PAGE | ||||||||
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Item 1. Financial Statements (Unaudited)
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3 | ||||||||
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4 | ||||||||
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5 | ||||||||
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6 | ||||||||
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7 | ||||||||
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25 | ||||||||
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38 | ||||||||
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40 | ||||||||
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41 | ||||||||
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45 | ||||||||
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Exhibit 4.18 |
Page 2 of 45
Page 3 of 45
Page 4 of 45
Page 5 of 45
Dropdown | PARTNERS EQUITY | |||||||||||||||||||||||||||
Predecessors | Limited Partners | General | ||||||||||||||||||||||||||
Equity | Common | Subordinated | Partner | Total | ||||||||||||||||||||||||
$ | Units | $ | Units | $ | $ | $ | ||||||||||||||||||||||
Balance as at December 31, 2007
|
1,118 | 22,540 | 454,459 | 14,735 | 227,133 | 26,582 | 709,292 | |||||||||||||||||||||
Net income
|
894 | | 20,256 | | 9,200 | 5,031 | 35,381 | |||||||||||||||||||||
Net change in parents equity in
Dropdown Predecessor
(notes 1
and 14)
|
224,366 | | | | | | 224,366 | |||||||||||||||||||||
Cash distributions
|
| | (46,000 | ) | | (21,696 | ) | (2,935 | ) | (70,631 | ) | |||||||||||||||||
Proceeds from follow-on public
offering of units, net of
offering costs of $6.2 million
(note 3)
|
| 7,114 | 198,345 | | | 4,174 | 202,519 | |||||||||||||||||||||
Re-investment tax credit received
(note 15)
|
| | 3,218 | | 2,104 | 109 | 5,431 | |||||||||||||||||||||
Equity based compensation
|
| | 186 | | 84 | 6 | 276 | |||||||||||||||||||||
Conversion of 25% of
subordinated units to common
(note 14)
|
| 3,684 | 46,040 | (3,684 | ) | (46,040 | ) | | | |||||||||||||||||||
Purchase of Teekay Nakilat (III)
Holdings Corporation
(note 10f)
|
| | (11,307 | ) | | (15,908 | ) | (977 | ) | (28,192 | ) | |||||||||||||||||
Purchase of Kenai LNG Carriers
from Teekay Corporation
(note
10j)
|
(226,378 | ) | | (1,305 | ) | | (2,203 | ) | (114 | ) | (230,000 | ) | ||||||||||||||||
|
||||||||||||||||||||||||||||
Balance as at September 30, 2008
|
| 33,338 | 663,892 | 11,051 | 152,674 | 31,876 | 848,442 | |||||||||||||||||||||
|
Page 6 of 45
Page 7 of 45
Fair Value at | ||||||||||||||||
September 30, | ||||||||||||||||
2008 Asset / | ||||||||||||||||
(Liability) | Level 1 | Level 2 | Level 3 | |||||||||||||
$ | $ | $ | $ | |||||||||||||
|
||||||||||||||||
Interest rate swap agreements assets
(1)
|
45,684 | | 45,684 | | ||||||||||||
Interest rate swap agreements liabilities
(1)
|
(90,530 | ) | | (90,530 | ) | | ||||||||||
Other derivatives
(2)
|
(27,230 | ) | | | (27,230 | ) |
(1) |
The fair value of the Partnerships interest rate swap agreements is the estimated amount that
the Partnership would receive or pay to terminate the agreements at the reporting date, taking
into account current interest rates and the current credit worthiness of both the Partnership and
the swap counterparties. The estimated amount is the present value of future cash flows. Given the
current volatility in the credit markets, it is reasonably possible that the amount recorded as
derivative assets and liabilities could vary by a material amount in the near term.
|
|
(2) |
The Partnerships other
derivative agreement is between Teekay Corporation and the
partnership and relates to hire payments under the time-charter contract for the
Toledo Spirit
(see Note 10m).
The fair value of this derivative agreement is the estimated amount that the Partnership would
receive or pay to terminate the agreement at the reporting date, based on the present value of
Partnerships projection of future spot market rates, which has been derived from current spot
market rates and long-term historical average rates.
|
Asset/(Liability) | ||||
$ | ||||
Fair value at December 31, 2007
|
(15,952 | ) | ||
Total unrealized losses reflected as a reduction of voyage revenues
|
(11,278 | ) | ||
|
||||
Fair value at September 30, 2008
|
(27,230 | ) | ||
|
Page 8 of 45
Three Months Ended September 30, | ||||||||||||||||||||||||
2008 | 2007 | |||||||||||||||||||||||
Liquefied | Suezmax | Liquefied | Suezmax | |||||||||||||||||||||
Gas | Tanker | Gas | Tanker | |||||||||||||||||||||
Segment | Segment | Total | Segment | Segment | Total | |||||||||||||||||||
$ | $ | $ | $ | $ | $ | |||||||||||||||||||
(restated) | (restated) | |||||||||||||||||||||||
|
||||||||||||||||||||||||
Voyage
revenues
(1)
|
57,668 | 20,538 | 78,206 | 43,239 | 19,678 | 62,917 | ||||||||||||||||||
Voyage expenses
|
189 | 426 | 615 | 73 | 244 | 317 | ||||||||||||||||||
Vessel operating expenses
|
10,776 | 6,724 | 17,500 | 7,977 | 5,958 | 13,935 | ||||||||||||||||||
Depreciation and amortization
|
14,310 | 4,795 | 19,105 | 11,490 | 5,011 | 16,501 | ||||||||||||||||||
General and administrative
(2)
|
2,361 | 1,806 | 4,167 | 1,663 | 1,868 | 3,531 | ||||||||||||||||||
|
||||||||||||||||||||||||
Income from vessel operations
|
30,032 | 6,787 | 36,819 | 22,036 | 6,597 | 28,633 | ||||||||||||||||||
|
Nine Months Ended September 30, | ||||||||||||||||||||||||
2008 | 2007 | |||||||||||||||||||||||
Liquefied | Suezmax | Liquefied | Suezmax | |||||||||||||||||||||
Gas | Tanker | Gas | Tanker | |||||||||||||||||||||
Segment | Segment | Total | Segment | Segment | Total | |||||||||||||||||||
$ | $ | $ | $ | $ | $ | |||||||||||||||||||
(restated) | (restated) | |||||||||||||||||||||||
|
||||||||||||||||||||||||
Voyage revenues
(1)
|
167,297 | 46,836 | 214,133 | 124,807 | 76,129 | 200,936 | ||||||||||||||||||
Voyage expenses
|
791 | 881 | 1,672 | 86 | 771 | 857 | ||||||||||||||||||
Vessel operating expenses
|
35,752 | 20,947 | 56,699 | 24,238 | 17,448 | 41,686 | ||||||||||||||||||
Depreciation and amortization
|
42,740 | 14,027 | 56,767 | 33,855 | 15,020 | 48,875 | ||||||||||||||||||
General and administrative
(2)
|
7,871 | 6,496 | 14,367 | 5,322 | 5,486 | 10,808 | ||||||||||||||||||
|
||||||||||||||||||||||||
Income from vessel operations
|
80,143 | 4,485 | 84,628 | 61,306 | 37,404 | 98,710 | ||||||||||||||||||
|
(1) |
Voyage revenues in the
Suezmax tanker segment includes unrealized mark-to-market gains
(losses) of the derivative liability relating to the agreement
between the partnership and Teekay Corporation for the
Toledo
Spirit
time charter contract (see Notes 10(m) and 11).
|
|
(2) |
Includes direct general and administrative expenses and indirect general and administrative
expenses (allocated to each segment based on estimated use of corporate resources).
|
Page 9 of 45
September 30,
2008 |
December 31,
2007 |
|||||||
$ | $ | |||||||
|
||||||||
Liquefied gas segment
|
3,667,156 | 3,298,495 | ||||||
Suezmax tanker segment
|
397,870 | 410,749 | ||||||
Unallocated:
|
||||||||
Cash and cash equivalents
|
59,731 | 91,891 | ||||||
Accounts receivable, prepaid expenses and other current assets
|
16,444 | 17,481 | ||||||
|
||||||||
Consolidated total assets
|
4,141,201 | 3,818,616 | ||||||
|
Year | Commitment | |||
2008
|
$ 6.0 million | |||
2009
|
$ 24.0 million | |||
2010
|
$ 24.0 million | |||
2011
|
$ 24.0 million | |||
2012
|
$ 4.0 million | |||
Thereafter
|
$ 977.1 million |
Year | Commitment | |||
2008
|
24.4 million Euros ($34.4 million) | |||
2009
|
25.7 million Euros ($36.1 million) | |||
2010
|
26.9 million Euros ($37.9 million) | |||
2011
|
64.8 million Euros ($91.4 million) |
Page 10 of 45
Year | Commitment | |||
2008
|
$ 6.1 million | |||
2009
|
$ 134.4 million | |||
2010
|
$ 8.4 million | |||
2011
|
$ 84.0 million |
September 30, | December 31, | |||||||
2008 | 2007 | |||||||
$ | $ | |||||||
|
||||||||
Gross carrying amount
|
182,552 | 182,552 | ||||||
Accumulated amortization
|
(38,465 | ) | (31,617 | ) | ||||
|
||||||||
Net carrying amount
|
144,087 | 150,935 | ||||||
|
September 30, | December 31, | |||||||
2008 | 2007 | |||||||
$ | $ | |||||||
|
||||||||
Liquefied Gas Segment
|
35,631 | 35,631 | ||||||
Suezmax Tanker Segment
|
| 3,648 | ||||||
|
||||||||
Total
|
35,631 | 39,279 | ||||||
|
Page 11 of 45
September 30, | December 31, | |||||||
2008 | 2007 | |||||||
$ | $ | |||||||
Advances to QGTC Nakilat (1643-6) Holdings Corporation (see Note 10f)
|
11,608 | 9,631 | ||||||
|
||||||||
|
||||||||
Advances from BLT LNG Tangguh Corporation (see Note 10e)
|
1,179 | 615 | ||||||
Advances from Qatar Gas Transport Company Ltd. (Nakilat)
|
43 | | ||||||
|
||||||||
Total advances from joint venture partners
|
1,222 | 615 | ||||||
|
September 30, | December 31, | |||||||
2008 | 2007 | |||||||
$ | $ | |||||||
|
||||||||
U.S. Dollar-denominated Revolving Credit Facilities due through 2018
|
155,000 | 10,000 | ||||||
U.S. Dollar-denominated Term Loan due through 2019
|
427,747 | 446,435 | ||||||
U.S. Dollar-denominated Term Loan due through 2020
|
875,822 | | ||||||
U.S. Dollar-denominated Term Loan due through 2020
(1)
|
| 600,990 | ||||||
U.S. Dollar-denominated Term Loan due through 2021
(1)
|
280,789 | 207,148 | ||||||
U.S. Dollar-denominated Unsecured Loan
(1)
|
1,144 | 1,144 | ||||||
U.S. Dollar-denominated Unsecured Demand Loan
|
16,007 | 16,002 | ||||||
Euro-denominated Term Loans due through 2023
|
420,570 | 443,992 | ||||||
|
||||||||
Total
|
2,177,079 | 1,725,711 | ||||||
Less current portion
|
73,687 | 36,844 | ||||||
Less current portion (newbuilding vessel financing)
(1)
|
52,200 | 34,665 | ||||||
|
||||||||
Total
|
2,051,192 | 1,654,202 | ||||||
|
(1) |
As at September 30, 2008, long-term debt related to newbuilding vessels to be delivered was
$281.9 million (December 31, 2007 $809.3 million) (see Note 12a).
|
Page 12 of 45
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
$ | $ | $ | $ | |||||||||||||
(restated) | (restated) | |||||||||||||||
Income tax recovery (expense)
|
336 | 195 | 248 | (1,222 | ) | |||||||||||
Equity income (loss)
|
278 | (29 | ) | (1,413 | ) | (93 | ) | |||||||||
Miscellaneous
|
(129 | ) | (33 | ) | 963 | (97 | ) | |||||||||
|
||||||||||||||||
|
||||||||||||||||
Other income (loss) net
|
485 | 133 | (202 | ) | (1,412 | ) | ||||||||||
|
Page 13 of 45
Page 14 of 45
Page 15 of 45
Fair Value / | ||||||||||||||||||||
Carrying | ||||||||||||||||||||
Amount of | Weighted- | |||||||||||||||||||
Interest | Principal | Asset | Average | Fixed | ||||||||||||||||
Rate | Amount | (Liability) | Remaining Term | Interest Rate | ||||||||||||||||
Index | $ | $ | (years) | (%) (1) | ||||||||||||||||
LIBOR-Based Debt:
|
||||||||||||||||||||
U.S.
Dollar-denominated
interest rate
swaps
(2)
|
LIBOR | 485,396 | (17,998 | ) | 28.3 | 4.9 | ||||||||||||||
U.S.
Dollar-denominated
interest rate swaps
|
LIBOR | 227,315 | (29,995 | ) | 10.5 | 6.2 | ||||||||||||||
U.S.
Dollar-denominated
interest rate
swaps
(3)
|
LIBOR | 400,000 | (21,518 | ) | 7.4 | 5.0 | ||||||||||||||
U.S.
Dollar-denominated
interest rate
swaps
(4)
|
LIBOR | 350,000 | (21,019 | ) | 16.7 | 5.2 | ||||||||||||||
LIBOR-Based Restricted
Cash Deposit:
|
||||||||||||||||||||
U.S.
Dollar-denominated
interest rate
swaps
(2)
|
LIBOR | 478,077 | 19,083 | 28.3 | 4.8 | |||||||||||||||
EURIBOR-Based Debt:
|
||||||||||||||||||||
Euro-denominated
interest rate
swaps
(5)
|
EURIBOR | 420,570 | 26,601 | 15.7 | 3.8 |
(1) |
Excludes the margins the Partnership pays on its floating-rate debt, which, at September
30, 2008, ranged from 0.3% to 0.9% (see Note 8).
|
|
(2) |
Principal amount reduces quarterly commencing upon delivery of each LNG newbuilding
financed with the indebtedness.
|
|
(3) |
Interest rate swaps held in Teekay Nakilat (III) of $400.0 million.
|
|
(4) |
Interest rate swaps held in Teekay Tangguh, a variable interest entity of which the
Partnership is the primary beneficiary (see Note 12a).
|
|
(5) |
Principal amount reduces monthly to 70.1 million Euros ($110.4 million) by the maturity
dates of the swap agreements.
|
Page 16 of 45
September 30, | December 31, | |||||||
2008 | 2007 | |||||||
$ | $ | |||||||
ASSETS
|
||||||||
Cash and cash equivalents
|
21,355 | 54,711 | ||||||
Advances on newbuilding contracts
|
354,512 | 240,773 | ||||||
Investment in and advances to joint venture
|
| 693,242 | ||||||
Advances to joint venture partner
|
| 9,631 | ||||||
Other assets
|
6,541 | 9,465 | ||||||
|
||||||||
Total assets
|
382,408 | 1,007,822 | ||||||
|
||||||||
LIABILITIES AND SHAREHOLDERS EQUITY
|
||||||||
Accounts payable
|
55 | 173 | ||||||
Accrued liabilities
|
3,579 | 4,799 | ||||||
Advances from affiliates and joint venture partners
|
37,444 | 23,961 | ||||||
Long-term debt relating to newbuilding vessels to be delivered
|
281,933 | 809,282 | ||||||
Other long-term liabilities
|
17,671 | 28,211 | ||||||
|
||||||||
Total liabilities
|
340,682 | 866,426 | ||||||
Non-controlling interest
|
18,615 | 20,364 | ||||||
Total shareholders equity
|
23,111 | 121,032 | ||||||
|
||||||||
Total liabilities and shareholders equity
|
382,408 | 1,007,822 | ||||||
|
Page 17 of 45
|
Right to receive distribution of available cash within approximately 45 days after the
end of each quarter.
|
||
|
No limited partner shall have any management power over the Partnerships business and
affairs; the General Partner shall conduct, direct and manage our activities.
|
||
|
The General Partner may be removed if such removal is approved by unitholders holding
at least 66-2/3% of the outstanding units voting as a single class, including units held
by our General Partner and its affiliates.
|
Quarterly Distribution Target Amount (per unit) | Unitholders | General Partner | ||||||
Minimum quarterly distribution of $0.4125
|
98 | % | 2 | % | ||||
Up to $0.4625
|
98 | % | 2 | % | ||||
Above $0.4625 up to $0.5375
|
85 | % | 15 | % | ||||
Above $0.5375 up to $0.65
|
75 | % | 25 | % | ||||
Above $0.65
|
50 | % | 50 | % |
Page 18 of 45
|
One of the requirements of SFAS No. 133 is that hedge accounting is appropriate only for
those hedging relationships that a company expects will be highly effective in achieving
offsetting changes in fair value or cash flows attributable to the risk being hedged. To
determine whether transactions satisfy this requirement, entities must periodically assess
the effectiveness of hedging relationships both prospectively and retroactively. Based on
the Partnerships review, the Partnership concluded that the prospective hedge
effectiveness assessment that was conducted for certain of its interest rate swaps on the
date of designation was not sufficient to conclude that the interest rate swaps would be
highly effective, in accordance with the technical requirements of SFAS No. 133, in
achieving offsetting changes in cash flows attributable to the risk being hedged.
|
||
|
To conclude that hedge accounting is appropriate, another requirement of SFAS No. 133 is
that hedge documentation should specify the method that will be used to assess,
retroactively and prospectively, the hedging instruments effectiveness, and the method
that will be used to measure hedge ineffectiveness. Documentation for certain of the
Partnerships interest rate swaps did not clearly specify the method to be used to measure
hedge ineffectiveness.
|
Page 19 of 45
|
Certain of the Partnerships derivative instruments were designated as hedges when the
derivative instruments had a non-zero fair value. However, this designation was not
appropriate as the Partnership used certain methods of measuring ineffectiveness that are
not allowed in the case of non-zero fair value derivatives.
|
||
|
One of the Partnerhips Suezmax tankers, the Toledo Spirit, operates pursuant to a
time-charter contract that increases or decreases the fixed rate established in the charter
depending on the spot charter rates that the Partnership would have earned had it traded
the vessel in the spot tanker market. The Partnership had entered into an agreement with
Teekay Corporation under which Teekay Corporation pays the Partnership any amounts payable
to the charterer as a result of spot rates being below the fixed rate, and the Partnership
pays Teekay Corporation any amounts payable to the Partnership from the charterer as a
result of spot rates being in excess of the fixed rate. Prior to April 2007, this agreement
with Teekay Corporation was not accounted for as a derivative agreement subject to the
provisions of SFAS No. 133, and after April 2007, the
agreement did not meet the criteria to be accounted for as a cash
flow hedge.
|
Page 20 of 45
Net Income (Loss) | Partners/Dropdown | |||||||||||
Three Months Ended | Nine Months Ended | Predecessors Equity At | ||||||||||
September 30, | September 30, | December 31, | ||||||||||
2007 | 2007 | 2006 | ||||||||||
$ | $ | $ | ||||||||||
As Previously Reported
|
(12,779 | ) | (8,916 | ) | 718,497 | |||||||
Adjustments:
|
||||||||||||
Derivative Instruments
|
(8,372 | ) | 36,844 | (30,088 | ) | |||||||
Dropdown Predecessor
(1)
|
| | 19,740 | |||||||||
Other
|
(483 | ) | (1,672 | ) | (4,959 | ) | ||||||
|
||||||||||||
As Restated
|
(21,634 | ) | 26,256 | 703,190 | ||||||||
|
(1) |
Relates to the results for the pre-acquisition period from April 1, 2003 to December 31, 2006
in which the Partnership and the acquired interests in vessel (the
Dania Spirit
) were both under
the common control of Teekay Corporation.
|
Page 21 of 45
Page 22 of 45
Page 23 of 45
Page 24 of 45
Three Months Ended | Nine Months Ended | |||||||
September 30,
2007 |
September 30,
2007 |
|||||||
$ | $ | |||||||
Net loss, as previously reported
|
(12,779 | ) | (8,916 | ) | ||||
Adjustments:
|
||||||||
Derivative Instruments
|
(8,372 | ) | 36,844 | |||||
Other
|
(483 | ) | (1,672 | ) | ||||
|
||||||||
Net (loss) income, as restated
|
(21,634 | ) | 26,256 | |||||
|
Page 25 of 45
|
Our financial results reflect the results of the interest in vessels acquired from
Teekay Corporation in all periods the vessels were under common control.
In April 2008, we
acquired interests in the two Kenai LNG Carriers, the
Arctic Spirit
and the
Polar Spirit
,
from Teekay Corporation and related long-term, fixed-rate time-charter contracts.
|
||
This transaction was deemed to be a business acquisition between entities under common
control. Accordingly, we have accounted for these transactions in a manner similar to the
pooling of interest method whereby our financial statements prior to the date the interests
in these vessels were acquired by us are retroactively adjusted to include the results of
these acquired vessels. The periods retroactively adjusted include all periods that we and
the acquired vessels were under the common control of Teekay Corporation and had begun
operations. As a result, our statement of income (loss) for the six months ended June 30,
2008 reflects the results of operations of these two vessels, referred to herein as the
Dropdown Predecessor
, as if we had acquired them when each respective vessel began
operations under the ownership of Teekay Corporation on December 13 and 14, 2007.
|
Page 26 of 45
|
Our financial results reflect the consolidation of Teekay Tangguh, Teekay Nakilat (III),
and the Skaugen Multigas Carriers prior to our purchase of interests in those entities.
On
November 1, 2006, we entered into an agreement with Teekay Corporation to purchase (a) its
100% interest in Teekay Tangguh Holdings Corporation (or
Teekay Tangguh
), which owns a 70%
interest in Teekay BLT Corporation (or the
Teekay Tangguh Joint Venture
), and (b) its 100%
interest in Teekay Nakilat (III), which owns a 40% interest in the RasGas 3 Joint Venture.
The Teekay Tangguh Joint Venture owns two LNG newbuildings (or the
Tangguh LNG Carriers
)
and related 20-year time charters. RasGas 3 Joint Venture owns the RasGas 3 LNG Carriers
and the related 25-year time charters. We acquired the interests in
RasGas 3 Joint Venture in the second quarter of 2008, and are required
to purchase the interests in the Teekay Tangguh Joint Venture in
2009. We have been required to consolidate Teekay Tangguh in our
consolidated financial statements since November 1, 2006, as this entity is a variable
interest entity and we are its
primary beneficiary; we likewise consolidated in our financial statements Teekay Nakilat
(III) as a variable interest entity of which we were the primary beneficiary from November
1, 2006 until we purchased it on May 6, 2008, as described above. After this purchase,
Teekay Nakilat (III) was no longer a variable interest entity and we now equity account for
Teekay Nakilat (III)s investment in the RasGas 3 Joint Venture in our consolidated
financial statements. On July 28, 2008, Teekay Corporation
signed contracts for the purchase of two
Skaugen Multigas Carriers from subsidiaries of Skaugen. We have agreed to acquire the
companies that own the Skaugen Multigas Carriers from Teekay Corporation upon delivery of
the vessels. We have consolidated these ship-owning companies in our financial statements as
variable interest entities as we are the primary beneficiary. Please read Item 1 Financial
Statements: Notes 10(e), 10(f), and 10(l) Related Party Transactions and Note 12(a)
Commitments and Contingencies.
|
||
We are seeking to purchase
Teekay Corporations interest in the Tangguh LNG Joint Venture in May
2009; however, we are also seeking to structure the project in a tax efficient manner and have
requested a ruling from the U.S. Internal Revenue Service related to
the type of structure we would use for this project. We do not
intend to complete the purchase until we obtain a favorable ruling, which we anticipate receiving in the
coming months. If we do not receive a favorable ruling, we would (i) seek to restructure the project, which may
provide us less benefit than we
originally anticipated or (ii) require certain tax elections to
be made by unitholders in order to avoid adverse tax consequences. If
any of these alternatives are not satisfactory to us, we may not acquire Teekay Corporations interest
in the Tangguh LNG Joint Venture. If the possibility of our not acquiring the interests in the Tangguh LNG Joint
Venture becomes more than remote, we may no longer account for the entity as a variable interest
entity, and we may need to reconsider our current accounting of the entity.
|
|
The size of our fleet
will change.
Our historical results of operations reflect changes
in the size and composition of our fleet due to certain vessel deliveries. Please read
Liquefied Gas Segment below for further details about certain prior and future vessel
deliveries.
|
||
|
One of our Suezmax tankers earns revenues based partly on spot market rates.
The time
charter for one Suezmax tanker, the
Teide Spirit
, contains a component providing for
additional revenues to us beyond the fixed hire rate when spot market rates exceed a
certain threshold amount in order to avoid adverse tax consequences. Accordingly, even though declining spot market rates will not
result in our receiving less than the fixed hire rate, our results may continue to be
influenced, in part, by the variable component of the
Teide Spirit
charter.
|
||
|
Our vessel operating costs are facing industry-wide cost pressures.
The shipping
industry is experiencing a global manpower shortage due to significant growth in the world
fleet. This shortage resulted in crewing wage inflation during 2007 and 2008, the effect of
which is included in the Results of Operations. We expect a trend of increasing crew
compensation during 2009.
|
|
As discussed above, on May 6, 2008 we acquired Teekay Corporations 40% interest in the
RasGas 3 Joint Venture. Please read Item 1 Financial
Statements: Note 10(f) Related
Party Transactions. All four RasGas 3 LNG Carriers have been delivered.
|
||
|
We have agreed to acquire
from Teekay Corporation its 70% interest in the Teekay Tangguh Joint
Venture, which owns the two newbuilding Tangguh LNG Carriers and the
related 20-year, fixed-rate time charters to service the Tangguh LNG
project in Indonesia. The purchase is anticipated to occur on
May 14, 2009. The estimated purchase price (net of assumed debt)
for Teekay Corporations 70% interest in the Teekay Tangguh
Joint Venture is $85 million, which will depend upon the total
construction cost of the vessels. Please read Item 1 Financial
Statements: Note 10(e) Related Party Transactions and
Note 12(a) Commitments and Contingencies.
|
||
|
We have agreed to acquire upon delivery three LPG carriers (or the
Skaugen LPG Carriers
)
from Skaugen for approximately $33.7 million per vessel. The
purchase price may be adjusted if the deliveries are delayed. The vessels are currently under
construction and are scheduled to be delivered between early 2009 and mid-2010. Please read Item
1 Financial Statements: Note 12(b) Commitments and Contingencies.
|
||
|
As discussed above, we agreed to acquire upon delivery the Skaugen Multigas Carriers
from Teekay Corporation for a total cost of approximately $94 million. The vessels are
scheduled to be delivered during the second half of 2010. Please read item 1 Financial
Statements: Note 10(l) Related Party Transactions.
|
||
|
As discussed above, Teekay Corporation is required to offer to us its 33% ownership
interest in the consortium relating to the Angola LNG Project not later than 180 days
before delivery of the related four newbuilding LNG carriers. Please read Item 1
Financial Statements: Note 16 Other Information.
|
Page 27 of 45
(in thousands of U.S. dollars, except revenue days, calendar-ship-days and percentages) | Three Months Ended September 30, | |||||||||||
2008 | 2007 | % Change | ||||||||||
$ | $ | |||||||||||
Voyage revenues
|
57,668 | 43,239 | 33.4 | |||||||||
Voyage expenses
|
189 | 73 | 158.9 | |||||||||
Net voyage revenues
|
57,479 | 43,166 | 33.2 | |||||||||
Vessel operating expenses
|
10,776 | 7,977 | 35.1 | |||||||||
Depreciation and amortization
|
14,310 | 11,490 | 24.5 | |||||||||
General and administrative
(1)
|
2,361 | 1,663 | 42.0 | |||||||||
Income from vessel operations
|
30,032 | 22,036 | 36.3 | |||||||||
Operating Data:
|
||||||||||||
Revenue Days (A)
|
920 | 705 | 30.5 | |||||||||
Calendar-Ship-Days (B)
|
920 | 736 | 25.0 | |||||||||
Utilization (A)/(B)
|
100.0 | % | 95.8 | % |
(in thousands of U.S. dollars, except revenue days, calendar-ship-days and percentages) | Nine Months Ended September 30, | |||||||||||
2008 | 2007 | % Change | ||||||||||
|
||||||||||||
Voyage revenues
|
167,297 | 124,807 | 34.0 | |||||||||
Voyage expenses
|
791 | 86 | 819.8 | |||||||||
Net voyage revenues
|
166,506 | 124,721 | 33.5 | |||||||||
Vessel operating expenses
|
35,752 | 24,238 | 47.5 | |||||||||
Depreciation and amortization
|
42,740 | 33,855 | 26.2 | |||||||||
General and administrative
(1)
|
7,871 | 5,322 | 47.9 | |||||||||
Income from vessel operations
|
80,143 | 61,306 | 30.7 | |||||||||
Operating Data:
|
||||||||||||
Revenue Days (A)
|
2,670 | 2,054 | 30.0 | |||||||||
Calendar-Ship-Days (B)
|
2,740 | 2,126 | 28.9 | |||||||||
Utilization (A)/(B)
|
97.4 | % | 96.6 | % |
(1) |
Includes direct general and administrative expenses and indirect general and administrative
expenses allocated to each segment based on estimated use of corporate resources.
|
|
increases of $10.1 million and $29.2 million for the three and nine months ended
September 30, 2008 from the purchase of the two Kenai LNG Carriers on April 1, 2008;
|
||
|
increases of $2.1 million and $7.5 million for the three and nine months ended
September 30, 2008, due to the effect on our Euro-denominated revenues from the
strengthening of the Euro against the U.S. Dollar during such periods compared to the
same periods last year;
|
||
|
an increase of $6.0 million for the nine months ended September 30, 2008 due to the
2007 RasGas II Deliveries during the first quarter of 2007;
|
||
|
a relative increase of $2.0 million for the three and nine months ended September
30, 2008, due to the
Hispania Spirit
being off-hire 30.8 days for a scheduled drydock
for the three and nine months ended September 30, 2007; and
|
Page 28 of 45
|
an increase of $0.5 million for the nine months ended September 30, 2008, due to
the
Madrid Spirit
being off-hire 7 days for repairs for the nine months ended
September 30, 2007;
|
|
a relative decrease of $3.1 million for the nine months ended September 30, 2008,
due to the
Catalunya Spirit
being off-hire for 34.3 days during the first six months
of 2008 for a scheduled drydock; and
|
||
|
a relative decrease of $0.3 million for the nine months ended September 30, 2008,
due to the
Dania Spirit
being off-hire for 15.5 days during the second quarter of 2008
for a scheduled drydock.
|
|
increases of $2.1 million and $8.3 million for the three and nine months ended
September 30, 2008 from the purchase of the two Kenai LNG Carriers on April 1, 2008
|
||
|
increases of $0.5 million and $1.8 million for the three and nine months ended
September 30, 2008, due to the effect on our Euro-denominated vessel operating
expenses from the strengthening of the Euro against the U.S. Dollar during such
periods compared to the same periods last year (a majority of our vessel operating
expenses are denominated in Euros, which is primarily a function of the nationality of
our crew; our Euro-denominated revenues currently generally approximate our
Euro-denominated expenses and Euro-denominated loan and interest payments);
|
||
|
increases of $0.6 million and $1.0 million for the three and nine months ended
September 30, 2008, due to the Dania Spirit being off-hire for 15.5 days during the
second quarter of 2008 for a scheduled drydock; and
|
||
|
increases of $0.1 million and $0.5 million for the three and nine months ended
September 30, 2008, relating to higher crew manning and repairs and maintenance costs;
|
|
a relative decrease of $0.8 million for the nine months ended September 30, 2008,
relating to the cost of the repairs completed on the
Madrid Spirit
during the second
quarter of 2007 net of estimated insurance recoveries.
|
(in thousands of U.S. dollars, except revenue days, calendar- | Three Months Ended September 30, | |||||||||||
ship-days and percentages) | 2008 | 2007 | % Change | |||||||||
(restated) | (restated) | |||||||||||
Voyage revenues
|
20,538 | 19,678 | 4.4 | |||||||||
Voyage expenses
|
426 | 244 | 74.6 | |||||||||
Net voyage revenues
|
20,112 | 19,434 | 3.5 | |||||||||
Vessel operating expenses
|
6,724 | 5,958 | 12.9 | |||||||||
Depreciation and amortization
|
4,795 | 5,011 | (4.3 | ) | ||||||||
General and administrative
(1)
|
1,806 | 1,868 | (3.3 | ) | ||||||||
(Loss) income from vessel operations
|
6,787 | 6,597 | 2.9 | |||||||||
Operating Data:
|
||||||||||||
Revenue Days (A)
|
736 | 736 | | |||||||||
Calendar-Ship-Days (B)
|
736 | 736 | | |||||||||
Utilization (A)/(B)
|
100.0 | % | 100.0 | % |
Page 29 of 45
(in thousands of U.S. dollars, except revenue days, calendar- | Nine Months Ended September 30, | |||||||||||
ship-days and percentages) | 2008 | 2007 | % Change | |||||||||
(restated) | (restated) | |||||||||||
|
||||||||||||
Voyage revenues
|
46,836 | 76,129 | (38.5 | ) | ||||||||
Voyage expenses
|
881 | 771 | 14.3 | |||||||||
Net voyage revenues
|
45,955 | 75,358 | (39.0 | ) | ||||||||
Vessel operating expenses
|
20,947 | 17,448 | 20.1 | |||||||||
Depreciation and amortization
|
14,027 | 15,020 | (6.6 | ) | ||||||||
General and administrative
(1)
|
6,496 | 5,486 | 18.4 | |||||||||
Income from vessel operations
|
4,485 | 37,404 | (88.0 | ) | ||||||||
|
||||||||||||
Operating Data:
|
||||||||||||
Revenue Days (A)
|
2,142 | 2,184 | (1.9 | ) | ||||||||
Calendar-Ship-Days (B)
|
2,192 | 2,184 | 0.4 | |||||||||
Utilization (A)/(B)
|
97.7 | % | 100.0 | % |
(1) |
Includes direct general and administrative expenses and indirect general and administrative
expenses allocated to each segment based on estimated use of corporate resources.
|
|
an increase of $1.5 million and a decrease of $24.9 million for the three and nine
months ended September 30, 2008, relating to the change in fair value of a derivative
relating to the agreement between us and Teekay Corporation for the
Toledo Spirit
time charter contract (we have not designated this derivative as a hedge and as such
the change in fair value is reflected in voyage revenues in our consolidated
statements of (loss) income) (please read Item 1 Financial Statements: Note 11
Derivative Instruments);
|
||
|
decreases of $0.1 million and $2.0 million for the three and nine months ended
September 30, 2008, relating to revenues earned by the
Teide Spirit
;
|
||
|
decreases of $0.7 million and $1.3 million for the three and nine months ended
September 30, 2008, due to interest-rate adjustments to the daily charter rates under
the time charter contracts for five Suezmax tankers (however, under the terms of these
capital leases, we had corresponding decreases in our lease payments, which are
reflected as decreases to interest expense; therefore, these and future interest rate
adjustments do not and will not affect our cash flow or net income);
|
||
|
a decrease of $0.7 million for the nine months ended September 30, 2008, due to the
African Spirit
being off-hire for 26 days during 2008 for a scheduled drydock; and
|
||
|
a decrease of $0.6 million for the nine months ended September 30, 2008, due to the
European Spirit
being off-hire for 24 days during 2008 for a scheduled drydock.
|
|
increases of $0.5 million and $1.8 million for the three and nine months ended
September 30, 2008, relating to higher crew manning, insurance, and repairs and
maintenance costs; and
|
||
|
increases of $0.3 million and $1.6 million for the three and nine months ended
September 30, 2008, due to the effect on our Euro-denominated vessel operating
expenses from the strengthening of the Euro against the U.S. Dollar during such period
compared to the same periods last year (a majority of our vessel operating expenses
are denominated in Euros, which is primarily a function of the nationality of our
crew; our Euro-denominated revenues currently generally approximate our
Euro-denominated expenses and Euro-denominated loan and interest payments).
|
Page 30 of 45
|
a decrease of $11.9 million for the three months ended September 30, 2008, relating
to the change in fair value of our interest rate swaps (please read Item 1 Financial
Statements: Note 11 Derivative Instruments);
|
|
decreases of $1.4 million and $2.7 million for the three and nine months ended
September 30, 2008, from declining interest rates on our five Suezmax tanker capital
lease obligations (however, as described above, under the terms of the time charter
contracts for these vessels, we received corresponding decreases in charter payments,
which are reflected as a decrease to voyage revenues);
|
|
decreases of $1.0 million and $2.4 million, respectively, for the three and nine
months ended September 30, 2008, from the scheduled loan payments on the
Catalunya
Spirit
, and scheduled capital lease repayments on the
Madrid Spirit
(the
Madrid Spirit
is financed pursuant to a Spanish tax lease arrangement, under which we borrowed under
a term loan and deposited the proceeds into a restricted cash account and entered into
a capital lease for the vessel; as a result, this decrease in interest expense from
the capital lease is offset by a corresponding decrease in the interest income from
restricted cash);
|
|
decreases of $0.3 million and $0.5 million for the three and nine months ended
September 30, 2008, relating to the increase in capital lease obligations in
connection with the delivery of the RasGas II LNG Carriers;
|
|
an increase of $49.9 million for the nine months ended September 30, 2008, relating
to the change in fair value of our interest rate swaps (please read Item 1 Financial
Statements: Note 11 Derivative Instruments);
|
|
increases of $1.9 million and $7.8 million for the three and nine months ended
September 30, 2008, relating to debt of Teekay Nakilat (III) used by the RasGas 3
Joint Venture to fund shipyard construction installment payments (as indicated below,
this increase in interest expense is offset by a corresponding increase in interest
income from advances to the joint venture);
|
|
increases of $1.1 million and $3.1 million for the three and nine months ended
September 30, 2008 relating to debt incurred to finance the acquisition of the Kenai
LNG Carriers;
|
|
increases of $0.8 million and $3.0 million for the three and nine months ended
September 30, 2008, due to the effect on our Euro-denominated debt from the
strengthening of the Euro against the U.S. Dollar during such period compared to the
same period last year; and
|
|
increases of $0.4 million and $0.9 million for the three and nine months ended
September 30, 2008, due to amortization of loan costs.
|
|
increases of $24.6 million for the nine months ended September 30, 2008 relating to
the change in fair value of our non-designated RasGas II defeasance deposit interest
rate swaps (please read Item 1 Financial Statements: Note 11 Derivative
Instruments);
|
|
increases of $0.6 million and $4.4 million for the three and nine months ended
September 30, 2008, relating to interest-bearing advances made
by us to the RasGas 3 Joint Venture for shipyard construction installment payments;
|
|
increases of $0.4 million for the nine months ended September 30, 2008, relating to
the interest earned on the refund of a re-investment tax credit received in the second
quarter of 2008;
|
Page 31 of 45
|
increases of $0.2 million and $0.8 million for the three and nine months ended
September 30, 2008, due to the effect on our Euro-denominated deposits from the
strengthening of the Euro against the U.S. Dollar during such period compared to the
same period last year;
|
|
decreases of $9.5 million for the three months ended September 30, 2008 relating to
the change in fair value of our non-designated RasGas II defeasance deposit interest
rate swaps (please read Item 1 Financial Statements: Note 11 Derivative
Instruments);
|
|
decreases of $0.4 million and $2.2 million for the three and nine months ended
September 30, 2008, relating to a decrease in restricted cash used to fund capital
lease payments for the RasGas II LNG Carriers.
|
Page 32 of 45
Nine Months Ended September 30, | ||||||||
(in thousands of U.S. dollars) | 2008 | 2007 | ||||||
(restated) | ||||||||
|
||||||||
Net cash flow from operating activities
|
89,300 | 81,406 | ||||||
Net cash flow from financing activities
|
343,520 | 595,459 | ||||||
Net cash flow from investing activities
|
(464,980 | ) | (665,260 | ) |
|
a change in our quarterly distribution from $0.53 per unit in the third quarter of 2007
to $0.57 per unit in the third quarter of 2008; and
|
|
an increase in the number of units eligible to receive the cash distribution as a result
of the public offering and private placement of common units during the second quarter of
2008.
|
Page 33 of 45
Page 34 of 45
|
incurring or guaranteeing indebtedness;
|
|
changing ownership or structure, including mergers, consolidations, liquidations and
dissolutions;
|
|
making dividends or distributions if we are in default;
|
|
making capital expenditures in excess of specified levels;
|
|
making certain negative pledges and granting certain liens;
|
|
selling, transferring, assigning or conveying assets;
|
|
making certain loans and investments; and
|
|
entering into a new line of business.
|
Balance | 2009 | 2011 | ||||||||||||||||||
of | and | and | Beyond | |||||||||||||||||
Total | 2008 | 2010 | 2012 | 2012 | ||||||||||||||||
(in millions of U.S. Dollars) | ||||||||||||||||||||
U.S. Dollar-Denominated Obligations:
|
||||||||||||||||||||
Long-term debt
(1)
|
1,756.5 | 36.7 | 168.7 | 170.2 | 1,380.9 | |||||||||||||||
Commitments under capital leases
(2)
|
232.9 | 6.1 | 142.8 | 84.0 | | |||||||||||||||
Commitments under capital leases
(3)
|
1,079.1 | 6.0 | 48.0 | 48.0 | 977.1 | |||||||||||||||
Advances from affiliates and joint venture partners
|
59.6 | 1.2 | | | 58.4 | |||||||||||||||
Purchase obligations
(4)
|
292.1 | 12.0 | 280.1 | | | |||||||||||||||
|
||||||||||||||||||||
Total U.S. Dollar-denominated obligations
|
3,420.2 | 62.0 | 639.6 | 302.2 | 2,416.4 | |||||||||||||||
|
||||||||||||||||||||
|
||||||||||||||||||||
Euro-Denominated Obligations:
(5)
|
||||||||||||||||||||
Long-term debt
(6)
|
420.6 | 2.8 | 24.7 | 230.9 | 162.2 | |||||||||||||||
Commitments under capital leases
(2) (7)
|
199.8 | 34.4 | 74.0 | 91.4 | | |||||||||||||||
|
||||||||||||||||||||
Total Euro-denominated obligations
|
620.4 | 37.2 | 98.7 | 322.3 | 162.2 | |||||||||||||||
|
||||||||||||||||||||
|
||||||||||||||||||||
Totals
|
4,040.6 | 99.2 | 738.3 | 624.5 | 2,578.6 | |||||||||||||||
|
(1) |
Excludes expected interest payments of $19.0 million (fourth quarter of 2008), $138.0 million
(2009 and 2010), $121.8 million (2011 and 2012) and $296.7 million (beyond 2012). Expected
interest payments are based on the existing interest rates (fixed-rate loans) and LIBOR at
September 30, 2008, plus margins that ranged up to 0.9% (variable-rate loans). The expected
interest payments do not reflect the effect of related interest rate swaps that we have used
as an economic hedge of certain of our floating-rate debt. Includes
100% of the RasGas 3 term loan of $875.8 million.
|
|
(2) |
Includes, in addition to lease payments, amounts we are required to pay to purchase certain
leased vessels at the end of the lease terms. We are obligated to purchase five of our
existing Suezmax tankers upon the termination of the related capital leases, which will occur
at various times from late-2009 to 2011. The purchase price will be based on the unamortized
portion of the vessel construction financing costs for the vessels, which we expect to range
from $35.6 million to $39.2 million per vessel. We expect to satisfy the purchase price by
assuming the existing vessel financing, although we may be required to obtain separate debt or
equity financing to complete the purchases if the lenders do not consent to our assuming the
financing obligations. We are also obligated to purchase one of our existing LNG carriers upon
the termination of the related capital leases on December 31, 2011. The purchase obligation
has been fully funded with restricted cash deposits. Please read Item 1 Financial
Statements: Note 5 Leases and Restricted Cash.
|
Page 35 of 45
(3) |
Existing restricted cash deposits of $486.4 million, together with the interest earned on the
deposits, will be sufficient to repay the remaining amounts we currently owe under the lease
arrangements.
|
|
(4) |
We agreed to acquire Teekay Corporations 70% interest in two 155,000 cubic
meter newbuilding LNG carriers. The Partnership expects the purchase to be effective during
the second quarter of 2009. See, however Results of
Operations Items You Should Consider When Evaluating Our
Results of Operations. The Tangguh vessels will provide
transportation services to The Tangguh Production Sharing Contractors, a consortium led by a
subsidiary of BP plc, to service the Tangguh LNG project in Indonesia at fixed rates, with
inflation adjustments, for a period of 20 years. An Indonesian joint venture partner owns the
remaining 30% interest in these vessels.
|
|
We acquired from Teekay Corporation its 40% interest in the four RasGas 3 LNG Carriers upon the
delivery of the first vessel on May 6, 2008. We paid the estimated purchase price (net of assumed
debt) of $110.2 million with $98.2 million paid during the second and third quarters of 2008 and
the remaining $12.0 million paid subsequent to September 30, 2008. Please read Item 1
Financial Statements: Note 10(f) Related Party Transactions.
|
||
In December 2006, we entered into an agreement to acquire the three Skaugen LPG Carriers from
Skaugen, for approximately $33.7 million per vessel upon their deliveries scheduled between
early-2009 and mid-2010. The purchase price may be adjusted if the deliveries
are delayed. In July 2008, Teekay Corporation signed contracts
for the purchase of two newbuilding Multigas
carriers from Skaugen and we have agreed to purchase these vessels from Teekay Corporation for a
total cost of approximately $94 million upon their delivery
scheduled for the second half of 2010.
Please read Item 1 Financial Statements: Note 12 Commitments and Contingencies.
|
||
(5) |
Euro-denominated obligations are presented in U.S. Dollars and have been converted using the
prevailing exchange rate as of September 30, 2008.
|
|
(6) |
Excludes expected interest payments of $5.9 million (fourth quarter of 2008), $45.7 million
(2009 and 2010), $25.2 million (2011 and 2012) and $65.9 million (beyond 2012). Expected
interest payments are based on EURIBOR at September 30, 2008, plus margins that ranged up to
0.66%, as well as the prevailing U.S. Dollar/Euro exchange rate as of September 30, 2008. The
expected interest payments do not reflect the effect of related interest rate swaps that we
have used as an economic hedge of certain of our floating-rate debt.
|
|
(7) |
Existing restricted cash deposits of $188.4 million, together with the interest earned on the
deposits, will equal the remaining amounts we owe under the lease arrangement, including our
obligation to purchase the vessel at the end of the lease term.
|
Page 36 of 45
|
our future financial condition;
|
|
results of operations and revenues and expenses;
|
|
LNG, LPG and tanker market fundamentals;
|
|
future capital expenditures and availability of capital resources to fund capital
expenditures;
|
|
offers of vessels and
associated contracts to us from Teekay Corporation, and completing
the acquisitions of vessels and projects;
|
|
delivery dates of newbuildings;
|
|
the commencement of service of newbuildings under long-term contracts and of LNG
and LPG projects;
|
|
our liquidity needs; and
|
|
the expected timing, amount and method of financing for the purchase of joint
venture interests and vessels, including our five Suezmax tankers operated pursuant to
capital leases.
|
Page 37 of 45
Balance | Fair Value | |||||||||||||||||||||||||||||||||||
of | There- | Asset/ | ||||||||||||||||||||||||||||||||||
2008 | 2009 | 2010 | 2011 | 2012 | after | Total | (Liability) | Rate (1) | ||||||||||||||||||||||||||||
(in millions of U.S. dollars, except percentages) | ||||||||||||||||||||||||||||||||||||
Long-Term Debt:
|
||||||||||||||||||||||||||||||||||||
Variable Rate ($U.S.)
(2)
|
17.9 | 26.0 | 19.2 | 22.7 | 24.4 | 934.6 | 1,044.8 | (1,044.8 | ) | 4.1 | % | |||||||||||||||||||||||||
Variable Rate (Euro)
(3) (4)
|
2.8 | 11.9 | 12.8 | 223.8 | 7.2 | 162.1 | 420.6 | (420.6 | ) | 5.6 | % | |||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
Fixed-Rate Debt ($U.S.)
|
18.8 | 62.0 | 61.5 | 61.5 | 61.5 | 446.4 | 711.7 | (721.1 | ) | 4.5 | % | |||||||||||||||||||||||||
Average Interest Rate
|
4.8 | % | 4.6 | % | 4.6 | % | 4.6 | % | 4.6 | % | 5.1 | % | 4.5 | % | ||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
Capital Lease Obligations
(5)
(6)
|
||||||||||||||||||||||||||||||||||||
Fixed-Rate ($U.S.)
(7)
|
2.3 | 120.3 | 3.9 | 80.1 | | | 206.6 | 206.6 | 7.4 | % | ||||||||||||||||||||||||||
Average Interest Rate
(8)
|
7.5 | % | 8.8 | % | 5.4 | % | 5.5 | % | | | 7.4 | % | ||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
Interest Rate Swaps:
|
||||||||||||||||||||||||||||||||||||
Contract Amount ($U.S.)
(6) (9)
|
1.2 | 11.3 | 17.9 | 18.4 | 18.9 | 909.7 | 977.3 | (72.5 | ) | 5.4 | % | |||||||||||||||||||||||||
Average Fixed Pay Rate
(2)
|
6.2 | % | 5.7 | % | 5.5 | % | 5.5 | % | 5.6 | % | 5.4 | % | 5.4 | % | ||||||||||||||||||||||
Contract Amount (Euro)
(4) (10)
|
2.8 | 11.9 | 12.8 | 223.8 | 7.2 | 162.1 | 420.6 | 26.6 | 3.8 | % | ||||||||||||||||||||||||||
Average Fixed Pay Rate
(3)
|
3.8 | % | 3.8 | % | 3.8 | % | 3.8 | % | 3.7 | % | 3.8 | % | 3.8 | % |
(1) |
Rate refers to the weighted-average effective interest rate for our long-term debt and
capital lease obligations, including the margin we pay on our floating-rate debt and the
average fixed pay rate for our interest rate swap agreements. The average interest rate for
our capital lease obligations is the weighted-average interest rate implicit in our lease
obligations at the inception of the leases. The average fixed pay rate for our interest rate
swaps excludes the margin we pay on our floating-rate debt, which as of September 30, 2008
ranged from 0.3% to 0.9%. Please read Item 1 Financial Statements: Note 8 Long-term Debt.
|
|
(2) |
Interest payments on U.S. Dollar-denominated debt and interest rate swaps are based on
LIBOR.
|
|
(3) |
Interest payments on Euro-denominated debt and interest rate swaps are based on EURIBOR.
|
|
(4) |
Euro-denominated amounts have been converted to U.S. Dollars using the prevailing exchange
rate as of September 30, 2008.
|
|
(5) |
Excludes capital lease obligations (present value of minimum lease payments) of 125.2
million Euros ($176.5 million) on one of our existing LNG carriers with a weighted-average
fixed interest rate of 5.8%. Under the terms of this fixed-rate lease obligation, we are
required to have on deposit, subject to a weighted-average fixed interest rate of 5.0%, an
amount of cash that, together with the interest earned thereon, will fully fund the amount
owing under the capital lease obligation, including a vessel purchase obligation. As at
September 30, 2008, this amount was 127.5 million Euros ($179.7 million). Consequently, we
are not subject to interest rate risk from these obligations or deposits.
|
Page 38 of 45
(6) |
Under the terms of the capital leases for the RasGas II LNG Carriers (see Item 1
Financial Statements: Note 5 Leases and Restricted Cash), we are required to have on
deposit, subject to a variable rate of interest, an amount of cash that, together with
interest earned on the deposit, will equal the remaining amounts owing under the
variable-rate leases. The deposits, which as at September 30, 2008 totaled $486.4 million,
and the lease obligations, which as at September 30, 2008 totaled $469.3 million, have been
swapped for fixed-rate deposits and fixed-rate obligations. Consequently, Teekay Nakilat is
not subject to interest rate risk from these obligations and deposits and, therefore, the
lease obligations, cash deposits and related interest rate swaps have been excluded from the
table above. As at September 30, 2008, the contract amount, fair value and fixed interest
rates of these interest rate swaps related to Teekay Nakilats capital lease obligations and
restricted cash deposits were $485.4 million and $478.1 million, ($18.0) million and $19.1
million, and 4.9% and 4.8% respectively.
|
|
(7) |
The amount of capital lease obligations represents the present value of minimum lease
payments together with our purchase obligation, as applicable.
|
|
(8) |
The average interest rate is the weighted-average interest rate implicit in the capital
lease obligations at the inception of the leases.
|
|
(9) |
The average variable receive rate for our U.S. Dollar-denominated interest rate swaps is
set quarterly at
3-month
LIBOR.
|
|
(10) |
The average variable receive rate for our Euro-denominated interest rate swaps is set
monthly at 1-month EURIBOR.
|
Page 39 of 45
Page 40 of 45
Page 41 of 45
Page 42 of 45
Page 43 of 45
|
our depreciation and amortization deductions for 2007 and many subsequent years
would be lower than if the termination did not occur;
|
||
|
unitholders who held our units in 2007 and did not use a calendar tax year in
2007 might be required to report more than 12 months of our net income or loss in
their 2007 tax returns;
|
||
|
unitholders who acquired our units in 2007 after the termination may suffer
reduced depreciation and amortization deductions if our reconstituted partnership
does not make a valid Section 754 election for the portion of 2007 falling after
the termination;
|
||
|
unitholders who held our units in 2007 or 2008 would be required to file
amended tax returns for those years and might be subject to penalties and interest
for those years; and
|
||
|
we would incur administrative expenses in connection with the filing of amended
tax returns for 2007 and 2008 and amended unitholder information reports for 2007
and 2008, and the IRS might assert penalties and interest against us for failure
to take the termination into account in our original tax returns and information
reports, though Teekay Corporation has agreed to indemnify us for these and any
other costs or losses to us arising from a May 11, 2007 termination.
|
4.18 |
Agreement, dated June 30, 2008, for a U.S. $172,500,000 Secured Revolving Loan Facility between Arctic Spirit
L.L.C., Polar Spirit L.L.C and DnB Nor Bank A.S.A.
|
|
REGISTRATION STATEMENT ON FORM S-8 (NO. 333-124647) FILED WITH THE SEC ON MAY 5, 2005
|
|
REGISTRATION STATEMENT ON FORM F-3 (NO. 333-137697) FILED WITH THE SEC ON SEPTEMBER 29,
2006
|
Page 44 of 45
Page 45 of 45
TEEKAY LNG PARTNERS L.P.
By:
Teekay GP L.L.C., its General Partner
Date: March 20, 2009
By:
/s/ Peter Evensen
Peter Evensen
Chief Executive Officer and
Chief Financial Officer
(Principal Financial and Accounting Officer)
Table of Contents
4.18
Page | ||||
|
||||
1 Definitions and Interpretation
|
2 | |||
|
||||
2 The Facility and its Purposes
|
16 | |||
|
||||
3 Conditions of Utilisation
|
18 | |||
|
||||
4 Advance
|
22 | |||
|
||||
5 Repayment
|
23 | |||
|
||||
6 Prepayment
|
23 | |||
|
||||
7 Interest
|
24 | |||
|
||||
8 Indemnities
|
27 | |||
|
||||
9 Fees
|
31 | |||
|
||||
10 Security and Application of Moneys
|
31 | |||
|
||||
11 Representations and Warranties
|
33 | |||
|
||||
12 Undertakings and Covenants
|
38 | |||
|
||||
13 Events of Default
|
43 | |||
|
||||
14 Assignment and Sub-Participation
|
49 | |||
|
||||
15 The Agent, the Security Trustee and the Lenders
|
51 | |||
|
||||
16 Set-Off
|
60 | |||
|
||||
17 Payments
|
60 | |||
|
||||
18 Notices
|
62 | |||
|
||||
19 Partial Invalidity
|
65 | |||
|
||||
20 Remedies and Waivers
|
65 |
(1) |
ARCTIC SPIRIT L.L.C.,
a limited liability company formed under the laws of the Marshall
Islands with its registered office at c/o Trust Company Complex, Ajeltake Road, Ajeltake
Islands, Majuro, Marshall Islands MH96960 and
POLAR SPIRIT L.L.C.,
a limited liability company
formed under the laws of the Marshall Islands with its registered office at c/o Trust Company
Complex, Ajeltake Road, Ajeltake Islands, Majuro, Marshall Islands MH96960 (together the
Borrowers
and each a
Borrower
), jointly and severally;
|
(2) |
the banks listed in Schedule 1, each acting through its office at the address indicated
against its name in Schedule 1 (together the
Lenders
and each a
Lender
);
|
(3) |
DNB NOR BANK ASA
, acting as agent (in that capacity the
Agent
);
|
(4) |
DNB NOR BANK ASA, NORDEA BANK FINLAND PLC, SUMITOMO MITSUI BANKING CORPORATION, Brussels
Branch
and
LLOYDS TSB BANK PLC
acting as mandated lead arrangers (in that capacity each an
MLA
and together the
MLAs
);
|
(5) |
DNB NOR BANK ASA
and
NORDEA BANK FINLAND PLC
acting as bookrunners (in that capacity each a
Bookrunner
and together the
Bookrunners
); and
|
(6) |
DNB NOR BANK ASA
, acting as security trustee (in that capacity the
Security Trustee
).
|
1 |
Definitions and Interpretation
|
1.1 |
In this Agreement:
|
2
3
4
(a) |
any release of Environmentally Sensitive Material from a
Vessel; or
|
||
(b) |
any incident in which Environmentally Sensitive Material is
released from a vessel other than a Vessel and which involves a collision
between a Vessel and such other vessel or some other incident of navigation or
operation, in either case, in connection with which the relevant Vessel is
actually or potentially liable to be arrested, attached, detained or injuncted
and/or where any guarantor, any manager (or any sub-manager of such Vessel) or
any of its officers, employees or other persons retained or instructed by it
(or such sub-manager) are at fault or allegedly at fault or otherwise liable to
any legal or administrative action; or
|
||
(c) |
any other incident in which Environmentally Sensitive Material
is released otherwise than from such Vessel and in connection with which that
Vessel is actually or potentially liable to be arrested and/or where any
guarantor, any manager (or any sub-manager of the relevant Vessel) or any of
its officers, employees or other persons retained or instructed by it (or such
sub-manager) are at fault or allegedly at fault or otherwise liable to any
legal or administrative action.
|
5
(a) |
have as a purpose or effect the protection of, and/or
prevention of harm or damage to, the environment;
|
||
(b) |
relate to the carriage of Environmentally Sensitive Material or
to actual or threatened releases of Environmentally Sensitive Material;
|
||
(c) |
provide remedies or compensation for harm or damage to the
environment; or
|
||
(d) |
relate to Environmentally Sensitive Materials or health or
safety matters.
|
6
7
8
(a) |
the applicable Screen Rate; or
|
||
(b) |
(if no Screen Rate is available for any Interest Period) the
arithmetic mean of the rates (rounded upwards to four decimal places) as
supplied to the Agent at its request quoted by the Reference Banks (or by one
of them if one is unable to quote) to leading banks in the London interbank
market,
|
9
(a) |
the financial condition, assets, prospects or business of any
Security Party or the Charter Guarantor or on the consolidated financial
condition, assets, prospects or business of the Guarantor Group;
|
||
(b) |
the ability of any Security Party to perform and comply with
its obligations under any Security Document or to avoid any Event of Default;
|
||
(c) |
the validity, legality or enforceability of any Security
Document; or
|
||
(d) |
the validity, legality or enforceability of any security
expressed to be created pursuant to any Security Document or the priority and
ranking of any such security,
|
(a) |
the Initial Maximum Amount for the period from the Execution
Date until the first Upsize Trigger Date; and
|
||
(b) |
the relevant Upsize Increased Maximum Amount from each Upsize
Trigger Date until the Maturity Date,
|
(a) |
lawfully enter into and perform its obligations under the
Security Documents to which it is party;
|
(b) |
ensure the legality, validity, enforceability or admissibility
in evidence in England and, if different, its jurisdiction of incorporation, of
such Security Documents to which it is party; and
|
||
(c) |
carry on its business from time to time.
|
10
11
12
(a) |
an actual, constructive, arranged, agreed or compromised total
loss of that Vessel; or
|
(b) |
the requisition for title or compulsory acquisition,
nationalisation or expropriation of that Vessel by or on behalf of any
government or other authority (other than by way of requisition for hire); or
|
(c) |
the capture, seizure, arrest, detention or confiscation of that
Vessel unless the Vessel is released and returned to the possession of its
Owner within ninety (90) days after the capture, seizure, arrest, detention or
confiscation in question.
|
13
(a) |
all benefits derived by the Security Trustee from Clause 10;
and
|
(b) |
all benefits arising under (including, without limitation, all
proceeds of the enforcement of) each of the Security Documents,
|
14
1.2 |
In this Agreement:
|
1.2.1 |
words denoting the plural number include the singular and vice versa;
|
1.2.2 |
words denoting persons include corporations, partnerships,
associations of persons (whether incorporated or not) or governmental or
quasi-governmental bodies or authorities and vice versa;
|
1.2.3 |
references to Recitals, Clauses and Schedules are references
to recitals, clauses and schedules to or of this Agreement;
|
1.2.4 |
references to this Agreement include the Recitals and the
Schedules;
|
1.2.5 |
the headings and contents page(s) are for the purpose of
reference only, have no legal or other significance, and shall be ignored in
the interpretation of this Agreement;
|
15
1.2.6 |
references to any document (including, without limitation, to
all or any of the Relevant Documents) are, unless the context otherwise
requires, references to that document as amended, supplemented, novated or
replaced from time to time;
|
1.2.7 |
references to statutes or provisions of statutes are
references to those statutes, or those provisions, as from time to time
amended, replaced or re-enacted;
|
1.2.8 |
references to any Finance Party include its successors,
transferees and assignees; and
|
1.2.9 |
a time of day (unless otherwise specified) is a reference to
New York time.
|
1.3 |
Offer letter
|
2 |
The Facility and its Purposes
|
2.1 |
Amount
|
2.1.1 |
Subject to the terms of this Agreement, each of the Lenders
agrees to make available to the Borrowers its Commitment of a revolving credit
in an aggregate amount not exceeding, until the first Upsize Trigger Date, the
Initial Maximum Amount at any one time to be used by the Borrowers for the
purposes referred to in the Recitals.
|
2.1.2 |
The Borrowers shall have the right (provided that no Event of
Default has occurred and is continuing unremedied or unwaived) to issue one or
more Upsize Notices requesting an Upsize Amount and specifying the Upsize
Trigger Date and the proportions in which it is to be allocated to Tranche A
and/or Tranche B, following receipt of which Upsize Notice the Lenders shall
have the right (but not the obligation) to subscribe in the Upsize Amount pro
rata to their Commitments in the Initial Maximum Amount. The availability of
the Upsize Amount
|
16
2.2 |
Finance Parties obligations
The obligations of each Finance Party under the
Finance Documents are several. Failure by a Finance Party to perform its obligations
under the Finance Documents does not affect the obligations of any other party to the
Finance Documents. No Finance Party is responsible for the obligations of any other
Finance Party under the Finance Documents.
|
17
2.3 |
Purposes
The Borrowers shall apply the Facility insofar as it relates to the
Initial Maximum Amount for the purposes referred to in the Recital and insofar as it
relates to the Upsize Amount for the purposes referred to in Clause 2.1.2.
|
2.4 |
Monitoring
No Finance Party is bound to monitor or verify the application of
any amount borrowed under this Agreement.
|
3 |
Conditions of Utilisation
|
3.1 |
Conditions precedent
|
3.1.1 |
Before any Lender shall have any obligation to advance any
Drawing the Borrowers shall deliver or cause to be delivered to or to the order
of the Agent all of the documents and other evidence listed in Part I of
Schedule 3.
|
3.1.2 |
Before any Lender shall have any obligation to advance any
subsequent Drawing the Borrowers shall deliver or cause to be delivered to or
to the order of the Agent all of the documents and other evidence listed in
Part III of Schedule 3.
|
3.1.3 |
Before any Lender that has agreed to participate in any Upsize
Amount shall have any obligation to advance any drawing in respect of the
Upsize Amount the Borrowers shall deliver or cause to be delivered to or to the
order of the Agent all of the documents and other evidence listed in Part IV of
Schedule 3.
|
3.2 |
Further conditions precedent
The Lenders will only be obliged to advance a
Drawing if on the date of the Drawdown Notice and on the proposed Drawdown Date:
|
3.2.1 |
no Default is continuing or would result from the advance of
that Drawing; and
|
3.2.2 |
the representations made by the Borrowers under Clause 11 and
by the Guarantor under the Guarantee are true in all material respects.
|
18
3.3 |
Drawing limit
The Lenders will only be obliged to advance a Drawing if:
|
3.3.1 |
no other Drawing under the same Tranche has been made on the
same Business Day;
|
3.3.2 |
that Drawing will not result in there being more than seven
Drawings outstanding in respect of that Tranche at any one time;
|
3.3.3 |
that Drawing is not less than five million Dollars
($5,000,000) and in an integral multiples of one million Dollars ($1,000,000)
or otherwise for the balance available under the relevant Tranche; and
|
3.3.4 |
that Drawing will not increase the outstanding amount of the
relevant Tranche to a sum in excess of the relevant Tranche Maximum Amount or
the Facility to a sum in excess of the Maximum Amount.
|
3.4 |
Facility Reduction
|
3.4.1 |
The amount of the Facility available to the Borrowers, for
drawing under this Agreement shall be the Maximum Amount. On the Reduction
Dates the amount of the Facility available for drawing shall be reduced by the
amounts set out in Schedule 8 (the
Initial Reduction Amounts
). On the
Maturity Date the Facility available shall be reduced to zero. Subject to the
proviso hereto, the mandatory reductions in the amount of the Facility
available for drawing required pursuant to this Clause will be made in the
amounts and at the times specified whether or not the Maximum Amount is reduced
pursuant to Clause 3.4.2, Clause 3.4.3, Clause 3.4.4, Clause 3.4.5, Clause 6.1
or Clause 7.9, PROVIDED ALWAYS THAT any reductions pursuant to Clause 3.4.2
(voluntary reductions) shall be applied to the remaining mandatory reductions
hereunder on a pro rata basis.
|
3.4.2 |
The Borrowers may voluntarily cancel the Maximum Amount in
whole or in part (such cancellation to be against the Tranches in the
proportions specified by the Borrowers) in an amount of not less than five
million Dollars ($5,000,000) such amount to be in integral multiples of one
million Dollars ($1,000,000) (or as otherwise may be agreed by the Agent),
provided that they have first given to the Agent not fewer than five (5) Business Days
|
19
3.4.3 |
In the event of a sale or disposal of a Vessel, the relevant
Tranche Maximum Amount shall be reduced to zero on the date falling thirty (30)
days after such sale or disposal. The Borrowers shall, on or before such
reduction date, prepay such Tranche in full. Any such prepayment shall oblige
the Borrowers to make payment of all interest and Commitment Commission accrued
on the amount so reduced up to and including the date of reduction together
with any Break Costs in respect of such reduced amount if the date of such
reduction is not the final day of an Interest Period. Any such reduction in
the Maximum Amount and Tranche Maximum Amounts shall not be reversed.
|
3.4.4 |
In the event that any Vessel becomes a Total Loss, on the
earlier to occur of (a) the date of receipt of the proceeds of the Total Loss
and (b) the date falling one hundred and eighty (180) days after the occurrence
of the Total Loss (the
Total Loss Reduction Date
), the relevant Tranche
Maximum Amount shall be reduced to zero. The Borrowers shall, on the earlier
to occur of (i) the date on which the relevant Owner receives the proceeds of
such Total Loss and (ii) the one hundred and eightieth day after the date of
such Total Loss occurring, prepay such Tranche in full PROVIDED that if the
date of such repayment is not the last day of the then current Interest Period,
the Borrowers shall prepay such Tranche in full on the last day of the then
current Interest Period. If the amount of the prepayment is not
immediately applied, the Borrowers shall promptly, if so requested by the
Majority Lenders, place the amount of the prepayment in an account held with
the Agent and pledge such account to the Agent as security for the
Indebtedness for the period up until such funds are applied in or towards
payment hereunder. Any prepayment under this Clause 3.4.4 shall not be
reborrowed and Clause 8.3 shall apply to any such prepayment.
|
20
3.4.5 |
In the event that (a) one of Charters is terminated early or
(b) one of the Charters expires prior to the Maturity Date, the relevant
Tranche Maximum Amount shall be reduced to zero. The Borrowers shall, on the
earlier to occur of (i) the date on which the relevant Owner receives the
notice of such Charter termination or (ii) on the expiry of the Charter prior
to the Maturity Date, prepay such Tranche in full. Any prepayment under this
Clause 3.4.5 shall not be reborrowed and Clause 8.3 shall apply to any such
prepayment.
|
3.4.6 |
To the extent that repayments or prepayments made by the
Borrowers to the Agent in accordance with this Agreement reduce the Facility
and Tranches outstanding to less than the Maximum Amount and the Tranche
Maximum Amounts respectively, the Borrowers shall again be entitled to make
Drawings up to the Commitment Termination Date in accordance with and subject
to the terms of this Agreement. Any part of the Facility which is undrawn on
the Commitment Termination Date shall be automatically cancelled.
|
3.4.7 |
Simultaneously with each reduction of the Maximum Amount in
accordance with Clause 3.4.1, Clause 3.4.2, Clause 3.4.3, Clause 3.4.4 or
Clause 3.4.5 (as the case may be), the Commitment of each Lender will reduce so
that the Commitments of the Lenders in respect of the amended Maximum Amount
and Tranche Maximum Amounts remain in accordance with their respective
Proportionate Shares. In the case of any increase in the Maximum Amount in
accordance with Clause 2.1.2, the Commitment of each Lender will be in
accordance with the revised Schedule 1 circulated by the Agent pursuant to
Clause 2.1.2 at or about the relevant Upsize Trigger Date.
|
21
3.5 |
Termination Date
No Lender shall be under any obligation to advance all or any
part of its Commitment after the Commitment Termination Date.
|
3.6 |
Conditions subsequent
The Borrowers undertake to deliver or to cause to be
delivered to the Agent on, or as soon as practicable after, the First Drawdown Date the
additional documents and other evidence listed in Part II of Schedule 3.
|
3.7 |
No Waiver
If the Lenders in their sole discretion agree to advance a Drawing
to the Borrowers before all of the documents and evidence required by Clause 3.1 have
been delivered to or to the order of the Agent, the Borrowers undertake to deliver all
outstanding documents and evidence to or to the order of the Agent no later than the
date specified by the Agent, except to the extent expressly waived by the Agent in
writing.
|
3.8 |
Form and content
All documents and evidence delivered to the Agent under this
Clause 3 shall:
|
3.8.1 |
be in form and substance reasonably acceptable to the Agent; and
|
3.8.2 |
if reasonably required by the Agent, be certified, notarised,
legalised or attested in a manner acceptable to the Agent.
|
4 |
Advance
|
4.1 |
Drawdown Request
The Borrowers may request a Drawing in respect of Tranche A
and/or Tranche B, in each case to be advanced on any Business Day prior to the
Commitment Termination Date, by delivering to the Agent a duly completed Drawdown
Notice not more than ten (10) and not fewer than three (3) Business Days before the
proposed Drawdown Date save in respect of a Same Day Drawing.
|
4.2 |
Lenders participation
Subject to Clauses 2 and 3, the Agent shall promptly
notify each Lender of the receipt of a Drawdown Notice, following which each Lender
shall advance its Proportionate Share of the relevant Drawing to the Borrowers through
the Agent on the relevant Drawdown Date.
|
22
5 |
Repayment
|
5.1 |
Repayment of each Drawing
The Borrowers agree to repay each Drawing to the
Agent for the account of the Lenders on the last day of the Interest Period in respect
of that Drawing unless the Borrowers select a further Interest Period for that Drawing
in accordance with Clause 7, provided that the Borrowers shall not be permitted to
select such a further Interest Period if a Default has occurred and shall then be
obliged to repay such Drawing on the last day of its then current Interest Period. The
Borrowers shall on the Maturity Date repay to the Agent as agent for the Lenders all
Facility Outstandings.
|
5.2 |
Reborrowing
Amounts of the Facility which are repaid or prepaid shall be
available for reborrowing in accordance with Clause 3 prior to the Commitment
Termination Date.
|
6 |
Prepayment
|
6.1 |
Illegality
If it becomes unlawful in any jurisdiction for a Lender to fund or
maintain its Commitment as contemplated by this Agreement or to fund or maintain the
Facility:
|
6.1.1 |
that Lender shall promptly notify the Agent of that event;
|
6.1.2 |
upon the Agent notifying the Borrowers, the Commitment of that
Lender (to the extent not already advanced) will be immediately cancelled; and
|
6.1.3 |
the Borrowers shall repay that Lenders Proportionate Share of
any Drawing on the last day of its current Interest Period or, if earlier, the
date specified by that Lender in the notice delivered to the Agent and notified
by the Agent to the Borrowers (being no earlier than the last day of any
applicable grace period permitted by law) and the Maximum Amount shall be
reduced by the amount of that Lenders Commitment in the Facility. Prior to
the date on which repayment is required to be made under this Clause 6.1.3 the
affected Lender shall negotiate in good faith with the Borrowers to find an
alternative method or lending base in order to reinstate and maintain its
Commitment in the Facility.
|
23
6.2 |
Voluntary prepayment of Facility
The Borrowers may prepay the whole or any
part of a Drawing (but, if in part, being an amount that reduces that Drawing by a
minimum amount of five million Dollars ($5,000,000)) provided that they give the Agent
not less than three (3) Business Days prior notice.
|
6.3 |
Restrictions
Any notice of prepayment given under this Clause 6 shall be
irrevocable and, unless a contrary indication appears in this Agreement, shall specify
the date or dates upon which the relevant prepayment is to be made and the amount of
that prepayment.
|
6.4 |
Mandatory Prepayment
If at any time the Facility Outstandings shall exceed the
Maximum Amount or the amount outstanding under a Tranche shall exceed the relevant
Tranche Maximum Amount, the Borrowers shall immediately prepay to the Agent on behalf
of the Lenders such amounts as will ensure that the Facility Outstandings do not exceed
the Maximum Amount or the amount outstanding under a Tranche shall not exceed the
relevant Tranche Maximum Amount, and shall pay to the Lenders all interest accrued on
the amount prepaid up to and including the date on which such prepayment occurred.
|
7 |
Interest
|
7.1 |
Interest Periods
The period during which each Drawing shall be outstanding
under this Agreement shall be an Interest Period of one, three or six months duration,
as selected by the Borrowers in the Drawdown Notice in respect of the Drawing in
question, or such other duration as may be agreed by the Agent (acting on the
instructions of all the Lenders). Not more than seven (7) one (1) month Interest
Periods in respect of a Tranche may be selected by the Borrowers in each twelve (12)
month period.
|
7.2 |
Beginning and end of Interest Periods
The first Interest Period in respect of
each Drawing shall begin on the Drawdown Date of that Drawing and shall end on
the last day of the Interest Period selected in accordance with Clause 7.1. Any
subsequent Interest Period selected in respect of each Drawing shall commence on the
day following the last day of its previous Interest Period and shall end on the last
day of its current Interest Period selected in accordance with Clause 7.1.
|
24
7.3 |
Interest Periods to meet Maturity Date
If an Interest Period for a Drawing
would otherwise expire after the Maturity Date, the Interest Period for that Drawing
shall expire on the Maturity Date.
|
7.4 |
Non-Business Days
If an Interest Period would otherwise end on a day which is
not a Business Day, that Interest Period will instead end on the next Business Day in
that calendar month (if there is one) or the preceding Business Day (if there is not).
|
7.5 |
Interest rate
During each Interest Period interest shall accrue on the
relevant Drawing at the rate determined by the Agent to be
|
(i) |
the WSJ Prime Rate in the case of the first Interest Period for
a Same Day Drawing; or
|
(ii) |
in all other cases the aggregate of (a) the applicable Margin
for that Tranche, (b) LIBOR and (c) the Mandatory Cost, if applicable.
|
7.6 |
Failure to select Interest Period
If the Borrowers at any time fail to select
or agree an Interest Period in accordance with Clause 7.1, the Interest Period
applicable shall be of three (3) months duration.
|
7.7 |
Accrual and payment of interest
Interest shall accrue from day to day, shall
be calculated on the basis of a 360 day year and the actual number of days elapsed (or,
in any circumstance where market practice differs, in accordance with the prevailing
market practice) and shall be paid by the Borrowers to the Agent for the account of the
Lenders on the last day of each Interest Period and, if the Interest Period is longer
than three months, on the dates falling at three monthly intervals after the first day
of that Interest Period.
|
25
7.8 |
Default interest
If the Borrowers fail to pay any amount payable by them
under a Finance Document on its due date, interest shall accrue on the overdue amount
from the due date, subject to any applicable grace period, up to the date of actual
payment (both before and after judgment) at a rate which is one point five per cent
(1.5%) higher than the rate which would have been payable if the overdue amount
had, during the period of non-payment, constituted a Drawing for successive
Interest Periods, each selected by the Agent (acting reasonably). Any interest
accruing under this Clause 7.8 shall be immediately payable by the Borrowers on
demand by the Agent. If unpaid, any such interest 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.
|
7.9 |
Changes in market circumstances
If at any time the Agent determines (which
determination shall be final and conclusive and binding on the Borrowers) that, by
reason of changes affecting the London interbank market, adequate and fair means do not
exist for determining the rate of interest on a Drawing for any Interest Period:
|
7.9.1 |
the Agent shall give notice to the Lenders and the Borrowers
of the occurrence of such event; and
|
7.9.2 |
the rate of interest on each Lenders Commitment in the
relevant Drawing for that Interest Period shall be the rate per annum which is
the sum of:
|
(a) |
the relevant Margin; and
|
(b) |
the rate notified to the Agent by that Lender
as soon as practicable, and in any event before interest is due to be
paid in respect of that Interest Period, to be that which expresses as
a percentage rate per annum the cost to that Lender of funding its
Commitment in the relevant Drawing from whatever source it may
reasonably select; and
|
(c) |
the Mandatory Cost, if any, applicable to that
Lenders Commitment,
|
26
7.9.3 |
the Agent on behalf of the Lenders will negotiate with the
Borrowers in good faith with a view to modifying this Agreement to provide a
substitute basis for determining the rate of interest which is financially a
substantial equivalent to the basis provided for in this Agreement;
|
7.9.4 |
any substitute basis agreed pursuant to Clause 7.9.3 shall be
binding on all the parties to this Agreement and shall apply to all Commitments
in the relevant Drawing; and
|
7.9.5 |
if, within thirty (30) days of the giving of the notice
referred to in Clause 7.9.1, the Borrowers and the Agent fail to agree in
writing on a substitute basis for determining the rate of interest in respect
of the relevant Drawing, the relevant Lender shall cease to be obliged to
advance its Proportionate Share of that Drawing, but, if it has already been
advanced, the Borrowers will immediately prepay that Proportionate Share of
that Drawing, together with any Break Costs, and the Maximum Amount shall be
reduced by the amount of that Lenders Proportionate Share of that Drawing.
|
7.10 |
Determinations conclusive
The Agent shall promptly notify the Borrowers of
the determination of a rate of interest under this Clause 7 and each such determination
shall (save in the case of manifest error) be final and conclusive.
|
8 |
Indemnities
|
8.1 |
Transaction expenses
The Borrowers will, within fourteen (14) days of the
Agents written demand, pay the Agent (for the account of the Finance Parties) the
amount of all reasonable out of pocket costs and expenses (including legal fees and
Value Added Tax or any similar or replacement tax if applicable) reasonably incurred by
the Finance Parties or any of them in connection with:
|
8.1.1 |
the negotiation, preparation, printing, execution and
registration of the Finance Documents (whether or not any Finance Document is
actually executed or registered and whether or not a Drawing is advanced);
|
8.1.2 |
any amendment, addendum or supplement to any Finance Document
(whether or not completed); and
|
8.1.3 |
any other document which may at any time be required by a
Finance Party to give effect to any Finance Document or which a Finance Party
is entitled to call for or obtain under any Finance Document.
|
27
8.2 |
Funding costs
The Borrowers shall indemnify each Finance Party, by payment to
the Agent (for the account of that Finance Party) on the Agents written demand,
against all losses and costs incurred or sustained by that Finance Party if, for any
reason due to a default or other action by the Borrowers, a Drawing is not advanced to
the Borrowers after the relevant Drawdown Notice has been given to the Agent, or is
advanced on a date other than that requested in the Drawdown Notice.
|
||
8.3 |
Break Costs
The Borrowers shall indemnify each Finance Party, by payment to
the Agent (for the account of that Finance Party) on the Agents written demand,
against all documented costs, losses, premiums or penalties incurred by that Finance
Party as a result of its receiving any prepayment of all or any part of a Drawing
(whether pursuant to Clause 6 or otherwise) on a day other than the last day of an
Interest Period for that Drawing, or any other payment under or in relation to the
Finance Documents on a day other than the due date for payment of the sum in question,
including (without limitation) any losses or costs incurred in liquidating or
re-employing deposits from third parties acquired to effect or maintain all or any part
of a Drawing.
|
||
8.4 |
Currency indemnity
In the event of a Finance Party receiving or recovering
any amount payable under a Finance Document in a currency other than the Currency of
Account, and if the amount received or recovered is insufficient when converted into
the Currency of Account at the date of receipt to satisfy in full the amount due, the
Borrowers shall, on the Agents written demand, pay to the Agent for the account of the
relevant Finance Party such further amount in the Currency of Account as is sufficient
to satisfy in full the amount due and that further amount shall be due to the Agent on
behalf of the relevant Finance Party as a separate debt under this Agreement.
|
||
8.5 |
Increased costs (subject to Clause 8.6)
If, by reason of the introduction of
any law, or any change in any law, or any change in the interpretation or
administration of any law, or compliance with any request or requirement from any
central bank or any fiscal, monetary or other authority occurring after the date of
this Agreement:
|
8.5.1 |
a Finance Party (or the Holding Company of a Finance Party)
shall be subject to any Tax with respect to payment of all or any part of the
Indebtedness (other than Tax on overall net income); or
|
8.5.2 |
the basis of Taxation of payments to a Finance Party in
respect of all or any part of the Indebtedness shall be changed; or
|
28
8.5.3 |
any reserve requirements shall be imposed, modified or deemed
applicable against assets held by or deposits in or for the account of or loans
by any branch of a Finance Party; or
|
8.5.4 |
the manner in which a Finance Party allocates capital
resources to its obligations under this Agreement or any ratio (whether cash,
capital adequacy, liquidity or otherwise) which a Finance Party is required or
requested to maintain shall be affected; or
|
8.5.5 |
there is imposed on a Finance Party (or on the Holding Company
of a Finance Party) any other condition in relation to the Indebtedness or the
Finance Documents;
|
8.6 |
Exceptions to increased costs
Clause 8.5 does not apply to the extent any
additional cost or reduced return referred to in that Clause is:
|
8.6.1 |
compensated for by a payment made under Clause 8.10; or
|
||
8.6.2 |
compensated for by a payment made under Clause 17.3; or
|
||
8.6.3 |
compensated for by the payment of the Mandatory Cost; or
|
||
8.6.4 |
attributable to the wilful breach by the relevant Finance
Party (or the Holding Company of that Finance Party) of any law or regulation.
|
29
8.7 |
Events of Default
The Borrowers shall indemnify each Finance Party from time
to time, by payment to the Agent (for the account of that Finance Party) on the Agents
written demand, against all losses and costs incurred or sustained by that Finance
Party as a consequence of any Event of Default.
|
8.8 |
Enforcement costs
The Borrowers shall pay to the Agent (for the account of
each Finance Party) on the Agents written demand the amount of all costs and expenses
(including legal fees) incurred by a Finance Party in connection with the enforcement
of, or the preservation of any rights under, any Finance Document including (without
limitation) any losses, costs and expenses which that Finance Party may from time to
time sustain, incur or become liable for by reason of that Finance Party being
mortgagee of a Vessel and/or a lender to the Borrowers, or by reason of that Finance
Party being deemed by any court or authority to be an operator or controller, or in any
way concerned in the operation or control, of each Vessel. No such indemnity will be
given where any such loss or cost has occurred due to gross negligence or wilful
misconduct on the part of that Finance Party; however, this shall not affect the right
of any other Finance Party to receive such indemnity.
|
8.9 |
Other costs
The Borrowers shall pay to the Agent (for the account of each
Finance Party) on the Agents written demand the amount of all sums which a Finance
Party may pay or become actually or contingently liable for on account of the Borrowers
in connection with a Vessel (whether alone or jointly or jointly and severally with any
other person) including (without limitation) all sums which that Finance Party may pay
or guarantees which it may give in respect of the Insurances, any expenses incurred by
that Finance Party in connection with the maintenance or repair of a Vessel or in
discharging any lien, bond or other claim relating in any way to a Vessel, and any sums
which that Finance Party may pay or guarantees which it may give to procure the release
of a Vessel from arrest or detention.
|
30
8.10 |
Taxes
The Borrowers shall pay all Taxes to which all or any part of the
Indebtedness or any Finance Document may be at any time subject (other than Tax on a
Finance Partys overall net income) and shall indemnify the Finance Parties, by payment
to the Agent (for the account of the Finance Parties) on the Agents written demand,
against all liabilities, costs, claims and expenses resulting from any omission to pay
or delay in paying any such Taxes.
|
9 |
Fees
|
9.1 |
Commitment fee
The Borrowers shall pay to the Agent (for the account of the
Lenders in proportion to their Commitments) a fee computed at the rate of forty per
cent (40%) of the applicable Margin on the undrawn and uncancelled amount of the
Tranche Maximum Amounts from time to time from the Execution Date until the Commitment
Termination Date. The accrued commitment fee is payable on the last Business Day of
each fiscal quarter following the Execution Date and on the Commitment Termination
Date.
|
9.2 |
Other fees
The Borrowers shall pay to the Agent on behalf of the Lenders the
fees in the amount and at the times agreed in the Fee Letter.
|
9.3 |
Upsize Fees
The Borrowers shall pay to the Agent on behalf of the Lenders the
fees in the amount and at the times agreed in each Upsize Notice.
|
9.4 |
Agency fee
The Borrowers shall pay to the Agent for its own account an agency
fee in the amount and at the times agreed in the Fee Letter.
|
10 |
Security and Application of Moneys
|
10.1 |
Security Documents
As security for the payment of the Indebtedness, the
Borrowers shall execute and deliver to the Security Trustee or cause to be executed and
delivered to the Security Trustee the following documents in such forms and containing
such terms and conditions as the Security Trustee shall require:
|
10.1.1 |
a first priority statutory mortgage over each of the Vessels together with a
collateral Deed of Covenants;
|
10.1.2 |
a first priority deed of assignment of the Insurances, Earnings, Charter,
Conversion Agreement, Charter Guarantee and Requisition Compensation of each of
the Vessels;
|
31
10.1.3 |
an on demand guarantee and indemnity from the Guarantor; and
|
10.1.4 |
a pledge of the membership interests of each of the Borrowers given by the
Pledgor.
|
10.2 |
Remittance of Earnings
Immediately upon the occurrence of an Event of Default
the Borrowers shall procure that all Earnings are paid to such account(s) as the Agent
shall from time to time specify by notice in writing to the Borrowers.
|
10.3 |
General application of moneys
Whilst an Event of Default is continuing
unremedied and unwaived each of the Borrowers irrevocably authorises the Agent and the
Security Trustee to apply all sums which either of them may receive:
|
10.3.1 |
pursuant to a sale or other disposition of a Vessel or any right, title or
interest in the Vessel; or
|
10.3.2 |
by way of payment of any sum in respect of the Insurances, Earnings or
Requisition Compensation; or
|
10.3.3 |
otherwise arising under or in connection with any Security Document,
|
(i) |
first in payment of all outstanding fees and
expenses of the Agent and the Security Trustee;
|
(ii) |
secondly in or towards payment of all
outstanding interest hereunder;
|
(iii) |
thirdly in or towards payment of all
outstanding principal hereunder;
|
(iv) |
fourthly in or towards payment of all other Indebtedness hereunder;
|
(v) |
fifthly the balance, if any, shall be remitted
to the Borrowers or whoever may be entitled thereto.
|
32
11 |
Representations and Warranties
|
11.1 |
Status and Due Authorisation
Each of the Security Parties is a corporation or
limited partnership duly incorporated or formed under the laws of its jurisdiction of
incorporation or formation with power to enter into the Finance Documents and to
exercise its rights and perform its obligations under the Finance Documents and all
corporate and other action required to authorise its execution of the Finance Documents
and its performance of its obligations thereunder has been duly taken.
|
11.2 |
No Deductions or Withholding
Under the laws of the Security Parties
respective jurisdictions of incorporation or formation in force at the date hereof,
none of the Security Parties will be required to make any deduction or withholding from
any payment it may make under any of the Finance Documents.
|
11.3 |
Claims Pari Passu
Under the laws of the Security Parties respective
jurisdictions of incorporation or formation in force at the date hereof, the
Indebtedness will, to the extent that it exceeds the realised value of any security
granted in respect of the Indebtedness, rank at least
pari passu
with all the Security
Parties other unsecured indebtedness save that which is preferred solely by any
bankruptcy, insolvency or other similar laws of general application.
|
11.4 |
No Immunity
In any proceedings taken in any of the Security Parties
respective jurisdictions of incorporation or formation in relation to any of the
Finance Documents, none of the Security Parties will be entitled to claim for itself or
any of its assets immunity from suit, execution, attachment or other legal process.
|
11.5 |
Governing Law and Judgments
In any proceedings taken in any of the Security
Parties jurisdiction of incorporation or formation in relation to any of the Finance
Documents in which there is an express choice of the law of a particular country as
the governing law thereof, that choice of law and any judgment or (if applicable)
arbitral award obtained in that country will be recognised and enforced.
|
33
11.6 |
Validity and Admissibility in Evidence
As at the date hereof, all acts,
conditions and things required to be done, fulfilled and performed in order (a) to
enable each of the Security Parties lawfully to enter into, exercise its rights under
and perform and comply with the obligations expressed to be assumed by it in the
Finance Documents, (b) to ensure that the obligations expressed to be assumed by each
of the Security Parties in the Finance Documents are legal, valid and binding and (c)
to make the Finance Documents admissible in evidence in the jurisdictions of
incorporation or formation of each of the Security Parties, have been done, fulfilled
and performed.
|
11.7 |
No Filing or Stamp Taxes
Under the laws of the Security Parties respective
jurisdictions of incorporation or formation in force at the date hereof, it is not
necessary that any of the Finance Documents be filed, recorded or enrolled with any
court or other authority in its jurisdiction of incorporation or formation (other than
the Registrar of Companies for England and Wales or the relevant maritime registry, to
the extent applicable) or that any stamp, registration or similar tax be paid on or in
relation to any of the Finance Documents.
|
11.8 |
Binding Obligations
The obligations expressed to be assumed by each of the
Security Parties in the Finance Documents are legal and valid obligations, binding on
each of them in accordance with the terms of the Finance Documents and no limit on any
of their powers will be exceeded as a result of the borrowings, granting of security or
giving of guarantees contemplated by the Finance Documents or the performance by any of
them of any of their obligations thereunder.
|
11.9 |
No Winding-up
Neither the Borrowers, the Pledgor nor the Guarantor have taken
any corporate action nor have any other steps been taken or legal proceedings been
started or (to the best of the Borrowers knowledge and belief) threatened against the
Borrowers, the Pledgor or the Guarantor for their winding-up, dissolution,
administration or reorganisation or for the appointment of a receiver, administrator,
administrative receiver, trustee or similar officer of it or of any or all of its
assets or revenues which might have a material adverse effect on the business or
financial condition of the Guarantor Group taken as a whole.
|
34
11.10 |
Solvency
|
11.10.1 |
Neither the Borrowers, the Pledgor, the Guarantor nor the Guarantor Group
taken as a whole is unable, or admits or has admitted its inability, to pay its
debts or has suspended making payments in respect of any of its debts.
|
11.10.2 |
Neither the Borrowers, the Pledgor nor the Guarantor by reason of actual or
anticipated financial difficulties, has commenced, or intends to commence,
negotiations with one or more of its creditors with a view to rescheduling any
of its indebtedness.
|
11.10.3 |
The value of the assets of each of the Borrowers, the Pledgor, the Guarantor
and the Guarantor Group taken as a whole is not less than the liabilities of
such entity or the Guarantor Group taken as a whole (as the case may be)
(taking into account contingent and prospective liabilities).
|
11.10.4 |
No moratorium has been, or may, in the reasonably foreseeable future be,
declared in respect of any indebtedness of the Borrowers or the Guarantor.
|
11.11 |
No Material Defaults
|
11.11.1 |
Without prejudice to Clause 11.11.2, neither the Borrowers, the Pledgor nor
the Guarantor is in breach of or in default under any agreement to which it is
a party or which is binding on it or any of its assets to an extent or in a
manner which might have a material adverse effect on the business or financial
condition of the Guarantor Group taken as a whole.
|
11.11.2 |
No Event of Default is continuing or might reasonably be expected to result
from the advance of any Drawing.
|
11.12 |
No Material Proceedings
No action or administrative proceeding of or before
any court, arbitral body or agency which is not covered by adequate insurance or which
might have a material adverse effect on the business or financial condition of the
Guarantor Group taken as a whole has been started or is reasonably likely to be
started.
|
11.13 |
Guarantors Accounts
All financial statements relating to the Guarantor
required to be delivered under Clause 9 of the Guarantee, were each prepared in
accordance with GAAP, give (in conjunction with the notes thereto) a true and fair view
of (in the case of annual financial statements) or fairly represent (in the case of
quarterly accounts) the financial condition of the Guarantor at the date as of which
they were prepared and the results of the Guarantors operations during the
financial period then ended.
|
35
11.14 |
No Material Adverse Change
Since the publication of the last financial
statements relating to the Guarantor delivered pursuant to Clause 9 of the Guarantee,
there has been no change that has a Material Adverse Effect.
|
11.15 |
No Undisclosed Liabilities
As at the date to which the Guarantors Accounts
were prepared neither the Borrowers, the Pledgor nor the Guarantor had any material
liabilities (contingent or otherwise) which were not disclosed thereby (or by the notes
thereto) or reserved against therein nor any unrealised or anticipated losses arising
from commitments entered into by it which were not so disclosed or reserved against
therein.
|
11.16 |
No Obligation to Create Security
The execution of the Security Documents by
the Security Parties and their exercise of their rights and performance of their
obligations thereunder will not result in the existence of nor oblige the Borrowers,
the Pledgor or the Guarantor to create any Encumbrance over all or any of their present
or future revenues or assets, other than pursuant to the Finance Documents.
|
11.17 |
No Breach
The execution of the Finance Documents by each of the Security
Parties and their exercise of their rights and performance of their obligations under
any of the Finance Documents do not constitute and will not result in any breach of any
agreement or treaty to which any of them is a party.
|
11.18 |
Security
Each of the Security Parties is the legal and beneficial owner of
all assets and other property which it purports to charge, mortgage, pledge, assign or
otherwise secure pursuant to each Finance Document and those Finance Documents to which
it is a party create and give rise to valid and effective security having the ranking
expressed in those Finance Documents.
|
11.19 |
Necessary Authorisations
The Necessary Authorisations required by each
Security Party are in full force and effect, and each Security Party is in compliance
with the material provisions of each such Necessary Authorisation relating to it and,
to the best of its knowledge, none of the Necessary Authorisations relating to it
are the subject of any pending or threatened proceedings or revocation.
|
36
11.20 |
Money Laundering
Any amount borrowed hereunder, and the performance of the
obligations of the Security Parties under the Finance Documents, will be for the
account of members of the Guarantor Group and will not involve any breach by any of
them of any law or regulatory measure relating to money laundering as defined in
Article 1 of the Directive (91/308/EEC) of the Council of the European Communities.
|
11.21 |
Disclosure of material facts
The Borrowers are not aware of any material
facts or circumstances which have not been disclosed to the Agent and which might, if
disclosed, have reasonably been expected to adversely affect the decision of a person
considering whether or not to make loan facilities of the nature contemplated by this
Agreement available to the Borrowers.
|
11.22 |
Charters etc
The copies of the Charters, the Sub-Charters and the Management
Agreements delivered or to be delivered to the Agent are true and complete copies, and
to the best of the Borrowers knowledge and belief, each such document is valid,
binding and in full force and effect in accordance with its terms.
|
11.23 |
Use of Facility
The Facility will be used for the purposes specified in the
Recital.
|
11.24 |
Representations Limited
The representation and warranties of the Borrowers in
this Clause 11 are subject to:
|
11.24.1 |
the principle that equitable remedies are remedies which may be granted or
refused at the discretion of the court;
|
11.24.2 |
the limitation of enforcement by laws relating to bankruptcy, insolvency,
liquidation, reorganisation, court schemes, moratoria, administration and other
laws generally affecting or limiting the rights of creditors;
|
11.24.3 |
the time barring of claims under any applicable limitation acts;
|
11.24.4 |
the possibility that a court may strike out provisions for a contract as
being invalid for reasons of oppression, undue influence or similar; and
|
11.24.5 |
any other reservations or qualifications of law expressed in any legal
opinions obtained by the Agent in connection with the Facility.
|
37
12 |
Undertakings and Covenants
|
12.1 |
General Undertakings
|
12.1.1 |
Maintenance of Legal Validity
The Borrowers shall obtain, comply with the
terms of and do all that is necessary to maintain in full force and effect all
authorisations, approvals, licences and consents required in or by the laws and
regulations of its jurisdiction of formation and all other applicable
jurisdictions, to enable them lawfully to enter into and perform their
obligations under the Finance Documents and to ensure the legality, validity,
enforceability or admissibility in evidence of the Finance Documents in their
jurisdiction of incorporation or organisation and all other applicable
jurisdictions.
|
12.1.2 |
Notification of Default
The Borrowers shall promptly, upon becoming aware of
the same, inform the Agent in writing of the occurrence of any Event of Default
and, upon receipt of a written request to that effect from the Agent, confirm
to the Agent that, save as previously notified to the Agent or as notified in
such confirmation, no Event of Default has occurred.
|
12.1.3 |
Claims Pari Passu
The Borrowers shall ensure that at all times the claims of
the Finance Parties against them under the Finance Documents rank at least pari
passu with the claims of all their other unsecured creditors save those whose
claims are preferred by any bankruptcy, insolvency, liquidation, winding-up or
other similar laws of general application.
|
12.1.4 |
Management of Vessels
The Borrowers shall ensure that each of the Vessels is
at all times technically and commercially managed by the Managers.
|
12.1.5 |
Classification
The Borrowers shall ensure that each Vessel maintains the
highest classification required for the purpose of the relevant trade of such
Vessel which shall be with a Pre-Approved Classification Society, in each
case, free from any overdue recommendations and conditions affecting that
Vessels class.
|
38
12.1.6 |
Certificate of Financial Responsibility
The Borrowers shall obtain and
maintain a certificate of financial responsibility in relation to any Vessel
which is to call at the United States of America.
|
12.1.7 |
Negative Pledge
The Borrowers shall not create, or permit to subsist, any
Encumbrance (other than pursuant to the Security Documents) over all or any
part of the Vessels or the Insurances other than a Permitted Encumbrance.
|
12.1.8 |
Registration
The Borrowers shall not change or permit a change to the flag
of the Vessels during the Facility Period other than to a Pre-Approved Flag or
under such other flag as may be approved by the Agent acting on the
instructions of the Majority Lenders, such approval not to be unreasonably
withheld or delayed.
|
12.1.9 |
ISM and ISPS Compliance
The Borrowers shall ensure that the relevant Company
complies in all material respects with the ISM Code and the ISPS Code or any
replacements thereof and in particular (without prejudice to the generality of
the foregoing) shall ensure that the Company holds (i) a valid and current
Document of Compliance issued pursuant to the ISM Code, (ii) a valid and
current SMC issued in respect of each Vessel pursuant to the ISM Code, and
(iii) an ISSC in respect of each Vessel, and the Borrowers shall promptly, upon
request, supply the Agent with copies of the same.
|
12.1.10 |
Necessary Authorisations
Without prejudice to Clause 12.1.9 or any other
specific provision of the Security Documents relating to an Authorisation, the
Borrowers shall (i) obtain, comply with and do all that is necessary to
maintain in full force and effect all Necessary Authorisations if a failure to
do the same may cause a Material Adverse Effect; and (ii) promptly upon
request, supply certified copies to the Agent of all Necessary Authorisations.
|
39
12.1.11 |
Compliance with Applicable Laws
The Borrowers shall comply with all
applicable laws to which they may be subject if a failure to do the same may
have a Material Adverse Effect.
|
12.1.12 |
Loans and Guarantees
The Borrowers shall be permitted to make loans and
grant credit upon such terms as they may determine to any other member of the
Guarantor Group and may otherwise give any guarantee or indemnity to procure
financing for other members of the Guarantor Group, but shall not otherwise
make any loans or grant any credit (save in the ordinary course of business) or
give any guarantee or indemnity (except pursuant to the Security Documents);
Provided that the Borrowers shall not make any such loans or guarantees
following the occurrence of an Event of Default which is continuing unremedied
or unwaived.
|
12.1.13 |
Further Assurance
The Borrowers shall at their own expense, promptly take
all such action as the Agent may reasonably require for the purpose of
perfecting or protecting any Finance Partys rights with respect to the
security created or evidenced (or intended to be created or evidenced) by the
Security Documents.
|
12.1.14 |
Other information
The Borrowers will promptly supply to the Agent such
information and explanations as the Majority Lenders may from time to time
reasonably require in connection with the operation of the Vessels and any
reasonable financial information in connection with the Borrowers, and will
procure that the Agent be given the like information and explanations relating
to all other Security Parties.
|
12.1.15 |
Inspection of records
Following the occurrence of an Event of Default which
is continuing unremedied and unwaived the Borrowers will permit the inspection
of their financial records and accounts on reasonable notice from time to time
during business hours by the Agent or its nominee.
|
12.1.16 |
Valuations
The Borrowers will deliver to the Agent a Valuation of each of
the Vessels (i) on the due date for delivery of the annual Guarantors Accounts
pursuant to clause 9 of the Guarantee and (ii) following the occurrence of an
Event of Default which is continuing unremedied and unwaived, on such other
occasions as the Agent may request.
|
40
12.1.17 |
Insurance
The Borrowers shall ensure at their own expense throughout the
Facility Period that the Vessels are insured and operated in accordance with
the provisions set out in the relevant Security Documents.
|
12.1.18 |
Change of Control
The Borrowers shall procure that throughout the Facility
Period:
|
(a) |
Ownership of the Guarantor
the Charter
Guarantor shall at all times own (directly or indirectly) a majority of
the limited liability company interests in the General Partner;
|
(b) |
Ownership of the Pledgor
the Guarantor shall
remain the one hundred percent (100%) legal and beneficial owner of the
Pledgor (either directly or indirectly).
|
(c) |
Ownership of the Borrowers
the Pledgor shall
remain the one hundred percent (100%) legal and beneficial owner of
each of the Borrowers (either directly or indirectly).
|
12.1.19 |
Know your
customer
checks
If:
|
(a) |
the introduction of or any change in (or in the
interpretation, administration or application of) any law or regulation
made after the date of this Agreement;
|
(b) |
any change in the status of the Borrowers after
the Execution Date; or
|
(c) |
a proposed assignment or transfer by a Lender
of any of its rights and obligations under this Agreement to a party
that is not a Lender prior to such assignment or transfer,
|
41
12.1.20 |
Borrowings
The Borrowers will not (save hereunder) borrow from entities
other than members of the Guarantor Group and Teekay Corporation on a
subordinated and unsecured basis.
|
12.1.21 |
No Dividends
The Borrowers shall not pay dividends or make other
distributions to shareholders whilst an Event of Default has occurred and is
continuing unremedied and unwaived.
|
12.1.22 |
No disposal of Assets
The Borrowers shall not dispose of any material
assets other than as permitted in the Finance Documents.
|
12.1.23 |
Chartering
The Borrowers shall not:
|
(a) |
bareboat charter any of the Vessels during the Facility Period; or
|
(b) |
without the prior written consent of the
Lenders, permit any termination of, alteration to, or waiver of any
material term of either of the Charters.
|
12.1.24 |
Conversion
The Borrowers may proceed with any conversion in respect of the
Vessels without the prior written consent of the Lenders PROVIDED that the
Vessels maintain the ability to operate within the LNG sector following any
conversion works.
|
42
13 |
Events of Default
|
13.1 |
Events of Default
Each of the events or circumstances set out in this Clause
13.1 is an Event of Default.
|
13.1.1 |
Borrowers Failure to Pay under this Agreement
The Borrowers fail to pay any
amount of principal due from them under this Agreement at the time, in the
currency and otherwise in the manner specified herein provided
that, if the Borrowers can demonstrate to the reasonable satisfaction of the
Agent that all necessary instructions were given to effect such payment and
the non-receipt thereof is attributable solely to an error in the banking
system, such payment shall instead be deemed to be due, solely for the
purposes of this paragraph, within three (3) Business Days of the date on
which it actually fell due under this Agreement (if a payment of principal),
five (5) Business Days (if a payment of interest or fees) or ten (10)
Business Days (if a sum payable on demand); or
|
13.1.2 |
Misrepresentation
Any representation or statement made by any Security Party
in any Security Document to which it is a party or in any notice or other
document, certificate or statement delivered by it pursuant thereto or in
connection therewith is or proves to have been incorrect or misleading in any
material respect, where the circumstances causing the same give rise to a
Material Adverse Effect; or
|
13.1.3 |
Specific Covenants
A Security Party fails duly to perform or comply with any
of the obligations expressed to be assumed by or procured by the Borrowers under
Clauses 12.1.7, 12.1.17 or 12.1.18; or
|
13.1.4 |
Financial Covenants
The Guarantor is in breach of the Guarantors financial
covenants set out in Clauses 8.1.1 or 8.1.2 of the Guarantee at any time; or
|
13.1.5 |
Other Obligations
A Security Party fails duly to perform or comply with any of
the obligations expressed to be assumed by it in any Security Document (other
than those referred to in Clause 13.1.3 or Clause 13.1.4) and such failure is not
remedied within 30 days after the Agent has given notice thereof to the
Borrowers; or
|
43
13.1.6 |
Cross Default
Any indebtedness of any member of the Guarantor Group or the
Charter Guarantor is not paid when due (or within any applicable grace period) or
any indebtedness of any member of the Guarantor Group or the Charter Guarantor is
declared to be or otherwise becomes due and payable prior to its specified
maturity where (in either case) the aggregate of all such unpaid or accelerated
indebtedness of:
|
(a) |
each of the Borrowers is equal to or greater
than ten million Dollars ($10,000,000) or its equivalent in any other
currency; or
|
(b) |
any other member of the Guarantor Group (save
for the Guarantor and the Pledgor) is equal to or greater than twenty
five million Dollars ($25,000,000) or its equivalent in any other
currency; or
|
(c) |
the Charter Guarantor is equal to or greater
than one hundred million Dollars ($100,000,000) or its equivalent in
any other currency; or
|
(d) |
the Guarantor is equal to or greater than fifty
million Dollars ($50,000,000) or its equivalent in any other currency;
or
|
(e) |
the Pledgor is equal to or greater than fifty
million Dollars ($50,000,000), or its equivalent in any other currency;
or
|
13.1.7 |
Insolvency and Rescheduling
A Security Party is unable to pay its debts as
they fall due, commences negotiations with any one or more of its creditors with
a view to the general readjustment or rescheduling of its indebtedness or makes a
general assignment for the benefit of its creditors or a composition with its
creditors; or
|
13.1.8 |
Winding-up
A Security Party takes any corporate action or other steps are
taken or legal proceedings are started for its winding-up, dissolution,
administration or re-organisation or for the appointment of a liquidator,
receiver, administrator, administrative receiver, conservator, custodian, trustee
or similar officer of it or of any or all of its revenues or assets or any
moratorium is declared or sought in respect of any of its indebtedness; or
|
44
13.1.9 |
Execution or Distress
|
(a) |
Any Security Party fails to comply with or pay
any sum due from it (within 30 days of such amount falling due) under
any final judgment or any final order made or given by any court or
other official body of a competent jurisdiction in an aggregate (i) in
respect of the Guarantor equal to or greater than fifty million Dollars
($50,000,000) or its equivalent in any other currency; or (ii)
in respect of the Pledgor equal to or greater than fifty million
Dollars ($50,000,000) or its equivalent in any other currency, or
(iii) in respect of each Borrower equal to or greater than ten
million Dollars ($10,000,000) or its equivalent in any other
currency being a judgment or order against which there is no right
of appeal or if a right of appeal exists, where the time limit for
making such appeal has expired.
|
(b) |
Any execution or distress is levied against, or
an encumbrancer takes possession of, the whole or any part of, the
property, undertaking or assets of a Security Party in an aggregate
amount (i) in respect of the Guarantor equal to or greater than fifty
million Dollars ($50,000,000) or its equivalent in any other currency;
or (ii) in respect of the Pledgor equal to or greater than fifty
million Dollars ($50,000,000) or its equivalent in any other currency,
or (iii) in respect of each Borrower equal to or greater than ten
million Dollars ($10,000,000) or its equivalent in any other currency
other than any execution or distress which is being contested in good
faith and which is either discharged within 30 days or in respect of
which adequate security has been provided within 30 days to the
relevant court or other authority to enable the relevant execution or
distress to be lifted or released.
|
(c) |
Notwithstanding the foregoing paragraphs of
this Clause 13.1.9, any levy of any distress on or any arrest,
condemnation, confiscation, requisition for title or use, compulsory
acquisition, seizure, detention or forfeiture of a Vessel (or any part
thereof) or any exercise or purported exercise of any lien or claim on
or against a Vessel where the release of or discharge the lien or claim
on or against such Vessel has not been procured within 30 days; or
|
45
13.1.10 |
Similar Event
Any event occurs which, under the laws of any jurisdiction,
has a similar or analogous effect to any of those events mentioned in Clauses
13.1.7, 13.1.8 and 13.1.9; or
|
13.1.11 |
Insurances
Insurance is not maintained in respect of each Vessel in
accordance with the terms of the relevant Security Document in respect of that
Vessel; or
|
13.1.12 |
Class
A Vessel has its classification withdrawn by the relevant
classification society PROVIDED THAT if such withdrawal is (in the opinion of
the Agent in its absolute discretion) capable of remedy such Event of Default
shall only occur if the Vessels classification is not reinstated to the
satisfaction of the Agent within twenty one (21) days; or
|
13.1.13 |
Environmental Matters
|
(a) |
Any Environmental Claim is pending or made
against an Owner or any of an Owners Environmental Affiliates or in
connection with a Vessel, where such Environmental Claim has a Material
Adverse Effect.
|
(b) |
Any actual Environmental Incident occurs in
connection with a Vessel, where such Environmental Incident has a
Material Adverse Effect; or
|
13.1.14 |
Repudiation
Any
Security
Party repudiates any Security Document to which it
is a party or does or causes to be done any act or thing evidencing an
intention to repudiate any such Security Document; or
|
13.1.15 |
Validity and Admissibility
At any time any act, condition or thing required
to be done, fulfilled or performed in order:
|
(a) |
to enable any Security Party lawfully to enter
into, exercise its rights under and perform the respective obligations
expressed to be assumed by it in the Security Documents;
|
(b) |
to ensure that the obligations expressed to be
assumed by each of the Security Parties in the Security Documents are
legal, valid and binding; or
|
(c) |
to make the Security Documents admissible in
evidence in any applicable jurisdiction is not done, fulfilled or performed within 30 days after notification from
the Agent to the relevant Security Party requiring the same to be done,
fulfilled or performed; or
|
46
13.1.16 |
Illegality
At any time it is or becomes unlawful for any Security Party to
perform or comply with any or all of its obligations under the Security
Documents to which it is a party or any of the obligations of the Borrowers
hereunder are not or cease to be legal, valid and binding and such illegality
is not remedied or mitigated to the satisfaction of the Agent within thirty
(30) days after it has given notice thereof to the relevant Security Party; or
|
13.1.17 |
Material Adverse Change
At any time there shall occur a change in the
business or operations of a Security Party or a change in the financial
condition of any Security Party which, in the reasonable opinion of the
Majority Lenders, materially impairs such Security Partys ability to discharge
its obligations under the Security Documents in the manner provided therein,
and such change, if capable of remedy, is not so remedied within thirty (30)
days of the delivery of a notice confirming such change by the Agent to the
relevant Security Party; or
|
13.1.18 |
Qualifications of Financial Statements
The auditors of the Guarantor Group
qualify their report on any audited consolidated financial statements of the
Guarantor Group in any regard which, in the reasonable opinion of the Agent,
has a Material Adverse Effect; or
|
13.1.19 |
Conditions Subsequent
if any of the conditions set out in Clause 3.6 is not
satisfied within thirty (30) days or such other time period specified by the
Agent in its discretion; or
|
13.1.20 |
Revocation or Modification of consents etc.
if any Necessary Authorisation
which is now or which at any time during the Facility Period becomes necessary
to enable any of the Security Parties to comply with any of their obligations
in or pursuant to any of the Security Documents is revoked, withdrawn or
withheld, or modified in a manner which the Agent reasonably considers is, or
may be, prejudicial to the interests of a Finance Party in a material manner,
or if such Necessary Authorisation ceases to remain in full force and effect;
or
|
47
13.1.21 |
Curtailment of Business
if the business of any of the Security Parties is
wholly or materially curtailed by any intervention by or under authority of any
government, or if all or a substantial part of the undertaking, property or
assets of any of the Security Parties is seized, nationalised, expropriated or
compulsorily acquired by or under authority of any government or any Security
Party disposes or threatens to dispose of a substantial part of its business or
assets; or
|
13.1.22 |
Challenge to Registration
if the registration of any Vessel or any Mortgage
becomes void or voidable or liable to cancellation or termination; or
|
13.1.23 |
War
if the country of registration of any Vessel becomes involved in war
(whether or not declared) or civil war or is occupied by any other power and
the Agent reasonably considers that, as a result, the security conferred by the
Security Documents is materially prejudiced; or
|
13.1.24 |
Notice of Termination
if the Guarantor gives notice to the Agent to
determine its obligations under the Guarantee; or
|
13.1.25 |
Status of Guarantor
if the Guarantor ceases to be a publicly listed
limited partnership, or merges or demerges without the prior written approval
of the Lenders; or
|
13.1.26 |
Termination of Charters
If either of the Charters is terminated.
|
13.2 |
Acceleration
If an Event of Default is continuing unremedied or unwaived the
Agent may (with the consent of the Majority Lenders) and shall (at the request of the
Majority Lenders) by notice to the Borrowers cancel any part of the Maximum Amount not
then advanced and:
|
13.2.1 |
declare that the Facility, together with accrued interest, and all other
amounts accrued or outstanding under the Finance Documents are immediately due
and payable, whereupon they shall become immediately due and payable; and/or
|
13.2.2 |
declare that the Facility is payable on demand, whereupon it shall
immediately become payable on demand by the Agent; and/or
|
||
13.2.3 |
declare the Commitments terminated and the Maximum Amount reduced to zero.
|
48
14 |
Assignment and Sub-Participation
|
14.1 |
Lenders rights
Subject to the Borrowers consent (not to be unreasonably
withheld or delayed) a Lender may assign any of its rights under this Agreement or sell
participations in its rights and obligations under this Agreement, or transfer by
novation any of its rights and obligations under this Agreement to any other branch or
Affiliate of that Lender or (subject to a minimum assignment amount of five million
Dollars ($5,000,000)) to any other bank or financial institution or special purpose
vehicles wholly owned by a bank or financial institution, and may grant
sub-participations in all or any part of its Commitment PROVIDED any assignment, sale
or transfer under this Clause 14.1 shall not result in increased costs to the Borrowers
at the time of any such assignment, sale or transfer. Any such assignment, sale or
transfer must include a pro rata share of that Lenders Commitment in respect of
Tranche A and Tranche B.
|
14.2 |
Borrowers co-operation
The Borrowers will co-operate fully with a Lender in
connection with any assignment, transfer or sub-participation by that Lender; will
execute and procure the execution of such documents as that Lender may require in that
connection; and irrevocably authorises any Finance Party to disclose to any proposed
assignee, transferee or sub-participant (whether before or after any assignment,
transfer or sub-participation and whether or not any assignment, transfer or
sub-participation shall take place) all information relating to the Security Parties,
the Facility, the Relevant Documents and the Vessels which any Finance Party may in its
discretion consider necessary or desirable (subject to any duties of confidentiality
applicable to the Lenders generally). Additionally, (but subject to the same duties of
confidentiality), any Lender may disclose the size and term of the Facility and the
names of each Security Party to any investor or potential investor in a securitisation
whether of a true sale, synthetic or other nature (or similar transaction of broadly
equivalent economic effect) of that Lenders rights and obligations under the Finance
Documents or to any ratings agency, professional adviser, financial institution or
other person for the same purpose.
|
49
14.3 |
Rights of assignee
Any assignee of a Lender shall (unless limited by the
express terms of the assignment) take the full benefit of every provision of the
Finance
Documents benefiting that Lender PROVIDED THAT an assignment will only be
effective on notification by the Agent to that Lender and the assignee that the
Agent is satisfied it has complied with all necessary Know your customer or other
similar checks under all applicable laws and regulations in relation to the
assignment to the assignee.
|
14.4 |
Transfer Certificates
If a Lender wishes to transfer any of its rights and
obligations under or pursuant to this Agreement, it may do so by delivering to the
Agent a duly completed Transfer Certificate, in which event on the Transfer Date:
|
14.4.1 |
to the extent that that Lender seeks to transfer its rights and obligations,
the Borrowers (on the one hand) and that Lender (on the other) shall be
released from all further obligations towards the other;
|
14.4.2 |
the Borrowers (on the one hand) and the transferee (on the other) shall
assume obligations towards the other identical to those released pursuant to
Clause 14.4.1; and
|
14.4.3 |
the Agent, each of the Lenders and the transferee shall have the same rights
and obligations between themselves as they would have had if the transferee had
been an original party to this Agreement as a Lender
|
(a) |
it is satisfied it has complied with all necessary know your
customer or other similar checks under all applicable laws and regulations in
relation to the transfer to the transferee; and
|
(b) |
the transferee has paid to the Agent for its own account a
transfer fee of three thousand five hundred Dollars ($3,500).
|
14.5 |
Finance Documents
Unless otherwise expressly provided in any Finance Document
or otherwise expressly agreed between a Lender and any proposed transferee and notified
by that Lender to the Agent on or before the relevant Transfer Date, there shall
automatically be assigned to the transferee with any
transfer of a Lenders rights and obligations under or pursuant to this Agreement
the rights of that Lender under or pursuant to the Finance Documents (other than
this Agreement) which relate to the portion of that Lenders rights and obligations
transferred by the relevant Transfer Certificate.
|
50
14.6 |
No assignment or transfer by the Borrowers, the Pledgor or the Guarantor
The
Borrowers, the Pledgor and the Guarantor may not assign any of their rights or transfer
any of their rights or obligations under the Finance Documents without the prior
written consent of the Lenders.
|
15 |
The Agent, the Security Trustee and the Lenders
|
15.1 |
Appointment
|
15.1.1 |
Each Lender appoints the Agent to act as its agent under and in connection
with the Finance Documents and each Lender and the Agent appoints the Security
Trustee to act as its security agent for the purpose of the Security Documents.
|
15.1.2 |
Each Lender authorises the Agent, and each Lender and the Agent authorises
the Security Trustee, to exercise the rights, powers, authorities and
discretions specifically given to the Agent or the Security Trustee (as the
case may be) under or in connection with the Finance Documents together with
any other incidental rights, powers, authorities and discretions.
|
15.1.3 |
Except where the context otherwise requires, references in this Clause 15 to
the
Agent
shall mean the Agent and the Security Trustee individually and
collectively.
|
15.2 |
Authority
Each Lender irrevocably authorises the Security Trustee (in the
case of Clause 15.2.1) and the Agent (in the case of Clauses 15.2.2, 15.2.3 and 15.2.4)
(in each case subject to Clauses 15.4 and 15.18):
|
15.2.1 |
to execute any Finance Document (other than this Agreement) on its behalf;
|
15.2.2 |
to collect, receive, release or pay any money on its behalf;
|
51
15.2.3 |
acting on the instructions from time to time of the Majority Lenders (save
where the terms of any Security Document expressly provide otherwise) to give
or withhold any waivers, consents or approvals under or pursuant to any Finance
Document; and
|
15.2.4 |
acting on the instructions from time to time of the Majority Lenders (save
where the terms of any Security Document expressly provide otherwise) to
exercise, or refrain from exercising, any rights, powers, authorities or
discretions under or pursuant to any Finance Document.
|
15.3 |
Trust
The Security Trustee agrees and declares, and each of the other Finance
Parties acknowledges, that, subject to the terms and conditions of this Clause 15.3,
the Security Trustee holds the Trust Property on trust for the Finance Parties
absolutely. Each of the other Finance Parties agrees that the obligations, rights and
benefits vested in the Security Trustee shall be performed and exercised in accordance
with this Clause 15.3. The Security Trustee shall have the benefit of all of the
provisions of this Agreement benefiting it in its capacity as security agent for the
Finance Parties, and all the powers and discretions conferred on trustees by the
Trustee Act 1925 (to the extent not inconsistent with this Agreement). In addition:
|
15.3.1 |
the Security Trustee and any attorney, agent or delegate of the Security
Trustee may indemnify itself or himself out of the Trust Property against all
liabilities, costs, fees, damages, charges, losses and expenses sustained or
incurred by it or him in relation to the taking or holding of any of the Trust
Property or in connection with the exercise or purported exercise of the
rights, trusts, powers and discretions vested in the Security Trustee or any
other such person by or pursuant to the Security Documents or in respect of
anything else done or omitted to be done in any way relating to the Security
Documents other than as a result of its gross negligence or wilful misconduct;
|
52
15.3.2 |
the other Finance Parties acknowledge that the Security Trustee shall be
under no obligation to insure any property nor to require any other person to
insure any property and shall not be responsible for any loss which may be
suffered by any person as a result of the lack or insufficiency of any
insurance; and
|
15.3.3 |
the Finance Parties agree that the perpetuity period applicable to the trusts
declared by this Agreement shall be the period of eighty years from the date of
this Agreement.
|
15.4 |
Limitations on authority
Except with the prior written consent of all the
Lenders, the Agent shall not be entitled to:
|
15.4.1 |
release or vary any security given for the Borrowers obligations under this
Agreement; nor
|
15.4.2 |
waive, or agree to the reduction of, a payment of any sum of money payable by
any Security Party under the Finance Documents; nor
|
15.4.3 |
change the meaning of the expressions
Majority Lenders
,
Margin
,
Commitment Commission
or
Default Rate
; nor
|
15.4.4 |
exercise, or refrain from exercising, any right, power, authority or
discretion, or give or withhold any consent, the exercise or giving of which
is, by the terms of this Agreement, expressly reserved to the Lenders; nor
|
15.4.5 |
extend the due date for the payment of any sum of money payable by any
Security Party under any Finance Document; nor
|
15.4.6 |
take or refrain from taking any step if the effect of such action or inaction
may lead to the increase of the obligations of a Lender under any Finance
Document; nor
|
15.4.7 |
agree to change the currency in which any sum is payable under any Finance
Document (other than in accordance with the terms of the relevant Finance
Document); nor
|
15.4.8 |
agree to amend this Clause 15.4.
|
53
15.5 |
Liability
Neither the Agent nor any of its directors, officers, employees or
agents shall be liable to the Lenders for anything done or omitted to be done by the
Agent under or in connection with any of the Relevant Documents unless as a result of
the Agents gross negligence or wilful misconduct.
|
15.6 |
Acknowledgement
Each Lender acknowledges that:
|
15.6.1 |
it has not relied on any representation made by the Agent or any of the
Agents directors, officers, employees or agents or by any other person acting
or purporting to act on behalf of the Agent to induce it to enter into any
Finance Document;
|
15.6.2 |
it has made and will continue to make without reliance on the Agent, and
based on such documents and other evidence as it considers appropriate, its own
independent investigation of the financial condition and affairs of the
Security Parties in connection with the making and continuation of the
Facility;
|
15.6.3 |
it has made its own appraisal of the creditworthiness of the Security
Parties; and
|
15.6.4 |
the Agent shall not have any duty or responsibility at any time to provide it
with any credit or other information relating to any Security Party unless that
information is received by the Agent pursuant to the express terms of a Finance
Document.
|
15.7 |
Limitations on responsibility
The Agent shall have no responsibility to any
Security Party or to any Lender on account of:
|
15.7.1 |
the failure of a Lender or of any Security Party to perform any of its
obligations under a Finance Document; nor
|
15.7.2 |
the financial condition of any Security Party; nor
|
54
15.7.3 |
the completeness or accuracy of any statements, representations or warranties
made in or pursuant to any Finance Document, or in or pursuant to any document
delivered pursuant to or in connection with any Finance Document; nor
|
15.7.4 |
the negotiation, execution, effectiveness, genuineness, validity,
enforceability, admissibility in evidence or sufficiency of any Finance
Document or of any document executed or delivered pursuant to or in connection
with any Finance Document.
|
15.8 |
The Agents rights
The Agent may:
|
15.8.1 |
assume that all representations or warranties made or deemed repeated by any
Security Party in or pursuant to any Finance Document are true and complete,
unless, in its capacity as the Agent, it has acquired actual knowledge to the
contrary;
|
15.8.2 |
assume that no Default has occurred unless, in its capacity as the Agent, it
has acquired actual knowledge to the contrary;
|
15.8.3 |
rely on any document or notice believed by it to be genuine;
|
15.8.4 |
rely as to legal or other professional matters on opinions and statements of
any legal or other professional advisers selected or approved by it;
|
15.8.5 |
rely as to any factual matters which might reasonably be expected to be
within the knowledge of any Security Party on a certificate signed by or on
behalf of that Security Party; and
|
15.8.6 |
refrain from exercising any right, power, discretion or remedy unless and
until instructed to exercise that right, power, discretion or remedy and as to
the manner of its exercise by the Lenders (or, where applicable, by the
Majority Lenders) and unless and until the Agent has received from the Lenders
any payment which the Agent may require on account of, or any security which
the Agent may require for, any costs, claims, expenses (including legal and
other professional fees) and liabilities which it considers it may incur or
sustain in complying with those instructions.
|
55
15.9 |
The Agents duties
The Agent shall:
|
15.9.1 |
if requested in writing to do so by a Lender, make enquiry and advise the
Lenders as to the performance or observance of any of the provisions of any
Finance Document by any Security Party or as to the existence of an Event of
Default; and
|
15.9.2 |
inform the Lenders promptly of any Event of Default of which the Agent has
actual knowledge.
|
15.10 |
No deemed knowledge
The Agent shall not be deemed to have actual knowledge
of the falsehood or incompleteness of any representation or warranty made or deemed
repeated by any Security Party or actual knowledge of the occurrence of any Default
unless a Lender or a Security Party shall have given written notice thereof to the
Agent in its capacity as the Agent. Any information acquired by the Agent other than
specifically in its capacity as the Agent shall not be deemed to be information
acquired by the Agent in its capacity as the Agent.
|
15.11 |
Other business
The Agent may, without any liability to account to the
Lenders, generally engage in any kind of banking or trust business with a Security
Party or with a Security Partys subsidiaries or associated companies or with a Lender
as if it were not the Agent.
|
15.12 |
Indemnity
The Lenders shall, promptly on the Agents request, reimburse the
Agent in their respective Proportionate Shares, for, and keep the Agent fully
indemnified in respect of all liabilities, damages, costs and claims sustained or
incurred by the Agent in connection with the Finance Documents, or the performance of
its duties and obligations, or the exercise of its rights, powers, discretions or
remedies under or pursuant to any Finance Document, to the extent not paid by the
Security Parties and not arising solely from the Agents gross negligence or wilful
misconduct.
|
15.13 |
Employment of agents
In performing its duties and exercising its rights,
powers, discretions and remedies under or pursuant to the Finance Documents, the Agent
shall be entitled to employ and pay agents to do anything which the Agent is empowered
to do under or pursuant to the Finance Documents (including the receipt of money and
documents and the payment of money) and to act or refrain
from taking action in reliance on the opinion of, or advice or information obtained
from, any lawyer, banker, broker, accountant, valuer or any other person believed by
the Agent in good faith to be competent to give such opinion, advice or information.
|
56
15.14 |
Distribution of payments
The Agent shall pay promptly to the order of each
Lender that Lenders Proportionate Share of every sum of money received by the Agent
pursuant to the Finance Documents (with the exception of any amounts payable pursuant
to Clause 9 and/or any Fee Letter and any amounts which, by the terms of the Finance
Documents, are paid to the Agent for the account of the Agent alone or of one or more
Lenders) and until so paid such amount shall be held by the Agent on trust absolutely
for that Lender.
|
15.15 |
Reimbursement
The Agent shall have no liability to pay any sum to a Lender
until it has itself received payment of that sum. If, however, the Agent does pay any
sum to a Lender on account of any amount prospectively due to that Lender pursuant to
Clause 15.14 before it has itself received payment of that amount, and the Agent does
not in fact receive payment within five (5) Business Days after the date on which that
payment was required to be made by the terms of the Finance Documents, that Lender
will, on demand by the Agent, refund to the Agent an amount equal to the amount
received by it, together with an amount sufficient to reimburse the Agent for any
amount which the Agent may certify that it has been required to pay by way of interest
on money borrowed to fund the amount in question during the period beginning on the
date on which that amount was required to be paid by the terms of the Finance Documents
and ending on the date on which the Agent receives reimbursement.
|
15.16 |
Redistribution of payments
Unless otherwise agreed between the Finance
Parties, if at any time a Finance Party receives or recovers by way of set-off, the
exercise of any lien or otherwise from any Security Party, an amount greater than that
Finance Partys entitlement to any sum due from that Security Party under the Finance
Documents (the amount of the excess being referred to in this Clause 15.16 and in
Clause 15.17 as the
Excess Amount
) then:
|
15.16.1 |
that Finance Party shall promptly notify the Agent (which shall promptly
notify each other Finance Party);
|
57
15.16.2 |
that Finance Party shall pay to the Agent an amount equal to the Excess
Amount within ten (10) days of its receipt or recovery of the Excess Amount;
and
|
15.16.3 |
the Agent shall treat that payment as if it were a payment by the Security
Party in question on account of the sum due from that Security Party to the
Finance Party and shall account to the Finance Parties in respect of the Excess
Amount in accordance with the provisions of this Clause 15.16.
|
15.17 |
Rescission of Excess Amount
If all or any part of any Excess Amount is
rescinded or must otherwise be restored to any Security Party or to any other third
party, the Finance Parties which have received any part of that Excess Amount by way of
distribution from the Agent pursuant to Clause 15.16 shall repay to the Agent for the
account of the Finance Party which originally received or recovered the Excess Amount,
the amount which shall be necessary to ensure that the Finance Parties share in the
amount of the receipt or payment retained in accordance with the provisions of the
Finance Documents, together with interest on that amount at a rate equivalent to that
(if any) paid by the Lender receiving or recovering the Excess Amount to the person to
whom that Lender is liable to make payment in respect of such amount, and Clause
15.16.3 shall apply only to the retained amount.
|
15.18 |
Instructions
Where the Agent is authorised or directed to act or refrain
from acting in accordance with the instructions of the Lenders or of the Majority
Lenders each of the Lenders shall provide the Agent with instructions within three (3)
Business Days of the Agents request (which request may be made orally or in writing).
If a Lender does not provide the Agent with instructions within that period, that
Lender shall be bound by the decision of the Agent. Nothing in this Clause 15.18 shall
limit the right of the Agent to take, or refrain from taking, any action without
obtaining the instructions of the Lenders or the Majority Lenders if
the Agent in its discretion considers it necessary or appropriate to take, or
refrain from taking, such action in order to preserve the rights of the Lenders
under or in connection with the Finance Documents. In that event, the Agent will
notify the Lenders of the action taken by it as soon as reasonably practicable, and
the Lenders agree to ratify any action taken by the Agent pursuant to this Clause
15.18.
|
58
15.19 |
Payments
All amounts payable to a Lender under this Clause 15 shall be paid
to such account at such bank as that Lender may from time to time direct in writing to
the Agent.
|
15.20 |
Know your customer checks
Each Lender shall promptly upon the request of
the Agent supply, or procure the supply of, such documentation and other evidence as is
reasonably requested by the Agent (for itself) in order for the Agent to carry out and
be satisfied it has complied with all necessary know your customer or other similar
checks under all applicable laws and regulations pursuant to the transactions
contemplated in the Finance Documents.
|
15.21 |
Resignation
Subject to a successor being appointed in accordance with this
Clause 15.21, the Agent may resign as agent and/or the Security Trustee may resign as
security agent at any time without assigning any reason by giving to the Borrowers and
the Finance Parties notice of its intention to do so, in which event the following
shall apply:
|
15.21.1 |
with the consent of the Borrowers not to be unreasonably withheld (but such
consent not to be required at any time after an Event of Default which is
continuing unremedied and unwaived) the Finance Parties may within thirty (30)
days after the date of the notice from the Agent or the Security Trustee (as
the case may be) appoint a successor to act as agent and/or security agent or,
if they fail to do so with the consent of the Borrowers, not to be unreasonably
withheld (but such consent not to be required at any time after an Event of
Default which is continuing unremedied and unwaived), the Agent or the Security
Trustee (as the case may be) may appoint any other bank or financial
institution as its successor;
|
15.21.2 |
the resignation of the Agent or the Security Trustee (as the case may be)
shall take effect simultaneously with the appointment of its successor on
written notice of that appointment being given to the Borrowers and the
Finance Parties;
|
59
15.21.3 |
the Agent or the Security Trustee (as the case may be) shall thereupon be
discharged from all further obligations as agent and/or security agent but
shall remain entitled to the benefit of the provisions of this Clause 15; and
|
15.21.4 |
the successor of the Agent or the Security Trustee (as the case may be) and
each of the other parties to this Agreement shall have the same rights and
obligations amongst themselves as they would have had if that successor had
been a party to this Agreement.
|
15.22 |
No fiduciary relationship
Except as provided in Clauses 15.3 and 15.14, the
Agent shall not have any fiduciary relationship with or be deemed to be a trustee of or
for any other person and nothing contained in any Finance Document shall constitute a
partnership between any two or more Finance Parties or between the Agent and any other
person.
|
16 |
Set-Off
|
17 |
Payments
|
17.1 |
Payments
Each amount payable by the Borrowers under a Finance Document shall
be paid to such account at such bank as the Agent may from time to time direct to the
Borrowers in the Currency of Account and in such funds as are customary at the time for
settlement of transactions in the relevant currency in the place of payment. Payment
shall be deemed to have been received by the Agent on the date on which the Agent
receives authenticated advice of receipt, unless that advice is received by the Agent
on a day other than a Business Day or at a time of day (whether on a Business Day or
not) when the Agent in its reasonable discretion considers that it is impossible or
impracticable for the Agent to utilise the amount
received for value that same day, in which event the payment in question shall be
deemed to have been received by the Agent on the Business Day next following the
date of receipt of advice by the Agent.
|
60
17.2 |
No deductions or withholdings
Each payment (whether of principal or interest
or otherwise) to be made by the Borrowers under a Finance Document shall, subject only
to Clause 17.3, be made free and clear of and without deduction for or on account of
any Taxes or other deductions, withholdings, restrictions, conditions or counterclaims
of any nature.
|
17.3 |
Grossing-up
If at any time any law requires (or is interpreted to require)
the Borrowers to make any deduction or withholding from any payment, or to change the
rate or manner in which any required deduction or withholding is made, the Borrowers
will promptly notify the Agent and, simultaneously with making that payment, will pay
to the Agent whatever additional amount (after taking into account any additional Taxes
on, or deductions or withholdings from, or restrictions or conditions on, that
additional amount) is necessary to ensure that, after making the deduction or
withholding, the relevant Finance Parties receive a net sum equal to the sum which they
would have received had no deduction or withholding been made.
|
17.4 |
Evidence of deductions
If at any time the Borrowers are required by law to
make any deduction or withholding from any payment to be made by them under a Finance
Document, the Borrowers will pay the amount required to be deducted or withheld to the
relevant authority within the time allowed under the applicable law and will, no later
than thirty (30) days after making that payment, deliver to the Agent an original
receipt issued by the relevant authority, or other evidence reasonably acceptable to
the Agent, evidencing the payment to that authority of all amounts required to be
deducted or withheld.
|
17.5 |
Rebate
If a Borrower pays any additional amount under Clause 17.3, and a
Finance Party subsequently receives a refund or allowance from any tax authority which
that Finance Party identifies as being referable to that increased amount so paid by
that Borrower, that Finance Party shall, as soon as reasonably practicable, pay to that
Borrower an amount equal to the amount of the refund or allowance received, if and to
the extent that it may do so without prejudicing its right to retain that refund or
allowance and without putting itself in any worse financial position
than that in which it would have been had the relevant deduction or withholding not
been required to have been made. Nothing in this Clause 17.5 shall be interpreted
as imposing any obligation on any Finance Party to apply for any refund or allowance
nor as restricting in any way the manner in which any Finance Party organises its
tax affairs, nor as imposing on any Finance Party any obligation to disclose to the
Borrowers any information regarding its tax affairs or tax computations.
|
61
17.6 |
Adjustment of due dates
If any payment or transfer of funds to be made under
a Finance Document, other than a payment of interest on a Drawing, shall be due on a
day which is not a Business Day, that payment shall be made on the next succeeding
Business Day (unless the next succeeding Business Day falls in the next calendar month
in which event the payment shall be made on the next preceding Business Day). Any such
variation of time shall be taken into account in computing any interest in respect of
that payment.
|
17.7 |
Control Account
The Agent shall without further input required from the
Borrowers open and maintain on its books a control account in the name of the Borrowers
showing the advance of the Facility and the computation and payment of interest and all
other sums due under this Agreement. The Borrowers obligations to repay the Facility
and to pay interest and all other sums due under this Agreement shall be evidenced by
the entries from time to time made in the control account opened and maintained under
this Clause 17.7 by the Agent and those entries will, in the absence of manifest error,
be conclusive and binding.
|
18 |
Notices
|
18.1 |
Communications in writing
Any communication to be made under or in connection
with this Agreement shall be made in writing and, unless otherwise stated, may be made
by fax or letter or (subject to Clause 18.6) electronic mail.
|
18.2 |
Addresses
The address and fax number (and the department or officer, if any,
for whose attention the communication is to be made) of each party to this Agreement
for any communication or document to be made or delivered under or in connection with
this Agreement are:
|
18.2.1 |
in the case of the Borrowers, c/o Teekay Shipping (Canada) Ltd Suite 2000,
Bentall 5, 550 Burrard Street, Vancouver, B.C., Canada V6C 2K2 (fax no: +1 604
681 3011) marked for the attention of Vice President, Finance;
|
62
18.2.2 |
in the case of each Lender, those appearing opposite its name in Schedule 1;
|
18.2.3 |
in the case of the Agent, 200 Park Avenue, 31
st
Floor, New York,
NY 10166, USA (fax no: +1 212 681 4123) marked for the attention of Teresa
Rosu; and
|
18.2.4 |
in the case of the Security Trustee, 200 Park Avenue, 31
st
Floor,
New York, NY 10166, USA (fax no: +1 212 681 4123)marked for the attention of
Teresa Rosu;
|
18.3 |
Delivery
Any communication or document made or delivered by one party to this
Agreement to another under or in connection this Agreement will only be effective:
|
18.3.1 |
if by way of fax, when received in legible form; or
|
18.3.2 |
if by way of letter, when it has been left at the relevant address or five
(5) Business Days after being deposited in the post postage prepaid in an
envelope addressed to it at that address; or
|
18.3.3 |
if by way of electronic mail, in accordance with Clause 18.6;
|
18.4 |
Notification of address and fax number
Promptly upon receipt of notification
of an address, fax number or change of address, pursuant to Clause 18.2 or changing
its own address or fax number, the Agent shall notify the other parties to this
Agreement.
|
63
18.5 |
English language
Any notice given under or in connection with this Agreement
must be in English. All other documents provided under or in connection with this
Agreement must be:
|
18.5.1 |
in English; or
|
18.5.2 |
if not in English, and if so required by the Agent, accompanied by a
certified English translation and, in this case, the English translation will
prevail unless the document is a constitutional, statutory or other official
document.
|
18.6 |
Electronic communication
|
(a) |
Any communication to be made in connection with this Agreement
may be made by electronic mail or other electronic means, if the Borrowers and
the relevant Finance Party:
|
(i) |
agree that, unless and until notified to the
contrary, this is to be an accepted form of communication;
|
(ii) |
notify each other in writing of their
electronic mail address and/or any other information required to enable
the sending and receipt of information by that means; and
|
(iii) |
notify each other of any change to their
address or any other such information supplied by them.
|
(b) |
Any electronic communication made between the Borrowers and the
relevant Finance Party will be effective only when actually received in
readable form and acknowledged by the recipient (it being understood that any
system generated responses do not constitute an acknowledgement) and in the
case of any electronic communication made by the Borrowers to a Finance Party
only if it is addressed in such a manner as the Finance Party shall specify for
this purpose.
|
64
19 |
Partial Invalidity
|
20 |
Remedies and Waivers
|
21 |
Joint and several liability
|
21.1 |
Nature of liability of the Borrowers
The representations, warranties,
covenants, obligations and undertakings of the Borrowers contained in this Agreement
shall be joint and several so that each Borrower shall be jointly and severally liable
with the other Borrower for all of the same and such liability shall not in any way be
discharged, impaired or otherwise affected by:
|
21.1.1 |
any forbearance (whether as to payment or otherwise) or any time or other
indulgence granted to the other Borrower or any other Security Party under or
in connection with any Finance Document;
|
21.1.2 |
any amendment, variation, novation or replacement of any other Finance
Document;
|
21.1.3 |
any failure of any Finance Document to be legal valid binding and enforceable
in relation to the other Borrower or any other Security Party for any reason;
|
21.1.4 |
the winding-up or dissolution of the other Borrower or any other Security
Party;
|
65
21.1.5 |
the release (whether in whole or in part) of, or the entering into of any
compromise or composition with, the other Borrower or any other Security Party;
or
|
21.1.6 |
any other act, omission, thing or circumstance which would or might, but for
this provision, operate to discharge, impair or otherwise affect such
liability.
|
21.2 |
No rights as surety
Until the Indebtedness has been unconditionally and
irrevocably paid and discharged in full, each Borrower agrees that it shall not, by
virtue of any payment made under this Agreement on account of the Indebtedness or by
virtue of any enforcement by a Finance Party of its rights under this Agreement or by
virtue of any relationship between, or transaction involving, the relevant Borrower and
the other Borrower or any other Security Party:
|
21.2.1 |
exercise any rights of subrogation in relation to any rights, security or
moneys held or received or receivable by a Finance Party or any other person;
or
|
21.2.2 |
exercise any right of contribution from the other Borrower or any other
Security Party under any Finance Document; or
|
21.2.3 |
exercise any right of set-off or counterclaim against the other Borrower or
any other Security Party; or
|
21.2.4 |
receive, claim or have the benefit of any payment, distribution, security or
indemnity from the other Borrower or any other Security Party; or
|
21.2.5 |
unless so directed by the Agent (when the relevant Borrower will prove in
accordance with such directions), claim as a creditor of the other Borrower or
any other Security Party in competition with any Finance Party
|
66
22 |
Miscellaneous
|
22.1 |
No oral variations
No variation or amendment of a Finance Document shall be
valid unless in writing and signed on behalf of all the Finance Parties.
|
22.2 |
Further Assurance
If any provision of a Finance Document shall be invalid or
unenforceable in whole or in part by reason of any present or future law or any
decision of any court, or if the documents at any time held by or on behalf of the
Finance Parties or any of them are considered by the Lenders for any reason
insufficient to carry out the terms of this Agreement, then from time to time the
Borrowers will promptly, on demand by the Agent, execute or procure the execution of
such further documents as in the opinion of the Lenders are necessary to provide
adequate security for the repayment of the Indebtedness.
|
22.3 |
Rescission of payments etc.
Any discharge, release or reassignment by a
Finance Party of any of the security constituted by, or any of the obligations of a
Security Party contained in, a Finance Document shall be (and be deemed always to have
been) void if any act (including, without limitation, any payment) as a result of which
such discharge, release or reassignment was given or made is subsequently wholly or
partially rescinded or avoided by operation of any law.
|
22.4 |
Certificates
Any certificate or statement signed by an authorised signatory
of the Agent purporting to show the amount of the Indebtedness (or any part of the
Indebtedness) or any other amount referred to in any Finance Document shall, save for
manifest error or on any question of law, be conclusive evidence as against the
Borrowers of that amount.
|
22.5 |
Counterparts
This Agreement may be executed in any number of counterparts
each of which shall be original but which shall together constitute the same
instrument.
|
22.6 |
Contracts (Rights of Third Parties) Act 1999
A person who is not a party to
this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to
enforce or to enjoy the benefit of any term of this Agreement.
|
67
22.7 |
Disclosure of Information
In addition to the disclosure of information
permitted under Clause 14.2, each of the Borrowers authorises each Lender to disclose
any information and/or document(s) concerning its relationship with such Lender (i) to
authorities in any other countries where such Lender or any Affiliate is represented
and/or where any Lender or any Affiliate may be requested information by any
regulatory authority, when this shall be deemed necessary in order for such Lender
or any Affiliate to meet its requirements for the contribution to reduction or
prevention of money laundering, terrorism and corruption, and (ii) to any Affiliate
of that Lender making it possible to consolidate the clients total commitments and
offer the client any other products offered by that Lender or any Affiliate, subject
always to the duties of confidentiality on the Lenders set out herein.
|
23 |
Law and Jurisdiction
|
23.1 |
Governing law
This Agreement shall in all respects be governed by and
interpreted in accordance with English law.
|
23.2 |
Jurisdiction
For the exclusive benefit of the Finance Parties, the parties to
this Agreement irrevocably agree that the courts of England are to have jurisdiction to
settle any disputes which may arise out of or in connection with this Agreement and
that any proceedings may be brought in those courts.
|
23.3 |
Alternative jurisdictions
Nothing contained in this Clause 23 shall limit the
right of the Finance Parties to commence any proceedings against the Borrowers in any
other court of competent jurisdiction nor shall the commencement of any proceedings
against the Borrowers in one or more jurisdictions preclude the commencement of any
proceedings in any other jurisdiction, whether concurrently or not.
|
23.4 |
Waiver of objections
Each of the Borrowers irrevocably waives any objection
which it may now or in the future have to the laying of the venue of any proceedings in
any court referred to in this Clause 23, and any claim that those proceedings have been
brought in an inconvenient or inappropriate forum, and irrevocably agrees that a
judgment in any proceedings commenced in any such court shall be conclusive and binding
on it and may be enforced in the courts of any other jurisdiction.
|
23.5 |
Service of process
Without prejudice to any other mode of service allowed
under any relevant law, each of the Borrowers:
|
23.5.1 |
irrevocably appoints Teekay Shipping (UK) Ltd of 2
nd
Floor, 86
Jermyn Street, London SW1Y 6JD England as its agent for service of process in
relation to any proceedings before the English courts in connection with this
Agreement; and
|
23.5.2 |
agrees that failure by a process agent to notify the Borrowers of the process
will not invalidate the proceedings concerned.
|
68
The Lenders | The Commitments | |||
(US$) | ||||
DNB NOR Bank ASA
|
34,500,000 | |||
|
||||
200 Park Avenue
|
||||
31
st
Floor
|
||||
New York
|
||||
NY 10166
|
||||
USA
|
||||
|
||||
For Credit Matters:
|
||||
Attention: Asa Jemseby-Rodgers / Sanjiv Nayar
|
||||
Fax no: +1 212 681 3900
|
||||
Tel: +1 212 681 3856 / +1 212 681 3862
|
||||
Email: asa.jemseby@dnbnor.no
|
||||
sanjiv.nayar@dnbnor.no
|
||||
|
||||
For Administrative Matters:
|
||||
Attention: Teresa Rosu / Ahelia Singh
|
||||
Fax no. + 1 212 681 3845
|
||||
Tel: +1 212 681 3900
|
||||
Email: teresa.rosu@dnbnor.no
|
||||
ahelia.singh@dnbnor.no
|
||||
|
||||
Nordea Bank Norge ASA, Cayman Islands Branch
|
34,500,000 | |||
|
||||
437 Madison Avenue
|
||||
New York
|
||||
NY 10022
|
||||
USA
|
||||
For Credit Matters:
|
||||
Attention: Hans Kjelsrud/Colleen Durkin
|
||||
Fax no: +1 212 421 4420
|
||||
Email: hans.kjelsrud@nordea.com
|
||||
colleen.durkin@nordea.com
|
||||
|
||||
For administration matters:
|
||||
Attention: Jacqueline Ng/Sonia Earle
|
||||
Fax no: +1 212 750 9188
|
||||
Email: jackie.ng@nordea.com
|
||||
sonia.earle@nordea.com
|
69
The Lenders | The Commitments | |||
(US$) | ||||
Sumitomo Mitsui Banking Corporation, Brussels Branch
|
34,500,000 | |||
|
||||
For Credit Matters:
|
||||
99 Queen Victoria Street
|
||||
London EC4V 4EH
|
||||
United Kingdom
|
||||
Attention: Robert Taylor / Cyrille Martin
|
||||
Fax no: + 44 207 786 101
|
||||
Email: robert_taylor@gb.smbcgroup.com
|
||||
cyrille_martin@gb.smbcgroup.com
|
||||
|
||||
With copy to
|
||||
|
||||
20 rue de la ville levêque
|
||||
75008 Paris
|
||||
Attention: Guillaume Dufour / Touf-itri Akdime
|
||||
Fax No: +33 1 44 71 40 50
|
||||
Email: guillaume_dufour@fr.smbcgroup.com
|
||||
Touf-itri_akdime@fr.smbcgroup.com
|
||||
|
||||
And
|
||||
|
||||
Avenue des Arts 58, Box 18
|
||||
1000 Brussels
|
||||
Belgium
|
||||
Attention: Francoise Bouchat / Nadine Boudart
|
||||
Fax No: + 32 2 502 07 80
|
||||
Email: francoise_bouchat@be.smbcgroup.com
|
||||
nadine_boudart@be.smbcgroup.com
|
||||
|
||||
For Administrative Matters:
|
||||
|
||||
European Loan Operations
|
||||
Attention: David Griffiths / Jo Dunnage
|
||||
99 Queen Victoria Street
|
||||
London EC4V 4EH
|
||||
Fax No: +44 207 786 1569
|
||||
(fax correspondence only)
|
||||
|
||||
Lloyds TSB Bank Plc
|
34,500,000 | |||
|
||||
10 Gresham Street
|
||||
London EC2V 7EA
|
||||
For Credit Matters:
|
||||
Attention: Tony Stevens / David Sumner
|
||||
Tel: +44 207 158 2647 / +44 207 158 2749
|
||||
Fax: +44 207 158 3271 / +44 207 158 3273
|
||||
Email: tony.stevens@lloydstsb.co.uk
|
||||
david.sumner@lloydstsb.co.uk
|
70
The Lenders | The Commitments | |||
(US$) | ||||
For Administrative Matters:
|
||||
|
||||
Bank House
|
||||
Wine Street,
|
||||
Bristol BS1 2AN
|
||||
|
||||
Attention: Martina Rogers / S-Z Team
|
||||
Tel: +44 117 923 3006 / +44 117 923 3086
|
||||
Fax: +44 207 158 3204
|
||||
Email: martina.rogers@lloydstsb.co.uk
|
||||
LoansAdmin_S-Z@lloydstsb.co.uk
|
||||
|
||||
Skandinaviska Enskilda Banken AB
|
34,500,000 | |||
|
||||
For Credit Matters:
|
||||
|
||||
SEB Merchant Banking
|
||||
Shipping Finance, KBBV
|
||||
SE-10640 Stockholm
|
||||
Sweden
|
||||
Attention: Arne Juell-Skielse
|
||||
Fax no: + 46 8 678 0206
|
||||
Email: arne.
juell-skielse@seb.se
|
||||
|
||||
With copy to
|
||||
|
||||
SEB Merchant Banking
|
||||
2 Cannon Street
|
||||
London EC4M 6XX
|
||||
Attention: Egil Aarrestad
|
||||
Fax No: +44 20 7236 5144
|
||||
Email:
egil.aarrestad@seb.co.uk
|
||||
|
||||
For Administrative Matters:
|
||||
|
||||
Skandinaviska Enskilda Banken AB
|
||||
Structured Finance Operations
|
||||
Rissneleden 110
|
||||
SE-10640 Stockholm
|
||||
Sweden
|
||||
Attention: Lars Hansson
|
||||
Fax No: +46 8 611 0384
|
71
Borrower | Vessel Name | Year Built | ||||||
Arctic Spirit L.L.C.
|
ARCTIC SPIRIT | 1993 | ||||||
|
||||||||
Polar Spirit L.L.C.
|
POLAR SPIRIT | 1993 |
72
1 |
Security Parties
|
(a) |
Constitutional Documents
Copies of the constitutional documents of each
Security Party, the Charterer and the Charter Guarantor together with such other
evidence as the Agent may reasonably require that each Security Party, the Charterer
and the Charter Guarantor is duly formed or incorporated in its country of
incorporation or formation and remains in existence with power to enter into, and
perform its obligations under, the Relevant Documents to which it is or is to become a
party.
|
(b) |
Certificates of good standing
A certificate of good standing in respect of
each Security Party, the Charterer and the Charter Guarantor (if such a certificate can
be obtained).
|
(c) |
Board resolutions
A copy of a resolution of the board of directors of each
Security Party, the Charterer and the Charter Guarantor (or its sole member):
|
(i) |
approving the terms of, and the transactions contemplated by,
the Relevant Documents to which it is a party and ratifying or resolving that
it execute those Relevant Documents; and
|
(ii) |
if required authorising a specified person or persons to
execute those Relevant Documents (and all documents and notices to be signed
and/or despatched under those documents) on its behalf.
|
(d) |
Officers certificates
A certificate of a duly authorised officer or
representative of each Security Party, the Charterer and the Charter Guarantor
certifying that each copy document relating to it specified in this Part I of Schedule
3 is correct, complete and in full force and effect as at a date no earlier than the
date of this Agreement and setting out the names of the directors and officers of that
Security Party, the Charterer and the Charter Guarantor (or its sole member) and the
proportion of shares held by each shareholder.
|
73
(e) |
Powers of attorney
The notarially attested and legalised (where necessary for
registration purposes) power of attorney of each Security Party, the Charterer and the
Charter Guarantor under which any documents are to be executed or transactions
undertaken by that Security Party, the Charterer and the Charter Guarantor.
|
2 |
Security and related documents
|
(a) |
Vessel documents
In respect of the relevant Vessel photocopies, certified as
true, accurate and complete by a duly authorised representative of the relevant Owner,
of any relevant Management Agreement, the Charter, the Sub-Charter and the Conversion
Agreement, together in each case with all addenda, amendments or supplements.
|
(b) |
Evidence of Owners title
Evidence that on the Drawdown Date (i) the relevant
Vessel is registered under the flag stated in Schedule 2 in the ownership of the
relevant Owner and (ii) the relevant Mortgage will be capable of being registered
against the relevant Vessel with first priority.
|
(c) |
Evidence of insurance
Evidence that the relevant Vessel is insured in the
manner required by the Security Documents and that letters of undertaking will be
issued in the manner required by the Security Documents, together with the written
approval of the Insurances by an insurance adviser appointed by the Agent.
|
(d) |
Confirmation of class
Certificate of Confirmation of Class for hull and
machinery confirming that such Vessel is classed with the highest class applicable to
vessels of her type with a Pre-Approved Classification Society.
|
(e) |
Security Documents
The Security Documents, together with all other documents
required by any of them, including, without limitation, all notices of assignment
and/or charge and evidence that those notices will be duly acknowledged by the
recipients.
|
(f) |
Other Relevant Documents
Copies of each of the Relevant Documents not
otherwise comprised in the documents listed in this Part I of Schedule 3.
|
74
3 |
Legal opinions
|
4 |
Other documents and evidence
|
(a) |
Drawdown Notice
A duly completed Drawdown Notice.
|
(b) |
Process agent
Evidence that any process agent referred to in Clause 23.5 and
any process agent appointed under any other Finance Document has accepted its
appointment.
|
(c) |
Other authorisations
A copy of any other consent, licence, approval,
authorisation or other document, opinion or assurance which the Agent considers to be
necessary or desirable (if it has notified the Borrowers accordingly) in connection
with the entry into and performance of the transactions contemplated by any of the
Relevant Documents or for the validity and enforceability of any of the Relevant
Documents.
|
(d) |
Fees
Evidence that the fees, costs and expenses then due from the Borrowers
under Clause 8 and Clause 9 (other than Clause 9.3) have been paid or will be paid by
the Drawdown Date.
|
(e) |
Know your customer documents
Such documentation and other evidence as is
reasonably requested by the Agent in order for the Lenders to comply with all necessary
know your customer or similar identification procedures in relation to the
transactions contemplated in the Finance Documents.
|
75
1 |
Evidence of Owners title
Certificate of ownership and encumbrance (or equivalent) issued
by the Registrar of Ships (or equivalent official) of the relevant Vessels flag state
confirming that (a) the relevant Vessel is permanently registered under that flag in the
ownership of the relevant Owner, (b) the relevant Mortgage has been registered with first
priority against the relevant Vessel and (c) there are no further Encumbrances registered
against the relevant Vessel.
|
2 |
Letters of undertaking
Letters of undertaking in respect of the Insurances in respect of
the Vessels as required by the Security Documents together with copies of the relevant
policies or cover notes or entry certificates duly endorsed with the interest of the Finance
Parties.
|
3 |
Acknowledgements of notices
Acknowledgements of all notices of assignment and/or charge
given pursuant to the Security Documents.
|
4 |
Legal opinions
Such of the legal opinions specified in Part I of this Schedule 3 as have
not already been provided to the Agent.
|
5 |
Companies Act registrations
Evidence that the prescribed particulars of the Security
Documents have been delivered to the Registrar of Companies of England and Wales and (where
relevant) the appropriate registry in Singapore within the statutory time limit.
|
76
1. |
A certificate from a duly authorised officer or representative of each Security
Party, the Charterer and the Charter Guarantor confirming that none of the documents
delivered to the Agent pursuant to Schedule 3 Part I (a), (b), (c), (d) and (e) have
been amended or modified in any way since the date of their delivery to the Agent or
otherwise confirming such amendments or modifications. Such confirmations may be
provided in the form of a single certificate issued by a duly authorised officer or
representative of one of the Security Parties.
|
2. |
Drawdown Notice
A duly completed Drawdown Notice.
|
77
1 |
Security Parties
|
(a) |
A certificate from a duly authorised officer or representative of each Security
Party, the Charterer and the Charter Guarantor confirming that none of the documents
delivered to the Agent pursuant to Schedule 3 Part I (a), (b), (c), (d) and (e) have
been amended or modified in any way since the date of their delivery to the Agent or
otherwise confirming such amendments or modifications.
|
(b) |
Officers certificates
A certificate of a duly authorised officer or
representative of each Borrower (a) certifying that each copy document relating to it
specified in this Part IV of Schedule 3 is correct, complete and in full force and
effect as at a date no earlier than the date of the Upsize Trigger Date (b) confirming
that the representations and warranties referred to in Clause 11 are true and accurate
as at the date of the Upsize Trigger Date and (c) setting out the names of the
directors and officers of each Borrower (or its sole member) and the proportion of
shares held by each shareholder.
|
2 |
Legal opinions
|
3 |
Other documents and evidence
|
(a) |
Upsize Notice
A duly completed Upsize Notice, accepted in writing by the
Agent.
|
(b) |
Drawdown Notice
A duly completed Drawdown Notice.
|
(c) |
Process agent
Evidence that any process agent appointed under any new Finance
Document has accepted its appointment.
|
78
(d) |
Other authorisations
A copy of any other consent, licence, approval,
authorisation or other document, opinion or assurance which the Agent considers to be
necessary or desirable (if it has notified the relevant Owner accordingly) in
connection with the entry into and performance of the transactions contemplated by any
of the Relevant Documents or for the validity and enforceability of any of the Relevant
Documents.
|
(e) |
Conversion Project Price
A certificate from the Borrowers which provides
information satisfactory to the Agent (in its reasonable opinion) in respect of the
conversion costs relating to the Vessels which shows that (i) the requested increase in
the Maximum Amount is no more than seventy five per cent (75%) of the conversion costs
incurred and (ii) an amount equivalent to the balance of the conversion costs incurred
has been paid to the party carrying out the conversion works.
|
(f) |
Fees
Evidence that the fees, costs and expenses then due from the Borrowers
under Clause 9.3 have been paid or will be paid by the Drawdown Date.
|
79
80
1 |
The Mandatory Cost is an addition to the interest rate to compensate the Lenders for the cost
of compliance with (a) the requirements of the Bank of England and/or the Financial Services
Authority (or, in either case, any other authority which replaces all or any of its functions)
or (b) the requirements of the European Central Bank.
|
(a) |
On the first day of each Interest Period (or as soon as possible thereafter) the Agent shall
calculate, as a percentage rate, a rate (the
Additional Cost Rate
) for each Lender in
accordance with the paragraphs set out below. The Mandatory Cost will be calculated by the
Agent as a weighted average of the Lenders Additional Cost Rates (weighted in proportion to
the percentage participation of each Lender in the Facility) and will be expressed as a
percentage rate per annum.
|
(b) |
The Additional Cost Rate for any Lender lending from an office in the euro-zone will be the
percentage notified by that Lender to the Agent to be its reasonable determination of the cost
(expressed as a percentage of that Lenders participation in the Facility) of complying with
the minimum reserve requirements of the European Central Bank as a result of participating in
the Facility from that office.
|
(c) |
The Additional Cost Rate for any Lender lending from an office in the United Kingdom will be
calculated by the Agent as follows:
|
|
F x 0.01 | per cent per annum | ||||
|
|
2 |
For the purpose of this Schedule:
|
(a) |
eligible liabilities
and
special deposits
have the meanings given to them
at the time of application of the formula by the Bank of England;
|
(b) |
fee base
has the meaning given to it in the Fees Regulations;
|
81
(c) |
Fees Regulations
means the regulations governing periodic fees contained in
the FSA Supervision Manual or such other law or regulation as may be in force from time
to time in respect of the payment of fees for the acceptance of deposits.
|
3 |
If a Lender does not supply the information required by the Agent to determine its Additional
Cost Rate when requested to do so, the applicable Mandatory Cost shall be determined on the
basis of the information supplied by the remaining Lenders.
|
4 |
If a change in circumstances has rendered, or will render, the formula inappropriate, the
Agent shall notify the Borrowers of the manner in which the Mandatory Cost will subsequently
be calculated. The manner of calculation so notified by the Agent shall, in the absence of
manifest error, be binding on the Borrowers.
|
82
[Date] |
83
1 |
Terms defined in the Facility Agreement shall, unless otherwise expressly indicated, have the
same meaning when used in this certificate. The terms
Transferor
and
Transferee
are
defined in the schedule to this certificate.
|
2 |
The Transferor:
|
2.1 |
confirms that the details in the Schedule under the heading
Transferors
Commitment
accurately summarise its Commitment; and
|
2.2 |
requests the Transferee to accept by way of novation the transfer to the
Transferee of the amount of the Transferors Commitment specified in the Schedule by
counter-signing and delivering this certificate to the Agent at its address for
communications specified in the Facility Agreement.
|
3 |
The Transferee requests the Agent to accept this certificate as being delivered to the Agent
pursuant to and for the purposes of clause 14.4 of the Facility Agreement so as to take effect
in accordance with the terms of that clause on the Transfer Date specified in the Schedule.
|
4 |
The Agent confirms its acceptance of this certificate for the purposes of clause 14.4 of the
Facility Agreement.
|
5 |
The Transferee confirms that:
|
5.1 |
it has received a copy of the Facility Agreement together with all other
information which it has required in connection with this transaction;
|
84
5.2 |
it has not relied and will not in the future rely on the Transferor or any
other party to the Facility Agreement to check or enquire on its behalf into the
legality, validity, effectiveness, adequacy, accuracy or completeness of any such
information; and
|
5.3 |
it has not relied and will not in the future rely on the Transferor or any
other party to the Facility Agreement to keep under review on its behalf the financial
condition, creditworthiness, condition, affairs, status or nature of any Security
Party.
|
6 |
Execution of this certificate by the Transferee constitutes its representation and warranty
to the Transferor and to all other parties to the Facility Agreement that it has the power to
become a party to the Facility Agreement as a Lender on the terms of the Facility Agreement
and has taken all steps to authorise execution and delivery of this certificate.
|
7 |
The Transferee undertakes with the Transferor and each of the other parties to the Facility
Agreement that it will perform in accordance with their terms all those obligations which by
the terms of the Facility Agreement will be assumed by it after delivery of this certificate
to the Agent and the satisfaction of any conditions subject to which this certificate is
expressed to take effect.
|
8 |
The Transferor makes no representation or warranty and assumes no responsibility with respect
to the legality, validity, effectiveness, adequacy or enforceability of any Finance Document
or any document relating to any Finance Document, and assumes no responsibility for the
financial condition of any Finance Party or for the performance and observance by any Security
Party of any of its obligations under any Finance Document or any document relating to any
Finance Document and any conditions and warranties implied by law are expressly excluded.
|
9 |
The Transferee acknowledges that nothing in this certificate or in the Facility Agreement
shall oblige the Transferor to:
|
9.1 |
accept a re-transfer from the Transferee of the whole or any part of the
rights, benefits and/or obligations transferred pursuant to this certificate; or
|
9.2 |
support any losses directly or indirectly sustained or incurred by the
Transferee for any reason including, without limitation, the non-performance by any
party to any Finance Document of any obligations under any Finance Document.
|
85
10 |
The address and fax number of the Transferee for the purposes of clause 18 of the Facility
Agreement are set out in the Schedule.
|
11 |
This certificate may be executed in any number of counterparts each of which shall be
original but which shall together constitute the same instrument.
|
12 |
This certificate shall be governed by and interpreted in accordance with English law.
|
1 |
Transferor
:
|
|
2 |
Transferee
:
|
|
3 |
Transfer Date
(not earlier that the fifth Business Day after the date of delivery of the
Transfer Certificate to the Agent):
|
|
4 |
Transferors Commitment
:
|
|
5 |
Amount transferred
:
|
|
6 |
Transferees address and fax number for the purposes of clause 18 of the Facility Agreement
:
|
[ name of Transferor ] | [ name of Transferee ] | |||||||||||||
|
||||||||||||||
By:
|
By: | |||||||||||||
|
Date: | Date: | ||||||||||||
|
|
|
DNB NOR Bank ASA as Agent | ||||||
|
||||||
By:
|
||||||
|
Date: | |||||
|
|
86
87
Reduction Dates | ||||||||||||
(from the date of | Initial Reduction | |||||||||||
this Agreement) | Reductions | Committed amount | Amounts | |||||||||
0
|
$ | 172,500,000 | 0 | |||||||||
6 months
|
1 st reduction | $ | 172,500,000 | $ | 6,100,000 | |||||||
1 year
|
2 nd reduction | $ | 166,400,000 | $ | 6,100,000 | |||||||
1 year 6 months
|
3 rd reduction | $ | 160,300,000 | $ | 6,100,000 | |||||||
2 years
|
4 th reduction | $ | 154,200,000 | $ | 6,100,000 | |||||||
2 years 6 months
|
5 th reduction | $ | 148,100,000 | $ | 6,100,000 | |||||||
3 years
|
6 th reduction | $ | 142,000,000 | $ | 6,100,000 | |||||||
3 years 6 months
|
7 th reduction | $ | 135,900,000 | $ | 6,100,000 | |||||||
4 years
|
8 th reduction | $ | 129,800,000 | $ | 6,100,000 | |||||||
4 years 6 months
|
9 th reduction | $ | 123,700,000 | $ | 6,100,000 | |||||||
5 years
|
10 th reduction | $ | 117,600,000 | $ | 6,100,000 | |||||||
5 years 6 months
|
11 th reduction | $ | 111,500,000 | $ | 6,100,000 | |||||||
6 years
|
12 th reduction | $ | 105,400,00 | $ | 6,100,000 | |||||||
6 years 6 months
|
13 th reduction | $ | 99,300,000 | $ | 6,100,000 | |||||||
7 years
|
14 th reduction | $ | 93,200,000 | $ | 6,100,000 | |||||||
7 years 6 months
|
15 th reduction | $ | 87,100,000 | $ | 6,100,000 | |||||||
8 years
|
16 th reduction | $ | 81,000,000 | $ | 6,100,000 | |||||||
8 years 6 months
|
17 th reduction | $ | 74,900,000 | $ | 6,100,000 | |||||||
9 years
|
18 th reduction | $ | 68,800,000 | $ | 6,100,000 | |||||||
9 years 6 months
|
19 th reduction | $ | 62,700,000 | $ | 6,100,000 | |||||||
10 years
|
20 th reduction | $ | 56,600,000 | $ | 56,600,000 | |||||||
|
0 |
88
SIGNED
by
|
) | |||
duly authorised for and on behalf
|
) | |||
of
ARCTIC SPIRIT L.L.C.
|
) | |||
|
||||
SIGNED
by
|
) | |||
duly authorised for and on behalf
|
) | |||
of
POLAR SPIRIT L.L.C.
|
) | |||
|
||||
SIGNED
by
|
) | |||
duly authorised for and on behalf
|
) | |||
of
DNB NOR BANK ASA
|
) | |||
(as a Lender)
|
) | |||
|
||||
SIGNED
by
|
) | |||
duly authorised for and on behalf
|
) | |||
of
NORDEA NORGE ASA, Cayman
|
) | |||
Islands Branch
|
) | |||
(as a Lender)
|
) | |||
|
||||
SIGNED
by
|
) | |||
duly authorised for and on behalf
|
) | |||
of
SUMITOMO MITSUI BANKING
|
) | |||
CORPORATION, Brussels Branch
|
) | |||
(as a Lender)
|
) | |||
|
||||
SIGNED
by
|
) | |||
duly authorised for and on behalf
|
) | |||
of
LLOYDS TSB BANK PLC
|
) | |||
(as a Lender)
|
) |
89
SIGNED
by
|
) | |||
duly authorised for and on behalf
|
) | |||
of
SKANDINAVISKA ENSKILDA
|
) | |||
BANKEN AB
|
) | |||
(as a Lender)
|
) | |||
|
||||
SIGNED
by
|
) | |||
duly authorised for and on behalf
|
) | |||
of
DNB NOR BANK ASA
|
) | |||
(as the Agent)
|
) | |||
|
||||
SIGNED
by
|
) | |||
duly authorised for and on behalf
|
) | |||
of
DNB NOR BANK ASA
|
) | |||
(as the Security Trustee)
|
) | |||
|
||||
SIGNED
by
|
) | |||
duly authorised for and on behalf
|
) | |||
of
DNB NOR BANK ASA
|
) | |||
(as an MLA)
|
) | |||
|
||||
SIGNED
by
|
) | |||
duly authorised for and on behalf
|
) | |||
of
NORDEA BANK FINLAND PLC,
|
) | |||
New York Branch
|
) | |||
(as an MLA)
|
) | |||
|
||||
SIGNED
by
|
) | |||
duly authorised for and on behalf
|
) | |||
of
SUMITOMO MITSUI BANKING
|
) | |||
CORPORATION, Brussels Branch
|
) | |||
(as an MLA)
|
) |
90