with such alterations or changes first. The BUYER shall, in any event, bear the costs and expenses for such alterations or changes (with, in the absence of mutual agreement, the amount thereof and/or any other discrepancy such as but not limited to the extension of Delivery Date, etc. to be determined by arbitration in accordance with Article XIII of this Contract).
3.
SUBSTITUTION OF MATERIALS AND/OR EQUIPMENT
In the event any of the materials and/or equipment required by the Specifications or otherwise under this Contract for the construction of the VESSEL cannot be procured in time to effect delivery of the VESSEL, the SELLER may, provided the SELLER shall provide adequate evidence and the BUYER so agrees in writing, supply other materials and/or equipment of the equivalent quality, capable of meeting the requirements of the Classification Society and of the rules, regulations, requirements and recommendations with which the construction of the VESSEL must comply.
4.
BUYER’S SUPPLIED ITEMS
The BUYER shall deliver to the SELLER at its shipyard the items as specified in the Specifications which the BUYER shall supply on BUYER’S account (the “BUYER’s Supplied Items”) by the time designated by the SELLER. SELLER will give reasonable advance notice to BUYER in order to allow BUYER to get these items in the shipyard for the time they are required.
Should the BUYER fail to deliver to the BUILDER such BUYER’s Supplied Items within the time specified, the delivery of the VESSEL shall automatically be extended for a period of such delay, provided such delay in delivery of the BUYER’s Supplied Items shall affect the delivery of the VESSEL. In such event, the BUYER shall pay to the SELLER all losses and damages sustained by the SELLER due to such delay in the delivery of the BUYER’s Supplied Items and such payment shall be made upon delivery of the VESSEL.
Furthermore, if the delay in delivery of the BUYER’s Supplied Items should exceed twenty (20) days, the SELLER shall be entitled to proceed with construction of the VESSEL without installation of such items in or onto the VESSEL, without prejudice to the SELLER’s right hereinabove provided, and the BUYER shall accept the VESSEL so completed.
The BUILDER shall be responsible for proper storage and handling with
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reasonable care of the BUYER’s Supplied Items as specified in the Specifications after delivery to the BUILDER and shall procure that at all times the BUYER’s supplies are identified as being the property of the BUYER. The BUILDER shall install BUYER’s Supplied Items on board the VESSEL at the BUILDER’s expenses. In order to facilitate installation by the BUILDER of the BUYER’S Supplied Items in or on the VESSEL, the BUYER shall furnish the BUILDER with the necessary specifications, plans, drawings, instruction books, manuals, test reports and certificates required by the rules and regulations of the Specifications. If so requested by the BUILDER, the BUYER shall, without any charge to the BUILDER, cause the representatives of the manufacturers of the BUYER’s Supplied Items to assist the BUILDER in installation thereof in or on the VESSEL and/or to carry out installation thereof by themselves or to make necessary adjustments at the BUILDER’s Shipyard.
Upon arrival of such shipment of the BUYER’s Supplied Items, both parties shall undertake a joint unpacking inspection. If any damages are found to be not suitable for installation, the BUILDER shall be entitled to refuse to accept such BUYER’s Supplied Items.
The SELLER shall not be responsible for the quality, performance or efficiency of any equipment supplied by the BUYER and is under no obligation with respect to the guarantee of such equipment against any defects caused by poor quality, performance or efficiency thereof.
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ARTICLE VI TRIALS
1.
NOTICE
(a)
The SELLER shall give NOTICE to the BUYER and BUYER’s Representative in writing at least fifteen (15) days’ notice in advance and seven (7) days definite notice in advance in writing or by telefax or e-mail, of the time and place of the VESSEL’s sea trial as described in the Specifications (hereinafter referred to as “the Trial Run”) and the BUYER and the BUYER’S REPRESENTATIVES shall promptly acknowledge receipt of such notice. The BUYER’S REPRESENTATIVES shall be on board the VESSEL to witness such Trial Run, and to check upon the performance of the VESSEL during the same. Failure to attend the trial run of the VESSEL by the BUYER’S REPRESENTATIVES shall have the effect to extend the date for delivery of the VESSEL by the period of delay caused by such failure to be present. However, if the Trial Run is delayed more than seven (7) days by reason of the failure of the BUYER’s representatives to be present after receipt of due notice as provided above, then in such event the non-attendance shall be deemed to be a waiver by the BUYER of its right to have its representative on board the VESSEL at the trial run, and the BUILDER may conduct such Trial Run without the BUYER’S REPRESENTATIVES being present, and in such case the BUYER shall be obliged to accept the VESSEL on the basis of a certificate jointly signed by the BUILDER and the Classification Society certifying that the VESSEL, after Trial Run subject to minor alterations and corrections as provided in this Article, if any, is found to conform to the Contract and Specifications. The SELLER hereby warrants that the necessary invitation letter for the BUYER’S REPRESENTATIVES to enter China will be issued in order on demand and without delay otherwise the Trial Run shall be postponed until after the BUYER’S REPRESENTATIVES have arrived at the BUILDER’s Shipyard and any delays as a result thereof shall not count as a permissible delay under Article VIII thereof. However, should the nationalities and other personal particulars of the BUYER’S REPRESENTATIVES be not acceptable to the SELLER in accordance with its best understanding of the relevant rules, regulations and/or Laws of the People’s Republic of China then prevailing, then the BUYER shall, on the SELLER’s telefax or e-mail demand, effect replacement of all or any of them immediately. Otherwise the Delivery Date as stipulated in Article VII hereof shall be extended by the delays so caused by the BUYER.
(b)
In the event of unfavorable weather on the date specified for the Trial Run, the same shall take place on the first available day thereafter that the weather conditions permit. The parties hereto recognize that the weather conditions in Chinese waters in which the Trial Run is to take place are such that great changes in weather may arise momentarily and without warning and, therefore, it is agreed that if during the Trial Run of the VESSEL, the weather should suddenly become unfavorable, as would have precluded
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the continuance of the Trial Run, the Trial Run of the VESSEL shall be discontinued and postponed until the first favorable day next following, unless the BUYER shall assent by telefax or e-mail and confirm in writing of its acceptance of the VESSEL on the basis of the Trial Run made prior to such sudden change in weather conditions. In the event that the Trial Run is postponed because of unfavorable weather conditions, such delay shall be regarded as a permissible delay, as specified in Article VIII hereof. For the purposes of this paragraph 1(b), unfavorable weather conditions shall be taken as (i) Beaufort Scale Force 6 and above or (ii) when the MSA (Maritime Safety Administration) does not permit the sea trial to proceed.
2.
HOW CONDUCTED
(a)
All expenses in connection with Trial Run of the VESSEL are to be for the account of the BUILDER, who, during the Trial Run and when subjecting the VESSEL to Trial Run, is to provide, at its own expense, the necessary crew to comply with conditions of safe navigation. The Trial Run shall be conducted in the manner prescribed in the Specifications.
The course of Trial Run shall be determined by the BUILDER and shall be conducted within the trial basin equipped with speed measuring facilities.
(b)
The BUILDER shall provide the VESSEL with the required quantities of water and fuel oil with exception of lubrication oil, greases and hydraulic oil which shall be supplied by the BUYER for the conduct of the Trial Run or Trial Runs as prescribed in the Specifications. The fuel oil supplied by the SELLER, and lubricating oil, greases and hydraulic oil supplied by the BUYER shall be in accordance with the applicable engine specifications, and the cost of the quantities of water, fuel oil, lubricating oil, hydraulic oil and greases consumed during the Trial Run or Trial Runs shall be for the account of the BUILDER.
3.
TRIAL LOAD DRAFT
In addition to the supplies provided by the BUYER in accordance with sub-paragraph (b) of the preceding Paragraph 2 hereof, the BUILDER shall provide the VESSEL with the required quantity of fresh water and other stores necessary for the conduct of the Trial Run. The necessary ballast (fresh and sea water and such other ballast as may be required) to bring the VESSEL to the trial load draft as specified in the Specifications, shall be for the BUILDER’s account.
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4.
METHOD OF ACCEPTANCE OR REJECTION
(a)
Upon notification of the BUILDER of the completion of the Trial Run of the VESSEL, the BUYER or the BUYER’S REPRESENTATIVES shall within six (6) days thereafter, notify the BUILDER by telefax or e-mail of its acceptance of the VESSEL or of its rejection of the VESSEL together with the reasons therefor.
(b)
However, should the result of the Trial Run indicate that the VESSEL or any part thereof including its equipment does not conform to the requirements of this Contract and Specifications, then the BUILDER shall investigate with the BUYER’S REPRESENTATIVES the cause of failure and the proper steps shall be taken to remedy the same and shall make whatever corrections and alterations and/or re-Trial Run or Runs as may be necessary without extra cost to the BUYER, and upon notification by the BUILDER of completion of such alterations or corrections and/or re-trial or re-trials, the BUYER shall, within six (6) days thereafter, notify the SELLER by telefax or e-mail of its acceptance of its VESSEL or of the rejection of the VESSEL together with the reason therefor on the basis of the alterations and corrections and/or re-trial or re-trials by the BUILDER.
(c)
In the event that the BUYER fails to notify the SELLER by telefax or e-mail of its acceptance or rejection of the VESSEL together with the reason therefor within six (6) Business Days period as provided for in the above sub- paragraphs (a) and (b), the BUYER shall be deemed to have accepted the VESSEL.
(d)
Any dispute arising among the parties hereto as to the result of any Trial Run or further tests or trials, as the case may be, of the VESSEL shall be solved by reference to arbitration as provided in Article XIII hereof.
(e)
Nothing herein shall preclude the BUYER from accepting the VESSEL with its qualifications and/or remarks following the Trial Run and/or further tests or trials as aforesaid.
5.
DISPOSITION OF SURPLUS CONSUMABLE STORES
Should any amount of fuel oil, fresh water, or other unbroached consumable stores furnished by the BUILDER for the Trial Run or Trial Runs remain on board the VESSEL at the time of acceptance thereof by the BUYER, the BUYER agrees to buy the same from the SELLER at the actual invoiced price, and payment by the BUYER shall be effected as provided in Article II 3 (e) and 4 (e) of this Contract.
The BUYER shall supply lubricating oil, greases and hydraulic oil for the purpose of Trial Runs at its own expenses and the SELLER will reimburse for the amount of lubricating oil and hydraulic oil actually consumed for the said Trial Run or Trial Runs at the original price incurred by the BUYER and payment by the SELLER shall be effected as provided in
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Article II 3(e) and 4(e) of this Contract.
6.
EFFECT OF ACCEPTANCE
The BUYER’s acceptance of the VESSEL by written or telefax, or e-mail notification sent to the SELLER, in accordance with the provisions set out above, shall be final and binding so far as conformity of the VESSEL to this Contract and the Specifications is concerned, and shall preclude the BUYER from refusing formal delivery by the SELLER of the VESSEL, as hereinafter provided, if the SELLER complies with all other procedural requirements for delivery as hereinafter set forth.
The BUYER shall not be entitled to reject the VESSEL (at the time of delivery) by reason of any minor or insubstantial non-conformity, or deficiencies of minor importance, which do not in any way affect the safety or the operation of the VESSEL, its crew, passengers or cargo, provided that:
i)
The SELLER shall for its own account remedy the deficiency and fulfill the requirements as soon as possible.
ii)
A list of such defect and non-conformities will be prepared by the parties immediately prior to the delivery of the VESSEL.
iii)
The SELLER shall pay BUYER upon delivery, the direct actual cost of rectification of minor deficiencies which in all events not exceeding the costs of a leading Chinese shipyard performing similar rectification of such deficiencies, if the rectification of such deficiencies affects the delivery schedule of the vessel. For the avoidance of doubt, the SELLER shall not be liable to the BUYER for the consequential and indirect costs (i.e. loss of time & loss of profit etc.).
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ARTICLE VII DELIVERY
1.
TIME AND PLACE
The VESSEL shall be delivered safely afloat by the SELLER to the BUYER at the BUILDER’s Shipyard, in accordance with the Specifications and with all Classification and Statutory Certificates and after completion of Trial Run (or, as the case may be, re-Trial or re-Trials) and acceptance by the BUYER in accordance with the provisions of Article VI hereof on or before December 31
st
, 2016 provided that, in the event of delays in the construction of the VESSEL or any performance required under this Contract due to causes which under the terms of the Contract permit extension or postponement of the time for delivery, the aforementioned time for delivery of the VESSEL shall be extended accordingly.
The aforementioned date or such later date to which delivery is extended pursuant to the terms of this Contract is hereinafter called the “Delivery Date”.
2.
WHEN AND HOW EFFECTED
Provided that the BUYER and the SELLER shall each have fulfilled all of their respective obligations as stipulated in this Contract, delivery of the VESSEL shall be effected forthwith by the concurrent delivery by each of the parties hereto, one to the other, of the Protocol of Delivery and Acceptance, acknowledging delivery of the VESSEL by the SELLER and acceptance thereof by the BUYER, which Protocol shall be prepared in quadruplicate and executed by each of the parties hereto.
3.
DOCUMENTS TO BE DELIVERED TO THE BUYER
Upon acceptance of the VESSEL by the BUYER, the SELLER shall deliver to the BUYER the following documents (subject to the provision contained in Article VII hereof) which shall accompany the aforementioned Protocol of Delivery and Acceptance:
(a)
PROTOCOL OF TRIALS of the VESSEL made by the BUILDER pursuant to the Specifications.
(b)
PROTOCOL OF INVENTORY of the equipment of the VESSEL including spare part and the like, all as specified in the Specifications, made by the BUILDER.
(c)
PROTOCOL OF STORES OF CONSUMABLE NATURE made by the BUILDER referred to under Paragraph 5 of Article VI hereof.
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(d)
FINISHED DRAWINGS AND PLANS pertaining to the VESSEL as stipulated in the Specifications, made by the BUILDER.
(e)
PROTOCOL OF DEADWEIGHT AND INCLINING EXPERIMENT, made by the BUILDER
(f)
ALL CERTIFICATES required to be furnished upon delivery of the VESSEL pursuant to the Specifications.
Certificates shall be issued by relevant Authorities or Classification Society. The VESSEL shall comply with the above rules and regulations which are in force at the time of signing this Contract. All the certificates shall be delivered in one (1) original to the VESSEL and two (2) copies to the BUYER.
If the full term certificate or certificates are unable to be issued at the time of delivery by the Classification Society or any third party other than the BUILDER, then the provisional certificate or certificates as issued by The Classification Society or the third party other than the BUILDER with the full term certificates to be furnished by the BUILDER after delivery of the VESSEL and in any event before the expiry of the provisional certificates shall be acceptable to the BUYER.
(g)
DECLARATION OF WARRANTY issued by the SELLER that the VESSEL is delivered to the BUYER free and clear of any liens, charges, claims, mortgages, or other encumbrances upon the BUYER’s title thereto, and in particular, that the VESSEL is absolutely free of all burdens in the nature of imposts, taxes or charges imposed by the province or country of the port of delivery, as well as of all liabilities of the SELLER to its sub-contractors, employees and crews and/or all liabilities arising from the operation of the VESSEL in Trial Run or Trial Runs, or otherwise, prior to delivery.
(h)
COMMERCIAL INVOICE made by the SELLER.
(i)
BILL OF SALE made by the SELLER.
(j)
BUILDER’S Certificate made by the BUILDER.
4.
TITLE AND RISK
Title to and risk of the VESSEL and her equipment (but excluding the BUYER’s supplies) shall pass to the BUYER only upon delivery and acceptance thereof. As stated above, it being expressly understood that, until such delivery and acceptance is effected, title to the VESSEL, and her equipment, shall remain at all times with the SELLER and are at the entire risk of the SELLER.
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5.
REMOVAL OF VESSEL
The BUYER shall take possession of the VESSEL immediately upon delivery and acceptance thereof, and shall remove the VESSEL from the premises of the BUILDER within seven (7) days after delivery and acceptance thereof is effected. If the BUYER shall not remove the VESSEL from the premises of the BUILDER within the aforesaid seven (7) days, then, in such event, without prejudice to the SELLER’s right to require the BUYER to remove the VESSEL immediately at any time thereafter, the BUYER shall pay to the SELLER the reasonable mooring charge of the VESSEL.
6.
TENDER OF THE VESSEL
If the BUYER fails to take delivery of the VESSEL after completion thereof according to this Contract and the Specifications without justified reason, the SELLER shall have the right to tender the VESSEL for delivery after compliance with all procedural requirements as above provided.
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ARTICLE VIII DELAYS & EXTENSION OF TIME FOR DELIVERY
1.
CAUSE OF DELAY
If, at any time before actual delivery, either the construction of the VESSEL, or any performance required hereunder as a prerequisite of delivery of the VESSEL, is delayed due to war, blockade, revolution, insurrection, mobilization, civil commotions, riots, strikes, sabotage, lockouts, local temperature higher than Thirty Five (35) degree centigrade (but each day above 35 degree shall be counted as one half day each), Acts of God or the public enemy, terrorism, plague or other epidemics, quarantines, prolonged failure or restriction of electric current from an outside source, freight embargoes, if any, earthquakes, tidal waves, typhoons, hurricanes, storms or other causes beyond the control of the BUILDER or of its sub-contractors or its key equipment suppliers (i.e. being the suppliers of the main engine, propeller and gearbox etc), as the case may be, or by force majeure of any description, whether of the nature indicated by the forgoing or not, or by destruction of the premises of the BUILDER or works of the BUILDER or its sub-contractors or its key equipment suppliers (i.e. being the suppliers of the main engine, propeller and gearbox etc) or of the VESSEL or any part thereof, by fire, flood, or other causes beyond the control of the SELLER or its sub-contractors or its key equipment suppliers (i.e. main engine, propeller, gearbox etc) as the case may be, or due to the bankruptcy of the equipment and/or material supplier or suppliers (i.e. main engine, propeller, gearbox etc), or due to the delay caused by acts of God causing significant shortage in the supply of parts essential to the construction of the VESSEL, then, in the event of delay due to the happening of any of the aforementioned contingencies, the SELLER shall not be liable for such delay and the time for delivery of the VESSEL under this Contract shall be extended without any reduction in the Contract Price for a period of time which shall not exceed the total accumulated time of all such delays, subject nevertheless to the BUYER’s right of cancellation under Paragraph 3 of this Article and subject however to all relevant provisions of this Contract which authorize and permit extension of the time of delivery of the VESSEL, provided however that:
(i) the delay in respect of which the BUILDER is claiming relief under this Article VIII.1 was not caused or contributed to by any intended act of the BUILDER;
(ii)
the delay event impacts upon the Vessel’s construction schedule and completion; and
(iii)
the BUILDER has taken reasonable steps to mitigate its effect upon the construction of the Vessel,
For the avoidance of doubt, where two delay events as described in this paragraph 1 occur simultaneously or overlap with each other, such delays caused by such events shall not be double-counted.
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2.
NOTICE OF DELAY
Within twenty (20) days from the date of the SELLER becomes aware of the commencement of any delay on account of which the SELLER claims that it is entitled under this Contract to an extension of the time for delivery of the VESSEL, the SELLER shall advise the BUYER by telefax or e-mail, of the date such delay commenced, and the reasons therefor and, if possible, its estimated duration of the probable delay in the delivery of the VESSEL, and shall supply the BUYER with evidence to support the delay claimed.
Likewise within twenty (20) days after such delay ends, the SELLER shall advise the BUYER in writing or by telefax or e-mail, of the date such delay ended, and also shall specify the maximum period of the time by which the SELLER claims the date for delivery of the VESSEL should be extended by reason of such delay. Failure of the BUYER to acknowledge the SELLER’s notification of any claim for extension of the Delivery Date within ten (10) days after receipt by the BUYER of such notification, shall be deemed to be a waiver by the BUYER of its right to object to such extension.
Failure of the SELLER to give notice of any relevant delay event in excess of fifteen (15) days in accordance with this paragraph 2 shall be deemed a waiver of the SELLER’s right to postpone the DELIVERY DATE under this Article VIII in respect of such relevant delay event.
3.
RIGHT TO CANCEL FOR EXCESSIVE DELAY
If (a) the total accumulated time of all delays on account of the causes specified in Paragraph 1 of this Article aggregate to two hundred and twenty-five (225) days or more, or (b) if the total accumulated time of all delays on account of the causes specified in Paragraph 1 of the Article and non-permissible delays as described in Paragraph 1 of Article III aggregate to two hundred and fifty-five (255) days or more, in any circumstances, excluding delays due to arbitration as provided for in Article XIII.7 hereof or due to default in performance by the BUYER, or due to delays in delivery of the BUYER’s Supplied Items, and excluding delays due to causes which, under Article V, VI.1, XI and XII.2(b) hereof, permit extension or postponement of the time for delivery of the VESSEL , then in such event, the BUYER may in accordance with the provisions set out herein rescind or cancel this Contract by serving upon the SELLER telefaxed or e-mailed notice of cancellation which shall be confirmed in writing and the provisions of Article X of this Contract shall apply. The SELLER may, at any time, after the accumulated time of the aforementioned delays justifying cancellation by the BUYER as above provided for, demand in writing that the BUYER shall make an election, in which case the BUYER shall, within thirty (30) days after such demand is received by the BUYER either notify the SELLER of its intention to cancel, or consent to an extension of the time for delivery to an agreed future date, it being understood and agreed by the parties hereto that, if any further delay occurs on account of causes justifying cancellation as specified in
30
this Contract, the BUYER shall have the same right of cancellation upon the same terms as hereinabove provided but in respect of the new agreed delivery date.
4.
DEFINITION OF PERMISSIBLE DELAY
Delays on account of such causes as provided for in Paragraph 1 of this Article excluding any other extensions of a nature which under the terms of this Contract permit postponement of the Delivery Date, shall be understood to be (and are herein referred to as) permissible delays, and are to be distinguished from non-permissible delays on account of which the Contract Price of the VESSEL is subject to adjustment as provided for in Article III hereof. Notwithstanding any other stipulations of this Contract, the Parties hereby agree that a default in performance of BUYER or any breach of this Contract by BUYER or reasons attributable to the BUYER or the events described under Article V, VI.1, XI and XII.2(b) of this Contract shall entitle the SELLER to extend the Delivery Date. Such extension of the Delivery Date shall be regarded as mutually agreed change of Delivery Date and shall be distinguished from Permissible Delay and non-permissible delays.
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ARTICLE IX WARRANTY OF QUALITY
1.
GUARANTEE OF MATERIAL AND WORKMANSHIP
The SELLER, for a period of twelve (12) months following delivery to the BUYER of the VESSEL, guarantees the VESSEL, her hull and machinery, her engine, and all parts and equipment thereof that are manufactured, furnished, supplied, or installed by the SELLER and/or its sub-contractors under this Contract including material, equipment (however excluding any parts for the VESSEL which have been supplied by the BUYER) against all defects which are due to defective materials, and/or poor workmanship.
Provided no additional cost occurs to the SELLER, the SELLER agrees that upon the expiry of this guarantee and upon request of the BUYER, it shall assign (to the extent to which it may validly do so) to the BUYER, all rights, title and interest that the SELLER may have in and to all guarantees or warranties given by the supplier (excluding the supplier of BUYER’s supplied item) of any of the appurtenances and materials used in the construction and/or operation of the VESSEL. The SELLER agrees to render to the BUYER reasonable assistance in making any claim or taking any action against any such supplier, which claim or action shall be made and/or taken at the BUYER’s sole expense. The BUYER shall meet all reasonable expenses incurred by the SELLER in rendering any assistance requested by the BUYER pursuant to this paragraph.
2.
NOTICE OF DEFECTS
The BUYER shall notify the SELLER in writing, or by telefax or e-mail, as promptly as possible, after discovery of any defect or deviations for which a claim is made under this guarantee. The BUYER’s written notice shall describe the nature of the defect and the extent of the damage caused thereby. The SELLER shall have no obligation under this guarantee for any defects discovered prior to the expiry date of the guarantee, unless notice of such defects, is received by the SELLER not later than thirty (30) days after such expiry date. Telefaxed or e-mailed advice with brief details explaining the nature of such defect and extent of damage within thirty (30) days after such expiry date and that a claim is forthcoming will be sufficient compliance with the requirements as to time.
3.
REMEDY OF DEFECTS
The SELLER shall remedy at its expense any defects, against which the VESSEL or any part of the equipment thereof is guaranteed under this Article by making all necessary repairs and/or replacement. Such repairs and/or replacement will be made by the SELLER. All parts
32
and/or materials so repaired shall be guaranteed for a further period of six (6) months, but the total warranty period shall not exceed eighteen (18) months after delivery and acceptance of the VESSEL by the BUYER. In any case, the VESSEL shall be taken, at the BUYER’S cost and responsibility, to place elected, ready in all respects for such repairs or replacement.
However, if it is impractical to make the repair by the SELLER, and if forwarding by the SELLER of replacement parts, and materials cannot be accomplished without impairing or delaying the operation or working of the VESSEL, then, in any such event, the BUYER shall, cause the necessary repairs or replacements to be made elsewhere at the discretion of the BUYER provided that the BUYER shall first and in all events, will, as soon as possible, give the SELLER notice in writing, or by telefax or e-mail of the time and place such repairs will be made and, if the VESSEL is not thereby delayed, or her operation or working is not thereby delayed, or her operation or working is not thereby impaired, the SELLER shall have the right to verify by its own representative(s) or that of Classification Society the nature and extent of the defects complained of. The SELLER shall, in such cases, promptly advise the BUYER, by telefax or e-mail, after such examination has been completed, of its acceptance or rejection of the defects as ones that are subject to the guarantee herein provided.
In any circumstances as set out below, the SELLER shall immediately pay to the BUYER in United States Dollars by telegraphic transfer the actual cost for such repairs or replacements including forwarding charges, or, at the average cost for making similar repairs or replacements including forwarding charges as quoted by a leading shipyard each in China, South Korea and Singapore whichever is lower:
(a) Upon the SELLER’s acceptance of the defects as justifying remedy under this Article, or
(b) If the SELLER neither accepts nor rejects the defects as above provided, nor request arbitration within thirty (30) days after its receipt of the BUYER’s notice of defects.
Any dispute shall be referred to arbitration in accordance with the provisions of Article XIII hereof.
4.
EXTENT OF THE SELLER’S LIABILITY
The SELLER shall have no obligation and/or liabilities with respect to defects discovered after the expiration of the period of guarantee as specified in Paragraph 1 of this Article.
The SELLER shall be liable to the BUYER for defects and damages caused by any of the defects specified in Paragraph 1 of this Article provided that such liability of the SELLER shall be limited to damage occasioned within the guarantee period specified in Paragraph 1 above. The SELLER shall not be obligated to repair, or to be liable for, damages to the VESSEL, or to any part of the equipment thereof, due to ordinary wear and tear or caused by the defects other than those specified in Paragraph 1 above, nor shall there be any SELLER’s
33
liability hereunder for defects in the VESSEL, or any part of the equipment thereof, caused by fire or accidents at sea or elsewhere, or mismanagement, accidents, negligence, or willful neglect, on the part of the BUYER, its employees or agents including the VESSEL’s officers, crew and passengers, or any persons on or doing work on the VESSEL other than the SELLER, its employees, agents or sub-contractors. Likewise, the SELLER shall not be liable for defects in the VESSEL, or the equipment or any part thereof, due to repairs or replacement which were made by those other than the SELLER and/or their sub-contractors or which have not been carried out in accordance with the procedures set out in this Article.
Upon delivery of the VESSEL to the BUYER, in accordance with the terms of the Contract, the SELLER shall thereby and thereupon be released of all responsibility and liability whatsoever and howsoever arising under or by virtue of this Contract (save in respect of those obligations to the BUYER expressly provided for in this Article IX) including without limitation, any responsibility or liability for defective workmanship, materials or equipment, design or in respect of any other defects whatsoever and any loss or damage resulting from any act, omission or default of the SELLER. The SELLER shall, in no circumstances, be liable for any consequential loss or special loss, or expenses arising from any cause whatsoever including, without limitation, loss of time, loss of profit or earnings or demurrage directly from any commitments of the BUYER in connection with the VESSEL.
The Guarantee provided in this Article and the obligations and the liabilities of the SELLER hereunder are exclusive and in lieu of and the BUYER hereby waives all other remedies, warranties, guarantees or liabilities, express or implied, arising by Law or otherwise (including without limitation any obligations of the SELLER with respect to fitness, merchantability and consequential damages) or whether or not occasioned by the SELLER’s negligence. This Guarantee shall not be extended, altered or varied except by a written instrument signed by the duly authorized representatives of the SELLER, and the BUYER.
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ARTICLE X CANCELLATION, REJECTION AND RESCISSION BY THE BUYER
1.
All payments made by the BUYER prior to the delivery of the VESSEL shall be in the nature of advance to the SELLER. In the event the BUYER shall exercise its right of cancellation and/or rescission of this Contract under and pursuant to any of the provisions of this Contract specifically permitting the BUYER to do so, then the BUYER shall notify the SELLER in writing or by telefax or e-mail, and such cancellation and/or rescission shall be effective as of the date the notice thereof is received by the SELLER.
For the avoidance of doubt, the events and/or occurrences which entitle the BUYER to rescind and cancel the Contract shall be limited to those occurrences or events specified in this Contract which specifically permits the BUYER to do so. No other event or circumstance shall give rise to any right to the BUYER for rescission or cancellation of the Contract whether under this Contract or under any applicable laws.
2.
Thereupon the SELLER shall refund in United States dollars immediately to the BUYER the full amount of all sums paid by the BUYER to the SELLER on account of the VESSEL, unless the SELLER disputes the BUYER’s cancellation and/or rescission by instituting arbitration in accordance with Article XIII. If the BUYER’s cancellation or rescission of this Contract is disputed by the SELLER by instituting arbitration as aforesaid, then no refund shall be made by the SELLER, and the BUYER shall not be entitled to demand repayment from the Refund Guarantor under its guarantee, until the arbitration award between the BUYER and the SELLER, which shall be in favour of the BUYER, declaring the BUYER’s cancellation and/or rescission justified, is made and delivered to the SELLER by the arbitration tribunal. In the event that the SELLER is obligated to make refundment, the SELLER shall pay the BUYER interest in United States Dollars at the rate of six percent (6%) per annum, if the cancellation or rescission of the Contract is exercised by the BUYER in accordance with the provision of Article III 1(c), 2(c), 3(c) or 4(c) hereof, on the amount required herein to be refunded to the BUYER computed from the respective dates when such sums were received by Bank of China, New York Branch or any such other bank account as nominated by the SELLER pursuant to Article II 4(a), 4(b), 4(c) or 4(d) from the BUYER to the date of remittance by telegraphic transfer of such refund to the BUYER by the SELLER, provided, however, that if the said rescission by the BUYER is made by reason of Paragraph 1 of Article VIII or Paragraph 2 (b) of Article XII, then in such event the SELLER shall not be required to pay any interest.
It is hereby understood by both parties that payment of any interest provided herein is by way of liquidated damages due to cancellation of this CONTRACT.
If the SELLER is obligated by the terms of the Contract to refund to the BUYER the instalments paid by the BUYER to the SELLER as provided in this Paragraph, the BUYER’s supplied items shall be at BUYER’s disposal.
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3.
Upon such refund by the SELLER to the BUYER, all obligations, duties and liabilities of each of the parties hereto to the other under this Contract shall be forthwith completely discharged.
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ARTICLE XI BUYER’S DEFAULT
1.
DEFINITION OF DEFAULT
The BUYER shall be deemed in default of its obligation under the Contract if any of the following events occurs:
(a)
The BUYER fails to pay the First or Second or Third or Fourth installment to the SELLER when any such installment becomes due and payable under the provisions of Article II hereof and provided the BUYER shall have received the SELLER’s demand for payment in accordance with Article II hereof; or
(b)
The BUYER fails to deliver to the SELLER an irrevocable and unconditional Letter of Guarantee under the provisions of Article II hereof; or
(c)
The BUYER fails to pay the fifth installment to the SELLER in accordance with Paragraph 3(e) and 4(e) of Article II hereof provided the BUYER shall have received the SELLER’s demand for payment in accordance with Article II hereof; or
(d)
The BUYER fails to take delivery of the VESSEL, when the VESSEL is duly tendered for delivery by the SELLER under the provisions of Article VII hereof.
2.
NOTICE OF DEFAULT
If the BUYER is in default of payment or in performance of its obligations as provided hereinabove, the SELLER shall notify the BUYER to that effect by telefax or e-mail after the date of occurrence of the default as per Paragraph 1 of this Article and the BUYER shall forthwith acknowledge by telefax or E-mail to the SELLER that such notification has been received. In case the BUYER does not give the aforesaid telefax or E-mail acknowledgment to the SELLER within three (3) calendar days it shall be deemed that such notification has been duly received by the BUYER.
3.
INTEREST AND CHARGE
(a)
If the BUYER is in default of payment as to any installment as provided in Paragraph 1 (a) and/or 1 (c) of this Article, the BUYER shall pay interest on such installment at the rate of six percent (6%) per annum until the date of the payment of the full amount, including all aforesaid interest. In case the BUYER shall fail to take delivery of the VESSEL when required to as provided in Paragraph 1 (d) of this Article, the BUYER shall be deemed in default of payment of the fifth installment and shall pay interest thereon at the same rate as aforesaid from and including the day on which the
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VESSEL is tendered for delivery by the SELLER, as provided in Article VII hereof.
(b)
In any event of default by the BUYER under 1 (a) or 1 (b) or 1 (c) or 1 (d) above, the BUYER shall also pay all costs, charges and expenses incurred by the SELLER in consequence of such default.
4.
DEFAULT BEFORE DELIVERY OF THE VESSEL
(a)
If any default by the BUYER occurs as defined in Paragraph 1 (a) or 1 (b) or 1 (c) or 1 (d) of this Article, the Delivery Date shall be automatically postponed for a period of continuance of such default by the BUYER. In any event of default by the BUYER, the BUYER shall also pay all charges and expenses incurred by the BUILDER in consequence of such default.
(b)
If any such default as defined in Paragraph 1 (a) or 1 (b) or 1 (c) or 1 (d) of this Article committed by the BUYER continues for a period of fifteen (15) days, then, the SELLER shall have all following rights and remedies:
(i)
The SELLER may, at its option, cancel or rescind this Contract, provided the SELLER has notified the BUYER of such default pursuant to Paragraph 2 of this Article, by giving notice of such effect to the BUYER by telefax or e-mail. Upon receipt by the BUYER of such telefax or e-mail notice of cancellation or rescission, all of the BUYER’s Supplies shall forthwith become the sole property of the SELLER, and the VESSEL and all its equipment and machinery shall be at the sole disposal of the SELLER for sale or otherwise; and
(ii)
In the event of such cancellation or rescission of this Contract, the SELLER shall be entitled to retain any instalment or instalments of the Contract Price paid by the BUYER to the SELLER on account of this Contract; and
(iii)
(Applicable to any BUYER’s default defined in 1(a) of this Article) The SELLER shall, without prejudice to the SELLER’s right to recover from the BUYER the 5th instalment, interest, costs and/or expenses by applying the proceeds to be obtained by sale of the VESSEL in accordance with the provisions set out in this Contract, have the right to declare all unpaid 1st, 2nd, 3rd and 4th instalments to be forthwith due and payable, and upon such declaration, the SELLER shall have the right to immediately demand the payment of the aggregate amount of all unpaid 1st, 2nd, 3rd, and 4th instalments from the Payment Guarantor in accordance with the terms and conditions of the Payment Guarantee issued by the Payment Guarantor.
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5.
SALE OF THE VESSEL
(a)
In the event of cancellation or rescission of this Contract as above provided, the SELLER shall have full right and power either to complete or not to complete the VESSEL as it deems fit, and to sell the VESSEL at a public or private sale on such terms and conditions as the SELLER thinks fit without being answerable for any loss or damage occasioned to the BUYER thereby.
In the case of sale of the VESSEL, the SELLER shall give telefax, or E-mail, or written notice to the BUYER.
(b)
In the event of the sale of the VESSEL in its completed state, the proceeds of sale received by the SELLER shall be applied firstly to payment of all expenses attending such sale and otherwise incurred by the SELLER as a result of the BUYER’s default, and then to payment of all unpaid installments and/or unpaid balance of the Contract Price and interest on such installment at the interest rate as specified in the relevant provisions set out above from the respective due dates thereof to the date of application.
(c)
In the event of the sale of the VESSEL in its incomplete state, the proceeds of sale received by the SELLER shall be applied firstly to all expenses attending such sale and otherwise incurred by the SELLER as a result of the BUYER’s default, and then to payment of all costs of construction of the VESSEL (such costs of construction, as herein mentioned, shall include but are not limited to all costs of labour and/or prices paid or to be paid by CSTC and/or the BUILDER for the equipment and/or technical design and/or materials purchased or to be purchased, installed and/or to be installed on the VESSEL) and/or any fees, charges, expenses and/or royalties incurred and/or to be incurred for the VESSEL less the installments so retained by the SELLER, and compensation to the SELLER for a reasonable sum of loss of profit due to the cancellation or rescission of this Contract.
(d)
In either of the above events of sale, if the proceed of sale exceeds the total of the amounts to which such proceeds are to be applied as aforesaid, the SELLER shall promptly pay the excesses to the BUYER without interest, provided, however that the amount of each payment to the BUYER shall in no event exceed the total amount of installments already paid by the BUYER and the cost of the BUYER’s Supplied Items, if any.
(e)
If the proceed of sale are insufficient to pay such total amounts payable as aforesaid, the BUYER shall promptly pay the deficiency to the SELLER upon request.
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ARTICLE XII INSURANCE
1.
EXTENT OF INSURANCE COVERAGE
From the time of keel-laying of the first section of the VESSEL until the same is completed, delivered to and accepted by the BUYER, the SELLER shall, at its own cost and expense, keep the VESSEL and all machinery, materials, equipment, appurtenances and outfit, delivered to the BUILDER for the VESSEL or built into, or installed in or upon the VESSEL, including the BUYER’s Supplied Items, fully insured with first class Chinese insurance companies for BUILDER’s RISK.
The amount of such insurance coverage shall, up to the date of delivery of the VESSEL, be in an amount at least equal to, but not limited to, the aggregate of the payments made by the BUYER to the SELLER including the value of maximum amount of US$ 200,000.00 of the BUYER’s Supplied Items. The policy referred to hereinabove shall be taken out in the name of the SELLER and all losses under such policy shall be payable to the SELLER.
2.
APPLICATION OF RECOVERED AMOUNT
(a)
Partial Loss:
In the event the VESSEL shall be damaged by any insured cause whatsoever prior to acceptance and delivery thereof by the BUYER and in the further event that such damage shall not constitute an actual or a constructive total loss of the VESSEL, the SELLER shall apply the amount recovered under the insurance policy referred to in Paragraph 1 of this Article to the repair of such damage satisfactory to the Classification Society and other institutions or authorities as described in the Specifications without additional expenses to the BUYER, and the BUYER shall accept the VESSEL under this Contract if completed in accordance with this Contract and Specifications and not make any claim for any consequential loss or depreciation.
(b)
Total Loss:
However, in the event that the VESSEL is determined to be an actual or constructive total loss, the SELLER shall either:
(i)
By the mutual agreement between the parties hereto, proceed in accordance with terms of this Contract, in which case the amount recovered under said insurance policy shall be applied to the reconstruction and/or repair of the VESSEL’s damage and/or reinstallation of BUYER’s Supplied Items, provided the parties hereto shall have first agreed in writing as to such reasonable extension of the Delivery Date
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and adjustment of other terms of this Contract including the Contract Price as may be necessary for the completion of such reconstruction; or
(ii)
If due to whatever reasons the parties fail to agree on the above, then the SELLER shall refund immediately to the BUYER the amount of all installments paid to the SELLER under this Contract without interest, whereupon this Contract shall be deemed to be canceled and all rights, duties, liabilities and obligations of each of the parties to the other shall terminate forthwith.
Within thirty (30) days after receiving telefax or e-mail notice of any damage to the VESSEL constituting an actual or a constructive total loss, the BUYER shall notify the SELLER in writing or by telefax or e-mail of its agreement or disagreement under this sub-paragraph. In the event the BUYER fails to so notify the SELLER, then such failure shall be construed as a disagreement on the part of the BUYER. This Contract shall be deemed as rescinded and canceled and Paragraph 2 (b) (ii) of this Article shall apply.
3.
TERMINATION OF THE SELLER’S OBLIGATION TO INSURE
The SELLER’s obligation to insure the VESSEL hereunder shall cease and terminate forthwith upon delivery thereof to and acceptance by the BUYER.
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ARTICLE XIII DISPUTES AND ARBITRATION
1.
PROCEEDINGS
In the event of any dispute between the parties hereto as to any matter arising out of or relating to this Contract or any stipulation herein or with respect thereto which cannot be settled by the parties themselves, such dispute shall be resolved by arbitration in London England in accordance with the Laws of England. Any arbitration of disputes under this Contract shall be conducted in accordance with the London Maritime Arbitrators’ Association Terms. Either party may demand arbitration of any such disputes by giving written notice to the other party. Any demand for arbitration by either party hereto shall state the name of the arbitrator appointed by such party and shall also state specifically the question or questions as to which such party is demanding arbitration. Within twenty (20) days after receipt of notice of such demand for arbitration, the other party shall in turn appoint a second arbitrator. The two arbitrators thus appointed shall thereupon select a third arbitrator, and the three arbitrators so named shall constitute the board of arbitration (hereinafter called the “Arbitration Board”) for the settlement of such dispute.
In the event however, that said other party should fail to appoint a second arbitrator as aforesaid within twenty (20) days following receipt of notice of demand of arbitration, it is agreed that such party shall thereby be deemed to have accepted and appointed as its own arbitrator the one already appointed by the party demanding arbitration, and the arbitration shall proceed forthwith before this sole arbitrator, who alone, in such event, shall constitute the Arbitration Board. And in the further event that the two arbitrators appointed respectively by the parties hereto as aforesaid should be unable to reach agreement on the appointment of the third arbitrator within twenty (20) days from the date on which the second arbitrator is appointed, either party of the said two arbitrators may apply to the President for the time being of the London Maritime Arbitrators Association to appoint the third arbitrator. The award of the arbitration, made by the sole arbitrator or by the majority of the three arbitrators as the case may be, shall be final, conclusive and binding upon the parties hereto.
2.
ALTERNATIVE ARBITRATION BY AGREEMENT
Notwithstanding the preceding provisions of this Article, it is recognized that in the event of any dispute or difference of opinion arising in regard to the construction of the VESSEL, her machinery and equipment, or concerning the quality of materials or workmanship thereof or thereon, such dispute may be referred to the Classification Society upon mutual agreement of the parties hereto. In such case, the opinion of the Classification Society shall be final and binding on the parties hereto.
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3.
NOTICE OF AWARD
Notice of any award shall immediately be given in writing or by telefax or e-mail to the SELLER and the BUYER.
4.
EXPENSES
The Arbitration Board shall determine which party shall bear the expenses of the arbitration or the proportion of such expenses which each party shall bear.
5.
AWARD OF ARBITRATION
Award of arbitration, shall be final and binding upon the parties concerned.
6.
ENTRY IN COURT
Judgment on any award may be entered in any court of competent jurisdiction.
7.
ALTERATION OF DELIVERY DATE
In the event of reference to arbitration of any dispute arising out of matters occurring prior to delivery of the VESSEL, the SELLER shall not be entitled to extend the Delivery Date as defined in Article VII hereof and the BUYER shall not be entitled to postpone its acceptance of the VESSEL on the Delivery Date or on such newly planned time of delivery of the VESSEL as declared by the SELLER. However, if the construction of the VESSEL is affected by any arbitration, the SELLER shall then be permitted to extend the Delivery Date as defined in Article VII and the decision or the award shall include a finding as to what extent the SELLER shall be permitted to extend the Delivery Date.
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ARTICLE XIV RIGHT OF ASSIGNMENT
1.
ASSIGNMENT AND TRANSFER BY THE BUYER
The SELLER agrees that prior to delivery of the VESSEL, the Contract may, with the prior written approval/consent of the SELLER, which the SELLER shall not unreasonably withhold, be assigned or transferred to BUYER’s bank for financing purpose or to a 100% subsidiary of the BUYER.
For the avoidance of doubt, the BUYER’s rights to transfer or assign under this Paragraph 1 shall apply equally to any transferee or assignee of the BUYER’s rights and obligations under this Contract as defined in the above paragraph, but always subject to SELLER’s prior consent, which the SELLER shall not unreasonably withhold.
2.
ASSIGNMENT BY THE
SELLER
SELLER shall have the right to assign this Contract to SELLER’s bank for financing purpose at any time after the effective date hereof, provided that prior written agreement is obtained from the BUYER, which the BUYER shall not unreasonably withhold.
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ARTICLE XV TAXES AND DUTIES
1.
TAXES
The SELLER shall bear and pay all taxes, duties, stamps, dues levies and fees of whatsoever nature incurred or imposed in China in connection with the execution and/or performance of this Contract by the SELLER. Any taxes and/or duties imposed upon those items or services procured by the SELLER in the People’s Republic of China or elsewhere for the construction of the VESSEL shall be borne by the SELLER.
The BUYER shall be responsible for the personal income tax for any person it employs, including BUYER’S REPRESENTATIVES or other BUYER’s staff, agent and representatives who work at SELLER’s shipyard and premise.
2.
DUTIES
The BUYER shall bear and pay all taxes, duties, stamps and fees incurred outside China in connection with execution and/or performance of this Contract by the BUYER, except for taxes, duties, stamps, dues, levies and fees imposed upon those items which are to be procured by the SELLER for the construction of the VESSEL in accordance with the terms of this Contract and the Specifications..
Any tax or duty other than those described hereinabove, if any, shall be borne by the BUYER.
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ARTICLE XVI PATENTS, TRADEMARKS AND COPYRIGHTS
The machinery and equipment of the VESSEL may bear the patent number, trademarks or trade names of the manufacturers. The SELLER shall defend and hold harmless the BUYER from patent liability or claims of patent infringement of any nature or kind, including costs and expenses for, or on account of any patented or patentable invention made or used in the performance of this Contract and also including cost and expense of litigation, if any.
Nothing contained herein shall be construed as transferring any patent or trademark rights or copyright in equipment covered by this Contract, and all such rights are hereby expressly reserved to the true and lawful owners thereof. Notwithstanding any provisions contained herein to the contrary, the SELLER’s obligation under this Article should not be terminated by the passage of any specified period of time.
The SELLER’s indemnity hereunder does not extend to equipment or parts supplied by the BUYER to the BUILDER if any.
The SELLER retains all rights with respect to the Specification, and plans and working drawings, technical descriptions, calculations, test results and other data, information and documents concerning the design and construction of the VESSEL and the BUYER undertakes therefore not to disclose the same or divulge any information contained therein to any third parties, without the prior written consent of the SELLER, excepting where it is necessary for usual operation, repair and maintenance, sale or charter of the VESSEL or registration, classification insurance or sale of the VESSEL.
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ARTICLE XVII NOTICE
Any and all notices and communications in connection with this Contract shall be addressed as follows:
To the BUYER :
NAVIG8 CRUDE TANKERS INC.
Address :
c/o Navig8 Asia Pte Ltd
3 Temasek Avenue
#25-01 Centennial Tower
Singapore 039190
Telefax No. :
+44 207 467 5867
E-mail :
legal@navig8group.com
To CSTC :
China Shipbuilding Trading Company, Limited
Address :
c/o Marine Tower,
No.1 Pudong Dadao,
Shanghai 200120
the People’s Republic of China
Telefax No. :
(021) 68860801
E-mail :
shipexport@mail.chinaships.com
To the BUILDER : Shanghai Waigaoqiao Shipbuilding Co., Ltd.
Address : 3001 Zhouhai Road, Pudong New District, Shanghai 200137,
the People’s Republic of China
Telex No. : (021) 58480446
E-mail : swsbiz@chinasws.com
Any notices and communications sent by CSTC or the BUILDER alone to the BUYER shall be deemed as having being sent by both CSTC and the BUILDER.
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Any change of address shall be communicated in writing by registered mail or by e-mail by the party making such change to the other party and in the event of failure to give such notice of change, communications addressed to the party at their last known address shall be deemed sufficient.
Any and all notices, requests, demands, instructions, advice and communications in connection with this Contract shall be deemed to be given at, and shall become effective from, the time when the same is delivered to the address of the party to be served, provided, however, that registered airmail shall be deemed to be delivered ten (10) days after the date of dispatch, express courier service shall be deemed to be delivered five (5) days after the date of dispatch, and telefax or e-mail acknowledged by the answerbacks shall be deemed to be delivered upon dispatch. E-mail transmissions shall be deemed as delivered upon the subject email has been removed to the “Sent” box on the sending computer.
Any and all notices, communications, Specifications and drawings in connection with this Contract shall be written in the English language and each party hereto shall have no obligation to translate them into any other language.
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ARTICLE XVIII EFFECTIVE DATE OF CONTRACT
This Contract shall become effective upon signing of this Contract
Upon signing of this Contract, both parties hereto shall do as follows:
(1)
Receipt by the BUYER of a Refund Guarantee in the form annexed hereto as Exhibit A issued by Refund Guarantor in accordance with Article II Paragraph 7 hereof.
(2)
Receipt by the SELLER of the first instalment in accordance with Paragraph 3(a) and 4(a) of Article II of this Contract; and
(3)
Receipt by the SELLER of a Letter of Guarantee in the form annexed hereto as Exhibit B issued by the Refund Guarantor in accordance with Article II Paragraph 6 hereof.]
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ARTICLE XIX INTERPRETATION
1.
LAW APPLICABLE
The parties hereto agree that the validity and interpretation of this Contract and of each Article and part hereof be governed by and interpreted in accordance with the laws of England.
2.
DISCREPANCIES
All general language or requirements embodied in the Specifications are intended to amplify, explain and implement the requirements of this Contract. However, in the event that any language or requirements so embodied in the Specifications permit an interpretation inconsistent with any provision of this Contract, then in each and every such event the applicable provisions of this Contract shall govern. The Specifications and plans are also intended to explain each other, and anything shown on the plans and not stipulated in the Specifications or stipulated in the Specifications and not shown on the plans, shall be deemed and considered as if embodied in both. In the event of conflict between the Specifications and plans, the Specifications shall govern.
However, with regard to such inconsistency or contradiction between this Contract and the Specifications as may later occur by any change or changes in the Specifications agreed upon by and among the parties hereto after execution of this Contract, then such change or changes shall govern.
3.
DEFINITION
“Banking Day(s)” are days on which banks are open in Singapore, New York, U.S.A.
“Business Day(s)” are days on which banks are open in Singapore and P. R. China.
In absence of stipulation of “banking day(s)” or “Business Day(s)”, the “day” or “days” shall be taken as “calendar day” or “calendar days”.
4.
ENTIRE AGREEMENT
This Contract sets forth the entire understanding of the Parties with respect to the subject matter discussed herein. It supersedes all prior discussions, negotiations and agreements, (including but not limited to the Letter of Intent / Option Agreement) whether oral or written, expressed or implied.
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In WITNESS WHEREOF, the parties hereto have caused this Contract to be duly executed on the day and year first above written.
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THE BUYER :
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NAVIG8 CRUDE TANKERS INC.
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By :
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/s/ Rasmus Bach Nielsen
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Name :
Rasmus Bach Nielsen
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Title : Attorney-in-Fact
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THE SELLER:
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CSTC : China Shipbuilding Trading Company, Limited
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By :
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/s/ HZ Fang
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Name :
HZ Fang
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Title : Attorney-in-Fact
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THE BUILDER: Shanghai Waigaoqiao Shipbuilding Co., Ltd.
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By :
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/s/ Huang Yicheng
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Name :
Huang Yicheng
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Title : Attorney-in-Fact
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Exhibit “A”: IRREVOCABLE LETTER OF GUARANTEE NO.
To:
Date:
Dear Sirs,
Irrevocable Letter of Guarantee No.
At the request of China Shipbuilding Trading Company, Limited and in consideration of your agreeing to pay China Shipbuilding Trading Company, Limited and Shanghai Waigaoqiao Shipbuilding Co., Ltd. (hereinafter collectively called “the SELLER”) the instalments before delivery of the VESSEL under the Contract concluded by and amongst you, and the SELLER dated 17
th
December, 2013 for the construction of one (1) 300,000 Metric Tons Deadweight Crude Oil Tanker to be designated as Hull No. H1358 (hereinafter called “the Contract”), we, the undersigned, do hereby guarantee irrevocably, as primary obligor, repayment to you by the SELLER of an amount up to but not exceeding a total amount of United States Dollars Thirty Seven Million Thirty Thousand One Hundred and Forty Only (US$ 37,030,140.00) (plus the interest described below) representing the first instalment of the Contract Price of the VESSEL, United States Dollars Nine Million Two Hundred and Fifty Seven Thousand Five Hundred and Thirty Five Only (US$ 9,257,535.00), the second instalment of the Contract Price of the VESSEL, United States Dollars Nine Million Two Hundred and Fifty Seven Thousand Five Hundred and Thirty Five Only (US$ 9,257,535.00), the third instalment of the Contract Price of the VESSEL, United States Dollars Nine Million Two Hundred and Fifty Seven Thousand Five Hundred and Thirty Five Only (US$ 9,257,535.00) and the fourth instalment of the Contract Price of the VESSEL, United States Dollars Nine Million Two Hundred and Fifty Seven Thousand Five Hundred and Thirty Five Only (US$ 9,257,535.00), as you may have paid to the SELLER under the Contract prior to the delivery of the VESSEL, if and when the same or any part thereof becomes repayable to you from the SELLER in accordance with the terms (Article X or Article XII 2(b)) of the Contract. Should the SELLER fail to make such repayment, we shall pay you the amount the SELLER ought to pay with an interest at the rate of six percent (6%) per annum if the cancellation of the Contract is exercised by you in accordance with the provisions of Article III 1(c), 2(c), 3(c) or 4(c) of the Contract or at the rate of zero percent (0%) per annum if cancellation of the Contract is exercised by you by reason of paragraph 1 of Article VIII or paragraph 2(b) of Article XII, in both cases calculated from the date the installments were received by the SELLER to the date of remittance of such refund within thirty (30) Business Days after our receipt of the relevant written demand from you for repayment. Any written demand to us shall be accepted by us as conclusive evidence that the amount claimed is due under this guarantee, provided that such demand: (1) is signed by authorized representative of you and accompanied by a power of attorney granted by you providing the relevant authorized representative with authority to make the demand; (2) states that the principal amount and interest thereon if any demanded by you has been demanded by you from the SELLER and was not paid by the SELLER within forty-five (45) days after that demand upon the SELLER; and (3) is accompanied by a copy of your said demand upon the SELLER.
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It is hereby understood that payment of any interest provided herein is by way of liquidated damages due to cancellation of the CONTRACT.
However, in the event of any dispute between you and the SELLER in relation to:
(1) whether the SELLER shall be liable to repay the instalment or instalments paid by you and
(2) consequently whether you shall have the right to demand payment from us,
and such dispute is submitted either by the SELLER or by you for arbitration in accordance with Article XIII of the Contract, we shall be entitled to withhold and defer payment until the arbitration award is published. We shall not be obligated to make any payment to you unless the arbitration award orders the SELLER to make repayment. If the SELLER fails to honour the award within 45 days of the final award being issued then we shall refund to you against your further written demand accompanied with a certified copy of the arbitration award which orders the SELLER to make repayment, to the extent the arbitration award orders but not exceeding the aggregate amount of this guarantee plus the interest described above.
The undersigned hereby certifies, represents and warrants that all acts, conditions and things required to be done and performed and to have occurred prior to the creation and issuance of this guarantee, and to ensure that this guarantee constitutes valid and legally binding obligations of the undersigned enforceable in accordance with its terms have been done and performed and have occurred in due and strict compliance with applicable laws.
The said repayment shall be made by us in United States Dollars. This Letter of Guarantee shall become effective from the time of the actual receipt of the first instalment by the SELLER from you and the amounts effective under this Letter of Guarantee shall correspond to the total payment actually received by the SELLER from time to time under the Contract prior to the delivery of the VESSEL. However, the available amount under this Letter of Guarantee shall in no event exceed above mentioned amount actually received by the SELLER, together with interest calculated, as described above at six percent (6%) or, zero percent (0%) per annum, as the case may be for the period commencing with the date of receipt by the SELLER of the respective instalment to the date of repayments thereof.
This Letter of Guarantee shall remain in force until the VESSEL has been delivered to and accepted by you or refund has been made by the SELLER or ourselves, or until November 11th, 2017, whichever occurs earlier, after which you are to return it to us by airmail for cancellation. Upon its expiration, this guarantee shall become null and void, any action of maintaining the original of this guarantee and its amendment(s) shall give no right to you for lodging any more claim hereunder.
However in the event that a dispute in respect of a refund is being referred to arbitration in accordance with Article XIII of the Contract, then this Letter of Guarantee shall continue to
53
remain in force until 60 days after such arbitration proceedings are concluded and a final arbitration award has been issued.
Any claim under this guarantee must be received by us before its expiration.
It is agreed that this Letter of Guarantee may, with our prior written approval and such approval shall not be unreasonably withheld, be assigned by you (excluding, in respect of a first class international bank, the right of demanding payment which shall in all respect remain with yourself) to a first class international bank that is financing the whole or part of your purchase of the VESSEL or one of your 100% subsidiaries or affiliates.
This Letter of Guarantee shall be construed, interpreted and governed by the Laws of England and any dispute arising out of or in connection with this Letter of Guarantee shall be submitted to the exclusive jurisdiction of the courts of England.
For the Refund Guarantor
54
Exhibit “B” IRREVOCABLE LETTER OF GUARANTEE
FOR THE 2ND, 3RD, AND 4TH INSTALLMENTS
To:
China Shipbuilding Trading Co., Ltd.
56(Yi), Zhongguancun Nandajie,
Beijing 100044, P. R. China
Dear Sirs,
(1)
In consideration of your entering into a shipbuilding contract dated 17
th
December 2013 (“the Shipbuilding Contract”) with NAVIG8 CRUDE TANKERS INC. or its Nominee as the buyer (“the BUYER”) for the construction of one (1) 300,000 Metric Tons Deadweight Crude Oil Tanker known as Shanghai Waigaoqiao Shipbuilding Co., Ltd.’s Hull No. H1358 (“the VESSEL”), we, NAVIG8 CRUDE TANKERS INC., hereby IRREVOCABLY, ABSOLUTELY and UNCONDITIONALLY guarantee, as the primary obligor and not merely as the surety, the due and punctual payment by the BUYER of each and all of the 2nd, 3rd, and 4th installments of the Contract Price amounting to a total sum of United States Dollars Twenty Seven Million Seven Hundred and Seventy Two Thousand Six Hundred and Five only (US$ 27,772,605.00) as specified in (2) below.
(2)
The instalments guaranteed hereunder, pursuant to the terms of the Shipbuilding Contract, comprise the 2nd installment in the amount of U.S. Dollars Nine Million Two Hundred and Fifty Seven Thousand Five Hundred and Thirty Five Only (US$ 9,257,535.00) payable by the BUYER within three (3) Singapore and New York business days after cutting of the first steel plate in your BUILDER’s workshop, the third installment in the amount of U.S. Dollars Nine Million Two Hundred and Fifty Seven Thousand Five Hundred and Thirty Five Only (US$ 9,257,535.00) payable by the BUYER within three (3) Singapore and New York business days after keel-laying of the first section of the VESSEL, and the 4th installment in the amount U.S. Dollars Nine Million Two Hundred and Fifty Seven Thousand Five Hundred and Thirty Five Only (US$ 9,257,535.00) payable by the BUYER within three (3) Singapore and New York business days after launching of the VESSEL.
(3)
We also IRREVOCABLY, ABSOLUTELY and UNCONDITIONALLY guarantee, as primary obligor and not merely as surety, the due and punctual payment by the BUYER of interest on each Instalment guaranteed hereunder at the rate of six percent (6%) per annum from and including the first day after the date of instalment in default until the date of full
55
payment by us of such amount guaranteed hereunder.
(4)
In the event that the BUYER fails to punctually pay any Instalment guaranteed hereunder or the BUYER fails to pay any interest thereon, and any such default continues for a period of fifteen (15) days, then, upon receipt by us of your first written demand, we shall immediately pay to you or your assignee all unpaid 2nd, 3rd and 4th instalments, together with the interest as specified in paragraph (3) hereof, without requesting you to take any or further action, procedure or step against the BUYER or with respect to any other security which you may hold.
(5)
We hereby agree that at your option this Guarantee and the undertaking hereunder shall be assignable to and if so assigned shall inure to the benefit of any 3rd party designated by you or Bank of China, Head Office, Banking Department, Beijing, the People’s Republic of China as your assignee as if any such third party or Bank of China, Head Office, Banking Department, Beijing, the People’s Republic of China were originally named herein.
(6)
Any payment by us under this Guarantee shall be made in the Unites States Dollars by telegraphic transfer to Bank of China, New York Branch, 415 Madison Avenue, New York, N. Y. 10017 U.S.A., as receiving bank nominated by you for credit to the account of you with Bank of China, Head Office, Banking Department, Beijing, the People’s Republic of China or through other receiving bank to be nominated by you from time to time, in favour of you or your assignee.
(7)
Our obligations under this guarantee shall not be affected or prejudiced by any dispute between you as the SELLER and the BUYER under the Shipbuilding Contract or by the BUILDER’s delay in the construction and/or delivery of the VESSEL due to whatever causes or by any variation or extension of their terms thereof or by any security or other indemnity now or hereafter held by you in respect thereof, or by any time or indulgence granted by you or any other person in connection therewith, or by any invalidity or unenforceability of the terms thereof, or by any act, omission, fact or circumstances whatsoever, which could or might, but for the foregoing, diminish in any way our obligations under this Guarantee.
(8)
Any claim or demand shall be in writing signed by one of your officers and may be served on us either by hand or by post and if sent by post to (or such other address as we may notify to you in writing), or by email (email: ) via Bank of China, with confirmation in writing.
56
(9)
This Letter of Guarantee shall come into full force and effect upon delivery to you of this Guarantee and shall continue in force and effect until the VESSEL is delivered to and accepted by the BUYER and the BUYER shall have performed all its obligations for taking delivery thereof or until the full payment of all 2nd, 3rd, and 4th Instalments together with the aforesaid interests by the BUYER or us, whichever first occurs.
(10)
The maximum amount, however, that we are obliged to pay to you under this Guarantee shall not exceed the aggregate amount of U.S. Dollars Twenty Eight Million Forty Six Thousand Five Hundred and Twenty Six only (US$28,046,526.00) being an amount equal to the sum of:-
(a)
All the 2nd, 3rd and 4th instalments guaranteed hereunder in the total amount of United States Dollars Twenty Seven Million Seven Hundred and Seventy Two Thousand Six Hundred and Five only (US$ 27,772,605.00) ; and
(b)
Interest at the rate of six percent (6%) per annum on the Instalment for a period of sixty (60) days in the amount of United States Dollars Two Hundred Seventy Three Thousand Nine Hundred and Twenty One only (US$ 273,921.00).
(11)
All payments by us under this Guarantee shall be made without any set-off or counterclaim and without deduction or withholding for or on account of any taxes, duties, or charges whatsoever unless we are compelled by law to deduct or withhold the same. In the latter event we shall make the minimum deduction or withholding permitted and will pay such additional amounts as may be necessary in order that the net amount received by you after such deductions or withholdings shall equal the amount which would have been received had no such deduction or withholding been required to be made.
(12)
This Letter of Guarantee shall be construed in accordance with and governed by the Laws of England. We hereby submit to the non-exclusive jurisdiction of the English courts for the purposes of any legal action or proceedings in connection herewith in England.
(13)
When this Letter of Guarantee shall have expired as aforesaid, you will return the same to us without any request or demand from us.
IN WITNESS WHEREOF, we have caused this Letter of Guarantee to be executed and delivered by our duly authorized representative the day and year above written.
57
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Very Truly Yours
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By: NAVIG8 CRUDE TANKERS INC.
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58
Exhibit 10.83
SHIPBUILDING CONTRACT
FOR
CONSTRUCTION OF ONE 300,000 DWT CRUDE OIL TANKER
(HULL NO. H1384)
BETWEEN
NAVIG8 CRUDE TANKERS INC. or its Nominee
as BUYER
and
SHANGHAI WAIGAOQIAO SHIPBUILDING CO., LTD.
as SELLER
CONTENTS
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ARTICLE
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PAGE NO.
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ARTICLE I DESCRIPTION AND CLASS
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2
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1. DESCRIPTION:
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2
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2. CLASS AND RULES
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2
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3. PRINCIPAL PARTICULARS AND DIMENSIONS OF THE VESSEL
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3
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4. GUARANTEED SPEED
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3
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5. GUARANTEED FUEL CONSUMPTION
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3
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6. GUARANTEED DEADWEIGHT
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4
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7. SUBCONTRACTING:
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4
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8. REGISTRATION:
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4
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ARTICLE II CONTRACT PRICE & TERMS OF PAYMENT
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5
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1. CONTRACT PRICE:
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5
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2. CURRENCY:
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5
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3. TERMS OF PAYMENT:
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5
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4. METHOD OF PAYMENT:
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6
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5. PREPAYMENT:
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8
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6. SECURITY FOR PAYMENT OF INSTALMENTS BEFORE DELIVERY:
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8
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7. REFUNDS
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8
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ARTICLE III ADJUSTMENT OF THE CONTRACT PRICE
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10
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1. DELIVERY
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10
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2. INSUFFICIENT SPEED
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11
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3. EXCESSIVE FUEL CONSUMPTION
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12
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4. DEADWEIGHT
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13
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5. EFFECT OF RESCISSION OR CANCELLATION
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13
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ARTICLE IV SUPERVISION AND INSPECTION
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14
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1. APPOINTMENT OF THE BUYER’S REPRESENTATIVES
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14
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2. COMMENTS TO PLANS AND DRAWINGS
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14
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3. SUPERVISION AND INSPECTION BY THE BUYER’S REPRESENTATIVES
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15
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4. LIABILITY OF THE SELLER
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17
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5. SALARIES AND EXPENSES
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17
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6. REPLACEMENT OF BUYER’S REPRESENTATIVES
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17
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ARTICLE V MODIFICATION,CHANGES AND EXTRAS
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18
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1. HOW EFFECTED
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18
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2. CHANGES IN RULES AND REGULATIONS, ETC.
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19
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3. SUBSTITUTION OF MATERIALS AND/OR EQUIPMENT
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20
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4. BUYER’S SUPPLIED ITEMS
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20
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ARTICLE VI TRIALS
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22
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I
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1. NOTICE
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22
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2. HOW CONDUCTED
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23
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3. TRIAL LOAD DRAFT
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23
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4. METHOD OF ACCEPTANCE OR REJECTION
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23
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5. DISPOSITION OF SURPLUS CONSUMABLE STORES
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24
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6. EFFECT OF ACCEPTANCE
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25
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ARTICLE VII DELIVERY
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26
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1. TIME AND PLACE
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26
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2. WHEN AND HOW EFFECTED
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26
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3. DOCUMENTS TO BE DELIVERED TO THE BUYER
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26
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4. TITLE AND RISK
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27
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5. REMOVAL OF VESSEL
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28
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6. TENDER OF THE VESSEL
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28
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ARTICLE VIII DELAYS & EXTENSION OF TIME FOR DELIVERY
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29
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1. CAUSE OF DELAY
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29
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2. NOTICE OF DELAY
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30
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3. RIGHT TO CANCEL FOR EXCESSIVE DELAY
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30
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4. DEFINITION OF PERMISSIBLE DELAY
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31
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ARTICLE IX WARRANTY OF QUALITY
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32
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1. GUARANTEE OF MATERIAL AND WORKMANSHIP
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32
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2. NOTICE OF DEFECTS
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32
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3. REMEDY OF DEFECTS
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32
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4. EXTENT OF THE SELLER’S LIABILITY
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33
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ARTICLE X CANCELLATION, REJECTION AND RESCISSION BY THE BUYER
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35
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ARTICLE XI BUYER’S DEFAULT
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37
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1. DEFINITION OF DEFAULT
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37
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2. NOTICE OF DEFAULT
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37
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3. INTEREST AND CHARGE
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37
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4. DEFAULT BEFORE DELIVERY OF THE VESSEL
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38
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5. SALE OF THE VESSEL
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39
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ARTICLE XII INSURANCE
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40
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1. EXTENT OF INSURANCE COVERAGE
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40
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2. APPLICATION OF RECOVERED AMOUNT
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40
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3. TERMINATION OF THE SELLER’S OBLIGATION TO INSURE
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41
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ARTICLE XIII DISPUTES AND ARBITRATION
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42
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1. PROCEEDINGS
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42
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2. ALTERNATIVE ARBITRATION BY AGREEMENT
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42
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3. NOTICE OF AWARD
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43
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4. EXPENSES
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43
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5. AWARD OF ARBITRATION
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43
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II
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6. ENTRY IN COURT
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43
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7. ALTERATION OF DELIVERY TIME
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43
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ARTICLE XIV RIGHT OF ASSIGNMENT
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44
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ARTICLE XV TAXES AND DUTIES
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45
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1. TAXES
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45
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2. DUTIES
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45
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ARTICLE XVI PATENTS, TRADEMARKS AND COPYRIGHTS
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46
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ARTICLE XVII NOTICE
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47
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ARTICLE XVIII EFFECTIVE DATE OF CONTRACT
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49
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ARTICLE XIX INTERPRETATION
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50
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1. LAW APPLICABLE
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50
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2. DISCREPANCIES
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50
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3. DEFINITION
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50
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4. ENTIRE AGREEMENT
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50
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EXHIBIT “A” : IRREVOCABLE LETTER OF GUARANTEE NO.
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52
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EXHIBIT “B” IRREVOCABLE LETTER OF GUARANTEE
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55
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FOR THE 2ND, 3RD, AND 4TH INSTALLMENTS
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55
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III
SHIPBUILDING CONTRACT FOR
CONSTRUCTION OF ONE DIESEL DRIVEN 300,000 DWT CRUDE OIL TANKER
(HULL NO.
H1384
)
This CONTRACT, entered into this 21
st
day of March 2014 by and between NAVIG8 CRUDE TANKERS INC. or its Nominee, a corporation organized and existing under the Laws of Marshall Islands, having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960 (hereinafter called the “BUYER”) on one part; and SHANGHAI WAIGAOQIAO SHIPBUILDING CO., LTD. a corporation organized and existing under the Laws of the People’s Republic of China, having its registered office at 3001 Zhouhai Road, Pudong New District, Shanghai 200137, the People’s Republic of China (hereinafter called the “SELLER”) on the other part.
WITNESSETH
in consideration of the mutual covenants contained herein, the SELLER agrees to design, build, launch, equip and complete at the SELLER’s own premises or at Shanghai Jiangnan Changxing Heavy Industry Co., Ltd. at Changxing Island, Shanghai (hereinafter called the SELLER’s shipyard) and to sell and deliver to the BUYER after completion and successful trial one (1) 300,000 Metric Tons Deadweight Crude Oil Tanker as more fully described in Article I hereof, to be registered under the flag of Marshall Islands and the BUYER agrees to purchase and take delivery of the aforesaid VESSEL from the SELLER and to pay for the same in accordance with the terms and conditions hereinafter set forth.
1
ARTICLE I DESCRIPTION AND CLASS
1. DESCRIPTION:
The VESSEL is a 300,000 metric tons deadweight crude oil tanker, at scantling draft moulded of 21.3 meters (hereinafter called the “VESSEL”) of the class described below. The VESSEL shall have the SELLER’s Hull No. H1384 and shall be designed, constructed, equipped and completed in accordance with the following “Specifications”:
(1) Specification (Drawing No. 300TK-13202-CS-R1)
(2) General Arrangement (Drawing No. 300TK-13202-GA-R1)
(3) Midship Section (Drawing No. 300TK-13202-MS-R1)
(4) Makers list (Drawing No. 300TK-13202-ML-R1)
(5) Technical Memorandum on the 300,000 DWT Crude Oil Tanker Specification dated December 17
th
, 2013
attached hereto and signed by each of the parties to this Contract (hereinafter collectively called the “Specifications”), making an integral part hereof.
2. CLASS AND RULES
The VESSEL, including its machinery and equipment, shall be designed, equipped and constructed in accordance with the rules and regulations issued and having become effective and compulsorily applicable to the VESSEL up to and on the date of signing this Contract of American Bureau of Shipping (ABS) (hereinafter called the “Classification Society”) and shall be distinguished in the record by the symbol of:
+A1 Oil Carrier, (E), CSR, AB-CM, +AMS, +ACCU, TCM, UWILD, SPMA, PMA, ESP, CPS, VEC-L, RW, GP, CPP, POT, CRC, BWT, HIMP, RES, RRDA
and shall also comply with the rules and regulations as fully described in the Specifications.
The requirements of the authorities as fully described in the Specifications including that of the Classification Society are to include additional rules or circulars thereof issued and become effective as at the date of signing this Contract.
The SELLER shall arrange with the Classification Society to assign a representative or representatives (hereinafter called the “Classification Surveyor”) to the SELLER’s Shipyard for supervision of the construction of the VESSEL.
All fees and charges incidental to Classification and to comply with the rules, regulations
2
and requirements of this Contract as described in the Specifications issued up to the date of signing this Contract as well as royalties, if any, payable on account of the construction of the VESSEL shall be for the account of the SELLER, except as otherwise provided and agreed herein. The key plans, materials and workmanship entering into the construction of the VESSEL shall at all times be subject to inspections and tests in accordance with the rules and regulations of the Classification Society.
Decisions of the Classification Society as to compliance or noncompliance with Classification rules and regulations shall be final and binding upon the parties hereto.
3. PRINCIPAL PARTICULARS AND DIMENSIONS OF THE VESSEL
(a) Hull:
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Length overall
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abt. 333.00m
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Length between perpendiculars
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324.00m
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Breadth moulded
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60.00m
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Depth moulded
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29.50m
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Design Draft moulded
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20.50m
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(b) Propelling Machinery:
The VESSEL shall be equipped, in accordance with the Specifications, with one (1) set of MAN 7G80ME-C 9.2 type main engine.
4. GUARANTEED SPEED
The SELLER guarantees that the trial speed, after correction, is to be not less than 15.5nautical miles per hour on the trial condition stipulated in the Specification.
The trial speed shall be corrected for wind speed and shallow water effect. The correction method of the speed shall be as specified in the Specifications.
5. GUARANTEED FUEL CONSUMPTION
The SELLER guarantees that the fuel oil consumption of the Main Engine is not to exceed 158.8+5% grams/brake horse power/hour at normal continuous output at shop trial based on diesel fuel oil having a lower calorific value of 10,200 kilocalories per kilogram.
3
6. GUARANTEED DEADWEIGHT
The SELLER guarantees that the VESSEL is to have a deadweight of not less than 300,000 metric tons at the scantling draft moulded of 21.3 meters in sea water of 1.025 specific gravity.
The term, “Deadweight”, as used in this Contract, shall be as defined in the Specifications.
The actual deadweight of the VESSEL expressed in metric tons shall be based on calculations made by the SELLER and checked by the BUYER, and all measurements necessary for such calculations shall be performed in the presence of the BUYER’s REPRESENTATIVE(S) or the party authorized by the BUYER.
Should there be any dispute between the SELLER and the BUYER in such calculations and/or measurements, the decision of the Classification Society shall be final.
7. SUBCONTRACTING:
The SELLER may, at its sole discretion and responsibility, subcontract any portion of the construction work of the VESSEL to experienced subcontractors, but delivery and final assembly into the VESSEL of any such work subcontracted shall be at the SELLER’s Shipyard. The SELLER shall remain responsible for such subcontracted work.
The performance of the works by the Shanghai Jiangnan Changxing Heavy Industry Co., Ltd. or wholly controlled subsidiaries of the SELLER does not constitute subcontracting for the purposes of this clause. Without prejudice to the generality of the foregoing the SELLER shall remain fully liable for the due and complete performance of all the SELLER’s obligations under this Contract notwithstanding the entering into of any such sub-contract as aforesaid. However, the Vessel shall always remain at the SELLER’s shipyard or Shanghai Jiangnan Changxing Heavy Industry Co., Ltd. unless the Buyer and the SELLER agree otherwise.
8. REGISTRATION:
The VESSEL shall be registered by the BUYER at its own cost and expenses under the laws of Marshall Islands at the time of delivery and acceptance thereof.
4
ARTICLE II CONTRACT PRICE & TERMS OF PAYMENT
1. CONTRACT PRICE:
The purchase price of the VESSEL is United States Dollars Ninety Eight Million Seven Hundred and Three Thousand Only (US$ 98,703,000.00), net receivable by the SELLER (hereinafter called the “Contract Price”), which is exclusive of the cost for the BUYER’s Supplies as provided in Article V hereof, and shall be subject to upward or downward adjustment, if any, as hereinafter set forth in this Contract.
2. CURRENCY:
Any and all payments by the BUYER to the SELLER under this Contract shall be made in United States Dollars.
3. TERMS OF PAYMENT:
The Contract Price shall be paid by the BUYER to the SELLER in instalments as follows:
(a) 1st Instalment:
The sum of United States Dollars Nine Million Eight Hundred and Seventy Thousand Three Hundred Only (US$9,870,300.00), representing ten percent (10%) of the Contract Price, shall become due and payable and be paid by the BUYER within three (3) Singapore and New York business days after its receipt of the Refund Guarantee substantially in the form agreed in Exhibit “A”to this Contract. SELLER shall send a copy of invoice as demand for the same.
(b) 2nd Instalment:
The sum of United States Dollars Nine Million Eight Hundred and Seventy Thousand Three Hundred Only (US$9,870,300.00), representing ten percent (10%) of the Contract Price, shall become due and payable and be paid within three (3) Singapore and New York business days after the cutting of the first steel plate of the VESSEL in the SELLER’s workshop, such to be confirmed in writing by the Classification Society, or a date not earlier than sixteen (16) months prior to the Delivery Date, whichever is later. The SELLER shall notify with a telefax or email notice to the BUYER stating that the 1st steel plate has been cut in its workshop and submit a copy of the invoice as demand for payment of this 2
nd
instalment.
5
(c) 3rd Instalment:
The sum of United States Dollars Nine Million Eight Hundred and Seventy Thousand Three Hundred Only (US$9,870,300.00), representing ten percent (10%) of the Contract Price, shall become due and payable and be paid within three (3) Singapore and New York business days after keel-laying of the first section of the VESSEL. The keel-laying shall be notified by the SELLER with a telefax or email notice to the BUYER stating that the said keel-laying has been carried out, such to be confirmed in writing by the Classification Society, or a date not earlier than eleven (11) months prior to the Delivery Date, whichever is later. The SELLER shall send to the BUYER a telefax or email stating that keel-laying has been carried out and submit a copy of the invoice as demand for payment of this 3
rd
installment.
(d) 4th Instalment:
The sum of United States Dollars Nine Million Eight Hundred and Seventy Thousand Three Hundred Only (US$9,870,300.00), representing ten percent (10%) of the Contract Price, shall become due and payable and be paid within three (3) Singapore and New York business days after launching of the VESSEL, such to be confirmed in writing by the Classification Society. The launching of the VESSEL shall be notified by the SELLER with a telefax or email notice to the BUYER stating that the launching of the VESSEL has been carried out. The SELLER shall send to the BUYER a telefax or email stating that launching has taken place and submit a copy of the invoice as demand for payment of this 4
th
installment.
(e) 5th Installment (Payment upon Delivery of the VESSEL):
The sum of United States Dollars Fifty Nine Million Two Hundred and Twenty One Thousand Eight Hundred Only (US$ 59,221,800.00), representing sixty percent (60%) of the Contract Price, plus any increase or minus any decrease due to modifications and/or adjustments of the Contract Price in accordance with provisions of the relevant Articles hereof, shall become due and payable and be paid by the BUYER to the SELLER concurrently with delivery of the VESSEL. The SELLER shall send to the BUYER a telefax or e-mail demand for this installment ten (10) days prior to the scheduled date of delivery of the VESSEL.
4. METHOD OF PAYMENT:
(a) 1st Instalment:
The BUYER shall remit the amount of this installment in accordance with Article II, Paragraph 3 (a) by telegraphic transfer to Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch, 9 Pudong Avenue, Shanghai, China for credit to
6
Account No.1001190709148073602 of Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch (Swift: ICBKCNBJSHI).
(b) 2nd Instalment:
The BUYER shall remit the amount of this installment in accordance with Article II, Paragraph 3(b) by telegraphic transfer to Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch, 9 Pudong Avenue, Shanghai, China for credit to Account No.1001190709148073602 of Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch (Swift: ICBKCNBJSHI), or through other receiving bank to be nominated by the SELLER from time to time and such nomination shall be notified to the BUYER at least 10 days prior to the due date for payment.
(c) 3rd Installment:
The BUYER shall remit the amount of this installment in accordance with Article II, Paragraph 3(c) by telegraphic transfer to Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch, 9 Pudong Avenue,Shanghai, China for credit to Account No.1001190709148073602 of Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch (Swift: ICBKCNBJSHI), or through other receiving bank to be nominated by the SELLER from time to time and such nomination shall be notified to the BUYER at least 10 days prior to the due date for payment.
(d) 4th Installment:
The BUYER shall remit the amount of this installment in accordance with Article II, Paragraph 3(d) by telegraphic transfer to Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch, 9 Pudong Avenue,Shanghai, China for credit to Account No.1001190709148073602 of Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch (Swift: ICBKCNBJSHI), or through other receiving bank to be nominated by the SELLER from time to time and such nomination shall be notified to the BUYER at least 10 days prior to the due date for payment.
(e) 5th Installment (Payable upon delivery of the VESSEL):
The BUYER shall, at least three (3) Singapore and New York business days prior to the scheduled date of delivery of the VESSEL, make an irrevocable cash deposit in the name of the BUYER with Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch, 9 Pudong Avenue, Shanghai, China for credit to Account No.1001190709148073602 of Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch (Swift: ICBKCNBJSHI), for a period of fifteen (15) days and covering the amount of this installment (as adjusted in accordance with the provisions of this Contract), with an irrevocable instruction that the said amount shall be released to the
7
SELLER against presentation by the SELLER to the said Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch, 9 Pudong Avenue, Shanghai, China for credit to Account No.1001190709148073602 of Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch (Swift: ICBKCNBJSHI), of a copy of the Protocol of Delivery and Acceptance signed by the BUYER’s authorized representative and the SELLER. Interest, if any, accrued from such deposit, shall be for the benefit of the BUYER.
If the delivery of the VESSEL is not effected and the SELLER fails to present a copy of the fully signed Protocol of Delivery and Acceptance to said Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch, 9 Pudong Avenue,Shanghai, China for credit to Account No.1001190709148073602 of Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch (Swift: ICBKCNBJSHI)on or before the expiry of the aforesaid fifteen (15) days deposit period, the BUYER shall have the right to withdraw the said deposit plus accrued interest upon the expiry of the said fifteen (15) days deposit period. However when the newly scheduled delivery date is notified to the BUYER by the SELLER, the BUYER shall make the cash deposit in accordance with the same terms and conditions as set out above.
5. PREPAYMENT:
The BUYER shall have the right to make prepayment of any and all instalments before delivery of the VESSEL, by giving to the SELLER at least thirty (30) days prior written notice, without any price adjustment of the VESSEL for such prepayment.
6. SECURITY FOR PAYMENT OF INSTALMENTS BEFORE DELIVERY:
The BUYER shall, within three (3) Business Days after the BUYER’s receipt of the Refund Guarantee, deliver to the SELLER an irrevocable and unconditional Letter of Guarantee in the form annexed hereto as Exhibit “B” (hereinafter called the “Payment Guarantee”) in favour of the SELLER issued by NAVIG8 CRUDE TANKERS INC. (hereinafter called the “Payment Guarantor”) acceptable to the SELLER. This guarantee shall secure the BUYER’s obligation for the payment of the 2nd, 3rd and 4th installments of the Contract Price.
7. REFUNDS
All payments made by the BUYER prior to delivery of the VESSEL shall be in the nature of advance to the SELLER, and in the event this Contract is rescinded or canceled by the BUYER, all in accordance with the specific terms of this Contract permitting such rescission or cancellation, the SELLER shall refund to the BUYER in United States Dollars the full
8
amount of all sums already paid by the BUYER to the SELLER under this Contract, together with interest (at the rate set out in respective provision thereof) from the respective payment date(s) to the date of remittance by telegraphic transfer of such refund to the account specified by the BUYER without deduction, set off or withholding in US dollars from the SELLER’s bank or jurisdiction.
As security to the BUYER, the SELLER shall deliver to the BUYER, within Thirty (30) days following the execution of this Contract, a Refund Guarantee to be issued by either Bank of China or Industrial and Commercial Bank of China or The Export-Import Bank of China, at SELLER’s sole direction, (hereinafter called the “Refund Guarantor”) in the form as per Exhibit “A” annexed hereto.
However, in the event of any dispute between the SELLER and the BUYER with regard to the SELLER’s obligation to repay the installment or installments paid by the BUYER and to the BUYER’S right to demand payment from the Refund Guarantor, under its guarantee, and such dispute is submitted either by the SELLER or by the BUYER for arbitration in accordance with Article XIII hereof, the Refund Guarantor shall withhold and defer payment until the final arbitration award between the SELLER and the BUYER is published. The Refund Guarantor shall not be obligated to make any payment unless the final arbitration award orders the SELLER to make repayment. If the SELLER fails to honour the award within 45 days, then the Refund Guarantor shall refund to the extent the final arbitration award orders.
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ARTICLE III ADJUSTMENT OF THE CONTRACT PRICE
The Contract Price of the VESSEL shall be subject to adjustments as hereinafter set forth. It is hereby understood by both parties that any reduction of the Contract Price is by way of liquidated damages and not by way of penalty.
1. DELIVERY
(a)
No adjustment shall be made, and the Contract Price shall remain unchanged for the thirty (30) days of delay in delivery of the VESSEL beyond the Delivery Date as defined in Article VII hereof ending as of twelve o’clock midnight (Beijing time) of the thirtieth (30
th
) day of delay.
(b)
If the delivery of the VESSEL is delayed more than thirty (30) days after the date as defined in Article VII hereof, then, in such event, beginning at twelve o’clock midnight (Beijing time) of the thirtieth (30
th
) day after the date on which delivery is required under this Contract, the Contract Price of the VESSEL shall be reduced by deducting therefrom the sum of United States Dollars Sixteen Thousand Only (US$ 16,000.00) per day.
Unless the parties hereto agree otherwise, the total reduction in the Contract Price shall be deducted from the fifth instalment of the Contract Price and in any event (including the event that the BUYER consents to take the VESSEL at the later delivery date after the expiration of Two Hundred and ten (210) days delay of delivery as described in Paragraph 1(c) of this Article or Paragraph3 of Article VIII) shall not be more than One Hundred and Eighty (180) days at the above specified rate of reduction after the thirty (30) days allowance, that is United States Dollars Two Million Eight Hundred and Eighty Thousand Only (U.S.$ 2,880,000.00) being the maximum.
(c)
If the delay in the delivery of the VESSEL continues beyond the period of Two Hundred and Ten (210) days (being the total non-permissible delays and Thirty (30) days allowance) after the Delivery Date (as defined in Article VII), then in such event, the BUYER may, at its option, rescind or cancel this Contract in accordance with the provisions of Article X of this Contract. The SELLER may at any time after the expiration of the aforementioned Two Hundred and ten (210) days, if the BUYER has not served notice of cancellation pursuant to Article X, notify the BUYER of the date upon which the SELLER estimates the VESSEL will be ready for delivery and demand in writing that the BUYER make an election, in which case the BUYER shall, within thirty (30) days after such demand is received by the BUYER, either notify the SELLER of its decision to cancel this Contract, or consent to take delivery of the VESSEL at an agreed future date, it being understood and agreed by the parties hereto that, if the VESSEL is not delivered by such future date, the BUYER shall have the same right of cancellation upon the same terms, as hereinabove provided.
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In the case the BUYER, within Thirty (30) days after such demand is received by the BUYER, fails to notify the SELLER of its decision to cancel this Contract, or consent to take delivery of the VESSEL at an agreed future date, it shall be deemed that the BUYER has consented to take delivery of the VESSEL at SELLER’s estimated date.
(d)
For the purpose of this Article III only, the delivery of the VESSEL shall not be deemed delayed and the Contract Price shall not be reduced when and if the Delivery Date of the VESSEL is extended by reason of causes and provisions of Articles V, VI.1, XI, XII.2, XIII.7 hereof. The Contract Price shall not be adjusted or reduced if the delivery of the VESSEL is delayed by reason of permissible delays as defined in Article VIII hereof.
2. INSUFFICIENT SPEED
(a)
The Contract Price of the VESSEL shall not be affected nor changed by reason of the actual speed (as determined by the Trial Run after correction according to the Specifications) being less than three tenths (3/10) of one knot below the guaranteed speed as specified in Paragraph 4 of Article I of this Contract.
(b)
However, commencing with and including a deficiency of three tenths (3/10) of one knot in actual speed (as determined by the Trial Run after correction according to the Specifications) below the guaranteed speed as specified in Paragraph 4, Article I of this Contract, the Contract Price shall be reduced as follows:
In case of deficiency
at or above 0.30 but below 0.40 knot US$ 150,000.00
at or above 0.40 but below 0.50 knot US$ 300,000.00
at or above 0.50 but below 0.60 knot US$ 450,000.00
at or above 0.60 but below 0.70 knot US$ 600,000.00
at or above 0.70 but below 0.80 knot US$ 750,000.00
(c)
If the deficiency in actual speed (as determined by the Trial Run after correction according to the Specifications) of the VESSEL upon the Trial Run, is more than 0.80 knot below the guaranteed speed of 15.5 knots, then the BUYER may at its option reject the VESSEL and rescind or cancel this Contract in accordance with provisions of Article X of this Contract, or may accept the VESSEL at a reduction in the Contract Price as above provided, by United States Dollars Seven Hundred and Fifty Thousand only (US$750,000.00) being the maximum.
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3. EXCESSIVE FUEL CONSUMPTION
(a)
The Contract Price of the VESSEL shall not be affected nor changed if the actual fuel consumption of the Main Engine, as determined by shop trial in manufacturer’s works, as per the Specifications, is greater than the guaranteed fuel consumption as specified and required under the provisions of this Contract and the Specifications if such actual excess is equal to or less than Five percent (5%) (such threshold being 166.74 grams/brake horse power/hour, being 5% above 158.8 grams/brake horse power/hour).
(b)
However, if the actual fuel consumption as determined by shop trial is greater than Five percent (5%) above the guaranteed fuel consumption then, the Contract Price shall be reduced by the sum of United States Dollars One Hundred and Thirty Five Thousand Only (US$135,000.00) for each full one percent (1%) increase in fuel consumption in excess of the above said Five percent (5%) (fractions of one percent to be prorated).
(c)
If as determined by shop trial such actual fuel consumption of the Main Engine is more than ten percent (10%) in excess of the guaranteed fuel consumption, i.e. the fuel consumption exceeds 174.68 grams/brake horse power/hour (being 10% above 158.8 grams/brake horse power/hour), the BUYER may, subject to the SELLER’s right to effect alterations of corrections as specified in the following sub-paragraph of Article III 3 (c) hereof at its option, rescind or cancel this Contract, in accordance with the provisions of Article X of this Contract or may accept the VESSEL at a reduction in the Contract Price by United States Dollars Six Hundred and Seventy Five Thousand Only (US$675,000.00) being the maximum.
If as determined by shop trial such actual fuel consumption of the Main Engine is more than ten percent (10%) in excess of the guaranteed fuel consumption, i.e. the fuel consumption exceeds 174.68 grams/brake horse power/hour, the SELLER may investigate the cause of the non-conformity and the proper steps may promptly be taken to remedy the same and to make whatever corrections and alterations and / or re-shop trial test or tests as may be necessary to correct such non-conformity without extra cost to the BUYER. Upon completion of such alterations or corrections of such nonconformity, the SELLER shall promptly perform such further shop trials or any other tests, as may be deemed necessary to prove the fuel consumption of the Main Engine’s conformity with the requirement of this Contract and the Specifications and if found to be satisfactory, give the BUYER notice by telefax and/or e-mail of such correction and as appropriate, successful completion accompanied by copies of such results, and the BUYER shall, within six (6) Business Days after receipt of such notice, notify the SELLER by telefax and/or e-mail of its acceptance or reject the re-shop trial together with the reasons therefor. If the BUYER fails to notify the SELLER by telefax and/or e-mail of its acceptance or rejection of the re-shop trial together with the reasons therefor within six (6) Business Days period as provided herein, the BUYER shall be deemed to have accepted the shop trial.
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4. DEADWEIGHT
(a)
In the event that there is a deficiency in the actual deadweight of the VESSEL determined as provided in the Specifications, the Contract Price shall not be decreased if such deficiency is Three Thousand and One Hundred (3,100) metric tons or less below the guaranteed deadweight of 300,000 metric tons at assigned designed draft.
(b)
However, the Contract Price shall be decreased by the sum of United States Dollars Seven Hundred Only (US$700.00) for each full metric ton of such deficiency being more than Three Thousand and One Hundred (3,100) metric tons.
(c)
In the event that there should be a deficiency in the VESSEL’s actual deadweight which exceeds Six thousand and One Hundred (6,100) metric tons below the guaranteed deadweight, the BUYER may, at its option, reject the VESSEL and rescind or cancel this Contract in accordance with the provisions of Article X of this Contract, or may accept the VESSEL with reduction in the Contract Price in the maximum amount of United States Dollars Two Million One Hundred Thousand only (US$2,100,000.00).
5. EFFECT OF RESCISSION OR CANCELLATION
It is expressly understood and agreed by the parties hereto that in any case as stated herein, if the BUYER rescinds or cancels this Contract pursuant to any provision under this Article, the BUYER, save for its rights and remedy set out in Article X hereof, shall not be entitled to any liquidated damages or compensation whether described above or otherwise.
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ARTICLE IV SUPERVISION AND INSPECTION
1. APPOINTMENT OF THE BUYER’S REPRESENTATIVES
The BUYER shall send in good time to and maintain at the SELLER’s Shipyard, at the BUYER’s own cost and expense, one or more representative(s) who shall be duly accredited and authorized in writing by the BUYER (such representative(s) being hereinafter collectively and individually called the “BUYER’S REPRESENTATIVES”) to supervise and survey the construction by the SELLER of the VESSEL, her engines and accessories. The SELLER hereby warrants that, the necessary invitation letter for the BUYER’S REPRESENTATIVES to enter China will be issued in order on demand and without delay provided that the BUYER’S REPRESENTATIVES meets with the rules, regulations and laws of the People’s Republic of China. The BUYER undertakes to give the SELLER adequate notice for the application of invitation letter.
2. COMMENTS TO PLANS AND DRAWINGS
The parties hereto shall, within Thirty (30) days after signing of this Contract, mutually agree a list of all the plans and drawings, which are to be sent to the BUYER (hereinafter called “the LIST”) along with a schedule of anticipated dates when these will be dispatched as per SELLER’s estimation, which may be subject to change by the SELLER. Before arrival of the BUYER’S REPRESENTATIVES at the SELLER’s Shipyard, the plans and drawings specified in the LIST shall be sent to the BUYER, and the BUYER shall, within Fourteen (14) working days after receipt thereof (excluding mailing time), return such plans and drawings submitted by the SELLER with comments, if any. Notwithstanding the above, the BUYER shall nevertheless waive its right to comment on the plans and drawings if such plans and drawings have been previously applied to build other vessels with the same specification as that of the VESSEL.
When and if the BUYER’S REPRESENTATIVES shall have been sent by the BUYER to the SELLER in accordance with paragraph 1 of this Article, the BUYER’S REPRESENTATIVES shall approve the plans and drawings submitted to him by the SELLER according to the List of plans and drawings agreed upon by both parties unless otherwise agreed upon between the parties hereto. The BUYER’S REPRESENTATIVES shall within three (3) Business Days after receipt hereof, return to the SELLER two (2) copies of such plans and drawings with approval or comments, if any, written thereon.
If the comments made by the BUYER or the BUYER’S REPRESENTATIVES are not clearly specified or detailed, the SELLER shall seek the BUYER’s clarification in writing. Should the BUYER or the BUYER’S REPRESENTATIVES not answer such request within reasonable time (minimum being three working days) of the request then the SELLER should
14
be entitled to place its own reasonable interpretation on the comments of the BUYER in implementing same.
In the event that the BUYER or the BUYER’S REPRESENTATIVES shall fail to give comments or return the plans and drawings to the SELLER within the time limit as herein provided, such plans and drawings shall be deemed have been automatically approved or confirmed without any comment.
3. SUPERVISION AND INSPECTION BY THE BUYER’S REPRESENTATIVES
The necessary inspection of the VESSEL, its machinery, equipment and outfittings shall be carried out by the Classification Society, and/or inspection team of the SELLER throughout the entire period of construction in order to ensure that the construction of the VESSEL is duly performed in accordance with the Contract and Specifications.
The BUYER’S REPRESENTATIVES shall have, at all times until delivery of the VESSEL, the right to attend tests according to the mutually agreed test list and inspect the VESSEL, her engines, accessories and materials at the SELLER’s Shipyard, its subcontractors or any other place where work is done or materials stored in connection with the VESSEL. In the event that the BUYER’S REPRESENTATIVES discovers any construction or material or workmanship which does not or will not conform to the requirements of this Contract and the Specifications, the BUYER’S REPRESENTATIVES shall promptly give the SELLER a notice in writing as to such nonconformity, upon receipt of which the SELLER shall correct such nonconformity if the SELLER agrees with the BUYER. In any circumstances, the SELLER shall be entitled to proceed with the construction of the VESSEL even if there exists discrepancy in the opinion between the BUYER and the SELLER, without however prejudice to the BUYER’s right for submitting the issue for determination by the Classification Society or arbitration in accordance with the provisions hereof. However the BUYER undertakes and assures the SELLER that the BUYER’S REPRESENTATIVES shall carry out his inspections and supervision in accordance with the agreed inspection procedure, SELLER’s working schedule and usual shipbuilding practice and in a way as to minimize any increase in building costs and delays in the construction of the VESSEL. Once an inspection and/or test has been witnessed and approved by the BUYER’S REPRESENTATIVES, the same inspection and/or test should not have to be repeated, provided it has been carried out in compliance with the requirements of the Classification Society and Specifications.
The SELLER agrees to furnish free of charge the BUYER’S REPRESENTATIVES with
15
office space, and other reasonable facilities including air conditioning, internet connection and public toilets according to SELLER’s practice at the Shipyard. But the fees for the communication like telephone, telefax and internet, etc. shall be borne by the BUYER. At all times, during the construction of the VESSEL until delivery thereof, the BUYER’S REPRESENTATIVES shall be given free and ready access to the VESSEL, her engines and accessories, and to any other place where the work is being done, or the materials are being processed or stored, in connection with the construction of the VESSEL, including the yards, workshops, stores of the SELLER, and the premises of subcontractors of the SELLER, who are doing work, or storing materials in connection with the VESSEL’s construction. The travel expenses for the said access to SELLER’s subcontractors outside of Shanghai shall be at BUYER’s account. The transportation within Shanghai for BUYER’S REPRESENTATIVES to get access to the inspection and/or test shall be provided to the BUYER’S REPRESENTATIVES by the SELLER.
The BUYER undertakes to maintain sufficient number of the BUYER’S REPRESENTATIVES at the SELLER’s yard throughout the period of construction of the VESSEL so as to meet the SELLER’s requirements for inspection, survey and/or attendances of tests and/or trials. The BUYER will use best endeavours to ensure that BUYER’S REPRESENTATIVES perform any inspections, surveys and attendances at tests and/or trials in all circumstances, including where such inspections, surveys and test/trial attendances are required during the weekend (Saturday and Sunday) or any public holiday.
Should the BUYER’S REPRESENTATIVES fail to conduct any inspection or attend any test (after reasonably advance and written notice by the SELLER of the same, except in the case of re-inspection where oral notice shall be sufficient) due to whatever reason, the SELLER shall be entitled to carry out the construction and/or test without inspection and/or attendance of BUYER’S REPRESENTATIVES and such work so carried out shall be treated as approved by the BUYER’S REPRESENTATIVES.
The SELLER is responsible for providing that a safe working environment and proper access is provided to the works and/or areas of inspection.
The decision, approval or advice of the BUYER’S REPRESENTATIVES shall be deemed to have been given by the BUYER and once given shall not be withdrawn, revoked or modified except with consent of the SELLER. However, if the BUYER’S REPRESENTATIVES fail to submit to the SELLER without delay any demand concerning alterations or changes with respect to the building, arrangement or outfit of the VESSEL, her engines or accessories, or any other items or matters in connection herewith, which the BUYER’S REPRESENTATIVES have examined or inspected or attended at the tests thereof under this Contract or the Specifications, the BUYER’S REPRESENTATIVES shall be deemed to have approved the same and shall be precluded from making any demand for alterations, changes or other complaints with respect thereto at a later date.
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4. LIABILITY OF THE SELLER
The BUYER’S REPRESENTATIVES engaged by the BUYER under this Contract shall at all times be deemed to be in the employ of the BUYER. The SELLER shall be under no liability whatsoever to the BUYER, or to the BUYER’S REPRESENTATIVES or the BUYER’s employees or agents for personal injuries, including death, during the time when they, or any of them, are on the VESSEL, or within the premises of either the SELLER or its subcontractors, or are otherwise engaged in and about the construction of the VESSEL, unless, however, such personal injuries, including death, were caused by gross negligence of the SELLER, or of any of the SELLER’s employees or agents or subcontractors of the SELLER. Nor shall the SELLER be under any liability whatsoever to the BUYER for damage to, or loss or destruction of property in China of the BUYER or of the BUYER’S REPRESENTATIVES or of the BUYER’s employees or agents, unless such damage, loss or destruction was caused by gross negligence of the SELLER, or of any of the employees, or agents or subcontractors of the SELLER. The BUYER’S REPRESENTATIVES or his assistants or employees shall observe the work’s rules and regulations prevailing at the SELLER’s and its subcontractor’s premises.
5. SALARIES AND EXPENSES
All salaries and expenses of the BUYER’S REPRESENTATIVES, or any other employees employed by the BUYER under this Article, shall be for the BUYER’s account.
6. REPLACEMENT OF BUYER’S REPRESENTATIVES
The SELLER has the right to request the BUYER in writing to replace any of the BUYER’S REPRESENTATIVES who is deemed unsuitable and unsatisfactory for the proper progress of the VESSEL’s construction together with reasons. The BUYER shall investigate the situation by sending its representative to the SELLER’s yard, if necessary, and if the BUYER considers that such SELLER’s request is justified and reasonable, the BUYER shall effect the replacement as soon as conveniently arrangeable.
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ARTICLE V MODIFICATION,CHANGES AND EXTRAS
1. HOW EFFECTED
The Specifications and Plans in accordance with which the VESSEL is constructed, may be modified and/or changed at any time hereafter by written agreement of the parties hereto, provided that such modifications and/or changes or an accumulation thereof will not, in the SELLER’s reasonable judgment, adversely affect the SELLER’s other commitments and provided further that the BUYER shall assent to adjustment of the Contract Price, time of delivery of the VESSEL and other terms of this Contract, if any, as hereinafter provided. Subject to the above, the SELLER hereby agree to exert their best efforts to accommodate such reasonable requests by the BUYER so that the said changes and/or modifications may be made at a reasonable cost and within the shortest period of time which is reasonable and possible. Any such agreement for modifications and/or changes shall include an agreement as to the increase or decrease, if any, in the Contract Price of the VESSEL together with an agreement as to any extension or reduction in the time of delivery, providing to the SELLER additional securities satisfactory to the SELLER (and an increased guarantee from Navig8 Crude Tankers Inc shall be deemed satisfactory security), or any other alterations in this Contract, or the Specifications occasioned by such modifications and/or changes. The aforementioned agreement to modify and/or to change the Specifications may be effected by an exchange of duly authenticated letters, or telefax, or e-mail, manifesting such agreement. The letters, telefaxes and emails exchanged by the parties hereto pursuant to the foregoing shall constitute an amendment of the Specifications under which the VESSEL shall be built, and such letters, emails and telefaxes shall be deemed to be incorporated into this Contract and the Specifications by reference and made a part hereof. Upon consummation of the agreement to modify and/or to change the Specifications, the SELLER shall alter the construction of the VESSEL in accordance therewith, including any additions to, or deductions from, the work to be performed in connection with such construction. If due to whatever reasons, the parties hereto shall fail to agree on the adjustment of the Contract Price or extension of time of delivery or providing additional security to the SELLER or modification of any terms of this Contract which are necessitated by such modifications and/or changes, then the SELLER shall have no obligation to comply with the BUYER’s request for any modification and/or changes.
The SELLER may make minor changes to the Specifications, if found necessary for introduction of improved production methods or otherwise, provided that the SELLER shall first obtain the BUYER’s written approval which shall not be unreasonably withheld. Any costs associated with such minor changes shall not affect the Contract Price nor the Delivery Date unless mutually agreed.
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2. CHANGES IN RULES AND REGULATIONS, ETC.
(1)
If, after the date of signing of this Contract, any requirements as to the rules and regulations as specified in this Contract and the Specifications to which the construction of the VESSEL is required to conform, are altered or changed by the Classification Society or the other regulatory bodies authorized to make such alterations or changes, the SELLER and/or the BUYER, upon receipt of the notice thereof, shall transmit such information in full to each other in writing, whereupon within twenty- one (21) days after receipt of the said notice by the BUYER from the SELLER or vice versa, the BUYER shall instruct the SELLER in writing as to the alterations or changes, if any, to be made in the VESSEL which the BUYER, in its sole discretion, shall decide. The SELLER shall promptly comply with such alterations or changes, if any in the construction of the VESSEL, provided that the BUYER shall first agree:
(a)
As to any increase or decrease in the Contract Price of the VESSEL that is occasioned by the cost for such compliance; and/or
(b)
As to any extension in the time for delivery of the VESSEL that is necessary due to such compliance; and/or
(c)
As to any increase or decrease in the guaranteed deadweight and speed of the VESSEL, if such compliance results in increased or reduced deadweight and speed; and/or
(d)
As to any other alterations in the terms of this Contract or of Specifications or both, if such compliance makes such alterations of the terms necessary.
(e)
If the price is to be increased, then, in addition, as to providing to the SELLER additional securities satisfactory to the SELLER and which shall be satisfied by the provision of an increased guarantee from Navig8 Crude Tankers Inc.
Agreement as to such alterations or changes under this Paragraph shall be made in the same manner as provided above for modifications and/or changes of the Specifications and/or Plans.
(2)
If, due to whatever reasons, the parties shall fail to agree on the adjustment of the Contract Price or extension of the time for delivery or increase or decrease of the guaranteed speed and deadweight or providing additional security to the SELLER or any alternation of the terms of this Contract, if any, then, the SELLER shall be entitled to proceed with the construction of the VESSEL in accordance with, and the BUYER shall continue to be bound by, the terms of this Contract and Specifications without making any such alterations or changes.
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If the alterations or changes are compulsorily required to be made by Class or IMO rules, then, notwithstanding any dispute between the parties relating to the adjustment of the Contract Price or extension of the time for delivery or decrease of the guaranteed speed and deadweight or increase fuel oil consumption or any other respect, the SELLER shall promptly comply with such alterations or changes first. The BUYER shall, in any event, bear the costs and expenses for such alterations or changes (with, in the absence of mutual agreement, the amount thereof and/or any other discrepancy such as but not limited to the extension of Delivery Date, etc. to be determined by arbitration in accordance with Article XIII of this Contract).
3. SUBSTITUTION OF MATERIALS AND/OR EQUIPMENT
In the event any of the materials and/or equipment required by the Specifications or otherwise under this Contract for the construction of the VESSEL cannot be procured in time to effect delivery of the VESSEL, the SELLER may, provided the SELLER shall provide adequate evidence and the BUYER so agrees in writing, supply other materials and/or equipment of the equivalent quality, capable of meeting the requirements of the Classification Society and of the rules, regulations, requirements and recommendations with which the construction of the VESSEL must comply.
4. BUYER’S SUPPLIED ITEMS
The BUYER shall deliver to the SELLER at its shipyard the items as specified in the Specifications which the BUYER shall supply on BUYER’S account (the “BUYER’s Supplied Items”) by the time designated by the SELLER. SELLER will give reasonable advance notice to BUYER in order to allow BUYER to get these items in the shipyard for the time they are required.
Should the BUYER fail to deliver to the SELLER such BUYER’s Supplied Items within the time specified, the delivery of the VESSEL shall automatically be extended for a period of such delay, provided such delay in delivery of the BUYER’s Supplied Items shall affect the delivery of the VESSEL. In such event, the BUYER shall pay to the SELLER all losses and damages sustained by the SELLER due to such delay in the delivery of the BUYER’s Supplied Items and such payment shall be made upon delivery of the VESSEL.
Furthermore, if the delay in delivery of the BUYER’s Supplied Items should exceed twenty (20) days, the SELLER shall be entitled to proceed with construction of the VESSEL without installation of such items in or onto the VESSEL, without prejudice to the SELLER’s right hereinabove provided, and the BUYER shall accept the VESSEL so completed.
The SELLER shall be responsible for proper storage and handling with reasonable
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care of the BUYER’s Supplied Items as specified in the Specifications after delivery to the SELLER and shall procure that at all times the BUYER’s supplies are identified as being the property of the BUYER. The SELLER shall install BUYER’s Supplied Items on board the VESSEL at the SELLER’s expenses. In order to facilitate installation by the SELLER of the BUYER’S Supplied Items in or on the VESSEL, the BUYER shall furnish the SELLER with the necessary specifications, plans, drawings, instruction books, manuals, test reports and certificates required by the rules and regulations of the Specifications. If so requested by the SELLER, the BUYER shall, without any charge to the SELLER, cause the representatives of the manufacturers of the BUYER’s Supplied Items to assist the SELLER in installation thereof in or on the VESSEL and/or to carry out installation thereof by themselves or to make necessary adjustments at the SELLER’s Shipyard.
Upon arrival of such shipment of the BUYER’s Supplied Items, both parties shall undertake a joint unpacking inspection. If any damages are found to be not suitable for installation, the SELLER shall be entitled to refuse to accept such BUYER’s Supplied Items.
The SELLER shall not be responsible for the quality, performance or efficiency of any equipment supplied by the BUYER and is under no obligation with respect to the guarantee of such equipment against any defects caused by poor quality, performance or efficiency thereof.
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ARTICLE VI TRIALS
1. NOTICE
(a)
The SELLER shall give NOTICE to the BUYER and BUYER’s Representative in writing at least fifteen (15) days’ notice in advance and seven (7) days definite notice in advance in writing or by telefax or e-mail, of the time and place of the VESSEL’s sea trial as described in the Specifications (hereinafter referred to as “the Trial Run”) and the BUYER and the BUYER’S REPRESENTATIVES shall promptly acknowledge receipt of such notice. The BUYER’S REPRESENTATIVES shall be on board the VESSEL to witness such Trial Run, and to check upon the performance of the VESSEL during the same. Failure to attend the trial run of the VESSEL by the BUYER’S REPRESENTATIVES shall have the effect to extend the date for delivery of the VESSEL by the period of delay caused by such failure to be present. However, if the Trial Run is delayed more than seven (7) days by reason of the failure of the BUYER’s representatives to be present after receipt of due notice as provided above, then in such event the non-attendance shall be deemed to be a waiver by the BUYER of its right to have its representative on board the VESSEL at the trial run, and the SELLER may conduct such Trial Run without the BUYER’S REPRESENTATIVES being present, and in such case the BUYER shall be obliged to accept the VESSEL on the basis of a certificate jointly signed by the SELLER and the Classification Society certifying that the VESSEL, after Trial Run subject to minor alterations and corrections as provided in this Article, if any, is found to conform to the Contract and Specifications. The SELLER hereby warrants that the necessary invitation letter for the BUYER’S REPRESENTATIVES to enter China will be issued in order on demand and without delay otherwise the Trial Run shall be postponed until after the BUYER’S REPRESENTATIVES have arrived at the SELLER’s Shipyard and any delays as a result thereof shall not count as a permissible delay under Article VIII thereof. However, should the nationalities and other personal particulars of the BUYER’S REPRESENTATIVES be not acceptable to the SELLER in accordance with its best understanding of the relevant rules, regulations and/or Laws of the People’s Republic of China then prevailing, then the BUYER shall, on the SELLER’s telefax or e-mail demand, effect replacement of all or any of them immediately. Otherwise the Delivery Date as stipulated in Article VII hereof shall be extended by the delays so caused by the BUYER.
(b)
In the event of unfavorable weather on the date specified for the Trial Run, the same shall take place on the first available day thereafter that the weather conditions permit. The parties hereto recognize that the weather conditions in Chinese waters in which the Trial Run is to take place are such that great changes in weather may arise momentarily and without warning and, therefore, it is agreed that if during the Trial Run of the VESSEL, the weather should suddenly become unfavorable, as would have precluded the continuance of the Trial Run, the Trial Run of the VESSEL shall be discontinued and
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postponed until the first favorable day next following, unless the BUYER shall assent by telefax or e-mail and confirm in writing of its acceptance of the VESSEL on the basis of the Trial Run made prior to such sudden change in weather conditions. In the event that the Trial Run is postponed because of unfavorable weather conditions, such delay shall be regarded as a permissible delay, as specified in Article VIII hereof. For the purposes of this paragraph 1(b), unfavorable weather conditions shall be taken as (i) Beaufort Scale Force 6 and above or (ii) when the MSA (Maritime Safety Administration) does not permit the sea trial to proceed.
2. HOW CONDUCTED
(a)
All expenses in connection with Trial Run of the VESSEL are to be for the account of the SELLER, who, during the Trial Run and when subjecting the VESSEL to Trial Run, is to provide, at its own expense, the necessary crew to comply with conditions of safe navigation. The Trial Run shall be conducted in the manner prescribed in the Specifications.
The course of Trial Run shall be determined by the SELLER and shall be conducted within the trial basin equipped with speed measuring facilities.
(b)
The SELLER shall provide the VESSEL with the required quantities of water and fuel oil with exception of lubrication oil, greases and hydraulic oil which shall be supplied by the BUYER for the conduct of the Trial Run or Trial Runs as prescribed in the Specifications. The fuel oil supplied by the SELLER, and lubricating oil, greases and hydraulic oil supplied by the BUYER shall be in accordance with the applicable engine specifications, and the cost of the quantities of water, fuel oil, lubricating oil, hydraulic oil and greases consumed during the Trial Run or Trial Runs shall be for the account of the SELLER.
3. TRIAL LOAD DRAFT
In addition to the supplies provided by the BUYER in accordance with sub-paragraph (b) of the preceding Paragraph 2 hereof, the SELLER shall provide the VESSEL with the required quantity of fresh water and other stores necessary for the conduct of the Trial Run. The necessary ballast (fresh and sea water and such other ballast as may be required) to bring the VESSEL to the trial load draft as specified in the Specifications, shall be for the SELLER’s account.
4. METHOD OF ACCEPTANCE OR REJECTION
(a)
Upon notification of the SELLER of the completion of the Trial Run of the VESSEL, the
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BUYER or the BUYER’S REPRESENTATIVES shall within six (6) days thereafter, notify the SELLER by telefax or e-mail of its acceptance of the VESSEL or of its rejection of the VESSEL together with the reasons therefor.
(b)
However, should the result of the Trial Run indicate that the VESSEL or any part thereof including its equipment does not conform to the requirements of this Contract and Specifications, then the SELLER shall investigate with the BUYER’S REPRESENTATIVES the cause of failure and the proper steps shall be taken to remedy the same and shall make whatever corrections and alterations and/or re-Trial Run or Runs as may be necessary without extra cost to the BUYER, and upon notification by the SELLER of completion of such alterations or corrections and/or re-trial or re-trials, the BUYER shall, within six (6) days thereafter, notify the SELLER by telefax or e-mail of its acceptance of its VESSEL or of the rejection of the VESSEL together with the reason therefor on the basis of the alterations and corrections and/or re-trial or re-trials by the SELLER.
(c)
In the event that the BUYER fails to notify the SELLER by telefax or e-mail of its acceptance or rejection of the VESSEL together with the reason therefor within six (6) Business Days period as provided for in the above sub- paragraphs (a) and (b), the BUYER shall be deemed to have accepted the VESSEL.
(d)
Any dispute arising among the parties hereto as to the result of any Trial Run or further tests or trials, as the case may be, of the VESSEL shall be solved by reference to arbitration as provided in Article XIII hereof.
(e)
Nothing herein shall preclude the BUYER from accepting the VESSEL with its qualifications and/or remarks following the Trial Run and/or further tests or trials as aforesaid.
5. DISPOSITION OF SURPLUS CONSUMABLE STORES
Should any amount of fuel oil, fresh water, or other unbroached consumable stores furnished by the SELLER for the Trial Run or Trial Runs remain on board the VESSEL at the time of acceptance thereof by the BUYER, the BUYER agrees to buy the same from the SELLER at the actual invoiced price, and payment by the BUYER shall be effected as provided in Article II 3 (e) and 4 (e) of this Contract.
The BUYER shall supply lubricating oil, greases and hydraulic oil for the purpose of Trial Runs at its own expenses and the SELLER will reimburse for the amount of lubricating oil and hydraulic oil actually consumed for the said Trial Run or Trial Runs at the original price incurred by the BUYER and payment by the SELLER shall be effected as provided in Article II 3(e) and 4(e) of this Contract.
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6. EFFECT OF ACCEPTANCE
The BUYER’s acceptance of the VESSEL by written or telefax, or e-mail notification sent to the SELLER, in accordance with the provisions set out above, shall be final and binding so far as conformity of the VESSEL to this Contract and the Specifications is concerned, and shall preclude the BUYER from refusing formal delivery by the SELLER of the VESSEL, as hereinafter provided, if the SELLER complies with all other procedural requirements for delivery as hereinafter set forth.
The BUYER shall not be entitled to reject the VESSEL (at the time of delivery) by reason of any minor or insubstantial non-conformity, or deficiencies of minor importance, which do not in any way affect the safety or the operation of the VESSEL, its crew, passengers or cargo, provided that:
i) The SELLER shall for its own account remedy the deficiency and fulfill the requirements as soon as possible.
ii) A list of such defect and non-conformities will be prepared by the parties immediately prior to the delivery of the VESSEL.
iii) The SELLER shall pay BUYER upon delivery, the direct actual cost of rectification of minor deficiencies which in all events not exceeding the costs of a leading Chinese shipyard performing similar rectification of such deficiencies, if the rectification of such deficiencies affects the delivery schedule of the vessel. For the avoidance of doubt, the SELLER shall not be liable to the BUYER for the consequential and indirect costs (i.e. loss of time & loss of profit etc.).
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ARTICLE VII DELIVERY
1. TIME AND PLACE
The VESSEL shall be delivered safely afloat by the SELLER to the BUYER at the SELLER’s Shipyard or at Shanghai Jiangnan Changxing Heavy Industry Co., Ltd., in accordance with the Specifications and with all Classification and Statutory Certificates and after completion of Trial Run (or, as the case may be, re-Trial or re-Trials) and acceptance by the BUYER in accordance with the provisions of Article VI hereof on or before December 31
st
,2015 provided that, in the event of delays in the construction of the VESSEL or any performance required under this Contract due to causes which under the terms of the Contract permit extension or postponement of the time for delivery, the aforementioned time for delivery of the VESSEL shall be extended accordingly.
The aforementioned date or such later date to which delivery is extended pursuant to the terms of this Contract is hereinafter called the “Delivery Date”.
2. WHEN AND HOW EFFECTED
Provided that the BUYER and the SELLER shall each have fulfilled all of their respective obligations as stipulated in this Contract, delivery of the VESSEL shall be effected forthwith by the concurrent delivery by each of the parties hereto, one to the other, of the Protocol of Delivery and Acceptance, acknowledging delivery of the VESSEL by the SELLER and acceptance thereof by the BUYER, which Protocol shall be prepared in quadruplicate and executed by each of the parties hereto.
3. DOCUMENTS TO BE DELIVERED TO THE BUYER
Upon acceptance of the VESSEL by the BUYER, the SELLER shall deliver to the BUYER the following documents (subject to the provision contained in Article VII hereof) which shall accompany the aforementioned Protocol of Delivery and Acceptance:
(a)
PROTOCOL OF TRIALS of the VESSEL made by the SELLER pursuant to the Specifications.
(b)
PROTOCOL OF INVENTORY of the equipment of the VESSEL including spare part and the like, all as specified in the Specifications, made by the SELLER.
(c)
PROTOCOL OF STORES OF CONSUMABLE NATURE made by the SELLER referred to under Paragraph 5 of Article VI hereof.
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(d)
FINISHED DRAWINGS AND PLANS pertaining to the VESSEL as stipulated in the Specifications, made by the SELLER.
(e)
PROTOCOL OF DEADWEIGHT AND INCLINING EXPERIMENT, made by the SELLER
(f)
ALL CERTIFICATES required to be furnished upon delivery of the VESSEL pursuant to the Specifications.
Certificates shall be issued by relevant Authorities or Classification Society. The VESSEL shall comply with the above rules and regulations which are in force at the time of signing this Contract. All the certificates shall be delivered in one (1) original to the VESSEL and two (2) copies to the BUYER.
If the full term certificate or certificates are unable to be issued at the time of delivery by the Classification Society or any third party other than the SELLER, then the provisional certificate or certificates as issued by The Classification Society or the third party other than the SELLER with the full term certificates to be furnished by the SELLER after delivery of the VESSEL and in any event before the expiry of the provisional certificates shall be acceptable to the BUYER.
(g)
DECLARATION OF WARRANTY issued by the SELLER that the VESSEL is delivered to the BUYER free and clear of any liens, charges, claims, mortgages, or other encumbrances upon the BUYER’s title thereto, and in particular, that the VESSEL is absolutely free of all burdens in the nature of imposts, taxes or charges imposed by the province or country of the port of delivery, as well as of all liabilities of the SELLER to its sub-contractors, employees and crews and/or all liabilities arising from the operation of the VESSEL in Trial Run or Trial Runs, or otherwise, prior to delivery.
(h)
COMMERCIAL INVOICE made by the SELLER.
(i)
BILL OF SALE made by the SELLER.
(j)
BUILDER’S Certificate made by the SELLER.
4. TITLE AND RISK
Title to and risk of the VESSEL and her equipment (but excluding the BUYER’s supplies) shall pass to the BUYER only upon delivery and acceptance thereof. As stated above, it being expressly understood that, until such delivery and acceptance is effected, title to the VESSEL, and her equipment, shall remain at all times with the SELLER and are at the entire risk of the SELLER.
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5. REMOVAL OF VESSEL
The BUYER shall take possession of the VESSEL immediately upon delivery and acceptance thereof, and shall remove the VESSEL from the premises of the SELLER within seven (7) days after delivery and acceptance thereof is effected. If the BUYER shall not remove the VESSEL from the premises of the SELLER within the aforesaid seven (7) days, then, in such event, without prejudice to the SELLER’s right to require the BUYER to remove the VESSEL immediately at any time thereafter, the BUYER shall pay to the SELLER the reasonable mooring charge of the VESSEL.
6. TENDER OF THE VESSEL
If the BUYER fails to take delivery of the VESSEL after completion thereof according to this Contract and the Specifications without justified reason, the SELLER shall have the right to tender the VESSEL for delivery after compliance with all procedural requirements as above provided.
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ARTICLE VIII DELAYS & EXTENSION OF TIME FOR DELIVERY
1. CAUSE OF DELAY
If, at any time before actual delivery, either the construction of the VESSEL, or any performance required hereunder as a prerequisite of delivery of the VESSEL, is delayed due to war, blockade, revolution, insurrection, mobilization, civil commotions, riots, strikes, sabotage, lockouts, local temperature higher than Thirty Five (35) degree centigrade (but each day above 35 degree shall be counted as one half day each), Acts of God or the public enemy, terrorism, plague or other epidemics, quarantines, prolonged failure or restriction of electric current from an outside source, freight embargoes, if any, earthquakes, tidal waves, typhoons, hurricanes, storms or other causes beyond the control of the SELLER or of its sub-contractors or its key equipment suppliers (i.e. being the suppliers of the main engine, propeller and gearbox etc), as the case may be, or by force majeure of any description, whether of the nature indicated by the forgoing or not, or by destruction of the premises of the SELLER or works of the SELLER or its sub-contractors or its key equipment suppliers (i.e. being the suppliers of the main engine, propeller and gearbox etc) or of the VESSEL or any part thereof, by fire, flood, or other causes beyond the control of the SELLER or its sub-contractors or its key equipment suppliers (i.e. main engine, propeller, gearbox etc) as the case may be, or due to the bankruptcy of the equipment and/or material supplier or suppliers (i.e. main engine, propeller, gearbox etc), or due to the delay caused by acts of God causing significant shortage in the supply of parts essential to the construction of the VESSEL, then, in the event of delay due to the happening of any of the aforementioned contingencies, the SELLER shall not be liable for such delay and the time for delivery of the VESSEL under this Contract shall be extended without any reduction in the Contract Price for a period of time which shall not exceed the total accumulated time of all such delays, subject nevertheless to the BUYER’s right of cancellation under Paragraph 3 of this Article and subject however to all relevant provisions of this Contract which authorize and permit extension of the time of delivery of the VESSEL, provided however that:
(i)
the delay in respect of which the SELLER is claiming relief under this Article VIII.1 was not caused or contributed to by any intended act of the SELLER;
(ii)
the delay event impacts upon the Vessel’s construction schedule and completion; and
(iii)
the SELLER has taken reasonable steps to mitigate its effect upon the construction of the Vessel,
For the avoidance of doubt, where two delay events as described in this paragraph 1 occur simultaneously or overlap with each other, such delays caused by such events shall not be double-counted.
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2. NOTICE OF DELAY
Within twenty (20) days from the date of the SELLER becomes aware of the commencement of any delay on account of which the SELLER claims that it is entitled under this Contract to an extension of the time for delivery of the VESSEL, the SELLER shall advise the BUYER by telefax or e-mail, of the date such delay commenced, and the reasons therefor and, if possible, its estimated duration of the probable delay in the delivery of the VESSEL, and shall supply the BUYER with evidence to support the delay claimed.
Likewise within twenty (20) days after such delay ends, the SELLER shall advise the BUYER in writing or by telefax or e-mail, of the date such delay ended, and also shall specify the maximum period of the time by which the SELLER claims the date for delivery of the VESSEL should be extended by reason of such delay. Failure of the BUYER to acknowledge the SELLER’s notification of any claim for extension of the Delivery Date within ten (10) days after receipt by the BUYER of such notification, shall be deemed to be a waiver by the BUYER of its right to object to such extension.
Failure of the SELLER to give notice of any relevant delay event in excess of fifteen (15) days in accordance with this paragraph 2 shall be deemed a waiver of the SELLER’s right to postpone the DELIVERY DATE under this Article VIII in respect of such relevant delay event.
3. RIGHT TO CANCEL FOR EXCESSIVE DELAY
If (a) the total accumulated time of all delays on account of the causes specified in Paragraph 1 of this Article aggregate to two hundred and twenty-five (225) days or more, or (b) if the total accumulated time of all delays on account of the causes specified in Paragraph 1 of the Article and non-permissible delays as described in Paragraph 1 of Article III aggregate to two hundred and fifty-five (255) days or more, in any circumstances, excluding delays due to arbitration as provided for in Article XIII.7 hereof or due to default in performance by the BUYER, or due to delays in delivery of the BUYER’s Supplied Items, and excluding delays due to causes which, under Article V, VI.1, XI and XII.2(b) hereof, permit extension or postponement of the time for delivery of the VESSEL , then in such event, the BUYER may in accordance with the provisions set out herein rescind or cancel this Contract by serving upon the SELLER telefaxed or e-mailed notice of cancellation which shall be confirmed in writing and the provisions of Article X of this Contract shall apply. The SELLER may, at any time, after the accumulated time of the aforementioned delays justifying cancellation by the BUYER as above provided for, demand in writing that the BUYER shall make an election, in which case the BUYER shall, within thirty (30) days after such demand is received by the BUYER either notify the SELLER of its intention to cancel, or consent to an extension of the time for delivery to an agreed future date, it being understood and agreed by the parties hereto that, if any further delay occurs on account of causes justifying cancellation as specified in
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this Contract, the BUYER shall have the same right of cancellation upon the same terms as hereinabove provided but in respect of the new agreed delivery date.
4. DEFINITION OF PERMISSIBLE DELAY
Delays on account of such causes as provided for in Paragraph 1 of this Article excluding any other extensions of a nature which under the terms of this Contract permit postponement of the Delivery Date, shall be understood to be (and are herein referred to as) permissible delays, and are to be distinguished from non-permissible delays on account of which the Contract Price of the VESSEL is subject to adjustment as provided for in Article III hereof. Notwithstanding any other stipulations of this Contract, the Parties hereby agree that a default in performance of BUYER or any breach of this Contract by BUYER or reasons attributable to the BUYER or the events described under Article V, VI.1, XI and XII.2(b) of this Contract shall entitle the SELLER to extend the Delivery Date. Such extension of the Delivery Date shall be regarded as mutually agreed change of Delivery Date and shall be distinguished from Permissible Delay and non-permissible delays.
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ARTICLE IX WARRANTY OF QUALITY
1. GUARANTEE OF MATERIAL AND WORKMANSHIP
The SELLER, for a period of twelve (12) months following delivery to the BUYER of the VESSEL, guarantees the VESSEL, her hull and machinery, her engine, and all parts and equipment thereof that are manufactured, furnished, supplied, or installed by the SELLER and/or its sub-contractors under this Contract including material, equipment (however excluding any parts for the VESSEL which have been supplied by the BUYER) against all defects which are due to defective materials, and/or poor workmanship.
Provided no additional cost occurs to the SELLER, the SELLER agrees that upon the expiry of this guarantee and upon request of the BUYER, it shall assign (to the extent to which it may validly do so) to the BUYER, all rights, title and interest that the SELLER may have in and to all guarantees or warranties given by the supplier (excluding the supplier of BUYER’s supplied item) of any of the appurtenances and materials used in the construction and/or operation of the VESSEL. The SELLER agrees to render to the BUYER reasonable assistance in making any claim or taking any action against any such supplier, which claim or action shall be made and/or taken at the BUYER’s sole expense. The BUYER shall meet all reasonable expenses incurred by the SELLER in rendering any assistance requested by the BUYER pursuant to this paragraph.
2. NOTICE OF DEFECTS
The BUYER shall notify the SELLER in writing, or by telefax or e-mail, as promptly as possible, after discovery of any defect or deviations for which a claim is made under this guarantee. The BUYER’s written notice shall describe the nature of the defect and the extent of the damage caused thereby. The SELLER shall have no obligation under this guarantee for any defects discovered prior to the expiry date of the guarantee, unless notice of such defects, is received by the SELLER not later than thirty (30) days after such expiry date. Telefaxed or e-mailed advice with brief details explaining the nature of such defect and extent of damage within thirty (30) days after such expiry date and that a claim is forthcoming will be sufficient compliance with the requirements as to time.
3. REMEDY OF DEFECTS
The SELLER shall remedy at its expense any defects, against which the VESSEL or any part of the equipment thereof is guaranteed under this Article by making all necessary repairs and/or replacement. Such repairs and/or replacement will be made by the SELLER. All parts
32
and/or materials so repaired shall be guaranteed for a further period of six (6) months, but the total warranty period shall not exceed eighteen (18) months after delivery and acceptance of the VESSEL by the BUYER. In any case, the VESSEL shall be taken, at the BUYER’S cost and responsibility, to place elected, ready in all respects for such repairs or replacement.
However, if it is impractical to make the repair by the SELLER, and if forwarding by the SELLER of replacement parts, and materials cannot be accomplished without impairing or delaying the operation or working of the VESSEL, then, in any such event, the BUYER shall, cause the necessary repairs or replacements to be made elsewhere at the discretion of the BUYER provided that the BUYER shall first and in all events, will, as soon as possible, give the SELLER notice in writing, or by telefax or e-mail of the time and place such repairs will be made and, if the VESSEL is not thereby delayed, or her operation or working is not thereby delayed, or her operation or working is not thereby impaired, the SELLER shall have the right to verify by its own representative(s) or that of Classification Society the nature and extent of the defects complained of. The SELLER shall, in such cases, promptly advise the BUYER, by telefax or e-mail, after such examination has been completed, of its acceptance or rejection of the defects as ones that are subject to the guarantee herein provided.
In any circumstances as set out below, the SELLER shall immediately pay to the BUYER in United States Dollars by telegraphic transfer the actual cost for such repairs or replacements including forwarding charges, or, at the average cost for making similar repairs or replacements including forwarding charges as quoted by a leading shipyard each in China, South Korea and Singapore whichever is lower:
(a) Upon the SELLER’s acceptance of the defects as justifying remedy under this Article, or
(b) If the SELLER neither accepts nor rejects the defects as above provided, nor request arbitration within thirty (30) days after its receipt of the BUYER’s notice of defects.
Any dispute shall be referred to arbitration in accordance with the provisions of Article XIII hereof.
4. EXTENT OF THE SELLER’S LIABILITY
The SELLER shall have no obligation and/or liabilities with respect to defects discovered after the expiration of the period of guarantee as specified in Paragraph 1 of this Article.
The SELLER shall be liable to the BUYER for defects and damages caused by any of the defects specified in Paragraph 1 of this Article provided that such liability of the SELLER shall be limited to damage occasioned within the guarantee period specified in Paragraph 1 above. The SELLER shall not be obligated to repair, or to be liable for, damages to the VESSEL, or to any part of the equipment thereof, due to ordinary wear and tear or caused by the defects other than those specified in Paragraph 1 above, nor shall there be any SELLER’s
33
liability hereunder for defects in the VESSEL, or any part of the equipment thereof, caused by fire or accidents at sea or elsewhere, or mismanagement, accidents, negligence, or willful neglect, on the part of the BUYER, its employees or agents including the VESSEL’s officers, crew and passengers, or any persons on or doing work on the VESSEL other than the SELLER, its employees, agents or sub-contractors. Likewise, the SELLER shall not be liable for defects in the VESSEL, or the equipment or any part thereof, due to repairs or replacement which were made by those other than the SELLER and/or their sub-contractors or which have not been carried out in accordance with the procedures set out in this Article.
Upon delivery of the VESSEL to the BUYER, in accordance with the terms of the Contract, the SELLER shall thereby and thereupon be released of all responsibility and liability whatsoever and howsoever arising under or by virtue of this Contract (save in respect of those obligations to the BUYER expressly provided for in this Article IX) including without limitation, any responsibility or liability for defective workmanship, materials or equipment, design or in respect of any other defects whatsoever and any loss or damage resulting from any act, omission or default of the SELLER. The SELLER shall, in no circumstances, be liable for any consequential loss or special loss, or expenses arising from any cause whatsoever including, without limitation, loss of time, loss of profit or earnings or demurrage directly from any commitments of the BUYER in connection with the VESSEL.
The Guarantee provided in this Article and the obligations and the liabilities of the SELLER hereunder are exclusive and in lieu of and the BUYER hereby waives all other remedies, warranties, guarantees or liabilities, express or implied, arising by Law or otherwise (including without limitation any obligations of the SELLER with respect to fitness, merchantability and consequential damages) or whether or not occasioned by the SELLER’s negligence. This Guarantee shall not be extended, altered or varied except by a written instrument signed by the duly authorized representatives of the SELLER, and the BUYER.
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ARTICLE X CANCELLATION, REJECTION AND RESCISSION BY THE BUYER
1.
All payments made by the BUYER prior to the delivery of the VESSEL shall be in the nature of advance to the SELLER. In the event the BUYER shall exercise its right of cancellation and/or rescission of this Contract under and pursuant to any of the provisions of this Contract specifically permitting the BUYER to do so, then the BUYER shall notify the SELLER in writing or by telefax or e-mail, and such cancellation and/or rescission shall be effective as of the date the notice thereof is received by the SELLER.
For the avoidance of doubt, the events and/or occurrences which entitle the BUYER to rescind and cancel the Contract shall be limited to those occurrences or events specified in this Contract which specifically permits the BUYER to do so. No other event or circumstance shall give rise to any right to the BUYER for rescission or cancellation of the Contract whether under this Contract or under any applicable laws.
2.
Thereupon the SELLER shall refund in United States dollars immediately to the BUYER the full amount of all sums paid by the BUYER to the SELLER on account of the VESSEL, unless the SELLER disputes the BUYER’s cancellation and/or rescission by instituting arbitration in accordance with Article XIII. If the BUYER’s cancellation or rescission of this Contract is disputed by the SELLER by instituting arbitration as aforesaid, then no refund shall be made by the SELLER, and the BUYER shall not be entitled to demand repayment from the Refund Guarantor under its guarantee, until the arbitration award between the BUYER and the SELLER, which shall be in favour of the BUYER, declaring the BUYER’s cancellation and/or rescission justified, is made and delivered to the SELLER by the arbitration tribunal. In the event that the SELLER is obligated to make refundment, the SELLER shall pay the BUYER interest in United States Dollars at the rate of six percent (6%) per annum, if the cancellation or rescission of the Contract is exercised by the BUYER in accordance with the provision of Article III 1(c), 2(c), 3(c) or 4(c) hereof, on the amount required herein to be refunded to the BUYER computed from the respective dates when such sums were received by Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch or any such other bank account as nominated by the SELLER pursuant to Article II 4(a), 4(b), 4(c) or 4(d) from the BUYER to the date of remittance by telegraphic transfer of such refund to the BUYER by the SELLER, provided, however, that if the said rescission by the BUYER is made by reason of Paragraph 1 of Article VIII or Paragraph 2 (b) of Article XII, then in such event the SELLER shall not be required to pay any interest.
It is hereby understood by both parties that payment of any interest provided herein is by way of liquidated damages due to cancellation of this CONTRACT.
If the SELLER is obligated by the terms of the Contract to refund to the BUYER the instalments paid by the BUYER to the SELLER as provided in this Paragraph, the BUYER’s supplied items shall be at BUYER’s disposal.
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3.
Upon such refund by the SELLER to the BUYER, all obligations, duties and liabilities of each of the parties hereto to the other under this Contract shall be forthwith completely discharged.
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ARTICLE XI BUYER’S DEFAULT
1. DEFINITION OF DEFAULT
The BUYER shall be deemed in default of its obligation under the Contract if any of the following events occurs:
(a)
The BUYER fails to pay the First or Second or Third or Fourth installment to the SELLER when any such installment becomes due and payable under the provisions of Article II hereof and provided the BUYER shall have received the SELLER’s demand for payment in accordance with Article II hereof; or
(b)
The BUYER fails to deliver to the SELLER an irrevocable and unconditional Letter of Guarantee under the provisions of Article II hereof; or
(c)
The BUYER fails to pay the fifth installment to the SELLER in accordance with Paragraph 3(e) and 4(e) of Article II hereof provided the BUYER shall have received the SELLER’s demand for payment in accordance with Article II hereof; or
(d)
The BUYER fails to take delivery of the VESSEL, when the VESSEL is duly tendered for delivery by the SELLER under the provisions of Article VII hereof.
2. NOTICE OF DEFAULT
If the BUYER is in default of payment or in performance of its obligations as provided hereinabove, the SELLER shall notify the BUYER to that effect by telefax or e-mail after the date of occurrence of the default as per Paragraph 1 of this Article and the BUYER shall forthwith acknowledge by telefax or E-mail to the SELLER that such notification has been received. In case the BUYER does not give the aforesaid telefax or E-mail acknowledgment to the SELLER within three (3) calendar days it shall be deemed that such notification has been duly received by the BUYER.
3. INTEREST AND CHARGE
(a)
If the BUYER is in default of payment as to any installment as provided in Paragraph 1 (a) and/or 1 (c) of this Article, the BUYER shall pay interest on such installment at the rate of six percent (6%) per annum until the date of the payment of the full amount, including all aforesaid interest. In case the BUYER shall fail to take delivery of the VESSEL when required to as provided in Paragraph 1 (d) of this Article, the BUYER shall be deemed in default of payment of the fifth installment and shall pay interest thereon at the same rate as aforesaid from and including the day on which the
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VESSEL is tendered for delivery by the SELLER, as provided in Article VII hereof.
(b)
In any event of default by the BUYER under 1 (a) or 1 (b) or 1 (c) or 1 (d) above, the BUYER shall also pay all costs, charges and expenses incurred by the SELLER in consequence of such default.
4. DEFAULT BEFORE DELIVERY OF THE VESSEL
(a)
If any default by the BUYER occurs as defined in Paragraph 1 (a) or 1 (b) or 1 (c) or 1 (d) of this Article, the Delivery Date shall be automatically postponed for a period of continuance of such default by the BUYER. In any event of default by the BUYER, the BUYER shall also pay all charges and expenses incurred by the SELLER in consequence of such default.
(b)
If any such default as defined in Paragraph 1 (a) or 1 (b) or 1 (c) or 1 (d) of this Article committed by the BUYER continues for a period of fifteen (15) days, then, the SELLER shall have all following rights and remedies:
(i)
The SELLER may, at its option, cancel or rescind this Contract, provided the SELLER has notified the BUYER of such default pursuant to Paragraph 2 of this Article, by giving notice of such effect to the BUYER by telefax or e-mail. Upon receipt by the BUYER of such telefax or e-mail notice of cancellation or rescission, all of the BUYER’s Supplies shall forthwith become the sole property of the SELLER, and the VESSEL and all its equipment and machinery shall be at the sole disposal of the SELLER for sale or otherwise; and
(ii)
In the event of such cancellation or rescission of this Contract, the SELLER shall be entitled to retain any instalment or instalments of the Contract Price paid by the BUYER to the SELLER on account of this Contract; and
(iii)
(Applicable to any BUYER’s default defined in 1(a) of this Article) The SELLER shall, without prejudice to the SELLER’s right to recover from the BUYER the 5th instalment, interest, costs and/or expenses by applying the proceeds to be obtained by sale of the VESSEL in accordance with the provisions set out in this Contract, have the right to declare all unpaid 1st, 2nd, 3rd and 4th instalments to be forthwith due and payable, and upon such declaration, the SELLER shall have the right to immediately demand the payment of the aggregate amount of all unpaid 1st, 2nd, 3rd, and 4th instalments from the Payment Guarantor in accordance with the terms and conditions of the Payment Guarantee issued by the Payment Guarantor.
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5. SALE OF THE VESSEL
(a)
In the event of cancellation or rescission of this Contract as above provided, the SELLER shall have full right and power either to complete or not to complete the VESSEL as it deems fit, and to sell the VESSEL at a public or private sale on such terms and conditions as the SELLER thinks fit without being answerable for any loss or damage occasioned to the BUYER thereby.
In the case of sale of the VESSEL, the SELLER shall give telefax, or E-mail, or written notice to the BUYER.
(b)
In the event of the sale of the VESSEL in its completed state, the proceeds of sale received by the SELLER shall be applied firstly to payment of all expenses attending such sale and otherwise incurred by the SELLER as a result of the BUYER’s default, and then to payment of all unpaid installments and/or unpaid balance of the Contract Price and interest on such installment at the interest rate as specified in the relevant provisions set out above from the respective due dates thereof to the date of application.
(c)
In the event of the sale of the VESSEL in its incomplete state, the proceeds of sale received by the SELLER shall be applied firstly to all expenses attending such sale and otherwise incurred by the SELLER as a result of the BUYER’s default, and then to payment of all costs of construction of the VESSEL (such costs of construction, as herein mentioned, shall include but are not limited to all costs of labour and/or prices paid or to be paid by the SELLER for the equipment and/or technical design and/or materials purchased or to be purchased, installed and/or to be installed on the VESSEL) and/or any fees, charges, expenses and/or royalties incurred and/or to be incurred for the VESSEL less the installments so retained by the SELLER, and compensation to the SELLER for a reasonable sum of loss of profit due to the cancellation or rescission of this Contract.
(d)
In either of the above events of sale, if the proceed of sale exceeds the total of the amounts to which such proceeds are to be applied as aforesaid, the SELLER shall promptly pay the excesses to the BUYER without interest, provided, however that the amount of each payment to the BUYER shall in no event exceed the total amount of installments already paid by the BUYER and the cost of the BUYER’s Supplied Items, if any.
(e)
If the proceed of sale are insufficient to pay such total amounts payable as aforesaid, the BUYER shall promptly pay the deficiency to the SELLER upon request.
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ARTICLE XII INSURANCE
1. EXTENT OF INSURANCE COVERAGE
From the time of keel-laying of the first section of the VESSEL until the same is completed, delivered to and accepted by the BUYER, the SELLER shall, at its own cost and expense, keep the VESSEL and all machinery, materials, equipment, appurtenances and outfit, delivered to the SELLER for the VESSEL or built into, or installed in or upon the VESSEL, including the BUYER’s Supplied Items, fully insured with first class Chinese insurance companies for SELLER’s RISK.
The amount of such insurance coverage shall, up to the date of delivery of the VESSEL, be in an amount at least equal to, but not limited to, the aggregate of the payments made by the BUYER to the SELLER including the value of maximum amount of US$ 200,000.00 of the BUYER’s Supplied Items. The policy referred to hereinabove shall be taken out in the name of the SELLER and all losses under such policy shall be payable to the SELLER.
2. APPLICATION OF RECOVERED AMOUNT
(a) Partial Loss:
In the event the VESSEL shall be damaged by any insured cause whatsoever prior to acceptance and delivery thereof by the BUYER and in the further event that such damage shall not constitute an actual or a constructive total loss of the VESSEL, the SELLER shall apply the amount recovered under the insurance policy referred to in Paragraph 1 of this Article to the repair of such damage satisfactory to the Classification Society and other institutions or authorities as described in the Specifications without additional expenses to the BUYER, and the BUYER shall accept the VESSEL under this Contract if completed in accordance with this Contract and Specifications and not make any claim for any consequential loss or depreciation.
(b) Total Loss:
However, in the event that the VESSEL is determined to be an actual or constructive total loss, the SELLER shall either:
(i) By the mutual agreement between the parties hereto, proceed in accordance with terms of this Contract, in which case the amount recovered under said insurance policy shall be applied to the reconstruction and/or repair of the VESSEL’s damage and/or reinstallation of BUYER’s Supplied Items, provided the parties hereto shall have first agreed in writing as to such reasonable extension of the Delivery Date
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and adjustment of other terms of this Contract including the Contract Price as may be necessary for the completion of such reconstruction; or
(ii) If due to whatever reasons the parties fail to agree on the above, then the SELLER shall refund immediately to the BUYER the amount of all installments paid to the SELLER under this Contract without interest, whereupon this Contract shall be deemed to be canceled and all rights, duties, liabilities and obligations of each of the parties to the other shall terminate forthwith.
Within thirty (30) days after receiving telefax or e-mail notice of any damage to the VESSEL constituting an actual or a constructive total loss, the BUYER shall notify the SELLER in writing or by telefax or e-mail of its agreement or disagreement under this sub-paragraph. In the event the BUYER fails to so notify the SELLER, then such failure shall be construed as a disagreement on the part of the BUYER. This Contract shall be deemed as rescinded and canceled and Paragraph 2 (b) (ii) of this Article shall apply.
3. TERMINATION OF THE SELLER’S OBLIGATION TO INSURE
The SELLER’s obligation to insure the VESSEL hereunder shall cease and terminate forthwith upon delivery thereof to and acceptance by the BUYER.
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ARTICLE XIII DISPUTES AND ARBITRATION
1. PROCEEDINGS
In the event of any dispute between the parties hereto as to any matter arising out of or relating to this Contract or any stipulation herein or with respect thereto which cannot be settled by the parties themselves, such dispute shall be resolved by arbitration in London England in accordance with the Laws of England. Any arbitration of disputes under this Contract shall be conducted in accordance with the London Maritime Arbitrators’ Association Terms. Either party may demand arbitration of any such disputes by giving written notice to the other party. Any demand for arbitration by either party hereto shall state the name of the arbitrator appointed by such party and shall also state specifically the question or questions as to which such party is demanding arbitration. Within twenty (20) days after receipt of notice of such demand for arbitration, the other party shall in turn appoint a second arbitrator. The two arbitrators thus appointed shall thereupon select a third arbitrator, and the three arbitrators so named shall constitute the board of arbitration (hereinafter called the “Arbitration Board”) for the settlement of such dispute.
In the event however, that said other party should fail to appoint a second arbitrator as aforesaid within twenty (20) days following receipt of notice of demand of arbitration, it is agreed that such party shall thereby be deemed to have accepted and appointed as its own arbitrator the one already appointed by the party demanding arbitration, and the arbitration shall proceed forthwith before this sole arbitrator, who alone, in such event, shall constitute the Arbitration Board. And in the further event that the two arbitrators appointed respectively by the parties hereto as aforesaid should be unable to reach agreement on the appointment of the third arbitrator within twenty (20) days from the date on which the second arbitrator is appointed, either party of the said two arbitrators may apply to the President for the time being of the London Maritime Arbitrators Association to appoint the third arbitrator. The award of the arbitration, made by the sole arbitrator or by the majority of the three arbitrators as the case may be, shall be final, conclusive and binding upon the parties hereto.
2. ALTERNATIVE ARBITRATION BY AGREEMENT
Notwithstanding the preceding provisions of this Article, it is recognized that in the event of any dispute or difference of opinion arising in regard to the construction of the VESSEL, her machinery and equipment, or concerning the quality of materials or workmanship thereof or thereon, such dispute may be referred to the Classification Society upon mutual agreement of the parties hereto. In such case, the opinion of the Classification Society shall be final and binding on the parties hereto.
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3. NOTICE OF AWARD
Notice of any award shall immediately be given in writing or by telefax or e-mail to the SELLER and the BUYER.
4. EXPENSES
The Arbitration Board shall determine which party shall bear the expenses of the arbitration or the proportion of such expenses which each party shall bear.
5. AWARD OF ARBITRATION
Award of arbitration, shall be final and binding upon the parties concerned.
6. ENTRY IN COURT
Judgment on any award may be entered in any court of competent jurisdiction.
7. ALTERATION OF DELIVERY DATE
In the event of reference to arbitration of any dispute arising out of matters occurring prior to delivery of the VESSEL, the SELLER shall not be entitled to extend the Delivery Date as defined in Article VII hereof and the BUYER shall not be entitled to postpone its acceptance of the VESSEL on the Delivery Date or on such newly planned time of delivery of the VESSEL as declared by the SELLER. However, if the construction of the VESSEL is affected by any arbitration, the SELLER shall then be permitted to extend the Delivery Date as defined in Article VII and the decision or the award shall include a finding as to what extent the SELLER shall be permitted to extend the Delivery Date.
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ARTICLE XIV RIGHT OF ASSIGNMENT
1.
ASSIGNMENT AND TRANSFER BY THE BUYER
The SELLER agrees that prior to delivery of the VESSEL, the Contract may, with the prior written approval/consent of the SELLER, which the SELLER shall not unreasonably withhold, be assigned or transferred to BUYER’s bank for financing purpose or to a 100% subsidiary of the BUYER.
For the avoidance of doubt, the BUYER’s rights to transfer or assign under this Paragraph 1 shall apply equally to any transferee or assignee of the BUYER’s rights and obligations under this Contract as defined in the above paragraph, but always subject to SELLER’s prior consent, which the SELLER shall not unreasonably withhold.
2.
ASSIGNMENT BY THE
SELLER
SELLER shall have the right to assign this Contract to SELLER’s bank for financing purpose at any time after the effective date hereof, provided that prior written agreement is obtained from the BUYER, which the BUYER shall not unreasonably withhold.
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ARTICLE XV TAXES AND DUTIES
1. TAXES
The SELLER shall bear and pay all taxes, duties, stamps, dues levies and fees of whatsoever nature incurred or imposed in China in connection with the execution and/or performance of this Contract by the SELLER. Any taxes and/or duties imposed upon those items or services procured by the SELLER in the People’s Republic of China or elsewhere for the construction of the VESSEL shall be borne by the SELLER.
The BUYER shall be responsible for the personal income tax for any person it employs, including BUYER’S REPRESENTATIVES or other BUYER’s staff, agent and representatives who work at SELLER’s shipyard and premise.
2. DUTIES
The BUYER shall bear and pay all taxes, duties, stamps and fees incurred outside China in connection with execution and/or performance of this Contract by the BUYER, except for taxes, duties, stamps, dues, levies and fees imposed upon those items which are to be procured by the SELLER for the construction of the VESSEL in accordance with the terms of this Contract and the Specifications..
Any tax or duty other than those described hereinabove, if any, shall be borne by the BUYER.
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ARTICLE XVI PATENTS, TRADEMARKS AND COPYRIGHTS
The machinery and equipment of the VESSEL may bear the patent number, trademarks or trade names of the manufacturers. The SELLER shall defend and hold harmless the BUYER from patent liability or claims of patent infringement of any nature or kind, including costs and expenses for, or on account of any patented or patentable invention made or used in the performance of this Contract and also including cost and expense of litigation, if any.
Nothing contained herein shall be construed as transferring any patent or trademark rights or copyright in equipment covered by this Contract, and all such rights are hereby expressly reserved to the true and lawful owners thereof. Notwithstanding any provisions contained herein to the contrary, the SELLER’s obligation under this Article should not be terminated by the passage of any specified period of time.
The SELLER’s indemnity hereunder does not extend to equipment or parts supplied by the BUYER to the SELLER if any.
The SELLER retains all rights with respect to the Specification, and plans and working drawings, technical descriptions, calculations, test results and other data, information and documents concerning the design and construction of the VESSEL and the BUYER undertakes therefore not to disclose the same or divulge any information contained therein to any third parties, without the prior written consent of the SELLER, excepting where it is necessary for usual operation, repair and maintenance, sale or charter of the VESSEL or registration, classification insurance or sale of the VESSEL.
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ARTICLE XVII NOTICE
Any and all notices and communications in connection with this Contract shall be addressed as follows:
To the BUYER :
NAVIG8 CRUDE TANKERS INC.
Address :
c/o Navig8 Asia Pte Ltd
3 Temasek Avenue
#25-01 Centennial Tower
Singapore 039190
Telefax No. :
+44 207 467 5867
E-mail :
legal@navig8group.com
To the SELLER : Shanghai Waigaoqiao Shipbuilding Co., Ltd.
Address : 3001 Zhouhai Road, Pudong New District, Shanghai 200137,
the People’s Republic of China
Telex No. : (021) 58480446
E-mail : swsbiz@chinasws.com
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Any change of address shall be communicated in writing by registered mail or by e-mail by the party making such change to the other party and in the event of failure to give such notice of change, communications addressed to the party at their last known address shall be deemed sufficient.
Any and all notices, requests, demands, instructions, advice and communications in connection with this Contract shall be deemed to be given at, and shall become effective from, the time when the same is delivered to the address of the party to be served, provided, however, that registered airmail shall be deemed to be delivered ten (10) days after the date of dispatch, express courier service shall be deemed to be delivered five (5) days after the date of dispatch, and telefax or e-mail acknowledged by the answerbacks shall be deemed to be delivered upon dispatch. E-mail transmissions shall be deemed as delivered upon the subject email has been removed to the “Sent” box on the sending computer.
Any and all notices, communications, Specifications and drawings in connection with this Contract shall be written in the English language and each party hereto shall have no obligation to translate them into any other language.
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ARTICLE XVIII EFFECTIVE DATE OF CONTRACT
This Contract shall become effective upon signing of this Contract
Upon signing of this Contract, both parties hereto shall do as follows:
(1) Receipt by the BUYER of a Refund Guarantee in the form annexed hereto as Exhibit A issued by Refund Guarantor in accordance with Article II Paragraph 7 hereof.
(2) Receipt by the SELLER of the first instalment in accordance with Paragraph 3(a) and 4(a) of Article II of this Contract; and
(3) Receipt by the SELLER of a Letter of Guarantee in the form annexed hereto as Exhibit B issued by the Refund Guarantor in accordance with Article II Paragraph 6 hereof.]
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ARTICLE XIX INTERPRETATION
1. LAW APPLICABLE
The parties hereto agree that the validity and interpretation of this Contract and of each Article and part hereof be governed by and interpreted in accordance with the laws of England.
2. DISCREPANCIES
All general language or requirements embodied in the Specifications are intended to amplify, explain and implement the requirements of this Contract. However, in the event that any language or requirements so embodied in the Specifications permit an interpretation inconsistent with any provision of this Contract, then in each and every such event the applicable provisions of this Contract shall govern. The Specifications and plans are also intended to explain each other, and anything shown on the plans and not stipulated in the Specifications or stipulated in the Specifications and not shown on the plans, shall be deemed and considered as if embodied in both. In the event of conflict between the Specifications and plans, the Specifications shall govern.
However, with regard to such inconsistency or contradiction between this Contract and the Specifications as may later occur by any change or changes in the Specifications agreed upon by and among the parties hereto after execution of this Contract, then such change or changes shall govern.
3. DEFINITION
“Banking Day(s)” are days on which banks are open in Singapore, New York, U.S.A.
“Business Day(s)” are days on which banks are open in Singapore and P. R. China.
In absence of stipulation of “banking day(s)” or “Business Day(s)”, the “day” or “days” shall be taken as “calendar day” or “calendar days”.
4. ENTIRE AGREEMENT
This Contract sets forth the entire understanding of the Parties with respect to the subject matter discussed herein. It supersedes all prior discussions, negotiations and agreements, (including but not limited to the Letter of Intent / Option Agreement) whether oral or written, expressed or implied.
In WITNESS WHEREOF, the parties hereto have caused this Contract to be duly executed on
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the day and year first above written.
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THE BUYER :
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NAVIG8 CRUDE TANKERS INC.
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By :
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/s/ Rasmus Bach Nielsen
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Name :
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Rasmus Bach Nielsen
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Title :
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Attorney-in-Fact
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THE SELLER:
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Shanghai Waigaoqiao Shipbuilding Co., Ltd.
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By :
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/s/ Huang Yicheng
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Name :
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Huang Yicheng
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Attorney-in-Fact
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Exhibit “A”: IRREVOCABLE LETTER OF GUARANTEE NO.
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Date:
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Dear Sirs,
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Irrevocable Letter of Guarantee No.
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At the request of Shanghai Waigaoqiao Shipbuilding Company Limited and in consideration of your agreeing to pay Shanghai Waigaoqiao Shipbuilding Company Limited (hereinafter called “the SELLER”) the instalments before delivery of the VESSEL under the Contract concluded by and amongst you, and the SELLER dated 21
st
March,2014 for the construction of one (1) 300,000 Metric Tons Deadweight Crude Oil Tanker to be designated as Hull No. H1384 (hereinafter called “the Contract”), we, the undersigned, do hereby guarantee irrevocably, as primary obligor, repayment to you by the SELLER of an amount up to but not exceeding a total amount of United States Dollars Thirty Nine Million Four Hundred and Eighty One Thousand Two Hundred Only (US$ 39,481,200.00) (plus the interest described below) representing the first instalment of the Contract Price of the VESSEL, United States Dollars Nine Million Nine Million Eight Hundred and Seventy Thousand Three Hundred Only (US$9,870,300.00), the second instalment of the Contract Price of the VESSEL, United States Dollars Nine Million Eight Hundred and Seventy Thousand Three Hundred Only (US$9,870,300.00), the third instalment of the Contract Price of the VESSEL, United States Dollars Nine Million Eight Hundred and Seventy Thousand Three Hundred Only (US$9,870,300.00) and the fourth instalment of the Contract Price of the VESSEL, United States Dollars Nine Million Nine Million Eight Hundred and Seventy Thousand Three Hundred Only (US$9,870,300.00), as you may have paid to the SELLER under the Contract prior to the delivery of the VESSEL, if and when the same or any part thereof becomes repayable to you from the SELLER in accordance with the terms (Article X or Article XII 2(b)) of the Contract. Should the SELLER fail to make such repayment, we shall pay you the amount the SELLER ought to pay with an interest at the rate of six percent (6%) per annum if the cancellation of the Contract is exercised by you in accordance with the provisions of Article III 1(c), 2(c), 3(c) or 4(c) of the Contract or at the rate of zero percent (0%) per annum if cancellation of the Contract is exercised by you by reason of paragraph 1 of Article VIII or paragraph 2(b) of Article XII, in both cases calculated from the date the installments were received by the SELLER to the date of remittance of such refund within thirty (30) Business Days after our receipt of the relevant written demand from you for repayment. Any written demand to us shall be accepted by us as conclusive evidence that the amount claimed is due under this guarantee, provided that such demand: (1) is signed by authorized representative of you and accompanied by a power of attorney granted by you providing the relevant authorized representative with authority to make the demand; (2) states that the principal amount and interest thereon if any demanded by you has been demanded by you from the SELLER and was not paid by the SELLER within forty-five (45) days after that demand upon the SELLER; and (3) is accompanied by a copy of your said demand upon the SELLER.
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It is hereby understood that payment of any interest provided herein is by way of liquidated damages due to cancellation of the CONTRACT.
However, in the event of any dispute between you and the SELLER in relation to:
(1) whether the SELLER shall be liable to repay the instalment or instalments paid by you and
(2) consequently whether you shall have the right to demand payment from us,
and such dispute is submitted either by the SELLER or by you for arbitration in accordance with Article XIII of the Contract, we shall be entitled to withhold and defer payment until the arbitration award is published. We shall not be obligated to make any payment to you unless the arbitration award orders the SELLER to make repayment. If the SELLER fails to honour the award within 45 days of the final award being issued then we shall refund to you against your further written demand accompanied with a certified copy of the arbitration award which orders the SELLER to make repayment, to the extent the arbitration award orders but not exceeding the aggregate amount of this guarantee plus the interest described above.
The undersigned hereby certifies, represents and warrants that all acts, conditions and things required to be done and performed and to have occurred prior to the creation and issuance of this guarantee, and to ensure that this guarantee constitutes valid and legally binding obligations of the undersigned enforceable in accordance with its terms have been done and performed and have occurred in due and strict compliance with applicable laws.
The said repayment shall be made by us in United States Dollars. This Letter of Guarantee shall become effective from the time of the actual receipt of the first instalment by the SELLER from you and the amounts effective under this Letter of Guarantee shall correspond to the total payment actually received by the SELLER from time to time under the Contract prior to the delivery of the VESSEL. However, the available amount under this Letter of Guarantee shall in no event exceed above mentioned amount actually received by the SELLER, together with interest calculated, as described above at six percent (6%) or, zero percent (0%) per annum, as the case may be for the period commencing with the date of receipt by the SELLER of the respective instalment to the date of repayments thereof.
This Letter of Guarantee shall remain in force until the VESSEL has been delivered to and accepted by you or refund has been made by the SELLER or ourselves, or until November 10
th
,2016whichever occurs earlier, after which you are to return it to us by airmail for cancellation. Upon its expiration, this guarantee shall become null and void, any action of maintaining the original of this guarantee and its amendment(s) shall give no right to you for lodging any more claim hereunder.
However in the event that a dispute in respect of a refund is being referred to arbitration in accordance with Article XIII of the Contract, then this Letter of Guarantee shall continue to
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remain in force until 60 days after such arbitration proceedings are concluded and a final arbitration award has been issued.
Any claim under this guarantee must be received by us before its expiration.
It is agreed that this Letter of Guarantee may, with our prior written approval and such approval shall not be unreasonably withheld, be assigned by you (excluding, in respect of a first class international bank, the right of demanding payment which shall in all respect remain with yourself) to a first class international bank that is financing the whole or part of your purchase of the VESSEL or one of your 100% subsidiaries or affiliates.
This Letter of Guarantee shall be construed, interpreted and governed by the Laws of England and any dispute arising out of or in connection with this Letter of Guarantee shall be submitted to the exclusive jurisdiction of the courts of England.
For the Refund Guarantor
54
Exhibit “B” IRREVOCABLE LETTER OF GUARANTEE
FOR THE 2ND, 3RD, AND 4TH INSTALLMENTS
Date:
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To:
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Shanghai Waigaoqiao Shipbuilding Co., Ltd.,
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3001 Zhouhai Road, Pudong New District,
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Shanghai 200137, the People’s Republic of China
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Dear Sirs,
(1)
In consideration of your entering into a shipbuilding contract dated 21
st
March,2014 (“the Shipbuilding Contract”) with NAVIG8 CRUDE TANKERS INC. or its Nominee as the buyer (“the BUYER”) for the construction of one (1) 300,000 Metric Tons Deadweight Crude Oil Tanker known as Shanghai Waigaoqiao Shipbuilding Co., Ltd.’s Hull No. H1384 (“the VESSEL”), we, NAVIG8 CRUDE TANKERS INC., hereby IRREVOCABLY, ABSOLUTELY and UNCONDITIONALLY guarantee, as the primary obligor and not merely as the surety, the due and punctual payment by the BUYER of each and all of the 2nd, 3rd, and 4th installments of the Contract Price amounting to a total sum of United States Dollars Twenty Nine Million Six Hundred and Ten Thousand Nine Hundred only (US$ 29,610,900.00) as specified in (2) below.
(2)
The instalments guaranteed hereunder, pursuant to the terms of the Shipbuilding Contract, comprise the 2nd installment in the amount of U.S. Dollars Nine Million Eight Hundred and Seventy Thousand Three Hundred Only (US$9,870,300.00)payable by the BUYER within three (3) Singapore and New York business days after cutting of the first steel plate in your SELLER’s workshop, the third installment in the amount of U.S. Dollars Nine Million Eight Hundred and Seventy Thousand Three Hundred Only (US$9,870,300.00) payable by the BUYER within three (3) Singapore and New York business days after keel-laying of the first section of the VESSEL, and the 4th installment in the amount U.S. Dollars Nine Million Eight Hundred and Seventy Thousand Three Hundred Only (US$9,870,300.00) payable by the BUYER within three (3) Singapore and New York business days after launching of the VESSEL.
(3)
We also IRREVOCABLY, ABSOLUTELY and UNCONDITIONALLY guarantee, as primary obligor and not merely as surety, the due and punctual payment by the BUYER of interest on each Instalment guaranteed hereunder at the rate of six percent (6%) per annum from and including the first day after the date of instalment in default until the date of full payment by us of such amount guaranteed hereunder.
55
(4)
In the event that the BUYER fails to punctually pay any Instalment guaranteed hereunder or the BUYER fails to pay any interest thereon, and any such default continues for a period of fifteen (15) days, then, upon receipt by us of your first written demand, we shall immediately pay to you or your assignee all unpaid 2nd, 3rd and 4th instalments, together with the interest as specified in paragraph (3) hereof, without requesting you to take any or further action, procedure or step against the BUYER or with respect to any other security which you may hold.
(5)
We hereby agree that at your option this Guarantee and the undertaking hereunder shall be assignable to and if so assigned shall inure to the benefit of any 3rd party designated by you or Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch , as your assignee as if any such third party or Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch were originally named herein.
(6)
Any payment by us under this Guarantee shall be made in the Unites States Dollars by telegraphic transfer to Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch, 9 Pudong Avenue,Shanghai, China for credit to Account No.1001190709148073602 of Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch (Swift: ICBKCNBJSHI), as receiving bank nominated by you for credit to the account of you with Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch, 9 Pudong Avenue,Shanghai, China for credit to Account No.1001190709148073602 of Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch (Swift: ICBKCNBJSHI) or through other receiving bank to be nominated by you from time to time, in favour of you or your assignee.
(7)
Our obligations under this guarantee shall not be affected or prejudiced by any dispute between you as the SELLER and the BUYER under the Shipbuilding Contract or by the SELLER’s delay in the construction and/or delivery of the VESSEL due to whatever causes or by any variation or extension of their terms thereof or by any security or other indemnity now or hereafter held by you in respect thereof, or by any time or indulgence granted by you or any other person in connection therewith, or by any invalidity or unenforceability of the terms thereof, or by any act, omission, fact or circumstances whatsoever, which could or might, but for the foregoing, diminish in any way our obligations under this Guarantee.
(8)
Any claim or demand shall be in writing signed by one of your officers and may be served on us either by hand or by post and if sent by post to (or such other address as we may
56
notify to you in writing), or by email (email: ) via Industrial And Commercial Bank Of China Limited , with confirmation in writing.
(9)
This Letter of Guarantee shall come into full force and effect upon delivery to you of this Guarantee and shall continue in force and effect until the VESSEL is delivered to and accepted by the BUYER and the BUYER shall have performed all its obligations for taking delivery thereof or until the full payment of all 2nd, 3rd, and 4th Instalments together with the aforesaid interests by the BUYER or us, whichever first occurs.
(10)
The maximum amount, however, that we are obliged to pay to you under this Guarantee shall not exceed the aggregate amount of U.S. Dollars Twenty Nine Million Nine Hundred and Seven Thousand and Nine only (US$29,907,009.00) being an amount equal to the sum of:-
(a)
All the 2nd, 3rd and 4th instalments guaranteed hereunder in the total amount of United States Dollars Twenty Nine Million Six Hundred and Ten Thousand Nine Hundred only (US$ 29,610,900.00); and
(b)
Interest at the rate of six percent (6%) per annum on the Instalment for a period of sixty (60) days in the amount of United States Dollars Two Hundred Ninety Six Thousand One Hundred and Nine only (US$ 296,109.00).
(11)
All payments by us under this Guarantee shall be made without any set-off or counterclaim and without deduction or withholding for or on account of any taxes, duties, or charges whatsoever unless we are compelled by law to deduct or withhold the same. In the latter event we shall make the minimum deduction or withholding permitted and will pay such additional amounts as may be necessary in order that the net amount received by you after such deductions or withholdings shall equal the amount which would have been received had no such deduction or withholding been required to be made.
(12)
This Letter of Guarantee shall be construed in accordance with and governed by the Laws of England. We hereby submit to the non-exclusive jurisdiction of the English courts for the purposes of any legal action or proceedings in connection herewith in England.
(13)
When this Letter of Guarantee shall have expired as aforesaid, you will return the same to us without any request or demand from us.
57
IN WITNESS WHEREOF, we have caused this Letter of Guarantee to be executed and delivered by our duly authorized representative the day and year above written.
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Very Truly Yours
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By: NAVIG8 CRUDE TANKERS INC.
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58
Exhibit 10.84
SHIPBUILDING CONTRACT
FOR
CONSTRUCTION OF ONE 300,000 DWT CRUDE OIL TANKER
(HULL NO. H1385)
BETWEEN
NAVIG8 CRUDE TANKERS INC. or its Nominee
as BUYER
and
SHANGHAI WAIGAOQIAO SHIPBUILDING CO., LTD.
as SELLER
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Shipbuilding Contract
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Hull No.
H1385
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CONTENTS
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ARTICLE
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PAGE NO.
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ARTICLE I DESCRIPTION AND CLASS
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2
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1. DESCRIPTION:
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2
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2. CLASS AND RULES
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2
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3. PRINCIPAL PARTICULARS AND DIMENSIONS OF THE VESSEL
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3
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4. GUARANTEED SPEED
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3
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5. GUARANTEED FUEL CONSUMPTION
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3
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6. GUARANTEED DEADWEIGHT
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4
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7. SUBCONTRACTING:
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4
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8. REGISTRATION:
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4
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ARTICLE II CONTRACT PRICE & TERMS OF PAYMENT
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5
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1. CONTRACT PRICE:
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5
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2. CURRENCY:
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5
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3. TERMS OF PAYMENT:
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5
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4. METHOD OF PAYMENT:
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6
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5. PREPAYMENT:
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8
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6. SECURITY FOR PAYMENT OF INSTALMENTS BEFORE DELIVERY:
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8
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7. REFUNDS
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8
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ARTICLE III ADJUSTMENT OF THE CONTRACT PRICE
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10
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1. DELIVERY
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10
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2. INSUFFICIENT SPEED
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11
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3. EXCESSIVE FUEL CONSUMPTION
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12
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4. DEADWEIGHT
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13
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5. EFFECT OF RESCISSION OR CANCELLATION
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13
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ARTICLE IV SUPERVISION AND INSPECTION
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14
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1. APPOINTMENT OF THE BUYER’S REPRESENTATIVES
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14
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2. COMMENTS TO PLANS AND DRAWINGS
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14
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3. SUPERVISION AND INSPECTION BY THE BUYER’S REPRESENTATIVES
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15
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4. LIABILITY OF THE SELLER
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17
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5. SALARIES AND EXPENSES
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17
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6. REPLACEMENT OF BUYER’S REPRESENTATIVES
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17
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ARTICLE V MODIFICATION,CHANGES AND EXTRAS
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18
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1. HOW EFFECTED
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18
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2. CHANGES IN RULES AND REGULATIONS, ETC.
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19
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3. SUBSTITUTION OF MATERIALS AND/OR EQUIPMENT
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20
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4. BUYER’S SUPPLIED ITEMS
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20
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ARTICLE VI TRIALS
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22
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Date: 21
st
March,2014
I
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1. NOTICE
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22
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2. HOW CONDUCTED
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23
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3. TRIAL LOAD DRAFT
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23
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4. METHOD OF ACCEPTANCE OR REJECTION
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23
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5. DISPOSITION OF SURPLUS CONSUMABLE STORES
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24
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6. EFFECT OF ACCEPTANCE
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25
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ARTICLE VII DELIVERY
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26
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1. TIME AND PLACE
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26
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2. WHEN AND HOW EFFECTED
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26
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3. DOCUMENTS TO BE DELIVERED TO THE BUYER
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26
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4. TITLE AND RISK
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27
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5. REMOVAL OF VESSEL
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28
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6. TENDER OF THE VESSEL
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28
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ARTICLE VIII DELAYS & EXTENSION OF TIME FOR DELIVERY
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29
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1. CAUSE OF DELAY
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29
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2. NOTICE OF DELAY
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30
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3. RIGHT TO CANCEL FOR EXCESSIVE DELAY
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30
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4. DEFINITION OF PERMISSIBLE DELAY
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31
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ARTICLE IX WARRANTY OF QUALITY
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32
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1. GUARANTEE OF MATERIAL AND WORKMANSHIP
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32
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2. NOTICE OF DEFECTS
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32
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3. REMEDY OF DEFECTS
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32
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4. EXTENT OF THE SELLER’S LIABILITY
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33
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ARTICLE X CANCELLATION, REJECTION AND RESCISSION BY THE BUYER
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35
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ARTICLE XI BUYER’S DEFAULT
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37
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1. DEFINITION OF DEFAULT
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37
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2. NOTICE OF DEFAULT
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37
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3. INTEREST AND CHARGE
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37
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4. DEFAULT BEFORE DELIVERY OF THE VESSEL
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38
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5. SALE OF THE VESSEL
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39
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ARTICLE XII INSURANCE
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40
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1. EXTENT OF INSURANCE COVERAGE
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40
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2. APPLICATION OF RECOVERED AMOUNT
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40
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3. TERMINATION OF THE SELLER’S OBLIGATION TO INSURE
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41
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ARTICLE XIII DISPUTES AND ARBITRATION
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42
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1. PROCEEDINGS
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42
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2. ALTERNATIVE ARBITRATION BY AGREEMENT
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42
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3. NOTICE OF AWARD
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43
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4. EXPENSES
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43
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5. AWARD OF ARBITRATION
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43
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II
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6. ENTRY IN COURT
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43
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7. ALTERATION OF DELIVERY TIME
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43
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ARTICLE XIV RIGHT OF ASSIGNMENT
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44
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ARTICLE XV TAXES AND DUTIES
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45
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1. TAXES
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45
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2. DUTIES
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45
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ARTICLE XVI PATENTS, TRADEMARKS AND COPYRIGHTS
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46
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ARTICLE XVII NOTICE
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47
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ARTICLE XVIII EFFECTIVE DATE OF CONTRACT
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49
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ARTICLE XIX INTERPRETATION
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50
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1. LAW APPLICABLE
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50
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2. DISCREPANCIES
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50
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3. DEFINITION
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50
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4. ENTIRE AGREEMENT
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50
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EXHIBIT “A” : IRREVOCABLE LETTER OF GUARANTEE NO.
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52
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EXHIBIT “B” IRREVOCABLE LETTER OF GUARANTEE
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55
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FOR THE 2ND, 3RD, AND 4TH INSTALLMENTS
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55
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III
SHIPBUILDING CONTRACT FOR
CONSTRUCTION OF ONE DIESEL DRIVEN 300,000 DWT CRUDE OIL TANKER
(HULL NO.
H1385
)
This CONTRACT, entered into this 21
st
day of March 2014 by and between NAVIG8 CRUDE TANKERS INC. or its Nominee, a corporation organized and existing under the Laws of Marshall Islands, having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960 (hereinafter called the “BUYER”) on one part; and SHANGHAI WAIGAOQIAO SHIPBUILDING CO., LTD. a corporation organized and existing under the Laws of the People’s Republic of China, having its registered office at 3001 Zhouhai Road, Pudong New District, Shanghai 200137, the People’s Republic of China (hereinafter called the “SELLER”) on the other part.
WITNESSETH
in consideration of the mutual covenants contained herein, the SELLER agrees to design, build, launch, equip and complete at the SELLER’s own premises or at Shanghai Jiangnan Changxing Heavy Industry Co., Ltd. at Changxing Island, Shanghai (hereinafter called the SELLER’s shipyard) and to sell and deliver to the BUYER after completion and successful trial one (1) 300,000 Metric Tons Deadweight Crude Oil Tanker as more fully described in Article I hereof, to be registered under the flag of Marshall Islands and the BUYER agrees to purchase and take delivery of the aforesaid VESSEL from the SELLER and to pay for the same in accordance with the terms and conditions hereinafter set forth.
1
ARTICLE I DESCRIPTION AND CLASS
1.
DESCRIPTION:
The VESSEL is a 300,000 metric tons deadweight crude oil tanker, at scantling draft moulded of 21.3 meters (hereinafter called the “VESSEL”) of the class described below. The VESSEL shall have the SELLER’s Hull No. H1385 and shall be designed, constructed, equipped and completed in accordance with the following “Specifications”:
(1)
Specification (Drawing No. 300TK-13202-CS-R1)
(2)
General Arrangement (Drawing No. 300TK-13202-GA-R1)
(3)
Midship Section (Drawing No. 300TK-13202-MS-R1)
(4)
Makers list (Drawing No. 300TK-13202-ML-R1)
(5)
Technical Memorandum on the 300,000 DWT Crude Oil Tanker Specification dated December 17
th
, 2013
attached hereto and signed by each of the parties to this Contract (hereinafter collectively called the “Specifications”), making an integral part hereof.
2.
CLASS AND RULES
The VESSEL, including its machinery and equipment, shall be designed, equipped and constructed in accordance with the rules and regulations issued and having become effective and compulsorily applicable to the VESSEL up to and on the date of signing this Contract of American Bureau of Shipping (ABS) (hereinafter called the “Classification Society”) and shall be distinguished in the record by the symbol of:
+A1 Oil Carrier, (E), CSR, AB-CM, +AMS, +ACCU, TCM, UWILD, SPMA, PMA, ESP, CPS, VEC-L, RW, GP, CPP, POT, CRC, BWT, HIMP, RES, RRDA
and shall also comply with the rules and regulations as fully described in the Specifications.
The requirements of the authorities as fully described in the Specifications including that of the Classification Society are to include additional rules or circulars thereof issued and become effective as at the date of signing this Contract.
The SELLER shall arrange with the Classification Society to assign a representative or representatives (hereinafter called the “Classification Surveyor”) to the SELLER’s Shipyard for supervision of the construction of the VESSEL.
All fees and charges incidental to Classification and to comply with the rules, regulations
2
and requirements of this Contract as described in the Specifications issued up to the date of signing this Contract as well as royalties, if any, payable on account of the construction of the VESSEL shall be for the account of the SELLER, except as otherwise provided and agreed herein. The key plans, materials and workmanship entering into the construction of the VESSEL shall at all times be subject to inspections and tests in accordance with the rules and regulations of the Classification Society.
Decisions of the Classification Society as to compliance or noncompliance with Classification rules and regulations shall be final and binding upon the parties hereto.
3.
PRINCIPAL PARTICULARS AND DIMENSIONS OF THE VESSEL
(a)
Hull:
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Length overall
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abt. 333.00m
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Length between perpendiculars
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324.00m
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Breadth moulded
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60.00m
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Depth moulded
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29.50m
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Design Draft moulded
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20.50m
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(b)
Propelling Machinery:
The VESSEL shall be equipped, in accordance with the Specifications, with one (1) set of MAN 7G80ME-C 9.2 type main engine.
4.
GUARANTEED SPEED
The SELLER guarantees that the trial speed, after correction, is to be not less than 15.5nautical miles per hour on the trial condition stipulated in the Specification.
The trial speed shall be corrected for wind speed and shallow water effect. The correction method of the speed shall be as specified in the Specifications.
5.
GUARANTEED FUEL CONSUMPTION
The SELLER guarantees that the fuel oil consumption of the Main Engine is not to exceed 158.8+5% grams/brake horse power/hour at normal continuous output at shop trial based on diesel fuel oil having a lower calorific value of 10,200 kilocalories per kilogram.
3
6.
GUARANTEED DEADWEIGHT
The SELLER guarantees that the VESSEL is to have a deadweight of not less than 300,000 metric tons at the scantling draft moulded of 21.3 meters in sea water of 1.025 specific gravity.
The term, “Deadweight”, as used in this Contract, shall be as defined in the Specifications.
The actual deadweight of the VESSEL expressed in metric tons shall be based on calculations made by the SELLER and checked by the BUYER, and all measurements necessary for such calculations shall be performed in the presence of the BUYER’s REPRESENTATIVE(S) or the party authorized by the BUYER.
Should there be any dispute between the SELLER and the BUYER in such calculations and/or measurements, the decision of the Classification Society shall be final.
7.
SUBCONTRACTING:
The SELLER may, at its sole discretion and responsibility, subcontract any portion of the construction work of the VESSEL to experienced subcontractors, but delivery and final assembly into the VESSEL of any such work subcontracted shall be at the SELLER’s Shipyard. The SELLER shall remain responsible for such subcontracted work.
The performance of the works by the Shanghai Jiangnan Changxing Heavy Industry Co., Ltd. or wholly controlled subsidiaries of the SELLER does not constitute subcontracting for the purposes of this clause. Without prejudice to the generality of the foregoing the SELLER shall remain fully liable for the due and complete performance of all the SELLER’s obligations under this Contract notwithstanding the entering into of any such sub-contract as aforesaid. However, the Vessel shall always remain at the SELLER’s shipyard or Shanghai Jiangnan Changxing Heavy Industry Co., Ltd. unless the Buyer and the SELLER agree otherwise.
8.
REGISTRATION:
The VESSEL shall be registered by the BUYER at its own cost and expenses under the laws of Marshall Islands at the time of delivery and acceptance thereof.
4
ARTICLE II CONTRACT PRICE & TERMS OF PAYMENT
1.
CONTRACT PRICE:
The purchase price of the VESSEL is United States Dollars Ninety Eight Million Seven Hundred and Three Thousand Only (US$ 98,703,000.00), net receivable by the SELLER (hereinafter called the “Contract Price”), which is exclusive of the cost for the BUYER’s Supplies as provided in Article V hereof, and shall be subject to upward or downward adjustment, if any, as hereinafter set forth in this Contract.
2.
CURRENCY:
Any and all payments by the BUYER to the SELLER under this Contract shall be made in United States Dollars.
3.
TERMS OF PAYMENT:
The Contract Price shall be paid by the BUYER to the SELLER in instalments as follows:
(a)
1st Instalment:
The sum of United States Dollars Nine Million Eight Hundred and Seventy Thousand Three Hundred Only (US$9,870,300.00), representing ten percent (10%) of the Contract Price, shall become due and payable and be paid by the BUYER within three (3) Singapore and New York business days after its receipt of the Refund Guarantee substantially in the form agreed in Exhibit “A”to this Contract. SELLER shall send a copy of invoice as demand for the same.
(b)
2nd Instalment:
The sum of United States Dollars Nine Million Eight Hundred and Seventy Thousand Three Hundred Only (US$9,870,300.00), representing ten percent (10%) of the Contract Price, shall become due and payable and be paid within three (3) Singapore and New York business days after the cutting of the first steel plate of the VESSEL in the SELLER’s workshop, such to be confirmed in writing by the Classification Society, or a date not earlier than sixteen (16) months prior to the Delivery Date, whichever is later. The SELLER shall notify with a telefax or email notice to the BUYER stating that the 1st steel plate has been cut in its workshop and submit a copy of the invoice as demand for payment of this 2
nd
instalment.
5
(c)
3rd Instalment:
The sum of United States Dollars Nine Million Eight Hundred and Seventy Thousand Three Hundred Only (US$9,870,300.00), representing ten percent (10%) of the Contract Price, shall become due and payable and be paid within three (3) Singapore and New York business days after keel-laying of the first section of the VESSEL. The keel-laying shall be notified by the SELLER with a telefax or email notice to the BUYER stating that the said keel-laying has been carried out, such to be confirmed in writing by the Classification Society, or a date not earlier than eleven (11) months prior to the Delivery Date, whichever is later. The SELLER shall send to the BUYER a telefax or email stating that keel-laying has been carried out and submit a copy of the invoice as demand for payment of this 3
rd
installment.
(d)
4th Instalment:
The sum of United States Dollars Nine Million Eight Hundred and Seventy Thousand Three Hundred Only (US$9,870,300.00), representing ten percent (10%) of the Contract Price, shall become due and payable and be paid within three (3) Singapore and New York business days after launching of the VESSEL, such to be confirmed in writing by the Classification Society. The launching of the VESSEL shall be notified by the SELLER with a telefax or email notice to the BUYER stating that the launching of the VESSEL has been carried out. The SELLER shall send to the BUYER a telefax or email stating that launching has taken place and submit a copy of the invoice as demand for payment of this 4
th
installment.
(e)
5th Installment (Payment upon Delivery of the VESSEL):
The sum of United States Dollars Nine Million Two Hundred and Twenty One Thousand Eight Hundred Only (US$ 59,221,800.00)), representing sixty percent (60%) of the Contract Price, plus any increase or minus any decrease due to modifications and/or adjustments of the Contract Price in accordance with provisions of the relevant Articles hereof, shall become due and payable and be paid by the BUYER to the SELLER concurrently with delivery of the VESSEL. The SELLER shall send to the BUYER a telefax or e-mail demand for this installment ten (10) days prior to the scheduled date of delivery of the VESSEL.
4.
METHOD OF PAYMENT:
(a)
1st Instalment:
The BUYER shall remit the amount of this installment in accordance with Article II, Paragraph 3 (a) by telegraphic transfer to Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch, 9 Pudong Avenue,Shanghai, China for credit to
6
Account No.1001190709148073602 of Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch (Swift: ICBKCNBJSHI).
(b)
2nd Instalment:
The BUYER shall remit the amount of this installment in accordance with Article II, Paragraph 3(b) by telegraphic transfer to Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch, 9 Pudong Avenue,Shanghai, China for credit to Account No.1001190709148073602 of Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch (Swift: ICBKCNBJSHI), or through other receiving bank to be nominated by the SELLER from time to time and such nomination shall be notified to the BUYER at least 10 days prior to the due date for payment.
(c)
3rd Installment:
The BUYER shall remit the amount of this installment in accordance with Article II, Paragraph 3(c) by telegraphic transfer to Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch, 9 Pudong Avenue,Shanghai, China for credit to Account No.1001190709148073602 of Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch (Swift: ICBKCNBJSHI), or through other receiving bank to be nominated by the SELLER from time to time and such nomination shall be notified to the BUYER at least 10 days prior to the due date for payment.
(d)
4th Installment:
The BUYER shall remit the amount of this installment in accordance with Article II, Paragraph 3(d) by telegraphic transfer to Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch, 9 Pudong Avenue,Shanghai, China for credit to Account No.1001190709148073602 of Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch (Swift: ICBKCNBJSHI), or through other receiving bank to be nominated by the SELLER from time to time and such nomination shall be notified to the BUYER at least 10 days prior to the due date for payment.
(e)
5th Installment (Payable upon delivery of the VESSEL):
The BUYER shall, at least three (3) Singapore and New York business days prior to the scheduled date of delivery of the VESSEL, make an irrevocable cash deposit in the name of the BUYER with Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch, 9 Pudong Avenue,Shanghai, China for credit to Account No.1001190709148073602 of Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch (Swift: ICBKCNBJSHI), for a period of fifteen (15) days and covering the amount of this installment (as adjusted in accordance with the provisions of this Contract), with an irrevocable instruction that the said amount shall be released to the
7
SELLER against presentation by the SELLER to the said Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch, 9 Pudong Avenue,Shanghai, China for credit to Account No.1001190709148073602 of Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch (Swift: ICBKCNBJSHI), of a copy of the Protocol of Delivery and Acceptance signed by the BUYER’s authorized representative and the SELLER. Interest, if any, accrued from such deposit, shall be for the benefit of the BUYER.
If the delivery of the VESSEL is not effected and the SELLER fails to present a copy of the fully signed Protocol of Delivery and Acceptance to said Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch, 9 Pudong Avenue,Shanghai, China for credit to Account No.1001190709148073602 of Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch (Swift: ICBKCNBJSHI)on or before the expiry of the aforesaid fifteen (15) days deposit period, the BUYER shall have the right to withdraw the said deposit plus accrued interest upon the expiry of the said fifteen (15) days deposit period. However when the newly scheduled delivery date is notified to the BUYER by the SELLER, the BUYER shall make the cash deposit in accordance with the same terms and conditions as set out above.
5.
PREPAYMENT:
The BUYER shall have the right to make prepayment of any and all instalments before delivery of the VESSEL, by giving to the SELLER at least thirty (30) days prior written notice, without any price adjustment of the VESSEL for such prepayment.
6.
SECURITY FOR PAYMENT OF INSTALMENTS BEFORE DELIVERY:
The BUYER shall, within three (3) Business Days after the BUYER’s receipt of the Refund Guarantee, deliver to the SELLER an irrevocable and unconditional Letter of Guarantee in the form annexed hereto as Exhibit “B” (hereinafter called the “Payment Guarantee”) in favour of the SELLER issued by NAVIG8 CRUDE TANKERS INC. (hereinafter called the “Payment Guarantor”) acceptable to the SELLER. This guarantee shall secure the BUYER’s obligation for the payment of the 2nd, 3rd and 4th installments of the Contract Price.
7.
REFUNDS
All payments made by the BUYER prior to delivery of the VESSEL shall be in the nature of advance to the SELLER, and in the event this Contract is rescinded or canceled by the BUYER, all in accordance with the specific terms of this Contract permitting such rescission or cancellation, the SELLER shall refund to the BUYER in United States Dollars the full
8
amount of all sums already paid by the BUYER to the SELLER under this Contract, together with interest (at the rate set out in respective provision thereof) from the respective payment date(s) to the date of remittance by telegraphic transfer of such refund to the account specified by the BUYER without deduction, set off or withholding in US dollars from the SELLER’s bank or jurisdiction.
As security to the BUYER, the SELLER shall deliver to the BUYER, within Thirty (30) days following the execution of this Contract, a Refund Guarantee to be issued by either Bank of China or Industrial and Commercial Bank of China or The Export-Import Bank of China, at SELLER’s sole direction, (hereinafter called the “Refund Guarantor”) in the form as per Exhibit “A” annexed hereto.
However, in the event of any dispute between the SELLER and the BUYER with regard to the SELLER’s obligation to repay the installment or installments paid by the BUYER and to the BUYER’S right to demand payment from the Refund Guarantor, under its guarantee, and such dispute is submitted either by the SELLER or by the BUYER for arbitration in accordance with Article XIII hereof, the Refund Guarantor shall withhold and defer payment until the final arbitration award between the SELLER and the BUYER is published. The Refund Guarantor shall not be obligated to make any payment unless the final arbitration award orders the SELLER to make repayment. If the SELLER fails to honour the award within 45 days, then the Refund Guarantor shall refund to the extent the final arbitration award orders.
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ARTICLE III ADJUSTMENT OF THE CONTRACT PRICE
The Contract Price of the VESSEL shall be subject to adjustments as hereinafter set forth. It is hereby understood by both parties that any reduction of the Contract Price is by way of liquidated damages and not by way of penalty.
1.
DELIVERY
(a)
No adjustment shall be made, and the Contract Price shall remain unchanged for the thirty (30) days of delay in delivery of the VESSEL beyond the Delivery Date as defined in Article VII hereof ending as of twelve o’clock midnight (Beijing time) of the thirtieth (30
th
) day of delay.
(b)
If the delivery of the VESSEL is delayed more than thirty (30) days after the date as defined in Article VII hereof, then, in such event, beginning at twelve o’clock midnight (Beijing time) of the thirtieth (30
th
) day after the date on which delivery is required under this Contract, the Contract Price of the VESSEL shall be reduced by deducting therefrom the sum of United States Dollars Sixteen Thousand Only (US$ 16,000.00) per day.
Unless the parties hereto agree otherwise, the total reduction in the Contract Price shall be deducted from the fifth instalment of the Contract Price and in any event (including the event that the BUYER consents to take the VESSEL at the later delivery date after the expiration of Two Hundred and ten (210) days delay of delivery as described in Paragraph 1(c) of this Article or Paragraph3 of Article VIII) shall not be more than One Hundred and Eighty (180) days at the above specified rate of reduction after the thirty (30) days allowance, that is United States Dollars Two Million Eight Hundred and Eighty Thousand Only (U.S.$ 2,880,000.00) being the maximum.
(c)
If the delay in the delivery of the VESSEL continues beyond the period of Two Hundred and Ten (210) days (being the total non-permissible delays and Thirty (30) days allowance) after the Delivery Date (as defined in Article VII), then in such event, the BUYER may, at its option, rescind or cancel this Contract in accordance with the provisions of Article X of this Contract. The SELLER may at any time after the expiration of the aforementioned Two Hundred and ten (210) days, if the BUYER has not served notice of cancellation pursuant to Article X, notify the BUYER of the date upon which the SELLER estimates the VESSEL will be ready for delivery and demand in writing that the BUYER make an election, in which case the BUYER shall, within thirty (30) days after such demand is received by the BUYER, either notify the SELLER of its decision to cancel this Contract, or consent to take delivery of the VESSEL at an agreed future date, it being understood and agreed by the parties hereto that, if the VESSEL is not delivered by such future date, the BUYER shall have the same right of cancellation upon the same terms, as hereinabove provided.
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In the case the BUYER, within Thirty (30) days after such demand is received by the BUYER, fails to notify the SELLER of its decision to cancel this Contract, or consent to take delivery of the VESSEL at an agreed future date, it shall be deemed that the BUYER has consented to take delivery of the VESSEL at SELLER’s estimated date.
(d)
For the purpose of this Article III only, the delivery of the VESSEL shall not be deemed delayed and the Contract Price shall not be reduced when and if the Delivery Date of the VESSEL is extended by reason of causes and provisions of Articles V, VI.1, XI, XII.2, XIII.7 hereof. The Contract Price shall not be adjusted or reduced if the delivery of the VESSEL is delayed by reason of permissible delays as defined in Article VIII hereof.
2.
INSUFFICIENT SPEED
(a)
The Contract Price of the VESSEL shall not be affected nor changed by reason of the actual speed (as determined by the Trial Run after correction according to the Specifications) being less than three tenths (3/10) of one knot below the guaranteed speed as specified in Paragraph 4 of Article I of this Contract.
(b)
However, commencing with and including a deficiency of three tenths (3/10) of one knot in actual speed (as determined by the Trial Run after correction according to the Specifications) below the guaranteed speed as specified in Paragraph 4, Article I of this Contract, the Contract Price shall be reduced as follows:
In case of deficiency
at or above 0.30 but below 0.40 knot US$ 150,000.00
at or above 0.40 but below 0.50 knot US$ 300,000.00
at or above 0.50 but below 0.60 knot US$ 450,000.00
at or above 0.60 but below 0.70 knot US$ 600,000.00
at or above 0.70 but below 0.80 knot US$ 750,000.00
(c)
If the deficiency in actual speed (as determined by the Trial Run after correction according to the Specifications) of the VESSEL upon the Trial Run, is more than 0.80 knot below the guaranteed speed of 15.5 knots, then the BUYER may at its option reject the VESSEL and rescind or cancel this Contract in accordance with provisions of Article X of this Contract, or may accept the VESSEL at a reduction in the Contract Price as above provided, by United States Dollars Seven Hundred and Fifty Thousand only (US$750,000.00) being the maximum.
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3.
EXCESSIVE FUEL CONSUMPTION
(a)
The Contract Price of the VESSEL shall not be affected nor changed if the actual fuel consumption of the Main Engine, as determined by shop trial in manufacturer’s works, as per the Specifications, is greater than the guaranteed fuel consumption as specified and required under the provisions of this Contract and the Specifications if such actual excess is equal to or less than Five percent (5%) (such threshold being 166.74 grams/brake horse power/hour, being 5% above 158.8 grams/brake horse power/hour).
(b)
However, if the actual fuel consumption as determined by shop trial is greater than Five percent (5%) above the guaranteed fuel consumption then, the Contract Price shall be reduced by the sum of United States Dollars One Hundred and Thirty Five Thousand Only (US$135,000.00) for each full one percent (1%) increase in fuel consumption in excess of the above said Five percent (5%) (fractions of one percent to be prorated).
(c)
If as determined by shop trial such actual fuel consumption of the Main Engine is more than ten percent (10%) in excess of the guaranteed fuel consumption, i.e. the fuel consumption exceeds 174.68 grams/brake horse power/hour (being 10% above 158.8 grams/brake horse power/hour), the BUYER may, subject to the SELLER’s right to effect alterations of corrections as specified in the following sub-paragraph of Article III 3 (c) hereof at its option, rescind or cancel this Contract, in accordance with the provisions of Article X of this Contract or may accept the VESSEL at a reduction in the Contract Price by United States Dollars Six Hundred and Seventy Five Thousand Only (US$675,000.00) being the maximum.
If as determined by shop trial such actual fuel consumption of the Main Engine is more than ten percent (10%) in excess of the guaranteed fuel consumption, i.e. the fuel consumption exceeds 174.68 grams/brake horse power/hour, the SELLER may investigate the cause of the non-conformity and the proper steps may promptly be taken to remedy the same and to make whatever corrections and alterations and / or re-shop trial test or tests as may be necessary to correct such non-conformity without extra cost to the BUYER. Upon completion of such alterations or corrections of such nonconformity, the SELLER shall promptly perform such further shop trials or any other tests, as may be deemed necessary to prove the fuel consumption of the Main Engine’s conformity with the requirement of this Contract and the Specifications and if found to be satisfactory, give the BUYER notice by telefax and/or e-mail of such correction and as appropriate, successful completion accompanied by copies of such results, and the BUYER shall, within six (6) Business Days after receipt of such notice, notify the SELLER by telefax and/or e-mail of its acceptance or reject the re-shop trial together with the reasons therefor. If the BUYER fails to notify the SELLER by telefax and/or e-mail of its acceptance or rejection of the re-shop trial together with the reasons therefor within six (6) Business Days period as provided herein, the BUYER shall be deemed to have accepted the shop trial.
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4.
DEADWEIGHT
(a)
In the event that there is a deficiency in the actual deadweight of the VESSEL determined as provided in the Specifications, the Contract Price shall not be decreased if such deficiency is Three Thousand and One Hundred (3,100) metric tons or less below the guaranteed deadweight of 300,000 metric tons at assigned designed draft.
(b)
However, the Contract Price shall be decreased by the sum of United States Dollars Seven Hundred Only (US$700.00) for each full metric ton of such deficiency being more than Three Thousand and One Hundred (3,100) metric tons.
(c)
In the event that there should be a deficiency in the VESSEL’s actual deadweight which exceeds Six thousand and One Hundred (6,100) metric tons below the guaranteed deadweight, the BUYER may, at its option, reject the VESSEL and rescind or cancel this Contract in accordance with the provisions of Article X of this Contract, or may accept the VESSEL with reduction in the Contract Price in the maximum amount of United States Dollars Two Million One Hundred Thousand only (US$2,100,000.00).
5.
EFFECT OF RESCISSION OR CANCELLATION
It is expressly understood and agreed by the parties hereto that in any case as stated herein, if the BUYER rescinds or cancels this Contract pursuant to any provision under this Article, the BUYER, save for its rights and remedy set out in Article X hereof, shall not be entitled to any liquidated damages or compensation whether described above or otherwise.
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ARTICLE IV SUPERVISION AND INSPECTION
1.
APPOINTMENT OF THE BUYER’S REPRESENTATIVES
The BUYER shall send in good time to and maintain at the SELLER’s Shipyard, at the BUYER’s own cost and expense, one or more representative(s) who shall be duly accredited and authorized in writing by the BUYER (such representative(s) being hereinafter collectively and individually called the “BUYER’S REPRESENTATIVES”) to supervise and survey the construction by the SELLER of the VESSEL, her engines and accessories. The SELLER hereby warrants that, the necessary invitation letter for the BUYER’S REPRESENTATIVES to enter China will be issued in order on demand and without delay provided that the BUYER’S REPRESENTATIVES meets with the rules, regulations and laws of the People’s Republic of China. The BUYER undertakes to give the SELLER adequate notice for the application of invitation letter.
2.
COMMENTS TO PLANS AND DRAWINGS
The parties hereto shall, within Thirty (30) days after signing of this Contract, mutually agree a list of all the plans and drawings, which are to be sent to the BUYER (hereinafter called “the LIST”) along with a schedule of anticipated dates when these will be dispatched as per SELLER’s estimation, which may be subject to change by the SELLER. Before arrival of the BUYER’S REPRESENTATIVES at the SELLER’s Shipyard, the plans and drawings specified in the LIST shall be sent to the BUYER, and the BUYER shall, within Fourteen (14) working days after receipt thereof (excluding mailing time), return such plans and drawings submitted by the SELLER with comments, if any. Notwithstanding the above, the BUYER shall nevertheless waive its right to comment on the plans and drawings if such plans and drawings have been previously applied to build other vessels with the same specification as that of the VESSEL.
When and if the BUYER’S REPRESENTATIVES shall have been sent by the BUYER to the SELLER in accordance with paragraph 1 of this Article, the BUYER’S REPRESENTATIVES shall approve the plans and drawings submitted to him by the SELLER according to the List of plans and drawings agreed upon by both parties unless otherwise agreed upon between the parties hereto. The BUYER’S REPRESENTATIVES shall within three (3) Business Days after receipt hereof, return to the SELLER two (2) copies of such plans and drawings with approval or comments, if any, written thereon.
If the comments made by the BUYER or the BUYER’S REPRESENTATIVES are not clearly specified or detailed, the SELLER shall seek the BUYER’s clarification in writing. Should the BUYER or the BUYER’S REPRESENTATIVES not answer such request within reasonable time (minimum being three working days) of the request then the SELLER should
14
be entitled to place its own reasonable interpretation on the comments of the BUYER in implementing same.
In the event that the BUYER or the BUYER’S REPRESENTATIVES shall fail to give comments or return the plans and drawings to the SELLER within the time limit as herein provided, such plans and drawings shall be deemed have been automatically approved or confirmed without any comment.
3.
SUPERVISION AND INSPECTION BY THE BUYER’S REPRESENTATIVES
The necessary inspection of the VESSEL, its machinery, equipment and outfittings shall be carried out by the Classification Society, and/or inspection team of the SELLER throughout the entire period of construction in order to ensure that the construction of the VESSEL is duly performed in accordance with the Contract and Specifications.
The BUYER’S REPRESENTATIVES shall have, at all times until delivery of the VESSEL, the right to attend tests according to the mutually agreed test list and inspect the VESSEL, her engines, accessories and materials at the SELLER’s Shipyard, its subcontractors or any other place where work is done or materials stored in connection with the VESSEL. In the event that the BUYER’S REPRESENTATIVES discovers any construction or material or workmanship which does not or will not conform to the requirements of this Contract and the Specifications, the BUYER’S REPRESENTATIVES shall promptly give the SELLER a notice in writing as to such nonconformity, upon receipt of which the SELLER shall correct such nonconformity if the SELLER agrees with the BUYER. In any circumstances, the SELLER shall be entitled to proceed with the construction of the VESSEL even if there exists discrepancy in the opinion between the BUYER and the SELLER, without however prejudice to the BUYER’s right for submitting the issue for determination by the Classification Society or arbitration in accordance with the provisions hereof. However the BUYER undertakes and assures the SELLER that the BUYER’S REPRESENTATIVES shall carry out his inspections and supervision in accordance with the agreed inspection procedure, SELLER’s working schedule and usual shipbuilding practice and in a way as to minimize any increase in building costs and delays in the construction of the VESSEL. Once an inspection and/or test has been witnessed and approved by the BUYER’S REPRESENTATIVES, the same inspection and/or test should not have to be repeated, provided it has been carried out in compliance with the requirements of the Classification Society and Specifications.
The SELLER agrees to furnish free of charge the BUYER’S REPRESENTATIVES with
15
office space, and other reasonable facilities including air conditioning, internet connection and public toilets according to SELLER’s practice at the Shipyard. But the fees for the communication like telephone, telefax and internet, etc. shall be borne by the BUYER. At all times, during the construction of the VESSEL until delivery thereof, the BUYER’S REPRESENTATIVES shall be given free and ready access to the VESSEL, her engines and accessories, and to any other place where the work is being done, or the materials are being processed or stored, in connection with the construction of the VESSEL, including the yards, workshops, stores of the SELLER, and the premises of subcontractors of the SELLER, who are doing work, or storing materials in connection with the VESSEL’s construction. The travel expenses for the said access to SELLER’s subcontractors outside of Shanghai shall be at BUYER’s account. The transportation within Shanghai for BUYER’S REPRESENTATIVES to get access to the inspection and/or test shall be provided to the BUYER’S REPRESENTATIVES by the SELLER.
The BUYER undertakes to maintain sufficient number of the BUYER’S REPRESENTATIVES at the SELLER’s yard throughout the period of construction of the VESSEL so as to meet the SELLER’s requirements for inspection, survey and/or attendances of tests and/or trials. The BUYER will use best endeavours to ensure that BUYER’S REPRESENTATIVES perform any inspections, surveys and attendances at tests and/or trials in all circumstances, including where such inspections, surveys and test/trial attendances are required during the weekend (Saturday and Sunday) or any public holiday.
Should the BUYER’S REPRESENTATIVES fail to conduct any inspection or attend any test (after reasonably advance and written notice by the SELLER of the same, except in the case of re-inspection where oral notice shall be sufficient) due to whatever reason, the SELLER shall be entitled to carry out the construction and/or test without inspection and/or attendance of BUYER’S REPRESENTATIVES and such work so carried out shall be treated as approved by the BUYER’S REPRESENTATIVES.
The SELLER is responsible for providing that a safe working environment and proper access is provided to the works and/or areas of inspection.
The decision, approval or advice of the BUYER’S REPRESENTATIVES shall be deemed to have been given by the BUYER and once given shall not be withdrawn, revoked or modified except with consent of the SELLER. However, if the BUYER’S REPRESENTATIVES fail to submit to the SELLER without delay any demand concerning alterations or changes with respect to the building, arrangement or outfit of the VESSEL, her engines or accessories, or any other items or matters in connection herewith, which the BUYER’S REPRESENTATIVES have examined or inspected or attended at the tests thereof under this Contract or the Specifications, the BUYER’S REPRESENTATIVES shall be deemed to have approved the same and shall be precluded from making any demand for alterations, changes or other complaints with respect thereto at a later date.
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4.
LIABILITY OF THE SELLER
The BUYER’S REPRESENTATIVES engaged by the BUYER under this Contract shall at all times be deemed to be in the employ of the BUYER. The SELLER shall be under no liability whatsoever to the BUYER, or to the BUYER’S REPRESENTATIVES or the BUYER’s employees or agents for personal injuries, including death, during the time when they, or any of them, are on the VESSEL, or within the premises of either the SELLER or its subcontractors, or are otherwise engaged in and about the construction of the VESSEL, unless, however, such personal injuries, including death, were caused by gross negligence of the SELLER, or of any of the SELLER’s employees or agents or subcontractors of the SELLER. Nor shall the SELLER be under any liability whatsoever to the BUYER for damage to, or loss or destruction of property in China of the BUYER or of the BUYER’S REPRESENTATIVES or of the BUYER’s employees or agents, unless such damage, loss or destruction was caused by gross negligence of the SELLER, or of any of the employees, or agents or subcontractors of the SELLER. The BUYER’S REPRESENTATIVES or his assistants or employees shall observe the work’s rules and regulations prevailing at the SELLER’s and its subcontractor’s premises.
5.
SALARIES AND EXPENSES
All salaries and expenses of the BUYER’S REPRESENTATIVES, or any other employees employed by the BUYER under this Article, shall be for the BUYER’s account.
6.
REPLACEMENT OF BUYER’S REPRESENTATIVES
The SELLER has the right to request the BUYER in writing to replace any of the BUYER’S REPRESENTATIVES who is deemed unsuitable and unsatisfactory for the proper progress of the VESSEL’s construction together with reasons. The BUYER shall investigate the situation by sending its representative to the SELLER’s yard, if necessary, and if the BUYER considers that such SELLER’s request is justified and reasonable, the BUYER shall effect the replacement as soon as conveniently arrangeable.
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ARTICLE V MODIFICATION,CHANGES AND EXTRAS
1.
HOW EFFECTED
The Specifications and Plans in accordance with which the VESSEL is constructed, may be modified and/or changed at any time hereafter by written agreement of the parties hereto, provided that such modifications and/or changes or an accumulation thereof will not, in the SELLER’s reasonable judgment, adversely affect the SELLER’s other commitments and provided further that the BUYER shall assent to adjustment of the Contract Price, time of delivery of the VESSEL and other terms of this Contract, if any, as hereinafter provided. Subject to the above, the SELLER hereby agree to exert their best efforts to accommodate such reasonable requests by the BUYER so that the said changes and/or modifications may be made at a reasonable cost and within the shortest period of time which is reasonable and possible. Any such agreement for modifications and/or changes shall include an agreement as to the increase or decrease, if any, in the Contract Price of the VESSEL together with an agreement as to any extension or reduction in the time of delivery, providing to the SELLER additional securities satisfactory to the SELLER (and an increased guarantee from Navig8 Crude Tankers Inc shall be deemed satisfactory security), or any other alterations in this Contract, or the Specifications occasioned by such modifications and/or changes. The aforementioned agreement to modify and/or to change the Specifications may be effected by an exchange of duly authenticated letters, or telefax, or e-mail, manifesting such agreement. The letters, telefaxes and emails exchanged by the parties hereto pursuant to the foregoing shall constitute an amendment of the Specifications under which the VESSEL shall be built, and such letters, emails and telefaxes shall be deemed to be incorporated into this Contract and the Specifications by reference and made a part hereof. Upon consummation of the agreement to modify and/or to change the Specifications, the SELLER shall alter the construction of the VESSEL in accordance therewith, including any additions to, or deductions from, the work to be performed in connection with such construction. If due to whatever reasons, the parties hereto shall fail to agree on the adjustment of the Contract Price or extension of time of delivery or providing additional security to the SELLER or modification of any terms of this Contract which are necessitated by such modifications and/or changes, then the SELLER shall have no obligation to comply with the BUYER’s request for any modification and/or changes.
The SELLER may make minor changes to the Specifications, if found necessary for introduction of improved production methods or otherwise, provided that the SELLER shall first obtain the BUYER’s written approval which shall not be unreasonably withheld. Any costs associated with such minor changes shall not affect the Contract Price nor the Delivery Date unless mutually agreed.
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2.
CHANGES IN RULES AND REGULATIONS, ETC.
(1)
If, after the date of signing of this Contract, any requirements as to the rules and regulations as specified in this Contract and the Specifications to which the construction of the VESSEL is required to conform, are altered or changed by the Classification Society or the other regulatory bodies authorized to make such alterations or changes, the SELLER and/or the BUYER, upon receipt of the notice thereof, shall transmit such information in full to each other in writing, whereupon within twenty- one (21) days after receipt of the said notice by the BUYER from the SELLER or vice versa, the BUYER shall instruct the SELLER in writing as to the alterations or changes, if any, to be made in the VESSEL which the BUYER, in its sole discretion, shall decide. The SELLER shall promptly comply with such alterations or changes, if any in the construction of the VESSEL, provided that the BUYER shall first agree:
(a)
As to any increase or decrease in the Contract Price of the VESSEL that is occasioned by the cost for such compliance; and/or
(b)
As to any extension in the time for delivery of the VESSEL that is necessary due to such compliance; and/or
(c)
As to any increase or decrease in the guaranteed deadweight and speed of the VESSEL, if such compliance results in increased or reduced deadweight and speed; and/or
(d)
As to any other alterations in the terms of this Contract or of Specifications or both, if such compliance makes such alterations of the terms necessary.
(e)
If the price is to be increased, then, in addition, as to providing to the SELLER additional securities satisfactory to the SELLER and which shall be satisfied by the provision of an increased guarantee from Navig8 Crude Tankers Inc.
Agreement as to such alterations or changes under this Paragraph shall be made in the same manner as provided above for modifications and/or changes of the Specifications and/or Plans.
(2)
If, due to whatever reasons, the parties shall fail to agree on the adjustment of the Contract Price or extension of the time for delivery or increase or decrease of the guaranteed speed and deadweight or providing additional security to the SELLER or any alternation of the terms of this Contract, if any, then, the SELLER shall be entitled to proceed with the construction of the VESSEL in accordance with, and the BUYER shall continue to be bound by, the terms of this Contract and Specifications without making any such alterations or changes.
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If the alterations or changes are compulsorily required to be made by Class or IMO rules, then, notwithstanding any dispute between the parties relating to the adjustment of the Contract Price or extension of the time for delivery or decrease of the guaranteed speed and deadweight or increase fuel oil consumption or any other respect, the SELLER shall promptly comply with such alterations or changes first. The BUYER shall, in any event, bear the costs and expenses for such alterations or changes (with, in the absence of mutual agreement, the amount thereof and/or any other discrepancy such as but not limited to the extension of Delivery Date, etc. to be determined by arbitration in accordance with Article XIII of this Contract).
3.
SUBSTITUTION OF MATERIALS AND/OR EQUIPMENT
In the event any of the materials and/or equipment required by the Specifications or otherwise under this Contract for the construction of the VESSEL cannot be procured in time to effect delivery of the VESSEL, the SELLER may, provided the SELLER shall provide adequate evidence and the BUYER so agrees in writing, supply other materials and/or equipment of the equivalent quality, capable of meeting the requirements of the Classification Society and of the rules, regulations, requirements and recommendations with which the construction of the VESSEL must comply.
4.
BUYER’S SUPPLIED ITEMS
The BUYER shall deliver to the SELLER at its shipyard the items as specified in the Specifications which the BUYER shall supply on BUYER’S account (the “BUYER’s Supplied Items”) by the time designated by the SELLER. SELLER will give reasonable advance notice to BUYER in order to allow BUYER to get these items in the shipyard for the time they are required.
Should the BUYER fail to deliver to the SELLER such BUYER’s Supplied Items within the time specified, the delivery of the VESSEL shall automatically be extended for a period of such delay, provided such delay in delivery of the BUYER’s Supplied Items shall affect the delivery of the VESSEL. In such event, the BUYER shall pay to the SELLER all losses and damages sustained by the SELLER due to such delay in the delivery of the BUYER’s Supplied Items and such payment shall be made upon delivery of the VESSEL.
Furthermore, if the delay in delivery of the BUYER’s Supplied Items should exceed twenty (20) days, the SELLER shall be entitled to proceed with construction of the VESSEL without installation of such items in or onto the VESSEL, without prejudice to the SELLER’s right hereinabove provided, and the BUYER shall accept the VESSEL so completed.
The SELLER shall be responsible for proper storage and handling with reasonable
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care of the BUYER’s Supplied Items as specified in the Specifications after delivery to the SELLER and shall procure that at all times the BUYER’s supplies are identified as being the property of the BUYER. The SELLER shall install BUYER’s Supplied Items on board the VESSEL at the SELLER’s expenses. In order to facilitate installation by the SELLER of the BUYER’S Supplied Items in or on the VESSEL, the BUYER shall furnish the SELLER with the necessary specifications, plans, drawings, instruction books, manuals, test reports and certificates required by the rules and regulations of the Specifications. If so requested by the SELLER, the BUYER shall, without any charge to the SELLER, cause the representatives of the manufacturers of the BUYER’s Supplied Items to assist the SELLER in installation thereof in or on the VESSEL and/or to carry out installation thereof by themselves or to make necessary adjustments at the SELLER’s Shipyard.
Upon arrival of such shipment of the BUYER’s Supplied Items, both parties shall undertake a joint unpacking inspection. If any damages are found to be not suitable for installation, the SELLER shall be entitled to refuse to accept such BUYER’s Supplied Items.
The SELLER shall not be responsible for the quality, performance or efficiency of any equipment supplied by the BUYER and is under no obligation with respect to the guarantee of such equipment against any defects caused by poor quality, performance or efficiency thereof.
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ARTICLE VI TRIALS
1.
NOTICE
(a)
The SELLER shall give NOTICE to the BUYER and BUYER’s Representative in writing at least fifteen (15) days’ notice in advance and seven (7) days definite notice in advance in writing or by telefax or e-mail, of the time and place of the VESSEL’s sea trial as described in the Specifications (hereinafter referred to as “the Trial Run”) and the BUYER and the BUYER’S REPRESENTATIVES shall promptly acknowledge receipt of such notice. The BUYER’S REPRESENTATIVES shall be on board the VESSEL to witness such Trial Run, and to check upon the performance of the VESSEL during the same. Failure to attend the trial run of the VESSEL by the BUYER’S REPRESENTATIVES shall have the effect to extend the date for delivery of the VESSEL by the period of delay caused by such failure to be present. However, if the Trial Run is delayed more than seven (7) days by reason of the failure of the BUYER’s representatives to be present after receipt of due notice as provided above, then in such event the non-attendance shall be deemed to be a waiver by the BUYER of its right to have its representative on board the VESSEL at the trial run, and the SELLER may conduct such Trial Run without the BUYER’S REPRESENTATIVES being present, and in such case the BUYER shall be obliged to accept the VESSEL on the basis of a certificate jointly signed by the SELLER and the Classification Society certifying that the VESSEL, after Trial Run subject to minor alterations and corrections as provided in this Article, if any, is found to conform to the Contract and Specifications. The SELLER hereby warrants that the necessary invitation letter for the BUYER’S REPRESENTATIVES to enter China will be issued in order on demand and without delay otherwise the Trial Run shall be postponed until after the BUYER’S REPRESENTATIVES have arrived at the SELLER’s Shipyard and any delays as a result thereof shall not count as a permissible delay under Article VIII thereof. However, should the nationalities and other personal particulars of the BUYER’S REPRESENTATIVES be not acceptable to the SELLER in accordance with its best understanding of the relevant rules, regulations and/or Laws of the People’s Republic of China then prevailing, then the BUYER shall, on the SELLER’s telefax or e-mail demand, effect replacement of all or any of them immediately. Otherwise the Delivery Date as stipulated in Article VII hereof shall be extended by the delays so caused by the BUYER.
(b)
In the event of unfavorable weather on the date specified for the Trial Run, the same shall take place on the first available day thereafter that the weather conditions permit. The parties hereto recognize that the weather conditions in Chinese waters in which the Trial Run is to take place are such that great changes in weather may arise momentarily and without warning and, therefore, it is agreed that if during the Trial Run of the VESSEL, the weather should suddenly become unfavorable, as would have precluded the continuance of the Trial Run, the Trial Run of the VESSEL shall be discontinued and
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postponed until the first favorable day next following, unless the BUYER shall assent by telefax or e-mail and confirm in writing of its acceptance of the VESSEL on the basis of the Trial Run made prior to such sudden change in weather conditions. In the event that the Trial Run is postponed because of unfavorable weather conditions, such delay shall be regarded as a permissible delay, as specified in Article VIII hereof. For the purposes of this paragraph 1(b), unfavorable weather conditions shall be taken as (i) Beaufort Scale Force 6 and above or (ii) when the MSA (Maritime Safety Administration) does not permit the sea trial to proceed.
2.
HOW CONDUCTED
(a)
All expenses in connection with Trial Run of the VESSEL are to be for the account of the SELLER, who, during the Trial Run and when subjecting the VESSEL to Trial Run, is to provide, at its own expense, the necessary crew to comply with conditions of safe navigation. The Trial Run shall be conducted in the manner prescribed in the Specifications.
The course of Trial Run shall be determined by the SELLER and shall be conducted within the trial basin equipped with speed measuring facilities.
(b)
The SELLER shall provide the VESSEL with the required quantities of water and fuel oil with exception of lubrication oil, greases and hydraulic oil which shall be supplied by the BUYER for the conduct of the Trial Run or Trial Runs as prescribed in the Specifications. The fuel oil supplied by the SELLER, and lubricating oil, greases and hydraulic oil supplied by the BUYER shall be in accordance with the applicable engine specifications, and the cost of the quantities of water, fuel oil, lubricating oil, hydraulic oil and greases consumed during the Trial Run or Trial Runs shall be for the account of the SELLER.
3.
TRIAL LOAD DRAFT
In addition to the supplies provided by the BUYER in accordance with sub-paragraph (b) of the preceding Paragraph 2 hereof, the SELLER shall provide the VESSEL with the required quantity of fresh water and other stores necessary for the conduct of the Trial Run. The necessary ballast (fresh and sea water and such other ballast as may be required) to bring the VESSEL to the trial load draft as specified in the Specifications, shall be for the SELLER’s account.
4.
METHOD OF ACCEPTANCE OR REJECTION
(a)
Upon notification of the SELLER of the completion of the Trial Run of the VESSEL, the
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BUYER or the BUYER’S REPRESENTATIVES shall within six (6) days thereafter, notify the SELLER by telefax or e-mail of its acceptance of the VESSEL or of its rejection of the VESSEL together with the reasons therefor.
(b)
However, should the result of the Trial Run indicate that the VESSEL or any part thereof including its equipment does not conform to the requirements of this Contract and Specifications, then the SELLER shall investigate with the BUYER’S REPRESENTATIVES the cause of failure and the proper steps shall be taken to remedy the same and shall make whatever corrections and alterations and/or re-Trial Run or Runs as may be necessary without extra cost to the BUYER, and upon notification by the SELLER of completion of such alterations or corrections and/or re-trial or re-trials, the BUYER shall, within six (6) days thereafter, notify the SELLER by telefax or e-mail of its acceptance of its VESSEL or of the rejection of the VESSEL together with the reason therefor on the basis of the alterations and corrections and/or re-trial or re-trials by the SELLER.
(c)
In the event that the BUYER fails to notify the SELLER by telefax or e-mail of its acceptance or rejection of the VESSEL together with the reason therefor within six (6) Business Days period as provided for in the above sub- paragraphs (a) and (b), the BUYER shall be deemed to have accepted the VESSEL.
(d)
Any dispute arising among the parties hereto as to the result of any Trial Run or further tests or trials, as the case may be, of the VESSEL shall be solved by reference to arbitration as provided in Article XIII hereof.
(e)
Nothing herein shall preclude the BUYER from accepting the VESSEL with its qualifications and/or remarks following the Trial Run and/or further tests or trials as aforesaid.
5.
DISPOSITION OF SURPLUS CONSUMABLE STORES
Should any amount of fuel oil, fresh water, or other unbroached consumable stores furnished by the SELLER for the Trial Run or Trial Runs remain on board the VESSEL at the time of acceptance thereof by the BUYER, the BUYER agrees to buy the same from the SELLER at the actual invoiced price, and payment by the BUYER shall be effected as provided in Article II 3 (e) and 4 (e) of this Contract.
The BUYER shall supply lubricating oil, greases and hydraulic oil for the purpose of Trial Runs at its own expenses and the SELLER will reimburse for the amount of lubricating oil and hydraulic oil actually consumed for the said Trial Run or Trial Runs at the original price incurred by the BUYER and payment by the SELLER shall be effected as provided in Article II 3(e) and 4(e) of this Contract.
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6.
EFFECT OF ACCEPTANCE
The BUYER’s acceptance of the VESSEL by written or telefax, or e-mail notification sent to the SELLER, in accordance with the provisions set out above, shall be final and binding so far as conformity of the VESSEL to this Contract and the Specifications is concerned, and shall preclude the BUYER from refusing formal delivery by the SELLER of the VESSEL, as hereinafter provided, if the SELLER complies with all other procedural requirements for delivery as hereinafter set forth.
The BUYER shall not be entitled to reject the VESSEL (at the time of delivery) by reason of any minor or insubstantial non-conformity, or deficiencies of minor importance, which do not in any way affect the safety or the operation of the VESSEL, its crew, passengers or cargo, provided that:
i)
The SELLER shall for its own account remedy the deficiency and fulfill the requirements as soon as possible.
ii)
A list of such defect and non-conformities will be prepared by the parties immediately prior to the delivery of the VESSEL.
iii)
The SELLER shall pay BUYER upon delivery, the direct actual cost of rectification of minor deficiencies which in all events not exceeding the costs of a leading Chinese shipyard performing similar rectification of such deficiencies, if the rectification of such deficiencies affects the delivery schedule of the vessel. For the avoidance of doubt, the SELLER shall not be liable to the BUYER for the consequential and indirect costs (i.e. loss of time & loss of profit etc.).
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ARTICLE VII DELIVERY
1.
TIME AND PLACE
The VESSEL shall be delivered safely afloat by the SELLER to the BUYER at the SELLER’s Shipyard or at Shanghai Jiangnan Changxing Heavy Industry Co., Ltd., in accordance with the Specifications and with all Classification and Statutory Certificates and after completion of Trial Run (or, as the case may be, re-Trial or re-Trials) and acceptance by the BUYER in accordance with the provisions of Article VI hereof on or before March 31
st
, 2016 provided that, in the event of delays in the construction of the VESSEL or any performance required under this Contract due to causes which under the terms of the Contract permit extension or postponement of the time for delivery, the aforementioned time for delivery of the VESSEL shall be extended accordingly.
The aforementioned date or such later date to which delivery is extended pursuant to the terms of this Contract is hereinafter called the “Delivery Date”.
2.
WHEN AND HOW EFFECTED
Provided that the BUYER and the SELLER shall each have fulfilled all of their respective obligations as stipulated in this Contract, delivery of the VESSEL shall be effected forthwith by the concurrent delivery by each of the parties hereto, one to the other, of the Protocol of Delivery and Acceptance, acknowledging delivery of the VESSEL by the SELLER and acceptance thereof by the BUYER, which Protocol shall be prepared in quadruplicate and executed by each of the parties hereto.
3.
DOCUMENTS TO BE DELIVERED TO THE BUYER
Upon acceptance of the VESSEL by the BUYER, the SELLER shall deliver to the BUYER the following documents (subject to the provision contained in Article VII hereof) which shall accompany the aforementioned Protocol of Delivery and Acceptance:
(a)
PROTOCOL OF TRIALS of the VESSEL made by the SELLER pursuant to the Specifications.
(b)
PROTOCOL OF INVENTORY of the equipment of the VESSEL including spare part and the like, all as specified in the Specifications, made by the SELLER.
(c)
PROTOCOL OF STORES OF CONSUMABLE NATURE made by the SELLER referred to under Paragraph 5 of Article VI hereof.
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(d)
FINISHED DRAWINGS AND PLANS pertaining to the VESSEL as stipulated in the Specifications, made by the SELLER.
(e)
PROTOCOL OF DEADWEIGHT AND INCLINING EXPERIMENT, made by the SELLER
(f)
ALL CERTIFICATES required to be furnished upon delivery of the VESSEL pursuant to the Specifications.
Certificates shall be issued by relevant Authorities or Classification Society. The VESSEL shall comply with the above rules and regulations which are in force at the time of signing this Contract. All the certificates shall be delivered in one (1) original to the VESSEL and two (2) copies to the BUYER.
If the full term certificate or certificates are unable to be issued at the time of delivery by the Classification Society or any third party other than the SELLER, then the provisional certificate or certificates as issued by The Classification Society or the third party other than the SELLER with the full term certificates to be furnished by the SELLER after delivery of the VESSEL and in any event before the expiry of the provisional certificates shall be acceptable to the BUYER.
(g)
DECLARATION OF WARRANTY issued by the SELLER that the VESSEL is delivered to the BUYER free and clear of any liens, charges, claims, mortgages, or other encumbrances upon the BUYER’s title thereto, and in particular, that the VESSEL is absolutely free of all burdens in the nature of imposts, taxes or charges imposed by the province or country of the port of delivery, as well as of all liabilities of the SELLER to its sub-contractors, employees and crews and/or all liabilities arising from the operation of the VESSEL in Trial Run or Trial Runs, or otherwise, prior to delivery.
(h)
COMMERCIAL INVOICE made by the SELLER.
(i)
BILL OF SALE made by the SELLER.
(j)
BUILDER’S Certificate made by the SELLER.
4.
TITLE AND RISK
Title to and risk of the VESSEL and her equipment (but excluding the BUYER’s supplies) shall pass to the BUYER only upon delivery and acceptance thereof. As stated above, it being expressly understood that, until such delivery and acceptance is effected, title to the VESSEL, and her equipment, shall remain at all times with the SELLER and are at the entire risk of the SELLER.
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5.
REMOVAL OF VESSEL
The BUYER shall take possession of the VESSEL immediately upon delivery and acceptance thereof, and shall remove the VESSEL from the premises of the SELLER within seven (7) days after delivery and acceptance thereof is effected. If the BUYER shall not remove the VESSEL from the premises of the SELLER within the aforesaid seven (7) days, then, in such event, without prejudice to the SELLER’s right to require the BUYER to remove the VESSEL immediately at any time thereafter, the BUYER shall pay to the SELLER the reasonable mooring charge of the VESSEL.
6.
TENDER OF THE VESSEL
If the BUYER fails to take delivery of the VESSEL after completion thereof according to this Contract and the Specifications without justified reason, the SELLER shall have the right to tender the VESSEL for delivery after compliance with all procedural requirements as above provided.
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ARTICLE VIII DELAYS & EXTENSION OF TIME FOR DELIVERY
1.
CAUSE OF DELAY
If, at any time before actual delivery, either the construction of the VESSEL, or any performance required hereunder as a prerequisite of delivery of the VESSEL, is delayed due to war, blockade, revolution, insurrection, mobilization, civil commotions, riots, strikes, sabotage, lockouts, local temperature higher than Thirty Five (35) degree centigrade (but each day above 35 degree shall be counted as one half day each), Acts of God or the public enemy, terrorism, plague or other epidemics, quarantines, prolonged failure or restriction of electric current from an outside source, freight embargoes, if any, earthquakes, tidal waves, typhoons, hurricanes, storms or other causes beyond the control of the SELLER or of its sub-contractors or its key equipment suppliers (i.e. being the suppliers of the main engine, propeller and gearbox etc), as the case may be, or by force majeure of any description, whether of the nature indicated by the forgoing or not, or by destruction of the premises of the SELLER or works of the SELLER or its sub-contractors or its key equipment suppliers (i.e. being the suppliers of the main engine, propeller and gearbox etc) or of the VESSEL or any part thereof, by fire, flood, or other causes beyond the control of the SELLER or its sub-contractors or its key equipment suppliers (i.e. main engine, propeller, gearbox etc) as the case may be, or due to the bankruptcy of the equipment and/or material supplier or suppliers (i.e. main engine, propeller, gearbox etc), or due to the delay caused by acts of God causing significant shortage in the supply of parts essential to the construction of the VESSEL, then, in the event of delay due to the happening of any of the aforementioned contingencies, the SELLER shall not be liable for such delay and the time for delivery of the VESSEL under this Contract shall be extended without any reduction in the Contract Price for a period of time which shall not exceed the total accumulated time of all such delays, subject nevertheless to the BUYER’s right of cancellation under Paragraph 3 of this Article and subject however to all relevant provisions of this Contract which authorize and permit extension of the time of delivery of the VESSEL, provided however that:
(i)
the delay in respect of which the SELLER is claiming relief under this Article VIII.1 was not caused or contributed to by any intended act of the SELLER;
(ii)
the delay event impacts upon the Vessel’s construction schedule and completion; and
(iii)
the SELLER has taken reasonable steps to mitigate its effect upon the construction of the Vessel,
For the avoidance of doubt, where two delay events as described in this paragraph 1 occur simultaneously or overlap with each other, such delays caused by such events shall not be double-counted.
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2.
NOTICE OF DELAY
Within twenty (20) days from the date of the SELLER becomes aware of the commencement of any delay on account of which the SELLER claims that it is entitled under this Contract to an extension of the time for delivery of the VESSEL, the SELLER shall advise the BUYER by telefax or e-mail, of the date such delay commenced, and the reasons therefor and, if possible, its estimated duration of the probable delay in the delivery of the VESSEL, and shall supply the BUYER with evidence to support the delay claimed.
Likewise within twenty (20) days after such delay ends, the SELLER shall advise the BUYER in writing or by telefax or e-mail, of the date such delay ended, and also shall specify the maximum period of the time by which the SELLER claims the date for delivery of the VESSEL should be extended by reason of such delay. Failure of the BUYER to acknowledge the SELLER’s notification of any claim for extension of the Delivery Date within ten (10) days after receipt by the BUYER of such notification, shall be deemed to be a waiver by the BUYER of its right to object to such extension.
Failure of the SELLER to give notice of any relevant delay event in excess of fifteen (15) days in accordance with this paragraph 2 shall be deemed a waiver of the SELLER’s right to postpone the DELIVERY DATE under this Article VIII in respect of such relevant delay event.
3.
RIGHT TO CANCEL FOR EXCESSIVE DELAY
If (a) the total accumulated time of all delays on account of the causes specified in Paragraph 1 of this Article aggregate to two hundred and twenty-five (225) days or more, or (b) if the total accumulated time of all delays on account of the causes specified in Paragraph 1 of the Article and non-permissible delays as described in Paragraph 1 of Article III aggregate to two hundred and fifty-five (255) days or more, in any circumstances, excluding delays due to arbitration as provided for in Article XIII.7 hereof or due to default in performance by the BUYER, or due to delays in delivery of the BUYER’s Supplied Items, and excluding delays due to causes which, under Article V, VI.1, XI and XII.2(b) hereof, permit extension or postponement of the time for delivery of the VESSEL , then in such event, the BUYER may in accordance with the provisions set out herein rescind or cancel this Contract by serving upon the SELLER telefaxed or e-mailed notice of cancellation which shall be confirmed in writing and the provisions of Article X of this Contract shall apply. The SELLER may, at any time, after the accumulated time of the aforementioned delays justifying cancellation by the BUYER as above provided for, demand in writing that the BUYER shall make an election, in which case the BUYER shall, within thirty (30) days after such demand is received by the BUYER either notify the SELLER of its intention to cancel, or consent to an extension of the time for delivery to an agreed future date, it being understood and agreed by the parties hereto that, if any further delay occurs on account of causes justifying cancellation as specified in
30
this Contract, the BUYER shall have the same right of cancellation upon the same terms as hereinabove provided but in respect of the new agreed delivery date.
4.
DEFINITION OF PERMISSIBLE DELAY
Delays on account of such causes as provided for in Paragraph 1 of this Article excluding any other extensions of a nature which under the terms of this Contract permit postponement of the Delivery Date, shall be understood to be (and are herein referred to as) permissible delays, and are to be distinguished from non-permissible delays on account of which the Contract Price of the VESSEL is subject to adjustment as provided for in Article III hereof. Notwithstanding any other stipulations of this Contract, the Parties hereby agree that a default in performance of BUYER or any breach of this Contract by BUYER or reasons attributable to the BUYER or the events described under Article V, VI.1, XI and XII.2(b) of this Contract shall entitle the SELLER to extend the Delivery Date. Such extension of the Delivery Date shall be regarded as mutually agreed change of Delivery Date and shall be distinguished from Permissible Delay and non-permissible delays.
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ARTICLE IX WARRANTY OF QUALITY
1.
GUARANTEE OF MATERIAL AND WORKMANSHIP
The SELLER, for a period of twelve (12) months following delivery to the BUYER of the VESSEL, guarantees the VESSEL, her hull and machinery, her engine, and all parts and equipment thereof that are manufactured, furnished, supplied, or installed by the SELLER and/or its sub-contractors under this Contract including material, equipment (however excluding any parts for the VESSEL which have been supplied by the BUYER) against all defects which are due to defective materials, and/or poor workmanship.
Provided no additional cost occurs to the SELLER, the SELLER agrees that upon the expiry of this guarantee and upon request of the BUYER, it shall assign (to the extent to which it may validly do so) to the BUYER, all rights, title and interest that the SELLER may have in and to all guarantees or warranties given by the supplier (excluding the supplier of BUYER’s supplied item) of any of the appurtenances and materials used in the construction and/or operation of the VESSEL. The SELLER agrees to render to the BUYER reasonable assistance in making any claim or taking any action against any such supplier, which claim or action shall be made and/or taken at the BUYER’s sole expense. The BUYER shall meet all reasonable expenses incurred by the SELLER in rendering any assistance requested by the BUYER pursuant to this paragraph.
2.
NOTICE OF DEFECTS
The BUYER shall notify the SELLER in writing, or by telefax or e-mail, as promptly as possible, after discovery of any defect or deviations for which a claim is made under this guarantee. The BUYER’s written notice shall describe the nature of the defect and the extent of the damage caused thereby. The SELLER shall have no obligation under this guarantee for any defects discovered prior to the expiry date of the guarantee, unless notice of such defects, is received by the SELLER not later than thirty (30) days after such expiry date. Telefaxed or e-mailed advice with brief details explaining the nature of such defect and extent of damage within thirty (30) days after such expiry date and that a claim is forthcoming will be sufficient compliance with the requirements as to time.
3.
REMEDY OF DEFECTS
The SELLER shall remedy at its expense any defects, against which the VESSEL or any part of the equipment thereof is guaranteed under this Article by making all necessary repairs and/or replacement. Such repairs and/or replacement will be made by the SELLER. All parts
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and/or materials so repaired shall be guaranteed for a further period of six (6) months, but the total warranty period shall not exceed eighteen (18) months after delivery and acceptance of the VESSEL by the BUYER. In any case, the VESSEL shall be taken, at the BUYER’S cost and responsibility, to place elected, ready in all respects for such repairs or replacement.
However, if it is impractical to make the repair by the SELLER, and if forwarding by the SELLER of replacement parts, and materials cannot be accomplished without impairing or delaying the operation or working of the VESSEL, then, in any such event, the BUYER shall, cause the necessary repairs or replacements to be made elsewhere at the discretion of the BUYER provided that the BUYER shall first and in all events, will, as soon as possible, give the SELLER notice in writing, or by telefax or e-mail of the time and place such repairs will be made and, if the VESSEL is not thereby delayed, or her operation or working is not thereby delayed, or her operation or working is not thereby impaired, the SELLER shall have the right to verify by its own representative(s) or that of Classification Society the nature and extent of the defects complained of. The SELLER shall, in such cases, promptly advise the BUYER, by telefax or e-mail, after such examination has been completed, of its acceptance or rejection of the defects as ones that are subject to the guarantee herein provided.
In any circumstances as set out below, the SELLER shall immediately pay to the BUYER in United States Dollars by telegraphic transfer the actual cost for such repairs or replacements including forwarding charges, or, at the average cost for making similar repairs or replacements including forwarding charges as quoted by a leading shipyard each in China, South Korea and Singapore whichever is lower:
(a)
Upon the SELLER’s acceptance of the defects as justifying remedy under this Article, or
(b)
If the SELLER neither accepts nor rejects the defects as above provided, nor request arbitration within thirty (30) days after its receipt of the BUYER’s notice of defects.
Any dispute shall be referred to arbitration in accordance with the provisions of Article XIII hereof.
4.
EXTENT OF THE SELLER’S LIABILITY
The SELLER shall have no obligation and/or liabilities with respect to defects discovered after the expiration of the period of guarantee as specified in Paragraph 1 of this Article.
The SELLER shall be liable to the BUYER for defects and damages caused by any of the defects specified in Paragraph 1 of this Article provided that such liability of the SELLER shall be limited to damage occasioned within the guarantee period specified in Paragraph 1 above. The SELLER shall not be obligated to repair, or to be liable for, damages to the VESSEL, or to any part of the equipment thereof, due to ordinary wear and tear or caused by the defects other than those specified in Paragraph 1 above, nor shall there be any SELLER’s
33
liability hereunder for defects in the VESSEL, or any part of the equipment thereof, caused by fire or accidents at sea or elsewhere, or mismanagement, accidents, negligence, or willful neglect, on the part of the BUYER, its employees or agents including the VESSEL’s officers, crew and passengers, or any persons on or doing work on the VESSEL other than the SELLER, its employees, agents or sub-contractors. Likewise, the SELLER shall not be liable for defects in the VESSEL, or the equipment or any part thereof, due to repairs or replacement which were made by those other than the SELLER and/or their sub-contractors or which have not been carried out in accordance with the procedures set out in this Article.
Upon delivery of the VESSEL to the BUYER, in accordance with the terms of the Contract, the SELLER shall thereby and thereupon be released of all responsibility and liability whatsoever and howsoever arising under or by virtue of this Contract (save in respect of those obligations to the BUYER expressly provided for in this Article IX) including without limitation, any responsibility or liability for defective workmanship, materials or equipment, design or in respect of any other defects whatsoever and any loss or damage resulting from any act, omission or default of the SELLER. The SELLER shall, in no circumstances, be liable for any consequential loss or special loss, or expenses arising from any cause whatsoever including, without limitation, loss of time, loss of profit or earnings or demurrage directly from any commitments of the BUYER in connection with the VESSEL.
The Guarantee provided in this Article and the obligations and the liabilities of the SELLER hereunder are exclusive and in lieu of and the BUYER hereby waives all other remedies, warranties, guarantees or liabilities, express or implied, arising by Law or otherwise (including without limitation any obligations of the SELLER with respect to fitness, merchantability and consequential damages) or whether or not occasioned by the SELLER’s negligence. This Guarantee shall not be extended, altered or varied except by a written instrument signed by the duly authorized representatives of the SELLER, and the BUYER.
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ARTICLE X CANCELLATION, REJECTION AND RESCISSION BY THE BUYER
1.
All payments made by the BUYER prior to the delivery of the VESSEL shall be in the nature of advance to the SELLER. In the event the BUYER shall exercise its right of cancellation and/or rescission of this Contract under and pursuant to any of the provisions of this Contract specifically permitting the BUYER to do so, then the BUYER shall notify the SELLER in writing or by telefax or e-mail, and such cancellation and/or rescission shall be effective as of the date the notice thereof is received by the SELLER.
For the avoidance of doubt, the events and/or occurrences which entitle the BUYER to rescind and cancel the Contract shall be limited to those occurrences or events specified in this Contract which specifically permits the BUYER to do so. No other event or circumstance shall give rise to any right to the BUYER for rescission or cancellation of the Contract whether under this Contract or under any applicable laws.
2.
Thereupon the SELLER shall refund in United States dollars immediately to the BUYER the full amount of all sums paid by the BUYER to the SELLER on account of the VESSEL, unless the SELLER disputes the BUYER’s cancellation and/or rescission by instituting arbitration in accordance with Article XIII. If the BUYER’s cancellation or rescission of this Contract is disputed by the SELLER by instituting arbitration as aforesaid, then no refund shall be made by the SELLER, and the BUYER shall not be entitled to demand repayment from the Refund Guarantor under its guarantee, until the arbitration award between the BUYER and the SELLER, which shall be in favour of the BUYER, declaring the BUYER’s cancellation and/or rescission justified, is made and delivered to the SELLER by the arbitration tribunal. In the event that the SELLER is obligated to make refundment, the SELLER shall pay the BUYER interest in United States Dollars at the rate of six percent (6%) per annum, if the cancellation or rescission of the Contract is exercised by the BUYER in accordance with the provision of Article III 1(c), 2(c), 3(c) or 4(c) hereof, on the amount required herein to be refunded to the BUYER computed from the respective dates when such sums were received by Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch or any such other bank account as nominated by the SELLER pursuant to Article II 4(a), 4(b), 4(c) or 4(d) from the BUYER to the date of remittance by telegraphic transfer of such refund to the BUYER by the SELLER, provided, however, that if the said rescission by the BUYER is made by reason of Paragraph 1 of Article VIII or Paragraph 2 (b) of Article XII, then in such event the SELLER shall not be required to pay any interest.
It is hereby understood by both parties that payment of any interest provided herein is by way of liquidated damages due to cancellation of this CONTRACT.
If the SELLER is obligated by the terms of the Contract to refund to the BUYER the instalments paid by the BUYER to the SELLER as provided in this Paragraph, the BUYER’s supplied items shall be at BUYER’s disposal.
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3.
Upon such refund by the SELLER to the BUYER, all obligations, duties and liabilities of each of the parties hereto to the other under this Contract shall be forthwith completely discharged.
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ARTICLE XI BUYER’S DEFAULT
1.
DEFINITION OF DEFAULT
The BUYER shall be deemed in default of its obligation under the Contract if any of the following events occurs:
(a)
The BUYER fails to pay the First or Second or Third or Fourth installment to the SELLER when any such installment becomes due and payable under the provisions of Article II hereof and provided the BUYER shall have received the SELLER’s demand for payment in accordance with Article II hereof; or
(b)
The BUYER fails to deliver to the SELLER an irrevocable and unconditional Letter of Guarantee under the provisions of Article II hereof; or
(c)
The BUYER fails to pay the fifth installment to the SELLER in accordance with Paragraph 3(e) and 4(e) of Article II hereof provided the BUYER shall have received the SELLER’s demand for payment in accordance with Article II hereof; or
(d)
The BUYER fails to take delivery of the VESSEL, when the VESSEL is duly tendered for delivery by the SELLER under the provisions of Article VII hereof.
2.
NOTICE OF DEFAULT
If the BUYER is in default of payment or in performance of its obligations as provided hereinabove, the SELLER shall notify the BUYER to that effect by telefax or e-mail after the date of occurrence of the default as per Paragraph 1 of this Article and the BUYER shall forthwith acknowledge by telefax or E-mail to the SELLER that such notification has been received. In case the BUYER does not give the aforesaid telefax or E-mail acknowledgment to the SELLER within three (3) calendar days it shall be deemed that such notification has been duly received by the BUYER.
3.
INTEREST AND CHARGE
(a)
If the BUYER is in default of payment as to any installment as provided in Paragraph 1 (a) and/or 1 (c) of this Article, the BUYER shall pay interest on such installment at the rate of six percent (6%) per annum until the date of the payment of the full amount, including all aforesaid interest. In case the BUYER shall fail to take delivery of the VESSEL when required to as provided in Paragraph 1 (d) of this Article, the BUYER shall be deemed in default of payment of the fifth installment and shall pay interest thereon at the same rate as aforesaid from and including the day on which the
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VESSEL is tendered for delivery by the SELLER, as provided in Article VII hereof.
(b)
In any event of default by the BUYER under 1 (a) or 1 (b) or 1 (c) or 1 (d) above, the BUYER shall also pay all costs, charges and expenses incurred by the SELLER in consequence of such default.
4.
DEFAULT BEFORE DELIVERY OF THE VESSEL
(a)
If any default by the BUYER occurs as defined in Paragraph 1 (a) or 1 (b) or 1 (c) or 1 (d) of this Article, the Delivery Date shall be automatically postponed for a period of continuance of such default by the BUYER. In any event of default by the BUYER, the BUYER shall also pay all charges and expenses incurred by the SELLER in consequence of such default.
(b)
If any such default as defined in Paragraph 1 (a) or 1 (b) or 1 (c) or 1 (d) of this Article committed by the BUYER continues for a period of fifteen (15) days, then, the SELLER shall have all following rights and remedies:
(i)
The SELLER may, at its option, cancel or rescind this Contract, provided the SELLER has notified the BUYER of such default pursuant to Paragraph 2 of this Article, by giving notice of such effect to the BUYER by telefax or e-mail. Upon receipt by the BUYER of such telefax or e-mail notice of cancellation or rescission, all of the BUYER’s Supplies shall forthwith become the sole property of the SELLER, and the VESSEL and all its equipment and machinery shall be at the sole disposal of the SELLER for sale or otherwise; and
(ii)
In the event of such cancellation or rescission of this Contract, the SELLER shall be entitled to retain any instalment or instalments of the Contract Price paid by the BUYER to the SELLER on account of this Contract; and
(iii)
(Applicable to any BUYER’s default defined in 1(a) of this Article) The SELLER shall, without prejudice to the SELLER’s right to recover from the BUYER the 5th instalment, interest, costs and/or expenses by applying the proceeds to be obtained by sale of the VESSEL in accordance with the provisions set out in this Contract, have the right to declare all unpaid 1st, 2nd, 3rd and 4th instalments to be forthwith due and payable, and upon such declaration, the SELLER shall have the right to immediately demand the payment of the aggregate amount of all unpaid 1st, 2nd, 3rd, and 4th instalments from the Payment Guarantor in accordance with the terms and conditions of the Payment Guarantee issued by the Payment Guarantor.
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5.
SALE OF THE VESSEL
(a)
In the event of cancellation or rescission of this Contract as above provided, the SELLER shall have full right and power either to complete or not to complete the VESSEL as it deems fit, and to sell the VESSEL at a public or private sale on such terms and conditions as the SELLER thinks fit without being answerable for any loss or damage occasioned to the BUYER thereby.
In the case of sale of the VESSEL, the SELLER shall give telefax, or E-mail, or written notice to the BUYER.
(b)
In the event of the sale of the VESSEL in its completed state, the proceeds of sale received by the SELLER shall be applied firstly to payment of all expenses attending such sale and otherwise incurred by the SELLER as a result of the BUYER’s default, and then to payment of all unpaid installments and/or unpaid balance of the Contract Price and interest on such installment at the interest rate as specified in the relevant provisions set out above from the respective due dates thereof to the date of application.
(c)
In the event of the sale of the VESSEL in its incomplete state, the proceeds of sale received by the SELLER shall be applied firstly to all expenses attending such sale and otherwise incurred by the SELLER as a result of the BUYER’s default, and then to payment of all costs of construction of the VESSEL (such costs of construction, as herein mentioned, shall include but are not limited to all costs of labour and/or prices paid or to be paid by the SELLER for the equipment and/or technical design and/or materials purchased or to be purchased, installed and/or to be installed on the VESSEL) and/or any fees, charges, expenses and/or royalties incurred and/or to be incurred for the VESSEL less the installments so retained by the SELLER, and compensation to the SELLER for a reasonable sum of loss of profit due to the cancellation or rescission of this Contract.
(d)
In either of the above events of sale, if the proceed of sale exceeds the total of the amounts to which such proceeds are to be applied as aforesaid, the SELLER shall promptly pay the excesses to the BUYER without interest, provided, however that the amount of each payment to the BUYER shall in no event exceed the total amount of installments already paid by the BUYER and the cost of the BUYER’s Supplied Items, if any.
(e)
If the proceed of sale are insufficient to pay such total amounts payable as aforesaid, the BUYER shall promptly pay the deficiency to the SELLER upon request.
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ARTICLE XII INSURANCE
1.
EXTENT OF INSURANCE COVERAGE
From the time of keel-laying of the first section of the VESSEL until the same is completed, delivered to and accepted by the BUYER, the SELLER shall, at its own cost and expense, keep the VESSEL and all machinery, materials, equipment, appurtenances and outfit, delivered to the SELLER for the VESSEL or built into, or installed in or upon the VESSEL, including the BUYER’s Supplied Items, fully insured with first class Chinese insurance companies for SELLER’s RISK.
The amount of such insurance coverage shall, up to the date of delivery of the VESSEL, be in an amount at least equal to, but not limited to, the aggregate of the payments made by the BUYER to the SELLER including the value of maximum amount of US$ 200,000.00 of the BUYER’s Supplied Items. The policy referred to hereinabove shall be taken out in the name of the SELLER and all losses under such policy shall be payable to the SELLER.
2.
APPLICATION OF RECOVERED AMOUNT
(a) Partial Loss:
In the event the VESSEL shall be damaged by any insured cause whatsoever prior to acceptance and delivery thereof by the BUYER and in the further event that such damage shall not constitute an actual or a constructive total loss of the VESSEL, the SELLER shall apply the amount recovered under the insurance policy referred to in Paragraph 1 of this Article to the repair of such damage satisfactory to the Classification Society and other institutions or authorities as described in the Specifications without additional expenses to the BUYER, and the BUYER shall accept the VESSEL under this Contract if completed in accordance with this Contract and Specifications and not make any claim for any consequential loss or depreciation.
(b) Total Loss:
However, in the event that the VESSEL is determined to be an actual or constructive total loss, the SELLER shall either:
(i)
By the mutual agreement between the parties hereto, proceed in accordance with terms of this Contract, in which case the amount recovered under said insurance policy shall be applied to the reconstruction and/or repair of the VESSEL’s damage and/or reinstallation of BUYER’s Supplied Items, provided the parties hereto shall have first agreed in writing as to such reasonable extension of the Delivery Date
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and adjustment of other terms of this Contract including the Contract Price as may be necessary for the completion of such reconstruction; or
(ii)
If due to whatever reasons the parties fail to agree on the above, then the SELLER shall refund immediately to the BUYER the amount of all installments paid to the SELLER under this Contract without interest, whereupon this Contract shall be deemed to be canceled and all rights, duties, liabilities and obligations of each of the parties to the other shall terminate forthwith.
Within thirty (30) days after receiving telefax or e-mail notice of any damage to the VESSEL constituting an actual or a constructive total loss, the BUYER shall notify the SELLER in writing or by telefax or e-mail of its agreement or disagreement under this sub-paragraph. In the event the BUYER fails to so notify the SELLER, then such failure shall be construed as a disagreement on the part of the BUYER. This Contract shall be deemed as rescinded and canceled and Paragraph 2 (b) (ii) of this Article shall apply.
3.
TERMINATION OF THE SELLER’S OBLIGATION TO INSURE
The SELLER’s obligation to insure the VESSEL hereunder shall cease and terminate forthwith upon delivery thereof to and acceptance by the BUYER.
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ARTICLE XIII DISPUTES AND ARBITRATION
1.
PROCEEDINGS
In the event of any dispute between the parties hereto as to any matter arising out of or relating to this Contract or any stipulation herein or with respect thereto which cannot be settled by the parties themselves, such dispute shall be resolved by arbitration in London England in accordance with the Laws of England. Any arbitration of disputes under this Contract shall be conducted in accordance with the London Maritime Arbitrators’ Association Terms. Either party may demand arbitration of any such disputes by giving written notice to the other party. Any demand for arbitration by either party hereto shall state the name of the arbitrator appointed by such party and shall also state specifically the question or questions as to which such party is demanding arbitration. Within twenty (20) days after receipt of notice of such demand for arbitration, the other party shall in turn appoint a second arbitrator. The two arbitrators thus appointed shall thereupon select a third arbitrator, and the three arbitrators so named shall constitute the board of arbitration (hereinafter called the “Arbitration Board”) for the settlement of such dispute.
In the event however, that said other party should fail to appoint a second arbitrator as aforesaid within twenty (20) days following receipt of notice of demand of arbitration, it is agreed that such party shall thereby be deemed to have accepted and appointed as its own arbitrator the one already appointed by the party demanding arbitration, and the arbitration shall proceed forthwith before this sole arbitrator, who alone, in such event, shall constitute the Arbitration Board. And in the further event that the two arbitrators appointed respectively by the parties hereto as aforesaid should be unable to reach agreement on the appointment of the third arbitrator within twenty (20) days from the date on which the second arbitrator is appointed, either party of the said two arbitrators may apply to the President for the time being of the London Maritime Arbitrators Association to appoint the third arbitrator. The award of the arbitration, made by the sole arbitrator or by the majority of the three arbitrators as the case may be, shall be final, conclusive and binding upon the parties hereto.
2.
ALTERNATIVE ARBITRATION BY AGREEMENT
Notwithstanding the preceding provisions of this Article, it is recognized that in the event of any dispute or difference of opinion arising in regard to the construction of the VESSEL, her machinery and equipment, or concerning the quality of materials or workmanship thereof or thereon, such dispute may be referred to the Classification Society upon mutual agreement of the parties hereto. In such case, the opinion of the Classification Society shall be final and binding on the parties hereto.
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3.
NOTICE OF AWARD
Notice of any award shall immediately be given in writing or by telefax or e-mail to the SELLER and the BUYER.
4.
EXPENSES
The Arbitration Board shall determine which party shall bear the expenses of the arbitration or the proportion of such expenses which each party shall bear.
5.
AWARD OF ARBITRATION
Award of arbitration, shall be final and binding upon the parties concerned.
6.
ENTRY IN COURT
Judgment on any award may be entered in any court of competent jurisdiction.
7.
ALTERATION OF DELIVERY DATE
In the event of reference to arbitration of any dispute arising out of matters occurring prior to delivery of the VESSEL, the SELLER shall not be entitled to extend the Delivery Date as defined in Article VII hereof and the BUYER shall not be entitled to postpone its acceptance of the VESSEL on the Delivery Date or on such newly planned time of delivery of the VESSEL as declared by the SELLER. However, if the construction of the VESSEL is affected by any arbitration, the SELLER shall then be permitted to extend the Delivery Date as defined in Article VII and the decision or the award shall include a finding as to what extent the SELLER shall be permitted to extend the Delivery Date.
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ARTICLE XIV RIGHT OF ASSIGNMENT
1.
ASSIGNMENT AND TRANSFER BY THE BUYER
The SELLER agrees that prior to delivery of the VESSEL, the Contract may, with the prior written approval/consent of the SELLER, which the SELLER shall not unreasonably withhold, be assigned or transferred to BUYER’s bank for financing purpose or to a 100% subsidiary of the BUYER.
For the avoidance of doubt, the BUYER’s rights to transfer or assign under this Paragraph 1 shall apply equally to any transferee or assignee of the BUYER’s rights and obligations under this Contract as defined in the above paragraph, but always subject to SELLER’s prior consent, which the SELLER shall not unreasonably withhold.
2.
ASSIGNMENT BY THE
SELLER
SELLER shall have the right to assign this Contract to SELLER’s bank for financing purpose at any time after the effective date hereof, provided that prior written agreement is obtained from the BUYER, which the BUYER shall not unreasonably withhold.
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ARTICLE XV TAXES AND DUTIES
1.
TAXES
The SELLER shall bear and pay all taxes, duties, stamps, dues levies and fees of whatsoever nature incurred or imposed in China in connection with the execution and/or performance of this Contract by the SELLER. Any taxes and/or duties imposed upon those items or services procured by the SELLER in the People’s Republic of China or elsewhere for the construction of the VESSEL shall be borne by the SELLER.
The BUYER shall be responsible for the personal income tax for any person it employs, including BUYER’S REPRESENTATIVES or other BUYER’s staff, agent and representatives who work at SELLER’s shipyard and premise.
2.
DUTIES
The BUYER shall bear and pay all taxes, duties, stamps and fees incurred outside China in connection with execution and/or performance of this Contract by the BUYER, except for taxes, duties, stamps, dues, levies and fees imposed upon those items which are to be procured by the SELLER for the construction of the VESSEL in accordance with the terms of this Contract and the Specifications..
Any tax or duty other than those described hereinabove, if any, shall be borne by the BUYER.
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ARTICLE XVI PATENTS, TRADEMARKS AND COPYRIGHTS
The machinery and equipment of the VESSEL may bear the patent number, trademarks or trade names of the manufacturers. The SELLER shall defend and hold harmless the BUYER from patent liability or claims of patent infringement of any nature or kind, including costs and expenses for, or on account of any patented or patentable invention made or used in the performance of this Contract and also including cost and expense of litigation, if any.
Nothing contained herein shall be construed as transferring any patent or trademark rights or copyright in equipment covered by this Contract, and all such rights are hereby expressly reserved to the true and lawful owners thereof. Notwithstanding any provisions contained herein to the contrary, the SELLER’s obligation under this Article should not be terminated by the passage of any specified period of time.
The SELLER’s indemnity hereunder does not extend to equipment or parts supplied by the BUYER to the SELLER if any.
The SELLER retains all rights with respect to the Specification, and plans and working drawings, technical descriptions, calculations, test results and other data, information and documents concerning the design and construction of the VESSEL and the BUYER undertakes therefore not to disclose the same or divulge any information contained therein to any third parties, without the prior written consent of the SELLER, excepting where it is necessary for usual operation, repair and maintenance, sale or charter of the VESSEL or registration, classification insurance or sale of the VESSEL.
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ARTICLE XVII NOTICE
Any and all notices and communications in connection with this Contract shall be addressed as follows:
To the BUYER :
NAVIG8 CRUDE TANKERS INC.
Address :
c/o Navig8 Asia Pte Ltd
3 Temasek Avenue
#25-01 Centennial Tower
Singapore 039190
Telefax No. :
+44 207 467 5867
E-mail :
legal@navig8group.com
To the SELLER : Shanghai Waigaoqiao Shipbuilding Co., Ltd.
Address : 3001 Zhouhai Road, Pudong New District, Shanghai 200137,
the People’s Republic of China
Telex No. : (021) 58480446
E-mail : swsbiz@chinasws.com
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Any change of address shall be communicated in writing by registered mail or by e-mail by the party making such change to the other party and in the event of failure to give such notice of change, communications addressed to the party at their last known address shall be deemed sufficient.
Any and all notices, requests, demands, instructions, advice and communications in connection with this Contract shall be deemed to be given at, and shall become effective from, the time when the same is delivered to the address of the party to be served, provided, however, that registered airmail shall be deemed to be delivered ten (10) days after the date of dispatch, express courier service shall be deemed to be delivered five (5) days after the date of dispatch, and telefax or e-mail acknowledged by the answerbacks shall be deemed to be delivered upon dispatch. E-mail transmissions shall be deemed as delivered upon the subject email has been removed to the “Sent” box on the sending computer.
Any and all notices, communications, Specifications and drawings in connection with this Contract shall be written in the English language and each party hereto shall have no obligation to translate them into any other language.
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ARTICLE XVIII EFFECTIVE DATE OF CONTRACT
This Contract shall become effective upon signing of this Contract
Upon signing of this Contract, both parties hereto shall do as follows:
(1)
Receipt by the BUYER of a Refund Guarantee in the form annexed hereto as Exhibit A issued by Refund Guarantor in accordance with Article II Paragraph 7 hereof.
(2)
Receipt by the SELLER of the first instalment in accordance with Paragraph 3(a) and 4(a) of Article II of this Contract; and
(3)
Receipt by the SELLER of a Letter of Guarantee in the form annexed hereto as Exhibit B issued by the Refund Guarantor in accordance with Article II Paragraph 6 hereof.]
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ARTICLE XIX INTERPRETATION
1.
LAW APPLICABLE
The parties hereto agree that the validity and interpretation of this Contract and of each Article and part hereof be governed by and interpreted in accordance with the laws of England.
2.
DISCREPANCIES
All general language or requirements embodied in the Specifications are intended to amplify, explain and implement the requirements of this Contract. However, in the event that any language or requirements so embodied in the Specifications permit an interpretation inconsistent with any provision of this Contract, then in each and every such event the applicable provisions of this Contract shall govern. The Specifications and plans are also intended to explain each other, and anything shown on the plans and not stipulated in the Specifications or stipulated in the Specifications and not shown on the plans, shall be deemed and considered as if embodied in both. In the event of conflict between the Specifications and plans, the Specifications shall govern.
However, with regard to such inconsistency or contradiction between this Contract and the Specifications as may later occur by any change or changes in the Specifications agreed upon by and among the parties hereto after execution of this Contract, then such change or changes shall govern.
3.
DEFINITION
“Banking Day(s)” are days on which banks are open in Singapore, New York, U.S.A.
“Business Day(s)” are days on which banks are open in Singapore and P. R. China.
In absence of stipulation of “banking day(s)” or “Business Day(s)”, the “day” or “days” shall be taken as “calendar day” or “calendar days”.
4.
ENTIRE AGREEMENT
This Contract sets forth the entire understanding of the Parties with respect to the subject matter discussed herein. It supersedes all prior discussions, negotiations and agreements, (including but not limited to the Letter of Intent / Option Agreement) whether oral or written, expressed or implied.
In WITNESS WHEREOF, the parties hereto have caused this Contract to be duly executed on
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the day and year first above written.
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THE BUYER :
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NAVIG8 CRUDE TANKERS INC.
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By :
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/s/ Rasmus Bach Nielsen
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Name :
Rasmus Bach Nielsen
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Title : Attorney-in-Fact
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THE SELLER:
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Shanghai Waigaoqiao Shipbuilding Co., Ltd.
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By :
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/s/ Huang Yicheng
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Name :
Huang Yicheng
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Title : Attorney-in-Fact
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Exhibit “A”: IRREVOCABLE LETTER OF GUARANTEE NO.
To:
Date:
Dear Sirs,
Irrevocable Letter of Guarantee No.
At the request of Shanghai Waigaoqiao Shipbuilding Company Limited and in consideration of your agreeing to pay Shanghai Waigaoqiao Shipbuilding Company Limited (hereinafter called “the SELLER”) the instalments before delivery of the VESSEL under the Contract concluded by and amongst you, and the SELLER dated 21
st
March,2014for the construction of one (1) 300,000 Metric Tons Deadweight Crude Oil Tanker to be designated as Hull No. H1385 (hereinafter called “the Contract”), we, the undersigned, do hereby guarantee irrevocably, as primary obligor, repayment to you by the SELLER of an amount up to but not exceeding a total amount of United States Dollars Thirty Nine Million Four Hundred and Eighty One Thousand Two Hundred Only (US$ 39,481,200.00) (plus the interest described below) representing the first instalment of the Contract Price of the VESSEL, United States Dollars Nine Million Nine Million Eight Hundred and Seventy Thousand Three Hundred Only (US$9,870,300.00), the second instalment of the Contract Price of the VESSEL, United States Dollars Nine Million Eight Hundred and Seventy Thousand Three Hundred Only (US$9,870,300.00), the third instalment of the Contract Price of the VESSEL, United States Dollars Nine Million Eight Hundred and Seventy Thousand Three Hundred Only (US$9,870,300.00) and the fourth instalment of the Contract Price of the VESSEL, United States Dollars Nine Million Nine Million Eight Hundred and Seventy Thousand Three Hundred Only (US$9,870,300.00), as you may have paid to the SELLER under the Contract prior to the delivery of the VESSEL, if and when the same or any part thereof becomes repayable to you from the SELLER in accordance with the terms (Article X or Article XII 2(b)) of the Contract. Should the SELLER fail to make such repayment, we shall pay you the amount the SELLER ought to pay with an interest at the rate of six percent (6%) per annum if the cancellation of the Contract is exercised by you in accordance with the provisions of Article III 1(c), 2(c), 3(c) or 4(c) of the Contract or at the rate of zero percent (0%) per annum if cancellation of the Contract is exercised by you by reason of paragraph 1 of Article VIII or paragraph 2(b) of Article XII, in both cases calculated from the date the installments were received by the SELLER to the date of remittance of such refund within thirty (30) Business Days after our receipt of the relevant written demand from you for repayment. Any written demand to us shall be accepted by us as conclusive evidence that the amount claimed is due under this guarantee, provided that such demand: (1) is signed by authorized representative of you and accompanied by a power of attorney granted by you providing the relevant authorized representative with authority to make the demand; (2) states that the principal amount and interest thereon if any demanded by you has been demanded by you from the SELLER and was not paid by the SELLER within forty-five (45) days after that demand upon the SELLER; and (3) is accompanied by a copy of your said demand upon the SELLER.
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It is hereby understood that payment of any interest provided herein is by way of liquidated damages due to cancellation of the CONTRACT.
However, in the event of any dispute between you and the SELLER in relation to:
(1) whether the SELLER shall be liable to repay the instalment or instalments paid by you and
(2) consequently whether you shall have the right to demand payment from us,
and such dispute is submitted either by the SELLER or by you for arbitration in accordance with Article XIII of the Contract, we shall be entitled to withhold and defer payment until the arbitration award is published. We shall not be obligated to make any payment to you unless the arbitration award orders the SELLER to make repayment. If the SELLER fails to honour the award within 45 days of the final award being issued then we shall refund to you against your further written demand accompanied with a certified copy of the arbitration award which orders the SELLER to make repayment, to the extent the arbitration award orders but not exceeding the aggregate amount of this guarantee plus the interest described above.
The undersigned hereby certifies, represents and warrants that all acts, conditions and things required to be done and performed and to have occurred prior to the creation and issuance of this guarantee, and to ensure that this guarantee constitutes valid and legally binding obligations of the undersigned enforceable in accordance with its terms have been done and performed and have occurred in due and strict compliance with applicable laws.
The said repayment shall be made by us in United States Dollars. This Letter of Guarantee shall become effective from the time of the actual receipt of the first instalment by the SELLER from you and the amounts effective under this Letter of Guarantee shall correspond to the total payment actually received by the SELLER from time to time under the Contract prior to the delivery of the VESSEL. However, the available amount under this Letter of Guarantee shall in no event exceed above mentioned amount actually received by the SELLER, together with interest calculated, as described above at six percent (6%) or, zero percent (0%) per annum, as the case may be for the period commencing with the date of receipt by the SELLER of the respective instalment to the date of repayments thereof.
This Letter of Guarantee shall remain in force until the VESSEL has been delivered to and accepted by you or refund has been made by the SELLER or ourselves, or until February 9th, 2017, whichever occurs earlier, after which you are to return it to us by airmail for cancellation. Upon its expiration, this guarantee shall become null and void, any action of maintaining the original of this guarantee and its amendment(s) shall give no right to you for lodging any more claim hereunder.
However in the event that a dispute in respect of a refund is being referred to arbitration in accordance with Article XIII of the Contract, then this Letter of Guarantee shall continue to
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remain in force until 60 days after such arbitration proceedings are concluded and a final arbitration award has been issued.
Any claim under this guarantee must be received by us before its expiration.
It is agreed that this Letter of Guarantee may, with our prior written approval and such approval shall not be unreasonably withheld, be assigned by you (excluding, in respect of a first class international bank, the right of demanding payment which shall in all respect remain with yourself) to a first class international bank that is financing the whole or part of your purchase of the VESSEL or one of your 100% subsidiaries or affiliates.
This Letter of Guarantee shall be construed, interpreted and governed by the Laws of England and any dispute arising out of or in connection with this Letter of Guarantee shall be submitted to the exclusive jurisdiction of the courts of England.
For the Refund Guarantor
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Exhibit “B” IRREVOCABLE LETTER OF GUARANTEE
FOR THE 2ND, 3RD, AND 4TH INSTALLMENTS
Date:
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To:
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Shanghai Waigaoqiao Shipbuilding Co., Ltd.,
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3001 Zhouhai Road, Pudong New District,
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Shanghai 200137, the People’s Republic of China
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Dear Sirs,
(1)
In consideration of your entering into a shipbuilding contract dated 21
st
March,2014 (“the Shipbuilding Contract”) with NAVIG8 CRUDE TANKERS INC. or its Nominee as the buyer (“the BUYER”) for the construction of one (1) 300,000 Metric Tons Deadweight Crude Oil Tanker known as Shanghai Waigaoqiao Shipbuilding Co., Ltd.’s Hull No. H1385 (“the VESSEL”), we, NAVIG8 CRUDE TANKERS INC., hereby IRREVOCABLY, ABSOLUTELY and UNCONDITIONALLY guarantee, as the primary obligor and not merely as the surety, the due and punctual payment by the BUYER of each and all of the 2nd, 3rd, and 4th installments of the Contract Price amounting to a total sum of United States Dollars Twenty Nine Million Six Hundred and Ten Thousand Nine Hundred only (US$ 29,610,900.00) as specified in (2) below.
(2)
The instalments guaranteed hereunder, pursuant to the terms of the Shipbuilding Contract, comprise the 2nd installment in the amount of U.S. Dollars Nine Million Eight Hundred and Seventy Thousand Three Hundred Only (US$9,870,300.00)payable by the BUYER within three (3) Singapore and New York business days after cutting of the first steel plate in your SELLER’s workshop, the third installment in the amount of U.S. Dollars Nine Million Eight Hundred and Seventy Thousand Three Hundred Only (US$9,870,300.00) payable by the BUYER within three (3) Singapore and New York business days after keel-laying of the first section of the VESSEL, and the 4th installment in the amount U.S. Dollars Nine Million Eight Hundred and Seventy Thousand Three Hundred Only (US$9,870,300.00) payable by the BUYER within three (3) Singapore and New York business days after launching of the VESSEL.
(3)
We also IRREVOCABLY, ABSOLUTELY and UNCONDITIONALLY guarantee, as primary obligor and not merely as surety, the due and punctual payment by the BUYER of interest on each Instalment guaranteed hereunder at the rate of six percent (6%) per annum from and including the first day after the date of instalment in default until the date of full payment by us of such amount guaranteed hereunder.
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(4)
In the event that the BUYER fails to punctually pay any Instalment guaranteed hereunder or the BUYER fails to pay any interest thereon, and any such default continues for a period of fifteen (15) days, then, upon receipt by us of your first written demand, we shall immediately pay to you or your assignee all unpaid 2nd, 3rd and 4th instalments, together with the interest as specified in paragraph (3) hereof, without requesting you to take any or further action, procedure or step against the BUYER or with respect to any other security which you may hold.
(5)
We hereby agree that at your option this Guarantee and the undertaking hereunder shall be assignable to and if so assigned shall inure to the benefit of any 3rd party designated by you or Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch , as your assignee as if any such third party or Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch were originally named herein.
(6)
Any payment by us under this Guarantee shall be made in the Unites States Dollars by telegraphic transfer to Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch, 9 Pudong Avenue,Shanghai, China for credit to Account No.1001190709148073602 of Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch (Swift: ICBKCNBJSHI), as receiving bank nominated by you for credit to the account of you with Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch, 9 Pudong Avenue,Shanghai, China for credit to Account No.1001190709148073602 of Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch (Swift: ICBKCNBJSHI) or through other receiving bank to be nominated by you from time to time, in favour of you or your assignee.
(7)
Our obligations under this guarantee shall not be affected or prejudiced by any dispute between you as the SELLER and the BUYER under the Shipbuilding Contract or by the SELLER’s delay in the construction and/or delivery of the VESSEL due to whatever causes or by any variation or extension of their terms thereof or by any security or other indemnity now or hereafter held by you in respect thereof, or by any time or indulgence granted by you or any other person in connection therewith, or by any invalidity or unenforceability of the terms thereof, or by any act, omission, fact or circumstances whatsoever, which could or might, but for the foregoing, diminish in any way our obligations under this Guarantee.
(8)
Any claim or demand shall be in writing signed by one of your officers and may be served on us either by hand or by post and if sent by post to (or such other address as we may
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notify to you in writing), or by email (email: ) via Industrial And Commercial Bank Of China Limited , with confirmation in writing.
(9)
This Letter of Guarantee shall come into full force and effect upon delivery to you of this Guarantee and shall continue in force and effect until the VESSEL is delivered to and accepted by the BUYER and the BUYER shall have performed all its obligations for taking delivery thereof or until the full payment of all 2nd, 3rd, and 4th Instalments together with the aforesaid interests by the BUYER or us, whichever first occurs.
(10)
The maximum amount, however, that we are obliged to pay to you under this Guarantee shall not exceed the aggregate amount of U.S. Dollars Twenty Nine Million Nine Hundred and Seven Thousand and Nine only (US$29,907,009.00) being an amount equal to the sum of:-
(a)
All the 2nd, 3rd and 4th instalments guaranteed hereunder in the total amount of United States Dollars Twenty Nine Million Six Hundred and Ten Thousand Nine Hundred only (US$ 29,610,900.00); and
(b)
Interest at the rate of six percent (6%) per annum on the Instalment for a period of sixty (60) days in the amount of United States Dollars Two Hundred Ninety Six Thousand and One Hundred and Nine only (US$ 296,109.00).
(11)
All payments by us under this Guarantee shall be made without any set-off or counterclaim and without deduction or withholding for or on account of any taxes, duties, or charges whatsoever unless we are compelled by law to deduct or withhold the same. In the latter event we shall make the minimum deduction or withholding permitted and will pay such additional amounts as may be necessary in order that the net amount received by you after such deductions or withholdings shall equal the amount which would have been received had no such deduction or withholding been required to be made.
(12)
This Letter of Guarantee shall be construed in accordance with and governed by the Laws of England. We hereby submit to the non-exclusive jurisdiction of the English courts for the purposes of any legal action or proceedings in connection herewith in England.
(13)
When this Letter of Guarantee shall have expired as aforesaid, you will return the same to us without any request or demand from us.
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IN WITNESS WHEREOF, we have caused this Letter of Guarantee to be executed and delivered by our duly authorized representative the day and year above written.
Very Truly Yours
By: NAVIG8 CRUDE TANKERS INC.
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Exhibit 10.85
SHIPBUILDING CONTRACT
FOR
THE CONSTRUCTION OF
300,000 DWT CLASS CRUDE OIL CARRIER
HULL NO. 2794
BETWEEN
NAVIG8 CRUDE TANKERS INC
(AS BUYER)
AND
HYUNDAI HEAVY INDUSTRIES CO., LTD.
(AS BUILDER)
I N D E X
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PAGE
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PREAMBLE
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3
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ARTICLE
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I
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DESCRIPTION AND CLASS
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4
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II
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CONTRACT PRICE
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8
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III
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ADJUSTMENT OF THE CONTRACT PRICE
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9
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IV
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INSPECTION AND APPROVAL
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1
2
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V
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MODIFICATIONS, CHANGES AND EXTRAS
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1
8
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VI
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TRIALS AND COMPLETION
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21
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VII
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DELIVERY
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2
5
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VIII
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:DELAYS
AND EXTENSIONS OF TIME (FORCE MAJEURE)
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29
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IX
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WARRANTY OF QUALITY
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32
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X
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PAYMENT
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3
5
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XI
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BUYER’S DEFAULT
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41
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XII
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BUYER’S SUPPLIES
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45
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XIII
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ARBITRATION
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4
8
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XIV
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SUCCESSORS AND ASSIGNS
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50
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XV
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TAXES AND DUTIES
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51
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XVI
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PATENTS, TRADEMARKS AND COPYRIGHTS
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52
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XVII
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: COMPLIANCE AND ANTI-BRIBERY
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XVIII
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INTERPRETATION AND GOVERNING LAW
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54
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XIX
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NOTICE
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XX
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EFFECTIVENESS OF THIS CONTRACT
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XXI
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EXCLUSIVENESS
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EXHIBIT “A” LETTER OF GUARANTEE
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59
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2
THIS
CONTRACT
,
made on this
24
th
day
of
March, 2014 by
and between
NAVIG8 CRUDE TANKERS INC, a
corporation incorporated and existing under the
laws
of
Marshall Islands
, having its registered office at
Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960
(hereinafter
called
the
“BUYER”
)
, the party of the first part and HYUNDAI
HEAVY INDUSTRIES CO., LTD.
a company organized and existing under the
laws
of the Republic of Korea, having its principal office
1,000 Bangeojinshunhwan-doro, Dong-Gu, Ulsan, Korea
, Korea (hereinafter called the “BUILDER”),
the
party of the second part,
W
I T N E S S E T H
:
In consideration of the mutual covenants c
o
ntained herein, the BUILDER
agrees
to design, build, launch, equip and complete one (1)
300,000
DWT
C
lass
Crude Oil Carrier as
described in Article I hereof (hereinafter called the “VESSEL”) at the
BUILDER’s
shipyard in Korea (hereinafter called the “SHIPYARD”) in accordance with
the BUILDER’s
shipbuilding practice for
Crude Oil Carrier
, as the B
UILDER
has been performing for its other clients and in accordance with
HSQM (Hyundai Shipbuilding Quality Manual)
and to
deliver
and sell the VESSEL to the BUYER, and the BUYER agrees to accept
delivery
of and purchase from the BUILDER the VESSEL, according to the terms
and
conditions hereinafter set forth:
(End of Preamble)
3
ARTICLE I:
DESCRIPTION AND CLASS
1. DESCRIPTION
The VESSEL shall have the BUILDER’s Hull No.
2794 and
shall be designed, constructed, equipped and completed in accordance with the specifications (No.
CONV300-FS-P1, dated 10th December 2013)
a
nd
the general arrangement plan (No.
1G7000201, dated 10th December 2013)
attached thereto (hereinafter called respectively the “SPECIFICATIONS” and the “PLAN”) signed by both parties, which shall constitute an integral part of this CONTRACT although not attached hereto.
The SPECIFICATIONS and the PLAN are intended to explain each other and anything shown on the PLAN and not stipulated in the SPECIFICATIONS or anything stipulated in the SPECIFICATIONS and not shown on the PLAN shall be deemed and considered as if included in both.
Should there be any inconsistencies or contradictions between the SPECIFICATIONS and the PLAN, the SPECIFICATIONS shall prevail. Should there be any inconsistencies or contradictions between this CONTRACT and the SPECIFICATIONS, this CONTRACT shall prevail.
2. BASIC
DIMENSIONS AND PRINCIPAL PARTICULARS OF THE VESSEL
(a) The basic dimensions and principal particulars of the VESSEL shall be:
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Length, overall
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abt.
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333
m
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Length, between perpendiculars
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abt.
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322
m
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Breadth, moulded
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abt.
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60
m
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Depth, moulded
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abt.
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29.4
m
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Design draught, moulded
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abt.
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20.5
m
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Scantling draught, moulded
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abt.
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21.6
m
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Main Engine
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HYUNDAI - B&W 7G80ME-C9.2
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Nominal Rating: 32,970 kW x 72 RPM
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MCR: 24,400 kW x 66 RPM
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NCR: 17,080 kW x 58.6 RPM
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Main engine to be part load optimized
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Deadweight, guaranteed
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299,969 metric tons at the Scantling draught of 21.6 meters on even keel in sea water of specific gravity of 1.025.
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4
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Speed, guaranteed
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14.8 knots at the design draught of 20.5 meters at the condition of clean bottom and in calm and deep sea with main engine output of 17,080 kW with 15% sea margin.
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Fuel Consumption, guaranteed
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161.7 grams/kW-hour using marine diesel oil having lower calorific value of 42,700 kj/kg at MCR measured at the shop trial with I.S.O reference conditions.
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The details of the aforementioned particulars as well as the definitions and method
of
measurements and calculations are as indicated in the SPECIFICATIONS.
(b)
The dimensions may be slightly modified by the BUILDER,
who also reserves the right to make changes to the SPECIFICATIONS and the PLAN if found necessary to suit the local conditions and facilities of the SHIPYARD, the availability of materials and equipment, the introduction of improved production methods or otherwise,
subject to the written approval of the BUYER which the BUYER shall not withhold unreasonably, and all subject to the other relevant provisions of this CONTRACT.
3. CLASSIFICATION,
RULES AND REGULATIONS
(a)
The VESSEL, including its machinery, equipment and outfitting shall be designed, equipped and constructed in accordance with the BUILDER’s HSQM (Hyundai Shipbuilding Quality Manual) and shipbuilding practices.
The VESSEL shall be built in compliance with the rules (editions and amendments thereto being in force at the date of signing this CONTRACT) of Korean Register of Shipping (hereinafter called the “CLASSIFICATION SOCIETY”), classed and registered with the symbol
of +KRS1-Oil Tanker (Double Hull) ‘ESP’, (FBC), (CSR), Crude, VEC-2, IGS, COW, IWS, IBWM, LI, +KRM1-UMA, STCM, PSPC, IAFS, IOPP, ISPP, IGPP, IAPP, IIHM, IEE, EQ-SPM, ERS, CHA.
The VESSEL shall be built in compliance with the standards provided in the
SPECIFICATIONS
and with the Rules and Regulations as mentioned in the
SPECIFICATIONS
which are in force at the date of signing the
SPECIFICATIONS (for reference, the published LR’s “Future IMO Legislation, Aug 2013” to be used).
EEDI verification to be performed by
the BUILDER
during sea trials
and confirmed by the CLASSIFICATION SOCIETY
.
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(b)
The BUILDER shall arrange with the CLASSIFICATION SOCIETY for the assignment by the CLASSIFICATION SOCIETY of representative(s) to the VESSEL during each stage of construction. All fees and charges incidental to classification of the VESSEL as well as in compliance with the above specified rules, regulations and requirements of this CONTRACT shall be for the account of the BUILDER.
All major plans, materials and workmanship used in the construction of the V
ESSEL
shall be subject to inspection and test by the CLASSIFICATION SOCIETY in accordance with the rules and regulations of the CLASSIFICATION SOCIETY
.
(c)
The decision of the CLASSIFICATION SOCIETY as to whether the
VESSEL
complies with the regulations of the CLASSIFICATION SOCIETY
shall
be final and binding upon the BUILDER and the BUYER, provided that in the case of dispute the decision shall be endorsed by Head Office of the CLASSIFICATION SOCIETY.
4.
SUBCONTRACTING
The BUILDER is authorised to sub-contract part of the work to third party sub-contractors who will carry out works in accordance with the quality standards and shipbuilding practices outlined above at Article I. 3. (a) of this CONTRACT, provided that the work is done in Korea and the BUILDER shall have first given notice in writing to the BUYER.
Without prejudice to the generality of the foregoing, the BUILDER shall remain fully liable for the due and complete performance of all the BUILDER’s obligation under this CONTRACT notwithstanding the entering into of any such sub-contract as aforesaid. However, the VESSEL shall always remain at the SHIPYARD unless the BUYER and the BUILDER agree otherwise.
No sub-contract shall bind or purport to bind the BUYER, and each sub-contract shall be the responsibility of the BUILDER and not contain any retention rights, liens or other such rights that may interfere at anytime with the transfer of unencumbered ownership and title of the VESSEL by the BUILDER to the BUYER.
All sub-contractors howsoever employed or engaged are hereby declared and agreed to be sub-contractors employed or engaged by the BUILDER and the BUILDER agrees that it is and shall remain fully responsible for and liable in respect of any sub-contractors and/or their acts or omissions and, without prejudice to the generality of the foregoing, the BUILDER shall ensure control over supervision and scheduling of the all work done by any subcontractor.
The BUILDER hereby agrees that if any of its employees, servants or agents or those of the
6
sub-contractors appointed pursuant to this CONTRACT shall, in the reasonable opinion of the BUYER, not be carrying out properly their duties and responsibilities under or pursuant to the terms of this CONTRACT, the BUYER shall be entitled (by giving written notice to the BUILDER) to draw the same to the attention of the BUILDER and, if the BUYER considers it necessary, to request the BUILDER to replace such person(s) if the same are its own employees, servants or agents, or to use its best endeavours to replace such person(s) if the same are the employees, servants or agents of a sub-contractor. The BUILDER shall investigate any such request, and, if found justified, take appropriate action. Any such replacement shall be within such a time scale so as to ensure that the BUILDER continues to carry out all of its duties and obligations under or pursuant to this CONTRACT.
The BUYER’s inspection and final assembly of any subcontracted work shall be at the BUILDER’s SHIPYARD. The BUILDER will arrange for the BUYER to execute pre-production inspection of sub-contractors premises by providing reasonable advanced notice to inspect the facility. The BUYER retains the right to inspect vetting records by BUILDER’s Quality Control Department confirming compliance with the BUILDER’s quality standards.
The BUYER’s rights hereunder shall not in any way be reduced in respect of such sub-contracted work and the BUYER shall not bear any additional costs in respect of such sub-contracted work.
5. NATIONALITY
OF THE VESSEL
The VESSEL shall be registered by the BUYER at its own cost and expense under the laws of Marshall Islands
with
its home port
at
the time of its delivery and acceptance hereunder.
(End of Article)
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ARTICLE II:
CONTRACT PRICE
The contract price of the VESSEL delivered to the BUYER at the SHIPYARD shall be United States Dollars One Hundred One Million Three Hundred Ten Thousand Two Hundred Ninety Four (US$ 101,310,294.-) (hereinafter called the “CONTRACT PRICE”) which shall be paid plus any increases or less any decreases due to adjustment or modification, if any, as set forth in this CONTRACT. Subject to the above, the CONTRACT PRICE is fixed and is not subject to any fluctuations in or on account of wages, costs of equipment or materials or currencies or otherwise. The above CONTRACT PRICE shall include payment for services in the inspection, test, survey and classification of the VESSEL which will be rendered by the CLASSIFICATION SOCIETY and shall not include the cost of the BUYER’s supplies as stipulated in Article XII.
The CONTRACT PRICE also includes all costs and expenses for supplying all necessary drawings as stipulated in the SPECIFICATIONS except those to be furnished by the BUYER for the VESSEL in accordance with the SPECIFICATIONS. All other costs and expenses of the BUILDER as provided in the CONTRACT or the SPECIFICATIONS or otherwise incurred by the BUILDER are for the account of the BUILDER unless expressly specified as being for the account of the BUYER in the CONTRACT or otherwise in writing.
The BUILDER shall, however undertake to install in the VESSEL all of such BUYER’s supplies in accordance with the SPECIFICATIONS without extra cost to the BUYER, but the BUYER shall pay all charges and expenses, including, but not limited to, the customs clearance fee, for transporting such BUYER’s supplied articles to the SHIPYARD.
(End of Article)
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ARTICLE III:
ADJUSTMENT OF THE CONTRACT PRICE
The CONTRACT PRICE of the VESSEL shall be adjusted as hereinafter set forth in the event of the following contingencies. It is hereby understood by both parties that any adjustment of the CONTRACT PRICE as provided for in this Article is by way of liquidated damages and not by way of penalty.
1. DELAYED DELIVERY
(a)
No adjustment shall be made and the CONTRACT PRICE shall remain unchanged for the first thirty (30) days of the delay in delivery of the VESSEL [ending as of 12 o’clock midnight Korean Standard Time on the thirtieth (30th) day of delay] beyond the Delivery Date calculated as provided in Article VII.1. hereof.
(b)
If delivery of the VESSEL is delayed more than thirty (30) days beyond the date upon which the delivery is due from the BUILDER under the terms of this CONTRACT, then, beginning at midnight of the thirtieth (30th) day after such due date, the CONTRACT PRICE of the VESSEL shall be reduced by U.S. Dollars Twenty Three Thousand (US$ 23,000) for each full day of delay.
However, unless the parties agree otherwise, the total amount of deduction from the CONTRACT PRICE shall not exceed the amount due to cover the delay of one hundred and Eighty (180) days after thirty (30) days of the delay in delivery of the VESSEL at the rate of deduction as specified hereinabove.
(c)
But, if the delay in delivery of the VESSEL continues for a period of more than two hundred and ten (210) days beyond the date upon which the delivery is due from the BUILDER under the terms of this CONTRACT then, in such event, and after such period has expired, the BUYER may, at its option, cancel this CONTRACT by serving upon the BUILDER a notice of cancellation by e-mail or facsimile to be confirmed by a registered letter via airmail directed to the BUILDER at the address given in this CONTRACT. Such cancellation shall be effective as of the date the notice thereof is received by the BUILDER. If the BUYER has not served the notice of cancellation after the aforementioned two hundred and ten (210) days delay in delivery, the BUILDER may demand the BUYER to make an election in accordance with Article VIII.3 hereof.
(d)
For the purpose of this Article, the delivery of the VESSEL shall be deemed to be delayed when and if the VESSEL, after taking into full account extension of the Delivery Date or permissible delays as provided in ArticlesV.1 and V.3, VI.2, VIII, XI.1, XII.1 and XIII.7, is delivered beyond or before the date upon which delivery would then be due under the terms of this CONTRACT.
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2.
INSUFFICIENT SPEED
(a)
The CONTRACT PRICE of the VESSEL shall not be affected or changed, if the actual speed, as determined by trial runs more fully described in Article VI hereof, is less than the guaranteed speed as defined in Article I paragraph 2 hereof, provided such deficiency in actual speed is not more than three tenths (3/10) of a knot below the guaranteed speed.
(b)
However, as for the deficiency of more than three tenths (3/10) of a knot in actual speed below the guaranteed speed, the CONTRACT PRICE shall be reduced by U.S. Dollars Eighty Thousand (US$ 80,000) for each full one-tenth (1/10) of a knot in excess of the said three tenths (3/10) of a knot of deficiency in speed (fractions of less than one-tenth (1/10) of a knot shall be regarded as a full one-tenth (1/10) of a knot). However, unless the parties agree otherwise, the total amount of reduction from the CONTRACT PRICE shall not exceed the amount due to cover the deficiency of one (1) full knot below the guaranteed speed at the rate of reduction as specified above.
(c)
If the deficiency in actual speed of the VESSEL is more than one (1) full knot below the guaranteed speed, then the BUYER, at its option, may, subject to the BUILDER’s right to effect alterations or corrections as provided in Article VI.5. hereof, cancel this CONTRACT or may accept the VESSEL at a reduction in the CONTRACT PRICE as above provided for one (1) full knot of deficiency only.
3.
EXCESSIVE FUEL CONSUMPTION
(a)
The CONTRACT PRICE of the VESSEL shall not be affected or changed by reason of the fuel consumption of the VESSEL’s main engine, as determined by the engine manufacturer’s shop trial as per the SPECIFICATIONS being more than the guaranteed fuel consumption of the VESSEL’s main engine as defined in Article I paragraph 2 hereof, if such excess is not more than five per cent (5%) over the guaranteed fuel consumption.
BUYER’s Representatives will be provided fourteen (14) days notice of engine trials in order to be present during aforementioned trials.
(b)
However, as for the excess of more than five percent (5%) in the actual fuel consumption over the guaranteed fuel consumption of the VESSEL’s main engine, the CONTRACT PRICE shall be reduced by U.S. Dollars Eighty Thousand (US$ 80,000) for each full one per cent (1%) increase in fuel consumption in excess of the said five per cent (5%) increase in fuel consumption (fraction of less than one per cent (1%) shall be regarded as a full one percent (1%)). However, unless the parties agree otherwise, the total amount of reduction from the CONTRACT PRICE shall not exceed the amount due to cover the excess of ten percent (10%) over the guaranteed fuel consumption of the VESSEL’s main
10
engine at the rate of reduction as specified above.
(c)
If such actual fuel consumption exceeds the guaranteed fuel consumption of the VESSEL’s main engine by more than ten percent (10%), the BUYER, at its option, may, subject to the BUILDER’s right to effect alterations or corrections as specified in Article VI. 5. hereof, cancel this CONTRACT or may accept the VESSEL at a reduction in the CONTRACT PRICE as above provided for the ten percent (10%) increase only.
4.
DEADWEIGHT BELOW CONTRACT REQUIREMENTS
(a)
The CONTRACT PRICE of the VESSEL shall not be affected or changed, if the actual deadweight determined as provided in this CONTRACT and the SPECIFICATIONS, is below the guaranteed deadweight as defined in Article I paragraph 2 hereof by one point five percent (1.5%) of the guaranteed deadweight or less.
(b)
However, should the deficiency in the actual deadweight of the VESSEL be more than one point five percent (1.5%) of the guaranteed deadweight (disregarding fractions of less than one (1) metric ton), the CONTRACT PRICE shall be reduced by the sum of U.S. Dollars Seven Hundred (US$ 700) for each one (1) metric deficiency (disregarding fractions of less than one (1) metric ton) in excess of the said one point five percent (1.5%) of deficiency.
(c)
In the event of such deficiency in the deadweight of the VESSEL being more than three percent (3%) of the guaranteed deadweight, the BUYER, at its option, may, subject to the BUILDER’s right to effect alterations or corrections as specified in Article VI. 5. hereof, cancel this CONTRACT or accept the VESSEL at a reduction in the CONTRACT PRICE as above provided for three percent (3%) only.
5.
EFFECT OF CANCELLATION
(a)
The liquidated damages payable according to the provisions of each Paragraph under this ARTICLE are cumulative and not exclusive.
(b)
It is expressly understood and agreed by the parties hereto that in any case, if the BUYER cancels this CONTRACT under this Article, the BUYER, save for its rights and remedies set out in Article X.5 hereof, shall not be entitled to any liquidated damages.
(End of Article)
11
ARTICLE IV:
INSPECTION AND APPROVAL
1.
APPOINTMENT OF BUYER’S REPRESENTATIVE
The BUYER shall timely dispatch to and maintain at the SHIPYARD, at its own cost, expense and risk, one or more representatives (hereinafter called the “BUYER’S REPRESENTATIVE”), who shall be duly accredited in writing by the BUYER to supervise adequately the construction by the BUILDER of the VESSEL, her equipment and all accessories. Before the commencement of any item of work under this CONTRACT, the BUILDER shall, whenever reasonably required, previously exhibit, furnish to, and within the limits of the BUYER’S REPRESENTATIVE’s authority, secure the approval from the BUYER’S REPRESENTATIVE of any and all plans and drawings prepared in connection therewith. Upon appointment of the BUYER’S REPRESENTATIVE, the BUYER shall notify the BUILDER in writing of the name and the scope of the authority of the BUYER’S REPRESENTATIVE.
The BUYER shall have the right to replace or substitute any of its representatives upon prior notice to the BUILDER. One individual BUYER’S REPRESENTATIVE shall be nominated by the BUYER in writing from time to time as having authority to bind the BUYER on certain matters as provided in this Article and that nominated BUYER’S REPRESENTATIVE shall alone be so authorized in respect of such matters and no other BUYER’S REPRESENTATIVE shall be authorized to so bind the BUYER in respect of such matters.
However, in any case, the BUYER shall not appoint any employees of the BUILDER or the persons who had been employed by the BUILDER within one (1) year before the BUYER’s appointment of such ex-employee of the BUILDER as the BUYER’S REPRESENTATIVE or his assistants or employees of the BUYER without the BUILDER’s prior written consent.
2.
AUTHORITY OF THE BUYER’S REPRESENTATIVE
According to the BUYER’s written authorization, such BUYER’S REPRESENTATIVE shall, at all times during working hours of the construction until delivery of the VESSEL, have the right to inspect the VESSEL, her equipment and all accessories, and work in progress, or materials utilized in connection with the construction of the VESSEL, wherever such work is being done or such materials are stored, for the purpose of determining that the VESSEL, her equipment and accessories are being constructed in accordance with the terms of this CONTRACT and/or the SPECIFICATIONS and the PLAN.
The BUILDER will endeavor to arrange for the inspection by the BUYER’S REPRESENTATIVE during working hours of the BUILDER. However, such inspection may be arranged beyond the BUILDER’s normal working hours, including weekend and/or holiday if this is considered necessary by the BUILDER in order to meet the BUILDER’s construction
12
schedule, on the condition that the BUILDER will inform the BUYER’S REPRESENTATIVE at least Two (2) working days in advance of such inspection.
The BUYER’S REPRESENTATIVE shall, within the limits of the authority conferred upon him by the BUYER, make decisions or give advice to the BUILDER on behalf of the BUYER within reasonable time on all problems arising out of, or in connection with, the construction of the VESSEL and generally act in a reasonable manner with a view to cooperating to the utmost with the BUILDER in the construction process of the VESSEL.
The decision, approval or advice of the BUYER’S REPRESENTATIVE shall be deemed to have been given by the BUYER and once given shall not be withdrawn, revoked or modified except with consent of the BUILDER.
Provided that the BUYER’S REPRESENTATIVE or his assistants shall comply with the foregoing obligations, no act or omission of the BUYER’S REPRESENTATIVE or his assistants shall, in any way, diminish the liability of the BUILDER under Article IX (WARRANTY OF QUALITY). The BUYER’S REPRESENTATIVE shall notify the BUILDER within reasonable time in writing of his discovery of any construction or materials, which he believes do not or will not conform to the requirements of the CONTRACT and the SPECIFICATIONS or the PLAN and likewise advise and consult with the BUILDER on all matters pertaining to the construction of the VESSEL, as may be required by the BUILDER, or as he may deem necessary.
However, if the BUYER’S REPRESENTATIVE fails to submit to the BUILDER, within one (1) working day after any inspections or tests, or in the case of major inspection or test items, within two (2) working days, any such demand concerning alterations or changes with respect to the construction, arrangement or outfit of the VESSEL, which the BUYER’S REPRESENTATIVE has examined, inspected or attended at the test thereof under this CONTRACT or the SPECIFICATIONS, the BUYER’S REPRESENTATIVE shall be deemed to have approved the same and shall be precluded from making any demand for alterations, changes, or complaints with respect thereto at a later date. Such major inspection or test items shall be decided and agreed by the parties to this CONTRACT at the time of the BUYER’s approval of an inspection and test plan submitted by the BUILDER upon the BUYER’S REPRESENTATIVE’s work commencement or opening up of his office at the SHIPYARD, whichever is the earlier.
The BUILDER shall comply with any such demand which is not contradictory to this CONTRACT and the SPECIFICATIONS or the PLAN, provided that any and all such demands by the BUYER’S REPRESENTATIVE with regard to construction, arrangement and outfit of the VESSEL shall be submitted in writing to the authorized representative of the BUILDER. The BUILDER shall notify the BUYER’S REPRESENTATIVE of the names of
13
the persons who are from time to time authorized by the BUILDER for this purpose.
It is agreed upon between the BUYER and the BUILDER that the modifications, alterations or changes and other measures necessary to comply with such demand may be effected at a convenient time and place at the BUILDER’s reasonable discretion in view of the construction schedule of the VESSEL.
In the event that the BUYER’S REPRESENTATIVE shall advise the BUILDER that he has discovered or believes the construction or materials do not or will not conform to the requirements of this CONTRACT and the SPECIFICATIONS or the PLAN, and the BUILDER shall not agree with the views of the BUYER’S REPRESENTATIVE in such respect, either the BUYER or the BUILDER may, with the agreement of the other party, seek an opinion of the CLASSIFICATION SOCIETY or failing such agreement, request an arbitration in accordance with the provisions of Article XIII hereof. The CLASSIFICATION SOCIETY or the arbitration tribunal, as the case may be, shall determine whether or not a nonconformity with the provisions of this CONTRACT, the SPECIFICATIONS and the PLAN exists. If the CLASSIFICATION SOCIETY or the arbitration tribunal, as the case may be, enters a determination in favour of the BUYER, then in such case the BUILDER shall make the necessary alterations or changes, or if such alterations or changes cannot be made in time to meet the construction schedule for the VESSEL, the BUILDER may make a proposal for a fair and reasonable adjustment of the CONTRACT PRICE in lieu of such alterations and changes, such proposal to be subject to the mutual agreement of the BUILDER and BUYER. If the CLASSIFICATION SOCIETY or the arbitration tribunal, as the case may be, enters a determination in favour of the BUILDER, then the time for delivery of the VESSEL shall be extended for the period of delay in construction, if any, occasioned by such proceedings, and the BUYER shall compensate the BUILDER for the proven loss and damages incurred by the BUILDER as a result of the dispute herein referred to.
3.
APPROVAL OF DRAWINGS
All plans and drawings and instruction books to be in English.
(a)
The BUILDER shall submit to the BUYER three (3) copies of each of the plans and drawings to be submitted to the BUYER for its approval at its address as set forth in Article XVIII hereof. The BUYER shall, within twenty one (21) days including mailing time after receipt thereof, return to the BUILDER one (1) copy of such plans and drawings with the approval or comments, if any, of the BUYER. A list of the plans and drawings to be so submitted to the BUYER shall be mutually agreed upon between the parties hereto.
(b)
When and if the BUYER’S REPRESENTATIVE shall have been sent by the BUYER to the SHIPYARD in accordance with Paragraph 1 of this Article, the BUILDER may submit
14
the remainder, if any, of the plans and drawings in the agreed list, to the BUYER’S REPRESENTATIVE for his approval, unless otherwise agreed upon between the parties hereto.
The BUYER’S REPRESENTATIVE shall, within seven (7) days after receipt thereof, return to the BUILDER one (1) copy of such plans and drawing with his approval or comments written thereon, if any. Approval by the BUYER’S REPRESENTATIVE of the plans and drawings duly submitted to him shall be deemed to be the approval by the BUYER for all purposes of this CONTRACT.
(c)
In the event that the BUYER or the BUYER’S REPRESENTATIVE shall fail to return the plans and drawings to the BUILDER within the time limit as hereinabove provided, such plans and drawings shall be deemed to have been automatically approved without any comment. In the event the plans and drawings submitted by the BUILDER to the BUYER or the BUYER’S REPRESENTATIVE in accordance with this Article do not meet with the BUYER’s or the BUYER’S REPRESENTATIVE’s approval, the matter may be submitted by either party hereto for determination pursuant to Article XIII hereof. If the BUYER’s comments on the plans and drawings that are returned to the BUILDER by the BUYER within the said time limit are not clearly specified or detailed, the BUILDER shall seek clarification from the BUYER prior to implementing them which clarification must be provided in writing by the BUYER within five (5) days of such request from the BUILDER. If the BUYER shall fail to provide the BUILDER with such clarification within the said time limit, then the BUILDER shall be entitled to place its own interpretation on such comments in implementing them.
4.
SALARIES AND EXPENSES
All salaries and expenses of the BUYER’S REPRESENTATIVE or any other person or persons employed by the BUYER hereunder shall be for the BUYER’s account.
5.
RESPONSIBILITY OF THE BUILDER
(a)
The BUILDER shall provide the BUYER’S REPRESENTATIVE and his assistants free of charge with suitably furnished office space at, or in the immediate vicinity of, the SHIPYARD together with access to telephone, internet connection, printer/copier and facsimile facilities, air conditioning, toilets, and computer outlet to enable the BUYER’S REPRESENTATIVE and his assistants to carry out their work under this CONTRACT. However, the BUYER shall pay for the telephone high speed internet connection and facsimile facilities used by the BUYER’S REPRESENTATIVE or his assistants.
The BUILDER shall provide full assistance and advice how to obtain the necessary visas,
15
working permits and/or other document that may be necessary for the BUYER’S REPRESENTATIVE to enter and remain and work in Korea without delay provided that the BUYER’S REPRESENTATIVE meets the requirements and laws of Korea.
The BUILDER, its employees, agents and subcontractors, during its working hours until delivery of the VESSEL, shall arrange for them to have free and ready access to the VESSEL, her equipment and accessories, and to any other place (except the areas controlled for the purpose of national security) where work is being done, or materials are being processed or stored in connection with the construction of the VESSEL including the premises of sub-contractors.
The BUYER’S REPRESENTATIVE or his assistants or employees shall observe the work’s rules and regulations prevailing at the BUILDER’s and its sub-contractor’s premises. The BUILDER shall promptly provide to the BUYER’S REPRESENTATIVE and/or his assistants and shall ensure that its sub-contractors shall promptly provide all such information as he or they may reasonably request in connection with the construction of the VESSEL and her engines, equipment and machinery.
The BUILDER is responsible for ensuring at all times that a safe working environment and proper access is provided to the works and/or areas of inspection. Failure to provide proper, safe access at either the BUILDER or any appointed sub contractor may result in declining an inspection provided that justifiable grounds are presented to the BUILDER. Such time and impact to schedule are for the BUILDER’s account / responsibility.
(b)
The BUYER’S REPRESENTATIVE and his assistants shall at all times remain the employees of the BUYER, and not of the BUILDER. The BUILDER shall not be liable to the BUYER or the BUYER’S REPRESENTATIVE or to his assistants or to the BUYER’s employees or agents for personal injuries, including death, during the time they, or any of them, are on the VESSEL, or within the premises of either the BUILDER or its sub-contractors, or are otherwise engaged in and about the construction of the VESSEL, unless, however, such personal injuries, including death, are caused by the gross negligence or willful misconduct of the BUILDER, its sub-contractors, or its or their employees or agents. The BUILDER shall not be liable to the BUYER for damages to, or destruction of property of the BUYER or of the BUYER’S REPRESENTATIVE or his assistants or the BUYER’s employees or agents, unless such damages, loss or destruction is caused by the gross negligence or willful misconduct of the BUILDER, its sub-contractors, or its or their employees or agents.
6.
RESPONSIBILITY OF THE BUYER
The BUYER shall undertake and assure that the BUYER’S REPRESENTATIVE shall carry
16
out his duties hereunder in accordance with the normal shipbuilding practice and in such a way so as to avoid any unnecessary and unreasonable increase in building cost, delay in the construction of the VESSEL, and/or any disturbance in the construction schedule of the BUILDER.
The BUILDER has the right to request the BUYER to replace the BUYER’S REPRESENTATIVE who is deemed unsuitable and unsatisfactory for the proper progress of the VESSEL’s construction.
The BUYER shall investigate the situation by sending its representative (s) to the SHIPYARD, if necessary, and if the BUYER considers that such BUILDER’s request is justified, the BUYER shall effect such replacement as soon as conveniently arrangeable.
The BUILDER’s employees, agents, subcontractors and so forth shall at all times remain under the BUILDER’s responsibility. The BUYER shall not be liable to the BUILDER, or the BUILDER’s employees, agents, subcontractors and so forth for personal injuries, including death, during the time they, or any of them, are on the VESSEL, or within the premises of either the BUILDER or his subcontractors, or are otherwise engaged in and about the construction of the VESSEL, unless, however, such personal injuries, including death are caused by the gross negligence of the BUYER, its employees including the BUYER’S REPRESENTATIVE and his assistants or agents. The BUYER shall not be liable to the BUILDER, or the BUILDER’s employees, agents, subcontractors and so forth for damages to, or loss or destruction of property of the BUILDER, or the BUILDER’s employees, agent, subcontractors and so forth unless such damages, loss or destruction were caused by the gross negligence of the BUYER, or its employees or agents.
(End of Article)
17
ARTICLE V:
MODIFICATION, CHANGES AND EXTRAS
1.
HOW EFFECTED
Minor modifications or changes to the SPECIFICATIONS and the PLAN under which the VESSEL is to be constructed may be made at any time hereafter by written agreement of the parties hereto.
Any modification or change requested by the BUYER which does not affect the frame-work of the SPECIFICATIONS or the PLAN and also does not adversely affect the BUILDER’s planning or program in relation to the BUILDER’s other commitments which have been entered into at that time shall be agreed to by the BUILDER if the BUYER agrees to adjustment of the CONTRACT PRICE(if any), deadweight and/or cubic capacity, speed requirements, the Delivery Date and other terms and conditions of this CONTRACT reasonably required as a result of such modifications or change.
The BUILDER has the right to continue construction of the VESSEL on the basis of the SPECIFICATIONS and the PLAN until the BUYER
and BUILDER
has agreed to
the necessary
adjustments
to the Contract Price of the VESSEL, the time of delivery and any other alterations in this
CONTRACT
, or the
SPECIFICATIONS. The BUILDER shall be entitled to refuse to make any alteration, change or modification of the SPECIFICATIONS and/or the PLAN requested by the BUYER, if the BUYER and BUILDER do not agree to the aforesaid adjustments within seven (7) days of the BUILDER’s notification of its proposal for the same to the BUYER, or, if, in the BUILDER’s reasonable judgement, the compliance with such request of the BUYER would cause an unreasonable disruption of the normal working schedule of the SHIPYARD.
The BUILDER, however, agrees to exert its best efforts to accommodate such reasonable request by the BUYER so that the said change and modification shall be made at a reasonable cost and within the shortest period of time reasonably possible. The aforementioned agreement to modify and change the SPECIFICATIONS and the PLAN may be effected by exchange of letters, e-mail or facsimiles manifesting the agreement.
The letters, e-mail and facsimiles exchanged by the parties pursuant to the foregoing shall constitute an amendment to this CONTRACT and the SPECIFICATIONS or the PLAN under which the VESSEL shall be built. Upon consummation of such an agreement to modify and change the SPECIFICATIONS or the PLAN, the BUILDER shall alter the construction of the VESSEL in accordance therewith including any addition to, or deduction from, the work to be performed in connection with such construction.
18
2.
SUBSTITUTION OF MATERIAL
If any materials, machinery or equipment required for the construction of the VESSEL by the SPECIFICATIONS and the PLAN or otherwise under this CONTRACT cannot be procured in time to meet the BUILDER’s construction schedule for the VESSEL, or are in short supply provided that they have been timely ordered, or are unreasonably high in price compared with the prevailing international market price on the date of signing this CONTRACT provided that they have been timely ordered, the BUILDER may supply, subject to the BUYER’s prior approval in writing, other materials, machinery or equipment of equal quality and effect capable of meeting the requirements of the CLASSIFICATION SOCIETY and the rules, regulations and requirements with which the construction of the VESSEL must comply.
Furthermore, it is expressly agreed that should the BUILDER have to use any steel plate made in China they will only use steel plate produced by major Chinese steel mills used by Hyundai Heavy Industries Group. No Brazilian steel will be used for any of the structural parts of the VESSEL without the BUYER’s prior approval in its absolute discretion. All steel for the structural parts of the VESSEL to be provided in accordance with the CLASSIFICATION SOCIETY’s standards and approvals.
3.
CHANGES IN RULES AND REGULATIONS
If any requirements as to CLASSIFICATION SOCIETY or as to the specified rules and regulations with which the construction of the VESSEL is required to comply in Article I. 3. (a) are altered or changed by the CLASSIFICATION SOCIETY or other regulatory bodies authorized to make such alterations or changes, either the BUYER or the BUILDER, upon receipt of due notice thereof, shall forthwith give notice thereof to the other party in writing. Thereupon, within ten (10) working days after giving the notice to the BUILDER or receiving the notice from the BUILDER, the BUYER shall advise the BUILDER as to the alterations and changes, if any, to be made on the VESSEL which the BUYER, in its sole discretion, shall decide.
The BUILDER shall comply promptly with the said request of the BUYER, provided that the BUILDER and the BUYER shall first agree to:
(a)
any increase or decrease in the CONTRACT PRICE of the VESSEL that is occasioned by such compliance;
(b)
any extension or advancement in the Delivery Date of the VESSEL that is occasioned by such compliance;
19
(c)
any increase or decrease in the deadweight and/or cubic capacity of the VESSEL, if such compliance results in any increase or reduction in the deadweight and/or cubic capacity ;
(d)
adjustment of the guaranteed speed if such compliance results in any increase or reduction in the speed; and
(e)
any other alterations in the terms of this CONTRACT or of the SPECIFICATIONS or the PLAN or both, if such compliance makes such alterations of the terms necessary.
Any delay in the construction of the VESSEL caused by the BUYER’s delay in making a decision or agreement as above shall constitute a permissible delay under this CONTRACT. Such agreement by the BUYER shall be effected in the same manner as provided above for modification and change of the SPECIFICATIONS and the PLAN.
(End of Article)
20
ARTICLE VI:
TRIALS AND COMPLETION
GENERAL
The BUILDER shall carry out and run the tests and trials on the VESSEL in the manner and to the extent as described in the SPECIFICATIONS (and the trials schedule) and otherwise as may be required by the CLASSIFICATION SOCIETY.
1.
NOTICE
When the VESSEL is substantially complete and in a safe and fit state to proceed to sea, with all appropriate safety and lifesaving equipment onboard for the expected number of persons to be present, the BUILDER shall notify the BUYER in writing or by e-mail or facsimile at least fourteen (14) days in advance of the time and place of the trial run of the VESSEL. Such notice shall specify the Korean port from which the VESSEL will commence her trial run and approximate date upon which the trial run is expected to take place. Such date shall be further confirmed by the BUILDER five (5) days in advance of the trial run by e-mail or facsimile.
The BUYER’S REPRESENTATIVE(s), who is/are to witness the performance of the VESSEL during such trial run, shall be present at such place on the date specified in such notice. Should the BUYER’S REPRESENTATIVE(s) fail to be present after the BUILDER’s due notice to the BUYER as provided above, the BUILDER shall be entitled to conduct such trial run with the presence of the representative(s) of the CLASSIFICATION SOCIETY only without the BUYER’S REPRESENTATIVE(s) being present. In such case, the BUYER shall be obliged to accept the VESSEL on the basis of a certificate issued by the BUILDER that the VESSEL, after the trial run, subject to alterations and corrections, if necessary, has been found to conform with the SPECIFICATIONS and this CONTRACT and is satisfactory in all respects, provided the BUILDER first makes such corrections and alterations promptly.
2.
WEATHER CONDITION
In the event of unfavourable weather on the date specified for the trial run, the trial run shall take place on the first available day that weather conditions permit. The parties hereto recognize that the weather conditions in Korean waters, in which the trial run is to take place, are such that great changes in weather may arise momentarily and without warning and therefore, it is agreed that if, during the trial run, the weather should become so unfavourable that the trial run cannot be continued, then the trial run shall be discontinued and postponed until the first favourable day next following, unless the BUYER shall assent to the acceptance of the VESSEL by notification in writing on the basis of such trial run so far made prior to such change in weather conditions. Any delay of the trial run caused by such unfavourable weather conditions shall also operate to extend the Delivery Date of the VESSEL for the
21
period of delay occasioned by such unfavourable weather conditions. For the purposes of this paragraph 2, unfavourable weather conditions shall be taken as Beaufort Scale Force 6 and above.
3.
HOW CONDUCTED
All expenses in connection with the trials of the VESSEL are to be for the account of the BUILDER, which, during the trials, is to provide at its own expense the necessary crew to comply with conditions of safe navigation. The trials shall be conducted in the manner prescribed in this CONTRACT and the SPECIFICATIONS, and shall prove fulfillment of the performance requirements for the trials as set forth in the SPECIFICATIONS.
The BUILDER shall be entitled to conduct preliminary sea trials, during which the propulsion plant and/or its appurtenance shall be adjusted according to the BUILDER’s judgement. The BUILDER shall have the right to repeat any trial whatsoever as it deems necessary.
4.
CONSUMABLE STORES
The BUILDER shall load the VESSEL with the required quantity of fuel oil, lubricating oil and greases, fresh water, and other stores necessary to conduct the trials as set forth in the SPECIFICATIONS. The necessary ballast (fuel oil, fresh water and such other ballast as may be required) to bring the VESSEL to the trial load draft, as specified in the SPECIFICATIONS, shall be supplied and paid for by the BUILDER whilst lubricating oil and greases shall be supplied and paid for by the BUYER within the time advised by the BUILDER for the conduct of sea trials as well as for use before the delivery of the VESSEL to the BUYER. The fuel oil as well as lubricating oil and greases shall be in accordance with the engine specifications and the BUYER shall decide and advise the BUILDER of the supplier’s name for lubricating oil and greases prior to the steel cutting of the VESSEL, provided that the supplier shall be acceptable to the BUILDER and/or the makers of all the machinery.
Any fuel oil, fresh water or other consumable stores furnished and paid for by the BUILDER for trial runs remaining on board the VESSEL, at the time of acceptance of the VESSEL by the BUYER, shall be bought by the BUYER from the BUILDER at the BUILDER’s purchase price for such supply in Korea (with supporting invoices and documents provided) and payment by the BUYER thereof shall be made at the time of delivery of the VESSEL. The BUILDER shall pay the BUYER at the time of delivery of the VESSEL for the consumed quantity of lubricating oil and greases which were furnished and paid for by the BUYER at the BUYER’s purchase price thereof (with supporting invoices and documents provided).
The consumed quantity of lubricating oils and greases shall be calculated on the basis of the difference between the remaining amount, including the same remaining in the main engine, other machinery and their pipes, stern tube and the like, and the supplied amount.
22
5.
ACCEPTANCE OR REJECTION
(a)
Upon completion of sea trial, the BUILDER shall give the BUYER a notice in writing or by e-mail or telefax of the result of the sea trial, as and if the BUILDER considers that the result of sea trial indicates conformity of the VESSEL to this CONTRACT and the SPECIFICATIONS and PLAN.
(b)
The BUYER shall within four (4) working days after receipt of such notice notify the BUILDER in writing or by e-mail or telefax of its acceptance or rejection of the VESSEL, provided that in case of rejecting the VESSEL, the BUYER shall set out in its notice of rejection a detailed, clear explanation of all and any aspects of the VESSEL which it considers do not comply with this CONTRACT, the SPECIFICAITONS and/or the PLAN.
(c)
If the BUILDER is in agreement with the BUYER’s determinations as to non-conformity, the BUILDER shall make such alterations or changes as may be necessary to correct such non-conformity and shall prove the fulfillment of the CONTRACT and SPECIFICATIONS by such tests or trials as may be necessary. If the BUILDER is not in agreement with the BUYER’s determination as to non-conformity, each party shall be entitled to refer the disagreement for determination as per Article XIII.
(d)
The BUYER shall not be entitled to reject the VESSEL by reason of any minor or insubstantial items which do not in any way affect the safety or the operation of the Vessel judged from the point of view of the BUILDER’s shipbuilding practice for Crude Oil Carrier, as the BUILDER has been performing for its other clients and HSQM (Hyundai Shipbuilding Quality Manual) as not being in conformity with the SPECIFICATIONS, but, in that case, the BUILDER shall not be released from the obligation to correct and/or remedy for its own account such minor or insubstantial items as soon as practicable after the delivery of the VESSEL. If inconvenient for the VESSEL to have such items corrected and/or remedied at the SHIPYARD, the BUILDER shall arrange to have such corrections or remedies carried out elsewhere, and may, if practicable, do such work while the VESSEL is sailing. The BUYER may in its absolute discretion accept a payment in lieu of such items being corrected and/or remedied. Any payment in lieu shall be agreed in writing between the BUILDER and the BUYER.
(e)
If during any sea trial any breakdowns occur entailing interruption or irregular performance which can be repaired on board, the sea trial shall be continued after such repairs and be valid in all respects. However, if during the sea trial it becomes apparent that the VESSEL or any part of her equipment requires alterations or correction, the BUILDER shall notify the BUYER promptly in writing or by e-mail or telefax to such effect and shall simultaneously advise the BUYER of the estimated additional time
23
required for the necessary alterations or corrections to be made. The BUYER shall, within five (5) days of receipt from the BUILDER of notice of completion of such alterations or corrections and after such further trials or tests as necessary, notify the BUILDER in writing or by e-mail or telefax of its acceptance or rejection of the VESSEL, all in accordance with the SPECIFICATIONS, PLAN and the CONTRACT, and shall not be entitled to reject the VESSEL on such grounds until such time.
(End of Article)
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ARTICLE VII:
DELIVERY
1.
TIME AND PLACE
The VESSEL shall be delivered by the BUILDER to the BUYER at the SHIPYARD, safely afloat at a quay on or before September 9, 2016 (hereinafter called the “DELIVERY DATE”) after completion of satisfactory trials and acceptance by the BUYER in accordance with the terms of Article VI, except that, in the event of delays in delivery of the VESSEL by the BUILDER due to causes which under the terms of this CONTRACT permit extensions of the time for delivery of the VESSEL, the aforementioned DELIVERY DATE shall be extended accordingly.
The BUILDER shall provide the BUYER in writing by e-mail or telefax thirty (30) days approximate notice of readiness and fourteen (14), seven (7) and three (3) days definite notice of readiness for delivery of the VESSEL.
2.
WHEN AND HOW EFFECTED
Provided that the BUYER shall concurrently with delivery of the VESSEL release to the BUILDER the fifth instalment as set forth in Article X.2.hereofand shall have fulfilled all of its obligations provided for in this CONTRACT (as it may have been amended from time to time) prior to the delivery of the VESSEL, delivery of the VESSEL shall be forthwith effected upon acceptance thereof by the BUYER, as hereinabove provided, by the concurrent delivery by each of the parties hereto to the other of a PROTOCOL OF DELIVERY AND ACCEPTANCE acknowledging delivery of the VESSEL by the BUILDER and acceptance thereof by the BUYER, which PROTOCOL shall be prepared induplicate and signed by each of the parties hereto.
3.
DOCUMENTS TO BE DELIVERED TO THE BUYER
Upon delivery and acceptance of the VESSEL, the BUILDER shall deliver to the BUYER the following documents, which shall accompany the aforementioned PROTOCOL OF DELIVERY AND ACCEPTANCE:
(a)
PROTOCOL OF TRIALS of the VESSEL made pursuant to this CONTRACT and the SPECIFICATIONS,
(b)
PROTOCOL OF INVENTORY of the equipment of the VESSEL, including spare parts, all as specified in the SPECIFICATIONS,
25
(c)
PROTOCOL OF STORES OF CONSUMABLE NATURE, such as all fuel oil and fresh water remaining in tanks if its cost is charged to the BUYER under Article VI. 4. hereof,
(d)
FINISHED DRAWINGS AND PLANS pertaining to the VESSEL as stipulated in the SPECIFICATIONS, which shall be furnished to the BUYER at no additional cost,
(e)
ALL CERTIFICATES required to be furnished upon delivery of the VESSEL pursuant to this CONTRACT, the SPECIFICATIONS and the customary shipbuilding practice, including
(i)
Classification Certificate
(ii)
Safety Construction Certificate
(iii)
Safety Equipment Certificate
(iv)
Safety Radiotelegraphy Certificate
(v)
International Loadline Certificate
(vi)
International Tonnage Certificate
(vii)
BUILDER’s Certificate
(duly notarized and legalized)
(viii)
Ship Sanitation Control Exemption Certificate
(ix)
Classification Certificate for anchor, chains and mooring ropes, machinery and equipment
(x)
Certificate for life-boats and life saving equipments
(xi)
Certificates for navigation lights and special signal lights
(xii)
International Oil Pollution Prevention Certificate
(xiii)
Compass adjustment Certificate
(xiv)
Suez Canal Tonnage Certificate
(xv)
Deadweight Certificate
(xvi)
Certificate for Provision Crane, Hose Handling Crane and Engine Room Crane
(xvii)
International Air Pollution Prevention Certificate
(xviii)
Coating Technical File
(xix)
International Sewage Pollution Certificate
(xx)
Class approved Loading Manual
(xxi)
Certified Cargo oil tanks calibration
(xxii)
Ballast Management Certificate
(xxiii)
Emergency Towing System
(xxiv)
Engine Technical File (NOx)
(xxv)
Load Test certificates for all designated lifting lugs / points installed (more than 3.0 ton S.W.L) (issued by the BUILDER)
The above list of Certificates and Documents is indicative and may possibly not include all the Required Certificates and Documents for the VESSEL as she is specified in her CLASSIFICATION notation to conduct unrestricted trade. However it is agreed that all
26
the required CLASSIFICATION SOCIETY and Statutory Certificates and Documents should be furnished by the BUILDER to the BUYER.
All certificates or relevant documents which are to be duly notarized and legalized shall be agreed between the parties prior to delivery. All certificates to be delivered in one (1) original and two (2) copies to the BUYER.
If any Certificate, Drawing, Plan, Diagram or other documents referred to in this Article, through no fault on the part of BUILDER, cannot be provided upon delivery and if the absence thereof does not impede the navigation or management of the VESSEL and/or constitute a breach of the statutory requirements of the flag state, of the VESSEL or the requirements of the CLASSIFICATION SOCIETY, a provisional/interim certificate shall be acceptable by the BUYER provided the formal Certificate, Drawing, Plan, Diagram or other document be delivered as soon as practicable after delivery of the VESSEL.
(f)
DECLARATION OF WARRANTY of the BUILDER that the VESSEL is delivered to the BUYER free and clear of any liens, claims, mortgages, or other encumbrances upon the BUYER’s title thereto, and in particular, that the VESSEL is absolutely free of all burdens in the nature of imposts, taxes, or charges imposed by the prefecture or country of the port of delivery, as well as of all liabilities of the BUILDER to its sub-contractors and employees and of all liabilities arising from the operation of the VESSEL in trial runs, or otherwise, prior to delivery except as otherwise provided under this CONTRACT.
(g)
COMMERCIAL INVOICE made by the BUILDER.
(h)
BILL OF SALE made by the BUILDER.
4.
TENDER OF THE VESSEL
If the BUYER fails to take delivery of the VESSEL after completion thereof according to this CONTRACT and the SPECIFICATIONS, the BUILDER shall have the right to tender delivery of the VESSEL after compliance with all procedural requirements as provided above.
5.
TITLE AND RISK
Title to and risk of the VESSEL and her equipment (but excluding the BUYER’s supplies) shall pass to the BUYER upon Delivery and Acceptance of the VESSEL being effected as stated above and the BUILDER shall be free of all responsibility or liability whatsoever related with this CONTRACT except for the warranty of quality contained in Article IX and the obligation to correct and/or remedy, as provided in Article VI. 5(d), if any. It is expressly understood between the parties hereto that, until such Delivery and Acceptance is effected, the
27
VESSEL and equipment thereof are at the entire risk of the BUILDER including but not confined to, risks of war, insurrection and seizure by Governments or Authorities, whether Korean or foreign, and whether at war or at peace. The title to the BUYER’s supplies as provided in Article XII shall remain with the BUYER and the BUILDER’s responsibility for such BUYER’s supplies shall be as described in Article XII.2.
6.
REMOVAL OF THE VESSEL
The BUYER shall take possession of the VESSEL immediately upon Delivery and Acceptance thereof and shall remove the VESSEL from the SHIPYARD within three (3) working days after Delivery and Acceptance thereof is effected.
From the delivery of the VESSEL until the actual removal thereof from the SHIPYARD, the BUYER shall be responsible for the safety and preservation of the VESSEL in all respects, including without limitation, keeping the VESSEL insured at his own cost, and furthermore, the BUYER shall indemnify and hold the BUILDER free and harmless against any liability or claims including without limitation, the claims of his insurers arising out of any accident whatsoever , unless caused by the gross negligence or willful misconduct of the BUILDER, his employee or agent.
Port dues and other charges levied by the Korean Government Authorities after Delivery and Acceptance of the VESSEL and any other costs related to the removal of the VESSEL shall be borne by the BUYER.
(End of Article)
28
ARTICLE VIII:
DELAYS AND EXTENSIONS OF TIME (FORCE MAJEURE)
1.
CAUSES OF DELAY
If, at any time after signing this CONTRACT, either the construction or delivery of the VESSEL or any performance required hereunder as a prerequisite to the delivery thereof is delayed by any of the following events: namely war, acts of state or government, blockade, revolution, insurrections, mobilization, civil commotion, riots, strikes, sabotage, lockouts, Acts of God or the public enemy, plague or other epidemics, quarantines, shortage or prolonged failure of electric current, freight embargoes, or defects in major forgings or castings, delays or defects in the BUYER’s supplies as stipulated in Article XII, if any, or shortage of materials, machinery or equipment or inability to obtain delivery or delays in delivery of materials, machinery or equipment, provided that at the time of ordering the same could reasonably be expected by the BUILDER to be delivered in time or defects in materials, machinery or equipment which could not have been detected by the BUILDER using reasonable care or earthquakes, tidal waves, typhoons, hurricanes, prolonged or unusually severe weather conditions or destruction of the premises or works of the BUILDER or its sub-contractors, or of the VESSEL, or any part thereof, by fire, landslides, flood, lightning, explosion, or delays in the BUILDER’s other commitments resulting from any such causes as described in this Article which in turn directly delay the construction of the VESSEL or the BUILDER’s performance under the CONTRACT (the BUILDER treating this CONTRACT not less favorably than other commitments), or delays caused by the CLASSIFICATION SOCIETY or the BUYER’s faulty action or omission, or other causes beyond the control of the BUILDER, or its sub-contractors, as the case may be, then in the event of delays due to the happening of any of the aforementioned contingencies, the DELIVERY DATE of the VESSEL under this CONTRACT shall be extended for a period of time which shall not exceed the total accumulated time of all such delays provided however that:
(i)
the delay in respect of which the BUILDER is claiming relief was beyond its reasonable control or that of its employees, suppliers and subcontractors and was not caused or contributed to by any error, neglect, act or omission of the BUILDER or of its agents, employees or subcontractors, nor by any breach of this CONTRACT;
(ii)
the delay impacts upon the Vessel’s construction schedule and completion;
(iii)
the BUILDER has shown due diligence in choice of sub-contractor; and
(iv)
the BUILDER has taken all reasonable steps to mitigate its effect upon the construction of the VESSEL,
29
For the avoidance of doubt, where two delay events as described in this paragraph 1(a) occur simultaneously or overlap with each other, such delays caused by such events shall not be double-counted.
2.
NOTICE OF DELAYS
Within seven (7) days after commencement of any delay on account of which the BUILDER claims that it is entitled under this CONTRACT to an extension of the DELIVERY DATE of the VESSEL, excluding delays due to arbitration, the BUILDER shall advise the BUYER in writing or by e-mail or facsimile of the date such delay commenced, the reasons thereof and, if possible, its estimated duration of the probable delay in the delivery of the VESSEL, and shall supply the BUYER if reasonably available with evidence to justify the delay claimed. Within seven (7) days after such cause of delay ends, the BUILDER shall likewise advise the BUYER in writing or by e-mail or facsimile of the date that such cause of delay ended, and also, shall specify the period of time by which the BUILDER claims the DELIVERY DATE should be extended by reason of such delay. Failure of the BUYER to object to the BUILDER’s notification of any claim for extension of the date for delivery of the VESSEL within seven (7) days after receipt by the BUYER of such notification shall be deemed to be a waiver by the BUYER of its right to object to such extension of the DELIVERY DATE.
Failure of the BUILDER to give notice of any relevant delay event in accordance with this paragraph 2 shall be deemed a waiver of the BUILDER’s right to postpone the DELIVERY DATE under this Article VIII in respect of such relevant delay event.
3.
RIGHT TO CANCEL FOR EXCESSIVE DELAY
If the total accumulated time of all permissible and non-permissible delays, excluding delays due to (i) arbitration under Article XIII.7, (ii) the BUYER’s defaults under Article XI.1 and XI.2., (iii) modifications and changes under Article V.1 and V.3 or (iv) delays or defects in the BUYER’s supplies as stipulated in Article XII.1, aggregates two hundred and sixty (260) days or more (inclusive of the thirty (30) days grace period as per Article III.1.(a)), then, the BUYER may, at any time thereafter, cancel this CONTRACT by giving a written notice of cancellation to the BUILDER. Such cancellation shall be effective as of the date the notice thereof is received by the BUILDER and the BUILDER, upon receipt of such notice, and upon the BUYER’s demand, shall refund in accordance with the provisions of Article X.5 hereof all payments made to the BUILDER by the BUYER.
If the BUYER has not served the notice of cancellation as provided in the above or Article III.1 hereof, the BUILDER may, at any time after expiration of the accumulated time of the delay in delivery, either two hundred and sixty (260) days in case of the delays referred to in this Paragraph 3 or two hundred and ten (210) days in case of the delay in Article III.1, notify
30
the BUYER of the future date upon which the BUILDER estimates the VESSEL will be ready for delivery and demand in writing or by e-mail or facsimile that the BUYER make an election either to cancel this CONTRACT or to consent to the delivery of the VESSEL at such future date, in which case the BUYER shall, within seven (7) business days after receipt of such demand, make and notify the BUILDER of such election. If the BUYER elects to consent to the delivery of the VESSEL at such future date (or other future date as the parties may agree):
(a)
Such future date shall become the contractual delivery date for the purposes of this CONTRACT and shall be subject to extension by reason of permissible delays as herein provided, and
(b)
If the VESSEL is not delivered by such revised contractual delivery date (as extended by reason of permissible delays), the BUYER shall have the same right of cancellation upon the same terms as provided in the above and Article III. 1.
If the BUYER shall not make an election within seven (7) business days as provided hereinabove, the BUYER shall be deemed to have accepted such extension of the DELIVERY DATE to the future delivery date indicated by the BUILDER.
4.
DEFINITION OF PERMISSIBLE DELAYS
Delays on account of the foregoing causes specified in Paragraph 1 above shall be understood to be permissible delays, and are to be distinguished from non-permissible unauthorized delays on account of which the CONTRACT PRICE of the VESSEL is subject to adjustment as provided in Article III hereof.
(End of Article)
31
ARTICLE IX:
WARRANTY OF QUALITY
1.
GUARANTEEOF MATERIAL AND WORKMANSHIP
Subject to the provisions hereinafter set forth, the BUILDER undertakes to remedy, free of charge to the BUYER, any defective design, construction, material and/or workmanship
and/or negligent or other improper acts or omissions
(hereinafter called the “DEFECT(S)”) on the part of the BUILDER and/or its sub-contractors, provided that the defect is discovered within a period of twelve (12) months after the date of delivery of the VESSEL and a notice thereof is duly given to the BUILDER as hereinafter provided.
For the purpose of this Article the VESSEL shall include her hull, machinery and equipment, painting and coatings thereof but shall exclude any parts for the VESSEL which have been supplied by or on behalf of the BUYER under Article XII.
The BUILDER agrees that upon the expiry of this guarantee it shall assign (to the extent to which it may validly do so and such supplier guarantee extends beyond
twelve (
12
)
months after the date of delivery of the VESSEL) to the BUYER, all rights, title and interest that the BUILDER may have in and to all guarantees or warranties given by the supplier of any of the appurtenances and materials used in the construction and/or operation of the VESSEL, unless such assignment is against Korean law.
2.
NOTICE OF DEFECTS
The BUYER shall notify the BUILDER in writing or by e-mail or facsimile, of any DEFECTS for which claim is made under this guarantee as promptly as possible after discovery thereof. The BUYER’s written notice shall include full particulars to describe the nature and extent of the DEFECTS. The BUILDER shall have no obligation for any DEFECTS discovered prior to the expiry date of the said twelve (12) months period, unless notice of such DEFECTS is received by the BUILDER no later than seven (7) business days after such expiry date.
3.
REMEDY OF DEFECTS
(a)
The BUILDER shall remedy, at its expense, any DEFECT against which the VESSEL or any part of the machinery or equipment thereof is guaranteed under this Article IX, by making all necessary repairs or replacements at the SHIPYARD or elsewhere as provided for in (b) hereinbelow.
(b)
However, if it is impractical to bring the VESSEL to the SHIPYARD, the BUYER may cause the necessary repairs or replacements to be made elsewhere which is deemed
32
suitable for the purpose, provided that, in such event, the BUILDER may forward or supply replacement parts or materials to the VESSEL, unless forwarding or supplying thereof to the VESSEL would impair or delay the operation or working schedule of the VESSEL. In the event that the BUYER proposes to cause the necessary repairs or replacements to be made to the VESSEL at any other shipyard or works than the SHIPYARD, the BUYER shall first, but in all events as soon as possible, give the BUILDER notice in writing or by e-mail or facsimile of the time and place such repairs will be made, and if the VESSEL is not thereby delayed, or her operation or working schedule is not thereby impaired, the BUILDER shall have the right to verify by its own representative(s) the nature and extent of the DEFECTS complained of. The BUILDER shall in such case, promptly advise the BUYER in writing or by e-mail or facsimile, after such examination has been completed, of its acceptance or rejection of the DEFECTS as ones that are covered by the guarantee herein provided. Upon the BUILDER’s acceptance of the DEFECTS as justifying remedy under this Article IX, or upon the award of the arbitration tribunal so determining, or if the BUILDER neither accepts nor rejects the defects nor requests arbitration within sixty (60) days after its receipt of the BUYER’s notice of defects, the BUILDER shall pay to the BUYER for such repairs or replacements a sum equal to the actual direct cost of the repairs or replacements, as evidenced in United States Dollars by the final invoices of the relevant shipyard/repairer or supplier, however, the amount of the BUILDER’s payment to the BUYER for such repairs or replacements shall not exceed the average cost quoted by two reputable repair yards in Singapore.
(c)
In any case, the VESSEL shall be taken at the BUYER’s costs and responsibility to the place elected, ready in all respects for such repairs or replacements and in any event, the BUILDER shall not be responsible for towage, dockage, wharfage, port charges or any other cost or expenses whatsoever incurred by the BUYER in getting and keeping the VESSEL ready for such repairs or replacements.
(d)
In the event that it is necessary for the BUILDER to forward a replacement for a defective part under this guarantee, replacement parts shall be shipped to the BUYER under the terms of C.I.F. port designated by the BUYER.
(e)
The BUILDER reserves the option to retrieve, at the BUILDER’s cost, any of the replaced equipment/parts in case DEFECTS are remedied in accordance with the provisions in this Article IX.
(f)
Any dispute under this Article IX shall be referred to arbitration in accordance with the provisions of Article XIII hereof.
(g)
In case any amount, which the BUILDER should pay to the BUYER for a single claim in accordance with this Article, is over US$100,000, then the BUILDER shall immediately
33
pay to the BUYER such amount.
4.
EXTENT OF BUILDER’S RESPONSIBILITY
(a)
After delivery of the VESSEL the BUILDER shall have no responsibility for any other DEFECTS whatsoever in the VESSEL than the DEFECTS specified in paragraph 1 of this Article IX and Article VI. 5(d). The BUILDER shall have no liability whatsoever in any circumstances whatsoever to the BUYER or to any third party for anything except the cost of repairing the DEFECT itself. The BUILDER shall not in any circumstances be responsible or liable for any consequential or special losses, damages or expenses including, but not limited to, loss of time, loss of profit or earning or demurrage directly or indirectly occasioned to the BUYER or any third party by reason of the DEFECTS specified in paragraph 1 of this Article or due to repairs or other works done to the VESSEL to remedy such DEFECTS or any other consequential or special losses, damages or expenses related to any liability, cost or expense whatsoever or howsoever arising in connection with any damage to the VESSEL or to any cargo or to any other property owned by the BUYER or any third party caused as a result of the DEFECT and after delivery the BUYER shall hold the BUILDER harmless and indemnify the BUILDER against any such claim from the BUYER or any third party whatsoever in respect of any such matters and in respect of any other claims relating to the VESSEL for which the BUILDER does not expressly give an warranty to the BUYER under this Article.
(b)
The BUILDER shall not be responsible for any DEFECTS in any part of the VESSEL which may subsequent to delivery of the VESSEL have been replaced or in any way repaired by any persons other than the BUILDER and/or its nominated sub-contractors, or for any DEFECTS which have been caused or aggravated by omission or improper use and maintenance of the VESSEL on the part of the BUYER, its servants or agents or by ordinary wear and tear or by any other circumstances beyond the control of the BUILDER.
(c)
The guarantee contained as hereinabove in this Article replaces and excludes any other liability, guarantee, warranty and/or condition whether expressly set out in this CONTRACT or imposed or implied by the law, customary, statutory or otherwise, by reason of the construction and sale of the VESSEL by the BUILDER for and to the BUYER.
Any major parts or materials (including painting or coating) replaced during the Guarantee Period under Paragraph 1 of this Article shall be guaranteed for a further twelve (12) months, but not more than eighteen (18) months from delivery of the VESSEL.
(End of Article)
34
ARTICLE X:
PAYMENT
1.
CURRENCY
All payments under this CONTRACT shall be made in United States Dollars.
2.
TERMS OF PAYMENT
The payments of the CONTRACT PRICE shall be made as follows.
(a)
First Instalment
Twenty percent (20%) of the CONTRACT PRICE amounting to U.S.Dollars Twenty Million Two Hundred Sixty Two Thousand Fifty Eight (US$ 20,262,058) shall be paid within three (3) business days after the BUYER’s receipt of the Letter of Guarantee via SWIFT, duly issued in accordance with Paragraph 8 of this Article.
Under this CONTRACT, in counting the business days, only Saturdays and Sundays are excepted. When a due date falls on a day when banks are not open for business in any of New York, London, Singapore or Seoul, such due date shall fall due upon the first business day next following.
(b)
Second Instalment
Ten per cent (10%) of the CONTRACT PRICE amounting to U.S.Dollars Ten Million One Hundred Thirty One Thousand Thirty (US$ 10,131,030) shall be paid on the date falling six (6) months from the date of signing this CONTRACT.
(c)
Third Instalment
Ten per cent (10%) of the CONTRACT PRICE amounting to U.S.Dollars Ten Million One Hundred Thirty One Thousand Thirty (US$ 10,131,030) shall be paid within three (3) business days of receipt by the BUYER of a facsimiled or emailed advice from the BUILDER that first steel cutting of the VESSEL has been commenced and confirmed in writing by the CLASSIFICATION SOCIETY. Such steel cutting to take place not more than twelve (12) months prior to the DELIVERY DATE.
(d)
Fourth Instalment
Ten per cent (10%) of the CONTRACT PRICE amounting to U.S.Dollars Ten Million One Hundred Thirty One Thousand Thirty (US$ 10,131,030) shall be paid within
35
three (3) business days of receipt by the BUYER of a facsimiled or emailed advice from the BUILDER that the first block of the keel has been laid and confirmed in writing by the CLASSIFICATION SOCIETY. Such keel laying to take place not more than eight (8) months prior to the DELIVERY DATE.
(e)
Fifth Instalment
Fifty
per cent (
50
%) of the CONTRACT PRICE amounting to U.S.Dollars
Fifty Million Six Hundred Fifty Five Thousand One Hundred Forty Six
(US$
50,655,146
) plus or minus any increase or decrease due to modifications and/or adjustment, if any, arising prior to delivery of the VESSEL of the CONTRACT PRICE under Articles III and V of this CONTRACT shall be paid to the BUILDER concurrently with the delivery and acceptance of the VESSEL, as evidenced by the execution by the parties of the Protocol of Delivery and Acceptance referred to in Article VII of the C
ONTRACT
. The BUILDER shall send to the BUYER a commercial invoice as demand for payment of this instalment.
(The date stipulated for payment of each of the five instalments mentioned above is hereinafter in this Article and in Article XI referred to as the “DUE DATE” of that instalment).
It is understood and agreed upon by the BUILDER and the BUYER that all payments under the provisions of this Article shall not be delayed or withheld by the BUYER due to any dispute or disagreement of whatsoever nature arising between the BUILDER and the BUYER. Should there be any dispute in this connection, the matter shall be dealt with in accordance with the provisions of arbitration in Article XIII hereof.
3.
DEMAND FOR PAYMENT
At least fourteen(14) days prior to the date of each event provided in Paragraph 2 of this Article X on which any payment shall fall due hereunder, with the exception of the payment of the first instalment, the BUILDER shall notify the BUYER by e-mail or facsimile of the date such payment shall become due.
The BUYER shall immediately acknowledge receipt of such notification by e-mail or facsimile to the BUILDER, and make payment as set forth in this Article. If the BUILDER fails to receive the BUYER’s said acknowledgement within three (3) days after sending the aforementioned notification, the BUILDER shall promptly e-mail or facsimile to the BUYER a second notification of similar import. The BUYER shall immediately acknowledge by e-mail or facsimile receipt of the foregoing second notification regardless of whether or not the first notification was acknowledged as aforesaid.
36
4.
METHOD OF PAYMENT
(a)
All the pre-delivery payments and the payment due on delivery in settlement of the CONTRACT PRICE as provided for in Paragraph 2 of this Article shall be made in U.S. Dollars on or before the DUE DATE thereof by telegraphic transfer as follows:
(i)
The payment of the first, second, third, and fourth instalments shall be made to the account of
Industrial Bank of Korea, Head Office, Seoul, Korea (hereinafter called “IBK”), Account No. 001-1-544566 at JP Morgan Chase Bank,
1 Chase Manhattan Plaza 10th FL
,
New York, NY 10081, USA
(hereinafter called “JPMCB, N.Y.”) in favour of
Hyundai
Heavy Industries Co., Ltd.
(hereinafter called the “
HHI
”)
under advice by telefax or telex, including swift, to IBK by the remitting Bank. If the BUILDER should wish to nominate an alternative bank, the designation, the account number, identity of account holder and name of such account bank shall be notified by the BUILDER to the BUYER at least five (5) business days prior to the DUE DATE.
(ii)
Upon the cost adjustment to the C
ONTRACT PRICE
in accordance with the provisions of the C
ONTRACT
, the fifth
)
instalment as provided for in Paragraph 2.(e) of this Article shall be deposited at the account of
IBK, Account No. 001-1-544566 at JPMCB, N.Y., or any other bank, Seoul, Korea as designated by the BUILDER, by the BUYER in favour of HHI
at least
three (3)
business days prior to the scheduled delivery date of the VESSEL notified by the BUILDER, with instructions valid for a period of twelve (12) business days that the
said instalment is
payable to the
HHI
against presentation by the BUILDER to
IBK, or any other bank, Seoul, Korea as the case may be,
of a copy of the original PROTOCOL OF DELIVERY AND ACCEPTANCE of the VESSEL signed by the BUILDER and the BUYER, together with an invoice for the amount due under this instalment.
(iii)
If the BUILDER fails to present a copy of the PROTOCOL OF DELIVERY AND ACCEPTANCE to the Bank within the said period of twelve (12)
business
days or unless the validity of the instruction is further extended by the BUYER based on mutual agreement in writing reached with the BUILDER within the said twelve (12)
business
days validity period, the BUILDER’s bank shall remit the said amount of the fifth instalment to the BUYER’s bank account immediately upon expiry of the initial twelve (12)
business
days validity period of the instruction. Interest, if any, accrued by such deposit shall be for BUYER’s account.
In the event of the fifth instalment having been so returned by the Bank to the BUYER, the BUYER shall remit the fifth instalment again to the Bank as laid down
37
in this paragraph upon receipt of a further notice from the Builder for readiness of the Vessel for delivery.
(b)
Simultaneously with each of such payments, the BUYER shall advise the BUILDER of the details of the payments by e-mail or facsimile and at the same time, the BUYER shall cause the BUYER’s remitting Bank to advise
IBK, or any other bank, Seoul, Korea as the case may be,
of the details of such payments by authenticated SWIFT
,
bank cable or telex.
5.
REFUND
BY THE BUILDER
(a)
The payments made by the BUYER to the BUILDER prior to delivery of the VESSEL shall constitute advances to the BUILDER. If the VESSEL is rejected by the BUYER in accordance with the terms of this CONTRACT or, except in the case of rescission or cancellation of this CONTRACT by the BUILDER under the provisions of Article XI.1 hereof, if the BUYER terminates, cancels or rescinds this CONTRACT pursuant to any of the provisions of this CONTRACT specifically permitting the BUYER to do so, the BUILDER shall forthwith refund to the BUYER, in U.S. Dollars, the full amount of total sums paid by the BUYER to the BUILDER in advance of delivery together with interest thereon as herein provided without deduction, set-off or withholding in US dollars.
(b)
The transfer and other bank charges of such refund shall be for the BUILDER’s account. The interest rate of the refund, as above provided, shall be
Six
per cent (
6
%) per annum from the date following the date of receipt by the BUILDER of the pre-delivery instalment(s) to the date of remittance by telegraphic transfer of such refund, provided, however, that if the cancellation of this CONTRACT by the BUYER is based upon delays due to Force Majeure or other causes beyond the control of the BUILDER as provided for in Article VIII.1 hereof, then in such event, the interest rate of refund shall be reduced to Four per cent (4%) per annum for the periods affected by such delays.
(c)
It is hereby understood by both parties that payment of any interest provided herein is by way of liquidated damages due to cancellation of this CONTRACT and not by way of compensation for use of money.
(d)
If, the BUILDER is required to refund to the BUYER the instalments paid by the BUYER to the BUILDER as provided in this Paragraph 5, the BUILDER shall return to the BUYER all of the BUYER’s supplies as stipulated in Article XII which were not incorporated into the VESSEL and pay to the BUYER an amount equal to the cost to the BUYER of those supplies incorporated into the VESSEL.
38
6.
TOTAL
LOSS
If there is a total loss or a constructive total loss of the VESSEL prior to delivery thereof, the BUILDER shall proceed according to the mutual agreement of the parties hereto either:
(a)
to build another vessel in place of the VESSEL so lost and deliver it under this CONTRACT to the BUYER, provided that the parties hereto shall have agreed in writing to a reasonable cost and time for the construction of such vessel in place of the lost VESSEL; or
(b)
to refund to the BUYER the full amount of the total sums paid by the BUYER to the BUILDER under the provisions of Paragraph 2 of this Article together with interest thereon at the rate of Four per cent (4%) per annum from the date following the date of receipt by the BUILDER of such pre-delivery instalment(s) to the date of payment by the BUILDER to the BUYER of the refund.
(c)
If the parties hereto fail to reach such agreement within two (2) months after the VESSEL is determined to be a total loss or constructive total loss, the provisions of (b) hereinabove shall be applied.
7.
DISCHARGE
OF OBLIGATIONS
Such refund as provided in the foregoing Paragraphs 5 and 6 by the BUILDER to the BUYER shall forthwith discharge all the obligations, duties and liabilities of each of the parties hereto to the other
(other than any obligations of the BUYER in respect of facilities afforded to the BUYER’s REPRESENTATIVE)
under this CONTRACT. Any and all refunds or payments due to the BUYER under this CONTRACT shall be made by telegraphic transfer to the account specified by the BUYER.
8.
REFUND
GUARANTEE
The BUILDER shall, within thirty (30) days following the execution of this CONTRACT, furnish the BUYER (and prior to the payment of the first instalment) with an assignable letter of guarantee issued by
IBK via SWIFT
for the assurance of and as security for the refund of the pre-delivery instalments under or pursuant to Paragraph 5 and/or Paragraph 6 above plus interest accrued thereon in accordance with this CONTRACT in the form and substance as annexed hereto as Exhibit “A”.
All expenses in issuing and maintaining the letter of guarantee described in this Paragraph shall be borne by the BUILDER.
39
If the BUILDER fails to provide the Refund Guarantee within thirty (30) days after the date of this CONTRACT, the BUYER shall be entitled to terminate this Contract with immediate effect by written notice to the BUILDER.
(End of Article)
40
ARTICLE XI:
BUYER’S DEFAULT
1.
DEFINITION
OF DEFAULT
The BUYER shall be deemed to be in default under this CONTRACT in the following cases:
(a)
If the first, second, third or fourth instalment is not paid to the BUILDER within the respective DUE DATE of such instalments; or
(b)
If the fifth instalment is not deposited in accordance with Article X.4.(a)(ii) hereof or if the said fifth instalment deposit is not released to the BUILDER against presentation by the BUILDER of a copy of the original PROTOCOL OF DELIVERY AND ACCEPTANCE; or
(c)
If the BUYER fails to take delivery of the VESSEL when the VESSEL is duly tendered for delivery by the BUILDER under the provisions of Article VII hereof; or
(d)
If an order or an effective resolution shall be passed for winding up of the BUYER (except for the purpose of reorganization, merger or amalgamation); or
In case the BUYER is in default as set out in Paragraph 1 above, the BUILDER is entitled to and shall have the following rights, powers and remedies in addition to such other rights, powers and remedies as the BUILDER may have elsewhere in this CONTRACT and/or at law, at equity or otherwise.
2.
EFFECT
OF THE BUYER’S DEFAULT ON OR BEFORE THE DELIVERY OF
THE
VESSEL
If the BUYER shall be in default
of its obligations under this CONTRACT
as provided in Paragraph 1 above, then;
(a)
The DELIVERY DATE of the VESSEL shall be extended automatically for the actual period of such default and the BUILDER shall not be obliged to pay any liquidated damages for the delay in delivery of the VESSEL caused thereby.
(b)
The BUYER shall pay to the BUILDER interest at the rate of
Six
percent (
6
%) per annum in respect of the instalment(s) in default from the respective DUE DATE to the date of actual receipt by the BUILDER of the full amount of such instalment(s).
(c)
If the BUYER is in default in payment of any of the instalment(s) due and payable prior to or simultaneously with the delivery of the VESSEL, the BUILDER shall, in writing or by
41
e-mail or facsimile, notify the BUYER to that effect, and the BUYER shall, upon receipt of such notification, forthwith acknowledge in writing or by facsimile to the BUILDER that such notification has been received.
(d)
If any of the BUYER’s default continues for a period o
f fourteen
(
14
) days after the BUILDER’s notification to the BUYER of such default, the BUILDER may, at its option, rescind this CONTRACT by serving upon the BUYER a written notice or e-mail or facsimile notice of rescission confirmed in writing.
(e)
In the event of such cancellation by the BUILDER of this CONTRACT due to the BUYER’s default as provided for in paragraph 1 above, the BUILDER shall
be entitled to retain and apply the instalments already paid by the BUYER to the recovery of the BUILDER’s proven loss and damage including reasonable estimated profit (in relation to this CONTRACT) due to the BUYER’s default and the cancellation of this CONTRACT and at the same time the BUILDER shall
have the full right and power either to complete or not to complete the VESSEL which is the sole property of the BUILDER as it deems fit, and to sell the VESSEL at a public or private sale on such terms and conditions as the BUILDER thinks fit
without being answerable for any loss and damage. However
the BUILDER shall exercise normal commercial diligence to secure the market price obtainable for a sale in such circumstances; and
(f)
The proceeds received by the BUILDER from the sale shall be applied in addition to the instalment(s) retained by the BUILDER as mentioned hereinabove as follows :
First, in payment of all reasonable costs and expenses of the sale of the VESSEL, including interest thereon at
Six
per cent (
6
%) per annum from the respective date of payment of such costs and expenses aforesaid to the date of sale on account of the BUYER’s default.
Second, if the VESSEL has been completed, in or towards satisfaction of the unpaid balance of the CONTRACT PRICE, to which shall be added the cost of all additional work and extras agreed by the BUYER including interest thereon at
Six
per cent (
6
%) per annum from the respective DUE DATE of the instalment in default to the date of sale, or if the VESSEL has not been completed, in or towards satisfaction of the unpaid amount of the cost incurred by the BUILDER prior to the date of sale on account of construction of the VESSEL, including work, labour, materials and reasonably estimated profit which the BUILDER would have been entitled to receive if the VESSEL had been completed and delivered plus interest thereon at
Six
per cent (
6
%) per annum from the respective DUE DATE of the instalment in default to the date of sale.
Third, the balance of the proceeds, if any, shall belong to the BUYER, and shall forthwith
42
be paid over to the BUYER by the BUILDER.
In the event of the proceeds from the sale together with instalment(s) retained by the BUILDER being insufficient to pay the BUILDER, the BUYER shall be liable for the deficiency and shall pay the same to the BUILDER upon its demand.
3.
DEFINITION OF BUILDER’S DEFAULT
The BUILDER shall be deemed to be in default of its obligations under this CONTRACT in the event of:
(i)
The filing of a petition or the making of an order or the passing of an effective resolution for the winding up of the BUILDER (other than for the purpose of reconstruction or amalgamation which has been previously approved in writing by the BUYER), or the appointment of a receiver, administrator, compulsory manager, trustee, liquidator or other similar officer has been made against the BUILDER or any of its assets under the laws of any jurisdiction or the appointment of a receiver of the undertaking or property of the BUILDER, or the insolvency of or a suspension of payments by the BUILDER, or the cessation of the carrying on of business by the BUILDER at any of its shipyards, or the making by the BUILDER of any special arrangement or composition with the creditors of the BUILDER; or any like or similar circumstance occurring under the laws of the Republic of Korea; or
(ii)
The occurrence of any of the events set out in (i) with respect to the bank issuing the Letter of Guarantee referred to in Article X.5, and the failure by the BUILDER within sixty (60) days thereof to replace such bank with an alternative guarantor reasonably acceptable to the BUYER and its bank; or
(iii)
Where the
BUILDER
:
(a)
remains in default of performance of any obligation or provision of the CONTRACT fourteen (14) days after receiving written notice from the BUYER that the BUILDER is in default; or
(b)
fails, neglects, refuses or is unable during the course of the construction of the VESSEL to provide materials, equipment, services or labour to perform the construction in accordance with the SPECIFICATIONS, the PLAN, and this CONTRACT prior to the date on which the BUYER shall be entitled to cancel this CONTRACT for delay.
43
4.
EFFECT OF BUILDER’S DEFAULT
If any such default as referred to in Paragraph3 above occurs, then the BUYER may terminate this CONTRACT by promptly notifying the BUILDER in writing but not later than two (2) weeks from the date of the BUILDER’s default takes place or after the period to remedy it has expired. Such cancellation is to be effective as of the date when such notice of cancellation is received by the BUILDER and the provisions of Article X. 5 shall apply in respect of such termination. In any event the BUYER shall be entitled to pursue such claims and remedies as it may elect subject to the applicable law.
(End of Article)
44
ARTICLE
XII:
BUYER’S SUPPLIES
1.
RESPONSIBILITY
OF THE BUYER
(a)
The BUYER shall, at its cost and expense, supply all the BUYER’s supplies mentioned in the SPECIFICATIONS, if any, (hereinafter called the “BUYER’S SUPPLIES”), to the BUILDER at the SHIPYARD in perfect condition ready for installation and in accordance with the time schedule to be furnished by the BUILDER to meet the building schedule of the VESSEL.
Such schedule to be advised by the BUILDER within six (6) months after this CONTRACT becomes effective according to Article XX.
(b)
In order to facilitate the installation of the BUYER’S SUPPLIES by the BUILDER in or on the VESSEL, the BUYER shall furnish the BUILDER with the necessary plans, instruction books, test report and all test certificates reasonably required by the BUILDER and shall cause the representative(s) of the makers of the BUYER’S SUPPLIES to give the BUILDER any advice, instructions or assistance which the BUILDER may reasonably require in the installation or adjustment thereof at the SHIPYARD, all without cost or expense to the BUILDER.
(c)
The BUYER shall be liable for any expense incurred by the BUILDER for repair of the BUYER’S SUPPLIES due to defective design or materials, poor workmanship or performance or due to damage in transit and the DELIVERY DATE of the VESSEL shall be extended for the period of such repair if such repair shall affect the delivery of the VESSEL.
(d)
Commissioning into good order of the BUYER’S SUPPLIES during and after installation on board shall be made at the BUYER’s expense by the representative of respective maker or the person designated by the BUYER in accordance with the BUILDER’s building schedule.
(e)
Should the BUYER fail to deliver to the BUILDER the BUYER’S SUPPLIES and the necessary document or advice for such supplies within the time specified by the BUILDER, the DELIVERY DATE of the VESSEL shall automatically be extended for the period of such delay if such delay in delivery shall affect the delivery of the VESSEL. In such event, the BUYER shall pay to the BUILDER all losses and damages sustained by the BUILDER due to such delay in the delivery of the BUYER’S SUPPLIES and such payment shall be made upon delivery of the VESSEL, provided, however, that the BUILDER shall have :
45
(i)
furnished the BUYER with the time schedule referred to above, two (2) months prior to installation of the BUYER’S SUPPLIES and
(ii)
given the BUYER written notice of any delay in delivery of the BUYER’S SUPPLIES and the necessary document or advice for such supplies as soon as the delay occurs which might give rise to a claim by the BUILDER under this Paragraph.
Furthermore, if the delay in delivery of the BUYER’S SUPPLIES and the necessary document or advice for such supplies should exceed
ten (10) working
days from the date specified by the BUILDER, the BUILDER shall be entitled to proceed with construction of the VESSEL without installation of such items (regardless of their nature or importance to the BUYER or the VESSEL) in or on the VESSEL without prejudice to the BUILDER’s right hereinabove provided, and the BUYER shall accept the VESSEL so completed.
2.
RESPONSIBILITY
OF THE BUILDER
The BUILDER shall be responsible for storing, safekeeping and handling the BUYER’S SUPPLIES
which has appropriate proof against weather, dust and theft and,
which the BUILDER is required to install on board the VESSEL under the SPECFICATIONS after delivery of such supplies to the SHIPYARD and shall procure that at all times the
BUYER’S SUPPLIES
are clearly marked as being the property of the BUYER. The BUILDER shall install such supplies on board the VESSEL at the BUILDER’s expense.
The BUILDER shall not be responsible for the quality, performance or efficiency of any equipment included in the BUYER’S SUPPLIES and is under no obligation with respect to the guarantee of such equipment against any defects caused by poor quality, performance or efficiency of the BUYER’S SUPPLIES.
If any of the
BUYER’S SUPPLIES
are lost or damaged while in the custody of the BUILDER, the BUILDER shall, if the loss or damage is due breach of its obligations under this Paragraph 2, default, negligence or omission on its part, be responsible for such loss or damage.
Upon delivery of the
BUYER’S SUPPLIES
at the SHIPYARD, the BUILDER and the BUYER shall carry out a joint unpacking inspection of the
BUYER’S SUPPLIES
so that the condition at the time of delivery can be confirmed.
3.
RETURN OF THE BUYER’S SUPPLIES
If pursuant to the provisions of this CONTRACT the BUILDER is required to refund to the BUYER the instalments paid by the BUYER to the BUILDER, the BUILDER shall either (i)
46
return to the BUYER all of the
BUYER’S SUPPLIES
not incorporated into the VESSEL and pay to the BUYER an amount equal to the actual cost of those supplies incorporated into the VESSEL, or (ii) pay to the BUYER an amount equal to the actual cost of all supplies provided to the BUILDER and paid for by the BUYER irrespectively of whether or not the same have been incorporated into the VESSEL by mutual agreement.
(End of Article)
47
ARTICLE XIII:
ARBITRATION
1.
DECISION BY THE CLASSIFICATION SOCIETY
If any dispute arises between the parties hereto in regard to the design and/or construction of the VESSEL, its machinery and equipment, and/or in respect of the materials and/or workmanship thereof and/or thereon, and/or in respect of interpretations of the SPECIFICATIONS, the parties may by mutual agreement refer the dispute to the CLASSIFICATION SOCIETY or to such other expert as may be mutually agreed between the parties hereto, and whose decision shall be final, conclusive and binding upon the parties hereto.
2.
LAWS
APPLICABLE
Any arbitration arising hereunder shall be governed by and conducted in accordance with the London Maritime Arbitrators’ Association Terms or any statutory modification or re-enactments thereof for the time being in force.
The award of the arbitrator shall be final, conclusive and binding upon parties hereto.
3.
PROCEEDINGS OF ARBITRATION
In the event that the parties hereto do not agree to settle a dispute according to Paragraph 1 of this Article and/or in the event of any other dispute of any kind whatsoever between the parties and relating to this CONTRACT or its rescission or any stipulation herein, such dispute shall be submitted to arbitration in London. The parties shall try to agree a single arbitrator to conduct the arbitration.
If the parties cannot agree upon the appointment of the single arbitrator within two (2) weeks after one of the parties has given notice to the other party notifying that the other party refer the dispute to arbitration, the dispute shall be settled by three arbitrators, each party appointing one arbitrator, the third being appointed by the two arbitrators so appointed. In the further event that the two arbitrators appointed respectively by the parties hereto as aforesaid should be unable to reach agreement on the appointment of the third arbitrator within twenty (20) days from the date on which the second arbitrator is appointed, either party of the said two arbitrators may apply to the President for the time being of the London Maritime Arbitrators Association to appoint the third arbitrator. If either of the appointed arbitrators refuses or is incapable of acting, the party who appointed him shall appoint a new arbitrator in his place.
If one party fails to appoint an arbitrator - either originally or by way of substitution - for two (2) weeks after the other party having appointed its arbitrator, has served the defaulting party notice of default for failure to make the appointment, the President of the London Maritime
48
Arbitrators Association shall, after application from the party having appointed its arbitrator, also appoint an arbitrator on behalf of the party in default. The award of the arbitration made by the sole arbitrator or by the majority of the three arbitrators as the case may be shall be final, conclusive and binding upon the parties hereto.
4.
NOTICE OF AWARD
The award shall immediately be given to the BUYER and the BUILDER by telefax or e-mail.
5.
EXPENSES
The Arbitrator or the Arbitration Board shall determine which party shall bear the expenses of the arbitration or the portion of such expenses which each party shall bear.
6.
ENTRY IN COURT
In case of failure by either party to respect the award of the arbitration, the judgement may be entered in any proper court having jurisdiction thereof.
7.
ALTERATION OF DELIVERY DATE
In the event of reference to arbitration of any dispute arising out of matters occurring prior to delivery of the VESSEL, the award may include any postponement of the DELIVERY DATE which the Arbitrator or the Arbitration Board may deem appropriate. To the maximum extent possible and provided the arbitration proceedings or the subject matter of the dispute do not affect the construction of the VESSEL, work under this CONTRACT shall continue during the arbitration of any dispute.
(End of Article)
49
ARTICLE
XIV:
SUCCESSORS AND ASSIGNS
1.
TRANSFER OR ASSIGNMENT BY THE BUYER
The
BUILDER agrees that, prior to delivery of the VESSEL, this CONTRACT may,
with
the prior written approval of the BUILDER, which the BUILDER shall not
unreasonably
withhold or delay, be transferred by novation to or assigned to another company and the title thereof may be taken by
another
company. In the event of any transfer or assignment pursuant to the terms of this
CONTRACT,
the transferee or assignee, its successors and assigns shall succeed to all the
rights
and obligations of the BUYER under this CONTRACT including but not limited to post-construction warranties of quality and the benefit of the Refund Guarantee. However, the
BUYER
shall remain responsible for performance by the assignee, its successors
and
assigns of all the BUYER’s obligations, liabilities and responsibilities under
this
CONTRACT. It is understood that any expenses or charges incurred due to
the
transfer or assignment of this CONTRACT by the BUYER shall be for the account of the BUYER.
The
BUILDER shall have the right to transfer or assign this CONTRACT at any time after
the
effective date hereof, provided that prior written agreement is obtained from
the
BUYER.
2.
TRANSFER BY THE BUILDER
The BUILDER shall not have the right to assign or transfer this CONTRACT at any time after the Effective Date (as defined in ARTICLE XIX) hereof, unless prior written approval is obtained from the BUYER.
(End of Article)
50
ARTICLE
XV:
TAXES AND DUTIES
1.
TAXES
Unless otherwise expressly provided for in this CONTRACT, all costs and taxes including stamp duties, if any, incurred in or levied by any country except Korea in connection with this CONTRACT shall be borne by the BUYER and corresponding costs and taxes in Korea
, before delivery of the VESSEL, if any,
shall be borne by the BUILDER.
2.
DUTIES
The BUILDER shall hold the BUYER harmless from any payment of duty imposed in Korea upon materials or supplies which, under the terms of this CONTRACT, or amendments thereto, may be supplied by the BUYER from abroad for the construction of the VESSEL.
The BUILDER shall likewise hold the BUYER harmless from any payment of duty imposed in Korea in connection with materials or supplies for operation of the VESSEL, including running stores, provisions and supplies necessary to stock the VESSEL for its operation and also from the payment of export duties
incurred by the BUILDER in Korea
, if any, to be imposed upon the VESSEL as a whole or upon any of its parts or equipment. This indemnity does not, however, extend to any items purchased by the BUYER for use in connection with the VESSEL which are not absolutely required for the construction or operation of the VESSEL.
3.
KOREAN BUNKER SALES TAX
The price of the delivery bunkers remaining on board the VESSEL on the DELIVERY DATE which is to be paid by the BUYER to the BUILDER shall be net of any sales tax payable to the Korean Government
.
(End of Article)
51
ARTICLE
XVI:
PATENTS, TRADEMARKS AND COPYRIGHTS
1.
PATENTS,
TRADEMARKS AND COPYRIGHTS
Machinery and equipment of the VESSEL, whether made or furnished by the BUILDER under this CONTRACT, may bear the patent numbers, trademarks, or trade names of the manufacturers. The BUILDER shall defend and hold harmless the BUYER from all liabilities or claims for or on account of the use of any patents, copyrights or design of any nature or kind, or for the infringement thereof including any unpatented invention made or used in the performance of this CONTRACT and also for any costs and expenses of litigation, if any in connection therewith. No such liability or responsibility shall be with the BUILDER with regard to components and/or equipment and/or design supplied by the BUYER.
Nothing contained herein shall be construed as transferring any patent or trademark rights or copyrights in equipment covered by this CONTRACT, and all such rights are hereby expressly reserved to the true and lawful owners thereof.
2.
RIGHTS
TO THE SPECIFICATIONS, PLANS AND ETC.
The BUILDER retains all rights with respect to the SPECIFICATIONS, plans and working drawings, technical descriptions, calculations, test results and other data, information and documents concerning the design and construction of the VESSEL and the BUYER undertakes therefore not to disclose the same or divulge any information contained therein to any third parties, without the prior written consent of the BUILDER, excepting where it is necessary for usual marketing
,
operation, repair and maintenance of the VESSEL or registration, classification, insurance or sale of the VESSEL.
In case the BUYER requests the prior written consent of the BUILDER as set out in the above paragraph, the BUYER shall provide the BUILDER with a written undertaking from the recipient stating that (1) he acknowledges and shall observe the foregoing terms concerning the BUILDER’s right to confidential information and (2) any confidential information furnished in tangible form shall not be duplicated by recipient except for the purpose of the job specifically assigned to him. (3) Upon the completion of his job requiring reference to the confidential information, recipient shall return to the BUYER at his option or otherwise destroy all the confidential information received in written or tangible form including copies or reproductions or other media containing such confidential information. (4) Any documents or other media developed by the recipient containing confidential information shall be destroyed by the recipient.
(End of Article)
52
ARTICLE XVII :
COMPLIANCE AND ANTI-BRIBERY
1.
REPRESENTATIONS OF THE PARTIES
During the Term of this CONTRACT and for the duration of any services provided hereunder, each party certifies and represents as follows:
(a)
It will comply with the laws of any jurisdiction applicable to such party as it relates to this CONTRACT, including but not limited to any applicable anti-corruption and anti-bribery laws, also including, without limitation, the United States Foreign Corrupt Practices Act (“US FCPA”), the UK Bribery Act 2010 (“UK Bribery Act”) and the anti-bribery or anti-corruption laws of South Korea as such laws may be amended from time to time.
(b)
In connection with this CONTRACT, it has not and will not make any payments or gifts or provide other advantages, or any offers or promises of payments or gifts or other advantages of any kind, directly or indirectly, to:
a.
any person or entity with the intention of obtaining or retaining a business advantage for itself or the other party to this CONTRACT;
b.
any official or member of any government or any agency or instrumentality thereof; any official or member of any public international organisation or any agency or instrumentality thereof; any or official of a political party or any candidate for political office (herein ‘public official’); or any person while knowing or reasonably suspecting that all or a portion of such money or thing of value will be offered, given or promised, directly or indirectly, to any public official, in violation of the UK Bribery Act, the US FCPA or the laws of South Korea.
(c)
In connection with this CONTRACT, it has not and will not request, agree to accept or accept from any person or entity any payments or gifts or other advantages, or any offers or promises of payments or gifts or other advantages of any kind, directly or indirectly, as a reward or inducement to perform its obligations under this CONTRACT in any way improperly.
2.
INDEMNIFICATION
Each party agrees that it will fully indemnify, defend and hold harmless the other party from any claims, liabilities, damages, expenses, penalties, judgments and losses (including reasonable attorneys’ fees) assessed or resulting by reason of a breach of the representations and undertakings contained in this Article XVII to the extent permitted by law.
(End of Article)
53
ARTICLE
XVII
I
:
INTERPRETATION AND GOVERNING LAW
This
CONTRACT has been prepared in English and shall be executed in duplicate
and
in such number of additional copies as may be required by either party
respectively.
The parties hereto agree that the validity and interpretation of this
CONTRACT
and of each Article and part thereof shall be governed by the laws of
England.
(End of Article)
54
ARTICLE
X
IX
:
NOTICE
Any
and all notices, requests, demands, instructions, advices and communications
in
connection with this CONTRACT shall be written in English, sent by registered
air
mail or facsimile or by hand or email and shall be deemed to be given when first
received
whether by registered mail or facsimile, by hand or email. They shall be
addressed
as follows, unless and until otherwise advised:
|
To the BUILDER
|
:
|
HYUNDAI
HEAVY INDUSTRIES CO., LTD.
|
|
|
|
625 Seohae-ro, Gunsan, Jeonbuk, Korea
|
|
|
|
|
|
Attention:
|
|
Mr. I. Y. Kim
/ Contract Management Dep’t.
|
|
|
|
Tel : +82 63 447 6801
|
|
|
|
Facsimile:
+ 82
63 447 6899
|
|
|
|
E-mail: gcmd@hhi.co.kr
|
|
|
|
|
|
To the BUYER
|
:
|
NAVIG8 CRUDE TANKERS INC
|
|
|
|
c/o Navig8 Asia Pte Ltd
|
|
|
|
3 Temasek Avenue, #25-01 Centennial Tower, Singapore 039190
|
|
|
|
|
|
Attention:
|
|
Mr. Daniel Chu
|
|
|
|
Facsimile: +44 207 467 5867
|
|
|
|
Tel: +44 207 467 5888
|
|
|
|
E-mail: legal@navig8group.com
|
The
said notices shall become effective upon receipt of the letter, e-mail or
facsimile
communication by the receiver thereof. Where a notice by e-mail or facsimile is concerned which is required to be confirmed by letter, then, unless
the
CONTRACT or the relevant Article thereof otherwise requires, the notice shall
become
effective upon receipt of the e-mail or facsimile.
(End of Article)
55
ARTICLE
XX:
EFFECTIVENESS OF THIS CONTRACT
This CONTRACT shall become effective upon signing by the parties hereto.
(End of Article)
56
ARTICLE
XX
I
:
EXCLUSIVENESS
This
CONTRACT shall constitute the only and entire agreement between the
parties
hereto, and unless otherwise expressly provided for in this CONTRACT, all
other
agreements, oral or written, made and entered into between the parties prior
to
the execution of this CONTRACT shall be null and void
and
shall be superseded by this CONTRACT.
(End of Article)
57
IN WITNESS WHEREOF, the parties hereto have caused this CONTRACT to
be
duly executed in duplicate on the date and year first above written.
|
|
|
|
|
BUYER
|
|
BUILDER
|
|
|
|
|
|
|
|
|
|
For
and on behalf of
|
|
For and on behalf of
|
|
NAVIG8 CRUDE TANKERS INC
|
|
HYUNDAI HEAVY INDUSTRIES CO., LTD.
|
|
|
|
|
|
|
|
|
|
|
|
By
|
/s/ Gary Brockelsby
|
|
By
|
/s/ T.Y. Cho
|
|
Name: Gary Brockelsby
|
|
Name:
T.Y. Cho
|
|
Title:
Attorney-in-Fact
|
|
Title:
Attorney-in-Fact
|
|
|
|
|
|
|
|
|
|
WITNESS
|
|
WITNESS
|
|
|
|
|
|
|
|
|
|
|
|
By
|
/s/ Daniel Chu
|
|
By
|
/s/ S.D. Yoon
|
|
Name: Daniel Chu
|
|
Name:
S.D. Yoon
|
|
Title: General Counsel
|
|
Title: Deputy General Manager
|
58
EXHIBIT “A”
DEED OF GUARANTEE
Date :[ ], 201
4
Gentlemen:
We hereby open our irrevocable letter of guarantee number [ ] (this “Guarantee”) in favour of
NAVIG8 CRUDE TANKERS INC
, a corporation organized and existing under the laws of
Marshall Islands
and having its principal office at
Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960
(hereinafter called the “BUYER”) for account of HYUNDAI HEAVY INDUSTRIES CO., LTD.,
Ulsan
, Korea (hereinafter called the “BUILDER”) as follows in connection with the shipbuilding contract dated [ ], 201
4
(hereinafter called “CONTRACT”) made by and between the BUYER and the BUILDER for the construction of 300,000 DWT Class Crude Oil Carrier having the BUILDER’s Hull No.
(hereinafter called the “VESSEL”).
If, in connection with the terms of the CONTRACT, the BUYER shall become entitled to a refund of the advance payment made to the BUILDER prior to the delivery of the VESSEL, we hereby irrevocably, unconditionally and absolutely guarantee, as primary obligor and not merely as surety, to you, your successors and assignees, the repayment of the same to the BUYER within thirty (30) days after demand not exceeding US$ [ ] (Say U.S. Dollars [ ] only)together with interest thereon at the rate of
six per cent (6%)
per annum from the date following the date of receipt by the BUILDER to the date of remittance by telegraphic transfer of such refund.
The amount of this Guarantee will be automatically increased upon the BUILDER’s receipt of the respective instalment, not more than three (3) times, each time by the amount of such instalment plus interest thereon as provided in the CONTRACT, but in any eventuality the amount of this Guarantee shall not exceed the total sum of US$ [ ] (Say U.S. Dollars [ ] only) plus interest thereon at the rate of
six
per cent (
6
%) per annum from the date following the date of the BUILDER’s receipt of each instalment to the date of remittance by telegraphic transfer of the refund. However, in the event of cancellation of the CONTRACT being based on delays due to Force Majeur
e
as provided under Article VIII of the CONTRACT, the interest rate of refund shall be reduced to four per cent (4%) per annum as provided in Article X.5of the CONTRACT for the periods affected by such delays.
The payment by us under this Guarantee shall be made(subject to the third paragraph hereof) against the BUYER’s first written demand and signed statement certifying that the BUYER’s demand for refund has been made in conformity with Article X of the CONTRACT and the BUILDER has failed to make the refund within
thirty (30)
days after the BUYER’s demand. Refund shall be made to the BUYER by telegraphic transfer in United States Dollars. All payments under this Guarantee shall be made without any set-off or counterclaim and without any
59
deduction or withholding for or on account of any taxes, duties or charges whatsoever unless we are compelled by law to deduct or withhold the same, in which case we shall make the minimum deduction or withholding permitted and will pay to you such additional amounts as may be necessary in order that the net amount received by you after such deduction or withholding shall be equal to the amount which would have been received had no such deduction or withholding been made.
In case any refund is made to the BUYER by the BUILDER or by us under this Guarantee, our liability hereunder shall be automatically reduced by the amount of such refund.
Notwithstanding the provisions hereinabove, in the event that within
thirty (30)
days from the date of your claim to the BUILDER referred to above, we receive notification from you or the BUILDER accompanied by written confirmation to the effect that your claim to cancel the CONTRACT or your claim for refundment thereunder has been disputed and referred to arbitration in accordance with the provisions of the CONTRACT, we shall under this Guarantee, refund to you the sum adjudged to be due to you by the BUILDER pursuant to the award made under such arbitration, or, if applicable, pursuant
to
a final court judgment issued in relation thereto, immediately upon receipt from you of a demand for the sums so adjudged and a copy of the award or court judgment, as the case may be.
The validity of this Guarantee and our liability under or in connection therewith shall not be discharged, impaired, reduced or in any way affected by any extension of time or other amendment, variation, modification or supplement whatsoever of or to the CONTRACT nor by the giving of any time or any concession granted by you to the BUILDER or any indulgence, waiver or consent on your part in respect of time or any other terms of the CONTRACT, nor by any delay or failure by you in enforcing your rights under or in connection with the CONTRACT, nor by the liquidation, insolvency, bankruptcy, reorganization, amalgamation, reconstruction or analogous proceedings or other financial failure of the BUILDER or any other person, nor by the illegality, invalidity or unenforceability or any defect in the CONTRACT or any provisions thereof, or any repudiation, termination or rescission thereof or any other matter or circumstance which would (but for the provisions of this paragraph) discharge, impair, affect or reduce our liability under or in connection with this Guarantee.
This Guarantee shall become null and void upon receipt by the BUYER of the sum guaranteed hereby together with interest thereon or upon acceptance by the BUYER of the delivery of the VESSEL in accordance with the terms of the CONTRACT and, in either case, this Guarantee shall be returned to us.
This Guarantee is valid and effective from the date of this Guarantee until such time as the VESSEL is delivered by the BUILDER to the BUYER in accordance with the provisions of the CONTRACT. However in the event that a dispute in respect of a refund is being resolved by
60
arbitration in accordance with Article XIII of the CONTRACT, then this Guarantee shall continue to remain in force until 30 business days after such arbitration proceedings are concluded and a final arbitration award has been issued.
We agree that you may assign without our prior written consent the benefit of this Guarantee to any lawful assignee of the benefit of the CONTRACT.
This Guarantee and any non-contractual obligations arising out of or in connection with it shall be governed by, interpreted and construed in accordance with the laws of England. The undersigned hereby submits to the exclusive jurisdiction of the courts of England for the settlement of any disputes which may arise out of or in connection with this Guarantee and any non-contractual obligations arising out of or in connection with it. We hereby irrevocably appoint [ ] to act as our agent to receive and accept on our behalf any process or other document relating to any proceedings in the English courts which are connected with this Guarantee.
Very truly yours,
This Guarantee has been executed and delivered as a Deed on the day and year written above.
Signed as a Deed on behalf of [ ],a company incorporated in [ ]
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by:
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being persons who, in accordance with the laws of that territory, are acting under the authority of the company
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In the presence of:
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Witness’s signature:
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Name (print):
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Occupation:
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Address:
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61
Exhibit 10.86
SHIPBUILDING CONTRACT
FOR
THE CONSTRUCTION OF
300,000 DWT CLASS CRUDE OIL CARRIER
HULL NO. 2795
BETWEEN
NAVIG8 CRUDE TANKERS INC
(AS BUYER)
AND
HYUNDAI HEAVY INDUSTRIES CO., LTD.
(AS BUILDER)
I N D E X
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PAGE
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PREAMBLE
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3
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ARTICLE
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I
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DESCRIPTION AND CLASS
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4
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II
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CONTRACT PRICE
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8
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III
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ADJUSTMENT OF THE CONTRACT PRICE
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9
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IV
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INSPECTION AND APPROVAL
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1
2
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V
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MODIFICATIONS, CHANGES AND EXTRAS
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1
8
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VI
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TRIALS AND COMPLETION
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21
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VII
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DELIVERY
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2
5
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VIII
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:DELAYS
AND EXTENSIONS OF TIME (FORCE MAJEURE)
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29
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IX
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WARRANTY OF QUALITY
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32
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X
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PAYMENT
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3
5
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XI
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BUYER’S DEFAULT
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41
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XII
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BUYER’S SUPPLIES
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45
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XIII
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ARBITRATION
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4
8
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XIV
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SUCCESSORS AND ASSIGNS
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50
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XV
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TAXES AND DUTIES
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51
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XVI
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PATENTS, TRADEMARKS AND COPYRIGHTS
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52
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XVII
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: COMPLIANCE AND ANTI-BRIBERY
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XVIII
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INTERPRETATION AND GOVERNING LAW
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54
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XIX
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NOTICE
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XX
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EFFECTIVENESS OF THIS CONTRACT
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XXI
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EXCLUSIVENESS
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EXHIBIT “A” LETTER OF GUARANTEE
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59
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2
THIS
CONTRACT
,
made on this
24
th
day
of
March, 2014 by
and between
NAVIG8 CRUDE TANKERS INC, a
corporation incorporated and existing under the
laws
of
Marshall Islands
, having its registered office at
Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960
(hereinafter
called
the
“BUYER”
)
, the party of the first part and HYUNDAI
HEAVY INDUSTRIES CO., LTD.
a company organized and existing under the
laws
of the Republic of Korea, having its principal office
1,000 Bangeojinshunhwan-doro, Dong-Gu, Ulsan, Korea
, Korea (hereinafter called the “BUILDER”),
the
party of the second part,
W
I T N E S S E T H
:
In consideration of the mutual covenants c
o
ntained herein, the BUILDER
agrees
to design, build, launch, equip and complete one (1)
300,000
DWT
C
lass
Crude Oil Carrier as
described in Article I hereof (hereinafter called the “VESSEL”) at the
BUILDER’s
shipyard in Korea (hereinafter called the “SHIPYARD”) in accordance with
the BUILDER’s
shipbuilding practice for
Crude Oil Carrier
, as the B
UILDER
has been performing for its other clients and in accordance with
HSQM (Hyundai Shipbuilding Quality Manual)
and to
deliver
and sell the VESSEL to the BUYER, and the BUYER agrees to accept
delivery
of and purchase from the BUILDER the VESSEL, according to the terms
and
conditions hereinafter set forth:
(End of Preamble)
3
ARTICLE I:
DESCRIPTION AND CLASS
1.
DESCRIPTION
The VESSEL shall have the BUILDER’s Hull No.
2795 and
shall be designed, constructed, equipped and completed in accordance with the specifications (No.
CONV300-FS-P1, dated 10th December 2013)
a
nd
the general arrangement plan (No.
1G7000201, dated 10th December 2013)
attached thereto (hereinafter called respectively the “SPECIFICATIONS” and the “PLAN”) signed by both parties, which shall constitute an integral part of this CONTRACT although not attached hereto.
The SPECIFICATIONS and the PLAN are intended to explain each other and anything shown on the PLAN and not stipulated in the SPECIFICATIONS or anything stipulated in the SPECIFICATIONS and not shown on the PLAN shall be deemed and considered as if included in both.
Should there be any inconsistencies or contradictions between the SPECIFICATIONS and the PLAN, the SPECIFICATIONS shall prevail. Should there be any inconsistencies or contradictions between this CONTRACT and the SPECIFICATIONS, this CONTRACT shall prevail.
2.
BASIC
DIMENSIONS AND PRINCIPAL PARTICULARS OF THE VESSEL
(a)
The basic dimensions and principal particulars of the VESSEL shall be:
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Length, overall
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abt.
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333
m
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Length, between perpendiculars
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abt.
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322
m
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Breadth, moulded
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abt.
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60
m
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Depth, moulded
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abt.
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29.4
m
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Design draught, moulded
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abt.
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20.5
m
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Scantling draught, moulded
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abt.
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21.6
m
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Main Engine
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HYUNDAI - B&W 7G80ME-C9.2
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Nominal Rating: 32,970 kW x 72 RPM
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MCR: 24,400 kW x 66 RPM
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NCR: 17,080 kW x 58.6 RPM
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Main engine to be part load optimized
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Deadweight, guaranteed :
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299,969 metric tons at the Scantling draught of 21.6 meters on even keel in sea water of specific gravity of 1.025.
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4
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Speed, guaranteed
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14.8 knots at the design draught of 20.5 meters at the condition of clean bottom and in calm and deep sea with main engine output of 17,080 kW with 15% sea margin.
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Fuel Consumption, guaranteed
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161.7 grams/kW-hour using marine diesel oil having lower calorific value of 42,700 kj/kg at MCR measured at the shop trial with I.S.O reference conditions.
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The details of the aforementioned particulars as well as the definitions and method
of
measurements and calculations are as indicated in the SPECIFICATIONS.
(b)
The dimensions may be slightly modified by the BUILDER,
who also reserves the right to make changes to the SPECIFICATIONS and the PLAN if found necessary to suit the local conditions and facilities of the SHIPYARD, the availability of materials and equipment, the introduction of improved production methods or otherwise,
subject to the written approval of the BUYER which the BUYER shall not withhold unreasonably, and all subject to the other relevant provisions of this CONTRACT.
3.
CLASSIFICATION,
RULES AND REGULATIONS
(a)
The VESSEL, including its machinery, equipment and outfitting shall be designed, equipped and constructed in accordance with the BUILDER’s HSQM (Hyundai Shipbuilding Quality Manual) and shipbuilding practices.
The VESSEL shall be built in compliance with the rules (editions and amendments thereto being in force at the date of signing this CONTRACT) of Korean Register of Shipping (hereinafter called the “CLASSIFICATION SOCIETY”), classed and registered with the symbol
of +KRS1-Oil Tanker (Double Hull) ‘ESP’, (FBC), (CSR), Crude, VEC-2, IGS, COW, IWS, IBWM, LI, +KRM1-UMA, STCM, PSPC, IAFS, IOPP, ISPP, IGPP, IAPP, IIHM, IEE, EQ-SPM, ERS, CHA.
The VESSEL shall be built in compliance with the standards provided in the
SPECIFICATIONS
and with the Rules and Regulations as mentioned in the
SPECIFICATIONS
which are in force at the date of signing the
SPECIFICATIONS (for reference, the published LR’s “Future IMO Legislation, Aug 2013” to be used).
EEDI verification to be performed by
the BUILDER
during sea trials
and confirmed by the CLASSIFICATION SOCIETY
.
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(b)
The BUILDER shall arrange with the CLASSIFICATION SOCIETY for the assignment by the CLASSIFICATION SOCIETY of representative(s) to the VESSEL during each stage of construction. All fees and charges incidental to classification of the VESSEL as well as in compliance with the above specified rules, regulations and requirements of this CONTRACT shall be for the account of the BUILDER.
All major plans, materials and workmanship used in the construction of the V
ESSEL
shall be subject to inspection and test by the CLASSIFICATION SOCIETY in accordance with the rules and regulations of the CLASSIFICATION SOCIETY
.
(c)
The decision of the CLASSIFICATION SOCIETY as to whether the
VESSEL
complies with the regulations of the CLASSIFICATION SOCIETY
shall
be final and binding upon the BUILDER and the BUYER, provided that in the case of dispute the decision shall be endorsed by Head Office of the CLASSIFICATION SOCIETY.
4.
SUBCONTRACTING
The BUILDER is authorised to sub-contract part of the work to third party sub-contractors who will carry out works in accordance with the quality standards and shipbuilding practices outlined above at Article I. 3. (a) of this CONTRACT, provided that the work is done in Korea and the BUILDER shall have first given notice in writing to the BUYER.
Without prejudice to the generality of the foregoing, the BUILDER shall remain fully liable for the due and complete performance of all the BUILDER’s obligation under this CONTRACT notwithstanding the entering into of any such sub-contract as aforesaid. However, the VESSEL shall always remain at the SHIPYARD unless the BUYER and the BUILDER agree otherwise.
No sub-contract shall bind or purport to bind the BUYER, and each sub-contract shall be the responsibility of the BUILDER and not contain any retention rights, liens or other such rights that may interfere at anytime with the transfer of unencumbered ownership and title of the VESSEL by the BUILDER to the BUYER.
All sub-contractors howsoever employed or engaged are hereby declared and agreed to be sub-contractors employed or engaged by the BUILDER and the BUILDER agrees that it is and shall remain fully responsible for and liable in respect of any sub-contractors and/or their acts or omissions and, without prejudice to the generality of the foregoing, the BUILDER shall ensure control over supervision and scheduling of the all work done by any subcontractor.
The BUILDER hereby agrees that if any of its employees, servants or agents or those of the
6
sub-contractors appointed pursuant to this CONTRACT shall, in the reasonable opinion of the BUYER, not be carrying out properly their duties and responsibilities under or pursuant to the terms of this CONTRACT, the BUYER shall be entitled (by giving written notice to the BUILDER) to draw the same to the attention of the BUILDER and, if the BUYER considers it necessary, to request the BUILDER to replace such person(s) if the same are its own employees, servants or agents, or to use its best endeavours to replace such person(s) if the same are the employees, servants or agents of a sub-contractor. The BUILDER shall investigate any such request, and, if found justified, take appropriate action. Any such replacement shall be within such a time scale so as to ensure that the BUILDER continues to carry out all of its duties and obligations under or pursuant to this CONTRACT.
The BUYER’s inspection and final assembly of any subcontracted work shall be at the BUILDER’s SHIPYARD. The BUILDER will arrange for the BUYER to execute pre-production inspection of sub-contractors premises by providing reasonable advanced notice to inspect the facility. The BUYER retains the right to inspect vetting records by BUILDER’s Quality Control Department confirming compliance with the BUILDER’s quality standards.
The BUYER’s rights hereunder shall not in any way be reduced in respect of such sub-contracted work and the BUYER shall not bear any additional costs in respect of such sub-contracted work.
5.
NATIONALITY
OF THE VESSEL
The VESSEL shall be registered by the BUYER at its own cost and expense under the laws of Marshall Islands
with
its home port
at
the time of its delivery and acceptance hereunder.
(End of Article)
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ARTICLE II:
CONTRACT PRICE
The contract price of the VESSEL delivered to the BUYER at the SHIPYARD shall be United States Dollars One Hundred One Million Three Hundred Ten Thousand Two Hundred Ninety Four (US$ 101,310,294.-) (hereinafter called the “CONTRACT PRICE”) which shall be paid plus any increases or less any decreases due to adjustment or modification, if any, as set forth in this CONTRACT. Subject to the above, the CONTRACT PRICE is fixed and is not subject to any fluctuations in or on account of wages, costs of equipment or materials or currencies or otherwise. The above CONTRACT PRICE shall include payment for services in the inspection, test, survey and classification of the VESSEL which will be rendered by the CLASSIFICATION SOCIETY and shall not include the cost of the BUYER’s supplies as stipulated in Article XII.
The CONTRACT PRICE also includes all costs and expenses for supplying all necessary drawings as stipulated in the SPECIFICATIONS except those to be furnished by the BUYER for the VESSEL in accordance with the SPECIFICATIONS. All other costs and expenses of the BUILDER as provided in the CONTRACT or the SPECIFICATIONS or otherwise incurred by the BUILDER are for the account of the BUILDER unless expressly specified as being for the account of the BUYER in the CONTRACT or otherwise in writing.
The BUILDER shall, however undertake to install in the VESSEL all of such BUYER’s supplies in accordance with the SPECIFICATIONS without extra cost to the BUYER, but the BUYER shall pay all charges and expenses, including, but not limited to, the customs clearance fee, for transporting such BUYER’s supplied articles to the SHIPYARD.
(End of Article)
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ARTICLE III:
ADJUSTMENT OF THE CONTRACT PRICE
The CONTRACT PRICE of the VESSEL shall be adjusted as hereinafter set forth in the event of the following contingencies. It is hereby understood by both parties that any adjustment of the CONTRACT PRICE as provided for in this Article is by way of liquidated damages and not by way of penalty.
1.
DELAYED DELIVERY
(a)
No adjustment shall be made and the CONTRACT PRICE shall remain unchanged for the first thirty (30) days of the delay in delivery of the VESSEL [ending as of 12 o’clock midnight Korean Standard Time on the thirtieth (30th) day of delay] beyond the Delivery Date calculated as provided in Article VII.1. hereof.
(b)
If delivery of the VESSEL is delayed more than thirty (30) days beyond the date upon which the delivery is due from the BUILDER under the terms of this CONTRACT, then, beginning at midnight of the thirtieth (30th) day after such due date, the CONTRACT PRICE of the VESSEL shall be reduced by U.S. Dollars Twenty Three Thousand (US$ 23,000) for each full day of delay.
However, unless the parties agree otherwise, the total amount of deduction from the CONTRACT PRICE shall not exceed the amount due to cover the delay of one hundred and Eighty (180) days after thirty (30) days of the delay in delivery of the VESSEL at the rate of deduction as specified hereinabove.
(c)
But, if the delay in delivery of the VESSEL continues for a period of more than two hundred and ten (210) days beyond the date upon which the delivery is due from the BUILDER under the terms of this CONTRACT then, in such event, and after such period has expired, the BUYER may, at its option, cancel this CONTRACT by serving upon the BUILDER a notice of cancellation by e-mail or facsimile to be confirmed by a registered letter via airmail directed to the BUILDER at the address given in this CONTRACT. Such cancellation shall be effective as of the date the notice thereof is received by the BUILDER. If the BUYER has not served the notice of cancellation after the aforementioned two hundred and ten (210) days delay in delivery, the BUILDER may demand the BUYER to make an election in accordance with Article VIII.3 hereof.
(d)
For the purpose of this Article, the delivery of the VESSEL shall be deemed to be delayed when and if the VESSEL, after taking into full account extension of the Delivery Date or permissible delays as provided in ArticlesV.1 and V.3, VI.2, VIII, XI.1, XII.1 and XIII.7, is delivered beyond or before the date upon which delivery would then be due under the terms of this CONTRACT.
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2.
INSUFFICIENT SPEED
(a)
The CONTRACT PRICE of the VESSEL shall not be affected or changed, if the actual speed, as determined by trial runs more fully described in Article VI hereof, is less than the guaranteed speed as defined in Article I paragraph 2 hereof, provided such deficiency in actual speed is not more than three tenths (3/10) of a knot below the guaranteed speed.
(b)
However, as for the deficiency of more than three tenths (3/10) of a knot in actual speed below the guaranteed speed, the CONTRACT PRICE shall be reduced by U.S. Dollars Eighty Thousand (US$ 80,000) for each full one-tenth (1/10) of a knot in excess of the said three tenths (3/10) of a knot of deficiency in speed (fractions of less than one-tenth (1/10) of a knot shall be regarded as a full one-tenth (1/10) of a knot). However, unless the parties agree otherwise, the total amount of reduction from the CONTRACT PRICE shall not exceed the amount due to cover the deficiency of one (1) full knot below the guaranteed speed at the rate of reduction as specified above.
(c)
If the deficiency in actual speed of the VESSEL is more than one (1) full knot below the guaranteed speed, then the BUYER, at its option, may, subject to the BUILDER’s right to effect alterations or corrections as provided in Article VI.5. hereof, cancel this CONTRACT or may accept the VESSEL at a reduction in the CONTRACT PRICE as above provided for one (1) full knot of deficiency only.
3.
EXCESSIVE FUEL CONSUMPTION
(a)
The CONTRACT PRICE of the VESSEL shall not be affected or changed by reason of the fuel consumption of the VESSEL’s main engine, as determined by the engine manufacturer’s shop trial as per the SPECIFICATIONS being more than the guaranteed fuel consumption of the VESSEL’s main engine as defined in Article I paragraph 2 hereof, if such excess is not more than five per cent (5%) over the guaranteed fuel consumption.
BUYER’s Representatives will be provided fourteen (14) days notice of engine trials in order to be present during aforementioned trials.
(b)
However, as for the excess of more than five percent (5%) in the actual fuel consumption over the guaranteed fuel consumption of the VESSEL’s main engine, the CONTRACT PRICE shall be reduced by U.S. Dollars Eighty Thousand (US$ 80,000) for each full one per cent (1%) increase in fuel consumption in excess of the said five per cent (5%) increase in fuel consumption (fraction of less than one per cent (1%) shall be regarded as a full one percent (1%)). However, unless the parties agree otherwise, the total amount of reduction from the CONTRACT PRICE shall not exceed the amount due to cover the excess of ten percent (10%) over the guaranteed fuel consumption of the VESSEL’s main
10
engine at the rate of reduction as specified above.
(c)
If such actual fuel consumption exceeds the guaranteed fuel consumption of the VESSEL’s main engine by more than ten percent (10%), the BUYER, at its option, may, subject to the BUILDER’s right to effect alterations or corrections as specified in Article VI. 5. hereof, cancel this CONTRACT or may accept the VESSEL at a reduction in the CONTRACT PRICE as above provided for the ten percent (10%) increase only.
4.
DEADWEIGHT BELOW CONTRACT REQUIREMENTS
(a)
The CONTRACT PRICE of the VESSEL shall not be affected or changed, if the actual deadweight determined as provided in this CONTRACT and the SPECIFICATIONS, is below the guaranteed deadweight as defined in Article I paragraph 2 hereof by one point five percent (1.5%) of the guaranteed deadweight or less.
(b)
However, should the deficiency in the actual deadweight of the VESSEL be more than one point five percent (1.5%) of the guaranteed deadweight (disregarding fractions of less than one (1) metric ton), the CONTRACT PRICE shall be reduced by the sum of U.S. Dollars Seven Hundred (US$ 700) for each one (1) metric deficiency (disregarding fractions of less than one (1) metric ton) in excess of the said one point five percent (1.5%) of deficiency.
(c)
In the event of such deficiency in the deadweight of the VESSEL being more than three percent (3%) of the guaranteed deadweight, the BUYER, at its option, may, subject to the BUILDER’s right to effect alterations or corrections as specified in Article VI. 5. hereof, cancel this CONTRACT or accept the VESSEL at a reduction in the CONTRACT PRICE as above provided for three percent (3%) only.
5.
EFFECT OF CANCELLATION
(a)
The liquidated damages payable according to the provisions of each Paragraph under this ARTICLE are cumulative and not exclusive.
(b)
It is expressly understood and agreed by the parties hereto that in any case, if the BUYER cancels this CONTRACT under this Article, the BUYER, save for its rights and remedies set out in Article X.5 hereof, shall not be entitled to any liquidated damages.
(End of Article)
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ARTICLE IV:
INSPECTION AND APPROVAL
1.
APPOINTMENT OF BUYER’S REPRESENTATIVE
The BUYER shall timely dispatch to and maintain at the SHIPYARD, at its own cost, expense and risk, one or more representatives (hereinafter called the “BUYER’S REPRESENTATIVE”), who shall be duly accredited in writing by the BUYER to supervise adequately the construction by the BUILDER of the VESSEL, her equipment and all accessories. Before the commencement of any item of work under this CONTRACT, the BUILDER shall, whenever reasonably required, previously exhibit, furnish to, and within the limits of the BUYER’S REPRESENTATIVE’s authority, secure the approval from the BUYER’S REPRESENTATIVE of any and all plans and drawings prepared in connection therewith. Upon appointment of the BUYER’S REPRESENTATIVE, the BUYER shall notify the BUILDER in writing of the name and the scope of the authority of the BUYER’S REPRESENTATIVE.
The BUYER shall have the right to replace or substitute any of its representatives upon prior notice to the BUILDER. One individual BUYER’S REPRESENTATIVE shall be nominated by the BUYER in writing from time to time as having authority to bind the BUYER on certain matters as provided in this Article and that nominated BUYER’S REPRESENTATIVE shall alone be so authorized in respect of such matters and no other BUYER’S REPRESENTATIVE shall be authorized to so bind the BUYER in respect of such matters.
However, in any case, the BUYER shall not appoint any employees of the BUILDER or the persons who had been employed by the BUILDER within one (1) year before the BUYER’s appointment of such ex-employee of the BUILDER as the BUYER’S REPRESENTATIVE or his assistants or employees of the BUYER without the BUILDER’s prior written consent.
2.
AUTHORITY OF THE BUYER’S REPRESENTATIVE
According to the BUYER’s written authorization, such BUYER’S REPRESENTATIVE shall, at all times during working hours of the construction until delivery of the VESSEL, have the right to inspect the VESSEL, her equipment and all accessories, and work in progress, or materials utilized in connection with the construction of the VESSEL, wherever such work is being done or such materials are stored, for the purpose of determining that the VESSEL, her equipment and accessories are being constructed in accordance with the terms of this CONTRACT and/or the SPECIFICATIONS and the PLAN.
The BUILDER will endeavor to arrange for the inspection by the BUYER’S REPRESENTATIVE during working hours of the BUILDER. However, such inspection may be arranged beyond the BUILDER’s normal working hours, including weekend and/or holiday if this is considered necessary by the BUILDER in order to meet the BUILDER’s construction
12
schedule, on the condition that the BUILDER will inform the BUYER’S REPRESENTATIVE at least Two (2) working days in advance of such inspection.
The BUYER’S REPRESENTATIVE shall, within the limits of the authority conferred upon him by the BUYER, make decisions or give advice to the BUILDER on behalf of the BUYER within reasonable time on all problems arising out of, or in connection with, the construction of the VESSEL and generally act in a reasonable manner with a view to cooperating to the utmost with the BUILDER in the construction process of the VESSEL.
The decision, approval or advice of the BUYER’S REPRESENTATIVE shall be deemed to have been given by the BUYER and once given shall not be withdrawn, revoked or modified except with consent of the BUILDER.
Provided that the BUYER’S REPRESENTATIVE or his assistants shall comply with the foregoing obligations, no act or omission of the BUYER’S REPRESENTATIVE or his assistants shall, in any way, diminish the liability of the BUILDER under Article IX (WARRANTY OF QUALITY). The BUYER’S REPRESENTATIVE shall notify the BUILDER within reasonable time in writing of his discovery of any construction or materials, which he believes do not or will not conform to the requirements of the CONTRACT and the SPECIFICATIONS or the PLAN and likewise advise and consult with the BUILDER on all matters pertaining to the construction of the VESSEL, as may be required by the BUILDER, or as he may deem necessary.
However, if the BUYER’S REPRESENTATIVE fails to submit to the BUILDER, within one (1) working day after any inspections or tests, or in the case of major inspection or test items, within two (2) working days, any such demand concerning alterations or changes with respect to the construction, arrangement or outfit of the VESSEL, which the BUYER’S REPRESENTATIVE has examined, inspected or attended at the test thereof under this CONTRACT or the SPECIFICATIONS, the BUYER’S REPRESENTATIVE shall be deemed to have approved the same and shall be precluded from making any demand for alterations, changes, or complaints with respect thereto at a later date. Such major inspection or test items shall be decided and agreed by the parties to this CONTRACT at the time of the BUYER’s approval of an inspection and test plan submitted by the BUILDER upon the BUYER’S REPRESENTATIVE’s work commencement or opening up of his office at the SHIPYARD, whichever is the earlier.
The BUILDER shall comply with any such demand which is not contradictory to this CONTRACT and the SPECIFICATIONS or the PLAN, provided that any and all such demands by the BUYER’S REPRESENTATIVE with regard to construction, arrangement and outfit of the VESSEL shall be submitted in writing to the authorized representative of the BUILDER. The BUILDER shall notify the BUYER’S REPRESENTATIVE of the names of
13
the persons who are from time to time authorized by the BUILDER for this purpose.
It is agreed upon between the BUYER and the BUILDER that the modifications, alterations or changes and other measures necessary to comply with such demand may be effected at a convenient time and place at the BUILDER’s reasonable discretion in view of the construction schedule of the VESSEL.
In the event that the BUYER’S REPRESENTATIVE shall advise the BUILDER that he has discovered or believes the construction or materials do not or will not conform to the requirements of this CONTRACT and the SPECIFICATIONS or the PLAN, and the BUILDER shall not agree with the views of the BUYER’S REPRESENTATIVE in such respect, either the BUYER or the BUILDER may, with the agreement of the other party, seek an opinion of the CLASSIFICATION SOCIETY or failing such agreement, request an arbitration in accordance with the provisions of Article XIII hereof. The CLASSIFICATION SOCIETY or the arbitration tribunal, as the case may be, shall determine whether or not a nonconformity with the provisions of this CONTRACT, the SPECIFICATIONS and the PLAN exists. If the CLASSIFICATION SOCIETY or the arbitration tribunal, as the case may be, enters a determination in favour of the BUYER, then in such case the BUILDER shall make the necessary alterations or changes, or if such alterations or changes cannot be made in time to meet the construction schedule for the VESSEL, the BUILDER may make a proposal for a fair and reasonable adjustment of the CONTRACT PRICE in lieu of such alterations and changes, such proposal to be subject to the mutual agreement of the BUILDER and BUYER. If the CLASSIFICATION SOCIETY or the arbitration tribunal, as the case may be, enters a determination in favour of the BUILDER, then the time for delivery of the VESSEL shall be extended for the period of delay in construction, if any, occasioned by such proceedings, and the BUYER shall compensate the BUILDER for the proven loss and damages incurred by the BUILDER as a result of the dispute herein referred to.
3.
APPROVAL OF DRAWINGS
All plans and drawings and instruction books to be in English.
(a)
The BUILDER shall submit to the BUYER three (3) copies of each of the plans and drawings to be submitted to the BUYER for its approval at its address as set forth in Article XVIII hereof. The BUYER shall, within twenty one (21) days including mailing time after receipt thereof, return to the BUILDER one (1) copy of such plans and drawings with the approval or comments, if any, of the BUYER. A list of the plans and drawings to be so submitted to the BUYER shall be mutually agreed upon between the parties hereto.
(b)
When and if the BUYER’S REPRESENTATIVE shall have been sent by the BUYER to the SHIPYARD in accordance with Paragraph 1 of this Article, the BUILDER may submit
14
the remainder, if any, of the plans and drawings in the agreed list, to the BUYER’S REPRESENTATIVE for his approval, unless otherwise agreed upon between the parties hereto.
The BUYER’S REPRESENTATIVE shall, within seven (7) days after receipt thereof, return to the BUILDER one (1) copy of such plans and drawing with his approval or comments written thereon, if any. Approval by the BUYER’S REPRESENTATIVE of the plans and drawings duly submitted to him shall be deemed to be the approval by the BUYER for all purposes of this CONTRACT.
(c)
In the event that the BUYER or the BUYER’S REPRESENTATIVE shall fail to return the plans and drawings to the BUILDER within the time limit as hereinabove provided, such plans and drawings shall be deemed to have been automatically approved without any comment. In the event the plans and drawings submitted by the BUILDER to the BUYER or the BUYER’S REPRESENTATIVE in accordance with this Article do not meet with the BUYER’s or the BUYER’S REPRESENTATIVE’s approval, the matter may be submitted by either party hereto for determination pursuant to Article XIII hereof. If the BUYER’s comments on the plans and drawings that are returned to the BUILDER by the BUYER within the said time limit are not clearly specified or detailed, the BUILDER shall seek clarification from the BUYER prior to implementing them which clarification must be provided in writing by the BUYER within five (5) days of such request from the BUILDER. If the BUYER shall fail to provide the BUILDER with such clarification within the said time limit, then the BUILDER shall be entitled to place its own interpretation on such comments in implementing them.
4.
SALARIES AND EXPENSES
All salaries and expenses of the BUYER’S REPRESENTATIVE or any other person or persons employed by the BUYER hereunder shall be for the BUYER’s account.
5.
RESPONSIBILITY OF THE BUILDER
(a)
The BUILDER shall provide the BUYER’S REPRESENTATIVE and his assistants free of charge with suitably furnished office space at, or in the immediate vicinity of, the SHIPYARD together with access to telephone, internet connection, printer/copier and facsimile facilities, air conditioning, toilets, and computer outlet to enable the BUYER’S REPRESENTATIVE and his assistants to carry out their work under this CONTRACT. However, the BUYER shall pay for the telephone high speed internet connection and facsimile facilities used by the BUYER’S REPRESENTATIVE or his assistants.
The BUILDER shall provide full assistance and advice how to obtain the necessary visas,
15
working permits and/or other document that may be necessary for the BUYER’S REPRESENTATIVE to enter and remain and work in Korea without delay provided that the BUYER’S REPRESENTATIVE meets the requirements and laws of Korea.
The BUILDER, its employees, agents and subcontractors, during its working hours until delivery of the VESSEL, shall arrange for them to have free and ready access to the VESSEL, her equipment and accessories, and to any other place (except the areas controlled for the purpose of national security) where work is being done, or materials are being processed or stored in connection with the construction of the VESSEL including the premises of sub-contractors.
The BUYER’S REPRESENTATIVE or his assistants or employees shall observe the work’s rules and regulations prevailing at the BUILDER’s and its sub-contractor’s premises. The BUILDER shall promptly provide to the BUYER’S REPRESENTATIVE and/or his assistants and shall ensure that its sub-contractors shall promptly provide all such information as he or they may reasonably request in connection with the construction of the VESSEL and her engines, equipment and machinery.
The BUILDER is responsible for ensuring at all times that a safe working environment and proper access is provided to the works and/or areas of inspection. Failure to provide proper, safe access at either the BUILDER or any appointed sub contractor may result in declining an inspection provided that justifiable grounds are presented to the BUILDER. Such time and impact to schedule are for the BUILDER’s account / responsibility.
(b)
The BUYER’S REPRESENTATIVE and his assistants shall at all times remain the employees of the BUYER, and not of the BUILDER. The BUILDER shall not be liable to the BUYER or the BUYER’S REPRESENTATIVE or to his assistants or to the BUYER’s employees or agents for personal injuries, including death, during the time they, or any of them, are on the VESSEL, or within the premises of either the BUILDER or its sub-contractors, or are otherwise engaged in and about the construction of the VESSEL, unless, however, such personal injuries, including death, are caused by the gross negligence or willful misconduct of the BUILDER, its sub-contractors, or its or their employees or agents. The BUILDER shall not be liable to the BUYER for damages to, or destruction of property of the BUYER or of the BUYER’S REPRESENTATIVE or his assistants or the BUYER’s employees or agents, unless such damages, loss or destruction is caused by the gross negligence or willful misconduct of the BUILDER, its sub-contractors, or its or their employees or agents.
6.
RESPONSIBILITY OF THE BUYER
The BUYER shall undertake and assure that the BUYER’S REPRESENTATIVE shall carry
16
out his duties hereunder in accordance with the normal shipbuilding practice and in such a way so as to avoid any unnecessary and unreasonable increase in building cost, delay in the construction of the VESSEL, and/or any disturbance in the construction schedule of the BUILDER.
The BUILDER has the right to request the BUYER to replace the BUYER’S REPRESENTATIVE who is deemed unsuitable and unsatisfactory for the proper progress of the VESSEL’s construction.
The BUYER shall investigate the situation by sending its representative (s) to the SHIPYARD, if necessary, and if the BUYER considers that such BUILDER’s request is justified, the BUYER shall effect such replacement as soon as conveniently arrangeable.
The BUILDER’s employees, agents, subcontractors and so forth shall at all times remain under the BUILDER’s responsibility. The BUYER shall not be liable to the BUILDER, or the BUILDER’s employees, agents, subcontractors and so forth for personal injuries, including death, during the time they, or any of them, are on the VESSEL, or within the premises of either the BUILDER or his subcontractors, or are otherwise engaged in and about the construction of the VESSEL, unless, however, such personal injuries, including death are caused by the gross negligence of the BUYER, its employees including the BUYER’S REPRESENTATIVE and his assistants or agents. The BUYER shall not be liable to the BUILDER, or the BUILDER’s employees, agents, subcontractors and so forth for damages to, or loss or destruction of property of the BUILDER, or the BUILDER’s employees, agent, subcontractors and so forth unless such damages, loss or destruction were caused by the gross negligence of the BUYER, or its employees or agents.
(End of Article)
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ARTICLE V:
MODIFICATION, CHANGES AND EXTRAS
1.
HOW EFFECTED
Minor modifications or changes to the SPECIFICATIONS and the PLAN under which the VESSEL is to be constructed may be made at any time hereafter by written agreement of the parties hereto.
Any modification or change requested by the BUYER which does not affect the frame-work of the SPECIFICATIONS or the PLAN and also does not adversely affect the BUILDER’s planning or program in relation to the BUILDER’s other commitments which have been entered into at that time shall be agreed to by the BUILDER if the BUYER agrees to adjustment of the CONTRACT PRICE(if any), deadweight and/or cubic capacity, speed requirements, the Delivery Date and other terms and conditions of this CONTRACT reasonably required as a result of such modifications or change.
The BUILDER has the right to continue construction of the VESSEL on the basis of the SPECIFICATIONS and the PLAN until the BUYER
and BUILDER
has agreed to
the necessary
adjustments
to the Contract Price of the VESSEL, the time of delivery and any other alterations in this
CONTRACT
, or the
SPECIFICATIONS. The BUILDER shall be entitled to refuse to make any alteration, change or modification of the SPECIFICATIONS and/or the PLAN requested by the BUYER, if the BUYER and BUILDER do not agree to the aforesaid adjustments within seven (7) days of the BUILDER’s notification of its proposal for the same to the BUYER, or, if, in the BUILDER’s reasonable judgement, the compliance with such request of the BUYER would cause an unreasonable disruption of the normal working schedule of the SHIPYARD.
The BUILDER, however, agrees to exert its best efforts to accommodate such reasonable request by the BUYER so that the said change and modification shall be made at a reasonable cost and within the shortest period of time reasonably possible. The aforementioned agreement to modify and change the SPECIFICATIONS and the PLAN may be effected by exchange of letters, e-mail or facsimiles manifesting the agreement.
The letters, e-mail and facsimiles exchanged by the parties pursuant to the foregoing shall constitute an amendment to this CONTRACT and the SPECIFICATIONS or the PLAN under which the VESSEL shall be built. Upon consummation of such an agreement to modify and change the SPECIFICATIONS or the PLAN, the BUILDER shall alter the construction of the VESSEL in accordance therewith including any addition to, or deduction from, the work to be performed in connection with such construction.
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2.
SUBSTITUTION OF MATERIAL
If any materials, machinery or equipment required for the construction of the VESSEL by the SPECIFICATIONS and the PLAN or otherwise under this CONTRACT cannot be procured in time to meet the BUILDER’s construction schedule for the VESSEL, or are in short supply provided that they have been timely ordered, or are unreasonably high in price compared with the prevailing international market price on the date of signing this CONTRACT provided that they have been timely ordered, the BUILDER may supply, subject to the BUYER’s prior approval in writing, other materials, machinery or equipment of equal quality and effect capable of meeting the requirements of the CLASSIFICATION SOCIETY and the rules, regulations and requirements with which the construction of the VESSEL must comply.
Furthermore, it is expressly agreed that should the BUILDER have to use any steel plate made in China they will only use steel plate produced by major Chinese steel mills used by Hyundai Heavy Industries Group. No Brazilian steel will be used for any of the structural parts of the VESSEL without the BUYER’s prior approval in its absolute discretion. All steel for the structural parts of the VESSEL to be provided in accordance with the CLASSIFICATION SOCIETY’s standards and approvals.
3.
CHANGES IN RULES AND REGULATIONS
If any requirements as to CLASSIFICATION SOCIETY or as to the specified rules and regulations with which the construction of the VESSEL is required to comply in Article I. 3. (a) are altered or changed by the CLASSIFICATION SOCIETY or other regulatory bodies authorized to make such alterations or changes, either the BUYER or the BUILDER, upon receipt of due notice thereof, shall forthwith give notice thereof to the other party in writing. Thereupon, within ten (10) working days after giving the notice to the BUILDER or receiving the notice from the BUILDER, the BUYER shall advise the BUILDER as to the alterations and changes, if any, to be made on the VESSEL which the BUYER, in its sole discretion, shall decide.
The BUILDER shall comply promptly with the said request of the BUYER, provided that the BUILDER and the BUYER shall first agree to:
(a)
any increase or decrease in the CONTRACT PRICE of the VESSEL that is occasioned by such compliance;
(b)
any extension or advancement in the Delivery Date of the VESSEL that is occasioned by such compliance;
19
(c)
any increase or decrease in the deadweight and/or cubic capacity of the VESSEL, if such compliance results in any increase or reduction in the deadweight and/or cubic capacity ;
(d)
adjustment of the guaranteed speed if such compliance results in any increase or reduction in the speed; and
(e)
any other alterations in the terms of this CONTRACT or of the SPECIFICATIONS or the PLAN or both, if such compliance makes such alterations of the terms necessary.
Any delay in the construction of the VESSEL caused by the BUYER’s delay in making a decision or agreement as above shall constitute a permissible delay under this CONTRACT. Such agreement by the BUYER shall be effected in the same manner as provided above for modification and change of the SPECIFICATIONS and the PLAN.
(End of Article)
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ARTICLE VI:
TRIALS AND COMPLETION
GENERAL
The BUILDER shall carry out and run the tests and trials on the VESSEL in the manner and to the extent as described in the SPECIFICATIONS (and the trials schedule) and otherwise as may be required by the CLASSIFICATION SOCIETY.
1.
NOTICE
When the VESSEL is substantially complete and in a safe and fit state to proceed to sea, with all appropriate safety and lifesaving equipment onboard for the expected number of persons to be present, the BUILDER shall notify the BUYER in writing or by e-mail or facsimile at least fourteen (14) days in advance of the time and place of the trial run of the VESSEL. Such notice shall specify the Korean port from which the VESSEL will commence her trial run and approximate date upon which the trial run is expected to take place. Such date shall be further confirmed by the BUILDER five (5) days in advance of the trial run by e-mail or facsimile.
The BUYER’S REPRESENTATIVE(s), who is/are to witness the performance of the VESSEL during such trial run, shall be present at such place on the date specified in such notice. Should the BUYER’S REPRESENTATIVE(s) fail to be present after the BUILDER’s due notice to the BUYER as provided above, the BUILDER shall be entitled to conduct such trial run with the presence of the representative(s) of the CLASSIFICATION SOCIETY only without the BUYER’S REPRESENTATIVE(s) being present. In such case, the BUYER shall be obliged to accept the VESSEL on the basis of a certificate issued by the BUILDER that the VESSEL, after the trial run, subject to alterations and corrections, if necessary, has been found to conform with the SPECIFICATIONS and this CONTRACT and is satisfactory in all respects, provided the BUILDER first makes such corrections and alterations promptly.
2.
WEATHER CONDITION
In the event of unfavourable weather on the date specified for the trial run, the trial run shall take place on the first available day that weather conditions permit. The parties hereto recognize that the weather conditions in Korean waters, in which the trial run is to take place, are such that great changes in weather may arise momentarily and without warning and therefore, it is agreed that if, during the trial run, the weather should become so unfavourable that the trial run cannot be continued, then the trial run shall be discontinued and postponed until the first favourable day next following, unless the BUYER shall assent to the acceptance of the VESSEL by notification in writing on the basis of such trial run so far made prior to such change in weather conditions. Any delay of the trial run caused by such unfavourable weather conditions shall also operate to extend the Delivery Date of the VESSEL for the
21
period of delay occasioned by such unfavourable weather conditions. For the purposes of this paragraph 2, unfavourable weather conditions shall be taken as Beaufort Scale Force 6 and above.
3.
HOW CONDUCTED
All expenses in connection with the trials of the VESSEL are to be for the account of the BUILDER, which, during the trials, is to provide at its own expense the necessary crew to comply with conditions of safe navigation. The trials shall be conducted in the manner prescribed in this CONTRACT and the SPECIFICATIONS, and shall prove fulfillment of the performance requirements for the trials as set forth in the SPECIFICATIONS.
The BUILDER shall be entitled to conduct preliminary sea trials, during which the propulsion plant and/or its appurtenance shall be adjusted according to the BUILDER’s judgement. The BUILDER shall have the right to repeat any trial whatsoever as it deems necessary.
4.
CONSUMABLE STORES
The BUILDER shall load the VESSEL with the required quantity of fuel oil, lubricating oil and greases, fresh water, and other stores necessary to conduct the trials as set forth in the SPECIFICATIONS. The necessary ballast (fuel oil, fresh water and such other ballast as may be required) to bring the VESSEL to the trial load draft, as specified in the SPECIFICATIONS, shall be supplied and paid for by the BUILDER whilst lubricating oil and greases shall be supplied and paid for by the BUYER within the time advised by the BUILDER for the conduct of sea trials as well as for use before the delivery of the VESSEL to the BUYER. The fuel oil as well as lubricating oil and greases shall be in accordance with the engine specifications and the BUYER shall decide and advise the BUILDER of the supplier’s name for lubricating oil and greases prior to the steel cutting of the VESSEL, provided that the supplier shall be acceptable to the BUILDER and/or the makers of all the machinery.
Any fuel oil, fresh water or other consumable stores furnished and paid for by the BUILDER for trial runs remaining on board the VESSEL, at the time of acceptance of the VESSEL by the BUYER, shall be bought by the BUYER from the BUILDER at the BUILDER’s purchase price for such supply in Korea (with supporting invoices and documents provided) and payment by the BUYER thereof shall be made at the time of delivery of the VESSEL. The BUILDER shall pay the BUYER at the time of delivery of the VESSEL for the consumed quantity of lubricating oil and greases which were furnished and paid for by the BUYER at the BUYER’s purchase price thereof (with supporting invoices and documents provided).
The consumed quantity of lubricating oils and greases shall be calculated on the basis of the difference between the remaining amount, including the same remaining in the main engine, other machinery and their pipes, stern tube and the like, and the supplied amount.
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5.
ACCEPTANCE OR REJECTION
(a)
Upon completion of sea trial, the BUILDER shall give the BUYER a notice in writing or by e-mail or telefax of the result of the sea trial, as and if the BUILDER considers that the result of sea trial indicates conformity of the VESSEL to this CONTRACT and the SPECIFICATIONS and PLAN.
(b)
The BUYER shall within four (4) working days after receipt of such notice notify the BUILDER in writing or by e-mail or telefax of its acceptance or rejection of the VESSEL, provided that in case of rejecting the VESSEL, the BUYER shall set out in its notice of rejection a detailed, clear explanation of all and any aspects of the VESSEL which it considers do not comply with this CONTRACT, the SPECIFICAITONS and/or the PLAN.
(c)
If the BUILDER is in agreement with the BUYER’s determinations as to non-conformity, the BUILDER shall make such alterations or changes as may be necessary to correct such non-conformity and shall prove the fulfillment of the CONTRACT and SPECIFICATIONS by such tests or trials as may be necessary. If the BUILDER is not in agreement with the BUYER’s determination as to non-conformity, each party shall be entitled to refer the disagreement for determination as per Article XIII.
(d)
The BUYER shall not be entitled to reject the VESSEL by reason of any minor or insubstantial items which do not in any way affect the safety or the operation of the Vessel judged from the point of view of the BUILDER’s shipbuilding practice for Crude Oil Carrier, as the BUILDER has been performing for its other clients and HSQM (Hyundai Shipbuilding Quality Manual) as not being in conformity with the SPECIFICATIONS, but, in that case, the BUILDER shall not be released from the obligation to correct and/or remedy for its own account such minor or insubstantial items as soon as practicable after the delivery of the VESSEL. If inconvenient for the VESSEL to have such items corrected and/or remedied at the SHIPYARD, the BUILDER shall arrange to have such corrections or remedies carried out elsewhere, and may, if practicable, do such work while the VESSEL is sailing. The BUYER may in its absolute discretion accept a payment in lieu of such items being corrected and/or remedied. Any payment in lieu shall be agreed in writing between the BUILDER and the BUYER.
(e)
If during any sea trial any breakdowns occur entailing interruption or irregular performance which can be repaired on board, the sea trial shall be continued after such repairs and be valid in all respects. However, if during the sea trial it becomes apparent that the VESSEL or any part of her equipment requires alterations or correction, the BUILDER shall notify the BUYER promptly in writing or by e-mail or telefax to such effect and shall simultaneously advise the BUYER of the estimated additional time
23
required for the necessary alterations or corrections to be made. The BUYER shall, within five (5) days of receipt from the BUILDER of notice of completion of such alterations or corrections and after such further trials or tests as necessary, notify the BUILDER in writing or by e-mail or telefax of its acceptance or rejection of the VESSEL, all in accordance with the SPECIFICATIONS, PLAN and the CONTRACT, and shall not be entitled to reject the VESSEL on such grounds until such time.
(End of Article)
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ARTICLE VII:
DELIVERY
1.
TIME AND PLACE
The VESSEL shall be delivered by the BUILDER to the BUYER at the SHIPYARD, safely afloat at a quay on or before November 15, 2016 (hereinafter called the “DELIVERY DATE”) after completion of satisfactory trials and acceptance by the BUYER in accordance with the terms of Article VI, except that, in the event of delays in delivery of the VESSEL by the BUILDER due to causes which under the terms of this CONTRACT permit extensions of the time for delivery of the VESSEL, the aforementioned DELIVERY DATE shall be extended accordingly.
The BUILDER shall provide the BUYER in writing by e-mail or telefax thirty (30) days approximate notice of readiness and fourteen (14), seven (7) and three (3) days definite notice of readiness for delivery of the VESSEL.
2.
WHEN AND HOW EFFECTED
Provided that the BUYER shall concurrently with delivery of the VESSEL release to the BUILDER the fifth instalment as set forth in Article X.2.hereofand shall have fulfilled all of its obligations provided for in this CONTRACT (as it may have been amended from time to time) prior to the delivery of the VESSEL, delivery of the VESSEL shall be forthwith effected upon acceptance thereof by the BUYER, as hereinabove provided, by the concurrent delivery by each of the parties hereto to the other of a PROTOCOL OF DELIVERY AND ACCEPTANCE acknowledging delivery of the VESSEL by the BUILDER and acceptance thereof by the BUYER, which PROTOCOL shall be prepared induplicate and signed by each of the parties hereto.
3.
DOCUMENTS TO BE DELIVERED TO THE BUYER
Upon delivery and acceptance of the VESSEL, the BUILDER shall deliver to the BUYER the following documents, which shall accompany the aforementioned PROTOCOL OF DELIVERY AND ACCEPTANCE:
(a)
PROTOCOL OF TRIALS of the VESSEL made pursuant to this CONTRACT and the SPECIFICATIONS,
(b)
PROTOCOL OF INVENTORY of the equipment of the VESSEL, including spare parts, all as specified in the SPECIFICATIONS,
25
(c)
PROTOCOL OF STORES OF CONSUMABLE NATURE, such as all fuel oil and fresh water remaining in tanks if its cost is charged to the BUYER under Article VI. 4. hereof,
(d)
FINISHED DRAWINGS AND PLANS pertaining to the VESSEL as stipulated in the SPECIFICATIONS, which shall be furnished to the BUYER at no additional cost,
(e)
ALL CERTIFICATES required to be furnished upon delivery of the VESSEL pursuant to this CONTRACT, the SPECIFICATIONS and the customary shipbuilding practice, including
(i)
Classification Certificate
(ii)
Safety Construction Certificate
(iii)
Safety Equipment Certificate
(iv)
Safety Radiotelegraphy Certificate
(v)
International Loadline Certificate
(vi)
International Tonnage Certificate
(vii)
BUILDER’s Certificate
(duly notarized and legalized)
(viii)
Ship Sanitation Control Exemption Certificate
(ix)
Classification Certificate for anchor, chains and mooring ropes, machinery and equipment
(x)
Certificate for life-boats and life saving equipments
(xi)
Certificates for navigation lights and special signal lights
(xii)
International Oil Pollution Prevention Certificate
(xiii)
Compass adjustment Certificate
(xiv)
Suez Canal Tonnage Certificate
(xv)
Deadweight Certificate
(xvi)
Certificate for Provision Crane, Hose Handling Crane and Engine Room Crane
(xvii)
International Air Pollution Prevention Certificate
(xviii)
Coating Technical File
(xix)
International Sewage Pollution Certificate
(xx)
Class approved Loading Manual
(xxi)
Certified Cargo oil tanks calibration
(xxii)
Ballast Management Certificate
(xxiii)
Emergency Towing System
(xxiv)
Engine Technical File (NOx)
(xxv)
Load Test certificates for all designated lifting lugs / points installed (more than 3.0 ton S.W.L) (issued by the BUILDER)
The above list of Certificates and Documents is indicative and may possibly not include all the Required Certificates and Documents for the VESSEL as she is specified in her CLASSIFICATION notation to conduct unrestricted trade. However it is agreed that all
26
the required CLASSIFICATION SOCIETY and Statutory Certificates and Documents should be furnished by the BUILDER to the BUYER.
All certificates or relevant documents which are to be duly notarized and legalized shall be agreed between the parties prior to delivery. All certificates to be delivered in one (1) original and two (2) copies to the BUYER.
If any Certificate, Drawing, Plan, Diagram or other documents referred to in this Article, through no fault on the part of BUILDER, cannot be provided upon delivery and if the absence thereof does not impede the navigation or management of the VESSEL and/or constitute a breach of the statutory requirements of the flag state, of the VESSEL or the requirements of the CLASSIFICATION SOCIETY, a provisional/interim certificate shall be acceptable by the BUYER provided the formal Certificate, Drawing, Plan, Diagram or other document be delivered as soon as practicable after delivery of the VESSEL.
(f)
DECLARATION OF WARRANTY of the BUILDER that the VESSEL is delivered to the BUYER free and clear of any liens, claims, mortgages, or other encumbrances upon the BUYER’s title thereto, and in particular, that the VESSEL is absolutely free of all burdens in the nature of imposts, taxes, or charges imposed by the prefecture or country of the port of delivery, as well as of all liabilities of the BUILDER to its sub-contractors and employees and of all liabilities arising from the operation of the VESSEL in trial runs, or otherwise, prior to delivery except as otherwise provided under this CONTRACT.
(g)
COMMERCIAL INVOICE made by the BUILDER.
(h)
BILL OF SALE made by the BUILDER.
4.
TENDER OF THE VESSEL
If the BUYER fails to take delivery of the VESSEL after completion thereof according to this CONTRACT and the SPECIFICATIONS, the BUILDER shall have the right to tender delivery of the VESSEL after compliance with all procedural requirements as provided above.
5.
TITLE AND RISK
Title to and risk of the VESSEL and her equipment (but excluding the BUYER’s supplies) shall pass to the BUYER upon Delivery and Acceptance of the VESSEL being effected as stated above and the BUILDER shall be free of all responsibility or liability whatsoever related with this CONTRACT except for the warranty of quality contained in Article IX and the obligation to correct and/or remedy, as provided in Article VI. 5(d), if any. It is expressly understood between the parties hereto that, until such Delivery and Acceptance is effected, the
27
VESSEL and equipment thereof are at the entire risk of the BUILDER including but not confined to, risks of war, insurrection and seizure by Governments or Authorities, whether Korean or foreign, and whether at war or at peace. The title to the BUYER’s supplies as provided in Article XII shall remain with the BUYER and the BUILDER’s responsibility for such BUYER’s supplies shall be as described in Article XII.2.
6.
REMOVAL OF THE VESSEL
The BUYER shall take possession of the VESSEL immediately upon Delivery and Acceptance thereof and shall remove the VESSEL from the SHIPYARD within three (3) working days after Delivery and Acceptance thereof is effected.
From the delivery of the VESSEL until the actual removal thereof from the SHIPYARD, the BUYER shall be responsible for the safety and preservation of the VESSEL in all respects, including without limitation, keeping the VESSEL insured at his own cost, and furthermore, the BUYER shall indemnify and hold the BUILDER free and harmless against any liability or claims including without limitation, the claims of his insurers arising out of any accident whatsoever , unless caused by the gross negligence or willful misconduct of the BUILDER, his employee or agent.
Port dues and other charges levied by the Korean Government Authorities after Delivery and Acceptance of the VESSEL and any other costs related to the removal of the VESSEL shall be borne by the BUYER.
(End of Article)
28
ARTICLE VIII:
DELAYS AND EXTENSIONS OF TIME (FORCE MAJEURE)
1.
CAUSES OF DELAY
If, at any time after signing this CONTRACT, either the construction or delivery of the VESSEL or any performance required hereunder as a prerequisite to the delivery thereof is delayed by any of the following events: namely war, acts of state or government, blockade, revolution, insurrections, mobilization, civil commotion, riots, strikes, sabotage, lockouts, Acts of God or the public enemy, plague or other epidemics, quarantines, shortage or prolonged failure of electric current, freight embargoes, or defects in major forgings or castings, delays or defects in the BUYER’s supplies as stipulated in Article XII, if any, or shortage of materials, machinery or equipment or inability to obtain delivery or delays in delivery of materials, machinery or equipment, provided that at the time of ordering the same could reasonably be expected by the BUILDER to be delivered in time or defects in materials, machinery or equipment which could not have been detected by the BUILDER using reasonable care or earthquakes, tidal waves, typhoons, hurricanes, prolonged or unusually severe weather conditions or destruction of the premises or works of the BUILDER or its sub-contractors, or of the VESSEL, or any part thereof, by fire, landslides, flood, lightning, explosion, or delays in the BUILDER’s other commitments resulting from any such causes as described in this Article which in turn directly delay the construction of the VESSEL or the BUILDER’s performance under the CONTRACT (the BUILDER treating this CONTRACT not less favorably than other commitments), or delays caused by the CLASSIFICATION SOCIETY or the BUYER’s faulty action or omission, or other causes beyond the control of the BUILDER, or its sub-contractors, as the case may be, then in the event of delays due to the happening of any of the aforementioned contingencies, the DELIVERY DATE of the VESSEL under this CONTRACT shall be extended for a period of time which shall not exceed the total accumulated time of all such delays provided however that:
(i)
the delay in respect of which the BUILDER is claiming relief was beyond its reasonable control or that of its employees, suppliers and subcontractors and was not caused or contributed to by any error, neglect, act or omission of the BUILDER or of its agents, employees or subcontractors, nor by any breach of this CONTRACT;
(ii)
the delay impacts upon the Vessel’s construction schedule and completion;
(iii)
the BUILDER has shown due diligence in choice of sub-contractor; and
(iv)
the BUILDER has taken all reasonable steps to mitigate its effect upon the construction of the VESSEL,
29
For the avoidance of doubt, where two delay events as described in this paragraph 1(a) occur simultaneously or overlap with each other, such delays caused by such events shall not be double-counted.
2.
NOTICE OF DELAYS
Within seven (7) days after commencement of any delay on account of which the BUILDER claims that it is entitled under this CONTRACT to an extension of the DELIVERY DATE of the VESSEL, excluding delays due to arbitration, the BUILDER shall advise the BUYER in writing or by e-mail or facsimile of the date such delay commenced, the reasons thereof and, if possible, its estimated duration of the probable delay in the delivery of the VESSEL, and shall supply the BUYER if reasonably available with evidence to justify the delay claimed. Within seven (7) days after such cause of delay ends, the BUILDER shall likewise advise the BUYER in writing or by e-mail or facsimile of the date that such cause of delay ended, and also, shall specify the period of time by which the BUILDER claims the DELIVERY DATE should be extended by reason of such delay. Failure of the BUYER to object to the BUILDER’s notification of any claim for extension of the date for delivery of the VESSEL within seven (7) days after receipt by the BUYER of such notification shall be deemed to be a waiver by the BUYER of its right to object to such extension of the DELIVERY DATE.
Failure of the BUILDER to give notice of any relevant delay event in accordance with this paragraph 2 shall be deemed a waiver of the BUILDER’s right to postpone the DELIVERY DATE under this Article VIII in respect of such relevant delay event.
3.
RIGHT TO CANCEL FOR EXCESSIVE DELAY
If the total accumulated time of all permissible and non-permissible delays, excluding delays due to (i) arbitration under Article XIII.7, (ii) the BUYER’s defaults under Article XI.1 and XI.2., (iii) modifications and changes under Article V.1 and V.3 or (iv) delays or defects in the BUYER’s supplies as stipulated in Article XII.1, aggregates two hundred and sixty (260) days or more (inclusive of the thirty (30) days grace period as per Article III.1.(a)), then, the BUYER may, at any time thereafter, cancel this CONTRACT by giving a written notice of cancellation to the BUILDER. Such cancellation shall be effective as of the date the notice thereof is received by the BUILDER and the BUILDER, upon receipt of such notice, and upon the BUYER’s demand, shall refund in accordance with the provisions of Article X.5 hereof all payments made to the BUILDER by the BUYER.
If the BUYER has not served the notice of cancellation as provided in the above or Article III.1 hereof, the BUILDER may, at any time after expiration of the accumulated time of the delay in delivery, either two hundred and sixty (260) days in case of the delays referred to in this Paragraph 3 or two hundred and ten (210) days in case of the delay in Article III.1, notify
30
the BUYER of the future date upon which the BUILDER estimates the VESSEL will be ready for delivery and demand in writing or by e-mail or facsimile that the BUYER make an election either to cancel this CONTRACT or to consent to the delivery of the VESSEL at such future date, in which case the BUYER shall, within seven (7) business days after receipt of such demand, make and notify the BUILDER of such election. If the BUYER elects to consent to the delivery of the VESSEL at such future date (or other future date as the parties may agree):
(a)
Such future date shall become the contractual delivery date for the purposes of this CONTRACT and shall be subject to extension by reason of permissible delays as herein provided, and
(b)
If the VESSEL is not delivered by such revised contractual delivery date (as extended by reason of permissible delays), the BUYER shall have the same right of cancellation upon the same terms as provided in the above and Article III. 1.
If the BUYER shall not make an election within seven (7) business days as provided hereinabove, the BUYER shall be deemed to have accepted such extension of the DELIVERY DATE to the future delivery date indicated by the BUILDER.
4.
DEFINITION OF PERMISSIBLE DELAYS
Delays on account of the foregoing causes specified in Paragraph 1 above shall be understood to be permissible delays, and are to be distinguished from non-permissible unauthorized delays on account of which the CONTRACT PRICE of the VESSEL is subject to adjustment as provided in Article III hereof.
(End of Article)
31
ARTICLE IX:
WARRANTY OF QUALITY
1.
GUARANTEEOF MATERIAL AND WORKMANSHIP
Subject to the provisions hereinafter set forth, the BUILDER undertakes to remedy, free of charge to the BUYER, any defective design, construction, material and/or workmanship
and/or negligent or other improper acts or omissions
(hereinafter called the “DEFECT(S)”) on the part of the BUILDER and/or its sub-contractors, provided that the defect is discovered within a period of twelve (12) months after the date of delivery of the VESSEL and a notice thereof is duly given to the BUILDER as hereinafter provided.
For the purpose of this Article the VESSEL shall include her hull, machinery and equipment, painting and coatings thereof but shall exclude any parts for the VESSEL which have been supplied by or on behalf of the BUYER under Article XII.
The BUILDER agrees that upon the expiry of this guarantee it shall assign (to the extent to which it may validly do so and such supplier guarantee extends beyond
twelve (
12
)
months after the date of delivery of the VESSEL) to the BUYER, all rights, title and interest that the BUILDER may have in and to all guarantees or warranties given by the supplier of any of the appurtenances and materials used in the construction and/or operation of the VESSEL, unless such assignment is against Korean law.
2.
NOTICE OF DEFECTS
The BUYER shall notify the BUILDER in writing or by e-mail or facsimile, of any DEFECTS for which claim is made under this guarantee as promptly as possible after discovery thereof. The BUYER’s written notice shall include full particulars to describe the nature and extent of the DEFECTS. The BUILDER shall have no obligation for any DEFECTS discovered prior to the expiry date of the said twelve (12) months period, unless notice of such DEFECTS is received by the BUILDER no later than seven (7) business days after such expiry date.
3.
REMEDY OF DEFECTS
(a)
The BUILDER shall remedy, at its expense, any DEFECT against which the VESSEL or any part of the machinery or equipment thereof is guaranteed under this Article IX, by making all necessary repairs or replacements at the SHIPYARD or elsewhere as provided for in (b) hereinbelow.
(b)
However, if it is impractical to bring the VESSEL to the SHIPYARD, the BUYER may cause the necessary repairs or replacements to be made elsewhere which is deemed
32
suitable for the purpose, provided that, in such event, the BUILDER may forward or supply replacement parts or materials to the VESSEL, unless forwarding or supplying thereof to the VESSEL would impair or delay the operation or working schedule of the VESSEL. In the event that the BUYER proposes to cause the necessary repairs or replacements to be made to the VESSEL at any other shipyard or works than the SHIPYARD, the BUYER shall first, but in all events as soon as possible, give the BUILDER notice in writing or by e-mail or facsimile of the time and place such repairs will be made, and if the VESSEL is not thereby delayed, or her operation or working schedule is not thereby impaired, the BUILDER shall have the right to verify by its own representative(s) the nature and extent of the DEFECTS complained of. The BUILDER shall in such case, promptly advise the BUYER in writing or by e-mail or facsimile, after such examination has been completed, of its acceptance or rejection of the DEFECTS as ones that are covered by the guarantee herein provided. Upon the BUILDER’s acceptance of the DEFECTS as justifying remedy under this Article IX, or upon the award of the arbitration tribunal so determining, or if the BUILDER neither accepts nor rejects the defects nor requests arbitration within sixty (60) days after its receipt of the BUYER’s notice of defects, the BUILDER shall pay to the BUYER for such repairs or replacements a sum equal to the actual direct cost of the repairs or replacements, as evidenced in United States Dollars by the final invoices of the relevant shipyard/repairer or supplier, however, the amount of the BUILDER’s payment to the BUYER for such repairs or replacements shall not exceed the average cost quoted by two reputable repair yards in Singapore.
(c)
In any case, the VESSEL shall be taken at the BUYER’s costs and responsibility to the place elected, ready in all respects for such repairs or replacements and in any event, the BUILDER shall not be responsible for towage, dockage, wharfage, port charges or any other cost or expenses whatsoever incurred by the BUYER in getting and keeping the VESSEL ready for such repairs or replacements.
(d)
In the event that it is necessary for the BUILDER to forward a replacement for a defective part under this guarantee, replacement parts shall be shipped to the BUYER under the terms of C.I.F. port designated by the BUYER.
(e)
The BUILDER reserves the option to retrieve, at the BUILDER’s cost, any of the replaced equipment/parts in case DEFECTS are remedied in accordance with the provisions in this Article IX.
(f)
Any dispute under this Article IX shall be referred to arbitration in accordance with the provisions of Article XIII hereof.
(g)
In case any amount, which the BUILDER should pay to the BUYER for a single claim in accordance with this Article, is over US$100,000, then the BUILDER shall immediately
33
pay to the BUYER such amount.
4.
EXTENT OF BUILDER’S RESPONSIBILITY
(a)
After delivery of the VESSEL the BUILDER shall have no responsibility for any other DEFECTS whatsoever in the VESSEL than the DEFECTS specified in paragraph 1 of this Article IX and Article VI. 5(d). The BUILDER shall have no liability whatsoever in any circumstances whatsoever to the BUYER or to any third party for anything except the cost of repairing the DEFECT itself. The BUILDER shall not in any circumstances be responsible or liable for any consequential or special losses, damages or expenses including, but not limited to, loss of time, loss of profit or earning or demurrage directly or indirectly occasioned to the BUYER or any third party by reason of the DEFECTS specified in paragraph 1 of this Article or due to repairs or other works done to the VESSEL to remedy such DEFECTS or any other consequential or special losses, damages or expenses related to any liability, cost or expense whatsoever or howsoever arising in connection with any damage to the VESSEL or to any cargo or to any other property owned by the BUYER or any third party caused as a result of the DEFECT and after delivery the BUYER shall hold the BUILDER harmless and indemnify the BUILDER against any such claim from the BUYER or any third party whatsoever in respect of any such matters and in respect of any other claims relating to the VESSEL for which the BUILDER does not expressly give an warranty to the BUYER under this Article.
(b)
The BUILDER shall not be responsible for any DEFECTS in any part of the VESSEL which may subsequent to delivery of the VESSEL have been replaced or in any way repaired by any persons other than the BUILDER and/or its nominated sub-contractors, or for any DEFECTS which have been caused or aggravated by omission or improper use and maintenance of the VESSEL on the part of the BUYER, its servants or agents or by ordinary wear and tear or by any other circumstances beyond the control of the BUILDER.
(c)
The guarantee contained as hereinabove in this Article replaces and excludes any other liability, guarantee, warranty and/or condition whether expressly set out in this CONTRACT or imposed or implied by the law, customary, statutory or otherwise, by reason of the construction and sale of the VESSEL by the BUILDER for and to the BUYER.
Any major parts or materials (including painting or coating) replaced during the Guarantee Period under Paragraph 1 of this Article shall be guaranteed for a further twelve (12) months, but not more than eighteen (18) months from delivery of the VESSEL.
(End of Article)
34
ARTICLE X:
PAYMENT
1.
CURRENCY
All payments under this CONTRACT shall be made in United States Dollars.
2.
TERMS OF PAYMENT
The payments of the CONTRACT PRICE shall be made as follows.
(a)
First Instalment
Twenty percent (20%) of the CONTRACT PRICE amounting to U.S.Dollars Twenty Million Two Hundred Sixty Two Thousand Fifty Eight (US$ 20,262,058) shall be paid within three (3) business days after the BUYER’s receipt of the Letter of Guarantee via SWIFT, duly issued in accordance with Paragraph 8 of this Article.
Under this CONTRACT, in counting the business days, only Saturdays and Sundays are excepted. When a due date falls on a day when banks are not open for business in any of New York, London, Singapore or Seoul, such due date shall fall due upon the first business day next following.
(b)
Second Instalment
Ten per cent (10%) of the CONTRACT PRICE amounting to U.S.Dollars Ten Million One Hundred Thirty One Thousand Thirty (US$ 10,131,030) shall be paid on the date falling six (6) months from the date of signing this CONTRACT.
(c)
Third Instalment
Ten per cent (10%) of the CONTRACT PRICE amounting to U.S.Dollars Ten Million One Hundred Thirty One Thousand Thirty (US$ 10,131,030) shall be paid within three (3) business days of receipt by the BUYER of a facsimiled or emailed advice from the BUILDER that first steel cutting of the VESSEL has been commenced and confirmed in writing by the CLASSIFICATION SOCIETY. Such steel cutting to take place not more than twelve (12) months prior to the DELIVERY DATE.
(d)
Fourth Instalment
Ten per cent (10%) of the CONTRACT PRICE amounting to U.S.Dollars Ten Million One Hundred Thirty One Thousand Thirty (US$ 10,131,030) shall be paid within
35
three (3) business days of receipt by the BUYER of a facsimiled or emailed advice from the BUILDER that the first block of the keel has been laid and confirmed in writing by the CLASSIFICATION SOCIETY. Such keel laying to take place not more than eight (8) months prior to the DELIVERY DATE.
(e)
Fifth Instalment
Fifty
per cent (
50
%) of the CONTRACT PRICE amounting to U.S.Dollars
Fifty Million Six Hundred Fifty Five Thousand One Hundred Forty Six
(US$
50,655,146
) plus or minus any increase or decrease due to modifications and/or adjustment, if any, arising prior to delivery of the VESSEL of the CONTRACT PRICE under Articles III and V of this CONTRACT shall be paid to the BUILDER concurrently with the delivery and acceptance of the VESSEL, as evidenced by the execution by the parties of the Protocol of Delivery and Acceptance referred to in Article VII of the C
ONTRACT
. The BUILDER shall send to the BUYER a commercial invoice as demand for payment of this instalment.
(The date stipulated for payment of each of the five instalments mentioned above is hereinafter in this Article and in Article XI referred to as the “DUE DATE” of that instalment).
It is understood and agreed upon by the BUILDER and the BUYER that all payments under the provisions of this Article shall not be delayed or withheld by the BUYER due to any dispute or disagreement of whatsoever nature arising between the BUILDER and the BUYER. Should there be any dispute in this connection, the matter shall be dealt with in accordance with the provisions of arbitration in Article XIII hereof.
3.
DEMAND FOR PAYMENT
At least fourteen(14) days prior to the date of each event provided in Paragraph 2 of this Article X on which any payment shall fall due hereunder, with the exception of the payment of the first instalment, the BUILDER shall notify the BUYER by e-mail or facsimile of the date such payment shall become due.
The BUYER shall immediately acknowledge receipt of such notification by e-mail or facsimile to the BUILDER, and make payment as set forth in this Article. If the BUILDER fails to receive the BUYER’s said acknowledgement within three (3) days after sending the aforementioned notification, the BUILDER shall promptly e-mail or facsimile to the BUYER a second notification of similar import. The BUYER shall immediately acknowledge by e-mail or facsimile receipt of the foregoing second notification regardless of whether or not the first notification was acknowledged as aforesaid.
36
4.
METHOD OF PAYMENT
(a)
All the pre-delivery payments and the payment due on delivery in settlement of the CONTRACT PRICE as provided for in Paragraph 2 of this Article shall be made in U.S. Dollars on or before the DUE DATE thereof by telegraphic transfer as follows:
(i)
The payment of the first, second, third, and fourth instalments shall be made to the account of
Industrial Bank of Korea, Head Office, Seoul, Korea (hereinafter called “IBK”), Account No. 001-1-544566 at JP Morgan Chase Bank,
1 Chase Manhattan Plaza 10th FL
,
New York, NY 10081, USA
(hereinafter called “JPMCB, N.Y.”) in favour of
Hyundai
Heavy Industries Co., Ltd.
(hereinafter called the “
HHI
”)
under advice by telefax or telex, including swift, to IBK by the remitting Bank. If the BUILDER should wish to nominate an alternative bank, the designation, the account number, identity of account holder and name of such account bank shall be notified by the BUILDER to the BUYER at least five (5) business days prior to the DUE DATE.
(ii)
Upon the cost adjustment to the C
ONTRACT PRICE
in accordance with the provisions of the C
ONTRACT
, the fifth
)
instalment as provided for in Paragraph 2.(e) of this Article shall be deposited at the account of
IBK, Account No. 001-1-544566 at JPMCB, N.Y., or any other bank, Seoul, Korea as designated by the BUILDER, by the BUYER in favour of HHI
at least
three (3)
business days prior to the scheduled delivery date of the VESSEL notified by the BUILDER, with instructions valid for a period of twelve (12) business days that the
said instalment is
payable to the
HHI
against presentation by the BUILDER to
IBK, or any other bank, Seoul, Korea as the case may be,
of a copy of the original PROTOCOL OF DELIVERY AND ACCEPTANCE of the VESSEL signed by the BUILDER and the BUYER, together with an invoice for the amount due under this instalment.
(iii)
If the BUILDER fails to present a copy of the PROTOCOL OF DELIVERY AND ACCEPTANCE to the Bank within the said period of twelve (12)
business
days or unless the validity of the instruction is further extended by the BUYER based on mutual agreement in writing reached with the BUILDER within the said twelve (12)
business
days validity period, the BUILDER’s bank shall remit the said amount of the fifth instalment to the BUYER’s bank account immediately upon expiry of the initial twelve (12)
business
days validity period of the instruction. Interest, if any, accrued by such deposit shall be for BUYER’s account.
In the event of the fifth instalment having been so returned by the Bank to the BUYER, the BUYER shall remit the fifth instalment again to the Bank as laid down
37
in this paragraph upon receipt of a further notice from the Builder for readiness of the Vessel for delivery.
(b)
Simultaneously with each of such payments, the BUYER shall advise the BUILDER of the details of the payments by e-mail or facsimile and at the same time, the BUYER shall cause the BUYER’s remitting Bank to advise
IBK, or any other bank, Seoul, Korea as the case may be,
of the details of such payments by authenticated SWIFT
,
bank cable or telex.
5.
REFUND
BY THE BUILDER
(a)
The payments made by the BUYER to the BUILDER prior to delivery of the VESSEL shall constitute advances to the BUILDER. If the VESSEL is rejected by the BUYER in accordance with the terms of this CONTRACT or, except in the case of rescission or cancellation of this CONTRACT by the BUILDER under the provisions of Article XI.1 hereof, if the BUYER terminates, cancels or rescinds this CONTRACT pursuant to any of the provisions of this CONTRACT specifically permitting the BUYER to do so, the BUILDER shall forthwith refund to the BUYER, in U.S. Dollars, the full amount of total sums paid by the BUYER to the BUILDER in advance of delivery together with interest thereon as herein provided without deduction, set-off or withholding in US dollars.
(b)
The transfer and other bank charges of such refund shall be for the BUILDER’s account. The interest rate of the refund, as above provided, shall be
Six
per cent (
6
%) per annum from the date following the date of receipt by the BUILDER of the pre-delivery instalment(s) to the date of remittance by telegraphic transfer of such refund, provided, however, that if the cancellation of this CONTRACT by the BUYER is based upon delays due to Force Majeure or other causes beyond the control of the BUILDER as provided for in Article VIII.1 hereof, then in such event, the interest rate of refund shall be reduced to Four per cent (4%) per annum for the periods affected by such delays.
(c)
It is hereby understood by both parties that payment of any interest provided herein is by way of liquidated damages due to cancellation of this CONTRACT and not by way of compensation for use of money.
(d)
If, the BUILDER is required to refund to the BUYER the instalments paid by the BUYER to the BUILDER as provided in this Paragraph 5, the BUILDER shall return to the BUYER all of the BUYER’s supplies as stipulated in Article XII which were not incorporated into the VESSEL and pay to the BUYER an amount equal to the cost to the BUYER of those supplies incorporated into the VESSEL.
38
6.
TOTAL
LOSS
If there is a total loss or a constructive total loss of the VESSEL prior to delivery thereof, the BUILDER shall proceed according to the mutual agreement of the parties hereto either:
(a)
to build another vessel in place of the VESSEL so lost and deliver it under this CONTRACT to the BUYER, provided that the parties hereto shall have agreed in writing to a reasonable cost and time for the construction of such vessel in place of the lost VESSEL; or
(b)
to refund to the BUYER the full amount of the total sums paid by the BUYER to the BUILDER under the provisions of Paragraph 2 of this Article together with interest thereon at the rate of Four per cent (4%) per annum from the date following the date of receipt by the BUILDER of such pre-delivery instalment(s) to the date of payment by the BUILDER to the BUYER of the refund.
(c)
If the parties hereto fail to reach such agreement within two (2) months after the VESSEL is determined to be a total loss or constructive total loss, the provisions of (b) hereinabove shall be applied.
7.
DISCHARGE
OF OBLIGATIONS
Such refund as provided in the foregoing Paragraphs 5 and 6 by the BUILDER to the BUYER shall forthwith discharge all the obligations, duties and liabilities of each of the parties hereto to the other
(other than any obligations of the BUYER in respect of facilities afforded to the BUYER’s REPRESENTATIVE)
under this CONTRACT. Any and all refunds or payments due to the BUYER under this CONTRACT shall be made by telegraphic transfer to the account specified by the BUYER.
8.
REFUND
GUARANTEE
The BUILDER shall, within thirty (30) days following the execution of this CONTRACT, furnish the BUYER (and prior to the payment of the first instalment) with an assignable letter of guarantee issued by
IBK via SWIFT
for the assurance of and as security for the refund of the pre-delivery instalments under or pursuant to Paragraph 5 and/or Paragraph 6 above plus interest accrued thereon in accordance with this CONTRACT in the form and substance as annexed hereto as Exhibit “A”.
All expenses in issuing and maintaining the letter of guarantee described in this Paragraph shall be borne by the BUILDER.
39
If the BUILDER fails to provide the Refund Guarantee within thirty (30) days after the date of this CONTRACT, the BUYER shall be entitled to terminate this Contract with immediate effect by written notice to the BUILDER.
(End of Article)
40
ARTICLE XI:
BUYER’S DEFAULT
1.
DEFINITION
OF DEFAULT
The BUYER shall be deemed to be in default under this CONTRACT in the following cases:
(a)
If the first, second, third or fourth instalment is not paid to the BUILDER within the respective DUE DATE of such instalments; or
(b)
If the fifth instalment is not deposited in accordance with Article X.4.(a)(ii) hereof or if the said fifth instalment deposit is not released to the BUILDER against presentation by the BUILDER of a copy of the original PROTOCOL OF DELIVERY AND ACCEPTANCE; or
(c)
If the BUYER fails to take delivery of the VESSEL when the VESSEL is duly tendered for delivery by the BUILDER under the provisions of Article VII hereof; or
(d)
If an order or an effective resolution shall be passed for winding up of the BUYER (except for the purpose of reorganization, merger or amalgamation); or
In case the BUYER is in default as set out in Paragraph 1 above, the BUILDER is entitled to and shall have the following rights, powers and remedies in addition to such other rights, powers and remedies as the BUILDER may have elsewhere in this CONTRACT and/or at law, at equity or otherwise.
2.
EFFECT
OF THE BUYER’S DEFAULT ON OR BEFORE THE DELIVERY OF
THE
VESSEL
If the BUYER shall be in default
of its obligations under this CONTRACT
as provided in Paragraph 1 above, then;
(a)
The DELIVERY DATE of the VESSEL shall be extended automatically for the actual period of such default and the BUILDER shall not be obliged to pay any liquidated damages for the delay in delivery of the VESSEL caused thereby.
(b)
The BUYER shall pay to the BUILDER interest at the rate of
Six
percent (
6
%) per annum in respect of the instalment(s) in default from the respective DUE DATE to the date of actual receipt by the BUILDER of the full amount of such instalment(s).
(c)
If the BUYER is in default in payment of any of the instalment(s) due and payable prior to or simultaneously with the delivery of the VESSEL, the BUILDER shall, in writing or by
41
e-mail or facsimile, notify the BUYER to that effect, and the BUYER shall, upon receipt of such notification, forthwith acknowledge in writing or by facsimile to the BUILDER that such notification has been received.
(d)
If any of the BUYER’s default continues for a period o
f fourteen
(
14
) days after the BUILDER’s notification to the BUYER of such default, the BUILDER may, at its option, rescind this CONTRACT by serving upon the BUYER a written notice or e-mail or facsimile notice of rescission confirmed in writing.
(e)
In the event of such cancellation by the BUILDER of this CONTRACT due to the BUYER’s default as provided for in paragraph 1 above, the BUILDER shall
be entitled to retain and apply the instalments already paid by the BUYER to the recovery of the BUILDER’s proven loss and damage including reasonable estimated profit (in relation to this CONTRACT) due to the BUYER’s default and the cancellation of this CONTRACT and at the same time the BUILDER shall
have the full right and power either to complete or not to complete the VESSEL which is the sole property of the BUILDER as it deems fit, and to sell the VESSEL at a public or private sale on such terms and conditions as the BUILDER thinks fit
without being answerable for any loss and damage. However
the BUILDER shall exercise normal commercial diligence to secure the market price obtainable for a sale in such circumstances; and
(f)
The proceeds received by the BUILDER from the sale shall be applied in addition to the instalment(s) retained by the BUILDER as mentioned hereinabove as follows :
First, in payment of all reasonable costs and expenses of the sale of the VESSEL, including interest thereon at
Six
per cent (
6
%) per annum from the respective date of payment of such costs and expenses aforesaid to the date of sale on account of the BUYER’s default.
Second, if the VESSEL has been completed, in or towards satisfaction of the unpaid balance of the CONTRACT PRICE, to which shall be added the cost of all additional work and extras agreed by the BUYER including interest thereon at
Six
per cent (
6
%) per annum from the respective DUE DATE of the instalment in default to the date of sale, or if the VESSEL has not been completed, in or towards satisfaction of the unpaid amount of the cost incurred by the BUILDER prior to the date of sale on account of construction of the VESSEL, including work, labour, materials and reasonably estimated profit which the BUILDER would have been entitled to receive if the VESSEL had been completed and delivered plus interest thereon at
Six
per cent (
6
%) per annum from the respective DUE DATE of the instalment in default to the date of sale.
Third, the balance of the proceeds, if any, shall belong to the BUYER, and shall forthwith
42
be paid over to the BUYER by the BUILDER.
In the event of the proceeds from the sale together with instalment(s) retained by the BUILDER being insufficient to pay the BUILDER, the BUYER shall be liable for the deficiency and shall pay the same to the BUILDER upon its demand.
3.
DEFINITION OF BUILDER’S DEFAULT
The BUILDER shall be deemed to be in default of its obligations under this CONTRACT in the event of:
(i)
The filing of a petition or the making of an order or the passing of an effective resolution for the winding up of the BUILDER (other than for the purpose of reconstruction or amalgamation which has been previously approved in writing by the BUYER), or the appointment of a receiver, administrator, compulsory manager, trustee, liquidator or other similar officer has been made against the BUILDER or any of its assets under the laws of any jurisdiction or the appointment of a receiver of the undertaking or property of the BUILDER, or the insolvency of or a suspension of payments by the BUILDER, or the cessation of the carrying on of business by the BUILDER at any of its shipyards, or the making by the BUILDER of any special arrangement or composition with the creditors of the BUILDER; or any like or similar circumstance occurring under the laws of the Republic of Korea; or
(ii)
The occurrence of any of the events set out in (i) with respect to the bank issuing the Letter of Guarantee referred to in Article X.5, and the failure by the BUILDER within sixty (60) days thereof to replace such bank with an alternative guarantor reasonably acceptable to the BUYER and its bank; or
(iii)
Where the BUILDER:
(a)
remains in default of performance of any obligation or provision of the CONTRACT fourteen (14) days after receiving written notice from the BUYER that the BUILDER is in default; or
(b)
fails, neglects, refuses or is unable during the course of the construction of the VESSEL to provide materials, equipment, services or labour to perform the construction in accordance with the SPECIFICATIONS, the PLAN, and this CONTRACT prior to the date on which the BUYER shall be entitled to cancel this CONTRACT for delay.
43
4.
EFFECT OF BUILDER’S DEFAULT
If any such default as referred to in Paragraph3 above occurs, then the BUYER may terminate this CONTRACT by promptly notifying the BUILDER in writing but not later than two (2) weeks from the date of the BUILDER’s default takes place or after the period to remedy it has expired. Such cancellation is to be effective as of the date when such notice of cancellation is received by the BUILDER and the provisions of Article X. 5 shall apply in respect of such termination. In any event the BUYER shall be entitled to pursue such claims and remedies as it may elect subject to the applicable law.
(End of Article)
44
ARTICLE
XII:
BUYER’S SUPPLIES
1.
RESPONSIBILITY
OF THE BUYER
(a)
The BUYER shall, at its cost and expense, supply all the BUYER’s supplies mentioned in the SPECIFICATIONS, if any, (hereinafter called the “BUYER’S SUPPLIES”), to the BUILDER at the SHIPYARD in perfect condition ready for installation and in accordance with the time schedule to be furnished by the BUILDER to meet the building schedule of the VESSEL.
Such schedule to be advised by the BUILDER within six (6) months after this CONTRACT becomes effective according to Article XX.
(b)
In order to facilitate the installation of the BUYER’S SUPPLIES by the BUILDER in or on the VESSEL, the BUYER shall furnish the BUILDER with the necessary plans, instruction books, test report and all test certificates reasonably required by the BUILDER and shall cause the representative(s) of the makers of the BUYER’S SUPPLIES to give the BUILDER any advice, instructions or assistance which the BUILDER may reasonably require in the installation or adjustment thereof at the SHIPYARD, all without cost or expense to the BUILDER.
(c)
The BUYER shall be liable for any expense incurred by the BUILDER for repair of the BUYER’S SUPPLIES due to defective design or materials, poor workmanship or performance or due to damage in transit and the DELIVERY DATE of the VESSEL shall be extended for the period of such repair if such repair shall affect the delivery of the VESSEL.
(d)
Commissioning into good order of the BUYER’S SUPPLIES during and after installation on board shall be made at the BUYER’s expense by the representative of respective maker or the person designated by the BUYER in accordance with the BUILDER’s building schedule.
(e)
Should the BUYER fail to deliver to the BUILDER the BUYER’S SUPPLIES and the necessary document or advice for such supplies within the time specified by the BUILDER, the DELIVERY DATE of the VESSEL shall automatically be extended for the period of such delay if such delay in delivery shall affect the delivery of the VESSEL. In such event, the BUYER shall pay to the BUILDER all losses and damages sustained by the BUILDER due to such delay in the delivery of the BUYER’S SUPPLIES and such payment shall be made upon delivery of the VESSEL, provided, however, that the BUILDER shall have :
45
(i)
furnished the BUYER with the time schedule referred to above, two (2) months prior to installation of the BUYER’S SUPPLIES and
(ii)
given the BUYER written notice of any delay in delivery of the BUYER’S SUPPLIES and the necessary document or advice for such supplies as soon as the delay occurs which might give rise to a claim by the BUILDER under this Paragraph.
Furthermore, if the delay in delivery of the BUYER’S SUPPLIES and the necessary document or advice for such supplies should exceed
ten (10) working
days from the date specified by the BUILDER, the BUILDER shall be entitled to proceed with construction of the VESSEL without installation of such items (regardless of their nature or importance to the BUYER or the VESSEL) in or on the VESSEL without prejudice to the BUILDER’s right hereinabove provided, and the BUYER shall accept the VESSEL so completed.
2.
RESPONSIBILITY
OF THE BUILDER
The BUILDER shall be responsible for storing, safekeeping and handling the BUYER’S SUPPLIES
which has appropriate proof against weather, dust and theft and,
which the BUILDER is required to install on board the VESSEL under the SPECFICATIONS after delivery of such supplies to the SHIPYARD and shall procure that at all times the
BUYER’S SUPPLIES
are clearly marked as being the property of the BUYER. The BUILDER shall install such supplies on board the VESSEL at the BUILDER’s expense.
The BUILDER shall not be responsible for the quality, performance or efficiency of any equipment included in the BUYER’S SUPPLIES and is under no obligation with respect to the guarantee of such equipment against any defects caused by poor quality, performance or efficiency of the BUYER’S SUPPLIES.
If any of the
BUYER’S SUPPLIES
are lost or damaged while in the custody of the BUILDER, the BUILDER shall, if the loss or damage is due breach of its obligations under this Paragraph 2, default, negligence or omission on its part, be responsible for such loss or damage.
Upon delivery of the
BUYER’S SUPPLIES
at the SHIPYARD, the BUILDER and the BUYER shall carry out a joint unpacking inspection of the
BUYER’S SUPPLIES
so that the condition at the time of delivery can be confirmed.
3.
RETURN OF THE BUYER’S SUPPLIES
If pursuant to the provisions of this CONTRACT the BUILDER is required to refund to the BUYER the instalments paid by the BUYER to the BUILDER, the BUILDER shall either (i)
46
return to the BUYER all of the
BUYER’S SUPPLIES
not incorporated into the VESSEL and pay to the BUYER an amount equal to the actual cost of those supplies incorporated into the VESSEL, or (ii) pay to the BUYER an amount equal to the actual cost of all supplies provided to the BUILDER and paid for by the BUYER irrespectively of whether or not the same have been incorporated into the VESSEL by mutual agreement.
(End of Article)
47
ARTICLE XIII:
ARBITRATION
1.
DECISION BY THE CLASSIFICATION SOCIETY
If any dispute arises between the parties hereto in regard to the design and/or construction of the VESSEL, its machinery and equipment, and/or in respect of the materials and/or workmanship thereof and/or thereon, and/or in respect of interpretations of the SPECIFICATIONS, the parties may by mutual agreement refer the dispute to the CLASSIFICATION SOCIETY or to such other expert as may be mutually agreed between the parties hereto, and whose decision shall be final, conclusive and binding upon the parties hereto.
2.
LAWS
APPLICABLE
Any arbitration arising hereunder shall be governed by and conducted in accordance with the London Maritime Arbitrators’ Association Terms or any statutory modification or re-enactments thereof for the time being in force.
The award of the arbitrator shall be final, conclusive and binding upon parties hereto.
3.
PROCEEDINGS OF ARBITRATION
In the event that the parties hereto do not agree to settle a dispute according to Paragraph 1 of this Article and/or in the event of any other dispute of any kind whatsoever between the parties and relating to this CONTRACT or its rescission or any stipulation herein, such dispute shall be submitted to arbitration in London. The parties shall try to agree a single arbitrator to conduct the arbitration.
If the parties cannot agree upon the appointment of the single arbitrator within two (2) weeks after one of the parties has given notice to the other party notifying that the other party refer the dispute to arbitration, the dispute shall be settled by three arbitrators, each party appointing one arbitrator, the third being appointed by the two arbitrators so appointed. In the further event that the two arbitrators appointed respectively by the parties hereto as aforesaid should be unable to reach agreement on the appointment of the third arbitrator within twenty (20) days from the date on which the second arbitrator is appointed, either party of the said two arbitrators may apply to the President for the time being of the London Maritime Arbitrators Association to appoint the third arbitrator. If either of the appointed arbitrators refuses or is incapable of acting, the party who appointed him shall appoint a new arbitrator in his place.
If one party fails to appoint an arbitrator - either originally or by way of substitution - for two (2) weeks after the other party having appointed its arbitrator, has served the defaulting party notice of default for failure to make the appointment, the President of the London Maritime
48
Arbitrators Association shall, after application from the party having appointed its arbitrator, also appoint an arbitrator on behalf of the party in default. The award of the arbitration made by the sole arbitrator or by the majority of the three arbitrators as the case may be shall be final, conclusive and binding upon the parties hereto.
4.
NOTICE OF AWARD
The award shall immediately be given to the BUYER and the BUILDER by telefax or e-mail.
5.
EXPENSES
The Arbitrator or the Arbitration Board shall determine which party shall bear the expenses of the arbitration or the portion of such expenses which each party shall bear.
6.
ENTRY IN COURT
In case of failure by either party to respect the award of the arbitration, the judgement may be entered in any proper court having jurisdiction thereof.
7.
ALTERATION OF DELIVERY DATE
In the event of reference to arbitration of any dispute arising out of matters occurring prior to delivery of the VESSEL, the award may include any postponement of the DELIVERY DATE which the Arbitrator or the Arbitration Board may deem appropriate. To the maximum extent possible and provided the arbitration proceedings or the subject matter of the dispute do not affect the construction of the VESSEL, work under this CONTRACT shall continue during the arbitration of any dispute.
(End of Article)
49
ARTICLE
XIV:
SUCCESSORS AND ASSIGNS
1.
TRANSFER OR ASSIGNMENT BY THE BUYER
The
BUILDER agrees that, prior to delivery of the VESSEL, this CONTRACT may,
with
the prior written approval of the BUILDER, which the BUILDER shall not
unreasonably
withhold or delay, be transferred by novation to or assigned to another company and the title thereof may be taken by
another
company. In the event of any transfer or assignment pursuant to the terms of this
CONTRACT,
the transferee or assignee, its successors and assigns shall succeed to all the
rights
and obligations of the BUYER under this CONTRACT including but not limited to post-construction warranties of quality and the benefit of the Refund Guarantee. However, the
BUYER
shall remain responsible for performance by the assignee, its successors
and
assigns of all the BUYER’s obligations, liabilities and responsibilities under
this
CONTRACT. It is understood that any expenses or charges incurred due to
the
transfer or assignment of this CONTRACT by the BUYER shall be for the account of the BUYER.
The
BUILDER shall have the right to transfer or assign this CONTRACT at any time after
the
effective date hereof, provided that prior written agreement is obtained from
the
BUYER.
2.
TRANSFER BY THE BUILDER
The BUILDER shall not have the right to assign or transfer this CONTRACT at any time after the Effective Date (as defined in ARTICLE XIX) hereof, unless prior written approval is obtained from the BUYER.
(End of Article)
50
ARTICLE
XV:
TAXES AND DUTIES
1.
TAXES
Unless otherwise expressly provided for in this CONTRACT, all costs and taxes including stamp duties, if any, incurred in or levied by any country except Korea in connection with this CONTRACT shall be borne by the BUYER and corresponding costs and taxes in Korea
, before delivery of the VESSEL, if any,
shall be borne by the BUILDER.
2.
DUTIES
The BUILDER shall hold the BUYER harmless from any payment of duty imposed in Korea upon materials or supplies which, under the terms of this CONTRACT, or amendments thereto, may be supplied by the BUYER from abroad for the construction of the VESSEL.
The BUILDER shall likewise hold the BUYER harmless from any payment of duty imposed in Korea in connection with materials or supplies for operation of the VESSEL, including running stores, provisions and supplies necessary to stock the VESSEL for its operation and also from the payment of export duties
incurred by the BUILDER in Korea
, if any, to be imposed upon the VESSEL as a whole or upon any of its parts or equipment. This indemnity does not, however, extend to any items purchased by the BUYER for use in connection with the VESSEL which are not absolutely required for the construction or operation of the VESSEL.
3.
KOREAN BUNKER SALES TAX
The price of the delivery bunkers remaining on board the VESSEL on the DELIVERY DATE which is to be paid by the BUYER to the BUILDER shall be net of any sales tax payable to the Korean Government
.
(End of Article)
51
ARTICLE
XVI:
PATENTS, TRADEMARKS AND COPYRIGHTS
1.
PATENTS,
TRADEMARKS AND COPYRIGHTS
Machinery and equipment of the VESSEL, whether made or furnished by the BUILDER under this CONTRACT, may bear the patent numbers, trademarks, or trade names of the manufacturers. The BUILDER shall defend and hold harmless the BUYER from all liabilities or claims for or on account of the use of any patents, copyrights or design of any nature or kind, or for the infringement thereof including any unpatented invention made or used in the performance of this CONTRACT and also for any costs and expenses of litigation, if any in connection therewith. No such liability or responsibility shall be with the BUILDER with regard to components and/or equipment and/or design supplied by the BUYER.
Nothing contained herein shall be construed as transferring any patent or trademark rights or copyrights in equipment covered by this CONTRACT, and all such rights are hereby expressly reserved to the true and lawful owners thereof.
2.
RIGHTS
TO THE SPECIFICATIONS, PLANS AND ETC.
The BUILDER retains all rights with respect to the SPECIFICATIONS, plans and working drawings, technical descriptions, calculations, test results and other data, information and documents concerning the design and construction of the VESSEL and the BUYER undertakes therefore not to disclose the same or divulge any information contained therein to any third parties, without the prior written consent of the BUILDER, excepting where it is necessary for usual marketing
,
operation, repair and maintenance of the VESSEL or registration, classification, insurance or sale of the VESSEL.
In case the BUYER requests the prior written consent of the BUILDER as set out in the above paragraph, the BUYER shall provide the BUILDER with a written undertaking from the recipient stating that (1) he acknowledges and shall observe the foregoing terms concerning the BUILDER’s right to confidential information and (2) any confidential information furnished in tangible form shall not be duplicated by recipient except for the purpose of the job specifically assigned to him. (3) Upon the completion of his job requiring reference to the confidential information, recipient shall return to the BUYER at his option or otherwise destroy all the confidential information received in written or tangible form including copies or reproductions or other media containing such confidential information. (4) Any documents or other media developed by the recipient containing confidential information shall be destroyed by the recipient.
(End of Article)
52
ARTICLE XVII :
COMPLIANCE AND ANTI-BRIBERY
1.
REPRESENTATIONS OF THE PARTIES
During the Term of this CONTRACT and for the duration of any services provided hereunder, each party certifies and represents as follows:
(a)
It will comply with the laws of any jurisdiction applicable to such party as it relates to this CONTRACT, including but not limited to any applicable anti-corruption and anti-bribery laws, also including, without limitation, the United States Foreign Corrupt Practices Act (“US FCPA”), the UK Bribery Act 2010 (“UK Bribery Act”) and the anti-bribery or anti-corruption laws of South Korea as such laws may be amended from time to time.
(b)
In connection with this CONTRACT, it has not and will not make any payments or gifts or provide other advantages, or any offers or promises of payments or gifts or other advantages of any kind, directly or indirectly, to:
a.
any person or entity with the intention of obtaining or retaining a business advantage for itself or the other party to this CONTRACT;
b.
any official or member of any government or any agency or instrumentality thereof; any official or member of any public international organisation or any agency or instrumentality thereof; any or official of a political party or any candidate for political office (herein ‘public official’); or any person while knowing or reasonably suspecting that all or a portion of such money or thing of value will be offered, given or promised, directly or indirectly, to any public official, in violation of the UK Bribery Act, the US FCPA or the laws of South Korea.
(c)
In connection with this CONTRACT, it has not and will not request, agree to accept or accept from any person or entity any payments or gifts or other advantages, or any offers or promises of payments or gifts or other advantages of any kind, directly or indirectly, as a reward or inducement to perform its obligations under this CONTRACT in any way improperly.
2.
INDEMNIFICATION
Each party agrees that it will fully indemnify, defend and hold harmless the other party from any claims, liabilities, damages, expenses, penalties, judgments and losses (including reasonable attorneys’ fees) assessed or resulting by reason of a breach of the representations and undertakings contained in this Article XVII to the extent permitted by law.
(End of Article)
53
ARTICLE
XVII
I
:
INTERPRETATION AND GOVERNING LAW
This
CONTRACT has been prepared in English and shall be executed in duplicate
and
in such number of additional copies as may be required by either party
respectively.
The parties hereto agree that the validity and interpretation of this
CONTRACT
and of each Article and part thereof shall be governed by the laws of
England.
(End of Article)
54
ARTICLE
X
IX
:
NOTICE
Any
and all notices, requests, demands, instructions, advices and communications
in
connection with this CONTRACT shall be written in English, sent by registered
air
mail or facsimile or by hand or email and shall be deemed to be given when first
received
whether by registered mail or facsimile, by hand or email. They shall be
addressed
as follows, unless and until otherwise advised:
|
To the BUILDER
|
:
|
HYUNDAI
HEAVY INDUSTRIES CO., LTD.
|
|
|
|
625 Seohae-ro, Gunsan, Jeonbuk, Korea
|
|
|
|
|
|
Attention:
|
|
Mr. I. Y. Kim
/ Contract Management Dep’t.
|
|
|
|
Tel : +82 63 447 6801
|
|
|
|
Facsimile:
+ 82
63 447 6899
|
|
|
|
E-mail: gcmd@hhi.co.kr
|
|
|
|
|
|
To the BUYER
|
:
|
NAVIG8 CRUDE TANKERS INC
|
|
|
|
c/o Navig8 Asia Pte Ltd
|
|
|
|
3 Temasek Avenue, #25-01 Centennial Tower, Singapore 039190
|
|
|
|
|
|
Attention:
|
|
Mr. Daniel Chu
|
|
|
|
Facsimile: +44 207 467 5867
|
|
|
|
Tel: +44 207 467 5888
|
|
|
|
E-mail: legal@navig8group.com
|
The
said notices shall become effective upon receipt of the letter, e-mail or
facsimile
communication by the receiver thereof. Where a notice by e-mail or facsimile is concerned which is required to be confirmed by letter, then, unless
the
CONTRACT or the relevant Article thereof otherwise requires, the notice shall
become
effective upon receipt of the e-mail or facsimile.
(End of Article)
55
ARTICLE
XX:
EFFECTIVENESS OF THIS CONTRACT
This CONTRACT shall become effective upon signing by the parties hereto.
(End of Article)
56
ARTICLE
XX
I
:
EXCLUSIVENESS
This
CONTRACT shall constitute the only and entire agreement between the
parties
hereto, and unless otherwise expressly provided for in this CONTRACT, all
other
agreements, oral or written, made and entered into between the parties prior
to
the execution of this CONTRACT shall be null and void
and
shall be superseded by this CONTRACT.
(End of Article)
57
IN WITNESS WHEREOF, the parties hereto have caused this CONTRACT to
be
duly executed in duplicate on the date and year first above written.
|
BUYER
|
|
BUILDER
|
|
|
|
|
|
|
|
|
|
For
and on behalf of
|
|
For and on behalf of
|
|
NAVIG8 CRUDE TANKERS INC
|
|
HYUNDAI HEAVY INDUSTRIES CO., LTD.
|
|
|
|
|
|
|
|
|
|
By
|
/s/ Gary Brockelsby
|
|
By
|
/s/ T.Y. Cho
|
|
Name: Gary Brockelsby
|
|
Name: T.Y. Cho
|
|
Title: Attorney-in-Fact
|
|
Title: Attorney-in-Fact
|
|
|
|
|
|
|
|
|
|
WITNESS
|
|
WITNESS
|
|
|
|
|
|
|
|
|
|
By
|
/s/ Daniel Chu
|
|
By
|
/s/ S.D. Yoon
|
|
Name: Daniel Chu
|
|
Name: S.D. Yoon
|
|
Title: General Counsel
|
|
Title: Deputy General Manager
|
58
EXHIBIT “A”
DEED OF GUARANTEE
Date :[ ], 201
4
Gentlemen:
We hereby open our irrevocable letter of guarantee number [ ] (this “Guarantee”) in favour of
NAVIG8 CRUDE TANKERS INC
, a corporation organized and existing under the laws of
Marshall Islands
and having its principal office at
Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960
(hereinafter called the “BUYER”) for account of HYUNDAI HEAVY INDUSTRIES CO., LTD.,
Ulsan
, Korea (hereinafter called the “BUILDER”) as follows in connection with the shipbuilding contract dated [ ], 201
4
(hereinafter called “CONTRACT”) made by and between the BUYER and the BUILDER for the construction of 300,000 DWT Class Crude Oil Carrier having the BUILDER’s Hull No.
(hereinafter called the “VESSEL”).
If, in connection with the terms of the CONTRACT, the BUYER shall become entitled to a refund of the advance payment made to the BUILDER prior to the delivery of the VESSEL, we hereby irrevocably, unconditionally and absolutely guarantee, as primary obligor and not merely as surety, to you, your successors and assignees, the repayment of the same to the BUYER within thirty (30) days after demand not exceeding US$ [ ] (Say U.S. Dollars [ ] only)together with interest thereon at the rate of
six per cent (6%)
per annum from the date following the date of receipt by the BUILDER to the date of remittance by telegraphic transfer of such refund.
The amount of this Guarantee will be automatically increased upon the BUILDER’s receipt of the respective instalment, not more than three (3) times, each time by the amount of such instalment plus interest thereon as provided in the CONTRACT, but in any eventuality the amount of this Guarantee shall not exceed the total sum of US$ [ ] (Say U.S. Dollars [ ] only) plus interest thereon at the rate of
six
per cent (
6
%) per annum from the date following the date of the BUILDER’s receipt of each instalment to the date of remittance by telegraphic transfer of the refund. However, in the event of cancellation of the CONTRACT being based on delays due to Force Majeur
e
as provided under Article VIII of the CONTRACT, the interest rate of refund shall be reduced to four per cent (4%) per annum as provided in Article X.5of the CONTRACT for the periods affected by such delays.
The payment by us under this Guarantee shall be made(subject to the third paragraph hereof) against the BUYER’s first written demand and signed statement certifying that the BUYER’s demand for refund has been made in conformity with Article X of the CONTRACT and the BUILDER has failed to make the refund within
thirty (30)
days after the BUYER’s demand. Refund shall be made to the BUYER by telegraphic transfer in United States Dollars. All payments under this Guarantee shall be made without any set-off or counterclaim and without any
59
deduction or withholding for or on account of any taxes, duties or charges whatsoever unless we are compelled by law to deduct or withhold the same, in which case we shall make the minimum deduction or withholding permitted and will pay to you such additional amounts as may be necessary in order that the net amount received by you after such deduction or withholding shall be equal to the amount which would have been received had no such deduction or withholding been made.
In case any refund is made to the BUYER by the BUILDER or by us under this Guarantee, our liability hereunder shall be automatically reduced by the amount of such refund.
Notwithstanding the provisions hereinabove, in the event that within
thirty (30)
days from the date of your claim to the BUILDER referred to above, we receive notification from you or the BUILDER accompanied by written confirmation to the effect that your claim to cancel the CONTRACT or your claim for refundment thereunder has been disputed and referred to arbitration in accordance with the provisions of the CONTRACT, we shall under this Guarantee, refund to you the sum adjudged to be due to you by the BUILDER pursuant to the award made under such arbitration, or, if applicable, pursuant
to
a final court judgment issued in relation thereto, immediately upon receipt from you of a demand for the sums so adjudged and a copy of the award or court judgment, as the case may be.
The validity of this Guarantee and our liability under or in connection therewith shall not be discharged, impaired, reduced or in any way affected by any extension of time or other amendment, variation, modification or supplement whatsoever of or to the CONTRACT nor by the giving of any time or any concession granted by you to the BUILDER or any indulgence, waiver or consent on your part in respect of time or any other terms of the CONTRACT, nor by any delay or failure by you in enforcing your rights under or in connection with the CONTRACT, nor by the liquidation, insolvency, bankruptcy, reorganization, amalgamation, reconstruction or analogous proceedings or other financial failure of the BUILDER or any other person, nor by the illegality, invalidity or unenforceability or any defect in the CONTRACT or any provisions thereof, or any repudiation, termination or rescission thereof or any other matter or circumstance which would (but for the provisions of this paragraph) discharge, impair, affect or reduce our liability under or in connection with this Guarantee.
This Guarantee shall become null and void upon receipt by the BUYER of the sum guaranteed hereby together with interest thereon or upon acceptance by the BUYER of the delivery of the VESSEL in accordance with the terms of the CONTRACT and, in either case, this Guarantee shall be returned to us.
This Guarantee is valid and effective from the date of this Guarantee until such time as the VESSEL is delivered by the BUILDER to the BUYER in accordance with the provisions of the CONTRACT. However in the event that a dispute in respect of a refund is being resolved by
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arbitration in accordance with Article XIII of the CONTRACT, then this Guarantee shall continue to remain in force until 30 business days after such arbitration proceedings are concluded and a final arbitration award has been issued.
We agree that you may assign without our prior written consent the benefit of this Guarantee to any lawful assignee of the benefit of the CONTRACT.
This Guarantee and any non-contractual obligations arising out of or in connection with it shall be governed by, interpreted and construed in accordance with the laws of England. The undersigned hereby submits to the exclusive jurisdiction of the courts of England for the settlement of any disputes which may arise out of or in connection with this Guarantee and any non-contractual obligations arising out of or in connection with it. We hereby irrevocably appoint [ ] to act as our agent to receive and accept on our behalf any process or other document relating to any proceedings in the English courts which are connected with this Guarantee.
Very truly yours,
This Guarantee has been executed and delivered as a Deed on the day and year written above.
Signed as a Deed on behalf of [ ],a company incorporated in [ ]
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by:
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being persons who, in accordance with the laws of that territory, are acting under the authority of the company
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In the presence of:
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Witness’s signature:
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Name (print):
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Occupation:
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Address:
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61
Exhibit 10.87
SHIPBUILDING CONTRACT
FOR
THE CONSTRUCTION OF
ONE (1) 300,000 DWT CLASS CRUDE OIL CARRIER
HULL NO. NTP0137
BETWEEN
NAVIG8 CRUDE TANKERS INC or its nominees
(AS BUYER)
AND
HHIC-PHIL INC.
(AS BUILDER)
I N D E X
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PAGE
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PREAMBLE
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3
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ARTICLE
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I
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DESCRIPTION AND CLASS
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4
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II
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CONTRACT PRICE
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8
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III
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ADJUSTMENT OF THE CONTRACT PRICE
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IV
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INSPECTION AND APPROVAL
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V
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MODIFICATIONS, CHANGES AND EXTRAS
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VI
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TRIALS AND COMPLETION
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VII
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DELIVERY
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VIII
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: DELAYS
AND EXTENSIONS OF TIME (FORCE MAJEURE)
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28
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IX
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WARRANTY OF QUALITY
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X
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PAYMENT
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XI
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BUYER’S DEFAULT
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XII
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BUYER’S SUPPLIES
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44
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XIII
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ARBITRATION
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XIV
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SUCCESSORS AND ASSIGNS
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48
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XV
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TAXES AND DUTIES
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49
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XVI
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PATENTS, TRADEMARKS AND COPYRIGHTS
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XVII
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: COMPLIANCE AND ANTI-BRIBERY
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XVIII
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INSURANCE
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XIX
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INTERPRETATION AND GOVERNING LAW
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XX
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NOTICE
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XXI
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EFFECTIVENESS OF THIS CONTRACT
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XXII
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: EXCLUSIVENESS
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EXHIBIT “A” LETTER OF GUARANTEE
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59
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EXHIBIT “B” PERFORMANCE GUARANTEE
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61
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2
THIS
CONTRACT
,
made on this 25th day of March, 2014
by
and between NAVIG8 CRUDE TANKERS INC, a corporation incorporated and existing under the
laws
of the Republic of the Marshall Islands having its registered office at Trust company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960 or its nominees
(hereinafter
called
the
“BUYER”), the party of the first part and HHIC-PHIL INC., a company organized and existing under the laws of the Republic of Philippines, having its principal office at Green Beach 1, Redondo Peninsula, Sitio Agusuhin, Brgy. Cawag, Subic, Zambales, the Philippines (hereinafter called the “BUILDER”),
the
party of the second part,
W
I T N E S S E T H
:
In consideration of the mutual covenants contained herein, the BUILDER
agrees
to design, build, launch, equip and complete one (1) 300,000 DWT class Crude Oil Carrier
as
described in Article I hereof (hereinafter called the “VESSEL”) at the
BUILDER’s
shipyard in Subic, Philippines (hereinafter called the “SHIPYARD”) and to
deliver
and sell the VESSEL to the BUYER, and the BUYER agrees to accept
delivery
of and purchase from the BUILDER the VESSEL, according to the terms
and
conditions hereinafter set forth.
(End of Preamble)
3
ARTICLE I : DESCRIPTION AND CLASS
1.
DESCRIPTION
The VESSEL shall have the BUILDER’s Hull No.NTP0137 and shall be designed, constructed, equipped launched, tested, surveyed by the classification society as mentioned hereinbelow and completed in accordance with the provisions of (a) this CONTRACT and (b) the Specifications No. NTP0137/0138 dated March 21, 2014 and the General Arrangement plan No. BTBWW0000001T dated March 21, 2014 attached thereto (hereinafter called the respectively the “SPECIFICATIONS” and the “PLAN”) signed by both parties, which shall constitute an integral part of this CONTRACT although not attached hereto.
Should there be any inconsistencies or contradictions between the SPECIFICATIONS and the PLAN, the SPECIFICATIONS shall prevail. Should there be any inconsistencies or contradictions between this CONTRACT and the SPECIFICATIONS, this CONTRACT shall prevail.
2.
BASIC
DIMENSIONS AND PRINCIPAL PARTICULARS OF THE VESSEL
(a)
The basic dimensions and principal particulars of the VESSEL shall be:
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Length, overall
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about
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333.0 M
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Length, between perpendiculars
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321.9 M
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Breadth, moulded
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60.0 M
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Depth to Upper Deck, moulded
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29.5 M
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Design draft, moulded, in seawater of specific gravity of 1.025
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20.5 M
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Scantling draft, moulded, in seawater of specific gravity of 1.025
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21.6 M
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Deadweight on the above moulded design draft of 20.5 M
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about 279,019 M/T
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Deadweight guaranteed on the above moulded scantling draft of 21.6 M
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about 299,019 M/T
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Guaranteed Capacity of Cargo oil tanks incl. slop tanks (100% Full)
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about 344,000 m
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Main propulsion engine
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MAN 7G80ME-C9.2 (Low Load Tuning w/EGB)
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NMCR :
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32,970 kW x 72.0 rpm
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SMCR :
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26,460 kW x 66.0 rpm
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NCR (65% SMCR) :
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17,200 kW x 57.2 rpm
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Guaranteed speed at 20.5 meters design draft
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at the condition of clean bottom and in
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calm and deep sea with main engine
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developing a NCR of 17,200 kW
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with fifteen per cent (15%) sea margin
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14.8 KNOTS
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Specific Fuel consumption of the main engine applying
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I.S.O. reference conditions to the result of
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official shop test at a SMCR of 26,460 kW
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using marine diesel oil having lower calorific
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value of 10,200 kcal/kg (42,700 kJ/kg).
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163.8 gr/kW.h
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The dimensions may be slightly modified by the BUILDER, who also reserves the right to make changes to the SPECIFICATIONS and the PLAN if found necessary to suit the local conditions and facilities of the SHIPYARD, the availability of materials and equipment, the introduction of improved production methods or otherwise, subject to the approval of the BUYER which the BUYER shall not withhold unreasonably.
3.
CLASSIFICATION,
RULES AND REGULATIONS
(a)
The VESSEL, including its machinery, equipment and outfittings shall be constructed in accordance with the BUILDER’s internationally recognized shipbuilding practices such as IACS and “H.P.Q.S (HHIC Phil Quality Standard)”.
The VESSEL shall be built in compliance with the applicable current rules and regulations, which have been issued and are effective as of the date of signing this CONTRACT, of DNV (hereinafter called the “CLASSIFICATION SOCIETY”) and to be classed and registered as +1A1, “Tanker for Oil ESP”, E0, CSR, SPM, BIS, VCS-2, BWM-T, COAT-PSPC (B;C), TMON, CLEAN, RECYCLABLE
Lube oil test kits shall be supplied by the Buyer for TMON.
ERS (Emergency Response Scheme) shall be prepared by the Buyer. But the necessary information shall be provided by the BUILDER upon the BUYER’s request.
The VESSEL shall be built in compliance with the Rules and Regulations as described in the SPECIFICATIONS which are in force at the date of signing the CONTRACT and/or which are ratified as of the date of signing the CONTRACT and which will come into force as compulsory on or before the date of delivery of the VESSEL having BUILDER’s Hull No. NTP0138 according to the publication by Lloyd’s Register Marine Service “LR’s future IMO legislation (except IMO NOx Tier III and Part 2 — IMO requirements currently under development)” — August 2013 Edition.
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(b)
The BUILDER shall arrange with the CLASSIFICATION SOCIETY for the assignment by the CLASSIFICATION SOCIETY of representative(s) to the VESSEL during construction. All costs, fees, charges and arrangement incidental to classification of the VESSEL in compliance with the rules, regulations and requirements of this CONTRACT shall be for the account of the BUILDER.
(c)
The decision of the CLASSIFICATION SOCIETY as to whether the
VESSEL
complies with the rules, requirements and regulations of the CLASSIFICATION SOCIETY
shall
be final and binding upon the BUILDER and the BUYER.
4.
NATIONALITY
OF THE VESSEL
The VESSEL shall be registered by the BUYER at its own cost and expense under the laws of Marshall Islands
with
its home port
at
the time of its delivery and acceptance hereunder.
5.
SUB-CONTRACTORS
The BUILDER shall build and outfit the VESSEL according to this CONTRACT at the SHIPYARD at Subic, the Philippines using mainly its own shipyard organization provided always that main hull blocks of the VESSEL, other than the bow section (including the bulbous bow), the stern blocks, upper deck unit, deck house, engine casing, funnel, T-bulkhead and L-bulkhead (including Lower Stool) and Hopper will be constructed at the SHIPYARD.
The BUILDER is, however, authorized to sub-contract part of the work to experienced third party sub-contractors in the vicinity of the SHIPYARD, provided that the BUILDER shall have first given notice in writing to the BUYER for any major sub-contract award (for the purpose of this CONTRACT an award involving consideration in excess of US$2 million or its equivalent in any other currency shall be deemed a major sub-contract) and received the BUYER’s written approval thereof which shall not be unreasonably withheld. The BUILDER shall compensate for direct cost of fuel and tolls required for BUYER’s supervision
of subcontractors outside the vicinity of the SHIPYARD (defined as more than 50km from the SHIPYARD).
Without prejudice to the generality of the foregoing, the BUILDER shall remain fully liable to the BUYER for the due and complete performance of any work (or part of it) undertaken by any subcontractor as if undertaken by the BUILDER. However, the VESSEL shall always remain at the SHIPYARD unless the BUYER and the BUILDER agrees otherwise.
No sub-contract shall bind or purport to bind the BUYER, and each sub-contract shall be the responsibility of the BUILDER.
All sub-contractors howsoever employed or engaged are hereby declared and agreed to be sub-contractors employed or engaged by the BUILDER and the BUILDER agrees that it is and shall remain fully responsible for and liable in respect of any sub-contractors and/or their acts or omissions and, without prejudice to the generality of the foregoing, the BUILDER shall ensure control over supervision and scheduling of the all work done by sub-contractors.
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The BUYER may request in the reasonable opinion of the BUYER’S REPRESENTATIVE the BUILDER to replace any sub-contractor whose level of workmanship has been demonstrated not to meet the requirements of this CONTRACT, including the SPECIFICATIONS, which request the BUILDER shall not unreasonably refuse. The BUILDER shall investigate any such request and, if found justified, take appropriate action.
(End of Article)
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ARTICLE II : CONTRACT PRICE
The contract price of the VESSEL delivered and accepted by to the BUYER at the SHIPYARD shall be United States Dollars Ninety Six Million Three Hundred Sixty Thousand Five Hundred (US$ 96,360,500) (hereinafter called the “CONTRACT PRICE”) which shall be paid plus any increases or less any decreases due to adjustment or modification, if any, as set forth in this CONTRACT. The above CONTRACT PRICE shall include payment for services in the inspection, test, survey and classification of the VESSEL which will be rendered by the CLASSIFICATION SOCIETY and shall not include the cost of the BUYER’s supplies as stipulated in Article XII.
The CONTRACT PRICE also includes all costs and expenses for supplying all necessary drawings as stipulated in the SPECIFICATIONS except those to be furnished by the BUYER for the VESSEL in accordance with the SPECIFICATIONS.
(End of Article)
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ARTICLE III : ADJUSTMENT OF THE CONTRACT PRICE
The CONTRACT PRICE of the VESSEL shall be adjusted as hereinafter set forth in the event of the following contingencies. It is hereby understood by both parties that any adjustment of the CONTRACT PRICE as provided for in this Article is by way of liquidated damages and not by way of penalty.
1.
DELAYED DELIVERY
(a)
No adjustment shall be made and the CONTRACT PRICE shall remain unchanged for the first thirty (30) days of the delay in delivery of the VESSEL ending as of 12 o’clock midnight Philippines Standard Time on the thirtieth (30th) day of delay beyond the Delivery Date calculated as provided in Article VII.1. hereof.
(b)
If delivery of the VESSEL is delayed more than thirty (30) days beyond the date upon which the delivery is due from the BUILDER under the terms of this CONTRACT, then, beginning at midnight of the thirtieth (30th) day after such due date, the CONTRACT PRICE of the VESSEL shall be reduced by U.S. Dollars Thirty Thousand (US$30,000) for each full day of delay.
However, unless the parties agree otherwise, the total amount of deduction from the CONTRACT PRICE shall not exceed the amount due to cover the delay of one hundred and eighty (180) days after thirty (30) days of the delay in delivery of the VESSEL at the rate of deduction as specified hereinabove.
(c)
But, if the delay in delivery of the VESSEL continues for a period of more than two hundred and ten (210) days beyond the date upon which the delivery is due from the BUILDER under the terms of this CONTRACT then, in such event, and after such period has expired, the BUYER may, at its option, cancel this CONTRACT by serving upon the BUILDER a notice of cancellation by facsimile or e-mail to be confirmed by a registered letter via airmail directed to the BUILDER at the address given in this CONTRACT. Such cancellation shall be effective as of the date the registered letter is received by the BUILDER. If the BUYER has not served the notice of cancellation after the aforementioned two hundred and ten (210) days delay in delivery, the BUILDER may demand the BUYER to make an election in accordance with Article VIII.3. hereof.
(d)
For the purpose of this Article, the delivery of the VESSEL shall be deemed to be delayed when and if the VESSEL, after taking into full account extension of the Delivery Date or permissible delays as provided in Article V, VI, VIII, XI or elsewhere in this CONTRACT,
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is delivered beyond the date upon which delivery would then be due under the terms of this CONTRACT.
2.
INSUFFICIENT SPEED
(a)
The CONTRACT PRICE of the VESSEL shall not be affected or changed, if the actual speed, as determined by trial runs more fully described in Article VI hereof, is less than the speed required under the terms of this CONTRACT and the SPECIFICATIONS provided such deficiency in actual speed is not more than three-tenths (3/10) of a knot below the guaranteed speed.
(b)
However, as for the deficiency of more than three-tenths (3/10) of a knot in actual speed below the speed guaranteed under this CONTRACT, the CONTRACT PRICE shall be reduced as follows:
For more than the three-tenth (3/10) of a knot — a total sum of US$ 145,000
For more than the four-tenths (4/10) of a knot — a total sum of US$ 290,000
For more than the five-tenths (5/10) of a knot — a total sum of US$ 435,000
For more than the six-tenths (6/10) of a knot — a total sum of US$ 580,000
For more than the seven-tenths (7/10) of a knot — a total sum of US$ 725,000
For more than the eight-tenths (8/10) of a knot — a total sum of US$ 870,000
* The above figures are not cumulative.
Fractions of less than one-tenth (1/10) of a knot shall be regarded as a full one-tenth (1/10) of a knot. However, unless the parties agree otherwise, the total amount of reduction from the CONTRACT PRICE shall not exceed the amount due to cover the deficiency of nine-tenth (9/10) of one (1) full knot below the guaranteed speed at the rate of reduction as specified above.
(c)
If the deficiency in actual speed of the VESSEL is more than nine-tenth (9/10) of one (1) full knot below the speed guaranteed under this CONTRACT, then the BUYER, at its option, may, subject to the BUILDER’s right to effect alterations or corrections as provided in Article VI.5. hereof, cancel this CONTRACT or may accept the VESSEL at a reduction in the CONTRACT PRICE as above provided for nine-tenth (9/10) of one (1) full knot of deficiency only.
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3.
EXCESSIVE FUEL CONSUMPTION
(a)
The CONTRACT PRICE shall not be affected or changed by reason of the fuel consumption of the VESSEL’s main engine, as determined by the engine manufacturer’s shop trial as per the SPECIFICATIONS being more than the guaranteed fuel consumption of the VESSEL’s main engine, if such excess is not more than five per cent (5%) over the guaranteed fuel consumption.
(b)
However, as for the excess of more than five per cent (5%) in the actual fuel consumption over the guaranteed fuel consumption of the VESSEL’s main engine, the CONTRACT PRICE shall be reduced by U.S. Dollars One Hundred Twenty Five Thousand (US$125,000) for each full one per cent (1%) increase in fuel consumption in excess of the said five per cent (5%) increase in fuel consumption. Fraction of less than one per cent (1%) shall be regarded as a full one percent (1%). However, unless the parties agree otherwise, the total amount of reduction from the CONTRACT PRICE shall not exceed the amount due to cover the excess of ten percent (10%) over the guaranteed fuel consumption of the VESSEL’s main engine at the rate of reduction as specified above.
(c)
If such actual fuel consumption exceeds the guaranteed fuel consumption of the VESSEL’s main engine by more than ten per cent (10%), the BUYER, at its option, may, subject to the BUILDER’s right to effect alterations or corrections as specified in Article VI. 5. hereof, cancel this CONTRACT or may accept the VESSEL at a reduction in the CONTRACT PRICE as above provided for the ten per cent (10%) increase only.
4.
DEADWEIGHT BELOW CONTRACT REQUIREMENTS
(a)
The guaranteed deadweight shall be deadweight as defined in Article I paragraph 2 hereof.
(b)
In the event that deficiency of the actual deadweight certified by the CLASSIFICATION SOCIETY as determined in accordance with the SPECIFICATION is not more than 2,000 metric tons or less of the guaranteed deadweight, there shall be no change in CONTRACT PRICE. However, should there be a deficiency of more than 2,000 metric tons (disregarding fractions of less than One (1) metric ton) the CONTRACT PRICE shall be reduced by the sum of United States Dollars One Thousand Five Hundred (US$1,500) for every One (1) metric ton deficiency (disregarding fractions of less than One (1) metric ton).
(c)
In the event of such deficiency in the deadweight of the VESSEL being more than 3,000 metric tons, the BUYER may at its option, reject the VESSEL and cancel the CONTRACT or accept the VESSEL at a reduction in the CONTRACT PRICE to be
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mutually agreed upon.
5.
CARGO TANKS’ CAPACITY BELOW CONTRACT REQUIREMENTS
The CONTRACT PRICE of the VESSEL shall not be affected or changed, if the actual cargo tank capacity determined as provided in this CONTRACT and the SPECIFICATIONS, is below the guaranteed cargo tank capacity as defined in Article I paragraph 2 hereof by one per cent (1%) of the guaranteed cargo tank capacity or less.
(a)
However, should the deficiency in the actual cargo tank capacity of the VESSEL be more than one per cent (1%) of the guaranteed cargo tank capacity (disregarding fractions of less than one (1) cubic meter), the CONTRACT PRICE shall be reduced by the sum of U.S. Dollars Seven Hundred (US$700) for each one (1) cubic meter deficiency (disregarding fractions of less than one (1) cubic meter) in excess of the said one per cent (1%) of deficiency.
(b)
However, unless the parties agree otherwise the total amount of reduction from the CONTRACT PRICE shall not exceed the amount due to cover the deficiency of two per cent (2%) below the guaranteed cargo tank capacity of the VESSEL as specified above.
(c)
In the event of such deficiency in the cargo tank capacity of the VESSEL being more than two per cent (2%) of the guaranteed cargo tank capacity, the BUYER, at its option, may, subject to the BUILDER’s right to effect alterations or corrections as specified in Article VI. 5. hereof, cancel this CONTRACT or accept the VESSEL at a reduction in the CONTRACT PRICE as above provided for two per cent (2%) of deficiency only.
6.
EFFECT OF CANCELLATION
It is expressly understood and agreed by the parties hereto that in any case, if the BUYER cancels this CONTRACT under this Article, the BUYER shall not be entitled to any liquidated damages but shall be entitled to the refunding of the price as per Article X.5.
(End of Article)
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ARTICLE IV : INSPECTION AND APPROVAL
1.
APPOINTMENT OF BUYER’S REPRESENTATIVE
The BUYER shall timely dispatch to and maintain at the SHIPYARD (not later than one(1) month prior to steel cutting), at its own cost, expense and risk, one or more representatives (hereinafter called the “BUYER’S REPRESENTATIVE”), who shall be duly accredited in writing by the BUYER to supervise adequately the construction by the BUILDER of the VESSEL, her equipment and all accessories. Before the commencement of any item of work under this CONTRACT, the BUILDER shall, whenever reasonably required, previously exhibit, furnish to, and within the limits of the BUYER’S REPRESENTATIVE’s authority, secure the approval from the BUYER’S REPRESENTATIVE of any and all plans and drawings prepared in connection therewith. Upon appointment of the BUYER’S REPRESENTATIVE, the BUYER shall notify the BUILDER in writing of the name and the scope of the authority of the BUYER’S REPRESENTATIVE,
2.
AUTHORITY OF THE BUYER’S REPRESENTATIVE
Such BUYER’S REPRESENTATIVE shall, at all times when work is being done at the SHIPYARD until delivery of the VESSEL, have the right to inspect the VESSEL, her equipment and all accessories, and work progress, or materials utilized in connection with the construction of the VESSEL, wherever such work is being done or such materials are stored, for the purpose of determining that the VESSEL, her equipment and accessories are being constructed in accordance with the terms of this CONTRACT and/or the SPECIFICATIONS and the PLAN.
The BUYER’S REPRESENTATIVE shall, within the limits of the authority conferred upon him by the BUYER, make decisions or give advice to the BUILDER on behalf of the BUYER promptly on all problems arising out of, or in connection with, the construction of the VESSEL and generally act in a reasonable manner with a view to cooperating to the utmost with the BUILDER in the construction process of the VESSEL.
The decision, approval or advice of the BUYER’S REPRESENTATIVE shall be deemed to have been given by the BUYER and once given shall not be withdrawn, revoked or modified except with consent of the BUILDER.
No act or omission of the BUYER’S REPRESENTATIVE or his assistants shall, in any way, diminish the liability of the BUILDER under Article IX (WARRANTY OF QUALITY). The BUYER’S REPRESENTATIVE shall notify the BUILDER promptly in writing of his discovery of any construction or materials, which he believes do not or will not conform to the
13
requirements of the CONTRACT and the SPECIFICATIONS or the PLAN and likewise advise and communicate with the BUILDER on all matters pertaining to the construction of the VESSEL, as may be required by the BUILDER, or as he may deem necessary.
However, if the BUYER’S REPRESENTATIVE fails to submit to the BUILDER without unreasonable delay any such demand concerning alterations or changes with respect to the construction, arrangement or outfit of the VESSEL, which the BUYER’S REPRESENTATIVE has examined, inspected or attended at the test thereof under this CONTRACT or the SPECIFICATIONS, the BUYER’S REPRESENTATIVE shall be deemed to have approved the same and shall be precluded from making any demand for alterations, changes, or complaints with respect thereto at a later date.
The BUILDER shall comply with any such demand which is not contradictory to this CONTRACT and the SPECIFICATIONS or the PLAN, provided that any and all such demands by the BUYER’S REPRESENTATIVE with regard to construction, arrangement and outfit of the VESSEL shall be submitted in writing to the authorized representative of the BUILDER. The BUILDER shall notify the BUYER’S REPRESENTATIVE of the names of the persons who are from time to time authorized by the BUILDER for this purpose.
It is agreed upon between the BUYER and the BUILDER that the modifications, alterations or changes and other measures necessary to comply with such demand may be effected at a convenient time and place at the BUILDER’s reasonable discretion in view of the construction schedule of the VESSEL.
In the event that the BUYER’S REPRESENTATIVE shall advise the BUILDER that he has discovered or believes the construction or materials do not or will not conform to the requirements of this CONTRACT and the SPECIFICATIONS or the PLAN, and the BUILDER shall not agree with the views of the BUYER’S REPRESENTATIVE in such respect, either the BUYER or the BUILDER may, with the agreement of the other party, seek an opinion of the CLASSIFICATION SOCIETY or failing such agreement, request an arbitration in accordance with the provisions of Article XIII hereof. The CLASSIFICATION SOCIETY or the arbitration tribunal, as the case may be, shall determine whether or not a nonconformity with the provisions of this CONTRACT, the SPECIFICATIONS and the PLAN exists. If the CLASSIFICATION SOCIETY or the arbitration tribunal, as the case may be, enters a determination in favour of the BUYER, then in such case the BUILDER shall make at its own cost the necessary alterations or changes, or if such alterations or changes can not be made in time to meet the construction schedule for the VESSEL, the BUILDER shall make fair and reasonable adjustment of the CONTRACT PRICE in lieu of such alterations and
14
changes. If the CLASSIFICATION SOCIETY or the arbitration tribunal, as the case may be, enters a determination in favour of the BUILDER, then the time for delivery of the VESSEL shall be extended for the period of delay in construction, if any, occasioned by such proceedings, and the BUYER shall compensate the BUILDER for the proven loss and damages incurred by the BUILDER as a result of the dispute herein referred to.
Failure of BUYER’s REPRESENTATIVE’s presence at such trials and tests after such due notice has been given to him shall be deemed to be a waiver of the BUYER’s right to demand such alterations or changes after the trials and tests and inspections unless such absence could not be avoided by the exercise of the BUYER’s REPRESENTATIVE’s due diligence due to an incident of force majeure nature and/or unless the BUYER’s REPRESENTATIVE gives seven (7) days advance notice of such absence, provided, however, that failure of the BUYER’s REPRESENTATIVE’s presence shall not affect the construction schedule of the VESSEL.
3.
APPROVAL OF DRAWINGS
(a)
The BUILDER shall submit to the BUYER three (3) copies of each of the plans and drawings to be submitted to the Buyer for its approval at its address as set forth in Article XX hereof. The BUYER shall, within twenty two (22) days including mailing time after receipt thereof, return to the BUILDER one (1) copy of such plans and drawings with the approval or comments, if any, of the BUYER. A list of the plans and drawings to be so submitted to the BUYER and the schedule of the drawings and plans submission by the BUILDER to the BUYER shall be mutually agreed upon between the parties hereto.
(b)
When and if the BUYER’S REPRESENTATIVE shall have been sent by the BUYER to the SHIPYARD in accordance with Paragraph 1 of this Article, the BUILDER may submit the remainder, if any, of the plans and drawings in the agreed list, to the BUYER’S REPRESENTATIVE for his approval, unless otherwise agreed upon between the parties hereto.
The BUYER’S REPRESENTATIVE shall, within ten (10) days after receipt thereof, return to the BUILDER one (1) copy of such plans and drawing with his approval or comments written thereon, if any. Approval by the BUYER’S REPRESENTATIVE of the plans and drawings duly submitted to him shall be deemed to be the approval by the BUYER for all purposes of this CONTRACT.
(c)
In the event that the BUYER or the BUYER’S REPRESENTATIVE shall fail to return the plans and drawings to the BUILDER within the time limit as hereinabove provided, such plans and drawings shall be deemed to have been automatically approved without any comment. In the event the plans and drawings submitted by the BUILDER to the BUYER
15
or the BUYER’S REPRESENTATIVE in accordance with this Article do not meet with the BUYER’s or the BUYER’S REPRESENTATIVE’s approval, the matter may be submitted by either party hereto for determination pursuant to Article XIII hereof. If the BUYER’s comments on the plans and drawings that are returned to the BUILDER by the BUYER within the said time limit are not clearly specified or detailed, the BUILDER shall seek clarification from the BUYER prior to implementing them which clarification must be provided in writing by the BUYER within three (3) days of such request from the BUILDER. If the BUYER shall fail to provide the BUILDER with such clarification within the said time limit, then the BUILDER shall be entitled to place its own interpretation on such comments in implementing them.
4.
SALARIES AND EXPENSES
All salaries and expenses of the BUYER’S REPRESENTATIVE or any other person or persons employed by the BUYER hereunder shall be for the BUYER’s account.
5.
RESPONSIBILITY OF THE BUILDER
(a)
The BUILDER shall provide the BUYER’S REPRESENTATIVE and his assistants free of charge with suitably furnished office space at, or in the immediate vicinity of, the SHIPYARD together with access to telephone and facsimile facilities and appropriate internet access as may be necessary to enable the BUYER’S REPRESENTATIVE and his assistants to carry out their work under this CONTRACT. However, the BUYER shall pay for the telephone or facsimile facilities used by the BUYER’S REPRESENTATIVE or his assistants.
The BUILDER, its employees, agents and subcontractors, during its working hours until delivery of the VESSEL, shall arrange for them to have free and ready access to the VESSEL, her equipment and accessories, and to any other place (except the areas controlled for the purpose of national security) where work is being done, or materials are being processed or stored in connection with the construction of the VESSEL including the premises or sub-contractors.
The BUYER’S REPRESENTATIVE or his assistants or employees shall observe the work’s rules and regulations prevailing at the BUILDER’s and its sub-contractor’s premises. The BUILDER shall promptly provide to the BUYER’S REPRESENTATIVE and/or his assistants and shall ensure that its sub-contractors shall promptly provide all such information as he or they may reasonably request in connection with the construction of the VESSEL and her engines, equipment and machinery.
16
(b)
The BUYER’S REPRESENTATIVE and his assistants shall at all times remain the employees of the BUYER. The BUILDER shall not be liable to the BUYER or the BUYER’S REPRESENTATIVE or to his assistants or to the BUYER’s employees or agents for personal injuries, including death, during the time they, or any of them, are on the VESSEL, or within the premises of either the BUILDER or its sub-contractors, or are otherwise engaged in and about the construction of the VESSEL, unless, however, such personal injuries, including death, are caused by the gross negligence of the BUILDER, its sub-contractors, or its or their employees or agents. The BUILDER shall not be liable to the BUYER for damages to, or destruction of property of the BUYER or of the BUYER’S REPRESENTATIVE or his assistants of the BUYER’s employees or agents, unless such damages, loss or destruction is caused by the gross negligence of the BUILDER, its sub-contractors, or its or their employees or agents.
The BUILDER shall provide the BUYER with any assistance that the BUYER may require in obtaining work permits, visas, resident permits and other necessary documents for the BUYER’s REPRESENTATIVE and their staff.
As far as practical, the BUILDER shall endeavour not to arrange for inspection of the same type of subcontracting work in two different places on the same day — including at the SHIPYARD premises — the distance between which cannot be covered by one man in one day.
6.
RESPONSIBILITY OF THE BUYER
The BUYER shall undertake and assure that the BUYER’S REPRESENTATIVE shall carry out his duties hereunder in accordance with the normal shipbuilding practice and in such a way so as to avoid any unnecessary and unreasonable increase in building cost, delay in the construction of the VESSEL, and/or any disturbance in the construction schedule of the BUILDER.
The BUILDER has the right to request the BUYER to replace the BUYER’s REPRESENTATIVE who is deemed unsuitable and unsatisfactory for the proper progress of the VESSEL’s construction. The BUYER shall investigate the situation by sending its representative(s) to the SHIPYARD if necessary, and if the BUYER considers that such BUILDER’s request is justified, the BUYER shall effect such replacement as soon as conveniently arrangeable.
(End of Article)
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ARTICLE V : MODIFICATIONS, CHANGES AND EXTRAS
1.
HOW EFFECTED
Minor modifications or changes to the SPECIFICATIONS and the PLAN under which the VESSEL is to be constructed may be made at any time hereafter by written agreement of the parties hereto. Any modification or change requested by the BUYER which does not affect the frame-work of the SPECIFICATIONS shall be agreed to by the BUILDER if the BUYER agrees to adjustment of the CONTRACT PRICE, deadweight and/or cubic capacity, speed requirements, the Delivery Date and other terms and conditions of this CONTRACT reasonably required as a result of such modifications or change. The BUILDER has the right to continue construction of the VESSEL on the basis of the SPECIFICATIONS and the PLAN until the BUYER has agreed to such adjustments. The BUILDER shall be entitled to refuse to make any alteration, change or modification of the SPECIFICATIONS and/or the PLAN requested by the BUYER, if the BUYER does not agree to the aforesaid adjustments within seven (7) days of the BUILDER’s notification of the same to the BUYER, or, if, in the BUILDER’s reasonable judgment, the compliance with such request of the BUYER would cause an unreasonable disruption of the normal working schedule of the SHIPYARD.
The BUILDER, however, agrees to exert its efforts to accommodate such reasonable request by the BUYER so that the said change and modification shall be made at a reasonable cost and within the shortest period of time reasonably possible. The aforementioned agreement to modify and change the SPECIFICATIONS and the PLAN may be effected by exchange of letters or facsimiles or e-mail manifesting the agreement.
The letters, facsimiles or e-mail exchanged by the parties pursuant to the foregoing shall constitute an amendment to this CONTRACT and the SPECIFICATIONS or the PLAN under which the VESSEL shall be built. Upon consummation of such an agreement to modify and change the SPECIFICATIONS or the PLAN, the BUILDER shall alter the construction of the VESSEL in accordance therewith including any addition to, or deduction from, the work to be performed in connection with such construction.
2.
SUBSTITUTION OF MATERIAL
If any materials, machinery or equipment required for the construction of the VESSEL by the SPECIFICATIONS and the PLAN or otherwise under this CONTRACT can not be procured in time to meet the BUILDER’ s construction schedule for the VESSEL, or are in short supply, or are unreasonably high in price compared with the prevailing international market price, the BUILDER may supply, subject to the BUYER’s prior approval, other materials, machinery or
18
equipment of at least equal quality and effect capable of meeting the requirements of the CLASSIFICATION SOCIETY and the rules, regulations and requirements with which the construction of the VESSEL must comply. The BUILDER shall not be entitled to claim any extra cost if it elects to use or install substitute materials.
3.
CHANGES IN RULES AND REGULATIONS
If the specified rules and regulations with which the construction of the VESSEL is required to comply are altered or changed by the CLASSIFICATION SOCIETY or bodies authorized to make such alterations or changes, either the BUYER or the BUILDER, upon receipt of due notice thereof, shall forthwith give notice thereof to the other party in writing. Thereupon, within ten (10) days after giving the notice to the BUILDER or receiving the notice from the BUILDER, the BUYER shall advise the BUILDER as to the alterations and changes, if any, to be made on the VESSEL which the BUYER, in its sole discretion, shall decide. The BUILDER shall not be obliged to comply with such alterations and/or changes if the BUYER fails to notify the BUILDER of its decision within the time limit stated above.
The BUILDER shall comply promptly with the said request of the BUYER, provided that the BUILDER and the BUYER shall first agree to:
(a)
any increase or decrease in the CONTRACT PRICE of the VESSEL that is occasioned by such compliance;
(b)
any extension or advancement in the Delivery Date of the VESSEL that is occasioned by such compliance;
(c)
any increase or decrease in the deadweight and/or cubic capacity of the VESSEL, if such compliance results in any increase or reduction in the deadweight and/or cubic capacity ;
(d)
adjustment of the speed requirements if such compliance results in any increase or reduction in the speed ; and
(e)
any other alterations in the terms of this CONTRACT or of the SPECIFICATIONS or the PLAN or both, if such compliance makes such alterations of the terms necessary.
Any delay in the construction of the VESSEL caused by the BUYER’s delay in making a decision or agreement as above shall constitute a permissible delay under this CONTRACT. Such agreement by the BUYER shall be effected in the same manner as provided above for modification and change of the SPECIFICATIONS and the PLAN.
(End of Article)
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ARTICLE VI : TRIALS AND COMPLETION
1.
NOTICE
The BUILDER shall notify the BUYER in writing or by facsimile or e-mail at least twenty one (21) days in advance of the time and place of the trial run of the VESSEL. Such notice shall specify the place from which the VESSEL will commence her trial run and approximate date upon which the trial run is expected to take place. Such date shall be further confirmed by the BUILDER ten (10) days in advance of the trial run by facsimile or e-mail.
The BUYER’S REPRESENTATIVE, who is to witness the performance of the VESSEL during such trial run, shall be present at such place on the date specified in such notice. Should the BUYER’S REPRESENTATIVE fail to be present after the BUILDER’s due notice to the BUYER as provided above, the BUILDER shall be entitled to conduct such trial run with the presence of the representative(s) of the CLASSIFICATION SOCIETY only without the BUYER’S REPRESENTATIVE being present. In such case, the BUYER shall be obliged to accept the VESSEL on the basis of a certificate issued by the BUILDER that the VESSEL, after the trial run, subject to alterations and corrections, if necessary, has been found to conform with the SPECIFICATIONS and this CONTRACT and is satisfactory in all respects, provided the BUILDER first makes such corrections and alterations promptly.
2.
WEATHER CONDITION
In the event of unfavourable weather on the date specified for the trial run, the trial run shall take place on the first available day that weather conditions permit. The parties hereto recognize that the weather conditions in Philippines waters, in which the trial run is to take place, are such that great changes in weather may arise momentarily and without warning and therefore, it is agreed that if, during the trial run, the weather should become so unfavourable that the trial run cannot be continued, then the trial run shall be discontinued and postponed until the first favourable day next following, unless the BUYER shall assent to the acceptance of the VESSEL by notification in writing on the basis of such trial run so far made prior to such change in weather conditions. Any reasonable delay of the trial run caused by such unfavourable weather conditions shall also operate to extend the Delivery Date of the VESSEL for the period of delay occasioned by such unfavourable weather conditions.
3.
HOW CONDUCTED
All expenses in connection with the trials of the VESSEL are to be for the account of the BUILDER, which, during the trials, is to provide at its own expense the necessary crew to comply with conditions of safe navigation. The trials shall be conducted in the manner prescribed in this CONTRACT and the SPECIFICATIONS, and shall prove fulfillment of the performance requirements for the trials as set forth in the SPECIFICATIONS.
20
The BUILDER shall be entitled to conduct preliminary sea trials, during which the propulsion plant and/or its appurtenance shall be adjusted according to the BUILDER’s judgment. The BUILDER shall have the right to repeat any trial whatsoever as it deems necessary.
4.
CONSUMABLE STORES
The BUILDER shall load the VESSEL with the required quantity of fuel oil, lubricating oil and greases, fresh water, and other stores necessary to conduct the trials as set forth in the SPECIFICATIONS. The necessary ballast (fuel oil, fresh water and such other ballast as may be required) to bring the VESSEL to the trial load draft, as specified in the SPECIFICATIONS, shall be supplied and paid for by the BUILDER whilst lubricating oil and greases shall be supplied and paid for by the BUYER within the time advised by the BUILDER for the conduct of sea trials as well as for use before the delivery of the VESSEL to the BUYER. The fuel oil as well as lubricating oil and greases shall be in accordance with the engine specifications and the BUYER shall decide and advise the BUILDER of the supplier’s name for lubricating oil and greases at least two (2) months in advance of the keel laying of the VESSEL, provided that the supplier shall be acceptable to the BUILDER and/or the makers of all the machinery.
Any fuel oil, fresh water or other consumable stores furnished and paid for by the BUILDER for trial runs remaining on board the VESSEL, at the time of acceptance of the VESSEL by the BUYER, shall be bought by the BUYER from the BUILDER at the BUILDER’s actual net purchase price for such supply in Philippines and payment by the BUYER thereof shall be made at the time of delivery of the VESSEL. The BUILDER shall pay the BUYER at the time of delivery of the VESSEL for the consumed quantity of lubricating oil and greases which were furnished and paid for by the BUYER at the BUYER’s purchase price thereof.
The consumed quantity of lubricating oils and greases shall be calculated on the basis of the difference between the remaining amount, including the same remaining in the main engine, other machinery and their pipes, stern tube and the like, and the supplied amount.
5.
ACCEPTANCE OR REJECTION
(a)
If, during any sea trial, any breakdown occurs entailing interruption or irregular performance which can be repaired on board, the trial shall be continued after such repairs and be valid in all respects. However, if such interruption or irregular performance occurs more than two times on the same items, then such item(s) should be identified by the BUILDER to the BUYER as soon as practicably possible, and inspected/corrected by the BUILDER as soon as practicably possible. In the meantime, the inspection result, which will be final or preliminary as the case may be, should be informed to the BUYER before the delivery of the VESSEL.
(b)
However, if, during or after the trial run, it becomes apparent that the VESSEL or any part of her equipment requires alterations or corrections which but for this provision would or
21
might entitle the BUYER to cancel this CONTRACT, the BUILDER shall notify the
BUYER promptly in writing or by facsimile or e-mail to such effect and shall simultaneously advise the BUYER of the estimated additional time required for the necessary alterations or corrections to be made.
The BUYER shall, within three (3) working days of receipt from the BUILDER of notice of completion of such alterations or corrections and after such further trials or tests as necessary, notify the BUILDER in writing or by facsimile or e-mail confirmed in writing of its acceptance, qualified acceptance or rejection of the VESSEL, all in accordance with the SPECIFICATIONS, the PLAN and this CONTRACT, and shall not be entitled to reject the VESSEL on such grounds until such time.
(c)
Save as above provided, the BUYER shall, within three (3) working days after completion of the trial run, notify the BUILDER in writing or by facsimile or e-mail confirmed in writing of its acceptance of the VESSEL or of the details in respect of which the VESSEL does not conform to the SPECIFICATIONS or this CONTRACT.
If the BUILDER is in agreement with the BUYER’s determinations as to non-conformity, the BUILDER shall make such alterations or changes as may be necessary to correct such non-conformity and shall prove the fulfillment of this CONTRACT and the SPECIFICATIONS by such tests or trials as may be necessary.
The BUYER shall, within three (3) working days after completion of such tests and/or trials, notify the BUILDER in writing or by facsimile or e-mail confirmed in writing of its acceptance or rejection of the VESSEL.
(d)
However, the BUYER shall not be entitled to reject the VESSEL by reason of any minor or insubstantial items judged from the point of view of standard shipbuilding and shipping practice as not being in conformity with the SPECIFICATIONS, but, in that case, the BUILDER shall not be released from the obligation to correct and/or remedy such minor or insubstantial items as soon as practicable after the delivery of the VESSEL.
(e)
If requested by the BUYER, the BUILDER shall give a demonstration to the BUYER’s crew how to operate the machineries and other equipment of the VESSEL at the time of the trial run or between after trial run and before delivery in order for the BUYER’s crew to be familiarized with the said machineries and other equipment.
6.
EFFECT OF ACCEPTANCE
The BUYER’s written facsimiled or e-mail notification of acceptance delivered to the BUILDER as above provided, shall be final and binding insofar as conformity of the VESSEL with the SPECIFICATIONS is concerned and shall preclude the BUYER from refusing formal delivery of the VESSEL as hereinafter provided, if the BUILDER complies with all conditions
22
of delivery, as herein set forth and provided that, in the case of qualified acceptance, any matters which were mentioned in the notice of the qualified acceptance by the BUYER as requiring correction have been corrected satisfactorily.
If the BUYER fails to notify the BUILDER of its acceptance or rejection of the VESSEL as hereinabove provided, the BUYER shall be deemed to have accepted the VESSEL. Nothing contained in this Article shall preclude the BUILDER from exercising any and all rights which the BUILDER has under this CONTRACT if the BUILDER disagrees with the BUYER’s rejection of the VESSEL or any reasons given for such rejections, including arbitration provided in Article XIII hereof.
(End of Article)
23
ARTICLE VII : DELIVERY
1.
TIME AND PLACE
The VESSEL shall be delivered by the BUILDER to the BUYER at the SHIPYARD, safely afloat on or before the July 31, 2016 (hereinafter called the “DELIVERY DATE”) after completion of satisfactory trials and acceptance by the BUYER in accordance with the terms of Article VI, except that, in the event of delays in delivery of the VESSEL by the BUILDER due to causes which under the terms of this CONTRACT permit extensions of the time for delivery of the VESSEL, the aforementioned DELIVERY DATE shall be extended accordingly.
However, in connection with Paragraph 1 as above, with sixty (60) days prior written notice to BUYER of its intention to deliver the Vessel early, the BUILDER shall be entitled to advance the DELIVERY DATE of the VESSEL by up to sixty (60) days, provided that the BUYER consents to such earlier DELIVERY DATE, with such consent not to be unreasonably withheld or delayed.
2.
WHEN AND HOW EFFECTED
Provided that the BUYER shall concurrently with delivery of the VESSEL release to the BUILDER the fifth instalment as set forth in Article X.2. hereof and shall have fulfilled all of its obligations provided for in this CONTRACT, delivery of the VESSEL shall be forthwith effected upon acceptance thereof by the BUYER, as hereinabove provided, by the concurrent delivery by each of the parties hereto to the other of a PROTOCOL OF DELIVERY AND ACCEPTANCE acknowledging delivery of the VESSEL by the BUILDER and acceptance thereof by the BUYER, which shall be prepared in duplicate and signed by each of the parties hereto.
3.
DOCUMENTS TO BE DELIVERED TO THE BUYER
Upon delivery and acceptance of the VESSEL, the BUILDER shall deliver to the BUYER the following documents, which shall accompany the aforementioned PROTOCOL OF DELIVERY AND ACCEPTANCE:
(a)
PROTOCOL OF TRIALS of the VESSEL made pursuant to this CONTRACT and the SPECIFICATIONS,
24
(b)
PROTOCOL OF INVENTORY of the equipment of the VESSEL, including spare parts, all as specified in the SPECIFICATIONS,
(c)
PROTOCOL OF STORES OF CONSUMABLE NATURE, such as all fuel oil and fresh water remaining in tanks if its cost is charged to the BUYER under Article VI. 4. hereof,
(d)
Three (3) sets of DRAWING AND PLANS pertaining to the VESSEL as stipulated in the SPECIFICATIONS, which shall be furnished to the BUYER at no additional cost,
(e)
ALL CERTIFICATES required to be furnished upon delivery of the VESSEL pursuant to this CONTRACT, the SPECIFICATIONS and the customary shipbuilding practice, including
·
Classification Certificate for Hull and Machinery
·
Statement of compliance for USCG regulations for foreign flag vessel
·
Cargo Ship Safety Construction Certificate
·
Cargo Ship Safety Radio Certificate
·
Cargo Ship Safety Equipment Certificate
·
International Load Line Certificate
·
International Tonnage Certificate
·
International Oil Pollution Prevention Certificate
·
IAPP Certificate for NOx
·
EIAPP for Main engine and Auxiliary engine
·
MARPOL 73/78 Annex VI Certificate for Incinerator
·
Suez Canal Tonnage Certificate
·
Statement of Compliance for Maritime Labor Convention 2006, Title 3, Regulation
Standard A 3.1
·
Ship Sanitation Control Exemption Certificate
·
Test Certificate of Windlass, Anchor, Anchor Chain
·
Certificate for Cargo hose handling, Provision Crane and Engine Room Crane
·
International Sewage Pollution Prevention Certificate
·
Statement of compliance for International Garbage Pollution Prevention.
(Garbage management plan shall be prepared by the BUYER)
·
Anti fouling (TBT free) Certificate
·
Statement of compliance for voyage data recorder system
·
Certificate for life boat, lifesaving appliances and firefighting equipment
·
Statement of Compliance for Inventory of Hazardous Materials
25
·
International Energy Efficiency Certificate (IEEC)
*SEEMP (Ship Energy Efficiency Management Plan) shall be prepared by BUYER.
Any other certificate required by the CLASSIFICATION SOCIETY and/or other relevant regulatory bodies as specified in the SPECIFICATION and/or the PLANS
However, it is agreed by the parties that if the Classification Certificate and/or other certificates are not available at the time of delivery of the VESSEL, provisional certificates shall be accepted by the BUYER, provided that the BUILDER shall furnish the BUYER with formal certificates as promptly as possible after such formal certificates have been issued.
(f)
DECLARATION OF WARRANTY of the BUILDER that the VESSEL is delivered to the BUYER free and clear of any liens, claims, mortgages, or other encumbrances upon the BUYER’s title thereto, and in particular, that the VESSEL is absolutely free of all burdens in the nature of imposts, taxes, or charges imposed by the prefecture or country of the port of delivery, as well as of all liabilities of the BUILDER to its sub-contractors and employees and of all liabilities arising from the operation of the VESSEL in trial runs, or otherwise, prior to delivery except as otherwise provided under this Contract.
(g)
Bill of Sale notarized by the BUILDER and legalized by the BUILDER at the BUYER’s cost, if required for registration of the VESSEL
(h)
Commercial invoice
(i)
Power of Attorney
(j)
Any other documents reasonably required by the BUYER
The BUYER may require the BUILDER by giving reasonable notice, prior to delivery, to arrange for any documents listed above to be duly notarized, where practically possible.
4.
TENDER OF THE VESSEL
If the BUYER fails to take delivery of the VESSEL after completion thereof according to this CONTRACT and the SPECIFICATIONS, the BUILDER shall have the right to tender delivery of the VESSEL after compliance with all procedural requirements as provided above.
26
5.
TITLE AND RISK
Title and risk shall pass to the BUYER upon delivery and acceptance of the VESSEL being effected as stated above and the BUILDER shall be free of all responsibility or liability whatsoever related with this CONTRACT except for the warranty of quality contained in Article IX and the obligation to correct and/or remedy, as provided in Article VI. 5 (d), if any, it being expressly understood that, until such delivery is effected, the VESSEL and equipment thereof are at the entire risk of the BUILDER including but not confined to, risks of war, insurrection and seizure by Governments or Authorities, whether Philippines or foreign, and whether at war or at peace. The title to the BUYER’s supplies as provided in Article XII shall remain with the BUYER and the BUILDER’s responsibility for such BUYER’s supplies shall be as described in Article XII.2.
6.
REMOVAL OF THE VESSEL
The BUYER shall take possession of the VESSEL immediately upon delivery thereof and shall remove the VESSEL from the SHIPYARD within four (4) days after delivery thereof is effected.
From the delivery of the VESSEL until the actual removal thereof from the SHIPYARD, the BUYER shall be responsible for the safety and preservation of the VESSEL in all respects, including without limitation, keeping the VESSEL insured at his own cost, and furthermore, the BUYER shall indemnify and hold the BUILDER free and harmless against any liability or claims including without limitation, the claims of his insurers arising out of any accident whatsoever, unless caused by the willful misconduct of the BUILDER, his employee or agent.
Port dues and other charges levied by the Philippine Government Authorities after delivery of the VESSEL and any other costs related to the removal of the VESSEL shall be borne by the BUYER.
(End of Article)
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ARTICLE VIII : DELAYS AND EXTENSIONS OF TIME (FORCE MAJEURE)
1.
CAUSES OF DELAY
If, at any time after signing this CONTRACT, either the construction or delivery of the VESSEL or any performance required hereunder as a prerequisite to the delivery thereof is delayed by any of the following events: namely war, acts of state or government, blockade, revolution, insurrections, mobilization. civil commotion, riots, strikes, sabotage, lockouts, Acts of God or the public enemy, plague or other epidemics, quarantines, shortage or prolonged failure of electric current, freight embargoes, or defects in major forgings or castings, delays or defects in the BUYER’s supplies as stipulated in Article XII, if any, or shortage of materials, machinery or equipment or inability to obtain delivery or delays in delivery of materials, machinery or equipment, provided that at the time of ordering the same could reasonably be expected by the BUILDER to be delivered in time or defects in materials, machinery or equipment which could not have been detected by the BUILDER using reasonable care or earthquakes, tidal waves, typhoons, hurricanes, prolonged or unusually severe weather conditions or destruction of the premises or works of the BUILDER or its sub-contractors, or of the VESSEL, or any part thereof, by fire, landslides, flood, lightning, explosion, or delays in the BUILDER’s other commitments resulting from any such causes as described in this Article which in turn delay the construction of the VESSEL or the BUILDER’s performance under the CONTRACT, or delays caused by the CLASSIFICATION SOCIETY due to Force Majeure or the BUYER’s faulty action or omission, or other causes beyond the control of the BUILDER, or its sub-contractors, as the case may be, provided that such causes could not be foreseen at the time of signing this CONTRACT, or for any other causes which, under the terms of this CONTRACT, authorize and permit extension of the time for delivery of the VESSEL, then in the event of delays due to the happening of any of the aforementioned contingencies, the DELIVERY DATE of the VESSEL under this CONTRACT shall be extended for a period of time which shall not exceed the total accumulated time of all such delays.
2.
NOTICE OF DELAYS
As soon as practicably possible, but not later than fourteen (14) days after commencement of any delay on account of which the BUILDER claims that it is entitled under this CONTRACT to an extension of the DELIVERY DATE of the VESSEL, excluding delays due to arbitration, the BUILDER shall advise the BUYER in writing or by facsimile or e-mail of the date such delay commenced, the reasons thereof and, if possible, its estimated duration of the probable delay in the delivery of the VESSEL, and shall supply the BUYER if reasonably available
28
with evidence to justify the delay claimed. Within one (1) week after such delay ends, the
BUILDER shall likewise advise the BUYER in writing or by facsimile or e-mail of the date that such delay ended, and also, shall specify the period of time by which the BUILDER claims the DELIVERY DATE should be extended by reason of such delay. Failure of the BUYER to object to the BUILDER’s notification of any claim for extension of the date for delivery of the VESSEL within two (2) week after receipt by the BUYER of such notification shall be deemed to be a waiver by the BUYER of its right to object to such extension.
Failure of the BUILDER to notify the BUYER of any Force Majeure event in accordance with the above shall preclude the BUILDER from claiming Force Majeure for such event.
3.
RIGHT TO CANCEL FOR EXCESSIVE DELAY
If the total accumulated time of all permissible and non-permissible delays, excluding delays due to (i) arbitration under Article XIII, (ii) the BUYER’s defaults under Article XI, (iii) modifications and changes under Article V or (iv) delays or defects in the BUYER’ s supplies as stipulated in Article XII, aggregates three hundred (300) days or more, then, the BUYER may, at any time thereafter, cancel this CONTRACT by giving a written notice of cancellation to the BUILDER. Such cancellation shall be effective as of the date the notice thereof is received by the BUILDER.
If the BUYER has not served the notice of cancellation as provided in the above or Article III. 1. hereof, the BUILDER may, at any time after expiration of the accumulated time of the delay in delivery, either three hundred (300) days in case of the delay in this Paragraph or two hundred and ten (210) days in case of the delay in Article III. 1, notify the BUYER of the future date upon which the BUILDER estimates the VESSEL will be ready for delivery and demand in writing or by facsimile or e-mail that the BUYER make an election either to cancel this CONTRACT or to consent to the delivery of the VESSEL at such future date, in which case the BUYER shall, within seven (7) days after receipt of such demand, make and notify the BUILDER of such election. If the BUYER elects to consent to the delivery of the VESSEL at such future date (or other future date as the parties may agree):
(a)
Such future date shall become the contractual delivery date for the purposes of this CONTRACT and shall be subject to extension by reason of permissible delays as herein provided, and
29
(b)
If the VESSEL is not delivered by such revised contractual delivery date (as extended by
reason of permissible delays), the BUYER shall have the same right of cancellation upon the same terms as provided in the above and Article III. 1.
If the BUYER shall not make an election within seven (7) days as provided hereinabove, the BUYER shall be deemed to have accepted such extension of the DELIVERY DATE to the future delivery date indicated by the BUILDER.
4.
DEFINITION OF PERMISSIBLE DELAYS
Delays on account of the foregoing causes shall be understood to be permissible delays, and are to be distinguished from non-permissible unauthorized delays on account of which the CONTRACT PRICE of the VESSEL is subject to adjustment as provided in Article III hereof.
(End of Article)
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ARTICLE IX : WARRANTY OF QUALITY
1.
GUARANTEE OF MATERIAL AND WORKMANSHIP
The BUILDER, for the period of twelve (12) months from the date of delivery and acceptance of the VESSEL to the BUYER, guarantees the VESSEL and all parts and equipment thereof that are designed, manufactured, installed or furnished by the BUILDER and its sub contractors under this CONTRACT against all defects which are directly due to defective design, materials, installation, construction miscalculation and/or poor workmanship, provided such defects have not been caused by perils of the sea, rivers or navigation, or by normal wear and tear, overloading, improper loading or stowage, external corrosion of the materials normally expected, fire, accident, incompetence, mismanagement, negligence or willful neglect or by alteration or addition by the BUYER not previously approved by the BUILDER.
The BUILDER will be responsible for all machinery or parts of machinery and all constructions which are supplied by sub-contractors and will guarantee the above mentioned for a period of twelve (12) months on the basis as laid down in this Paragraph.
Notwithstanding the above, in the event that within the guarantee period of twelve (12) months any remedies are carried out or replacements are provided by the BUILDER and/or its subcontractors, the guarantee period in respect to such repairs or replacements shall be extended for the period of twelve (12) months from the date upon which the same are carried out, provided that the total accumulated period of guarantee shall not exceed eighteen (18) months from the date of delivery of the VESSEL.
2.
NOTICE OF DEFECTS
The BUYER or its duly authorized representative will notify the BUILDER in writing or by facsimile or e-mail promptly after discovery of any defect for which a claim is to be made under this guarantee.
The BUYER’s written notice shall include full particulars as to the nature of the defect and the extent of the damage caused thereby, but excluding consequential damage as hereinafter provided. The BUILDER will be under no obligation with respect to this guarantee in respect of any claim for defects discovered prior to the expiry date of the guarantee, unless notice of such defects is received by the BUILDER before the expiry date. However, facsimile or e-mail advice received by the BUILDER within seven (7) days after such expiry date that a claim is forthcoming will be sufficient compliance with the requirement as to time, provided that such
31
facsimile or e-mail advice shall include at least a brief description of the defect including the identity of the equipment, extent of damage, name and number of any replacement part and description of any remedial work required, and that full particulars are given to the BUILDER not later than fifteen (15) days after the expiry date.
3.
REMEDY OF DEFECTS
(a)
The BUILDER shall remedy, at its expense, any defects, against which the VESSEL is guaranteed under this Article, by making all necessary and reasonably practicable repairs or replacements at the SHIPYARD or elsewhere as provided for in (b) hereinbelow.
In such case, the VESSEL shall be taken at the BUYER’s cost and responsibility to the place selected, ready in all respects for such repairs or replacements and in any event, the BUILDER shall not be responsible for towage, dockage, wharfage, port charges and anything else incurred for the BUYER’s getting and keeping the VESSEL ready for such repairing or replacing.
(b)
However, if it is impractical (which shall include, but not be limited to, an emergency) to bring the VESSEL to the SHIPYARD, the BUYER may cause the necessary repairs or replacements to be made elsewhere which is deemed by the BUYER with the consent of the BUILDER which shall not be unreasonably withheld, to be suitable for the purpose, provided that, in such event, the BUILDER may forward or supply replacement parts or materials to the VESSEL under the terms described in (c) hereinbelow, unless forwarding or supplying thereof to the VESSEL would impair or delay the operation or working schedule of the VESSEL. In the event that the BUYER proposes to cause the necessary repairs or replacements to be made to the VESSEL at any shipyard or works other than the SHIPYARD, the BUYER shall first (but in all events as soon as reasonably possible) give the BUILDER notice in writing or by facsimile or e-mail of the time and place such repairs will be made, and if the VESSEL is not thereby delayed, or her operation or working schedule is not thereby impaired, the BUILDER shall have the right to verify by its own representative(s) the nature and extent of the defects complained of. The BUILDER shall, in such case, promptly advise the BUYER by facsimile or e-mail, after such examination has been completed, of its acceptance or rejection of the defects as ones that are covered by the guarantee herein provided. Upon the BUILDER’s acceptance of the defects as justifying remedy under this Article, or upon award of the arbitration so determining, the BUILDER shall compensate the BUYER an amount equal to the reasonable cost of making the same repairs or replacements which shall not exceed the average cost of making same repairs or replacements at a reputable Korean repair yard, a
32
reputable European repair yard, a reputable Singapore repair yard and a reputable Chinese repair yard. The repair yards for the reference of BUILDER’s compensation shall be chosen by the BUYER subject to the BUILDER’s prior written consent which shall not be unreasonably withheld.
(c)
In the event that it is necessary for the BUILDER to forward a replacement for a defective part under this guarantee, replacement parts shall be shipped to the BUYER under the terms of C.I.F. port of the country where they are to be purchased.
(d)
The BUILDER reserves the option to retrieve, at the BUILDER’s cost, any of the replaced equipment/parts in case defects are remedied in accordance with the provisions in this Article.
(e)
Any dispute under this Article shall be referred to arbitration in accordance with the provisions of Article XIII hereof.
4.
EXTENT OF THE BUILDER’S LIABILITY
(a)
After delivery of the VESSEL the responsibility of the BUILDER in respect of and/or in connection with the VESSEL and/or this CONTRACT shall be limited to the extent expressly provided in this Article. Except as expressly provided in this Article, in no circumstances and on no ground whatsoever shall the BUILDER have any responsibility or liability whatsoever or howsoever arising in respect of or in connection with the VESSEL or this CONTRACT after the delivery of the VESSEL. Further, but without in any way limiting the generality of this Article, the BUILDER shall have no liability or responsibility whatsoever or howsoever arising for or in connection with any consequential or special loss and/or damages (including any loss of earnings), any pecuniary loss or expense, any liability to any third party or any fine, compensation, penalty or other payment or sanction incurred by or imposed upon the BUYER or any other party whatsoever in relation to or in connection with this CONTRACT or the VESSEL.
(b)
The BUILDER shall be under no obligation with respect to defects discovered after the expiration of the period of guarantee specified above, nor in any event shall the BUILDER be liable for any worsening of defects after the expiry date of the guarantee.
(c)
The BUILDER shall under no circumstances be liable for defects in the VESSEL or
33
any part of equipment thereof caused by perils of the sea, rivers or navigation, or normal wear and tear, or fire or accidents at sea or elsewhere or by mismanagement, accident, negligence, willful neglect, alteration or addition on the part of the BUYER, its employees or agents on or doing work on the VESSEL, including the VESSEL’s officers, crew and passengers. Likewise, the BUILDER shall not be liable for defects in the VESSEL or any part of equipment thereof that are due to repairs which were made by other than the BUILDER at the discretion of the BUYER as hereinabove provided.
(d)
The liability of the BUILDER provided for in this Article shall be limited to defects directly caused by defective materials, design, construction miscalculation and/or poor workmanship as above provided. The BUILDER shall not be obliged to repair, not be liable for, damage to the VESSEL or any part of the equipment thereof, which after delivery of the VESSEL, is caused other than by the defects of the nature specified above. The guarantees contained as hereinabove in this Article replace and exclude any other liability, guarantee, warranty and/or condition imposed or implied by statute, common law, custom or otherwise on the part of the BUILDER by reason of the construction and sale of the VESSEL for and to the BUYER.
(End of Article)
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ARTICLE X : PAYMENT
1.
CURRENCY
All payments under this CONTRACT shall be made in United States Dollars.
2.
TERMS OF PAYMENT
The payments of the CONTRACT PRICE shall be made as follows.
(a)
First Instalment
Twenty per cent (20%) of the CONTRACT PRICE amounting to U.S. Dollars Nineteen Million Two Hundred Seventy Two Thousand One Hundred Only (US$19,272,100) shall be paid within four (4) business days after either the BUYER’s receipt of fax or scanned copy of Letter of Guarantee or the BUYER’s bank’s receipt of Letter of Guarantee by SWIFT, as the case may be, duly issued in accordance with Paragraph 8 of this Article.
Under this CONTRACT, in counting the business days, only Saturdays and Sundays are excepted. When a due date falls on a day when banks are not open for business in New York, Philippines, Singapore such due date shall fall due upon the first business day next following.
(b)
Second Instalment
Ten per cent (10%) of the CONTRACT PRICE amounting to U.S. Dollars Nine Million Six Hundred Thirty Six Thousand Fifty Only (US$9,636,050) shall be paid within six (6) months after signing this CONTRACT within four (4) business days after BUYER’s receipt of a notice from the BUILDER together with an invoice for the specified amount.
(c)
Third Instalment
Ten per cent (10%) of the CONTRACT PRICE amounting to U.S. Dollars Nine Million Six Hundred Thirty Six Thousand Fifty Only (US$9,636,050) shall be paid within five (5) business days of receipt by the BUYER of a facsimiled or e-mail notice from the BUILDER together with a Certificate issued by the CLASSIFICATION SOCIETY confirming that steel cutting has commenced.
35
(d) Fourth Instalment
Ten per cent (10%) of the CONTRACT PRICE amounting to U.S. Dollars Nine Million Six Hundred Thirty Six Thousand Fifty Only (US$9,636,050) shall be paid within four (4) business days after the later of receipt by the BUYER of a facsimiled or e-mail notice from the BUILDER confirming that the first block of the keel has been laid together with a Certificate issued by the Classification Society confirming that the keel laying has commenced.
(e) Fifth Instalment
Fifty per cent (50%) of the CONTRACT PRICE amounting to U.S. Dollars Forty Eight Million One Hundred Eighty Thousand Two Hundred Fifty Only (US$48,180,250) plus or minus any increase or decrease due to modifications and/or adjustment, if any, arising prior to delivery of the VESSEL of the CONTRACT PRICE under Articles III and V of this CONTRACT shall be paid to the BUILDER concurrently with the delivery of the VESSEL. (The date stipulated for payment of each of the four instalments mentioned above is hereinafter in this Article and in Article XI referred to as the “DUE DATE” of that instalment).
It is understood and agreed upon by the BUILDER and the BUYER that no payments under the provisions of this Article shall be delayed or withheld by the BUYER due to any dispute or disagreement of whatsoever nature arising between the BUILDER and the BUYER. Should there be any dispute in this connection, the matter shall be dealt with in accordance with the provisions of arbitration in Article XIII hereof. It is understood that any expenses for receiving such payment shall be for the account of the BUILDER.
3.
DEMAND FOR PAYMENT
At least fourteen (14) days prior to the date of each event provided in Paragraph 2 of this Article on which any payment shall fall due hereunder, with the exception of the payment of the first and second instalments, the BUILDER shall notify the BUYER by facsimile or e-mail of the date such payment shall become due.
The BUYER shall immediately acknowledge receipt of such notification by facsimile or e-mail to the BUILDER, and make payment as set forth in this Article. If the BUILDER fails to receive the BUYER’s said acknowledgement within three (3) days after sending the aforementioned notification, the BUILDER shall promptly facsimile or e-mail to the BUYER a second notification of similar import. The BUYER shall immediately acknowledge by facsimile or e-mail receipt of the foregoing second notification regardless
36
of whether or not the first notification was acknowledged as aforesaid.
4.
METHOD OF PAYMENT
(a)
All the pre-delivery payments and the payment due on delivery in settlement of the CONTRACT PRICE as provided for in Paragraph 2 of this Article shall be made in U.S. Dollars on or before the DUE DATE thereof by telegraphic transfer as follows ;
(i)
The payment of the first, second, third and fourth instalment shall be made to the account (Account No. 093-1700-3622) of the Korea Development Bank (Swift Code : KODBKRSE) (hereinafter called the “KDB” or “BUILDER’s Bank”) at JP Morgan Chase Bank, New York (Swift Code : CHASUS33) or the account of the BUILDER with any other bank in favour of the BUILDER, as designated and notified by the BUILDER at least seven (7) business days prior to the due date.
(ii)
The fifth instalment as provided for in Paragraph 2.(e) of this Article shall be deposited at the account of the KDB
in favour of the BUILDER
at least two (2) business days prior to the scheduled delivery date of the VESSEL notified by the BUILDER, with instructions that the said instalment is payable to the BUILDER against presentation by the BUILDER to the KDB of a copy of the original PROTOCOL OF DELIVERY AND ACCEPTANCE of the VESSEL signed by the BUILDER and the BUYER.
If the delivery of the VESSEL is not effected within fifteen (15) days after the scheduled delivery date, the BUYER shall have the right to withdraw the said deposit plus accrued interest (if any) upon the expiry date. However when the newly scheduled delivery date is notified to the BUYER by the BUILDER, the BUYER shall make the cash deposit in accordance with the same terms and conditions as set out above.
Reference to the BUILDER’s Bank
|
·
Name:
|
THE KOREA DEVELOPMENT BANK
|
|
·
Address:
|
14 Eunhaeng-ro (16-3, Yeouido-Dong), Yeongdeungpo-Gu, Seoul, Korea
|
|
·
Telephone Number:
|
+82 2 787 5421
|
|
·
Telefax Number:
|
+82 2 787 5492
|
|
·
Swift Code:
|
KODBKRSE
|
|
·
Beneficiary:
|
HHIC-Phil Inc.
|
37
|
·
Through Bank:
|
JP Morgan Chase Bank, New York (Swift Code: CHASUS33)
|
|
·
Account number:
|
093-1700-3622
|
(b)
Provided however that none of the above installments shall be payable if the Refund Guarantee referred to in Article X .5 hereof ceases to be in force and no substitute Refund Guarantee has been provided in accordance with the provisions of this CONTRACT.
5.
REFUND
BY THE BUILDER
The payments made by the BUYER to the BUILDER prior to delivery of the VESSEL shall constitute advances to the BUILDER. If the VESSEL is rejected by the BUYER in accordance with the terms of this CONTRACT or, except in the case of cancellation of this CONTRACT by the BUILDER under the provisions of Article XI hereof, if the BUYER terminates, cancels or rescinds this CONTRACT pursuant to any of the provisions of this CONTRACT specifically permitting the BUYER to do so, the BUILDER shall forthwith refund to the BUYER, in U.S. Dollars, the full amount of total sums paid by the BUYER to the BUILDER in advance of delivery together with interest thereon as herein provided.
The transfer and other bank charges of such refund shall be for the BUILDER’s account. The interest rate of the refund, as above provided, shall be six per cent (6%) per annum from the date following the date of receipt by the BUILDER of the pre-delivery instalment(s) to the date of remittance by telegraphic transfer of such refund, provided, however, that if the cancellation of this CONTRACT by the BUYER is based upon delays due to Force Majeure or other causes beyond the control of the BUILDER as provided for in Article VIII hereof, then in such event, the interest rate of refund shall be reduced to four per cent (4%) per annum.
It is hereby understood by both parties that payment of any interest provided herein is by way of liquidated damages due to cancellation of this CONTRACT and not by way of compensation for use of money.
If, the BUILDER is required to refund to the BUYER the instalments paid by the BUYER to the BUILDER as provided in this Paragraph, the BUILDER shall return to the BUYER all of the BUYER’s supplies as stipulated in Article XII which were not incorporated into the VESSEL and pay to the BUYER an amount equal to the cost to the BUYER of those supplies incorporated into the VESSEL.
6.
TOTAL
LOSS
If there is a total loss or a constructive total loss of the VESSEL prior to delivery thereof, the
38
BUILDER shall proceed according to the mutual agreement of the parties hereto either:
(a)
to build another vessel in place of the VESSEL so lost and deliver it under this CONTRACT to the BUYER, provided that the parties hereto shall have agreed in writing to a reasonable price and time for the construction of such vessel in place of the lost VESSEL; or
(b)
to refund to the BUYER the full amount of the total sums paid by the BUYER to the BUILDER under the provisions of Paragraph 2 of this Article together with interest thereon at the rate of six per cent (6%) per annum from the date following the date of receipt by the BUILDER of such pre-delivery instalment(s) to the date of payment by the BUILDER to the BUYER of the refund.
If the parties hereto fail to reach such agreement within two (2) months after the VESSEL is determined to be a total loss or constructive total loss, the provisions of (b) hereinabove shall be applied and the BUILDER shall make such refund to the BUYER within ten (10) business days of such date.
7.
DISCHARGE
OF OBLIGATIONS
Such refund as provided in the foregoing Paragraphs 5 and 6 by the BUILDER to the BUYER shall forthwith discharge all the obligations, duties and liabilities of each of the parties hereto to the other, other than any obligations of the BUYER in respect of facilities afforded to the BUYER’S REPRESENTATIVE, under this CONTRACT. Any and all refunds or payments due to the BUYER under this CONTRACT shall be made by telegraphic transfer to the account specified by the BUYER.
8.
REFUND
GUARANTEE
As a condition precedent to the payment of the first intsalment, the BUILDER shall furnish the BUYER with an assignable letter of refundment guarantee issued by the Korea Development Bank for the refund of all the pre-delivery instalments plus interest as aforesaid to the BUYER under or pursuant to Paragraph 5 above in the substantially similar form and tenor as annexed hereto as Exhibit “A”.
All expenses in issuing and maintaining the letter of guarantee described in this Paragraph shall be borne by the BUILDER.
39
9.
PERFORMANCE GUARANTEE
Before signing the CONTRACT, the BUYER shall provide the BUILDER with an irrevocable Letter of Guarantee issued by NAVIG8 Crude Tankers Inc for the due and faithful performance by the BUYER of all its obligations under the CONTRACT including, but not limited to, the payment of the CONTRACT PRICE and taking delivery of the VESSEL in the form as annexed hereto as Exhibit “B”.
(End of Article)
40
ARTICLE XI : BUYER’S DEFAULT
1. DEFINITION
OF DEFAULT
The BUYER shall be deemed to be in default under this CONTRACT in the following cases:
(a)
If the first, second, third, or fourth instalment is not paid to the BUILDER within respective DUE DATE of such instalments; or
(b)
If the fifth instalment is not deposited in accordance with Article X.4.(a)(ii) hereof or if the said fifth instalment deposit is not released to the BUILDER against presentation by the BUILDER of a copy of the original PROTOCOL OF DELIVERY AND ACCEPTANCE; or
(c)
If the BUYER fails to take delivery of the VESSEL when the VESSEL is duly tendered for delivery by the BUILDER under the provisions of Article VII hereof; or
(d)
If an order or an effective resolution shall be passed for winding up of the BUYER (except for the purpose of reorganization, merger or amalgamation).
In case the BUYER is in default as defined in this Article XI.1, the BUILDER is entitled to and shall have the following rights, powers and remedies in addition to such other rights, powers and remedies as the BUILDER may have elsewhere in
this CONTRACT
.
2. EFFECT
OF THE BUYER’S DEFAULT ON OR BEFORE THE DELIVERY OF
THE
VESSEL
If the BUYER shall be in default as provided in Paragraph 1 above of its obligations under this CONTRACT, then;
(a)
The DELIVERY DATE of the VESSEL shall be extended automatically for the actual period of such default and the BUILDER shall not be obliged to pay any liquidated damages for the delay in delivery of the VESSEL caused thereby.
(b)
The BUYER shall pay to the BUILDER interest at the rate of six per cent (6%) per annum in respect of the instalment(s) in default from the respective DUE DATE to the date of actual receipt by the BUILDER of the full amount of such instalment(s).
41
(c)
If the BUYER is in default in payment of any of the instalment(s) due and payable prior to or simultaneously with the delivery of the VESSEL, the BUILDER shall, in writing or by facsimile or e-mail, notify the BUYER to that effect, and the BUYER shall, upon receipt of such notification, forthwith acknowledge in writing or by facsimile or e-mail to the BUILDER that such notification has been received.
(d)
If any of the BUYER’s default continues for a period of ten (10) days after the BUILDER’s notification to the BUYER of such default, the BUILDER may, at its option, rescind this CONTRACT by serving upon the BUYER a written notice or facsimile or e-mail notice of rescission confirmed in writing.
(e)
In the event of such cancellation by the BUILDER of this CONTRACT due to the BUYER’s default as provided for in paragraph 1 above, the BUILDER shall be entitled to retain and apply the instalments already paid by the BUYER to the recovery of the BUILDER’s loss and damage including, but not being limited to, reasonable estimated profit due to the BUYER’s default and the cancellation of this CONTRACT and at the same time the BUILDER shall have the full right and power either to complete or not to complete the VESSEL which is the sole property of the BUILDER as it deems fit, and to sell the VESSEL at a public or private sale on such terms and conditions as the BUILDER thinks fit without being answerable for any loss or damage but must take reasonable precautions to obtain the true market value of the VESSEL.
The proceeds received by the BUILDER from the sale shall be applied in addition to the instalment(s) retained by the BUILDER as mentioned hereinabove as follows:
First, in payment of all reasonable costs and expenses of the sale of the VESSEL, including interest thereon at six per cent (6%) per annum from the respective date of payment of such costs and expenses aforesaid to the date of sale on account of the BUYER’s default.
Second, if the VESSEL has been completed, in or towards satisfaction of the unpaid balance of the CONTRACT PRICE, to which shall be added the cost of all additional work and extras agreed by the BUYER including interest thereon at six per cent (6%) per annum from the respective DUE DATE of the instalment in default to the date of sale, or if the VESSEL has not been completed, in or towards satisfaction of the unpaid amount of the cost incurred by the BUILDER prior to the date of sale on account of construction of the VESSEL, including work, labour, materials and reasonably estimated profit which the BUILDER would have been entitled to receive if the VESSEL had been completed
42
and delivered plus interest thereon at six per cent (6%) per annum from the respective DUE DATE of the instalment in default to the date of sale.
Third, the balance of the proceeds, if any, shall belong to the BUYER, and shall forthwith be paid over to the BUYER by the BUILDER.
In the event of the proceeds from the sale together with instalment(s) retained by the BUILDER being insufficient to pay the BUILDER, the BUYER shall be liable for the deficiency and shall pay the same to the BUILDER upon its demand.
3. DEFAULT BY THE BUILDER
The BUILDER shall be deemed to be in default under this CONTRACT ;
(i)
If the BUILDER shall apply for or consent to the appointment of a receiver, trustee or liquidator, shall be adjudicated insolvent, shall apply to the courts for protection from its creditors, file a voluntary petition in bankruptcy or take advantage of any insolvency law, or any action shall be taken by the BUILDER having an effect similar to any of the foregoing or the equivalent thereof in any jurisdiction or there is possibility of occurrence of any of foregoing events due to the BUILDER’s inability to pay its debts as they fall due.
(ii)
If the BUILDER, without reasonable excuse, suspends the commencement or progress of the construction of the VESSEL for a period of one hundred (100) days or more and the BUILDER has not rectified the same within fourteen (14) days of being notified by the BUYER of such delay.
(iii)
If the refund guarantee is not issued within thirty (30) days from the date of this CONTRACT or if the refund guarantee is not maintained in accordance with the terms and conditions of this CONTRACT and the BUILDER fails to provide the BUYER with a replacement refund guarantee from a first class bank acceptable to the BUYER (acting reasonably) .
In the event of such BUILDER’s default the BUYER may then cancel this CONTRACT by promptly notifying the BUILDER in writing but not later than two (2) weeks from the date the BUYER becomes aware of the BUILDER’s default. Such cancellation is to be effective as of the date when such notice of cancellation is received by the BUILDER.
(End of Article)
43
ARTICLE
XII : BUYER’S SUPPLIES
1.
RESPONSIBILITY
OF THE BUYER
The BUYER shall, at its cost and expense, supply all the BUYER’s supplies mentioned in the SPECIFICATIONS, if any, (hereinafter called the “BUYER’S SUPPLIES”), to the BUILDER at the SHIPYARD in perfect condition ready for installation and in accordance with the time schedule to be furnished by the BUILDER to meet the building schedule of the VESSEL.
In order to facilitate the installation of the BUYER’S SUPPLIES by the BUILDER, the BUYER shall furnish the BUILDER with the necessary plans, instruction books, test report and all test certificates required by the BUILDER and shall cause the representative(s) of the makers of the BUYER’S SUPPLIES to give the BUILDER any advice, instructions or assistance which the BUILDER may reasonably require in the installation or adjustment thereof at the SHIPYARD, all without cost or expense to the BUILDER.
The BUYER shall be liable for any expense incurred by the BUILDER for repair of the BUYER’S SUPPLIES due to defective design or materials, poor workmanship or performance or due to damage in transit and the DELIVERY DATE of the VESSEL shall be extended for the period of such repair if such repair shall affect the delivery of the VESSEL.
Commissioning into good order of the BUYER’S SUPPLIES during and after installation on board shall be made at the BUYER’s expense by the representative of respective maker of the person designated by the BUYER in accordance with the BUILDER’s building schedule.
Should the BUYER fail to deliver to the BUILDER the BUYER’S SUPPLIES and the necessary document or advice for such supplies within the time specified by the BUILDER, the DELIVERY DATE of the VESSEL shall automatically be extended for the period of such delay if such delay in delivery shall affect the delivery of the VESSEL. In such event, the BUYER shall pay to the BUILDER all losses and damages sustained by the BUILDER due to such delay in the delivery of the BUYER’S SUPPLIES and such payment shall be made upon delivery of the VESSEL, provided, however, that the BUILDER shall have :
(a)
furnished the BUYER with the time schedule referred to above, two (2) months prior to installation of the BUYER’S SUPPLIES and
(b)
given the BUYER written notice of any delay in delivery of the BUYER’S SUPPLIES and the necessary document or advice for such supplies as soon as the delay occurs which might give rise to a claim by the BUILDER under this Paragraph.
Furthermore, if the delay in delivery of the BUYER’S SUPPLIES and the necessary document or advice for such supplies should exceed ten (10) days from the date specified by the
44
BUILDER, the BUILDER shall be entitled to proceed with construction of the VESSEL without installation of such items (regardless of their nature or importance to the BUYER or the VESSEL) in or on the VESSEL without prejudice to the BUILDER’s right hereinabove provided, and the BUYER shall accept the VESSEL so completed.
2.
RESPONSIBILITY
OF THE BUILDER
The BUILDER shall be responsible for storing, safekeeping against weather and theft and handling the BUYER’S SUPPLIES, if any, which the BUILDER is required to install on board the VESSEL after delivery of such supplies to the SHIPYARD, and shall install such supplies on board the VESSEL at the BUILDER’s expense.
The BUILDER shall not be responsible for the quality, performance or efficiency of any equipment included in the BUYER’S SUPPLIES and is under no obligation with respect to the guarantee of such equipment against any defects caused by poor quality, performance or efficiency of the BUYER’S SUPPLIES. If any of the BUYER’S SUPPLIES is lost or damaged while in the custody of the BUILDER, the BUILDER shall, if the loss or damage is due to willful default or negligence on its part, be responsible for direct repair or correction.
(End of Article)
45
ARTICLE XIII : ARBITRATION
1.
DECISION BY THE CLASSIFICATION SOCIETY:
If any dispute arises between the parties hereto in regard to the design and/or construction of the VESSEL, its machinery and equipment, and/or in respect of the materials and/or workmanship thereof and/or thereon, and/or in respect of interpretations of this CONTRACT or the SPECIFICATIONS, the parties may by mutual agreement refer the dispute to the CLASSIFICATION SOCIETY or to such other expert as may be mutually agreed between the parties hereto, and whose decision shall be final, conclusive and binding upon the parties hereto.
2.
LAWS
APPLICABLE
Any arbitration arising hereunder shall be governed by and conducted in accordance with the Arbitration Act 1996 of England or any statutory modification or re-enactments thereof for the time being in force. The award of the arbitrator shall be final and binding upon parties hereto.
3.
PROCEEDINGS OF ARBITRATION:
In the event that the parties hereto do not agree to settle a dispute according to Paragraph 1 of this Article and/or in the event of any other dispute of any kind whatsoever between the parties and relating to this CONTRACT or its rescission or any stipulation herein, such dispute shall be submitted to arbitration in London. The proceedings of any arbitration shall be governed by the rules of the London Maritime Arbitrators Association. The parties shall try to agree a single arbitrator to conduct the arbitration.
If the parties cannot agree upon the appointment of the single arbitrator within two (2) weeks after one of the parties has given notice to the other party notifying that the other party to refer the dispute to arbitration, the dispute shall be settled by three arbitrators, each party appointing one arbitrator, the third being appointed by the London Maritime Arbitrators Association. If either of the appointed arbitrators refuses or is incapable of acting, the party who appointed him shall appoint a new arbitrator in his place.
If one party fails to appoint an arbitrator - either originally or by way of substitution - for two (2) weeks after the other party having appointed its arbitrator, has served the party making default with notice to make the appointment, the London Maritime Arbitrators
46
Association shall, after application from the party having appointed its arbitrator, also appoint an arbitrator on behalf of the party making default. The award of the arbitration made by the sole arbitrator or by the majority of the three arbitrators as the case may be shall be final, conclusive and binding upon the parties hereto.
4.
NOTICE OF AWARD:
The award shall immediately upon receipt be given to the BUYER and the BUILDER by telefax or e-mail to be confirmed by a registered letter via airmail directed to the each party.
5.
EXPENSES:
The Arbitrator or the Arbitration Board shall determine which party shall bear the expenses of the arbitration or the portion of such expenses which each party shall bear.
6.
ENTRY IN COURT:
In case of failure by either party to respect the award of the arbitration, the judgment may be entered in any proper court having jurisdiction thereof.
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ALTERATION OF DELIVERY DATE:
In the event of reference to arbitration of any dispute arising out of matters occurring prior to delivery of the VESSEL, the award shall include any postponement of the DELIVERY DATE which the Arbitrator or the Arbitration Board may deem appropriate.
(End of Article)
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ARTICLE
XIV : SUCCESSORS AND ASSIGNS
The BUILDER agrees that at any time prior to delivery of the VESSEL, this CONTRACT may, with the prior written approval of the BUILDER, which the BUILDER shall not unreasonably withhold, be transferred by the BUYER to (and the title thereof may be taken by) another company.
Further, the BUYER may assign its rights (but not its obligations) under this CONTRACT to a first class financial institution in order for the BUYER to obtain finance from such financial institution with prior notification to the BUILDER and its acknowledgement of receipt thereof.
In the event of any assignment by the BUYER pursuant to the terms of this CONTRACT the assignee (and the assignee’s successors and assigns) shall succeed to all the rights of the BUYER under this CONTRACT. However, the BUYER shall remain responsible for performance the BUYER’s obligations, liabilities and responsibilities under this CONTRACT.
It is understood that any expenses or changes incurred in connection with the transfer/ assignment of this CONTRACT by the BUYER shall be for the account of the BUYER.
The BUILDER shall have the right to assign its rights (but not its obligations) under this CONTRACT at any time after the effective date hereof, provided that prior written agreements is obtained from the BUYER which the BUYER shall not unreasonably withhold.
(End of Article)
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ARTICLE
XV : TAXES AND DUTIES
1.
TAXES
Unless otherwise expressly provided for in this CONTRACT, all costs and taxes including stamp duties, if any, incurred in or levied by any country except Philippines in connection with this CONTRACT shall be borne by the BUYER and corresponding costs and taxes in Philippines, before delivery of the VESSEL, if any, shall be borne by the BUILDER.
2.
DUTIES
The BUILDER shall hold the BUYER harmless from any payment of duty imposed in Philippines upon materials or supplies which, under the terms of this CONTRACT, or amendments thereto, may be supplied by the BUYER from abroad for the construction of the VESSEL.
The BUILDER shall likewise hold the BUYER harmless from any payment of duty imposed in Philippines in connection with materials or supplies for operation of the VESSEL, including running stores, provisions and supplies necessary to stock the VESSEL for its operation. This indemnity does not, however, extend to any items purchased by the BUYER for use in connection with the VESSEL which are not absolutely required for the construction or operation of the VESSEL.
(End of Article)
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ARTICLE
XVI : PATENTS, TRADEMARKS AND COPYRIGHTS
1.
PATENTS,
TRADEMARKS AND COPYRIGHTS
Machinery and equipment of the VESSEL, whether made or furnished by the BUILDER under this CONTRACT, may bear the patent numbers, trademarks, or trade names of the manufacturers. The BUILDER shall defend and save harmless the BUYER from all liabilities or claims for or on account of the use of any patents, copyrights or design of any nature or kind, or for the infringement thereof including any unpatented invention made or used in the performance of this CONTRACT and also for any costs and expenses of litigation, if any in connection therewith. No such liability or responsibility shall be with the BUILDER with regard to components and/or equipment and/or design supplied by the BUYER.
Nothing contained herein shall be construed as transferring any patent or trademark rights or copyrights in equipment covered by this CONTRACT, and all such rights are hereby expressly reserved to the true and lawful owners thereof.
2.
RIGHTS
TO THE SPECIFICATIONS, PLANS, ETC.
The BUILDER retains all rights with respect to the SPECIFICATIONS, plans and working drawings, technical descriptions, calculations, test results and other data, information and documents concerning the design and construction of the VESSEL and the BUYER undertakes therefore not to disclose the same or divulge any information contained therein to any third parties, without the prior written consent of the BUILDER, excepting where it is necessary for usual operation, repair and maintenance of the VESSEL.
In case the BUYER requests the prior written consent of the BUILDER as set out in the above paragraph, the BUYER shall provide the BUILDER with a written undertaking from the recipient stating that (1) he acknowledge and shall observe the foregoing terms concerning the BUILDER’s right to confidential information and (2) any confidential information furnished in tangible form shall not be duplicated by recipient except for the purpose of the job specifically assigned to him. (3) Upon the completion of his job requiring reference to the confidential information, recipient shall return to the BUYER at his option or otherwise destroy all the confidential information received in written or tangible form including copies or reproductions or other media containing such confidential information. (4) Any documents or other media developed by the recipient containing confidential information shall be destroyed by the recipient.
(End of Article)
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ARTICLE XVII : COMPLIANCE AND ANTI-BRIBERY
1.
REPRESENTATIONS OF THE PARTIES
During the term of this CONTRACT, each party certifies and represents as follows:
(a)
It will comply with the laws of any jurisdiction applicable to such party as it relates to this CONTRACT, including but not limited to any applicable anti-corruption and anti-bribery laws, also including, without limitation, the United States Foreign Corrupt Practices Act (“US FCPA”), the UK Bribery Act 2010 (“UK Bribery Act”) and the anti-bribery or anti-corruption laws of
Philippines
as such laws may be amended from time to time.
(b)
In connection with this CONTRACT, it has not and will not make any payments or gifts or provide other advantages, or any offers or promises of payments or gifts or other advantages of any kind, directly or indirectly, to:
a.
any person or entity with the intention of obtaining or retaining a business advantage for itself or the other party to this CONTRACT;
b.
any official or member of any government or any agency or instrumentality thereof;
any official or member of any public international organisation or any agency or instrumentality thereof; any or official of a political party or any candidate for political office (herein ‘public official’); or any person while knowing or reasonably suspecting that all or a portion of such money or thing of value will be offered, given or promised, directly or indirectly, to any public official, in violation of the UK Bribery Act, the US FCPA or the laws of
Philippines
.
c.
In connection with this CONTRACT, it has not and will not request, agree to accept or accept from any person or entity any payments or gifts or other advantages, or any offers or promises of payments or gifts or other advantages of any kind, directly or indirectly, as a reward or inducement to perform its obligations under this CONTRACT in any way improperly.
2.
INDEMNIFICATION
Each party agrees that it will fully indemnify, defend and hold harmless the other party from any claims, liabilities, damages, expenses, penalties, judgments and losses (excluding
51
punitive damages or indirect damages) assessed or resulting by reason of a due to a breach of the representations and undertakings contained in this Article XVII to the extent permitted by law.
(End of Article)
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ARTICLE XVIII : INSURANCE
(a)
Until delivery,
the VESSEL as well as all her equipment and accessories to be used therein shall be at the risk of the BUILDER and the BUILDER shall at its own expense insure the same from launching and items of BUYER’s supply from time to time delivered to the SHIPYARD until delivery of the VESSEL and while undergoing Acceptance Trials in accordance with the Trials Schedule against the usual marine perils. Such insurance shall be taken out with a first class insurance company with a credit rating acceptable to the BUYER (“Acceptable Insurer”) on terms corresponding to the Institute of London Underwriter’s Clauses for BUILDER’s risks, as amended to cover earthquakes. Such insurance shall be in an amount corresponding to the Value of Items of BUYER’s supply delivered as aforesaid together with whichever shall be the greater of:
(i)
the value of the items, all equipment and accessories supplied from time to time by the BUILDER and used therein; or
(ii)
the total of the instalments of the CONTRACT PRICE hereinafter mentioned already paid (together with interest thereon calculated at the rate of
six
per cent (
6
%) per annum from the respective dates on which such instalments have been paid).
(b)
Insurance shall be effected by the BUILDER with an Acceptable Insurer and the BUILDER shall provide the BUYER with a certified copy of all insurance policies on issue of same.
(c)
Should the VESSEL be damaged during construction or while undergoing acceptance Trials or otherwise and should such damage not constitute the VESSEL an actual total loss or constructive or arranged or compromised total loss this CONTRACT shall in no way be invalidated but the BUILDER shall at its own expense make good such damage to the satisfaction of the CLASSIFICATION SOCIETY and to the reasonable satisfaction of the BUYER.
(End of Article)
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ARTICLE
XIX : INTERPRETATION AND GOVERNING LAW
This
CONTRACT has been prepared in English and shall be executed in duplicate
and
in such number of additional copies as may be required by either party
respectively.
The parties hereto agree that the validity and interpretation of this
CONTRACT
and of each Article and part thereof shall be governed by the laws of
England.
(End of Article)
54
ARTICLE
XX : NOTICE
Any
and all notices, requests, demands, instructions, advices and communications
in
connection with this CONTRACT shall be written in English, sent by e-mail or registered
air
mail or facsimile and shall be deemed to be given when first
received
whether by e-mail or registered mail or facsimile. They shall be
addressed
as follows, unless and until otherwise advised:
To the BUILDER :
HHIC-PHIL INC.
Green Beach 1, Redondo Peninsula,
Sito Agusuhin, Brgy. Cawag,
Subic, Zambales, the Philippines
Attn :
Contract Administration Team
Facsimile :
+ 63 47 252 2703
Telephone :
+ 63 47 306 5100 (Ext. 1290)
E-mail : cat-subic@hanjinsc.com
To the BUYER
:
The
said notices shall become effective upon receipt of e-mail or registered
air
mail or facsimile by the receiver thereof. Where a notice by e-mail or facsimile is concerned which is required to be confirmed by letter, then, unless
the
CONTRACT or the relevant Article thereof otherwise requires, the notice shall
become
effective upon receipt of the e-mail or facsimile.
(End of Article)
55
ARTICLE
XXI : EFFECTIVENESS OF THIS CONTRACT
This
CONTRACT shall become effective upon signing by the parties hereto.
(End of Article)
56
ARTICLE
XXII : EXCLUSIVENESS
This
CONTRACT shall constitute the only and entire agreement between the
parties
hereto, and unless otherwise expressly provided for in this CONTRACT, all
other
agreements, oral or written, made and entered into between the parties prior
to
the execution of this CONTRACT shall be null and void.
(End of Article)
57
IN WITNESS WHEREOF, the parties hereto have caused this CONTRACT to
be
duly executed in duplicate on the date and year first above written.
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BUYER
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BUILDER
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For
and on behalf of
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For and on behalf of
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BUYER:
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BUILDER:
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NAVIG8 CRUDE TANKERS INC
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HHIC-PHIL INC.
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By:
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/s/
Gary Brockelsby
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By:
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/s/ Young-Joon Jean
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Name:
Gary Brockelsby
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Name:
Young-Joon Jean
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Title:
Attorney-in-Fact
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Title:
Attorney-in-Fact
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WITNESS
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WITNESS
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By:
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/s/
Daniel Chu
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By:
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/s/ Sung Woon Moon
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Name:
Daniel Chu
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Name:
Sung Woon Moon
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Title:
General Counsel
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Title:
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58
EXHIBIT “A”
LETTER OF GUARANTEE
Letter of Guarantee NO.:
Date : March , 2014
Gentlemen:
We hereby open our irrevocable letter of guarantee number in favour of NAVIG8 CRUDE TANKERS INC or its nominees (hereinafter called the “BUYER”) for account of HHIC-PHIL INC. (hereinafter called the “BUILDER”) as follows in connection with the shipbuilding contract dated March , 2014 (hereinafter called “CONTRACT”) made by and between the BUYER and the BUILDER for the construction of one (1) 300,000 DWT Class Crude Oil Carrier having the BUILDER’s Hull No. NTP0137 (hereinafter called the “VESSEL”).
If, in connection with the terms of the CONTRACT, whether so supplemented, amended, changed or modified, the BUYER shall become entitled to a refund of the advance payment made to the BUILDER prior to the delivery of the VESSEL, we hereby irrevocably guarantee the repayment of the same to the BUYER within twenty (20) days after demand not exceeding US$ 19,272,100.- (Say U.S. Dollars Nineteen Million Two Hundred Seventy Two Thousand One Hundred) together with interest thereon at the rate of six per cent (6%) per annum from the date following the date of receipt by the BUILDER to the date of remittance by telegraphic transfer of such refund.
The amount of this guarantee will be automatically increased upon the BUILDER’s receipt of the respective instalment, not more than three (3) times, each time by the amount of instalment plus interest thereon as provided in the CONTRACT, but in any eventuality the amount of this guarantee shall not exceed the total sum of US$ 48,180,250 (Say U.S. Dollars Forty Eight Million One Hundred Eighty Thousand Two Hundred Fifty only) plus interest thereon at the rate of six per cent (6%) per annum from the date following the date of the BUILDER’s receipt of each instalment to the date of remittance by telegraphic transfer of the refund. However, in the event of cancellation of the CONTRACT being based on delays due to Force Majeure or other causes beyond the control of the BUILDER, the interest rate of refund shall be reduced to four per cent (4%) per annum as provided in Article X of the CONTRACT.
This letter of guarantee is available (subject to the third paragraph hereof) against the BUYER’s first written demand and signed statement certifying that the BUYER’s demand for
59
refund has been made in conformity with Article X of the CONTRACT and the BUILDER has failed to make the refund within thirty (30) days after the Buyer’s demand. Refund shall be made to the Buyer by telegraphic transfer in United States Dollars.
In case any refund is made to the BUYER by the BUILDER or by us under this Letter of Guarantee, our liability hereunder shall be automatically reduced by the amount such refund.
It is hereby understood that payment of any interest provided herein is by way of liquidated damages due to cancellation of the CONTRACT and not by way of compensation for use of money.
Notwithstanding the provisions hereinabove, in the event that within thirty (30) days from the date of your claim to the BUILDER referred to above, we receive notification from you or the BUILDER accompanied by written confirmation to the effect that your claim to cancel the CONTRACT or your claim for refundment thereunder has been disputed and referred to arbitration in accordance with the provisions of the CONTRACT, we shall under this guarantee, refund to you the sum adjudged to be due to you by the BUILDER pursuant to the award made under such arbitration immediately upon receipt from you of a demand for the sums so adjudged and a copy of the award.
This letter of guarantee shall become null and void upon receipt by the BUYER of the sum guaranteed hereby or upon acceptance by the BUYER of the delivery of the VESSEL in accordance with the terms of the CONTRACT or rescission or termination of the CONTRACT due to the BUYER’s default in accordance with the CONTRACT and, in any case, this letter of guarantee shall be returned to us.
This letter of guarantee is assignable upon our receipt of your prior written notice and valid from the date of this letter of guarantee until such time as the VESSEL is delivered by the BUILDER to the BUYER in accordance with the provisions of the CONTRACT.
This guarantee shall be governed by and construed in accordance with the laws of England and the undersigned hereby submits to the non-exclusive jurisdiction of the courts of England.
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Very truly yours,
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for and on behalf of
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By
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Name :
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Title :
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60
EXHIBIT “B”
Messrs.
HHIC-PHIL
Green Beach 1, Redondo Peninsula,
Sito Agusuhin, Brgy. Cawag,
Subic, Zambales, the Philippines
Date: [ ] March 2014
PERFORMANCE GUARANTEE
Gentlemen,
In consideration of your executing a shipbuilding contract (hereinafter called the “CONTRACT”) dated March , 2014 with NAVIG8 CRUDE TANKERS INC or its nominees (hereinafter called the “BUYER”) providing for the design, construction, equipment, launch and delivery of one (1) 300,000 DWT Class Crude Oil Carrier having the BUILDER’s Hull No. NTP0137 (hereinafter called the “VESSEL”), and providing, among other things, for payment of the contract price amounting to United States Dollars Ninety Six Million Three Hundred Sixty Thousand Five Hundred only (US$ 96,360,500) for the VESSEL, prior to and upon delivery of the VESSEL, the undersigned, as a primary obligor and not as a merely surety, hereby unconditionally and irrevocably guarantees to you or your successors, the due and faithful performance by the BUYER of all its obligations under the CONTRACT and any supplements, amendments, changes or modifications hereinafter made thereto including but not limited to the prompt payment of the contract price, when due (whether on account of principal, interest or otherwise) by the BUYER to you or your successors under the CONTRACT, notwithstanding any obligation of the BUYER being or becoming unenforceable by defect in or want of its powers, (hereby expressly waiving notice of any such supplement, amendment, change or modification as may be agreed to by the BUYER) and confirms that this guarantee shall be fully applicable to the CONTRACT whether so supplemented, amended, changed or modified and if it shall be assigned by the BUYER in accordance with the terms of the CONTRACT. This guarantee will expire on the payment of the DELIVERY installment of the VESSEL as defined in the CONTRACT.
The undersigned hereby certifies, represents and warrants that all acts, conditions and things required to be done and performed and to have occurred precedent to the creation and issuance of this guarantee, and to constitute the guarantee the valid and legally binding obligation of the undersigned enforceable in accordance with its terms have been done and performed and have occurred in due and strict compliance with applicable laws.
The payment by the undersigned under this guarantee shall be made forthwith within thirty
61
(30) days upon receipt by us of written demand from you including a substantiated statement that the BUYER is in default of payment of the amounts (including, but not limited to, the instalment(s) payable prior to or upon delivery of the VESSEL) that were due under the CONTRACT, without requesting you to take any or further procedure or step against the BUYER. In the event that any withholding or deduction is imposed by any law, Article XV of the CONTRACT shall apply so that the undersigned will pay such additional amount as may be necessary in order that the actual amount received after deduction or withholding by virtue of any law outside Philippines shall equal to the amount that would have been received if such payment had been made by the BUYER.
Notwithstanding the provisions hereinabove, in the event that any of your request under the CONTRACT is disputed by the BUYER and referred to arbitration in accordance with the provisions of the CONTRACT and we receive notification of this from either you or the BUYER, we shall pay you within thirty (30) days from receipt of your written request together with a certified copy of the award ordering the payment by the BUYER to you of the sum due.
This guarantee shall be governed by and interpreted in accordance with the laws of England and the undersigned hereby submits to the non-exclusive jurisdiction of the Courts of England.
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Very truly yours,
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For and on behalf of
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By
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Name :
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Title :
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62
Exhibit 10.88
SHIPBUILDING CONTRACT
FOR
THE CONSTRUCTION OF
ONE (1) 300,000 DWT CLASS CRUDE OIL CARRIER
HULL NO. NTP0138
BETWEEN
NAVIG8 CRUDE TANKERS INC or its nominees
(AS BUYER)
AND
HHIC-PHIL INC.
(AS BUILDER)
I N D E X
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PAGE
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PREAMBLE
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3
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ARTICLE
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I
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:
DESCRIPTION AND CLASS
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4
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II
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CONTRACT PRICE
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8
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III
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:
ADJUSTMENT OF THE CONTRACT PRICE
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IV
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INSPECTION AND APPROVAL
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V
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MODIFICATIONS, CHANGES AND EXTRAS
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VI
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TRIALS AND COMPLETION
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VII
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DELIVERY
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VIII
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: DELAYS
AND EXTENSIONS OF TIME (FORCE MAJEURE)
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IX
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WARRANTY OF QUALITY
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X
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PAYMENT
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XI
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BUYER’S DEFAULT
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XII
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BUYER’S SUPPLIES
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XIII
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ARBITRATION
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XIV
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SUCCESSORS AND ASSIGNS
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XV
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TAXES AND DUTIES
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XVI
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PATENTS, TRADEMARKS AND COPYRIGHTS
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XVII
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: COMPLIANCE AND ANTI-BRIBERY
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XVIII
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INSURANCE
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XIX
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INTERPRETATION AND GOVERNING LAW
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XX
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NOTICE
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XXI
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EFFECTIVENESS OF THIS CONTRACT
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XXII
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: EXCLUSIVENESS
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57
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EXHIBIT “A” LETTER OF GUARANTEE
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59
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EXHIBIT “B” PERFORMANCE GUARANTEE
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61
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2
THIS
CONTRACT
,
made on this 25th day of March, 2014
by
and between NAVIG8 CRUDE TANKERS INC, a corporation incorporated and existing under the
laws
of the Republic of the Marshall Islands having its registered office at Trust company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960 or its nominees
(hereinafter
called
the
“BUYER”), the party of the first part and HHIC-PHIL INC., a company organized and existing under the laws of the Republic of Philippines, having its principal office at Green Beach 1, Redondo Peninsula, Sitio Agusuhin, Brgy. Cawag, Subic, Zambales, the Philippines (hereinafter called the “BUILDER”),
the
party of the second part,
W
I T N E S S E T H
:
In consideration of the mutual covenants contained herein, the BUILDER
agrees
to design, build, launch, equip and complete one (1) 300,000 DWT class Crude Oil Carrier
as
described in Article I hereof (hereinafter called the “VESSEL”) at the
BUILDER’s
shipyard in Subic, Philippines (hereinafter called the “SHIPYARD”) and to
deliver
and sell the VESSEL to the BUYER, and the BUYER agrees to accept
delivery
of and purchase from the BUILDER the VESSEL, according to the terms
and
conditions hereinafter set forth.
(End of Preamble)
3
ARTICLE I : DESCRIPTION AND CLASS
1.
DESCRIPTION
The VESSEL shall have the BUILDER’s Hull No.NTP0138 and shall be designed, constructed, equipped launched, tested, surveyed by the classification society as mentioned hereinbelow and completed in accordance with the provisions of (a) this CONTRACT and (b) the Specifications No. NTP0137/0138 dated March 21, 2014 and the General Arrangement plan No. BTBWW0000001T dated March 21, 2014 attached thereto (hereinafter called the respectively the “SPECIFICATIONS” and the “PLAN”) signed by both parties, which shall constitute an integral part of this CONTRACT although not attached hereto.
Should there be any inconsistencies or contradictions between the SPECIFICATIONS and the PLAN, the SPECIFICATIONS shall prevail. Should there be any inconsistencies or contradictions between this CONTRACT and the SPECIFICATIONS, this CONTRACT shall prevail.
2.
BASIC
DIMENSIONS AND PRINCIPAL PARTICULARS OF THE VESSEL
(a)
The basic dimensions and principal particulars of the VESSEL shall be:
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Length, overall
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about
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333.0 M
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Length, between perpendiculars
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321.9 M
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Breadth, moulded
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60.0 M
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Depth to Upper Deck, moulded
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29.5 M
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Design draft, moulded, in seawater of specific gravity of 1.025
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20.5 M
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Scantling draft, moulded, in seawater of specific gravity of 1.025
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21.6 M
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Deadweight on the above moulded design draft of 20.5 M
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about 279,019 M/T
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Deadweight guaranteed on the above moulded scantling draft of 21.6 M
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about 299,019 M/T
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Guaranteed Capacity of Cargo oil tanks incl. slop tanks (100% Full)
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about 344,000 m
3
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Main propulsion engine
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MAN 7G80ME-C9.2 (Low Load Tuning w/EGB)
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NMCR :
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32,970 kW x 72.0 rpm
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4
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SMCR :
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26,460 kW x 66.0 rpm
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NCR (65% SMCR) :
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17,200 kW x 57.2 rpm
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Guaranteed speed at 20.5 meters design draft at the condition of clean bottom and in calm and deep sea with main engine developing a NCR of 17,200 kW with fifteen per cent (15%) sea margin
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14.8 KNOTS
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Specific Fuel consumption of the main engine applying I.S.O. reference conditions to the result of official shop test at a SMCR of 26,460 kW using marine diesel oil having lower calorific value of 10,200 kcal/kg (42,700 kJ/kg).
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163.8 gr/kW.h
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The dimensions may be slightly modified by the BUILDER, who also reserves the right to make changes to the SPECIFICATIONS and the PLAN if found necessary to suit the local conditions and facilities of the SHIPYARD, the availability of materials and equipment, the introduction of improved production methods or otherwise, subject to the approval of the BUYER which the BUYER shall not withhold unreasonably.
3. CLASSIFICATION,
RULES AND REGULATIONS
(a)
The VESSEL, including its machinery, equipment and outfittings shall be constructed in accordance with the BUILDER’s internationally recognized shipbuilding practices such as IACS and “H.P.Q.S (HHIC Phil Quality Standard)”.
The VESSEL shall be built in compliance with the applicable current rules and regulations, which have been issued and are effective as of the date of signing this CONTRACT, of DNV (hereinafter called the “CLASSIFICATION SOCIETY”) and to be classed and registered as +1A1, “Tanker for Oil ESP”, E0, CSR, SPM, BIS, VCS-2, BWM-T, COAT-PSPC (B;C), TMON, CLEAN, RECYCLABLE
Lube oil test kits shall be supplied by the Buyer for TMON.
ERS (Emergency Response Scheme) shall be prepared by the Buyer. But the necessary information shall be provided by the BUILDER upon the BUYER’s request.
The VESSEL shall be built in compliance with the Rules and Regulations as described in the SPECIFICATIONS which are in force at the date of signing the CONTRACT and/or which are ratified as of the date of signing the CONTRACT and which will come into force as compulsory on or before the date of delivery of the VESSEL having BUILDER’s Hull No. NTP0138 according to the publication by Lloyd’s Register Marine Service “LR’s future IMO legislation (except IMO NOx Tier III and Part 2 — IMO requirements currently under development)” — August 2013 Edition.
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(b) The BUILDER shall arrange with the CLASSIFICATION SOCIETY for the assignment by the CLASSIFICATION SOCIETY of
representative
(s) to the VESSEL during construction. All costs, fees, charges and arrangement incidental to classification of the VESSEL in compliance with the rules, regulations and requirements of this CONTRACT shall be for the account of the BUILDER.
(c)
The
decision of the CLASSIFICATION SOCIETY as to whether the
VESSEL
complies with the rules, requirements and regulations of the CLASSIFICATION SOCIETY
shall
be final and binding upon the BUILDER and the BUYER.
4. NATIONALITY
OF THE VESSEL
The VESSEL shall be registered by the BUYER at its own cost and expense under the laws of Marshall Islands
with
its home port
at
the time of its delivery and acceptance hereunder.
5.
SUB-CONTRACTORS
The BUILDER shall build and outfit the VESSEL according to this CONTRACT at the SHIPYARD at Subic, the Philippines using mainly its own shipyard organization provided always that main hull blocks of the VESSEL, other than the bow section (including the bulbous bow), the stern blocks, upper deck unit, deck house, engine casing, funnel, T-bulkhead and L-bulkhead (including Lower Stool) and Hopper will be constructed at the SHIPYARD.
The BUILDER is, however, authorized to sub-contract part of the work to experienced third party sub-contractors in the vicinity of the SHIPYARD, provided that the BUILDER shall have first given notice in writing to the BUYER for any major sub-contract award (for the purpose of this CONTRACT an award involving consideration in excess of US$2 million or its equivalent in any other currency shall be deemed a major sub-contract) and received the BUYER’s written approval thereof which shall not be unreasonably withheld. The BUILDER shall compensate for direct cost of fuel and tolls required for BUYER’s supervision
of subcontractors outside the vicinity of the SHIPYARD (defined as more than 50km from the SHIPYARD).
Without prejudice to the generality of the foregoing, the BUILDER shall remain fully liable to the BUYER for the due and complete performance of any work (or part of it) undertaken by any subcontractor as if undertaken by the BUILDER. However, the VESSEL shall always remain at the SHIPYARD unless the BUYER and the BUILDER agrees otherwise.
No sub-contract shall bind or purport to bind the BUYER, and each sub-contract shall be the responsibility of the BUILDER.
All sub-contractors howsoever employed or engaged are hereby declared and agreed to be sub-contractors employed or engaged by the BUILDER and the BUILDER agrees that it is and shall remain fully responsible for and liable in respect of any sub-contractors and/or their acts or omissions and, without prejudice to the generality of the foregoing, the BUILDER shall ensure control over supervision and scheduling of the all work done by sub-contractors.
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The BUYER may request in the reasonable opinion of the BUYER’S REPRESENTATIVE the BUILDER to replace any sub-contractor whose level of workmanship has been demonstrated not to meet the requirements of this CONTRACT, including the SPECIFICATIONS, which request the BUILDER shall not unreasonably refuse. The BUILDER shall investigate any such request and, if found justified, take appropriate action.
(End of Article)
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ARTICLE II : CONTRACT PRICE
The contract price of the VESSEL delivered and accepted by to the BUYER at the SHIPYARD shall be United States Dollars Ninety Six Million Three Hundred Sixty Thousand Five Hundred (US$ 96,360,500) (hereinafter called the “CONTRACT PRICE”) which shall be paid plus any increases or less any decreases due to adjustment or modification, if any, as set forth in this CONTRACT. The above CONTRACT PRICE shall include payment for services in the inspection, test, survey and classification of the VESSEL which will be rendered by the CLASSIFICATION SOCIETY and shall not include the cost of the BUYER’s supplies as stipulated in Article XII.
The CONTRACT PRICE also includes all costs and expenses for supplying all necessary drawings as stipulated in the SPECIFICATIONS except those to be furnished by the BUYER for the VESSEL in accordance with the SPECIFICATIONS.
(End of Article)
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ARTICLE III : ADJUSTMENT OF THE CONTRACT PRICE
The CONTRACT PRICE of the VESSEL shall be adjusted as hereinafter set forth in the event of the following contingencies. It is hereby understood by both parties that any adjustment of the CONTRACT PRICE as provided for in this Article is by way of liquidated damages and not by way of penalty.
1.
DELAYED DELIVERY
(a)
No adjustment shall be made and the CONTRACT PRICE shall remain unchanged for the first thirty (30) days of the delay in delivery of the VESSEL ending as of 12 o’clock midnight Philippines Standard Time on the thirtieth (30th) day of delay beyond the Delivery Date calculated as provided in Article VII.1. hereof.
(b)
If delivery of the VESSEL is delayed more than thirty (30) days beyond the date upon which the delivery is due from the BUILDER under the terms of this CONTRACT, then, beginning at midnight of the thirtieth (30th) day after such due date, the CONTRACT PRICE of the VESSEL shall be reduced by U.S. Dollars Thirty Thousand (US$30,000) for each full day of delay.
However, unless the parties agree otherwise, the total amount of deduction from the CONTRACT PRICE shall not exceed the amount due to cover the delay of one hundred and eighty (180) days after thirty (30) days of the delay in delivery of the VESSEL at the rate of deduction as specified hereinabove.
(c)
But, if the delay in delivery of the VESSEL continues for a period of more than two hundred and ten (210) days beyond the date upon which the delivery is due from the BUILDER under the terms of this CONTRACT then, in such event, and after such period has expired, the BUYER may, at its option, cancel this CONTRACT by serving upon the BUILDER a notice of cancellation by facsimile or e-mail to be confirmed by a registered letter via airmail directed to the BUILDER at the address given in this CONTRACT. Such cancellation shall be effective as of the date the registered letter is received by the BUILDER. If the BUYER has not served the notice of cancellation after the aforementioned two hundred and ten (210) days delay in delivery, the BUILDER may demand the BUYER to make an election in accordance with Article VIII.3. hereof.
(d)
For the purpose of this Article, the delivery of the VESSEL shall be deemed to be delayed when and if the VESSEL, after taking into full account extension of the Delivery Date or permissible delays as provided in Article V, VI, VIII, XI or elsewhere in this CONTRACT,
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is delivered beyond the date upon which delivery would then be due under the terms of this CONTRACT.
2.
INSUFFICIENT SPEED
(a)
The CONTRACT PRICE of the VESSEL shall not be affected or changed, if the actual speed, as determined by trial runs more fully described in Article VI hereof, is less than the speed required under the terms of this CONTRACT and the SPECIFICATIONS provided such deficiency in actual speed is not more than three-tenths (3/10) of a knot below the guaranteed speed.
(b)
However, as for the deficiency of more than three-tenths (3/10) of a knot in actual speed below the speed guaranteed under this CONTRACT, the CONTRACT PRICE shall be reduced as follows:
For more than the three-tenth (3/10) of a knot — a total sum of US$ 145,000
For more than the four-tenths (4/10) of a knot — a total sum of US$ 290,000
For more than the five-tenths (5/10) of a knot — a total sum of US$ 435,000
For more than the six-tenths (6/10) of a knot — a total sum of US$ 580,000
For more than the seven-tenths (7/10) of a knot — a total sum of US$ 725,000
For more than the eight-tenths (8/10) of a knot — a total sum of US$ 870,000
* The above figures are not cumulative.
Fractions of less than one-tenth (1/10) of a knot shall be regarded as a full one-tenth (1/10) of a knot. However, unless the parties agree otherwise, the total amount of reduction from the CONTRACT PRICE shall not exceed the amount due to cover the deficiency of nine-tenth (9/10) of one (1) full knot below the guaranteed speed at the rate of reduction as specified above.
(c)
If the deficiency in actual speed of the VESSEL is more than nine-tenth (9/10) of one (1) full knot below the speed guaranteed under this CONTRACT, then the BUYER, at its option, may, subject to the BUILDER’s right to effect alterations or corrections as provided in Article VI.5. hereof, cancel this CONTRACT or may accept the VESSEL at a reduction in the CONTRACT PRICE as above provided for nine-tenth (9/10) of one (1) full knot of deficiency only.
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3.
EXCESSIVE FUEL CONSUMPTION
(a)
The CONTRACT PRICE shall not be affected or changed by reason of the fuel consumption of the VESSEL’s main engine, as determined by the engine manufacturer’s shop trial as per the SPECIFICATIONS being more than the guaranteed fuel consumption of the VESSEL’s main engine, if such excess is not more than five per cent (5%) over the guaranteed fuel consumption.
(b)
However, as for the excess of more than five per cent (5%) in the actual fuel consumption over the guaranteed fuel consumption of the VESSEL’s main engine, the CONTRACT PRICE shall be reduced by U.S. Dollars One Hundred Twenty Five Thousand (US$125,000) for each full one per cent (1%) increase in fuel consumption in excess of the said five per cent (5%) increase in fuel consumption. Fraction of less than one per cent (1%) shall be regarded as a full one percent (1%). However, unless the parties agree otherwise, the total amount of reduction from the CONTRACT PRICE shall not exceed the amount due to cover the excess of ten percent (10%) over the guaranteed fuel consumption of the VESSEL’s main engine at the rate of reduction as specified above.
(c)
If such actual fuel consumption exceeds the guaranteed fuel consumption of the VESSEL’s main engine by more than ten per cent (10%), the BUYER, at its option, may, subject to the BUILDER’s right to effect alterations or corrections as specified in Article VI. 5. hereof, cancel this CONTRACT or may accept the VESSEL at a reduction in the CONTRACT PRICE as above provided for the ten per cent (10%) increase only.
4.
DEADWEIGHT BELOW CONTRACT REQUIREMENTS
(a)
The guaranteed deadweight shall be deadweight as defined in Article I paragraph 2 hereof.
(b)
In the event that deficiency of the actual deadweight certified by the CLASSIFICATION SOCIETY as determined in accordance with the SPECIFICATION is not more than 2,000 metric tons or less of the guaranteed deadweight, there shall be no change in CONTRACT PRICE. However, should there be a deficiency of more than 2,000 metric tons (disregarding fractions of less than One (1) metric ton) the CONTRACT PRICE shall be reduced by the sum of United States Dollars One Thousand Five Hundred (US$1,500) for every One (1) metric ton deficiency (disregarding fractions of less than One (1) metric ton).
(c)
In the event of such deficiency in the deadweight of the VESSEL being more than 3,000 metric tons, the BUYER may at its option, reject the VESSEL and cancel the CONTRACT or accept the VESSEL at a reduction in the CONTRACT PRICE to be
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mutually agreed upon.
5.
CARGO TANKS’ CAPACITY BELOW CONTRACT REQUIREMENTS
The CONTRACT PRICE of the VESSEL shall not be affected or changed, if the actual cargo tank capacity determined as provided in this CONTRACT and the SPECIFICATIONS, is below the guaranteed cargo tank capacity as defined in Article I paragraph 2 hereof by one per cent (1%) of the guaranteed cargo tank capacity or less.
(a)
However, should the deficiency in the actual cargo tank capacity of the VESSEL be more than one per cent (1%) of the guaranteed cargo tank capacity (disregarding fractions of less than one (1) cubic meter), the CONTRACT PRICE shall be reduced by the sum of U.S. Dollars Seven Hundred (US$700) for each one (1) cubic meter deficiency (disregarding fractions of less than one (1) cubic meter) in excess of the said one per cent (1%) of deficiency.
(b)
However, unless the parties agree otherwise the total amount of reduction from the CONTRACT PRICE shall not exceed the amount due to cover the deficiency of two per cent (2%) below the guaranteed cargo tank capacity of the VESSEL as specified above.
(c)
In the event of such deficiency in the cargo tank capacity of the VESSEL being more than two per cent (2%) of the guaranteed cargo tank capacity, the BUYER, at its option, may, subject to the BUILDER’s right to effect alterations or corrections as specified in Article VI. 5. hereof, cancel this CONTRACT or accept the VESSEL at a reduction in the CONTRACT PRICE as above provided for two per cent (2%) of deficiency only.
6.
EFFECT OF CANCELLATION
It is expressly understood and agreed by the parties hereto that in any case, if the BUYER cancels this CONTRACT under this Article, the BUYER shall not be entitled to any liquidated damages but shall be entitled to the refunding of the price as per Article X.5.
(End of Article)
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ARTICLE IV : INSPECTION AND APPROVAL
1.
APPOINTMENT OF BUYER’S REPRESENTATIVE
The BUYER shall timely dispatch to and maintain at the SHIPYARD (not later than one(1) month prior to steel cutting), at its own cost, expense and risk, one or more representatives (hereinafter called the “BUYER’S REPRESENTATIVE”), who shall be duly accredited in writing by the BUYER to supervise adequately the construction by the BUILDER of the VESSEL, her equipment and all accessories. Before the commencement of any item of work under this CONTRACT, the BUILDER shall, whenever reasonably required, previously exhibit, furnish to, and within the limits of the BUYER’S REPRESENTATIVE’s authority, secure the approval from the BUYER’S REPRESENTATIVE of any and all plans and drawings prepared in connection therewith. Upon appointment of the BUYER’S REPRESENTATIVE, the BUYER shall notify the BUILDER in writing of the name and the scope of the authority of the BUYER’S REPRESENTATIVE,
2.
AUTHORITY OF THE BUYER’S REPRESENTATIVE
Such BUYER’S REPRESENTATIVE shall, at all times when work is being done at the SHIPYARD until delivery of the VESSEL, have the right to inspect the VESSEL, her equipment and all accessories, and work progress, or materials utilized in connection with the construction of the VESSEL, wherever such work is being done or such materials are stored, for the purpose of determining that the VESSEL, her equipment and accessories are being constructed in accordance with the terms of this CONTRACT and/or the SPECIFICATIONS and the PLAN.
The BUYER’S REPRESENTATIVE shall, within the limits of the authority conferred upon him by the BUYER, make decisions or give advice to the BUILDER on behalf of the BUYER promptly on all problems arising out of, or in connection with, the construction of the VESSEL and generally act in a reasonable manner with a view to cooperating to the utmost with the BUILDER in the construction process of the VESSEL.
The decision, approval or advice of the BUYER’S REPRESENTATIVE shall be deemed to have been given by the BUYER and once given shall not be withdrawn, revoked or modified except with consent of the BUILDER.
No act or omission of the BUYER’S REPRESENTATIVE or his assistants shall, in any way, diminish the liability of the BUILDER under Article IX (WARRANTY OF QUALITY). The BUYER’S REPRESENTATIVE shall notify the BUILDER promptly in writing of his discovery of any construction or materials, which he believes do not or will not conform to the
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requirements of the CONTRACT and the SPECIFICATIONS or the PLAN and likewise advise and communicate with the BUILDER on all matters pertaining to the construction of the VESSEL, as may be required by the BUILDER, or as he may deem necessary.
However, if the BUYER’S REPRESENTATIVE fails to submit to the BUILDER without unreasonable delay any such demand concerning alterations or changes with respect to the construction, arrangement or outfit of the VESSEL, which the BUYER’S REPRESENTATIVE has examined, inspected or attended at the test thereof under this CONTRACT or the SPECIFICATIONS, the BUYER’S REPRESENTATIVE shall be deemed to have approved the same and shall be precluded from making any demand for alterations, changes, or complaints with respect thereto at a later date.
The BUILDER shall comply with any such demand which is not contradictory to this CONTRACT and the SPECIFICATIONS or the PLAN, provided that any and all such demands by the BUYER’S REPRESENTATIVE with regard to construction, arrangement and outfit of the VESSEL shall be submitted in writing to the authorized representative of the BUILDER. The BUILDER shall notify the BUYER’S REPRESENTATIVE of the names of the persons who are from time to time authorized by the BUILDER for this purpose.
It is agreed upon between the BUYER and the BUILDER that the modifications, alterations or changes and other measures necessary to comply with such demand may be effected at a convenient time and place at the BUILDER’s reasonable discretion in view of the construction schedule of the VESSEL.
In the event that the BUYER’S REPRESENTATIVE shall advise the BUILDER that he has discovered or believes the construction or materials do not or will not conform to the requirements of this CONTRACT and the SPECIFICATIONS or the PLAN, and the BUILDER shall not agree with the views of the BUYER’S REPRESENTATIVE in such respect, either the BUYER or the BUILDER may, with the agreement of the other party, seek an opinion of the CLASSIFICATION SOCIETY or failing such agreement, request an arbitration in accordance with the provisions of Article XIII hereof. The CLASSIFICATION SOCIETY or the arbitration tribunal, as the case may be, shall determine whether or not a nonconformity with the provisions of this CONTRACT, the SPECIFICATIONS and the PLAN exists. If the CLASSIFICATION SOCIETY or the arbitration tribunal, as the case may be, enters a determination in favour of the BUYER, then in such case the BUILDER shall make at its own cost the necessary alterations or changes, or if such alterations or changes can not be made in time to meet the construction schedule for the VESSEL, the BUILDER shall make fair and reasonable adjustment of the CONTRACT PRICE in lieu of such alterations and
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changes. If the CLASSIFICATION SOCIETY or the arbitration tribunal, as the case may be, enters a determination in favour of the BUILDER, then the time for delivery of the VESSEL shall be extended for the period of delay in construction, if any, occasioned by such proceedings, and the BUYER shall compensate the BUILDER for the proven loss and damages incurred by the BUILDER as a result of the dispute herein referred to.
Failure of BUYER’s REPRESENTATIVE’s presence at such trials and tests after such due notice has been given to him shall be deemed to be a waiver of the BUYER’s right to demand such alterations or changes after the trials and tests and inspections unless such absence could not be avoided by the exercise of the BUYER’s REPRESENTATIVE’s due diligence due to an incident of force majeure nature and/or unless the BUYER’s REPRESENTATIVE gives seven (7) days advance notice of such absence, provided, however, that failure of the BUYER’s REPRESENTATIVE’s presence shall not affect the construction schedule of the VESSEL.
3.
APPROVAL OF DRAWINGS
(a)
The BUILDER shall submit to the BUYER three (3) copies of each of the plans and drawings to be submitted to the Buyer for its approval at its address as set forth in Article XX hereof. The BUYER shall, within twenty two (22) days including mailing time after receipt thereof, return to the BUILDER one (1) copy of such plans and drawings with the approval or comments, if any, of the BUYER. A list of the plans and drawings to be so submitted to the BUYER and the schedule of the drawings and plans submission by the BUILDER to the BUYER shall be mutually agreed upon between the parties hereto.
(b)
When and if the BUYER’S REPRESENTATIVE shall have been sent by the BUYER to the SHIPYARD in accordance with Paragraph 1 of this Article, the BUILDER may submit the remainder, if any, of the plans and drawings in the agreed list, to the BUYER’S REPRESENTATIVE for his approval, unless otherwise agreed upon between the parties hereto.
The BUYER’S REPRESENTATIVE shall, within ten (10) days after receipt thereof, return to the BUILDER one (1) copy of such plans and drawing with his approval or comments written thereon, if any. Approval by the BUYER’S REPRESENTATIVE of the plans and drawings duly submitted to him shall be deemed to be the approval by the BUYER for all purposes of this CONTRACT.
(c)
In the event that the BUYER or the BUYER’S REPRESENTATIVE shall fail to return the plans and drawings to the BUILDER within the time limit as hereinabove provided, such plans and drawings shall be deemed to have been automatically approved without any comment. In the event the plans and drawings submitted by the BUILDER to the BUYER
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or the BUYER’S REPRESENTATIVE in accordance with this Article do not meet with the BUYER’s or the BUYER’S REPRESENTATIVE’s approval, the matter may be submitted by either party hereto for determination pursuant to Article XIII hereof. If the BUYER’s comments on the plans and drawings that are returned to the BUILDER by the BUYER within the said time limit are not clearly specified or detailed, the BUILDER shall seek clarification from the BUYER prior to implementing them which clarification must be provided in writing by the BUYER within three (3) days of such request from the BUILDER. If the BUYER shall fail to provide the BUILDER with such clarification within the said time limit, then the BUILDER shall be entitled to place its own interpretation on such comments in implementing them.
4.
SALARIES AND EXPENSES
All salaries and expenses of the BUYER’S REPRESENTATIVE or any other person or persons employed by the BUYER hereunder shall be for the BUYER’s account.
5.
RESPONSIBILITY OF THE BUILDER
(a)
The BUILDER shall provide the BUYER’S REPRESENTATIVE and his assistants free of charge with suitably furnished office space at, or in the immediate vicinity of, the SHIPYARD together with access to telephone and facsimile facilities and appropriate internet access as may be necessary to enable the BUYER’S REPRESENTATIVE and his assistants to carry out their work under this CONTRACT. However, the BUYER shall pay for the telephone or facsimile facilities used by the BUYER’S REPRESENTATIVE or his assistants.
The BUILDER, its employees, agents and subcontractors, during its working hours until delivery of the VESSEL, shall arrange for them to have free and ready access to the VESSEL, her equipment and accessories, and to any other place (except the areas controlled for the purpose of national security) where work is being done, or materials are being processed or stored in connection with the construction of the VESSEL including the premises or sub-contractors.
The BUYER’S REPRESENTATIVE or his assistants or employees shall observe the work’s rules and regulations prevailing at the BUILDER’s and its sub-contractor’s premises. The BUILDER shall promptly provide to the BUYER’S REPRESENTATIVE and/or his assistants and shall ensure that its sub-contractors shall promptly provide all such information as he or they may reasonably request in connection with the construction of the VESSEL and her engines, equipment and machinery.
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(b)
The BUYER’S REPRESENTATIVE and his assistants shall at all times remain the employees of the BUYER. The BUILDER shall not be liable to the BUYER or the BUYER’S REPRESENTATIVE or to his assistants or to the BUYER’s employees or agents for personal injuries, including death, during the time they, or any of them, are on the VESSEL, or within the premises of either the BUILDER or its sub-contractors, or are otherwise engaged in and about the construction of the VESSEL, unless, however, such personal injuries, including death, are caused by the gross negligence of the BUILDER, its sub-contractors, or its or their employees or agents. The BUILDER shall not be liable to the BUYER for damages to, or destruction of property of the BUYER or of the BUYER’S REPRESENTATIVE or his assistants of the BUYER’s employees or agents, unless such damages, loss or destruction is caused by the gross negligence of the BUILDER, its sub-contractors, or its or their employees or agents.
The BUILDER shall provide the BUYER with any assistance that the BUYER may require in obtaining work permits, visas, resident permits and other necessary documents for the BUYER’s REPRESENTATIVE and their staff.
As far as practical, the BUILDER shall endeavour not to arrange for inspection of the same type of subcontracting work in two different places on the same day — including at the SHIPYARD premises — the distance between which cannot be covered by one man in one day.
6.
RESPONSIBILITY OF THE BUYER
The BUYER shall undertake and assure that the BUYER’S REPRESENTATIVE shall carry out his duties hereunder in accordance with the normal shipbuilding practice and in such a way so as to avoid any unnecessary and unreasonable increase in building cost, delay in the construction of the VESSEL, and/or any disturbance in the construction schedule of the BUILDER.
The BUILDER has the right to request the BUYER to replace the BUYER’s REPRESENTATIVE who is deemed unsuitable and unsatisfactory for the proper progress of the VESSEL’s construction. The BUYER shall investigate the situation by sending its representative(s) to the SHIPYARD if necessary, and if the BUYER considers that such BUILDER’s request is justified, the BUYER shall effect such replacement as soon as conveniently arrangeable.
(End of Article)
17
ARTICLE V : MODIFICATIONS, CHANGES AND EXTRAS
1.
HOW EFFECTED
Minor modifications or changes to the SPECIFICATIONS and the PLAN under which the VESSEL is to be constructed may be made at any time hereafter by written agreement of the parties hereto. Any modification or change requested by the BUYER which does not affect the frame-work of the SPECIFICATIONS shall be agreed to by the BUILDER if the BUYER agrees to adjustment of the CONTRACT PRICE, deadweight and/or cubic capacity, speed requirements, the Delivery Date and other terms and conditions of this CONTRACT reasonably required as a result of such modifications or change. The BUILDER has the right to continue construction of the VESSEL on the basis of the SPECIFICATIONS and the PLAN until the BUYER has agreed to such adjustments. The BUILDER shall be entitled to refuse to make any alteration, change or modification of the SPECIFICATIONS and/or the PLAN requested by the BUYER, if the BUYER does not agree to the aforesaid adjustments within seven (7) days of the BUILDER’s notification of the same to the BUYER, or, if, in the BUILDER’s reasonable judgment, the compliance with such request of the BUYER would cause an unreasonable disruption of the normal working schedule of the SHIPYARD.
The BUILDER, however, agrees to exert its efforts to accommodate such reasonable request by the BUYER so that the said change and modification shall be made at a reasonable cost and within the shortest period of time reasonably possible. The aforementioned agreement to modify and change the SPECIFICATIONS and the PLAN may be effected by exchange of letters or facsimiles or e-mail manifesting the agreement.
The letters, facsimiles or e-mail exchanged by the parties pursuant to the foregoing shall constitute an amendment to this CONTRACT and the SPECIFICATIONS or the PLAN under which the VESSEL shall be built. Upon consummation of such an agreement to modify and change the SPECIFICATIONS or the PLAN, the BUILDER shall alter the construction of the VESSEL in accordance therewith including any addition to, or deduction from, the work to be performed in connection with such construction.
2.
SUBSTITUTION OF MATERIAL
If any materials, machinery or equipment required for the construction of the VESSEL by the SPECIFICATIONS and the PLAN or otherwise under this CONTRACT can not be procured in time to meet the BUILDER’ s construction schedule for the VESSEL, or are in short supply, or are unreasonably high in price compared with the prevailing international market price, the BUILDER may supply, subject to the BUYER’s prior approval, other materials, machinery or
18
equipment of at least equal quality and effect capable of meeting the requirements of the CLASSIFICATION SOCIETY and the rules, regulations and requirements with which the construction of the VESSEL must comply. The BUILDER shall not be entitled to claim any extra cost if it elects to use or install substitute materials.
3.
CHANGES IN RULES AND REGULATIONS
If the specified rules and regulations with which the construction of the VESSEL is required to comply are altered or changed by the CLASSIFICATION SOCIETY or bodies authorized to make such alterations or changes, either the BUYER or the BUILDER, upon receipt of due notice thereof, shall forthwith give notice thereof to the other party in writing. Thereupon, within ten (10) days after giving the notice to the BUILDER or receiving the notice from the BUILDER, the BUYER shall advise the BUILDER as to the alterations and changes, if any, to be made on the VESSEL which the BUYER, in its sole discretion, shall decide. The BUILDER shall not be obliged to comply with such alterations and/or changes if the BUYER fails to notify the BUILDER of its decision within the time limit stated above.
The BUILDER shall comply promptly with the said request of the BUYER, provided that the BUILDER and the BUYER shall first agree to:
(a)
any increase or decrease in the CONTRACT PRICE of the VESSEL that is occasioned by such compliance;
(b)
any extension or advancement in the Delivery Date of the VESSEL that is occasioned by such compliance;
(c)
any increase or decrease in the deadweight and/or cubic capacity of the VESSEL, if such compliance results in any increase or reduction in the deadweight and/or cubic capacity ;
(d)
adjustment of the speed requirements if such compliance results in any increase or reduction in the speed ; and
(e)
any other alterations in the terms of this CONTRACT or of the SPECIFICATIONS or the PLAN or both, if such compliance makes such alterations of the terms necessary.
Any delay in the construction of the VESSEL caused by the BUYER’s delay in making a decision or agreement as above shall constitute a permissible delay under this CONTRACT. Such agreement by the BUYER shall be effected in the same manner as provided above for modification and change of the SPECIFICATIONS and the PLAN.
(End of Article)
19
ARTICLE VI : TRIALS AND COMPLETION
1.
NOTICE
The BUILDER shall notify the BUYER in writing or by facsimile or e-mail at least twenty one (21) days in advance of the time and place of the trial run of the VESSEL. Such notice shall specify the place from which the VESSEL will commence her trial run and approximate date upon which the trial run is expected to take place. Such date shall be further confirmed by the BUILDER ten (10) days in advance of the trial run by facsimile or e-mail.
The BUYER’S REPRESENTATIVE, who is to witness the performance of the VESSEL during such trial run, shall be present at such place on the date specified in such notice. Should the BUYER’S REPRESENTATIVE fail to be present after the BUILDER’s due notice to the BUYER as provided above, the BUILDER shall be entitled to conduct such trial run with the presence of the representative(s) of the CLASSIFICATION SOCIETY only without the BUYER’S REPRESENTATIVE being present. In such case, the BUYER shall be obliged to accept the VESSEL on the basis of a certificate issued by the BUILDER that the VESSEL, after the trial run, subject to alterations and corrections, if necessary, has been found to conform with the SPECIFICATIONS and this CONTRACT and is satisfactory in all respects, provided the BUILDER first makes such corrections and alterations promptly.
2.
WEATHER CONDITION
In the event of unfavourable weather on the date specified for the trial run, the trial run shall take place on the first available day that weather conditions permit. The parties hereto recognize that the weather conditions in Philippines waters, in which the trial run is to take place, are such that great changes in weather may arise momentarily and without warning and therefore, it is agreed that if, during the trial run, the weather should become so unfavourable that the trial run cannot be continued, then the trial run shall be discontinued and postponed until the first favourable day next following, unless the BUYER shall assent to the acceptance of the VESSEL by notification in writing on the basis of such trial run so far made prior to such change in weather conditions. Any reasonable delay of the trial run caused by such unfavourable weather conditions shall also operate to extend the Delivery Date of the VESSEL for the period of delay occasioned by such unfavourable weather conditions.
3.
HOW CONDUCTED
All expenses in connection with the trials of the VESSEL are to be for the account of the BUILDER, which, during the trials, is to provide at its own expense the necessary crew to comply with conditions of safe navigation. The trials shall be conducted in the manner prescribed in this CONTRACT and the SPECIFICATIONS, and shall prove fulfillment of the performance requirements for the trials as set forth in the SPECIFICATIONS.
20
The BUILDER shall be entitled to conduct preliminary sea trials, during which the propulsion plant and/or its appurtenance shall be adjusted according to the BUILDER’s judgment. The BUILDER shall have the right to repeat any trial whatsoever as it deems necessary.
4.
CONSUMABLE STORES
The BUILDER shall load the VESSEL with the required quantity of fuel oil, lubricating oil and greases, fresh water, and other stores necessary to conduct the trials as set forth in the SPECIFICATIONS. The necessary ballast (fuel oil, fresh water and such other ballast as may be required) to bring the VESSEL to the trial load draft, as specified in the SPECIFICATIONS, shall be supplied and paid for by the BUILDER whilst lubricating oil and greases shall be supplied and paid for by the BUYER within the time advised by the BUILDER for the conduct of sea trials as well as for use before the delivery of the VESSEL to the BUYER. The fuel oil as well as lubricating oil and greases shall be in accordance with the engine specifications and the BUYER shall decide and advise the BUILDER of the supplier’s name for lubricating oil and greases at least two (2) months in advance of the keel laying of the VESSEL, provided that the supplier shall be acceptable to the BUILDER and/or the makers of all the machinery.
Any fuel oil, fresh water or other consumable stores furnished and paid for by the BUILDER for trial runs remaining on board the VESSEL, at the time of acceptance of the VESSEL by the BUYER, shall be bought by the BUYER from the BUILDER at the BUILDER’s actual net purchase price for such supply in Philippines and payment by the BUYER thereof shall be made at the time of delivery of the VESSEL. The BUILDER shall pay the BUYER at the time of delivery of the VESSEL for the consumed quantity of lubricating oil and greases which were furnished and paid for by the BUYER at the BUYER’s purchase price thereof.
The consumed quantity of lubricating oils and greases shall be calculated on the basis of the difference between the remaining amount, including the same remaining in the main engine, other machinery and their pipes, stern tube and the like, and the supplied amount.
5.
ACCEPTANCE OR REJECTION
(a)
If, during any sea trial, any breakdown occurs entailing interruption or irregular performance which can be repaired on board, the trial shall be continued after such repairs and be valid in all respects. However, if such interruption or irregular performance occurs more than two times on the same items, then such item(s) should be identified by the BUILDER to the BUYER as soon as practicably possible, and inspected/corrected by the BUILDER as soon as practicably possible. In the meantime, the inspection result, which will be final or preliminary as the case may be, should be informed to the BUYER before the delivery of the VESSEL.
(b)
However, if, during or after the trial run, it becomes apparent that the VESSEL or any part of her equipment requires alterations or corrections which but for this provision would or
21
might entitle the BUYER to cancel this CONTRACT, the BUILDER shall notify the BUYER promptly in writing or by facsimile or e-mail to such effect and shall simultaneously advise the BUYER of the estimated additional time required for the necessary alterations or corrections to be made.
The BUYER shall, within three (3) working days of receipt from the BUILDER of notice of completion of such alterations or corrections and after such further trials or tests as necessary, notify the BUILDER in writing or by facsimile or e-mail confirmed in writing of its acceptance, qualified acceptance or rejection of the VESSEL, all in accordance with the SPECIFICATIONS, the PLAN and this CONTRACT, and shall not be entitled to reject the VESSEL on such grounds until such time.
(c)
Save as above provided, the BUYER shall, within three (3) working days after completion of the trial run, notify the BUILDER in writing or by facsimile or e-mail confirmed in writing of its acceptance of the VESSEL or of the details in respect of which the VESSEL does not conform to the SPECIFICATIONS or this CONTRACT.
If the BUILDER is in agreement with the BUYER’s determinations as to non-conformity, the BUILDER shall make such alterations or changes as may be necessary to correct such non-conformity and shall prove the fulfillment of this CONTRACT and the SPECIFICATIONS by such tests or trials as may be necessary.
The BUYER shall, within three (3) working days after completion of such tests and/or trials, notify the BUILDER in writing or by facsimile or e-mail confirmed in writing of its acceptance or rejection of the VESSEL.
(d)
However, the BUYER shall not be entitled to reject the VESSEL by reason of any minor or insubstantial items judged from the point of view of standard shipbuilding and shipping practice as not being in conformity with the SPECIFICATIONS, but, in that case, the BUILDER shall not be released from the obligation to correct and/or remedy such minor or insubstantial items as soon as practicable after the delivery of the VESSEL.
(e)
If requested by the BUYER, the BUILDER shall give a demonstration to the BUYER’s crew how to operate the machineries and other equipment of the VESSEL at the time of the trial run or between after trial run and before delivery in order for the BUYER’s crew to be familiarized with the said machineries and other equipment.
6.
EFFECT OF ACCEPTANCE
The BUYER’s written facsimiled or e-mail notification of acceptance delivered to the BUILDER as above provided, shall be final and binding insofar as conformity of the VESSEL with the SPECIFICATIONS is concerned and shall preclude the BUYER from refusing formal delivery of the VESSEL as hereinafter provided, if the BUILDER complies with all conditions
22
of delivery, as herein set forth and provided that, in the case of qualified acceptance, any matters which were mentioned in the notice of the qualified acceptance by the BUYER as requiring correction have been corrected satisfactorily.
If the BUYER fails to notify the BUILDER of its acceptance or rejection of the VESSEL as hereinabove provided, the BUYER shall be deemed to have accepted the VESSEL. Nothing contained in this Article shall preclude the BUILDER from exercising any and all rights which the BUILDER has under this CONTRACT if the BUILDER disagrees with the BUYER’s rejection of the VESSEL or any reasons given for such rejections, including arbitration provided in Article XIII hereof.
(End of Article)
23
ARTICLE VII : DELIVERY
1.
TIME AND PLACE
The VESSEL shall be delivered by the BUILDER to the BUYER at the SHIPYARD, safely afloat on or before the December 31, 2016 (hereinafter called the “DELIVERY DATE”) after completion of satisfactory trials and acceptance by the BUYER in accordance with the terms of Article VI, except that, in the event of delays in delivery of the VESSEL by the BUILDER due to causes which under the terms of this CONTRACT permit extensions of the time for delivery of the VESSEL, the aforementioned DELIVERY DATE shall be extended accordingly.
However, in connection with Paragraph 1 as above, with sixty (60) days prior written notice to BUYER of its intention to deliver the Vessel early, the BUILDER shall be entitled to advance the DELIVERY DATE of the VESSEL by up to sixty (60) days, provided that the BUYER consents to such earlier DELIVERY DATE, with such consent not to be unreasonably withheld or delayed.
2.
WHEN AND HOW EFFECTED
Provided that the BUYER shall concurrently with delivery of the VESSEL release to the BUILDER the fifth instalment as set forth in Article X.2. hereof and shall have fulfilled all of its obligations provided for in this CONTRACT, delivery of the VESSEL shall be forthwith effected upon acceptance thereof by the BUYER, as hereinabove provided, by the concurrent delivery by each of the parties hereto to the other of a PROTOCOL OF DELIVERY AND ACCEPTANCE acknowledging delivery of the VESSEL by the BUILDER and acceptance thereof by the BUYER, which shall be prepared in duplicate and signed by each of the parties hereto.
3.
DOCUMENTS TO BE DELIVERED TO THE BUYER
Upon delivery and acceptance of the VESSEL, the BUILDER shall deliver to the BUYER the following documents, which shall accompany the aforementioned PROTOCOL OF DELIVERY AND ACCEPTANCE:
(a)
PROTOCOL OF TRIALS of the VESSEL made pursuant to this CONTRACT and the SPECIFICATIONS,
24
(b)
PROTOCOL OF INVENTORY of the equipment of the VESSEL, including spare parts, all as specified in the SPECIFICATIONS,
(c)
PROTOCOL OF STORES OF CONSUMABLE NATURE, such as all fuel oil and fresh water remaining in tanks if its cost is charged to the BUYER under Article VI. 4. hereof,
(d)
Three (3) sets of DRAWING AND PLANS pertaining to the VESSEL as stipulated in the SPECIFICATIONS, which shall be furnished to the BUYER at no additional cost,
(e)
ALL CERTIFICATES required to be furnished upon delivery of the VESSEL pursuant to this CONTRACT, the SPECIFICATIONS and the customary shipbuilding practice, including
·
Classification Certificate for Hull and Machinery
·
Statement of compliance for USCG regulations for foreign flag vessel
·
Cargo Ship Safety Construction Certificate
·
Cargo Ship Safety Radio Certificate
·
Cargo Ship Safety Equipment Certificate
·
International Load Line Certificate
·
International Tonnage Certificate
·
International Oil Pollution Prevention Certificate
·
IAPP Certificate for NOx
·
EIAPP for Main engine and Auxiliary engine
·
MARPOL 73/78 Annex VI Certificate for Incinerator
·
Suez Canal Tonnage Certificate
·
Statement of Compliance for Maritime Labor Convention 2006, Title 3, Regulation Standard A 3.1
·
Ship Sanitation Control Exemption Certificate
·
Test Certificate of Windlass, Anchor, Anchor Chain
·
Certificate for Cargo hose handling, Provision Crane and Engine Room Crane
·
International Sewage Pollution Prevention Certificate
·
Statement of compliance for International Garbage Pollution Prevention.
(Garbage management plan shall be prepared by the BUYER)
·
Anti fouling (TBT free) Certificate
·
Statement of compliance for voyage data recorder system
·
Certificate for life boat, lifesaving appliances and firefighting equipment
·
Statement of Compliance for Inventory of Hazardous Materials
25
·
International Energy Efficiency Certificate (IEEC)
*SEEMP (Ship Energy Efficiency Management Plan) shall be prepared by BUYER.
Any other certificate required by the CLASSIFICATION SOCIETY and/or other relevant regulatory bodies as specified in the SPECIFICATION and/or the PLANS
However, it is agreed by the parties that if the Classification Certificate and/or other certificates are not available at the time of delivery of the VESSEL, provisional certificates shall be accepted by the BUYER, provided that the BUILDER shall furnish the BUYER with formal certificates as promptly as possible after such formal certificates have been issued.
(f)
DECLARATION OF WARRANTY of the BUILDER that the VESSEL is delivered to the BUYER free and clear of any liens, claims, mortgages, or other encumbrances upon the BUYER’s title thereto, and in particular, that the VESSEL is absolutely free of all burdens in the nature of imposts, taxes, or charges imposed by the prefecture or country of the port of delivery, as well as of all liabilities of the BUILDER to its sub-contractors and employees and of all liabilities arising from the operation of the VESSEL in trial runs, or otherwise, prior to delivery except as otherwise provided under this Contract.
(g)
Bill of Sale notarized by the BUILDER and legalized by the BUILDER at the BUYER’s cost, if required for registration of the VESSEL
(h)
Commercial invoice
(i)
Power of Attorney
(j)
Any other documents reasonably required by the BUYER
The BUYER may require the BUILDER by giving reasonable notice, prior to delivery, to arrange for any documents listed above to be duly notarized, where practically possible.
4.
TENDER OF THE VESSEL
If the BUYER fails to take delivery of the VESSEL after completion thereof according to this CONTRACT and the SPECIFICATIONS, the BUILDER shall have the right to tender delivery of the VESSEL after compliance with all procedural requirements as provided above.
26
5.
TITLE AND RISK
Title and risk shall pass to the BUYER upon delivery and acceptance of the VESSEL being effected as stated above and the BUILDER shall be free of all responsibility or liability whatsoever related with this CONTRACT except for the warranty of quality contained in Article IX and the obligation to correct and/or remedy, as provided in Article VI. 5 (d), if any, it being expressly understood that, until such delivery is effected, the VESSEL and equipment thereof are at the entire risk of the BUILDER including but not confined to, risks of war, insurrection and seizure by Governments or Authorities, whether Philippines or foreign, and whether at war or at peace. The title to the BUYER’s supplies as provided in Article XII shall remain with the BUYER and the BUILDER’s responsibility for such BUYER’s supplies shall be as described in Article XII.2.
6.
REMOVAL OF THE VESSEL
The BUYER shall take possession of the VESSEL immediately upon delivery thereof and shall remove the VESSEL from the SHIPYARD within four (4) days after delivery thereof is effected.
From the delivery of the VESSEL until the actual removal thereof from the SHIPYARD, the BUYER shall be responsible for the safety and preservation of the VESSEL in all respects, including without limitation, keeping the VESSEL insured at his own cost, and furthermore, the BUYER shall indemnify and hold the BUILDER free and harmless against any liability or claims including without limitation, the claims of his insurers arising out of any accident whatsoever, unless caused by the willful misconduct of the BUILDER, his employee or agent.
Port dues and other charges levied by the Philippine Government Authorities after delivery of the VESSEL and any other costs related to the removal of the VESSEL shall be borne by the BUYER.
(End of Article)
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ARTICLE VIII : DELAYS AND EXTENSIONS OF TIME (FORCE MAJEURE)
1.
CAUSES OF DELAY
If, at any time after signing this CONTRACT, either the construction or delivery of the VESSEL or any performance required hereunder as a prerequisite to the delivery thereof is delayed by any of the following events: namely war, acts of state or government, blockade, revolution, insurrections, mobilization. civil commotion, riots, strikes, sabotage, lockouts, Acts of God or the public enemy, plague or other epidemics, quarantines, shortage or prolonged failure of electric current, freight embargoes, or defects in major forgings or castings, delays or defects in the BUYER’s supplies as stipulated in Article XII, if any, or shortage of materials, machinery or equipment or inability to obtain delivery or delays in delivery of materials, machinery or equipment, provided that at the time of ordering the same could reasonably be expected by the BUILDER to be delivered in time or defects in materials, machinery or equipment which could not have been detected by the BUILDER using reasonable care or earthquakes, tidal waves, typhoons, hurricanes, prolonged or unusually severe weather conditions or destruction of the premises or works of the BUILDER or its sub-contractors, or of the VESSEL, or any part thereof, by fire, landslides, flood, lightning, explosion, or delays in the BUILDER’s other commitments resulting from any such causes as described in this Article which in turn delay the construction of the VESSEL or the BUILDER’s performance under the CONTRACT, or delays caused by the CLASSIFICATION SOCIETY due to Force Majeure or the BUYER’s faulty action or omission, or other causes beyond the control of the BUILDER, or its sub-contractors, as the case may be, provided that such causes could not be foreseen at the time of signing this CONTRACT, or for any other causes which, under the terms of this CONTRACT, authorize and permit extension of the time for delivery of the VESSEL, then in the event of delays due to the happening of any of the aforementioned contingencies, the DELIVERY DATE of the VESSEL under this CONTRACT shall be extended for a period of time which shall not exceed the total accumulated time of all such delays.
2.
NOTICE OF DELAYS
As soon as practicably possible, but not later than fourteen (14) days after commencement of any delay on account of which the BUILDER claims that it is entitled under this CONTRACT to an extension of the DELIVERY DATE of the VESSEL, excluding delays due to arbitration, the BUILDER shall advise the BUYER in writing or by facsimile or e-mail of the date such delay commenced, the reasons thereof and, if possible, its estimated duration of the probable delay in the delivery of the VESSEL, and shall supply the BUYER if reasonably available
28
with evidence to justify the delay claimed. Within one (1) week after such delay ends, the BUILDER shall likewise advise the BUYER in writing or by facsimile or e-mail of the date that such delay ended, and also, shall specify the period of time by which the BUILDER claims the DELIVERY DATE should be extended by reason of such delay. Failure of the BUYER to object to the BUILDER’s notification of any claim for extension of the date for delivery of the VESSEL within two (2) week after receipt by the BUYER of such notification shall be deemed to be a waiver by the BUYER of its right to object to such extension.
Failure of the BUILDER to notify the BUYER of any Force Majeure event in accordance with the above shall preclude the BUILDER from claiming Force Majeure for such event.
3.
RIGHT TO CANCEL FOR EXCESSIVE DELAY
If the total accumulated time of all permissible and non-permissible delays, excluding delays due to (i) arbitration under Article XIII, (ii) the BUYER’s defaults under Article XI, (iii) modifications and changes under Article V or (iv) delays or defects in the BUYER’ s supplies as stipulated in Article XII, aggregates three hundred (300) days or more, then, the BUYER may, at any time thereafter, cancel this CONTRACT by giving a written notice of cancellation to the BUILDER. Such cancellation shall be effective as of the date the notice thereof is received by the BUILDER.
If the BUYER has not served the notice of cancellation as provided in the above or Article III. 1. hereof, the BUILDER may, at any time after expiration of the accumulated time of the delay in delivery, either three hundred (300) days in case of the delay in this Paragraph or two hundred and ten (210) days in case of the delay in Article III. 1, notify the BUYER of the future date upon which the BUILDER estimates the VESSEL will be ready for delivery and demand in writing or by facsimile or e-mail that the BUYER make an election either to cancel this CONTRACT or to consent to the delivery of the VESSEL at such future date, in which case the BUYER shall, within seven (7) days after receipt of such demand, make and notify the BUILDER of such election. If the BUYER elects to consent to the delivery of the VESSEL at such future date (or other future date as the parties may agree):
(a)
Such future date shall become the contractual delivery date for the purposes of this CONTRACT and shall be subject to extension by reason of permissible delays as herein provided, and
29
(b)
If the VESSEL is not delivered by such revised contractual delivery date (as extended by reason of permissible delays), the BUYER shall have the same right of cancellation upon the same terms as provided in the above and Article III. 1.
If the BUYER shall not make an election within seven (7) days as provided hereinabove, the BUYER shall be deemed to have accepted such extension of the DELIVERY DATE to the future delivery date indicated by the BUILDER.
4.
DEFINITION OF PERMISSIBLE DELAYS
Delays on account of the foregoing causes shall be understood to be permissible delays, and are to be distinguished from non-permissible unauthorized delays on account of which the CONTRACT PRICE of the VESSEL is subject to adjustment as provided in Article III hereof.
(End of Article)
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ARTICLE IX : WARRANTY OF QUALITY
1.
GUARANTEE OF MATERIAL AND WORKMANSHIP
The BUILDER, for the period of twelve (12) months from the date of delivery and acceptance of the VESSEL to the BUYER, guarantees the VESSEL and all parts and equipment thereof that are designed, manufactured, installed or furnished by the BUILDER and its sub contractors under this CONTRACT against all defects which are directly due to defective design, materials, installation, construction miscalculation and/or poor workmanship, provided such defects have not been caused by perils of the sea, rivers or navigation, or by normal wear and tear, overloading, improper loading or stowage, external corrosion of the materials normally expected, fire, accident, incompetence, mismanagement, negligence or willful neglect or by alteration or addition by the BUYER not previously approved by the BUILDER.
The BUILDER will be responsible for all machinery or parts of machinery and all constructions which are supplied by sub-contractors and will guarantee the above mentioned for a period of twelve (12) months on the basis as laid down in this Paragraph.
Notwithstanding the above, in the event that within the guarantee period of twelve (12) months any remedies are carried out or replacements are provided by the BUILDER and/or its subcontractors, the guarantee period in respect to such repairs or replacements shall be extended for the period of twelve (12) months from the date upon which the same are carried out, provided that the total accumulated period of guarantee shall not exceed eighteen (18) months from the date of delivery of the VESSEL.
2.
NOTICE OF DEFECTS
The BUYER or its duly authorized representative will notify the BUILDER in writing or by facsimile or e-mail promptly after discovery of any defect for which a claim is to be made under this guarantee.
The BUYER’s written notice shall include full particulars as to the nature of the defect and the extent of the damage caused thereby, but excluding consequential damage as hereinafter provided. The BUILDER will be under no obligation with respect to this guarantee in respect of any claim for defects discovered prior to the expiry date of the guarantee, unless notice of such defects is received by the BUILDER before the expiry date. However, facsimile or e-mail advice received by the BUILDER within seven (7) days after such expiry date that a claim is forthcoming will be sufficient compliance with the requirement as to time, provided that such
31
facsimile or e-mail advice shall include at least a brief description of the defect including the identity of the equipment, extent of damage, name and number of any replacement part and description of any remedial work required, and that full particulars are given to the BUILDER not later than fifteen (15) days after the expiry date.
3.
REMEDY OF DEFECTS
(a)
The BUILDER shall remedy, at its expense, any defects, against which the VESSEL is guaranteed under this Article, by making all necessary and reasonably practicable repairs or replacements at the SHIPYARD or elsewhere as provided for in (b) hereinbelow.
In such case, the VESSEL shall be taken at the BUYER’s cost and responsibility to the place selected, ready in all respects for such repairs or replacements and in any event, the BUILDER shall not be responsible for towage, dockage, wharfage, port charges and anything else incurred for the BUYER’s getting and keeping the VESSEL ready for such repairing or replacing.
(b)
However, if it is impractical (which shall include, but not be limited to, an emergency) to bring the VESSEL to the SHIPYARD, the BUYER may cause the necessary repairs or replacements to be made elsewhere which is deemed by the BUYER with the consent of the BUILDER which shall not be unreasonably withheld, to be suitable for the purpose, provided that, in such event, the BUILDER may forward or supply replacement parts or materials to the VESSEL under the terms described in (c) hereinbelow, unless forwarding or supplying thereof to the VESSEL would impair or delay the operation or working schedule of the VESSEL. In the event that the BUYER proposes to cause the necessary repairs or replacements to be made to the VESSEL at any shipyard or works other than the SHIPYARD, the BUYER shall first (but in all events as soon as reasonably possible) give the BUILDER notice in writing or by facsimile or e-mail of the time and place such repairs will be made, and if the VESSEL is not thereby delayed, or her operation or working schedule is not thereby impaired, the BUILDER shall have the right to verify by its own representative(s) the nature and extent of the defects complained of. The BUILDER shall, in such case, promptly advise the BUYER by facsimile or e-mail, after such examination has been completed, of its acceptance or rejection of the defects as ones that are covered by the guarantee herein provided. Upon the BUILDER’s acceptance of the defects as justifying remedy under this Article, or upon award of the arbitration so determining, the BUILDER shall compensate the BUYER an amount equal to the reasonable cost of making the same repairs or replacements which shall not exceed the average cost of making same repairs or replacements at a reputable Korean repair yard, a
32
reputable European repair yard, a reputable Singapore repair yard and a reputable Chinese repair yard. The repair yards for the reference of BUILDER’s compensation shall be chosen by the BUYER subject to the BUILDER’s prior written consent which shall not be unreasonably withheld.
(c)
In the event that it is necessary for the BUILDER to forward a replacement for a defective part under this guarantee, replacement parts shall be shipped to the BUYER under the terms of C.I.F. port of the country where they are to be purchased.
(d)
The BUILDER reserves the option to retrieve, at the BUILDER’s cost, any of the replaced equipment/parts in case defects are remedied in accordance with the provisions in this Article.
(e)
Any dispute under this Article shall be referred to arbitration in accordance with the provisions of Article XIII hereof.
4.
EXTENT OF THE BUILDER’S LIABILITY
(a)
After delivery of the VESSEL the responsibility of the BUILDER in respect of and/or in connection with the VESSEL and/or this CONTRACT shall be limited to the extent expressly provided in this Article. Except as expressly provided in this Article, in no circumstances and on no ground whatsoever shall the BUILDER have any responsibility or liability whatsoever or howsoever arising in respect of or in connection with the VESSEL or this CONTRACT after the delivery of the VESSEL. Further, but without in any way limiting the generality of this Article, the BUILDER shall have no liability or responsibility whatsoever or howsoever arising for or in connection with any consequential or special loss and/or damages (including any loss of earnings), any pecuniary loss or expense, any liability to any third party or any fine, compensation, penalty or other payment or sanction incurred by or imposed upon the BUYER or any other party whatsoever in relation to or in connection with this CONTRACT or the VESSEL.
(b)
The BUILDER shall be under no obligation with respect to defects discovered after the expiration of the period of guarantee specified above, nor in any event shall the BUILDER be liable for any worsening of defects after the expiry date of the guarantee.
(c)
The BUILDER shall under no circumstances be liable for defects in the VESSEL or
33
any part of equipment thereof caused by perils of the sea, rivers or navigation, or normal wear and tear, or fire or accidents at sea or elsewhere or by mismanagement, accident, negligence, willful neglect, alteration or addition on the part of the BUYER, its employees or agents on or doing work on the VESSEL, including the VESSEL’s officers, crew and passengers. Likewise, the BUILDER shall not be liable for defects in the VESSEL or any part of equipment thereof that are due to repairs which were made by other than the BUILDER at the discretion of the BUYER as hereinabove provided.
(d)
The liability of the BUILDER provided for in this Article shall be limited to defects directly caused by defective materials, design, construction miscalculation and/or poor workmanship as above provided. The BUILDER shall not be obliged to repair, not be liable for, damage to the VESSEL or any part of the equipment thereof, which after delivery of the VESSEL, is caused other than by the defects of the nature specified above. The guarantees contained as hereinabove in this Article replace and exclude any other liability, guarantee, warranty and/or condition imposed or implied by statute, common law, custom or otherwise on the part of the BUILDER by reason of the construction and sale of the VESSEL for and to the BUYER.
(End of Article)
34
ARTICLE X : PAYMENT
1.
CURRENCY
All payments under this CONTRACT shall be made in United States Dollars.
2.
TERMS OF PAYMENT
The payments of the CONTRACT PRICE shall be made as follows.
(a)
First Instalment
Twenty per cent (20%) of the CONTRACT PRICE amounting to U.S. Dollars Nineteen Million Two Hundred Seventy Two Thousand One Hundred Only (US$19,272,100) shall be paid within four (4) business days after either the BUYER’s receipt of fax or scanned copy of Letter of Guarantee or the BUYER’s bank’s receipt of Letter of Guarantee by SWIFT, as the case may be, duly issued in accordance with Paragraph 8 of this Article.
Under this CONTRACT, in counting the business days, only Saturdays and Sundays are excepted. When a due date falls on a day when banks are not open for business in New York, Philippines, Singapore such due date shall fall due upon the first business day next following.
(b)
Second Instalment
Ten per cent (10%) of the CONTRACT PRICE amounting to U.S. Dollars Nine Million Six Hundred Thirty Six Thousand Fifty Only (US$9,636,050) shall be paid within six (6) months after signing this CONTRACT within four (4) business days after BUYER’s receipt of a notice from the BUILDER together with an invoice for the specified amount.
(c)
Third Instalment
Ten per cent (10%) of the CONTRACT PRICE amounting to U.S. Dollars Nine Million Six Hundred Thirty Six Thousand Fifty Only (US$9,636,050) shall be paid within five (5) business days of receipt by the BUYER of a facsimiled or e-mail notice from the BUILDER together with a Certificate issued by the CLASSIFICATION SOCIETY confirming that steel cutting has commenced.
35
(d) Fourth Instalment
Ten per cent (10%) of the CONTRACT PRICE amounting to U.S. Dollars Nine Million Six Hundred Thirty Six Thousand Fifty Only (US$9,636,050) shall be paid within four (4) business days after the later of receipt by the BUYER of a facsimiled or e-mail notice from the BUILDER confirming that the first block of the keel has been laid together with a Certificate issued by the Classification Society confirming that the keel laying has commenced.
(e) Fifth Instalment
Fifty per cent (50%) of the CONTRACT PRICE amounting to U.S. Dollars Forty Eight Million One Hundred Eighty Thousand Two Hundred Fifty Only (US$48,180,250) plus or minus any increase or decrease due to modifications and/or adjustment, if any, arising prior to delivery of the VESSEL of the CONTRACT PRICE under Articles III and V of this CONTRACT shall be paid to the BUILDER concurrently with the delivery of the VESSEL. (The date stipulated for payment of each of the four instalments mentioned above is hereinafter in this Article and in Article XI referred to as the “DUE DATE” of that instalment).
It is understood and agreed upon by the BUILDER and the BUYER that no payments under the provisions of this Article shall be delayed or withheld by the BUYER due to any dispute or disagreement of whatsoever nature arising between the BUILDER and the BUYER. Should there be any dispute in this connection, the matter shall be dealt with in accordance with the provisions of arbitration in Article XIII hereof. It is understood that any expenses for receiving such payment shall be for the account of the BUILDER.
3.
DEMAND FOR PAYMENT
At least fourteen (14) days prior to the date of each event provided in Paragraph 2 of this Article on which any payment shall fall due hereunder, with the exception of the payment of the first and second instalments, the BUILDER shall notify the BUYER by facsimile or e-mail of the date such payment shall become due.
The BUYER shall immediately acknowledge receipt of such notification by facsimile or e-mail to the BUILDER, and make payment as set forth in this Article. If the BUILDER fails to receive the BUYER’s said acknowledgement within three (3) days after sending the aforementioned notification, the BUILDER shall promptly facsimile or e-mail to the BUYER a second notification of similar import. The BUYER shall immediately acknowledge by facsimile or e-mail receipt of the foregoing second notification regardless
36
of whether or not the first notification was acknowledged as aforesaid.
4.
METHOD OF PAYMENT
(a)
All the pre-delivery payments and the payment due on delivery in settlement of the CONTRACT PRICE as provided for in Paragraph 2 of this Article shall be made in U.S. Dollars on or before the DUE DATE thereof by telegraphic transfer as follows ;
(i)
The payment of the first, second, third and fourth instalment shall be made to the account (Account No. 093-1700-3622) of the Korea Development Bank (Swift Code : KODBKRSE) (hereinafter called the “KDB” or “BUILDER’s Bank”) at JP Morgan Chase Bank, New York (Swift Code : CHASUS33) or the account of the BUILDER with any other bank in favour of the BUILDER, as designated and notified by the BUILDER at least seven (7) business days prior to the due date.
(ii)
The fifth instalment as provided for in Paragraph 2.(e) of this Article shall be deposited at the account of the KDB
in favour of the BUILDER
at least two (2) business days prior to the scheduled delivery date of the VESSEL notified by the BUILDER, with instructions that the said instalment is payable to the BUILDER against presentation by the BUILDER to the KDB of a copy of the original PROTOCOL OF DELIVERY AND ACCEPTANCE of the VESSEL signed by the BUILDER and the BUYER.
If the delivery of the VESSEL is not effected within fifteen (15) days after the scheduled delivery date, the BUYER shall have the right to withdraw the said deposit plus accrued interest (if any) upon the expiry date. However when the newly scheduled delivery date is notified to the BUYER by the BUILDER, the BUYER shall make the cash deposit in accordance with the same terms and conditions as set out above.
Reference to the BUILDER’s Bank
·
Name:
THE KOREA DEVELOPMENT BANK
·
Address:
14 Eunhaeng-ro (16-3, Yeouido-Dong), Yeongdeungpo-Gu, Seoul, Korea
·
Telephone Number:
+82 2 787 5421
·
Telefax Number:
+82 2 787 5492
·
Swift Code:
KODBKRSE
·
Beneficiary:
HHIC-Phil Inc.
37
·
Through Bank:
JP Morgan Chase Bank, New York (Swift Code: CHASUS33)
·
Account number:
093-1700-3622
(b)
Provided however that none of the above installments shall be payable if the Refund Guarantee referred to in Article X .5 hereof ceases to be in force and no substitute Refund Guarantee has been provided in accordance with the provisions of this CONTRACT.
5.
REFUND
BY THE BUILDER
The payments made by the BUYER to the BUILDER prior to delivery of the VESSEL shall constitute advances to the BUILDER. If the VESSEL is rejected by the BUYER in accordance with the terms of this CONTRACT or, except in the case of cancellation of this CONTRACT by the BUILDER under the provisions of Article XI hereof, if the BUYER terminates, cancels or rescinds this CONTRACT pursuant to any of the provisions of this CONTRACT specifically permitting the BUYER to do so, the BUILDER shall forthwith refund to the BUYER, in U.S. Dollars, the full amount of total sums paid by the BUYER to the BUILDER in advance of delivery together with interest thereon as herein provided.
The transfer and other bank charges of such refund shall be for the BUILDER’s account. The interest rate of the refund, as above provided, shall be six per cent (6%) per annum from the date following the date of receipt by the BUILDER of the pre-delivery instalment(s) to the date of remittance by telegraphic transfer of such refund, provided, however, that if the cancellation of this CONTRACT by the BUYER is based upon delays due to Force Majeure or other causes beyond the control of the BUILDER as provided for in Article VIII hereof, then in such event, the interest rate of refund shall be reduced to four per cent (4%) per annum.
It is hereby understood by both parties that payment of any interest provided herein is by way of liquidated damages due to cancellation of this CONTRACT and not by way of compensation for use of money.
If, the BUILDER is required to refund to the BUYER the instalments paid by the BUYER to the BUILDER as provided in this Paragraph, the BUILDER shall return to the BUYER all of the BUYER’s supplies as stipulated in Article XII which were not incorporated into the VESSEL and pay to the BUYER an amount equal to the cost to the BUYER of those supplies incorporated into the VESSEL.
6.
TOTAL
LOSS
If there is a total loss or a constructive total loss of the VESSEL prior to delivery thereof, the
38
BUILDER shall proceed according to the mutual agreement of the parties hereto either:
(a)
to build another vessel in place of the VESSEL so lost and deliver it under this CONTRACT to the BUYER, provided that the parties hereto shall have agreed in writing to a reasonable price and time for the construction of such vessel in place of the lost VESSEL; or
(b)
to refund to the BUYER the full amount of the total sums paid by the BUYER to the BUILDER under the provisions of Paragraph 2 of this Article together with interest thereon at the rate of six per cent (6%) per annum from the date following the date of receipt by the BUILDER of such pre-delivery instalment(s) to the date of payment by the BUILDER to the BUYER of the refund.
If the parties hereto fail to reach such agreement within two (2) months after the VESSEL is determined to be a total loss or constructive total loss, the provisions of (b) hereinabove shall be applied and the BUILDER shall make such refund to the BUYER within ten (10) business days of such date.
7.
DISCHARGE
OF OBLIGATIONS
Such refund as provided in the foregoing Paragraphs 5 and 6 by the BUILDER to the BUYER shall forthwith discharge all the obligations, duties and liabilities of each of the parties hereto to the other, other than any obligations of the BUYER in respect of facilities afforded to the BUYER’S REPRESENTATIVE, under this CONTRACT. Any and all refunds or payments due to the BUYER under this CONTRACT shall be made by telegraphic transfer to the account specified by the BUYER.
8.
REFUND
GUARANTEE
As a condition precedent to the payment of the first intsalment, the BUILDER shall furnish the BUYER with an assignable letter of refundment guarantee issued by the Korea Development Bank for the refund of all the pre-delivery instalments plus interest as aforesaid to the BUYER under or pursuant to Paragraph 5 above in the substantially similar form and tenor as annexed hereto as Exhibit “A”.
All expenses in issuing and maintaining the letter of guarantee described in this Paragraph shall be borne by the BUILDER.
39
9.
PERFORMANCE
GUARANTEE
Before signing the CONTRACT, the BUYER shall provide the BUILDER with an irrevocable Letter of Guarantee issued by NAVIG8 Crude Tankers Inc for the due and faithful performance by the BUYER of all its obligations under the CONTRACT including, but not limited to, the payment of the CONTRACT PRICE and taking delivery of the VESSEL in the form as annexed hereto as Exhibit “B”.
(End of Article)
40
ARTICLE XI : BUYER’S DEFAULT
1.
DEFINITION
OF DEFAULT
The BUYER shall be deemed to be in default under this CONTRACT in the following cases:
(a)
If the first, second, third, or fourth instalment is not paid to the BUILDER within respective DUE DATE of such instalments; or
(b)
If the fifth instalment is not deposited in accordance with Article X.4.(a)(ii) hereof or if the said fifth instalment deposit is not released to the BUILDER against presentation by the BUILDER of a copy of the original PROTOCOL OF DELIVERY AND ACCEPTANCE; or
(c)
If the BUYER fails to take delivery of the VESSEL when the VESSEL is duly tendered for delivery by the BUILDER under the provisions of Article VII hereof; or
(d)
If an order or an effective resolution shall be passed for winding up of the BUYER (except for the purpose of reorganization, merger or amalgamation).
In case the BUYER is in default as defined in this Article XI.1, the BUILDER is entitled to and shall have the following rights, powers and remedies in addition to such other rights, powers and remedies as the BUILDER may have elsewhere in
this CONTRACT
.
2.
EFFECT
OF THE BUYER’S DEFAULT ON OR BEFORE THE DELIVERY OF
THE
VESSEL
If the BUYER shall be in default as provided in Paragraph 1 above of its obligations under this CONTRACT, then;
(a)
The DELIVERY DATE of the VESSEL shall be extended automatically for the actual period of such default and the BUILDER shall not be obliged to pay any liquidated damages for the delay in delivery of the VESSEL caused thereby.
(b)
The BUYER shall pay to the BUILDER interest at the rate of six per cent (6%) per annum in respect of the instalment(s) in default from the respective DUE DATE to the date of actual receipt by the BUILDER of the full amount of such instalment(s).
41
(c)
If the BUYER is in default in payment of any of the instalment(s) due and payable prior to or simultaneously with the delivery of the VESSEL, the BUILDER shall, in writing or by facsimile or e-mail, notify the BUYER to that effect, and the BUYER shall, upon receipt of such notification, forthwith acknowledge in writing or by facsimile or e-mail to the BUILDER that such notification has been received.
(d)
If any of the BUYER’s default continues for a period of ten (10) days after the BUILDER’s notification to the BUYER of such default, the BUILDER may, at its option, rescind this CONTRACT by serving upon the BUYER a written notice or facsimile or e-mail notice of rescission confirmed in writing.
(e)
In the event of such cancellation by the BUILDER of this CONTRACT due to the BUYER’s default as provided for in paragraph 1 above, the BUILDER shall be entitled to retain and apply the instalments already paid by the BUYER to the recovery of the BUILDER’s loss and damage including, but not being limited to, reasonable estimated profit due to the BUYER’s default and the cancellation of this CONTRACT and at the same time the BUILDER shall have the full right and power either to complete or not to complete the VESSEL which is the sole property of the BUILDER as it deems fit, and to sell the VESSEL at a public or private sale on such terms and conditions as the BUILDER thinks fit without being answerable for any loss or damage but must take reasonable precautions to obtain the true market value of the VESSEL.
The proceeds received by the BUILDER from the sale shall be applied in addition to the instalment(s) retained by the BUILDER as mentioned hereinabove as follows:
First, in payment of all reasonable costs and expenses of the sale of the VESSEL, including interest thereon at six per cent (6%) per annum from the respective date of payment of such costs and expenses aforesaid to the date of sale on account of the BUYER’s default.
Second, if the VESSEL has been completed, in or towards satisfaction of the unpaid balance of the CONTRACT PRICE, to which shall be added the cost of all additional work and extras agreed by the BUYER including interest thereon at six per cent (6%) per annum from the respective DUE DATE of the instalment in default to the date of sale, or if the VESSEL has not been completed, in or towards satisfaction of the unpaid amount of the cost incurred by the BUILDER prior to the date of sale on account of construction of the VESSEL, including work, labour, materials and reasonably estimated profit which the BUILDER would have been entitled to receive if the VESSEL had been completed
42
and delivered plus interest thereon at six per cent (6%) per annum from the respective DUE DATE of the instalment in default to the date of sale.
Third, the balance of the proceeds, if any, shall belong to the BUYER, and shall forthwith be paid over to the BUYER by the BUILDER.
In the event of the proceeds from the sale together with instalment(s) retained by the BUILDER being insufficient to pay the BUILDER, the BUYER shall be liable for the deficiency and shall pay the same to the BUILDER upon its demand.
3.
DEFAULT BY THE BUILDER
The BUILDER shall be deemed to be in default under this CONTRACT ;
(i)
If the BUILDER shall apply for or consent to the appointment of a receiver, trustee or liquidator, shall be adjudicated insolvent, shall apply to the courts for protection from its creditors, file a voluntary petition in bankruptcy or take advantage of any insolvency law, or any action shall be taken by the BUILDER having an effect similar to any of the foregoing or the equivalent thereof in any jurisdiction or there is possibility of occurrence of any of foregoing events due to the BUILDER’s inability to pay its debts as they fall due.
(ii)
If the BUILDER, without reasonable excuse, suspends the commencement or progress of the construction of the VESSEL for a period of one hundred (100) days or more and the BUILDER has not rectified the same within fourteen (14) days of being notified by the BUYER of such delay.
(iii)
If the refund guarantee is not issued within thirty (30) days from the date of this CONTRACT or if the refund guarantee is not maintained in accordance with the terms and conditions of this CONTRACT and the BUILDER fails to provide the BUYER with a replacement refund guarantee from a first class bank acceptable to the BUYER (acting reasonably) .
In the event of such BUILDER’s default the BUYER may then cancel this CONTRACT by promptly notifying the BUILDER in writing but not later than two (2) weeks from the date the BUYER becomes aware of the BUILDER’s default. Such cancellation is to be effective as of the date when such notice of cancellation is received by the BUILDER.
(End of Article)
43
ARTICLE
XII : BUYER’S SUPPLIES
1.
RESPONSIBILITY
OF THE BUYER
The BUYER shall, at its cost and expense, supply all the BUYER’s supplies mentioned in the SPECIFICATIONS, if any, (hereinafter called the “BUYER’S SUPPLIES”), to the BUILDER at the SHIPYARD in perfect condition ready for installation and in accordance with the time schedule to be furnished by the BUILDER to meet the building schedule of the VESSEL.
In order to facilitate the installation of the BUYER’S SUPPLIES by the BUILDER, the BUYER shall furnish the BUILDER with the necessary plans, instruction books, test report and all test certificates required by the BUILDER and shall cause the representative(s) of the makers of the BUYER’S SUPPLIES to give the BUILDER any advice, instructions or assistance which the BUILDER may reasonably require in the installation or adjustment thereof at the SHIPYARD, all without cost or expense to the BUILDER.
The BUYER shall be liable for any expense incurred by the BUILDER for repair of the BUYER’S SUPPLIES due to defective design or materials, poor workmanship or performance or due to damage in transit and the DELIVERY DATE of the VESSEL shall be extended for the period of such repair if such repair shall affect the delivery of the VESSEL.
Commissioning into good order of the BUYER’S SUPPLIES during and after installation on board shall be made at the BUYER’s expense by the representative of respective maker of the person designated by the BUYER in accordance with the BUILDER’s building schedule.
Should the BUYER fail to deliver to the BUILDER the BUYER’S SUPPLIES and the necessary document or advice for such supplies within the time specified by the BUILDER, the DELIVERY DATE of the VESSEL shall automatically be extended for the period of such delay if such delay in delivery shall affect the delivery of the VESSEL. In such event, the BUYER shall pay to the BUILDER all losses and damages sustained by the BUILDER due to such delay in the delivery of the BUYER’S SUPPLIES and such payment shall be made upon delivery of the VESSEL, provided, however, that the BUILDER shall have :
(a)
furnished the BUYER with the time schedule referred to above, two (2) months prior to installation of the BUYER’S SUPPLIES and
(b)
given the BUYER written notice of any delay in delivery of the BUYER’S SUPPLIES and the necessary document or advice for such supplies as soon as the delay occurs which might give rise to a claim by the BUILDER under this Paragraph.
Furthermore, if the delay in delivery of the BUYER’S SUPPLIES and the necessary document or advice for such supplies should exceed ten (10) days from the date specified by the
44
BUILDER, the BUILDER shall be entitled to proceed with construction of the VESSEL without installation of such items (regardless of their nature or importance to the BUYER or the VESSEL) in or on the VESSEL without prejudice to the BUILDER’s right hereinabove provided, and the BUYER shall accept the VESSEL so completed.
2.
RESPONSIBILITY
OF THE BUILDER
The BUILDER shall be responsible for storing, safekeeping against weather and theft and handling the BUYER’S SUPPLIES, if any, which the BUILDER is required to install on board the VESSEL after delivery of such supplies to the SHIPYARD, and shall install such supplies on board the VESSEL at the BUILDER’s expense.
The BUILDER shall not be responsible for the quality, performance or efficiency of any equipment included in the BUYER’S SUPPLIES and is under no obligation with respect to the guarantee of such equipment against any defects caused by poor quality, performance or efficiency of the BUYER’S SUPPLIES. If any of the BUYER’S SUPPLIES is lost or damaged while in the custody of the BUILDER, the BUILDER shall, if the loss or damage is due to willful default or negligence on its part, be responsible for direct repair or correction.
(End of Article)
45
ARTICLE XIII : ARBITRATION
1.
DECISION BY THE CLASSIFICATION SOCIETY:
If any dispute arises between the parties hereto in regard to the design and/or construction of the VESSEL, its machinery and equipment, and/or in respect of the materials and/or workmanship thereof and/or thereon, and/or in respect of interpretations of this CONTRACT or the SPECIFICATIONS, the parties may by mutual agreement refer the dispute to the CLASSIFICATION SOCIETY or to such other expert as may be mutually agreed between the parties hereto, and whose decision shall be final, conclusive and binding upon the parties hereto.
2.
LAWS
APPLICABLE
Any arbitration arising hereunder shall be governed by and conducted in accordance with the Arbitration Act 1996 of England or any statutory modification or re-enactments thereof for the time being in force. The award of the arbitrator shall be final and binding upon parties hereto.
3.
PROCEEDINGS OF ARBITRATION:
In the event that the parties hereto do not agree to settle a dispute according to Paragraph 1 of this Article and/or in the event of any other dispute of any kind whatsoever between the parties and relating to this CONTRACT or its rescission or any stipulation herein, such dispute shall be submitted to arbitration in London. The proceedings of any arbitration shall be governed by the rules of the London Maritime Arbitrators Association. The parties shall try to agree a single arbitrator to conduct the arbitration.
If the parties cannot agree upon the appointment of the single arbitrator within two (2) weeks after one of the parties has given notice to the other party notifying that the other party to refer the dispute to arbitration, the dispute shall be settled by three arbitrators, each party appointing one arbitrator, the third being appointed by the London Maritime Arbitrators Association. If either of the appointed arbitrators refuses or is incapable of acting, the party who appointed him shall appoint a new arbitrator in his place.
If one party fails to appoint an arbitrator - either originally or by way of substitution - for two (2) weeks after the other party having appointed its arbitrator, has served the party making default with notice to make the appointment, the London Maritime Arbitrators
46
Association shall, after application from the party having appointed its arbitrator, also appoint an arbitrator on behalf of the party making default. The award of the arbitration made by the sole arbitrator or by the majority of the three arbitrators as the case may be shall be final, conclusive and binding upon the parties hereto.
4.
NOTICE OF AWARD:
The award shall immediately upon receipt be given to the BUYER and the BUILDER by telefax or e-mail to be confirmed by a registered letter via airmail directed to the each party.
5.
EXPENSES:
The Arbitrator or the Arbitration Board shall determine which party shall bear the expenses of the arbitration or the portion of such expenses which each party shall bear.
6.
ENTRY IN COURT:
In case of failure by either party to respect the award of the arbitration, the judgment may be entered in any proper court having jurisdiction thereof.
7
.
ALTERATION OF DELIVERY DATE:
In the event of reference to arbitration of any dispute arising out of matters occurring prior to delivery of the VESSEL, the award shall include any postponement of the DELIVERY DATE which the Arbitrator or the Arbitration Board may deem appropriate.
(End of Article)
47
ARTICLE
XIV : SUCCESSORS AND ASSIGNS
The BUILDER agrees that at any time prior to delivery of the VESSEL, this CONTRACT may, with the prior written approval of the BUILDER, which the BUILDER shall not unreasonably withhold, be transferred by the BUYER to (and the title thereof may be taken by) another company.
Further, the BUYER may assign its rights (but not its obligations) under this CONTRACT to a first class financial institution in order for the BUYER to obtain finance from such financial institution with prior notification to the BUILDER and its acknowledgement of receipt thereof.
In the event of any assignment by the BUYER pursuant to the terms of this CONTRACT the assignee (and the assignee’s successors and assigns) shall succeed to all the rights of the BUYER under this CONTRACT. However, the BUYER shall remain responsible for performance the BUYER’s obligations, liabilities and responsibilities under this CONTRACT.
It is understood that any expenses or changes incurred in connection with the transfer/ assignment of this CONTRACT by the BUYER shall be for the account of the BUYER.
The BUILDER shall have the right to assign its rights (but not its obligations) under this CONTRACT at any time after the effective date hereof, provided that prior written agreements is obtained from the BUYER which the BUYER shall not unreasonably withhold.
(End of Article)
48
ARTICLE
XV : TAXES AND DUTIES
1.
TAXES
Unless otherwise expressly provided for in this CONTRACT, all costs and taxes including stamp duties, if any, incurred in or levied by any country except Philippines in connection with this CONTRACT shall be borne by the BUYER and corresponding costs and taxes in Philippines, before delivery of the VESSEL, if any, shall be borne by the BUILDER.
2.
DUTIES
The BUILDER shall hold the BUYER harmless from any payment of duty imposed in Philippines upon materials or supplies which, under the terms of this CONTRACT, or amendments thereto, may be supplied by the BUYER from abroad for the construction of the VESSEL.
The BUILDER shall likewise hold the BUYER harmless from any payment of duty imposed in Philippines in connection with materials or supplies for operation of the VESSEL, including running stores, provisions and supplies necessary to stock the VESSEL for its operation. This indemnity does not, however, extend to any items purchased by the BUYER for use in connection with the VESSEL which are not absolutely required for the construction or operation of the VESSEL.
(End of Article)
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ARTICLE
XVI : PATENTS, TRADEMARKS AND COPYRIGHTS
1.
PATENTS,
TRADEMARKS AND COPYRIGHTS
Machinery and equipment of the VESSEL, whether made or furnished by the BUILDER under this CONTRACT, may bear the patent numbers, trademarks, or trade names of the manufacturers. The BUILDER shall defend and save harmless the BUYER from all liabilities or claims for or on account of the use of any patents, copyrights or design of any nature or kind, or for the infringement thereof including any unpatented invention made or used in the performance of this CONTRACT and also for any costs and expenses of litigation, if any in connection therewith. No such liability or responsibility shall be with the BUILDER with regard to components and/or equipment and/or design supplied by the BUYER.
Nothing contained herein shall be construed as transferring any patent or trademark rights or copyrights in equipment covered by this CONTRACT, and all such rights are hereby expressly reserved to the true and lawful owners thereof.
2.
RIGHTS
TO THE SPECIFICATIONS, PLANS, ETC.
The BUILDER retains all rights with respect to the SPECIFICATIONS, plans and working drawings, technical descriptions, calculations, test results and other data, information and documents concerning the design and construction of the VESSEL and the BUYER undertakes therefore not to disclose the same or divulge any information contained therein to any third parties, without the prior written consent of the BUILDER, excepting where it is necessary for usual operation, repair and maintenance of the VESSEL.
In case the BUYER requests the prior written consent of the BUILDER as set out in the above paragraph, the BUYER shall provide the BUILDER with a written undertaking from the recipient stating that (1) he acknowledge and shall observe the foregoing terms concerning the BUILDER’s right to confidential information and (2) any confidential information furnished in tangible form shall not be duplicated by recipient except for the purpose of the job specifically assigned to him. (3) Upon the completion of his job requiring reference to the confidential information, recipient shall return to the BUYER at his option or otherwise destroy all the confidential information received in written or tangible form including copies or reproductions or other media containing such confidential information. (4) Any documents or other media developed by the recipient containing confidential information shall be destroyed by the recipient.
(End of Article)
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ARTICLE XVII : COMPLIANCE AND ANTI-BRIBERY
1.
REPRESENTATIONS OF THE PARTIES
During the term of this CONTRACT, each party certifies and represents as follows:
(a)
It will comply with the laws of any jurisdiction applicable to such party as it relates to this CONTRACT, including but not limited to any applicable anti-corruption and anti-bribery laws, also including, without limitation, the United States Foreign Corrupt Practices Act (“US FCPA”), the UK Bribery Act 2010 (“UK Bribery Act”) and the anti-bribery or anti-corruption laws of
Philippines
as such laws may be amended from time to time.
(b)
In connection with this CONTRACT, it has not and will not make any payments or gifts or provide other advantages, or any offers or promises of payments or gifts or other advantages of any kind, directly or indirectly, to:
a.
any person or entity with the intention of obtaining or retaining a business advantage for itself or the other party to this CONTRACT;
b.
any official or member of any government or any agency or instrumentality thereof;
any official or member of any public international organisation or any agency or instrumentality thereof; any or official of a political party or any candidate for political office (herein ‘public official’); or any person while knowing or reasonably suspecting that all or a portion of such money or thing of value will be offered, given or promised, directly or indirectly, to any public official, in violation of the UK Bribery Act, the US FCPA or the laws of
Philippines
.
c.
In connection with this CONTRACT, it has not and will not request, agree to accept or accept from any person or entity any payments or gifts or other advantages, or any offers or promises of payments or gifts or other advantages of any kind, directly or indirectly, as a reward or inducement to perform its obligations under this CONTRACT in any way improperly.
2.
INDEMNIFICATION
Each party agrees that it will fully indemnify, defend and hold harmless the other party from any claims, liabilities, damages, expenses, penalties, judgments and losses (excluding
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punitive damages or indirect damages) assessed or resulting by reason of a due to a breach of the representations and undertakings contained in this Article XVII to the extent permitted by law.
(End of Article)
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ARTICLE XVIII : INSURANCE
(a)
Until delivery,
the VESSEL as well as all her equipment and accessories to be used therein shall be at the risk of the BUILDER and the BUILDER shall at its own expense insure the same from launching and items of BUYER’s supply from time to time delivered to the SHIPYARD until delivery of the VESSEL and while undergoing Acceptance Trials in accordance with the Trials Schedule against the usual marine perils. Such insurance shall be taken out with a first class insurance company with a credit rating acceptable to the BUYER (“Acceptable Insurer”) on terms corresponding to the Institute of London Underwriter’s Clauses for BUILDER’s risks, as amended to cover earthquakes. Such insurance shall be in an amount corresponding to the Value of Items of BUYER’s supply delivered as aforesaid together with whichever shall be the greater of:
(i)
the value of the items, all equipment and accessories supplied from time to time by the BUILDER and used therein; or
(ii)
the total of the instalments of the CONTRACT PRICE hereinafter mentioned already paid (together with interest thereon calculated at the rate of
six
per cent (
6
%) per annum from the respective dates on which such instalments have been paid).
(b)
Insurance shall be effected by the BUILDER with an Acceptable Insurer and the BUILDER shall provide the BUYER with a certified copy of all insurance policies on issue of same.
(c)
Should the VESSEL be damaged during construction or while undergoing acceptance Trials or otherwise and should such damage not constitute the VESSEL an actual total loss or constructive or arranged or compromised total loss this CONTRACT shall in no way be invalidated but the BUILDER shall at its own expense make good such damage to the satisfaction of the CLASSIFICATION SOCIETY and to the reasonable satisfaction of the BUYER.
(End of Article)
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ARTICLE
XIX : INTERPRETATION AND GOVERNING LAW
This
CONTRACT has been prepared in English and shall be executed in duplicate
and
in such number of additional copies as may be required by either party
respectively.
The parties hereto agree that the validity and interpretation of this
CONTRACT
and of each Article and part thereof shall be governed by the laws of
England.
(End of Article)
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ARTICLE
XX : NOTICE
Any
and all notices, requests, demands, instructions, advices and communications
in
connection with this CONTRACT shall be written in English, sent by e-mail or registered
air
mail or facsimile and shall be deemed to be given when first
received
whether by e-mail or registered mail or facsimile. They shall be
addressed
as follows, unless and until otherwise advised:
To the BUILDER :
HHIC-PHIL INC.
Green Beach 1, Redondo Peninsula,
Sito Agusuhin, Brgy. Cawag,
Subic, Zambales, the Philippines
Attn :
Contract Administration Team
Facsimile :
+ 63 47 252 2703
Telephone :
+ 63 47 306 5100 (Ext. 1290)
E-mail : cat-subic@hanjinsc.com
To the BUYER
:
The
said notices shall become effective upon receipt of e-mail or registered
air
mail or facsimile by the receiver thereof. Where a notice by e-mail or facsimile is concerned which is required to be confirmed by letter, then, unless
the
CONTRACT or the relevant Article thereof otherwise requires, the notice shall
become
effective upon receipt of the e-mail or facsimile.
(End of Article)
55
ARTICLE
XXI : EFFECTIVENESS OF THIS CONTRACT
This
CONTRACT shall become effective upon signing by the parties hereto.
(End of Article)
56
ARTICLE
XXII : EXCLUSIVENESS
This
CONTRACT shall constitute the only and entire agreement between the
parties
hereto, and unless otherwise expressly provided for in this CONTRACT, all
other
agreements, oral or written, made and entered into between the parties prior
to
the execution of this CONTRACT shall be null and void.
(End of Article)
57
IN WITNESS WHEREOF, the parties hereto have caused this CONTRACT to
be
duly executed in duplicate on the date and year first above written.
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BUYER
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BUILDER
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For
and on behalf of
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For and on behalf of
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BUYER:
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BUILDER:
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NAVIG8 CRUDE TANKERS INC
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HHIC-PHIL INC.
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By:
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/s/ Gary Brockelsby
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By:
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/s/ Young-Joon Jean
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Name:
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Gary Brockelsby
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Name:
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Young-Joon Jean
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Title:
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Attorney-in-Fact
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Title:
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Attorney-in-Fact
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WITNESS
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WITNESS
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By:
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/s/ Daniel Chu
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By:
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/s/ Sung Woon Moon
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Name:
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Daniel Chu
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Name:
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Sung Woon Moon
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Title:
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General Counsel
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Title:
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EXHIBIT “A”
LETTER OF GUARANTEE
Letter of Guarantee NO.:
Date : March , 2014
Gentlemen:
We hereby open our irrevocable letter of guarantee number in favour of NAVIG8 CRUDE TANKERS INC or its nominees (hereinafter called the “BUYER”) for account of HHIC-PHIL INC. (hereinafter called the “BUILDER”) as follows in connection with the shipbuilding contract dated March , 2014 (hereinafter called “CONTRACT”) made by and between the BUYER and the BUILDER for the construction of one (1) 300,000 DWT Class Crude Oil Carrier having the BUILDER’s Hull No. NTP0138 (hereinafter called the “VESSEL”).
If, in connection with the terms of the CONTRACT, whether so supplemented, amended, changed or modified, the BUYER shall become entitled to a refund of the advance payment made to the BUILDER prior to the delivery of the VESSEL, we hereby irrevocably guarantee the repayment of the same to the BUYER within twenty (20) days after demand not exceeding US$ 19,272,100.- (Say U.S. Dollars Nineteen Million Two Hundred Seventy Two Thousand One Hundred) together with interest thereon at the rate of six per cent (6%) per annum from the date following the date of receipt by the BUILDER to the date of remittance by telegraphic transfer of such refund.
The amount of this guarantee will be automatically increased upon the BUILDER’s receipt of the respective instalment, not more than three (3) times, each time by the amount of instalment plus interest thereon as provided in the CONTRACT, but in any eventuality the amount of this guarantee shall not exceed the total sum of US$ 48,180,250 (Say U.S. Dollars Forty Eight Million One Hundred Eighty Thousand Two Hundred Fifty only) plus interest thereon at the rate of six per cent (6%) per annum from the date following the date of the BUILDER’s receipt of each instalment to the date of remittance by telegraphic transfer of the refund. However, in the event of cancellation of the CONTRACT being based on delays due to Force Majeure or other causes beyond the control of the BUILDER, the interest rate of refund shall be reduced to four per cent (4%) per annum as provided in Article X of the CONTRACT.
This letter of guarantee is available (subject to the third paragraph hereof) against the BUYER’s first written demand and signed statement certifying that the BUYER’s demand for
59
refund has been made in conformity with Article X of the CONTRACT and the BUILDER has failed to make the refund within thirty (30) days after the Buyer’s demand. Refund shall be made to the Buyer by telegraphic transfer in United States Dollars.
In case any refund is made to the BUYER by the BUILDER or by us under this Letter of Guarantee, our liability hereunder shall be automatically reduced by the amount such refund.
It is hereby understood that payment of any interest provided herein is by way of liquidated damages due to cancellation of the CONTRACT and not by way of compensation for use of money.
Notwithstanding the provisions hereinabove, in the event that within thirty (30) days from the date of your claim to the BUILDER referred to above, we receive notification from you or the BUILDER accompanied by written confirmation to the effect that your claim to cancel the CONTRACT or your claim for refundment thereunder has been disputed and referred to arbitration in accordance with the provisions of the CONTRACT, we shall under this guarantee, refund to you the sum adjudged to be due to you by the BUILDER pursuant to the award made under such arbitration immediately upon receipt from you of a demand for the sums so adjudged and a copy of the award.
This letter of guarantee shall become null and void upon receipt by the BUYER of the sum guaranteed hereby or upon acceptance by the BUYER of the delivery of the VESSEL in accordance with the terms of the CONTRACT or rescission or termination of the CONTRACT due to the BUYER’s default in accordance with the CONTRACT and, in any case, this letter of guarantee shall be returned to us.
This letter of guarantee is assignable upon our receipt of your prior written notice and valid from the date of this letter of guarantee until such time as the VESSEL is delivered by the BUILDER to the BUYER in accordance with the provisions of the CONTRACT.
This guarantee shall be governed by and construed in accordance with the laws of England and the undersigned hereby submits to the non-exclusive jurisdiction of the courts of England.
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Very truly yours,
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for and on behalf of
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By
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Name :
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Title :
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60
EXHIBIT “B”
Messrs.
HHIC-PHIL
Green Beach 1, Redondo Peninsula,
Sito Agusuhin, Brgy. Cawag,
Subic, Zambales, the Philippines
Date: [ ] March 2014
PERFORMANCE GUARANTEE
Gentlemen,
In consideration of your executing a shipbuilding contract (hereinafter called the “CONTRACT”) dated March , 2014 with NAVIG8 CRUDE TANKERS INC or its nominees (hereinafter called the “BUYER”) providing for the design, construction, equipment, launch and delivery of one (1) 300,000 DWT Class Crude Oil Carrier having the BUILDER’s Hull No. NTP0138 (hereinafter called the “VESSEL”), and providing, among other things, for payment of the contract price amounting to United States Dollars Ninety Six Million Three Hundred Sixty Thousand Five Hundred only (US$ 96,360,500) for the VESSEL, prior to and upon delivery of the VESSEL, the undersigned, as a primary obligor and not as a merely surety, hereby unconditionally and irrevocably guarantees to you or your successors, the due and faithful performance by the BUYER of all its obligations under the CONTRACT and any supplements, amendments, changes or modifications hereinafter made thereto including but not limited to the prompt payment of the contract price, when due (whether on account of principal, interest or otherwise) by the BUYER to you or your successors under the CONTRACT, notwithstanding any obligation of the BUYER being or becoming unenforceable by defect in or want of its powers, (hereby expressly waiving notice of any such supplement, amendment, change or modification as may be agreed to by the BUYER) and confirms that this guarantee shall be fully applicable to the CONTRACT whether so supplemented, amended, changed or modified and if it shall be assigned by the BUYER in accordance with the terms of the CONTRACT. This guarantee will expire on the payment of the DELIVERY installment of the VESSEL as defined in the CONTRACT.
The undersigned hereby certifies, represents and warrants that all acts, conditions and things required to be done and performed and to have occurred precedent to the creation and issuance of this guarantee, and to constitute the guarantee the valid and legally binding obligation of the undersigned enforceable in accordance with its terms have been done and performed and have occurred in due and strict compliance with applicable laws.
The payment by the undersigned under this guarantee shall be made forthwith within thirty
61
(30) days upon receipt by us of written demand from you including a substantiated statement that the BUYER is in default of payment of the amounts (including, but not limited to, the instalment(s) payable prior to or upon delivery of the VESSEL) that were due under the CONTRACT, without requesting you to take any or further procedure or step against the BUYER. In the event that any withholding or deduction is imposed by any law, Article XV of the CONTRACT shall apply so that the undersigned will pay such additional amount as may be necessary in order that the actual amount received after deduction or withholding by virtue of any law outside Philippines shall equal to the amount that would have been received if such payment had been made by the BUYER.
Notwithstanding the provisions hereinabove, in the event that any of your request under the CONTRACT is disputed by the BUYER and referred to arbitration in accordance with the provisions of the CONTRACT and we receive notification of this from either you or the BUYER, we shall pay you within thirty (30) days from receipt of your written request together with a certified copy of the award ordering the payment by the BUYER to you of the sum due.
This guarantee shall be governed by and interpreted in accordance with the laws of England and the undersigned hereby submits to the non-exclusive jurisdiction of the Courts of England.
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Very truly yours,
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For and on behalf of
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By
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Name :
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Title :
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